Estate Planning Lawyer in Petaluma

Andrew Kern - Estate Planning Attorney Integrity & Compassion Serving Marin and Sonoma County — **Andrew Kern** - Estate Planning Attorney
Integrity & Compassion
Serving Marin and Sonoma County

Good hard-working Americans spend their entire lives striving to achieve economic, professional, and social success, but everyone understands that we can not take our possessions with us when we pass away. Often, we leave our assets to our children, spouses, or other family members because we want to ensure that our survivors are financially stable when we are gone.

However, the process of dividing a loved one’s assets after they have passed away can be a cumbersome, overwhelming burden on their family members. This process can lead to fighting among family members over assets or last wishes. In fact, in 2017 alone, over 26,000 probate cases reached a disposition in California. These statistics demonstrate why creating a comprehensive will or trust is so important.

What is Estate Planning?

Estate planning involves the preparation of tasks associated with the transfer of property in the event of or in anticipation of a person’s death. This is normally accomplished through legal instruments such as wills or trusts. When this process is completed with an estate planning attorney, the lawyer acts as a legal advisor to their client, which includes not only the creation of a will or trust but also educating their client on the applicable elements of probate law to ensure that the will or trust is legally binding.

How is a Will Written?

Estate planning is a comprehensive, multi-step process. Although it may seem obvious, the first step involves gathering and categorizing an individual’s assets. If certain assets are not included in a will or trust, It is important to understand that those assets will be transferred according to the probate laws in California that deal specifically with the transfer of property in the absence of a will or trust. Due to this, it is important to methodically gather all of the appropriate documentation regarding each asset and create a list of assets for the estate planning process.

The second step in the estate planning process involves determining the individuals who will have an interest in the client’s estate. This process involves not only determining which people will receive a portion of the estate, such as a spouse, children, or other family members, but also allocating individual assets to each heir or determining what percentage of the liquidated estate each person will receive.

What is a Personal Representative?

After the assets and heirs have been determined and compiled in a list, the client will need to make a determination as to who will appointed as their personal representative or if a trust is being created, a trustee. A personal representative is a person tasked with executing an individual’s will.

The personal representative is generally indicated within the contents of the will, and assuming there are no objections to the appointment of the personal representative in probate court, they will be recognized as the “executor” of the estate by the court. When the named executor is not available or unable to execute the will, or when the deceased individual did not have a will, generally a family member will request to be appointed by the court as the “administrator” of the deceased’s estate.

Duties of a personal representative in California

Being appointed as an executor or administrator of an estate is a serious responsibility, and when drafting a will, it is important to understand not just the responsibilities of being a personal representative, but also the potential liability the personal representative carries by agreeing to execute the estate of the deceased.

The executor or administrator of an estate has a number of responsibilities such as settling certain debts with the assets of the estate, gathering assets, and distributing the assets to the deceased’s heirs, once the final account, report, and petition for distribution has been submitted and approved by the appropriate court.

Liabilities of a Personal Representative in California

Besides being tasked with a host of responsibilities, a personal representative has a fiduciary duty to those individuals who have an interest in the estate. If the personal representative breaches their fiduciary duty, they could be liable to repay money, with interest, to the estate for the loss in the estate’s value as a result of the personal representative’s actions. Additionally, a personal representative can be compelled to repay any profit gained as a result of a breach of their fiduciary duty.

Normally, after an individual has passed away, their personal representative will collaborate and seek legal guidance from the deceased’s estate planning lawyer. By involving the deceased’s estate planning attorney, a personal representative can gain an understanding of what is required of them by law, what paperwork needs to be prepared in order to execute the deceased’s will, and what debts need to be paid out of the estate under California law.

What is a Trust?

Trusts hold many uses under law, but in the context of estate planning, a trust at its core is a tool whereby an individual, normally referred to as a settlor, transfers property to another person, normally referred to as a trustee, to hold for the benefit of the settlor or the settlor’s beneficiaries, which could be the settlor’s heirs or other individuals that the settlor has given an interest in the trust.

One benefit of using a trust to distribute assets to a person’s heirs is that, in certain instances, the beneficiaries to a trust do not need to go to probate court. The reason being, in these instances, the settlor does not own any property, because the property is being held in a trust. A trust also allows the settler to control how the money is used by their beneficiaries as well. This attribute of a trust can be appealing if the settlor believe’s their heirs might make poor financial decisions if given a large sum of money.

