Some would assert that the pandemic and shifting landscape around wealth transfers is fueling increased trust and estate disputes.  This article will summarize a podcast with an interview of the Honorable Glen Reiser, a judge who serves as educational trainer for all trust and probate judges throughout California.  He spent more than 20 years with the Superior Court in Ventura County, California, and before that, more than two decades as a civil litigator.  The full transcript of the podcast can be found here:  https://www.jdsupra.com/legalnews/podcast-jams-neutrals-on-the-evolution-5378200/

Contested cases have risen dramatically over the last five years, and particularly recently due to COVID. 

• With Covid, we are seeing a high number of unexpected deaths.

• There is an increase in the will disputes, with issues relating to blended families and sibling rivalry.

• More people are dying without a will due to the unexpected nature of Covid.

• In the “old days” more wealth was earned individually, but now we are seeing that more frequently, wealth is transferred through family deaths and trust and estate matters, so that seems to be where large amounts of capital are exchanged.  Contests in that area have risen dramatically.

The Court system is increasingly encouraging mediation over trial.

• With Covid, we are seeing a high number of unexpected deaths.

• There is an increase in the will disputes, with issues relating to blended families and sibling rivalry.

• More people are dying without a will due to the unexpected nature of Covid.

• In the “old days” more wealth was earned individually, but now we are seeing that more frequently, wealth is transferred through family deaths and trust and estate matters, so that seems to be where large amounts of capital are exchanged.  Contests in that area have risen dramatically.

 

•  Mediation has advantages the court cannot offer.

Mediation can save time and money.

• Attorneys can work with the mediator and other parties to craft often creative solutions.

 

• Mediation can allow for more customized solutions, since they can be tailored specifically to the parties.

Capacity tends to be a significant issue and cases require a lot of court resources. 

• Will and trust contests tend to be judge decided not jury
• The burden on judges for these types of cases is large because the cases require trial and long opinions, so judges generally would like to encourage settlement
• The testamentary instrument is either a trust or a will. That document in most cases, not always, was drafted by an estate planner or a lawyer who dabbles in estate planning.  Thorough preparation would be to interview the estate planner to see what their recollection is, even if it relates to issues such as capacity, undue influence, document interpretation or intent.
• With capacity cases, a geriatric psychiatrist or PhD psychologist with expertise in geriatrics should be consulted.

 

The role of undue influence in estate disputes. 

• In our mobile society, many family members move away, but someone stays to help take care of the elderly person.  So, when the elderly person changes their instrument to benefit the person taking care of them, then that’s a common circumstance where undue influence will be alleged.

• Undue influence is a particularly fact specific factor, and questions that should be asked are:  Is the person isolated?  Are they competent to write emails?  Who is taking them to the lawyer’s office?  Whose lawyer is it?  Who is sitting in on meetings with an estate planner?  These issues and more are the type of fact-specific inquiry needed on these cases.

 

 Tips for successful mediation of estate disputes.

• Preparation is key.

• Consider spending money on the science up front.  There is a lot of development in the science of cognitive deficits with scientific evidence that can be relevant to undue influence and capacity, and it may be that spending money on the science up front will make the negotiating position stronger.

• Find a mediator who will read everything, understand the positions and get involved.

• Avoid selecting a mediator who is just a “carrier pigeon” to take the offers back and forth.  Look for a mediator who has the skill set to add to the discussion.

Conclusion

At the Law Office of David Knecht, at 707-451-4502, we have extensive experience in estate planning and litigating estate disputes.   Contact us today!

If you are considering estate planning, one of the important aspects of the future that is probably on your mind is how to make sure your children do not squander what you are leaving them.  At the Law Office of David Knecht, we have extensive experience in estate planning and can help you think through many of the important issues, and especially a plan to help your heirs utilize their inheritance effectively. 

Business Insider highlighted a few of the worst things that can be done with an inheritance, and this article will summarize a few of those topics to help you begin to strategize the best estate plan for your family. See https://www.businessinsider.com/personal-finance/worst-things-inheritance-financial-planner-2021-1.

Sitting on the money—often better to invest the money.  

