Over the next three decades, Americans will transfer more wealth than ever before — an estimated $6 trillion dollars — as the World War II generation and Baby Boomers reach the end of their lives. Sadly, too many people aren’t prepared to deal with a significant inheritance. It’s estimated that 70 percent of assets transferred to the next generation are lost. Ninety percent don’t make it to the generation beyond that.

Even people who are responsible about developing an estate plan often fail to discuss the importance of saving and investing that money wisely with their heirs. Even fewer discuss how they’d like to see their life savings be used by their families after they’re gone so that the values they cherish are honored.

Of course, financial literacy begins in childhood. As kids get older and start to earn their own money, that education needs to continue. Parents can include them in family budget planning meetings so that by the time that kids are out of college and living on their own, they should know how to make a budget for themselves.

However, inheriting a significant windfall of cash can be an entirely different matter. If you’re going to be leaving your kids a good deal of money, it’s best that they are introduced to wealth planning professionals and financial advisors to help them make that money last.

Some people include what’s called an “ethical will” in their estate plan. The contents of an ethical will vary with each individual. Some people use it to pass on family stories, perhaps about how your parents built a family business from scratch, that help your children understand the genesis of your money. Other people use it to pass along values that they hope their heirs will model and continue to pass on to future generations

It’s important to note that ethical wills aren’t legally binding documents, as traditional wills are. Therefore, if you want part or all of your estate to go to specific organizations, the best way to ensure that is to name those organizations as beneficiaries. Further, if you’re concerned that your children aren’t prepared to handle a large inheritance, you can work with your California estate planning attorney to plan for a gradual release of assets. Your attorney can help you determine how best to leave the legacy you desire.

Source: Spotlightnews.com, “Inheritance and the passing along of financial values,” John McIntyre, accessed Sep. 21, 2016

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Sometimes family members need guidance in their lives from a guardian or conservator. These type of court ordered relationships are set in place to aid a young person or adult with their health and finances. In many states the term guardianship is blanketed over all age groups, but California has a different set of terms.

Guardianship is appointed for minors

Guardianships are appointed by a court, ordering an adult to have custody over a child and/or responsibility of their estate. A minor is appointed a legal guardian for help managing their health and affairs. A guardianship is typically set in place when the parent is no longer able to be the legal guardian. Guardianship is supervised by the court and is not the same as adoption. In a guardianship the parent still has parental rights.

Guardians must be responsible for the child’s welfare, including major responsibilities such as:

• Living arrangements
• Medical needs and decisions
• School arrangements
• Mental health care

Conservatorship is appointed for adults

Conservatorships are court cases in which a judge appoints a person responsible for another adult. The conservator will be responsible for the adult’s affairs and finances. These types of court appointed relationships are necessary when a family member has become incapacitated without signing powers of attorney for their finances and health care. There are options to become a conservator of a person and conservator of an estate.

Conservatorship of a person will come with important decisions to keep the loved one healthy and happy. Some responsibilities include:

• Health care decisions
• Living arrangements
• Personal care
• Much more

Conservatorship of an estate also comes with some major decisions. Be prepared to handle all the finances. Conservator of an estate will be responsible for:

• What to do with real estate: this includes any houses or land the conservatee may own. Also any personal property on the estates
• What to do with any liquid assets
• Taking care to pay the adult’s loans, bills, and taxes
• Deciding on the conservatee’s living arrangements
• Any additional financial obligations

Conservatorship comes with a lot of responsibilities but can greatly benefit an adult who has become unable to take care of their affairs. Becoming a conservator can help your family member make the best decisions for their future. If you are interested in becoming a conservator then contact an experienced conservatorship attorney.

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For many people, estate planning isn’t something they want to think about when they’re healthy. No one enjoys contemplating death. However, that means that many Californians wait until they’re at the end stages of their lives to make wills and other financial preparations.

If that’s the situation for yourself or a loved one, there are some considerations to ensure that your wishes are carried out and your affairs are in order. These can help you minimize unnecessary work and costs for your loved ones.

If you anticipate being incapacitated and unable to make decisions for yourself, it’s essential to designate one or more trusted persons as powers of attorney to handle your financial matters and your health care decisions. You can provide instructions for your health care power of attorney so that he or she knows your wishes regarding life-saving or resuscitative measures.

