Trusts and Estates Blog

LTC Insurance Agent Warns of Major Changes in Industry

This development could have major implications for our clients. As an estate planning lawyer, I am constantly asked for advice on whether someone should buy Long Term Care Insurance. If this writer is accurate, it will most definitely make LTC less attractive in the future. Read the article here.

If you would like more information concerning estate planning, contact Antelope Valley estate planning law firm Thompson | Von Tungeln (TVT) at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com. www.EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts. www.Medi-CalHelp.com is a comprehensive online resource for long term nursing home care for the middle class. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve clients with the creative, effective and custom solutions they demand.

How Living Trusts Avoid Probate

estate planningThe point of creating a will and planning an estate is to organize your affairs before death so that all monies and properties are transferred efficiently and quickly to the desired recipients. The more prepared you are, the easier the process will be after you are gone. Having your estate enter probate prolongs the estate settling process and costs considerable money, taking away from your beneficiaries. One way to avoid probate is by creating a living trust. (A Will does not avoid probate!)

The probate process involved inventorying and appraising assets that were in your name, paying debts/taxes, and re-appropriating the monies/properties to the estate beneficiaries. But when you create a living trust, all this can be done quickly and without probate. Usually taxes and fees are lower and your loved ones receive more of your money with a well planned and funded trust based estate plan.

    A trust avoids probate because your assets (or most of them) will be held in the name of the trust, not your individual name.

How to create a trust.

A living trust is similar to a will and begins with a document known as a declaration of trust or trust agreement. You are named as the trustee (if you create the living trust with your spouse you are both co-trustees). Next, you will transfer ownership of all (or some) of your properties to yourself as trustee of the living trust. You won’t give up any control because you are the trustee.

In the living trust, you will declare the people, organizations, or charities you wish to receive benefits from your estate after your death. Realize that you can change these beneficiaries at anytime before you pass on.

Also, when you create a living trust, it’s crucial to create a back-up will as well, commonly called a pour over will. This will ensures that any properties not named in the trust will be given to the desired beneficiaries. If you do not have a pour over will will and properties are not named in the trust, the properties could be handed over to the courts to appropriate according to the laws of the state of your residence.

If you would like more help with using trusts to avoid probate, Antelope Valley estate planning law firm Thompson Von Tungeln (TVT) offers sophisticated estate planning and administration for the successful, discriminating client. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve these clients with the creative, effective and custom solutions they demand. For more information, contact TVT at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com.

Should I Avoid Probate?

Senior couple meeting with agentWhen settling the estate of a loved one, most times friends and family will face the reality of probate. While avoidable, most estates enter probate and face a months-long process of settling the estate through probate court. This process can become costly and time-consuming, and can prolong the grieving process for many people.

Many times I’m asked the question of how to avoid probate and is it worth avoiding? In most every case the answer is yes, probate is worth avoiding. Probate rarely benefits loved ones and those handling the estate. Beneficiaries usually suffer and must pay time and money to settle the estate. Probate can be avoided by some careful planning.

When should you spend your time and money on avoiding probate? The simple answer is before you die. However, your age and health will be a factor in how your planning is set up.

Consider a few factors—your age, health, and wealth. If you are young and in relatively good health, planning will generally be very conservative due to the fact that the laws will likely change many times in the decades (we hope) before you need to implement your plan. If you are over 60, in poor health, or have a considerable amount of property, planning now to avoid probate may be a wise investment of your time and money. In this second category, planning will generally be slightly more aggressive, with the likelihood of the plan being implemented sooner under laws that are in effect today. In other words, the sooner your plan will be implemented, the more certainty we have in our planning to lower your estate’s costs and death taxes.

If you would like more information concerning estate planning, including learning how to avoid probate, contact Antelope Valley estate planning law firm Thompson | Von Tungeln (TVT) at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.comwww.EstatePlanningSpecialists.com and www.Medi-CalHelp.com. www.EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts. www.Medi-CalHelp.com is a comprehensive online resource for long term nursing home care for the middle class. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve clients with the creative, effective and custom solutions they deserve.

Probate: Defining Probate

Young hands tending to an elderly personEstate planning can sometimes be presented as a headache or painful task, yet the rewards of properly caring for an estate are many. Consider this fact: when you pass, everything you own must be transferred to someone else. Ideally, you will have established a trust which will clearly outline who is to receive what. But what happens if you pass without a trust? Does having a trust make that much difference?

When a person dies without a trust, the estate enters probate. This includes people who only have a will. The dictionary definition of probate is “the legal process in which a will is reviewed to determine whether it is valid and authentic. Probate also refers to the general administering of a deceased person’s will or the estate of a deceased person without a will. The court appoints either an executor named in the will (or an administrator if there is no will) to administer the process of collecting the assets of the deceased person, paying any liabilities remaining on the person’s estate and finally distributing the assets of the estate to beneficiaries named in the will or determined as such by the executor.” Simply put, the court and law of the state determines who receives the contents of the deceased’s estate. It is a primary goal of most people in California to simply avoid probate.

