CA Estate Planning Blog

Wednesday, October 8, 2014

Asset Protection for Medi-Cal Enrollees Staying the Same For Now

Many Americans rely on the government to pay for their very expensive long term care costs.  The Federal and state governments usually work together to assist those in need through their respective Medicaid programs.  In California, these benefits are managed by Medi-Cal, which is a means tested program.  Only those that fall below a certain financial level qualify for these benefits in the state.

Even for those who are eligible, chances are that when the money becomes available they will be pursued.  If a Medi-Cal enrollee passes away, the state can take steps to collect the money they spent on that persons care from their estate or surviving spouse.  Right now, the only protection for the surviving spouse of a Medi-Cal enrollee is an exception that exists if collecting the money would cause the spouse substantial hardship. 

There has been a push in the California legislature to reform the Medi-Cal recovery rules.  Senate Bill 1124, proposed by Senator Ed Hernandez, was introduced but eventually rejected.  This bill would have revised the Medi-Cal recovery rules to allow only Federally required actions to collect expenditures.  It would have limited recovery to cases where the recipient used the benefits to cover nursing home care and disallowed recovery in cases of expenditures for necessary medical treatment.  The bill would have also barred recovery from surviving spouses’ estates.  In essence, the legislation would have made it much more difficult for the state to collect the money they laid out to Medi-Cal recipients.  Recently, the bill was vetoed by Governor Jerry Brown.  While he expressed that reform might be necessary in this area a better solution is needed.  As the state does not collect anywhere near what it expends on Medi-Cal benefits, the Governor reiterated that reform must be made with this is mind.  

If you or a loved one are having trouble paying for long term care or are interested in planning to avoid this hardship, speaking with an experienced Medi-Cal planning attorney is in your best interest.  Eligibility for Medi-Cal benefits can be difficult to understand and you should rely on a trusted advisor to explain all of the options to you.  Call Orange County, CA attorney Brian Chew at (949)347-5256 for a consultation today.

Tuesday, September 23, 2014

Estate Planning Lessons from Joan Rivers

Many of us like to make an entrance.  But, some of us, like recently passed Joan Rivers, want to make an exit.  When referring to an exit, we mean a final exit, or a funeral.  Rivers wanted her funeral to be Hollywood affair. She wanted a flashy, star-studded event, a Valentino gown and even a Harry Winston toe tag.  While most of her requests were facetious, she did want a larger than life funeral and that costs money.  After her recent passing, her family has been charged with this task and expense.  Luckily, funeral expenses can be deducted when calculating Federal estate taxes, which will save them a lot of money.  

Currently, the Federal estate tax will be assessed on estates worth over $5,340,000.  As Rivers’ estate is most likely worth much more than that, it will probably be subject to the tax.  Just like with an income tax return, certain things can be used as deductions on an estate tax return.    One of these deductions is funeral expenses.  Funeral costs can be claimed as deductions on Schedule J of the Federal estate tax return.  There is no cap on how much can be claimed except that it cannot be more than the gross estate is worth.  There are really no other regulations governing the amount, but there are some guidelines.  The costs have to be reasonable in light of the life of the person who has passed.  The costs that may be deducted include expenses for basic funeral components such as the funeral home, burial plot and marker, bringing the body to the place of rest and even flowers and sometimes the refreshments after the burial or service.

As the State of California does not assess an estate tax, if your loved ones estate is above the Federal exemption, the only place to claim these expenses as deductions would be on an estate tax return.  If you have questions about the Federal estate tax or estate planning in general, call OC Wills and Trust Attorneys at (949)347-5256.

Thursday, September 11, 2014

Should You Name A Trust As Beneficiary of Your IRA?

Some of us are lucky enough to have an IRA account that we will not have to use during our life.  For these individuals, it might be a concern whether to leave this IRA to beneficiaries outright or in a trust.  There has been an ongoing debate relating to whether it is more beneficial to simply designate a beneficiary or use a trust to receive IRA assets.  After a United States Supreme Court case recently found that an IRA is accessible by creditors in bankruptcy, many are leaning towards the latter option.

IRA accounts do not pass according to a person’s will.  When you open an IRA account, you are asked to fill out a beneficiary designation that specifies who will receive the assets in the event of your death.  If you decide to use a trust to receive these assets, you must create one specifically for that purpose, to be sure that is has all of the necessary terms and manages the assets according to your requirements.  

Using a trust to receive an IRA account after death can be beneficial to your heirs.  They can offer protection from creditors, even in the case that one of your beneficiaries gets divorced.  They also allow you to put certain restrictions on the inheritance to protect it from an irresponsible heir.  In addition, the use of a trust can allow you to leave these assets to an heir that is a minor, a task that cannot be done using a beneficiary designation, and allows you to control the way the inheritance is used when the minor becomes of age.  

