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Is Your Estate Plan Unfinished? Don’t Wait to Complete This Important Process

Is Your Estate Plan Unfinished? Don’t Wait to Complete This Important Process

For most people, thinking about one’s own mortality is unpleasant and low on the list of priorities. While you may objectively recognize the need to plan for your future – and the future of your loved ones after you’re gone – it can be hard to summon the motivation to actually create a will or trust. If you’ve made an effort to begin the process but haven’t finalized the details, consider this article the sign you need to finish up. When it comes to an estate plan, though, an unfinished one is about as useful as not having one at all.

Estate Plan Procrastination

There are many reasons why people avoid finishing up their estate planning. For one, the process can be a reminder that you are not, in fact, immortal. The very real consideration of how your retirement fund, your assets, and your wealth will be distributed amongst your beneficiaries can trigger many difficult emotions. Even initiating a meeting with an estate planning attorney can feel like a chore. Instead of acting in their own best interests, many choose to bury their heads in the sand to avoid these feelings.

Of course, even if you are feeling relatively level-headed about the estate planning process, the choices you are tasked with making can feel overwhelming. Depending on your family dynamics, beneficiaries may end up feeling frustrated, sad, or even angry about their inheritance. It’s impossible to please everyone, but when serious money is on the line, the pressure to make fair decisions can be intense. It is better for you to make the decision instead of leaving it up to the courts.

An unfinished estate plan isn’t always the result of emotional upheaval or internal debate about inheritance. Like other money management chores, estate planning is often put off in favor of more pressing concerns. Busy lives, holidays, vacations, and major life events like marriage or pregnancy can cause people to put off their estate planning. While certainly understandable, this kind of procrastination can have serious consequences and will add another large and emotionally charged project to your family’s to-do list when you pass away.

The Unfinished Estate Plan

Regardless of your reasons for procrastinating on estate planning, the results are the same: Your unfinished will or trust – if it exists at all – is likely unenforceable. While there may be documentation of your wishes, without a signature, your estate will be forced through probate. Expensive and time-consuming, probate is a public legal proceeding that puts your private affairs on display. While probate doesn’t always have to be a stressful experience for beneficiaries, there is a risk that your unfinished estate plan won’t be adhered to by a judge.

Regardless of the reason, if you have an unfinished estate plan, give me a call at (858) 432-3923 so I can assist you in ensuring you have a complete and comprehensive estate plan that will actually work in the event of your incapacity and at your death. If you’ve been putting off finishing or starting your plans for your estate, grab your calendar, and give me a call to schedule an appointment to complete the process and check one more thing off your to-do list.

My Trust is Signed, No Probate for My Family, Right?

My Trust is Signed, No Probate for My Family, Right?

Planning ahead has obvious benefits. Whether you’re planning a vacation or researching for a job interview, it’s always smart to outline your priorities and anticipate potential challenges that may arise. Planning your estate has similar benefits. With plans clearly established, your wealth and assets are protected should you pass away or become incapacitated. It’s important to be aware, however, that simply meeting with an attorney and signing a Trust does not mean your estate planning process is complete. Without properly funding your Trust, your assets could still be forced through the probate process.

Understanding the Process

While the term seems scary, Probate is a relatively simple concept: it’s a legal procedure that transfers assets from the deceased to their heirs or beneficiaries. When a Will doesn’t exist or does not clearly outline a person’s plans for their estate after their passing, a judge will need to give legal permission for their assets to be passed on to their heirs. If a Will does exist, the court is involved to ensure the Personal Representative administers and distributes the estate according to the terms of the Will. This process, called Probate, is more common than you might expect. Not only does the Probate process invite the judge to become involved in the distribution of the assets, it can also be a very public, time consuming, and expensive process.

Depending on the value of the assets to be distributed through the Probate process, some jurisdictions have a simplified probate proceeding. However, this can still be a time consuming and public proceeding.

Not every asset goes through the Probate process. Anything owned solely by the deceased, like a home or vehicle, will be subject to Probate. Any asset that has a surviving co-owner or beneficiary designation will transfer to the named individual automatically upon your death. Property held in a Living Trust is also exempt from the Probate process because the assets are deemed to be owned by the Trust, not you.

Avoiding Probate

Probating a Will can be stressful. In the days and weeks following the loss of a loved one, the last thing family members want is a legal battle for their inheritance. In especially large estates, property may need to be professionally appraised and inventoried. Debts and taxes will also need to be paid before the estate can be fully settled. The attorneys who handle these tasks will also take a chunk of the money for their involvement in the administration of the estate. Also, since Probate is a matter of public record, there is a lack of privacy to consider. It’s no wonder so many people hope to avoid Probate altogether.

One of the most common ways to avoid Probate is to use a Revocable Living Trust to protect your assets. In order for the Trust to keep your assets out of Probate, the assets have to be funded into the Trust while you are alive. Failure to complete this step will lead your family to Probate Court, even if it is just to have the assets transferred to the Trust.

If you have successfully funded your Trust, your assets will be administered as you have directed in your Trust once you pass away, without court involvement. The result is the transfer of your assets easily, timely, and privately.

If you have questions about funding your Trust, please give me a call at (858) 453-6032 or click here to set up a call. I can review your assets and ensure that everything is in place so your family can have a smooth administration, without court involvement. When it comes to the future, leave nothing to chance.

Loan, Gift, or Advancement: Why the Classification Matters

Loan, Gift, or Advancement: Why the Classification Matters

While we all want to provide financial help to our loved ones—whether they are family or close friends—it is important to understand that how the money is classified will directly affect your estate planning. Accordingly, the intent behind the transfer of the money is key when determining if it will be considered a loan, gift, or advancement.

