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Entries in Inheritance (80)

Wednesday
Aug022017

5 Things To Make Your Estate Plan Yours

You intend to pass along your wealth through your estate plan, but what about your wisdom? Ensuring you accomplish both calls for a family meeting to have a conversation about your money, your legacy, and your core principles. 

Most families lead far-flung and busy lives, meaning the only time they see one another face-to-face is around the dinner table during a handful of major holidays. The estate planning process is a perfect opportunity to bring everyone together outside of those scheduled occasions—even if a child or grandchild has to attend via video chat. 

Working with your estate planning attorney in collaboration any other advisors you have in your corner can make this legacy-enriching process seamless and genuinely enjoyable. But bringing your family and your professional advisors into the conversation is better yet, as they’ll get to learn new things about you and get to share stories and memories of their own. Here are just a few of the topics you’ll want to go over during your Family Meeting:

1. Your Rich Life Story:

You may think it’s all been said before, but this is the perfect time to schedule or conduct recording sessions about your own personal life narrative. These recordings will be treasured while you’re still here and long after you’re gone. Allow your family members to ask about particularly fond memories of yours, knowing that you’re creating a time capsule of sorts that will contain the uniqueness of your personality and the experiences that shaped you into the person you are today. And perhaps most importantly, share the valuable lessons you’ve learned from your experiences. Your family will be better for it. 

2. How You’d Like To Be Honored:

Estate planning involves considering some weighty decisions when it comes to long-term care, powers of attorney, and other situations that may arise should you become mentally incapacitated. Although these are not the sunniest of topics, it’s important to express to your family why you’re opting for the choices you feel most aligned with. This will ease those processes for your loved ones, should these things ever come to pass. And once you get this part of the conversation covered, there are better things to come.

3. Your Family Tree:

Your family might be curious about more than just your own life story. Take this time to go over your family tree and answer questions the younger members of your family don’t know the answers to about your heritage. Getting a who’s who on paper and in a digital format is an excellent gift to your beneficiaries, as they’ll be able to reference it and build upon it throughout the years. 

4. Significant Heirlooms:

Every family has heirlooms, and every piece tells a story. It’s common for estate plans to contain physical objects that matter dearly to their owners, such as furniture, garments, jewelry, hobby collections, and memorabilia. Keeping the story of the object alive is more important than transferring its monetary value to the next generation. Additionally, it is these items of tangible personal property that often lead to estate litigation. Hence, it is crucial to ensure that how these items pass upon death are clearly stated.

5. Your Core Values:

Your estate plan can be customized to include specific language that carries your values along with it while still leaving room for your beneficiaries to grow and explore on their own terms. Educational, incentive, and charitable trusts are just a few methods available to you to express your values through your estate plan

You know there’s much more to you than the wealth you’ve accumulated in your life. Likewise, your estate plan is about more than just your financial worth. After all, what’s passed down from generation to generation amounts to something far greater than numbers on paper.  

We’d love to help you build your estate plan to include a balanced representation of who you are and what you believe. We’re here to help coach you through the process of going over these topics with your family and weaving them into your trusts and other critical documents. Give us a call today to set up a time, and we’ll get started right away.

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
Jul282017

Money Isn’t Everything—Passing Your Stories and Values to the Next Generation

Money may be the most talked about wealth contained within a person’s estate, but the riches of their experience and wisdom can mean even more to family members down the line. Reinforcement of family traditions can be built into your estate plan alongside your wishes regarding your money, property, and belongings. After all, what really makes a family a family is its values and traditions—not the way its finances read on paper. 

It's an excellent idea to hold a family meeting in which you discuss the sorts of things that matter to you most. In addition to the value of sharing your wisdom, you can also make it more likely that your heirs will handle their inheritance correctly if they understand the reasons behind your choices. This is just one of the many reasons to have a family discussion about your legacy and your estate plan. 

How To Tell Your Story Through Your Estate Plan:

It’s a delight to get to hear your elders’ stories of their fondest memories and wildest adventures, as well as the struggles they overcame to get the family where it is today. This wisdom provides meaning for a financial legacy that otherwise might just be viewed as a windfall. As part of your estate and legacy planning, you can decide to record your own personal history. Here are a few ways:

1. Audio Files: With the broad range of audio formats available today, you can record in the way that’s easiest for you - anything from a handheld cassette recorder to the Voice Memos app on your iPhone. There are some easy-to-use digitizing services that can compile your stories into audio files to make available to your family and descendants. 

