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What Is an Estate Plan and Why You Need One – Part 1

An estate plan is simply a set of legal documents that instruct your loved ones how to manage your assets when you pass away, and if you have young children, it identifies the persons you want to raise your children. It also authorizes the persons you choose to manage your assets and make health care decisions for you if you become incapacitated. An estate plan can also leverage your assets to reduce…

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Clark v Rameker – Protecting IRAs

In June, the US Supreme Court ruled in Clark v. Rameker that inherited IRAs will not be protected in bankruptcy. Here is a brief summary of the case: Mom established IRA in 2000 and named her daughter as beneficiary. Mom died in 2001. In 2010, daughter and her husband filed for bankruptcy and tried to exempt daughter's inherited IRA, worth $300,000, from the bankruptcy estate. The US Supreme Court, in a rare…

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Starting a Business

If you are ready to start a business, congratulations, you are on the road to one of the purest forms of American freedom. But you must know it will not be easy. It is fraught with challenges. But it will give you freedom, the freedom to determine how to structure your life. One of the basic issues you must sort out is how to organize your business. The main options are 1)…

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Inherited IRAs Not Protected – Unless . . .

In Clark v. Rameker (June 12, 2014) the US Supreme Court ruled that inherited IRAs will not be protected against bankruptcy. Jay Adkisson summarized the background and the result in Forbes: Ruth Heffron established a traditional IRA in 2000, and then promptly died the following year. At the time of Ruth’s passing, there was $450,000 in the IRA The sole beneficiary-on-death of Ruth’s IRA was her daughter, Heidi Heffon-Clark. After Ruth passed, Heidi decided…

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Give Your Children Divorce and Asset Protection

(This is an update of a post from two years ago.) Of the thousands of clients I’ve worked with, most know how they want to distribute their assets when they die: For married couples, it’s usually to the surviving spouse and then in equal shares to their children. For a divorced client or widow, it’s usually in equal shares to his or her children. Is that enough planning? