California Estate Planning Attorney Blog

Three huge steal pieces of a Bay Bridge's section snapped and crashed onto the upper deck of bridge on Tuesday, October 27th. Three vehicles were hit badly and nearly destroyed. Lucky enough, nobody was hurt. However the outcome could have been way more disastrous. The people in their cars could have died easily or - if they survived - been severely injured.

What has this to do with estate planning? The incident should remind everyone, that tragic events might strike anyone at any time. As I have already outlined in our firm's learning center everyone - not only the elderly and particularly rich people - should prepare for the unexpected.

There are numerous estate planning instruments that can be used to plan ahead, not only for death but also for the case that you might become incapacitated. Living trusts avoid probate, which could be a heavy and costly burden for your heirs. With a durable power of attorney and with an advance health care directive the tragic of incapacitation will not become better, but these instruments can help your family to cope better with a blow of fate.

A good start for you personal estate plan would involve some reading. For this our learning center or any other internet resource or book about estate planning can be used.

Continue reading "Bay Bridge Accident and Estate Planning" »

QTIP is the abbreviation for "Qualified Terminable Interest Property". A QTIP Trust can delay estate taxes that arise when one spouse leaves property to the other spouse. Technically it is a basic revocable trust, like the living trusts I have already described in our learning center.

A QTIP style trust is designed in a way, that grants the surviving spouse a lifetime interest in the grantor's estate but does not transfer the assets of the deceased upon death of the grantor. The surviving spouse may receive the income but usually not the principal of the trust (some exemptions can be stipulated in the trust document).

The grantor is the person who chooses the final beneficiaries (when the surviving spouse has died). Therefore the most common situation for a QTIP Trust is when a wealthy spouse has children from a previous marriage. Like all living trusts property, property enclosed in a QTIP-Trust does not have to go through probate.

Continue reading "What is a QTIP-Trust" »

Proper estate planning does not begin with reading money magazines or with excessive studies of estate planning sites on the internet. The start is easier than that. You simply need to get your finances organized. In that way you can get an overview that helps you or your estate planning attorney to set up a proper estate plan.

To put your money matters in order before meeting with your estate planning attorney can even help you to save a lot of money. If you don't show up organized your lawyer will have to do this with you before even coming to the legal aspects. There is no need that a lawyer is doing the work for a lawyer's salary that you could easily do yourself.

Get an overview of your accounts. Where is your money located? Do you have several credit cards? Determine the individual balances and find out where your money is. The same applies to real estate and other property of value. If you have any, list it and if possible include a current appraisal. Go through your papers, what sort of life insurances, retirement plans and other investments do you have? Once this step is complete, you can visit your lawyer with a well arranged inventory in your pocket.

Continue reading "First Step to a Proper Estate Plan: Get Organized!" »

You will probably have heard about retirement accounts, called Roth IRA. But can you really explain what they are and in what situation it is desirable to put money into such an investment vehicle? If you can answer these questions with a clear yes, you can stop reading here. Others may read on and learn the basics.

IRA stands for Individual Retirement Account. Its called Roth IRA because Senator William Roth of Delaware introduced the bill into Congress, that established this new kind of IRA in 1997.

The conceptual difference of a Roth IRA compared to a traditional IRA is that contributions to the IRA are in general not deductable from your taxable income. Instead withdrawals from a Roth IRA are generally tax free. A Roth IRA is therefore funded with money that has already been taxed.

The advantage of a Roth IRA is that the growth of the money within the account is tax-free as long as the funds are not withdrawn before a certain age. This is also the reason why the government has restricted these retirement accounts to individuals who do not exceed certain income levels. Also the yearly sum that can be contributed to a Roth IRA is limited.

Therefore as far as you qualify for paying into a Roth IRA it is mostly advisable to do so. On the other hand, because the payments to the Roth IRA are not deductable in the year of payment, people with large incomes may be better of with a traditional IRA.

Continue reading "What is a Roth IRA?" »

In today's post I'd like you to notice an recent article about investment and planning strategies that has been published by Carla Fried on CBS Moneywatch.com. While my blog usually covers the legal issues of estate planning, she follows a more economic approach that is worth looking at. She outlines the different investment and social security vehicles that all together allow a good retirement if planned well.