2. Video Files: The same goes for home movies and other video recordings. Older film formats can be easily digitized and organized along with the videos from your phone. Today’s technology also makes it easier than ever to add narration (and context) to a video, making the story all the richer.

3. Photo Albums: Many families have prized photo collections that catalog generations. It’s a tragedy when something like this is lost in a fire or extreme weather event, or even misplaced in a move. Creating a digital database is a favor to your family in more ways than one: Not only will they have access to these memories at any time, they can also feel secure knowing that these family treasures won’t be lost anytime soon and that multiple copies can be made for the different branches of the family.

4. Letters and Other Writings: If you enjoy writing, you can also include handwritten or typed letters or stories to your family members in your legacy plan to be received and read at the time of your choosing. You can also include past letters and postcards that might be tucked away in the attic. It’s not only a personal delight to relive the memories of the past by reviewing your old letters and postcards, but it's also a great way for younger generations to get to know and sincerely appreciate your life journey and legacy.

Passing Your Values To The Next Generation:

Some estate planning strategies blend your finances and personal values. For example, we might have a discussion on some of your core values in life. Whether you feel most passionate about the need for your beneficiaries to travel and gain worldly experience, continue a unique family tradition like sailing or astronomy, or support meaningful charitable or spiritual work, we can draft trusts that contain funds specifically set aside for these endeavors. 

1. Educational Trusts: If you value education, you might want to set up a trust to fund undergraduate and graduate degrees, med school, study abroad, or even community classes for your family’s future generations. Because of sharp increases in educational costs within the U.S., your grandchildren will likely stand to benefit immensely from an educational trust. 

 2. Incentive Trusts: Similar to the way educational trusts set aside wealth for the purpose of funding a beneficiary’s schooling, incentive trusts can also help steer the course of your descendants’ lives be encouraging some paths while discouraging others. For example, an incentive trust could contain instructions for disbursements to be released when the beneficiary is working a part or full-time job. Or if family vacations were an important part of your upbringing, you could set aside funds specifically for your grandchildren to experience the same wonderful tradition you enjoyed.

 3. Charitable Trusts or Foundations: Charitable trusts or foundations establish a family legacy of supporting a particular cause, but they also have the added financial benefit of reducing income and estate taxes. They are an excellent way to help a charitable organization that’s central to your core values and make your name associated with that philanthropic effort for generations to come. 

Are you curious about exploring a few of these options in your estate and legacy plan? Give us a call today, and we can schedule an appointment to go over your many options for showcasing your memories and values in a long-lasting way that truly benefits your heirs. 

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
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. 

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.


 

 

Thursday
Jun222017

Tools for Passing Your Legacy to the Next Generation

You come into the world a blank slate, and as you grow, you gain wisdom. You've planned your estate to leave physical assets to beneficiaries, so now think about leaving them something that’s just as important but less tangible: the hard-won wisdom you’ve accumulated over your life. Let your family and friends learn from your mistakes, and profit from your successes.

Living and Other Trusts:

You probably know that a fully-funded living trust avoids probate. If you have concerns about some of your beneficiaries' ability to handle a windfall, speak to an estate planning lawyer about some options you can include in your trust. For example, one option is an incentive trust, which pays out money when the beneficiary meets certain conditions, such as finishing college or staying clean and sober. An incentive trust combined with a personal statement or video explaining why you’ve put conditions on the beneficiary’s inheritance helps to pass along your wisdom to the next generation. You can let your heirs know that you love and care about them, and that’s why you took the actions you did with the trust. While an heir may resent the limitation at the time, he or she may look back and realize you did a wise thing, especially after they’ve lived and incorporated your wisdom into their life.

Video Wills:

Video wills aren’t legally binding since the law requires that a will be a written document, but that doesn’t mean you can’t make a video regarding your will as an adjunct to the written will. For example, suppose you left art, jewelry or other valuables to specific family members or friends. You might want to explain why you chose to leave that particular item to that person and perhaps share the article’s meaning to you on the video. (Hint: If you think one child might resent the giving of an item to a sibling, this can be a good way to explain your intentions.) Some attorneys use video to help prove you were competent if it includes footage of you signing of the written will. Whether this is a good option depends on state law and your circumstances, so this may not be recommended for you.

