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What is a Will, and How Does it Differ from a Trust?

When you start thinking about planning for the future, understanding the tools at your disposal is essential. One of the first questions many people ask is, "What is a will, and how is it different from a trust?" The distinction in California is vital because each has unique implications for managing and distributing assets upon death.

A will, sometimes referred to as a last will and testament, is foundational to any comprehensive estate plan. This legal document allows you to dictate how your assets should be divided among your beneficiaries. You can also appoint a guardian for your minor children and designate an executor who will oversee the distribution of your assets according to your wishes. When you have a will in place, you take control of these decisions, preventing the state from making them on your behalf. This is particularly important in California, as the state's intestacy laws, which kick in when someone dies without a will, may not align with your personal wishes.

A Trust Complements a Will

While a will is essential, it is just one piece of the puzzle. A trust is another critical component of a comprehensive estate plan. A trust is a legal entity that holds assets, and you can set up different types of trusts to accomplish different goals. People often use revocable living trusts to allow their assets to pass without the need for probate. In this type of trust, you control your property during your lifetime and when you pass away, your successor trustee distributes the remaining assets to your successor beneficiaries.

To cover any property that is not transferred into a trust, it is a good idea to have a pour-over will that transfers any remaining assets into the trust for distribution. All property transfers are completely privately, unlike the situation where property passes through a will which becomes a public record when it goes through probate.

How a Will and Trust Work Together in California Estate Planning

In California, like in many other states, incorporating both a will and a trust into your estate plan can provide a robust strategy to ensure your assets are managed and distributed according to your wishes. Each document serves a unique purpose. But how exactly do they work together?

  1. Seamless Distribution of Assets: You can establish a plan that allows most or all of your assets to pass directly to beneficiaries through a trust quickly, easily, and privately. Assets that form part of your estate but that have not been transferred into the trust can be folded in with the use of a pour-over will.
  2. Avoiding Probate in California: One of the significant benefits of incorporating a trust into your estate plan is the ability to avoid probate. In California, the probate process can be long and costly and is a matter of public record. Assets placed in a trust, however, can bypass probate, allowing for a more streamlined and private transfer of assets to your beneficiaries.
  3. Flexibility and Control: A trust offers flexibility and control that a will alone does not. For example, you can set up a trust to distribute assets over time, such as when a beneficiary reaches a certain age or meets specific criteria you've established. This level of detail and control ensures that your assets are distributed according to your wishes and in a manner that aligns with your values and goals.
  4. Protection for the Unforeseeable: Also, trusts can provide protection in case of unforeseeable circumstances. For instance, if you become incapacitated, your successor trustee could manage your affairs. If a beneficiary faces financial difficulties or legal issues or is not prepared to manage their own money, assets held in a trust can be shielded from creditors or legal judgments, ensuring that your beneficiaries receive the support you've intended for them.

So, while a will is an essential component of any estate plan, a trust offers additional layers of management, protection, and control over how your assets are distributed. When used together, they create a comprehensive strategy that can handle the complexities of your estate and ensure that your wishes are honored to the letter, while reducing the burden on your loved ones.

Contact Holstrom, Block & Parke, APLC for Comprehensive Estate Planning in California

Estate planning is crucial to protect your assets and ensure they are distributed according to your wishes. At Holstrom, Block & Parke, APLC, we have the knowledge and experience to guide you through the estate planning process and create a plan that meets your unique needs. Call us today at 855-426-9111 or online to schedule a consultation with our experienced attorneys in Southern California.

Aretha Franklin's Estate: Uncertainty Months After Death

NEW YORK, NY - FEB 18, 2012: Aretha Franklin performs in concert at Radio City Music Hall on February 18, 2012, in New York. (Editorial Use Only)

Based upon documentation filed in Michigan’s Oakland County court, the beloved singer-songwriter’s estate is estimated to be worth approximately $80 million dollars. However, despite her wealth and access to counsel, she died with no will, trust or estate plan. In December, the IRS filed a claim in probate court alleging that Ms. Franklin owed several million dollars in back taxes and penalties at the time of her death. These claims must be either satisfied or contested prior to the distribution of the estate, and could add years to an already complicated, expensive process. To add to the disorder, it is being reported that an heir to Ms. Franklin’s estate is attempting to obtain a court order requiring the estate to provide them with monthly financial documents and that another potential heir suffers from special needs.

Ms. Franklin’s lack of a comprehensive estate plan has resulted in the details of her wealth, debts and family relationships being a very public matter. Generally, the rights to song royalties, copyrights and publishing rights and the inherent difficulty in valuing such assets, lead to prolong battles with the IRS and will ensure a long and very public probate process. Additionally, the consequences of a distribution of funds to a special needs beneficiary can have far reaching, unintended effects to such beneficiary.

A properly drafted estate plan could have avoided this very public probate, kept her estate assets and debts private, expedited the distribution of her wealth and provided appropriately for the special needs of one of her children.

