Monday, December 19, 2016
The most basic estate planning tool is a will which establishes how an individual's property will be distributed and names beneficiaries to receive those assets. Unfortunately, there are circumstances when disputes arise among surviving family members that can lead to a will contest. This is a court proceeding in which the validity of the will is challenged.
In order to have standing to bring a will contest, a party must have a legitimate interest in the estate. Although the law in this regard varies from state to state, the proceeding can be brought by heirs, beneficiaries, and others who stand to inherit. While these disputes are often the result of changes to the distribution plan from a prior will, some common types of will contests are as follows.
Lack of testamentary capacity
The testator, that is the person making the will, must have the mental capacity and be of sound mind at the time the will is executed , modified or revoked. Further, being of sound mind means that the testator knows what property he or she owns and understands the effect of executing the will. Although these are considered to be low standards, claims that the deceased lacked the mental capacity when the will was executed are common.
If the deceased was coerced into executing the will, it may be considered invalid. In order to ensure that the testator is not subjected to undue influence, the will should be prepared by an attorney. Moreover, heirs and beneficiaries should not take part in meetings and discussions between the testator and his or her attorney.
Will improperly executed
There are certain formalities that must be followed in order for a will to be considered validly executed. While some states require a notarized signature, others insist on a certain number of witnesses being present when the will is executed. If these formalities are not strictly followed, the will may be found to be improperly executed.
A will can also be considered invalid if a person is intentionally deceived when preparing and executing the document.
If a will is successfully contested, it can be declared invalid by the court. This means that the assets will be distributed either according to the terms of a prior will or if no such will exists, the state's intestacy rules. Ultimately, engaging the services of an experienced estate planning an attorney can minimize the risk of a will contest.
Monday, September 12, 2016
So, you have a will, but is it valid? A will can be contested for a multitude of reasons after it is presented to a probate court. It is in your best interest to have an attorney draft the will to prevent any ambiguity in the provisions of the document that others could dispute later.
A will may be targeted on grounds of fraud, mental incapacity, validity, duress, or undue influence. These objections can draw out the probate process and make it very time consuming and expensive. More importantly, an attorney can help ensure that your property is put into the right hands, rather than distributed to unfamiliar people or organizations that you did not intend to provide for.
At the time you executed the will, you must have been mentally competent, or of “sound mind.” A court will inquire as to whether you had full awareness of what you were doing. There will also be an inquiry into your understanding and knowledge of the assets in your name. If, at the moment you executed the will, you were pressured or influenced by another individual to sign the document, it may be invalidated.
If the document was signed under duress or undue influence, the provisions are likely to be against your intentions or requests. Moreover, if you are trying to nullify a will on your own behalf, you are likely to need an attorney because it is very difficult and complicated to demonstrate the existence of duress, fraud, or undue influence. If drafting a new will, counsel can ensure that your document abides by all of the validity requirements, so the will’s provisions can successfully carry out your intentions after your death.
For example, the will creator or “testator,” is usually required to sign the document before several witnesses who are over the age of eighteen, during a certain period of time. A will or a certain bequest to a person could be deemed void if the beneficiary was also a witness. In your state, you may be able to execute a “self-proving affidavit,” which may do away with some of the requirements in order to establish a valid will. The testator should also designate a person to execute the document. Consult your attorney to ensure that your will comports with your state’s particular laws and is sustainable against any future contests.
Monday, March 21, 2016
Transfer of property at death can be rather complex. Many are under the impression that instructions provided in a valid will are sufficient to transfer their assets to the individuals named in the will. However, there are a myriad of rules that affect how different types of assets transfer to heirs and beneficiaries, often in direct contradiction of what may be clearly stated in one’s will.
The legal process of administering property owned by someone who has passed away with a will is called probate. Prior to his passing, a deceased person, or decedent, usually names an executor to oversee the process by which his wishes, outlined in his Will, are to be carried out. Probate property, generally consists of everything in a decedent’s estate that was directly in his name. For example, a house, vehicle, monies, stocks or any other asset in the decedent’s name is probate property. Any real or personal property that was in the decedent’s name can be defined as probate property.
