estate planning for your elder parents

Estate Planning for Aging Parents

Thinking about the possibility of your parent’s death or incapacitation can be difficult to say the least. However, it is something you need to do, as it is the only way to ensure your parents’ wishes are carried out after their passing and their assets are managed, divided, and distributed as per their instructions.

Talking to Your Elderly Parents About Estate Planning

First and foremost, you need to talk to your parents about the need for estate planning and find out what they think about it. Generally, elderly people tend to put off estate planning because they do not understand just how important it is or because they believe that it is not the right time to do it.

Tell your parents about probate and help them understand that in the absence of an estate plan, their assets would be divided and distributed by a court-appointed executor – not by someone they love and trust. More importantly, tell them that creating an estate plan is the only way to make sure that their wishes are taken care of after their passing.

If you have siblings and other family members whom your parents might want to pass on their assets to, make sure you involve all of them in the process. Your parents need to know that all of you are on the same page regarding the need for an estate plan.

Be patient with your parents, address all their concerns, and make sure they are not pressured or forced into doing anything they do not like.

Determining Your Parents’ Estate Planning Needs

Once your parents are ready to create an estate plan, you need to determine their estate planning needs.

  • Do your parents have a list of beneficiaries that they want to pass on their assets to?
  • Do your parents want to pass on all their assets to their beneficiaries?
  • Do they want to leave some assets to charity?
  • Do they want their assets to be divided and distributed equally to all the beneficiaries?
  • Is there a beneficiary with special needs or some other kind of disability who might need lifelong care?

These are some of the questions you need to ask to determine your parents’ estate planning needs.

Creating an Advance Healthcare Directive

Talk to your parents about what should be done in the event of their incapacitation and create a plan for the same.

Firstly, ask your parents to choose someone as their healthcare agent who can make medical and healthcare decisions on their behalf. It can be you, one of your siblings, or anyone else that your parents trust completely. It’s a good idea to ask your parents to choose an alternate healthcare agent who can make decisions on your parents’ behalf if the primary designee is unavailable, unwilling, or incapable of doing so.

Secondly, make a list of your parents’ healthcare preferences. The most important questions you need to ask your parents include:

  • Do they want palliative care?
  • Under what circumstances do they want to be resuscitated if their heart stops?
  • Do they want to be put on a ventilator if they are unable to breathe? If so, for how long?
  • Do they have any specific preferences regarding the type and level of medical care they want to receive?
  • Do they want their organs to be donated?

Creating a Financial Power of Attorney

Talk to your parents about who should control their finances in the event of their incapacitation. Ask them to choose someone who can handle their financial affairs and make decisions on their behalf. As is the case with the advance healthcare directive, it’s necessary to designate an alternate agent who can take control of your parents’ finances if the primary agent is unavailable, unwilling, or incapable of performing their duties.

Creating a Trust

A trust can help your parents manage their assets while they are alive and of sound mind and make sure the assets are managed, divided, and distributed as per their instructions after their passing. The biggest advantage of a trust is that it eliminates the need for probate completely.

Depending on your parents’ needs, you can set up a revocable or irrevocable trust. You can consult with an experienced California estate planning attorney to decide what kind of trust might be the right choice for your parents.

Need an Estate Plan for Your Aging Parents? Let Us Help You

At Garmo & Garmo, we know how important it is for aging parents to have an estate plan in place. We can talk to your parents, understand what they are trying to accomplish by creating an estate plan, and create a customized plan which is best suited for their needs. We have over 80 years of estate planning experience and can provide you with the specialized guidance you need at every step of the process.

To discuss the estate planning needs of your parents with a proven southern California estate planning attorney, call us today at 619-441-2500 or contact us online and schedule a free consultation.

flexibility in your estate plan

Building Flexibility into Your Estate Plan

Creating an estate plan is without a doubt the best way to plan for the uncertainties in life, protect your assets, and provide for your loved ones. However, your estate plan should be flexible enough to be updated or revised as and when the circumstances change. Here are four useful tips to build flexibility into your estate plan.

Naming Alternate Agents and Trustees

Failing to name an alternate executor, trustee, or healthcare agent is one of the biggest estate planning mistakes you can make. For instance, let us assume that you designate your eldest son as your healthcare agent and want him to make healthcare decisions on your behalf in case you are unable to do so due to incapacitation.

