Pros and Cons of a Family Member as a Trustee Part 2

If you are setting up a trust, a key decision is who the right trustee is for your assets and goals. This article is part 2 of a two-part examination about the pros and cons of a family member as trustee and will focus on the advantages of a family member trustee. Each family is different, so this article will review general ideas, but you should consult an experienced estate planning attorney, such as the Law Office of David Knecht, to discuss your specific family, circumstances and estate planning goals. 

Advantages of Family Member Trustee

  • Cost savings.

Professional trustee fees can be expensive if a family member is willing to act as trustee for free. 

  • Family knowledge. 

Having a deep understanding of the family, the personalities, the relationship and the history can be an advantage to a trustee to potentially be able to anticipate problems and foresee challenges to the trust administration. 

  •  Confidence. 

A person doing estate planning may have more confidence in a family member than a professional trustee. Some people feel worried that a professional may not have the empathy for their family or understanding that someone on the inside would have.

Contact an Experienced Estate Planning Firm

If you are considering setting up a trust with a family member as trustee, you may need advice about the pros and cons of the trustee you want. Regardless of your estate planning objectives, an experienced estate planning firm can help you analyze and evaluate your choices.  At the Law Office of David Knecht, we want to help you achieve your estate planning goals. Contact us at 707-451-4502. 

Filed Under: Estate Planning, Estates

Pros and Cons of a Family Member as a Trustee Part 1

If you are setting up a trust, your choice of who to make the trustee is one of the most important decisions. This article is part 1 of a two-part examination about the pros and cons of a family member as trustee. This will focus on the challenges. The circumstances vary widely for each family, so this article will review general ideas, but you should consult an experienced estate planning attorney, such as the Law Office of David Knecht, to discuss your specific family, circumstances and estate planning goals. This article will summarize information.

Challenges of Family Member Trustee

Fiduciary Duties. 

The family member who serves as the trustee will have important responsibilities. The trustee is managing money for the benefit of someone else, so the law holds the trustee to a higher standard of conduct than someone who is managing their own assets. A fiduciary duty is the duty to act in the best interest and failure to meet those responsibilities can have consequences. 

Inexperience. 

Being a trustee can require financial and legal knowledge and expertise. It can involve managing investments, taking charge of business responsibilities, etc. Depending on the particular trust assets involved, the lack of experience of a family member can potentially be a challenge. 

 Potential personal bias. 

Another challenge for a family member trustee can be a potential personal bias. The family member may have a lot of history, perhaps past conflicts, and personal relationships that may impact their ability to be objective and impartial. Even if the family member is completely objective, you may be subjecting that family member to criticism or conflict with other family members who might want a different result. 

Contact an Experienced Estate Planning Firm

If you are considering setting up a trust with a family member as trustee, you may need advice about how to ameliorate the challenges described in this article. Regardless of your estate planning objectives, an experienced estate planning firm can help you analyze and evaluate your choices.  At the Law Office of David Knecht, we want to help you achieve your estate planning goals. Contact us at 707-451-4502. 

Filed Under: Estate Planning, Estates

Will My Roth IRA Heirs Have to Take Annual Distributions?

A Roth IRA is one of the many estate planning tools because of some of the tax advantages that apply. This article summarizes information about how Roth IRA’s can be a powerful investment tool both while you are alive and as a mechanism to transfer assets after you pass on. 

What is a Roth IRA?

  • A Roth IRA is an Individual Retirement Account to which you contribute after-tax dollars. While there are no current-year tax benefits, your contributions and earnings can grow tax-free, and you can withdraw them tax-free and penalty free after age 59½ and once the account has been open for five years. 

Why is a Roth IRA beneficial for heirs?

  • Many are happy to find out that heirs get to inherit your Roth IRA tax-free. This is quite the advantage compared to a traditional IRA or 401(k) where withdrawals made by heirs are taxed. In other words, you get to pass your Roth IRA benefits directly down to your heirs. 

Are there specific benefits for a spouse beneficiary of a Roth IRA?

