pederson-law

Why Timely Trust and Estate Administration Matters

Thu, 06 Mar 2025 19:41:03 GMT

Losing a loved one is an emotionally taxing experience, often accompanied by the daunting responsibility of managing their trust or estate. While grief and familial obligations understandably take precedence, delaying the steps required to settle an estate can lead to significant legal, financial, and relational consequences. Timely administration ensures compliance with California’s stringent probate and trust laws, protects beneficiaries’ interests, and helps to promote family harmony during an already challenging period. Below, we explore the numerous reasons prompt action is essential, along with the legal requirements and practical considerations for trustees and executors.

Legal Compliance and Fiduciary Responsibilities

Executors and trustees bear a legal obligation to act promptly under California law. Delaying key steps—such as filing required notices, inventorying assets, or initiating probate—can expose fiduciaries to personal liability. For example, California Probate Code Section 16061.7 mandates that trustees notify beneficiaries within 60 days of a settlor’s death, triggering a 120-day contest period. Failure to meet these deadlines risks court sanctions, disputes over mismanagement, or even removal as trustee or executor.

Similarly, probate administrators must adhere to strict timelines for creditor notifications. Under Probate Code Sections 9050–9054, executors must publish creditor notices and resolve claims within specified periods. Delays prolong the estate’s exposure to liabilities, increasing the risk of unanticipated claims depleting assets meant for beneficiaries.

Mitigating Family Conflicts Through Transparency

Disputes among beneficiaries often arise from perceived delays or lack of communication. Proactively providing updates and adhering to statutory notice requirements fosters trust and transparency. For instance, initiating the 120-day contest period early allows beneficiaries to voice concerns promptly, reducing prolonged uncertainty. Clear communication about timelines for asset distribution also prevents misunderstandings. Gifts left undistributed beyond one year may accrue interest, escalating tensions and complicating the estate’s financial obligations.

Financial and Tax Implications of Delayed Action

Timely administration is critical to minimizing tax penalties and preserving asset value. Federal estate taxes (Form 706) for taxable estates are due within nine months of death, with delays incurring penalties up to 25% of unpaid taxes plus interest. At the state level, California’s property tax rules demand swift action. Transfers which may be excluded from reassessment under Proposition 19 require prompt filing to avoid reassessment. For transfers that are not excluded from reassessment, procrastination may result in large retroactive supplemental property tax bills which can strain beneficiaries, whereas timely transfers allow periodic payments.

Protecting Assets and Beneficiary Interests

Assets left unmanaged risk depreciation, loss, or mismanagement. Real estate may decline in value if maintenance lapses, while investment accounts could suffer market volatility. Executors and trustees must promptly secure physical assets (e.g., homes, vehicles) and prudently manage trust or estate assets. Additionally, California’s probate process limits creditor claims to four months after notices are served on creditors, but delays in initiating this window extend liabilities.

Navigating Jurisdiction-Specific Challenges

California’s unique legal landscape necessitates localized expertise. For example, Proposition 19’s reassessment exclusions require meticulous documentation to qualify for parent-child transfers. Trustees must file exclusion claims promptly to avoid inflated property taxes. Similarly, complex estates with out-of-state assets or business interests demand coordinated efforts to comply with multi-jurisdictional laws.

Conclusion: Balancing Compassion and Diligence

Administering a trust or estate requires balancing empathy for grieving families with rigorous adherence to legal duties. Partnering with experienced legal counsel ensures compliance, mitigates risks, and honors the decedent’s intentions efficiently. At Pederson Law Offices, we guide clients through every step so families can focus on healing.

Please note: This blog post is for informational purposes only and does not constitute legal advice or create an attorney-client relationship. Consult with a qualified attorney at Pederson Law Offices for advice on your specific circumstances.

Home Insurance, Wildfires, and Earthquakes

Tue, 18 Feb 2025 23:03:47 GMT

The recent devastation caused by the Palisades, Eaton, and other wildfires in Los Angeles and Ventura counties has left many homeowners grappling with the aftermath of destruction and the realities of rebuilding.

A question that often arises in the context of estate planning is whether your revocable living trust should be named on your homeowner’s and earthquake insurance policies.

1. Inform Your Insurance Broker

If you’ve placed your home in a revocable living trust—a common step in estate planning—it’s important to inform your insurance broker. While most homeowner policies remain valid as long as the grantor (you) is listed as the named insured, adding your trust as an additional insured can provide peace of mind.

Why This Matters: Insurance claims can be complicated. Therefore, ensuring that your trust is properly listed could prevent unnecessary delays or disputes during what is already a stressful time.

2. How a Revocable Trust Affects Ownership

A revocable living trust allows you to maintain control over your property while offering significant estate planning benefits. For insurance purposes, most carriers treat homes held in a revocable trust similarly to those owned outright by individuals, as long as the home is used according to the policy (e.g., as a primary residence or rental).

3. Reviewing Your Policy Language

Not all insurance policies are created equal. Some may require specific endorsements or riders for homes held in trusts, while others may already include broad language that covers such arrangements.

Action Needed: Sit down with your broker to review your policy carefully. It’s better to address potential gaps now rather than during a claim.

4. Wildfire and Earthquake Coverage Concerns

California homeowners are no strangers to natural disasters—from wildfires to earthquakes. The recent fires have highlighted how quickly lives can be disrupted. Unfortunately, many major carriers are no longer writing policies in California. Further, wildfire mitigation is going to become a key issue in securing coverage for your property, so it’s important that you educate yourselves and make preparations well before it’s time to renew your policies.

Why This Matters Now: Keeping your policies updated—even if listing your trust isn’t explicitly required—can help to ensure smoother claims processing should you suffer a loss.

5. Seek Professional Advice When in Doubt

If you’re unsure about how best to structure your insurance policies or if you own multiple properties, consulting with an experienced insurance professional is essential.

Tailored Guidance: Every situation is unique, so professional advice can help you navigate complex scenarios, avoid costly mistakes, and ensure that you have adequate coverage.

In Conclusion

The recent fires have been a sobering reminder of how quickly life can change for homeowners. If you’ve placed your home into a revocable living trust—or are considering doing so—now is the time to review your homeowner’s and earthquake insurance policies. Informing your broker, reviewing policy language, and seeking professional advice are small but crucial steps that can make all the difference when it comes to protecting what matters most: your home and family. As we rebuild together as a community, let’s ensure we’re prepared for whatever challenges lie ahead.

If you have questions about trusts, estate planning, or protecting your property through insurance, don’t hesitate to reach out—we’re here to help guide you every step of the way.

What is the Difference Between a Revocable and an Irrevocable Trust?

