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.

Why Avoid Probate?

empty pocketsMost people realize that probate is not a favorable process to encounter after the death of a loved one. But why should you avoid probate? What exactly is it about probate that makes it so undesirable? Consider the main drive of avoiding probate—probate fees and the 18 months or so it take to go through the process.

Attorney and court fees in the probate process can take away up to five percent or more of an estate’s value. But it gets worse, your executor is entitled to the same statutory fees as your attorney, doubling the fees. That can take away TEN PERCENT of a $100,000 estate! And that is the starting point of the costs, they only go up from there.

Most of what happens in the probate process is basically clerical, but properties and monies can be tied up in the process for eighteen months or even many years. Even if there is no conflict or petitioning parties in the process, the probate process can be extremely tedious and costly.

For their roles in the probate proceedings, both your lawyers and the will executor will be entitled to a fee paid from the estate. If the executor inherits a substantial portion of the estate, it is normal for he/she to waive the fee owed. However, the probate attorney fees are set by the court (and the amount varies per state).

Many states base the attorney fees on a percentage of the estate value. Routinely, a probate attorney’s fee and court costs for a basic state that grosses $400,000 can total $15,000 or more. (And don’t forget to add in the executor’s fees.) Add in any court costs, appraiser fees, and other random expenses and the cost of the probate process can become extremely costly.

With the dip of the economy, many estates aren’t as large as they once were, and the charges on the estate for probate fees can leave a smaller inheritance even more modest than the deceased hoped to pass on to family. Avoiding probate can help save on costs and make sure all your hard earned money is enjoyed by those you love.

If you would like more help with avoiding probate, 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.

Does All Property Have to Go Through Probate?

Last Will and Testament XSmallMost people fear the probate process and wish to avoid it at all costs. True, the probate process can lengthen the grieving process for the death of a loved one and prolong the settling of the estate, but for the most part it is a necessary process after a loved one has passed on. While it is necessary, you can avoid certain headaches and worries in the probate process by knowing a few simple facts.

“Does all my property have to be claimed in probate court and go through the process of probate after I pass on?” I’ve been asked this question many times, and thankfully there is a welcomed answer for those asking it.

In many states, a set amount of property value does not have to face probate. For example, in the state of California, up to $100,000 in properties can be passed to other family members or beneficiaries without enduring the full blown probate process. If the property is left to a surviving spouse, there is also a simpler transfer process that the state of California allows.

Also, any properties passed outside of a will through joint custody or a living trust does not have to be claimed in probate court and can be settled outside of probate.

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.

How Does the Probate Process Work?

gavelPreparing for death includes facing some difficult situations and preparing for what will come after you or a loved one is gone. One aspect of settling a deceased loved one’s estate is the probate process. Often plans are not made for the probate process, leaving the will executor or appointed executor lost and searching to learn more about the probate process. Below is a brief introduction to the probate process for those who are responsible for settling an estate.

After a loved one passes on, their estate is settled in probate court—whether they established a will or not. If they did establish a will, the named executor of the will handles the probate process. (Wills do not avoid probate!) If they did not establish a will, the court appoints an administrator handles the probate process.

The executor files papers in local probate court to legally prove the validity of the will. The executor will provide the court with proof of validity and presents a list of assets, properties, and the contents of the estate for the court. After the court approves the will, beneficiaries and creditors are notified of the deceased one’s death.

The probate process usually lasts a year to eighteen months during which time the will executor will control all assets of the will. Depending on the contents of the will or on debts owed, the executor may have to decide to sell certain assets to pay debts or to pay beneficiaries. For example, if you owe certain monies on a mortgage, bills, or other debts, pieces of your estate may have to be appraised and solid if your cash assets will not cover such debts. That decision is up to the executor.

In many states, immediate family members may request the courts to release funds to cover immediate debts and bills while the estate is being settled. Eventually, after the court settles the estate, the executor will be free to pay all outstanding debts, liquidate any assets and properties, and distribute the proceeds of the estate to the proper beneficiaries.

If you would like more information concerning estate planning, including 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.

Recognizing Financial Elder Abuse

Arrest XSmallAs parents and older loved ones age, they can find themselves unadjusted to a new dynamic of society. Where once they might have trusted many people in their younger days, they’re now faced with the sad reality that not everyone who offers help is truly interested in helping them. As a younger care giver or family member, it’s up to you to keep an eye out for financial abuse of your loved one.

