Education – Page 4

Don’t Let Your Kids Move Out Without Signing These Documents

Education, Estate Planning, Estate Planning Blog, Kids Protection Planning, Parents

Although I haven’t experienced it yet, I’ve seen clients, friends, and family watch their kids leave home to attend college or start their career. It can be an emotional time as a parent. On one hand, moving out on their own is a major accomplishment that makes parents proud. On the other hand, having your kids leave the nest and face the world can also induce anxiety and fear.

And it is critical to know that once they reach age 18, your kids become legal adults, and many areas of their lives that were once under your control will be solely their responsibility. Make sure they know that one of the very first items on their to-do list as new adults should be estate planning.

While you may believe that planning is the last thing your kids need to be thinking about, it’s actually the first, because once they turn 18, you no longer have automatic access to their medical records and/or financial accounts should anything happen to them.

Before your kids head out on their own, you should discuss and have them sign the following three documents:

1. Medical Power of Attorney

Medical power of attorney is an advance directive that allows your child to grant you (or someone else) the legal authority to make healthcare decisions for them in the event they become incapacitated and cannot make such decisions for themselves.

For example, a medical power of attorney would allow you to make decisions about your child’s medical treatment if he or she is knocked unconscious in a car accident or falls into a coma due to an illness. And with a properly drafted medical power of attorney, you will be able to access your child’s medical records, whereas without one you would not.

Should they become incapacitated without a properly executed medical power of attorney, you’d have to petition the court to become their legal guardian. While a parent is typically the court’s first choice for guardian, the court process can be slow (not to mention expensive)—and in medical emergencies, every second counts.

2. Living Will

Whereas medical power of attorney allows you to make healthcare decisions on your child’s behalf during their incapacity, a living will provides specific guidance about how your child’s medical decisions should be made while they’re incapacitated, particularly at the end of life.

For example, a living will allows your child to let you know if and when they want life support removed, if they ever require it. In addition to documenting how your child wants their medical care handled, a living will can also include instructions about who should be able to visit them in the hospital and even what kind of food they should be fed.

If your child has certain wishes for their medical care, it’s important you discuss these decisions with them and have those wishes documented in a living will to ensure they’re properly carried out.

3. Durable Financial Power of Attorney

Should your child become incapacitated, you’ll also need the ability to access and manage their finances, and this requires your child to grant you durable financial power of attorney.

Durable financial power of attorney gives you the immediate legal authority to manage their financial and legal matters, such as paying bills, applying for Social Security benefits, and/or managing banking and other financial accounts. Without this document, you’ll have to petition the court for such authority.

Start adulthood off right
As parents, it’s natural to experience anxiety when your kid leaves home. But with the support of a trusted attorney, you’ll at least have peace of mind knowing that he or she will be well taken care of in the event of an unforeseen accident or illness. Contact us today to discuss our Young Adult Estate Planning Package to ensure that if your child ever does need your help, you’ll have the legal authority to provide it.

Dedicated to empowering your family, building your wealth and defining your legacy,

November 26, 2019/by Marc Garlett

Buyer Beware: The Hidden Dangers of DIY Estate Planning—Part 2

Asset Protection, Common Mistakes, Education, Estate Planning, Estate Planning Blog, Trusts

Last week, I shared the first part of this series on the dangers of do-it-yourself estate planning. Here, we’ll look at how online legal documents can also put your minor children at risk.

Given how far web-based technology has evolved, you might think online legal document services have advanced to the point where they’re a viable alternative to having your estate plan prepared by a lawyer.

After all, you’ve been able to prepare and file your taxes online for years, so what makes estate planning different? Aren’t lawyers using the very same forms you find on these document websites?

This kind of reasoning is exactly what do-it-yourself (DIY) planning services would like you to believe—but it’s far from true. Indeed, relying on generic, fill-in-blank planning documents can be one of the costliest planning mistakes you can make for your loved ones.

