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SANTA’S 2019 ESTATE PLANNING: A NAUGHTY OR NICE LIST

Have you been naughty or have you been nice in 2019? This article is directed towards all my clients, and all estate planners, including attorneys, accountants, trust officers, life insurance agents, and financial planners. This will help you decide whether you’ve been naughty or you’ve been nice.

1. Do you have a living trust or a living nightmare? Do you even know what you have?
If you have not reviewed your estate plan in the last 5 years, you are on the naughty list.

2. Are you leaving your assets to your children unprotected, outright, and free of trust?
You are on the naughty list.

3. Are you eliminating the income tax on assets passing to your children or are you forcing them to pay unnecessary taxes on their inheritance? If you are forcing them to pay unnecessary taxes on their inheritance, you are on the naughty list.

4. If your financial power of attorney is over 5 years old, it is powerless! Your power of attorney won’t be accepted by your bank or stock broker because it is “stale.” If your power of attorney is powerless, you are on the naughty list because you are facing a potential conservatorship, aka a “living probate.”

5. Have you failed to create a wallet card for your health care directive so you have immediate access to it when you need it? It doesn’t make sense to put your health care directive in your safe deposit box. You are nice if you have a wallet card with your health care directive in it.

6. Have you reviewed or discussed with your parents how they can modify their estate plan to give you asset protection, predator and creditor protection, after you receive your inheritance? If you have, you are on the nice list.

7. Staggered distribution trust. If your trust makes mandatory outright distributions to your children upon reaching staggered ages, then you are on the naughty list. This subjects the trust assets to the creditors and divorcing spouses of the children. Trusts should be designed to keep the assets in continuing trusts so that they are protected here in California for the next 100 years.

8. Have you planned your estate to avoid the in-laws that may become the out-laws? If you’ve taken advantage of this opportunity, you are on the nice list.

9. After you die, the person wrapping up your affairs needs to access your digital assets. The best way to provide your survivors with the ability to access your accounts and files is to leave specific instructions including passwords and logins with your digital executor and your digital trustee. You are naughty if you have not updated your will and trust to give written permission to your executor and trustee to access your digital assets.

10. Have you checked to make sure you have a beneficiary designation form for each and every IRA? Have you discussed with your children the tax advantages of a stretch-out? If you have not taken advantage of the stretch-out provisions, you have a blow-out and you are on the naughty list.

11. Do you have physical custody of your beneficiary designation forms? If you have physical custody of these forms which tell us who your primary and secondary beneficiaries are, then you are on the nice list.

12. You are naughty if you hold title to your appreciating assets in joint tenancy because your surviving spouse must pay income taxes that could otherwise be avoided.

13. You have taken the time to create a revocable living trust but you have failed to transfer your assets to your trust and therefore, you are naughty because your estate will go through probate.

14. If your attorney is not a certified specialist by the California State Bar in estate planning, probate, and trust, you are naughty. Orange County now has 15,000 attorneys all saying they are experts in estate planning but only ½ of 1% have passed a second bar exam that allows them to be “certified” as a specialist in estate planning.

15. If you want to convert your “naughty” to “nice”, you need to call W. Bailey Smith, the “Trust Doctor” at 949-756-0684.

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