Here's why you need an Estate Plan - My Press Plus

October 19th-25th, 2020 is National Estate Planning Awareness Week, so if you’ve been thinking about creating an estate plan, but still haven’t checked it off your to-do list, now is the perfect time to get it done.

When it comes to putting off or refusing to create an estate plan, your mind can concoct all sorts of rationalizations: “I won’t care because I’ll be dead,” “I’m too young,” “That won’t happen to me,” or “My family will know what to do.”

But these thoughts all come from a mix of pride, denial, and above all, a lack of real education about estate planning and the consequences to your family of not planning. Once you understand exactly how planning is designed to work and what it protects against, you’ll realize there is no acceptable excuse for not having a plan.

Indeed, the first step in creating a proper plan is to thoroughly understand the potential consequences of going without one. In the event of your death or incapacity, not having a plan could be incredibly traumatic and costly for your family, who will be forced to deal with the mess you’ll have created by neglecting to plan.

While each situation and family are unique, in this multi-part series I’m going to discuss some of the things most likely to happen to your loved ones if you fail to create a plan. This is the first:

Your family will have to go to court
If you don’t have a plan, or if you only have a will (yes, even with a will), you’re forcing your family to go through probate upon your death. Probate is the legal process for settling your estate, and even if you have a will, it’s notoriously slow, costly, and public. But with no plan at all, probate can be a true nightmare for your loved ones.

Depending on the complexity of your estate, probate can take years, or even decades, to complete. And like most court proceedings, probate can be expensive. In fact, once all of your debts, taxes, and court fees have been paid, there might be little left for your loved ones to inherit. And for whatever is left, your family will have to pay hefty attorney’s fees and court costs in order to claim them.

Yet, the most burdensome part of probate is the frustration and anxiety it can cause your loved ones. In addition to grieving your death, planning your funeral, and contacting everyone you’re close with, your family will be stuck dealing with a crowded court system that can be challenging to navigate even in the best of circumstances. Plus, the entire affair is open to the public, which can make things all the more arduous for those you leave behind, especially if the wrong people take an interest in your family’s affairs.

That said, the expense and drama of the court system can be almost totally avoided with proper planning. Using a trust, for example, we can ensure that your assets pass directly to your family upon your death, without the need for any court intervention. As long as you have planned properly, just about everything can happen in the privacy of our office and on your family’s time.

No more excuses
Given the potentially dire consequences probate can cause for your family, you can’t afford to put off creating your estate plan any longer. Next week we’ll look at how the lack of an estate plan will cost you control of who inherits your assets as well as when and how the inheritance is received.  

 

Serving as a Trustee - What to Know

Being asked by a loved one to serve as trustee for their trust upon their death can be quite an honor, but it’s also a major responsibility—and the role is definitely not for everyone. Indeed, serving as a trustee entails a broad array of duties, and you are both ethically and legally required to properly execute those duties or face potential liability.

In the end, your responsibility as a trustee will vary greatly depending on the size of the estate, the type of assets covered by the trust, the type of trust, how many beneficiaries there are, and the document’s terms. In light of this, you should carefully review the specifics of the trust you would be managing before making your decision to serve.

And remember, you don’t have to take the job.

Yet, depending on who nominated you, declining to serve may not be an easy or practical option. On the other hand, you might actually enjoy the opportunity to serve, so long as you understand what’s expected of you.

To that end, this article offers a brief overview of what serving as a trustee typically entails. If you are asked to serve as trustee, feel free to contact us to support you in evaluating whether you can effectively carry out all the duties or if you should politely decline.

A trustee’s primary responsibilities
Although every trust is different, serving as trustee comes with a few core requirements. These duties primarily involve accounting for, managing, and distributing the trust’s assets to its named beneficiaries as a fiduciary.

As a fiduciary, you have the power to act on behalf of the trust’s creator and beneficiaries, always putting their interests above your own. Indeed, you have a legal obligation to act in a trustworthy and honest manner, while providing the highest standard of care in executing your duties.

This means that you are legally required to properly manage the trust and its assets in the best interest of all the named beneficiaries. And if you fail to abide by your duties as a fiduciary, you can face legal liability. For this reason, you should consult with us for a more in-depth explanation of the duties and responsibilities a specific trust will require of you before agreeing to serve.

