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    Joshua and Laura Meier Newport Beach Trust and Estate Planning Attorneys Focused on Helping Families with Young Kids
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    Category Archives: Inheritance

    Family Financial Traditions

    With the holidays right around the corner, many of us are looking forward to celebrating our favorite family traditions.  But have you ever familybackbayoutingthought about having family ‘financial’ traditions? Most of our initial exposure to money management comes from our family upbringing. For parents who model good money management, they are passing on family traditions that go well-beyond Christmas morning pancakes.

    Don’t Just Give Your Kid an iPhone or Car

    The greatest motivator there is for a teenager is freedom and their path to that freedom is first an iphone, and eventually a car. When we just buy our kids an iphone or car, rather than supporting them to learn to earn money to pay for these things, we overlook one of the greatest opportunities we have for helping our kids to become self-sufficient.

    If you have an extra phone or car available for your child, consider requiring them to pay for the monthly data bill, or for the car’s gas and insurance.  By requiring our kids to contribute, we prepare them for a life of independence, which is a far better gift than any material item.

    Play the Stock Market With Your Kids

    Introducing children to the stock market is not a far-fetched idea. There is plenty of information available that can be understood by kids. First off, children are very aware of products — toys and games like the CashFlow Board Game, for example. They can be introduced to the fact that the companies that make these toys are owned by people like their parents, who hold shares of stock. From there, they can be shown the daily stock prices and how they change. As they grow older, your children can begin making small stock purchases and become comfortable with investing.

    Family Vacation Saving

    Family vacations are usually looked back on fondly and may even be considered family traditions. Saving during the year, by children as well as parents, for an annual vacation can also be part of that tradition and help teach good money management techniques.

    Whether it be from jobs kids have like grass cutting or babysitting, or just from allowance savings, it will serve children well later in life to have learned the value of setting money aside for a deferred pleasure.

    Charitable Giving

    Teaching kids to be charitable helps them become aware of the needs of others.  Introducing kids to putting money in the pot at church, or donating clothes to the local homeless shelter, gets them in the habit of giving from an early age.

    If you give to charity regularly, you may want to consider setting up a private foundation that can be used to consolidate your giving plus be used to educate your children about investing (all of the assets of the charitable foundation need to be invested) and giving.

    Estate Planning

    Involve your children in your estate planning as soon as they are old enough to understand. They will feel secure knowing you’ve planned well for what would happen to them, if and when something happens to you. Have them meet your lawyer, tell them about who would be their guardian, or how they will receive their inheritance and when. And, begin to talk now about how you can increase the overall family wealth you have and how you want to be cared for by them at the end of your life.

    Early Entrepreneurship

    Supporting your children to think like entrepreneurs can be one of the greatest gifts you give them. As the world shifts, we are moving into a new economy in which reliance on traditional jobs no longer provide the security they once did. Technology will replace many of the jobs people relied on in the past and the only real security going forward is resourcefulness, creativity and community, all of which is learned via the path of entrepreneurship.

    One simple way to encourage entrepreneurship for small children can be as simple as setting up a lemonade stand.  For older children, encourage them to babysit or tutor as a way to make money.

    For more financial and estate planning guidance, contact your Newport Beach Trust and Estate Planning Law Firm. We help families secure their future through proper estate planning.  Call our Client Services Director, Bonnie Johnson, at (949) 718-0420, to receive a free copy of Laura Meier’s #1 best-seller Good Parents Worry, Great Parents Plan, when you schedule a planning session with a Meier Law Firm attorney.

    “And the Estate Planning Oscar Goes To…” Lessons on Film About Family

    The film “Black Heirlooms” has not received any Oscar nominations. It was made by 32-year-old Amanda Brown, whose grandmother’s long-term illness ripped her once close-knit family apart for lack of long-term care planning. grandmother

    Profiled recently in the New York Times, the film is “about the extended uncomfortable, intergenerational conversations that we do not have enough of and that her family did not have until it was too late.”

    Vonley and Edna Mae Royal raised eight children and saw them all graduate from college. Vonley had several businesses that provided a small inheritance for his wife after he died. Following his death, the Royal children tried to get Edna Mae to talk about how she wanted her estate divided after she died. However, when she proved resistant to such a discussion, her children backed off. “We didn’t want to give her the impression that we were trying to gain some kind of advantage,” said her son Gary.

    Edna Mae had a stroke in 2009 and her children soon became divided on how she should be taken care of once she was discharged from the hospital, whether or not she could make that decision for herself and who should have power of attorney over her affairs. The family eventually wound up in court, exhausting any inheritance they might have had on legal fees and dividing many family members.

