CA Estate Planning

ESTATE PLANNING / RETIREMENT PLANNING

If you were counting on tapping the equity in your home to help finance your retirement, you may have reason to worry.  A recent issue of SmartMoney points out, “With home prices falling for nearly five years, many American must consider what to do with their homes should prices continue to collapse and the equity in their homes, if they are still lucky enough to have any, disappears completely.”

If you are a Baby Boomer with an eye toward retirement, your plans may be taking quite a beating right now. Warnings about shortfalls in social security and Medicare, rising health care costs, and the prospect of higher taxes now combine with disappearing home equity. No wonder so many Boomers say they plan to work through their “retirement.”

So, what do the experts say you should do with your home? Should you stay put and wait it out, hoping that home prices will eventually recover? Or should you bail out now, before you lose even more, and downsize?

“The answer is that it depends on the individual situation,” says Nicholas Paleveda, an adjunct professor at the graduate tax program at Northeastern University. “If you have plenty of assets for retirement, there may be no reason to downsize. If you do not have sufficient assets for retirement, then selling your home to live in a smaller home may be appropriate.”

For more answers to your Estate Planning questions please visit our website.

 

ESTATE PLANNING / SAME-SEX COUPLES

Unmarried couples are a growing part of our population, and with them the growing controversy over their legal rights as couples. If the government doesn't recognize a relationship, taxes, estate planning, buying property, and dividing assets after a breakup all get messier—and pricier. And, as Bloomberg Businessweek recently pointed out, the number of unmarried cohabiting couples has surged, meaning millions more Americans, gay and straight, are facing these issues. The U.S. Census Bureau estimates 7.5 million heterosexual couples and 620,000 same-sex couples lived together in 2010, compared with 6.7 million heterosexual couples and 476,000 same-sex couples in 2009.

The lack of a legally recognized union or marriage has always been a problem in the event of dispute or estate transfer. But with new laws and court rulings increasingly recognizing the rights of live-in couples, rapid change is also making the legal and financial status of couples more confusing.

"It's a changing area of the law,” according to Linda Lea Viken, attorney and president of the American Academy of Matrimonial Lawyers. “ Some places are becoming more hostile to same-sex relationships. Others are becoming more liberal."

This is especially important for same-sex couples, and estate planning is one of the thorniest issues. There are many tax advantages enjoyed by married couples, which simply are not available to those whose unions are not legally recognized. And, even if you are “legally married” in one state, don’t think your problems are solved. You can still face difficulties, especially if you move to a state that does not recognize your marriage.

Whether gay or straight, non-traditional couples need to take a serious look at the legal and economic realities they face. “It's dangerous to leave matters like custody of your children or holding on to your home to non-specialists, says Howard Forman, an attorney at Turkel, Forman & de la Vega in New York. “It's heart-wrenching when you see people who think they are protected and they're not.”

For more information on GLBT Estate Planning issues please visit our website.

ESTATE PLANNING / INSIGHTS ON WEALTH

 If you are a Baby Boomer who has worked hard, accumulated significant assets, support charitable causes, and plan to continue working through “retirement,” you are not alone! And you won’t be particularly surprised by the findings of a recently released survey by US Trust: Insights on Wealth and Worth. The survey was conducted earlier this year, with 457 high net worth and ultra high net worth individuals, with $3 million or more in investable assets. The survey found a distinct generational mindset among the wealthy – many of whom are Baby Boomers, self-made, first generation wealthy who achieved financial success on their own.

You are probably familiar with some of these insights found by the survey:

 

• Nearly half of these wealthy individuals plan to continue working in “retirement,” many starting a second career or new business.
• Many also want to be able to travel – remember my post last week about “going mobile” with your business, perhaps even into retirement?
• Many wealthy Americans want to give back to their communities and support charitable causes, and they may need professional legal advice to fulfill those ideals.
• Few have the type of comprehensive estate planning in place that matches the complexity of their estate, their finances and their estate planning goals.
  
  

That last insight, about few people having the type of comprehensive estate planning they really need, may come as a surprise to you – or even to US Trust – but not to me. I see this in my practice every day. Just because you have a simple will in place, or believe the federal estate tax will not affect you, does not mean you have adequate met your estate planning needs. Some common “gaps” that turned up in the US Trust survey include:

• No living will or health care directive
• No durable financial power of attorney
• No revocable living trust
• Inadequate planning for life insurance
• No charitable planning, despite charitable intent
• No written plan for the distribution of personal property
• No business succession plan, in fact only three percent of business owners had a business succession plan in place

 

If you saw yourself in the first paragraphs of this post, you likely saw yourself again in the last few. If you don’t take action, then you are, as US Trust President Keith Banks said, “leaving the legacy of (your) life’s work to chance.”

You can download the full survey report from the US Trust website.

For more information on estate planning please visit our website.