(858) 432-3923 tara@cheeverlaw.com
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.  

Don’t Forget to Include Your Digital Assets In Your Estate Plan—Part 2

Don’t Forget to Include Your Digital Assets In Your Estate Plan—Part 2

In the first part of this series, I discussed the importance of including your digital assets in your estate plan. Here, I’ll talk about the best ways to get started with this process. 

Today, estate planning encompasses not just tangible property like finances and real estate, but also digital assets like cryptocurrency, blogs, and social media. With so much of our lives now lived online, it’s vital you put the proper estate planning provisions in place to ensure your digital assets are effectively protected and passed on in the event of your incapacity or death.

However, because many types of online assets have only been in existence for a handful of years, there are very few laws governing how they should be dealt with through estate planning. And due to their virtual and often anonymous nature, just locating and accessing some of these assets can be extremely difficult for those you leave behind.

Given these unique challenges, in the first part of this series, I discussed some of the most common types of digital assets and the legal landscape surrounding them. Here, I offer some practical tips to ensure all of your digital property is effectively incorporated into your estate plan.

Best practices for including digital assets in your estate plan
If you’re like most people, you probably own numerous digital assets, some of which likely have significant monetary and/or sentimental value. Other types of online property may have no value for anyone other than yourself or be something you’d prefer your family and friends not access or inherit.

To ensure all of your digital assets are accounted for, managed, and passed on in exactly the way you want, you should take the following steps:

  1. Create an inventory: Start by creating a list of all your digital assets, including the related login information and passwords. Password management apps such as LastPass can help simplify this effort. From there, store the list in a secure location, and provide detailed instructions to your fiduciary about how to access it and get into the accounts. Just like money you’ve hidden in a safe, if no one knows where it is or how to unlock it, these assets will likely be lost forever.
  2. Back up assets stored in the cloud: If any of your digital assets are stored in the cloud, back them up to a computer and/or other physical storage device on a regular basis, so fiduciaries and family members can access them with fewer obstacles. That said, don’t forget to also include the location and login info of these cloud-based assets in case you don’t have a chance—or forget—to back them all up.
  3. Add your digital assets to your estate plan: Include specific instructions in your Will, Trust, and/or other Estate Planning documents about the heir(s) you want to inherit each asset, along with how you’d like the accounts managed in the future, if that’s an option. Some assets might be of no value to your family or be something you don’t want them to access, so you should specify that those accounts and files be closed and/or deleted by your fiduciary.

    Do NOT provide the specific account info, logins, or passwords in your estate planning documents, which can be easily read by others. This is especially true for Wills, which become public record upon your death. Keep this information stored in a secure place, and let your fiduciary know how to find and use it. Consider a service such as Directive Communication Systems to support you here.

    It’s also a good idea to include terms in your estate plan allowing your fiduciary to hire an IT consultant if necessary. This will help him or her manage and troubleshoot any technical challenges that come up, particularly with highly complex and/or encrypted assets.

  4. Limit access: In your plan, you should also include instructions for your fiduciary about what level of access you want him or her to have. For example, do you want your executor to be able to read all of your emails and social media posts before deleting them or passing them on to your heirs? If there are any assets you want to limit access to, I can help you include the necessary terms in your plan to ensure your privacy is honored.
  5. Include relevant hardware: Don’t forget that your estate plan should also include provisions for any physical devices—smartphones, computers, tablets, flash drives—on which the digital assets are stored. Having quick access to this equipment will make it much easier for your fiduciary to access, manage, and transfer the online assets. Since the data can be wiped clean, you can even leave these devices to someone other than the person who inherits the digital property stored on it.
  6. Check service providers’ access-authorization tools: Carefully review the terms and conditions for your online accounts. Some service providers like Google, Facebook, and Instagram have tools in place that allow you to easily designate access to others in the event of your death. If such a function is offered, use it to document who you want to have access to these accounts.

    Just make certain the people you named to inherit your digital assets using the providers’ access-authorization tools match those you’ve named in your estate plan. If not, the provider will probably give priority access to the person named with its tool, not your estate plan.

