Find Answers to Your Questions from Our Orange County Trust and Will Lawyers
We believe in client service. That means that we field questions daily! Our Villa Park and Placentia estate lawyers compiled a list of the most frequently asked questions about California trust issues, California wills, and California estate planning. We hope you find the answers you need.
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How do I make sure my will is valid in California?
When creating your estate plan, it is important to seek guidance from an experienced attorney who can help ensure that your will is valid. Some people make the mistake of trying to execute a will on their own without understanding all of the requirements that are outlined under California law. If your will is determined not to be valid, the assets of your estate may not pass to the people you want to have them.
Requirements for a Valid Will
What are the requirements for a valid will? The following is an overview:
- The will should be in writing.
- The will must be signed by you, as the testator or testatrix, which means the creator of the will.
- The will can be signed by someone else if you’re unable to do it yourself. It must be signed by someone else in your name, in your presence, and at your direction. In the alternative, your will may be signed by your conservator.
- Your will must be signed in the presence of two witnesses. These people must be present at the same time, and they must either see you sign the will or see you acknowledge that you signed it.
- The two witnesses must also understand that the instrument they are signing is your will.
- The will must be signed when you are of sound mind. You must understand what you are signing, the nature of your property and who you are leaving it to, and you must not be under the influence of fraud, duress, or coercion.
In some cases, a will that does not comply with these requirements may still be valid, but this requires the guidance and assistance of a knowledgeable and experienced attorney. It is best to abide by the general requirements for a valid will under California law in order to reduce the likelihood of challenges down the road.
Creating a will that is valid is crucial to ensuring that your estate is carried out in the manner you wish after you die. Fortunately, we are here to help. To learn more, we encourage you to contact us today at (714) 459-5481.
How do I appoint someone to serve as the personal representative of my estate after I die?
Choosing a personal representative is an important aspect of creating a valid and an effective estate plan. This plan includes the documents that dictate what should happen to your assets after you die. The personal representative is the person who ultimately will be responsible for carrying out your estate’s administration and is appointed under the terms of your will.
6 Steps for Appointing a Personal Representative of Your Estate
How do you appoint someone to serve in this important role? The following are six steps to follow:
- Consult with an experienced attorney for assistance in creating your estate plan.
- Craft a last will and testament that outlines your goals and wishes.
- Name a personal representative who will be in charge of administering your estate after you die. Name this person, in writing, in the will.
- Consider whether you want to name a co-personal representative to serve alongside your initial choice. There are pros and cons to choosing co-personal representatives. Your attorney can help you decide which choice is right for your needs.
- Name an alternate personal representative to serve in this role in the event that your initial choice is unavailable or unwilling to act in this capacity.
- Execute the will in accordance with the laws of California. Every state has its own requirements for executing a valid will. For example, you may need a certain number of witnesses, a notary, and other parties present. You also must be of sound mind and acting under your own free act and volition when signing the will.
Creating an estate plan should always be done under the guidance of an experienced and knowledgeable attorney. To learn more, we encourage you to contact us today at (714) 459-5481.
When creating an advance health care directive, can I limit the authority of my agent for health care decisions?
When creating an estate plan, most people opt to execute an advance health care directive. This important document allows you to appoint someone to make health care decisions on your behalf. It is important to note, however, that you can limit some of the authority given to this individual. To do so, you must specifically address these limitations when creating the document.
10 Options for Limiting an Agent’s Authority Under an Advance Health Care Directive
What are some of the limitations that you can impose on your agent? You can limit your agent’s ability to do the following:
- Consent or refuse consent for specific types of care, treatment, service, or procedures.
- Select or discharge your health care providers or institutions.
- Approve or deny specific diagnostic tests, surgical procedures, or programs of medication.
- Decide whether or not you should receive artificial nutrition or hydration.
- Decide whether or not you should receive cardiopulmonary resuscitation.
- Make anatomical gifts.
- Authorize an autopsy.
- Allow for you to be cremated.
- Withhold or administer life-sustaining treatment.
- Withhold or administer pain medications.
Deciding how best to craft an advance health care directive that meets your needs and goals is an important part of the estate planning process. Your attorney can walk you through each option to ensure that you fully understand the decisions you make when creating this important document. Your attorney can also help ensure that you are making the best choices for your estate plan.
If I use a Crummey trust in my estate plan, what are the tax consequences?
When meeting with your estate planning attorney, you may want to minimize potential estate taxes when you die. Many people feel they do not want the wealth they worked so hard to build to be minimized by these taxes. In order to reduce the size of their estate and potentially avoid the tax, various techniques may be utilized. One such example is to create a Crummey trust to remove assets from your estate, such as a life insurance policy.
