To receive their inheritance after your passing, your beneficiaries may need to start a probate case with the Superior Court. This is likely if you own property (such as a house, car, bank account, investment account, or other asset) in your name alone, and have not designated a pay-on-death, or transfer-on-death beneficiary. Although a will is a fundamental form of planning, it does not prevent probate. Instead, a will merely informs the probate court of your preferences; your loved ones must still go through the probate process to distribute your asset.

Now that you understand why probate may be required, consider the following three reasons for avoiding probate whenever possible:

1. Everything is public record.

Almost every court proceeding, including probate, becomes a matter of public record. Therefore, in order to properly wind up your affairs after your death (i.e., pay your bills, submit any remaining tax returns, and distribute your money and property to your selected beneficiaries), a lot of personal and private information will become public through the probate court, including your family and financial information.

The courts have at least taken efforts to reduce the risk of identity theft, so this does not necessarily imply that account numbers and Social Security numbers will be made public.

However, the amount of your accounts and property, creditor claims, the identity of your beneficiaries, contact information for your loved ones, and even family disputes that affect the distribution of your money and property may all be made public.

The easiest method to protect your privacy is to keep your affairs out of probate, as most individuals want to keep this type of information private.

2. It can be costly.

Due to court charges, attorney’s fees, executor fees, and other expenses, the cost of probate can rapidly approach thousands of dollars, even for small estates. If a family member or beneficiary contests the estate, or creditor claims are filed in the probate case, these costs can quickly escalate into the tens of thousands of dollars or more. Your money and property should go to your loved ones, but if your estate goes through probate, a considerable percentage may be allocated to executor fees, legal fees, and court costs.

While creating a will or estate plan that avoids probate does cost money, Benjamin Franklin said it best: “An ounce of prevention is worth a pound of cure.”

Costs incurred now to implement a plan are more easily controlled than uncertain costs in the future, especially when you consider that your loved ones may be grieving while making important estate and financial decisions. You can decrease the possibility of costly disagreement and reduce or eliminate some costs via careful planning.

3. It will take some time.

Although the length of time required to probate an estate can vary significantly by county and based on the value, quantity, and complexity of the deceased person’s assets and property, probate is typically a lengthy procedure. Even probate cases that seem simple can a year or more. During this time, your beneficiaries will not have easy access to the money and property you left them. This delay can be especially challenging for loved ones enduring financial, emotional or medical challenges, as they could benefit from a quicker, more straightforward process, such as the administration of a living trust. Bypassing probate can expedite the distribution of money and property, allowing the beneficiaries to receive their inheritance sooner than they would under probate.

If you own real estate in many states, you generally will have a probate case in each state where your real estate is located. These additional probate cases may cost your family members more time and money. The good news is that with effective trust-centered estate planning, you likely will avoid probate in every state, streamlining the transfer of your financial legacy.

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To learn more, please contact us to schedule a consultation. We will gladly discuss formulating an estate plan strategy to help you avoid probate.

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Here are five things to consider before embarking on your next adventure to ensure your safety and the safety of your loved ones:

1. Have you established a basic estate plan, and, if so, have you had it reviewed recently?

An estate plan is a set of documents that outline your wishes for your care and the care of any of your dependents, as well as the management of your finances and assets. You provide these instructions to trusted individuals who can make decisions on your behalf.

Last will and testament

One aspect of an estate plan may be a last will and testament, also known as a will. This document allows you to appoint someone to handle the distribution of your assets and property after your death. You can also name a guardian for your minor children, if you have any. However, a will only goes into effect upon your death, and the probate process (a legal procedure overseen by the court to validate the will and to make sure it is followed correctly) may be necessary to carry out its provisions. This process can be costly, time-consuming, and public, which is why it’s important to consider all of your options when creating an estate plan.

