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Tag: financial planning

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As an Estate Planning Attorney, I often take on the role of “Money Protector.” The reason being is that an estate plan is the effective management and distribution of assets on behalf of a person during their incapacity or at their death. Over 70% of Americans don’t have an estate plan in place, which means their family is paying tens of thousands of dollars to the government at their death, all of which can be avoided.

Over the many years of counseling clients, these are the 6 things, that I would never do, as a Money Protection Attorney:

THING 1: I would never leave anything to my kids when I die, instead I would leave everything to a trust where my kids are named as the beneficiary on that trust.

By opting to create a living trust and have your trust own your assets, whereby your kids are named as the beneficiaries on that trust, provides several advantages. The three main advantages that leaving your assets to a trust can provide are: 1) Control; 2) Creditor and Asset Protection; 3) Tax Strategies.

  1. Control: Creating a trust and naming your kids as the beneficiaries of the trust, as opposed to just having a Will or not having a plan in place at all, allows you to have more control over your assets, even after your death. You can specify how and when the assets are to be distributed, which can be especially beneficial if you have concerns about the maturity or financial management skills of your children at the time of your passing.
  2. Creditor and Asset Protection: A trust can provide protection for the assets from creditors, legal judgments, or divorces that your children might experience. This is because the assets are not in your children’s names directly but in the trust.
  3. Tax Strategies: A proactive plan that includes a trust whereby assets are held in the trust and then distributed to your kids allows you to structure your trust in a way that can minimize estate taxes, thereby preserving more of your wealth for your beneficiaries under current tax laws.

THING 2: I would never name my minor children as beneficiaries on my life insurance accounts, instead I would set up a trust and designate my trust as the beneficiary of my life insurance accounts and name my kids as the beneficiary of the trust.

Naming minor children directly as beneficiaries on life insurance policies or other financial accounts often presents several practical and legal challenges. Here’s why it might be more advantageous to set up a trust and name the trust as the beneficiary, with your children as the beneficiaries of that trust:

  1. Legal Limitations for Minors: Minors cannot legally control property or finances until they reach the age of majority (18 in most states). If you pass away when your children are still minors and they are direct beneficiaries, the court will typically appoint a guardian to manage the funds until they reach adulthood. This process can be time-consuming, costly, and might not necessarily align with your intentions for the management of the funds.
  2. Control Over the Funds: By using a trust, you can specify exactly how and when the money should be distributed to your children. This can include stipulations for education, health, maintenance, and support, or dispersing funds at certain ages or milestones, like graduating from college. This helps ensure the money is used in a way that benefits their long-term well-being.
  3. Protection from Creditors and Divorce: Assets held in a trust are generally protected from the beneficiaries’ creditors, legal judgments, or divorce settlements. This protection helps ensure that the assets are preserved for the intended purpose of supporting your children, rather than being vulnerable to external claims.
  4. Avoiding Probate and Privacy: Trusts can help bypass the probate process, which is public and can be lengthy and expensive. By having the trust as the beneficiary, the disbursement of life insurance proceeds can be handled privately and swiftly according to the terms you’ve established.
  5. Tax Considerations: Depending on the size of your estate and the structure of the trust, there can be significant tax advantages to using a trust to manage and distribute your assets, including life insurance payouts.

THING 3: I would never add my childrens’ name to my home to get around medicaid recovery. Instead I would put my home in a medicaid asset protection trust and my children would be the benefits of that trust.

Adding your children’s names directly to the deed of your home might seem like a straightforward way to manage estate planning and Medicaid planning, but it can lead to several significant issues, particularly regarding Medicaid asset recovery. Here’s why it’s often a better strategy to establish a Medicaid Asset Protection Trust (MAPT) instead:

  1. Medicaid Asset Protection Trust (MAPT): A better alternative might be to place the home into a MAPT, naming your children as beneficiaries. This type of trust is designed to own assets like your home while allowing you to retain some benefits, such as living in the home. Here’s why it’s effective:
    • Protection from Estate Recovery: Assets in a MAPT are typically protected from Medicaid’s estate recovery, as the assets technically no longer belong to you.
    • Maintaining Medicaid Eligibility: Since the assets in a MAPT are not considered yours for Medicaid eligibility purposes (assuming the trust is irrevocable and properly set up before the look-back period), it helps in maintaining eligibility for Medicaid.
    • Control and Management: With a MAPT, you can appoint a trustee who manages the trust according to the terms you’ve set, providing a structured way to handle the property and other assets without exposing them to the risks associated with direct ownership by children.

