California Probate - Law Offices of Janet Brewer Blog

Empty Nest? Time to Adjust Emotions and Finances

Your lifestyle, budget and goals change.  However, it is a good idea to go slowly on those adjustments.

You start a family, you nurture the family and the kids move on to their own lives. It is a challenge in many ways and it is time to make adjustments, according to the Daily Messenger in “John Ninfo: Some advice for empty nesters.”

With one less person in the household, it’s time to re-adjust your budget. Many of your everyday expenses, such as electricity, food and gas, will likely be lower. However, you may have new expenses that are related to your new life. You may spend more on activities that were put off until the kids grew up or find yourself dining out more often. Go slow when it comes to spending money on pricey vacations or fancy dinners. You want to strike a balance between enjoying your new-found freedom and cash flow, as well as keeping retirement savings in mind.

Assuming your cash flow is easier now, it’s time to commit to paying down outstanding debts, especially credit card debt. Reduce any interest or finance charges that you can. You might even think about paying down your mortgage or paying off a high-interest car loan. If you’ve taken on student loans or a home equity loan, now is the time to try to knock those down. At the same time, try to minimize any new spending or borrowing.

Take another look at how your retirement saving is progressing. Will you have enough at your current rate of spending, or should you ramp up your efforts, if you have room in your budget?

Have you thought about downsizing, or decluttering? Even if you are not planning on moving, your home may be filled with things you don’t need or want anymore. Set some time aside to clear out what you don’t need, donate what you can to a local charity or start planning yard sales. You don’t have to tackle this project all at once.  It is possible to donate a few hours each weekend to the task.

When was the last time you updated your will and other estate planning documents? Now is the time to revisit these matters, as well as looking at any long-term care insurance. If you don’t have a long-term policy in place, this is the time to buy it—if you can.

Are you finding yourself with a lot of free time? We don’t often ask ourselves the important questions, like “What matters to me?” and “How do I want to be remembered?” Many people find the answers to those questions in service to others. 

Reference: Daily Messenger (August 26, 2018) “John Ninfo: Some advice for empty nesters”

Divorce Can Hinder Retirement for Women

‘Divorce gap’ can have an impact on income, as well as on retirement planning.

A study from the Center for Retirement Research at Boston College found that divorced women historically are better off than single, never married women, because of the assets they have accumulated before divorce, primarily home ownership. However, that can have a negative impact on retirement, according to Money in “This is The Single Best Way Divorced Women Can Secure a Successful Retirement.”

Many divorce lawyers and financial advisors say that keeping the house after divorce, isn’t always the best move. Many newly-single women find they don’t have the resources to keep up with mortgage payments, maintain the property, pay taxes and deal with unexpected crises.

One advisor says she’s concerned that these new numbers will lead to women who can’t necessarily afford to maintain a home to hang on to their homes.

However, a researcher involved in the study maintains that while the study mentions homeownership, there’s a bigger point being made. Married women who divorce benefit from receiving a share of marital assets. Single, never-married women do not and must rely solely on themselves for saving and accumulating assets that can be used to finance their retirement.

A critical fact that women who are divorced must do: whatever assets they get in the divorce settlement, commit to keeping those assets intact for retirement. It’s easier to do this with a house. However, it’s tempting to dip into assets that are intended for retirement.

An estate planning attorney can advise you in creating an estate plan that meets your unique circumstances, including retirement planning. 

Reference: Money (Aug. 10, 2018) “This is The Single Best Way Divorced Women Can Secure a Successful Retirement”

Estate Plan Can Guard against Elder Abuse

There are many types of elder abuse. A good estate plan can help prevent such actions.

Three cases of elder abuse have been handled by the Queens County Criminal Court of New York recently and are just a sampling of a far larger problem in the U.S., according to the Queens Daily Eagle in “Nuanced Directives, Power of Attorney Can Stem Elder Abuse.”

As the borough of New York ages, the instances of predatory behavior and outright scams are getting worse. Predators often start out as well-intentioned caregivers.  However, they then start to take advantage of the senior under their care. They may start as someone who comes every day to check on the senior, helping with bills and then they see the senior’s assets. Sometimes they begin thinking they are entitled to some or all the senior’s assets.

Other types of abuse include stealing deeds to homes, when younger people establish seemingly caring relationships with elderly people, marrying them and then stealing their money while isolating the victims from their families. This is sometimes called “granny-napping,” where the caregiver manipulates the senior and turns them against other loved ones or former caregivers.

Cases like this turn to heartbreak for genuine, caring family members. The abuser poisons their loving relationship with a parent or grandparents.

One way to stem this abuse is to ensure that older adults have advanced directives before something occurs. The estate planning or elder law attorney can tailor the document, so the person does not forfeit their rights or property while putting legal protection in place.

