Category Archives: Trusts

4 Estate Planning Tips for Gen X’ers and Millennials

Estate Planning, Trusts, Wills

Occasionally we receive common questions from clients. This month we wanted to share a few questions we receive about living trusts.

If you have a question about a living trust, probate, wills, or estate planning in general contact Annette Dawson-Davis at [email protected]

What are some advantages of having a living trust?

A properly funded living trust keeps your beneficiaries out of probate court, thus saving your beneficiaries thousands of dollars. A living trust allows your successor trustee to easily manage your assets for you if you lack capacity and cannot manage your assets. A living trust also allows your trustee to manage funds for your beneficiaries who are not good with money.

What are some of the common mistakes people make when they have made a living trust?

The biggest problem is that some people never get around to putting their accounts or homes into their living trust. If the accounts do not have a “pay on death” or “transfer on death” beneficiary, a probate may be necessary if the accounts have a cumulative value of more than $150,000. If a home is not in the trust it will need to be probated unless there is proof they intended the home to be in the trust. Lenders will sometime make people take their home out of their living trust to refinance, and then the borrowers forget to deed the home back into the trust.

Additional Blog articles

What to do When you Win the Lottery

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8 Estate Planning Mistakes to Avoid

13Apr2018

4 Estate Planning Tips for Gen X’ers and Millennials

April 13, 2018

Estate Planning, Trusts, Wills

4 Estate Planning Tips for Gen X'ers and Millenials

Estate Planning is not just for the wealthy and it is not just about when you die. Life is unpredictable. We have all lost young friends or loved ones. Everyone, over the age of eighteen, should designate someone to manage their assets and make health care decisions for them in case they cannot speak for themselves. If no arrangements are made for your incapacity, someone must get legal authority from the court in the form of a conservatorship. It is intrusive and expensive because ongoing court approval is required. It is much easier and less expensive to obtain a few legal documents that will allow people to help you when you need help.

Older people are not the only ones who get sick and or die. An Advance Health Care Directive gives someone the authority to talk to a doctor for you and give the doctor instructions about your health care if you are not able to do so for yourself. Does someone know your wishes and have the authority to express them to a doctor? Someone also needs the authority to make final arrangements for you.
Anyone who has ever been laid up and unable to deal with financial institutions knows they need a General Durable Power of Attorney for Finances. It allows your agent to manage your financial accounts, buy or sell real estate, sign rental agreements and deal with utility companies. This document is only valid while you are alive.
A HIPAA Release. Allows your Agent to access your medical records. Your health insurance company may not pay your medical bills if they cannot see your medical records. If no one is authorized to obtain your medical records, the insurance company will not pay your medical bills and the doctor or hospital can turn your bills over to a collection agency.
A Will leaves directions for who should care for a minor child or how assets should be distributed when you die. Even if you do not have many assets, it is necessary because it allows someone to collect a small amount of assets in a bank account, cancel a lease, or sell an automobile.

19Oct2017

What to do When you Win the Lottery

October 19, 2017

advice for lotto winners, Lotto winning, Updating your estate plan Estate Planning, Trusts

You have just won the lottery, congratulations! Now what?

I would advise all lottery winners to see an estate planning attorney to draw up a trust, a pour-over will, a general durable power of attorney for finance and an Advance Health Care Directive that includes HIPAA provisions. It is important someone can manage your money for you, if you cannot.

The type of trust you set up depends on any inheritance tax consequences that might arise for your beneficiaries. There are dynasty trusts that may be set up to provide for your children’s children’s, children. Depending on the amount of the winning a simple probate savings trust may be all that is needed.

A consultation with a financial adviser would be a wise move, to ensure the income would support you for life.

Below is an article from forbes.com which shares some tips on what to do if you were to win the lottery.

What To Do If You Win The Lottery

By Zack Friedman, published on Forbes.com

If you win the next Powerball drawing, you could walk away with $650 million.

It’s easy to imagine how you might spend all that money.

Before you start spending your impending fortune, however, it’s important to ask yourself one question.

What do you actually do if you win the lottery?

