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Tag: estate plan review

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What Happens to Your Social Media Accounts After You Pass Away?

When we pass away, our social media accounts, repositories of personal memories, interactions, and expressions, don’t just vanish. Each platform has unique policies for handling the profiles of deceased users, from erasing them to turning them into memorial sites. It’s crucial for us to know these options to ensure our digital legacies are managed according to our wishes.

Platform Policies for Deceased Users

As of April 2024, here’s what you can expect from the major social media platforms:

  • Facebook: Users can choose to either permanently close their account or transform it into a memorial page where friends can continue posting memories. Facebook allows you to assign a “Legacy Contact” who can manage the memorialized profile by changing profile pictures and responding to friend requests, but they cannot access private messages.
  • Instagram: Similar to Facebook, Instagram offers options to either memorialize an account or have it permanently deleted. Memorialized accounts feature a “Remembering” label and are removed from public spaces like the Explore section. Proof of death must be provided to enact these changes.
  • TikTok: Currently, TikTok allows the deactivation of a deceased user’s account upon request by family members or legal representatives, provided they can show proof of death. There is no option to memorialize accounts at this time.
  • X (formerly Twitter): X permits family members to close a deceased user’s account by submitting necessary documentation, which leads to the permanent deletion of the account without a memorialization option.
  • YouTube: Managed by Google, YouTube falls under the Inactive Account Manager policy, which lets users set directives for their account in case of prolonged inactivity. Options include sharing data with trusted contacts or deleting the account altogether.
  • LinkedIn: Immediate family members or colleagues can request the removal of a deceased user’s profile by providing proof of death. LinkedIn focuses on maintaining a professional environment and does not offer a memorial option.

Managing Your Digital Afterlife

Directly logging into a deceased person’s social media account is generally discouraged due to privacy and security concerns. Instead, platforms require family members to follow specific procedures, providing the necessary documents to either close or memorialize accounts. This process can be cumbersome and emotionally taxing.

However, preparing in advance can make it easier for your loved ones. By consulting with an estate planning lawyer, you can create a digital asset plan that details your preferences for each account, whether to close or memorialize them.

Role of Estate Planning Attorneys

A competent estate planning attorney can guide you in drafting a comprehensive digital asset plan, appointing an executor, and preparing all necessary legal documentation to empower your executor to act on your behalf with digital platforms. They can also suggest secure methods to store your account information, ensuring it remains accessible yet protected until needed.

Our Commitment to Your Legacy

At Peaceful Warrior Law, we do more than just draft documents. We understand your unique needs and help you plan thoroughly, ensuring no detail is overlooked, including your digital footprint. Our approach prevents the stress and confusion often associated with managing digital legacies.

To find out more about how we can help you craft a plan that includes your digital assets, schedule a complimentary 15-minute call with our office today.

This article is a service of Brittany Cohen, a Personal Family Lawyer® Firm. We are dedicated to ensuring that you make informed, empowered decisions about your legacy and the well-being of your loved ones. Join us for a Family Wealth Planning Session to become more financially organized and confident in the choices you make for yourself and your family.

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Table of Contents

  1. Introduction to Estate Planning
  2. Why Estate Planning is Crucial
  3. Components of an Estate Plan
    – Wills and Trusts
    – Power of Attorney
    – Healthcare Directives
    – Beneficiary Designations
    – Guardianship Designations
  4. Steps to Creating an Estate Plan
    Step 1: Understand What Comprises an Estate Plan
    Step 2: Inventory Your Assets
    Step 3: Identify Your Goals
    Step 4: Meet with an Estate Planning Attorney
    Step 5: Choose Your Executors and Trustees
    Step 6: Review Your Beneficiary Designations
    Step 7: Legally Execute Your Estate Planning Documents
    Step 8: Safeguard Your Documents
    Step 9: Review and Update Regularly
    Step 10: Fund Your Trust
  5. Conclusion
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Your estate is made up of everything you own, which includes your personal possessions as well as your home, a car, bank accounts, insurance, furniture and more.

But your wealth is much more than just your financial assets. It includes your purposes, passions, family values, memories and stories that make up your personal legacy. Your wealth is the culmination of tangible and intangible pieces of your life that embody who you are and how you would like to be remembered.

Why is putting an estate plan in place important? Well for starters, everyone is going to die. And if you don’t have a proactive plan in place, the state has a default plan set for you. The states plan is more expensive, more time consuming, and less effective at accurately distributing your wealth in the manner that you desire.

The purpose of estate planning is to give you the control over how your estate is distributed to the people or organizations you care about, and to preserve your legacy for the next generation and beyond.

Estate planning is also used for a number of other important things, including:

  • Providing instructions for your care in case you are unable to do so;
  • Naming someone to manage your financial affairs if you are unable to do so;
  • Naming a guardian for your children;
  • Providing for children or other family members who have special needs in a way that won’t affect government benefits, and protecting loved ones from the “incidents of life” – creditors, predators, and unnecessary taxes;
  • Providing protection for your assets, both during your lifetime and after;
  • Minimizing taxes and probate fees;
  • Planning for retirement and long-term care costs.

How to put an estate plan together?

Step 1: Understand what comprises of an Estate Plan. Estate planning goes beyond just having a will. It also includes:

  • Wills and Trusts: To direct how your assets should be distributed.
  • Power of Attorney: To appoint someone to manage your affairs if you’re unable to do so.
  • Healthcare Directives: To specify your wishes for medical treatment and appoint someone to make decisions on your behalf if you’re incapacitated.
  • Beneficiary Designations: To ensure your retirement accounts and insurance policies are passed on as intended.
  • Guardianship Designations: To appoint guardians for minor children, if applicable.

