Blog of Law Offices of Daniela Lungu

Archive for the ‘Estate Planning’ Category

Important legislation, written by Senate President Pro Tem Darrel Steinberg (D-Sacramento), Senate Bill 1140, took effect this January and amends the Welfare and Institutions Code, and is an expansion of the rights of financially exploited elders.

Before this important legislation took effect, an elder had to prove his or her property was taken for a wrongful use or with the intent to defraud in order to fall under the legal definition of financial abuse.  There are different levels of fraud.  Over fraud is easy to identify and in some instances rectify or avoid. It is the more overt kinds of fraud, such as undue influence that causes the most harm and is often harder to prove and remedy.  In such cases, proving intent, the legal measure by which you can make someone accountable in most instances, is difficult, if not outright impossible.  This bill addresses this situation by changing the definition to add undue influence as a basis for proving financial abuse. (See Cal. Welf. &: Inst. Code § 15610.30(a)(3).)

Undue influence, as defined by Civil Code section 1575, involves taking unfair advantage of a person’s weakness of mind or the confidence that person had in the perpetrator. By including undue influence as a basis for financial abuse, California now authorizes the recovery of damages, attorneys fees, and costs and thereby provides victims with a potent tool for a faster recovery (§ 15657.5(a)).   This is a preferable remedy to the traditional remedy of rescission, which simply undoes the bad act performed on the elder person.

In addition, SB 1140 requires a perpetrator to return, upon demand, property taken from an elder who lacks capacity. Failing to do so subjects the perpetrator to remedies that reach beyond rescission: damages, attorney’s fees, and costs (§ 15657.6).   This removes the possibility that the elder person will have to deplete all their remaining assets in order to recapture or regain assets taken from them wrongfully.

Perhaps most significantly, SB 1140 changed the statutory definition of wrongful use.  Wrongful use is now defined as the taking of an elder’s property whereby the perpetrator knew or should have known that doing so would likely be harmful to the elder (§ 15610.30(b)).  This puts aggressive salespeople on notice that their interactions with the elderly are going to be scrutinized more carefully.  Caveat emptor no longer applies in most transactions involving the elderly.  A seller may be liable for damages if the seller knows or should know that the sale is likely to harm the elder.

Other changes to the law of financial abuse in SB 1140 are as follows:  expressly recognizes that a victim may recover compensatory as well as punitive damages; holds an employer vicariously liable for financial-abuse damages resulting from the wrongful conduct of an employee committed in the course and scope of employment; and provides a four-year statute of limitations that commences when the plaintiff discovers, or should discover, the facts constituting the financial abuse (§§ 15657.5 and 15657.7).

This new law is an important tool in the protection and rights of elders and should help victims of elder abuse recover from the effects of wrongdoing.

Do you suspect that someone is the victim of elder abuse?  If so, please contact the Law Offices of Daniela Lungu at (925) 558-2710 or email info@lungulaw.com.

Do you want a specific topic discussed in this blog? If so, please contact us at info@lungulaw.com with your suggestions.

About Daniela Lungu, Attorney at Law

Daniela Lungu, founder of the Law Offices of Daniela Lungu, devotes her law practice to asset protection through estate and business planning. Ms. Lungu’s goal is to provide the people of the Bay Area and California with the highest quality, and most personalized legal services possible. Her attention to detail and a high level of communication with her clientele distinguish her from other attorneys in the field.

A. Definition of a Beneficiary

According to the Restatement (Third) of Trusts (“Restatement 3d”), trust beneficiaries are generally defined as persons that are intended to have enforceable rights in trust property and the successors to those persons. Restatement 3d § 48 adds that “[a] person is a beneficiary of a trust if the settlor manifests an intention to give the person a beneficial interest; a person who merely benefits incidentally from the performance of the trust is not a beneficiary.”

These rules are very relevant to the determination of whether a person has standing to bring a claim against the trustee to enforce the provisions of a trust.

