Category: Estate Planning

Estate planning is essential and beneficial for all families. Through estate planning, individuals can ensure their loved ones are taken care of after their death. 

However, estate planning for blended families can be challenging. There may be questions about dividing assets among children from a previous relationship and the children of the marriage. A spouse might want to protect family heirlooms from being transferred to non-blood relatives. Below are five tips for estate planning for blended families from our California estate planning attorney.

1.  Consider a Trust Agreement

A will allows you to control how your assets are distributed after your death. Without a valid will, California intestate laws dictate who receives your property when you die.  At a minimum, you will want to have a valid will in place before you get married, so that your intended beneficiaries are protected.

You can better ensure that your children from a previous relationship receive certain assets by placing those assets in a trust. The assets pass outside of your estate to the beneficiaries. A trust agreement can also be very useful when your children are minors. A trustee manages the trust assets for your children’s benefit after you die, according to the terms you establish when you create the trust.

2.  Do Not Forget Life Insurance and Retirement Accounts

Life insurance and retirement accounts pass directly to the named beneficiary instead of going through the estate. Make sure that you update your beneficiaries after a divorce. You can name a trust as the beneficiary if your children are minors at the time of your death.

3.  Advance Health Care Directives

When you remarry, your spouse has the legal authority to make healthcare decisions for you unless you appoint another person to make those decisions. For parents with adult children, there could be a question of whether the adult children should make those decisions for their parent instead of the new spouse.

If you want your adult children to make healthcare decisions for you, at a later time when  you can no longer make those decisions for yourself, you need to execute legal documents giving that authority to your children. You should discuss executing an Advance Health Care Directive with your California estate planning lawyer.

4.  Consider a Premarital Agreement

Premarital agreements can resolve some of the issues that blended families might have regarding estate planning. The marital agreement can include terms related to the rights of the parties during a divorce and the rights of a surviving spouse in the estate of a deceased spouse. The parties may also designate property that will remain separate property during the marriage, so that property is not subject to property division if the couple divorces.  

California’s Family Code has strict requirements to ensure that a premarital agreement is valid.  You and your prospective spouse should each consult your own California family law attorney to ensure that the premarital agreement adequately protects the rights of both spouses.

Marital agreements do not take the place of estate planning. An individual or couple should have wills, a trust, and other estate planning documents even if the couple enters a premarital agreement.

Contact a California Estate Planning Attorney for Help

Blended families are becoming more common. Deciding how to protect your spouse and your children if you die can be challenging. Consulting a California estate planning attorney is the best way to learn about the laws governing estates and inheritances so that you can make informed decisions about protecting all the people you love. Contact our office today.

The SECURE Act, which got made into law in 2019 and became effective on January 1, 2020, changed the rules about contributions to Individual Retirement Accounts (IRAs). As with other changes to federal law, the SECURE Act is complicated. You might want to talk to a California estate planning attorney about how the SECURE Act could affect your finances and estate plan.

An Overview of the SECURE Act

The Setting Every Community Up for Retirement Act (SECURE Act) is a bipartisan effort to make it easier for people who are not wealthy to save for retirement. Here are some of the key provisions of the Act:

• A person can continue to contribute to an IRA after the age of 70 ½ years. The individual does not have to be still employed at that point, but they must have earned income, as opposed to entirely passive income. 
• People used to have to take Required Minimum Distributions (RMDs) from their defined contribution or defined benefit plan at age 70 ½ – or more precisely, by April 1 of the year after they turn 70 ½. The SECURE Act makes the RMD age 72 for everyone who turned 70 ½ after December 31, 2019.
• The amount that a person contributes to an IRA after the age of 70 ½ will reduce the amount of the annual qualified charitable distribution that an individual can make during that tax year. The standard annual qualified charitable distribution limit is $100,000.
• The SECURE Act created the “10-Year Distribution Rule.” Other than a surviving spouse, everyone who inherits proceeds from a traditional IRA or a Roth IRA must take a distribution of the entire account within 10 years of the death of the person who owned the retirement account. This rule does not apply to minor children until they reach the age of majority, people who are disabled or chronically ill, or beneficiaries who are within 10 years of the age of the deceased IRA owner. Beneficiaries used to be able to stretch out their distributions based on their life expectancy if they elected to do so.

These changes could have an impact on the tax brackets of beneficiaries and IRA owners. 

What Happens When Congress and the IRS Disagree

Although Congress wrote the SECURE Act, other government agencies can get involved after the legislation goes into effect. The Internal Revenue Service (IRS) and Congress do not always see eye-to-eye on changes in the law. In the situation of the SECURE Act, the IRS issued rulings that minimized or took away some of the benefits of the new law about IRAs.

