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Sacramento Estate Planning Attorney

Sacramento Estate Planning Blog

Attorneys utilizing trusts to meet estate planning goals

Last week on the blog we discussed the estate of famed movie star Burt Reynolds and how he utilized a trust to protect his assets for his son. Although it may seem a bit unconventional to write someone out of your will like Burt Reynolds did to his son, it can serve a purpose. In fact, there are a number of decisions you can make during the estate planning process to protect yourself, your assets, and your heirs and beneficiaries.

This customization is a true benefit of estate planning. While many people turn to the standard options such as creating a simple will, your planning doesn't have to end there. Instead, you can utilize trusts as a way to ensure that your assets provide a charitable benefit, provide long-term security for your loved ones, and/or avoid taxes and the reach of creditors. You can even set up a trust to ensure that your pet is well cared for after you are gone.

Burt Reynolds utilized a trust to protect estate

Many of you probably heard about the recent passing of acting superstar Burt Reynolds. While news stories are peppered with remembrances of his best film roles and his contributions to Hollywood, some reports are shining a light on another aspect of the actor's life: his estate planning.

According to those reports, Reynolds intentionally wrote his 30-year-old son out of his will. Why? Simply put, Reynolds placed his entire $5 million estate into a trust that will provide for his son. There are a number of reasons Reynolds may have done this. First, the late actor was known for having money woes late in life. By placing his estate in a trust, he protected many, if not all, of those assets from creditors. If they had been left to his son through a will, then creditors would have gotten the first stab at claiming those assets to settle any outstanding debt.

Losing a spouse and estate planning

Thinking about your own mortality can be frightening. None of us like to think about when our time will come to an end, but it's inevitable, meaning that we all need to have our affairs in order before that time comes. For many people, this means engaging in estate planning to deal with their own finances. Yet, estate planning can be just as powerful when considering the passing of a spouse.

Of course, thinking about the death of a spouse isn't any easier than thinking about your own death, yet many Californians find themselves in positions where they know that a significant other will pass before they will. In these situations, it is important to consider the steps you can take with your spouse to ensure that an estate is protected and your finances are secure for when you are left to live alone.

What is a charitable trust and how is it beneficial?

There are a number of legal vehicles that you can use to better position your estate for distribution upon your passing. One effective way to save money on taxes and increase an estate's income is to create a charitable trust. This type of trust isn't tax exempt and is meant to benefit one or more charities. However, the assets in a charitable trust can be subjected to a charitable contribution deduction, which can significantly decrease the size of a taxable estate.

So how does a charitable trust work? In many instances an asset like real estate is placed into the trust and income is paid to the trust creator over a period of years. Once that period of time expires, then the asset is distributed to the charity named in the trust, or it remains in the trust for the charity's benefit without additional payment.

Don't forget about "soft" estate planning

We spend a lot of time on this blog discussing what many consider to be the biggest parts of estate planning. This includes how to utilize wills, trusts and other legal vehicles to protect estate assets and ensure that they are distributed according to an individual's wishes upon his or her death. While these matters are extremely important to address and address correctly, they are not the only matters to consider when creating an estate plan.

Instead, Californians may find it important to consider what some consider "soft" estate planning. One part of soft estate planning is laying out instructions for how you want your funeral service to proceed. Do you want an open casket? Do you want to wear a particular outfit or certain clothes? Is there a certain song that you want played during your funeral? If you answered "yes" to any of these questions, then you may want to think about laying those instructions out in your will so that your sendoff can go according to your plans and ease the planning stresses that are often thrust upon family members.

Estate planning when a small business is involved

Californians who have minimal assets may find the estate planning process to be pretty straightforward and simple. Those who have significant assets, though, may find the matter much more complicated. This can be especially true for those who own a business. Deciding what to do with a small business can be difficult because an individual must consider not only financial ramifications of passing it down to one's heirs, but he or she also has to consider the emotional effect of his or her decision.

There are many ways to handle a business in an estate plan. One way is to simply sell it. By doing so, an individual can obtain cash that is more easily divisible amongst one's heirs. A similar option is to enter into a buy-sell agreement. Here, a business is transferred to another individual with the business owner retaining an interest. When a qualifying event occurs, such as death, the business owner's interest in the business is then purchased by the other party to the contract. The payment is made to the estate and dealt with accordingly.

The value of holistic and competent estate planning

Throughout life, individuals accumulate wealth in hopes of being able to meet their own needs and desires. If they are lucky, they are able to accomplish this feat and help out others in the process. However, once you pass away, your assets mean nothing to you. However, those who choose to engage in estate planning can better ensure that those who mean the most to them will receive assets that may be helpful to whatever purpose they are trying to attain.

Estate planning is a completely individualized process. Therefore, if you want to develop your estate plan in a way that allows you to take care of an ill loved one upon your passing, you can do so through various trusts. If you want to leave wealth to another individual but ensure that the full value of the asset isn't used up quickly, then you can place parameters on the distribution of that wealth to better ensure its longevity. You can even leave people out of your estate plan if you don't want them to receive any assets upon your death.

Aretha Franklin's passing shows importance of estate planning

It seems like we were just talking about the passing of pop icon Prince. This music legend left behind millions in assets, some of which were very hard to value, spurring a contentious fight as his estate passed through probate court.

Now the estate of another music icon is in the same state. The recent passing of singer Aretha Franklin has left her estate in limbo despite the fact that she has four adult children, including one who has special needs. Franklin's attorney says that he tried to prompt her to engage in estate planning, but she simply didn't follow through. Now the singer's estimated $80 million estate may be hotly contested amongst family members, and more than a quarter of it may have to be paid in estate taxes.

Using a will to name a guardian for a minor child

Most Californians think of estate planning as something that is done as they grow older and prepare for the distribution of assets upon their own death. While this is true in many instances, estate planning should actually occur at a much younger age and be modified over time as assets are obtained and relationships change. This is especially true for those with children.

Why? Because those who fail to address who will care for their children upon their passing may leave their children in the middle of a battle for guardianship or adoption. In some of these instances, the state has to step in to ensure that these children are legally protected. Sometimes this means placement in foster care.

Estate planning, long-term care and home healthcare

A few weeks ago on the blog we discussed the importance of Medicaid planning when it comes to planning for the potential need for long-term care. Many Californians neglect to address this issue because they simply don't think that they will need long-term care. However, many individuals find themselves inflicted with serious medical conditions that disallow them from taking care of themselves. Although some individuals are able to rely on family and friends for their care, this can prove to either be impossible or overly burdensome. This is where long-term care can come into play.

For many elderly individuals, it is of the utmost importance that they remain in their house as they age. Most people don't want to wind up in a nursing home. Home healthcare can be made available to these individuals, but it will take advance planning to ensure that this is a viable option. This often means careful consideration of any existing medical conditions and how that may impose limitations on one's physical abilities.

My Sacramento law practice, Michael A. Sawamura, Attorney at Law, focuses on wills, trusts and estate planning law in addition to business law and corporate defense services. My clients include professionals, government employees, small businesses, blue-collar workers and national corporations.

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