When Is A Person Unfit To Make A Will?

Testamentary capacity refers to a person’s ability to understand and execute a will. As a general rule, most people who are over the age of eighteen are thought to be competent to make and sign the will. They must be able to understand that they are signing the will, they must understand the nature of the property being affected by the will, and they must remember and understand who is affected by the will. These are simple burdens to meet. However, there are a number of reasons a person might challenge a will based on testamentary capacity.

If the testator of a will suffers from paranoid delusions, he or she may make changes to a testamentary document based on beliefs that have no basis in reality. If a disinherited heir can show that a testator suffered from such insane delusions when the changes were made, he or she can have the will invalidated. Similarly a person suffering from dementia or Alzheimer’s disease may be declared unfit to make a will. If a person suffers from a mental or physical disability that prevents them from understanding from understanding that a will is an instrument that is meant to direct how assets are to be distributed in the event of his or her death, that person is not capable of executing a valid will.

It is not entirely uncommon that disinherited heirs complain that a caretaker or a new acquaintance brainwashed the testator into changing his or her will. This is not an accusation of incapacity to make the will, but rather a claim of undue influence. If the third party suggested making the changes, if the third party threatened to withhold care if the will was not changed, or if the third party did anything at all to produce a will that would not be the testator’s intent absent that influence, the will may be set aside for undue influence. Regardless of the reason for the challenge, these determinations will only be made after the testator’s death if the will is presented to a court and challenged. For this reason, it is especially important for the testator to be as thorough as possible in making an estate plan and making sure that any changes are made with the assistance of an experienced estate planning attorney at Schneiders & Associates. Call today for a no fee consultation.

By: Roy Schneider, Esq.

4 Reasons Everyone Needs An Estate Plan

Many people are under the misconception that estate plans are only necessary for those with substantial wealth. In fact, estate plans are important for everyone who wants to plan for the future. For those unfamiliar with the concept, an estate plan coordinates the distribution of your assets upon your death. Without an estate plan, your estate (assets) will go through the probate system, regardless of how much or how little you have. There are many reasons that everyone needs an estate plan, but the top reasons are:

  1. Protecting You and Your Family
    Most people associate an estate plan with death, but an estate plan also comes into play if you become incapacitated. Through a proper estate plan, you can designate who will be responsible for making your financial and medical decisions, the authority they will have, and restrictions you would like placed on their power.
  2. Distributing Your Assets as You See Fit
    Without an estate plan, your estate will go to the probate courts, and your assets will be distributed according to the state’s intestacy laws, which generally prioritize spouses, children and parents. In addition, not having a will or trust in place lends itself to the potential of disputes between surviving family members. The best way to ensure that your beneficiaries receive the inheritance you intend for them is by having a well-conceived estate plan.
  3. Reducing Taxes
    Whether married or single, having an estate plan can significantly reduce taxes owed upon the transfer of your assets to your heirs.. Without proper planning, any transfers from you to a beneficiary may be subjected to federal and state taxation. Trusts, one of the most well-known, but least understood, estate planning tools, present excellent opportunities for reducing taxes associated with inheritance.
    Through a system of trusts and transfers, you can reduce the overall tax burden associated with the inheritance. For those with substantial assets, more advanced tax planning strategies will be necessary. Regardless of your current wealth, you will likely be able to reduce the taxation of your estate’s assets with the help of an experienced estate planning attorney.
  4. Providing for Your Family as You Believe Best
    By combining the ability to distribute assets with other estate planning tools such as trusts, you can include conditions for each recipient. This ensures that the money you want to give your nephew for college will actually be used for college, even if that is still 10 or 15 years away.
    As noted, estate planning is for everyone – not just the super-wealthy. Whether it’s avoiding a future family dispute, helping a loved one later in life, or reaching any other goals or objectives, having an estate plan is the best way to protect your interests.

If you have any questions regarding estate planning, please do not hesitate to contact an Estate Planning Attorney at Schneiders & Associates, LLP for advice and counsel.