Review your life insurance policy to ensure that it’s current and paid up. If the value is adequate, you may be able to reduce or stop further payments based on your current life expectancy. However, make sure that this won’t endanger the payout to your loved ones. You may also be able to sell it to an irrevocable life insurance trust. Whatever you decide, ensure that your beneficiary designations are current.

Also confirm that the beneficiary designations on your retirement accounts, investments and annuities are accurate. Many people think that the beneficiaries named in their wills apply to all of their accounts. However, they don’t. You need to make those designations separately for certain types of accounts.

Consider making your final charitable donations while you’re still alive. Many people leave a substantial part of their estate to non-profit organizations that do work they want to support. If your estate is large enough to be subject to estate taxes ($5.45 million for a single person and twice that for a married couple), this can save your heirs those taxes. However, even if your estate isn’t at that level, making these donations while you’re alive can still provide tax savings to those who inherit your estate.

These are just a few of many things to consider if you are doing your estate planning near the end of your life. Your California estate planning attorney can advise you on other options to help more of your estate go to your heirs and beneficiaries and less to the government.

Source: NASDAQ, “6 Estate Planning Tips for Those Approaching Death,” John M. Goralka, accessed Sep. 15, 2016

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Many people don’t think of themselves as having an “estate” that they will be leaving to others after their death. However, even if you own don’t own a home, have a stock portfolio or have accumulated little in the way of valuables, you likely have at least one bank account. If you don’t codify who will get the funds in your account upon your death, it could end up in probate, creating unnecessary costs and inconvenience for your loved ones.

Sometimes, even people who draw up a detailed estate plan think little about their bank accounts. Even if you go over your accounts with your estate planning attorney, you may forget about some of them if their balances are small or you haven’t used them for awhile.

There are steps that you can take to designate how the funds in your bank accounts will be disbursed. This is particularly important to do for any accounts where you have sole ownership. If you don’t name a payable-on-death beneficiary on your account, it may need to go through probate. This is true even if you are married if your spouse isn’t a co-owner of the account.

It’s important to note that if you give your spouse (or anyone else) power of attorney on a sole ownership account, but it’s not a payable-on-death account, that person won’t have access to the funds after your death.

If you set up a living trust and include the account in the trust, it will be taken over by your successor trustee when you die. He or she will distribute the assets, along with the other assets in your trust, as you’ve designated. You’ll need to change the ownership of your account to your living trust name to help avoid any complications.

Many married couples have joint bank accounts. Generally, when one owner dies, the other one automatically becomes the sole owner.

Whether your estate plan involves a simple will or numerous documents, it’s important to designate what will happen to your bank accounts. Your California estate planning attorney can provide guidance and answer your questions.

Source: Huffington Post, “What Happens to Your Bank Account When You Die?,” accessed Sep. 07, 2016

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For people who are in lines of work that involve intellectual property, taking steps to protect that property from being used by others without their permission is essential. This can include artistic works like music, art and fashion designs, as well as computer programs and inventions. If you’re a famous person, it can even include the use of your photo or other likeness. Intellectual property is generally trademarked, patented or copyrighted.

Protecting your intellectual property after you’re gone is also essential. That’s why it needs to be included in your estate plan. The untimely death of music icon Prince this year, reportedly without a will, highlighted the complications that arise when it’s uncertain what someone wanted done with their intellectual property after their death. For Prince, that included large amounts of music, both published and unpublished, as well as his likeness.

It’s important to detail how you want the earnings on your intellectual property to be divided among your heirs and beneficiaries. However, you also want to ensure that the property is properly administered.

One issue in designating your wishes for your intellectual property after you’re gone is estimating the value of it. In many cases, it’s based on future earnings potential, which can be difficult to estimate. Sometimes, writers’ and artists’ works increase greatly in value after their death. Others, sadly, may be forgotten once the person behind them is no longer around creating new works and promoting their creations.

Determining who will handle your intellectual property is a crucial consideration. Some people designate a trusted family member who’s handling the rest of the estate. Some designate a separate person or entity with knowledge about managing intellectual property to be their intellectual property executor.

Tax considerations are just as important for more intangible assets like intellectual property as they are for assets like real estate, cash and jewelry. A California estate planning attorney who has experience with intellectual property can provide guidance to help you ensure that your work is protected after you’re gone and that your wishes for it are carried out.