Tue, 07 Jan 2025 22:49:05 GMT

Introduction to Trusts

Trusts are powerful estate planning tools designed to help individuals manage their assets during their lifetime and beyond. In California, creating a trust can simplify the transfer of property, reduce probate hassles, and provide clear guidance for loved ones. Although there are many types of trusts, they generally fall into two broad categories: revocable and irrevocable. Understanding the core differences between these two categories can help you decide which trust aligns best with your goals.

What is a Revocable Trust?

A revocable trust (often referred to as a “living trust”) can be changed or revoked entirely by the person who created it (the settlor) at any time, as long as they are still mentally competent. This flexibility allows the settlor to adjust the trust to reflect changing life circumstances—be it marriage, divorce, new children or grandchildren, alterations in financial status, or evolving estate planning goals. During the settlor’s lifetime, assets held in a revocable trust remain under their control and are considered part of their taxable estate. While revocable trusts don’t provide robust asset protection from creditors or lawsuits, they do help streamline the inheritance process and can reduce or eliminate probate after death. Importantly, most revocable trusts become irrevocable at the death of the settlor, at which point the trust terms “lock in” and the successor trustee must follow the established directives.

What is an Irrevocable Trust?

An irrevocable trust is not easily changed or revoked once it has been established. In creating this type of trust, the settlor effectively “gifts” the assets into the trust and gives up control over them. While this arrangement is more restrictive, irrevocable trusts can offer significant tax advantages, asset protection benefits, and ensure a more secure legacy for beneficiaries. Because the assets are generally no longer considered the settlor’s property, they may be shielded from certain creditors and may not be included in the settlor’s taxable estate—potentially lowering estate tax liabilities for larger estates.

Major Differences Between Revocable and Irrevocable Trusts

When choosing between a revocable and an irrevocable trust, it’s crucial to understand how they differ in terms of control, flexibility, asset protection, and tax implications. Let’s dive deeper into these distinctions:

Control Over Assets :
Revocable Trust : The settlor retains full control of the assets placed in the trust, able to add or remove assets and modify terms. During the settlor’s lifetime, this adaptability makes it easier to respond to new circumstances. However, once the settlor passes away, this formerly flexible trust typically becomes irrevocable, ensuring the trust’s instructions remain fixed.
Irrevocable Trust : Once funded, the settlor typically cannot take back assets or alter the trust’s terms without the consent of beneficiaries (if at all). By giving up control, the settlor effectively removes the assets from direct ownership, which can be beneficial for long-term estate planning goals.
Flexibility :
Revocable Trust : The hallmark of a revocable trust is flexibility. Since these trusts can be revised at any point during the settlor’s lifetime, they provide peace of mind for individuals who want to maintain the ability to respond to life’s uncertainties. Upon the settlor’s death, however, this flexibility ends, and the trust’s terms become “locked in.”
Irrevocable Trust : Irrevocable trusts offer far less adaptability. They are usually established with a very specific purpose—like minimizing estate taxes, protecting assets from future creditors, or ensuring Medicaid eligibility.
Asset Protection :
Revocable Trust : Because the settlor maintains ownership and control, the assets in a revocable trust are generally not protected from the settlor’s creditors, lawsuits, or divorce settlements. If a financial crisis occurs, the assets in a revocable trust can still be vulnerable.
Irrevocable Trust : By transferring ownership of the assets into an irrevocable trust, the settlor often removes them from reach of personal creditors and legal judgments. This layer of protection can be crucial for individuals who wish to protect family wealth or provide long-term security for beneficiaries who might face their own financial or legal challenges.
Tax Implications :
Revocable Trust : Because the settlor retains ownership of the assets, they remain part of the settlor’s taxable estate. This means that while a revocable trust helps avoid probate, it does not provide much relief from estate or income taxes.
Irrevocable Trust : Assets placed in an irrevocable trust may be excluded from the settlor’s taxable estate, potentially reducing estate taxes for high-net-worth individuals. In addition, certain types of irrevocable trusts can be structured to minimize income taxes, gift taxes, or create other tax efficiencies.

Choosing the Right Type of Trust for Your Situation

Deciding between a revocable and an irrevocable trust depends on your personal and financial circumstances, as well as your estate planning objectives. If your priority is maintaining control and flexibility, a revocable trust may be the better option. If, however, you are looking to protect your assets from creditors or implement complex tax strategies, an irrevocable trust might be more appropriate. Factors such as the size of your estate, family dynamics, and long-term goals should all be considered before making a decision.

The Importance of Professional Guidance

Laws and regulations can be complex. Therefore, working with an experienced California estate planning attorney can help ensure that you select the right type of trust for your unique needs. A knowledgeable professional can guide you through the nuances of trust formation, provide personalized tax strategies, and ensure that your estate plan remains compliant with state and federal laws.

If you’re ready to take the next step in creating a customized estate plan tailored to your family’s needs, consider reaching out to Pederson Law Offices. With a clear understanding of your options, you can move forward with confidence, knowing that your legacy will be managed and preserved exactly as you intended.

Investing in the Future: Estate Planning with 529 Plans and Annual Gifting

Wed, 04 Dec 2024 21:09:37 GMT

Planning for the future involves more than just saving money—it's about making strategic decisions that benefit both you and your loved ones. One powerful way to do this is by combining 529 college savings plans with annual gifting strategies. This approach not only supports your family's educational aspirations but also offers significant estate planning advantages.

Understanding 529 Plans in California

A 529 plan is a tax-advantaged savings account designed to encourage saving for future education costs. While California doesn't offer a state tax deduction for contributions, the benefits at the federal level are substantial:

Tax-Deferred Growth : Earnings in a 529 plan grow federal income tax deferred.
Tax-Free Withdrawals : Funds withdrawn for qualified education expenses are not subject to federal income taxes, including the growth on said funds that were previously deferred.
Estate Planning Perks : Contributions are considered completed gifts, reducing your taxable estate.

The Power of Annual Gifting

The annual gift tax exclusion currently allows individuals to give up to $18,000 per recipient (increased to $19,000 in 2025) without incurring gift taxes. For married couples, this amount doubles to $36,000 (increased to $38,000 in 2025) per recipient. Utilizing this exclusion is a strategic way to transfer wealth without affecting your lifetime gift and estate tax exemption, which is currently $13.61 million per individual (increased to $13.99 million in 2025).

