You’ve, likely, heard the term, “power of attorney.”  Powers of attorney are legal documents used to authorize someone else to act on your behalf, in some sort of legal situation.  There are financial, health care, real estate, and business powers of attorney.

Financial powers of attorney are often called, “General Durable Power of Attorney.”  “General” means that the document covers a myriad of situations, mainly financial and personal business oriented. “Durable” means that the power of attorney is affective even if you become legally incapacitated.  (That’s the point.)  And, “Power of Attorney” means that you’re authorizing someone else (i.e. your agent) to act on your behalf in the listed situations and to sign your name.  They are, typically, effective immediately, unless they’re designed to be “springing.”  Springing powers of attorney become when you need them; when you’re legally incapacitated.

Health care powers of attorney might also be called “Advance Health Care Directives.”  Same thing.  So long as you are able to make your own health care decisions, you continue to do so.  But, if the time ever comes when you are unable to make those decisions yourself, your health care agent will be authorized to help you by providing informed consent.

Sometimes, business or real estate powers of attorney are used for a particular deal or real estate transactions.  They are specific to the situation outlined in the power of attorney.  For example, a businesswoman might be out of town when a deal is going to close, so she authorizes her business partner or another trusted individual to sign her name to the deal on her behalf.  In real estate, a spouse may be unavailable for a closing on a house; she’ll sign a power of attorney authorizing her spouse to sign the closing documents on her behalf.

If you don’t have a power of attorney for health care and finances, which was professionally drafted and is up-to-date (i.e. less than three to five years old), 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.

The federal estate tax can be reduced or even eliminated with advanced estate planning measures for any estate.  In fact, the federal estate tax is a voluntary tax; if you don’t plan, you volunteer to pay it.  Here is a memorable federal estate tax lesson from the owner of Hooters, the infamous restaurant chain.

When Robert H. Brooks died, his family sold Hooters, in part, because was it worth approximately $250 million dollars and the estate tax, at that time, was 46% or $115 million dollars.  That’s right, this $1 billion dollar in annual sales company, was sold to pay estate taxes.

Brooks didn’t have appropriate advanced estate planning.  This is a problem for many family owned businesses; they simply don’t plan.

If you have a family owned business, consult with a qualified estate planning attorney and plan early.  It is important to have all legal documentation in place while you have legal capacity; and, because life insurance is often a key in advanced estate planning.  Insurance costs rise each year and the owner may become uninsurable.

For example, life insurance may be used to fund a buy-sell agreement, pay federal estate taxes, equalize inheritances, provide an inheritance for children not in the family business, or provide an inheritance when other techniques such as a charitable lead trust delay assets passing to the family for federal estate tax purposes.

Life insurance trusts are the only way to leverage the federal estate tax and generation skipping taxes.  In addition, they can provide asset protection for assets used for all those reasons cited immediately above.

$115 million in taxes is surely incentive to get a good estate plan in place.  If your family has a business, consult with an experienced and qualified estate planning attorney to get an advanced estate plan in place.  Don’t volunteer to pay the federal estate tax.

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

In America, we insure our homes, vehicles, businesses–some of us even insure our pets. Along with all these types of insurance, we are also all told that we simply cannot be caught “dead” without life insurance. Do you really need life insurance? Is it the best option for you? Only you can make that decision, but there are some things to consider when contemplating the purchase of life insurance.

If you are part of a young family with no other means of support in the event of your death, life insurance may be right for you. Term life insurance typically provides the most coverage for the money but will not build any equity. If you have no other investments or assets that your family can count on, then a term life insurance policy may be your best bet.

If you have a decent investment portfolio and some valuable assets that can be used by your family for support in the event of your death, life insurance may not be the best way to spend your money. Adding to your already existing investment portfolio may be a wiser choice from a financial perspective.

If you are considering the purchase of whole life insurance, or one of the many variations thereof, make sure you do your homework. While this type of insurance does build equity, it often builds it at a considerably slower rate than other investments. While some variations of whole life will provide a bigger return for your investment, there is typically a large risk factor associated with the investment.

Decisions about all insurance, including life insurance, should be made as part of an overall financial plan, not just on the recommendation of a commissioned sales person whose interest is only to make a sale and is not necessarily in your best interest.

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

A special needs trust, sometimes referred to as a supplemental needs trust, is a specific type of trust used to provide support for a special needs individual. This exceptional estate planning tool should be considered by anyone who has a child or loved one who qualifies. So what is a supplemental needs trust and why would I want to create one?

