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Entries in Advanced Estate Planning (37)

Friday
Feb242017

Passing to the Next Generation— A Powerful Exercise

 “Every one of us receives and passes on an inheritance. The inheritance may not be an accumulation of earthly possessions or acquired riches, but whether we realize it or not, our choices, words, actions, and values will impact someone and form the heritage we hand down.”

— Ben Hardesty 

Successful estate planning is about far more than simply passing your wealth to the next generation—it’s also about passing on your values. No matter which financial or legal structures you choose to contain and manage your assets, these instruments only preserve your wealth until it reaches the hands of your beneficiaries. What happens then? Your values enabled you to accumulate wealth and persevere despite all obstacles and long odds. If your children and grandchildren don’t share and cherish those values, they could lose their inheritance as quickly as they received it.

 But our values can be hard to capture in language. They seem second nature to us only because we live them every day. Here’s an exercise to help you identify your (perhaps) rarely-spoken moral code and communicate it to the next generation.

The Science of Surfacing Your Subconscious Values:

In Chapter 3 of his bestselling book, Getting Things Done: The Art of Stress-Free Productivity, productivity author David Allen discusses what he calls vertical project planning—that is, identifying the “why’s” and“what’s” of any project before engaging with its details. To reveal the standards that you have regarding any task, just finish the following sentence:

I would give others totally free rein to do this as long as they…

For instance, if you’re planning a dinner celebration for your dad’s 70th birthday, you could fill in the blanks as follows:

…So long as they created a budget for the party and got buy-in from both of my sisters to contribute;

…So long as they made sure to double check the guest list with mom;

…So long as they booked a restaurant within 30 minutes from my parents’ home.

 As it pertains to communicating values, we could reword it like this:

I would give a total stranger free rein to guide the people I care about most about how to live a great and moral life as long as they…

…So long as they make sure to communicate my core values of creativity, compassion and integrity;

 …So long as they give many concrete examples of these standards being met and not met to demonstrate exactly what I mean;

 …So long as there’s some mechanism to remind my family of these values in an ongoing way, so that they don’t forget;

 …So long as they make inheritance from the trust I establish conditional on whether my beneficiaries live these values.

 

Estate planning is ultimately not only about passing along your tangible wealth and deciding how to distribute assets. It’s an opportunity to ensure your legacy into the next generation and beyond. Clarifying your values and working to effectively pass them along can be a profoundly liberating experience. 

If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

 

Thursday
Feb092017

3 Famous Pet Trust Cases—Lessons Learned

Things don’t always go according to plan. Sometimes, pet owners can get a bit creative when providing for their pets. Let’s look now at 3 famous cases involving pet trusts and distill important lessons from them.

David Harper and Red:

David Harper, a wealthy, reclusive bachelor in Ottawa, Canada, wasn’t exactly famous during his life. In his death, however, he made headlines by reportedly leaving his entire $1.1 million-dollar estate to his tabby cat, Red. Just to make sure his wishes were carried out, Harper bequeathed the fortune to the United Church of Canada under the stipulation that they take care of Red for him! The ploy worked.

Lesson learned: You can be as creative as you desire in your approach to making sure your pets receive proper care after you’re gone.

Maria Assunta and Tommaso:

In a four-legged and furry version of the classic rags-to-riches story, wealthy Italian widow Maria Assunta rescued a stray cat from the streets of Rome and gave him a proper home and name: Tommaso. As Assunta’s health failed, she tried for several years to find an animal organization to entrust Tommaso. When no suitable organization was found, Assunta left the estate valued at $13 million directly to the cat in her will and named her own nurse as caretaker. She passed away in 2011 at the ripe old age of 94, knowing her beloved Tommaso would be well taken care of.

Lesson learned: The best way to ensure the care of your pet is in writing, with a proper estate plan.

 

Patricia O’Neill and Kalu:

Patricia O’Neill, daughter of British nobility and ex-spouse of Olympian Frank O’Neill, had designated a fortune worth $70 million to her chimpanzee, Kalu and other pets, in her will - or so she thought. It was discovered in 2010 that the heiress herself was virtually broke, thanks to the shady dealings of a dishonest financial advisor. This story provides perhaps the most famous example of a pet trust gone dry while the owner is still living.

Lessons learned: You can only give away what you have. If caring for your pets after your death is important to you, make sure your financial plan is in line with your estate plan and that you’ve taken appropriate steps to oversee your advisors.

 To summarize, establishing a pet trust is the best way to ensure that your beloved pets receive the care they deserve after you pass on. If you want to ensure that your family—including your pet animals—are cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Tuesday
Feb072017

Trump’s Presidency—Synopsis of Impacts On Estate Planning

It's official—the Electoral College voted on December 19, 2016, essentially completing the 2016 presidential election cycle. With that bit of uncertainty behind us and a fresh year starting out, here's what you need to know about planning your estate under the incoming Trump administration and Republican-controlled Congress. Regardless of how you feel about the election results, it is now the reality in which we currently live.

President Trump’s Tax Plan:

A new president usually means major shakeups in fiscal and tax policy, and Trump’s tax plan is no exception. Here are several of the proposed changes we will potentially see rolling out during his administration.

  1. The repeal of the estate tax;
  2.  Lower income tax rates;
  3. The introduction of a tax deduction for childcare costs;
  4. Dependent care savings accounts (DCSAs) with conditional matching;
  5. The switch from seven to three tax brackets;
  6. Increased standard joint deduction from $12,600 to $30,000;
  7. Increased itemized deductions cap from $100,000 to $200,000; and
  8. Decrease in business tax from 35 percent to 15 percent.