And of course, you can (and should!) create a personal video that has nothing to do with a will. If you have a family video collection, consider making a new video including favorite snippets and commenting on the earlier days. Time gives perspective and appreciation—and those gifts are priceless. The memories and meaning that these videos have can be memorialized for generations to come.

The Old-Fashioned Way:

Scrapbooking is a time-honored pastime that’s recently experienced a renaissance. Pass on journals, photos, newspaper clippings and other ephemera via scrapbooks or albums. You can leave specially constructed letters inside for your family and loved ones. While only one family member can have the physical scrapbook at any one time, digital scrapbooking tools are fast-evolving and now allow you to create either a digital version or multiple print copies so that all your loved ones can share your life and thoughts. 

Charitable Planning:

Many of us have a favorite charity or cause we support during life. Estate planning offers many opportunities to continue to support these organizations via planned charitable giving, both during your lifetime and after your death. An estate planning attorney can discuss charitable planning options best suiting your situation. Two examples are the Charitable Lead Trusts which can provide an immediate charitable gift and Charitable Remainder Trusts which can support a loved one (or you) for a period of time with money eventually going to your chosen charity.  Leaving some of your estate to charity shows the next generation what mattered to you, and it encourages them to follow in your footsteps. While your heirs may not choose to fund the same organizations, you are setting an example of the importance of financially supporting charities close to your heart.

Business Succession Planning:

If you own your company, business succession planning is crucial. Formal business succession planning, however, is just as important as your personal estate planning. It can make the difference in whether the company succeeds or fails, and the financial future of your family. But along with proper succession planning, a written statement or video to your board or employees helps enshrine your business’ mission, values, and tradition.

Leave a History:

When you’re bequeathing antiques, art, jewelry and the like, leave the beneficiary a history of the piece and why it was important to you. If it’s a family heirloom, write down whom it has passed to, from generation to generation. It’s possible the family ties outweigh the actual value of the item. Sharing these stories will make a family heirloom cherished all the more. 

Regardless of how you’re leaving your memories and the meaning behind them to the next generation, you want to make sure that your family avoids unnecessary hassle and expense. Contact us today to discuss how we can implement a plan to leave the wisdom and wealth you’ve accumulated to 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. 


Friday
Jun162017

Helping a Loved One Who Struggles with Addiction—Your Family Trust

Substance addiction is by no means rare, impacting as many as one in seven Americans. Because of its prevalence, navigating a loved one’s addiction is a relatively common topic in everyday life. But you should also consider it when working on your estate planning. Whether the addiction is alcoholism, drug abuse, or behavioral like gambling, we all want our loved ones to be safe and experience a successful recovery.  A properly created estate plan can help.

The idea that money from a trust could end up fueling those addictive behaviors can be a particularly troubling one. Luckily, it’s possible to frame your estate planning efforts in such a way that you’ll ensure your wealth has only a positive impact on your loved one during their difficult moments. 

Funding For Treatment:

One of the ways your trust can have a positive influence on your loved one’s life is by helping fund their addiction treatment. If a loved one is already struggling with addiction issues, you can explicitly designate your trust funds for use in his or her voluntary recovery efforts. In extreme cases where an intervention of some sort is required to keep the family member safe, you can provide your trustee with guidance to help other family members with the beneficiary’s best interest by encouraging involuntary treatment until the problem is stabilized and the loved one begins recovery.

Incentive Trusts:

Incentive features can be included in your estate planning to help improve the behavior of the person in question. For example, the loved one who has an addiction can be required to maintain steady employment or voluntarily seek treatment in order to obtain additional benefits of the trust (such as money for a vacation or new car). Although this might seem controlling, this type of incentive structure can also help with treatment and recovery by giving a loved one something to work towards. This approach is probably best paired with funding for treatment (discussed above), so there are resources to help with treatment and then benefits that can help to motivate a beneficiary.

Lifetime Discretionary Trusts:

Giving your heirs their inheritance as a lump sum could end up enabling addiction or make successful treatment more difficult. Luckily, there’s a better way.  Lifetime discretionary trusts provide structure for an heir’s inheritance. If someone in your life is (or might eventually) struggle with addiction, you can rest easy when you know the inheritance you leave can’t be accessed early or make harmful addiction problem worse. 