What is financial abuse?

Financial abuse can take many forms. Basically, it’s the illegal embezzlement, theft, or misappropriation of funds or possessions from an elderly person to someone else. Many elderly people have a difficult time caring for themselves so often depend on others to handle their affairs. If the person handling financial and personal affairs is not honest, financial abuse can occur. Financial abuse occurs for too often.

Who could be financially abusing your love one?

Consider checking the backgrounds of those caring for your loved one such as nurses, home health care attendants, personal caretakers, and nursing home personnel. Often those who you’d trust most with your loved one can be the ones abusing them. Not to indict all medical professionals, many only want what’s best for your elderly patient, but be careful to watch for any signs of elderly abuse.

What to do if you suspect financial elder abuse?

Financial Elder Abuse is far more common than most people realize. If you believe your loved one is being taken advantage of financially, don’t hesitate to act. Gather information on why you believe they are being abused and seek positive evidence of these acts. Find a local attorney in your area who deals with elder law and seek his/her help in determining if enough evidence exists for legal action to take place. Do not approach the abuser personally until you are sure you have legal actions in place.

Antelope Valley estate planning law firm Thompson Von Tungeln (TVT) offers assistance to victims of financial abuse.. 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.

The Advantages of Tax-Free Gifts

file system - focus on the taxation sectionThere are many reasons to hire an estate planning attorney when you are concerned about the financial security of your loved ones. However, a reason that is arguably the most significant is the issue of estate taxes, and a specialist’s inside knowledge on the best ways to navigate the system.

If you haven’t asked your estate planning attorney about how tax-free gifts can best work to your advantage, now is the time to do so. A tax-free gift is one of the few options available to you to avoid the overwhelming federal estate tax, which is currently at 35%. (A qualified estate planning attorney can even tell you when taxable gifts make sense.)

There are several ways in which part of your estate can qualify as a tax-free gift. Listed below are some options that an estate planning attorney can help you set up:

You can give up to $13,000 per year and per recipient starting January 1, 2009. This is still the amount as of June, 2011. This amount reduces the value of your estate, and therefore, the final estate tax that could be applied to your assets. This also allows you to enjoy watching your loved ones benefit from your gift.

Paying someone’s college tuition qualifies as a tax-free gift. If your estate planning includes an amount for a child or grandchild who wishes to attend college, paying or prepaying the tuition to the institution directly will ensure that this portion of your assets will not be assessed any estate tax. There is no cap on this gift.

Paying someone’s medical bills qualifies as a tax-free gift, and will not be assessed the estate tax. There is also no cap on this gift.

Donating money to a charity of your choice qualifies as a tax-free gift, and will not be assessed the estate tax. This is true only if the charity holds a tax-exempt status. As long as the entity is tax exempt, you can gift any amount and it will be tax free. This type of gift can also lower your income taxes.

A qualified attorney will be able to discuss with you the ways in which you can allocate your assets to avoid as much state and federal taxation as possible. Your life’s earnings and hard work should be spent on the things that you find most important, and the more that is left to your family and loved ones, the better. When you consider the effects of a 45% decrease in your total assets, it is worth looking into as many options as possible to keep the money in your family’s hands.

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.

Why Staying Active is Important as We Age

Senior couple on cycle rideAs our bodies grow older, they slow down and tend to want to move as little as possible. After all, we’ve spent our lives keeping up with the rat race, rushing between appointments, caring for children, and working at our careers. Isn’t it time for a break, time for some rest?

It’s easy to think that resting our bodies will help them avoid injury or sickness, but the opposite is actually true. Our bodies need to keep moving in order to prevent degeneration. Exercise lowers your risk for obesity, heart disease, diabetes, colon cancer, high blood pressure, and other problems. In fact, one aging expert wrote, “Biologically you can reverse the aging process by 15 to 25 years.”

Certain test results also show that continual activity can reverse the affects of age-related brain decline. Aerobic exercise can improve task coordination, planning, goal maintenance, working memory, and the ability to switch between tasks. Results also showed that regular moderate levels of exercise (activity that leaves you breathless) can increase the speed and sharpness of thought, the volume of brain tissues, and the efficiency of brain function.

