Case Examples

Don’t Let This Happen to You

Below you will find examples of cases and problems that can be avoided by obtaining the help of a professional estate planning attorney like Daniel Kisner. 

Happy Married Couple Signing Contract — Newark, CA — Daniel Kisner Law

Wills & Trusts Created During Second Marriages

Anita and Francisco were 35 years old when they decided to get married. Both of them had been previously married and divorced and each had two children from their prior marriages. Francisco had been living in an apartment before he got married; he did not own a home. However, Anita owned a home and that is where Anita and Francisco chose to live after getting married. Not long after getting married, they each created their own will, in which each left all of his/her assets to his/her spouse and if such spouse was no longer alive, half of his/her assets to one spouse's children and the other half to the other spouse's children. For example, if Anita died first, Francisco would inherit all of Anita's assets. Then, under their current wills, when Francisco died, half of his assets, which then included the assets inherited from Anita, would go to his children and the other half to Anita's children. Anita died first and Francisco inherited all of Anita's assets. Francisco later created a new will that left all of his assets to his own children. He did not include Anita's children in his will. Therefore, when Francisco died, his children inherited everything and Anita's children inherited nothing.

The unintended results of this scenario could have been avoided if Anita and Francisco had consulted with an estate planning attorney. An estate planning attorney would have advised the couple to create a revocable living trust that provided the following: on the death of the first spouse that dies, all of that spouse's property would go automatically into an irrevocable trust for the surviving spouse's benefit but that on the survivor's death all of the assets of the irrevocable trust would go to the first deceased spouse's children. Because such a trust is irrevocable, it could not be changed by Francisco after Anita's death. This would have ensured that Anita's children would inherit their mother's estate upon Francisco's death and that Francisco would be able to live in Anita's house until he died.

Beware of Trust Mills

A living trust for $399.00. Sounds too good to be true. Well it usually is. Some companies or firms put on seminars at local hotels or meeting rooms, advertising living trusts at low prices. Usually an attorney will give the presentation and offer you a special deal if you sign up that day. You fill out a questionnaire form and give them your check, which are sent to their computer processing center, usually in another city. Data entry clerks input your information and a computer-generated form living trust is printed based on your responses. Sometimes the final documents are delivered to you by their representative, who may be an annuity sales person, who will then try to convince you to convert your savings, IRAs, 401Ks, stocks, bonds and other investments to annuities with the promise that these annuities will give you a good return on your money, protect your estate from creditors and exempt your assets from Medi-Cal requirements if you need long term care in a nursing home. Such promises are rarely true, but these annuities generate large commissions that are split with the trust mill that you hired to do your trust, and subject you to huge early-withdrawal penalties if you cancel the annuity contract before a certain specified date. That’s where they make their money. Don't rely on these assembly lines to create the best estate plan for you.

Providing for
Disabled Children

Michael and Linda had just celebrated their 30th wedding anniversary when they were killed in a car accident. They left behind two adult children, Daniel and Rebecca. Daniel was disabled at birth and is currently receiving Supplemental Security Income (SSI) and Medi-Cal (California Medicaid) benefits. SSI and Medi-Cal are government programs that help only those who have very limited income and resources. Michael and Linda died without a will. Following the laws of intestate succession, a probate court divided Michael and Linda's estate in the following way: Half of the estate to Daniel and the other half to Rebecca. Daniel's inheritance disqualified him from receiving further SSI and Medi-Cal benefits because his inheritance put him above the income/resource levels that he must stay below in order to continue receiving government benefits. Daniel, therefore, had to either spend down his inherited assets back to the poverty level so that he could reapply for the SSI and Medi-Cal benefits he had been receiving or form a special pooled special needs trust where his inheritance would be managed by a stranger, who also manages the pooled assets of other special needs beneficiaries.