What happens if you become incapacitated and if your son is unable or unwilling to act as your healthcare agent? In the absence of an alternate agent who can step into your son’s shoes and make decisions on your behalf, your family might not know what to do and make decisions that might be contrary to your wishes.

Similarly, if you fail to name an alternate successor trustee, and if the original designee is unavailable, unable, or unwilling to take control of your trust, your family members might disagree with each other on who should serve as the trustee, which in turn can lead to unnecessary litigation.

To avoid such problems, you should make sure you name alternates who can carry out your instructions if the originally chosen executor, successor trustee, or healthcare agent is unable to do so.

Granting Discretionary Powers to the Successor Trustee

Generally, a successor trustee is expected to abide by the terms of the trust you set up and follow your instructions. However, if there is a material change in the circumstances under which the trust was set up, the terms of the trust might no longer be relevant or fair to the beneficiaries.

You can preempt this problem by granting discretionary powers to your successor trustee. When the successor trustee is given discretionary powers, they can make decisions on their own depending on the circumstances and decide how the assets in your trust should be managed and how the income should be distributed.

It should be noted that granting broad discretionary powers to the trustee is a good idea only if it is someone whom you have known for a long time and can completely trust. Otherwise, it is advisable to specify the standards that the trustee should abide by and include certain restrictions that can restrict the discretionary powers of the trustee to a certain extent.

Decanting

Decanting is the process of moving the assets from an irrevocable trust into a new trust. If you have set up an irrevocable trust, you can grant the trustee with the discretionary power to decant the trust if and when needed.

Normally, the terms of an irrevocable trust cannot be modified, unless the trustee approaches the court and manages to get the consent of all the beneficiaries. Needless to say, it can be a stressful and time-consuming process.

When the trustee is granted discretionary powers, they can choose to decant the trust if and when there is a material change in the circumstances and if they believe that the terms of the trust are no longer applicable or fair to the beneficiaries. In such a scenario, the trustee can move the assets into a new trust with more favorable terms – as long as the terms are not against the grantor’s intent.

Appointing a Trust Protector

A trust protector is a third party who can guide the trustee to make the right decisions regarding how the trust should be managed and how the proceeds should be distributed among the beneficiaries. They can also make modifications to the trust if and when there is a material change in the circumstances.

A trust protector also has the authority to remove the trustee and appoint a new one – if they believe that the trustee in question is not acting in the best interests of the beneficiaries or if they fail to manage the trust as per the grantor’s intent.

Looking to Create a Flexible Estate Plan? Let Our California Estate Planning Attorneys Help You!

Nobody can predict the future. But by creating a flexible estate plan that can be amended as and when needed, you can make sure your loved ones do not have to approach the court every time there is a change in circumstances.

The estate planning attorneys at Garmo & Garmo have over 80 years of combined experience and have helped thousands of clients from diverse backgrounds with their estate planning needs over the years. We can create a highly personalized, flexible estate plan which is best suited for your unique needs and goals.

To discuss your estate planning needs with a hard-working attorney from our firm, call us today at 619-441-2500 or contact us online and schedule a free consultation.

 

estate planning for new parents in La Mesa

Estate Planning for New Parents

As a new parent, taking care of your baby and catching a good night’s sleep (if possible) might be your top priorities. And during this season of your life, planning for your incapacitation or death is probably the last thing you want to think about.

However, it is necessary to plan for these contingencies – regardless of your age. As a parent, you have the responsibility to make sure your child is taken care of and provided for in your absence. So, this is the right time for you to create an estate plan.

Essential Aspects of Estate Planning for New Parents

Guardianship

As a new parent, this should be your topmost priority while creating an estate plan. By designating a legal guardian, you can make sure that even if something were to happen to you and your spouse, your child will be taken care of by someone you trust and raised the way you want.

The guardian you designate is authorized to take care of your child, make decisions on behalf of your child, and perform what are generally considered parental duties, which include:

  • Providing food, clothing, and shelter
  • Education
  • Healthcare
  • Safety and protection
  • Emotional support

It should be noted that in the event of your death, your child will be raised by your spouse – assuming they are healthy and of sound mind. The guardian is authorized to raise your child only under the following circumstances.

  • If you and your spouse pass away at the same time.
  • If they pass away shortly after you do and if your child is still a minor at that point.
  • If they have a physical or mental illness that prevents them from performing the duties of a parent.
  • If they have a serious alcohol or drug addiction.
  • If they have a history of being abusive and cruel to your child.
  • If they are convicted of a criminal offense and sentenced to prison.
  • If they are unable to take care of your child due to any other reason.

