Friday, January 27, 2012 Race Day, Super Bowl Sunday and Estate Planning??
My next race is quickly approaching and as most people are living and breathing Football, I will be running the Surf City half-marathon on Superbowl Sunday. So what does football and running have to do with estate planning? Well, it seems like just about nothing. The Super Bowl means a day of good football, good food, a celebrity half-time show, and hyped-up commercials. My race promises sunshine, a good time and a beer garden at the end. Estate planning means a well designed plan that helps people protect their families and their money.
Sports carry risks, and life itself carries risks. The head injuries suffered by professional football players have been publicly investigated over the past few years. A study commissioned by the NFL and conducted by the University of Michigan reported that former NFL players have been diagnosed with Alzheimer’s disease and other similar memory-related diseases at nineteen times the normal rate for men ages 30-49. The accuracy of statistics is always questionable; however it is apparent to any football fan that the players face injury when they are on the field. In reality, any sport or any career carries risk of injury, and the actions we take in our day to day life can always threaten us with injury as well. Forming an estate plan will guide you through selecting people to care for your estate and your family should you ever be faced with these circumstances and become incapacitated. Life is unpredictable; it is never too early to put a plan in place.
All this said, let’s hope for a well played and injury free game this year….and a better season for our Chargers next year!
Monday, December 26, 2011 A New Year, A New Plan
Are you setting new goals for yourself in 2012? The new year tends to get us all to stop and think about our life, and evaluate what we would like to change or better about it. These goals and changes may affect your estate plan if they involve family circumstances or relationships with those close to you. For example, do you hope to grow your family and have children this year? Or has your relationship with a friend or family member changed so they are (or are not) a very trusted and important person in your life now? Family and relationship changes may raise the need to update your estate plan to change the beneficiaries you have named, re-evaluate how you are providing for your children in your plan, and review the people you have named to serve as your agents for health care and financial decisions. To keep your estate plan aligned with your wishes, make it one of your new year’s resolutions to review your estate plan!
Monday, November 28, 2011 Can I use my estate plan to make sure my son marries a Christian woman?
Conditions in a will that restrain religious practice are usually permitted. The law provides that an effective provision in a will designed to prevent/permit a gift of property on account of adherence to or rejection of a certain religious belief or practice of the beneficiary is valid. Conditions on religious beliefs tend to be invalid only when they coincide with other invalid provisions. If you are concerned about preserving your religious faith and its transmission to future generations, you might want to give property to a child in your will only if he or she marries someone of a particular faith. Such a condition could be held invalid if it unreasonably limits your children’s opportunity to marry (are there enough potential mates in the city/surrounding area to give a realistic opportunity for marriage?)
Jumping to another area of law, there is a constitutional right to marry. Conditions such as above have not been found in violation; merely a restriction upon the inheritance of a testator’s children. Note that this same theory arises when a restraint on marriage applies to only one person whom the testator does not want his beneficiary to marry ( i.e. My daughter will not receive her inheritance should she marry Bill). Just keep in mind, as California holds, there is a constitutional right to marry the person of one's choice and a disposition trying to restrain this right could be found to be a violation in the future. Whether a limitation is reasonable or not is a factual matter, determined on a case by case basis.
What if you don’t like the idea of your wife/husband remarrying after you are gone?
Conditions on marriage are almost always void. But, this does not affect provisions of limitation where your intent is not to forbid marriage, but merely to provide support and protection for your spouse until remarriage occurs. If you wish to reduce the amount your spouse gets once they remarry, the provision is valid where your intent is simply to provide until your spouse forms another relationship. Language in your will becomes very important here; if you had said you wanted to provide for her, but if she remarries the support ends, then this would not be valid. But providing for her until she remarries is valid.
Keep in mind that marriage is not the only way to form a relationship. With enough money at stake, two people may just decide to live together for the rest of their lives, collecting the support money, and not violating any of the carefully constructed provisions.
What will happen if you include an invalid provision in your will?
If you include or try to slip in one of these conditions and it is invalid, they will be disregarded by the court (that’s if your lawyer doesn’t stop you first). And the gift will go to the beneficiary regardless of the provision you tried to tack on. The Civil Code also states that if any condition requires the performance of an illegal or wrongful act of itself (such as X can only have their inheritance if they steal a car or murder Y etc.) the provision including it is void and cannot exist.
Sunday, November 27, 2011 Can I leave money to my daughter, only if she leaves her husband?