There are a few risks of sitting on the money:  inflation, opportunity cost, and the temptation to spend.  A quote attributed to Warren Buffett is “The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worthless over time. But good businesses are going to become worth more over time.”  See Warren Buffet quotes at https://www.insightssuccess.com/a-compilation-of-warren-buffett-quotes-that-will-add-perspective-to-your-investorlife/?gclid=Cj0KCQjwqKuKBhCxARIsACf4XuH2NAAwThinvlMnBvwSJIYXWAcNoskp5xpFzFZjtQWMq7SrlSmTRfkaAnu5EALw_wcB

Cash is an excellent asset for heirs to receive in an inheritance because it is so flexible, so it is not a negative in an estate plan.  However, you may consider providing your children with instructions, education or just simply helpful advice on how to invest after you are gone so that they can make the most of what you are leaving them. 

 

• Holding onto an inherited property that the heirs can’t afford – often better to sell or rent. 

 

If an heir inherits a property, they may not want to sell or rent it for sentimental reasons.  For some, the desire to keep it “as is” can prevent the best financial utilization of the property.  There can be maintenance costs, taxes, and other expenses that the heirs may not have the funds readily available to cover.  One strategy for estate planning is to anticipate in advance how the property will be used and maintained and to leave sufficient cash to cover the potential expenses the heirs may face in keeping the property.  This is just one plan, but there are many other choices here as well to make the transition smooth and effective.  

 

• Putting all of your money in one place – often better to diversify. 

 

Your heirs may not be as experienced in money management as you are and one common mistake with inherited assets is to put the money all in one place.  Many financial planners recommend diversification rather than putting all your eggs in one basket, and this holds true for inherited assets as well as assets that are obtained other ways.  The idea behind diversification is that a variety of investments will yield a higher return and investors may face a lower risk by investing in different vehicles.  See https://www.investopedia.com/articles/03/072303.asp.

Consult with the Law Office of David Knecht

At the Law Office of David Knecht, at 707-451-4502, we have extensive experience in estate planning in California.  We can help you create a plan that is right for you and can help make the transition smooth for your heirs.  Contact us today!

 

Estate planning is a hot topic in 2021, and creating a plan with taxes in mind is especially important.  Taxes are a very important part of estate planning and this article will focus on a narrow slice of that large pie from a legal point of view as we discuss the estate planning tax advantages for married couples.  Of course, these advantages apply to both same sex and different sex couples, and understanding how they work can be helpful background information for you as you consider your overall estate plan.  If you are interested in learning more from an investor’s perspective, this article on Investopedia may also be a helpful resource.  https://www.investopedia.com/terms/u/unlimited-marital-deduction.asp   

1. Unlimited Marital Deduction.  As per federal law, you can give assets by gift of inheritance to your spouse, and the taxes on that transfer are deferred until the death of the second spouse.  This is a powerful tool because there is not a limit on the amount that qualifies for the marital deduction.  
2.  U.S. Citizen Requirement.  It is important to be aware that the unlimited marital deduction only applies when both people are U.S. Citizens.  If the survivor is a non-citizen, then federal estate taxes must be paid on an estate that is above the federal estate tax exemption. 
3. Qualified Domestic Trust (QDOT).  If you are a U. S citizen wanting to pass assets to a non-U. S. Citizen spouse to defer federal estate taxes, a QDOT may be the right mechanism for you.  A QDOT allows the spouse who dies first to defer all federal estate taxes until both spouses have died and also allows that spouse to retain control over where his or her estate will be distributed after both die. 
   
4. Qualified Terminable Interest Property Trust (QTIP Trust).  A Qualified Terminable Interest Property Trust (QTIP trust) allows a person to create a trust upon his or her death that grants a life estate for the spouse that survives.  The advantage here is that it can be done without incurring federal estate taxes.  This trust will be included in the surviving spouse’s estate for federal estate taxes, but it is distributed according to the wishes of the spouse that died first.  The surviving spouse cannot change the QTIP Trust.  

 

Consult with the Law Office of David Knecht

There are many ways to effectively utilize estate planning to effectuate your wishes with tax advantaged methods. For a thorough discussion of issues relating to estate planning and taxes, please contact the attorneys at the Law Office of David Knecht, at 707-451-4502.  

