If you have a loved one with disabilities or special needs, you have likely thought about how you will protect and provide for them after you pass. Providing for a loved one with special needs does not need to be difficult, but it should be done carefully to avoid any unintended consequences. An experienced attorney can help you tailor a plan to provide for your loved one in a way that supports a fulfilling lifestyle and serves their individual abilities and preferences.

The most common way to provide for a loved one with special needs is to create a Special Needs Trust (SNT). However, SNTs can be structured in a number of ways, and each structure creates a different impact on the beneficiary’s finances. SNTs can be General Support or Supplemental Needs trusts, and they can be third-party funded or “self-settled.” SNTs can also be kept individually for the beneficiary or be “pooled” with other SNTs to save on costs of administration.

Like other trusts, the grantor can set guidelines for how the funds should be used to support the named beneficiary. These controls, as well as a well-chosen trustee, provide some oversight and protection from the financial abuse of a disabled person, and they also protect the funds from creditors. Leaving assets in an SNT ensures that those funds will only be spent on the specific needs of the beneficiary outlined in the trust document.

Circumstances to Consider when Structuring a Special Needs Trust

The most important matter to consider when choosing how to structure an SNT is whether the trust will be sufficiently funded as to provide all care and support for the beneficiary throughout their lifetime or whether the beneficiary will also seek to take advantage of federal benefits programs such as Supplemental Security Income (SSI) and Medicaid.

If your loved one is already receiving or intends to take advantage of SSI and Medicaid, gifts and bequests will need to be handled very carefully to avoid disqualifying them from these programs or any other means-based disability benefits. When a grantor dies and passes an inheritance in the form of cash, an insurance policy payout, or a bank account, these assets may disqualify the beneficiary for SSI or Medicaid. Transfers of real estate, vehicles, or any other personal property will not affect eligibility.

If the beneficiary does not intend to apply for any means-based benefits, then they are likely best suited for a General Support Special Needs Trust. This is a relatively straight-forward trust that allows the trustee to release funds to provide for any and all general needs of the beneficiary.

However, if the beneficiary does intend to utilize public benefits such as Medicaid, the trust will need to be structured in such a way that the Social Security Administration (SSA) does not view the funds as “available” to the beneficiary. This is called a Supplemental Needs Trust, and the majority of SNTs fall into this category. To avoid disqualification from public disability benefits, the trust document will need to restrict the use of funds so that they cannot be used for food and shelter. Outside of those two categories, the SSA does not place too much restriction on how funds can be used.

 

Special needs trust funds are commonly used for –

Personal care attendants and nursing

Vacations

Home furnishings

Out-of-pocket medical and dental expenses

Education

Recreation

Vehicles (if titled to the trust)

Physical rehabilitation

The trust document can be as permissive or restrictive as the grantor wishes. How the funds are distributed for these purposes, however, will need to be more narrowly controlled. Generally, the trust will need to pay for any services, goods, or expenses directly, rather than providing the funds to the beneficiary to pay for such expenditures. Again, this is to ensure that the funds are not “available” to the beneficiary and will therefore not disrupt governmental benefits.

Funding a Special Needs Trust

An SNT can either be funded by a third party (this can be one family member or a number of people who wish to provide for the beneficiary’s support) or self-settled. A self-settled SNT is one that is funded by the assets of the beneficiary him- or herself. These funds may have been earned by the individual prior to becoming disabled, received as a result of a personal injury lawsuit, or been given prior to the creation of a trust.

A self-settled SNT is slightly more restricted than a third party funded SNT. If a trust is funded with the beneficiary’s own assets, federal law requires that, after the beneficiary dies, any Medicaid benefits paid out to the beneficiary during his or her life should be reimbursed out of the remainder of the trust. Federal law also requires that a self-settled supplemental care SNT must be for the benefit of a beneficiary who is 1) disabled within the definition in the Social Security Act, and 2) under the age of 65 when the SNT is established. A beneficiary over the age of 65 is limited to creating a supplemental care SNT that is “pooled.”

If the SNT is funded by anyone other than the beneficiary, there is no Medicaid payback or limit on the age or disability of recipient.

As you plan for the future of your loved one, it will be important to communicate your intentions to anyone else who may wish to bequeath some assets or make financial gifts to that individual. Even if you set up an SNT to preserve your beneficiary’s eligibility for public benefits, that eligibility can still be jeopardized by financial gifts from other sources. It will be essential that you communicate the existence of the trust to anyone who may wish to contribute to your loved one’s support.

