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Should your child’s guardian and trustee be the same person?

Should your child’s guardian and trustee be the same person?

If you have overheard any discussion about estate planning, you have likely heard the words “guardian” or “trustee” tossed around in the conversation. When it comes to estate planning, who will be ultimately in charge of your minor child is an important decision that requires consideration of many factors. Although there is no substitute for you as a parent, a guardian is essentially someone who steps in as a parent, assuming the parental role and raising the child through adulthood. A trustee, on the other hand, is in charge of managing the financial legacy that has been left behind for the minor. As a parent, you need to take into account the characteristics needed for each role.

Who Makes a Good Guardian?

When choosing a guardian, the top factor to consider is who is the best person that will love and raise your child in a manner that you would. This would include religious beliefs, parenting style, interest in extracurricular activities, energy level, and whether or not he or she has children already. Keep in mind that a guardian will provide day-to-day love, care, and support for your child. While the guardian you choose may be great with your children, he or she may not be great with money. For this reason, it may make sense to place the financial management of your minor child’s funds in the hands of someone else.

Who Makes a Good Trustee?

Not surprisingly, when choosing a trustee the most important characteristic is that he or she is great with finances. Specifically, the trustee must be able to manage the funds in accordance with your intent and instructions that are left in your trust. Consider whether he or she will honor your wishes. Likewise, should you choose to grant your successor trustee discretion in making financial decisions regarding the management of funds left behind you should ensure the individual’s decisions will be aligned with your intent. In short, you want to choose a successor trustee who will act in your minor child’s best interest within the limits you have set forth in your estate plan documents. If you choose two different people for the role of guardian and trustee, make sure to consider how the two get along as they will likely have to work together throughout your minor’s childhood and possibly into adulthood.

Seek Help to Make Your Decision

While estate planning can be daunting, it does not have to be. Contact me, a knowledgeable estate planning attorney, to help guide you through this process. I can explain your options and advise you on the best plan that will follow your wishes while at the same time meeting your family’s needs.

This article is a service of Tara Cheever,  Estate Planning and Business Planning Attorney. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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6 Steps to Select and Name the Right Guardians for Your Children—Part 2

6 Steps to Select and Name the Right Guardians for Your Children—Part 2

Last week, I shared the first part of my series on selecting and naming the right guardians for your children. If you haven’t read it yet, you can do so here. Here in part two, I discuss the final three steps in the process.

  1. Narrow candidate list, and rank your choices

When you’ve come up with all of the potential candidates for guardian, narrow down the list to your top five people. There’s no guarantee that your ideal candidate(s) will be willing to serve as guardian, so having more than one or two is a practical necessity.

To aide in this process, you should consider things, such as who really loves your children and who do your kids really get along with? Will this person be physically, mentally, and emotionally able to raise your kids to adulthood? The most important thing is to choose SOMEONE, even if you aren’t 100% sure about them, since you can always select a new guardian later.

Then rank your choices from top choice down to last. Again, backups are critical in case your first choice cannot serve.

  1. Sit down with top candidates and discuss what’s involved

When it comes to asking someone to be your child’s guardian, you need to provide crystal-clear guidance about what’s involved. The discussion should cover all of your expectations about how you want your kids raised. Speak openly about finances, discipline, education, spirituality, and any needs that are unique to your children.

Once the discussion is complete, give them a few days to carefully consider the choice, even if they seem immediately gung-ho about doing it. Depending on the age of your kids, this could be a more than decade-long commitment. If they don’t carefully think it over, the responsibility can easily turn into resentment.

  1. Legally document your plan

It’s essential to legally document your choice as soon as possible. Verbal commitments mean nothing in the eyes of the law. This is especially true when you name a friend over a family member.

In addition to naming Guardians for your minor children, you can then work with me as your Personal Family Lawyer® to create a comprehensive plan that includes all of the necessary legal documents to ensure the well-being of your children and the assets you’re leaving behind, no matter what happens.

With me as your Personal Family Lawyer®, you’ll have a trusted advisor who can help you navigate all of the legal, insurance, financial, and tax issues involved with estate planning. Indeed, I can put a plan in place that not only protects and provides for your children, but your entire family.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today at 858-432-3923 to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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Why Not Just Go on NoloⓇ and Create Your Own Estate Planning Documents Cheaply?

Why Not Just Go on NoloⓇ and Create Your Own Estate Planning Documents Cheaply?

There are many software programs, as well as websites, that sell do-it-yourself estate planning documents. These websites and form tools seem to offer a convenient and cost-effective alternative to consulting with an estate planning attorney. But do they really meet your needs and protect your family? Is online, do-it-yourself estate planning worth the perceived upfront savings?

Penny Wise and Pound Foolish

In almost every scenario do-it-yourself estate planning is risky and can become a costly substitute for comprehensive in-person planning with a professional legal advisor. Typically, these online programs and services have significant limitations when it comes to gathering information needed to properly craft an estate plan. This can result in crucial defects that, sadly, won’t become apparent until the situation becomes a legal and financial nightmare for your loved ones.

Creating your own estate plan without professional advice can also have unintended consequences. Bad or thoughtless documents can be invalid and/or useless when they are needed. For example, you can create a plan that has no instructions for when a beneficiary passes away or when a specific asset left to a loved one no longer exists. You may create a trust on your own but fail to fund it, resulting in your assets being tied up in probate courts, potentially for years. Worse yet, what you leave behind may then pass to those you did not intend.

Your family situation and assets are unique. Plus, each state has its own laws governing what happens when someone becomes incapacitated or dies. These nuances may not be adequately addressed in an off-the-shelf document. In addition, non-traditional families, or those with a complicated family arrangement, require more thorough estate planning. The options available in a do-it-yourself system may not provide the solutions that are necessary. A computer program or website cannot replicate the intricate knowledge a qualified local estate planning attorney will have and use to apply to your particular circumstances.

