Orange County Estate Planning

Why Do I Need Estate Planning If I’m Not Rich?

Many people spend more time planning a vacation than they do thinking about who will inherit their assets after they pass away. Although estate planning isn’t an enjoyable activity, without it, you don’t get to direct who gets everything for which you’ve worked so hard.

Investopedia asks you to consider these four reasons why you should have an estate plan to avoid potentially devastating results for your heirs in its article “4 Reasons Estate Planning Is So Important.”

Wealth Won’t Go to Unintended Beneficiaries. Estate planning may have been once considered something only rich people needed, but that's changed. Everyone now needs to plan for when something happens to a family's breadwinner(s). The primary part of estate planning is naming heirs for your assets. Without an estate plan, the courts will decide who will receive your property.

Protection for Families With Young Children. If you are the parent of small children, you need to have a will to ensure that your children are taken care of. You can designate their guardians, if both parents die before the children turn 18. Without a will and guardianship clause, a judge will decide this important issue.

Avoid Taxes. Estate planning is also about protecting your loved ones from the IRS. Estate planning is transferring assets to your family, with an attempt to create the smallest tax burden for them as possible. A little estate planning can reduce much or even all of their federal and state estate taxes or state inheritance taxes. There are also ways to reduce the income tax beneficiaries might have to pay. However, without an estate plan, the amount your heirs will owe the government could be substantial.

No Family Fighting (or Very Little). One sibling may believe she deserves more than another. This type of fighting can turn ugly and end up in court, pitting family members against each other. However, an estate plan enables you to choose who controls your finances and assets, if you become mentally incapacitated or after you die. It also will go a long way towards settling any family conflict and ensuring that your assets are handled in the way you wanted.

To protect your assets and your loved ones when you no longer can do it, you’ll need an estate plan. Without one, your family could see large tax burdens, and the courts could say how your assets are divided, or even who will care for your children.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, and trust law, please visit our website and request our monthly e-newsletter.

Reference: Investopedia (May 25, 2018) “4 Reasons Estate Planning Is So Important”

How Do I Choose An Executor?

Are there any ramifications for making your attorney the third-party executor of you will? No, as nj.com asks and answers in its article, “Who should be executor of your will?” You’re free to choose almost anyone to be your executor. Some people choose family members, friends, business associates, or even professional fiduciaries like trust companies.

An executor is a person you name in your will or who is appointed by the court and is given the legal responsibility to address a deceased person's remaining financial obligations. An executor is responsible for paying debts and creditors, filing tax returns, paying taxes, and distributing the estate's assets, pursuant to the deceased person's wishes as stated in the will.

The individual named as an executor in a will can refuse to accept this task. A person who originally accepted the role as executor, may resign at any point in time. Therefore, it’s a good idea to name alternative executors. If you don’t, a judge will appoint a replacement executor, if your original selection says no for any reason.

Most executors typically perform their duties without payment, but they are entitled to some renumeration. The reason that most executors don't ask for compensation, is because most executors are close family members and perform their duties out of respect for their deceased loved one. The amount an executor gets paid, is usually set by state law and what a probate court decides is reasonable under the circumstances.

For larger estates, it may be wise to select a professional, such as a trust company, who is familiar with the duties and obligations of serving as an executor. This can be extremely useful, when the deceased was the owner of a business and the estate may be complicated.

Executors California get paid a statutory fee based on the gross size of the estate plus extraordinary fees if approved by the court.  The attorney representing the Executor gets paid the same statutory fee as the Executor and may also request extraordinary fees.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, and trust law, please visit our website and request our free monthly e-newsletter.

Reference: nj.com (April 16, 2018) “Who should be executor of your will?”

How to Find the Right Assisted Living Facility

For many seniors, assisted living has become an increasingly common option to remaining in their homes. An elderly individual can live in a comfortable residence, get the services that he or she requires, such as help with bathing and dressing, as well as avoid the institutionalized setting of a nursing home.

However, Consumer Reports’ recent article, “5 Steps for Choosing the Right Assisted Living Community”, says that finding the right residence can be a huge challenge.