When choosing how much to put into an SNT, you will need to take into account the specific needs of the individual and the expected level of care that she or he will require over time. The trust will end either when the beneficiary dies or when the funds have been exhausted, so it will be important to carefully assess how much you are willing or able to provide.

Selecting a Trustee

As with any trust, the funds set aside to support the beneficiary will need to be managed by a trustee. This can be a family member or friend; however, if they are also listed as the remainder beneficiaries of the trust (meaning that they will receive any assets left remaining in the trust when the beneficiary dies), this may create a conflict of interest. Performing the role of a trustee for an SNT is also particularly labor intensive and requires that the trustee understand the beneficiary’s needs. Most families choose to have a professional trustee, such as a bank or a trust company, manage the trust. Corporate trustees usually charge an annual fee of around 1% of the value of the trust.

If the amount to be given through a trust is relatively modest, the cost of a corporate trustee may be prohibitive. In that instance, a pooled SNT managed by a nonprofit might make more sense.

Pooled Special Needs Trust

If there are limited funds to be placed into an SNT, the trust is to be self-settled and the beneficiary is over the age of 65, or if you are simply more comfortable having a nonprofit or state government trustee, you may choose to fund a “Pooled” SNT. Traditionally, a pooled SNT is a mechanism that allows nonprofit organizations to act as trustees for a group of beneficiaries. This saves on trustee costs, and the trustees may be more experienced with the relevant laws and needs for your loved one. As of 2016, states may now also manage their own pooled SNTs, called ABLE accounts. Family members can fund up to $100,000 into an ABLE account without impacting eligibility for means-based benefits.

Ask for Help 

This may seem complicated and overwhelming, but an experienced attorney will be able to work with you to create a Special Needs Trust that is best suited for the needs of your loved one. If you are caring for someone with special needs, start by calling The Trust Brothers at Leisinger Law. Our office number is 626-331-1515.

At Leisinger Law, we care deeply about our clients and their families. From our perspective, estate planning is all about love, and we are committed to helping our clients show their love by providing for and protecting those they cherish. But, like most things, there are two sides to every coin.

For many, estate planning seems like Scrooge at the beginning of A Christmas Carol. They think it’s about minimizing taxes, protecting wealth, and keeping a close count on the family treasure. But for us and for our clients, estate planning is truly an embodiment of the holiday spirit. It’s Scrooge after his transformation. Post-ghosts, the Scrooge that really feels the true meaning of Christmas. Because we see estate planning as love in action. It’s prioritizing your loved ones, their futures, and your shared values by creating safeguards to protect and a support system to sustain.

Give the Gift of Estate Planning this Holiday Season 

We have said this before, but estate planning truly is the greatest gift you can give to your loved ones. Not only can your estate plan provide for their support and success in the future, but it has much more immediate effects as well. If something unexpected happens to you, your estate plan should be able to provide for your loved ones’ immediate and long-term care. Especially if you have minor children or loved ones with special needs, your estate plan can make sure they are cared for and safe. An estate plan also does something very important that is often overlooked: by creating a clear communication of your wishes, you can help avoid any potential conflict that arises from a lack of communication and unclear instructions. All too often, a family that loves each other and wants what’s best for one another can find itself in conflict over how to interpret unclear or missing last wishes. Death or incapacity is stressful and often chaotic. It truly is a gift to have a clearly-stated set of plans to follow if and when the time comes.

Start the New Year Fresh

For many, estate planning is a pot sitting on the back burner, threatening to bubble over. We all know we need an estate plan, but many of us just keep putting it off. You know you should do it, but it never quite feels like the right time. You are always too busy, or you are about to go through a big change, or something keeps you from taking the leap. Here’s the best-kept secret about estate planning: it’s not a leap. It’s strategic. You don’t need everything in your life to be perfect or complete or organized before beginning your estate plan. Messy and disorganized is our wheelhouse! That’s why you hire an attorney to help you create an estate plan. We are here to help you get organized, create a plan, and then amend and adapt that plan as your family and your assets grow.

Incorporate Charitable Giving into Your Plan

The year is drawing to a close, and it is the season of giving. Maybe it’s the chill in the air or maybe it’s a feeling of gratitude that comes from spending quality time with those we love. But something about the holiday season reminds us all of how lucky we are. When you create your estate plan, you can capture the spirit of giving and pass it on for future generations. An estate plan, as much as it is about transferring wealth, is about creating a legacy. By incorporating charitable giving into your estate plan, you can capture your values and what matters most to you. Not only can you use your hard-earned assets to further a cause that is important to you but you can use your charitable gift as a way to share your values with the next generation.

