The Dayton Law Firm

Desert Caballeros Ride

Hidden somewhere in the middle of this is the firm founder Rich Dayton.  He attends the annual Desert Caballeros Ride, who just published their pictures from this year’s trip.  Since Congress hasn’t decided to shed light on what the future tax laws will be yet, we decided to take it easy and let you know what we do in our spare time.


If you are interested in joining Rich, more information can be found here:

Terry Pratchett and the Steamroller: a lesson in unusual requests

Terry Pratchett, famed author of the ‘Discworld’ series of satirical fantasy novels, passed back in 2015. He may have been a citizen of the United Kingdom, but watching his estate teaches a good lesson on how proper planning is done. He had a will which specifically handled is multi-million-pound estate. However, more importantly, he talked his last wishes out with his loved ones to ensure even his most unusual requests are honored.

As a prolific author, Mr. Pratchett had several books he was working on at the time of his death. Since he had fair warning, he made sure to tell his friends what he wanted to happen to those unpublished works. On August 25, 2017, that wish was fulfilled thanks to the help of a bonafide steam-powered vintage steamroller. As fellow author and friend Neil Gaiman had told the press previously, Mr. Pratchett had asked that all his computers and work “…be put in the middle of a road and for a steamroller to steamroll over them all.” The idea being the author did not want anyone trying to finish and publish what he had still been working on. Fortunately, sufficient instructions and liquidity was available to be sure the odd desire was fulfilled in excruciating detail.

Requesting such a bizarre task may be on your wish list, and if so, you can learn from this tale. First, and most important, is to make sure the wishes are not a secret. Telling your loved ones and additionally getting it in writing is a great way to know it will be on their minds. Second, making sure there is enough liquid funds set aside as needed can be the difference between a hope and reality. While loved ones may be willing to go out of pocket to see ashes spread on a faraway beach, it is much more likely if there is a provision that the cost be paid for by your trust or estate. Those two together can ensure almost anything happen after your passing. It may seem like a far-off situation, but as we discussed last year, even David Bowie was not buried where he wanted because no one knew about his request until he was already in the ground. (read more here:

For more details, including pictures of the steamroller, see BBC’s report on the rolling here:

Estate Planning in the Digital Age

At this point, most people have had the odd experience of realizing one of your Facebook friends is deceased, and one of his or her loved ones are posting on that account. More concerning is realizing who may have access to your online accounts with private information, such as those associated with your bank or hospital. This is why planning for digital estates is a topic of increasing importance.

Residents of California (along with a few other states, including New York, Florida, and Illinois) have adopted a general set of rules for this cutting-edge issue. The Revised Uniform Fiduciary Access to Digital Assets Act provides authority for the creator of an estate plan to authorize his or her agents to have legal authority to access, manage, and close online accounts. For this to work, your estate plan must specifically reference digital asset powers. Fortunately, we work to ensure estate plans from our firm include this language, focusing the role of handling these assets to be controlled by the Trustee.

Separately, there are a couple things you can do on your own to ensure your online accounts pass to your loved ones correctly. First, the only guaranteed way to ensure someone can access your account after you are done is to provide the user name and password. Either personally organizing your online accounts and passwords or making use of a password management program or service can help make transferring the accounts easier. It is always important to practice safe practices when creating a list of sensitive information, such as password protecting the document or only keeping a written copy. Second, be sure to make sure of designated recipients or beneficiaries of your online accounts, as some services allow you to nominate a successor email in the event of periods of unusual inactivity. Facebook includes the ability to nominate a legacy contact for a memorialized account, and other services offer something similar. Third, and this can often be the most important, be sure there is information in your estate plan that these digital assets exist. If you don’t tell your children about an account, and they have no reason to know it exists, they will not try to locate and claim the account.

Active Ownership: Planning for Business Owners

This is a general reminder that ownership of a closely held or family business should be integrated in your estate plan. While sophisticated planning can be done to maximize estate and gift tax treatment, even those who do not have estate tax concerns can benefit from pre-planning. In situations where the owner is the manager of a business, providing the correct authorizations for agents and trustees to act on your behalf can save your business legal costs and delays associated with an important manager/owner falling ill or worse.

