Wills • Trusts • Taxation • Probate
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Jerry's Blog
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Which funeral home will the family call to assist with your services? The best advice is to pre-pay your funeral costs. I recommend that you call Gilda Vilasana at Fresno Memorial Gardens and have her explain to you the various options available. Dignity owns many Fresno-area funeral homes that can fit your needs. Gilda's number is 559-268-7823. This email address is being protected from spambots. You need JavaScript enabled to view it.
More stuff tomorrow.
Jerry
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The following is excerpted from the booklet Let The Choice Be Mine-A Personal Guide to Planning Your Own Funeral
"We plan and perpare for most of the events of our lifetime. Yet few of us prepare for the final event of our lives, our funeral.
Making funeral arrangements can be over-whelming and grief is numbing. Clear and rational choices are difficult to make. When a death occurs there are over 50 decisions that will have to be made within approximtely 24 hours. Planning ahead will spare your family the added burden, both financial and emotional, of having to make these decisions on your behalf.
The ultimate gift to those we leave behind is to make our wishes known, in writing.
More family disputes disputes arise following a death than almost any other time in our lives. Emotions are at a peak and venting them occurs at inappropriate times.
If possible, pre-pay your funeral expenses, or have a designated life insurance policy for these expenses. In the event of your death, the financial burden of your funeral expense can be devastating to the members of your family. Consult with your local funeral director to find out what expenses to expect and the berst way to take care of this obligation. Don't leave it to someone else."
Future blogs will inform and guide you for the necessary preparation.
Jerry
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Yesterday I made a brief presentation to some Fairwinds elder care residents.
I was a little disappointed to learn that several residents who had revocable living trusts thought nothing needed to be done after the death of their spouse. In fact, just yesterday morning a lady came in with one of her sons about the death of her husband ten years ago! She said no one told her that she needed to do things following his death. I had not done their trust.
First of all, the California Probate Code requires certain things to be done: Deposit the Will with the Clerk of the Court and to Notify beneficiaries of any irrevocable trust of their rights, which happens in many trusts that divide at the first death to protect the assets from being taxed.
Beyond that, if real estate has been transferred into the trust of a married couple, an affidavit needs to be recorded to evidence that just the surviving spouse (normally) can deal with the real estate. How else can the property be sold or financed? And financial institutions need to have some documentation to justify changing the account to the name of just one of the spouses acting as trustee.
Then there's the issue of appraisals to adjust the cost basis of the assets owned at the date of death. That alone can be very beneficial for income producing property because the CPA can then devise a new depreciation schedule "as if" the property was newly purchased, which can save the surviving spouse many thousans of dollars in income tax in future years.
Remember, though, that the revocable living trust will save the family many thousands of dollars in probate fees, far outweighing the cost of post death work of the attorney and CPA.
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If you don't yet have a long-term-care policy, consider the following to make it less expensive, as reported by Kiplinger:
Beginning in 2010, the tax law now permits a tax-free exchange from life insurance and annuity policies into a long-term-care policy.
Additionally, long-term-care insurance can be offered as part of an annuity contract, and no tax is due if the insurance premiums are paid with the annuity's cash value.
Also, the cash value in annuities and life insurance policies can be used free of tax to purchase long-term-care coverage.
Your professional advisor can get the details at Notice 2011-68.
I'll be writing more about long-term-care policies in the near future. My wife is currently getting home care-giving services as a result of an auto accident she had in late January. The policies are expensive, but when needed you're glad you have it.
You wont hear from me for about a week as I have a full plate tomorrow and then going to Boston to visit relatives.
Jerry
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Legal fees range from $2,500 to well beyond for complicated economic and family issues. Thus, it's best that the parties discuss as much as possible and come to some tentative resolution before the lawyers get too far into things. I stress "tentative" because the attorneys may say something that willl change one or both minds.
How long will the surviving spouse be allowed to remain the house after the other spouse dies? It could be until she/he dies or could be a year or less. Each situation is different.
