April is Financial Literacy Month

Is it Time to Review Your Estate Plan?

If you already have your estate plan in place, this is a good time to review your plan to make sure it is current?  Have there been any big changes in your life?  A marriage, divorce, birth or death?  If so, it’s definitely time to update your estate plan.  If there haven’t been any big changes, it is always good to make sure you still agree with the decisions that you made when you originally created your plan.

If you don’t already have a plan, there is no better time than now to create one!

What is an estate plan?

At its most basic, your “estate” includes the things that you own and the things that you owe.  Your “estate plan” is what you want to happen to those things in the event of your death or incapacity.

I like my clients to think of their estate plan as a map of how to take care of the big things in their lives.  These things are:

  • Family
    • who will take care of your children (guardians)
    • what money will your family live on? (life insurance)/
  • House
  • Retirement Assets (401(k), IRA, etc.)
  • Finances (bank accounts, bills, etc.)
  • Health Care

By working with an estate planning attorney, you can ensure that these “big things” in your life are coordinated and you have systems in place to make sure that in the event of a major issue (illness or death) the big things in your life transition with as little hassle as possible.


Living Trust Infographic

Like many people, I am a visual learner.  That is why, during my meetings with estate planning clients, I always draw out a sketch of the different types of assets my clients may own and how they work with a living trust.  If find that the graphic representation really helps clients “see” the types of assets are held in their living trust (which I refer to a a “treasure chest” or “toy box”).  The sketch I make during our meetings is very rough (made even more so by the fact that I am writing upside down).  Here is an infographic version of that sketch:


Top Excuses For Putting Off Estate Planning

We are now a week into 2014.  Did you make a resolution to take better care of yourself?  One of the best ways to take care of ourselves is to reduce or eliminate stress from our lives. Having a plan in place for who will help you in a crisis is a great way to reduce your stress.

In my opinion, every adult should have an estate plan in place. However, many people that I talk to do not have theirs in place yet. I have heard many excuses for why they haven’t yet put a plan into place. Some of the more common ones follow:

“It’s too expensive.

Preparing an effective estate plan is not cheap.  It is, however, much less expensive than not having a plan in place.  If you have no plan in place, probate fees are based on a percentage of the gross value of your estate (in other words, your debts do not reduce the amount to be paid).  Many law firms will accept payment plans to ease the cost of an estate plan as well.

“Seeing a lawyer is intimidating.”

Lawyers can be intimidating. Plus, as a profession, lawyers do not have the greatest reputation.

Many people also think that the process of preparing an estate plan is complicated. To the contrary, the process can be quite simple. The process frequently begins with a questionnaire (which includes biographical and financial information).

Clients then meet with an attorney for about an hour or two to discuss goals and potential solutions. A short time later, clients will have the opportunity to review drafts, and then will meet with the attorney again to sign the documents.

“I’m not sure who to appoint.”

The choice of whom to appoint to raise your children, make financial decisions or make health care decisions can be one of the largest stumbling blocks in making the first appointment to see an Estate Planning Attorney. In fact, my own husband delayed finalizing our estate plan for this very reason.

What I told him (and my clients) is that someone is better than no one. Get something down. If you think of someone better later, you can always revise your documents. If you are really stumped, discuss your options with family, friends, your pastor or your attorney.

“I’m too young.”

Accidents can happen at any time.  Enough said.

“I don’t have enough time.”

The process of preparing your Estate Planning documents is simple and fairly streamlined. I have put together an entire estate plan at one dinner party (though I don’t recommend it, and would prefer not to do that again).

“I don’t have an ‘estate’.”

Estate plans include much more than just your assets. A revocable trust and/or Last Will and Testament (which relate to your assets) are only two of the documents that make up a complete estate plan. Other very important documents include an Advance Health Care Directive, and a General Durable Power of Attorney. These documents allow you to appoint someone that you trust to make financial decisions and healthcare decisions for you if you are incapacitated or injured and cannot make your own decisions (either temporarily or permanently).

“I don’t want to die.”

Someone once said, “Talking about babies won’t make you pregnant, and talking about death won’t make you dead.”

You cannot prevent your death, but you can ease your loved ones grief by having a plan in place.

If you are ready to begin the process of putting your estate plan in place (and you live in California) contact The Thatcher Law Group to schedule a complementary initial consultation.  Or, feel free to ask questions in the comments.

Wishing you peace.

IRA Inheritance Trust®

Tax deferred accounts such as IRAs and 401(k) often make up the bulk of our retirement planning. Unfortunately, the rules governing distribution to beneficiaries are complicated and our beneficiaries can sometime be stuck with unintended tax burdens when they “inherit” an IRA (or other tax deferred retirement account).

