Britney Spears makes headlines today for very different reasons than she did a few years ago. James Spears, Britney’s father, became his daughter’s conservator five years ago after the singer exhibited bizarre public behavior.

Conservatorships in California are granted through probate court in cases when conservatees are incapable of making personal or financial decisions. Most of Britney Spears’ life decisions have been made by her father. Some observers wonder whether the singer will ever get the chance to take back control.

Thirty-one-year-old Britney Spears recently walked away from a second stint as a judge on the television show the X Factor. During her one-year, $15 million tenure, Spears exhibited qualities that were missing in the days before conservatorship. Some reports say show originator Simon Cowell was disappointed that Spears did not act out in public.

Spears also abandoned her engagement to Jason Trawick. Trawick shared and then resigned a partial conservator role with Britney’s father. Some bloggers’ reports suggest the singer felt her fiancé was acting more of a babysitter than a husband-to-be.

Under conservatorship, Spears is legally incompetent and makes few of her own decisions. Conservatorship proceedings – guardianships for minors — are generally reserved for individuals who have been incapacitated by illnesses, age, injuries or disabilities.

A mental health condition, as Spears has been rumored to have, could make conservatorship necessary indefinitely. Evidence of a positive change in the singer’s demeanor in the last several years has been noted, but no move has been made to end conservatorship.

A California court could place Spears back in charge of her own life. Before that could happen, the celebrity would have to prove that she was capable of taking care of herself and the enormous sums of money she makes from her career.

Becoming a conservator could save a loved one’s life. An attorney familiar with the conservatorship process can advise clients concerned about struggling or disabled relatives.

Source: forbes.com, “When Will Britney Spears Be Free Of Conservatorship?” Danielle and Andy Mayoras, Jan. 14, 2013

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The Taxpayer Relief Act of 2012 was the subject of a recent meeting of estate planners from Los Angeles and across the country. Estate planning specialists spent much of last year bolstering trusts for clients in anticipation of less-generous gift and estate tax changes in 2013. The changes were not as dramatic as expected.

Some of the estate planners admitted spending the last months of 2012 frantically creating tax-free options for wealthy clients. The Taxpayer Relief Act, enacted with the first of the year, put an end to the worry by changing almost nothing about federal estate and gift taxes.

Compared to what might have happened without congressional action, the new tax laws were very much the same as last year’s laws.

Without the Taxpayer Relief Act, the estate tax-free ceiling would have dropped to $1 million per individual, down from over $5 million. For taxable assets, the federal rate might have risen to 55 percent.

The 2013 unified credit – for gift and estate tax exclusions – is $5.25 million per person for assets given away before and after death. The basic exclusion was $5.12 million in 2012. The difference is an inflation adjustment making the tax-free amount essentially the same.

The estate tax climbed from 35 percent in 2012 to 40 percent for 2013, 15 percent less than feared.

Some estate planning clients will take a new approach to asset disbursement, like the opportunity to give away $14,000 per year to individuals without affecting a lifetime tax exemption. Others will turn from heir tax protection to personal long-term planning for later-life needs like health care.

The race to beat the clock ended, not with a blind dive off a steep fiscal cliff, but with an almost seamless transition from one tax year to the next. Legal experts and clients now have the time to devote to full-scale estate planning projects instead of panic-mode measures.

Source: forbes.com, “Morphing Into The New Age Of Estate Planning,” Deborah L. Jacobs, Jan. 15, 2013

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A surprising number of people in California and throughout the country give little thought to long-term financial planning. Young adults may be more concerned with wealth building than wills, trusts and estate administration.

Older adults can be too preoccupied with a career track and parenthood to give serious thought to the possibilities of accidents, illnesses or death. While estate planning is not the most pleasant of tasks, it can provide satisfaction and comfort. When properly portioned assets are waiting for beneficiaries, the giver and heirs are relieved of future stress, lengthy probate and family conflicts over estate uncertainty.

By the time adults reach age 40, there are several financial moves that professionals say can benefit tax situations and family members.

