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Archive for February, 2012

Wills and Trust Administration Basics in Orange County: What Does It Mean to Contest a Will?

Wednesday, February 29th, 2012

When it comes to the administration of your will in Orange County, you likely assume that the hard work and planning you put in with your lawyer will ensure everything goes off without a hitch. The good news is that this is precisely what happens the majority of the time. Wills and trust administration is a big job, and the sole purpose of creating a will is to make your wishes as clear as possible to simplify the process.

When a will is “contested” that means that it is being challenged for some reason. Fortunately, heirs can’t simply overturn your will because they’re not happy with it. Instead, they have to show a legal reason that the will itself is invalid. If it is found to be invalid, then the administration process changes dramatically for all involved.

Who Can Contest a Will

As mentioned above, a will can’t just be contested because someone doesn’t think you left him or her enough or to create more drama at an already difficult time. Instead, it must be shown that there is a valid reason for contesting. Those who can contest a will during the administration process include:

Someone named in the will who feels he or should have inherited differently
Someone not named in the will who thinks he or she should have been

One way to determine if a person has standing to contest the will is to determine if he or she would have inherited if you had died without one and your estate had gone into probate.

Reasons to Contest a Will

Simply being unhappy with your share isn’t enough for a court to consider a request to contest a will. Instead, specific problems must be shown. For example:

The testator was unduly influenced
The testator did not have the mental capacity to make binding decisions
There was a mistake in the will
The will constitutes fraud or was created fraudulently

If any of these things are found to be true, then all or part of the will can be voided. If the entire will is considered invalid, then its administration is governed by California’s intestate laws. If only part of the will is questionable, then that portion of the estate can be added to the residuary estate and dispersed as the will otherwise states.

No Contest Clauses

Many estate planning clients work to improve the desired outcome of their wills by including “no contest” clauses. These typically state that anyone attempting to contest your will is simply disinherited. That may be enough of an incentive to stop someone from interfering with your wishes out of their own sense of greed or mischief. Working with a local Newport Beach wills and trusts lawyer will ensure that you are following the applicable laws for our state.

Tags: california trust administration
Posted in Orange County Wills and Trusts | No Comments »

26 Costly Mistakes from Do-it-yourself Estate Planning

Tuesday, February 28th, 2012

Guest Article by Kellen Bryant, P.L.

A lot of times, I get questioned: “Can’t I just add someone to my deed and bank account to achieve this?” “Isn’t a will just a form where you fill in the blanks? Or my favorite: “Can’t I do this myself?” The answer is you don’t know what you don’t know and there is more to estate planning than avoiding probate.

In my world as an estate planning and elder law attorney in Jacksonville, Florida, I see and hear all the horror stories that people just don’t think about when they add names to deeds and bank accounts. Based on the example above of adding your child’s name to your bank account and house, here are the 26 costly mistakes from DIY estate planning.