If you’re a person of wealth, then concerns about income and estate taxes enter the picture too. An online estate planning website or program that prepares basic Wills without taking into account the size of the estate can result in hundreds of thousands of dollars in increased (and usually completely avoidable) tax liability and future probate fees. A qualified estate planning attorney will know how to structure your legal affairs to properly address these issues.

One important aspect of estate planning is protecting adult children from the negative financial consequences of divorce, bankruptcy, lawsuits, or illness. An online planning tool will not take these additional steps into account when putting together what is usually a basic estate plan. Similarly, parents who have children or adult loved ones with special needs must take extra caution when planning. There are complicated rules regarding government benefits that these loved ones may receive that must be considered, so that valuable benefits are not lost due to an inheritance.

Consult an Estate Planning Attorney

No matter how good a do-it-yourself estate planning document may seem, it is no substitute for personalized advice. Estate planning is more than just document production. In many cases, the right legal solution to your situation may not be addressed by these do-it-yourself products – affecting not just you, but generations to come. To make sure you are fully protecting your family, contact me, a Personal Family Lawyer®, today.

As a Personal Family Lawyer®, I offer expert advice on Wills, Trusts, and numerous other estate planning vehicles. Using proprietary systems, such as my Family Wealth Inventory and Assessment™ and Family Wealth Planning Session™, I’ll carefully analyze your assets—both tangible and intangible—to help you come up with an estate planning solution that offers maximum protection for your family’s particular situation and budget. Contact me today to get started.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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Estate Planning When Not All of Your Kids are in the Family Business

Estate Planning When Not All of Your Kids are in the Family Business

Owning your own business can be a great endeavor that takes a lot of passion and drive. Many small business owners focus on the day-to-day management and growth of the business, rather than thinking about a time when he or she may not be in the business. This is a far too common mistake. Future plans for your enterprise are even more important when one child works in the business but the others do not. Keeping the peace among your children after you are no longer able to participate in the business requires careful balancing of your estate plan.

Planning Ahead

Before considering whether or not to pass your business to the next generation — as opposed to selling it to a third party — make sure at least one of your children is capable of (and willing to) running the company. Once that has been established, then early planning is the next step to ensuring the best outcome. Ideally, succession planning should start at least five years before you decide to retire. And because life is unpredictable — you may become incapacitated or pass away without warning — the best time to start planning is now. There are several things to consider when planning for your small business if not all of your children are involved. It is important to keep in mind that treating your children fairly does not necessarily mean you will treat them equally when it comes to your estate planning. For this reason, being proactive will make sure your desires will be followed even after you can no longer run your company.

Factors to Consider

First, minimizing the risk of conflict among your children once you are gone requires a mindful weighing of your estate, your successor trustee, and other aspects of your estate plan to ensure your wishes are recorded and can be easily followed.

Second, you must consider the value of the business as well as control and management issues. This can be done by clearly identifying the roles and responsibilities of your successor in a written plan.

Third, if you have a sizeable estate, there are financial strategies that a knowledgeable estate planning professional like myself can use to equalize distributions. This can also be done with other assets such as IRAs, 401(k)s, investment real estate, life insurance, as well as stocks, bonds, and/or mutual funds.

Finally, there must be an analysis of how the business is capitalized in order to ensure your estate plan is fair when it comes to your children — whatever you consider fair to be in your particular circumstance. Notably, how a person’s business is organized has a direct effect on how it is treated, taxed, and administered upon his or her death.

Don’t Leave It To Chance

Ignoring or delaying estate planning for your small business is not financially prudent. As a successful business owner who already has the next generation involved in the company, you must take charge of the future so that the fruit of your hard work can continue on. More important, clearly writing down your desires will help keep your family from bickering — a likely result if you just leave the business’s future to chance. As a Family Business Lawyer® Give me a call today, so we can craft an estate plan that will allow your business to continue to thrive for generations to come.

This article is a service of Tara Cheever, Family Business Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.  I also offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death.  As part of this service, I offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call me today to schedule.

The Key Differences Between Wills and Trusts

The Key Differences Between Wills and Trusts

When discussing estate planning, a Will is what most people think of first. Indeed, Wills have been the most popular method for passing on assets to heirs for hundreds of years. But Wills aren’t your only option. And if you rely on a Will alone (without a Trust) to pass on what matters, you’re guaranteeing your family has to go to court when you die.

In contrast, other estate planning vehicles, such as a Trust-based plan, which used to be available only to the uber wealthy, are now being used by those of all income levels and asset values to keep their loved ones out of the court process.

But determining whether a Will alone or a Trust-based plan (Trust and Pour-Over Will) is best for you depends entirely on your personal circumstances. And the fact that estate planning has changed so much makes choosing the right tool for the job even more complex.

The best way for you to determine the truly right solution for your family is to meet with me as your Personal Family Lawyer® for a Family Wealth Planning Session™. During that process, I’ll take you through an analysis of your personal assets, what’s most important to you, and what will happen for your loved ones when you become incapacitated or die. From there, you can make the right choice for the people you love.

In the meantime, here are some key distinctions between Wills and Trusts you should be aware of.

When they take effect
A Will only goes into effect when you die, while a Trust takes effect as soon as it’s signed and your assets are transferred into the name of the Trust. To this end, a Will directs who will receive your property at your death, and a Trust specifies how your property will be distributed before your death, at your death, or at a specified time after death.  The Trust is what keeps your family out of court in the event of your incapacity or death.