Many adults in their 40s have growing children and have already considered or established college savings accounts like a 529 plan. Parents may think of the educational savings plan simply as a way to lessen their burden or their children’s responsibility for the costs of a higher education. The plans can also provide substantial tax savings and can be used to fund the education of any beneficiary, including a second-career education for a parent.

Financial considerations during the prime of life may also include the needs of aging parents. Elderly parents may have enough to get by during a healthy retirement but could fall short financially if long-term medical care is required. Adult children can ease the strain by investing in medical insurance for parents that would take care of nursing home costs.

The lack of a will gives permission to a probate judge to decide where your assets end up when you die. Even individuals without children might not be satisfied to know a stranger is distributing the assets they’ve worked hard to earn.

Financial and legal professionals discourage procrastination for estate planning. Drawing up a will can help avoid forcing family members into lengthy probate.

Source: businessinsider.com, “Five Smart Financial Moves 40-Somethings Should Do Every Day,” Allison Kade, Jan. 8, 2013

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Everyday people are not the only ones who fail to plan future strategies for their assets. Famous people with great wealth including musicians and reclusive billionaires have been guilty of inadequate estate planning.

A past skiing accident caused the death of a man known for his political clout in California almost as much as he was recognized as the ex-husband of singer Cher. Sonny Bono died with no will or trust. Bono’s failure to plan placed his $1.7 million estate in the hands of a probate court. The three-time married politician left behind a complex and family struggle for his assets.

One of the wealthiest people ever to ignore estate planning needs was Howard Hughes. Hughes was worth $2.5 billion at the time of his death in 1976, a respectable sum even by today’s standards. Hughes had no will. Shortly after the aviator’s death, a mysterious handwritten will was found in a church office. The will was eventually discredited. The Hughes fortune took more than three decades to settle. In the end, billions were divided among 22 relatives.

Funk musician James Brown was guilty of procrastination. The singer had hoped to improve the lives of impoverished children through a $100 million trust. What the “Godfather of Soul” didn’t anticipate was the legal tug-of-war that would ensue among family members. The singer had at least three wives and nine sons. The last woman in Brown’s life claimed to be his fourth wife with Brown’s tenth son. The self-proclaimed widow and her child were not mentioned in James Brown’s will. The will had not been updated since before the couple’s marriage.

Never created and outdated legal documents are estate planning mistakes common to the great and humble and the rich and poor. Poor financial planning and updating can force estates of every size into probate, where court fights and expenses can quickly deplete assets meant for heirs.

Source: wealthmanagement.com, “Lessons of the Rich and Famous . . . in Death,” Jim Moniz, Dec. 24, 2012

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Life improvements are almost always the subject of New Year’s resolutions. The declarations to get fit, change relationships and improve career or financial prospects that are sincere on Dec. 31 often become diluted or forgotten by spring.

Estate planning experts in California encourage consumers to consider commitments that last beyond a lifetime. Living wills, medical directives and trusts are integral elements in well-rounded estate plans.

Unless death is sudden, most people reach a point in life when they are incapacitated either temporarily or permanently. Accident or illness may physically or mentally disable a person of any age. Slow, cognitive decline is common for the elderly.

Without a plan to give directions or pass decisions to a trusted party, relatives and medical personnel may be helpless to act on your behalf. A living will contains your medical choices. A designated health care surrogate becomes your voice for decisions you can no longer make.

Within these documents are choices you have made. The health-related documents can be as detailed as a person wishes. Without these estate planning documents or the naming of a health care proxy, a judge who knows nothing about you may decide how to proceed.

Experts note that many individuals who create estate plans forget to update them regularly. Every account, insurance policy or retirement plan includes a beneficiary. If the last time you verified a beneficiary was before a family birth, death or divorce an update is overdue.

Assets meant for heirs, including minor children, may be placed in trusts. A revocable trust and the assets within it can remain in the control of the person who establishes the trust until incapacity or death. Control then passes to a designated trustee who manages and distributes assets according to pre-set instructions.

A vow to protect and update personal health care and financial choices is a resolution that will outlast the year and may benefit generations.

Source: forbes.com, “Three Resolutions For The End Of Life,” Carolyn McClanahan, Jan. 1, 2013

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California estate plans often include trusts that have dual roles. Assets in revocable living trusts benefit individuals during their lifetimes and reward beneficiaries when the trust creator, also known as a settlor, is no longer alive.