The difference between non-probate property and probate centers around whose name is listed as owner. Non-probate property consists of property that lists both the decedent and another as the joint owner (with right of survivorship) or where someone else has already been designated as a beneficiary, such as life insurance or a retirement account. In these cases, the joint owners and designated beneficiaries supersede conflicting instructions in one’s will. Other examples of non-probate property include property owned by trusts, which also have beneficiaries designated. At the decedent’s passing, the non-probate items pass automatically to whoever is the joint owner or designated beneficiary.
Why do you need to know the difference? Simply put, the categories of probate and non-probate property will have a serious effect on how plan your estate. If you own property jointly with right of survivorship with another individual, that individual will inherit your share, regardless of what it states in your will. Estate and probate law can be different from state-to-state, so it’s best to have an attorney handle your estate plan and property ownership records to ensure that your assets go to the intended beneficiaries.
Monday, December 21, 2015
When a loved one dies, an already difficult experience can be made much more stressful if that loved one held a significant amount of debt. Fortunately, the law addresses how an individual’s debts can be paid after he or she is deceased.
When a person dies, his or her assets are gathered into an estate. Some assets are not included in this process. Assets owned jointly between the deceased and another person pass directly to the other person automatically. If there are liens on the property at that time, they will stay on the property, but no new liens can be placed on the property for debts in the name of the deceased. Similarly, debt jointly in the name of the deceased and another party may continue to be collected from the other party. In community property states, all assets and debts are the joint property of both spouses and pass automatically from one to the other. The community property states are Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
From the pool of assets in the estate, an executor is required to pay all just debts. This means that, before a beneficiary may receive anything, all debts must be satisfied. Property might be sold to create liquidity in order to accomplish this. If there are more debts than there are assets, the estate must sell of as many assets as possible to pay off the creditors. If there is no money in the estate, the creditor can not collect anything. Rather than force people into this tiresome process, many creditors will agree to discharge a debt upon receipt of a copy of a death certificate or obituary. This is particularly true of small, unsecured debts. Life insurance proceeds were never owned by the decedent and should pass to a beneficiary without consequence to the estate. Proceeds of a retirement account may also be exempt from debts.
If creditors continue harassing the beneficiaries of debtors, they may be violating federal regulations under the FDCPA. They can be held accountable by their actions, either by the FTC, the state attorney general, or a private consumer law attorney.
Monday, December 7, 2015
The law allows a person preparing a will to have almost complete control over his or her assets after the testator passes on, but there are limits to such power. A person can restrict a property from being sold, or make sure that it is used for a specific purpose. A property can be bequeathed to a family member as long on condition that the person maintains the family business in a specific city, or exercises daily, or places flowers on the deceased's grave every week, or engages in any other behavior the testator desires. This freedom, however, is not without limits. The time limit on this ability is called the rule against perpetuities. The rule is also referred to as the “dead man’s hand” statute.
The rule against perpetuities is complex and rarely utilized. At the time of the passing of the testator, the heirs of the estate are locked in. These heirs are referred to as “lives in being.” For the purposes of this rule, if a child is conceived but not yet born at the time of the testator’s death, it will be considered a life in being. Once the last living heir named in the will passes away, the restrictions on the property will continue in place as the testator desired for 21 years. The idea is that a testator may control his assets for a full generation after his or her death. The rule is notoriously difficult to apply properly. When it does apply, the conditions on the bequest are abandoned and the gift returns to the residual estate.
What makes this rule so confusing is that, when an individual writes a will, he or she may make gifts to potential children or grandchildren. These children and grandchildren, however, may not be born until years later. If a child has been born at the time the decedent passes away, he or she is subject to the restrictions on the bequest during his or her lifetime. If a grandchild is conceived and born after the decedent’s death, however, the child may avoid the restrictions 21 years after the death of the last heir alive at the time of the decedent’s death. There is no way to predict when this might occur. The rule is archaic and easily avoided. A knowledgeable attorney can help a person planning his or her estate set up an equitable trust. Similar to a will, a trust may impose conditions on the use of assets, but is not subject to the rule against perpetuities. There are other advantages to a trust, but one of the most important is avoiding this unpredictable and confusing rule.