Step 2: Inventory Your Assets. List all of your assets including your real estate, bank accounts, investments, insurance policies, and personal possessions of value. This comprehensive inventory will form the foundation of your estate plan.

Step 3: Identify Your Goals. It is important to consider what you aim to achieve with your estate plan. Is generational wealth a concept that is important to you? Do you want to support a charitable cause? Do you want to make sure that your children don’t burn through their entire inheritance on fancy material items? Your goals will guide the structure of your estate plan.

Step 4: Meet with an Estate Planning Attorney at Peaceful Warrior Law. Estate planning can be complex and the laws not only vary by state, but depending on the types of assets that you own, each asset is governed by a different set of laws. It is best to have your Estate Planning Attorney coordinate with your Financial Advisor and CPA to ensure your plan is legally sound and aligns with your financial goals.

Step 5: Choose Your Executors and Trustees. The people who you select as your Executors and Trustees for your Estate Plan is crucial. Executors are the personal representatives that you select to administer the terms of your will. Trustees are the fiduciary roles you select to make the management, investment, and distribution decisions that are laid out in the terms of your trust. These decisions should not be taken lightly.

Step 6: Review Your Beneficiary Designations. Ensure that your beneficiary designations of your life insurance policies and retirement accounts are up to date with your estate planning goals and that there is no inconsistency. Be very careful when naming minor children as the beneficiary designated on any of these accounts.

Step 7: Meet with Your Estate Planning Attorney to legally execute your Estate Planning Documents. Once you have met with an Estate Planning attorney at Peaceful Warrior Law, you will have created a blueprint for your perfect estate plan, which includes a Living Trust, a Will, Financial Powers of Attorney, Advance Health Care Directives, and Guardian Nominations. You then will go back into the office with your attorney to sign and notarize these documents and discuss what is important in the next steps thereafter.

Step 8: Safeguard Your Documents. Store your estate planning documents in a safe, accessible place. Inform your Executors and Trustees, as well as your close family members about where these documents can be found. Trusts are considered private, and therefore do not get recorded anywhere. Wills become public once the person has died, but it is very important not to lose the original Will that you prepared.

Step 9: Review and Update Regularly. Life changes, such as marraige, divorce, the birth or adoption of a child, changes in the law, and acquisition of new assets — can all necessitate updates to your Estate Plan. It is important to regularly review and update your plan so that your wishes are reflected at the time when you need it.

Step 10: Fund Your Trust. Arguably the most important part of your estate plan is actually retitling your assets into your Trust so your family can avoid probate court. Meet with an estate planning attorney at Peaceful Warrior Law if you need help with how to fund your trust.

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As a parent, you have probably thought about the importance of naming permanent legal guardians for your child in case something happens to you, and maybe you have already done it. If you haven’t yet, take this as the sign that now’s the time to do it, in case the unthinkable happens to you. 

But in some cases, naming permanent legal guardians for your child may not be enough to guarantee your kids will always be cared for in the way you want by the people you want. And, there may even be a risk of your kids being taken into the care of strangers or someone you would never want.

Read on to find out if that’s the case for your family, and if it is, contact us ASAP to get your Kids Protection Plan in place. 

 

You Leave Your Kids With Non-Related Caregivers 

If you ever leave your minor kids with a caregiver who isn’t a grandparent, aunt, or other family member that the authorities would naturally leave your kids with if something happens to you, this is what could happen.

Your kids are home with the babysitter. You don’t make it home, and the authorities are called. The authorities show up at your house, and what would they do?

Would they leave your children at home with the person taking care of them while they attempt to find your Will or legal guardian nomination? Would they even be able to find your legal documents? Would your legal documents name someone who would be immediately available to come to stay with your children, and would the authorities leave your children with those people without a court order?

If not, you need a Kids Protection Plan® to fill in the gap. 

Permanent guardian nominations only take effect upon your passing and are made official through the court system. This means that they do not give any legal authority to your chosen guardians in an emergency or if you become incapacitated. 

Because of this, law enforcement could place your child into protective custody with social services in the event of your sudden absence or incapacity due to an illness or injury. To minimize the chances that would happen, we can name legal guardians for the short-term, and give those named guardians the legal documentation they would need and instructions on what to do immediately if something happens to you. 

In addition, we will give you the tools to ensure that anyone staying with your children while you aren’t there knows exactly what to do if something happens to you. 

 

You Have Someone In Your Life You Would NEVER Want Raising Your Kids 

While this may not apply to you, if it does, you absolutely, 100%, without question need to contact us for a Kids Protection Plan® STAT. If you have anyone in your life you would never want raising your kids if you aren’t able to due to illness or injury, we can ensure that person is confidentially excluded from your plan using a Kids Protection Plan®. And, we can structure it so that this confidential document is only brought forward if necessary to keep your children out of the care of the person you would never want to raise them.

 

You Have Unique Desires For Your Kids’ Education, Health Care or Financial Well-Being

You’ve probably given a lot of thought to how you want to educate your children, the kinds of healthcare decisions you make for them, and how you want them to experience reality from a financial perspective. If that’s the case, then you absolutely want to ensure that anyone raising your children, if you can’t, will know how you would have wanted these decisions to be made. 

Otherwise, if you don’t take the time to leave instructions to the people who could raise your children, they will not know how you would make decisions if you cannot be there to communicate your hopes, dreams, wishes, and desires.

And, here’s the great thing about this … there’s a 99% chance that you are not going to become incapacitated or die while your children are minors (phew), and yet taking the time to write down your unique desires for their well-being and care is an illuminating process in and of itself that will make you a better parent right now.

We hear it again and again from our clients that when they create their Kids Protection Plan® with us, they immediately feel a great deal of relief and a belief that they are being the best parents they can possibly be. They have more clarity about what’s really important to them, what they want to emphasize, who they want their children to develop relationships with, and where they can better focus their own time, energy, and attention.

