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Don't Put off Estate Planning till Tomorrow

Thursday, November 05, 2015

Finalizing documentation that clearly states in whose hands you want your assets to end up in after your passing, should be one of the most pressing matters on your table. Unfortunately, very often, California estate planning lawyers find that people put off these matters for later.

There are a number of reasons why people procrastinate when it comes to estate planning. For one, many people find it difficult or uncomfortable to confront the reality of their own mortality. In other cases, the process may be delayed because of complicated assets, or because of a complex family situation. This can intimidate people, who simply put off the inevitable.

However, there simply isn't a reason that is strong enough to warrant putting off estate planning. In fact, neglecting these important tasks only contributes to family squabbles, conflict and dysfunction down the road. Besides, when a person dies without a proper will, there's a high chance that the assets will end up in court, contributing to family bickering and legal squabbles that can last for years.

Having a proper estate plan can help prevent this. It can also help reduce taxes, and help smoothen the transition of the passing of assets from your hands to your heirs.

Even if your family situation at this point in time is fairly smooth and conflict-free, there is no guarantee that things will continue in this manner after you are gone. In fact, as lawyers often see, the death of the head of the family does very often bring old-wounds and long-festering sores to the surface. When matters of property and wealth are involved, minor matters can expand into a full-blown conflict.

Every family has its share of weak relationships that can blow up under the kind of pressure that can be exerted on family members when a person dies without clear instructions about how to deal with his assets.

The Number One Estate Planning Mistake Is Also the Most Common

Wednesday, October 21, 2015

A new study indicates that one of the biggest estate planning mistakes is also a far too frequent one. According to the research that focused on wealthy persons who had a net worth of more than $500 million, most of these persons’ estate plans were at least five years old at the time of the study.

For any person, estate planning gives a sense of completion, and many people chalk this down as one more task that they must finish. There is a feeling of accomplishment, and not surprisingly, many people believe that now that they have drafted and attested an estate plan, they can simply file it away, and relax. That is the number one mistake that people make. Your estate plan is not just a document that can be put in storage for years until your passing, when your heirs go back to the papers to see how you have divided your assets. If this is what estate planning means to you, then your heirs are likely to be in for a big shock.

There are a number of changes that can occur over a person's lifestyle and circumstances over a period of years, after he has made his estate plan. It's not just the wealthy who need to go back to their estate plans periodically to review and update these plans. Everyone must review their plans periodically, and update them as needed.

Divorce, for instance, is one of the biggest reasons why your estate plan needs to be changed. Approximately 50% of all marriages end in divorce, and once the marriage ends, there are changes that must be made to the division of assets set out in your plan. Removing your ex-spouse’s name from your your estate plan seems obvious, but it’s shocking how many people don’t bother to do so. Apart from divorce, the birth of a child, the launch of a new business, a marriage in the family involving your children or grandchildren and other life events necessitate that you go back to your estate plan, review it and make changes as appropriate.

The Do's and Don'ts of Estate Planning for Heirlooms

Thursday, September 17, 2015

According to a study conducted in 2012, more than three-quarters of Americans above the age of 75 are more interested in keeping alive their family history through heirlooms, family stories, and other objects than in receiving any monetary inheritance. While the size of the inheritance that you leave behind to your heirs can shrink due to economic factors, the heirlooms, and other memories that you leave them are invaluable.

What was surprising about the 2012 survey was the sheer number of baby-boomers who were actually looking forward to receiving not just money as part of their inheritance, but also personal keepsakes and family stories. Approximately 64% of the baby boomers in the study and 58% of seniors above the age of 72 said that heirlooms are a key aspect of the inheritance that they expect to receive/leave. Only 9% of boomers said that they were keen on receiving money, and 14% of seniors said that financial assets were an important part of their estate planning.

Heirlooms, keepsakes, family stories - this is what makes your family unique. Many heirs want to keep those memories alive, and therefore, it is very important for you to be prudent about how you distribute those assets as well. One of the things that you could do is ask your children which of the heirlooms, or keepsakes they would prefer to have for themselves. This will give you an idea of each person's desires, and help you plan these special bequeaths in a manner that actually makes all of your children happy.

Be very specific and mention which personal keepsakes you are bequeathing. You can also consider distributing at least some of these personal mementos, keepsakes and antiques while you're alive, to avoid discord later.

