Are You Wasting Money?—Part Two: Food, Clothing and Entertainment:

In Part One of this series on wasting money, we looked at housing, interest and transportation—areas in which you or your loved ones may be wasting larger amounts of money. In Part Two, we will look at how money can be wasted in everyday areas of life—specifically food, clothing and entertainment. 

In many ways, it is the routine purchases that occur without planning that subsequently accumulate to large amounts. An area of high importance when making beneficiary distributions is for the money to be used in meaningful ways such as home purchases, education, and investing and not simply to cover shortfalls in month-to-month expenditures. These simple lessons are helpful reminders for everyone.

The Key Takeaways:

• Money is wasted when we pay more for convenience, excess, impulse buying and bad habits.

• While this may be okay if it happens occasionally, living a lifestyle that consistently wastes money can cause people to live beyond their means and incur debt, which causes more money to be wasted by paying interest on that debt.

• Recognizing areas in which money is wasted, and taking steps to change buying habits, helps keep people out of debt and give more money to spend on the things that really matter.

Where People Waste Money…And Actions to Consider:

Groceries:

We’ve all been guilty of buying more at the grocery store than we intended. Here are a few tips that will likely fit within a current routine:

1. Plan meals for a week, make a shopping list and stick with it. Make an exception only if something regularly used is on sale.

2. Use coupons only for items regularly purchased (and don’t buy things you don’t normally use, just to use the coupon).

3. Buy in bulk; split the purchases with a friend if storage space is lacking.

4. Shop without young children whenever possible to save money, time and frustration.

Eating out:

If the amount of money spent in this area is unknown, track it for a month or two and consider other ways that this money could be spent. Socializing with friends over meals is important, but this is one area that usually can be reined in. Meet over lunch or an early dinner. Watch the alcohol; bar drinks are expensive, add up quickly and make an affordable meal completely unaffordable. Consider entertaining at home; it is less expensive and more personal.

Clothing:

Look at how much is spent on clothing, especially on items purchased and not worn. Avoid shopping as a hobby or because of boredom; retailers are great at making people think something is needed.

Entertainment:

Evaluate cable or satellite TV subscriptions and drop the premium channels not being used. Monitor cell phone bills. Investigate bundling phone, Internet and TV services under one carrier. When going to the movie theater, go to early showings, buy discounted tickets, shop for bargain-priced theaters, and bring snacks. Check out community theater productions. 

What You Need to Know:

Cash expenditures are usually the most difficult to track. Consider the envelope system (cash set aside in envelopes marked for specific cash purchases); place the receipts inside the envelope so it is easy to remember how cash was spent. Alternatively, use a debit card for even the smallest purchases.

More Actions to Consider:

1. Review how money is currently spent. If not using a personal accounting program like Quicken to track spending—now would be a good time to start. Carefully evaluate areas where overspending occurs.

2. Start comparison-shopping. Make a list of items bought regularly, including size and the last price paid. Keep the list handy for other shopping trips and compare prices. Then make a new shopping list for items at the stores with the best prices.

3.  Keep a running grocery list. As an item gets in short supply, add it to the list. This will make grocery shopping more efficient and save time by not having to make frequent trips.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Are You Wasting Money?—Part One: Housing, Interest and Transportation:

Most of us are guilty of wasting money in one way or another. Often we are so busy that we pay too much for convenience, and we don’t comparison shop or look for bargains. Sometimes we waste money because we just stay in the same routines—shopping at the same stores, eating at the same places, using the same services. And sometimes, especially if we don’t keep good records of how we spend our money, we may not even realize how much money we are wasting.

In this three-part series, we look at ways that money is wasted. While it may not apply to you, there are others in your life such as children or grandchildren that will benefit from these lessons. For those with budgeting discipline, an element of your financial legacy is to teach and train others to live within their means. And, as these disciplines are learned by your beneficiaries, you gain greater comfort that valued purposes will be pursued with distributions.

The Key Takeaways:

• Tracking and evaluating how money is spent helps illustrate areas of waste.

• Overspending can drive people into debt and prevent them from having money for things that really matter.

• Reducing wasteful spending helps people to live within their means and provide more money for things that are most important.

Major Spending Areas—And Actions to Consider:

1. Housing. Living close to where one works definitely can save time and money on a commute, but moving to a neighborhood that is just a little farther out can save a bundle. If someone is retired or works from home, moving to a less expensive part of the country is an attractive option.

2. Interest. Credit cards, student loans, car loans, home mortgage, home equity line of credit, other consumer loans—any time money is borrowed, interest payments accumulate. The most expensive of all is credit card debt. By renegotiating interest rates, not only are monthly payments reduced but considerable amounts of accumulated interest are also saved. Of course, great care needs to be taken when considering buying anything via debt.

3. Transportation. Car payments, insurance, gas, maintenance and repairs are necessary expenses, but there may be ways to economize. Some people can work from home one or two days a week. Since a new car depreciates the minute it is driven off the lot, buying a previously owned car can save thousands.