  • Yes, spouses who inherit a Roth IRA have several advantageous options. 
    • If they are the sole beneficiary, they can be the account owner and avoid required minimum distributions (RMD’s) during their lifetime. 
    • If they are not the sole beneficiary, they can roll over their portion of the assets into an inherited or beneficiary IRA and stretch RMD’s out over their life expectancy. 
    • Roth distributions are tax free if the account has been open for at least five years.

 Will my non-spouse IRA heirs have to take RMD’s?

  • This question was asked and answered on nj.com, and the answer was “A non-spousal beneficiary must begin taking RMDs on the basis of his/her life expectancy by Dec. 31 of the year after the owner’s death.

Contact an Experienced Estate Planning Lawyer

There are many estate planning tools such as the Roth IRA to effectuate beneficial growth and tax treatment in life and for the heirs after your death. At the Law Office of David Knecht, we have extensive experience helping clients with estate planning and can help you make a plan that is just right for you and your loved ones. Contact us at 707-451-4502. 



Filed Under: Legal Advice, Living Trust , Living Will

How Should I Tell My School Aged Children About Divorce?

One of the most important and challenging conversations a parent can have with their children is telling them about a divorce. It’s a discussion that will likely always be remembered, so handling this topic is of utmost importance. This article summarizes content from divorcemag.com and provides a checklist for parents to guide them in breaking the news to their children in a positive way. The full article can be found here: 

Affirmation. 

  • Begin by affirming your love for the children and assuring them that you will always be their parent. Tell them that you will always be there for them, but there will be some changes in the family. 

Acknowledge Problems but Don’t Detail Them.

  • Acknowledge that there were problems in the marriage and that you tried to fix them, but do not go into detail about what you think your spouse did wrong. Those are adult issues and too complex and heavy or children, and also you do not want to place your children in a situation where they feel they have to take sides. Be clear with the children that they were in no way at fault and consider apologizing to them for impacting their lives with this new change. 

Consider Your Words. 

  • Consider your children and carefully choose your words. For example, the word “divorce” can be extremely triggering to some children, so you may want to start by calling it a separation. For other children, they may want or need a more direct explanation from you. Make a decision ahead of the conversation about the words you will use. 

Convey Security and Confidence. 

  • Your children need to know that both you and then will be ok. Avoid expressing insecurity about what will happen or how you will get by financially. Try to express confidence and security to your children so that they will feel safe to weather the changes. If one parent is moving out, it is helpful if they already have those arrangements in place so that they can tell the children where they will be and confirm to them that they will still be available and accessible. 

Have the Conversation Together with Your CoParent. 

  • Although emotions may be running high with your coparent, it is often beneficial to work jointly to deliver the message to the children. This can provide confidence to the children that both parents love them and will work together. Emphasize that you will both try to do your best to make the changes as easy on the children as possible. 

Contact an Experienced Family Lawyer

Even if you are just contemplating a divorce, but not certain that you want to go forward, contacting an experienced divorce attorney can be helpful. You can make a plan and know your options. At the Law Office of David Knecht, we have extensive experience helping clients with a California divorce, and we are happy to answer your family law questions. Contact us at 707-451-4502. 



Filed Under: Divorce Advice, Divorce Attorney, Divorce Lawyer, Divorce Planning

Considering Divorce? 3 Things You Need to Know

An article published on Parents.com was authored by a woman who was both a mother and a divorce lawyer and discussed what she wished all clients knew prior to a divorce. This article summarizes the article with a list of 5 things you need to know if you are considering divorce. The article can be found in its entirety here: Understand Your Finances. 

  • Money is clearly and important issue in divorce, yet it is surprising how many people are in the dark about their spouse’s finances. 
  • Find out about your spouse’s income. Are they an employee or independent contractor? Are they contributing to retirement accounts? Do they have other investment properties, stock holdings, or other investments?
  • Figure out your debts. Do you have the credit card bills? Do you know the monthly mortgage amount? Who pays for the car insurance and how much is it? 
  • Although understanding the financial system seems very basic and obvious, many people do not have the documents or online access at their fingertips, and getting this access prior to the divorce will be very beneficial down the road. 

