Most couples enter into marriage with the hope that the union will last forever. As such, couples typically blend assets, name each other as beneficiaries in estate planning documents, and assume the other one will take care of the children in the event of death. Sadly, more than 50 percent of all marriages end in divorce. If you are in the middle of a divorce, or who has recently concluded the divorce process, you may not have considered the impact the divorce has on your estate plan. While most people consider the immediate financial concerns associated with a divorce, most fail to look at the estate planning concerns that are also associated with a divorce. Consider the following estate planning documents that could need to be amended, created or revoked as a result of your divorce.  However, before taking action, consult with both your divorce attorney and an experienced and qualified estate planning attorney because California law imposes certain “automatic temporary restraining orders” during the pendency of the divorce proceeding.  Changing estate planning documents that violate these orders could result in advance sanctions by the judge presiding over the divorce proceeding.

With that said, the following are actions to consideer:

Execution of a new advance healthcare directive if one was executed in favor of your ex-spouse at any point in time and in any state.

Revocation of any existing powers of attorney that gave your ex-spouse agency powers.

Appointing a guardian, or modifying a previous appointment of a guardian, in your Will for your minor children.

Removal of any bequests to your ex-spouse in your Last Will and Testament.

Replacing your ex-spouse as the beneficiary of pension plans, life insurance policies, ERISA plans, investment plans, or pay on death accounts. Don’t make the mistake of counting on state laws to automatically disinherit your ex-spouse as a result of the divorce.

Creating a trust, and appointing someone in whom you have both trust and confidence in their financial abilities, as trustee. You can then direct your estate assets that are meant for your children into the trust and be assured that someone other than your ex-spouse will oversee those assets.

With careful planning under the supervision of qualified and experienced legal counsel, you can accomplish your goals of control

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

A trust requires a few essential components, one of which is a trustee. The trustee performs a wide variety of functions within the trust, making the choice of trustee one of the most important decisions you make when you create your trust. Ultimately, only you can decide who to appoint as trustee; however, there are some factors that are worth considering when making the decision.

• Location of Trust Assets: This is a factor that is easy to overlook. Because your trustee must manage all trust assets, one consideration is whether your trustee is close to trust assets when those assets are tangible assets, such as real property.
• Paid or Unpaid Trustee?: The more complicated the trust and the more assets the trust holds, the more you should consider a paid trustee. A simple trust, however, such as a pet trust, may be better suited to an unpaid trustee.  However, you should discuss the issue of compensation with your trustee to ensure that he or she will be willing to serve under the terms that you propose.
• Relationship of the Trustee to the Beneficiaries: People tend to automatically consider a close family member as the trustee. Although this can make sense based on the fact that you know the person and trust the person, stop and consider whether the person has a potential conflict of interest, or a financial interest, in the trust as a result of the relationship to a beneficiary or a bad personal relationship with the benefiaries. If this is the case, you may wish to consider appointing someone else as the trustee.
• Financial Ability and Experience: Regardless of whether you decide to appoint a paid or unpaid trustee, make sure that the appointee has the financial ability and experience to perform the required duties.
• Consider a Professional Trustee: Due to the nature and extent of trust assets and/or the complexity of relationships between the trustee and the beneficiaries, it may also be prudent to seek assistance of a trustee who is outside your circle of family or friends.  Professional trustees, whether individual or institutional (e.g. a bank trust department), may be a better solution.

The best way to address this critical issue is to consult with an experienced and qualified estate planning attorney to discuss your concerns and goals.  An experienced attorney will be able to guide to the correct decision and will have knowledge of the qualified professional fiduciaries in your community should that option be considered.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

If you own a small business, make sure you include your interest in the business in your estate plan. Even if you plan to leave all your interest in the business to a family member, failing to structure the transfer of your interest in the business in the right way could subject the value of the interest to estate or gift taxes. With proper planning, you may be able to minimize or eliminate estate or gift taxes by using one of the numerous business succession options.

• Sale of Your Business: Among other options, selling your business can be accomplished by using a private annuity, a buy-sell agreement, an outright sale, or other sale options. As a general rule, as long as the sale is completed prior to, or at the time of, death, it will not result in the need to pay gift or estate taxes; however, it may incur capital gains taxes.
• Trusts: Trusts are not only for personal assets. You can create an irrevocable trust in the form of a grantor retained annuity trust (GRAT) or grantor retained unitrust (GRUT) for your business and use the business assets to fund the trust. As the grantor, you will receive annuity payments each year for the life of the trust. When the trust terminates, the remaining trust assets are transferred to the trust beneficiaries, but at a reduced valuation, thereby reducing any applicable taxes.
• Forming a Family Partnership: By forming a family partnership, you may be able to retain control as the holder of the general partner interest — something that is likely important to you. You can then gift the limited interests to your family member over the life of the partnership. The limited interest may be eligible for a discounted valuation which will decrease the resulting transfer taxes.

