How to Fairly Distribute Assets of an Estate

How to Fairly Distribute Assets of an Estate

Planning your estate is never easy, and you may have a lot of questions. From personal belongings to money to real estate, there are several steps you can take to ensure that your affairs will be in order for your family when the time comes to distribute assets. You must determine what to leave, to whom, and the best way to distribute those belongings. There are four basic methods of asset distribution:

• Gift assets before your death.
• Establish a trust during your lifetime.
• Distribution of assets after death through a will.
• Distribution of assets after death outside of a will.

Based on your unique financial situation, each method will have its advantages and disadvantages. It may also be possible to combine these methods in order to accomplish your goal. No matter what you decide to do, you should discuss your options of distribution with an attorney that is knowledgeable in estate law to ensure that everything is set up correctly.

Asset Distribution Options

Once you have made a decision on how to distribute your assets, your next step is to determine who your beneficiaries will be and how you want to leave them your property. This is a personal decision and only you can make it. After all, these are the people that are important to you.

To Have a Will or Not to Have a Will

Making a will is a surefire way to ensure that the people you wish to inherit assets from your estate will actually do so. If there is no will, then the law of intestacy will come in and dictate how your estate gets distributed. If this happens, there is a chance that the decisions made by a probate court may not reflect what you ultimately would have wanted. If you are interested in what happens to an estate after someone dies without a will, check out this blog that details the process for California.

Leaving Everything to Your Spouse

If you wish to leave everything you own to your spouse, there are a couple of ways to accomplish this that will depend on the laws of your state. The first possibility is joint tenancy. This can be a complex option, but might be exactly what your estate needs. Joint tenancy allows for the surviving spouse to inherit all property outside of the will. Holding property as joint tenants avoids the probate process at the time of your death. However, it does not avoid probate at the later time of death of the surviving spouse.

The second option is a type of will that has been termed the “I Love You” will. This is a simple document that leaves all assets to the surviving spouse and then, for example, to the surviving children. Some common language designed to accomplish this may be something like: “Upon my death, I leave my entire estate to my spouse, and upon the death of my spouse, our assets go to our children.”

But, neither a joint tenancy nor a simple will that leaves everything to your spouse will ensure protection to your children. This is because your spouse could either spend or lose all the property, or might remarry and lose control of the assets. These situations could leave your children with no part of your estate whatsoever.

For couples who have divided their property ownership equally between themselves, a complex will is a great option. In this case, the will directs property, typically real estate but not personal residence, to the children with lifetime use and enjoyment for the surviving spouse during his/her lifetime.

Children from a Previous Marriage

What if you have children from a previous marriage and you want to make sure part of or all of your assets go to them? You can have this done in several different ways.

You may use your will and be specific of which gifts or shares of the estate go to them. You should also be mindful that this type of gift will bypass your spouse and, in some circumstances, may lead to family conflict.

Another option is setting up a trust. Trusts are often the best way for cutting financial ties between a current spouse and grown children from another marriage. One type of trust that is often used is known as a qualified terminable interest property (or QTIP). A QTIP is used to transfer assets to children from previous marriages. What this basically does is provide support for your surviving spouse during his or her lifetime, but then controls the distribution of the estate after your spouse’s death.

If you worry that your spouse will outlive the assets set aside in the trust (QTIP), you are able to stipulate the annual income from the residual go to him or her. Setting up a trust like this with a residuary stipulation probably will not eliminate all the tension that can arise in the family once you are deceased, but it may ultimately help remove confusion.

Equal Distribution to Your Children

What would happen if you passed away without a will and had children but no surviving spouse? In most cases, your estate would be divided equally between your children. If this is not what you want, then you need to make a will that clearly states what parts or percentages of your estate should go to each individual. For example, you may have three surviving children but feel that one child has a greater financial need than the other two. In such a scenario, it would be possible to leave 50% of your estate to one child and 25% each to the other two.

Your Parents Survive You

If you want any of your assets to go to your parents, it is important to make a will that expresses this desire. If there is no will set up, the court will most likely transfer a third or half of the assets in your name to your spouse and the rest over to your children. Depending on the state you live in, half of your assets may go to your surviving parent if you have no children. If your will specifies which parts of your estate you would like to go to your parents, it would also be a wise choice to have alternate beneficiaries in case your parents do not survive you.