Figure Out Your Monthly Expenses

  • Do you know where your money goes every month? This is often important to know down the road for spousal support. 
  • Try to identify where the money is spent on housing, utilities, health insurance, food, phone services, tv and internet, education, charitable donations, etc. 
  • Organizing your proof of these expenses by having the credit card and bank information at your fingertips will save you time later. 
  • You may have student loans or credit card debts or may plan to incur those during the marriage. 
  • You may inherit money during the marriage. 
  • You may want a safety net against your future spouse’s unhealthy behaviors (money toward addictions, uncontrolled spending, etc. )
  • Be aware of red flags, such as sudden changes in spending habits by one spouse. It is not unusual for a spouse who is considering divorce to try to reduce spending in the months prior or to cancel bills before they come under the court’s scrutiny.  

Many divorces are resolved by settlement, so begin considering your divorce goals.  

  • Most divorces are resolved through a mutually agreed settlement by the parties, so if you are thinking about divorce, it is helpful to analyze your feelings about various settlement possibilities before the divorce even commences. 
  • If you have children, consider their ages, preferences and education. Look realistically at what physical custody you think will be in their best interest. 
  • Decide about assets, such as whether you want to keep possession of the home, whether there are keepsakes that you want to be yours in the divorce, etc. 
  • Try to think long term. A common mistake when parties begin a divorce is short term thinking because it is hard to imagine what life will be like down the road ten years, but the decisions you make with your divorce strategy will have far-reaching consequences. 

Contact an Experienced Family Lawyer

Even if you are just contemplating a divorce, but not certain that you want to go forward, contacting an experienced divorce attorney can be helpful. You can make a plan and know your options. At the Law Office of David Knecht, we have extensive experience helping clients with a California divorce, and we are happy to answer your family law questions. Contact us at 707-451-4502. 



Filed Under: Divorce Lawyer, Divorce Planning

Inheritance and Preventing Family Conflicts

As reported by Newsweek.com, a man recently sparked a storm of debate on Reddit when he inherited a property and refused to honor the tradition of hosting family weddings there. This article will summarize some of the suggestions on how to prevent family conflicts with inherited property from the full article, which can be found here:

A study shows asset transfers are of increasing importance for families. 

  • As per an April 2017 study published in Families, Relationships and Societies, “asset transfers are of increasing importance for families as a way of transmitting advantages over generations…but little is known about how inheritance generates disputes, tensions or dissatisfaction among family members.” 
  • See 

Research indicates a continuum of motivations by gifters. 

  •  A study published in the European Journal of Ageing, indicates that material inheritance constitutes a challenge for families and that the motivation of the gifter can fluctuate on a continuum between unconditional donation (altruism) and conditional donation (strategic, reciprocity). 

The person inheriting property should clearly communicate boundaries. 

  • Bill Gladwell, a communication expert, was quoted in the Newsweek article as advising people who inherit property to clearly communicate their boundaries and expectations to family members up front. 
  • Make it clear that any use of inherited property by family members must now be agreed to and approved by the person who now owns it. 
  • Having an open and honest conversation about concerns is vital. 
  • It is important for the new owner of the inherited property to be firm in their boundaries, but it is also imperative to express respect and understanding for the other family members’ feelings to keep the lines of communication open. 

Contact an Experienced Estate Planning Laywer

One aspect of estate planning that is extremely important is thinking ahead to potential family conflicts and creating a plan that will promote the goals of the giver without stirring up disputes in the family. At the Law Office of David Knecht, we have extensive experience helping clients with estate planning and can help you make a plan that is just right for you and your loved ones. Contact us at 707-451-4502. 



Filed Under: Estate Planning, Estates

3 Myths and Misconceptions about Postnuptial Agreements in California

If you are planning to get married, you may be getting advice from family or friends encouraging you to get a “prenup.” A prenuptial agreement is contract entered into prior to marriage that often contains provisions for property and debt division in the event of a divorce. This article addresses some of the common myths and misconceptions regarding prenup agreements.  

