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Entries in Financial Planning (107)

Wednesday
Jul262017

Protecting Your Child’s Inheritance from An Untrustworthy Spouse

Parents who develop an estate plan often do so to provide for their heirs financially. Many want to make sure hard-earned assets, family heirlooms, or closely held businesses stay within the family. Indeed, a common question is what cost-effective options are available to protect one’s children’s inheritance from a spouse in the event of untrustworthiness or divorce. Thankfully, there are many ways to structure your child’s inheritance to help ensure it will remain in the family for future generations. Here are a few available options.

  1. Create a Trust:

A trust involves three parties:

(1)  the person creating the trust (you might see this written as the “settlor,” “trustmaker,” or “grantor.”),

(2)  the person or entity holding the trust property for the benefit of the beneficiary, known as the “trustee”, and

(3)  the person(s) that benefit from the creation of the trust, known as the “beneficiaries.”

Choosing a trustee who is independent can be a great way to eliminate any arguments that one beneficiary has more control to receive assets than what is actually provided in the trust documents than other beneficiaries, a helpful situation when you have an untrustworthy son- or daughter-in-law.

A lifetime trust is a type of trust that - as is evident from its name - lasts for the lifetime of the beneficiary and passes to the next generation of beneficiaries upon his or her death. It is commonly referred to as a “generation-skipping trust” and can also dramatically reduce or eliminate estate taxes. Assets in a lifetime trust are protected against commingling in the marriage and, therefore, cannot be pursued by a spouse. When assets are held by a trust your children - and, by extension, their spouses - cannot access these assets. Therefore, even in the event of a divorce, an ex-spouse cannot pursue them.

2. Use Prenuptial Agreements:

In addition to creating a trust to protect your children’s inheritance from an untrustworthy spouse, your children can use a prenuptial agreement as a tool for asset protection. A prenuptial agreement is a document that details an agreement between your child and his or her spouse about the characterization of assets owned at the time of marriage and those earned after marriage. This legal document also provides the couple to agree upon the division of assets in the event there is a divorce. Because enforceability of prenuptial agreements varies by state, it is important to seek the advice of a legal professional before drafting and signing the contract. It may be an uncomfortable suggestion to bring up with your children, but it can be an incredible benefit in the event of a later divorce.

3. Other Planning Ideas:

Beyond the actual legal tools, it is important for you to let your wishes be known to the family. One way to do this is to have a family discussion about your estate plan, explaining your intentions and reasons as to why it is set up in this manner. Additionally, using clear language in your estate planning documents that specify the intent or purpose in leaving the inheritance to benefit descendants - and not their spouses - can further solidify your wishes are followed. Finally, choosing a trustee that is independent will keep control over the funds in the trustee’s hands and not your child’s untrustworthy spouse. This will also allow you to manage or overcome any conflict that you may not have been expecting.

4.Bottom Line: Seek Out Estate Planning Help:

If you wish to make sure your descendants receive a portion of your estate, discuss these intentions with your children and devise an estate plan that will guarantee this desire is fulfilled after your passing. Whether you have no estate plan, or have one that more than a few years old, sit down with an estate planning professional to create or update this plan to suit your goals.

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
Jul232017

Estate Planning for Military Families

Although Memorial Day has passed, it is important to honor those that have served our country. This time is also a good opportunity for members of the military and their loved ones to consider setting up an—or revising an existing—estate plan. Military families need to consider special estate-planning issues that others do not. This is particularly true when one or more family members are deployed overseas. Beyond this, members of the military have access to special benefits and resources. This can become complicated and, for this reason, it is important that you seek special help if you are a military family.

Whether you are just starting in the military or you are a seasoned veteran, below are some common factors to consider for your estate planning needs.

Factors to Consider:

Everyone’s estate plan should be customized to the person’s particular circumstances. Some factors that should be considered include whether:

  1. You own real property and, if so, if the real estate is located in different states;
  2. You are married;
  3. You have minor children, or children with special needs;
  4. You have money set aside in 401(k), IRAs, or thrift savings plans;
  5. You plan to give to charity; and
  6. You are moving multiple times across states or to different countries

Estate Planning Necessities:

There are many benefits offered to military families that can help with estate planning. These include:

Life insurance—An important part of an estate plan and intended for those who are financially dependent upon you, life insurance is especially important if a member of the military is heading out to a combat zone. Active-duty members have access to low-cost life insurance for themselves and loved ones from Service Members’ Life Insurance Group. More information can be found on the Department of Veterans Affairs website. When examining your life insurance, work with us to make sure that the beneficiary designation works the way you expect it to.

Wills and Trusts—A last will and testament to whom and how you want your property distributed, names who will administer your estate and specifies who will care for a minor or special needs child. A trust, on the other hand, is a separate legal entity that can hold property and assets for the benefit of one or more people or entities. For most families, a trust-centered estate plan is a better fit, but a will can work for some families.

Other Benefits For Survivors—Survivor benefit plans (SBP) are pension-type plans in the form of an annuity that will pay your surviving spouse and children a monthly benefit. Likewise, dependency and indemnity compensation (D&IC) provides a monthly benefit to eligible survivors of servicemembers or veterans (1) who die while on active duty, (2) whose death is due to a service-related disease or injury or (3) who are receiving or entitled to receive VA compensation for service-related disability and are totally disabled. When you are examining any financial services or insurance product, it’s a good idea to work with us to make sure any beneficiary designations work the way you expect and provide the maximum benefit to your family.

You Need Special Help:

Members of the military often experience frequent moves, have access to lots of government benefits after service, and can be subject to some unusual tax rules. For these reasons, estate planning for military families is more complicated than most.

 You can expect an estate planning professional to assist you with setting up the following:

  1. Powers of attorney for limited and general financial matters, as well as health care decisions (there are very helpful when a spouse is deployed);
  2. Funeral and burial arrangements;
  3. Wills and living wills;
  4. Organ donation;
  5. Family care plans;
  6. Life insurance;
  7. Trusts;
  8. Estate taxes;
  9. Survivor benefits; and
  10.  Estate administration and/or probate.

An estate plan has multiple objectives: to provide for your family’s financial security, ensure your property is preserved and passed on to your beneficiaries, and determine who will manage your assets upon your death, among others. We are here to guide you through the best options available to you and your family.

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
Jul192017

3 Ways Your Trust Can Help a Loved One With Mental Illness

When a loved one suffers from a mental illness, one small comfort can be knowing that your trust can take care of them through thick and thin. There are some ways this can happen, ranging from the funding of various types of treatment to providing structure and support during his or her times of greatest need.