Your son gets in a car accident and the plaintiff wants more than the policy limits of your son’s auto insurance. Result: the plaintiff can garnish your bank account you have with your son. It is his asset now.
You and your son get into a car accident and you are both incapacitated. Result: your son’s power of attorney (likely his wife) has access to your checking account. It is your son’s asset. Additional penalty: you may need a guardian to manage your medical decisions, monthly income and expenses, and your remaining assets.
You and your son become estranged. Result: you cannot sell your house without his signature because he has an interest in your house that you can only get back via his signature.
You have substantial wealth. Result: the IRS comes after you for a gift tax audit because the addition of your son on the account and house is a gift and a gift tax return must be filed for gifts over $13,000.
You die and have substantial wealth. Result: your son has to pay the government estate taxes, which taxes money that you already paid income tax for.
Your son dies and you don’t change anything before you die. Results: depending on the deed’s language, your son’s spouse or children get his share of the house; and your bank account and IRA do not avoid probate because there is no beneficiary or joint owner and as a result of not having a will, the assets can be distributed to estranged family members, go unclaimed, or be split among many family members.
You die and your son wants to sell your house because he has his own. Result: your son’s income tax liability will be the gain on his share of the house from the date of your purchase to the date of the sale.
You want to change what you have done with the deed. Result: your son will have to sign off on a new deed to change it to another person and eliminate his share in the home.
You son files for bankruptcy. Result: your bank account could become part of the bankruptcy and sold for creditors.
You die and your son liquidated your entire IRA. Result: the entire IRA will likely be taxed at your son’s income tax rate, which may be a lot higher than your tax rate during your retirement.
Your assets are exposed to nursing home costs. Result: nursing home monthly fees are extremely expensive in Jacksonville, Florida – some of your assets may have to be spent down.
You die, your son buys jewelry for his wife… then gets a divorce a few years later. Result: the son’s former wife will likely keep the jewelry.
You die, your son renovated his house with your IRA money (the one that got the tax hit remember?)… then gets a divorce a few years later. Result: the equity in the house gets split and given to your son’s ex-wife barring an attorney fee intensive divorce battle.
You die, your son’s wife spends some of their money renovating your house… then they get divorced. Result: the ex-wife could claim that her money went into your house and she should get a cut.
You die and you are married. Result: your spouse can sue your son for his spousal elective share and homestead rights to your home to become a co-owner of the home with your son. WHAT?!?
You die, you are married and your surviving spouse remarries. Result: the surviving spouse can give your property and accounts to his new spouse.
The paralegal you hired on the cheap drafted the deed incorrectly and you die. Result: a lawsuit will likely be needed to correct the drafting error. Good luck finding that person to sue for malpractice which your family will never collect on.
The IRA custodian never recorded your beneficiary designation and then you die. Result: a probate of the IRA will be required or your existing beneficiary gets the account. What if that beneficiary was an ex-spouse?
Instead of having your child on these accounts, you have your spouse on there and you all have an infant, and then you pass away. Result: child gets everything to spend how they please at the wise old age of 18 and the two families must determine who will raise the child until then. In case of a dispute, the judge will have to decide who is in the infant’s best interest to raise him.
You have another son and you may be in your fragile years. Result: the other son claims elder financial abuse against the son added to the accounts and the deed, files a criminal complaint and for guardianship to make financial and medical decisions for you.
You have memory defects and someone takes you in to change IRA and bank account information. Result: the accounts can get changed even if you are mentally incapacitated, it is your money and the banker or the internet may not be able to tell whether or not you have a 10 minute short term memory. Don’t worry, your son may be able to get some of the money back through a lawsuit.
Your son is selfish after you pass. Result: when holding these accounts and the property, it is the co-owner’s property and they do not have to share with anyone, including other siblings. There is no legal requirement to share.
Your son is secretive after you pass. Result: the other children can file a lawsuit requiring disclosure of the financials. Whether they have grounds to do so is another story… but one that requires attorneys fees.
Your son has addiction issues. Result: your son can pull all the money out of the account and can try to sell or mortgage his share of the house (or hold your IRA ransom over that threat).
You die and your son has addiction issues. Result: the money is spent on the son’s addictions and the house becomes neglected and ruined.
There is a mortgage on the house, you die and your son has financial problems. Result: the money is spent paying off your son’s creditors and your house gets foreclosed on or sold at a tax deed sale.

You see, do it yourself planning cannot prevent 26 costly or stressful errors from occurring. This post was actually easy to write because I have seen these things happen in my estate planning practice in Jacksonville or have been asked these questions. Visit my estate planning video page or call to sign up for an educational workshop to learn more about how estate planning attorneys can prevent these errors.

Kellen Bryant is the founder of Law Office of R. Kellen Bryant, P.L. and a Jacksonville, Florida native. Kellen focuses his law practice on estate planning and elder law with a particular focus on asset protection and preservation from long term care costs, creditors, and predators. Kellen works with families with special needs adults and children, small business owners, newlyweds, octogenarians and their respective parents and children in between.

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Estate and Tax Planning Opportunities Available to Affluent Families

Monday, February 27th, 2012

With the $5.12 million per person exemption from federal estate tax ($10.24 million for married couples), most of the estate planning “talk” recently has been on the planning opportunities available to affluent families. However, the need for estate planning remains for everyone.