Here’s what you need to know and how to execute your lottery financial game plan:

1. Sign the back of your lottery ticket

It sounds so simple, but it is the easiest step to take for granted. Despite the advent of technology, you still need to sign the back of a winning lottery ticket.

Why? Like a check, a lottery ticket is considered a bearer instrument. Whoever signs the winning lottery ticket and presents a valid photo ID can claim the lottery prize.So, sign your ticket right after you purchase it so you protect yourself in case you lose your winning ticket.

2. Choose a one-time, lump-sum payment or installment payments

You have 60 days from the day you present your winning ticket to determine how you want to receive your prize.

You have two choices when you win the lottery: you can receive a one-time, lump-sum payment or 30 installments over 29 years.

If you choose the lump-sum payment, you will receive your prize winnings upfront, and immediately will owe income tax on the full amount.

If you choose the installment plan in the form of an annuity, each installment payment will be taxed. Which should you choose? It depends in your personal preference.

Financially, a dollar today is worth more than a dollar tomorrow. If you choose the lump-sum payment, you have the peace of mind of receiving all the funds today and can invest the proceeds to earn a financial return.

However, if you prefer to set an allowance for yourself to help control spending, an annuity payment plan can help instill fiscal discipline.

You should compare the after-tax proceeds and your intended investment return (lump-sum payment) with the after-tax annuity payments and intended investment return (installment payments).

Overall, you will want to consider the time value of money — that is, how much you can earn under each scenario comparing the timing of the payments that you receive.

3. Assemble your financial and legal wolfpack

If you win the lottery, you may need help managing your new fortune. It is critical to have a team of trusted advisors to help you manage an array of investment, accounting, tax and legal issues.Expect to be approached by just about every type of advisor who wants to lend a helping hand.

Invest the time to make careful selections about who you want in your inner circle.

Not all advisors are created equally, so you will want to vet personally each new advisor you retain.

Don’t outsource this function. It’s your money, and you need to protect it.

You should interview each prospective candidate, and make sure he or she understands your goals.

Make sure to check their credentials to ensure they are properly licensed.

Advice is not always free so make sure to understand their fee arrangements before you retain them.

Most importantly, hire a team that tells you “no.”

The last thing you want is a team that says “yes” to every time you want to spend money on large purposes.

It’s your call how you spend your money, but it’s helpful to have a team that gives you honest advice even if it’s not what you want to hear.

4. Don’t abandon your budget

Wait, you just won hundreds of million of dollars. Why would you still need a budget?

Financial discipline doesn’t go away when you become a millionaire.

You may have more money, but that doesn’t mean the same principles of personal finance do not apply.

With more financial resources, there may be more things to purchase.

That’s why budgeting is even more essential.

Develop an action plan that accounts for your monthly and annual spending. Categorize your major expenses. Understand your income sources.

One strategy to instill financial discipline is to live off your income, not your prize winnings.

Therefore, you can preserve principal.

5. Take care of your heirs with an estate plan

If you have an existing estate plan, now is the time to update it.

If you have never put one together, now is the time to create one.

When you win the lottery, or have any major life change, it’s essential to ensure that your estate plan reflects your new reality.

With an estate plan, you will want to protect your estate, institute tax planning and consider how to provide for your heirs.

Read the entire article

Additional Blog articles

What is a Durable Power of Attorney?

Do I need a Will in California?

8 Estate Planning Mistakes to Avoid

28Jul2017

What is a Durable Power of Attorney?

July 28, 2017

Do I need a Will in California?

Durable power of attorney, financial management, power of attorney Estate Planning, Probate, Trusts, Wills

“Annette, what is a Durable Power of Attorney for Property Management?
Do I need one of these? I am a small business owner a homeowner and not sure if I need this. “

A durable power of attorney for financial management allows an individual to provide for continuing management of their assets in case of future incapacity. The “durable” means that the power of attorney continues to be effective despite the incapacity of the person who signed the power of attorney. Very old powers of attorney may not be durable, so they are no help if someone becomes incapacitated, which is when you really need them to be effective.

