Trusts & Estates

Estate Planning

Estate planning is undertaken to ensure your loved ones are adequately provided for, minimize tax consequences, and specify your wishes for asset distribution after your death. The term "estate planning" is broad, and can include creation of a revocable living trust, a will, a durable power of attorney, health care directive, and supporting documents (such as schedules of assets, waivers of confidentiality for health care providers, and assignments of business interests).  Some clients require only one or two of these documents, while others require all of them, as well as additional assistance with tax planning and asset protection.  Good estate planning provides a roadmap not only for a client's death, but for his or her incapacity.  The attorneys at Vaught & Boutris will work with you to ensure that you and your loved ones are protected and provided for with a thorough and personalized estate plan.

Estate Planning: Trusts

Trusts, which are often created as part of your estate planning process, are legal agreements that set rules for property held for your beneficiaries. There are many different types of trusts, all with specific purposes.  The most common type of trust is a revocable living trust.  Many of our estate planning clients need only a revocable living trust and supporting estate planning documents (such as a pour-over will, a durable power of attorney, and a health care directive).  However, if you have a beneficiary with special needs, we may recommend a special needs trust.  And for our higher wealth clients who may face taxation at death, we may recommend creation of an IRA trust, irrevocable life insurance trust, grantor retained annuity trust, or other forms of irrevocable trusts.

More information:

• Types of Trusts

  Trusts, which are often created as part of an estate planning process, are designed to help you manage your assets. There are many different types of trusts, all with specific purposes. The attorneys at Vaught & Boutris LLP provide assistance to clients with wide range of trusts, including:

  • Living trusts
  • IRA trusts
  • Special needs trusts
  • Irrevocable life insurance trusts
  • Charitable trusts
  • Grantor retained annuity trusts

  Living Trusts
  A living trust, also known as a revocable living trust, is similar to a last will and testament in that both are used to transfer property to beneficiaries. However, a major difference—and one of the principal reasons why people choose to establish a living trust—is that a living trust is not subject to probate.  This means that property can be transferred much more quickly, and without court oversight.  Although beneficiaries of the trust must be notified of the trust administration process, this process is not public.  Trust administration is also, as a general matter, significantly less expensive than a probate.    

  IRA Trusts
  An IRA trust allows a person to leave the wealth in his or her individual retirement account (IRA) to a beneficiary. These are usually structured in a way that ensures the assets in a person's IRA trust are protected from financial difficulties that may be incurred by the beneficiaries. They may also be set up to make sure estate taxes are paid.

  Special Needs Trust
  Also referred to as a supplemental needs trust, a special needs trust is designed to provide benefits to a beneficiary who is physically or mentally disabled, or who has a chronic or acquired illness, and is unable to maintain meaningful employment.  A special needs trust is designed so as not to disqualify the beneficiary from receiving important forms of government assistance during his or her lifetime.  

  Irrevocable Life Insurance Trusts
  Irrevocable life insurance trusts are used to hold life insurance policies outside of a person's gross estate.  This allows for the passage of a significant asset while using little or none of the lifetime exemption for estate and gift taxes.  Irrevocable life insurance trusts are often used as a tool to ensure that estate taxes can be paid on death, or to minimize estate and gift taxes for individuals whose assets exceed the exemption amount.  

  Charitable Trusts
  The two major types of charitable trusts are charitable lead trusts and charitable remainder trusts.  With a charitable lead trust, a charity receives a set amount (either a fixed annuity or a percentage) from the trust for a term of years, and at the termination of this term, a named beneficiary--or the person who established the trust--receives the remainder.  This structure serves to not only benefit a favorite charity, but to provide an estate and gift tax deduction for the amount passing to charity.  In addition, the person who establishes the charitable lead trust can, if structured correctly, take an immediate income tax deduction for the value of the gift to the charity.  

  A charitable remainder trust is an irrevocable trust that provides for payments (either an annuity or a unitrust amount) to an individual for a term of years or for life, with the remainder to pass to a named charity (or charities).  A charitable remainder trust is a valuable tool for transferring highly appreciated assets while avoiding capital gains taxes, while benefitting a favorite charity.  The charity may sell the asset and reinvest the proceeds without being subject to capital gains taxes.  If structured correctly, the individual receives an immediate charitable income tax deduction, thereby potentially reducing income taxes.  In addition, the individual is guaranteed an income stream for a term of years (or life), with the knowledge that a charity (or charities) of choice will also benefit.  