Truly comprehensive estate planning

With technology rapidly evolving, it’s critical that your estate planning strategies evolve at the same time to adapt to this changing environment. With me as your Estate Planning Attorney I can help you update your plan to include not only your physical wealth and property, but all of your digital assets, too.

I know how valuable online property can be, and unlike many lawyers, I have the experience and skills to ensure these assets are preserved and passed on seamlessly.  Moreover, I can do this while respecting and protecting your privacy rights. Contact me at (858) 432-3923 today to get started.

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Don’t Forget to Include Your Digital Assets In Your Estate Plan—Part 1

Don’t Forget to Include Your Digital Assets In Your Estate Plan—Part 1

If you’ve created an estate plan, it likely includes traditional wealth and assets like finances, real estate, personal property, and family heirlooms. But unless your plan also includes your digital assets, there’s a good chance this online property will be lost forever following your death or incapacity.

What’s more, even if these assets are included in your plan, unless your executor and/or trustee knows the accounts exist and how to access them, you risk burdening your family and friends with the often lengthy and expensive process of locating and accessing them. And depending on the terms of service governing your online accounts, your heirs may not be able to inherit some types of digital assets at all.

With our lives increasingly being lived online, our digital assets can be quite extensive and extremely valuable. Given this, it’s more important than ever that your estate plan includes detailed provisions to protect and pass on such property in the event of your incapacity or death.

Types of digital assets
Digital assets generally fall into two categories: those with financial value and those with sentimental value.

Those with financial value typically include cryptocurrency like Bitcoin, online payment accounts like PayPal, domain names, websites and blogs generating revenue, as well as other works like photos, videos, music, and writing that generate royalties. Such assets have real financial worth for your heirs, not only in the immediate aftermath of your death or incapacity, but potentially for years to come.

Digital assets with sentimental value include email accounts, photos, video, music, publications, social media accounts, apps, and websites or blogs with no revenue potential. While this type of property typically won’t be of any monetary value, it can offer incredible sentimental value and comfort for your family when you’re no longer around.

Owned vs licensed

Though you might not know it, you don’t actually own many of your digital assets at all. For example, you do own certain assets like cryptocurrency and PayPal accounts, so you can transfer ownership of these in a Will or Trust. But when you purchase some digital property, such as Kindle e-books and iTunes music files, all you really own is a license to use it. And in many cases, that license is for your personal use only and is non-transferable.

Whether or not you can transfer such licensed property depends almost entirely on the account’s Terms of Service Agreements (TOSA) to which you agreed (or more likely, simply clicked a box without reading) upon opening the account. While many TOSA restrict access to accounts only to the original user, some allow access by heirs or executors in certain situations, while others say nothing about transferability.

Carefully review the TOSA of your online accounts to see whether you own the asset itself or just a license to use it. If the TOSA states the asset is licensed, not owned, and offers no method for transferring your license, you’ll likely have no way to pass the asset to anyone else, even if it’s included in your estate plan.

To make matters more complicated, though you heirs may be able to access your digital assets if you’ve provided them with your account login and passwords, doing so may actually violate the TOSA and/or privacy laws. In order to legally access such accounts, your heirs will have to prove they have the right to access it, a process which up until recently was a major legal grey area.

Fortunately, a growing number of states are adopting a law that helps clarify how your digital assets can be accessed in the event if your death or incapacity.

The Revised Uniform Fiduciary Access to Digital Assets Act

The Revised Uniform Fiduciary Access to Digital Assets Act, which has been adopted in 37 states so far, lays out guidelines under which fiduciaries, such as executors and trustees, can access these digital accounts.  California adopted the Revised Uniform Fiduciary Access to Digital Access Act on September 24, 2016. The Act allows you to grant a fiduciary access to your digital accounts upon your death or incapacity, either by opting them in with an online tool furnished by the service provider or through your estate plan.

