Category: Estate Planning

Life is always changing. With it, our estate planning needs to change as well. As far as major life upheavals go, nothing quite compares to the recent COVID-19 pandemic. As it appears to be winding down, at least we hope, now is a good time to take a hard look at your existing estate plan (or to create one for the first time) and evaluate whether your needs have changed over the last couple of years.

Major Economic Changes

Fortunes were made and lost during the pandemic. There’s hardly a single business that wasn’t affected in some way, and the stock market has been, at times, unpredictable. This means it’s time to re-assess the value of your assets. 

The overall valuation may have changed significantly, you may have sold off some properties or acquired new ones, or perhaps you put off retirement for a few more years. Any of these means your existing estate plan needs to be updated and adapted to your new economic circumstances. New investments and legal instruments should be considered to match your goals and minimize tax exposure.

Inflation is also a major factor to consider in updating or creating your estate plan. It’s no secret that high inflation rates currently afflict the global economy, and the U.S. economy is no exception. There are hopeful indicators that inflation has already peaked, but it has likely already affected your estate in a number of ways. The most common is an increase in real estate value and property taxes. There are ways to reduce the overall tax liability of your estate in situations like this, such as putting the property into an irrevocable trust. A general diversification of your investments is also a good way to ride out economic uncertainty.

For some people, inflation brings a few benefits. In 2022, the IRS increased the estate and gift tax exemption from $11.7 million to $12.06 million (double that for married couples). This means that a married couple who already maxed out their lifetime exemption can give away another $720,000 tax-free.

Similarly, the annual gift tax exclusion per individual was raised for the first time in several years, from $15,000 to $16,000. Married couples may give away $32,000 tax-free per individual per year without affecting their lifetime exemption total. It’s important to note that the lifetime exemption amount will be cut in half starting in 2026, so anyone wishing to take advantage should do so without delay.

Change in Outlook

While less tangible, the COVID pandemic has profoundly affected many people’s overall perspective on life. Perhaps they lost loved ones or became seriously ill themselves and started to rethink the legacy they would leave behind. 

Owners whose businesses had been stable for years went through great uncertainty, forcing them to reconsider succession plans and their long-term prospects. 

If you’ve arrived on this side of the pandemic and your outlook has changed, you should be sure your estate plan changes as well.

Meet With an Estate Planning Attorney

Any estate plan should be revisited from time to time as your goals and economic circumstances change. The COVID pandemic has almost certainly affected your estate planning needs, so now is a good time to sit down with an attorney and take stock of the situation. 

Our team has the experience and knowledge to create the plan that is right for your unique situation. Contact our office today.

Estate planning has been thrown for a loop when it comes to figuring out the best way to negotiate crypto-assets alongside traditional assets and holdings. While cryptocurrency can be arranged into estate planning, securing digital assets falls outside of a typical will. 

For those who are just beginning to enter these murky waters, it’s important to find out how to reconcile crypto-assets in the estate planning process and which pitfalls to avoid. 

Understanding the Concerns With Crypto

Like in typical estate planning, digital assets will need to be divided among beneficiaries and distributed by an executor or a trustee. However, the primary stumbling block in the process has become how to locate and transfer the necessary information to access digital accounts. Unlike a will, there is no template for managing cryptocurrency after death, and keeping the digital information private is of utmost importance.

Documenting and Establishing Who Has Access

While there is no unified form to direct crypto allocation in the estate planning process, the options have become more streamlined. The most important aspect is to make sure that any crypto-assets have been clearly documented in the estate plans and that someone, somewhere, will have access to the seed phrases and private keys necessary for access and distribution. 

Safekeeping

As it stands, digital-asset custody services are available and equipped to hold seed phrases or private keys necessary to access crypto accounts. Ownership is not easily transferred in self-sovereign assets, and, as such, the custody of the keys for safekeeping relies on specific guidelines for release. 

Placing Crypto in a Trust

Placing crypto in a trust can help shield it from estate taxes while keeping access keys safe and secure. For example, suppose clients are unsure that other family members or executor services are proficient enough to access and evaluate the digital assets. In that case, financial advisors can be named as trustees. 

