San Diego Estate Planning Blog: Creating Legacies

From the desk of San Diego Will Attorney, Kristina Haymes

What Your California Will Really Does

 Sally and Sam of Carmel Valley just had a new baby so they went out and created a will where they  named a guardian to raise their son if they die and to distribute their property. 

Maybe you too finally got around to making a will, so now you can rest easy.

You went online, found the forms, filled them out and you’re done.  If anything happens to you, your loved ones are taken care of. 

One less thing to worry about, right?

I hate to cause you more sleepless nights, but just having a will is not the “be all and end all” of planning your estate.

Let’s clear up a few misconceptions about what your will actually does and doesn’t do:

This is What A Sound Will Actually Does

Your will distributes property that you own at the time of your death.  You can divide up your property any way you choose as long as your state doesn’t prevent you from disinheriting a spouse or children.  If you intend to do either of those things, you need to talk to a lawyer and make sure it’s even legal.  If you have property that would legally pass outside your estate (things like joint property, life insurance, or retirement plans), you will does not provide for how those assets are distributed unless you’ve made them payable to your estate.  Additional estate planning documents are required in order to do that.

Needless to say, there are various types of wills and they can be incredibly simple or terribly complex.  A very simple will is called exactly that – a simple will.  A will that establishes trusts is usually called a testamentary trust will.  If your will leaves assets to a trust created during your lifetime, it is called a pour-over will.  If you have either a testamentary trust will or a pour-over will, it should provide for property management and protection from creditors for your heirs and minimize their tax obligations on whatever property they inherit. 

Aside from creating trusts and distributing property, you can also designate a guardian for your minor children. If your will is properly written and you’ve set up the right kind of trust and chosen the right trustee to handle your minor child’s estate, the need for court supervision will be limited or even eliminated.  The same could hold true if you name an executor.  Check with an attorney to ensure that you’re taking full advantage of the laws in your state and that these designations are made in accordance with those laws.

What Your Will Does Not Do

If you have any nonprobate property, such as real estate that would pass to a surviving owner, or an IRA or insurance policy payable to a named beneficiary, your will does not determine how those assets are passed on.  These types of assets are governed by contract law.  Just because you list them in your will does not ensure that they will be handled as you’ve requested.  Always make sure that your beneficiary designations are up to date and in line with your intentions. 

Other types of nonprobate property you will want to account for are any jointly owned property, trusts, annuities, and retirement benefits and life insurance, to name a few. 

Makes filling out a form online and thinking you can sleep better at night a little less appealing, doesn’t it?  A simple piece of paper will not necessarily ensure that everyone gets what you want them to have and that Uncle Sam doesn’t take more of what you’ve worked for than your loved ones receive.

If you would like an expert opinion on exactly how effective your current will is, or advice on actually drafting a will, call us to schedule your Family Wealth Planning Session today.  We can help ensure you take the right steps to take care of your loved ones if something happens to you. 

Also, as part of our estate planning process, we will do a video for you where you can share or we will interview you about your specific wishes and what you want your family to know.  We provide you with a copy of the interview so you can pass on the information you want your family to remember.  We understand that it’s not just about the paper you leave behind, but the voice you leave behind. 

Call Sarah Kerr at 858-794-1426 and ask how you can get a complimentary Family WEalth Planning Session — only 2 available per month!

Create Legacies that last.

Kristina Haymes

San Diego Will Attorney

From the desk of Del Mar Estate Planning Attorney, Kristina Haymes (serving California)

Sam and Sally of Rancho Santa Fe, California are setting up an Estate Plan and the first question they have is, ” how do we choose the right trustee to manage our living trust?”

I am glad they asked and you may also be asking this question… How do we choose?  What does a trustee do?

Should I have a family member or a professional fiduciary?  Should it be the same person as my guardians?

Many of the answers to these questions will depend on your specific situation and your potential trustees, but here is some additional food for thought…

One of the most important, and sometimes difficult, decisions you will make in setting up your estate plan is the choice of trustee.

You want to choose people to handle your estate that you trust to carry out your wishes and represent your best interests.  You may think your cousin Billy is the greatest guy on the planet, but he may not be the best choice to take care of your estate. 

To help you make the right determination, it helps to understand exactly what a trustee does and what you should consider in choosing him or her.

First, Let’s Define “Trustee”

The term “trustee” is bantered around quite a bit and is sometimes used incorrectly.  A trustee is a person given the power to manage the assets that you title in the name of your Revocable Living Trust or any other trust agreement. A trustee can be an individual or an institution, such as a bank or a trust company.    

