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Why Proper Estate Planning is a Gift in and of Itself | Newport Beach Wills and Trusts

Tuesday, January 31st, 2012

Far too many people view estate planning as a way to bequeath “gifts” to future generations. There are properties and trusts and various types of accounts to be managed, and it’s up to you to determine how and what you what to gift to whom. What many people don’t necessarily consider, however, is that the very act of planning for the financial future of your family is its own gift.

Consider this article from Forbes.com (“What My Father’s Death Taught Me About Estate Planning”) in which an adult child of a hard-working man describes the financial lessons taught both before and after the father’s death. The father was a planner, and he decided to involve his daughter as much as possible, since she would be the executor of the estate. There were several “gifts” he provided his daughter in the form of education and preparation:

The executor was already on his bank accounts. Dad gave her access and had her name included on the checks. That meant that it was easy for her to take over bill paying as he became sicker, and even after he passed away, she felt that it was “absolutely seamless” to take care of expenses. Being a true planner, Dad even placed enough money in the account to cover the bills for two years, just in case the home didn’t sell right away and needed to be maintained.
She met the right people. The father discovered he was dying of cancer and had only a short time to live. In that time, he made sure that his executor had the opportunity to meet those who would play important roles in the dispersal of funds and property upon his death. In addition to the estate attorney, it makes sense for the executor to get to know insurance representatives, bankers, accountants, etc. When the time comes, the executor will be miles ahead of the game in knowing who to contact and what to expect from them.
Dad anticipated legal fees. It’s quite common for attorney’s fees on an estate to run between three and five percent. This particular dad was savvy enough to negotiate a fee with his attorneys up front and then placed the amount into a separate account. When the executor needed to pay the attorney, she simply withdrew the funds rather than having to scramble around to try and make the situation work.
The funeral and costs were planned in advance. Dad put together a master binder that included all of his funeral plans, right down to his obituary and photos. Many people are unaware that it costs money to place an obituary in the paper, and there were other unforeseen expenses. Fortunately, he recognized that this might be the case, and he left some extra money in a checking account precisely for that purpose.

Working with an estate planning attorney now can offer so much solace and support for your family and friends later. While this may be an extreme example of planning ahead, it is possible to do what will work for your situation. It truly is a gift that you can give your family that goes far beyond financial rewards.

Tags: newport beach wills and trusts
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Estate Planning Mistakes to Avoid in Southern California

Thursday, January 26th, 2012

Estate planning attorneys see a lot, whether on a small scale here in Southern California or by looking at the national and international media. Fortunately, the lessons learned from these observations can be applied to our own clients. There are some common estate planning mistakes that seem to be made over and over again, and a good attorney will help steer you clear of these pitfalls.

Making a Poor Choice for Executor – The executor of your will or estate is the person who will be in charge of seeing your wishes are met and may need to stay in charge all the way through the probate process. It’s very common for a spouse or oldest child to be named as the executor, which can certainly be a great choice. Keep in mind, however, that this isn’t just about making someone feel good. The executor has real work to do and must be able to make wise decisions regarding your estate, including the hiring of companies and institutions to manage funds when required. Not only does the executor need to have some business sense, but your estate planning attorney will also tell you that he or she needs to be highly trustworthy. The executor holds a lot of power, and you want to ensure that it’s not being used either to advance one agenda or to exact revenge on others.

Forgetting to Change Documents after a Divorce – When a couple divorces for irreconcilable differences, it’s generally safe to assume that neither ex wants the other to inherit his or her estate. Unfortunately, this can be precisely what happens if you don’t change your wills, trusts, insurance policies, retirement plans, etc. after a divorce has happened. Many, many people have been shocked to learn that their parent’s estate has passed to a former spouse who then has the power to do anything at all with it…including cutting out those who it would seem have a more legitimate claim.

Not Planning for Unmarried Partners – In this day and age, it’s quite common for unmarried couples to live together, whether due to personal preference, legal issues, or even a desire not to lose survivor benefits from another spouse. When one of the partners in this type of situation passes away, the other partner does not have the automatic protections that a married spouse would have. For example, even if the couple lived together in the same house for decades, if it isn’t in the surviving partner’s name, it becomes part of the estate to be passed on to heirs. These heirs can then force the surviving partner out, which estate planning attorneys see happen quite frequently when the deceased’s children didn’t approve of the relationship in the first place.

Of course, these are just a few of the major estate planning mistakes that one should take into consideration when setting up wills, trusts, and other legal documentation of his or her wishes. Working with an attorney here in Southern California will help you ensure that you are meeting all applicable laws and taking advantage of legislation that works in your favor.

