Choosing Trustees for Irrevocable Trust

Irrevocable trusts are created in two ways:

1.  A revocable trust becomes irrevocable after the grantor has died.

2.  An irrevocable trust is established while the grantor is living to save estate taxes (by removing assets from the grantor's estate) and/or for asset protection or Medicaid planning.

 

While a grantor may technically be allowed to serve as the trustee of an irrevocable trust he/she creates, it is not a good idea at best. That is because if the grantor has any discretion with trust asset distributions, it could lead to inclusion of the trust assets in his estate for tax, Medicaid and other purposes, which could frustrate the trust's objectives.

 

Often there is someone the grantor knows who the grantor suggests to be the trustee. Typical choices are the grantor's spouse, sibling, child, or friend. Any of these may be an acceptable choice from a legal perspective, but may be a poor choice for other reasons.  Client trustee appointments will frequently be made with little consideration of the qualifications the trustee should have. Likewise, those who agree to be trustees typically have no idea what they are getting into. Non-professional trustees often are overworked, underpaid, unappreciated, find they are dealing with unhappy and unappreciative beneficiaries, and may even wind up being sued by the beneficiaries.

Non-Tax Considerations for Selecting a Trustee

·         Judgment: Clients typically want their trustee to make the same decisions they would. Someone who shares the grantor's values, virtues, spending habits and faith is more likely to do this. Also, consider whether the trustee candidate will be aware of his own capabilities and weaknesses. If the trustee candidate does not have accounting or investment experience, would he/she have the judgment to admit this and engage an appropriate qualified professional?  

·         Availability/Location: Does this trustee candidate have the time required to be a trustee? Will he/she be available when needed or will work and/or family demands leave too little time for trust responsibilities? Where does the candidate live? If the trustee lives in a place different than the trust situs, different laws may apply. Is living near the beneficiary important?

·         Longevity: How long will the trustee be needed? Many grantors are most comfortable with friends who share their values and have gained wisdom from life experiences, but someone near the grantor's age may not live long enough to fulfill the job. A trust established for the grantor's child will likely need a trustee for many years to come. Thus, for trusts that may last a long time, a corporate trustee is often the preferred choice.

·         Impartiality: The trustee must be capable of being impartial among the beneficiaries. This is especially difficult to do if the trustee is one of several beneficiaries. Corporate trustees, because they can be impartial, are often chosen to prevent a sibling or relative from being placed in an uncomfortable (and often unfair) position.

·         Interpersonal Skills: The trustee needs to be able to communicate well and effectively to the beneficiaries and to professionals who may be involved with the trust. Some people may be good record keepers or investors, but lousy at diplomacy or feel intimidated or even be offended if a beneficiary gets an attorney. A good trustee will need to be able to work calmly and well with all involved.

·         Attention to Detail: Does the trustee understand the serious duties that come with the job and is he/she willing to be accountable for his/her actions? Fiduciaries are often thought by the beneficiaries to be guilty until proven innocent. While it may not happen, the trustee should assume he/she will be sued at some point and keep meticulous records as a ready defense. A trustee who expects to be sued will be much better prepared than one who doesn't think it will happen and, as a result, does not take the record keeping requirement seriously.

·         Investment Experience: While it is helpful to have investment experience, the trustee can certainly get by without it, as long as he/she recognizes this is an area for which to secure professional help. Also, if the trustee lives in a place different than the trust situs, different investment laws may apply, making it especially prudent or even essential to seek professional assistance.

·         Fees: The non-professional trustee rarely discusses fees with the beneficiaries. Often, family members and friends will not charge a fee for their services out of a sense of family duty or respect for the grantor. But trustees should be paid and, more often than not, an unpaid trustee will eventually come to that conclusion or fail to diligently carry out his duties. From the outset, a trustee should keep close track of time and expenses so that a reasonable fee can be substantiated. Generally, a reasonable fee is what a corporate trustee would charge, so thinking that a non-corporate trustee will do the same necessary work for less is false economy.

