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Fullerton Estate Planning Law Blog

Charitable remainder trusts can provide annuity income

Establishing a charitable trust is an excellent way to preserve important resources and support causes that you value, allowing you to still benefit financially. If these trusts are properly constructed and thoughtfully planned, they may serve as a strong component of any estate plan. They can help you establish a legacy that may last long after you are gone, helping to tell your story and furthering the issues that you care about deeply.

In general, charitable trusts can provide two types of income. These come in the form of either percentage payments or annuity payments. Annuity payments pay out of the trust to the beneficiary on a yearly basis. The amount of the payment is set when you establish the trust. Once you set the amount of the annuity, the law does not allow you to alter it, even if becomes disadvantageous.

Estate planning helps prevent family conflicts

For many people, estate planning is a chore that they put off as long as possible. This may make sense in the moment, especially for those who find the idea of estate planning stressful. Often, creating an estate plan forces us to consider our own mortality and the legacy that we hope to leave behind us when we pass away. This is not always comfortable, but the potential harm caused by failing to create an estate plan before it is too late is much greater than the discomfort of considering death.

One of the most important aspects of creating a clear, well-constructed estate plan is preventing conflict between family members when it comes time to disperse your estate. Few things have the power to tear families apart like property disputes, especially if emotions and sentiment are tied up in financial concerns. This is truly a recipe for an explosive conflict, as different family members may have very different priorities or expectations.

Make your wishes for your funeral immediate visible and available

The way that movies and television shows portray the reading of a deceased person's will, it often seems as though it is one of the first things that occurs when that person breathes their last breath. In reality, the reading of a will is often not done until some time after its creator passes away, sometimes for a week or more.

For this very practical reason, it is important to make sure that your wishes for your funeral are not solely established in your will. If you do not clearly outline your wishes for your funeral elsewhere and make sure that the proper people know about them, then your wishes may lay unread until after your funeral is already over.

Establishing a durable financial power of attorney

At some point, most of us will need someone to look after our finances, whether due to some serious life event like long-term illness or incapacitation, or merely old age. While this is a practical concern for nearly everyone sooner or later, many people resist making this transition, often out of a desire to maintain independence.

Fortunately, it is possible to assign these responsibilities as you wish, without giving away all of your legal authority at once. A durable financial power of attorney allows you to grant another person specific authority to act on your behalf in financial matters. If you have concerns about giving too much authority to a single person, you may assign only some of your legal authority to an appointee.

Why establish a charitable trust?

When many people think about establishing a charitable trust, it seems like the kind of thing that only the super-rich do, and even then, mostly for the tax advantages. It is true that charitable trusts offer significant tax advantages. However, they are not only a tool for those with a considerable amount of money. In fact, even moderately sized estates may benefit considerably from using a charitable trust as part of an estate plan.

Charitable trusts create both direct and indirect value in your estate plan. For instance, it is possible to receive some income from the trust, which is not taxed like traditional income. In most cases, this payout is either a fixed amount that the trust pays you at regular intervals, or a percentage of the trust itself.

Should I make gifts to reduce my estate tax?

When it comes to handling significant resources in estate planning, it can certainly feel as though the popular saying "more money, more problems" is true. Because California has many more regulations than most other states, understanding how to navigate through the maze of laws and guidelines is a full time job. Many people find this so daunting that they simply put off dealing with it.

Putting off drafting an estate plan is never a good idea. None of us know how much time we have on Earth, and delayed peace of mind is not peace of mind at all. A common estate planning mistake, beyond simply failing to make one, is to fail to reduce estate tax by maximizing your giving.

Yes, every adult should have a will!

Recently, news broke that music legend Aretha Franklin —one of the most influential and widely loved artists of her generation — passed away without any sort of estate planning in place. Not only did she die without a trust to hold her assets, she did not have a will in place either.

Now, not only must her surviving loved ones navigate the emotional difficulties of her loss, they must also wait on the court to assess and distribute her estate as it sees fit. Not only will this take many months or even years to complete, the process itself may significantly decrease the value of the estate overall.

If your home is in a trust, can you sell it?

Here in California, owning a home is an expensive proposition, and in almost all cases it pushes the owner past the relatively low estate threshold of probate. In very simple terms, if a person owns real estate in California at all, their estate is almost certainly subject to probate upon their passing. While this is a frustrating reality, especially considering the high taxation that Californians already bear, there are some ways around this issue, including placing a home in a trust.

Once a homeowner places the property in the trust, the trust owns it, removing it from their estate. However, this comes with some complications. Because the home now belongs legally to the trust, it is more complicated to sell the home if and when the former owner chooses to do so.

Duties and privileges of will executors

Whenever a person with an estate of any substantial size passes away, it is necessary for someone to take on the responsibilities of resolving the estate. Even in cases where the estate owner took care to plan out their passing and left specific instructions outlining their wishes, the law rarely allows for the quick transfer of assets, even in best-case-scenarios.

In most cases, the process of assessing the estate, settling outstanding obligations, resolving tax matters, and distributing the estate according to a will takes several months at least. During this time, it is necessary for someone to oversee the day-to-day needs of the estate to keep the process moving forward. Otherwise, the slowly turning gears of bureaucracy may drag the process out much longer than it has to, draining the assets within the estate and generally complicating the matter for all involved.

Micro estate planning protects children after tragedy

Estate planning is not one-size-fits all, especially for parents with dependent children. While it is good to have a plan for the long-term care of your loved ones, it is also important to consider the short-term needs of your children if and when the unthinkable happens and you don't make it home.

It only takes an instant for a flat tire or a workplace accident to take your life or place you in a coma, and if you don't establish a clear plan for your children's immediate care, their heartbreak and fears may only compound when police show up and take them away. This is an unnecessary strain you can avoid by outlining who to call to care for your children in the short term if tragedy strikes.

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