Regardless of the type of trust or the assets it holds, some of your key responsibilities as trustee include:

  • Identifying and protecting the trust assets
  • Determining what the trust’s terms require in terms of management and distribution of the assets
  • Hiring and overseeing an accounting firm to file income and estate taxes for the trust
  • Communicating regularly with beneficiaries and meeting all required deadlines
  • Being scrupulously honest, highly organized, and keeping detailed records of all transactions
  • Closing the trust when the trust terms specify

No experience necessary
It’s important to point out that being a trustee does NOT require you to be an expert in law, finance, taxes, or any other field related to trust administration. In fact, trustees are not only allowed to seek outside support from professionals in these areas, they’re highly encouraged to do so, and the trust estate will pay for you to hire these professionals.

So even though serving as a trustee may seem like a daunting proposition, you won’t have to handle the job alone. And you are also often able to be paid to serve as trustee of a trust.

 

Get Ready for 2020 Taxes - Kienitz Tax Law

 

Although you may have just filed your 2019 income taxes in July, now is the time to start thinking about your 2020 return due next April. While it’s always a good idea to be proactive when it comes to tax planning, it’s particularly important this year.

In addition to annual updates for inflation, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides individual taxpayers with several new tax breaks, most of which will only be available this year. The sooner you learn about the different forms of tax-savings available, the more time you will have to take advantage of them.

Here are 6 ways your 2020 return will differ from prior years:

1. Waived RMDs
You are typically required to take an annual required minimum distribution (RMD) from your IRA, 401(k), or other tax-deferred retirement account starting in the year when you turn 72, but the CARES Act temporarily waived the RMD requirement for 2020. The waiver also applies if you reached age 70½ in 2019, but waited to take your first RMD until 2020, as allowed under the SECURE Act.

RMDs generally count as taxable income, so taking this waiver means that you may have lower taxable income in 2020 and therefore owe less income taxes for 2020.

However, there are a number of factors to consider, including the state of the market and your living expenses, when deciding whether or not to waive your RMDs. Given this, consult with your tax professional before making your final decision.

2. Higher standard deduction

If you do not itemize deductions, you can use the standard deduction to reduce your taxable income. Trump’s tax reform legislation nearly doubled the standard deduction starting in 2018, and it has increased even more for inflation since then. For 2020, the new standard deduction amounts include the following:

  • $12,400 for single filers
  • $24,800 for those who are married filing jointly
  • $18,650 for people filing as a head of household

3. Higher contribution limits for certain retirement accounts Depending on the type of retirement account you are invested in, the maximum amount you can contribute may have increased this year. The contribution limit for a 401(k) or similar workplace-retirement plan has increased from $19,000 in 2019 to $19,500 in 2020. If you are 50 or older in 2020, the 401(k) catch-up contribution limit is $6,500, up from $6,000.

On the other hand, the amount you can contribute to a traditional IRA remains the same for 2020: $6,000, with a $1,000 catch-up limit if you’re 50 or older. However, if you made too much money to contribute to a Roth IRA last year, the maximum income limits for contributing to a Roth have increased, so you may be able to contribute in 2020.

In 2020, eligibility to contribute to a Roth IRA starts to phase out at $124,000 for single filers and $196,000 for married couples filing jointly. Those phase-out limits are up from 2019, which started at $122,000 for single individuals and $193,000 for married couples.

4. New charitable deduction
In most years, you are only able to deduct charitable donations on your income tax return when you itemize deductions. However, the CARES Act included a provision to allow everyone to claim up to a $300 “above-the-line” deduction for charitable contributions, if you take the standard deduction in 2020. This change was designed to encourage people to donate money to charity to help with COVID-19 relief efforts.

5. Adoption credit changes
If you adopted a child this year, you can claim a higher tax credit on your 2020 return to cover your adoption-related expenses such as adoption fees, court and attorney costs, and travel expenses. The maximum credit amount for 2020 is $14,300, which is an increase of $220 from last year.

6.New rules for early withdrawals from retirement accounts
If your finances were seriously impacted by the coronavirus, you may be in dire need of funds to cover your expenses. Thanks to new rules under the CARES Act, you now have more flexibility to make an emergency withdrawal from tax-deferred retirement accounts in 2020, without incurring the normal penalties.

Ordinarily, permanent withdrawals from traditional IRAs or 401(k) accounts are taxed at ordinary income rates in the year the funds were taken out. And pulling out money before age 59 1/2 would also typically cost you a 10% penalty.