An IRA Inheritance Trust® can be used to maximize the retirement benefits received by your loved ones (beneficiaries) and protect the funds from creditors, poor financial management and even divorce!

What does An IRA Inheritance Trust® do?

The IRA Inheritance Trust® is a stand alone (separate) document from your existing Revocable “Living” Trust.  It can be modified during your lifetime to reflect your beneficiaries needs, but upon your death it become irrevocable.  This tool allows your beneficiary to take advantage of the “stretch-out” benefits of your IRA – in other words, a properly structured IRA Trust can allow your retirement accounts to grow exponentially (while remaining tax deferred).  A $250,000 IRA account can grow to $10 million or significantly more (depending on the age of the designated beneficiaries)!

In my opinion, however, one of the most important benefits of an IRA Inheritance Trust® is the ability to protect the assets for your loved ones.   It can be especially useful in these situations:

  • Your beneficiary is now or may become disabled and you want to ensure their ability to receive governmental benefits
  • You are concerned about your beneficiary’s ability to manage their money
  • You want to protect your beneficiary from creditors
  • You want to ensure that the inherited IRA benefits are not available to a divorcing spouse

Is An IRA Inheritance Trust® Right for YOU?

  • Is the combined value of your retirement accounts (including 401(k), Roth IRA, Sep IRA and other tax-deferred plans) for both you and your spouse (or significant other) at least $200,000?
  • Are you concerned about protecting the finances for one or more of your designated beneficiaries?

If your answer to either of these questions is yes, then an IRA Inheritance Trust® may be right for you.

To learn more about an IRA Inheritance Trust®, contact The Thatcher Law Group!

Wishing you peace.


Why I Think an Estate Plan is a Wonderful Gift

For his birthday this year, I gave my husband a pedometer. At first he was not thrilled with the gift. But I chose it because I love him and I want to keep him around for a long time – so it is in my best interest to keep him healthy. What could be more romantic?

Giving a loved one the gift of an estate plan is a similarly loving gift – whether you are giving it to your adult child (possibly the parent of your grandchildren) or your spouse. The gift of an estate plan tells your loved one that you care about what happens to them.

Why give an Estate Plan as a gift?

• Most people do not want to pick up the phone and schedule an appointment, often because they think that planning for death is scary, difficult or too expensive.

• The Thatcher Law Group’s estate planning process is much more simple than most people think. Preparing Attorney Laura Thatcher makes planning your estate easy and as fun as possible.

• Estate planning is not just for the wealthy. Everyone should have an estate plan, whether you own a home that is heavily mortgaged, only have $100 to your name or nothing but debts, you still need an estate plan. What type of estate plan will vary, but there are many documents that everyone over the age of 18 needs to have.

• With the gift of an estate plan, you remove the biggest hurdle most people have to creating their estate plan: “I cannot afford it right now.”

Estate planning with The Thatcher Law Group is fast, simple and easy to do!  This holiday season, The Thatcher Law Group is offering special discounts on estate planning packages.  This is therefore the perfect time to consider giving an estate plan as a gift for the parents of your grandchildren (also know as your children) or your spouse.  Click on this link for our 2013 Holiday Special!

Contact The Thatcher Law Group to find out if the gift of an Estate Plan is the right thing for you and your loved ones.

Wednesday Words: Intestate Succession

Intestate Succession  The method by which property is distributed when a person dies without a valid will. 

Source:  Nolo Plain English Legal Dictionary

Each state’s law provides that the property be distributed to the closest surviving relatives. In most states, the surviving spouse or registered domestic partner, children, parents, siblings, nieces and nephews, and next of kin inherit, in that order.

If there is no next of kin, then property will “escheat” or revert to the state.

Only “probate-able” assets (that would have passed through your will) are affected by intestate succession laws.

How your assets are distributed in California depends upon who your closest relatives are when you die.  California Probate Code §§6400-6414 determines the order of inheritance.  The following some of the more common examples are illustrated here:

Parents and siblings survive you, but you have no spouse or children  — Parents receive 100% of all property[1]

Siblings survive you, but you have no spouse or children – Siblings split equally 100% property[2]

Spouse and parents survive you, but you have no children – Spouse receives 100% of community property[3] and 50% of separate property and your parents receive 50% of separate property[4]

Spouse and siblings survive you, but you have no children or parents — Spouse receives 100% of community property and ½ of separate property and your siblings split equally 50% of separate property[5]

Spouse and one child survive you –  Your spouse receives 100% of community property and 50% of separate property[6]

Spouse and multiple children survive you –  Your spouse receives 100% of community property and 1/3 of separate property AND you children split 2/3 of separate property[7]