6 Potential Tax Consequences of a Crummey Trust
What are the tax consequences of using this type of trust? The following is an overview:
- Your irrevocable trust may be responsible for paying income taxes. This is true if the trust earns more than a certain amount each year.
- Depending on how the trust is drafted, the trust may need to obtain its own tax ID number. In other cases, if the trust is deemed a grantor trust for tax purposes, the grantor’s social security number is used.
- The trust may need to issue K-1s to the beneficiaries of the trust each year.
- If the grantor of the trust makes gifts to the trust in excess of the annual gift tax exemption amount, the amount exceeding the exemption may be deemed a taxable gift. A gift tax return would then need to be filed.
- If the proper criteria are met during your lifetime, upon your death, the trust assets will not be included in your estate for estate tax purposes.
- The beneficiaries of the trust will not have to pay income taxes on the life insurance proceeds that they ultimately receive.
Creating an estate plan that meets your needs and goals requires assistance from a knowledgeable professional. We encourage you to get started. Contact us today at (714) 459-5481 for more information.
What estate planning issues can arise between children and second spouses?
Creating an estate plan that makes everyone in your life happy is not an easy task, and this is especially true when your family involves a second marriage and children from prior relationships. It is important to recognize the potential for conflict now, when you are creating the estate plan. Doing so can help your attorney craft a plan that minimizes the risk of issues down the road.
5 Issues That Can Arise Between Second Spouses and Children From a Previous Marriage
What types of conflict can arise between spouses and children from previous relationships? The following are five examples:
- If you leave the majority of your assets to your children, your spouse may feel she’s being left with nothing. This can feel frightening and stressful for a surviving spouse because she may worry about how to support herself going forward.
- If your plan is designed to first take care of your spouse, with the remainder left to your children after your spouse dies, your children may feel as though their step-parent is robbing them of their “rightful” inheritance.
- If you leave assets for your spouse in trust and name a child as trustee, the spouse may feel as though the child is controlling his or her property, giving rise to conflict.
- If your plan is designed to distribute assets to your children only after your spouse dies, consider carefully the age difference between your spouse and kids. If the age difference is not substantial, there is a chance that your children may never receive an inheritance because the spouse could outlive them.
- If you leave some or all of these assets to your children, your spouse may feel that your children are taking what belongs to her. She may feel a sense of ownership over certain assets even when the assets were held in your name alone.
As you create your estate plan, we can help you with a strategy that accomplishes your goals while minimizing the risk of conflict. Check out our client testimonials page today to learn more about how we have helped previous clients achieve their estate planning goals.
After I create my advance health care directive, who should receive a copy?
Creating an advance health care directive is an important step in the estate planning process. This crucial document is necessary in order to appoint someone to make health care decisions on your behalf. An advance health care directive also allows you to outline your wishes with regard to your medical care. In order to ensure that your directive is used to its maximum effectiveness, it is wise to give a copy to certain individuals and entities.
7 People Who Should Receive a Copy of Your Advance Health Care Directive
Who should receive a copy of your advance health care directive? The following is an overview of suggestions:
- Your doctor
- The person you appoint as your agent
- Any person you cite as an alternate agent in the event your initial agent is unable or unwilling to serve in the role
- Your other health care providers
- The health care institution that is providing you with care
- Family members, such as a spouse, sibling, or children
- Other responsible parties who are likely to be called if there is a medical emergency, such as a friend or neighbor
Perhaps most importantly, your attorney should have copies of all of your estate planning documents. That way, if something happens to you, your loved ones know where to turn for guidance. We have filled this important role for many clients and their families in the past. We are here to help you as well. Check out our client testimonials page today to learn more.
If I’m getting married and creating an estate plan, is a prenuptial agreement all I need to protect my interests?
Creating an estate plan when marriage is on the horizon is important in order to protect the interests of both parties entering into the relationship. A prenuptial agreement is one tool that can be used for this purpose. There are also additional tools that can be used as well. In many cases, the prenuptial agreement can be viewed as a starting point that can be added to later.
4 Potential Asset Protection Tools for Use in Marital Estate Planning
What are some of the other options that your attorney may suggest as part of your estate planning when contemplating marriage? The following is an overview:
- Consider a domestic or foreign asset protection trust. Unlike prenuptial agreements, these trusts do not have to be mutually negotiated. Certain assets, such as small business interests, can be placed inside the trust in order to ensure that the asset remains separate after the marriage begins. The asset is transferred irrevocably to a trust that is managed by a trustee.
- Consider a qualified personal residence trust. This trust can be incorporated into the prenuptial agreement and allow for your spouse to stay in your home for a set period of time if you die unexpectedly. At the same time, the house is preserved for the ultimate inheritance by someone else, such as your children.
