King & Wood, P.A.

Why Does Stormy Daniels Have a Nuncupative Will?

Why Does Stormy Daniels Have a Nuncupative Will?
“Daniels’s recording is an oral will, also known in the law as a nuncupative will.”
Stormy Daniels recently released her memoir, Full Disclosure. The book delivers Daniels’s vivid narrative of her 2006 Lake Tahoe meeting with President Trump and the drama that ensued from her signing of a Non-Disclosure Agreement before the 2016 election.
Daniels’ book unintentionally provides a lesson in trusts and estates, says Above the Law’s recent article, “Stormy Daniels’s Oral Will: Nuncupative Wills Make For Risky Estate Planning.”
The final chapters of her book tell of her great fears after The Wall Street Journal’s January 2018 reporting of a Non-Disclosure Agreement that she later argued in federal court was invalid. She appeared on news shows and many articles were written about her relationship with the President.
After she received threats against her and her daughter, Daniels made her friend record a video in which she directs the disposition of her estate at her death. She refers to the recording as her last will and testament, writing that she was “never so direct about anything” in her life and that she had “the clear-eyed vision of a person about to die.” The recording shows detailed information about her life insurance policy and specific distribution instructions. She also gives instructions for the care of her horses—Daniels directs the sale of one horse, so that the proceeds can be used for the care of her daughter.
The recording she made is an oral will—also known as a nuncupative will. An oral will is rarely enforceable in a court of law, but there are a few specific exceptions. One is when a written will is nearly impossible to execute. Oral wills create issues, because they raise questions as to authenticity and fraud. In California and Texas, where Daniels lives, oral wills aren’t admissible for probate. In New York, these wills are permissible in some situations, like when it’s made by a member of the armed services in active duty during a war or a seaman at sea.
Wills, as opposed to many other legal documents that can be valid with an e-signature, must have original signatures and in-person witnesses. A handwritten will, also called a holographic will, is generally unacceptable, except in certain limited circumstances.
When executing a will, each state has a list of specific requirements, including that the testatrix (testator) makes certain statements as she signs the document, and witnesses attest to her ability to execute the document. Validity issues frequently are dependent on the disposition of a testatrix, the testimony of the witnesses and the strength and character of the testatrix’s signature. To offer a will for probate, the original document with a real signature must be filed with the probate court.
Daniels, as an artist, opted to record her final disclosure, even though her imminent fear of danger prompted the recording. Her actions show us that we shouldn’t wait until an emergency to think about estate planning. With her many irons in the fire and court cases, Daniels should properly prepare and execute her last will and testament, this time, on paper and with the help of an experienced estate planning attorney.

Reference: Above the Law Advisor (October 10, 2018) “Stormy Daniels’s Oral Will: Nuncupative Wills Make For Risky Estate Planning”

How to Pass Heirloom Real Estate to Your Heirs

“Some assets require special estate planning strategies and a lot of thought. One such asset is what I sometimes call heirloom real estate, or family real estate.”

Heirloom real estate is a property that’s been in the family for some time and that one may want to keep in the family. This includes vacation homes or other second homes, farms, a longtime residence, but not business or investment properties.

Forbes’ recent article, “How To Transfer Heirloom Real Estate,” notes that, as the senior generation ages, heirloom real estate can be the place where many generations get together at least once a year, usually around a holiday. As families spread around the country or world, the family real estate can become the one tie or source of stability and continuity for the family.

To maximize the chances that the property will stay in the family and help keep the family together, you have to give the details some thought and work with your family members and an estate planning attorney. Most people think to leave the real estate in their wills to their children jointly, much as they do with the rest of their estate. However, that is usually not a wise strategy for heirloom real estate.

If the property is in a different state than where you reside, your estate will have to be probated in two states. The state where you reside will control the probate of most of your estate. However, the real estate is probated in the state where it is located. You can avoid that second probate by having the property owned through a trust, limited liability company (LLC), or other entity.

Maintenance and other routine expenses often become problems, because each sibling has to agree to pay a share of these expenses. Some expenses are mandatory, like real estate taxes, but other expenses can be discretionary.

