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Planning a BBQ is like Planning Your Estate

For many, Memorial Day weekend sets the tone for the summer season, beckoning outdoor festivities such as lively backyard barbecues. Although barbecues are generally casual get-togethers, meticulous preparation is essential for a memorable event. Similarly, thorough planning is crucial when it comes to estate planning. Just as you would carefully organize a BBQ, timely estate planning can keep complications at bay and secure a smooth transition of your assets.

Step 1. The menu: what do you own?

When you organize a barbecue, your first move is to select the dishes you will serve. Missing out on an essential item like buns for the burgers can leave your menu incomplete, potentially disrupting the party. The same applies to your estate plan, where a clear understanding of your assets forms the initial step. Overlooking important assets or accounts in your estate plan might derail its intended objectives.

As your legal advisors in estate planning, we will provide you with a comprehensive checklist that aids in identifying your property so that nothing is accidentally left out of your plan. For instance, you will be asked to catalog your real and personal assets, all financial and other accounts, and clarify whether they are owned individually or in partnership with your spouse or others. This exhaustive listing helps you review your total assets and decide on how they should be distributed posthumously or gifted during your lifetime. It also empowers us to recommend estate planning tactics that ensure your loved ones’ well-being while simultaneously meeting other objectives like tax minimization.

Step 2. The guest list: who are your beneficiaries?

The initial stage in organizing your outdoor gathering involves deciding whom you wish to invite. Similarly, when devising your estate plan, you must determine the individuals who will act as your beneficiaries—the ones who will inherit your assets and wealth upon your demise or those you desire to benefit while you are still alive. Although it may appear straightforward and require little contemplation, compiling this list involves more complexity than meets the eye. Your beneficiaries could encompass your spouse or partner, children and stepchildren, grandchildren, other relatives, friends, charitable organizations, and your place of worship.

While identifying your beneficiaries, it’s important to consider certain factors. For instance, you might need to assess whether all your children require an equal inheritance, or if one child, such as a disabled individual, has greater financial needs. In the case of a child struggling with substance addiction, you might opt not to leave them an inheritance, instead creating a trust that safeguards their funds from being spent on sustaining their habit. We can assist you in deliberating over your desired recipients of wealth and assets, and we can also discuss optimal strategies for providing for your beneficiaries while achieving other goals, such as minimizing estate and gift taxes or offering incentives for grandchildren to pursue higher education or embark on entrepreneurial ventures.

Step 3: Serving sizes: how much does each person get?

When planning a barbecue, it is essential to calculate the appropriate food portions for each person. Your adult son, towering at six feet tall, will likely require a larger serving than your two-year-old granddaughter. Likewise, in estate planning, your initial inclination might be to divide your assets equally among all beneficiaries. However, akin to a cookout scenario, you may prefer to grant some beneficiaries a larger share while others receive a smaller one. As mentioned earlier, if you have a dependent child with special needs, it might be necessary to establish a trust specifically designed to cater to their requirements, while allocating smaller inheritances to financially independent siblings.

Depending on your assets, it could be important to assign specific accounts or properties to particular beneficiaries while designating others for different beneficiaries. For example, if you possess a family home, real estate, or business in which only one child is actively involved, splitting ownership among multiple siblings may lead to disagreements and strain or even irreparably damage relationships. To prevent familial disputes after your passing, contemplate granting the more challenging-to-divide property to one child while providing money (through accounts or insurance proceeds) to the others. Alternatively, you may stipulate in your will or trust that the property, which is challenging to divide, be sold and the resulting proceeds be equally distributed among the siblings.

Step 4: Extras: personal letters and property to loved ones.

Similar to embellishing your barbecue with extra touches like umbrellas, tablecloths, or festive lighting to create a memorable occasion, your estate plan can incorporate special elements. These may include heartfelt letters addressed to loved ones, expressing your emotions and leaving them with a final blessing upon your departure. While a will or trust document may come across as impersonal, even if the intentions behind the bequests are acts of love for your family, a letter conveying your sentiments and aspirations could be one of the most cherished gifts you bestow.