B. Impact of Beneficiaries on Trust Modification and Termination

The issues of whether a person is a beneficiary, and, if so, what type of beneficiary, are relevant with regard to the termination or modification of non-charitable trusts. In most jurisdictions, trust beneficiaries may compel a trust’s termination or modification if: (1) continuance of the trust is not necessary to carry out a material purpose for which it was created; and (2) all of the trust beneficiaries consent and are not incapacitated. If the settlor is alive and not incapacitated, his or her consent is also necessary. Also, the trust will be terminated or modified if the trust’s purposes have become impossible to accomplish, or, because of a change of circumstances, continuance of the trust would defeat or substantially impair the fulfillment of the trust purposes. IV Scott & Fratcher, The Law of Trusts, §§ 337, 340 (4th ed. 2001) (hereinafter “Scott”).

Non-consenting beneficiaries whose interests are not benefited by a termination or modification of a trust will prevent a trust termination, whether or not such beneficiaries only hold contingent interests or are not yet ascertained. Scott § 340; Matter of Schroll, 297 N.W.2d 282 (Minn. 1980) (an inter vivos trust provided that a successor trustee should be a bank. The court held that this provision could not be eliminated by the consent of the settlor and all living beneficiaries, because there were possible unborn contingent beneficiaries). On the other hand, in a number of cases the court has decreed the partial termination of the trust, although one or more of the beneficiaries did not consent to such termination, on the ground that the interests of the non-consenting beneficiaries were not adversely affected. Scott § 340.2.

Some court laws may differ.  For example, Cal. Prob. Code § 15404(b) provides that if one or more beneficiaries do not consent to the proposed modification or termination, then a court may still grant a modification or termination if the interests of the non-consenting beneficiaries are not substantially impaired. Section 15404(c) provides that if the trust instrument provides for the disposition of principal among a class of persons, the court may limit the class of beneficiaries whose consent is needed to compel the modification or termination of the trust to the beneficiaries who are reasonably likely to take under the circumstances.

C. Required Disclosures to Beneficiaries

The determination of whether a person is a beneficiary, and, if so, what type of beneficiary, is also relevant to determining the nature and amount of information concerning the trust to which the beneficiary is entitled.

A trustee’s successful administration of a trust is often facilitated by clear and frequent communication with the beneficiaries. Keeping the beneficiaries informed can help avoid the trustee’s involuntary removal and/or being sued for breach of fiduciary duty. Furthermore, to be able to enforce the trustee’s duties, the beneficiaries must know of the trust’s existence and the details of its administration.

1. Information Required to be Disclosed — Nature and Timing

a. The Restatement and Case Law. Usually, when the settlor is competent and can revoke the trust, the settlor can easily keep information regarding the trust from the beneficiaries. Restatement (Third) of Trusts (“Restatement 3d”) § 74 (T.D. 2005). Once the settlor becomes incapacitated or dies and can no longer revoke the trust, however, the trustee’s duties that are owed directly to the beneficiaries and the beneficiaries’ rights regarding the trust are implicated.

b. State Statutory Law. States have enacted statutes regarding a trustee’s duty to disclose to beneficiaries.  California provides that the trustee has a duty to: 1) keep beneficiaries of the trust reasonably informed of the trust and its administration, 2) provide upon reasonable request a report of transactions, 3) provide prompt notice to the beneficiaries when the trust becomes irrevocable and whenever there is a change in trustee, 4) provide upon a request a copy of the trust instrument when such trust becomes irrevocable, and 5) provide annual accountings to current beneficiaries. Cal. Prob. Code 16061.2; 16062; 16061.5; 16060; 16061.

c. Duty to Keep Beneficiaries Informed Under the Uniform Trust Code.

The UTC contains provisions concerning how much trust information must be disclosed to beneficiaries and a settlor’s right to control such disclosure. The provisions of the UTC that codify the trustee’s duty to inform and report are among the most controversial portions of the UTC and, as a result, have become the least uniform among jurisdictions that have enacted the UTC.

D. Trustee Compensation

1. State Law Regarding Trustee Compensation

For some time a trustee has been allowed compensation in the United States unless the trustee voluntarily serves without compensation or waives his or her right to compensation. The amount of the compensation is fixed either by the terms of the trust instrument, by contract between settlor and trustee, by statute or by court action.