Online planning documents may appear to save you time and money, but keep in mind, just because you created “legal” documents doesn’t mean they will actually work when you (or most importantly, the people you love) need them. Without a thorough understanding of how the legal process works and impacts family dynamics upon your death or incapacity, you’ll likely make serious mistakes when creating a DIY plan.

Even worse, these mistakes won’t be discovered until it’s too late—and the loved ones you were trying to protect will be the very ones forced to clean up your mess or get stuck with a huge nightmare.

Putting your children at risk
Knowing that your DIY plan could fail and force your family into court and conflict is distressing enough. But imagine how you’d feel if you knew that your attempt to save money on your estate plan caused your children to be taken into the care of strangers, even temporarily.Yet this is exactly what could happen if you rely on a generic will and/or other legal documents you find online to name legal guardians for your kids. In fact, this could happen even if you create a plan with a lawyer who isn’t trained to plan for the unique needs of parents with minor children.
Naming and legally documenting guardians for your kids might seem like a straightforward process, but it entails a number of complexities most people aren’t aware of. Even lawyers with decades of experience typically make at least one of six mistakes when naming long-term legal guardians.

What’s so complicated about naming guardians?
Some DIY wills allow you to name legal guardians for your kids in the event of your death, and that’s a good start. But does it allow you to name back-up candidates in case your first choice is unable to serve?

If you named a married couple to serve and one of them is unavailable due to injury, death, or divorce, what happens then? Would it still be okay if only one of them can serve as your child’s guardian? And does it matter which one it is?

What would happen if you become incapacitated by illness or injury and are unable to care for your kids? You might assume the guardians named in your DIY will would automatically get custody, but did you know that a will only goes into effect upon your death and does nothing to protect your kids in the event of your incapacity?

Do the guardians you named live far from your home? If so, how long would it take them to make it to your house to pick up your kids: a few hours, a few days, a few weeks? Who would care for your kids until those guardians arrive? Did you know that without legally binding arrangements for the immediate care of your children, they are likely to be placed with child protective services until those guardians arrive?

Even if you name family who live nearby as guardians, what happens if they are out of town or otherwise can’t get to your kids right away?

And assuming the guardians you named can immediately get to your home to pick up your kids, do they even know where your will is located? How will they prove they’re your children’s legal guardians if they can’t find your planning documents?

These are just a few of the potential complications that could arise if you try to create your own plan naming legal guardians for your kids. And if just one of these contingencies were to occur, your children would more than likely be placed into the care of strangers, even if it’s only for a short period of time.

The Child Protection Plan™
Seeing all of the things that could go wrong, you should never trust the safety and care of your children to a DIY plan—or for that matter, a plan created by a lawyer unfamiliar with the unique needs of planning for parents of minor children. To ensure your children are never raised by someone you don’t trust or taken into the custody of strangers, even temporarily, consider creating a Child Protection Plan™ – a comprehensive system designed specifically to address the inherent gaps in the way most estate plans document legal guardians.

Consider what’s at stake
The DIY approach might be a good idea if you’re looking to build a new deck for your backyard, but when it comes to estate planning, it’s one of the worst choices you can make. Are you really willing to put your family’s well-being and wealth at risk just to save a few bucks?

If you’ve yet to do any planning, stop putting it off and get started today – especially if you have minor children.

If you’ve already created a plan—whether it’s a DIY job or one created with another lawyer’s help—contact us if you’d like to schedule an Estate Plan Review and Check-Up. We’ll ensure your plan is not only properly drafted and updated, but that it has all the protections in place to prevent your children from ever being placed in the care of strangers or anyone you’d never want to raise them.

Dedicated to empowering your family, building your wealth and defining your legacy,

November 21, 2019/by CaliLaw

3 Estate Planning Concerns for Married, Same-Gender Couples

Education, Estate Planning, Estate Planning Blog, Family, Trusts, Wills, Wills vs. Trusts

Now that same-gender couples can legally marry in all 50 states, more Americans than ever before are enjoying the rights and benefits that come with marriage. Estate planning is one arena where these new rights and benefits are readily apparent.

While the planning vehicles available to same-gender and opposite-gender married couples are generally the same, there are a few unique considerations those in same-gender marriages should be aware of. Here are three of the most important things to keep in mind.