Revocable living trust

This is document that you create that sets out how your assets and property will be managed both during your lifetime and when you pass away. For the trust to work, you have to transfer certain of your assets and property to the trust. For your trust to own your accounts and property, they will either be retitled in the name of your trust (instead of in your sole name) or the trust will be named as the beneficiary that will receive money and property at your death. The trust document provides instructions to the trustee, who is the person you have chosen to manage the trust. Initially, you will serve as the trustee of your own trust, which means you maintain control over the trust’s assets. You can also continue to benefit from these assets as a trust beneficiary. If you become incapacitated or pass away, the successor trustee you have designated can take over management of the trust without court intervention. Because the trust owns your property or is named as the beneficiary of your assets, there is nothing that needs to go through probate upon your death. The trust becomes effective as soon as you sign it.

Review your documents

It’s important to regularly review your estate planning documents to ensure that they still accurately reflect your wishes. If you have experienced major life changes, you may need to reconsider your estate plan. If you have a revocable living trust as part of your estate plan, it is crucial to ensure that all accounts and property intended to be owned by the trust have been properly transferred, and that any accounts or property naming the trust as a beneficiary have the appropriate documentation in place.

2. Can someone manage your financial affairs when you cannot?

If you are traveling abroad, it may be more challenging to manage your personal financial affairs (such as paying rent or following up on an insurance claim). However, just because you are unable to do these things does not mean that they cannot be handled by someone else.

To appoint a trusted individual to handle your financial affairs while you are abroad, you can create a durable financial power of attorney. This document allows you to specify when the person you have chosen should have the authority to act on your behalf. You can choose to grant this power immediately, or only in the event that you are unable to make decisions for yourself. If you are traveling internationally, you may want to consider granting the power of attorney immediately so that your chosen decision maker can act quickly if needed. You can also customize the level of authority granted to your decision maker, whether it be limited to a specific transaction or broad enough to cover most financial matters. This is a personal decision based on your specific needs and circumstances.

3. How will you manage your health while you are away?

To ensure that you have someone to make medical decisions on your behalf if necessary, it’s important to appoint a trusted individual through a medical power of attorney, sometimes called an advance health care directive. This is often included in a comprehensive estate plan, along with a living will or advance directive outlining your end-of-life wishes, and a HIPAA authorization allowing named individuals to access your private healthcare information. Keep in mind that these documents may not be recognized in other countries, so if you are traveling internationally for an extended period of time, you may need to consider naming a medical decision maker according to the laws of the country you are visiting.

Additionally, it’s important to determine whether your health insurance will be accepted overseas, as it may only be valid in the United States. If necessary, you may need to secure a short-term health insurance policy to cover you while traveling.

4. Speaking of insurance, do you have adequate insurance?

There are two other types of insurance that can be useful while traveling: travel insurance and life insurance.

Travel insurance can help you navigate unexpected complications that may arise during an international trip, and it may save you money in an emergency, depending on the cost of your trip and the items you are taking.

Life insurance is also important to have and review. It’s essential to correctly designate beneficiaries and to review the policy terms to ensure that your coverage will not be voided by any activities you plan to engage in while on vacation.

Some insurance companies may not pay out if the insured has participated in extreme activities such as bungee jumping, skydiving, or scuba diving, so it’s important to be aware of any exclusions in your policy.

5. What arrangements have you made for your minor children?

If you have minor children, it’s important to make arrangements for their care while you are traveling. If your children will be traveling with you, they will need a passport, which needs to be renewed more frequently for children than for adults.

Some countries may require proof of your relationship as a parent or legal guardian to ensure the safety of the children. If your children will be staying with someone else while you are away, it’s important to have the appropriate documentation in place to authorize the chosen adult to care for them.

It’s also important to have a last will and testament that names a guardian for your children in the event that you and their other legal parent are unable to care for them. While such a document does not avoid court involvement, they can help ensure that your wishes for your children’s care are honored.

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We understand that planning for international travel involves a lot of considerations. Let us help you ensure that you are properly protecting yourself and your loved ones during your trip. Contact us to schedule an appointment before you leave.