·         Insurance: Anyone serving as a trustee needs to have plenty of insurance (errors and omissions or liability). Some of the laws that govern trustees are absolute standards, so a trustee needs to have adequate insurance for protection in the event of a mistake or an innocent error. The amount of insurance needed can depend on the degree to which a trustee is indemnified. However, legal defense costs in trustee litigation can be very large and are typically borne by the insurer.

·         Indemnification: This often comes up when family members or friends are serving as trustee. Grantors want to indemnify family members and their friends; they do not want them to be sued. It is possible to reduce or eliminate the prudent investor rule for such trustees. However, indemnification is a two-edged sword because it may result in the non-professional trustee not taking the job seriously.

 

Tax Considerations

 

·         Estate Tax:  If a purpose of the trust is to remove assets from the grantor's estate, the grantor cannot have any role in determining who gets distributions or when they occur. However, the grantor can have the power to remove and replace the trustee or to control the investments of the trust. Neither of those will cause estate tax inclusion providing the grantor cannot appoint a trustee who is related or subordinate to the grantor (as would be a brother, employee or someone else who will capitulate to the grantor's wishes). Interestingly, there is no problem appointing, at the inception of the trust, an initial or successor trustee who is related or subordinate to the grantor.

·         Income Tax:  A non-adverse trustee having certain powers may trigger grantor trust rules and cause the grantor to be taxed on the trust's income. In some instances the client may not want the tax to come back to the grantor and instead want a trust that is a separate tax-paying entity for which the income that is distributed to the beneficiaries is to be taxed to the beneficiaries.  Because the trustee’s identity may affect state income tax as well, you may be able to shift the trust situs to a state with a lower income tax rate.  Depending on the trust assets, this could be important as some investments (such as oil and gas) may be taxed significantly higher in some states than in others.

 

Beneficiary Removal and Replacement of Trustee

 

This is an area that is customizable for each trust and can help maintain some downstream flexibility. Some grantors may not want the beneficiaries to be able to remove the trustee, especially if the grantor is aware of family quarreling. But if the corporate or individual trustee knows it cannot be replaced there is little need for responsiveness or careful attention to investments. Because there does need to be a way to have the trustee removed if things should deteriorate, the document can include that the trustee can only be removed for cause as determined by the court. On the other end, spendthrifts may want to "trustee shop" until they find one that will do whatever they want, so there will need to be some restraints on when a trustee can be replaced.

 

Team Approach

 

There are times when a team can do a better job than a single trustee. Having more than one trustee, even with different duties and responsibilities, can work well for many situations. The trust can benefit from assigning the trustees specific duties based on their strengths and experience. Of course, the fewer people who are involved, the less complicated the administration. Also, disagreements will have to be worked out. If there are two trustees or any even number, deadlocks are possible. With an odd number, a simple majority would be needed. If an agreement cannot be reached, the court can be allowed to intervene as a last resort.

Also, family member trustees can work with professionals as paid advisors instead of as trustees. This would allow the advisors to provide valuable input and insight into both the grantor's desires and the personalities of the beneficiaries, without being so exposed to possible lawsuits.

      

Conclusion

   

A competent trustee is as important to the success of a trust as its being well-drafted. Naming a favorite family member as trustee may not be the smartest (or kindest) thing the grantor can do. As experienced professionals who have seen the consequences of unwise choices for trustee, we must counsel our clients with their and their beneficiaries' best interests in mind.

Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

This information on this site is designed to provide a general overview with regard to the subject matter covered and may not be state specific. The authors, publisher and host are not providing legal, accounting, tax or other specific advice to your situation.

Copyright © 2011 Alvis Frantz and Associates.

What are you waiting for?

When I meet with a client for the first times, one of the very first questions I ask them is why they wanted to meet with me and why are they coming in for estate planning now.  I constantly hear people tell me they have been putting it off and putting it off and putting it off.  But what is it that finally brings them in.  It's typically one of four reasons:


• Travel.
• Hospitalization or terminal medical diagnosis
• Change in family status (marriage, divorce, death, birth of a child)
Many of the reasons that cause people to stop procrastinating and get things in order is when they are forced to face their own mortality.  For many, once we begin to come to terms with the inevitable, we begin taking those steps to prepare and protect our loved ones. 

