How to Avoid Probate Through Estate Planning and Assignment of Beneficiaries

Learning how to avoid probate can save heirs' time and money, prevent family disputes, and allow easy transfer of inheritance property upon death. Many people are not even familiar with probate let alone how to prevent it from occurring. Probate is required within all states of the U.S. to ensure decedent estates are settled according to inheritance laws. It is a time-consuming process that can take several months to complete.

Becoming educated about how to avoid probate is as simple as conducting research on the Internet or consulting with a family law attorney or estate planner. Many banks, credit unions, and financial advisors offer estate planning services for a nominal fee.

The only way to completely avoid the probate process is to transfer assets into a trust. However, trusts are generally reserved for individuals with assets valued over $100,000. Individuals with smaller estates can take measures to keep certain assets from undergoing the probate process.

One of the most important aspects of estate planning is executing a last will and testament, along with healthcare directives and designating Power of Attorney rights. POA allows a person to make decisions on your behalf if you are incapacitated and unable to make important decisions. Power of attorney rights also allow individuals to pay bills from your checking account, transfer titled property, and make legal decisions. Therefore, the person granted these powers should be someone whom can be trusted to make decisions based on your best interests.

Healthcare directives allow you to state what type of medical care you do or do not want. These can include being placed on life support, receiving nutritional support, organ donation, and do not rescesitate orders.

The Will is used to designate an estate administrator to handle all facets of estate management. Required duties vary depending on estate value, inheritance property, and family dynamics. Small probated estates can settle in three to six months. If heirs contest the Will, estate settlement can be prolonged until attorneys can work out acceptable agreements. Legal fees from contested Wills often bankrupt estates and leave nothing for heirs to inherit.

If people die without executing a legal will, the probate process takes longer. An estate administrator must be appointed through the court and additional work is required to locate heirs, inventory property, and other details which are normally included in the last will.

Individuals who hold bank accounts, retirement accounts, financial portfolios, and life insurance policies can assign beneficiaries to receive proceeds upon death. Beneficiary forms can be obtained through the financial institution where the account is held. Account holders can assign multiple beneficiaries and state the percentage of funds they will receive.

Beneficiaries must abide by each financial institution's policy regarding distribution of inheritance funds. Most states require beneficiaries to submit date-of-death value forms to the county tax assessor's office. As long as decedents are current with taxes, the Assessor's off will stamp the form so proceeds can be distributed.

Titled property can be kept out of probate by establishing joint ownership. When real estate or motor vehicles have joint titles, the property automatically transfers to the co-owner. When joint ownership is with a person other than your spouse, you might need to establish Joint Tenancy with Rights of Survivorship.

A lesser known way to avoid probate is through gifting inheritance property while you're still alive. The Internal Revenue Service allows gifting up to $12,000 per individual or $20,000 per married couple per year. If gifting limits exceed maximum level, recipients are required to file a federal gift tax return and pay appropriate inheritance taxes.

Implementing strategies to avoid probate is one of the best gifts you can leave loved ones. Regardless of how little or how much you own, it is important to put your affairs in order and execute a last will. Probate is not a fun process, so take measures to protect inheritance property and minimize the time required to settle your estate.

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When You Need a Quit Claim Deed

Transactions involving the transfer of real estate normally involve several documents known as deeds (judicial, warranty, will, sheriff's and deeds of trust). These deeds are vital to make the transfer of a property from one person to another legitimate. One of these deeds is the Quit Claim Deed.

A quit claim deed is a legal document which releases a person's claim or interest on a certain real estate property and passes it to another individual. This type of deed, however, provides no assurance as to the rights of the person receiving it and makes no warranty that the person concerned owns anything. Quit claim deeds can be used in various situations such as in a divorce, transferring real estate properties between family members, as tokens or gifts or to remove doubts on title.

A typical example of a situation where a quit claim deed may be necessary is when one spouse disclaims any interest in the property that the other spouse owns such as during a divorce. In this circumstance, the spouse who foregoes his interest on the property is called the grantor while the spouse who owns the property is referred to as the grantee. The risks will be shouldered by the grantee especially since there is no warranty on the title.

If a married individual solely holds title to a property or the wife or the husband bought the property before tying the knot, the other spouse may be required to sign a quit claim deed when the property is sold to a third party. For instance, Annie bought a house before marrying Tom. A few years after the wedding, Annie decides to sell the house to Mr. Taylor and Tom, the husband, was required to sign a quit claim deed to Mr. Taylor. The main purpose of the quit claim deed here is to ensure that the spouse not on the deed does not return later on and reclaim the property.