But thanks to the CARES Act, you can avoid the 10% penalty (if under 59 1/2) on up to $100,000 in coronavirus-related distributions (CRDs) from your retirement account. You are also allowed to spread such distributions over three years to reduce the tax impact. Or better yet, you can opt to put this money back into your retirement account—also within three years—and avoid paying taxes on the money all together.

That said, emergency withdrawals are only available to those individuals with a valid COVID-19-related reason for early access to retirement funds.  These reasons include:

  • Being diagnosed with COVID-19
  • Having a spouse or dependent diagnosed with COVID-19
  • Experiencing a layoff, furlough, reduction in hours, or inability to work due to COVID-19 or lack of childcare due to COVID-19
  • Have had a job offer rescinded or a job start date delayed due to COVID-19
  • Experiencing adverse financial consequences due to an individual or the individual’s spouse’s finances being affected due to COVID-19
  • Closing or reducing hours of a business owned or operated by an individual or their spouse due to COVID-19

Because early withdrawals can negatively impact your retirement savings down the road, if you are looking to take advantage of this provision, you should consult with your financial advisor first. Also note that employers are not required to participate in this provision of the CARES Act, so you’ll also need to check with your plan administrator to see if it’s available at your workplace.

Maximize tax-savings for 2020
While the deadline for filing your 2020 income taxes isn’t until April 15, 2021, with all of the new COVID-19 legislation, the earlier you start planning your taxes, the better. Let me know if you need support in clarifying how these new changes will affect your return and to implement strategies to maximize your tax savings for 2020 and beyond.

 

What Estate Planning Documents Do Your Young Adult Children Need?

While estate planning is probably one of the last things your teenage kids are thinking about, when they turn 18, it should be one of their (and your) number-one priorities. Here’s why: At 18, they become legal adults in the eyes of the law, so you no longer have the authority to make decisions regarding their healthcare, nor will you have access to their financial accounts if something happens to them.

With you no longer in charge, your young adult would be extremely vulnerable in the event they become incapacitated by COVID-19 or another malady and lose their ability to make decisions about their own medical care. Seeing that putting a plan in place could literally save their lives, if your kids are already 18 or about to hit that milestone, it’s crucial that you discuss and have them sign the following documents.

Medical Power of Attorney
A medical power of attorney is an advance directive that allows your child to grant you (or someone else) the legal authority to make healthcare decisions on their behalf in the event they become incapacitated and are unable to make decisions for themselves.

For example, a medical power of attorney would allow you to make decisions about your child’s medical treatment if he or she is in a car accident or is hospitalized with COVID-19.

Without a medical power of attorney in place, if your child has a serious illness or injury that requires hospitalization and you need access to their medical records to make decisions about their treatment, you’d have to petition the court to become their legal guardian. While a parent is typically the court’s first choice for guardian, the guardianship process can be both slow and expensive.

And due to HIPAA laws, once your child becomes 18, no one—even parents—is legally authorized to access his or her medical records without prior written permission. But a properly drafted medical power of attorney will include a signed HIPAA authorization, so you can immediately access their medical records to make informed decisions about their healthcare.

Living Will
While a medical power of attorney allows you to make healthcare decisions on your child’s behalf during their incapacity, a living will is an advance directive that provides specific guidance about how your child’s medical decisions should be made, particularly at the end of life.

For example, a living will allows your child to let you know if and when they want life support removed should they ever require it. In addition to documenting how your child wants their medical care managed, a living will can also include instructions about who should be able to visit them in the hospital and even what kind of food they should be fed.

Durable Financial Power of Attorney
Should your child become incapacitated, you may also need the ability to access and manage their finances, and this requires your child to grant you durable financial power of attorney.

Durable financial power of attorney gives you the authority to manage their financial and legal matters, such as paying their tuition, applying for student loans, managing their bank accounts, and collecting government benefits. Without this document, you will have to petition the court for such authority.

Peace of Mind
As parents, it is normal to experience anxiety as your child individuates and becomes an adult, and with the pandemic still raging, these fears have undoubtedly intensified. While you can’t totally prevent your child from an unforeseen illness or injury, you can at least rest assured that if your child ever does need your help, you’ll have the legal authority to provide it. Contact us if you have any questions.