Distributing Personal Belongings

Often, after someone passes away, the separating and sharing of personal items can become an emotionally involved issue amongst potential heirs. Personal possessions like jewelry, dishes, or other belongings may carry individual significance to each of your loved ones. It is possible to create a will that takes these considerations into account and specifies which items will be handed down to particular people. Otherwise, this task is often left up to the surviving family to decide and may become an unpleasant and contentious process. Consider the personalities involved among your potential heirs before deciding to let them fend for themselves after your death.

No matter how you look at it, planning your estate is never an easy task. It is best to talk to an attorney who specializes in estate law. It is also important to discuss your options with your family. Doing so could ensure that there are no surprises later and maximize the possibility that everyone will be content with your wishes.

This blog has focused on the creation of a will, but there are several other important documents to set up in a comprehensive estate plan. If you want more information, schedule an appointment with Ventura Estate Planning Attorney Dan Higson or check out his California estate planning checklist here.

Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC is a debt relief agency pursuant to 11 U.S.C. 528(a)(4) and assists individuals, families, and businesses file for bankruptcy relief under the Bankruptcy Code.  This website is a communication under California Rule of Professional Conduct 1-400.  No legal relationship is created by the use of this website and no legal advice is provided.  No guarantee or warranty is provided that your case or matter will achieve any particular result and testimonials and endorsements provided on this site do not constitute a guarantee, warranty, or prediction about your matter or case. This communication is made on behalf of Hathaway Perrett Webster Powers Chrisman & Gutierrez, APC and DANIEL A. HIGSON, State Bar No. 71212 is responsible for its contents.  All information contained on this website may be factually substantiated by a credible source, including data from the United States Public Access to Court Electronic Records (PACER) system.  Detailed data and information is available on request.

Payless ShoeSource Files Chapter 11 Bankruptcy

Brief History of Payless ShoeSource

Payless ShoeSource is an American discount shoe retailer based in Topeka, Kansas. Cousins Shaol and Louis Pozez established the company in 1956. The stores became more widespread in the 1980’s as a result of its Pro Wings brand. These shoes were notable for the use of Velcro instead of shoelaces. Recently, the company has established over 4,400 locations in more than 30 countries.

As of 2012, Blum Capital and Golden Gate Capital privately own Payless ShoeSource. Unfortunately, the company has struggled in the following years. In 2016, it closed all of its stores in Australia. This destroyed around 730 jobs. On April 5, 2017, Payless ShoeSource filed for Chapter 11 bankruptcy. As a result of the reorganization, the company decided to close over 400 locations within the United States. The closures hit the West Coast hard, since nearly 50 of these failed stores were in California. The timing of store closures depended upon each location. A complete list of Payless ShoeSource closing store locations can be found here.

Chapter 11 Reorganization

By filing for Chapter 11 bankruptcy, Payless ShoeSource will attempt to reorganize the company in order to have a stronger footing going forward. The company plans to reduce its debt by 50% and lower the interest payments. According to Payless, lenders have agreed to pay up to $385 million to keep the rest of the stores operational.

Modern Retail Store Struggles

When asked about the bankruptcy case, Payless ShoeSource Chief Executive Paul Jones stated, “This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify.” In the modern age, many brick and mortar retail stores are seriously struggling. Shoppers tend to make purchases online or at discount outlets. Even discount stores such as Payless ShoeSource are failing to keep up.

2016 and 2017 have been full of bankruptcies and store closures for many companies. Clothing companies are also having problems staying open. Teenage clothing store Wet Seal attempted Chapter 11 reorganization in 2015. However, it completely failed by 2017, closing all locations and terminating all employees. The Limited filed for Chapter 11 bankruptcy in early 2017 and decided to close all brick and mortar locations. The company will continue to provide online sales, but many jobs were lost in the process.

With the rise in online sales and so many stores closing across the United States, it’s hard to imagine a revival of brick and mortar stores and shopping malls in the future. Many of the businesses that want to remain successful will have to adapt to the changing sales environment of the 21st Century. Hopefully Payless ShoeSource can use this Chapter 11 reorganization to find a place for itself in modern retail business.