But, the use of a trust does have some disadvantages as well.  For instance, a trust allows you to name multiple beneficiaries of IRA assets.  But, by doing this, you might be burdening your other heirs.  If one of the beneficiaries is much older than the rest, the minimum required distribution (the amount your heirs are required to take every month) might be significantly greater than it would be had you only appointed a single beneficiary of a younger age.  Spouses can also be negatively affected by using a trust to receive an IRA.  Spouses can lose the income tax benefit that they would get if the IRA was inherited outright, among other things.

If you want to know whether it is in your heirs’ to create an IRA beneficiary trust, you should speak to a qualified estate planning attorney.  Call Brian Chew at (949)347-5256.

Thursday, August 28, 2014

Is a Trust Right for You?

A trust is an estate planning tool that holds assets to be distributed after you die.  Most people think that you must be wealthy to benefit from the use of a trust in an estate plan. This is not the case, as there are many different types of trusts.  Some estate planning attorneys recommend that anyone with an estate worth over $100,000 and satisfying one of the following conditions should consider using a trust.  The conditions are as follows:

• A good amount of your assets are in the form of real estate, art or business holdings.
• You want to control how your assets are distributed to your beneficiaries.
• It is important to you that you provide your spouse with financial support after your death and also that your other beneficiaries inherit after your spouse passes away.
• You are worried that you might be subject to significant estate taxes and you want to reduce the liability as much as possible.  
• Your goal is to provide for a disabled beneficiary but want that beneficiary to continue to be eligible for government benefits.

No estate planning situation is the same and there are many different types of trusts that can be used in a wide variety of situations.

• Credit-Shelter Trust
A credit-shelter trust allows you to stipulate to leave a certain amount of assets (under the estate tax exemption) to a trust upon your death.  By then leaving the remainder of your estate to your spouse you can reduce or even avoid estate taxes.

• Dynasty Trust
A dynasty trust is created for the benefit of your grandchildren by allowing assets under the generation-skipping tax exemption to be passed to them tax free.  Your children can also benefit from trust income during this time.

• Qualified Personal Residence Trust (QPRT)
The QPRT trust allows you to transfer your residence or vacation home into the trust but continue to control it for a certain number of years.  The IRS values the asset at less than its current value as it assumes that your beneficiaries will not possess it for a while.  As long as you outlive the trust the home will not be included in your estate upon your death.

Trusts are complex legal documents that can assist in the preservation of assets if drafted correctly.  It is imperative to consult with a qualified estate planning attorney if you are considering a trust.  If you think a trust might be right for you call OC Wills and Trust Attorneys at (949)347-5256 for a consultation today.

Thursday, August 14, 2014

How to Avoid a Conservatorship

Becoming incapacitated is a common fear among those considering putting together an estate plan.  Who will take care of your needs is an even more frightening question.  Many people incorrectly believe that their loved ones are entitled to take over care immediately.  Someone has to be legally appointed to care for a loved one in the event they become incapacitated.  Also, not just anyone is allowed to manage a person’s finances if he or she is unable to do so.  An individual has to be appointed to assist with financial management in the same way as they do for personal needs.  This person can either be selected by the court or can be chosen in advance using certain estate planning documents.  

A conservatorship is a legal proceeding in which a court chooses a person or organization to care for an incapacitated adult and/or manage their finances.  A conservator can be selected for one need and not the other or to fill both roles.California has different types of conservatorships including a general and limited conservatorship, as well as one for the purpose of caring for a mentally ill individual.  A conservator of the person tends to the personal needs of the incapacitated such as making living arrangements, arranging for meals and housekeeping.  A conservator of the estate is chosen to handle the incapacitated person’s finances.This person controls the income, assets and expenses of the person subject to the conservatorship.

Just like many other legal proceedings, conservatorships can be long, drawn out, expensive and emotionally trying. Luckily, all of this can be avoided by a small amount of pre-planning.  Health care directives can circumvent the need for a conservator of the person and a durable power of attorney can be used to avoid the need for a conservator of the estate.  Going to an estate planning attorney saves beneficiaries money that would otherwise go towards legal fees in the event that a conservatorship becomes necessary.  This also allows a person to maintain a certain amount of control over who cares for them in the event of incapacity.

If you are interested in discussing a durable power of attorney and a health care directive, or have any other estate planning or asset protection questions, call Brian Chew at (949)347-5256.

