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How to Protect Your Estate from a Child’s Divorce

Asset Protection, California Trusts, Estate PlanningNo Comments

divorce split couple 150x150 How to Protect Your Estate from a Child’s DivorceWith the days of arranged marriages far behind us, many parents are concerned about how to protect the assets they plan to leave their children from in-laws who may not be around for the long haul.  Suggesting a prenuptial agreement to your child who is about to get married is usually met with resistance, so most parents don’t even broach the subject.

Fortunately, there are a number of ways to shield your estate from those who marry – and may divorce – your children:

Irrevocable trust – this is a common trust instrument to pass assets to children.  But married children must be careful not to contaminate the trust with marital funds – for example, paying taxes or insurance with marital assets – or else the trust is a bust.

Preservation trust – this can be used to shield assets from a soon-to-be spouse by having the child place assets they already own into the trust and naming someone other than their spouse as beneficiary.

Post-marital agreement – once the honeymoon period is over, it may be easier to convince a son or daughter to draw up a post-marital agreement to protect the family estate.

For more guidance on protecting family assets, contact our Newport Beach law firm.

Making a Plan for Your Pets

California Trusts, Estate PlanningNo Comments

retired couple with dog e1332449149257 Making a Plan for Your PetsWhat will happen to your pets if they outlive you?  Most of us have come to view our pets as important members of our family, and if you have always had a pet, chances are they will be with you until the end.  Have you made a plan for their protection after you’re gone?

If not, there are several ways to do this.  One popular method is creating a California pet trust.  Much like creating a trust and naming a guardian for a minor child, a pet trust can be established for the care of your pet after your death or even in case of incapacitation. You will need to choose a trustee and fund the trust, as well as provide your instructions for the pet’s care and what should happen to the remaining assets after the pet dies.

Another method gaining in popularity for those who may not need to create a trust for the care of their pet is a pet protection agreement.  In the agreement, you will need to designate a caretaker for your pet and this person must sign the agreement.  You will also need to include details about the type of care that will be provided for your pet, and include the amount of money you will be leaving for your pet’s care.

If you had planned to leave provisions for your pet in your will, don’t do it.  Your will could be tied up in probate for some time, which could leave the care of your pet in limbo.  However, your will should mention the steps you have already taken to provide for your pet, whether it be through a pet trust or a pet protection agreement.

If you have questions about providing for your pets in your estate plan, contact our Costa Mesa law firm.

Do You Qualify for a California Estate Plan?

California Trusts, Estate PlanningNo Comments

estate planning image 284x250 150x150 Do You Qualify for a California Estate Plan?We’ve heard it a million times: trusts are just for the wealthy and estate planning is for old people.  However, recent research says that only 3 out of every 100 Americans over the age of 65 are set up to live comfortably in the years following their retirement.  Are you betting on being one of those three?

This scary and sad prospect should be a warning sign to younger Americans that only early planning will net you a comfortable retirement. Even if you end up having to borrow against a retirement fund later, just having one gives you a huge advantage.

People in their mid-20s should be thinking about estate planning, even if they plan to switch careers or are still in school. Just adding 5-10 percent of a paycheck to a Roth IRA once or twice a month will add up more than you think and can be a nice spring board to a fuller fund — and a better retirement.

For those who have yet to speak to an estate planner, now is the time, even if you don’t think so. By not knowing your options, you limit yourself to what you know — and most likely, you are not a financial analyst or asset protection lawyer who knows the ins and outs of trusts and estates.

You can create a better tomorrow for yourself at any age.  Contact our Newport Beach law firm for more details.


5 Ways Establishing a Trust Can Benefit You & Yours

California Trusts, Estate PlanningNo Comments

Trustpic 150x150 5 Ways Establishing a Trust Can Benefit You & Yours1.  Avoid estate taxes.  If you have significant assets or own property in a state that has an estate tax, an irrevocable trust can enable you to remove appreciating assets from your estate at a discount.  This means most of what you leave behind over and above the current $5.25 million exemption (which is indexed each year for inflation) can go to your heirs.