Moreover, you can utilize a unique memorandum, commonly known as a personal property memorandum, to specify who should receive your tangible personal possessions, such as heirlooms, collectibles, or sentimental items (excluding real estate or intangible assets like accounts). This memorandum allows you to ensure that certain family members receive particular items or that everyone receives something meaningful to them. A well-documented personal property memorandum, with clear descriptions of each item and its intended recipient, can also help prevent disputes among family members over significant possessions. To ensure the memorandum’s effectiveness and legal enforceability, refer to it in your will or trust and adhere to any formalities stipulated by state law.

Lettuce help you plan! Call Celaya Law

You may have concerns about facing an intensive inquiry during your estate planning consultation, but we assure you that you will be pleased with your decision to seek our guidance. Anyone who has transitioned past their youthful days recognizes that failure to plan leads to suboptimal outcomes. Contact us today to confidentially discuss your estate planning objectives, and we will aid you in developing a comprehensive estate plan that fulfills your desire to secure a prosperous future for yourself and your family.

 

Your retirement accounts serve as a shield for your assets during your lifetime. However, once you pass them on to a loved one, that protection disappears. Inherited retirement accounts become vulnerable to creditors who can seize the funds to satisfy their claims. This means that a single lawsuit can wipe away your lifelong savings, leaving your loved ones destitute. Fortunately, there is a solution to this predicament: a specialized trust known as a standalone retirement trust (SRT). An SRT can safeguard inherited retirement accounts from the creditors of your beneficiaries.

If you want your loved ones to enjoy the benefits of your retirement accounts, rather than allowing creditors to lay claim to them, it is crucial to consider the use of an SRT. Here are five situations where employing an SRT to protect your retirement accounts is highly advisable:

  1. You have substantial combined retirement plans: If you have significant combined retirement plans, an SRT can provide a shield against creditors for these plans when they pass to your beneficiaries.
  2. You are concerned about beneficiary spending: If you worry that your beneficiary may not exercise prudence in managing their inheritance, an SRT allows you to exert oversight and provide instructions regarding the amount and timing of distributions.
  3. You are concerned about lawsuits, divorce, or other legal actions: In cases where your beneficiary is involved in lawsuits, divorce proceedings, bankruptcy filings, or any other legal issues, a well-crafted SRT can safeguard the inherited retirement accounts from potential creditors.
  4. You have beneficiaries with needs-based governmental assistance: If a beneficiary relies on or qualifies for government assistance programs based on financial need, inheriting an individual retirement account could lead to disqualification. By incorporating an SRT, you can structure it in a way that avoids jeopardizing their eligibility for such benefits.
  5. You are married and have children from previous marriage: If this describes you, designating your current spouse as the primary beneficiary of your retirement account might unintentionally disinherit your children, even if they are listed as contingent beneficiaries. To prevent this, you can designate your spouse as the lifetime beneficiary of an SRT and ensure that the remaining assets pass to your children from the previous marriage after your spouse’s passing.

You have diligently worked to safeguard and grow your wealth, and it is essential to maintain that protection. Your retirement accounts should not be vulnerable to the claims of your beneficiaries’ creditors. Give us a call, and we can discuss how an SRT can effectively shield your retirement accounts and provide the security you desire.

Navigating the vast array of trusts can appear overwhelming when creating your estate plan. However, as estate planning attorneys, we handle these matters every day. With our knowledge of the laws, we can design a customized plan that addresses your specific needs.

Here’s a brief overview of ten common types of trusts to provide you with a general understanding of the available options. Rest assured, there won’t be a quiz at the end. When we meet, simply come prepared to share your goals, family dynamics, and financial situation, and we’ll design a plan incorporating the most suitable documents for your circumstances.

