LIVING TRUSTS AND ESTATE PLANNING: A MUST FOR EVERY BUSINESS OWNER

Business owners survive many challenges and for family businesses, there are some unique challenges to protect and preserve your business… and your family. A living trust is an estate planning tool business owners can use to help their business continue to run after their death.
LIVING TRUSTS CAN:

• Avoid probate. Probate is the legal process where the court validates your will, sees that your debts are paid, and interprets your will to determine how and to whom your assets are distributed. The major problems with probate are that it is expensive, lengthy, public, and it places all the control in the hands of the probate courts.

Having a living trust will ensure that your estate will be settled quickly, privately, and inexpensively as it keeps your estate out of probate and allows you to maintain full control over the distribution of your assets and your business.
• Minimize or Eliminate Estate Taxes. A living trust can provide a means to reduce, or even eliminate estate taxes. With fewer tax burdens, there are fewer debts to satisfy and a better outlook for the continued health of the business as well as your families’ future.

• Create a Business Succession Plan. Establishing a system within your business will create a plan for someone to succeed you so that your business can continue to run smoothly without you. The death of a business owner causes a number of problems which can be addressed with proper planning, one of which is that the value of your business may be drastically reduce without you there to run the show unless you plan ahead. Ask yourself:

• Should the business remain in the family?

• Are there capable successors/owners?

• Should the business be sold? If so, to whom and at what price.

ESTATE PLANNING CAN:

• Minimize loss of business assets: What people may not consider is that often, assets from a business may have to be used to satisfy the personal debts of a business owner. When there are not enough personal assets to satisfy personal debts, the creditors/government will go after business assets to satisfy these debts. This may leave a business strapped or even insolvent. However, with proper estate planning, you can protect your business and allow it to continue and grow after you die.

• Plan for the financial needs of your estate. Take a look at your personal assets and debts. Can your family continue to survive based on your financial picture as it is today? If you do not have enough personal assets to cover your personal debts, start to put more money aside to cover those debts. Another option is to purchase life insurance. For many, life insurance can be a quick and less costly solution. Life insurance will provide you and your heirs with an immediate guarantee that when you die, the proceeds from the life insurance can be used to satisfy the personal debts, thereby, allowing your business to continue unharmed.

For many small business owners, it can be difficult to separate business and estate planning as they are each contingent on the other. With proper planning and advice, you can ensure that your family and your business will continue to survive when you are no longer there to hold the reins.

Have you had your trust check up lately?

Please remember to review your trust each year.  Make sure your home and your bank accounts are properly funded.  Every probate I have handled this year are for families having to probate a parent's estate where there was a living trust but either the home, or a bank account was outside of the trust. 

Haven't had a trust check up in a while, call Alvis Frantz and Associates and get your trust check up today.  Call 925-516-1617!

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.

Pet Trusts are no joke. Have you protected your 4-Legged or Winged Friends?

In January 2009, California finally enacted Probate Code 152121 which provides the ability to draft legally enforceable trusts to provide for the care of your pets after your death or incapacity.

Before the law was enacted, planning for pets was a bit tricky and had to be done using loopholes - essentially because a "pet" could not be a valid beneficiary of a will or trust. Courts will now enforce trust that provide for pets and will even allow evidence supporting the intent of the trust or will maker in enforcing these pet trusts. Basically, these new pet trust will be subject to all provision of the Probate Code that govern wills and trusts.

Pet trusts can be designed to ensure that they only benefit the pet(s) (and not the pet care taker) and to provide a reasonable compensation for the person you appoint to manage the pet trust (trustee). The trusts will also provide for a distribution of any unused funds after your pet dies. Furthermore, if there is not enough money left in the trust to care for your pet, the trust should be designed to allow for the trust to terminate.

If you are concerned about how you pet trust is managed, you can also name an "enforcer" of the trust. Depending on how much money you are setting aside, this may be an important planning concern. The other side of this though is that you may want to have your trust drafted to prevent or limit any third party inspections of your trust as is allowed under the new law. The law allows that any person interested in the welfare of your pet or even a charity whose main activity is the care of animals can seek court approval to be appointed as an "enforcer" of your pet trust. These enforcers may have powers that you do not want an outsider person or organization to have.

Finally, as is the case with all trusts, pet trusts must be reviewed every year or so to be certain that your wishes and objectives are still being met as laws and life are perpetually changing.

For more information on how to protect your pets with a pet trust, call 925-516-1617 or email info@alvisfrantzlaw.com to schedule a 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.

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.

Are you moving? Don't forget to pack your estate plan... or should you?

One question people ask me when getting ready to set up their estate plan (trust(s), wills, powers of attorney, etc) is what happens if they move. It is really a good question.

States typically have different laws. Some states in the U.S. have adopted (either in its entirety or with some modifications) what is known as the "Uniform Probate Code" which basically means they all have the same laws with respect to wills, trusts, probates, etc. California is not one of them. But don't despair, this does not necessarily mean that if you move out of California (or have just moved to CA) you will have to start all over again with your estate plan documents.

A trust is esentially a contract, and contracts that are deemed valid in the state and at the time in which they were created, are enforceable in other states. So your trust for example, is still a valid document if you move out of the State. Wills are also treated the same. However, the real issue is that a trust is used to hold property by a trustee for the benefit of the beneficiaries.... so if you move, what property is the trust protecting now? If you no longer hold any assets in California, what you really need to do is to update your trust to ensure it holds all of your newly acquired assets and reflects the disposal of previously held assets.

It would also be advisable to check with an attorney in your new home state to see if any amendments are required to provide you with further protection in that state. For example, one state may have different STATE inheritance taxes than another and therefore added protections may need to be included in your trust.

Additionally, you may have named someone as a successor trustee/executor in your original trusts/wills and now they live 3000 miles away and the reality of it, is that it may no longer be a practical choice. In this case, amendments will need to be made to re-name a new successor trustee/executor.

Then there is the question of your Powers of Attorney both for your finances and for your health care. As mentioned above, the person you have previously named may logistically no longer be the best choice for your agent(s). For example, say your brother is named as your health care agent and lives back in California and you now live in Texas. You get in a terrible car accident and are in a coma and your leg is severly injured and may need to be amputated right away to save your life. Your brother can not get to you in time to be able to tell the doctors that, because you are a professional dancer and it is your passion above everything else in the world, you would rather risk your life than lose a leg, so with no agent available to act on your behalf, they chose to ampute.

And what about your children? In your will, you are able to name someone who will be their guardians if both parents die. If you really start to get settled in your new hometown, do you want your children to have to move to live with who had named as guardians? Maybe, maybe not. It is just one more thing to consider when you move and decide what part of your estate plan documents needs updating.

In many instances, a few simple updates are sufficient. Sometimes it may be easier (but yes, a bit more costly) to do what is called a "restated amendment" to your original trust. This is basically like starting from scratch but keeping the original name and date of your first trust so that all of your assets do not need to be retitled again.

For additional questions about what to do with your estate plan if you move, call Amy Alvis at the law offices of Alvis Frantz and Associates at 925-516-1617 or email us at info@alvisfrantzlaw.com

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.