A probate court is not under obligation to honor any verbal or written wishes a person may have expressed as to the appropriation of their estate. Even if the deceased had told others they would receive certain items of the state, without a will proving such, the claims are invalid.

Setting up your estate properly can be a special way for you to show love and appreciation to loved ones or friends after you are gone, but if you are not proactive in creating a trust now, your estate will be handled in probate court.

If you would like more information concerning estate planning, including learning how to avoid probate, contact Antelope Valley estate planning law firm Thompson | Von Tungeln (TVT) at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.comwww.EstatePlanningSpecialists.com and www.Medi-CalHelp.com. www.EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts. www.Medi-CalHelp.com is a comprehensive online resource for long term nursing home care for the middle class. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve clients with the creative, effective and custom solutions they demand.

Avoiding Retirement Planning Mistakes

seniors having teaI once ran into a retiree who had a considerable amount of wealth and lived very luxuriously. Over the course of our conversation it was discovered that he had spent his entire life working as a janitor of an elementary school. Floored, I asked the obvious, “How did you accumulate such worth in such a moderate career?” He replied, “I just started putting money into a retirement account when I first began work here, a little bit each paycheck.”

How do some people retire in such ease and others struggle to keep up with inflation after quitting work? Sadly, many people fall into some of the most common retirement planning mistakes as are listed below. Take note to these mistakes and be sure to avoid them so you can retire in ease.

Waiting until you’re 55. The number one retirement mistake people face is not beginning planning soon enough. Beginning early makes all the difference in the long run, for if begun early enough, your retirement total will not be as impacted by your immediate salary. Allowing time to compound your wealth will give you a more comfortable retirement.

Decide what percent is enough. Another common mistake people make in planning is assuming too small of a percentage of their yearly income. True, times are tough and money is not at a surplus currently, but if you make retirement planning a priority, your sacrifice now will pay off for years to come. Determining your percentage of investment depends on several factors. Consult a financial planner for help in setting a percentage to invest.

An undetermined goal. True, beginning early is key, but when you begin, take time to set a goal for your retirement total. This step will take strategic planning and help from someone in the business of retirement planning. Not only must you set a goal for a comfortable life after retirement, but you must assume inflation for such a time.

Using retirement monies now. With the downturn of the economy many people were forced to look to alternative means of income for a time. Many looked to retirement accounts and pulled monies saved for the future. If you can ever avoid it, don’t use the monies in your retirement account. Besides the fact you’ll need these monies in the future, often penalties and taxes are charged on monies removed from retirement accounts prematurely.

Antelope Valley estate planning law firm Thompson Von Tungeln (TVT) offers sophisticated estate planning and administration for the affluent, discriminating client. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve these clients with the creative, effective and custom solutions they demand. For more information, contact TVT at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com.

6 Steps for Helping Parents with Retirement Planning

Tree lined roadOne of the benefits of a struggling economy is the increased attention to retirement planning. Granted, some people will have a retirement plan in place early in life, but the average American isn’t fully prepared to retire into a life of comfort. As the child of an aging parent, it would be wise for you to sit down with your parents and discuss the specifics of their retirement plan. Here are a few questions to ask to help them as they plan for retirement.

Start Early. The sooner your start planning for retirement, the better. Even more so for your older parents, the time to talk to them about retirement planning is immediately. By age 50, you should have talked to them about their retirement plans, even if just in an informative manner. Even if your parents are retired, it’s not too late to have this conversation.

Know their Goals. Where do your parents want to live when they retire? Do they wish to travel often? Do they plan to move? Do they wish to begin any new hobbies or activities? Get an idea of where they envision themselves once retired so you can help determine their financial needs during retirement.

Determine Finances. You may not feel comfortable asking about your parents financial situation, but finances are important in determining how to plan for retirement. You need to know if they’ve saved enough to sustain their lifestyle during retirement. Remind them that they cannot survive solely on Social Security benefits alone (according to studies these only cover roughly 40% of retirement costs). They need more planning.

Check into Social Security. Although your parents can’t survive on Social Security benefits alone, knowing how much they will receive in benefits will factor into their financial retirement planning.

Early Retirement? Let your parents know that early retirement may be a possibility, especially if the industry in which they work is being hit hard by the economy. They may be able to avoid lay-offs or cut-backs by retiring early if their affairs are in order.

Discuss Health Care. One of the biggest expenses during retirement will be health care. Consider the medical history of your family, any diseases or disabilities your parents have, and factor in costs of doctors’ visits and existing medication. Also discuss their desires regarding health care facilities and assisted living homes.

