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8 Steps to Take to Ensure Your Will is Valid

WillsNo Comments

will4 150x150 8 Steps to Take to Ensure Your Will is Valid1.  Keep your will up to date. Your life circumstances have probably changed since you first drafted your Last Will and Testament.  Be sure to consult with your estate planning attorney regularly to make sure your document reflects changes to estate tax and other laws.

2.  Make sure at least a few different people in your family know where to find your will when you die. Do not make the common mistake of tucking your will away in a safe deposit box. Bank safety deposit boxes can be sealed upon your death, and then no one will have the access necessary to gather the documents they will need to settle your estate.

3.  Choose your executor/personal representative with care. It is wise to choose someone who is not likely to die before you. It is also best to choose someone who is responsible, honest and fair. Be sure to ask him or her to be your executor before you die; do not assume that they want the title. It is also imperative that you have a back-up executor/personal representative in case your first choice in unavailable at the time of your death, as an executor/personal representative must meet a standard set by California probate laws to be appointed by the court.

4.  Don’t contradict yourself. To avoid legal battles, make sure your will does not contradict the beneficiaries named on your retirement fund or other payable-on-death accounts.

5.  Plan for the worst. Provide a back-up guardian for your minor children in case your first choice has already died. Even if they are still alive, circumstances could make it impossible for him or her to take care of your children.  Also, think about where assets should go if your first choice has already died.  You may not want a child’s ex-spouse to have a share of your estate.

6.  Be explicit. Do not necessarily leave everything to your spouse if you want your children to inherit as well. Many circumstances can occur that would leave nothing for your children. For example, if a surviving spouse remarries, the new spouse may be the rightful heir to the surviving spouse’s estate.  If you want to disinherit a child, you must mention that desire explicitly because in many cases, a child not named in a will may still get a share of the inheritance since the probate court will not know if you accidentally excluded that child.

7.  Be clear about who gets valuable and sentimental items. It is not necessary to make a list of who should have every last one of your possessions, but consider giving those little things away while you are still alive.

8.  Get professional help. An estate planning attorney experienced in these common pitfalls can help you draft a solid California Last Will and Testament.  Contact our Orange County law firm to learn more.

9 Good Reasons to Conduct a Trust Review

California Trusts, Trust AdministrationNo Comments

trust pic e1378498532909 9 Good Reasons to Conduct a Trust ReviewIf you have a revocable trust, when is the last time you reviewed it to make sure it still meets your goals and complies with current law?  If it has been a few years, then it’s time to conduct a thorough trust review – which is usually best done with the help of your estate planning attorney.

Here are 9 good reasons you should schedule a trust review soon:

1.  Check successor trustees.  For many revocable trusts, the trust owner serves as the trustee with a spouse named as co-trustee.  You should also have designated others to serve as successor trustees, so be sure those designations are still correct.  You should also specify when you want successor trustees to step in – upon the death of the first spouse or after both of you are gone.

2.  Trustee removal by heirs.  Have you provided your heirs with the ability to remove successor trustees?  This should be considered and addressed specifically in your trust.

3.  Distribution of assets by co-trustee.  Many trusts are created that provide the option for co-trustees – generally a surviving spouse – to change the distribution of assets in the trust at his or her discretion after the death of the trust owner.  However, this could lead to family conflict in cases of a second marriage or if a surviving spouse remarries.

4.  Asset protection.  Today, it is probably a wise move to ensure your trust continues during the lives of your children to protect assets from creditors or divorce.

5.  Funding the trust.  You must be sure you have titled all the assets held in the trust in the name of the trust, not the original owner.  This is called “funding the trust”, and if this is neglected, your trust is a bust.

6.  Check beneficiaries.   Make sure the beneficiaries of your trust are coordinated with other beneficiary designations in your estate plan for retirement and investment accounts.

7.  Consider age-based distributions.  Many trusts hold assets for children or grandchildren until they reach a certain age – usually 21.  However, every family is different, so if you believe those distribution ages should change, you will need to update your trust.

8.  Retirement plan benefits.  The best way to pass on retirement plan benefits is via a beneficiary designation form filed with the custodian of your retirement plan.  However, some people choose to name a trust as beneficiary of retirement plan assets.   In this case, your trust should have special provisions that allow annual required minimum distributions to be stretched out for as long as possible.