Relying solely on a will is risky: For several reasons, putting a trust in place—rather than relying solely on will—is a good planning strategy for nearly everyone. Upon the death of one spouse, a will is required to go through the often long, costly, and conflict-ridden court process known as probate. However, assets passed through a trust go directly to the named beneficiaries without the need for probate.

What’s more, a trust works in cases of both your death and incapacity, while a will only goes into effect upon death. Given this, it’s usually best for those in any marriage to create trust based plans.

Don’t neglect to plan for incapacity: Estate planning is not just about planning for your death; it’s also about planning for your potential incapacity. Should you be incapacitated by illness or injury, it’s not guaranteed that your spouse would have the ultimate legal authority to make key decisions about your medical treatment and finances.

Absent a plan for incapacity, it’s left to the court to appoint the person who will make these decisions for you. Though spouses are typically given priority, this isn’t always the case, especially if unsupportive family members challenge the issue in court. To ensure your spouse has the authority to make decisions for you, you must grant him or her medical power of attorney and financial power of attorney.

Medical power of attorney gives your spouse the authority to make health-care decisions for you if you’re incapacitated and unable to do so yourself. By the same token, financial power of attorney gives your spouse the authority to manage your financial affairs. And be sure to also create a living will, so that your spouse will know exactly how you want your medical care managed in the event of your incapacity.

Ensure parental rights are protected: While the biological parent of a child in a same-gender marriage is of course automatically granted parental rights, the non-biological spouse/parent still faces a number of legal complications. Because the Supreme Court has yet to rule on the parental rights of non-biological spouses/parents in a same-gender marriage, there is a tangled, often-contradictory, web of state laws governing such rights.

To ensure the full rights of a non-biological parent, you may want to consider second-parent adoption. But, by using a variety of unique planning strategies, your Personal Family Lawyer can provide non-biological, same-gender parents with nearly all parental rights without going through adoption. Using our Kids Protection Plan®, couples can name the non-biological parent as the child’s legal guardian, both for the short-term and the long-term, while confidentially excluding anyone the biological parent thinks may challenge their wishes.

Dedicated to empowering your family, building your wealth and defining your legacy,

September 6, 2019/0 Comments/by Marc Garlett

The Real Cost to Your Family: Having No Estate Plan At All

Common Mistakes, Education, Estate Planning, Estate Planning Blog, Family Values, Parents, Trusts

When it comes to putting off or refusing to create an estate plan, your mind can concoct all sorts of rationalizations: “I won’t care because I’ll be dead,” “I’m too young,” “That won’t happen to me,” or “My family will know what to do.”

But these thoughts all come from a mix of pride, denial, and a lack of real education about estate planning and the consequences to your family. Once you understand exactly what planning is designed to prevent and support, you’ll realize there really is no acceptable excuse for not having a plan, provided you are able to plan and truly care about your family’s experience after you die or become incapacitated.

With that in mind, here are some of the things most likely to happen to you and your loved ones if you fail to create any estate plan at all.

Your family will have to go to court
If you don’t have a plan, or only have a will (yes, even with a will), you’re forcing your family to go through probate upon your death. Probate is the legal process for settling your estate, and even if you have a will, it’s notoriously slow, costly, and public.

Depending on the complexity of your estate, probate can take years to complete. And like most court proceedings, probate is expensive. In fact, once all your debts, taxes, and court fees have been paid, there might be nothing left for anyone to inherit. And if there are any assets left, your family will likely have to pay hefty attorney’s fees and court costs in order to claim them.

The expense and drama of the court system can be almost totally avoided with proper planning. Using a trust, for example, we can ensure that your assets pass directly to your family upon your death, without the need for any court intervention.

You have no control over who inherits your assets
If you die without a plan, the court will decide who inherits your assets, and this can lead to all sorts of problems. Who is entitled to your property is determined by California’s intestate succession laws, which hinge largely upon on whether you are married and if you have children.