Without some "push" we can easily find an excuse to put this on the "to do" list but never get it done.  Here are some common excuses:

• I/We don't have time
• I/We can't get all the paperwork together
• I/We don't have the money
• I/We need help from a family member and that person is just too busy
• I/We don't have much and therefore don't need anything
• Don't know anyone who I would want to have raise my kids if something happens to us
• Don't have the money, and for many superstitious people....
• If we do it (write a will, buy life insurance, etc.) something bad will happen to us

What I always find though is that once people do get it done, they always feel so much more secure and confident.  The answer to many of these questions lies in one of a few answers....

• Time:  It may take a few hours now, but it will take your loved one years later if you don't
• A small investment now will same your estates tens of thousands later
• Everyone need some planning - unless you want someone else to make your decisions for you.... like the State and a Judge.
• If you don't pick someone to raise your children if you can't, the State and a Judge will decide for you.
• If you do it or don't do it.... we are all going to die someday.  Being prepared will only make it easier for your loved ones to grieve since there will be a lot less hassle.

If you can't focus on estate planning right now, set a timeline.  Don't wait until you are rushed, scarred or after it's too late.  Create a savings plan for it if money is your issue (don't skimp though... you get what you pay for).  The next time something gives you that big "push", jump on it, call us, I am sure you will feel so much better when it's done. 

4 Tips to Reduce the Potential for Will and Trust Disputes:

Advise your beneficiaries of your distribution plans, especially when children are being treated unequally. Will contests and litigation arise from disappointed feelings of entitlement. Telling the children ahead of time what their shares will be may avoid a later dispute. (Although it could cause family problems now though so be careful. Sometime writing a “family love letter” to your children to be read after your death, explaining why you set up the distribution plan the way you did may help as well. This will vary from family to family.

Use a Trust - not just a Will. Since trusts can be funded and operate during lifetime, it is difficult to contest on the grounds that the individual was unaware of its terms. When the Trustor of the trust dies, there is no need to begin a court proceeding to "prove" the validity of the trust, like there is for a will.

Use Disinheritance Or No Contest Clause.  The goal here is to prevent beneficiaries from causing a legal dispute after someone dies. A lot of trust and estate litigation is not about the validity of the document, but about how it is to be interpreted or how it is being managed. In order to reduce this type of litigation, a disinheritance clause can cause a forfeiture of a beneficiary's interest if such a challenge is made. The entire estate plan must be consistent with this clause.

Use Mediation or Arbitration Provisions in your plan. Arbitration or mediation cannot be used with respect to the challenge of a document's validity unless the parties agree to it. Using a disinheritance clause to cause forfeiture if the parties will not participate can be used. This could stop claims that are filed only to harass other beneficiaries or to delay distributions to others. Another approach would be having the parties enter into a contract agreeing to arbitration before the transfer.

Disclaimer: The information provided is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to your particular issue or problem. Use of this information or any related information does not create an attorney-client relationship between ALVIS FRANTZ AND ASSOCIATES. The opinions expressed at or through this site are the opinions of the individual authors and does not reflect the opinions of any firm or attorney.

Unmarried Couples – What they need to know to protect themselves and their estates:

There are many unique issues facing unmarried couples. Just because two people chose not to marry, or may not have the legal right to marry, does not mean they are without options to protect each other with their estate planning.

As California does not recognize common law marriage nor same sex marriages, these couples do not have the same protections as legally married couples. Their partner is not considered a “next of kin” when it comes to health care, they are not a legal “heir” under the probate code, and there could be issues regarding child custody rights. Therefore, it is very important for couples to understand what their legal status as a couple is and what legal implications that may have on them.

