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How To Avoid Common Estate Planning Mistakes

estate planning

Estate plans are not merely for the super-wealthy. Most of us have assets worth something we want to pass on to our loved ones. However, it is estimated by AARP that only 34% of Americans have made an estate plan. Also, if you make some of the mistakes listed in this article, you may pass on less of your assets and funds than you wish. If you need help with next steps, our Encino estate planning attorneys at Ourfalian & Ourfalian can help.

What Should Be In Your Estate Plan?

A comprehensive estate plan is a toolkit that settles your financial and legal affairs, giving you peace of mind that your assets will be handled and distributed as you intended. If you leave any of the following tools out, there could be a negative impact on you and your loved ones:

  • Will: You detail what will happen to your property and who will raise the children when you pass away.
  • Healthcare power of attorney: You appoint a person to make decisions about healthcare if you are incapacitated.
  • Financial power of attorney: You name someone to make your financial decisions if you cannot.

Not Making An Estate Plan

Unfortunately, one of the most serious and common mistakes in this legal area is not doing an estate plan. Whether or not you have done estate planning, your loved ones will have to deal with your final affairs when you pass on. Regardless of the circumstances, your loved ones will be confronted by grief, and if there has been no estate planning, it is one more challenge they will be faced with.

It is always best to have a valid trust or will when you pass away. That way, those who love you know what your wishes were, and there is a clear path to move forward with handling your assets. It is best for your family if you have a will so it is clear who gets what and they know what you wanted to be done when you are gone.

Failing To Name Contingent Beneficiaries

A contingent beneficiary is a person who will receive the asset in the will if the primary beneficiary passes away. It is wise to name contingent beneficiaries for every asset in the will; if the primary one passes away, there will be no question of who gets it. Without contingent beneficiaries, there will likely be a will contest in probate court, which is usually a negative for your family and estate value.

Selecting The Wrong Person To Handle The Estate

An essential part of estate planning is choosing an executor. While your spouse might seem like the logical choice, they could be overwhelmed with grief and unable to think clearly about essential probate decisions. If they do not have the best grasp of finances, taxes, and investments, it may be better to choose someone else.

Also, situations arise where a child or spouse is not the ideal choice for executor because they disagree with the decisions you made for beneficiaries and other key matters. If you lack a good choice in the family to be your executor, you should talk to your estate planning attorney for ideas.

Making A Will That Specifies Investments

If the estate plan names investments that you want to leave to beneficiaries, it is essential to check that you still own them. If you do not, the estate could have to buy them at a higher current price, which would lower what your beneficiaries receive. This could drain most of your estate’s assets in the worst situation.

Not Doing Pre-Planning For Long-Term Care

It is wise for many people to have pre-planning for long-term care in their estate plan. Many people who require care in a nursing home will use Medicare. However, this is usually only possible if they exhaust their personal assets first. If you have a spouse behind on a fixed income, this can be a severe financial hardship.

When you include long-term care in the estate plan, you have a better financial path over the coming years. One way to do this is with a special needs trust, which allows for protecting a partner or spouse at home while making sure the one who needs Medicare funds can get them.

Not Making Gifts To Lower Estate Taxes

Another common estate planning gaffe is not to use early gifting to reduce the possible impact of estate taxes. For 2023, the IRS allows gifts of up to $17,000 per year per person to be exempt from estate taxes. For larger estates, taking advantage of early gifts can be key to avoiding estate taxes.

Not Updating Your Estate Plan

No matter how good the estate plan is, it must be updated occasionally. This is because family situations change, beneficiaries die, people get married and divorced, etc. Also, if your will is decades old and has not been updated, it could be out of compliance with current laws. Have your attorney review your estate plan every one or two years to be safe.

Not Telling Loved Ones About Your Plans And Wishes

It always helps to have a frank discussion with your loved ones about your estate plan. That way, they know what to expect when you pass on. One of the common reasons there is a contested will is there is an unpleasant surprise for one or more beneficiaries when the person passes away.

If a beneficiary thinks they were not treated appropriately regarding inheritance, it could cause problems. While beneficiaries must have valid, specific reasons to challenge a will, an unhappy beneficiary can at the very least cause family discord. So, that is a problem that is best avoided by communicating your intentions with your family ahead of time.

Contact Our Encino Estate Planning Attorneys

If you want to create an estate plan that ensures your assets are protected and inherited according to your wishes, you need the help of a skilled attorney. Contact our Encino estate planning attorneys at Ourfalian & Ourfalian are ready to assist at (818) 550-7777.

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How to Properly Fund a Living Trust

living trust

In addition to a will, many people opt for living trusts as part of their estate plans. Revocable living trusts can end up saving time and money by avoiding probate, and they give the grantor a high level of control over assets during their lifetime.

For 99% of people, a living trust is more useful than an irrevocable trust, which does have certain tax and creditor protection. Unlike an irrevocable trust, a living trust allows the grantor to retain control over all of the assets within the living trust during their lifetime. As such, the grantor can put in and pull out assets as they like. But a living trust does not have much use to anyone if it is not properly funded.

