Yours, mine and ours … in today’s modern family, it’s oh so common. The blended family is the product of 2nd (or more) marriages, in which one or more of the parties comes with children from a prior marriage. And then, they may even go on to have children together.

If you have or are part of a blended family, it’s important to understand how estate planning could be exactly what you need to keep your family out of conflict and in love, both during life, in the event of incapacity, and when one or more of the senior generation (read: parents) dies. 

Let’s begin with understanding where potential conflicts could arise when you have a blended family. 

Consider the ones you love

If you have children from a prior marriage, and you become incapacitated or die, leaving everything to your new spouse or partner, there is almost certain to be some conflict (whether spoken or not) between your children and new spouse. Your children may feel unloved, forgotten or resentful. 

You may think that this can be avoided by leaving everything to your new spouse or partner, and then on their death, to your children. But this too could set up a scenario where your children feel the need to monitor your spouse/partner’s use of your assets, during their life. And that may not be what you want.

Conversely, you may have a partner or spouse that you have not legally planned for, who you would want to inherit some or all of your assets. But, as things stand right now, your entire estate may go to your children from a prior marriage. This could create a reality where your current partner even gets kicked out of the house you share if something happens to you before your plan is updated.

You can avoid all of this (and even use the estate planning process to build stronger bonds with those you love) by having clear planning in place that has been discussed with your children and your new spouse or partner. We facilitate this as part of the planning process for all blended families.

If you are the child of a parent who has remarried or re-partnered, after a divorce or death, of your other parent, you may want to bring these issues to your parent’s attention.

If you are ready to create a well-thought-out estate plan for your blended family, start by sitting down with us, your Personal Family Lawyer®. During your Family Wealth Planning Session™, we can help you plan for the needs of your unique family and ensure everything and everyone you love is protected and provided for as you wish – including you. Our estate planning process guides you to protect and preserve what matters most. Before the session, we’ll send you a Family Wealth Inventory and Assessment to complete that will support your thinking on what you own, what’s most important to you, and what you can do to ensure your family is taken care of. You can schedule your Family Wealth Planning Session™ online with us or give us a call if you have any questions. We’re happy to help!

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love.  That’s why we offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

Even if you put a totally solid estate plan in place, it can turn out to be worthless for the people you love if it’s not regularly updated. 

Estate planning is not a one-and-done type of deal—your plan should continuously evolve along with your life circumstances and other changing conditions, such as your assets and the law. 

No matter who you are, your life will inevitably change: families change, laws change, assets change, and goals change. In the absence of any major life events, we recommend reviewing your estate plan annually to make sure its terms are up to date.

Additionally, there are several common life events that require you to immediately update your plan—that is, if you want it to actually work and keep your loved ones out of court and out of conflict. With this in mind, if any of the following events occur, contact us, your Personal Family Lawyer® right away to amend your plan.

1) You get married: Marriage not only changes your relationship status; it changes your legal status. Regardless of whether it’s your first marriage or fourth, you must take the proper steps to ensure your estate plan properly reflects your current wishes and needs.

After tying the knot, some of your most pressing concerns include naming your new spouse as a beneficiary on your insurance policies and retirement accounts, granting him or her medical power of attorney and/or durable financial power of attorney (if that’s your wish), and adding him or her to your will and/or trust.

2) You get divorced: Since divorce can be one of the most stressful life events, estate planning often gets overshadowed by the other dramatic changes happening. But failing to update your plan for divorce can have terrible consequences.

Once divorce proceedings start, you’ll need to ensure your future ex is no longer eligible to receive any of your assets or make financial and medical decisions on your behalf—unless that’s your wish. Once the divorce is finalized and your property is divided, you’ll need to adjust your planning to match your new asset profile and living situation.

3) You give birth or adopt: Welcoming a new addition to your family can be a joyous occasion, but it also demands entirely new levels of planning and responsibility. At the top of your to-do list should be legally naming both long and short-term guardians for your child. Our Kids Protection Plan offers everything you need to complete this process for free right now.

Once you’ve named guardians, consider putting estate planning vehicles, such as a revocable living trust, in place for your kids. These planning tools can make certain the assets you want your child to inherit will be passed on in the most effective and beneficial way possible for everyone involved. Consult with your Personal Family Lawyer® to determine which planning strategies are best suited for your family situation.

4) A loved one dies: The death of a family member, partner, or close friend can have serious consequences for both your life and estate plan. If the person was included in your plan, you need to update it accordingly to fill any gaps his or her absence creates. From naming new beneficiaries, executors, and guardians to identifying new heirs to receive assets allocated to the deceased, make sure you address all voids the death creates as soon as possible.

