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4 Signs it’s Time to Update Your Will

There are risks to putting off critical updates to your legal documents, especially when it comes to estate planning concerns. If you were to pass away with a will that is woefully out of date, your loved ones are left behind to sort out your affairs. Is it time to update your will? If it’s been a while, it’s a good idea to check in with an estate planning expert. But in the meantime, here are a few tips from a Brentwood will attorney.

Read on for 4 signs that it’s time to update your will. Some of them might just surprise you. 

1)Your Beneficiary Has a Gambling or Substance Abuse Problem

If your beneficiary has developed an addiction like gambling or a substance abuse problem, you might want to make some changes to your estate planning documents. One option would be to talk with your Brentwood will attorney about establishing a trust that has some oversight, rather than leaving cash for your beneficiary. 

2) You Had a Child

Having a new child changes everything. Regardless of whether or not this is your first child, your will needs to be revised as soon as possible. One reason for this is that your will allows you to name someone to care for your child in case anything ever happened to you. If you choose to create a trust for your child, you can also decide who will oversee administration of property in that trust. Be sure to update your will before your child is born, as it’s more challenging to find the time once they arrive. 

3) You’re Getting a Divorce

If you’re thinking about getting a divorce or your marriage has already come to an end, your former spouse no longer has marital rights to your estate. That is, unless it was included in the divorce agreement. This is an important time to review your estate planning documents and make sure they’re all current, especially if you’re going back to your family name. 

4) Your Executor Passed Away

Your will needs to be updated if you named an executor to manage your estate but they’ve since passed away. Although, if your current will also has a contingency plan this might not be the case. Check to make sure.

Schedule an Appointment with a Tracy Will Lawyer

For your peace of mind, don’t put off creating or updating your will. When you’re ready to talk to an estate planning attorney, contact Lewman Law by calling (925) 447-1250. John Lewman is a leading estate planning attorney in the Tri-Valley area. He’s known for his knowledge, skill and dedication, as well as his reassuring and compassionate demeanor. Do you have questions? Lewman Law is here to help.

Filed under Estate Planning Tips

Is a Trust Right For You?

If you already have a will, you may be wondering why you’d need or want a trust too. But a will is just the beginning of basic estate planning. Keep reading to learn more about what a trust is and how it can help you. Or, talk to a Tracy trust lawyer today at Lewman Law

What is a Trust?

You’ve probably heard about trusts before, most people have, but it’s also likely that you aren’t quite sure what they are. You probably have a few questions lined up for your Tracy trust lawyer. Essentially, a trust is just another estate planning tool. It holds property or assets for another person (your beneficiary), or even a charity, and determines how it will be distributed after you’re gone. You make the rules.

Benefits of Trusts

You can use a trust to accomplish a number of estate planning goals. Ultimately, your Tracy trust lawyer can help you review your estate planning goals and determine which kind of trust is right for your needs. 

One of the main benefits of establishing a trust is that it can help your beneficiaries avoid both the time and expense of going through the probate process in the court system. It’s important to note that when your estate passes through probate, it’s open to the public. Many people consider this a violation of their privacy. Some other benefits of setting up a trust are that you may be able to minimize taxes on your estate, safeguard assets for minor children, or prevent future family arguments about who gets what. 

Types of Trusts

There’s more than one type of trust, so this is where it can get a little confusing if you aren’t experienced with the ins and outs of estate planning. It’s a good idea to talk to an estate planning attorney to figure out which trust is right for you. For example, is it important to be able to make changes to your trust at some point down the road? If that’s the case, a revocable trust is probably in your best interest. 

Preparing to Meet With an Estate Planning Attorney 

Before meeting with your attorney, spend a little time thinking about your overall estate planning goals. What are you hoping to accomplish? Taking inventory up front can help you save time in your attorney’s office, which, unless you’re being offered a flat fee, will also help you save some money. Consider writing down your questions so that you don’t forget to ask something important. Most people are curious about what can be held in a trust, as well as the pros and cons of their different options. 

Talk to a Tracy Trust Lawyer

If you’re in search of a reputable trust lawyer in the East Bay, then you’re in the right place. At Lewman Law, we have the experience you need to handle all of your estate planning concerns. Contact our office today to schedule a consultation by calling (925) 447-1250. You can also click this link to read client testimonials.

Filed under Estate Planning Tips

Do You Need More than a Will?

If you haven’t yet created a will, you might think that’s all you need to tie up loose ends. But estate planning is actually more comprehensive than it seems. If you’re looking for a Pleasanton estate planning attorney, let’s go over why you need more than a will to rely on.