Let’s explore a few ways you can help take care of a loved one struggling with mental illness with the help of your estate planning attorney:

1. It Can Contribute To Voluntary Treatment:

Trusts can be disbursed in many ways. If your loved one is involved in an inpatient care facility or an ongoing outpatient program, you can structure your trust so that its disbursements cover the costs of that treatment as time goes on. This also helps your loved one because it relieves them of the responsibility of managing large sums of money on their own. They can rest easier knowing that their care is covered without having to set up a complicated payment plan on their own.

In some cases, the person suffering from mental illness doesn’t have the capacity to enroll themselves in the right type of care. If an intervention of care is needed, your trust can also help encourage involuntary treatment that ultimately serves your loved one’s best interests in the long run. 

2. Trustees Can Help Watch Over Them:

Selecting a trustee isn’t always an easy feat. That’s one of many decision-making areas where we’re more than happy to step in and walk you through the process. When you have a loved one battling mental illness, your choice of a trustee becomes even more of a nuanced decision.

We’ll help you deduce the perfect person to not only manage the wealth contained within the trust but also keep a compassionate watchful eye on your loved one benefitting from the trust. An astute trustee can look for early warning signs surrounding your loved one’s mental health issue and make sure to get them connected to the care and services they need in no time.

3. Lifetime Trusts Provide Structure And Support:

Most people don’t think of large inheritances as a burden. But this can be the case when an individual is dealing with depression, anxiety, hoarding, or diseases like schizophrenia. Lifetime trusts are an excellent way to take care of your loved one without saddling them with a challenge on top of what they are already experiencing.

A discretionary lifetime trust can be drafted in such a way that its funds can only be used to go toward certain goods and services — such as outpatient mental health care, housing, or other “necessaries” of life. Likewise, it can also prohibit spending in areas that would cause more harm than good — gambling or compulsive shopping, for example. The discretionary nature of these types of trusts makes it so your loved one doesn’t have to worry about their own potential missteps when it comes to using the wealth contained within the trust.

Do you have a family member or other loved one who could use the financial flexibility and structural support of a trust? Give us a call today, and together we’ll figure out the best ways to enhance your loved one’s life by finding the right estate planning tools to offer the most 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.


 

 

Tuesday
Jun202017

Why Your Estate Plan Must Include Both Lifetime and “Death-time” Planning 

According to a March 2017 survey by Caring.com, six out of ten Americans have no will or any other kind of estate planning. Many said they’d get around to it, eventually. When they’re old. (The survey did find that the elderly are much more likely to have some plan in place.) It’s all too clear that most of us think “estate planning” is a euphemism for “death-time” planning. Indeed, in the Caring.com survey, one-third said that they didn’t need an estate plan because they didn’t have any assets to give someone when they’d died.

However, comprehensive estate planning isn’t just death-time planning. It’s lifetime planning, too. It’s about ensuring that your medical and financial decisions can be made by someone that you trust. Lifetime planning can help you address potential tax liabilities, find you benefit programs you may eligible for, and protect your family from costly guardianship or conservatorship court. It can make sure that a trusted party looks after and protects your affairs, if you’re not able to.

Lifetime Planning Tools:

As estate planners, we have an arsenal of lifetime planning tools to benefit clients, and we can custom-tailor such plans to an individual’s needs. Here are a couple of the most common (and necessary) lifetime planning tools you should discuss with us.

Revocable Living Trusts:

When people hear the word “trust,” they may think of “trust fund babies” or think that trusts are something only for the super-rich. 

However, a trust is simply a legal tool that can help almost anyone with property - not just the wealthy. In a trust, assets you own are re-titled and transferred into the trust. When this happens, technically, you no longer own your real estate, stocks, bonds and similar properties. Instead, the trust owns them all. But you still control everything in the trust: You can buy and sell these assets as if they were still in your name. In fact, revocable living trusts don’t even change your income taxes while you’re alive. You continue to file your tax returns as you always have, making them very easy to administer while you’re alive. And as the creator, or settlor of the trust, you can continue to make changes to the trust as long you’re competent to do so.

Once you die, the trust becomes irrevocable, meaning its terms can’t generally be changed. At this point, your chosen successor trustee distributes assets to beneficiaries (the people, such as your spouse, children, a church, or other charity, you named to inherit from you). In many respects, the role of the trustee is akin to that of the Executor of a Will. However, a trustee of a fully funded trust does not have to go through the public and expensive probate process. Trusts are private unlike wills, which can also provide valuable privacy to your family. While widely unknown, a Will becomes effective only after it has been approved by the Probate Court.

Durable Power Of Attorney:

Durable powers of attorney come in two forms. With a standard durable power of attorney, a person is legally designated to act on your behalf, in the ways specified in the document. You can make the durable power of attorney broad in scope or quite limited, and it becomes active as soon as you sign it. Under this document, the person may sign checks for you, enter contracts on your behalf, even buy or sell your assets. What they can do depends on what you authorized in the document.

In the case of a “springing” power of attorney (POA), also known as a conditional power of attorney, the person only has this authority if you become incapacitated. At that point, the POA “springs” into action.

There is no “best” power of attorney. We’ll work with you to determine which is the best fit for your needs and goals.

Health Care Power of Attorney:

In an instant, an accident can change a healthy, vigorous person into someone who can’t make her healthcare decisions. Others face a long decline in mental capacity because of a disease like Alzheimer’s. In either case, you want to empower those you trust to make medical decisions for you. Though health care legal documents vary somewhat by state, the general principle is that, through this document, you authorize someone to make medical decisions for you, if you no longer have the capacity to do so. You can also communicate your desired treatment and end-of-life care. However, those instructions may not be valid in every state.

A Holistic Approach:

Lifetime planning is a comprehensive approach to estate planning. And while it addresses needs of the living, comprehensive planning may also improve the after-death part of your plan as well, because it can reduce family conflict and preserve assets against court control or interference in the event of incapacity.

Contact an Experienced Estate Planning Attorney:

For insight into how to establish a trust and implement other lifetime planning options, we are here to 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. 

Wednesday
Jun142017

Integrating Community Property Trust Into Your Estate Plan

A well-crafted estate plan is comprised of many individual parts, and careful, trust-based estate planning is the best way to ensure the highest possible quality of life for you and your loved ones.

One way couples can make get the most mileage out of their estate plans is through community property trusts. This is a special type of trust that combines a couples jointly acquired assets as community property and can save a significant amount of taxes.

Why Community Property Trusts Are Beneficial:

The essential benefit of a Community Property Trust (“CPT”) is that the basis of community-owned property is stepped up when one member of the couple dies. Not only that—it also steps up the basis for the surviving spouse’s half of the property (rather than only half, which is what happens with “plain” jointly owned property). This means that the capital gains tax will take a much smaller percentage of the surviving spouse’s wealth when the property is sold.

