Estate and Retirement Planning - How Can My Estate Avoid Probate?

If you are a retiree, you likely have heard many claims made about probate problems. The word itself may even fill you with dread. If you are planning your estate, there are some things you should consider concerning probate. In this, as in all things, it is important to take a balanced approach. Let's review some of the issues pertaining to probate. Then you can decide if you need to approach your estate planning differently.

What is the purpose of probate?

You have heard this word many times, but may never have considered what it means. In legal terms, probate is the period of time during which a will is proven authentic or valid. The purpose of probate is to distribute an estate according to the decedent's wishes described in his or her will. Typically, the first step of probate is to use the person's probate assets and property to pay all debts. After that, any remaining assets and property are distributed to persons named in the will. There may be costs associated with the probate process.

Probate ensures that your wishes for the distribution of your estate are carried out upon your death. Probate is a public process. If your estate is of any size, your heirs could suddenly have new friends trying to advise them on how to manage their newly inherited assets.

People often assume all assets are subject to probate, which raises the following question.

Are all assets subject to probate?

No. Some assets are excluded from probate. An example would be assets that are held in joint ownership with rights of survivorship, such as your personal home. Other assets not subject to probate are those governed by a beneficiary designation. This would include assets such as your 401(k), IRAs, life insurance policies, and annuities. Additionally, assets held in a trust are not subject to probate. If the majority of your estate assets are held in accounts of this type, you may not have that much to be concerned about.

What about my brokerage and bank accounts?

These types of accounts can be set up to transfer on death (TOD) to a beneficiary. This designation allows you to pass securities and banking accounts directly to another person (your TOD beneficiary) upon your death without having to go through probate. By setting your accounts up this way, the executor or administrator of your estate will not have to take any action to ensure that your accounts transfer to the person you have designated. The TOD beneficiaries will have to take steps to retitle the accounts in their name, but this is not a very cumbersome process.

As you can see, probate may not be as bad as you have heard. There are many things to consider during the estate planning process.  

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Advance Health Directive: The Living Will and The Power of Attorney

A living will, also called will to live, is one type of advanced health care system, or advanced health care principle. It often goes along with a specific type of power of attorney. These are legal tools that are usually witnessed or notarized.

A living will usually covers specific directions as to the course of treatment that is to be taken by caregivers, or, in particular, in some cases denying treatment and sometimes also food and water, should the patient be unable to give conscious consent ("individual health care instruction") due to illness.

A power of attorney for health care, appoints an individual (a proxy) to give health care decisions should the patient be unable to do so.

Refusal of treatment forms, the name suggests, the term "will to live", as opposed to the other terms, tends to point out the wish to live as long as possible rather than refusing treatment in the case of serious conditions.

In the Netherlands, patients and likely patients can identify the circumstances under which they would want euthanasia for themselves. They do this by providing a written order. This helps to ascertain the preexisting expressed wish of the patient even if the patient is no longer able to exchange a few words. However, it is only one of the factors that is taken into account.

In Switzerland, there are several associations which take care of registering patient declarations, forms which are signed by the patients declaring that in case of unending loss of judgment (e.g., inability to communicate or severe brain damage) all means of prolonged life shall be stopped. Family members and groups, also keep alternatives which entitle its holder to enforce such patient decrees. Establishing such decrees is pretty straightforward.

In the United States, most states recognize living wills or the label of a health care surrogate. However, a "report card" issued by the Robert Wood Johnson Foundation in 2002 concluded that only seven states deserved an "A" for meeting the standards of the model Uniform Rights of the Terminally Ill Act. Surveys show that one-third of Americans say they've had to make decisions about end-of-life care for a loved one.

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3 Positive Points of Starting an LLC

When you start a business you will have to sift through the variety of options that are available to you in terms of running a full scale operation. Even if you're the only person working within the framework of a company, you will still need to file paperwork with your state and city governments, and you will need to have a good plan of action. Sure, you could just go into business and wait for the penalties to pile up and then form a legitimate business, or you could look into the proper way to go about starting an LLC. The latter is far better in many people's views, and will definitely save you headaches later on. Consider the following positive points of starting an LLC.

Multiple Owners or One Owner - Whether you have a great deal of investors that want to be part owners or you are alone in the process you will find that an LLC allows you to run your company with a great deal of freedom. Not only that, you will be able to include others in a management or even ownership capacity later on as long as you have an operation document that will showcase your ideas moving forward.

