Estate planning can be simple if you've got a small family with only one child and no siblings. It's when you have a large family, such as a blended family, that it can get complicated. That's why you need a trust attorney in Orange County to help you create a will that encapsulates your wishes, especially regarding asset distribution among your beneficiaries.
They'll be able to tell you which type of distribution, per stirpes or per capita, matches your needs.
Per stirpes is a Latin term that means "by branch" or "by roots". It's a linear asset distribution method. It means that if one of your descendants passes away before you do, their share of your estate goes to their children. It's a direct line from you to your children to your grandchildren.
However, it doesn't make provisions for your spouse or other loved ones. It also only applies to your biological children. Unless you create a trust for your stepchildren, they are completely left out of your will.
You have two children, Alice and Betty. Alice has two children and Betty has three children. According to your will, they share your estate equally, 50-50. Alice dies in a tragic accident and, according to per stirpes, her share goes to her children. Each child receives a quarter of your estate and Betty still has her 50% share.
You still have Alice and Betty and they still have their children. This time Betty dies from a major heart attack and, according to per stirpes, her share goes to her children. Each child receives approximately 16% of your estate assets and Alice still has her 50% share.
Per stirpes has many benefits, but one glaring problem is the "unfair" estate distribution among your grandchildren. Alice's children get 25% of your estate while Betty's children only get 16%.
There is absolutely no favoritism on your part. There is no spite, no desire to cheat Betty's children. But, it could appear so and suddenly where there was none, there is now enmity between your grandchildren.
Per stirpes is not a default asset distribution method. You have to specify it in your will. You also have to use specific terms. "Assets are to be distributed to my descendants, per stirpes."
Per capita shares your assets equally among your named beneficiaries, including sisters-in-law, uncles, half-brothers, etc. Should a primary beneficiary pass away before you, their share is added to the pot and then equally distributed among your living beneficiaries.
Your probate attorney in Orange County will help make your wishes clear by using specific terms in your will, "I leave my estate to my descendants, per capita."
You still have Alice and Betty and they still have their children. Alice falls from a tree and dies from her injuries. Her share of the estate goes to Betty. Betty now receives 100% of the estate. Alice's children don't get anything.
You have three children, Alice, Betty, and Carol and your estate is to be shared equally between them, so each gets a one-third share. Alice has two children, Betty has three children, and Carol has one child. Alice dies from a terminal disease and her share of the estate is then divided between Betty and Carol. Now they both get 50% of your estate.
Alice's children don't get anything.
Many people consider per capita distribution to be the fairer of the two methods, but it also has disadvantages.
One of the biggest advantages of per stirpes is that the line of distribution has been established. You don't need to update your will or estate plan when an original beneficiary passes away.
It also eliminates uncertainty and potential squabbles about how a deceased beneficiary's share is to be distributed if they die before you, the testator. You can further secure assets for your beneficiaries by including a no-contest clause in your will.
You can't add a new beneficiary (contingent beneficiary) if one of your children or grandchildren dies. Inheritance is strictly linear.
All beneficiaries receive an equal share in your estate, regardless of your relationship, for example, spouse, niece, or cousin.
In theory, it also eliminates squabbles because distribution is clearly stated.
If the value of your estate is worth more than a set amount and you decide to leave it to your grandchildren rather than your children, they will have to pay generation-skipping transfer tax (GSTT).
You can't give your favorite niece a bigger share of the estate than your least favorite niece. Per capita distributes assets equally, regardless of your preferences.
You have to update your will whenever there are significant life events, like a death, divorce, marriage, or birth.
There is a very clear difference between the two types of asset distribution and they each serve a specific purpose. However, they also each have little details and state-specific regulations that are best explained by an experienced estate planning lawyer. Parker Law Offices employs some of the best Orange County estate planning attorneys who are experienced in estate planning, including trusts and probate.
If you have any questions about estate planning or want to start the estate planning process, get in touch via email, our onsite contact form, or by calling 949-867-4818.
Making your adult child co-owner of your bank account seems like a sensible thing to do. After all, they're responsible and you can trust them to take care of your financial affairs and decisions should you become incapacitated. It's also a good way to avoid probate. However, when you talk to a probate attorney in Orange County, you'll find the decision has more risks than benefits.
Co-ownership is attractive to many elderly parents who are single. There's great relief in knowing that, if you are incapacitated, your adult child has the financial power to pay bills and manage the joint account.
Many parents don't realize that joint account holders have the right to use" their" account as they wish. They can pay their own bills and expenses and you have no authority to stop them.
For example, in a month's time, you're having hip replacement surgery and you've designated some of the money to pay the medical expenses. Unfortunately, money is missing every time you check the account.