Our Doors are Open

If you have been waiting for a sign, here it is. Our doors are open this holiday season, and we are waiting for you to reach out to us! The compassionate, hard-working attorneys at Leisinger Law are here for you. Let’s create a plan together and ring in the new year right. Give us a call at 626-331-1515 to make an appointment. Happy Holidays to you and yours!

If you are like most people, your home is the highest-value asset in your estate. As a large part of your estate, you will want to make sure that your home is properly prepared to transfer to your intended heir(s) as quickly, privately, and affordably as possible.

Planning to transfer real property after your death is different than the other assets in your estate. Real property is your home, the land you own, and anything attached to the land. Unlike other assets, such as bank accounts, insurance policies, and personal property, real property ownership is shown with a deed and is recorded in the land records for the jurisdiction. 

Estate planning as a homeowner does not have to be as complicated as it seems, but it is essential that you look closely at how your property will be treated after you pass. A will alone will land your property in probate court, costing your heirs additional time and money, and it may not create the result you wish. 

As you begin thinking about estate planning and your home, start by locating your deed and taking a look at it with an attorney. The language that lays out how your property is titled has a huge impact on what will happen to your home after you die.

How is Your Property Titled?

How you own your property, or how it is titled, will have significant impacts on how the property is transferred to heirs. There are a number of ways you can hold title to real property. The most common are sole ownership, community property, community property with a right of survivorship, joint tenancy, and tenancy in common.

If you have sole ownership of your home, that means that it is titled in your name only. You own the property alone, and it is wholly included in your estate. After you pass, your property will be subject to probate and will pass to your heirs in accordance with a will or, in the absence of a will, with state law. In probate court, your home, along with your other assets, will be publicly recorded and may be subject to any debts and liabilities you may leave behind.

If you own property with a spouse or domestic partner, it is presumed that you own it as “community property.” Without specifically stating otherwise, the law will presume that both married partners equally own the real estate, and it will require both owners’ signatures on all agreements and documents transferring the property or using it to secure a loan. Under this form of ownership, each married partner is considered to own one-half of the property and can dispose of their own half however he or she wishes.

Spouses and domestic partners also have the option to hold title as “community property with a right of survivorship.” When one partner dies, title to the property automatically transfers to the surviving owner. Unmarried co-owners can also benefit from the right of survivorship by taking title to a property in “joint tenancy.” The deed must expressly declare that owners intend to hold the property in joint tenancy. Under both of these ways to hold title, all owners hold full ownership of the property collectively. At the death of one owner, whole ownership of the property remains with the other owner(s), and the property will not pass through the deceased owner’s estate, thereby avoiding the probate process. 

Co-owners who are not married and do not expressly choose to include a “right of survivorship” hold property as “tenants in common.” Tenancy in common means that each owner owns a portion of the property and holds proportionate ownership rights. Each owner may transfer and sell his or her portion of the property without consulting with the other owners. When one owner dies, his or her portion of the property will transfer to his or her heirs in accordance with a will or state law. As an example, if siblings John and Susan own their late parents’ home as tenants in common, they each own half of the property. When John dies, he leaves his estate to his daughter, Alice, in his will. His assets that are subject to probate, including this partial ownership of the property, will go through the probate process in court before transferring to his daughter. Alice and her aunt, Susan, will now own the property together as tenants in common. 

Co-owning a home with the person you intend to leave it to makes the transfer upon your death relatively quick and easy. However, this form of ownership does create some challenges of its own. First, a jointly owned property can become subject to the judgments, lawsuits, and liabilities of any of the owners. Second, all living joint tenants of a property must sign and deed or mortgage. If one owner becomes incapacitated, it can be more difficult to exercise ownership rights. Finally, because full ownership passes to the surviving owner upon the death of the other owner, the property may not continue to pass down the way that the deceased homeowner intended. For example, Bob and Katie are married and own a home as community property with the right of survivorship. When Katie passes away, Bob will be the sole owner of the home. Katie’s children from a previous marriage will hold no ownership rights to the property, and it will be up to Bob to decide whether he intends to provide for them in his estate.

Community property with a right of survivorship and joint tenancy are only created through express language in the deed and recorded in the land records. Failure to use the appropriate language will cause ownership to revert to tenancy in common or community property. Owning real property with the right of survivorship does not eliminate the need for a will. In the case that all owners of property with right of survivorship die close in time to one another, the property will then be transferred in accordance with a will through the probate process. Failure to have a written will can result in the property being transferred in accordance with state law.  