  A prenup dooms your marriage. 

  • Asking your loved one to sign a prenup is not very romantic, but often marriage involves challenges where thoughtful planning and communication can trump the romance and assumptions that come in the courtship stage, which is why loving relatives and friends urge couples to keep the romance alive later in the marriage by tackling tough topics before conflicts arise. 
  • Asking for a prenup is not bucking a trend, but rather following it. As reported on mediate.com, 44% of singles think a prenup is a good idea and 15% of divorcing couples wish they had signed a prenup. 

Prenups are expensive to get or are just for rich people

  • Truth is, not matter how much or little money you have, everyone at some level cares about money because it is the way we survive. 
  • You may have student loans or credit card debts or may plan to incur those during the marriage. 
  • You may inherit money during the marriage. 
  • You may want a safety net against your future spouse’s unhealthy behaviors (money toward addictions, uncontrolled spending, etc. )

Prenups are unfair 

  • The most widely publicized prenup cases are often those that are unfair to one spouse, but the norm is to create a balanced and fair agreement that effectuates the goals of both spouses. 
  • Both parties should be represented each by their own lawyer to ensure fairness in the prenup process. 

Contact an Experienced Family Lawyer

Many couples want a simple prenup that doesn’t break the bank and others want a complex contract that deals with significant assets and future income. Regardless of where you fall on the spectrum of cost and complexity, here at the Law Office of David Knecht, we have extensive experience in prenuptial agreements in California and can help you successfully prepare a contract within your budget that meets your goals. Contact us at 707-451-4502. 

 

Filed Under: Divorce Advice, Divorce Attorney

How Can Prenuptial and Postnuptial Agreements Strengthen Marriages?

Many people are reluctant to broach the topic of a prenuptial or postnuptial agreement to their fiancée or spouse with the concern that it may be seen as a hostile or distrusting gesture, but in an article published at Forbes.com, the author (who is a wealth advisor and divorced parent herself) asserts that these types of agreements can actually strengthen marriage and can avoid disastrous consequences in divorce. 

Why talk about prenuptial agreements and postnuptial agreements before things go sour?

  • Life is unpredictable and marriage is difficult
  • Talking about challenging topics while the marriage is still good is better than waiting until the typically adversarial construct of a divorce
  • Money and communication are the two top reasons why people get divorced,

What is a prenup or postnup and why do you need one?

  • A prenup is a contract entered prior to marriage
  • A postnuptial agreement is similar to a prenup except that it is executed after a couple is already married. 
  • It commonly addresses spousal support and provisions of assets in a divorce
  • It’s not just for the rich and famous. Everyone has something worth protecting.
  • It can address property, debt, future inheritances and earnings. 
  • Information or documents that show assets and debts.

What are topics to consider in a prenup/postnup?

  • Division of assets and debts
  • Amount and duration of maintenance/alimony upon divorce
  • Ownership and use of property 
  • Trusts or wills

Can a prenup or postnup determine child custody or support?

  • No, parental responsibilities and child support are based on the best interest of the children, so they cannot be negotiated in advance of a marriage or divorce.

Contact an Experienced Family Lawyer

An experienced family lawyer can help you with a prenuptial or postnuptial agreement that can save time and anxiety in the future. At the Law Office of David Knecht we have extensive experience with family law in California and can help you successfully prepare these agreements. We look forward to assisting you.  Contact us at 707-451-4502. 

 

Filed Under: Divorce Advice, Divorce Attorney, Divorce Lawyer

What Can We Learn From Hollywood About Estate Planning

For those who follow celebrity news, there have been recent sobering and tragic events. This article discusses the heartbreaking passing of dancer, Stephen (tWitch) Boss, and actress, Kirstie Alley, as well as Celine Dion’s recent news of a challenging health diagnosis with stiff man syndrome. While we mourn with other fans about these events with sensitivity and compassion, we also urge our clients to use these celebrity examples as motivation to consider loved ones and make estate planning priority. Below we share a few lessons that can be gleaned from celebrity news. 

