Tag: estate planning

Our daily lives are becoming more enmeshed with digital data, paperless accounts, social media, and electronics with every passing day.  Millions of Americans use Facebook, Instagram, and Snapchat many times a day to keep in contact with friends and family members who live across the globe.  In addition to social media, an enormous amount of our daily business and financial transactions are conducted online.  Most of us depend on these services to pay bills, transfer funds, and make purchases.  Despite the fact we use these services almost daily, many people do not account for their digital assets in their estate plans.

In January 2017, the Revised Uniform Fiduciary Access to Digital Assets Act took effect in California.  This law defines “digital asset” as “an electronic record in which an individual has a right or interest.”  This means your photos on Instagram, posts on Facebook, or access to online past bank statements, for example, would all fall under the umbrella of “digital asset.”  This set of laws provides that the executor of the estate will have access to these digital assets.  Part of an executor’s responsibilities is to gather an inventory of all assets belonging to the decedent.  However, before this law came into effect, executors sometimes encountered significant difficulties when attempting to gain access to a decedent’s online accounts.  The Revised Uniform Fiduciary Access to Digital Assets Act provides that executors or other fiduciaries, such as trustees, must be given access to and control of digital assets just as they must be given access to physical, tangible property.  The law does have some restrictions.  A provider is not required to produce records if the production would impose a significant burden.  In addition, the provider is not required to produce information that has already been deleted by the original user.  Providers are not required to decrypt devices and are not required to disclose passwords.  Trustees and executors must exercise the same high level of care with digital assets as they do with physical assets.  They must take care to guard the property and privacy of the decedent and beneficiaries.  Finally, some platforms provide a “legacy” option for their users, wherein the users can designate a particular person to be the recipient of their data from that platform.  If the user makes such a designation, that will override any designation of executor or trustee made in other documents.

Let us help you with your digital assets.  We are familiar with the specific issues associated with digital assets, estate planning, and probate.  Call us at 818.340.4479 today for an appointment.

 

 

 

Owning your own home can be a good step to building wealth and securing your future.  Purchasing the right real estate can be a good investment, if you buy at the right time in the right area.  Your estate plan should work hand in hand with your real estate purchases, as for most people, their residence is one of their most valuable assets.  There are many choices regarding how to best handle your real estate in your estate plan.  A Qualified Personal Residence Trust, or “QPRT,” is just one possible solution you may want to consider.

A QPRT may be the right trust for you and your estate plan if you plan to leave your home to a particular person in the future.  Typically a QPRT is used when parents want to make sure to pass their home on to their children.  With a QPRT, the person who creates the trust chooses a specific time limit during which he or she will continue to reside in the home.  At the end of that specific term, the home is transferred directly to the named beneficiary.  If the trust creator wants to continue to reside in the home after it is transferred from the trust to the beneficiary, then he or she will need to pay rent to the beneficiary.

The primary benefit to using a QPRT is to reduce potential tax liability.  For tax purposes, the value of the home is fixed at the time it is transferred into the trust.  The value of the home will count toward your lifetime gift tax exemption, not your overall estate tax limit.

There are a few drawbacks to using a QPRT.  The most obvious is that if you pass away before the end of the time limit specified in the trust documents, then the trust is destroyed and your home will revert to being part of your estate.  If you have a high number of assets, this could create an estate tax liability.  Moreover, if the home has significantly increased in value since the purchase, the beneficiaries of the trust could face a significant capital gains tax in the future, which could possibly erase any gift tax savings enjoyed because using the QPRT.

QPRT planning can be beneficial when done properly. We have extensive experience in assisting our clients choose the right estate planning tools to fit their needs.  Call us at 818.340.4479 today for a consultation.

Real estate ownership is a cornerstone of many peoples’ American dream, as is protecting one’s assets from catastrophic illnesses and judgments.  Investing in our futures and that of our family is an essential step to ensure future stability, and purchasing the right real estate can be a key piece of that future estate plan.  While the first big real estate purchase for most families is the marital home, it is becoming more and more common for families to purchase and maintain rental properties as a supplemental source of income as well as an investment for the future.  When purchasing rental properties and acting as a landlord, you should keep in mind how these investments fit into your estate plan and your long-term plan for asset protection.

One common strategy used by rental property owners to protect assets is to form a Limited Liability Company, or “LLC.”  An LLC is one of the most simple type of business structures.  The primary advantage to setting up an LLC and handling your landlord affairs like a proper business is that you can insulate your assets.  Any landlord knows that lawsuits are common, ranging from housing discrimination to property damage after a water pipe bursts.  If you do not have the proper business structure, the tenant can sue you personally.  This means that if he or she is successful in the suit, then any judgment awarded will have to come out of your personal assets.  However, if you have set up an LLC, the tenant will have to sue the LLC instead of you personally.  The tenant will not be able to recover any damages against your personal assets, including high value assets you intend to pass on to your friends and family such as your family home.