Eric A. Hirschberg, “40 Under 40” Honoree

Schneiders & Associates, LLP is proud to announce that the Pacific Coast Business Times has named Eric A. Hirschberg a “40 Under 40” honoree! Eric focuses his practice in the areas of estate planning, trust administration, probate, business and corporate transactions, and entity formation. Eric prides himself on his lasting relationships with his clients built on trust and mutual respect, where they feel comfortable seeking legal advice from him regarding all aspects of their estates and businesses. Congratulations Eric!

Do Not Be Foolish With Your Heirs’ Future

If you own real property in California, the California Probate Code almost forces you to create a trust to avoid fettering away your children’s or your heirs’ inheritance.  While trust and probate law is a very complicated area of practice with numerous intricacies that requires the assistance of an attorney well versed in this practice area, below are some of the reason why it is so important in California to create an estate plan, which most likely would need to include a living trust.

Although there are some exceptions, if your home, other real property, and other assets have a combined gross value of over $150,000.00, and you do not have a trust or other vehicles for your assets to be transferred upon your death, such as “payable on death accounts”, then your assets will be required to go through probate before they can be distributed to your heirs[1].

Probate is time consuming, expensive, and the information disclosed therein is part of the public record.  Even a simple probate concerning a home with a value of over $150,000.00 takes at least six months to be completed, but typically longer.  Almost all of the documents filed in a probate are part of the public record and can be viewed by anyone.  However, the greatest determent to your heirs and family is   the cost of probate. California law imposes statutory fees to be paid to both the attorney that probates your estate and your personal representative (the person appointed by the Court to handle your assets and debts during the probate process).  Pursuant to California Probate Code section 10810(a), these fees are as follows:

“(1) Four percent on the first one hundred thousand dollars ($100,000).

(2) Three percent on the next one hundred thousand dollars ($100,000).

(3) Two percent on the next eight hundred thousand dollars ($800,000).

(4) One percent on the next nine million dollars ($9,000,000).

(5) One-half of 1 percent on the next fifteen million dollars ($15,000,000).

(6) For all amounts above twenty-five million dollars ($25,000,000), a reasonable amount to be determined by the court…”

Thus, if you have an estate consisting of a home with a gross value of $550,000, the statutory fees to probate your estate would be $14,000 to the attorney and $14,000 to the personal representative.  Thus, your heir will automatically lose $28,000 of their inheritance if your estate has to be probated.

To avoid these extensive fees, a person should consider creating a trust.  A trust in California can be as simple or as complicated as your particular assets, desired distributions, and tax needs require. However, whether you need a relatively simple trust or a complex trust, these instruments provide you with possible asset protection, privacy, and expedite the distribution of your assets following your death.  Unless there is litigation, the administration of a trust is not done through the courts and is not part of the public record.  Also, the creator of the trust, the settlor, can decide how his or her assets are to be distributed and to whom. Such benefits are not available if your estate is probated.  While a Will allows an individual to decide who will receive his or her estate, it will not avoid probate, nor does it provide the assets protection associated with a trust.

Further, the cost of preparing a trust should be far less than the cost of probate.  While there can still be some attorney’s fees associated with administering a trust upon the creator’s death, these attorney’s fee are typically far less than those mandated by statute for a probate.  Also, the creator of the trust can decide the fees that will be paid to the person they choose to administer the trust, the trustee.

Therefore, through estate planning, including a trust, a person or couple, can avoid time consuming, costly probates and ensure that their heirs and beneficiaries receive as much of their estates as possible.  Thus, it is imperative for people to discuss their estates with an estate planning attorney before it is too late to avoid the pitfalls set forth above.

Eric A. Hirschberg is an attorney with Schneiders & Associates, L.L.P., who focuses his practice on estate planning, trust administration, and probate.  If you have any questions about how to best protect your estate, please do not hesitate to contact Mr. Hirschberg and schedule a consultation.