Supercharging Your 529 Contributions with Front-Loading

If you're looking to make a more significant impact, consider the "front-loading" option for 529 plans:

Front-Load Contributions : You can currently contribute up to $90,000 per beneficiary (increased to $95,000 in 2025), or $180,000 for married couples (increased to $190,000 in 2025), by using five years' worth of annual exclusions at once. If you front-load five years’ worth of annual exclusions at once, then you cannot continue to make annual exclusion gifts to the same recipient until after the five years have elapsed.
Immediate Estate Reduction : This lump-sum contribution removes a substantial amount from your taxable estate immediately. If you die within the five year period, a pro rata portion of the previously gifted assets com back into your estate.
Continued Control : Despite the large contribution, you retain control over the assets in the 529 plan.

Combining Strategies for Maximum Benefit

By integrating 529 plans with annual gifting, you can:

Support Education Goals : Provide for your children or grandchildren's future education expenses.
Reduce Estate Taxes : Decrease your taxable estate, potentially saving up to 40% in estate taxes on your contribution.
Maintain Flexibility : Adjust beneficiaries as needed within your family, offering adaptability to changing circumstances.

Flexibility and Control with 529 Plans

One of the standout features of 529 plans is the control they offer:

Change Beneficiaries : You can switch the beneficiary to another family member if plans change.
Refund Options : If the funds aren't needed for education, you can withdraw them (subject to taxes and penalties on the earnings).
Investment Choices : You may customize your investment strategy within the plan to align with your risk tolerance and goals.

Schedule a Consultation

At Pederson Law Offices, we're here to help you navigate the complexities of estate planning. Schedule a consultation with us today to explore how combining 529 plans with annual gifting strategies can benefit you and your family. Our guidance, along with that of your financial advisor, can help you strategically plan for your loved ones’ educational needs.

The Hidden Consequences of Do-It-Yourself Estate Planning

Fri, 01 Nov 2024 17:45:57 GMT

In today's digital age, do-it-yourself (DIY) solutions are just a click away for almost any task, from home improvements to financial planning. The allure of saving time and money makes DIY estate planning seem like an attractive option. However, when it comes to securing your legacy and protecting your loved ones, taking shortcuts can lead to unintended and costly consequences. In this blog post, we'll explore the pitfalls of DIY estate planning in California and why professional guidance is essential.

1. The High Cost of Probate

One of the most significant concerns in estate planning is avoiding the probate process—a court-supervised procedure that can be time-consuming and expensive for your heirs. DIY estate plans often fail to properly implement strategies to minimize or avoid probate, potentially leaving your loved ones to navigate this complex process unnecessarily.

2. Risk of Invalid or Incomplete Documents Under California Law

Another significant risk of DIY estate planning is the potential for creating documents that don't comply with California's stringent legal requirements. Wills, trusts, and other estate planning documents must meet specific criteria to be considered valid. For instance, a formal will must be signed in the presence of at least two witnesses who are present at the same time. Failure to meet these requirements can render your documents invalid, leaving your estate subject to California's default intestacy laws.

3. Failure to Address California's Community Property Laws

California's community property laws dictate that assets acquired during marriage are owned jointly by both spouses. Assets acquired before marriage, received as gifts, or inherited remain separate property. Without proper legal guidance, you might overlook how these laws affect the distribution of your assets. DIY estate planners often struggle to properly characterize and document which assets fall into each category and plan accordingly.

4. Unintended Tax Consequences for Heirs and Beneficiaries

Taxes can significantly reduce the value of the inheritance you leave behind. DIY estate planning tools may not provide adequate guidance on tax minimization strategies, such as setting up certain types of trusts or making lifetime gifts. Without these strategies, your heirs could face substantial estate and income taxes that could have been avoided with proper planning.

5. Lack of Customization for Unique Family Situations

Generic templates and online forms rarely account for the complexities of modern family dynamics. Blended families, special needs dependents, and non-traditional relationships require personalized estate planning solutions. A one-size-fits-all approach may lead to unintended exclusions or disputes among beneficiaries, undermining your intentions and potentially harming family relationships.

6. Increased Likelihood of Family Disputes and Litigation

Ambiguities or errors in DIY estate planning documents can open the door to conflicts among your heirs. If your will or trust is unclear or contradicts other documents, it may be contested in court. Litigation not only depletes the estate's assets through legal fees but also creates emotional stress and potential rifts among family members.

7. Failure to Create a Cohesive Estate Plan; Importance of Funding the Trust

A common oversight in DIY estate planning is the lack of a cohesive strategy that aligns all your assets and documents. This includes ensuring that deeds, titles to accounts, and beneficiary designations are consistent with your overall estate plan. Inconsistencies can lead to assets being distributed contrary to your wishes. For example, if your will or trust leaves a bank account to one person but the account's beneficiary designation names someone else, the beneficiary designation will typically take precedence, causing confusion and potential disputes. See our previous blog about the importance of properly funding your trust .

8. Missing Out on Advanced Estate Planning Tools and Strategies

Professional estate planners can offer sophisticated tools and strategies that are often overlooked in DIY plans. These may include setting up revocable living trusts to avoid probate, establishing irrevocable trusts for asset protection, or utilizing charitable trusts for philanthropic goals and tax benefits. Without expert advice, you may miss opportunities to enhance the effectiveness of your estate plan.

9. Inability to Adapt to Legal Changes Without Professional Guidance

Trust and estate laws are complex and frequently change at both the federal and state levels. DIY estate plans lack the benefit of ongoing legal counsel to keep your documents current. Without periodic reviews by a professional, your estate plan may become outdated, leading to unintended consequences when it's time to administer your estate plan upon your passing.

10. Overlooking Long-Term Care and Incapacity Planning

Estate planning isn't just about distributing assets after death; it's also about preparing for potential incapacity. DIY solutions often neglect crucial documents like durable powers of attorney and advance healthcare directives. Without these, your family may face legal hurdles in managing your affairs or making medical decisions on your behalf if you become incapacitated.

Conclusion

While the DIY approach may seem convenient and cost-effective, the risks associated with self-directed estate planning far outweigh the perceived benefits. The complexities of California law, coupled with the potential for significant financial and emotional costs, make professional estate planning an indispensable investment. An experienced attorney can help you create a cohesive, comprehensive plan that reflects your unique circumstances and ensures your wishes are honored.

Take the Next Step

Protect your legacy and provide peace of mind for you and your loved ones. Contact Pederson Law Offices today to schedule a consultation. Let's work together to create a customized estate plan that best suits you and your loved ones.

Demystifying Trust Administration: What Is Its Purpose?

Tue, 01 Oct 2024 20:37:46 GMT

When a loved one passes away, leaving behind a trust, you may hear the term "trust administration" being used. But what exactly does this mean, and why is it so important? Let's demystify trust administration and explore its core purpose in estate planning.

What is Trust Administration?

