I get this question a lot…

What is a Trust 

Trusts are entities that exist just as individual people exist.  Trusts, therefore, are capable of doing most things that people are capable of doing with respect to operating in business and life.  They can enter contracts, buy real estate, make investments, open bank accounts, start businesses, and even inherent property.

Like business entities, trusts operate at the direction of people.  The people who create trusts and put assets into them are called settlors.  The people who operate trusts are called trustees.  Trustees make the decisions, and they direct trust assets.  Of course, there are constraints.  For one, trust documents typically spell out the guidelines that trustees must follow.  In addition, the law imposes a very high level of fiduciary responsibilities on trustees in order to ensure that they are managing assets properly and not engaging in improper conflicts of interest.

Finally, the people who receive trust income and those who are entitled to receive trust principal are called beneficiaries.  In other words, trustees manage trust assets for the beneficiaries.  Under certain circumstances, this structure—management of assets by the trustee for the benefit of the beneficiaries, who have no control over the assets—creates a shield between the creditors of beneficiaries and assets held in trust.

Grantor Trusts

Grantor trusts are trusts where the settlor is also the beneficiary.  Revocable living trusts are an example of grantor trusts.  In an RLT, the same person or people are the settlors, beneficiaries, and the trustees.  In this type of setting, trust assets aren’t protected from creditors.  The purpose of a revocable living trust is simply to avoid probate after death.  By putting assets into the name of a trust, you can retain control of those assets and beneficial use of those assets and, at the same time, avoid ever giving the judicial system control over the disposition of your assets when you die (and avoid being subject to unnecessary taxes).

Revocable living trusts are the ultimate in “pass through” type entities.  The settlor retains all the benefits of ownership (and runs the risk of exposing assets in the trust to creditors), including the ability to sell, lease or mortgage certain property, and has a built-in last will and testament-type feature.

Trusts: Not One Size Fits All

Realistically, anyone who expects to die with even a small net worth needs to have a revocable living trust and a will.  The will typically leaves everything to the revocable living trust, which then controls how assets are distributed.  Again, this is all designed to avoid an expensive and unpredictable probate process.

But some people need trusts that are more protective in nature—trusts that truly protect against the claims of creditors or those who might file frivolous lawsuits.  Others need trusts to protect against estate taxes.  Whatever your ultimate needs may be, you need to start with a revocable living trust and a will.  All planning for anyone with assets will require those two tools on some level.

Putting Your Plan Together

We can do two things for you.  First, we can assess your situation and put together a revocable living trust and will that places your estate beyond the reach of a judge.  Second, we can help you determine what other sorts of estate planning tools might be appropriate for your situation.  Visit www.vterzianlaw.com to find out more…

When Designating a Guardian


Guardianship is a topic we cover very extensively in our articles and in our Kids Protection Planning™ seminars.  In fact, I recently appeared on an on-line TV show to discuss this very topic.  You can view this show and hear about a very special offer here: http://thelip.tv/estate-planning-with-vanessa-terzian-on-the-intentional-parent/

Today we want to share some practical considerations with you—things you should consider before naming one or more people to serve as guardians for your children.  The intent is to encourage you to engage in proactive planning, and also to take some pressure off of you.  The latter comes from realizing that until you actually die, your planning is quite flexible and can be changed to meet your wishes.

Not Permanent Until It’s Permanent

Naming one or more people to serve as a guardian for your children in the event of your death or incapacity might seem very permanent, but again, it’s not.  You can change the named guardians in your plan at will … right up until the time you pass away or become incapacitated.  For that reason, it’s not enough that you set up a great plan initially.  You must also review that plan and the continuing suitability of the people you’ve chosen.  As circumstances change and people evolve, so might your choices.

That’s where our law firm is unique.  We have options available whereby we conduct a bi-annual review of your plan each year just to make sure that our planning is still appropriate.  We want you to sleep well at night, but we also want your children to receive the best care possible if something happens to you.  It’s very important.

