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What You Need to Know About Pet Trusts

by | Last updated May 15, 2019 | Children's Trusts, Estate Planning, Pet Trusts, Trusts

Pets are the most often overlooked members of the family when it comes to estate planning. Some might think that it’s a bit silly to think about estate planning for pets, but pet loves sure don’t. It’s really a serious matter. Most pets eventually end up in some sort of a rescue shelter after their original owners pass away. Most pet owners assume, that if something were to happen to them, their loved ones, or a neighbor would take their pets in. There are financial responsibilities associated with owning a pet, family compositions change, and many people are unwilling or unable to take on the responsibility- hence why so many pets end up in shelters. California is one of a few states in the country, that recognizes that pets are more than just property. In 2008, Governor Schwarzenegger signed into a law Probate Code Section 15212, which allows you to create an enforceable pet trust. This vehicle makes sure that your pet will find a good home, and allows you to allocate funds to make sure your pet are well cared for. Pet Trusts are simple to create, and work much in the same way as the provisions you might insert into your trust to care for underage or special needs children. 5 steps to get started to get started with a pet trust: 1. Find the right home and care givers for your pet. 2. Determine the average cost to care for your pet. This includes costs such as food, vet visits, medicine, and grooming. 3. Multiply the average life expectancy of your pet by the average care...

Why You Should Rethink Joint Tenancy Agreements

by | Last updated Feb 22, 2023 | Estate Planning

Sometimes people can get a little too cleaver in their attempts to avoid probate, and save some money in legal fees. One of the maneuvers we see quite a bit involves adding children, or other family members to accounts are joint tenants. Unfortunately, this maneuver can have real world impacts on you and your assets while you’re still alive. What is a Joint Tenant? A joint tenant is a means of holding title to property so that two or more people (the joint tenants) hold title together with “right of survivorship.” This means that the surviving joint tenant or tenants are entitled to the property upon the death of one joint tenant, without probate. What are the dangers of Joint Tenancy? There are several dangers with adding joint tenants to any accounts or property, and they all stem from this simple fact— When you add a joint tenant to an account or property, you are adding a new owner. Here are some of the common issues we associated with this: 1. Capital Gains If one person owns the property, at that person’s death, the property basis is fully stepped up to the value at the day of death. With a joint tenant, only the decedent’s half is stepped up. This will lead to significant capital gains taxes that would have been entirely avoided if the joint tenant has not been created. 2. Loss of Control When you name someone a joint tenant to your property, you are making an immediate gift of one-half of that property to that person. This gives them ownership rights, and they could do things...

What is the Best way to Avoid a Conservatorship?

by | Last updated Sep 29, 2019 | Conservatorships, Estate Planning

The best way to avoid a conservatorship is to plan ahead and make sure you’re protected in the event that you become incapacitated. Under California law, if a person is found to be legally incompetent, the probate court can appoint a conservator to oversee a person’s personal or financial affairs. This is where things can get pretty ugly. Some of the times you end up with one of these two scenarios: The wrong person as conservator. Fight over who should be the conservator. The first scenario does not really need that much explaining. You could end up with a conservator that is at geographic distance from you, which would make it harder, you could end up with someone who can’t manage your estate, or with someone you would never have chosen for your own reasons. The second scenario is just as bad. A lengthy legal battle over who should be your conservator could drive up legal expenses, which will be paid from your estate. Additionally, Conservatorships require bi-annual accounting, which in turn is yet another expense that will be paid out of your estate. As I said earlier, the best way to avoid a conservatorship is to plan ahead. There are sections inside of a Revocable Living Trust, where you can appoint and direct your Successor Trustee to step in and manage your estate during your incapacity for your benefit. The trustee you chose would then be able to step in and manage your estate during your incapacity for your benefit. He or She would be able to pay your bills, manage and/or reinvest your assets, and even sells assets...

How Can I Use a Trust to Take Care of my Children?

by | Last updated Feb 22, 2023 | Children's Trusts, Trusts

You can use a Revocable living trust to specify a trustee to hold the trust assets and keep them invested until your child or children reach an age your feel comfortable with. This type of trust is referred to as a Spendthrift Trust, and can be folded right into your Revocable Living Trust. Statistics show that, on average, within 3 generations a family fortune will be spent. In order to beat the statistics, you can arrange for the trustee to pay for the child’s college education, care and support until that age. This helps prevents the beneficiary from squandering their inheritance at a very young age. Most people chose between 21 and 30 years of age for distribution. Spendthrift trusts are a great way to protect your children from squandering their inheritance, but they do require foresight to make you can properly provide for your children until they reach that age. You’ll typically need the help of several professionals to make sure set it up correctly, including: Estate Attorney Financial Planner Life Insurance Specialist Accountant Real Estate Appraiser  ...

What does Stepped Up Basis mean?

by | Last updated Feb 22, 2023 | Taxes

The “Stepped up Basis” (new value) is a new basis which is available to property received through inheritance. The basis of a property is the value used to determine gain or loss for income tax purposes. Basically, it is the cost of the property (what you paid for it). The new value is determined by the of a value at the date of death of the person who owned it. This is the value of the property used to determine gain for income tax purposes. As you’ll read below there are tax advantages to ensuring that real estate passes through to heirs as inheritance, rather than as a gift during your lifetime. When does a property receive “Stepped up Basis?” Where it is received as an inheritance, either through a Revocable Living Trust or through a will (there will be probate fees and taxes when passed through a will), the piece of real estate receives a stepped up basis. However if it is received as a gift, for example, through a quitclaim deed, then the it retains the basis (value) established by the person who made the gift. For Example, let’s assume a man purchases a piece of home for $10,000 in 1940 and it was worth $1,000,000 at the time of his death. If the heirs of that man received the home as an inheritance (for example through a Revocable Living Trust) then the new value of that home would be $1,000,000. This means that if the heirs sold the house for $1,000,000, no income tax liability would accrue. However if the man transfered the house to the heirs during his...