9.  Estate taxes.  There were major changes to the estate tax laws a year ago, so if you have not reviewed your trust since that time, it should be reviewed by an estate planning lawyer to be sure it is still current and complies with the new laws.

To schedule your trust review or to learn more about creating a trust, contact our Orange County law firm.

7 Tax Changes That Could Impact Your 2013 Return

Tax PlanningNo Comments

tax wallet empty 150x150 7 Tax Changes That Could Impact Your 2013 ReturnA recent Wall Street Journal article noted 7 tax changes that could impact your 2013 return, including:

Increase in top tax rate on income, capital gains and dividends.  A new top tax rate of 39.6% now applies to individuals earning more than $400,000/year, married couples filing jointly with income in excess of $450,000/yr. and head of household filers with annual income of over $425,000.  For people in these income brackets, the top tax rate on capital gains and dividends has increased to 20%.

Investment income Medicare surtax.  If your adjusted gross income (AGI) is more than $200,000 (individual) or over $250,000 (married, filing jointly), you could be subject to the 3.8% Medicare surtax.  If — or how much — you owe depends on the amount of your net investment income and how much your AGI exceeds the threshold of $200K/$250K.

Medicare surtax on combined salaried and self-employed income.  Taxpayers with a combined salary and self-employment income greater than $200,000 (individual) or $250,000 (married, filing jointly) will be subject to an additional 0.9% Medicare surtax – on top of the 2.9% Medicare tax.

Personal and dependent exemptions cut.  Personal and dependent exemptions may be cut or eliminated entirely for some taxpayers for 2013.  The phasing out of these exemptions begin at $250,000 AGI for individuals, $300,000 AGI for married couples filing jointly, and $275,000 AGI for heads of household.

Itemized deductions cut.  The phasing out of itemized deductions – home mortgage interest, property taxes, state and local income taxes, charitable donations and others — begin at $250,000 AGI for individuals, $300,000 AGI for married couples filing jointly, and $275,000 AGI for heads of household. The affected deductions are reduced by an amount equal to 3% of AGI over the threshold limits.

Medical deduction threshold increased.  The new threshold for claiming itemized medical expense deductions is up 2.5% for 2013 — medical expense must now exceed 10% of AGI, up from 7.5% in 2012.  However, if you or your spouse was over the age of 65 at the end of 2013, this higher level won’t kick in until 2017.

Married same sex couples have to file as married taxpayers.  Same sex couples that were legally married in states that recognize same sex marriage must file their federal taxes either jointly or as married-filing-separately.

If you are looking for ways to save on taxes, contact our Costa Mesa law firm.


7 Ways to Regain Control of Your Retirement

Retirement PlanningNo Comments

help button 150x150 7 Ways to Regain Control of Your RetirementIf you feel like you’ve lost control of your retirement before you even started it, you are not alone.  Here are 7 ways you can regain control of your retirement:

1.  Have a plan.  You need to know how much money you will need in retirement and then create a plan for saving or investing your way to that number.

2.  Have a Plan B.  Unfortunately, we are not always in control of our own destinies, especially when it comes to employment.  You need to consider different potential scenarios and create alternate plans for those.

3.  Know what you have.  Make a comprehensive list of all your assets – savings, investments, property, etc. – so you have a baseline for planning.

4.  Fully fund your retirement accounts.  Contribute the maximum each year to your retirement accounts.  If you’re over 50, take advantage of “catch-up” contributions that stretch the annual limits by $5,500 for 401(k)s and $1,000 for IRAs in 2014.

5.  Take calculated risks.  Being too cautious with investments after you retire could cost you.

6.  Don’t forget the fees.  Fees for managing your investments, including your 401(k), can take a chunk of change out of your nest egg over time.  Be sure you scrutinize these fees – which administrators are now bound by law to provide to you – and make any necessary changes if you find they are out of line.

7. Don’t count on home equity.  Although the housing marketing has improved significantly from the recession, financial experts caution homeowners against counting home equity into their net worth.  Instead, they say it should be viewed as insurance to shore up any shortfalls in retirement income projections.

