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 Oh, mirror in the sky, what is love?
Can the child within my heart rise above?
Can I sail through the changing ocean tides?
Can I handle the seasons of my life?
-Fleetwood Mac –

My teen went to high school today but she’s not a high school student. Instead she’s touring a local high school in an activity called “shadow day.” She’ll attend classes and, hopefully, get an idea of what it’s like to be a student there.

Much preparation went into this shadow day. She had to secure a coveted spot; get tested for Covid no more than 72 hours in advance; and, of course, select the right outfit. Of course, I did not prepare myself and so, I was not prepared for the nausea that rose in me the few seconds it took for her to turn from me, bounce up the steps and dart through the frosted glass doors into another world.

We learn the phrase “object permanence” when we first become interested in a baby. People whose job it is to know, explain that babies cry when mother goes away because babies just don’t understand the concept of “object permanence.” A thing can go away and still exist. But, they reassure us, once baby sees that father leaves and then comes back, baby won’t cry or at least won’t cry so much. And there is more good news. We can help baby understand through games like peek-a-boo. “See”, we say, “here’s my face, now it’s behind my hand. I’m still here!”

While standing with the other parents on the sidewalk, looking at the watercolor shapes and figures as they shifted behind the frosted glass doors, I wondered, “Do babies feel nauseous during their first peek-a-boo experience?” Maybe, they cry because of the nausea. I felt like crying, too.

Really, my daughter practices leaving all the time. She is getting pretty good at leaving. She is the captain of her ship. I need lots of practice standing on the shore. I try to help. “Look out,” I shout into the wind, “I crashed there once before!” If you have never shouted into the wind, try it. Your words don’t get very far. I am learning to live with the nauseous feeling.

But really, she has been practicing leaving for a long time, for like forever. Babies disappear into toddlers and then into little kids and then into big kids and on and on. The constant disappearing act leaves me off-balance. Think you know that little boy? Wait a few months and a new little boy will be in his place. Like in Maurice Sendak’s weird and spine-tingling picture book: “Outside, Over There” in which the baby was kidnapped by goblins and replaced with an ice baby. He’s a new boy with brand-new opinions, he prefers a different nickname, his best friend was an enemy yesterday, and he loves the food cooked by his friend’s mother but can’t stand it when you serve it. Then, to keep it interesting, wait a few months more and he’s back to the little boy you knew before, sort of.

But many things about childhood are outrageous and confusing. That is probably why it took so long for me to realize that the kids aren’t disappearing at all. They are being incorporated, like yeast into bread or in the way the seed incorporates the rain, soil and sun to become an apple. My daughter has been incorporating into herself. My care, meddling and feeding, like soil, sun and rain, are no separate thing but necessary and indivisible.

I’ll pick her up this afternoon. She’ll learn things I can’t even imagine. Perhaps the baby cries because it already knows the lesson of object permanence. There is no such thing.

I can’t wait to see her again.

I created this download to offer some ideas about what type of planning is typical for people by age. Most people are complicated and life is . . . interesting. This means that a chart like this should not be relied on to make any decisions.

I hope it does bring awareness and raise questions for you to bring to your own attorney. Only your attorney can tell you what’s best for you.

Starting a new job is an exciting new chapter in your life. Depending on your company’s onboarding process, there can be a lot of moving parts. You may feel overwhelmed by the introduction and review of the many different types of employee benefits. Not only are there forms to be filled out, they need to be filled out properly to ensure that your financial and estate planning wishes are carried out.

By making the appropriate elections and designations, you can make sure that many of your benefits go to the right people at the right time.

Beneficiary Designations

Beneficiary designation forms are an effective way for you to choose who should receive the death benefit from your employer-provided life insurance policy or the balance of your retirement account if either or both of these benefits are being offered to you as part of your employment. The beneficiary designation forms allow you to name a primary beneficiary and a contingent beneficiary (as backup in case the primary beneficiary is deceased or does not want the money). You have several choices when naming a primary beneficiary. You can choose one person, two people to split the death benefit or account, a charity, or even a trust. In some circumstances, your employer’s plan may require that your spouse be listed as the primary beneficiary of the retirement account or consent to someone else being named as primary beneficiary.

