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Estate Planning

Estate Planning for Minors

March 7, 2016 by Verleana D. Green Leave a Comment

Estate Planning for Minors is more important than some think.  When clients are preparing their estate plans, many have children below the age of 18, and desire to have their children take most, if not all, of their assets upon their transition.  Children are often left as the beneficiaries of life insurance policies, retirement accounts and even as real property joint tenants.  In this article I will share why leaving your children as beneficiaries of your insurance, retirement accounts and as joint tenants on real property is not the best option, and why executing a Trust and other estate plan documents may provide your child with the best planning for their future.  

An individual under the age of 18 years old is considered to not have sufficient “capacity” to accept transfers of assets.  If a parent dies and leaves his or her assets, including, but not limited to, life insurance policies, retirement accounts and real property to their child who is a minor, the child would need a guardianship of the estate established on their behalf. A guardianship of the estate requires a petition to the court, an initial hearing and further hearings, depending on the case. Notice is given to the child’s brothers and sisters, paternal and maternal grandparents and any living parent. A filing fee to file a guardianship petition is required, and most of the time, individuals hire attorney.  Thus, the process can get expensive.  Even if the child has a living parent, that parent is still required to establish a guardianship of the estate to receive any assets left to their child by the deceased parent.  There are two basic problems with a guardianship of the estate. First, the funds are generally ordered for placement in a blocked bank account, and none of the funds can be spent for any purpose without filing a petition to the court to allow some of the money to be released. Second, the funds are distributed to the minor when the minor turns 18. A better way to leave assets to your child is through a Uniform Transfer to Minors Act transfer, and a better way is through the vehicle of a trust.

The most simple method of making gifts to minors is the California Uniform Transfers to Minors Act (CUTMA).  Under CUTMA, a Custodian is named (typically in a Will) to hold, invest, and spend assets for the minor child when the parent transitions. The Custodianship may last until the minor reaches age 21 if the parent specifies, and if no age is specified, the minor becomes the outright owner of the gift when the minor reaches age 18. The drawback to such an account is that the minor automatically receives the assets left in the CUTMA account at 18 or 21, and is free to do what they like with the asset!  This could mean spending money on a new car, vs. college tuition, selling home, vs. retaining the home as an asset, and even traveling the world and coming back home flat broke!   A better method is to establish a formal Trust for minors.

A Trust allows assets to be held for the child, even after he has reached age 21. A Trustee is appointed to spend, invest and hold assets for the child until the parent deems the child is ready to manage the assets, which may be never!  This protects against the child foolishly spending money without the consent of the Trustee. Typically, the Trustee uses the Trust assets for the health, education, and support of the child. When the child reaches whatever age is specified in the Trust document, the child gets the assets without any further supervision.  In some trusts, the child can get lump sum payments when they reach certain ages.  In other trusts, the Trustee manages the Trust until the Trust assets are fully exhausted.  A parent has broad authority and creativity to distribute assets to their child as they see fit through a Trust.  That is the beauty of it.  If you have a child with a drug or alcohol addiction, the Trustee can distribute funds to make sure that the child’s basic needs are met without providing a lump sum of funds that could further contribute to the addiction.   A child who is a “spendthrift” would also be protected from over spending and shield creditors from reaching those funds.  Trusts establish a way of transferring assets to your child upon your transition without the need of a court petition, and without the worry that your child may not spend your hard earned assets frivolously.  

Establishing a Trust and guidelines for your minor children to receive your assets upon your transition should be considered a high priority.  Their future depends on it!  

***The information in this article is provided for informational purposes only and does not constitute legal advice. Transmission of this information or the receipt of this information does not constitute an attorney-client relationship between the sender and receiver of this newsletter. You should not act or rely on any information contained in this newsletter without first seeking the advice of an attorney.This article is the sole property of the Law Offices of Verleana D. Green. Please do not use without our permission. Thank you!

Filed Under: Estate Planning, Trusts

Elder Law 101 for Attorneys

May 8, 2014 by Verleana D. Green Leave a Comment

Elder law attorneys provide advise and advocate for elders, their families and caregivers. Elder law attorneys have special knowledge in the practice areas and related disciplines of Estate Planning ( including special needs planning) , benefits Eligibility (including Medi-Cal eligibility), Elder Abuse (under the Elder Abuse and Dependent Adult Civil Protection Act),  Conservatorship practice, Trust Administration, Family Law and Civil and Criminal Law relating to Elder Abuse. Elder law attorneys have specialized knowledge in Community and service based needs, Long Term Care Planning, Reverse Mortgage options and financing for elders the future, and also are a referral source for geriatric care and social services.  Elder law attorneys can provide Estate Planning services, but Elder Law attorneys provide more comprehensive services as relating to Elder Care and resources than Estate Planning attorneys do.