What You Need to Know:

Eliminating wasteful spending is especially important for people who need to watch their expenses—retirees who may be on a fixed budget, those who have been laid off or are working part time, young families, and college graduates who are trying to start a career while repaying student loans. But even if plenty of money is at hand for living expenses, being a careful consumer helps money go further and adds important lessons to be passed to loved ones as a component of a financial legacy.

Other Actions to Consider:

1. Evaluate housing, interest and transportation expenses.

2. Determine how much to spend in these high-cost areas and how much can be cut.

3. Check out different neighborhoods and transportation options and see how much money can be saved.

4. Call lenders and their competitors to see if better interest rates can be negotiated.

5. Pay off debt as soon as possible. 

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Personal Risk Management Part 2: Using Trusts in Estate Planning

Paying insurance premiums to protect against potential losses frees us mentally to enjoy driving a car, leave our house empty while on vacation and receive medical treatment for an injury or illness. In the same way, the use of trusts acts like insurance and can shift anxiety to comfort, turmoil to peace, and complexity to understanding.

The Key Takeaways:

• Trusts provide a protective cure for many of the financial anxieties, concerns, frustrations and hassles we fear for ourselves and loved ones.

• Trusts also provide similar assurances for business owners and for those with considerable assets.

• The benefit of planning is peace of mind for you and your family now.

What Are Risks Related to Estate Planning?

Proper estate planning can protect you against awful things that can happen to you, your family and your assets. These can include: a costly and public court guardianship/conservatorship if you or your spouse becomes incapacitated; being kept in a vegetative state; a potentially costly and time consuming probate process after you die; federal and state estate taxes; a will contest or heirs fighting over your assets; your surviving spouse not having enough money to live on; irresponsible spending by a beneficiary; an inheritance becoming part of a beneficiary’s divorce proceedings; an inheritance not making it to the intended beneficiary (i.e., left to an adult for the benefit of a minor); and an inheritance not being used according to your values and beliefs.

What You Need to Know: Not addressing these risks can cause you pain, worry, frustration, anxiety, fear and anguish. And, if any of these awful things should happen to you or a loved one, your quality of life can suffer.

Why Use Trusts for Your Broader Financial and Wealth Planning?

There are many different trusts that can be used to address a wide range of your circumstances, needs, anxieties, and aspirations. Take a simple but important example of trusts’ capabilities:  the living trust. Most people want to avoid court interference at incapacity (i.e., disability) and at death, and a living trust solves this worry. When you establish a living trust, you transfer your assets to it and select someone to step in and manage them for you when you are not able to do so. Because the assets are no longer in your name, the court has no reason to get involved at either incapacity or death; your successor can manage your assets according to your instructions for as long as necessary.

More broadly, trusts can hold investments, property and insurance policies, with benefits of reducing various taxes and protecting your wealth from lawsuits and creditors. A trust can continue beyond your lifetime—assets can be kept in a trust until your beneficiaries reach the age(s) you want them to inherit, to provide for a loved one with special needs, or to protect an inheritance from beneficiaries’ creditors, spouses and future death taxes. A trust will also let you provide for your surviving spouse without disinheriting your children.

What You Need to Know:

Trusts, in their various forms, offer you a robust package of dollar and quality-of-life benefits. And, trusts are fully compatible with your various investments and assets, from mutual funds to stocks (both public and private) to insurance policies to property.

Actions to Consider:

• Become aware of the financial, wealth and estate planning risks you and your family face, and how they can be managed or completely avoided with the use of trusts.

  • An advisor and trust/estate planning attorney will be able to help you become an informed consumer.

• List the fears and anxieties you have for yourself and your loved ones concerning your wealth.

• Compare the costs associated with planning and implementation to the financial and emotional value you will receive.

  • Keep in mind that while trusts have set-up costs, overall costs can be less over time by avoiding court expenses and delays, saving on a variety of taxes, eliminating exposure to legal costs, and so forth.

• Life insurance inside a trust is an excellent way to provide a larger inheritance for your loved ones.

• If you are a business owner, investigate the many benefits that trusts can provide for your business wealth.

• Don’t procrastinate. Trusts have as much application for the living as for those who pass on. Put your plan into effect now based on your current circumstances, and then make changes as needed. Acting now will give you the peace of mind you desire.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Personal Risk Management, Part 1: Insurance

Simply put, personal risk management is being aware of the risks in your home and in your life, and then planning how to handle those risks. Insurance plays a big part in managing risk. Most people don’t like paying insurance premiums, but when something happens and the insurance pays for a covered expense, they are relieved they had it.

The Key Takeaways:

• Not recognizing and managing risk can set your family up for financial ruin.

• Recognizing and managing risk will give you and your family the freedom to live life, without worrying about how you would handle a catastrophic loss.

What kinds of risks should I be aware of?

