CA Estate Planning Blog

Wednesday, October 2, 2013

Divorce and Estate Planning

There are a variety of factors to consider when you get divorced. Although the number of items to take care of can feel overwhelming, some are more important than others. Consider this, if something were to happen to you today the person who would most likely make health care decisions for you is the same person that you are divorcing. Frightening thought. In order to avoid this reality, it is crucial to revisit your Estate Plan when you file for divorce.

Your Estate Plan refers to what you want to have happen to your person, your assets and your children when you cannot make those decisions for yourself, or when you are no longer here. These decisions will be carried out through the Trustee of your Living Trust; the Executor of your Will; the Agent of your Health Care Directive and the Agent of your Power of Attorney. For married couples the most common designation of Trustee, Executor and Agent is their spouse.

While the law is smart enough to automatically revoke the appointment of your spouse as your Power of Attorney, Health Care Agent, Trustee and Executor upon divorce, the filing for separation does not have the same effect. That is why it is critical to revoke any previous determinations and memorialize any of your new wishes as soon as you file for divorce.

Here are some of the questions to think about:

BENEFICIARIES

  • Do you have children?
  • Who will your things automatically go to if you don’t take care of your Estate?
  • Who do you want your things to go to?

ASSETS

  • What assets do you have now?
  • What assets will you have when your divorce is final?
  • How difficult will it be for your loved ones to access your assets?

GUARDIANSHIP

  • What will your custody agreement look like?
  • Will your ex-spouse automatically receive custody of your kids if you are gone or incapacitated?
  • Who will take care of your children if both you and your ex-spouse are gone?
  • Will the guardian for your children be able to financially support your children?

HEALTH CARE

  • Who can you count on to make decisions about your health?
  • Will that person know what your wishes are?

POWER OF ATTORNEY

  • Who can you trust with your assets?
  • Will that person know what your wishes are?

 

These are just some of the questions you will want to ask yourself when you divorce, but like many situations it’s just the tip of the iceberg. You should consult an experienced attorney that can help walk you through these issues.


Friday, September 13, 2013

Estate Planning for Women

Estates planning for women have changed drastically over the past several years. Many women today have their own careers, and manage their own financial planning. 

Estate planning does not pertain only to death.  A typical younger woman nowadays should start thinking about her own estate plan as soon as she is capable of starting her own life outside of her immediate household. She can even start when she begins to travel on her own, or her career starts and she obtains substantial assets.  OC Wills and Trust Attorneys can put these goals into action and get you started on your planning earlier.

The most important and crucial time for women to have an estate plan ready is when they become a new mother. OC Wills & Trust Attorneys can help you set up a college fund for your new baby, get you to prepare for retirement, or just to name a guardian to raise your child should the worst happen. Although it may be hard to think about, it is something that takes a load off your shoulders once it is done, mostly because it ensures the best person to care and raise your child(ren).

Women now generally outlive their spouses. In the past, the male spouse will generally take care of the household finances, but once he passes away, the surviving spouse would be “taken care of” but she would not really have any control or say over her assets. In the past, AB Trusts are common for married couples. Now, with the new updated exemption laws, portability allows the first spouse to die to transfer his/her unused estate tax applicable exclusion amount to the surviving spouse for their own tax purposes. With this update in the law, the surviving spouse is able to manage his or her own assets, and be able to better make decisions on her assets after her own death. 

Please give us a call at 949-288-3598 to schedule your Free Consultation with us. 


Tuesday, August 20, 2013

Estate Planning and Bankruptcy [Nelson Radio]

Check us out on Nelson Radio! Brian talks about the things we need to be aware of if a living trust is not set in place. What if something were to happen to you tomorrow? What then?

 


Monday, August 19, 2013

Both Married and Unmarried Couples Can Have Trusts

People tend to think that you have to be married in order to have a trust. However, unmarried couples should also have living trusts. 

For married couples, a basic joint living trust is common and will meet all their needs. Both spouses will have control over the whole trust and can revoke the trust at any time. Each person will be a grantor and a trustee of the joint trust. Each person can also decide who will be a beneficiary of their share of the community owned property, and for his or her separate property as well.

However, both married and unmarried couples can create individual trusts. Individual trusts are useful if one spouse or both have a lot of separate property…or if one spouse just wants full control of their own property. Recently married couples can keep their individual trusts in order to maintain their previously acquired separate property.

Do note, however, that jointly owned assets are not very well suited in individual trusts. Spouses who co-own real property will have to record two deeds to transfer half-ownership of their interest into their separate trusts.  