Of course, you want to balance this lifetime protection of the money with the ability of your loved one to actually obtain money out of the trust. That’s where the critical consideration of who to appoint as a trustee comes in. Your trustee will have discretion to give money directly to your beneficiary or pay on your loved one’s behalf (such as a payment directly to an inpatient treatment center or payment of an insurance premium). When dealing with addiction, your trustee will need to have a firm grasp of what appropriate usage of the trust’s funds looks like. Appointing a trustee is always an important task, but it’s made even more significant when that person will be responsible for keeping potentially harmful sums of money out of the addicted person’s hands. 

Navigating a loved one’s addiction is more than enough stress already without having to worry about further enablement through assets contained in your trust. Let us take some of the burden off your shoulders by helping you build an estate plan that positively impacts your loved one and doesn’t contribute to the problem at hand. That way, you can go back to focusing your efforts on the solution. Contact our office today to see how 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. 


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. 

Friday
Jun022017

Safeguarding Your Estate Plan Against Three Worst-Case Scenarios

There is no such uncertainty as a sure thing. 

                                     –Robert Burns

Even with an estate plan, things can always happen that may cause confusion for the estate–or threaten the plan altogether. Below are three examples of worst-case scenarios and ways to demonstrate how a carefully crafted plan can address issues, from the predictable to the total surprise.

Scenario 1: Family Members Battle One Another:

Despite your best intentions, what happens if the people you care about most get into a knockdown, drag-out fight over your estate? Disputes over who should get what assets, how to interpret an unclear instruction from you, or how loved ones should manage your business can open old wounds.

Lawsuits between family members can drain your estate and tarnish your legacy. Family infighting can lead to less obviously dramatic problems as well. For instance, let’s say you name your daughter as the executor, and she holds a deep grudge against your youngest son. Your daughter cannot do something as drastic as rewriting your will to leave him out. However, she could drag her feet with the probate court, interpret the will “poorly” (unfairly privileging herself and your other son over your youngest), or engage in other shenanigans. In each of these cases, your youngest son would have to hire a lawyer and potentially get involved in a protracted legal battle. This is a bad outcome for everyone.

To prevent such scenarios, consider using an impartial (e.g. third party) trustee or executor. Moreover, speak with a qualified estate planning attorney to prepare for likely future conflicts among family members.

Scenario 2: Both Spouses Die Simultaneously:

Many estate plans transfer assets to a surviving spouse, but what happens if both spouses die at or near the same time? This situation may be even more complicated if both spouses have separately owned assets or if the size of the estate is significant. In that case, asset distribution may depend on who predeceased whom, the amount of estate tax paid, and other factors. There are, however, ways to address this in an estate plan making it easier for your family to understand your intent, including, as recently discussed in Motley Fool:

· A simultaneous death clause that automatically names one spouse as the first to die;

· A survivorship deferral provision, delaying transfer of assets to a surviving spouse, thus preventing double probate and estate taxes; and

· A so-called “Titanic” clause that names a final beneficiary in the event all primary beneficiaries die at once.

Scenario 3: Passing Away Overseas:

Expatriates may require specific expertise when creating an estate plan. If a death occurs outside the U.S., foreign laws may conflict with provisions of an American-made estate plan. As such, a plan may need to be reviewed both for the US and other nations’ laws. If you intend to live abroad for an extended period, as discussed in this New York Times article, it may be smart to draw up a second will consistent with those nations' laws, too. However, the starting point is completing your estate planning (will, trust, and other documents) here in the United States first.

If you have concerns as to whether your current estate plan is safeguarded against these three worst-case scenarios or anything else you might be worried about, 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.


 

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
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.


 


 

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.

 

Wednesday
Feb222017

Got Stuff? George Carlin Says You Need An Estate Plan!

George Carlin would have been a great pitchman for estate planning. You may remember his stand-up routine on “stuff.” We all have stuff, and we're quite particular about our stuff. We move it around with us, it's hard for some of us to get rid of it, and some of us don't like our stuff mixed up with other people's stuff.

During your lifetime, you collect a lot of stuff, some of it valuable and some of it not. But because it's your stuff, it means something to you. You already know you can't take it with you when you die, so there must be some way of distributing your stuff to other people.