 

 

Family-Go-Bag-Comfort4-Survival-Kit—400-V2-AMP-min – Sustain Supply

In response to a series of wildfires that ravaged Southern California in 2017, I wrote a previous article explaining https://www.calilaw.com/saving-matters-12-must-items-pack-go-bag/ ready in the event a natural disaster or other emergency strikes your home. Go-bags originated with the US military, which requires its personnel to always keep one on-hand packed with the essential items needed to survive for at least three days following a disaster.When you have just minutes to evacuate, you won’t have time to think about what you should pack to survive the days—or weeks—to come, so the time to prepare for your family’s safety is now.

In 2020, we’re not only dealing with deadly wildfires again in California, we’re still in the middle of the COVID-19 pandemic, which has already killed more than 180,000 Americans and seems unlikely to disappear anytime soon.

In light of the increased dangers posed by the pandemic, I decided to update my previous go-bag article. Although most of the items you should have in your go-bag remain the same, here we’ll cover the supplies and documents you should pack to deal with COVID-19. Whether you are forced to temporarily relocate somewhere other than your home, require hospitalization, or are subject to quarantine, the pandemic comes with unique risks that call for additional preparation.

The go-bag revisited
Before we discuss the estate planning and other key documents you should include in your go bag, we need to mention some general supplies to include to help protect your family from contracting COVID-19. Along with the personal sanitary items listed in the previous article, you should add the following items:

  • Face masks and/or face coverings
  • Hand sanitizer containing at least 60% alcohol
  • Lysol or other disinfectant sprays
  • Disinfecting wipes
  • Disposable gloves

Now, when it comes to your estate plan, even if you have all of the necessary planning documents in place and updated, they won’t do you any good if your loved ones don’t know about them or can’t quickly locate them during an emergency. Without immediate access to your plan, if you become seriously ill or injured, medical and financial decisions can be dangerously delayed or be made by someone other than the people you would want.

And the need for your plan to be easily accessible is particularly urgent during the pandemic. Due to the highly contagious nature of COVID, there’s a good chance your family members will not be allowed to accompany you if you are hospitalized or forced to quarantine. For these reasons, adding your estate plan and other important documents to your go-bag is a must.

While all of your estate planning documents should be included in your go-bag, be sure to include your up-to-date medical power of attorney and living will along with copies of your health insurance or Medicare card and a summary of your medical history. In your medical history, you’ll want to mention any chronic underlying medical conditions and illnesses, as well as list all prescriptions drugs, over-the-counter medications, and/or supplements you are currently taking—and don’t forget to list any known allergies.

Make sure your loved ones know about your go-bag, and where to find it. To make it as portable as possible, download your plan and other essential documents to a thumb drive you can carry in your go-bag and upload additional copies to the cloud.

 

Safeguard your belongings—and memories
While protecting your family’s health, safety, and well-being is the primary purpose of packing a go-bag, you should also take steps to prevent the financial devastation that can result from having your home and other property destroyed in a disaster. Obviously, having the appropriate levels of insurance coverage in place is your first task.
But to make sure the insurance companies fully reimburse you for what you stand to lose, you should also take video and photos of all your belongings. Such visual documentation can not only ensure you are able to replace your assets, but that your insurance claim is processed as quickly and smoothly as possible.

Finally, if you own your home, it should be titled in your living trust and your living trust MUST be identified as an “additional named insured” on your homeowner’s policy. Pull out your policy and check for that now. This often-overlooked detail can cause big problems in the event a claim must be made.

 

Estate Planning Essentials for Same-Sex Couples - WillWritten Will Writing

 

A case on the Supreme Court’s docket for October could have a major impact on the parental rights of same-gender couples seeking to adopt or foster children. In February, the high court agreed to hear Fulton v. City of Philadelphia, which deals with whether taxpayer-funded, faith-based foster care and adoption agencies have a Constitutional right to refuse child placement with LGBTQ families.

In March 2018, the City of Philadelphia learned that Catholic Social Services (CSS), an agency it contracted with to provide foster care services was refusing to license same-gender couples as foster parents. This was despite the fact the agency consented to abide by a city law prohibiting anti-LGBTQ discrimination.

The city told CSS it would not renew their contract unless they abided by its nondiscrimination requirements, but CSS refused to comply, and the city cancelled its contract. CSS then sued the city, claiming it had a First Amendment right to refuse licensing same-gender couples, since those couples were in violation of their religious beliefs.

Both a federal judge and the 3rd Circuit Court of Appeals sided with the city, noting the city’s decision was based on a sincere commitment to nondiscrimination, not a targeted attack on religion. From there, CSS took the case to the Supreme Court.