Antelope Valley estate planning law firm Thompson Von Tungeln (TVT) offers sophisticated estate planning and administration for the affluent, discriminating client. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve these clients with the creative, effective and custom solutions they demand. For more information, contact TVT at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com.

How Securities Are Valued At Death

U.S. tax forms with glasses, pen, and calculatorEstate plans containing securities have specific rules that are best negotiated by a certified estate planning specialist. The federal government has specific rules for the valuation of securities and financial instruments included inside or outside of estate plans. Since there are a vast number of financial instruments available in the market, this article will focus on the more common instruments included in estate plans which include stocks, bonds, mutual funds, Treasury securities, cash and cash-equivalent accounts and retirement accounts.

The federal rules for valuation are:
Stocks, bonds and mutual funds – for stocks, it is the average of the trading range on the date of death, or in the event of a weekend or holiday, the average of the preceding and following trading days. Bonds are priced by averaging the closing price on the date of death and the preceding trading day, and must include any accrued interest. U.S. Savings Bonds are valued at their redemption value at the end of the month, according to the redemption value published by the U.S. government. U.S. Treasury notes and bonds are valued the same as commercial bonds. U.S. Treasury bills are valued at their redemption price, since interest in included in their price.
Cash, bank, and credit union accounts – All cash and cash-equivalent accounts must report the exact value on the date of death. Any uncleared checks must be listed separately so their value can be deducted from the account.
Retirement accounts – including IRA’s, pension, 401(k) and similar retirement accounts must account for the value on the date of death. Any stock, bonds or mutual funds will be valued using the rules mentioned above.

Proper recordkeeping of all of the investments in your estate plan will make the valuation process much easier for your estate planning attorney and loved ones. Keeping meticulous records with your estate planning documents will enable them to efficiently value your assets and avoid any unnecessary investigation that will be subtracted from your estate value.

Antelope Valley estate planning law firm Thompson Von Tungeln (TVT) offers sophisticated estate planning and administration for the affluent, discriminating client. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve these clients with the creative, effective and custom solutions they demand. For more information, contact TVT at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com.

Move Quickly on Very Long Term Dynasty Trusts

file system - focus on the taxation sectionFor years now wealthy people have used dynasty trusts to shield their assets from estate taxes for tens and hundreds of years, or even forever. But the dynasty trust is under attack from a new piece of legislations in President Obama’s 2012 budget. The bill would limit tax-free dynasty trusts to a maximum of ninety years. While experts say the bill has little to no chance of passing this year, the fact that its shown up is reason enough for investors and those seeking to transfer wealth to act quickly on establishing dynasty trusts as the bill will not be retroactive.

Besides the short time span before a bill limiting the effectiveness of the dynasty trust is signed, several positive reasons exist for establishing such a fund. The dynasty trust contains a generous terms on the state and gift tax—a $5 million individual exemption and a top 35% rate (both of which will expire after 2012).

Since a tax overhaul in 1986, many people have begun using dynasty taxes to transfer funds without penalty. For example, a man who wishes to leave money to his children, grandchildren, and great grandchildren would leave the money in a Dynasty Trust to his children and the trust would be rolled on to the next generation without estate taxes until it reached its final recipient. Without using a Dynasty Trust, each generation would amass an estate tax to be paid. Rather than losing wealth on taxes, this man could place his entire estate into a Dynasty Trust and avoid the many layers of taxes. In essence, heirs don’t have to spend their inheritance on estate taxes.

The Obama administration proposal would remove the federal estate tax exemption after ninety years so the trust can go on indefinitely but the tax exemption cannot. Because allowing such a trust affects many current state tax laws, only the following states allow dynasty trusts: Alaska, Delaware, District of Columbia, Idaho, Illinois, Kentucky, Maine, Maryland, Michigan, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Virginia, Wisconsin, and Wyoming.

Again, while the bill should not be passed this go-around according to experts, the fact dynasty trusts are being targeted is a good reason for those wanting to roll inheritance monies on to many generations to establish a trust as soon as possible.

Antelope Valley estate planning law firm Thompson | Von Tungeln, A P.C. (TVT) offers sophisticated estate planning and administration for the affluent, discriminating client. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve these clients with the creative, effective and custom solutions they demand. For more information, contact TVT at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com.

Easing into Elder Care

Elderly hands holding adult handsElder care is a giant step for most families who go through the transition of an older loved one living on their own to living with assistance. Some transition well, yet others can become discouraged by the lack of complete freedom. To ease your loved one into elder care (and to reduce the burden on yourself as well) consider these three steps to take as you make the transition.

