Dead Hand Control: How Wills and Trusts Can Control Behavior
You may want to use your estate to influence your heirs in your absence. To a certain extent, this might be possible, but the process is delicate, and it requires well-designed structures.
By exerting what is called “dead hand control,” people may condition bequests in their legacies by framing bequests around required or forbidden activities. So, while you can do as you wish, you can’t expect everyone to be happy about it.
Disgruntled beneficiaries are sometimes quick to take their grievances to court. As a general principle, courts are inclined to deny provisions that could contravene accepted social norms or public policies.
For example, you cannot set up any of your beneficiaries in ways that would require them to perform illegal acts. You also cannot prevent them from marrying anyone, though in some cases, you may be able to enforce a narrower prohibition, such as marriage involving a particular faith or to someone of a specific ethnicity.
Ultimately, the outcomes of various probate cases always vary, and quite widely at that. Many details will impact the results, such as the jurisdiction in which everything is playing out. As the saying goes, the devil is in the details.
Bargaining from beyond
Provisions can often be manipulated, particularly when they are intended to achieve reasonable results. Any efforts to discourage beneficiaries from being lazy or attempting to alter what has been set up may appear fair on the surface.
However, a quick review of some probate judgments indicates that wills may be enforceable when they are designed to encourage positive habits. A major tip to keep in mind is to try making the goal relatively broad.
For instance, it might be allowable to require your nephew to graduate from college, but it would be too much to insist he attend Harvard or go to law school. Similarly, it would be appropriate to insist that your heirs not be convicted of a crime, although disinheriting an heir if he or she is found guilty of a trivial misdemeanor would not be.
You can have preferences and standards as long as they are not unrealistically strict. As another example, it would not raise eyebrows to insist that your beneficiaries vote, but you cannot specify that they vote for a particular party or a certain candidate.
Famous for setting demands that overstepped immensely, a woman by the name of Leona Helmsley stipulated that her grandchildren must visit their father’s grave twice per year. This in and of itself is not a duty that would be considered excessively onerous.
However, if she were to state that her grandchildren must allocate a certain number of hours visiting their father’s grave every week, then that might be considered as being over the top. Many testators will try to engineer ways to keep an elderly relative out of a nursing home, but those intentions may not necessarily remain intact as the testator originally intended.
However, courts will do their best to adhere to and uphold a testator’s wishes whenever possible. A prime example of this was when an Illinois dentist required that his grandchildren marry within the Jewish faith.
Although lower courts struck it down, the Illinois Supreme Court upheld the provision in 2009 on the basis that the values of the testator’s grandchildren reflected the values of the testator.
Avoiding trouble
What steps can you take to ensure that your wishes pan out? Here are a few suggestions that can assist you in setting your preferences up for success:
Use a professional fiduciary, whether that be an executor or a trustee, even if it costs more money to do so.
Draft your estate documents with no-contest clauses as a ploy to discourage disappointed beneficiaries. At the same time, make sure you leave any dissatisfied people just enough to make it easier for them to leave things as they are instead of trying to change the contents of the will.
Avoid probate altogether by using trusts.
If you decide to rely on a trust, it is a good idea to make it flexible. Be sure to state that trustees should act in ways that reflect the beneficiaries’ best interest as well.
You may also want to include a statement of wishes, which is not legally binding but can help trustees as they work to adhere to your intentions. Trusts can be a powerful tool when it comes to maintaining your legacy or just your personal inclinations in general.
Circling back to Leona Helmsley, she famously left behind a trust fund for her Maltese dog, Trouble, valued at $12 million. Trouble ended up dying when he was 12 years old in human years, which is 84 in dog years.
Now, while your final wishes may be more run-of-the-mill than those of Helmsley, it is still imperative that you consult your attorneys to ensure that you create a suitable trust and allocate your estate in the best way. Legal professionals can assist you in properly drafting all pertinent documents, so contact your lawyer as soon as possible.
The “estate” you own comprises much more than just physical real estate. Whether you have a modest income or sizeable assets, understanding the full scope of your estate is essential for planning purposes. Let’s delve into the various components of an estate with guidance from a knowledgeable Modesto estate lawyer.
Key Components of an Estate
Real Property: This includes homes, land, and any other real estate holdings you own or have an interest in.
Personal Property: Items like cars, jewelry, furniture, artwork, and personal belongings are all part of your estate.
Financial Accounts: This encompasses bank accounts (checking, savings), investment accounts, retirement accounts (IRAs, 401ks), and any other financial assets.
Life Insurance: The death benefit of a life insurance policy is considered part of your estate if you own the policy.
Business Interests: If you have ownership in a business—whether it’s a sole proprietorship, partnership, corporation, or LLC—it’s part of your estate.
Intellectual Property: Copyrights, patents, trademarks, and other intellectual property rights can also be estate assets.
Digital Assets: In today’s digital age, things like social media accounts, websites, blogs, and digital currencies (like Bitcoin, Robinhood) can be considered part of your estate.
Debts Owed to You: Money that others owe you, including personal loans or business-related debts, adds to your estate’s value.
Why Identifying All Assets Matters
Accurate Valuation: Knowing the entirety of your estate helps in determining its total value, crucial for tax implications and distribution strategies.
