Estate Planning for Franchise and Multilevel Marketing Business Owners

Estate Planning for Franchise and Multilevel Marketing Business Owners

Franchise and multilevel marketing (MLM) businesses are often attractive because they offer people the chance to start a small business with a well-known brand and an established business model. However, they present different estate planning challenges than other types of small businesses because the rights and obligations of franchisees and multilevel marketers are spelled out in contractual agreements.

What Is a Franchise?

When you purchase a franchise, you are purchasing a unit from a company that is already established in a particular industry. As a franchisee, you are entitled to use the company’s business model, advertising resources, and products, and receive training and ongoing support from the company to enhance your chances for success. In return, you must adhere to specified business practices and standards. The cost of purchasing the franchise can be quite high, and there are typically also ongoing fees for support and royalty payments for the use of the brand name.

What Is an MLM Business?

In an MLM business, you benefit from having established products to sell and the use of the company’s advertising materials to promote them. You earn money by selling the company’s products and recruiting other sellers whose sales provide you with additional income. MLM businesses usually offer flexible schedules and do not require substantial initial costs, though the company may require a minimum monthly purchase of products. Those who have a large network of friends and acquaintances and are friendly and extroverted are more likely to succeed, as MLM businesses involve presentations of products to generate sales.

How Do These Business Types Impact My Estate Planning?

Unlike many other types of money and property you own, an interest in an MLM or franchise business may not automatically transfer to your beneficiaries, even if you include it in your will or trust. Further, if it is permitted to be transferred, it may be forfeited if your beneficiaries fail to meet certain contractual requirements. This is because the transfer of those interests is governed by the terms of the agreement you entered into with the franchisor or MLM company.

A franchise agreement typically imposes strict requirements on the transfer of a franchise business. For example, the person to whom the franchise may be transferred must apply for the transfer, and the franchisor (the person who sells the right to open and operate a franchise to another) usually has the right to approve or reject the transfer. Prior to granting approval, the franchisor will conduct background checks and personality tests, review financial statements, and even check if the transfer applicant is on the terrorist watch list. The proposed transferee must often agree to meet certain financial and operational criteria, attend required training, sign a new franchise agreement, and provide a personal guaranty. Thus, simply including a franchise business interest in your will or trust is likely insufficient to accomplish a transfer of your business interest to your beneficiaries.

MLM agreements may impose other requirements that could prevent your beneficiaries from receiving what you intend. An MLM contract may specifically state that the MLM interest may be inherited by an individual or trust pursuant to a will, trust, or state law. However, it may further state that the person who inherits the business interest must execute a new, separate agreement, fulfill all of the obligations under your contract, and abide by all of the company’s policies by promoting and supporting the product and motivating and training other distributors. If the beneficiary fails to do so, even immediately, the beneficiary may forfeit the right to receive commission payments based upon your years of work for the MLM company.

Review Your Agreement

If you have not done so already, carefully review your agreement to learn the contractual requirements for transferring your interest. It may be helpful to have your attorney review and discuss it with you to avoid any misunderstanding about your rights and obligations. In addition, provide a copy of the agreement to your estate planning attorney, so any desired transfer of your business interest can be incorporated into your estate plan. It is not uncommon to discover that the MLM business in which you have an interest has not addressed these issues in its contract. If that is the case, you may need to work with the organization’s leaders to encourage the creation of a company policy dealing with these end-of-life or incapacity issues.

Have a Family Meeting

If you are not sure if any of your children or family members are interested in taking over your business, a family meeting will help you to determine their level of interest and prevent conflicts after you pass away. In addition, interested beneficiaries must likely take certain steps to facilitate the transfer pursuant to the agreement; therefore, you should educate and prepare those beneficiaries in advance to maximize their chances of becoming a successful transferee. Alternatively, you may consider transferring the business interest during your lifetime or choosing another MLM distributor or franchisee to purchase your interest at your death if allowed by the terms of your business contract.