What needs to be understood is this: the person who signs the document and becomes a senior’s representative has a fiduciary duty to act in the best interest of the person. If they breach that duty, there are legal consequences.

Bar associations work with attorneys across the country to help them in identifying and stopping elder abuse. The attorneys work with people in the healthcare field and in real estate, two areas where elder abuse occurs.

When an attorney suspects that elder abuse is taking place, the attorney has an option not to represent the agent and refer a case for guardianship on the grounds that the adult is being abused.

In markets where real estate values have skyrocketed, another real estate scam is for property hunters to go to Surrogate’s Court and find out who has died and who has inherited their estate. They approach heirs they deem to be financially or emotionally vulnerable and coax them into selling their property, usually for far below market value.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and can also protect your loved ones, regardless of age. If you've spoken with us before and want to make sure everything is current or if you're a new client, we would be honored to look at your plan with you and help you in your unique situation. Contact us today to set up a meeting.

Reference: Queens Daily Eagle (Aug. 8, 2018) “Nuanced Directives, Power of Attorney Can Stem Elder Abuse”

It Is Important to Focus on Flexibility during Retirement

The 4% annual withdrawal fee is a starting point. However, there are many other factors to consider.

There are many old rules about planning for and living in your retirement years.  However, those rules are often put out of date by health costs and working well into your later years, according to Forbes in “Here’s How to Refresh Your Retirement: The 4% Rule of Thumb.”

It is now thought that the 4% rule is a decent baseline. However, you’ll need to go deeper into the details to plan for your retirement. Your spending also has a lot to do with what you expect from retirement and how expensive a lifestyle you choose.

One key factor today is tax-deferred investing. The importance of being taxed at the highest rate versus paying a lower tax rate can be misleading. Many people defer taxes on their investments because they don’t want to pay 30% to 40% income taxes when they could defer to a higher bracket if tax laws change.

Some are considering investment in single-family rental properties. If you buy a rental house with a small capital investment, the house will ideally appreciate over time on a tax-deferred basis. Owners benefit by depreciating expenses on their tax returns. The single-family rental home can be paid off in 15 years to 20 years and create income for the owner—predictable income that could also increase from year to year.

Another strategy is to create an investment portfolio that combines diversified stocks and high-quality fixed annuities, paired with a systematic withdrawal plan and a built-in buffer strategy to reduce risk in the case of severe stock market swings.

One advisor noted that if a retiree today relies on a traditional 60/40 stock/bond portfolio, they could be looking at a financial disaster. The yields on bonds are at historic lows and a 4% withdrawal is just asking for trouble.

An effective tax reduction strategy has the potential to raise a retiree’s safe withdrawal rate even higher.

The best advice is to have a plan in place that works for the lifestyle that you and your spouse want and being prepared to adjust, if necessary. Your plan may include working until you both reach full retirement age, working part-time during retirement, moving to a location that is more affordable or aging in place.

An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and will most likely include a solid retirement plan. Contact The Law Offices of Janet Brewer for your own custom estate planning needs.

Reference: Forbes (Aug. 7, 2018) “Here’s How to Refresh Your Retirement: The 4% Rule of Thumb”

‘LOVE’ Estate Hearings Private or Public?

Robert Indiana’s estate is estimated at $50 million. Many people are interested in it and where it will go.

There are a number of attorneys involved in the estate of the late “LOVE” artist Robert Indiana. A major question has arisen, on whether the legal proceedings should be public or private, according to the Press Herald in “Attorneys want hearings on the value of Robert Indiana’s estate held behind closed doors.”

No less than eight attorneys representing individuals and organizations connected to Indiana, creator of the “LOVE” sculpture, are asking that future hearings be held in closed sessions to protect people’s privacy and the value of some of his works of art, it reports.

Atty. James Brannan, who represents Indiana’s estate, is requesting information in a testimonial hearing to better determine the estate’s value.

Due to the disagreement, Judge of Probate Carol Emery postponed the testimonial hearing and set a new date for a hearing in mid-September. The first scheduled witness will be Indiana’s caretaker, Jamie Thomas.

Brannan has petitioned the court to order Jamie Thomas, the Morgan Arts Foundation, Michael McKenzie and American Image to provide documentation on any assets they may have, that belong to the estate, including contracts for royalties.

The attorneys representing Thomas said he’s concerned about confidential matters becoming public. The judge has asked attorneys to file arguments on how she can justify closing the proceedings. It’s not easy to do, because of the First Amendment.

The attorney said the publication of information about where pieces of art are located would create a safety issue and information about the number of existing artworks could have an impact on the value of pieces that are up for sale.

Indiana’s will wanted proceeds from the estate to be used to restore his home to museum quality and serve as an art environment that would be open to the public for classes and lectures, and to preserve his collection and the property itself.

The will directed that Jamie Thomas be the executive director of the museum.

