Many San Diego families face the challenge of college planning.  Paying for schools that are $20,000 – $50,000 per year is daunting for everyone.  You are not alone in feeling overwhelmed; however, 529 Plans are a flexible college planning tool that is useful and easy to use.

529 Plan Basics

• You can invest in most state’s 529 Plans; residency is not typically a requirement
• www.savingforcollege.com is a great 529 Plan resource
• The money you put into a 529 Plan grows tax free
• The money you distribute from a 529 Plan, including all growth, is distributed tax free so long as the funds are used for college expenses
• Anyone can contribute to your child’s 529 Plan account (i.e. grandparents and aunts and uncles)
• 529 Plan accounts can be super-funded with up to $65,000, using your $13,000 annual exemption x 5 years; In other words you can gift $65,000 into the 529 Plan at one time and not incur any gift tax consequences, but you must then wait 5 years to use your $13,000 annual exemption again for that individual; these numbers are doubled for married couples

California’s 529 Plans

California has two 529 Plans that are managed by Fidelity Investments.  One option is a direct account, meaning that you don’t need a financial advisor to set up or manage the account.  The second option is an advisor centered plan which requires the assistance of a financial advisor.

·         The ScholarShare College Savings Plan

·         ScholarShare Advisor College Savings Plan

How to Choose a 529 Plan

·         Consider fees (set up, annual maintenance, and investment fees) because fees diminish your returns

·         Consider reputation of managing company

·         Consider ranking on www.savingforcollege.com

·         Consider minimum contribution requirements (Note that these are often quite low, such as $15 or $50, with an automatic investment plan)

·         Consider your state’s tax treatment of distributions

·         Consider your state’s possible tax deduction for contributions

Where to Get Help with College Planning

Be sure to consult with a qualified estate planning attorney if you have questions or concerns about college planning.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

If you have elderly parents, there are likely three generations in your family that all need estate planning: you, your parents, and your adult children. For those with elderly parents, there are important estate planning considerations:

• Your elderly parents may fear losing control of their finances and their lives. Proceed with caution and great respect.

• Your elderly parents may fear the onslaught of dementia. Gently support them in getting medical treatment and having open and honest discussions with the doctor.

• Sometimes, elderly parents attempt to hide symptoms of dementia because they are afraid and/or ashamed. Never shame. Always support.

• Elderly parents often deal with depression especially if they have failing health, the loss of a spouse, the loss of friends and siblings, and the loss of independence. Depression can be treated with medication. There is no reason anyone should suffer.

• Many elderly parents should not be driving, but they are hesitant to give up their driver’s license because it is the last line of defense in losing their independence. If your parents have a HIPAA release and your are authorized to do so, speak with your parents’ doctors about the driving issue.

• Talk to your elderly parents about estate planning. Gently ask what planning is already in place. If comprehensive and up to date planning is not in place, suggest that they meet with an estate planning attorney and offer to make the arrangements and drive them.

• Gently explain that if your parents don’t have powers of attorney for health care, you can’t help them with medical decisions and a court might have to intervene.

• Gently explain that if your parents don’t have powers of attorney for finances, you can’t help them with paying bills and taking care of day to day business. If they become too ill to take care of these matters themselves, the court will have to intervene.

• Court intervention is expensive, time consuming, an invasion of privacy, and public.

If you have questions about elderly parent estate planning considerations, consult with an estate planning attorney.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

Planning for the future is an imperfect science for just that reason, it’s the future, and none of us has a crystal ball. The earlier you get started the more time you have to accumulate assets that you can spread across your retirement years, and that’s a good reason to start thinking ahead as soon as you can. But at the same time the further you are trying to peek into the future the harder it is to make predictions with any degree of certainty.

There is however one thing that is just about as sure as death and taxes: health care and long-term care costs will rise. Just how much is hard to predict, but the charge for a year in an assisted living facility went up this year by 5.2% to a national average of over $39,500. These costs are expected to continually rise so what that number is going to look like in ten to twenty years is going to be another story entirely. And just to paint a more complete picture, nursing home costs were more than double assisted living charges in 2010 and these too are on an upward trajectory.

What can you do about it? The fact is that health care costs are incurred by people who are ailing. Residence in an assisted living community is something that is required when you need help taking care of your day-to-day needs. These expenses are not a given because you may not get seriously ill for long periods of time and you may be able to take care of yourself well into your twilight years.

