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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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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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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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July is National Family Reunion Month and the perfect time to reconnect with family from near and far, share life’s updates, and reminisce about the wonderful memories you share together. If you’re getting together with family this month, it’s also a perfect time to talk to your loved ones about your shared goals, family resources, and the legacy you want to leave behind for the next generation.

You might think that estate planning is too somber a topic for a happy family reunion, but it can actually be an opportunity to bring you closer to your loved ones by giving everyone time to speak openly about their wishes for the family and can help everyone feel unified by working together toward the family’s future wellbeing.

Not sure how to bring up estate planning in a way that makes your family feel empowered? Keep reading to learn how to navigate the conversation without scaring away party guests!

Invite Your Loved Ones to the Conversation In Advance

No one wants to be that party guest who won’t stop talking about a sad news story or their personal troubles. Don’t get me wrong, it’s important to share the good and the bad with our loved ones, but pushing a mellow topic at a happy occasion is sure to dampen the mood and turn off the other guests.

Instead of bringing up the topic on the spot at your reunion, reach out to your relatives in advance and let them know that you’d like to set aside some time during the reunion to talk about your family’s legacy and how you can work together to take care of each other in the future.

Everyone likes to feel they’re being looked after and that their input in family matters is wanted and valued. Any ongoing concerns with your family, such as an aging relative’s declining memory or your upcoming knee surgery, are great lead-ins to bring up the topic in a way that feels natural.

If anyone is resistant to the idea of talking about estate planning, don’t push them. Instead, keep your energy warm and empathetic, and keep the invitation to the discussion open in case they change their mind.

Be Vulnerable and Explain Why Estate Planning Is Important to You

Assure everyone that the goal of the conversation is to make sure the family’s future security and well-being are taken care of no matter what happens – not to try and pry into anyone’s finances, health, or relationships. Instead, it’s about ensuring everyone’s wishes are clearly understood and respected, and not about finding out how much money someone stands to inherit.

Be sure to tell your family that talking about these issues now is also a good way to avoid future conflict and expense. When family members don’t clearly understand the reasoning behind one another’s planning choices, it’s likely to breed conflict, resentment, and even costly legal battles in the future.

Instead, tell your loved ones that you’d like to start the conversation about estate planning early and continue it as an open dialogue with the whole family for years to come. Positioning the conversation as one about planning for the future health and well-being of your family rather than as a conversation about dividing assets at someone’s death will help your relatives will feel more at ease, and some may even be eager to be involved in the conversation.

If you haven’t yet handled your own planning, now would be a great time to start. You can have the conversation with your loved ones by sharing about your personal experience and how handling your own estate planning has helped you to think more deeply about what matters to you, how you want to live out the rest of your life, and how you’d love to share this experience with your whole family.

Set a Time and Place for the Conversation

Rather than trying to find the right moment to bring up the topic, set a time and a place with your family in advance of the get-together. Be sure to schedule a specific time, but don’t feel like the meeting invite needs to sound too serious or foreboding. Asking if everyone can meet around the fire pit at 6:00 pm or meet at your house for coffee at 9:00 am is perfect.

I also recommend giving everyone an end time for the discussion as well. By doing this, your loved ones will know what to expect and won’t feel worried that the conversation will eat up too much of their time.

Setting boundaries for the conversation will also help motivate members of your family to participate and stay on topic.

To make things even easier, come to the meeting with a list of the most important points you’d like to cover and encourage your family members to do the same. But keep the list short so you don’t go over the time you’ve set aside for the discussion.

If there are too many things to cover in the time allotted, that’s okay. Talk about the most important topics and agree as a family to get together again on a specific date either in person, on the phone, or via video chat to continue the discussion and flesh out any details that were left for later.

Focus on Your Family’s Legacy

While talking to your loved ones about estate planning, remember to talk about your family’s legacy and your desire to pass on your cumulative stories, memories, values, and lessons to the younger generation and beyond. A family reunion is a wonderful way to come together, and estate planning can be an amazing tool for memorializing your family’s most important assets – your human assets.

You and your loved ones have generations of stories, traditions, and triumphs worth protecting and celebrating. Let your family know that estate planning isn’t just about planning for death – it’s also about planning ahead so you can enjoy your life to the fullest knowing that everything and everyone you love will be taken care of if you become ill or when you die.

For my clients, it’s also a unique opportunity to capture your family’s most valued memories and stories through a process I call the Family Wealth Legacy Interview. During the interview, I help my clients record the things that mean the most to them and the things they want to pass on that are far more valuable than money.

What would be more precious than being able to share and watch this recording of our loved ones at future family reunions for generations to come?