Here are a few examples of rulings the IRS issued that take some of the wind out of the SECURE Act’s sails:

• IRA custodians (banks and other financial institutions) do not have to accept IRA contributions from anyone over the age of 70 ½. The custodian of the IRA does not have to give a reason for the denial, and there is no circumstance in which the individual who owns the IRA can force the financial institution to accept the contribution.
• The IRS imposed extra work on IRA custodians who want to accept contributions to IRAs from people over the age of 70 ½. The bank will have to amend the IRA contract and update the disclosure agreements.

A California estate planning attorney can help you evaluate whether you should make adjustments to your estate plan because of the SECURE Act. Contact us today.

It is a common misconception that a person who has a will has an estate plan. While it is better to have a will than to die intestate (without a will), a thorough estate plan can do much more than merely state who gets your things after your death. 

A California estate planning attorney can talk with you and explain what makes a great estate plan for you. Everyone’s situation is different, so a cookie-cutter estate plan is not the best option.

Five Goals of a Great Estate Plan

You might want to consider these suggested goals when crafting your estate plan. Some of these topics will apply, while others might not, depending on your circumstances.

Protecting You During Your Lifetime

Some people do not bother to create a will or living trust because they think these documents will not benefit them. They do not realize that estate planning can protect them while they are still alive. No matter how fit or cautious a person is, life as they know it could change without warning. A perfectly healthy person could become incapacitated in an instant by a car accident, heart attack, or brain aneurysm. 

Without a power of attorney for financial matters and a medical power of attorney (also called a medical directive or other names), the disabled person could be at the mercy of other people he would never have chosen to make his decisions for him. The only way to have input as to who will manage your money and have decision-making authority on your medical care if you cannot perform those tasks for yourself is to have the appropriate legal documents.

Distributing Your Assets and Naming an Executor

Wills and trusts both distribute your assets to your beneficiaries and designate someone to administer your estate. Generally, a will is a simpler, less expensive document than a trust. A trust can deal with special circumstances, like making arrangements for the education and care of minor children and safeguarding their assets until they are old enough to handle it properly. 

The additional cost of a living trust is usually well worth the expense. Trusts do not have to go through the probate courts, so these estate planning documents are more private than wills. Going through probate court tends to cost more and take longer than most trust administration.

Minimizing Estate Taxes

A great estate plan will develop strategies for minimizing or avoiding estate taxes. One common way that an estate plan can accomplish this outcome is by setting up a schedule of gifting during the person’s lifetime. One must take care to follow the tax laws to avoid causing estate and gift tax consequences.

Addressing Special Circumstances of Your Loved Ones

If you have a child with a disability, your estate plan could include a special needs trust that sets up funds for the benefit of the disabled child without jeopardizing his eligibility for government assistance. Also, specialized trusts can be useful for a person who has a child with addiction or money management challenges. These trusts protect the child from squandering the assets.

Long-Term Care Planning

Your estate plan might include a trust that protects your assets in the event that you or your spouse needs to move into a nursing home. The spouse who remains in the family home could end up destitute without appropriate estate planning.

A California estate planning attorney can help you design a great estate plan that meets your needs and goals. Contact our office today.

As you consider your estate plan, it’s important you work with an experienced California estate planning attorney. A holistic approach to estate planning includes provisions for what will happen after you die, as well as for the management of your affairs if you become mentally or physically incapacitated. 

Talk to your estate planning attorney about how to prepare in the event of incapacitation. A good place to start is by asking, “What is the Difference Between a Power of Attorney and Conservatorship?”

What is a Power of Attorney (POA)?

A power of attorney is a document granting another person authority over decision making in your place. Most commonly needed as you age, a POA allows a designated person, your agent, to make decisions for you as your ability to understand and make decisions for yourself declines.  A power of attorney is also necessary in the event you become physically or mentally incapacitated due to an accident or health-related condition. 

Along with a POA, you should generally execute an advance health care directive, which will allow the same agent, or a different agent, to make healthcare decisions for you if you are incapacitated.

To execute a power of attorney or advance health care directive, you should work with an estate planning attorney to make sure all California legal requirements are met, and you must do so while you are still of sound mind. 

It is critical you consider carefully who you want making decisions in your place. You may elect to have separate individuals act as your agent for financial and medical affairs. 

What is a Conservator?

