Saving for the future is always a good plan. But what happens when an emergency occurs and you are not prepared. It is common for people to forget to put money into an emergency fund until circumstances make having one essential. Here are some common situations where having an emergency fund may prevent financial stress and prevent you from going into debt.
- You or your spouse loses a job
A job loss can happen to anyone at anytime. Having a safety net that covers your expenses for three to six month is crucial. This will allow you to keep current on your bills while you cut back expenses and search for new employment.
- Emergency medical or dental bills
Even with health insurance, emergencies and unexpected expenses and high deductibles still occur and can put you in a financial rut if you don’t have enough
- Unexpected home or vehicle repairs
You may have homeowners or renters insurance, and vehicle warranties may cover many repairs, however they do not cover everything. Repairs are inevitable, regardless of the age of your home or vehicle. For unexpected repairs it is helpful to have a stash of cash to pay for them
- Tax-time surprises
Most people only think about taxes in April, when they are due. They eagerly plan what they will do with their refund. But sometimes you are surprised with a tax bill that is much higher than what you had anticipated. Having an emergency fund can help cover the financial shock.
- Last minute travel
This sort of travel usually entails an ailing loved one, a funeral or other family related emergency. You need to get somewhere fast on short notice. Having money saved will alleviate the need for using credit cards to pay for the trip.
In order for a Revocable Trust to work correctly it must be funded, that is, your assets must be put in the name of your trust. The Trust can only govern what it owns. By funding your Trust, the Trust governs those assets. We tell our clients the importance of funding their Trust all the time. Since there are different types of assets, there are different ways to fund them into your trust. Bank accounts, for example, are funded differently than life insurance. The rights to royalties or money owed to you are funded in a different manner. Here are three ways to fund assets into your trust.
Change of Title/Ownership
Changing title or ownership applies to assets such as bank accounts and real property. These assets are funded into your Trust by changing the owner of the asset from your individual name to the name of the Trust.
Here is an example:
Current name on ABC Bank Checking Account: John A. Smith
New Title on ABC Bank Checking Account: John A. Smith as Trustee of the John A. Smith Revocable Trust dated April 1, 2010.
Important Fact: The date of your Trust is part of the name.
Assignment of Ownership Rights
These are things such as monies owed to you. If you loan money to someone and have not been paid back yet, you can assign the debt to your Trust. The same goes for royalties, copyrights and patents. Even oil and mineral rights are assigned to Trusts.
These are done through “Assignments of Interest” and require specific language. Contact your Estate Planning attorney if you need one, and they can draft one depending on your asset. Different assets require different language.
Change of Beneficiary
Many people have assets that are beneficiary driven. Meaning that you can’t change the title, but you can change the beneficiary. These are assets such as IRAs, 401Ks and Life insurance policies.
If you would like to fund these assets into your trust so the money is divided equally, or is used in the manner in which you chose, it is best to name your Trust as the beneficiary.
It may be best to contact your attorney or Financial advisor to help you change the beneficiary on these accounts/assets. For many of these you can contact the financial institution that has these assets and ask them for a Change of Beneficiary form and update your beneficiary that way.
At Hornstein Law we know the value and importance of funding your Trust and we are always available to discuss funding. Give our office a call, at 818.887.9401, with any questions. We cannot stress the importance of this enough.
It is that time of year, school is back in session. Many parents and many of our clients are sending their kids to college. At this point, something all parents should do is encourage their kids to get a power of attorney, its important.
We understand that this is not something on kid’s minds right now. But as parents, having a power of attorney in place usually prevents you from having to go to court to get permission to act as your child’s proxy. Which is both expensive and time consuming. A power of attorney that’s validly executed in the state in which an individual has full-time residency is usually honored across the U.S. But if a child attends school out of state, we recommend having your attorney contact an attorney where the school is located to confirm this.
We write our estate plans to stand the test of time. We include clauses that cover digital life, pets and even heirs and beneficiaries that haven’t been born yet. If you never looked at your estate plan again, you would still be protected.
But it never hurts to look at it again and update it.
First let’s review what an estate plan is. An estate plan is a group of different legal documents that work together to protect you in case anything should happen. There is a Power of Attorney if you become incapacitated, and a Healthcare Directive, for your end-of-life decision, plus much more.
The whole plan works together. If one piece is out of date, you should review the whole plan and update any part that may be out-of-date or no longer reflect your wishes.
The answer is YES. Yes they can.
A revocable living trust does not provide protection from creditors, lawsuits or divorce.
There are many advantages to a Revocable Living Trust, but protection of assets isn’t one of them.
A creditor or judgment holder or even an ex-spouse can take property owned by your revocable living trust because the trust is revocable. It is not necessarily permanent, you can change the terms of a revocable living trust agreement at any time. You can put assets into trust and take them out. A creditor, judgment holder or divorce court can force you to take property out of trust to pay off judgments or other types of debt and obligations.