Of these proposed changes, the repeal of the estate tax, also known as the “death tax,” means your assets would not be taxed by the government upon your death and would transfer in full to your beneficiaries. It is also predicted that the gift and generation-skipping taxes may be repealed as well. These actions could result in a greater ability to keep wealth within your family, but we must wait until we see the final legislation to know the exact mechanics. Additionally, the proposed changes would also negatively impact taxation on charitable gifts and other philanthropic gestures contained in your estate plan.

Estate taxes differ from state to state, so the wisest move in your playbook is to go over your estate plan with an experienced estate planning attorney to discover how these changes may impact its other components.

Of course, proposed policy changes must go through Congress, which has its own agendas and ideas about fiscal and tax policy. So, staying on top of new developments and in close contact with your team means you’ll be prepared for whatever unfolds over the coming years.

More Benefits to Revocable Trust-based Planning:

There are also many non-tax-related benefits to trust-based planning that you can take advantage of regardless of which proposed changes take place under the new administration and Congress. Just a few key benefits of trust-based planning include:

  1. Greater privacy for your family and avoidance of probate;
  2. Incapacity protection and avoidance of conservatorship or guardianship;
  3. The creation of lifetime beneficiary directed trusts providing long-term asset protection benefits to your heirs;
  4. Ensuring the protection of your asserts during your lifetime; and
  5. Ensuring that your desires for taking care of your loved one’s after you pass away are effectuated.

Schedule a Call with Us:

Not even the nation’s top financial experts know exactly how Trump’s presidency and the Republican-run Congress will impact estate planning best practices for every citizen, but a skilled estate planning attorney can guide your estate planning in a smart, careful, and decisive manner.

We’re here to help you navigate policy changes to ensure your estate is managed as beneficially as possible for you and your family for generations to come. If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.


 

Wednesday
Dec212016

5 Tragic Mistakes People Make When Leaving Assets to Their Pets

A pet trust is an excellent way to make sure your beloved pet will receive proper care after you pass on. The problem, of course, is that you won’t be there to see that your wishes are carried out. It’s critical to set up a pet trust correctly to ensure there are no loopholes or unforeseen situations that could make your plans go awry. Here are 5 tragic mistakes people often make when leaving their assets to their pets.

1. Appropriating more than the pet could ever need:

The gossip stories about such-and-such celebrity who left his or her entire fortune to a pet are the exception rather than the rule. Leaving millions of dollars, houses, and cars to your pet is not only unreasonable, but it’s more likely to be contested in court by family members who might feel neglected. To avoid this pitfall, leave a reasonable sum of money that will give your pet the same quality of life that she enjoys now.

2. Providing vague or unenforceable instructions:

Too many pets don’t receive the care their owners intended because they weren’t specific enough in their instructions or because they did not use a trust to make the instructions legally binding. Luckily, a pet trust can clarify your instructions and make them legally valid.

If you leave money to a caretaker without a pet trust in place, hoping it will be used for the pet’s care for example, nothing stops the caretaker from living very well on the pet’s money. But when you use a pet trust to designate how much the caretaker receives and how much goes for the pet’s care, you’ve provided a legal structure to protect your furry family member. You can be as specific about your wishes as you’d like, from how much is to be spent on food, veterinary care, and grooming. You can even include detailed care instructions, such as how often the dog should be walked.

3. Failing to keep information updated:

Bill sets up a pet trust for his dog Sadie, but what happens if Sadie passes away? If Bill gets a new dog and names her Gypsy, but he doesn’t update this information before he dies, Gypsy could easily wind up in a shelter or euthanized because she’s not mentioned in the trust. This is a common yet tragic mistake that can be easily avoided by performing regular reviews with your estate planning attorney to ensure that your estate plan works for your entire family.

4. Not having a contingency plan:

You might have a trusted friend or loved one designated as a caretaker in your pet trust, but what happens if that person is unable or unwilling to take that role when the time comes? If you haven’t named a contingent caretaker, your pet might not receive the care you intended. Always have a “Plan B” in place, and spell it out in the trust.

5. Not engaging a professional to help:

Too many people make the mistake of trying to set up a pet trust themselves, assuming that a form downloaded from a do-it-yourself legal website will automatically work in their circumstances. Only an experienced estate planning attorney should help you set it up to help ensure that everything works exactly the way you want.

When attempting to leave assets to your pet, the good news is that with professional help, all these mistakes are preventable. Talk with us today about your options for setting up a new pet trust or adding a pet trust to your current estate plan. If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Wednesday
Dec142016

3 Tips for Overwhelmed Executors

While it is an honor to be named as an executor of a will or estate, it can also be a sobering and daunting responsibility. Being a personal representative requires a high level of organization, foresight, and attention to detail to meet all responsibilities and ensure that all beneficiaries receive the assets to which they are entitled. If you’ve found yourself in the position of “overwhelmed executor,” here are some tips to lighten the load.

1.  Get professional help from an experienced attorney:

The caveat to being an executor is that once you accept the responsibility, you also accept the liability if something goes wrong. To protect yourself and make sure you’re crossing all the “i’s” and dotting all the “t’s,” consider hiring an experienced estate planning attorney at the beginning. Having a legal professional in your corner not only helps you avoid pitfalls and blind spots, but it will also give you greater peace of mind during the process.

2. Get organized:

One of the biggest reasons for feeling overwhelmed as an executor is when the details are coming at you from all directions. Proper organization helps you conquer this problem and regain control. Your attorney will help advise you of what to do when, but in general, you’ll need to gather several pieces of important paperwork to get started. It’s a good idea to create a file or binder so you can keep track of the original estate planning documents, death certificates, bills, financial statements, insurance policies, and contact information of beneficiaries. Bringing all this information to your first meeting will be a great start.