Understanding the Differences

Loan

If there is a mutual understanding that the money you gave to a loved one is to be paid back, this is considered a loan—whether the so-called loan was documented or not. If the money lent is not paid back before you pass away, the sum is still owed to your estate by the borrower. The loan becomes an asset of the estate. For this reason, it is key to ensure the proper documentation is drawn up so that both parties—the lender and the borrower—are aware that the transfer is a loan and will remain an outstanding obligation until it is paid in full.

Because there is a debt that is owed to you, there are a couple of ways you can handle it in your estate plan. First, you could decide that you will forgive the debt if it is still outstanding when you die. In order to do this, there needs to be specific language in your will or trust. Also, depending upon the amount to be forgiven, you may want to consult with your accountant or CPA to make sure that this will not bring about any undesirable consequences for either party. Alternatively, if you die while the debt is still outstanding, and the borrower is set to receive an inheritance from you, an arrangement can be made that his or her inheritance will be reduced by the amount of the loan. This will decrease the amount that the borrower will owe, and, depending upon the amount of the inheritance, may eliminate the debt.

In sum, if you are not expecting the loan to be paid back, the transfer of funds could be classified as a gift or an advancement depending upon what impact you would like the transfer to have on the individual’s inheritance.

Gift

If you transfer money to a loved one without the expectation of being paid back and without any additional considerations made with respect to your estate planning, it is deemed to be a gift. It is important to note, if the gift is for an amount over the annual exclusion, which is $15,000.00 in 2019, a gift tax return will need to be prepared and filed with the Internal Revenue Service. When deciding to make a gift to a loved one, it is important to consider what impact you would like it to have on your estate planning. If your estate planning goal is to make the same gifts to  all of your beneficiaries, making a gift to one of them during your lifetime will upset this balance because this one individual may ultimately receive more than the other beneficiaries.

Advancement

If you would like to give money to a beneficiary during your lifetime but you do not want it to disrupt the distribution scheme contained in your estate plan, you can consider the giving of the money to be an advancement.If the money transfer is classified as an advancement, then the person would in effect be receiving a portion of his or her inheritance ahead of time. In such a scenario, the beneficiary’s share of the estate will be reduced by the amount of the advancement when you pass away. In order for this to be properly carried out, however, there are particular provisions that must be contained in your estate planning documents. Additionally, accurate records must be kept regarding the transfer of funds, particularly if multiple advancements are made.

Estate Planning Help

If you are thinking about transferring money to a family member or friend, give me a call at (858) 432-3923 or contact me to schedule an appointment so we can discuss how the transfer can or will affect your estate planning goals.

When is Probate necessary?

When is Probate necessary?

Whether or not you have an estate plan in place, you have likely heard the term “probate.” Probate is the legal process by which a deceased individual’s assets are distributed under court supervision. Said in another way, Probate is a lawsuit against your estate for the benefit of your creditors and beneficiaries. This process is necessary to distribute assets that are solely in the name of the deceased person. Probate is governed by state law.

Avoiding Probate

One of the appealing aspects of putting together an estate plan is to avoid probate. One way to avoid the probate process is to ensure that no assets will be titled in the decedent’s name, or providing for an automatic transfer of title, at death. Ways to accomplish this include joint tenancy with rights of survivorship, transfer-on-death (TOD) or payable-on-death (POD) beneficiaries, or use of a Trust.

Joint ownership is easy to create and transfer property; however, this solution provides its own set of concerns. TOD and POD accounts can be efficient because, upon the account owner’s death, they immediately transfer the account, outside of probate, to the named recipient.  While they are easy (and typically free) to set up, there are some drawbacks to this form of “probate avoidance” planning. It is important to note that in this case, the account is transferred to the beneficiary outright without any creditor protection. The best and most efficient way to avoid probate is the use of a trust. By placing assets into a Trust, you, as Trustee, own them, have full control of them (until incapacity) and benefit from them. Accordingly, the assets do not go through probate because only property owned by the decedent goes through this process.

Note: If your estate planning consists of just a Will, this document will go through the probate process. While having a Will allows you to determine who will get your assets – as opposed to letting the court decide for you, a public, expensive and long court process will be initiated in order for your estate to pass to your beneficiaries under a Will.

Benefits & Downsides of Probate

While there are numerous estate planning tools that can be used to avoid probate, it is not always a bad thing. A probate court can ensure that your intentions and wishes listed in your Will are carried out after your passing. Additionally, the probate process guarantees all presented debts are discharged as well as any outstanding taxes on the estate. This, in turn, results in finality to the affairs of the deceased – and surviving family members. Of note, if the deceased had outstanding debt, the probate process gives creditors a window of time to file a claim against the estate, which could result in some debt forgiveness if there is a concern about the estate being insolvent.

That being said, there are downsides to the probate process. One such downside is the cost.  Due to the filing and inventory fees imposed by the probate courts, this is an additional expense eating away at the estate. Also, the probate process can be very time consuming. The probate must be open for a minimum period of time to permit creditors to file claims against the estate. For most uncomplicated probate estates, it will take a minimum of one year to administer. Additionally, the lack of privacy can be a concern for most families.  The contents of your Will, and any other documents that have to be filed with the court, will be a matter of public record.  Any disgruntled family member wondering how your estate was divided up, will have the ability to get access to the documents through the probate process. Lastly, the probate process takes control away from the deceased and the family because if you do not have a Will the probate process puts the disbursement of a deceased’s assets in the hands of the court and at the mercy of local intestacy law.

