ESTATE PLANNING

Published on: June 16, 2009

Parents & Grandparents – Have You Considered a Special Needs Trust

Many parents and grandparents don’t realize that a child, grandchild, or other beneficiary with a disability complicates an estate plan. If you have such a loved one you want to provide for in your estate plan, you need an appropriate trust even more so than someone without a disabled beneficiary in the picture. Here are some of the points often overlooked in planning for a special needs beneficiary:

Outright distributions to a special needs child or adult will likely make the beneficiary ineligible for continued SSI or Medi-Cal benefits. On the other hand, leaving such a beneficiary out of your will or trust may not be something you feel comfortable with and disinheriting that person could leave the beneficiary with total reliance on such benefits. Sometimes people think they will leave property or assets to another family member with the understanding that he or she will provide for the disabled beneficiary. This approach is unwise as the family member could not follow through ( it happens), die, or run into financial difficulty.

The way around the issue is to create a third party special needs trust as part of your estate plan. If you already have a trust, a stand-alone special needs trust can be drafted. If you haven’t created a trust yet, a special needs trust can be incorporated into yours. The trust can provide distributions for the beneficiary’s special needs, such as medical care not covered by public benefits, computers, TV, vacations, and other items or activities to enhance the beneficiary’s life. With such a trust, the beneficiary is able to continue eligibility for government benefits and use his or her inheritance to supplement those benefits.

Published on: June 5, 2009

Celebrities Whose Estates Make Millions Long After They’re Dead

by Scott C. Soady

Wouldn’t it be nice for your heirs to conintue to receive money from your estate long after you are gone? A recent article in Forbes Magazine listed the top celebrities whose estates continue to make money long after their death.

Not surprisingly, Evis Presley comes out on top, with income of $52 million in 2008. Some stars that are alive don’t make that much in a year. It is not known exactly how much of that flows into his estate because various entities own interests in the income stream.

Second on the list is Charles Schultz, of “Peanuts” fame whose estate gets a big chunk of the syndicatication and merchandise fees generated by the comic strip.

Published on: June 4, 2009

Do Living Trusts Protect Your Assets From Creditors?

by Scott C. Soady

We frequently get calls from prospective clients wanting to know if creating a trust will protect their assets from creditors or lawsuits. Unfortunately, they do not.

A revocable living trust is a legal arrangement whereby you hold your assets in trust to be used and managed until your death when they will be distributed to someone else. You can add assets or remove assets from your trust at any time, even revoke the trust completely and put them back into your name individually. Since you have control of your assets, creditors can reach those assets to collect on a debt.

There are some irrevocable trusts that can remove assets from your control but these cannot be revoked, hence they should be created with advice from an experienced estate planning attorney and possibly your financial advisor.

Published on: May 31, 2009

Can You Pass the Estate Planning Quiz?

by Scott C. Soady

Many younger Americans, even though they have managed to buy a home and acquire a number of other assets, remain unfamiliar with estate planning issues. A survey conducted by Fidelity Investments reveals that many Americans between the ages of 30 – 49 do not know some of the key issues and strategies for managing their assets.

61% did not know the maximum amount you can give annually in gifts without having to pay federal gift tax. Do you know that the amount for 2009 is $13,000 per person to each individual?

80% did not know what the maximum value of your estate can be to avoid federal estate taxes. Correct answer – $3.5 million in 2009.

Published on: May 17, 2009

Medi-Cal for San Diego Seniors

by Scott C. Soady

With the aging baby boomers now becoming seniors and people living longer in general, one of the issues seniors face, especially in this economy, is the possibility of needing long term care. The cost of nursing home care has risen tremendously in the last decade. A survey done by Metlife in October 2008 listed the average cost of a private room in San Diego as $240 per day. Assisted living facilities can run anywhere from $2500 – $5000 per month, even more for specialized care such as for Alzheimer’s patients.

You can read more about long term care planning in an article here on our website. One option to pay for nursing home care is Medi-Cal, the California state-funded needs based program. Medi-Cal provides health and long term coverage to over 10 million Californians. To qualify for Medi-Cal for 24 hour care in a skilled nursing home,an applicant must pass the Income Test and the Asset Test. Medi-Cal has certain income limitations and also only pays for the cost of nursing home care if the “countable” or “non-exempt” assets of the person needing care and their spouse are below certain limits.

