California Probate - Law Offices of Janet Brewer Blog

How Do You Ask Parents about Estate Planning?

“Do you expect your parents to leave you a financial legacy? Nearly half of working-age Americans assume that they will receive an inheritance that will support them later in life, according to a survey by financial services company HSBC. Perhaps the bigger question, though, is how to even approach this topic with your parents.”

How do you ask your parents about their estate planning? No matter how you slice it, it’s a touchy subject to bring up.

You don’t want to come off as greedy when asking your parents about their estate planning.  However, you may need answers to certain questions to ensure that their financial wishes are carried out and there is a smooth transition of wealth and assets.

Yahoo Finance’s recent article entitled “How To Talk to Your Parents About Their Estate Plan (Without Making It Awkward)” shows us how to approach this touchy subject and get the info that you need.

Begin by asking your parents about whether they have an estate plan. You can tell them that they don’t need to share the numbers and that you just want to be able to follow their instructions. A good way to start this conversation is to acknowledge how awkward and difficult this conversation is for you. You should emphasize that you don’t want to think about their deaths but are just trying to sort things out.

Experts say that you’ll likely get a better reception from your parents if you let the conversation happen organically and not schedule a time to talk. No matter how you approach the topic of an inheritance from your parents, the objective of the discussion is to make certain they have a plan in place, so there will be a clear path for whoever is left behind to go forward. You can start by asking if they have these key legal documents:

• A will
• A power of attorney; and
• A living will or health care directive.

Ask where your parents keep these documents and how you can access them, if necessary.

You should also ask if your parents have written funeral or burial instructions. You also need to ask them to give you other important information, so you can handle their finances if they are unable to or when they die. This includes account numbers and passwords, insurance policies, information on their retirement plan or pension administrator, as well as the contact information for their accountant, attorney, financial planner, or other financial professionals.

If you have any questions about your current estate plan, please call or email us today.

Reference: Yahoo Finance (Oct. 7, 2020) “How To Talk to Your Parents About Their Estate Plan (Without Making It Awkward)”

What Does an Estate Planning Attorney Actually Do?

“Estate planning is crucial, setting up a peace of mind for you, as you enter your senior years. Most people don’t create a will because they are afraid to even think about the possibility of death. It feels like too big of a responsibility.”

It’s critical to understand what will happen to your estate after your death. That’s where the help of an experienced estate planning attorney comes in, says VENTS Magazine’s recent article entitled “What Does an Estate Lawyer Do Exactly?”

An experienced estate planning attorney is a legal professional, upon whom you can rely to help protect your estate after your death or in the event that you become incapacitated.

He or she will make certain that your assets and property are handled correctly.

In addition to assisting you with your estate, an estate planning attorney can help handle any family members trying to get involved in your legal affairs.

It may be difficult to please everyone when creating your will. Having an estate planning attorney will help you make the best decisions when it comes to distributing your wealth.

Estate planning is critical—especially if you’re older, experiencing chronic illness, or just want to be smart about protecting your assets.

As we grow older, we can accumulate a long list of stressful issues and responsibilities. You may worry that your estate will be gobbled up by creditors once you pass away, or that your children will fail to distribute your assets as you intended.

Much of this stress is eliminated with the guidance and counsel of an experienced estate planning attorney. Having an estate plan allows you to enjoy a better quality of life, once you’re older. You won’t have to live every day with worry or stress about the future after you’re gone.

An experienced estate planning attorney is a valuable resource for your family, in the event someone tries to contest the will after your death. Estate planning attorneys also aid in distributing the wealth, protecting your property from creditors, and lowering estate taxes.

You can read more about how our process works, how we can make sure we are a good fit for your needs, and how to get started today right here.

Reference: VENTS Magazine (Sep. 28, 2020) “What Does an Estate Lawyer Do Exactly?”

Does My Estate Plan Need an Audit?

“Estate planning is the process of transferring the management of your assets, if and when you are unable to manage them yourself due to disability or death. Whether you have $100 or $100 million you should have an estate plan.”

You should have an estate plan because every state has statutes that describe how your assets are managed, and who benefits if you don’t have a will. Most people want to have more say about who and how their assets are managed, so they draft estate planning documents that match their objectives.