Because the beneficiary designation will override anything written in a will or trust, it is important that you complete this form properly. If you do not fill it out and subsequently die, the account or death benefit will be distributed according to the default rules of the account or policy agreement, which may give the balance to your spouse or heirs, as defined by the plan agreement or applicable state law, or to your estate, which will require your loved ones to go through the costly, time-consuming, and public probate process and could result in adverse tax consequences because of a shorter payout period.

Note that most people find that life insurance provided by an employer is rarely sufficient. For example, the policy usually ends when you leave the job and as you age, your health profile may make it hard for you to find affordable insurance. That’s why most financial advisors recommend purchasing life insurance while you’re in good health.

Stock or Other Ownership Interests

If you are being offered company stock or other ownership interests as part of your employment benefits, it is important that you understand what that entails. Experienced financial, tax, and estate planning professionals should be contacted so they can help you understand what you have received. To properly plan, you need to know

• the type of interest,
• when the interest vests,
• whether there any tax obligations or reporting requirements,
• what will happen if you leave your employment,
• what happens if you die while still employed, and
• how you can pass along your interest to your loved ones through your estate plan.

To safeguard the employment benefits you may be offered, a foundational estate plan is key to tying everything together for a successful future.

Foundational Estate Planning

A foundational estate plan can close the gap on making sure you and your loved ones get the most protection for when you need it.

• Last will and testament. This document, also known as a will, or a pour-over will if you also have a revocable living trust, can be used to name an executor or personal representative to wind up your affairs, direct what should happen with your money and property, and nominate someone as a guardian for your minor children if you have any. Your family will have to go through probate to receive any money or property controlled by the will.
• Revocable living trust. As an alternative to a standalone will, a revocable living trust allows you and your loved ones to avoid the probate process by transferring your money and property to a trust during your lifetime or naming the trust as a beneficiary of your accounts and property. In most cases, you are the trustee and continue to manage the money and property. In addition, you can continue to enjoy the use of the money and property during your lifetime. If you become unable to manage your financial affairs, a successor trustee that you previously selected can step in without court involvement and manage the trust on your behalf and for your benefit. You can also designate what will happen to the trust’s money and property at your death.
• Financial power of attorney. This document allows you to choose a trusted person (an agent or attorney-in-fact) to handle your financial matters (sign checks, open a bank account, etc.). In this document, you can specify the scope of the agent’s authority and when the agent can act. Without this document, a court will need to appoint someone if you need someone to handle a financial matter on your behalf. This can take time and money that may not be available in the midst of a crisis.
• Medical power of attorney. This document allows you to appoint a trusted person as your decision maker to communicate or make healthcare decisions on your behalf if you cannot do so. Absent this designation, the court may be required to name someone to make these decisions for you, costing your loved ones time, money, and privacy.
• Advance Health Care Directive. This document, known by either name depending on your state, allows you to convey your wishes regarding end-of-life decisions. Properly documenting your wishes can make them easier to carry out and reduce tensions brought on by uncertainty.
• HIPAA authorization form. A Health Insurance Portability and Accountability Act (HIPAA) form allows you to grant specific individuals access to your medical information (e.g., to get a status update on your condition or receive test results) without giving those individuals the authority to make decisions on your behalf. Sometimes having information can help reduce tensions among the parties involved because everyone has access to the same information even if only one party has the authority to make any decisions.

Joining a new company is an exciting adventure. In addition to the human resources representative at your new company, we are here to help you protect the legacy you are in the process of building by creating a proper estate plan.

More often than ever couples are looking to plan for their futures with each other but without marriage.

This article addresses some of the options that unmarried couples have when planning’s transitions.

