Category: Estate Planning

Professional estate planning is a clear necessity for those with millions of dollars in assets. It reduces the tax burden on their estate, minimizes conflict and confusion among heirs, and helps ensure that the estate is distributed according to their wishes.

But what about the rest of us? Most people don’t have estates worth millions, so they naturally have doubts that they need to worry too much about what happens to their property after they die. However, it’s important to understand that estate planning is not just for the wealthy; it can provide the same benefits for people with more modestly sized estates and is generally worth the investment.

The best way to understand how estate planning can work for you is to run a “fire drill.” This means playing out what would happen if you were to die right now. While it may seem a bit morbid, it helps people understand that they do have assets (often more than they realized) and that if they don’t make decisions about what happens to those assets after they die, then someone else will.

A proper estate planning fire drill requires the assistance of a professional, as most people are not familiar enough with things like probate and estate taxes to simulate the legal consequences. However, we can still run through a few common considerations.

Minor Children

If you have children under the age of 18, it’s important to consider what will happen to them if both parents die. Unfortunately, this can happen, and when it does happen, it is usually unexpected. In that case, someone must be appointed as the child’s legal guardian until they reach adulthood. If you don’t make that decision yourself, a court will have to make it for you. Given the obvious importance of this issue, it’s best that you make your wishes clear and discuss them with the person or persons you want to take on that responsibility.

It’s also good to create a trust that will care for your estate until your children are old enough to do so themselves. This helps ensure that the children are cared for and gives you some control over the terms of the trust. For example, you can decide who will be the trustee and what age the children should reach before taking full control of the property.

Spouses & Partners

If a married person dies without a will, their property generally goes to the surviving spouse through the laws of intestacy. While this usually makes sense, there are a few issues to keep in mind.

First, if there is property you want to go to someone else—a child or a friend, for example—then you will need to make that clear in writing.
Second, even if all the property ultimately goes to the surviving spouse, a lack of estate planning can create unnecessary headaches. For example, a common issue is when property such as a house is only in one person’s name; the surviving spouse may get the house eventually, but the process will be more complicated and expensive.

Unmarried couples have significantly greater estate planning needs precisely because of the laws of intestacy mentioned above. Courts will usually not recognize the legal significance of these relationships, leaving the surviving partner with little recourse and potentially in conflict with other family members.

Specific Circumstances of Family Members

You may be well acquainted with the lives of the people who could inherit your estate—their economic circumstances, personal abilities, etc.—but courts are not. Without a will, the probate judge will distribute your estate according to the laws of intestacy, which do not consider those people’s specific circumstances. For example, maybe one of your children helped you build your house, and you want them to have it after you die. Unless this wish is recorded in a will, all the siblings could jointly inherit the house.

Create the Right Estate Plan

These and most other issues can usually be resolved without much effort if you take the time to sit down with an estate planning attorney. They could help you figure out what would happen to your estate if you were to die today and then improve on those results. With just a little investment, you can make things much easier for those that survive you and see that your wishes are respected.

Contact our office today to schedule a consultation and get the process started.

Billions of dollars are being poured into cryptocurrency every year, an economic development that may have far-reaching implications. Many believe it is the dawn of a new era of decentralized finance, a world without banks or middlemen. Whether that’s true remains to be seen, but one of the more practical concerns for cryptocurrency is how to ensure it is transferred to the right person after you die, i.e., how to make it part of your estate planning.

The very aspects of cryptocurrency that attract many of its proponents—anonymity and decentralization—create unique concerns that must be specifically addressed in an estate plan.

Make Sure Someone Knows About It!

The biggest problem with cryptocurrency and estate planning is that very often, no one else is aware of its existence. There are no bank statements or W-2s; in some ways, the money invested in cryptocurrency has dropped off the grid, and it can easily be lost there if no one knows to go looking for it.

Therefore, the first step to including cryptocurrency in your estate plan is to list it as an asset. You can leave it to your beneficiaries in a traditional will, though some believe this is less secure because the will becomes public when it goes to probate. 

Another popular option is to transfer your cryptocurrency to a living trust. A will helps ensure the cryptocurrency doesn’t get lost and has the added benefits of being more private and bypassing probate.

Passing Along Your Credentials

Cryptocurrency funds are essentially anonymous, accessible to anyone who has the private key or seed phrase needed to log in to the account or digital wallet. Because there is no centralized institution holding the investment, there is no safeguard or backup plan to retrieve funds if the password is lost. In a well-publicized case, one Bitcoin owner misplaced the password to his digital wallet containing hundreds of millions of dollars worth of cryptocurrency, losing access to that fortune forever.