By: Eric A. Hirschberg, Esq.


[1] If your real property is held as “community property with right of survivorship” or in Joint Tenancy, then the property will go to your spouse or joint tenant.  However, if your survivor passes without a trust then the property would have to be probated.

How to Avoid Family Conflict In Naming Your Trustee

Choosing a trustee or financial fiduciary to handle your estate upon death or incapacity is very personal decision and varies from family to family.  Some families prefer to name their children as their successor trustees or financial fiduciaries.  However, consider the “explosiveness” potential of requiring all your children to agree on every decision.  On the face of it, the desired effect of “forcing them to agree” can also force them to fight.  Appointing just one of two or three or whatever number of children may really impose more of a burden than necessary on such one child and places that child in a “family hot seat” leading again to family conflict that parents wish to avoid.

To avoid the potential for family fights and unnecessary burdens, consider naming an independent trustee or financial fiduciary.  There are private, licensed and bonded fiduciaries, and there are excellent financial institutions, who serve in the role of successor trustee or financial fiduciary and who simply follow the terms of the trust without the potential drama that comes from family.

If you would like to discuss your estate plan and the options regarding who is the financial matters at the proper time, please make an appointment with the estate planning attorneys at Schneiders & Associates, LLP.

A Primer on Irrevocable Trusts

Most individuals are aware that a will is one way to plan for the distribution of their assets after death. However, frequently a will by itself is not sufficient to accomplish many people’s estate planning goals.  Thus, a comprehensive estate plan also should consider other objectives such as planning for long-term care, privacy, asset protection, and efficiency. For this reason, it is essential to consider utilizing an irrevocable trust.

An irrevocable trust is an estate planning tool that becomes effective during a person’s lifetime, but it cannot be amended or modified. The person making the trust, the grantor, transfers property into the trust permanently. In so doing, the grantor no longer owns the transferred property, and a designated trustee owns and manages the assets for the benefit of the beneficiaries.

In short, irrevocable trusts provide a number of advantages. First, the property is not subject to estate taxes because the grantor no longer owns it. Moreover, unlike a will, an irrevocable trust is not probated in court. Finally, the assets are protected from creditors.

Common Irrevocable Trusts

There are a variety of irrevocable trusts, including:

  • Bypass Trusts –  utilized by married couples to reduce estate taxes when the second spouse dies. In this arrangement, the property of the spouse who dies first is transferred into the trust for the benefit of the surviving spouse. Because he or she does not own it, the property does not become part of this spouse’s estate when he or she dies.
  • Charitable Trusts – created to reduce income and estate taxes through a combination of gifting and charitable donations.  For example, a charitable remainder trust transfers property into a trust and names a charity as the final beneficiary, but another individual receives income before its final distribution, for a certain time period.
  • Life Insurance Trusts – proceeds of life insurance are removed from the estate and ownership of the policy is transferred into the trust. While insurance passes outside of the estate, it is not factored into the value of the estate for tax purposes, so this vehicle is designed to minimize estate taxes.
  • Spendthrift Trusts – designed to protect those who may not be able to manage finances on their own. A trustee is named to manage and distribute the funds to the beneficiary or directly to creditors, depending on the terms of the trust.
  • Special needs trusts – designed to protect the public benefits that many special needs individuals receive. Since an inheritance could disqualify a beneficiary from Medicaid, for example, this estate planning tool provides money for additional day to day expenses while preserving government benefits.

The Takeaway

Irrevocable trusts are essential estate planning tools that can protect an individual’s assets, minimize taxes and provide for loved ones. Therefore, to properly employ these above tools to accomplish your estate planning objectives, it is crucial to seek the advice and counsel of an experienced estate planning attorney at Schneiders & Associates, L.L.P.

By: Eric A. Hirschberg, Esq.

