Newman Law Group

Tustin Estate Planning Law Blog

In season of gift giving, estate planning can be priceless

As the year draws to an end in California, one's thoughts may be drawn to a review of the year almost passed and plans for the year about to begin. Plans for the new year may include taking steps to protect one's family for the future. No one relishes the idea of contemplating the end of his or her life, but the fact remains that no one gets out of this life alive. Engaging one's family in estate planning may be difficult to contemplate, but it will help make a difficult time easier for all involved.

Many pieces of the pie that may go into an estate plan are fairly obvious. What are one's assets and are they wholly owned or held in partnership? Who is in one's family? Should there be a trust? Are there minor children to be provided for and who will be their designated guardians?

Estate planning and California real estate

Much has been written about how people can learn from the mistakes made by celebrities who passed away without having created an estate plan. Something that is less prevalent is being able to learn from celebrities who have planned well. Estate planning is not something that should be left until one's later years in California. Luke Perry, the actor, was only 52 years old when he died but had apparently already put into place a very comprehensive and well-thought-out plan.

While the size of Perry's estate is likely considerable, one of the biggest assets may well be the $2 million home that had been transferred to his two children. The house had been transferred from a revocable trust to his two children, with each child receiving an equal share of the property. This enables the children to be able to take advantage of a little-known property tax loophole known as the parent-child property tax exemption.

Digital assets should be included with estate assets

Most people in California have some awareness  of the importance of having an estate plan, in part due to the recent passing of notable people who did not have one and the chaos that resulted around the resolution of their estates. What people may not be aware of is the necessity to include one's digital life in estate assets when creating a comprehensive plan. Digital footprints have grown considerably and failure to incorporate it can cause one's heirs unnecessary angst, inconvenience and possible financial cost.

One's digital footprint consists of any and all accounts that require a log in and passwords to access. This can include email accounts, social media accounts, financial accounts including retirement and brokerage accounts as well as cloud storage accounts. Digital devices such as smart phones and lap top computers are also considered digital assets.

Protecting assets is key reason for an estate plan

Once upon a  time a person could go to school, grow up, work for a company and then retire with a pension. Pensions have, for the most part, given way to 401(k) programs that rely in part on the investment knowledge of the individual. This can make the question of growing and protecting assets a daunting and confusing question for some people in California.

One way to provide some clarity is to look at the situation of one person and what he did well and what he could have done better. Being an older man, he did retire with a pension but also had significant savings, much of which was in stock holdings. Since he did have a pension, he and his wife lived primarily on the proceeds of Social Security and his pension. As a result, his estate was worth nearly $2 million when he passed away. Saving money was something he did well.

Procrastination and estate planning do not go together

There is one word that frequently comes up in conjunction with creating an estate plan: procrastination. That procrastination can prove to be a fatal mistake. There was another well-known personality in California whose recent death drove that fact home. John Singleton, a well-known filmmaker, passed away at the age of 51 from apparent complications due to a stroke. He had procrastinated estate planning, and this has caused public family disagreements over the filmmaker's estate.

He only had an outdated will that had been created in 1993 when he had only one child. At the time of his death, he had five children. In addition to arguing over the estate, the family also disagreed over his care following the stroke. There was no medical directive in place, and the family could not agree on what measures should be taken for their father's health.

A person's inheritance may include bequests to benefit pets

When putting together an estate plan in California people take into account family members and others to whom they wish to leave bequests. Also frequently considered are funds to care for children with special needs or other family members who may warrant special consideration. Additionally, people may include, as part of an inheritance, financial provisions to provide continued care for their pets. This used to be seen as being particular to the wealthy. Many people will recall that Leona Helmsley's dog, Trouble, was the beneficiary of a sizable bequest for his continued care.

The vast majority of people do not have millions to leave for the care of their beloved animals, but most people consider pets to be a part of their family and as such wish to provide for their care in the event that the owner passes away. This is particularly true for older people who may realistically face the possibility of passing before a younger pet. An older person creating or updating an estate plan may wish to consider the age and the current health of the pet when creating a bequest as part of the plan.

Asset distribution can be spelled out for unrelated beneficiaries

Estate planning provides the means to provide for the settlement of one's estate once the individual dies. Because family structures have changed considerably over the years, it is worth taking a closer look at what asset distribution can look like when considering one's own family structure. Often the biggest asset a Californian has is real estate. How that property was acquired could impact how it should be handled in regard to one's estate.

It is often said that some people have two families -- the one they were born into and the one they choose. It is not unusual these days for two people to share and even a purchase a home or property together though they may have no intention of marrying. They may intend to live in the property or it may be purchased as a rental property for investment purposes.

Review of estate plan necessary to protect estate assets

Another year is winding down. As the season changes, it is typically a time to review the year almost passed and contemplate the year to come. It is also a good time to take a look at one's estate assets and review plans that are in place or establish a plan if one is not already in place in California.

Once an estate plan has been created, it is not uncommon for people to view the task as complete and then just leave it alone. But as life goes on, changes will happen. People divorce and remarry, have additional children, experience changes in career and finances and any number of other circumstances that can impact people's lives. These changes often bring about the need to review estate documents such as wills and trusts.

Estate administration important for a plan to succeed

Once an estate plan is established in California, it is advisable that the documents be reviewed and updated as needed. Such updates would be recommended in the event of a major life event such as the birth of a child, a significant change in finances or a significant change in one's health. A qualified person entrusted with the estate administration can assist with necessary changes.

Making changes on one's own may result in unintended consequences. There are many types of estate planning documents, and two of them are wills and trusts. Handwritten wills, also known as holographic wills, are, on occasion, changed by marking out certain provisions and replacing them with others. Depending on the situation, the change may or may not hold up in court.

Estate administration planning can reduce stress at painful time

Americans are living longer and healthier lives. As a result, some families in California neglect to review estate plans or to even establish one in the first place. When a parent becomes ill and death may appear imminent, children may find themselves confronted with questions and issues regarding the transfer of property and other estate administration concerns.

A recent case found a family concerned about the transfer of their father's house. The brother and sister, whose mother predeceased their father, intended to split the estate. The daughter's name was on bank accounts and the father did have a will. The children were concerned about the estate having to go into probate.