Transferring your key or seed phrase as part of your estate is an essential part of passing along your cryptocurrency assets, but the vulnerability to theft also makes this a little tricky. Here are a few options for keeping track of these passwords and making sure they are available after your death.

Share Your Passwords with Someone You Trust – This is the simplest solution, assuming you can trust someone with access to your funds. You may also share parts of the password with multiple people to keep one person from having access.

Safe Deposit Box – An old-school approach to a 21st-century problem. Simply create a hard copy of the passwords and store them in a safe deposit box which can be accessed in the event of your death. Some may choose to divide the password into two or more pieces and store them in multiple locations.

A Dead-Man’s Switch App – Cryptocurrency owners can configure a system where they are required to log in regularly to confirm they are still alive. If they fail to do so, a predetermined process will transfer ownership to someone else.

Create a Living Trust – If you put your cryptocurrency into a trust, not only does it simplify probate as mentioned above, a trustee can access and disburse funds according to the terms of the trust.

Get Help From an Attorney

Cryptocurrency can form a significant part of the legacy you leave behind, but you must take proactive steps to ensure it is passed on. Our experienced estate planning attorneys can help you find a secure solution that meets your needs. Contact us today for a consultation.

How is estate planning for unmarried couples different than if you’re married or even single? Here’s a look:

Estate Planning For Unmarried Couples vs. Married Couples

The significant difference is that marriage creates many legally recognized assumptions. For example, two assumptions are that your spouse will inherit your estate when you die and also make decisions on your behalf if you’re incapacitated. These assumptions essentially become the default estate plan without an explicit estate plan.

However, the situation is different when someone is unmarried and without children. The law will still try to make assumptions about what to do with the estate. But the results can become increasingly disconnected from the person’s actual wishes. That’s due to the laws of intestacy—state laws that determine what happens to a person’s assets if they die without a will.

The probate court goes through a set order of succession to find a relative who should inherit your estate. Your estate will go to the state if no such person can be found. The process in this situation can be quite complicated. Your assets, for example, could easily end up going to a distant cousin you never met, which may not be what you want.

This result can be especially unfortunate when the person who dies or is incapacitated is unmarried but does have a long-term partner. Even if the relationship is like a marriage in everything but name, the law may not recognize it. As a result, the partner can be left out as an estate is divided up or major medical decisions are being made.

How To Do Estate Planning When You’re An Unmarried Couple

When it comes to estate planning for unmarried couples, you have to be much more deliberate to overcome any legal assumptions that run counter to your wishes. The overall estate-planning process remains the same:

1. Take stock of your assets
2. Decide who you want to benefit from your estate
3. Meet with an attorney to create a plan
4. Review the plan from time to time

If you have someone in mind that you want to inherit all or part of your estate, whether a partner, friend, or relative, it’s essential to put this in writing in a properly drafted legal document. Or perhaps you want to establish a legacy of charitable giving. There are several ways to accomplish this, including establishing a revocable or irrevocable trust. Meeting with an attorney will help you do this in a way that passes legal scrutiny and minimizes tax exposure.

Unmarried couples should also strongly consider creating an advance medical directive and designating someone who has power of attorney to make decisions on their behalf if they become incapacitated. You should review these documents regularly to ensure they still match your wishes.

Meet with an Estate-Planning Attorney

When you’re ready to create an estate plan, our team of expert attorneys can help you put it into action. Schedule a consultation today to get started.

Estate planning is one of the most common reasons for someone to require the services of an attorney. Virtually everyone has at least some assets, and those assets will need to be distributed after they pass away. Because this affects so many people, it’s helpful to know some of the top estate planning tips, such as mistakes to avoid.

Mistake #1: Not Having an Estate Plan

Hands down, the most common estate planning mistake is simply not having an estate plan. There are many reasons for this. Younger people often just don’t think about it, some people think they don’t have enough assets for it to be a concern, and others underestimate the complications that can arise when someone dies without a will. It may be an unpleasant thought, but everyone should ask themselves: what would happen to all of my property if I died today?

Mistake #2: Not Hiring an Attorney

As some of the following entries on this list will suggest, several legal requirements must be met for an estate plan to be valid. This becomes more important as the complexity of the estate increases, but even a simple will must be executed according to the law.

Mistake #3: Not Keeping Your Estate Plan Updated

As your life changes, your assets and wishes will likely change, too. It is all too easy to create an estate plan once and then forget about it. You should periodically revisit your estate plan, especially after major events such as marriage or the birth of a child.

Mistake #4: Underestimating the Potential for Conflict

It’s easy to assume that everyone you leave behind will understand your wishes and agree on what those wishes are, but that is not always the case. Emotions often run high after death, and you will not be there to clarify things. A clear estate plan can minimize conflict.

