Visalia, CA Estate Planning Blog

As an Estate Planning Attorney, it is my job to create estate plan documents best suited for your family’s needs. And as a mom (my favorite job), protecting kids is a subject that is very close to my heart. So my natural maternal instinct combined with my estate planning experience draws me to young families; to help them figure things out. But more often than not, I find that parents have little or no information regarding even basic legal documents. I want to fix this. (To make it easy, I provide a no-cost informational consultation, and for young parents, a no-cost first basic document …but more on that later).

I have identified ten of the most common mistakes made when planning for the needs of families and estates. This month I’d like to share these with you and offer you solutions to avoid these kinds of errors; so you can protect the ones you love.

I have created a 4-part message campaign this month to get the word out to young parents. So please, pass it on. 

Over the years, I have noticed that not only do many young parents fail to have any estate planning in place, but even those that have created a Will or a Trust are often left wildly under-assisted with guardianship nominations and legacy details; important components of estate planning that define the sort of life their children should have.For example, when I ask a young parent: “What would happen to your kids if you didn’t make it home one day?” I note that few have given this enough thorough (or any) reflection. Understandably; it is a hard question. It’s against our nature to think about death or our mortality, and so we avoid these thoughts. Let’s think about that tomorrow. But the truth is… this kind of thinking leaves our kids unprotected. 

Your child’s safety and happiness is something that affects every decision a young parent makes. From what car seat to select, to what school they will attend, to what they have for dinner…so many routine things require such careful consideration. 

But these choices are easy -and perhaps even fun- to make when compared to the most important (and most difficult) decision of all: thinking through the outcome of what your child’s life would be like if something happened to you, and then drafting and providing clear, thoughtful instructions as to the life you would want for your child if you cannot be there.

So, WHO is the person that you would choose to be responsible for taking care of your children’s physical, emotional and spiritual needs if you aren’t there to do it yourself?

Helping you execute these crucial decisions is where I come in.

Go to www.itrustlaw.com and schedule a no-cost consultation, or call me directly at (559) 635-1775 to schedule an appointment. If you or someone you know is a young parent, please contact me to arrange for the preparation of your first basic document: a FREE guardianship nomination prepared for use in the event of necessity, which will establish your clear intentions, and your choices as to who will raise your children if you cannot be there. 

Hello all!

This is the final installment of our five-part email campaign to get the word out identifying the ten most common mistakes regarding guardianship nominations made by parents in estate planning. If you have been following this campaign, then congratulations! You now know the most important do’s and don’ts that will benefit a young family when planning for their estate. But even if you haven’t been with us since the beginning, we’ve got you covered: the entire campaign can be found right here on this blog.

Our core subject: What would happen to the kids if something happened to you? You now know how important attention to detail is when developing your estate plan, and you know there is much more to consider than most planners advise. It is often the simplest, most obvious-seeming considerations that are missed when guardianship planning is undertaken. And you know that I am here to help you avoid the 10 mistakes I have identified; with careful planning tailored specifically to you, and the ones you love. (Oh, and did I mention that I will do this for you young parents at no cost! Please read on…)

On to the final two mistakes!

Mistake #9:  The ninth mistake is not using a stand-alone guardian nomination document, but rather, putting limited instructions in a Will. When planning for minor children, one of the things I stress is the creation of a stand-alone guardianship nomination. I do this because such a document makes it easier and clearer to identify and address all the details we have been talking about. As we’ve discovered, it is identifying your wishes, your beliefs, your preferences, your choices, your parenting plan for your children in a guardianship nomination document, providing details for your chosen guardian to pass on to your children. And so I prefer to create the document that deals exclusively with those details as a way to honor your legacy.   

Mistake #10: The tenth and final mistake I have identified is having no clear instructions for caregivers or guardians. I can see no reason not to be completely thorough when planning a guardianship nomination. Think about all the decisions you make for your child’s well-being every day; there are hundreds! And though you can’t use guardianship planning to legislate every minute of your child’s life, there are some very important markers that are worth outlining for your chosen guardian, i.e.; your customs, traditions, religious beliefs, education preferences, arts, literature, music…etc. It is okay to be specific.  

