One of the most frequent questions I get from my clients is “Why should I spend the money to create a trust?”

The easiest answer to that question is that for the price you pay now, you save far more money down the road. But that answer doesn’t satisfy everyone. So here is one serious money-sucking situation that might make you think twice before dismissing your need for a trust.

In the event of your incapacity, the court may impose a conservatorship because the individual can no longer handle his or her own finances. Anytime you have to initiate court proceedings, you’re looking at a significant investment of time and money – more of both if the proceedings are contentious.

Also, nearly anyone can petition the court to become your conservator if they can show that you no longer have the capacity to manage your affairs. We have seen this most recently where an advocacy group for child actors, A Minor Consideration, petitioned the court to take control of the finances for the 14 children of OctoMom, Nadya Suleman. An Orange County judge has given the green light to the group to proceed with their case.

However, you might become incapacitated for any number of reasons in your life having nothing to do with the Hollywood scene, including dementia, illness, disease, or accident.

By creating a revocable living trust, you designate ahead of time a successor trustee who you want to be in charge of your affairs should you become incapacitated. Moreover, you can designate exactly what property that person can control and choose different individuals to manage multiple assets. Most people transfer the title to their house into a living trust so that the successor trustee would be able to manage the affairs of the home.

Your life is probably not as crazy as the OctoMom’s, and you may never have Lindsay Lohan or Britney Spears’ problems (both have battled conservator petitions in court), but you may one day be struck by Alzheimer’s disease, or an accident or illness resulting in a coma, any one of a number of mundane real life disasters that strike regular people.

You and your estate planning attorney have tools available to prevent confusion in your family and keep them from fighting for control should you become incapacitated.

James D. Perry

The law is full of old rituals that today we would consider ridiculous.

For example, in early Bavaria, to convey real property by sale, by gift, or by will, one had to box the ears of young boys to seal the deal. The idea was that by creating a memory of pain in the child, he would be a good witness later in life if a dispute over the transfer ever arose. Without this formality, the conveyance was ineffective, even where the intended recipient took possession of the land and even if no dispute ever arose.

Thankfully today, the law has done away with such silly rituals. There are, however, three formalities you must follow too ensure that your property transfers upon your death in the manner and to the person your intend.

1) You must create a will. Write down all the property you own and to whom it should go upon your death. Without this basic document, all your property will be sent through the probate court and distributed to your heirs through the rigid state laws of intestacy.

2) You must sign your will. In California, this requirement can be filled one of three ways: you may sign the will yourself; your name may be affixed to the will by some other person at your direction and in your presence; or your name may be affixed by a conservator acting under court order.

3) Your will must be witnessed by at least two people. During your lifetime, at least two people who do not stand to inherit must sign your will as disinterested. Furthermore, they must be present and physically watching as you sign the will and they must be competent of the fact that they are signing your will.

If any one of these requirements is not met, the probate court can determine that you died without a valid will and the land that you wanted to go to your grandchildren may instead go to your son with a nasty gambling habit. Of course, there are some exceptions to these rules, but they too throw your intentions to the scrutiny of the court, which costs your estate time and money.

If you have any questions about the validity of your will, I urge you to talk to your estate planning lawyer.

James D. Perry

I read a news story from Wisconsin about a man who was accused of killing his parents in May. The man apparently had petitioned to be a co-representative with his sister of his parents’ estate.

The court found that he was incapable of being an executor because he was jailed on $1 million bond, but the article also noted that, if convicted of their murder, he also wouldn’t inherit.

Many states have these so-called “slayer rules” prohibiting murderers from profiting off the estates of their victims. These rules seem like common sense, fitting into our sense of justice, but they also serve to combat elder abuse and spousal murder.

Under California’s probate code, anyone who intentionally and feloniously kills a person is barred from inheriting any property or property interest from his victim regardless of whether the murderer is named in the will or whether the victim dies intestate.

Essentially, the murderer is treated as if he or she died prior to his victim, cutting off the possibility of inheritance. The murderer’s allotted share is redistributed to other heirs as directed by the will or by intestate law.

Sometimes, probate and estate law can be painfully complex, but sometimes the law just makes sense.

James D. Perry

Late-in-life second marriages are becoming commonplace in American society, and with it, anxiety has been rising among stepchildren. Estate planning lawyers have had to pay greater attention to the particular concerns and needs of blended families because also becoming more common is the courtroom brawls between stepparents and stepchildren and stepsiblings.

The first concern I hear from clients is often related to the financial security of the parents. If Mom moved into Stepdad’s home, what’s to keep Stepdad’s kids from kicking her out of the house if Stepdad were to die first?

The second concern is for the adult children’s prospective inheritance from their natural parent. Many state elective share laws dictate that when a person dies, the spouse naturally inherits a certain share of the estate, which will certainly cut into how much, if any, is left to the decedent’s natural children after the spouse dies.

In California, community property laws can be both a blessing and a nightmare for the adult children of a blended family. On one hand, generally, a surviving spouse doesn’t have a claim over to any property or account kept separately and in the deceased’s name.

However, any property that was held jointly (i.e., homes, common bank accounts) is presumed to be community property and, unless that presumption is rebutted in court, it passes entirely to the surviving spouse. And, even separate property may pass in whole or in part to the surviving spouse if the deceased partner leaves no will.

Older adults bring a greater amount of personal wealth into new relationships and, experts say, they are more practical about the financial realities their late-in-life marriage presents.

A prenuptial or postnuptial agreement can keep Mom in the house owned by Stepdad until her death at which point it passes solely to his children. Keeping property separate in trust accounts can prevent it from being transmuted into community property. And a clause inserted into Dad’s will can ensure that the separate property in his name passes to his children, not his spouse upon his death.

After you die, you could either be rolling in your grave because of the nasty legal battle you left your blended family or resting in peace.

James D. Perry