There are some assets that are “exempt” meaning they do not count in figuring your assets. Some of these “exempt assets” are a home, car, personal property, $1500 in life insurance, and prepaid funeral plans. You can also convert some of your countable assets into exempt assets before entering a nursing home.

Published on: May 14, 2009

Is a Handwritten Will Valid in California?

by Scott C. Soady

A will that is written in one’s own hand is called a holographic will and is valid in California. The basic requirements are:

1. The document must be completely written in the handwriting of the Testator (the individual creating the will).

2. The will must be dated and signed.

Published on: May 10, 2009

Some “No No’s Once Your Trust is in Place

by Scott C. Soady

At Law Office of Scott C. Soady, A Professional Corporation we see trusts everyday that are drafted by other estate planning lawyers in San Diego or even by our own firm that cause some concern. Once your trust is drafted, it is intended to be reviewed periodically and also there are some things you need to aware of.

Not transferring into your trust all of your assets that should be in the trust. Depending on your attorney and what arrangements you make concerning transfer of assets into the trust, some transfers of assets require an affirmative action on your part. For example, to transfer your accounts into the name of your trust, you often have to visit the bank and fill out new signature cards. If you forget to do this, the bank account will not be in the trust at the time of your death, causing problems for your heirs. As you acquire new assets or change the form of the ones you have, you need to remember to title those new or changed assets into your trust. Assets that are left out, with some exceptions, will require probate and that is what you were trying to avoid in creating the trust in the first place.

Writing on your trust, crossing out words, or writing in the margins. We often have clients come into the office for a review of their trust or for some other service and find that their trust document has words crossed out or writings in the margins or highlighting. Please remember that a trust is a notarized document and it can only be changed by another document that is notarized. You cannot change your trust by crossing out language and adding the changes with your signature; it has to be formally amended. Also if we are going to petition the Court for some reason concerning your trust, a clean copy of the original trust will have to be filed.

Published on: May 4, 2009

What is the meaning of the term “capacity” in California?

by Scott C. Soady

What is the meaning of the term “capacity” in California?

Many people, particularly estate planning lawyers toss the term “capacity” out as though everyone knows what the term means. Often you hear people talk about someone “losing capacity” in the sense of not being able to make a will or trust or take care of their finances. What exactly does the term “capacity” mean in the context of making a will or a trust?

The California Probate Code provides that a person is not “mentally competent”to make at will if either of the following is true:

Published on: April 28, 2009

Gifting or Loaning Money to Your Kids

by Scott C. Soady

Often as parents or grandparents, we want to give or loan money to our children or grandchildren. Sometimes these amounts can be substantial and the question arises as to whether it should be a gift or loan. If the amount is significant, you may feel also feel that out of fairness to your other children, the loan or gift should be mentioned in your estate plan to even out the eventual distribution of your estate.

You first need to decide whether a gift or loan is appropriate. A loan means you expect to be repaid while a gift is given without any expectation that the money will be repaid.

If your assistance is to be a gift, remember that in 2009 you can gift $12,000 to any one person. If you are married and want to give a gift to your child for a car or a down payment on a house, for example, you and your spouse can give $24,000 per year. If the amount is over $12,000 per person, the IRS requires that you file a gift return.

Published on: April 23, 2009

What Happens to Your Online Accounts When You Die?

by Scott C. Soady

Most people in our high tech society have online accounts such as ebay, Pay Pal, Facebook, Linked in, etc. not to mention their online banking accounts, brokerage accounts, and others with passwords. Some people have photographs and documents stored in their computer and have passwords to get into their computer. What happens when someone dies and no one knows the passwords?

If you bank online or you conduct business on line, your family or your executor or trustee may need to access those accounts to close them, transfer funds, or conduct business. You may also want them to respond to emails, retrieve photos, or post a final blog if you have one.

Accessing online accounts can be difficult. Google for example requires proof of death and will provide access only to an executor or trustee. Facebook won’t provide access at all. Banking institutions and investment companies all have their own rules and regulations for access.