Irvine, California Attorney, Mark W. Bidwell
949-474-0961 to schedule an appointment
Mark W. Bidwell
18831 Von Karman Avenue
Suite 270
Irvine, CA 92612
ph: 949-474-0961
fax: 949-474-0963
attorney
7 Deadly Sins of Trusts
THE SEVEN DEADLY SINS
Persons owning real estate in California need a trust to avoid costly and lengthy legal action in probate court. A trust need not be expensive or complicated. An affordable, basic trust is a wise investment when theses seven deadly sins are avoided.
The First Sin: Pride or hubris for ruling from the grave
Instead of outright distribution on death, people want to control the behavior of their loved ones by restricting access or use of assets. Ruling from the grave may be appropriate. The classic example is the drug addicted child. Any money given to the child will only go to drugs and most likely kill the child. Here detailed restrictions and safeguards are mandatory. But often ruling from the grave comes not from a place of caring, but from a sense of ego that creates hardship and bitterness.
For example one couple in their trust has declared no child of theirs will receive any money until the child has graduated from the University of Southern California. No doubt these parents are devoted alumni. But a basic trust is no place for controlling children’s lives. What happens if a child is not admitted to USC? The parent’s hubris in their school will fall in a basic trust.
The Second Sin: Sloth for failure to change title on real estate property
The typical California resident who owns a home should have a trust for that home to avoid probate. To avoid probate the home must be titled into the trust. Not taking the effort to transfer the house into the trust is the most common mistake made and the most easy to correct. Now there is an online service www.DeedandRecord.com to prepare and record trust transfer deeds.
The Third Sin: Feeding the lust of youth by distributing to a minor
Persons under 18 years of age cannot receive assets. Any distributions directly to a minor will go through probate under court supervision. At least while the assets are under supervision of the court they are not wasted. But at age 18, the court must release the assets to the minor. The minor then spends the assets to feed his or her lust for life.
If there is a potential distribution to a minor, the trust should have a “children’s trust” provision. A children’s trust keeps the minor’s assets under control of the trust until the child has reached an age of financial maturity, such as 25 years.
The Fourth Sin: Envy created by one trust with two prior marriages
Often persons in their second marriage together create one trust. The survivor is usually the wife. The husband never intended for distribution of assets to his children on his death. The trust provides for distribution of assets to all children upon the death of the second spouse.
In a pattern that is repeated again and again, an adult child envious of the assets of the deceased husband will demand from the widow a distribution of the father’s assets. For some reason this is also done within a few days of death without giving the widow time to grieve.
The widow is now afraid, angry and hurt. The widow promptly goes to an attorney for protection. The typical trust can be changed by the surviving widow and in the process of change the terms of the trust are less favorable to children of the deceased husband.
Spouses with children from a prior marriage should avoid a joint trust. This means two trusts at twice the cost. But both surviving spouse and children will be protected. A basic trust is not appropriate for couples with children from prior marriages.
The Fifth Sin: Wrath incurred by an amendment instead of a restatement
Amendments must be read with the original. The heirs see what they would have received and what they now receive. Amendments typically do not include “no-contest” provisions. The situation causes wrath in the disinherited heir and is ripe for litigation or at the very least creates bitter resentment. Restatement replaces the entire prior document and does not waive red flags in the face of the disinherited heir.
The Sixth Sin: Gluttony and the risk undue influence
People will put off their estate planning until their later years. In the later years objectivity is lost and dependency on others is created. Persons befriend the elderly in anticipation of a windfall at death. Heirs’ and friends’ gluttony for the elder’s assets only increase as the elder's capacity decreases
Any distributions out of the ordinary are questioned and become suspect, even if the distribution or bequest is valid. Trusts and Wills should be prepared when there is no question in the capacity of the testator. Changes then should only be made judiciously when there is a substantial change in circumstance.
The Seventh Sin: Greed of attorneys
Californians will use trust mills, boiler plate forms and pseudo legal centers because of apprehension or fear of walking into a law office and paying the full cost of an attorney. Often an estate planning attorney’s best value is not in what is done, but advising on what to avoid. But too often attorneys charge the fees associated with advanced estate planning when all that is needed is a simple trust.
Mark W. Bidwell
18831 Von Karman Avenue
Suite 270
Irvine, CA 92612
ph: 949-474-0961
fax: 949-474-0963
attorney
