Life Insurance and Estate Planning

I can’t over-emphasize the importance life insurance can play in your estate plan!

Often, a person or couple will delay buying life insurance until they feel they can better afford it. However, that’s not wise. The older you get, the more expensive new life insurance policies become and the less insurable you become. At some point, life insurance will become unavailable to you, either due to age or to a medical condition. The best time to buy life insurance is while you are relatively young and healthy.

Why to buy life insurance? As a tool in estate planning, life insurance can:

1. Create an estate for your spouse or children.
2. Provide cash needed to settle your estate or pay estate expenses.
3. Allow you to give to charity without depleting your estate.
4. Cover estate tax expenses.

Contact our office with any questions – we’re always happy to talk to you!  (858) 740-4370.

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Estate Planning Checklist

Estate Planning begins with the following steps:

1.  List your Assets:  Make a list of everything you own, including all bank accounts, investments, real estate, insurance policies, and any other valuable items of personal property.  Split the list into assets with named beneficiaries (such as insurance policies and retirement plans), jointly held assets, and assets you own personally that do not have named beneficiaries (such as cars, boats, collections, etc.).

2.  Assign beneficiaries:  Determine who you would like to receive each asset when you pass away.

3.  Write a Will:  Working with a qualified attorney, write a will that specifies where your assets should go and who should serve as guardians for your minor children, if necessary.

4.  Write Incapacity Documents:  Prepare an Advance Health Care Directive and a Durable Power of Attorney for Property Management, each of which “springs” into effect if you become incapacitated and can’t make your own health care or financial decisions.

5.  Consider Probate:  Work with an attorney to understand the Probate process, how it would affect your loved ones, and what can be done to avoid it.

6.  Consider a Living Trust:  If you think a trust might be right for you, consult and attorney and/or a financial advisor.

7.  Update your Insurance Policies:  If you have dependents, consider increasing your Life Insurance to the point where your spouse and child could live without income for two years – start by multiplying your annual income by five and see how that works.  If you’re in your 50’s or older, consider long-term-care insurance.

8.  Review your Advance Estate Planning needs:  If you have $3.5M or more, consider transferring assets out of your estate: charitable trusts and giving; advance gifts to children; grantor retained annuity trusts; etc.

9.  Plan for Business Succession:  If you own a business, consider which children (if any) you would like to inherit the ownership.   Otherwise, plan for the sale or transfer of your business or equity on your death.

While you can do some of these tasks yourself, why not consult an experienced attorney?  Daniel K. Printz, Esq. has represented San Diego families for nine years, and teaches “Estates, Wills and Trusts” at the University of San Diego.

Call him at (858) 740-4370 for a free consultation today!!

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San Diego Paralegal Association MCLE

The San Diego Paralegal Association (SDPA) is pleased to announce the following:

MCLE EVENT – 6:00 – 7:00 p.m.

“Recent Tax Legislation and Estate Planning Practices,” presented by Daniel K. Printz, Esq.

Date: Wednesday, June 3, 2009

Location: San Diego County Library – North County Branch 325 S. Melrose Drive, Suite 300 Vista, CA 92081-6697

Cost: $15.00, SDPA Members; $20.00, Non-SDPA Members

DINNER IS INCLUDED IN THE COST OF THE EVENT.

THIS IS FOR 1.0 MCLE HOURS.

The Compliance Period for California Paralegals to earn 4.0 hours of general education and 4.0 hours of ethics is from 01/01/2009 – 12/31/2010. Start earning those hours early!!! For more information and to enroll, please go to www.sdparalegals.org

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California Probate Fees

What are the fees to Probate an estate?

In California, both the personal representative (an executor or administrator) and the personal representative’s attorney are entitled to compensation.  If the Will specifies the compensation, then that’s all they can receive (P.C. 10812).  If the Will doesn’t specify, then the personal representative and the attorney are each entitled to fees for ordinary services (P.C. 10810) and fees for extraordinary services (P.C. 10811).

Fees for extraordinary services must be approved by the Court and are in an amount that the Court considers “just and reasonable”.

But fees for ordinary services are set according to the gross value of the estate, without reference to encumbrances or other obligations.  In other words, if your home has a fair market appraisal of $1,000,000 then the fees are set on that amount, even if you have a $900,000 outstanding mortgage!