There are other options for asset protection. Here are two suggestions:
- Setting up a limited liability company (LLC) or limited partnership and transferring the ownership of assets into these legal entities. It is a good idea to contact an attorney who knows about this, and they can help you set up one of these corporations.
- Creating one or more irrevocable trusts – these do provide asset protection. But you are essentially giving the assets away to this trust. Be very careful when choosing his options, it is always best to consult an estate planning attorney who knows about Irrevocable Trusts before doing this.
Even though a revocable trust does not offer asset protection and cannot protect your property from the claims of creditors or a divorcing spouse, there are still options. Speak with a knowledgeable attorney about the steps you can take to create a comprehensive asset protection plan that goes along with your estate plan.
Call our offices for any questions 818.887.9401
People have attempted to write their own documents, and we can honestly say every attorney we speak with agrees that writing your own Living Trust is a bad idea.
Here are four reasons why writing your own Revocable Living Trust is a BAD IDEA:
Estate Planning is not a one-size-fits-all or even most.
There are many books and online programs that can help with generating estate planning documents. But they are designed to cover only the most basic estate planning needs. These generic forms are also deliberately kept as simple as simple as possible in order to comply with the law of all 50 state and D.C. Complying with the laws in Arkansas wont help a family who needs estate planning in Seattle. Estate planning is kind of like fingerprints, no one is a like, and using a generic software or book wont help your loved ones in the future.
Trust Laws Vary from State to State
Stat laws are all different when it comes to issues like probate, state estate tax, inheritance tax and even Trusts and wills. There are so many different and specific issues it is best to speak with an attorney regarding your states laws. Probate in California is very different then probate in Michigan and can impact your loved ones after you pass. If you write estate planning docs yourself, they may not include provisions or topics that need to be addresses in your state. Here are some specific issues that can impact a Trust from state-to-state: definition of descendants, anti-lapse statutes, community property laws, homestead rights, common law marriages and many more. A generic trust cannot properly address all of these specific state law issues.
Books, software programs and online DIY websites all have the same type of disclaimer – “The information contained in the book/program/website is not legal advice and is not a substitute for legal advice. For legal advice, consult with an attorney.” We recommend just that, consult an Attorney!
You Get What You Pay for
Would you fix your own car? Repair your own computer? Perform your own surgery? I doubt it. While doing things yourself can save time and money in the short term, when it comes to estate planning, it’s the long term you need to worry about.
Here’s a brief story from an attorney who handled a Trust Administration for a family who did it themselves. A couple brought in their family’s trust. The elder couple had used a well-known attorney’s estate planning website to generate their own docs. When the family brought in the Trust, it stated on the first page that it was governed by Nevada law. I am a practicing attorney in Florida. What is the problem here? Nevada is a community property state and Florida is a separate property state. That was the first of many problems I faced. It was very clear the couple didn’t understand what they were doing when they used the software. There were many contradictions in the Trust, which made administering it a long and expensive process due to the amount of time it took to try to understand what their intentions were.
Give Hornstein Law Offices a call to discuss estate planning and Trust administration. Doing it yourself will leave your family with a big mess if done incorrectly, and could potentially cost you and your family thousands of dollars. 818.887.9401.
This month we are covering the subject of caring for our elderly parents. Whether your elderly parent suffers from illness or if they are just getting older and need assistance, these steps will help you organize and care for them. This newsletter continues where we left off last time. We discussed helping ill or elderly parents and loved ones. We ended our discussion after in-home care options. If you are interested in catching up on our newsletters they are all available on our blog. Now we will cover what are your choices when in-home care isn’t a viable option.
If the option to stay in their home is not viable for an elderly loved one you will need to start considering assisted living facilities.
This month we are going to cover the subject of caring for our elderly parents. Whether your elderly parent suffers from illness or if they are just getting older and need assistance, these steps will help you organize and care for them. This newsletter will cover what documents you will need and what types of assistance may be necessary. Communicating with your loved one is the first thing you need to do and our previous newsletter covered that topic.
As we age sometimes illness and disability can come without warning. Alzheimer’s and dementia are mental illnesses that many elder adults suffer from and the onset can be sudden and rapid. These illnesses require a special type of assistance.
An elderly loved one may suffer from a fall or accident that disables them physically. This type of disability will require a different type of assistance for your loved one. It is important to know the variety of options available depending on your situation.
We have all heard the recent news that legendary artist Prince has passed away and he didn’t leave a Will. There has been much speculation about the battle between siblings over his estate and music royalties.
We wanted to talk about five musicians who passed away without Wills, like Prince, and what ended up happening in their battles.
Did you know Bob Marley and Tupac Shakur died without Wills? Bob Marley died after an 8-month battle with cancer, and he left no Will and nine children. Not to mention an estimated $30 million and royalties to all his music, and that was in 1981. Even with months to plan he did not make any attempt to set up an estate plan. As recently as 2012 there had been a lawsuit involving royalties of his music. And there may continue to be lawsuits in the future.