The reason most Los Angeles residents have an individual retirement account is to help supplement income in later life or, following an account owner’s death, to add to the financial support of a surviving spouse. However, some California residents see IRAs as assets meant to be passed through an estate to heirs.

A new financial product has appeared on the market that features benefits similar to a trust in an estate plan. A trusteed IRA gives the account owner control over the distribution of IRA funds over time to a beneficiary, apparently with some tax advantages.

The financial services companies that market trusteed IRAs promote the idea that the products are cheaper than trusts to create. While that may be true, trust administration adds to the cost of a trusteed IRA over other types of individual retirement accounts. The expense may not be worth the investment, unless the IRA is worth a substantial amount; a minimum of $2 million is recommended by product carrier U.S. Bank.

A trust is managed by a trustee, chosen by the grantor. The management of a trusteed IRA is handled by a financial services employee, who may not have the same leeway as a trustee to adjust withdrawals, according to beneficiary need.

A control mechanism in trusteed IRAs allows the long-term dispersal of a limited amount of funds. The withdrawal may be as low as the Internal Revenue Service’s yearly minimum requirement, while the remaining funds are free to increase in value. The beneficiary potentially can end up with an asset worth far more than a straightforward cash inheritance.

The IRS is very particular about the way trusts are set up and administered. It’s a good idea to discuss the positives and negatives of a trust or trusteed IRA with a tax professional and estate planning attorney before sinking time, effort and assets in either estate-related investment.

Source: Market Watch, “Trusteed IRAs can help heirs manage inheritance” Kelly Greene, Dec. 19, 2013

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A Los Angeles forensic accountant can be hired to place a fair market price on the estate assets you have, but only you and your loved ones know the worth of sentimental objects. Some of the worst squabbles in probate occur over property that has little or no value outside of a family.

An insurance survey conducted last year discovered what baby boomers, now inheriting their World War II-era parents’ wealth, and older Americans thought about inheritances. Even more than money, the majority of boomers and people ages 72 and older said that they wanted to give or receive the stories, histories and heirlooms of their family members.

Family treasures aren’t necessarily expensive, but they have enough personal value to cause heirs to do battle in court. Parents can help avoid an estate administration nightmare by making preparations for the distribution of assets unique to an estate.

Estate planning attorneys suggest creating a discussion in a family group and with individual heirs about these important possessions. Children and others who know in advance what to expect when you die may not be thrilled with your choices, but they will be less tempted to fight if they aren’t shocked after your death.

Wills address your “big-ticket” assets. A memorandum can be added that directs keepsakes to individuals. To avoid any confusion, be as specific as possible in the description of the items in the memorandum and include photos of the property, when possible.

To a parent, a 4-year-old’s crayoned holiday picture can be more emotion-stirring than a masterpiece. The one-of-a-kind art adds a thread to the fabric that is a family’s story. As precious as Mona Lisa is, her painting couldn’t do all that. That’s why it is important to talk to an estate planning attorney about options for distributing heirlooms valuable to your family, regardless of their monetary value.

Source: Market Watch, “Your heirs want this even more than your money” Andrea Coombes, Dec. 16, 2013

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Independence is a precious possession that seniors often guard carefully as long as they feel sound in body and mind. Even when age or illness interferes with that independence, older people can be hard-pressed to give up activities like driving or balancing a bank statement.

Many elderly people in Los Angeles live alone, whether by choice or unfortunate circumstances, making them vulnerable to financial abuse. As we age, we often need assistance from family members, neighbors or a paid caregiver. A close relationship doesn’t mean a healthy one; seniors’ finances can be devastated by someone they trust.

The National Committee for the Prevention of Elder Abuse released a 2010 report, co-sponsored by an insurance company, about seniors’ financial losses at the hands of “trusted” individuals. Older participants said they lost $2.9 billion to strangers or someone they knew, including children who took advantage of them. The problem is not uncommon or new, according to elder law and care experts.