Reasons to Include More than a Will

As important as a will is, it can’t cover the full scope of everything that can happen in a lifetime. That said, there are many things you can document in a will. The following are a few items you can include:

  • Guardians for your children
  • Beneficiaries and what they’ll receive from your estate
  • Family members you’ve chosen to disinherit
  • An executor to administer your estate
  • Who will care for your pets

Other Estate Planning Documents

Even if you don’t have a large estate at this time, you’re sure to feel better knowing that all of your affairs are in order. But what else should be included in your estate plan? Good question. You may want to include things like provisions for funeral expenses, transfer-on-death property or accounts, or a life insurance policy, among other things. For a more comprehensive outlook, talk to your Pleasanton estate planning attorney about the most essential documents. Here are two that are important to consider:

Advance Directives

An advance directive is a document that specifies the medical care you’d want if you were ever too ill or injured to speak for yourself. This is important for a number of reasons. Not only does it ensure that your wishes are honored, but it also removes the burden from loved ones to make such vital decisions under stress. We all react differently in times of crisis, so having a plan in place can also prevent arguments about the best course of action. Your Pleasanton estate planning attorney can discuss the details with you, but an advance directive can include a range of things like:

  • Organ donation
  • A DNR (Do Not Resuscitate) or DNI (Do Not Intubate)
  • Whether or not you’d choose to be kept alive by artificial means, such as oxygen or a feeding tube
  • Palliative care

Power of Attorney

When you assign a financial power of attorney, this person is able to handle your finances if you’re ever in a situation where you’re no longer able to manage them on your own. This can address things like filing your taxes, overseeing bank accounts, investing, and making sure all bills are paid. When it comes to setting up a POA, you have different options to choose from so it’s best to seek guidance from an experienced estate planning attorney.

Talk to a Pleasanton Estate Planning Attorney

For your peace of mind, don’t put off creating an estate plan. When you’re ready to talk to a Pleasanton estate planning attorney, contact Lewman Law by calling (925) 447-1250. John Lewman is a leading estate planning attorney in the Tri-Valley area. He’s known for his knowledge, skill and dedication, as well as his reassuring and compassionate demeanor. Do you have questions? Lewman Law is here to help.

Filed under Estate Planning Tips

How to Responsibly Leave an Inheritance to Your Grandchildren

Estate planning attorneys frequently hear from their clients, “I’d like to leave something to my grandchildren. What’s the best way to do that?” 

Naturally, grandparents love their grandchildren and want them to succeed in life. And when grandparents are in the twilight of their lives, their hearts often turn to the younger generation with a desire to give them whatever advantages they can, especially if they were unable to give their own children those same advantages when their children were younger.

For most grandparents, the best way to provide for their grandchildren is to leave their accounts and property to the grandchildren’s parents to ensure the financial stability of that family unit, thereby indirectly benefiting the grandchildren. In fact, default inheritance laws in nearly every state reflect this common desire to provide first for children and then for the grandchildren in the event that an adult child predeceases the grandparent. From a practical perspective, the grandchildren’s parents are often in the best position to know how to use the money for the benefit of their children and can spend or invest it appropriately on their behalf.

In some cases, however, it makes better sense for grandparents to leave property to their grandchildren—for example, if the grandparents have reason to believe that their own children would not responsibly use the money intended for the benefit of the grandchildren, or if the grandchildren’s parents are independently wealthy and distributing the property to them would unnecessarily expose the property to estate tax in their estates. In some cases, although the intent of grandparents may have been to leave everything to their adult children, an inheritance may flow to grandchildren unintentionally because of an accident or illness that prematurely takes the life of an adult child. In any of these situations, it is important to consider the possibilities and the options for leaving an inheritance to grandchildren. Failing to do so can have long-lasting consequences and, in many cases, do more harm than good.

The Trouble with Outright Gifts

Perhaps the simplest way to leave an inheritance to your grandchildren is to name them as beneficiaries in your will or trust to receive a specific amount of money or a percentage of your total accounts and property. If all of the grandchildren who will receive such gifts are physically and emotionally stable, financially prudent, and have reached adulthood, this strategy may work just fine and reduce the administrative burden of managing and distributing your accounts and property to the beneficiaries or heirs.

However, depending on when you pass away, if any of the named grandchildren are minors, you could create additional hassles by leaving a gift directly to them. The executor of your estate or the trustee of your trust may have to establish certain types of custodial accounts to hold that gift for the minor child until they have reached the age of majority (either age eighteen or twenty-one depending on the state). In some states, and depending upon how much money is involved, establishing a court-controlled conservatorship over the property may be required. In other cases, setting up an account using the Uniform Transfers to Minors Act laws of the state may be all that is necessary. In either of these cases, however, once the child reaches the age of majority, you may not be able to control how that money is used by the grandchild. It could be spent on fast cars and fancy clothes rather than on an education, starting a business, or a down payment on a home as you might have imagined. In a worst-case scenario, a grandchild might even unwisely invest it with a spouse who later divorces them, or with an unscrupulous business partner who preys upon inexperienced individuals who have come into a sum of money.
By being aware of these risks, you can take steps today to make sure that any of your property that ends up in the hands of your grandchildren is protected from not only your grandchildren’s own poor spending choices but also the claims of a divorcing spouse, an unethical business partner, or an opportunistic lawsuit filed by a stranger against your grandchild.