Tuesday, July 30, 2013

Veteran's Benefits [Exemptions]

There are a variety of benefits out there for the men and women who bravely served our Country.  Some of these benefits are well known, others less so.  While looking into some property tax exemptions for an inheritance issue, I came across two Veterans Property Tax Exemptions.  Although I was familiar with the exemptions it occurred to me that they may not be well known so I thought they were worth sharing.

 

Types of Veterans Property Tax Exemptions

1)    Veteran’s Exemption

2)    Disabled Veteran’s Exemption

  • Basic
  • Low Income

 

Veterans Exemption

The California Constitution provides a $4,000 real property (for ex. a home) or personal property (for ex. a boat) exemption for honorable discharged veterans or the spouse or pensioned parent of a deceased, honorably discharged veteran.   There are restrictions on the value of property a claimant may own, so the exemption applies to only a limited number of qualified veterans, but it is still worthy of mention.

 

Disabled Veterans Exemption

The California Constitution and the Revenue and Taxation Code provide a property tax exemption for the home of a disabled veteran or an unmarried spouse of a deceased disabled veteran.  There is a basic $100,000 exemption or low income $150,000 exemption (both exemption amounts are annually adjusted for cost of living index, as of January 1, 2012, the exemption amounts are $119,285 and $178,929 respectively) available to a disabled veteran who because of an injury incurred in military service: is blind in both eyes, or has lost the use of two or more limbs, or is totally disabled as determined by the US Department of Veterans Affairs or by the military service from which the veteran was discharged.  

 

An unmarried surviving spouse may also be eligible if the service person died as the result of a service-connected injury or a disease incurred while on active duty in the military even if the veteran was not eligible during his or her lifetime.  While the Veterans Exemption has personal cap requirements, the Disabled Veterans Exemption does not.  The disabled veterans exemption is only available on a veteran’s principal place of residence, and the home may only receive one property tax exemption, the greater benefit will be taken.

 

The issues regarding these exemptions are complex and the eligibility requirements are specific.  And the filing requirements differ for each exemption.  If you are interested in learning more about property tax exemptions contact our office to sign up for our next seminar.

- See more at: http://mycaliforniaestate.com/lawyer/2013/07/30/Veterans-Aid-and-Attendance/Veterans-Benefits-[Exemptions]_bl8953.htm#sthash.KzoDKGSe.dpuf


Tuesday, July 16, 2013

Fear Can Be a Great Motivator

I am often surprised by the number of situations where professionals use fear to spur people to take action.  Action which is often in that person’s best interest to take.  There are a number of examples in our everyday world: dentists who shock you with photos of a diseased mouth; doctors who quote statistics of how many people have died from cancer; insurance agents who tell you horrible stories of homes destroyed by disaster; and even attorneys who dramatically recount tragedies to prove their point. 

I’m not suggesting that those tales are untrue.  What I am suggesting is that using fear as a motivator to get you to do something is unnecessary and can be construed as condescending.  Making someone afraid assumes that if you educate them about a situation they won’t make the right choice.  I myself, believe that most people are competent and when enlightened by the facts will make an informed decision that is in their best interest.

The majority of professionals are great advocates for their clients.  Most dentists, doctors, insurance agents and attorneys study a particular area at length because it interests them and they genuinely want to use their knowledge to make people’s lives better.  And when given the chance, those are the types of specialists I prefer to work with.  The one’s who take the time to explain the situation to me, help me understand my options and treat me with respect.

So rather than scare you with horrific images about what happens when you don’t have an Estate Plan, let me explain some of the benefits of what an Estate Plan can accomplish. 

SIMPLICITY:

  • If you have a Guardian Appointment your children will be cared for by the person of your choosing and not that of the courts.
  • If you have a Power of Attorney then you will choose who will be responsible for your assets, how they will manage them and when the time comes they will be able to access those assets without delay.
  • If you have a Will your personal belongings will be directed to the person you want to receive them and any of the smaller incidents of your Estate can be seamlessly transferred to your Living Trust.
  • If you have a Health Care Directive you can appoint someone to act in your stead and make health care decisions for you when you are unable to do so for yourself.  
  • If you have a Living Trust you can help your loved ones avoid dealing with the courts to manage your affairs, your assets and your Estate the way you would want it handled if you were able to do so yourself. 
  • An Estate Plan enables you to protect your loved ones and your assets.

While fear may be a great motivator, you deserve better.  Get working on your Estate Plan now because it’s the smart and right thing to do.   If you have questions about how Estate Planning works, please do not hesitate to contact us.  We will spend time getting to know you, your particular situation and your goals.  We are interested in helping you learn how to help yourself and your family. 