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As you plan your next vacation, you may decide to handle the arrangements on your own. While this may be fine for deciding what to see and do, how much to spend, and when to travel, it’s important to consider seeking the assistance of a team of professionals to ensure the safety and protection of yourself and your loved ones during and after your trip. Here are some people you should consider meeting with before you depart on your adventure:

As you plan your next vacation, you may decide to handle the arrangements on your own. While this may be fine for deciding what to see and do, how much to spend, and when to travel, it’s important to consider seeking the assistance of a team of professionals to ensure the safety and protection of yourself and your loved ones during and after your trip. Here are some people you should consider meeting with before you depart on your adventure:

As you plan your next vacation, you may decide to handle the arrangements on your own. While this may be fine for deciding what to see and do, how much to spend, and when to travel, it’s important to consider seeking the assistance of a team of professionals to ensure the safety and protection of yourself and your loved ones during and after your trip. Here are some people you should consider meeting with before you depart on your adventure:

1. Financial Advisor

A financial advisor can help you ensure that your finances are organized and easily accessible while traveling. In case of an emergency, it’s important to have access to your funds and to be able to reach your financial advisor if necessary. Your advisor can also assist you if you want to make a large purchase while on vacation but do not have enough cash on hand.

2. Insurance Agent

An insurance agent can help you review or obtain necessary insurance policies, including life insurance. If you already have life insurance, it’s important to regularly review your policies and beneficiary designations. Vacation planning is a good opportunity to do this.

It’s also important to check if your life insurance policy will cover you for high-risk activities such as skydiving, bungee jumping, or rock climbing. If your coverage could be voided by participating in these activities, you may need to reconsider your plans.

In addition to reviewing your life insurance, it’s a good idea to consider purchasing travel insurance to protect against unexpected costs that may arise during an international trip.

Lastly, you should verify that your health insurance plan covers you for medical care in foreign countries. If it does not, you may want to consider buying a temporary policy that is valid in the countries you will be visiting, depending on the length of your trip.

3. Tax Professional

A tax professional can help you understand any potential tax liability when traveling abroad. Different countries have their own tax laws that you will be subject to, and it’s important to be aware of these if you plan to make any large purchases.

For example, countries in the European Union may add a Value Added Tax on purchased items, but you may be able to get a refund of this tax by completing the necessary paperwork and providing receipts.

When returning to the United States, you may also be required to pay duties on any items you purchased while abroad. These rates can vary based on the purchase price, the location of the purchase, and the type of item. A tax professional can help you understand the potential costs and how to navigate the process.

4. Estate Planning Attorney

An estate planning attorney can help ensure that your wishes are properly documented. Estate planning is not just about preparing for death; it also is useful while you are alive. By working with an attorney to create a financial power of attorney, you can appoint a trusted decision maker in the United States to handle your financial affairs without the need for court involvement. This can be especially helpful if you need something done while you are on vacation, such as depositing a check or signing legal documents.

An attorney can also help you prepare the appropriate documentation to give the person you have chosen to care for your minor children the maximum authority to make decisions for them while you are away. This can allow the caregiver to take care of your child’s needs, such as going to the hospital or signing permission slips for field trips, and keep your child safe and healthy.

Going on a trip can be an exciting experience, but it’s important to make sure that you and your loved ones are properly protected. By forming a planning team, you can take steps to ensure that your trip goes smoothly. We are here to help you and any members of your planning team to make sure that your next adventure is a success.

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Many people mistakenly believe that naming their spouse, child, or loved one as the beneficiary of their life insurance policy is enough to secure the benefits for them in the event of their death.

While life insurance is indeed a crucial tool for financial and estate planning, it’s important to understand that simply designating a beneficiary may not provide the desired level of protection. Without certain safeguards, there is no assurance that the intended beneficiary will ultimately receive and retain the insurance benefits.

When it comes to life insurance, there are factors to consider beyond just choosing a beneficiary. Without proper precautions in place, the benefits could be at risk of being lost or mismanaged. That’s why it’s crucial to explore additional protective measures to ensure your beneficiary receives the full benefit from your insurance policy and that it is used according to your wishes.