Source: The Sabetha Herald, “Estate planning for intellectual property,” Bob Schumann, Aug. 24, 2016

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The probate process varies from one person to the next; however, there are some basics you should become familiar with.

Once you know the ins and outs of probate, you can make more informed decisions in regards to your estate plan. Generally speaking, here are the basic steps associated with probate:

— The person outlined in the will files the appropriate documents to be named the fiduciary.

— Notices are sent in regards to the hearing.

— If there is any reason to question the validity of the will, an objection could be filed resulting in litigation.

— The fiduciary will take inventory of all assets.

— All debt is paid by the estate.

— Remaining assets are distributed as outlined in the will.

In its most basic form, there isn’t much confusion associated with the probate process. However, if you’ve ever been part of this in the past, you know that things can and will come up along the way.

It doesn’t matter if you are creating an estate plan or in charge of the probate process upon a person’s death, you must make sure you know the law and what is required of you.

Our law firm can help you better understand probate law, including where you fit in and what you can do to avoid mistakes and stay on track.

If you have any questions about probate or estate planning in general, we are here to help. Either way, you know that we are here to answer your questions and make things simple to help you avoid a stressful situation.

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Managing your assets as you get into your later years is tricky. You don’t want to give away too much too soon, so that your care becomes a burden to others. But if you aren’t careful you can get hit with medical costs that threaten to eat up much of your estate.

A timely example of this is what happens when someone has a lengthy stay for rehabilitation in a nursing facility, after a hospital stay that was classified as “observation status” rather than admission. In that situation, Medicare refuses to pay for the rehabilitative stay – which can result in extremely large out-of-pocket expenses for patients.

In this post, we will update you on a new federal law that affects payments for rehabilitative care in this context. We will also discuss how this could affect your estate plan.

When Medicare won’t pay: an example

Earlier this month, The New York Times gave an example of how people can get blindsided with huge medical costs when going to skilled nursing facility for rehab after a hospital stay that was classified as observational rather than a formal admission.

The case involved an 85-year-old woman in Pennsylvania who had handled her money well and had substantial assets. After suffering a bad fall, she spent nearly a week in the hospital, and then almost five more months in a skilled nursing facility for rehabilitative care.

Quite to the woman’s surprise, Medicare refused to pay for the woman’s stay and services in the nursing facility. The cost was over $40,000. And the elderly woman would have to pay that out of her own pocket.

Naturally she found this nonsensical. After all, she had paid into Medicare for so many years. How then could Medicare not cover her now?

How Medicare rules got to be this way

Medicare rules restrict reimbursement for rehab after an “observational” hospital stay because auditors working for the government had become concerned about hospitals becoming too quick to admit patients.

What resulted was a rule that withheld payment for stays in rehabilitative nursing care unless such stays were preceded by a hospital admission of at least three successive days.

Under the peculiarities of the Medicare rules, time under in a hospital bed under “observation” status is not counted when calculating the three days. This is the case even if the person under observation receives extensive services.

As a result, a long stay in rehab can result in bewilderingly large out-of-pocket costs for someone who was expecting Medicare to pay for them.

Response by Congress

Congress has acted to address, though not completely fix, this strange payment scenario.

What Congress didn’t do is require Medicare to pay for rehab services that follow a lengthy hospital stay. But Congress has required that Medicare outpatients get a formal notice that they are on the hook for the costs. This new notice requirement takes effect in January.

Congress is also considering tweaking the law further, so that time spent under observation in a hospital could be included in determining whether someone was in the hospital long enough in order for Medicare to cover subsequent nursing and rehabilitative care.

Protecting your assets

A rule like this one on Medicare coverage can affect you in several different ways. For starters, if you or a close family member is facing several nights in a hospital under “observation,” you could consider insisting on admission as the formal status.

More broadly, there is also the question on how to manage your assets so that they are not excessively impacted by health care costs. It makes sense to discuss your situation with a knowledgeable attorney. An attorney can help you make appropriate use of trusts or other estate planning tools to make decisions about your assets that fit your family’s goals.

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Remarriage is one of those life events that will likely necessitate some changes to your estate plan. You’ll probably want to include your new spouse in your plan while ensuring that any children from your previous marriage still receive at least some of the assets that you originally designated to them. Further, you may want to designate your new spouse as your health care and/or financial power of attorney.

Simply by marrying someone, you give that person a considerable share in your assets as well as authority over your estate. Remember that California is a community property state.