Because a Will only goes into effect when you die, it offers no protection if you become incapacitated and are no longer able to make decisions about your financial and healthcare needs. If you do become incapacitated, your family will have to petition the court to appoint a conservator or guardian to handle your affairs, which can be costly, time consuming, and stressful.

With a Trust-based plan, which includes a Pour-over Will, Durable Power of Attorney and health care documentation, you can include provisions that appoint someone of your choosing—not the court’s—to handle your medical and financial decisions if you’re unable to. This keeps your family out of court, which can be particularly vital during emergencies, when decisions need to be made quickly.

The property they cover

A Will covers any property solely owned in your name. A Will does not cover property co-owned by you with others listed as Joint Tenants, nor does your will cover assets that pass directly to a beneficiary by contract, such as life insurance.

Trusts, on the other hand, cover property that has been transferred, or “funded,” to the Trust or where the Trust is the named beneficiary of an account or policy. That said, if an asset hasn’t been properly funded to the Trust, it won’t be covered, so it’s critical to work with me as your Personal Family Lawyer® to ensure the trust is properly funded.

Unfortunately, many lawyers and law firms set up Trusts, but don’t emphasize the important of ensuring your assets are properly re-titled or beneficiary designated, and the Trust doesn’t work when your family needs it. I have systems in place to ensure that transferring assets to your Trust and making sure they are properly owned at the time of your incapacity or death happens with ease and convenience.

How they’re administered

In order for assets through a Will to be transferred to a beneficiary, the will must pass through the court process called Probate. The court oversees the Will’s administration in Probate, ensuring your property is distributed according to your wishes, with automatic supervision to handle any disputes.

Since Probate is a public proceeding, your Will becomes part of the public record upon your death, allowing everyone to see the contents of your estate, who your beneficiaries are, and what they’ll receive.

Unlike Wills, Trusts don’t require your family to go through Probate, which can save both time and money. And since the Trust doesn’t pass through court, all of its contents remain private.

How much they cost

Wills and Trusts do differ in cost—not only when they’re created, but also when they’re used. The average Will-based plan can run between $500-$2000, depending on the options selected. An average Trust-based plan can be set up for $3,500-$6,000, again depending on the options chosen. So at least on the front end, Wills are far less expensive than Trusts.  However, Wills must go through Probate, where attorney fees and court costs can be quite hefty, especially if the Will is contested. Given this, the total cost of executing the Will through probate can run $15,000 or more plus all of the other disadvantages of going through a Court proceeding.

Even though a Trust may cost more upfront to create than a Will, the total costs once Probate is factored in can actually make a Trust the less expensive option in the long run.  And if you think you can cut costs by having your “trust” done through an online program like LegalZoom or through a Trust-mill company, please think again.  While you will end up with a document with the word “Trust” on the first page, the document is likely filled with errors and problems that will leave your loved ones in Court proceedings that you thought you were avoiding.  Since the problem will be discovered at your incapacity or at your death, it will be too late to correct.  As the old adage goes “you get what you pay for.”  While we all like getting a bargain, your estate plan is not the place to cut corners.

During our Family Wealth Planning Session™, I’ll compare the costs of Will-based planning and Trust-based planning with you, so you know exactly what you want and why, as well as the total costs and benefits over the long-term.

As your Personal Family Lawyer®, I offer expert advice on Wills, Trusts, and numerous other estate planning vehicles. Using proprietary systems, such as my Family Wealth Inventory and Assessment™ and Family Wealth Planning Session™, I’ll carefully analyze your assets—both tangible and intangible—to help you come up with an estate planning solution that offers maximum protection for your family’s particular situation and budget. Contact me today to get started.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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How and When to Talk to Your Children About Money

How and When to Talk to Your Children About Money

Whether you consider yourself wealthy or not, you need to think about how (and when) you’ll talk with your children about money, whether they’re little kids, tweens, teens, or already adults.

The Wall Street Journal article “The Best Way for Wealthy Parents to Talk to Children About Family Money” offers guidelines for how and when “the money talk” should take place. Based on interviews with multiple financial experts, the article suggests these discussions should happen in three stages during the child’s lifetime.

Here, I’m showing you how each of these three stages apply to your family wealth as a whole, regardless of how much—or how little—money you have at the moment:

Tweens and teens

The tween years (ages 10-12) are a good time to start talking with your children about your family wealth. At this age, the discussion should be aimed at letting your children know that family wealth is not just the amount of money that your family has, but involves all of the family resources.

Time, energy, attention, and money (TEAM) are the resources that make up your family wealth. With this in mind, use one day over a coming weekend to create a Family Wealth Inventory with your tween or teen children. Inventory all of the family’s TEAM resources, along with other intangibles, such as values, insights, as well as stories and experiences you want considered as part of the Family Wealth bank.

This is an ideal time to tell them the family story, talking about how you and their other relatives worked your way to the family wealth you have now, how decisions have been made from one generation to the next regarding family wealth, and how you hope decisions will be made in the future.

Around ages 10 to 12, you can also start talking to your children about the fact that one day you won’t be here, your intentions surrounding what you plan to pass on to them (beyond just money) and how you plan to pass it on, as well as what they choose to do with the inheritance they’re receiving.

Again, the inheritance they’re receiving is not just the money you’re leaving—it also involves your family genetics, epigenetics, values, ancestry, connections, knowledge, and much more.

In their 20s
If you haven’t yet begun talking to your children about your family wealth, you should start now. And if you’ve already begun the conversations, make sure to continue talking to them during this important stage of their life.

Once they’ve moved out of the home, they need to begin thinking about their own family wealth, including setting up their own legal documents, so if something happens to them, you won’t get stuck in court or conflict. They also need to know whether you plan to offer them financial assistance during their lifetime, along with what the parameters of this assistance are and why you’ve set things up this way.