Need help getting started? Please feel free to give our Newport Beach wills and estates law firm a call at (949) 260-1400 and ask if you qualify for a free Family Wealth Planning Session ($750 value) with the mention of this article.

Tags: southern california estate planning
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New Estate Planning Law in California is Good News for those with Smaller Estates

Wednesday, January 25th, 2012

Generally speaking, it makes sense for just about everyone to spend some time with a California estate planning lawyer to look over their assets and plan for the future. Even those who don’t have large estates, for example, really need to consider who they want in charge of them should they become incapacitated. Living wills, powers of attorney, and advance directives for medical care are all incredibly important in ensuring that your wishes are met in a variety of situations.

When it comes to estate planning, however, many people with smaller estates don’t see the sense in hiring an attorney and drawing up paperwork. Things like “trusts” are often thought to only be needed by the very wealthy and are therefore just overlooked by many in the lower and middle classes. Surprisingly, it takes very little to trigger the probate process, which can take a substantial chunk of money out of an already fairly small inheritance.

The state of California is working to make this situation a bit more reasonable for those with smaller estates. The 2011 California State Assembly Bill 1305 has been successful in raising the limits on the value of assets that can be passed on without going through the probate process. At this point, estates worth up to $150,000 will not automatically be placed into probate by the courts. This is an increased from the previous limit of $100,000.

Perhaps of even greater interest is the increase in the gross value of real estate that can be passed on without necessarily going through probate. The earlier limit of $20,000 has been raised to $50,000. This tends to protect those passing on property in the form of partial interests, timeshares, vacant land, etc. These types of property are eligible to be claimed by successors without having to go through the time and expense of a formal probate process. Instead, they will be eligible for summary procedures, theoretically saving considerable cost and frustration.

Of course, none of this negates the benefits of working with a good Orange County estate planning attorney. Claims cannot be made on the property for six months after your death, for example, which may not be as desirable as passing the property or assets through a will or trust. And, as mentioned above, while this new law is certainly helpful, it does not pertain at all to your need for powers of attorney (medical and financial), setting up educational opportunities and guardianships for minor children, sheltering assets from excessive taxes, or any of the other important concerns that are addressed by a skilled Orange County estate planning lawyer.

Tags: estate planning in california
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Estates Attorney in Orange County Offers Tips for Paying Your Grandchild’s College Tuition

Wednesday, January 18th, 2012

The increasing cost of college tuition has sent many people running to their Orange County estate planning attorneys to discover the most strategic, tax-friendly ways to meet their children or grandchildren’s future education needs.

It’s well known that Ivy League schools can cost over $50,000 a year, while state university programs can cost up to $25,000, with prices projected to climb. Add to the mix the cost of graduate degrees and its very likely today’s college student will leave school with a six-figure mess on their hands.

Prior to the Tax Relief Act of 2010, there were two big tax breaks grandparents and parents could claim to help their loved ones offset college expenses. They could (and still can) pay any amount of tuition directly to an accredited school for a grandchild’s education without a gift-tax requirement. And, at the time of this writing (2011), an individual may gift up to $13,000 per year tax-free.

Additionally, grandparents may set up custodial accounts or fund a 529 college savings plan for their grandchildren. Because of the larger tax exemption, many professionals are seeing a trend of grandparents earmarking education expenses for grandchildren who are toddlers or even unborn grandchildren. Another option is setting up one large trust for multiple grandchildren and even future generations.

There is one downside to setting up a trust, however, as students must report irrevocable trusts on their financial aid forms. Even if the trust doesn’t provide for income until after college graduation, it is counted. There are still things we can do, however, with irrevocable trusts.

That is why if you are a grandparent who doesn’t plan to pay the entire cost of college, you might consider contributing to a 529 plan instead. An experienced estate planning attorney in Newport Beach can help you weight your options regarding this matter.

If you would like to learn more about saving for college and how to best plan for your grandchildren’s educational future, let’s sit down and talk. I would be happy to discuss your financial and estate planning needs. Simply call our Newport Beach office at (949) 260-1400 and ask to schedule a Family Wealth Planning Session with the mention of this article ($750 value).

Tags: estate planning attorney in newport beach
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When Designating a Guardian | Estates Attorney in Orange County

Tuesday, January 17th, 2012

Guardianship is a topic we cover very extensively in our weekly articles and in our Kids Protection Planning™ seminars. Today we want to share some practical considerations with you–things you should consider before naming one or more people to serve as guardians for your children. The intent is to encourage you to engage in proactive planning, and also to take some pressure off of you. The latter comes from realizing that until you actually die, your planning is quite flexible and can be changed to meet your wishes.

