FAQS

If you own property in your name when you die, no matter how clearly you may set forth your desires in your will, your will guarantees that a probate proceeding will be necessary. Every state has laws which affect the timing and manner in which your assets are distributed, and nothing you say in your will can avoid those laws.

Beneficiaries are entitled to an accounting during your term as Trustee, which means the credits and debits must balance. A large part of our Trustee representation consists of advising the Trustee of the terms of the Trust document and the rules (contained in both the Trust document and the Probate Code) applicable to the Trustee’s administrative duties. The Trustee’s duties generally include:

• Cataloging all property of the decedent;

• Paying any debts, claims or taxes that are due;

• Collecting rights to any income (royalties, stock dividends, etc.) to which the deceased was entitled;

• Settling financial and property disputes;

• Filing the decedent’s final income tax return;

• Filing the estate tax return, if needed;

• Preparing an accounting of estate assets and expenses;

• Litigating creditor’s claims; and

• Distributing or transferring the remaining property to heirs.

Because Trusts may contain sub-trusts for minor beneficiaries or beneficiaries of special needs, the Trustee’s duties may not be short lived. Moreover, the Trustee of a special needs trust will have to navigate the laws of SSI and Medi-Cal to make sure that payments from the Trust do not jeopardize the beneficiary’s state “need based” benefits.

Missteps by the Trustee can result in a beneficiary filing a Court action to have the Trustee removed and surcharged (financial penalty). Furthermore, any suits against a Trustee challenging the actions of the Trustee may require the Trustee to spend their own money to defend the suit.

It has been our experience that dealing with the distribution of assets after the death of a parent can be as personally stressful as a divorce. Often, the parent, during their life, was the “glue” holding the family together, and without the glue the family ties are weakened. Add to this the stress of an inheritance and disputes often arise.

Your rights as a beneficiary stem from the terms of the Trust document and we can help you translate the “legalese” into understandable English. Your basic rights as a beneficiary include:

• The right to information about the assets of the estate;

• The right to an accounting of the transactions of the estate; and

• The right to receive distributions.

A dispute can take many forms. We find that most disputes arise because the beneficiaries think the Trustee is just not moving fast enough or not providing enough information. Therefore, the resolution can be as simple as having the Trust Administration process clearly explained or requesting that the Trustee provide additional information.

However, when the reasonable requests of a beneficiary go unanswered or assets are disappearing without explanation, informal resolution may not be so simple. These disputes may call for a more aggressive approach, such as interjecting yourself into an existing Court proceeding or initiating a Court proceeding.

We at Zalikah Law Firm can review your individual factual situation, provide you with an analysis of your rights and advise you of the best way to proceed to protect your rights. Being fully

informed of your rights and the law, will help you to make an informed decision as to how best to proceed.

The Will is commonly referred to as a "Pour Over Will." The Will governs the property held in your name at your death. The Will provides for the administration of that property and directs that the portion of such property remaining after the payment of your debts, expenses of administration, and estate taxes imposed on such property be added to your Revocable Trust.  A Pour -Over Will is used first to name a guardian for the minor children.  Second, it protects against intestacy in the event any assets have not been transferred into the trust at the death of the Trustmaker/owner.  It will also invalidate any previous wills which you may have executed.  Its function is to pour any assets left out of the trust into it, so the assets are ultimately distributed according to the terms of your Trust.

The Trust Agreement creates what is typically referred to as a "Living Trust." The Trust Agreement is entirely revocable and amendable by you during your lifetime. The Trust Agreement becomes irrevocable and not subject to amendment upon the death of the first spouse to die.

Any property that you transfer to the Trust during your lifetime will avoid probate upon your death. Property that you do not transfer to the Trust will be subject to probate but will pass to the Trust through the probate process.

The Trust Agreement contains the provisions governing the disposition of your property upon your deaths. The Trust Agreement provides for gifts, creates trusts, names successor trustees, and sets forth your instructions to the trustees. Your important estate tax planning is also accomplished through the provisions of the Trust Agreement.

You are the initial trustee of the Trust. Upon your incapacity or death, the person you have named to act as successor trustee will serve. You reserve the right to remove and appoint trustees during your lifetime and to designate who will serve as trustees in the future.

The Advance Health Care Directive identifies the individuals that you desire to act for you if you become unable to make medical decisions for yourself. The most common decision involves when, and under what circumstances, extraordinary measures should be used to prolong life. There are also sections of the Advanced Health Care Directive which deals with whether you desire to be an organ donor.