Rampant discrimination at the state level
LGTBQ adoptions are particularly contentious right now at the state level. The Supreme Court has yet to rule on the issue of the parental rights of non-biological spouses in a same-gender marriage. Given this, many married same-gender couples looking to obtain full parental rights in every state turn to second-parent adoption, as the Supreme Court has previously ruled that the adoptive parental rights granted in one state must be respected in all states.

That said, 11 states currently permit state-licensed adoption agencies to refuse to grant an adoption, if doing so violates the agency’s religious beliefs. In other states, the law specifically forbids such discrimination, but as we’ve seen in the Fulton case, those laws are being challenged.

Estate planning offers another option

No matter how the Supreme Court rules, same-gender couples seeking parental rights have another option—estate planning. It may be surprising to hear, but it’s critically important for you to know that when used wisely, estate planning can provide a non-biological, same-gender parent with necessary and desired rights, even without formal adoption.

Starting with our Kids Protection Plan®, couples can name the non-biological parent as the child’s legal guardian, both for the short-term and the long-term, while confidentially excluding anyone the biological parent thinks may challenge their wishes. In this way, if the biological parent becomes incapacitated or dies, his or her wishes are clearly stated, so the court will keep the child in the non-biological parent’s care.

Beyond that, there are several other planning tools—living trusts, powers of attorney, and health care directives—we can use to grant the non-biological parent additional rights. We can also create “co-parenting agreements,” legally binding arrangements that stipulate exactly how the child will be raised, what responsibility each partner has toward the child, and what kind of rights would exist if the couple splits or gets divorced.

Secure parental rights—and your family’s future
Whether you are married, or in a domestic partnership, even with no children involved, it’s critically important you understand what will happen in the event one (or both) of you becomes incapacitated or when one (or both) of you dies. Proper planning can ensure your beloved is left with ease and grace, not a financial and legal nightmare that could have been avoided.

With proper guidance and support, you can ensure your partner or spouse will be protected and provided for in the event of your incapacity or when you die, while preventing your plan from being challenged in court by family members who might disagree with your relationship.

 

 

 

Prenup: Romance killer or wealth protector? - The Globe and Mail

 

 

Last week, I discussed some of the pros and cons of using prenuptial agreementshttps://www.calilaw.com/prenuptial-agreement-pros-and-cons/ . Here, we’ll look at different estate planning vehicles that could provide similar—or even better—protection than prenups.

 

Revocable living trust created by you: By setting up a revocable living trust and funding it with your separate assets before getting married, those assets would likely be considered non-marital property and not subject to division by the court upon divorce—as long as you never commingle any of those assets with your spouse after your marriage. To ensure your separate property assets stay separate, it’s vital that you create and fund the trust with your assets before the marriage and never add any assets acquired or created during the marriage.

 

If you commingle assets acquired during the marriage in a trust containing your separate non-marital assets, a court could declare all of those assets as marital property subject to claim as part of a divorce settlement. To this end, a revocable trust only protects your separate assets from divorce if they remain separate from marital property throughout the whole length of your marriage.

 

You can also use a revocable living trust to provide for your surviving spouse and children from a previous marriage in the event of your death or incapacity. Unlike a will, assets held by a trust are not subject to the court process known as probate, so those assets would be immediately available to your spouse and kids, sparing your family the time, expense, and potential conflict of probate.

 

Note that since a revocable trust is “revocable” by definition, there is no asset protection for assets in your revocable trust, meaning that a revocable living trust will not protect your assets from creditors during your lifetime. If you want to achieve protection from both a future divorce and future creditors, you may want to consider one of the irrevocable trusts below.

Irrevocable trust created by your family: You can protect your assets from divorce by having your parents (or another loved one) establish an irrevocable trust for you before your marriage. Then, the Investment Trustee of the irrevocable trust (who could be you) could purchase all of your existing assets in an arms-length transaction and manage those assets inside of the trust, where they are totally protected from a future divorce and any future creditors.

Note that this strategy does require special provisions to ensure you cannot make distributions to yourself from the trust without the approval of an “independent trustee.” This trustee could be a best friend or a professional trustee, but cannot be anyone related or subordinate to you.