Transfer by Will: Navigating the Probate Process

Unless your estate plan transfers your home to your heirs in one of the methods that avoids probate, real property is generally subject to probate. If you are the sole owner or hold a property as a tenant in common with other owners, your property ownership is a part of your estate and will be distributed in accordance with your will. 

The primary goal of estate planning is to ensure that the person who accumulates property throughout his or her lifetime is able to decide what should be done with the estate after death. In California, state laws governing the probate process are designed to ensure that assets are distributed fairly. However, this process is costly, time-consuming, and public.  

The cost of probate is approximately 5% of the value of your estate, based on the fair market value of your home. These costs, including legal fees and court costs, can be extremely high. Going through the probate process can also take a long time, between a few months to over a year. During this time, your heirs will not be able to exercise any ownership rights over the property. Probate is also a public court proceeding, and your will, as well as descriptions of any real property you own, will become part of the public record.

Another benefit to keeping real property out of probate is that this prevents any disruption in paying bills, homeownership fees, and mortgage payments on the property. While a property is in probate, your heirs may find it difficult to get permission to continue making these payments using funds from your estate.

Planning to avoid probate and default state laws protects your assets and your heirs from court costs, legal fees, unnecessary delay, and public disclosure. Working with an attorney helps ensure that you can transfer your home to your heirs while meeting all legal requirements and preventing legal challenges after your death.

Putting Your Property into a Trust: Revocable vs. Irrevocable

One way to keep real property out of probate altogether is to create a trust. A revocable living trust allows for a property owner to transfer ownership of real property into a trust during his or her lifetime. Creating a trust allows you to create instructions for how the property is to be used, and trustees are bound to act in accordance with the directions of the trust. The grantor is no longer the “owner” of the property, so you will need to change the title of the property to show that the trust is the new owner.  You can then name yourself as the trustee, and you will retain ownership rights throughout your lifetime until a successor trustee takes over upon your death. Property held in trust is not a part of the estate for the purposes of probate, so this method does prevent a home from going through the probate process. However, putting a property into a trust does not exclude the property from the value of the estate for the purposes of taxation.

The instructions for a revocable living trust that guide how successor trustees manage assets on behalf of beneficiaries may be altered or the trust terminated during the grantor’s lifetime. Upon the grantor’s death, the trust becomes irrevocable and cannot be altered.

An irrevocable trust is one that cannot be amended or terminated as soon as it is created. As the grantor, you agree to place an asset into a trust and it cannot be undone. There are a few distinct benefits to creating an irrevocable trust for the purpose of transferring your home to your heirs. One is that an irrevocable trust shields the property from creditors and judgments. Another is that this prevents the property’s value from being included in the total value of your estate. This may matter to you if you have a sufficiently large estate as to trigger estate taxes.

Estate Taxation

Keeping a property out of probate does not affect your estate’s obligation to pay estate taxes. Your taxable estate includes any property you own at your death, whether it goes through probate or not. However, federal estate taxes are only charged if the estate is worth more than $11.18 million (in 2018). When determining your total estate value, the value of a home or any other real property will be based on the equity you have in the property. 

What if I have a mortgage or other debts?

When you meet with an attorney to discuss your estate plan, make sure to bring all documentation with you regarding your home. This includes all mortgages and financial interests in your home. An attorney can help you sort out all outstanding amounts due and determine the best plan for you. 

Typically, a mortgage cannot be called at the transfer of ownership due to death. However, this protection generally only applies if the mortgage is current. Depending on the bank or mortgage company, a mortgage may or may not be called if you transfer a property into a living trust. You can look through your loan documents with your attorney to ensure that you have a plan in place should you die before the mortgage is fully paid off.

Contact the Trust Brothers To Learn More About How To Best Protect Your Home

We hope this guide has been helpful for you in thinking about your real property plan. If you are not sure about how you hold title to your property or if you are ready to create an estate plan that smoothly and efficiently transfers your property to your loved ones, feel free to give us a call at 626-331-1515.

Very often, clients tell us that they wish they hadn’t waited so long to start the estate planning process. It can seem scary or overwhelming, and there are a lot of reasons people put it off. One of the most common is that people want to wait until they have achieved certain financial goals before meeting with an attorney. These goals may include buying a home or earning a certain amount of money, but one we hear the most is getting out of debt. Many individuals we see say that they really wanted to resolve all credit card debt or finish paying off a mortgage before making an estate plan. However, many of these people don’t realize that the vast majority of Americans pass away while they still owe outstanding debt. Ignoring the situation or putting off making a plan can create a significant impact on your loved ones and your legacy. 