As with all relationships there are benefits and drawbacks to “making it official.”  Depending on the value of your money and property, your desired level of protection from your partner’s creditors, and other factors unique to your situation, one or more of these strategies may be beneficial.

A word of caution: regardless of what methods you use, you must work with an experienced estate planning attorney. While do-it-yourself options may be cheaper, small, seemingly inconsequential decisions can sometimes create more problems than they solve, and the problems can be expensive to remedy. In California, we see this often with transfers of real estate between unmarried people when property tax increase exponentially.

Add Your Partner as a Joint Owner on an Account or Piece of Property

Making your partner a joint owner isone of the easiest ways to give your partner immediate access to and control over an account or property. As long as the account or property is owned jointly with the right of survivorship, your partner will automatically become the sole owner upon your death with no involvement by the probate court.

This option has its shortcomings. Because your partner will become the sole owner at your death, your partner, not you, gets to choose what will happen to the account or property upon their death. You have to trust that your partner will make a decision you would have supported. In addition, once your partner becomes a joint owner of the account or property, your partner’s debts become your problem. Should your partner become subject to a creditor’s claim or lawsuit, the creditors could seize your jointly owned account or property to satisfy any outstanding judgment. Finally, if you and your partner break up, removing your partner’s name from your accounts or property could be problematic and lead to costly and emotional litigation if your partner is unwilling to cooperate.

Name Your Partner as the Beneficiary of a Retirement Account or Life Insurance Policy

Most retirement accounts and life insurance policies have beneficiary designation forms that allow you to dictate who will receive your retirement account balance or the death benefit when you die. In many cases, the instructions ask you to name a primary beneficiary and a contingent beneficiary (as backup in case the primary beneficiary is deceased or does not want the money). Adding your partner as a beneficiary is another easy solution to get money to your partner at your death without jeopardizing your ability to control the account or policy during your lifetime.

On the other hand, should your partner be sued, that money could be available to satisfy any judgments against your partner. Any money remaining when your partner dies goes to your partner’s heirs, not yours. This also doesn’t work if you want to make sure your partner is cared for since you won’t be able to control how the money will be spent. Your partner could bet it all on the 49ers to win the SuperBowl and take all their friends a fancy dinner at French Laundry.

Name Your Partner as the Pay-on-Death or Transfer-on-Death Beneficiary of an Account

Naming your partner as the pay-on-death (POD) or transfer-on-death (TOD) beneficiary of an account has the same pitfalls as naming them on a beneficiary designation form. Although the POD or TOD option allows you to maintain control of the account during your lifetime after the account has been transferred or the funds paid to your partner at your death, the account or money will become your partner’s. The money then becomes subject to any creditors or judgments your partner may face, it can be spent on frivolous items, and your partner gets to decide what happens to any remaining amounts.

Another downside of the POD or TOD option is that your partner will have access to the money in these accounts only upon your death. Should you become incapacitated (unable to make your decisions), the accounts would still be deemed yours and your partner could not access the funds, absent additional estate planning measures.

Name Your Partner as a Beneficiary in Your Last Will and Testament

A Last Will and Testament allows you to specify what money and property (owned solely in you and not automatically passing to a surviving joint owner or beneficiary) your partner will receive and how your partner will receive it (for example, as a lump sum or as installments over time).

If you choose to leave money or property to your partner, these items are vulnerable to the risks mentioned above, because your partner owns them outright. However, with a will, we can create a testamentary trust to provide extra protection for the money and property you leave to your partner. You must remember, however, that if you use a will, your partner will have to go through the probate process to get the money and property at your death and the probate process could be under court supervision until your partner receives the final amount. In addition, a will is effective only at your death. It will not provide any instructions or benefits to your partner if you become incapacitated.

