Avoiding Living Trust Mills: A Warning from the Office of the Attorney General for California

The State of California Department of Justice provides information to consumers on estate planning scams on its website:  https://oag.ca.gov/consumers/general/living_trust_mills

This article will summarize the information published by the Attorney General on this website about how to identify and avoid estate planning fraud. Although in depth information will be provided below, one good way to avoid fraud is to only do business with reputable estate planning service providers. At the Law Office of David Knecht, all attorneys are licensed by the State Bar of California. We have extensive experience with estate planning and you can trust us to provide honest and accurate information. Contact us at 707-451-4502.

 

  •  What is a living trust?
  • A living trust is an estate planning tool that allows you to control your money and property during life and then have it distributed to your desired recipients (people or organization), when you pass away. 

 

 

 

  • Why do you need to be careful in choosing someone to help you create a living trust?

 

  • Estate planning involves important legal, financial and personal decision-making. If estate planning documents are not properly created and executed, the consequences may be that your wishes are not properly followed or there may be tax or other unintended consequences.

 

 

  • What should you look for in filtering through choices of estate planning professionals?

 

  • Confirm whether the person who claims to be licensed actually is licensed.
  • Obtain identification from the professional you are working with to confirm that they are who they profess to be. 
  • Be wary of any professional who is pushing selling you one single product rather than helping you consider a variety of options. 
  • Watch for scare tactics to try to motivate you to jump into something without a lot of time and thought. 
  • Look for someone who is trying to sell annuities as well as trusts. Seniors can find themselves trapped in an annuity that doesn’t pay out until a far future date. 
  • Know your cancelation rights. For more information on cancelation rights for sales that occur in your home, go to https://www.dca.ca.gov/publications/legal_guides/k_9.shtml

 

 

  •  What are some signs of a living trust mill?

 

  • Scammers working for “living trust mills” may try to sell you an unnecessary living trust oryou’re your financial information to sell you products that are inferior to your current investments. 
  • Scammers often target seniors with “free” seminars at assisted living facilities, churches, vacation resorts and any other places where seniors gather. 
  • Be wary of “one size fits all” approaches to estate planning. Not every person needs a living trust, and if the professional you are working with is not taking time to find our your particular assets and needs, then that is a red flag. 

Consult the Law Office of David Knecht

At the  Law Office of David Knecht,, we understand the importance of creating an environment of trust and confidence. We will perform a one-on-one evaluation to help you create an estate plan that is customized for your needs. Call us at 707-451-4502.

 

Filed Under: Estate Planning

Estate Planning Lessons from One Woman’s Journey with her Mother’s Cancer

A recent article published on Kiplinger.com was authored by an estate planning attorney whose own mother received a terminal cancer diagnosis. It was a poignant perspective from a woman who was a veteran in the estate planning field, only to have to call on that knowledge for her own family member.  

This article will summarize the takeaways from the unique perspective of an estate planner who had to plan for her own family member.  

 

How has the Schiavo case influenced estate planning?

  • Terri Schiavo was a woman who suffered a massive heart attack in 1990 and was left in a permanent vegetative state. Her husband and parents had a complicated and bitter legal battle over whether she would have wanted to be maintained in that vegetative state. 
  • This case was a horror story of what can happen in the absence of a clear advance medical directive. 
  • The number one lesson from this case is that the battle between the husband and the parents was preventable, had Schiavo properly prepared by making her wishes known and documented. 
  • Here you can see more details about the Schiavo case.  

 

Why might estate planning be particularly important for those of a particular faith?

  • In the Schiavo case, the role of faith played prominently in the push and pull of the end of life debate. 
  • Similarly, the author’s mother was part of a faith-based community and therefore had very strong beliefs about what her end-of-life care should look like and how her body should be treated in the final moments. 
  • The takehome lesson here is that family members can benefit from directives as to what the person wanted, what customs to follow, and what preferences to adhere to.   
  • The author’s experience with her mother helped her realize that the stress and emotion of a tough diagnosis are draining, so it can be particularly challenging to start on estate planning when someone’s health is in the declining stages.
  • It’s much easier to plan ahead during times of health.