3. Establish lines of communication:

As an executor, you are effectively a liaison between multiple parties related to the estate: namely, the courts, the creditors, the IRS, and the heirs. Create and maintain an up-to-date list of everyone’s contact information. You’ll also want to retain records, such as copies of correspondence or notes about phone calls for all the contact you make as executor. Open and honest communication helps keeps the process flowing smoothly and reduces the risk of disputes. It’s worth repeating because it’s so important -- keep records of all communications, so you can always recall what was said to whom.

If you have been appointed as an executor, and you are feeling overwhelmed, we can provide skilled counsel and advice to help you through the process. We can also help you set your own estate plan, so your family can avoid the stress of probate. If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Friday
Dec092016

3 Celebrity Probate Disasters and Lessons to Learn from Them

With all the wealth accumulated by the rich and famous, one would assume that celebrities would take steps to protect their estates once they pass on. But think again: Some of the world’s richest and most famous people have passed away without a will or a trust, while others have made mistakes that tied their fortunes and heirs up for years in court. Let’s look at three high-profile celebrity probate disasters and discover what lessons we can learn from them.

1. Tom Carvel:

As the man who invented soft-serve ice cream and established the first franchise business in America, Tom Carvel had a net worth of up to $200 million when he passed away in 1990. He did have a will and accompanying trust that provided for his widow, family members and donations for several charities, but he also named seven executors, all of whom had a financial stake in the game. The executors began infighting that lasted for years and cost millions. In the end, Carvel’s widow passed away before the disputes could be settled, essentially seeing none of the money.

Lesson learned: “Too many cooks spoil the broth.” Your trustee and executor may have to make tough decisions. Consider naming executors and trustees who have no financial interest in your estate to reduce the risk of favoritism. Also, consider have only a single trustee and executor rather than a committee.

2. Jimi Hendrix:

Passing away tragically at age 27, rock guitarist Jimi Hendrix left no will when he died. What he did leave behind was a long line of relatives, music industry bigwigs, and business associates who had an interest in what would become of his estate - both what he left behind, and what his intellectual property would continue to earn. An attorney managed the estate for the first two decades after Jimi’s death, after which Jimi’s father Al Hendrix successfully sued for control of the estate. But when Al attempted to leave the entire estate to his adopted daughter upon his passing, Jimi’s brother, Leon Hendrix, sued, launching a messy probate battle that left no clear winners.

Lesson learned: When you don’t leave a will or trust, the effects can last for generations. An experienced estate planning attorney can help put your wishes in writing so they are carried out after your death rather than opening a door to costly conflict.

3. Prince:

The court battle currently in preparation over Prince’s estate is a celebrity probate disaster in action. When the 80’s pop icon died in early 2016, he left no will, reportedly due to some previous legal battles that left him with a distrust of legal professionals in general. The lines are already being drawn for what will likely be a costly and lengthy court battle among Prince’s heirs. Sadly, there’s even a battle looming about determining who his heirs are—for certain.

Lesson learned: Correct legal documentation protects your legacy. Don’t let a general distrust or a bad experience cause your heirs to fight and potentially lose their inheritance.

These celebrity probate disasters serve as stark reminders that no one’s wealth is exempt from the legal trouble that can occur without proper estate planning. As always, we are here to help you protect your family and legacy. If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Monday
Dec052016

Including Grandkids in your Will—5 Tips to Avoid Common Problems

As we build wealth, we naturally desire to pass that financial stability to our offspring. With the grandkids, especially, we often share a special bond that makes us want to provide well for their future. However, that bond can become a weakness if proper precautions aren’t set in place. If you’re planning to include the grandchildren in your will, here are five potential dangers to watch for, and ways you can avoid them.

1. Including no age stipulation:

We have no idea how old the grandchildren will be when we pass on. If they are under 18, or if they are financially immature when you die, they could receive a large inheritance before they know how to handle it, and it could be easily wasted.

Avoiding this pitfall: Create a long-term trust for your grandchildren that provides continued management of assets regardless of their age when you pass away.

2. Too much, too soon:

Even if your grandkids are legally old enough to receive an inheritance when you pass on, if they haven’t learned enough about handling large sums of money properly, the inheritance could still be quickly squandered.

Avoiding this pitfall: Outright or lump-sum distributions are usually not advisable. Luckily, there are many options available, from staggered distributions to leaving their inheritance in a lifetime, “beneficiary-controlled” trust. An experienced estate planning attorney can help you decide the best way to leave your assets.

3. Not communicating how you’d like them to use the inheritance:

You might trust your grandchildren implicitly to handle their inheritance, but if you have specific intentions for what you want that inheritance to do for them (e.g., put them through college, buy them a house, help them start a business, or something else entirely), you can’t expect it to happen if you don’t communicate it to them in your will or trust.

Avoiding this pitfall: Stipulate specific things or activities that the money should be used for in your estate plan. Clarify your intentions and wishes.

4. Being ambiguous in your language:

Money can make people act in unusual ways. If there is any ambiguity in your will or trust as to how much you’re leaving each grandchild, and in what capacity, the door could be opened for greedy relatives to contest your plan.

Avoiding this pitfall: Be crystal clear in every detail concerning your grandchildren’s inheritance. An experienced estate planning attorney can help you clarify any ambiguous points in your will or trust.

5. Touching your retirement:

Many misguided grandparents make the mistake of forfeiting some or all of their retirement money to the kids or grandkids, especially when a family member is going through some sort of financial crisis. Trying to get the money back when you need might be difficult to impossible.

