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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: Trusts

    Advice on Wills: Should Each Child Get the Same?

    *This article originally appeared on Investopedia.com. Laura K. Meier. Esq. was interviewed and contributed to this article.*

    So when does it make sense to leave each of your children the same inheritance, and when does a different arrangement make more sense? And how might each choice affect sibling harmony and whether your wishes are carried out as you intended?

    When to Do Equal Amounts

    If there are three children, each will get one-third of the remaining estate after both parents have passed away.

    “It makes sense for each child to get the same inheritance when each child has similar needs and is similarly situated in life, each child has received similar support in the past from their parents, and each child is mentally and emotionally capable and responsible,” says Laura K. Meier, an estate planning attorney in Newport Beach, Calif., and the author of “Good Parents Worry, Great Parents Plan – Wills, Trusts, and Estate Planning for Families of Young Children.”

    For example, if your children have all completed college (with you paying their tuition) and no longer rely on you for financial assistance; if no child has a handicap or serious illness; and if all have demonstrated that they’re responsible with money, it’s logical to divide your assets evenly among them.

    If your bequests include real estate and other tangible assets, you will need to determine the dollar value of each asset and figure what makes the most sense to leave to each child. Consider the common situation where children are scattered across the country. “If one child always loved the primary house in Connecticut and still lives nearby, it could make sense to bequeath it to him or her,” says Eric Meermann, a certified financial planner and portfolio manager with Palisades Hudson Financial Group in Scarsdale, NY. Another child, who lives in Florida, could inherit the beach house in Boca. “Any differences in the values of the properties could be made up in cash or other assets,” he says.

    There are also less pleasant reasons to leave an equal inheritance, even if you feel one or more of your children don’t deserve it: Doing so can help avoid the costs of conflict, both emotional and financial. Merely from a litigation standpoint, the best way to decide is to weigh the likelihood of a child dragging an estate through litigation, says Philip Ruce, an estate planning attorney with Stone Arch Law Office in Minneapolis. A lawsuit “is financially and emotionally draining for your family and for your estate,” he says, and will “cause some of your assets to end up in a different place than you had hoped – in lawyers’ pockets.”

    When to Do Different Amounts

    Leaving each child an equal piece of the pie doesn’t always feel right. Perhaps one of your offspring is acting as your caregiver, and you want to reward him or her for that devotion or make compensation for lost time and wages, says Candice N. Aiston, an estate planning attorney with Aiston Law in Portland, Ore.

    Or perhaps you’ve given one child considerably more money during your lifetime than you’ve given to another: say, $50,000 for a wedding, grad school or a down payment on a house. In this scenario, if you would otherwise leave your two children equal inheritances of $200,000 apiece, you would instead leave $175,000 to the child you previously gifted money to and $225,000 to the child you didn’t. This distribution follows the equitable, not equal guideline.

    If you have a child who cannot care for him or herself, you may want to leave most of your estate to provide for that child’s care through a special needs trust, Aiston says. A disabled child may need income support to meet basic living expenses and funds to pay for ongoing medical needs. Siblings will likely understand such a situation and not be offended by receiving less money, but it’s still a good idea to let them know your plans, so there are no surprises after your death.

    You might also decide to bequest disparate amounts when you have a blended family, and one child can expect to continue receiving support from another parent; when you run a family business and one child has a larger ownership share than another; or when one child is financially irresponsible, has an addiction you don’t want to support or otherwise doesn’t deserve or can’t be trusted with a windfall.

    Aiston says the overall guideline should be promotion of family harmony. “It is unbelievable how many families fall apart after the parents die because of how the estate is divided up,” she says.

    Could a Child Sue for More?

    If you decide not to divide your assets equally among your children, understand that you’re putting your plans and your children at risk of going through a lawsuit. How significant is this risk, and how likely is it that the result will be a different division of assets than the one you desired?

    “Children can always sue, but there generally needs to be a valid basis for a will contest,” says Jeffrey R. Gottlieb, an estate planning attorney in Palatine, Ill. With careful estate planning, however, you can mitigate any challenge. The first step is to draft your will with the assistance of an estate planning attorney, while you’re of sound mind and memory, and without undue influence from one of your children.

    “Undue influence” means that one of your other children believes – or at least thinks it can be proved in court – that you were manipulated during the process of creating your will. As a result, that child contends, you expressed wishes that you otherwise wouldn’t have or that weren’t really what you wanted.You won’t be there to defend yourself against such a claim so you need to make sure no one can successfully argue it.

