Desert Estate Planning Law Blog : Palm Springs Estate Planning Lawyer & Attorney : Daryl Binkley Law Firm : Palm Desert, Indian Wells, Southern California

The Community Foundation presented its Coachella Valley edition of The Philanthropic Series at Rancho Las Palmas in Rancho Mirage on September 25.  The event included some great speakers across various topics, including:   "Real Estate Exit Strategies" in relation to charitable giving; a crystal ball look into the future of all types of taxes; and some insight into "What's Ahead for the U.S. & California Economy." 

This was a top-notch event put on by the charitable organization and allows them a chance to strengthen ties with the Coachella Valley.   

Michael McGreevy, from Private Asset Management, and Board Member of the Coachella Valley Fund said, "The Philanthropic Series seminar was full of useful estate planning information.  I was particularly impressed with the segment that addressed the future of the U.S. and California economies."

In setting up an overall estate plan, charitable gifting is an often overlooked option.  For example, some people might have a hard time coming to a decision about which charity to give to, or if they want to give to more than one charity, then they become worried about creating additional complications to their estate plan.   

The Community Foundation has made Cherry Picking your Charity easy.  You just put them as the recipient of your charitable gift, and then they distribute your gift to other non-profits aligned with your charitable interests.

Depending on the type of gift you want to establish with the organization, it can be spread across many charities. As stated on their informational materials:

"In response to the wishes of Coachella Valley leaders, The Community Foundation...has created The Coachella Valley Fund to match donors' philanthropic interests with gifting opportunities to a wide variety of charitable organizations solely within the Coachella Valley.  Funds given to The Coachella Valley Fund shall be used exclusively to benefit causes in the Coachella Valley."

There are many great charitable organizations in the Desert, The Community Foundation is another one worth your consideration.

Further, it is my understanding that they have contributed more to Coachella Valley projects (nonprofits) than they have received from valley donors.  Desert it is time to give back.

In another blog post I will discuss the possible benefits of charitable giving when coordinated with an overall estate plan--but I will state here that the benefits are significant.  Further, the pride one feels knowing that at least part of their estate will truly make a difference in many people's lives can be quite heavenly, I would like to imagine. 

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Yes, the Desert Estate Planning Law Blog has launched.  The Blog's official launch was this week and the launch was reported in The Desert Sun.

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"'I have an estate plan--I have my will, and that means my loved ones won’t have to go through a probate when I die.” This is a great misconception about wills. Maybe the greatest. 

However, PROBATE essentially means to prove the will (see Etymology on Wikipedia).

Think about it, you might find a "form will" on the Internet for free, or pay an Internet site a low fee.  This seemingly inexpensive price for the handling and organizing of your affairs, comes with its own cost--YOU have to complete the form, completely at your own risk. 

In California, probate generally occurs when an estate has real and personal property with a combined value in excess of $100,000.  For those owning real estate in the Desert, probate is a real threat (THINK ABOUT IT:  when was the last time you bought a home in the Desert or anywhere else in California for less than $100,000).  

So, while you may pay little or nothing now for that "cheap" will you procured, your estate may pay much more later, with overall costs related to the settling of a probate from 2% on up to 5 or 6%.  And in some cases, there might be extraordinary fees raising the costs even higher.  On an estate with a total value around one million dollars, the costs could be in the range between $20,000 to $50,000, depending on the circumstances and involvement of outsiders to administer the estate.  All of a sudden free or cheap, doesn't seem so FREE or CHEAP. 

This reminds me of one of my favorite sayings, “When you try to get something for nothing, you might get NOTHING for something.” 

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I got into estate planning law after experiencing first-hand (with family and friends) what can happen to an inheritance without proper estate planning. Homes are sold at fire-sale prices to pay for estate taxes, family assets get tied up in endless probates, and all that accumulated wealth people worked so hard to build begins to disappear--all because there was either inadequate or no planning in place.  And in most cases a lot of that headache and stress would have been avoided with some proper planning and knowledge of law.

So if many people don't know how to do this the right way, then at least the high-net worth family owned businesses in America--they must know and certainly do proper planning, right?

