California Prepaid Funeral Plans and Estate Planning and Elder Law

Part of California Elder Law planning and California Estate Planning includes planning for funerals.  Medi-Cal exempts prepaid funeral plans.  These can be funded by a cash purchase.

The Federal Trade Commission has published Funeral’s: A Consumer Guide.  It certainly does not hurt to read this.  Among the points it makes is that funeral homes are required to provide a  price list that includes all goods and services the funeral home will provide the buyer.  The buyer is entitled to select whatever he or she wants.

While most people do not like to consider their funeral and burial, it is part of estate planning.  Moreover, it frequently assists in qualifying for Medi-Cal.   Please contact a California Estate Planning attorney for assistance in determining eligibility for these programs.

Living Trusts were popularized as a way to avoid probate fees.  That is true.  A properly funded living trust will avoid probate and therefore the fees associated with probate.  In Los Angeles (or for that matter Culver City, Santa Monica, Westchester, Marina del Rey, etc.), that should not be the sole reason for doing a living trust.

The reality is that most outside people will charge a fee for administering a trust as well.  This may occur when administering a trust for someone who is incapacitated to act – the alternative to having a trust in this situation is a conservatorship.  I will discuss this in another blog.

So what about the fees at death.  Sometimes the trust instrument will provide a specific fee.  Most banks and trust companies charge between 1% and 2% depending on the size of the trust.

Section 15680 of the California Probate Code speaks to the issue as follows:

            (a)        Subject to subdivision (b), if the trust instrument provides for the trustee’s compensation, the trustee is entitled to be compensated in accordance with the trust instrument.

            (b)        Upon proper showing, the court may fix or allow greater or lesser compensation than could be allowed under the terms of the trust in any of the following circumstances:

                        (1)        Where the duties of the trustee are substantially different from those contemplated when the trust was created.

                        (2)        Where the compensation in accordance with the terms of the trust would be inequitable or unreasonably low or high.

                        (3)        In extraordinary circumstances calling for equitable relief.”

In the event that compensation is not specified, Section 15681 of the California Probate Code provides as follows:

            “If the trust instrument does not specify the trustee’s compensation, the trustee is entitled to reasonable compensation under the circumstances.”

Therefore, as we see administering a trust is not free!  However, there are other reasons for having a living trust besides avoiding conservatorships.  These include avoiding probates in multiple states if real estate is owned in more than one state. 

A big reason for creating a trust is creating a plan for the distribution of the entire estate.  Frequently, people have different beneficiaries on different assets which are not coordinated with their will.  Another benefit to having a living trust is avoiding the problems associated with joint tenancy including loss of control and in California, the loss of step-up in basis at the first death.

There are many other reasons to have a living trust; the point of this blog is to explain that there are costs associated with them.

Estate planning is about more than simply preparing documents.  It is about protecting your values and not just your valuables.  It is about working with an attorney that has the ability to counsel you about your estate and offer a variety of solutions.

When this California estate planning attorney meets with people concerning their living trust, I listen to them and over the years have seen the way to do it right and the mistakes that people frequently make.  Few make all of these mistakes, but many make some of these mistakes.

1. Spend more on a home than you should: this is especially in the news right now as frankly many people thought that appreciation would continue forever.  Real estate, like virtually everything else is cyclical.  Remember that and remember that property taxes, homeowners insurance, maintenance and repairs only increase with time.

2. Debts and Retirement: Ideally prior to retirement the vast majority of your debts will be paid off and your mortgage will be easily managed.  In the event that you are thinking about moving and undertaking a new mortgage, see the previous paragraph!!

3. Raiding the Retirement Account:  Often there are large penalties associated with doing so.  Even if there were not, think about the long term consequences.  Obviously that money will not be there when you are going to need it.

4. Think about health costs: The good news is that we are living longer; the bad news is that many of us are going to be incapacitated for a fairly long time.  Many companies are reducing, if not eliminating, health benefits for retirees.  Have a plan in place.  While it is not for everyone, think about long term care insurance. 