Trust administration is the process of managing and distributing trust assets after the trust creator (also known as the settlor or grantor) passes away. It's the phase where the trust's key instructions are put into action, ensuring that the settlor's wishes are carried out effectively and legally.

The Primary Purpose: Fulfilling the Settlor's Wishes

At its heart, trust administration serves to implement the settlor's main intentions as outlined in the trust document. This typically includes distributing assets to beneficiaries, managing ongoing trusts, and handling any specific instructions left by the settlor. The ultimate goal is to honor the settlor's desire by providing for their loved ones as they intended.

Key Responsibilities in Trust Administration

The trustee, who is appointed to manage the trust, has several core responsibilities during trust administration. While not exhaustive, these often include:

Identifying and valuing trust assets: This involves creating an inventory of primary trust property and determining its current market value.
Paying debts, taxes, and expenses: The trustee must settle any outstanding debts, file necessary tax returns, and pay ongoing expenses of the trust.
Managing investments: Trust assets often need to be prudently invested to maintain or grow their value.
Communicating with beneficiaries: Keeping beneficiaries informed about the trust's status and administration is a crucial part of the process.
Distributing trust assets: The trustee is responsible for distributing the trust assets to the beneficiaries according to the terms outlined in the trust document.

Understanding Core Trustee Duties

Trustees have specific legal duties they must uphold during trust administration. While there are many nuances to these duties, some of the fundamental ones include:

Duty of loyalty: The trustee must act solely in the best interests of the beneficiaries, avoiding conflicts of interest.
Duty of impartiality: When there are multiple beneficiaries, the trustee must treat them fairly and without favoritism.
Duty of prudent management: Trust assets must be managed with care, skill, and caution.

These fiduciary duties are critical to ensuring the trust is administered properly and ethically.

Fulfilling Fiduciary Duties and Avoiding Legal Issues

Proper trust administration is essential for fulfilling the trustee's primary fiduciary duties and avoiding potential legal complications. Mismanagement of trust assets or failure to follow key trust instructions can lead to disputes with beneficiaries or even lawsuits. Careful adherence to trust terms and state laws helps ensure a smooth administration process.

Avoiding Probate and Maintaining Privacy

One of the significant advantages of trust administration is that it typically avoids the probate process. This means faster distribution of assets, reduced costs, and greater privacy for the family. Unlike probate, which is a public process, trust administration is handled privately, keeping family matters confidential.

The Importance of Professional Guidance

Given the complexities of trust administration, seeking professional guidance is crucial. An experienced estate planning attorney can help navigate the main aspects of trust law, ensure compliance with key legal requirements, and provide valuable advice on handling challenging situations. Additionally, tax professionals and financial advisors may be necessary to manage the primary financial aspects of trust administration effectively.

If you're facing the responsibilities of trust administration or have questions about your role as a trustee, don't navigate these complex waters alone. At Pederson Law Offices, we specialize in guiding trustees through the intricacies of trust administration. Our experienced team can help you understand your duties, avoid common pitfalls, and ensure the trust is administered according to both the settlor's wishes and California law.

Schedule a Consultation

If you need assistance with trust administration or have any questions, we encourage you to schedule a consultation with us. Our team at Pederson Law Offices is ready to provide the professional guidance you need to fulfill your fiduciary duties effectively.

California Trust Law Update: Notice Requirements for Incapacitated Settlors

Tue, 17 Sep 2024 18:22:09 GMT

Changes to California Probate Code §15800 have introduced important new requirements for trustees when a settlor becomes incapacitated. As your trusted estate planning advisors, we want to ensure you are aware of these changes and how they may impact your trust administration.

Key Changes to Probate Code §15800(b)

California Probate Code §15800(b) now requires trustees to provide certain notifications to beneficiaries when the settlor of a revocable trust becomes incapacitated. These new requirements include:

Notice : Providing a copy of the trust instrument and any amendments to beneficiaries within 60 days of the trustee obtaining documentation of the settlor's incapacity.
Accounting : Furnishing annual accountings and other requested information to beneficiaries.

Impact on Existing Trusts

For many of our clients, these new notification requirements may not align with their wishes. Some settlors prefer to maintain privacy regarding their trust provisions and financial affairs, even in the event of incapacity.

Need to Amend Your Trust

Fortunately, the law allows for flexibility in addressing these new requirements. The terms of your trust can specify that the §15800 notice is not required to be sent and that accountings are not necessary during incapacity. Therefore, many of our clients may wish to amend their trust documents to better reflect their preferences.

Considerations for Amending Your Trust

When deciding whether to amend your trust to opt out of these new notification requirements, consider the following:

Privacy concerns : If maintaining confidentiality about your trust provisions during your incapacity is important to you, opting out may be beneficial.
Family dynamics : Consider how providing information might affect relationships among beneficiaries while you are still living but incapacitated.
Complexity of your estate : For larger or more complex estates, while providing accountings during incapacity might help prevent misunderstandings or disputes from later arising, they also increase the administrative burden upon your trustee and lead to increased legal and accounting fees.
Trustee responsibilities : Opting out of these requirements may simplify the trustee's duties during your incapacity.

Next Steps

If you're concerned about how these new requirements might affect your estate plan, we recommend scheduling a review of your trust documents. Our experienced attorneys can help you determine whether amendments are necessary to align your trust with your wishes and the new legal landscape.

Conclusion

The changes to California Probate Code §15800(b) represent a significant shift in trust administration during a settlor's incapacity. By staying informed and proactively addressing these changes, you can ensure that your estate plan continues to reflect your intentions and protect your interests.

Contact our office today to schedule a consultation and discuss how these changes may impact your specific situation. We're here to help you navigate these new requirements and make any necessary adjustments to your estate plan.

Estate Planning After Divorce: Essential Considerations for California Residents

Thu, 01 Aug 2024 16:15:00 GMT

Divorce significantly impacts your life, including your estate plan. For California residents, updating your estate plan post-divorce is crucial to protect your assets and provide for your loved ones. At Pederson Law Offices, we understand the intricacies of post-divorce estate planning and are here to guide you through this complex process. Here are key considerations for revising your estate plan after a divorce in California.

1. Review and Implement Your Divorce Judgment

Before making any changes to your estate plan, carefully review your divorce judgment. Ensure all required asset transfers have been completed according to the judgment. If any transfers are outstanding, work with your family law attorney or our office to finalize them.

2. Update Your Will and Revocable Living Trust

Revise your will and revocable living trusts to remove your ex-spouse as a beneficiary or executor. In California, unless expressly provided otherwise certain provisions in these documents are automatically revoked upon divorce, including dispositions to your former spouse and their appointment as executor or trustee. However, it's crucial to explicitly update these documents to avoid any confusion or potential disputes.

