Let’s say that a couple in California wants to leave their beloved vacation home to their children.  They see this as an act of love, providing future generations the opportunity to gather there and continue on the traditions that were started while the couple was still living.  It’s a beautiful, romantic, and idealized way to look at passing on the property.

Unfortunately, the generations that follow may have less interest or ability to keep and maintain the property than the original owners.  Once the vacation property has been passed on, it is the heirs’ responsibility to maintain it, pay annual property taxes, etc.  In many cases, the heirs may simply not be able to afford this.

And what about those heirs that live too far away to enjoy the vacation property regularly?  Should they be held just as responsible for its upkeep as siblings and cousins who live nearby and are able to use it on a regular basis?  What kind of alternative might be available for them?

Working with a wills and trusts lawyer can offer great insight into the options available…and there are options.  For example, the original couple may choose to place the property into a trust, meaning that a trustee would manage the home, and that (as much as possible), maintenance, taxes, repairs, etc. would be paid for out of the trust.  It may even be possible for some of the heirs to be “bought out” of their share by using funds from the trust.

Another advantage of placing the vacation property into a trust is that it can help if there are family tensions at play.  The trustee can be someone outside of the family whose only interest really is to preserve the property and the trust in an appropriate manner.  He or she may even determine that the property can be rented out to generate income if the trust is having trouble paying for maintenance.

Finally, if a vacation home is not put into a trust and there is a probate, it can really be a disaster. If the beneficiaries cannot agree, the property would have to be sold and the proceeds divided.  Losing a family vacation home like this can be devastating.

It is possible that some members of the family will simply be uninterested in the vacation property.  For this reason, the wills and trusts lawyer can set up an exit strategy that allows some heirs to purchase the shares of others, even using other assets from the estate.   It’s also not unusual for the third or subsequent generations to not have the same emotional ties to it as earlier generations.  In preparation for such an event, the trust can include an exit strategy that allows for the sale of the property with proceeds going to living heirs.

Vacation properties can be a little tricky when it comes to wills and trusts administration, so choosing an Orange County, CA lawyer who has expertise in dealing with this type of situation can make a big difference in ensuring that your wishes are clear.

Have questions about the best ways to pass your vacation home down to the next generation? Give our Newport Beach estate planning law firm a call at (949) 260-1400 and ask to schedule a free Family Wealth Planning Session ($750 value) with the mention of this article (limited to first 10 callers per month).

•    Where do I find clients?
•    How do I pay for inventory and equipment?
•    How do I market my products/services?

These are all critical things to work out to ensure a successful business. However, you should consider putting these issues aside for just a moment, because you really need to make sure you’ve got a solid legal foundation in place to protect your business and your personal assets.

One of the first steps to creating this rock solid foundation is to determine how you should form your business.  There are several options to consider: LLC, sole proprietorship, S-Corp…how in the world are you supposed to decide that on your own?  The answer is: you shouldn’t.  You should consult with a trusted advisor who can guide you through the advantages and disadvantages of all business structures as they relate to your business.

Here at the Morgan Law Group, we’ve counseled lots of Orange County business owners who have either neglected to take the time to address this issue or were poorly advised (or not advised at all!) when they made their choice to form their business.  But, no worries…it’s never too late to set things straight!
In future blog posts we’ll walk through the four pillars of a successful business, starting with things to consider when forming your business.  But for now, you should consider attending the Orange County Chapter of the National Association of Women Business Owner’s (NAWBO-OC) educational event on April 6th, where I will be teaching women business owners how to make sure their business is on a rock solid foundation.

You see, an estate plan is just like a car or house; it needs regular review to make sure that it stays in good working order.  There are just too many things that impact your estate plan.  You should consider your estate plan something that ages and something that requires care and tending.  Here are just a few reasons why your plan may need to be updated:

•    You’ve given birth or adopted a child.
•    Someone you’ve named in your plan passes away.
•    You’ve added or sold a significant asset.
•    You’ve changed your mind about who you want to raise your kids.