In most states there are statutes that govern the allowance of a trustee’s compensation.

There are basically three types of trustee compensation statutes in force. The most common type of statute authorizes the court in its discretion to allow the trustee “reasonable compensation.” See, e.g., Cal. Prob. Code 15681. Under this type of statute the trustee often requests a specific amount on one or more of the trustee’s accountings, and the court grants the trustee a fee which it deems fair and reasonable under the circumstances. A second type of statute provides that the trustee is “entitled” to compensation and authorizes the trustee to collect the compensation from the trust estate without prior court authorization but subject to review upon petition of an interested person. The third basic type of compensation statute sets forth, in varying degrees of detail, a schedule or scale of commissions or fees that are permitted a trustee.

The following factors have been considered in determining the reasonableness of a trustee’s appropriate compensation: (1) the size of the trust; (2) the responsibility involved; (3) the character of the work involved; (4) the results achieved; (5) the knowledge, skill, and judgment required and used; (6) the time and services required; (7) the manner and promptness in performing its duties and responsibilities; (8) any unusual skill or experience of the trustee; (9) the fidelity or disloyalty of the trustee; (10) the amount of risk; (11) the custom in the community for allowances to trustees; (12) any estimate of the trustee of the value of his services.

Many corporate trustees publish schedules of fees for their services as trustee under a will or a trust agreement.

2. Other Considerations in Corporate and Individual Trustee Compensation

Fees charged by a corporate trustee, including minimums, can vary greatly. A frequent misconception is that substantial amounts are saved by naming an individual trustee. Often, however, using an individual trustee can end up costing money due to the individual’s inexperience with the complex legal requirements of trusts, lack of investment or tax knowledge or not having time to perform the job. The fees charged by a corporate trustee are sometimes believed to be less than the differential between the investment return earned in a given trust by a corporate trustee and the investment return that would have been earned in such trust had a family member served as trustee. Also, in most states, using a corporate trustee avoids the need to obtain a bond.

Frank discussion of fees and expenses in advance can also extinguish unrealistic expectations and potential problems. Acting as trustee entails considerable responsibility, inconvenience and potential risk. Although it is often anticipated that an individual trustee will not charge a fee, the trustee should certainly understand what is involved before agreeing to serve without a fee. If it is anticipated that the individual trustee will take a fee, it may avoid misunderstanding if the instrument specifies (or there is agreement) that a fee will be taken and, if possible, how it will be calculated.

The trust instrument should discuss compensation especially when the trust instrument appoints co-trustees. Depending on the circumstances, each trustee may receive a full fee; a single fee may be divided between two trustees, or the individual trustee may forego receiving any compensation. However, it is generally unwise to set forth a rigid compensation schedule in the trust instrument because of the difficulty in anticipating the services that may be required of the trustee and the difficulty of obtaining approval of any change in such schedule.

If you have questions of how to pick fiduciaries, or get answers to your other trust questions, please call the Law Offices of Daniela Lungu at (925) 558-2710 or email info@lungulaw.com.

Do you want a specific topic discussed in this blog? If so, please contact us at info@lungulaw.com with your suggestions.

About Daniela Lungu, Attorney at Law

Daniela Lungu, founder of the Law Offices of Daniela Lungu, devotes her law practice to asset protection through estate and business planning. Ms. Lungu’s goal is to provide the people of the Bay Area and California with the highest quality, and most personalized legal services possible. Her attention to detail and a high level of communication with her clientele distinguish her from other attorneys in the field.

The internet is the greatest invention yet.  You can find anything on the internet, merely if you have the patience to look for it.  Often I am asked by my clients if they should use forms and other documents provided for free on the Internet to create legal forms, such as wills, trusts, powers of attorney, basic contracts and more.

An attorney can’t tell you whether you should or should not use what is readily available on the internet, but as a consumer, you should always use caution and make sure you fully understand what you are doing.