Using Trusts for Gifting to Grandchildren

A trust offers one of the most flexible methods for leaving an inheritance to grandchildren. When you leave an inheritance to grandchildren via a trust, you can ensure that the money and property are used appropriately and at appropriate times. There are a variety of ways to use trusts in your estate planning. You can add provisions to your will or revocable living trust that instruct the executor or trustee to hold any property that is payable to a grandchild in a separate trust share rather than making a direct distribution of the accounts or property to them. You can specify in those trust terms how the money is to be used or distributed and when. These can be very important provisions to include in your trust even if you are planning to leave your accounts and property only to your children. As mentioned, it is possible for your child to pass away before you do in an accident or from illness. And if your child has children of their own and you want your child’s share to go to their children, it can be crucial to have a trustee protect and manage it until it can be distributed to the grandchildren at a more appropriate time.
Another way to use trusts is to create the trust during your lifetime, name yourself as the trustee, and transfer some of your property into the trust for the benefit of your grandchildren. From a tax perspective, you can make gifts to this trust using the annual gift tax exemption (currently, $15,000 per beneficiary of the trust per year) to shelter the gifts from transfer taxes. Gifting in this way during life allows you to have confidence that the trust is set up appropriately and enables you to enjoy watching your grandchildren actually benefit from the trust. You can also feel confident that once you pass away, your grandchildren and even your great-grandchildren will continue to benefit from the property in the trust, if that is your goal.

Health and Education Exclusion Trusts

Beyond the traditional use of trusts in your estate planning, you can also design special trusts to provide additional tax benefits if your estate is large enough to potentially be subject to the generation-skipping transfer (GST) tax. A health and education exclusion trust (HEET) is one of these special types of trusts. A HEET is designed to make use of certain tax code provisions that exclude from lifetime gifts any amounts paid directly to healthcare and education institutions on behalf of someone. A HEET can be designed to name, as beneficiaries, any number of your grandchildren or succeeding generations, if desired. The funds in the trust can then be used to pay for health and education expenses directly on behalf of the beneficiaries without being subjected to gift taxes in the future. Furthermore, the distributions to the beneficiaries will be exempt from the GST tax. This benefit is obtained by naming a charitable institution as an additional beneficiary of the trust. As long as the trustee makes regular and reasonably substantial distributions to the charitable beneficiary from the trust, the distributions to the other beneficiaries will be GST tax-exempt.

A HEET is worth considering if (1) you would like to help your grandchildren and succeeding generations with their education and medical expenses, (2) you have used up your GST tax exemption amount through gifting or other estate planning strategies, and (3) you want to benefit a charitable organization as part of your estate planning.

Generation-Skipping Transfer Taxes

Although we have mentioned GST taxes in passing, it is important to remember that whenever you are including grandchildren in your estate planning, you should seek advice from your attorney or accountant with regard to this unique form of taxation. For most people with modest accounts and property, the GST tax is not a significant issue. However, if what you own is valued at more than the current estate tax exemption amount, the GST tax is something that you should be aware of and plan around, particularly if you anticipate that any amount of your property will eventually be distributed to your grandchildren. You should also be aware of the GST tax if you are creating trusts specifically for your grandchildren and their descendants. You may need to take certain steps upon creation of such trusts to ensure that the trust is GST tax-exempt. Your tax professional can provide you with important guidance on this point.

Keeping Parents in the Loop

Grandparents often overlook bringing parents into the conversation when planning for their grandchildren. Consequently, some grandparents have been unpleasantly surprised at the negative reactions from their own children or in-laws when they make generous gifts to their grandchildren. Depending on a family’s parenting philosophy, the grandchildren’s parents may resent an unexpected, large sum of money or payment for certain expenses. Instead of seeing it as a boon, a parent could see it as a grandparent interfering in the character development of their children, robbing them of important opportunities to become financially independent, learn important life lessons about sacrifice and hard work, such as qualifying for merit-based scholarships, and the value of money in general. Speaking beforehand with your grandchildren’s parents about how you can best support the development of your grandchildren into responsible adults can go a long way toward ensuring that your gifts will be appreciated and truly beneficial.

Conclusion

Whether you want to specifically and intentionally include your grandchildren in your estate planning or just want to make sure that they are carefully accounted for in the event that they unexpectedly inherit your property, it is critical to examine your estate planning with your attorney to make sure that your plan reflects your wishes and your family’s values. Beyond making sure your property gets to the right people at the right time, careful planning with the help of your tax professionals can also ensure that significant tax savings are preserved, thereby keeping more money in the hands of your family and out of the hands of the government.

Interested to Learn More?

Please visit us at our website today. The focus of Lewman Law is estate planning, estate litigation, probate, trust administration, and Medi-Care planning which is designed to help seniors and their families preserve their legacy and prevent the devastating financial effects of long-term care. 
Please contact us at: (925) 447-1250.

Filed under Estate Planning Tips