CA Estate Planning Blog

Monday, August 17, 2015

Estate Planning to Protect Your Assets

How should members of the "sandwich generation" protect themselves and their loved ones?

Members of the sandwich generation, those responsible for aging parents and children (even adult children) simultaneously, may experience a great deal of stress, financially as well as emotionally. In such cases, a skilled estate planning attorney  can be a godsend.

The sandwich generation has grown rapidly during the last several decades. Research has shown that over 30 percent of baby boomers and over 40 percent of generation Xers are supporting both a young or adult child and an aging parent. How did this happen?

There are several reasons for the rocketing increase in members of the sandwich generation. Among them are increased longevity and its concomitant increased medical costs. Caring for aging parents with medical ailments at the same time as coping with the expense of one's own encroaching health issues can be daunting.

Another contributing factor is the increasing costs of higher education. While young children have always been dependent on their parents for financial support, the situation has worsened as college education has become more and more expensive. Students and parents now incur debt during the youngsters' college years and frequently students try to save money by living in their parents' homes long after they graduate. During recent years of recession, when unemployment was abnormally high, even for educated workers, this situation was exacerbated.

For people experiencing the crunch of being sandwiched between needy parents and dependent children, professionals should be consulted. It is of paramount importance that individuals sandwiched between the generations take care of themselves, remembering that, unless they put on their own oxygen masks first, they will be unable to care for either their children or their parents.  Recommendations to protect one's own assets may include:

  • Not withdrawing savings from retirement accounts, even when tempted
  • Chipping in with siblings to purchase long-term care for parents while they are reasonably young
  • Investing in long-term healthcare insurance while your age makes it more affordable
  • Not investing beyond a sensible risk-tolerance level in hopes of saving the family
  • If possible, avoid taking out a home equity line of credit
  • Applying for government assistance, such as Medicaid, when necessary, to fund parental care
  • Considering the possibility that you may be making an adult child permanently dependent by supporting him or her

When you find yourself uncomfortably sandwiched between your parents and your children, why not consult with Brian Chew, a knowledgeable and experienced  asset protection attorney, at OC  Wills & Trusts. Proudly serving clients throughout Orange County, California, he can be reached at 949.347.5256.

Wednesday, July 29, 2015

Estate Planning for Property Owners

What do property owners have to consider when engaging in estate planning?

Estate planning, desirable for almost everyone, is absolutely necessary for homeowners who co-own property.  They must be prepared for the eventuality of the death of a spouse, family member, friend or colleague with whom they share ownership.
Read more . . .

Friday, July 24, 2015

Estate Planning for Same-Sex Couples in the Wake of Obergefell v. Hodges

How does this landmark United States Supreme Court decision effect estate planning strategies?

While the State of California has recognized same-sex marriage for a number of years, a recent landmark United States Supreme Court decision has legalized this practice across the country.  Even though this type of marriage was already legal in California it is important to understand the effect it will have on estate planning strategies for these couples.

Most importantly, the ambiguity is gone.  It is no longer up in the air whether the plan of a same sex couple will be honored or not.  Often times, it was unclear whether a plan created in California would hold up in a state that did not recognize same-sex marriage.  That is no longer the case.  These couples now have the ability to create estate plans that must be honored no matter where they end up being administered.  With this recognition come a number of benefits.

In states that previously did not recognize same-sex marriages, a surviving same-sex spouse will now be included in intestacy laws.  This means that if his or her spouse dies without a will the surviving spouse will be entitled to inherit as a matter of law.  With this also comes the principle that a spouse cannot be disinherited.  Same-sex spouses will also be legally entitled to make financial and medical decisions for their partner in certain situations even if this power is not directly given to them in a Power of Attorney or Health Care Proxy.  

Same-sex couples will also be able to benefit from the estate tax exemption as heterosexual couples would.  Individuals are not required to pay a Federal estate tax unless their estate is worth more than $5.43 million.  For couples, the amount of the exemption climbs to over $10 million.  There is now no question that same-sex couples will benefit from the exemption.  The exemption is also portable meaning that the surviving spouse can use the remainder of the exemption left by a deceased spouse.  Same-sex spouses are now also able to pass assets to one another tax-free, as they will qualify for the marital deduction.