I understand that people avoid thinking about elements of estate planning such as naming guardians, deciding on beneficiaries and division of estates, etc., primarily because this involves facing our mortality. Thinking about death. Not fun! So we wait until disaster strikes, like illness. Or, worse, we completely blow it, and face an unexpected death, and leave loved ones to deal with the harsh and public process of court probate. So, really, death without planning is worse than taking a moment now and thinking it through. Putting in place the protections that are available through proper and comprehensive estate planning is responsible. It is liberating. It provides peace of mind. At our office, we respect the seriousness of the issues at hand, but we lighten it up! We strive to make it fun. Our comprehensive estate plan includes “goodies” such as: a ceremonial signing wherein we “tie” the will (an old-school process we are bringing back as a gesture of respect). We provide an executive binder holding all documents, a personalized flash drive holding pdf copies of all executed original documents, a memorial planner, and we place all items in a tote bag, printed with custom artwork designed by Katherine Desrochers, and inspired by the poem by Ralph Waldo Emerson “The Key To A Successful Life.”  (Visit our website here for more on that poem and our philosophy). 

To all you young parents and readers who care about them, thank you for letting me share these ten mistakes with you. I hope this information has been informative for you, and inspirational in helping you plan your estate around your most valuable asset of all: your family. 

Can I Get In Trouble With the IRS for Trying to Reduce the Amount of Estate Tax That I Owe?

You’ve likely heard that one of the many benefits of estate planning is reducing the amount of federal, and state, taxes owed upon your passing. While it may seem like estate tax planning must run afoul of IRS rules, with the proper strategies, this is far from the case.

It is very common for an individual to take steps to try to reduce the amount of federal estate taxes that his or her "estate" will be responsible for after the person's death. As you may know, you may pass an unlimited amount of assets to your spouse without incurring any federal estate taxes. You may pass $5.25 million to non-spouse beneficiaries without incurring federal estate tax and if your spouse died before you, and if you have taken certain steps to add your spouse's $5.25 million exemption to your own, you may have $10.5 million that you can pass tax free to non-spouse beneficiaries.

It’s always best to seek out the advice of an estate planning attorney when making decisions like these, just to make sure you’ve dotted all the i’s and crossed all the t’s. But it’s particularly important to secure the assistance of someone like me if your estate is still larger than these exemption amounts. For such estates, there are planning techniques that we can implement to help reduce the taxable value of your estate in order to pass more assets to your loved ones upon your death, and lessen the impact of the estate taxes. 

After your death, the duty normally falls on your executor (or perhaps a successor trustee) to file the appropriate tax returns and pay the necessary taxes. Failure to properly plan for potential estate taxes will significantly limit what your executor/trustee will be able to accomplish after your passing. Let me help you make sure that this doesn’t happen to you.

If you have taken steps to try to reduce the taxes owed, it is possible that the IRS may challenge the reported value or try to throw out the method you used. This does not mean that the executor/trustee will be in trouble; it just means that they will need to be prepared to support their position with the IRS and take it through an audit or even a tax court (or other appropriate court system). In the event of a challenge, it is critical to have a good attorney to help you ensure that all of the necessary steps are taken; and it’s my job to do just that.

Do Heirs Have to Pay Off Their Loved One’s Debts?

The recent economic recession and staggering increases in health care costs have left millions of Americans facing incredible losses and mounting debt in their final years. Are you concerned that, rather than inheriting wealth from your parents, you will instead inherit bills? Well, even if you do, the good news is; you probably won’t have to pay them.

As you are dealing with the emotional loss, while also wrapping up your loved one’s affairs and closing the estate, the last thing you need to worry about is whether you will be on the hook for the debts your parents leave behind. Generally, heirs are not responsible for their parents’ outstanding bills. Creditors can go after the assets within the estate in an effort to satisfy the debt, but they cannot come after you personally. Nevertheless, assets within the estate may have to be sold to cover the decedent’s debts, or to provide for the living expenses of a surviving spouse or other dependents.

Heirs are not responsible for a decedent’s unsecured debts, such as credit cards, medical bills, or personal loans, and many of these go unpaid or are settled for pennies on the dollar. However, there are some circumstances in which you may share liability for an unsecured debt, and therefore are fully responsible for future payments. For example, if you were a co-signer on a loan with the decedent, or if you were a joint account holder, you will bear ultimate financial responsibility for the debt.

Unsecured debts which were solely held by the deceased parent do not require you to reach into your own pocket to satisfy the outstanding obligation. Regardless, many aggressive collection agencies continue to pursue collection even after death, often implying that you are ultimately responsible to repay your loved one’s debts, or that you are morally obligated to do so. Both of these assertions are entirely untrue.

Secured debts, on the other hand, must be repaid or the lender can repossess the underlying asset. Common secured debts include home mortgages and vehicle loans. If your parents had any equity in their house or car, you should consider doing whatever is necessary to keep the payments current, so the equity is preserved until the property can be sold or transferred. But this must be weighed within the context of the overall estate.

