Robinson ♦ Thatcher, LLP

Posts Tagged ‘Living Trust’

Following on the heels of the New Year are two very important dates in my life.  The first is my birthday, the second is the anniversary of my father’s death, just two days later.  One of the very last things my dad said in his life was “Happy Birthday” to me.  So, at this time of year, when we are all making resolutions (or better yet, goals) for the new year, I tend to reflect on my dad and the example he set for my life.

With that frame of mind, when I recently read an article on the importance of elder care, and selecting the right provider, it started me thinking about my dad’s illness and the lessons I learned from the examples he and my mom set.

Living Trust

My parents had a “living” trust to take care of the financial aspects of death.  I previously discussed Living Trusts and other necessary estate planning documents, here.

Advance Health Care Directives

My both my mom and dad had advance care directives and medial peers of attorney allowing each other to make necessary medical care decisions. Just as important as having the legal documents in place, my parents discussed their wishes with each other (and me).

Before giving someone the power to make decisions on your behalf, make sure that person knows how YOU would make the decisions.

Long Term Care Insurance

My parents invested in long term care insurance. This insurance became vital in my dad’s illness. When they first purchased the insurance, I thought it was a great idea to help me when it came time to paying for a nursing home for them!

As it turned out, they needed the insurance sooner than expected, because my father passed away when he was only 65 (in no sense of the word was my father “elderly”). However, he did fight a ten year battle with cancer. When we learned that the cancer has spread to his lungs and liver and that the chemotherapy was more likely to kill him than save him, dad insisted on coming home (despite the fact that most of the hospital staff thought he should go to a rehab facility or nursing home).

Dad was too weak and ill to care for himself, my mom arranged for his care through a combination of hospice care and a wonderful in home care provider Visiting Angels in Orlando, FL.   As you might imagine, 24 hour, in home care can be costly.  Although, medicare covered some of the expense, my mom was able to pay for Dad’s care because she and my dad had the foresight to invest in long term care insurance.

At Robinson – Thatcher, LLP our mission is to bring peace to your family. Part of that mission is to ensure that our clients, friends, and neighbors have the necessary tools in place to enable their peace of mind knowing that their families are taken are of as they would wish.

Wishing you peace.

New Years Resolutions

I have a lot of resolutions for the new year, some are personal, some are professional. Most are a combination of both. For example, my resolution to work out in the new year helps to increase my general energy and will make me more productive for my clients (which is always a good thing).

Take Stock of Where You Are Now

The new year is a perfect time to take stock of where you are in life. Do you have children? If so, have you made a plan for their future? Helping secure our children’s future has so many aspects is hard to take care of them all at once. A good place to start is this: make a list of what you must, should and want to do for your children. Whether you can accomplish everything on your list this week (or even this year) is not the important thing.

Some of the things that should be on your “must” list:

1) have officially nominated guardians
2) have an estate plan in place (it can be either a will or a living trust)
3) have a plan for college and educational savings (such as a 529 plan or Coverdale account).

Leave Lasting Memories

I have an unusual recommendation for something that you may want to consider putting on your should do list. Write an autobiography. It could be as simple as an annotated photo album, or simply providing answers to questionnaires you find on the Internet.

There are also authors who can ghost write your story. The year my Dad died, he prepared his autobiography with a ghost writer (he also put one together for his mom, my grandma). I learned so many things about my parents and grand parents from those stories. And more importantly, I can use the books to help keep the memories of my parents alive for my children.

While I can’t write your life story for you, I can help you with creating Guardian Nominations for your children and preparing an estate plan to ensure your wishes are fulfilled as you would want them to be. If your New Years Resolutions include preparing an estate plan, please contact Robinson – Thatcher, LLP or another qualified estate planning lawyer.

Wishing you peace in the New Year!

I repeatedly advise my clients and friends who have children that there are certain indispensable documents they should have in place in the event that the unthinkable happens.  The following is a list of some of the most important documents every parent should have, along with a description of why they are important.  There are other important things to consider, but this list will help start the conversation regarding what you need to have in place to protect you, your family, and most importantly, your children.

Will

Although not the only element is a well thought out estate plan, a will is probably the single most important document for parents of minor children.  A will is the instrument by which your wishes for legal guardians for your children are created.  Without a properly drafted will, that nominates legal guardian for your minor children, the decision of who will become the guardian for your children will be left up to the court.

Depending on your estate planning needs, a will can serve several different functions in your estate plan.  Your will can be the foundation by which you transfer your assets after your death.   Or, if you have a living trust in place, a will is drafted as a “pour over will” which operates to transfer into the trust any assets which may have been left out.

When assets transfer via a will, it will be necessary to go through a process called probate.  While there is nothing inherently wrong with the probate process, there are two main drawbacks to probate:  it can be expensive and assets transferred through probate are accessible to the public.

Revocable Living Trust

A Living Trust can serve as the foundation for your Estate Plan.  In fact, it should be the foundation of your estate if your estate is over $100,000.  As the name suggests it is Revocable at any time by the Creator(s) and can also be amended or changed as your circumstances change without legal aid if you so desire.  The Trust is also recognized as a living entity (like a corporation) in the sense that it continues to live after your life to administer the affairs of your estate.

With a trust, you not only avoid the expense of probate, but you can customize how your estate will be distributed.  A living trust will allow you to continue to provide financial guidance after your death.  Trust can also be used to provide for the care of your pets after your death and to put conditions upon how your estate will be distributed to your beneficiaries.