Creating Legal Forms to Help a Friend Considered the Unauthorized Practice of Law

A woman asked her friend to help her prepare a will.  The friend found a will in the internet, and filled in the blanks provided.  The friend was named as executor of the estate.  The woman subsequently died and her will was admitted to probate.  In Franklin v. Chavis, 640 S.E.2d 873 (S.C. 2007), the court found that the testatrix was not involved in drafting the document and did not review it. Further, the court held that the friend had acted as more than a scrivener and had engaged in the unauthorized practice of law. The friend also drafted a power of attorney for the testatrix that did not involve filling in blanks in a form and this, too, was the unauthorized practice of law. The court also determined that the friend could not receive compensation for acting as the executor.

In addition to the loss of compensation to the executor, this person was subject to legal action for the unauthorized practice of law.  The cautionary tale here is to remember that sometimes helping a friend out, and providing them with legally enforceable agreements, opens the door to future legal action.  You should always consult with a licensed attorney prior to creating, filling out, or drafting any legal documents.

Do you want to create a will?  If so, please contact the Law Offices of Daniela Lungu at (925) 558-2710 or email info@lungulaw.com.

Do you want a specific topic discussed in this blog? If so, please contact us at info@lungulaw.com with your suggestions.

About Daniela Lungu, Attorney at Law

Daniela Lungu, founder of the Law Offices of Daniela Lungu, devotes her law practice to asset protection through estate and business planning. Ms. Lungu’s goal is to provide the people of the Bay Area and California with the highest quality, and most personalized legal services possible. Her attention to detail and a high level of communication with her clientele distinguish her from other attorneys in the field.

For many of us that are into our second or subsequent marriage, questions of rights to property are often complicated and do not get resolved prior to one spouse’s passing, which can make for a very complicated estate administration.  Often, spouses come into these partnerships with property, separate assets, and often children. This situation becomes even more complicated if there are children born to this new union. As always, it is important to have a frank discussion on all aspects of estate planning early on, so that neither spouse feels that they are “forgotten” later in life.

Couples can consider entering into pre or post nuptial agreements, which will spell out the reasons for the particular division of property agreed to. Remember that it is important that both sides fully disclose assets and are independently represented by counsel so if there is a challenge to these agreements later, their strength can be ensured.  The Code section also requires a seven-day waiting period prior to marriage if a spouse waived their right to a share of the estate in the other spouse’s estate.  Remember that if you do not provide for all contingencies, the law will.

SHARES FOR FORGOTTEN SPOUSES

Section 21610 of the California Probate Code protects a spouse who is not mentioned in estate planning documents executed prior to the marriage. The statute gives the omitted spouse a statutory share of the estate, but not if (1) the decedent’s estate plan specifically disinherits the spouse, (2) the spouse receives assets outside the estate, or (3) the spouse executes a valid waiver.

So, what this means is that after a marriage, it is imperative to speak with your estate planning professional to ensure that your future desires are properly spelled out in those important documents.  The Code specifically provides certain rules for waiving rights that must be followed to the letter.  Consult with your estate planning professional to ensure you do not have a forgotten spouse problem in the future.

Furthermore, all life changing events, such as marriage, childbirth, divorce, or death of a loved one–should trigger a re-examination of a person’s estate plan, if not an amendment of key documents.   Not amending the documents in a timely manner may indeed ensure a protracted and expensive litigation among remaining family members.

If you require a review and amendment of your estate planning documents, please call The Law Offices of Daniela Lungu for your complimentary consultation at (925) 558-2710 or by email at info@lungulaw.com.

Do you want a specific topic discussed in this blog? If so, please contact us at info@lungulaw.com with your suggestions.

About Daniela Lungu, Attorney at Law

Daniela Lungu, founder of the Law Offices of Daniela Lungu, devotes her law practice to asset protection through estate and business planning. Ms. Lungu’s goal is to provide the people of the Bay Area and California with the highest quality, and most personalized legal services possible. Her attention to detail and a high level of communication with her clientele distinguish her from other attorneys in the field.

Often couples divvy up financial responsibilities in their marriage depending on strengths, or simply a pattern of behavior.  If the husband for example, has always handled the couple’s finances, that will continue in perpetuity. The issue then becomes..what happens to the wife when the husband dies?  Will she have knowledge and access to all financial accounts? Will she have an understanding of the overall financial picture and what she needs to do to protect her future?  This of course is more complicated if there are minor children in the marriage at that first death.

