MDS Law – Law Office of Matthew D. ScottYour Source For Effective Estate Planning Solutions2026-11-09T18:25:33Zhttps://www.matthewscottlaw.com/feed/atom/WordPress/wp-content/uploads/sites/1604194/2021/11/cropped-site-icon-32x32.pngOn Behalf of MDS Law - Law Office of Matthew D. Scott<![CDATA[Is arbitration ever better than mediation?]]>https://www.matthewscottlaw.com/?p=479912026-11-09T18:25:33Z2026-11-09T18:25:33ZBoth arbitration and mediation are forms of alternative dispute resolution (ADR) that can save time and money compared to traditional litigation – but they differ in some critical ways. While mediation encourages a cooperative approach and compromises, arbitration gives a definitive result when the parties simply cannot agree.
For those facing contract disputes, partnership disagreements or conflicts involving estates and trusts, understanding these differences can help determine which path is more appropriate.
How does mediation differ from arbitration?
The primary difference is who makes the final decision.In mediation, a neutral third party helps the disputing parties communicate with each other, find common ground and work toward a mutually acceptable conclusion. The mediator does not have the authority to impose a “verdict” or order a specific resolution. Instead, the parties decide for themselves whether to accept a proposed agreement.Arbitration is more like a court proceeding, but not as formal. A neutral arbitrator hears both sides’ arguments, reviews the evidence and imposes a judgment. The process does not rely on the continued cooperation of both parties.
What are the advantages of choosing arbitration?
While arbitration can be particularly useful when negotiations stall and neither party is willing to budge, arbitration can offer several additional benefits over mediation:
The parties may select an arbitrator with experience in business law, financial matters or other relevant areas for a more nuanced judgment.
Arbitration can be faster than litigation, particularly when the procedure is outlined in a contract.
Private arbitration can offer greater confidentiality than public court proceedings, which can protect against reputational damage.
Arbitration may be binding or nonbinding. In binding arbitration, which is common, the parties generally agree to accept the arbitrator's decision as final. In most cases, the arbitration award cannot be overturned except in cases of fraud or misconduct. Nonbinding arbitration allows parties to reject the decision and pursue further legal action, usually in court.Mediation, by comparison, never has an imposed decision. Any negotiated result may only become final once the parties enter into a formal agreement.Ultimately, choosing between mediation and arbitration depends on your goals, the ability of both sides to work together and the need for a clear resolution. Understanding each process's benefits and limitations can help individuals and businesses choose a path.
]]>On Behalf of MDS Law - Law Office of Matthew D. Scott<![CDATA[Mistakes that can impact a charitable remainder trust]]>https://www.matthewscottlaw.com/?p=479882026-11-09T00:50:06Z2026-11-09T00:50:06ZCommon mistakes when establishing a charitable remainder trust
One significant mistake is drafting trust terms that fail to satisfy federal tax requirements. Under Internal Revenue Code Section 664, a charitable remainder trust must qualify as either a charitable remainder annuity trust or a charitable remainder unitrust.
Each has specific distribution requirements. The charitable remainder interest must also meet the applicable 10% minimum valuation requirement.
Another mistake is naming an organization that does not qualify as an eligible charitable beneficiary. Donors must make sure that the remainder interest will pass to a qualified charitable organization. Poorly defined payment terms, incorrect asset valuations or failing to account for the trust's irrevocable nature can also create problems.
Administration errors that can jeopardize the trust
Even a properly drafted trust can encounter difficulties if the trustee fails to follow its terms. For example, making unauthorized payments to beneficiaries, using trust assets for personal expenses or failing to maintain accurate financial records can expose the trust to legal and tax consequences.
Trustees must also comply with applicable reporting obligations. Charitable remainder trusts must file IRS Form 5227 annually and provide beneficiaries with the appropriate tax information. Misreporting distributions or failing to account for asset sales can jeopardize compliance.
California residents considering this arrangement can benefit from obtaining appropriate legal and tax guidance before funding the trust. An experienced legal team can review a trust instrument, assess potential risks and help ensure that its structure reflects a donor's charitable and financial objectives.]]>On Behalf of MDS Law - Law Office of Matthew D. Scott<![CDATA[Can a family limited partnership preserve generational wealth?]]>https://www.matthewscottlaw.com/?p=479862026-10-27T02:43:06Z2026-10-27T02:43:06ZHow does a family limited partnership work?
An FLP is a legal entity family members can use to retain and manage their assets as a group. It has two types of partners:
General partners: Typically, these are the parents or grandparents who retain responsibility for managing the partnership and making financial decisions.
Limited partners: Usually, these are the adult children or other family members who have an ownership interest but little or no role in managing the assets.
For example, parents who own several investment properties might transfer them into an FLP. They can then gradually give partnership interests to their children without immediately giving up control over the properties themselves.
