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Can you do estate planning with a lack of mental capacity?

January 27, 2018 by robotmirror Leave a Comment

Can you do estate planning with a lack of mental capacity?

THE CONCEPT OF LEGAL LACK OF MENTAL CAPACITY

The law in California has certain standards as to people’s capacity to make wills and to make trusts. If those standards are not met, then the will and are trust could be declared invalid if challenged in court. Here are the basic rules for wills and trusts.  Even worse, people who are seriously ill or seriously mentally incapacitated can be totally incapable of even having a discussion with their attorney about a will or trust and cannot sign anything.

CAPACITY TO MAKE A VALID WILL

A person must be at least 18 years old and of sound mind to make a will. A person is not mentally competent to make a will if at the time of making the will (i) he or she does not understand the nature of the testamentary act, (ii) does not understand and recollect the nature and situation of his or her property, (iii) and does not remember or understand his or her relations to living descendants, spouse, parents, and those whose interests are affected by the will.  Also a person is not mentally competent to make a will if he or she suffers from a mental disorder with symptoms including delusions or hallucinations, which result in his or her devising property in the will in a way which except for the existence of the delusions or hallucinations he or she would not have done.

THE CAPACITY TO MAKE A TRUST

Generally speaking, the legal rules to prove that a person is competent enough to execute a will are not as stringent as competency to execute a trust. A trust is considered a contract and the law has higher standards for capacity to make contracts.  That capacity means that a person has the ability to communicate verbally or by any other means and to understand and appreciate (i) the rights, duties, and responsibilities created by or affected by the trust; (ii) the probable consequences for the decision-maker and the persons affected by the decision; and (iii) the significant risks, benefits, and reasonable alternatives involved in the decision.

CONSERVATORSHIP AS A SOLUTION

When a person becomes incompetent such that they lack the mental capacity to do a will or trust a conservatorship could be formed.  The will and are trust could then be done through the conservatorship.
A conservatorship is a court proceeding in which a court-appointed fiduciary, known as the “conservator”, manages the personal care of the person who cannot properly provide for his or her personal needs.  A conservator can either be a conservator of the person or a conservator of the estate or both. The person who is the subject of the conservatorship is known as the “conservatee”.  A conservatorship is an extremely serious proceeding and requires the conservator to file various reports and accountings with the court throughout the conservatorship.  Where the conservatee has no will or trust, there is a specific part of the California law which allows the conservator to apply for permission to establish a will and/or trust for the conservatee. The point of doing this would be to avoid the expense and time and complication of a probate proceeding where the conservatee has significant assets.  When faced with mandatory attorneys fees in the probate court of 4% of the first $100,000,  3% of the next $100,000, 2% of the next $800,000 and 1% of the estate asset amounts in excess of $800,000, most people are motivated to have the conservatee’s assets be placed in a living trust to avoid probate and those fees.
Getting a conservatee’s assets into a living trust involves several steps. First, the conservatorship has to be formed which involves filing a court petition and other papers and then a hearing is held and a Judge decides if the conservatorship can be established.  After that, the conservator files a special court under the law providing for the establishment of wills and trusts and the court’s permission has to be granted. Also, the court and all interested parties will need to review and approve the proposed will and trust. However, when the alternatives of probate costs and time delays are considered, doing a conservatorship is often a good choice.

CALL  (949) 682-5316  to speak with Orange County Estate Planning Lawyer Robert L. Miller

PROOF OF CAPACITY IN A BORDERLINE SITUATION PRIOR TO MAKING A WILL OR TRUST

If the person wanting to make a will or trust has no mental capacity or is so sick that they could sign those types of documents then conservatorship is the only alternative. However, if they are of questionable mental capacity, they could be tested first to determine if they have enough mental capacity to discuss and sign a will and/or trust. The testing would be done by a licensed mental health professional. The mental health professional would then make a report and/or fill out a court form having to do with capacity as a backup to the attorney’s file.  If the report indicates the person does have the proper legal capacity, then that is good evidence to have available to defend against a will contest or trust contest case.  If the person lacks the capacity to do a will or a trust and then everyone involved will realize that a conservatorship is the best action to take.