Setting up a MAPT can be complex and requires careful planning and timing to ensure compliance with Medicaid rules and to achieve your estate planning goals effectively. It’s crucial to work with an attorney who is familiar in Medicaid planning and trusts to ensure that the structure of the trust meets legal requirements and aligns with your objectives.

THING 4: I would never add my children’s name to my deed as a way to get around probate court. Instead I would put my home in a living trust and my children would be beneficiary of that trust.

Adding your children’s names to the deed of your home as a way to avoid probate can seem like a simple solution, but it has several potential pitfalls and legal complexities. Here’s why adding your children’s name to the deed can pose several problems:

  1. Legal and Financial Risks: When you add your children to the deed, they become part-owners of the property immediately. This exposure means that any financial difficulties, legal problems, or liabilities they face (such as divorces, bankruptcies, or lawsuits) could threaten the home. Creditors could potentially place liens on the property or seek to recover debts through your children’s ownership interest.
  2. Loss of Control: By adding your children to the deed, you dilute your control over the property. Major decisions such as selling or refinancing the property would require their consent, which could limit your flexibility and autonomy, particularly if there are disagreements or if logistical issues arise, such as a child living far away or being unresponsive.
  3. Potential Gift Tax Consequences: Transferring part ownership of your home to your children is considered a gift for tax purposes and may trigger federal gift tax liabilities if the value of the share exceeds the annual gift tax exclusion amount.
  4. Capital Gains Tax Implications for Children: If your children are added to the deed and later sell the property after your death, they might not qualify for the full homeowner’s capital gains exclusion typically available when selling a primary residence. This could result in a significant capital gains tax if the home has appreciated in value.

THING 5: I would never make my kids go through probate court — instead I would create a living trust which would avoid probate court.

Probate Court is the State’s plan for you if you don’t have an estate plan created for yourself. If you die with assets titled in your name, such as the deed to your real estate, the title of your bank accounts and investment accounts, or a single member owned business, you are leaving your family to have to go to probate court. Probate court can be thought of as the court’s supervision of transfer of ownership.

A more structured and safer way to avoid probate and ensure smooth transfer of your property after your death is to set up a trust, such as a revocable living trust. Here’s why:

  • Avoids Probate: The property in the trust does not go through probate, which can expedite the distribution process to your beneficiaries and keep it private.
  • Full Control During Lifetime: You can maintain control over the property as the trustee of your trust. This arrangement allows you to manage, sell, or refinance the property as you see fit during your lifetime.
  • Protection from Creditors and Lawsuits: Since the trust owns the property, your children’s creditors or legal issues typically cannot affect the home.
  • Stepped-Up Basis: Upon your death, your children can benefit from a stepped-up basis for tax purposes, potentially reducing capital gains taxes if they sell the property.
  • Flexibility and Specific Terms: You can specify in the trust document how and when your children will inherit the property, allowing you to address any concerns about their maturity, financial management skills, or other personal circumstances

THING 6: I would never create a Will and make my kids go through Probate Court. Instead I would create a living trust which would avoid probate court.

Probate Court is also the process in which the court validates your Will and distributes a decedent’s assets. In other words, if all your family has is a Will, they WILL be going through probate court.

A Will alone is not sufficient to keep your family out of probate court. A trust is.

BONUS TIP: I would never leave this earth without a good plan in place to protect my loved ones.