Property and casualty risks include your car and other vehicles, home and furnishings, jewelry, cameras, and so forth. You would want to protect these from accidents, theft, fire, flood, and earthquake damage. Health and long-term care insurance help protect your finances if you become ill or injured. Disability income and life insurance help replace income in the event of a long-term illness or death. If you volunteer with children or youth, you may need personal liability insurance. An increase to your umbrella policy is warranted once you have teenage drivers. If you are a business owner, you may need insurance as part of a buy-sell agreement with a key employee or business partner in addition to business liability insurance. If you are in a high-risk profession (like health care, construction or real estate), you will probably need additional asset protection planning.

How much insurance do I need?

You need enough insurance to protect your assets in the worst-case scenario. At the same time, the premiums should be an amount you can comfortably afford in your budget. Decide what you need to insure, how much to insure it for, and how much you are able and willing to pay in deductibles and premiums.

What You Need to Know:

Your family’s needs for insurance will change over time and will reflect your values at each stage in life. For example, you may need more life insurance when your children are young; you may want long-term care insurance as you near retirement (although it is less expensive when you are younger); you may not need as much personal liability insurance if you retire from volunteering or once your children become independent; and you may not need business insurance if you sell your business.

Actions to Consider:

1. Look at ways you can reduce premiums. For example, installing a home security alarm system or trimming shrubbery may save on your homeowner’s insurance. If you drive an older car, you may not need collision insurance. If you can handle higher deductibles, your premiums will likely be lower.

2. Look for ways to reduce risk entirely. For example, you may want to sell a property that is high risk or even retire from a high-risk profession.

3. Some risk may be perfectly acceptable to you. Consider what you might lose if the worst happens and see if you could live with the loss. This is called risk budgeting.

4. Keep good records on personal property. Review the values and your insurance coverage annually. Values fluctuate, and you don’t want to over- or under-insure.

5. Determine what you would lose if someone sued you with a liability claim. You worked hard to build your net worth and you do not want to lose wealth if someone files a claim against you. Even if it is a frivolous claim, you may have to spend a small fortune to defend yourself. Take action to protect your assets for yourself and your family.

6. Health care and long-term care costs are increasing at an alarming pace, people are living longer, and many older Americans have seen their retirement savings decline in recent down markets. A professional can help you evaluate your health care risks and determine how to plan for them.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

How to Choose a Trustee

When you establish a trust, you name someone to be the trustee. A trustee basically does what you do right now with your financial affairs—collect income, pay bills and taxes, save and invest for the future, buy and sell assets, provide for your loved ones, keep accurate records and generally keep things organized and in good order.

The Key Takeaways:

• You can be trustee of your revocable living trust. If you are married, your spouse can be co-trustee.

• Most irrevocable trusts do not allow you to be trustee.

• Even though you may be allowed to be your own trustee, you may not be the best choice.

• You can also choose an adult child, trusted friend or a professional or corporate trustee.

• Naming someone else to be co-trustee with you helps them become familiar with your trust, allows them to learn firsthand how you want the trust to operate, and lets you evaluate the co-trustee’s abilities.

Who Can Be Your Trustee:

If you have a revocable living trust, you can be your own trustee. If you are married, your spouse can be trustee with you. This way, if either of you become incapacitated or die, the other can continue to handle your financial affairs without interruption. Most married couples who own assets together, especially those who have been married for some time, are usually co-trustees.

You don’t have to be your own trustee. Some people choose an adult son or daughter, a trusted friend or another relative. Some like having the experience and investment skills of a professional or corporate trustee (e.g., a bank trust department or trust company). Naming someone else as trustee or co-trustee with you does not mean you lose control. The trustee you name must follow the instructions in your trust and report to you. You can even replace your trustee should you change your mind.

When to Consider a Professional or Corporate Trustee:

You may be elderly, widowed, and/or in declining health and have no children or other trusted relatives living nearby. Or your candidates may not have the time or ability to manage your trust. You may simply not have the time, desire or experience to manage your investments by yourself. Also, certain irrevocable trusts will not allow you to be trustee. In these situations, a professional or corporate trustee may be exactly what you need: they have the experience, time and resources to manage your trust and help you meet your investment goals.

What You Need to Know:

Professional or corporate trustees will charge a fee to manage your trust, but generally the fee it is quite reasonable, especially when you consider their experience, services provided and investment returns.

Actions to Consider:

1. Honestly evaluate if you are the best choice to be your own trustee. Someone else may truly do a better job than you, especially in managing your assets.

3. Name someone to be co-trustee with you now. This would eliminate the time a successor would need to become knowledgeable about your trust, your assets, and the needs and personalities of your beneficiaries. It would also let you evaluate if the co-trustee is the right choice to manage the trust in your absence.

5. Evaluate your trustee candidates carefully and realistically.

7. If you are considering a professional or corporate trustee, talk to several. Compare their services, investment returns and fees.

