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Estate Planning for Peace of Mind: The Importance of Being Prepared

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Ask yourself this question:  Would my family or loved ones know how to handle my care and financial affairs if I die or become incapacitated? The question might seem daunting, but planning for death and incapacity is an act of love and foresight that brings peace of mind to your family. By taking proactive steps today, you are providing your family with a road map to follow your wishes during emotional and challenging times.

Planning for death and incapacity is about taking control of your legacy and providing clear instructions to guide your loved ones. The practical benefits of being prepared far outweigh the discomfort of thinking about death and incapacity. Your clear instructions and wishes can prevent any potential disputes and can help your family move forward.  Here are some important practical planning steps to take:

Creating a Comprehensive Estate Plan: Every estate plan should include several key documents including a will, a durable power of attorney, an advance healthcare directive, and potentially a revocable trust. Each document serves a specific purpose in safeguarding your interests, and in providing guidance to those you trust. Among other things, a proper plan allows your family to take care of you according to your wishes, and to ensure the transfer of your assets without the need for court intervention after death.

Reviewing Beneficiary Designations: It is very important to regularly check and update the beneficiary designations on your personal accounts, which are in your name, such as retirement plans and bank accounts. After your death, these designations will override any instructions in your other estate planning documents, such as in your will.  By presenting certain documentation to the institution, including a death certificate, the asset will be transferred to the beneficiary you have designated.

Creating Master Lists: Another essential planning tool is to create certain master lists.  Create a detailed list of your assets (including bank accounts, investment accounts, real estate, valuable personal property, and digital assets) and your liabilities. You may wish to keep the account numbers in a separate document. A master list of assets and obligations ensures that your executor (or trustee) can efficiently manage and distribute your estate.  Also, create a list of the important people in your life with their contact information.  This list would include anyone you have named in your estate planning documents, and the professionals in your life such as your physicians, tax preparer, financial advisor and estate planning attorney.

Communication is Key: Talk to your family and your loved ones about your wishes. It is important to communicate your wishes and intentions with the people you have entrusted with the handling of your care and your assets. To the extent you feel comfortable, discuss your plan details with your loved ones and explain your decisions. Open and honest communications, albeit uncomfortable at times, can help avoid misunderstandings in the future.

A Positive Legacy: Ultimately, planning for death and incapacity is about ensuring you and your loved ones are cared for, your assets are distributed according to your wishes, and your values are honored. Instead of viewing it as an unpleasant task, embrace the opportunity to plan for the future, knowing that you are providing a great gift: peace of mind for yourself and your loved ones.

Information in this article is intended for educational purposes only. It is not, nor should it be considered as legal or tax advice, and should not be relied upon as such. You should consult your attorney or other tax professional to determine what is best for your individual needs.

Copyright by Gita K. Nassiri, Esq. MBT, CPA.

Vacation Peace of Mind: Update Your Estate Plan Before You Go

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Now that summer is here, many of us eagerly anticipate our long-awaited vacations, envisioning sunny beaches, thrilling road trips, or adventures in far-off destinations.  Amidst the excitement of planning and packing, there’s one critical aspect that often gets overlooked; updating your estate plan. Before you embark of your summer escape, make sure your estate plan is up-to-date to ensure your loved ones are protected and your peace of mind is intact, no matter where your travels take you.

Why Updating Your Estate Plan is Crucial

Life Changes and Milestones:

Life is full of changes—marriages, divorces, births, deaths, and financial shifts. These significant events can impact your estate plan. Before you leave for vacation, take a moment to review your documents and make sure they reflect your current situation. Updating beneficiary designations, wills, trusts, and powers of attorney ensures your wishes are accurately represented.

Travel Risks:

Travel, especially international travel, can come with increased risks. While we all hope for smooth and enjoyable trips, accidents, illnesses, and other emergencies can happen. An updated estate plan ensures that your affairs are in order, providing clear instructions for your loved ones if the unexpected occurs.