Another example during a divorce is when one of the spouses wants to keep their conjugal home. In this case, the spouse who wants to remain in the house needs to request a quit claim deed so he or she could have sole interest in the house.

Of course, in selling any residential property, the owner is usually required to file a quit claim deed with the county in their state. The document will then transfer the interest of the house involved from the seller to the buyer.

Still another use is when a family home inherited by several siblings who share ownership is sold to a new owner. However, even before the sale, a sibling can already sell his or her share in the home to another sibling and sign a quit claim deed to give up all his or her rights and interests in the property.

Legal experts say there are important things to keep in mind when using a quit claim deed. They point out that the document should bear the current legal names of the parties involved. For divorced couples, the names that appear in their divorce decree should be the same as that will appear in the quit claim deed. The quit claim document will not be needed, though, if the divorcing couple decides to live in separate homes but would like to remain on the title.

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QDRO Forms to Divide Pension Benefits in Divorce - "Shared Interest" Or "Separate Interest" Approach

Many people facing the prospect of divorce are surprised to learn that pension benefits accrued during the course of a marriage are considered marital property (or, in some states such as California, community property) that is divided between the spouses upon divorce. A pension plan falls under the category of retirement plans known as defined benefit plans. These types of retirement plans generally provide that upon retirement, the participant (employee) is entitled to a monthly annuity that is payable over his or her lifetime.

Because of certain provisions contained a Federal law known as the Employment Retirement Security Act, a divorce judgment or matrimonial settlement agreement, standing alone, is not a legally sufficient mechanism for dividing a pension plan. It is essential that a further order, known as a qualified domestic relations order (QDRO) be entered by the court and approved by the pension plan administrator.

In situations where the participant spouse is not yet retired, the QDRO form can utilize two different methods for dividing pension benefits. These include the "shared interest approach" and "separate interest approach."

If a QDRO form uses the Shared Interest Approach, payments to the Alternate Payee cannot begin until the Participant chooses to retire and begins to receive a retirement allowance. Furthermore, payments to the Alternate Payee must end upon the Participant's death unless the Alternate Payee was designated in the QDRO as the surviving spouse of the Participant for the purpose of electing a Qualified Joint and Survivor Annuity and such election was elected by the Participant at the time of the Participant's retirement.

If a QDRO form applies the Separate Interest Approach, a "separate interest" is carved out for the Alternate Payee and adjusted to his or her actuarial life expectancy. In addition, the Alternate Payee controls the timing and manner of his or her receipt of the benefit payments. The Alternate Payee can commence receiving benefits at the Participant's earliest retirement date, rather than wait for the Participant to begin to receive a retirement allowance.

In most instances, it is highly beneficial for the non-participant spouse that the QDRO form utilize a separate interest approach. Sample QDRO forms are available for download. Upon completion of a proposed QDRO form, the document must be submitted to the pension plan administrator for approval, and, thereafter, to the divorce court adjudicating the matter.

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BY THE PEOPLE of Fairfield has helped thousands of people in the Solano County Area since 2004. We have assisted people in preparing the paperwork for many different uncontested legal matters, and we can help you, too! We try to make each process is simple and fast as possible, as well as affordable. Our fees are a fraction of the cost that you would pay at an attorney’s office. Please call or stop in for more information. There is no cost or obligation to stop in and have an initial consultation with us. We offer a friendly and relaxed atmosphere at our office, which we think you will find very comfortable.

707-428-9871

Grasping the Concept of a Conservatorship

As people begin to age, practical issues begin to rear their head that nobody really contemplated before hand. Specifically, the ability of the senior to make financial or health decisions can become questionable and a conservatorship might be needed.

There is little doubt that we begin to slow down as we age. This is true for both our physical and mental capabilities. This is never more so the case then when people start to get into their sixties and older. The memory starts to go. The mind starts to slow down. If things start to degrade quickly, the issue of whether a senior has the capacity to make decisions for themselves can lead to a conservatorship hearing.

What is a conservatorship? It is the appointment of a third person to handle decisions for the individual in question. The decisions can be related to medical care, financial issues or both. The conservatorship is created by a judge during a court hearing. The conservator is often a family member, but the court can select a third party trustee or separate individual to handle the issues surrounding the impacted person.