Right off the bat, the cost is high. In 2017, the median fee for a private one-bedroom was $45,000 a year, according to Genworth, a long-term care insurer. Most residents pay out of pocket, although some qualify for Medicaid. Medicare generally does not cover long-term care services.

In addition, shortfalls in caregiving can be a problem for assisted living residents. A 2017 survey of state long-term-care ombudsmen conducted for Consumer Reports, which monitors senior living facilities nationwide, found the most common complaints dealt with understaffing and delays in response to calls for assistance. Ombudsman data show that complaints about assisted living have gone up 10% in recent years.

For families looking at into assisted living facilities for a family member, there are ways to find a facility that delivers quality care in a comfortable setting. The key is to conduct thorough research. You should begin by asking these five key questions:

1. What Kind of Care is Required? Remember that different facilities offer varying levels of care. Is there a registered nurse on staff? Without this basic level of care, your loved one might end up going to the ER more often.
2. What is the Quality of Care? Look at the residence’s licensing and inspection records, to see if there are any issues. To get a feel for the way things work, make several visits to the facility. Go for meals and during the weekends, when fewer staff are on duty. You should also talk to residents and their families about their experiences.
3. Uncover the Real Costs of the Care. Get a written list of fees and charges from the residence and be sure that they’re included in the contract. It is recommended that you hire an elder law attorney, who’s familiar with local facilities to review the terms of the contract.
4. Can Your Parent or Family Member Age in Place? Find out what scenarios might trigger a discharge, and whether you could hire private aides, if more care is required. You should also ask what assistance the facility would be able to provide, if a move is needed.
5. Is There an Advocate? When you’ve selected a residence for your parent, it’s important to have family and friends visit regularly. If you do this, you’ll quickly be able to spot any issues with care. That is critical when your family member is ill or confused and can’t advocate for herself.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, and trust law, please visit our website and request our free monthly e-newsletter.

Reference: Consumer Reports (April 16, 2018) “5 Steps for Choosing the Right Assisted Living Community”

Parents and Kids Switching Roles as Nation Ages

In many U.S. families, children and parents are going to be switching roles. As parents age, they’re becoming their own kids’ children in many ways, requiring time and care, as well as sometimes creating a financial burden, says Fox Business in the recent article, “Aging parents are the new ‘children.’”

One concern is that aging parents can lose their mental abilities. The Alzheimer’s Association says that every 65 seconds, someone in the U.S. develops the disease. It’s now the sixth-leading cause of death. This can create additional long-term care needs for parents and result in an emotional and financial burden on adult children.

Parents with physical limitations may have difficulties living independently. Therefore, you should understand your parents’ long-term plans and how they will impact you. Let’s examine some of the things you can do, as your parents go through the aging cycle.

Family Conversations. While talking to your parents about these topics now may be uncomfortable, it will save you a lot of stress, time and money in the future. Parents who want to preserve autonomy should express their wishes. Parents should discuss their healthcare wishes, the what ifs and finances now to discover what options they may have for care. It’s important that adult children understand details of their parents’ financial situations, before they’re unable to communicate due to incapacity or death.

Get the Family Affairs in Order. Create a system to help with gathering information. This should include medical histories and estate plans. Start to organize information with your parents as early as possible. Adult children should be sure that their parents have a will, a trust (or both), a durable power of attorney for property and a durable power of attorney for healthcare.

Determine Parents’ Long-Term Financial Needs. It’s extremely expensive to provide care for aging parents. Seek professional guidance to determine how much of your parent’s savings is currently allocated to pay for healthcare in retirement, not covered by Medicare. Look at long-term care insurance.

Be Involved. As parents age, look for signs of anything that might be amiss. If you aren’t near your parents physically, or perhaps need additional assistance, you may want to get someone to help you with the care management of your parents. An aging-care support person can go with your parent(s) to doctors’ visits, act as liaisons with care facilities and provide you with regular reports.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, and trust law, please visit our website and request our free monthly e-newsletter.

Reference: Fox Business (May 25, 2018) “Aging parents are the new ‘children’”

What Grade Does Your Estate Plan Get?

Many people think that having an estate plan just means drafting a will or a trust. That is not true. There’s much more to add to your estate planning to be sure that all of your assets are transferred efficiently to your heirs, when you pass away.