In the American Legal system, the right to pass on one’s property, to family in particular, has been in existence since the feudal times. Testamentary freedom is a benchmark of American tradition which allows testators to pass on land at their deaths to individuals of their choosing. The law is broad in scope as is evident from the allowance of individuals to disinherit minor children “for any reason or no reason” as long as it is not against public policy. Conditions on a provision in a will are usually allowed as long as they are “reasonably definite” and not contrary to public policy. However, the mere fact that freedom of testation is important does not mean that it is unlimited and absolute. So what does it mean?
In general, provisions in your will that are made directly to induce your kids to separate from their spouse without just cause and in a lawful manner are against public policy and void under the law. However, some of these gifts have been upheld when they are conditioned on a lawful dissolution (meaning they were going to get a divorce whether or not an inheritance depended on it) or where it is shown that your intent was to provide for the support of your daughter if her husband died or divorced her. The true test is that the provision can’t be an inducement to get a divorce, because that is contrary to public policy, but if you put such a provision in your will because you anticipate that the death of your daughter’s husband or a divorce would end the husband’s support of her, then you are justified in providing other support. This is a complex issue that certainly requires individual counseling with an attorney to ensure your goals are met.
Monday, November 14, 2011 Be Prepared for a Medical Emergency with Easy Access to Your Health Care Documents
A thorough estate plan will include health care documents, such as documents that authorize your physicians to speak to those individuals who you designate as your health care agents, and that designate those individuals whom you would like to make decisions for you, should you not be able to make your own health care decisions. When these documents are drafted, careful thought is put into the selection of agents and particular health care or end of life decisions; however they are often viewed as something that won’t be needed for a long time. While we hope that is the case, it is not always the reality.
Most of us have had an experience at the ER, and realize that visit was not something that could have been predicted. Because of the unpredictability of an emergency, your loved ones may not be with you when it arises. They will want to call or visit the hospital to find out the details of your condition, and they will be able to do so if you have executed a document known as a HIPAA Authorization, allowing your physicians to speak to them. But do they know you’ve given them such authorization, and do they know where the document giving this authorization is located? If the existence of the document is unknown to the authorized agents, cannot be located by them, or even worse, cannot be accessed because it is locked up in your personal safe deposit box which can only be accessed by you during banking hours, then it is essentially ineffective.
This problem can be avoided by providing your agents and family members with copies of your documents, or even better, by creating secure online 24/7 emergency access to the documents. To be best prepared for any emergency situation and to be able to access your documents at anytime, please contact our firm for alternative safekeeping solutions.
Tuesday, October 04, 2011 Are You Planning for Your Child’s College Education? Take One More Step by Planning for Your Estate!
It is nearing college application time and college is on many people’s minds right now, especially for those who have to finance it! College tuition is continuously rising, both at public and private schools, and is projected to continue to rise over the years. Despite these increasing costs, higher education remains valued in our society and is a cost that many of us will face either as a parent or as a student ourselves. One tool used to help save for this future expense is a 529 college savings plan.
In setting up a 529 plan you may have designated a successor to the account, perhaps your spouse or a family member. However, this does not ensure that your account will smoothly transition into your estate if both you and your successor pass away. If the beneficiary of the 529 plan is a minor, a guardian will have to be appointed by the court to own the plan, and a separate account will have to be established for the minor. This ultimately results in more hassle and costs for your estate, and could disrupt contributions that your surviving family members may wish to continue to make to the 529 plan after your death. If you have already taken a step towards planning for your child/beneficiary’s future by setting up a 529 college savings plan, or any other college savings plan, we encourage you to go one step further and talk to our office about estate planning. We will integrate the two, to help ensure the proper succession of your 529 plan so that your child/beneficiary can receive the utmost benefit from your planning. Monday, September 05, 2011 How Does Divorce Impact My Estate Plan?
In California, a surviving spouse receives preferential treatment when the death of their husband/wife occurs. Under the law, a surviving spouse is entitled to one-half of the couple’s community property and if there was no will, would also receive a portion of the deceased’s separate property. But what happens if you die while in the process of a divorce? Does your spouse still inherit that same one-half of the couple's community property?
A dissolution of marriage in California is not final until at least six months (more realistically one year) after divorce papers are served. Until that six month period is over and a final judgment is given, the spouses are still legally married and each party retains their rights as a surviving spouse if the other were to die. So yes, a spouse would still inherit that same one-half of the couple's community property and a portion of the deceased's separate property. This means that if you are headed towards a divorce and do not want your spouse to have legal rights to your property in the event of an untimely demise, your estate plan and other documents should be reviewed and altered as early as possible during the divorce proceedings. There are some very specific rules that must be followed, so this should only be done with the help of an attorney.