If you aren’t sure where to start when creating these instructions, don’t worry. We will support you with the whole process when we create your Kids Protection Plan. 

 

Comprehensive Protection for The Ones You Love Most

Nominating permanent legal guardians is an essential piece of your estate plan, but in reality, it often isn’t enough to ensure your child remains in the care of people you choose, know, love, and trust if something happens to you. If your children are ever left with a relative, or if there is anyone in your life you wouldn’t want raising your kids, or if you have unique high-value wishes for the way your children are raised when it comes to their education, health, or financial well-being, you need a full-fledged Kids Protection Plan®. 

If you’re ready to create a Kids Protection Plan® for your child, the first step is to schedule your Life & Legacy Planning™ Session. During the Session, I’ll look at everything you own and everyone you love to get to know your family and your wishes on a personal level. Then I’ll explain how the law would affect your family if something happened to you today, and together, we’ll design a plan that will protect your assets and your loved ones, no matter what.

To get started, click the button below and schedule a complimentary 15-minute call. We can’t wait to protect your children and your entire family through comprehensive planning.

[Schedule a Complimentary Call With Us]

 

This article is a service of Brittany Cohen, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

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HOW MANY TIMES HAS ONE OF YOUR CLIENTS ASKED YOU “HOW SHOULD I TAKE TITLE TO MY NEW HOME?”

As an estate planning attorney, navigating clients through this pivotal question becomes a crucial aspect of our service. A correctly titled property is not just a matter of legal compliance; it’s a strategic move to ensure the financial security and wishes of the property owners are honored.

Realtors play a pivotal role in not just finding the perfect home for clients but also in navigating the intricate pathways of home ownership. One question that frequently arises, yet is often underestimated in its complexity, is, “How should I take title to my new home?” This question extends beyond the closing of a deal and delves into the realms of legal compliance, financial security, and estate planning. As a realtor, equipping yourself with knowledge on this subject isn’t just adding another feather to your cap—it’s about becoming an indispensable resource to your clients.

Realtors: You have the opportunity to make sure that your clients have all the benefits of rightly titled property and they will definitely thank you for it.

WHY IS TITLING PROPERTY CORRECTLY SO IMPORTANT TO HOMEOWNERS?

The Importance of Correct Titling:

The foundation of estate planning is control. Homeowners want assurance that their wishes, especially regarding their property, will be respected and executed.

If Titled Incorrectly:

If titled incorrectly, the property owner cannot control what happens to the property after he dies; second, if titled incorrectly, the heirs can lose the property to creditors, the government, or even an ex-spouse; third, if titled incorrectly, the heirs will have to pay capital gain on the sale of the property.  

THREE COMMON WAYS TO HOLD TITLE 

JOINT TENANCY:  

The worst part about joint tenancy is the owner who dies first cannot control what happens to the property after his or death.  Joint Tenancy ensures that there will be a probate upon the death of the second joint tenant.  Finally, the surviving joint tenant will pay capital gain on one-half of the property after the death of one joint tenant.

 

COMMUNITY PROPERTY:  

Possibly the most common way for married couples to own property, Community Property causes half of the property owned as community property to be probated upon the first death and the whole property must be probated upon the second death.  Probate is not fun- it is time consuming and costly!  

 

COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP:  

Like joint tenancy, CPw/ROS is a he who dies last wins situation, because the surviving owner controls the disposition of the property on her death.

 

THE FOURTH AND BEST WAY TO OWN PROPERTY – A REVOCABLE LIVING TRUST:  

Realtors: Present this option as a comprehensive solution, offering control, protection, and tax efficiency. It’s an avenue to sidestep probate, maintain privacy, and ensure a seamless transfer of the estate.

The best way for your homeowners to own their property is in a revocable living trust.  

  • A properly drafted and funded trust will avoid time consuming, expensive and public probate upon the first death and the second death.  
  • A revocable living trust will make sure that the right people receive the property after the death of both owners and that it doesn’t go to creditors, predators, or future spouses.  
  • Property received by the heirs can usually be sold free of any capital gain tax and can be protected from creditors and predators of the heirs.

Empowering Conversations with Knowledge:

Your role as a realtor is evolving. Clients are looking for more than property listings—they are seeking informed guidance. By understanding the implications of each title option, you can engage in deeper, more meaningful conversations with your clients, positioning yourself as a trusted advisor.

Revocable living trusts extend beyond financial savings, morphing into a protective shield for the property and its intended beneficiaries. In a world where creditors and predators lurk, having a well-structured trust is akin to building a fortress around the estate. It’s an assurance that the property will transition according to the explicit wishes of the owners.

The Realtor’s Advantage with Revocable Living Trusts:

Revocable living trusts stand out for their multifaceted benefits. Educate your clients about this option; explain how it enhances control, minimizes tax liabilities, and acts as a shield against third-party claims. When clients realize you’re not just about the sale but genuinely invested in their long-term welfare, your reputation and relationships will be solidified.

Conclusion:

In the competitive world of real estate, the realtors who stand out are those who offer value beyond the conventional services. Equip yourself with the knowledge of property titling, and transform each client interaction into an opportunity for empowerment. You’re not just helping clients buy a property—you’re guiding them to secure their legacy, and in doing so, you’re building your legacy as a realtor of distinction. Your informed advice on property titling won’t just close deals; it will open doors to enduring client relationships, referrals, and a reputation anchored in trust and expertise.

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Introduction:

When crafting an estate plan in California, it’s crucial to address the multifaceted aspect of real estate ownership to ensure a seamless transition of assets. Real estate can often be the most significant component of an individual’s estate, and adequately addressing it is essential for comprehensive estate planning. Depending on when you purchased or acquired California real estate, there is a good chance that the property has appreciated in value, or is likely to appreciate in value. for this reason, when crafting your estate plan, your real estate portfolio requires additional thought that should not be overlooked. Sometimes it’s not always as straightforward as simply choosing a beneficiary to receive the property following your passing.