Investopedia’s recent article, “6 Estate Planning Must-Haves,” provides a list of items that every estate plan should have. This includes a will (and perhaps a trust), a durable power of attorney, up-to-date beneficiary designations, a letter of intent, a healthcare power of attorney and guardianship designations.

Let's take a look at each item on the list to see if you’ve left any decisions to chance.

Wills and Trusts. This should be one of the main elements of every estate plan—even if you don't have substantial assets. Wills are documents that make certain property is distributed, according to your wishes (if drafted pursuant to state laws). Some trusts also help limit estate taxes or legal issues. But this isn’t enough. The wording of these documents is extremely critical: a will or trust should be written in a way that’s consistent with the way you've bequeathed the assets that pass outside of the will.  In California, if the gross value of your estate exceeds $150,000, it could be subject to probate.

Durable Power Of Attorney. A durable POA authorizes an agent of your own choosing to act on your behalf, when you’re unable to do so for yourself. Without a power of attorney, a judge may have to decide what happens to your assets, if you’re found to be mentally incompetent. That ruling may not be what you wanted. A POA can give your agent the power to transact real estate, enter into financial transactions and make other legal decisions in your stead (as if he or she were you). This POA is revocable by the principal at a time of his or her choosing, typically at a time when the principal is deemed to be physically able, mentally competent or upon death.

Beneficiary Designations. Some assets can pass directly to your heirs, without being dictated in the will (like a 401(k) plan).  Therefore, it’s important to have an up-to-date beneficiary, as well as a contingent beneficiary, on these types of accounts. If you fail to designate a beneficiary, or if the beneficiary has passed away or is unable to serve, a judge may decide what to do with your funds. This again may not be what you wanted.

Healthcare Power of Attorney. This appoints another individual (usually a spouse or family member) to make important healthcare decisions on your behalf, in the event of incapacity. If you’re thinking about creating such a document, you should select someone you trust, who shares your views and who would likely recommend a course of action with which you’d agree. A backup agent should also be named, if your initial pick is unavailable or unable to act at the time needed.

Guardianship Designations. If you have minor children or are considering having kids, choosing a guardian is very important and many times is overlooked. Be sure the individual or couple you choose shares your views, is financially sound and is willing to rear your children. You should also add a contingent guardian. Without these designations, a judge could rule that your kids should live with a family member you wouldn't have wanted, and in some cases, the court could require that your children become wards of the state.

As you can see, a will is a great start, but it's just the beginning.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, and trust law, please visit our website and request our free monthly e-newsletter.

Reference: Investopedia (April 18, 2018) “6 Estate Planning Must-Haves”

Power of Attorney - What is it and Is it Enough?

A financial Power of attorney (POA) is a document that grants a specific person, called an agent, the authority to make important decisions on behalf of another person, called the principal.

The scope of the authority the principal grants to the agent can be very broad or quite specific.  The power of attorney document specifies exactly what that authority looks like.  For example, it is customary to give someone the power to make decisions about your:

• Finances
• Personal property
• Real estate
• Business
• Personal and family matters
• Lawsuits
• Insurances and annuities
• Taxes
• Government benefits

The agent can be granted authority to make only financial decisions or just health care decisions.  Every situation is different and calls for a customized document reflecting the wishes of the principal. 

When it comes to powers of attorney, there are several options for granting decision-making authority in your life.  A power of attorney cannot address all situations and is not recommended as a substitute for a living will, or a Trust.

If you are looking to give comprehensive authority to another in the event you are unable to make decisions for yourself, and in the event of your death, consider executing a separate advance health care directive for medical decisions and creating a Living Trust to hold title to your assets to meet those needs.

Financial institutions are often hesitant to accept a power of attorney and may require your family to go to Court to get access to your assets in the event you are incapacitated.  And, a power of attorney will not keep your family out of Court in the event of your death.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, and trust law, please visit our website and request our free monthly e-newsletter.

Reasons to Establish a Trust (and Being Rich Isn’t One of Them)

Simply put, a trust is just a vehicle used to transfer assets.  According to a recent article at The Motley Fool, Trust Funds: They're Not Just for the Rich, and You Might Need One, trusts are especially useful for parents of minor children as well as those who wish to spare their beneficiaries the hassle of going to Court in the event of their incapacity or death.

