Month: April 2022

Common Estate Planning Mistakes, Part I

Aside from not preparing any estate planning documents, here are some common mistakes our office has seen with estate planning documents

 Assigning Co-Trustees or Co-Executors.

The best advice is to just have one trustee and one executor. Having one is best, and then list in order who your alternates will be.  Many people think in fairness to all their kids they make them all responsible for administering the trust or estate.  That is a really bad idea.  It leads to a lot of arguments when you need everyone to agree on something.

If you have a house and you want to sell the estate assets, some of your children may say , ‘No, it should remain in the family.’  Or one child might say ‘I don’t want to sell.’  With another child saying, ‘How much should it sell for?’  These little disagreements will inevitably turn into family in-fighting, and there are going to be two sides and two factions. Not everybody gets along, and all those things come out.

If you have co-trustees and they don’t agree, who will get the final say?  Your trustees could end up in court battling out even the simplest decisions.

Also, having two or more trustees means two or more people have to sign checks.  Banks don’t want to monitor that, and if you and the other trustees don’t all live nearby that can get very complicated. 

Believing a Will is all you need to avoid loved ones going to court.

Probate is the legal process of administering a person’s estate both when they die intestate, meaning without a will, and when they die with one.  Probate means “proving the will.”

Although a valid will can ultimately direct where assets are allocated, it will likely not avoid the probate process if there are assets titled solely in your name.  The newest threshold for probate is $184,500.  If your loved one passes with assets valued over that amount then yes, you are going to Probate.  Most people’s houses here in California are valued at more than that.

Being too vague about items with sentimental value.

Generally, people give each of their kids an equal share.  But that doesn’t necessarily leave the option available for kids to say, ‘I want to buy this property’ or ‘I want this specific item.’  People believe their kids will figure things out, they all get along.  When people pass away, relationships change. Money changes people. Your children that got along so well when you were alive may not get along as well when you are gone. 

Being specific about what items should go to who will avoid fighting. 

Forgetting to update documents to reflect life changes.

The biggest mistake people make when it comes to their estate plans is their failure to update their documents.  There are certain life events that require the documents to be updated – marriage, divorce, births of children. It’s typically recommended that your estate plan be revisited every five to seven years. 

Forgetting to update your documents after a life event could mean an ex-wife, who you don’t like, gets a share instead of someone else you care about.  It could mean a new born child is left out.  Then a spouse might need to go to court to have that child added.  After life events, take a look at your documents and see if any updates or changes need to be made. Don’t hesitate or procrastinate.

Celebrity Estate Plans: Lessons We Can Learn From

What happened to Chadwick Boseman’s estate?

Chadwick Boseman passed away in August 2020 at the age of 43.  It came as a surprise to many that the late actor had been diagnosed with stage III colon cancer in 2016.  He battled for four years after it progressed to stage IV.  The Instagram post that discussed his passing stated that he endured countless surgeries and chemotherapy while filming several films.

Boseman died without a will, so his estate went through California’s slow process of court-governed disposition, aka PROBATE — one that involves appraisals, referees, creditor claims, and status reports.  Probate in California can take years. Someone has to be appointed by the court to be an executor or administrator. In this case, Boseman’s wife was appointed.

According to court documents, Boseman’s probate estate was initially valued at $939,000, which likely did not encompass the entirety of his wealth. His non-probate assets, which include assets such as life insurance, 401ks, and other retirement accounts, would not be included in that estimate.  Several uncashed checks, including two from Disney Worldwide Services, Inc., were included in the inventory and appraisal, which means that his estate is worth way more than originally listed on official documents. Over $5,000 is listed as “separate property,” and over $3.3 million is listed for his corporation, Chadwick Boseman, Inc.

The estate was worth exactly $3,577,861.11, according to a final appraisal.

Probate is public process.  All the information regarding his assets became public knowledge.  Every step of the Probate process has court oversite and requires court approval. That can take months or years. If you do not want your assets and liabilities to become public information, a trust is a good way to avoid that.  Otherwise, all your information is public and can be accessed by almost anyone.

The “Get on Up” star’s wife submitted her own creditor’s claim to her husband’s estate, asking the court for reimbursement costs for Chadwick’s funeral. Her claim has been approved for $71,613.74. Some of the costs include $1,275 for flowers and over $21,000 for funeral reception costs.

Chadwick’s wife listed one interesting claim for her late husband’s funeral costs. She spent $33,420 on mausoleum crypts at Forest Lawn Cemetery for Chadwick, but also Chadwick’s parents. His parents were listed as living relatives in the original probate filing, and now they can be laid to rest next to their late son when the time comes.

Lesson to Learn:  MAKE AN ESTATE PLAN.  Dying without an estate plan means the probate court will divide up your estate pursuant to state law and probate is a public process, not private.  This may result in your assets being inherited by estranged family members or, even worse, by family members who you strongly dislike.  Make it a priority to find the time to execute your estate plan.  In the case of Boseman, an estate plan would have provided authority for someone to pay for funeral costs without having to submit creditor’s claims to Probate Court. A breakdown of every cost for the funeral would not have been so readily available to the public.