Executors and estate administrators have a duty to locate and inventory all of the decedent’s assets and debts, and must notify creditors and financial institutions of the death. Avoid making the mistake of automatically paying off all of your loved one’s bills right away. If you rush to pay off debts without a clear picture of your parents’ overall financial situation, you run the risk of coming up short on cash within the estate to cover higher priority bills such as medical expenses, funeral cost, or legal fees required to settle the estate.

Collections, probate, and other bureaucratic minutiae is the last thing anyone feels like dealing with after losing a loved one. The best way to avoid some or all of these issues is through clear and thorough estate planning. Give us a call today, and let us help you craft the plan that maximizes your asset retention, provides for your loved ones, and brings you peace of mind.

Beware of “Simple” Estate Plans

“I just need a simple will.” It’s a phrase estate planning attorneys hear practically every other day. From the client’s perspective, there’s no reason to do anything complicated, especially if it might lead to higher legal fees. Unfortunately, what may appear to be a “simple” estate is all too often rife with complications that, if not addressed during the planning process, can create a nightmare for you and your heirs at some point in the future. Such complications may include:

Probate - Probate is the court process whereby property is transferred after death to individuals named in a will or specified by law if there is no will. Probate can be expensive, public and time consuming. A revocable living trust is a great alternative that allows your estate to be managed more efficiently, at a lower cost and with more privacy than probating a will. A living trust can be more expensive to establish, but will avoid a complex probate proceeding. Even in states where probate is relatively simple, you may wish to set up a living trust to hold out of state property or for other reasons.

Minor Children - If you have minor children, you not only need to nominate a guardian, but you also need to set up a trust to hold property for those children. If both parents pass away, and the child does not have a trust, the child’s inheritance could be held by the court until he or she turns 18, at which time the entire inheritance may be given to the child. By setting up a trust, which doesn’t have to come into existence until you pass away, you are ensuring that any money left to your child can be used for educational and living expenses and can be administered by someone you trust. You can also protect the inheritance you leave your beneficiaries from a future divorce, as well as from creditors.

Second Marriages - Couples in which one or both of the spouses have children from a prior relationship should carefully consider whether a “simple” will is adequate. All too often, spouses execute simple wills in which they leave everything to each other, and then divide the property among their children. After the first spouse passes away, the second spouse inherits everything. That spouse may later get remarried and leave everything he or she received to the new spouse or to his or her own children, thereby depriving the former spouse’s children of any inheritance. Couples in such situations should establish a special marital trust to ensure children of both spouses will be provided for.

Taxes - Although in 2011 and 2012, federal estate taxes only apply to estates over $5 million for individuals and $10 million for couples, that doesn’t mean that anyone with an estate under that amount should forget about tax planning. Many states still impose a state estate tax that should be planned around.

Incapacity Planning – Estate planning is not only about death planning. What happens if you become disabled, or comatose?  You need to have proper documents to enable someone you trust to manage your affairs if you become incapacitated.  There are a myriad of options that you need to be aware of when authorizing someone to make decisions on your behalf, whether for your medical care or your financial affairs.  If you don’t establish these important documents while you have capacity, your loved ones may have to go through an expensive and time-consuming guardianship or conservatorship proceeding to petition a judge to allow him or her to make decisions on your behalf.  

By failing to properly address potential obstacles, over the long term, a “simple” will can turn out to be incredibly costly. At the law office of Joan A. Watters, our goal is to use insight and expertise to provide you with the estate planning tools you need to ensure that your wishes are carried out in the most efficient manner possible, while providing protection and comfort for you and your loved ones for years to come.

The ‘Sandwich Generation’ – Taking Care of Your Kids While Taking Care of Your Parents

“The sandwich generation” is the term given to adults who are raising children and simultaneously caring for elderly or infirm parents. Your children are one piece of “bread,” your parents are the other piece of “bread,” and you are “sandwiched” into the middle.

Caring for parents at the same time as you care for your children, your spouse and your job is exhausting and will stretch every resource you have. And what about caring for yourself? Not surprisingly, most sandwich generation caregivers let self-care fall to the bottom of the priorities list which may impair your ability to care for others.

Following are several tips for sandwich generation caregivers.