Typically, at least one sibling will want to sell the property, while others don’t. In some instances, when the other siblings don’t want to sell but aren’t able to buy the other sibling’s share, one of the siblings will try to sell her share to an unrelated person. Joint ownership also creates issues, when one of the owners divorces or passes away, because the death of a co-owner raises the issues of whether that owner’s share goes to the surviving co-owners or the heirs of the deceased.

A limited liability company (LLC) may be the best choice. It provides the liability shield of a corporation with the operating and tax flexibility of a partnership. If you chose an LLC or other entity as the best option, the parents who currently own the property should create the entity right away: they’ll be the original owners of the LLC and set up its operating rules. They then can give or sell ownership interests to the children, or they can hold the LLC for life and leave its ownership to the children through their estates. The parents set up rules for sharing and maintaining the property that can be implemented on a trial basis, while the parents are alive. Changes can be made as needed.

An important feature of the LLC is that it can keep the property from being sold outside of the family. The LLC bylaws can prohibit any owner from selling her shares to someone not in the family. The bylaws can also create a process for one member, or other owners, to sell to the LLC and provide a formula for determining the price and payment terms.

The LLC won’t resolve all of the cash flow and money issues. The co-owners must still be willing and able to finance continuing ownership of the property. One way to address money problems is for the parents to leave a cash fund or a life insurance policy to the LLC that will cover some or all of the ownership costs for a period of time. It might also provide a way for the other owners to buy out the interest of anyone who wants to sell.

This can also be a great tax planning tool, when an estate is possibly subject to federal, state, or inheritance taxes. Giving shares of the LLC and establishing minority ownership interests can decrease the value of the property for tax purposes.

You can take these actions to make sure your family property remains heirloom real estate but have frank discussions with the next generation, so it understands the full picture and its members are interested in retaining the property. Seek the counsel of a qualified estate planning attorney, when you’re ready to create the LLC or other entity.

Reference: Forbes (August 19, 2018) “How To Transfer Heirloom Real Estate”

James Brown Estate Still Up for Grabs, 12 Years Later

“The Godfather of Soul married a woman who was married to another man, who in turn was married to three other women. It's up to a federal court to decide who gets millions in song royalties in a case with major implications for artists and families.”

When James Brown, the "Godfather of Soul," passed away at 73 in 2006, he left behind quite a legacy and quite a mess. The musician gave us some wonderful music. At the time of his death, he was married to Tomi Rae Hynie. Or was he? The two had a child named James Brown II. Or did they?

The Hollywood Reporter’s recent article, “James Brown Family Feud: Inside a 12-Year Fight Over Bigamy, DNA Tests and Copyright Law,” reports that in the 12 years since Brown's death, these questions still plague a South Carolina probate court that must determine how to divide Brown's assets. So far, Hynie and James II have succeeded in overcoming challenges to their assertion of being the surviving spouse and legitimate son, respectively. That puts them in position to collect a large part of Brown’s estimated $100 million estate.

However, there’s more to the story and the fighting. Nine children and grandchildren from Brown's previous marriages recently filed a lawsuit alleging dishonesty on the part of Hynie and the administrators of the estate. This new case deals with Brown's copyrights and may move the estate battles to a federal court, which usually has exclusive jurisdiction over copyright matters.

Tomi Rae Hynie is a former Janis Joplin impersonator in Las Vegas. She became a backup singer for Brown and eventually, in 2001, his fourth wife. However, when she married Brown, she was already married to Javed Ahmed and had been since 1997. In turn, Ahmed had his own secret: when he married Hynie, he already was married to at least three other women in Pakistan. Ahmed told her about his wives after the ceremony and disappeared without consummating the marriage. He really was only looking for U.S. citizenship.