Not Permanent Until It’s Permanent

Naming one or more people to serve as a guardian for your children in the event of your death or incapacity might seem very permanent, but again, it’s not. You can change the named guardians in your plan at will . . . right up until the time you pass away or become incapacitated. For that reason, it’s not enough that you set up a great plan initially. You must also review that plan and the continuing suitability of the people you’ve chosen. As circumstances change and people evolve, so might your choices.

That’s where our law firm is unique. We have options available whereby we conduct an annual review of your plan each year just to make sure that our planning is still appropriate. We want you to sleep well at night, but we also want your children to receive the best care possible if something happens to you. It’s very important.

Really, Really Know The Appointees

Make sure you know the person or people you’re appointing very well. That means you need to spend a lot of time with them. Ideally, choose someone who is already a parent. That way you can observe and get comfortable with their parenting style. It’s also great if your children feel close to, and a sense of support from, the person you’re going to choose. You need to know and feel comfortable with things like religious beliefs, habits, where the person lives (so your children aren’t uprooted if that’s important to you), and how equipped the person is to help your children through a very difficult time.

Practical Considerations

Does the person you’re considering have a home that is big enough to include your children? How about his or her relative health and financial stability, does that meet your standards? Financial issues can be overcome with additional planning on your part, which might include something like a term life insurance policy. But the real question is whether the person you’re appointing manages money well enough to make the inheritance last.

You do have the option to name two guardians for your children, because it just so happens that raising children and managing money requires two different skill sets! One guardian would be the caretaker (“Guardian of the Person”), and the other would manage the money (“Guardian of the Estate”). If you consider this option, make sure the two guardians get along well, and make sure that they’re on the same page with respect to your wishes and what you believe to be in the best interest of your children.

DO NOT WAIT

It’s very important that you act right away to name a guardian for your children. Remember, until you die, the decision can be “undone,” but if you die without having named a guardian, then the fate of your children will be left to the discretion of a total stranger . . . a judge. You have the ability to take control right now, and your words and planning will have the effect of law. In other words, a less than perfect choice is better than no choice at all.

If you would like to discuss setting up a guardianship plan, please call our offices and schedule a time to speak with an attorney. If you mention this article by name and say that you’re interested in a Kids Protection Plan™, we will meet with you absolutely free of charge.

Tags: estates attorney in orange county, guardianship in california
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Newport Beach Estate Planning: More Than Planning for Death

Friday, January 13th, 2012

Part of estate planning involves deciding how much you want to give away while you’re alive. Many, many people get a lot of joy from seeing their loved ones benefit from and even grow gifts. In some sense, that’s infinitely more gratifying than working to put an estate plan in place and letting the gifts occur after your death. You worked for your assets, and if you know they’re going to be passed on, why not enjoy the process of gifting now? It’s at least worth thinking about, for the tax benefits alone if nothing else.

The Two Easiest Ways to Gift

There two very easy ways to give gifts without incurring any gift tax, which coincidentally reduces the size of your estate and your estate tax liability, if applicable. Giving gifts, in short, is a very effective double-edged sword for fighting the tax monster. The two easiest ways to give are as follows:

You may pay an unlimited amount of tuition and medical expenses for as many people as you want, so long as such money is paid directly to the educational or healthcare institutions, and
You may give up to $13,000 annually to as many individuals as you like. If you ever give more than $13,000 worth of cash or assets to a single individual, you must file a gift-tax return, and the amount exceeding $13,000 will go against your lifetime gift tax credit.

If your gifts exceed the annual limit, you will be charged the applicable gift-tax rate. The good news is that the rate has been gradually decreasing, but Congress is set to address the lifetime gift-tax exclusion again in 2012, so what will happen is anybody’s guess.

A Reason to Give Now

Here is one very good reason (besides enjoying the process of giving) to give now: If you exceed your gift tax exclusion within three years of dying, then your estate tax exemption is reduced by the same amount. For example, if you give one person $113,000 in one gift two years before you die, then your estate tax exemption will be reduced by $100,000. That’s a very good reason to act right now, unless you happen to know exactly when you’re going to die!

Charitable Gifts

Giving to charity is another option that can help reduce estate taxes and, at the same time, allow you to make a difference in the world. You have four options in this realm.

Give directly to a charity that you believe in.
Contribute to a charitable gift fund. These are like IRA’s in that you make a contribution (which is tax-deductible), grow the money tax free, and then direct it to the charity of your choosing.
Donate to a foundation that pools donations and then allocates grant money to local charities or causes that you designate.
Set up a charitable trust. These either allocate income to a charity or cause of your choosing and the principal to your heirs or vice versa.

Speaking of Gifts . . . .