Staying active becomes more important as you grow older. While you may not be able to run several miles or be as active as you once were, there are some simple ways to keep your body moving. (Be sure to consult a doctor before beginning any sort of exercise routine.)

Start low and build. If your body isn’t used to regular activity, don’t overwhelm it with sudden, intense activity. Start small with ten minutes of walking a day, fifteen minutes spent gardening, a walk around your block or at the mall, or other light activities.

If something hurts, stop. There’s no need to push through any sort of pain or irritation in your body. If you begin feeling discomfort, take a break or wait until later to continue your activity.

Be comfortable. Wear comfortable clothing and especially comfortable shoes. Make sure you feel comfortable at all times during your exercising.

Stay hydrated. One of the most important things to remember is to stay hydrated. Keep a bottle of water nearby and take regular breaks to re-hydrate your body. Don’t ever go through long periods of activity without stopping for water.

Choose activities you enjoy. Activity and exercise doesn’t have to be a dreaded routine. Find something active you enjoy doing (a swim class at the local YMCA, gardening, walking around the mall, etc.) and find someone to exercise with you. When you enjoy your time being active, you’re more likely to keep up with it.

By staying active and exercising regularly (even a few times a week), you should notice increased flexibility and ease of motion. Also, the activity could help eliminate some of your medication and give you increased energy to try other things during this stage of your life.

The Three Types of Special Needs Trusts

Young girl in wheelchairWhen debating whether to establish a Special Needs Trust (SNT) for yourself (if you are the one who is disabled) or a loved one, you must consider which type of trust is best for you. Here are three types of Special Needs Trusts and how they help beneficiaries:

First Party Special Needs Trusts

This type of trust is funded by assets owned by the beneficiary. The trust is established to protect current or future benefits if the beneficiary is about to receive a settlement, inheritance, or other monies that would put them over the benefit limit of countable assets. These trusts are for people under the age of 65.

First Party trusts are most common when the beneficiary’s disability is due to an accident, injury, or another person from which the beneficiary will receive a settlement. Also, this trust can be used to protect the benefits from any inheritances or well-meaning gifts from others.

This type of SNT is called First Party because the money is treated as belonging to the person who will benefit from the SNT. The money or property legally belongs to the beneficiary of the SNT. In the case of an inheritance, a First Party SNT will be used when the parents did not create a SNT in their estate plan, and the inheritance will disqualify the child from their benefits. The right of the child to create a SNT in this scenario was created by federal law in 1993. In the case of a personal injury settlement, the settlement proceeds also belong to the person benefiting from the trust. After the beneficiary dies, federal law requires that the government be paid back for certain benefits paid to the beneficiary.

Third Party Special Needs Trusts

Unlike the First Party trust, the Third Party Special Needs Trust is funded by assets from parents, relatives, and friends—not from assets owned by the beneficiary. Third Party trusts are ideal for parents, grandparents, and family members who wish to leave monies or an inheritance to persons with disabilities. This is the most common type of SNT we deal with.

Also of note is that with Third Party trusts, unlike the other two, when the beneficiary dies, Medicaid/Medi-Cal payback is not required. The establisher of the trust has complete control over selection of the trust remainder beneficiaries.

Much thought and consideration should be given to the establishment of Special Needs Trusts, especially if you care for a loved one with disabilities. While beneficial, the trust must be set up in a very specific manner to avoid the loss of public benefits. Special Needs Trusts are a sub-specialty of estate planning, and they are very complex.

Pooled Trusts

This type of SNT is the only option if the money or property belongs to the beneficiary AND the beneficiary is over the age of 65. This trust is also funded by a beneficiary’s assets – just like a First Party SNT. If the beneficiary is receiving a small settlement or sum, the First Party Special Needs Trust would may be the best option due to the cost of maintaining the First Party SNT. Also, if the beneficiary has no immediate family members to act as trustee, a pooled trust would be preferred.

Pooled trusts are established and managed by nonprofit organizations. The assets are held by the organization and pooled for use in investment opportunities, but the assets are also managed in a sub account for the beneficiary.

If you would like more information concerning Special Needs Trusts, contact Antelope Valley estate planning law firm Thompson | Von Tungeln (TVT) at 661-945-5868 or visit their website at www.EstatePlanningSpecialists.com. EstatePlanningSpecialists.com is a comprehensive online resource for personal wealth management solutions through wills and revocable trusts. 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.

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