The Act offers three-tiers for prioritizing access. The first tier gives priority to the online provider’s access-authorization tool for handling accounts of a decedent. For example, Google’s “inactive account manager” tool lets you choose who can access and manage your account after you pass away. Facebook has a similar tool that allows you to designate someone as a “legacy contact” to manage your personal profile.

If an online tool is not available or if the decedent did not use it, the law’s second tier gives priority to directions given by the decedent in a will, trust, power of attorney, or other means. If no such instructions are provided, then the third tier stipulates the provider’s TOSA will govern access.

As long as you use the provider’s online tool—if one is available—and/or include instructions in your estate plan, your digital assets should be accessible per your wishes in states that have adopted the law. However, all 50 states are expected to adopt the Act soon, so even if the law isn’t on the books in your state, you should take it into serious consideration when planning.

Look to us for guidance
In the second part of this series, we’ll offer practical steps for preserving and passing on your digital assets in your estate plan. Meanwhile, contact me at (858) 432-3923 if you have any questions about your online property or how to include it in your estate plan.

Next week, we’ll continue with part two in this series, discussing the best ways to protect and preserve your digital assets through estate planning.

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When Something is NOT Better Than Nothing—Part 2

When Something is NOT Better Than Nothing—Part 2

Last week, I shared the first part of this series discussing the hidden dangers of do-it-yourself estate planning. In part two, I cover one of the greatest risks posed by DIY documents.

You might think you can save time and money by using do-it-yourself estate planning documents you find online. You’re probably anxious to check estate planning off your life’s to-do list, and these forms offer a seemingly quick and inexpensive way to handle this important task.

You may even realize such generic plans aren’t as high quality as those drafted with an attorney’s help, but with your hectic schedule, a DIY will is just way more convenient. Besides, having “something” in place is better than having nothing, right?

Unfortunately, this is one case in which SOMETHING is not better than nothing.

Indeed, the false sense of security offered by DIY wills can lead you to believe you have things covered and no longer have to worry about estate planning. The reality, however, is that such generic forms could end up costing the loved ones you leave behind more money and heartache than if you’d never gotten around to doing anything at all.

In this way, DIY wills and other legal documents are among the most dangerous choices you can make for the people you love. In part one, I discussed the many ways DIY plans can fail to keep your family out of court and out of conflict, and here I’ll explain how these generic documents can leave the people you love most of all—your children—at risk.

The people you love most
It’s probably distressing to think that by using a DIY will you could force your loved ones into court or conflict in the event of your incapacity or death. And if you’re like most parents, it’s probably downright unimaginable to contemplate your children’s care falling into the wrong hands.

Yet that’s exactly what could happen if you rely on free or low-cost fill-in-the-blank wills found online, or even if you hire a lawyer who isn’t equipped or trained to plan for the needs of parents with minor children.

Naming and legally documenting guardians entails a number of complexities that most people aren’t aware of. Even lawyers with decades of experience frequently make at least one of six common errors when naming long-term legal guardians.

If Wills drafted with the help of a professional are likely to leave your children at risk, the chances that you’ll get things right on your own are pretty much zero.

What could go wrong?
If your DIY will names legal guardians for your kids in the event of your death, that’s great. But does it include back-ups? And if you named a couple to serve, how is that handled? Do you still want one of them if the other is unavailable due to illness, injury, death, or divorce?

And what happens if you become incapacitated and are unable to care for your children? You might assume the guardians named in the DIY will would automatically get custody, but your will isn’t even operative in the event of your incapacity.

Or perhaps the guardians you named in the will live far from your home, so it would take them a few days to get there. If you haven’t made legally-binding arrangements for the immediate care of your children, it’s highly likely that they will be placed with child protective services until those guardians arrive.

Even if you name family who live nearby as guardians, your kids are still at risk because it’s possible they might not be immediately available if and when needed.

And who even knows where your will is or how to access it?

There are simply far too many potential errors you can make when you go it alone.

The Kids Protection Plan®

To ensure your children are never raised by someone you don’t trust or taken into the custody of strangers (even temporarily), consider creating a comprehensive Kids Protection Plan®, which only a select few Estate Planning Attorneys are trained and licensed to counsel you through and prepare.