The Limits Of Community Property Trusts:

There are two states in which CPT’s can be formed: Alaska and Tennessee. These trusts must be funded and have ongoing requirements to achieve their tax benefits. So, they are not a panacea and don’t necessarily fit every married couple’s situation.

How CPT’s Fit In With Other Estate Planning Strategies:

If your estate plan is robust and ready for all of life’s potential successes and challenges, it likely includes any number of revocable and irrevocable trusts, powers of attorney, long-term care directives, and miscellaneous probate-avoidance precautions.

Community property trusts can only work for the property you fund into them, meaning that you can and should have other strategies in place such as a revocable trust, will, power of attorney, etc. The same property cannot be managed under multiple trusts at the same time, so it is important for us to figure out which of your assets you’d like to set aside for other types of trusts before settling on the details of your CPT.

Community property trusts are not for everyone. However, if we can determine that setting one up is a realistic fit for you and your family, you can expect to save a large sum by avoiding taxes you would otherwise accrue. Schedule your complimentary Estate Planning Strategy Session with our office, to see whether this solution might be an effective addition to your other estate planning strategies.

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
Jun122017

How a Community Property Trust Could Save You From Heavy Taxation

When it comes to your family’s legacy, every dollar you can save from tax collection counts. One way to keep your assets out of the hands of the IRS is the formation of community property trusts.

How Does A Community Property Trust (CPT) Work?

Community Property Trusts (“CPT’s”) save you money on taxes by adjusting or “stepping up” the basis of the entire property after the death of one member of the couple. When you and your spouse invest in property jointly—be it real estate, stocks, or other assets—it becomes what’s called community property if you live within nine applicable states. However, there are two states, Alaska and Tennessee, where community property can be utilized via the creation of a community property trust, even if you do not live in Alaska or Tennessee.

When couples work with their estate planning attorneys to create these trusts, they can take advantage of a double step-up on the property’s basis. The basis of the property is stepped-up to its current value for both members of the couple’s halves. This is different from jointly owned property which only receives the step-up on one-half of the property. That means capital gains taxes are much lower because the taxed amount is reduced thanks to the stepped-up basis. Community property helps couples reduce their income taxes after the death of a spouse.

Getting To Know Your Basic CPT Terminology:

First, let’s start with a few quick definitions of the financial terms you will need to know to get a sense of whether a community property trust is right for you.

1. Community Property

Assets a married couple acquires by joint effort during marriage if they live in one of the nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

2. Community property trust:

A particular type of joint revocable trust designed for couples who own low-basis assets, enabling them to take advantage of a double step up. Tennessee or Alaska are the two places you can form these trusts.

3. Basics

What you paid for an asset. The value that is used to determine gain or loss for income tax purposes. A higher basis means less capital gains tax.

4. Stepped-up basis:

Assets are given a new basis when transferred by inheritance (through a will or trust) and are revalued as of the date of the owner’s death. The new basis is called a stepped-up basis. A stepped-up basis can save a considerable amount of capital gains tax when an asset is later sold by the new owner.

5. Double step-up:

Because of a tax loophole, community property receives a basis adjustment step-up on the entire property when one of the spouses dies. So, if a surviving spouse sells community property after the death of their spouse, the capital gain is based on the increase in value from the first spouse’s death (where the basis got adjusted on both spouses’ shares) to the value at the date of the sale. This allows the survivor to save money on capital gains tax liability.

One of the best parts of estate planning is that you get out so much more than you put in. In just a short amount of time, we can implement a community property trust that could save your spouse and family tens of thousands of dollars down the road. We are here to help make sure as little of your hard-earned property as possible ends up lost to taxation. Schedule your free consultation with us today, and set yourself up for a better tomorrow.

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
Jun092017

6 Life Events That Require An Immediate Estate Plan Update

Estate planning is the process of developing a strategy for the care and management of your estate if you become incapacitated or upon your death. One commonly known purpose of estate planning is to minimize taxes and costs, including taxes imposed on gifts, estates, generation skipping transfer and probate court costs. However, your plan must also name someone who will make medical and financial decisions for you if you cannot make decisions for yourself.  You also need to consider how to leave your property and assets while considering your family’s circumstances and needs.

Since your family’s needs and circumstances are constantly changing, so too must your estate plan. Your plan must be updated when certain life changes occur. These include, but are not limited to the following Six: 1) Marriage, 2) The birth or adoption of a new family member, 3) Divorce, 4) The death of a loved one, 5) A significant change in assets, and 6) A move to a new state or country.

1. Marriage: 

It is not uncommon for estate planning to be the last item on the list when a couple is about to be married - whether for the first time or not. On the contrary, marriage is an essential time to update an estate plan. You probably have already thought about updating emergency contacts and adding your spouse to existing health and insurance policies. There is another important reason to update an estate plan upon marriage. In the event of death, your money and assets may not automatically go to your spouse, especially if you have children of a prior marriage, a prenuptial agreement, or if your assets are jointly owned with someone else (like a sibling, parent, or other family member). A comprehensive estate review can ensure you and your new spouse can rest easy.

2. Birth Or Adoption Of Children Or Grandchildren: 

When a new baby is born, it seems like everything changes—and so should your estate plan. For example, your trust may not “automatically” include your new child, depending on how it is written. So, it is always a good idea to check and add the new child as a beneficiary. As the children (or grandchildren) grow in age, your estate plan should adjust to ensure assets are distributed in a way that you deem proper. What seems like a good idea when your son or granddaughter is a four-year-old may no longer look like a good idea once their personality has developed and you know them as a 25-year-old college graduate, for example.

 3. Divorce: 

Some state and federal laws may remove a former spouse from an inheritance after the couple splits, however, this is not always the case, and it certainly should not be relied on as the foundation of your plan. After a divorce, you should immediately update beneficiary designations for all insurance policies and retirement accounts, any powers of attorney, and any existing health care proxy and HIPAA authorizations. It is also a good time to revamp your will and trust to make sure it does what you want (and likely leaves out your former spouse).

 4. The Death Of A Loved One: 

Sometimes those who are named in your estate plan pass away. If an appointed guardian of your children dies, it is imperative to designate a new person. Likewise, if your chosen executor, health care proxy or designated power of attorney dies, new ones should be named right away.

 5. Significant Change In Assets

Whether it is a sudden salary increase, inheritance, or the purchase of a large asset these scenarios should prompt an adjustment an existing estate plan. The bigger the estate, the more likely there will be issues over the disposition of the assets after you are gone. For this reason, it is best to see what changes, if any, are needed after a significant increase (or decrease) in your assets.