Whether you’re a celebrity or not, the best course of action, always, is to prepare for the eventuality of death with an updated, current estate plan, which takes into consideration all aspects of your life and ensures that your estate, big or small, and the distribution of your assets remains a private matter between you and your loved ones.

The Impact on Your Estate if You Die Before a Divorce is Final

The untimely death of chef and actor Anthony Bourdain has brought to national attention the potential ramifications of a person’s death during a divorce proceeding. In the same vein, it has highlighted the importance of understanding what would happen to your estate if you were to die during the pendency of your dissolution without having made any changes to your estate plan.

As occurred with Mr. Bourdain’s untimely death, he had been separated from his wife of 20 years for a year and a half. Though the pending “divorce” was made very public, it is unknown whether any divorce filing actually occurred,

What if does indeed happen if you have not taken steps in expectation of a permanent separation (indeed some are more permanent than others)? The broad answer to this complicated issue depends on whether your passing occurs before or after entry of judgment terminating your marital status. This discussion describes what occurs under California Probate and Family Law. The rules for these scenarios may be different in other states.

Death Before Entry of Judgment Terminating Marital Status

If you should die before entry of a status-only judgment, the Family Law Court would lose jurisdiction over all issues, except those already adjudicated. In California, this is called Abatement, and it happens automatically in this situation. Under these circumstances, your share of the community property and all of your separate property would pass as if the Divorce had never been filed! This is true, regardless of who originally filed, how long the divorce went on, how long the period of separation, or how hostile the parties were to each other during the process. It is also true regardless of cohabitation with a new significant other, regardless of the length of that cohabitation.

Therefore, your assets would pass to the beneficiaries of your current estate plan, which is usually your surviving spouse. If you do not have an estate plan, your estate, if over $150,000.00, would pass through probate, and your spouse would potentially receive all of the community property assets and a share of the separate property. Any non-probate assets, such as retirement assets and life insurance plans, would pass to your designated beneficiaries, again, normally your estranged spouse.

Death After Judgment Terminating Marital Status

If you should die after a status-only judgment (a provision of California law that allows the divorce to occur before, or separate from, the resolution of the other issues) that expressly reserves jurisdiction over the remaining issues in the case, the Family Law Court would retain jurisdiction and the property division would take place there. The personal representative of your estate would be substituted in your place in the divorce for this purpose, and the Family Law Court would be able to decide the outstanding issues in the case. It is worth noting, that the court’s jurisdiction over custody, child support, and spousal support would terminate automatically upon your death in the vast majority of cases.

Death after a status-only judgment also has a very different impact on how your estate would be distributed. A judgment of dissolution automatically terminates non-probate transfers between former spouses, including wills, trusts, and beneficiary rights under retirement plans. It also terminates the right of survivorship interest in joint tenancies and community property with right of survivorship. Unless the respective wills provide otherwise, the judgment also revokes all testamentary transfers between former spouses and any provision in a will nominating the former spouse as trustee, conservator or agent. However, a judgment of dissolution does not terminate the surviving spouse’s rights as a designated beneficiary under the life insurance policy. While the ability to change a beneficiary of a retirement plan or life insurance policy may remain during a divorce, California law prohibits such a change after the filing or service of Divorce papers.

One issue that everyone should consider with an impending divorce is that if you do not sign documents specifically stating otherwise, your estranged spouse will continue to hold the power, upon your incapacity, to make medical decisions on your behalf and, like in the case of Anthony Bourdain, will be the person to make all decisions regarding the disposition of your remains.

While no-one anticipates their death, the best course of action, always, is to prepare for that eventuality with an updated, current estate plan, which takes into consideration all aspects of your life, including an impending divorce. Sometimes doing nothing is indeed a conscious choice; by way of illustration a person with knowledge of a terminal illness also going through a divorce who chooses to maintain or change his/her estate plan. Sometimes it’s simply doing nothing.

Obviously we recommend that you always make that conscious choice knowing all of the consequences of that choice.

Wills And Trusts 101-Part 1 Of 2

WILLS AND TRUSTS 101—Part 1 Of 2

Written by Scott Feig, Esq.

Very often we hear these terms used together—Wills and Trusts. However, they are not the same thing and, in many instances, serve different functions. It’s likely that many of us have seen those infamous scenes on T.V. programs, or movies, where the lawyer reads the Last Will and Testament of the deceased uncle to the surviving members of the family—each member on the edge of his/her seat wondering whether they were left the uncle’s millions. And, as for a trust, it’s likely that many of us think of wealthy adult children receiving money from a trust—often called trust babies. But, both of these images limit really how important it is for the every-day person to have some type of will or trust in place.

It is likely that you may be reading this because you, like so many of us, know that having some type of document directing how our assets are to be given away at death, as well as who will take care of our children at our death, is crucial. And, knowing we have these documents in place helps us sleep better at night. To this end, this week, which is Part 1 of 2, we will start with understanding will basics.

