You’ve packed sunblock and a beach novel. You’ve planned your itinerary and bought plane tickets. But have you ensured that your estate plan is up to date? Don’t leave home without making sure your financial health and the future of your loved ones is provided for. It’s even more crucial than getting a pet sitter and locking the front door.
If you are a client, you have likely heard me say it a dozen times, “we never know what the tax laws will be at the time of your death – they are changing all the time.” As it happens, a new bill has been proposed in the California Senate that would impose a California gift, estate and generation-skipping tax (GST) beginning on January 1, 2021.
Shocking to most people, your retirement accounts can be seized once they pass to your loved ones. During your lifetime, your retirement funds have asset protection, meaning they can’t be taken in a lawsuit. Unfortunately, as soon as retirement accounts are inherited, the protection evaporates. This means your hard earned money can legally be snatched by strangers and the courts.
Receiving a health diagnosis or learning that you need to undergo major surgery can cause substantial disruption in your day-to-day life. During this time, the last thing you may want to think about is estate planning.
Should You Choose a Will or a Trust
A recent study states that over half of all Americans die "intestate", meaning without a will. That's not completely true – California (and most other states) has "intestate laws" defining how your property will be distributed. So, you do have a will, but not necessarily one you'd like. Either you choose how your estate is divided or the State of California will choose for you.
The choice, obviously, should be yours. That means every person should have an estate plan. Attorney Heather Johnston founded Sapphire Law Group to deliver a level of elder law and other services equal to any major firm, but in a way that is convenient, efficient and, most of all, personal.
What is a Will?
A will is a legal document that defines who (beneficiaries) receives your property (estate), and in what amounts, after you die and who's in charge of the transfer (executor). If you have minor children, it can also define who'll raise them for you (guardians). Wills can even specify funeral arrangements.
There is a legal process (probate) that certifies your will is final and binding. This, by the way, makes your will a matter of public record. If anyone doesn't like the will, they can ask the court to invalidate it (contest).
What is a Trust?
A trust (also called a "living trust") is a legal relationship defined by a document (instrument) defining how one person or business (trustee) holds and handles the property of another (donor, grantor, settler, trustor) on behalf of others (beneficiaries). In California, the trustee can be the donor and/or one of the beneficiaries or the trustor can pick a relative, a friend or a trust company to act for them.
Upon your death, the trust passes immediately to the beneficiaries without probate. Trust transfers can, therefore, remain entirely private. A trust can also deal with incapacity – assuring that your wishes are carried out even if you're still around but can't make those wishes known. A trust can't specify guardianship for children, but a trust instrument isn’t at all easy to contest.
Is a Will or Trust Better for You?
Since every individual's situation is different, every estate plan is different. Consult an experienced living trust lawyer to see exactly how best to safeguard your family and property. In Folsom, California, that living trust attorney should be Sapphire Law Group. With Sapphire as your lawyer for wills and trusts, probate, trust administration or estate planning, you get more than just the documents, you get a partner and the peace of mind your family deserves.
We understand that it feels hard to get around to estate planning; it sounds about as fun as getting a root canal. However, we also understand that we all want to make sure that our loved ones are protected and receive our hard-earned assets - regardless of whether we have $10 million or $10,000.
If you just purchased a new home, congratulations! Whether this is your first home or an upgrade/downsize, the purchasing of a home is a big event in your life. When these major life changes occur, it is important that you are properly prepared. Below are a few things for you to consider now that you finally have the keys to your new home!
- Update Your Address. Now that you are in your new home, it is very important that you update your address with the appropriate entities. Your local United States Postal Office will have a form you can fill out. If you cannot make it into the post office, you can also update this information on their website. This will assist them in forwarding your mail to you. To ensure that you don’t miss any important tax notices or refunds, you will also want to update this information with the Internal Revenue Service, using Form 8822, and your local state tax agency.