To fully safeguard your life insurance benefits, it’s essential to understand the potential pitfalls and take steps to protect your policy’s proceeds. By implementing appropriate strategies and seeking professional guidance, you can secure the intended outcome, providing your loved ones with the financial support you intend even after you’re gone.

Name a Trust as the Beneficiary of Your Life Insurance

A popular way to ensure your loved ones receive money and property as part of your estate plan is by structuring the ownership of assets through a trust. By titling assets in the name of a trust or making the trust the beneficiary of accounts or properties, you can designate your spouse or child as the ultimate recipients. This approach can also be applied to life insurance policy proceeds, providing an additional layer of protection for your beneficiaries.

There are two common methods to achieve this: naming a revocable living trust as the beneficiary or establishing an irrevocable life insurance trust. These options allow you to have control over how your assets are distributed and provide valuable benefits for your loved ones.

Revocable Living Trust

If you have accounts and property that fall below the estate tax exemption or if you’ve already established a trust, considering a revocable living trust as the beneficiary of your life insurance policy can be a smart choice. By doing this, the death benefit from your policy will be added to the assets already held in the trust, and it will be distributed according to the instructions outlined in the trust agreement. The great thing about this option is that it seamlessly aligns your life insurance proceeds with the rest of your estate plan, ensuring everything works together smoothly.

Irrevocable Life Insurance Trust

By establishing an irrevocable life insurance trust, you add an extra layer of protection for your life insurance policy. This trust has the ability to both own the policy and be named as the beneficiary. You have two options to create this trust: either transfer an existing policy into it or have the trust purchase a new policy. To cover the insurance premiums, you can utilize your annual gift tax exclusion by making cash gifts to the trust.

When you pass away, the trust becomes the recipient of the death benefit from the policy. Then, the trustee carries out the instructions specified in the trust document and distributes the funds accordingly. This approach offers an additional advantage of reducing the value of the life insurance policy and the death benefit from your taxable estate. It’s a smart strategy to safeguard your life insurance proceeds and potentially minimize estate taxes.

What’s next?

While the estate tax exemption is currently set at a high level, it’s important to remember that it could change in the future. Given this uncertainty, it’s wise to take proactive measures to safeguard the financial well-being of your loved ones.

If you have already purchased life insurance, it’s worth considering the additional step of structuring your life insurance estate plan. This can provide added security and peace of mind for the future of your family.

To explore the best options available and create a plan tailored to your needs, reach out to us today. Our team is ready to assist you and ensure that your loved ones’ financial futures are protected.

As you near retirement, your approach to estate planning is different from other stages of your life. When you no longer earn a salary and benefits from a job, how will you sustain your new lifestyle? You must be able to afford your needs while securing your family’s future during retirement. This is where smart estate planning can help. Here are 5 Estate Planning Tips to make your retirement years productive and meaningful.

Tip #1 Maximize Insurance and Retirement Accounts

If you’re looking to pass money to heirs tax free, start converting traditional IRA (Individual Retirement Account) into Roth IRA. The converted amount is subject to regular income taxes, but withdrawals – either by you or your heirs – are tax free. With tax rates at an all-time low, it may be better to pay taxes on the money now rather than later.

Many people with young children decide to purchase life insurance to replace their income if they have an untimely death. However, life insurance can also be an effective estate planning strategy for a financially secure retirement. Life insurance can provide beneficiaries with tax-free funds and provide replacement income for your spouse, your children, your elderly parents, or other individuals who depend on you for financial support.

Tip #2 Plan for Disability

A comprehensive estate plan should include provisions in case you become disabled. Several documents you should create include:

Power of Attorney

A power of attorney gives someone the right to act on your behalf regarding your financial affairs. If you get sick or hurt, your agent can step in and take care of your finances. This lets you name someone you trust to manage your day-to-day finances.

Living Will

A living will puts your wishes regarding end-of-life care in writing. Without it, you may have to undergo extreme medical measures that you would not have asked for if you were able. Also, your loved ones could wind up depleting your estate by insisting on such extreme medical measures.