Naming Beneficiaries

Naming beneficiaries in a traditional will can be risky unless the signer has explicitly communicated plans. Many beneficiaries with access to parts of the seed phrase can make distribution difficult to negotiate if tensions are high. 

Guiding Clients on Wallets 

The current guidance is for users to appoint trustees, advisors, or trusted family members to be two out of a three-part multi-signature wallet rather than the self-sovereign option. Then, when the account holder is no longer available, the two other keyholders will be able to access the necessary information with their signatures alone. 

We Can Help With Cryptocurrency Estate Planning

Cryptocurrency can be a great addition to your legacy strategy, but you must know to ensure it is passed on. Our experienced cryptocurrency estate planning attorneys can help you navigate through the process. Contact us today for a consultation.

Professional estate planning is a clear necessity for those with millions of dollars in assets. It reduces the tax burden on their estate, minimizes conflict and confusion among heirs, and helps ensure that the estate is distributed according to their wishes.

But what about the rest of us? Most people don’t have estates worth millions, so they naturally have doubts that they need to worry too much about what happens to their property after they die. However, it’s important to understand that estate planning is not just for the wealthy; it can provide the same benefits for people with more modestly sized estates and is generally worth the investment.

The best way to understand how estate planning can work for you is to run a “fire drill.” This means playing out what would happen if you were to die right now. While it may seem a bit morbid, it helps people understand that they do have assets (often more than they realized) and that if they don’t make decisions about what happens to those assets after they die, then someone else will.

A proper estate planning fire drill requires the assistance of a professional, as most people are not familiar enough with things like probate and estate taxes to simulate the legal consequences. However, we can still run through a few common considerations.

Minor Children

If you have children under the age of 18, it’s important to consider what will happen to them if both parents die. Unfortunately, this can happen, and when it does happen, it is usually unexpected. In that case, someone must be appointed as the child’s legal guardian until they reach adulthood. If you don’t make that decision yourself, a court will have to make it for you. Given the obvious importance of this issue, it’s best that you make your wishes clear and discuss them with the person or persons you want to take on that responsibility.

It’s also good to create a trust that will care for your estate until your children are old enough to do so themselves. This helps ensure that the children are cared for and gives you some control over the terms of the trust. For example, you can decide who will be the trustee and what age the children should reach before taking full control of the property.

Spouses & Partners

If a married person dies without a will, their property generally goes to the surviving spouse through the laws of intestacy. While this usually makes sense, there are a few issues to keep in mind.

First, if there is property you want to go to someone else—a child or a friend, for example—then you will need to make that clear in writing.
Second, even if all the property ultimately goes to the surviving spouse, a lack of estate planning can create unnecessary headaches. For example, a common issue is when property such as a house is only in one person’s name; the surviving spouse may get the house eventually, but the process will be more complicated and expensive.

Unmarried couples have significantly greater estate planning needs precisely because of the laws of intestacy mentioned above. Courts will usually not recognize the legal significance of these relationships, leaving the surviving partner with little recourse and potentially in conflict with other family members.

Specific Circumstances of Family Members

You may be well acquainted with the lives of the people who could inherit your estate—their economic circumstances, personal abilities, etc.—but courts are not. Without a will, the probate judge will distribute your estate according to the laws of intestacy, which do not consider those people’s specific circumstances. For example, maybe one of your children helped you build your house, and you want them to have it after you die. Unless this wish is recorded in a will, all the siblings could jointly inherit the house.

Create the Right Estate Plan

These and most other issues can usually be resolved without much effort if you take the time to sit down with an estate planning attorney. They could help you figure out what would happen to your estate if you were to die today and then improve on those results. With just a little investment, you can make things much easier for those that survive you and see that your wishes are respected.

Contact our office today to schedule a consultation and get the process started.

