Distribution Planning: Summary of Different Distribution Options

Trust Fund Options for Paying Adult Beneficiaries an Inheritance

When deciding who you want to inherit your estate after you die, aside from figuring out who will get what, you’ll need to determine how and when they’ll get it. For adult beneficiaries, there are three options for giving them their inheritance: outright, in stages, or in a discretionary lifetime trust.

See Julie Garber, Trust Fund Options for Paying Adult Beneficiaries an Inheritance, www.thebalance.com, July 23, 2018

Distribution Planning: Leaving Assets Outright To Adult Children

This part of the Distribution Planning series discusses the effect of leaving your assets outright to your adult children.


People understand why minor children and even young adults shouldn’t inherit property outright. Someone with more maturity and experience needs to manage the assets and make spending decisions. That’s why for minors and young adults, inheritances routinely are left in trusts at least until the youngsters are older.

Too often, however, people overlook the benefits of leaving assets in trust for adult children instead of having them inherit the property outright.

Consider the risks of leaving wealth outright even to grown children and these benefits of using inheritance trusts to hold bequests for them.

See Bob Carlson, Leaving Assets Outright to Adult Children, www.forbes.com/, 

How to Leave a Legacy When You Don’t Have Children

Many people either choose to not have children or have accepted the circumstances in their lives that do not allow children to be a part of them. A question on how to leave a lasting legacy remains for those that do not have immediate heirs. Ms. Malone Wright, founder of NotAMom.com who lives in Cleveland, noted that even if you have a child, you have no way to control where your child carries your legacy; it might not be a direction you would choose.

Many people try to better the greater good by donating money or by volunteering in their local communities. Others try to make lasting impressions through their careers. you don’t have to be rich, a genius or a world-renowned luminary to touch people’s lives for generations to come. Here are some ways to leave a lasting legacy when you don’t have genetic offspring:

  • Get it in writing.
  • Preserve your family history.
  • Support institutions you find meaningful.
  • Champion worthy causes.

See Anna Goldfarb, How to Leave a Legacy When You Don’t Have Children, New York Times, July 17, 2018.

Distribution Planning: Common “Pot” Trusts – Why You Shouldn’t Treat Your Children Equally

Estate planning is more than just planning to avoid probate. You can also develop a very specific plan for the distribution of your assets. In the series of blog posts entitled “Distribution Planning”, we will discuss the different options of distributing your assets and the pros/cons of each one.

The first part of this series discusses “Common Pot Trusts”.


The Common Pot Trust takes this concept of spending for your minor children as needed and applies it to your trustees.  Instead of your will or trust passing your estate into separate, equally funded trusts for each child, the whole “pot”, is combined into one trust that benefits all the children together until they all reach adulthood.

If both parents are tragically gone during their children’s minority, then the trustee (the person overseeing and dispensing money from the “pot”) is directed to spend as if he or she is like a surrogate parent – he or she spends money on the kids in the same way that the parents would if they were alive.

See Scott R. Zucker, Esq. , Common “Pot” Trusts – Why You Shouldn’t Treat Your Children Equally, estateplanninginfoblog.com, July 23, 2018.

The Important of Beneficiary Designations – The case of Life Insurance paying to an Ex-Spouse

A recent California Case highlights the importance of making sure you review your estate plan and beneficiary designations every couple of years. The beneficiary listed on retirement plans and Life Insurance policies supersede anything your write in your Will or Trust.

This was reinforced in a recent case where an Ex-Spouse received the life insurance proceeds of her former spouse after his death because he never took her name off of the policy, even though he wrote in his Will that he didn’t want anything to pass to her.

Be sure to check your beneficiary designations to ensure they are up-to-date with your current intent.

Here are the facts to the case mentioned above:

Estate of Post

Decedent Jerome Norman Post purchased a life insurance policy during his lifetime and named his then-spouse, Angela Post, as the primary beneficiary, and his sons from a prior marriage, Kenneth Post and Eric Post, as the contingent beneficiaries. Decedent was divorced at the time of his death, but he had not changed the beneficiary designation on his life insurance policy to remove his former spouse as the primary beneficiary. He had executed a codicil to his will shortly before his death expressing his strong desire that his former spouse receive nothing from him after his death, including by beneficiary designation. Decedent’s sons sought an Order designating them as the rightful beneficiaries of the decedent’s life insurance policy under Probate Code Sections 5040 and 9611. The appeals court found in favor of the former spouse and she was entitled to receive the life insurance proceeds.