We Are Here to Help

If you have an interest in an MLM business or franchise, it is crucial to familiarize yourself with any provisions in the contract affecting your ability to transfer your interest to your beneficiaries, and a copy of the agreement should be provided to your estate planning attorney. We can help you determine your rights and obligations under the agreement and the best way to address your business interest in your estate plan. Please call us today at 818-285-2850 to set up a consultation. We are happy to meet with you by phone or video conference if you prefer.



Last evening the U.S. Senate passed a $2.2 trillion spending bill to support the economy.  Included in this bill are forgivable small business loans, a very important part of the bill, which will allow almost any business (self-employed and independent contractors are eligible) with less than 500 employees to borrow and to have that loan forgiven to the extent of a formula which includes payroll and healthcare costs.

The bill also includes FICA tax credits for employee retention, sick leave, and family leave.  Additionally, the bill allows a deferred employer side FICA taxes, where the business will be able to defer fifty percent (50%) of its FICA taxes (on the employer side only) till December 2021, and the other fifty percent (50%) till December 2022.

Moreover, the bill includes important income tax relief in the form of special penalty-free distributions from IRAs with repayment provision over three years, increased plan loan limits, and the suspension of the Required Minimum Distribution (IRD).

Further on the tax side, Congress is going to great extremes to free up Net Operating Losses (NOL), so that individuals that are losing money in their business in 2020 will be able to carry those losses back to earlier years to seek an immediate refund.

Critical Take-Away From The CARES Act

H.R. 748, SEC. 1102 Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

1) Payroll Protection Program/Loan (H. R. 748, SEC. 1102)

  • Allows a loan on a deferred basis for the covered period, which means the period beginning on February 15, 2020, and ending on June 30, 2020;
  • Basic Eligibility: Any business concern, non-profit, veterans organization or Tribal business; not more than 500 employees (generally);
  • Self-employed and independent contractors are eligible;
  • The loan can be used to pay: payroll costs, group healthcare benefits; employee salary, wages, commissions, or similar, payment of interest on any mortgage obligation associated with the business, rent, utilities, and interest on any debt obligations incurred before the covered period;
  • No requirement that business is not a le to obtain credit elsewhere;
  • Loans are nonrecourse – except if the proceeds are used for an unauthorized purpose;
  • No personal guarantee required;
  • No collateral required, but a good faith certificate will be required; and
  • General Loan Terms: Interest rate not to exceed 4%, 6-12 months of deferment including principal, interest and fees, and origination fees paid by SBA.
  • You can view a sample loan application by clicking the following

    —-> Paycheck Protection Program Application Form    &    Paycheck Protection Program Q&A

2) Payroll Protection Program/Loan (H. R. 748, SEC. 1106) – Loan Forgiveness 

  • The principal is forgiven in an amount equal to the following costs incurred during the covered period (2/15 – 6/30): payroll costs, mortgage interest associated with the business, rent, and utilities;
  • Loan Forgiveness Taxability – Any amount forgiven is excluded from gross income.

 3) Individual Tax Relief (H. R. 748, SEC. 2201)

IRC §6428 – 2020 Recovery Rebates for Individuals: Credit equal to the lesser of: (1) net income tax liability or (2) $1,200 ($2,400 MFJ); $500 for each qualified child (under §24(c)); credit reduced by 5% of the amount of AGI which exceeds $75,000 ($112,500 HoH; $150,000 MFJ); no credits for non-resident aliens dependents or trusts.

  • Rebates treated as 2019 payment;
  • No refund or credit shall be made or allowed under this subsection after December 31, 2020;
  • For those who have not filed a 2019 return, the rebates may be determined: (1) using the taxpayers’ 2018 return, OR (2) using the 2019 SSA-1099.

4) Individual Tax Relief – Retirement Plan Distributions (H. R. 748, SEC. 2202)

  • $100,000 “coronavirus-related distribution” exemption from §72(t) – 10% penalty;
  • A person: diagnosed with COVID-19; whose spouse is diagnosed with COVID-19; who experiences adverse financial consequences as a result being quarantined, furloughed, or laid off or having work hours reduced, being unable to work due to lack of child care, closing or reducing hours of a business owned or operated or other factors determined by the Secretary;
  • Distributions must take place in 2020;
  • Income from the distribution recognized ratably over a three year period;
  • The amount distributed can be repaid over a three year period;
  • Retirement Plan Loans: must apply within 180-days of enactment, limit increased from $50,000 to $100,000, and limit increased to 100% of the balance from 50%;
  • Temporary waiver of RMDs (H. R. 748, SEC. 2203): RMDs are generally not required in 2020, and taxpayers subject to the 5-year rule can “skip” 2020.

