Event details http://www.everycircle.com/en/events/2014aug26seminar Rev 07/09/14, 5:55am
`Dirty Dozen` Estate Planning Mistakes: and how to avoid them
111 N. Market St, Tower 2, Ste 300, Downtown San Jose
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My Top Ten List of Estate Planning Mistakes
Mistake #1 - Failure to Create a “Real” Estate Plan
Mistake #2 - Failure to Plan for Health Care Decisions
Mistake #3 - No Plan to Control Financial or Other Property While Incapacitated
Mistake #4 - No Wealth Transfer Strategy
Mistake #5 - Failure to Plan for Estate Taxes
Mistake #6 - Failure to Consider Trusts for Children
Mistake #7 - Failure to Preserve Income Tax Referral Benefits
Mistake #8 - Failure to Organize Your Estate Plan and Other Documents
Mistake #9 - Failure to Protect Your Children in Second Marriages
Mistake #10 - Failure to Provide for Gifts By Memorandum
Mistake #11 - Failure to Include a HIPAA Release
Mistake #12 - Believing That Estate Planning is a One-Time Event
Tue. August 26 http://2014aug26seminar.eventbrite.com
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Estate Planning for Life [or Who Needs an Estate Plan?]
By John M. Daley, Esq. September 19, 2013
More than half of the U.S. population does not have any of the estate planning documents they need to protect themselves in the event of death or incapacity. Moreover, only a relatively small percentage (around ten percent) have a complete and current set of the documents they need to protect themselves and their family in the event of death or incapacity.
Failure to have a complete and up-to-date Estate Plan in place can result in the wasting away of your estate, pain and suffering for your family, and huge Court costs and attorneys’ fees.
Moreover, the need for Estate Planning does not suddenly arise when you become middle-aged or older. Karen Ann Quinlan stopped breathing after returning home after a party at age 21. Terri Schiavo had a heart attack at home at age 26, after which she fell into a coma and vegetative state. In both cases, the failure of these individuals to have any Estate Plan documents resulted in years of litigation and at least hundreds of thousands of dollars in attorneys’ fees.
The truth is that you need to have some form of Estate Plan in place from the day you become an adult. As your life changes, you need to add to or change your Estate Planning, but you should never be without some form of Estate Plan from that day forward. In this article, I will explain what sort of Estate Planning you need for your stage of life, and when you need it.
Young Adults With Few Assets
In forty of the fifty States, including California, you become an “adult” when you turn 18 (the “age of majority”). The age of majority is (1) 19 in three states (Alabama, Delaware and Nebraska), (b) 21 in one State (Mississippi) and (3) 18 or some other age or upon graduation from high school in six States. Once you become an adult, you have the legal “capacity” to make your own legally binding decisions, and your parents lose the right to make them for you.
So what does this have to do with Estate Planning? Most significantly, it means that your parents no longer have the power or right to receive your medical information, make decisions about your medical care, or handle your bank or other accounts. In other words, if you have an accident or emergency, your parents (1) are not entitled to receive your medical records or make medical decisions on your behalf and (2) have no control over your bank accounts or other assets (e.g., they cannot pay your auto loan, life insurance, mortgage or other bills from your account).
Remember Karen Ann Quinlan? At age 21, Ms. Quinlan became unconscious after arriving home from a party where she had consumed alcohol and Valium. She had been on a radical diet to lose weight. After arriving home, she was put to bed by her roommates, but was found not breathing fifteen minutes later. She received mouth-to-mouth resuscitation which resulted in improved color, but she did regain consciousness. She was later found to have suffered irreversible brain damage and to be in a “persistent vegetative state.”
After being in this condition for several months, her parents asked the hospital to remove their daughter from the ventilator, but the hospital refused. Eventually, the Quinlans had to file a petition with the Court to obtain the authority to direct the hospital to remove the ventilator. Since the lower Court refused to give the parents to power to make this decision, the Quinlans had to go all the way to the Supreme Court of Massachusetts to obtain the authority to make this decision for their daughter.
Do not let this happen to you or your adult children. If you are a parent, speak to your adult or soon-to-become-adult child and offer to have an Advance Health Care Directive, HIPAA Release and Living Will prepared for them so that you (or someone else they choose) has the legal right to make medical decisions for them if they become incapacitated. Your child should also have a Power of Attorney giving his or her parents or another person they trust the legal power to deal with their assets; for example, to use their bank account to pay their car payments, pay rent or mortgage, pay insurance premiums, or to take any other actions with regard to their assets which would be appropriate under the circumstances.
If you are an adult and your parents have not taken care of this problem for you, you should take care of this issue on your own. If your circumstances are uncomplicated (few assets, no children), you can download and use online forms for Powers of Attorney, Advance Care Directives and HIPPA Releases in several States, including California. However, these forms are not always easy to use or understand, so it is better to seek the assistance of a qualified Estate Planning Attorney. Although all attorneys have their own fee schedules, my guess is that you can get these documents (and perhaps a basic will) prepared for less than $500.00.
When You Have Children, Get Married or Acquire Significant Assets
Once you have children, get married, acquire assets in excess of whatever amount your State specifies as the maximum for an abbreviated procedure (e.g., if you have less than $150,000 in total assets, your estate could be resolved through an “affidavit” procedure in the State of California), you also need at least a Will and/or Revocable Living Trust.
If you have children, you need a Will to appoint a Guardian for your minor children in the event of your death. You cannot appoint a Guardian for your children in a Revocable Living Trust, and even your decision to appoint a guardian in your Will is subject to approval of the Court. Thus, if you have children, you need a Will whether or not you are married. If you do not make a choice, the Court might well appoint someone other than the guardian you prefer.