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Did You Choose the Right Trustee?

Choosing just the right trustee is a highly important decision, and in many cases more imperative than that of the proper executor of your estate. They will have discretionary authority over an entity that can last for multiple generations and will have the responsibility of decision making and asset investing for your trust.

  • Trustee Qualifications
    • A trustee should have sound professional financial judgment, and be reliable and trustworthy. They will be in charge of every financial and tax related responsibility of the trust including collecting trust assets, paying bills, filing trust tax returns and accounting as well as distributions to the beneficiaries, balancing the competing interests of income beneficiaries and remaindermen, considering whether to make loans of, or pledge, trust assets, and monitoring the investment performance of the trust.
  • Should You Select a Family Member?
    • Family members may have a stake in the success of the trust, prompting a heightened level of care and concern. However, if the family member chose to be trustee is also a beneficiary of the trust, their authority over trust distributions will be limited. If you would prefer that a trustee have broad discretionary power over trust distributions, you will need to name at least one trustee with no beneficial interest in the trust.
  • Should You Select an Unrelated Party?
    • An unrelated party, such as a close family friend, professional advisor or bank is another option. You may be hesitant to name a family friend as a trustee as they will then be granted intimate knowledge of your family’s finances. If you are creating a long-term “dynasty trust,” you may want to consider naming a bank or trust company as trustee, since the trust will last beyond the lifetimes of any individuals you may know.
  • Revisiting Your Choice of Trustee?
    • One’s circumstances and relationships often change through the years, and you will want to make sure that the person or institution you selected a few years ago is still the right choice.

See Cheryl E. Hader, Monika Jain, & Avigail Goldglancz, Did You Choose the Right Trustee?, KramerLevin.com, July 16, 2018.

7 Common Estate Planning Disasters and How to Avoid Them

Baby boomers are now aging in a tax era that is favorable to transferring wealth to loved ones of younger generations. The recent increase in the estate and gift tax exemptions thresholds, along with expanding wealth, work to create an atmosphere conducive to transferring extensive assets after death. But many people believe that because of this amicable atmosphere, the process of passing along their estate is now so simple that they are able to take care of their estate planning on their own. However, due to longer lifespans, higher incidences of multiple marriages, and blended families, the process of creating an estate plan that satisfies all of your needs may be more complicated than originally thought.

See Michael Feinfeld, 7 Common Estate Planning Disasters and How to Avoid Them, Market Watch, April 26. 2018.

Out of State Representative for a California Probate

In most cases, it is perfectly fine to have an out-of-state family member or other individual act as the personal representative (executor/administrator).

If you have questions regarding your status as a personal representative residing outside California, I encourage you to contact me. We are experienced in working with a personal representative who lives out-of-state and can make the process extremely efficient for you. Call us now for a no charge consultation: (858) 485-1990.

Why Do I Need Will if I already have a Trust?

A revocable living trust can only control the assets that have been transferred into it. This process of changing titles and beneficiary designations to your trust is called “funding your trust.” It is a simple concept, yet it is what keeps you and your family out of Probate in the event of your death; it also allows you to keep more control over the distribution of your assets to your beneficiaries.

While you may intend to put everything into your trust, you may inadvertently leave something out of it. For example, you could acquire new assets after creating the trust and simply not get around to titling the assets in the name of your trust. Your pour over will states that if a “forgotten” asset is discovered after you die, the asset is to go into your trust. It may have to go through Probate first, but at least your pour over will catches the asset and sends it back (pours it over) into your living trust so it can be distributed as part of your overall estate plan.

Remember, a pour over will is simply a safety net. It is not a substitute for changing titles and beneficiary designations while you are alive. If your intention is to avoid probate (which is probably a big reason why you set up a living trust in the first place), you must fund your trust.

If you are unsure whether your Trust is properly funded, please contact us today.