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Redlands California Estate Planning Blog

Tom Petty's family feuding over his estate

Since his death in October 2017, Tom Petty's family has feuded over the late singer's estate. California residents who are creating their estate plans could learn something from the details of this celebrity case. The dispute revolves around a trust established by Petty, the Thomas Early Petty Living Trust, and some potentially contradictory provisions in it. Tom Petty's widow has alleged that two of his daughters are unjustly demanding control of certain intellectual property.

The daughters also filed lawsuits, theirs alleging that the trust language gives them equal control with the widow regarding trust property. The most valuable property in the trust is Tom Petty's artistic library, as well as his name and image, all of which were transferred by the terms of the trust into a new limited liability company. The daughters have alleged that the widow and other parties have stolen Petty's intellectual property, usurped corporate opportunities, engaged in unfair competition and breached a fiduciary duty.

Trusts can help single parents with estate planning

Single parents in California may have particular concerns when it comes to planning for the future. In general, when people think about making wills or trusts and planning their estate, they think about how they can help to ensure their children have a brighter future. The same is true whether the kids in question are already adults or if they are still minors. However, when single parents have minor children, they may be even more concerned with how the process will work to pass their assets on.

While a parental death is nearly always devastating, this can be especially true when single parents are concerned. If the child's other parent is an active presence in his or her life, concerns may be somewhat allayed. However, there still may be serious questions about financial management of the assets left behind. Single parents may need to think about who they would ask to serve as a guardian if the child's other parent has died or is unfit.

Carrie Fisher's estate detailed in probate papers

According to probate papers filed in California on May 20, Carrie Fisher's estate is worth about $6.8 million. The documents, which were filed in the Los Angeles Superior Court, state that the administrator of the estate has performed all of the duties required of him and all costs associated with administering the estate have been paid. Under the terms of Fisher's last will and testament, the assets will be added to the Carrie Fisher Living Trust.

The trust's beneficiary is Fisher's 26-year-old daughter, and its trustee also acted as the estate's administrator. According to court documents, the trustee can use his discretion to determine how assets will be distributed, which will take place after federal and state inheritance taxes have been paid. The trust was established about three weeks after the 60-year-old actress passed away in December 2016. In addition to investment and bank accounts, the estate includes memorabilia and collectibles, an automobile, and publicity rights associated with Fisher's acting career.

Protecting family relationships with estate planning

Many people in California hesitate to engage in the estate planning process because they are concerned about family problems. They may fear that writing wills or trusts can bring tensions and family debates to the surface, leading to damaged relationships or hurt feelings. This is especially true for people with significant wealth, because the consequences of estate planning decisions can be far more significant over the years to come. Families with substantial wealth may face particular challenges when discussing the future of their assets.

Open communication can be particularly important, even when this is uncomfortable. In some cases, people may also want to leave a letter or other document to be read alongside the will after they pass away. However, in general, most people respond more positively when they are not suddenly shocked. Making an estate plan is not a purely financial decision, even though most people want to work to protect the family's assets. The emotional and psychological effects of estate conversations and decisions cannot be underestimated, and it is usually possible to develop plans that are emotionally satisfying and financially responsible.

What to consider when creating a special needs trust

Setting up a trust can allow individuals with special needs in California to retain government benefits while also receiving assets from family members. Those who have assets of more than $2,000 may not be allowed to participate in programs such as Medicaid. However, money or other items inside of a trust are owned by the trust as opposed to the beneficiary.

Trusts may be funded by a parent or money received in a lawsuit. It can also be funded by insurance payouts or by funds that were inherited when a parent or grandparent passed away. Ideally, the trust will start with at least $100,000. This amount can make it easier to cover costs related to setting up and maintaining the trust. While a friend or family member may act as a trustee for free, banks or other financial institutions will generally charge a fee to handle this task.

Could a trust protect your elderly parents’ assets?

No one wants to see their elderly parents' assets and resources be consumed by the state in order for them to qualify for Medi-Cal benefits. But health care costs continue to climb, meaning that senior citizens' savings can be depleted long before their lives end.

If you are the adult child of a senior citizen, you may be able to help your parent(s) protect their assets with a trust.

Estate administration in California

The legal issues involved in administering an estate generally include making a list of the deceased individual's assets, paying their outstanding debts and then distributing any remaining assets to heirs or beneficiaries. During the probate process, the court appoints an individual to take care of these tasks. If the deceased individual had a last will and testament, this person is known as an executor. If the estate owner dies intestate, the court appoints an administrator.

Probate is usually a fairly straightforward process, but matters become more complex when a will is contested or there is no will and heirs become embroiled in disputes. Probate may also take longer when there is not enough money in the estate to pay all of the deceased person's creditors. This is known as an insolvent estate. In these situations, the executor or administrator will ask the court to determine which creditors get paid. In California, probate is simplified and going to court is not usually necessary when estates are worth $150,000 or less.

Why special needs trusts can be beneficial

Special needs trusts may be an effective tool for parents or grandparents who are looking to care for a loved one. The trusts may be structured in a variety of different ways to help meet the needs of the beneficiary. Furthermore, the trust will be overseen by a trustee who will make decisions based on guidance provided by the document itself. This person may be a California resident or any other adult of sound mind.

Generally speaking, it is not a good idea to simply appoint an older sibling or other family member as a trustee. One of the key reasons why a trust can be effective is that it may help preserve a special needs individual's access to government benefits. If assets are held in a trust, they do not count toward the special needs individual's net worth.

John Singleton's family fighting over $35 million estate

California readers may have heard that director John Singleton died of a stroke in Los Angeles on April 28. Apparently, he had an outdated will, which means there could be conflict over his estimated $35 million estate.

Singleton, who earned an Academy Award nomination for directing "Boyz n the Hood" in 1991, had seven children. However, when he drafted his will in 1993, he only had one son, and he never updated his estate plan to include his other six children when they were born. That means that his entire estate will go to his first-born son. In early May, the will was filed by his mother in a California probate court. Court records show she listed his assets at approximately $3.8 million, but his estate is believed to be worth at least an additional $31 million.

Special needs trusts explained

California parents of special needs children understandably want to do everything possible to make sure loved ones unable to care for themselves independently will have access to important financial resources. However, setting funds aside presents possible issues with eligibility for government assistance. One way to resolve this problem for parents looking to plan ahead is with an estate planning tool known as a special needs trust (SNT).

A special needs trust allows funds to be set aside without jeopardizing eligibility for government assistance. It's designed to allow for future support for a dependent. The assets in an SNT are invested and managed by designated trustees, who are typically other family members or trust professionals. Funds in the trust are also protected from creditors and lenders. Additionally, the creator of the trust (grantor) normally has control over what happens with remaining funds when the beneficiary passes.

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