Children, but no spouse –  Your children split 100% of all property[8]

There are some additional factors that affect intestate inheritance as well,

Survivorship period. To inherit under California’s intestate succession statutes, a person must outlive you by 120 hours. So if you and your brother are in a car accident and he dies a few hours after you do, his estate would not receive any of your property.[9]

Half-relatives. “Half” relatives inherit the same as if they were related by whole blood. [10]

Posthumous relatives. Relatives conceived before (but born after) you die inherit as if they had been born while you were alive.[11]

Immigration status. Relatives entitled to an intestate share of your property will inherit whether or not they are citizens or legally in the United States.[12]

There are numerous estate planning options that can be used to change the “default” intestacy rules.

In the coming weeks, we will be reviewing many options in our Wednesday Words series.  In the meantime, if you have any questions, or would like to discuss your estate plan, please contact Laura L. Thatcher, or a qualified estate planning attorney in your area.

[1] CA Prob Code §6402

[2] CA Prob Code §6402

[3] Community property is generally defined as all property earned by the labor of either spouse during marriage.

[4] CA Prob Code §6401-2

[5] CA Prob Code §6401-2

[6] CA Prob Code §6402

[7] CA Prob Code §6401

[8] CA Prob Code §6402

[9] CA Prob Code §6403

[10] CA Prob Code §6406

[11] CA Prob Code §6407

[12] CA Prob Code §6411


Friday Funnies: Veterans’ Day Humor

Sunday is Veterans’ Day, so I searched for a military themed joke for this week’s Friday Funnies.  There are lots of great ones.  However, as you might imagine, most of the jokes out there are just a bit raunchier than would be appropriate for this site.  After searching many sites, I came across Vetfriends and found the perfect joke – it even has estate planning references!

As unlikely as it seems, a Marine and a Sailor were friends and decided to go on a ski trip.

Along the way, they had car trouble and broke down by a farm on one of the coldest nights of the year.  They knocked on the farm house door and a beautiful widow stood before them.  The widow told them they were welcome to spend the night in the barn, but she could not allow them to stay in the house for appearance sake.

The night seemed to go uneventfully and the next morning the guys continued and finished their ski trip.  Nine months later the Marine was contacted by a lawyer.

The Marine caught up to his Sailor buddy and asked him, “Hey Mack, you remember that beautiful widow we met on our ski trip”?

The Sailor replied rather sheepishly, “Yes.”

The Marine said, “You didn’t happen to get up in the middle of the night and pay her a visit did you?”

The Sailor again said, “Yes.”

The Marine asked, “And by the way did you use my name instead of yours”?

The Sailor again said, rather red faced, “Yeah Buddy.  I’m sorry.”

The Marine replied, “That’s okay, she died and left me a million bucks!”

Anderson Ware, YN1, USN RET

Wishing you peace!


Estate Planning Red Flag: You Have Not Planned for Incapacity

Estate planning is often associated with death.  But it’s just as important for your plan to address incapacity associated with illness, injury, advanced age or other circumstances.

Unless you specify how financial and health care decisions will be made in the event you become incapacitated, there’s no guarantee that your wishes will be carried out.  Plus, without a plan, your loved ones will be saddled with the difficult task of seeking a court-appointed guardian.

On the financial side, planning tools you should consider include:

  • A revocable living trust. You transfer your assets to the trust, retaining control over your financial affairs by serving as trustee.  In the event you become incapacitated, your chosen representative takes over as trustee.
  • A durable power of attorney. This document authorizes your representative to manage your financial affairs and control your assets, subject to limitations you establish.
  • Joint ownership. Holding title to property jointly with another person allows him or her to manage the property in the event you become incapacitated.  It’s a simple, inexpensive strategy.   But it produces two results that may or may not be desirable: 1) It provides your co-owner with immediate, unrestricted access to the property, and 2)  the property will pass to him or her when you die.  Joint ownership also may trigger negative tax consequences.

On the health care side, planning tools you should consider include:

  • A health care power of attorney. Also referred to as an Advance Health Care Directive, Durable Medical Power of Attorney or Health Care Proxy, this document appoints a representative to make medical decisions for you in the event you can’t make them yourself.
  • A living will. A living will communicates your preferences for life-sustaining medical intervention — such as artificial nutrition or hydration — under specified, life-threatening circumstances.
  • A Guardian Nomination. A stand-alone Guardian Nomination allows you to designate a guardian (and temporary guardian) for you minor children.

Your attorney can help you prepare the documents necessary to implement these estate planning tools.

If you have any questions, please contact The Thatcher Law Group or another qualified estate planning attorney.

Wishing you peace.