Fortunately, an experienced San Diego estate planning lawyer can assist you through this process.

 

When drafting your estate plan, here are ten pivotal questions to consider.

1. What Real Estate Do You Own and Who Do You Want to Receive Your Real Estate?

Evaluation:

Begin by taking stock of all your real estate assets. List each property, including primary residences, rental properties, vacation homes, and any undeveloped land. This foundational step is crucial for the subsequent planning stages.

Then list who your potential beneficiaries are and the relationship you have with them. How old are your beneficiaries? Are they related to you? 

2. How is My Real Estate Titled?

Ownership Structures:

Identify how each property is titled – whether individually, jointly, or through a business or trust. The title structure profoundly influences how the property is handled in estate planning and taxation.

Common ways to hold title in real estate can be:

  • Tenants in Common
  • Joint Tenants
  • Husband and Wife, as Community Property with Rights of Survivorship
  • Individual as sole and separate property
  • In a Trust
  • LLC

3. What is the Value of My Properties?

Appraisal:

Obtain current appraisals to know the market value. This valuation will play a significant role in tax planning and distribution to heirs.

4. What Are the Tax Implications?

Tax Liability:

Understand the potential tax liabilities, including property, capital gains, and estate taxes. California’s Proposition 19 has nuanced tax implications that should be understood and planned for.

5. How Should I Distribute My Real Estate?

Beneficiaries:

Decide how you wish to distribute each property. Consider the beneficiaries’ individual needs, preferences, and their ability to manage real estate.

  • Will my beneficiaries use the real property as their primary residence in the future?
  • Should I distribute the real estate into the names of my beneficiaries where there names will be on the deed upon my death?
  • Should I distribute the real estate in an Asset Protection Trust to my beneficiaries?

These questions are all incredibly important to consider for purposes of Prop 19 and transfer tax reassessment purposes.

6. Is there a mortgage on the property?

Who will assume your mortgage?:

Under the Garn-St Germain Depository Institutions Act of 1982, lenders cannot enforce the due-on-sale clause in certain situations, such as property transfers between family members upon death, during a divorce, or into a living trust.

7. How Can I Protect My Real Estate from Creditors?

Asset Protection:

Explore strategies to protect your properties from potential creditors’ claims, lawsuits, or other liabilities. Legal tools like LLCs or trusts can offer enhanced protection.

8. Is My Real Estate Suitable for a Trust?

Trust Incorporation:

Consider incorporating trusts to avoid probate, provide for privacy, manage tax implications, and ensure a structured distribution of assets.

Revocable Living Trusts are best for probate avoidance and privacy. You can build in estate tax and capital gains tax planning strategies within your Revocable Living Trust.

Who will be responsible for the expenses of the property, including taxes and upkeep, during the administration process?

9. How Does California Law Affect My Estate Plan?

Legal Landscape:

California has specific laws regarding real estate and estate planning. How do these laws impact your properties and your overall estate?

10. Should I Consult with a Professional?

Expert Guidance:

Consider seeking advice from an estate planning attorney, especially one well-versed in California’s complex legal and tax landscape, to ensure your estate plan is robust, compliant, and optimized for your specific circumstances.

Conclusion:

The intertwining of real estate and estate planning is intricate, necessitating thorough scrutiny and strategic planning. By addressing these ten questions, you embark on a journey of crafting an estate plan that not only stands the test of legal and financial scrutiny but also honors your legacy and provides for your heirs with foresight and diligence.

Call to Action:

Embarking on estate planning, especially where real estate is involved, requires nuanced insight. Reach out to our team of seasoned estate planning professionals at Peaceful Warrior Law in San Diego, California, to guide you through each step, ensuring peace of mind and a legacy preserved. Contact us today for a personalized consultation.

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For California’s real estate owners, weaving through the intricacies of estate planning can be akin to navigating a labyrinth. However, with strategic planning, understanding of tax laws, and adept utilization of estate planning tools, property owners can ensure that their assets are not only protected but also serve as a legacy for generations. This article will explore the comprehensive steps, legal considerations, and practical examples to optimize estate planning for real estate owners in California.

California Homeowners Should have a Living Trust

Table of Contents

  1. DETAILED PLANNING WITH RELEVANT LAWS
    • Understanding Proposition 19
    • Navigating Federal Estate Tax Laws
  2. HOW A TRUST PROVIDES PROTECTION
    • Benefits of Establishing a Trust
    • Why a Revocable Living Trust is Usually Best
    • Other Types of Trusts That Provide Different Types of Protection
  3. EXAMPLES OF HOW COMPLEX ASSETS SUCH AS REAL ESTATE ARE INTEGRATED INTO INTO ESTATE PLANS 
    • Incorporating a Living Trust
  4. HOW DO YOU KNOW WHICH TYPE OF TRUST IS RIGHT FOR YOU?
    • Revocable Living Trust
    • Irrevocable Living Trust
    • Domestic Asset Protection Trust
    • Medicaid Asset Protection Trust

1. DETAILED ESTATE PLANNING WITH RELEVANT LAWS IN CALIFORNIA

A) Understanding Proposition 19

Under Proposition 19, effective February 16, 2021, California homeowners who are 55 or older, severely disabled, or victims of wildfires and natural disasters can transfer their property tax base to a new residence of any value anywhere in the state up to three times during their lifetime California Board of Equalization.

Prior to Proposition 19, homeowners would be able to pass down real property to their heirs and preserve their tax basis, wholly discouraging people to sell their family property and istead, opt to continue to pass it down from one generation to the next.