  5) Employee Retention Credit (H. R. 748, SEC. 2301)

  • 50% of qualified wages up to $10,000 ($5,000 credit);
  • Credit against employment taxes and is refundable; and
  • Reduced for credits in Section 7001 and 7003 of the Families First Coronavirus Response Act. 

 6) Delay of Employer Payroll Taxes (H. R. 748, SEC. 2302)

  • Payroll tax deposits delayed until the applicable date (employer-side only);
    • Applicable Date

12/31/2021: 50% of the amount due

12/31/2022: the remaining amount due

  • Exception for taxpayers which had ineptness forgiven by the SBA loan program;
  • Includes 50% of SECA taxes.

7) NOL Modification (H. R. 748, SEC. 2303)

  • 20-year carryforward NOLs before 1/1/2018;
  • Plus the lesser of: (1) all NOLs after 12/31/2017, OR (2) 80% of taxable income;
  • Denied excess business loss treated as NOL in the current taxable year for the purposes of determining carryovers (excludes losses from the sale or exchange of capital assets) – H. R. 748, SEC. 2304.

Talai Law Offices is a boutique law firm located mainly in the Los Angeles area providing estate planning and business planning legal services with tax planning in mind.  Please feel free to contact us at 818-285-2850.

Are Any of These 11 Mistakes Lurking in Your Estate Plan?

Estate Planning Mistakes

1) Lack of Healthcare and Disability Planning. The majority of deaths occur in hospitals or other institutions. Patients may be incapacitated to the point where they can no longer communicate their healthcare wishes. Advance Directives and a Healthcare Power of Attorney can identify healthcare proxy decision-makers, specify wishes for end-of-life care, and provide a formal plan to control financial and property matters.

2) No will or estate plan. Without proper planning, your estate may be tied up in probate court for months or years after your death, at a great emotional and financial cost to your family.

3) Lack of attention to digital assets. Without a plan for digital assets and social media, you may lose critical documents, photos, memories, and family records.

4) Lack of attention to your children’s possible future divorces or lawsuits. It’s not fun to think about, but if your children divorce or are sued at some point in the future, their inheritance may be decimated and end up in the hands of those you never intended. A trust can help protect your legacy and your children’s inheritance.

5) Lack of attention to the conscious transfer of family values. Comprehensive estate planning can include family meetings, a family mission statement, and custom planning for children.

6) IRA funds wasted. Retirement account beneficiaries often receive these account funds in a lump sum, creating the potential for a huge and unexpected tax bill. A standalone retirement trust (sometimes called an IRA trust) can protect these funds while still providing for your beneficiaries.

7) Chaotic record-keeping. Good planning is essential to make sure your heirs do not spend months or years trying to make sense of what you left behind. A comprehensive estate plan provides you with a framework for maintaining your vital legal and financial records.

8) Surviving spouse creditors and predators. If your surviving spouse remarries and then divorces, your estate could end up in the hands of people you never intended. Likewise, if your surviving spouse is victimized by financial predators – something increasingly common as the population ages – your family may discover too late that your legacy is gone. A trust can ensure family money stays in and benefits the family.

9) Family feuds over sentimental items. This problem can be avoided with a Personal Property Memorandum, which can account for tangible items like artwork, family heirlooms, and jewelry. In addition to the financial assets, your plan should include careful consideration of important family items.

10) HIPAA privacy lockout.If incapacity leaves you unable to communicate, family members—even your spouse—may not be able to access your medical records because of HIPAA privacy rules. Executing a HIPAA authorization ensures access to medical information.

11) Outdated Estate Plan. You may have a will and estate plan already. Does it reflect your current circumstances, goals, and needs? A comprehensive review by an estate planner ensures that your estate plan reflects your current situation, desires, and needs.