 If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

The Advisory Team Approach to Estate Planning

Estate planning is not simply the documents prepared by an attorney, nor is it the insurance and financial plan recommended by a financial advisor. Properly done, estate planning encompasses at least the legal and financial elements, but it may include more, as estate planning often points out the need to plan in other areas.

These other areas often include planning for asset protection for the client’s lifetime and for the heirs; retirement; providing for a surviving spouse in the event of disability and/or death; providing for a parent or a child with special needs; long-term health care costs; estate taxes; and/or a business succession plan at retirement, disability and/or death.

To meet a client’s needs and goals, it may be necessary to grow a business, increase or adjust insurance, and manage investments in a certain way. No one professional has all the answers; a team of qualified advisors, however, can provide the diverse skills and experience that are necessary for the best result. Instead of consulting with various professionals at different times and stages in the planning (often getting different opinions from each one), many people find they benefit from having a team of advisors involved in the process from the beginning. The team approach also minimizes time and costs and, with everyone involved from planning through implementation, the advisors can work together and hold each other accountable.

An advisory team will likely include the estate planning attorney; accountant/CPA; insurance agent/broker; investment advisor; and possibly a professional trustee. For business owners, a business attorney and valuation expert will probably be needed, as well as a business broker if the plan calls for the business to be sold at some point. Other advisors may also be included, depending on specific circumstances and needs.

Several meetings are usually needed. The advisory team will first meet with the client to help identify goals and set priorities. At this stage, the advisors should be asking more questions than providing answers. Usually the advisors will then meet without the client to discuss how best to meet these goals, bringing their areas of expertise into the planning as they consider various legal and financial solutions. Then the team will present its recommended plan to the client and, once approved, will begin to implement the plan. From time to time, the team will meet to monitor the progress and make any needed revisions as needs and goals change.

Involving family members will acquaint them with the members of the advisory team, help them to understand what is being done and why, and avoid confusion and distrust later. An advisory team can also provide continuity if planning provides for minor children and/or grandchildren, those with special needs and even for generations to come.

If the advisory team approach interests you, please contact our office. We will be happy to discuss our process with you.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Estate Planning Today Must Include Digital Assets and Social Media

It wasn’t very long ago that we had only paper for financial and tax records. We could simply point to a file cabinet or drawer and tell someone, “Everything is in there when the time comes.” Now we have computers and the internet, and so much of our lives are online. Unless we include our digital assets and social media in our estate planning, our family or administrator may not be able to find critical documents.

For example, if you scan documents or receive financial statements electronically, someone else may not even know these exist. If you use a program like Quicken or QuickBooks and tax preparation software, those records are on your computer. Facebook pages, blogs, email accounts and photos stored digitally on a computer or an online account would certainly have special meaning to your family.

Much of this information is password protected. Unless we make arrangements in advance, family members or administrators may not be able to access these and the information could be lost forever.

Estate planning for digital assets and social media accounts is similar to estate planning for other assets. You need to make a list of what you have and where it is located, name someone (with computer and social media know-how) to step in for you, provide that person with access, and provide some direction for what you want to happen to these assets.

Listing your digital assets by category (hardware, software, social media/online presence, online accounts) will help make the task less daunting. Next to each one, add user names, passwords, PIN numbers and the site’s domain name. Keep this list in a safe place and tell your successor where it is. (Do not store it unprotected on your computer; if it were stolen, the thief would have all of your passwords. If you store it on your computer, passwords protect the file and give that information to your successor.)

Think about what you want to happen to these assets. For example, if you have a website or blog and you want it to continue, you need to leave instructions for keeping it up or having someone take it over and continue it. If a site is currently producing or could produce income (e-books, photography, videos, blogs), make sure your successor knows this. If there are things on your computer or hard drive that you want to pass on (scanned family photos, ancestry research, a book you have been writing), put them in a “Do Not Delete” folder and include it on your inventory list.

Closing down accounts that are no longer needed will help to protect your family from identity theft after you are gone. The person you name as your successor will need a death certificate to do this. Consider naming this person as a co-trustee or co-executor with responsibilities limited to this area to give them legal authority to act for you.

Yes, this will take some time and thought. But, just like “other” estate planning, the more we can do now to put things in order, the easier it will be for our families later.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

What and When Should You Tell Your Children About Their Inheritance?

Not many parents like to talk to their children about their wealth. How much money people have is usually considered a private matter, something it’s not polite to talk about. But not talking to children about how much they may inherit can leave them unprepared to handle even a modest amount.

This is becoming especially important because children of baby boomers are due to inherit more wealth than ever before. It has been estimated that baby boomers will inherit $12 trillion from their parents, and they will leave an additional $30 trillion to their own children over the next 30 to 40 years.

Many who have substantial wealth are concerned that letting their children know how much they have will take away any motivation for the children to be productive and involved citizens. They often want their children to learn how to live in the world as “normal” people, and to be productive and successful in their own right.