Efficient Distribution: Proper estate planning ensures that all assets, big or small, are distributed according to your wishes.
Avoiding Legal Complications: Missing out on any asset can lead to potential disputes or legal challenges in the future.
Getting Help
Your estate encompasses more than you might initially realize. From tangible assets like homes and cars to intangible ones like intellectual property and digital profiles, everything counts. Collaborate with a Modesto estate lawyer to ensure that you have a holistic view of your wealth and a solid plan for its future management and distribution. If you’re ready to get started, reach out to us by calling 209-416-0353 for guidance and peace of mind.
Special Needs Trusts (SNTs) are designed to provide supplemental support to individuals with disabilities without jeopardizing their eligibility for government assistance, such as Medi-Cal or Supplemental Security Income (SSI). However, there are certain expenses that an SNT should not cover. Understanding these can prevent unintentional complications and preserve the trust’s integrity. Let’s dive deeper with insights from a leading Stanislaus County special needs lawyer.
Potential Pitfalls: Expenses to Avoid
While an SNT can cover many life-enhancing expenditures, here are some it should NEVER pay for:
Cash Distributions Directly to the Beneficiary: Direct cash distributions can be counted as income, potentially affecting SSI and Medi-Cal eligibility. Always ensure disbursements are for specific services or products instead.
Basic Food and Shelter: Direct payments for food or shelter-related expenses, including mortgage, rent, utilities, and groceries, can reduce the SSI benefits due to the In-Kind Support and Maintenance (ISM) rule.
Assets That Might Count as Resources: Avoid buying assets that could be counted towards resource limits for government benefits. For instance, multiple cars or property not serving as the primary residence can pose problems.
Payments to Relatives for Basic Care: Compensating a family member for basic caregiving services can be perceived as a gift from the beneficiary, impacting benefits. Formal caregiver agreements, crafted with a Stanislaus County special needs lawyer, can provide a structured solution.
Why It Matters
Maintain Benefits Eligibility: Missteps can jeopardize the beneficiary’s government assistance, often their primary source of support.
Preserve the Trust’s Intent: The trust’s primary objective is to enhance the beneficiary’s quality of life without displacing primary needs covered by government benefits.
Avoid Legal Complications: Unintended violations can lead to legal issues, potential penalties, or a need for corrective action.
Work Closely with a Trusted Stanislaus County Special Needs Lawyer
The nuances of SNTs require an understanding of both federal and state laws. By working closely with an attorney you’ll:
Receive guidance on allowable disbursements.
Ensure compliance with all legal stipulations
Regularly review and adapt the trust in light of changing needs and regulations.
Getting Help
While a Special Needs Trust is a valuable tool for supporting a loved one with disabilities, it’s vital to be aware of the disbursements that could jeopardize their well-being and benefits. Collaborate with a Stanislaus County special needs lawyer to navigate the complexities and safeguard your child’s future. If you have questions or require expertise in crafting or managing an SNT, contact us by calling 209-416-0353.
Designing a trust is a significant move in estate planning, one that provides flexibility and potential tax advantages. Central to the operation of any trust is the Trustee, who is responsible for managing and distributing the trust’s assets as per its terms. Given this responsibility, how financially knowledgeable should a Trustee be? Let’s uncover the answer with advice from an experienced Central Valley trust attorney.
Decoding the Trustee’s Responsibilities
The Trustee’s duties span various functions, from prudent investment of assets to managing distributions and ensuring taxes are filed. Considering these diverse tasks, financial savvy is undoubtedly beneficial.
Assessing the Financial Acumen Needed
Nature & Size of the Trust: If the trust holds complex assets, like business interests or diverse investment portfolios, a Trustee with financial acumen will be better poised to oversee them effectively.
Expert Consultations: It’s vital to remember that a Trustee can always consult financial experts, tax professionals, or a Central Valley trust attorney when specific challenges arise. So, while financial knowledge is an advantage, it isn’t mandatory if the Trustee knows when and how to seek expert guidance.
Trustworthiness & Diligence: Financial expertise aside, the Trustee’s integrity is non-negotiable. They must always act in the best interest of all trust beneficiaries, not just the ones they like!
Organizational Skills: Beyond financial know-how, strong organizational skills can be critical. This helps in meticulous record-keeping, timely distributions, and efficient communication with beneficiaries.
Still Struggling to Choose? Consider These Tips:
Co-Trustees: If you’re grappling with choosing between two potential Trustees – one familiar with your personal wishes and another with financial expertise – think about naming them as co-Trustees.
Clarity in Trust Documents: A well-drafted trust document that clearly outlines your desires can alleviate the Trustee’s burden. Regular consultations with a Central Valley trust attorney can ensure your trust remains current and reflects your wishes.
Open Communication: Engage in open discussions with your prospective Trustee. Gauge their comfort with the role and the prospect of working with professionals when needed.
Conclusion
Choosing a Trustee is a blend of trust, capability, and foresight. While financial insight is beneficial, it’s one of several factors to weigh. Collaborate with a Central Valley trust attorney to align your choice with your trust’s intricacies, safeguarding your legacy and beneficiaries’ interests. If you’re in need of help or have additional questions, we are here to offer guidance and support. Simply contact our law firm at 209-416-0353 to schedule a consultation.
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