  1. Bypass Trust: Also known as a credit shelter trust, family trust, or B trust, a bypass trust contains a portion of a deceased spouse’s accounts and property. It utilizes the deceased spouse’s lifetime exclusion amount to reduce or eliminate estate tax. This trust is bypassed for estate tax purposes when the second spouse passes away.
  2. Charitable Lead Trust: A charitable lead trust provides a stream of income to a charity of your choice for a specified period or lifetime. At the end of the term or upon death, the remaining assets pass to you or your loved ones, resulting in significant tax savings.
  3. Charitable Remainder Trust: This trust offers you a stream of income for a designated period or lifetime, after which the remaining assets are donated to the charity of your choosing. Similar to the charitable lead trust, it provides substantial tax benefits.
  4. Special Needs Trust: A special needs trust enables you to provide financial support for someone with special needs without jeopardizing their eligibility for government benefits. Carefully crafted trusts can preserve certain benefits while ensuring adequate provisions.
  5. Generation-Skipping Trust: This trust allows you to distribute assets to your grandchildren or future generations without incurring taxation. By using your lifetime exemption, you can offset any potential tax obligations.
  6. Grantor Retained Annuity Trust: An irrevocable trust that provides you with an annuity for a specified period based on the trust’s property value. At the end of the annuity period, the remaining assets pass to your named beneficiaries. This trust is useful for making substantial gifts of appreciating assets to your loved ones.
  7. Irrevocable Life Insurance Trust: Designed to hold high-value life insurance policies, this trust ensures that the insurance proceeds are excluded from your estate for tax purposes. The proceeds can be used to provide liquidity for tax payments, equalize inheritances, or fulfill other intended purposes.
  8. Marital Trust: A marital trust safeguards accounts and property for the surviving spouse’s benefit while qualifying for the unlimited marital deduction. Although included in the deceased spouse’s estate for tax purposes, these assets are exempt from estate tax at the first spouse’s passing.
  9. Qualified Terminable Interest Property Trust: This trust initially provides income to the surviving spouse and distributes the remaining assets to other named beneficiaries upon the surviving spouse’s death. It allows for the unlimited marital deduction while maximizing estate and generation-skipping tax exemptions.
  10. Testamentary Trust: Created within a will, a testamentary trust is established after the individual’s death. It protects money and property on behalf of beneficiaries, rather than transferring assets directly to them. Testamentary trusts can be used for minors, individuals with medical or substance abuse issues, or to shield assets from lawsuits or divorcing spouses. However, they require the probate process before activation.

Numerous trust options exist, and we will help determine which, if any, align with your needs. Schedule your in-person or virtual appointment today, and we’ll be ready to assist you.

The start of retirement marks a significant milestone in life, and it’s a cause for celebration. However, before you embark on this exciting new journey, it’s essential to ensure that you’ve thought through all the necessary aspects of this phase of life. Retirement brings certain estate planning issues that you need to consider carefully.

If you already have an estate plan, you need to review it regularly, especially after significant life events, like beginning your retirement. It’s important to ask yourself a few key questions, such as whether you still own the same property or have the same account balances as when your plan was created. You may have invested in retirement accounts during your working years to prepare for retirement, but it’s important to remember that the value of those accounts may decrease when you start withdrawing from them.

Additionally, if you have children or other young beneficiaries, you need to ensure that your estate plan still caters to their needs. For example, if your will assumes that your children are still minors, but they are now adults, you need to update your estate plan accordingly.

If your estate plan relies on proceeds from an employer-provided life insurance policy, you need to explore other options, as this policy may no longer exist once you retire.

It’s also crucial to consider whether you want to change how much your beneficiaries inherit and how they receive their inheritance. As time passes, the amounts and ways of giving money and property may no longer be appropriate or possible. For example, if your will or trust provided that $300,000 be held in a trust for your child’s benefit and then distributed to them when they turned thirty-five, it’s possible that you may have less than $300,000 at your death. You may also want to consider whether your child requires more than you had originally planned or if they are successful enough that they don’t need an inheritance from you.

If you don’t have an estate plan or haven’t completed it yet, don’t procrastinate any longer. The only way to protect yourself and your loved ones is to have an intentional and legally enforceable estate plan. You need to evaluate your new lifestyle and determine what accounts and property you own and the value of your money and property. You also need to consider the needs of your loved ones and whether you’re able to support them during your lifetime and after your death. Working with an experienced professional, you can determine the best possible solution for you and your loved ones.