3. Revise Beneficiary Designations

Update beneficiary designations on financial accounts, retirement plans, and insurance policies. In California, divorce typically revokes many nonprobate transfers to your ex-spouse absent clear and convincing evidence of a contrary intent. However, it's crucial to note that this automatic revocation does not apply to life insurance policies and may not control certain retirement plans which are governed by ERISA (Employee Retirement Income Security Act). Therefore, it's essential to formally change these designations as soon as possible after your divorce to ensure your assets are distributed according to your current wishes.

4. Address Powers of Attorney and Healthcare Directives

In California, your ex-spouse's authority under a Durable Power of Attorney or Advance Health Care Directive is automatically revoked upon divorce. However, you should still update these documents to appoint new agents for making financial and healthcare decisions on your behalf if you become incapacitated. An ex-spouse’s authority under a Durable Power of Attorney or Advance Health Care Directive may be revived upon remarriage to the former spouse.

5. Review Property Ownership

If you owned property with your ex-spouse as joint tenants or community property with right of survivorship, the accompanying rights of survivorship are generally severed by divorce in California (absent remarriage to the former spouse or clear and convincing evidence that the deceased spouse intended to preserve the former spouse’s right of survivorship). Ensure that property titles are updated to reflect the new ownership arrangement as specified in your divorce judgment.

6. Consider Child Support Obligations

If you owe child support, be aware that this obligation survives your death in California and can be enforced against your estate. Consider providing for child support in a trust or purchasing life insurance to satisfy this obligation in case of your untimely death. This can protect your other beneficiaries from potential claims against your estate.

7. Evaluate Tax Implications

Divorce can change your tax situation, which may affect your estate planning strategy. Consider how divorce may result in changes in your income tax filing status or your estate tax exemption. Consult with our office or a tax professional to understand the implications for your specific situation.

8. Contemplating Remarriage

If you're considering remarriage, plan accordingly. Update your estate plan to consider your new spouse and any stepchildren, clearly outlining how you want your assets divided among your blended family to prevent future disputes.

9. Regular Review and Updates

Estate planning is an ongoing process. Regularly review and update your plan to reflect life changes, such as new assets, births, or changes in relationships. In California, the law regarding estate planning and divorce continues to evolve, making periodic reviews even more critical.

At Pederson Law Offices, we specialize in guiding clients through the complexities of estate planning during and after a divorce. Our expertise in California law ensures that your estate plan will be comprehensive, up-to-date, and aligned with your current circumstances and wishes. Schedule a consultation with us today to ensure your estate plan effectively protects your assets and honors your intentions in this new chapter of your life.

The Cost of Failing to Fund Your Trust

Mon, 01 Jul 2024 18:04:40 GMT

Creating a revocable living trust is a smart move in estate planning, designed to bypass probate and ensure your assets are distributed according to your wishes. However, many people overlook a crucial step: properly funding the trust. This oversight can lead to unexpected costs and complications, potentially undermining the very benefits you sought to achieve. Let's explore why funding your trust is so important and what steps you can take to protect your legacy.

The Pitfall of an Unfunded Trust

A common misconception is that simply creating a trust is enough. In reality, a trust may only avoid court involvement for assets that are actually titled in its name. Any assets left out may still be subject to probate – the very process you aimed to avoid.

The California Probate Threshold

In California, estates valued at $184,500 (as of 2024) or more must go through probate if not properly protected through title in trust, joint ownership, or proper beneficiary designations. This process can be both expensive and time-consuming:

For a $500,000 estate, probate fees can exceed $26,000
For a $1,000,000 estate, fees can surpass $46,000

Beyond these financial costs, probate can drag on for months or even years, delaying asset distribution to your beneficiaries. It's also a public process, potentially exposing your family's financial details to prying eyes.

Funding Your Trust: A Crucial Step

To reap the full benefits of your trust, you need to transfer ownership of certain assets to the trust itself. This process, known as "funding" the trust, typically includes:

Real estate
Bank accounts
Investment accounts
Other significant assets

However, not all assets should be titled in the trust's name. Some, like life insurance policies and retirement accounts, should have beneficiary designations set directly.

The Role of a Certification of Trust

When transferring assets, you'll often need to provide proof of your trust's existence without revealing its detailed terms. This is where a Certification of Trust comes in handy. This document outlines the trustee's authority and the proper title to your trust, and it simplifies the process of retitling assets.

Keeping Your Trust Up to Date

Estate planning isn't a one-and-done affair. Life changes, laws evolve, and your asset portfolio shifts over time. To ensure your trust remains effective:

Regularly review your assets and their titling
Update beneficiary designations as needed
Consult your living trust funding instructions provided by your attorney
Schedule periodic reviews with your estate planning attorney

These steps help identify any gaps or necessary changes in your trust funding strategy, ensuring your estate plan continues to meet your goals.

Safeguarding Your Legacy with Pederson Law Offices

At Pederson Law Offices, we understand the intricacies of trust funding and estate planning. Our team is dedicated to helping you navigate this complex landscape, ensuring your trust operates as intended and your legacy is protected.

Don't let an unfunded trust undermine your carefully laid plans. Schedule a consultation with us today to review your current trust funding strategy and receive personalized advice on maintaining and updating your trust.

Remember: A well-funded trust is the key to avoiding probate, minimizing costs, and ensuring your wishes are carried out smoothly and efficiently.

Protecting Your Beneficiaries from Their Poor Decision Making

Tue, 04 Jun 2024 16:18:53 GMT

When planning your estate, it's essential to consider how to protect your beneficiaries from their potentially poor financial decisions. Pederson Law Offices offers various strategies to ensure that your assets are used wisely and beneficially, providing long-term security for your loved ones. Here’s a detailed look at some key tools and considerations.

Benefits of a Trust Versus Outright Beneficiary Designations

Creating a trust can be a more secure way to manage and distribute your assets compared to outright beneficiary designations. Trusts allow you to set specific terms and conditions on how and when your assets are distributed. This control can help prevent beneficiaries from mismanaging large sums of money, ensuring that the funds are used as intended.

Spendthrift Clauses

Incorporating spendthrift clauses into your trust can protect your beneficiaries from creditors and their own poor spending habits. A spendthrift clause restricts the beneficiary’s ability to access the trust’s principal, thereby preventing them from squandering their inheritance quickly or making poor financial choices. This clause is especially useful if your beneficiaries have a history of financial irresponsibility.