Forbes’ recent article entitled “Auditing Your Estate Plan” says the first question is what are your estate planning objectives? Almost everyone wants to have financial security and the satisfaction of knowing how their assets will be properly managed. Therefore, these are often the most common objectives. However, some people also want to also promote the financial and personal growth of their families, provide for social and cultural objectives by giving to charity and other goals. To help you with deciding on your objectives and priorities, here are some of the most common objectives:

• Making sure a surviving spouse or family is financially OK
• Providing for others
• Providing now for your children and later
• Saving now on income taxes
• Saving on estate and gift taxes in the future
• Donating to charity
• Having a trusted agency manage my assets, if I am incapacitated
• Having money for my children’s education
• Having retirement income; and
• Shielding my assets from creditors.

Speak with an experienced estate planning attorney about the way in which you should handle your assets. If your plan doesn’t meet your objectives, your estate plan should be revised. This will include a review of your will, trusts, powers of attorney, healthcare proxies, beneficiary designation forms and real property titles.

Note that joint accounts, pay on death (POD) accounts, retirement accounts, life insurance policies, annuities and other assets will transfer to your heirs by the way you designate your beneficiaries on those accounts. Any assets in a trust won’t go through probate. “Irrevocable” trusts may protect assets from the claims of creditors and possibly long-term care costs, if properly drafted and funded.

Another question is what happens in the event you become mentally or physically incapacitated and who will see to your financial and medical affairs. Use a power of attorney to name a person to act as your agent in these situations.

If, after your audit, you find that your plans need to be revised, follow these steps:

1. Work with an experienced estate planning attorney to create a plan based on your objectives
2. Draft and execute a will and other estate planning documents customized to your plan
3. Correctly title your assets and complete your beneficiary designations
4. Create and fund trusts
5. Draft and sign powers of attorney, in the event of your incapacity
6. Draft and sign documents for ownership interest in businesses, intellectual property, artwork, and real estate
7. Discuss the consequences of implementing your plan with an experienced estate planning attorney; and
8. Review your plan regularly.

You can read more about how our process works, how we can make sure we are a good fit for your needs, and how to get started today right here.

Reference: Forbes (Sep. 23, 2020) “Auditing Your Estate Plan”

Does an Ex-Wife Get Her Former Husband’s Inheritance Because He Died of COVID-19?

“My big brother died of COVID-19 and he didn’t have a will. He divorced 20 years ago and has no children, but his ex is telling me she should get an inheritance. Who has the right to his money?”

Nj.com’s recent article entitled “My brother died of COVID-19. Should his ex-wife get an inheritance?” says that it’s unlikely that an ex-wife is entitled to any of her former husband’s assets.

There are three main ways property can transfer at death. They each have different rules.

Joint assets. When property is held as Joint Tenants with Rights of Survivorship (JTWROS), the surviving joint owner (if there are two owners) automatically becomes the sole owner of the property. Usually, jointly owned property is retitled into individually owned property after the divorce. If this was never done, some states (such as New Jersey) automatically change JTWROS property to a different form of joint ownership, called tenancy in common when a divorce is finalized. As a result, with tenants in common property, when one owner dies, his or her 50% ownership interest becomes a probate asset and passes pursuant to his or her will (or the state’s intestacy laws, if they didn’t have a will).

This means that even if the husband in this scenario still owned JTWROS property with his ex-wife when he passed away, she wouldn’t automatically inherit his share. She still has her own 50% share that she owned all along.

Property can also pass by beneficiary designation, like with life insurance or retirement accounts.

Beneficiary designations are typically updated after a divorce. However, again, ask an experienced estate planning attorney about your state laws. For example, New Jersey law revokes a divorced spouse as beneficiary, even if the beneficiary designation was never updated.

In this situation, even the husband named his wife as a beneficiary on an insurance policy or retirement accounts and never changed it, she wouldn’t be able to collect.

Finally, the third way that property can pass, is through the probate process. This means there’s a will.  If there was no will, it would be pursuant to the state’s intestacy laws.

An ex-spouse is never entitled to inherit property under state intestate statutes.

There are two important caveats for these rules. One is that they can be superseded by a divorce decree. Therefore, review the divorce decree to see whether it has any relevant language. The rules also apply to ownership, beneficiary designations or wills that arose during the marriage. Anything that happened after the marriage would not be affected by the divorce.

Contact our office today to schedule your consultation and make sure you know what will happen with your assets.

Reference: nj.com (Aug. 4, 2020) “My brother died of COVID-19. Should his ex-wife get an inheritance?”

Why Should I Think about My Death?

“Talking about death makes most of us uncomfortable, so we don't plan for it. That's a big mistake, because if you don't have an end-of-life plan, your state's laws decide who gets everything you own. A doctor you've never met could decide how you spend your last moments, and your loved ones could be saddled with untangling an expensive legal mess after you die.”