According to a recent Forbes article, 55% of Americans do not have even a will. The article suggests the following “common sense” guidelines for determining the extent one needs an estate plan:

(1) Minor children – Everyone with minor children needs, at a minimum, to nominate guardians for their children. The author suggests the parents select “the first one that comes to mind” and “don’t over think it.”

(2) Beneficiary Designations – For those with less wealth, beneficiary designations may control how most of their property passes. But for everyone, are these designations current, and do they pass all of the property as the client desires?

(3) Home Ownership – The article recommends a trust for homes and investment property to avoid probate; and not simply adding another to title because of the numerous problems this “simple solution” creates.

(4) Affluence – Popular belief is that the current exemption means that only affluent families need concern themselves with the federal estate tax, but as the author notes, the exemption is schedule to decrease to $1 million per person at the end of 2012. What will the exemption amount be in the year of death (when it really matters)?

(5) Special Circumstances – Those with special circumstances (e.g., a special needs child, a spendthrift grandchild, charitable interests, etc.) definitely need an estate plan.

(6) And for everyone . . . Powers of Attorney – the author recognizes that everyone needs, at a minimum, financial and medical powers of attorney

Remember that estate planning is not permanent, and if circumstances change plans can be update d. But it’s better to have something in place when needed than nothing at all. The full Forbes article is available here.

Tags: estate and tax planning
Posted in California Estate Tax Lawyer, Orange County Estate Planning | No Comments »

Wills and Trusts Attorney in Newport Beach Discusses The Need For Estate Planning

Wednesday, February 22nd, 2012

A recent US News and World Report blog succinctly states What you Need to Know About Estate Planning . Taking excerpts from The Wall Street Journal Complete Estate Planning Guidebook, the author states:
•              “Everybody needs to think about estate planning”;
•              “The number one [estate planning] mistake is not doing anything at all”;
•              “[T]he safest thing to do” is to see an estate planning lawyer rather than attempt do-it-yourself planning;
•              People should review their estate plans “often – at least every three years.”

This is a simple yet straightforward article on the importance of estate planning for everyone – and on the need to review existing estate plans frequently.

Tags: wills and trusts attorney
Posted in Orange County Estate Planning, Orange County Wills and Trusts | No Comments »

Election Year Antics

Thursday, February 16th, 2012

Welcome to politics in 2012! Did you sign up for what we’re getting in America? In many ways, nobody is happy with the landscape. I, for one, am pushing through the urge to disengage.

More Reasons To Be Involved Than Ever Before

Even if the typical issues like taxes, the economy, social matters, job creation, globalization, and fiscal policy aren’t enough to motivate you to be involved, there is one issue that will probably get you off the couch this election season: YOUR MONEY!

On December 31st of this year, a law that provides very good tax treatment for estates will sunset, unless it is renewed by Congress and the President. The current law exempts from taxation estates of $5 million or less ($10 million for married couples). That means that most folks currently fall completely outside the realm of taxation.

If the current law does expire, the law that replaces it will likely tax estates that exceed the $1 million mark. In other words, the new law will almost certainly cast a much wider net, and if you are at all concerned about your wealth, then you should be paying attention to the 2012 elections and writing to your representatives in Congress. Every dollar in your bank account is a reason to be more involved than ever before.

It Can Actually Be Fun

The idea is to fully express yourself, and it’s okay to have some fun while doing it. While the issues are very serious, there’s no reason that you have to take yourself too seriously, even when you’re talking politics with friends and family. When you talk about your favorite candidates, talk about the issues and encourage your loved ones of voting age to research those issues and where the candidates stand on those issues. And smile while you’re doing it!

An election year also presents an opportunity to teach your kids about our electoral system, the reasons it exists, and the importance of being involved. Kids really do believe that they can make a difference in the world, and that idea should be nurtured, since children really are our future.