Spouses and children are given top priority, followed by your other closest living family members. If you’re single with no children, your assets typically go to your parents and siblings, and then more distant relatives if you have no living parents or siblings. If no living relatives can be located, your assets go to the state.

Keep in mind, intestacy laws only apply to blood relatives, so unmarried partners and/or close friends would get nothing. If you want someone outside of your family to inherit your property, having a plan is an absolute must.

You have no control over your medical, financial, or legal decisions in the event of your incapacity

Most people assume estate planning only comes into play when they die, but that’s dead wrong. Yes, pun intended.

If you become incapacitated and have no plan in place, your family would have to petition the court to appoint a guardian or conservator to manage your affairs. This process can be extremely costly, time consuming, and traumatic for everyone involved. In fact, incapacity can be a much greater burden for your loved ones than even your death.

You need Powers of Attorney which grant the person(s) of your choice the immediate authority to make your medical, financial, and legal decisions for you in the event of your incapacity. You can also provide specific guidelines detailing how you want your medical care to be managed, including critical end-of-life decisions.

You have no control over who will raise your children
If you’re the parent of minor children, the most devastating consequence of having no estate plan is what could happen to your kids in the event of your death or incapacity. Without a plan in place naming legal guardians for your kids, it will be left for a judge to decide who cares for your children. And this could cause major heartbreak not only for your children, but for your entire family.

You’d like to think that a judge would select the best person to care for your kids, but it doesn’t always work out that way. Indeed, the judge could pick someone from your family you’d never want to raise them to adulthood. And if you don’t have any family, or the family you do have is deemed unfit, your children could be raised by total strangers.

If you have minor children, your number-one planning priority should be naming legal guardians to care for your children if anything should happen to you. This is so critical, we’ve developed a comprehensive system called the Child Protection Plan® to accomplish this goal.

No more excuses
Given the potentially dire consequences for both you and your family, you can’t afford to put off creating your estate plan any longer. And once you have a plan in place, you’ll gain the peace of mind that comes from knowing that your loved ones will be provided and cared for no matter what happens to you. Don’t wait another day.

Dedicated to empowering your family, building your wealth and defining your legacy,

August 1, 2019/0 Comments/by Marc Garlett

Protect Your Family Wealth with a Lifetime Asset Protection Trust

Asset Protection, Education, Estate Planning, Estate Planning Blog, Family Values, Legacy Planning, Trusts

What if you could leave your wealth to your children knowing it would be protected, for the rest of their lives, from their own bad decisions as well as any malicious intent by outsiders? Well, you can.

There are proactive estate planning solutions designed to safeguard your adult children’s inheritance. And these planning protections aren’t just for the extraordinarily rich—even relatively modest amounts of wealth can be squandered or taken if not adequately protected.

Indeed, the planning strategies we describe here can safeguard your child’s inheritance from being depleted by events such as a divorce, a catastrophic medical expense, an at-fault accident, or even a simple mistake. You just never know what life has in store for your heirs, and our planning protections can ensure their inheritance is protected from practically all potential threats—even those you could never possibly imagine.

Big money can cause big problems
“Big” money is relative. What might be a modest inheritance to a 50-year old could be an enormous windfall to an 18-year old. And there are stories upon stories of heirs being negatively impacted by inheriting too much money at a young age. These cases occur quite often, and no matter how well adjusted your children or grandchildren may seem, there’s just no way to accurately predict how their inheritance will affect them.

One unique planning vehicle designed to prevent the potential perils of outright distributions is a Lifetime Asset Protection Trust (LAPT). These trusts last for the lifetime of their respective beneficiaries and provide them with a unique and priceless gift. With an LAPT, for instance, the beneficiary can use and invest the trust assets, yet at the same time, the trust offers airtight asset protection from unexpected life events, such as a lawsuit or serious debt, which have the potential to wipe out their inheritance.

Help your heirs handle their inheritance
When drafted properly, an LAPT can be used to educate your beneficiary on how to handle their inheritance. This is done by allowing the beneficiary to become a co-trustee with someone you’ve named at a specific age or stage of life, and then the beneficiary can become the sole trustee later in life, once he or she has been properly educated and is ready to take over.

