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Newport Beach Estate Law Blog

Get your children involved in your company early

With your business, passing it down in the family has always been your plan. You built this for them. You want to do more than just provide for them when they're young. You want to give them a way to earn and find financial security for the rest of their lives.

Now, you cannot force them to want this, as well. They may decide they want to take a different path in life. But you can still give them the tools for success and help them work toward that goal.

What to know about estate planning in a digital world

The internet revolutionized how we store our valuables; instead of photo albums or safety deposit boxes, we save our family photos on Facebook, and our bank information is encrypted online.

It makes sense that the digitalization of everyday life affects how adults plan their estate and transfer digital assets to their family members. It’s crucial to understand the unique challenges that come with digital assets and how to address them quickly.

6 things you may need in your estate plan

Your estate plan probably starts with a will. It's the most basic document expressing what you want to happen with your estate after you pass away.

However, some people make the mistake of assuming that this is all they need. The reality is that this is just the beginning. You may also want to consider the following:

  1. A trust
  2. Specific beneficiary designations
  3. A durable power of attorney
  4. A health care power of attorney
  5. A letter of intent
  6. Guardianship designations

The types of irrevocable trusts

Are you considering creating a trust? There's a lot that goes into drafting and funding a trust. As a trust grantor, you will need to understand how the law governs trusts. You need to determine who the beneficiaries of the trust will be, what resources you want to put in the trust and much more. Let's take a look at the different types of irrevocable trusts available for you to create in your trust.

There are two types of irrevocable trusts available today — living trusts and testamentary trusts. A living trust is created and funded by someone during their lifetime. It is also known as an inter vivos trust.

What's a joint tenancy for real estate?

Sometimes, you can use a joint tenancy to bypass the need for real estate property to go through the probate process after you've passed away. You might buy a piece of property together with another person -- like your spouse -- and set up the ownership as joint tenants. Or, you might simply sign part ownership of your home to a joint tenant as a part of your estate planning strategy.

Joint tenancy gives "the right of survivorship." In other words, the "survivor" who lives longer than the other will be the one who ends up owning the full property one day. Ownership of a home, for example, will immediately transfer to the joint tenant. All the joint tenant needs to do is produce the death certificate and proper identification to show ownership.

How would a living trust benefit your estate plan?

Living trusts are identified by the word "living" because you create them while you're alive, and you have the ability to change them while you're alive. After your death, the trust will be set in stone and no one will be allowed to change it. This flexibility while you're still alive is one of the many benefits received from an estate planning perspective when someone chooses to set up a living trust.

Let's look at some of the benefits of such a trust:

What's special about a Totten trust?

There are so many varieties of trusts that it's difficult to keep track of them all. These trusts can also drafted in a number of ways, which makes it tricky to know exactly what to do for an inexperienced trust planning attorney, and especially for a layperson who doesn't have any legal training. A Totten trust, for example, is a type of legal document that many people have never heard of.

Totten trusts are created while the estate planner is still alive. All the planner needs to do is to deposit money into a designated bank account in his or her name. These revocable trusts do not complete the actual gift to the trust beneficiary until the grantor passes away. Any person, business, charity or other legal entity can serve as the beneficiary of the trust.

What's a testamentary trust and how does it help minor children?

Imagine that you want to use a trust as a part of your estate plan in order to protect the inheritances of your minor children. To put it bluntly, you don't want the inheritances of your children to be vulnerable to another family member -- like the guardian of the children -- taking them. Unfortunately, this can happen if both parents die and they leave behind a sizable inheritance for their child. The children's guardian could potentially spend the child's money for the guardian's own benefit.

This will not happen with a testamentary trust. By virtue of the testamentary trust document -- which is written into the will and won't go into effect until you pass away -- the assets contained in the testamentary trust must be managed and cared for in accordance with the instructions in the trust documentation. These instructions, which are carried out by the named "trustee" for the benefit of the beneficiaries, must be strictly followed. Failure to follow the instructions in the trust could result in the financial liability of the trustee.

Are you considering an irrevocable trust in your estate plan?

An irrevocable trust is just like it sounds — irrevocable. In other words, once you create the trust and transfer assets to it, you can't dismantle the trust and take back the assets. In this sense, the trust cannot be changed, modified or taken apart by anyone, including the grantor who initially created it.

When creating an irrevocable trust, the grantor or estate planner will benefit from having flexibility in terms of the trust's organizational structure. However, once the trust has been signed and finalized, it's set in stone. In some cases, trust creators use irrevocable trusts as a container for survivorship life insurance for estate tax-planning purposes. In other cases, a grantor will sign over ownership of real estate property, bank account assets and investment assets to the irrevocable trust. This could potentially protect the grantor's assets from creditors.

Calculating your net worth is an important estate planning step

One important step to take early in the estate planning process is determining what your overall net worth is. This will help you determine what assets you may want to pass on, what debts may need to be settled by your estate, how much estate tax your estate may be liable for and what estate planning tools may best fit your situation.

In general, your net worth is the value of everything you own minus the value of everything you owe. The best way to calculate your net worth is to make two lists. One list should include all your assets, while the other should include all your debts. If you are married, you may consider giving your asset and liability lists three columns: one for you, one for your spouse and one for shared items..

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The Soto Law Group
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Suite 200
Newport Beach, CA 92660

Phone: 949-945-0415
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