What are the benefits of an FLP?
Depending on the family's circumstances and how the partnership is structured, an FLP may provide multiple advantages:
Transferring partnership interests during a parent's lifetime may remove some assets and their future appreciation from the parent's taxable estate. Certain transfers may also qualify for discounted valuations, subject to rules made by the IRS.
Limited partnership interests can also offer some protection against creditors, although that protection isn't absolute.
Centralized management can help prevent valuable assets or family businesses from being divided or sold simply because ownership passes to multiple heirs.
Parents can transfer economic interests in family assets while retaining certain management rights.
A carefully written partnership agreement can establish how ownership interests are transferred and how future decisions will be made.
An FLP isn't appropriate for every family. The IRS closely examines partnerships created primarily for tax advantages, particularly when parents continue treating partnership assets as their personal property. Families also need to consider formation costs, annual tax obligations and potential property tax consequences when transferring real estate. Experienced legal guidance can help you determine whether it’s right for your needs.]]>On Behalf of MDS Law - Law Office of Matthew D. Scott<![CDATA[What is ancillary probate, and why is it sometimes necessary?]]>https://www.matthewscottlaw.com/?p=479832026-10-25T13:11:53Z2026-10-25T13:11:53Zan additional process called “ancillary” probate may be required in each state where the deceased owned real property solely in their name.
Why would an estate need multiple probate proceedings?
Each state has its own laws when it comes to the transfer of real estate. The probate court in one state generally doesn't have the authority to transfer ownership of property located in another state, so ancillary probate resolves the issue.
For example, suppose a California resident dies owning a vacation home in Arizona. There is no co-owner or transfer-on-death deed in place. The primary probate proceedings would typically take place in California. However, the executor would also likely need an ancillary probate process in Arizona to transfer ownership of the vacation home to its intended beneficiary.
The reverse could also be true for people who live elsewhere but maintain property in this state. California Probate Code - PROB § 12510 allows an interested party or an out-of-state personal representative to petition the court to open ancillary probate proceedings here.
What happens during ancillary probate?
Ancillary probate is generally limited to the assets located in the second state, so that can make the process considerably shorter and less involved than the primary probate case. Depending on the circumstances, it may involve:
Filing the necessary documents with the appropriate court, including information about the primary probate proceedings.
Obtaining legal authority to manage the property located in that state.
Identifying and resolving valid creditor claims or other obligations that could affect the property.
Distributing the property to the appropriate beneficiaries (or selling it, when necessary to pay debts or divide the asset).
While generally more focused, ancillary probate can still add considerable expense and frustration to estate administration, particularly when there is real estate scattered in various locations.
Fortunately, owning property in another state doesn't automatically mean a second probate proceeding is required. Property held in a properly funded revocable living trust generally passes outside probate. Certain forms of joint ownership and property with beneficiary designations can also transfer directly to their intended recipients, bypassing probate.
For those who own vacation homes, rental properties or other real estate outside California, these possibilities are worth evaluating when you are creating or updating your estate plan.]]>On Behalf of MDS Law - Law Office of Matthew D. Scott<![CDATA[Your estate planning checklist]]>https://www.matthewscottlaw.com/?p=479812026-10-23T08:41:11Z2026-10-23T08:41:11ZCreate a valid will
A will states who receives your assets after your passing. Without a valid will, California's intestate succession laws decide how to divide your estate. Intestate succession means the state distributes your assets based on a fixed legal order, typically prioritizing spouses, children and then other relatives. This process often fails to account for your specific wishes or the unique dynamics of your family.
Consider setting up a living trust
In California, estates valued above $208,850 for deaths occurring on or after April 1, 2025 must go through probate. A living trust holds your assets while you are alive and transfers them to your beneficiaries after your death, bypassing the probate process. A properly funded trust allows your family to receive their inheritance without court delays or excessive legal fees.
Name your beneficiaries
Beneficiaries are the individuals designated to receive specific assets from your estate. Review the designations on your retirement accounts, life insurance policies, and bank accounts. Under California law, these designations transfer assets outside of your will. For example, a former spouse still listed on an account will receive those assets unless you update the form.
Prepare a durable power of attorney
A durable power of attorney authorizes a trusted person to manage your financial affairs if you become incapacitated. This includes paying bills, managing accounts and handling property transactions. Without this document, your family must petition the court for a conservatorship. A conservatorship is a legal arrangement where a judge appoints someone to manage your finances or personal care on your behalf. This process can be both costly and time-consuming.
Include an advance healthcare directive
An advance healthcare directive records your medical treatment preferences when you cannot communicate them. It also designates a healthcare agent to make medical decisions on your behalf. This document ensures that medical staff follow your specific wishes rather than relying on family members to interpret them.