Unlike a pre-selected, designated agent named in a power of attorney, a conservator is appointed by the court to act as a decision maker for another individual. Conservators may be appointed to act on behalf of elderly or incapacitated adults. Once conservatorship is imposed over another person, the conservator will make any financial, legal, or medical decisions allowed under the provisions of the conservatorship order.  A conservator who makes financial or legal decisions is often referred to as a conservator of the estate, while a conservator who makes medical decisions is often referred to as a conservator of the person.  

Often, a close friend or family member will be appointed as conservator, though any person assigned by the court who passes a background check and meets the courts’ criteria can be appointed conservator over another person. Conservatorships are most common in cases where individuals are suddenly incapacitated and did not plan in advance to set up a power of attorney. 

Conservatorships vs Powers of Attorney

Conservatorship proceedings can be an extremely stressful, protracted, and costly court process for family members to endure. Advance planning for POA’s will avoid the need for court intervention and conservatorship proceedings. With thoughtful consideration, you can retain a measure of control over your affairs by establishing financial and medical powers of attorney and assigning individuals you trust to make decisions on your behalf. 

Do You Need a California Estate Planning Attorney?

It’s essential that you prepare for life’s unexpected events and your eventual death by working with an experienced estate planning attorney. California estate planning, including powers of attorney and conservatorships, can be complex.

A knowledgeable California estate planning lawyer will assess your wishes, family dynamics, and overall estate to establish a plan that will benefit you and your loved ones in the event of a tragedy. 

Contact our office today to learn more about powers of attorney, conservatorships, and general estate planning tools. Contact us today.

Some people think they do not need an estate plan unless they are married, own a home, have children, and own significant assets.  But that is not always the case. A young, single person could have a devastating accident or illness. Without a power of attorney for healthcare decisions, the family might have to go to court for an order allowing them to make medical decisions while the person is incapacitated. This process could waste precious weeks or months, cause a rift in the family, and cost thousands of dollars.  Alternatively, a person who dies without a will or trust may force his survivors to go to court after he’s gone, to sort out his estate over a year or more, while a well-crafted estate plan might have avoided court altogether. 

A California estate planning attorney can evaluate your situation and explain which documents you need.

The Benefits of a Will or Living Trust

Wills and living trusts may each tell your survivors what you want to be done with your assets and who will handle the administrative steps after you’re gone. The person you select to be the executor of your will or the trustee of your trust can hire a professional, like a lawyer, to do the actual work while the executor or trustee supervises that work.

A living trust has many advantages over a will.  A will has to go through court, once you’ve died, so there is less privacy about the terms of the will. A trust generally does not have to go through the probate court, so there is more privacy. If you decide to execute a living trust, make sure that you retitle all of the property into the name of the trust if you want those things to pass by means of the trust. 

Trusts give more options and greater flexibility than wills. For example:

• A special needs trust can provide assets for the benefit of a loved one with a disability without making the person ineligible for government assistance programs.
• A Medicaid trust can help an individual qualify for Medicaid benefits to help pay nursing home bills without leaving the spouse who still lives at home destitute.
• A spendthrift trust lets you provide assets with protections to a loved one who is still young and attending school, or who might otherwise spend all the money quickly.

These are just a few examples of the many types of living trusts that could be a part of your estate plan.

A General Power of Attorney 

Although the name sounds intimidating, a power of attorney merely gives someone else permission to act on your behalf under certain circumstances. A power of attorney (POA) does not give someone the legal right to take over against your will or to steal your assets. 

Many POAs are general in nature and open-ended in duration. For example, you might name someone to pay your bills and manage your investment accounts if you become unable to do so for yourself. It is essential to make a general power of attorney “durable.” In other words, the POA is still valid if you become incapacitated.

A power of attorney might also be specific, like authorizing someone to sign papers for you at a real estate closing that you cannot attend. This type of POA is usually limited in time as well as scope; in other words, it will expire shortly after the real estate closing date.

All POAs are revocable as long as you have the legal capacity to create a POA. If you change your mind about the person you named as your “attorney in fact,” you can revoke the POA and create a new one naming someone else.

A Medical Power of Attorney or Advance Health Care Directive

A medical power of attorney, or Advance Health Care Directive (“AHCD”), as it is called in California, lets you decide who will make medical decisions on your behalf if you become incapacitated temporarily or long-term. You can revoke an AHCD at any time before you become incapacitated. As stated earlier, this document spares your loved ones from having to get a legal guardian appointed who can make healthcare decisions for you.

Depending on your situation and goals, you might need other documents in your estate plan in addition to the ones mentioned in this article. Contact our office today. Our California estate planning attorneys can recommend and prepare the documents that will best serve your needs.