Taking it to the Grave: Americans are Buried in Debt

Seventy-three percent of American consumers die with outstanding debt — on average almost $62,000 per person. These numbers, compiled through data collected by Experian, break down to show that, among those who die with debt,

• 60% have outstanding credit card balances
• 37% have some amount of mortgage debt
• 25% have auto loans
• 12% have personal loans
• and 6% have remaining student loans.

These debts are incredibly common, and they are nothing to be ashamed about. However, it is necessary that consumers come to terms with their debts and make a plan to deal with them sooner than later. If you die with debt and you have not put a plan in place, your loved ones will be left with a complex, stressful, and overwhelming legacy to manage.

What Happens to Your Debt When You Die 

In most cases, debt does not directly pass to your loved ones after you die. Instead, your estate will be responsible for any outstanding debts. It will be the executor’s responsibility to identify outstanding debts, give notice to potential creditors, and then distribute funds to satisfy creditors. If there are enough assets in the estate to satisfy all debts, then the executor will ensure that creditors get paid before distributing the remainder of the estate to the beneficiaries in accordance with the will. If there aren’t enough assets in the estate, the probate court will prioritize creditors. Those with top priority will be paid first, and creditors with lower priority may lose out. Any heirs named in the will may also receive nothing, since the full estate amount will be necessary to satisfy debts.

Although the majority of outstanding debts are resolved through this probate process, there are some situations in which heirs or loved ones may need to step in to resolve outstanding debts. For example, if family members or friends live in a home owned by the deceased, the home may need to be sold to cover outstanding debts such as mortgages. Instead, to preserve the family home, it is possible that heirs could take over the mortgage.

If there are co-signers or co-applicants who incurred a debt with the deceased, these debts will likely not pass to the estate. Instead, the creditors may hold the surviving signer responsible for the full balance of the debt.

Student loans are another incredibly common form of debt, and as the cost of higher education increases, more and more former students will pass, leaving behind outstanding federal and private loans. To learn more about how student loans can impact your estate, take a look at our article, What Happens to Your Student Loans When You Die?

What Can You Do About it?

If you have any debt, whether it’s a mortgage, credit card debt, auto loans, or any other form of credit,  it is essential that you make an appointment to meet with an estate planning attorney. Being in a less-than-desirable financial position is more of a reason to meet with an attorney, not a reason to put it off. Ignoring your debt or waiting until you are out of debt to meet with an estate planning attorney is a huge mistake. The only way to protect your family is to take responsibility for your future.

First, take a look at your credit report to get a sense of your debts and where you stand. If you need some help, you can meet with a financial planner to create a plan to reduce your debt as quickly as possible and to ensure that you are living within your budget.

When you take stock of your financial situation, if there is a possibility that you could pass leaving an insolvent estate (debts greater than the value of the estate), it may be a good idea to purchase a life insurance policy to provide for your spouse or minor children. A life insurance policy, as long as beneficiaries are properly designated, will pass to your loved ones outside of probate, which can provide protection from creditors.

Other financial assets, such as retirement and investment accounts can be distributed using beneficiary designation forms. These forms control outside of the probate process, so assets may be protected from creditors. To ensure that these assets pass smoothly to your heirs without being subject to your debts, it is essential that you keep beneficiary designation forms up-to-date. An experienced estate planning attorney can help you review your financial assets and make sure that all beneficiary designations are correct and effective.

Finally, it is also possible to protect assets from creditors using a trust. Different trust structures provide different levels of protection from creditors, but all trusts keep assets out of probate, which means preserving your privacy and saving money. The probate process is lengthy, public, and can be expensive. Especially if you are worried about the amount that your debts will cut into your loved ones’ inheritance, a trust may be a good way to transfer assets quickly and without extra court costs and legal fees.

Get Started Now with a Plan to Protect Your Loved Ones

If you are ready to get started on your estate plan and begin managing your debt, give the Trust Brothers at Leisinger Law a call. Our experienced estate planning attorneys are ready to help you stop hiding from your debt and start taking control of your legacy.

If you’ve been paying attention to the news, you know that student loans are bigger and more common than ever before. There is currently over $1.45 trillion in outstanding student loan debt in the United States, and 42 million Americans have some amount of student loan debt (the average borrower owes over $30,000). Despite student loans being incredibly common, there is still a lot student loan borrowers don’t know about their debts.

One in three consumers over the age of 40 are still paying on their student loans. Are you one of them? If you are, you may have questions about how to think about your student debt in the context of your collected wealth. Most importantly, what happens to student debt after you pass?