If you have children, I recommend either establishing a revocable living trust, or at minimum, a testamentary trust.

Living Will

The purpose of a is, should you wish, to prevent your assets from being used to unnecessarily prolong your life, so that they may be used instead to benefit your children or other family.  The Living Will also allows for certainty in decision making in the event of an extended illness.  In a Living Will you nominate a decision maker and provide guidance as to your wishes.

Durable General Power of Attorney

A Durable Power of Attorney is designed to allow its designated Attorney in Fact to make asset administration decisions on your behalf in the event that become incapacitated.  The Durable Power of Attorney relates only to those assets which may be outside of a Trust.  (Assets which are in the Trust can automatically be administered pursuant to the terms of the Trust).

Durable Power of Attorney for Health Care

This document is required in order to legally allow an Attorney in Fact to make health care decisions on your behalf in the event that you cannot make them for yourself.

Medical Information Disclosure Authorization

This document provides authorization for disclosure of medical information to your agents, pursuant to the requirements of Health Insurance Portability And Accountability Act (HIPAA).

Why do I need an estate plan?  The following provides a list of possible reasons to have an estate plan:

• You have children.  If you die without an estate plan in place, a judge will determine who will be the guardian for your children

• You care who inherits your property.  If you do not have a will, California laws of intestate succession govern who gets control of your property.  In that case your property is distributed as follows:
  • Your spouse gets one half of all community property;
  • Your children get a pro-rata share of the remaining property;
  • If you are not married and don’t have children, your parents and other relatives would inherit your property;
  • If you have no relatives, your property reverts to the state of California.
• You want to control how your money is used.  A living trust can be used to determine how your money is spent.  For example, you can set conditions on when your children will inherit the money you leave for them.  You can also provide that your children receive money only if they get certain grades or attend college.
• You want to give money to charity.
• You have a large estate.  If you have significant assets and property, sophisticated estate planning is necessary to avoid estate taxes.
• You want to disinherit a member of your family.
• You have a child with special needs.  If you have a child with special needs, you can set up a trust to provide for your child while keeping eligibility for government funds.

Without proper estate planning, you have no control over what happens to your children or your assets.  With a will, you have the power to determine who get your money after you die and to nominate guardians over your children.  A living trust gives you the ability to have control over your assets even after you die.  A trust is an effective way to guide your children and loved ones even after death.

I urge you to contact me or another qualified attorney to discuss your estate planning options.

In the last few weeks we have had a number of popular celebrities pass away. In the midst of our grief on behalf of Farrah Fawcett, Michael Jackson, Steve McNair and their families, the furor over their estates provides us with a number of valuable lessons which we can use in our own estate planning.

Public information regarding the estates of each of these celebrities provides a framework to examine a number of issues including:

• Custody of Children
• Inheritance
• Continuing Parental Guidance
• Estate Taxes
• Privacy Concerns

Farrah Fawcett

Farrah Fawcett’s estate plan has not been officially made public.  There have been leaks from several “close confidents” which give us interesting insights into Farrah Fawcett’s estate plan.

From the sources available, it is evident that Farrah Fawcett employed a living trust to distribute her money upon her death.  The bulk of her estate was apparently left in trust to her son Redman O’Neill.  According to the Daily Mail article,Farrah appointed two trustees to manage the money for her son, and the trust was established with conditions to help him get his life back on track afterhis well known battles with drug addiction and legal problems.  Farrah Fawcett also gave a charitable donation to her alma mater, the University of Texas.

Farrah Fawcett’s estate highlights several proper estate planning techniques.  1) the creation of a trust allows her to provide continuing guidance to her son even after her death; 2) Charitable giving helps avoid estate taxes for very large estates (in 2009 there is a $3.5 million federal estate tax exemption, but the future of estate taxes is unsettled);  3) the trust is private.  Were it not for the “source” the details of Farrah Fawcett’s estate plan would not be made public.

MichaelJackson

Michael Jackson’s estate is teeming with legal controversy.  Although Jackson did have a living trust, it appears that the trust may not have been adequately funded.  (A living trust which is notfunded will be overturned – an important reason to have an estate planning attorney prepare a living trust on your behalf).

One aspect of Jackson’s estate which  is public is the will filed with the probate court on July 1, 2009. This will is an example of a “pour over will.”  Anything not included in the trust would be transferred into a trust through the probate process.

A key function of a will is to name guardians for your minor children, as Michael Jackson does in his will.  Generally, unless determined by a probate judge to be unfit, the guardians so named in a will be appointed by the court.

SteveMcNair

The estate of former NFL star SteveMcNair provides an illustration of what not to do.  McNair died without a will – or “intestate.”  Thus, all of McNair’s assets will be subjectto probate and will be distributed according to his state’s (Tennessee) laws of intestate succession.

To add a further layer of complication to McNair’s estate is the fact that he had two children out of wedlock.  Without a will to provide for these children, they will have to prove their right to inherit in probatecourt.  McNair’s widow, Mechelle McNairoriginally excluded his two older children from documents filed with theprobate court.  According to an interview with McNair’s agent, these issues have since been resolved.

Failure to implement appropriate estate planning documents, including a will and possibly a living trust will only burden your loved ones unnecessarily in the event of your death.  Losing a loved one is difficult enough, but to add complicated legal battles to grief for lack of simple planning is tragic.