Is a Will All You Need? Probably Not

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inheritance 91024One of the most prevalent misconceptions when it comes to estate planning is that a Will is all most people need. But before you fall into this trap with your own estate plan, consider these five circumstances where a will simply doesn’t work:

Avoiding Court. To take effect, a will must go through the probate process at your death (or a conservatorship if you become incapacitated while still living), which can be lengthy and deny your heirs (or family while you are incapacitated) a quick resolution to the distribution of your estate (or the ability to pay your bills while you are incapacitated). There are also situations which complicate probate even further such as having minor children or owning property in another state.

Protecting privacy. Once a will is open to probate, it is a matter of public record and open to everyone — meaning that anyone can get access to it and learn the details on everything you owned and exactly where it is going. Wills can also contain personal information that is attractive to identity thieves.

Protecting you in case of incapacity. Since a will only goes into effect upon death, it provides zero protection for you if you should become incapacitated and no longer able to handle your own financial affairs or make decisions about your health care. If that were the case, your family would have to go through the stress and expense of petitioning the court to appoint a guardian or conservator to handle your affairs. This is costly and can even drain your entire estate. This can easily be avoided by having advance medical directives and a financial power of attorney drawn as part of your comprehensive estate plan.

Protecting your assets. Passing assets to heirs via a will does not provide any protection for those assets. Once they are distributed, they become vulnerable to a divorce actions, civil lawsuits, creditors, and even bad financial decisions by your beneficiaries. Placing your assets in a trust gives you control over how and when they are distributed, and protects them from creditors and judgments. This is one of the most powerful aspects of a living trust.

Passing real estate. When your home passes to your heirs through Probate (which it will do without a trust in place) it loses the step up in tax basis that a trust can provide. That means your heirs (who are most likely your family) will have to pay capital gains tax on the difference between the value of the home when you bought it versus the value of the home now. This can be another huge financial burden to bear on top of the already expensive cost of Probate.

See, trusts aren’t just for the wealthy because wills aren’t always the best way to protect and pass on even modest financial assets. Comprehensive estate planning should use living trusts and other legal tools to preserve your assets and make things as easy as possible on your family. Taking care of your family, after all, is really what it’s all about.

To you family’s health, wealth, and happiness,
Marc Garlett 91024

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Good Reasons to Establish a Trust (and Being Rich Isn’t One of Them)

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family estate plan 91024As far as estate planning goes, many people have the misconception that trusts are only for the wealthy while wills are for everyone else. But that couldn’t be further from the truth. You don’t need to live in a mansion or own a fancy yacht to benefit from having a trust. The fact is, a will simply isn’t enough for most of us. Why not? There are many reasons, but one of the biggest is that a will won’t keep your family out of probate.

What is probate? Probate is a court process used to transfer the assets (not held in a trust) of a deceased person to their heirs. In other words, after your death – if you don’t have a trust in place – someone will have to petition the court to open probate so your assets can be transferred to your beneficiaries. A will only serves to guide the court on how to distribute your assets, it does not keep your family out of court.

So why do I want to avoid probate? All assets passing through probate court become a matter of public record, and as such, vulnerable to creditors, predators, and opportunists – and believe you me, there are plenty of scammers and con-artists who read the probate records to identify who is receiving an inheritance so they can go after their next mark. The court system in California is underfunded and overburdened and the probate process can take years to get through. Also, probate is very expensive, ultimately diminishing the overall assets available to your family by a substantial margin. Keep in mind too, if you have minor children the probate court will give them complete, unrestricted control of their inheritance as soon as they turn eighteen. And think about it, the probate process is generally the last thing family members want to endure after losing a loved one. Ultimately, probate just makes a hard time that much harder.

Okay, how do I avoid probate? Avoiding probate is not hard to do. By creating and transferring assets into a revocable living trust there will be no need for probate at your death. In fact, probate is really only for people with little to no assets or for those who, during their lifetime, failed to plan to keep their families out of probate court.

What are the advantages of a trust? Putting your assets in a trust avoids the probate process once you pass away. This saves your loved ones the time, money, and emotional hassles associated with probate. A trust can also be kept confidential which allows families to keep their privacy in the process. Another advantage is that a trust allows you to give your assets to minor children exactly when and how you see fit – they don’t have to become instant millionaires at eighteen if that’s not what you want. Finally, a trust can provide asset protection from your beneficiaries’ creditors, court judgments, divorces, and even their own bad money management practices.

As you can see, there are many reasons to create a trust, and being rich isn’t one of them. You can learn more about how a trust might benefit you and your family by calling us to schedule a Family Estate Planning Session. I’d be happy to sit down with you, talk about your particular situation, and help you make sure things are as easy as possible for your loved ones in the future.

To you family’s health, wealth, and happiness,
Marc Garlett 91024

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Casey Kasem’s Estate Planning Not in Anyone’s Top 40

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Casey Kasem 91024Casey Kasem, the celebrity radio host who counted down America’s Top 40 popular songs for decades, died on June 15 at the age of 82 and left behind an estimated $80 million fortune. He also left a family feud of biblical proportions between his surviving spouse and his three children from a prior marriage. And this is exactly why I do what I do — to help keep your family connected in love, not conflict.

Kasem married his second wife, Jean, who is 22 years his junior, in 1980. Together, they had one child, Liberty Kasem. Casey also had three children from a prior marriage: Kerri, Mike and Julie. The family was apparently in discord prior to Casey’s death; in mid-May, Mike and Julie filed a missing persons case with the Santa Monica police department saying they could not locate their father. At that time, Kerri was fighting with Jean over control of his care.

After Kasem died, news broke that his body had been taken from the Washington state funeral home and a judge awarded Kerri a temporary restraining order preventing Jean from removing his remains or having him cremated before an autopsy had been performed. Kerri hired a private investigator who says the body has been moved to Montreal, the hometown of a man that Jean has allegedly been involved with for the past two years.

