10 Ways To Lawsuit-Proof Your Estate #8

FORBES Magazine online blog, The Best Revenge – by Ashlea Ebeling, has an excellent article called 10 Ways to Lawsuit Proof Your Estate that covers a lot of the advice that we at Ainer & Fraker, LLP give to our clients.

Please read the entire article by clicking on the following link: 10 Ways to Lawsuit-Proof Your Estate.

Today, we’ll examine Part 8 – Establish you’re of sound mind

One of the most common allegations in estate litigation is that the testator lacked the mental capacity to sign his will. One way to counter this claim, particularly if you’re getting up there in years: Get evaluated by both a treating physician and a geriatric psychiatrist immediately before signing the documents.

~ Ashlea Ebeling, 10 Ways to Lawsuit Proof Your Estate

Ainer & Fraker, LLP Analysis

Unfortunately, the fastest growing area in the field of Estate Planning is Litigation: Litigation between beneficiaries and Trustees; Litigation between Beneficiaries and each other; all manner of Will Contests designed to swing the advantage of the legal process in one’s favor.

While we agree with some of the analysis in this article, we always have clients assess the realistic chances of a dispute over the estate before advising them on capacity declarations.

Obviously, if the family gets along extremely well, or there is little to fight over, then extreme measures to document capacity may be overkill.

However, in our combined two decades of experience with Probate Litigation and Will Contests, we can flatly state – when in doubt, assume there will be a Contest.

We have seen numerous cases where everything appeared straightforward, and family members appeared to be free of disagreements, until Mom and Dad died.

Then, a family member (usually one with financial difficulties of their own) see an advantage to be gained by filing a contest.

If a challenge is likely, then a Capacity Declaration should be sought  immediately before and after the signing of the Documents.  Also, more than one doctor should be sought, often from different medical practices.

We have seen one case where the client had been evaluated by a court-recognized expert on incapacity, only to have the same court choose to believe another physician’s report instead.

The more likely there is to be a contest, the more you should approach it with a “belt and suspenders” approach.

10 Ways to Lawsuit-Proof Your Estate #7

FORBES Magazine online blog, The Best Revenge – by Ashlea Ebeling, has an excellent article called 10 Ways to Lawsuit Proof Your Estate that covers a lot of the advice that we at Ainer & Fraker, LLP give to our clients.

Please read the entire article by clicking on the following link: 10 Ways to Lawsuit-Proof Your Estate.

Today, we examine Part 7 – Consider a corporate executor

If you have modest assets and don’t anticipate family fights, you’ll probably want to name your spouse, and alternatively an adult child, to be executor of your estate.  If you anticipate problems, don’t do this. Putting a favored child in the driver’s seat is a set up for abuse of power or the perception of abuse, which can lead to litigation. A corporate executor (say a bank) is expensive, but there’s less chance of fights among siblings.

~ Ashlea Ebeling, 10 Ways to Lawsuit Proof Your Estate

Ainer & Fraker, LLP Analysis

We regularly advise our clients to consider using a corporate or professional Trustee, to manage their Trust after they are gone.

In addition to reducing the likelihood of family friction, a professional Trustee can manage the individual shares of a beneficiary for many years (if necessary).  Rarely do family members enjoy managing a Trust for several decades, until the youngest child reaches their twenties or thirties.

Here are some of the questions our clients raise with us when considering a Professional Trustee:

1) Do we have to choose a Bank?  The short answer is No.  While a Bank Trust Department or other Corporate Trustee provides valuable services to their clients, they are not the only game in town.  In California, we have the Professional Fiduciary Association of California, whose members are known as Professional Fiduciaries.  They are independently licensed, insured and bonded, and provide many of the same services as a Bank Trustee, and sometimes more.

2) How Much will it Cost? In general, a Trustee can charge a “Reasonable” fee, based on the complexity of the matter and the skill set of the Trustee.  A Bank or Corporate Trustee generally charges a percentage of Assets Under Management (AUM), which typically can range from 1-2% annually.  A Professional Fiduciary will charge an hourly rate, so they tend to be less expensive if the administration is relatively simple.

3) Will we Lose Control of Our Money?  Again, the answer is No.  While the Trustee has legal control, the California Probate Code imposes a wide array of duties and obligations, to ensure that the Trustee is responsive to the needs of the Beneficiaries.  In addition, a Professional Trustee can be removed if they are not doing the right job, or if the beneficiaries agree it’s time for a change.

4) Is Our Money Safe with a Professional Trustee?  We hear this one all the time, and it never ceases to amaze us.  Corporate or Professional Trustees exist to serve their clients – you.  They are licensed, insured, bonded and highly regulated.  If they are found guilty of a breach of their duties, they can be sanctioned.  If they cause a loss of Trust corpus due to mismanagement, their insurance and bond protects your family from loss.  If a family member Trustee runs off with the money, it’s almost never coming back.  You can sue them, but if it’s gone, it’s gone.