My office will be more than happy to counsel and advise you regrading your estate plan.  Please call us at (818) 285-2850.

Three Key Questions to Ask When You Seek an Estate Planning Attorney

Hiring an estate planner is an important decision as you are seeking advice on how to protect your loved ones once you are gone. For this reason, it is critical to hire an attorney with good knowledge of estate planning and how to use the tools available to create the best plan for your particular needsBe sure to ask questions of the lawyer before deciding whether or not you will hire him or her.

Here are three key questions to ask when looking to hire an estate planner.

  1. How does the attorney’s estate planning process achieve your goals? Just like every family’s needs are different, you should make sure the attorney you hire does not have a one-size-fits all approach when putting together an estate plan for clients. This is because what may work well in one situation may not in another. Be sure that the attorney you hire familiarizes him or herself with your specific situation and custom tailors a plan that will meet your goals and needs.
  2. What are the advantages and disadvantages of the various planning tools for your situation? A knowledgeable estate planning attorney will be able to explain the benefits and risks of the different estate planning tools – such as wills, trusts, pre or post nuptial agreements, and healthcare proxies, among others – available to you under the law. He or she should be able to explain this in terms that you can understand, and explain how these tools work in your specific situation.
  3. How does the attorney take into account other assets and will he or she make sure your plan works with all of them? This question is particularly important if you already have other assets in place such as life insurance, retirement plans, among others. A well crafted estate plan will incorporate other assets so that they help to offset income taxes, equalize inheritances, or leave a legacy. A whole-picture approach to your estate plan is the best way to make sure your family’s needs are met.

Estate planning is a very personal aspect of one’s life and addresses sensitive issues. Making sure you choose the right experienced attorney can make all the difference when your family members needs your estate plan the most. We would be honored to discuss these questions and your needs with you. Give us a call today – (818) 992-2901.

3 Liability Planning Tips for Physicians

You probably know that the practice of medicine is a profession fraught with the risk of liability.

It’s not just medical malpractice claims either (although those are certainly scary enough). It’s the entire scope of risk from being in business, including employment-related issues, careless business partners and employees, and contractual obligations, as well as personal liabilities.  Unfortunately, in our litigious society, these liability risks are not unique to physicians, although physicians are a frequent target.

Below are three liability planning tips for physicians to protect their hard-earned money.

Tip #1 – Insurance is Always the First Line of Defense Against Liability

Liability insurance is the first line of defense against a claim.  Liability insurance provides a source of funds to pay legal fees as well as settlements or judgments. Types of insurance you should consider are:

  • Homeowner’s insurance
  • Property and casualty insurance
  • Excess liability insurance (also known as “umbrella” insurance)
  • Automobile and other vehicle (motorcycle, boat, airplane) insurance
  • General business insurance
  • Professional liability insurance
  • Directors and officers insurance

Tip #2 – State Exemptions Protect a Variety of Personal Assets from Lawsuits

Each state has a set of laws and/or constitutional provisions that partially or completely exempt certain types of assets owned by residents from the claims of creditors.  While these laws vary widely from state to state, in general, the following types of assets may be protected from a judgment entered against you under applicable state law:

  • Primary residence, referred to as “homestead exemption.”  California provides the following homestead exemptions: $50,000 (Single), $75,000 (Family), and $150,000 (65 or older) Cal. Civ. Proc. Code. § 704.730
  • Qualified retirement plans (401Ks, profit sharing plans, money purchase plans, IRAs)
  • Life insurance (cash value).  California provides a limited amount of protection for cash value of the policy, $12,200 ($24,400 if married) (amount adjusted every 3 years). Cal. Code of Civ. Proc. §§704.100(b) and §703.150
  • Annuities (same as life insurance cash value if annuity contract considered “life insurance” and not “investment” In re Payne, 323 B.R. 723 (9th Cir. BAP 2005)
  • Prepaid college plans
  • Section 529 plans
  • Disability insurance payments
  • Social Security benefits

Tip #3 – Business Entities Protect Business and Personal Assets from Lawsuits

Business entities include partnerships, limited liability companies, and corporations. Physicians who are business owners need to mitigate the risks and liabilities associated with owning a business, and real estate investors need to mitigate the risks and liabilities associated with owning real estate, through the use of one or more entities. The right structure for your enterprise should take into consideration asset protection, income taxes, estate planning, retirement funding, and business succession goals.