Hynie had her marriage to Ahmed annulled in 2004, but by that point her relationship with Brown had become tumultuous. Hynie and Brown got into a physical altercation, and he was arrested for domestic assault, which led to a separation. Brown then sought his own annulment, and she countersued for divorce. The question of whether the two were truly legally married wasn’t resolved at the time. Right after the separation, the couple told a court, of a settlement wherein she would waive any claim of a common law marriage. Hynie says she then reconciled with Brown, and they lived together until he died. However, Hynie was included in Brown's will because he never updated it during their relationship. She asked to correct this at his death.

James II also wasn't included in Brown's will. The questions regarding his lineage arise from the notion that in the 1980s, Brown had a vasectomy specifically to avoid paternity suits. James II was Brown's only child born after that. But James II proved himself to be Brown’s son after taking not one but two DNA tests.

The nine heirs of James Brown filed their case in California and accused Hynie of having "embarked on a series of duplicitous business machinations calculated to deprive Brown's children of their rightful interests in Brown's music under the Copyright Act."

The issue of Brown’s music deals with an increasingly important part of copyright law known as termination rights. In the 1970s, Congress extended the copyright term, and lawmakers elected to recognize that many who had created works at the early stage of their careers had assigned rights to publishers without much bargaining power. Therefore, these songwriters or their heirs were allowed to terminate those deals 35 years after their work was published and reclaim rights during the later years of the copyright term.

As a surviving spouse, Hynie would be entitled to 50% of the termination interest, with the other 50% shared by the surviving children (or grandchildren if the child is deceased). Because of her large stake, Hynie is in position to veto any effort to reclaim song rights. If there's no termination, under the existing song publishing agreements, the song royalties go to the estate. Those monies would then be distributed in accordance with Brown's will and any court-ordered alterations. Before he passed, Brown earmarked some of his estate to go to charity. The estate stipulated that the motive was to donate money for scholarships to needy children, however, "to date not one penny has been available for those scholarships, because the probate litigation has continued."

The complaint says that starting in 2013, a consultant for the estate tried to get the children to sign away their copyright termination interests for cash. "Defendants deliberately concealed the underhanded nature of these proposals by orchestrating their pressure campaign through go-betweens, who falsely professed to be working in Plaintiffs’ best interests," the complaint alleges.

At the same time, Hynie and James II served notice on Warner/Chappell Music, the publisher and rights holder of James Brown's back catalog, that they were exercising termination rights on 138 of Brown's compositions. They failed to inform the other heirs.

The complaint further states that Hynie reached a $1.875 million deal with Warner/Chappell in 2015 to transfer back rights to five of the songs. The suing children say the deal was written in a way that leaves a royalty structure intact that favored the estate to the disadvantage of Brown's children. Hynie is, in effect, being accused of trading away the family's copyright termination powers. The children and grandchildren are upset by the deal, which leaves them out of the money.

Hynie and the estate administrators argue that the litigation doesn't belong in federal court, and that copyright law doesn’t provide a remedy to invalidate the types of agreements at issue.

Reference: The Hollywood Reporter (October 3, 2018) “James Brown Family Feud: Inside a 12-Year Fight Over Bigamy, DNA Tests and Copyright Law”

Estate Planning Basics

“Most people likely know there are some basic documents they need for their estate plan. Those include a will, living wills or medical directives, durable powers of attorney for health care or property and side letters.”

USA Today’s recent article, “Preparing a will: What you need to know about estate planning documents, laws,” says that, technically, a will is called a “Last Will and Testament.” It’s a document designed to assure the integrity of the disposition process, declare the heirs of the estate and name the individual (the executor) who will manage the disposition process. A will is just one component of the estate planning process. The decedent’s will generally designates an executor or personal representative to coordinate the probate process.

A person must have testamentary capacity or sufficient capacity to execute a will. Adults are usually presumed to have that capacity. A person challenging a will must show that the person lacked sufficient capacity.

There are two types of wills. A holographic will is one that is self-written and doesn’t meet the requirements of state law. In some states, this makes the will unenforceable, but other states allow holographic wills, if certain conditions are satisfied. A nuncupative will is an oral will, and most states don’t recognize these wills as enforceable (but there are exceptions).

If you are said to die intestate, it means that you passed away without a valid will in place before your death. With no will, state intestacy statutes dictate who receives what portion of your assets and property that does not otherwise have a surviving joint owner or a designated beneficiary.