  Grantor Retained Annuity Trusts

  A grantor retained annuity trust is a powerful tool for moving assets that are expected to appreciate significantly out of one's gross estate and into an irrevocable trust.  The value of the asset at the time of the transfer is declared as a gift to the Internal Revenue Service, but any future appreciation of the asset is not attributable to the person who established the trust.  Therefore, this appreciation will not count against the person who established the trust's lifetime estate and gift tax exemption amount.  

  If you have questions about preparing a trust or need assistance in doing so, the attorneys at Vaught & Boutris would be happy to speak with you.
   

• Trusts and Trusts Attorneys

  Trusts, which are often created as part of an estate planning process, are legal agreements that set rules for property held for beneficiaries. 

  Components of a Trust
  Trusts have four components:

  • Trustmaker: Also known as the grantor, trustor, or settlor, this person creates a trust.
  • Trustee: The person who manages the assets of a trust and is responsible for distributing the property in accordance with the terms created by the trustmaker. While a trustmaker is alive, he or she can also be the trustee.
  • Beneficiary: The person or entity who receives the benefits of a trust. The trustmaker can designate him or herself as a beneficiary.
  • Assets: The property that is placed into a trust (also known as trust property).

  Why Consult a Trust Attorney?
  Anybody may set up a trust.  However, state and federal trust laws can be complex. To avoid litigation, your trusts must meet specific requirements, also known as certainties. They are:

  • Certainty of intention: A clear intention to create a trust must exist.
  • Certainty of subject matter: The property to be held in a trust must be clearly identified. In other words, it must be specific property, such as real estate or cash.
  • Certainty of objects: Trust beneficiaries must be clearly defined or ascertainable. There are different tests for certainty of objects depending on whether a trust is fixed or discretionary.

  Working with a qualified trust attorney can give you peace of mind in creating the documents that will provide for your loved ones and beneficiaries. If you’d like legal guidance, the attorneys at Vaught & Boutris LLP provide trust assistance in the following areas:

  • IRA trusts
  • Living trusts
  • Life insurance trusts
  • Grantor retained trusts
  • Charitable trusts
  • Asset protection trusts
  • Special needs trusts
  • Income trusts
  • Powers of attorney
  • Trust administration and litigation
     

Estate Planning: Wills

A will, also known as a testament, is a legal document created by you that names the person who will manage your estate and explains how your property will be transferred upon your death.  A will also nominates guardians for minor children.  Depending upon the complexity of a client's estate, and upon the client's wishes for distribution of assets, some clients need only a will.  Others will have a "pour-over will" in conjunction with a revocable trust.  

More information:

• Wills

  A will, also known as a testament, is a legal document created by you that names the person who will manage your estate and explains how your property will be transferred upon your death.  If you have minor children, a will also names a guardian for those children.  

  Why Create a Will?
  Discussing and drafting wills can be difficult, because it forces you to consider your own death. However, not creating a will can place great burdens and stress on your loved ones and make a difficult situation even more challenging. 

  If you die without a will, you’ll be said to have died intestate and your property will be distributed under California's laws of intestacy.

  If a will isn’t prepared according to required formalities it may be found defective in a court of law. Because there are important legal considerations in drafting wills, working with an experienced attorney can help ensure that your wishes are accurately captured and carried out. If you’d like legal guidance, the attorneys at Vaught & Boutris LLP provide a full range of estate planning services.

• Wills Law

  A will, also known as a testament, is a legal document created by you that names the person who will manage your estate and explains how your property will be transferred upon your death. If you have minor children, a will also nominates a guardian for those children.  A person who makes a will is called the testator.

  A will may be amended or supplemented after it is executed.  This amendment is known as a codicil. In order to be valid, wills and codicils must be validly executed, meaning they must follow specific rules which vary from state to state.
  
