GIFTING REAL ESTATE TO FAMILY MEMBER CARETAKER: RED FLAGS

Posted June 8, 2018 in Estate Planning by Michael Lonich.

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June 8, 2018
GIFTING REAL ESTATE TO FAMILY MEMBER CARETAKER: RED FLAGS
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Giving gifts to loved ones late in life is a meaningful way to make family and friends feel cherished. Gifts of real estate to family and friends may show appreciation, but a gift of real estate made late in life to a family member or caretaker can raise several red flags. Is the donor susceptible to fraud or undue influence by the recipient of the gift? Does the donor have sufficient mental capacity to make the gift? To address these red flags, courts require certain documentation or evidence if a gift is contested.

One of the court’s primary concerns regarding gifts from adults late in life is whether the gift was influenced by fraud or undue influence, especially when gifts are given to people who have close relationships with the adult. Therefore, California law requires courts to apply a legal presumption – an assumption that any gift from a dependent adult (person over 65 who is unable to provide for his or her personal needs) to a “care custodian” was the product of fraud or undue influence. (Cal. Prob. Code, § 21380.)

A “care custodian” is a person who provides health or social services to a dependent adult. A “care custodian” is not someone who provided services to a dependent adult if the custodian had a personal relationship with the dependent adult at least 90 days before providing health or social services, at least 6 months before the dependent adult’s death, and before the dependent adult was admitted to hospice care if he/she was admitted.  (Cal. Prob. Code, § 21362.)  The person in favor of the gift can rebut, or oppose, the presumption of fraud or undue influence with evidence that the gift was not the product of fraud or undue influence.  (Cal. Prob. Code, § 21380.)

Courts will not assume the gift is a product of fraud or undue influence if a “certificate of independent review” is executed with the transfer. A certificate of independent review shows the court that an independent attorney consulted with the person making the gift about the nature and consequences of the gift and attempted to determine if the intended gift was the result of fraud or undue influence. This consultation must occur out of the presence of the any heirs or proposed recipients. The certificate is signed and given to the person making the gift.

The court will not assume the donor’s family members and cohabitants received gifts from a dependent adult by fraud or influence. (Cal. Prob. Code , § 21382.)  However, gifts to family members and cohabitants will be invalid if the family member or cohabitant drafted the transfer document themselves. Family members and cohabitants are also subject to claims that the donor’s gift was subject to fraud or undue influence. (Cal. Prob. Code, § 6104.) They may also be subject to a claim that the donor did not have sufficient mental capacity to make the gift.

To prove undue influence, one must show the donor acted under excessive persuasion that overcame his/her free will. In California, the court will assume undue influence occurred if the party contesting the gift can prove three elements: (1) the existence of a confidential or fiduciary relationship between the donor and the person allegedly asserting undue influence over the donor, (2) active participation by the alleged influencer in the creation of the transfer document, and (3) an undue benefit on the alleged influencer (typically the receipt of the gift).

A gift may also be contested on the basis of the donor’s lack of mental capacity at the time the gift was made. The court can consider testimony and documentation showing the donor may or may not have been mentally competent to make the gift while alive.

Gift of real estate to family members and caretakers can be complicated and raise red flags that the donor, recipient, or other family members did not intend to face. If you are contemplating giving a gift to a family member or caretaker, receiving a gift from a family member, or contesting a gift to a donor’s family member or caretaker, please contact one of the experienced attorneys at Lonich Patton Erlich Policastri. We offer a free half-hour consultations.

Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

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PROTECTING YOUR ESTATE DURING DIVORCE

Posted May 4, 2018 in Estate Planning by Michael Lonich.

Going through divorce may be one of the most challenging and stressful ordeals you will experience. There are numerous questions you have to answer, a slew of documents you have to dig up, and brings an incredible amount of emotional turmoil. While you may be ready to forget your ex-spouse completely, do not forget to change your estate plan.  If you have a previous plan, you likely named your ex-spouse as the successor trustee, executor, power of attorney, and/or beneficiary. It is very unlikely that you will want to leave your ex-spouse in that role, making it vital to change your estate plan.

In a revocable trust, the trustor or trustee, not the beneficiary, has control over when and if the benefits are distributed. However, when you die, whomever you named as executor of your will or successor trustee of your trust will have control over when and if the benefits are distributed. It is likely that you would designate your spouse as executor and successor trustee during marriage, so it will be important to have a new estate plan done, in order to designate a new person to fill these rolls. It is your decision who will fill the roles. Your executor or trustee does not need any special training, but must be an organized, prudent, responsible, and honest person. Additionally, you will want to consider who is named as beneficiary on any retirement accounts, life insurance, or additional benefits. If you had named your spouse, you would want to give your estate attorney at least one new person who would be a beneficiary.