You may have heard of the term “codicil.” That’s an amendment of an existing will.

It’s smart to work with an experienced estate planning attorney, because there are plenty of state-specific wrinkles and tax ramifications that may not be apparent.

For instance, if you get divorced and remarry years later, and your intent is to have all of your assets pass to your children from your first marriage, you might think that since your will doesn’t name your new spouse, he or she can’t inherit from you. That’ wrong. You need a new will.

Some state laws say that a “pretermitted spouse” (a spouse not named in the will) is entitled to a share of the estate—unless the will expressly states that he or she isn’t to inherit. Nonetheless, even where the spouse is disinherited by the will, almost every state provides that a surviving spouse has the right to take a statutory share of the deceased spouse’s estate.

Speak with an experienced estate planning attorney, especially if your life has included second marriages, to make sure that your wishes are followed, and your family is protected.

Reference: USA Today (October 3, 2018) “Preparing a will: What you need to know about estate planning documents, laws”

Should I Get A Living Trust?

“A living trust is a great way to protect and distribute your estate assets, in private and without court intervention.”

A living trust can be an effective way to handle your estate because you can provide clear direction on how your assets should be disbursed (and to whom) after your death.

A recent article from The Street asks, “What Is a Living Trust and Why Should You Have One?” The article explains that a living trust primarily helps individuals keep more control over their assets and have their instructions carried out after they pass away. A living trust can help save the costs and delay of probate—that can take up to three years and 10-15% of an individual's estate's value. Since you don't have to register a trust with the courts, creating one up can also provide you with more privacy than a will.

A trust provides flexibility and creativity, as well as the level of control over funds passed to heirs that a will alone might not. For instance, a parent leaving money to a child could leave that money with a third-party to be given to the child at whatever age the parent decides, or on specific birthdays. A trust can also protect the assets from bankruptcies and lawsuits.

There are many forms of living trusts, all of which can be set up easily with the help of a qualified estate planning attorney. Here are the primary types of trusts:

A revocable trust enables an individual to keep control of assets, while she’s still alive. The trust assets can be moved around, and it’s pretty flexible in its structure. It can be modified at any time, and it can be revoked at any time.

An irrevocable trust can’t be changed and can’t be revoked. Any assets included in an irrevocable trust can't be accessed by creditors. An irrevocable trust provides protection from lawsuits and provides solid asset protection.

An asset protection trust helps protects the trust holder's assets from any future efforts by creditors to get hold of an individual's assets. These trusts can be established for a specific amount of time, and all assets in the trust that remain are returned to the trust holder when the trust term expires.

A charitable trust is established to benefit a particular charity or charities. These trusts provide an outlet for an individual's favorite charities and causes, and they provide significant tax benefits for the trust holder, because they help lower or eliminate estate and gift taxes.

With a trust, you'll bypass probate and save on those expenses. You'll also have peace of mind because a living trust can eliminate much of the stress over how your estate will be handled after you're gone. It provides clear direction on how your assets will be distributed.

A living trust can be a very helpful document in distributing estate assets. However, be sure to consult with an experienced estate planning attorney.

Reference: The Street (October 1, 2018) “What Is a Living Trust and Why Should You Have One?”

Recently Deceased Rapper Reportedly Had Will Similar to Michael Jackson’s

“Mac Miller, a 26-year-old American rapper and music producer who died Sept. 7 in California, had a will, and its contents are similar to those of musical phenom Michael Jackson.”

The fact that the rapper Mac Miller even had a will may surprise some, since he was only 26 when he died. This planning was in sharp contrast to other famous, much older musicians like Aretha Franklin and Prince, who died without wills (intestate). This ties up their sizable fortunes in a complex legal process, says Investment News’ recent article, “Deceased rapper Mac Miller was 26 and had a will — similar to that of Michael Jackson.”

Miller, whose real name was Malcolm McCormick, is said to have had a net worth of $9 million at the time of his death. The cause of his death is still not known, officials say.