 Here is the fee table, based on gross value of the estate:

Fee Percent	Of What Amount?	Max Executor Fee	Max Lawyer Fee	Total Fees	Minimum Loss
4%	First $100,000	4,000	4,000	8,000	8% of total estate
3%	Next $100,000	3,000	3,000	14,000	7% of total estate
2%	Next $800,000	16,000	16,000	46,000	4.6% of total estate
1%	Next $9,000,000	90,000	90,000	226,000	2.2% of total estate
0.5%	Next $15,000,000	75,000	75,000	376,000	1.5% of total estate
“reasonable amount”	Over $25,000,000	Unknown	Unknown	Unknown	Unknown

 What does this tell us? First, that everyone needs to avoid probate.  Second, that the smaller the estate, the harder the beneficiaries will be hurt by probate fees. 

Contact a qualified estate planning attorney in your area, or call the Law Office of Daniel K. Printz at (858) 740-4370 to make an appointment.

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Free online estate planning?

Today, I saw a posting about doing one’s will and trust online:

“What about going to http://www.SuzeOrman.com and clicking “will and trust kit” on the left side of the screen. She said on a recent show to use the password “peoplefirst” to get the documents for free.  I bought this package at a KPBS fundraiser a few years ago and it’s the one my family is using. “

After a certain knee-jerk emotional reaction, I decided that I’d better check out the Suze Orman package before I criticized it.  After all, she’s strongly in favor of estate planning (a position I certainly agree with), and I’ve quoted her admonitions for years to clients.  I certainly would select Suze Orman over, say, legalzoom.

So I went online to check out her program. 

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Estate Planning for New Parents

Congratulations on your new family! You are in the midst of an exciting adventure, but it’s an adventure with real-life concerns. Among them – how best to protect your children should something happen to you?

In my practice, I try to patiently walk  clients through the maze of choices they need to make as responsible parents.  Here are some of the topics every new parent should consider:

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Simple Gift Taxing as a Tool to Reduce Estate Taxes

Let’s talk about gift taxes!

Under IRC Section 2503(b), the first $13,000 (plus cost of living adjustments) of gifts to any person, other than gifts of future interests in property, made during a calendar year are not included in the total amount of gifts made during the year. There is no limit to the number of recipients to whom a donor may make an annual exclusion gift each year.

Therefore, a client with numerous objects of his or her affection can significantly reduce their estate with tax-free transfers.

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Estate Tax Exemption Likely to Remain at $3.5M

The Wall Street Journal and other sources have reported that President Obama wants to freeze the estate tax credit at its current level. This means that estates with less than $3.5 million in value can be transferred free of the estate tax at death. In other words, the vast majority of us (98%) won’t have to worry that our children’s inheritance will be reduced by a 45% tax when we die.

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Letter of Last Instructions

Here’s a good idea: Give guidance to your heirs, expected personal representative (executor or trustee) and loved ones by creating a Letter of Last Instructions. Tell your estate planning attorney, and proposed Excecutor  or Trustee where it can be found, and leave it in that trusted place (safe deposit box or fire-proof safe – you can buy a small fire-proof safe at Staples or Office Depot for less than $60).

What should you put into your Letter? Here are some suggestions:

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Parent’s Home not in Trust?

Here’s a call I’ve started to get recently: My aging parent has a trust but she hasn’t transferred her home into it – what can I do?

Most estate planning attorneys these days prepare a grant deed or quitclaim deed and transfer their clients’ primary residence into trust as part of their flat fee performance. In the past, however, some attorneys would prepare a quitclaim deed and instruct their client to store the deed so it could be recorded on their death. The first thing you could check out is whether a deed exists that hasn’t been recorded.

You can easily confirm whether the proprety has been transferred to the trustee by checking with the County Recorder’s office or a local realtor/title company, and asking for a copy of the “vesting deed.” In San Diego, you can even order the copy online and have it mailed to you for an extra $1 charge!

If the property is definately not transferred, and you have a Power of Attorney for your parent(s) that gives you the power to transfer real property and the power to create/modify/revoke trusts, you can act on your own to transfer the property.

If you don’t, you can work with your parents to accomplish the task. Most local attorneys will prepare and record the deed for you for a minimal fee (say, $100 – $200), which includes the recording costs and the filing of a Preliminary Change of Ownership Report.

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