Get Advice

If you have questions about the probate process and intestacy laws in California, feel free to give me a call at (858) 432-3923 or click here to schedule an appointment. No matter if you have a little or a lot, a comprehensive and customized estate plan will help you avoid probate and make sure your loved ones are taken care of when you are gone.

Changes to ABLE Accounts You Should Know

Changes to ABLE Accounts You Should Know

If you have a loved one with disabilities, you may be familiar with “ABLE” accounts, authorized by Congress in 2014 under the Achieving a Better Life Experience Act.  ABLE accounts are tax-advantaged savings accounts–similar to 529 education savings plans–whose funds can be used to pay for certain qualifying expenses of disabled individuals. As a result of the Tax Cuts and Jobs Act (TCJA), there are several changes that affect ABLE accounts.

What You Should Know

First, a 529 account can now be rolled over to an ABLE account. However, the ABLE account must be for the same beneficiary as the 529 account or for a member of the same family. Previously, families who originally funded a 529 account for a child whose disability manifested later in life would suffer a tax penalty if the funds were withdrawn from the 529 account to cover medical expenses because they were not allowable education expenses.  Now those same funds, through the use of the rollover, can be made available for the beneficiary’s disability-related expenses. There are limits as to how much can be rolled over, so it is important to discuss any changes to a 529 plan with your tax professional.

Second, a beneficiary of an ABLE account can now contribute their personal earned income into their own account. The maximum amount a beneficiary can contribute is equal to the annual federal poverty level for a one-person home ($12,490.00 in 2019 in the continental United States and the District of Columbia). These contributions, however, are separate and apart from  contributions made to the ABLE account by other individuals (family members, friends, estates, trusts, etc.).  Further, a working beneficiary will not be eligible to contribute their own money to the ABLE account if their employer contributes to a workplace retirement plan on his or her behalf.

Third, those beneficiaries who contribute to their own ABLE account, as opposed to others who contribute to the account, may be eligible for the Saver’s Credit. Up to $2,000 of the contributions made by ABLE account beneficiaries may be eligible for this credit.  This may help lower any income tax owed by the beneficiary or help increase any refund the beneficiary may be entitled to. There are, however, additional requirements that need to be met and it is important to check with an experienced professional to determine what credits may be available for a beneficiary who contributes to their own account.

Know Your Options

It is important to know that ABLE accounts, as well as Special Needs Trusts, have an underlying purpose: to supplement, not replace, the benefits and services provided by government programs like Medicaid and Supplemental Security Income (SSI). If you have a loved one with special needs, contact me at (858) 432-3923 to help guide you through the process of creating a plan that best suits your family’s needs. I look forward to discussing your specific needs and objectives with you!

6 Questions to Consider When Selecting Beneficiaries For Your Life Insurance Policy—Part 2

6 Questions to Consider When Selecting Beneficiaries For Your Life Insurance Policy—Part 2

In the first part of this series, I discussed the first three of six questions you should ask yourself when selecting a life insurance beneficiary. Here I cover the final half.

Selecting a beneficiary for your life insurance policy sounds pretty straightforward; however, given all of the options available and the potential for unforeseen problems, it can be a more complicated decision than you might imagine.

For instance, when purchasing a life insurance policy, your primary goal is most likely to make the named beneficiary’s life better or easier in some way in the aftermath of your death. However, unless you consider all of the unique circumstances involved with your choice, you might actually end up creating additional problems for your loved ones.

Last week, I discussed the first three of six questions you should ask yourself when choosing a life insurance beneficiary. Here I cover the remaining three:

4. Are any of your beneficiaries minors?
While you’re technically allowed to name a minor as the beneficiary of your life insurance policy, it’s a bad idea to do so. Insurance carriers will not allow a minor child to receive the insurance benefits directly until they reach the age of majority.

If you have a minor named as your beneficiary when you die, then the proceeds would be distributed to a court-appointed custodian tasked with managing the funds, often at a financial cost to your beneficiary, even if the minor has a living parent. As a result the child’s other living birth parent would have to go to court to be appointed as custodian if he or she wanted to manage the funds. Additionally, in some cases, that parent would not be able to be appointed (for example, if they have poor credit), and the court would appoint a paid fiduciary to hold the funds.

Rather than naming a minor child as beneficiary, it’s better to set up a trust for your child to receive the insurance proceeds. With a Trust you get to choose who would manage your child’s inheritance, and how and when the insurance proceeds would be used and distributed.

5. Would the money negatively affect a beneficiary?

When considering how your insurance funds might help a beneficiary in your absence, you also need to consider how it might potentially cause harm. This is particularly true in the case of young adults.

For example, think about what could go wrong if an 18 year old suddenly receives a huge windfall of cash. The 18 year old might blow through the money in a short period of time and even worse, getting all that money at once could lead to actual physical harm (even death), as could be the case for someone with a substance-abuse problem.

To help mitigate these potential complications, some life insurance companies allow your death benefit to be paid out in installments over a period of time, giving you some control over when your beneficiary receives the money. However, as discussed earlier, if you set up a trust to receive the insurance payment, you would have total control over the conditions that must be met for proceeds to be used or distributed. For example, you could build the trust so that the insurance proceeds would be kept in trust for beneficiary’s use inside the trust, yet still keep the funds totally protected from future creditors, lawsuits, and/or divorce.

