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1520 6th Ave
San Diego, CA, 92103
United States

(619) 320.8780

San Diego law firm focusing on estate planning including preparation of trusts, wills, and powers of attorney, trust administration, probate, business formations including partnerships, limited liability companies, and corporations, business succession planning, bankruptcy, business litigation, employment law, and general civil litigation.

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Current happenings and anecdotal information regarding estate planning, wills, trusts, business formations, partnerships, Limited Liability Companies, Corporations, business succession planning, and bankruptcy.

Best of the Bar 2016

Casey OConnell

This week, I was recognized in the San Diego Business Journal's "Best of the Bar 2016" for Estate Planning. I'd like to sincerely thank my colleagues who voted for me and the San Diego Business Journal for recognizing the attorneys in San Diego who go above and beyond for their clients. I am humbly honored to be featured amongst other excellent San Diego attorneys. I will continue to build on my expertise in Estate Planning to better serve my existing and future clients. A celebration is in order!

Internal Trust Disputes & the Trust Protector: A Lesson from Spaceballs

Casey OConnell

Internal disputes amongst successor trustees and trust beneficiaries are common. Despite the intent expressed in a trust document, beneficiaries may argue about distributions, clash with the successor trustee, or carry preexisting spats with siblings and family members into a trust administration. Our firm regularly sees beneficiaries who are disappointed or disgruntled with the trustee's failure to communicate about trust administration or failure to properly distribute trust assets as called for in the document. This bickering between beneficiaries or between beneficiaries and trustee can create such strife that court intervention is needed to interpret the trust and direct or correct the behavior of the trustee. After all, your trust was created to help avoid the need for court interaction with your estate so how do you keep your trust out of court and prevent your trustee and beneficiaries from dueling like the clowns below?

Our firm implements "Trust Protector" provisions into your revocable living trust to prevent such internal squabbling between trustees and beneficiaries. What does a Trust Protector do, you ask? The simplest way to put it is that the Trust Protector is tantamount to a referee. In the absence of a rule enforcer, you have chaos. Traditionally, a Probate Court judge was the only individual with the ability to diffuse internal trust disputes, however, using these new provisions in your trust allows the Trust Protector to act as that rule enforcer. This saves your estate court costs, attorneys' fees, time, and also defeats the potential for a larger dispute or trust contest. Imagine a boxing match without a referee. The fighters would break the rules, throw low blows, and make a mockery of the sport much like the "Schwartz" fighters in the clip from Spaceballs. However, if your trust has a referee, the risk of such behavior is mitigated if not eliminated. 

So what authority does the Trust Protector have over the trust? The Trust Protector is vested with the authority to oversee a trustee's discretionary distributions to beneficiaries. Simply put, the Trust Protector makes sure such discretionary distributions are done prudently under the circumstances and prevents breaches of the trust's terms. The Trust Protector is authorized to request financial statements and bank statements of trust assets to prevent fraud and Trustee self-dealing (i.e. using trust assets to benefit the trustee personally). The Trust Protector also has the power to remove a successor trustee should he or she engage in malfeasance or should he or she fail to uphold the position of trustee under the law. Moreover, and importantly, the Trust Protector is authorized to mediate Trustee and Beneficiary disputes as opposed to bringing the dispute to court, or to resolve ambiguities in trust provisions. Instead of allowing your trustee and beneficiaries to blindly battle one another like the two stooges in the video, the Trust Protector can be consulted to interpret, correct, or direct the proper administration of the trust. 

These provisions may also include the power for the Trust Protector to amend the trust document in certain limited circumstances. For instance, the Trust Protector may be afforded the power to amend the trust if there is a change in the law or financial changes impacting the purpose of the trust. The Trust Protector may also amend the trust to correct typos in the trust document or other scrivener errors that would otherwise require court reformation through a formal petition.

The Trust Protector can be anyone you'd like to act in that role, however, most of our clients select our firm to act in this capacity. The reason being is that your estate planning attorney has been involved in the creation of your trust and is likely to understand and recall your intent with respect to the trust provisions and is also conscious of the Probate Code and the obligations of the trustee to the trust and its beneficiaries. 

To discuss the application and implementation of these provisions to your existing trust or to discuss your estate planning objectives and the advantages of the Trust Protector, contact our firm today. 