Review and organize your assets
A complete asset inventory is a necessary part of estate planning. Your executor relies on this information to fulfill your wishes. List all bank accounts, real estate holdings, retirement accounts and life insurance policies. Update this list after major life events such as marriage, divorce or the birth of a child to ensure it remains up-to-date.
Start planning for your family’s future
Estate planning does not have to feel overwhelming. Starting early can give you more time to review your plan and make adjustments as your life changes. The decisions you make today give your family a clear path forward and reduce the uncertainty they may face during an already difficult time.]]>On Behalf of MDS Law - Law Office of Matthew D. Scott<![CDATA[Estate planning moves to make before December 31st]]>https://www.matthewscottlaw.com/?p=478442026-10-13T12:44:29Z2026-10-13T12:44:29ZYour finances, family composition and priorities can change over time, and your estate plan should change with them. The larger your anticipated estate, the more important it may be to review your plan annually, particularly when minimizing taxes and protecting family wealth are major concerns.
The end of the year is a natural time to take stock of your finances and make adjustments. Here are several moves worth considering in the 60-90 days before 2026 comes to a close.
Your yearly estate planning review checklist
Even a relatively simple estate plan needs regular attention. For families with substantial wealth, business interests or multiple investment properties, annual reviews are almost a necessity to catch changes and make certain that any goals are still in focus. Here are some steps to take:
Take advantage of annual gift tax exclusions, if you haven’t already. In 2026, you can generally give up to $19,000 to each recipient (or $38,000 if you are a married couple) without using any of your lifetime federal gift and estate tax exemption.
Review your estate tax exposure and make necessary changes. The federal estate tax exemption is $15 million per individual in 2026. If your estate is approaching that amount, consider options like lifetime gifting, irrevocable trusts or other wealth-transfer strategies. Remember to account for appreciating investments and business interests.
Revisit your trusts to see if they still meet your needs. Your living trusts may need to be modified in some way, and assets that haven’t been properly transferred may need to be addressed. You may even need to establish new trusts for new members of the family, such as grandchildren.
Review whether your final will and other estate documents, including powers of attorney, still reflect your feelings. Changes in your assets, relationships with beneficiaries or financial objectives may make some adjustments necessary. This is particularly important if you have substantial investments, real estate holdings or business interests.
Review your business succession plan. If you own a business, take stock of your one-year and five-year goals and make sure that your current succession arrangements reflect those goals. Family limited partnerships, buy-sell agreements and other arrangements may help facilitate an orderly transition.
Check beneficiary designations. Any bank accounts, life insurance policies, investments and other assets with beneficiary designations generally pass outside of probate and are not controlled by your will. Make sure those designations still reflect your wishes and coordinate with the rest of your estate plan.
Making an appointment now with your estate planning attorney can give you enough time to revisit your existing estate plan and help you ultimately protect your assets, reduce your taxes and make sure that your wishes are clearly expressed.]]>On Behalf of MDS Law - Law Office of Matthew D. Scott<![CDATA[Complications when passing vacation properties to beneficiaries]]>https://www.matthewscottlaw.com/?p=478422026-10-12T20:59:10Z2026-10-12T20:59:10ZWhen creating an estate plan, one key asset that you own may be a vacation property. This could be a vacation home, a cabin or a cottage where your children often went as they were growing up. It holds a lot of nostalgic value to them, and it also has significant financial value.
You can pass these properties on to the next generation, but there are some potential complications to be aware of.
Joint ownership
For one thing, if you are leaving it to multiple beneficiaries, they are all going to be joint owners. It is good to clearly define what ownership percentages they hold.Additionally, joint ownership can make selling difficult. If one beneficiary just wants to sell the property, but the others want to keep it because of the sentimental connection, they can get into conflicts. Be sure that everyone wants to be involved and understands their role.
Splitting up expenses
Additionally, passing down real estate as an asset means that you are also giving your beneficiaries certain expenses. They will have to pay for maintenance and upkeep, property insurance and utilities. It is wise to have a plan in place for how they will split up these obligations.
Tax considerations
Finally, you have to consider taxes from a number of different perspectives. You may need to consider estate taxes, and some people will decide to put real estate into a trust. You also have to consider the ongoing property tax obligations, which can sometimes increase when the real estate changes hands.Overall, vacation properties can be valuable to beneficiaries, both from a financial and a sentimental perspective. But it is very important to take the time to carefully make an estate plan to address some of these considerations and avoid conflicts.]]>by MDS Law - Law Office of Matthew D. Scott<![CDATA[How to value a business before creating a succession plan]]>https://www.matthewscottlaw.com/?p=478382026-10-07T07:50:41Z2026-10-06T11:35:25ZThree valuation approaches for small businesses
Business valuation follows one of three recognized approaches:
Asset-based: This method adds a company’s tangible and intangible assets and subtracts its debts. It works best for asset-heavy businesses with major equipment, real estate or inventory, as well as holding companies and investment entities.