Filed Under: Blog

Dying without a Will: How Courts Decide Who Gets What

December 23, 2017 by robotmirror Leave a Comment

Orange County Wills and Trusts Attorney

Dying without a Will: How Courts Decide Who Gets What

If you die without a will, then the law calls that dying “intestate” (as opposed to dying with a will, which is called “testate”). Many people don’t bother getting a will, because they figure it doesn’t matter: if they die, their spouse gets everything, and if their spouse has already died by that time, their kids get everything split equally. Easy, right?
Unfortunately, it’s not always that easy.
If you die intestate, then California’s intestate laws (CA Probate Sections 6400-6455, if you’d like to look them up) dictate who inherits your property and other assets. Here are the general rules:
  1. If the deceased person)did not leave behind any descendants (children, grandchildren, etc.), then their surviving spouse inherits everything. If the decedent was survived by descendants, but did not leave behind a spouse, then the inheritance is split equally between the descendants.
  2. If the decedent did leave behind descendants as well as a spouse, and those descendants are also the descendants of the surviving spouse, then the surviving spouse still inherits everything. For example, if a person dies and is survived by his wife and their two children, his wife inherits the entire estate.
  3. If the decedent did leave behind descendants as well as a spouse, and at least one of those descendants is not a descendant of the surviving spouse, then the surviving spouse inherits 50% and the other 50% is divided equally between the descendants who are not also descendants of the surviving spouse. For example, a person dies and is survived by her husband and three children. One of those children is also child of the surviving husband, but the other two children are the decedent’s children from a previous marriage (in other words, the surviving husband’s step-children). In this case, the surviving husband would inherit 50% of the estate, and the other two children (the step-children of the surviving husband) would split the other 50%, each winding up with 25% apiece.
As you might imagine, it’s Rule #3 that often winds up surprising people. Many folks assume that, upon their death, their spouse will inherit everything. However, if you leave behind children that are not your surviving spouse’s, then your spouse will only inherit 50% and the other 50% will go to those children. For people with children from different partners, this can obviously be a large issue, and one that almost no one sees coming until it’s too late.
One of the main reasons everyone should have a good estate plan is to make sure that, after your death, your assets go to exactly how you would like them to go. A will or trust can take care of this and spell it out in easy to understand language that your family can rely on. The intestate laws, however, can be confusing and can be changed anytime the state legislature decides to do so. I know I wouldn’t want to let the politicians in California decide who inherits from me. I wouldn’t recommend that you let them make that decision for you, either.
To learn more about how Miller & Associates can work with you to ensure that your hard-earned assets are passed down exactly how you would like, or for questions about dying without a will: how Courts decide who gets what, please call us at (877) 568-2977 or contact us via our website to schedule a consultation.

Filed Under: Blog

Does a trust have to be notarized?

June 23, 2017 by robotmirror Leave a Comment

A common question about executing a trust is, does a trust have to be notarized?

Orange County Will Attorney

With a will, California law requires that a will be witnessed by two people.  A California will does not need to be notarized.  However, with a revocable, living trust, most trusts prepared by an attorney are notarized. Does a trust have to be notarized?

Surprisingly, although most estate planning attorneys in Orange County notarize wills, there is no legal requirement in the law that a trust be notarized.

A trust grantor can sign their name by mark (such as an “X”).  That type of signature is allowed under Civil Code Section 14.  The requirements are for the signer to make his mark on the signature line in front of two witnesses, then one of the witnesses writes the signor’s name next to his mark and the two witnesses then sign their own names near the mark as witnesses.
It is common to have a notary present at a trust signing, and be a witness to the signing.  If one of the witnesses (a notary) also notarizes the grantor’s mark, that creates a problem, because under California law, a notary cannot notarize his or her own signature (Government Code sec. 8224). The signor’s mark is incomplete and therefore invalid without the witnesses’ signatures.  In effect then, isn’t the notary also notarizing her own signature as one of the two witness?  If improper, what effect, if any, would the improper notarization have on the validity of the amendment?
The signing of estate planning documents, including revocable trusts, are frequently witnessed and the signatures notarized as a matter of custom. California laws do not require either for creating or amending a living trust.
But it is a good idea to have the document notarized. A revocable trust document usually specifies the method by which it can be amended. For this reason, the language of the trust that allows for amendment should be reviewed carefully. If the trust document requires witnesses and/or a notary public, failing to abide by these requirements could render the amendment ineffective.
Does a trust have to be notarized? No.  But the main reasons to notarize are as follows:
1. To make sure there is evidence that the settlor(s) and trustee(s) actually signed the documents.
2. In case the trust has to be recorded.
3. In case the trust owns out of state property. (Florida trusts need to be executed in the same manner as Florida wills-but they will accept out of state trusts executed according to the other state’s laws.); and
4. To avoid hassles with bank officers who usually look for, and ask for, a notary stamp.

Contact us

Contact our Estate Planning Lawyers in Orange County if you need help creating or amending a living trust.  We are here to help.

Filed Under: Blog

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Contact Us Today

Call us! Our phone number is (949) 682-5316. Or email us at estate@expertlawfirm.com. We would love to meet you, answer your questions, during a free consultation or telephone conference, at your convenience.

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