It is also important to note that a judgment of marital dissolution (divorce) may have an effect on existing wills and other estate planning documents. Before choosing to ignore the risk of an untimely death consider your personal situation including your age, health, size of your estate, nature of your assets, income, and likelihood that your divorce will be resolved promptly.
Saturday, August 27, 2011 Improving the Quality of Life for the DisabledI am currently training for a 10 mile run as part of the San Diego Triathlon Challenge in support of the Challenged Athletes Foundation. I feel very fortunate to physically be able to take on such a challenge and to support those with physical disabilities, particularly because protecting the needs of the disabled is an integral part of my estate planning practice.
If you or a loved one is physically or mentally disabled supplemental needs planning should be considered when doing your estate plan. A Supplemental Needs Trust, which may also be referred to as a Special Needs Trust, is used to improve the quality of life of a disabled child or adult. It is a vehicle to supplement and preserve any benefits received through or from various governmental assistance programs.
A Supplemental Needs Trust may either be “Self Settled” or a “Third Party” Trust. A Self Settled Supplemental Needs Trust is established by the disabled beneficiary with his or her own funds for the purpose of retaining benefits. Such planning may be necessary should the beneficiary come into possession of funds such as a large sum received through an inheritance or a settlement in a lawsuit. A Third Party Supplemental Needs Trust is one established by the non-disabled person, often by a parent for his or her disabled child, with funds to be used by and for the benefit of the disabled beneficiary.
Our firm can help you set up a Supplemental Needs Trust to meet the goal of providing assets to the person with the disability while preserving government benefit eligibility. Our firm is also familiar with local programs and benefits available to families with special needs children and would be happy to help you and your family with our many resources. Thursday, August 04, 2011 Do I Really Need to Do My Corporate Minutes?
I often see business clients to assist them with important business decisions, draft a contract, or talk about succession planning and when I ask what seems to be an innocent question of whether they are current with their corporate minutes, I receive an embarrassed "no." Some people might have forgotten this year, some may not have ever known this was needed, and other may have been meaning to get around to them since 1989.
As you are probably aware there are many advantages to incorporating your business. Corporation owners enjoy the benefit of limited liability protection and generally are not responsible for the debts of the business. In short, creditors are not able to come after personal property such as your home or family car to satisfy business debts. Additionally, corporations may gain tax advantages that are not available to other business entities. These advantages can include write offs of health insurance premiums and savings on self-employment taxes. Incorporating bolsters the credibility of any business increasing investment and loan opportunities for the business. Retirement funds and qualified plans, such as 401(k)’s, can be more readily established through corporations than through other business entities.
All of these benefits do not come without performing the proper formalities of running a business in order to maintain corporate status. One important formality involves keeping a record of all corporate actions - the often forgotten corporate minutes. California Corporations Code Section 600 requires that at least an annual Board of Directors Meeting and Shareholders Meeting is held and minutes are recorded and signed. While complying with these formalities may be require some extra time and expense, it is required in order to enjoy the benefits awarded.
Failure to comply with corporate formalities, such as neglecting annual meetings, can result in the loss of your personal liability protection rendering you personally liable for your corporation’s bills and debts. Observing corporate formalities continues to protect the investment you have made in your business. Feel free to contact me if you have questions or need help getting caught up with your documentation.
Friday, June 17, 2011 Protect Your Home with a Living Trust
It is no secret that our economy has suffered. In the past few years many of us have been personally affected by the economic downturn and housing crisis. However, the American Dream of home ownership has not been lost. Many view this as the time to buy because home prices are at a low.
If you are buying a new home, there are likely many factors you are considering during the purchase, but have you stopped to think about how you want to take title to your home? What may seem like a minor detail is actually a decision that much thought should be put into.
For example, one way a couple may choose to take title to their home is as joint tenants with the right of survivorship. This seems great at first glance, for if anything happens to one of them the home passes to the other. But what happens after the death of the surviving joint tenant; do you desire for your home to be inherited according to the state’s default laws and for your estate to have to pay the accompanying probate fees? Or what if a creditor of one of the tenants goes after that tenant’s interest and the court orders the property sold?
A living trust may be a better way to own property to eliminate such risks. By creating a living trust, you are able to name whomever you want as beneficiary for the home. Whether you are purchasing a new home, or currently own a home, please contact our office to discuss your estate planning goals and the protections a living trust can provide for your home. |