Really, Really Know The Appointees

Make sure you know the person or people you’re appointing very well.  That means you need to spend a lot of time with them.  Ideally, choose someone who is already a parent.  That way you can observe and get comfortable with their parenting style.  It’s also great if your children feel close to, and a sense of support from, the person you’re going to choose.  You need to know and feel comfortable with things like religious beliefs, habits, where the person lives (so your children aren’t uprooted if that’s important to you), and how equipped the person is to help your children through a very difficult time.

Practical Considerations

Does the person you’re considering have a home that is big enough to include your children?  How about his or her relative health and financial stability, does that meet your standards?  Financial issues can be overcome with additional planning on your part, which might include something like a term life insurance policy.  But the real question is whether the person you’re appointing manages money well enough to make the inheritance last.

You do have the option to name two guardians for your children, because it just so happens that raising children and managing money requires two different skill sets!  One guardian would be the caretaker (“Guardian of the Person”), and the other would manage the money (“Guardian of the Estate”).  If you consider this option, make sure the two guardians get along well, and make sure that they’re on the same page with respect to your wishes and what you believe to be in the best interest of your children.

DO NOT WAIT

It’s very important that you act right away to name a guardian for your children.  Remember, until you die, the decision can be “undone,” but if you die without having named a guardian, then the fate of your children will be left to the discretion of a total stranger … a judge.  You have the ability to take control right now, and your words and planning will have the effect of law.  In other words, a less than perfect choice is better than no choice at all.

If you would like to discuss setting up a guardianship plan, please call our offices and schedule a time to speak with me.  If you mention this article by name and say that you’re interested in a Kids Protection Plan™, we will meet with you absolutely free of charge.

Story Book Endings

Story book endings only occur in … well, stories.  Okay, it happens in Hollywood too.  But happily ever after doesn’t have to be a fantasy.  It is possible in the real world.  How many of you have watched the movie Meet Joe Black with Anthony Hopkins and Brad Pitt?  The reason I bring up that movie is quite simple.  If you haven’t thought about what you’d do if you’re days were numbered you should, because guess what … your days are numbered, just like everyone else’s!

First, the Legal

If you haven’t seen Meet Joe Black, the premise is that a man (Anthony Hopkins) has been called by the Grim Reaper.  But before passing into the next life, the Angel of Death makes a request, in essence: “Show me around the world.  Let me experience temporal existence and emotions as a human being.”  The gist is that Anthony Hopkins’s character—an incredibly wealthy man—knows he has very little time remaining on planet earth.  So what does he do?

Well, he’s presumably made all the legal arrangements necessary.  When you’re wealthy and have lots of assets to worry about, that goes without saying.  After all, who wants to believe they’ll leave a mess and a lot of fighting in their wake?  The better question, however, is have you thought about it?  Have you really considered the consequences of not having a plan?

There will always be fighting over the estates of the super rich, no matter how much planning they do and no matter how specific they are about their wishes.  It’s a function of the legal system and greed.  But the vast majority of people can totally prevent any type of interference by the court system with some very simple planning.  Then you can worry about what really matters.

What Really Matters

The character in Meet Joe Black knew what really mattered—family.  Knowing that death was just around the corner didn’t deter him from living the way he had always lived.  He engaged his family, showed them his love, and worked to pass on his story.  There was nothing more he could do, and there’s nothing more important for you to do.  That’s what really matters.  Sharing your authentic identity, beliefs, passions, expressing your love, and being in the moment when sharing experiences with your family is truly all that matters.

Get the legal stuff out of the way, so that you can live every day focusing on how you’ll be remembered and not worrying about the future for lack of certainty about being prepared.

 Taking Care of it Now

We can help you address the legal component of planning your estate, and we are going to help a few people get started for free.  We have a little bit of space left in our schedule this coming week, so if you call us today and mention this article, you’ll be given an opportunity to meet with an attorney for a Family Wealth Planning Session absolutely free.  We normally charge $750 for these sessions, so act now or you might have to pay full price later.  And really, knowing that our days are numbered, is there any reason not to act now? 