5) You get seriously ill or injured: As with death, illness and injury are an unavoidable part of life. If you’ve been diagnosed with a serious illness or are involved in a life-changing accident, you may want to review the people you’ve chosen to handle your healthcare decisions as well as how those decisions should be made. The person you want to serve as your healthcare proxy can change with time, so be sure your plan reflects your current wishes.

6) You relocate to a new state: Since estate planning laws can vary widely from state to state, if you move to a different state, you’ll need to review and/or revise your plan to comply with your new home’s legal requirements. Some of these laws can be incredibly complex, so consult with us to make certain your plan will still work exactly as you desire in your new location.

7) Your assets or liabilities change significantly: Whenever your estate’s value dramatically increases or decreases, you should revisit your estate plan to ensure it still offers the maximum protection and benefits for yourself and your loved ones. Whether you inherit a fortune, take out a new loan, close your business, or change your investment portfolio, your estate plan should be adjusted accordingly.

8) You plan to buy or sell a business: If you plan to sell a business, you can engage in estate planning strategies to avoid almost all of your capital gains taxes, if you revisit your estate plan ahead of time. And, of course, if you are buying a business, you’ll want to ensure your plan is updated to take into account your succession plans for the new business. 

For every business you own, you should consider creating a buy-sell agreement and/or a business succession plan to protect both your business and your family in case something happens to you. In your estate plan, you can not only decide who will take over your role as the company’s owner should something happen to you, but you can also provide him or her with a road map for how the business should be run in your absence by creating a comprehensive business succession plan.

At the same time, you should consult with your Personal Family Lawyer® to take advantage of the numerous tax-savings opportunities that may be available when you buy or sell your business. The tax laws are constantly changing, so you should consult with us to amend your estate plan to achieve the maximum level of tax savings possible in light of the latest changes to the tax code.

A Common Mistake

Outside of not creating any estate plan at all, one of the most common planning mistakes we encounter is when we get called by the loved ones of someone who has become incapacitated or died with a plan that no longer works because it has not been properly updated. Unfortunately, once something happens to you, it’s too late to adjust your plan, and the loved ones you leave behind are forced to deal with the aftermath.

Keeping your estate plan updated is so important, we’ve created proprietary systems designed to ensure these changes are made for all of our clients, so you don’t need to worry about whether you’ve overlooked anything like your family, the law, and your assets change over time. Be sure to ask us about these systems during your visit.

Furthermore, because your plan is designed to protect and provide for your loved ones in the event of your death or incapacity, as your Personal Family Lawyer®, we’re not just here to serve you—we’re here to serve your entire family. We take the time to get to know your family members and include them in the planning process, so everyone affected by your plan is well-aware of what your latest planning strategies are and why you made the choices you did, along with knowing exactly what they need to do if something happens to you.

For The Love of Your Family

As your Personal Family Lawyer®, our estate planning services go far beyond simply creating documents and then never seeing you again. We develop a relationship with you and your family that lasts not only for your lifetime but for the lifetime of your children and their children if that’s your wish.

Plus, we support you in not only creating a plan that keeps your family out of court and out of conflict in the event of your death or incapacity, but we will also ensure that your plan is regularly updated to make certain that it works and is there for your family when you cannot be. Contact us today to get started.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

Wills and trusts are two of the most commonly used estate planning documents, and they form the foundation of most estate plans. While both documents are legal vehicles designed to distribute your assets to your loved ones upon your death, the way in which they work is quite different.

From when they take effect and the property they cover to how they are administered, wills and trusts have some key differences that you need to consider when creating your estate plan. That said, when comparing the two documents, you won’t necessarily be choosing between one or the other—most plans include both.

In fact, a will is a foundational part of nearly every person’s estate plan. Yet, you may want to combine your will with a living trust to avoid the blind spots inherent in plans that rely solely on a will. As you’ll learn below, the biggest of these blind spots is the fact that if your estate plan only consists of a will, you are guaranteeing your family has to go to court if you become incapacitated or when you die.

To determine the right solution for your family, you should meet with us, your Personal Family Lawyer® for a Family Wealth Planning Session™. We offer a comprehensive process for helping you feel confident that you’ve chosen the right planning tools at the right fees for yourself and the people you love. 

In the meantime, here are some of the key differences between wills and trusts that you should be aware of.  

When They Take Effect

A will only will go into effect when you die, while a trust takes effect as soon as it’s signed and your assets are transferred into the name of the trust, known as “funding” the trust. To this end, a will directs who will receive your assets upon your death, while a trust specifies how your assets will be distributed before your death, at your death, or at a specified time after death. This is what keeps your family out of court in the event of your incapacity or death.

Furthermore, because a will only goes into effect when you die, it offers no protection if you become incapacitated and are no longer able to make decisions about your financial, legal, and healthcare needs. If you do become incapacitated, your family will have to petition the court to appoint a conservator or guardian to handle your affairs, which can be costly, time-consuming, and stressful. 