The article shows that there are always to sides when it comes to estate planning: The economic side and also the legal side. As the economic side tries to improve your return on investment, the legal side ensures that legal complications do not waste the money, which has been earned through hard work and smart investments. Both sides need to go hand in hand to ensure a good estate plan and a retirement free of worries.

Continue reading "Investing Strategies for Retirement" »

Estate planning is not a one-time affair. Life changes over time and so should your estate plan. Last week I've already posted a link to a list of events, that should trigger a revision of your estate plan. An article by G.M. Filisko now follows a timeline-based approach to the same issue. He identifies 8 stages in an ordinary life that each requires adjustment of your estate plan.

Beginning at the age of 18 everyone should have a durable power of attorney, a health care proxy, a HIPPA release and eventually a living will. Also as soon as a young adult acquires property, a will or a living trust is also a good thing to have (we have outlined all of those estate planning instruments on our firm's website. In this first stage usually the parents fulfill the role of a beneficiary and caretaker in case that something serious happens to the young adult.

Sooner or later you will usually commit yourself into a serious relationship and finally become married. As a grownup you have to think about a prenuptial agreement and also about a major revision of your estate plan. If you have not done it at this point, you should definitely do it now. If you've an estate plan in place, marriage is the time to let the spouse take over the part, which so far has been fulfilled by your parents. Also one can think about buying life insurance.

Things change again with every child you will be blessed with. You should appoint a legal guardian for the case that something serious happens to you and revise all your estate planning instruments to match the new situation.

In the unhappy event of divorce also estate planning also has to be adjusted. Finally, when you advance in age, hopefully without worries, you will have to think about long-term care insurance and check your estate plan whether it still reflects your wishes.

The timeline-approach shows that estate planning accompanies you during your whole life.

Continue reading "Estate Plan Adjustments" »

As a Walnut Creek Trust Attorney I review estate planning trends throughout the country.

Effective on July 1, 2009, the state of Vermont introduced new statutory law the governs the administration of trusts. The statute adopts the Uniform Trust Code (UTC) that many states have already introduced. This act modernizes and codifies the laws governing testamentary and living trusts (the full text can be found here).

California already has its own statutory law, governing living trusts. The statutory regulations are contained in the California Probate Code (sec. 15000-16504). When setting up a living trust these regulations have to be watched closely.

Continue reading "Vermont has adopted the Uniform Trust Code" »

Greg Herman-Giddens has posted a list with events that should trigger a review of your overall estate plan. Although some items are really broad ("(11) Substantial increase or decrease in wealth") he provides a good checklist, that somebody, who already has an estate plan should keep an eye on.

As an estate plan changes, a living trust you might have, needs review as well. I already mentioned some reasons to change your living trust document withinthe learning center on the firm's website. The list of Mr. Herman-Giddens provides a good complement to this.

Continue reading "Reasons to Review your Estate Plan" »

I've come across an interesting article in the Contra Costa Times, written by Laura Casey. Using the example of a recently widowed mother of two young sons, the author explains the importance of naming a legal guardian for children.

It is of course a very difficult decision to make, but an important one. If you don't name a legal guardian for your kids, the probate court is going to do appoint a guardian of its choice as soon as both parents die. The decision of the court may or may not be what the parents would have opted for themselves. Therefore it is always a good idea to name the legal guardian in advance even though the thinking about such a topic feels awkward. In most cases the court will follow the decision of the parents and presume that the parent's wish is in the interest of the child.

The decision for a specific person as a guardian is complex. Family values, religion, race and culture and a possible relocation can play a major role. Often a lot of thinking is required to find out the right person to be the kids guardian. The guardian should also be informed of the choice and agree to it, because nobody can be forced to be a legal guardian.

Usually a legal guardian can be named in an ordinary letter, within the declaration of a living trust (although this is not always recommended), or within the will (see my website for further reference). Because its importance it is always useful to contact an estate planning lawyer in this issue. The consultant will not only check if the naming of the guardian was done in the right way but also assist you in other estate planning matters.

Continue reading "Naming of a Legal Guardian for Children" »