While a revocable living trust is usually not a creditor protection plan, it helps when it is irrevocable.  With a revocable trust, you can be the person placing the property into the trust, the trustee, and also the beneficiary.  Your tenants can pay their rent directly to the trust.  When you pass away, the real estate can pass immediately to your intended heirs without having to have the real estate pass through probate.  However, unlike an LLC, a living trust does not provide insulation from law suit liability.  If this is your chosen strategy, you should consider purchasing more insurance to make sure potential lawsuits are covered.

We have extensive experience helping our clients understand their options for protecting their assets and estate planning.  Contact us at 818.340.4479 today to talk about your plans for the future.

Everyone we speak with says they want to avoid going into a nursing home and want to protect their assets, if they are forced to go there.  Looking forward to retirement is an exciting time. During retirement, we will have the time to invest in our hobbies and spend time with our families.  Unfortunately, when our health starts to fail, it may become necessary to reside in a nursing home to ensure the appropriate level of medical care.  What many people do not realize, however, is that Medicare and most regular health insurance policies do not cover the cost of long-term nursing home care.  With the cost of nursing homes soaring past $8,000 per month or even more, it is important that you understand how your potential nursing home requirements fit in with your plans for asset protection.

Assuming your private insurance does not cover long-term nursing home stays, and you do not have a long-term care policy, you will need to pay for this care out of pocket.  This means that the assets that you would like to pass on to your friends and family will have to be used to pay for the costs of your extended residential care stay.  After your assets are sufficiently drained, you may be able to apply for Medi-Cal, which provides health insurance care to adults with low incomes and few assets, as does Medicaid.  Medi-Cal and Medicaid will provide coverage for your nursing home requirements, as well as other medical services, but in order to qualify for coverage under these programs, you will have to have assets and income under specific levels.  This means that if you have too many assets, you will have to use these assets to fund your nursing home care out of your own pocket.  Only after all of your assets are depleted down to $2000 (single) and $3000 (married) under the threshold eligibility requirement can you receive Medi-Cal benefits.  There are some other ways and programs under which you may qualify for Medi-Cal which are unrelated to assets.

With proper estate and Medi-Cal planning, however, you can pass on your assets to your heirs and beneficiaries while maintaining your ability to apply for Medi-Cal.  Timing of this estate planning is very important.   It is also important to note that some assets are exempt from the total asset calculation, including the family home if at least one spouse will continue to reside there.

If you have questions about protecting your assets while you require long-term nursing home care, contact us today.  Our experts in Medi-Cal planning can discuss your estate and what we can do to help protect your assets or qualify you for Medi-Cal. Call us at 818.340.4479 or email us for a complimentary consultation appointment at Info@SirkinLaw.com.

We all know that planning for the future security is an essential component of creating a trust.  Having a solid and comprehensive estate plan with the essential components, is the best way to go about that planning.  If you are thinking of beginning to build your estate plan, you should understand hat estate planning is not a do it yourself project.  There are many reasons you should consider hiring an estate planning attorney.

First, there are many different types of estate planning documents and vehicles.  These tools range from a simple will, to a pour over will, to a living will to an irrevocable trust.  Most people mistake a living will and confuse that with a living trust. A skilled estate planning attorney will be able to speak with you about your needs and desires for the future and help you to choose the best types of estate planning tools for your goals.

Second, the repercussions of faulty estate planning documents can be severe.  There is no one to protect you, if you draft your own trust and it fails.  Even wills drafted with the best intentions, sometimes fail.  Read about it in Estate of Duke.    Failing to adhere to the logistical, procedural, and administrative requirements for crafting and executing your estate planning document can result in the entire document being declared void.  For example, if your will is executed incorrectly and declared void, all of your specific wishes in your will, and decisions to grant friends and family members particular assets will not be honored.  Instead, your property will be distributed according to the California laws of intestacy.

Third, by not using an estate planning lawyer, you may not full grasp the tax implications or options in your estate plan.   People often make mistakes by gifting assets to their children, which creates a low tax basis for the child, if the parent acquired the assets at a low price.   Leaving all of your assets through your will could seem like the easiest way to go, but if you have substantial assets, it could result in your estate being assessed heavy estate taxes.  Estate planning lawyers have different options and strategies to help make sure that will not happen.

Finally, by not contacting and discussing your plans with an estate planning lawyer, your estate plan could have unintended consequences.  For example, if you leave substantial assets to your disabled sibling who receives state benefits such as Medicaid or Medi-Cal, the substantial gift could result in the sibling no longer being eligible to receive those benefits.  Moreover, using the wrong estate planning tool could result in unintended distributive consequences for the recipient.  For example, many times, hand-written wills do not include residuary clauses which complicates the distribution of the asset, as some pass by will, and some pass by intestacy.

We have extensive experience in all types of estate planning matters.  Contact us today at 818.340.4479 so we can talk to you about you, you kids, your estate and your goals.