Name Your Partner as a Beneficiary of Your Revocable Living Trust

A revocable living trust (RLT) is a trust you create during your lifetime that can be changed until your incapacity or death. While you are alive and can make decisions for yourself, you are both the current trustee (the person or entity who manages, invests, and hands out the money and property) and the current beneficiary (allowing you to continue enjoying the money and property during your lifetime). In the trust agreement, you determine who manages the trust and who receives the benefit of the money and property during your lifetime and at your death. You can specify how your partner should be financially provided for during any period of your incapacity, what accounts or property your partner will receive, and when and how your partner will receive the money and property at your death. Under a carefully drafted RLT, the accounts or property can be used to support your partner after your death and even while you are alive and unable to manage your affairs. Also, anything you want your partner to receive can be protected from your partner’s creditors or judgments and from your partner’s spending the money or selling the property to buy extravagant items. The accounts and property owned by the trust will avoid probate, a significant benefit that allows you to keep your private matters out of court and away from prying eyes.

Note, however, that if, after your death, your trust owns any accounts that generate income that is not given to the beneficiaries, the trust will be taxed on the income, usually at a higher rate than what an individual would pay on the same income. Also, the longer the trust exists, the longer it needs to be managed, so there could be ongoing fees associated with the trust such as tax preparation, investment, and management fees, depending on who is the trustee.

We Are Here to Help

As you can see, there are several different ways to provide for your partner during your incapacity or when you die. We are here to help you craft a plan that addresses your concerns and help you ensure that your partner is taken care of during all phases of life. Call us today to schedule your phone or video consultation.

Photo by Raphael Renter on Unsplash

Genealogy has long fascinated many people, and it continues to be studied by those who are interested in discovering who they descended from and what those family members were like. Many of us have gazed at black and white or sepia-tone photos of ancestors whose names we don’t know and wondered about their lives, joys, trials, and accomplishments. Fortunately, today, there are many resources making it much easier to discover information about prior generations of our families.

Celebrate National Genealogy Day this month by delving into the past to find out more about your family members, but also by taking steps to leave behind a legacy for your own present and future family members. By creating an estate plan, you can benefit future generations, not only monetarily, but also by sharing important values and life lessons.

Investigate the Past

Talk to members of the older generation. If you have older relatives still living, take advantage of their knowledge to gain more information not only about their lives, but also about your family tree and the individuals comprising it. You can ask them about how important historical events impacted them and other family members, where they grew up, stories about other family members, the occupations of family members, and other facets of their lives.

Do research. Online services are available that enable you to do research for a fee, but you may also be able to find some information using the libraries of local genealogical societies, genealogical resources in local public libraries, or genealogy databases available at the U.S. Library of Congress. Some companies may even enable you to identify other people to whom you may be related, as well as the cultures and migration paths of your ancestors, by analyzing a sample of your DNA.

Using these tools, you can find out a lot about your family and geographical roots. But you can also get inspired to leave something behind for your own descendants.

Have an Impact on the Future

Leave monetary gifts. Most parents and grandparents want to leave an inheritance for their family members. You can draft a will to transfer the money and property you have worked hard to accumulate to your loved ones, but a simple will alone is often not the best estate planning tool. If you leave outright gifts to your children and grandchildren, there is no guarantee that it will be spent wisely and it can be taken by beneficiaries’ creditors to satisfy claims. In addition, the money and property transferred using a will has to go through probate proceedings, which can be lengthy and expensive, and are open to the public. If you want to ensure that your money and property are available to benefit your family over the long term without the hassle of probate, there are other estate planning tools you can use.

You can make life easier not only for your children but potentially also for your grandchildren by creating a trust, either during your lifetime or that will become effective upon your death, naming them as beneficiaries. When you form and fund a trust, it can hold money and property for the benefit of specific people, and certain types of trusts will protect it from future legal claims arising from lawsuits, creditors’ claims, or divorcing spouses. In addition, you can include terms designed to ensure the funds held in the trust are sustainable by specifying how and when money should be distributed to your beneficiaries. You could decide to have it transferred as a lump sum upon your death, have portions of it distributed when the beneficiaries reach certain ages, or state that it should be distributed for specific purposes, such as expenses for their health, education, support, and welfare. In addition, you can have a positive impact on the lives of your children and grandchildren by setting aside funds to help them with expenditures associated with certain important life events, i.e., a wedding, college tuition, a down payment on a house, or funding for a new business.