Additionally, this is an ideal time to start discussing your own plans for retirement and whether or not you’ll need any financial support from them later on in their life.

If you haven’t already shared your estate plan with your children—including where to find it, why you’ve made the decisions you’ve made, and introduced them to your family lawyer—this is the time to do that as well.

In their 30s and 40s
By their 30s, your children should be ready to be fully involved in your family wealth. This would be the perfect time to have a family meeting facilitated by me, if you haven’t done so already.

You can kick-start the talk by reading from a letter you’ve written that outlines the hopes you have for your family wealth, both now and in the future. Since you’ll likely be nearing or in retirement at this stage, it’s important that you eventually discuss the actual value of the family’s wealth and detail your wishes about passing it on. At this age, you never know how much time you have left to prepare your children to effectively manage the money you’ve spent your entire life accumulating.

By now, you definitely want your children to know if they should plan to provide financial support for you. At the same time, you may want to start looking at how you can pass on what you do have during your lifetime, instead of waiting until death, so you can invest in creating more family wealth with your children together.

As your Personal Family Lawyer®, I can not only help facilitate these discussions, I can also provide estate planning strategies to help your children become creators of more family wealth, instead of people who you might be afraid will squander what you’ve created. Indeed, I can help you set up structures that incentivize them to invest and grow their inheritance, rather than waste it. Contact me today to learn more.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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Five Surprisingly Common Planning Mistakes Many Baby Boomers are Making

Five Surprisingly Common Planning Mistakes Many Baby Boomers are Making

Baby boomers – the first generation tasked with the responsibility of planning for and funding their golden years. This generation, which includes those born between 1946 and 1964, have entered and continue to enter into retirement. As they make this financial transition into retirement, many are learning that they have made some of the most typical retirement mistakes.

But, even if you’ve made a financial mistake or two, there’s still time to avoid these five surprisingly common planning mistakes baby boomers are making in droves.

Mistake #1: Believing Estate Planning is Only for the Wealthy: While baby boomers are not the only ones guilty of this mistake, the common misconception is that only the ultra-rich need to have an estate plan prepared. By some reports, about half of Americans between the ages of 55 and 64 do not even have a Will. Because estate planning encompasses not only protection of your assets (regardless of how much you’ve accumulated), but also your incapacity planning and healthcare choices, the lack of planning can leave you in a dire situation should any medical issues arise.

Mistake #2: Checklist Mentality: For many, estate planning is just the preparation of legal documents. Once the documents are signed, the client crosses off the item from his or her to-do list and moves on. But, your circumstances may (and usually will) change. And the likelihood of this happening increases the longer time goes by. To ensure your estate planning objectives are carried out and that you plan will actually work by minimizing family conflict and avoid court intervention, you should update your estate plan every time a major (or minor) life change happens, such as retirement.

Mistake #3: Not Completing Your Estate Planning Homework: Just because the estate planning documents have been signed does not necessarily mean that the planning is complete. It is important that any assets that need to be retitled are done so as soon as possible, before you forget. If the ownership or designations on financial accounts and property do not align with your estate planning strategy, there can be major problems in the future. Improper titling of financial accounts or property can result in an unexpected or undesirable distribution. This can happen because you may make one plan through your will or trust, but the ultimate determination of who inherits will rely on the ownership or beneficiary designation of those assets upon your death.

Mistake #4: Leaving Out Little (And Not So Little) Things: It is important to consider all forms of property, not just the high-value assets when putting together an estate plan. Some of the most commonly overlooked assets include digital assets and family pets. If not expressly addressed in your estate plan, your family may end up fighting over valuable assets, abandoning those they deem worthless, or not even realizing certain assets existed.

Mistake #5: Not Preparing for Life Events & Emergencies: No one has a crystal ball. However, with proper estate planning, you may be able to weather the storm brought on by some of life’s unexpected events or emergencies. With long term care costs increasing year after year, planning for the future possibility of a nursing home can save you money and reduce worry if the time comes.

Estate Planning Help

Although many baby boomers have made these mistakes, you do not have to be one of them.   As a Personal Family Lawyer®, I can give you the peace of mind knowing you have a plan in place that will work for you and your family in the event of incapacity and at death. I can teach you some estate planning options and you can be sure that you and your family are protected from these common mistakes.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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Estate Planning Best Practices Gleaned From Famous Celebrity Deaths

Estate Planning Best Practices Gleaned From Famous Celebrity Deaths

Discussing death can be awkward, and many people would prefer just to ignore estate planning all together. However, ignoring—or even putting off—such planning can be a huge mistake, as these celebrity stories will highlight.

The next time one of your relatives tells you they don’t want to talk about estate planning, share these famous celebrities’ stories to get the conversation started. Such cautionary tales offer first-hand evidence of just how critical it is to engage in estate planning, even if it’s uncomfortable.

The Marley Family Battle
You would think that with millions of dollars in assets—including royalties offering revenue for the indefinite future—at stake, more famous musicians would at least have a will in place. But sadly, you’d be wrong. Legendary stars like Bob Marley, Prince, and Jimi Hendrix failed to write down their wishes on paper at all.

Not having an estate plan can be a nightmare for your surviving family. Indeed, Marley’s heirs are still battling one another in court three decades later. If you do nothing else before you die, at least be courteous enough to your loved one’s to document your wishes and keep them out of court and out of conflict.

Paul Walker Died Fast and Furious at Just 40
While Fast and Furious actor Paul Walker was just 40 when he died in a tragic car accident, he had enough forethought to implement some basic estate planning. His will left his $25 million estate to his teenage daughter in a trust and appointed his mother as her legal guardian until 18.