Sometimes a California estate planning attorney is a great person to speak with about planning for retirement.  In addition to making sure that your legal documents (living trust, will, power of attorney, advance health care directive, HIPAA authorization), he/she can provide you with a variety of options concerning your future.

In the event you are in Culver City, West Los Angeles, Marina del Rey, Westchester, Santa Monica, Brentwood, Beverly Hills, or nearby areas, please give me a call!

Lawyers prepare California trusts for a variety of reasons.  A Los Angeles trust attorney can work with you to determine what type of estate planning is correct for you.

One benefit of a trust, over will based planning, is that there is privacy.  When a Will is probated, it is made a public record.  Living trusts are private unless someone files a lawsuit.

California trusts can be designed to protect the inheritance of children from creditors, predators, divorce, and themselves.  Thus, we can protect a child from his/her own bad decisions!

When there are younger children or beneficiaries, trusts can protect their inheritance until they obtain an appropriate age.  This is especially true if the child is under age 18, but frequently parents do not want their children to receive their entire inheritance until they are age 30 or above.

Irrevocable Trusts can also be created for charitable purposes; tax planning; and asset protection.

If you think you may benefit from a California trust, and you are in Southern California, please contact our office.

Uncle Sam taxes those with an estate above two million dollars at their death.  In a sense, this is double (if not triple) taxation, as people are taxed annually on their income.

It is double taxation because the estate tax is taxing monies that have already been taxed once before.  As with most anything else in life, there are ways to avoid or reduce the tax.  However, it does take some planning.  That is where a California estate planning attorney can be of assistance.  Depending on your age, size of your estate, your goals and desires, we can show you a variety of ways in which your estate can be “reduced” so that ultimately more is distributed to those whom who you wish to have it and less to Uncle Sam.

If you think you may benefit from estate planning, and you are in Southern California, please contact our office.

Recently a lot was made of the fact that Barron Hilton of Hilton Hotels announced that he was donating 97 percent of his estimated $2.3 billion fortune to charity.  The Conrad N. Hilton Foundation made the announcement indicating that it was to be the recipient of the monies.

Many articles took the position that Paris was losing out.  Some articles indicated that Barron Hilton is not all that happy with his granddaughter.  The implication being that she lost out on an inheritance due to her behavior.

It is likely that Mr. Hilton’s estate planning had nothing to do with his granddaughter and more than a fair amount to do with estate taxes.  By giving his money to a Foundation that his son Steve is president and chief executive of, he allows the family to control the money for a long time, avoids estate taxes and in the case of his grandchildren, avoids the generation skipping tax in addition to the estate tax.

While living trusts are a great estate planning tool, there are some misconceptions concerning California living trusts held by some people.  The following attempts to set the record straight.

Income Taxes: living trusts have no effect on the income taxes of the trust makers – the people creating the living trust.  Anyone who thinks otherwise is incorrect.

Medi-Cal Qualification:  A lot of people used to think that having a living trust would make it easier to qualify for Medi-Cal.  Not true.  In California it is of no benefit.

Protection from Lawsuits: A revocable living trust in California will not provide any protection from a lawsuit because the trust maker has complete control of the assets in the revocable living trust.  On the other hand, an irrevocable trust might!  The reason for that is that under an irrevocable trust the person who has set it up, has given up control of the asset.

Refinancing: In California, when people refinance their house, they are often required to sign a deed taking the home out of the trust.  This is fairly easy to do and usually the mortgage broker or lender will cause the paperwork to be prepared.  The problem comes after the refinancing is complete and the lender has failed to create a deed transferring the home back to the trust.  Now it is outside the trust and quite possibly is subject to probate.