 

Some of the common ethical problems elder law attorneys face are issues related to Conflicts of Interests in representing the elder client, Duties of loyalty and Confidentiality and capacity issues relating to the elder client.

 

Conflicts of interest issues may arise when an elder law attorney represents the elder client and their family members.   An example of this is when the elder law attorney provides estate planning services for the elder client, and the elder client then requires a Conservatorship. The family typically wants to retain the elders attorney for representation as conservator ( State Bar of California Standing Committee on Professional Responsibility and Conduct Formal Opinion No. 1989-112). Under Cal. Rules of Prof.  Responsibility 3-3-310, an attorney is required to disclose actual or potential conflicts in representation, and required to obtain informed written consent of the Client and family members and a waiver for all parties, including the elder and family members. The attorney in the above example should obtain written informed consent from all parties. 

 

Although there is no codified duty, an attorney has a duty of undivided loyalty to the [elder client] which is fiduciary ( People Ex rel Dept. of Corps. v. SpeeDee Oil Changes Sys. (1999) 20. Cal. 4th 1335. In some instances, family members believe that the attorney representing the elder is representing the entire family. To avoid this, good practice would be to advise participating family members in writing they are not being represented by the attorney. 

 

An attorney has a duty to maintain Client confidences and secrets of clients(Business and Professional Code section 6068(e)).   This also covers non verbal communication. Elder Law attorneys may face this issue when there is a family member who is taking the elder client to the meeting or present in the meeting. Good practice is to meet with the elder client independently of family members, even if that family member was the attorneys first point of contact with the attorney. This duty to protect client confidences may come up in the estate planning context. It is good practice for an attorney to consult with the elder client independently of their participating family members, who may inform or even transcribe for the attorney what the elder wants. Best practice is for the attorney to verify any changes with the elder directly and in confidence- that the elder wants to execute or change their estate plan. An elder law attorneys duty of confidence also comes up when the Elder law attorneys observes issues relating to the capacity of the elder client based on their demeanor and actions. 

 

Clients with potential limited capacity pose several ethical concerns for elder law attorneys. If the elderly client is losing capacity, the attorney must determine if the Client is capable of engaging the attorney (attorney-client agreement). In addition, the attorney must determine if the elder is capable of making estate plan decisions, if there are any signs of elder abuse, and how to properly maintain the duty of confidence with the elder client if a fiduciary is involved.

 

Representing seniors requires significant skill and care.  Practitioners should always have a team of professionals available to serve the needs of one of our most vulnerable classes of persons, and make sure to keep up on the changes in laws impacting the Elderly.

 By Verleana D. Green, Esq.- Owner, Law Offices of Verleana D. Green

Filed Under: Estate Planning

5 Tips on Making a Will

March 31, 2014 by Verleana D. Green Leave a Comment

  1. Determine if You Need A Will.  Most individuals and families will need some form of estate planning in place in the event of their demise. A Will is an estate planning tool that requires court supervision to administer your estate upon your demise in most circumstances – meaning your heirs or beneficiaries will usually have to initiate court proceedings to collect assets left in your Will.  ALWAYS speak with an attorney before executing a Will, or any estate planning documents, to determine the best estate plan for you and your family.
  2. Have Capacity!  In most states, an individual must be 18 years or older and have capacity to make a Will.  Capacity typically requires that the person executing a Will has the ability to identify the assets in their estate, identify their heirs, or the persons they are leaving their property to and understand they are disposing of their property upon their demise by creating a Will.
  3. Select An Executor You Trust.  An executor is the individual responsible for administering your estate, and has access to all of your assets upon your passing.  It is important to choose an executor you trust to handle your assets in a professional manner, as they will be held accountable to beneficiaries and the court for the actions they take in administering your estate.
  4. Have 2 Witness Present When Signing Your Will.  It is best practice to have 2 witness present when signing a Will, although this is not always required.  The witnesses should be disinterested, meaning not a beneficiary of the Will.  Witnesses should sign the the presence of the testator, or person executing the Will, under penalty of perjury of the laws of the state that the Will is being signed.
  5. Sign the Will.  Remember to sign your Will and date it!  Will contests are a frequent occurrence in courts of all states,  even if there are no contest clauses included in the Will!  Signing a Will in the presence of two (2) disinterested witnesses provides validity to the Will if later contested.

By Verleana D. Green, Esq.- Owner, Law Offices of Verleana D. Green

Filed Under: Estate Planning

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