Newman Law Group

Tustin Estate Planning Law Blog

Estate planning vs. estate documents

It's almost mid-February, and perhaps one is sitting back and reflecting on a year that he or she believes is off to a good start in California. The often delayed task of estate planning has been completed. But has it? Has an estate plan actually been created or are there now estate documents where before there were none? And what is the difference?

Some people have a will, maybe a health care directive and even a medical power of attorney. These are estate documents, but they do not comprise a comprehensive estate plan. While many contingencies may be provided for in the existing documents, others may not be.

Wills are beneficial even if a couple has no children

So the New Year has passed, the parties are over and planning for all of those resolutions are well under way. One resolution many people make in California is to review their wills or to create one if it does not already exist. Life changes, such as the birth of a child, can cause a person to create a will. But what about the couple without children? Is a will really needed in that instance?

Regardless of whether or not a couple has children, they should have a will. Without a will, if a spouse dies, the surviving spouse may inherit some of the deceased's assets. Accounts that are not set up as survivorship accounts might not be payable to a surviving spouse without estate documents in place.

Estate planning: U.S. Senate bill seeks to change estate tax

Preparing one's estate can be a complicated process for many families here in California. An estate owner may have to decide what to do with a family home, certain heirlooms or the savings he or she has accumulated. Others may have to consider the process of how to manage passing down a family business or farm. A recent bill introduced in the senate may change the percentage of estate tax, and supporters claim that it will have a positive effect on those who want to leave their company to their children as part of the estate planning process.

Three U.S. senators from out of state introduced a bill called the "Estate Tax Rate Reduction Act." If passed, it would reduce the percentage of estate tax from the current rate of 40 percent to 20 percent. This would bring the rate in line with the current rate for the capital gains tax. The senators say that the new rate will make the preservation of a family's legacy much more easy.

Estate planning can be a positive experience

January is coming to an end and it's a time when many people turn their attention from the festivities of the holiday season to the far more serious issue of tax season in California. While tax season and estate planning may not, at first glance, seem closely related, a change in the tax law impacts how one may structure one's estate plan. The estate tax exemption increased dramatically, which affects how much money can be gifted. The new exemption amount is $11.18 million per person.

Avoiding taxes and protecting assets used to be one of the prime motivators people used to create an estate plan. With the increased exemption, people can focus more on what they want their money to do in the long term and who they want it to benefit. A couple revisiting their plan 18 years after it was initially created found they could focus less on tax issues and more on avoiding probate, privacy for their family and planning for the long term use of their assets.

Stepfamilies and their implications on existing wills

Family structure has changed over the years in California. Divorces and second marriages have made stepfamilies commonplace. Multiple divorces can add complications to the situation where estate planning is concerned. Subsequent divorces can create a scenario where former stepchildren are now involved. Wills need to be periodically reviewed and amended to reflect family changes and clarify bequests.

One interesting scenario involves the parents of a stepparent naming the child of the stepparent as a beneficiary instead of their own child. If their child the stepparent, were to divorce, what would be the impact on the step-grandchild as far as inheriting property from the step-grandparents, or a former stepparent? California law states that an ex-spouse is treated as having predeceased the testator of a will or trust as long as the document or documents were finalized and the divorce was finalized prior to the testator's death.  However no such laws exist concerning gifts to stepchildren from stepparents or step-grandparents.

Is having a will enough to protect estate assets?

The new year has begun and it is a time that people often take a measure of their lives and make goals for the coming year. Estate planning can figure into some of these goals. Life changes such as getting married, the birth of a child or starting a new job can inspire a person to write a will in California. But is having a will in place enough to protect one's estate assets?

A will is a good first step in protecting one's heirs and determining how one's affairs are to be handled after one's death. But it is just a first step. A more detailed estate plan can help to avoid family squabbles, clarify health care directives and clarify the what, why and who of one's final wishes.

Estate planning documents should be revised following a divorce

People in California marry for love, begin families and build futures together. Estate planning is frequently part of that process. While divorce is not the anticipated outcome when a couple marries, a significant percentage of marriages do end in divorce. In that event, an estate plan will need to be revised.

After a divorce, certain aspects of the plan need to be addressed and probably changed. If a spouse is the beneficiary or representative in the will, that may be a change one wishes to make. In addition, if the previous partner's family is included in the will that may need to be looked at. One may not want an ex-spouse's relative named as a guardian for minor children, for example.

Where to begin to protect estate assets

Another year is coming ever closer to its end. As people review the past and anticipate the future, resolutions and plans for the New Year are made. Among those plans may be a plan to protect one's estate assets. A comprehensive estate plan can go a long way towards achieving that goal, but how does one begin in California?

Every adult can benefit from having an estate plan. Even if one believes that his or her net worth is not sufficient to merit a will, most everyone has possessions that are dear to them. In addition, a trust or living will can provide for medical decisions that may need to be made in the event of one's incapacitation and inability to make those decisions.

Estate planning can be a gift to the next generation

Tis the season of giving in California and asking the perennial question of what gifts to get one's family for the holidays. As the baby boomer generation enters their 60s and 70s, they are seeing their own children become adults. Baby boomers have begun to share their wealth with their children and grandchildren. In so doing, they are concerned that the Millennial and GenX generations are not focused on estate planning.

This concern has inspired the idea of gifting an estate plan by offering to pay to have one created. The younger generation may not be as concerned with the future of their finances as they are with the present concerns regarding student debt, growing families and so on. There are steps that parents can take to broach the subject with their adult children and to steer them in the right direction.

Wills can lessen family anguish in the event of a tragedy

Mortality is a fact of life, and no one in California will live forever. While this is an accepted fact, younger people tend to focus less on their mortality than those who may be middle aged or older. There is a certain feeling of perpetual immortality among the young. Sadly, this feeling has been dealt a mortal blow in the recent shootings at a concert in Las Vegas and a night club and high school in Florida, to name just a few of the mass shootings that have taken too many young lives. Many of those who lost their lives likely had no wills or other estate documents in place.

It is a sad fact that today's young people, also known as millennials, may benefit from having a will, health care directive or other estate planning documents in place. Families who face the ultimate tragedy, having to bury a child, may have had to do so without knowing their young adult children's wishes regarding end of life care, organ donation and other final wishes. In addition, most may not have access to bank accounts, social media passwords and other important pieces of information regarding their loved one's everyday life.