Planning for the end of life isn't about you, says NPR’s recent article entitled “End-Of-Life Planning Is A 'Lifetime Gift' To Your Loved Ones.” As the owner of the estate, you really don’t get to see the benefit of your estate planning. The NPR article gives us some easy and practical steps to planning for the end of life.

Name your executor. If you're an adult, you should have a last will. This is because estate planning isn’t just for the rich. With a last will, you name an individual you trust to take care of everything when you die. That is the executor or personal representative. It's a good idea to choose someone from your family or a person with whom you have a good relationship. This person also should have a good attention to detail, because an executor would have to locate all your financial assets and communicate with everyone you've named in your last will.

Conduct an inventory. Create a list of everything you own. This includes financial assets—such as bank accounts, retirement savings or car—as well as things that have sentimental value, like jewelry, furniture and mementos. Once this is done, specify in writing those persons you want to have these items. If you have young children, designate a guardian for their care, in case you and your spouse are no longer alive. This person will be responsible for your child's schooling, health care decisions and value system. Digital accounts are also part of your property, such as your social media accounts, online photos, and whatever is in your Google Drive or iCloud. This also includes any online subscriptions and airline or credit card rewards. Create a secure list of all those accounts and the login and password details. Let your executor know where to find it. Make specific instructions about what you'd like to have happen with your online information.

Your decisions will change over time, so review and update your last will.

Think about your health care decisions. Your last will addresses what happens after you die. However, an advance directive is a legal document that addresses your health care and protects your wishes at the end of your life. There are two parts to an advance directive: a medical power of attorney, which is granted to someone to make decisions for you if you’re incapacitated; and a living will, in which you detail how you should be cared for by healthcare professionals.

Remember the emotional and spiritual aspects of death. The way in which you want to die is personal and about much more than just the medical aspect. It may be about being at peace with God or having your pets nearby.

Plan ahead to give you and your family peace of mind.

Reference: NPR (June 30, 2020) “End-Of-Life Planning Is A 'Lifetime Gift' To Your Loved Ones”

Should I Let The State Write My Will?

“Death is not a favorite conversation topic. However, we all know it is something we must at some point discuss. The loss of a close friend or family member, or an event, such as the COVID-19 pandemic, seems to bring the topic to the forefront.”

It’s a common question asked of estate planning attorneys: “Do I Really Need A Will?” This article in The Sun explains that the answer is “yes.” If you die without a will or “intestate,” the probate laws of the state will determine who will receive the assets in your estate. Of course, that may not be how you wanted things to go. That’s why you need a will.

When you die, your assets (i.e., your “estate”) are distributed to family and loved ones in your estate plan, if there is no surviving joint owner or designated beneficiary (e.g., life insurance, annuities, and retirement plans). No matter the complexity, a will is a key component of the plan.

A will allows you to make decisions about the distribution of your assets, such as your real estate, personal property, investments, and any businesses. You can make donations to your favorite charities or a religious organization. Your will is also important if you have minor children; it’s where you nominate a guardian to care for them if you die.

Of course, you can write your own will or pay for a program on the Internet, but it’s better to have one prepared by an experienced estate planning attorney. Prior to sitting down with an attorney, make a listing of all your assets (your home, real estate, bank accounts, retirement plans, personal property, and life insurance policies). If you have prized possessions or family heirlooms, be sure to also detail these.

Make a list of all debts, such as your mortgage, auto loans, and credit cards. You should also collect contact information for all immediate living family members, detailing their addresses and birth dates.

When meeting with an attorney, ask about other components of an estate plan, such as a power of attorney and medical directive.

The originals of these documents should be kept in a safe place, where they can be easily accessed by your estate administrator or executor.

You should also review your estate plan every few years and at significant points in your life, like marriage, divorce, the adoption or birth of a child, or the death of a beneficiary.

Do your homework, then visit an experienced estate planning attorney to receive important planning insights from their experience working with estate plans and families. You can read more about how our process works, how we can make sure we are a good fit for your needs, and how to get started today right here.

Reference: The (Jonesboro, AR) Sun (July 15, 2020) “Do I Really Need A Will?”

Could It Be Time to ‘Unretire’?

“After spending decades in the workplace, retirement may sound attractive. However, many people develop second thoughts soon after leaving their jobs.”

MoneyTalksNews’ recent article entitled “8 Signs That It’s Time for You to Unretire” says just because a person is 65 or older doesn’t mean they’re ready to stop working. Some people miss their co-workers and the sense of purpose that’s derived from holding a job. The article suggests that if you’re motivated and in good health, returning to work is often a good decision. Let’s look at some signs that it is time to unretire.