2.  Protect your privacy.  Generally, assets are distributed in two ways after you are gone – via a will or through a trust.  A will must pass through the probate process, and is made public record.  Trusts are private, so how much and to whom you bequeath your assets will remain private as well.

3.  Asset protection.  Trusts are especially effective at protecting assets against creditors, divorce or other unexpected life events that may plague your heirs.  You can add a spendthrift clause in a trust if you want to protect assets for future generations from being spent all at once, and you can also use a trust to protect assets for children from previous marriage or a special needs child.

4.  Provides control.  Trusts give you the power to control how your assets will be distributed, which can be especially useful if you are concerned about the money management abilities of your direct heirs.

5.  Avoid probate.  One of the main reasons to create a revocable trust is to avoid the delay and expense of probate, which can take anywhere from a year to several years depending on the size and complexity of your estate.  The cost of establishing a revocable trust is far less than the cost of probate in California.

Trusts are an essential part of a good estate plan; for more information on trusts, contact our Costa Mesa law firm.

Be Sure to Fund Your Trust to Avoid Probate

California TrustsNo Comments

trust1 e1319135794367 Be Sure to Fund Your Trust to Avoid ProbateA common estate planning mistake many make is not funding the trust you have created.  If you do not transfer your assets into your trust, it is an empty shell and does nothing to accomplish the objectives you had in mind when you established it.

Here are the proper procedures for funding your trust:

Real estate – a new deed in the name of the trust must be drawn and recorded at the county clerk’s office.

Stocks, bonds, mutual funds – to transfer the ownership of these assets into your trust, you need to contact your broker, investment counselor or transfer agent for the proper paperwork and complete those documents as instructed.

Savings bonds – you will need to obtain a reissue form from the Federal Reserve Bank and re-title the bonds in the name of the trust.

Brokerage accounts – contact your broker for the proper forms that will enable the broker to close the existing accounts and transfer the assets into a new trust account.

Stock certificates – you will need to send a completed “stock power” form as well as a W-9 form with your tax ID number with the original stock certificates to the company’s transfer agent.

Bank accounts, CDs – new accounts will need to be established in the name of the trust.  If your bank cannot transfer CDs until the maturity date, then mark them “in trust for” a beneficiary until the CDs mature and you can transfer them to the trust.

To avoid common estate planning mistakes, contact our Costa Mesa law firm.

8 Steps to Create a California Pet Trust

California TrustsNo Comments

cat and dog e1347571391364 8 Steps to Create a California Pet Trust The American Humane Society reports that 90 percent of pet owners in America consider their pets to be members of the family.  This trend may be contributing to the rising popularity of pet trusts in America, including California.

To establish a California pet trust, you should:

1.  Determine who will act as the trustee and gain their permission to name them in your trust documents.  You will need to provide their name and address.

2.  Determine a successor trustee in case your primary trustee is unable to fulfill his or her role according to your pet trust.

3.  If different from the trustee, name a primary caregiver and a successor caregiver for your pets.

4.  Furnish photos and microchip ID numbers for each pet included in the trust to prevent fraud.

5.  Outline the care of each pet in detail, including a requirement for veterinary visits, nutritional needs, healthcare needs, etc.

6.  Determine how much cash or assets are needed to properly care for your pet(s).  Be realistic, as your heirs could challenge an excessive amount left for the care of pets.  Include the costs of administering the trust as well.

7.  Select a beneficiary to receive any funds that are left over after the last pet provided for in the trust has died.

8.  Provide instructions for the burial or cremation of your pet(s).

If you have a beloved pet that you want to provide for in a pet trust, contact our Orange County law firm.

How Trusts Can Protect Assets in the Event of a Divorce

California TrustsNo Comments

trust1 e1319135794367 How Trusts Can Protect Assets in the Event of a DivorceTrusts play an important role in protecting assets against creditors as well as providing an efficient and tax-saving way to gift and manage assets.