Peace of Mind:

Knowing that your estate plan is up to date can significantly reduce stress and anxiety. You’ll be able to fully enjoy your vacation, confident that your loved ones are protected and your wishes will be honored.

Steps to Update Your Estate Plan

Review and Revise Your Will:

Your will is a cornerstone of your estate plan. Ensure it reflects your current wishes, including any recent changes in your family or financial situation. Consider whether your chosen executor is still the best person for the job and update their information if necessary.

Update Beneficiary Designations:

Check the beneficiary designations on your life insurance policies, retirement accounts, and other financial instruments. Make sure they align with your current intentions and include any new family members or remove those no longer relevant.

Evaluate Your Powers of Attorney:

Your powers of attorney for healthcare and finances should be reviewed regularly. Confirm that the appointed agents are still appropriate and willing to act on your behalf if needed.

Assess Your Trusts:

If you have established any trusts, review the terms and conditions to ensure they align with your current goals. Update trustee information and make any necessary changes to trust provisions.

Review Guardianship Designations:

If you have minor children, revisit your guardianship designations. Ensure that the chosen guardians are still suitable and willing to take on this crucial role.

Consult with Your Attorney:

It’s always a good idea to consult with your estate planning attorney before making any changes. They can provide valuable insights, ensure legal compliance, and help you navigate complex situations.

Conclusion

As you prepare for your summer vacation, take the time to update your estate plan. This small but essential step can provide immense peace of mind, allowing you to fully enjoy your time away knowing your loved ones and your wishes are protected. If you need assistance with updating your estate plan or have any questions, our law firm is here to help. Contact us today to schedule a consultation and ensure your estate plan is ready for your summer adventures. Safe travels!

For more information on creating or updating your estate plan, contact Gita K. Nassiri, Esq., MBT, CPA at 760.979.1280 or gita@capitallegacylaw.com. Information in this article is intended for educational purposes only. It is not, nor should it be considered as legal or tax advice, and should not be relied upon as such. You should consult your attorney or other tax professional to determine what is best for your individual needs.

What is California Probate? San Diego Probate Attorney

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Most of us know that we should plan our estates. One main reason for planning is to avoid the probate courts in case of incapacity or at death. The California probate court administration can be a costly, time consuming and very public process. Most people generally prefer to handle their family and financial affairs privately with clear written instructions about their wishes rather than go through the court system and have the courts make those decisions for them. However, California probate courts seem to be more busy than ever with many uncontested cases because of improper or no planning.

Probate is more common than you think. Death is an inevitable fact of life, yet many people do not have an end-of-life plan to take care of loved ones and avoid unnecessary delays, expenses and court proceedings. According to a recent study, the majority of U.S. adults don’t have a will. When a celebrity dies without a proper estate plan, the general reaction is one of shock or disbelief that they did not properly plan their estates given their wealth. Through the probate process, private details of their estates and their lives become available to the public. We know so much about the estates of celebrities like Aretha Franklin or Prince because the probate courts were involved.

Probate Process. The probate estate administration is the process of transferring the decedent’s assets to the persons or institutions entitled to receive them. The main functions of estate administration are: (1) collection and valuation of assets, (2) payment of debts and taxes; and, (3) distribution of the estate to the heirs (if there is no will) or to the named devisees (if there is a will). If there is no will, the probate judge determines who are the heirs according to the intestacy laws of the state. Some of the costs related to a probate case include the court costs, publication costs, attorney fees and executor/administrator fees (both fees are set by statute), and the probate referee fees for the appraisal of probate assets.

Plan Now. Planning your estate is a relatively easy process with the help of a qualified advisor. Creating an estate plan with the proper documentation should not be put off until later. A simple way to help avoid the probate court process, and also keep things more private, is to set up a living revocable trust as part of an estate plan. By putting off the planning of our estates, we are exposing our loved ones to unnecessary and avoidable burdens and challenges. It is inevitable that every person, celebrity or not, will die one day. So, we should set up an end-of-life plan for the benefit of our children, family, and loved ones.