In conclusion, retirement is a time to celebrate, but it’s crucial to think through your retirement plans and ensure that you have a solid estate plan in place. It’s advisable to consult with a financial and estate planning team to help you navigate this new chapter of your life and ensure that you can enjoy it for many years to come. If you’re interested in discussing your existing estate plan or creating your first one, reach out to a professional for assistance.

If you want to safeguard your assets and properties, it’s important to have a solid estate plan that includes various tools tailored to your needs. One such tool is a limited liability company (LLC) that owns some of your accounts and property. Here are some key things to know before adding an LLC to your estate plan:

What is an LLC?
An LLC is a business structure that can own many types of accounts and property. The LLC is owned by members who contribute money or property to the LLC. You can have a single-member-owned LLC or a multimember-owned LLC. If there is more than one member, management of the LLC can either be carried out by each member or the members can elect a manager.

What can an LLC own?
An LLC can own various types of accounts and property. Besides businesses, LLCs can own real estate (such as a second home, rental property, or a family-owned property), investments (allowing multiple people to pool their money and invest it with a larger volume), and expensive and risky property such as airplanes and boats.

Why should you consider using an LLC in your estate plan?
There are two main reasons to consider using an LLC in your estate plan: asset protection and probate avoidance. The LLC’s creditors can only go after the LLC’s money and property, not the member’s personal accounts or property. Also, the LLC avoids the public, costly, and time-consuming probate process. Anything owned by the LLC, either retitled into the name of the LLC during your lifetime, bought by the LLC, or transferred by operation of law at your death, will not go through probate. However, if you own a membership interest in your own name, the transfer of the membership interest at your death may need to go through the probate process.

How can an LLC be used in an estate plan?
To use an LLC in your estate plan, create an LLC during your lifetime and transfer accounts and property to the LLC or name the LLC as the beneficiary of your accounts and property at your death. Once created, you may also purchase property or create accounts in the name of the LLC. You will be a member as the creator of the LLC, and depending on the number of members and the type of management, may also manage the LLC. If you are married, your spouse may also be a member. You can also add other people as LLC members. However, adding members who do not contribute their own money or property to the LLC may have gift tax consequences.

Operating Agreement
Most LLCs have an operating agreement that outlines the rules for managing and transferring a member’s interest in the LLC. The agreement should include details such as who the members of the LLC are, the percentage of ownership that each member has, how conflicts among members are settled, any restrictions on a member’s ability to transfer their membership interest (including transfers to a trust), and what happens to each member’s interest if they die.

Trust Agreement
To provide an additional layer of protection, you may choose to transfer your membership interest in an LLC to a revocable living trust. As the creator, trustee, and beneficiary of the trust, you would still be able to participate in the management of the LLC and benefit from the LLC, you would just do so as the trustee of the trust and not as an individual. Because the trust owns the membership interest, transfer of the membership interest will not require probate. The trust can continue to own the membership interest after your death, and you can include instructions that allow a successor trustee to handle LLC matters on behalf of the trust’s beneficiaries. Alternatively, you could state in the trust instructions that the membership interest be distributed to a named beneficiary at your death.

Overall, incorporating an LLC into your estate plan can provide asset protection and avoid the probate.

The short answer is yes, your trust can retain ownership of your business following your demise. However, several considerations come into play that may influence the outcome. One crucial factor is the type of business interest you possess, such as a limited liability company (LLC), partnership, corporation, or sole proprietorship. Another important consideration is how your business is managed, whether it operates as an LLC, partnership, or corporation.

Let’s explore how the trust acquires ownership of the business and how the management of the business is handled under various circumstances:

How Does the Trust Obtain Ownership of the Business?

How is the Business Managed?

Post-transfer, the management of the business by the trust depends on factors such as the type of business transferred and how it was managed before the transfer.

What Will the Beneficiaries Receive?

The distribution received by the beneficiaries is determined by the provisions set forth in the trust. As the trust holds the right to receive income or profit distributions meant for owners or stockholders, whether these earnings are distributed to the beneficiaries and the conditions governing such distributions depend on the terms specified in the trust agreement.