How To Leave Gifts To Stepchildren

Today, blended families have become increasingly common, and many individuals have step-children, that is, children of a spouse or partner. In situations where step-children have not been legally adopted, however, they may not have a legal right to an inheritance from a step-parent.  However, California has a statute wherein a stepchild is to be treated as an intestate heir of the deceased stepparent so long as two requirements are met: (1) the stepparent relationship began during the stepchild’s minority and continued to the stepparent’s death, and (2) there is clear and convincing evidence that the stepparent would have adopted the child but for some legal impediment (such as the non-consent of some interested party). Cal. Prob. Code § 6454.  Leaving the issue of a step-child’s right to inheritance to statute is not the most efficient way to proceed.  It may create claims of pretermission (unintentionally left out of the will or trust and thus allowing the step-child to claim a share of the estate) or other litigation actions.

For those who wish to leave step-children part of their estate, it is best to include them in an estate plan, or if they are not to receive a share of the estate, to add clear language of disinheritance.

The easiest way to leave gifts to step-children is to name them in a will or trust. As with any other gift, they can be given a percentage of the estate, or specific gifts. If there are other children involved, it is important to avoid confusion by naming each child and step-child by using their individual names, rather than terms such as “descendants,” “heirs,” or “children.”

There are also a number of estate planning tools that can be utilized to include step-children in an inheritance. If the objective is to avoid probate, for example, a revocable living trust can be established in which a step-child is named as a beneficiary. Moreover, it may be necessary to provide for a disabled step-child who is eligible for public benefits by establishing a special needs trust. Lastly, a step-child can also be named as a beneficiary in a life insurance policy or a pay-on-death financial account.

While there is no legal obligation to leave step-children an inheritance, it may be the best choice for those who have a close relationship, or played a significant role, in raising them. However, this will reduce the amount of assets available to other children and beneficiaries. Because blended family relationships are complex and subject to emotional challenges, it is important to explain these decisions with all family members.

By engaging in an open and honest dialogue, you can minimize the potential for strife and the possibility of a will contest. In particular, it is important to clarify why you gave each recipient a gift, the selection of your executor, and your thoughts about the family.  Lastly, you are well advised to engage the services of an estate planning attorney who can help ensure your wishes regarding step-children are carried out.

If you are considering establishing an estate plan, whether or not you have step-children, the attorneys at Schneiders & Associates, L.L.P. can help! Please contact us to complete an estate planning questionnaire and schedule a no fee consultation.

By: Roy Schneider, Esq. 

What is a Spendthrift Trust?

When it comes to estate planning, there are many factors to consider, not the least of which how to provide for loved ones. Although we like to believe that our heirs are deserving and capable of managing an inheritance, some beneficiaries may not be responsible or lack an understanding of financial matters. Fortunately, it is possible to leave assets to a troubled heir by creating a spendthrift trust.

This estate planning tool limits a beneficiary’s access to trust property in order to protect it from him or her as well as creditors. Rather than providing assets or funds directly to the beneficiary, the trust maker (or grantor), designates a trustee to manage the trust property and provide regular payments to, or purchase goods and services for, the beneficiary, either for a period of years, during periods of particular stress, such as alcohol or drug dependency, or for life.

Spendthrift trusts are typically created when an heir does not know how to manage money or is frequently delinquent with debt. In addition, a spendthrift trust can protect those who have drug, alcohol or gambling problems or who are at risk of being manipulated.

The role of the trustee

The trustee is responsible not only for managing the trust, but also protecting the assets from being squandered by the beneficiary. This requires the trustee to manage the trust in a manner that preserves the value of the assets while providing for the beneficiary.

In order to do so, the trustee should have the power to make set payments to the beneficiary on a regular basis. Similarly, the trustee must also be able to withhold payments under certain conditions, particularly if the beneficiary gambles or gets into debt. However, this would also require the trustee to monitor the beneficiary’s behavior, which could be problematic.