For financial control reasons, many individuals choose to retain the roles of settlor, trustee and beneficiary when a revocable living trust is initiated. Taking all three positions at once is legal although; on occasion, a settlor will name other individuals as a trustee or beneficiary.

A trustee who is not the settlor usually remains bound to instructions from the trust creator. After all, the settlor has the option to change, defund or discontinue a revocable trust at any moment during a lifetime.

Trustees sometimes encounter situations when settlor or beneficiary desires conflict. What kind of power does an independent trustee have? Estate planning and legal experts say decision-making powers are conditional.

Other than perform duties according to settlors’ wishes, trust managers must also realize when instructions are mandatory. Trustees may choose to adhere to a settlor’s guidelines, even when a settlor’s incapacity interferes with trust decisions.

A trustee may go against a settlor’s instructions when the settlor has been judged incompetent by a physician and a court. A legally incompetent settlor loses the ability to revoke a trust. A certificate of incapacity does not require the trustee to oppose the settlor’s desires automatically.

The California Supreme Court will review a case next year that involves trustee responsibilities. A decision made by a lower court absolved trustees from having to ask about a settlor’s competence. The court felt that trustees should not be liable for inquiring about the complicated issue.

Legal advisers also note that trustees do not have to follow beneficiary recommendations during a competent settlor’s lifetime. Beneficiaries may not bring lawsuits against a trustee after a settlor’s death because the trustee failed to heed the beneficiaries’ advice.

Source: lakeconews.com, “Estate Planning: May a trustee follow a living settlor’s bad instructions?” Dennis Fordham, Dec. 15, 2012

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A California attorney who specializes in helping clients formulate effective estate plans understands the usefulness of wills and trusts, but the average individual may be less familiar. Conversely, an estate planning attorney cannot decide an individual’s desires concerning end-of-life medical care, beneficiaries’ worthiness or assets to pass on after death.

Those personal choices are up to an estate owner. An individual’s last wishes can be actualized by employing legal advisers to craft documents like living wills and trusts. In order to achieve the desired results, it is necessary to understand what these documents accomplish.

Although they have similar names, a will and living will are separate legal documents with unique functions. A living will pertains to and gives direction regarding the medical care of an incapacitated, but still living individual. A health care proxy can be assigned as an aspect of this to appoint a trusted person to make medical decisions in the event the individual is incapacitated.

Conversely, a will takes effect only after the death of the person who created it. Wills are formal directions for the distribution of a deceased person’s assets. Wills also resolve other legal issues like guardianship.

Living or revocable trusts are loaded with assets that benefit a person who is alive. The contents of the living trust may be changed or revoked during a trustmaker’s lifetime. This means that it is possible for a living individual to be a trustmaker, trustee and the beneficiary of a living trust, all at the same time. Then, upon the trustmaker’s death, the assets within the trust would be managed by a named trustee on behalf of designated beneficiaries.

While this is a very high level overview of how some key aspects of estate planning function, there are still many other issues that can be addressed and unique needs that can be tailored to an individual. To learn more about how best to utilize these documents in planning for health, long-term care and the care of loved ones after an individual’s passing, it is best to consult with an experienced estate planning attorney.

Source: theepochtimes.com, “Living Will vs. Living Trust,” Arleen Richards, Dec. 5, 2012

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Individual Retirement Accounts are investments designed to provide income during the later years of life. What happens to IRAs or the unused portions in them after death? Ideally, a Los Angeles estate planning expert will ensure that the IRA or remaining sum benefits heirs.

Ignoring or misunderstanding IRA distribution rules can cause unnecessary taxation during life and financial headaches for beneficiaries. IRA owners must be aware when to begin taking distributions and how much to withdraw to avoid tax implications.

An IRA distribution becomes mandatory on the first day of April after the account owner turns 70 ½ years old. A minimum amount must be taken from the account annually. If not, the government imposes a 50 percent “accumulations” tax on the difference between what was distributed and what should have been withdrawn.