Billions of dollars are being poured into cryptocurrency every year, an economic development that may have far-reaching implications. Many believe it is the dawn of a new era of decentralized finance, a world without banks or middlemen. Whether that’s true remains to be seen, but one of the more practical concerns for cryptocurrency is how to ensure it is transferred to the right person after you die, i.e., how to make it part of your estate planning.

The very aspects of cryptocurrency that attract many of its proponents—anonymity and decentralization—create unique concerns that must be specifically addressed in an estate plan.

Make Sure Someone Knows About It!

The biggest problem with cryptocurrency and estate planning is that very often, no one else is aware of its existence. There are no bank statements or W-2s; in some ways, the money invested in cryptocurrency has dropped off the grid, and it can easily be lost there if no one knows to go looking for it.

Therefore, the first step to including cryptocurrency in your estate plan is to list it as an asset. You can leave it to your beneficiaries in a traditional will, though some believe this is less secure because the will becomes public when it goes to probate. 

Another popular option is to transfer your cryptocurrency to a living trust. A will helps ensure the cryptocurrency doesn’t get lost and has the added benefits of being more private and bypassing probate.

Passing Along Your Credentials

Cryptocurrency funds are essentially anonymous, accessible to anyone who has the private key or seed phrase needed to log in to the account or digital wallet. Because there is no centralized institution holding the investment, there is no safeguard or backup plan to retrieve funds if the password is lost. In a well-publicized case, one Bitcoin owner misplaced the password to his digital wallet containing hundreds of millions of dollars worth of cryptocurrency, losing access to that fortune forever.

Transferring your key or seed phrase as part of your estate is an essential part of passing along your cryptocurrency assets, but the vulnerability to theft also makes this a little tricky. Here are a few options for keeping track of these passwords and making sure they are available after your death.

Share Your Passwords with Someone You Trust – This is the simplest solution, assuming you can trust someone with access to your funds. You may also share parts of the password with multiple people to keep one person from having access.

Safe Deposit Box – An old-school approach to a 21st-century problem. Simply create a hard copy of the passwords and store them in a safe deposit box which can be accessed in the event of your death. Some may choose to divide the password into two or more pieces and store them in multiple locations.

A Dead-Man’s Switch App – Cryptocurrency owners can configure a system where they are required to log in regularly to confirm they are still alive. If they fail to do so, a predetermined process will transfer ownership to someone else.

Create a Living Trust – If you put your cryptocurrency into a trust, not only does it simplify probate as mentioned above, a trustee can access and disburse funds according to the terms of the trust.

Get Help From an Attorney

Cryptocurrency can form a significant part of the legacy you leave behind, but you must take proactive steps to ensure it is passed on. Our experienced estate planning attorneys can help you find a secure solution that meets your needs. Contact us today for a consultation.

How is estate planning for unmarried couples different than if you’re married or even single? Here’s a look:

Estate Planning For Unmarried Couples vs. Married Couples

The significant difference is that marriage creates many legally recognized assumptions. For example, two assumptions are that your spouse will inherit your estate when you die and also make decisions on your behalf if you’re incapacitated. These assumptions essentially become the default estate plan without an explicit estate plan.

However, the situation is different when someone is unmarried and without children. The law will still try to make assumptions about what to do with the estate. But the results can become increasingly disconnected from the person’s actual wishes. That’s due to the laws of intestacy—state laws that determine what happens to a person’s assets if they die without a will.

The probate court goes through a set order of succession to find a relative who should inherit your estate. Your estate will go to the state if no such person can be found. The process in this situation can be quite complicated. Your assets, for example, could easily end up going to a distant cousin you never met, which may not be what you want.

This result can be especially unfortunate when the person who dies or is incapacitated is unmarried but does have a long-term partner. Even if the relationship is like a marriage in everything but name, the law may not recognize it. As a result, the partner can be left out as an estate is divided up or major medical decisions are being made.

