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What Role Does a Private Fiduciary Play?

It’s necessary for all estate plans to name someone to settle financial matters after your death. Or, in the event you’re no longer able to act on your own behalf. Selecting a private fiduciary is one of the most crucial decisions you’ll make.

You invest careful thought into estate planning, but if you choose the wrong person to oversee the details, it’s unlikely your wishes will be carried out as you’d intended. Here’s a look at the role and responsibilities of a fiduciary, so you can better understand your decision. 

What is a Private Fiduciary?

First and foremost, a fiduciary must be trustworthy because this role is filled by a person (or institution) with the power to act on the behalf of others. Sometimes this arrangement happens through a private agreement. But in certain circumstances, the court system appoints an individual.

There are different types of fiduciaries. For example, an executor has a fiduciary duty to the beneficiaries of an estate. But overall, this position comes with a legal burden to behave in a fair and honest manner.

Choosing a Private Fiduciary

It’s a tough choice, but when selecting a fiduciary, family members, friends, business associates, and attorneys are all justifiable options. In order to avoid conflict, we suggest designating only one fiduciary, rather than co-fiduciaries to serve together. But remember, it’s important to select more than one backup.    

It’s a Responsibility Not a Privilege

Your fiduciary will be responsible for tasks like paying any remaining bills and income taxes, overseeing trusts, taking inventory of investments and properties, as well as distributing assets.  

There will be meetings and phone calls with beneficiaries and various professionals, as well as official letters to draft. The person you select needs to communicate effectively with all relevant parties, such as financial institutions, legal representation, and beneficiaries.

They have the additional responsibility to submit a regular written report addressed to your heirs. The “Account of Fiduciary” summarizes all their financial (and other) activities. Finally, your private fiduciary will likely need to hire people to help settle your affairs, possibly including real estate agents, attorneys, and financial advisors.  

Proper planning helps to prevent family feuds and protects your legacy for loved ones. As your estate planning law firm, we help you evaluate your best options when choosing a private fiduciary.

To schedule an appointment, please contact our office at (925) 447-1250.

Money Mistakes People Make After the Death of a Spouse

Everyone handles loss in their own way, but there are some common money mistakes people make after the death of a spouse. The following are four suggestions to help your finances weather this vulnerable time.

Don’t Rush Important Decisions

Grief is powerful. It alters the way we think and can affect memory function, as well as our ability to focus. If major decisions can wait, it’s best to put them aside for a while. It’s okay to pause. Well-meaning friends and relatives will likely offer unsolicited advice, but now is not the time to be moving money around, unless it’s really necessary. Instead, allow yourself the space to process emotions.

Spending Spree

Perhaps one of the most common money mistakes someone can make in this situation is to go on a spending spree. When a bereaved spouse attempts to move on or distract his or herself with retail therapy, or vacations, it can quickly lead to a downward financial spiral.

Money Mistakes on the Home Front

Sometimes a surviving spouse wants to hold on to the home they shared with their partner, and those memories they cherish there. But other times it may seem too painful not to sell right away. Maybe you no longer need as much space, or hope to relocate closer to family. All of those reasons are valid. Still, try to defer any major decisions for a few months.  

Even considerations such as paying off the mortgage might sound responsible, but consider meeting with a financial planner to ensure you’re thinking clearly and won’t be strapped for cash down the road.

Review Your Finances and Estate Plan

When you feel up to reviewing your finances, revise a budget. Spending needs will be different with one less person in the house, and you might choose to make some lifestyle changes. If you weren’t responsible for handling financial decisions in the past, be certain you fully understand your investments, sources of income, and all expenses, to avoid money mistakes.  

At this time, it’s also a good idea for the surviving spouse to review his or her own estate plan. Please contact us at Lewman Law for further information and assistance. Our office can be reached at (925) 447-1250.

Common Estate Planning Mistakes

It can be a relief to finally get your affairs in order, but keep in mind these common estate planning mistakes that are all avoidable with the right knowledge.

1. Not having an estate plan at all.

The worst thing you can do is nothing at all. If you die without a will, the state will decide who inherits your assets through probate court. In the absence of an heir, whatever you own becomes the property of the state. It’s especially important to name a guardian for your children, if you have any.

2. Your plan is out-of-date

Don’t create your will and then forget about it. Major life changes will require updates to your will, such as buying a new home, a birth, death, marriage, or divorce. Get in touch with your estate planner if your finances or life circumstances change. 

3. Not planning for disability

Not preparing for illness is a common estate planning mistake because no one wants to consider the possibility of being sick or injured. But it’s important to decide who would handle your finances and make healthcare decisions on your behalf in the event that you were unable to advocate for yourself.

4. Putting your child’s name on the deed

If you put your child’s name on the deed to your home, it becomes a gift that is subject to taxation. The alternative is to pass real estate to your child through their inheritance. Note, however, that gifts valued at less than $14,000 are excluded from this estate tax.

5. You aren’t too youngDon’t make the estate planning mistake of waiting until you’re older. It’s true that your needs will change as you age, but if you have a family or assets, it’s best to settle your affairs sooner rather than later. Plans can and should be updated down the road.

6. Reduce your estate tax through gifts

 A common estate planning mistake is failing to reduce estate taxes through gifts. These gifts can be made to individuals, organizations, or businesses of your choosing.  

7.  Forgetting the family pet

With everything else to consider, don’t forget to plan for your pets. It’s not only possible to establish a trust for your children, but for animals, as well. This is one way to ensure funds are available for their continued care. The last thing you’d want is for furry family members to end up in a shelter where they might be euthanized.

By preparing now, you make important decisions that affect your loved ones, instead of leaving things to federal and state governments. For more information on avoiding common estate planning mistakes, please contact us at Lewman Law to discuss your needs, and how we can help.

Four Ways to Avoid Probate

What is Probate?

There are four basic ways to avoid probate in California. Probate is the court-supervised process that occurs after someone passes away, even if they left a will. It ensures the estate is distributed in accordance with their wishes, and all taxes and debts are paid in full. The executor or attorney representing the estate begins this process, and a court then authenticates the will, authorizing the distribution of the estate to proceed.

Why Avoid Probate?

Time and money are the two main reasons to avoid probate. The court deducts its own fees, and like all court proceedings, this process can be expensive and drawn out, especially if the will is contested. There are other reasons to avoid probate; it’s a public process, meaning anyone can search records to access information on the value of an estate, and personal financial affairs.

How to Avoid Probate

The only way to avoid probate in California is to plan for your assets to transfer directly to your heirs. There are four main ways to accomplish this.

  1. Trust Agreement
    Assets placed in a trust are transferred directly to the named beneficiary. It is no longer necessary for a trust to be handled by a third party. The person who creates the trust may also manage it, until the time of their death.
  2. Right of Survivorship
    The right of survivorship doesn’t apply to bank accounts, but when two individuals share the title to a property through “joint tenancy,” full ownership can be transferred to the surviving party.
  3. Designation of Beneficiary
    Life insurance policies and retirement accounts fall under the Nonprobate Transfer Rules in California. Funds in these types of accounts are transferred without passing through probate.
  4. Operation of Law
    California Multi-Party Account Laws determine who owns the remaining money in a bank account after the account holder is deceased. Funds are transferred to a new account for the survivor and avoid probate.

If you have questions regarding the probate process in California, or any other estate planning needs, please contact Lewman Law for further information and assistance.

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