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Newport Beach Estate Law Blog

Consider using a trust to pass money on to your children

Some Newport Beach parents think that they should start giving money away to their children right now, as they're getting older, to avoid different estate planning and tax consequences when they die. If you're one of these parents, you're definitely on to something. If your children are as good as you are -- or better -- at handling their finances, this could be a good idea.

However, a lot of parents may be concerned about the financial management skills of their kids. If you're in this category, you may want to consider using a trust to pass money over to your children. A trust provides the assets you give your children enormous protection. Potentially a trust will provide:

  • Protection from creditors
  • Protection from probate proceedings
  • Protection from taxes
  • Confidentiality protections (or protection from prying and curious eyes)
  • Protection from the bad financial decisions of the beneficiaries who will receive the money and more

How to compile a net worth statement for a physician

When a physician begins his or her estate planning process, the physician will no doubt need to create a net worth statement. This statement will also need to include a listing of life insurance policies.

When you create your net worth statement, you will be listing all of your assets (including the cash, investments, real estate and other possession that you own) and all of your liabilities (any loans, mortgages and credit card balances that you need to pay). "Net worth" in this simply refers to the sum of your assets minus the sum of your liabilities. Your California estate planning lawyer might also refer to your net worth statement as your "balance sheet."

The basic components of an estate plan

It's best to complete your estate planning now, rather than later. You never know when you're going to take your last breath, and if you're still without an estate plan, it can cause low-lying anxiety and stress to think that your family members could be left in a difficult situation if you die.

To gain the peace of mind that your loved ones will be taken care of, you'll want to make sure that your estate plan has the following components:

  • Last will and testament: Your will dictates what will happen to your personal possessions after you're gone. Your will also indicates who will be the caretakers of your children in the event of your death.
  • Living trust: A living trust is an optional estate planning document that can be used if you have a large estate and you're worried about the tax consequences associated with the transfer of your assets. A living trust can also help to protect your assets as you grow older so that you can receive government benefits without depleting your savings. Finally, your living trust will allow your heirs to avoid probate proceedings
  • Incapacity documents: Living wills and powers of attorney are incapacity documents that allow you to indicate someone who will handle your affairs and take care of decisions for you in the event that you become too ill to make decisions for yourself relating to health care and financial concerns.
  • Emergency information: Every estate plan needs to include a list of all your bank, financial, insurance and other accounts -- in addition to online accounts and passwords for your digital information -- so that your family members can access this information when necessary.
  • Health Insurance Portability and Accountability Act (HIPAA) Release: Your medical records cannot be released to your spouse automatically, but signing a HIPAA Release that allows your spouse access to medical records solves this potentially difficult challenge if you become incapacitated.

8 steps to an excellent family business succession

Imagine you have an incredibly successful business. You don't want your children to lose out on the success of this business, which you know could serve your family for generations to come. As such, you've decided to create a business succession plan to leave the company to your kids.

As you make the preparations for your business succession plan, you'll probably want to consult with an estate planning attorney and financial professionals. To ensure the success of your succession, consider the following eight steps carefully:

  1. Develop a code of conduct that will be used during family business meetings. This code must be followed to ensure that family members voice their points and work together logically and in a business-like fashion.
  2. Make a list of your professional advisors: attorneys, bankers, accountants and peers who do business with you.
  3. Get clear about your goals and expectations and design contingency plans that will address different issues that might arise.
  4. Identify your unknowns and knowns relating to your business, and what might be changing in the industry so you can better plan ahead for upcoming challenges.
  5. Work closely with your advisory team to ensure you've chosen the right business succession plan.
  6. Work closely with financial and tax professionals to ensure your tax and legal structures are sound. Also, make sure these structures are prepared to handle the ownership transition.
  7. Get everyone on the same page by communicating your plan to all parties involved -- including your professional advisors.
  8. Write down a step-by-step action plan, and take ownership of it as the leader of the plan.

Business succession plan: Did you choose the right successor?

Newport Beach families may dream of a son or daughter taking up the family business preserve their legacies into the future. Indeed, it's beautiful to think that something you created could last to provide income and stability for future generations of your family. However, to keep the family tradition, you will want to make the right choices when it comes to your business succession plan. Perhaps most importantly, you want to choose the right successor.

Does Johnny like spending months out of the year traveling to exotic destinations around the globe and sample cocktails and cuisine? He might not be the best person to take over the family's statewide home services business. Did Jane study business and accounting and currently play a major role in the running of your family business? Jane is clearly a great choice for your successor.

How is estate planning different for a woman?

Men and women have a lot of differences. The answer to the question of what those differences are will be different depending on who you ask. When it comes to estate planning, however, there are some clear differences that most estate planning lawyer can point to.

First of all, women live longer than men -- an average of 4.9 years. This means that women should prepare for their death later, and they need to make sure that their money will last them. Their husbands may need to plan their estates in anticipation of their wives outliving them, too.

The primary benefits of a special needs trust

Newport Beach parents who are raising a special needs child will need to consider the future of their child -- and how their child will be cared for -- if they become incapacitated or die before their child. A lot of parents choose to create a special needs trust that will ensure the needs of their child will be met in the event of their untimely deaths.

Here are some of the benefits of a special needs trust:

  • A special needs trust is created to house your child's inheritance assets so that your child does not own them directly. Rather, the trust will own the assets and your child will be the sole beneficiary of income and distributions of those assets. This allows your child to essentially be asset-less in the eyes of the government, preserving his or her eligibility to benefit from Social Security Income (SSI) and Medicaid. The trust is then available to pay for expenses that government benefits don't cover.
  • There are tax benefits that families benefit from when creating a special needs trust.
  • The creation of a trust establishes a legal and fiduciary obligation on the part of the trustee to administer the trust in a way that benefits your child, the beneficiary. The trustee is legally bound to use the assets to care only for your child. This is important because a child with special needs could potentially be manipulated or taken advantage of.
  • If your child falls into debt, creditors cannot have access to the trust assets. The money can only be spent on the care and needs of your child and it is protected from creditors.

Guardianship for an adult child with autism

If you have a child with autism, you'll want to consider his or her future -- especially as he or she becomes an adult. After reaching the age of 18, even young adults with mental health disabilities, like autism, will be legally allowed to make decisions on their own behalf. If you wish to keep caring for your child in the way that you have before he or she became 18, you will need to seek legal guardian status.

Guardianship is court-ordered, and it provides the guardian with the legal authority to make all decisions pertaining to the "incapacitated" person. In the guardianship order, the extent to which guardianship authority extends -- or what areas of life the authority covers -- will be specified by the court.

Families bear most of the cost of dementia care

As adults, we grow increasingly more aware of the costs of long-term medical care as we age. However, when confronted with this potentially unpleasant new information, we are prone to set it aside. Thinking about what we might do for ourselves or a loved one in need of long-term care isn't an easy topic to discuss and plan around, but it is necessary when considering the real costs.

A new study from the Journal of the American Geriatrics Society outlines the long-term care costs of an adult with dementia compared to those without. According to the research, caring for the five million Americans with dementia costs more than $300,000 per person and families bear two-thirds of the cost. This amount is more than 130 percent higher than caring for a person without dementia.

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The Soto Law Group
1101 Dove Street,
Suite 200
Newport Beach, CA 92660

Phone: 949-945-0415
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