Estate Planning Interview with Joel Harris


Did you know that March 31st, 2019 marked a momentous point radio history? Yes, it’s true! I sat down to be interviewed by the hosts of Real Estate Radio Talk for 90 minutes.  In this post I thought it would be a good idea to memorialize the many topics we explored on the show, from probate to sibling disputes over real estate. Let me know if you enjoyed the interview (source at the end of this article).

Q: Are your clients going after short term investment gains through the stock market or are they investing in real estate?

Joel: Most of my clients tend to be older, so they are first focused on planning for a place to stay in their retirement, then on investment properties that will help them live the lifestyle that can be supported.  But it’s not easy to find those investment properties!  

We want to get a good rate of return on any investment so the challenge is where to find those investments.

Q: Can estates be managed in order to be fair to all of the heirs, even when one may be disabled?

Joel: Have you looked into a special needs trust? We can set up a component of your living trust will be called a Special Needs Trust, which will protect the assets and manage them for your disabled child. Then the key is pointing to the right person or profession to manage the money for them. 

Q: What is probate? How can having a trust be beneficial? 

Joel: Probate is court procedure for administering a decedent’s estate when they haven’t done estate planning in order to avoid going to court. If the estate is over $150,000, welcome to court. If you have real estate in California, it doesn’t matter what the value is. If you haven’t made arrangements, then there will be some kind of court procedure. 

Q: What is the consequence of not having a trust set up for the family? 

Joel: The best case scenario is a year or two in court, all assets will be frozen, and expenses starting at 8% of the gross value of the estate plus court costs. The larger the estate the scale drops down, but that is the minimum fee, called the statutory fee. 

I’ve seen cases where the fee hit 100%. When you spend enough time in court, the attorney fees can consume an entire estate. 

Q: What is the benefit of having a living trust?

Joel: When assets are owned by a living trust or other kinds of trusts, they are no longer subject to probate. There are a lot of other protections built into the trust. What’s nice about trusts is that you can change the typical trust (add assets, remove assets). It’s very easy, in what’s called a revocable trust. My advice to anyone who has real estate and heirs that they like is that a trust is the way to go. 

A lot of people that I’ve seen that have set up trusts has never had anyone tell them that they have to put their assets into the trust. A couple of cases recently had someone who did not include their real estate in the trust, and then there is a court procedure. 

Q: Are their new updates to the process or practice of utilizing a trust? 

Joel: There is a new procedure in the state of California where if you have an irrevocable trust, and there is a problem, you can now modify that trust without going to court. If you’ve got an old life insurance trust or your beneficiary now has health problems and the trust needs to be fixed, we can fix it. It’s called trust decanting. If you’ve got an old trust, and somebody has died or set up an irrevocable trust that needs to be fixed, we can fix it. Tax advantages and protecting your heirs is the main reason to do that. 

Another thing I hear a lot is that a lot of clients are concerned about the cost of nursing homes, and wiping out their money. If they get on government benefits and onto MediCal, Medical will go after your estate for repayment. The new law is, if your home doesn’t go through probate then it is protected from MediCal. 

Q: What is the process for sibling disputes over real estate? 

Joel: The bottom line is you have to sell. The person who wants to sell can take you to court and do something called a partition action. Not only will the court require you to sell it through a complicated and expensive procedure, you might not get as much as you would get otherwise. The other owners have two choices: They buy the other out, or sell the property. One owner can make everyone sell. That’s why if we can set up something in the estate plan, then we can anticipate these kind of issues. 

Q: What is the new policy pertaining to trusts before 2012? 

Joel: For everyone who has a trust from before 2012, you need to take a look at your trust and see if you have what was the classic 90’s kind of living trust, called an AB living trust. This trust was set up to divide into two or three different trusts when the first spouse died. Those types of trusts can increase the tax when you die, due to the new tax laws. People who have that kind of trust need to fix that kind of trust immediately. The only time that one would want to consider using this kind of trust is in the case of a blended family, in order to restrict the surviving spouse, even if there is a little extra tax.  

Want to hear more from Joel? He will be a regular throughout 2020!


Are You Worried About Your End of Life Plan?

If you are not prepared with a current estate plan then your family could be vulnerable to higher tax bills, extensive legal fees, and familial conflicts. To avoid those obstacles you should visit an Estate Planning Attorney to get professional help, and create a plan that well suits your goals.