Depending upon how they are structured, trusts can also help protect assets in case of a divorce; here’s how:

If assets are placed in trust prior to marriage, they are typically treated as separate property and a future spouse would have no claim against the trust property.

In some states, assets placed in a discretionary trust are not considered to belong to the beneficiary and may not be used in calculating alimony.

Trusts can be used to protect post-divorce assets from creditors and lawsuits.

Drafted properly, a trust can help protect assets from unintended beneficiaries like an ex-spouse.

For more information on trusts and other asset protection strategies, contact our Orange County law firm.

Structure Your Trust with Flexibility for Maximum Benefit

California TrustsNo Comments

trust1 e1319135794367 Structure Your Trust with Flexibility for Maximum BenefitGuidelines On How To Structure Your Trust For Maximum Flexibility

To provide the maximum benefit, a Trust should be structured with the flexibility to distribute assets over time.  As the Grantor, you can stipulate specific ages at which beneficiaries might receive their assets, either in a lump sum or in proportional shares over time.

A Trust for a minor child can be established to pay necessary expenses over time, for educational needs, clothing or anything else you deem necessary or desired.  The Trustee is given specific authority to distribute trust assets under the guidelines provided by you as the Grantor.  A Grantor can specify what expenses can and cannot be paid from the Trust.

Alternatively, a Grantor can designate ages at which the Trust assets may be distributed to the beneficiary. A beneficiary could receive 10 percent of the Trust assets each year until he or she reaches a certain age, at which time he or she could receive the balance of the Trust assets.  The payments can be distributed in a number of ways, or the assets can be left in Trust to the beneficiary to insulate assets from creditor claims.

Contact our law firm for additional guidance on protecting your assets.

Still Good Reasons to Establish a Trust: Protect Assets, Avoid Probate and More

Asset Protection, California Trusts, ProbateNo Comments

trust1 e1319135794367 Still Good Reasons to Establish a Trust: Protect Assets, Avoid Probate and MoreCommentary from a Top Rated Estate Planning & Probate Lawyer in California

Trusts are fundamental estate planning tools that have been used for years by people wishing to protect their assets and ensure their safe passage on to heirs.  With the estate tax exclusion now set at $5.25 million per person for 2013 (and adjusted annually for inflation), some may think that a trust is no longer necessary to perform these valuable tasks.

However, there are still several good reasons for establishing a trust:

  • Trusts can allow you to pass on assets without having to go through probate.
  • Establishing a trust is usually much less expensive than the cost of probate.
  • Trusts provide everyone with a degree of privacy that is lost through probate.
  • Trusts can protect assets against creditors.
  • Trusts enable you to set rules on when and if a beneficiary will inherit assets.
  • Trusts guard against the vagaries of changing estate tax rules, shielding assets from potential taxes.

Even if your estate is modest, a trust can help you provide for your heirs today as well as for those in future generations.

Your California legal and financial planning experts are at your service; Contact us today.

How Trusts Can Help Heirs with Special Needs

California Trusts, Estate PlanningNo Comments

special needs trust 150x150 How Trusts Can Help Heirs with Special NeedsProbably one of the most prevalent worries for parents of special needs children is the long-term care of that child once the parents are gone.  There are ways to plan for the care of a long-term special needs heir via special trusts, including:

Housing – A special needs trust allows parents to place assets in trust for the benefit of a special needs heir without endangering their government benefits.  A qualified personal residence trust (QPRT) allows parents to stay in the home with the special needs child, and upon their death transfers ownership to an heir – for example, another adult child or a charity – at a discount to the current market value.

Long-term care – should the parent of a special needs child under the age of 65 need long-term care, a special needs trust can shelter parental assets and still allow the parent to qualify for Medicaid coverage.

Inheritance – in order to avoid a special needs child from being disqualified for government services, parents may be tempted to leave everything to their other children with the proviso that they care for their special needs sibling.  However, those assets could go to others if one of the other children gets divorced or dies.  Parents should consider leaving equal shares to all children, and placing the special needs child’s shares in a trust.

Help is available to you by contacting your Southern California financial planning experts today.

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