All this talk of gifts has us thinking. We can help you determine whether or not gifting is a good option for you and whether it makes sense from a tax perspective. To that end, we are offering you a gift: For a very limited time (i.e. until our calendar is full), we will meet with you and provide you with a free Family Wealth Planning Session™. We normally charge $750 for these sessions, so the free slots will go quickly. To take advantage of this offer, please call our office and mention this article by name.

Tags: newport beach estate planning
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Estate Planning is Not Just for Elderly Newport Beach Residents

Thursday, January 12th, 2012

Many people in Newport Beach have a limited understanding of what estate planning is all about. Of course, an important component of it is to determine how your affairs will be handled after your death, but there’s a lot more to it than that. Younger people should also consider “estate planning” in terms of what will happen to them and their assets in the event that they should somehow become incapacitated.

Should you become somehow incapacitated, say due to an accident or illness, your estate planning attorney can help ensure that your wishes are clearly known. That means that even if you are unable to communicate with doctors, lawyers, or other parties, you can still have a say in what takes place.

For example, how do you feel about life support? Some people are all in favor of extending life by any means are available, while others prefer not to take any extraordinary measures. This is a hot topic in estate planning, and by working with an attorney in advance, your views on the subject will be known.

In this case, an Advance Health Care Directive is incredibly important. You can use this tool to create your own health care directives to develop a plan that meets your wishes. You will likely also want to put some considerable thought into who you would like to have power of attorney, not just over your medical needs, but also over your finances. This person will be able to take care of bills, provide for family members or pets, and otherwise keep your finances in order when you are unable to do so. A trusted estate planning attorney can help you determine who would be a good fit for this role.

While these issues certainly apply to the elderly, they are also relevant to younger adults. In some cases, the need for estate planning can be even more important, as it is more likely that there will be dependent children involved. When that happens, having guardianships and even certain trusts set up in advance can help to protect the children and ensure that their needs are being met.

A Newport Beach estate planning attorney can help individuals at all stages of life to identify and prepare for a variety of situations, whether that includes long-term medical care, providing for your children’s future, or choosing a trustworthy individual to take care of your financial obligations when you are incapacitated.

Tags: advance health care directive, newport beach estate planning attorney
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California Trust Attorney Explains How to Set Up Your Estate

Wednesday, January 4th, 2012

The idea of planning your estate can be unnerving to say the least. Besides being an unwanted reminder of your mortality, it can be somewhat awkward to think about your “things” outliving you. There are, however, a few very good reasons to start the process of planning your estate:

You get to decide to whom you wish for your assets to go . . . and you get to know that for once, your wishes are the law! In other words, if you don’t plan your estate, you’re wasting a tremendous opportunity to exercise power!
Without estate planning, taxes might eat into your estate. The only thing worse than dying would be dying and then giving a significant portion of your wealth to taxes rather than to your loved ones.
You can rest assured that you are not saddling your loved ones with the administrative nightmare that is the probate process. Believe me, your loved ones will be broken up enough over losing you. You don’t want to unnecessarily add to their grief, especially when you can take some very simple steps that will result in your estate being settled without court involvement.

The First Step–Taking Stock

The first step to planning your estate is to take stock of your assets. Assets are things with a value in excess of liabilities. Think of a house worth $200,000 that carries a $250,000 mortgage. That house is not an asset to its owner (and it won’t be an asset to the owner’s heirs, either). But a house worth $200,000 with a mortgage of only $50,000, on the other hand, is a significant asset. Other assets include investments (stocks and bonds), real estate, retirement accounts, insurance policies, and business interests. Be thorough when creating this list.

Who Do You Trust?

The next step in the process is to determine who you would trust to administer your estate. Who do you trust to follow your wishes and execute your last wishes? You’ll also want to decide who you would like to handle your business affairs and make medical decisions on your behalf in the event that you become legally incapacitated.

Letting the Heirs Know

At this stage you’ll also need to decide who you would like to inherit your property (by the way, an heir can also be the administrator). Once you’ve decided how you want your assets allocated, have a conversation with your loved ones! I can’t tell you how taboo this step seems for some people, but I highly encourage you to talk to your family about your bequests. If you fully outline your intentions and wishes to your family and friends, then you’ve significantly decreased the chances of a there being disagreements after you’re gone.

If your wealth and intentions are hidden until the day you die, on the other hand, then you’re setting up your estate for disaster . . . or at least a lot of bickering and hurt feelings. Take responsibility now for making sure that your wishes are fully expressed, both within your formal estate plan and to those with whom you have relationships.