 

If you are a senior, you may be feeling the urgency to get your affairs in order, but you may not have the time or the energy to take big steps.  This article will provide a small checklist on ways you can get started that do not require a lot of time or preparation. 

 

• Beneficiaries

One relatively easy first step to take is to get your beneficiaries updated and designated.  If you have had these accounts for a long time, you may not have the right people or all the people that you want on these records. 

• Checking and savings accounts at each bank 
• IRA accounts
• 401K accounts
• Life insurance policies

 

•  Advance Healthcare Directive

 

You have the right to give instructions about your own healthcare or to name someone else to make healthcare decisions for you.  You can also express your wishes regarding donation of organs.  The Office of the Attorney General for California has provided a form as a helpful resource to help you.  You can find the Advance Healthcare Directive form here:  https://oag.ca.gov/sites/all/files/agweb/pdfs/consumers/ProbateCodeAdvancedHealthCareDirectiveForm-fillable.pdf

 

•   Consult with an Attorney

 

If you are serious about estate planning, an effective step would be to set up an initial consultation with an attorney who has experience in estate planning.  You can go in without any preparation and your attorney can guide you in what you need to think about and do.  These are some areas of estate planning that may be discussed:

• A Living Trust
• Powers of Attorney for Property and Healthcare
• HIPAA Authorization
• A Living Will/Advance Healthcare Directive
• A Pour-Over Will
• Deeds to Your Properties
• Beneficiary Designations
• Guardian Nominations for Minor Children

Consult with the Law Office of David Knecht

For a consult with a knowledgeable and professional attorney about your questions relating to estate planning, do not hesitate to reach out tot he attorneys at the Law Office of David Knecht.  We have extensive experience in estate planning and we will help you understand what needs to be done and how to do it.  Contact us at 707-451-4502 for more information.  

 

For a many people, when they hear “estate planning,” they think simply of a will, but a complete California estate plan is much more than that.  This article will explain what a HIPAA Authorization is and three important reasons why it is an important part of your estate plan. 

What is HIPAA?

The Health Insurance Portability and Accountability Act, or HIPAA, is a law relating to the privacy of health care records.  Having a HIPAA authorization in your estate plan is important to make sure that the people who are important to you have access to your health care records and can communicate with your medical care providers.  Your doctor and other health care providers are not able to talk to your loved ones on the phone about your condition, share lab or diagnostic reports, or release other medical information with family members or friends unless you have prepared a HIPAA Authorization. 

What are the 3 important reasons you need a HIPAA Authorization?

The HIPAA  Authorization has these advantages:

• Allows your family access to medical records.
• Gives family members ability to receive updates about your condition.
• Enable loved ones to access your medical bills to ensure they are paid.  

What is the difference between a HIPAA Authorization and a Living Will/Healthcare Directive?

A HIPAA authorization provides certain people with the right to give and receive medical information about you that would otherwise be protected as private.  For example, they can ask the doctor what medications you are taking or let the doctor know about side effects you may be experiencing.  They can receive information about test results, etc.  They can also talk to the provider about billing issues on your behalf.  The Advance Healthcare Directive goes further as it is more encompassing than the HIPAA Authorization.  The Advance Directive can give the person you select the right to talk with medical personnel but beyond just hearing about your condition, this document gives them the right to make medical decisions on your behalf if you are incapacitated.  For example, if you were in a coma, the Advance Directive would give that person the decision-making power to allow or give up on certain treatments. 

How do I create a HIPAA Authorization?

The easiest way to create HIPAA authorization is to contact an attorney who is experienced in estate planning and include it in a comprehensive estate plan.  A HIPAA Authorization will generally meet these requirements:

• State that it is a HIPAA Privacy Authorization Form
• Include your name
• Define the scope of authorization – for example authorize all medial information or contain exceptions
• Include the effective date it goes into effect as well as the date of expiration of the Authorization

What attorney can help me create a HIPAA Authorization and an estate plan?

The attorneys at the Law Office of David Knecht, have extensive experience in all aspects of estate planning and can help you create a HIPAA Authorization and all other documents necessary for a complete and customized estate plan.  Contact us at 707-451-4502 for more information.