What You Can Do

Even if the beneficial estate tax laws sunset in 2012, you can take action today to prevent losing significant benefits. There are several things you can do. You can give gifts, you can create a trust, and there are some other tricks that can likely help you save on estate taxes.

If you have questions about establishing an estate plan, please don’t wait to call our offices. Time is ticking. If you call our office today and mention this article by name, we’ll give you a Family Wealth Planning Session™ free of charge . . . a $750 value, absolutely free of charge. Don’t wait. November and election time could honestly be too late.

Tags: estate tax
Posted in California Estate Tax Lawyer, Orange County Estate Planning | No Comments »

Prenup 101: The Basics of the Prenuptial Agreement in Orange County, CA

Wednesday, February 15th, 2012

Prenuptial agreements tend to get a lot of attention when it comes to celebrity divorces, but there are plenty of non-famous people who are opting in to this type of contract. The reasons for doing so are pretty varied, and it rarely has to do with the parties not trusting each other. As an Orange County prenup lawyer, it makes sense to share some basic fundamentals of prenuptial agreements that you should consider if you are planning to get married.

The Real Reason People Choose Prenuptial Agreements

One of the original uses for this type of agreement is one that prenup lawyers still see on a regular basis: people getting married for the second or subsequent time. When entering a second or later marriage, it’s likely that the parties involved have their own assets and possibly even children that resulted from the earlier relationship. They are often looking to make sure that those things accumulated from the first marriage will be inherited by their biological children rather than the new step-children.

For example, a widowed mother of two adult children might marry a divorced man who has a grown child of his own. Their prenuptial agreement could state that certain assets from each of their previous marriages will rightfully pass only to their biological offspring. Each of the partners may also come to the marriage with enough financial security that it is unnecessary to inherit the new spouse’s estate.

This idea has expanded as our culture has shifted to one where many people get married for the first time later in life. Each spouse may already have his or her own successful career, personally owned property, and other assets that they want to ensure remain theirs. The high divorce rate is certainly another cultural factor that comes into play, with many couples having seen well-intentioned friends end up going through painful divorces in which they lost their assets.

Will the Prenup Be Upheld?

A good prenup lawyer in Orange County is probably your best ally in creating a prenuptial agreement that holds up in court. In fact, it is preferable for each spouse to hire a separate lawyer to represent his or her interests. By doing this, you increase the likelihood of it being upheld later, too, as it’s less likely for one person to claim that he or she was misled. The parties need to be honest when they disclose their assets, too. If it appears that one was hiding assets from the other, this can definitely call the prenup into question.

Basically, it needs to be clear that both parties have entered into the prenup freely and with good intentions. It’s recommended to meet with your Orange County prenup lawyer well in advance of the wedding date, as that helps to strengthen it in the eyes of the court. It needs to be signed by both partners, and all involved should know that a court will possibly overlook parts of the prenuptial agreement that attempt to lay out custody or child support agreements, as these things may need to be determined by a court following standards for what is in the best interest of the child.

Tags: orange county prenup lawyer
Posted in California Newlywed Planning | No Comments »

Danger Ahead For Bobbi Kristina: Attorney Says Whitney Houston’s Legal Troubles May Put Daughter’s Inheritance At Risk

Tuesday, February 14th, 2012

It was just weeks ago that Whitney Houston won a lawsuit against her step-mother to collect the proceeds of her father’s estate. Now the question is whether daughter Bobbi Kristina, who has a reported history of drug use and emotional problems, will inherit her grandfather’s money outright if Houston did not have enough time to protect the cash.

Orange County, CA (2/14/12)- It’s a common fear for any parent: suddenly passing away and having their child inherit their money outright at age 18, before the child is mature or responsible enough to handle such a large sum of cash.

That’s why many parents leaving a significant inheritance to their children choose to place their money in a trust, which helps to ensure their money is not lost or wasted on things like fancy cars, luxury items, gambling, foolish spending or expensive drug habits. Leaving an inheritance in an asset-protected manner also helps to protect family wealth in the event the child faces a future lawsuit or messy divorce.