Well apparently not.  An article in Conde Nest Portfolio cites "a recent study of 242 family businesses owned by ultra high-net-worth individuals commissioned by U.S. Trust, Bank of America Private Wealth Management shows that despite professing dedication to preserving wealth, these companies are not doing the planning--estate, succession, asset protection--to achieve it."

"Only 15 percent of the companies studied stay under the control of their founding families past the second generation" ONLY 15 PERCENT.  Another interesting point in the article that exemplifies the idea: "Do as I say not as I do" is that "Two-thirds of these uber-rich business owners want to keep it in the family and have a succession plan.  Only one-third of those plans are being implemented, and most of them are out of date." If they are out of date, then they might fail, quite spectacularly too.  Russ Alan Prince a co-author of the study is quoted as follows:  "They're too busy making money to protect the money they're making."

The reality is that laws are tricky and many people are scared to ask lawyers what to do. Sometimes they are scared of the price an attorney might ask. In reality, many attorneys will offer a free consultation, review your situation and give you options. And the price of estate planning work needed (before problems occur) is generally a fraction of what probate and estate taxes might be (for those that have estate tax issues). Sometimes people are not even aware of any tax implications, and if you don't know what you don't know, how can you even ask the right questions?

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The revocable living trust is a great way to avoid probate.  Probate involves unnecessary costs, delays for distributions, and potentially the loss of otherwise private information. Generally speaking, the revocable trust escapes probate and it works so well that some might think it must be voodoo or black magic. 

Sadly, some people believe that "trusts" are for the rich, you know something only the Rockefeller's and Carnegie's of this world need. 

However, in California a probate is triggered at a person's death when they own a combined total of qualifying real and personal property worth over $100,000. Sure property values in the Desert have been headed lower in recent times, but, there are a lot of homes worth over $100,000 that are not owned by the Rockefeller or Carnegie types.

I would say many home owners in the Desert have real property that is worth over $100,000, and that's before adding personal property to the overall estate value.  So probate avoidance can benefit many homeowners (clearly the average owners of real property in the Desert)--and thus a revocable living trust is a great option for homeowners.   

But some might also think that a revocable living trust is something that will complicate their lives too much, and so it is easier to be an ostrich with their head in the ground. Of course an ostrich with its head in the ground is pretty exposed elsewhere.

In general terms, a trust is merely a legal device to hold your assets so they can be transferred without the need for a probate upon your death. There is no magic involved, but it is advisable to have a competent attorney draft the provisions of a trust to fit your own needs. 

But once your trust is created, your life will not cease to exist as you know it! 

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As I was reading the recent article in the New York Times "The Key to Wedded Bliss? Money Matters" about how much views and attitudes on money can impact a marriage and wedded bliss--it got me thinking about all of those people who end up in divorce, and what will happen to their families later in life, from an estate planning perspective.

Regardless of whether the main reason for divorce is money, divorce will definitely impact the future finances, assets, and methods of distribution for members of the divorced family unit. 

For example, what happens if one spouse has substantially more assets and a greater earning capacity--and then starts a second family with new children.  First, how does this impact the amount of lifetime support the children from the first marriage will receive?  Second, what amount of assets will both sets of children receive from that parent at that parent's death? 

Second, third, fourth, and/or "mourth" marriages bring a unique set of challenges to the table when considering estate planning.  And in the Desert area it just seems that blended families are so common, probably again as a result of a population that is weighted more heavily to the retired or retiring population.

However, blended families not only cause complexity from a financial perspective, but also on an emotional level, too.  In many cases relationships of blended family members are hospitable during the lifetimes of everyone involved, but then when a parent passes away and step-relatives are involved, once hospitable relationships begin to sour (to put it lightly), or turn into outright war between beneficiaries.   

While having no estate plan is a poor recommendation, sometimes outdated estate plans (created before the divorce and not updated after) present their own set of problems.  Further, even when planning does occur, it still may not adequately address how assets should be distributed to children from these blended families. 

Parents of blended family situations should give serious thought as to how they want their assets to be handled after their gone, and consider in concrete terms how to execute their desired distributions at death. 

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HAL could there really be no estate taxes in 2010???

As it stands right now, the Estate Tax is scheduled to take a complete break in 2010, meaning there will be no estate taxes charged to any estate of people that die that year.  

Of course 2010 hasn't occurred yet, but it will be an interesting experiment if it remains a death-tax-free year. 

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