Avoiding this pitfall: Resist the temptation to jeopardize your future by trying to “fix it” for your grandchildren. If you want to help them now, consider giving them part of their inheritance in advance, or setting up a trust for them. But, always make sure any lifetime giving you make doesn’t leave you high and dry.

If you’re planning to put your grandchildren in your will or trust, we’re here to help with every detail you need to consider. If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Saturday
Dec032016

Giving Your Kids an Early Inheritance—4 Things to Consider

If you’re thinking about giving your children their inheritance early, you’re not alone. A recent Merrill Lynch study suggests that these days, nearly two-thirds of people over the age of 50 would rather pass their assets to the children early than make them wait until the will is read. It can be especially satisfying to fund our children’s dreams while we’re alive to enjoy them, and there’s no real financial penalty for doing so, if the arrangement is structured correctly. Here are four important factors to take consider when planning to give an early inheritance.

1. Keep the tax codes in mind:

The IRS doesn’t care whether you give away your money now or later. The lifetime estate tax exemption as of 2016 is $5.45 million per individual, regardless of when the funds are transferred. So, whether you give up to $5.45 million away now or wait until you die with that amount, your estate will not owe any federal estate tax (although, remember, the law is always subject to change). You can even give up to $14,000 per person (child, grandchild, or anyone else) per year without any gift tax issues at all. You might hear these $14,000 gifts referred to as “annual exclusion” gifts. There are also ways to make tax-free gifts for educational expenses or medical care, but special rules apply to these gifts. Your estate planner can help you successfully navigate the maze of tax issues to ensure you and your children receive the greatest benefit from your giving.

2. Gifts that keep on giving:

One way to make your children’s inheritance go even farther is to give it as an appreciable asset. For example, helping one of your children buy a home could increase the value of your gift considerably as the home appreciates in value. Likewise, if you have stock in a company that is likely to prosper, gifting some of the stock to your children could result in greater wealth for them in the future.

3. One size does not fit all:

Don’t feel pressured to follow the exact same path for all your children in the name of equal treatment. One of your children might prefer to wait to receive her inheritance, for example, while another might need the money now to start a business. Give yourself the latitude to do what is best for each child individually; just be willing to communicate your reasoning to the family to reduce the possibility of misunderstanding or resentment.

4. Don’t touch your own retirement:

If the immediate need is great for one or more of your children, resist the urge to tap into your retirement accounts to help them out. Make sure your own future is secure before investing in theirs. It may sound selfish in the short term, but it’s better than possibly having to lean on your kids for financial help later when your retirement is depleted.

Giving your kids an early inheritance is not only feasible, but it also can be highly fulfilling and rewarding for all involved. That said, it’s best to involve a trusted financial advisor and an experienced estate planning attorney to help you navigate tax issues and come up with the best strategy for transferring your assets. If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Sunday
Sep112016

Act Now! Avoid New IRS Regulations That Might Raise Taxes on Your Family’s Inheritance 

The IRS recently released proposed regulations which effectively end valuation discounts that have been relied upon for over 20 years. If the IRS’s current timetable holds, these regulations may become final as early as January 1, 2017. Although that date isn’t set in stone, I expect that the regulations will be final around that time or shortly thereafter.

With New Regulations Looming, What Should You Do Now?

As I mentioned before, the timetable isn’t set in stone. Luckily, there’s still a narrow window of time to implement “freezing” techniques under current, more favorable law, to save taxes and protect your family’s inheritance.

Depending on your circumstances, some options are going to be a better fit than others, and I want to make sure you get the best outcome possible. Some of these “freezing” techniques involve the use of a family business entity to own and operate your family fortune, in combination with one or more special tax-saving trusts. These plans provide numerous benefits including asset protection, divorce protection, centralized management of assets, and more – in addition to the tax savings.

Unfortunately, these types of plans can take 2-3 months to fully implement and time is running short.

So, here’s your action plan:

  1.  First, schedule an appointment with me as soon as possible. I’d like to get a time on the calendar so that I can take a look at the options that are available to you under current law between now and the end of this year.
  2. Second, find your estate planning portfolio and take a look at it. If I prepared your plan, you’ll have a graphic that represents your current plan, making it easy to review. (If you can’t find it, let me know and I will send you another one.) If someone else prepared your plan, you might have a graphic summary or some other type of summary. Regardless of who prepared your plan, now’s a great time to review your plan. When we meet, I want to make sure that anything we do to help you protect your family’s inheritance from the IRS still achieves your overall planning goals - and not just the tax-saving goals.

Our firm is available to assist you with the immediate implementation of your wealth transfer plan using valuation discounts that are still available under current law.

If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Wednesday
May252016

6 Ways a Trust Protector Can Fortify Your Trust

Trust protectors are a fairly new and commonly used protection in the United States. To summarize, a trust protector is someone who serves as an appointed authority over a trust that will be in existence for a long period of time. Trust protectors ensure that trustees: 1) maintain the integrity of the trust, 2) make solid distribution and investment decisions, and 3) adapt the trust to changes in law and circumstance. 

Whenever changes occur, as they naturally do, the trust protector has the power modify the trust to carry out the Grantor’s intent. Significantly, the trust protector has the power to act without going to court—a key benefit which saves time and money and honors family privacy. 

Here are 6 Key Ways a Trust Protector Can Protect You:

Your trust protector can:

  1. Remove or replace a difficult trustee or one who is no longer able or willing to serve.
  2. Amend the trust to reflect changes in the law.
  3. Resolve conflicts between beneficiaries and trustee(s) or between multiple trustees.
  4. Modify distributions from the trust because of changes in beneficiaries' lives such as premature death, divorce, drug addiction, disability, or lawsuit.
  5. Allow new beneficiaries to be added when new descendants are born.
  6. Veto investment decisions which might be unwise.