Tuesday, June 18, 2013

Nelson Radio

Nelson Radio is a great radio channel focusing on Real Estate, Business, and Financial Law. Tune in every Saturday from 2-3 pm PST and learn from different experts and speakers on essential topics that every person should know about their estate, business, or just finance in general. 

 

 

We were featured on the June episode, where our Managing Partner Brian Chew talks about the importance of having an estate plan. 

 


Tuesday, June 11, 2013

To Zoom or Not to Zoom a Living Trust

We’ve all heard the claims that we’re an instant gratification society.  We drive thru windows for sustenance, find our new homes virtually without crossing the threshold and diagnose our ailments with the help of our handheld devices.  So why then would it not make sense to use a quick and easy online service to create some of our most important legal documents?  

While the rhetorical question may have satisfied its own query let me offer a few supporting arguments for the benefits of substantial, real and comprehensive.  First, fast food is cheap and convenient but it’s notoriously unhealthy and not meant to make up the basis of nutrition.  Second, a picture is worth a thousand words but sometimes the picture doesn’t tell the whole story.  And lastly, while you might be able to cure a simple stomachache, would you really want to bet your life on the idea that you didn’t overlook a more serious problem.

There’s no point in trying to bombard you with clichés, or instill you with doubt and fear about the process.  The point is to educate you and help you understand what is involved with the quick fixes of the world.  The following is an excerpt from the Disclaimer on LegalZoom, “We are not a law firm or a substitute for an attorney or law firm. We cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies.”

In the spirit of thoroughness I attempted to create a Living Trust online.  The questions that were posed to me were straightforward, however on occasion my answers were not.  If I had been a single person with one beneficiary, the online version probably would have provided sufficiently for my estate planning needs.  However, what if I was a divorced woman who owned property with my ex husband as well as my brother and wanted to designate my best friend as my children’s guardian.  While I’m sure the support staff would have made an effort to help me through those questions, the system was not set up to deal with these anomalies.      

There are a variety of benefits to dealing with a live attorney when discussing your estate planning needs.  They provide comprehensive tailored help to address all of your unique needs.  They ask pertinent questions and take time to understand all of the nuances of your case.  And in the end the best of them provide substantial legal advice, explanations of the consequences of your choices and make appropriate recommendations.  We may very well be a society of instant gratification, but sometimes there is no substitute for the real thing. 


Thursday, June 6, 2013

Credit Card Debt & Your Estate Plan

Our office received an interesting question the other day about credit card debt. He wanted to know if his credit card debt is automatically forgiven upon his death. A lot of people are under the impression that your credit card debt dies along with you.  That is not exactly correct. There is no black letter law or one size fits all answer for this. It all depends on a number of factors including who else is on your account, whether your estate will go through probate, and what state you live in. 

First, upon your death, your estate is expected to pay off any outstanding debt, including your credit card debt. Creditors of all kinds will come out of the woodwork to try to get what you have, and they can be very aggressive with debt collection, knowing that the deceased person's spouse or their estate may be responsible for that debt. However, the estate trustee or the executor is responsible for contacting the creditors and geting these debts paid off.

Although credit card debt should be paid off, it is not the first priority on the list of outstanding debt to pay off in an estate. Sometimes, the credit card company loses.  If the estate does not have the assets to pay off the credit card debt, the debt may be forgiven becauase a credit card company cannot force someone else to pay. However, if the account was shared [i.e. joint bank account, or co-signer], that survivor may be responsible for the outstanding balance.

States vary on what funds are used to pay off credit card debt. 401(k) plans with a specific beneficiary or IRAs are not considered part of an estate, and will go straight to the beneficiary, not through probate. Insurance benefits are similar in this regard.  

In community property states, however, it can get complicated. Most assets (and sometimes debts) acquired during a marriage are considered joint property. Therefore, even if a credit card was only in the deceased person’s name, the surviving spouse still might be responsible if they lived in a community state such as Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin. But community property laws are different in every state so check with a probate lawyer to find out more.

The bottom line on any credit card debt question is: Never rely solely on what the creditor or collections agent tells you. Contact your probate attorney and ASK MORE QUESTIONS.


Friday, May 31, 2013

Single Parents Need Trusts Too

Single parent trusts look slightly different from that of a married parent. Usually, in a married revocable living trust for married parents, the trust language and laws are set in place to ensure that both the custody and the property go to the surviving spouse. However, for single parents, the courts will determine your next of kin and disperse your property accordingly. For minor children, the courts will appoint a guardian based on California laws. Although it's great that these laws are set in place as a default when there is no will or trust in place, it is not so great when the person[s] the court chooses are not the people you would have chosen yourself. Worse yet, they may choose the exact opposite of the person you would want to have guardianship over your child[ren]. 