    Today, 90-year-old Edna Mae is taken care of by five of her eight children; the other three do not speak to their siblings and rarely see their mother. The inheritance that Edna Mae worked so hard to maintain for her own care and her children’s inheritance is gone. In the film, her granddaughter Amanda wonders, “Now that the family is divided, what was the point of working so hard to keep everything intact?”

    If you have been putting off this conversation in your family, we can help. Executing a plan for your own health care can be extremely fulfilling, knowing that you are making your wishes known and alleviating family of the burden of guessing the right health care choices for you.

    If you would like to have a talk about estate and long-term care planning for your family, call our office today to schedule a time for us to sit down and talk about a Family Wealth Planning Session.  We can not only guide you through the creation of your own plan, we can also assist you with that all-important family discussion.

    Newport Beach Families Should Treat Each Child Uniquely When Planning Their Estate

    parent with more than one child knows that not all kids are created equal…And
    when it comes to estate planning, it's time to think hard about what each child
    needs and what you've done for each one already.

    Young Kids Playing SchoolIt’s never easy to make sure
    your children are equally supported. After all, they have different interests
    and gifts. Unfortunately, this task is no easier with adult children,
    especially when it comes to your estate planning.

    This subject was taken up by Business Insider in a recent article
    titled “Not Every Good Estate Plan Treats Its Heirs

    Sometimes you can divide
    everything equally and everyone is happy. Sometimes, however, the “even-Steven”
    approach may not be the best approach in every situation. For example, the
    recipients may have very different needs, some may be more deserving than
    others, or the estate assets may not be subject to easy division.

    Have you ever marveled at how
    children who grew up under the same roof and eating at the same table can be so
    different? It can be as simple as the differences between two individuals: one
    adult child is wealthy while the other is a starving artist; one child is
    disabled or otherwise needs medical aid while the other is as healthy as a

    Then, there are the other kinds
    of inequities. For example, one child has received financial help from you over
    the years while the other toughed it out. The list of differences can go on and
    on, but it’s worth a look at the selection pulled together in the original
    article before taking a good look at your own plans and family dynamics.

    In so many words, life is
    complicated, and family can be complicated with it. When it comes to planning
    for your estate, there are bound to be any number of conditions you need to
    mull over. As a result, you might need to proportion and tailor the
    inheritances responsibly. When you do, be sure to consult with the attorneys at Meier Law Firm to help guide you.

    Contact your Newport Beach
    estate planning attorneys at Meier Law Firm to discuss all of your estate
    planning needs

    Reference: Business Insider
    (October 26, 2012) “Not Every Good Estate Plan Treats Its Heirs

    The Inheritance Blues – Lessons Newport Beach Families Can Learn From The Whitney Houston Estate

    The chief risk is always that the money will
    impact a kids’ motivation and self-reliance. “Ideally one would set aside
    enough funds to allow our family members to do anything they could do, but not
    so much that they could do nothing.”

    You give an inheritance to your
    younger loved ones and future generations to bless them and not to curse them.
    Once again, our object lesson is another celebrity estate. This time the
    decedent is Whitney Houston.

    The inheritance left by Whitney
    Houston is chronicled by CNBC in an
    article titled “When $20 Million Is Too Much to Leave the Kids.” Without delving too much into the
    case, the passing of Whitney Houston has set her 19-year-old daughter, Bobbi
    Kristina Brown, up to receive a staggering $20 million. Recently, Houston’s
    mother and manager, who are the executors of the Houston estate, have filed a
    petition to restrict the inheritance payments on the basis that these were
    simply too large. According to the petition, such inheritance payments would
    make Bobbi too easy a target for predators, or worse, enable Bobbi to devolve
    into a bad lifestyle. Taking the petition at face value, this consequence would
    not have been Whitney’s intention.

    Regardless of Whitney’s
    intention, the article recommends an excellent alternative that she could have
    employed to protect the inheritance from Bobbi and Bobbi from the inheritance.
    This alternative is called a “discretionary trust.” The article also provides
    some practical pointers, like teaching your children financial responsibility
    at an early age and reviewing (and revising) your estate plan from time to

    Contact your Newport Beach estate planning attorneys at Meier
    Law Firm to discuss all of your estate planning needs

    Reference: CNBC
    (October 19, 2012) “When $20 Million Is Too Much to Leave the

    Reporting a Gift or Inheritance from Foreign Sources: The IRS Wants to Know!

    about foreign gifts and inheritances? These rules aren’t as well publicized but
    the stakes are huge.