Information in this article is intended for educational purposes only. It is not, nor should it be considered as legal or tax advice, and should not be relied upon as such. Copyright © Gita K. Nassiri

Estate Planning with Coronavirus

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We are living in uncertain times with the new coronavirus (COVID-19) pandemic taking over our lives and the world. New phrases such as “social distancing”, “flattening the curve” and “new normal” are now part of our daily conversations. During these challenging times, families, communities and nations are coming together more and more to address this crisis with a united front. We are all trying to do our best to deal with a situation that we have never dealt with before. Many are thinking about their estate planning so that their wishes are expressed and their families are protected.

We are staying home, and schools and non-essential businesses are closed. This is to minimize the spread of the virus and to not overburden our healthcare system so people who have the virus can receive proper care. Every day, healthcare and other essential workers are facing this invisible enemy with courage and determination to ensure our safety and wellbeing.

At this point, from an estate planning perspective, we would simply encourage the following actions to ensure that your affairs are in order:

  1. Review your estate planning documents. Locate copies of your existing documents and make sure that they still reflect your values and wishes. Ascertain where the original documents are located.
  2. Follow up and address any changes you would like to make. Were there any major changes in your family and circumstances that are not reflected in your plan?
  3. Make sure that those who play a role in your estate plan know that you have appointed them. This would include the executor of your will, the successor trustee(s) of your trust, the guardian(s) for your minor children, the agents appointed under your financial durable power of attorney, and under your health care power of attorney.
  4. Review and update your beneficiary designations, if needed. Consider contacting your financial, insurance or other advisors to ensure that your beneficiary designations are up to date and discuss any new planning opportunities relative to your current financial status. For example, under the new Coronavirus Stimulus package, the required minimum distributions (RMDs) for 2020 may be waived.
  5. Make sure that your health care directives are up to date. Should you require any medical attention, confirm that your designated agent has a copy of your directive, knows your wishes and can have access to your confidential health information, if necessary.
  6. If you do not already have an estate plan, consider setting one up. A properly set up estate plan with a will/revocable trust, a financial power of attorney, and a healthcare power of attorney can certainly contribute to your peace of mind knowing that you have planned ahead and addressed your risks and concerns.

In these times of hardship and stress, let’s strive to be kind, patient and composed with ourselves and others, and also find moments of joy and peace. Be safe and healthy!


Information in this article is intended for educational purposes only. It is not, nor should it be, considered as legal or tax advice, and should not be relied upon as such. Copyright © 2020 Gita K. Nassiri.

Be Specific About Personal Effects

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It’s Ours- Now What!

Recently I read something in the news that, as an estate planning attorney, caught my attention and that I would like to share with you.  Actress Audrey Hepburn’s two sons are apparently fighting in court over the distribution of her memorabilia and other personal items. Why is this newsworthy?  Well it is newsworthy because we are talking about the famous actress and humanitarian Audrey Hepburn and because she passed away 22 years ago!  This situation showcases something I constantly remind my estate planning clients: Leaving your personal effects in your will or trust to be divided equally is not a good idea!

We all know Audrey Hepburn for her elegant demeanor, her movies, including “Breakfast at Tiffany’s” and her humanitarian efforts on behalf of children’s rights all over the world.  She passed away in 1993 and was survived by two sons.   According to the news reports, a storage locker in Los Angeles full of her personal items including her clothing, movie posters, awards etc. was left to her two sons to be divided equally between them.  Therein lies the problem.  The two sons (now ages 45 and 54) cannot agree about how the property in storage should be divided amongst them.  So, the items are sitting in storage and gathering dust while the matter is now before the courts to be resolved by a judge or jury.  At the end of the day, the property will be divided but after a long, stressful and costly process that could have been avoided.