A comprehensive estate plan includes the following:

  1. A Revocable Living Trust
  2. A Pour-Over Will
  3. Financial and Medical Powers of Attorney
  4. HIPAA authorizations
  5. Funeral Instructions
  6. Minor’s Guardian Nominations
  7. Fully Funded Trust and Updated Beneficiary Designations

The question you need to ask yourself is: What experience do I want the people who I love to have to go through in order to become owners of the assets I want to transfer to them?

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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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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If you own real estate, chances are you have purchased insurance to protect your assets against damage or loss. But have you taken the necessary steps to protect your assets against lawsuits or probate?

If you own rental properties, there is likely a nagging fear in the back of your mind about being sued by one of your tenants. And if there isn’t, there probably should be. It’s a major risk.

And while it may be heartbreaking to think about, there is always a chance your death could trigger a family feud over your home, vacation home or other real estate investments.

Two common estate planning tools for real estate asset protection include limited liability companies (LLCs) and trusts:

LLC

If you have income-producing property, then an LLC probably makes sense for you, since it protects your personal assets from lawsuits or claims that result from your ownership of the real estate. LLCs may also offer owners privacy since the property can be listed in a company name, not in your name directly. However, you must be sure you maintain the LLC properly so the planned for protections remain intact. It’s not too difficult though, especially with counsel.

TRUSTS

If you own vacation home property that you do not rent out on a regular basis, then a trust may be a better choice for you. There are several options: a Qualified Personal Residence Trust (QRPT) is an irrevocable trust (meaning it cannot be changed without the consent of the beneficiaries) that allows an owner to use the property for a fixed term, and then pass the property on to heirs. This is a commonly used structure to reduce the size of your estate for estate tax purposes.

A revocable trust (which can be changed without consent of the beneficiaries) is more flexible and, if you choose a dynasty trust, can last for multiple generations. The major benefit of the revocable trust, besides control of what happens to the assets after the death of the grantors, is that it keeps your assets out of the hands of the Court after your death, and totally within the control of your family.

You can also use a combination of LLCs and trusts to protect real estate assets if you have a combination of primary residence and rental properties. We can help you decide on the best course of action for your individual circumstances.

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.

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You’ve probably heard about the national debt ceiling and its recent extension, but you might wonder what it has to do with your everyday life as a family. While it may seem like a distant matter, the national debt ceiling extension can have a significant impact on your family’s financial well-being and future planning.

So What Exactly is the National Debt Ceiling Extension? 

The national debt ceiling is a legal limit set on the amount of money the government can borrow to finance its operations and meet its financial obligations domestically and around the globe. When the government reaches this limit, it cannot borrow more money unless Congress raises or extends the country’s debt ceiling. If the ceiling isn’t raised and the United States can’t pay back its debts, the country’s global creditworthiness is affected as well as financial security abroad and at home.

Congress raised the national debt ceiling on June 3, 2023, which means the United States will not default on its loans. This is good news, and yet the extension of the debt ceiling can still affect the economy and your family.

Here’s how the national debt ceiling extension can affect the economy, and your family, and what you can do to mitigate the impacts.

Access to Credit and Loans

You likely rely on credit and loans for various purposes, such as buying a home, financing education, or handling unexpected expenses. When the national debt ceiling is extended, it can create uncertainty in the financial markets, leading to higher interest rates and tighter lending conditions. This means that securing affordable credit and loans for major life milestones or managing financial emergencies may become more challenging.

One of the ways you can mitigate this impact could be to consider starting a business or a side hustle, so you can create multiple revenue streams instead of just being reliant on one, and leverage access to business credit, which can be more accessible and less expensive than using personal credit, even in tight lending markets.

Consumer Confidence and Spending Habits

Your family’s financial health may be closely tied to the state of the external economy. When there is uncertainty surrounding the national debt ceiling, coupled with high inflation, it can affect consumer confidence and spending habits. As people become concerned about the government’s ability to manage its debt, they may tighten their spending, leading to decreased demand for certain goods and services. This can have a direct impact on your job stability, income growth, and even your ability to save and invest for the future.

