When it comes to estate planning in California, one-size does not fit all. To start, the estate plan must take into account the specific values of the clients creating the estate plan and the maturity of those benefiting from it. This requires understanding each client’s background, their vocation, education, philosophies on saving and spending, their wealth, financial sophistication, and their personal views on work, gifts, inheritances, and taxes. For a plan to truly work the estate planning attorney must also take into account the maturity and life’s experiences of the beneficiaries. For an outright gift to a disciplined, hard-working, independent child may make sense, the same outright gift to a debt-burdened, motivationally challenged child could spell disaster.
Archive for Estates
A charitable remainder trust is a tax exempt trust that can liquidate an asset to create two interests: income interest and remainder interest. The income interest is paid out to a designated beneficiary (such as the creator of the trust) for a lifetime or at the conclusion of the term, and the remainder interest is passed to a qualified organization of the donor’s choice as specified in the trust document. Qualified organizations include charities, family foundations, and donor advised funds.
Establishing a life estate is a relatively simple process in which you transfer your property to your children, while retaining your right to use and live in the property. Life estates are used to avoid probate, maximize tax benefits and protect real property from potential long-term care expenses you may incur in later years. Transferring property to a life estate avoids some of the disadvantages of making an outright gift of property to your heirs. However, it is not right for everyone and comes with its own set of advantages and disadvantages.
Estate planning and retirement planning go hand and hand. Proper estate planning can avoid the costs associated with probate and deal with matters of incompetency and provide for minor children. In terms of retirement planning, individuals are living longer and the rule today is to plan for a 30 year retirement.
If you are over 50 years old, you should start planning for your retirement and that starts with your estate planning documents.
Joint tenancy is a form of co-ownership where individuals hold an equal, undivided interest to a piece of property. When one joint tenant dies, the surviving joint tenant, by operation of law, automatically inherits the deceased joint tenant’s interest regardless of what any document, whether a will or a trust, dictates.
If you have a living trust, do you need assistance in reviewing whether you have properly transferred title to your assets to the living trust?
Have there been any significant changes in the lives of your appointed decision makers that would affect their ability to serve on your behalf? Are there people you would like to have as decision makers who are not listed on your original estate plan documents?
Has your net worth changed significantly since you established or modified your estate plan? Has your marital status changed? Are you concerned about leaving an inheritance outright to a beneficiary?
Before portability, each spouse was forced to use their lifetime exclusion either before or at the time of their death. If the lifetime exclusion was not used, it was lost. Now, with portability, the couple is not regulated to consuming the first spouse’s lifetime exclusion at the first spouse’s death. Portability extends the time to both spouses’ exclusion until the survivor dies; that is a major advantage.
There is no “one size fits all” estate planning tool. Many planning tools work well for a majority of couples – some work well for many, others work well for only a few. Portability of the estate tax exclusion is one of those planning tools that would work well for a great majority.