6. Is the beneficiary eligible for government benefits? Considering how your life insurance money might negatively affect a beneficiary is absolutely critical when it comes to those with special needs. If you leave the money directly to someone with special needs, an insurance payout could disqualify your beneficiary from receiving government benefits. Under federal law, if someone with special needs receives a gift or inheritance of more than $2,000, they can be disqualified for Supplemental Security Income and Medicaid. Since life insurance proceeds are considered inheritance under the law, an individual with special needs SHOULD NEVER be named as beneficiary.

To avoid disqualifying an individual with special needs from receiving benefits they may genuinely need, you would create a “special needs” trust to receive the proceeds. In this way, the money will not go directly to the beneficiary upon your death, but be managed by the trustee you name and dispersed per the trust’s terms without affecting benefit eligibility.

The rules governing special needs trusts are quite complicated and can vary greatly from state to state, so if you have a child who has special needs, meet with me, an experienced estate planning attorney, to ensure you have the proper planning in place, not just for your insurance proceeds, but for the lifetime of care your child may need.

Make sure you’ve considered all potential circumstances
These are just a few of the questions you should consider when choosing a life insurance beneficiary. Consult with me to be certain you’ve thought through all possible circumstances.

If you think you may need to create a trust—special needs or otherwise—to receive the proceeds of your life insurance, please feel free to contact me so I can properly review all of your assets and consider how to best leave behind what you have in a way that will create the most benefit—and the least challenges—for the people you love. Schedule your Family Wealth Planning Session today by calling me at (858) 432-3923. I look forward to being of service to you and your family!

Why You Might Actually Owe Taxes in 2018

Why You Might Actually Owe Taxes in 2018

Like many taxpayers, if you’ve already filed your federal income taxes for 2018, you may be surprised to discover you’re not getting a refund this time.  If so, this was almost certainly due to the sweeping tax overhaul made by the 2017 Tax Cut and Jobs Act (TCJA).

Since personal tax rates were lowered by the TCJA, it’s natural to assume you would owe less taxes, not more. But as you may have discovered, this isn’t always the case.

Seeing that the TCJA was promised to offer most people a tax break, understanding why you might owe more taxes in 2018 (rather than less) can be confusing. The following questions and answers are designed to shed some light on this situation, so you can start revising your tax strategies for coming years.

Q: What changed?

A: In addition to lowering personal income tax rates, the TCJA doubled the standard exemption to $12,000, added limits to deductions for state and local taxes (SALT), eliminated personal exemptions, set limits on deductions for home-mortgage interest, among many other changes.
 
Given all of the changes, you may find that you’re no longer withholding the proper amount of taxes from your paycheck and/or quarterly installments to the IRS. When filing, this can result in either overpaying your taxes (and getting a refund) or underpaying (and owing money).

Q: What does this mean for me?

A: In light of these new changes, you should carefully review your withholding and make adjustments if necessary. To help with this, the IRS published new withholding tables and updated its withholding calculator into which you can input your current tax data to see if you need to make any changes.

Q: How do I change my withholding?

A: If you work as an employee, you change your withholding by making adjustments to your W-4. If you work for yourself, you either increase or decrease your estimated quarterly payments.

A W-4 determines how much income tax is withheld from your pay by your employer. You fill out a W-4 when you start a new job, but you can change it at any time. Specifically, the form asks you for the number of allowances you want to claim based on personal factors, such as being married and/or having children and filing as head of household.

The more allowances you claim, the less federal income tax your employer will withhold, which translates to more money in your paycheck. The fewer allowances you claim, the more federal income tax your employer will withhold, lowering your take-home pay.

It’s important that you withhold the proper amount from your paycheck or make quarterly payments. Don’t withhold enough, and you’ll owe the IRS at the end of the year. Withhold too much, and you might get a big refund, but you’ve basically given the government an interest-free loan for that year.

Maximize your tax savings

Adjusting your withholding is just one of many strategies you can use to save on your taxes. Indeed, the TCJA also changed tax laws that have the potential to affect your estate planning strategies as well. In light of this, when the 2018 tax season wraps up, I’ll be happy to refer you to a few of my favorite local CPAs to bring you support and guidance that you can use to maximize your tax savings in 2019 and beyond.

As always, if there is anything I can do to support you or if you have any questions about your estate plan or need to set up a new estate plan, please contact my office at (858) 432-3923.

Four Easy to Avoid Mistakes People Make at Tax Time

Four Easy to Avoid Mistakes People Make at Tax Time

It’s that time of year again: tax season. No one enjoys doing their taxes, and that is likely why many of us leave this tedious task to the last…possible…moment. As Tax Day approaches, millions of Americans are likely scrambling to track down all of their important documents to meet the April 15 deadline. But as with anything in life, the more you rush, the more likely you are to make mistakes. When it comes to your taxes, these mistakes can result in monetary penalties, delays in getting a refund, and even an increased chance of being audited. Below are four easily avoidable mistakes people make at tax time.