One way to mitigate this risk is to begin to separate the well-being of your family from the greater economy by creating your own local economy, wherever possible. If that feels far afield, consider ways that you can begin to generate income locally by making a product that friends and neighbors would want and need, or providing a side service within your local community.

If you decide to go this route, contact me at (858) 427-0539 to discuss options to create your side business in the most tax-advantaged and liability protected manner.

Government Programs and Support

Government programs and support play a crucial role in many families’ lives, especially during challenging times. However, when the national debt ceiling is extended, it can put pressure on government budgets, leading to potential cuts or delays in funding for essential programs and services. This may directly affect your access to healthcare, education, housing assistance, and other forms of support that your family relies on.

If you have a child or family member with special needs or an elderly family member you’re supporting, this may affect you even more. Now is the time to get into closer relationship with your nuclear and extended family, marshall all the family resources, and get into conversation around how you can use all the family resources to support all of the children and elders in the best way possible. If you need help speaking to your parents, or considering how best to ensure a lifetime of support for a child with special needs, give us a call at (858) 427-0539 and let’s strategize together.

Tax and Fiscal Policies

Changes in tax and fiscal policies, often influenced by the national debt, can have a significant impact on your family’s finances. As the government seeks ways to manage the national debt, it may consider adjustments to tax rates, deductions, or credits. These changes can directly affect your take-home income, savings, and overall financial planning. Understanding and adapting to these shifts is crucial for effectively managing your family’s budget and long-term wealth and legacy.

You can be fairly certain tax rates will go up to support the debt extension. And, the middle class, especially those who don’t know how to mitigate tax impacts with legal entity structuring, are likely to bear the burden. If you want to leverage the tax-advantaged strategies of the wealthy to keep more money in your local community, and in your family’s bank account, contact us at (858) 427-0539 to discuss options.

Ongoing Guidance for Your Family

We understand that managing your family’s financial and legal well-being can feel overwhelming, especially when it’s hard to know how changes in the law and the financial landscape will affect you. But remember, you don’t have to face these challenges alone. Our mission is to provide you with the support and guidance you need as you navigate changes in the law so you can build a life you love while protecting and preserving your wealth and legacy for the next generation.

While we aren’t financial advisors, we can connect you with a trusted network of professionals and work alongside your financial and tax advisors to make sure your estate plan coordinates with your overall financial plan and protects your family’s wishes and wealth no matter what the future brings.

Ready to protect your family’s wealth and preserve your assets and your story for generations to come? Call us at (858) 427-0539 to learn more.

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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June is a time of celebration and reflection for the LGBTQ+ community as Pride Month shines a spotlight on the progress made in the fight for equal rights. While significant strides have been made, such as the legalization of same-gender marriage and increased recognition of LGBTQ+ families, there is still a large gap in estate planning for LGBTQ+ individuals that could leave your loved ones with a big mess.

Estate planning laws are still written for hetero, cisgender individuals, and many lawyers aren’t well equipped to customize their estate plans to account for the unique family dynamics and wishes of LGBTQ+ clients. Sadly, if you have LGBTQ+ family members or are in a non-traditional family dynamic of any kind and don’t have a custom estate plan, the people you love most could find themselves accidentally disinherited from your estate or stuck in a lengthy and expensive court battle.

To make sure your family is well-cared for no matter how the law defines you, keep reading to learn why customized estate planning is so crucial for LGBTQ+ and all non-traditional humans.

Care for Your Family as You Define It

The concept of family has expanded far beyond the confines of the traditional “nuclear family.” Gratefully, we now celebrate the beautiful diversity of family structures, encompassing same-gender couples, unmarried partners, civil unions, polyamorous relationships, and an array of other unique family dynamics. However, when it comes to death or incapacity, the law still lags behind, often failing to accommodate non-traditional family units in ways that you would choose.

If you die without an estate plan in place, the law will apply the state’s default estate plan to your unique situation. Under the law’s default plan, your possessions and money will pass to your next closest relatives by blood or marriage. If you aren’t legally married to your partner or partners, the people you love will be automatically disinherited in the event of your death.