If you are the caregiver chosen to take over an elderly person’s finances, you are a fiduciary – a relationship of trust in which a person acts in the best interests of someone else. The trusted individual may be a guardian, a trustee or an agent with power of attorney with responsibilities to manage finances efficiently and honestly. A senior may hand over car keys, identity records, bills, account numbers and credit cards to a fiduciary. Unfortunately, some caregivers take advantage of the position.

People can watch for signs of exploitation in older family members, friends and acquaintances. Some indicators include unusual purchases or gifts, failure to meet regular expenses, missing funds, sudden beneficiary changes and large or frequent bank transactions.

Age can rob a person of good physical health and strong cognitive abilities. Younger, caring individuals can help make sure that nothing else is taken from the elderly. If you see financial abuse, report it.

Source: dallasnews.com, “Steps caregivers can take to prevent senior financial abuse” Gordon Studer, Nov. 29, 2013

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Many California legal documents, like some trusts, cover asset transfer wishes for individuals in robust health. Other estate planning documents, like wills, have no effect until a person dies. However, neither of these documents will do much good if you become incapacitated and unable to manage your finances and health care decisions.

Well-rounded Los Angeles estate plans take incapacity into consideration. If you bypass the subject, however, your doctor might order a treatment that you don’t want, or your adult child might have to submit a costly, avoidable probate petition to become your legal guardian.

A health care power of attorney, health proxy or advanced directive designates someone else to make your medical choices in these types of situations. This can be supplemented by a medical information release form and a living will, which consists of the instructions you want health care providers to follow when you are in a terminal state. The documents can be as simple or detailed as you choose.

A durable power of attorney, separate from a health proxy, is a document that transfers the management of your finances to another person or party. In most cases, the transition occurs before incapacity, usually at the time the document is executed.

Estate planning attorneys can provide all these resources to cover incapacity, although some standardized forms are widely available. Keep in mind a lawyer also can explain the documents’ contents, answer your questions about incapacity, certify validity according to updated laws and customize documents to your specifications.

Legal and health professionals recommend preliminary discussions about end-of-life intentions with the parties your choices will most affect – doctors, financial institutions and your family. The more they know, the better they will be able to fulfill your needs at a critical time. Advance directives keep incapacity from catching you off guard.

Source: nasdaq.com, “4 Key End-of-Life Documents to Get in Order” No author given, Dec. 03, 2013

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California residents are likely familiar with several high profile legal battles in recent years involving the termination of life-sustaining treatment for terminally ill individuals. This kind of conflict can place families under a great deal of stress, and it may often be prevented if the individual concerned has drafted a living will. This document outlines what form of treatment an individual will receive if they become incapacitated, and it outlines the circumstances when treatment should be discontinued.

The forms of treatment usually mentioned in living wills include the intravenous provision of nutrients and the use of medical equipment such as ventilators or heart-lung machines. The document provides medical professionals specific instructions about when this type of treatment is appropriate, and it names an individual who is authorized to communicate these wishes. A living will is a document that should be considered carefully as it often contains provisions that may conflict with deeply held religious or ethical beliefs.

Lawmakers in California have addressed the issue of living wills with the California Natural Death Act. The law outlines the requirements a living will must satisfy to be considered valid, and it states that the provisions of such a document may be implemented only when two physicians have certified in writing that the individual concerned has a terminal condition. The act also states that physicians who are unwilling to follow the directives of a living will must take all reasonable steps to transfer care of the individual to another physician.

These matters are difficult for many people to contemplate, but even the most robust individuals could find themselves incapacitated after an automobile crash or other accident. An attorney with experience in this area may offer advice about how a comprehensive estate plan, including a living will or health care directive, could lead to improved peace of mind and avoid potentially bitter family conflicts.Source: Findlaw, California Living Wills Laws

Source: American Bar Association, “Living Wills, Health Care Proxies, & Advance Health Care Directives“, November 30, 2014

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The holiday season is one of the few times each year that entire families make a concerted effort to be in the same place at the same time. Even members of small families have incompatible schedules that make scheduling otherwise difficult. A California parent who wants to convey their estate wishes may have no better opportunity to talk face-to-face with heirs than the holidays.