- Consider a trust to hold retirement plan assets for the benefit of your children. While this option may be useful if you want to protect these assets in the event of a divorce or death, your spouse may have to specifically waive his or her rights to be a beneficiary.
- Consider making a gift of a certain asset to your spouse, giving up rights or income to that asset in the future. This can be done in exchange for something else that you want, such as your spouse waiving a future right to spousal support.
Creating an estate plan prior to entering into marriage requires the guidance of an experienced legal professional who can help you identify potential issues and suggest solutions that will work well for your family. We are here to help. We encourage you to learn more about how we have helped other clients by checking out our client testimonials page today.
Should I consider incorporating insurance policies into my estate plan when I am young?
As you will soon discover when meeting with an attorney to discuss estate planning, the process involves more than just creating a will or trust. A good estate plan will also factor in retirement assets, disability planning, and insurance products. Even if you are relatively young when creating your estate plan, insurance products in particular can be an important part of the estate planning process.
5 Reasons to Consider Insurance Policies as Part of Estate Planning While Young
Why should you consider incorporating insurance products into your estate plan even while you are young? The following is an overview:
- While you are young and healthy, term life insurance is often very inexpensive. A relatively small sum can purchase a significantly large policy.
- If you die unexpectedly, the proceeds of the policy can be used to pay off your bills. These bills may include a mortgage, student loans, credit card debt, or medical debt.
- If you die leaving a spouse, the proceeds of an insurance policy are important in order to benefit your surviving spouse and replace your lost income. In addition, if you have small children, the proceeds can be used to pay for child care or college tuition.
- The proceeds of your policy can also be used to leave a legacy to your loved ones if you otherwise do not have significant assets to pass on at this stage in life.
- Depending on your age and overall needs, it may also be a good time to consider long-term care insurance. If you wait until you are significantly older to purchase this type of policy, you may no longer be eligible.
Creating an estate plan can feel overwhelming with many considerations to factor into the process. We encourage you to learn more by checking out our free pamphlet, The Ten Things You Must Know Before Creating (or Amending) Your Will or Trust.
Can I name a beneficiary to receive my shares of stock and avoid the need for probate administration?
For many people, avoiding probate administration is an important consideration when creating an estate plan. There are various mechanisms that can be utilized to avoid probate. For example, some types of assets allow you to name an individual up front to receive the asset when you die. This allows for a smooth and quick transfer of ownership. One such type of asset is shares of stock. Under the Uniform Transfer on Death Securities Registration Act, brokerages are allowed to offer transfer on death registration.
Know Whether You Can Take Advantage of Transfer on Death Registration of Stock
If any item on the list below is located in a state that has adopted the Act, and if the brokerage offers transfer on death registrations, you can take advantage of the provisions of the Act:
- Your legal residence
- The office making the registration
- The stockbroker’s principal office
- The incorporation of the issuer of the stock or the stockbroker
- The office of the transfer agent
Currently, every state except for Texas and Louisiana allows for transfer on death registrations for stocks.
Some clients have concerns about setting up transfer on death registrations because they worry about giving up control or ownership over their assets. It is important to note that a transfer on death beneficiary has no rights to the shares of stock while you are living. Until you die, you can still sell or give away the stock at any time. In addition, you are free to name a different beneficiary at any time. Once you die, the beneficiary named can claim the stock with ease.
Should I make a trust the owner of my LLC membership interest?
Creating an estate plan is extremely important when you have ownership interests in a limited liability company, or LLC. This type of entity is commonly used in California, including for those who own rental property. As you create your estate plan, it may be possible to combine the use of a newly created revocable trust with the benefits of an LLC to provide for easy transition of your assets when you die.
3 Reasons to Consider Combining a Trust and an LLC When Creating an Estate Plan
Why consider using both an LLC and a trust when creating your estate plan? The following is an overview:
- The LLC allows for limited liability protection while also avoiding the double taxation issue that accompanies corporations. As a result, an LLC is often a wise choice for holding title to rental real estate.
- A trust does not provide liability protection; however, it does allow for the smooth and efficient transfer of assets upon your death. A revocable trust will help avoid the need for probate administration when you die. As a result, assets can be passed more quickly and with less cost than if they were subject to oversight of the probate court.
- When creating an estate plan, you can combine the use of these two valuable tools to address your rental property. This allows you to take advantage of the liability protection and tax benefits of the LLC while maintaining the estate planning benefits of the trust. To do so, the trust should be made the holder of the LLC’s membership interest, either initially or upon your death.
While combining an LLC and a trust is generally a good option for property owners, every situation is unique and should be carefully addressed as part of the estate planning process. Your attorney will discuss the potential drawbacks of creating an estate plan in this manner, such as the annual costs that may be associated with using an LLC and any tax issues that may arise. To learn more, we encourage you to contact us today at (714) 459-5481.
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