If you are married to a person of the same sex and are interested in creating an estate plan the experienced Orange County and Irvine, California lawyers at OC Wills and Trust Attorneys can help.  Contact us today at (949)347-5256 to schedule a consultation

Monday, July 6, 2015

Cloud-Based Estate Planning

How can cloud-based technology assist in your estate planning?

Technology never ceases to amaze.  New cloud technology can even aid in your estate planning needs.
Products are now available that allow you to upload final messages to be read after your death. In these final messages you can reveal your feelings, secrets, last wishes or any other instructions or information you wish to pass on to your friends and family. It is also possible to set the terms of the encrypted data so that it is automatically emailed to the designated recipients upon your death or after a specified time period.

In addition to leaving a final message that might comfort or soothe your loved ones upon your passing, or help them carry out your last wishes, digital cloud storage is also a great way to store documents for your trustees or beneficiaries. A digital locker can safeguard your private financial information such as account numbers, keys, overseas account pin numbers and other essential login information so that your heirs and trustees can access them upon your death. You can also include any social media account information, business website passcodes and digital media, including property rights that you have to published e-books, recordings, photographs and other valuable intellectual property, in this digital locker.  In addition, you can use this tool to pass on sentimental archives, videos or photographs that you may not want to distribute until death, while keeping them from trustees who may not have a need for that particular data. 

Cloud-based estate planning tools can also be used to provide confidential health care information. They can be utilized to pass along needed documents including health care proxies, living wills, and other papers that your agents will need. You can also keep your own health care information and documents secure and only allow it to be released by someone with an encryption key or upon the happening of a certain event, such as your disability. 

The lawyers at OC Wills & Trust attorneys are always looking beyond the traditional estate planning methods to uncover different ways to provide you with services that take advantage of new technology as it develops. We believe that, in certain cases, cloud-based technology might be an appropriate tool. Contact our Orange County estate planning attorneys today at (949)347-5256.

Tuesday, June 16, 2015

Widow and Children Continue to Battle Over Robin Williams' Assets

How can an estate plan meet the needs of a spouse, ex-spouse and children from previous marriages?

Even when an estate is quite large, heirs and beneficiaries may quarrel over small sums of money and ownership of personal effects. These disputes can be especially acrimonious when children are feuding with a stepparent.

In the case of Robins Williams, his survivors have finally managed to divide thousands of the late comedian's possessions, but are still litigating over 300 articles, including watches, photos, awards, boxer shorts, t-shirts and slippers. His children are also disputing the amount of money his widow should receive to maintain the home she inherited. 

A California judge has set a deadline of the end of July for the parties to resolve the differences themselves.
Read more . . .

Wednesday, June 3, 2015

Soap Opera Star Sues Mental Health Center For Wrongful Death Of Son

Can an estate administer posthumous damages?

Kristoff St. John, star of The Young and The Restless, and his former wife, Mia Rosales St. John, a professional boxer, filed a lawsuit against La Casa Mental Health Rehabilitation Center for the wrongful death of their son. The suit alleges negligence and wrongful death against the Long Beach facility’s owner, Telecare Corp.

Their son, Julian, was in the facility on suicide watch. He had attempted suicide multiple times in the previous weeks including trying to walk into oncoming traffic and suffocation. Julian was under one-on-one observation, but a short time after that ended, staff members found him dead in a bathroom with a bag over his head. He was 24 years old.
The suit alleges negligence of the nurses and staff members for failing to keep harmful objects, such as bags, away from their son. The nurses and staff also allegedly did not perform all mandatory checks and falsified documents to cover up their neglect in caring for Julian.

The rehabilitation center recently issued a statement about the lawsuit through its public relations firm. The facility said in the statement the California Department of Health Care Services had recently reviewed the case and found the facility was compliant with all licensing laws and regulations. The facility also noted the Los Angeles Department of Mental Health reviewed the case and concluded the patient’s treatment was reasonable and followed clinical procedures.