Business entities can also be an effective tool for protecting your personal assets from lawsuits.  In many states, in addition to the protections offered by incorporating, assets held within a limited partnership or a limited liability company are protected from the personal creditors of an owner.  In many cases, the personal creditors of an owner cannot step into the owner’s shoes and take over the business.  Instead, the creditor is limited to a “charging order” which only gives the creditor the rights of an assignee.  In general, this limits the creditor to receiving distributions from the entity if and when they are made.

Final Advice for Protecting Your Assets

Liability insurance, exemption planning, and business entities should be used together to create a multi-layered liability protection plan.  Our firm is experienced with helping physicians, professionals, business owners, board members, real estate investors, and retirees create and—just as important—maintain a comprehensive liability protection plan.  Please call our office if you’d like to make sure you have the right protection in place.  Our office number (for all three locations – Woodland Hills (main office), West Los Angeles, and Irvine) 818-992-2901.

Is Your Estate Plan as Stale as Last Week’s Turkey Sandwich?

5 Reasons to Update Your Estate Plan

Estate plans are almost magical: they allow you to maintain control of your assets, yet protect you should you become incapacitated. They take care of your family and pets. And, if carefully crafted, they reduce fees, taxes, stress, and time delays. Estate plans can even keep your family and financial affairs private. But one thing estate plans can’t do is update themselves.

Estate plans are written to reflect your situation at a specific point in time. While they have some flexibility, the bottom line is that our lives continually change and unfold in ways we might not have ever anticipated. Your plan needs to reflect those changes. If not, if will be as stale as last week’s ham sandwich and can fail miserably.

If anything in the following 5 categories has occurred in your life since you signed your estate planning documents, call us now to schedule a meeting. We’ll get you in ASAP to make sure you and your family get protected.

  1. Marriage, Divorce, Death. Marriage, remarriage, divorce, and death all require substantial changes to an estate plan. Think of all the roles a spouse plays in our lives. We’ll need to evaluate beneficiaries, trustees, successor trustees, executors/personal representatives, and agents under powers of attorney.
  2. Change in Financial Status. A substantial change in financial status – positive or negative – generally requires an estate plan update. These changes can be the result of launching, winding down, or selling a business; business and professional success; filing bankruptcy; suffering medical crisis; retiring; receiving an inheritance; or, even winning the lottery.
  3. Birth, Adoption, or Death of a Child / Grandchild. The birth or adoption of a child or grandchild may call for the creation of gifting trusts, 529 education plans, gifting plans, and UGMA / UTMA (Uniform Gifts to Minors Act / Uniform Transfers to Minors Act) accounts. We’ll also need to reevaluate beneficiaries, trustees, successor trustees, executors/personal representatives, and agents under powers of attorney.
  4. Change in Circumstances. Circumstances change. It’s a fact of life – and when you’re the beneficiary or fiduciary of an estate plan, those changes may warrant revisions to the plan. Common examples include:
  • Children and grandchildren attain adulthood and are able to serve in trusted helper roles
  • Relationships change and different trusted helpers need to be named
  • Beneficiaries or trusted helpers develop overspending or drug / gambling habits
  • Guardians, executors, or trustees are no longer able (or no longer wish) to serve in their preassigned roles
  • Beneficiaries become disabled and need a special needs trust to receive government benefits
  • Guardians for minor children divorce, move to a new state, or are, otherwise, no longer appropriate to serve
  1. Changes in Venue. Moving from one state to another always warrants estate plan review as state’s laws differ. Changes may be needed to ensure that you’re taking full advantage of – and not being penalized by – your new state’s laws. This is also true when purchasing a second home outside of your state.

Estate Plans Are Created to Help, Not Hurt, You

Old estate plans get stale just like old sandwiches do. You wouldn’t rely on last week’s ham sandwich for lunch; please don’t rely on your estate plan from yesteryear. If you’ve experienced any of the changes we’ve mentioned in this article, it’s time to come in and chat. We’ll review your estate plan and make sure you and your loved ones are protected.