    “Lack of capacity,” another way a will can be challenged, means that you didn’t understand what you were doing when you created or changed your will, perhaps because of your age or because a physical or mental illness had deteriorated your ability to make sound decisions. A child could also try to argue that your will isn’t valid because of fraud or because your signature wasn’t witnessed.

    There are ways to minimize the chances of a less-favored child contesting your will in court, and ways to minimize their chances of winning if he or she does. “A no-contest clause paired with at least some nominal gift can create a disincentive to challenge,” Gottlieb says. The no-contest, or non-contestability clause, is, basically, language in your will stating that any inheritor who takes your will to court forfeits any bequests. That’s where the nominal gift comes in – for the clause to be effective, your child has to have something to lose. You’ll need to leave the less-favored child enough that he or she likely has more to gain by keeping quiet than by going to court.

    It’s an unpalatable option, to be sure, but it might mean the best chance of keeping your will intact. The enforceability of these clauses varies by state, however, so check your state’s laws before considering this option.

    Estate-planning experts say other ways to avoid challenges to your will include:

    • using a trust to provide structure for a child who might not be able to manage an inheritance responsibly on his or her own
    • having your doctor be a witness when you sign your will to invalidate claims of lack of capacity
    • excluding all children from the will-writing process to invalidate claims of undue influence
    • discussing your will with each child to avoid surprises and explain your reasoning

    A lawsuit of this type is always most likely to end in a settlement, Ruce says. “That settlement will in some way vary your estate plan because funds will likely end up in a different place or with a different person than you had hoped.”

    The Bottom Line

    “The most important thing to remember when dividing up an inheritance is that it is your money, and you have a right to do with it what you choose,” Ruce says. That said, an equal inheritance makes the most sense when any gifts or financial support you’ve given your children throughout your life have been minimal or substantially equal, and when there isn’t a situation where one child has provided most of the custodial care for an aging parent.

    “When there is actual or perceived inequality,” Ruce says, “the likelihood of someone looking for legal remedies increases substantially.” You have to decide how significant that risk is given your children’s temperaments and their relationships with each other, and whether any risk in leaving an unequal inheritance is worth what you’re trying to accomplish.

    If you have questions about your will or trust, and how to best leave money to your children, we invite you to call your Newport Beach Family Trust Attorneys at 949.718.0420 or visit meierfirm.com.

    This article originally appeared on Investopedia.com and is authored by Amy Fontinelle.

    Estate Planning For Single People

    happy-single-personIf you are single, it’s critical that you establish an estate plan!

    Chances are you hold most of your assets in your own name, and without a joint account owner. This means that without creating your own estate plan, you’ll be leaving it to the courts to sort out everything from where your assets should go, who should make your medical decisions, and who should raise your children if they are under eighteen.

    Make sure your estate plan includes these 5 key components:

    1. A Revocable Living Trust. The Revocable Living Trust allows you to direct where you want your assets to go upon your death. Unlike a Will that would be subject to a long, expensive and public court process known as probate, a Revocable Living Trust is a private document that is administered by your attorney upon your passing. It allows you to also place controls on the money you leave behind, such as not allowing your children to control the money until they attain a certain age.
    2. Financial Durable Power of Attorney. The Financial Durable Power of Attorney allows another adult you trust to make all financial decisions on your behalf if you were incapacitated. Without this document, your loved ones who would have to go through a burdensome court process to get the authority to act on your behalf.
    3. Medical Directives. Your Medical Directives will allow your loved ones to talk to your doctors if you were seriously injured. They also address your end of life wishes, and designate someone you trust to make all medical decisions on your behalf if you cannot make them for yourself.
    4. Guardianship. If your child’s other parent is able to continue to raise your child, guardianship is not necessary. However, it’s imperative that all parents name guardians for their children in case the other parent is not available. Without this key document, a judge would have to decide who should raise your child.
    5. A Trusted Family Attorney. It’s one thing to have a set of legal documents that direct where assets should go and how decision will be made, but it’s another for your loved ones to have someone to turn to in a time of crises, who knows you and your wishes, and can can guide your loved ones during that difficult time. Make sure you only work with an estate planning attorney who can offer you a lifelong relationship.

    Talk with your Newport Beach Estate Planning Law Firm attorney today to learn what you need to protect yourself and to ensure your loved ones would be completely taken care of if anything should happen to you! Call our Client Services Director, Bonnie Johnson at 949.718.0420 Monday through Friday between 9am and 4pm to schedule a planning session to get started.