The LAPT is discretionary, which means that the trust would not only protect your heir from outside threats, like creditors and ex-spouses, but also from their own mistakes. The trustee you name holds the trust’s assets upon your death. This gives the person you choose the power to distribute its assets to the beneficiary at their discretion, rather than requiring him or her to release the assets in more structured ways, such as in staggered distributions at certain ages.

Your direction and guidance are paramount
Many of our clients choose to provide guidelines directing the trustee on how the client would choose to make distributions in many different scenarios, such as for the purchase of a home, a wedding, the start of a business, and/or travel. Some clients choose to provide guidelines around how their successor trustees should make investment decisions, as well.

Meet with your Personal Family Attorney to see if a Lifetime Asset Protection Trust is the right option for protecting your family wealth and loved ones from situations and circumstances (no matter what they may be), which are simply impossible to foresee. Don’t have a Personal Family Attorney? Contact us today to get your questions answered.

Dedicated to empowering your family, building your wealth and defining your legacy,

July 16, 2019/by CaliLaw

Avoid Another Common Causes for Dispute Over Your Estate Plan

Common Mistakes, Education, Estate Planning, Estate Planning Blog, Trusts, Wills

In the first part of this series, we discussed one of the most frequent causes for dispute over your estate plan. Here, we’ll look at another leading cause for dispute and offer strategies for its prevention.

Contesting the validity of wills and trusts
The validity of your will and/or trust can be contested in court for a few different reasons. If such a contest is successful, the court declares your will or trust invalid, which effectively means the document(s) never existed in the first place. Obviously, this would likely be disastrous for everyone involved, especially your intended beneficiaries.

However, just because someone disagrees with what he or she received in your will or trust doesn’t mean that person can contest it. Whether or not the individual agrees with the terms of your plan is irrelevant; it is your plan after all. Rather, he or she must prove that your plan is invalid (and should be thrown out) based on one or more of the following legal grounds:

The document was improperly executed (signed, witnessed, and/or notarized) as required by state law.
You did not have the necessary mental capacity at the time you created the document to understand what you were doing.
Someone unduly influenced or coerced you into creating or changing the document.
The document was procured by fraud.

Furthermore, only those individuals with “legal standing” can contest your will or trust. Just because someone was intimately involved in your life, even if they’re a blood relative, doesn’t automatically mean they can legally contest your plan.

Those with the potential for legal standing generally fall into two categories: 1) Family members who would inherit, or inherit more, under state law if you never created the document. 2) Beneficiaries (family, friends, and charities) named or given a larger bequest in a previous version of the document.

Solution: There are times when family members might contest your will and/or trust over legitimate concerns, such as if they believe you were tricked or coerced into changing your plan by an unscrupulous caregiver. However, that’s not what I’m addressing here.

Here, we’re looking at—and seeking to prevent—contests which are attempts by disgruntled family members and/or would-be beneficiaries seeking to improve the benefit they received through your plan. We’re also seeking to prevent contests that are a result of disputes between members of blended families, particularly those that arise between spouses and children from a previous marriage.

First off, working with an experienced lawyer is of paramount importance if you have one or more family members who are unhappy—or who may be unhappy—with how they are treated in your plan. This need is especially critical if you’re seeking to disinherit or favor one part of your family over another.

Some of the leading reasons for such unhappiness include having a plan that benefits some children more than others, as well as when your plan benefits friends, unmarried domestic partners, and/or other individuals instead of, or in addition to, your family. Conflict is also likely when you name a third-party trustee to manage an adult beneficiary’s inheritance because he or she is likely to be negatively affected by the sudden windfall of money.

In these cases, it’s vital to make sure your plan is properly created and maintained to ensure these individuals will not have any legal ground to contest your will or trust. One way you can do this is to include clear language that you are making the choices laid out in your plan of your own free will, so no one will be able to challenge your wishes by claiming your incapacity or duress.

