This is an area of estate planning that can be incredibly beneficial to those individuals who have been dealt a tough hand.  For parents of a special needs child there is an extra incentive to do everything correctly including making sure that they have done the proper estate planning.

Obviously when one has a child with special needs, one has a responsibility that lasts a lifetime.  Many parents become “experts” in their child’s situations as they deal with medical, educational, and therapeutic professionals.  With special needs children, it rarely gets easier.  Rather, the challenges change.

Virtually every parent of a special needs child, concern themselves with what will occur when they are no longer around.  People want their child to continue to have the care that they have provided and yet worry about who will care for their child and the cost associated with the care.  Estate planning attorneys contend that they can benefit virtually all families – it is especially true of those families that contain an individual with special needs.

It is important that planning is done because if a child inherits assets directly it may adversely affect the benefits that the special needs child is receiving from the government.  The idea is that the recipient of government benefits should not have his or her own assets.

A special needs trust is a trust that has been entered into by the parent or parents of a special needs child.  Frequently its creation is provided for in the underlying living trust.  The special needs child is almost always the only beneficiary of the specific special needs trust.

Most of the time a special needs trust is irrevocable – meaning that it cannot be changed.  Moreover, it generally provides so that the trust benefits do not interfere with or duplicate the benefits that the individual is receiving from the government.  There is special language that needs to be used so as not to interfere with the government benefits.

The trustee is given specific instructions on how to distribute assets and is told not to act in such a way that will cause the government benefits to be lost.  Once again, the provisions should be drafted by an experienced estate planning lawyer.

As in any situation that calls for a trustee, care should be taken in determining the identity of that person.  Additionally, a second and third choice should also be indicated in the special needs trust.  One of the jobs of the attorney, is to guide his or her client in this area.

Depending on the amount of money in the family, life insurance may be used to fund the special needs trust.  In any event, a properly drafted special needs trust can almost guarantee that the special needs child will both continue to  receive the government benefits that he or she is legally entitled to receive as well all the extras that the law allows for him or her to have.

Taking the time to meet with an estate planning lawyer to create a special needs trust will be one of the wisest investments of your life.  It will give you peace of mind to know that you have done what you can to benefit your child.

Estate planning is similar in other respects to other purchases we make or medical procedures we have done.  Once we buy the item, we have to maintain it.

An irrevocable life insurance trust is created to hold a life insurance policy.  It is utilized by people who have taxable estates.  Today, that means an individual with over $2,000,000 or for a couple with over $4,000,0000; however, next year that increases to $3,500,000 for an individual and $7,000,000 for a couple. 

The way it is supposed to work is that a lawyer prepares the trust.  In the trust, the trustor or trustmaker appoints a trustee who then applies for life insurance on the insured’s life.  In reality, it does not always happen exactly that way, but most of the time it is fairly close.

As with a lot of things, the devil is in the details.  For example, if a married individual is having the trust prepared, the premiums should be paid from separate property funds.  The trust should have its own checking account.  Crummy letters (named after the family in an important court case) need to be sent to each of the beneficiaries every year explaining to the beneficiaries that they have the right to withdraw money from the trust for a certain period of time.

You, the client, need to ask the professionals (attorneys, CPAs, financial planners, and insurance agents) questions when you do estate planning so that the trusts provide the benefit that they are meant to bring.

Uncle Sam taxes those with an estate above two million dollars at their death.  In a sense, this is double (if not triple) taxation, as people are taxed annually on their income.

It is double taxation because the estate tax is taxing monies that have already been taxed once before.  As with most anything else in life, there are ways to avoid or reduce the tax.  However, it does take some planning.  That is where a California estate planning attorney can be of assistance.  Depending on your age, size of your estate, your goals and desires, we can show you a variety of ways in which your estate can be “reduced” so that ultimately more is distributed to those whom who you wish to have it and less to Uncle Sam.

If you think you may benefit from estate planning, and you are in Southern California, please contact our office.

Everyone wants to avoid probate.  This causes people to do all kinds of things in the name of avoiding probate.  For example, some people will give away assets.  Others will put a child on an asset with them.  Both of these “solutions” lead to their own problems which are often much worse than the cost of probate.