A calculation involving a life expectancy figure is used to decide the yearly amount that must be withdrawn from an IRA. It doesn’t matter how many IRAs a person owns or which IRA is tapped for distributions. As long as the minimum amount is removed from any of the total number IRAs, the government will not tack on the excess tax.

Qualified designated beneficiaries of IRAs are people including relatives and non-family members. Some trusts, but not all, also may be named as qualified designated beneficiaries.

The life expectancy calculation is reworked for a qualified beneficiary or, in the case of qualified trusts, according to the life expectancy of a trust beneficiary. Charities, the majority of trusts and estates are not qualified designated beneficiaries, which have a “ghost” life expectancy limit or five years to remove money from the inherited IRA account. The full withdrawal date depends on the status of the account at the time of the original owner’s death.

An Individual Retirement Account should work as hard as possible for as long as possible. Because of this, estate planners often discourage naming non-qualified designated beneficiaries — especially for tax free Roth IRAs.

Source: marketwatch.com, “Top 10 IRA-planning mistakes,” Robert Powell, Nov. 29, 2012

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Not every person requires a trust to complete an estate plan. Sometimes a will and powers of attorney cover everything necessary for an estate. In other circumstances, trust instruments are needed to ensure assets and heirs are protected from probate and, sometimes, even from an inability to manage inheritances.

All trusts are not the same. Their use in California estate planning depends on an individual’s needs and desires during life and following death. The most widely used trust is a revocable living trust, which can be altered as long as its author is alive.

The trust is stocked with assets and contains instructions about property distribution to heirs. The assets used to build a living trust are varied, from cash to stocks to real estate.

Estate planners recommend that assets are retitled when the switch to a living trust takes place. Making the change before death avoids the time and expense of a court action to move the assets.

Many people have estate plans that cover what happens to what they own after death. Revocable living trusts also give individuals the chance to secure finances and assets before death.

Illness, accident or age can cause incapacity. A revocable trust allows an individual to name a trusted person to step in when the ability to handle finances is lost during a lifetime. The trust also allows its creator the chance to assign a trust administrator to handle after-death affairs.

Privacy is a good reason for some estate planners to choose a revocable trust. Trust actions are not open to public inspection the way probate actions are. Only people affected by a trust are informed of its contents.

Finally, control of asset distribution comes with the establishment of a revocable trust. An assigned trustee can guide assets for an heir who is a minor child, unreliable or inexperienced with finances. The trustee manages assets for heirs who may not be able capable of doing the job themselves.

Source: fresnobee.com, “Revocable living trust has benefits,” Claudia Buck, Nov. 26, 2012

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Events like Hurricane Sandy make pet owners think about what would happen to a loved animal when owners were unable to care for them. Natural disasters and an owner’s incapacity or death can separate a pet from a human friend.

The ASPCA encourages pet owners to include the long-term care of pets in an estate plan through wills or trusts. Proper instructions for estate administrators can ensure that a pet lives with the right person and has enough funding to support feeding and medical attention.

ASPCA officials say an estimated 100,000 pets enter shelters annually because their owners have died or lost the ability to take care of them. The lost animals are often grouped with 3 to 4 million other unwanted pets in the U.S. that are euthanized every year.

More than 60 percent of American homes contain a pet. An ASPCA survey of 1,000 respondents found that just 17 percent of pet owners made legal plans for their dogs and cats. The arrangements could include leaving the pet – considered property by law – with a chosen guardian.

Sometimes owners establish a pet trust fund so that an animal’s financial needs are not a burden to the person who cares for them. Pet trusts are available in every state with the flexibility to include the name of a pet beneficiary, the details about the pet’s care and arrangements to finance the pet’s needs.

Pets may also be included in a will. Remember that wills are contestable and can stall in limbo until the matter is resolved. Unfortunately, pets listed as assets for distribution may be caught without a caregiver during that wait.

One of the easiest ways to let others know how you want a pet handled in the event of an emergency is a simple card. Keeping an “animal card” and storing a similar document with estate papers will give others information and a contact for the pet’s care.

Source: lifeinc.today.com, “Superstorm showed need for estate planning for pets,” Jacoba Urist, Nov. 12, 2012

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