Importance of Trustee Selection

Choosing the right trustee is crucial for the effective management of your trust. An independent trustee or professional fiduciary can provide unbiased and expert management of the trust, ensuring that the terms are followed precisely. Unlike family members who might be too lenient or biased, a professional trustee can offer a more balanced and prudent oversight of the trust.

Staggered or Discretionary Distributions

To prevent beneficiaries from accessing large sums of money all at once, consider implementing staggered or discretionary distributions. Staggered distributions allow the trust to release funds at predetermined ages or milestones, while discretionary distributions give the trustee authority to decide when and how much to distribute based on the beneficiary’s needs and maturity. This approach helps ensure that the funds are available when genuinely needed and reduces the risk of misuse.

Lifetime Trust

A lifetime trust provides continuous financial support and protection for your beneficiaries throughout their lives. This type of trust can be particularly beneficial for beneficiaries who might struggle with managing money due to age, disability, immaturity, or lack of basic financial skills. It ensures that their needs are met without giving them complete control over the assets.

Specific Guidelines for Beneficiaries Struggling with Addiction

If a beneficiary is struggling with addiction, specific guidelines within the trust can provide additional protection. These guidelines might include requiring regular drug testing, completing rehabilitation programs, or limiting access to funds to cover only essential needs. Such measures can help ensure that the inheritance supports their recovery and well-being rather than fueling destructive behaviors.

Regular Reviews and Updates

As the circumstances of your beneficiaries change, it’s important to regularly review and update your estate plan. Adjusting the terms of the trust based on the evolving maturity or condition of the beneficiary ensures that the plan remains relevant and effective. Regular consultations with your estate planning attorney can help you make necessary adjustments to better protect your beneficiaries over time.

By implementing these strategies, you can safeguard your beneficiaries from poor financial decisions and ensure that your legacy is preserved and used wisely. At Pederson Law Offices, we are committed to helping you design a comprehensive estate plan tailored to your family’s needs.

Schedule a Consultation with Pederson Law Offices today to secure your beneficiaries’ future and protect your legacy.

Can I Disinherit My Estranged Child?

Tue, 14 May 2024 16:17:12 GMT

Navigating the complexities of estate planning can be challenging, especially when it involves making difficult decisions such as disinheriting an estranged child or other heirs. At Pederson Law Offices, we specialize in providing our clients with the guidance needed to address these sensitive issues effectively. This blog post aims to shed light on the legal aspects of disinheriting a child or other heir in California, the risks involved, and the processes that follow.

Yes, You Can Disinherit a Child or Heir

In California, the law allows you to explicitly disinherit a child or any other potential heir in your estate plan. This means you can choose not to leave any part of your estate to a particular person who would otherwise be a legal heir. However, it’s crucial to handle this carefully to ensure that your wishes are clearly stated and legally enforceable. It’s advisable to explicitly mention the disinherited party by name in your estate planning documents, along with a statement that you are intentionally omitting them.

No Guarantee Disinherited Child or Heir Won't Contest

It’s important to recognize that disinheriting a child or heir does not guarantee they will not contest your will or trust. Disgruntled heirs may still decide to challenge your wishes if they believe they were unfairly omitted or if there are questions about your mental capacity or any undue influence at the time you made your estate plan. This can lead to lengthy legal disputes that may drain your estate’s resources and further damage family relationships.

How a No Contest Clause Works

To mitigate the risk of litigation, California allows the inclusion of a "no contest clause" in your estate planning documents. This clause can discourage challenges by penalizing heirs who contest your estate plan. If an heir files a contest and loses, they might forfeit any inheritance they might otherwise have received. However, no contest clauses have limitations and are not always enforceable, particularly if the heir has reasonable cause and probable grounds to file the contest.

Gifts as an Incentive

One strategy to dissuade litigation is to leave a smaller gift to the disinherited child or other heir, while also including a no contest clause. This tactical approach can provide just enough incentive to deter them from contesting the estate plan, as they risk losing the gift if they contest and fail. The specific details and effectiveness of this strategy can vary based on individual circumstances and should be discussed with an experienced estate planning attorney.

Other Considerations

When planning to disinherit a child or heir, several additional legal considerations must be addressed:

Notice Requirements: California law requires that certain notices be provided at times of incapacity and death to all beneficiaries and to all legal heirs, even if they have been disinherited. Ensuring compliance with these requirements is crucial for the administration of the estate.
Emotional Impact: The emotional ramifications on family relationships should also be considered. Clear communication and the rationale behind your decision can sometimes help mitigate negative feelings among surviving family members.

Schedule a Consultation

Disinheriting an heir, especially a child, is not a decision to take lightly. It involves numerous legal intricacies and personal considerations. At Pederson Law Offices, we understand the delicate nature of such decisions and are here to provide the legal expertise and support you need. If you are considering this step in your estate planning, we encourage you to schedule a consultation with us. Our experienced attorneys can help you navigate the legal framework and craft an estate plan that aligns with your wishes while minimizing the risk of disputes and expensive litigation.

Should I put my child on title to my house?

Wed, 10 Apr 2024 21:14:55 GMT

Adding a child to the title of your house is generally not a recommended alternative to comprehensive estate planning. At Pederson Law Offices, our goal is to empower our clients with comprehensive knowledge, enabling them to make informed decisions that align with their estate planning objectives. This blog post explores the complexities of adding a child to your property title, detailing the consequences of such a decision.

Understanding the Impact on Property Tax, Cost Basis, Control, and Exposure to Creditors

Property Tax Consequences

One of the foremost considerations when thinking about adding a child to the title of your house is the potential impact on property taxes. The change of ownership can trigger a reassessment of the property value, potentially resulting in a significant increase in property taxes. This aspect often catches many homeowners by surprise, leading to unexpected financial strain.

Loss of Step-Up in Cost Basis

Another critical factor to consider is the loss of the step-up in cost basis, which could have considerable tax implications for your child upon selling the property. Cost basis is the original purchase price of an asset and is used to calculate capital gains taxes at sale. The cost basis of inherited property is adjusted to its current market value at the time of the original owner's death, thereby minimizing capital gains taxes at sale. However, by adding a child to title during your lifetime, you might inadvertently forfeit all or a portion of this benefit, leading to higher capital gains taxes at sale.

Loss of Control

Adding a child to your house title also means a loss of unilateral control over your property. Decisions about the home, including selling or refinancing, would require the involvement of all parties on title. This shared ownership could complicate your ability to make swift decisions, particularly in situations where time-sensitive opportunities or needs arise.

Exposure to Child's Creditors

An additional factor to consider is the exposure of your property to your child’s creditors. When you add a child to the title of your house, the property may then become subject to claims by their creditors. In the event of your child’s financial difficulties, creditors may place liens on your property or even force its sale to satisfy debts. This risk is particularly pertinent if your child is involved in professions or businesses where the potential for significant liabilities exists.