Leave gifts reflecting your values.

Not all wealth is in the form of money and property. Over a lifetime, an individual accumulates a wealth of knowledge, life lessons, values, and experiences that can be shared with later generations. Two great ways you can communicate your values, life experiences, and knowledge are creating an ethical will and leaving instructions for your funeral service.

Ethical will. An ethical will, sometimes called a legacy letter, is not a binding legal document. Rather, it is simply a letter—or even a video recording—in which you can communicate any important values, sentiments, or life lessons that you think will benefit your family members and descendants.  Your ethical will can be one of the most meaningful parts of your estate plan, and it can become a part of your family history that will be cherished by future family members who may have no other opportunity to know you or benefit from the wisdom you have gained over a lifetime.

Funeral or memorial service. Although no one enjoys thinking about their own funeral, one of the most thoughtful acts you can do for your loved ones is to make arrangements in advance for your own funeral service. It is also a means to ensure that your service includes elements reflecting values or religious convictions that you want to communicate and pass on to your family members and loved ones. In your arrangements, you can ask the officiate to include scripture verses, songs, or stories that convey principles that you would like your children and grandchildren to heed.

Care for Your Family—Past and Future

This month, you can celebrate National Genealogy Day by spending a little time investigating your family’s roots by researching genealogical records. But an even more important investment of your time can be made by creating an estate plan designed to provide both a monetary and spiritual inheritance that will enhance your family members’ future. Call us today to schedule a meeting so we can help you create an estate plan enabling you to pass on all aspects of your wealth.

NOTE: As always, the information on this website is for general information and entertainment only. Do not rely on this information to take a course of action or refrain from taking action – hire a lawyer.

California Proposition 19, Changes Certain Property Tax Rules. Legislative Constitutional Amendment. (2020)

Summary: The passage of Proposition 19 has generated a number of estate planning issues. For example, the changes could affect pre-existing trusts, such as qualified personal residence trusts, which are typically established with the intent of allowing parents to continue to live in the home while passing ownership on to their children. Once Proposition 19 takes effect, the property will be reassessed unless the children are also using it as their primary residence—and even if they are using it as their primary residence, there is a cap of $1 million on the exclusion. Thus, strategies designed to mitigate unfavorable results should be effectuated without delay. However, the benefits of making a lifetime transfer of the property must be weighed against those of a transfer at death, which would enable the children to have a stepped-up basis in the property. Gift and estate tax considerations may also come into play.

Discussion: Proposition 19, a California ballot measure, modifies Proposition 13 (which limits increases of real property tax to two percent per year unless reassessed due to sale or transfer) and Proposition 58 (which allows property owners to transfer their primary residence to their children at the preferential property tax assessment and up to $1 million of assessed value of other real property, with a later proposition extending the benefit to qualifying grandchildren).

Under Proposition 19, only a primary residence, not other real property, can be transferred to children or qualifying grandchildren at the preferential assessed value. Further, the preferential assessed value is only available if the children or qualifying grandchildren will use the home as their primary residence and to the extent that the fair market value of the residence does not exceed the assessed value by more than $1 million. This part of Proposition 19 takes effect on February 16, 2021 (note that February 15 is President’s Day, when recorder’s offices will be closed).