Amending the Trust: People often want to change their trust.  This is fine as long as it is done properly.  Many people attempt to self-amend the document.  This can ultimately lead to problems as there may be a dispute as to what the amendment is attempting to accomplish and/or whether it was properly executed.  In California, it is best to go to an attorney and have the attorney prepare the amendment.

Most problems concerning living trusts are not really problems.  It is always best to speak with a qualified living trust attorney and if you live in the Los Angeles area it is very easy to find such an attorney.

The frequency of review of estate planning is like going to the doctor for a check-up or to the dentist for a tooth cleaning.  It needs to be done on a repetitive basis.  This is true because circumstances in life can change and certainly the law can change.  Even if you do not think that much has changed in your life, an estate planning attorney can frequently point out some options that you might have missed.  What follows is a list of life changing events or activities, in no particular order, that should cause you to consult a Los Angeles estate planning attorney: a. marriage or divorce; b. birth or adoption of a child; c. significant change in size of estate; d. serious illness in the family; e. marriage or divorce of an heir or beneficiary; f. change in career including retirement; g. death of your spouse; h. purchasing real estate in another state; i. moving to another state; j. maturity (or irresponsibility) of a child; and k. more than a couple of years since the review of your plan with an estate planning attorney.

The message is that California estate plans should be reviewed regularly.  Otherwise, there is a risk of unintended consequences and probate litigation.  To have your estate plan reviewed, please contact a Los Angeles Estate Planning Attorney.

What is the authority for a Pet Trust in California?  Would you believe the California probate code?  Section 15212 of the California Probate Code provides as follows:

“A trust for the care of a designated domestic or pet animal may be performed by the trustee for the life of the animal, whether or not there is a beneficiary who can seek enforcement or termination of the trust and whether or not the terms of the trust contemplate a longer duration.”

Thus, in California you may create a trust, whether within your will or your living trust, for the care of your pet for the remainder of its lifetime.  The length of time of the trust will only be for the lifetime of the pet – no longer.

Pet trusts are becoming more and more popular as evidenced by there being written about in many major newspapers.  Plus, everyone has heard or read about Leona Helmsley’s provisions for her dog.

There are two major types of pet trusts in California – testamentary trusts and inter vivos trusts.  A testamentary trust provides care after you die; while an inter vivos trust provides care for your pet while you are living but are unable to provide the care for yourself.

Under either type of trust, you provide a caretaker to care for your pet.  You may also provide a separate trustee to ensure that the caretaker is undertaking his/her job with the necessary skill and passion.

What are the issues with pet trusts?  More than any other is that of relatives who believe you have left too much for your pet.  While you can never stop someone from being upset, working with an experienced California estate planning attorney/lawyer will make it very difficult for an heir to successfully challenge your bequest to your pet.  In the event that you are located near Los Angeles, please contact a Los Angeles trust and wills attorney to assist you.

In California, especially in Los Angeles, as practically everywhere else in the country, people are very concerned for their pets welfare. I am frequently drafting provisions for the care of pets after the death of their human caretaker.

Frequently the most difficult step is finding a caretaker. Obviously, you want someone who is able and who would happily undertake the responsibility of caring for your pet(s). Friends and relatives may like your pets, but that does not necessarily mean that they are ready to be their fulltime caretakers.

In the event that you do not have someone that would be suitable, there are organizations throughout Los Angeles that will undertake the responsibility. More than likely there will be a fee involved and you should investigate what it will cost to provide for your pet for the remainder of its life.

As with humans, you will want to provide your pet’s caretaker with complete information. For example are there registration papers? Can you provide a description of your pet? Markings? DNA identification? What about its medical history? Medical conditions? Diet? Exercise? Does your pet get along with certain types of people? Does your pet dislike certain types of people or animals?

Adding provisions for your pet’s care after you are gone is not that difficult for an experienced estate planning attorney/lawyer especially one that prepares a fair amount of living trusts. For more information on California pet trusts, contact a Los Angeles estate planning attorney and/or a lawyer who prepares many living trusts and wills.