 6. A Move To A New State Or Country

For most individuals, it is a good idea to obtain a new set of estate planning documents that clearly meet the new state’s legal requirements. Estate planning for Americans living abroad or those who have assets located in numerous countries is even more complicated and requires professional assistance. It is always a good idea to learn what you need to do to completely protect yourself and your family when you move to a new state or country.

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
Jun072017

3 Imprudent Ways to Leave Your Children an Inheritance

Estate planning [creating your Family Legacy Protection Plan] offers many ways to leave your wealth to your children, but it’s just as important to know what not to do. Here are some things that are all-too-common, but textbook examples of what not to do or try…

“Oral Wills”:

If you feel you have a good rapport with your family or don't have many assets, you might be tempted simply to tell your children or loved ones how to handle your estate when you’re gone. However, even if your family members wanted to follow your directions, it may not be entirely up to them. Without a written document, any assets you own individually must go through probate, and “oral wills” have no weight in court. It would most likely be up to a judge and the intestate laws written by the legislature, not you or your desired heirs, to decide who gets what. This is one strategy to not even try.

Joint Tenancy:

In lieu of setting up a trust, some people name their children as joint tenants on their properties. The appeal is that children should be able to assume full ownership when parents pass on, while keeping the property out of probate. However, this does not mean that the property is safe; it doesn't insulate the property from taxes or creditors, including your children’s creditors, if they run into financial difficulty. Their debt could even result in a forced sale of your property.

There’s another issue. Choosing this approach exposes you to otherwise avoidable capital gains taxes. Here’s why. When you sell certain assets, the government taxes you. But you can deduct your cost basis—a measure of how much you’ve invested in it—from the selling price. For example, if you and your spouse bought vacant land for $200,000 and later sell it for $315,000, you’d only need to pay capital gains taxes on $115,000 (the increase in value).

However, your heirs can get a break on these taxes. For instance, let’s say you die, and the fair market value of the land at that time was $300,000. Since you used a trust rather than joint tenancy, your spouse’s cost basis is now $300,000 (the basis for the heirs gets “stepped-up” to its value at your death). So, if she then sells the property for $315,000, she only pays capital gains on $15,000, which is the gain that happened after your death! However, with joint tenancy, she does not receive the full step-up in basis, meaning she’ll pay more capital gains taxes.

Giving Away the Inheritance Early:

Some parents choose to give children their inheritance early–either outright or incrementally over time. But this strategy comes with several pitfalls. First, if you want to avoid hefty gift taxes, you are limited to giving each child $14,000 per year. You can give more, but you start to use up your gift tax exemption and must file a gift tax return. Second, a smaller yearly amount might seem more like current expense money than the beginnings of your legacy, so they might spend it rather than invest. Third, if situations change that would have caused you to re-evaluate your allocations, it's too late. You don’t want to be dependent on them giving the cash back if you need it for your own needs. 

Shortcuts and ideas like these may look appealing on the surface, but they can do more harm than good. Consult with an estate planner to find better strategies to prepare for your and your families' future.

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
Jun042017

Does a Dynasty Trust Make Sense for Your Family?

Earlier this year, NBA team owner Gail Miller made headlines when she announced that she was effectively no longer the owner of the Utah Jazz or the Vivint Smart Home Arena. These assets, she said, were being placed into a family trust, therefore raising interest in an estate planning tool previously known only to the very wealthy—the dynasty trust.

Dynasty Trusts Explained:

A dynasty trust (also called a “legacy trust”) is a special irrevocable trust that is intended to survive for many generations. The beneficiaries may receive limited payments from the trust, but asset ownership remains with the trust for the period that state law allows it to remain in effect. In some states, a legal rule known as the Rule Against Perpetuities forces the trust to end 21 years after the death of the last known beneficiary. However, some states have revoked this limitation so, in theory, a dynasty trust can last forever.

Advantages and Disadvantages:

Wealthy families often use dynasty trusts as a way of keeping the money “in the family” for many generations. Rather than distribute assets over the life of a beneficiary, dynasty trusts consolidate the ownership and management of family wealth. The design of these trusts makes them exempt from estate taxes and the generation-skipping transfer tax, at least under current laws, so that wealth has a better ability to grow over time, rather than having as much as a 40-50% haircut at the death of each generation.

However, these benefits also come at the expense of other advantages. For example, since dynasty trusts are irrevocable and rely on a complex interplay of tax rules and state law; changes to them are much more difficult, or even potentially impossible as a practical matter, compared to non-dynasty trusts. Because change is very difficult or even impossible as a practical matter, the design of the dynasty trust needs to anticipate all changes in family structure (e.g. a divorce, a child's adoption) and assets (e.g. stock valuation, land appraisals), even decades before any such changes occur.

Is a Dynasty Trust Right for Your Family?

This trust usually makes the most sense for very wealthy families whose fortunes would be subject to large estate taxes. For multiple generations, it can defend estates from taxes, divorces, creditors or ill-advised spending habits. That said, if you desire to give your descendants more flexibility with their inheritance, a dynasty trust may not be right for you. To learn more about the pros and cons of this and other estate planning strategies, contact our office today.

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
May282017

Life Insurance and Estate Planning: Protecting Your Beneficiaries’ Interests

One misconception people have about life insurance is that naming beneficiaries is all you should do to ensure the benefits of life insurance will be available for a surviving spouse, children, or other intended beneficiary. Life insurance is an important estate planning tool, but without certain protections in place, there's no guarantee that your spouse or children will receive the benefit of your purchase of life insurance. Consider the following examples:

Example 1: David identifies his wife Betsy as the beneficiary on a life insurance policy. Betsy does receive the death benefit from the insurance policy, but when Betsy remarries, she adds her new husband’s name to the bank account where she deposited the death benefit. In so doing, she leaves the death benefit from David’s life insurance to her new husband, rather than to her children as she and David discussed before his death and which is what she indicates in her will.

Example 2: Dawn, a single mother, names her 10-year-old son Mark as a beneficiary on her life insurance. She passes away when he is twelve. The court names a relative as a guardian or conservator for Mark until he is of age. When Mark reaches his 18th birthday, his inheritance has been partially spent down on court costs, attorney’s fees, and guardian or conservator fees. Additionally, it hasn’t kept pace with inflation because of the restrictive investment options available to guardians or conservators. Dawn hoped the life insurance proceeds would be there for Mark’s college, but the costs and lack of investment flexibility mean there may not be as much as Dawn hoped.

