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By Liza Horvath


Innovation Leads to Complexity in Estate Planning


“Back in the day,” as some say, estate planning was relatively straight forward. Parents may have been faced with the dilemma of a spendthrift child – do you give this son his inheritance outright knowing it will likely be spent in record time on fast women and even faster cars or, do you leave his share of the estate in trust to be doled out for his lifetime? If left in trust – a distribution plan that often causes feelings of resentment – who is going to be put in the unenviable position of trustee? Planning may also have included decisions about what charities do you benefit and to what degree. While undeniably important issues, the questions about spendthrift children, fast cars and favorite charities pale when compared to the complexity currently surrounding estate planning and distribution – and we have innovation to thank for these new challenges.


Way back when, law schools taught would-be lawyers about  the “fertile octogenarian” – a case in which an 80-year-old woman conceived and bore a child – underscoring the notion that an attorney should never do planning with the assumption that a couple of a certain age would have no additional children. That case is so passé.  


Couples now and with some regularity create and freeze embryos for the purpose of future offspring which leads to entirely new estate planning concerns for lawyers and, as an aside, a whole new adventure for divorce attorneys in “splitting family assets” when couples separate – but that fun topic is beyond the scope of this column. In planning for young couples today an attorney would be remiss if she did not ask if they had “genetic material assets” – referring to stored embryos and, if so, should one of the couple die what should be done with those assets. Most doctors’ offices that create and store embryos have agreements regarding the handling of embryos but your estate planning would – or should – discuss the inheritance rights of those embryos if they are born and under what circumstances they would have such rights.


For instance, in 2012 the U.S. Supreme Court considered and ruled on a case in which a woman was implanted with the embryos that she and her husband had stored – nine months after the death of the husband. When the (now) widow gave birth to twins, she applied for and received  the social security benefits that her children would be entitled to due to their father’s death. The Supreme Court considered the issue and upheld the granting of benefits ushering in new and albeit unending possibilities when it comes to income and estate planning.


The California Probate Code defines the "heirs of a decedent" as a child or issue of a deceased child (decedent's grandchildren), or a parent or issue of a deceased parent (the decedent's brothers/sisters) but, just when we thought things could not become more interesting, enter the three-parent child. Biotechnology has now made it possible to take the nucleus of one egg, insert it into the cytoplasm of another egg and then fertilize this combo with the sperm of yet a third person and  – walluh! – the three parent child.


Stay tuned – the term “descendant” and “ancestor” and the resulting inheritance rights has never been more interesting and, consequently, more of a legal quandary.

Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com










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