• A Special needs trust, or SNT, may be used for an individual who is physically or mentally disabled or who suffers from a chronic or acquired illness.
• A parent, grandparent or guardian may set up an SNT.
• A SNT is intended to provide supplemental care above and beyond that which is provided by government sponsored programs such as Medi-Cal (Medicaid), SSI or public housing.
• A SNT will not disqualify the beneficiary from government assistance programs. A SNT is specifically intended to allow a beneficiary to qualify for these programs while still having access to additional means of financial support.
• Absent an SNT, any funds used to care for the individual could jeopardize his or her eligibility for government assistance programs.
• A SNT will continue to operate after your child reaches adulthood.
• A SNT will also continue to operate after your death if you wish.
• Although you may appoint yourself to be the trustee of the trust, this is not the same as being your child’s legal guardian.
• Very specific language is required to draft a proper SNT. Be sure to consult with an experienced and qualified planning attorney if you are interested in creating a SNT.

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

With the divorce rate hovering around 50 percent in the United States, blended families have become the norm in today’s society. If you have just created a blended family, or are planning to do so in the near future, there are a number of changes that you may need to make to your existing estate plan in order to reflect your new status as a blended family. Although each family is unique, the following are possible options to consider.

• Adding Your Spouse to Titles.  Titles to real property, vehicles or anything else that your wish to share with your new spouse should now reflect that desire. Anything titled in your name alone will likely be held up in probate for some time in the event of your death. Various methods are available to avoid probate.
• Updating Your Last Will and Testament or Living Trust. If you wish to include your new spouse and/or step-children in your estate plan, your Will or Trust must be updated to reflect your intentions.
• Changing Beneficiaries on Life Insurance Policy. Often, the beneficiary on a life insurance policy is still the ex-spouse because there are minor children to consider. You may need to purchase a new policy depending on the terms of your divorce or you may simply be able to add your new spouse to an existing policy.
• Changing Beneficiary of Retirement Accounts: This is also something that may, or may not, be possible. In some cases, your ex-spouse may be entitled to remain the beneficiary by law or by the terms of the divorce. Check your divorce settlement agreement or judgment.

Planning for all the interested persons in a blended family situation can be very complex, so it is important to consult with an experienced and qualified estate planning attorney.  Failing to plan will likely cause significant problems and unduly expensive and protracted legal proceedings followin one’s incapacity or death as these same persons fight over control and assets.  This is certainly not the legacy that you should leave to your loved ones.

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

Trusts have become popular estate planning tools. Trusts come in many forms and can be constructed to accomplish specific goals in many cases. A basic trust consists of a trustor, a trustee, at least one beneficiary and assets that are used to fund the trust. Beyond the basics, trusts then fall into one of two broad categories — revocable and irrevocable. Although there are numerous other decisions that must be made when you create a trust, deciding whether your trust will be revocable or irrevocable is generally the starting point.

A revocable trust is often used to avoid probate. Probate is the legal process that is often required when someone dies. Probate inventories and values assets, pays debts and finally distributes estate assets. Avoiding probate allows your trust beneficiaries access to the trust assets without having to wait for the probate process to terminate. Most importantly for some, a revocable trust lets you make changes to, or even terminate, the trust at any time.

Probate can also be avoided by creating an irrevocable trust. In addition, an irrevocable trust allows you to avoid estate taxes and protect assets from creditors. You may also get capital gains and personal income tax benefits with an irrevocable trust that you don’t get with a revocable trust. What you give up with an irrevocable trust is the ability to make changes or terminate the trust. Once you create an irrevocable trust, for all intents and purposes you are locked in to the terms of the trust.

The best way to make su

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

For many families, an estate plan based upon a revocable living trust may be all that is needed to protect their assets from death taxes.  However, for folks with larger estates, it may make sense to look for ways to transfer assets in a tax-free manner. Though there is a gift tax in place there are ways to facilitate tax-free giving if you take the appropriate actions. One such strategy involves zeroing out a grantor retained annuity trust, often abbreviated as a GRAT.

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

Everyone knows that an estate plan can ensure your chosen beneficiaries receive the right inheritance. But did you know there are other benefits too? Here’s five things a good estate plan can for you.

1. Protect Against Disability – No, your estate plan can’t prevent disability from striking but it can certainly ensure that you and your estate are protected if it happens. Using an Advanced Health Care Directive and General Durable Power of Attorney can ensure that your medical wishes are followed and that your finances are handled by someone you trust.
2. Provide Incentives to Your Heirs – With the right planning tools, you can do much more than leave your heirs a lump sum estate. Instead, you can create incentives for them to excel and achieve by offering inheritance bonuses for graduating college, getting married or other milestones. You can also set it up so that your heirs’ inheritance matches whatever income they earn each year. If they want a bigger inheritance, they must find a way to earn a better living.
3. Avoid Probate – Yes, with the right tools, your estate plan can help your heirs stay out of probate court. This makes the whole property distribution process much smoother and ensures that the details of your estate remain private.
4. Sponsor A Charity – There are certain types of trusts that allow you to structure assets so that they benefit both your heirs and your favorite charity.  Donating this way also provides significant tax breaks to all parties involved.
5. Protect Dsabled Dependents – A Special Needs Trust can ensure that your disabled loved one continues to qualify for important public benefit programs while still enjoying the benefits of his or her inheritance.