A study done by Fidelity Investments shows that about 45 percent of couples work jointly in making day-to-day financial decisions such as budgeting and only 38 percent discuss retirement, savings and investments.  This lack of communication guarantees that the surviving spouse will have financial problems and confusion when the first spouse passes.

During my initial sessions with couples that are considering creating an estate plan, I encourage frank and complete dialogue of these issues between spouses.  Even if one spouse is more financially savvy than the other, it makes financial and economic sense that each spouse know where the assets are held, passwords to the accounts, has access to paper financial records and statements, etc.

There are many reasons for having this discussion with your spouse and working together so that each person understands the full financial picture.  Health care, future retirement, savings, care for children, and more provide the basis for this discussion. 

Before you have that all important discussion, use this checklist as a guide to gathering the information needed:

·         Identify all cash, savings, money market, certificates of deposit and other liquid assets

·         Identify all retirement accounts including 401(k), 403(b), SEP and other IRA accounts

·         List all real property investments worldwide and have a copy of the deed handy

·         List all other assets such as vehicles, promissory notes, business interests

·         List all other personal property, such as jewelry, art collections, etc.

Make sure that you have a copy of the most recent statement for each titled assets.  Once you have assembled the documents, make sure both of you understand the ownership and titling of each asset and how it might pass after death, either by will, trust or joint ownership.  You might also want to involve a financial advisor, CPA, or estate planning attorney in this process.

Should you require a questionnaire to assist in gathering all the information required to complete this project, please send your request to info@lungulaw.com .

If you have any questions about the information provided or recommendations, please call the Law Offices of Daniela Lungu at (925) 558-2710 or email info@lungulaw.com.

Do you want a specific topic discussed in this blog? If so, please contact us at info@lungulaw.com with your suggestions.

About Daniela Lungu, Attorney at Law

Daniela Lungu, founder of the Law Offices of Daniela Lungu, devotes her law practice to asset protection through estate and business planning. Ms. Lungu’s goal is to provide the people of the Bay Area and California with the highest quality, and most personalized legal services possible. Her attention to detail and a high level of communication with her clientele distinguish her from other attorneys in the field.

A. Trust Distribution Issues

Undoubtedly, one of the trustee’s most important duties is to make distributions to beneficiaries in accordance with the settlor’s wishes as expressed in the trust instrument. This will often require the prudent exercise of discretion to provide income and principal payments to one or more beneficiaries, in accordance with the trust instrument. The trustee must be loyal and fair to all beneficiaries, both current and remainder. In addition, the trustee may have to take into account (but not necessarily be controlled by) the income tax situation of each beneficiary to assure that the overall income tax liabilities for the trust and the various beneficiaries will be minimized to the extent consistent with the settlor’s objectives.   If the trustee does not follow the terms of the trust instrument, or provisions of the law, then there is risk

1. Sanctions for Improper Distributions

If the trustee makes an improper payment, even if it was an honest mistake, there is liability.   Therefore the beneficiary may successfully sue the trustee for the improper distribution, depending on the circumstances surrounding that distribution.  Trustees are duty bound to treat beneficiaries fairly, make proper distributions, provide accountings, etc.  If any of these duties are violated, the trustee is in violation of the law, and therefore liable for damages, which might include restoring the financial value of the trust.  What this means is that the trustee has to be careful that any distributions proposed are consistent with the terms of the trust and also the law before being made.

2. Withholding or Postponing Distributions

The UTC and the Restatement prohibits a trustee from withholding distributions to which a creditor or other transferee of a beneficiary’s interest is entitled.  Before withholding distributions from the trust, trustees should ensure that they have a legally defensible reason for doing so.

b. Preventing Distributions For Asset Protection Purposes.