Financial trouble. Many people have issues trying to save enough money for retirement. Typically, Social Security benefits don’t give you enough income to keep your lifestyle in retirement. You might want to work a few more years to up your income and gain more time to save money. Every year on the job is one less year that you’ll need to rely on savings during retirement.

You’re a couch potato. A big benefit of going back to work, is that it may help your health. Studies say there’s a connection between job satisfaction and good health. Couch potatoes are more likely to get sick.

You're having difficulty adjusting. This new life without work can be tough. Some people have hobbies in retirement or they travel. However, if you’re bored and unhappy without a work schedule, you might be better off getting back in the workforce.

You’ve lost relationships. No contact with work colleagues can leave you feeling lost and lonely. Research shows that loneliness and feelings of isolation can cause physiological changes that increase the risk of premature death in older persons by 14%.

You totally enjoyed your office. If you were fortunate enough to enjoy what you did for a living, it makes sense that you’d want to go back to the workplace. Some people don’t see how much they like working until they quit.

You want a new beginning in the workplace. Returning to work after you chose to retire can be a challenge. Once you retire, it can be difficult to return, so you must be highly motivated. There may be age discrimination, and if you’ve been retired a year or more, be ready to discuss the “employment gap” on your resume. It may cause potential employers to question your dedication.

You’ve got a fantastic idea for a new business. If you have many years of experience working for others, it may be the time to put it to use for yourself by starting your own business. If you have a really good idea for a business, age shouldn’t matter.

You want to pursue your passion. After you have a secure retirement income from Social Security benefits, investments, or a pension, you have the freedom to take a risk on a passion-driven career.

Reference: MoneyTalksNews (June 23, 2020) “8 Signs That It’s Time for You to Unretire”

What Should I Know about Immediate Variable Annuities?

“Immediate annuities (also known as payout or income annuities) require you to pay to an insurance company. The insurer will send you a stream of payments, starting right away.”

FedWeek’s recent article entitled “Buying an Annuity for an Income Stream” explains that these annuities come in two varieties, immediate fixed annuities and immediate variable annuities. With an immediate fixed annuity, you receive the same amount each month, as long as the annuity lasts.

However, a fixed payout may not be attractive, because that fixed amount is likely to decrease in value over the years as prices increase.

There are, however, immediate variable annuities with payments that are indexed to inflation.

There’s are also immediate variable annuities, where you decide among investment accounts with the aim of upping your payments.

Immediate annuities can be a good strategy for people 65 and older. That’s because the older you are when you buy one, the more cash flow you’ll get and the greater the portion of each check that will be a tax-free return of capital.

When you purchase an immediate annuity, you can select some of the terms of the contract. Let’s look at some of the common choices.

A straight life annuity will pay one individual for as long as he or she lives, whether it’s a month or 50 years.

With a joint annuity, a married couple purchases an annuity that will pay as long as either spouse is alive.

Finally, there are period certain annuities. This kind of annuity can be on one person’s life, just like a straight life annuity. However, with a period-certain annuity, the insurer agrees to make payments for at least a specific number of years (a common term is 10 years). If the annuitant dies within that term, payments to a beneficiary will continue until the term is completed. You can get period-certain annuities for many different lengths of time.

Note that joint annuities and period-certain annuities have smaller payouts than a straight life annuity.

You need to consider whether protecting a spouse or another beneficiary is worth the reduced cash flow while you’re around.

Reference: FedWeek (June 18, 2020) “Buying an Annuity for an Income Stream”

Insurance: Why it Pays off in the Long-Run

Most individuals go through an eye-opening period during early adulthood, where a certain financial reality sets in, and most people begin to notice how expensive everything is and start scrutinizing every purchase they make. Indulgent expenses may be cut so that limited budgets can cover the necessities.

While most individuals plan for expenses such as housing, groceries, and transportation, they often overlook insurance. And while some insurance is required by law – such as automobile insurance for those who own vehicles – other policies are optional. For those on a tight budget, it may be tempting to scale back your insurance coverage to only the minimum required policies purchased from the most cost-effective provider.

But this action can be a big mistake that can cost you far more in the long run. Understanding the role of insurance and how it can actually save you money, protect your investments, and provide stability for your family is often the first step in identifying what types of insurance coverage you need.