Special Notes on S Corporations

If your business is classified as an S corporation (note that being an actual corporation is not a requirement for S corporation taxation), specific regulations govern the ownership of S corporations. It is crucial to seek guidance from a qualified legal or tax professional before transferring the ownership of your S corporation business interest to a trust, particularly following the death of the grantor or trust maker. Obtaining professional advice ensures compliance with the specialized rules concerning S corporation ownership and guarantees a sound understanding of the implications involved in such a transfer.

Although your trust can own your business after you die, you must consider many factors when transferring your business ownership interest to your trust. Therefore, it is important to consult a qualified professional who can ensure that you have considered all the factors and help you properly complete the transfer.

Medi-Cal is a publicly funded healthcare program in California, United States. It provides comprehensive medical coverage to low-income individuals and families who meet certain eligibility requirements. Medi-Cal is administered by the California Department of Health Care Services (DHCS) and is part of the larger Medicaid program at the federal level.

Key features of Medi-Cal include:

  1. Eligibility: Medi-Cal is available to various groups, including low-income adults, children, pregnant women, seniors, and people with disabilities. Eligibility is based on income, assets, residency, and other factors. The program has expanded under the Affordable Care Act (ACA), allowing more individuals to qualify.
  2. Covered Services: Medi-Cal provides a broad range of healthcare services, including doctor visits, hospital care, prescription medications, laboratory tests, mental health services, preventive care, dental services, and more. Some services may require prior authorization.
  3. Managed Care: Medi-Cal offers managed care plans, where beneficiaries enroll in health plans that work with a network of doctors, hospitals, and other healthcare providers. These plans help coordinate care and provide additional services.
  4. Cost-sharing: Medi-Cal beneficiaries may have to pay certain cost-sharing amounts for certain services, such as copayments or premiums. However, these costs are generally very low compared to private insurance plans.
  5. Long-Term Care: Medi-Cal also covers long-term care services, such as nursing home care and in-home supportive services, for eligible individuals who require assistance with daily activities due to age, disability, or medical conditions.
  6. Application Process: Individuals can apply for Medi-Cal through the California Department of Social Services or their local county human services agency. Applications can be submitted online, by mail, or in person. The eligibility determination process considers various factors, including income, household size, and immigration status.

It’s important to note that Medi-Cal is a needs-based program, and eligibility and benefits can vary based on income and other factors. Additionally, Medi-Cal is subject to evolving policies and changes in healthcare legislation, so it’s advisable to consult official sources or seek guidance from qualified professionals, such as the Celaya Law team, for the most up-to-date and accurate information regarding the program.

Many people hold to personal ethics that they wish to reflect in their estate plan. If you find yourself in this category, there are several strategies you can consider:

Charitable giving

A properly executed estate plan can provide for donations to a charity from your estate. Specific amounts and specific charities can be stipulated in a living trust, which your successor trustee will execute upon your death. Under these circumstances, donations to hospitals, non-profit organizations, religious groups, and schools are not only possible, but quite common.

Funeral arrangements

A thorough estate planning process will contemplate and then document any specific instructions you would like to leave regarding your funeral. Although this is can be particularly pertinent for those with certain religious beliefs, many individuals may find that they would like the arrangements to be carried out in a specific way, or that specific instructions be followed regarding their burial.

California Health Care Directive

This important medical document legally authorizes a person of your choice (agent) to make medical decisions for you if you were to lose mental capacity. Through this document you can make specific health care requests, such as refusing blood transfusions or prolongation of life. If you find that these decisions are important to you, it is critical that you make them clear to your chosen agent before you lose capacity to do so.

Family Legacy

It may be proper and desirable for you to create space in your estate plan for a collection of things you would like to pass on to your descendants. These might be written memories, traditions, recipes, journals, or even just thoughts or letters for your descendants. These may be incredibly meaningful to your children and grandchildren years down the road.