Despite repeatedly talking to your child, they continue to be compulsive spenders and you have no legal means to stop them.
There are negative unintended consequences, yes, but there are some advantages to joint bank account ownership.
| Pros | Cons |
| No probate or estate administration tax.It's easy to add a joint holder.The adult child assists in account management and ensures the parent's finances are protected from scammers and their own poor financial decisions.Funds are immediately accessible to cover funeral and other death-related costs. | Use the account without permissionCo-ownership trumps a will. If your will states the proceeds must be split between your three children, but one of them is the joint owner, all proceeds go to her. As the sole owner, she's under no legal obligation to share the proceeds with her siblings.Creditors can be paid from the accountEx-spouses are entitled to a share of the money because it's listed as a marital asset.It's exceptionally difficult to remove a co-owner.Co-ownership could render either party ineligible for certain benefits, for example, disability benefits. |
Co-owning a bank account with an adult child exposes both of you to risks as you each take on the financial obligations of the other.
One way to keep on top of spending is to set up mobile notifications so both of you are aware of the other's transactions.
When it looks like spending is getting out of hand, you can arrange a meeting to address the problem. It's a good idea to get an estate attorney who specializes in wills and trusts involved. They'll act as mediators and ensure that the outcome is recorded in a legal document.
When you make an adult child a co-owner of your bank account, you share everything. They automatically have unrestricted access to money. It also means that you take on their debt and financial obligations, such as child support.
Your co-owners creditors are well within their rights to claim payment from the co-owned account. Your child's ex-spouse is also entitled to claim child support from the account if your child has fallen behind on payments.
A co-owned bank account is separate from your estate and while this avoids probate, it also means that it isn't included in your will As a result, the entire bank account is transferred to the co-owner. Often, the co-owner will share the proceedings with their siblings. But there are others who keep the full amount. It's accidental disinheritance.
You could have a meeting with all of your children to discuss options. For example, the co-owner retains the bank account but doesn't inherit any other part of your estate to the same value as the cash in the account. After that, the remaining estate is shared equally among all your children.
The co-owner might prefer to inherit items from the estate and will negotiate shares in the account. Whichever alternative your children choose, make sure you have an Orange County estate planning attorney draw up agreement documents that are beyond legal challenges.
Your financial planning is one of the most important subjects to discuss with your kids about. They must know if you have enough for a comfortable and lengthy retirement, health insurance, and an emergency fund.
You should discuss your estate and what you mean to do with it when you die. For instance, 70% is to be shared equally between them, 10% is to go to an animal shelter, 10% to nieces and nephews, and 10% is to be held in trust for 10 years, after which it is to be shared among the children.
Now is the time for your children to ask questions about your estate plan and bring up their concerns. It's also the time to emphasize the importance of honoring your wishes. It may be helpful to have an attorney who specializes in wills and trusts at the meeting.
The points discussed show that the disadvantages heavily outweigh the potential advantages of making an adult child a co-owner of your bank account. You risk losing everything when your child's creditors come knocking or they're involved in a serious traffic collision and are severely injured. The money in your co-owned bank account may be siphoned off to pay for their care.
You could become embroiled in complex legal matters, such as your child's messy divorce settlement.
You can enjoy the benefits of co-owned accounts without the risks by giving your child power of attorney (POA). This enables them to manage your finances and make financial decisions on your behalf.
Your lawyer will look into the viability of Transfer on Death, which enables you to name your child a transfer-on-death beneficiary. The account is immediately turned over to your child, which avoids probate.
Our Orange County estate planning attorneys will explain how a revocable living trust affects the probate process. Contact us via our online form or call us at 949-867-4818 at Parker Law Offices to book a consultation with our team!
Retirement accounts are part of your estate and must be included in your estate plan to ensure it goes to your chosen beneficiaries after you've passed on. Talk to your probate attorney in Orange County about how best to divide your retirement account among your descendants.
One way to keep it in the family is to use per stirpes. Per stirpes ensures that your grandchildren inherit a fair portion of the estate if their mother, which is your daughter, dies before you. In other words, the children inherit their mother's share.
Without per stirpes, your daughter's share of the inheritance is divided among your surviving children which is her siblings, increasing the amount they stand to inherit. Your grandchildren don't see a cent of your retirement account.
You need to be sure about who you want to inherit your retirement account. This is because the named beneficiary will benefit despite what you say in your will. For example, you weren't married when you opened your retirement account and named your cousin John the beneficiary.
However, in your will, you state that you want your daughter, Betty, to inherit the account. If you forgot to update the beneficiary, or you mistakenly thought that your will superseded the designated retirement account beneficiary, John will still get the money.