  Legal Requirements
  If you’re a resident of California, you’ll need to abide by certain laws when preparing a will. The requirements include the following:

  • You are at least 18 years old.
  • You are of sound mind.
  • The will must be signed by you; by another person, in your presence and at your direction; or by a conservator pursuant to a court order.
  • The will must be signed by at least two witnesses, who fulfill certain legal requirements.

  If these requirements are not met, your will may be found invalid and your property may pass by the laws of intestacy.  

  Types of Wills
  California recognizes three types of wills:

  • Wills prepared by a third party (usually an attorney);
  • Statutory wills;
  • Holographic or handwritten wills.

  Holographic or Handwritten Will
  In California, if you write a will in your own hand, it is considered a holographic will.  The signature and the material provisions must be in the handwriting of the testator.  Litigation surrounding holographic wills is not uncommon, so many individuals elect to have a will prepared by an attorney who is trained in the requirements for drafting a valid will.  

  Statutory Will
  A statutory will is also known as a fill-in-the-blank will and is typically used by people who have small estates. It is quite limited in its scope, as the choices that are provided for how property is distributed cannot be tailored to fit all situations.  Statutory wills are described in Probate Code sections 6200 et seq.

  A Will Prepared by a Third Party
  These types of wills are also referred to as lawyer-prepared wills because they are almost always prepared by lawyers. This can be helpful, because an attorney can advise you on the most economical and effective ways to distribute your assets to loved ones, including minimizing tax implications.  Experienced attorneys are also familiar with the requirements for valid execution of a will, as well as strategies for avoiding common pitfalls in the drafting and execution of wills.  

  If you have questions about preparing a will or need assistance in doing so, the attorneys at Vaught & Boutris would be happy to speak with you.
   

• Contesting a Will

  If someone contests a will, that person challenges the content of a will in a court of law.  A will can be invalidated on a number of grounds that include the following:

  • Fraud is involved, such as a person writing a will under the name of somebody else.
  • The decedent was under duress, meaning they were threatened or forced to write or change the contents of their will.
  • The decedent was acting under undue influence from another person.
  • There are mistakes resulting from honest error.
  • The writer had insufficient mental capacity at the time the will was written.

  What Happens if a Will Contest is Successful?
  The result of a successful contest depends on the reason for the will dispute. If the will was found to be invalid because it did not conform to California law, or if the testator was not mentally competent when it was made, then the property will pass according to the laws of intestacy as if the will never existed. 

  If you have questions about a will contest, or if you would like to contest a will, the expert attorneys at Vaught & Boutris will be happy to speak with you.
   

• Revoking a Will

  A testator may change or cancel a will at any time before he or she dies, as long as the testator has capacity. However, there must be concurrence between the testator’s intent to revoke the will and an act that revokes it. In other words, if you intend to revoke the will but don’t act on that intention, your will is not revoked. Conversely, if someone acts to revoke your will without your knowledge or direction, your will is not revoked.

  Revoking a Will by Another Writing
  One way to revoke a will is by a clause in another writing made and signed with the same formalities required for a will. Indeed, a will often contains a clause revoking all prior wills. A will can also be partially revoked by a will amendment known as a codicil.

  Revoking a Will by Physical Act
  Another way to revoke a will is by a physical act done with a current intent to revoke the will. The common physical acts are burning, tearing, or otherwise destroying the document, or obliterating the document's text.

  It is important to remember that a will cannot be revoked accidentally. If a will is merely misplaced, lost, or stolen, it is not revoked. If the contents of the will can be reliably recreated from other sources, the will controls the disposition of the testator's estate.

  In California, if a will cannot be found  and it was last in the possession of the testator, and the testator was competent until death, and neither the will nor a duplicate original of the will can be found after the testator's death, then it is presumed that the testator destroyed the will with the intent to revoke it.

  Revoking a Will by Operation of Law
  A will can be revoked, or partially revoked, by operation of law. 

  A provision in a new will or codicil that contradicts a provision in an old will or codicil revokes the provision in the old will or codicil.  Also, in California, unless the will expressly provides otherwise, a final decree of dissolution of marriage or annulment (or a termination of a domestic partnership) automatically revokes gifts in the testator's will to the testator's spouse or domestic partner, and automatically revokes any provision of the will nominating the former spouse or domestic partner as executor.