Finally, the grantor could also specify conditions under which payments should be released to the beneficiary. For example, the grantor could instruct payments be made directly to a landlord or a creditor rather than the beneficiary. In some cases, the beneficiary could also be required to undergo drug or alcohol testing before receiving a payment from the trustee.

In sum, a well-designed spendthrift trust must consider the unique relationship of all the parties. It is crucial for the grantor to name a trustee who is honest and capable, and who will fulfill his or her obligation to preserve the trust assets and provide for the beneficiary.

If you would like to learn more about spendthrift trusts and how they may be beneficial for your loved ones, please make an appointment to speak to a knowledgeable estate planning attorney at Schneiders & Associates, L.L.P.

By: Roy Schneider, Esq.

Estate Planning: Can I Include My Pet?

The basics of estate planning includes planning for the transfer of your estate to others during life, at death or after death, and planning for incapacity.  But can an estate plan include your pet?  YES!  However, assets cannot be left directly to pets, since animals are still considered property under the law, but you can care for your animal companions in a few different ways:

  • Designate an animal shelter that they are to go to upon your death and where they will be cared for their life or given to a nice family
  • Give them to a friend or family member and hope for the best
  • Designate a caregiver to care for them and a trustee to handle funds for their care which funds remain in trust for the life of your animal companion

In California, you can establish a trust for the care of your pet.  You may want to choose a caregiver and trustee that share your level of devotion and concern for your pets.  Under the law, your pet trust is enforceable by a person designated in the trust, a person appointed by the court, any person interested in the welfare of the animal, or any nonprofit charity that is involved with animal welfare.

Selecting a caregiver for your pet is analogous to selecting a guardian for your children.  The ideal candidate for selecting a caregiver for your pet is someone who knows and loves your pet, who can provide a stable home, and who is willing to assume the responsibilities of caring for your pet.  The trust terminates upon the death of the pet and the balance is distributed to the remainder beneficiaries.  You should carefully consider who the remainder beneficiaries should be and if the caregiver should also be one of those beneficiaries.

If you are considering establishing an estate plan for yourself, whether or not you wish to include a trust for your pet, the attorneys at Schneiders & Associates can help!  Please contact us today.

By: Roy Schneider, Esq.

Responsibilities and Obligations of the Executor or Administrator

When a person dies with a will in place and no trust, an executor is named as the responsible individual for winding down the decedent’s affairs. In situations in which a will has not been prepared, and there is no trust, the probate court will appoint an administrator. Whether you have been named as an executor or administrator, the role comes with certain responsibilities including taking charge of the decedent’s assets, notifying beneficiaries and creditors, paying the estate’s debts and distributing the property to the beneficiaries.

In some cases, an executor may also be a beneficiary of the will, however he or she must act fairly and in accordance with the provisions of the will. An executor is specifically responsible for:

  • Finding a copy of the will and filing it with the appropriate state court
  • Informing third parties, such as banks and other account holders, of the person’s death
  • Locating assets and identifying debts
  • Providing the court with an inventory of these assets and debts
  • Maintaining any assets until they are disposed of
  • Disposing of assets either through distribution or sale
  • Satisfying any debts
  • Appearing in court on behalf of the estate

By filing for probate of a will or if there is not will, the executor or administrator, as the case may be, can then pay all of the decedent’s outstanding debts and distribute the property to the beneficiaries according to the terms of the will or, if there is no will, according to the laws of intestacy. The executor or administrator is also is also responsible for filing all federal and state tax returns for the deceased person as well as estate taxes, if any. Lastly, an executor or administrator may be entitled to compensation for the time he or she served the estate. In the end, being name an executor or appointed as an administrator ultimately means supporting the overall goal of distributing the estate assets according to wishes of the deceased or state law.  If you are named as an executor of a will, or if you feel that you are the responsible party to probate an estate without a will, contact an experienced probate or estate planning attorney at Scheniders & Associates, L.L.P. to help you carry out these duties.

By: Roy Schneider, Esq.