Solution: Use a Trust as the Beneficiary on Your Life Insurance:

When estate planning, a common method for passing assets is by placing them in a trust, with a spouse or children as beneficiaries. The same approach may also be used for life insurance policy proceeds. You can designate the trust as the life insurance policy's beneficiary, so the death benefits flow directly into the trust. Two popular ways to accomplish this:

  1. Revocable Living Trust (RLT) Is the named beneficiary:

This option works well for those who have a modest-sized estate or who have already set up a trust. Naming your RLT as a life insurance beneficiary simply adds those death benefits to what you already have in trust, payable only to beneficiaries of the trust itself. The benefit of this approach is that it instantly coordinates your life insurance proceeds with the rest of your estate plan.

       2. Set up an Irrevocable Life Insurance Trust (ILIT):

For an added layer of protection, an ILIT can both own the life insurance policy and be named as the beneficiary. As The Balance explains, this not only protects the death benefits from potential creditors and predators, but from estate taxes as well.

With the estate tax exemption at $5.49 million per person in 2017, and a potential repeal on the legislative agenda of President Trump and the Republican Congress, you may not need estate tax planning. But everyone who’s purchased life insurance needs to take an extra step to ensure your loved ones' financial future. To discuss your best options for structuring your life insurance estate plan, schedule your complimentary Estate Planning Strategy Session with our office.

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
May262017

Building Asset Protection Into Your Estate Plan

Much of estate planning relates to the way a person’s assets will be distributed upon their death. But that’s only the tip of the iceberg. From smart incapacity planning to diligent probate avoidance, there is a lot that goes into crafting a comprehensive estate plan. One crucial factor to consider is asset protection.

One of the most important things to understand about asset protection is that not much good can come from trying to protect your assets reactively when surprised by situations like bankruptcy or divorce. The best way to take full advantage of estate planning concerning asset protection is to prepare proactively long before these things ever come to pass—and hopefully many of them won’t. First, let’s cover the two main types of asset protection:

Asset Protection For Yourself:

This is the kind that must be done long in advance of any proceedings that might threaten your assets, such as bankruptcy, divorce, or judgement. As there are many highly-detailed rules and regulations surrounding this type of asset protection, it’s important to lean on your estate planning attorney’s expertise.

Asset Protection For Your Heirs:

This type of asset protection involves setting up discretionary lifetime trusts rather than outright inheritance, staggered distributions, mandatory income trusts, or other less protective forms of inheritance. There are varying grades of protection offered by different strategies. For example, a trust that has an independent distribution trustee who is the only person empowered to make discretionary distributions offers much better protection than a trust that allows for so-called ascertainable standards distributions. Don’t worry about the complexity - we are here to help you best protect your heirs and their inheritance.

This complex area of estate planning is full of potential miscalculation, so it's crucial to obtain qualified advice and not solely rely on common knowledge about what's possible and what isn't. But as a general outline, let’s look at three critical junctures when asset protection can help, along with the estate planning strategies we can build together that can set you up for success.

  1. Bankruptcy:

It’s entirely possible that you’ll never need asset protection, but it’s much better to be ready for whatever life throws your way. You’ve worked hard to get where you are in life, and just a little strategic planning will help you hold onto what you have so you can live well and eventually pass your estate’s assets on to future beneficiaries. But experiencing an unexpected illness or even a large-scale economic recession could mean you wind up bankrupt.

Bankruptcy asset protection strategy: Asset protection trusts:

Asset protection trusts hold on to more than just liquid cash. You can fund this type of trust with real estate, investments, personal belongings, and more. Due to the nature of trusts, the person controlling those assets will be a trustee of your choosing. Now that the assets within the trust aren’t technically in your possession, they can stay out of creditors’ reach — so long as the trust is irrevocable, properly funded, and operated in accordance with all the asset protection law’s requirements. In fact, asset protections trusts must be formed and funded well in advance of any potential bankruptcy and have numerous initial and ongoing requirements. They are not for everyone, but can be a great fit for the right type of person.

       2. Divorce

One of the last things you want to have happen to the nest egg you’ve saved is for your children to lose it in a divorce. To make sure your beneficiaries get the parts of your estate that you want to pass onto them—regardless of how their marriage develops—is a discretionary trust.

 Divorce asset protection strategy: Discretionary trusts:

When you create a trust, the property it holds doesn’t officially belong to the beneficiary, making trusts a great way to protect your assets in a divorce. Discretionary trusts allow for distribution to the beneficiary but do not mandate any distributions. As a result, they can provide access to assets but reduce (or even eliminate) the risk that your child’s inheritance could be seized by a divorcing spouse. There are several ways to designate your trustee and beneficiaries, who may be the same person, and, like with many legal issues, there are some other decisions that need to be made. Discretionary trusts, rather than outright distributions, are one of the best ways you can provide robust asset protection for your children.

Family LLCs or partnerships are another way to keep your assets safe in divorce proceedings. Although discretionary trusts are advisable for people across a wide spectrum of financial means, family LLCs or partnership are typically only a good fit for very well-off people.

Judgment:

When an upset customer or employee sues a company, the business owner’s personal assets can be threatened by the lawsuit. Even for non-business owners, injury from something as small as a stranger tripping on the sidewalk outside your house can end up draining the wealth you’ve worked so hard for. Although insurance is often the first line of defense, it is often worth exploring other strategies to comprehensively protect against this risk.

  Judgment asset protection strategy: Incorporation:

Operating your small business as a limited liability company (commonly referred to as an LLC) can help protect your personal assets from business-related lawsuits. As mentioned above, malpractice and other types of liability insurance can also protect you from damaging suits. Risk management using insurance and business entities is a complex discipline, even for small businesses, so don’t only rely on what you’ve heard online or “common sense.” You owe it to your family to work with a group of qualified professionals, such as us as your estate planning attorney and an insurance advisor, to develop a comprehensive asset protection strategy for your business.

These are just a few ways we can optimize your estate plan to keep your assets protected, but every plan should be tailored to an individual’s exact circumstances. Contact our office so we can determine the best asset protection strategies for your 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
May242017

5 Reasons to Embrace the Emotional Side of Estate Planning

When you hear the phrase “estate plan,” you might first think about paperwork. Or your mind might land on some of the uncomfortable topics that estate planning confronts head-on: end-of-life decisions, incapacity, and your family’s legacy from generation to generation. Those subjects hit home for everyone.

But while that could feel like a reason to avoid estate planning, the emotional nature of these decisions is a reason to embrace the process with enthusiasm. Here are a few ways in which emotion in estate planning is a good thing:

  1. Estate Planning Creates Stability In Times Of Loss:

If you end up in a state of incapacity later in life, it’s guaranteed to be a difficult time for your family. If your estate plan doesn’t include detailed instructions for a trusted decision maker and an actionable long-term care plan, it’s guaranteed to be even worse. You can save your loved ones from the confusion about what to do and the pressure to make rushed choices if this occurs, allowing them to save their energy for processing the situation.