Your powers to manage your business are often tied to ownership in small, closely held, and family businesses. Unless specific planning is done in the business entity documents, owners have many voting rights tied to either making management decisions or deciding to remove and replace managers. Unfortunately, if the ownership is in your name (rather than held in a trust), then a court must appoint a representative to act for you in situations of incapacity or death. Appointing this appropriate conservator or administrator could take months and cost thousands. Any small business owner knows that few decisions can wait months and few balance sheets can easily take that hit.

However, doing an attorney advised estate plan and making sure your attorney knows you own a small business can help avoid the courts. Creating an appropriate Trust and Durable Power of Attorney document, funding/assigning as many interests in the Trust, and ensuring both documents have business interest powers built in can be the solution. This plan allows the owner to assign someone the power to make decisions and sign documents on behalf of the business owner in times of incapacity or death. Because the person was pre-designated, there is no need for the court’s delays and costs.

Thus, business owners can benefit from having their business interests included in their estate plans. If you have a plan but it was done before creating the business or without discussing it with the attorney (or if the plan was not attorney advised), then there are benefits to be gained by revisiting the plan and incorporating your business interests.

Will Your Evil Sister-in-Law Raise Your Children?

You may be surprised to find some of the most important parts of an estate plan have nothing to do with money. Planning includes naming who is in control of everything you own and everything you are responsible for. This means your parental rights over your children are also something that should be handled with your plan.

Many parents are familiar with how this works, but just as review: until your children reach the age of majority (age 18 years in California) or are Court emancipated, they do not have the right to sign contracts, open bank accounts, or make medical decisions. Until then, the minor’s rights are controlled by their parent or Guardian.

A Guardian is a Court appointed adult who is accountable for managing the child’s living situation and assets (including government benefits available for the child). Technically, the Guardian of the Estate (who manages money) and Guardian of the Person (who manages living situation) are not required to be the same person. In special circumstances, you may see these jobs separated, but generally a single person is appointed by the Court to take both jobs.

The Court must be involved with appointing the Guardian of a child who has lost a parent (or if the parent is unavailable to act for some reason). There are default laws for the Court to use to decide who gets to take the job. This rule is a list of relatives of the natural parents. The highest person on the list who asks to take the job is normally given it after a thorough investigation and hearing any objections from other relatives. Thus, if you don’t name your preferred guardians, there is a long list of relatives of natural parents (including your favorite in-law) who may end up as Guardian.

In California, the place to name your Guardians is in your will. Even if you have a trust, having a “pour-over” will can be important for many reasons, especially to name your preferred Guardians. Keeping your list of Guardians updated may change more often than other decisions, so you can know just changing this is a very small update that only requires changing the will. While it is necessary to vet your choices carefully, you can also feel safe that the job is not required, and relieving themselves of the responsibility to let your next named person act is as easy as a signed one-page document.

If you have already done a comprehensive estate plan, then you have already handled this. If you are a parent or planning on being a parent, deciding to create an estate plan can be for purposes beyond just yourself.

Vacation Planning

Summer is everyone’s favorite time to go adventuring across the world.  Clients of ours who completed a comprehensive estate plan can head off on those journeys knowing they have their affairs in order.  For those out there who either haven’t completed a plan or haven’t started, we offer the following tips to try and get things in a good situation.


  1. Make sure you have an Advance Health Care Directive (or your state’s equivalent). A general version of this is included in our comprehensive package, but specific versions are normally available from your primary care physician if you ask.
  2. Once you’ve done an Advance Health Care Directive, be sure you save a copy of the order of names and phone numbers of those you named as your agents. Then, when you are asked to list emergency contacts while out on potentially risky activities, you’ll know exactly who to name.
  3. Financial planning is not as essential for vacation emergencies, but being sure you have correctly set up authorized access on your accounts for your agents (often through a bank’s own special Power of Attorney form) can help in time of need.


All of that said, if you have time to put a comprehensive plan in place, a complete set of documents that all cooperate with each other cuts more red tape than the above method.