While most assets are subject to your estate plan at death, there are some exceptions. These exceptions include life insurance policies, IRAs, and other tax-deferred retirement plans. These are distributed according to beneficiary designations, which override the designation in your will or trust. It is important to update beneficiary designations right after the divorce, if you choose not to during the process, as just updating your estate plan will not affect who gets the benefits of these plans.

Further, if your ex is your agent on your durable power of attorney for property, you should consider changing his/her name immediately to prevent your ex from having unlimited access to bank accounts or financial assets. Additionally, you should name another person as your agent to make health care decisions for you if you are unable to make your own decisions. It is important to also name an alternate agent to act for you if your first choice is not willing, able, or reasonably available to make decisions for you.  You may choose to limit the authority of your agent, but if you choose not to limit his/her authority, they may, but are not limited to, consent or refuse care, treatment, or procedures, agree to tests, surgery, and medication, and designate anatomical gifts. Who you choose to make these decisions should be someone you believe understands and will respect your wishes.

Finally, you may also be wondering how to provide for your minor children in the event of your death, if your ex has no custody rights over them. You should nominate a guardian to supervise and care for your child until he/she is 18 years old. Under California law, a minor child would not be legally qualified to care for him/herself, or to manage his/her own property. You can make the designation in your estate plan.

If you are seeking information or counsel regarding estate planning or protecting your property during divorce, please contact one of the experienced attorneys at Lonich Patton Erlich Policastri – we offer free half-hour consultations. We also offer free wills to all of our family law clients during the process of their divorce.

Lastly, please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

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HOW TO AVOID CONFLICT IN ESTATE PLANNING

Posted March 9, 2018 in Estate Planning by Michael Lonich.

Some say, “if there is a will, there is a family fighting over it.” But a brawl between loved ones isn’t necessary if these 6 tips are followed.

1. Make A Plan!

You do not want to leave uncertainty and confusion for your loved ones when you pass. Do not take a “they will figure it out” approach. This is most likely lead to confusion, conflict, and possibly court. Be detailed in your wishes and instructions. If you fail to be clear or make a plan all together then it will be up to the court in deciding who is given what.

There are several options available when deciding an estate plan and what is best for your best friend may not be best for you. Therefore, it may be wise to meet with a knowledgeable estate attorney who can guide you through your planning options.

2. Update On The Regular

Once you make a plan – keep it updated. This does not need to be a weekly event, but it does need to happen when there is a change in life circumstances. These events may include: a divorce, a marriage, change in property ownership, or having a baby.

3. Do Not Rely On Family Utopia

Even if your family gatherings are like a glimpse into Utopia itself, do not rely on everyone agreeing all the time. Life is complicated and constantly changing. Therefore, if a child’s life circumstances change their goals may no longer align with everyone else’s. Change is normal in life and your estate plan should reflect that.

4. Communicate

You are not required to talk to your loved ones about your plans, but this tip is encouraged. Family input may be beneficial and it will lessen the chances of someone being surprised later on. It is also important to communicate in order to have everyone on the same page regarding issues such as: plans for a disabled child, the succession of the family business, or for the continued enjoyment of a vacation home. Although it may be an awkward conversation, it is important to have these discussions.

5. Remove Assets From Probate

Probate is something most people try to avoid and if you want your loved ones getting the most from what you left them, you will too. Two common ways to avoid probate is through revocable trusts and beneficiary designations. Another way to help avoid probate is to make sure the named beneficiaries in other asset documents are consistent with your whole plan. However, once again, it is important to discuss what estate plan options are best for you with an attorney – a revocable trust may not be it and you may be able to avoid probate through other avenues.

6. Consider Someone Outside The Family In Charge Of Assets

Some good choices are a law firm or trust company. By naming someone not in the family, it will help reduce the risk of disharmony. It is crucial to make a smart choice in appointing a Trustee and Agents under Powers of Attorney. You should not make this decision based solely on who is your favorite to hang out with. There are a multitude of factors to take into consideration and you should speak openly with your attorney to decide who would be best for the position.

If you are considering creating an estate plan and would like more information, please contact the experienced family law attorneys at Lonich Patton Erlich Policastri.