Your parents or grandparents could also leave any future inheritance you are to receive to this irrevocable trust, ensuring that your inheritance would also be protected. If this irrevocable trust is properly established and the terms are well-drafted, all assets the trust owns—and any assets left to you in the future—will be fully protected from a future divorce, future creditors, and even from estate taxes and probate upon your death. Yes, I like these trusts a lot.

 

Irrevocable trust created by you: It’s also possible for you to establish an irrevocable trust for yourself and gift your assets into the trust to keep them safe from divorce. However, this strategy is not as airtight as having a parent or grandparents establish the trust for you.

When you gift assets to an irrevocable trust, there’s a risk that a spouse or future creditor can claim fraudulent conveyance, depending on how soon you gift those assets after creating the trust. That said, if you are looking for asset protection and an alternative to a prenuptial agreement, and do not have a parent or grandparent available, a self-settled irrevocable trust can be a great second-best alternative.

Start your marriage off right
If you are getting ready to tie the knot and would like to ensure that assets you bring into the marriage don’t end up being lost in a future divorce settlement or are protected for your kids from a prior marriage, it is important to take action now. Once you are married, many planning options are off the table.

 

And regardless of your concerns about divorce, you definitely need to create or update your estate plan to protect and provide for your soon-to-be-spouse and any children you have in the event of your death or incapacity.

 

 

The Pros and Cons of Prenups | Tim W. Smith, Attorney at Law

If you’re counting down the days to your wedding, divorce is probably the last thing you and your fiancé want to be thinking about, and yet you might be rightfully concerned about what would happen to your assets in the event of a divorce—or your death. You may also be worried that suggesting a prenuptial agreement could hurt your future spouse’s feelings by making him or her think you don’t trust them, thereby creating friction before the marriage even begins.

I do recommend talking with your future spouse about your assets, what would happen in the event of your death, and also making plans in advance so you can feel confident that any children from a prior marriage (or an expected inheritance) are well-planned for no matter what happens. But introducing the topic of a prenup during that conversation is a hugely personal decision. To help you make the best decision for you I have put together a list of prenup pros and cons.

Prenup Pros

Sets clear financial expectations: For many couples, not openly discussing money and the partnership’s financial expectations can lead to big problems down the road. In fact, money problems are one of the leading reasons that marriages end, right up there with infidelity. A well-counseled prenuptial agreement could be an opportunity to start your marriage with complete transparency and clearly establish the financial and property rights of each spouse should a divorce occur or in the event of the death of either spouse. 

Helps protect your separate assets: If you have any tangible or intangible assets you are bringing into the marriage that you don’t want to risk losing, a prenuptial agreement can help shield that property from divorce proceedings or from a future “elective share” of a spouse upon your death. This can be vital if you have significant assets like a business, real estate, intellectual property, vehicles, or family heirlooms. And, if you know you’ll want to ensure your assets go to children from a prior marriage, a prenuptial agreement can protect those assets for your children.

Helps prevent a lengthy, contentious, and expensive divorce: Divorce is never fun and can often be both emotionally and financially painful, but putting a prenuptial agreement in place could make it less so. Clearly establishing the financial and property rights of each spouse when the relationship is at its most loving—and putting those parameters in a legally-binding document—can greatly reduce the chances of you two duking it out in court later if your marriage doesn’t work out. A long, expensive court battle is the last thing you need when dealing with the painful emotions and often-hefty legal fees associated with a divorce.

Helps prevent disputes over debt: Not everyone is equal in their ability to manage their money. As I mentioned earlier, disagreements over finances are a frequent reason marriages fail. Therefore, it could be a good idea to use a prenup to identify who is responsible for taking care of specific debts and liabilities. You don’t want to be stuck paying for your ex-spouse’s credit card debt when you had nothing to do with racking it up.

Prenup Cons

It’s not exactly a romantic gesture: People often perceive creating a prenuptial agreement stems from an expectation the marriage will fail or that it indicates a lack of trust. Such concerns should be respected and addressed as tactfully as possible. But the reality is marriage involves lots of issues that aren’t romantic, and dealing with such delicate matters up front could bring the two of you closer (or expose hidden red flags), regardless of whether an agreement is actually created or not. Whatever you do, however, don’t wait to have the discussion until right before the ceremony. It’s not only extremely rude, but it could lead a court to invalidate an agreement put in place at the last minute as being created with undue pressure.