CONTACT THE LAW OFFICE OF DAVID KNECHT TO GET STARTED ON ESTATE PLANNING

If you need help getting started on estate planning, or if you are looking to update or expand on work already completed, contact the  Law Office of David Knecht. We have extensive experience with estate planning in California. Contact us at 707-451-4502 for more information.  

 

Filed Under: Estate Planning, Estates

67% of Americans Have No Estate Plan, Here Is How to Get Started

A recent article published on CNBC.com highlighted a surprising trend:  although the Covid-19 pandemic has greatly increased awareness and conversations regarding estate planning, Americans are still not taking action, with 67% of Americans without any estate plan according to sources cited by the CBNC.com article.  See This article will summarize the CNBC report on what Americans are missing and how to get started on planning for the future. 

What does the research show as the reason why 67% of Americans are leaving what happens to them and their assets in the case of disability or death up to others?

  • A study from Caring.com showed that the main reason for the apathy toward estate planning is just procrastination (approx. 40%). 
  • Meanwhile, about a third of respondents didn’t think they had enough assets to pass on to their loved ones, and about 10% said that estate planning was too expensive or that they didn’t know how to get a will. 

How has Covid impacted estate planning motivation?

  • 41% of people age 18-34 report seeing more need for estate planning after the pandemic. 
  • Even with Covid providing increased motivation, there are opportunities to do better: the Caring.com study found that only 48% of people who had severe Covid have an estate plan in place. 

What is the recommendation from the CNBC report on how to get started on estate planning?

  • The first step is to become as informed as possible and consult with a financial advisor or estate planning attorney. 
  • For those with fewer assets, online resources may be useful for planning.
  • California Residents – With online resources, be sure to confirm whether they are valid and binding in California 

CONTACT THE LAW OFFICE OF DAVID KNECHT TO GET STARTED ON ESTATE PLANNING

If you need help getting started on estate planning, or if you are looking to update or expand on work already completed, contact the  Law Office of David Knecht. We have extensive experience with estate planning in California. Contact us at 707-451-4502 for more information.  

 

Filed Under: Estate Planning, Estates

The Evolution of Trust and Estate Disputes and Selecting the Right Mediator in California

Some would assert that the pandemic and shifting landscape around wealth transfers is fueling increased trust and estate disputes.  This article will summarize a podcast with an interview of the Honorable Glen Reiser, a judge who serves as educational trainer for all trust and probate judges throughout California.  He spent more than 20 years with the Superior Court in Ventura County, California, and before that, more than two decades as a civil litigator.  The full transcript of the podcast can be found here:  https://www.jdsupra.com/legalnews/podcast-jams-neutrals-on-the-evolution-5378200/

Contested cases have risen dramatically over the last five years, and particularly recently due to COVID. 

  • With Covid, we are seeing a high number of unexpected deaths.
  • There is an increase in the will disputes, with issues relating to blended families and sibling rivalry.
  • More people are dying without a will due to the unexpected nature of Covid.
  • In the “old days” more wealth was earned individually, but now we are seeing that more frequently, wealth is transferred through family deaths and trust and estate matters, so that seems to be where large amounts of capital are exchanged.  Contests in that area have risen dramatically.

The Court system is increasingly encouraging mediation over trial.

  • With Covid, we are seeing a high number of unexpected deaths.
  • There is an increase in the will disputes, with issues relating to blended families and sibling rivalry.
  • More people are dying without a will due to the unexpected nature of Covid.
  • In the “old days” more wealth was earned individually, but now we are seeing that more frequently, wealth is transferred through family deaths and trust and estate matters, so that seems to be where large amounts of capital are exchanged.  Contests in that area have risen dramatically.

 

  •  Mediation has advantages the court cannot offer.

Mediation can save time and money.

  • Attorneys can work with the mediator and other parties to craft often creative solutions.

 

  • Mediation can allow for more customized solutions, since they can be tailored specifically to the parties.

Capacity tends to be a significant issue and cases require a lot of court resources. 

  • Will and trust contests tend to be judge decided not jury
  • The burden on judges for these types of cases is large because the cases require trial and long opinions, so judges generally would like to encourage settlement
  • The testamentary instrument is either a trust or a will. That document in most cases, not always, was drafted by an estate planner or a lawyer who dabbles in estate planning.  Thorough preparation would be to interview the estate planner to see what their recollection is, even if it relates to issues such as capacity, undue influence, document interpretation or intent.
  • With capacity cases, a geriatric psychiatrist or PhD psychologist with expertise in geriatrics should be consulted.