Of course, that’s not all an estate plan can do, but it’s a good start. To learn more about how a good estate plan can make your life easier, contact 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’re like most people, you’ve heard the term, “living will,” but have some questions about it.  What is a living will?  Why do I need one?  Is it the same as a will?  What’s it all matter anyway?

In general, the term “living will” refers to a document in which a person can set forth his or her wishes relating to future medical care, in particular, end-of-life care.  It is different than a Last Will and Testament wherein you set forth your instructions for your estate following your death. Unfortunately, there is no consensus among the states about what constitutes a living will.  While some states specifically authorize the use of living wills, others have adopted documents such as durable powers of attorney for health care, advance health care directives, directives to physicians, and other similar documents.

In California, the document which serves as both a durable power of attorney for health care and a living will is called an Advance Health Care Directive.  In this document, which has a statutorily prescribed format, you can designate an “agent” to make medical decisions on your behalf, normally when you are unable to do so due to some physical or mental infirmity and to control the disposition of your remains.  In the same document, you can also set forth your preferences concerning such matters as end-of-life care, relief of pain and organ donation, among others.

These Directives are a critical part of a comprehensive estate plan that addresses not only the handling of affairs following death, but the need for decision in the event one becomes incapacitated.  Without one, you risk putting yourself and your loved one’s through much agony.

Consider the case of Terri Schiavo of Florida.  Terri didn’t put her wishes about end of life care in a legal recognized writing; and, when she collapsed, she was hooked up to life support machines.  When it became clear to her doctors and husband that she would not get better, her husband sought to have the life support machines removed, to let Terri die naturally.

Terri’s parents disagreed.  Years of court battles followed.  Fifteen years after being put on life support, it was finally removed and Terri died naturally.  At her death, an autopsy was conducted and it was confirmed that Terri had been brain dead the entire fifteen years.

If you don’t want this to happen to you, you need to create and sign an Advance Health Care Directive; talk to your family, explaining your wishes; and ensure that the Directive is available when needed.

If you don’t have an Advance Health Care Directive, 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.

Effective, January 1, 2012, California law now has authorized the formation of two new types of corporate entities: Benefit Corporations and Flexible Purpose Corporations.  Traditional corporations, which are owned by their shareholders, will generally operate for the maximum benefit of those shareholders.  Officers and directors whose actions arguably vary from that goal may find themselves in hot water with the shareholders for whom they work.  For those who wanted to create an entity that whose purpose was more to serve the public good, existing law generally required them to form a nonprofit corporation which carried with it many restrictions on its mode of operation and did not allow profits to be distributed to the persons forming the business.

However, not all corporate owners are that single minded. Some would also like to benefit society in general along with their own self interest.  If you are in a business where demonstrating your social responsibility is important to you or may give you an advantate over your competitors,  these two new types of corporations that California has authorized this year may be of interest.

The two new California entities allow you to have a for-profit business which is also designed to have a public purpose but operate in somewhat different ways.

Benefit Corporations

Benefit Corporations are formed for the general public benefit such as 1) Providing low-income or underserved individuals or communities with beneficial products or services; 2) Promoting economic opportunity for individuals or communities beyond the creation of jobs in the ordinary course of business; 3) Preserving the environment; 4) Improving human health; 5) Promoting the arts, sciences, or advancement of knowledge; 6) Increasing the flow of capital to entities with a public benefit purpose; 7) The accomplishment of any other particular benefit for society or the environment.

The new law requires Benefit Corporations to annually report to their shareholders and to the public on their website how they measured up against that third-party standard.

Flexible Purpose Corporations.

Flexible Purpose Corporations must have one or more “special purposes” that include benefiting one or more of the following: 1) the corporation’s employees, suppliers, customers, and creditors; 2) the community and society; 3) the environment.

Under the new law, Flexible Purpose Corporation, too, must also provide annual reports to shareholders and on the company website where the management discusses details of what the company has done to achieve its special purposes, what it plans to do in the future, and how successful it has been.  However, unlike a Benefit Corporation, these do not have to be measured against a specific third-party standard.

In recent years, we have all witnessed the disastrous results caused by imprudent decisions made by the leaders of our county’s largest companies in the name of short term corporate profits.j With the enactment of these new laws expanding the options for business owners to create entities that can carry out multiple purposes, California is one of several states leading the vanguard for more socially responsible businesses.

If you have an existing business or are contemplating starting a new one and these new entities have some appeal to you, consult with an experienced and qualified attorney to assist you with the conversion or formation.

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