To take control of your retirement, and the financial future of your family, contact our Orange County law firm.


Retirement Planning for Boomers: 5 Moves You Need to Make Now

Retirement PlanningNo Comments

retirement sign e1367526898975 Retirement Planning for Boomers: 5 Moves You Need to Make NowFor many baby boomers, retirement planning has been a bit of a roller coaster ride in the last few years.  First the recession slammed your nest egg, and then the bull market hopefully helped you fatten it up again.

But if you are nearing retirement, don’t rely on the vagaries of the stock market and the economy to determine your retirement lifestyle.  To get back on track with your retirement planning, you need to make these five moves now:

Make catch-up contributions.  If you are over 50, you are allowed to add an extra $5,500 to your 401(k) in 2014, in addition to the $17,500 limit.  For IRAs, you can add another $1,000 to the $5,500 annual limit.

Educate yourself on Social Security benefits.  You can check what your anticipated Social Security benefits will be online now using the Social Security Administration’s Retirement Estimator.  If you are married, you can optimize your benefits by having the highest wage earner delay taking benefits until full retirement age (66+) or, even better, at age 70.

Plan for retirement income.  Once you retire, you go from building your savings to managing it so it lasts through the rest of your life.  You may want to consider financial instruments like a fixed annuity to pay you income for life.

Spend less, save more.  Cut back as much as possible now and funnel those savings into your retirement savings.  You may also need to work longer than planned if you are still catching up.  If you are still working, increase your retirement plan contributions by one percent every year.

Get help.  Consult with an estate planning attorney and a financial advisor to review your investments and savings strategies to be sure you can meet your retirement goals.

If you need retirement planning expertise, contact our Orange County law firm.

Harvard Medical School’s Caregivers Handbook Now Available

Estate PlanningNo Comments

caregivers handbook e1390512010664 Harvard Medical School’s Caregivers Handbook Now AvailableHarvard Medical School has just published the Caregiver’s Handbook, a special health report designed as a comprehensive resource for anyone who has assumed the role of caregiver for a loved one.

According to the Harvard Health Publications website, the new handbook was designed as a complete resource for those who have been thrust into the role of caregiver, and provides tips for daily caregiving tasks, technologies that caregivers can employ to protect their loved one, guidance for navigating the Medicaid and Medicare systems, potential problem areas and viable solutions as well as some basic legal, financial and medical planning information.

The Caregiver’s Handbook is available to order online for $20 for a printed copy or $18 for an electronic PDF download.

If you are the caregiver for an elderly relative, it is imperative that the person you are caring for has these necessary estate planning documents in place:

Durable Power of Attorney – allows caregivers to handle the financial affairs of someone without having to incur the expense and trouble of establishing a guardianship.

Advance Medical Directive  – this document enables a caregiver to make necessary medical decisions if the person is unable to do so and should also include a HIPAA release so the caregiver has access to important medical information.

Living Will – a legal document that spells out a person’s wishes for end-of-life care.

For more information on the legal issues concerning elder care and estate planning, contact our Costa Mesa law firm.

Before You Remarry, Revisit Your Estate Plan

Asset Protection, Estate PlanningNo Comments

Marry for Money1 150x150 Before You Remarry, Revisit Your Estate PlanIf you are planning to remarry soon, you have probably given some thought to how this new marriage will impact your finances and that of your old and new families.  Before you take your next trip down the aisle, you both should review your estate plans with the following in mind:

Asset management – both of you need to create a list of your separate assets, including IRAs, brokerage accounts, bank accounts, retirement plans, pensions, life insurance policy, etc., and then decide which of these you plan to combine and which you plan to keep separate.

Asset plan – if one or both of you have children you are bringing to the new marriage, then you need to plan for how they will be included in your estate plan and wills.  You may want to consider creating a trust or buying additional life insurance to cover children.

Estate plan — consulting with an estate planning attorney is important, whether your assets are great or small.  If you have an existing estate plan and you remarry, you need to update your will, living will, powers of attorney, HIPAA authorization, and change the beneficiary designation on your qualified retirement and life insurance plans.  And if one spouse is bringing significantly more assets to the marriage, you may want to consider a prenuptial agreement to protect assets.