Income-based: This method projects future earnings and discounts them to present value. Service firms often use it because their value depends on loyal clients and repeat revenue.
Market-based: This method compares the business to similar companies that have recently sold, using industry multiples as a guide. Retail firms and franchises with clear market comparables are often a good fit.
Knowing which approach fits the business is one of the first practical steps in getting ready for a valuation.
When to get a formal appraisal
Getting a professional appraisal well before a planned transition gives owners time to address factors that may reduce the company's value. Ideally, the process should begin several years in advance. Economic downturns can push valuations lower, so owners who plan early have more flexibility to time a transition around stronger market conditions. That flexibility may disappear if illness, death or a contractual obligation triggers a change in ownership.
What a certified appraiser and attorney bring to the process
Business valuation requires knowledge of tax law, accounting standards and industry norms. A certified appraiser brings outside objectivity that family members or partners may lack. In California probate proceedings, an appraiser's formal report serves as persuasive evidence evaluated independently by the court; for federal estate tax purposes, the IRS separately reviews the valuation and requires strict compliance with IRS qualified appraisal standards under IRC § 6662 to avoid accuracy penalties.
An attorney who handles business succession matters can explain how different transfer structures affect tax results. Common ownership transfer mechanisms include installment sales, gifting strategies and buy-sell agreements governing co-owner cross-purchases or entity redemptions. Each produces a different tax result based on the valuation.
Why early planning leads to better succession outcomes
Valuing a business is not a one-time task. It is the foundation of any sound succession plan. The goal may be a family transfer, a sale to a co-owner or a move to an outside buyer. In each case, a clear valuation gives all parties a shared picture of what the company is worth. Starting early makes a smooth transition possible rather than one driven by time pressure.]]>On Behalf of MDS Law - Law Office of Matthew D. Scott<![CDATA[How does a trust improve an estate plan?]]>https://www.matthewscottlaw.com/?p=478242026-09-29T02:36:54Z2026-09-29T02:36:54ZYou may want to consider creating a trust if you have a high-asset estate. There are many benefits a trust can offer that a will cannot. For example, the right kind of trust can protect your assets from estate taxes, debt collection and disputes. You can also use a trust to skip the probate process and distribute assets directly to beneficiaries.
There are several different kinds of trusts that might be of benefit, depending upon your needs.
5 types of trusts that could be useful
You can draft a unique trust to accomplish different goals. A few common types of trusts include the following:
Revocable trust: You can use this trust to distribute assets to beneficiaries. A revocable trust can be altered or revoked at any time.
Irrevocable trust: This kind of trust typically cannot be altered or revoked once created. A revocable trust becomes irrevocable when you pass away.
Charitable trust: You can use this trust to distribute funds to a charity. Trust funds can be distributed for several years to support an organization.
Spendthrift trust: You can use this trust to limit access to trust funds. A spendthrift trust can help limit misuse and prolong the value of the trust.
Generation-skipping trust: You can use this trust to distribute assets to a later generation. Some people use generation-skipping trusts to create generational wealth by distributing funds to grandchildren or great-grandchildren.
Before drafting a trust, it is important to consider the goals of the legal document. You can obtain professional legal guidance to learn about your options to build an estate plan that is customized to your family's needs and your goals. ]]>On Behalf of MDS Law - Law Office of Matthew D. Scott<![CDATA[Why a will alone may not be a complete estate plan]]>https://www.matthewscottlaw.com/?p=478172026-09-20T19:23:55Z2026-09-20T19:23:55ZA will may not cover every asset you own
Some assets pass outside the will. Life insurance, retirement accounts, payable-on-death accounts and some jointly owned property may transfer according to beneficiary designations or ownership rules. Even with a will, your beneficiary designations and how your property is titled should be consistent with your overall estate planning goals.
A will cannot plan for incapacity
Planning for incapacity is an important part of estate planning. You want to know that someone you trust can step in to manage your financial affairs or make health care decisions if you become unable to do that for yourself.
A will generally cannot provide that authority because it takes effect only after your death. Without proper planning, your family may have to turn to the court for authority to manage certain financial or personal matters on your behalf if you become incapacitated.
Your family circumstances may require more than a will
A will may not give you the flexibility to determine how and when certain assets should be distributed or managed after your death. For instance, leaving property outright to a young beneficiary through a will may produce a very different result than placing that property in a trust with specific instructions for how and when it should be distributed. A trust can establish rules for managing property after your death, unlike a will.
If you’re looking to craft a comprehensive estate plan, reaching out for professional estate planning guidance can help you look beyond a will and build a plan that reflects your assets, family circumstances and wishes.]]>