    Students Aren’t the Only Ones with an Important Assignment This Fall

    Now that the kids are back in school, and families are returning to more structure and routine, there is no time like the present to cross estate planning off of your to-do list. The next time you tell your kids to go and do their homework, you can tell them that you’re even doing yours!

    Below are 5 essential estate planning strategies that your family should implement or update right away.

    Will.  Look around you right now.  Everything you see has to be distributed in the event of your death.  Your Will names the person you want to handle it all and can also indicate who you want to receive it all.  It also names guardians for your minor children. If you don’t have a Will, a Judge decides who is in charge of your affairs and State law provides who receives everything you own.  Take control now by getting your Will in place today.

    Emergency Plan.  If you have minor children at home, you need a comprehensive set of documents to ensure they are taken care of by the people you want, in the way you want, no matter what.  Not just for the long-term, but also in the immediate term if and when something happens to you.  A Kids ICE Plan does just that.  Only estate planning law firms who focus on families with young children have the skills, training, and resources to create a comprehensive Kids ICE Plan for your family, so call us today if you do not have one in place already.

    Advance Medical Directive.  Also known as a health care proxy, durable power of attorney for healthcare or living will, this document provides the legal right for the person of your choice (your representative) to make healthcare decisions for you in case you become incapacitated and unable to make those decisions for yourself.  Plus, it also lets that person know HOW you want decisions to be made if you cannot make them for yourself.  Without an Advance Medical Directive in place, your family could have their hands tied when it comes to ensuring you get the best care possible, in the way you would want.

    Power of Attorney.  In the event you cannot communicate, your Power of Attorney will allow your family to gain access to your financial accounts so they can pay your bills and manage your financial affairs. Without this in place, they’ll face an expensive, long and public court process to take matters into their hands.  Don’t leave your family in that position, handle this today.

    Trust.  If you own any property that would go through the probate process (a home, bank accounts, brokerage accounts, business assets, investment real estate, and other investment assets), you’ll want to make sure to have a Trust set up as soon as possible so your family isn’t stuck dealing with an expensive, unnecessary, long, and totally public Court process in the event of your death.  A revocable living trust puts the people you know, love and trust in control without having to go to Court.

    If you’re ready to do the right thing by your family, call your Newport Beach Estate Planning Attorneys at the Meier Law Firm to schedule a time for an Achieve Your Dreams Planning Session. Our Client Services Director Bonnie Johnson would be happy to help you get scheduled or answer any questions you have. Bonnie can be reached at 949.718.0420 Mondays through Fridays between 9am and 4pm. Just mention this article and your Session will be free with no pressure or obligation whatsoever, as long as you reserve your session by September 18, 2015.

    Or, if you’re the ‘do it yourself’ type and like to do your homework ahead of time, call our Client Services Director Bonnie Johnson at 949.718.0420 today and request a free copy of Laura Meier’s book, Good Parents Worry, Great Parents Plan. It has a lot of information you’ll want to know to prepare the best estate plan possible for your family. We’d be happy to send you your free copy with no obligation whatsoever as long as you reserve your copy by September 18, 2015.

    How To Leave Your Home To Your Kids

    Many parents want to know the best way to leave a home to their children. Before you make a plan, you should first be sure that your children actually want the property. We have seen too many parents take on unnecessary financial hardship in order to keep a home as an inheritance their children do not truly want.  home

    That said, here are some of the most common ways to leave your home to your kids:

    Will. You can leave real estate to anyone in your will. Once the will has been probated, your children will receive title to the property.

    Trust. Using a trust is a convenient way to transfer property without having to go through probate. Title is transferred automatically upon a triggering event — in this case, the death of the original property owner.

    Joint tenancy with right of survivorship. This method allows you to add your children to the property title while you are still alive. When you pass, the children become owners of the property as surviving joint owners.

    Transfer on death deed. This allows you to name a beneficiary for your property without giving a present interest in it to the beneficiary. Upon your passing, the beneficiary takes title.

    Life estate. You can transfer title to the property while you are still living, and retain the right to live there during your lifetime. After your death, the beneficiary owns the entire interest in the property.

    There are pros and cons to each of these options.  Deciding on the best option for you and your family should be done with the assistance of a Personal Family Lawyer.