So, what does the conservator actually do? For health decisions, the conservator is the person authorized to give informed consent to medical procedures such as surgeries. For financial decisions, the conservator takes over the person's bank account, investment accounts and so on.

The conservator is not given free reign over the life of the individual being evaluated by the court. Instead, the conservator has a duty to make decisions in a manner that reflects the best interests of the person in question. The specific ramifications of how this plays out is determined state by state as conservatorship law is controlled at the state level and each has a slightly different way of going about it.

So, what keeps the conservator from "playing funny" with the money and such? The court will assign a second person, usually an attorney, to oversee the decisions being made by the conservator. If the conservator starts taking action that looks contrary to the best interests of the individual in question, the overseeing party can alert the court.

There is no secret we have a bulge in our population known as the baby boomers. As that bulge moves into their senior years, conservatorships will become more and more common. If you have a senior adult in your life, make sure you understand the basic concept and what you might be required to get into.

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Minors Seeking To Be Legally Adults Should Consider Emancipation

Generally children are under the legal care of their parents until they turn 18 years old. In special circumstances a child may need to gain legal control of their lives before this age. Reasons could include a desire to marry before 18 without the consent of parents, entering the military or financial reasons. Gaining legal independence from parents before turning 18 is known as emancipation.

Courts are generally hesitant about granting emancipation, but teenagers with strong reasons may have their requests granted. The Court will require that these teens prove that being emancipated in their best interests before entering an order recognizing them as independent adults.

Every case is different and the Judge should consider the special circumstances of each case. A few possible situations that could convince a Judge to grant an emancipation include:

Financial independence: this is often seen with child stars or children who inherit large amounts of money but don't trust their parents to manage it for them for some reason, but is not limited to the very rich. It is possible for a minor to inherit a sum of money or property but not have the ability to fully claim those funds due to their minority. A court order of emancipation allows them to act as an adult and claim their inheritance.

Marriage: if the child has married prior to becoming an adult legally they can request emancipation. Most States require that the minor's parents consent to the marriage and having done so they have little say in the emancipation of the child as it is a little difficult to say that the minor was adult enough to marry but is not adult enough to be independent.

Parental abandonment: if the parents are nowhere to be found and the child has been taking care of themselves they can request that the Court recognize their independence.

The Judge has the discretion to grant emancipation or not and there is no real appeals process. The Judge should use the child's best interest as the standard to determine whether to grant the request or not.

First the teen must qualify for emancipation by meeting the age requirement. Every State has a certain age that must be reached before the Court can consider emancipation. In many States the minimum age is 16 years old. If the teen meets the age requirement they must file a request for emancipation with the Court. This is a rather complicated document that should be prepared by an attorney. After the request for emancipation is filed a hearing will be set and the judge will hear from the teen and potentially their parents and then reach a decision.

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Be Protected With a Simple Promissory Note

While most of us may not realize it the simple promissory note that is in use today is not that much different from the ones that were used as far back as the 10th century BC. This note is a very simple yet legally binding contract between the lender and the person who is borrowing the money. It is designed to help both parties avoid making what could be costly mistakes that could easily result in a court battle and ill feelings between both parties. The law does not require this to be an overly complicated form and in fact the simpler the note is the better.

In the early days a promissory note only contained three things, the name of the lender, the name of the borrower and how much money had been loaned. Those in use today require little more and may only add such information as the contact information for both parties, the interest rate being applied to the loan and the final due date for repayment of the loan. This information is used to ensure that there can be no misunderstandings by either party involved in the loan.

There are typically two forms of this type of loan agreement; they are the secured note and the unsecured note. With a secured note you will be required to provide some form of collateral in the form of real property before the lender will complete the loan. These notes are generally used when a person buys a home or a car that has to be financed and the property they are buying is what gets used as their collateral. This way if they default on the loan the lender has something that can be sold in an attempt to recoup some of their losses.

With an unsecured note the loan is usually much smaller and often between two friends or family members. The problem with using this type of simple promissory note is that if the borrower defaults on the loan, the lender may have no other recourse than a court of law to attempt to recover his money. Since the borrower has already defaulted on the loan there is a relatively large possibility that the lender who takes civil action may not just end up out the value of the loan, but his expenses for attempting to collect the debt. A promissory note is only a legally binding contract if both parties have signed the document and should always be used when lending or borrowing money.

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What is a Revocable Living Trust?

Living trusts have becoming an increasingly common and popular choice in estate planning in recent years because they offer a unique and smart way to protect your assets both while you are still capable of managing them and after you have passed away or fallen ill. A revocable living trust is a specific type of trust that differs from other trusts in important ways.