When creditor protection is important, such as in cases where the trust instrument has a valid and enforceable spendthrift provision, the trust itself would provide the trustee with the legal basis for withholding otherwise mandatory distributions, if the trustee, in the exercise of the trustee’s sole and absolute discretion, should deem the distributions to be adverse to the beneficiary’s interest because there exists a creditor problem at the time that the distribution would otherwise be made. The beneficiary’s interest is reinstated after the disqualifying event has passed or has been resolved. This suspension protects against creditors’ claims, provided that the trustee’s power to suspend distributions is absolute and not just a condition limiting the time or manner of payment.  The trustee should ensure that the spendthrift provision gives them the appropriate level of control over trust assets before making such an important decision.

C. Appropriate Screening by the Prospective Trustee

Each individual or corporate fiduciary that is considering an offer to be a trustee under a particular trust should fully assess the situation before agreeing to serve.  Careful review of the trust documents might highlight potential pitfalls that should be discussed with the settlors prior to that agreement being made.  Some of the things to look for can include: ambiguities, inconsistencies, potential tax problems, and potential conflicts of interest, as well as trustee fees.  Further, the potential trustee should learn as much as possible about the beneficiaries of the trust, including their family history and familial relationships.   Doing the appropriate level of due diligence might avoid potential future problems.

A potential future trustee and the settlor can and should seek the advice of their professional counselors in order to consider and address all these issues, prior to proceeding with legally enforceable trusts.

Do you want to create a trust?  Are you considering being a trustee or successor trustee?  If so, please contact the Law Offices of Daniela Lungu at (925) 558-2710 or email info@lungulaw.com for a complimentary assessment of your legal needs.

Do you want a specific topic discussed in this blog? If so, please contact us at info@lungulaw.com with your suggestions.

About Daniela Lungu, Attorney at Law

Daniela Lungu, founder of the Law Offices of Daniela Lungu, devotes her law practice to asset protection through estate and business planning. Ms. Lungu’s goal is to provide the people of the Bay Area and California with the highest quality, and most personalized legal services possible. Her attention to detail and a high level of communication with her clientele distinguish her from other attorneys in the field.

I have repeatedly stated to my clients that one of the functions of estate planning is the avoidance of probate related matters.  Not all probate actions are bad or ill advised, and in the absence of complete planning, might be the best option available.  Certain matters handled by probate courts, such as admitting wills to probate and appointing executors, are routine and not contested. Routine probate matters can be handled very efficiently.

Here is a list of some of the factors (in no particular order) involved in probate litigation, grouped by categories:

“Contested matters” handled by probate courts (aka “probate court litigation”) is a broad term that includes a variety of situations, including, but not limited to,

• will contests (a challenge to the validity of a will);

• will and trust construction suits (a request that the court make a determination regarding the legal meaning or effect of particular wording used in a will or trust);

• guardianship contests (a fight over (1) whether a guardian should be appointed for a particular individual who allegedly has lost his mental capacity (and did not do any advance planning, such as executing powers of attorney), and (2) if so, who should be appointed as the guardian to make medical decisions and handle financial matters for that mentally incapacitated person);

• trust modification and trust reformation suits (a proceeding that requests the court to change (or “fix”) the terms of a trust because something is wrong with the way the trust is worded);

• trust termination suits (a legal action brought to terminate a trust because the purpose of the trust has been fulfilled or can no longer be fulfilled); and

• breach of fiduciary duty actions (suits by beneficiaries against an executor, trustee, guardian, or agent alleging that the fiduciary failed to act in accordance with the law and/ or the instrument appointing her and thereby caused damage to the beneficiaries).

There are several high risk factors for probate litigation such as sibling rivalry and multiple marriage situations, the so-called “second marriage” situation. Many people marry for a second (or even third or fourth) time without signing a premarital agreement (“Pre-Nup”) before the wedding. The Pre-Nup is one of the best ways to avoid probate litigation on death. It can also avoid a very expensive “forensic accounting” on the death of the first spouse. Many people mistakenly believe they own certain assets as their separate property (perhaps simply because the asset was in existence before the marriage and/ or is titled solely in their name) when, in fact, their property may have become community or marital property, in whole or in part, during the marriage. The classic probate court litigation case: children of the first marriage versus the spouse of the second marriage.