Think about contingency beneficiaries. They benefit when none of your primary beneficiaries is around to inherit undistributed estate assets. For example, you bequeath your car to your niece but she passes away before you. If you named your niece's daughter as a contingent beneficiary then she gets the car.
It may sound confusing, but an Orange County estate planning attorney will help you make sense of it all.
Most married couples name each other as beneficiaries, which makes sense. Your spouse has plenty of choices when deciding how best to use the account. For example, they can keep the account where it is and let it grow, they can liquidate a portion or all of it, or they can roll it into their retirement account.
Note that if you live in a community property state, your spouse is entitled to claim 50% of the account, regardless of who is the designated beneficiary.
If your beneficiary is your daughter and you die while she is still a minor, she has the option to take the required minimum distribution (RMD) based on her life expectancy as determined by the Single Life Table.
Your daughter's designated guardian can help her make the choice, but it's an even better idea to consult the attorney who helped you with your estate planning.
If the beneficiary isn't part of the family, they must withdraw all the assets from the account before December 31, on the 10th anniversary year of your death. Other beneficiaries must take annual life expectancy payments until December 31, on the 10th anniversary of your death.
There are many advantages to naming a trust as your beneficiary, including the increased control you have over distributing your assets.
When you create trust, you must name someone trustworthy as the administrator. They manage the trust on behalf of your beneficiaries. Trusts can be tricky to set up. This is why you should engage a specialist trust attorney in Orange County.
You can name your favorite charity/ies as a beneficiary, but it's recommended that you only do so once your closest descendants are taken care of.
Yes, it can, but it's not recommended. Retirement accounts don't go through probate. It's one of the things that makes them so attractive. When your account becomes part of your estate, it's subject to probate, just like everything else in your entire estate.
Per stirpes is a way to include your grandchildren as beneficiaries on your retirement account. The legal term demonstrates a lineal distribution process should the primary beneficiary pass away before the testator.
Specifically, it follows a line of lineal descendants; from the testator to their child to grandchild and to great-grandchild.
Per stirpes doesn't apply to spouses, siblings, or parents, it's lineal children only. Clearly State It's Per Stirpes. You must say that the distribution is per stirpes, otherwise, your assets will be distributed per capita.
For example: "I leave my daughter, Berta King, half or 50% of my estate. If Berta King predeceases me, her inheritance must be distributed to Berta King's descendants, per stirpes."
If you don't state that the distribution is per stirpes, your estate is likely to be distributed per capita. Per capita or by the heads distribution of property divides assets equally between all direct descendants, with no provision for grandchildren.
Mom and Dad have two children, James and Charlotte. James and Charlotte each have three children. James and Charlotte are the beneficiaries of Mom's retirement account. James dies before Mom. Charlotte gets 100% of the account.
Or ...
Mom and Dad have three children, James, Charlotte, and Angela, and the siblings have three children each. The retirement account is divided equally between the three siblings: 33.33% each. James dies before Mom. His 33.33% is returned to the estate and divided among his sisters, who now get 50% each.
Mom and Dad have two children, James and Charlotte. James and Charlotte have three children each. James and Charlotte are beneficiaries of Mom's retirement account. James dies before Mom. Charlotte still gets her 50%. James' 50% is divided among his three children. Each gets â…“ of 50%.
Per stirpes works better for small families than big ones. Per capita is better for big families. It's related to the perception of fairness.
Per stirpes
Mom and Dad have three children, James, Charlotte, and Angela. James and Charlotte have two children each. Angela has five children.
Mom and Dad have a horse riding business, which they want to keep in the family. Rather than dividing 1500 shares equally between the three children, they decide to skip a generation and leave the shares to the grandchildren.
James' children split 500 shares between them, 250 each. Charlotte's children also split 500 shares between them, 250 each. Angela's children have to split 500 shares five ways. They each get 100 shares.
In a per capita arrangement, 1500 shares would have been split evenly between nine grandchildren who get the same amount.
Think about your financial dependents and how they'll cope after your death. For example, you might have an irresponsible brother who has never been independent. You might also have a daughter who has special needs and won't ever be able to support herself independently.
You can choose to leave most of your assets in trust for your daughter so she always has the care she needs, and leave only a small portion to your brother, forcing him to make his own way.
When you die, your estate faces estate tax, gift tax, income tax, and property tax. Your estate planning and probate attorney will help you distribute your assets in a way that avoids as much tax as possible.
Life is fluid. Your circumstances this year will be different in two years' time. For example, you downscaled your house and your granddaughter was born. Your son got divorced and married a mother of two.