     2. Comprehensive Estate Plans Keep Emotional Matters Private

Detailed, trust-based estate planning with lifetime beneficiary directed trusts keeps your private matters out of the public eye. When your estate plan is scant—such as a simple “I love you” will—you’re running the risk of your estate going through court in a proceeding called probate. This means that choices become visible to those outside your inner circle. Because of the notice requirements, probate can also invite controversy and conflict which a private transfer would have avoided.

     3. Estate Planning Can Bring A Family Together:

Everyone has heard of a situation in which siblings argued over what their parents left them as beneficiaries. But the opposite is also quite true. When you get your family and other loved ones involved in your estate planning process, you gain a wonderful opportunity to show them how much you care. Creating your estate plan can strengthen the bonds of love in a family and serve as a reminder of those bonds for years to come.

     4. Your Estate Is About Much More Than Money:

Estate planning is about a whole lot more than just wealth distribution and taxes. During an estate planning session, we can talk about significant family heirlooms, your hard-won hobby collection, and other matters totally unique to your life. We can even dive deeply into the memories and intellectual property you want to make sure your beneficiaries receive, such as photos, art, and even recorded videos or audio files of family stories you’d like to share with future generations.

     5. An Estate Plan Means You’re Not Going It Alone:

You shouldn’t have to face trying times alone. Whether the estate in question is yours or a loved one’s, your estate planning attorney will have the answers. Let us take care of the nuts and bolts with regards to educating your appointed agents about their duties so you can know that your family will be in good hands if anything happens to you. The idea of setting everything straight on your own can be a stressful one, but these emotional decisions are much easier to make with a trusted advisor by your side.

We want you to feel ownership and investment in getting your estate plan to reflect who you are. Estate planning is an opportunity to look at some of life’s big questions and ultimately make sure your family feels your care for them through the choices you make. Schedule your free consultation with us today to see how we can create custom-made solutions that 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.

Friday
May192017

Avoid Living Probate: How to Keep Guardians and Conservators Out of Your Estate

While most proactive individuals know the importance of having a well-rounded estate plan, it is typically considered as something that will take effect after they have passed away. But in fact, there are many ways in which comprehensive estate planning can have a positive impact on your life while you are still around to reap the benefits.

Planning for Incapacity:

Most people who reach old age come to a point at which they are no longer able to handle all their affairs on their own. In many cases this incapacity is due to dementia or other cognitive impairments associated with the elderly. At that point, the decisions they’ve made with their estate planning attorney can have major repercussions on their lifestyle and the handling of their wealth.

Take Alex for example. Long before Alex retired from his long and successful career as an IT manager at a large corporation, he put a cursory estate plan in place with a will detailing who would get which of his assets upon his death. But, Alex didn’t update his plan as he aged. In his late seventies, he developed Alzheimer's and it became unclear to his family how to proceed with his medical care and wealth management. Since Alex did not formally choose an individual to be in control of his affairs in the event of incapacity, it falls upon the court to appoint a guardian or conservator. Unfortunately, that’s where things get complicated.

What is guardianship?

Guardianship goes by a few other names, so it’s important to get familiar with various terms used to indicate similar and somewhat overlapping concepts. The other terms you may hear include “conservatorship,” “plenary guardianship,” and “living probate.”

It’s important to note that these terms are used in slightly different manners from state-to-state, with some states using “guardian” and “conservator” interchangeably. Others maintain the distinction of a guardian being a person who makes decisions about medical care and living arrangements, whereas a conservator makes decisions about property and assets. In either case, the guardian or conservator is essentially a substitute decision maker that’s authorized by the court to make decisions on behalf of the incapacitated person.

3 Reasons You Should Avoid It:

In the process of living probate, the court tries to settle on solutions that will fit the incapacitated individual’s best interests. However, there is a much better way. Here are just a few of the reasons guardianship and conservatorship are not ideal fallbacks:

    1. Cost To put it simply, living probate is expensive. The legal fees associated with court-appointed attorneys representing incapacitated individuals can chip away at their estates very quickly. Living probate also brings your affairs into the public sector.

    2. Privacy Alex may not have wanted his family to have to experience the financial and emotional costs of his living probate court proceedings, but he may also have felt less than enthusiastic about his personal affairs being discussed in a public forum.

    3. Clarity In addition to being costly and a compromise of privacy, living probate is also full of guesswork. If Alex had assigned powers of attorney and established long-term care provisions in his estate plan, his affairs would be handled exactly as he wished in the event of his incapacity. When the court is involved, they usually apply default rules of state law, which means the legislature is essentially making some choices for you and your family.

    How to Structure Your Estate Plan:

    What does an individual like Alex need to do to avoid the chance of his family having to go through living probate? There are a few specific steps we can take to make in planning your estate to ensure your affairs never end up in a court-appointed guardian’s hands:

    1. Powers of Attorney:

    A complete estate plan includes named powers of attorney who will fulfill the roles of guardians and conservators in the event of your incapacity. The difference is that these individuals will be chosen by you rather than by the court. There are several different types of powers of attorney for specific purposes, such as a healthcare power of attorney or a general durable power of attorney, the latter of which controls the management of your finances.

           2. Long Term Care Planning

    Although you may never need long-term care, building a strategy for it into your estate plan will allow you to relax knowing that you’ll receive long-term care according to your wishes if that becomes necessary. This type of planning also helps protect the assets in your estate plan from being used up on medical expenses before going to your beneficiaries.

    Avoiding guardianship and conservatorship through living probate is a relatively pain-free process if handled well ahead of time. Get in touch with us today to go over the parts of your estate plan that may need amending to give you and your family the best possible outcomes. We are here to help and can quickly get your estate plan in optimal shape.

    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
    May182017

    Do It Now: Name a Guardian for Your Minor Child

    We know it’s hard. Thinking about someone else raising your children stops us all in our tracks. It feels crushing and too horrific to consider. But you must. If you don’t, a stranger will determine who raises your children if something happens to you—your child’s guardian could be a relative you despise or even a stranger you’ve never met.

    Due to the importance of choosing an appropriate Guardian, and our experience seeing firsthand the difficulties people go through determining who to name—we have created a step-by-step Guide: How To Choose Your Child’s Guardian. To obtain your free copy, click here.