What is interesting about Miller is that he was single, young and had no kids. Nevertheless, he still took the time and effort to do this. It’s rarity for anybody, let alone someone who's an artist in the music industry, to have a will like this.

According to his will, the rapper left his entire estate to a trust, and he named himself as trustee of the trust.

Michael Jackson did the same thing in his will, giving his estate to the Michael Jackson Family Trust, of which he was trustee. The use of revocable trusts is a common strategy in estate planning.

A revocable trust takes the proceedings out of probate court, plus they’re private. In contrast, a will is a matter of public record.

It’s critical to be sure that an estate stays out of probate, by funding a trust during one's lifetime.

In Miller's case, that would have meant retitling assets, like a house and investment accounts, so they weren't owned in his name as Malcolm McCormick the individual. Instead, they were named as trustee of the Malcolm McCormick Revocable Trust.

A trust is like buying a new car—it won't run right if you don't put gas in it. “Gassing up” the revocable trust means the creator must retitle his assets during his lifetime to avoid probate.

Miller's will was a "pour-over" will. This is a catch-all in the event Miller failed to retitle an asset, which would then "pour over" into his trust and remain out of probate. That's the only purpose his will serves.

Reference: Investment News (September 21, 2018) “Deceased rapper Mac Miller was 26 and had a will — similar to that of Michael Jackson”

Your Legacy is About More Than Assets

“People often put off creating a will or estate plan because they want to avoid making difficult decisions or having stressful conversations with loved ones. The idea of death, money, and splitting possessions can create conflict. However, it doesn't have to be that way.”

With a few exceptions, most people find planning for their legacy, creating an estate plan and thinking about their own mortality to be unpleasant. In response, they procrastinate, often leaving their families with financial and legal disasters.  However, according to a recent article from The Street, “Planning Your Legacy: More Than Just Finances,” there are four concepts you can use to shift how you think about planning your legacy, and make it a productive and meaningful task.

Values and Life Lessons. Because so much of estate planning focuses on financial aspects, people often forget that some of the most valuable gifts for them to pass on to the next generation are experiences and memories. Your years of life have given you lessons and stories that your children or their children will want to know. To pass this valuable asset along, you can use something as simple as pen and paper or make movies of yourself. Remember that no detail is too small and things you might not think are important, may be instructive and memorable for generations to come.

Instructions and Wishes. An estate planning attorney can work with you to make sure the necessary documents are created to carry out your instructions or wishes. First, do you have the correct insurance in place? Have you named a health care power of attorney? Do you have a living will? Give thought to what you want to happen in the event of a life-threatening event. Do you want extraordinary measures taken to prolong your life? Be as specific as possible, so your wishes will be followed. You don’t want any grey areas or challenges to your desires.

You should also consider what kind of living arrangement you’d like as you age. Would you want to live in an assisted care facility or could a loved one make room for you in their home? The more thought you can give to these topics in advance, the better you can plan for life’s eventualities.

Be sure that your estate planning attorney creates clearly written instructions for your executor and any trustees. If you can bear it, also give instructions for your wishes regarding your funeral, including burial, cremation, services, etc.

Personal Possessions with Emotional Value. The jade ring your father left you may not have any value in the jewelry marketplace, but if you want to pass it along to a certain son, then you’ll want to put that into a letter that specifies who should receive what. Family squabbles often arise over possessions that have more sentimental than market value, so have some conversations with family members in advance to try to avoid any kind of infighting.

Financial Assets and Real Estate. Your estate planning attorney will be able to help you get your assets in order. Inventory any high-value objects, like art, antiques or jewelry and decide what should happen to them. Have them appraised and make sure you have the correct insurance coverage in place. Next, what will happen to your primary residence upon your death? Do you own rental properties or other pieces of real estate that need to be conveyed at your death? If your family has a vacation home, consider whether or not it will be sold, or converted to a corporation with shares held by your adult children.

Finally, do an asset audit and list all of your accounts, including savings, retirement and investments. How do you want these assets to be distributed? Does charitable giving play a role in your estate plan?

