California Legal Implications: Asset Liquidity and Privacy in Estate Planning
A recent controversy involving Alyssa Milano defending a crowdfunding campaign for a former co-star highlights a critical misconception about wealth and financial planning. As detailed in a recent Yahoo Life article, Milano argued that public visibility does not always equate to financial stability. She noted that many actors face inconsistent income and lack the liquid assets required for end-of-life expenses, leading to public backlash when families turn to GoFundMe., Milano argued that public visibility does not always equate to financial stability. She noted that many actors face inconsistent income and lack the liquid assets required for end-of-life expenses, leading to public backlash when families turn to GoFundMe.
For California residents, this story underscores a vital lesson in estate planning: having assets is not the same as having immediate cash access when a tragedy occurs.
The Difference Between Net Worth and Liquidity
The debate highlighted in the article centers on the public’s confusion between “wealth” (owning things) and “liquidity” (having cash). In the legal world of California probate, this is a common issue for families of all income levels, not just Hollywood actors.
A person may own a home in Los Angeles worth millions or have significant intellectual property rights, yet pass away with very little cash in their checking account. If these assets are not properly placed in a Living Trust, they generally become frozen upon death. This means surviving family members cannot sell the house or access the accounts to pay for funeral costs, medical bills, or mortgages until the court grants approval—a process that can take months., they generally become frozen upon death. This means surviving family members cannot sell the house or access the accounts to pay for funeral costs, medical bills, or mortgages until the court grants approval—a process that can take months.
Avoiding the “GoFundMe” Approach with a Living Trust
The reliance on crowdfunding to pay for memorial services often stems from a lack of immediate access to funds. In California, if a person passes away with assets totaling more than $184,500 (as of 2024) and does not have a Trust, the estate must go through Probate..
Probate is a court-supervised process that is:
– Expensive: Statutory fees can consume a significant percentage of the estate.
– Time-Consuming: It often takes 12 to 18 months to resolve.
– Frozen: Assets are locked until the court appoints an administrator. Assets are locked until the court appoints an administrator.
By establishing a Revocable Living Trust, you allow your designated Trustee to access accounts immediately upon your incapacitation or death. This ensures that funds are available for funeral expenses and immediate debts without the need to ask the public for help. to access accounts immediately upon your incapacitation or death. This ensures that funds are available for funeral expenses and immediate debts without the need to ask the public for help.
Privacy vs. Public Scrutiny
The news story also touches on the discomfort of “optics” and public judgment. When families are forced to use crowdfunding, their financial struggles become a matter of public debate.
Probate is a public proceeding. Every document filed, including the value of assets, debts, and beneficiary information, becomes a public record. Anyone can look up the details of the estate. Conversely, a Trust is a private legal arrangement. The distribution of assets, the value of the estate, and the identity of beneficiaries remain confidential, protecting the family from prying eyes and potential fraud.
Planning for Inconsistent Income
Milano pointed out that many actors suffer from inconsistent income and a lack of residuals. This situation parallels the “gig economy” or entrepreneurship common in California. Estate planning allows for the structuring of assets to weather lean times.
Through proper planning, you can:
– Designate specific accounts for emergency liquidity.
– Utilize life insurance policies to provide an immediate, tax-free cash infusion to cover debts or estate taxes.
– Create sub-trusts to manage spending for beneficiaries who may not be financially savvy.
About This Case
California Probate and Trust, PC Can Help
Ensure your family has immediate access to funds and privacy during difficult times.
– Free consultations: (866)-674-1130
– Experienced California estate planning
– Schedule consultation
– Learn more: cpt.law
Legal Disclaimer
This article is for informational purposes only. Consult with a qualified California estate planning attorney for advice specific to your situation.