In my experience as an Orange County Probate Lawyer, the vast majority of estates are settled without difficulty. Still about twenty percent of all estates have some type of conflict. These estate conflicts are expensive and directly impact the amount of estate assets, including cash, that pass on to the heirs.

Just having an up-to-date will or trust can rather easily prevent almost all of the most common conflicts among heirs and potential heirs.

The most common conflicts arise in mixed family situations. An elderly man or woman, with grown children, begins a new relationship after a spouse of many years dies or after a divorce. The children do not always accept the new partner with open arms. An added complication occurs when both new partners have children.

Absent a clearly defined will or trust, the children and the surviving spouse will seldom agree on a distribution of the estate. This is especially true in California if the parties were married, where, absent a will, all of the deceased’s community property and up to 2/3rds of his or her separate property goes to the surviving spouse. If the children fail to inherit, then they are upset. If the surviving partner fails to inherit, then he or she is upset.

The above situation is made even more difficult, when there is a significant age difference between the partners, where an elderly man or woman suddenly takes up with a much younger partner. In this case, even having a will or trust sometimes is only part of the solution. The children may challenge the will or trust alleging that the older partner was unjustly influenced to leave all of the estate to his or her partner.

Another variation on this theme is where the couple never marries and never registers as domestic partners, leaving the more recent partner entirely without support. Despite what the deceased intended, without a will or trust, general California law will apply to the estate and if the parties are not married, and never registered as domestic partners, all of the deceased’s property will go to his or her statutory heirs and not to a surviving partner.

Although more predominant among the elderly, these problems can arise in any situation where there is an untimely death. Lack of planning will almost always insure some type of conflict. If you find yourself in a situation where your heirs may have a potential conflict, it is absolutely important to have a clearly drawn will or trust that conforms strictly to legal requirements.

James D. Perry

In addition to seemingly endless gift lists to satisfy, the holiday season presents many with the perplexing issue regarding service tipping.

Consumer Reports magazine states in the December issue that gratuities, in general, rose by approximately $5.00 over the previous holiday season. In general, Consumer Reports found that the experts they surveyed recommended a one-week service fee match for the total amount of the tip.

In my own case, the biggest tip will go to the caregivers for my parents. My Dad is 93 and Mom is 91. They are still able to live in their own home with the assistance of caregivers who come in each day to prepare meals, take them to the doctor, and any place else they want to go. They also provide an extra set of eyes and ears to report on how my folks are doing from day to day.

Most caregivers are unpaid family members who volunteer their services, or live in the home of their parent rent free. In these cases, when money is not available to show appreciation, I suggest that you take the time to write a genuine thank you note to the relative providing the care. As Ralph Waldo Emerson said, “the only gift is a portion of thyself”.

Where an elder has a 24-hour caregivers or neighbors who provide care, the decisions on a holiday gratuity are not the issue. Often they have little communication with relatives and family who have moved from the area. These elderly and dependent adults are easy prey to the darker side of care giving…the caregiver or neighbor who talks the elder into making a substantial gifts to the them in a will or trust.

Caregivers are one category of people the State of California would rather you left out of your will. If the person receiving the care is a “dependent adult” (a person who has physical or mental limitations that restrict his or her ability to carry out normal activities, or whose physical or mental abilities have diminished because of age) they will have to jump through a few extra hoops to leave anything substantial to their caregiver. This is because many dependent adults are too weak of body or mind to resist the influence of a caregiver who suggests a trip to the lawyer’s office to make changes to their will. As a general rule in California, gifts to caregivers by a dependent adult in a will or trust are void unless certain conditions are met.

There are legal ways to leave some part of an estate to a caregiver. The law specifically exempts gifts of $3000 and some small estates. For larger gifts, California requires the client meet with a second attorney to explain why they would want to make a gift to the caregiver. The second attorney must then certify that the client is not making the gift as a result of fraud, menace, duress or undue influence.

In a recent interpretation of this law, the California Supreme Court, in Bernard v. Foley, ruled that the definition of a caregiver includes relatives and friends who provide care for a nominal cost or no cost at all, not just professional paid caregivers. By widening this definition, many friends of dependent adults, that provide any ongoing health or social service, will find themselves falling within the definition of “care custodian”, which could in turn bar them from donative transfers intended for them in wills and trust.

When in doubt, any person desiring to gift money from a will or trust to a person who has provided them care giving service, paid or not, should make sure proper legal steps are taken to ensure that the gift will not be voided by failing to follow the proper legal procedures.

How about gifting those beaten down stocks?

As folks across the country opened up their brokerage statements, one thing was apparent–their stocks are worth less than they were the previous month or year – or ever.

With the dramatic decline in the stock market, many of us are holding stocks whose value has declined substantially. What to do? Well, this article in the Wall-Street Journal suggest you might consider gifting those stocks to family members as the tax benefit from the gift is that much greater.

With a new administration taking over the White House, Democrats controlling Congress, and the previous administration’s estate and gift tax measures reaching the end of their life cycle, most experts agree we can expect new estate and gift tax policies in 2009.

You don’t need a crystal ball to suspect the tax savings in the previous legislation will probably erode. The question is how much. So during these trying economic times, the advice in the Wall-Street Journal may be a good option to consider for your battered stocks.

Remember, we are always here to help.