WARNING:

The key to making a trust protector work for you is being very specific about the powers available to that person. It’s important to authorize that person, and any future trust protectors, to fulfill their duty to carry out the trust maker’s intent - not their own.

Can You Benefit from a Trust Protector?

Generally speaking, the answer is yes. Trust protectors provide flexibility and an extra layer of protection for trust maker intent as well as trust assets and beneficiaries. Trust protector provisions are easily added into a new trust and older trusts can be reformed (re-drafted) to add a trust protector. If you have trusts you’ve created or are the beneficiary of a trust that feels outdated, we can help. If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

 

Friday
May202016

3 Examples of When an Irrevocable Trust Can—and Should—Be Modified

Did you know that irrevocable trusts can be modified? If you didn’t, you’re not alone. The name lends itself to that very belief. However, the truth is that changes in the law, family, trustees, and finances sometimes frustrate the trust maker’s original intent. Or, sometimes, an error in the trust document itself is identified. When this happens, it’s wise to consider trust modification, even if that trust is irrevocable.

Here are three examples of when an irrevocable trust can, and should, be modified or terminated:

1.  Changing Tax Law. Adam created an irrevocable trust in 1980 which held a life insurance policy excluding proceeds from his estate for federal estate tax purposes.  Today, the federal estate tax exemption has significantly increased making the trust unnecessary. 

2.  Changing Family Circumstances. Barbara created an irrevocable trust for her grandchild, Christine. Now an adult, Christine suffers from a disability and would benefit from government assistance. Barbara’s trust would disqualify Christine from receiving that assistance.

3.  Discovering Errors. David created an irrevocable trust to provide for his numerous children and grandchildren. However, after the trust was created, his son (Jack) discovered that his son (Frank) had been mistakenly omitted from the document. 

Are You Sure Your Trust is Still Working for You?

If you’re not sure an irrevocable trust is still a good fit or if you wonder whether you can receive more benefit from a trust, we’ll analyze the trust. Perhaps irrevocable trust modification or termination is a good option. Making that determination simply requires a conversation with us and a look at the document itself.

If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.


 

Wednesday
May182016

4 Steps To Irrevocable Trust Decanting

We all need a “do over” from time to time. Life changes, the law changes, and professionals learn to do things in better ways. Change is a fact of life - and the law. Unfortunately, many folks think they’re stuck with an irrevocable trust. After all, if the trust can be revoked, why call it “irrevocable”? Good question.

Fortunately, irrevocable trusts can be changed and one way to make that change is to decant the original trust. Decanting is a “do over.” Funds from an existing trust (with less favorable terms) are distributed to a new trust (with more favorable terms). 

As the name may suggest, decanting a trust is similar to decanting wine: you take wine from one bottle and transfer it to another (decanter)—leaving the unwanted wine sediment / trust terms in the original bottle / document. Just like pouring wine from one bottle to another, decanting is relatively straight-forward and consists of these four steps:

1. Determine Whether Your State Has a Decanting Statute. 

Nearly half of US states currently have decanting laws. If yours does, determine whether the trustee is permitted to make the specific changes desired. If so, omit step 2 and move directly to step 3. 

If your state does not have a decanting statute, the answer isn’t as clear cut. While attempting to decant a trust in a state without a statute certainly can be done, it’s risky.  Consider step 2.

2. Move the Trust. 

If the trust’s current jurisdiction does not have a decanting statute or the existing statute is either not user friendly or does not allow for the desired modifications, it’s time to review the trust and determine if it can be moved to another jurisdiction.

If so, we can make that happen, including adding a trustee or co-trustee, and taking advantage of that jurisdiction’s laws. If not, we can petition the local court to move the trust.

3. Decant the Trust. 

We’ll prepare whatever documents are necessary to decant the trust by “pouring” the assets into a trust with more favorable terms. All statutory requirements must be followed and state decanting statutes referenced. 

4. Transfer the Assets

The final step is simply transferring assets from the old trust into the new trust. While this can be effectuated in many different ways, the most common are by deed, assignment, change of owner / beneficiary forms, and the creation of new accounts. 

Get the Most from Your Trust

Although irrevocable trusts are commonly thought of as documents which cannot be revoked or changed, that isn’t quite true. If you feel stuck with a less than optional trust, we’d love to review the trust and your goals to determine whether decanting or other trust modification would help.

If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Friday
May132016

5 Compelling Reasons to Decant Your Trust

When a bottle of wine is decanted, it’s poured from one container into another. When a trust is decanted, trust assets are poured from an old trust into a new trust with more favorable terms.

Why Should a Trust Be Decanted?

Trusts are decanted to escape from a bad trust and provide beneficiaries with more favorable trust provisions and benefits. 

Here are 5 compelling reasons to decant your trust:

1. To clarify ambiguities or drafting errors in the trust agreement. As trust beneficiaries die and younger generations become the new heirs, vague provisions or mistakes in the original trust agreement may become apparent. Decanting can be used to correct these problems.

2. To provide for a special needs beneficiary. A trust that is not tailored to provide for a special needs beneficiary will cause the beneficiary to lose government benefits.  Decanting can be used to turn a support trust into a supplemental needs trust, thereby supplementing, but not supplanting, what government benefits cover.

3. To protect trust assets from the beneficiary’s creditors. A trust that is not designed to protect the trust assets from being snatched by beneficiary’s creditors can be rapidly depleted if the beneficiary is sued, gets divorced, goes bankrupt, succumbs to business failure, or suffers a health crisis. Decanting can be used to convert a support trust into a full discretionary trust that beneficiary’s creditors will not be able to reach.