Liability - The best part of starting an LLC is that you will not be liable for a great variety of issues that will come up. For instance, let's assume that you have a client that is hell bent on suing you, and so they sue the business that you own and you have to go to court. If you file your paperwork properly, and you lose the case, you will only be liable for the money that is held within your business, and nothing else! That means if you own a home, a boat, a car or just about anything that is not part of the business proper, you could stand to lose nothing on a personal level. This is a great thing because you can protect your assets and not worry about what some might do to try and get your money.

Taxes - Dealing with taxes can be quite easy because they flow into personal income taxes in many ways. You will find that you will have to deal with your taxes in a manner that is a bit more simple than starting a larger company or a different option in terms of business. While it's not a matter of not paying your fair share, it's really a matter of ease when tax time comes around.

The above 3 positive points when starting an LLC are just 3 items that many find to be great. There are a number of other integral points to consider and each one seems to make the formation of this type of company a bit better than others. Only you can decide what path your business takes, but when it comes to starting something away from the traditional route of 40 hour work weeks, this is definitely one of the more attractive options. You'll find that it's easier than others, and it can bring amazing profits in time.

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Power of Attorney

Rene at By the People in Fairfield CA talks about just some of the reasons for a need for a Power of Attorney. These documents can be really important aids in helping loved ones.

For any questions about the types of Power of Attorney, and what may be beneficial for your individual needs, call Rene or Tammy at 707-428-9871 and visit the website at http://www.bythepeopleca.com

Reasons Why Making a Will Is Important

Most people tend to procrastinate about making their last will and testament, primarily because it is a harsh reminder of our mortality and as such, we prefer not to have anything to do with it until the time comes when it is too late to do something about it. In most funerals you attend, you often hear people ask if the deceased left any will and the most common answer being "no" or "none."

While making a will is certainly no one's favorite thing to do, what many people don't realize is that it can alleviate your fears of death because once you decide to make it, you will be assured that the loved ones you leave behind will be taken care of properly and that your estate won't be spent on legal expenses from contests initiated by your heirs.

However, that's not to say you can't die without ever making a will. In fact, there are two ways by which you can die without a will, the first being because you never wrote one and the second being, the will you wrote was declared invalid by probate court. In both cases, this is referred to as dying intestate or dying without a valid will.

When you die intestate, that means the control of your property and the distribution of your assets will be done under the laws of intestacy. If for example you co-owned a property with two other people, the laws of intestacy dictate that the ownership will not transfer to the other co-owners but your heirs, which is one situation that the remaining co-owners may contest.

There are four types of assets where these laws don't apply and they are as follows:

• Life insurance and retirement plan proceeds
• Properties that are jointly owned with a right of survivorship
• Properties held in a living trust
• Properties under the community property system

The entire purpose of making a will is to make sure your property and assets are distributed to people and organizations as you intended. To make sure this happens you can elect an executor of your will to make sure every condition in your will is fulfilled. Choosing an executor means you should choose someone you trust like a relative or a close friend. If you don't have neither to choose from, then it should be someone who is dependable, trustworthy, well-organized, good with paperwork and diligent about meeting deadlines.

And lastly, making a will doesn't have to follow a strict guideline because what will matter is not how the will was written but the conditions written within. There are many ways these days to write your own will, such as software that you can use just by asking you a few questions where your answers will be inserted into a ready-made will. Having a will ready will also save you from having to hire a lawyer to help you write one - not only is it time-consuming to find a good lawyer, it is also quite expensive to have one draft your will for you.

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Irrevocable Vs Revocable Trust

Establishing a living trust is critical to the ability to protect your assets and beneficiaries when you die. But many people don't know that there are two types of trusts - irrevocable trusts and revocable trusts. With irrevocable trusts, the grantor's assets are moved out of the estate. In a revocable trust, assets stay in the grantor's estate. There are advantages to each type depending on the grantor's specific circumstances. Here is a rundown on the differences between the two types of trusts.

Irrevocable Trust

Most people are unaware of the advantages that this type of trust provides:

• Asset Protection - Moves assets out of the grantor's hands, keeping it safe from lawsuits or creditors. A trustee has the power to make decisions with or without the input of the grantor.
• No Estate Taxes - Many people are attracted to these trusts because they are protected from federal estate taxes.
• No Capital Gains Taxes - A skilled lawyer will be able to move assets into irrevocable trusts so as to avoid capital gains taxes. This cannot occur with revocable trust.

Before placing assets into this type of trust, make sure that the grantor will never need them. While it is possible to retrieve assets, it is very difficult and time consuming.

Revocable Trust

Most people have an idea of what this type of trust is. Grantors without complicated tax issues that want to still maintain control over their assets, often choose to have a this trust.