• Executors: Settling Assets

  As  a personal representative (administrator or executor of an estate) who has been appointed by the court, the first step in settling the decedent's estate is to locate and safeguard all of the decedent's assets. You must then figure out which assets belonged solely to the decedent so that you can protect them until they can be distributed either according to the decedent's will or, if the decedent had no will, under California intestacy laws. Finding such assets can be a challenge.

  Bank Accounts
  One place to begin your search is the decedent's bank accounts. Checking accounts can provide invaluable information through bank statements. By reviewing the decedent's transactions for the year preceding death, you are likely to find information on insurance policies, loans, taxes, healthcare expenses, mortgages, and investments. 

  Mail
  Another good place for information about assets is the decedent's mail. When the local post office learns of the death, a decedent's mail will be held for 15 days and then returned to the sender. If a family member provides the local post office with proper identification and a copy of the death certificate, he or she will be able to claim the decedent's mail or have the mail readdressed to him or her by filling out a change of address form. You may do the same thing once you have been officially appointed and you have been issued "Letters" by the court.  

  Be aware that you will not have access to most government checks or to documents intended for the exclusive use of the decedent, and such documents must be returned to the sender.

  Keep in mind that any mail addressed to joint owners should be given to the surviving owner because it is not part of the decedent's estate. You may then wish to sort the mail into assets, liabilities, personal letters, and junk mail. You should monitor the decedent's mail for at least one year because many assets have semiannual and annual terms.

  Safe Deposit Boxes
  A last place to look for actual assets or for documentary evidence of assets is a safe deposit box. Your review of the decedent's bank accounts may show a safe deposit box rental payment. If not, you can ask at any bank where the decedent did business as to whether he rented a safe deposit box. 
   

• Wills and Probate Attorneys

  Although it may be an uncomfortable topic, executing a will is one of the most important actions you can take during your lifetime. By thoughtfully assessing your estate while you are still alive, you have the peace of mind knowing that when you pass away, the people and things that you care about will be protected.

  Why Consult a Wills and Probate Attorney?
  Obtaining legal advice and representation regarding your will can be beneficial in many situations, including the following:

  • Your estate consists of considerable assets and requires tax planning to mitigate the effects of estate tax.
  • Your plans are more complex than just naming people to inherit property.
  • A beneficiary requires long-term care.
  • The will is being contested, or you have concerns about somebody contesting the will.

  Probate can also be a difficult situation to navigate, particularly if someone died intestate (without a will), no executor is named, or a will is contested. You may also need help understanding probate laws and procedures. Other complicated situations may include:

  • There are complex tax situations regarding distribution of assets.
  • There is excessive debt on the estate.
  • There is uncertain or unclear wording in a will.
  • Property has been left to a minor.

  You may also elect to establish a living trust, thereby avoiding probate altogether. In all these cases, working with an experienced wills and probate attorney can be very helpful. 

  Vaught & Boutris can handle your wills and probate work with expertise, tact, and sensitivity.  If you’d like to learn more, our attorneys would be happy to speak with you.
   

Estate and Gift Taxes

The estate tax and the gift tax are parts of the federal Unified Gift and Estate Tax system.  The estate tax is a tax on the fair market value of your gross estate, or all the property you owned or had an interest in at the time of your death; there are a limited number of deductions that can be applied to reduce the gross estate’s value. 

The gift tax applies to transfers of money or property while you are still alive. The amount at which taxation begins is regulated by an annual exclusion amount. 

More information:

• Estate Tax

  The federal estate tax is a tax on the fair market value of a person's gross estate, or all the property the person owned or had an interest in at the time of death; there are a limited number of deductions that can be applied to reduce the gross estate’s value. 

  What is Your Estate?
  A person's estate is defined as the value of all of his or her assets at death, which includes:

  • Cash
  • Stocks and bonds
  • Real estate
  • Personal property
  • Trust assets
  • Annuities
  • Business interests
  • Life insurance, with certain exceptions
  • Retirement accounts

  Estate Tax Deductions and Exemptions
  A portion of the gross estate amount receives tax-exempt status and certain deductions are also taken into consideration, such as:

  • The share of a property left to a surviving spouse
  • Funeral expenses of the estate
  • Debts owed at the time of death 
  • Property that is legally transmitted to a tax-exempt charity.