  1. Not filing when you could get a refund: No matter what your income level, filing your taxes is important. This is particularly true if you are a low-income earner, as you may be entitled to a refund from the government through the earned income credit.
  2. Not taking advantage of professional advice: Our tax law is complicated. That’s why speaking with a tax professional can help ensure you are maximizing your tax refund or minimizing your tax bill. Whether it is itemizing expenses or taking advantage of tax credits, do not leave your taxes to chance. If you do not have a CPA, please contact me and I’ll be happy to make an introduction to a professional and qualified CPA.
  3. Not taking the time to organize paperwork: Getting all of your important documents together is not only important because it ensures you are properly filing your taxes, but it particularly comes in handy in the event you get audited by the IRS. Instead of doing this at the last minute, take the time to save documents throughout the year so you are ready when April 15 arrives.
  4. Not handling other “legal” matters: Since you are getting your financial house in order for tax season, it is a great opportunity to assess your other legal needs – like Estate Planning (also known as Legal Life Planning). Wills, Trusts, life insurance, healthcare proxies, and powers of attorney are just some of the valuable tools available to you. Planning for your incapacity and your family’s future when you are gone is just as critical, and leaving the results to chance can cause more stress on already grieving loved ones.

Getting ready for tax season is important, but so is Estate Planning. Do not leave this important task for later, as life is unpredictable. If you have questions about how to get started on your estate plan or need assistance updating an existing plan, contact Cheever Law, APC at 858-432-3923. I look forward to being of service to you.

4 Estate Planning Must-Haves for Unmarried Couples—Part 2

4 Estate Planning Must-Haves for Unmarried Couples—Part 2

In the first part of this series, I discussed the estate planning tools all unmarried couples should have in place. Here, we’ll look at the final two must-have planning tools.

Most people tend to view estate planning as something only married couples need to worry about. However, estate planning can be even more critical for those in committed relationships who are unmarried.

Because your relationship with one another is not legally recognized, if one of you becomes incapacitated or when one of you dies, not having any planning can have disastrous consequences. Your age, income level, and marital status makes no difference—every adult needs to have some fundamental planning strategies in place if you want to keep the people you love out of court and out of conflict.

Last week, I discussed Wills, Trusts, and Durable Powers of Attorney. Here, I’ll look at two more must-have estate planning tools, both of which are designed to protect your choices about the type of medical treatment you’d want if tragedy should strike.

3. Medical power of attorney (Advance Health Care Directive)
In addition to naming someone to manage your finances in the event of your incapacity, you also need to name someone who can make health-care decisions for you. If you want your partner to have any say in how your health care is handled during your incapacity, you should grant your partner medical power of attorney.

This gives your partner the ability to make health-care decisions for you if you’re incapacitated and unable to do so yourself. This is particularly important if you’re unmarried, seeing that your family could leave your partner totally out of the medical decision-making process, and even deny your him or her the right to visit you in the hospital.

Don’t forget to provide your partner with HIPAA authorization within the medical power of attorney, so he or she will have access to your medical records to make educated decisions about your care.

4. Living will
While medical power of attorney names who can make health-care decisions in the event of  your incapacity, a living will explains how your care should be handled, particularly at the end of life. If you want your partner to have control over how your end-of-life care is managed, you should name them as your agent in a living will.

A living will explains how you’d like important medical decisions made, including if and when you want life support removed, whether you would want hydration and nutrition, and even what kind of food you want and who can visit you.

Without a valid living will, doctors will most likely rely entirely on the decisions of your family or the named medical power of attorney holder when determining what course of treatment to pursue. Without a living will, those choices may not be the choices you—or your partner—would want.

I can help
If you’re involved in a committed relationship—married or not—or you just want to make sure that the people you choose are making your most important life-and-death decisions, consult with me to put these essential estate planning tools in place.

With my help, I can support you in identifying the best planning strategies for your unique needs and situation. Contact me at 858-432-3923 today to get started with a Family Wealth Planning Session. I look forward to serving you.

4 Estate Planning Must-Haves for Unmarried Couples—Part 1

4 Estate Planning Must-Haves for Unmarried Couples—Part 1

It is thought that Estate planning is only needed once you get married; however, the reality is every adult, regardless of age, income level, or marital status, needs to have some fundamental planning strategies in place if you want to keep the people you love out of court and out of conflict.

In fact, estate planning can be even more critical for unmarried couples. Regardless if you’ve been together for decades and act just like a married couple, you are not viewed as married in the eyes of the law. And in the event one of you becomes incapacitated or when one of you dies, not having any planning in place can have disastrous consequences.

If you’re in a committed relationship and have yet to get—or even have no plans to get—married, the following estate planning documents are an absolute must:

1. Wills and Trusts
If you’re unmarried and die without planning, the assets you leave behind will be distributed according to your state’s intestate laws to your family members: parents, siblings, and possibly even other, more distant relatives if you have no living parents or siblings. California law does not provide protection for your unmarried partner. As a result, if you want your partner to receive any of your assets upon your death, you need to—at the very least—create a Will (although that will not avoid court proceedings).

A Will details how you want your assets distributed after you die, and you can name your unmarried partner, or even a friend, to inherit some or all of your assets. However, certain assets like life insurance, pensions, and 401(k)s, are not transferred through a Will. Instead, those assets will go to the person named in the beneficiary designation, so be sure to name your partner as beneficiary if you’d like him or her to inherit those assets.

However, there could be an even better way.

Although Wills and beneficiary designations offer one way for your unmarried partner to inherit your assets, they’re not always the best option. First and foremost, they do not operate in the event of your incapacity, which could occur before your death. In that case, your partner may not have access to needed assets to pay bills, or he or she could potentially even be kicked out of your home by a family member appointed as your guardian during your incapacity.

Moreover, a Will requires probate, a court process that can take quite some time to navigate and comes with great costs. And finally, assets passed by beneficiary designation go outright to your partner, with no protection from creditors or lawsuits. To protect those assets for your partner, you’ll need a different planning strategy.