There are cases when people are stricken by health problems that they could have done nothing to avoid, but they are the exception rather than the rule. If health care costs concern you the best course of action is to take fitness and nutrition very seriously–as seriously as you do your finances. The longer you stay healthy the less your health care costs are going to be, and diet, exercise, and the ability to make healthy lifestyle choices are totally within your control.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

The process of estate planning has traditionally been about gaining personal control over your affairs to make sure that your wishes are carried out after your death. This endeavor is of course still central to estate planning, but there is an added dimension that is sometimes overlooked. One of the most amazing demographic trends of our time involves senior citizens. They are in fact the fastest growing portion of the population, and the group of seniors who are 85 years of age and older is growing fastest of all. This increasing longevity is making incapacity planning a must if you want to make sure that you are prepared for any eventuality.

Decision making power is at the core of incapacity planning. If you were to become unable to make your own decisions due to either physical or mental incapacitation, and you hadn’t planned for it, the court could be petitioned to protect you. If the petition is granted they will name a guardian who will make your personal decisions for you, and this includes medical decisions along with where you will reside. A conservator will also be appointed to handle your financial affairs, and this individual or entity will have the power to invest the assets in your estate.

You can, however, maintain personal control of the matter and take that decision out of the hands of the court with the proper estate planning. You simply execute a health care proxy naming the medical decision maker of your choice. You then add a durable financial power of attorney and with this document you select the individual that you would like to empower to handle your financial affairs in the event of your incapacity. As simply as that you have a solid incapacity plan in place, and if you ever decide to change the attorneys-in-fact you are free to do so as long as your capacity is intact.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

The field of elder law encompasses all legal matters that are of particular relevance to people entering their twilight years, and one of the possible eventualities that we may encounter as we age is that of incapacity. Many of us have seen the families of elder patients face difficult decisions, and it is not uncommon for family members to disagree about the correct course of action. This is one of the reasons why estate planning attorneys recommend that their clients include health care components when they are planning their estates. One of these that is very useful is the durable medical power of attorney, which is also referred to as a health care proxy.

When you execute this legal instrument you name a person of your choice to act as attorney-in-fact, and by doing so you empower this individual to make medical decisions for you in the event of your incapacity. Many people will also include a living will to elucidate their preferences when it comes to the medical procedures they would like to accept and those that they would deny should they become unable to make real-time decisions.

There is an added element to consider when you are making sure that your health care wishes are honored, and it stems from the passing of the Health Insurance Portability and Accountability Act of 1996. This law is in place to protect the confidentiality of your medical records by making it illegal for health care providers or insurance companies to share this information without your consent.

This sounds great on the surface, but some hospitals will not honor durable medical powers of attorney due to this law. They require a HIPAA release to allow your agent access to your health care information, so it is a good idea to add this to your estate plan. It is also useful to point out that you may want to add multiple family members to the HIPAA release so that they can all communicate openly with your doctors about your condition should you become incapacitated in the future.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

There are people who are well aware of the fact that current economic conditions and the ongoing state of their health are going to impact their estate plans, and some are quite proactive about making changes when necessary. Others may recognize the need to make some adjustments to their plan as a result of an evolving financial situation, an illness, a change in the family dynamic or some other matter and never act due to procrastination. And then there is a third group who don’t fully grasp the fact that estate planning is an ongoing process.

Anticipating likely future events is a part of life, and of course it is also a part of long term estate planning. But uncertainty is built into life itself, and so it is with the details of your estate plan. One huge element that is totally unpredictable is the aging process and how it will impact your health. There are those who play 18 holes of golf or a couple sets of tennis every day when they are in their eighties. Others are faced with the challenges of disability or incapacitation. Each possible scenario can require an adjustment to your estate plan.

If there is anything that is almost as unpredictable as your future health it would probably be the state of the economy. When you initially created your estate plan there was a particular financial dynamic in place in your own life, and your strategies were devised in light of the economy at that time. Over the years things change, as those who had planned on funding their nursing home costs with Enron stock will attest.

The point is that smart estate planning requires ongoing improvisation. Keep your eyes open and react to the changes that take place in your life and throughout the society as a whole when they have an effect on your estate plan.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

The process of estate planning is unique in that you are engaging in the creation of a strategy that for the most part won’t spring into action until after you have passed away. These preparations are made for the benefit of your loved ones, and it is their interests that you have in mind when you are planning your estate.

When you draw up a will to express your final wishes your estate must go through the legal process of probate, where the validity of the will is determined and claims against the estate are heard. Probate is time consuming, and it can be expensive. The estate has to pay legal fees and probate fees, executor fees, and in many cases the executor will have to retain the services of a tax accountant and/or an appraiser or appraisers.