Trust versus Will

One of the main things a trust does is replace many of the functions of a will. You may still choose to have a will in addition to the trust to take care of any property that you do not incorporate into the trust. However, the main advantage of a trust as opposed to a will is that it does not need to be filed in probate court, which allows individuals a greater degree of privacy as there is no public record of all the assets in their possession.

A Revocable Living Trust

All trusts are entities into which one transfers their assets. The assets then become property of the trust rather than the individual. A revocable living trust is used so that individuals can put all of their property into a single location, allowing it to be distributed quickly and easily when the time comes for that process. The trust takes effect immediately, which is why it is called "living." The opposite type of trust is called a testamentary trust, and does not take effect until the person dies. At that point, their assets are transferred into the trust for disposal.

Controlling a Trust

In the meantime, most people choose to name themselves as the trustee as long as they are alive and competent, which means that they retain control over their assets even though the trust owns the assets rather than the individual. Revocable trusts can be changed, altered, or even dissolved at the discretion of the person who creates them as long as they are competent, at any time, and for any reason. In this way, this type of trust offers the greatest degree of flexibility while providing the degree of protection and privacy desired by people considering a trust.

To summarize, some of the advantages to a revocable living trust include:

- flexibility to change or dissolve the trust while you're alive

- Ability to serve as the trustee of your own trust

- Privacy because no will needs to be filed

- Savings after death because avoids the costs and delays of probate court

These flexible trusts are a great choice for many people. If you are interested in this or other options regarding trusts and estate planning, it is important to consult someone with knowledge and experience before making these important decisions.

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LLC vs Corporation: What Entity Is The Right One For You?

Choosing the right entity

You finally decided to form your own legal entity. However, how would you know which one is the best choice for you particular needs?

To make this choice wisely it is important to understand the basic differences between various types of legal entities. This article focuses on comparison between LLC (limited liability company), one of the most popular business entities today, and various forms of corporation, namely C- and S-Corporation.

C-Corporation vs. S-Corporation

All corporations start as C-Corporations and are required to pay income tax on taxable income generated by the corporation. An C-Corporation becomes a S-Corporation by completing and filing federal form 2553 with the IRS.

1. Taxation: An S-Corporation's net income or loss is "passed-through" to the shareholders and are included in their personal tax returns. Because income is NOT taxed at the corporate level, there is no double taxation as with C corporations.
2. Difference in income allocation: Subchapter S-Corporations, as they are also called, are restricted to having no more than 100 shareholders, and cannot be owned by C-Corporations, other S-Corporations, many trusts, LLCs, partnerships, or non-resident aliens.

LLC vs. C-Corporation

There are three principle differences between LLC and C-Corporation:

1. The entities are taxed differently: An LLC is a pass-through tax entity, meaning that the income is not taxed at the company level (however, LLC is still required to complete a tax return). The income or loss as shown on this return is "passed through" the business entity to the individual shareholders or interest holders, and is reported on their individual tax returns. C-Corporation is a separately taxable entity, and pays tax on the income prior to any dividend distributions to shareholders. If and when corporate earnings are distributed to shareholders in the form of dividends, the corporation does not receive the reasonable business expense deduction, and dividend income is taxed as regular income to the shareholders.
2. The entities differ in their structure: LLCs are less rigid in their structure than corporations, so you have more flexibility in adapting the LLC to your unique business. The Operating Agreement of an LLC can be structured in a limitless amount of ways.
3. Formality: A corporation is a formal entity with officers and directors (at least one of each) required. An LLC, on the other hand, can be "member managed" and run in a less formal way. For small, start-up businesses, less formality means you can focus on making money rather than administrative work.

LLC vs. C-Corporation

Even though LLC and S-Corporation have a lot in common, those two types of entities differ on the following:

1. Difference in income allocation: While S-Corporation special tax status eliminates double taxation, it lacks the flexibility of an LLC in allocating income to the owners. An LLC may offer several classes of membership interests, while an S-Corporation may only have one class of stock.
2. Ownership restrictions: Any number of individuals or entities may own interests in an LLC. However, ownership interest in an S-Corporation is limited to no more than 100 shareholders, and S-Corporations cannot be owned by C-Corporations, other S-Corporations, many trusts, LLCs, partnerships, or non-resident aliens. Also, LLCs are allowed to have subsidiaries without restriction.

