Estate Planning

Provide Creditor and Divorce Protection to Your Children

An Irrevocable Life Insurance Trust (ILIT) can insure that your beneficiaries are protected from their inabilites, disabilities, predators, creditors, in-laws, and out-laws, including potential ex-spouses. An outright transfer of an insurance policy to beneficiaries does not provide the same level of protection as an insurance trust. Maximum flexibility and creditor protection can be achieved through the use of an independent trustee, spendthrift provision, and the grantor's surviving spouse having a testamentary limited power of appointment over the family trust (after death of the insured).     

Do not buy life insurance for your spouse without talking first to an attorney about the difference between buying life insurance outright and buying life insurance through an ILIT. 

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True Grit - Using Life Insurance together with a Qualified Personal Residence Trust

A QRPT is a type of "grantor retained income trust" or a "GRIT" which work to save estate taxes.  Our tax system imposes a one-way transfer on transferring wealth from one person to another; a QRPT can work to save on the transfer tax.

One of the kinks of using a QRPT has to do with the generation-skipping transfer (GST) laws.  In short, there is a strong incentive to have the trust property pass only to your living children, sounds obvious, but stay with me.  If, heaven forbid, your child dies during the QRPT term, your grandchildren of that child cannot benefit from the trust property.  The benefits skip a generation.

If this is a concern, then the QRPT could hold a term insurance policy on your life, you being the donor of the QRPT.  The term of the policy should match the term of the QPRT and its face amount could equal the estimated estate tax savings it is hoped the OPRT would produce.  A good tactic resulting in either a tax savings from the QPRT, or if the family loses that because you pass before the term of the QPRT expires, your family will still gain the life insurance proceeds.

Maximizing FDIC Insurance Coverage

The news of Washington Mutual and other bank failures recently has increased interest in the topic of FDIC insurance. Consider the following when structuring accounts to secure maximum FDIC coverage.

The FDIC insures deposits at insured banks including checking, NOW and savings accounts, money market accounts, and certificates of deposit (CDs). FDIC does not insure stocks, bonds, mutual funds, ETF's, life insurance policies, annuities, or municipal securities purchased from an insured bank. SIPC (Securities Investor Protection Corporation) protects brokerage accounts up to $500,000 per customer if the brokerage firm fails. Speak to your brokerage firm about SIPC rules they are different from FDIC rules. See www.sipc.org.

FDIC will cover deposits, dollar for dollar, including principal and any accrued interest, up to the insurance limit. To find out whether the FDIC insures your bank or savings association, see www.fdic.gov/deposit/index.html and use 'Bank Find'.

The basic amount insured by FDIC is $100,000 per depositor per insured bank. Certain retirement accounts, such as IRAs, may be insured up to $250,000 per depositor per insured bank. You can increase the FDIC insured available holding accounts in different types of ownership.

There is more to estate planning than transferring wealth, minimizing taxes or protecting assets from creditors - It's about protecting family relationships.

Preserving Family Relationships

If you are a member of that in-between generation, you have both kids to take care of and aging parents to worry about, I encourage you to talk to your parents now, while they still have the ability to prepare for their own incapacity and death. The following suggestions are based on actual situations from clients who did not have a chance to talk with their parents about estate planning until it was too late and therefore very difficult on the entire surviving family. Here are a few Estate Planning considertions:

Protecting Your Estate for Future Generations

Asset Protection & Estate Planning

You're beginning to accumulate substantial wealth, but you worry about protecting it from future potential creditors. Whether your concern is for your personal assets or your business, various tools exist to keep your property safe from tax collectors, accident victims, health-care providers, credit card issuers, business creditors, and creditors of others.

To insulate your property from such claims, you'll have to evaluate each tool in terms of your own situation.

How is a Legal Guardian Appointed for My Child?

A legal guardian is an adult appointed to care for your child if you and his other parent both die before he reaches adulthood. While the thought of that might make you shudder, you need to choose a guardian so the courts don't do it for you.

If you think your mother or sister will automatically receive custody of your child if you die, think again. Unless you specifically name a guardian in your will, anyone can step forward and ask for the job, and a judge will decide who wins custody.

Where to Begin? Initiating the Discussion

For many people, one of the biggest challenges in getting started in estate planning is beginning a discussion. Too often, family members are hesitant to discuss estate planning. In some cases it is older family members who delay because of unpleasant thoughts of growing older and dying.

In other cases, it’s younger family members who hesitate because they don’t want to place additional stress on older family members. How can you initiate a discussion without causing misunderstandings?

Download Kids & the Law an A-to-Z Guide for Parents

This is a great publication by the California State Bar designed to give you a general understanding of some of the laws that apply to children.

For example, did you know that in California it is against the law to ride a bike on a sidewalk unless you are age 12 or under.  The publication is loaded with lots of interesting facts and information that apply to your children. 

Download 2007kidslawcalifornia_bar_assn_publication.pdf

Can I Do It Myself?

Who Should Help Me With My Estate Planning Documents?

Can I Do It Myself?

It is possible for a person to do his or her own estate planning with forms or books bought at a stationery or bookstore or from the State Bar. At the least, a review of such forms can be helpful in preparing you for doing estate planning. If you do review such materials and have any unanswered questions, however, you should seek professional help.

Do I Need a Professional To Help?

If you do seek advice, wills and trusts are legal documents which should be prepared only by a qualified lawyer. However, many other professionals and business representatives may become involved in the estate planning process. For example, certified public accountants, life insurance salespersons, bank trust officers, financial planners, personnel managers and pension consultants often share in the estate planning process. Within their areas of expertise, these professionals can help you in planning your estate.

Is Your Family Protected?

If you are a member of that in-between generation, you totter between kids to take care of and aging parents to worry about, I encourage you to talk to your parents now, while they still have the ability to prepare for their own incapacity and death. The following suggestions are based on actual situations from clients who did not have a chance to get all the finishing touches on their parents’ estate planning in place until it was too late and therefore very expensive. Here is a list of estate planning considerations:

1. Make sure you know where your parents’ estate planning documents are located.

2. Check to see that their documents include all the necessary components of a complete estate plan.