Use Incentivized Trusts to Avoid Squandering of Inheritance

Tuesday, June 30, 2015

For parents, who are concerned that their children will squander their inheritance, there are estate planning tools that can be used to ensure that this does not happen.

Talk to a San Jose estate planning lawyer about setting up an incentivized trust. Many parents who use trusts like this, fear that the children will use their inheritance irresponsibly, and worse, that the inheritance will kill any drive that the child might have. In many cases, parents have built their wealth on their own, and they want their children to exhibit some of that same spirit and passion for creating wealth that they had. Unfortunately, receiving a large inheritance can very often snuff that spirit, and prevent the child from making a mark on the world.

Parents like these can use an incentivized trust. A trust like this will actually use incentives before delivering money to the ends.

You can use creative incentives, setting milestones for your children that they must meet before they can receive the next windfall from your trust. Many parents incentivize their children's income levels. For instance, you can stipulate in your trust agreement that the child must earn a certain amount of income every year, and that the trust will deliver only the amount of income that child has earned. For instance, if your child has earned $80,000 this year, then the trust will disburse $80,000 at the end of the fiscal year.

You can also incentivize your child's education. You can add a clause to your trust agreement to allow the trust to deliver a certain amount of money when a child completes college and gets a bachelor’s degree, and can increase incentives if the child studies further too.

Staggered Disbursement Can Help Prevent Misuse of Inheritance

Thursday, June 04, 2015

One way to prevent large inheritances from completely sucking out a child's ambition is to ensure that the funds are disbursed in a staggered manner. You can choose, for instance, to make sure that the child receives funds during certain stages of his life.

There are ways that you can design your trust to do this. Sometimes, parents prefer that children have the money, when they reach certain goals in their career. For instance, your trust might require that your child earn a certain amount of money before receives the next disbursement of funds from the trust. If your child earned $80,000 in income this year, your trust can disburse the same amount of money to him. This can help keep your child's goal-setting and reaching skills and ambition alive.

You can also design your trust to distribute only income from the trust assets to your children over a period of time, and distribute the principal when the children are much older. A 20-year-old will have very different ideas about what to do with money, compared to a 30-year –old or even a 40-year-old. Therefore, limit the amount of money that passes on to your children when they are younger, and let the bulk of your inheritance pass on to them when they're much older, more financially sophisticated, and much less likely to squander it.

There are several ways that you can design a trust to reduce the risk of heirs squandering away their inheritance and losing their ambition and spirit. Speak to an estate planning lawyer in San Jose about establishing a revocable living trust that'll manage your assets for you, and earn an income while you are alive, and manage the distribution of your estate in the manner you have specified, after you.

Do I Have To Write a Will?

Wednesday, May 20, 2015

You don't have to write a will. There is nothing illegal about not having a will to decide the management of your assets after you. However, if you die without a will in place, then California’s succession laws will apply to the management of your estate, and your assets will be transferred according to these laws.

That may not necessarily be what you have in mind for the disposal of your assets. Remember, that it is not just the wealthy that need a will. Failure to have a will can lead to the imposition of additional taxes on your estate, which can make things very difficult for your heirs. Even if you have minimal assets, it is important to write a will to ensure that there are no disputes after you.

Through a will, you can leave your assets to whoever you want. You can name charitable organizations in your will that can benefit from your hard-earned wealth after you're gone. You can also name a guardian, who will look after your minor children after your death. This is a very important part of the will for persons, who have minor children. You can also name a person who can manage the property that has been left to your minor children. You can name a person who you can trust to carry out all the provisions of the will. This person will be known as the executor of the will.

There are only two requirements for a valid will in California. Your will must be signed in front of two witnesses, and the will must be attested by the two witnesses.

For help writing a will, or for other information about estate planning, speak to a California estate planning attorney.

What Happens When a Person Dies without a Will in California?

Sunday, May 03, 2015

When a person dies without a will in California, he is said to have died intestate, and the state’s succession laws will automatically apply. The succession laws will determine who inherits the person’s estate. That inheritance will depend on a number of factors, including whether the person was married at the time of his death.

If he was married, questions of whether the property that he owned at the time of his death was separate property or community property will apply. Community property is property that both the spouses acquired over the course of the marriage, while separate property is property that the persons brought individually into the marriage.

If the person had community property at the time of his death, then all of the property will go to his surviving spouse. However, if he also had separate property, then things may become more complicated. The surviving spouse may also be eligible to a share of the separate property, but there may also be other inheritors, including the parents, siblings, and other relatives. If your loved one has died interstate, speak to a California estate planning lawyer for advice.