But isn’t 18 far too young for a child to receive an inheritance of any size? Walker would have been far better advised to leave his assets in an ongoing trust, with financial education built in to give his daughter her best shot at a life well lived, even without him in the picture.

Most inheritors, like lottery winners, are not properly educated about what to do after receiving an inheritance, so they often lose their inheritance within just a few years, even when it’s millions.

Indeed, none of us has any clue when we’ll die, only that it will happen, so no matter how young you are or how much money you have—and especially if you have any children—don’t put off estate planning for another day. You truly never know when it’ll be needed.

Heath Ledger Didn’t Update His Estate Planning
Even though actor Heath Ledger created a will shortly after becoming famous, he failed to update it for more than five years. The will left his entire fortune to his parents and sister, so when he died unexpectedly in 2008, his young daughter received nothing, as she hadn’t been added to the will. Fortunately, his parents made sure their granddaughter was provided for, but that might not always be the case.

Creating an estate planning strategy is just the start—be sure to regularly update your documents, especially following births, deaths, divorces, new marriages, acquiring new assets, or retiring. Many estate plans fail because most lawyers don’t have built-in systems for updating your estate plans, but we do—mostly because we don’t want this to happen to your family.

Paul Newman Cut Out His Daughters Too
Though it’s a good idea to regularly update your estate plan, be sure your heirs know exactly what your intentions are when making such updates, or your family might experience significant shock by not knowing why you did what you did.

The final update to Paul Newman’s will, which was made just a few months before his death in 2008, left his daughters with no ownership or control of Newman’s Own Foundation, his legendary charity associated with the Newman’s Own food brand. Prior versions of Newman’s will— and indeed his own personal assurances to his family—indicated they’d have membership on the foundation’s board following his death.

Instead, the final version of his will left control of the foundation to his business partner Robert Forrester. Some allege that during his final months, when Newman was mentally unstable, he was secretly persuaded to change his estate plan to leave control of the Newman’s Own brand and foundation to Forrester. Newman’s daughters are currently fighting Forrester in court over the rights they believe they’re entitled to receive.

While changes to your estate plan may seem perfectly clear to you, make sure your family is on the same page by clearly communicating your intentions. In fact, if you are making significant changes to your plan, and your children are adults, we often recommend a full family meeting to go over everything with all impacted parties, and we often facilitate such meetings for our clients.

Muhammad Ali Made His Wishes Clear
Boxing great Muhammad Ali wanted multi-day festivities to be held in his honor, including a large festival, an Islamic funeral, and a dazzling public memorial at the KFC headquarters in Louisville, KY. Given such elaborate plans, he worked with his lawyers for years, ensuring his wishes would be properly carried out.

While you probably won’t need a multi-day festivity to celebrate your life, you may have wishes regarding how your life should be memorialized when you pass or how your care should be handled if you’re incapacitated. If you eat a special diet or want certain friends by your side while incapacitated, you have to make these wishes clearly known in writing or they very well might not happen. At the same time, you should spell out exactly how you want your remains cared for and what kind of memorial service, if any, you prefer.

As your Personal Family Lawyer®, we can help ensure your final wishes are carried out exactly how you want. But more importantly, we’ll help protect your family and keep them out of conflict and out of court in the event of your death or incapacitation. With a Personal Family Lawyer® on your side, you’ll have access to the exact same estate planning strategies and protections that A-List celebrities use, so don’t wait another day—contact us now to get started!

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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After Tax Reform, Is Estate Planning Still Necessary?

After Tax Reform, Is Estate Planning Still Necessary?

The new tax legislation raises the federal estate tax exemption to $11.2 million for individuals and $22.4 million for couples. The increase means that an exceedingly small number of estates (only about 1,800, nationally) will have to worry about federal estate taxes in 2018, according to estimates from the nonpartisan congressional Joint Committee on Taxation.

So, you may be wondering, is estate planning even still necessary?

To put it simply: Yes!

Comprehensive estate planning does a lot more than guard against you owing federal estate taxes. Other than taxes, you and your family likely face a range of estate planning challenges, such as:

  • Distribution of your assets. Create your legacy with the help of tools like a trust and/or a last will and testament.
    • If you die without a will, state intestacy laws determine where your stuff goes. You lose control, and the people closest to you may feel hurt or may suffer financially.
    • If your estate plans do not include asset protection strategies, your lifetime of hard work and savings could be squandered needlessly.
    • Without an estate plan, your family may not be aware of all of the assets that you own.  Your hard earned money may end up with the California Department of Unclaimed Property, which is estimated to reach over $9 Billion in unclaimed property by mid-2018.
  • Cognitive impairment. Dementia, Alzheimer’s disease or other disorders could make handling your own affairs impossible or at least ill-advised. Executing a Durable Power of Attorney (DPOA), for instance, allows you to choose a person, referred to as an agent or attorney-in-fact, to step in and manage your financial affairs on your behalf. Without this important document, your fate will be left to the public whims of the court in a proceeding called a Conservatorship (aka Living Probate).  If a family member hasn’t stepped in to Petition for Conservatorship, the court could appoint someone else—for instance, a public conservator.
  • Medical emergencies. What if you become unable to communicate your preferences regarding medical care yourself? Naming someone as your health care power of attorney under a medical Power of Attorney allows him or her to act as your voice for medical decisions. In addition, a Living Will and Advance Health Care Directives allows you to specify the types of life-sustaining treatment you do or do not want to receive.
  • Specific family situations. Life is unpredictable. You need to consider (and proactively deal with) challenges like the following:
    • If you have minor children, you can name a guardian for them and provide for their care through your estate plan. Without a named guardian, the decision of who raises your children will be left to a Judge.  The Judge will not know your family dynamics and who would be best to raise your children in the manner in which you intended.  Even worse, your children may even end up with the Department of Child Protective Services while the courts sort your affairs out.
    • If you care for a dependent with a debilitating condition, provide for her and protect her government benefits using tools like the Special Needs Trust (SNT).
    • If you’re married with children from a previous relationship, you need clear, properly prepared documents to ensure that your current spouse and children inherit according to your wishes.
  • Probate is the court-supervised process of the distribution of a deceased person’s assets. A veritable avalanche of paperwork, expense and stress awaits your loved ones during probate. But it doesn’t have to happen to your family! Through proper planning, you can keep all of your assets outside of probate to be distributed according to your wishes in a private Trust administration.