What is the lesson in all this?  It is preferable not to leave your personal effects to a group of people and ask them to divide and distribute them amongst themselves as they wish.  Even though your personal effects may not be worth millions like Ms. Hepburn’s, the more specific you are about who gets what, the easier it will be for your loved ones.  You can give specific gifts and, if you like, leave a written explanation so that your intent is clearly stated and understood.  You can have one person (your executor or trustee) decide who gets what and distribute the personal assets that way.  You can set up a system where, under the supervision of the trustee or executor, each beneficiary can take a turn picking an item until all items are handed out.  You can be as creative as you like.  What you want to avoid is ambiguity that can cause disputes and hurt feelings.

How have you handled this aspect of your planning?  Have you provided specific instructions about your personal effects?  Sometimes we may think that it is easier to not make these decisions and to let our loved ones figure it out.  Or we don’t want to think about it and procrastinate and leave it as something to take care of later and put it on our “to do” list.  The Audrey Hepburn case is a lesson to us all about taking proactive steps to be as clear as possible in our estate plans about who gets what and not leaving it to our loved ones to figure it out. 

Gita K. Nassiri | Attorney-at-Law/ CPA
CAPITAL LEGACY LAW, INC.
760.979.1280
2794 Gateway Road, Suite 101
Carlsbad, CA 92009
www.CapitalLegacyLaw.com

Estate & Gift Tax Planning 2014

Charitable Contributions Before Year End- Part 3

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Charitable contributions are a means to support and help a cause you believe in and, at the same time, you may be able to deduct your contributions for income tax purposes. In order to obtain an income tax charitable deduction for 2014, your charitable gifts must be made by December 31 and properly documented. The added benefit of your charitable contributions is that, for estate planning purposes, this type of gifting can reduce your estate and, therefore, your possible estate tax exposure.

Gifting Appreciated Assets to Charity– If you are considering giving to charity, one way to avoid capital gains taxes and the 3.8% surtax on net investment income on the sale of appreciated property is to gift the appreciated property to a charity (instead of selling the property, recognizing the gain, and contributing cash to charity). You get an income tax deduction equal to the fair market value of the property (subject to normal AGI and itemized deductions limitations), and the charity can sell the property and pay no capital gain tax because it is a tax-exempt entity. The appreciated property must be a long-term capital gain property (held for more than one year). Also, your contribution must be to a qualified charity. Different rules apply, for example, to gifting appreciated properties to private foundations. If you are uncertain of an organization’s charitable status, you should consult with your tax and legal advisors.

Substantiate and Document Your Gifts– When making significant charitable contributions, their deductibility depends on your proper compliance with the IRS substantiation rules. In other words, you need the proper documentation for your gift. Generally, you can substantiate cash gifts to charity of less than $250 with a reliable record such as a canceled check, written receipt or a credit card statement. The record should include the name of the charity, the amount and date of the gift. For any cash gifts in excess of $250, be sure to obtain a proper “contemporaneous” receipt from the charity before filing your tax return, even if the donation was made to your own private foundation. The receipt must include the date and amount of the gift, describe any non-cash donations, indicate the value of any goods or services provided you received as consideration for the donation and any intangible religious benefits provided. A canceled check does not meet these requirements. The receipt and acknowledgement from the charity can be sent by email.

If your non cash gifts total more than $500 for the year, you need to file Form 8283 with your federal income tax return. Also, if your gifted property is valued at more than $5,000 ($10,000 for closely held stock) you’ll need a “qualified appraisal” from a “qualified appraiser”. No appraisal is needed for publicly traded stock.

There are specials rules for gifts of art, clothing, household items and used cars.

Charitable contributions not only benefit the recipient of the gift but also provide you, the donor, with an income tax deduction opportunity and a reduction in your estate and your possible estate tax exposure. Compliance with the charitable contribution rules, including the substantiation rules, is required to take advantage of these tax opportunities. Consult with your tax and legal advisor if you are considering a significant gift to a charity.