Likewise, if you have children that are unrelated to you genetically who you haven’t formally adopted, like a partner’s child or stepchild, those children won’t receive anything from your estate after you die. Even if you’re married to the child’s parent, the law doesn’t recognize a stepchild as a direct descendant and therefore doesn’t include them in its default plan.

To make sure the people you love — your chosen family – are taken care of, no matter how the law labels your family, it’s important to create a custom estate plan that ensures your assets are distributed according to your wishes and that your partners, children, and chosen family members are protected and cared for if something happens to you, even if they may not be recognized under default inheritance laws.

Protect Your Financial and Health Care Rights

If you ever wondered who would take care of you and your things if you become ill or incapacitated, your first thought is probably your partner. Right? After all, it seems like common sense that your partner of ten years (or 2 years, or 5 years, or 20!) should be the one to make healthcare decisions for you or pay your bills.

But unfortunately, the law doesn’t operate based on what might seem like common sense when we look at our everyday lives and relationships. The law doesn’t assume that you’d want any particular person making decisions for you if you become incapacitated. Instead, your family members will need to go through a stressful court guardianship procedure to be granted decision-making power by a judge.

If your family members can’t come to an agreement on who should be your decision-maker, the court may assign a professional guardian – a complete stranger – to make decisions for you instead!

To avoid court involvement altogether, it’s vital to name your chosen decision-makers – your powers of attorney –  long in advance of ever needing them. This is especially important if you want to choose a decision-maker who isn’t related to you by blood or if you want to make sure that any certain lifestyle choices or beliefs such as a special diet, style of dress, or hormone therapy are still carried out if you’re incapacitated.

If you don’t put these wishes on paper and name someone you trust to uphold them, it’s likely a judge won’t appoint your chosen decision-maker. In this case, the person the judge chooses can make whatever decisions for you they feel is best, even if that means ignoring your chosen gender expression or identity.

No one expects to become incapacitated due to an illness or injury, but sadly, it happens. Legally naming a decision maker in advance and talking about your wishes with them and your extended family helps safeguard your rights and ensures that your wishes for how you’re cared for are honored while avoiding family conflict as much as possible.

Work With a Lawyer Who Understands You

Protecting your family and your wishes as an LGBTQ+ individual requires the guidance and expertise of a lawyer who understands your unique circumstances and desires for your family. That’s where we come in.

While the law may still fall short in accommodating the diverse family structures and dynamics that exist today, we understand that every family is different, and we know how to craft a custom plan that not only protects your loved ones and ensures your wishes are honored, but also embodies the values, beliefs, and stories that make your family unique.

If you want to make sure your LGBTQ+ family will be cared for and supported no matter what the future holds, schedule a free 15-minute discovery call to learn more about how I serve LGBTQ+ families differently than other lawyers. Then, check back next week when I cover part two of this blog.

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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If you’re going to take investment and estate planning advice from anyone, Warren Buffett is likely one you want to consider. As one of the most successful investors in history, his track record speaks for itself. However, his wisdom goes beyond picking stocks and making money.

At this year’s Berkshire Hathaway annual shareholder meeting, Buffett shared several pieces of financial advice but also provided insights on the importance of personal growth and estate planning when seeking to grow wealth. While many of us may feel overwhelmed by the thought of estate planning or building our wealth, Buffett’s advice reminds us of two key but simple steps we can take to create financial and generational wealth.

Focus on Your Human Assets to Build Your Wealth and Your Legacy

In almost every interview Buffett provides, he stresses the importance of investing in yourself. “The best thing you can do is to be exceptionally good at something,” said Buffett. “Whatever abilities you have can’t be taken away from you. They can’t actually be inflated away from you. So the best investment by far is anything that develops yourself, and it’s not taxed at all.”

Your earning power is the greatest determiner of your financial well-being, and the one thing you can count on no matter what’s happening in the external economic environment. If you have a highly valuable skill, and you know how to get paid well for that skill, market your services, and sell your services to those who need them, you’ll never have to worry about money. That doesn’t mean you won’t worry about money; but it does mean you don’t have to worry about money.

