Estate Planning, trusts, right of occupancy versus life estate.

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Right of Occupancy v. Life Estate Many revocable trusts provide that a surviving spouse or another beneficiary has the right to live in a residence rent-free for the remainder of his or her life.  This type of provision is particularly common in a second marriage when the person who created the trust (the Trustmaker) comes into the marriage with a home that is separate property and wants the surviving spouse to be able to live there before the property passes to the Trustmaker's children or other heirs. Sometimes this occurs when one adult child caretaker ha lived with the parent in their final years, and the parent wants to allow the adult child to live in the home for a period of years as a "reward" for faithful care. Right of Occupancy:  The right to live in a home that does not belong to you is typically referred to as a "life estate," or a "right of occupancy."  They are not the same thing. A right of occupancy does not grant the holder any kind of title to the property in question.  During any period of occupancy, the title is held by the trustee of the trust.  The holder has the exclusive right to occupy the property, although usually subject to certain conditions. Unless spelled out in the trust document, there are often disputes between the person occupying the property and the remainder beneficiaries about who is responsible for the expenses regarding the property, such as utilities, property taxes, insurance, maintenance, etc.  The law is unclear about whether someone with a right of occupancy can bring in other residents, like a new spouse or life partner.  Also unclear is whether the Trustee can sell the underlying property and terminate the right to occupancy. Life Estate:  A life estate is transferred through a recorded deed.  A life estate tenant, by law, is responsible for upkeep and repairs, mortgage payments, taxes, and other annual charges, unless the trust says otherwise. Estate Taxes:  There is also an important tax issue in play.  If the right of occupancy is provided in a marital deduction trust of a high-net-worth Trustmaker, and the surviving spouse doesn't provide a full, unfettered right to occupy the residence for life, the settlor's estate could lose the marital deduction on the residential property and be subject to estate taxes.  An example of this is when the right of occupancy would terminate if the surviving spouse does not live in the home or allows others to do so. Consult with an experienced estate planning attorney about your estate planning wishes.

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Sacramento Estate Planning - Chronically Ill

There are certain considerations that should be kept in mind for those with chronic illnesses.   Before addressing this issue, there should be some clarification as to the definition of "chronically ill." There are at least two definitions of chronically ill. The first is likely the most common meaning, which is an illness that a person may live with for many years. Diseases such as diabetes, cardiovascular disease, lupus, multiple sclerosis, hepatitis C and asthma are some of the more familiar chronic illnesses. Contrast that with a legal definition of chronic illness which usually means that the person is unable to perform at least two activities of daily living such as eating, toileting, transferring, bathing and dressing, or requires considerable supervision to protect from crisis relating to health and safety due to severe impairment concerning mind, or having a level of disability similar to that determined by the Social Security Administration for disability benefits. Having said all of that, the estate planning such a person may undertake will likely be similar to that of a healthy person, but there will likely be a higher sense of urgency and it will be much more "real" and less "hypothetical."



Most healthy individuals view the estate planning they establish as not having any applicability for years, perhaps even decades. Whereas a chronically ill person more acutely appreciates that the planning he or she does will have real consequences in his or her life and the life of loved ones. Some of the most important planning will center around who the person appoints as his or her health care decision maker and also who is appointed to handle financial affairs. a will and/or revocable living trust will play a central role in the person's planning as well.  Care should also be taken to address possible Medicaid planning benefits.  A consultation with an estate planning and elder law attorney is critical to ensuring all necessary planning steps are contemplated and eventually implemented. 

Choosing a Guardian for Your Children

If you are a parent and you are considering estate planning, one of the most difficult decisions you will have to make is choosing a guardian for your minor children.  It is not easy to think of anyone else, no matter how loving, raising your child. Yet, you can make a tremendous difference in your child’s life by planning ahead.
The younger your child, the more crucial this choice is, because very young children cannot form or express their own preferences about caregivers. Yet young children are not the only ones who benefit from careful parental attention to guardianship. Children close to 18 years old will be legal adults soon, but, as you well know, may still need assistance of a parental figure after the fact.
By naming and talking about your choice of guardian, you can encourage a lifelong bond with a caring family. The nomination of guardians is a straightforward aspect of any family’s estate plan. It can be as basic or detailed as you want. You can simply name the guardian who would act if both you and your spouse were unable to or you can provide detailed guidance about your children and the sort of experiences and family environment you would like for them. Your state court, then, can give strong weight to your expressed wishes.
There are essentially four steps to this process. First, make a list of anyone you know that might be a candidate for guardian of your children.  It is important to think beyond your sisters and brothers and consider cousins, aunts and uncles, grandparents, child-care providers and business partners. You might also want to consider long-time friends and those you’ve gotten to know at parenting groups as they may share similar philosophies about child-rearing. Second, make a list of factors that are most important to you. Here are some to consider:

• Maturity
• Patience
• Stamina
• Age
• Child-rearing philosophy
• Presence of children in the home already
• Interest in and relationship with your children
• Integrity
• Stability
• Ability to meet the physical demands of child care
• Presence of enough “free” time to raise children
• Religion or spirituality
• Marital or family status
• Potential conflicts of interest with your children
• Willingness to serve
• Social and moral habits and values
• Willingness to adopt your children

You might find that all or none of these factors are important to you or that there are others that make more sense in your particular situation.  The third step is to, match people with priorities. Use the factors you chose in step two to narrow your list of candidates to a handful.
For many families, it is as easy as it looks. For others, however, these three steps are fraught with conflict. One common source of difficulty is disagreement between spouses. But, consensus is important. Explore the disagreements to see what information about values and people is important to one another and use all of your strongest communications skills to understand each other’s position before you try to find a solution that you can both feel good about. Step four is to make it positive. For some parents, getting past this decision quickly is the best way to achieve peace of mind and happiness. For others, choosing a guardian can be the start of an intensive relationship-building process. An attorney who understands where you and your spouse fall on that spectrum can counsel you appropriately.

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Sacramento Estate Planning | Elder Law | Asset Protection | Planning for Children | Special Needs Planning | Probate and Estate Administration | Medi-Cal Planning | Wills and Trusts

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Companies: Implementing preventative legal strategies.

Most people are familiar with the idea of “preventative” legal action. The term refers to anticipating legal issues and conflicts and working to prevent them, rather than solving them or “winning” them once they occur. Companies can benefit from implementing preventative legal strategies as this approach is often less expensive than litigation, mediation, arbitration, and local, state and federal fines.

By working with an attorney early on in the creation of your new business, you can build a sound foundation for your company while likely saving money down the road. The following steps can serve as a great starting point for sound legal planning:

1. Establish a relationship with an attorney who can assist you with the legal issues your new business will face early on in the start-up process. When an attorney is familiar with your firm from the onset, he or she can more effectively anticipate and address legal challenges and provide solutions. Also, many business lawattorneys will allow for a flat-fee relationship that enables you to address legal issues as they arise without incurring any additional expenses.
2. Determine what you want, negotiate it and memorialize it in proper legal documents. Businesses encounter disagreements with vendors, landlords, employees, partners and others. To minimize the number of conflicts, it’s important to establish written contracts for all important agreements, arrangements and accommodations.
   
   A business law attorney can help you identify all key concerns regarding employee compensation and benefits, property usage and maintenance, relationships with suppliers and responsibility and profit sharing with partners. An attorney can ensure that, when a question, disagreement or conflict arises, your interests are written down, clearly stated and legally protected by a mutual agreement with the party in question.
3. There are many exciting steps in starting a new business venture; selecting the type of legal entity the business will be is rarely one of them. Yet, it’s important to select a business structure early. Corporations offer numerous advantages but also require officers, boards, articles of incorporation and other formalities. Partnerships and sole proprietorships are simpler than most other business structures but open owners to potentially costly liability. Limited liability companies offer a middle ground for many, providing a liability shield and comparative simplicity. A business attorney can help you determine which business structure will work best for you by taking into account tax planning, location and other key considerations.

Even with preventative legal planning, a lawsuit may arise. If it does, it’s important to approach it from a business, not a personal standpoint. This strategy can help you make decisions that are best for your company’s future, keep your focus on the day-to-day needs of your business and avoid unnecessarily disclosing information. For legal advice and hands-on assistance during the formation and continued operation of your business, contact a qualified business attorney.

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Top Five Estate Planning mistakes to avoid.

Email privacy. Sacramento Estate Planning.

Email @ Work: Is There Any Expectation of Privacy?

The proliferation of high-speed communication devices have made us more productive and more vulnerable in terms of our privacy. Desk-bound workers may be tempted to use the office email account to engage in personal communications – however, they do so at some risk to their privacy. How much privacy can employees expect for their electronic communications at work? Practically speaking, it is safe to presume everything may be monitored by your employer.

The law generally favors employers’ interests over employees’ privacy. Employers clearly have a legitimate business interest in tracking employee time and productivity. Additionally, employers must ensure their workers are not engaging in any illegal activity or releasing trade secrets. The law permits employers to read employee email messages; if there is a company policy in place that assures employees that email messages will remain private, a worker may be able to argue that there was a reasonable expectation of privacy, but the effectiveness of that argument varies. The courts have generally upheld employers’ rights to monitor and read their employees’ email messages, particularly when there is a compelling, business-related reason for doing so.