In this example, you should update your beneficiary designation forms after each major change. Even if you don't have major life changes, it's still a good idea to take a look at your beneficiary forms every two years or so.
A beneficiary might have moved to a different state or gotten married and changed their name. The changes must be made in the beneficiary forms to ensure your retirement accounts go to the right person.
Your Orange County estate planning attorney will help you with the updates because any mistakes you make will stand if you die before you get around to updating the form again. Note, named beneficiaries to trump the wishes stated in your will. If you want to make a change, you must do it on the form.

Estate planning is not as simple as one thinks. Especially as you mature and accumulate the trappings of a comfortable life. One of the things you should think about is whether you want to leave your family their inheritance directly, or in trusts.
Trusts aren't always the best choice. If this is the case in your situation, your trust attorney in Orange County will advise you on asset distribution, especially per stirpes and per capita methods. This enables you you can make an informed decision to bequeath assets in a way that matters to you.
Estate planning attorneys, including those who specialize in trusts or probate, are well-versed in the finer details of wills, trusts, and guardianship decisions. They'll show you how to structure your estate to avoid probate and pay the least amount of tax.
Estate planning and trust attorneys know how to use the law in a way that is most beneficial to you and your beneficiaries.
If you start estate planning early, and you stick with the same firm, your attorney gets to know you and provides personalized advice. Your attorney also gets to know your family, which gives them further insights into which aspects of estate planning will suit you.
We all make mistakes. Sometimes the consequences are negligible, but sometimes they're significant. With an expert estate planning lawyer by your side, you can avoid the most common mistakes, including the following:
Be specific if you name your favorite cousin in your will. Use her full name and be clear about what it is that you're leaving her. Don't leave it open to interpretation.
This is especially important where stepchildren are concerned. Stepchildren aren't natural beneficiaries, like adopted and biological children. You may love them like your own, but unless you specifically enter their full names and designate their share in assets, they could be left out entirely.
Contingent beneficiaries are the people or entities (like a charity) that will inherit an asset should your primary beneficiary have passed away. It's important to name as many contingent beneficiaries as necessary for your estate.
Don't name one of your children as the beneficiary on all your retirement accounts and policies. You may think they'll share with their siblings, but don't take it for granted. There might be an unrelated spat between the two of them, which leads to decisions made in anger, or spite. They may be regretted and amended, but it's best to avoid the situation in the first place.
Moreover, a named beneficiary isn't obliged to share assets. If there are tenuous relationships between your children, this is where they'll suffer. In some cases, this could result in contestation and even more animosity.
You must very clearly state if you want assets distributed per stirpes. If you aren't clear then your estate will be distributed in the default manner, which is typically per capita.
Almost every family has one person who recklessly spends money. Name that person the beneficiary of your retirement account and all your hard-earned money will be frittered away.
It's better to put the money in a trust for that person and then appoint a responsible trustee who will administer money or assets in a judicious manner.
Getting your estate planning attorney's input here is important because it's tricky ground. You can leave your retirement accounts to a minor, but not directly. A trust is suitable in this instance.
You might not be doing your nephew with special needs a favor by naming him on the beneficiary form. Many people with special needs get government benefits, but your gift could put them in a situation where they no longer qualify for benefits. Even a marginal change can worsen their circumstances. Your estate planning lawyer will set up a trust instead.
There are plenty of stories of millionaires who left their entire fortune to their cats. You might think that's a good idea because you're not fond of your family or you don't have any family left, but it's not.
Instead, make provision for them in your will or a living trust. Just appoint a fellow animal lover as your pet's trustee.
Your family may make certain assumptions about your will. If your son assumes he's going to inherit the family business, but you want to leave it to your daughter because she's more business savvy, you need to discuss it with both of them.
Special circumstances aside, talking to your family about your estate plan is generally a good idea. There's no need to go into detail but a frank discussion will go a long way to providing your family with peace of mind.
It's never too early to develop an estate plan. One of our estate planning attorneys in Orange County will help you keep your plan up to date over the years and ensure that it remains clear about your wishes, especially if you want to go with per stirpes distribution to ensure your grandchildren aren't left out of your will.
To book a consultation and get your estate planning going, request a free estate planning consultation at 949-867-4818 at Parker Law Offices today!
If you have a beneficiary with a substance abuse problem, you may be concerned about leaving money to them, but with the help of an Orange County estate planning attorney, you can add provisions to your estate plan to limit that beneficiary’s access to their inheritance.
Creating an estate plan gives you the chance to make important decisions about what happens to your assets after your death. It is also possible to provide a more practical provision that will protect the beneficiary from wasting their money by establishing a special trust that will fund only their necessities.