It is always a good idea to name an alternate guardian for your child as well. So that if the original designee is unable or not willing to take care of your child, the alternate guardian can do so.

Life Insurance

Life insurance is meant to provide a financial safety net for your family in the event of your untimely death. The payout from the policy can provide your spouse with the financial security they need to run the household and raise your child.

The best part is that life insurance is extremely affordable for those who are young and healthy. For example, if you are a 35-year-old non-smoker without any underlying health conditions, a 20-year term life policy with a death benefit of $500,000 will only cost you around $40 per month.

You can name your spouse as the beneficiary of your policy so that they can get the proceeds after you are gone. Alternatively, you can set up a trust and name it as the beneficiary, so that the proceeds are used to provide for your child’s needs.

Trusts

Setting up a trust is undoubtedly one of the best ways to make sure your child is provided for until they become an adult. It is particularly important if you have a special needs child who might require lifelong care. Learn more about creating a trust fund in California.

Experienced Estate Planning Attorneys in La Mesa, California

If you are a new parent who wants to make sure your child is taken care of and provided for after you are gone, the attorneys at Garmo & Garmo are here to help. We have an in-depth understanding of California’s probate and estate planning laws and have over 80 years of combined experience helping clients with these matters.

We can assess your child’s needs, understand what you are trying to accomplish with your estate plan, and create a plan that suits your needs. If you already have a plan that needs to be revised and updated, we can help you do that as well.

To discuss your needs with one of our Southern California estate planning attorneys, call us today at 619-441-2500 or contact us online and schedule a free consultation.

transferred on death deed California

California’s Transfer on Death Deed: What You Need to Know

A transfer on death (TOD) deed is an estate planning device that allows you to pass on your real estate property to your loved ones in the event of your death. Introduced in California in 2016 through AB 139, TODs allow you to transfer real estate property to your beneficiaries without having to set up a trust.

In this article, we take a look at the upsides and downsides of California’s TOD deeds.

California Transfer on Death Deed: The Upsides

  • It is one of the cheapest and easiest ways to transfer real estate property to your beneficiaries. All you need to do is fill out the TOD form, sign it in front of two witnesses, get their signatures, notarize the form, and get it recorded in the county where the property in question is located.
  • It protects the property in question from probate and allows your beneficiaries to inherit it without any delay or any unnecessary intervention from the probate court.
  • The beneficiaries who are named in the TOD deed can receive the property by recording the evidence of your death and filing a change in ownership notice. No other legal action is required on their part to be able to take ownership of the property.
  • You can revoke it at any time for any reason. You are not legally obligated to get your beneficiaries’ consent before revoking the deed. Similarly, the beneficiaries who are named in the deed do not have the authority to stop from you revoking the deed.
  • A TOD deed allows you to retain full control over the property in question until you die. The beneficiaries named in the deed cannot have any say in how the property should be maintained or what you can do with it.
  • If you only name one beneficiary in the deed and if they predecease you, the deed becomes automatically invalid. You are not required to revoke it. If you name multiple beneficiaries and if one of them predeceases you, their share will be equally split among the remaining beneficiaries.

California Transfer on Death Deed: The Downsides

  • A TOD only allows you to transfer residential real estate property to your beneficiaries. It can be a single-family home, a condo, a property that contains no more than four residential units, or a single-family home that is built on agricultural land (40 acres or less). If you own commercial or industrial property or if your residential property does not fit into any of the aforementioned categories, you cannot pass it on to your beneficiaries through a TOD.
  • It can eliminate the need for probate only if the value of the rest of your estate (excluding the property named in the TOD deed) does not exceed $166,250. If it exceeds this threshold, it must go through probate. In such a scenario, your beneficiaries might be able to inherit the property named in the TOD deed without probate. However, the remaining assets must go through probate, which can be expensive and time-consuming.
  • A TOD does not have any built-in mechanisms to defer the distribution of the property to the beneficiaries named in the deed. For instance, if you want to leave your home to your minor children, you cannot add a provision in the TOD that they can receive the property only after they turn 18. In fact, you cannot set any terms as to how the property should be managed after your death. It is entirely up to your beneficiaries to decide what they should do with the property.
  • The beneficiaries who inherit your property through a TOD deed can be held personally liable for your debts.