Whitney Houston may have had the same concerns about leaving money outright at age 18 to her own daughter, Bobbi Kristina, who recently has been photographed using drugs, partying and acting erratically.

It’s likely that Houston took some form of precaution to protect her daughter in the event of her untimely death, but when it comes to money Houston recently inherited from her father, Orange County estate planning attorney Darlynn Morgan warns it may be too late to keep it from Bobbi Kristina’s hands.

“There’s a good chance that Whitney didn’t have time to plan for the money that she was just awarded from her father’s estate, “ says Morgan. “If that is the case, the money will likely end up in the probate court and will eventually be awarded outright to Bobbi Kristina, who is her surviving heir,” she adds.

Morgan believes that this oversight could prove very dangerous to Bobbi Kristina, who may not be stable enough to handle such a large sum of money following her mother’s death.

“Bobbi Kristina is in a very fragile state and she’s very young. There are people that might try to take advantage of that and get close to her because of the money she’s about to receive. It also makes it that much harder to avoid situations that got her parents in trouble in the past,” says Morgan.

Morgan believes there is a lesson in Houston’s death for all parents to take precautions and protect their money in such a way that it would not hurt their children in the event of their untimely death. She says legal tools such as living trusts are great ways to place age restrictions and some oversight on family wealth to ensure that it lasts.

For more information about concerns regarding Whitney Houston’s estate or about Orange County attorney Darlynn Morgan, please visit www.morganlawgroup.com or call (949) 260-1400.

Posted in Orange County Estate Planning | No Comments »

Working with an Orange County Elder Attorney to Determine Who Will Pay for Your Long-Term Care

Tuesday, February 14th, 2012

A huge misconception about estate planning is that it only helps people plan for taxes and distribute your “stuff” after death.

While planning for death is certainly a key piece of the estate planning puzzle, estate planning also helps you protect your wishes, your assets and your independence during life, too.

This is especially true when it comes to helping you navigate the complicated world of long-term care and making arraignments to pay for it during the golden years.

It’s important to note that long-term care is a very likely scenario for all of us. People are living longer than ever, but it also means that the period of time in which we cannot fully care for ourselves may be longer, too.

More and more people are finding that they need some form of long-term care to deal with these issues. In some cases, this can even be handled at home, but even in-home health care options are expensive.

Nursing homes are another common solution when it comes to long-term care, and an attorney can help you plan for this transition. It’s common for people to think that the government will pay for their nursing home stay or that a nursing home isn’t any more expensive than renting an apartment. Both ideas are usually untrue.

Instead, there are typically 4 ways to cover the costs associated with long-term care. Here is a brief rundown of the most common options:

Private Pay – Private pay means that any care that is needed, from nursing homes to prescriptions drugs (including co-payments or full costs) are covered out of pocket. This is typically not a feasible option for most seniors, as elder care services tend to be very expensive. It’s not unusual for assisted-living placements to cost upwards of $8,000 a month. That means that “simple” basics that are required for day-to-day living come out to $96,000 a year.
Medicare – Medicare is a health insurance program administered through the government. Estate planning and elder attorneys in Orange County work with this program a lot because one of the basic requirements is that you must be over 65 to receive benefits. Many people are surprised to learn that Medicare does not typically cover long-term care. So, even if you qualify for this program, it cannot be used to cover nursing home care or in-home healthcare professionals for more than about 100 days.
Medicaid (Medi-Cal) – Medicaid , or Medi-Cal here in California, is used by those with great financial need, and you must apply and qualify for the benefits. Many people are shocked when their attorney explains that Medicaid is not actually available to everyone, and if you have too many assets (even including a modest home or a few thousand dollars in the bank), you may not qualify at all. If you are hoping to qualify for Medi-Cal, however, you must prepare several years in advance to protect your assets.
Long-Term Care Insurance – This type of insurance can help to cover or offset the costs associated with long-term care, such as an in-home healthcare workers or nursing home care. Policies can be somewhat confusing and expensive, so it’s highly recommended to work with an Newport Beach elder attorney when reviewing potential policies to ensure you understand them and are getting what you expect.

