Posted by & filed under Estate planning.


Don’t Hide Your Estate PlanEstate Planning is the process of making a plan in advance and naming whom you want to receive the things you own after you pass away. Estate Planning is not just for “retired” people. Although people tend to think about it more as they get older. Unfortunately, we can’t successfully predict how long we will live, and illness and accidents happen to people of all ages. When creating an Estate Plan there’s many things to consider, one of them is should I make my estate plan private or public?


Five Reasons To Make Your Estate Planning Public

  • If your documents aren’t found, the state takes over

    Life is very unpredictable. We should always plan for the worst, and hope for the best. One of the worst things that can occur after death is your hard earned assets not being properly distributed. This can be due to the fact that you were the only person to have the only original document of your estate plan.

 

    To avoid having your documents lost after your death, you can share copies with the right people, including your attorney and your Executor or Trustee. You should also let your Executor or Trustee know where your original documents are kept. If you use a safe deposit box, your Executor or Trustee should have their name on the box, and access to a key.

 

    For our trust clients, we always prepare a summary of your trust called an “Abstract”. Some trusts will come with a similar document called a “Certification”. We recommend providing copies of the trust summary, together with your attorney’s business card or contact information, to your successor trustees.

 

    In California, if nobody can find your original Will, the presumption will be that you either did not leave a will or you intended to destroy it. According to the balance, Your assets will pass to your closest kin in an order set by state law rather than by the terms you set out in your estate plan if your documents aren’t found.
  • Keeping it “In a Safe Place” might require a court order to later retrieve your document

    An Estate document is very important, but sometime keeping it too safe is counterintuitive. Many people think that their safe deposit box is the best place to store their original estate planning documents, but this isn’t always the case. According to the balance, In many states, your family will need a court order to open up the box and locate your documents if it’s in your sole name without a joint owner. Your loved ones won’t have immediate access to your estate plan if you become disabled or after you die, at least not without that court order. If you still believe that a safe box is the best way to keep your document safe. Consider adding the names of your executors or successor trustees to your safe deposit box, and make sure they have access to a key!
  • Natural Disasters can create a headache – if you’re not prepared

    Keeping your original estate plan in your home is perfectly okay. Keeping the ONLY original estate plan document in your home on the other hand is very risky. Natural disaster cannot be avoided, and when they do arrive – grabbing your estate documents is not your first priority. Allowing your Attorney to retain signed copies of all paperwork relating to your estate is crucial. So in case your house undergoes a natural disaster,  you know that your attorney will be able to recreate everything. Apart from your Attorney, your Executor or Trustee can also retain signed copies. Your executor will be able to proceed with the papers at their fingertips without any issues.

Our office actually prepares signed duplicate originals for our clients “just in case”. This was a great relief for our clients affected by the recent Napa/Sonoma area fires.
  • California maintains an Advance Directive Registry.

    California maintains an Advance Directive Registry. By filing your advance directive with the registry, your health care provider and loved ones may be able to find a copy of your directive in the event you are unable to provide one. You can read more about the registry, including instructions on how to file your advance directive, at http://www.sos.ca.gov/registries/advance-health-care-directive-registry/

You may also want to save a copy of your form in an online personal health records application, program, or service that allows you to share your medical documents with your physicians, family, and others who you want to take an active role in your advance care planning.

 

  • Are You Asking Yourself “Is My Estate Plan Ready & Is It Perfectly Distributed?”


An Estate document has a vast amount of personal information. You should be able to count on the people that retain your documents. At The Law Offices of Joel A. Harris, we can help you build your estate plan, answer any questions, help you distribute your documents to right people, and properly protect your signed estate plan. Throughout the process, we explain everything & answer every question you may have. Since 1993,
The Law Offices of Joel A. Harris has worked tirelessly to assure individuals receive the most beneficial estate planning. Feel free to call us at (925)757-4605!

Posted by & filed under Estate planning, taxes.


“Am I Prepared for the New Tax Law?

The new Tax Plan recently signed into law affects many homeowners, especially those that have a home equity line-of-credit (HELOC). HELOC loans are very popular among homeowners due to their low-interest rates and the option of deducting your interest payments in your taxes. Things are a little different now, but how different are they for you?


What is a Home Equity Line of Credit (HELOC)?

Home Equity Line of Credit or better known as HELOC (pronounced HE-lock) acts like a credit card: It has a credit limit you can borrow against, pay all or part of the balance, and borrow again up to the credit limit. The interest rate varies with the prime rate. Essentially, it’s still a loan but the only difference is that the interest rate is lower than all other types of loans because borrowers are required to use their home as collateral. According to Bankrate, “The first 5 or 10 years of a HELOC (the period varies by lender) are known as the draw period. During the draw period, you may borrow from the HELOC and the minimum monthly payments are interest only. After the draw period expires, the repayment period begins. Usually the repayment period lasts 20 years.” HELOC loans have been a very popular means for our clients to self-fund their long term care costs, such as paying for assisted living.


How Do the New Tax Laws Affect HELOC?