Monday, November 30, 2015
The world of estate planning can be complex. If you have just started your research or are in the process of setting up your estate plan, you’ve likely encountered discussions of wills and trusts. While most people have a very basic understanding of a last will and testament, trusts are often foreign concepts. Two of the most common types of trusts used in estate planning are testamentary trusts and inter vivos trusts.
A testamentary trust refers to a trust that is established after your death from instructions set forth in your will. Because a will only has legal effect upon your death, such a trust has no existence until that time. In other words, at your death your will provides that the trusts be created for your loved ones whether that be a spouse, a child, a grandchild or someone else.
An inter vivos trust, also known as a revocable living trust, is created by you while you are living. It also may provide for ongoing trusts for your loved ones upon your death. One benefit of a revocable trust, versus simply using a will, is that the revocable trust plan may allow your estate to avoid a court-administered probate process upon your death. However, to take advantage this benefit you must "fund" your revocable trust with your assets while you are still living. To do so you would need to retitle most assets such as real estate, bank accounts, brokerage accounts, CDs, and other assets into the name of the trust.
Since one size doesn’t fit all in estate planning, you should contact a qualified estate planning attorney who can assess your goals and family situation, and work with you to devise a personalized strategy that helps to protect your loved ones, wealth and legacy.
Thursday, August 6, 2015
You want your money and property to go to your loved ones when you die, not to the courts, lawyers or the government. Unfortunately, unless you’ve taken proper estate planning, procedures, your heirs could lose a sizable portion of their inheritance to probate court fees and expenses. A properly-crafted and “funded” living trust is the ideal probate-avoidance tool which can save thousands in legal costs, enhance family privacy and avoid lengthy delays in distributing your property to your loved ones
What is probate, and why should you avoid it? Probate is a court proceeding during which the will is reviewed, executors are approved, heirs, beneficiaries, debtors and creditors are notified, assets are appraised, your debts and taxes are paid, and the remaining estate is distributed according to your will (or according to state law if you don’t have a will). Probate is costly, time-consuming and very public.
A living trust, on the other hand, allows your property to be transferred to your beneficiaries, quickly and privately, with little to no court intervention, maximizing the amount your loved ones end up with.
A basic living trust consists of a declaration of trust, a document that is similar to a will in its form and content, but very different in its legal effect. In the declaration, you name yourself as trustee, the person in charge of your property. If you are married, you and your spouse are co-trustees. Because you are trustee, you retain total control of the property you transfer into the trust. In the declaration, you must also name successor trustees to take over in the event of your death or incapacity.
Once the trust is established, you must transfer ownership of your property to yourself, as trustee of the living trust. This step is critical; the trust has no effect over any of your property unless you formally transfer ownership into the trust. The trust also enables you to name the beneficiaries you want to inherit your property when you die, including providing for alternate or conditional beneficiaries. You can amend your trust at any time, and can even revoke it entirely.
Even if you create a living trust and transfer all of your property into it, you should also create a back-up will, known as a “pour-over will”. This will ensure that any property you own – or may acquire in the future – will be distributed to whomever you want to receive it. Without a will, any property not included in your trust will be distributed according to state law.
After you die, the successor trustee you named in your living trust is immediately empowered to transfer ownership of the trust property according to your wishes. Generally, the successor trustee can efficiently settle your entire estate within a few weeks by filing relatively simple paperwork without court intervention and its associated expenses. The successor trustee can solicit the assistance of an attorney to help with the trust settlement process, though such legal fees are typically a fraction of those incurred during probate.
Monday, March 23, 2015
An executor's fee is the amount charged by the person who has been appointed as the executor of the probate estate for handling all of the necessary steps in the probate administration. Therefore, if you have been appointed an executor of someone’s estate, you might be entitled to a fee for your services. This fee could be based upon a variety of factors and some of those factors may be dependent upon state, or even local, law.
