Estate Planning FAQ
I want to know my wishes will be honored. What steps can I take to ensure my future and my legacy?
Do not wait until you are in a family or health crisis. It is critical to get a good estate plan in place. First, you must sign basic estate planning documents, including your living trust, your Durable Power of Attorney, your Advance Directive, and Family Protection or Dynasty Trusts for your children. You must be sure that assets (other than retirement accounts) are titled in your trust. You must pick reliable individuals to manage your estate if you become ill or incapacitated.
You are an individual. No one plan makes sense for everyone. After we get to know you, we can develop a plan that respects your wishes and ensures that your wishes – for your children and your grandchildren – will be honored. By doing things the right way upfront, you can save your family and heirs massive problems and expenses.
I have worked hard to build my estate. What can I do to preserve my assets for my children and avoid estate or “death tax?”
An individual can pass up to $5.43 million to heirs, tax free. A couple can pass up to $10.86 million in 2015 with no estate tax exposure. Even if you are not exposed to estate tax, you must consider other issues. You want to be sure that assets do not go to your child before she is ready to manage them. You want to protect what you leave your child from divorce and litigation. This can be done, utilizing Family Protection Trusts, also known as “Dynasty Trusts”.
If your estate exceeds these levels, many strategies are available to reduce or eliminate this 40% estate tax. See Beat Estate Tax Forever (2013), authored by Michael Gilfix.
We have over 30 years of successful experience developing and implementing tax strategies to reduce or eliminate this tax, saving hundreds of thousands or even millions of dollars in estate tax liability. See our tax planning section.
The use of a Living Trust is critical – you can direct your assets to whom you want, in the manner that you want. For estate tax, divorce, and litigation protection, Family Protection or Dynasty Trusts represent the appropriate, powerful approach.
I or my spouse may need long-term care. How can I ensure we will be well cared for while safeguarding our estate?
The majority of us will eventually need long-term care. This includes at home care, assisted living, or nursing home care. This can be extremely expensive. Indeed, nursing home costs can exceed $120,000 per year. It is critical that you plan ahead for this possibility.
Fortunately, many planning strategies and options exist. Long-term care insurance is one possible approach. Medi-Cal planning, where strategies are used to protect assets while becoming eligible for Medi-Cal (which pays the cost of nursing home care) is also important. Indeed, we have helped countless families protect their estate while obtaining eligibility for government benefits.
See Facing the Reality of Long-Term Care (2014), authored by Michael Gilfix and Mark R. Gerson Gilfix, available here. This publication presents a comprehensive, practical and multi-generational analysis of this topic.
For more information on long-term care planning, click here.
How can my special needs child be cared for and have sufficient resources to maintain his quality of life?
It is critical that they are able to receive government disability benefits if necessary – especially if they are unable to work or live independently. For this reason, leaving them money directly can be problematic. A Special Needs trust is a powerful estate planning tool that can ensure that your child is eligible for government benefits, including SSI, Social Security Disability Insurance, or Medi-Cal while providing a valuable financial “safety net” to supplement public benefits and pay for items and services not covered by public benefit programs.
What are the benefits of a living trust?
A Living Trust is a planning technique that offers benefits to virtually all Californians. It is particularly appropriate for individuals who are older or who have substantial assets. If you own a home in California, a living trust makes sense for you.In a very real sense, a Living Trust is a new being. It will hold your property while you are living, and it will continue in existence after your death.
My spouse just entered a nursing home. How can I protect my assets?
With appropriate planning, an estate can be protected. This includes a residence. A properly implemented plan may include retitling of assets, gifts, or the creation of a new trust. Many options exist. With rare exceptions, Medicare does not pay for the cost of long-term care. At most, it will pay for only a portion of your stay. Long-term care insurance can be expensive, and it may be difficult to obtain. Medi-Cal is a government program that will help you pay the cost of a nursing home once you qualify.
Here is the bottom line: there are many planning options.
When is it time to review my trust?
You should also review your living trust at least every couple of years. The law changes, your circumstances change, and other planning needs may emerge.
If you do not already have a living trust in place, you know that you should. A fully-funded trust avoids probate, saves money, and keeps your family out of the court system. A living trust is the cornerstone of your estate planning.
What is a "Power of Attorney"?
A Power of Attorney is a document in which you give another person, the “attorney in fact,” the legal authority to act on your behalf. This authority can be limited to a particular asset, a particular transaction, or a particular period of time. It can also be general, such that it conveys broad authority to act on your behalf.
Is it a good idea to transfer assets to other family members "just in case" nursing home care is ever required?
Transferring assets out of your estate is a radical step that should be taken only with great care. There are potentially harmful tax implications involved. In addition, Medi-Cal rules impose restrictions. One must consider how comfortable he or she will be with the loss of control and the loss of access to money that was earned over a lifetime. In other words, asset preservation steps should be taken only if the individual feels very comfortable with the idea and with the options that are available.
If I have a trust, why do I need to sign a will?
One of the main reasons you signed your living trust is to be sure that your estate avoids probate. Probate, as you know, is the court-supervised process by which an estate is managed and ultimately distributed to named beneficiaries. A probate is necessary when an individual dies either with a will or with nothing.If your assets are in your trust at the time of death, your will plays virtually no role. While it must be lodged or filed with the Superior Court within 30 days of the date of death, it is all but ignored.
Nevertheless, you sign a “pour over will”, just to be on the safe side, even if you have a trust. Your will says, in effect, that any assets you forgot or neglected to put into your trust are to go into your trust at the time of death under terms of the will. This is necessary because assets in your name (rather than in the name of your trust) are outside of and are not controlled by your trust. Some additional steps must be taken to get the asset into your trust. That is the role of your will.
If the total value of assets in your name and not in your trust at the time of death is under $150,000, probate is still unnecessary. There is a relatively simple procedure that can be utilized to get those assets into the trust. If the value exceeds $150,000, a probate process will be necessary.
Think of your pour over will as a clean-up document. If there is nothing to clean up – if there is nothing in your name and outside of your trust at the time of death – it plays no role. If there is such an asset, the will goes into effect and simply ensures that the terms of your trust will ultimately be respected.