Life keeps us so busy that even if one of these events occurs and you remember that you need to change your will or trust, very few people actually take the time to do so.

This won’t happen to the clients of the Morgan Law Group.  One of the many benefits that our clients receive is that they will be reminded at least every three years that their estate plan must be reviewed.  We do this review free of charge and, most importantly, we remind you when it is time.  Your plan is simply just not going to get old or stale.
If you had your estate plan done at another law firm, you should contact them and ask them about their process and ask how they are ensuring that your plan will work in the way you planned when it was created.  If they don’t have an answer for you, contact us to see if you are eligible for a free review of your existing plan.  We’ll be happy to take a look and make sure that your family will be taken care of no matter what.

This may surprise you, but without hesitation I can tell you: most estate plans are in grave danger of failing.

Why do I say that?

There are many reasons actually, but what I see the most often is that people have not changed the title of all their assets, including real property, bank accounts, stocks & business interests, into the name of the trust.  This is called “funding” the trust. Your trust will not work unless it is funded.

To make sure your trust remains properly funded, to avoid probate and to ensure your plan works the way it was intended, it is a good idea to review the titles to your assets at least once a year.

Questions to consider are:

• Did you buy any real estate, stocks, bonds or other investments during this past year and, if so, is the asset titled in the name of your Living Trust?  (Refer to your Living Trust Identification Card or your trust document for the correct legal name).
• Have you acquired any other assets with “title certificates,” and are the titles in your name as Trustee?
• Did you purchase any life insurance or annuities? If so, are the beneficiaries properly designated? (Please call us if you are unsure).

Common Funding Errors to Avoid:

• Assets are not transferred into the name of the trust
• Assets that were purchased after the creation of the trust are not transferred
• Assets “drift out” of the trust (i.e. during a refinance)

Funding Services That Make Us Unique.

We walk each of our clients step-by-step through the transfer process so that they know how to transfer title to their assets into their trust. We prepare the deeds to transfer California real estate to the trust, coordinate deed preparation for out-of-state properties, and coordinate with your Financial Planner and CPA throughout the process.  We give clients a Funding Toolkit and then offer as much guidance as needed to make sure that they get their assets properly titled into their Trust.

We also offer our Wealth Plan where we do it all.  Some busy families want the least amount of personal effort and the greatest amount of convenience and care.  We will prepare an asset spreadsheet confirming what is owned and how title is held and then complete all of the forms and requests necessary to transfer every asset and designate every beneficiary for the maximum  protection of their family and their assets.  This asset spreadsheet is invaluable, as it can be updated over time.  It is also a helpful tool for families in a time of crisis—so they can easily navigate  their loved ones financial and legal affairs, knowing exactly what assets are owned and where they are located.

If your child’s other biological parent is living and you share custody, your children will automatically be raised by the surviving parent, unless there is some clear reason why that should not happen. There is nothing you can do about this other than stay alive at all costs!

Unfortunately, you don’t have control over such things.  So, the next best thing is to name your own guardians and leave instructions so that if something happens to both parents, your wishes for the care of your children will be known.

Also, it is crucial to nominate first responders and provide clear instructions so that there will never be a question as to whether your children should be taken into child protective services if something happens to you.

Finally, if you are a single parent and your child’s other parent is living, you must speak with an attorney about protecting the assets you leave for your children, especially if the thought of your ex handling the assets you leave behind for your children makes you shudder.

If you are parenting your children with a partner who is not biologically related to your children, creating a comprehensive plan that protects your kids is vital because you want to ensure that your partner will be able to care for your child if something happens to you. In addition, you will want to have a “Medical Power of Attorney” giving your partner authority to make medical decisions for your child if you are unavailable.

Do not make the mistake of failing to plan just because your children would automatically go to their other parent in the event of your death or incapacity. It’s just the opposite: you have even more of a need to plan -you want your wishes for your children to always be known and never forgotten.