Get the right “something”
Protecting your family and assets in the event of your death or incapacity is such a monumentally important task you should never consider winging it with a DIY plan. No matter how busy you are or how little wealth you own, the potentially disastrous consequences inherent in such plans are simply too great—often they’re not even worth the paper they’re printed on.

Plus, proper estate planning doesn’t have to be super expensive, stressful, or time consuming. Working with me as your Estate Planning Attorney, planning will not only be as stress-free as possible, but I offer options for all budgets and asset values.

What’s more, many of my clients actually find the process highly rewarding. My proprietary systems provide the type of peace of mind that comes from knowing that you’ve not only checked estate planning off your to-do list, but you’ve done it using the most forethought, experience, and knowledge available.

Act now
If you’ve yet to do any planning, contact me to schedule a Family Wealth Planning Session. This evaluation will allow us to determine if a simple will or some other strategy, such as a living trust, is your best option.

If you’ve already created a plan—whether it’s a DIY job or one created with another lawyer’s help—contact me at (858) 432-3923 to schedule an Estate Plan Review and Check-Up. I’ll ensure your plan is not only properly drafted and updated, but that it has all of the protections in place to prevent your children from ever being placed in the care of strangers or anyone you’d never want raising them.

No matter what you do, make certain you have a “something” that’s actually better than nothing. Contact me as your Estate Planning Attorney today, and I’ll provide you with that level of confidence—and so much more.

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When Something is NOT Better Than Nothing—Part 1

When Something is NOT Better Than Nothing—Part 1

Go online, and you’ll find tons of websites offering do-it-yourself estate planning documents. Such forms are typically quite inexpensive. Simple Wills, for example, are often priced under $50, and you can complete and print them out in a matter of minutes.

In our uber-busy lives and DIY culture, it’s no surprise that this kind of thing might seem like a good deal. You know estate planning is important, and even though you may not be getting the highest quality plan, such documents can make you feel better for having checked this item off your life’s lengthy to-do list.

But this is one case in which SOMETHING is not better than nothing, and here’s why:

A false sense of security
Creating a DIY Will online can lead you to believe that you no longer have to worry about estate planning. You got it done, right?

Except that you didn’t. In fact, you thought you “got it done” because you went online, printed a form, and had it notarized, but you didn’t bother to investigate what would actually happen with that document in place in the event of your incapacity or when you die.

In the end, what seemed like a bargain could end up costing your family more money and heartache than if you’d never gotten around to doing anything at all.

Creating a DIY Will can lead you to believe that you no longer have to worry about estate planning. In the back of your mind, you might even promise that one day you’ll revisit and update your plan with something better, but chances are, having done “something” will lead you to put this off until it’s too late.

By doing nothing, on the other hand, at least you won’t be lulled into a false sense of security, and estate planning will still be at the top of your life’s to-do list, as it should be until you handle it properly.

Not just about filling out forms
Unfortunately, because many people don’t understand that estate planning entails much more than just filling out legal documents, they end up making serious mistakes with DIY plans. Worst of all, these mistakes are only discovered when you become incapacitated or die, and it’s too late. The people left to deal with your mistakes are often the very ones you were trying to do right by.

The primary purpose of Wills and other estate planning tools is to keep your family out of court and out of conflict in the event of your death or incapacity. With the growing popularity of DIY Wills, tens of thousands of families (and millions more to come) have learned the hard way that trying to handle estate planning alone can not only fail to fulfill this purpose, it can make the court cases and conflicts far worse and more expensive.

The hidden dangers of DIY Wills
From the specific state you live in and the wording of the document to the required formalities for how it must be signed and witnessed, there are numerous potential dangers involved with DIY Wills and other estate planning documents. Estate planning is most definitely not a one-size-fits-all deal. Even if you think you have a simple situation, that’s almost never the case.