Gita K. Nassiri | Attorney at Law/ CPA
NASSIRI LAW FIRM, INC.
760.216.9593
2794 Gateway Road, Suite 101
Carlsbad, CA 92009
www.nassirilawfirm.com

 

Estate & Gift Tax Planning 2014

529 Plan- Estate Planning Before Year End- Part 2

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What is a 529 Plan? It is basically a college savings plan sponsored by states, state agencies and certain educational institutions.

Consider funding a 529 plan before December 31st to use your annual gift tax exclusion of $14,000 ($28,000 for married couple) per recipient. Moreover, you have the option of using up to five years of gift tax exclusions in a single year, allowing you to make an accelerated gift through a 529 plan of up to $70,000 ($140,000 for couples) per beneficiary without generating gift tax or using any of your gift tax exemption.

There is no specific amount limitation on the amount of contribution; however, the tax code requires the plans to provide “adequate safeguards to prevent contributions on behalf of a designated beneficiary in excess of those necessary to provide for the qualified higher education expenses of the beneficiary”. Your contribution to the 529 plan effectively removes the cash assets (and any future earnings) from your taxable estate.  Anyone can set up a 529 plan, i.e. parent for child, grandparent for grandchild — you don’t have to even be related.

Some advantages of the 529 plans are that, even though the contributed cash asset is no longer included in your estate for estate tax purposes, you still retain certain rights to change beneficiaries, control the timing of the distributions, move the assets from one plan to another. You can also get your money back subject to certain taxes and penalties.  The contributions to the 529 plan are not deductible for federal income tax purposes; however, any distributions (including accrued earnings) for “qualified higher education expenses” are not taxable.

Note that the 529 plan accounts will be treated as the parents’ assets on a student’s financial aid application if the student files as a dependent, and that there are administrative fees associated with these plans.

Overall 529 plans are very attractive education savings vehicles and should be considered if college or higher education expenses are in your future. Consult with your estate planning attorney about 529 plans and other education savings options.

Part 3 will address the topic of charitable giving.

Gita K. Nassiri | Attorney at Law/ CPA
NASSIRI LAW FIRM, INC.
760.216.9593
2794 Gateway Road 
Carlsbad, CA 92009
www.nassirilawfirm.com

Estate & Gift Tax Planning 2014

Estate and Gift Tax Planning Before Year End 2014- Part 1

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Before the end of 2014, there are some estate and gift tax planning opportunities and gift tax savings that you may want to consider. One such gifting opportunity is the Annual Gift Tax Exclusion which will be covered in Part 1 of this post.  

The Annual Gift Tax Exclusion allows you to gift up to $14,000 per recipient in 2014 without incurring any federal gift tax obligation. Spouses together may gift up to double that amount ($28,000) per recipient in 2014. In other words if you and your spouse have 5 children and 5 grandchildren, you can gift $28,000 to each child and grandchild without having to pay federal gift taxes on the gifted amount of $280,000. If the recipient is a minor, you can set up a trust for the child and annually contribute to that trust for the child’s benefit. If the minor is your grandchild, your son or daughter can act as trustee, or anyone else you would like to take on that role. Also, the recipient does not have to be related to you. This exclusion allows you to give gifts every year without incurring a tax liability and, for estate planning purposes, this gift planning opportunity allows you to reduce your estate amount and your potential estate tax exposure.

Regarding the potential estate tax exposure, in 2014 the lifetime federal gift and estate tax exclusion is $5.34 million ($10.68 for married couples), the largest gift and estate tax exemption in history. This means that, as the law stands today, up to and including $5.34 million of the value of what you give away during your lifetime (above the annual gift exclusion) and what is remaining in your estate at your death is not subject to federal estate and gift taxation. For example, a single person passes away in 2014 and gave away $2 million (over and above the annual exclusion amount) during his/her lifetime and has $3 million in their estate at death. The estate of this person will not owe any estate taxes because of the lifetime exclusion of $5.34 million.