Those are just the principle differences between the three most popular entities. However, when choosing to organize a business one should consider other less popular types of legal entities, as those might answer to particular needs of the business. Consider discussing your situation with a licensed attorney or a CPA, familiar with your situation and whatever requirements your state might have for forming various business entities.

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The Five Types of Power of Attorney Privileges

Establishing power of attorney privileges is an essential element of estate planning. POA authorizes another person to make decisions related to finances and healthcare for someone else in the event they are unable to make decisions on their own.

Before bestowing power of attorney privileges it is crucial to understand how the process works and the rights the person will be given. The person appointed to this position ought to be capable of making difficult decisions that might go against what other family members want.

Individuals who are granted authority to make decisions must be at least 18 years of age. It's important to choose a person who will remain true to decisions pertaining to medical and financial transactions.

There are five different types of power of attorney rights and responsibilities differ based on powers authorized. Each consists of two individuals that include the 'Principal' and 'Attorney-in-Fact.' The Principal is the person that sets up the contract and the attorney-in-fact is the person who carries out the duties on their behalf.

Durable Power of Attorney is the most common type of contract. This legal document authorizes the attorney-in-fact to make financial and medical decisions based on directives provided by the Principal. Powers remain in effect until the Principal dies or until powers are revoked.

The next most common document is the Non-Durable Power of Attorney which authorizes the attorney-in-fact to make decisions for specific types of transactions. Non-durable POA is generally used when the Principal must undergo surgery or some type of medical treatment that might prevent them from being able to make decisions. Powers are granted for a specific transaction and expire once the transaction is completed.

A Limited Power of Attorney is typically used to grant authorization to the attorney-in-fact to sell or transfer real estate owned by the Principal. This document revokes privileges when the transaction is completed.

A Healthcare Power of Attorney is needed to authorize a person to make medical decisions on behalf of the Principal It is vital to discuss the types of medical procedures wanted or not wanted with the person who will be in charge of making decisions to ensure they will abide by your desires.

People often feel uncomfortable discussing these topics, but it's best to openly talk about what kind of treatments should be given or avoided if the unthinkable happens. If a person is adamant about not being placed on life support if declared brain dead, they need to make their decisions known in a healthcare POA. Otherwise, medical personnel must abide by state laws and provide life saving treatment.

A Springing Power of Attorney is required to authorize release of medical records and information. The attorney-in-fact is required to obtain court authorization before they can make decisions on behalf of the Principal.

It's recommended to talk with a lawyer before drafting Power of Attorney documents. Lawyers can advise which document is best suited for the situation and help Principal's select an appropriate attorney-in-fact to carry out required duties.

Article Source: http://EzineArticles.com/6526726

BY THE PEOPLE of Fairfield has helped thousands of people in the Solano County Area since 2004. We have assisted people in preparing the paperwork for many different uncontested legal matters, and we can help you, too! We try to make each process is simple and fast as possible, as well as affordable. Our fees are a fraction of the cost that you would pay at an attorney’s office. Please call or stop in for more information. There is no cost or obligation to stop in and have an initial consultation with us. We offer a friendly and relaxed atmosphere at our office, which we think you will find very comfortable.

707-428-9871

Qualified Domestic Relations Orders (QDRO)

A Qualified Domestic Relations Order (QDRO) is an order issued by a state authority or court, which provides funds from the retirement account of a divorcing individual to his or her spouse. This is done to pay alimony or child support payments, or to split up the marital property.

Requirements for a QDRO

For a Qualified Domestic Relations Order to be issued by the court, the court must have information:

• on the total amount of payments to be made
• on the periods for which payments must be made
• on the names and addresses of the divorcing individuals
• about the retirement account out of which the QDRO will be set up

Features of a QDRO

A Qualified Domestic Relations Order has the following features

• A QDRO does not affect the basic rules of a retirement account. For example, funds cannot be withdrawn earlier than what the retirement plan allows.
• The benefits to be received under a Qualified Domestic Relations Order are taxable, even if they are being paid in place of child support payments, which are usually not taxable.
• The recipient of the benefits can defer the tax payments by investing the amount in an Individual Retirement account.
• Although used mostly in divorce cases, a Qualified Domestic Relations Order may also be set up for a legal separation case.
• The account to be used must be a retirement account.
• Previous alimony and child support payments can be paid with a Qualified Domestic Relations Order.

There are a number of other factors concerning QDROs that a person going through a divorce should consider before proceeding with his or her case.

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