One way cohabitating couples can protect themselves is through agreements such as Domestic Partnership or Cohabitation Agreements which act like a Prenuptial Agreement (but without the “nuptial” part). These documents clarify ownership of co-owned property, use of property, handling of debts, etc. Additionally, Wills, Trusts, Powers of Attorney, and Advance Directives are other extremely important estate planning documents that will allow couples to name who will manage their financial affairs and health care when they are no longer able to, and how their estate will be distributed after death. Children bring up a whole set of other issues, since custody and parenting rights can’t be contracted. As a result, nominations of guardianship in Wills are incredibly important.

Remember, estate plans aren’t for you; they’re for the people who depend on you. So if the law doesn’t provide you protection for each other, you need to create it through agreements and estate planning documents.

Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

A Gift Isn't Always A Gift

If you as a parent give a substantial amount of money to one of your children, it is important for the parents to decide how they want to treat that money.  First, if you decide it is a loan, it is important to have a proper promissory note drawn up and terms of payment.  It is also important to determine what will happen if the loan is not repaid.  For example, do you want the loan to be forgiven if you die, or should the unpaid balance be deducted from that child's inheritance.

But what if you decide to treat the amount as a gift.  If you have more than one child, it is very important to understand and document how you want to address this gift.   If the other siblings discover a gift  was made to one of them but not all of them, it could create some resentment or fighting after both of the parents have  passed away.

When making a gift to a child, you need to decide if this is an outright gift with no bearing on future inheritance, or rather, do you want the gift to be considered an "advance" of future inheritance.  In this case, the gifted amount would be deducted from that child's share of their inheritance at the time they are to receive their inheritance.

So in simple terms,  if you chose to treat the amount given as a "gift", you will need to do one of the following (depending on your wishes):
1) Intend to provide disproportionate amounts to your children through gift and inheritance
2) Gift equalizing amounts to all siblings (be sure to understand any tax implication of your gifting)
3) Consider the gift an advance on inheritance.

Whichever option you choose, you should be sure to document, document, document - either with an update to your will and/or trust, in other writing, or through documented action.  If you don't, there will most likely be a a great deal of fighting and frustration among your children after you have passed away.

Disclaimer: The information provided is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to your particular issue or problem. Use of this information or any related information does not create an attorney-client relationship. The opinions expressed at or through this site are the opinions of the individual authors and does not reflect the opinions of any firm or attorney.

CONSERVATORSHIPS - The result of not preparing.

Client's mom & dad did their own trust. Dad is deceased and mom has alzheimers. Trust wasn't done right and there was no power of attorney. For son to get mom's property into her trust, he has to go to court to be appointed a conservator of mom's estate. Have your parents set up their estate plan properly? Call Amy Alvis at 516-1617 for an estate plan consult.

What happens to my Facebook, Email, Website when I die?

When we think about estate planning, we immediately think about how our wills and trusts will protect our physical possessions, our home and our money. But what about your Facebook account, your email, your twitter accounts or even your web site? (For those Facebook addicts.... who will make sure your Farmville crops get harvested when you are no longer able to tend your farm?) But seriously, even if you are not hip with the latest social media, almost everyone has some forms of online account such as email, bill pay, maybe even a dating site membership. All of these accounts have user i.d.'s and passwords. Does anyone else know this information or at least where you store this information in the event that something happens to you?
It is not always easy for someone to just call up Yahoo and ask them to close out an email account. Many internet providers consider this information to be private and will not just send you the passwords without legal authority. Google mail requires a copy of a death certificate, copy of a power of attorney or birth certificate and an email sent front the account you are trying to close. With MySpace, the account dies with the person.

So what is the solution? Keep a file of all your log in information on a flash drive or stored on your computer somewhere but name the file something unique... not "passwords". Give a copy of this to a trusted individual, your agent, successor trustee, executor, family member, etc. When you add log in information or change passwords, be sure to update that file as well. If you prefer not to give this file to anyone else, keep it in a safe or safe deposit box, but be sure to let someone know it exists, and where to find it.

