Posted by & filed under blog, Estate planning.

 

Having an Estate Plan is the best way to insure that your family is protected from probate, taxes, and the unexpected upon your death.   Your Estate Plan will direct how your assets will be divided -and if done right – will leave provisions for covering debt and other expenses, and avoid family fights and other problems.

 

Marriage and divorce significantly affect your Estate Plan if you have one, and make estate planning even more important if you do not.  However, even happily married couples often procrastinate creating an Estate Plan thinking their spouse will automatically get everything – including the responsibility of managing the estate. Here are some things every couple needs to know about marriage, divorce and estate planning.

 

Getting Married

Marriage proposal. Man with boquet of flowers kneeling and give engagement ring for his girlfriend

First, both newlyweds will need to change the beneficiary on their insurance policies, existing wills or trusts, retirement accounts and health savings accounts.  You both will also need to decide if you want to designate a secondary beneficiary in case you both die, or if you want to leave more detailed instructions in a will or trust.

 

Next, you will need to update any existing wills or trusts. Or, if you don’t have one, this would be the perfect time to get one.  It’s important for your new spouse and you to know how you want your assets allocated should anything happen to you both, how much you want parents and children to get and who should oversee your matters should you both become incapacitated. If you have a prenuptual agreement, a new Estate Plan will probably be required to follow the requirements of the prenup (normally there is always a prenup for second or later marriages).

 

As part of your Estate Plan, you will also need to create financial and medical durable powers of attorney, otherwise your spouse will not be able to handle your individual affairs should you become too ill to do so -being married is not enough in California.  Powers of attorney are even more critical for unmarried couples, as you will have no rights to take care of each other without them.

 

Getting Divorced

Once the divorce process is started, you are restricted from making changes to your Estate Plan, assets and beneficiaries. Your divorce attorney will explain this to you.  However, it is important to start updated your Estate Plan, starting with your powers of attorney.  You probably don’t want your soon-to-be former spouse able to make your financial and medical decisions during the difficult divorce process.

 

After divorce, you will need a new Estate Plan. You will replace your old marital Will and Living Trust, update beneficiaries, nominate Guardians for minor children of your choice, determine who will handle your affairs upon incapacity or death, and otherwise insure that your “new” affairs are in order.  We cannot count how many times a family has come to us upon a loved one’s death only to learn that their former spouse is still the beneficiary of old life insurance polices and retirement plans – don’t be that person!

 

Are you getting married or divorced? Or do you just have questions about your Estate Plan? Contact us today to schedule your consultation or Estate Plan review.

Posted by & filed under Uncategorized.

 

Put simply, a Living Trust ensures that once you’re gone your final wishes will be known and properly implemented. What surprises many young people and elders alike is how many families can benefit from having a Living Trust.

 

Below I debunk six of the most common myths about Living Trusts.

 

 

  1. Estate Plans don’t need updating. There are dozens of reasons your Living Trust could become invalid or outdated over time. For example, your asset schedule could be out of date, there could be changes in family status, financial status, name changes, dead executors or beneficiaries, new grandchildren and many more changes that can affect your estate plan. It’s a good idea to review your Trust with an Estate Planning attorney every five years.

  2. Estate Plans are only for rich people. A Living Trust is much more than a plan for how to divvy up your estate, it leaves instructions for loved ones on who will be responsible for taking care of minor children, who will take care of your affairs should you become incapacitated and who will get your prized possessions. A Living Trust can even protect your assets from nursing home expenses and protect your heirs from creditors. It’s also a good idea to leave instructions to survivors about how you want your social media accounts managed and by whom. As you can see, nearly everyone can benefit from a Living Trust, not just rich people.

  3. Estate Planning is to be done as part of your retirement plan. Many of the clients we meet for the first time are preparing their Living Trust as part of their retirement plan.  Waiting this long can be a huge mistake for your family!  The best time to create your first living trust is when you first start a family, as a trust is the best way to protect your children in case of your incapacity or death.

  4. Estate Planning is only for old people.  As I stated in #3,  Living Trusts safeguard young families should the unthinkable happen. Think of a living trust as your voice after you’ve passed away or become unable to make decisions for your children, finances or your own healthcare.  Having a valid Living Trust in place will prevent your loved ones from having to make difficult decisions – guessing at your intentions- should something happen to you. It also can prevent lengthy, drawn out, expensive and contentious court battles over things like custody, debt, inheritance, etc.  Most people don’t actually want a young person to control a lot of money – with a trust you can appoint a responsible person or bank to manage the finances of your children (or grandchildren) until they are older and more responsible.