A far better option would be to place the assets you want your partner to inherit in a Living Trust. First off, Trusts can be used to transfer assets in the event of your incapacity, not just upon your death. Trusts also do not have to go through probate, saving your partner precious time and money.

What’s more, leaving your assets in a continued Trust that your partner could control would ensure the assets are protected from creditors, future relationships, and/or unexpected lawsuits.

Consult with me for help deciding which option—a Will or Trust—is best suited for passing on your assets.

2. Durable power of attorney

When it comes to estate planning, most people focus only on what happens when they die. However, it’s just as important—if not even more so—to plan for your potential incapacity due to an accident or illness.

If you become incapacitated and haven’t legally named someone to handle your finances while you’re unable to do so, the court will pick someone for you. And this person could be a family member, who doesn’t care for or want to support your partner, or it could be a professional guardian who will charge hefty fees, possibly draining your estate.

Since it’s unlikely that your unmarried partner will be the court’s first choice, if you want your partner (or even a friend)  to manage your finances in the event you become incapacitated, you would grant your partner (or friend) a Durable Power of Attorney.

A Durable Power of Attorney is an estate planning tool that will give your partner immediate authority to manage your financial matters in the event of your incapacity. He or she will have a broad range of powers to handle things like paying your bills and taxes, running your business, collecting government benefits, selling your home, as well as managing your banking and investment accounts.

Granting a Durable Power of Attorney to your partner is especially important if you live together, because without it, the person who is named by the court could legally force your partner out with little to no notice, leaving your partner homeless.

Next time, I’ll continue with part two in this series on must-have estate planning strategies for unmarried couples.

As an Estate Planning Attorney, I can guide you to make informed, educated, and empowered choices to protect yourself and the ones you love most. Contact me today to get started with a Family Wealth Planning Session.

Three Keys to Protecting Yourself from a Rogue Executor/Trustee

Three Keys to Protecting Yourself from a Rogue Executor/Trustee

Unfortunately, sometimes a death in the family can bring out the worst in people. Indeed, family resentments sometimes simmer during a time of grieving – particularly when money and assets from the deceased’s estate are involved. If you are a beneficiary under a loved one’s estate plan, you may be under the assumption that those assets will be distributed according to his or her wishes. Inheritance theft, however, is an underreported problem that can cost families dearly. Moreover, the theft can be perpetrated by someone who was highly trusted by the decedent – the executor or Trustee, who is the person typically chosen by the decedent to manage the estate upon his or her death or incapacity. Thankfully, you have the ability to deter a thief from stealing your inheritance and the inheritance of other beneficiaries of the estate.

Safeguard Your Inheritance

There are several ways in which you can ensure that you will not lose your inheritance due to theft perpetrated by a rogue executor or Trustee. The following are three basic ways to do so:

  1. Knowledge is key: First, be sure to have information about the trust or estate and its assets. You should not get pushback when requesting this. As a beneficiary of the estate, you almost always have a legal right to an inventory and accounting of the estate. This is a summary of all the transactions and assets of an estate or trust and should come with supporting documentation such as receipts or cancelled checks. Even though the executor or trustee is in charge of the assets, he or she is legally required to report on the assets and transactions as well as act in the best interests of the beneficiaries.
  2. Document, document, document: Whether it is a phone call or an in-person meeting, be sure to document everything in writing. Be sure to confirm details such as what you asked for, what you learned, what you received (or did not receive), etc. Courts across the country often place greater weight on written evidence than on verbal testimony.
  3. Get outside help: Understand that emotions run high when a loved one has passed away. This can sometimes cloud our judgment, making legally required or authorized actions performed by the executor seem hurtful. Assistance from a third party can help make sure your rights are protected so that neither you nor the estate are unnecessarily tied down with the expense and stress of court battles.

While the best way to protect your wishes is through a well-drafted estate plan – which includes a detailed Trust, Will, and Power of Attorney that appoints multiple individuals as Trustees, Executors and Agents –  inheritance theft still happens. Theft can occur through undocumented loans, denigration of other heirs, destruction or forgery of documents, or embezzling, to name a few.

Bottom Line

While laws vary from state-to-state regarding how an heir can establish that his or her inheritance has been hijacked or is in danger of being stolen, there are certain basic rights an heir or beneficiary can count on. To learn more, contact me at (858) 432-3923.

Wills vs. Trusts: A Quick & Simple Reference Guide

Wills vs. Trusts: A Quick & Simple Reference Guide

Confused about the differences between Wills and Trusts?  If so, you’re not alone. While it’s always wise to contact professionals focused on this area, like Cheever Law, APC, it’s also important to understand the basics. Here’s a quick and simple reference guide:

What Revocable Living Trusts Can Do – That Wills Can’t

  • Avoid a conservatorship and guardianship. A Revocable Living Trust allows you to authorize your spouse, partner, child, or other trusted person to manage your assets should you become incapacitated and unable to manage your own affairs. Wills only become effective when you die, so they are useless in avoiding conservatorship and guardianship proceedings during your life.
  • Bypass probate. Property in a Revocable Living Trust does not pass through probate. Property that passes using a Will guarantees probate. The probate process, designed to wrap up a person’s affairs after satisfying outstanding debts, is public and can be costly and time consuming – sometimes taking years to resolve.
  • Maintain privacy after death. Wills are public documents; Trusts are not. Anyone, including nosey neighbors, predators, and unscrupulous “charities” can discover the details of your estate if you have a Will. Trusts allow you to maintain your family’s privacy after death. 
  • Protect you from court challenges. Although court challenges to wills and trusts occur, attacking a Trust is generally much harder than attacking a Will because Trust provisions are not made public.

