Patterns in Estate Planning in California

Patterns occur in estate planning just like in other fields. The following are typical patterns that I deal with:

1. Parents with minor children
At the very least, a will is required because if the parents die together (car crash) it is in a will where you designate guardians. There are two kinds of guardians: of the person (who will have physical custody of the child) and of the estate (who will handle the financial affairs of the child). The guardians can be one in the same or two different people.

If the guardians are not set forth in a will, then a court will decide… most parents want to make that decision themselves.

2. Parents with Adult children
Usually the easiest situation, if there is no conflict within the family. Generally, the distribution is for each of the children to get an equal share of the estate. If one of the children dies before distribution, it is typically provided that the deceased child’s share will go to their children, or if there are none, to the surviving siblings.

If there are conflicts between parents and children, uneven distributions may occur or there may be an outright disinheritance. It is the parents’ choice if they want to do that; it usually sets up conflicts between the siblings after the parents die. Not the parents’ problem, they won’t be around to deal with the conflict. But it is a human cost.

3. Blended Families
More and more I see parents who have had prior marriages, with children from those marriages. Sometimes there is a big age difference between the couple. In any event, there is the issue of who gets what.

Some families (the minority of those I counsel) simply say that they want all of the children (including step children) to share equally and that is that…. Fairly simple.

Predominantly, however, each parent has separate property that they brought into the marriage, and they want their progeny to benefit from that property, not the progeny of the other spouse.

This can lead to some serious drafting issues.

For example, if the other spouse is likely to remarry after a death, do you want her to give the deceased spouse’s wealth to the new paramour?

Or even if there is no new love, is there a concern that the surviving spouse may take everything and give it to her own children (in my world, it is always assumed that the wife survives the husband, even though in the real world that is not always the case) to the exclusion of the deceased spouse’s children? More human cost.

In such circumstances, it is appropriate to recommend the use of a trust, which splits into two trusts after the first death. One trust holds the decedent’s property; the other trust holds the survivor’s property.

The decedent’s trust will provide that the income from the decedent’s property is paid to the survivor to further provide support. But upon the survivor’s death, the decedent’s trust requires that property to go to the decedent’s children; the survivor has complete control over her trust and can do with it as she fits.

4. Special Needs
Sometimes a couple will consult with me concerning one of their children who has public assistance (such as SSDI). If that child receives outright their share of the parents’ estate, the public benefits may be jeopardized. A Special Needs Trust may be created to address this issue.

A Special Needs Trust keeps the money out of the hands of the disabled child thereby safeguarding the public benefits. But it is available to provide what the public benefits do not; items separate from food and shelter.

When the disabled child no longer needs the public benefits, the trust can be distributed to that child; or if that child has died, the trust can be distributed to the surviving siblings.