Why You Need a Comprehensive Estate Plan

As you can see, a TOD deed has several limitations and cannot be used to pass on all your assets to your beneficiaries. To be able to do so, you need to set up a trust and have a proper estate plan in place.

Unlike a TOD deed, a trust gives you complete control over your assets and allows you to decide how your assets should be managed, how they should be divided, and when they should be distributed to your beneficiaries. So, if you have substantial assets whose value exceeds California’s probate threshold, setting up a trust might be a better way to manage and pass on your assets to your beneficiaries.

Need Help with Estate Planning? Our California Estate Planning Lawyers Can Assist You

At Garmo & Garmo, we understand how complicated estate planning can be. Our attorneys can make the process easier for you by offering the right advice and creating a plan which is tailor-made to suit your unique needs. We have over 80 years of combined experience in estate and incapacitation planning and can create a personalized plan that works for you.

To talk to one of our Southern California estate planning attorneys, call us today at 619-441-2500 or contact us online and schedule a free consultation.

why you shouldn't create a diy will

Why You Shouldn’t Create a DIY Will

The devastation to human life caused by the pandemic has forced many people – including young people – to think about what would happen to their family in case the unthinkable happens. As a result, people are rushing to create online wills, so that their assets are passed on to beneficiaries of their choosing in the event of their death.

While making an online will is certainly better than not having a will at all, it is not a good idea to create your own will without consulting an estate planning attorney. If you are not careful, your decision to create a DIY will could prove to be a costly mistake and make it difficult for your loved ones to deal with your estate when you pass on.

DIY Wills in California – What You Need to Know

Under California law, you have the authority to make your own will. It can be a handwritten will (commonly referred to as a holographic will) or a statutory will (a downloadable will that you can fill out).

  • For a handwritten will to be deemed legally valid, you should date and sign it.
  • For a statutory will to be deemed legally valid, you should have two witnesses who must witness you sign the will and sign it themselves.

Since these requirements are extremely easy to meet, many people think that they can save a lot of time and money by making a DIY will. The problem, however, is that a DIY will can lead to a lot of unnecessary legal complications, which your loved ones might have to deal with after you are gone.

The Risks Associated with a DIY Will

Your Will Could Be Declared Invalid

One of the biggest risks associated with a DIY will is that if you are not careful, it could be declared invalid by the court after your death. For instance, if your handwriting is not legible, your will could be deemed undiscernible.

Similarly, if your will does not express your intentions clearly, it could be declared too vague. If you have more than one beneficiary, you should clearly mention how your assets should be split up and who should get what. If you fail to do so, your beneficiaries might choose to contest the will, as a result of which it might get stuck in probate limbo for months – if not years.

A DIY Will Might Not Suit Your Needs

The one-size-fits-all nature of a DIY will might not suit your unique estate planning needs and goals. You are not allowed to make any changes or add anything to a statutory will. If you do, it will be declared invalid. So, by choosing to create your own will, you might not be able to accomplish all your goals.

You Might Add Contradictory Provisions

Without the guidance of a seasoned California estate planning attorney, you might find it difficult to express your intentions clearly in your will. If you accidentally add provisions that are contradictory to each other, the executor might not be able to carry out your instructions. It can also lead to disagreements among your beneficiaries, which in turn can lead to litigation.

There Might Be Issues with Guardianship

One of the common mistakes that many people make while creating a DIY will is that they tend to focus only on the financial aspects and fail to make provisions for other, equally important issues like guardianship of minor children.

The most common issues with guardianship are:

  • If you fail to designate a guardian for your minor children, the court will step in and choose someone as the guardian.
  • If you fail to designate an alternate guardian, and if the original designee becomes ill, dies, or if they are unwilling to be the guardian of your children, the court will have to step in and choose someone as the guardian.
  • If you designate a couple as the guardians for your minor children, and if they split up after your death, your children could get caught in a custody battle.

A Will Is Not an Estate Plan by Itself

A Last Will and Testament can accomplish a lot toward your estate planning goals, but there are some things it cannot do. For example, a will cannot help you plan for your incapacitation. Nor can it help you avoid probate. In order to plan for these contingencies, you need other tools like a financial power of attorney, an advance healthcare directive, and a living trust. So, along with your will, you should utilize other documents to create a comprehensive estate plan that addresses all your needs and goals.

Need Help with Estate Planning? Our Southern California Estate Planning Attorneys Are at Your Service!