Ask for help. If you are becoming the primary carer for a parent or loved one, seek help from other friends, family, or those who’ve gone through the process. You don’t have to be the only one caring for your loved one. Others can help with certain tasks or providing relief for you once a week or so. Be sure to value your own health and freedom by seeking help from others.

Encourage social activities. Many communities have provided seniors with social activities to connect them with other older people and to help them maintain social interaction. Whether through a community center, a church, an independent group, or a retirement home, check into activities your loved one can partake in to keep their spirits high. Also, organize family game nights or other personal activities that will keep them connected with family as well as those their age.

Communicate with doctors. Doctors, nurses, caregivers, and other medical personnel are a vital part of your loved one’s life. If possible, accompany your loved one on doctors’ visits and speak with the doctor about your loved one’s health. Be willing to help with new medication, watch for side effects, better care for illnesses, and be an extension of the doctor in your home. As you stay current with their overall health, you’ll be able to better help them live in ease.

Remember that you and your loved one are both transitioning in this time. You are caring for others, but also will be forced to take better care of yourself. Plan time for yourself and get others involved so the burden doesn’t fall squarely on you. Also, make the needs of your loved one a priority in your life. Keep their spirits high by keeping them involved with the outside world. Also be a help to their doctor by being actively involved in their medical health.

Transitioning to full-time (or even part-time) care of an aging loved one comes with its challenges, but the benefits of spending time with someone you love and gleaning from their life wisdom is an invaluable opportunity to have.

If you would like more information concerning Elder Care or any other aspect of estate planning, contact Antelope Valley estate planning law firm Thompson Von Tungeln (TVT) at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com. www.EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts. www.Medi-CalHelp.com is a comprehensive online resource for long term nursing home care for the middle class. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve clients with the creative, effective and custom solutions they demand.

Charitable Trusts Explained

Girl holding Thank You Sign XSmallOne of the major questions people have regarding estate planning is how to avoid taxes and other costs that would diminish the size of their estate. While there are several ways to avoid state and federal estate taxes, one way is through a charitable trust.

Charitable trusts are usually thought to be for the sole purpose of donors who wish to give to charities. While that is a main reason many people establish a charitable trust, the trust can also provide substantial tax and income benefits to the donor. The trust can be for any charity you wish to help, from helping children to helping find a cure for cancer.

Several variations of a charitable trust exist and each serve a certain purpose. Consider the following explanation of charitable trusts and their usefulness.

Charitable Remainder Trust. This trust is used to donate assets (especially appreciated assets) to a charity now, but with you receiving benefits for a set number of years or the remainder of your life. The trust holds the property and can sell it without added capital gains tax, and also gives the trust the ability to create a diversified portfolio in which it can invest. The donor will receive payment from the trust at least annually and upon death, the principal of the trust will be given to the charity free of income or estate taxes. (The trust owner will receive a current income tax charitable contribution deduction which can be substantial.) There are two types of Charitable Remainder Trusts, Charitable Remainder Annuity Trust and the Charitable Remainder Unitrust.

Charitable Remainder Annuity Trust. The most common of the two Charitable Remainder Trusts, the Charitable Remainder Annuity Trust pays the trust owner an annual amount based on annuity payments (a fixed percentage of the initial value of the assets contributed, i.e. 5% initially).

Charitable Remainder Unitrust. A Charitable Remainder Unitrust makes annual payments to the trust owner based on a fixed percentage of the value of the assets owned by the trust each year, i.e., 5% of the trust assets each January 1st. This trust is most often used when assets are easily valued (such as publicly traded stocks) rather than used for assets that would require a formal appraisal (real estate, closely held businesses).

Charitable Lead Trust. Assets are given to the Charitable Lead Trust. The trust owner can establish one or more charities to receive annual annuity payments. When the trust ends (or upon death), the trust owner’s heirs will receive the principal of the trust. Again, this helps the estate planner avoid substantial gift or estate taxes when transferring assets to heirs. There can also be a substantial income tax deduction when the assets are transferred to the trust. If the entire income tax deduction cannot be used in the first year, the deduction can be carried forward an additional 5 years. There are also two types of Charitable Lead Annuity Trusts, and Charitable Lead Unirusts and Charitable Lead Trust. These will be discussed in more detail in another article.

Antelope Valley estate planning law firm Thompson Von Tungeln (TVT) offers sophisticated estate planning and administration for the affluent, discriminating client. As Board Certified Specialists in Estate Planning, Trusts and Probate as certified by the State Bar of California Board of Legal Specialization, partners Mark E. Thompson and Kevin L. Von Tungeln are expertly equipped to serve these clients with the creative, effective and custom solutions they demand. For more information, contact TVT at 661-945-5868 or visit their websites at www.EstatePlanningSpecialists.com and www.Medi-CalHelp.com.

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