 

  • You Can no Longer Spend HELOC Loans on Anything and Everything

 

Not so long ago, homeowners were allowed to obtain a HELOC loan and not be limited to what they used the money for. According to a 2007 U.S Census report, “In the past, people would take out home equity loans to make renovations (45 percent), pay off their debts (26 percent), buy a car (9 percent), or pay for medical emergency/tuition (4 percent). As we can see, more than half of the homeowners in 2007 used their HELOC loan for something other than house renovation. This is called “Home Equity Indebtedness.” Unfortunately, due to Section 11043 of the new tax law, these type of HELOC loans are no longer eligible for interest tax-deduction, according to the Washington Post.

 

  • HELOC Loan Interest is No Longer Tax-Deductible

 

There are two types of HELOC loans, one was mentioned previously “Home Equity Indebtedness” and the other is “Acquisition Indebtedness.” As mentioned before, Home Equity Indebtedness interest will no longer be tax-deductible for homeowners, no exception. Meaning that if you obtained a “Home Equity Indebtedness” loan before the new law, you would still be subject to the new law and would no longer be able to tax-deduct your loan interest.

On the other hand, if you obtained an “Acquisition Indebtedness” loan, meaning that you can ONLY use the loan to acquire, build or substantially improve the residence, then you would be able to tax-deduct your loan’s interest. According to The Orange County Register, as long as all other terms are not violated, tax-deduction is still an option for  “Acquisition Indebtedness” HELOC loans.

 

  • Mortgage Debt Limit Has Dropped from $1.1M to $750K

 

According to CNBC under the bill homeowners who purchased a house before Dec. 15 of this year will be able to continue deducting the interest they pay on mortgage debt of up to $1 million. For purchases after that date, the cap drops to $750,000. That amount of mortgage debt can be for a primary or secondary residence (i.e., a vacation house). Earlier versions of the bill would have eliminated the tax break for second homes. This is for all total acquisition mortgage debt combined (i.e a split first mortgage and a HELOC).

 

  • Are you Asking “Am I Prepared for the New Tax Law?”

 

We know that everyone is unique and might have different situations. That’s why we encourage you to ask questions of your CPA if you have any concerns about your HELOC or other mortgages. If you don’t have a CPA, please contact us so at (925) 757-4605 so that we can refer you to an excellent local CPA to answer all of your tax questions.


Sources
  1. Bankrate
https://www.bankrate.com/finance/topic/heloc.aspx
  1. CNBC, Sarah O’Brien
https://www.cnbc.com/2017/12/20/here-are-the-finalize.html
  1. The Orange County Register, JEFF LAZERSON
https://www.ocregister.com/2017/12/28/heloc-loans-might-still-be-deductible-under-new-tax-plan/
  1. Forbes, Nick Clements
https://www.forbes.com/sites/nickclements/2017/12/28/borrowers-lose-home-equity-tax-deduction/#3c54f5676cdf
  1. MarketPlace, Jana Kasperkevic
https://www.marketplace.org/2017/12/22/business/tax-bill-2017/tax-reform-home-equity-interest-deduction-affect.
  1. Census
https://www.census.gov/prod/2007pubs/c2kbr-37.pdf
  1. Washington Post, Kenneth R. Harney
https://www.washingtonpost.com/realestate/did-the-tax-code-overhaul-kill-home-equity-loans/2018/01/16/626f8054-facf-11e7-ad8c-ecbb62019393_story.html?utm_term=.484075c08a87

Posted by & filed under blog, Estate planning.

Four Tips For Effortless Estate Administration
Being put in charge of a loved one’s estate doesn’t have to be stressful. If you are the executor of an estate or successor trustee of a trust, then you have a legal responsibility to manage the assets of the trust or estate in accordance with both the will/trust and applicable State laws. According to Judy Martel at Bankrate, “The executor’s natural inclination is to “make everyone happy and distribute the assets . . . but if the executor rushes and misses some crucial legal steps, he or she could be found personally liable. This is where having an attorney who knows the rules will help.”

 

Since this can be a difficult task for anyone, here are our Four Tips for Effortless Estate Administration:

One: Locate and Protect All Assets


According to Foxbusiness The very first thing an Estate Executor or Trustee should do is determine, locate, and protect all assets. Assets can be property, artwork, bank accounts, and more. This is most likely the first thing your attorney will ask you for.


Two: Decide Who Gets What


Deciding who gets what is often the most stressful part of this process, because often times people have vested interests in certain things due to nostalgia, or value. Bankrate says It’s important to remain impartial to all parties involved and follow the guidelines of any wills or trusts. Identify and inventory the decedent’s property, and have that property appraised, Pay debts and taxes, and Distribute the remaining property according to the terms of the Will or Trust.  If there is no Will or Trust you must use your State’s laws of intestate succession (this is usually supervised by the probate Court).


Three: Take Your Time


You don’t have to rush this process. According to HanleyLaw, the Executor’s [or Trustee’s] natural inclination is to “make everyone happy and distribute the assets.” However be sure that while doing this you follow the proper legal guidelines in the proper order. Take everything a step at a time. It’s easy to become daunted by how much there is to be done. Divide everything into small steps, and focus on one step at a time.


Make sure to use due diligence with each step in order to make the entire process go as smoothly as possible. Expect there to be a few hiccups along the way, that’s just a part of the job, and prepare accordingly.


Four: Seek Professional Advice


You can avoid mistakes by consulting with an estate attorney who is a State Bar Certified Specialist in Estate Planning, Trust & Probate Law.  Your financial advisor and CPA can also provide expertise. We encourage you to reach out to the Law Offices of Joel A. Harris for any Estate Administration needs.