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The Tax Cuts and Jobs Act – What did not change

What did not change?

The new Act encompasses many new and updated provisions including the new code §199A, addressing the taxation of income generated from pass through entities.  However, the followings are sections that were unchanged:

  • No Change to Capital Gains Rates – qualified dividends from C-Corp. are taxed at capital gains rates 15% for many taxpayers, and 20% for high-income taxpayers.
  • No Change to Net Investment Income Tax (NIIT) – qualified dividends from C-Corp. may be subject to the NIIT.
    • 3.8% surtax on investment income for taxpayers with modified adjusted gross income exceeding $200,000 and married filing joint exceeding $250,000 (these thresholds are not indexed for inflation).
  • No Change to Health Savings Accounts (HSA) Deduction –  $3,450 for individual coverage and $6,900 for family coverage, $1,000 catch‐up for those over 55 for those with High Deductible Health Plans (HDHP) through employer, purchased on the open market, or through the health exchanges.
  • No Change to IRA and Qualified Plans Deductions, but Roth conversions are repealed.

If you have questions about Business Planning & Estate/Trust Planning, call Attorney Ali Talai @ 818-992-2901 or visit our website @

Keeping Control with a REVOCABLE LIVING TRUST

Revocable Living Trust

There are several different kinds of trusts.

An irrevocable trust is frequently used in tax planning. After it has been set up, you usually cannot change it or remove assets that have been transferred into it.

A testamentary trust is created after you die by a provision in your will. It can be used in tax planning or to manage assets for minors or other beneficiaries. However, a testamentary trust does not avoid probate and it provides no protection if you become incapacitated because it is part of your will.

The kind of trust we are discussing in this handout is called a revocable living trust (to keep things simple, we will often refer to it from now on as a living trust or trust).

What is a revocable living trust?

A revocable living trust is a legal document that, like a will, includes your instructions for what you want to happen to your assets after you die. But, unlike a will, a living trust can avoid probate at death. It can prevent the court from controlling your assets if you become incapacitated. And it can give you, not the court, control of the assets you leave to your minor children and/or grandchildren.

How does a living trust avoid probate and prevent court control at incapacity?

When you set up a living trust, you transfer assets from your individual name to the name of your trust, which you control – such as from “John and Mary Smith, husband and wife” to John and Mary Smith, Trustees under trust dated (month/day/year of trust).”

Technically, you no longer own anything, so there is nothing for the courts to control when you die or if you become incapacitated. The concept is very simple, but this is what keeps you and your family out of the courts – even if you own assets in other states.

Do I lose control of the assets I put into my living trust?

Absolutely not. You keep full control. As trustee of your trust, you can do everything you could do before, including buying, selling, investing, renting, and etc. You can make changes or even cancel your trust; that’s why it’s called a revocable living trust. In fact, the Internal Revenue Service considers putting assets in a revocable living trust to be a “non-event” because you can take them out at any time. Nothing changes but the names on the title. And, as you’ll see in the next few pages, you’ll actually have more control with your assets in a living trust that you do now.

How does a living trust work?

When you set up a living trust, you become the grantor – the person whose trust it is. If you are married, you and your spouse can be co-grantors, or you can be grantors of your own separate trust. Only you, the grantor, can make changes to your trust. That’s how you keep control.

You will need to name someone, called the trustee, to manage your assets in your trust. You can be your own trustee. If you are married, you and your spouse can be co-trustees. As long as you are a trustee of your trust, you file the same income tax returns as you do now, using your own social security number.

Can I name someone else as my trustee?

Yes. You could name an adult son or daughter, another relative or a good friend to be your trustee or co-trustee. You could also name a corporate trustee; that’s a bank or trust company that manages trust assets.

However, even if you name someone else as trustee, you’re still in control. As long as you are competent, you can replace your trustee at any time if you don’t like the job they’re doing for you, because you are the grantor of your trust.

What happens if I become incapacitated?