• Mental Disability - Individuals who fear that they will one day be incapacitated, may want to designate a trustee to handle their assets which can include extensive instructions that the trustee must carry out. This is called a Disability Trustee.
• To Protect Beneficiaries and Property - Keeps your property and assets out of probate. This ensures that your documents stay private and out of the public record. If privacy is important to you, consider a Revocable Living Trust as opposed to a Last Will and Testament which becomes a matter of public record that can be seen by anyone.
• To Avoid Probate - Assets at the time of a person's death will pass directly to the beneficiaries named in the trust agreement and avoid probate.
• For Flexibility - These types of trusts can be changed. If you have a second thought about a particular item or beneficiary, you can modify the document through a trust amendment. If you don't like the trust as a whole, then you can revoke the entire document.

Word of Caution: These trusts offer not creditor protection. If the asset holder is sued, the items in the trust are fair game. Upon your death, those assets will be subject to federal and state estate taxes.

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Happy Thanksgiving!

"Give thanks for a little, and you will find a lot." 

Hausa Proverb 

Wishing You and Your Family a Safe and Happy Thanksgiving!

What Are the Benefits of an Uncontested Divorce?

When you hear "uncontested divorce", also known as no fault divorce in California, you probably think of a couple who amicably and in a friendly manner decide to call it quits. While this is surely the case in some situations, choosing to go the uncontested divorce route may be a financial decision rather than an emotional one. Just like any divorce, there is the chance that an uncontested will see unpleasantness and bitterness to some degree.

So why would you choose this path if you are unhappy with your former partner? Well, for one an uncontested divorce is much cheaper than a contested divorce in most cases. The couple could even file for divorce without the assistance of lawyers, although at the very least speaking with an attorney is often helpful and important in protecting one's rights.

What's more, it allows the couple to end their marriage quickly and with as little animosity as possible, even if the former couple isn't walking away from the marriage with the best of feelings towards one another. You probably will not agree on every single aspect of the divorce, but after a little negotiating, compromising and talking through the issues, couples are often able to reach an agreement without fighting each other in court.

Getting back to the money-saving benefit of an uncontested divorce, the extra cash that may otherwise go to a divorce attorney can be used to rebuild your life. You won't have a partner with whom you can split your expenses, including rent, car payments, utilities, etc., and if you have kids you'll be able to pamper them a little bit as they deal with the divorce.

There are some cases in which a no fault divorce may not be right. If abuse exists in the relationship, negotiating may be difficult for the victim of abuse, as intimidation and possibly fear will put create an uneven playing field. If either you or your spouse decides that you want to walk away with most of your assets, or if you are not on speaking terms with your spouse, an uncontested divorce may not be the best of choices.

In the end, though, many choose an uncontested divorce because of the money, headaches and hassle that it saves them.

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Advance Directives: A Need for All Ages

Emergencies or a health care crisis can happen at any time, and the time to think about how you would want your medical care is now.

Probate and Administrative Process, Know Your Rights

Probate is the system in which the court's system's method of processing the estates of a dead person. It is a legal document that enables the administration of the estate of the deceased. It allows for the resolving of claims and distribution of the deceased's will. Any grievances surrounding a deceased person's estate are filed in the probate court also known as the surrogate court. Once probated, the will becomes a legal instrument that can be enforced by the executor.

Administration process

Administration process of an estate on the other hand is the process by which the deceased person's assets are collected, maintained and distributed. An estate administrator sees to the proper administration of the will.

The Probate process

The probate process begins after the death of a person. An interested person files an application to administer the estate; a fiduciary is then appointed who is to administer the estate and at times may be required to pay a bond to safeguard and to insure the estate. Creditors are notified and legal notices published. There may be filed a petition to appoint a personal representative may need to be filed and letters of administration obtained. All these processes must be done in accordance with the limitation clause.

Property that avoids probate

Property that passes to another person contractually upon the death of a person does not enter probate for example a jointly owned property with rights of survivorship. Property held in a revocable or irrevocable trust that was created when the grantor's was still alive does not also enter probate. In most of these cases the property is distributed privately and without many issues thus no court action is required.

What happens in the probate and administrative process?

After a probate case has been filed in court, an inventory is entered and the deceased's property collected. The debts and taxes are paid first then the remaining property distributed to the beneficiaries. The probate and administrative process may be challenged at any time as a whole or part of it. The issues that arise during such hearings include will contests and paternity issues and these have to be solved before the matter is decided.

The need for the appointment of an administrator arises where the deceased left no will, some assets are not disposed of by the will, in cases where there is a will however, the case goes to probate directly. The estate administrators act like will executors but where the will does not state how to distribute of property, they follow the laid down laws.

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