Even those who are not as wealthy may not want their children to know how much they have. They may be concerned that all of their savings will be needed for retirement, medical expenses and end-of-life expenses. If that turns out to be the case, their kids would not receive an inheritance they may have been counting on.

But not knowing what they may inherit leaves children in the dark and can actually hinder their ability to handle money wisely. Those who inherit a substantial amount may be unprepared for what to do with that much money. Many find they suddenly feel separated from their friends, isolated, even confused about how to handle relationships; some will be wasteful and lazy. Those who inherit even a modest amount are likely to be just as irresponsible; stories of inheritances being squandered on an expensive sports car, lavish vacations and fast living are all too common.

Experts agree it is important to talk to children about money and wealth, at least in generalities. There is no need to show them bank and financial statements. Instead of concentrating on money and material things, talk to them about your values, the opportunities money can provide and what you want to accomplish with it. Most parents want their children to think about others, and many want to encourage entrepreneurship. Some give their children a small amount of money at a young age, and teach them how to save and invest, give a certain amount to charity and spend wisely.

Of course, the most effective way to teach children about money is to be an example; let them see you using your money in ways that reinforce your values. Many parents show how they value family relationships by spending their money on family vacations or buying a second home where the entire family can gather for summers and holidays. If your children see you being charitable and helping others, chances are they will become charitable, too.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

The Many Needs for Life Insurance in Our Lives

While many people are hesitant when it comes to life insurance, the potential benefits are so great, that we recommend that you place your reservations on hold—if only momentarily—to consider the benefits, before writing off the idea completely.

The main reasons most people have life insurance are to pay final expenses (medical, funeral, burial, etc.), replace an income stream and/or create wealth for our dependents after we die. Life insurance can also play an important role in business, estate planning and charitable giving.

When considering whether or not you need life insurance, think about what would happen to your loved ones if you should die today. Most people would agree if you have children (babies through college age) you need life insurance, but those who depend on us financially may also include our spouse, aging parents, siblings, and other family members with special needs.

Here are some ways life insurance can be useful at various stages in our lives"

Young Single Adults:

If you have no dependents, you may only need enough life insurance to pay your final expenses and debt so your family will not have that burden. However, if you help support an elderly parent or another person, life insurance can replace that financial support.

Married with No Children:

At this point, both partners are probably working. If one should die unexpectedly, one income may not be enough. Life insurance can provide cash to pay final expenses, pay down credit cards and other loans, and help with mortgage payments and ongoing monthly expenses—at least until the survivor can make lifestyle adjustments. If you are thinking about having children in the future, it’s not too early to buy life insurance.

Married with Dependent Children:

Adding kids to the scenario multiplies our financial obligations. In addition to final and regular ongoing expenses, life insurance can pay off a mortgage, fund college educations and provide for the surviving spouse’s retirement, easing the financial burden on the surviving parent and even allowing a stay-at-home parent to remain at home with the children. If a stay-at-home spouse should die while the children are young, life insurance can provide the funds to hire someone to help with child care, shopping, cooking, transportation, cleaning, and other household responsibilities. At this stage, it makes sense to have life insurance on both parents. 

Single Parents:

Single parents already have the work and responsibilities of two people. Life insurance can provide the financial protection and security your family would need.

Business Owners:

Business partners often have buy-sell agreements that are funded with life insurance; when one dies, the proceeds can be used to buy the other’s share of the business from the deceased owner’s family. “Key man” insurance can be purchased on the life of an employee or partner whose role in sales or management is very valuable to the business; if this person dies, money would be available to help keep the business going while a replacement is found. Life insurance can also create an inheritance for all children, including those not working in the family business.

Empty Nesters and Retirees:

Life insurance can help provide for the surviving spouse’s retirement and potential medical and long-term care expenses. Existing and new life insurance policies can also be used to make charitable gifts, and to fund private foundations and trusts for future generations. Life insurance can also pay estate taxes, preserving the rest of the estate for family members.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Family Values and History Are Still the Best Inheritance

According to a recent study, family values, traditions and history still mean more than money as an inheritance.

These results are from the 2012 Allianz Life American Legacies Pulse Study* which surveyed baby boomers (age 47 to 66) and “elders” (age 72 and older). Allianz Life conducted a similar study in 2005. Interestingly, despite the financial crises that occurred between 2005 and 2012, the results were strikingly similar, with a high percentage of both boomers (86%) and elders (74%) agreeing that family stories, values and life lessons are the most important part of a family’s legacy. 

In addition, in both studies, only four percent of boomers said that an inheritance is “owed” to them. By contrast, the number of elders who felt an inheritance is owed to their children dropped from 22% in 2005 to 14% in 2012; this may be a result of their concern about having to use more of their savings for living expenses, compounded by loss of savings from lower market values.