If you are a single parent raising your children alone, you can complete your own plan, and sign documents alone.  If you are on friendly terms with your children’s other biological parent, then you and your partner/ex should each complete your own plan and sign documents that will provide for the same outcomes if something should happen to you both.

1. Do you prepare a comprehensive plan for my kids’ care if something happens to me, like the Kids Protection Plan™ that names short and long‐term guardians and gives specific instructions to all of the guardians and my caregivers? What about an ID card for my wallet listing the short‐term guardians with their contact information?
2. Are all of your fees flat fees? What about for ongoing work after the initial completion of my estate plan documents? What happens when I call with legal questions 2 years after my planning documents were completed? What if the questions are about something other than my estate plan?
3. Do you have a whole team in place or is it just you? What happens if something happens to you or you retire?
4. What happens if I need to get a quick question answered and you are not available?
5. Do you make sure my assets are titled in the right way? How?
6. What happens when things change in my life? Do you notify me about changes in the law? How often do you communicate with me?
7. Does my planning fee include a regular review of my plan? What if I want to make changes to my plan?
8. Do you have a process for helping me capture and pass on my intangible wealth, such as my intellectual, spiritual and human assets or who I am and what’s important to me?
9. Can you structure my estate plan so that whatever I leave to my kids will be protected from a lawsuit against them or if they are divorced in the future? How often do you build that kind of planning into client’s plans?
10. Can you help me make smart choices about things like buying insurance, saving for college, and retirement planning?

Knowing the answers to these questions before you engage an estate planning lawyer will ensure you put in place an estate plan for your family that will really work when your family needs it and won’t end up just a pile of worthless paper after you are gone.

Typically, mom and dad think they have it all taken care of.  They had some estate planning done several years ago and then put the documents up on some shelf where they gathered dust and they haven’t looked at them since.  Unfortunately, this is a recipe for disaster and you and your family may be in for quite a surprise should there be a death or incapacity.

Here are 3 steps that you can take now to make sure that your parents’ estate plan really does do what they want it to do and make sure your family isn’t going to be faced with thousands of dollars in legal expenses, taxes and needless complication.

1.  Review Legal Title to All Assets.

If your parents assets are not properly titled, it could cost you tens or even hundreds of thousands of dollars.  Title to the family home and other assets are often not properly titled and therefore do not accomplish the family’s estate planning goals.  This also means reviewing beneficiary designations on retirement plans and life insurance.  You could be facing an expensive, time-consuming and stressful process called probate.  Probate is totally avoidable by ensuring that ALL of your parents’ assets are properly titled.

2.  Review All Estate Planning Documents, At Least Every 3 years

Just as it’s necessary to have regularly scheduled medical check-ups, even when you are feeling fine, so too an estate plan needs periodic check-ups to make sure that it is still going to work as intended.  The law changes; your assets change, and your family changes too.  Uncovering a problem that might lie buried in your files until it is too late can save you and your family a ton of heartache and thousands of dollars.

Financial or healthcare powers of attorney can go stale, meaning that they may not be accepted if they are old or don’t meet updated legal requirements.  If a parent gets rushed to the hospital, and is then in for some length of time or becomes incapacitated, you could be stuck if they have not executed updated documents.  This not only protects them, but you as well; you need to be able to step in with the legal authority to obtain critical information and handle their affairs.

3.  Plan to Protect Your Inheritance – Don’t Leave it At Risk!

Most estate plans leave an inheritance outright: a lump sum distribution.  This is simple and easy, but dangerous.  If your parents’ estate plan is drafted in the best way possible, you could receive your inheritance completely protected from divorce, estate taxes, and creditor claims.

You can easily plan now by having your parents’ estate plan reviewed and then take the necessary steps to prepare everything for a smooth administration.  Invest a fraction of the time and energy now to avoid major complication, stress and cost later.  It’s one of the best and least expensive investments you can make for your peace of mind.