Whenever a major life event brings change to your family circumstances, contact our Orange County law firm to review or update your estate plan.

Making a Plan for Your Digital Afterlife [INFOGRAPHIC]

Asset Protection, Estate PlanningNo Comments

As more and more of us join social networks to keep in touch and live our lives online, the practice of planning for what happens to those digital assets after we are gone is a growing area of estate planning.

Your digital assets can have both sentimental and financial value.  Think of all the financial transactions you perform every week online, and you will realize that a plan needs to be prepared for what happens to your online accounts after you are gone.

The infographic below — prepared by web hosting information site WhoIsHostingThis? – provides information on what the major social networks require to deactivate an account as well as information about online tools available to help you protect and plan for the disposition of your digital assets:

preparing for your digital afterlife infographic 52caa38e5ed42 Making a Plan for Your Digital Afterlife [INFOGRAPHIC]

To learn more about estate planning for digital assets, contact our Newport Beach law firm.

7 Common Items Often Overlooked in Estate Plans

Estate PlanningNo Comments

estate planning wills trusts e1378411406862 7 Common Items Often Overlooked in Estate PlansIt’s been said that the devil is in the details, and it is often the overlooked details in estate plans that can bedevil estate executors and loved ones.  Here are 7 of the most common items that are often overlooked when it comes to estate planning:

1.  Incomplete asset list.  One of the ways an estate administrator’s job can be made more difficult is when there is an incomplete list of estate assets.  Trying to locate all the assets in an estate can cost extra time and money, so be sure you have a complete list of your assets accounted for in your estate plan.

2.  No cash to administer the estate.  While an estate is being settled, there will be a need for cash to pay some expenses and for a surviving spouse to live on.  If there is not adequate liquidity in the estate, some assets may need to be sold, which can reduce an inheritance for heirs.

3.  Taxes not considered.  Even if the estate will not be subject to estate taxes, if there are assets that earn income, these will be taxed and should be planned for.

4.  Asset valuation.  If there is a collection or other type of hard-to-value asset in the estate, the owner should leave written instructions for an executor on how the asset values have been determined.

5.  Designated beneficiaries.  An estate owner should leave a comprehensive list of all financial accounts or life insurance policies that carry beneficiary designations.  Include the account information, custodian institution and who is named as beneficiary of each account with copies of the beneficiary forms included.

6.  List of creditors.  Before inheritances are distributed, creditors must be paid, so a list of creditors should be included with your estate plan so your executor can verify claims.

7.  Accounting for gifts.  If you have provided family members with a loan or a gift, be sure to specify in your estate plan whether or not the loan or gift is to be offset with an unequal distribution or forgiven.

To ensure that you don’t overlook some of these common issues in your estate plan, contact our Orange County law firm.

How to Choose the Right Trustee or Executor

Estate Administration, Trust AdministrationNo Comments

choice e1336511185349 How to Choose the Right Trustee or ExecutorWhen creating an estate plan, many parents wonder if they should name the oldest child as executor or trustee.  While we certainly understand the thinking behind that choice, what should be guiding your choice is not birth order, but who will do the best job.

Here are some guidelines on how to select the best executor or trustee:

Estate size.  The larger the estate, the bigger the job to manage it.  If you need someone with expertise to manage assets for beneficiaries, you should choose someone with financial prowess or with the management skills to engage expert help.  The person you choose also needs to be well organized and disciplined, with the ability to do what is best for all beneficiaries.

Family dynamics.  If you have more than one child and plan to choose one over the others, this could create conflict.  First, be sure the child you are choosing really wants the job.  If this is confirmed as your best choice, sit down with your other children and explain your thinking and why the child you have chosen has the skills for the job.

Outside counsel.  You do have the option to choose a corporate trustee to manage a trust, which means you would have someone with the legal and financial expertise to manage the trust assets and the impartiality to fairly assess requests and distribute assets.  You will need to weigh the benefits versus the fees the trust will have to pay if you choose this option.

We can help you make the right decision when it comes to choosing an executor or a trustee; contact our Orange County law firm for more information.

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