November 24th, 2010
One of the fastest growing forms of elder abuse is financial exploitation. One study estimates that each year there is $2.6 billion in senior fraud. The elderly are often targeted by financial abusers because they account for 70% of household net worth in the U.S. The typical profile of an elder abuse victim is a senior who is polite, trusting, wants to preserve their freedom, and fears being physically harmed.
If you care for an elderly family member, part of your responsibility is to protect them from financial elder abuse. Financial elder abuse occurs where an abuser takes an elder’s money or property for their own benefit. Abusers use different tactics to gain access to an elder’s finances. Some may use intimidation or threats of abandonment. Others may try to befriend the elder in order to gain their trust. Read the rest of this entry »
Posted in California Conservatorship, Financial Elder Abuse
October 22nd, 2010
When persons over age 65 are no longer able to perform all the tasks of daily living, moving to a care facility may be the best option. Today, there are several categories of facilities which offer different levels of care depending on the person’s specific needs. Assisted living facilities are for seniors who need help with daily activities like meal preparation, house-keeping, laundry, and errands. Nursing home facilities cater to seniors whose medical conditions require supervision or administration of medication.
These facilities ensure that a senior is receiving the proper level of care while maintaining as much of their independence as possible. However, the cost of many care facilities can run thousands of dollars per month. Medicare will only pay for 100 days of care in a nursing home after a 3-day hospital stay. After Medicare runs out, the person will have to pay for their care themselves, or qualify for Medi-Cal. Medi-Cal is California’s public health insurance program which provides services for low-income people, including seniors. Read the rest of this entry »
Posted in Medi-Cal Help
September 10th, 2010
What is a Living Trust?
A Living Trust is a legal document that holds title to your assets on your behalf. You, as the “trustee” of the Living Trust, can move assets in and out of the trust, revoke the trust, or amend the trust at any time. However, after your death the trust becomes irrevocable and the assets in the trust are transferred to your “beneficiaries,” the people you want to inherit your property.
Should a Living Trust be a Part of an Estate Plan?
When deciding whether to make a Living Trust part of your estate plan, you should consider the benefits it can provide. One of the most important reasons to make a Living Trust part of your estate plan is to avoid probate. Under California law, if your estate has over $100,000 in assets at the time of your death, your estate must be probated whether or not you have a will. (Some assets, such as life insurance benefits paid to others, do not have to be included in calculating the $100,000.) Probate can be a time-consuming and costly process. However, assets conveyed to a Living Trust before death are not subject to probate, although a Living Trust generally does not contain every item you own, and a will is necessary to provide for the distribution of the remaining ones. If the value of those assets is less than $100,000, then no probate is required.
Can a Living Trust Help Me Plan For a Disability?
Without a living trust, if you become incapacitated, dramatic measures such as a court-supervised guardianship or conservatorship may be needed to manage your property. The advantage of a Living Trust is that you can specify who can manage your property if you become disabled. However, you need to make sure that your Living Trust is written to specifically address disability planning.
Can a Living Trust Reduce Estate Taxes?
A Living Trust may reduce estate tax liability. For example, a married couple can create an estate plan that qualifies for the federal estate tax exemption by having a Living Trust drafted as an “AB Living Trust.” This may be a useful document to include as part of an estate plan depending on the value of the estate, whether or not each spouse has separate property of a substantial value, and whether there are children who are to be provided for after the death of one parent.
A final reason that a Living Trust may be valuable to you is that it keeps your information private. Probate is a court-supervised process that requires the disclosure of private records that you may not want to become part of public court records. If all your assets were handled in a probate, any person could find out who was going to inherit your assets and what those assets were.
Estate planning is an intimate matter that you want handled with ease, efficiency, and a sense of trust between you and your attorney. Estate planning does seem complicated when there is so much to consider. Creating a living trust that will allow you the freedom to manage your assets while you are alive, plan for a potential disability, and avoid costly estate taxes takes the experience of a seasoned attorney. Call the team of estate planning attorneys at San Diego Law Firm at (619) 794-0243 for the living trust, will, and other estate plan options that will work best for you. The cost is surprisingly affordable, while the protection and peace of mind you’ll gain are priceless.
Posted in Estate Plan, Trust
August 20th, 2010
Parents who want to leave property and investments to their children can utilize general estate planning tools to distribute their assets upon their death. However, families who have children with special needs require an estate planning device that ensures their disabled child is protected once they enter adulthood, both while the parents are living and after they have passed away. If you have a disabled child, an estate planning device you should consider is a Special Needs Trust. Many national associations that provide support to families with special needs children, such as the Autism Society of America, recommend using a Special Needs Trust as part of your estate plan. Read the rest of this entry »
Posted in Estate Plan, Special Needs Trust, Trust
June 21st, 2010
Benefits of Life Insurance
Knowing loved ones will be financially cared for in the event of death can give a family breadwinner great peace of mind. Life insurance is a valuable tool in any estate plan because of the benefits it provides.
First, life insurance can help family members bare the financial consequences of an unexpected death. The National Funeral Directors Association approximates the average expense of a funeral to be upwards of $6500.00. This is a cost that may be prohibitive unless there is a reliable and immediate source of funds which can be used to pay for high funeral expenses.
Second, a life insurance policy ensures the loved ones’ future financial security. For example, if the family’s primary income earner passes away, a well funded life insurance policy will provide money to meet current and future household expenses such as mortgage and education costs. If you want to ensure that all of your life insurance proceeds are used for the purposes which you intend, you may want to consider having your attorney prepare an Irrevocable Life Insurance Trust for you.