Estate planning is a complicated process that requires the guidance of a committed attorney. At Garmo & Garmo, we have a team of highly skilled attorneys who have more than 80 years of combined experience with estate plans and related matters. We can create a plan that takes all your needs and goals into account and update it as your circumstances change.

To discuss your estate planning needs with one of our attorneys, call us today at 619-441-2500 or contact us online and schedule a free consultation.

updating my estate plan

How to Update Your Estate Plan

Updating or Revising an Estate Plan

If your estate plan is three or more years old, or if an heir has died, you need to have it reviewed. Your estate planning attorney should also review the plan when specific events occur in your life. These events include if you got divorced, moved to another state, or you have a new child or grandchild, or there has been a significant change in your assets/liabilities.

If circumstances surrounding your trustees or executors of your estate plan have changed, then also you need to update it. Carefully consider the people appointed in your plan – have they moved away or passed away? Are they still able and willing to perform the jobs you have outlined in your estate plan?

Revising Your Estate Plan After the Death of An Heir

Amending Your Will

If you named the heir in question as one of the beneficiaries in your will, the heir’s family might be eligible to receive their share under California’s anti-lapse law.

However, if the heir in question did not have a family of their own and if there are no blood relatives who are qualified to receive their share under the state’s anti-lapse law, their share will become part of the residuary estate and will be shared among the remaining beneficiaries.

Furthermore, things can get complicated if your will is ambiguously worded or if you failed to name any alternate beneficiaries in your will. With that said, it’s wise to amend your will and specify who gets to inherit the deceased heir’s share.

If you are not sure as to how the amendment might affect other provisions in your will, you can revoke your existing will and create a new one with the help of a seasoned California estate planning attorney.

Amending Your Trust

If you have allocated a share of the assets in your trust to the deceased heir or if you have allocated a share of the revenue generated from the assets in the trust to the deceased heir, it’s essential to amend the terms of the trust so that the share can be allocated to the heir’s family or distributed among the remaining beneficiaries.

Amending a revocable trust is only a matter of replacing the existing trust document with a new one. You can do it any time you want, for any reason, with the help of an estate planning attorney.

On the other hand, if you have set up an irrevocable trust, you can only amend it under limited circumstances. If all the remaining beneficiaries are in agreement with the amendment you propose, you can get it done without any legal intervention.

However, if one or more of the beneficiaries do not agree with you, you might have to file a petition with the court and convince the court that the proposed amendment does not impair the interests of the aforementioned beneficiaries and is not against the material purpose of the trust.

Revising Your Durable Power of Attorney and Advance Healthcare Directive

If you have named the deceased heir as your agent who is authorized to make financial decisions on your behalf, it’s vital to revise your durable power of attorney or create a new one altogether. Similarly, if you have named the deceased heir as your agent who is authorized to make medical decisions on your behalf, you need to amend it as well.

Divorce is also another instance when you must revise your advance healthcare directive.
When you are married, it makes sense to designate your spouse as your healthcare agent, as you can count on them to respect your wishes and make medical decisions in your best interests. Once you are divorced, you need to find someone else who can do it for you in the event of your incapacitation or death.
Once you choose a person, talk to them and make sure they clearly understand what you want them to do. With your spouse, you do not have to spell out everything, as they can instinctively understand your needs. However, it might not be the case with a third party – even if they happen to be your close friend or relative. So, tell them exactly what they should do and what they should not do in the event of your incapacitation or death.

Factors to Consider When Creating or Updating Your Estate Plan

An estate plan is not just about what will happen after you die. It also covers the situation of who should have the authority to handle your affairs when you are still alive but unable to handle them yourself.

If you are not sure where to begin with estate planning, your first step should be to hire an experienced estate planning lawyer. They will help put your goals and thoughts onto a paper and prepare language that accurately expresses your ideas.