    No one will ever be you or parent exactly like you, but there is someone who could muddle through and provide for your children’s general welfare, education, and medical needs. Parents with minor children need to name someone to raise them (a guardian) in the event both parents should die before the child becomes an adult. While the likelihood of that happening is slim, the consequences of not naming a guardian are more than intense.

    If no guardian is named in your will, a judge—a stranger who does not know you, your child, or your relatives and friends - will decide who will raise your child. Anyone can ask to be considered, and the judge will select the person she deems most appropriate. Families tend to fight over children, especially if there’s money involved - and worse - no one may be willing to take your child; if that happens, the judge will place your child in foster care. On the other hand, if you name a guardian, the judge will likely support your choice.

    How to Choose a Guardian:

    Your child’s guardian can be a relative or friend. Here are factors our clients have considered when selecting guardians (and back up guardians).

    1. How well the child and potential guardian know and enjoy each other
    2. Parenting style, moral values, educational level, health practices, religious/spiritual beliefs
    3. Location - if the guardian lives far away, your child would have to move from a familiar school, friends, and neighborhood
    4. The child’s age and the age and health of the guardian-candidates:
    •  Grandparents may have the time, and they may or may not have the energy to keep up with a toddler or teenager
    •  An older guardian may become ill and/or even die before the child is grown, so there would be a double loss
    • A younger guardian, especially a sibling, may be concentrating on finishing college or starting a career.

          5. Emotional Preparedness:

             a. Someone who is single or who doesn't want children may resent having to care for your   children.

             b. Someone with a houseful of their own children may or may not want more around.

     

    WARNING:

    Serving as guardian and raising your child is a big deal; don’t spring such a responsibility on anyone. Ask your top candidates if they would be willing to serve, and name at least one alternate in case the first choice becomes unable to serve.

    Who’s in Charge of the Money?

    Raising your child should not be a financial burden for the guardian, and a candidate’s lack of finances should not be the deciding factor. You will need to provide enough money (from assets and/or life insurance) to provide for your child. Some parents also earmark funds to help the guardian buy a larger car or add onto their existing home, so there’s plenty of room for extra children.

    Factors to consider:

           1. Naming a seperate person to handle this money can be a good idea. That person would be a guardian of the estate or a trustee, but not guardian of the children.

           2. However, having the same person raise the child and handle the money can make things simpler because the guardian would not have to ask someone for the money.

           3. But the best person to raise the child may not be the best person to handle the money and it may be tempting for them to use this money for their own purposes.

     Compromise Will Likely be Necessary:

    Naming a guardian is a difficult decision for most parents. Keep in mind that this person will probably not raise your child because odds are that at least one parent will survive until the child is grown. By naming a guardian, however, you are being responsible and planning for a bad—but avoidable—situation arises. It’s important to realize that no one besides you will be the perfect parent for your child, so typically this means making compromises in some areas. Select the person you think will muddle through the best.

     Let’s Continue this Conversation:

    We know it’s not easy, but don’t let that stop you. We’re happy to talk this through with you and legally document your wishes. Know that you can change your mind and select a different guardian anytime you’d like. You are a parent and your job is to provide for and protect your children, so let’s do this—together. To get started, download your free copy of our Guide: Choosing Your Child’s Guardian. Next, contact our office to schedule your free consultation and we’ll get your children protected.

     

    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
    Mar012017

    How to Choose Your Trustee

    While the term fiduciary is a legal term with a long history, it very generally means someone who is legally obligated to act in another person’s best interests. Trustees, executors, and agents are all examples of fiduciaries. When you pick trustees, executors, and agents in your estate plan, you’re picking one or more people to make decisions in your and your beneficiaries’ best interests and in accordance with the instructions you leave. Luckily, understanding the basics of what each of these terms means and what to consider when making your choices can make your estate plan work far better.

     Trustee:

    A revocable living trust is often the center of a well-designed estate plan because it is simply the best strategy for achieving most individuals’ goals. In a revocable living trust, your successor trustee will be responsible for making sure your wealth is passed on and managed in accordance with your wishes after your death or incapacity. Like each of the following individuals involved in your estate planning, it’s best to have a trusted person or financial institution carry out this vitally important role.

     It’s important to make the language in your trusts as clear as possible so that your trustee knows exactly how to handle various situations that can arise is asset distribution. Lastly, your trustee will only control the assets contained within the trust — not the rest of your estate, another reason that completely funding yourliving trust is incredibly important.

     Powers of Attorney:

    Your power of attorney is the document in your estate plan that appoints individuals to make decisions on your behalf if you become unable to do so yourself. There are a few different types of powers of attorney, each with their own specific provisions. There is quite a wide range of situations covered by various powers of attorney, and we can help you decide which types you’ll need based on your current situation and future goals. Here are two common types to cover in your estate plan:

    ●      Financial Powers of Attorney :

    Financial powers of attorney grant individuals the ability to take financial actions on your behalf such as purchasing life insurance or withdrawing money from your accounts to cover your costs. In most cases, powers of attorney are granted to individuals appointed as agents. However, especially regarding financial decisions, an institution like a trust company can also be named.

     ●     Advance Health Care Directive:

    Your Advance Health Care Directive, also referred to as your Health Care Power of Attorney, covers a wide range of specific actions that can be taken regarding an individual’s medical needs such as making decisions about the types of care you receive. For example, a health care power of attorney can be the doctor you most trust to gauge your mental competency.

     Executor:

    Your executor is the person who will see your assets through probate if necessary and carry out your wishes based on your last will and testament. Depending on your preferences, this may be the same person or institution as your trustee. You might also see this position designated as personal representative, but it means the same thing.

    Many individuals chose to go with a paid executor. This is someone who doesn’t stand to gain anything from your will, and is often the best choice if your estate is large and will be divided among many beneficiaries. Of course, family or friends can also serve, but it’s important to consider the amount of work involved before placing this burden on your family or friends. 

    Being an executor can be hard work and may have court-ordered deadlines, so it’s crucial to pick someone you know will be up for the job. They may need to hire a CPA to help sort out your taxes or a lawyer to assist in the process or to aid in dispute resolution. Therefore, choosing a spouse or someone else intimately involved in your life may not always be the wisest option, as they may not be up to the task at the time.

     Get in touch with us today:

    Let us help you make the process of picking your trustee, powers of attorney, and executor as smooth and headache-free as possible. Once you have these choices in place, you’ll be able to rest easy knowing that your estate plan is in good hands no matter what life brings. 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
    Feb262017

    Better to Play it Safe: Proactive Estate Planning & Cognitive Impairment

    Most financially savvy individuals begin planning their estate when they’re in peak mental shape. The idea that this might change at some point in the distant future is an unpleasant one, and they would rather go about their estate planning as if they’ll be as sharp as a tack late into their golden years. Unfortunately, this common approach of ignoring a potential problem and hoping it simply won’t happen can leave a giant hole in your estate plan. Read on to find out that this common hole can be more easily filled than you might think. 