The following scenarios are just a few of the most common complications that can result from attempting to go it alone with a DIY Will:

  • Improper execution: For a Will to be valid, it must be executed following strict legal procedures. Such procedural requirements are designed to prevent foul play and vary by state. For example, many states require that you and every witness to your Will must sign it in the presence of one another. If your DIY Will doesn’t mention that or you don’t read the fine print and fail to follow this procedure, it can be worthless.
  • Court challenges: Before the assets covered in a Will can be transferred to your heirs, the Will must go through the court process called probate. During probate, creditors, heirs, and other interested parties have the opportunity to contest your Will or make claims against your estate. Though Wills created with an attorney’s guidance can also be contested, DIY Wills are not only far more likely to be challenged, but the chances of those challenges being successful are much greater than if you have an attorney-drafted Will.
  • Thinking a Will is enough: It is almost never the case that a Will alone is sufficient to handle all of your legal affairs. In the event of your incapacity, you would also need a health care directive and/or a living Will plus a durable financial power of attorney. In the event of your death, a Will does nothing to keep your loved one’s out of court. And if you have minor children, having a Will alone could leave your kids’ at risk of being taken out of your home and into the care of strangers, at least temporarily.

In many ways, DIY Will planning is the worst choice you can make for the people you love because you think you’ve got it covered, when you most certainly do not.

Next week, I’ll continue with Part Two in this series on the hidden dangers of DIY estate planning.

If you’ve yet to do any estate planning at all, have DIY documents you aren’t sure about, or have a plan created with another lawyer’s help that hasn’t been updated or reviewed in more than a few years, meet with me, a knowledgeable and experienced Estate Planning Attorney.  Take action to ensure that your family will be kept out of court and out of conflict if something should happen to you. Contact me at (858) 432-3923 today to learn more.

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Estate Planning Considerations for Benefits Open Enrollment

Estate Planning Considerations for Benefits Open Enrollment

The fall, generally late-October or early-November, is the time when employers send out summaries of employee benefits offered by the company and give employees the option to enroll in these benefits. These can generally include retirement plan options, health care, dental, vision, short and/or long-term disability, and life insurance coverage. Your employer may pay 100 percent of the premiums, split the costs with you, or you may have to pay all of the premiums yourself. Below are several considerations you should keep in mind once open enrollment begins.

Benefits Explained

When considering any retirement plan offered through your employer such as a 401(k), 403(b), or 457 plan, you will need to consider: what percentage of income you choose to contribute and whether the contribution must be made pre-tax, after-tax, or to a Roth plan (if available). How much you can contribute, and whether pre- or post-tax, depends on your specific financial circumstances. Remember to also consider any “matching” contributions your employer may make since these contributions can help improve your overall retirement savings.

Healthcare benefits may include the ability to enroll in a Health Savings Account (HSA), in addition to enrolling in the usual healthcare, vision, and/or dental coverage. HSAs allow plan participants to set funds aside, tax-free, for health care costs.

Employer-provided life and disability insurance coverage will provide your beneficiary with a stated amount of money if you die while employed by your employer or become disabled. The coverage generally expires when you no longer work for that employer.

Perhaps the most important thing to do during your employer’s open enrollment period is to review the employer-provided benefit package to determine what should remain and what should be changed. If you do not understand the options being provided to you, contact human resources right away for more information.

Beneficiary Designations

While you are reviewing your benefit package, you should consider your beneficiary elections or those who will inherit these assets upon your death or incapacity. A primary beneficiary is the first to inherit. Should he or she pass before you, or with you, assets would then go to any secondary beneficiary you have designated. These are often referred to as contingent beneficiaries.

Even if you have previously enrolled, you must review your beneficiary designations on your employer-provided benefits to ensure they are still how you want them. Benefits that may require a beneficiary designation are life insurance policies, retirement accounts, health savings accounts (HSA), as well as disability insurance.

If there are any new providers for your employer-sponsored benefits, this means that the insurance company has changed. Keep in mind that your previously chosen beneficiaries, and possibly coverage, may not have carried over. It is always better to review these documents, even if you are not planning any changes.