If you don’t have a highly valuable skill or if you have a skill that will soon be replaced by AI, that’s the first place for you to invest. You may need to get retrained, or uplevel your skills to be more human or relational so you can use AI, but not compete with it, and all that may take investment. Don’t shy away from investing in additional training to get even better at your service, or even get the additional support to learn to market and sell your services. Those investments will always pay off, whereas the stock market is out of your control.

Investing in yourself not only leads to financial success, but also personal fulfillment and a clear sense of purpose that will organically become your legacy. At the end of the day, you likely won’t be remembered for your financial success (though it’s a nice bonus if you are!). Even Warren Buffett, who is renowned for his wealth and investment skill, is even more often acclaimed for his wisdom, humility, and generosity than for his money.

Raising Kids Well is Key in Effective Wealth Planning

During a Q&A session with an estate planning attorney, Buffett stressed the importance of talking to your children about your estate planning well before your death. Buffett stated, “If the children are grown when the will is read to them and it’s the first they’ve heard about what the deceased thought about things, the parents have made a terrible mistake.”

Leaving your family in the dark about your personal and financial wishes until you die or become incapacitated due to an accident or illness can lead to large amounts of confusion and conflict among family members. If you don’t want to leave a mess, don’t wait to talk to the people you love.

As we recommend and build into our Life & Legacy Planning Process, Buffett recommends involving your heirs in the planning process. By doing so, you can ensure that everyone is on the same page and that your wishes are understood and respected far in advance. Additionally, this provides an opportunity to discuss your values and beliefs with your heirs, which can have a lasting impact on their lives. Buffett expressed that if you really want your heirs to act responsibly with their inheritance, you must live out your values and instill them in your heirs.

How to Start the Conversation About Estate Planning With Your Heirs

So how do you start the conversation about estate planning with your heirs? We recommend you do it directly and with an invitation to meet with you and your lawyer together. This is something we love to do with our clients, and we’d love to support your family in this way too. You might say something like: “I want to make sure that we’re all taken care of, both now and in the future. That’s why I’d like to talk to you about my wishes for our family resources, and how we can ensure that everything is handled smoothly when I can’t be here.”

If your loved ones aren’t immediately open to having a conversation about estate planning with you or are resistant to how you want your assets managed after your death, don’t worry. Talking about estate planning can be uncomfortable at first, but as you normalize the topic, the conversation will become easier and more open.

Or, if you’re worried that filling your heirs in on what they’ll receive will cause harm, please call us at (858) 427-0539. This is a place we can really help by supporting you to get prepared to have a conversation with your heirs and also supporting them to be ready to receive their inheritance.

When you talk money and inheritance with your heirs during your lifetime, you have the opportunity to truly pass on not just the money, but your values too. If you wait until you’re incapacitated or have died, it’s simply too late.

Finally, if you’re the future heir of a parent who hasn’t yet talked with you about estate planning, you can jumpstart the conversation by getting your own planning done, and then talking with your parents about the choices you made, why you made them, and letting them know you’d like to help them feel comfortable talking to you about the choices they’re making. If you aren’t sure how to handle any of this, please reach out to us at (858) 427-0539.

Thoughtful Guidance to Build Your Personal and Financial Life and Legacy

Warren Buffett’s advice on building and preserving wealth is timeless and valuable no matter the size of your family or your estate. By involving your heirs in your estate planning and investing in yourself, you can set yourself and your loved ones up for long-term financial success and create a legacy that spans not only through your life but through the generations that follow you.

If you aren’t sure where to start or how to talk about your wishes with your family, reach out to me. I’d be happy to guide you and your loved ones through the process of creating an estate plan that focuses on the needs and hearts of everyone it involves, so you can build a life you love today knowing that your loved ones and your community will be impacted by your legacy for years to come.

To learn more about my heart-centered approach to estate planning, reach out to me to learn about my Family Wealth Planning Session process.

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