For business owners, the creation of a succession plan or plans to sell the business could take years to complete. Start as soon as you can, so you have time to work out all of the kinks.

Planning a personal legacy is a complex business, with significant emotions. However, once you get started, and if you follow these four pillars, you’ll achieve peace of mind for yourself and for your family. That is a terrific legacy to leave behind to those you love.

Resource: The Street (September 19, 2018) “Planning Your Legacy: More Than Just Finances”

Burt Reynolds Set Up a Trust for His Son, Reports Say

“Burt Reynolds' will excludes his only son, Quinton Reynolds, and names his niece Nancy Lee Brown Hess the trustee for his estate.”

According to TMZ, Burt Reynolds' sole child, son Quinton, 30, was left out of his will because Burt created a trust for him several years ago. The money from that trust goes to Quinton Reynolds.

This is usually done to avoid estate taxes, and it appears that all of Reynolds’ assets were put in the trust, according to Wealth Advisor’s recent article entitled “Burt Reynolds' Will Says Niece Will Manage His Estate.”

The actor’s will was described as a "hollow document" because it says all assets not already in the trust will be directed to it.

Reynolds probably didn’t designate his son as the trustee, to avoid a conflict of interest because he’s the beneficiary of the trust.

Reynolds died of a heart attack in September in his Jupiter, Florida home at age 86. His death certificate noted that the actor’s remains were cremated.

The Hollywood star was known for his long list of hit films from the 1970s and early 1980s, including Deliverance, Smokey and the Bandit, The Cannonball Run, Stroker Ace, Best Friends, City Heat, The Best Little Whorehouse in Texas, and Hooper. Burt was nominated for an Oscar for Boogie Nights, which also won him a Golden Globe award.

Reynolds’ will designates his niece, Nancy Lee Brown Hess, as the trustee for his estate.

"My uncle was not just a movie icon; he was a generous, passionate and sensitive man who was dedicated to his family, friends, fans and acting students," she said after Reynolds' death.

Reynolds was cast in Quentin Tarantino's Once Upon A Time in Hollywood, but the star died before he could film his role.

"He has had health issues. However, this was totally unexpected. He was tough. Anyone who breaks their tailbone on a river and finishes the movie is tough. And that’s who he was. My uncle was looking forward to working with Quentin Tarantino [in Once Upon a Time in Hollywood] and the amazing cast that was assembled."

Burt Reynolds was married to Judy Crane from 1963 to 1965 and Loni Anderson from 1988 to 1994. Anderson and Reynolds adopted Quinton.

Reference: Wealth Advisor (September 18, 2018) “Burt Reynolds' Will Says Niece Will Manage His Estate”

Can Beneficiary Designations Create Problems for My Estate Plan?

“How you name beneficiaries can complicate an estate plan.”

A senior with a $2.5 million estate, 85% of which is in brokerage accounts, has designated his two children as beneficiaries with per stirpes on all his accounts. His will does the same thing, so he can avoid the probate process. Does this create any issues?

A recent nj.com article asks “Will my estate plan avoid probate?” According to the article, this current plan could have complications.

Even though our senior has his beneficiary designations lined up on his investment accounts, having a will is critical because we all have assets that don’t pass by beneficiary designation. These are usually personal assets like jewelry, household goods or automobiles. These items will pass by the state laws of intestacy, if there’s no will to instruct how they should pass.

A beneficiary designation, like a "payable on death" account, will supersede the terms of a will as far as that specific account. Naming both (or all) children on all your accounts is preferable to naming one on one account and another on another account, because a senior can spend down the accounts at different times and in different amounts. That could result in unintentionally benefiting the beneficiaries unequally.

With this type of issue, it’s wise to speak to an estate planning attorney about whether to designate beneficiaries on financial accounts or life insurance policies, or instead, have the assets payable to the estate or trusts under the will. Depending on the overall estate plan, naming beneficiaries could disrupt and undermine the estate plan strategy that is designed by your attorney. The reason is trusts established in a will may not be able to be funded, and taxes or administration expenses may not be able to be paid as planned.

