California Estate Planning Attorney Blog

Any estate plan should be reassessed and if necessary updated at least once a year. Usually the arrival of the new year is a good time to tackle this little task. If you don't plan a full overhaul of your estate plan, there is generally not very much to do.

1. You should look for your estate planning documents and see if they are still in the place where you left them. There is nothing more painful for your heirs if they know that you have an estate plan but they cannot find the according documents if they need to.

2. Think about the year that passed. Have you acquired any substantial assets? If yes, you should make sure that those assets are transferred to your living trust. If not, those assets could trigger probate even though you have a living trust in place which is supposed to avoid this. For assets of daily use (e.g. an expensive TV, Art, Furniture) it might be necessary to draft a new declaration of assignment to move those newly acquired assets to your living trust. Within the firm's learning center we have outlined the basics how you move different kind of assets into your living trust.

3. Check your insurances. Does a live insurance still cover the amount that would be necessary to support your family or did the requirements raise in the past year? If you need more live insurance contact your insurance provider.

4. Think about your asset distribution in your living trust. Does your living trust still reflect your wishes of how you would like to distribute your wealth when you die? If not, your will or your living trust may have to be amended.

5. What about your chosen trustee? Is he or she still willing to take over the duty of a successor trustee? If you have any doubt about it, you should talk to the nominated trustee and if necessary choose a new one.

6. Are there any other concerns regarding your estate plan? You will have more peace of mind during the year if you find a solution for your concerns early on. If you don't know the answer to your special situation, speak to a lawyer. He or she will be able to solve your problems and make sure that your loved ones are save if something bad happens to you.

Continue reading "A New Year - Time to Update Your Estate Plan" »

In a tough economy it may become necessary for some parents to lend money to their children. Liza Horvath has recently published an article on http://www.montereyherald.com that deals with family loans and estate planning. With this article, I would like to add some thoughts from an estate planner's point of view regarding the intertwined issues of estate planning and family loans.

First of all it is highly recommended to keep loan agreements in between family members in writing. That is especially important - even though you trust each other - because if something happens to one of the parties a third party "professional" might have to figure out, what exactly the parties agreed on. Even more important, if you use a promissory note, both parties will know what they've agreed on (memory tends to fade over time). The written document will also allow to formally write off the loan for tax purpose if it is not repaid as initially intended.

The document should outline all the details of the loan, starting with the loan value and the repayment details (repayment schedule). The document should also contain a clause, the deals with the solution of problems between the parties that might arise in the future (arbitration clause). The document should be written clearly and unambiguously in order to avoid later disputes. If you don't feel comfortable with perfectly drafting such a document it is often a good idea to ask a lawyer to draft or at least to revise your document.

From an estate planning perspective it is also important to consider the loan with respect to your general estate plan. If you have for example a living trust that leaves all off the parent's estate to more than one child in equal shares, the prior loan to one child should be mentioned in the trust document to avoid later disputes that might end up court. You could for example regard the loan as irrelevant or alternatively deduct it from the debtor's share as far as it is not repaid upon the death of the grantor. The decision is up to the grantor. Either way, the living trust document should be updated. If you don't feel comfortable to update your living trust document yourself (see our learning center for living trust amendments), you should ask an estate planning attorney to do so.

Continue reading "Estate Planning and Family Loans" »

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.

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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" »

Inspired by an interesting article of Christopher Yugo on nwi.com, i'd like to discuss the practical ways of how living trusts can be amended.

As I have already outlined in our firm's online learning center, there are basically two ways of amending living trusts.

You can either write down a separate document, that only contains amendment instructions, e.g. "delete section 4" and paste the section that is outlined in the amendment document into the living trust document instead. The legal effect is, assuming the grantor is entitled to change the trust (for further reference see here), that the legal implication of the trust change according to the amendment.

The other option is to restate the whole trust. If you do change the trust a couple of times, using simple amendments as outlined above can be a little confusing. Often restating the whole trust document is the better way to go. What Christopher Yugo does not mention in his article though is that one has to be really careful with the restatement of the trust. With the use of modern day word processors, it is very easy, that a passage of the restated trust document is deleted accidently. Such an oversight has to be avoided by all means. However, if you apply the proper diligence to the restatement, it is a great way of keeping you living trust document clear and understandable.

Continue reading "Different ways to amend a living trust document" »