What are some common drafting techniques used in effective Wills and Trusts? (Part 1)
Drafting estate planning documents requires careful consideration of not only your current situation in life, but also how circumstances might change over the course of the remaining years you are alive. A well-drafted set of estate planning documents should carry out your wishes as they exist today and also provide enough flexibility to account for changes that may arise.
Your Will and Revocable Living Trust may be modified or revoked during your lifetime, so steps can be taken to update them if necessary. In fact, major life changes such as marriage, the birth of a child, or a death in the family are almost certainly times when you should be reviewing your estate planning documents.
Below are some of the things that an estate planning lawyer might consider as he or she is drafting your documents.
Sometimes people use words in a colloquial manner that don't necessarily match what they intended in their Will or Trust. For example, if a person states that they want their assets to "be distributed to their children," are they including step-children, adopted children, or foster children? Defining key terms can help to clear up any confusion after the person passes away.
Often people will specify a gift to a beneficiary, but fail to consider what will happen if the beneficiary isn't alive at the time the gift is to be made. Should the gift go instead to that person's children? If not, should the gift be given to someone else? It's always important to consider contingencies when it comes to gifts.
Gifts to Young People
One aspect that people often forget is that minors may be legally unable to receive a gift from your estate. Moreover, even if they could, it may not make sense to give substantial gifts to young people who are not mature enough to handle the responsibility. In such situations, one may want to provide that the gift is to be held by a custodian or in a special trust for the minor beneficiary until he or she is old enough to manage it themselves.
What if a beneficiary related to you died shortly after receiving the gift from your estate? In that situation, it's possible that the anti-lapse rules (found in California Probate Code Section 21110) would apply and the beneficiary's children would receive the gift instead. If that's not your intent, including a requirement that the beneficiary outlive you for a certain number of days in order to receive the gift can help avoid this outcome. Here's the text of California Probate Code Section 21110:
(a) Subject to subdivision (b), if a transferee is dead when the instrument is executed, or fails or is treated as failing to survive the transferor or until a future time required by the instrument, the issue of the deceased transferee take in the transferee’s place in the manner provided in Section 240. A transferee under a class gift shall be a transferee for the purpose of this subdivision unless the transferee’s death occurred before the execution of the instrument and that fact was known to the transferor when the instrument was executed.
(b) The issue of a deceased transferee do not take in the transferee’s place if the instrument expresses a contrary intention or a substitute disposition. A requirement that the initial transferee survive the transferor or survive for a specified period of time after the death of the transferor constitutes a contrary intention. A requirement that the initial transferee survive until a future time that is related to the probate of the transferor’s will or administration of the estate of the transferor constitutes a contrary intention.
(c) As used in this section, “transferee” means a person who is kindred of the transferor or kindred of a surviving, deceased, or former spouse of the transferor.
Thinking through the various permutations can be difficult for the uninitiated, and certainly gaining the perspective of a skilled estate planning lawyer will help avoid problems down the road.