No one is suggesting that the ideal time to discuss your estate planning goals is during a holiday feast or while children are unwrapping gifts. There are in-between moments during family holiday gatherings ? perhaps during a lull in celebrations ? that invite conversation about finances.

Adult children often skirt around the subject of inheritance for fear siblings or parents will view them as greedy. Parents can feel uncomfortable about acknowledging and discussing advanced age. Death is no one’s favorite subject and open money discussions are not far behind.

Just because families are reluctant to bring up these topics, it doesn’t mean that individuals haven’t thought about them. Adult children wonder whether mom and dad have wills and about expectations parents have regarding health care in old age. Parents usually realize that heirs need to know what to do if incapacity occurs, but expressing it can be hard.

Estate plans include legal documents that outline everything you want to happen with your assets. Attorneys know that family members left in the dark about your desires can be disappointed, shocked and even litigious after your death.

Families take a lot of time and effort to have a shared holiday season. The peace and contentment you enjoy together can be shattered in the future by a family dispute over an estate.

The last things you want to bequeath to heirs are hard feelings. Open a discussion. Let adult children in on your estate plans. That way no one is unclear about what you want and expect.

Source: kitsapsun.com, “Pass the turkey, then start the money talk” Claudia Buck, Nov. 25, 2013

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The holiday season gives Los Angeles families the opportunity to get together. That can be something that can be hard to coordinate any other time of the year. There are only a few occasions outside of holidays that draw families to one place. Among the most common are births, marriages and deaths.

Careful preparations are often made in advance of these events. The exception is frequently death, not due to its often-sudden nature but because many people don’t want to think about it. Ignoring death has no effect on its course, but dismissing the necessity of an estate plan can have a tremendous backlash for heirs.

Many individuals agree that wills are important, but many more just haven’t gotten around to executing one. Just 41 percent of baby boomers have wills. That’s disconcerting since the youngest of the bunch, born in 1964, will turn 50 next year. More than 70 percent of people below age 34 have no wills.

Wills are wishes made legal. Until you formalize asset distribution plans, wishes are all they are. Dying without a will evaporates those desires. A probate judge and California estate laws will determine who gets your wealth. Since wills also establish guardianship for minors, not having one also allows a court to decide who gets your children.

The lack of a will also places your estate assets on hold indefinitely. Heirs may wait until probate works out the depth and worth of an estate and the bills and taxes owed. What’s left goes to heirs the court chooses. Some assets can circumvent the probate process. Assets placed in trusts and accounts with beneficiaries, like pension plans and insurance, can be distributed quickly and directly.

As you enjoy the company of family members during the holidays, think about what you’d like to share with them in the future. With the creation of an estate plan, you smooth the way for inheritances for the people you love.

Source: thetimes-tribune.com, “Do You Need Estate Planning?” Herman Krug, Nov. 17, 2013

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Many people are hale and hearty throughout their whole lives, but many more suffer health problems as they age that make it difficult to continue to perform tasks that were once easy. It’s not uncommon for older Southern California residents to get to a point where they cannot or do not want to handle finances effectively.

Incapacity is possible due to illness or accident at any age. Anyone can be placed in a position where financial and medical decisions are impossible to make. Powers of attorney – written estate planning documents – allow individuals to select fiduciaries or legal representatives to make decisions for them. The relationships are bound by trust that the chosen party will act solely on the individual’s behalf rather than for personal gain.

Trust cannot be emphasized too strongly in matters that involve the financial security of an elderly person. Research from the National Committee for the Prevention of Elder Abuse and a major insurer found that U.S. seniors were bilked out of nearly $3 billion in 2010.

Elderly people, especially ones who live alone, are easy financial crime targets. How many stories have you read about fly-by-night contractors taking seniors’ money for home repairs and never doing the job? Unfortunately, some people that an older person trusts blindly – friends or relatives – may also take advantage of easy financial access.