    If you’d like to learn more about estate planning, call your Newport Beach Estate Planning Attorneys at the Meier Law Firm today to schedule a time for an Achieve Your Dreams Planning Session. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

    No More Reasons for Delay in Implementing These 5 Estate Planning Essentials

    Last year’s uncertainty about the future of the estate and gift tax caused many people to put their estate planning on hold, even though estate and gift tax planning is only a teeny tiny piece of estate planning.  Now that the clouds have lifted and Congress has given us clarity, there is simply no reason for anyone to delay in implementing these five estate planning essentials: estate plan

    Will.  Look around you right now.  Everything you see has to be distributed in the event of your death.  Your Will names the person you want to handle it all and can also indicate who you want to receive it all.  If you don’t have a Will, a Judge decides who is in charge of your affairs and State law provides who receives everything you own.  Take control now by getting your Will in place today.

    Kids ICE Plan.  If you have minor children at home, you need a comprehensive set of documents to ensure they are taken care of by the people you want, in the way you want, no matter what.  Not just for the long-term, but also in the immediate term if and when something happens to you.  A Kids ICE Plan does just that.  Only a licensed Personal Family Lawyer has the skills, training, and resources to create a comprehensive Kids ICE Plan for your family, so call us today if you do not have one in place already.

    Advance Medical Directive.  Also known as a health care proxy, durable power of attorney for healthcare or living will, this document provides the legal right for the person of your choice (your representative) to make healthcare decisions for you in case you become incapacitated and unable to make those decisions for yourself.  Plus, it also lets that person know HOW you want decisions to be made if you cannot make them for yourself.  Without an Advance Medical Directive in place, your family could have their hands tied when it comes to ensuring you get the best care possible, in the way you would want.

    Power of Attorney.  In the event you cannot communicate, your Power of Attorney will allow your family to gain access to your financial accounts so they can pay your bills and manage your financial affairs. Without this in place, they’ll face an expensive, long and public court process to take matters into their hands.  Don’t leave your family in that position, handle this today.

    Trust.  If you own any property that would go through the probate process (a home, bank accounts, brokerage accounts, business assets, investment real estate, and other investment assets), you’ll want to make sure to have a Trust set up as soon as possible so your family isn’t stuck dealing with an expensive, unnecessary, long, and totally public Court process in the event of your death.  A revocable living trust puts the people you know, love and trust in control without having to go to Court.

    If you’re ready to do the right thing by your family, call your Newport Beach Estate Planning Attorneys at the Meier Law Firm to schedule a time for an Achieve Your Dreams Planning Session.  Call today and mention this article.

    Robin Williams’ Family Fight Over Personal Property Not So Funny

    Robin Williams’ wife Susan has gone to court over personal items she says were taken from the couple’s Tiburon, California, home without her permission. Williams’ children say their father set up a trust that bequeathed the items to them and that his wife of three years is acting against his wishes. Could this have been avoided?  grieving family

    According to a recent article at the Huffington Post, there is a court fight brewing in San Francisco over the disposition of some personal property from the estate of comedian/actor Robin Williams, who committed suicide last year. His wife of three years claims his three children from prior marriages took certain items from the Tiburon residence where she lived with Williams.

    According to the children, these items are part of the inventory of personal property conveyed by certain trusts established for their benefit. Williams’ trust granted his children his memorabilia and awards in the entertainment industry as well as some other specific personal items, according to court documents.

    His widow, Susan Williams, claims that since they lived together in their own house in Tiburon, and there was a separate residence in Napa, it stands to reason he wanted the children to receive items from the Napa residence and she is to receive the property from the Tiburon home.

    Attorneys for the two sides appeared to offer conflicting characterizations of the court case. Susan Williams’ attorney said she is just seeking a clarification from the court; the attorney for the children says she has accused them of stealing items belonging to her.

    The probate court in California will look first at both Williams’ will and the documents that established the trusts for the children. The court will seek to determine if those documents delineate who gets exactly what. If neither document contains either an inventory of each item of personal property with instructions as to who shall receive it or a broader instruction perhaps suggesting “all other property contained at the Tiburon residence or the Napa residence,” then the court will have to engage in a more difficult analysis to determine what Williams’ wishes were when he set up the trusts and executed his will.

    As this contest is occurring in San Francisco and the family lived in the state, California trust and estate law will control the legal issues to be resolved.

    The Robin Williams’ estate underscores the need to specify exactly which personal items you are giving to family members by trust or will so there is no ambiguity once you pass.  It’s this ambiguity that causes family in-fighting and costs excessive amounts of time, money and energy, even (and maybe even especially) when the estate is of small value.