The Alternative: Trusts as a Strategic Estate Planning Tool

In contrast to the direct addition of a child to a property title, establishing a trust offers a strategic alternative with numerous benefits. Trusts can provide enhanced control over assets, allowing for a more tailored approach to estate planning. By placing property into a trust, you can specify the terms under which your beneficiaries will inherit without impacting your property taxes during your lifetime. Transferring to children at death through a trust may also preserve the step-up in cost basis, ensuring that beneficiaries can minimize capital gains tax upon a future sale of the property. Furthermore, trusts can be designed to protect your estate from your beneficiaries’ creditors after your passing.

Navigating Your Options with Expert Guidance

We understand that the decision to add a child to the title of your property is not one to be taken lightly. The implications—ranging from tax consequences and loss of control to exposure to a child’s creditors—require careful consideration and expert guidance. Our team is dedicated to providing you with the nuanced advice and support you need to navigate these complex decisions.

We invite you to schedule a consultation with us to discuss your estate planning needs in detail. Our experienced attorneys at Pederson Law Offices are here to help you evaluate the pros and cons specific to your situation, ensuring that your estate planning strategies align with your long-term objectives, while protecting your interests and those of your loved ones.

^{Please note: This blog post is for informational purposes only and does not constitute legal advice or create an attorney-client relationship. Consult with a qualified attorney at Pederson Law Offices for advice on your specific circumstances.}

Does your Revocable Living Trust address your current life circumstances?

Wed, 03 Jan 2024 16:54:23 GMT

Are you one of millions who setup your revocable living trust years ago and thought you were done?

No question that a Revocable Living Trust (RLT) is a great, relatively simple, and effective estate planning tool. In fact, it is the core component of most estate plans. However, a RLT requires periodic review to ensure that it accurately addresses your family’s current circumstances and your ever changing goals.

The following is a simple list of questions you should ask yourself on an annual basis to determine if your current plan is appropriate:

Have there been any births, deaths, illnesses, or accidents in your family which would impact your distribution plan?
Are your named beneficiaries competent and mature enough to receive the distributions pursuant to your current plan?
Are any of your beneficiaries or heirs receiving or likely to receive any public assistance due to a disability? If so, please consider the appropriateness of a Special Needs Trust to protect that individual.
Are the successor Trustees of your Trust and Executors of your Will all in good health and competent to serve in those capacities?
Have all of your assets been changed to the name of the Trust and are your Schedules of Assets up to date? Specifically, have you purchased any new property or refinanced any old property, and have deeds been prepared to transfer that property into the name of the Trust?
Has the size of your estate changed due to an inheritance, a new life insurance policy, or an increase in the value of investments, etc.?
Are the attorneys in fact and health care agents for your Durable Powers of attorney in good health and still competent to serve in those capacities, or have those Powers of Attorney expired?

If you have significant assets in tax-deferred or tax-free accounts such as 401k’s, IRA’s, Roth IRA’s, etc., do you understand your options regarding beneficiary designations, and how those designations will impact the estate and income tax planning aspects of your trust? New techniques are available to further protect these types of assets, without compromising the tax benefits associated with these tax-deferred or tax-free accounts.

Additionally, you should also review your estate plan whenever a major change in the law occurs. At a minimum, we recommend that you sit down with your estate planning attorney to review your trust at least once every three years.

Is life insurance really tax free?

Fri, 29 Dec 2023 16:52:41 GMT

Life Insurance can be a wonderful estate planning tool when properly utilized. Not only does it provide income replacement in case of premature death, but it also provides liquidity in estates that may face significant Federal Estate Taxes.

You may have been told by your insurance broker that life insurance is “tax free” to your heirs/beneficiaries. Not so fast…let’s clarify what is meant by “tax-free.”

While the beneficiaries of a life insurance death benefit will typically receive that benefit free of any income tax, the total value of the death benefit will typically be included in the estate of the deceased individual for purposes of calculating Federal Estate Taxes. Remember, Estate Tax rates have fluctuated between 35 to 55 percent over the last decade. The estate tax exemption has fluctuated between $1 million and $5 million since 2001.

This occurs because as the owner of the policy, the deceased individual held the power to direct where the death benefit would be paid. Thus, the IRS considers the full value of the death benefit subject to Federal Estate Taxation.

To avoid Federal Estate Taxation on life insurance, you must simply avoid being the owner of the policy. The I rrevocable L ife I nsurance T rust (ILIT) is a simple and effective way to transfer life insurance proceeds “Estate and Income Tax Free” to your beneficiaries.

Timeshare Trusts

Wed, 22 Nov 2023 16:49:04 GMT

Do you own timeshare interests? If so, the following are a number of questions you may want to consider regarding your estate planning:

How do you plan on distributing your timeshares to your beneficiaries when you're gone?
Is it wise to make all of your kids co-owners after you pass?
Did you purchase your timeshares with the hope that your kids and grandchildren could use them for years to come?
Are you afraid they will be sold for a fraction of what you paid?

If you're concerned about any or all of the above questions, perhaps you should consider adding Timeshare Trust provisions to your current revocable living trust.

A Timeshare Trust is a way to hold title to all of your timeshare interests after you've passed. It will contain specific provisions to govern how the timeshares will be held for your family after you're gone. A Timeshare Trust allows you to designate one or more knowledgeable person(s) to manage the use of the timeshare properties or points. A Timeshare Trust can also ensure that the maintenance fees, insurance, and property taxes associated with timeshare ownership are paid proportionately by all beneficiaries. For example, the failure of a beneficiary to pay their fair share of the expenses could result in a forfeiture of use that year. Finally, a Timeshare Trust can ensure that these interests aren't sold unless a majority of the beneficiaries agree.

A Timeshare Trust can be customized to meet your specific family circumstances and goals. When you use a Thousand Oaks estate planning attorney, they can assist you with the ins and outs of establishing a fool proof timeshare trust. Contact Pederson Law Offices if you're interested in learning more about how to plan for your timeshare interests.

Your Options for Real Estate Title-Holding

Thu, 19 Oct 2023 15:47:28 GMT

If you are a Thousand Oaks homeowner, then chances are that you have a title for your property. There are a variety of different ways to hold a real estate title, and all of them have implications for the future. Normally, the way that your title is held will depict how your property is divided upon your passing. Sometimes, the way that a title is held will even surpass the wishes in your will, so you will want to make sure that you hold your title in a way that is effective for your personal plans.

