Archives for February 2021

One of the big worries in divorce can be health insurance.  A study from 2012 estimated that roughly 115,000 American women lose private health insurance annually in the months following divorce and that roughly 65,000 of these women become uninsured.  This article will provide information about health insurance during a divorce, but it is important to discuss your options prior to the finalization of the divorce.  Here at the Law Office of David Knecht, at 707-451-4502, we have extensive experience with family law and can help ensure that we advocate for your health insurance needs.  

• Before the divorce is final, parties are prevented from changing health insurance beneficiaries. 

When a California divorce is filed, there are immediate restraining orders which prevent the parties from changing the beneficiaries of their health insurance. (See https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=2040.&lawCode=FAM)

• COBRA option. 

One option for keeping health insurance after the divorce is COBRA.  If your former spouse had insurance through an employer that has at least 20 employees, COBRA lets you stay on that plan for up to 36 months, provided you don’t marry again or enroll in a new plan.  You’ll need to tell the administrator of the health plan within 60 days of your divorce or legal separation that you want to remain on COBRA.  The main potential downside is that it can be expensive because you’ll pay the premiums yourself, without the additional money you are used to from the employer. 

(See https://www.webmd.com/health-insurance/insurance-divorce#:~:text=Also%2C%20in%20order%20to%20get,plan%20of%20your%20ex%2Dspouse.)

• Legal Separation to Stay on Spouse’s Insurance. 

For some employers, legal separation is not a disqualifying event.  If the parties are not looking to have a final divorce and legal separation is sufficient, then staying on your spouse’s health insurance and keeping the employer contribution to the premiums may be an option for you.  This might be a preferred option if deductibles have been met for the year and the parties anticipate further need for medical care. 

• Affordable Care Act Insurance.  

Another option after a divorce is insurance options under the Affordable Care Act.  These options can be accessed here: https://www.coveredca.com/.  

• Individual Health Insurance. 

You can contact an insurance broker to find out what insurance options are available to you as individual health insurance. 

• Medicare. 

If you meet certain criteria (for example, typically if you are 65 and have contributed via your earned income or your spouse or former spouse contributed), then subject to some restrictions you may qualify for Medicare. 

This article is an overview and does not include all the options and/or restrictions that may apply to you.  For personalized help making sure that your health care needs are considered in the divorce process, contact the Law Office of David Knecht, at 707-451-4502.  We have extensive experience in family law.

According to an op-ed article posted at CNBC.com, the pandemic has inspired a rise in estate planning. In a survey conducted for LegalZoom.com, 32% of young people ages 18 to 34 said they created a will because of Covid -19.  The LegalZoom survey found that 62% of Americans don’t have a will, and those who do, 12% created them in the past 12 months.  The reasons for why many Americans have not followed through with estate planning are many and varied:  for some, they may mistakenly believe they don’t have enough assets to justify estate planning, or for others they may erroneously think that they are too young to worry about.  However, one of the most common reasons for delaying estate planning is a general feeling of helplessness by being overwhelmed with what to do and how to get started.  Source:  https://www.cnbc.com/2020/10/05/op-ed-more-people-are-creating-wills-amid-the-pandemic.html

Get Started on Estate Planning with David Knecht Law Consultation

At David Knecht Law, we have extensive experience in estate planning.  We can meet with you, understand your objectives, analyze your assets and liabilities, and help you establish a plan that is tailored to you and your family.  

We also publish articles to help you understand estate planning, and today we will discuss part two, with a sequel to our first article about Living Trust Basics.  (Source: https://www.scscourt.org/self_help/probate/medical/living_trust.shtml

1. What is a Living Trust?

A Living Trust is a legal tool for financial planning that allows a person (Trustee) to hold another person’s (Settlor’s) property for the benefit of someone else (Beneficiary). Unlike a testamentary trust, a Living Trust goes into effect during the settlor’s lifetime.

2. Does a Living Trust have tax benefits?

Yes, a Living Trust may have tax benefits, depending on your specific situation and the type of Living Trust you use.  Several kinds of Living Tursts let you avoid, reduce or postpone federal estate taxes. 