Example:

Let’s consider John, a 60-year-old long-term homeowner in San Francisco. His home, purchased two decades ago, has an assessed value of $500,000, although its current market value is $2 million. His annual property taxes are based on the assessed value, leading to substantial savings.

With Proposition 19 in effect, John has the option to purchase a new home in Los Angeles, valued at $2 million, without seeing a spike in his property taxes. He can transfer the $500,000 assessed value (adjusted for the difference in the market price of the two homes) to the new property, resulting in considerably lower property taxes than if the new home were taxed at its full market value.

B) Navigating Federal Estate Tax Laws

As of my knowledge cut-off in 2022, the federal estate tax exemption is at $11.7 million for individuals and $23.4 million for couples, indexed for inflation IRS.

Example:

If Sarah, a homeowner in San Diego, has an estate valued at $10 million, including her real estate, she won’t owe federal estate taxes upon her death, safeguarding her heirs from this financial burden.

2. HOW A TRUST PROVIDES PROTECTION FOR HOMEOWNERS IN CALIFORNIA

A) Benefits of Establishing a Trust

In California, establishing a trust can offer significant protection for homeowners by ensuring their property is managed according to their specific desires and providing a shield against probate proceedings upon death. By placing your home into a trust, you maintain control over the property during your lifetime while designating a successor trustee to manage the property upon your passing. This strategy not only facilitates a smoother and faster transfer of property to your designated beneficiaries but also helps protect the asset from public scrutiny and the often lengthy and costly probate process. Trusts can also offer a layer of privacy and may provide some protection against creditors, making them a wise consideration for anyone looking to safeguard their most valuable asset—their home.

There are many different types of trusts, but the type of trust that is the most foundational for all homeowners in California is the “Revocable Living Trust.”

B) Why A Revocable Living Trust is Usually the Best Option

A revocable living trust is a legal entity created to hold ownership of an individual’s assets during their lifetime and to specify how those assets are to be handled after their death. This type of trust is called “revocable” because it can be altered or completely revoked by the trustor (the person who creates the trust) at any point during their life, as long as they remain mentally competent. The trustor typically acts as the trustee, managing the trust’s assets, which might include real estate, bank accounts, and investments. Upon the trustor’s death, the trust becomes irrevocable, meaning it can no longer be changed, and the successor trustee then steps in to manage or distribute the assets according to the trust’s terms. This setup helps bypass the often lengthy and costly probate process, provides privacy since the trust details do not become part of the public record, and can offer more precise control over the distribution of assets to beneficiaries.

C) Other Types of Trusts That Provide Different Types of Protection

  • Irrevocable Trust

An irrevocable trust is a type of trust where the terms cannot be modified, amended, or terminated without the permission of the grantor’s named beneficiaries once it has been created. Unlike a revocable trust, the grantor, once they transfer assets into an irrevocable trust, effectively removes all of their ownership rights over those assets. This transfer is permanent, providing significant benefits such as protection from creditors and legal judgments, as well as potential tax advantages. Because the assets no longer belong to the grantor, they are not included in the grantor’s taxable estate, potentially reducing estate taxes. Irrevocable trusts are often used for asset protection, to provide for a beneficiary who shouldn’t directly inherit assets due to incapacity or irresponsibility, and for charitable estate planning.

  • Domestic Asset Protection Trust

A Domestic Asset Protection Trust (DAPT) is an irrevocable trust established under specific U.S. state laws to shield a grantor’s assets from creditors and legal claims. By transferring assets into a DAPT, the grantor relinquishes ownership but can still potentially benefit as a discretionary beneficiary, managed by an independent trustee. This structure ensures that the assets are generally inaccessible to creditors and not included in the grantor’s personal estate, providing significant protection while allowing the grantor some level of access to the trust’s benefits. DAPTs are particularly appealing to high-net-worth individuals seeking effective asset protection strategies.

  • Medicaid Asset Protection Trust

A Medicaid Asset Protection Trust (MAPT) is a type of irrevocable trust designed to protect an individual’s assets from being counted for Medicaid eligibility purposes. By placing assets into a MAPT, individuals can safeguard their wealth, ensuring it is not depleted by the costs of long-term healthcare, while potentially qualifying for Medicaid benefits. The trust must be properly structured and adhere to strict regulations, including a look-back period, typically five years, during which assets transferred into the trust may still be considered by Medicaid in determining eligibility. The grantor of the MAPT relinquishes control over the assets and cannot be the trustee, but they can designate who will receive the trust’s assets after their death. This setup allows the assets within the trust to be protected from both Medicaid recovery and other creditors, ensuring that the grantor’s legacy can be preserved for their beneficiaries.

3. EXAMPLES OF HOW COMPLEX ASSETS (SUCH AS REAL ESTATE) ARE INTEGRATED INTO ESTATE PLANS

A) Incorporating a Living Trust

Living trusts are pivotal for California property owners. They ensure that real estate and other assets are passed on seamlessly without going through probate, which can be a public, time-consuming, and expensive process.

Example:

Matthew, owning a beachfront property in Malibu, places it in a living trust. Upon his passing, the property is transferred to his daughter, Lisa, without undergoing probate, ensuring privacy and expediency.

B) Utilizing Gift Deeds

While gifting property can be an efficient method of asset transfer, it’s pivotal to understand the tax implications. The annual gift tax exclusion and lifetime gift and estate tax exemption play a crucial role IRS.

Example:

David gifts a condo in Sacramento to his son, Alex. Given the current annual gift tax exclusion, if the property’s value is within the allowable limits, there will be no immediate tax implications for either party.