4. To merge similar trusts into a single trust or create separate trusts from a single trust. An individual may be the beneficiary of multiple trusts with similar terms. Decanting can be used to combine trusts into one trust thereby reducing administrative costs and oversight responsibilities. And, on the other hand, a single trust that has multiple beneficiaries with differing needs can be decanted into separate trusts tailored to each individual beneficiary.

5. To change the governing law or situs to a different state. Changes in state and federal laws can adversely affect the administration and taxation of a multi-generational trust.  Decanting can be used to take a trust, governed by laws that have become unfavorable, and convert it into a trust that is governed by different and more advantageous laws.  

You’re Not Stuck With Your Trust: We’ll Help You Escape:

We include trust decanting provisions in the trusts we create. Including trust decanting provisions in an irrevocable trust agreement or a revocable trust agreement that will become irrevocable at some time in the future is critical to the success and longevity of the trust. Such provisions will help to ensure that the trust agreement has the flexibility necessary to avoid court intervention to fix a trust that no longer makes practical or economic sense. 

You and your loved ones don’t need to muddle through with outdated and inappropriate trust provisions. If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

 

Wednesday
May112016

Decanting: How to Fix a Trust That Is NOT Getting Better With Age

While many wines get better with age, the same cannot be said for some irrevocable trusts.  Maybe you’re the beneficiary of trust created by your great grandfather over seventy years ago, and that trust no longer makes sense.  Or, perhaps you created an irrevocable trust over twenty years ago, and it no longer makes sense.  Wine sommeliers may ask: ‘Is there any way to fix an irrevocable trust that has turned from a fine wine into vinegar?’  You may be surprised to learn that under certain circumstances the answer is yes. How? By “decanting” the old fragmented trust into a brand new one.

What Does It Mean to “Decant” a Trust?

Wine lovers know that the term “decant” means to pour wine from one container into another to open up the aromas and flavors of the wine.  In the world of irrevocable trusts, “decant” refers to the transfer of some or all of the property held in an existing trust into a brand new trust with different and more favorable terms.

When Does It Make Sense to Decant a Trust?

Decanting a trust makes sense under a myriad of different circumstances, including the following examples:

1. Tweak the trustee provisions to clarify who can or cannot serve as the trustee.

2. Expand or limit the powers of the trustee.

3. Convert a trust that terminates when a beneficiary reaches a certain age into a lifetime trust.

4. Change a support trust into a full discretionary trust to protect the trust assets from the beneficiary’s creditors.

5. Clarify ambiguous provisions or drafting errors in the existing trust.

6. Change the governing law or trust situs to a less taxing or more beneficiary friendly state.

7. Add, modify, or remove powers of appointment for tax or other reasons.

8. Merge similar trusts into a single trust for the same beneficiary.

9. Create separate trusts from a single trust to address the differing needs of multiple beneficiaries.

10. Provide for and protect a special needs beneficiary.  

What is the Process for Decanting a Trust?

Decanting must be allowed under applicable state case law or statutory law.  Aside from this, the trust agreement may contain specific instructions with regard to when or how a trust may be decanted.

Once it is determined that a trust can and should be decanted, the next step is for the trustee to create the new trust agreement with the desired provisions.  The trustee must then transfer some or all of the property from the existing trust into the new trust.  Any assets remaining in the existing trust will continue to be administered under its terms; and, an empty trust will be terminated.

WARNING:  Decanting is Not the Only Solution to Fix a Broken Trust

While decanting may work under certain circumstances, fortunately, it is not the only way to fix a “broken” irrevocable trust.  Our firm can help you evaluate options available to fix your broken trust and determine which method will work the best for your situation.

If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Friday
Apr222016

Revocable Trust v. Irrevocable Trust: Which Is Best for You?

Trusts allow you to avoid probate, minimize taxes, provide organization, maintain control, and provide for yourself and your heirs. In its most simple terms, a trust is a book of instructions wherein you tell your people what to do, when.

While there are many types of trusts, the major distinction between trusts is whether they are revocable or irrevocable. Let’s take a look at both so you’ll have the information you need:

Revocable Trusts. Revocable trusts are also known as “living trusts” because they benefit you during your lifetime and you can alter, change, modify, or revoke them if your circumstances or goals change.

1. You stay in control of your revocable trust. You can transfer property into a trust and take it out, serve as the trustee, and be the beneficiary. You have full control. Most of our clients like that.

2. You select successor trustees to manage the trust if you become incapacitated and when you die.   Most of our clients like that they, not the courts, select who’s in charge when they need help.

3. Your trust assets avoid probate. This makes it difficult for creditors to access assets since they must petition a court for an order to enable the creditor to get to the assets held in the trust. Most of our clients want to protect their beneficiaries’ inheritances.

Irrevocable Trusts: When irrevocable trusts are used, assets are transferred out of the Grantor’s estate into the name of the trust.  You, as the Grantor, cannot alter, change, modify, or revoke this trust after execution. It’s irrevocable and you usually can’t be in control.

1. Irrevocable trust assets have increased asset protection and are kept out of the reach of creditors.

2. Taxes are often reduced because, in most cases, irrevocable trust assets are no longer part of your estate.

3. Trust protectors can modify your trust if your goals become frustrated.

As experienced estate planning attorneys, we can help you figure out whether a revocable or irrevocable trust is a good fit for you and your loved ones. If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Tuesday
Mar292016

James Brown’s Vague Estate Plan Equated To Years of Family Litigation

James Brown, the legendary singer, songwriter, record producer, dancer, and bandleader was known to many as the “Godfather of Soul.” Although he intended his estimated $100 million estate to provide for all of his children and grandchildren, his intentions were somewhat vague.  This forced his family into years of litigation which ended up in the South Carolina Supreme Court.