Mistake #5: Not Creating a Health Care Directive

Tragedies and accidents can happen in an instant. If an event such as a car crash leaves you incapacitated, your family will have to make important and difficult decisions about your medical care. Creating a health care directive in advance that lays out your specific instructions for various circumstances will make sure your wishes are met and make things easier for your family.

Mistake #6: Not Choosing an Executor for Your Estate

It will fall to someone to take care of all the work of administering your estate. If you have someone specific in mind, be sure to identify them. Otherwise, the probate court will appoint an executor for you.

Mistake #7: Missing Assets

All of your assets must be dealt with in one way or another. If your will only lists a series of specific gifts, the remainder of your estate will be distributed according to the state’s laws of intestacy (the rules that dictate what happens when someone dies without a will). On the other end, if your will only speaks in generalities, you might be overlooking specific property you want to be distributed in a more specific way.

Mistake #8: Digital or Electronic Wills

In most states, including California, electronic or digital wills are currently not accepted as valid. A will must be printed out, signed, and stored as a hard copy. Even if it complies with every other legal requirement, a document in your computer will likely be rejected by a probate court.

Mistake #9: Witness Signatures

In California, a will must be signed by two witnesses, preferably when you signed the document yourself. This helps prevent fraud. The witnesses should not be estate beneficiaries, either. If they are, the probate court can presume the will was created under duress and may disregard portions of it.

Mistake #10: Not Keeping the Will in a Place Where It Will Be Found

A will is no good if nobody can find it after you pass away. If you keep it in your home or office, keep it in a place where it will be easily discovered. The best option, however, is to keep your will on file with your attorney.

For More Estate Planning Tips

One of the best estate planning tips is to meet with an attorney. It may be tempting to go it alone, but many things can go wrong. The price of consulting an expert is quite modest compared to the potential problems created by DIY estate planning. Contact our office today to schedule a meeting.

Digital assets have grown massively in popularity in recent years. One need only look at the explosion of cryptocurrency and non-fungible token (NFT) trading to understand how much money is being invested in this area. With this growth has also come a new, and sometimes tricky, set of considerations for those trying to plan their estates.

What Are Digital Assets?

A digital asset is a uniquely identifiable property or material that exists only in digital (i.e., nonphysical) form and includes a legal right to use it. The term can be applied to a wide variety of properties. Here are a few common examples of digital assets:

• Audio or video files 
• Internet domain names
• Photographs and images
• Business data
• Software
• Cryptocurrency
• NFTs

Questions of ownership or other legal interest can be challenging with digital assets, as they are so easily copied. For instance, downloading a logo from a website does not give you any right to use it for your own purposes, much less sell it to someone. Ownership often may be demonstrated by documentation such as a copyright, bill of sale, etc., but sometimes it is almost entirely a question of who has the password, token, or other means of accessing the asset. In terms of estate planning, it is important to establish what it is you actually own and whether it can be transferred to someone else.

Keeping Track of Passwords

One of the biggest problems with transferring digital assets after someone has passed away is surprisingly mundane: no one has the passwords to access them. The assets may be encrypted on a hard drive or server, or may require an online account login, but the decedent never wrote the passwords down anywhere. Sometimes this issue can be resolved by proving the transfer of ownership to, say, the data storage company or email provider, but that is not always possible. Cryptocurrency has become notorious for this problem. There are several examples of investors losing very large amounts of money after misplacing their password.

Therefore, a key aspect of your estate plan should be to keep track of all passwords and store them in a secure location that can be accessed in the event of your death.

Additional Considerations for Digital Assets

For the most part, digital assets are treated like any other property that makes up your estate, but there are a few specialized concerns to keep in mind. The first is that it’s important to document all of these assets. This may apply to any estate property, but it is especially easy for an executor or administrator to overlook digital assets or simply be unaware of their existence. Cryptocurrency trading, for example, is virtually anonymous, so unless you’ve told someone about your holdings no one will know about them.

In fact, cryptocurrencies present a few challenges for estate planning and administration. Despite the name, the IRS considers cryptocurrency to be property, not currency (analogous to company stocks). The value of cryptocurrencies also tends to be rather volatile, potentially creating unexpected tax consequences. It helps to keep regular records tracking the values of these assets.

Southern California Estate Planning Attorneys

Digital assets have created new and potentially lucrative investment opportunities for many people, but making sure these assets are passed on to your successors takes careful planning and organization. Our experienced estate planning attorneys can help make sure these assets end up in the right hands and minimize the tax burden on your estate. Contact our office today to schedule a consultation.