2022 Estate Planning Statistics

If you have not yet made time for estate planning or if you have put off updating an existing plan, you are not alone. Recent research published at caring.com indicates that although more than half of Americans think a will is important, less than 33% have a will or a trust in place. That means 2 out of 3 Americans are not covered with an estate plan. This article will highlight other interesting findings from the caring.com research and suggest ways to move forward with estate planing. 

What are some of the most interesting findings from the 2022 study? 

  • 50% more young adults now have estate planning documents since pre-pandemic
  • The typical reason cited for not estate planning amongst young people is lack of assets
  • Other reasons cited for not estate planning are 
    • Not knowing how to do a will 
    • Concerns that the process is too expensive
  • For those with the highest earnings, the main reason for delay is just simply procrastination – not getting around to it
  • Higher education correlates with seeking estate planning – about half of those with a postgraduate degree have a plan in place

 Inflation concerns may be another key factor for estate planning delay in 2022.

 What does the research show are the first steps to estate planning? 

  • The most common first step that respondents indicated was talking to a loved one. 
  • Online research was also an initial step.

What are the three main estate planning documents highlighted in the caring.com research? 

  • Wills – this is the most common type of estate document according to the survey. It can be used to divide property, guardianship, debts and more. 
  • Trusts – according to the caring.com article, trusts are useful to avoid probate, provide more support than wills for larger estates or for those who might expect a disability. A trust can take effect during life, as opposed to a will, that determines rights at death. A trust is typically more complex and expensive than a will.   
  • Advanced directives – this provides a person’s wishes regarding end of life or what happens in the event of incapacity. They are intended to take effect during life, not at death. The survey found that only 1 in 5 people knew what an advanced healthcare directive is, which indicates lack of education on this important estate planning component. 

Consult the Law Office of David Knecht

If you are one of the many people in California who need to get started on estate planning, then you would benefit from using an attorney with experience in estate planning in California. Contact Law Office of David Knecht. Call us at 707-451-4502. We have extensive experience with estate planning and can help you. 

How Do I Make Charitable Giving Part of My Estate Plan?

xIs there a charity or a cause that really speaks to your heart? Do you want to make a difference in the world even after you are gone? If so, you may be wondering how to put your charitable giving desires into effect with your estate plan. This article will give you ideas of how to accomplish charitable giving and where to start. For more information on estate planning.

 

Make an outright bequest.

  • This is probably the easiest method for supporting causes you love through your estate plan. 
  • Typically, this method would involve identifying and exact amount to give to a specific charity and specifying that in your will. 

 

Donations in lieu of flowers when you die.

  • You can ask friends and family to leave a gift to a certain foundation in lieu of flowers when you die. 
  • This can be a good way to not only fund-raise for your favorite charity, but also to bring awareness and public support for the charity also. 

 

Name beneficiaries for non-probate assets. 

  • Assets that do not go through probate include assets held in trust, life insurance policy payouts, and retirement accounts and pensions  
  • You can name the beneficiary on these accounts as the charity or charities that you want to support. 
  • As a note of caution on this one, though, your loved ones may want to inherit these types of assets because tax benefits may be involved.

 

Can I remain anonymous in my charitable giving?

  • Prior to 2021, California had a law requiring nonprofits to file a list of their large donors with the state. The U.S. Supreme Court in a 2021 decision struck down California’s law, thus siding with donors who may have a desire to remain anonymous. Consult the Law Office of David Knecht

 

At the  Law Office of David Knecht, we have extensive experience with estate planning and can help you accomplish charitable giving or a plan that accomplishes the purposes you have in mind. 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.

 

If the Market is Down, is it the Right Time for a Roth Conversion?

A Roth conversion is a tool for transferring money from one investment tool into a Roth IRA. When the stock market is down, investors can consider whether the conversion makes sense for their tax planning, investment goals, and estate planning needs. This article is not intended to provide legal or financial advice, but will summarize information published online which may assist you in working with your legal or financial advising professional to create a plan that is right for you. 

 

  • What is a Roth conversion?

 

Why might a Roth conversion be appealing when my stock portfolio is down?

  • With a Roth conversion, the account owner has to pay income tax on the money they convert. 
  • If your stock is down, the amount calculated for income tax will be lower. 
  • For example, if you purchased stocks for $100,000, but now they are only worth $75,000, then a Roth conversion at that time would only involve income tax on the $75,000 amount. 

 

 Why might a Roth conversion be appealing for estate planning in California purposes?

  • The Roth IRA conversion is a strategy to pass IRA assets to non-spousal beneficiaries either directly or as continent beneficiaries upon the death of a surviving spouse. 
  • It is a way to prepay taxes for the beneficiaries. 
  • For more discussion about this strategy, consult these resources:

 

Where can I find information on the other pros and cons of a Roth conversion?

 

 

 

 

Consult the Law Office of David Knecht

At the  Law Office of David Knecht,, we have extensive experience with estate planning and can help you understand and evaluate the various tools for effectuating your wishes and efficiently preparing for the transfer of your estate. 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.

 

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.  

 

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.  

 

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!

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!

 

Why Is Estate Planning Important for Unmarried Couples in California

Estate planning is especially important for couples that are not married in the state of California because unless an unmarried couple has certain documents in place, the surviving spouse typically will have no inheritance rights upon the other spouse’s death.  If one spouse becomes incapacitated, the results can also be complicated.  However, with a comprehensive estate plan, an unmarried couple can have everything in place for the future, which will give you security and peace of mind. 

 

  • What is the purpose of a Durable Power of Attorney?

 

  • A durable power of attorney gives your partner authority to handle important aspects of your life if you are unable to do so.  It’s a tool used to delegate financial affairs to a loved one or to appoint their partner as a healthcare proxy to make important life-or-death medical decisions. 

 

  • What are some of the ways a Durable Power of Attorney can be used?

 

  • A Power of Attorney lets you authorize someone to handle a specific task such as making bank deposits, trading stocks, paying your bills, buying or selling property, hiring people to take care of you, filing your tax returns, arranging the distribution of retirement benefits, or signing contract.  Your agent can do almost anything the Power of Attorney permits.  

 

  • What is a letter of instruction?
  • A letter of instruction is not legally required, but it can be a useful tool to assist your significant other in obtaining and distributing your assets upon your passing. 

 

  •  How can a letter of instruction be helpful? 
  • A letter of instruction can be helpful to communicate important information such as: accounts, passwords, location of important documents or keys, contact information of beneficiaries, specific funeral arrangements, etc.  

 

  •  What should unmarried couples consider in estate planning? 
  • Unmarried couples can set up an estate plan to protect each other from the unintended consequences of incapacity or death.  
  • At the Law Office of David Knecht, at 707-451-4502, we have extensive experience in estate planning in California.  We can customize a plan for you and your loved ones.

 

 

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.