Normally, you want your stuff to go to people you care about—your family and special friends, sometimes a worthwhile cause. And you may want certain people to have certain things to remember you by.

Document Instructions for Your Stuff:

When you die, all your stuff, no matter how valuable or invaluable it is, is called your "estate." In the simplest terms, an “estate plan” is your instructions for getting your stuff to the people you want to have it after you die.

Important Legal Mumbo Jumbo: 

An estate plan must meet certain legal requirements, including that it must be written down, it must be signed by you, and it must be witnessed by other people who see you sign it. Your estate plan may be very simple, or it may be more complex, depending on how much stuff you have, how long you want your stuff to provide for the people you care about, and when you want them to receive your stuff. For example, you'd probably want to wait a few years before that cute two-year-old receives grandpa's antique pocket watch.

How Do You Get an Estate Plan? 

You decide who you want to get your stuff and when you want them to get it. Your attorney then puts your instructions into a legal document called a will or trust. (There are distinct advantages to using a trust, but we'll save that discussion for another time.) Also, while you can legally write your own, you have a much better chance of your estate plan working if you have an experienced attorney do it for you. To be frank, laypersons mess it up all the time.

What Happens if I Just Don’t Get Around to It?

What if you die and you don't have an estate plan? Well, there still must be a way to get your stuff to other people, so the state in which you live has a plan waiting if you don't have one. The only problem is that you won't have any say in who gets your stuff, and someone might get left out, and, your stuff may go to a stranger—some “heir at law”—that you don’t even know.

Example 1: If more than one of your relatives want the same part of your stuff, that can get messy and expensive… and a lot of your stuff will be used to pay the courts and attorneys to sort it all out. (Happens all the time.) 

Example 2: If you're not married and you want your significant other to get some of your stuff when you die, you'd better get your plan in place, or it just won't happen. Under the state's plan, your stuff will go to your blood relatives. Period.

 Example 3: If you're married and you've got kids, don't be too sure that your spouse is going to get all your stuff. Your kids will probably get their share of your stuff, which means your spouse may not get enough of your stuff to live on.

By the way, if your stuff includes kids, then you've got to have a plan. Otherwise, the court will decide wh will raise them if something happens to both parents.

Scary thoughts? You bet!

The Bottom Line:

If you're responsible enough to have your own stuff, you need to be responsible for making sure what will happen to it after you're gone. Let’s make sure you do it right; call the office now and we’ll help you translate your plans for your stuff into a legally binding document. 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
Feb082017

A Trust—the Best Option for Avoiding Probate

Ideally, when someone passes away, the paperwork and material concerns associated with the estate are so flawlessly handled—usually thanks to excellent preparation—that they fade into the background, allowing the family to grieve and remember in peace.

In fact, the whole business of estate planning—or at least a significant piece of it—is concerned with ease. How can assets and legacies be transferred to the next generation in a harmonious, stress-free, fair process?

To that end, one primary goal of many people is to avoid the complications and costs involved with probate.

There are many “tools of the trade”, that a qualified attorney can use to keep your assets out of probate—for example, establishing joint ownership on bank accounts and real estate titles, designating beneficiaries for life insurance policies and certain accounts, and so on. However, setting up a revocable living trust is quite often the best, most comprehensive option for avoiding probate. Let’s discuss why this is true.

What is a trust?

Often touted as an alternative to a will, a trust is a legal structure that permits management of your assets by a trustee on behalf of your beneficiaries. A living trust is established while you are still alive, as opposed to being created upon your death. You can be the trustee for your own living trust until you are no longer able to manage your financial affairs or pass away, at which point the responsibility for managing the trust passes to someone you designate as a successor trustee.

How does a trust help you avoid probate?

The purpose of probate is to transfer property ownership for all assets that were listed in your name when you passed away. A trust can bypass this process completely because your assets are transferred to the trust while you are still alive. Therefore, when you die, there’s nothing that needs to be transferred by the probate court (everything is already in your trust). Furthermore, a trust can cover virtually any type of asset, from real estate to vehicles to stock to bank accounts. When a trust is structured correctly with the help of an experienced estate planning attorney, your entire estate can stay out of probate court entirely. This process not only limits court costs, but it also maintains the privacy of your financial records while enabling your beneficiaries to enjoy the benefits of the trust without disruption or delay.