Banks often encourage people to name beneficiaries on various accounts because of the FDIC insurance limitations but moving some funds to another bank may be a better idea. Another issue with beneficiary designations is that as banks merge, and the accounts change, or as you move your accounts from one bank to another, the beneficiary designations that you once had set may be inadvertently left off.

Therefore, if our senior is relying on beneficiary designations, after any change in his financial institution, whether a branch change, name change, or institution change, he would be smart to reconfirm the beneficiary designations. This is especially true for insurance policies and retirement accounts, which generally pass by beneficiary designation forms and not by a will.

Talk to an estate planning attorney to be certain your current plan still meets your goal for your assets and heirs.

Reference: nj.com (September 24, 2018) “Will my estate plan avoid probate?”

No Will? Your Family Should Start Worrying Now

“Aretha Franklin’s death on Aug. 16 and the passing of Prince in April 2016 turned up one thing the entertainers shared in common. Both died without a will. According to experts, dying without a will creates mystery.”

That’s not a mystery you want your family and loved ones to experience. What happens when someone dies without a will, is that your children, partner and relatives end up spending a lot of time in court, trying to convince a court-appointed probate administrator of what you may have wanted done with your property and other assets. That’s probably not how you want to be remembered, says The North Bay Business Journal in the article “Don’t have a will? Lack of estate-planning could cost your successors dearly.”

The most common way to avoid confusion, expense and stress is to have an estate plan, including a will, in place. Another tool used in estate planning is called a “pour-over” will. A pour-over will states that assets that have not been placed in the living trust, should go there when you die. By creating a trust that contains all of your assets, you are avoiding the cost and time it takes to go through the probate process.

A living trust is a legal document that places your assets inside a trust for your benefit, while you are still living. When you die, the assets are distributed by your chosen representative, which in this case is a successor trustee, to the beneficiaries you have named.

All states have their own laws about how trusts are treated. However, if you live in California, the court can initiate a probate case when there is no will and there are assets requiring the opening of a probate, particularly concerning real estate owned in the decedent’s name. The court typically appoints a close relative—a spouse, adult child or grandchild, in that order—as an administrator.

That person is responsible for settling your debts, including final state and federal income taxes. Debts are deducted from the assets of the estate, then the administrator distributes the remaining assets to the deceased person’s heirs.

If you are survived by children but have no spouse, then the children inherit everything in equal shares. If you are survived by a spouse only, then assets are handled differently, depending upon whether the assets are community or separate property. Community property is property acquired during the marriage, including income earned during the marriage.

Separate property is property that a spouse owned before marriage or after a separation. It also includes property that a spouse inherits or receives as a gift before, during and after marriage. Assets can change status, if they are commingled, if the spouses have a written agreement, or the spouses improve separate property with community income.

After a decedent passes, the spouse gets all of the community property. When the decedent is survived by a spouse and there are no children, grandchildren, parents, siblings, nieces or nephews, then the spouse also inherits all the separate property.

The probate process starts with the filing of a probate petition in the county in which the decedent lives. The petitioner must also pay a court reporter fee and a fee for publishing the notice of probate with a local newspaper. The court then appoints a probate referee to appraise the estate assets. There is at least one fee for the appraisal, but there can be more fees. The probate process closes with the filing of a petition for the final distribution of the estate assets. This action also has a fee.

The probate court will also charge fees for filing other petitions, the probate notice, compensating the probate referee and if needed, for providing certified copies of court documents. When there is no will, the court requires the administrator to get a probate bond. That protects the beneficiaries and creditors, in case the administrator does not do his or her job correctly.

It sounds like a lot of trouble for a grieving family member, doesn’t it?

It will be far better for your family, if you have a will and an estate plan in place. Make an appointment with an experienced estate planning attorney to review your situation, any existing legal documents and make sure that your estate plan is properly prepared. You’ll need a will, you may need a trust and you’ll want a power of attorney and a medical power of attorney.

Reference: The North Bay Business Journal (September 24, 2018) “Don’t have a will? Lack of estate-planning could cost your successors dearly”