Penny wise; pound foolish.  Estate planning is different than most other things in that frequently the results are not measured until after death.  It therefore leads people to try to save money.  There is now a movement for California to join 9 other states and make legal a means to avoid probate.  There is a bill, AB 250, that would create the revocable transfer on death (“TOD”) deed for real property. 

Like everything else, there can be problems.  One is leaving minors as beneficiaries.  In the event that you pass, then there will probably be more administration and court proceedings than under a simple probate.  Certainly a living trust would have been much better.

How about when you leave more than one beneficiary?  Now there are multiple owners of the property.  This may sound good until you actual think about the practical circumstances.  What if one party wants to sell and the others do not?  Ideally there would be a buyout, but what if they cannot agree on price.

What if one beneficiary is deceased?  Now his/her estate is an owner?  There may have to be a probate of the beneficiary’s estate before anything can be done.

What if there is fraud involved?  Undue influence?  In my practice, I frequently see senior citizens do things that they would not have done years earlier.  They are more susceptible to being manipulated.

Frequently, the biggest winners in these attempts to avoid attorneys are lawyers themselves!  That is because, it is much more expensive to litigate than it simply would have been to prepare a living trust.  Frequently instead on there being one attorney in drafting a living trust, there are two are more attorneys.  Unfortunately by the time there are problems, the person who executed the deed, is either incompetent or deceased, so he or she never sees the problems.

Penny wise, pound foolish.  Do not let that be you.  See an experienced California estate planning attorney.  In the event that you are in Southern California, we are available to assist.

Frequently people come in to my office and are unaware of what their estate planning documents say. For all they know, their attorney made herself the beneficiary of their estate.  While that is extremely unlikely and while most of the time, the documents do what they are supposed to do, it is important that you understand what your documents state and also what they can accomplish on your behalf. 

I also see many clients who have not reviewed their California estate planning documents since their attorney drafted them (I use the word “attorney”, but about 20 percent of the time, I review documents that were drafted by paralegals or companies that claim to do things like an attorney, but are not an attorney – more about that in another post).

Your attorney should explain to you in detail what you are signing.  I realize that there are a lot of documents and frankly some of my clients do not want to hear everything.  However, I make certain that my clients have a basic understanding of their estate plan when they leave my office.

Compare it to the purchase of a car.  Before you buy the car, most people do some research about the car; they talk to the salesman; and they learn about the car.  The same thing should be done with regard to an estate plan. 

If you do not understand something that the attorney is explaining to you, speak up!!  Make him give you an example or two.  I am not talking to hear myself talk, but to convey the benefits of the document to my clients.  I attempt to tailor the explanation to my client, but sometimes I need to be asked to explain things in a different way.

In summary, you need to make sure that what you are signing is something that you understand and that is appropriate for you.  If it is not the way you want it, then just as with the car salesman, have the attorney craft the document to meet your needs.    

California Prepaid Funeral Plans and Estate Planning and Elder Law

Part of California Elder Law planning and California Estate Planning includes planning for funerals.  Medi-Cal exempts prepaid funeral plans.  These can be funded by a cash purchase.

The Federal Trade Commission has published Funeral’s: A Consumer Guide.  It certainly does not hurt to read this.  Among the points it makes is that funeral homes are required to provide a  price list that includes all goods and services the funeral home will provide the buyer.  The buyer is entitled to select whatever he or she wants.

While most people do not like to consider their funeral and burial, it is part of estate planning.  Moreover, it frequently assists in qualifying for Medi-Cal.   Please contact a California Estate Planning attorney for assistance in determining eligibility for these programs.

Living Trusts were popularized as a way to avoid probate fees.  That is true.  A properly funded living trust will avoid probate and therefore the fees associated with probate.  In Los Angeles (or for that matter Culver City, Santa Monica, Westchester, Marina del Rey, etc.), that should not be the sole reason for doing a living trust.

The reality is that most outside people will charge a fee for administering a trust as well.  This may occur when administering a trust for someone who is incapacitated to act – the alternative to having a trust in this situation is a conservatorship.  I will discuss this in another blog.

So what about the fees at death.  Sometimes the trust instrument will provide a specific fee.  Most banks and trust companies charge between 1% and 2% depending on the size of the trust.

Section 15680 of the California Probate Code speaks to the issue as follows:

            (a)        Subject to subdivision (b), if the trust instrument provides for the trustee’s compensation, the trustee is entitled to be compensated in accordance with the trust instrument.

