Blog

Planning for Liquidity

Liquidity is an important consideration in the estate planning process. Upon your death, your family will be met with many expenses, such as burial costs, debts, and taxes. Your estate should be arranged in a way such that there is adequate assets to liquidate to cover the expenses. Most people cover the immediate liquidity need by purchasing life insurance policies.

credit-squeeze-taxation-purse-tax-46242The key to understanding liquidity at time of death is the immediate nature of the expenses. For example, if the deceased is the sole provider for the family, then drawing down cash from a checking account for burial expenses may be possible, but it may leave the family with no cash for groceries and recurring bills and expenses.

Additionally, the estate should not rely on the liquidation of assets to meet expense needs. The forced sale of assets rarely meets the hopes of the family. For example, people go to estate sales and garage sales to get good deals on items that need to move. Fair market value is a foreign concept for the immediate liquidation of assets in an estate sale.

 

-BDR

– – – –

Brian Russ is an estate planning attorney in West Sacramento, Yolo County, California. Call today to schedule a free estate planning consult: (916) 750-5155.

Originally posted in January 2018.

Case Review: Estate of Shellenbarger – How A Deadbeat Dad Can Get A Windfall Payday

If you don’t have will, then your personal belongings will be disposed of according to the relevant statute in place at the time of your death. This is called intestate succession. Lelsley Shellenbarger died at the age of 42 without a will. Lesley died in California, so his property passed according to California’s Probate Code.

pexels-photo-256621In California, intestate succession is governed in part by Section 6402 of the Probate Code. Section 6402(a)-(b) provides that if the person dying has no issue (children, grandchildren, etc.), then the property passes to the person’s parent(s). The Probate Code does not dictate how the property should be passed to the parents of if any exclusions apply.

Lesley Shellenbarger passed away without any children, and both of his parents survived him, so all of his property thereby had to pass to his parents, Lesley’s father left the family when Lesley was very long and, according to Lesley’s mother, his father did not pay any child support. Per modern colloquialism, Lesley’s father might be known as a “deadbeat dad” (see Urban Dictionary).

Despite effectively abandoning Lesley, Lesley’s father was still his natural parent and his parental rights were never terminated. Therefore, upon Lesley’s death, his father was entitled to a share of Lesley’s estate.

Estate of Shellenbarger illustrates the importance of drafting a will to avoid an undeserving person from receiving a share of your estate upon your death. A simple will that expressly disinherits a deadbeat parent or deadbeat dad could be sufficient, depending on the circumstances.

Estate of Shellenbarger is cited as 169 Cal. App. 4th 894 (2008).

-BDR

– – – –

Brian Russ is an estate planning attorney in West Sacramento, Yolo County, California. Call today to schedule an estate planning consult: (916) 750-5155.

Originally published on February 10, 2018.