 

The role of undue influence in estate disputes. 

  • In our mobile society, many family members move away, but someone stays to help take care of the elderly person.  So, when the elderly person changes their instrument to benefit the person taking care of them, then that’s a common circumstance where undue influence will be alleged.
  • Undue influence is a particularly fact specific factor, and questions that should be asked are:  Is the person isolated?  Are they competent to write emails?  Who is taking them to the lawyer’s office?  Whose lawyer is it?  Who is sitting in on meetings with an estate planner?  These issues and more are the type of fact-specific inquiry needed on these cases.

 

 Tips for successful mediation of estate disputes.

  • Preparation is key.
  • Consider spending money on the science up front.  There is a lot of development in the science of cognitive deficits with scientific evidence that can be relevant to undue influence and capacity, and it may be that spending money on the science up front will make the negotiating position stronger.
  • Find a mediator who will read everything, understand the positions and get involved.
  • Avoid selecting a mediator who is just a “carrier pigeon” to take the offers back and forth.  Look for a mediator who has the skill set to add to the discussion.

Conclusion

At the Law Office of David Knecht, at 707-451-4502, we have extensive experience in estate planning and litigating estate disputes.   Contact us today!

Filed Under: Estate Planning, Estates

3 of the Worst Things Your Kids Can Do with Their Inheritance

If you are considering estate planning, one of the important aspects of the future that is probably on your mind is how to make sure your children do not squander what you are leaving them.  At the Law Office of David Knecht, we have extensive experience in estate planning and can help you think through many of the important issues, and especially a plan to help your heirs utilize their inheritance effectively. 

Business Insider highlighted a few of the worst things that can be done with an inheritance, and this article will summarize a few of those topics to help you begin to strategize the best estate plan for your family. See https://www.businessinsider.com/personal-finance/worst-things-inheritance-financial-planner-2021-1.

Sitting on the money—often better to invest the money.  

There are a few risks of sitting on the money:  inflation, opportunity cost, and the temptation to spend.  A quote attributed to Warren Buffett is “The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worthless over time. But good businesses are going to become worth more over time.”  See Warren Buffet quotes at https://www.insightssuccess.com/a-compilation-of-warren-buffett-quotes-that-will-add-perspective-to-your-investorlife/?gclid=Cj0KCQjwqKuKBhCxARIsACf4XuH2NAAwThinvlMnBvwSJIYXWAcNoskp5xpFzFZjtQWMq7SrlSmTRfkaAnu5EALw_wcB

Cash is an excellent asset for heirs to receive in an inheritance because it is so flexible, so it is not a negative in an estate plan.  However, you may consider providing your children with instructions, education or just simply helpful advice on how to invest after you are gone so that they can make the most of what you are leaving them. 

 

  • Holding onto an inherited property that the heirs can’t afford – often better to sell or rent. 

 

If an heir inherits a property, they may not want to sell or rent it for sentimental reasons.  For some, the desire to keep it “as is” can prevent the best financial utilization of the property.  There can be maintenance costs, taxes, and other expenses that the heirs may not have the funds readily available to cover.  One strategy for estate planning is to anticipate in advance how the property will be used and maintained and to leave sufficient cash to cover the potential expenses the heirs may face in keeping the property.  This is just one plan, but there are many other choices here as well to make the transition smooth and effective.  

 

  • Putting all of your money in one place – often better to diversify. 

 

Your heirs may not be as experienced in money management as you are and one common mistake with inherited assets is to put the money all in one place.  Many financial planners recommend diversification rather than putting all your eggs in one basket, and this holds true for inherited assets as well as assets that are obtained other ways.  The idea behind diversification is that a variety of investments will yield a higher return and investors may face a lower risk by investing in different vehicles.  See https://www.investopedia.com/articles/03/072303.asp.

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 in California.  We can help you create a plan that is right for you and can help make the transition smooth for your heirs.  Contact us today!

 

Filed Under: Estate Planning, Estates

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.  

 

Filed Under: California Estate Plan, Estate Planning, Estates

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.

