We Answer Some Frequently Asked Questions About Estate Planning

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  • What is a Will?

    Sometimes called an Advance Medical Directive, a living will allows you to state your wishes in advance regarding what types of medical life support measures you prefer to have, or have withheld/withdrawn if you are in a terminal condition (without reasonable hope of recovery) and cannot express your wishes yourself. Oftentimes a living will is executed along with a Durable Power of Attorney for Health care, which gives someone legal authority to make your health care decisions when you are unable to do so yourself.

  • What is Joint Tenancy with Rights of Survivorship?
    (in some states "Tenancy by the Entirety" when between spouses)

    This is the most common form of asset ownership between spouses. Joint tenancy (or TBE) has the advantage of avoiding probate at the death of the first spouse. However, the surviving spouse should not add the names of other relatives to their assets. Doing so may subject their assets to loss through the debts, bankruptcies, divorces and/or lawsuits of any additional joint tenants. Joint tenancy planning also may result in unnecessary death taxes on the estate of a married couple.

  • What is Probate?

    Probate is a long and expensive court process that families must go through if their late loved one had more than $150,000 in assets that were not automatically passed to the family through a trust, joint ownership, or beneficiary designations, upon the loved one’s death.  Probate is approximately 12-18 months long, open and public, and very expensive. For this reason, families usually plan to avoid their family being subject to Probate by establishing a trust.  

  • 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.

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

  • How Much Do You Charge for a Will in Newport Beach California?

    If you came to this page to find out what I’ll charge you for a Will or you are considering calling me (or any other attorney) to ask, “How much do you charge for a will?” Stop. 

    older coupleIt’s not the right question.

    The question you need an answer to first is “What do I really need to have in place to ensure me, my family, and money are cared for the way I want?”

    Far too many people make their estate planning decisions based on what it’s going to cost. Sometimes, that may be the right criteria. Most of the time it’s not.

    The problem is you don’t know what you don’t know.

    When you get on the internet to download a cheap will or fill out canned documents from a book or DIY kit from the office supply store, you don’t know what you are actually putting into place or setting in motion.

    When tragedy strikes, it’s your family who is left holding the bag.

    Failed plans, unnecessary, expensive, totally public probate, multiple probates in different states, even, loss of sovereignty, legal fees for guardianships and conservatorships, being at the mercy of the judicial system.

    When you hire me, you aren’t paying for documents.

    You are hiring me for my guidance throughout your lifetime and to be there for your loved ones when you can’t be.

    When you hire me, you aren’t renting my time, but my brain and my heart. You are hiring an ally who will help you get your affairs in order, and keep them there across time and changes in the law, tax policies and your life.

    When you call me and ask how much for a Will, I can’t give you an answer because I don’t even know if that’s what you need.

    Maybe a Will would suffice for your family, but maybe it won’t.  And if I tell you how much a Will costs and then you come into my office and you need so much more, you’ll be angry with me.

    So I won’t answer your question.  Because I don’t charge for Wills.  I charge for advice, guidance, counsel and support.  The Will? It’s free.

    Our process begins with an Achieve Your Dreams Planning Session.  Before this Session, you will receive a package of information with homework for you to complete so you can benefit from the time with me the most.

    Whether I ever write a Will (or any other documents) for you or not, I want every interaction of ours to be extremely valuable to you.

    To that end, I’ll review the homework you complete before we meet.  And then we’ll invest our time together exploring your life, looking at what would happen to you, your children, your money, and the people you love if anything happens to you.

    You will feel heard, cared about, informed, educated, and empowered to make the best decisions for the people and things that matter most in your life.

    If, after we spend that time together, it turns out you need a Will (or any other type of legal planning), it will be because we came to that conclusion together.

    Then, I will offer you planning packages that will cover the different options for taking care of things the way you want.

    I can tell you this – most of our foundational plans range between $2,000 and $8,000, and you will know the exact price of your plan before there is any charge. Your package will be customized to the specific needs of your family.  And you will stay in control the whole time.

    How do you choose a lawyer, if not based on price?