Please note that any gifts above the annual gift tax exclusion of $14,000 per recipient (or $28,000 for a married couple) will require filing a gift tax return even if no tax is due. Before making such a gift, please consult with your estate planning attorney.

In Part 2 we will address the topic of gifting through a 529 plan.

Gita K. Nassiri | Attorney at Law/ CPA
NASSIRI LAW FIRM, INC.
760.216.9593
2794 Gateway Road 
Carlsbad, CA 92009
www.nassirilawfirm.com

Reasons To Update Your Estate Plan- A Checklist

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Have any of the following changes occurred in your life since you signed your will or trust? Answer the following questions to evaluate if you need to update your estate plan:

  • Has your marital status changed? Have you married or been divorced?
  • Have you had children, more children or grandchildren?
  • Have your children gone to college or moved out of, or into, your home?
  • Have relatives or beneficiaries or the executor/agent/trustee died or has your relationship with them changed and your will or trust does not cover this situation?
  • Has the mental or physical condition of any of your relatives or beneficiaries or one of your executor/trustee/agent changed substantially?
  • Have you moved to another state?
  • Have you bought, sold, mortgaged a business or real estate?
  • Have you acquired major assets such as a car, home, or bank account)?
  • Have your business or financial circumstances changed significantly (increase or decrease in estate size due to inheritance, pension, salary, ownership)?
  • Have any federal laws changed that might affect your tax and estate planning?
  • Do you have a trust that was drafted prior to 2013?

If you answered “yes” to any of the foregoing questions, it may be time to review your estate planning documents and to update your estate plan.  Review this checklist every once in a while to evaluate whether you need to update your estate plan.

Gita K. Nassiri | Attorney at Law/ CPA
NASSIRI LAW FIRM, INC.
760.216.9593
2794 Gateway Road 
Carlsbad, CA 92009
www.nassirilawfirm.com

Estate Planning for College Students

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It is that time of year when students are heading back to school, and this includes many young adults who are heading out to college and away from home. The two estate planning documents every young adult needs to have in place are: (1) a health care power of attorney; and, (2) a financial power of attorney.

Even though most parents feel that they are responsible for their college-age children, the law does not see it that way because the”children” are now adults. In other words, once your children are 18, from a legal standpoint, you are not able to represent them, make decisions for them or have access to their financial or health information.

Planning for our death or incapacity is something that we put on our “to do” list and don’t really want to think about. The general misconception is that estate planning is for the elderly, people with kids or dependents, and/or people with “lots of assets”. We tend to forget that estate planning is necessary for every adult, including young adults, because without proper estate planning we are giving up control over what happens to us in case of incapacity.

College-age students may not have dependents or assets but, for everyone’s peace of mind, an estate plan that gives authority to their parents to make financial and health decisions for them is highly advisable.

For example, if a college student gets hurt and ends up in the hospital, as the parent of an adult child you have no legal right to access their medical records and cannot make medical decisions for them (even if the student is unable to make such decisions) unless you have the proper estate planning/ legal documents in place or go to court to get the authority. The risk is real. Each year a quarter million Americans between the ages of 18 and 25 are hospitalized due to nonlethal injuries.

Some college students may not want their parents to have access to their grades or have complete control over their finances. In these cases, the powers of attorney can be drafted to limit the powers of the agent(s) parent(s), and/or also limit when the parents(s) can exercise those powers. A springing power of attorney for financial decisions goes into effect only in case the student is not able to make decisions for him or herself, i.e. in case of incapacity.

Going off to college is an exciting and new phase in a young adult’s life and in the life of their parents. As part of the planning process for college, parents and their college students should consult with an estate planning attorney about having the proper estate planning documents in place. This is one item that should not be on left on anyone’s “to do” list.

Gita K. Nassiri | Attorney at Law/ CPA
NASSIRI LAW FIRM, INC.
760.216.9593 Direct
760.929.8008 Fax
2794 Gateway Road 
Carlsbad, CA  92009

www.nassirilawfirm.com