Creating Estate Planning Documents on Your Own

Jamal and Vanessa have been married for many years and have acquired a net worth of about $3,000,000, including the value of their residence, other real estate, money in bank accounts, retirement accounts and investment accounts. Jamal discovered that he could save hundreds or thousands of dollars by creating certain estate planning documents that avoid probate and eliminate or reduce estate taxes. Having been well educated, he decided to save a few thousand dollars legal fees and prepare his own estate planning documents. He purchased a "home-lawyer" software package where he obtained a trust form that he filled out and signed. The trust form that Jamal and Vanessa signed provided that upon the death of the first spouse to die, the entire combined trust estate would be divided equally into a revocable "survivor's trust" or "A" Trust and an irrevocable ""decedent's trust" or "bypass trust"  or "B" Trust.


Jamal died in his late 60's. After his death, Vanessa consulted with an estate planning attorney who advised her that the trust form Jamal and Vanessa signed is referred to as an "A-B" trust, in which the initial one trust estate must be divided when the first spouse dies into a revocable Survivor's Trust or "A" Trust and an irrevocable Decedent's Trust or Bypass Trust or "B" Trust. The A-B trust was commonly used when the the estate tax exclusion amount was historically very low (i.e., less than $1,000,000) to provide a method or reducing or eliminating an estate tax on the death of the surviving spouse.  The A-B Trust provisions were also used to provide a level of protection to each spouse's designated trust beneficiaries because a portion of the original trust estate attributable to the deceased spouse will be allocated to an irrevocable Decedent's Trust and the beneficiaries of that trust cannot be changed by the surviving spouse. However, the mandatory splitting of the one trust into two trusts on the death of the first spouse creates additional expenses and administrative burdens that may not be necessary for estate tax purposes, with the large estate tax exclusion amounts now in effect under current law.


The attorney also advised her that according to the trust they signed, now ½ of Jamal and Vanessa's trust estate must be transferred to the irrevocable decedent's trust sometimes called the "B" Trust or the "Bypass Trust," that will be subject to additional reoccurring annual expense since there will now be two different trusts instead of just one trust and that Vanessa now has restrictions on what she can use the assets in the Bypass Trust for. The attorney explained that under the Tax Cuts and Jobs Act of 2017, the estate exclusion amount in effect for those dying in 2023 is $12,920,000, and that amount would be increased each year by an inflation factor until January 1, 2026, at which time the exclusion amount for those dying in 2026 or later would drop to about $6,400,000 under the current law.


The attorney pointed out that the estate tax law was changed effective on January 1, 2011 to allow the surviving spouse to claim the "portability" of Deceased Spouse's Unused Exclusion Amount (called the "DSUE Amount"), to add the DSUE Amount to the surviving spouse's own exclusion amount for both the surviving spouse's lifetime gifts and estate, by timely filing a federal estate tax return for the first deceased spouse even if such estate tax return is not otherwise required. By doing so, the surviving spouse can increase the surviving spouse's "gift and estate tax exclusion amount" from $12,920,000 to as much as $25,840,000 for those dying in 2023, subject to annual increases based on inflation, until January 1, 2026 when the estate exclusion amount will drop to about $6,400,000. In many cases, the surviving spouse's claiming the portability of the DSUE Amount can be used for estate tax planning instead of using the mandatory splitting of the one trust estate into the "A" Trust and the "B" Trust to avoid the expenses and burdens of the A-B Trust and the resulting loss of certain tax benefits.


Therefore, the trust that Jamal drew up and they signed imposed unnecessary expenses and financial and tax complications on Vanessa for the rest of her life, when there was no estate tax benefit to be obtained since the estate tax law was changed effective January 1, 2018 that avoided the payment of an estate tax when Vanessa died based on the likely value of her estate when she died.


The unintended consequence of Jamal's actions could have been avoided by seeking the help of an estate planning attorney before Jamal died. Jamal could have taken the documents he created to an estate planning attorney who would have reviewed them and informed Jamal of the consequences of such documents. An estate planning attorney would also have been able to recommend a different estate plan for Jamal that better met his goals of avoiding probate and estate taxes. The money that Jamal would have spent on a consultation with an estate planning attorney would have been insignificant compared to the expenses and complications that his wife had to endure as a result of creating estate planning documents on his own.


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