Create the Following Documents

These documents are a good place to start:

  • Durable Financial Power of Attorney: This is the document where you name an individual to act on your behalf in matters pertaining to all of your property such as bank accounts, real estate, retirement plans, digital assets, taxes, insurance, and so forth.
  • Health Care Power of Attorney: In this document, you will name the individual who will only have the authority when you are unable to make a medical decision for yourself. For example, if you are undergoing surgery or you are in an accident and temporarily unconscious and a question comes up regarding your treatment, this individual will have the authority to make a decision. Note: The “agent” you name cannot override your wishes so long as you can speak for yourself or if you have refused/consented to the treatment in the past.
  • Living Will Declaration: If you do not want to give anyone authority to act on your behalf when you are unconscious, this is the document you need. For example, if you are in a coma and you do not want to receive technologically supplied food and water, you should give a copy of this document to your doctors.
  • Declaration for Funeral Arrangements: In California, you can assign a representative to handle the disposition of your body after your demise. In this document, you will name that person. You can also list preferences regarding preferences (cremation, burial, entombment, etc.)
  • Last Will and Testament: This document will list how your property and assets should be distributed after your demise. You will also need to name an “executioner” to handle the distribution to the beneficiaries you name.

Review Your Beneficiaries

A feature with beneficiaries is that their circumstances can change. If you created your estate plan 10 years ago when you were married to your previous spouse, but they are still a beneficiary on your life insurance policy, your current spouse will get the catastrophic news after you are gone.

You should update the beneficiary designation on all the assets, investments, and accounts where your spouse is named as the beneficiary. These might include:

  • Life insurance policies
  • Investment accounts
  • 401(K) accounts, IRA plans, and other retirement accounts
  • Payable-on-death bank accounts
  • Certificates of deposits
  • Real estate properties and other assets for which you have created a transfer-on-death deed

Also, make sure you have backup beneficiaries in addition to the primary ones in case the latter pass away before you do.

Work with Seasoned Estate Planning Attorneys to Secure Your Legacy

You have worked hard to create the wealth you have today, regardless of its size. To ensure your legacy has a lasting impact, it is crucial to work with an estate planning attorney that you can trust.

At Garmo & Garmo, we understand that estate planning can seem overwhelming, which is where we come in. We can help you pass your property to your family and/or to charity, both upon death and during your lifetime. We can also analyze and implement asset protection and tax reduction strategies, coordinate life insurance, and help plan for possible disability.

Schedule a free, no-obligation consultation today by calling us at 619-897-2144 or filling out this form.

joint tenancy in estate planning

Joint Tenancy Problems in Estate Planning

Joint tenancy is seen by many as one of the easiest ways to pass on their assets to their loved ones without having to go through probate. While it is true that a joint tenancy arrangement can help you bypass the probate process, it is not an effective tool for estate planning – due to the inherent disadvantages associated with the arrangement.

How Does Joint Tenancy Work in California?

Under a joint tenancy agreement with rights of survivorship, you can co-own a property with one or more people – all of whom have ownership interests in the property. When you die, your ownership interest in the property will get transferred to the joint tenants.

As simple as the arrangement might sound, it can lead to several problems down the road. 

What Are the Disadvantages of Joint Tenancy as an Estate Planning Tool?

Your Estate Might Have to Go Through Probate Even with Joint Tenancy

The biggest reason why many people – especially couples – select joint tenancy is that it allows them to bypass the probate process. However, the truth is that even with joint tenancy, your estate still might have to go through probate under certain circumstances.

Let us assume that you and your spouse own your home in joint tenancy. If you and your spouse die in a car accident, your property has to go through probate, since both the owners are dead. A guardian or conservator appointed by the probate court will decide how your assets should be distributed among your beneficiaries.

Let us now picture another scenario. You and your spouse own your home in joint tenancy. A few years later, you die of a heart attack and your spouse inherits the home. However, your spouse is too distraught with your death to add another joint tenant. A few years later, your spouse dies – without adding any joint tenant to the property. Again, in such a situation, probate becomes unavoidable.

The Risk of Liens

There are many circumstances under which a lien could be placed on your joint tenant’s ownership interests in your property.

If your joint tenant injures someone accidentally and gets sued as a result, they might have to pay compensatory damages to the injured party. If they do not have sufficient liability insurance coverage, the court might decide to place a lien on their ownership interest in your property in order to compensate the victim.

If your joint tenant is unable to pay off their debts, the creditors might choose to file a lawsuit against them. If they win the case, a lien can be placed on your joint tenant’s ownership interest in your property.

If your joint tenant has children from their previous marriage and if they are unable to pay child support, the recipient can approach the court and get a lien placed on your joint tenant’s ownership interest in the property.

If your joint tenant fails to pay back taxes, the IRS might decide to place a lien on their ownership interest in your property – as well as any other property they own. If the amount owed by your joint tenant is substantial, the IRS can force a sale as well.