When Asset Protection Fails

The California Supreme Court recently clarified how spendthrift trusts are treated in federal bankruptcy, and the news is not good for those who want to protect assets from creditors.  Carmack v. Reynolds, opinion filed 3/23/2017, answered a question about how much of the current and future payments of a spendthrift trust are payable to the creditors of the beneficiary of the trust.  Over the course of the opinion, the Court lays out the following formula as an interpretation of Probate Code Section 15306.5: Unless the distributions are designated for the beneficiary’s support and are actually required for support, a creditor may collect the full amount of distributions that are payable now, and in addition the creditor may collect now up to 25% of all future known payments.  The creditor may then request to be paid the remaining 75% in each year that a future payment becomes currently available.  This is despite the trust’s spendthrift provision because the Trust includes a way to calculate distributions.  Near the end of the opinion, the Court felt a hypothetical was needed.  It clears up the otherwise convoluted formula:


“As an illustration, suppose a trust instrument specified that a beneficiary was to receive distributions of principal of $10,000 on March 1 of each year for 10 years. Suppose further that a general creditor had a money judgment of $50,000 against the beneficiary and that the trust distributions are neither specifically intended nor required for the beneficiary‘s support. On March 1 of the first year, upon the creditor‘s petition a court could order the trustee to remit the full distribution of $10,000 for that year to the creditor directly if it has not already been paid to the beneficiary, as well as $2,500 from each of the nine anticipated payments (a total of $22,500) as they are paid out. If the creditor were not otherwise able to satisfy the remaining $17,500 balance on the judgment, then on March 1 of the following years, upon the general creditor‘s petition the court could order the trustee to pay directly to the creditor a sum up to the remainder of that year‘s principal distribution ($7,500), as the court in its discretion finds appropriate, until the judgment is satisfied.”


The full opinion can be found here, above section can be found on page 15:


What are the takeaways? For now, asset protection in California is best achieved with unspecified discretionary distribution language to be exercised by an independent trustee.  This can be achieved with the help of an estate planning attorney, and is our firm’s default version of option for asset protection trusts.  However, this area of law changes often.  Anyone with a trust that incudes asset protection should consider having it reviewed regularly.  Had Rick Reynold’s parents updated their plan to sure up the asset protection, their son would not have lost their trust to his own creditors.

Sometimes The Greatest Change Brings About Even Greater Opportunity

After learning who won the election, many of us went looking to the president’s campaign website for his policy choices. Those of us in the estate planning world took note of the industry-changing decision to repeal the federal estate tax. At this point, the federal budget is still working its way through congress before the new President has his say about what it should include, but it does looks likely it will not include a federal estate tax.

A California state representative, however, has seen the potential repeal of the federal estate tax as an opportunity. California Senator Scott Wiener proposed S.B. 726, which mirrors the current federal estate tax and would include a maximum 40% rate and an approximate $5.5 million lifetime exemption. The only major difference is the checks are cut to California instead of the United States. Due to the way California handled this issue in the past, even if S.B. 726 clears the State Senate it will need to pass a statewide public vote. This makes the bill unlikely to become a law.

Despite the hurdles in his way, it seems Senator Wiener took advise from the fake Teddy Roosevelt in the movie Night at the Museum, “…and who knows, sometimes the greatest change brings about even greater opportunity.”


For the curious, the full text of the proposed bill can be found here:

Update: Funeral Expenses Out Of Control

While we all wait with bated breath for the government to implement the promised federal estate tax reforms to see how they will change estate planning, there is news of a lighter nature.


The story of Hunter S. Thompson’s funeral is one of estate planning legend.  With his estate illiquid, the executors couldn’t fund the famed writer’s last wish: for his ashes to be fired out of a cannon on his property.  However, because Mr. Thompson made sure one of his best friends knew of his wishes, Johnny Depp gave the estate the funds for the funeral/firing.  The lesson from the tale is to make sure the important people in your life know your wishes or know how to find them.


Now details from a lawsuit by his former managers claim the cannon and party cost a total of $3 million, and contributed to Mr. Depp’s financial ruin.  I guess the new lesson is to be careful about how you phrase your wishes and who you let do the party planning.