Beyond having a sound plan in place, it’s also crucial that you clearly communicate your intentions to everyone affected by your will or trust while you’re still alive, rather than having them learn about it when you’re no longer around. Indeed, we often recommend holding a family meeting (which we can help facilitate) to go over everything with all impacted parties.

Outside of contests originated by disgruntled loved ones, the potential for your will or trust to cause dispute is significantly increased if you have a blended family. If you are in a second (or more) marriage, with children from a prior marriage, there’s an inherent risk of dispute because your children and spouse often have conflicting interests.

To reduce the likelihood of dispute, it’s crucial that your plan contain clear and unambiguous terms spelling out the beneficiaries’ exact rights, along with the rights and responsibilities of executors and/or trustees. Such precise terms help ensure all parties know exactly what you intended.

If you have a blended family, it’s also essential that you meet with all affected parties while you’re still alive (and of sound mind) to clearly explain your wishes in person. Sharing your intentions and hopes for the future with your spouse and children is key to avoiding disagreements over your true wishes for them.

Prevent disputes before they happen
The best way to deal with estate planning disputes is to do everything possible to make sure they never occur in the first place. This means working with a trusted attorney to put planning strategies in place aimed at anticipating and avoiding common sources of conflict. Moreover, it means constantly reviewing and updating your plan to keep pace with your changing circumstances and family dynamics.

Dedicated to empowering your family, building your wealth and defining your legacy,

June 13, 2019/by CaliLaw

Avoid This Common Cause for Disputes Over Your Estate Plan

Blended Family, Education, Estate Planning, Estate Planning Blog, Trusts

No matter how well you think you know your loved ones, it’s impossible to predict exactly how they’ll behave when you die or if you become incapacitated. Of course, no one wants to believe their family would ever end up battling one another in court over inheritance issues or a loved one’s life-saving medical treatment, but the fact is, we see it all the time.

Family dynamics are extremely complicated and prone to conflict during even the best of times. And when tragedy strikes a key member of the household, even minor tensions and disagreements can explode into bitter conflict. When access to money is on the line, the potential for discord is exponentially increased.

The good news is you can drastically reduce the odds of such conflict through estate planning with the support of a lawyer who understands and can anticipate these dynamics. It’s so important to work with an experienced lawyer when creating your estate plan and never rely on generic, do-it-yourself planning documents found online. Unfortunately, even the best set of documents will be unable to anticipate and navigate complex emotional matters like this, but a good lawyer can.

By becoming aware of some of the leading causes of such disputes, you’re in a better position to prevent those situations through effective planning. Though it’s impossible to predict what issues might arise around your plan, the following is one of the most common catalysts for conflict.

Poor fiduciary selection
Many estate planning disputes occur when a person you’ve chosen to handle your affairs following your death or incapacity fails to carry out his or her responsibilities properly. Whether it’s as your power of attorney agent, executor, or trustee, these roles can entail a variety of different duties, some of which can last for years.

The individual you select, known as a fiduciary, is legally required to execute those duties and act in the best interests of the beneficiaries named in your plan. The failure to do either of those things is referred to as a breach of fiduciary duty.

The breach can be the result of the person’s deliberate action, or it could be something he or she does unintentionally, by mistake. Either way, a breach—or even the perception of one—can cause serious conflict among your loved ones. This is especially true if the fiduciary attempts to use the position for personal gain, or if the improper actions negatively impact the beneficiaries.

Common breaches include failing to provide required accounting and tax information to beneficiaries, improperly using estate or trust assets for the fiduciary’s personal benefit, making improper distributions, and failing to pay taxes, debts, and/or expenses owed by the estate or trust.

If a suspected breach occurs, beneficiaries can sue to have the fiduciary removed, recover any damages they incurred, and even recover punitive damages if the breach was committed out of malice or fraud.

Solution: Given the potentially immense responsibilities involved, you need to be extremely careful when selecting your fiduciaries, and make sure everyone in your family knows why you chose the fiduciary you did. You should only choose the most honest, trustworthy, and diligent individuals, and be careful not to select those who might have potential conflicts of interest with beneficiaries.