Better Late Than Never…

Estate Planning for Couples Marrying Later in Life

Couples who choose to marry later in life have different concerns than those marrying earlier, and a good Los Angeles (Glendale, Pasadena, Encino area) estate planning lawyer can help you make the right decisions for your circumstances.  Each situation is a little different, but there are some fairly common topics that should be considered:

1.       Do the husband and wife have grown children?  If so, then the estate plans will likely need to include specific instructions regarding how inheritance will work.  This is fairly important to ensure that each biological and step child receives what the parent wishes, rather than allowing California laws to supersede your desires.

2.       Does each intend to be the beneficiary of the other?  Older couples who marry may already have their own plans for their estates, and sometimes these don’t involve one another at all.  If spouses do not intend to inherit from one another, they will likely need a prenuptial agreement that clearly spells this out.  Without it, spouses will almost always inherit, despite plans that were made to the contrary.

3.       Who will pay medical expenses?  If one spouse becomes ill, it may be the responsibility of the other (usually wealthier) spouse to pay for medical expenses.  Again, a prenuptial agreement can help to limit this, although Medicare will usually supersede a prenuptial agreement.

4.       Is one spouse widowed?  Some older couples today have chosen not to marry because it can stop pension or social security benefits from a previous marriage.  This is something that should be carefully explored with your Los Angeles (Glendale, Pasadena, Encino area) estate planning lawyer.

5.       Should you have joint accounts?  When older couples marry, it is sometimes recommended to keep assets separate.  This extends to bank accounts and titles on property.  Any assets that are in both spouse’s name can go to the survivor, even if a prenuptial agreement stating otherwise was in place.

When estate planning, older couples usually do best by choosing an independent trustee.  The passing of a loved one often brings out the worst in people, so naming either you or your spouse’s child as the trustee can have unexpected negative consequences.  Your Los Angeles (Glendale, Pasadena, Encino area)estate planning lawyer can help you identify a good candidate or even recommend a trust company to keep your trust or will from being ignored or misused. 

In addition, the estate planning lawyer can help you uncover other areas of concern that are not obvious at first glance, such as updating legal documents to reflect the new relationship and setting up powers of attorneys, living trusts, etc.

If you need help and are ready to get started, simply call our Los Angeles (Glendale, Pasadena, Encino area)estate planning law firm at 818-864-6174 (www.vterzianlaw.com) and ask to schedule a free couple planning session. These sessions are normally $750, but you can come in free with the mention of this article (limited to first 20 responders).

It’s National Estate Planning Awareness Week!

A Los Angeles, Glendale and Pasadena Probate Lawyer Gives Provides a Quick Overview of the Probate Process

In some circles, “probate” almost feels like a dirty word.  There are plenty of reasons that a person may prefer to skip the probate process, when possible, but it is a fact of wills and trust administration.  The details of probate can vary somewhat from place to place.  For example, probate in California will likely be different than probate in Washington.  There are such differences, in fact, that separate proceedings are necessary for an individual with estates in both states.  This means that involving a probate lawyer is usually the best choice for those who are local.

The process of probate is used to ensure that an individual’s estate is being administered in a way that conforms with probate laws.  This is one of the reasons that a qualified probate lawyer can make such a difference.  He or she can help family members and other heirs navigate the process and ensure that all steps are being completed properly.

Many of those who engage in estate planning do their best to avoid probate by creating a living trust.   This helps to set out their wishes in advance and allows for a trustee to follow through on those wishes when the time comes.  Those who simply have a will and those who have not planned their estates at all will have their assets go into probate.

One of the biggest concerns about probate is the fact that it is a public affair.  Because the will or estate goes through the court system, the information that arises is available to the public.  While this may not be a major concern for some people, others prefer to keep matters of money, property, and inheritance private.