If the person was not married, then the estate will go to his children, and if there were no children, or any other heirs, then to the parents.

When California's succession laws apply to your property, your assets may end up in the hands of those whom you do not desire to have your property. That is why it is important to have an estate plan in place. That includes not just a will, but also a living trust, and a living will. For help drafting a will, speak to a California estate planning lawyer.

Wealthy Worry about Tax Consequences of Large Inheritance

Sunday, April 19, 2015

A recent survey focused on how much wealth rich individuals should leave children. On an average, according to the survey by Merrill Lynch, leaving a child $60 million out of an estate of $100 million, is simply too much.

The survey focused on high net worth individuals, and more than 50% of the individuals in the survey admitted that they were very concerned about leaving vast inheritances to their children. The biggest concern was that this would create a sense of privilege and entitlement, and their children would lose any drive or ambition.

However, children who worry that their parents will leave them nothing at all, shouldn't be too concerned. The survey found that leaving children just $26 million out of $100 million was deemed much too little. In other words, parents want to leave their children enough to do as much as they possibly can and explore different opportunities with their inheritance, but do not want to leave them enough to simply kill any ambition that they have.

Another major concern that wealthy individuals have is the impact of real estate taxes on their inheritance. Each of the individuals in the survey had a minimum of $5 million in investable assets, which means that estate taxes would apply on these estates. For most of these individuals, or 85%, minimizing the impact of estate taxes was a high priority. 91% said that they planned to leave much of their wealth to their immediate family members, while 4% felt that charitable organizations and philanthropic activities would come first.

High net worth individuals have special concerns when it comes to estate planning and inheritances. It's important to make use of effective estate planning tools that can help you leave assets to your children, while encouraging them to be responsible about spending it.

Study Shows Many Americans Clueless about Parents’ Estate Documents

Wednesday, April 01, 2015

Many Americans in a recent survey by Caring.com admitted that they do not have any information about where their parents’ estate planning documents are located. That means severe inconvenience and endless delay for these people, if their parents suddenly die or incapacitated and if they're not able to locate the documents.

It seems like one of the most things most important to take care of, but it is one that many American adults sadly postpone. It's important not only to understand what your parents have planned, and the distribution of their assets after them, but also to have the legal documents that will allow you to carry out those plans if your parents are incapacitated, or are no longer with you.

As an adult caregiver of a parent or an adult child, it is important for you to know where all of these estate planning documents are located, and to make sure that all of the documents are in order. Make sure that your parents can revise these plans regularly, so that they are updated with all the latest changes. For instance, wills must be updated to take into account any deaths, or births in the family. There may have been marriages and divorces in your family, and all of these must also be taken into account. Remind your parents about the importance of these changes.

It is important to know not just where your parents’ will, or living will is located, but also what is contained in it. There must be no surprises when these documents need to be executed. A living will, for instance, will contain all of the wishes that your parents have for end-of-life care or life-prolonging care. This will ensure that your parents’ wishes are carried out in these matters. Your parents also need to have a power of attorney healthcare, to designate a person in the family who will take care of all their health care decisions when they are incapacitated.

What Happens to My debt after I Die?

Thursday, March 19, 2015

California is a community property state, which means that all property accumulated within a marriage, including assets as well as debts, are considered the joint property of both the spouses. That means that your spouse could be left dealing with many types of debt after you. This is something that you also need to plan for in your estate plan.

In most other non-community property states, the spouses are not responsible for any types of debt, like credit card debt. The only exceptions would be in those cases, where there was another person or family member who was actually liable for the debt because they were joint owners of the credit card, or some other reason. For instance, if a family member cosigned a student loan, the cosigner would be liable in the case of the death of the borrower.

However, in California, you may not even have that exception. If you die, your spouse may become immediately liable for most of your debt after you. This is something that you need to account for. Speak to an estate planning lawyer in San Jose about how to account for all of the repayment of your debt from the state.

In California, creditors typically try to the target the surviving spouse for recovery of the debt. However, the individual assets or separate property of the surviving spouse is not included in the marital community property, and is not eligible for target by creditors. In other words, creditors can only target the community property of the deceased, now inherited by the spouse.

For more information about how you can protect your assets, and prevent erosion of your assets for your heirs, speak to a San Jose estate planning lawyer.


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