Advance Health Care Directive

An advance health care directive allows someone you chose to make medical decisions for you if you can’t make them for yourself.

Tip #3 Set up a Trust

If you want to keep your money in the family for as long as possible, a trust can be used to ensure that money is passed from one generation to the next and is protected from divorces, lawsuits and creditor claims.

A trust allows you to designate a trustee to manage your finances according to your instructions. For example, you can direct your trustee to invest in your children’s college education rather than letting minors spend all of their inheritance.

You can instruct your trustee to pay for your family’s medical needs first, or to provide distributions to your children when they are older, like 30 or 40. You can also instruct your trustee to pay for your medical expenses and insurance payments out of trust funds if you become disabled.

Trusts can be set up in several ways. Most people choose to have a revocable living trust, which allows them the most control to change or update their trust when necessary.

irrevocable, or permanent, trusts offer many tax benefits. When money is put into an irrevocable trust, the assets no longer belong to you. They belong to the trust itself. As a result, the money cannot be subject to estate taxes. While a trustee ultimately controls the money, you can create stipulations on its use, and money can be distributed from a trust even while you are alive.

Setting up a trust can allow you to avoid expensive court cases, such as probate and conservatorship proceedings. Additionally, a trust can restrict disbursements so that your property is used only in the way you intended.

Tip #4 Create a Will

Writing a will is the most basic of estate planning strategies. This document stipulates how your assets will be divided after your death.

Without a will, your estate will be divided in probate court, meaning someone else decides who gets your money. Having a will doesn’t mean your heirs avoid probate though. A will still has to go through probate.

It’s also a good idea to review beneficiary information after any major life change, such as the birth of children, the death of a family member, marriage, or divorce.

Tip #5 Donate or Give Away Your Assets

As of 2022, the IRS allows individuals to give up to $16,000 per person per year in gifts. If your goal is to avoid estate taxes, these gifts can decrease the value of your estate. The money is also tax-free for recipients of the gifts.

Another way to reduce your estate value is through charitable donations. Rather than giving a one-time gift, consider setting up a donor-advised fund. This option would give you an immediate tax deduction for money deposited in the fund, and then lets you make charitable grants over time. A child or grandchild could be named as a successor in managing the fund as well.

However, be careful about giving away assets that appreciate in value, such as stocks or a house, which receive a step-up in basis when part of an estate. That means the taxable amount of an asset is adjusted upon the owner’s death and, as a result, it may be beneficial to transfer certain assets after death rather than before.

To kick-start your Retirement Estate Planning process, DOWNLOAD Your Free Estate Planning Guide

What’s next?

Complex rules and changing tax laws can make estate planning difficult. However, ignoring it can leave you and your family bereft during your retirement. Even if you don’t have a lot of money in the bank, the right attorney can make the most out of estate planning tools and strategies so that you can live your best years in retirement.

Start taking action now with your estate planning by booking your free consultation with our team at Crider Law Group.

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What do Activities of Daily Living mean?

When the business is dependent on you as the owner, having an estate plan before you need one is a critical investment. If you suddenly pass away without an estate plan in place, your business may not be able to survive. After your death, your entire business and its assets may have to  go through a lengthy and expensive probate process, which could cause your family to suffer.

Estate planning involves creating a comprehensive legal plan for the management and distribution of your assets after your death. Your assets include all possessions of value, including property, bank accounts, insurance, etc. that are tied to your business. Your estate plan should also include financial instructions and medical directives in case you suddenly fall ill and become incapacitated.

To protect your business and your family, consider these tips to start your estate planning on the right path.

#1 Decide the future of your business

Before you start preparing your  estate planning documents, first imagine if there is a future for your business without you running it. Here are some questions  to help you in your decisions:

What is your Succession Plan?

How will the business continue without you? Do you have a Succession Plan? Many business owners will gesture towards their business and say “THIS is my succession plan.” However, this view may leave out important considerations for transfer of the business, your or your surviving spouse’s income needs, and other important topics.