RadioShack’s Rollercoaster History of Boom and Bankruptcy

The Beginning

RadioShack is an American chain of electronics stores that has experienced both highs and lows throughout its long history. Brothers Theodore and Milton Deutschmann founded it in 1921 to sell ham radio equipment. The company originally consisted of a single location for retail and mail order sales. RadioShack issued its first catalogue in 1939, and even extended into the high fidelity music market by producing its own private label products with the brand name Realist. Throughout its history, the company constantly attempted to rebrand itself, changing its name, slogan, management, and purpose time after time.

Bankruptcy and Changing Strategies

By the 1960s, RadioShack had expanded its mail order business and had 9 stores. Soon the company fell on hard times, however, and had to file for bankruptcy. Luckily for RadioShack, entrepreneur Charles Tandy took an interest and bought the company for $300,000 in 1962. Tandy Corporation was interested in expanding their leather goods company into other hobby businesses. In order to make RadioShack viable again, Tandy ended the mail-order business and credit sales and dropped most of the upper management positions. Tandy led the ailing company through a period of growth and success in the ‘60s and ‘70s before his death.

In the ‘80s, RadioShack attempted to edge into the IBM PC compatible market. This didn’t last long though, as the company struggled against rivals like Dell. In 1982, people were moving towards owning their own phones instead of renting them after the breakup of the Bell System, and RadioShack jumped on board by offering 20 different models of home phone.

In the ‘90s, RadioShack once again attempted to change, this time having to restructure over 200 store locations. The company wanted to shift away from components and cables towards more mainstream consumer electronics. It continued to do so into 2015 by selling things like cell phones. In 1994, the company began to offer inexpensive, non-warranty repairs for over 45 brands of electronics. In 1998, RadioShack claimed to be the largest seller of consumer telecommunications products in the world. By 2011, smartphone sales accounted for over half of the company’s revenue.

2015 Chapter 11 Bankruptcy

Unfortunately, management issues and tough competition led to several bouts of restructuring, purging of management, and financial instability after the turn of the century. In 2005, a switch in the wireless providers that RadioShack featured caused a huge decline in profits. This along with management problems led to several cuts in 2006. Nearly 500 stores closed down, and stock prices plummeted. The company also attempted to cut overhead expenses by laying off a fifth of its headquarters workforce.

Since 2006, RadioShack has continued to close more stores and lay off more people. At the beginning of 2015, the company faced over $1 billion in debt and filed for Chapter 11 bankruptcy in the hopes that another restructuring would save it. Late in 2015, the bankruptcy plan was approved, and RadioShack began the liquidating funds to pay off its creditors. The chain was forced to close nearly all of its remaining 4,000 stores.

In September of 2015, many problems still faced RadioShack’s Chapter 11 plan. Standard General LP and Wells Fargo claimed that RadioShack was obligated to pay the substantial legal fees accrued from lawsuits with junior creditors, estimated at around $15-20 million. This stipulation would have probably led to the collapse of all of the creditor repayment plans. Luckily, the junior creditors decided to drop the lawsuit instead.

2017 Chapter 11 Bankruptcy

As part of the restructuring plan, Standard General bought RadioShack’s brand and saved around 1,700 stores. Standard General, Wells Fargo, and other banks provided $9.4 million in cash and savings to a liquidation trust. As part of the RadioShack restructuring, the company has switched focus to pushing the Sprint brand for mobile phones.

Standard General created an affiliate company called General Wireless to operate RadioShack’s brand and assets along with Sprint. Together, Sprint and General Wireless opened co-branded stores under Sprint’s name that sold products from both brands.

In March, 2017, RadioShack was forced to close 187 more stores. This accounts for about 9% of its remaining 1,943 locations. This move affected around 1,850 of the company’s 5,900 employees. The company again filed for Chapter 11 bankruptcy, and stated plans for closing many of its locations that are shared with Sprint.

Sprint also paid $12 million as a “wind down payment” to General Wireless. In return, Sprint received the leases for 115 stores and the equipment from 245 other locations where Sprint was primarily in control.

Time will tell if Standard General and General Wireless will manage to salvage anything from RadioShack’s remains. For now, the company retains control of over 1,000 locations. If the struggles continue, this longstanding household name might go down in history as yet another company that failed to keep up with the speed of modern technological advances.

Motorcycle Accident Attorney

Riding a motorcycle is a wonderful sensation, but there are a lot of dangers associated with them. Because of a motorcycle’s size, other drivers have a harder time seeing them on the road. If a collision occurs, motorcycles provide almost no protection from injury. If you or a loved one have experienced a motorcycle accident as the result of another person’s negligence, you may be entitled to compensation for damages. By using the services of an experienced personal injury attorney such as Dan Higson, you will increase the likelihood of getting the most compensation possible.