Types of Trusts

There a different types of trusts that can be used in estate planning. Each trust has certain attributes that could be appealing in different situations. The decision as to which type of trust is appropriate should be made with an experienced estate planning attorney because some trusts cannot be easily modified or terminated after a settlor has passed away. Due to this, the settlor needs to have a through understanding of the pros and cons of each type of trust in order to make an informed decision.

From an estate planning perspective, there are three different types of trusts:

Living Trust
Irrevocable Trust
Testamentary Trust

What is a Living Trust?

A living trust is by far one of the most common and most utilized trusts in estate planning. Normally, the settlor of the trust will designate themselves as the trustee of the trust. Some or all of the settlors property will be placed in the trust, but as the trustee, the individual creating the trust has the ability to access their property without restriction, add property to the trust, and take property out of the trust. Additionally, the settlor will normally designate a successor trustee in addition to beneficiaries to the trust.

If the settlor, who is also acting as the trustee, becomes mentally incapacitated, the successor trustee will then manage the trust for the settlor’s benefit. Should the settlor pass away, the successor trustee will then manage the trust for the benefit of the settlor’s beneficiaries and disburse assets out of the trust according to the last wishes of the settlor.

What is an Irrevocable Trust?

Trusts can take many forms, and often, an estate planning lawyer will explain to a settlor what options are available to them in order to accomplish the settlor’s estate planning goals. In the case of an irrevocable trust, the settlor permanently transfers property to the trust to be managed by the trustee, which can occur for a number of reasons. Some trusts are irrevocable immediately. While others might begin as a revocable or living trust, but after the settlor passes away, the trust could then become irrevocable.

Can an Irrevocable Trust be Modified?

An irrevocable trust can be modified under certain circumstances. For example, Cal.Prob.Code.15403(a) allows the beneficiaries of an irrevocable trust to petition the appropriate probate court to modify or terminate an irrevocable trust. However, all beneficiaries must consent to the modification or termination.

In the instance where one or more beneficiaries will not consent to the modification or termination of an irrevocable trust, a probate court can still be petitioned to modify or terminate the trust pursuant to Cal.Prob.Code.15403(b) or (c). The court, in its discretion, may or may not grant the petition given the specific circumstances of the case. There are other scenarios where the modification or termination of an irrevocable trust could be permitted under law, but these cases can evolve into a complex legal matter that should be considered only with the legal guidance of an estate planning attorney that is familiar with the specific circumstances surrounding the case.

What is a Testamentary Trust?

Trusts and wills are used for the same purpose which is to protect and provide for loved ones after an individual has passed away. The characteristics of each of these tools are different, but their purpose is the same. A testamentary trust combines the characteristics of both wills and trusts by creating a trust within a will that normally takes effect after a person passes away. Normally, this is a more cost effective option than a trust, but it will require the deceased’s heirs go through the probate court process, which most people try to avoid.

Duties of a Trustee in California

Being a trustee is a serious legal responsibility that requires the trustee to have a thorough understanding of what is required of them by law. Due to this, most settlors of a trust either appoint an estate planning attorney as their trustee or make certain provisions that allow the settlor’s trustee to collaborate and seek legal counsel from an estate planning lawyer. Cal.Prob.Code§16000 - 16015 establishes the general responsibilities of a trustee. Some of the most common duties of a trustee are listed below:

A trustee has an obligation to manage a trust according to the provisions of the trust instrument, which is also referred to as a trust agreement.
A trustee must manage a trust solely for the benefit of the beneficiaries to the trust.
When there are more than two beneficiaries to a trust, the trustee must act impartially to each beneficiary while taking into account the interests of each beneficiary as the management of the trust is being executed.

In addition to these responsibilities, a trustee has many other guidelines regarding the management of the trust that the trustee must follow by law. If a beneficiary to a trust suspects that a trustee is not executing their obligations in a legal manner, it is advisable for the beneficiary consult with an estate planning attorney to determine if the trustee has breached their fiduciary duty.

What Debts are Paid Out of an Estate in California?

Regardless of whether an estate is structured in a will or trust, certain debts must be paid out of the estate. Cal.Prob.Code§11420 - 11429 establishes the different classes of debts that must be paid with the assets of an estate and the priority that each debt has. Some debts are paid before others by law. These debts include things such as administration fees, mortgages, funeral expenses, expenses of last illness, and family allowances, to name a few. When a loved one has passed away, their beneficiaries should always consult with an estate planning attorney not only to determine which debts need to be paid out of the estate but also, to gain an understanding of the notification process for creditors.