General Duties of an Executor
- Securing the decedent's home (changing locks, etc.)
- Identifying and collecting all bank accounts, investment accounts, stocks, bonds and mutual funds
- Having all real estate appraised; having all tangible personal property appraised
- Paying all of the decedent’s debts and final expenses
- Making sure all income and estate tax returns are prepared, filed and any taxes paid
- Collecting all life insurance proceeds and retirement account assets
- Accounting for all actions; and making distributions of the estate to the beneficiaries or heirs.
This list is not all-inclusive and depending upon the particular estate more, or less, steps may be needed.
As you can see, there is a lot of work (and legal liability) involved in being the executor of an estate. Typically the executor would keep track of his or her time and a reasonable hourly rate would be used. Other times, an executor could charge based upon some percent of the value of the estate assets. What an executor may charge, and how an executor can charge, may be governed by state law or even a local court's rules. You also asked whether the deceased can make you agree not to take a fee. The decedent can put in his or her will that the executor should serve without compensation but the named executor is not obligated to take the job. He or she could simply decline to serve. If no one will serve without taking a fee, and if the decedents will states the executor must serve without a fee, a petition could be filed with the court asking them to approve a fee even if the will says otherwise. Notice should be given to all interested parties such as all beneficiaries.
If you have been appointed an executor or have any other probate or estate planning issues, contact us for a consultation today.
Monday, February 9, 2015
If you’ve been named a beneficiary in a loved one’s estate plan, you’ve likely wondered how long it will take to receive your share of the inheritance after his or her passing. Unfortunately, there’s no hard or and fast rule that allows an estate planning attorney to answer this question. The length of time it takes to distribute assets in an estate can vary widely depending upon the particular situation.
Some of the factors that will be involved in determining how long it takes to fully administer an estate include whether the estate must be probated with the court, whether assets are difficult to value, whether the decedent had an ownership interest in real estate located in a state other than the state they resided in, whether your state has a state estate (or inheritance) tax, whether the estate must file a federal estate tax return, whether there are a number of creditors that must be dealt with, and of course, whether there are any disputes about the will or trust and if there may be disagreements among the beneficiaries about how things are being handled by the executor or trustee.
Before the distribution of assets to beneficiaries, the executor and trustee must also make certain to identify any creditors because they have an obligation to pay any legally enforceable debts of the decedent with those assets. If there must be a court filed probate action there may be certain waiting periods, or creditor periods, prescribed by state law that may delay things as well and which are out of the control of the executor of the estate.
In some cases, the executor or trustee may make a partial distribution to the beneficiaries during the pending administration but still hold back sufficient assets to cover any income or estate taxes and other administrative fees. That way the beneficiaries can get some benefit but the executor is assured there are assets still in his or her control to pay those final taxes and expenses. Then, once those are fully paid, a final distribution can be made. It is not unusual for the entire process to take 9 months to 18 months (sometime more) to fully complete.
If you’ve been named a beneficiary and are dealing with a trustee or executor who is not properly handling the estate and you have yet to receive your inheritance, you should contact a qualified estate planning attorney for knowledgeable legal counsel.
Monday, January 26, 2015
The death of a loved one is a difficult experience no matter the circumstances. It can be especially difficult when a person dies without a will. If a person dies without a will and there are assets that need to be distributed, the estate will be subject to the process of administration instead of probate proceedings.
In this case, the decedent’s heirs can select someone to manage the estate, called an administrator instead of executor. State law will provide who has priority to be appointed as the administrator. Most states’ laws provide that a spouse will have priority and in the event that there is no spouse, the adult children are next in line to serve. However, those that have priority can decline to serve, and the heirs can sign appropriate affidavits or other pleadings to be filed with the court that nominate someone else as the administrator. Once the judge appoints the nominated person they will then have the authority to act and begin estate administration.