If you would like more advice on how to talk to your family about estate planning or are interested in beginning your own estate planning journey so you can ensure your family is taken care of and share your personal planning experience with your family, give me a call at (858) 427-0539.

It’s my passion to guide you through every stage of planning your life and legacy, and when there’s an opportunity for an entire family to come together on their estate planning goals, love and happiness are bound to follow

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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Including a trust as part of your estate plan is a smart decision. It allows you to avoid probate, maintain privacy, and distribute your assets to your loved ones while also providing them with a lifetime of asset protection, if you choose it for them. But, here’s the thing you might not know, and is critically important to remember: simply creating a trust is not enough. For your trust to work, it has to be funded properly and may need to be updated over time.

Funding your trust means transferring ownership of your assets from your own name into the name of your trust. This can include bank accounts, investments, real estate, and other valuable possessions.

By funding your trust properly, you ensure your assets are managed according to the terms of your trust and will be distributed according to your wishes when you die or if you become incapacitated.

But, if you fail to fund your trust, it becomes nothing more than an empty vessel. Your assets won’t be protected or distributed as intended, at least partially defeating the purpose of creating a trust in the first place! While your assets can still get into your trust and be governed by your trust after your death, that means that your family still goes to court to get your assets there, and that’s a costly endeavor.

To make sure your trust works for you, avoid these funding fiascos and work with an attorney who will ensure that everything that needs to get into your trust does.

Forgetting to Update Your Account Beneficiaries

Many people mistakenly believe that a will or trust alone is enough to dictate how their financial accounts should be distributed after they die. However, this isn’t the case. Without proper beneficiary designations on your accounts, your wishes may not be honored and your assets could end up in the wrong hands.

Remember, the beneficiaries you designate on your accounts supersede any instructions in your will or trust, so this step is vitally important. 

Take a moment to review your various accounts, such as bank accounts, retirement plans, and life insurance policies. Ensure that each account has your trust named as your designated beneficiary, unless you’ve made different plans for that specific account.

When you’re working with a lawyer, make sure your lawyer has a plan for each one of your beneficiary-designated assets, communicates that plan to you, and that the two of you decide who will handle updating your beneficiary designations. Then, make sure you review your beneficiary designations annually. In our office, we support our clients to do all of this with well-documented asset inventories, and a regular review process built into all of our plans.

Your Attorney Didn’t Move Your Home Into Your Trust

For many of us, our home is our most important and valuable asset. But if your attorney doesn’t deed your home into your trust, your home won’t be included under the terms of your trust if you become incapacitated or pass away.

That means your home could end up going through the long and expensive probate court process in order to be managed during an illness or passed on to your loved ones after you die. If you own a $300,000 home, that means your family could lose up to $15,000 or more just to transfer your home to your trust and then distribute your home pursuant to the terms of the trust – and that’s not including any other assets that would have to go through probate.

A knowledgeable estate planning attorney shouldn’t miss this step, but it happens. And if you’re using a DIY service online to create a trust without the help of any attorney at all, it’s bound to happen!

That’s why it’s so important to work with a lawyer who takes the time to make sure every asset you own is in your trust before they say their farewells.

Not Reviewing Your Plan and Accounts Every Three Years

You might wonder how not reviewing your estate plan every few years could really make your plan worthless. Well, the good news is that failing to review your plan is unlikely to completely eliminate the benefits it provides you because an estate plan is made up of a number of moving parts, not just a will or a trust.

But, failing to keep your financial assets up to date and aligned with your estate plan can result in huge issues for you and your family and can even make the trust you invested in worth little more than the paper it’s printed on!

That’s because your trust can’t control any assets that don’t have the trust listed as the owner or beneficiary. By reviewing your accounts every 3 years, you can help catch any accounts that don’t have your trust listed in this way.

For example, it’s very common for clients to open a new bank account and forget to open the account in the name of their trust or add their trust as a beneficiary.

Thankfully, by comparing my clients’ financial accounts to their estate plan at least every 3 years, I’m able to catch simple oversights like this that could cause their assets to be completely left out of their trust.

Make Sure All of Your Assets Are Included In Your Plan with Help From Your Personal Family Lawyer

Getting your legal documents in place is an important step, but it’s equally important to know that the documents themselves are not magic solutions (as magical as they may seem!). Merely creating a trust or naming beneficiaries on your accounts doesn’t guarantee that your wishes will be carried out unless all of the pieces of your plan are coordinated to work together.

If you aren’t experienced in the area of estate planning, trying to coordinate all these pieces yourself can be a recipe for disaster.