  Changes in Federal Estate Tax Law
  Federal estate tax law has undergone several changes in recent years. In 2010, for the first time since 1916, there was no federal estate tax.  When it was reimplemented in 2011, the 2010 Tax Relief Act (passed in December that year) had instituted some changes, including a $5 million per person exemption from estate tax. 

  That legislation was due to sunset in 2013 and return the estate tax to its 2001 level. However, in January 2013 Congress made permanent an estate tax on estates in excess of $5 million at a rate of 40 percent.  This amount has adjusted for inflation each year, and in 2017, the estate and gift tax exemption for an individual was raised to $5.49 million.  
   

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  With law offices in Oakland and Walnut Creek, Vaught & Boutris LLP provides estate and trust expertise throughout the San Francisco Bay Area, including Contra Costa County and Alameda County. We provide our clients with estate and asset protection planning, including wills, trusts, and probate; trust administration; and estate and trust litigation. If you wish to contact us, you may contact us online or call 510-430-1518 today.  
   

• Gift Tax

  The federal gift tax is a part of the federal Unified Gift and Estate Tax system and applies to transfers of money or property while you are still alive. However, you are exempt from the gift tax up to a certain dollar amount (in 2017, up to $14,000 given to any number of different people).

  The Basics of the Gift Tax
  When a person gives another person or a non-charitable organization money or property that is equal to or above the annual gift tax exclusion amount, a gift tax is imposed on the giver.  In 2017, a U.S. taxpayer can give up to $14,000 to any number of different individuals without incurring the gift tax. If someone is married, the law effectively allows them to give double this amount by "gift splitting." 

  Other rules that apply to gift tax law include: 

  • Education expenses, paid directly to the educational institution, may be nontaxable if done properly.
  • Gifts for medical expenses, paid directly to the provider may be nontaxable if done properly.
  • Gifts given to a U.S. citizen spouse, and some gifts given to a non-U.S. citizen spouse, will be nontaxable if done properly.

  If you are considering giving a gift, or you are the recipient of one, and need more information about gift tax planning, the attorneys at Vaught & Boutris LLP would be happy to speak with you.
   

Probate

Probate is a legal process that validates a will. While it is usually straightforward, certain circumstances may arise that call into question the terms of a will. In the case of a will dispute in Oakland, a probate court hears arguments concerning its validity. If it is declared invalid, the court then decides how the assets it names will be distributed.

More information:

• Probate Law

  Probate is a legal process that validates a will (if the decedent had a will), appoints a personal representative to administer the estate, and oversees the distribution of the decedent's assets.  If a decedent died without a will, his or her assets will pass according to California law.  

  Probate includes the following stages:

  • A court determines the validity of the will of a deceased person, or that a person died without a valid will ("intestate").
  • A court appoints a personal representative (who will be known as an executor or an administrator, depending upon whether the person died with or without a will).
  • The personal representative notifies known creditors of the death and the time limits for making a creditor's claim.
  • The property of a deceased person is identified, inventoried, and appraised.
  • Outstanding debts and taxes are paid.
  • The remaining property is distributed as outlined in the will, or according to California law.

  Typically, if there is a will, it names an executor who serves as a personal representative. The executor is in charge of estate management and following probate procedure. However, until the executor is formally appointed by the court, this person has no authority to act as personal representative.

  If there is no will, or if no executor is named in the will, or if none of the named executors are able or willing to serve, the probate court appoints an individual known as an administrator to act as personal representative.
  
  In California, probate hearings are held in the Probate Department of the Superior Court in the county in which the deceased person was living when they died.

  Probate Litigation
  It is possible for someone to file an objection to a will. When this happens, a process known as a will contest begins. In order for somebody to initiate contested probate, they must hold a stake in the outcome of the will. Although loosely defined, examples of such individuals are:

  • A spouse or child who was not included in the will.
  • A child who receives a less equitable share of the estate than a sibling.
  • An heir or beneficiary who benefited more from an earlier will.