An Advanced Health Care Directive or a Living Will informs others of your preferred medical treatment should you become permanently unconscious, terminally ill, or otherwise unable to make or communicate decisions regarding your treatment. Almost all states have enacted laws to protect a patient’s right to refuse medical treatment. Even if you receive medical care in a state without living will laws this document is useful to a court trying to decide what an unconscious patient would want. In conjunction with other estate planning tools, it can bring peace of mind and security while avoiding unnecessary expense and delay in the event of future incapacity, A good estate plan will typically include the four documents described above. When properly executed, these four documents can ensure a smooth transition for your loved ones and ensure that your wishes are carried out if you die or become incapacitated. With properly drafted estate planning documents, your heirs should not have to hire an attorney or go to probate court. This will save them thousands of dollars and years of bureaucratic headaches.

If a couple has minor children, it is very important to prepare a Nomination of Guardians to serve if both parents are deceased. A court proceeding in the Family Law court is required to formally approve a guardian, but the court affords the written nomination of the parents’ great weight in making its decision. Such a Nomination can avoid a "tug of war" between well-meaning family members. A properly drafted Trust will also provide for the management of your estate until such time as you deem your child is mature enough to receive a distribution.

We recommend that you review your estate plan at least every 5 years or so, to make sure that it still expresses your wishes. You may no longer be in contact with the persons you named as Executors, Trustees, Guardians, or Health Care Agents, and thus may want to change these designations. Other changes, such as births, deaths, marriages, divorces, or changes in the size or nature of your estate, may also make changes appropriate.

Zalikah Law Firm offers all its clients online access to their executed estate planning documents. With online access our clients can view and print their documents anytime and anywhere they have internet access.

First, property inherited through a trust avoids probate in at least one State. Probate is the lengthy court procedure which culminates in a judge’s order as to how your assets should be distributed. The process includes mandatory newspaper publications to provide notice of the probate action to the public, written notification to all possible heirs and creditors, and long statutory wait periods which invite anyone to file a claim to the estate. The expenses are very high, and probate is usually required in every State where you own real property. The cost and time delays of going through probate in two or more States can be quite undesirable. The benefit of utilizing a living trust to avoid probate is that assets can be quickly distributed to beneficiaries and without the costs of probate. In contrast, a will does not avoid probate.

Unlike a will, implementing a living trust estate plan avoids court control of your assets, not only in the event of your death, but also if you are temporarily or permanently incapacitated, and avoids public disclosure thereby providing maximum privacy. Additionally, the distribution of your property to your beneficiaries is much more difficult to contest. Since probate can take a long time, sometimes several years, the benefit of a living trust is that your family will not have to deal with a long period where there would be very limited or no access to your assets. And having a disability plan in your trust will allow your family to avoid the need for a conservatorship if you become disabled.

In addition, you can substantially reduce or eliminate estate taxes though the use of an A-B living trust, and also allow flexibility, through the use of an Disclaimer A-B living trust or powers of appointment, to ensure step-up in cost basis on your property to reduce or even eliminate capital gains taxes. You can avoid reassessment on your home and your real property taxes will not increase due to transfers to your living trust.

Furthermore, you can set up an alternative to your heirs receiving 100% of inheritance outright. You can regulate the transfer of assets (including principal and/or income) to heirs who are prone to mismanagement, who may quickly squander their inheritance, or who may be subject to creditors or an ex-spouse. And proper trust provisions can protect dependents with special needs while also ensuring their continued qualification for government assistance and benefits.

In California, everyone has an estate plan even if they have no Will or Trust. That is because California law provides a detailed scheme of who is entitled to your property when you die. However, very few people would be happy with the results under the law because the law does not take into account an individual’s wishes or family situation. Regardless of who you are, how much money you have, who you want to inherit your estate or when you want them to receive distribution, your wishes are likely very different from the basic disposition provided under California state statutes. For instance, if both spouses ultimately die from a common accident but one outlives the other, even for a short time, all of the property of both spouses could go to the survivor's family rather than be split between the heirs of both spouses.

Having no estate plan can also be a problem for those with minor children. For example, if a couple with children died, California law provides that the children would be entitled to full ownership of the property, including any businesses, at age 18. Most people consider age 18 far too young an age to receive a full inheritance. However, with a well thought out Estate Plan you can make sure that your children are well cared for (food, clothing and schooling) by a responsible adult trustee and that your minor children receive their inheritance at an age when they are more mature and less likely to blow through their inheritance on frivolous items.

