By Staci Yamashita-Iida, Esq.
Oftentimes my clients, most of whom are Japanese and Japanese American, hesitate to ask questions during our meetings. They feel ashamed of their inquires, fearing that they come off as being unintelligent or ignorant (which is definitely not the case!).
After speaking to many families, I began to notice a trend of similar questions. They would ask, “What happens if I do this?” Or, “What happens if I do that?” As a result, I began taking down a list of frequently asked questions posed by my clients. I figure if two or three people are thinking about these types of things, others are bound to be curious as well.
Accordingly, following is the first installment of “What Happens If … ”
… I handwrite a Last Will and Testament before I go on vacation. Is it valid?
A few years ago, a family friend came to see me to get her estate plan drafted. She had been meaning to get it done for years and years, but she never got around to it. When I asked her what finally motivated her to come in, she said it was because she had went on vacation with her entire family and realized if the plane went down, she had no legal documents in place to specify who would inherit her assets. So before she left, she printed out a fill-in-the-blank will template that she found online and taped it to her fridge. Thankfully, she returned home safely, but that fear was the push she needed to finally get things done.
In this situation, the question that usually arises is whether a “vacation will” has any legitimacy. Is it valid? Probably (assuming all of the legal requirements were met). Is it enough? Probably not. If you own a home, a last will and testament does not necessarily save your family from the legal headache of the probate process. A more secure form of estate planning is to have a living trust prepared. Proper planning is always key.
… I refinanced my house. Does anything need to be done with my living trust?
Many financial institutions will ask you to take your home out of your living trust before you refinance. Once the refi occurs, there are three possibilities: 1) the financial institution immediately puts your home back into the trust; 2) the financial institution waits until the loan is paid off before putting your home back into the trust; or 3) the financial institution does not put your home back into your trust.
If you experience possibility #1 or #2, then your home should be properly funded at the time of your passing. However, if you experience possibility #3, then your Successor Trustee may be in for a bit of a problem. Time, effort and money will be spent to ensure that your beneficiaries still receive the property.
If you’re worried about possibility #3, there are a few simple remedies. You can quickly check your property tax bill to see if the word “Trust” or “TR” appears next to your name. If so, chances are your home is in your trust (though it’s not 100 percent conclusive).
To be safe, I would recommend doing a title search to confirm that the last vesting deed shows that the home is, in fact, in your trust. Your Estate Planning attorney (or even your realtor) should be able to assist you with this task.
… What if my executor, successor trustee, power of attorney, etc. dies before me?
If you created your estate plan 20-plus years ago, your children may have been too young for you to name them as your executor; you may have appointed siblings, friends or a financial institution instead.
If you chose an executor that has aged with you, then there’s a chance that you’ll outlive that person. What happens then?
In some cases, your estate plan will provide for that situation. For example, your last will and testament may name sister Sue as your executor, but if she predeceases you, then nephew Neal serves as the alternate.
It’s always a good idea to review your Estate Plan periodically to refresh your memory as to who your alternates are. One of my clients named her close friend and next-door neighbor as her executor. Years later, she retired and followed her children to another state. When it came time to update her living trust, she was surprised — she had completely forgotten that she had chosen her neighbor for the role. They hadn’t been in contact for years, and she didn’t even have a correct telephone number or address for her.
Additionally, if your children are old enough to act as executor now, you may want to make modifications to your Estate Plan to appoint them instead. Reviewing your Estate Plan every so often is a great way to ensure that your wishes are correct and up to date.
Questions will always arise when you create your Estate Plan. As I mentioned, people tend to have the same ones, so please do not hesitate in asking them — you’ll never regret putting your mind at ease. As I collect more frequently asked questions, a second installment of “What Happens If … ” will emerge. Stay tuned for more!
Staci Yamashita-Iida, Esq. is an Estate Planning attorney at Elder Law Services of California. She can be contacted at (310) 348-2995 or staci@elderlawcalifornia.com. The opinions expressed in this article are the author’s own and do not necessarily reflect the view of the Pacific Citizen or JACL. The information presented does not constitute legal or tax advice and should not be treated as such.