    Have you received a gift or
    inheritance from a loved one living in a different country? The IRS wants to
    know about it, and failing to notify them could cost you. As pointed out in an
    article at Forbes, “Beware IRS Reporting Of Foreign Gifts Too,”
    you will need to file an IRS Form 3520, Annual
    Return to Report Transactions with Foreign Trusts and Receipt of Certain
    Foreign Gifts
    , if you receive:

    More than $100,000
    from a nonresident alien individual or a foreign estate (including foreign
    persons related to that nonresident alien individual or foreign estate) that
    you treated as gifts or bequests; or

    More than $14,375 from
    foreign corporations or foreign partnerships (including foreign persons related
    to such foreign corporations or foreign partnerships) that you treated as

    You are required to report these
    bequests on Form 3520 when you actually or constructively receive them. Late
    reporting penalties are high – five percent of the gift’s value for each month
    the gift is not reported, up to 25 percent of the total value.

    Remember that income from abroad
    is taxable, and the IRS is looking at foreign accounts ever more closely under
    the Foreign
    Account Tax Compliance Act
    (FATCA). To learn more, read the Forbes article, “How
    to Report Foreign Gifts and Bequests to IRS
    .” Better yet, consult with Meier Law Firm for counsel on your individual circumstance.

    Reference: Forbes
    (August 13, 2012) “Beware IRS Reporting Of Foreign Gifts Too

    Inheriting a Non-Spousal IRA

    The rollover into a non-spousal beneficiary's receiving IRA (an IRA set up specifically to receive an inherited retirement plan distribution) must be accomplished via a direct (trustee-to-trustee) transfer that does not pass through the hands of the beneficiary (you).

    Inheriting non-spousal retirement funds can be very, very tricky. One mistake and boom! The IRS will descend with a vengeance.

    You can’t teach an old dog new tricks, but you can teach an inherited non-spousal IRA to “rollover” correctly. In fact, if you do not handle this basic financial transaction with care, then it will cost you.

    As with most tax moves, there is a wrong way and a right way.

    First, the wrong way. In former times you had no choice as a “non-spousal” inheritor of an IRA. You had to take the entire account balance as a “lump-sum” and take the tax hit. Similarly today, the result is the same if the money reaches you before it reaches an IRA trustee.

    Now, for the right way, as described in a recent article in SmartMoney titled Rolling Over Uncle Henry's 401(k). Essentially, you can let your inherited IRA spill over into a newly created IRA you establish to receive regular distributions from the inherited IRA. Note: the retirement funds you inherit cannot be accumulated tax-deferred in the newly created IRA, as under certain rules that apply to spousal IRA rollovers. In fact, you are required to make minimum withdrawals or face a 50% excise tax on the difference between what you should have withdrawn and what you actually did withdraw.

    For further guidance on the rollover “dance steps,” an article in Forbes is spot on. The article, titled IRA Rollovers – Let's Be Careful Out There, even reviews some recent court cases to illustrate the finer points of an entirely trustee-to-trustee rollover. Never let an IRA trustee of an inherited IRA write a check directly to you! Instead, instruct the trustee to talk to the new trustee of your newly created non-spousal beneficiary IRA to coordinate the transfer.

    Contact Meier Law Firm to discuss all of your estate planning needs.

    Reference: SmartMoney (August 9, 2012) “Rolling Over Uncle Henry's 401(k)

                      Forbes (August 2, 2012) “IRA Rollovers – Let's Be Careful Out There

    Estate Planning and Your Heirs – How Much Should You Disclose?

    Inheriting money would seem like one of life’s unabashed blessings: someone gives you a lump sum just for being you. For the rest of us, inheritors seem like a democracy’s version of royalty: born into a world of privilege we would love to know. Yet the inheritors I spoke to said they were ill equipped to handle the windfall and found that it quickly made them feel separate from their peers.

    While the decision to leave wealth to your loved ones is typically an easy one, more difficult issues can be what to leave, to whom, and how. To further complicate matters, you should be asking yourself a couple of questions. Should you talk to your loved ones now about your plans and their future inheritance? If yes, then how and when should you talk about the matters?

    Fortunately, The New York Times has addressed these circumstances with an article titled “What to Tell the Children About Their Inheritance and When.” Unfortunately, the article does not solve these inquiries for you. The questions of if, how, and when to inform your heirs are solely yours to resolve. They are entirely dependent upon your and your loved ones’ unique circumstances.

    Nonetheless, the article does provide firsthand accounts of others’ similar situations. It seems as if more and more heirs actually want to know what is going on, and some even need to know for various reasons. Either way, there are risks involved.

    A sensible approach would be to seek the counsel of your estate-planning attorney who undoubtedly can provide experience-based insights. It is prudent to learn from the successes and mistakes of others.