As an estate planning attorney, I work with my clients’ to ensure that we avoid these types of situations before they happen. In this author’s humble opinion, it is well worth spending the time up-front, to avoid the nightmares that can result later without proper planning.

Everything Seemed In Order…

Brown signed his last will and testament in front of Strom Thurmond, Jr. in 2000. Along with the will that bequeathed personal assets such as clothing, cars, and jewelry, Brown created a separate, irrevocable trust which bequeathed music rights, business assets, and his South Carolina home. 

At first glance, it seems as though everything in Brown’s estate plan was in order. In fact, he was very specific about most of his intentions, including:

  1. Donating the majority of his music empire to an educational charity
  2. Providing for each of his six adult living children (Terry Brown, Larry Brown, Daryl Brown, Yamma Brown Lumar, Deanna Brown Thomas and Venisha Brown)
  3. Creating a family education fund for his grandchildren

However, only days after his death in 2006 from congestive heart failure, chaos erupted. 

Heirs Not Happy With Charitable Donation:

Apparently, Brown’s substantial charitable donations didn’t sit well with his heirs. Both his children and wife contested the estate.

 i. Children. His children filed a lawsuit against the personal representatives of Brown's estate alleging impropriety and alleged mismanagement of Brown's assets. (This was likely a protest of the charitable donation.)

 ii. Wife. Brown’s wife at the time, Tomi Rae Hynie, and the son they had together, received nothing as Brown never updated his will to reflect the marriage or birth. In her lawsuit, Hynie asked the court to recognize her as Brown's widow and their son as an heir. 

In the end, the South Carolina Supreme Court upheld Brown’s plans to benefit charities and recognized Hynie and their son as an heir. 

Should You Anticipate Litigation?

Brown’s estate was substantial and somewhat controversial – and he failed to update or communicate his intentions to his family.  His heirs were taken by surprise.  And experienced attorney could have avoided much of the family upset.

If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.


 

Friday
Mar042016

Trusting Your Trustee—Doris Duke’s Trustee Bilked Estate for $1Million

Choosing a trustee is a very personal matter and should never be left to chance. Doris Duke, heiress of Duke’s energy and tobacco fortunes, didn’t seem to know her trustee very well at all.  After Duke passed in 1992, her trustee bilked the estate for over $1 million. It begs the question:  How well do you know your trustee?

In our experience, choosing the people to nominate as fiduciaries through your estate plan is one of the hardest tasks that our clients’ face. That is why we work with each client to help them decide the best people to name in the all important roles that fiduciaries must take on when named in an estate plan.

The Butler Did It:

That old saying certainly fits in this situation because Doris Duke had her butler appointed as her estate’s trustee. The estate was reportedly worth $1.3 billion at the time of her death. Perhaps all that money was too much temptation for Bernard Lafferty, an Irish immigrant with only a grade school education. 

After Duke’s death in 1992, Lafferty went on a bit of a spending spree. It was reported that he spent over $1 million on himself, including:

  1. Charging hundreds of thousands of dollars on luxury store items onto estate charge cards
  2. Traveling all over the world, whenever he felt the urge
  3. Redecorating Doris Duke’s old bedroom for himself

Lafferty apparently had very expensive taste as he spent over $60 thousand on the bedroom redecoration alone. 

The final straw was when he borrowed more than $825,000 from the U.S. Trust Company, the estate's co-executor, apparently without having to pay interest. He was removed as the trustee three years later.

5 Characteristics of a Good Trustee:

Your trustee will ultimately manage your financial future as well as the disposition of your estate. While it’s tempting to choose a family, friend, or say – your butler – it might be wiser to treat your choice as a strict business decision. 

Trustees have a “fiduciary” responsibility toward the trust. That means they owe the highest duty of care, good faith, honesty and diligence when it comes to managing it. Five characteristics of a good trustee include someone who is:

  1. Organized
  2. Dependable
  3. Detail-oriented
  4. Experienced in business matters
  5. Confident in their understanding of your intentions

Whomever you choose, keep in mind that anyone who is dissatisfied with the terms of your trust might try to influence your trustee. In many cases, family relationships are wrought with various types of emotion. Those close bonds could put your trustee in the middle of a situation they can’t handle – especially when it involves someone where saying no simply isn’t an option. Therefore, let’s talk about whether a professional trustee would be appropriate.

Protect Your Assets, Heirs & Wishes:

Whether it’s choosing a trustee, creating a will, or coming up with a comprehensive estate plan, we can help you make the right choices. Protect your assets, your heirs, and your wishes. We can show you how to select the best trustee for your individual situation.

If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.


 

Wednesday
Feb172016

Over 70% of Elvis Presley’s Estate Paid in Taxes & Fees: How To Avoid Unnecessary Taxes

Legendary singer and actor, Elvis Presley, earned over a billion dollars throughout his somewhat short career. That’s a Billion [with a capital B]. However, when the “King of Rock & Roll” died in 1977, his estate’s net worth was only $10 million. 

Of that, over 70% went to pay taxes and fees. That left someone who had earned over a billion dollars with only about $3 million (this time with an M) in the end. So, where did the money go and, more importantly, how can you avoid the same trap?

Where Did The Money Go?

It seems incomprehensible that someone who earned so much ended up with so little. Since Presley’s death, there have been many accusations made about his business manager, “Colonel” Tom Parker,” and his financial manager—Elvis’s very own father Vernon.