Benefits of Insurance

When you have the right insurance policies in place, you can save yourself a ton of money in the long run if you have to file a claim. For instance, if you were to develop a severe illness that requires hospitalization, the average cost per day is around $3,949. Very few people could financially afford a stay of more than a couple days without completely wiping out their savings or putting themselves into serious debt that could take years to pay off. If you do have health insurance, you will still have some out-of-pocket costs, but they won’t be nearly as hefty as they would be without coverage.   

Insurance can also help you to protect your assets and investments. When making a significant purchase, such as a car or an automobile, most people have to finance the balance and then make monthly payments, which requires insurance. But even if you were to make the purchase outright, insurance provides some peace of mind that in a worst-case scenario, such as a fire that destroyed both, you wouldn’t suffer a total loss. Most policies would cover the majority of the value of the asset, minimizing your losses.

And some types of insurance also help to protect your loved ones, even when you are gone. In the event of an untimely death or accident, life insurance can cover the expenses of your final arrangements and even provide for the loss of income to your family. While this will never replace the loss of a loved one, it can ensure that your family doesn’t have additional financial stress.

When you’re young, it’s essential to carefully weigh all purchases and ensure that you are making smart choices with your income. And since most don’t see the immediate payoff in having insurance, it’s definitely an expense that some consider eliminating. However, the reality is that if you often don’t need insurance unless a major event has occurred that could potentially lead to a substantial financial setback, or even bankruptcy in some instances. And you never know when that might happen, so having essential policies in place is crucial, even if you don’t think you need them.

Essential Insurance Policies

Selecting the right policies and carrier can be confusing. There are so many to choose from, and while it may be tempting to purchase coverage for everything you can afford, there is such a thing as being overinsured. Given this, it’s worth taking time to understand what types of policies are offered and which ones fit your needs. The list below covers the types of insurance that are often considered essential, even for younger individuals. It’s an excellent place to start if you are evaluating your insurance needs.

1. Automobile Insurance: Most states require drivers to have auto insurance, or have outlined financial responsibility for those involved in a car accident. And unfortunately, even the best drivers sometimes get into unforeseen accidents. And while you may think that automobile insurance isn’t worth it if your car has little value, you may be on the hook for the damages to the other vehicle and medical expenses of its passengers. It’s simply too risky to drive any vehicle without auto insurance.
2. Health Insurance: Don’t let a serious illness bankrupt you. While some jobs offer health insurance as a benefit, it can also be purchased independently. It’s definitely worth purchasing since you never know when you may need it.
3. Life Insurance: Life insurance provides peace-of-mind that your family won’t be financially burdened in the event of our death. It’s especially important to have a policy that will cover some of your lost income if you are leaving behind dependents.

While you may find that you need additional types of insurance, such as disability insurance and home insurance when you purchase a home, these three are crucial for nearly all individuals.

How Can I Use Estate Planning for My Small Business?

“Small businesses are often caught up in growth cycles, profits and ensuring that products arrive to consumers on time. The life of a small business owner is a hectic one with many owners failing to follow basic estate planning and business law practices.”

All business owners would like to live long enough to see their business become successful, but there are no guarantees.

Legal Scoops’ recent article entitled “3 Ways Estate Planning is Used in Small Business” says that estate planning can work to keep your dream alive and help keep your business thriving after your death. Let’s look at some ways that estate planning helps small business owners.

1. Protection from Unfamiliar Owners with Buy-Sell Agreements. Small businesses are frequently partnerships between family members or friends. However, one of the owners will die before the other, and if this occurs, the business may be in jeopardy if a buy-sell agreement isn’t in place. Buy-sell agreements can make certain that family members of the deceased don’t gain control of the business. It also automatically allows other owners to buy the owner’s share in the company.

2. Implementation of a Succession Plan. A succession plan can identify and develop new leaders and key people to fill business objectives. Succession plans are implemented long before an owner’s death, so their wishes can be upheld. A succession plan can also decrease the chance of family arguments that come after a person’s death.

3. Elimination of Unnecessary Taxes. A business that’s operational and successful will have assets and significant tax burdens for heirs. If a majority of your wealth is tied into a business, you must take action to help remove these unnecessary tax burdens from your business. Business owners can do one of the following:

• Gift family members shares in the business, while they’re still alive
• Redeem stocks at a lower tax rate than cash; or
• Estate taxes can pay estate taxes in installments.

When a business is illiquid, heirs may not be able to pay the 35% – 50% estate tax on the business.

To help you with your business succession planning, contact an experienced estate planning attorney to make certain that your family is financially sound after your death and that your legacy continues on with your family business. Contact our office today to schedule your consultation.

Reference: Legal Scoops (July 14, 2020) “3 Ways Estate Planning is Used in Small Business”