Having a Power of Attorney is a great tool as well, but most powers do not specifically provide for the power to access internet and/or email accounts. Therefore proper drafting is important. I have created a provision specifically for just such a situation for my clients.

There are also companies out there, such as Legacy Locker, which acts like a safe deposit box for your log-ins, account information, etc. They also provide personalized instructions to survivors as to how you want your online identity handled.

Websites are another issue you may have to consider. If you have a website, what happens to it when you die? You can actually leave your website to a beneficiary - especially if your website provides you passive income, this could be a valuable asset you will want to protect with your estate planning.

So as you can see, estate planning has a variety of new issues to consider when planning, so meeting with a trust and estate attorney who is current on the latest web based media will put your estate plan one step ahead of the rest.


When we think about estate planning, we immediately think about how our wills and trusts will protect our
So as you can see, estate planning has a variety of new issues to consider when planning, so meeting with a trust and estate attorney who is current on the lastest web based media will put your estate plan one step ahead of the rest.

For more information, call Amy Alvis, Esq. at Alvis Frantz and Associates A Professional Law Firm (925) 516-1617, email at info@alvisfrantzlaw.com

Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

Now What.... Estate Tax in Limbo

Okay, so it seems like there's a big hiccup in the proposed extention of the estate tax law. Basically congress failed to finalize any changes in that tax law. It is expected that they will resume after the holidays but until then, we are all in planning limbo.

What is also at issue is if/when they do enact a new tax law, will it be applied retroactively. The court have upheld a retroactive application of income tax laws, but the issues as it pertains to estate tax has not yet been faced.

Here's the rub: See, typical tax issues are "regulations" and not "statutes". They are handled differently. Courts can can "interpret" statutes to tell us how they apply. On the otherhand, the IRS can simply issue a formal "Notice" explaining that the tax consequences of a certain type of transaction that is under review and then later apply a "regulation" to apply.

Now with respect to the Federal Estate Tax issue, it is NOT a "regulation", but rather an actual "statute" so some elected officials see it as importants (like a statute) where others are much more casual about it like they are with "regulations".

For example, on December 4th, the House of Representatives passed an Estate Tax Bill which provides that the current law would remain in effect. The House did not including it in any bills to be passed by the senate by the end of the year. (Senate is busy with health care, go figure)

So, maybe people think no estate tax is a great thing if you die in 2010. The grass is not always greener though and kids, don't think that this is the perfect opportunity to wait until Jan 1 to pull the plug on the heart and lung machine.

As it stands today, we are back where we started.... no estate tax for 2010 and in 2011 it will revert back to the old rate of 55% for estates over $1 mill (all the more reason to rejoice in this horrible houseing market, no?)

For two more days at least, married couples (with proper trust planning) can shelter up to $7 million ($3.5 million for individuals). Anything over that is subject to 45% estate tax. So when heirs sell inherited property, little or no capital gains tax is due on the increase in value that occurred during the lifetime of the original owner because the inherited asset is "stepped-up" in value based on the value at the date of death.

So what does this mean if there is a new estate tax law passed later in 2010 and it is applied retroactively. Say mom and dad pass in January, you file to estate tax return, but then the law is enacted in June, now you have to go back and refile and pay taxes. What if all the money has since been dispersed, invested, spents, etc. The trustee alone may be personally liable to pay for any owed estate taxes.

So it may be a good time to plan properly to protect your heirs during this time of tax limbo.

THE FUTURE OF THE ESTATE TAX EXEMPTION

I just finished reading a a Wall Street Journal article by Laura Saunders on the issue of what will happen to the Estate Tax next year the and consequences thereof. The current Federal Estate Tax exemption ($3.5 million) is set to "disappear" next year. (The current law is expiring). Most people would say "Great! So it doesn't matter how much I own, if I die next year there will be no estate tax due for my kids." Unfortunately, there may be much bigger problems to consider.