The Law Offices of Joel A Harris are located in the cities of Concord, Walnut Creek, and  Antioch, California.  We have worked for over 25 years giving the best guidance our clients need to protect their assets. Have a question about your planning your estate? Feel free to schedule a sit-down meeting where we are happy to patiently answer every question you may have. For your free consultation reach out to us at (925) 757-4605.

Sources

  • https://omny.fm/shows/real-estate-radio-talk/real-estate-radio-talk-march-31-2019

The Simple Truths About Disinheriting a Family Member From Your Will

There are three certainties in life: death, taxes and someone who can’t wait until you die. Inheritance refers to giving property to an individual upon your death. To disinherit means refusing to leave your property to a would-be heir. For most people, the term “disinherit” is a dirty, cruel word. For you, it may not be a dirty world, but a way to express your final wishes.

Reasons to Disinherit
The reasons to disinherit a family member are extremely personal and range from emotional to business decisions. Some common reasons people disinherit include:

1. Estrangemedisinheriting a childnt between you and a family member
2. Protecting the interest of your birth children over your stepchildren
3. Allocating money and assets to a deserving family member
4. The family member received your money and assets while you are alive
5. You believe your relative only wants your money

Disinheritance Factors to Consider
The threat of disinheriting a spouse or child seems powerful (especially when you see the dramatization portrayed on a television and movie). However, disinheriting immediate family members isn’t always as easy as a subplot in a movie or television series. If you are thinking about disinheriting a child or spouse from your will, you have to do more than just leave their name from the document.

In California, you can’t disinherit a spouse unless:
• You clearly and intentionally explain your decision in your will
• You include evidence that you left property and assets to your spouse outside your will or trust. This evidence must be included in the will.
• Your spouse waived rights to inherit from you in a valid, signed agreement such as a pre-nuptial agreement.disinheriting a spouse

In California, you are permitted to disinherit your children or any other family members from your will as long as your wishes are clearly stated. 

The most efficient way to handle disinheriting someone is to leave a small amount of money to the disinherited relative and include a no contest clause to prevent them from challenging the will.

If you’re struggling with this difficult decision, contact the Law Offices of Joel A. Harris, we can help you make the right decision for you – and your family. You’ve worked too hard to leave your family’s future to chance.

5 Important Reasons to Review Your Estate Plan

Despite the world still having 100% mortality rate, planning for the inevitable is rarely something we look forward to. No one wants to think about their own mortality – and our families can be even worse; choosing to bury their heads in the sand rather than think about losing us.

Senior couple doing the income tax declaration online

That’s why many put off estate planning – or worse – never get to it at all.  And for those who do it, oftentimes, it gets done, you think it’s over and you shove it in a drawer and never think about it again. Sound familiar?

Not reviewing your estate plan on a regular basis can be almost as bad as not having one at all. Changes in your family, finances, investments, and laws can make the best laid estate plans, wills, and trusts, moot. Leaving your family with exactly what you wanted to avoid; questions, confusion – and worse, lengthy and costly probate.

Here are 5 reasons you need to review your estate plan:

1.   Family changes. It may be obvious that if you get a divorce, lose a spouse or child, or adopt a child (or disinherit one) that an estate plan review is in order. But did you know that this also applies to your children and other heirs?  If THEY get married, change their names, get a divorce, adopt children, or have any other changes in their family, it might be a good idea to take a look at your plan and see if any changes need to be made. This is also true in the case of incapacitation of a spouse (yours or your heirs’).

2. Changes in income. Whether it’s retirement, bankruptcy, inheriting money, winning the lottery (nice problem to have!), buying investment property (especially if it’s out of state), this is a huge reason to get your plan reviewed.  If it’s not included in your plan it opens your family up to expensive probate and other problems once you’re gone. 

3.  Changing state of residency. Trust and estate planning laws can vary by state – especiSenior couple in love during retirement - Happy elderly conceptally if moving from a common law to a community property state. So if you move be sure to contact your estate planning attorney for a review. 

4.  Changes in the law. You can’t possibly know every law and how it    affects your estate plan, and you especially aren’t expected to keep up  on changes in the law! A good estate planning attorney will do that for  you – and should contact you for an estate plan review if changes in the  law affect you.  We update our clients by email.  If you would like to add  yourself or your friends and family to the list, please click here.

5.  If you’re in doubt. If you are ever in doubt about anything, it’s best to check with your estate planning attorney to find out if you need to review your plan. It’s always better to be safe than sorry.