    Especially in a blended family situation, like with Robin Williams family, it’s important to be exceedingly clear about whether children from a prior marriage should receive any money or other assets at the time of your death or if they should wait for all inheritance until the death of your spouse.

    This is one of the situations that is most likely to result in strife and complication after death, and it’s so straightforward and easy to deal with ahead of time.

    The best way to learn about protecting your family is to talk with your Newport Beach Estate Planning Attorneys at the Meier Law Firm about an Achieve Your Dreams Planning Session, where we can identify the best strategies for you to provide for and protect the financial security of your loved ones.

    5 Reasons Why You Need to Review Your Estate Plan

    Creating an estate plan to protect your financial future and that of your family is just the first step in the estate planning process. Once those documents are executed, you will still need to review your plan annually to ensure it continues to reflect your needs and achieve your goals. Here are 5 reasons that can trigger the need to review your existing estate plan:

    mother daughter

    Family changes. Marriage, divorce, birth and death are four family changes that should prompt an estate plan review. If one of your beneficiaries dies, you will need to remove them from your estate plan. A new child or grandchild means adding beneficiaries. If your daughter gets a divorce, you will likely want to remove her ex from your estate plan but keep their children in. These circumstances can also trigger changes to those people designated as guardians, executors or health care agents.

    Health changes. The state of your own health may dictate changes to your estate plan, especially when it comes to long-term care. You may want to help a family member who has no other resources for long-term care, or if you yourself suddenly need long-term care, you may need to provide a trustee with new instructions on the kind of care you want – i.e., staying at home with in-home help or paying to live in a senior living facility.

    Work changes. You may suddenly want – or need – to retire, which could necessitate withdrawing from your IRA funds to support yourself instead of contributing more. If you have a family business, you may want to sell it or convert a sole proprietorship into an LLC or corporation, which could mean a significant change for your estate plan.

    Market changes. If the total value of your estate has fluctuated by more or less than 20 percent, this should prompt an estate plan review. A significant gain could provide you with assets you may want to gift to children or grandchildren to reduce or remove estate taxes.

    Law changes. Tax law changes all the time, so reviewing your plan at least once a year is the best way to either take advantage of any new changes that could benefit you, or revise your plan so these changes do not adversely impact your estate.

    To review an existing estate plan or create one for yourself and your family, call your Newport Beach Estate Planning Attorneys at the Meier Law Firm today to schedule a time for us to sit down and talk about an Achieve Your Dreams Planning Session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.

    Supreme Court Decision Makes Inherited IRAs Fair Game in Bankruptcy

    A recent U.S. Supreme Court decision has changed the way inherited IRAs are viewed when it comes to bankruptcy, and calls for those who inherit these retirement account assets to find new ways to protect that inheritance.supreme court

    In Clark v. Rameker, Heidi Heffron-Clark inherited an IRA from her mother. She received distributions from that inherited IRA for several years before filing Chapter 7 bankruptcy. Ms. Heffron-Clark relied on the Bankruptcy Code, which states that IRAs are exempt up to $1.245 million from bankruptcy, to claim that her inherited IRA qualified for the retirement account exemption.

    In a unanimous ruling, the Supreme Court disagreed, distinguishing inherited IRAs from other IRAs established by an individual for his or her own retirement. Because the beneficiary of an inherited IRA cannot make contributions to that IRA, an inherited IRA does not provide any tax incentives, which is an important purpose of other IRAs. Since the beneficiary of an inherited IRA has different rules for taking distributions than other IRA owners, this also establishes inherited IRAs as different from other IRAs. These differences, the Court reasoned, are enough to disqualify an inherited IRA from qualifying for the federal bankruptcy exemption.

    Even though some states offer protection for inherited IRAs in bankruptcy, a move to another state that does not offer this protection can endanger inherited IRA assets. IRA owners who wish to provide their heirs with valuable protection should consider naming a trust as beneficiary of IRA assets instead of heirs, who could instead be designated as beneficiaries of that trust.

    The Court did not address spousal inherited IRA beneficiaries; however, since a spouse is allowed to roll over an inherited IRA into his or her own account, this may qualify a spousal inherited IRA for the bankruptcy exemption for retirement funds.

    We can help you plan for the safe, successful transfer of wealth to the next generation. Call your Newport Beach Estate Planning Attorneys today to schedule a time for us to sit down and talk about an Achieve Your Dreams Planning Session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.

