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Dealing with 'incomplete transfers' in probate

Northern California has enjoyed a major economic boom in recent decades. The development of the technology industry has significantly increased wealth for many individuals in the 48 counties that make up the region. Along with it has come some increase in awareness about strategies for smoothly transferring that wealth for the benefit of others.

Solid estate planning is important, not just for bequeathing funds but also for sustaining business viability. Legal methods for achieving those ends and minimizing tax liability do exist. Proper use of the available tools can be complicated, however, and mistakes can lead to unexpected difficulties, such having an attempted transfer or gift declared "incomplete."

The main reason for leveraging the various legal instruments is to protect assets from dissipation during probate upon your death. If the process is done incorrectly, the assets involved will be subject to probate by the court along with the rest of your estate.

A transfer might be declared incomplete in any number of circumstances. For example, if an asset holder writes a check to a recipient but dies before the check is cashed, the funds might revert back to the estate. Likewise, if you create a revocable trust and then die, the intended recipient might be left in the cold. The legal theory for this in both instances is the idea that the person making the gift while alive, retained control of the funds.

Another issue that an incomplete transfer can raise is if the gift was meant to be private. If handled through probate, the transfer becomes a matter of public record. The assets might eventually get to the intended recipient, but it could also trigger legal challenges from others who feel they deserve something.

If you have the wherewithal and desire to distribute your wealth to loved ones or charitable entities, you don't want the largesse scuttled because of an incomplete transfer determination.

Source: FindLaw, "Probate and Estate Administration: Dealing With Incomplete Transfers," accessed on Sept. 13, 2017

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