OC Wills & Trust Attorneys have more than 20 years of estate planning experience, including estate administration. If you are involved in a lawsuit related to an estate or trust, we can provide knowledgeable advice. Contact our Orange County, California office today at (949) 347-5256 for a consultation.

Monday, June 1, 2015

5 Common Estate Planning Myths in California

I hear a lot of different information about the consequences of making a mistake in an estate plan. How can I separate fact from fiction? 

Estate planning is, of course, an important consideration for every family, regardless of size or financial situation. However, there are a number of myths out there, many of which are designed to coax folks into purchasing costly plans or unnecessary trusts on the promise of tax avoidance and the like. The following explores five common myths circulating the estate planning industry, followed by helpful suggestions to avoid being duped or misguided. 

Myth #5: Everyone needs a revocable trust: A revocable trust is an estate planning tool that requires testators (known as “grantors” or “settlors”) to retitle their property into the name of the trust, which will then be distributed according to the terms of the trust agreement. This tool is handy for probate avoidance, but will not necessarily save on estate taxes or other assessments if not properly drafted. Likewise, a revocable trust may not be necessary for everyone, as it can be costly to set up and maintain. 

Myth #4: A trust avoids estate tax: Only a very small fraction of estates in the U.S. are subject to the estate tax. To avoid paying estate tax, an elaborate and complex network of trusts, gifting, asset transfers, and charitable bequests is necessary – and begins long before the testators reach their final years. In sum, a simple trust will generally not avoid estate tax, and most individuals need not worry about this issue in the first place.

Myth #3: Probate is to be avoided at all costs: Many will have you believe that enduring the probate process will be an intolerable experience fraught with delay, expense and unnecessary court procedures. While true that probate proceedings can be inconvenient, executing an elaborate and expensive estate plan to avoid the process may be unnecessary for some, particularly those with a small estate. 

Myth #2: Transferring assets to my children will qualify me for Medicaid: This myth may be partially true, provided the transfers occurred long ago and fall outside the five-year look-back period. By contrast, transferring property to children immediately prior to applying for Medicaid will trigger a lengthy penalty period, and you may be better off selling the assets for value in order to pay for medical expenses prior to reaching eligibility.

Myth #1: I can download my will from the Internet: At first blush, downloading a will template from the Internet may seem like a cost-effective exercise, particularly if your estate is relatively straightforward. However, this can also invite disaster, particularly if the will form is not drafted with California formalities in mind.

Contact a reputable Orange County estate planning attorney today


OC Wills & Trust Attorneys have more than 20 years of experience guiding clients in their estate planning journey. Contact our Orange County, California office today by calling (949)347-5256.

Wednesday, May 27, 2015

What You Need to Know About the Proposed ‘Death Tax Repeal Act of 2015’

My estimated gross estate will be at or above the current federal exemption threshold. How is this tax law expected to change in the near future?

While it is always considered a wise idea to prepare an estate plan with an eye on the federal exemption, this figure is constantly increasing, decreasing, or being (temporarily) eliminated altogether. Currently, the individual estate tax exemption is $5.43 million, whereas a married couple can defer estate tax liability for a total exemption of $10,860,000 upon the death of the second spouse. However, legislation making its way through Congress could mean the ultimate death of the death tax, creating a number of alternative planning tools for high-net worth testators seeking to properly dispose of assets and provide for loved ones. 

Death Tax Repeal Act of 2015

In April, 2015, the United States House of Representatives voted 240-179 to repeal the estate tax all together. The measure, known as the Death Tax Repeal Act of 2015, was introduced on February 26, 2015 by Rep. Kevin Brady (R-TX) and works to amend the Internal Revenue Code by repealing both the estate tax and the generation-skipping transfer taxes levied upon any estate created on or subsequent to the date the Act is executed. 

The proposal contains two exceptions, however, including (i) distributions from such trust before the death of a surviving spouse made more than 10 years after the enactment date of this Act, and; (ii) assets remaining in such trust upon the death of the surviving spouse. 

Moreover, the Act addresses the federal gift tax rates, and would lower the top rate to 35%. Also, transfers in trust are still considered a taxable gift unless the trust is drafted as wholly-owned by the donor or the donor’s spouse. 