That’s why I work closely with my clients to not only create documents but to create a comprehensive plan that accounts for all of your assets and how each one needs to be titled to make sure your plan works for you the way you intended.

Plus, I offer my clients a free review of their plans and financial accounts every three years to ensure that their plans accurately reflect their lives and their wishes for their assets and loved ones.

If you want to know more about my process for funding your trust and making sure nothing is ever left out of your plan, reach out to me at (858) 427-0539. 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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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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Vacations are a time to relax, unwind, and create beautiful memories with your loved ones. But before you set off on your adventure, it’s essential to ensure that your legal affairs are in order so you can fully relax during your travels.

Can’t imagine doing one more thing before you take some much-needed time away?

Don’t worry! I’m here to guide you through these important tasks so you can enjoy your vacation worry-free. Plus, these steps only take a little time to complete and can provide you with peace of mind knowing that you have made proper arrangements if the unexpected happens to you or your family while you’re away.

Let’s dive in! (No pool puns intended!)

1.     Create Powers of Attorney

Whether you’re traveling overseas or just a few hours away, it’s crucial to have powers of attorney in place for both health care and financial matters before you leave.

A healthcare power of attorney designates someone you trust to make medical decisions on your behalf if you become incapacitated during your vacation. While no one plans to become incapacitated, a slip on the diving board, an injury while boating, or a parasite caught from local cuisine can happen.

Similarly, a financial power of attorney empowers a trusted individual to manage your financial affairs for you. With a financial power of attorney, you can give someone the authority to manage your investments or pay your bills away while you’re gone, or just have it as a safety net in case you become incapacitated or can’t be reached while traveling.

By having these documents prepared ahead of time, you can ensure that no matter what hiccups you run into on your travels, your wishes for your health will be respected and your financial affairs will be handled according to your instructions, even when you’re away.

2.    Nominate Permanent Legal Guardians for Your Kids

As a parent, naming a permanent guardian for your children is one of the most important decisions you can make. While it’s a difficult topic to consider, designating a permanent legal guardian ensures that your children will be cared for by someone you trust if the unexpected happens while you’re on vacation.

It’s a good idea to take a little time to choose someone who shares your values, loves your children, and is willing to take on the responsibility of raising them. However, anyone you trust to raise your kids is a better choice than leaving the decision up to a judge who doesn’t know you or your family.

By documenting your chosen guardian, you make sure your children will be cared for by someone who loves them and knows them if the unthinkable happens to you, and you can always update your choice at any time in the future as your children and their relationships change over time.

3.    Designate Short-Term Guardians for Your Kids

In addition to naming a permanent guardian, it’s equally crucial to designate short-term legal guardians for your children. Short-term guardians step in when the permanent guardian lives far away, or in case of a short-term, immediate emergency.

You can give multiple people the authority to be your child’s short-term guardian, including relatives, neighbors, or nannies. When planning a vacation, it’s a good idea to name any adults who your child will be staying with while traveling with you or staying home.

For example, if your child is spending the week at their grandparents’ house, you should name their grandparents as short-term guardians and give them medical power of attorney for your minor child. If your child is traveling with you, naming any adult travel companions as short-term guardians and giving them medical powers of attorney is a wise choice in case a guardian or medical POA is needed for your child while on your trip.

Discuss this arrangement with the individuals you’ve chosen and make sure they’re aware of their roles and responsibilities. By establishing short-term guardians and medical POAs, you can ensure that your children are well-cared for in the event of an emergency.

4.    Tell the People You Trust About Your Plans

Last but not least, make sure that the people you trust know about your travel plans and the preparations you’ve made, including where you’ll be staying and how to get in contact with you.

Let them know about any legal documents you’ve put in place, and how to access them if needed. Share this information with your chosen guardians, family members, and close friends. By keeping everyone in the loop, you can ensure that your wishes are known and your loved ones can act swiftly and effectively in case of an emergency.

You should also provide your loved ones with my contact information in case they need copies of your powers of attorney or kids’ guardianship documents or need them delivered digitally.

Estate Planning for The Life (And Vacation) You Deserve

As you pack your bags and prepare for your vacation, don’t overlook the importance of handling your legal affairs. Taking the time to create powers of attorney, permanent and short-term legal guardians for your children, and communicating your plans to trusted individuals can provide you with peace of mind and save your family incredible stress if there’s an emergency while you’re away.

To ensure that these documents are prepared correctly and in accordance with your state’s laws, I encourage you to contact me at (858) 427-0539. I start by guiding all of my clients through a unique process I call the Family Wealth Planning Session. During the session, I get to know you and your family on a personal level and review exactly what you own and who you love to make sure everything and everyone is protected and cared for in the best way possible when you pass away or if you become incapacitated.

