Dynasty Trusts ensure that wealth gets passed down to successive generations. In fact, the special tax provisions in this wealth-building vehicle can allow you to amass a fortune relatively quickly. So much so— in fact— that $1 million can turn into roughly $20 million over the course of just three generations (assuming that the trusts balance grows by a net of 6%, annually). 

However, with so much wealth going to such a (potentially) small clique’ of future progeny, you may be wondering how non-family members can also be made to benefit from your fortune-accruing efforts.  
Of course, were referring to the philanthropic considerations so common among the truly noble wealthy.  

By Who’s Who Directories

Newport Beach, CA WW/Press/September 19, 2016 –Theodore M. Hankin, Attorney with Messina & Hankin, LLP, was selected for inclusion in the forthcoming Top Attorneys of North America 2016 edition of The Who’s Who Directories.

The accomplishments and achievements attained by Mr. Theodore Hankin, in the field of Legal Services, warrants inclusion into the Top Attorneys of North America. Ted Hankin is licensed by the State of California as an Attorney at Law and Certified Public Accountant. His concentration is in the areas of business and probate law as well as trusts and estate planning, and he currently represents licensed broker/dealers, law firms, engineers, mailing list companies, manufacturers, computer technology dealers, and other professionals. His transactional experience includes formation of partnerships and corporations, mergers and acquisitions, and has also dealt with the dissolution of business entities, drafting of employment contracts, leases, and purchase and sell agreements. Mr. Hankin is admitted to practice before all Courts of the State of California, as well as the United States District Courts for the Northern, Central, Eastern and Southern Districts of California. Ted graduated cum laude from the University of California in Los Angeles and received his J.D. from The University of California, Hastings College of the Law. He is a member of the American Bar Association, Orange County Bar Association, American Association of Attorney-Certified Public Accountants, American College of Forensic Examiners, and the California Society of Certified Public Accountants.

It’s true.  Sometimes referred to as “companion animals”, California Probate Code §15212 specifically provides for the creation of a trust to care for your beloved dog, cat or other companion animal after you pass.

An “animal” is defined as a “domestic or pet animal” (California Probate Code §15212(i))…. could be a horse or pot-bellied pig so long as it can fit the definition.

Per the statute, any money left for the care of the animal can only be used for the animal’s care; not for the benefit of the trustee (California Probate Code §15212(b)(1)).  Further, when the trust terminates (presumably after the passing of the animal), the remaining money goes in accordance with the terms of the trust or in accordance with a residuary clause in the decedent’s will (California Probate Code §(b)(2)).

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A frequent question that comes up when doing estate planning in my Newport Beach, California office is why should one pay for a trust, when a will is so much cheaper.  My response is are you thinking long-term or short-term?

If you are thinking short-term, a will is always going to be cheaper than a trust.  The cost, however, comes at the end, because you have virtually guarantied that there will be a probate of that will.  Probate fees will far exceed the cost of any trust.

Probate fees in California are set by statute.  As an example, if you have an estate valued at $500,000.00 that is subject to probate, the statutory fees for the attorney are $13,000.00.  That is a number of times more expensive than the cost of establishing a trust. Continue Reading

Virtually every decision regarding probate is based on title to or value of assets owned by the decedent.

Title is important because ownership can transfer as a matter of law (e.g. joint tenancy with right of survivorship, where the surviving joint tenant takes by recording an affidavit, death of joint tenant); or a bank account might be titled to a trust (e.g. John Doe and Mary Doe, trustees of the John Doe and Mary Doe 2015 Family Trust), in which case the trust controls what is in the account.  In these instances, for those assets, a probate would not be necessary.

However, where there are no joint tenancy assets, payable on death accounts, trusts or other legal means by which property transfers to another without probate, one must then look to value.

In general, if the total estate of the decedent (not counting those assets which pass because of their title as described above) is $150,000.00 or less and does not include real property, California law permits the heirs to use an affidavit procedure (Probate Code §13101) to obtain ownership of the assets.  This is very easy when the sole account of the Decedent is $149,000.00.  However, if the assets exceed $150,000.00, probate will be necessary to have those assets transferred to the decedent’s heirs.