Resource: Press Herald (Aug. 7, 2018) “Attorneys want hearings on the value of Robert Indiana’s estate held behind closed doors”

General Rule? Take Care of the Spouse and Kids

Many families are similar, when it comes to creating a will.  However, sometimes a family member gets left out.  That must be done carefully.

There are some exceptions.  However, the usual plan in estate planning is to take care of the family, according to nwi.com’s “Estate Planning: Excluding a loved one from the plan.”

The exceptions are mainly because of family dynamics and those times the person is not married or doesn’t have children.  However, sometimes even a regular old-fashioned “Mom and Dad and Brother and Sister” family has a reason why one or more of the kids are left out of the will.

If someone needs to be excluded, for whatever reason, your estate planning attorney will create a will that accomplishes this. Some people think that instead of excluding someone entirely, they should leave something small, or that they are required to leave something, and the best solution is to leave $1. That’s not true and could lead to problems with settling the estate.

The person who is most problematic to exclude from your estate, is your spouse. They have certain legal rights that are not easily overcome.

Another common question concerns the “no contest” term. These causes provide that if anyone challenges the will, there is a penalty. Some states do not recognize this clause, so there’s no point to using it. Your estate planning attorney will know the laws for your state and be able to advise you about whether you can use this to exclude someone from your will.

The bottom line: your will should reflect your wishes and accomplish your goals. If a family member has a problem such as a substance abuse problem or is not able to manage money, an estate planning attorney can work with you to either exclude them from your will, create a trust with guidelines (i.e., requirements to be engaged in a rehab program or be gainfully employed) or distribute your assets at certain periods of time.

If you need guidance in making these decisions, look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.

Resource: nwi.com (Aug. 5, 2018) “Estate Planning: Excluding a loved one from the plan”

Explore the Options Beyond Roth or IRA

Retirement offerings generally begin with 401(k) and IRA.  However, there is a world beyond them, when looking to save for your retirement years.

Even though an IRA is the most common offering by companies to employees to plan for their retirement, there are options beyond the norm, according to Forbes in “10 Retirement Accounts You Should Know About.”

Few of us need less money in our retirement accounts. Most of us enjoy the tax benefits we get from retirement accounts. Americans, in general, do a terrible job of saving for retirement. Some say the IRA, Roth IRA and other similar accounts were created to give us an incentive to do a better job. The tax advantages of these accounts make it more attractive to sock away money every year. These accounts were also set up with deliberate penalties, so people wouldn’t raid their accounts every time they needed a few extra dollars.

If you are among those who work for companies that have a retirement savings plan match, make the most out of it. If you put in the annual percentage or amount your plan requires, your employer will match that contribution. Most workers walk away from this money.  That's free money you could be adding to your account with each paycheck!

Employees usually are offered a 401(k), 403(b) or 457 plan from their employer. The financial institution is already chosen, the money is automatically taken out of your paycheck and often you can only make decisions about what kind of funds you can select at certain times of the year. In 2018, you can contribute up to $18,500. If you’re 50+, you can make an additional $6,000 contribution, known as a catch-up contribution.

Self-employed? You need a retirement plan more than someone who works for a company. Self-employed people have many more options. If you need help, talk to your CPA. There may be some plans that are better suited or have more tax advantages than others.

For self-employed people, the basic choices are the solo 401(k) for a sole proprietor or someone working with their spouse. You can make contributions as both the employer and the employee. You could contribute as much as $55,000 in 2018 (or, if you are 50+, $61,000). Your total contributions are determined by your net business income.

Another choice for retirement savings for the self-employed is a SEP IRA, the Simplified Employee Pension. It’s easier to set up than a 401(k)and is typically used by people with self-employment income or small business owners. As the employer, you can contribute up to a quarter of your income, or $55,000, or whichever is less. There are no catch-up contributions for a SEP IRA.

Self-employed or working for a company, your retirement plan needs to include an estate plan. At the Law Offices of Janet Brewer, we can help make sure all of these are set up properly. Contact us today for a consultation.

Resource: Forbes July 23, 2018 “10 Retirement Accounts You Should Know About”

Bad News Received: What Do You Do Next?

A diagnosis of a fatal illness leaves everyone in shock.  However, when reality sets in, other considerations need to be handled.

If the worst news is received on the medical front, emotional and medical resources are necessary.  However, legal considerations are also needed to handle end-of-life planning, according to CNBC in “When end-of-life planning is suddenly a lot closer than you thought.”

A good place to begin is to start assembling all your financial information in one place. An old-school, loose-leaf binder may be easier for your family, depending on their comfort level with technology. If your family is accustomed to online portals where information is stored, consider the emotional state of shock they will be in. Make it as easy and accessible as possible for you and them.

The information should include your Social Security benefits and pension information. There may be survivor benefits that your family will need to know about.