Some examples provide additional clarity regarding the effect of Proposition 19:

Under current law: Parents seek to give their home and a rental property to their child. The home has a taxable value of $2 million with a property tax bill of $22,000. Today, the home has appreciated, and the value is now $4 million, which means it has increased by $2 million. If the parents gift the home to their child, the taxable value remains $2 million, and the child receives the benefit of continuing to pay only $22,000 on the assessed value (with modest annual increases). The rental property has a taxable value of $500,000, but its FMV is $1 million, with a property tax bill of $5,500. The parents could gift the rental property to their child, and the taxable value of the property would also remain the same at $5,500.

Under Prop 19: Using the same examples, and assuming the child uses the home as the child’s principal residence, only the first $1 million of increased value in the home is exempt. However, the home has increased in value by $2 million, resulting in only $1 million of the increase being excluded from reassessment, or $3 million of assessed value. This would result in a new property tax bill to the child of $33,000. Since there is no longer an exemption for non-principal residences, the rental property is reassessed to FMV of $1 million, resulting in a tax bill to the child of $11,000. Between the two properties, this is a net increase in annual property taxes of $16,500 over the pre-Prop 19 parent-child exclusion.
 

*1.1% is used for calculating tax bill on taxable value

Proposition 19 also provides benefits for certain homeowners. Under current law, homeowners over fifty-five years old and certain disabled individuals can transfer the taxable value from their current home to a new residence in the same county if the value of the new home is less than or equal to the value of their old home. Proposition 19 allows victims of wildfires and other natural disasters, regardless of their age or disability, to transfer their taxable value to a new home. In addition, homeowners within the preferred classes are no longer limited to purchasing a new home in the same county but can relocate anywhere in the state of California. Also, the value of the new home can be greater than the value of the previous one—though the increase in value must be added to the old home’s transferred assessed value. This change will become effective on April 1, 2021.

If you or your clients have questions about ways you can protect against the effects of Proposition 19, please call or schedule an appointment.

When I moved out of my hometown to go to law school, my grandmother would send me packages of homemade tortillas and chocolate chip cookies. She sent these little tastes of home, not because there were no Mexican grandmothers making tortillas in my new town, but as a way to remind me of her love.

She was so proud of me for daring to reach for my dreams and homemade tortillas were one of her ways to support me. She also tried matchmaking. Anytime I took her to a routine doctor’s visit or even to the hospital in an emergency, “Hi doctor, yes I’m having trouble breathing. Are you married? No? Good, this is my granddaughter, she’s going to be a lawyer.” But that’s another story.

When I meet with families about how to distribute their estate after they pass away, they often want to make similar “I love you” gifts. Gifts of tortillas haven’t come up, instead its usually cash gifts to friends or loved ones. Sometimes these are very small gifts but they represent big love. This usually comes up when we are designing a trust – the most popular way to pass property in California. Note: If you live in California and don’t have revocable living trust and you have children or own your own home, you probably need a trust.

One of the underlying themes with cash or care packages of tortillas and chocolate chip cookies, is that we equate these gifts with love. Take a scenario of a mother who leaves her son $1,000,000 and her daughter $1,000. Many people would ask why only $1,000 to the daughter? When parents do things like this is can be confusing and hurtful to their children. Even though parents usually have some logical reason, it can feel like a slap in the face to the daughter receiving only a percentage of what brother received. Consider also, what will become of the relationship between the son and daughter? Did we make the holidays tense and uncomfortable? Have we torn an emotional gash that will estrange the children from each other for the rest of their lives? We must always consider the impact of our gifting.

In estate planning parlance gifts of money made in a Will or Trust are called “general gifts” and they are often problematic. So much so that California’s preeminent practice guide warns that these gifts “can distort the settlor’s dispositive plan, the trust drafter should counsel sparing use of them.”

What makes these gifts of cash so problematic?