Moreover, it’s vital that your planning documents contain clear terms spelling out a fiduciary’s responsibilities and duties, so the individual understands exactly what’s expected of him or her. And should things go awry, you can add terms to your plan that allow beneficiaries to remove and replace a fiduciary without going to court.

Find an attorney who’s focus is on assisting you with selecting the most qualified fiduciaries; drafting the most precise, explicit, and understandable terms in all of your planning documents; as well as ensuring that your family understands your choices, so they do not end up in conflict when it’s too late. In this way, the individuals you select to carry out your wishes will have the best chances of doing so successfully—and with as little conflict as possible.

Dedicated to empowering your family, building your wealth and defining your legacy,

June 5, 2019/by CaliLaw

Understand What’s At Stake Before Agreeing to Serve as Trustee

Education, Estate Planning, Estate Planning Blog, Trusts

Being asked by a family member or close friend to serve as trustee for their trust upon their death can be an incredible honor. At the same time, however, serving as a trustee can be a massive responsibility—and the role is not for everyone.

In fact, depending on the type of trust, the assets held by the trust, the specific terms of the trust, and the beneficiaries named, the job can require you to fulfill a wide range of complex (and potentially unpleasant) duties over the course of many years. What’s more, trustees are legally required to properly execute those duties or face liability.

Given this, agreeing to serve as trustee is a decision that shouldn’t be made lightly. Indeed, sometimes the best thing you can do for everyone involved is to politely decline the job. Remember, you don’t have to take it. On the other hand, you might enjoy the opportunity to be a trustee, so long as you understand what it entails.

It’s best to make your decision about serving as trustee with eyes wide open. Here’s a brief look at what the job will likely entail, along with some situations where you might want to seriously think twice before agreeing.

What trustees do
As mentioned earlier, a trustee’s duties can vary tremendously depending on the size of the estate, the type of trust, and the trust’s specific instructions. That said, every trust comes with a few core requirements, primarily revolving around accounting for, managing, and distributing the trust’s assets to its named beneficiaries.

Regardless of the type of trust or the assets it holds, some of a trustee’s key responsibilities include:

Identifying and protecting the trust assets
Managing the trust assets for the term specified and distributing them properly
Filing income and estate taxes for the trust
Communicating regularly with beneficiaries
Being scrupulously honest, highly organized, and keeping detailed records
Closing the trust when the trust terms specify

Ultimately, trustees have a fiduciary duty to properly manage the trust in the best interest of all the trust beneficiaries. Consult with us for more in-depth details regarding the duties and responsibilities a specific trust will require of you as trustee.

Signs the trustee role might be a bad fit
Given the sense of loyalty and filial responsibility that’s often involved, it might feel difficult to turn the trustee role down. But for several reasons, saying “no thanks” can sometimes be the best decision, not only for you, but for all parties involved.

Of course, this is an entirely personal decision and one you’ll ultimately have to make for yourself after considering all the factors. That said, here are a few red flags that can signal the role might be better fulfilled by someone other than you:

Your job, family, and/or health situation is such that you won’t be able to give the job the time and attention it deserves. Some trusts can require far more work than others, and if the role would seriously impede your own life, you might consider declining.
You don’t get along with the beneficiaries. If there are underlying conflicts or bad blood with the people you’ll be required to serve, this could make the job incredibly difficult and unpleasant for everyone.
The trust’s terms are vague and/or unclear, leaving you in the position to make difficult decisions you don’t feel qualified to make. Such grey areas are especially troublesome when it comes to distributing trust assets to young adult beneficiaries, who might not be the most responsible with their spending and/or lifestyle.
It’s not clear exactly what assets the trust creator (grantor) owned, and/or the estate is highly unorganized. Tracking down and managing unorganized and/or poorly funded assets can be a massive undertaking—and a potential liability.
Lawsuits are likely or already underway. As trustee, it’s your duty to defend the trust against lawsuits, and just doing this can be a huge expenditure of your time and energy. What’s more, if a lawsuit against the trust is successful, it could seriously reduce the trust’s value, making your job infinitely more challenging.