    Contact Meier Law Firm to discuss all of your estate planning questions.

    Reference: The New York Times (July 20, 2012) “What to Tell the Children About Their Inheritance and When

    Inheritance Uncertainties – A Generation Gap?

    Most young, wealthy Americans believe it's important to pass money on to their heirs. They may be disappointed to learn that their parents don't feel the same way.

    Are you planning to leave an inheritance to your children or are you expecting to receive an inheritance from your parents? According to a recent survey by U.S. Trust, as reported in Reuters, your answer may depend on your generation.

    The Reuters article, titled “Baby Boomers to kids: Inheritance? Maybe not,” reveals that among today’s older generations (a misnomer surely, as the study only surveyed those over age 46), there is an increasing tendency to lean away from leaving an inheritance to their heirs. In fact, roughly a third thought it would be better to leave their money to charity than to their children.

    On the other hand, three-quarters of wealthy adults under the age of 46 indicated that it was a priority to leave money for their children. Is it a generational gap? Perhaps that is an appropriate better question for sociologists.

    Statistics and sociologists aside, you really need to decide the best use of your own wealth for your loved ones and your charities. It need not be a mutually exclusive proposition. Intrafamilial communication can go a long way toward avoiding hard feelings at best, or litigation at worst.

    In the end, cultivating and maintaining positive family relationships is all about managing expectations.

    Contact Meier Law Firm to discuss estate planning for your family and to learn about our unique approach to protecting families no matter what life brings.

    Reference: Reuters (June 18, 2012) “Baby Boomers to kids: Inheritance? Maybe not

    Inheritance Planning Considerations for the Inheritor

    While not always easy to think about, inheritances are a part of the financial pictures for many baby boomers. Handling an inheritance sometimes requires thought and a game plan, and it is a topic that can be too easily set aside to be dealt with in the future.

    An inheritance can be a blessing or a curse. Proper planning, however, can tilt the odds in favor of the former, rather than the latter.

    “Inheritance.” The word alone is packed with emotion. Whether you are planning to leave an inheritance or planning to receive one, there are weighty considerations to be made. In fact, the prospect of an inheritance presents the perfect opportunity for significant intergenerational dialogue about the family wealth.

    If you are looking for some practical guidance about how to manage an inheritance, a Forbes article offers some timely advice. The article, titled “How To Manage An Inheritance,” suggests four matters every prudent inheritor should consider regarding his or her inheritance: Make it a part of your plan; Don’t ignore retirement accounts; Have a tax plan; and Disclaim.

    Interestingly, the last of the four considerations, Disclaim, actually involves “giving up” the inheritance in whole or in part before you actually inherit it. To effectively disclaim an inheritance (or a gift), there are and specific steps you must take. As with any complex estate and tax issues, contact Meier Law Firm early rather than later.

    Reference: Forbes (April 19, 2012) “How To Manage An Inheritance

    Old and Young Differ on How Assets Should be Distributed

    The heads of ultra-high-net-worth families often have different views of how money should be bequeathed than those who will inherit it, according to a recent study.

    For every planner considering the inheritance to leave and the arrangements to make, there is also a would-be inheritor with their own thoughts and strategies. As if figuring out your own plans and ensuring that they fall into place without a hitch weren’t difficult enough, it might also be necessary to contend with the would-be inheritor.

    According to a new study out of Morgan Stanley Private Wealth Management and Campden Wealth entitled, "Next-Generation Wealth: The New Face of Affluence,” and as reported on over at Private Wealth Magazine, there is a tangible divide between the heads of today’s high-net-worth families and their inheritors.

    The Private Wealth article, titled “In Rich Families, Old And Young Differ On Inheritance Issues, Study Says,” found a disconnect between the heads of families and their thirty-something inheritors. On the other hand, inheritors who are age 40 and older generally have either more involvement in the family wealth or greater complacency.

    As for those thirty-something inheritors, the study reveals them to be an increasingly discontented bunch:

    “Of the respondents aged 30 to 39, one quarter said they were not satisfied with their families' investment decisions and 43% disagreed with the wealth transfer plans. This compares to 84% of those in their 40s who said they have a high degree of satisfaction with the wealth transfer plans.”

    Statistics aside, if you are passing wealth to a new generation, you might want to take into account their hopes and intentions. After all, planners increasingly want to leave more than a mere financial legacy. If you want the inheritance you leave to carry your values and insights, then plan and communicate.

    Contact Meier Law Firm to discuss your estate planning goals.

    Reference: Private Wealth (May 10, 2012) “In Rich Families, Old And Young Differ On Inheritance Issues, Study Says

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