While the size of the financial inheritance is not seen as important, planning is. A high percentage of both groups (82-84%) emphasized having instructions in place in the event a parent were to become terminally ill or permanently unconscious. Both have strong desires to avoid family conflicts when it comes to estate planning and legacy issues. Younger people also believe that keeping family possessions is important.

Elders also want to impress upon their children the importance of personal responsibility. About three-fourths of elders surveyed have obtained some professional assistance with estate planning and have initiated discussions with their children about end-of-life and inheritance issues. By contrast, only about a quarter of the boomers have planned their estates and less than half have had discussions with their own children about these issues. That may be due in part to boomers being less frugal in general than their parents, or that they simply feel they have plenty of time left to plan.

The best course of action is to talk with parents or children about end-of-life issues (incapacity and health care directives, location of important financial documents, estate planning) and what is important to them and to you. Do this now, before illness or aging interfere and make it impossible.

* 2012 Allianz Life American Legacies Pulse Study, sponsored by Allianz Life Insurance Co. of North American, surveyed 1,000 “boomers” (age 44-67) and 1,007 “elders” (age 72+). The online survey was conducted January 12-19, 2012. For more information about the survey, please click here.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Organization: A Key To Successful Estate Planning To Ensure Your Families Protection

Think for a few moments about what would happen if you suddenly became incapacitated or died. Would your spouse or family know what to do? Would they know where to find important records, assets and insurance documents? Would they be able to access (or even know about) online accounts or files on your computer? Would they know whom to ask if they need help?  Putting the effort in now to establish a formal document inventory can alleviate unnecessary anxiety and turmoil in the future.

The Key Takeaways:

• If you should suddenly become incapacitated or die, your family would need to know where to find the information they would need.

• Let your key relationships know where to find your document inventory.

• Do not assume your process will be readily understood by others; have a trial run to make sure they can find and understand your records.

• Keep your inventory current with an annual review.

What Information Would They Need?

There is a large volume of documents and information that your family would need during a calamitous event such as incapacitation (even temporary) or death. This basic list will help you start thinking of the critical information you would want your family to have.

  1.     Legal documents (will, living trust, health care documents);

2.     List of medications you are taking;

3.     List of your advisors (attorney, CPA, banker, insurance agent, financial advisor, physicians);

4.     Insurance policies (health and life);

5.     Year-end bank and investment account statements;

6.     Storage facility location, access method, and inventory;

7.     List of other assets, including location, account numbers, date purchased and purchase price;

8.     Safe deposit box location, list of contents and location of key;

9.     List of people to whom you owe money (mortgage, credit cards, etc.);

10.  List of people who owe you money;

11.  Death or disability benefits from organizations; and

12.  Past tax returns.

Also, many of your records are probably on a computer or stored online. If you scan documents or receive financial statements electronically, someone else may not even know they exist. If you use a computer accounting program such as Quicken, QuickBooks or Mint, those records would be on your computer. Family photos may be stored digitally or online. Much of this information is password protected.

What You Need to Know: 

Your document inventory requires a methodical listing of both hard copy and digital forms.  While the effort will be more challenging at the start, the maintenance of the inventory is much simpler.  Be mindful that your digital footprint will likely grow much faster in the future than it has in the past.

Actions to Consider:

1. Give current copies of your health care documents to your physicians and designated agent(s).  

2. Keep your original documents in one safe place, like a fireproof safe or safe deposit box. Make copies for the notebook described next. 

3. Buy one or two three-ring binders to organize your personal and financial information. You can enter it by hand or create spreadsheets on your computer, but having it all in one or two binders will make it easy for your family to find and use. (If you leave it on your computer, they may never find it.) Include locations, contact information, account numbers and amounts.

4. Include a list of online accounts and how to access them (including passwords).

5. Clean up your computer desktop and put important files in an easy-to-find desktop folder.

6. Have a trial run. Ask your spouse or other family member (or your successor trustee or executor) to pretend that he or she needs to access needed information.

7. At least once a year, review and update your notebook, computer desktop files and passwords for online accounts.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Why Does a Living Trust Cost More than a Will?

It will probably cost more initially to set up a well-drafted living trust than to have a will prepared. A true cost comparison should include not only the expense to establish the will or trust, but also what it will cost should you become incapacitated and after you die.

The Key Takeaways:

• A living trust document has more provisions than a will because it deals with issues while you are living and after you die, while a will only deals with issues that occur after your death.

• A properly prepared and funded living trust will avoid court proceedings at incapacity and death. A will provides no such protection and in deed, ensures court intervention at both events, which can be very costly (in time, privacy and dollars) to your family.

Instructions at Death and Incapacity:

Both a will and a living trust contain instructions for distributing your assets after you die. But a living trust also contains your instructions for managing your assets and your care should you become incapacitated.

A Living Trust Avoids the Costs of Court Interference at Incapacity and Death:

A properly prepared and funded living trust (one that holds all of your assets) will avoid the need for a court guardianship and/or conservatorship if you become incapacitated. The person(s) you select will be able to manage your care and your assets privately, with no court interference.