The current estate tax law was enacted by Congress back in 2000. It increaed every year and it is currently at $3.5 million per person ($7 million per couple). In otherwords, if you and your spouse own $7 million in assets and died in 2009, you can pass all the assets to your heirs and they wont owe any estate tax - which is at 45%.

Under the current law, the will be no federal estate tax at all for 2010 and in 2011 it will follow the current lifetime gift tax exemption of $1 million per individual ($2 million for a couple). In the above situation, if the above couple died in 2011 with an estate of $7 million, $5 million would be taxed - if the rates stays at 45% - then the heirs would owe $2.25 million on their inheritance.

It is believed among most in the industry that Congress will step in very soon and extend the current exemption because of the collateral tax damage this "lapse" can cause. It is really an issue of what is called a "step-up in cost basis". This means that when someone inherits an asset, the value of that asset is "stepped up" to the current value at the time of inheritance (date of death). Without a "step-up", the asset would retain the original value from when the original owner acquired it. If the estate tax goes away, so will this "step-up in cost basis".

Here's an example:

Let's say your mother leaves your son a stock that she bought in 1970. She paid $5 for the stock but tody it is valued at $75. Under the current tax law, if mom died today, when your son inherits the stock, the value is $75. So if next year your son sells the stock and it sells for $80, he will only have to pay capital gains tax on the $5 profit. Without the "step up", the original cost of $5 for the stock would transfer to your son (called a "carry-over basis"), so when he sold the stock at $80, he would now have to pay capital gains tax on $75 profit. Now if you apply that same principal to something larger, like a home purchased for $50k in 1970 and is valued at $750k today, it is clear how much of a tax burden this will place on your son. This is also why gifting an asset versus allowing it to pass through inheritance is not always the best option.

There are many possible solutions being proposed in congress right now. Something may be passed by the end of the year, something may happen later and be applied retroactively, it is definately an area to be aware of and if you haven't developed your estate plan, yet, it is definately a time to get things done and protect your estate not only from probate, but also to attempt to minimize the tax burdens on your heirs while we still have the ability to do so.

Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.


Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication, including attachments, was not written to be used and cannot be used for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. If you would like a written opinion upon which you can rely for the purposes of avoiding penalties, please contact us.

Chosing Guardians

During one of my recent client consultations we discussed the difficulty for them to chose their guardian(s) for their children. Whether or not to include a spouse, who should be alternates, what if one of the couples chosen get's divorced, etc. Choosing guardians is probably the hardest decision for parents to make in the estate planning process.

In my research about a way to help "simplify" this process for my clients, I found a great article written by an attorney in Thousand Oaks, CA. I don't want to improperly reproduce her article without her permission, but I would like to recap some of her wise and helpful ideas.

First, she wanted to remind parents that when naming guardians, we are not just choosing who will take care of your children when you die, but who will take care of your children if you become incapacitated or incompetent.

It was noted that parents should really provide as much detail as they desire about not just who will raise their children, but how. Basically what this will allow for example, is if college education is very important to you then you can express that the guardians strive to ensure that your children go to college. If your family religion is very important to you, you can express that your child continue to be exposed to and participate in their religion. You can be as detailed as you want to ensure that your children continue to be raised with the same morals and values you would instill in them if you were still there to raise them.

She went out to list out four basic steps for parents to chose a guardian.

The first step was to "Make a List"

It was recommended that the list be long, including anyone who you think might be a good guardian. This would mean, people you would chose over the foster system basically. In doing this, also list those you would absolutely NEVER want to raise your children. You can specifically exclude someone if you want. If you are having trouble making a long list, be sure to come up with at least 3-4 though. This list can include family members, friends, colleagues, etc. especially if they have similar values to you. Remember, the person(s) who takes over as guardian for your children does NOT need to be the same person who acts as trustee over their money, so don't limit your list because of financial considerations.

The article also discussed the difference between Temporary & Permanent Guardians and your ability to chose both if that feels better for you.

Temporary guardians are basically for a certain defined time period. They may be appointed to care for your children if you become temporarily disabled or even for a short time to finish the school year out before having to move to a new city, state or country even.