Another common concern is the cost.  A considerable amount (anywhere up to four percent) of the gross of an estate will go to the courts.  A similar amount will be paid in attorney’s fees.  For some people, these fees are negligible, but in many cases, these costs significantly affect the overall inheritance.

Finally, if you are involved with an estate that is going into probate in Los Angeles, Glendale or Pasadena it is important to be aware that it can be a lengthy process.  An accounting must be done of all the assets, creditors must be contacted regarding any money owed, and assets may need to be sold off.  All of these things take time.

 A good probate lawyer will have experience with this process making it smoother.  He or she will also understand the concerns of those involved and will keep clients up to date and informed on the status of their case.  While a wills and trust lawyer is a great contact point during estate planning, a Los Angeles, Glendale and Pasadena probate lawyer may very well be needed as the estate is actually being administered.

At Law Offices of Vanessa M. Terzian we are here to assist you with your probate and estate administration needs.  It is our goal to make navigating the complicated world of probate as easy as possible and help you carry out the wishes of your deceased loved one.   If you have specific questions or you are not sure how to get started with the probate process, please give our office a call at 818-864-6174 (www.vterzianlaw.com) and ask to schedule a Probate Planning Session $750 value.  

Estate Planning for Senior Citizens – It’s About Taking Care of Your Loved Ones

I hear the same excuse over and over….

I don’t have an “estate.”

I have more debt than assets.

The only thing I have is my home.

As you may have guessed, these are excuses that people make for not preparing an estate plan. These people are sadly misinformed. They think estate planning is only about money. Estate planning does take care of financial issues, but the way I see it, the most important reason for doing an estate plan is for the benefit of the people that you leave behind.

Estate planning is essential for senior citizens who are concerned about the well-being of their loved ones. No matter what your level of wealth happens to be, there are decisions that will have to be made if you become incapacitated or when you pass on.  If you don’t leave detailed instructions for the type of medical care you want or what to do with your things, you will be putting those you love most in the position of being a mind-reader. They will have to do their best to figure out what you would have wanted and then deal with the consequences such as unhappy family members who disagree with them. Do you really want to cause this type of stress for them at a time when they are already upset and mourning?  I doubt it.

I realize thinking about these things is not easy or fun, but approaching it in an organized manner may help. Here’s a list of things to consider when planning your estate:

1.      Talk to close family members and let them know how you would like to handle the dispersal of your assets and sentimental items. Also, talk to them about the type of medical care you would like to receive should you become incapacitated. Chances are, if everyone knows your plans ahead of time, there will be fewer arguments and a lot less stress.

2.      Prepare a list of all of your assets including your home, your financial accounts, insurance policies and any personal possessions.

3.      Make a list of everyone that you would like to be a beneficiary of your estate. You may also want to include organizations that are meaningful to you.

4.       Plan for how you would like your pets cared for if something should happen to you.

5.       Make a list of passwords, PIN numbers and other codes that someone might need.

6.       Think about who you would like to put in charge of your medical care and who you would like to oversee the dispersal of your assets. You can appoint different people for these critical jobs.

7.      Consult with an experienced estate planning attorney who can offer advice about how to arrange your estate so that the person you put in charge of your financial and medical decisions will have the fewest complications.

These steps alone will go a long way in reducing the stress that your loved ones will experience. Isn’t their well-being enough reason to do an estate plan?

If you answered “yes,” then be sure to give our office a call at 818-864-6174 and ask to schedule a planning session and learn more.  These comprehensive sessions are normally $750, but you can come in absolutely free with the mention of this article. However, this offer is limited to the first 10 responders so call today! 

Think about this…

70% of people who receive an inheritance will spend it in its entirety, and 80% will do so within 2 years! (The Institute For Preparing Heirs)

www.vterzianlaw.com

Join Us!

Join us Thursday July 14th 6:30-7:30 for a complimentary seminary on Elder Law & Incapacity Planning Issues. 

Where: The Leven Oaks. 120 S. Myrtle Ave., Monrovia, CA 91016 

www.vterzianlaw.com

Things I like