Establishing a trust can be a bit complicated, and the process can cost a bit more upfront than a will; however, if you’re willing to invest a little more up front, a trust can be your best option for avoiding probate later. Especially in California, probate should generally be avoided absent extenuating circumstances.

That said, as wonderful as revocable living trusts can be—always bear in mind H.L. Mencken’s warning that “For every complex problem there is an answer that is clear, simple, and wrong.”

The key to planning effectively to minimize the likelihood of a drawn out, contentious, expensive process is to work with highly qualified, trusted people. Find a lawyer who genuinely cares about you and your family and who knows how to forge the right strategy for 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.

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.


 

Sunday
Feb052017

The Pros and Cons of Probate

In estate planning circles, the word “probate” often comes with a starkly negative connotation. Indeed, for many people—especially those with larger estates—financial planners recommend trying to keep property out of probate whenever possible. However, the probate system was ultimately established to protect the property of the deceased and his/her heirs, and in a few cases, it may even work to an advantage. Let’s look briefly at the pros and cons of going through probate.

While in certain situations a probate proceeding can be the most effective manner of distributing a decedent’s estate [for instance, if there is a large amount of contention between beneficiaries, it may be advisable for a successor trustee to commence a court-controlled probate process to limit personal liability], in California, it generally should be avoided absent extenuating circumstances.

The Pros:

For some estates, especially those in which no will was left, the system works to make sure all assets are distributed pursuant to state law. Here are some potential advantages of probating an estate:

 1. It provides a trustworthy procedure for redistributing the property of the deceased if no will was left.

 2. It validates and enforces the intentions of the deceased if a will exists.

 3. It ensures taxes and claimed debts are paid on the estate, so there’s a finality to the deceased   person’s affairs, rather than an uncertain, lingering feeling for the beneficiaries.

4. If the deceased was in debt, probate gives only a brief window for creditors to file a claim, which can result in more debt forgiveness.

 5. Probate can be advantageous for distributing smaller estates in which estate planning was unaffordable.

The Cons:

While probate is intended to work fairly to facilitate the transfer of property after someone dies, consider bypassing the process for these reasons:

 1. Probate is a matter of public record, which means personal family and financial information become public knowledge.

 2. There may be considerable costs, including court, attorney, and executor fees, all of which get deducted from the value of the estate.

 3. Probate can be time-consuming, holding up distribution of the assets for months, and sometimes, years.

 4. Probate can be complicated and stressful for your executor and your beneficiaries.

 5. You have no control over the distribution of your property after you pass, whereas by planning for distributions during your lifetime you have full control over where your assets ultimately end up.

 6. In California, because the fees paid to the Probate Attorney and Executor are defined by the California Probate Code, you do not have much control over the cost of settling your estate once you pass away.

 7. Probate is generally more expensive than creating and maintaining a revocable trust during your lifetime. As way of example, the following asserts the combined fees paid to the Probate Attorney and Executor in California for taking your estate through the probate proceeding after you die.

 a. If on the date of your death the value of your gross estate (“Gross Estate”) is:

                                  i.   $150,000

1.  The Statutory Attorney & Executors Fees are:

a.   $11,000

b.  Gross Estate:

                                    i.   $250,000

1.   The Attorney & Executors (“Probate”) Fees are:

a.  $16,000

c.  Gross Estate:

                                     i.    $500,000

1.    Probate Fees are:

a.   $26,000

d.   Gross Estate:

                                      i.    $750,000

1.    Probate Fees are:

a.   $36,000

e.   Gross Estate:

                                      i.    $1,000,000

1.      Probate Fees are:

a.   $46,000

f.   Gross Estate:

                                      i.    $1,250,000

1.    Probate Fees are:

a.   $51,000

g.  Gross Estate:

                                      i.    $1,500,000

1.    Probate Fees are:

a.   $56,000

h.   Gross Estate:

                                       i.    $1,750,000

1.    Probate Fees are:

a.    $61,000

i.    Gross Estate:

                                        i.    $2,000,000

1.    Probate Fees are:

a.    $66,000

j.     Gross Estate:

                                         i.     $2,500,000

1.     Probate Fees are:

a.    $76,000

k.    Gross Estate:

                                         i.    $3,000,000

1.    Probate Fees are:

a.    $86,000

l.     Gross Estate:

                                         i.    $3,500,000

1.    Probate Fees are:

a.    $96,000

m.  Gross Estate:

                                          i.    $5,000,000

1.    Probate Fees are:

a.   $126,000

As you can see, the cost of creating your estate plan during life is almost always going to be less than the cost of the fees that will ultimately be paid to the Probate Attorney and Executor if when you die you do not have an estate plan, or you solely have a Will without a properly funded revocable trust. Remember, a Will is not effective until after it goes through a probate proceeding.