A Succession Plan is a strategy for the successful transfer of business operations, management and ownership to partners, future generations, or successors. It is important to create a succession plan as part of your estate plan to ensure that whoever replaces you as a business owner is someone you fully trust. The succession plan should include details about not only how the property and financial assets of the business will be transferred to a new owner, but how your income needs will be met after the transfer. 

Would you rather sell the business instead?

Can you and your family live comfortably from the sale proceeds when you retire? If so, selling the business might be the better option. If you’re a sole proprietor, the process is relatively straight forward. But if you have a corporation, an LLC, or multiple business partners, you may need a Buy-Sell Agreement to facilitate the sale of your ownership. Generally, any current co-owners of the business will have a right of first refusal on purchasing any interest that has become available.

#2 Organize your business records

Make the hand-over process easy for your successors by having a secure and organized filing system for your business records. Here are just some of the more important records that you need to update and prepare for your estate plan:

1. Your business plan
2. State-filed documents, such as Articles of Organization or Incorporation
3. Your Operating Agreement, if any
4. Your Succession Plan, if any
5. Financial records and statements
6. Tax returns
7. Insurance policies
8. Business licenses

A note on Insurance Policies:

Apart from having a general life and disability insurance and naming your family as beneficiaries, you might consider purchasing a separate life and disability insurance policy for your business called a “key person” policy.

With a key person policy, you can name your business as the beneficiary. These policies provide payouts when a “key person” in the company passes away or experiences a disability. This money could be a lifeline for your small business. This money can also be used to fund the buy-out provision of a Buy-Sell Agreement, providing ready cash to the new owners to pay your surviving spouse or other heirs for the value of your business.

#3 Appoint an Agent in a Power of Attorney

It is in your best interest  as a business owner to appoint someone that you trust to be your agent under a power of attorney who can oversee your business and finances on your behalf.

A durable power of attorney is a legal tool that involves appointing a trusted individual to handle your finances if you can no longer make decisions due to health reasons such as being in a coma, developing dementia or becoming too ill to make decisions.

While an ordinary Power of Attorney expires if you become mentally incapacitated, a Durable Power of Attorney remains intact even if you become incapacitated.

In California, a Durable Power of Attorney can become active whenever you choose. You can make it take effect immediately or choose a specific date in the future.

What can an authorized agent do with a Durable Power of Attorney?

• Buy and sell property
• Manage bank accounts, bills, and investments
• File tax returns
• Apply for government benefits
• Manage your business

#4 Create a Living Trust

As a business owner, you own many assets that are tied specifically to your business. Shouldn’t you be concerned about how your beneficiaries will manage your assets when you pass away?

Creating a Living Trust ensures that no matter what happens to you, the assets that keep your business running will be protected and will be managed by your Trustee – the person or entity you trust to manage your financial affairs.

Most people name themselves as the trustee during their lifetime. If you decide to do this, you can remain in control, even though your assets have been put into the trust. You can also name a successor trustee (a person, business, or institution) who will manage the trust’s assets if you ever become unable to manage your property, or when you die.

#5 Audit and review

To help you make smart decisions for your estate plan, you need to take a hard look at your business and personal situation by answering these questions:

• If you die today, what is the current net worth of your personal and business assets? This can be done by totalling your current assets and liabilities and adding the value of any life insurance.
• Is estate privacy important to you? Do you want your estate to be public record upon your death? If your estate goes through probate, anything filed with the Court will be a public record.
• Do you have a list of reliable trustees? It is advisable to have two or more alternates in case your first choice is unwilling or unable to serve.
• If your heirs or successors predecease you, who are your alternate beneficiaries?
• How will your assets be distributed after your death, and when will these distributions take place?

What’s next?

Estate planning is complex, especially for entrepreneurs and owners of small and medium businesses. The right attorney can help you protect your business and your family after you’re gone, advise you on such issues as taxes, organize titles and trust documents, and facilitate the smooth transfer of assets and business operations to your beneficiaries.

Start taking action with your estate planning by booking your free consultation with our team at Crider Law Group.

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