You Might Not Be Able to Pass on Your Assets to Your Loved Ones

This is by far the biggest disadvantage associated with a joint tenancy agreement.

Let us assume that you and your spouse jointly own all your marital assets and have two children. After your death, your spouse will inherit all your assets automatically. If they decide to remarry and name their new spouse as the joint tenant, your children might be left with nothing in the event of your spouse’s death.

Let us picture a different scenario. You and your spouse both have children from your previous marriages. After your death, your spouse decides to add the children from their previous marriage as joint tenants. Again, in such a scenario, your children might be left with nothing.

In other words, far from making it easier for you to pass on your assets to your loved ones, a joint tenancy agreement might actually prevent you from doing so.

Trusts – The Better and Safer Alternative to Joint Tenancy

If you want to protect your assets in the event of your death and make sure they are passed on to your loved ones, setting up a trust is generally a much better option than getting into a joint tenancy agreement with your spouse or anyone else for that matter.

A trust not only allows you to bypass the probate process, but the right types of trusts can also protect your assets from liens and make sure they are managed, divided, and distributed exactly the way you intended them to be.

Need Help with Estate Planning? Contact Our Southern California Estate Planning Attorneys Today

At Garmo & Garmo, we are committed to providing high quality estate planning services to our clients. Our attorneys are highly skilled and have over 80 years of combined experience in this area of law. We can craft a comprehensive estate plan that is customized to your needs and can accomplish your goals both now and after you are gone.

To schedule a free consultation with one of our seasoned attorneys, call us today at 619-441-2500 or contact us online.

estate planning for millennials

Estate Planning for Millennials

One of the biggest misconceptions associated with estate planning is that it is only meant for aging adults. And this is borne out in the data that shows only one in five millennials in the US have an estate plan in place.

Contrary to what many young people think, estate planning is not meant for older people alone. In fact, experts say that as soon as you are independent and start earning, you should have an estate plan in place and update it as and when your goals change.

Why Is Estate Planning Important for Millennials?

The Threshold for Probate in California Is Very Low

Under California law, if the value of your estate is equal to or more than $100,000, it must go through probate – in the absence of an estate plan. If you own a home anywhere in California, the combined value of your home and other assets (jewelry, furniture, savings, and so on) can easily cross the threshold for probate.

In the unfortunate event that you die without an estate plan, your loved ones might not only have to spend a significant amount of money on probate but might also have to wait several months to inherit your assets.

Millennials Stand to Inherit a Significant Amount of Wealth

It is well known that baby boomers are the wealthiest generation in the nation’s history. As they grow older, they are all set to pass on their assets to their millennial sons and daughters in what experts call the ‘great transfer of wealth’.

By 2030, millennials stand to inherit as much as $68 trillion from their boomer parents. It is a staggering amount of wealth – to put it mildly. This is the most important reason why experts say that millennials should think about what to do with the wealth they stand to inherit from their parents.

If you belong to the aforementioned category and stand to inherit a substantial amount of assets from your parents, you need to have a plan to manage it, protect it, and eventually pass it on to your loved ones.

An Estate Plan Is Not Just about Your Assets

If you have young children, it is extremely important to think about who will raise them and care for them if something were to happen to you and your spouse. It is even more important if you are a single parent with young children. By creating an estate plan, you can designate a trustworthy person as the guardian of your children.

In the absence of an estate plan, the court will be forced to step in after your death and designate a guardian for your children. The problem is that the person chosen by the court might not be someone you would have wanted to take care of your children. This is one of the biggest reasons why parents with minor children should have an estate plan in place.

If you have pets that you are extremely fond of, you can name a guardian for your furry friends as well.

An Estate Plan Can Protect Your Digital Assets

If you own cryptocurrencies, domain names, Venmo and PayPal accounts, and other valuable digital assets, you need to have an estate plan in place to make sure your loved ones are able to inherit them after your death.

Also, if you have a large amount of photos, videos, songs, movies, and e-books stored on the cloud, you need to make sure your loved ones can access it after your death. The same rule applies to your social media accounts as well.

You Need to Plan for Incapacity

You are never too young to think about who would make financial and healthcare decisions on your behalf if you are incapacitated due to an injury, infection, or illness. An estate plan allows you to designate someone who can handle your finances and investments (commonly referred to as a durable power of attorney) and someone who can make medical and healthcare decisions on your behalf (commonly referred to as an advance healthcare directive).