Proper estate planning is important as a means of avoiding Probate Court. When you die without a Will or with a Will but no Trust, your heirs are required to bring the matter to Probate Court. Until such time as someone is appointed by the Probate Court, your assets are frozen, and your heirs are unable to access your accounts to pay any bills and expenses.

In addition to being costly, Probate Court is time consuming and many acts require Probate Court approval. Even the most basic of estates can take a year to close. Moreover, all documents filed in Probate Court are fully accessible by the public. Another pitfall with the no estate plan philosophy is that lack of clarity most often breeds disputes and heirs tend to fight over the smallest of estates. These disputes are expensive to litigate, and the fees incurred by the estate come from the estate's assets.

A properly drafted Will and Trust can avoid both the application of California's default provisions, as well as unnecessary expenses and the inconveniences of Probate Court. Not only does this keep the estate administration private, but it ensures that your wishes are followed and done so in a timely fashion.

One of the main goals of estate planning is to reduce the tax bite. There are a number of deductions, credits, and strategies, such as specialized trusts, that can lower or even eliminate such taxes. In addition, there are also transfer tax considerations. Gifts are not income to the person receiving the gift, but transfer taxes are imposed on lifetime gifts and gifts made at death above certain amounts. There is an exception, which allows a person to make unlimited gifts to a spouse, and there is another exception, which allows a person to make annual gifts to anyone as long as the value of such gift does not exceed a set amount per year (currently $14,000). At Zalikah Law Firm we advise our clients as to which of these taxes apply to them, and what steps they can take to minimize such taxes.

Common questions concerning the succession of a family business:

•     How do I give a part of my business to my children yet retain control of the business?
•     What if I want to give 20% of my apartment building to my son, but I do not like my daughter-in-law?
•     What will happen when my spouse has to work with my long-time business partner if something happens to me?
•     Our company is still owned mostly by my father. He wants to make a gift to the grandkids, but he still feels he needs most of the business income. What is the best way to do that?
•     I have several apartment buildings, how many LLC’s should I have?

• After my Mom died my Dad owns 100% of the family company stock. Will that have any effect on his estate tax?



What is an Irrevocable Life Insurance Trust “ILIT”?




• An Irrevocable Trust that holds an insurance policy on the client’s life.

An Irrevocable Trust where the client retains the right to an asset during life with the residua of the asset passing to a charity upon death.

An Irrevocable Trust where the client retains the right to certain annuity payments for a period of time with the residua of the asset passing to a charity upon death.

An Irrevocable Trust or Revocable Trust created for the benefit of a family member with a disability. The SNT has to be carefully drafted so as not to extinguish or diminish State granted benefits.

• Insurance

When a client thinks of a “creditor” what they mean in many cases is defending against a potential lawsuit, like a car accident, a major medical expense, or a slip and fall. In the United States, lawsuits are expensive for all parties involved. Many times, a person who is thinking of suing someone else will only proceed if there is an insurance policy that is available to pay any judgment. The bottom line is that insurance is often the least expensive option to protect against liability.

• “Structural” Asset Protection

When we refer to “structural” asset protection, we mean the various ways a person could structure their asset holdings to provide protection against liabilities. One of the easiest “structural” ways to protect assets is to hold an asset in a legal entity, which gives creditor protection. For example, a limited partner of a limited partnership has liability that is limited to the assets of the partnership. This is valuable protection, especially if the limited partners have other substantial assets. Another example of a “structural” asset protection is a premarital agreement for couples getting married. California is a community property state and depending upon the circumstances either spouse could be liable for a community debt. If the couple has a valid premarital agreement, which maintains a separate property structure, there would only be separate property liability for separate property debt.

• Gifts and Other Transfers

While a gift or transfer made in contemplation of avoiding a creditor will not be effective, gifts and transfers can and do limit risk of family members when done properly. To take one simple example, a parent may desire to make a gift to a child. If the parent makes the gift to the child outright, such gift will be fully subject to the creditors of the child. However, if the parent makes the gift to an irrevocable Trust for the benefit of the child, the same asset may be wholly protected from the child’s creditors.