4. HOW DO YOU KNOW WHICH TYPE OF TRUST IS RIGHT FOR YOU?

Choosing the right trust for a California homeowner who currently lacks an estate plan depends on their specific goals, financial situation, and needs for asset protection. Here’s a brief guide to help determine the most suitable type of trust:

  1. Revocable Living Trust: Ideal for homeowners who desire flexibility and control over their assets. This trust allows the grantor to retain control over the assets during their lifetime, including the ability to amend or revoke the trust. It helps avoid probate, provides privacy, and ensures that assets are distributed according to the grantor’s wishes upon their death. It’s a good fit if the primary concern is simplifying the administration of the estate rather than asset protection from creditors.
  2. Irrevocable Living Trust: Suitable for those who are willing to relinquish control over their assets for the benefit of asset protection and potential tax advantages. Once assets are transferred into this trust, the grantor cannot modify the trust without the beneficiaries’ consent. This trust offers stronger protection against creditors and can reduce estate taxes, making it a good choice for individuals with significant assets who are also concerned about future liabilities and estate tax implications.
  3. Domestic Asset Protection Trust (DAPT): Appropriate for individuals with substantial assets who seek to protect their wealth from potential future creditors while maintaining some beneficial interest in the trust. This type of trust is particularly effective in states that allow for DAPTs, providing strong creditor protection while allowing the grantor to remain a discretionary beneficiary.
  4. Medicaid Asset Protection Trust (MAPT): Best suited for individuals concerned about future medical costs and the possibility of depleting their estate through long-term care expenses. This trust protects assets from being counted for Medicaid eligibility, but it requires careful planning to comply with Medicaid’s look-back period and other eligibility criteria.

For a California homeowner starting an estate plan, a revocable living trust often serves as a foundational component due to its flexibility and the control it offers. However, if the homeowner is particularly concerned about protecting assets from creditors or ensuring Medicaid eligibility, considering an irrevocable trust, DAPT, or MAPT might be more appropriate. Each type of trust serves different purposes and comes with its own set of legal and financial considerations, so it’s essential to evaluate the homeowner’s individual circumstances and objectives thoroughly. Consulting with a specialized estate planning attorney can provide tailored advice and ensure that the chosen trust aligns with the homeowner’s overall estate planning goals.

Conclusion

Owning real estate in California presents both an opportunity and a responsibility. Through comprehensive estate planning infused with an intricate understanding of state and federal tax laws, property owners can turn potential complexities into streamlined, cost-effective processes that ensure asset preservation and legacy building.

Key Takeaways

  • Stay updated with the evolving tax landscape, including state-specific propositions and federal tax laws.
  • Incorporate specialized estate planning tools like living trusts to facilitate efficient asset transitions.
  • Regularly review and adapt your estate plan, considering the dynamic nature of the real estate market, tax laws, and individual asset portfolios.

It’s crucial to remember that estate planning is about more than just documents; it’s about informed decisions that shape your future and the future of your family. To take your financial organization to the next level and make the best choices for your loved ones. Click here to schedule a Family Wealth Planning Session™ with us. Mention this article, and you can access this valuable $750 session at no charge.

As always, we’re here to support you on your journey toward financial security and peace of mind. Financial planning is a dynamic process, and with the right strategies in place, you can confidently navigate the ever-changing financial landscape and achieve your long-term goals.

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You might think that estate planning is something you can complete one time and then check off your to-do list for good. But the reality is that in order for your estate plan to work for you no matter how your life changes, your plan needs to change with it.

To make sure any big changes in your life are considered in your plan, I recommend reviewing your estate plan with your attorney at least every three years. But if any major life events happen before then, it’s crucial to have your plan reviewed as soon as possible so it can be updated if needed.

Last week, we started to explore 10 life changes that might affect your estate plan. This week, we’re coving five more life events that mean it’s time to review your plan.

06 | You Became Seriously Ill or Injured

A sudden illness or injury can leave you incapacitated and unable to manage your affairs. Therefore, it’s essential to review your estate plan to ensure it includes powers of attorney for healthcare and finances. These documents let you name someone you trust to pay your bills and manage your assets, as well as make medical decisions for you if you can’t speak for yourself.

It’s also important to include healthcare directives that describe what kind of healthcare you want if you become incapacitated. This can include dietary restrictions or preferences, religious beliefs, or limits to certain treatments or life-sustaining measures. By legally documenting your healthcare choices, your power of attorney will feel more comfortable in the role and will be able to make medical decisions for you that align with your wishes.

07 | You Moved Here From Another State

Each state has its own laws and regulations regarding estate planning, so if you moved here from another state after completing your estate plan, it’s crucial to have your plan reviewed by a local attorney. If your existing plan doesn’t meet our state’s requirements for how an estate plan is signed or witnessed, or contains terms or processes that differ from the processes of our state, this can cause delays when your plan needs to be used and may even require a court to review its validity.

Reviewing your plan with a local attorney and making any changes to comply with our laws will make sure that your estate plan can be relied upon at any moment without delay or confusion.

08 | You Got Married

Marriage brings about not only joy and celebration but also important legal updates that are easy to put off. When you tie the knot, your estate plan needs to reflect your new marital status. Some states automatically make your spouse a co-owner of some of your property, but that doesn’t ensure an easy transfer of that property to your spouse when you die. Other states do not make any automatic updates in ownership.

To make sure your assets will go to your new spouse if you die or become incapacitated, it’s essential to update beneficiaries and make arrangements for shared assets. Additionally, you might consider creating provisions to protect your spouse financially and emotionally in the event of your passing.

09 | You Got a Divorce

The end of a marriage is a significant life event that requires immediate attention to your estate plan. After a divorce, you’ll likely need to revoke and redo your entire estate plan. This includes creating a new will and trust, updating beneficiary designations on life insurance and retirement accounts, and revising asset distribution to reflect your new circumstances and relationships.

