Probating a will and distributing an estate’s assets is a process that can drag on for months or even years, especially in complicated situations.
Delays may result from any of the following circumstances:
Multiple beneficiaries.
Disputes.
Will contests.
Creditors.
Taxes.
Court oversight.
However, beneficiaries can sidestep such a lengthy process with the help of vehicles such as trusts. A simpler and cheaper solution may be creating one or several joint accounts. You can open a joint account with anyone, including a parent, a child, a sibling, a spouse, an elderly person with caregivers, a business associate and even a friend.
What are trust accounts and joint rights of survivorship?
Trust accounts, which are sometimes known as a poor man’s will, are often set up to give families and beneficiaries ready access to a decedent’s funds or for the purpose of paying urgent bills. Trusts are created with joint rights of survivorship, meaning the surviving account holders immediately own all residual funds as soon as the owner of said account passes.
Those rights are typically granted at the bank on a signature card at the time the account is established. However, in some cases, beneficiaries may claim an automatic right of survivorship when it becomes problematic to obtain the signature card itself. For example, a series of bank mergers could make it difficult to trace the original card.
Whom does the money in the joint account belong to?
The money in the joint account belongs to both account holders, regardless of who deposited it in the first place. Additionally, either of the holders can withdraw some or all of the funds. Both account holders hold the power to close the account as well.
In order to open the account or be added to it, applicants must provide information such as their name, address, phone number, date of birth and Social Security number. Prior to closing the account, holders must show proof of their identity and withdraw all the money in the account.
What are the risks and benefits of joint accounts?
One major danger of a joint account is that joint account holders can withdraw large amounts and even wipe out the balance with impunity. There are many cautionary tales of estranged spouses who rush to clean out the couple’s marital assets as soon as the relationship breaks down.
This means the cardinal rule for joint accounts is that you must trust the person with whom you are sharing the account 100%. Remember that good relationships do go south, so you could be left in the hole if your joint account holder decides — rightly or wrongly — that they are entitled to usurp the funds.
Here are various other risks that may be involved:
The account is transparent to both owners, resulting in a lack of privacy.
Creditors of any defaulting account holder may be able to access the money.
Ownership of the funds may need to be divided if a relationship goes sour or business needs change.
Specific government benefits or financial aid eligibility may be affected.
Gift taxes may be applied to the funds in the account.
On the other hand, advantages extend well beyond survivorship rights and probate avoidance. Two other examples of useful features include the following:
Simplicity for shared joint living expenses.
Higher total account balance to meet minimum balance requirements.
Disputes
The best laid plans of mice and men may still result in will contests and litigation. Whether or not the main intention of the deceased was to facilitate the transfer of assets by avoiding probate, other disappointed beneficiaries may claim that the joint designation was only designed for the sake of convenience.
Frustrated relatives and wannabe heirs may argue that the account was, in reality, structured as a mechanism to pay the deceased owner’s living expenses, particularly if the departed was old and frail or reliant on others for day-to-day living. Contesters may also argue that the deceased did not even understand the implications of the joint structure.
In trying to distinguish between a convenience arrangement and a genuine survivorship mechanism, courts will take a close look at a handful of key details, including:
Who contributed the majority of the funds to the joint account?
Who made withdrawals or paid expenses from it?
Were the funds primarily used to pay for the expenses of the deceased?
When was the account created? Was it years prior to the decedent’s death?
It cuts both ways. A more up-to-date instrument may suggest that the account was an estate planning tool. Conversely, the deceased might also have been less mentally acute.
No matter what, if you are considering setting up a joint account for the purpose of estate planning or for another reason, be sure to check with your attorneys and financial advisers to clarify any legal and tax-related considerations.
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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