And why would you want to keep your family out of court (known as avoiding probate)?
Perhaps you’d like to keep private the details of the assets you are leaving your heirs.  Leaving assets via a will that must go through probate to go into effect makes your estate a matter of public record.  A trust is a private document and distributes assets upon your death without the need for probate, which can tie up assets for a long period of time in court.

The court process can take longer than is necessary and keep your family from getting access to your assets as quickly as they want or need them.

If you have minor children, you need to create a trust in order to leave your assets to them since minors cannot inherit directly.  You will want to name a trustee to manage those assets for your children.  Even if your children are adults, a trust can help protect assets you leave for them from creditors, legal judgments, divorce, or even their poor money management habits.

You can even establish a trust for yourself in case you become incapacitated and cannot manage your own finances at some future time.  The trust assets are managed by a successor trustee, which avoids the need for a court-appointed conservator if you become incapacitated.

Trusts are also wonderful tools for those who are members of a blended family.  If you are remarried and have children from a previous marriage, you can provide for your current spouse while ensuring your assets pass to your children from another marriage using a by-pass trust.  With this kind of trust, the assets will pass to your children free of estate tax upon the death of your surviving spouse.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, and trust law, please visit our website and request our free monthly e-newsletter.

What Women Need to Know About Estate Planning

Women outlive men, make less during their careers, and have less in savings due to pay discrepancies and time taken out of the workforce to raise their families. 

These are just a few reasons why it is important for you to know the following about estate planning:

Minor children can be legally protected with a guardian nomination, which provides parents with important legal tools to name short- and long-term guardians, provide instructions and guidelines for those guardians and execute medical powers of attorney that allow you to dictate medical care for your minor children in case they are injured and you are not with them.

A will and a living trust are both essential estate planning tools, and although both can be used to transfer assets upon death, they serve separate purposes.  A living trust can take effect while you are alive or after death.  It allows you to hold assets for your benefit during your life, which may prove useful if you become incapacitated in the future.  A living will can also be beneficial if you own real estate in another state.  A will only takes effect upon death, and is used to appoint guardians for minor children, cover assets that are not part of a living trust and create trusts that kick in after death.

Women need to execute financial and healthcare durable powers of attorney and consider choosing a member of the family if that person is willing to assume the responsibility of making financial and/or medical decisions on your behalf in case of incapacity.  And, if you are married or partnered, make sure your spouse or partner does the same because you’ll be the one who is handling things if anything happens to your spouse/partner and you want it to be as easy as possible.

Make sure your partner/spouse has life insurance to support you for as long as you will need support and that there’s enough to last your whole lifetime, unless you will have your own savings.

Don’t own your own life insurance policy as the proceeds will be subject to estate tax after you die.  Instead, if your life insurance is designed to pay estate taxes, designate a spouse or other family member as owner or set up an irrevocable life insurance trust (ILIT), which buys the policy and holds the proceeds for beneficiaries.  And again, if you have a taxable estate, make sure the same is set up for your spouse’s life insurance.

Keep beneficiary forms for retirement accounts (IRAs, 401(k)s, etc.) up to date, as they determine who receives the assets of each one of your accounts. 

Make sure there is enough cash held in a joint account to handle any immediate expenses if your spouse dies suddenly.  You may not be able to access a deceased spouse’s separate bank account right away.

Surviving spouses are allowed to add the unused portion of a deceased spouse’s estate tax exclusion to their own – which means the surviving spouse can have an estate tax exclusion of up to $11,200,000 million in 2018.  However, this exclusion transfer must be claimed by the deceased spouse’s executor filing an estate tax return.  There’s other critical items that must happen when your spouse dies that can easily be overlooked.  Contact an attorney within a few weeks of your spouse’s death whether you have a sizable estate or not.

Married couples can participate in “gift splitting” during life, which means they can share each other’s $11,200,000 million lifetime gift exclusion and can each make gifts each year and give more to their children now tax-free.  We recommend you transfer as much as possible during life for many reasons.  Ask us about it.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, and trust law, please visit our website and request our free monthly e-newsletter.