If you should choose, you can hold a title in your individual name . This means that you will be the sole owner of the property that you occupy. You can even make this arrangement if you are married or have children. There are a few drawbacks to this arrangement. For example, if you become mentally or physically incapacitated but are the sole owner of your property, then the court will need to appoint someone to act for you. This may not be the person that you would have wanted to manage your property. Chances are that if your property needs to be refinanced, or a line of credit needs to be opened, this court-appointed individual will be in charge of getting these jobs done.

A will only goes into effect after you pass away, so if you are incapacitated and are the sole homeowner of a property, then that will won't help you. Also, most powers of attorney end at incapacity, so this document may not help you. A durable power of attorney is valid in the event of incapacity, but many financial institutions won't even accept your durable power of attorney unless it is on their form. Also, this document could give the person you listed the ability to do whatever he or she wants with your assets. That means that you're appointed property manager could sell the property and spend the proceeds.

If you pass away and are the only titleholder for a piece of property, then the property will almost certainly have to go through the probate court system before it can be distributed to your heirs. This can be frustrating for heirs, as they will have to go through a legal process to strip your name off of the title and add the new owner's name onto the title.

There are also options which allow for multiple names on a real estate title. For example, you can create a joint tenants with right of survivorship title . This is how most married couples hold a title because it means that the spouse will inherit the property in the event that one partner passes away. This normally postpones probate, because the children or survivors won't be able to divide the property until both spouses pass away. One thing to consider is that when adding a co-owner, you will lose control. This means that if you and your spouse or partner disagree on property issues, you could end up in court.

Some people decide to hold real estate titles in a tenants-in-common arrangement. This is an ownership where each owner's share will be distributed as directed in his or her will. If there is no will, then the property will go to the owner's rightful heirs through a court process. In nine states, there is also an option to hold real estate by community property . This is an arrangement that is specifically for spouses. California is one of the states that honor this arrangement, saying that spouses give up their sole right to property when they get married.

Another option is a tenants-by-entirety arrangement . This is a form of joint ownership which is available between spouses in some states. This is similar to a community property arrangement because the spouse automatically inherits the property when a husband or wife passes away. Some property owners also explore the option of a revocable living trust . This allows you to transfer the title of your real estate to the trustee of your trust but still maintain full control of your property.

If you want to learn more about any of the above real estate arrangements, you are going to want a Thousand Oaks estate planning lawyer on your side. With the right attorney there to assist you, you can trust that you have a team to guide you through your decisions. You can work to keep your loved ones out of court with this law firm that is committed to excellence. Hire the Pederson Law Offices to help you work through your case today!

The Beneficiary's Role in an Estate Plan

Wed, 13 Sep 2023 15:44:32 GMT

The term "beneficiary" comes up frequently during the process of estate planning because the efforts of estate planning are focused on transferring the decedent's assets to the beneficiary. A beneficiary is anyone who gains an advantage or profits from something. In the context of a will, or a trust, or administration proceedings, the beneficiary is someone who is eligible to receive distributions from a will or a trust, or otherwise from the decedent's estate; however, the beneficiary can also be the person who is named in a life insurance policy, a retirement plan, or other contract who is intended to receive the distribution specified in the policy.

Usually any person or entity can be named as a beneficiary to a will, or a trust, or a life insurance policy. Also, the one distributing those funds (the benefactor) has the right to place various stipulations on how those funds are to be disbursed. For example, the benefactor can require that the beneficiary be married, or completes college, or reaches a certain age before receiving the funds. There can also be tax consequences for the beneficiary. To illustrate, while the principal on most life insurance policies is not taxed, the accrued interest may be subject to taxes.

In most cases the benefactor will designate beneficiaries who are to receive the benefactor's assets after they pass away. However, if a beneficiary is not alive or if they don't qualify under the restrictions set forth, the assets will normally pass to what are called contingent beneficiaries. There are some types of accounts that don't allow restrictions beyond death of the primary beneficiaries; however, a trust in particular can allow for a variety of restrictions providing they are not illegal or made for an illegal purpose.

At Pederson Law Offices, our Thousand Oaks estate planning attorneys can explain how the different estate planning tools are used to achieve a variety of goals. Whether you wish to bequeath your assets through a will, or if you have a child who is irresponsible with money and you're afraid that a windfall would be a disaster, there are ways to structure your estate plan so that your concerns are adequately addressed. We understand how no two clients' situations are identical and we are therefore here to provide you with a personalized and tailored estate plan that meets your goals and expectations, whatever they may be.

If you have any questions or are interested in creating an estate plan of your own, we encourage you to contact us today at (805) 372-1507 .

Online Estate Plans May Result in Unnecessary Litigation or Probate

Tue, 08 Aug 2023 15:42:24 GMT

When you develop your estate plan, you are deciding the best way to keep your memory alive and pass on your legacy to loved ones. When your property and assets are valued and considered with the help of an estate planning attorney, you can have peace of mind knowing it was decided with the best interests of all involved. While death taxes used to be considered the biggest threat to your beneficiaries receiving all of what you intended, a larger threat has taken its place: litigation.

How the Internet Affects Estate Planning

Estate planning attorneys are no stranger to families fighting over a will. Sometimes it is due to the lack of an estate plan while other fights are caused because the family simply did not get along with one another to begin with. However, more and more cases are popping up that do not fit into either of these categories. Instead, they concern pre-developed estate plans obtained from the internet.

There are many reasons you may think that developing an estate plan without the help of a lawyer is a good idea: cost and time involved to name just a couple. With the rise of the internet and internet-based legal services, some people may find themselves making slight changes to forms, printing them out, and using this for estate planning. While this may be a good place to start, you need to think of your estate plan as a living document. If anything changes, you need to know that your estate planning concerns are properly addressed.

For example, in a recent case, a woman left all of her property to her sister, unless her sister predeceased her, in which case her brother would receive her assets. The sister passed first and left her property to the woman. When the woman died, her brother was unable to access all of the property left by his sister since the additional assets were not properly titled nor identified in her estate plan. Even with information indicating that her property was to be left to her brother, the additional assets that were inherited from her sister were placed in intestacy and given to other relatives, contrary to the women's intent. In this case, the internet form that was used was either missing some critical provisions or the woman deleted them not understanding their purpose.

Working with a qualified estate planning attorney can help to ensure that your property is distributed the way you intend following your death.

Here is a link below to the full article regarding avoidable litigation resulting from the use of pre-printed estate plans:

http://www.lexology.com/library/detail.aspx?g=a0f0d2b1-e3ee-407c-bc39-7b7acc411f5a

Pederson Law Offices cares about your legacy. Call our firm to begin or revisit your estate planning today.