Federal v. Private Loans

Student loans are issued either by the federal government or a private lender, like a bank. Depending on which kind of student loan you have, there will be a different impact on your loved ones when you pass.

If you have federal student loans, the news is generally pretty good. Federal student loans are forgiven when the student borrower dies, so there will be no impact on your estate or any inheritance you wish to pass on to your loved ones. The executor of your estate or another loved one will simply need to provide a copy of the death certificate to your loan servicer, and the debt will be forgiven without any tax penalty.

Federal Parent PLUS loans, which are taken out by parents on behalf of their children, are forgiven on the death of the student for whom the loan was issued or the parent who signed for the loan. However, there may be some tax implications. The parent whose child dies before a Parent PLUS loan is repaid will receive a form 1099-C when the debt is discharged. The amount of the discharged debt will be considered taxable income to the parent. Depending on the balance due on the debt, this can cause a significant tax liability for the parent.

While federal loans all contain some protections for student borrowers in their terms, private loans are mixed. Some private lenders may also offer a death discharge if the student borrower dies. However, more commonly the lender will treat the debt like any other and go after the balance when the student borrower dies.

When private lenders issue student loans, they sometimes will require a cosigner to guarantee the loan. If a private student loan has a cosigner, this adds another layer of complexity. A cosigner is equally responsible for student loan liability as the student borrower, so he or she will remain liable for the balance of the loan if the student passes away before it is paid off. Some lenders may even consider the student’s death a “default” and bring the entire balance of the debt to come due immediately.

To avoid these consequences, it is a good idea to see if your lender will allow you to apply for a cosigner release. Lenders will sometimes allow a cosigner to be released from liability if a certain amount of the debt has been paid off and the borrower can show a consistent payment history.

A Side Note about Debts and Probate

Probate is the process by which a state court will assess the validity of your will, name an executor, pay debts, and then distribute the remaining assets in accordance with your will.

One of the first duties of an executor is to assess any debts owed and assets held by the estate to determine if it is solvent or insolvent. A solvent estate is one that has enough assets to pay off all outstanding debts. An insolvent estate owes more than it holds.

Even if an estate is solvent, creditors are paid before any remainder is distributed according to the will. For heirs, this may mean that their inheritance is significantly (or entirely) reduced by the time all debts have been satisfied.

The probate process is completed once all outstanding liabilities are satisfied and the remainder of the estate (if any) is distributed to the decedent’s heirs.

Protecting Your Estate from Student Loan Debt 

One way to prevent your private student loan debt from impacting the inheritance you leave for your loved ones is to take out a life insurance policy in the amount of the balance owed. This would provide enough funds for your loved ones and heirs to immediately pay back the balance owed on your student debt and keep your estate solvent.

Another way to ensure that your loved ones will receive a portion of your wealth after you pass is to keep as many of your assets as possible out of probate. This can be done by naming beneficiaries on all financial accounts, retirement accounts, and insurance policies. Beneficiary designation forms supersede anything written in a will, so these accounts will pass directly to your named beneficiary without passing through probate. If you name your estate or someone who has deceased as your beneficiary, however, the assets from these accounts may revert to your estate and be included in the probate process.

Another way to keep assets out of probate is to place them into a trust. Assets owned by a trust can only be distributed to the named beneficiaries under the guidelines of the trust. Creating a trust to distribute assets to your heirs will protect your wealth from creditors, including private student loan holders. An estate planning attorney can advise you on the best ways to use trusts to ensure your loved ones are cared for after you pass – even if you still have outstanding student loan debt.

How Will My Child’s Student Loan Debt Impact Their Inheritance?

Talking to your children about money – especially about debt – can be awkward, but it is absolutely necessary. Not only will your children be able to learn from your experiences, but it is important for your estate planning strategy to understand your children’s liabilities. If your child has significant student loan debt, difficulty repaying student loan debt, or is in default on student loans, you will want to take steps to minimize the chance your estate will end up with creditors, rather than with your heir.

If you leave any assets to a child who has defaulted on student loans, these assets will be vulnerable to collection efforts. Student loan debts do not go away (even in bankruptcy), so if your child defaulted on his or her student loans years ago, any gift or inheritance he or she receives may be at risk.

One way to protect your child’s inheritance is to place assets into a trust. A trust can help ensure that your estate is passed on and used according to your wishes. Establishing a trust and protecting the assets from a beneficiary’s creditors is technical, but it is both possible and legal. As the grantor, you can limit when and how funds are distributed to beneficiaries and specify the ways in which you want the funds to be used. Because the funds have limited use, creditors would not be able to seize these assets to pay back a loan in default.