For this reason, many estate plans are devised with the intention of avoiding probate. One way to do this is through the creation of a revocable living trust. The person who starts the trust is the settlor or grantor; the person or entity that manages the trust is called the trustee; and those who will receive assets from the trust are the beneficiaries. The settlor acts as trustee while he or she is living, but appoints a successor trustee or trustees. Upon the death of the settlor, the assets in the trust are distributed to the beneficiaries by the successor trustee, and probate is avoided. Since it is indeed a “revocable” living trust it can be changed or dissolved by the settlor at any time.

Revocable living trusts provide control and flexibility while the settlor is still living while enabling smooth and efficient estate administration. If this sounds interesting to you, simply give us a call at 619-696-0778 to arrange for a free consultation and we will be glad to answer any questions you may have about revocable living trusts.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

Some people start to take the subject of estate planning seriously after they have retired, and this is one way to address the matter. However, it is advisable to have a plan in place long before retirement for a number of different reasons, and many people choose to take a holistic approach. When you discuss the details of your legacy with an estate planning attorney while you are still working, retirement planning is going to be a relevant topic. For this reason there are those who plan their retirement and their estate simultaneously, and this is a very logical choice.

These days most estate planning or probate lawyers would consider themselves to be comprehensive specialists in the legal discipline of elder law. Since our senior population is rapidly growing and people are living longer lives, there are new issues to address and longer term retirement planning has become necessary. The fun side of retirement is clearly part of what you need to plan for from a financial perspective. However, when you consider the fact that more people are living beyond the age of 85 than ever before, you need to address the realities of encroaching age as well. Elder law attorneys provide Medicaid advice, disability planning, and strategies to address the financial impact of nursing home or assisted living facility expenses.

Retirement and estate planning are clearly interconnected, and it can be very comforting to have a solid plan in place that addresses every eventuality from the day you retire through the time of your passing. Because it can take significant time to accumulate the resources that you need, it is really never too soon to sit down with a retirement and estate planning lawyer to discuss your goals. To that end, please feel free to give us a call at 619-696-0778 to arrange for a free consultation.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

Depending on the specifics of your assets and what it is that you would like to accomplish over the long term, a donor advised fund may be a very useful piece when you are assembling your estate plan. We have all heard of charitable family foundations, such as the Ford Foundation or the Bill and Melinda Gates Foundation, and these vehicles serve their purpose for families of considerable means. However, they are costly to administer and really not appropriate for most people, even those who would like to include ongoing charitable contributions as part of their estate.

Donor advised funds can be the ideal way to divert some of your assets to charity while minimizing your tax exposure, especially when it comes to capital gains. When you set up a donor advised fund, the assets are placed with a third party public charitable foundation. Everything that you contribute is tax deductible for that year, and if part or all of the contributions consist of appreciated securities, you are not required to pay capital gains taxes on them. The public foundation then awards grants from the fund, most of the time to other public charities. The donor can make recommendations concerning the grant giving, but the final decision making power rests with the public foundation.

Donor advised funds are an extremely efficient charitable giving vehicle, and this is why they are being used more and more every day. One of the many advantages that they provide is the flexibility to make a charitable contribution within a tax year without stressing over the deadline. You can donate the funds at any given time and make your recommendations in terms of how the funds should be granted at a later date. When a donor advised fund is part of your estate plan, you can appoint a successor or successors to act as advisers after your passing.

Leaving a lasting legacy and giving something back to those in need can be a meaningful part of your estate plan. Donor advised funds provide a means for doing just that while optimizing the overall value of your estate.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

A life insurance policy is a policy you pay for during your lifetime to ensure that your family has money after your death. What you intend the money to be used for will affect how big of a policy you need.

If you are young, single and without children, life insurance may not be important to you. If no one is relying on you as a source of income, then you may not need a policy or you may only need a small one to help your parents or siblings pay your funeral expenses and final debts. One benefit to purchasing a policy at this young age, however, is getting a lower premium because you are still in great health.

Once you get married it is definitely time to consider a life insurance policy. As you and your spouse begin to establish a financial life together with a mortgage, car payments and monthly bills, your life insurance policy can help your spouse maintain those bills and the lifestyle he or she is accustomed to after you have passed away.

If you have children, a life insurance policy becomes even more important. Proceeds from a life insurance policy may be used for your final expenses, to help your family replace your income and to assist your children with college education expenses. You must take into account inflation, which will cause your family’s living expenses to rise. You must also consider the fact that over time you would have received raises at your job and been able to better support your family.

So what’s the bottom line? There isn’t an easy answer. If you don’t have an adequate life insurance policy, your family members may have to sell assets and move to a lower standard of living. How much insurance you need will depend upon the debts that will have to be paid and the amount of resources you want to leave to your loved ones.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.