What Should I Consider When Naming a Trustee?

Serving as a trustee for someone’s Living Trust is a big responsibility and can be very time consuming.  You want to make sure that you choose someone who is up to the task.  When choosing your trustee, consider the following character traits:

Loyalty and a Sense of Fairness – If your trustee is named to take care of you and your affairs if you’re disabled, you want them to be loyal to you and take care of matters in the way you would want.  If they are to continue to take care of your estate after your death, you want them to be fair to your beneficiaries.  Your successor trustee must be fair minded enough to treat all your beneficiaries equally and protect all their interests in administering your trust.

Trustworthiness – Is the person you’re thinking of naming as a trustee someone you would trust with your money or even your life?  Remember, when you die your trustee could possibly be handling large sums of cash and property.  Is this someone you would trust to invest the money well and sell your assets wisely?

Practicality – Common sense is a very valuable character trait when it comes to administering an estate.  Make sure your nominee is able to make practical decisions both when it comes to your care if you’re incapacitated and to your estate when you die. 

Organized – We’ll pick on Cousin Billy again.  If he hasn’t balanced his own checkbook in 10 years and has a stack of bills permanently situated on his kitchen table with no clue what is or isn’t there, you may want to rethink naming him as a trustee.  The person you name needs to be organized so that trust account balances and all bills, invoices, and other documents are handled promptly and properly.

Tough – You don’t want to name someone as your trustee who is terminally unpleasant, but you definitely want someone who is tough-minded and strong willed enough to fend off greedy beneficiaries, deal with all the red tape involved in administering a trust and anything else that you just can’t plan for in advance.

Who Do You Have To Choose From?

To help you narrow down the pool of potential trustees, bear in mind that only adults can serve.  That means they must be over the age of 21, although in some states the age of majority is 18. 

Also, depending upon the type of fiduciary nomination, your family and friends may or may not be eligible.  In most cases, your family members will be allowed to serve as trustees, but that depends on the type of trust you’re establishing.  Check with us to make sure that your friends and/or family are not excluded from serving as trustees before you nominate them.   

Some restrictions also apply to the naming of professional advisors, people who are not citizens of the United States, and some institutions. 

And, as always, if you decide on someone to serve as your trustee, discuss it with them before you put them in your estate planning documents and make sure they understand exactly what they’ll be undertaking.    

If you would like some skilled counsel on the appropriate trustee for your particular circumstances, call us to schedule your Family Wealth Planning Session today.  We can help you ensure that you make the right decision in choosing someone to carry out your wishes. 

Also, as part of our estate planning process, we will interview you about your specific wishes and what you want your family to know.  We provide you with a copy of the interview so you can pass on the information you want your family to remember.  We understand that it’s not just about the paper you leave behind, but your voice and your values that you express as part of your legacy.  Our Family Wealth Planning Session is normally $750, but this month I’ve made space for the next two people who mention this article to have a complete planning session with me at no charge.  Call today and mention this article. 

Create Legacies that Last,

Kristina

From the desk of Kristina Haymes, San Diego Estate Planning lawyer…

So, this is your opportunity to tell me what your biggest estate planning questions are?

What do you really want to know about estate planning?

Are your questions basic and foundational?

Like,  What is a Trust?

What is a Will?  Do I need a Trust or a will?

How much does it cost to set up a Trust?

Can I do it myself?

What makes a plan work?

What do you really want to know?

Maybe your questions are more advanced?

How can I eliminate estate taxes?

How can I dictate who gets my money when?

What is an ILIT?

Please go to our contact page and send me an email about your top trust and estate questions!  I will be preparing some materials that answer all of your questions (and you will be anonymous!).

Just go here: http://www.krhess.com/contact.html

Or post a comment on the blog.

All right, I will also be preparing materials about the questions you should be asking…

like…

1) Are my children adequately protected and provided for if I die?

2) How can I avoid the 3 evils of Probate (and what are they?)

3) Who needs an estate plan? (everyone should have some basic planning documents)

4) How can I disinherit the IRS?

5) How can I leave a legacy that lasts?

6) What is the hottest estate planning tool for 2011 and beyond?

7) How to leave your child or children an iron-clad inheritance.

Why it is even more critical for women than men to plan for the future?

9) An objective review of Legal Zoom – a real case study analysis.

10) Why when it comes to estate planning penny wise really is pound foolish.

I want to hear from you!

Let me know your questions!

Kristina

Estate Planning Lawyer