Estate Planning Concerns

If you are contemplating any changes to your beneficiaries, give me a call at (858) 432-3923 so I can ensure your beneficiary designations work as expected with your current estate plan or so I can properly prepare a plan that carries out your ultimate goals for you and your family. Once you have updated your beneficiaries, make sure to obtain written confirmation of this from your employer’s human resources department and share this information with my office. If you have any questions, please feel free to contact me. We’re here to help.

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Big “Life Changes” Often Mean Big “Estate Plan Changes”

Big “Life Changes” Often Mean Big “Estate Plan Changes”

Many people who put together an estate plan do so when they start a family – assuming they put an estate plan together at all during their lifetime. While putting an estate plan together is a good thing to do, many people make few updates once the plan has been created, despite other key life events happening over the years. This is a major mistake that can place your hard-earned money and assets into a costly probate or into the wrong hands.

Estate planning must be reviewed and updated regularly to ensure that your plan still accomplishes your goals and objectives and will work the way you want it to at incapacity and at death.

To make sure you do not run into these issues and your wishes are followed in the event of your incapacity at at your death, below are nine life decisions or events that should get you thinking about updating — or creating — your estate plan right away.

Important Life Decisions

There are several important life decisions that you should factor into your estate plan. They include:

  1. Getting married: Estate planning after tying the knot does not have to be complicated. Simply updating your beneficiary information, purchasing a life insurance policy, and updating emergency contact information are all things that should happen right away. You should also consider preparing a will and a living will. As your marriage progresses, it may make sense to consider a revocable trust as well. Having discussions with your spouse about how you want your estate to be managed depending on different scenarios is also important.
  2. Getting divorced: While couples do not plan for divorce, many spouses go through this process. For many, the emotional toll and legal complexities of divorce can be overwhelming. Oftentimes estate planning is overshadowed by the divorce, resulting in unintended consequences. Making sure you make changes to your estate plan as soon as your divorce proceedings have been finalized will make sure your ex will not end up with the house, life insurance proceeds or other assets of yours.
  3. Buying life insurance: These policies are present in virtually all estate plans and serve as a useful source of liquidity, education-expense coverage, and financial support for your family or loved ones. Make sure to list all beneficiaries under the policy and make sure to update them as time passes.
  4. Buying a new home: When you purchase or refinance a home or other real estate, you should always make sure the asset is titled appropriately. If you use a trust, sometimes a lender will take a property out of a trust during a refinance. The key is to make sure your title furthers your goals.
  5. Having a child: While adding another member to your family is an exciting time in your life, it is not an excuse to forget to update your estate plan. A new child necessitates major revisions to your estate plan. This not only affects who will inherit your estate upon your death but will also require you deciding who will be the guardian of your children if you should die before they become adults. As your child grows and matures — and more children are added — your estate plan will likely continue to change.
  6. Starting a business: If you start a business or ownership interest changes in a current business, you need to understand what impact these changes have on your estate plan. Even more, there may be tax implications that could affect your heirs without proper planning ahead of time.
  7. Death of a loved one: The passing away of someone listed in your will is often overlooked in estate planning. These individuals may be named guardians to your children, have an inheritance allocated to them, be designated as emergency contacts, or may be named as executors of your estate. Leaving the role vacant can have terrible unintended consequences and necessitates transitioning new people to fill the void left behind by your loved one’s death right away.
  8. Moving to another state or country: When you change your residency from one state to another, you must review your estate plan to make sure it conforms with local laws. The same is true if you move to another country. Likewise, if you have property in more than one state or country, special attention must be paid to how those assets will be distributed according to your estate plan and applicable law.
  9. Change in work benefits: Whether this happened through a promotion, demotion, or your employer just changed the benefits they offer, this could impact the type amount of assets you have available. Look at your estate plan to see if your goals are still achievable or if you can do more with what you have.

Estate Planning Advice

Planning based on your life stages is important because your circumstances over the years will change. The only thing certain in life is change. Your estate plan must be reviewed and updated regularly to reflect your life’s changes. If you have any questions about estate planning — or have had to make a recent big decision in your life — contact me at (858) 432-3923 to learn more about your options.

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