While the Act was met with substantial Republican support in the House, it has yet to meet its fate in the Senate. According to Congressional insiders, Democrats promise a filibuster of the Act, and the President is expected to veto any attempt to do away with the estate tax. 

In 2013, only one out of every 700 estates – or 0.1% – was required to pay the estate tax. Industry experts expect that level to rise once the data from 2014 is compiled, but only to approximately 0.2% of all estates. 

In many cases, exposure to estate tax liability can be significantly reduced with proper planning. For more information, contact Orange County estate planning attorney Brian Chew by calling 949-347-5256 today. 

Wednesday, May 20, 2015

Top 4 Ways a California Living Trust Can Enhance Your Estate Plan

I am thinking about executing a revocable living trust, but I am not sure if it will be beneficial. How will a trust help my family administer my estate? 

A revocable living trust is a popular and powerful tool for estate planners, and offers a number benefits for both surviving family members and beneficiaries. The following lists the top four ways in which executing a revocable living trust can help effectuate convenience, as well as possibly help high-net worth clients preserve assets and even avoid the over-imposition of estate tax.

#4: Increased Privacy – A revocable living trust is created with a trust agreement. It lists the creators (known as “trustors”), the trustees, and the beneficiaries. In the appendix, the trust lists the real and personal property placed in trust and subject to the distribution terms in the residuary estate clause. 

Assuming the trust is properly funded, and assets are fully re-titled in the name of the trust, the language of the trust agreement will govern the transfer of property. In other words, no public revelation of transfers will occur, and recipients will receive their inheritances seamlessly and privately – unlike the typical situation involving probate court (discussed further below). 

#3: Seamless Transition – As a follow-up to the explanation offered above, beneficiaries will not have to wait months (or years) for the estate to travel through the probate administration process. In many cases, beneficiaries will have access to their assets immediately, or within a few weeks if a deed or title transfer is necessary. As the testator, you may be able to further reduce the wait-time by creating payable-on-death accounts on behalf of your children or beneficiaries, which will transfer immediately upon remittance of a death certificate. 

#2: Possible Avoidance of Estate Tax - With more advanced estate and trust planning, married couples may be able to maximize their marital estate tax deduction to avoid the double-imposition of estate taxes upon the death of both spouses. Fortunately, there is no separate estate tax imposition by the State of California, however the federal government’s estate tax exemption is currently set at $5.43 million, with a 40 percent tax bill imposed on all assets above and beyond this limit. For married couples, using trusts can help maximize this even further upon the death of the second spouse – thereby leaving more for surviving children and heirs. 

#1: Avoidance of Probate - For estate valued at greater than $150,000, the administrator or executor will likely be required to file a Petition for Probate – which jumpstarts the official probate administration process, that can take up to 1 ½ years. Using a trust, assets will transfer from the trust corpus to the named beneficiary, and will not be subject to any probate proceedings or unnecessary inconvenience. 

If you are considering a revocable living trust, please contact experienced estate planning attorney Brian Chew. Conveniently located in Orange County, California, you can reach the office by calling (949)347-5256. 

Monday, May 18, 2015

Protecting the Assets of My Family Owned Business

What Can I Do to Protect Assets in Our Family Business?

Proactive business succession and estate planning can help preserve your business interests and allow them to be passed on to loved ones. This type of planning will require some thought and the process should start with some honest discussions among family members. There are many issues to consider, as outlined by Fidelity Investments in the link above, and many ways to plan around these issues.
Read more . . .

Friday, May 8, 2015

Using Annuities in Planning for Long-Term Care

I am approaching retirement and still in great health. What are some long-term care planning options aside from a long-term care insurance policy? 

For those who are considering their options in long-term care planning, one of most pivotal issues to consider is eventual eligibility for Medicaid. Unlike Medicare, Medicaid is the only government health insurance program that provides full coverage for the staggering costs of residing in a nursing home.  But, only those meeting certain income and asset requirements will qualify. What’s more, for married couples – with only one spouse needing care – using one’s savings to pay for long-term care can render the community spouse nearly destitute.
Read more . . .

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