Thursday, July 31, 2014

Financial Advantages of a Revocable Living Trust

Revocable living trusts  are estate planning tools that have become very popular in recent years mostly because of the financial advantages they offer.  A trust is a vehicle in which property is held for the benefit of another person.  A living or inter vivos trust is one created during an individual’s lifetime as opposed to upon their death.  A trust is revocable when the grantor (creator of the trust) has the freedom to change the trust terms throughout their life.  Assets held by the trust are managed by an individual, known as the trustee, who is appointed by the grantor.

There are many benefits to the use of a revocable living trust in your estate plan.  Although you should always speak to a qualified attorney before creating a trust to ensure that it is drafted correctly, some of the advantages are as follows.

Revocable living trusts avoid probate.  Probate is the legal process by which a last will and testament is validated.  Assets held in a revocable living trust pass immediately to beneficiaries upon the grantors death.    By passing your assets via a revocable living trust instead of a will, you can avoid the costly and lengthy probate process.  In the case that you own property in more than one state and hand down your assets by will, ancillary probate will be necessary.  Ancillary probate is the process of validating a will in another state where property is owned.  This can be even more expensive and time consuming than the standard probate process.  Using a revocable living trust to distribute these out of state assets will also eliminate the need for ancillary probate, saving your heirs time and money.

This type of trust offers the grantor a large amount of control over their assets throughout their life.  By naming themselves as trustee, the grantor can manage the assets in the trust as long as they are competent, enabling them to make financial decisions that will grow their wealth over time.  

A revocable living trust also enables the grantor to appoint a co-trustee that will manage the trust assets in the event that the grantor trustee becomes incompetent.  If you have not designated someone to handle these affairs via a revocable living trust or another method, a conservatorship proceeding could be necessary.  These proceedings are also quite expensive and can be avoided by the use of a revocable living trust, preserving money for your heirs.

If you are interested in the financial advantages of a revocable living trust, call Brian Chew at (949)347-5256.

Thursday, July 17, 2014

Important Estate Planning Steps for Newlyweds

Are you newly married?  The honeymoon isn’t even over yet, but, one of the first things you should think about is estate planning.  People are getting married later in life and may have amassed a large amount of assets before entering into their first nuptials.  That is why it is important to understand how your marriage affects the way your estate will be handled and to create an estate plan with these considerations in mind.  Newlyweds can do certain things to create a comprehensive estate plan and should always start this process by discussing everything with their new spouse.

Update Beneficiaries on Accounts
One of the easiest ways to start the estate planning process is to change the beneficiaries on your financial accounts.  These accounts include banking, investment and retirement accounts.  You should also talk to your spouse about who you would want to inherit from your estate should something happen to both of you.

Last Will and Testaments
You should execute or update your will.  A will instructs how you would like your property distributed after you die.  In most cases, spouses name each other as beneficiaries to each other’s estates.  But, this might not be right for you.  You should consider other beneficiaries such as existing children, parents and other loved ones if you would like them to inherit from your estate.
Discuss it with your spouse and decide how you would like your assets distributed in the event of your death or if both of you die.  

Durable Power of Attorney
If you and your spouse want to be able to make personal and financial decisions on each other’s behalf in the event of incapacity, you should appoint each other in reciprocal durable powers of attorney.  You should also check with your account holders to determine if you will need additional paperwork for the appointments to apply to specific financial accounts.

Advanced Directives
You and your spouse should also be sure to discuss end of life issues.  You should each document your wishes in advanced directives and appoint each other as health care proxies if you decide that is the best course of action.

If you have a sizeable estate and/or own a lot of property, you should discuss with your attorney the best way to title your assets and the possibility of using a trust in your estate plan.  Whenever you have a major life event, i.e. marriage, children, divorce, death of a loved one, you should think about how this affects your estate plan. It is in your best interest to consult with an experienced attorney on these matters such as the Orange County, California attorney Brian Chew.  Call OC Wills and Trust Attorneys at (949)347-5256 for a consultation today.

Friday, June 27, 2014

Supreme Court rules that Inherited IRA's provide no asset protection in Bankruptcy

The Supreme Court has ruled in the case of Clark v. Rameker that inherited IRA's (i.e. and IRA/401k account that you receive from your parent's estate) do not have the same creditor protection as an employer funded 401k or a self funded IRA.  As a result, the funds held in an inherited IRA's can be attached by creditors in a bankruptcy proceeding.  

This ruling should result in an increase in the use of an IRA Beneficiary Trust as a vehicle in which the inherited IRA can reside for the lifetime of your heirs and while the funds are held within the trust, it is unavailable to your heir's creditors.  

Friday, January 3, 2014

New Year's Resolutions: Estate Planning

Happy 2014!  Now that you've rung in the new year with a bang, it's time to get your to-do list of resolutions out and start acting on them! 2014 is a year of big changes in the legal world, so we here at OC Wills & Trust Attorneys encourage you to stay on top of these legal issues as they may affect your pocketbook. 