You should also create either a Revocable Living Trust or a Testamentary Trust (i.e., one which is created upon your death) to care for the needs of your children. The Trust should include provisions regarding how the money is to be spent while your children still minors and how the money is to be distributed (e.g., in stages, upon graduation from college, etc.) when your children become adults.
Married couples can rely upon many statutory protections, especially in California, which is a community property State. For example, if you and your spouse purchase a home as community property, which is typical, the property automatically passes to the surviving spouse, whether or not you have children.
However, in many States, separate property of the deceased spouse will have to be shared with the parents or other relatives of the deceased spouse unless there is a Will or Trust which provides otherwise. In order to ensure that the surviving spouse gets what he or she needs, you need either a Will or a Trust.
Acquiring Assets (Especially a Home)
The more assets you have, the more likely it is that you need a Will and a Revocable Living Trust to preserve your Estate. As I mention above, the State of California currently has an “Affidavit” procedure for estates with $150,000 or less in total assets. The value of your assets depends upon its gross market value, without regard to any loan which is secured by the property, such as a mortgage or “Deed of Trust.”
If you own a home or condominium in any metropolitan area in California, you will almost certainly need a Revocable Living Trust, since even the most basic home in these areas costs more than $150,000.
Special Needs Planning
If you have a child who is born with a disability, or who becomes disabled, or if your spouse or other loved one is suffering from a disability which is going to require public benefits, you need to add Special Needs Planning to your Estate Plan.
If you have an Estate Plan prepared by a WealthCounsel® attorney, your Revocable Living Trust already includes what a default “Supplemental Needs Trust” for your beneficiaries, but you should consider creating a standalone plan if you have a child or other love one who you already needs public benefits.
Marriage at a Later Age or Remarriage After Death or Divorce
If you marry at a later age, or remarry after a death or divorce, you should definitely consult with an Estate Planning Attorney.
First, and especially if one of the couples or both of you have substantial assets and/or your own children, you should decide whether you want to enter into a Marital Agreement. A Marital agreement can be used to retain the separate nature of the property each of you brings into the marriage.
You also need to decide what happens to the separate and community (or joint) property upon your death to avoid disinheriting your own children. For example, after the first to die, do you want your assets to go to your spouse, or to your spouse and children from the prior marriage?
International Issues for Married Couples and Singles
There are a several estate planning issues which arising with respect to Estate Planning for U.S. citizens living abroad, foreign citizens who own property in the United States, U.S. citizens who own property in foreign countries, and foreign citizens who are residents of the United States.
If you fall into one of these categories, you need to consult with an Estate Planning attorney immediately to find out what issues you need to address.
Asset Protection Trusts
If you or your spouse is a profession which engenders lots of claims (e.g., a medical doctor, lawyer or owner of substantial residential real estate), and if you have enough assets to justify the expense, you should consider creating an Asset Protection Trust in one of the several U.S. States which have them, or even offshore.
For most individuals, the best asset protection is good old-fashioned insurance, plus umbrella insurance, which is relatively inexpensive. However, there are now several U.S. States which permit the creation of specially designed “asset protection trusts.” Although the effectiveness of these Trusts has not yet been fully tested, they offer at least some protection at a relatively low cost when compared to offshore trusts.
Offshore Trusts are more expensive, but they seem to offer greater protection for your assets and might be appropriate in some cases.
Planning for Alzheimer’s and Other Types of Disability
If you or your spouse are suffering from Alzheimer’s or another ailment which may require long term care, you should consult with an Estate Planning or Elder Care Attorney to see what you can due to preserve as much as possible of your Estate, while at the same time ensuring your eligibility for governmental benefits.
Upon the Death of a Spouse
You should see your Estate Planning attorney shortly after the death of your spouse. The issues which need to be addressed at this time depend upon what sort of Estate Plan you had while you were married. For example, if you have an AB Trust, the assets of a couple need to be separated and assigned to different Trusts.
Moreover, even in the simplest estate, an Estate Tax Return has to be filed to preserve the deceased spouse’s marital deduction. This feature of the Estate law did not come into effect until 2010, and was made permanent in the Estate Law passed on January 2, 2013.
About the Presenter
John M. Daley
PROTECTING YOUR BUSINESS AND ASSETS WHILE HELPING YOU PLAN FOR THE FUTURE
Whether you own a business or need personal representation, we can help. We are conveniently located in San Jose, CA, and can serve clients throughout Santa Clara County, the Bay Area and beyond. We have provided legal assistance to individuals and businesses for more than 37 years in several different areas of the law.
Mr. Daley has over twenty years experience handling transportation law, transportation litigation and international trade disputes and is admitted to all federal courts in California, the United States Court of International Trade in New York City, and the Federal Court of Claims in Washington, D.C.
Mr. Daley is also a member of WealthCounsel®, the largest organization of Estate Planning attorneys in the country. The Estate Plans we prepare for you have been developed based upon the combined expertise of experienced Estate Planning attorneys throughout the United States and include many provisions and features that are not found in any other plans.
ESTATE PLANNING FOR YOUR BENEFIT AND THE BENEFIT OF YOUR HEIRS
The Estate Plan we prepare for you is specially designed to reflect your individual needs and concerns based upon our in-depth interviews and consultations with you. Each of our plans is designed to fulfill your particular needs and desires, as you explain them to us. Moreover, after your plan is complete, we continue to keep in touch with you through emails and other communications to ensure that your Estate Plan continues to serve your needs and desires. Our goal is to create a life long relationship with you and your heirs.
LAW OFFICES OF JOHN M. DALEY
111 North Market Street, Suite 300 | San Jose, CA 95113
408 286-0200, Fax: 408 418-4612, Cell 408 693-0715
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