Lastly, please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

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CHARITABLE BEQUEST

Posted March 2, 2018 in Estate Planning by Michael Lonich.

In 2016, charitable giving amounts reached record levels – $390.05 billion to be exact. This increase and the overall size of charitable contributions is testament to the integral role charities play in our lives. Thus, for people who have given to charities and organizations throughout their lives many wish for its continuance after their death.

Can I give assets to a charity or organization after I die?

An estate attorney can draft a charitable bequest provision for individuals who wish to bequest certain assets to an organization or charity. A charitable bequest is a written statement in a person’s will that directs a gift to be made to a charity upon the death of the testator, the maker of the will. However, there are other options available and it is therefore important to speak with an attorney to best fulfill your wishes.

What can I bequest to a charity?

There are many things you can give. A set money amount or real property, such as a home or land are two options. Additionally, an individual may bequest tangible personal property such as: a jet, car, artwork, antiques, or collectables. It is important to consider what the charity or organization can use best; some would greatly appreciate a parcel of land, while others would be better served with receiving money.

How do I bequest these assets?

There are different formats a testator may choose from.

The most common is called a general bequest. This allocates a set amount of money paid to a particular beneficiary. It is charged against the estate at death and must be satisfied.

The next is called a special bequest. This allocates a particular property or dollar amount to be awarded to a beneficiary. However, if you are considering to bequest a property you MUST own that specific property at your death – no other property will satisfy. A special bequest is also the first type of bequest satisfied upon an estate distribution.

A residuary bequest is a third form. This allows the beneficiary to receive assets that remain in the estate after all other bequests, as well as any tax or administrative costs, have been satisfied.

The final form is a percentage bequest, where a set percentage of the estate’s value is given to a beneficiary. This allows the charity or organization to benefit from the estate’s growth during the donor’s lifetime.

If you are considering ­­­­­­bequesting to a charity and would like more information, please contact the experienced family law attorneys at Lonich Patton Erlich Policastri.

Lastly, please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

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WHO TO PICK AS AN EXECUTOR OF YOUR WILL

Posted February 23, 2018 in Estate Planning by Michael Lonich.

Executors of wills have an important job. They are the person who will collect assets of your estate, protect the estate’s property, pay valid claims against the estate, and will distribute estate property to beneficiaries. The work can be extensive and complicated for someone who is not a proper fit, therefore it is essential to pick the right person.

If a person is chosen and does not have the ideal qualities, the estate may find itself being contested. This takes time and is also costly. Therefore, when choosing an executor it is important to look for qualities such as honesty, organization, and being a good communicator.

Having someone who is honest speaks for itself, but having an organized person is important too. Being organized will help your executor effectively distribute and manage your estate. Choosing someone with good communication skills is also helpful since this person will be talking with a variety of people and will be dealing with sensitive situations. Also take into consideration the location of who you are considering to choose. An executor may have to appear in court, check the property mail, and handle the property’s maintenance. These jobs may be easier for someone located close by versus someone out of the area.

There are a multitude of options for who can be your executor. An obvious choice is your partner or spouse. They are most likely to know your intentions for your estate. But if they are later in years, they may not be able to handle everything that needs to be done.

Children are another popular choice. For this option, take into account family dynamics; if you know choosing one child as executor and excluding another would cause problems then it may be best to name both as co-executors. This may be an option if both hold the qualities mentioned before. Also naming siblings as co-executors allows them to divide up responsibilities so not all duties fall on one child alone. However, if one child is obviously not qualified to be an executor it may be better to exclude them. In these situations, it is helpful to discuss the situation with your children that way they are able to hear from you why you chose one sibling over another.

If you do not have a spouse or children to name as executor, don’t despair. You can name other close family members or friends. Just make sure they have an idea of your intentions for your estate and possess the qualities that will help distributing the estate successfully.

However, if none of the above options are appealing, or if you have a particular complex estate then you may want to hire a specialist such as an attorney, bank, or trust company. Although this option costs an additional amount, these entities are experts in closing out an estate and distributing the property to beneficiaries. There is also less stress involved since they are not personally involved in the estate and are not mourning the loss of someone while distributing their property.

Whomever you choose, you must communicate with that individual that you are considering them to be your executor. This is an important role and they should be willing to do the job. If they decline, try not to take it personally; it’s a large job and there are plenty of options.

If you would like more information about estate planning, please contact the experienced family law attorneys at Lonich Patton Erlich Policastri.

Lastly, please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

 

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