In certain circumstances, it may be necessary to change the initially appointed administrator during the administration process. Whether this is advisable depends on many factors. First, the initial administrator will have started the process and will be familiar with what remains to be done. The new administrator will likely be behind in many aspects of the case and may have to review what the prior administrator did. This can cause expenses and delays. Also, it is possible that the attorney representing the initial administrator may not be able to ethically represent the new one, again causing increased expenses and delays. However, if the first administrator is not doing his/her job, the heirs can petition to remove the individual and appoint a new one.
If you are currently involved in a situation where an estate needs to be administered, it is recommended that you speak with an estate planning attorney in your state.
Thursday, December 4, 2014
Preventing a Will Contest & Preserving Peace in the Family
The purpose of writing a Last Will and Testament is to make sure that you – and not an anonymous probate court judge – have control over the distribution of your property after your death. If one or more family members disputes the instructions in your will, however, then it is possible that a probate court judge may decide how your assets will be distributed.
Protect yourself, your family members and your last wishes by taking steps to prevent a will contest after your death. Will contests (this is the legal term used to describe a family member’s challenge to the contents of a will) can be based on one or more of these claims:
- The will was not properly executed
- The willmaker was under improper or undue influence from a beneficiary
- The willmaker or another person committed fraud
- The willmaker lacked the mental capacity to make the will
There are a number of steps that you can take to help prevent will contests based on any of those claims. It is important to remember, though, that different states have different laws regarding wills and probate. What is advisable in one state may be inadvisable in another, which is why the first suggestion for preventing a will contest is:
- Obtain qualified legal advice regarding your estate plan. Estate planning has become a popular “do it yourself” legal task, but you should at least consider having your will reviewed – if not written – by a qualified estate planning lawyer. Writing your will with the help of an estate planning attorney will also ensure that your will is a properly executed and valid legal document.
- Don’t delay estate planning. Plan your estate while you are in good health – “of sound mind and body.” If you create your will while your physical or mental health is failing, your will becomes vulnerable to claims that it is invalid due to your lack of mental capacity.
- Consider a no-contest clause. A no-contest clause (also called an in terroreum clause) in a Last Will and Testament disinherits anyone who contests the will. Keep in mind, though, that no-contest clauses are valid in some states but not in others.
- Consider using trusts. Trusts are becoming more widely usedin estate planning , and are useful for various situations. A will is a public document once it is filed in probate court, and the public nature of the document can give rise to disputes and will contests. In contrast, a revocable living trust is a personal and private document that does not have to be filed as a public record. Furthermore, lifetime trusts can be used to provide financially for “troublesome” beneficiaries who might otherwise spend through their inheritance. Lifetime trusts are flexible and can link financial inheritance to the accomplishment of goals that you set forth in the trust documents.
- Write your will independently. To avoid claims of undue influence after your death, make sure you write your will in circumstances that are clearly free from interference by family members or other beneficiaries. Avoid having beneficiaries serve as witnesses, for example, and don’t allow beneficiaries to attend your meetings with your estate planning attorney. This is especially important if you are under the care of a family member who is also a beneficiary.
- Be of sound mind and body. At the time you write and sign your will, you can ask your physician to perform a physical examination and certify that you are mentally competent to execute your will. Another option is for your attorney to ask you a series of questions before you sign your will and document that the questions were asked and answered. It may also be a good idea to make a video recording of the process of signing your will, as another way to prove mental competency.
- Answer your family’s questions. Consider sharing your intentions with your family and other beneficiaries. If you explain the reasons for the decisions you made regarding bequests, you may help prevent will contests after your death. Instead or in addition, you may write a letter to your beneficiaries that will be read at the same time your will is read.
- Keep your will dust-free. Once your Last Will and Testament and other estate planning documents are complete, don’t just file and forget them. Review your will with an attorney at least once a year and make any necessary changes in a timely manner.
The Fenelli Law Firm located in Laguna Hills, CA serves clients with estate planning, special needs trusts, planning for children, asset protection, probate & trust administration, conservatorship / guardianships, business succession planning, & corporate entity formation needs throughout Los Angeles, San Diego, and Orange County CA.