1. A general gift is paid first.

• Consider a father with a net worth of $100,000.
• He wants his daughter to inherit most of his wealth but also wants to make sure his best fishing pal is remembered with a gift of $10,000.
• If father dies right after signing his trust, the fishing buddy would get a cash gift of $10,000 and his daughter would inherit everything else, $90,000. But it also almost never happens this way.
• Most commonly, father goes on his merry way, happy that he’s taken care of his daughter and made a nice gift to his fishing buddy.
• Years later, father has had some medical issues and spent a large amount of his savings on his medical care.  
• When he passes away, father’s estate is only worth $11,000. The general gift is paid first so his fishing buddy gets a $10,000 and his daughter inherits the remainder, just $1,000. Was this father’s intent? What will the daughter think? Remember, when dealing with the death of a loved one, money equals love.

Consider that even if the trust value is at least $100k when dad dies, all the assets might not be held in cash. For example, dad could own a $100K a home intending that daughter inherit it when he dies. On his death, the trustee is require to make the general gift first so the house is sole to pay the $10,000 gift to the fishing buddy. Again, not the outcome dad would have wanted.

• Your Trust is Mostly Private Unless It’s Not

One of the benefits of a trust is that it is a private document. Unlike a Will, it is not filed in a courthouse for the world to read. This is a real benefit because bad guys and fraudsters are staying up nights to separate your heirs from your money.

I am not a fan of hiding things unless there is a good reason to do so. Justice Brennan said “sunlight is the best disinfectant” and I often refer to that adage when trying to decide the best way to make a gift. Secrets among family members have a habit of causing trouble. However, there are times and good reasons for keeping things private.

Under California law, when you pass away certain people have a right to demand to see a copy of the trust. Typically, those people include your heirs at law (people who would have inherited if you did not have a Will or Trust) and those people named in your trust.  

If you leave dramatically different general gifts in your trust it can cause hurt feelings, driving people to fight and even litigate over what they thought they should have inherited. Do you want your niece to know how much you gave to her cousin? If not, better to make a gift in another way.

Your Gift May Not Be So Great After All

When I graduated from college with a degree in accounting my first job at prestigious tech company paid $15 per hour plus benefits. I happy with that. Now, over 20 years later, that is barely minimum wage in my town.

Consider that your very generous gift of $25K today might be spare change in 20 years and not have the impact you intended.  

So, is there a better alternative than a general gift in a trust?

I think so. Here are some alternatives to consider:

• Give a percent of your estate.

In our first example, dad could have divided his estate in percentages: 10% to his buddy and 90% daughter. When dad passed away with %11,000, the buddy would have inherited $1,100  and daughter $8,900 – which was dad’s likely intent.

• Use life insurance

A life insurance policy pays out a benefit to your beneficiaries when you die. There are some drawbacks to life insurance, for example if you forget to pay the premium or fail to update beneficiary designations.

• Name your intended heir as pay on death beneficiary of a bank account, brokerage account, IRA, etc.

Using bank accounts like this are called “will substitutes” and they have their own set of risks and drawbacks. For example, my grandfather set up bank accounts naming my sister and I as pay on death beneficiaries. At some point, the accounts were either closed or emptied and when he died there was nothing for us. We were left to wonder did he intentionally disinherit us? Was he defrauded by a caregiver? Did he simply need the money during the end of his life? We will never know.

There are other issues with these will substitutes but there is a time and place for them.

• Give the money now

A huge benefit of making a gift today is that you get the satisfaction of seeing someone really appreciate your gift because you are alive, after all. A drawback is that if you need the money for yourself later on, you won’t have it anymore. Also, some people feel that a gift made in a Will or Trust is more impactful than a lifetime gift. If you choose to do this, keep track of these gifts and keep your estate planning attorney and CPA informed.   

Everyone’s circumstances are different and if your attorney suggests making general gifts that’s likely the best arrangement for you in your current circumstances.

There are certainly other considerations that I have not mentioned here with transferring cash and property. What are some creative ideas you have for making gifts of cash after you pass away? 

Remember that everything you read on this website is for general information and entertainment purposes only. Do not take action or fail to act based on anything you read on this site. If anything you read on this website raises questions or concerns for you, take all that to your attorney so that you can get advice that is appropriate for you.