And there’s always the possibility that the court could appoint a family member as a guardian that you’d never want making such critical decisions on your behalf. Or the court might select a professional guardian, putting a total stranger in control of just about every aspect of your life and leaving you open to potential fraud and abuse by crooked guardians.

With a trust, however, you can include provisions that appoint someone of your choosing—not the court’s—to handle your assets if you’re unable to do so. When combined with a well-drafted medical power of attorney and living will, a trust can keep your family out of court and out of conflict in the event of your incapacity, while ensuring your wishes regarding your medical treatment and end-of-life care are carried out exactly as you intended.

The Assets They Cover

A will covers any asset solely owned in your name. A will does not cover property co-owned by you with others listed as joint tenants, nor does your will cover assets that pass directly to your loved ones via a beneficiary designation, such as life insurance, IRAs, 401(k)s, and payable-on-death bank accounts.

Trusts, on the other hand, cover any asset that has been transferred, or “funded,” to the trust or where the trust is the named beneficiary of an account or policy. That said, if an asset hasn’t been properly funded to the trust, it won’t be covered, so it’s critical to work with your Personal Family Lawyer® to ensure your trust works as intended.

Most lawyers will set up a trust for you, but few will ensure your assets are properly inventoried or funded, and we believe this is the single most important aspect of estate planning—and it’s one that is almost always overlooked. As your Personal Family Lawyer®, we will not only make sure your assets are properly inventoried and titled when you initially set up your trust, we’ll also ensure that any new assets you acquire over the course of your life are inventoried and properly funded to your trust on an ongoing basis, with various maintenance plans to ensure your plan works when your family needs it. This keeps your assets from being lost and prevents your family from being inadvertently forced into court because your plan was never fully completed.

Finally, even with the support of a lawyer like us, it can sometimes be difficult to transfer every single one of your assets into a trust before your death. Given this, consider combining your trust with what’s known as a “pour-over” will. With a pour-over will in place, all assets not held by the trust upon your death are transferred, or “poured,” into your trust through the probate process.

How They Are Administered

In order for assets in a will to be transferred to a beneficiary, the will must pass through the court process known as probate. During probate, the court oversees the will’s administration, ensuring your assets are distributed according to your wishes, with automatic supervision to handle any disputes.

However, probate proceedings can drag out for months or even years, and your family will likely have to hire an attorney to represent them, which can result in costly legal fees that can drain your estate. During probate, there’s also the chance that one of your family members might contest your will, especially if you have disinherited someone or plan to leave significantly more money to one relative than the others.

Bottom line: If your estate plan consists of a will alone, you are guaranteeing your family will have to go to court if you become incapacitated or when you die.

Furthermore, since probate is a public proceeding, your will becomes part of the public record upon your death. This means everyone will be able to learn the contents of your estate, who your beneficiaries are, and what they inherit, setting them up as potential targets for scam artists and frauds.

Unlike wills, trusts don’t require your family to go through probate, which can save them time, money, and the potential for conflict. Plus, when you have a trust set up, the distribution of your assets happens in the privacy of our office—not the courtroom—so the contents and terms of your trust will remain completely private. 

How Much They Cost

Wills and trusts do differ in cost—not only when they’re created, but also when they’re used. The average will-based estate plan can run between $1500 to $2,000, depending on the options selected. An average trust-based plan can be set up for $3,000 to $5,000, again depending on the options chosen. So at least on the front end, wills are less expensive than trusts.

However, wills must go through probate, where attorney fees and court costs can be quite pricey, especially if the will is contested. So even though a trust may cost more upfront to create than a will, the total costs once probate is factored in can actually make a trust the less expensive option in the long run. 

That said, each family’s circumstances are different, and this is why as your Personal Family Lawyer® we do not create any documents until we know what you actually need, and what will be the most affordable solution for you and your family, both now and in the future, based on your family dynamics, your assets, and your desires. 

With this in mind, our Family Wealth Planning Session Process™ is designed to compare the costs of will-based planning and trust-based planning with you, so you know exactly what you want and why, as well as the total costs and benefits over the long term.

Find The Option That’s Right For Your Family

The best way for you to determine whether or not your estate plan should include a will, a living trust, or some combination of the two is to meet with us as your Personal Family Lawyer® for a Family Wealth Planning Session™. During this process, we’ll take you through an analysis of your assets, what’s most important to you, and what will happen to your loved ones when you become incapacitated or die.

Sitting down with us, your Personal Family Lawyer® will empower you to feel 100% confident that you have the right combination of estate planning solutions to fit with your unique asset profile, family dynamics, and budget. Schedule your appointment today to get started.