There are many issues to take into consideration when planning for your future, and long-term care is undoubtedly one of the most important. Working with an elder care attorney in Newport Beach means that you will understand the options that are available to you and how they apply according to state and federal law.

If you have questions or need help getting started, please feel free to call our Orange County estate, elder and probate law firm at (949) 260-1400 and ask to schedule a free Family Wealth Planning Session with the mention of this article. Availability for these sessions is limited to 10 families per month, so call today!

Tags: newport beach, orange county elder attorney
Posted in California Probate, Orange County Elder Lawyer, Orange County Estate Planning | No Comments »

Which assets do not go through probate in California?

Monday, February 13th, 2012

Probate is a court process in California that facilitates the legal transfer of assets from a deceased person to their named beneficiaries or heirs. It is often expensive, time consuming and can delay the transfer of assets to loved ones for many months and in some cases, years.

However, the process is necessary to ensure the estate is administered according to the will, or in the absence of a will, according to the California probate code. The process also helps to ensure that the decedents debts and outstanding obligations are paid to creditors, the state and the IRS.

Fortunately, however, not all assets are subject to the expenses and delays of the probate court following the death of a loved one. Here is a brief overview of some assets that may avoid oversight from the probate courts:

Property held in joint tenancy
Other jointly owned assets
Assets with named beneficiaries such as insurance policies, IRAs and annuities
Assets placed in a living trust
Informal trust accounts, also referred to as Totten Trusts or payable on death (POD) accounts
Banking and investment products, such as savings, checking accounts, CDs, and brokerage accounts with a Transfer on Death (TOD) beneficiary
Your spouse’s share of the community property you own together
Small gifts of your personal property

Keep in mind that while these assets generally are not subject to probate, there may be instances when they will need to go before the court. This typically happens when a beneficiary is not properly named or is no longer alive at the time of the deceased’s passing.

The best thing to do if you have questions about which assets may or may not go through the probate court following the death of a loved one is to contact an experienced Orange County probate attorney. Here at Morgan Law Group, we are dedicated to providing individuals and families in Orange, Los Angeles, Riverside and San bernardino Counties with the information and compassionate guidance they need during a time of loss. To schedule a complimentary appointment at our Newport Beach estates and probate law firm, please call (949) 260-1400.

Tags: orange county probate attorney, probate in california
Posted in California Probate | No Comments »

Working With a Newport Beach Trust Attorney To Protect Intergenerational Wealth Transfers

Friday, February 10th, 2012

A recent article on Forbes.com took a look into the surprisingly high rate at which intergenerational wealth transfers are failing. According to research done by Roy Williams and Vic Preisser, the study found that intergenerational wealth transfers fail a staggering 70% of the time!

The main factor cited in these failures was that the families in question simply did not implement any post-transition planning. In other words, the heirs were never prepared to take on the privileges and responsibilities of inheriting the family’s wealth!

On the contrary, the study found that families who were actually successful in preserving their wealth had put much forethought and preparation into how their wealth would be passed down.

For example, if family wealth was often used for philanthropic purposes, the younger generations would have a hand in this type of administration before the head of the family ever passed on. Or, in the case of a family business, children and grandchildren would be given opportunities to participate and learn early on what may be expected of them in years to come.

The obvious conclusion to draw from the numbers is that most families with a lot of wealth are simply not preparing the next generations for the roles they will play. This, coupled with potential strain and animosity among family members, has led to a reality in which the vast majority of intergenerational transfers are failing.

Fortunately, this does not have to be the fate of your family’s wealth. If you are serious about making sure your inheritance is never lost or wasted, the time to start planning and having tough conversations with your heirs is now.

Meeting with an Orange County estate planning attorney is the first step in this process. If you are ready to get started putting a plan in place that will protect your wealth for future generations, be sure to give our Newport Beach trusts, estates and probate office a call at (949) 260-1400 and ask to schedule a Family Wealth Planning Session with the mention of this article.

Tags: orange county estate planning attorney
Posted in Orange County Estate Planning | No Comments »

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