What Wills Can Do – That Revocable Living Trusts Can’t                    

  • Name guardians for children. Only a Will – not a Living Trust or any other type of document – can be used to name guardians to care for minor children.
  • Specify an executor or personal representative. Wills allow you to name an executor or personal representative – someone who will take responsibility to wrap up your estate after you die. This typically involves working with the probate court, protecting assets, paying your debts, and distributing what remains to beneficiaries. But, if there are no assets in your probate estate (because you have a fully funded Revocable Living Trust), this feature is not necessarily useful.

What Both Wills & Trusts Can Do:

  • Allow revisions to your document. Both Wills and Trusts can be revised whenever your intentions or circumstances change so long as you have the legal capacity to execute them. 

WARNING: There is such as a thing as irrevocable trusts, which can only be changed under certain circumstances, using very specific methods.           

  • Name beneficiaries. Both Wills and Trusts are vehicles which allow you to name beneficiaries for your assets. 
  • Wills simply describe assets and proclaim who gets what. Only assets in your individual name will be controlled by a Will.
  • While Trusts act similarly, you must go one step further and “transfer” the property into the Trust – commonly referred to as “funding.” Only assets in the name of your Trust will be controlled by your Trust.
  • Provide asset protection. Trusts, and less commonly, Wills, can be crafted to include protective sub-trusts which allow your beneficiaries access but keep the assets from being seized by their creditors such as divorcing spouses, car accident litigants, bankruptcy trustees, and business failure.

While some of the differences between Wills and Trusts are subtle; others are not. Together, we’ll take a look at your goals as well as your financial and family situation and design an estate plan tailored to your needs. Call me at (858) 432-3923 today and let’s get started.

The Silent Threat to Your Estate Plan

The Silent Threat to Your Estate Plan

It is common knowledge that everyone needs to have an estate plan in place. Commonly, the focus is on assets, taxes, and any changes to legislation that may affect the security of your loved ones in the event of your incapacity or death. What many often forget, however, is that changes in family dynamics and circumstances can threaten even the most well thought out estate plan. This silent threat can easily keep your estate plan from actually working when it is truly needed. Below are several situations where updating an existing estate plan or creating a plan for the first time is necessary to protect your loved ones.

Children reach the age of majority: When beneficiaries under your estate plan grow into adulthood, the manner in which you plan to transfer your assets will likely change. Special needs individuals, for example, may now be eligible for government assistance and the provisions of your existing plan may disqualify them from receiving those benefits in the future. Also, paying for higher education can be a focus as the children become adults. This may prompt changes in distribution amounts or requirements before the beneficiary can receive the money.

You are getting married for the first time: Marriage changes the structure of your family and could cause you to re-prioritize who you would like to leave your assets to. It also may require you to add your new spouse as a beneficiary on retirement accounts or life insurance policies, as well as to update your personal inventory of assets resulting from the purchase, sale, or consolidation that typically occurs with a marriage. If you are changing your legal name, make sure to update all of the relevant documents—including insurance policies, bank accounts, credit card companies, and property deeds.

You are getting remarried: In addition to the things to consider when you are getting married for the first time, a second marriage has the added concern about how to provide financial security for your new spouse while providing an inheritance for your children from a first marriage. This scenario can also affect the timing of how you want the inheritance to be distributed and the amount that is allocated to each loved one. There are several tools that may be used—such as annuities, irrevocable life insurance trusts, or splitting your estate among the beneficiaries—to address your family’s unique needs.

The birth or adoption of a child or children: Whether you are giving birth to or adopting a child, overseeing a minor’s life can be overwhelming. Make sure you have plans prepared in the event you are not around. This includes having a will or trust prepared to outline financial distributions and management of funds for the child(ren), deciding on a guardian and any other necessary fiduciaries, and ensuring that accounts and/or life insurance policies left for the children are properly accounted for.

Bottom Line

Be comforted in knowing that there are no right or wrong answers when it comes to the estate plan for your family’s needs. What is key is to make sure you work with an experienced and knowledgeable estate planning professional to ensure that these silent threats are addressed so your true wishes are carried out when they are needed most. Give me a call at (858) 432-3923 so we can discuss your concerns and craft the best plan to meet your unique family situation.

4 Ways Estate Planning Can Improve Relationships with Loved Ones

4 Ways Estate Planning Can Improve Relationships with Loved Ones

With the holiday season just ending, you probably spent lots of time with your family and friends. During those moments, you were likely reminded of just how important these relationships can be. And as we grow older, you begin to realize how precious little time we have to spend with one another.

Given life’s fleeting nature, using time with your family and friends to talk about estate planning is vital for ensuring you and your loved ones will be provided and cared for no matter what happens. Though death and incapacity can be uncomfortable subjects to discuss, with a comprehensive plan in place, you’ll almost certainly experience a huge sense of relief and peace, knowing this critical task has been discussed and documented.

And though you might not realize it, estate planning also has the potential to enhance your relationship with loved ones in some major ways. Planning requires you to closely consider your relationships with family and friends—past, present, and future—like never before. Indeed, the process can be the ultimate forum for heartfelt communication and prioritizing what matters most in life.

Indeed, communicating clearly about what you want to happen in the event of your incapacity or death (and asking your loved ones what they want to happen) can foster a deeper bond and sense of intimacy than just about anything else you can do.