Life Changes that Require an Update to Your Estate Plan

Even if you do not have an estate plan that you’ve created, the State has one for you.  And it’s likely one you won’t like.  It may be time for you to review the plan the State has for you and make more informed, empowered choices for your family.

If you have created an estate plan with a lawyer, or on your own, it may be time for a review and an update.

Estate planning is simply not something you do once, set it, and forget it.  In the same way your life, the law and your assets change, your estate plan must change as well.

Far too many people spend thousands of dollars on a plan, only to have it sit on a shelf getting stale, and then end up leaving their family with a huge mess they thought they had invested time and money to prevent.

Don’t let this be the case for your family.  Your family is worth more than that.

At bare minimum, your plan should be reviewed every three years.  We do recommend that your listing of your assets be updated annually.  You may want to check to make sure you even have an asset inventory included with your plan.  Most plans don’t have this included. 

Unfortunately, most lawyers (and every do it yourself) system overlooks this and there are Billions of dollars in our State Departments of Unclaimed Property as a result.

In addition to the minimum review every three years, your plan needs to also be reviewed in the event of any of these life changes:

• significant changes in the value of your estate;
• changes in your “income level or requirements,” such as retirement;
• an out of state move;
• job changes;
• changes to family situations, such as births, marriages, deaths, and major illnesses;
• changes to business interests;
• significant purchases or payoffs;
• major changes in insurance coverage; and
• the death or major illness of someone named as your executor, trustee, power of attorney, or child guardian.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, and trust law, please visit our website and request our free monthly e-newsletter.

What Every Single Parent Needs to Know About Estate Planning

If you are a single parent, life for you right now probably couldn’t get any busier.  You are likely being pulled between work, school activities, sports teams, and the inevitable emergencies that fill the lives of single parents everywhere.

Being a single parent is a huge responsibility.  You may have taken it on willingly or not but your children’s lives are now largely in your hands.  So what would happen to them if something happened to you?  Who would take care of them?  Who would pay for their housing and food?  Who would pay for their education?  These are questions you need to get answered, and the best way to do that is through estate planning.

Having an estate plan that covers the care of your children in case you should die suddenly or even become incapacitated provides welcome peace of mind for the single parent.  Here are the elements that can help you:

Will.  A will lets you name the person responsible for your estate as well as who will inherit your assets.  Most importantly is the legal vehicle you use to name a guardian for your children, without a will, the state will decide their fate.

Revocable Living Trust.  There are so many benefits of a living trust for single parents.  First, a trust enables you to still control your assets while you’re able, but if you die or become incapacitated, it transitions that decision-making authority immediately to the person you have named as your trustee (obviously someone you can trust and count on to do what you would have wanted).  If your children are still minors or even young adults their inheritance can be handled for them until the time comes when they are capable (and you decide that time).  Plus, if you have a trust, your estate doesn’t have to go through probate, which can be costly and time-consuming.  Also probates are not the best idea if your children need to continue living in their home and having their expenses paid. 

Durable Power of Attorney.  As a single parent, you are likely the only signatory on your mortgage, your bank accounts, and other financial instruments.  What would happen if you became incapacitated and there was no one to pay the mortgage or the bills?  That is why it is important to have a durable power of attorney in place.  When choosing your power of attorney, it should be someone you trust managing your financial affairs, while also make legal decisions on your behalf if you are unable to do so.

Advance Medical Directive.  An advance medical directive gives you the legal power to have someone you select make your health care decisions in case you are not capable of doing so yourself. 

Beneficiary Forms.  Your life insurance policy, retirement accounts, and brokerage accounts all require beneficiary designations.  Those you designate to receive the assets in these accounts will only receive them if you execute the proper beneficiary forms!  They cannot pass to your heirs via a will or trust.  And minor children should never be named as beneficiaries as they are not legally able to own assets.  Talk with us about strategies to leave these assets to your children without court intervention.

Guardian Nomination.  A guardian nomination provides single parents with the legal planning tools they need to make sure there is never a question about who will take care of your kids if you are in an accident.

One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.  Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.

For more information and articles on estate planning, probate, and trust law, please visit our website and request our free monthly e-newsletter.