There are different ways that the “power” becomes effective; either immediately or on the incapacity of the person who executed the power. Everyone over the age of 18 needs a power of attorney for financial management and an Advance Health Care Directive.

Who could handle your affairs if you became incapacitated? If you do not have papers in place, the court will appoint someone to help you and the court will supervise that help, in the form of a conservatorship.

Additional Blog articles

8 Estate Planning Mistakes to Avoid

20Apr2017

Estate Planning Mistakes to Avoid

April 20, 2017

Read the entire article...

account beneficiaries, estate planning, Update Wills Estate Planning, Trusts, Uncategorized, Wills

In the following article we learn some valuable lessons from celebrities and their estate planning. In regard to the sad story of Whitney Houstons’s daughter, it is a mistake in kindness when someone leaves lots of money to an individual who cannot handle money because of their chronological age, maturity or mental illness. It may seem like a good idea, however, it can have devastating consequences. A gentleman who came to my office and intended to change his trust to allow for supervised monthly distributions to his son, he never got around to making the changes. He died leaving his son over two million dollars in assets. In less than a year, most of the money was gone and the son was incapacitated due to drug and alcohol abuse and he needed round the clock supervision. If you are setting up a trust, please consider the consequences of any gifts you might leave to your loved ones.

Celebrity Estate Planning Mistakes

by Lynnette Khalfani-Cox, June 8, 2016

Simple blunders can cause grief for heirs
What We Can Learn From Their Errors

With all the millions some celebrities have, you’d think they would be able to afford good estate planning advice. But too often after celebrities die, we learn that they made some simple blunders that trigger years of court battles or cost their heirs millions of dollars. Here are eight actors, athletes, and entertainers who have passed away — and what we can learn from them financially.

From www.aarp.org

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24Jan2017

10 Reasons to Update Your Will or Trust

January 24, 2017

Changing a Trust, Changing a Will, Update Trusts, Update Wills, Updating your estate plan Estate Planning, Trusts, Wills

Many people will prepare estate planning documents and place them in a safe deposit box and forget about them. There are many reasons to review and update your documents. Below are 10 reasons that should prompt you to review your documents.

The beneficiaries you named in your will or trust are deceased.
New people in your life should be named in your will (e.g. birth, adoption, or possibly marriage).
New laws. You need to periodically check to see if new laws impact your estate planning documents. New Tax laws may make the type of trust you have with your spouse inappropriate now.
If you move to a different state, don’t assume that your will or trust conforms to the requirements of your new state. Each state has its own legal requirements for making a will.
Change in guardians, personal representatives, or trustees.
Children reach the age of eighteen.
A substantial increase or decrease in the value of your estate.
The acquisition or disposition of a significant asset.
You should see an attorney about reviewing and updating your estate plans prior to reaching 70½ years of age if you have an IRA, 401(k), or other qualified plan that requires you to begin taking distributions at age 70½.
The passage of time is reason enough. You should review your estate planning documents every three to five years.

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If you have questions about making changes to your will or trust call Annette Dawson-Davis Attorney at Law 805.498.0909 or email: [email protected].

Source: www.findlaw.com

Additional Blog articles

19Dec2016

Starting a conversation about estate planning

December 19, 2016

conversation about estates, estate planning, family, trustee Estate Planning, Trusts, Wills

Communication is the key to a successful estate plan. It is also important that your successor trustee be good with people and money and be able to communicate well and honestly with your beneficiaries.

Below is an article from Fidelity with some tips on getting the conversation started about an estate plan.

Tips for Estate Planning Conversations

By Fidelity.com

Even in the most open families, conversation often quiets when two subjects arise: death and money.

For both parents and adult children, confronting the prospect of each other’s deaths can be uncomfortable. Privacy around financial matters is often a key concern, even among close family members.

Why conversation is critical

When it comes to estate planning, there are often significant financial and personal benefits to being transparent and having sensitive conversations. For example, you might assume one of your likely survivors would be comfortable managing a certain asset or serving as trustee, when in reality that person is not up to the responsibility.