The biggest problem most likely to occur to business owners is simply the failure to plan for the future taking into account the prospect of retirement, possible disability and eventual death.  The best way to avoid the potentially devastating problems that could occur

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

When you create your estate plan, you’re taking the time to make sure that your assets are given to the right people.  By naming beneficiaries, you’re in control over how your assets will be distributed after your death.  Unfortunately, your assets may not be able to be given to your first choice beneficiaries.  Take a look at some of the information below to better understand the importance of naming alternate beneficiaries.  If you have any questions, or if you need help creating your estate plan, contact an estate planning attorney.

There is a chance that one or more of your beneficiaries dies before you.  If this is the case, you may not get around to making updates to your plan.  Alternately, you may later become legally incapacitated, e.g., dementia,  and, therefore, be unable to update your estate plan even though you have survived your primary beneficiary.  It’s best to name primary and alternate beneficiaries so that your wishes are carried out.

How exactly does this work?  If you would like to give your car to your brother after your death, you would name him as the primary beneficiary.  If you’ve decided to name your cousin, Fred, as an alternate beneficiary, you will also include this in your plan.  If your brother is not surviving after your death, your car will be given to Fred.

If you don’t take the time to list alternate beneficiaries, your wishes may not be known or respected.  Because your primary beneficiary isn’t able to receive your assets, your state’s law may decide how the asset is distributed.  This means that you will have no say in how your asset is distributed.

It’s important to carefully consider possible alternate beneficiaries when creating your estate plan. You should choose individuals who you trust and appreciate.  Take the time to think through the best alternate beneficiaries so that your assets are in good hands.

If you have any questions about choosing alternate beneficiaries, or if you’d like to review and update your estate plan, consult with an experienced and qualified estate planning attorney.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

If you are in a second or third marriage and have children from previous relationships, very careful estate planning is necessary to keep the peace while you’re alive and avoid litigation after your death.

Tips for Using Estate Planning to Keep the Peace in a Second Marriage

• Communicate. Let your loved ones know that they are protected by and provided for in your estate plan.

• Update. Update your estate planning when your family changes.

• Honor Prenuptial Agreements and Promises. If you have a prenuptial (or post-nuptial) agreement or have promised your spouse that you will do something for him/her in your estate plan, do it.

• Avoid Joint Ownership. If you are in a second marriage, you will most likely need trust planning; your trust should own your assets.  Do NOT own assets in joint tenancy with your spouse, unless you want your spouse to inherit them.  Jointly tenancy assets held with your spouse will disinherit your children if you are the first to die.

• Consider Planning That Won’t Make Your Children Wait. In some cases, it may make sense not to make children from a previous relationship wait until your spouse dies to inherit. Without careful planning, making your children the remainder beneficiary of a trust for your spouse may cause conflicts between them.  Every dollar your spouse spends may be questioned and disputes and litigation may arise unless careful planning is used.

• Be Specific about Personal Possessions.  Your children would, likely, appreciate inheriting personal items, family pictures, family heirlooms and the like. Be sure that all of your personal possessions don’t go automatically to your spouse. Either pass these items while you’re alive or make a list of things to go to your children (and include the list in your estate plan.)

If you’re in a second or third marriage and have children from a previous relationship, get thorough legal advice from a qualified and experienced estate planning attorney and follow these tips to keep peace in the family.  Failing to plan will inevitably lead to more conflicts and higher legal costs as your survivors are left to fight over your estate.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

More than half of all Americans don’t have a formal estate plan, meaning no will, no trust, no powers of attorney, no trust.  The other Americans have some form of an estate plan, but most of those folks don’t realize that estate planning is a life-long process.  Estate planning is not a “once and done;” don’t stop now.

What Would an Experienced and Qualified Estate Planning Attorney Say?

 What do you think an experienced and qualified estate planning attorney would say when he or she reviewed your estate plan?

• Would it surprise you to hear that your estate plan may not work?
• What if you heard the words, “You’ll unintentionally disinherit your children.”
• Do you think you’re assets are going to avoid probate?  Maybe/maybe not.

Many existing estate plans that we review won’t work, meaning that they won’t do what our new clients want them to do.  Estate plans often don’t work because they are not up-to-date. Some others were either deficient from the outstart or failed to address an important planning concern, such as taxes, property transfers or beneficiary protections, among others.

Every Estate Plan Faces These Changes

 Each and every estate plan should be reviewed every few years – sooner if there are significant life changes.

These are some of the common changes any estate plan may face:

• Changes in state and federal law
• Change in goals, family situation, and finances
• Change in available planning strategies (experienced and qualified estate planning attorneys continue to develop new and better ways to meet clients’ goals and needs as laws and circumstances change)

If it’s been more than a few years or you’ve moved to a new state or had a significant change in your health, family situation, finances, or goals, your current estate plan may not work.  Because estate planning is a life-long process, your plan needs to be reviewed by an estate planning attorney.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

We get a lot of questions about revocable living trusts and some prospective clients wonder whether they really need a trust.  They say, “After all, I’m not a Warren Buffet or a Kennedy. Do I really need a trust?”

Whether you need a trust (or not) depends upon your assets and your goals; mainly your goals.  You do not need to be wealthy to benefit from a trust.