You are never too young for estate planning

  • The recent tragic death of Stephen (tWitch) Boss, a dancer who rose to fame through So You Think You Can Dance, is a case in point as he was only 40 when he died. 
  • There is much public concern as to the reason Twitch took his own life, but no answers that have been made public at this time and the hearts of many of his fans have been mourning his early death and its impact for his wife and children. 
  • The lesson here for estate planning is a heartbreaking one: you may not know the demons your spouse or partner is facing in life or how to help them, so preparing for tragic possibilities is wise even though it can be a challenging topic to discuss with loved ones. 

Estate planning for a health crisis is wise because a health crisis can be severe and unexpected

  • Celine Dion, renowned singe, recently announced a challenging health diagnosis, stiff person syndrome, that is preventing her from completing her upcoming tour.
  • This highlights that disease and disability can happen suddenly to anyone, and that serious health conditions can impact ability to work and qualify of life. 
  • Part of complete estate planning is thinking ahead to your wishes regarding health challenges in the future – for example, who do you want to help make medical decisions for you if a health condition prevents you from making decisions for yourself, how can you plan your assets for protection from creditors in the event of a major health crisis?

Estate planning is necessary because you never know how much time you have left

  • The reality for all of us is that life is precious and the amount of time we have left is unknown, so estate planning to communicate your wishes to loved ones and dispose of your property as you see fit is timely no matter when you begin. 

Contact an Experienced Estate Planning Law Firm

Although these celebrity stores are sobering, the good news is that you can seize today to get started on an estate plan that can help alleviate the stress and sorrow of loved ones in the instance of challenging or tragic events. the Law Office of David Knecht we have extensive experience with estate planning in California and can help you successfully plan for the future. We look forward to assisting you.  Contact us at 707-451-4502. 

 

Filed Under: Estate Planning, Estates

Year End Estate Planning Strategies from the National Law Review

A recent article from the National Law Review shares 2022 year end estate planning updates and strategies for clients to consider. This article summarizes this publication, which can be found in its entirety here:

Gifts for 2022 

  • A person can make gifts up to $16,000 per recipient to an unlimited number of persons free from gift tax. 
  • For a married couple splitting the gift, this means they can gift up to $32,000 per recipient. 
  • Gifts are within an annual exclusion amount, so they do not reduce the tax payer’s lifetime federal estate and gift tax exemption. 
  • This creates an easy and effective way to pass wealth to family members or others. 
  • The gift must be made by December 31, 2022 to qualify. 
  • All gifts made outright can qualify and certain gifts made to a beneficiary in trust can qualify also if properly structured. 
  • In 2023, the annual amount will increase to $17,000 per recipient. 

The gift exclusion is a tool that is used by many of clients because it is a straightforward and easy mechanism for passing wealth to family members and others without a gift tax consequence for the giver. For clients with greater resources, the lifetime federal estate and gift tax exemption amounts should be considered in estate planning.

What is the lifetime federal estate and gift tax exemption?

  • This is the combined amount a person can transfer during life without 
    • triggering a current gift tax 
    • or upon death, transferring free from estate tax. 
  • However, transfers to U.S. citizen spouses and qualified charitable organizations are not generally subject to tax. 
  • Annual gifts within the gift exclusion described above do not “count” against this lifetime number
  • Other lifetime gifts, however, will reduce the amount of estate tax exemption available at death. 
  • Currently the lifetime exemption is $12,060,000 per taxpayer estate.
  • In 2023, this number will go up to  $12,920,000 per taxpayer estate.
  • This allows opportunities for estate planning in 2023 with these new numbers in mind.  

Contact an Experienced Family Lawyer

Whether you are just embarking on building your wealth or whether you have significant assets, estate planning can be helpful in utilizing tax advantageous tools and planning for the outcomes you seek. At the Law Office of David Knecht we have extensive experience with estate planning in California and can help you successfully prepare the right estate plan for you and your family. We look forward to assisting you.  Contact us at 707-451-4502. 

 

Filed Under: Estate Planning, Estates
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