Bottom line: While probate is a default mechanism that ultimately works to enforce fair distribution of even small estates, it can create undue cost and delays. For that reason, many people prefer to use strategies to keep their property out of probate when they die.

A talented attorney whose practice focuses solely on estate planning can help you develop a strategy to avoid probate, ensure that your post-death desires are realized, and make life easier for the next generation. 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.

Monday
Dec192016

Why You Need an Estate Plan To Compliment Your Financial Plan

If you want to leave a robust financial legacy for your family, a financial plan alone is like trying to guide a boat with just one oar. It’s only part of the big picture for your overall monetary health. A well-informed financial plan is worth your time for several reasons, but let’s look at how financial and estate planning can work in tandem to create the best possible future for you and your family in the years to come.

What’s included in a financial plan:

Financial planners take stock of an individual’s fiscal landscape and come up with approaches to maximize his or her overall financial well-being. Take Emily for instance, an energetic project manager in her late-twenties. She’s found a successful career track after graduating with her bachelor’s and now has the steady income necessary to start daydreaming about buying a house with bay windows like the one she passes on her morning commute.

But before she can take such a big leap, Emily tracks down a skilled financial planner who will take an honest look at her foreseeable cash flow and her spending and saving habits. People from all walks of life use the help of financial planners to make sure they’re in good shape for making big purchases, saving for their children’s education, and ensuring a comfortable retirement. This also includes developing an investment portfolio, which the financial planner monitors and manages.

But financial planning only goes so far. To have a comprehensive approach, Emily also must also consider her estate and the wills and trusts she should put in place so her assets go where she wants them to in the long run. That’s where a trusts and estates attorney comes in.

What’s included in an estate plan:

Estate planning attorneys are lawyers who give sound advice about what will happen to a person’s assets if he or she becomes mentally incapacitated or when he or she dies. While this may not sound like the sunniest of topics, knowing that what you pass on to your family will be legally protected lets you focus on enjoying the best things in life without worrying about your loved ones’ futures. Estate planning includes defining how you want your loved ones to benefit from the financial legacy you leave behind, implementing tactics to protect your assets from creditors down the road, providing a framework so your loved ones can make medical decisions on your behalf when you can’t, developing strategies to help you reduce estate taxes, and more.

And at the end of the day, your attorney is a teacher. He or she should be equipped to clearly explain your legal options. Even though estate planning can be highly technical, your professional bond with your attorney can and should feel like a friendly partnership since it involves taking an honest look at many personal wishes and priorities. There is no one-size-fits-all estate plan, so choose an attorney whom you trust and enjoy working with and who is responsive to questions and needs.

Remember Emily? While financial planning helped, her get from point A to point B with some pretty big money milestones, she now knows she needs an estates and trusts attorney to make sure her wishes are carried out and her money stays in the right hands—her family’s.

How these two efforts work together:

There are several ways these two components of your financial wellness work in harmony. Asking your financial planner and estate planning attorney to collaborate is common practice, so don’t be concerned that what you’re asking is outside their regular scope of work. Knowing who else advises you will help both parties get the information they need do their jobs at peak effectiveness. For example, your estate planning attorney may prepare a living trust for you, but your financial planner may help you transfer certain assets into that trust.

What are you waiting for?

If you already have a financial planner and are thinking about working with a trusts and estates attorney, you’re in an excellent position. We can often collaborate with your advisor to begin working on your estate plan. This might save you time and money, as we’ll get up to speed with the help of your financial planner.

The right time to plan your estate is right now. The sooner you put yourself and your family able to rest easy knowing a solid plan is in place, the better. And now that you know your financial plan is a wonderful start—but not a complete solution—you’re ready to take the first step on the path to total financial security.

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.