Estate Planning Involves Much More Than Minimizing Estate Taxes

Even prior to the Tax Cuts and Jobs Act, relatively few Americans needed to worry about the estate tax. However, virtually everyone faces one or more of the issues outlined above. Shockingly, a 2016 Gallup poll found that 56% of Americans do not even have a simple will. A 2017 poll conducted by Caring.com found similarly alarming news—a majority of U.S. adults (especially Gen-Xers and Millennials) do not have their estate plans in order.

We can help you get prepared for the future.  Please contact me to begin your plan and get the peace of mind you need.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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IRAs, Annuities and Guardianship: Providing for Your Minor Children after You Die

IRAs, Annuities and Guardianship: Providing for Your Minor Children after You Die

Deciding guardianship for your minor children may very well be the most vexing decision you’ll make regarding your estate planning. Not only must you trust the appointed guardian to raise your children as you’d want them raised, but you also need that person to be financially responsible with your children’s inheritance. For example, if you have an IRA or an annuity that you wish to pass to your minor children, how can you ensure those funds will be used properly—especially if the person you trust most to raise your kids isn’t necessarily the best with finances?

This question is multifaceted, so let’s unravel one aspect at a time.

The Question of Guardianship

Here’s the good news: The person who raises your minor children and the person who handles their inheritance don’t have to be the same person. If necessary, you can appoint one guardian to serve each function, naming one as the guardian of the person and another as the guardian of the estate. In this arrangement, you entrust one person with your children’s assets and another with their care, while enabling each to interact with the other. This dual guardianship model gives many parents peace of mind—knowing they don’t necessarily have to risk their children’s inheritance while ensuring that they are raised according to the family’s values.

Although guardianship of the estate is an option, for many families the best strategy for financially providing for the children is to use a trust. In that case, a trustee fulfills the responsibility that would otherwise belong to the guardian of the estate. The trust assets can be released to the children or the caregiver incrementally according to age and needs. For example, the trustee could distribute money for the children’s needs until age 18 and then manage for the money until the child is a financially mature adult. Your trustee may also exercise discretion in investing and distributing the funds for the children’s support, education, etc., coordinating with their physical guardian to ensure the children’s needs are met until they come of age. This can ensure that the assets are there when they’re needed for your family.

Passing an Annuity to the Children

Annuities pay out regular income—which can make them convenient vehicles to cover ongoing expenses for minor children. If you have set up an annuity for yourself or a spouse, you can name the children as beneficiaries, or you can also name a trust for the benefit of your children. If you are still paying into the annuity at the time of death, your children may receive the balance, or you may give a trustee the option of rolling the balance into another annuity to be paid out to the children at a later maturity date. If you are already receiving annuity payments yourself, the children may simply continue receiving these payments for the remainder of the term. Depending on your annuity contract, payouts may also be made lump sum. Annuities are a very flexible financial product with many different options. If you have annuity now, or if you are considering purchasing one, bring it up with me as we work on your estate plan so we can make sure it works with your will or trust seamlessly.

Transferring an IRA to the Children

Individual Retirement Accounts (IRAs) are also excellent vehicles to pass along wealth for minor children’s welfare—because, unlike most annuities, they have the ability to grow over time and can provide a lifetime of financial benefit to your children.

When you name the next generation as beneficiaries on an IRA, you effectively extend the IRA’s life expectancy. While the required minimum distribution payments to the children will be smaller than they would have been for you (since, according to the IRS’s rules, they have a longer life expectancy), the account balance can remain invested for growth over time. Your financial and tax advisor can evaluate your situation to help you decide which type of IRA (Roth or traditional) is the best option for your goals. And I can work with you to make sure that the IRA is fully protected against creditors, predators, and bad financial decision making with an IRA trust.

Planning for the welfare of minor children after your death is neither simple nor pleasant to consider, but it’s absolutely necessary for peace of mind. Determining the right person(s) to be the guardian of your children requires careful thought, but you don’t have to sacrifice your children’s inheritance for their proper care. With the right financial plan, you can manage both facets successfully. As always, I’m here to provide assistance and explain your options. Call my office for an appointment today.

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Four Reasons Why Estate Planning Isn’t Just for the Top 1 Percent

Four Reasons Why Estate Planning Isn’t Just for the Top 1 Percent

There is a common misconception that estate plans are only for the ultra-rich – the top 1 percent, 10%, 20%, or some other arbitrary determination of “enough” money. In reality, nothing could be further from the truth. People at all income and wealth levels can benefit from a comprehensive estate plan. Sadly, many have not sat down to put their legal house in order.

According to a 2016 Gallup News Poll more than half of all Americans do not have a will, let alone a comprehensive estate plan. These same results were identified by WealthCounsel in its Estate Planning Awareness Survey. Gallup noted that 44 percent of people surveyed in 2016 had a Will place, compared to 51 percent in 2005 and 48 percent in 1990. Also, over the years, there appears to be a trend of fewer people even thinking about estate planning.

