Estate administration and wills and trusts are complicated subject matters. A will and trust are options for those who want to appoint heirs or name beneficiaries of the trust. Last wills and testaments, for example, are often used to determine inheritance, and who gets to inherit what. (Keep in mind, however, that accounts or property that has a transfer-on-death designation or a payable on death beneficiary should not be included in these documents. Seek legal advice from a competent Calabasas estate planning attorney to clarify if this applies to you).

Right of First Refusal on Certain Property

Clients often ask estate planning attorneys if their estate plan can include a right of first refusal (ROFR) on certain real property or personal property. As with most cases, an estate planning tool could be useful for such concern, if proper procedures are done and the right provisions are included. Both a will and revocable living trust (unlike an irrevocable trust) may be amended or revised, as long as there is no incapacity to make decisions. As such, a ROFR provision may be something you need to consider including in these estate planning documents.

Creating a will

Will & Trust BasicsWills allow you to appoint an executor of the will (or personal representative) who shall be responsible for administering and distributing accounts and property not held in trust, dealing with proceedings in the probate court, and settling what is owed to a creditor. Additionally, under state law, as long as there is testamentary capacity, a last will and testament may be used in naming guardians for a minor child. However, since this estate planning document only becomes effective when you die, a last will and testament is not useful if you want to avoid guardianship and conservatorship proceedings during your lifetime. They can, however, help with matters related to ROFR.

Establishing a trust

A revocable living trust is a legal document used to name a spouse, child, grandchild, or any reliable loved one as trustee. Challenging trust in the courthouse is more difficult than contesting a will. Additionally, it is often ideal to create a trust if you plan on drafting protective sub-trusts, which will allow a beneficiary of the trust to receive some level of enjoyment and asset protection. 

The probate estate of a decedent can be tedious and probate costs are high, and trusts become extremely useful for avoiding probate issues. Keep in mind that transferring accounts and property into the trust account is making sure that they are transferred from your name to the name of the trust. As such, by setting up a trust and appointing a trustee instead, your loved ones need not go through the probate process at the time of death. An experienced Calabasas estate planning attorney can explain how to avoid probate procedure and paperwork through such legal documents, and how they can help with ROFR.

Knowing how ROFR factors into your estate plan

ROFR is generally applicable to estate property that a surviving spouse or loved one would not have wanted to be sold outside the family (after the death of the original owners) but is above the share of estate assets that should be allotted to him or her.

Depending on the circumstance, a possible solution to this is for testators or grantors to provide the heir concerned with a ROFR. This solution will ensure that as long as his or her offer to buy the property in question meets the conditions of the ROFR, he or she will have the opportunity to purchase particular estate assets at the time of death of his or her parents.

Seeking legal advice from a reliable Calabasas estate planning lawyer

Pursuant to the relevant statute under estate law, a local attorney can create a ROFR provision in the wills or living trust documents of the testator or grantor. In the actual estate planning documents, the provision could read something like this:

“I instruct my trustee or estate executor (or personal representative) to provide, after I pass away, ________ with the right to purchase ________ under the same terms and conditions made by an independent third-party offer on the property.”

To likewise protect the interests of other heirs or family members, the provision would also usually specify that: “If _______ fails to exercise that right and enter into a contract to purchase the property after ___ number of days, this right terminates. After which, my trustee or executor may accept offers from an independent party.”

If you need an attorney from a law firm specializing in these issues, give us a call. Consult with a trusted Calabasas estate planning attorney at Moschetti Law Group for your estate planning needs.

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