In the absence of an incapacitation plan, your family members might quarrel among each other as to who should make decisions on your behalf in the event of your incapacity.

Experienced Estate Planning Attorneys in La Mesa, California

If you are thinking about creating an estate plan, now is the right time to act. The skilled estate planning attorneys at Garmo & Garmo have extensive knowledge of California estate planning laws and have more than 80 years of combined experience. We can create a plan which is customized to your needs and goals and meets the highest legal standards.

To discuss your estate planning needs with a seasoned California estate planning attorney, call our firm today at 619-441-2500 or contact us online and schedule a free consultation. 

will contests

Can You Prevent Someone from Contesting Your Will or Trust?

One of the most commonly asked questions about estate planning in California is whether it is possible to prevent someone from contesting the validity of a will or trust. The short answer is: yes, it is possible – to a certain extent.

The No-Contest Clause in Estate Planning

Under California law, you have the right to add what is called a ‘no-contest’ clause to your will or trust in order to discourage your beneficiaries from contesting its validity. If a beneficiary still decides to challenge the legality or validity of your will or trust and loses, they risk losing their share of the assets, which they otherwise would have inherited.

There are two reasons why you might want to add a no-contest clause to your will or trust:

  • First, the very reason for making a will or setting up a trust is to make sure your assets are managed, divided, and passed on to those you love and care about exactly as per your wishes. If anyone could challenge the validity of your will or trust for any reason, it defeats the very purpose of creating an estate plan in the first place.
  • Secondly, if a disgruntled beneficiary decides to challenge the validity or your will or trust – despite knowing that they have no probable cause and do not have a chance of winning – it can cause unnecessary delays in administering your estate. As a result, other beneficiaries might have to wait for years – through no fault of their own – before they could inherit what is rightfully theirs.

Once a no-contest clause is added, your beneficiaries will be essentially left with two choices – accept the terms of your will or trust and inherit their share or contest your will or trust and risk losing their share. In most cases, a reasonable person would choose the first option over the second one, since it is the safer choice. That said, there are unreasonable people in the world that might still challenge a will or trust even with these provisions in place and the odds stacked against them.

What Kind of Legal Challenges Violate the No-Contest Clause?

Under California law, a no-contest clause comes into the picture under the following circumstances:

  • If a beneficiary challenges your will or trust’s validity without having any probable cause
  • If a beneficiary challenges the legality of a property transfer based on the grounds that the transferor was not the owner of the property in question at the time of the transfer
  • If a beneficiary files a creditor’s claim against your trust for debts owed to them

In the aforementioned scenarios, the beneficiary who files the pleading with the court would lose their share of inheritance.

Exceptions to the No-Contest Clause

As is the case with any legal provision, there are exceptions to the no-contest clause as well. What it means is that a no-contest clause does not prohibit your beneficiaries from challenging your will or trust. If, despite knowing that they risk losing their share of assets, they still decide to contest your will or trust, they can do so.

Under the law, a beneficiary has the right to challenge your will or trust on the following grounds:

  • Mental incapacitation
  • Duress or undue influence
  • Fraud or forgery
  • Faulty or unlawful execution
  • Revocation

It should be noted that even if a beneficiary loses their challenge, they might still be eligible to receive their share of the assets, if the court believes that they had probable cause to file the pleading.

This leads to the question – what exactly is probable cause when it comes to challenging a will or trust?

If – at the time of filing the challenge – a beneficiary has reasons to believe that they have a good chance of winning – based on the information available to them – it might be considered a meritorious claim by the court. In which case, they might be eligible to receive their inheritance even if they lose the challenge.

On the other hand, if the challenge is brought about based on frivolous reasons or if the information available to the beneficiary at the time of filing the challenge is unlikely to convince a reasonable person that they have a good chance of winning, it might trigger the no-contest clause. In which case, the beneficiary might be prohibited from receiving their share of the assets.

Need to Add a No-Contest Clause to Your Will or Trust? Let Us Help You!

If you need to create a will or trust or add a no-contest clause to an existing will or trust, the Southern California estate planning lawyers at Garmo & Garmo can help.

We can analyze your estate plan, determine whether someone could challenge it after your death, and add an appropriate no-contest clause that can prevent frivolous litigations to a great extent.

If you have any questions regarding the no-contest clause or if you need to create a new estate plan, call us today at 619-441-2500 or contact us online and schedule a free consultation with one of our attorneys.