When it comes to estate planning, the sooner you start the better. Below are four reasons why everyone – no matter what income or wealth level – can benefit from a comprehensive estate plan:

  1. Forward Thinking Family Goals: Proper estate planning can accomplish many things. The first step is to ask what your goals are. They may include caring for a minor child, an elderly parent, a disabled relative, or distributing real and personal property to individuals who will appreciate and maintain these assets prudently. Understanding what your family wants and needs are for the future is a great starting point for any estate plan. If you can sit down and spend time planning your vacation, you can do the same for your estate. Your future self, and your loved ones, will thank you.
  2. Financial Confidence Now and After You Are Gone: One immediate benefit of having a finished estate plan in place is that you will likely feel in control of your finances, possibly for the first time ever. Many people experience a new sense of discipline in maintaining their finances which can help with saving for retirement, a big purchase, or other goal. In addition to the personal benefit of financial control, an estate plan allows you to dictate exactly how and when your heirs receive an inheritance. This is particularly important for minor heir or those who need additional guidance to manage their inheritance, like a disabled child.
  3. Identify Risks: An important aspect of a good estate plan is to mitigate against future and current risks. One example is becoming disabled and unable to support your family. Another is the possibility of dying early. Through an estate plan you can chose who will be in control of your personal assets, instead of the court appointing a legal guardian who will cost money and be a distraction for your family. While contemplating these types of risks is never fun, preparing ahead of time ensures your loved ones will be prepared if an unfortunate tragedy occurs.
  4. To Maintain Your Privacy: In the absence of an fully funded, Trust-based estate plan, a list one’s assets are available for public view upon death. This occurs when a probate court needs to step in. Probate is the legal process by which a court administers the deceased person’s estate. A solid estate plan should generally avoid the need for involvement by the probate court, so your family’s privacy can be maintained.

The Bottom Line: Seek Professional Advice

There are numerous benefits to working with a professional team when it comes to estate planning. Estate planning attorneys, financial advisor, insurance agents, and others have a broader and deeper knowledge of money management, financial implications, and the law. When you work with a qualified team to implement an estate plan you can rest easy knowing your family will be taken care of no matter what happens in the future.

This blog is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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What is a Trust?

What is a Trust?

A trust is a legal creation set up to benefit someone or something. For example, some people set up trusts to benefit their children, their grandchildren, or even charities. It is easiest to understand if you think about three separate people being involved.

One person, called the grantor, funds the trust somehow, by placing money or other assets into it. Any type of asset may be used, such as money, bank accounts, cars, and even real estate.

The second person, who is known as the trustee, agrees to manage the assets. Once the assets are in this legally created trust, the trustee holds title to the assets. The third person, who is known as the beneficiary, receives the benefits of the trust. For example, the benefits might include interest paid on money in the trust, a monthly allowance, or even a place to live.

The use of trusts as a planning tool can provide many benefits, including the following:

  • Avoiding the formal probate process associated with transferring property using a will;
  • Protecting assets from creditors;
  • Caring for those who cannot care for themselves, such as minor children or those with special needs; and
  • Reducing tax liability.

Although it may seem confusing, a trust can even be set up to benefit the person who puts the assets into the trust. In other words, while there are three roles to be played, each role does not have to be played by separate and distinct people. One person can serve in more than one of the roles.

For instance, a person may place assets into a trust, select someone else to manage those assets, and then receive the benefits himself. To take that example one step further, the person who is both the grantor and the beneficiary could even be the trustee if the circumstances suited such a scenario.

How a trust is drafted and who plays each of these three roles depends on the goals of the person setting it up. Call my office today to schedule a Family Wealth Planning Session, where I can explain trusts further and help identify the best strategies for you and your family.

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New Baby? Time to Create Your Estate Plan

New Baby? Time to Create Your Estate Plan

Estate planning is often one item that gets pushed back on nearly everyone’s to-do list. The reasons you might be delaying vary: lack of time, not thinking you have enough assets, not knowing how to start, or fear of contemplating death. Whatever the reason for not putting an estate plan together, it is important to understand that if you just had a baby or have minor children – now is the time to meet with me to implement an estate plan.

In general terms, an estate plan is a set of legal documents that outline your wishes on how your assets should be distributed and who is responsible for your dependents, in the event of your death or legal incapacity. An estate plan should be developed with a qualified estate planning attorney to ensure that it will work as intended and fully protect your family. Here’s how an estate plan can you protect the newest addition to your family.

Protect Your Children

Perhaps to top reason to put together an estate plan is to dictate who will care for your children in the event you and your spouse die early or become legally incapacitated and therefore unable to care for your kids. Your estate plan can designate someone you trust and who shares your values as a guardian of your minor children.  This is the person who will essentially be a surrogate parent and raise the children through adulthood. When selecting a guardian, it is important to choose people who will be willing participants in your estate plan, who share your values and parenting philosophy, and who you trust to raise your children.

Distribute Your Things

While some assets have purely financial value, others have deep emotional attachments. Not only will a properly funded trust-based estate will eliminate probate, it will promote family harmony and save time and money. As you may already know, probate is the court-supervised process of wrapping up a deceased person’s affairs. This consists of multiple steps, including presenting a deceased’s last will and testament (if they had one – otherwise the probate court uses the government’s default plan known as intestacy), gathering assets, paying off debts, and distributing what’s left over to the deceased’s heirs.  Essentially, a probate proceeding is a lawsuit against the estate for the benefit of the creditors.  Using a trust to provide specific instructions on distribution of assets can help ward off fights among surviving relatives and will keep your affairs private.  Additionally, special features in your trust, sometimes called lifetime trusts, also allow you provide long-term financial stability and support for your children. These lifetime trusts can prevent a financially immature young child from using up their inheritance.