If we find that things wouldn’t go the way you wanted if something happened to you, I can help you create a custom estate plan that leaves no rock unturned.

Don’t let the joy of vacation be overshadowed by the “what if’s.” Contact me today 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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Get ready for an interesting twist in the world of legal and business news. You may already be familiar with the upcoming Corporate Transparency Act, set to kick in next year. If you aren’t, it’s time to get in the know because it could impact you, and if it does, you’ll need support.

Starting January 1, 2024, every small business will be obligated to submit an annual report revealing the names of their major owners. Now, here’s where it gets intriguing. If you happen to have a trust that holds partial or full ownership in a business, that business might be required to disclose private details about your trust, including details about the name of your trustee or beneficiaries, in your annual corporate report to the government. But how do you figure out if your trust needs to be reported?

What Is the Purpose of the Corporate Transparency Act and What Does It Require?

Enacted in 2020 and set to take effect on January 1, 2024, this Act aims to tackle money laundering and terrorism financing schemes involving “shell” corporations—companies that exist merely on paper and don’t engage in actual business or trade (like “Vamonos Pest” in Breaking Bad).

Under this Act, small companies will now have to disclose the names of any owners who hold 25% or more ownership in the company, as well as any individuals who exercise significant control over the company’s activities. The goal is to identify and expose shell corporations that are frequently involved in money laundering, as such illicit activities tend to occur within small businesses rather than large corporations.

To comply with the requirements, businesses must submit an annual report to the Financial Crimes Enforcement Network (FinCEN) containing the following details about each owner or controller:

  • Business name
  • Current business address
  • State in which the business was formed and its Entity Identification Number (EIN)
  • Owner/controller’s name, birth date, and address
  •  Photocopy of a government-issued photo ID (such as a driver’s license or passport) of every direct or indirect owner or controller of the company

Failing to file an annual report could result in serious repercussions, from paying a fine of $500 for every day the report is late up to imprisonment for two years.

Does My Trust Need to Be Disclosed?

Since a trust can own a business or a share of a business, trusts are also involved in the Corporate Transparency Act, but under more limited circumstances.

So how do you know if your trust information will need to be disclosed?

The new rule applies to any company that is created by filing a formation document with the Secretary of State or a similar office, such as corporations and limited liability companies (LLCs).

Non-profits, publicly traded companies, and regulated companies like banks and investment advisors are exempt from the rule. Large companies are also exempt if they have 20 or more full-time employees in the US and generate $5 million in sales. So, if your trust owns a share of any of these types of companies, it doesn’t need to be reported.

If you have an LLC or corporation you created but aren’t actively using to run a business, that company is exempt from reporting due to its inactivity, so your trust wouldn’t be reported in that instance, either.

But if your trust owns a share of a small, for-profit company (like a small family business or local investment), the beneficial owner of the trust will need to be reported to the Financial Crimes Enforcement Network.

The beneficial owner is the person or people who benefit from the trust or have the power to make major decisions about the trust assets. Depending on how your trust is written, this is usually the trustee, but it can also be the beneficiaries of your trust.

Make sure to contact us at (858) 427-0539 to have your trust reviewed before 2024 to make sure you report the correct beneficial owner of your trust.

Does the Corporate Transparency Act Affect My Trust’s Asset Protection?

One of the best things about creating a trust is that it provides you and your family with an extra level of privacy and provides asset protection from divorce or lawsuits for your trust’s beneficiaries after you’re gone.

Thankfully, having a trust that owns a business or a share of a business doesn’t take away from the trust’s ability to provide asset protection to your heirs.

While the new Corporate Transparency Act rule reduces some of the privacy benefits that come with owning assets in a trust, the names of your trust, trustees, and beneficiaries aren’t made public and are only used by the government for the specific purpose of investigating financial crimes.

Because of this, trusts remain an excellent tool for providing privacy, avoiding probate, and setting up your family with a lifetime of asset protection and financial security.

Guidance for Your Family Now and For Years to Come

If you have a trust or are curious about creating an estate plan for your family, you may be wondering how changes in the law will affect your plan in the future and how you can possibly plan for them.

Unlike many estate planning attorneys who serve their clients once and never see them again, I see estate planning as a life-long relationship. Your life and the world around you are constantly changing, and your estate plan should too.

That’s why I keep my clients informed about any changes in the law that may affect their estate plan and offer to review your plan for free every three years to make sure that your plan still works for you just as well as it did on the day you created it.

If you’re ready to create a custom plan for the ones you love or have questions about how the Corporate Transparency Act might affect you, give me a call today.

I can’t wait to serve you now and for years to come.

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