What’s probably the most important issue for many of us is that a well-drafted will tells our survivors who will be the guardian of our children. For example, if a single person with children dies without a will, his/her survivors must file papers with the court to determine who will be the guardian of the surviving children. This can be a long and expensive process and may not necessarily carry out the deceased person’s unwritten wishes. A well-drafted will is analogous to the adage—an ounce of prevention is worth a pound of cure.

Please note that it cannot be stressed enough how important it is to seek guidance from an attorney regarding will formation. In fact, a well-drafted will distributes our property to the survivors we choose—like making sure your ‘69 Camaro goes to your brother, your coin collection goes to your son, and your ‘75 Thurman Munson baseball card goes to your best friend from childhood. However, without a will, it is unlikely that the ‘gifts’ will be made. In fact, in California, if you die without a will, then State law, not you, chooses how all of your property will be given away at your death. For example, if a married person, with no children, but surviving parents, dies without a will, then half of his/her property will go to his surviving wife, and the other half will go to his surviving parents. That’s it. So the car he wanted to give to his brother, and the baseball card collection he wanted to give to his best friend, may never happen.

So, why an attorney? And not a pre-printed form from a stationary store or an online form from a website that advertises wills? Like all areas of law, there are many concerns involving technicalities being carried out correctly so the will is valid when a person dies. An invalid will is the same as dying without a will. And, at times, portions of a will may be invalid without the proper legal guidance. For example, let’s look at a common scenario: A person has a valid will drafted where, among other things, leaves his expensive coin collection to his oldest brother. A few years later, he and his oldest brother have a falling out. So, this person takes a pen and crosses out his oldest brother’s name in his will and writes in his youngest brother’s name—believing that he cancelled the ‘gift’ to his oldest brother and made a ‘gift’ of this coin collection to his youngest brother. Are you ready for this? Neither the oldest brother nor the youngest brother gets the coin collection via the will. The law regarding crossing out on a will is complicated. And, often, when a person takes his/her own pen to a drafted will, problems arise. Thus, attorney guidance regarding will drafting, and even changes to the will, is highly recommended. In case you are curious, the coin collection would be distributed as if the person died without a will. So, if the man is survived by parents only, then the entire coin collection will go to his parents. This is quite a dilemma now for the parents if they have to choose to whom the coin collection should be given.

Please note that the above information was kept in simplest form to help give you a primer of a situation that is important to many people’s piece of mind. As many areas of law, the complexity is understood and handled well by an attorney. Thus, it’s helpful to know that an experienced attorney is a phone call, or email, away to help provide guidance.

About Dayn Holstrom

Dayn Holstrom is a hard working, compassionate problem solver who welcomes the opportunity to serve you in any way he can. His maximum availability to your questions and concerns begins with your free initial consultation. He is well-seasoned in all matters related to family law and a skilled negotiator and litigator.

What to Do If My Father Dies Without a Will?

All too often people put off thinking about or starting to draft a will or a trust with an attorney because they cannot bear thinking about their own mortality.

Writing a will can be one of the greatest gifts you give to your family and/or friends. By doing so, you choose who gets your assets and you can direct the ownership of those assets to the place where it will do the most good. A well-prepared will also help to alleviate stress and family strife.

What happens if you have assets that you want specific people to inherit when you die, but you die without first writing a valid will?

The decision of who inherits your property can either be made by you, or can be decided by the State of California.

In California your property will be distributed according to California’s intestacy laws. If you die leaving a husband or wife, a certain portion of your property will go to them since most probably it is community property and your spouse is entitled to at least half if not all of the community property upon your death.

In addition, your spouse is also entitled to an additional share of your separate property depending on:

  • If you die without any living siblings or parents – receive all of your separate property
  • If you die with at least one sibling and/or parent – receive half of your separate property
  • If you die with more than one living child – receive one-third of your separate property

What about your children? The property that your children receive will depend on how much your spouse received. California law says that your children will receive everything that was not received by your spouse. However, if you die without a spouse, your children receive everything.

Dividing your assets and property after your death can be a complex process, but it doesn’t have to be. Planning for your family ahead of time can avoid these complicated rules and stressful times. You deserve the peace of mind and comfort that an enforceable estate plan can bring.

If you need legal assistance creating a valid will, we invite you to contact the family law offices of Holstrom, Block & Parke to discuss your legal options. The consultation is free, and confidential, speak to one of our attorneys today.

Located in San Bernardino, Riverside and Orange Counties, our law firm focuses on matters relating to estate planning and probate administration.

About Dayn Holstrom

Dayn Holstrom is a hard working, compassionate problem solver who welcomes the opportunity to serve you in any way he can. His maximum availability to your questions and concerns begins with your free initial consultation. He is well-seasoned in all matters related to family law and a skilled negotiator and litigator.

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