If you don’t have an estate plan in place, now is the time to put one in place.  If you already have a plan, now is the time to do an estate plan review.  As time passes, many things in your life change, and those changes can have a drastic impact on your estate plan wishes.  Not sure where to begin?  Take a look at the list below. 

Do you have any assets?
Do you have children?
Are you married?
Are you divorced?

During our free consultation appointment an OC Wills & Trust Attorney will gather information about you, your family, your assets and your wishes.  They will review your estate planning options, identify the estate planning documents that will best fit your needs and tell you how much it will cost to prepare the documents.


Educate yourself on the facts of the Affordable Care Act, and how it can affect you in this upcoming year. Beginning in 2014, most Americans who lack insurance will have to pay a penalty under Obamacare -- a penalty that's set to increase annually for some uninsured individuals.


The staff at OC Wills & Trust Attorneys wish you a New Year filled with peace, prosperity and happiness.

Tuesday, December 17, 2013

25 Important Documents to Keep Safe/Handy Before You Die

The Wall Street Journal has a great article on the 25 most important documents you need to have before you die. I highly recommend you reading the whole article as they make some great points. 


  • Will
  • Letter of Instruction
  • Trust Documents


  • List of all bank accounts
  • List of all usernames and passwords
  • List of safe deposit boxes


  • Housing, Land and Cemetery Deeds
  • Escrow mortgage accounts
  • Proof of Loans made and Debts Owed
  • Vehicle Titles
  • Stock Certificates, Savings Bonds and Brokerage Accounts
  • Partnership and Corporate Operating Agreements
  • Tax Returns


  • Personal and Family Medical History
  • Durable Health Care and Power of Attorney
  • Authorization to Release Health Care Information
  • Living Will
  • Do Not Resuscitate Order


  • Life Insurance Policies
  • Individual Retirement Accounts
  • 401(k) Accounts
  • Pension documents
  • Annuity contracts


  • Marriage license
  • Divorce papers

Tuesday, December 3, 2013

Holiday Estate Plan

What is the greatest gift you can give your family this Holiday Season?

Peace of mind.  Getting your Estate Plan in order is not always at the top of everyone’s to do list, but it should be.  With the proper legal documents in place, you can help ease the difficulties that your loved ones will face upon your incapacity or passing.  Your assets can be managed by someone you trust.  Your children can be cared for by someone you know will treat them well.   Your money will be available for your loved ones when they need it and will be easily accessible.  In short, you will provide security and stability for those you care about most when they are dealing with a great loss.

Here are some of the common issues and questions we encounter:

I don’t want to consider something bad happening to me.

You don’t think about getting into a car accident every day, but you buy auto insurance just in case.  Planning for issues that might arise doesn’t make bad things happen, it mitigates the damage when they do.   If your Estate Plan is complete then you don’t have to continue to focus on it and expend energy needlessly.  It becomes the equivalent of auto insurance and when life changes or new drivers are added you might have to review your policy and make adjustments but you will be protected in the meantime.     

Why do I need an Estate Plan?

Generally speaking, if you have assets in excess of $150,000 or have young children, you need an Estate Plan to avoid the Probate process.   In the absence of valid legal Estate Planning documents your loved ones will have to petition the Probate Court to determine what will happen to your assets or your children.  The Probate process can be difficult, overwhelming, costly and lengthy.  

What does an Estate Plan include?

Living Trust – a legal document that directs your successor Trustee to carry out your wishes with regard to your finances, your children, your health and your legal affairs.  The power of a Trust is that it allows your assets to pass directly to your beneficiaries without going through Probate.

Pour Over Will – allows a decedent’s nominal assets to be included in their Trust.

Healthcare Directive – allows you to appoint someone to decide about your medical treatment if you cannot decide for yourself and gives them parameters regarding your wishes.

Durable Power of Attorney – allows you to name an agent to act on your behalf and carry out your financial affairs.

How do I go about doing my Estate Plan?

Sometimes tasks seem more daunting than they really are because we don’t know what is involved in the process or where to begin.  Getting your Estate Plan in order is simple.  Consider the ages of your children, think about what you would want to happen to them if something happened to you tomorrow, or 10 years from now.  Determine who you would want to act in your stead, with regard to your finances and your healthcare.  Take stock of your assets: homes, cars, boats, IRA’s, 401k’s, Life Insurance, etc., and decide how you would want them divided.  Consider what quality of life you would want if something happened to you. 

How do I get started?

Contact our office, make an appointment for a consultation and give the gift of peace of mind to your family this Holiday Season.


Happy Holidays from all of us!

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