If you have named someone else as your trustee or to be a co-trustee with you (for example, your spouse or a corporate trustee), they will continue to manage your financial affairs according to your trust’s instructions for as long as necessary. If you recover, you automatically resume control. If you are the only trustee or if your co-trustee is unable to act (for example, if your spouse is also incapacitated or has died), the successor trustee(s) you personally selected will step in and act for you.

What happens when I die?

Your trustee or co-trustee essentially has the same duties as an executor. He/she collects any income or benefits, pays your remaining debts, sees that tax returns are filed, and distributes assets according to your trust’s instructions. If estate tax planning is involved, he/she will work with your team of professionals to make sure everything is done properly. All of this is handled efficiently and privately, with no court interference. Again, your successor trustee will preform these duties if you are the only trustee or if your co-trustee is unable to act.

How do I know my successor trustee will do what I want?

A trust is a binding legal contract, and trustees are fiduciaries; by law, they have a legal duty to follow your trust’s instructions and act in a prudent (conservative) manner at all times for the benefit of your beneficiaries. If your successor trustee were to abuse his/her duties by not following the instructions in your living trust, he/she could be held legally liable.

Choose your successor trustee(s) carefully – they have a lot of responsibility. Consider how busy your candidates are with their own affairs, how far away they live, and how capable they are. Talk to them and see if they would be willing to serve. If you have any doubts or concerns, you should probably consider a corporate trustee.

By the way, a successor trustee(s) has no control or say in your affairs until he/she steps in at your incapacity or death. And, of course, you can change your successor trustee(s) at any time until you become incapacitated or die.

When will my beneficiaries receive their inheritances?

With a living trust, that’s up to you. Without one, it would be up to the courts. One of the most powerful benefits of a trust is that you can keep control over who will receive your assets, and when and how they will receive them (this is one area where you definitely have more control when your assets are in a trust).

Since the court is not involved, assets can be distributed as soon as your successor trustee can wrap up your final affairs and serve the required notification (California Probate Code §16061.7). Or assets can stay in your trust, managed by the person or corporate trustee you can chosen, until your beneficiaries reach the age(s) you want them to inherit. For example, some parents prefer to give children or grandchildren their inheritance in installments so they have more than one opportunity to use the money wisely.

Your trust can continue longer to provide for a loved one with special needs without disturbing valuable government benefits. If you are concerned about a beneficiary’s spending habits, you could have the trustee provide periodic income and keep the rest of his or her inheritance in the trust. You could also supplement the income of a child who wants to teach, be a pastor or missionary, or do other worthwhile but typically lower-paying work.

Even if you feel that your beneficiary would handle the inheritance well, you may want to keep the assets in the trust to protect them from creditors, current spouses, ex-spouses, potential lawsuits, and future death taxes. Your trustee can make distributions to the beneficiary as needed, but the assets that remain in the trust would be protected from these creditors and predators and, if invested well, could even help provide for future generations.

Most people would like to leave their children or grandchildren enough so they can do anything they want, but not so much that they do nothing. With a trust, you can do that and more.

How does a living trust let me control assets for minor children?

As long as the assets stay in a trust, you prevent the court from taking control of the inheritance at your death or incapacity.

If you have minor children, you will name a guardian to raise them if something happens to you. You will also name a trustee to manage the assets and provide money for expenses until each child reaches the age(s) you want him or her to inherit. The trustee can be one or more individuals, including the person you name as the guardian, and/or corporate trustee (nominating one person as trustee and guardian may seem convenient, but the person you want to raise your kids may not be your best choice to handle the money). The court still has the right to approve your choice of guardian, but it cannot control the inheritance. The trustee can automatically step in at your death or incapacity and follow your instructions, with no court interference.

If you are divorced or separated: Since you control who will manage the assets, an irresponsible “ex” may have no incentive to even get involved. And if the other natural parent isn’t interested, the court may go along with your choice of guardian.

Grandparents: You can name a trustee (perhaps one of the child’s parents or a corporate trustee) to manage the assets until each child reaches the age(s) you want him/her to receive the inheritance. You may also want to inform their parents about a living trust to prevent court control if they were to experience incapacity or an early death.

If you have questions about Living Trust or other estate planning tools, call Attorney Ali Talai @ 818-992-2901 or visit our website @