A will can only go into effect at your death, so it can provide no instructions regarding incapacity. In that case, your family would almost certainly have to ask the court to establish a guardianship and/or conservatorship for your care and your assets—a process that is public, time consuming, expensive and difficult to end.

What You Need to Know:

The same living trust document that can keep you out of a court guardianship at incapacity can also keep your family out of probate court when you die. But a will must go through probate. Depending on where you live, this can be costly and time consuming.

Costs to Transfer Assets…Pay Now or Later:

There may be some minor costs to transfer assets into your living trust when you set it up, and then from your trust to your beneficiaries after you die. But these will be minimal if you and your successor trustee do much of the work yourselves. With a will, the probate court (with its costs and attorney fees) is the only way to transfer your assets to your heirs after you die. So you can pay now to set up your trust and transfer titles, or you can pay the courts and attorneys to do this for you after you die.

Actions to Consider:

  1.     Find out what probate costs are where you live. If your state has a fee schedule based on the value of probate assets, this will be easy. If it has “reasonable” fees, ask an attorney to estimate what these fees would be if you die tomorrow and, if you are married, if your spouse dies the next day.

  2.     Similarly, ask your attorney to estimate what the costs would be if you become incapacitated tomorrow and, if you are married, if your spouse becomes incapacitated the next day. (Practically speaking, this will be impossible to estimate because no one will be able to predict how long the incapacity will last or what complications might arise. The mere uncertainty of these costs should give you pause—and propel you to plan for incapacity.)

3.     Add these estimates to the cost of having a will prepared—and compare that to the cost of a living trust. When you make a true comparison, you may conclude that having a living trust actually costs less than a will.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Estate Planning Basics For Young Families

Many young families put off estate planning because they are young and healthy, or because they don’t think they can afford it. But even a healthy, young adult can be taken suddenly by an accident or illness. And while none of us expects to die while our family is young, planning for the possibility is prudent and responsible. Also, estate planning does not have to be expensive; a young family can start with the essential legal documents and term life insurance, then update and upgrade as their financial situation improves. A good estate plan for a young family will accomplish the following:

Name an Administrator:

This person will be responsible for handling final financial affairs—locating and valuing assets, locating and paying bills, distributing assets, and hiring an attorney and other advisors. It should be someone who is trustworthy, willing and able to take on the responsibility.

Name a Guardian for Minor Children:

Deciding who will raise the children if something happens to both parents is often a difficult decision. But it is very important, because if the parents do not name a guardian, the court will have to appoint someone without knowing their wishes, the children or other family members.

Provide Instructions for Distribution of Assets:

Most married couples want their assets to go to the surviving spouse if one of them dies. If both parents die and the children are young, they want their assets to be used to care for their children. Some assets will transfer automatically to the surviving spouse by beneficiary designations and how title is held. However, an estate plan is still needed in the event this spouse becomes disabled or dies, so that the assets can be used to provide for the children.

Name Someone to Manage the Children’s Inheritance:

Unless this in included in the estate plan, the court will appoint someone to oversee the children’s inheritance. This will likely be a friend of the judge and a stranger to the family. It will cost money (paid from the inheritance) and the children will receive their inheritances in equal shares when they reach legal age, usually age 18. Most parents prefer that their children inherit when they are older, and to keep the money in one “pot” so it can be used to provide for the children’s different needs. Establishing a trust for the children’s inheritance lets the parents accomplish these goals and select someone they know and trust to manage it.

Include An Insurance Review To Ensure Appropriate Policies Are In Place:

Income earned by one or both parents would need to be replaced, and someone may need to be hired to take over the responsibilities of a stay-at-home parent. Additional coverage may be needed to provide for the children until they are grown; even more if the parents want to pay for college. At the Law Office of Matthew J. Tuller, we have an insurance review performed for each family that we create an estate plan as a matter of course. While there is no additional cost for this service, we believe that each client should be adequately informed of any potential issues that may arise.

Plan for Disability:

There is the possibility that one or both parents could become disabled due to injury, illness or even a random act of violence. Both parents need medical powers of attorney that give someone legal authority to make health care decisions if they are unable to do so for themselves. (You would probably name your spouse to do this, but one or two others should be named in case your spouse is also unable to act.) HIPPA authorizations will give doctors permission to discuss your medical situation with others (parents, siblings and close friends). Disability income insurance should also be considered, because life insurance does not pay at disability.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Eight Estate Planning Tasks To Complete Before Your Holiday Travels

Before any trip, most of us create a “to-do list” of things we have put off and want to take care of before we leave. Here is a checklist of estate planning things to do before you take your next trip. Taking care of these will help you travel with peace of mind, knowing that if you don’t return due to serious illness or death, you have made things much easier for those you love.