Permanent guardians would be the ones to care for your children until the age of majority when you pass away. (You don't need to have separate Temporary and Permanent Guardians named, but in some situations, you may feel it would be best)

A new concept she discussed was a "Guardianship Panel" which is basically a collection of people you name (friends, family, maybe even a doctor) who will decide who would be the best caretaker for your children. Personally, I don't think this is the best "first" option as it can lead to a lot of disagreements. I think as a last resort if all named guardians are not able to serve or chose not to serve, it might be okay.

The second step was to write down "What Matters Most". Factors she states to consider about a prospective guardian are:

• maturity
• patience
• stamina
• age
• child-rearing philosophy
• presence of children in the home already
• interest in and relationship with your children
• stability
• ability to meet the physical demands of child care
• presence of enough "free" time to raise children
• religion or spirituality
• integrity pets
• potential conflicts of interest with your children
• willingness to serve
• social and moral habits and values
• marital or family status
• willingness to adopt your children

I would write these in order of importance, then see how each potential guardian measures up.

Once again, don't let money issues guide you. For example, let's say you have been a stay-at-home mom and want to be certain your children continue to haven a parent at home full time if you should die. But what if your top choice for a guardian works full-time and her children are in day care? What you can do is properly prepare financially with life insurance and investments to be able to provide adequate financial support so that the guardian you want to raise your children is able to stay at home and raise your children.

The third step was to "Match People to Priorities"

After you measured everyone up based on the above factors, narrow your list down to 3-4. Rank those in order, and there you go!

Now that you have your list, as I would ask my clients, ask yourself: what if that couple you name first should get divorced, what if one of them dies? Are you willing for either of the two to raise them on their own, or would you rather move down the list to your next choice of guardian? In some cases, it may be best to only name one person than that person and their spouse.

The final/fourth step "Make it Positive"

This will be an opportunity for parents to really share their thoughts, hopes, and fears with each other. Hopefully the two of you can grow from the process. Remember as well, when you make your wishes know, and detail them out, and share them with your intended guardians for your children:

• The relationship between all parties may increase
• As parents, you have a mutually focused idea of what you want for your children and can share this with your named guardians.
• You will know what you want to achieve with your children while you are still there for them.

So once it is all said and done, you will have "secured your peace of mind" and will rest easier at night knowing your children will be cared for according to YOUR wishes, whatever may come your way.


Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

I'll DO IT TOMORROW

Don't we all just love thinking about making our legal plans and thinking about our own mortality? I mean, really, there is just nothing more exciting, right? Okay really, we'd much rather spend our time watching water boil than think about who will take care of our kids if we should die or who will be the one to tell the doctor to pull the plug if all hope is lost.

Did you know that it is estimated that only about 1/3 of all adult Americans have actually taking the time to prepare the life and estate plans? So what about the other 2/3 of the population? Are they just simply irresponsible. Not likely. So maybe it is just a matter of procrastination. I mean, if we're young, healthy, etc, thinking about our death seems years away.

So what causes people to procrastinate with this very important task people must handle.
It really is normal behavior to avoid things that are unpleasant. How many look forward to doing our taxes... even if we know we will get a refund... it is just the "hassle" of gathering all the paperwork. We all know that death is unavoidable and that we should get our affairs in order to prepare for it and to ensure our families are protected. But since most adults under the age of 60 do no see their death as being in the near future, they don't see the urgency to plan now.

I mean, people are living longer these days so even if you live to a ripe old age, however, the downside is that, the longer you live, the greater your chances of wearing out physically and mentally before you pass on. Have you visited a nursing home lately?

So part of the "unpleasant-ness" of estate planning is people's age (or lack of old age for some), for some it may be the "hassle" of paperwork, for others it may be avoiding interpersonal relationships. For example, maybe you are not on good terms with family members and therefore, deciding who will take care of your children and/or who should inherit your assets, is some you have no idea what to do about. Whatever the reason, is really is just another excuse.

