Articles Posted in ESTATE PLANNING

Estate planning is important process for any couple, but same sex couples have an even heightened reason to ensure the protection of their union. While the recent election resulted in more states legalizing gay marriage, many states, including California and the federal government still do not recognize gay marriages as legal. While the U.S. Supreme Court’s ultimate decision on the Prop 8 case may again allow same-sex couples to marry in our state, those couples would still not receive full recognition of their union at the federal level.

This means that for same sex couples in California to fully protect their relationships, significant planning needs to be done. A lawyer well versed in trust and estate planning can be of great assistance in creating a comprehensive estate plan.

In an interview with CNBC, a financial consultant with Schwab noted that “The federal government does not treat [same-sex couples] as married couples and this creates financial and tax complications.”

Choosing the right life insurance policy can be tricky. However, sometimes even doing your research and paying a significant amount towards your life insurance does not mean that your beneficiaries will benefit in the end.

This lesson became a harsh reality for many beneficiaries of AIG’s life insurance policies in California.

An audit conducted by California Controller John Chiang reveals that AIG fails to “pay death benefits to the beneficiaries of life insurance policies, despite having access to federal records indicating that policyholders had died, or direct confirmation of relatives of the deceased.” AIG not only fails to pay these policies but also continues to collect the premium payments by “drawing down the policies’ cash reserves.” Once there are no more cash reserves to withdraw, AIG would cancel the policy unbeknownst to its beneficiaries.

This week is referred to by some as the National Estate Planning Awareness Week. It is an opportune time to examine your life and take steps to protect your assets now and in the future.

Each stage of life requires a different type of planning, but through it all it is critical to have the aid of professionals to ensure your work actually protects you and your family. In the San Diego area we encourage you to contact one of our estate planners for help. Every situation is different, but some of the more common planning tools include…

Health Care Proxy

The present federal estate tax rates and levels are set to expire at the end of this year. Under current rules, only estates that have a total value of $5.2 million have any obligation, paying a top 35% tax rate on any assets over that amount. If Congress allows the current plan to expire, at the start of the year the exemption level will drop to $1 million at a top tax rate of 55%

There is a false assumption among some that this tax is only a concern for the super-rich. While middle and lower income families do not have to worry about the change, you may be surprised to learn that a lot of families may actually be affected by the reversion of this tax cut down to the $1 million mark. That is because for the purposes of this tax, the IRS Takes in all the value of an estate into account, including real property, life insurance, and business ownership, among other things. When all of that is added up, more people may fit into this group than is realized.

These are assets accumulated over a lifetime of hard work and sacrifice and no one wants to see them dispersed to the IRS. It is reasonable for these families to be concerned about their possible tax bill and plan accordingly.

Caring for a child with special needs and/or raising a child with disabilities is fraught with financial responsibilities that may be difficult to manage. These life situations require careful estate planning when the parent or caregiver is no longer around to make the necessary financial and other decisions for that child.

Believe it or not, some estimates suggest that lifetime care for a child with autism may add up to an estimated $3.2 million over that child’s lifetime in some of the more severe cases. This represents a significant challenge for the nearly 20 million U.S. families facing this struggle.

For this reason, it is natural for families who have a child with special needs to want to set aside assets in their children’s names or name them as beneficiaries in wills or life insurance policies. But some of this basic planning comes with pitfalls-most notably risking the child’s access to support services. Families must be mindful with their financial planning in order to avoid disqualifying their child from crucial benefits. In many cases a special needs trust should be used to provide for their child’s care instead of having their assets flow directly to the special needs child. On top of that, many parents need to consider how they should plan for their own retirement, since they may never have an “empty nest”.

Leaving money to pets in your Will is not as uncommon as you might think. In fact lots of people,

especially the elderly, want to make sure that watch dog Fido, or lap cat Fluffy, are well taken care after they are gone.

Leona Helmsley, the late 87-year-old real estate investor, set aside $12 million in her Will for the care of her beloved Maltese. A lot of people found the very idea to be absurd, but for those who loved animals, it was encouraging.

The person who will make choices for your end-of-life healthcare and the person who will handle your finances may not always be the same person. In fact, you might want to consider having different people handle each one.

A power of attorney is a legal document that gives another person legal authority to act on your behalf.

When you create such a document, you are called the principal and the person to whom you give this authority is called your agent. A power of attorney may give your agent power over all your affairs, or it may be limited, only giving your agent permission to handle a specifically defined task. If a power of attorney is made ‘durable,’ it continues in effect even if you become incapacitated. By changing the language in the document, you can also specify that the durable power of attorney not take effect ‘unless’