We’ve Seen It All

We’ve pretty much seen it all when it comes to estate planning, so we can certainly shed light on any questions that you might have while putting a plan in place. Because we are here to serve, we are offering two free Family Wealth Planning Sessions™ this week. These sessions are normally priced at $750. Obviously, the two slots will fill up very fast, so you should call us and mention this article today!

Tags: california trust attorney, how to setup your estate
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What’s in a Name? | Orange County Trust Law Firm

Friday, December 30th, 2011

When meeting with my Orange County trust and estate planning clients, I have found that many are confused by the types of financial advisors to whom they have been referred, or what each profession does, so I have prepared a brief outline of experts and their scope of services for you. I work closely with many of these professionals as my clients are developing their estate plans and I hope you find this overview helpful.

CFP® Professional
Financial planners who hold CFP® certification have met education, examination, experience and ethics requirements.

Accountant

Accountants provide advice on tax matters and help you prepare and submit your tax returns. All accountants who practice as Certified Public Accountants (CPAs) must be licensed by the state(s) in which they practice.

Attorney

A relatively small percentage of attorneys provide financial planning services, usually specializing in estate and tax planning. A financial planner may ask an attorney to provide specific legal advice for a client, particularly in the areas of taxation or estate planning. An attorney may also be called upon to prepare the legal documents necessary to implement recommendations in areas such as wills, trust documents or business ownership planning.

Insurance Agent

Insurance agents are individuals licensed by a state or states to sell life and health and/or property and casualty insurance products. Many financial planners are licensed to sell or give advice on insurance products. Other financial planners might identify insurance needs for a client, but turn to a licensed insurance agent for recommendations about which existing insurance products best meet your needs. Independent insurance agents sell products for two or more insurance companies, while exclusive insurance agents represent only one.

Investment Adviser

Investment advisers are individuals or firms that provide securities advice for compensation as part of a regular business. They must register with the Securities and Exchange Commission (SEC) or appropriate state securities agencies, unless specifically exempted. Because financial planners often advise people on securities-based investments, many are registered as investment advisers. Investment advisers cannot sell securities products without a securities license. For that, you must use a licensed securities representative, such as a stockbroker.

Stockbroker

Also called registered representatives, stockbrokers are licensed by the state(s) in which they practice to buy and sell securities products such as stocks, bonds and mutual funds. They generally earn commissions on all of their transactions. Stockbrokers must be registered with a company that is a member of the Financial Industry Regulatory Authority (FINRA) and pass FINRA-administered securities exams.

If you have questions about which type of financial or legal professional would be best to handle your unique planning needs, be sure to give our Orange County trust and estate planning law firm a call at (949) 260-1400.

Tags: orange county trust law firm
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Do You Need an Orange County Estate Planning Lawyer With All The Online Options Available?

Friday, December 23rd, 2011

Estate planning lawyers are well aware of the variety of online estate planning tools available to those in Orange County and beyond. The variety of products available can create a false sense of security, however, when an individual believes he or she has made adequate plans for the estate. Recent Consumer Reports findings determined that the tools they reviewed were not robust enough to plan for situations that were even slightly complex.

For example, the high divorce rate in the US means that many individuals wish to provide for children from multiple relationships. Most of the software reviewed by Consumer Reports could not meet the hypothetical clients’ specific wishes when it came to this subject. In these “blended family” situations, the estate planning tools were too rigid in their options.

A number of other problems were uncovered in this experiment, which is not a big surprise to estate planning lawyers in Orange County. Each family and individual’s situation is highly dependent upon so many factors that it is nearly impossible for a computer program to anticipate them all. Additionally, engaging with a live person means that there is a capacity for human understanding that the programs simply cannot replicate.

This interpersonal relationship is every bit as important as the documents that are created as a result. From the lawyer’s extensive education and experience, he or she is able to guide clients into creating documents that are truly relevant to their particular circumstances. In the world of estate planning, “one size fits all” simply doesn’t work.

One of the biggest problems with online estate planning tools is the fact that they seem to open so many estates up to the probate process. As a result, families are left waiting for the courts to rule on decisions that the deceased believed had already been made. Unfortunately, those decisions don’t always reflect the true wishes or spirit of the documents generated through the software. Just as devastating is that fact that the probate process can be very expensive, thereby decreasing the amount of inheritance that beneficiaries do eventually receive.

It is commendable that so many Orange County residents are taking an interest in the estate planning process. It is an unfortunate reality, however, that using online tools generally won’t be enough to plan for the actuality of your given situation. Without a doubt, the best and safest approach is to develop a relationship with a trusted estate planning lawyer who can provide the expertise required to truly meet the needs of today’s modern families.

Tags: estate planning lawyers in orange county
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