Contact the Trust Brothers at Leisinger Law Today

If you are not sure you need an attorney, you can always come in for a consultation to discuss your situation. Please contact our office if you or your loved ones are concerns about student debt. We are happy to talk through your loans with you and come up with a solution that protects your loved ones.

Call us today at (626) 331-1515 or contact us online to schedule your initial consultation with a Los Angeles area estate planning attorney today.

Traveling the world is an exhilarating adventure! Planning for a big trip across the globe is fun and exciting, and thinking about estate planning while plotting the course of your big adventure can be decidedly less exciting. Although estate planning isn’t the first thing that comes to mind when traveling internationally, it is important to spend some time reviewing your current estate plan, or creating one if you haven’t already. Preparing your plan before your trip can give you (and your family) peace of mind so that you can enjoy the trip of your dreams. Read some of the most frequently asked questions about estate planning below. Then, call the experienced attorneys at Leisinger Law. We’ll walk you through your options, so you can be prepared for anything that comes your way.

What Paperwork Should I Prepare Before Traveling?

A common misconception about estate planning is that it’s all about reducing your tax burden. While lowering the tax burden on your estate can be a goal of careful estate planning, the truth is that preparing your estate is really about planning for the future. There are a number of estate planning options that are important to consider, depending on your financial and personal goals.

If you’ll be traveling internationally in the near future, consider the following estate planning options:

• Creating a durable power of attorney: durable powers of attorney authorize a trusted individual to make financial decisions on your behalf if you are unable to do so.
• Establishing guardianship of your children (and pets!): if your trip is extended due to a medical emergency, make sure you’ve established who will take care of the kids (and your pets) while you’re away. Formally establishing guardianship in a legal document makes sure that your children are cared for by someone you trust.
• Creating an advance health care directive: similar to a durable power of attorney, a health care power of attorney allows an authorized person to make medical decisions for you and gives your instructions regarding medical treatment.
• Creating a will: regardless of your financial situation, it’s important to have a will. Your will reflects your wishes regarding your assets should you pass away. Drafting a will or reviewing your existing will before you travel means you travel without worry.

Traveling internationally, like estate planning, is all about logistics. In addition to your estate planning tools, there is other paperwork you should make sure you have in order before traveling internationally. To be fully prepared, consider carrying the following with you on your trip:

• Updated vaccines record
• Copy of your marriage license
• A secondary photo ID in addition to your passport
• Proof of international health insurance
• Child travel consent (if you are traveling with your child and share joint custody with their other parent)
• Your child’s birth certificate (if traveling with your child)

That may seem like a lot of paperwork to prepare before leaving on vacation! However, making sure you have the necessary paperwork you may need can ensure your trip goes smoothly.

 

Why Should I Add Estate Planning to the Long List of Things I Have to Do Before My Trip?

Managing the logistics of an international trip can be time-consuming but is essential to having an enjoyable trip. And, once you’ve started your estate plan and build a relationship with an attorney you trust, keeping your plan up to date before each big trip won’t take long at all. Eventually, you will just come to consider updating your estate a vital step to preparing for your trip.

The main reason to prepare your estate before travel is to make sure you and your family are prepared for the remote possibility of accident, injury, or death overseas. Dealing with the headache of who pays for medical bills or who has guardianship of your kids can be extremely difficult to do while you’re in a foreign country. Instead of waiting for something to happen, plan now.

 

What happens if I Have an Accident While I’m Out of the Country?

Accidents happen at home and abroad. Whether you’re taking the international adventure of a lifetime, or plan a more leisurely trip, you never know when you might get hurt or fall ill. Before traveling, review your medical insurance policy to make sure you have international coverage. Without proper international health insurance, you could face high medical bills if you have an accident or get sick overseas.

In addition to squaring away your health insurance, consider creating an advance health care directive. As noted above, an advance health care directive is a document that designates someone you trust to make your medical decisions for you. If, for example, you fall off the gondola in Venice or have a sailing accident in the Caribbean, your designated decision-maker can guide your health care, so you can recover. Similarly, creating a durable power of attorney gives your trusted designee the authority to pay your bills while you’re recovering from an illness or accident. By planning your estate before your trip, you can travel without worrying about your care or your loved ones if something happens to you.

 

Isn’t Estate Planning Only Important for Wealthy People?