Life Insurance and Estate Tax
What you may not know is that the proceeds paid on a life insurance policy are included in an estate (everything you own when you die) for estate tax purposes. This means the size of the estate is actually inflated by the face value of the policy. For example, if you have real estate, bank accounts, and stocks that add up to $2,000,000 you may think that only $2,000,000 of the estate will be subject to the federal estate tax rate. However, if you have $500,000 worth of life insurance it is considered part of your estate, and estate taxes will be due on $2,500,000! The underlying reason life insurance benefits are included in an estate is because the policy holder is deemed to “own” the proceeds so that the IRS can fully tax those proceeds as part the deceased persons estate at death.
Reduce Estate Tax With a Life Insurance Trust
One way to avoid tax on life insurance proceeds is to establish an Irrevocable Life Insurance Trust, or ILIT. Under an ILIT, the life insurance policy is not “owned” by the decedent or his or her spouse. Therefore, the proceeds are not considered part of the decedent’s estate. This is done by transferring ownership of a life insurance policy to the trustee of an ILIT. After ownership interest of the life insurance policy is transferred to the trustee, you’ll no longer “own” the policy and the proceeds can’t be taxed as being part of your estate when you die.
Advantages and Disadvantages
However, there are a few drawbacks to consider in setting up an ILIT. For example:
- You can’t change the beneficiary of the policy: If you as an insured want the flexibility to deal with changed family circumstances, an ILIT may not be the right choice for you because after the ILIT is created, the insured gives up the right to change the beneficiary of the policy.
- You can’t borrow from the policy: If your policy normally allows you to borrow against the policy or make cash withdrawals from it, under an ILIT you will no longer be able to do this.
- Transferring an existing policy to the trust could be complicated: If you already have a life insurance policy, ownership can be transferred. But, if the insured dies within 3 years of the date from which the policy was transferred, the life insurance policy will be included in the estate for tax purposes anyway! However, depending on a number of factors, your attorney may be able to avoid this problem with a “fail-safe” clause that ensures that the proceeds of a transferred policy are held separately under an ILIT.
Our estate planning attorneys at San Diego Law Firm know the complexities involved in making sure loved ones and assets will be cared for and protected in the worst-case scenario for a family. We can answer your questions about life insurance trusts and other estate planning tools that you can use to ensure that 100% of life insurance proceeds go to the beneficiaries instead of to paying estate taxes. Also, we can look over your existing estate plan to make sure that all potential “fail-safe” mechanisms are in place. Call us at 619-794-0243 for advice and a consultation on ILIT issues.
Posted in Estate Plan, Life Insurance
May 14th, 2010
The decision of who inherits your property (and how) can either be made by you, or can be decided by the State of California. Let’s say that you never create a will or trust. Who would inherit your money and property?
Dying Without a Valid Will (Intestacy)
If you don’t leave behind any instructions for how you want your property divided (such as with a valid will or living trust), then California law steps in so that the probate court can distribute your property to your heirs. A person who dies without a valid will is said to have died “intestate.” In these situations, California’s intestacy laws apply. These laws decide which family members will inherit by creating a hierarchy. Sometimes things get more complicated, but here are the basics: Read the rest of this entry »
Posted in Estate Plan, Living Trust Inheritance, Probate & Inheritance, Trust, Will
April 23rd, 2010
As discussed in the previous post, a power of attorney is a great tool that lets you plan for possible of incapacity in the future, but this document can also be used now in your day to day life if you’d like.
Decide if you want your agent’s powers to start now, or later
Just as important as what your agent can do is when they can do it. A power of attorney can give your agent power right away, or hold off until a future event or condition happens. We’ll explain the benefits and drawbacks with either option. Your decision will depend on who you will name as your agent and your personal circumstances. Read the rest of this entry »
Posted in California Conservatorship, Estate Plan, Guardianship, Health Care, Power of Attorney
April 23rd, 2010
In California, a “financial power of attorney” is a document you can use to give someone permission to manage your money and property and make decisions on your behalf.
Choosing someone to manage your finances
Whoever you choose to handle your finances through your power of attorney is known as your “agent.” If this person steps in because you aren’t able to manage your finances, then you’ll depend on your agent to keep things on the right track for you. Read the rest of this entry »
Posted in Estate Plan, Health Care, Power of Attorney
March 12th, 2010
Parenthood involves planning not only for your day to day responsibilities, but also for the major “what-ifs.” If you have minor children, have you thought about who you would want to take care of them if both you and the other parent become incapacitated or pass away? California law lets you choose in your will who you’d want to raise your children if you and the other parent are unable to. This is done through a “guardianship.”
Your choice of guardian is one of the most important decisions you’ll make in your will, so how do you decide? In “How to Choose a Guardian,” mother of three Denise Oliveri proposes that you figure this out by answering five questions. To decide who will be right for the job, she suggests you evaluate age and health concerns, moral and educational values, financial ability to care for a child, and whether your child would have to move away. Read the rest of this entry »
Posted in Estate Plan, Guardianship, Trust, Will
February 9th, 2010
When you’re concerned about the safety and wellbeing of someone close to you who has lost the mental or physical ability to make personal or financial decisions, a California conservatorship can help. By creating a conservatorship, the court will name a person to serve as a “conservator,” who will supervise the incapacitated person’s care or finances. Every situation is different, which is why conservatorships can take three different forms: The conservator can be given decision-making authority over the incapacitated person’s personal affairs (known as a conservatorship of the person), over his or her property and finances (known as a conservatorship of the estate), or both. The type of conservatorship created will depend on what’s needed under the circumstances to fully take care of the “conservatee.” Read the rest of this entry »
Posted in California Conservatorship
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