A mess, right? And they haven’t even gotten to the money yet!

A little advance estate planning could have helped prevent this scenario, which is not uncommon when an older man with children from a prior marriage takes a second, significantly younger wife.

A recent WSJ Marketwatch.com article outlined four estate planning tools that could have helped head off this disaster:

Revocable trust. Placing assets in a revocable trust can help protect the trust owner’s wealth transfer wishes, and provides the flexibility to make changes as long as the trust owner has the legal capacity to make those decisions. Upon the owner’s death, the assets are dispersed as outlined in the trust without having to go through probate. A trust is also more difficult to contest than a will.

Life insurance. A life insurance policy can be a good way to provide for a surviving spouse while leaving the rest of the estate to children from a previous marriage, or vice versa.

QTIP trust. A qualified terminal interest property (QTIP) trust is used to set aside assets for a surviving spouse’s benefit while that spouse is alive. After the surviving spouse passes, the remaining assets in the trust are passed on according to the trust terms.

Family meeting. Having a family meeting so that everyone knows their beneficiary status and what will happen to the estate after the estate owner dies is a good way to head off conflict. An estate planning attorney can mediate these meetings, which is usually advisable when there is a potential for conflict.

One of the main goals of my law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation without conflict or court involvement. Call my offices today to schedule a time for us to sit down and talk about your family estate planning needs so we can identify the best strategies for you and your family to ensure you provide a legacy of love and financial security.

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6 Cases When a Trust is Better Than a Will in California

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A simple will is one of the most basic California estate planning documents there is, and everyone over the age of eighteen should have one to make sure that there is no question about what would happen to their assets (and kids) if something happened to them. But there are some cases when having a trust in addition to a will is imperative; here are six of them:

Avoiding probate or conservatorship. To carry out instructions in a will, a probate must be opened in the county where the decedent lived. That means your family is stuck dealing with the Court if you get hospitalized or die. As the old joke among attorneys goes, where there’s a will, there’s a probate. A trust, on the other hand, bypasses the probate process completely; saving the people you love time, money, privacy, and emotional energy.

Providing for a person with special needs. If you have a child or another dependent with special needs, a trust commonly known as a Special Needs Trust can protect assets for a special needs person without jeopardizing their qualification for government benefits. That’s a big deal. A will only allows you to transfer assets to a special needs person, but does not provide any protection for those assets.

Privacy. Since a will undergoes probate in California courts, it becomes a matter of public record. That means creditors, predators, and opportunists will all be on notice your loved ones are receiving assets. A trust is totally private.

Blended families. If you are part of a blended family, a trust can give you flexibility to ensure children of prior marriages are provided for in exactly the way you want.

Out-of-state property. If you own property in a state other than California, you can more easily transfer ownership via a trust than through a will. Transferring out-of-state property through a will usually means multiple probates in multiple states which translates into additional legal expenses, time, and emotional energy being sucked from those you love.

Asset protection. If you want the assets you leave for your loved ones to be protected from creditors, bankruptcy, and divorce, you want a trust. That kind of protection is a gift only you can give your loved ones. They cannot easily (or at all) set up that kind of protection for themselves.

If you would like to learn more about the use of trusts in California to pass on what you care about to the people you love, we should talk. Call us today.

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What is the Difference Between a Will and a Trust?

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It is important to know the difference between a Will-based plan and a Trust-based plan so you can make an informed decision about what is best for you and, ultimately, your family.

A Will-based plan is an estate plan that does not include a Living Trust to hold title to your assets. For example, our Family Plan is a Will-based plan which includes the following legal documents: Health Care Directives, Powers of Attorney, Wills and optionally, if you have minor children, a Kids Protection Plan.

A Trust-based plan, on the other hand, is an estate plan that does include a Living Trust to hold title to your assets during your lifetime and to provide for the ease of transfer of those assets in the event of your incapacity or death. For example, our Trust Plan and Wealth Plan are both Trust-based plans which contain all of the legal documents included in the Family Plan PLUS one or more Living Trusts.

So, Why Should I Care?

The practical difference between a Will-based plan and a Trust-based plan is that without a Trust in place your family would have to go through the Probate Court process to get access to your assets in the event of your incapacity or death.

Your Will indicates both WHO you want to have access to your assets and HOW you want them distributed, but it does not keep your family out of Probate. Going through Probate (or guardianship in the event of incapacity) is expensive, time-consuming, totally public and completely unnecessary. But that’s what happens when you have only a Will in place instead of a Trust.

When you do have a Trust in place, there is a bit more work for you to do upfront because you need to ensure all of your assets are properly owned by the Trust throughout your lifetime (and insurance beneficiaries are designated to the Trust), but we are here to assist you with that (or even take care of it for you, if you prefer).

And, with our regular trust review process or valuable membership plan, we monitor your assets and ensure they are owned in the correct manner throughout your lifetime while also making sure your plan stays up to date as your life, your assets, and the law changes.

How Do I Know Which Plan Is Right For Me?

My process begins with a Family Wealth Planning Session. And because I want every interaction between us to be extremely valuable to you (whether you need a Will-Based Plan, a Trust-Based Plan, or no plan at all), I’ll send you a comprehensive information packet with homework for you to complete before our Session together so you can gain the most from your time with me.

I’ll review the homework you complete before we meet so we can invest our full time together examining your specific situation and assessing whether a Will-Based Plan or a Trust-Based Plan makes the most sense for you and your family.

I guarantee you will be heard, cared about, informed, educated, and empowered to make the best decisions for the people and things that matter most in your life.

If this is a conversation you’re ready to have, we should talk. Please call me.

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