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Fullerton Estate Planning Law Blog

Protect your heirs from themselves with a spendthrift trust

Imagine you don't have any children who can inherit your estate, except you do have a niece who happens to have a serious spending problem. As soon as she has any amount of money in her hands, she spends it on something irresponsible. Considering that this is your only heir, it's understandable that you're concerned. Fortunately, you and your niece might benefit from a "spendthrift" trust.

The word "spendthrift" refers to someone who doesn't spend his or her money wisely, and is, instead, a wasteful spender. In the context of trust planning, a spendthrift trust allows estate planners to bequeath money to their heirs in a way that protects the heirs from their own poor spending habits. A spendthrift trust can be designed in such a way as to distribute money to the beneficiary in small monthly increments. If there are sufficient assets within the trust to generate a sustainable income, then the trust can even be structured in a way that a trust manager invests the assets in the trust and uses the income to make regular disbursements to the heir.

Are you considering a pet trust? Read this first

California pet lovers who want to create a responsible plan for their animals may want to consider the creation of a pet trust. This can be an excellent way to ensure that your animal is cared for long after you're gone, or in the event that you become medically incapacitated and are no longer able to tend to your pet's needs without assistance.

The principal reasons why people create a pet trust is to (1) indicate who will care for their pets (2) provide financial assistance to cover the expenses related to the care of those pets and (3) give clear guidelines about how to care for the animal relating to snacks, veterinary visits, walks and end-of-life arrangements.

What are the goals of your estate planning trust?

Many California estate planners have benefited greatly from incorporating a trust into their estate plans. In fact, some individuals have saved their personal assets from certain depletion through a strategically-crated trust document.

Let's take a look at some of the most important reasons you might want to consider a trust:

Estate planning tips: What to do immediately after someone dies

When someone close to you passes away, your head will be swimming with emotions -- especially if you are the one who discovers that he or she passed. You may be panicking because it's so difficult to face this kind of reality. However, it's important to focus and take care of several tasks.

Here's what you'll need to do immediately, on the first day of the death:

Why you need to create a will (before it's too late)

Many California residents have not completed the most basic element of an estate plan: the last will and testament. If you ask them, they'll say something like, "I'm going to do it soon. I just haven't had the time." Or they'll say, "I'll take care of it before the end of the year." But what if today is your last day? What if you die next week and you leave your family without the most vital piece of estate planning documentation?

If you die without a will, California intestacy laws will go into effect. Those laws will dictate who gets what under the guidance of a probate court judge after you're gone. If you don't have a lot of assets to your name, intestacy laws might be enough to settle your estate, but they certainly won't make things easier on your family.

Estate planning for unmarried couples

In today's social climate, it much more common for couples to live together for long stretches of time before deciding whether to marry. Some choose to remain together and unmarried indefinitely. While this may not cause too many complications while both parties are still living, if one party dies or becomes incapacitated, then the other party may not receive any of their possessions from their estate. Typically, when a legally single person dies, their property passes on to direct relatives, depending on the intestacy laws that their state of residence uses.

If you live with your significant other and do not plan to get married, or if that is not on the table in the near future, it is still wise to create a will that outlines how you wish to distribute your property when you die. This may seem unnecessary if you do not have a large estate, but your property is still your property, and you deserve to determine who receives it.

Using lottery trusts to protect your interests

While most people think of good luck as finding a good parking spot at the store or avoiding an accident on the freeway, some people find their lives turned upside down by good luck when they win the lottery or come into some other sort of windfall of good fortune. Of course, with every stroke of luck, there is always the possibility that the blessing can become troublesome and cause more problems than it alleviates. For those who find themselves suddenly on the receiving end of lottery winnings, it is wise to consider a lottery trust.

One of the most important aspects of protecting yourself and your rights after winning the lottery is protecting your anonymity. One does not have to look into the corners of the internet very long to find many stories of people who won the lottery and then saw their lives change for the worse very quickly. In large part, this is because everyone around them knew that they were lottery winners. If you want to have a good shot at enjoying your good fortune and not ruining all of your personal and professional relationships, protecting your anonymity is important. By placing your winning inside a lottery trust, only the title of the trust is made public.

The benefits of a living trust

When you begin considering all the estate planning options available these days, it can seem overwhelming. It may even keep you from creating a plan at all.

This is a response that many people have, and it can prevent them from taking important steps toward protecting their estate and securing their legacy once they are gone. For those who have difficulty deciding which estate planning tools to use to address their needs, it is always wise to consider a living trust.

Keep these estate planning mistakes out of your life

Creating an estate plan is one of the most important things you'll ever do, as this impacts you and your loved ones in a number of ways. Without an estate plan in place, there's no way of knowing exactly what will happen when you pass on.

Many people before you have made estate planning mistakes, but that doesn't mean you have to do the same. Knowledge of these mistakes can help you avoid trouble, and here are five of the most common:

  • Not creating an estate plan: This one is obvious, but it's a mistake many people make. It doesn't matter if you're young and single or older with adult children, make sure you have an estate plan in place.
  • Neglecting to make changes: Your life will change as you age, and so should your estate plan. Make changes as necessary, such as when you get married, have a child or come into more money.
  • Forgetting to plan for a future disability: You need to have a plan in place in the event that you become incapacitated. For example, a power of attorney gives another person the ability to step in and make decisions on your behalf.
  • Forgetting to name a guardian: It's hard to think about leaving your children behind, but this could happen. By naming a guardian, you know there will be someone to care for them should you pass on before they reach the age of 18.
  • Choosing the wrong executor: When you pass on, your executor is in charge of handling your estate. This can mean many things, such as taking inventory of your assets, paying your debts and assisting with the probate process. You must choose an executor you can trust to carry out your final wishes.

Consider unequal bequests in your will very carefully

When you create your will, it is always best to consider how the terms of the will may affect the people that you include or exclude from it. For many families, unequal bequests in a will can create strong rifts between family members who feel that they were treated unfairly. While your wishes are your own and you have the freedom to leave your property to anyone that you'd like, it is always a good idea to think ahead and anticipate how certain bequests may create conflict.

If, for instance, you have two children, you may wish to leave more of your property to one than the other. If your children do not know that you plan to do so, it can create great tensions between them or other parties who get involved. In many instances, it is wise to make your wishes known ahead of time, and in some cases, you may want to explain you reasoning to your children and any other beneficiaries.

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