• Hold an all-family meeting regarding your parents. Involve your parents, your parents’ siblings, and your own siblings in a detailed conversation about the present and future. If you can, make joint decisions about issues like who can physically care for your parents, who can contribute financially and how much, and who should have legal authority over your parents’ finances and health care decisions if they become unable to make decisions for themselves. Your parents need to share all their financial and health care information with you in order for the family to make informed decisions. Once you have that information, you can make a long-term financial plan.
• Hold another all-family meeting with your children and your parents.  If you are physically or financially taking care of your parents, talk about this honestly with your children. Involve your parents in the conversation as well. Talk – in an age-appropriate way – about the changes that your children will experience, both positive and challenging.
• Prioritize privacy.  With multiple family members living under one roof, privacy – for children, parents, and grandparents – is a must. If it is not be feasible for every family member to have his or her own room, then find other ways to give everyone some guaranteed privacy. “The living room is just for Grandma and Grandpa after dinner.”  “Our teenage daughter gets the downstairs bathroom for as long as she needs in the mornings.”
• Make family plans.  There are joys associated with having three generations under one roof. Make the effort to get everyone together for outings and meals. Perhaps each generation can choose an outing once a month.
• Make a financial plan, and don’t forget yourself.  Are your children headed to college? Are you hoping to move your parents into an assisted living facility? How does your retirement fund look? If you are caring for your parents, your financial plan will almost certainly have to be revised. Don’t leave yourself and your spouse out of the equation. Make sure to set aside some funds for your own retirement while saving for college and elder health care.
• Revise your estate plan documents as necessary.  If you had named your parents guardians of your children in case of your death, you may need to find other guardians. You may need to set up trusts for your parents as well as for your children. If your parent was your power of attorney, you may have to designate a different person to act on your behalf.

Seek out and accept help

.  Help for the elderly is well organized in the United States. Here are a few governmental and nonprofit resources:
• www.benefitscheckup.org – Hosted by the National Council on Aging, this website is a one-stop shop for determining which federal, state and local benefits your parents may qualify for
• www.eldercare.gov – Sponsored by the U.S. Administration on Aging
• www.caremanager.org  -- National Association of Professional Geriatric Care Managers
• www.nadsa.org – National Adult Day Services Association

Remember: although it might not seem like the most pressing thing, it is essential to take care of yourself, and your resources. One of the best ways to manage your responsibilities as a member of the Sandwich Generation is to secure some peace of mind by making sure that your estate plan is up to date, and accurately tailored for your special family situation. A good estate planning attorney will help you shoulder this responsibility with careful planning, knowledgeable guidance, and the assurance that they will be by your side to see you through not just the creation of your plan, but its successful administration, for your life and beyond. We would be honored to assist you and your family in this endeavor, with personalized estate planning that is right for you. Call or explore our site today.

What Does the Term "Funding the Trust" Mean in Estate Planning?

If you are about to begin the estate planning process, you have likely heard the term "funding the trust" thrown around a great deal. What does this mean? And what will happen if you fail to fund the trust?

The phrase, or term, "funding the trust" refers to the process of titling your assets into your revocable living trust. A revocable living trust is a common estate planning document and one which you may choose to incorporate into your own estate planning. Sometimes such a trust may be referred to as a "will substitute" because the dispositive terms of your estate plan will be contained within the trust instead of the will. A revocable living trust will allow you to have your affairs bypass the probate court upon your death, using a revocable living trust will help accomplish that goal.

Upon your death, only assets titled in your name alone will have to pass through the court probate process. Therefore, if you create a trust, and if you take the steps to title all of your assets in the name of the trust, there would be no need for a court probate because no assets would remain in your name. This step is generally referred to as "funding the trust" and is often overlooked. Many people create the trust but yet they fail to take the step of re-titling assets in the trust name. If you do not title your trust assets into the name of the trust, then your estate will still require a court probate.

A proper trust-based estate plan would still include a will that is sometimes referred to as a "pour-over" will. The will acts as a backstop to the trust so that any asset that is in your name upon your death (instead of the trust) will still get into the trust. The will names the trust as the beneficiary. It is not as efficient to do this because your estate will still require a probate, but all assets will then flow into the trust.

Another option is to name your trust as beneficiary of life insurance and retirement assets. However, retirement assets are special in that there is an "income" tax issue, so it is important to seek competent tax and legal advice before deciding who to name as beneficiary on those retirement assets.

At the law office of Joan A. Watters, our goal is to begin by creating the estate plan that is right for you, and then to follow that creation with guidance in funding your trust, keeping it up to date, and ultimately administering the terms that you laid down to protect your assets and provide for your loved ones when the time comes. 

Estate planning is not a transaction; an effective estate plan is a lifetime process. That’s why we offer an Estate Plan Maintenance service for our clients. Our yearly membership is called PathPlan©, and is designed to give you peace of mind that your planning is in order, up to date, and includes any and all changes required to ensure your wishes are in place and carried out. 