If you have children from your previous marriage, you may need to revisit guardianship arrangements and provide for their financial needs accordingly.

10 | The Law Changed

Tax laws are subject to change, and revisions to estate tax exemptions can have a substantial impact on your estate plan. If there are significant changes in federal or state estate tax laws, it’s crucial to review your plan with an estate planning attorney to minimize tax burdens and protect your wealth for your loved ones.

Even if you weren’t affected by federal or state estate taxes in the past, changes in federal estate tax law are scheduled for 2026, so now is the time to review whether this change will affect your family’s estate tax filing status. Estate taxes can cost your family tens or even hundreds of thousands of dollars, but these tax liabilities are optional and can be avoided with proper estate planning.

By Your Side Through All of Life’s Changes

Your estate plan serves as the bedrock protecting your family and finances, not just for today but also for the future. However, estate planning isn’t a one-time task – it should adapt and evolve alongside the changes in your life.

My mission is to be by your side through all of life’s changes, ensuring your estate plan remains up-to-date and effective no matter what life brings your way. That’s why I offer my clients a complimentary review of your estate plan every three years, and I encourage you to reach out at (858) 427-0539 any time before then with questions about life changes or events that might affect your plan.

If you’re ready to create an estate plan that protects your loved ones and your legacy, or want your existing plan reviewed, give me a call at (858) 427-0539. I’d be honored to help ensure your family’s well-being for years to come.

Reach out to me at (858) 427-0539 to get started. I can’t wait to hear from you.

This article is a service of Brittany Cohen, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

[email protected]

858-427-0539

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Maybe you thought creating a will or trust is something you can do once and then your family and assets are protected forever after. It seems to be how most lawyers structure their services, so it wouldn’t be surprising if you did think this. You work with your lawyer, they draft documents, you bring them home in a binder or notebook, put them on a shelf or in a drawer, and you never hear from them again. Estate plan, done. But, it’s not, and thinking of it that way could leave your family with a big mess when something happens to you.

In reality, life events can drastically affect your estate plan and even cause your plan not to work in the way you intended. To make sure your plan remains up to date throughout your life, we recommend reviewing your plan at a minimum of every three years. Because I’m so passionate about this, I offer to review my clients’ plans every three years for free.

And, if any of these 10 life events happen before your three-year plan review, you’ll want to have your plan professionally reviewed right away. Let’s take a closer look at these 10 life events and how they can affect your estate plan and what changes may be required.

01 | Your Assets or Liabilities Changed

Life is full of changes and your financial situation is unlikely to stay the same over time. Changes in your assets, such as acquiring a new home or other assets, selling property, or incurring debt should prompt a review of your estate plan. You may need to update asset distribution, beneficiary designations, and financial provisions to reflect these changes accurately and ensure the people you love receive what you intend when you die. Most importantly, you need to update your asset inventory every time your assets change, and if you don’t have an asset inventory, you need to call us at (858) 427-0539 and update your plan to ensure you have an inventory included. The biggest risk to your family in the event of your incapacity or death is that they don’t know what you have, where it is, or how to find it. We solve this by creating and updating your asset inventory regularly.

02 | You Bought, Sold, or Started a Business

Owning a business adds another layer of complexity to your estate plan. If you’ve recently bought or sold a business, it’s essential to update your plan to reflect what you want to happen to your business when you die, ensure a smooth transfer of ownership (if desired), and create a plan to protect your business assets for yourself and your loved one’s future.

The financial and personal value of your business can be a significant gift to your loved ones both today and for years to come – if you know how to incorporate it into your estate plan in the right way.

03 | You Gave Birth or Adopted a Child

Welcoming a new child into your family is an incredibly joyful moment. As a parent, it’s essential to update your estate plan to include provisions for your child’s well-being and financial future. This includes naming guardians for minor children, creating a Kids Protection Plan, and ensuring their financial security through trusts or other means.

It’s also important to document your wishes for your child’s education, religion, and values in your plan so their legal guardians will know how you would want your child raised if something happened to you.

04 | Your Minor Child Reached the Age of Majority (or Will Soon)

As your children grow up and reach the age of majority, it’s time to review how they will receive their inheritance, make sure someone can legally make healthcare decisions for them, and manage their money in the event they become incapacitated. Depending on their level of maturity, you may want to consider if they’re ready to handle assets on their own and if so, what amount.

An even better idea is to provide lifelong protection of your child’s inheritance through the use of a Lifetime Asset Protection Trust. By using this estate planning tool, your child’s inheritance can be used to support your child’s future while safeguarding its use and protecting it from any potential future lawsuits or divorces your child may face later in life.

This ensures that your children are financially secure as they head into adulthood while also supporting your children with financial responsibility.

05 | A Loved One Dies

The loss of a family member is emotionally devastating, and it can significantly affect your estate plan. If a deceased loved one was a recipient of assets under your will, trust, or financial accounts, it’s crucial to update these documents to make sure your assets will be distributed to the right people.

Additionally, if the deceased individual was designated as a trustee or executor of your estate or a guardian of your minor children, you will need to appoint new individuals to fill these roles.

Planning for Life’s Changes

Your estate plan is the foundation that protects your family and your finances today and in the future. But estate planning is not a set-it-and-forget-it task; rather, your estate plan should change and evolve with the changes in your life.

We’re here to guide you through life’s changes to keep your estate plan up-to-date and effective, so you can have the peace of mind of knowing your plan will work exactly how you want it to when your loved ones need it most.

If you’ve recently experienced a significant life event or it’s been a while since your last estate plan review, now is the time to review your plan. If you haven’t created an estate plan yet, it’s better to plan early than to have no plan at all.