Estate plans discourage elder abuse. Decisions about fiduciary responsibilities and asset distribution can be made when an individual is mentally and physically sound. Estate planning documents seamlessly cover financial management matters during incapacity and after death.

Elderly financial abuse is widespread. A financial planners’ survey conducted last year found that 56 percent of older clients had been deceived or unfairly treated in money matters. Additionally, only about five percent ever reported the abuse.

An estate plan helps close the window on opportunities to rob you and your heirs of wealth.

Source: sacbee.com, “How to prevent elderly financial abuse on another’s behalf” Claudia Buck, Nov. 11, 2013

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An adult lifetime is spent carefully gathering, managing and protecting assets. If you’re like many Los Angeles residents with considerable wealth, some or a great deal of those assets will outlive you to benefit the ones you love. Many affluent Californians supplement estate planning documents with trusts, to ensure that heirs and beneficiaries preserve assets wisely and receive the maximum benefits.

Wills and trusts essentially serve the same purpose but in different ways. Among other pluses, trusts give you the power to control the management and distribution of assets during incapacity and beyond death. Trusts help shelter assets from creditors and probate, while decreasing or erasing the estate’s – and consequently your heirs’ — tax burden. You control how and when assets are shared with chosen beneficiaries.

Revocable living trusts are active from the moment you create them, unlike wills, which become effective only upon death. Assets are transferred from you to the trust. You or someone you designate manages them. You can add or remove assets or dissolve the trust any time before incapacity or death.

Trusts are available that can accomplish specific goals, like dynasty trusts that extend estate tax savings over generations, credit-shelter trusts, charitable trusts or complex foreign grantor trusts. The trust you require depends on your financial vision of the future and how you would like to maintain it.

Multiple estate planning strategies are often employed to help wealthy individuals achieve their purpose. Estate liquidity is available through life insurance. Proceeds can be used to pay taxes, especially useful for estates containing substantial real estate or business investments.

Affluence does impact the depth of an estate plan, but that doesn’t mean that all plans for well-to-do individuals need to be elaborate to be effective. An estate planning attorney can help you achieve the results you have in mind, but you’re the one who has to set the financial course.

Source: forbes.com, “What Is Estate Planning?” Russ Alan Prince, Nov. 04, 2013

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Drafting an estate plan can be as much about what you do want as it is about what you don’t want. Maybe it has taken you several years to get to the point of meeting with an estate administration and planning adviser. Many Los Angeles residents want the distribution of assets issues finalized so they can get back to living instead of talking about dying.

Not so fast.

Beneficiaries are not a static bunch. The relationships beneficiaries have with you undergo sometimes sudden, but always constant, change. Children grow, marry and become parents. Spouses – yours and those of your heirs – fall in and out of love.

Think about your retirement account, the one you opened 20 years ago when you were married to a different spouse and had two, instead of four, children. At the time, you did what most people do; you chose your spouse as beneficiary. The spouse is now a long-time ex, but, without no beneficiary update, your old married partner stands to collect your pension.

Retirement plans often provide a default beneficiary, when none is named. Pension proceeds could end up in probate as part of your taxable estate. By naming a beneficiary, the asset can pass directly to a loved one and bypass the court and tax collectors.

You cover a lot of bases by naming contingent and secondary beneficiaries. For most people, a spouse is designated as the primary recipient of a retirement fund. Where will the money go if your spouse dies before you do?

Estate planning attorney advise revisiting an estate plan from time to time, but especially after any major shift in your life or a beneficiary’s – divorce, marriage, birth or death.

You’ve worked hard to put together a plan to share your assets. Don’t create problems by failing to make your beneficiary desires clear and reflective of the personal relationships you have today.

Source: news.ellwoodcity.org, “Six Costly Beneficiary Mistakes to Avoid” Robert A. Powell, Oct. 27, 2013

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