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Newport Beach Estate Law Blog

A concerning trend shows women don't make financial decisions

Are you married, in an opposite-sex marriage? If so, how do you and your spouse make financial decisions? Who tends to handle the finances more often?

For instance, perhaps you are a woman and you tend to let your husband make big financial decisions. Maybe he pays the bills, puts money aside for taxes, decides what loans to take out and much more. Maybe he even invests your money and saves for retirement. You have very little to do with it and, other than knowing that you have enough money to pay the bills, you don't know much about your family's financial position.

Estate planning after getting married again

You got married 20 years ago, had children and got divorced. Now you're getting married again. Is it time to think about estate planning? Do you need to create a plan or update the one you have?

This is absolutely something to think about. If you don't, experts warn that you could accidentally cut your own kids out of part of your estate.

Staying in your home to leave it to your children

You want your children to have your house after you pass away. However, you do not want to give it to them as a gift in advance because you plan to live there until you pass away. Likewise, you don't want to sell it to them. So, if you just stay in the home and wait, what happens?

After you pass away, the tax basis for your home increases to the fair market value as it was on the last day of your life. This means that neither you nor your heirs have to shell out a substantial sum for capital-gains taxes. If your entire estate is worth less than $11.4 million (as of 2019), then your heirs also do not have to worry about federal estate tax payments. As such, simply remaining in your home may be the best economic decision.

Do employees stay as your business changes hands?

As you prepare to move on from your business, you start thinking about your employees. Do they now face an uncertain future? Or will they stay with the company?

Every situation is different, but remember that even many third-party buyers want to keep key employees, if they can. It helps the transition go more smoothly. It gives them someone who really knows the business inside and out. Some sellers even create bonus systems, essentially paying people extra money if they'll stick around, rather than looking for new jobs.

The terms of a trust specify how the money can be used

When creating a trust, you likely have a specific goal in mind. How the trust accomplishes that goal depends on the terms that you put in place. Those terms define how the money can be used.

For instance, some people who have trusts in their name want to use them to buy homes. They may use the trust to directly buy the house so that the trust owns it, or they may request a loan from the trust so that they can use that money to pay for the house, rather than a mortgage. They may also just get to use the money without it being a loan so that they can buy the house outright.

Misconceptions about estate planning

Estate planning is important, but many people don't do it. Often, the reason is that they have heard some common myths and now they hold onto popular misconceptions about the process. It derails their planning and puts their family's financial future in jeopardy.

Whether you have done your estate planning yet or not -- but especially if you have not -- it is important for you to know what these myths look like. You do not want any of these misconceptions to cause you to make serious mistakes. These are often mistakes people do not even understand that they made until it is too late. To help you out, here are some of the common myths:

  1. You can never change your estate plan. Sometimes, people feel intimidated by estate planning because they think they can't make changes. What if they earn or spend a lot of money in the years to come, before they pass away? They put off making the estate plan until they're confident things won't change. The reality, of course, is that you can always change an estate plan. In fact, you should make your plan and then review it on a set schedule to make sure it still works.
  2. You can wait until you're older. This is one of the biggest issues with estate planning. People just think they have a lot more time. They want to wait until they're retired or until they turn 75 or until they go to the hospital and death seems closer at hand. The truth, though, is that life is unpredictable. You never know when you and your family will need that plan. You can do it at any age, even if you feel way too young to think about the end.
  3. All you need is a will. Most people talk about drafting a will as if it's the only piece of estate planning they have to do. They figure they just need to divide their assets in the will and call it a day. In reality, you want to think about things like trusts and more complex ways to pass on your assets. You also want to think about guardians if you have children. You may want to consider your tax situation and how to reduce what you'll pay. There are many things to consider outside of the will alone.

Do you think of estate planning as an issue for women?

When you think about estate planning, who do you think it should focus on the most? Do you think it's for couples? Is it primarily for men? Is it a women's issue?

While all people, of all genders, do need to do their estate planning, some experts do refer to it as a serious women's issue. Their reasoning is simple: Women tend to live longer than men. Many wives are going to outlive their husbands.

Small business statistics in the United States

If you're planning to pass a small business on to your children, you cannot understate how important it is to have a good succession plan. It's about more than just you or your heirs. It's also about the employees and the economy as a whole.

You could make the argument that nothing is more important to the economy than small businesses. Many experts have called them the backbone of America. Here are a few key statistics to consider:

  • There are 30.2 million small businesses in the United States
  • These businesses employ around 58.9 million people
  • Of all the businesses in the country, small businesses make up 99.9%
  • In terms of overall employees in America, these companies employ 47.5%

What can you do with your estate if you don't have children?

For most people, estate planning just means leaving their assets to their children. When deciding who should make medical decisions for them and who should handle their financial affairs at the end of their lives, they also pick children.

But what if you do not have any children? That makes these decisions more difficult, but you do still have options.

Who are the most popular guardians for children?

To make sure someone will take care of their children if they pass away, parents often pick guardians. They can do this as part of the estate planning process. The guardians only apply until the children are no longer minors, in most cases.

If you're thinking about doing this yourself, you may be mulling over who to choose. It can help to consider the most popular choices in the United States.

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Newport Beach, CA 92660

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