If you don’t already have a will or other estate planning documents when you remarry, now is the time to draw them up. Unless you designate otherwise, your new spouse can make decisions regarding your estate. This could include denying your children and your former spouse any assets or property you may have promised them. Your spouse would also have the right to make health care and end-of-life decisions for you if you’re unable to do so.

If you already have estate planning documents, your attorney can help you make the changes you desire and provide advice and guidance to help ensure that your wishes are carried out. If you don’t have an estate plan, he or she can work with you to draft the necessary documents. Many people think that a prenuptial agreement is enough, but it’s not.

It’s important to be honest with your children about whether or how your new marriage will impact their inheritance. A conversation with your former spouse may also be necessary. If family members know what to expect, there will be less in-fighting after you’re gone.

Source: CNBC, “Getting remarried? Protect your assets and your interests,” Deborah Nason, July 28, 2016

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Most young people don’t consider developing an estate plan unless they have a considerable amount of money or assets, either from earnings, an inheritance, a legal settlement or some other source. They’re busy building their careers, working towards paying off student loans and perhaps starting families.

However, even successful young actor Anton Yelchin, who was suddenly and tragically killed in June when his Jeep rolled down his driveway, crushing him, didn’t have a will. The parents of the 27-year-old actor, best known for his role in the latest round of “Star Trek” films, had to go to court to be granted the right to administer his $1.4 million estate.

While most young people don’t have anything close to those types of assets, estate planning experts recommend that anyone 18 and older should at least have documents in place stating who can make health care and financial decisions for him or her should he or she be unable to do so. Once people turn 18, their parents or guardians no longer automatically have the authority to make medical decisions for them.

Debilitating accidents and illnesses can happen to anyone at any age. We’ve all seen stories about family members fighting over whether a person should be kept on life support or allowed to die. A health care power of attorney (in California, it’s called an “Advance Health Care Directive”) allows you to choose the person who will be responsible for overseeing these decisions.

Further, it gives you the opportunity to designate your wishes if you were to become incapacitated and unable to speak for yourself. This can relieve the considerable burden placed on family members who have to make end-of-life decisions.

A financial POA is also a good estate planning document to have. It designates who can access your accounts. This can help prevent your family from having to go to court to have one appointed. It can also help in ensuring that bills and other obligations continue to be paid if you’re unable to take care of the obligations for a time.

As one estate planning professional notes, these documents allow people “to have a voice ahead of time” in what will happen to them and their assets if they die or are unable to speak for themselves. They can also be the basis for a more comprehensive estate plan later on.

Source: Investment News, “The most important part of a young person’s estate plan,” Greg Iacurci, Aug. 03, 2016

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Increasingly, more of our financial and social activity is carried out online. This can create a dilemma for surviving family members when someone dies. While people can and should designate an executor for their estate in their will, that designation doesn’t give them access to accounts that are strictly online, such as some bank accounts and e-mail accounts.

Some states have enacted legislation to allow executors, trustees and others named by the court to access to a person’s “digital estate,” based on the Uniform Fiduciary Access to Digital Assets Act (UFADAA). However, California hasn’t yet done so.

As part of your estate planning, your attorney will likely recommend that you maintain a list of your passwords, along with security questions and other information needed to access your online accounts. Of course, it’s essential to keep that up-to-date as you add accounts and change passwords.

You can do that on something as simple as an Excel spreadsheet that’s password protected (with your executor or designated family member having that password). However, there are also third-party password manager sites like LastPass that allow you to store your passwords and send the information to a designated person if the user dies. However, if you choose to store your passwords with a third-party site, there’s always the risk of the site being hacked.

There are also digital legacy companies that make it easier to transfer access information to executors and/or family members. Your attorney may be able to recommend one.

Many people of all ages have a social media presence on Facebook, Twitter and other sites. Facebook now lets users designate an executor to access their account after their death and delete it or memorialize it. This can be a simple way to notify people of someone’s death and perhaps share information about things like funeral services and memorial funds, while giving people a place to share condolences and memories.

Some estate planning attorneys have portals on their websites where clients can securely store information, documents and anything that you think will be helpful for those administering your estate. Your attorney can help you with your digital estate as you’re working on your estate planning documents.

Source: WealthManagement.com, “Creating an Effective Digital Estate Plan,” Christopher Steele, July 20, 2016

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