This article is a service of Marsala Law Firm, Personal Family Lawyer®. We do not just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge. 

Your living trust is out of date and needs to be updated.

There are two options to updating your trust:

• Amendment
• Restatement

Amendment vs Restatement?

Amendment

An amendment to a trust only revisions certain sentences or paragraphs. In essence, you have an addendum to the trust that says, replace paragraph 3(A) with this paragraph. The remaining trust language remains the same, so you need a copy of the original trust document and all amendments. If you have multiple paragraphs that need to be updated, amendments become tedious, confusing and not as effective as a restatement.

Restatement

A restatement replaces every word of the original trust; it’s almost like a brand new trust. The trust name stays the same, so you don’t have to retitle your assets into a new trust. Restatements are preferred because you don’t need the original trust document to refer to. It offers more privacy. For instance, if you are removing a beneficiary, a restatement means that beneficiary will never know they were removed. With an amendment, the beneficiary can see all the changes and that they were removed.

Why a restatement?

For new clients, we almost always recommend a restatement.

It’s cheaper for you to have us restate your trust. We haven’t had a chance to get to know you and your family yet, we don’t have our notes and file open for you yet. We spend just as much time with you as someone who doesn’t have an existing trust. Further, an amendment would require us manually rewrite the update and match new language to old language. If you were to pay hourly for us to manual rewrite sections of your trust and double-check that everything a trust needs is included, you would spend a lot more money than if you simply had us restate your existing trust.

Clients often believe that they just need a simple update, to change a trustee for instance. However, when we do our 50-point review of the existing trust, we find the trust is missing critical protective language that should be included in the update as well. Once we add the missing language, the paragraph numbering gets confusing and we might as well restate the trust to keep it clear and simple.

Also, as mentioned above, an amendment also means that all your changes will be known. Some changes such as updating beneficiaries are more sensitive and keeping it private helps minimizes family conflict.

Finally, we can’t certify another attorney’s work, and the law is constantly changing. We find that it’s better for the client to have a trust with language they know was drafted correctly, with protective language, and will actually work when they need it.

There are three (3) ways to avoid probate in California:

• Have a small estate; or
• Have only non-probate assets;
• Have a living trust hold title to probate assets.

A will alone does not avoid probate.

Non-probate assets

Some types of assets don’t need to go through the probate process and can go directly to your beneficiaries (non-probate assets). If your entire estate consists of non-probate assets, your heirs can avoid probate.

Non-probate assets can include the following:

• Bank or stock brokerage accounts held in joint tenancy
• Life insurance or brokerage accounts with a valid beneficiary designated
• Retirement accounts with a valid beneficiary designated
• Property that is held in joint tenancy or community property with right of survivorship

If all your assets are non-probate assets, then you don’t have to worry about probate. However, there may be other reasons why you need an estate plan, such as providing for a minor child or minimizing tax liability.

Also, keep in mind: A will does not control the distribution of non-probate property. 

Example: Your only asset is a life insurance policy where you named Susie as your beneficiary. Later, you create a will leaving everything to Bob. When you pass away, Bob gets nothing. Why? Because the life insurance beneficiary is Susie, which passed outside of probate. Your will doesn’t change the beneficiary designation.

Read more about common mistakes with non-probate property.

Probate Assets

If you own probate assets worth more than $150,000, then your estate will need to go through probate. Probate assets can include the following:

• Real property
• Personal property, such as jewelry, furniture, and automobiles
• Bank accounts with only one owner
• An interest in a partnership, corporation, or limited liability company
• Any life insurance policy or brokerage account that lists either the decedent or the estate as the beneficiary

If you have probate property worth more than $150,000, the only way to avoid probate is through a living trust.

When planning your estate, you need to take into account whether property is probate property or non-probate property. 

A living trust avoids probate

A trust avoids probate. If your assets are placed in a trust, you do not “own” them: the trustee of the trust does. Often, you are also the trustee so you remain in control of your assets in the trust. There are many different types of trusts, but the most common trust is a revocable living trust.

Revocable

A revocable trust is a trust that you can modify or amend or revoke at any time in the future. You can change the beneficiaries, you can change the terms of the trust. You can decide you don’t need it and revoke it. You stay in control of the trust.

Living

You created the living trust while you are still alive (sometimes referred to as as an intervivos trust), as opposed to a trust created after you pass away (referred to as a testamentary trust). With a living trust, you can choose your beneficiaries or who receives what, and the terms under which they inherit your property.

Trust

A trust owns property through a trustee. With a revocable living trust, you can be the trustee. This means you stay in control of the assets in the trust. You don’t need permission from anyone before selling your property or using the assets. You can continue to use your assets just as you did before you created the trust.