            (b)        Upon proper showing, the court may fix or allow greater or lesser compensation than could be allowed under the terms of the trust in any of the following circumstances:

                        (1)        Where the duties of the trustee are substantially different from those contemplated when the trust was created.

                        (2)        Where the compensation in accordance with the terms of the trust would be inequitable or unreasonably low or high.

                        (3)        In extraordinary circumstances calling for equitable relief.”

In the event that compensation is not specified, Section 15681 of the California Probate Code provides as follows:

            “If the trust instrument does not specify the trustee’s compensation, the trustee is entitled to reasonable compensation under the circumstances.”

Therefore, as we see administering a trust is not free!  However, there are other reasons for having a living trust besides avoiding conservatorships.  These include avoiding probates in multiple states if real estate is owned in more than one state. 

A big reason for creating a trust is creating a plan for the distribution of the entire estate.  Frequently, people have different beneficiaries on different assets which are not coordinated with their will.  Another benefit to having a living trust is avoiding the problems associated with joint tenancy including loss of control and in California, the loss of step-up in basis at the first death.

There are many other reasons to have a living trust; the point of this blog is to explain that there are costs associated with them.

Estate planning is about more than simply preparing documents.  It is about protecting your values and not just your valuables.  It is about working with an attorney that has the ability to counsel you about your estate and offer a variety of solutions.

When this California estate planning attorney meets with people concerning their living trust, I listen to them and over the years have seen the way to do it right and the mistakes that people frequently make.  Few make all of these mistakes, but many make some of these mistakes.

1. Spend more on a home than you should: this is especially in the news right now as frankly many people thought that appreciation would continue forever.  Real estate, like virtually everything else is cyclical.  Remember that and remember that property taxes, homeowners insurance, maintenance and repairs only increase with time.

2. Debts and Retirement: Ideally prior to retirement the vast majority of your debts will be paid off and your mortgage will be easily managed.  In the event that you are thinking about moving and undertaking a new mortgage, see the previous paragraph!!

3. Raiding the Retirement Account:  Often there are large penalties associated with doing so.  Even if there were not, think about the long term consequences.  Obviously that money will not be there when you are going to need it.

4. Think about health costs: The good news is that we are living longer; the bad news is that many of us are going to be incapacitated for a fairly long time.  Many companies are reducing, if not eliminating, health benefits for retirees.  Have a plan in place.  While it is not for everyone, think about long term care insurance. 

Sometimes a California estate planning attorney is a great person to speak with about planning for retirement.  In addition to making sure that your legal documents (living trust, will, power of attorney, advance health care directive, HIPAA authorization), he/she can provide you with a variety of options concerning your future.

In the event you are in Culver City, West Los Angeles, Marina del Rey, Westchester, Santa Monica, Brentwood, Beverly Hills, or nearby areas, please give me a call!

Lawyers prepare California trusts for a variety of reasons.  A Los Angeles trust attorney can work with you to determine what type of estate planning is correct for you.

One benefit of a trust, over will based planning, is that there is privacy.  When a Will is probated, it is made a public record.  Living trusts are private unless someone files a lawsuit.

California trusts can be designed to protect the inheritance of children from creditors, predators, divorce, and themselves.  Thus, we can protect a child from his/her own bad decisions!

When there are younger children or beneficiaries, trusts can protect their inheritance until they obtain an appropriate age.  This is especially true if the child is under age 18, but frequently parents do not want their children to receive their entire inheritance until they are age 30 or above.

Irrevocable Trusts can also be created for charitable purposes; tax planning; and asset protection.

If you think you may benefit from a California trust, and you are in Southern California, please contact our office.

Uncle Sam taxes those with an estate above two million dollars at their death.  In a sense, this is double (if not triple) taxation, as people are taxed annually on their income.

It is double taxation because the estate tax is taxing monies that have already been taxed once before.  As with most anything else in life, there are ways to avoid or reduce the tax.  However, it does take some planning.  That is where a California estate planning attorney can be of assistance.  Depending on your age, size of your estate, your goals and desires, we can show you a variety of ways in which your estate can be “reduced” so that ultimately more is distributed to those whom who you wish to have it and less to Uncle Sam.

If you think you may benefit from estate planning, and you are in Southern California, please contact our office.