How To Do Estate Planning When You’re An Unmarried Couple

When it comes to estate planning for unmarried couples, you have to be much more deliberate to overcome any legal assumptions that run counter to your wishes. The overall estate-planning process remains the same:

1. Take stock of your assets
2. Decide who you want to benefit from your estate
3. Meet with an attorney to create a plan
4. Review the plan from time to time

If you have someone in mind that you want to inherit all or part of your estate, whether a partner, friend, or relative, it’s essential to put this in writing in a properly drafted legal document. Or perhaps you want to establish a legacy of charitable giving. There are several ways to accomplish this, including establishing a revocable or irrevocable trust. Meeting with an attorney will help you do this in a way that passes legal scrutiny and minimizes tax exposure.

Unmarried couples should also strongly consider creating an advance medical directive and designating someone who has power of attorney to make decisions on their behalf if they become incapacitated. You should review these documents regularly to ensure they still match your wishes.

Meet with an Estate-Planning Attorney

When you’re ready to create an estate plan, our team of expert attorneys can help you put it into action. Schedule a consultation today to get started.

Estate planning is one of the most common reasons for someone to require the services of an attorney. Virtually everyone has at least some assets, and those assets will need to be distributed after they pass away. Because this affects so many people, it’s helpful to know some of the top estate planning tips, such as mistakes to avoid.

Mistake #1: Not Having an Estate Plan

Hands down, the most common estate planning mistake is simply not having an estate plan. There are many reasons for this. Younger people often just don’t think about it, some people think they don’t have enough assets for it to be a concern, and others underestimate the complications that can arise when someone dies without a will. It may be an unpleasant thought, but everyone should ask themselves: what would happen to all of my property if I died today?

Mistake #2: Not Hiring an Attorney

As some of the following entries on this list will suggest, several legal requirements must be met for an estate plan to be valid. This becomes more important as the complexity of the estate increases, but even a simple will must be executed according to the law.

Mistake #3: Not Keeping Your Estate Plan Updated

As your life changes, your assets and wishes will likely change, too. It is all too easy to create an estate plan once and then forget about it. You should periodically revisit your estate plan, especially after major events such as marriage or the birth of a child.

Mistake #4: Underestimating the Potential for Conflict

It’s easy to assume that everyone you leave behind will understand your wishes and agree on what those wishes are, but that is not always the case. Emotions often run high after death, and you will not be there to clarify things. A clear estate plan can minimize conflict.

Mistake #5: Not Creating a Health Care Directive

Tragedies and accidents can happen in an instant. If an event such as a car crash leaves you incapacitated, your family will have to make important and difficult decisions about your medical care. Creating a health care directive in advance that lays out your specific instructions for various circumstances will make sure your wishes are met and make things easier for your family.

Mistake #6: Not Choosing an Executor for Your Estate

It will fall to someone to take care of all the work of administering your estate. If you have someone specific in mind, be sure to identify them. Otherwise, the probate court will appoint an executor for you.

Mistake #7: Missing Assets

All of your assets must be dealt with in one way or another. If your will only lists a series of specific gifts, the remainder of your estate will be distributed according to the state’s laws of intestacy (the rules that dictate what happens when someone dies without a will). On the other end, if your will only speaks in generalities, you might be overlooking specific property you want to be distributed in a more specific way.

Mistake #8: Digital or Electronic Wills

In most states, including California, electronic or digital wills are currently not accepted as valid. A will must be printed out, signed, and stored as a hard copy. Even if it complies with every other legal requirement, a document in your computer will likely be rejected by a probate court.

Mistake #9: Witness Signatures

In California, a will must be signed by two witnesses, preferably when you signed the document yourself. This helps prevent fraud. The witnesses should not be estate beneficiaries, either. If they are, the probate court can presume the will was created under duress and may disregard portions of it.

Mistake #10: Not Keeping the Will in a Place Where It Will Be Found

A will is no good if nobody can find it after you pass away. If you keep it in your home or office, keep it in a place where it will be easily discovered. The best option, however, is to keep your will on file with your attorney.

For More Estate Planning Tips

One of the best estate planning tips is to meet with an attorney. It may be tempting to go it alone, but many things can go wrong. The price of consulting an expert is quite modest compared to the potential problems created by DIY estate planning. Contact our office today to schedule a meeting.