What will happen to your children if you become incapacitated or die today?  Who will take care of them? How will they be provided for? These aren’t pleasant thoughts to contemplate, but they are important to consider.  Should something happen to you, the last thing you want is your children’s future to be decided by the courts.  

Estate Planning Tips for Parents with Minor Children

California estate planning attorneys are committed to helping families protect their children through proactive, comprehensive estate planning. While each family’s unique needs will guide their estate plan, these five estate planning tips for parents of minor children are a good starting point:

1. Decide on a Guardian

You must decide who you want to raise your children if you aren’t around to do so.  Naming a guardian for your children will safeguard their future well-being and ensure that they will remain with someone of your choosing. If you do not name a guardian, the courts may need to appoint one for them or place them in foster care. 

When choosing someone to act as your child’s guardian, ask yourself these questions:

• Do they live close by, or will they relocate to your children’s community?
• Do they have stable personal relationships?
• Are they financially responsible and secure?
• Will they provide the lifestyle and religious upbringing you would prefer?
• Are they willing to assume the responsibility of raising your children?

2. Update Beneficiaries on Retirement Accounts

Review your retirement and investment accounts and update your beneficiaries. Ask your estate planning attorney about naming beneficiaries and how to ensure that benefits are distributed according to your wishes. 

3. Purchase Life Insurance

Life insurance offers peace of mind that your children will have the funds needed to live comfortably and pursue their goals in the event of your death. 

An estate planning attorney may advise you regarding policy types and amounts suitable to your family’s needs. Factor your estate debts and your children’s short-term and long-term needs when purchasing life insurance policies, including:

• Special medical needs
• Care-taking support
• Standard of living
• Sports and recreation
• College expenses

4. Advance Health Care Directives

Many people think of estate planning exclusively in terms of finances. However, it’s equally important to exeu an advance health care directive. 

A medical directive a will define your preferences regarding medical treatment and decision-makers. A financial power of attorney designates who can access and manage your finances when you can’t. 

These documents are essential to any comprehensive estate plan, establishing clarity and direction for your loved ones in the event you are incapacitated or deceased.

5. Establish a Will and Trust

Decisions regarding your children’s care and the management of your estate need to be recorded in a legal format. A skilled estate planning attorney will prepare all necessary documents and ensure they are legally sound if challenged. 

Trusts are particularly valuable as they allow for specific instructions regarding the trustee’s estate. For instance, many parents instruct that their estate be disbursed incrementally, as a child ages and matures, and for specific purposes, such as funding college or entrepreneurial pursuits. 

Trusts also protect against costly probate and unnecessary court intervention, saving thousands of dollars upon estate distribution.

Protect your Family with the Help of a California Estate Planning Attorney 

Families with young children should be proactive in their approach to the future.  Anything could happen, which might tragically leave minor children at risk of being orphaned. Don’t risk their future to chance.  

Contact our office today and plan ahead with the help of an experienced California estate planning attorney. 

Many children with special needs rely on public funding for their support, like Medicaid for health insurance and Supplemental Security Income (SSI) for monthly income. If your estate plan is not set up correctly, your child could lose eligibility for these programs when he or she needs them the most.  Whether your child with special needs is a minor or an adult, you will need to address unique issues when making your estate plan. 

A California estate planning attorney can help you avoid pitfalls when creating your estate plan. Parents with special needs children typically have these three goals when planning for the future of their children:

• To avoid outcomes that could jeopardize your child’s eligibility for government benefits programs. For example, the assets or income you provide for your child need to be in a category that the government does not consider as “countable” assets for purposes of qualifying for Medicaid, SSI, and other benefits.
• To make assets available to help your child if the public funding programs get canceled or reduced.
• To plan for the management of your child’s money. You need to select someone who will manage your child’s financial matters if you become incapacitated and after you pass away. Choosing the right person to assist with your child’s finances may be one of the most critical decisions you will have to make for your child’s future well-being. 

Special Needs Trusts

A thoughtfully-drafted Special Needs Trust can help provide disabled beneficiaries with the support they require, without causing them to forfeit their public benefits during their lifetime.  After the beneficiary of a Special Needs Trust passes away, the government may  have the right to claim the assets that remain in the trust as reimbursement for benefits and services received during his or her lifetime. But any funds remaining after that reimbursement can go to the other beneficiaries you name in the trust.Special Needs Trusts can be tricky to set up. If not done correctly, your child will not receive the financial security you wanted him or her to have. Contact us today for a consultation. Our California estate planning attorneys can draft the trust documents and guide you through the process of transferring assets to the trust.