3. How much of my property is exempt from estate tax?

The federal estate tax is based on the gross value of the property you own or control at the time of your death, over a certain amount.  Taxable property includes property in a trust that is revocable by you or over which you have excessive rights to use the property in it for your benefit, property in your name, funds from IRA’s, retirement benefits or life insurance and property held in joint tenancy.  The tax rate depends on the year of your death. 

4. What happens if I die or become incompetent?

With most Living Trusts, someone else, like a trusted friend, relative, or a professional trustee, will take over as trustee when you die or become incompetent.   At that point, the trustee has certain legal duties, which can include managing or investing your property, spending trust assets on your behalf (if you are still alive), and paying all your debts and distributing or managing all trust assets according to your instructions when you die.  

5. Are all the assets distributed immediately?

Not necessarily.  Sometimes the terms of the trust will direct the trustee not to distribute the assets right away.  The beneficiaries may be children or considered too young to handle their inheritance.  The successor trustee does not need to ask the court to get involved and will typically need only the trust document and death certificate. 

6. With a Living Trust, do I still need a Will?

Yes, it’s typically a good idea to have a Will in conjunction with a Living Trust for any new property that is acquired after the trust is created and for a guardian if you have young children.  You should sign a “Pourover Will” along with your Living Trust. The Pourover Will is a back-up for any property that might not have been properly transferred to the Living Trust during the settlor’s lifetime.  Without a Pourover Will, any property acquired after you set up your Living Trust that inadvertently is listed in your name rather than in the name of your trust would normally pass to your heirs as determined under State law, who may or may not be the same people that you name in your trust to receive your assets at your death. The Pourover Will will ensure that any such assets will be added to your trust so that they will be ultimately distributed to the beneficiaries you name in your trust.  If you have minor children, you can use your Will to establish a guardian for your children if both you and the other parent die. 

If you are interested in more information about how a Living Trust may be a useful tool for your estate planning, please contact the Law Office of David Knecht, at 707-451-4502.

If the COVID-19 pandemic has you thinking about the importance of estate planning, you are not alone.  In a study reported at https://www.caring.com/caregivers/estate-planning/wills-survey#the-importance-of-estate-planning, the results showed that more than 60% of respondents believed that estate planning is important, but unfortunately less than 25% of those that responded actually had a will set up.  Perhaps the reason why so many people haven’t followed through on their estate planning goals is a lack of knowledge about the tools and resources that are available.  At David Knecht Law, we have extensive experience in estate planning.  We can meet with you, understand your objectives, analyze your assets and liabilities, and help you establish a plan that is tailored to you and your family.  

This article will help you understand one estate planning tool, which is a living trust. (source: https://www.scscourt.org/self_help/probate/medical/living_trust.shtml)

1. What is a Living Trust?

A Living Trust is a legal tool for financial planning that allows a person (Trustee) to hold another person’s (Settlor’s) property for the benefit of someone else (Beneficiary). Unlike a testamentary trust, a Living Trust goes into effect during the settlor’s lifetime.

2. Can you keep full control over the property once a trust is set up?  

Yes, you can keep full control over the property and have the right to use and spend that property as if it had never been put into trust.  In most cases, the settlor, trustee, and beneficiary are the same person (at least until that person dies or becomes incompetent). In other words, if you set up a Living Trust, you can be the settlor, the trustee and the beneficiary of the trust.

3. What are some of the potential advantages of a Living Trust?

Some of the advantages of a living trust are:

• You avoid probate – If all your property is in trust wen you die or become incompetent, then legally you don’t own anything in your name, so you can avoid probate, which is the formal court administration of a decedent’s estate. 
• Tax planning – a Living Trust may help avoid or reduce estate taxes, gift taxes and income taxes.
• Control – a Living Trust lets you decide what will happen to your property after death. 
• Protection Against Beneficiary Creditors – sometimes trusts can protect assets received by the beneficiaries from their creditors
• Privacy – a trust is not a public record, so the general public who is not a beneficiary does not have a right to know about the assets in your trust.  However, when you die, all the named beneficiaries and successors at law have a right to a copy of your trust. 

If you are interested in more information about how a Living Trust may be a useful tool for your estate planning, please contact the Law Office of David Knecht, at 707-451-4502.