From the survivors’ perspective, it’s important they understand your intentions and plans for your estate. Lack of clear communication during estate planning (or an inadequate or outdated plan) can not only reduce the amount your beneficiaries receive, it can also result in uncertainty and conflict for them in an already difficult time.

If you do most of the work on your family’s finances, you’ll want to be certain of your survivors’ comfort level with taking on the task and their understanding of your intentions. For some, it may be best for a professional to assume the responsibility. Consult with your attorney or advisor.

Survivors may even make decisions based on erroneous ideas of what the deceased would have wanted. For example, when communication is lacking, some surviving spouses think honoring their loved one means keeping investments exactly as they were at the time of death. Eventually, this could lead to an outdated portfolio and missed growth opportunities.

Additional benefits of dialogue

The benefits of having a dialogue about estate planning within your family don’t stop at asset protection and an accurate understanding of intentions. Such an open dialogue can:

Bring your family a sense of empowerment, that you are taking control of each other’s collective future rather than leaving some elements to chance.
Pass on family values.
Help your family develop a common understanding and a common philosophy for how you and your family’s legacy will be carried out through generations.
Help prepare the family in the event you or another family member becomes incapacitated.
Help other members of your family—your parents, your siblings, or your children— develop a responsible plan.
Allow your family to take advantage of some of the best tax strategies.

How to get the conversation started

Despite how important this conversation can be, it may still be difficult to initiate. There is certainly more than one right way to begin a dialogue; however, here are a few suggestions to help guide you:

Pick a positive, comfortable environment during a period of relative calm. Don’t wait until a time of crisis when it may be too late to make adequate plans and family members may not feel emotionally able to talk.
Be sincere about your intentions. Be clear that you are initiating these talks out of concern that proper plans are in place and are understood.
Stress the importance and benefits of this conversation to everyone affected.One way to do this is to show an example of an estate that was improperly handled because family members had failed to discuss their plans with each other.

Adult Child

As an adult child, make sure your parents have their own plans and will be properly cared for if one of them passes away or becomes incapacitated.

Parent

As a parent, make sure your children have an understanding of your plans and wishes; if the children are still minors, make sure the appointed guardians are willing and clear on your intentions.

Grandparent or other

As a grandparent or other relative,ensure your grandchildren, nieces, nephews, etc., will be taken care of through your own estate planning, as well as coordinating with their parents on their plans, too.

View the entire article here on Fidelity.com.

Additional Blog articles

8Oct2016

Is a Special Needs Trust needed?

October 8, 2016

assets, Special Needs Trust, Trusts, Wills Estate Planning, Probate, Trusts, Wills

Occasionally I get questions from people about different trusts for their estate. I recently received an email asking about Special Needs Trusts, that I thought would be good to share.

Dear Annette,

My aunt and uncle have one son who is mentally handicapped, he lives in a group home where he is supervised and works. This is my aunt and uncle’s only heir. They are in their early 70’s my cousin is about 49 now.

What do they need to do if something happens to either one of them or both of them?

Do they need to set up a special needs trust?

Your Aunt and Uncle need to set up a special needs trust for the benefit of your cousin. If they do not, he will likely inherit cash making him ineligible for the governmental benefits he needs. A person who receives Medi-Cal and is in a program that follows the SSI rules can only have $2,000 of countable assets. All assets are countable unless specifically excluded, examples of Excluded assets are a home (he or she lives in), household goods and personal effects, an automobile, life insurance with a cash value of less than $1500, a burial plot and a revocable burial fund of $1,500, or les

A special needs trust allows a trustee to purchase extras that do not supplant the beneficiaries governmental benefits. For instance you cannot use the special needs trust funds to purchase groceries, meals or give them cash, but you can use the funds to pay for extras like clothes, phones, recreational equipment, television and cable, haircuts, glasses, airline tickets, travel, durable medical equipment, medical insurance, medical treatment for which public funds are unavailable, dental care, education and tuition. This is not a complete list, but I think it will give you the gist of why the special needs trust is so important for your cousin’s future.

Please have your Aunt and Uncle contact me and I would be happy to assist them in setting up this trust.

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Starting a conversation about estate planning

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