Provide for Your Loved Ones

Beyond your children, creating an estate plan will inform your loved ones what final health care decisions should be made on your behalf in the event you become incapacitated and are unable to make decisions. Serving as healthcare proxy is an enormous responsibility for the person you name, but you can help lessen the burden by communicating your wishes about medical decisions. One significant advantage of properly planning is that your intentions can be clearly stated so that your surviving family members do not have to guess what your desires are.

Complete your Estate Planning

If you have experienced a recent life-event – such as a new baby, a work promotion, purchasing a home, moving to a new state, or any other milestone – you should discuss your situation with me, your Family Business Lawyer. If you already have a will or trust in place, it may make sense to update it to ensure it provides for your family and loved ones and ensure that your Trust is properly and fully funded, which is the legal term for transferring assets into you Trust.  To learn how estate planning can protect you, your newborn, and the rest of your family, contact me today.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

 

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Do I really need an Estate Plan?

Do I really need an Estate Plan?

It is often a misconception that only the ultra-wealthy have an estate, which requires planning.  In fact, virtually anyone who owns anything has an “estate” in the eyes of the law. Although the term may conjure images of expansive country properties, expensive cars, or other symbols of high wealth, for the purposes of estate planning law, the term “estate” covers a whole lot more.

What constitutes as an estate

Ordinary possessions like homes, jewelry collections, bank accounts, cars, furniture — basically anything you can own — are also under the purview of your estate, meaning estate planning is something that profoundly impacts virtually everyone.

So even if you wouldn’t ordinarily consider yourself the owner of an estate, it’s quite likely that you are. The answer to the question “I don’t have an estate. Do I really need an estate plan?” is, “Yes, virtually everyone who owns property could benefit from estate planning.” Plus estate planning covers more than just property, too: It’s also about ensuring someone you trust can make critical medical and financial decisions for you if you’re unable to do so due to incapacity.

4 key advantages of estate planning

Estate planning may seem overwhelming, but it doesn’t have to be – you are not alone. I know what it takes to create a comprehensive estate plan tailored to your exact needs and can make the process easier for you. Here are the core tenets of what’s involved in estate planning and how you stand to benefit from the process:

  1. It allows you to remain in complete control of your property while you’re still alive and well.
  2. It helps you provide for yourself and your loved ones if you become incapacitated or disabled – without expensive and distracting court hearings.
  3. It minimizes the impact of professional fees, court costs, and taxes.
  4. It provides a framework so you can give what you have to whom you want, the way you want, when you want.

Are you ready to sit down with a qualified estate planning attorney to see how you can ensure a better future for yourself and your family? There’s no time to waste — the sooner you take stock of your estate and get critical documents like wills and trusts completed, the better. Give me a call today to find out how I can keep your health and wealth in the right hands for good.

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How Your Trust Can Help a Loved One Who Struggles with Addiction

How Your Trust Can Help a Loved One Who Struggles with Addiction

Substance addiction is by no means rare, impacting as many as one in seven Americans. Since it is so prevalent, navigating a loved one’s addiction is actually a relatively common topic in everyday life.  Therefore, you should also consider it when working on your estate planning. Whether the addiction is alcoholism, drug abuse, or irresponsible spending, such as shopping or gambling, we all want our loved ones to be safe and experience a successful recovery. A properly created estate plan can help.

The idea that money from a trust could end up fueling those addictive behaviors can be a particularly troubling one. Luckily, it’s possible to frame your estate planning efforts in such a way that you’ll ensure your wealth has only a positive impact on your loved one during their difficult moments.

Funding for treatment

One of the ways your trust can have a positive influence on your loved one’s life is by helping fund their addiction treatment. If a loved one is already struggling with addiction issues, you can explicitly designate your trust funds for use in his or her voluntary recovery efforts. In extreme cases where an intervention of some sort is required to keep the family member safe, you can provide your trustee with guidance to help other family members with the beneficiary’s best interest by encouraging involuntary treatment until the problem is stabilized and the loved one begins recovery.

Incentive trusts

Incentive features can be included in your estate planning to help improve the behavior of the person in question. For example, the loved one who has an addiction can be required to maintain steady employment or voluntarily seek treatment in order to obtain additional benefits of the trust (such as money for a vacation or new car). Although this might seem controlling, this type of incentive structure can also help with treatment and recovery by giving a loved one something to work towards. This approach is probably best paired with funding for treatment (discussed above), so there are resources to help with treatment and then benefits that can help to motivate a beneficiary.

Lifetime discretionary trusts

Giving your heirs their inheritance as a lump sum could end up enabling addiction or make successful treatment more difficult. Luckily, there’s a better way. Lifetime discretionary trusts provide structure for an heir’s inheritance. If someone in your life is (or might eventually) struggle with addiction, you can rest easy when you know the inheritance you leave can’t be accessed early or make harmful addiction problem worse.

Of course, you want to balance this lifetime protection of the money with the ability of your loved one to actually obtain money out of the trust. That’s where the critical consideration of who to appoint as a trustee comes in. Your trustee will have discretion to give money directly to your beneficiary or pay on your loved one’s behalf (such as a payment directly to an inpatient treatment center or payment of an insurance premium). When dealing with addiction, your trustee will need to have a firm grasp of what appropriate usage of the trust’s funds looks like. Appointing a trustee is always an important task, but it’s made even more significant when that person will be responsible for keeping potentially harmful sums of money out of the addicted person’s hands.

Navigating a loved one’s addiction is more than enough stress already without having to worry about further enablement through assets contained in your trust. Let us take some of the burden off your shoulders by helping you build an estate plan that positively impacts your loved one and doesn’t contribute to the problem at hand. That way, you can go back to focusing your efforts on the solution.  Should you have any questions about estate planning or how I can help you, please feel free to contact me.

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