Legal Question in Wills and Trusts in California

Re: Joint Account vs. Beneficiary

Making you the beneficiary (presumably POD account) will allow you to get the funds on the survivor's death. However, there might be some technical difficulties due to the diverse residences. Making you a joint owner, with right of survivorship, would be better, but also gives you access to the funds prior to their deaths. This could be good or bad, since you could wipe out their assets or have your creditors make a claim against the account. I recommend that they create a trust, funded with their assets, and naming you as a successor trustee to them and you as the secondary beneficiary (to get the assets after the survivor dies). If you have children, the trust document can be worded to protect the assets from creditor claims (either your parents or yours), allow them to control investments and distributions while alive and competent, continue on their deaths for you and your children (or just go to you if you have no children). An attorney familar with trusts should be consulted. The use of a trust will eliminate probate, provide easy access to the assets and negate any problems of the diversity of locations. Call me if you wish to discuss this at 973-377-3313.

Re: Joint Account vs. Beneficiary

First of all bank investment counselors are individuals who have the bank's interests many times more at heart then in the depositor's interests. The minimum then any one individual may have before a federal tax is levied in this year is $1 million. Therefore, not only is there no tax upon your parents that they do not even have to fill out form. California has no death tax as long as there is no federal estate tax ergo no tax. I cannot see a problem realistically because you're in New York but I don't know what bank you are dealing with an I don't know if they have any kind of weird rules for that purpose. My advice would be right to the bank and get, in writing back, a letter that details what if any problems would exist once your parents passed away for you to obtain those funds. The big problem was icy used a may want you to go through probate. If that's the case my advice immediately would be at the funds out of the bank, start a living trust immediately for them with you as the ultimate beneficiary and place the funds into what ever investment accounts in the name of the trustees of the living trust. Nothing really changed realistically in terms of the ability to use the money for them. All changed on paper only with the same zero tax effect but, ultimately you in control. For instance, if both of them became so disabled the could not care for themselves the trust would allow you to act in their place to be able to write checks on their behalf, for their care, without having to go into court in started conservatorship. I practice elder law on hand for many years and if you wish to consult with me I am in the San Francisco Bay Area 925 -- 945 -- 6000

Re: Joint Account vs. Beneficiary

Unless your parents own real estate also, it appears that they will avoid state requirements for probate (court proceeding for distribution of property), provided the beneficiary endorsement on their accounts is "payable on death" to you (the money would not go through their estate, but directly to you). However, there may be issues--like if one dies before the other, if creditors are involved, if they own ANY real property, etc. For these reasons, a listing of their estate should be provided to a California attorney who can advise them. The fact that you personally are in New York will not affect their estate directly, but you may have to travel to California to handle distribution. It is VERY wise for your parents to have at least simple wills, leaving their intentions in writing. An estate is probated in California regardless of whether there is a will--it is the amount of money in the estate that matters--so leaving your written intentions is always a good idea. Also, its a good idea to state their intentions regarding health decisions by the statutory form and to make a power of attorney to cover their affairs WHILE THEY ARE STILL ALIVE but unable to handle their financial affairs--otherwise a conservatorship may be needed. Finally, federal estate taxes apply to estates over $1 million--probably no worries there.

Re: Joint Account vs. Beneficiary

If I understand your facts, I actually think their bank gave them the right advice. Pay on death accounts (i.e. designated beneficiaries) avoid probate. Putting a child on as a joint tenant is bad because if the child refuses to cooperate, it can only be reversed in a lawsuit plus they make the account vulnerable to your creditors. The taxes are levied at death and only in excess of a $1mil, so the account should be fine. Nevertheless, if your parents are nervous, they should review the matter with an attorney

Re: Joint Account vs. Beneficiary

your facts are not too clear but in California assuming you are implying forming a trust you will have no significant tax advantages unless estate is over 675,000.