- Make Sure Your House Title Coordinates With Your Estate Plan. While it is still fresh in your mind, reference your new deed to see how the property is titled. Then, you will want to reference your estate planning documents to make sure that your property has been titled properly to achieve your estate planning goals. For example, if your previous plan had a specific provision distributing your old property, you will want to make sure that you update this provision since you no longer own the previous property. On the other hand, if this is your first home and your estate plan includes a trust to avoid probate, you will need to make sure that your home was titled in the name of the trust and not in your name individually.
- Check Your Life Insurance Coverage and Beneficiary Designations. Unless you were fortunate enough to pay cash for your new home, chances are you now have a large monthly mortgage expense. In order to protect your loved ones, it is important that you check your life insurance coverage. Should you die before paying off the mortgage, it is a good idea that you have enough life insurance to meet that obligation should you have a surviving spouse or children that will likely continue to reside in the home. Even if they choose to not remain in the home, the life insurance can provide valuable assets during what is usually an emotionally difficult time. This is also a great opportunity to double check your beneficiary designations. Life changes happen so quickly that sometimes this can be overlooked. If your designations do not match up with the rest of your estate plan, you may end up inadvertently disinheriting a family member or having the money fall directly into the hands of an individual without any guidance. Lastly, now that you have a home and homeowner’s insurance, call your insurance agent to make sure that you are getting all of the discounts that you are entitled to. Many insurance companies will offer discounts when you bundle services. If you already have car insurance through a carrier and use the same company for your homeowner’s insurance, you may be entitled to a better rate that if you had both policies separately. In addition, homeowners often get discounts that renters don’t.
Buying a new home is a big step and we are here to help. Give us a call and we can help make sure that your new purchase and estate planning are working together to carry out your goals.
As graduation celebrations abound, the parents of young adults experience a mixed bag of emotions. It can be exciting to see your children branching out and becoming successful adults in their own right —a time full of hard work and self-discovery that hopefully lays the groundwork for a fulfilling career in the coming years. But, it can also be a time of anxiety for some parents. We all want to know that we are doing absolutely everything we can to make sure our kids stay safe, healthy, and secure so they can pursue their dreams to the fullest.
School is almost out and summer vacations are coming up quickly. Before you head out for your epic summer adventures, here are a few important things to add to your vacation readiness checklist.
It’s the week after tax day and you’ve probably been working on (or finished) your tax returns. Most of us don’t feel comfortable sharing the details of our tax returns, unless we have to, say for a mortgage. But, your estate plan, an important part of having your affairs in order, is a bit different. You might be wondering whether or not your family should be acquainted with the details of your estate plan.
Have you ever wondered what would happen to your debts if you passed away before paying them off? Will your loved ones be obligated to pay your debts or will they simply disappear? Every person’s debt landscape is different, and the best approach is to create a tailor-made estate planning strategy to make sure your debt doesn’t come back to haunt your family after you’re gone.
Confused about the differences between wills and trusts? If so, you're not alone. While it's always wise to contact an estate planning attorney like us, it's also important to understand the basics.
There’s an entire category of commonly-overlooked legacy to consider – digital assets. Don’t worry if you didn’t consider these assets when made your will or trust – it’s surprisingly common and, luckily, easy to correct.
In December 2017, Congress passed, and President Trump signed a sweeping tax reform bill commonly (but unofficially) known as the Tax Cuts and Jobs Act. This Act contains significant changes that will impact your estate planning and income tax situation going forward.
We know it’s hard. Thinking about someone else raising your children stops us all in our tracks. But you must.
Common reasons that someone may decide to create a trust include privacy, tax benefits, avoiding probate, and caring for family members with special needs. Estate planning also lets you dictate how your assets will pass on to future generations after your death.
Ordinary possessions like homes, jewelry collections, bank accounts, cars, furniture — basically anything you can own — are also under the purview of your estate, meaning estate planning is something that profoundly impacts virtually everyone, not just the “country club” crowd.