 

Filed Under: California Estate Plan, Estate Planning, Estates

Estate Planning Tax Advantages for Married Couples in California

Estate planning is a hot topic in 2021, and creating a plan with taxes in mind is especially important.  Taxes are a very important part of estate planning and this article will focus on a narrow slice of that large pie from a legal point of view as we discuss the estate planning tax advantages for married couples.  Of course, these advantages apply to both same sex and different sex couples, and understanding how they work can be helpful background information for you as you consider your overall estate plan.  If you are interested in learning more from an investor’s perspective, this article on Investopedia may also be a helpful resource.  https://www.investopedia.com/terms/u/unlimited-marital-deduction.asp   

  1. Unlimited Marital Deduction.  As per federal law, you can give assets by gift of inheritance to your spouse, and the taxes on that transfer are deferred until the death of the second spouse.  This is a powerful tool because there is not a limit on the amount that qualifies for the marital deduction.  
  2.  U.S. Citizen Requirement.  It is important to be aware that the unlimited marital deduction only applies when both people are U.S. Citizens.  If the survivor is a non-citizen, then federal estate taxes must be paid on an estate that is above the federal estate tax exemption. 
  3. Qualified Domestic Trust (QDOT).  If you are a U. S citizen wanting to pass assets to a non-U. S. Citizen spouse to defer federal estate taxes, a QDOT may be the right mechanism for you.  A QDOT allows the spouse who dies first to defer all federal estate taxes until both spouses have died and also allows that spouse to retain control over where his or her estate will be distributed after both die. 
  4. Qualified Terminable Interest Property Trust (QTIP Trust).  A Qualified Terminable Interest Property Trust (QTIP trust) allows a person to create a trust upon his or her death that grants a life estate for the spouse that survives.  The advantage here is that it can be done without incurring federal estate taxes.  This trust will be included in the surviving spouse’s estate for federal estate taxes, but it is distributed according to the wishes of the spouse that died first.  The surviving spouse cannot change the QTIP Trust.  

 

Consult with the Law Office of David Knecht

There are many ways to effectively utilize estate planning to effectuate your wishes with tax advantaged methods. For a thorough discussion of issues relating to estate planning and taxes, please contact the attorneys at the Law Office of David Knecht, at 707-451-4502.  

 

Filed Under: Estate Planning, Estates

3 Simple Steps to Get Started on Estate Planning

If you are a senior, you may be feeling the urgency to get your affairs in order, but you may not have the time or the energy to take big steps.  This article will provide a small checklist on ways you can get started that do not require a lot of time or preparation. 

 

  • Beneficiaries

One relatively easy first step to take is to get your beneficiaries updated and designated.  If you have had these accounts for a long time, you may not have the right people or all the people that you want on these records. 

  • Checking and savings accounts at each bank 
  • IRA accounts
  • 401K accounts
  • Life insurance policies

 

  •  Advance Healthcare Directive

 

You have the right to give instructions about your own healthcare or to name someone else to make healthcare decisions for you.  You can also express your wishes regarding donation of organs.  The Office of the Attorney General for California has provided a form as a helpful resource to help you.  You can find the Advance Healthcare Directive form here:  https://oag.ca.gov/sites/all/files/agweb/pdfs/consumers/ProbateCodeAdvancedHealthCareDirectiveForm-fillable.pdf

 

  •   Consult with an Attorney

 

If you are serious about estate planning, an effective step would be to set up an initial consultation with an attorney who has experience in estate planning.  You can go in without any preparation and your attorney can guide you in what you need to think about and do.  These are some areas of estate planning that may be discussed:

  • A Living Trust
  • Powers of Attorney for Property and Healthcare
  • HIPAA Authorization
  • A Living Will/Advance Healthcare Directive
  • A Pour-Over Will
  • Deeds to Your Properties
  • Beneficiary Designations
  • Guardian Nominations for Minor Children

Consult with the Law Office of David Knecht

For a consult with a knowledgeable and professional attorney about your questions relating to estate planning, do not hesitate to reach out tot he attorneys at the Law Office of David Knecht.  We have extensive experience in estate planning and we will help you understand what needs to be done and how to do it.  Contact us at 707-451-4502 for more information.  

 

Filed Under: Estate Planning, Estates

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.  

Filed Under: California Estate Plan, Estate Planning, Estates
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