Common Motorcycle Accident Causes

Even if you’re the safest driver in the world, accidents can happen to you. It’s impossible to control all of the factors around you, including road conditions and other drivers. Here are some of the most common causes of motorcycle accidents:

Inattentiveness. Inattentive drivers account for a large amount of motorcycle accidents each year. Inattentive drivers are often responsible for head-on collisions and left-turn collisions. They happen when a driver is not fully aware of their surroundings. With the ever-increasing presence of smart phones in drivers’ hands, this hazard has become even more commonplace.

Recklessness. Many collisions occur because of reckless driving. Examples of this include drivers going over the speed limit or driving under the influence of drugs or alcohol.

Bad communication. It’s important to be able to communicate with other drivers around you. Whether you’re riding with a group of motorcyclists or determining whether another car is taking a turn in front of you, communication, such as properly using signals, is key to surviving on the road.

Road hazards. Hazardous road conditions include loose gravel, potholes, uneven asphalt, and other issues. State and local governments maintain most roadways, but government agencies often fail to address problems on the road. Unaddressed road hazards are responsible for many motorcycle accidents.

What to Do When in a Motorcycle Accident

When a motorcycle accident occurs, it’s important to understand that the other driver and the insurance companies are not necessarily on your side. Because of this, there are several important steps to take after an accident occurs to protect your personal and legal safety. If you are seriously injured, wait for emergency personnel to arrive on the scene and worry about legal issues after your safety is ensured. If you are able to, acquire further information. Below, are some steps to keep in mind after you’ve been in a motorcycle accident:

1. Seek medical attention. Even for minor injuries, it’s important to get official medical records that can be used to support your claim. Sometimes injuries do not become apparent until days or even weeks after an accident, so have these injuries checked out as soon as they develop.
2. Gather information. Accurate, detailed information is crucial for your case. If safe to do so, take photographs of the crash site, the condition of your motorcycle, and your injuries. Get the contact information of the other drivers involved and any witnesses.
3. File a police report. If possible, call the police to the site of the accident. By cooperating with the police and making a statement, you provide even more evidence for your case. Make sure to inform the police of any witnesses that might have relevant information.
4. Hold off on repairs. Hold off on making any repairs to your motorcycle until an insurance claim is opened. If you preserve the damages done to your motorcycle throughout the examination process, it will make it easier to determine what compensation is needed. If this is not possible, keep detailed records of all repairs that are done.

California Motorcycle Laws

California has a few unique motorcycle laws that don’t necessarily exist in other states. In California, lane-splitting is legal. Lane-splitting is when motorcyclists ride between the lanes of traffic when it has slowed down. This practice is risky to the motorcyclist, so be careful whenever you attempt to do so. When lane-splitting, the motorcyclist can be ticketed if they drive recklessly. Thus, it is advisable that motorcyclists travel at a safe speed when lane-splitting so that he/she can react to sudden movements by the surrounding cars. Surrounding cars are not allowed to impede motorcycles between lanes, and they can be punished if they attempt do so.

Motorcyclists should also be aware that any negligence on their part, such as unsafe operation of your motorcycle while lane-splitting, could be used as evidence to reduce their recovery in a subsequent trial. This is because California uses the “comparative fault” system to offset an injured person’s recovery for any percentage of negligence that is attributed to their own conduct. For example, if a person suffers $50,000 in damages and is determined to be 50% at fault for their own accident, they would only be entitled to recover $25,000.

More up-to-date information can be found online at the California Department of Motor Vehicles motorcycle handbook page.

If you have been injured in a motorcycle accident caused by another person’s negligence, let Dan Higson help you get through the paperwork and insurance companies and get you the compensation you deserve. It’s possible to receive compensation for a variety of damages such as medical expenses, motorcycle repair, lost wages, therapy, disability, and pain and suffering.

Getting yourself and your motorcycle back in peak condition after an accident can be expensive. Having an experienced personal injury attorney on your side can mean the difference between fully covering your accident costs and paying everything out of pocket.

Call Ventura Attorney Daniel A. Higson at 805-644-7111

Is It Time For Bankruptcy?