  5. Estate Plans, Trusts and Wills are expensive to set up and maintainLiving Trust estate plans are normally set up for a modest, fixed fee. There is no annual maintenance fee.  This cost is nominal compared to the cost of probate. Probate is the process surviving family members and loved ones must go through to settle your estate in court in the absence of a valid estate plan. This process can take years and can cost tens of thousands of dollars. In some circumstances trusts can also reduce or eliminate capital gains taxes, gift taxes, and offer other protection for your assets.

  6.  Trusts don’t come in pretty colors (true story!). Living trusts aren’t pretty, quick, fast or as easy as some online estate planning services would lead you to believe. A Trust is perhaps the single most important legal document you will every create. Do you really want to leave that to chance, working with a faceless chat box on an estate planning website, a paralegal or other non-attorney? Sure it may seem like a good idea to save a few bucks, but in the end, it could cause years of hardship, expense and legal battles for your surviving loved ones. Don’t be fooled by showy online resources that over-promise and under-deliver. Hire an attorney who is a State Bar Certified Specialist in trusts.

 

If you have questions about getting started with a Living Trust, Estate Plan or Will in California  or would like your existing plan reviewed contact us to schedule a consultation.

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As an Estate Planning and Trust Attorney who’s been helping families preserve their legacies and avoid probate for over twenty-five years, I’ve seen it all; family squabbles turned to drawn-out legal battles; grieving children having to deal with lengthy and costly probate and surviving spouses left with the results of a bad or outdated Trust.

 

I cannot stress enough the importance of not just having a Trust, but having one that’s accurate, up to date and valid. If you or a loved one has Living Trust, these 10 warning signs that it may not work as you expect are a must read:

 

1. The Trust names dead beneficiaries or trustees – you can’t just write a Trust (or Will) and never look at it again!  We have seen many trusts that name beneficiaries who have died and the owners of the trust never made updates. To Do:  Look at your trust now and make sure all the beneficiaries and trustees and alive and well.  This is also a good time to confirm that your trustees are still willing and able to act for you.

 

2. There is no “pour over” Will – a Living Trust Estate Plan should always include a back-up Will that directs all your assets to your Trust in case something is left out.  The backup Will may still require probate, but at least the assets will go into the trust, and be available to your designated beneficiaries.  This also allows for any special provisions or restrictions in your trust to take effect.Reviewing an old estate plan

 

3. The Trust has a bad asset schedule – one key to a smooth Trust administration is a current, signed and dated asset schedule for the trust.  This allows your successor trustee to know what assets are in the trust.  This also helps avoid a full probate for assets that are listed in your Trust, but not actually owned by the Trust.  A complete asset schedule is not enough by itself – your Trust must also be on title to your real estate, bank accounts and investments (but usually not tax-deferred retirement accounts). To do:  Look at your Trust now and be sure all your assets are listed!

 

4. The Trust is not funded – assets (real estate, bank accounts, stocks, bonds, mutual funds, etc.), that are left out of your Trust may have to go through probate, and may not even go to the same beneficiaries if you don’t have a “pour over” Will. In our experience, when the time comes to administer the trust, we find that most Trusts are missing assets.  We have seen many more empty trusts than full ones!

 

5. The Trustees don’t get along – if you have appointed co-trustees and they cannot work well together, administering a trust can be a nightmare.  Even if they work well together, if they live far apart this can be challenging.

6. The Trustees are incompetent – not everyone is competent to handle your affairs. Be sure to select successor trustees who understand how to manage assets, sell property, etc.  If you have picked someone who is very good at this, but they become ill, aged, or move away, they may not be competent to handle your trust.  Trustees should also be United States citizens.  Executors of Wills are required to be citizens.

 

7. The family can’t find the Trust, or doesn’t know it exists – your Trust (or Will) won’t help your family if they cannot find it when you die.  Locking it up in a safe deposit box can be just as good is hiding it away, as banks may require a probate court order to transfer the contents of the safe deposit box! To do:  call your successor trustee (or Executor) and let them know where they can find your Estate Plan and be sure they can access it!

 

8. The Trust is in an old A-B format – older trusts, especially “AB” format trusts, may no longer work well due to changes in the law.  If your trust was done before 2012, you may have some work to do. To do:  if your trust was created before 2012 contact your Estate Planning Trust attorney and schedule a review.

 

9. The Trust wasn’t created by an attorney – sorry, if you did your own trust, went to an online Estate Plan Trust service, had a document preparer or other unskilled labor help you, it is probably not going to work the way you would wish.

 

10. The Trust isn’t signed –   We have seen trusts, Wills and powers of attorney that were not signed, witnessed and/or notarized properly, causing the documents to fail.  One of the jobs of an estate planning attorney is to make sure this does not happen! To do:  Go find your Trust right now and make sure it’s signed! Please!

 

The death of a loved one is hard enough without inheriting a legal mess. Please, look at your Trust (or Will) now, make sure it is up to date and still makes sense, and contact us if you need a review, or even a second opinion. We’re here to help!