Include the prior year’s tax returns and a note, as to where your other tax returns can be found.

If you don’t have a will, power of attorney, health care directive or any estate planning legal documents in place, it is now the time to make an appointment with an estate planning attorney.

Another task will be to designate beneficiaries for any financial accounts and insurance policies. Depending on your brokerage house, you may be able to attach a transfer-on-death instruction to your non-retirement accounts.

You can do the same thing with real estate in 27 states. An estate planning attorney will know if this is applicable to your state.

Next, make a list of your liabilities. It should include your mortgage, car loans and credit card debt.

Create a contact list for your family that includes your estate planning attorney, CPA, financial advisor and insurance agent.

Should you pay off your mortgage? This might not always be the best move. Consider the funds available, your tax bracket and the current mortgage. Do you want a family member to be able to live in the house? Your estate planning attorney will be able to run through different scenarios and strategies.

Write a legacy letter. This is not a legal document but a letter that will express your intentions for your will and your wishes for personal property.

Reference: CNBC (July 18, 2018) “When end-of-life planning is suddenly a lot closer than you thought.”

Estate Planning When You Own a Small Business

When you own a small business, you need to do some estate planning to protect both your business and your family. If you have not yet made an estate plan, you may be unfamiliar with the advantages it can offer to them: namely, peace of mind and practical steps to take should something happen to you.

Succession Planning

One of the most important parts of an estate plan for a small business owner is succession planning. Have you decided who will take over your role in the business if you cannot perform it? Have you documented processes and written down important information such as passwords and account numbers? Ask yourself these questions and spend some time making a succession plan.

As a small business owner, you may have partners who help run the business or who made financial contributions to get it running. You may want to form a buy-sell agreement with the partners as part of your succession plan. This agreement explains how to determine the value of your share in the business, who will take over your share if you pass away, and whether you want the share to be sold. Without an agreement like this, your family may inherit your share. However, your partners may not want to work with your family, or your family may not have time to run the business.

Insurance

Small business owners, who often invest a substantial portion of their personal money into their businesses, may leave little when they die to dependent family members. If all the money is tied up in the business, relatives could be in trouble. You can purchase life insurance that pays out to your family in the event of your death. Alternatively, the beneficiary could be your business or business partner, so that he or she can buy you out of the business under the terms of your buy-sell agreement. You also could set up a life insurance trust to receive the money and pay it to trust beneficiaries.

Power of Attorney

In California, you can sign a durable power of attorney to allow another person to carry out your business affairs if you are incapacitated. For businesses that need to pay employees or pay bills on a regular schedule, the owners need these special powers of attorney.

Again, make sure the person you assign to carry out your affairs will be able to access important information needed to keep the business running. You need a plan for how your agent will log in to the computer, find the passwords, unlock the store’s door, or pay invoices. Spend some time doing basic estate and succession planning so that if disaster strikes, your business and family will land on their feet.

Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.

Why to Avoid the “Fill-in-the-Blanks” Estate Documents Available Online

Instead of talking to an estate planning attorney, many people choose a fill-in-the-blanks estate plan by finding documents online. They fill out the PDFs or Word document templates they find, sign them, and move on with their lives. As experienced estate planners know, this could be a big mistake.

False sense of security

Signing a bunch of documents you found using a search engine may give you a sense of security. You feel good knowing that you took a concrete step towards planning for the future, and it only took a few minutes! Unfortunately, the documents you signed could cause some problems in your future. When you locate estate planning documents online, you have limited or no method of verifying their content. You do not know if they will work in California, and you do not know if you should have chosen a different type of estate structure for your situation.

New or undiscovered assets not mentioned in the documents

After you make your fill-in-the-blanks plan, your life could change dramatically. You could acquire new assets that the documents do not discuss, you could forget that you own some assets and omit them from your plan, or you could have a major life change that is not mentioned in the documents. Sometimes, after someone passes away their family learns about assets that they had no idea existed. Other times, people expecting a windfall learn that due to a technicality they will not inherit an item of property.

Misunderstandings and legal errors

All too often, people fill out and sign documents that they do not read in full. Hidden in the fine print is some important sentence that totally changes the document’s importance to them or its impact on their lives. Further, estate planning and probate use a lot of legal jargon that some people do not look up or misunderstand. There could be legal implications far beyond what it says in a document of which non-lawyers are not aware

Tax problems

Estate planning and probate implicate a lot of tax issues, both for the living and for the deceased person’s estate. People without tax experience may not realize how or why signing a single PDF could cost them thousands of dollars in the future. They may not find this out until it is too late. Fortunately, some estate planning attorneys have extensive experience on advising clients on tax issues and tax education (including degrees like a Master of Laws in Taxation (“LLM”)).

Do you want to look beyond fill-in-the-blank estate planning forms? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience and her LLM degree will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.