It might not be necessary: What a prenuptial agreement can cover depends on what kind of assets you have and where you live. Given this, existing divorce laws might already split your assets up in a way you think is fair. For example, in community-property states, the court will divide the property you and your spouse acquired during the marriage in an equal 50/50 split, while each spouse gets to keep his or her separate property.

It can’t resolve issues of child custody, support, or visitation: It’s important to note that prenups can’t address certain issues related to children and divorce. For example, though prenups can help ensure your children from a prior marriage are able to inherit assets you want to leave them, these agreements cannot be used to address child support, custody, or visitation rights. Those issues must be resolved by the court, so a prenup would be useless if that’s all you’re hoping to achieve.

It may require two lawyers to be valid: Prenuptial agreements may be invalidated if both parties are not represented by independent legal counsel. And depending on the lawyers you each work with, lawyers who are not well-experienced with counseling, care, and conflict resolution can inadvertently escalate or intensify conflicts, rather than supporting you and your future spouse to get on the same page.

Alternative options

If you plan ahead, certain estate planning vehicles can be used to protect your assets from divorce settlements and ensure that assets pass to your children from a prior marriage in the event of a divorce. There are different types of trusts, for instance, that can be set up to allow you to protect assets for yourself in the event of a divorce, and for your children in the event of your incapacity or death.

In fact, such planning vehicles may prove much more effective at protecting your assets and providing you with more control over how your assets are distributed than a prenup. Next week I’ll cover the various ways to use estate planning vehicles to proactively protect your assets as an alternative to having multiple attorneys draft  a prenup or risk losing assets to a new spouse in the event of divorce or death.

Dedicated to empowering your family, building your wealth and defining your legacy,

 

 

 

 

As we head into the thick of the holiday season, you’re likely spending more time than usual surrounded by family and friends.

The holidays offer an opportunity to visit with loved ones you rarely see and get caught up on what’s been happening in everyone’s life. And though it might not seem like it, the holidays can also be a good time to discuss estate planning. In fact, with everyone you love—from the youngest to the oldest—gathered under one roof, the holidays provide the ideal opportunity to talk about planning.

That said, asking your uncle about his end-of-life wishes while he’s watching the football game probably isn’t the best way to get the conversation started. In order to make the discussion as productive as possible, consider the following tips.

1. Set aside a time and place to talk
Trying to discuss estate planning in an impromptu fashion over the dinner table or while opening Christmas gifts will most likely not be very productive. Your best bet is to schedule a time separate from the festivities, when you can all focus and talk without distractions or interruptions.

It’s also a good idea to be upfront with your family about the meeting’s purpose, so no one is taken by surprise, and are more prepared for the talk. Choose a setting that’s comfortable, quiet, and private. The more relaxed people are, the more likely they’ll be comfortable sharing about sensitive topics.

2. Create an agenda, and set a start and stop time

To ensure you can cover every subject you want to address, create a list of the most important points you want to cover—and do your best to stick to them. You should encourage open conversation but having a basic agenda of the items you want to address can help ensure you don’t forget anything.

Along those same lines, set a start and stop time for the conversation. This will help you keep the discussion on track and avoid having the conversation veer too far away from the main points you want to discuss. If anything significant comes up that you hadn’t planned on, you can always continue the discussion later.

Keep in mind that the goal is to simply get the planning conversation started, not work out all the specific details or dollar amounts.

3. Explain why planning is important
From the start, assure everyone that the conversation isn’t about prying into anyone’s finances, health, or personal relationships. Instead, it’s about providing for the family’s future security and wellbeing no matter what happens. It’s about ensuring that everyone’s wishes are clearly understood and honored, not about finding out how much money someone stands to inherit.

While some relatives might be reluctant to open up, being surrounded by the loved ones who will ultimately benefit from planning can make people more willing to discuss these sensitive subjects.

Talking about these issues is also a crucial way to avoid unnecessary conflict and expense down the road. When family members don’t clearly understand the rationale behind one another’s planning choices, I’ve seen it breed conflict, resentment, and costly legal battles.

4. Discuss your experience with planning
If you’ve already set up your plan, one way to get the discussion going is to explain the planning vehicles you have in place and why you chose them. Mention any specific questions or concerns you initially had about planning and how you addressed them. If you have loved ones who’ve yet to do any planning and have doubts about its usefulness, discuss any concerns they have in a sympathetic and supportive manner.