  Common reasons that a court will find a will to be invalid include:

  • The will does not adhere to state law.
  • The will was forged.
  • The decedent was of an unfit mental state when the will was executed.

  If you decide to initiate a probate contest, we recommend that you hire an experienced probate attorney. The lawyers at Vaught & Boutris will be happy to discuss your options with you.
   

• Probating a Will

  Probate is a legal process that validates a will. While it is usually straightforward, certain circumstances may arise that call into question the terms of a will. In the case of a will dispute, a probate court hears arguments concerning its validity. If it is declared invalid, the court then decides how the assets it names will be distributed.

  During the probate process:

  • A court determines the validity of the will of a deceased person.
  • The property of a deceased person is identified, inventoried, and appraised.
  • Any outstanding debts, creditor claims, and taxes owed by a deceased person are paid.

  The property that remains is distributed in the way outlined in the will. This process is usually overseen by an executor who is named in the will.

  Even if there is no will, probating still must occur. In this case there is no executor, and that duty is often filled by a court-appointed administrator. The executor or administrator (called the personal representative) is responsible for handling applicable estate taxes. 

  The entire probate process could take anywhere from a few months to years, depending on the circumstances. In the case of a contested will, the process can be quite lengthy.

  The attorneys at Vaught & Boutris are experienced in matters related to probating a will and would be happy to discuss your options with you.
   

• Wills and Probate Attorneys

  Although it may be an uncomfortable topic, executing a will is one of the most important actions you can take during your lifetime. By thoughtfully assessing your estate while you are still alive, you have the peace of mind knowing that when you pass away, the people and things that you care about will be protected.

  Why Consult a Wills and Probate Attorney?
  Obtaining legal advice and representation regarding your will can be beneficial in many situations, including the following:

  • Your estate consists of considerable assets and requires tax planning to mitigate the effects of estate tax.
  • Your plans are more complex than just naming people to inherit property.
  • A beneficiary requires long-term care.
  • The will is being contested, or you have concerns about somebody contesting the will.

  Probate can also be a difficult situation to navigate, particularly if someone died intestate (without a will), no executor is named, or a will is contested. You may also need help understanding probate laws and procedures. Other complicated situations may include:

  • There are complex tax situations regarding distribution of assets.
  • There is excessive debt on the estate.
  • There is uncertain or unclear wording in a will.
  • Property has been left to a minor.

  You may also elect to establish a living trust, thereby avoiding probate altogether. In all these cases, working with an experienced wills and probate attorney can be very helpful. 

  Vaught & Boutris can handle your wills and probate work with expertise, tact, and sensitivity.  If you’d like to learn more, our attorneys would be happy to speak with you.
   

Trust Administration

Trust administration refers to the execution and fulfillment of the terms of the trust by the trustee or trustees. It can be a complicated process and includes notifying beneficiaries, marshaling assets, settling debts and liabilities, transferring property titles, possibly filing federal estate tax returns, funding sub-trusts, and carrying out a variety of legal duties and obligations. 

Trustees are subject to myriad legal duties, including:

• the duty to administer the trust according to its terms;
• the duty of loyalty to the beneficiaries;
• the duty to deal impartially with beneficiaries;
• the duty to avoid conflicts of interest;
• the duty to make trust property productive;
• the duty to take control of and preserve trust property;
• the duty to report to beneficiaries;
• and more.

Non-professional trustees are generally not aware of the legal duties that come with being appointed trustee of a trust.  Because this area of law is so complex, and because of the potential for personal liability of a trustee if certain duties are not carried out, it is wise to consult with an attorney if you have been appointed trustee of a trust.  The attorneys at Vaught & Boutris would be happy to speak with you further if you have been appointed trustee of a trust.  

Estate and Trust Litigation

The terms of a will or trust can be challenged in court for a variety of reasons. For example, there may be a dispute among beneficiaries; the instrument may be challenged as a product of fraud or undue influence; or a trustee’s decisions may be challenged as outside the scope of his powers, erroneous, biased, or a breach of trust.