For residents of Glendale, California that have questions about estate planning tools like living trusts, the Glendale living trust lawyers at Ourfalian & Ourfalian can help.

What Does Funding a Trust Mean?

Executing the trust documents does not end the estate planning process. You have to physically transfer the title of your assets into the name of the trust; otherwise, any assets that are left out of the trust, i.e., are not properly transferred into the name of the trust, will wind up going through probate.

To fund a trust, you simply change the title from your name to that of the trust you wish to fund. While this is simple, in theory, it can quickly become complicated, especially if you are married. For married couples, funding a trust means changing the title of any jointly owned assets—marital assets, which include all assets acquired during the course of a marriage—to either a joint trust or each spouse’s individual trust.

Determining how to split these assets can be complex, and will likely require the assistance of an experienced estate planning attorney. However, as the California Department of Justice warns, beware of unscrupulous individuals working for living trust mills in California that sell invalid and unnecessary living trusts to unsuspecting victims. Only trusted estate planning attorneys are qualified for this type of work.

What Types of Assets Can I Use to Fund My Living Trust?

Many types of assets require a new title (proof of ownership) document before they can be used to fund a living trust. To do this, you need to change the title of said assets from your name to the name of the trust. Examples of assets that require this title transfer include real estate, stocks, and bank accounts. Some assets, such as personal belongings or heirlooms, do not require title documents. Below is a list of all types of assets that can be used to fund a living trust:

  • Checking accounts
  • Savings accounts
  • Money market accounts
  • CDs
  • Real property
  • Non-retirement investment accounts including brokerage and mutual funds
  • Bonds and stock certificates
  • Shareholder stock
  • Business interests
  • Non-liquefied annuities
  • Notes payable to you
  • Safety deposit boxes
  • Personal property and family heirlooms

Are There Assets I Should Not Use to Fund the Trust?

Some assets should not be transferred to a living trust. For example, retirement accounts and 401(k) Plans should not name the trust as the primary beneficiary. Since the trust is not a natural person, the trust would have to take a mandatory distribution of the entire retirement account and pay income taxes currently. Your children or other persons who you have designated as beneficiaries of such retirement accounts would have rollover rights deferring the payment of income taxes. As such, unless the designated beneficiaries of such accounts are not seen as being in a position to manage a retirement account, such retirement accounts should be distributed directly to these beneficiaries, rather than your trust. There are other ways to pass down these assets, however, which an attorney can help you with.

  • 401(k) accounts
  • 403(b) accounts
  • IRAs
  • Certain qualified annuities
  • Certain other retirement accounts
  • Health savings accounts
  • Interests in professional corporations
  • Incentive stock options
  • Active bank accounts
  • Vehicles

How Can I Use Real Property to Fund My Living Trust?

Real estate is usually the most valuable asset an individual or married couple owns. The current median home sale is $1.2 million in Glendale, according to the online real estate marketplace Realtor. As such, many believe it would make sense to fund your living trust with your most valuable asset.

In order to accomplish this, the real property must be re-titled, including executing a trust transfer deed, which must be notarized, and then sending off the deed to be recorded by the county. While you may be able to handle some of the more straightforward types of bank account and investment transfers necessary to fund your living trust, real property is not so simple. This is one of the reasons you should consider working with an attorney to create and fund a revocable living trust.

What if I Forget to Transfer Assets To My Living Trust?

Your trust package is normally accompanied by a document called “pour-over will” that causes any forgotten assets to pour over or be transferred to your trust at your death. While this does not avoid the probate process, it at least ensures that such “forgotten” assets are passed down in accordance with beneficiary designations and instructions contained in your trust agreement, in accordance with your wishes.

While the funding process may not be difficult, many people delay such funding process; this is why it is recommended to consult with experienced living trust attorneys to help you with the process. In the future, as you acquire more properties, just remember to title those properties in the name of your trust!

Benefits of Creating a Living Trust

  • Greater Privacy—Assets distributed to beneficiaries through a will must pass through probate, the official proving of a will. A will is a public document once it goes through probate. As such, information about accounts, assets, and beneficiaries will also become public knowledge. When it comes to a living trust, “who gets what and how much” is a private matter. There will be no public record surrounding your assets or accounts.
  • Flexibility and Retraining Control Over Assets—An alternative to a revocable living trust is an irrevocable trust. There are some pros to revocable trusts for certain individuals, but a living trust allows much greater flexibility. Health issues, financial constraints, and other unforeseen circumstances may arise after you create and fund a living trust. Because you retain control over the assets within the trust until you pass away, having access to those assets may be of significant importance to you.
  • Avoiding Probate—Probate often takes half a year or longer to be completed and for beneficiaries to have access to their inheritances. A living trust can expedite the bequeathal timeline, as well as save money, in many circumstances, by avoiding the costly probate process.