Some Factors That Could Lead to Probate Litigation

Creating a “Nonstandard” Estate Plan

Some examples included estate plans that (1) “cut out” a child, (2) treat children differently, (3) create overly detailed trusts attempting to “control from the grave,” and (4) make gifts to mistresses.

The Second Marriage Situation

As previously noted, if the Pre-Nup or Post-Nup does not clearly define the ownership of assets by couples who were married previously, the potential for litigation on the death of a spouse is much greater (especially if there are children from the prior marriage). If assets are not cleanly divided between the surviving spouse and the children from the prior marriage, problems can arise.

Not Appointing the Right Fiduciary

Serving as the executor of an estate, the trustee of a trust, or an agent under a financial power of attorney requires a huge commitment of time and effort and absolute honesty. When making your choice consider all factors, including: 1) their communication skills, 2) ability to follow legal instructions from adviser, 2) timeliness in getting work done, 3) trustworthiness, 4) financial skill set, 5) susceptibility to bad influence, 6) general attitude, 7) level of common sense, and ability to be organized.

Ill-conceived or “Faulty” Planning

There are so many examples of “bad estate planning” that it is impossible to list all of them here. Some are the result of incompetence and/ or lack of experience on the part of the attorney who prepared the plan. Others are the result of individuals trying to do things themselves that are not well thought-out. Some examples include (1) a person writing his or her own will or codicil (unless the instrument is a handwritten codicil that disposes only of personal effects); (2) having a customized estate plan not drafted by an attorney with sufficient expertise to draft non standard provisions, or 3) appointing one child as the trustee over another child’s trust.

Other Difficult Situations

Other situations that are always more difficult to plan for and that increase the need for solid planning to avoid probate litigation (and other problems) include (1) heterosexuals living together who have not executed a “non-marital cohabitation agreement” to avoid a “common law spouse” lawsuit on death; (2) gay and lesbian couples who do not do “special additional planning  to place their partners in a secure position of control (to override state law priority statutes) and to arrange for the unassailable transfer of assets to their partners on death (tax planning also can be harder because the estate tax marital deduction is not available to gay and lesbian couples); (3) making unreported “taxable gifts during life (a taxable gift is a gift that is more than $13,000 per person per year (the current annual exclusion amount)); (4) making gifts during life to just one child and not to all children in equal amounts; (5) failing to tell the estate planning attorney about an illegitimate child or child from a prior marriage; and (6) failing to organize the client’s financial and other important information to enable the executor of the estate to do a good job.

Failure to Follow Up

This category includes the client (1) failing to review the estate plan on a periodic basis (estate plans become outdated very quickly); (2) failing to do the necessary “homework incident to the estate plan (such as re-titling accounts and completing beneficiary designation forms as instructed so that non-probate assets are coordinated with the client’s estate plan in his will or trust); (3) failing to change the will, account titles, and beneficiary designations after marriage or divorce; and (4) failing to re-title all the assets in the name of the living trust before death if the intention is to avoid probate completely.

How to Avoid Probate Litigation

Do not do anything that could cause serious legal consequences without first discussing them with legal or other advisors. Check with your advisors regularly to ensure you are on the correct path and be prepared to discuss every issue and concern. Follow through on necessary “homework” such as account titling and beneficiary designation matters (see above). Plan ahead whenever possible.  Make sure you make the correct choice of fiduciaries.

In discussions with family members, you should explain the reasons for the plan being implemented, although you will need to be careful how you state your reasons.

Not all probate litigation can be prevented, of course, but a large portion of probate litigation can be prevented by good planning.

For a complimentary consultation of your particular legal needs and how to avoid probate in your estate, please contact the Law Offices of Daniela Lungu at (925) 558-2710 or email info@lungulaw.com.

Do you want a specific topic discussed in this blog? If so, please contact us at info@lungulaw.com with your suggestions.

About Daniela Lungu, Attorney at Law

Daniela Lungu, founder of the Law Offices of Daniela Lungu, devotes her law practice to asset protection through estate and business planning. Ms. Lungu’s goal is to provide the people of the Bay Area and California with the highest quality, and most personalized legal services possible. Her attention to detail and a high level of communication with her clientele distinguish her from other attorneys in the field.