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In other words, must there be a full-on probate in California because the real property asset (assuming a value in excess of $20,000.00, no joint tenancy or transfer on death provision in the deed) was in the decedent’s name alone when he/she died?

Likely the answer is no.  Assuming that there is a trust and for purposes of example, a surviving spouse, there will have to be a petition filed in the probate court (per Probate Code §850) to get the real property asset transferred to the trust, but that is not the same as a full-on probate.

Consider this set of facts:  Husband, in California, acquires a parcel of land while he is married and fails to have his wife’s name put on it.  In fact, let’s say that he takes title as a married man, as his sole and separate property.  He dies.  There is a family trust and if someone had thought about it, the decedent would have been counseled to place the property into the name of the trust, thus avoiding any probate proceeding.  Alas, that was not done.  Please note, I am ignoring any Family Law issues in this discussion.

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By California Trust Litigation Attorney – Ted Hankin

Over the years I have watched many attorney-themed television programs.  I understand, given the time allotted, one must take the case and try it to conclusion within the obligatory one hour format.  Unfortunately, this perception of a sprint to the finish line is not reality; litigation is more in the nature of an endurance contest in California.

Much of the time involved in a litigated case (let’s take a business case as an example) involves discussion with the attorney to insure that he/she has a complete understanding of the facts, analysis by the attorney to determine what rights have been violated by the actions of the other side, and drafting a complaint.

Once the complaint has been drafted and approved by the client, it then is filed, with an accompanying summons, with the court.  After filing, it is sent out for service on the defendant.  Once the defendant has been served, the defendant, in California, has thirty days in which to respond.  A response can be an answer (the case is then “at issue”) or a demurrer.  If a demurrer (everything in the complaint may be assumed to be true, but still doesn’t give the plaintiff a right to the relief sought), the court might set it out three or more months before scheduling a hearing (for oral argument).

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In California, over the years, I have handled many cases involving disputes between family members over the estates of a deceased relative. Brothers against sisters, sisters against brothers, uncles against nieces, nephews and others.  Some cases go to trial; other cases settle.  In all events, however, someone is going to be disappointed with the outcome, which disappointment can occur even if they prevail.

If you have been disinherited, you believe that the instrument that disinherited you was obtained by undue influence or when your deceased loved one (or relative) was incompetent, your recourse is the courts.  Let’s say that you succeed in getting the offending instrument (a will or a trust) thrown out.  What then?

The court may say that if there is no other earlier instrument, the estate will go by intestacy (as if the decedent died without a will) and it will then be divided among the heirs of the decedent.  However, if there is an earlier instrument (perhaps a will) in which you have also been disinherited, then prevailing in the trust contest only sets you up for the next contest, which is to challenge the will (presumably on the same grounds as you challenged the trust).

In California, a typical estate planning tool is the revocable trust. A husband and wife usually create one jointly, with the two of them serving as co-trustees until one dies. Then the other becomes the sole trustee. When the surviving spouse dies, the trust will usually name a successor trustee to take over the responsibilities of trustee.

A key feature of a revocable trust is to recognize that what was once a revocable trust becomes an irrevocable one when both of its creators/settlors/grantors die ( a portion of it could become irrevocable on the first death, depending on the language of the trust).

As the successor trustee, one of your responsibilities is to notify all named beneficiaries of the trust and heirs of the decedent that the trust has become irrevocable. This is as set forth in California Probate Code §16061.7, which prescribes the notice that is to be given by the successor trustee.

In California, Probate Code Sections 15300-15301 protect the principal and income of a spendthrift trust from judgment creditors. A spendthrift trust is one where there is a restraint written the trust instrument to prevent a transfer of a beneficiary’s interest. This protection does not exist with respect to distributions from a spendthrift trust, once the distributions become due and payable (Probate Code Section 15301(b)); it also does not exist with respect to support orders for spousal or child support that exist against the beneficiary of the trust (Probate Code Section 15305).

Further, under Probate Code Section 15306.5, up to 25% (but no more) of the principal of a spendthrift trust may be reached by judgment creditors. Additional rules apply if there are both support orders and judgment creditors, with the general rule being that the support orders have a priority over those of judgment creditors.

The take away is that while spendthrift trusts are useful, they are not 100% bulletproof. Some portion of them will be made available to creditors regardless of the grantor’s intent.