Far too many people go through life mistakenly thinking they don’t have enough money to plan their estate. The truth is, everyone should take time for estate planning regardless of the state of their assets. There is no financial threshold for preparing for your future. Again, estate planning is about preparing for what you want to happen in the future. Whether you’re interested in designating how your assets will be divided in your will or are considering how a trust could ease your tax burden in the future, take the time to think through your options now rather than later.

 

Can’t I Just Worry About This After My Vacation?

It is very tempting to put off estate planning until next year or after the birth or your next child or after your vacation. The reality is, none of us know what the future holds. All we can do is prepare for the possibilities. So, instead of waiting to plan your estate after you get back from vacation, call Leisinger Law to schedule your free consultation. We’ll walk you through your options and make recommendations based on your needs and goals. Our experienced estate planning attorneys will answer any questions you may have about wills, trusts, and other options. We will take care of the paperwork so that you that can enjoy a worry-free vacation.

Your Fur-Baby is Part of the Family

If you are like us at Leisinger Law, you know that pets are a part of the family. In the words of Jane Goodall,

“You cannot share your life with a dog … or a cat, and not know perfectly well that animals have personalities and minds and feelings.”

Pets have the capacity to bring great joy into our lives, and we often come to think of them as one of our own. It’s hard to imagine, but it is possible that your pets may outlive you, or something could happen to you that prevents you from providing adequate care for your pets. Just like our family and friends, it is important to create a plan that ensures that our beloved pets will be cared for in the future.

Who Will Care for Your Pet if You Can’t?

If you die or become incapacitated, who will care for your pet? You may have someone come to mind right away. Or, you may struggle a little with this decision. Who do you know that

• Is able to provide adequate care for this pet?
• Is willing to care for this pet?
• Has the financial means to care for this pet?

In asking these questions, you may have a hard time coming up with just one person, or you may be overwhelmed with choice. In the former situation, you may need to look to an organization to take in your pet. In the latter, you will need to prepare for the possibility of a family conflict that could arise over the care of this pet.

If someone does come to mind who you would trust to care for your pet, it is important to include them in the decision. Ask if they would be willing to provide care and if they have the means to do so. If they do not have the means but are otherwise willing and able to take in your beloved fur-baby, you do have some financial support options we will discuss later on. However, if no one you know is willing to take your pet on, you may have to make other arrangements.

If you don’t know of someone who is willing to care for your pet, there are organizations that will help place a pet after the owner passes, including the SPCA and its affiliate programs, veterinary school programs, and private animal sanctuaries/rescue organizations. Contact some organizations in your area and ask about advance planning for pet care.

How Will You Provide for Your Pet’s Care?

Pets cannot own property, so it’s not possible to leave Fluffy funds to provide for her care. Instead, you have a range of options, from a simple letter of instruction to a complex trust. If you know someone who can care for your pet, who is willing and trustworthy, you may not need a formal arrangement for your pet’s care. Instead, all you would need is a simple statement in your will naming the caretaker and, if you choose to do so, leaving some money to the caretaker to help in your pet’s care.

The challenge with using a will, however, is that there is no way to ensure that funds left to a caretaker to provide for your pet’s care will actually be used for that purpose. There is also no way to ensure that your pet will receive a certain level of care or to provide instruction regarding that care. Finally, a will only goes into effect when you pass away, so they provide no protection for your pet if you become incapacitated. A trust, however, provides much more control.

Creating a Pet Trust

Creating a trust to provide for your pet’s care is not as extravagant as it may seem. In fact, you can create a relatively simple trust that provides for your pet’s care if you are ever unable to do so yourself. This includes if you become incapacitated or if you die. A pet trust allows you provide for your pet’s care, designate a caretaker, provide funds specifically earmarked for the pet’s care, and provide instructions for care. You can also provide for regular payments to be disbursed to the caregiver, rather than a lump sum.

A trust is different from leaving a pet to a caretaker in a will because
1) it creates a legal obligation to care for the pet

2) it provides accountability for how the funds allocated for the pet are used

3) it allows you to set up a plan that goes into effect if you become incapacitated, rather than die.

Incorporate Pet Care into Your Estate Plan

Of course, an estate plan is a much broader concept that providing pet care, but your pet’s future is easily incorporated into your comprehensive plan. You can even include charitable giving to your favorite rescue organization or animal sanctuary as a part of your estate plan as well. If you are a pet parent, don’t forget to mention your fluffy loved one when you are meeting with an experienced estate planning attorney. At Leisinger Law, our experienced attorneys will make sure that your pets are looked after in your estate plan according to your wishes. We know that pets are a part of the family, and we want to treat them that way! Give us a call at (626) 331-1515 to learn more!