To get started, call us at (858) 427-0539 to learn more about my Family Wealth Planning Session process where we’ll discuss your family dynamics and goals, address any changes in your life, and create a comprehensive estate plan that brings you peace of mind.

Plus, don’t forget to return next week when I’ll be discussing five more life events that signal it’s time to review your plan

This article is a service of Brittany Cohen, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

[email protected]

858-427-0539

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How to Benefit from an Estate Plan When You Own Real Estate

Avoiding Probate and Tax Pitfalls in Real Estate Transfers

Adding a child’s name to a property deed might seem simple, but it can lead to probate and tax issues. Discover smarter ways to handle real estate in your estate plan.

Table of Contents

1. Introduction

2. Understanding Property Ownership Types

  • Tenants in Common
  • Joint Tenants with Right of Survivorship

3. Legal Implications of Adding a Child to a Deed

  • Potential Probate Issues
  • Medicaid and Medicare Considerations

4. Tax Consequences of Transferring Real Estate

  • Gift Tax Implications
  • Example Scenario
  • Inherited Property and Step-Up in Basis

5. Effective Estate Planning Strategies

  • Creating a Trust
  • Consulting with an Estate Planning Attorney
  • Addressing Government Benefits Concerns

6. Conclusion

Introduction

Many parents believe that by adding a child’s name to a property deed, they can pass along the property outside of probate. Unfortunately, those who act on that belief often find they have invited more problems than they have avoided. Estate planning, particularly when it involves real estate, is a complex process that requires careful consideration to avoid pitfalls such as probate complications and adverse tax consequences. This guide will explore various aspects of estate planning for real estate owners, providing insights into ownership types, legal implications, tax consequences, and effective strategies to safeguard your property and legacy.

Understanding Property Ownership Types

Tenants in Common

When more than one person owns property together and they are not married, the property is often held as tenants in common. This type of ownership means that each owner has an individual, divisible interest in the property. If one owner dies, their share of the property does not automatically transfer to the surviving owners but goes to the deceased owner’s heirs through probate. This can lead to unwanted complications and delays.

Joint Tenants with Right of Survivorship

An alternative to tenants in common is joint tenancy with the right of survivorship. This arrangement means that if one owner dies, their share of the property automatically transfers to the surviving owners, bypassing probate. This designation must be explicitly stated in the deed to ensure that the property is handled according to the owners’ wishes. Seeking legal advice to set up this type of ownership can help prevent probate and ensure a smoother transition of property ownership.

Legal Implications of Adding a Child to a Deed

Probate Complications

Adding a child’s name to a property deed with the intent to avoid probate can inadvertently cause more problems. If the deed does not explicitly state joint tenancy with right of survivorship, the property will still go through probate upon the death of one owner. This process can be time-consuming and costly, defeating the original purpose of avoiding probate.

Medicaid and Medicare Considerations

Adding a child’s name to a property deed with the intent to avoid probate can inadvertently cause more problems. If the deed does not explicitly state joint tenancy with right of survivorship, the property will still go through probate upon the death of one owner. This process can be time-consuming and costly, defeating the original purpose of avoiding probate.

Tax Consequences of Transferring Real Estate

Gift Tax Implications

When real estate is transferred as a gift by adding a child’s name to the deed, it is subject to gift tax rules. The IRS considers this a taxable event, and the original cost basis of the property (what you paid for it) transfers to the new owner. This can result in significant capital gains tax when the property is eventually sold.

Example Scenario:

Consider a home purchased for $50,000 that is now worth $350,000. If you add your children to the deed and they sell the home after your death, they will be taxed on the difference between the original cost basis ($50,000) and the sale price ($350,000), resulting in a taxable gain of $300,000. This substantial tax burden can be avoided with proper estate planning.

Inherited Property and Step-Up in Basis

If your children inherit the property through a will instead, they benefit from a step-up in basis. This means the property’s value at the time of inheritance becomes the new cost basis. Using the same example, if the property is worth $350,000 at the time of inheritance, and the children sell it for that amount, there will be no taxable gain. This strategy can significantly reduce the tax burden on your heirs.

Effective Estate Planning Strategies

Creating a Trust

One of the most effective ways to avoid probate and minimize taxes is to create a trust. By transferring real estate into a trust and naming your children as beneficiaries, you can ensure the property passes outside of probate in a tax-advantaged way. Trusts offer flexibility and control over how and when your assets are distributed, providing peace of mind and protection for your heirs.

Consulting with an Estate Planning Attorney

Given the complexities of estate planning, it is advisable to consult with an experienced estate planning attorney. They can help you navigate the various legal and tax implications, ensuring your estate plan aligns with your goals and protects your assets. An attorney can also coordinate with financial advisors and tax professionals to create a comprehensive plan that meets all your needs.

Addressing Government Benefits Concerns

For those concerned about the potential impact of Medicaid or Medicare on their property, specialized estate planning strategies are available. An attorney can help structure your estate to protect your home from being taken to cover medical bills. This might include setting up irrevocable trusts or other legal mechanisms designed to shield your assets while still qualifying for benefits.

Conclusion

Effective estate planning is crucial for real estate owners who want to avoid probate, minimize taxes, and protect their property from potential government claims. By understanding the different types of property ownership, the legal implications of adding a child to a deed, and the tax consequences of transferring real estate, you can make informed decisions that benefit your heirs and preserve your legacy. Consulting with an estate planning attorney and utilizing tools such as trusts can provide additional security and peace of mind.

About Attorney Brittany Cohen

This article is a service of Brittany Cohen, Esq., Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
By integrating the knowledge of historic preservation, local events, health and wellness, arts and culture, and home design, we ensure your estate plan not only protects your financial assets but also preserves the rich tapestry of your life and legacy. Whether you’re passionate about architecture or community engagement, our holistic approach to estate planning will reflect your unique values and aspirations.

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