We can help you decide
Given the serious nature of a trustee’s responsibilities, you can meet with us for help deciding whether to accept the job. We can offer a clear, unbiased assessment of what will be required of you based on the specific trust’s terms, assets, and beneficiaries.

And if you do decide to accept the trustee role, we can guide you step-by-step through the entire process, ensuring you effectively fulfill all of the grantor’s wishes with minimal risk. Serving as trustee can be a lot of work, but if you go into the job with eyes wide open and have the proper guidance, it can be an immensely rewarding experience, too.

Dedicated to empowering your family, building your wealth and defining your legacy,

March 29, 2019/by CaliLaw

Before Agreeing to Serve as Trustee, Carefully Consider the Duties and Obligations Involved—Part 1

Education, Estate Planning, Estate Planning Blog, Trusts

If a friend or family member has asked you to serve as trustee for their trust upon their death, you should feel honored—this means they consider you among the most honest, reliable, and responsible people they know.

However, being a trustee is not only a great honor, it’s also a major responsibility. The job can entail a wide array of complex duties, and you’re both ethically and legally required to effectively execute those functions or face significant liability. Given this, agreeing to serve as trustee is a decision that shouldn’t be made lightly, and you should thoroughly understand exactly what the role requires before giving your answer.

Of course, a trustee’s responsibility can vary enormously depending on the size of the estate, the type of trust involved, and the trust’s specific terms and instructions. But every trust comes with a few core requirements, and here I’ll highlight some of the key responsibilities.

First off, serving as trustee does NOT require you to be an expert in law, finance, taxes, or any other field related to trust administration. In fact, it’s almost always a good idea for a trustee to seek assistance from professionals in these fields, and funding to pay for such services should already be set aside for this in the trust.

Adhere to the trust’s terms
Every trust is unique, and a trustee’s obligations and powers depend largely on what the trust allows for, so you should first carefully review the trust’s terms. The trust document outlines all the specific duties you’ll be required to fulfill as well as the appropriate timelines and discretion you’ll have for fulfilling these tasks.

Some trusts are relatively straightforward, with few assets and beneficiaries, so the entire job can be completed within a few weeks or months. Others, especially those containing numerous assets and minor-aged beneficiaries, can take decades to completely fulfill.

Act in the best interests of the beneficiaries
Trustees have a fiduciary duty to act in the best interest of the named beneficiaries at all times, and they must not use their position for personal gain. Moreover, they cannot commingle their own funds and assets with those of the trust, nor may they profit from the position beyond the fees set aside to pay for the trusteeship.

If the trust involves multiple beneficiaries, the trustee must balance any competing interests between the various beneficiaries in an impartial and objective manner for the benefit of them all. In some cases, grantors try to prevent conflicts between beneficiaries by including very specific instructions about how and when assets should be distributed, and if so, you must follow these directions exactly as spelled out.

However, some trusts leave asset distribution decisions up to the trustee’s discretion. If so, when deciding how to make distributions, the trustee must carefully evaluate each beneficiary’s current needs, future needs, other sources of income, as well as the potential impact the distribution might have on the other beneficiaries. Such duties should be taken very seriously, as beneficiaries can take legal action against trustees if they can prove he or she violated a fiduciary duty and/or mismanaged the trust.

Invest trust assets prudently
Many trusts contain interest-bearing securities and other investment vehicles. If so, the trustee is responsible not only for protecting and managing these assets, they’re also obligated to make them productive—which typically means selling and/or investing assets to generate income.

In doing so, the trustee must exercise reasonable care, skill, and caution when investing trust assets, otherwise known as the “prudent investor” rule. The trustee should always consider the specific purposes, terms, distribution requirements, and other aspects of the trust when meeting this standard.

Unless specifically spelled out in the trust terms, it will be up to the trustee’s discretion to determine the investment strategies that are best suited for the trust’s goals and beneficiaries. But trustees should not invest trust assets in overly speculative or high-risk stocks and/or other investment vehicles. A financial adv