For the love of your family
Though death and incapacity can be awkward topics to discuss, talking about how to properly plan for such events can actually bring your family closer together this holiday season. In fact, our clients consistently share that after going through our estate planning process they feel more connected to the people they love the most. And they also feel clearer about the lives they want to live during the short time we have here on earth. 

When done right, planning can put your life and relationships into a much clearer focus and offer peace of mind knowing that the people you love most will be protected and provided for no matter what.

Most importantly this holiday season, enjoy being in the moment and strengthening your bonds with the important people in your life.

Dedicated to empowering your family, building your wealth and defining your legacy,

In the aftermath of rapper Nipsey Hussle’s murder this March, his family and ex-girlfriend have been locked in a bitter battle for custody of one of his young children. And as this ugly drama plays out in the courtroom and tabloids, it highlights the single-most costly estate-planning mistake a parent can make.

Hussle, 34, was gunned down outside his South Los Angeles clothing store in March. The young rapper’s death was tragic on many levels. But perhaps most tragic is what’s happening to Hussle’s kids. Because Hussle never named legal guardians, the decision of who will raise his two children—daughter Emani, 10, and son Kross, 2—is now up to the courts. And this mistake is already having unfortunate consequences. 

In addition to not naming guardians for his kids, Hussle also failed to create a will, which makes their guardianship even more contentious. Hussle’s estate is estimated to be worth $2 million, and under California law, in the absence of a will, that money is to be split equally between his two kids. 

Given that both children are minors, however, they’re ineligible to access their inheritance until they reach the age of majority. This means that whomever ultimately wins guardianship of the children will likely gain control over their money as well.

Caught in the middle
Guardianship of Hussle’s son Kross, while still undecided, is currently not a source of conflict. Who will be awarded guardianship of Hussle’s daughter Emani, however, is very much in contention.

Since the day of the shooting, Hussle’s sister, Samantha Smith, has been caring for Emani. Following Hussle’s shooting, Smith petitioned the court to obtain Emani’s guardianship. But Emani’s mother, Tanisha Foster, an old girlfriend of Hussle’s, is also seeking guardianship.

The competing parties have filed court documents alleging criminal conduct and making other terrible accusations against each other.  This war is taking its toll on the whole family with poor Emani caught in the middle.

Don’t leave your child’s life in a judge’s hands
As Hussle’s case so dramatically demonstrates, if you’re the parent of minor children, it’s imperative that you select and legally document long-term guardians for your kids. In fact, as a parent, naming guardians for your children should be your number-one planning priority.

The fact that Hussle didn’t create a will is obviously another terrible mistake. But when it comes to your children’s well-being, all the money in the world is meaningless in comparison. For this reason, I’m going to focus solely on the consequences resulting from Hussle’s failure to name legal guardians, and how easily this whole ugly mess could have been avoided.

As we’re seeing with Hussle, leaving it up to the court to name guardians for your kids
can lead to conflict, as otherwise well-meaning family members fight one another over custody. This process is not only costly, but it can be terribly traumatizing for everyone involved, especially your kids.

Hussle’s case also shows how agonizingly slow this process often is. There have already been numerous court hearings related to Emani’s custody since her father’s death in March, and the saga remains ongoing. Indeed, these custody battles often drag on for years, making the lawyers wealthy, while your kids are stuck in the middle.

But the most tragic consequence of Hussle’s failure to name legal guardians is that a judge will be the one who decides who’s best suited to care for his kids.

Though we can’t be sure exactly who Hussle would have wanted to raise Emani, it’s almost certain he wouldn’t have wanted a total stranger to make that decision for him. Yet, because he didn’t take the time to document legal guardians, that’s exactly what’s going to happen.

Child Protection Planning
A Child Protection Plan™ is a comprehensive methodology to guide you step-by step through the process of legally documenting guardians for your kids for the short-term, long-term, and so much more. If you are a parent, you absolutely must put in place a Child Protection Plan™ for your minor children and/or children with special needs.

Get started immediately
Because naming legal guardians for your kids is so critical, you can’t afford to wait to get the process started.

You must name long-term guardians and grant the people you choose (along with backups) the legal authority to temporarily care for your children, until the long-term guardians can be located and granted custody by the court. And you should also confidentially exclude any person you know you’d never want to raise your kids.

A Child Protection Plan™  provides for the well-being and care of your kids no matter what happens to ensure your family never falls victim to the same tragic circumstances as Hussle’s.

Dedicated to empowering your family, building your wealth and defining your legacy,