If you’re aware that a beneficiary of yours has substance abuse issues, it’s in that person’s best interest for you to limit their access to funds. A sudden large distribution from a trust could quickly be spent on drugs, enabling your beneficiary's addiction and potentially allowing them to squander large amounts of money.
Someone with substance abuse issues might not have the capacity to make wise decisions about money in other areas of life, either, and may not be equipped to handle your investments or other assets included in the trust.
If you want to avoid this outcome, you have options other than leaving this person out of your will entirely. Instead, you can use a trust to limit their access to funds and prevent them from using their inheritance to fund their substance problems. That way, you can support your family members without letting them use your money on self-destructive behaviors.
When people think of estate planning, they typically think of wills before anything else. However, a trust can be very effective for passing assets on to your beneficiaries.
For one, there are potential tax benefits, depending on the type of trust you use. Using a trust also allows for an immediate transfer of assets to your beneficiaries, which allows them to avoid probate, legal fees, and long waits.
Trusts also give you, the grantor, the ability to set many stipulations and provisions that affect how assets are distributed to the beneficiaries. In this way, you can continue to protect your beneficiaries even after you pass away.
The use of a trust can also limit your beneficiaries’ access to their inheritances in order to protect the wealth. People facing substance abuse issues often don’t have the judgment to manage their funds wisely.
Estate planning allows you to limit access to an inheritance until your beneficiary has a change in lifestyle, such as entering rehab or maintaining sobriety for an extended period of time. Putting an inheritance in a trust makes it easier to manage and grow your wealth while also protecting it from misuse.
A provision in your trust can limit how assets are distributed to your beneficiaries. Provisions can require that beneficiaries complete certain tasks before they receive an inheritance, such as completing college.
When you are dealing with someone who abuses substances, you can direct their inheritance into a special trust designed to protect them from themselves. This trust will keep the money safe and prevent your beneficiary from accessing cash and valuable assets.
Another approach you could take is to include a provision that will directly take care of the beneficiary’s primary needs directly. This entails giving instructions regarding their inheritance which would flow right into a special trust that will cover their care and basic needs.
A probate attorney in Orange County can sit down with you and make sure that your trust will cover any essential bills your beneficiary needs. Instead of allowing your beneficiary to access cash and make those payments themselves, a trustee will make payments directly to third parties, such as a landlord, medical provider, or other institution.
This provision will prevent the beneficiary with substance abuse issues to squander the money or use it to harm themselves further. Some of the basic necessities that are often overlooked when one is suffering from substance abuse issues include paying basic utilities like rent, electric and water bills, as well as cell phone bills.
Establishing trust with this provision will also make it easier for them to complete larger monthly payments such as car payments and insurance. If you are actively undergoing a rehab program or seeking mental health care, the provision will cover all medical bills and insurance for continuous care.
It’s important to note that the beneficiary does not have control of the funds meant to cover their needs and overall medical care. A person is named a trustee to pay the bills and other payments for the person’s benefit and care until they reach full recovery.
You can include incentive provisions to their trust as well. This will allow distributions from the trust fund to reward sobriety or other positive behavior. Restrictive provisions can also end distributions in the event of a relapse. However, provisions need to be detailed and thorough, because it can be a challenge to determine if a person is abusing drugs or not.
A legal professional with expertise in trusts can help you write a provision that is legally sound and gives your trustee a clear plan of action. Trust assets can then be disbursed or managed by a skilled trustee, who handles them according to the terms you specify when you set up the trust.
A trustee plays an important role in this type of trust. They will need to work closely with the beneficiary to track their drug use or recovery. The trustee may also need to perform special tasks, like administering drug or alcohol tests to check your beneficiary’s sobriety.
Though it may be tempting to choose a family member to fill this role, some prefer to use an impartial third party, like a bank or a professional trustee. An experienced trustee can also potentially oversee investments and maintain assets; it all depends on your preference.
However, when your beneficiary has a substance abuse problem, it’s important that the trustee is able to look at the situation honestly and limit the beneficiary’s access to funds when necessary. Choosing a reliable trustee can give you peace of mind and ensure that your beneficiary is taken care of financially as much as possible.
Our law offices can help you create an estate plan and add provisions that will protect your beneficiaries. We specialize in the estate planning of all kinds, and we can help you put limits on trust distributions.Â
5 reasons to hire an estate planning attorney at Park Law Offices means ensuring people who need help with estate plans, trust administrations, probate matters, and other related matters are met with utmost professionalism and years of expertise. schedule a free estate planning consultation today and learn more about estate planning services at Park Law Offices.
