Posted by & filed under Estate planning.

The primary purposes of a Living Trust are to protect your assets from court, taxes, and young or foolish heirs. Trusts can protect the inheritances of problem children and the disabled and also protect their inheritances from lawsuits and creditors.  Trusts can eliminate capital gains taxes, family feuds, and public spectacles.  But to accomplish this, your trust must own your assets.

 

You may be tempted to leave some of your assets out of your trust. Maybe you’ve secretly been hoarding a bank account for a favorite relative, or think that little condo in Hawaii that no one knows about should stay with its current occupant. Or, maybe you’ve just forgotten to include something, no big deal, right? Wrong!

 

Trust me, once you die, there are no secrets.  Uncle Sam or a meticulous family member will find all of your “secret” assets, subjecting them to lengthy and expensive court battles. It’s best to put them all in your trust, list them as trust assets, then clearly state who gets them on your death.

 

Real Estate

Nothing will change by adding your real estate holdings to your trust.  The title will transfer from your name to your trust’s name; with you are trustee.  As you are the owner of the trust, it’s still your property and you still have complete control.  Because a normal living trust is revocable, transferring real estate to your trust should not disturb your current mortgage or property taxes.

 

Property without a Title

Personal belongings like your coin collection, sports memorabilia, jewelry, electronics and art should also become part of your trust so that you can leave binding directions on how they should be allocated. Placing them in the trust ensures your wishes will be unequivocally carried out. This is done by simply assigning these items to the trust, normally as part of your trust asset schedule. A trust should always have a current, signed and dated, asset schedule!

 

Bank and Brokerage Account

The owner of all bank and brokerage accounts should be your Trust if you want to ensure that the funds will be available, upon your incapacity or death, to cover your expenses, then distributed per your wishes.

 

Items You May or Must Leave Out of Your Trust

 

 

Automobiles

In most states, automobiles are exempt from probate and can easily be transferred upon your death, so it’s best to leave title in your name(s) unless they are very valuable and substantially increase the value of your estate.

 

 

Retirement Accounts

For tax purposes, you should normally always name your spouse, then competent adult heirs, as beneficiary of tax deferred accounts, to avoid having these accounts taxed, upon your death. Normally a trust will only be a beneficiary of you have age restricted or handicapped heirs.  Your attorney and financial advisor will assist you with designating the proper IRA beneficiaries.

 

Life Insurance

Life insurance is normally not owned by a revocable living trust, but should almost always name the trust as the primary beneficiary.  Annuities often follow the same rule, but are more complicated, and should be discussed with your financial advisor before naming beneficiaries.

 

Assets You Don’t Own

It’s not uncommon for people to make gifts of assets they don’t own, naming them as gifts in their trust, because they feel that they morally have a right to the asset.  This is usually not recommended.

 

If you have further questions  or need help with your Trust, contact us for a consultation today at 925-757-4605 or email us.

 

 

 

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.