Equal or Equitable:  Should Each Child Get the Same in a California Estate Plan?

Dividing assets among your children is not always an easy question.  Should each get an equal share or should you look at the totality of the circumstances to create something not equal, but in fact fair and equitable?  This article references an Investopedia analysis of this topic and highlights questions to consider:  https://www.investopedia.com/articles/personal-finance/102215/advice-wills-should-each-child-get-same.asp

  1. Equal Division.  

In many cases, and equal division of assets is conventional and seems to be the most logical choice.  Such is the case when each child has similar needs.  This often happens if they are similar in age, in earning capacity, in responsibility, in mental and emotional maturity, etc.  One advantage of an equal division is that it typically appears fair on it’s face to outside observers and perhaps the heirs themselves. If you want to leave children different assets, but to give them equal value, then it makes sense to assign values to each of the assets and to ensure equality in the overall monetary division.  

 

  • Equitable but not Equal Division. 

 

There are many situations in which you feel more comfortable or fair by giving children unequal but equitable divisions.  For example, if one child has been a caregiver, then perhaps you want to reward that child for his or her sacrifice during your lifetime with additional assets in the inheritance.  Or perhaps you have given certain children more financial assistance during your lifetime and want to even out the distributions after your death. If you have a family member who cannot care for themselves, then you may want to leave the bulk of your estate for the care of that heir. You may have a blended family and want disparate amounts to go to children depending on which children have a biological connection to you.

Consult with the Law Office of David Knecht

Whether you are leaning to an equal distribution or an equitable plan, the Law Office of David Knecht, at 707-451-4502, can help. We have extensive experience in estate planning and can help you create a plan that addresses the needs of you and your family and accomplishes your goals.  

 

Estate Planning for Blended Families in California

Blended families are very common, but estate planning for a blended family can come with a set of challenges to consider.  This article will summarize 5 blended family mistakes to avoid, with content referenced from:  https://www.aarp.org/retirement/planning-for-retirement/info-2021/blended-family-estate-planning-mistakes-to-avoid.html

Not Changing Beneficiaries.  

One of the most common mistakes is failing to update wills or beneficiary designations.  It’s not unusual that the ex-spouse may be inadvertently left as a beneficiary.  Make sure that you have properly updated the beneficiary on all stock accounts, life insurance, bank accounts, and all other type of account with a beneficiary designation. 

  • Treating All Heirs Equally. 

It’s important to give extensive thought to the needs of each of the children and the assets that you have.  For example, you may have some children with different ages, earning capacities, or lifestyles.  You can treat heirs equitably without treating them all equally. You may see that one possible heir might have special needs or disabilities.  One spouse may have greater assets going into the marriage than the other and want some of those proceeds to go to certain heirs.  Every person’s situation is different, but careful consideration of your heirs and their needs will help you plan wisely. 

  • Waiting Until You Are Gone to Give. 

You may want to give your heirs a gift when you are alive to see them enjoy it.  You can gift up to $15,000 a year (in 2021) without a tax consequence.  See https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

Skipping the Lawyer

If you are older and on your second marriage, it’s likely that your estate plan may be somewhat complicated.  Ex-spouses, blended families and comingled assets can add to the complexity.  For this reason, investing the time and money in getting a thorough estate plan may give you the comfort of knowing that the plan you have is sound and solid.  

Consult with the Law Office of David Knecht

At the Law Office of David Knecht, at 707-451-4502, we have extensive experience in estate planning and can help you create a plan that addresses the needs of you and your family and accomplishes your goals.

 

What is a California Estate Plan?

A comprehensive California estate plan should be specific and customized to fit your personal circumstances.  It  generally includes a Living Trust, Powers of Attorney for Property and Healthcare, a “HIPAA” authorization, a Living Will/Advance Healthcare Directive,  a Pour-Over Will, Deeds to your properties, Beneficiary Designations on life insurance, annuities, IRAs, 401 (k)s, Guardian Nominations for minor children and perhaps more.  Sounds like a lot?  Well, there can be many advantages to getting everything in order while you are in good health and capacity to make the many decisions involved in preparing these documents.  This article will give you an overview what each of the pieces of the Estate Planning puzzle are and how they can help you.  

What is a California Living Trust?

A California Living Trust protects you while you are alive.  During your lifetime, you have complete control over the Living Trust to change it, and you will have the right to use the property during your lifetime with no restrictions.  However, upon incapacity or death, the Living Trust puts the power into the hands of your heirs, generally with no requirement to go to court.  It can have advantages for tax planning and avoiding creditors.  You can find more information on Living Trusts here:  https://www.scscourt.org/self_help/probate/medical/living_trust.shtml#what

What is a Living Will/Healthcare Directive?

A California Living Will is more commonly knowns as an Advanced Healthcare Directive, and it helps your loved ones know how to carry out your wishes when you are no longer able to make your own decisions.  It can direct them on tough decisions such as breathing and feeding tubes and other end of life dilemmas.  You can find more information here: https://oag.ca.gov/consumers/general/care#advance

What is a California Durable Power of Attorney for Property and Healthcare?

A Power of Attorney is a document that authorizes someone to represent you.  A Power of Attorney can authorize another person to make bank transactions, trade stocks, pay your bills, buy or sell your property, file your tax returns, hire people to take care of you, apply for benefits on your behalf and more. You can find more information here:  https://www.scscourt.org/self_help/probate/medical/poa.shtml#what

How do I designate a guardian for my children in California?

If you have minor children, it is likely a great concern for you to determine who will take care of your children if you pass away or become incapacitated. When both parents are dead, the court will decide who the guardian will be as per what is the best interest of your children.  The court will ask the children what they want and consider your guardianship wishes.  Alternatively, while you are alive, if you have legal custody, you can obtain a joint guardianship, and then when you pass away, the legal custody will transfer to the other joint guardian usually without additional hearings.   You can find more information here: https://www.courts.ca.gov/1215.htm?rdeLocaleAttr=en

What is a California Pour-Over Will?

A Pour-Over Will works hand-in-hand with our Living Trust.  It  covers everything that may not be in your Living Trust at death to your trust.  For example, if you took your home out of your trust to refinance and forgot to put it back into the trust, you Pour-Over Will would make sure that the home is distributed under the terms of the trust.  You can find more information here: https://www.scscourt.org/self_help/probate/medical/living_trust.shtml

What is a HIPAA Authorization?

A HIPAA authorization allows the people you designate to have access to your healthcare documents.  This can be important for your family members to get updates on your condition, view diagnostics such as lab reports or test results, and to make more informed healthcare decisions on your behalf. You can find a HIPAA form here:  https://www.dhcs.ca.gov/services/Documents/Authorization%20for%20Release%20of%20Protected%20Health%20Information%20DHCS%206247.pdf

How can the Law Office of David Knecht help you personalize your estate plan?

Depending on your specific circumstances, you may need other documents.  If you are anticipating bankruptcy, divorce, or certain types of lawsuit, you may need strategic planning to protect your beneficiaries.  An estate plan goes further than a checklist of documents, but should be approached with a unique plan just for you that provides the best tax strategies and plans to carry out your wishes with exactness. The attorneys at the Law Office of David Knecht, have extensive experience in all aspects of estate planning and can help you create a plan that is complete and advantageous.  Contact us at 707-451-4502 for more information.