There is, however, a law that affords employees some protection of their privacy when accessing personal email accounts, such as Gmail or Hotmail. Should the password to a personal email account fall into the wrong hands, the employer is prohibited from using that information to access the employee’s personal emails without the employee’s permission. Under the Stored Communications Act, such conduct is a crime and also creates a civil cause of action for damages. Keep in mind that accessing these accounts from a work computer can give the employer the right to read messages employees send or receive using company equipment. However, the employer is not permitted to log in and view other personal email communications.

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Funding the Trust. Sacramento Estate Planning.

What Does the Term "Funding the Trust" Mean in Estate Planning?

If you are about to begin the estate planning process, you have likely heard the term "funding the trust" thrown around a great deal. What does this mean? And what will happen if you fail to fund the trust?

The phrase, or term, "funding the trust" refers to the process of titling your assets into your revocable living trust. A revocable living trust is a common estate planning document and one which you may choose to incorporate into your own estate planning. Sometimes such a trust may be referred to as a "will substitute" because the dispositive terms of your estate plan will be contained within the trust instead of the will. A revocable living trust will allow you to have your affairs bypass the probate court upon your death, using a revocable living trust will help accomplish that goal.

Upon your death, only assets titled in your name alone will have to pass through the court probate process. Therefore, if you create a trust, and if you take the steps to title all of your assets in the name of the trust, there would be no need for a court probate because no assets would remain in your name. This step is generally referred to as "funding the trust" and is often overlooked. Many people create the trust but yet they fail to take the step of re-titling assets in the trust name. If you do not title your trust assets into the name of the trust, then your estate will still require a court probate.

A proper trust-based estate plan would still include a will that is sometimes referred to as a "pour-over" will. The will acts as a backstop to the trust so that any asset that is in your name upon your death (instead of the trust) will still get into the trust. The will names the trust as the beneficiary. It is not as efficient to do this because your estate will still require a probate, but all assets will then flow into the trust.

Another option: You can also name your trust as beneficiary of life insurance and retirement assets. However, retirement assets are special in that there is an "income" tax issue. Be sure to seek competent tax and legal advice before deciding who to name as beneficiary on those retirement assets.

Sacramento Estate Planning - Asset Protection - Special Needs Planning - Elder Law - Living Trusts -

Probate and Estate Administration - Medi-Cal Planning - Wills and Trusts - Planning for Children

Law Office of Joan Medeiros

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Grandparenting 2.0

(Grand)Parenting 2.0 According to the National Census Bureau, grandparent-headed homes are among the fastest growing household types in the United States. Grandparent-headed homes are defined as living arrangements where the primary financial and care-giving responsibilities are held by one or more grandparents rather than a parent. Though the reasons that lead to this type of arrangement vary, many speculate that a difficult job market and bleak economy has led to an increase in the past few years. At the height of the financial crisis, the Wall Street Journal published an article describing the financial strain placed on grandparent-headed households. For grandparents who have already retired, finding a job at an advanced age can be next to impossible. The unemployment rates for this demographic are disproportionately high as are levels of ‘discouragement,’ or the part of the population so frustrated with trying to find work that they are driven from workforce. The degree of financial hardship is exacerbated by the increase in the price of everyday goods and necessities, like food and clothing. Beyond the financial strain, taking care of a young child can also have a significant impact on a grandparent’s mental and physical well-being. If an infant is placed in the grandparent’s care, he or she may have disrupted sleep due to nightly feedings. Grandparents raising young children are also frequently exposed to diseases and infections common in childhood. Depression and anxiety disorders are not uncommon and for children with developmental delays or behavioral problems, the demands placed on caregivers are that much greater. In some cases, grandparents may become the head of a household even when parents are present. In situations where a parent has become unemployed or otherwise cannot care for the children, he or she may move the entire family into his or her parents’ home. In addition to grandparent-headed homes, other types of arrangements where the parent is not the primary caregiver are on the rise. These may include instances where an aunt or uncle takes responsibility for a nephew or niece. Fortunately, many federal and state governments have started to recognize this trend and are putting resources in place to assist non-parent-headed homes. The American Association of Retired Persons has also created a comprehensive guide and resource center for grandparents parenting a child.

Sacramento Estate Planning - Asset Protection - Special Needs Planning - Elder Law - Living Trusts -

Probate and Estate Administration - Medi-Cal Planning - Wills and Trusts - Planning for Children

Law Office of Joan Medeiros

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