Here are just a few of the valuable ways estate planning can improve the relationships you cherish most:

1) It shows you sincerely care
Taking the time and effort to carefully plan for what will happen to you in the event of your incapacity or when you die is a genuine demonstration of your love. It would be far easier to do nothing and simply let you family and friends figure it out for themselves. After all, you won’t be around to deal with any of the fallout.

Planning in advance, though, shows that you truly care about the welfare of your loved ones, even when you’re no longer around to benefit from their love and companionship. Such selfless concern and forethought equates to nothing less than a final expression of your unconditional love.

2) It inspires honest communication about difficult issues
Sitting down and having an honest discussion about life’s most taboo subjects—incapacity and death—is almost certain to bring you and your loved ones closer. By forcing you to face immortality together, planning has a way of highlighting what’s really important in life—and what’s not.

In fact, my clients consistently share that after going through our estate planning process they feel more connected to the people they love the most. And they also feel more clear about the lives they want to live during the short time we have here on earth. 

Planning offers the opportunity to talk openly about matters you may not have even considered. When it comes to choices about distributing assets and naming executors and trustees, you’ll have a chance to engage in honest discussions about why you made the choices you did.

While this can be uncomfortable, clearly communicating your feelings and intentions is crucial for maintaining healthy relationships. In the end, it might just be the first step in actively addressing and healing any problems that may be lurking under the surface of your relationships.

3) It builds a deep sense of trust and respect
Whether it’s the individuals you name as your children’s legal guardians or those you nominate to handle your own end-of-life care, estate planning shows your loved ones just how much you trust and admire them. What greater honor can you bestow upon another than putting your own life and those of your children in their hands?

Though it’s often challenging to verbally express how much you love your family and friends, estate planning demonstrates your affection in a truly tangible way. And once these people see exactly how much you value them, it can foster a deepening of your relationship with one another.

4) It creates a lasting legacy
While estate planning is primarily viewed as a way to pass on your financial wealth and property, it can offer your loved ones much more than just financial security. When done right, it lets you hand down the most precious assets of all—your life stories, lessons, and values.

In fact, the wisdom and experience you’ve gained during your lifetime are among the most treasured gifts you can give. Left to chance, these gifts are likely to be lost forever. In light of this, I’ve built in a process, known as Family Wealth Legacy Passages, for preserving and passing on these intangible assets.

With this service, which is included in every estate plan I create, I guide you to create a customized recording in which you share your most insightful memories and experiences with those you’re leaving behind. Family Wealth Legacy Passages can not only ensure you’re able to say everything that needs to be said, but that your legacy carries on long after you—and your money—are gone.

The heart of the matter
With me as your Estate Planning Attorney I can help guide and support you in having these intimate discussions with your loved ones. I offer a wide-array of customized planning options designed to enrich your family and friends with far more than just material wealth.

With my help, estate planning planning doesn’t have to be a dreary affair. When done right, it can put your life and relationships into a much clearer focus and ultimately be a tremendously uplifting experience for everyone involved. Contact me at (858) 432-3923 to learn more.


Three Tips for Talking About Your Estate Plan During the Holidays

Three Tips for Talking About Your Estate Plan During the Holidays

Christmas is right around the corner, bringing the joyous season of gathering with family and loved ones into full-swing. It is the time to slow down, get caught up with loved ones, and enjoy the family and experience quality time around the dinner table. It is also a great idea to take this opportunity to review your estate plan and talk about the topic with your loved ones.

Do Not Be Indifferent

While the entire topic of estate planning can be a touchy subject, covering your eyes about the issue is not good for you or your family. According to a Caring.com survey from 2017, as many as six in 10 Americans do not have an estate planning document put together –  like a Will or a Trust. This is particularly alarming when it is estimated that $30 trillion in wealth is set to transfer between baby boomers and their heirs in the next few years. Accordingly, it is vital that families discuss estate planning well in advance of an emergency or life tragedy – while the eldest members of the family are still physically and mentally healthy. Leaving the topic to chance can result in disastrous or costly outcomes.

Time it Right

Not surprisingly, estate planning is a topic that does not come up in everyday conversation. And randomly informing your loved ones who will get your things when you die or if you become incapacitated will likely damper the holiday spirit.

There are ways, however, to discuss estate planning during this season with grace and tact. Instead, choose or make a time when you and your loved ones can be together and talk within a comfortable, calm, and private environment. Make sure that everyone is relaxed and distractions are at a minimum so the conversation stays on track.

In an ideal situation, the parents – or the elders – will bring up the subject. Sometimes, however, they refuse to discuss estate planning. In such a case, children have to broach the subject. Asking where important papers and records are kept is a great start.

Boundaries Are Important

Once you find the time, place, and opportunity for the conversation about estate planning to happen make sure to set down some ground rules. Keep the discussion as transparent as possible, perhaps by having each family member address their thoughts, questions, or wishes and discuss together. Some items that may be on the list to discuss may include:

  • Notifying them that you have a Will or Living Trust that spells out how assets will be divided when you die or become incapacitated;
  • Letting them know who will act as the executor of your Will or trustee of your Trust;
  • Discussing who will serve as your agent under your financial power-of-attorney and patient advocate under your healthcare power-of-attorney; and
  • Explaining to your family how to handle any medical or long-term care situations, if necessary.

Bottom Line

While discussing estate planning needs can be straightforward and simple, the conversation can quickly become complicated when personalities clash or emotions get in the way. The main goal is to let your family and loved ones know you have a plan, without needing to go into detail about the plan’s contents. I can help parents and children come together and create an appropriate plan that will meet your family’s short- and long-term estate planning needs.