    Hollywood Legend Lauren Bacall Leaves Large Estate and Two Potentially Large Headaches for Heirs

    Legendary Hollywood actress Lauren Bacall died on August 12, 2014, leaving behind an estate estimated at $26.6 million and three children who face a couple of potentially serious problems that could have been avoided through effective estate planning. Home estate

    Bacall, who was married to Humphrey Bogart and Sam Robards, passed away in her New York City apartment, which at a $10 million valuation constitutes a sizeable part of her estate.  Bacall used a will as the governing document of her estate plan instead of a revocable living trust, so the division of her estate is public record.

    Her will was made public a mere 10 days following her death because her children plan to auction off her artwork this fall.  As a resident of New York, Bacall’s estate will be subject to both state and federal estate taxes.  A trust left to her by Bogart will also be subject to tax based on its valuation.

    Unfortunately, her estate only included $100,000 in liquid assets at the time of her death, so her heirs face a potentially serious liquidity problem when it comes to paying these taxes. This is probably the reason behind the rush to auction her artwork. Her family has only nine months from the date of her death to pay estate taxes.

    Although Bacall directed in her will that her apartment be sold, there is no guarantee that it could sell in time to pay the estate taxes. Life insurance is one of the most common ways to ensure there is sufficient liquidity to pay taxes and other expenses.

    Besides the financial assets, Bacall left her children the right to her likeness and other intellectual property associated with her illustrious career.  (She did request that her children not sell her personal effects, letters and memorabilia in her will.) This could be of significant value in future years, and the IRS could come after the heirs for taxes based on that value.

    There could also be issues that arise regarding the management of this intellectual property in the coming years, which could lead to litigation as it has in the cases of other Hollywood greats, like Michael Jackson. To help avoid this, the family could establish a trust or family entity to manage these assets and make decisions on how they will be used in the future.

    One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call your Newport Beach Estate Planning Attorneys today to schedule a time for us to sit down and talk about an Achieve Your Dreams Planning Session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.

    7 Things To Think About Before Making Gifts to Grandchildren

    If you have grandchildren – or are getting ready to welcome one like political power couple Bill and Hillary Clinton – you know the special joy they bring. After all, you can now leave all the heavy lifting to the parents and just enjoy connecting with them.grandparents and family

    Many grandparents who enjoy financial freedom are often more than generous to grandchildren. And some even wish to see their grandchildren enjoy an inheritance now instead of waiting to pass along assets after they are gone. If that’s you, here are 7 things you should think about before you make gifts to grandchildren.

    Clarify the gift. Most grandparents gift outright, no strings attached. But if you think you are providing a loan or an advance on an inheritance, you need to clarify that in writing.

    Equal treatment. It is not unusual for a grandparent to be closer to some grandchildren than others, but when you are gifting assets, unequal treatment among grandchildren could lead to family resentments. Even if you give more to some than others during your life, consider treating all grandchildren equally in your estate plan.

    Taxes. With the federal gift tax threshold at $5.25 million (double that for married couples), most people won’t have to worry about paying federal gift taxes. However, any gift to an individual that exceeds $14,000 each year ($28,000 for married couples) must be reported on a gift tax return.

    Education. You can help with a grandchild’s college tuition by making payments directly to their educational institutions, which don’t have to be reported. And there is no limit on these contributions. Investing in a 529 plan for each of your grandchildren is also a great way to help them (and their parents!) save for college, building a tax-deferred account that will never be taxed as long as it is used for educational purposes.

    Your own needs. It’s tempting to be too generous in making gifts to grandchildren, but you should not give to the detriment of your own needs. Finding the right balance will help ensure your children and grandchildren don’t have to support you because you gave too much to them.

    Long-term care. Chances are that you will need some kind of long-term care at the end of your life, research shows that most of us will.  If you can’t afford long-term care and need help, any gift of assets you have given could make you ineligible for Medicaid benefits for five years.

    Consider a trust. There are many reasons why you should not give gifts of cash or assets to grandchildren, some that you may not even be aware of. Lots of cash could be fuel on the fire of bad behavior or undermine your own children’s goals for their children. To make a lasting gift, consider using a trust that will pass assets along to grandchildren safely and protect those assets from bad behavior, bad marriages and bad credit.

    One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call your Newport Beach Estate Planning Attorneys today to schedule a time for us to sit down and talk about an Achieve Your Dreams Planning Session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.




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