    Get referrals from your friends and family. When you call the office to inquire about their services, rather than asking what they charge, ask HOW they charge and what makes their office different than others.  Call your Newport Beach Trust and Estate Planning Attorney at Meier Law Firm today at 949.718.0420 to schedule a time for us to sit down and talk.

  • How to Reduce the Cost of Long-Term Care Insurance

    A person who turns 65 today has a 70% chance of needing some type of long-term care at some time in their remaining years, according to the U.S. Department of Health and Human Services. On average, women will need 3.7 years of long-term care and men will need 2.2 years of care. Only 20% will need care for longer than five years.

    Long-term careIf you don’t have the financial resources to pay for this long-term care yourself – either for a nursing home stay or in-home care – you will likely consider long-term care insurance to fill the void. While annual premiums can vary according to your age and health status, they can be fairly expensive.

    Here are some tips to reduce the cost of long-term care insurance:

    • Buy young. Since premiums rise as you age, purchasing a long-term care policy when you are younger can mean cheaper premiums. Just be sure you are aware that premiums can increase as you age, so be sure to discuss this with your insurer.
    • Shorten the benefit period. Lifetime policies are the most expensive, and since statistics show that most of us will not need long-term care for more than five years, you can save thousands of dollars in premiums if you buy a short-term policy.
    • Lengthen the elimination period. Most policies have a 30-90 day waiting period before coverage begins. If you can make this period longer, your premiums will be cheaper.
    • Reduce daily benefits. If you can pay for some of your long-term care needs yourself, you can reduce the daily benefit amount on your policy, which will result in lower premiums.
    • Share the care. If you are married and both of you are buying long-term care insurance, a shared care policy could provide you both with more coverage for less money. A shared care policy provides a pool of benefits that are shared between you and your spouse, so if you buy a 5-year shared care policy, the two of you would have 10 years of benefits. If your spouse only uses 3 years, you would have 7 years of benefits to use.
    • Take the deduction. Your long-term care insurance premiums may be deductible. If they meet the requirements for “qualified” long-term care expenses, they can be deductible, with the amount depending on your age and tax year. For 2014, the long-term care premium deductibility limits are $1,400 for those more than 50 but not more than 60, $3,720 for those more than 60 but not more than 70, and $4,660 for those over 70.

    To learn more about long-term financial planning for your golden years and other elder law issues, call your Newport Beach Estate Planning Attorneys today at the Meier Law Firm to schedule a time for us to sit down and talk about an Achieve Your Dreams Planning Session.

  • How to Write a Family Mission Statement

    Quick-step: Write a Family Mission Statement

    What it is: A Family Mission Statement is a simple written statement developed together by all members of the family that identifies your family’s core values and what you hope to become and achieve together.

    Why you need one: Writing a mission statement is a simple, yet powerful way to bring greater purpose to your family, and serve as a guide when making important decisions impacting your family.

    Estimated time: 30-60 minutes

    How to do it:

    1. Have each family member identify their three most important values (young kids should participate!)
    2. Give each family member a turn to verbally share their three most important values with the other family members without interruption or judgment.
    3. Identify the three most common values among the family members and write them down. It doesn’t mean other values aren’t important or less, it just means you are focusing on the three most SHARED values. (Example: Education, Forgiveness, Philanthropy)
    4. For each shared value, identify how you want that value to impact your family. (Example: Education- To increase our knowledge and expand our abilities in our community. Additional Example: Forgiveness- To move forward together as a family focusing on our family’s strengths instead of our mistakes and shortcomings.)
    5. Put it all together in one simple statement.  Here is an example:

    “The [Your Family Name] Mission is to continually come together to….

    • become more educated, so we can increase our knowledge and expand our abilities in our community;
    • Freely forgive, so we can move forward together as a family focusing on our family’s strengths instead of our mistakes and shortcomings; and
    • Be philanthropic, so we can share our wealth and love with others in our world.”

    For additional guidance on creating a Family Mission Statement, feel free to contact your Newport Beach Trust and Estate Planning Attorneys at Meier Law Firm. We have some great resources you can use to reach your family’s unique goals.