1.    “Colonel” Tom Parker.  Presley’s manager may have discovered him, but he was later accused of charging unreasonable and exorbitant commissions compared to industry averages. In fact, unlike most managers who get 10 or 20 percent, Parker’s deal with Elvis was 50/50.

a. It was later revealed that Parker was actually an illegal immigrant from Holland, who was born under an entirely different name, never obtained a green card, and refused to let Elvis tour overseas because he couldn’t go with him.

b.    If that weren’t enough, Parker also had a gambling problem and rumors say that he often lost more than $1 million in a night. After the truth came out, Parker’s rights to Elvis’s estate were terminated.

2.    Vernon Presley. Elvis’s father, Vernon Presley, was very involved with his son’s finances. However, many believe that he may not have had enough business savvy to manage such a large enterprise. 

 a.  Very little was done to invest profits and a trust was never created to avoid millions of dollars in estate taxes and fees which nearly bankrupted the estate itself. Had he sought the help of advisors, things might have turned out differently.

After Vernon died, Elvis’s only child, Lisa Marie, sold most of Elvis’s trademark rights for over $100 million. Perhaps she should have gotten involved sooner…

How To Protect Yourself Against Unnecessary Taxes:

Regardless of whether you earn a billion dollars and are known as a “King” or are simply a hard working Joe, do everything you can to protect yourself against taxes. In most situations, that means creating a trust that, if properly funded, will not be subject to probate and some of the taxes that associated with passing assets from one generation to the next.

Make the most of your hard earned income! Call our office today to find out about estate planning and how it can provide for and protect you and your family for generations to come.

If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.

Wednesday
Feb172016

Kaley Cuoco’s “Ironclad” Prenup Challenged: Can A Prenup Be Bulletproof?

The Big Bang Theory actress Kaley Cuoco, is one of the highest paid actresses on television. She earns one million dollars per episode and has a net worth of Forty-four million dollars ($44 Million). Before she married tennis star Ryan Sweeting in 2013, Cuoco asked him to sign a prenuptial agreement (generally referred to as a “Prenup”). 

After less than two years of marriage, Cuoco filed for divorce. She assumed the prenup would be valid. However, Sweeting alleges that the prenup shouldn’t be enforced and he wants spousal support. So, is The Big Bang Theory star’s Prenup ironclad? A better question might be—is it possible to create a Prenup that is bulletproof?

Cuoco Was Smart, But…

Cuoco was certainly smart to have Sweeting sign a prenuptial agreement as his net worth was only about two million dollars versus her 44 million. However, while a well-written prenup generally addresses asset division and support issues, they are not always ironclad. 

In this case, Sweeting alleges that his circumstances have substantially changed due to numerous sports injuries and an addiction to pain killers which have prevented him from earning a living as a tennis player. So, while he didn’t need support when the prenup was signed, he does now

3 Ways to Invalidate a Prenup:

There are generally three ways to invalidate a prenup, by proving:

  1.   Unconscionability. This is a legal term of art meaning that, under the circumstances, it would be grossly unfair to enforce the document. To overcome it, Cuoco would likely have to prove that Sweeting was represented by an independent attorney who advised him of the consequences before signing.  
  2.   Coercion. Legal contracts can be deemed void when one party was coerced into signing it. In its harshest terms, that equates to being forced to sign something at gunpoint. In this case, it means that either Sweeting wasn’t given enough time to read it or didn’t voluntarily sign it. 
  3.     Fraud. Sweeting could also allege that Cuoco lied about her net worth and that, based on her fraudulent activity, the prenup shouldn’t be enforced.

If Cuoco’s attorney did his or her job correctly, which seems to be the case, it’s most likely that she’ll prevail.

Don’t Risk Your Wealth:

Prenuptial agreements, part of a strong estate plan, should always be prepared by experienced attorneys (a different one for each party) who know how to comply with the laws of that particular state and take into account what changes in the relationship might affect the validity of the prenup. 

Today, 50% of all first marriages end in divorce; more than 70% of all second marriages do so. It makes sense to plan for the worst and hope for the best. Certainly, don’t risk your wealth and future by failing to have as ironclad a Prenup (or “Postnup” – an agreement made after marriage) as possible. It’s easier to accomplish than you would think and we can provide you with the tools you need to do just that.

If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.


 

Thursday
Feb042016

Caution: Creditors Now Have Easy Access to Inherited IRAs

Do you have IRAs or other retirement accounts that you plan to leave to your loved ones?  If so, proceed with caution.  Most people don’t know the law has changed: inherited retirement accounts no longer have asset protection, meaning they can be seized by strangers.

How Can Inherited IRAs Be Protected?  Enter the Standalone Retirement Trust

Fortunately, retirement account protection still exists but only if you take action.  Many people like you are using Standalone Retirement Trusts (SRT) to protect retirement assets.  The SRT is a special type of revocable trust just for retirement accounts. 

A properly drafted SRT:

       Protects the inherited retirement accounts from creditors as well as predators and lawsuits

       Ensures that inherited retirement accounts remain in your bloodline and out of the hands of a daughter-in-law or son-in-law or former daughter-in-law or son-in-law

       Allows for experienced investment management and oversight of the assets by a professional trustee

       Prevents the beneficiary from gambling away the inherited retirement account or blowing it all on exotic vacations, expensive jewelry, designer shoes, and fast cars

       Enables proper planning for a special needs beneficiary

       Permits you to name minor beneficiaries such as grandchildren without the need for a court-supervised guardianship

       Facilitates generation-skipping transfer tax planning to ensure that estate taxes are minimized or even eliminated at each generation of your family

 

 The Bottom Line on Protecting Inherited IRAs

Unfortunately, the Supreme Court decision has made outright beneficiary designations for IRAs and other retirement accounts risky business.  However, we are here to help you decide whether an SRT is a good fit for you and to answer your questions about protecting your retirement accounts.

If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.