Common guardians to have custody of a child upon the parent's death are usually the other parent, grandparents, a close aunt, or relative. In many families, any of these would be a good choice. However, if there has been a falling out between family members, or the grandparent is too elderly, or the other parent is insufficiently able to care for the child[ren], then perhaps a better choice could have been made. 

Appointing a guardian is only of the most pressing issues for which a single parent would need to see an estate planning attorney such as OC Wills & Trusts. We can help you create a financial plan to help support your child[ren] even if you are not there such as a trust that not only protects the money from certain creditors against the beneficiary, but also protects them from being heavily taxed as well as give you a say on how the money is to be allocated/spent. 

We make sure that everything is in order for your estate planning needs, and also follow up with you in the event of new emerging laws. Since every family is unique, we attorneys here at OC Wills & Trusts do our very best to make sure you have the best plan that works for your specific needs. 


Friday, March 15, 2013

Top 3 Clauses to Make Sure You Have in Your Living Trust

Living Trusts are a great tool to save time and money by avoiding the probate process when the Trustor dies. However, that is not all of the living trust offers. Besides skipping the probate process, living trusts also offer other benefits that may even surpass the importance of avoiding probate. However, you must make sure that the clauses are included in your trust in order to get all the benefits that the trust offers.  The following are some provisions and clauses that you should make sure are included in your living trust.

  • Protection Property from Certain Beneficiaries and Creditors.  Spendthrift clauses in trusts allow you to give your well earned money and property to the ones you love, and at the same time, protect it from them.  Spendthrift clauses protect beneficiaries from themselves as well as creditors because it keeps the money in the trust [which shields them from creditors] rather than their own personal accounts [where creditors can reach].  It also protects beneficiaries who accumulate bills such as medical problems or job loss.  Most think that when you have an estate plan, you are intending to protect your loved ones such as your husband/wife/children when you die. However, some of the beneficiaries may not be able to handle an inheritance given to them in a large lump sum. Trustor's might turn in their graves if they knew what their 18 year old beneficiary is doing with their money after they are gone.  Hence, many attorneys advise that the Trustor[s] implement an age [usually 25 yo] that their beneficiaries have to be in order to get the Trust assets outright. Even then, many beneficiaries over 25 years of age should not have access to those funds either. Some may be going through divorce, so it can keeps a creditor or ex-spouse of a beneficiary from being able to reach the beneficiary's interest in the trust.  The clause also prevents a future beneficiary from alienating ("selling") his or her interest in the trust (usually for pennies on the dollar).  

    One of the important provisions of this paragraph is the discretionary right it gives to the Trustee to hold any distribution for a beneficiary deemed by the Trustee to be incompetent or suffering from substance abuse, or because the beneficiary's financial circumstances are such that failure to delay the distribution would actually reduce the trust benefits to the beneficiary (e.g., a beneficiary who is receiving state assistance of some kind).

  • No Contest Provision.  The “No Contest” provision in the trust states that, to the extent permitted under California law, if anyone challenges the validity of the trust or your intent as expressed in the trust, that person and his or her descendants will receive nothing from the trust.   Revocable living trusts are a huge deterrent for contests for a number of reasons.  1) They are incredibly hard to contest. 2) They are much more expensive to contest. The will contest is heard in probate court and the person contesting doesn't have to put out much money if they can find an attorney that can work on contingency. Whereas the revocable living trust contest is heard in civil court which encompass substantial filing fees and procedures that can add up to be very costly for the person contesting. 3) Defending a will costs a lot of money, which is generally paid for out of the estate. This means that the beneficiaries end up with a lot less.  4) Contests are usually settled instead of going to court, so the settlement will further diminish the Estate. Overall, these are huge deterrents for contest the revocable living trust as they can be very time consuming and expensive for both parties.
  • Residual Clause.  Residual clauses are safety nets to help ensure that no part of your estate goes through probate. Basically, a catch all within the estate plan.  Once all the taxes, payments, debts, claims, and distributions are settled against the estate, the money that is leftover is called the residue.  There are also assets that can also be part of the estate, the most common are assets that are purchased or acquired after the trust is drafted. The residue clauses catches these assets under the net of the Estate.  Failing to include the residue clause can be very problematic for the Trustee as the remaining assets will have to go through probate [i.e. court and legal fees]. Residual clauses can be added to the trust at any time so make sure that it is included in your trust!

 

 




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