The inheritance and succession statutes of most states contain a provision designed to prevent a spouse from being disinherited. Such statutory provisions, often called elective-share statutes, entitle a surviving spouse to a minimum distribution from the estate of a deceased spouse and can be used to override the terms of a Trust or Will. If you do not take this into consideration when designing an estate plan, the enforcement by your spouse of his or her elective share can significantly disrupt the settlement of your estate.

Yes. You can leave all your separate property in trust, with the income to benefit your children. In order to ensure that your wishes are followed, and because you may not feel comfortable with your husband as the trustee, you may want to name a corporate trustee, such as a bank trust department or an established trust company.

The family trust is designed to be tax-free when the first spouse dies. The value of the family trust is equal to the applicable exclusion amount, meaning that no tax is due. If the family trust is properly drafted and administered, it is not included in the estate of the second spouse to die, regardless of how much it has grown.

The family trust’s tax-free benefit can be significant. A simple approximation of the value of the family trust in the future can be calculated using the Rule of 72. This rule states that if you divide 72 by the interest rate or rate of growth of an asset, the result is the number of years it takes to double that asset. For example, 72 divided by 7.2 equals 10; that is, it takes 10 years to double the asset at 7.2 percent growth. The recent equities market has produced returns in excess of 14.4 percent, which, when divided into 72, results in 5; it takes 5 years to double an asset at 14.4 percent growth. Minimal inflation of 3.6 percent divided into 72 equals 20, so it takes 20 years to double an asset at the inflation rate. If we apply the growth rate of 7.2 percent to the family trust and assume that your spouse will survive you by 20 years, the value of the family trust will double twice. The entire family trust will pass to your children free of federal estate tax, no matter how large it has grown.

The best approach is to create a qualified terminable interest property (QTIP) trust in your living trust document. A QTIP is a type of marital trust that qualifies for the unlimited marital deduction. After you are deceased, all or part of your assets passes to the QTIP trust. Your spouse is the only beneficiary of the QTIP trust, and the trust continues for his or her lifetime. Upon your spouse’s death, the remaining trust assets pass to your children according to the terms of your trust. 

If your spouse either consents to give up his or her rights or receives property of yours at your death that suffices to comply with your state’s rules, your family trust does not have to provide for your spouse.

Many people underestimate the amount of planning, organization and investment needed to get the permits they want. Getting government permits involves a large amount of paperwork, which is why it is essential to have someone experienced on your side from the beginning.

Yes. I often represent clients in both formal and informal hearings. In many cases, it is better to have an attorney advising you in these early stages - instead of calling someone when you're already facing litigation. I can also assist clients with mediation and negotiations.

Learn everything you can about the property and have representation up front. A real estate agent cannot give you full advice on how to use a property. By working with an attorney experienced in land use and zoning, you can avoid issues down the road.

For all intent and purpose, yes. The term divorce is associated with fault-based proceedings to end a marriage. California, like most states, are no-fault states and the courts have adopted the dissolution terminology instead. However, both terms are used interchangeably in California to mean the legal termination of a marriage.

You can only be legally divorced once a judge has ruled on a petition to dissolve your marriage. No amount of time separated from your spouse will lead to you being divorced. In the same way that steps had to be taken in order to get married, such as getting a license and participating in some type of ceremony, steps must be taken by at least one of the spouses in order for the marriage to end.

Technically, a spouse may contest a divorce. For practical purposes, however, there is little point fighting to save a marriage in court. A spouse who no longer wishes to be married has a right to get divorced, and the courts will ultimately grant any dissolution request. If you wish to "fight to save your marriage," you should do so without any reliance on the courts helping you out. The judge is not a therapist and will not counsel you or your spouse, nor will the court weigh in on whether the couple should get divorced or not.

Once dissolution papers have been signed, filed, and signed by a judge, you are officially divorced, provided that six-months have passed since the filing of the petition for dissolution of marriage. This statutory six-month cooling-off period in California is there in order to give the parties a chance to change their minds about getting divorced. Once a divorce decree is issued, it is final. Should the parties change their minds after the divorce is final, there is no way to reverse the divorce and they will have to marry anew, with no credit for the years they were previously married.

Very few divorces go to trial, and in fact, with the right attorneys representing both parties, consensus and compromise is frequently possible and a dissolution may happen without the parties even going to court. The divorce attorneys at Kimera Law Firm strive for amicable dissolution through settlement whenever possible. It saves time, heartache, and money!