Deciding whether or not to file for bankruptcy is a stressful and complex situation that is further burdened by social stigmas. Nevertheless, bankruptcy might be the right choice for you. Many people believe that by filing for bankruptcy, they will never be accepted for loans again, but this is not true at all. Your bankruptcy stays on your credit report for 10 years, but you can get credit again within that time period, depending on your pre-filing payment history, income, debt-to-income ratio, and how well you pay off your debts after the filing.

Now that you know that filing for bankruptcy doesn’t doom your credit forever, the question remains: should you file for bankruptcy? Here are some general details to take into consideration when making your decision.

Can You Avoid Bankruptcy?

Firstly, you should sit down and take all aspects of your finances into consideration. You may find that you can alleviate your financial issues by fixing some problems or scaling back on certain purchases. Even though bankruptcy isn’t a permanent detriment to your credit, it is still a huge undertaking that shouldn’t be initiated unless you are sure it’s your best option.

What Type of Bankruptcy Should You Choose?

If you intend to go through with a bankruptcy, there are two major types that are commonly filed by individuals: Chapter 7 and Chapter 13. Chapter 7 bankruptcy can discharge most of your debt within a few months, but you may lose some of your personal property to help pay off the debt. Chapter 13 bankruptcy consists of a repayment plan based on your income, which helps you pay off your debts over the course of several years.

It’s important to know whether or not you quality for the type of bankruptcy you intend to file. If your income is too high, you may be denied from Chapter 7 bankruptcy and be expected to pay off your debt. On the other hand, if your income is too low, you might not be able to manage a repayment plan. There are many other deciding factors, so make sure to consult an experienced bankruptcy lawyer to help you determine eligibility.

Which Debts will be Forgiven?

Some types of debts cannot be wiped out no matter what type of bankruptcy you file. Some examples of non-dischargeable debts include alimony, child support, and tax debt. Most of the time student loans also can’t be discharged. If the majority of your debt will not be wiped out by bankruptcy, there is little point in filing.

What will Happen to Your Assets?

Before you file for bankruptcy, you need to take your assets into consideration to make sure that you don’t lose something that puts you into a worse situation than before. If you have a lot of equity invested in your home, you may lose it if you file for Chapter 7 bankruptcy. However, filing may alleviate the strain from your mortgage when other debts are forgiven. If your income allows for Chapter 13 bankruptcy, your mortgage will be incorporated into your repayment plan.

The fates of your other assets depend on the circumstances. Only certain items are included in exemption laws, and this depends on your location. Also, if you put an asset such as a car or boat down as collateral on a loan, the creditor may be able to take the property even if you are filing bankruptcy. Make sure that you would keep what you need to survive after the filing.

What will Happen to Your Credit Card Debt?

Bankruptcy is often an effective way to discharge your credit card debt, but not all credit cards debts can be wiped clean. Check with a bankruptcy lawyer to ensure that your credit card debt is dischargeable. Some examples of situations where credit card debt is a problem during a bankruptcy filing are if you lied on your application or used the cards to an extreme extent.

What will Happen to Your Pension and Insurance Plans?

Most pension and life insurance plans are protected from bankruptcy proceedings. However, you should check before you file to make sure that this is the case for any plans you have, including 401k, IRA, or life insurance policies.

What Happens to Co-Signers?

You need to make sure that co-signers on your loans will not be left with your debt after bankruptcy wipes it clean from your record. If you go through a bankruptcy filing with co-signed loans, the people close to you who helped you get your loan may be stuck with the entirety of the remaining payments. In general, Chapter 13 bankruptcy protects co-signers, but Chapter 7 bankruptcy does not.

How will Bankruptcy Affect You?

Fear of social stigmas shouldn’t stop you from considering bankruptcy, but you should be warned that the process involved in filing for bankruptcy is invasive and demanding. You display your entire financial life to the court. If you file Chapter 7, you may lose some of your personal property. If you file for Chapter 13, your spending habits will be scrutinized for several years.

Taking the positive and negative factors into account, if you are still considering bankruptcy, it’s crucial to consult an experienced and certified bankruptcy specialist. Dan Higson, with Hathaway Perrett Webster Powers Chrisman & Gutierrez A Professional Corporation, is such a resource in the Ventura and Oxnard counties of California. He can help guide you along every step of the bankruptcy process, including your decision on whether or not to file in the first place. Call him today! (805) 644-7111