You Need to Consider a Revocable Living Trust if you…

• Want to avoid probate
• Want to avoid court interference, through the conservatorship process
• Want to stay in control of your assets
• Want to minimize costs
• Want to minimize time delays
• Want to lessen the burden on loved ones
• Want to protect the assets you leave to your surviving spouse and children
• Want to keep your affairs private
• Want to avoid having your assets, debts, and beneficiary and trusted helper contact information published at the courthouse.
• Want to minimize or eliminate federal estate taxes
• Want to provide for your pet

Where to Get Help Creating a Revocable Living Trust

Estate planning is not appropriate for the do-it-yourselfer (i.e., no downloaded or formbook documents, with no legal counseling.) The potential for failure and its consequences are too high.  You should also avoid bargain basement trusts prepared by non-lawyers, paralegals and even general practice attorneys who do not specialize in estate plannng.  Estate planning involves many complex considerations involving topics such as a multitude of ta

Instead, consult with a qualified estate planning attorney who will design, draft, and implement your revocable living trust, according to your individual goals and needs.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

We don’t think anyone gets up in the morning and says, “Yippee!  Today, I’ll call an estate planning lawyer to discuss creating a comprehensive estate plan.”  However, we do think you should consider creating a plan that addresses all you  Why? Consider this solid estate planning lesson from the estate of author, Stieg Larsson, who wrote the incredibly successful Girl with the Dragon Tattoo.

No Estate Plan

Larsson died, suddenly, at age 50; he had no estate plan. None. What he did have was a girlfriend he had lived with for 32 years and at least $40 million. The estate could actually be much larger as the movie adaption of Girl with the Dragon Tattoo grossed over $140 million.

Litigation

Because Larsson and his girlfriend were not married and because he didn’t have a will or trust, his father and brother inherited his assets; they even sued to get Larsson’s laptop because it had an unpublished manuscript on it.

The litigation continues as of this writing.

Loss of Control, Burden, Pain, Huge Fees

No estate plan means no control; the courts will decide who gets what of Larsson’s assets at a huge financial and emotional cost.  Imagine the emotional pain of losing a loved one and going through litigation. This is a huge burden and not the legacy most people would choose to leave.

Learn from the Girl with the Dragon Tattoo; call an experienced and qualified estate planning attorney today to schedule an estate planning consultation.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

When asked if they are going to disinherit their children, most folks reply, “Of course not.”  However, many of them do, unintentionally.

The Perils of a Blended Family

Unfortunately, the unintentional disinheritance of children happens every day.  It usually happens in blended families, which are comprised of second, third, or even forth marriages and children from previous relationships.

No matter what promises are made or understandings are had, a spouse that is not the parent of all of your children may not give assets to those children when you die.

The Perils of Joint Ownership

One of the most significant perils of joint tenancy is that children may be disinherited.

In the case of joint tenancy with right of survivorship between married persons, when you die all those assets go directly, by operation of law, to your surviving spouse.

Neither your will nor your trust control jointly owned assets if you die before your spouse. 

Here’s an Example

Consider this example and how it would play out in your own family.

Jake and Melissa were married a few years ago; they put nearly all that they owned in joint names.  This included their house, bank accounts, and investments accounts.

They both had two children from previous marriages. 

Jake was killed by a DUI driver and Melissa inherited everything they owned jointly…all the money in the bank, the investments, and the house.  When Melissa dies, her own two children will inherit these assets unless she has a will or trust that includes Jake’s children as beneficiaries.  However, that planning decision is solely under Melissa’s control.

Unless Melissa does the necessary planning to include them, Jake’s children will never inherit anything from Jake.

Get Legal Guidance

If you have a blended family, your estate planning has an extra layer of complexity and, in most cases, joint tenancy should be avoided.  However, with thoughtful, comprehensive planning, the problems of a blended family can be addressed. Consult with an experienced and qualified estate planning to avoid the unintentional disinheritance of your children.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.

Each day, many parents with young children put off the important task of planning for the future. It can be easy to become busy with life’s everyday events. If you are a parent, you need to take the time to create an estate plan.  This will allow you to make sure that your children are protected in the future.

Are you unsure about the need for an estate plan?  If so, consider the following questions:

• What will happen if you become disabled or die tomorrow?
• Who will care for your children?
• What funds will be used to care for your children?
• Who will the court appoint as a guardian, if you do not have an estate plan in place?

It can be stressful thinking about the above situations.  The truth is the unexpected can happen at any time.  It is important to have a plan in place so that your children are always loved and cared for.

An estate plan can allow parents with young children to do the following:

• Plan for funding that can be used to care for your child after your death.  A qualified estate planning attorney can help you explore all funding options.
• Appoint someone to manage the assets that you leave to your child.  These assets can be used to provide for your child on a daily basis.
• Appoint someone who will care for your child if you are ever unable to due to disability or death.  This guardian can also be responsible for managing the assets that you leave for your children, if you wish.

If you want to make sure that your children receive proper care in the future, take the time to create an estate plan.

If you have any questions about why parents with young children need an estate plan, consult with a qualified, experienced estate planning attorney.

Northern California Estate Planning Counselors, LLP is a member of the American Academy of Estate Planning Attorneys.