When you enroll in PathPlan© you engage us to continue as your personal attorney, and guide along your path to peace of mind. We will be there to make sure your plan is regularly reviewed and refined, that your file is maintained and updated, and that your healthcare wishes will be honored. Our job is to ensure the continued integrity of your plan, and confirm that your goals are being addressed. 

With PathPlan©, you can rest easy knowing that you’re on the right track with a guide who knows the way.

You’ve Established an Estate Plan. Do You Know Where the Documents Are? Does Your Family?

For most people, finally establishing an estate plan is a big step that they have undertaken after years of delay. A second step is making decisions regarding the executor, trustees, beneficiaries, funeral costs and debt, and a third step is actually completing the Will. There is, however, a fourth step that is often skipped: placing the original will and other critical documents in a place where it can be found when it is needed. 

As far as Wills are concerned, this step is more important than you might think, for two reasons:

1. If your Will can’t be found upon your death then, legally, you will have passed away intestate, i.e. without a Will.
2. If your loved ones can only locate a photocopy of your Will, chances are the photocopy will be ruled invalid by the courts. This is because the courts assume that, if an original Will can’t be located, the Willmaker destroyed it with the intention of revoking it.

Options for Storing the Original Copy of Your Will 

Because an original Will is usually needed by the probate court, it makes sense to store it in a strategic location. Common locations traditionally recommended by estate planning attorneys include: a fireproof safe or lock box, a safety deposit box in a bank, or perhaps at the local probate court (if they provide such a service).

However, with the advent of electronic storage systems and their ever-increasing security and accessibility, a new option is to store your Will is in an online document banking system. Our law office offers just such a service, simply called "The Registry". The Registry allows you (and whoever else you designate) to access your Will at any time, and from any location with access to the internet or a phone. The Registry is also ideal (and recommended) for storing other important documents, such as your health care directives.

By making sure that your original Will is safe and can be found when needed, you don’t just ensure that it can be used when the allocation of your assets and debt occurs. You also ensure that disputes, confusion and disappointment don’t occur years after your death. While uncommon, in some cases, by the time the Will has been discovered, the assets of the decedent have long been distributed according to intestacy laws and not the decedent’s Will. Intestacy laws are essentially the “default Will” that the state establishes for individuals who do not have their own estate plan.

You’ve taken the trouble to protect your assets and loved ones by creating an estate plan. Don’t leave its discovery to chance. Ensure that your executor or trustee can easily and reliably find your Will when it comes time to put it into effect. And if you haven't yet drafted your Will, we'd like to help you get started. That's why every February, our office drafts Living Wills completely FREE OF CHARGE. Call or make your appointment online today! 

If your Living Will, Health Care Power of Attorney, and HIPPA authorizations are all drafted and up-to-date, then congratulations! You’ve made excellent progress in protecting your wishes, and creating important guidelines for your loved ones and medical professionals. But now what?

Now, it’s time to make sure these important documents are available to help you when you need them. In the event of an emergency or unforeseen incapacity, your doctor is going to need immediate access to these documents to make sure your wishes are honored. Quick access to your medical directives is the best way to avoid costly hospital runarounds and distressing speculations about your wishes, and to ensure that any special medical needs you may have are addressed post haste.

We offer a unique service to ensure your directives remain accessible, yet secure. It’s called “The Registry” -an online, cloud-based, high security document bank service that gives you access to your healthcare directives anytime, anywhere. Your information is kept perfectly safe, yet completely accessible to the very specific people who will need it.

Don’t let your careful planning fail you when you need it most! We want to help you provide your loved ones with guidance and peace of mind. That is why each February we draft LIVING WILLS FREE OF CHARGE. Call or visit us online today. 

The cost of healthcare is an expensive necessity, but the one thing that imposes a heavier emotional and financial cost than any medical procedure is not having Health Care Directives outlining your medical wishes.

As many recent cases have shown us, these important documents can mean the difference between your health care wishes being carried out in a timely, peaceful fashion; or family members fighting over sensitive decisions like nursing home placement or life support removal; a situation that is expensive, frustrating, and sad. 

We prepare three vital documents to cover your health care wishes: a Living Will, a California Health Care Directive, and a HIPPA authorization. AND we provide you with a unique card that will allow access to these documents anywhere, anytime.

A Living Will expresses your essential preferences -like life support- and is an extremely important document which forms the basis of your control over your healthcare wishes. 

We want to help you provide your loved ones with guidance and peace of mind. We care deeply about this issue. That is why each February we draft LIVING WILLS FREE OF CHARGE. Call or visit us online today.