    Expect The Best, But Plan for The Worst:

    The reality is that an individual’s chances of experiencing some form of cognitive impairment rise with age. While it’s never certain whether cognitive impairment will occur, smart estate planning means factoring it in as a very real possibility.

    As the huge baby boomer generation transitions from the workforce and begins to make their way into retirement, cases of Alzheimer's are expected to spike from the current 5.1 million to 13.2 million as soon as 2050. Alzheimer’s is just one of several cognitive impairment conditions along with dementia and the much more common mild cognitive impairment, or MCI, which is often a precursor to those more serious ailments.

    As U.S. life expectancies increase, the chances of living with cognitive impairment increase as well — with at least 9.5 percent of Americans over 70 experiencing it in one form or another.

    No matter your age or family history, cognitive impairment can affect anyone although it’s widely acceptedto affect mostly older adults. As you implement or revise your estate plan, it is well worth the effort to plan for this potential. Luckily, estate planning attorneys have developed good solutions to handle this circumstance and can help guide you on the best way to protect yourself and your family.

     An Easily-Avoidable Estate Planning Mistake:

    Consider Ashley’s story. A successful real estate agent with a stellar career in her hometown of Kalamazoo, MI, Ashley begins planning her estate in her mid-thirties.

    She partners with an estate planning attorney, and together they draft a revocable living trust with Ashley’s preferred beneficiaries and charities in mind, figure out guardianship for her two sons in case she and her husband pass suddenly, and settle on an appropriate beneficiary for her life insurance policy. Now that she knows where her assets will go after her death, Ashley rests easy assuming there’s nothing more that needs doing in her estate plan.

    Save Your Family From Obstacles and Conundrums:

    But forty years down the road, Ashley’s children realize her MCI is developing into Alzheimer’s. Although she’s occasionally visited with her attorney to adjust her plan, she never added any provisions for how she wanted her children and other guardians to handle a situation like this. Here’s where things get complicated.

    Ashley did not work with her estate planning attorney to put disability provisions into her trust and never worked with an insurance professional to purchase adequate income insurance or long-term care insurance. The care she requires to live her best life possible with cognitive impairment doesn’t come cheap. Those mounting care costs will likely quickly erode Ashley’s estate. As a result, her estate plan may no longer work as intended, since it no longer lines up with her actual asset portfolio.

    But since Ashley does not have the ability to rework her estate plan in her current mental state, her family is left with the burden of figuring out what to do while navigating a complex and bureaucratic legal system in the guardianship or conservatorship court. No one in the family really knows what Ashley’s wishes are regarding both serious medical decisions and financial changes. All Ashley’s family wants is to see her enjoying her remaining years in peace and security, but they are now tasked with using guesswork to make difficult choices on her behalf while a guardianship or conservatorship court watches every move.

    Give Us a Call Today:

    Factoring the potential for cognitive impairment into your estate plan doesn’t have to be a headache. In fact, a little effort now by legally designating who you want to be in charge and what you want them to do can have a wonderful impact on you and your family later on. We can work together to ensure your estate plan is ready for whatever life throws your way. 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
    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.

     

    Friday
    Feb172017

    Why Factoring Long-Term Care Into Your Estate Plan Pays Off

    For most people, thinking about estate planning means focusing on what will happen to their money after they pass away. But that misses one pretty significant consideration: the need to plan for long-term care.

    The last thing any of us want to contend with when a health issue arises later in life is having to throw together a hasty estate planning solution in the face of mounting medical costs. Your best defense is careful planning with the help of a trusted expert.

    Why it’s so important to plan for long-term care:

    While only about 19 percent of current U.S. residents will need to reside under long-term care for a period of over three years, that number sharply increases when factoring in nursing home stays of a shorter duration — which will still have a substantial impact on your estate.

    Whether the care you need takes place in a nursing home, assisted living facility, or with an in-home provider, the costs can mount with alarming speed. For example, national average rates for assisted living hover around $3,500 per month. As those costs add up, you could see your assets dwindle much sooner than you’d hoped. Luckily, estate planning attorneys can help in several ways.

    What to go over with your estate attorney:

    If long-term care isn’t factored into your estate plan, you are probably not looking at a truly realistic and accurate representation of your assets. Talk to your estate planning attorney about the following factors in order to get on the right track:

    1. Set reasonable expectations for long-term care:

    It’s impossible to know what life will bring, but we can certainly make educated guesses. For example, are there any major diseases that run in your family? There is a chance you will have the good fortune of staying healthy well into your golden years, but estate planning is an aspect of your financial life in which it’s helpful to protect yourself against worst-case scenarios.

    In the estimated likelihood that you will require such care, at what age could you reasonably predict you’ll need it? Do you have any current health conditions to consider? Exploring these possibilities may not be the most enjoyable exercise, but it’s far better than facing the reality of long-term care with no plans in place.

    2. Consider a long-term care insurance policy:

    As Medicare or standard health insurance may not cover your costs, a long-term care insurance policy is one way to protect yourself against draining your financial assets. Ask for resources for finding an affordable premium that isn’t likely to increase prohibitively over time. Begin this process as soon as possible, as your premium will be lower the younger you are when you apply.

    Another potential oversight is assuming your long-term care will be covered by Medicaid. Discuss it as an option to determine your qualifications and get authoritative insights about the specificities of your unique financial situation in terms of Medicaid benefits.

    3. Get Smart About Living Wills and Trusts:

    To best prepare your loved ones for complex medical decisions, go over advance directives. In addition, discuss options for setting a revocable living trust, and possibly one or more irrevocable trusts, like a life insurance trust or a charitable remainder trust, as part of your long-term care planning.

    It’s also important to create a plan that allows someone you trust to access and utilize your financial resources for your benefit in the event of unforeseen medical circumstances. One common mistake is tying up assets in investments that lack liquidity when you need them most. For example, money locked into annuities can result in a fee for early withdrawal. Working with a team of that includes an estate planning attorney, financial advisor, and insurance professional can provide you and your family with the best overall solution.

    Take the time now to talk to an estate planning attorney about the best ways to maintain financial security in tandem with the demands of long-term care. Even if you don’t end up needing long-term care in you lifetime, you can enjoy the peace of mind knowing you’ll be covered.

    The process of completing a long-term care plan may sound daunting, but we’re here to help you by making it a streamlined experience—simply get in touch with us today and let us put you in a more secure position for the future. 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.