Be very careful about the debts that one spouse brings into the marriage. Although the debt-free spouse has no legal liability to pay them, it could cause great strain and affect the emotional relationship and the debt-free spouse may find themselves "forced" to help pay just to keep the relationship positive.
A wealthy spouse can provide for a less-wealthy spouse and then the remaining assets can be distributed to the wealthy spouse's children via a Trust arrangement. Life insurance is sometimes used to assist in these cases.
Also, be sure that the parties' wills and trusts are in synch with the Prenuptial Agreement and consistent with it.
Family heirlooms can be the most valuable items to some people and need to be specifically described in the Agreement to prevent problems after the death of a spouse.
I also recommend that the Agreement be shared with family members to prevent it "loss" after one spouse dies and to also reassure the children that matters are well in hand.
Jerry
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People who have children from a previous marriage and/or significant assets should consider a prenuptial agreement which spells out what happens upon death or divorce.
Raising the issue of having a prenuptial agreement needs to happen early in a relationship to allow plenty of time for both parties and their attorneys to complete the process with a minimum of emotion to figure out how to resolve financial and other matters.
Both parties need to fully disclose all of their assets and values or the agreement will be deemed void. All debts and sources of income must also be disclosed.
Each party must have their own attorney to eliminate any conflicts of interest.
More about Prenups tomorrow
Jerry
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Will provisions do not control the distribution of assets that are held in Joint Tenancy.
Assets, such as your home, stock and bank accounts, held in Joint tenancy will be owned by the person or persons who are Joint Tenants with you. So if you are in a second marriage or have a "significant other" relationship and have a Will that gives a portion or all of some assets to your children by the previous marriage, they wont get anything if your new spouse or significant other are listed as Joint tenants. In fact, your Will could say that you are disinheriting the new spouse or anyone else, and it wont make any difference because Joint Tenancy trumps your
Will!
The same rule applies to beneficiaries of your IRA and/or 401K and life insurance: The beneficiary designation trumps your Will when there's a conflict.
Be very careful in adding other people's names to bank accounts, stock accounts and real estate without first checking with your attorney. What you assume may not be true with respect to gifting of those assets during life and at death.
Jerry
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Where is your Trust/Will that you spent so much time and money to put together? Tell your children. If you have a safe deposit box, be sure someone other than you has access.
Who/where should your children call to do things and get things such as the CPA and attorney, life insurance claim forms and such?
Sometimes life insurance premiums are paid by direct transfer from a bank account, and if the account is closed before the parent dies the life insurance will be terminated for non-payment. A similar thing happened to one of my cients: The son moved and the next year's life insurance statement for his father was not forwarded to the new address and it was eventually cancelled for non-payment. It cost the client about $150,000!
Is your funeral prepaid? Where is the information located? Do you want a party or cremation or music or what? Write it and deliver!
If you have long-term care insurance, be sure that information is available because you may not be able to communicate anything.
Where did you hide something?
Who knows your computer password? Safe combination? Location of automobile ownership certificates?
One of the biggest mistakes is when people forget to update the beneficiary designations on IRAs and pensions when their first choice previously died. Or they left a previous spouse on as the beneficiary!
Jerry
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The Federal Estate and Gift Tax Exemption is $5,000,000 per person for 2011 and 2012. After that it is scheduled to decrease to $1,000,000.
Will Congress extend the current law? The Kiplinger Tax Letter believes that the current exemption and rates will be extended, but that it will probably be late in 2012 before we know for sure. In the meantime, tax advisors and their clients will be in limbo. However, if clients have been considering making large gifts, do so before 2013 to remove future appreciation from the donor's estate in the event Congress does nothing.
Also remember that the annual gift tax exclusion is $13,000 per year to everyone without a reduction in the lifetime exemption.
Donees pay no gift tax irrespective of the amount of the gift during life or at the donor's death. Only donor's pay gift tax, if any.
Jerry
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Use of Joint Tenancy can result in unwanted situations.
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