Call a Glendale Living Trust Estate Planning Attorney Today

Many aspects of estate planning can be carried out on your own. Others, such as funding a living trust, should be handled by a qualified and trusted Glendale estate planning attorney. There is no reason to procrastinate when it comes to estate planning. The sooner you begin, the better off you and your loved ones will be in the long run. We urge you to call a Glendale estate planning attorney at Ourfalian & Ourfalian today. Call us at (818) 550–7777 to schedule a free consultation.

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How To Avoid Contested Estates In California

Contested Estates

A contested estate can be an extremely troubling experience. From the frustration that comes along with it to the costs of having it untangled, a contested estate can be a major pain in the butt for anyone. Fortunately, avoiding this hassle is possible and can be done while taking a few key steps. It is critical to take these steps correctly to avoid issues down the road.

When planning your estate, therefore, be sure to take your time and ensure that every T is crossed and every I is dotted. The vast majority of people today will require the assistance of a seasoned estate professional to make sure the estate is up to par and does not have any holes that may later be exploited.

An estate planning attorney, licensed in your state of residence, is the best person to seek advice from. Your attorney will be your legal advocate and be able to give you the best guidance on how to set up your final documents in a way that minimizes the chances of a contested estate.

If you would like assistance with your estate plan in California, the talented Glendale estate planning attorneys at Ourfalian & Ourfalian can help.

Steps To Take To Avoid A Contested Estate

The steps to take to avoid contesting an estate can vary depending on whether you are the one leaving the estate or inheriting it. The greatest ease with which to prevent any contesting of an estate is to craft it carefully, ensuring all steps are followed correctly and your wishes are looked over by an experienced attorney. A properly constructed, legal California estate plan done correctly will leave very little, if any, room for someone to congest your final wishes.

Below are five simple steps you can take right now that can help make your will bulletproof:

  1. Include a no-contest clause
  2. Properly execute
  3. Obtain proof of the mental capacity
  4. Include a self-proving clause
  5. Discuss your wishes with your family

These steps may be fairly simple, but it is critical they are followed to the letter.

No-Contest Clause

A no-contest clause, for example, can only be enforced under very specific and limited circumstances in California. This clause prohibits someone who contests a will from inheriting from it as well. Courts have found that in many cases if the person had probable cause to contest the will, he or she will not be disinherited if they lose the contest. Bottom line is to make sure it is done correctly by a licensed attorney at Ourfalian & Ourfalian.

Proper Execution Of Will

The proper execution of a will is paramount to it being uncontestable and upheld. Although the state of California may recognize a handwritten will signed with no witnesses, it is always better to have your will signed by two witnesses who are not beneficiaries. Crossing the T’s and dotting the I’s can make all of the difference when it comes to an estate so make sure it is done properly.

Proof Of Mental Capacity

Obtaining proof of mental capacity can eliminate claims of you not being in your “right mind.” To do this, you can simply obtain written statements by two physicians stating that you have been examined and have the mental capacity to execute legal documents. Although this may not prevent someone from deciding to contest your will, it will make winning their case that much more difficult.

Obtaining a self-proving clause can also prevent unwanted estate contests. This involves having the witness or witnesses provide a statement swearing to the fact that they believe you were under no undue influence when signing the will and that you had the appropriate mental capacity and intent to create it. Just as with mental capacity, this may not prevent someone from contesting the will but will definitely make it much harder for them to succeed.

Talk To Family Members About Your Estate Plan

Talking your estate over with your family members can help avoid someone contesting the will later on. In fact, many contested wills are the direct result of a family member not receiving something. If you make your final wishes clear to them beforehand, the odds of someone contesting the will may fall dramatically.

For example, if you make it clear to your family that you do not much care for Uncle Ralph, it should come as no surprise if you elect not to leave something to him upon your passing. If Uncle Ralph were to contest your estate or consider doing so, the family could act as key witnesses having heard your disdain for him.

Avoiding the contesting of your estate may not always be possible but is oftentimes a very reasonable expectation. Taking a little time when planning can go a very long way towards the prevention of issues when the time comes. That, along with some attention to detail, can help your estate steer clear of being contested or otherwise argued upon your passing. The idea of yourself passing on or becoming incapacitated is difficult enough to ponder.

The last thing you’d want your heirs to deal with should it happen is someone contesting your final wishes. Take the time and spend the necessary energy now to make your estate and final wishes hassle-free for you and your heirs. You’ll be glad you did so! Getting the necessary advice and counsel has never been easier and can be started by simply picking up the phone. Start today and make your estate go to the people you like when the time comes.

Speak to an Experienced Glendale Estate Planning Attorney Today

When it comes to reducing the chances of a contested estate, taking certain, specific steps can make a lot of difference. Hiring an experienced and seasoned California estate planning attorney licensed in the State of California can potentially make your estate bulletproof. Do not sell yourself short or look to save money now by exposing your estate to hassles later on. Do it right the first time. Contact Ourfalian & Ourfalian today by calling (818) 550-7777 to schedule a free consultation.