August is national Make A Will Month, and a good time to make sure that your planning documents are in place.  Just under half of U.S. adults say that they have created a will or plan for how they would like for their estate to be handled after their death.  The Trusts and Estates attorneys at Weintraub Tobin have written frequently on this blog about the importance of having an estate plan, and about the difficulties (and even litigation) that heirs can face when a will is not in place.
Continue Reading Resources for National Make a Will Month (August)

Last Thursday, the United States Supreme Court ruled in Clark v. Rameker that funds held in inherited individual retirement accounts (IRAs) are not “retirement funds” for bankruptcy purposes.

In October 2010, the Clarks filed for bankruptcy and claimed that Heidi Clark’s $300,000 inherited IRA was exempt from their bankruptcy estate under Section 522 of the Bankruptcy Code (which provides that tax-exempt retirement funds are exempt from a bankruptcy estate). The bankruptcy trustee and creditors objected to this, taking the position that the funds were not “retirement funds” within the meaning of Section 522. The Bankruptcy Court agreed with the trustee and creditors.

The district court ruled that inherited IRAs are exempt because they retain their character as retirement funds, but the US Court of Appeals for the Seventh Circuit reversed that ruling. The Supreme Court agreed with the Seventh Circuit, holding that the funds in an inherited IRA are not set aside for the debtor’s retirement and, thus, are not “retirement funds” under the exemption in Section 522.


Continue Reading U.S. Supreme Court Ruling Regarding Inherited IRAs Highlights the Benefits of IRA Trusts

HilaryLWhen discussing your estate planning needs with your attorney, after you discuss basic terms and concepts, your attorney will likely talk to you about the different types of revocable living trusts that may be appropriate for you.  If you are married, this may include a discussion about a revocable living trust structure commonly referred to as a “Sweetheart Trust.”

The Sweetheart Trust derives its name from the high level of control and discretion the surviving spouse maintains after the death of the first spouse. Initially, while both spouses are alive and competent, either spouse can revoke his or her share of the trust and the terms of the trust can usually be modified with the consent of both spouses.  When one spouse dies, all trust assets remain in the same revocable trust for the lifetime of the surviving spouse.  During the surviving spouse’s lifetime, he or she can terminate the trust, change its terms, add or remove beneficiaries, and otherwise manage the trust as he or she sees fit.  Because the surviving spouse has complete and absolute control over the trust after the first spouse dies—in essence, an unconditional gift—this type of trust is called a Sweetheart Trust.
Continue Reading Estate Planning 101: What is a “Sweetheart Trust?”

KayBAre you having trouble completing or updating your estate plan, although you are convinced you should?  Maybe you have a referral to an attorney recommended by a friend or other advisor, but you haven’t yet scheduled the first meeting?  Or you have attended the first meeting with your estate planning attorney, but you can’t quite seem to finish your action list for the next meeting?

Estate planning is not the top of anyone’s “to do” list.  As an estate planning attorney, part of my job is to help my clients complete their estate plans.  No one intends to delay the process, but many times the process stalls.

Here are some ideas that have helped my clients cross the finish line and enjoy the relief that a completed plan brings.  See if they work for you!


Continue Reading Overcoming Proscrastination – Tips for Starting and Completing Your Estate Plan

In my two previous posts, I discussed the value of comprehensive estate planning even if you have a small estate or you want everything to go to your spouse.  In this last installment, I will address the most common reason I hear from clients who say they don’t need an estate plan, which is, “I don’t need an estate plan because I have everything in beneficiary designation accounts.”

People often try to create a “do-it-yourself” estate plan by creating beneficiary designations on all of their assets.  This is typically done by titling assets with another person “with right of survivorship,” holding assets jointly, or creating “payable on death” (POD) or “transfer on death” (TOD) accounts.  I caution against using this approach for several reasons.

In California, you can have $150,000 in total assets (subject to a few exclusions) outside of a trust or without beneficiary designations without triggering a probate.  Additionally, the threshold amount for transferring real property without a probate in California is $50,000.  With TOD/POD accounts, if the designated beneficiary is deceased at your death and if no successor is named, the account goes back to your estate and counts toward the $150,000.  The same is true if you are the surviving owner of property that had been owned “with right of survivorship,” which often happens with real property.  If enough beneficiary designations fail or were never created, it is possible that a probate will be required.


Continue Reading You Need an Estate Plan (Even in Your 20s and 30s) (Part Three)