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Law Offices of Roshni T. Desai
Long-term Planning For Orange County
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Santa Ana Estate Planning & Probate Blog

Who does a trust benefit?

In California, there are many laws governing trusts. Who are they used for? Who can they benefit, and how can you set one up? These are just a few of the valid questions you may be asking yourself. Today, we will examine who can benefit from a trust.

FindLaw carefully examines the different types of trusts that can be formed. From looking at that, the groups of people or individuals who can benefit from a trust can be determined. Most of these beneficiaries are unable to manage their own finances for one or more reasons. Some such people include:

  • Minors
  • The elderly
  • People with developmental disabilities, mental disorders, or other handicaps
  • People who have suffered from traumatic brain injury

Making sure your will and trust work together

You likely have a will and one or more trusts as part of your California estate plan. But before you sit back with a sigh of relief, thinking that you now have everything just the way you want it, you need to do one more thing. Review all your documents to make sure your will and your trust(s) work together. 

Remember, however many trusts your estate plan includes, the only assets in those trusts are the ones you transferred into them at the time you set them up. All your other assets, except for those you own in joint name with someone else, still belong to you personally and will become part of your probate estate when you die. This may make it difficult for your executor and your trustee(s) to carry out your wishes exactly as you intend. Updating your will, if necessary, to make it a pour-over will can solve this dilemma.

When an executor of a will may be removed from office

Perhaps your loved one spent a great deal of time and thought choosing the personal representative, or executor, of his or her California estate. However, now that the probate process has begun, you are seeing warning signs that this person is not the right one for the job. At the Law Offices of Roshni T. Desai, our legal team often provides advice to beneficiaries during probate and beyond.

California statutes say that there are certain situations when it is possible to remove a personal representative from the position of estate executor. You can only petition to remove someone from this position if you have an interest in the estate. Your petition should include one or more of the following:

  • You have evidence that the executor is or will be committing fraud on the estate, or wasting, mismanaging or embezzling the assets. 
  • The executor is not qualified to fulfill the duties of the position or is incapable of fulfilling them.
  • You can show that the executor has neglected to fulfill his or her duties, or has neglected the estate itself.
  • Removing the executor is necessary to protect your interests, the interests of other beneficiaries or the estate itself.

Are you breaching your fiduciary duty?

If you agreed to be the executor of someone’s California estate or the trustee for a trust someone set up, this makes you a fiduciary. FindLaw explains that as a fiduciary, you must act in the best interests of the estate or trust and its ultimate heirs or beneficiaries. You may not and must not act in your own interests.

Bear in mind that you are a human being, and human beings often make mistakes. Consequently, no one, not the heirs, beneficiaries, a court or the law itself, insists that you perform your fiduciary duties perfectly. For instance, should you inadvertently miscalculate something, or if what looked like a solid investment to make with the estate’s or trust’s assets turns out to underperform, no one will accuse you of breaching your fiduciary duty.

When is a good time to start planning your estate?

Too many people assume that estate planning is only for the rich and old, but the truth is, the young and broke can benefit from having a plan in place, too. According to U.S. News Money, estate planning has nothing to do with your net worth but everything to do with protecting your loved ones in the event of your death. Whether you are in your 20s and living in your parent's California home or you are 40 and have a house and family of your own, now is the time to begin thinking about to whom your assets will go in the event of a tragedy.

Depending on your age, your estate planning efforts may involve little more than naming a healthcare proxy. If you are still young, single and without a lot of assets, you may not need a will or trust, but you could benefit from naming a healthcare proxy. This person will make healthcare decisions on your behalf in the event that you are unable to make them yourself. Too many young adults assume that their parents can make these decisions, but once a person turns 18, the government strips that power from them entirely.

Divorce, estate planning and emotional challenges

There are many aspects of life that can be very challenging but bringing a marriage to an end and dealing with estate planning issues can be especially complicated. Furthermore, some people find themselves dealing with both of these matters simultaneously, which can be especially difficult. For example, someone whose marriage may have come to an end may also need to go over their estate plan to remove their ex as a beneficiary or find a new executor. These tasks can result in emotional challenges also, which can be counterproductive in some instances.

Someone who is in this position may have to deal with overwhelming stress, which could carry over into other aspects of their life. For example, high anxiety levels could affect their performance at work or have a negative impact on their relationships with friends and relatives. Depression is another emotional hurdle that some people have to work through when they are going through a divorce or dealing with estate matters. Some people may even be angry with their former partner and the difficulties that they are facing.

Why would I need to hire a professional for an estate sale?

After your parents’ deaths, you may have been stuck with a lot of possessions you have no use for. The figurines and art? Expensive, but not your style. The fine china and silver? You already have your own sets. The living room furniture and the sports equipment in the garage? You don’t have room for all of it. Like other California residents who have inherited items they don’t need, you may be considering holding an estate sale.

How complicated can an estate sale be, you might wonder. As HowStuffWorks points out, estate sales are often more intricate than garage or yard sales. While most people having a yard sale are just trying to get rid of their old junk, estate sales typically involve all the home’s possessions that the heirs don’t want or need – from clothing and knickknacks to antiques and even vehicles. The sale of higher-end items can benefit from having someone involved who knows how to appraise, price and manage these items.

Does your child qualify for a special needs trust?

As the parent of a California special needs child, you may have considered setting up a special needs trust for him or her to ensure that the money will always be there to provide the care (s)he needs, even when you are no longer around to provide it yourself.

But what exactly qualifies as a “special need” for trust purposes? Very Well Family explains that although your child’s special needs are specific to him or her, special needs generally fall into one of the following six categories: 

  1. Congenital conditions
  2. Medical conditions
  3. Developmental conditions
  4. Learning conditions
  5. Behavioral conditions
  6. Psychiatric conditions

What steps should I take after an Alzheimer’s diagnosis?

A diagnosis of a disabling medical condition can be devastating and life-altering. Sadly, Alzheimer’s disease and dementia are only a couple of the age-related conditions that can keep you from being independent in your senior years. You and other California residents may wonder how to protect your assets and your loved ones’ inheritance if you are diagnosed with the early stages of Alzheimer’s.

As Web MD explains, there are several steps that may preserve your quality of life and protect your financial interests after an Alzheimer’s diagnosis. These include the following:

  • Educate yourself about the condition, as well as your treatment options and medical coverage.
  • Eat healthy food and get adequate exercise, which may preserve brain function and slow the progress of the disease.
  • Talk to your loved ones about your diagnosis and how to proceed with your estate planning.
  • Establish routines and lists that can help you stay as comfortable, reassured and independent as possible.
  • Decide on your advance care directive and consider signing over power of attorney to a trusted relative.

Be aware of trusts’ potential limitations as well as benefits

You may know that certain wills and trusts have different benefits. However, as we at the Law Offices of Roshni T. Desai, are aware, different types of estate planning in California can also have limitations.

Consider, for example, special needs trusts. As we have explained in previous posts, special needs trusts can help disabled people remain eligible for Medicaid benefits while holding onto their assets. A first-party special needs trust allows you to create the trust yourself if you are disabled but mentally competent. Special needs trusts have other benefits, including trust funds being tax deductible, creditors having no claim on trust funds and ensuring the money is used for your care. However, as CNBC warns, first-party special needs trusts have a payback provision, of which you may not be aware.