Excuses, Excuses - we all have them and I am sure we all can justify and rationalize a "reason" why we procrastinate on something. It is an amazing talent we, as humans, have mastered to a tee.

Take these rational excuses as examples to why someone has not set up their estate plan yet:

"We don’t have time, because we are getting ready to do some traveling."

Ironically, most people spend more time packing their luggage, than they do making proper estate plans. And in the the worse case scenario... what if something happens during the flight?

"My son can’t get away from work to come with me for an initial consultation."

Well, if you wait until you are incapacitated or dead, your son can take off work to sort through your assets, squabble with his siblings, hire an attorney and develop an almost first-name relationship with the probate judge.

"Since my children all get along, there’s no need to bother with any planning."

That may be true, but will they know your specific wishes for your home, your bank accounts and your investments, not to mention your heirlooms like the kind over which you and your siblings fought after your parents died.

"We don’t have an estate tax problem." or "Why, my business has no value without me."

Perhaps, but the IRS may not agree with you, especially given your inventory, equipment, real estate, loyal customer base and goodwill.

"It’s too expensive."

You have spent a lifetime working hard to build your estate. A small investment now will save potentially tens to hundreds of thousands of dollars in unnecessary probate costs and taxes. What price tag can you put on that kind of peace of mind?

SO WHAT ARE YOU STILL WAITING FOR?

Don't we all know someone or a friend of someone who has gone through the devastating emotional and financial hardship when a loved one has passed away without proper planning. Wouldn't you sleep better at night knowing you wont have to place your family in that predicament when you overcome your estate planning procrastination.

Schedule an estate planning consultation today... it's free... so what are you still waiting for? Call 925-301-7195 or visit www.LivingTrustsbyAmy.com for more information.

Fraudulent Transfers - BEWARE

Did you know that when someone tries to do something to remove an asset to avoid creditors after a lawsuit has been filed, is is most likely a "fraudulent conveyance". If has been recommended that individuals in high risk professions must keep some assets available to creditors so that the courts don't look to seize assets that may have been transferred to relatives or into protected entities (S Corps, LLC, Irrevocable Trusts, etc.)

If you tried to establish and irrevocable trust as a way to protect family assets from future lawsuits, make sure you discuss the laws against defrauding creditors (present and future) that may be relevant to any asset transfers into said trust as a way to keep those assets out of the reach of creditors.

In essence, a fraudulent conveyance requires that someone transfer an asset with the INTENTION of hindering, delaying or defrauding creditors.

Disclaimer: The information provided is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to your particular issue or problem. Use of this information or any related information does not create an attorney-client relationship between Amy Alvis and/or Living Trusts by Amy. The opinions expressed at or through this site are the opinions of the individual authors and does not reflect the opinions of any firm or attorney.

Have You Unintentionally Disinherited Your Kids?

Jim formed a close friendship with his widowed neighbor after the death of his wife of 38 years as a way to cope with his loss. After time, this friendship grew and soon after, they were married. Unfortunately, a few years later, Jim died and because he had moved all of his assets into joint tenancy with his new wife, all his assets went directly to his new wife, completly disinheriting his children.

How have you planned your estate? If you have everything left to your spouse, what will happen if you die first. Even if he or she doesn't remarry, as in Jim's case, will he or she be able to manage their assets on their own? Have your planned for the potential for incapacity? With the number of blended families these days, the problem of how to provide for your spouse without disinheriting your children (especially those from a previous marriage) is huge.

So how can we solve these problems? A trust can provide for your surviving spouse while he or she is living, then upon your spouse's death, the remaining assets will go to your children. Depending on the size of your estate, some assets could be segregated out specifically for your children and/or grandchildren. A trust will give you added assurance - it can protect your children's inheritances.

Each family is unique, which is why it takes careful planning with an experienced attorney who can look at various factors and options for your specific needs. CALL LIVING TRUSTS BY AMY 925-301-7195 TODAY to schedule your free consultation.

Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.