1. Have Your Estate Planning Done.

If you have been procrastinating about your estate planning, use your next trip as your deadline to finally get this done. Be sure to allow adequate time to get your estate plan completed in advance of your trip.

2. Review And Update Your Existing Estate Plan.

Revisions should be made any time there are changes in family (birth, death, marriage, divorce, remarriage), finances, tax laws, or if a trustee or executor can no longer serve. Again, be sure to allow enough time to have the changes made.

3. Review Titles And Beneficiary Designations.

If you have a living trust and did not finish changing titles and/or beneficiary designations, now is the time to do so. If a beneficiary has died, or if you are divorced, change these immediately. If a beneficiary is incapacitated or a minor, set up a trust for this person and name the trust as beneficiary to prevent the court from taking control of the proceeds. 

4. Review Your Plan For Minor Children.

If you haven’t named a guardian who is able and willing to serve and something happens to you, the court will decide who will raise your kids without your input. If you have named a guardian, consider if this person is still the best choice. Name a back up in case your first choice cannot serve. Select someone responsible to manage the inheritance.

5. Secure Or Review Incapacity Documents.

Everyone over the age of 18 needs to have these:

1) Durable Power of Attorney for Heath Care, which gives another person legal authority to make health care decisions (including life and death decisions) for you if you are unable to make them for yourself; and

2) HIPPA Authorizations, which give written consent for doctors to discuss your medical situation with others, including family members. 

6. Review Your Insurance.

Check the amount of your life insurance coverage and see if it still meets your family’s needs. Consider getting long-term care insurance to help pay for the costs of long-term care (and preserve your assets for your family) in the event you and/or your spouse should need it due to illness or injury.

7. Organize Your Accounts And Documents.

It used to be that we could just point to a file cabinet and say everything was “in there.” Now, so much is done online that there may not even be a paper trail. Make a list of ALL of your accounts, where they are located, and the user names and passwords, then review and update it before each trip. Print a hard copy, so that you are prepared if your computer is stolen or crashes. Additionally, let someone you trust know where to find it. Clean up your computer desktop and put your financial and other important files where they can be easily found. Make a back-up copy in case your computer is stolen or crashes, and let someone know where to find it. Be sure to include on your master list any passwords that might be needed to access your computer and files. 

8. Talk To Your Children About Your Plan.

You don’t have to show them financial statements, but you can discuss in general terms what you are planning and why, especially when any changes are made. The more they understand your plan, the more likely they are to accept it—and that will help to avoid discord after you are gone.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.

Why Young Adults Need Estate Planning

Once a child turns 18, parents lose the legal ability to make decisions for their child or even to find out basic information. Learning you cannot see your college student’s grades without his/her permission can be mildly frustrating. However, a medical emergency can take this frustration to a completely different level. The parents (or a sibling or another person) will probably have to go to court and ask for permission to obtain information about the student’s medical condition, be able to make decisions about treatment, and have access to the student’s financial records and accounts.

The following legal documents allow anyone, including a young adult, to name another person to make medical and financial decisions if someone is unable to make them for themself. The person(s) selected should be someone the young adult knows and trusts, and a candid discussion should occur now so they know what their wishes would be. These documents are not expensive, and everyone over the age of 18 should have them.

Parents may want to set an appointment with their attorney after each child’s 18th birthday and encourage other parents to do the same for their young adults. Having these documents in place does not mean anyone expects to use them, but everyone will be glad to have them should they be needed.

In the Event of Incapacity:

1. A Durable Power of Attorney for Heath Care gives another person legal authority to make health care decisions (including life and death decisions) if you are unable to make them for yourself.

2. A Durable Financial Power of Attorney gives another person legal authority to manage your assets without court interference. (A “regular” power of attorney ends at incapacity; a “durable” power of attorney remains valid through incapacity.) Your attorney can write it in such a way that it does not go into effect until you become incapacitated.

3. HIPPA Authorizations give your doctors permission to discuss your medical situation with others, including family members and other loved ones.

In the Event of Death:

Most young adults do not have substantial assets, so a simple will is probably all that is needed at this time. It will let the young adult designate who should receive his/her assets and belongings in the event of death. Otherwise, the laws of the state in which the young adult lives will determine this, and that may not be what anyone would want.

After the Documents Have Been Signed:

A little housecleaning will probably be in order. It is important that the designated person knows where to find financial records and passwords if needed. The young adult should consider making a list of accounts and passwords (including her computer’s password), print the list and put it in a safe place; a hard copy is important in case the computer is lost or stolen. If an online back-up system is used, be sure to include it. Don’t forget online accounts and social media. If there is anything the young adult does not want others to see, either get rid of it now or ask a friend to delete files or remove things if something happens. Finally, the young adult should update these documents as life changes.

If you are interested in ensuring that your family is cared for after you have passed away, please call our office at 415-625-0773 to schedule your free estate planning consultation with San Francisco’s premiere estate planning attorney, Matthew J. Tuller.