Divorce & Estate Planning: Before, During, and After the End of a Marriage

Casey OConnell

No-fault divorce has been in place in California since then Governor Ronald Reagan signed it into law in 1970. Divorce rates in the U.S. and in California have increased steadily with the most recent reliable statistics indicating that at least 50% of marriages end in divorce (note, there are statistics indicating that in Southern California, the divorce rate is as high as 74%). Consequently, it is more likely than not that you or someone you know has experienced divorce first-hand. Closely intertwined with the decision to divorce a spouse is what must be done with your estate plan before, during, and after any divorce proceedings. After all, if you or a loved one has made the difficult decision to end their marriage, they likely do not want their assets to end up in their soon-to-be ex-spouse's hands if something were to happen to them during or after the divorce. 

Automatic Temporary Restraining Orders (ATROs)                                                                       When a married individual files for dissolution, certain Automatic Temporary Restraining Orders go into effect to protect the rights of the divorcing spouses and maintain the financial status quo of the married parties. These ATROs put restrictions on what a spouse may do with his or her assets and estate plan during the divorce proceeding. These restrictions apply to any property, whether real, personal, community, quasi-community, or separate and remain in place until a final judgment of dissolution is entered. 

Actions to Consider Taking Before Filing a Divorce Petition                                                             Below is a list of estate planning actions to consider before filing a petition for divorce. All of these actions can be done of your own volition, with neither notice to nor consent of your spouse required:

  • Create, modify, or revoke an existing will;
  • Revoke an existing revocable (marital) trust;
  • Create and fund a new revocable trust;
  • Sever joint tenancies;
  • Change beneficiary designations of non-probate transfers; and
  • Revoke existing powers of attorney and execute new powers of attorney.

Keep in mind that these actions are subject to fiduciary duties owed to a spouse and governed by any provisions of the documents being revoked or modified. Keep these actions in mind when meeting with a family law attorney or estate planner before the divorce petition is filed.

Actions to Consider Taking After the Divorce Petition is Filed (During Divorce)                            Once a petition for divorce is filed, the above mentioned ATROs go into effect. Accordingly, while certain estate planning actions can still be completed, some actions require notice to the other spouse and some require a court order. 

The following actions can be done unilaterally (no notice or consent of other spouse needed, no court order needed) even after filing for divorce:

  • Creating, modifying, or revoking a will;
  • Creating an unfunded revocable or irrevocable trust;
  • Revoking and creating new powers of attorney for finances and healthcare.

A quick note on creating an unfunded revocable or irrevocable trust: after the divorce petition is filed, a spouse can create a new revocable or irrevocable trust, however, that trust CANNOT be funded until the conclusion of the divorce proceeding UNLESS the other spouse's consent is obtained or by court order, neither of which are likely to occur given the divorce.

The following actions can be done ONLY if notice is served on the other spouse BEFORE the change is made:

  • Unilateral revocation of a non-probate transfer, including an IRA beneficiary change and revocation of a revocable trust;
  • Unilateral severance of a joint tenancy.

Note that the revocation of a non-probate transfer does NOT mean a divorcing spouse can modify the beneficiary designation simply by providing notice to the other spouse. In other words, revoking a beneficiary designation is NOT equivalent to modifying the beneficiary designation. See below for more information.

The following actions can be done ONLY with the written consent of the other spouse OR upon order of the Court:

  • Transferring, encumbering, concealing, or in any way disposing of ANY property; and
  • Creating or modifying a non-probate transfer in a way that affects the disposition of the asset subject to the transfer.

For non-probate transfers, the opposing spouse must consent to beneficiary modifications that would in effect disinherit the opposing spouse. Also, special considerations exist for qualified retirement accounts governed by ERISA. Please discuss these matters with an experienced family law or estate planning attorney to determine the specifics.

After Conclusion of the Divorce Proceeding

Once a final divorce decree is entered by the Court, any existing marital trust the parties had created while married is terminated as a matter of law. Thus, it is imperative that the client, after determining the division of marital assets, meet with an estate planning attorney to discuss properly titling assets and establishing a new estate plan including a new revocable trust. By doing so, the newly divorced person can ensure that assets do not transfer to his or her now ex-spouse at death, including life insurance death benefits, retirement accounts, and any other assets now owned as a single person. Also important is the creation of new powers of attorney for finances and health care. Once a person is divorced, I can imagine that 0% of them would want his or her now ex-spouse to make health care decisions on his or her behalf!

In sum, the crossover issues of estate planning and family law can have dire consequences for those who neglect them. If you or someone you know is contemplating divorce, is currently involved in a divorce, or is recently divorced, our office offers free initial client consultations for those of you with specific questions about your circumstances.