The Living Trust

Finally, it is important to remember that the flexibility and scope of a living trust can work in your favor. There may be specific ways you would like your property distributed, for example, in accordance with your personal ethics. This includes to whom you would like to make your distribution to (whether it be a group of family members and friends, a parent, a caretaker, a child, or a charity), how you would like to make your distributions (for example, if it is your desire that a piece of property be preserved and not sold, and thus be distributed-in kind), and the purposes for which those distributions are made (you may desire to include wishes regarding the use of the distributions; perhaps for education, or for the care of a pet or piece of property).

These are a few of the many strategies and tools you can use to plan around your personal ethics. It can be gratifying and comforting to personalize your estate plan this way, and can ensure that you leave behind the legacy you intend to.

 

Contact the offices of Celaya Law today to start the discussion with our trusted team about your options.

People sometimes move quickly to disinherit a child. Estrangement, arguments, disability, and addiction are typical reasons for making this choice. Before this is decision becomes definitive, however, it may be prudent to review the following considerations:

First, it is important to consider whether or not these decisions will cause or worsen a riff between this child and their siblings. Disinheritance might deepen sentiments of estrangement, or inspire feelings of superiority or jealously. It can lead to arguments, and even lawsuits if the disinherited child believes the decision to be unfair. These are real potential consequences that may be avoided if the distribution of a trust is adjusted, even just a little.

Second, you should consider this to be the last message you send to this child. Deciding to include an estranged child, for example, may be a last opportunity to reach out to them, or a gift that expresses affection. Disinheritance, on the other hand, is a quite contrasting message, one you may wish to withhold.

Third, although a child may appear to be well off economically, or at least more so than the rest of the child’s siblings, one should take caution before making this the reason to disinherit. A child that appears well off may have underlying problems they do not share openly, or in the future might lose some or all of the financial security they had while you were alive. These possible developments are important to keep in mind.

Fourth, many people disinherit children out of fear that an inheritance might disqualify a child with disability from receiving government benefits. This, however, can be resolved with a Special Needs Trust. Passing on an inheritance to a child with a disability through this type of trust will allow the child to access the inheritance without disqualifying the child from current or future government benefits they may be receiving.

Fifth, for a child suffering from an addiction, a living trust can be used to provide specific instructions regarding the distribution of the child’s share. Your chosen successor trustee, as a third party, would distribute this child’s share according to your legally binding instructions. This can allow the addicted child to receive their share in small portions over a period of time, have a third party manage their inheritance for them, or can provide that the distribution be made contingent on the child’s participation in rehabilitation of some sort. There are many possibilities that should be considered before the decision to disinherit becomes definitive.

 

Contact the offices of Celaya Law today to start the discussion with our trusted team about your options.

 

Although many understand the importance of creating an estate plan, it can often seem like a daunting task. To help ease the process, here are a few first steps you can take to get started:

Make a list of your assets.

The first step is to know what is in your estate, so grab a piece of paper and start listing out your assets. Here is a general idea of what your list might include:

    • Home
    • Other real property
    • Business(es)
    • Bank accounts
    • Retirement accounts
    • Investments
    • Items of value

These, of course, are you most valuable assets. Other smaller items, such as cars, furniture, clothing, etc., can be wrapped up into a single bullet point entitled “personal property”.

Choose beneficiaries and decide on a distribution.

Next you should decide to whom you would like these assets to go. This could be your children, grandchildren, siblings, or anyone else you would like to provide for. Once this list is complete, give each of these people a percentage or flat dollar amount reflecting the portion of your estate that you would like to give them. If you would like to give them a specific item, note that as well.

Elect trustees and agents.

Finally, consider who among your family and friends you trust the most. In creating a Revocable Living Trust you will need to choose a successor trustee to carry out these distributions. Since you will be gone once this process begins, you will want someone, or several people, from this list. You should also consider who you would trust to run your finances and make medical decisions for you if you were to lose capacity in life. These people will be your agents on your Power of Attorney and Advance Health Care Directive Documents.

Once you have given good effort to these simple steps, you’re ready to see an estate planning attorney and get your estate plan in place.