FACT: Everyone, irrespective of wealth, require planning. Individuals of all income levels should consider drafting a Revocable Living Trust, a will, a Durable Power of Attorney, and Health-Care Medical Directive. These documents will allow your family to handle your affairs in the event of disability or death. If you have children under 18, a Nomination of Guardian will nominate who will serve as their guardian if both parents die.
Many factors other than wealth affect the need for estate planning, including: (1) legally avoiding taxes (2) transferring your property in accordance with your desires; (3) caring for a surviving spouse; (4) caring for a minor or disabled child; (5) avoiding probate; (6) charitable giving;; and
These are only a few of the reasons to plan your estate. Each individual has their own goals and objectives, but wealth not the only reason to plan.

MYTH #2: I am too young to plan.

FACT: This would be true if everyone knew when they would become incapacitated or die. Also, everyone needs to have an health care directive/power of attorney in place to enable someone to make medical decisions for them should they become ill or are in an accident.

MYTH #4: A will avoids probate.

FACT: A will does not provide probate, on the contrary it requires probate to be administered. A probate court determines how your estate will be divided. The court looks to your will for instructions as long as it is valid and uncontested.

MYTH #5: Life insurance proceeds are exempt from estate taxes.

FACT: The value of life insurance proceeds are included in the taxable estate and subject to estate taxes as high as 55%. If your life insurance policy is owned by an irrevocable trust it will not be taxed as part of your estate. (Special Rules Apply) If you own your Life Insurance Policy you should contact us to discuss an Irrevocable Life Insurance Trust.

MYTH #6: If I have a will, then I don't need a trust.

FACT: A will does not allow an individual to manage your property in the event you become incapacitated. A will only comes into effect at death. A well drafted trust provides for the management of your property in the event you become incapacitated or cannot manage the property yourself. A will, as discussed above, does not avoid probate, whereas a trust does avoid probate.

MYTH #7: If you have a revocable trust, the surviving spouse need do nothing after a death.

FACT: After the death of a spouse, the surviving spouse must contact an estate planning attorney to determine what, if any, actions need to be taken. Failure to follow the legal formalities can have serious tax and administrative implications and penalties.

MYTH #8: The estate tax will be permanently repealed so I don't need to take any action.

FACT: Current federal law provides that $3,500,000 of an estate will be free from federal estate tax and repealed for the year 2010. However, the estate tax exemption will return to $1 million in 2011. [Attorney's Note: President Obama has proposed freezing the tax exemption at the 2009 rate of $3,500,000 million]

MYTH #9: Holding property in joint tenancy is a less expensive and easier method to avoid probate than a revocable trust.

FACT: Holding property in joint tenancy will avoid probate, however, it is a terrible way to transfer property at death. Executing a deed is a present gift to the joint tenant and there may be significant gift tax consequences. Furthermore, the joint tenant will own the property and the property may be subject to the joint tenant's creditors. For example, a property put in joint tenancy by a parent for a child is subject to the child's creditors and could be sold without the parent's knowledge or consent. Also, unlike an estate plan which is fully revocable, a gift of property into joint tenancy is not revocable without the cooperation of the joint tenant. If you have a falling out with the joint tenant, you may not be able to take the property back.

MYTH #10: I'm too busy to deal with Estate Planning now.

FACT: Planning your estate doesn't have to be a lengthy and time consuming event. Simply gather information about your estate and share the information with your estate planning attorney. Your attorney will analyze your family and financial situation, recommend a course of action, prepare documents and assist you in executing your estate plan with the formalities requires by California law.

Estate Tax Faces Its Own Life-and-Death Struggle

"Parties are at odds on how to deal with a levy set to disappear entirely in 2010 before being resurrected at full pre-Bush level..."
www.WSJ.com

Commercial Real Estate’s $1 Trillion Time Bomb

"According to analysts at Deutsche Bank AG, as property value declines and scarce credit continue to drive commercial property developers and investors into default, total lifetime losses on banks' $1 trillion 'core' commercial-mortgage holdings..."
www.WSJ.com

Debate Over Estate Tax Likely to Wait Till 2010

"A split among Democrats and a busy fall agenda is likely to have lawmakers hold off this year on debating the future of the estate tax, even though it expires at the end of the year..."
www.TheHill.com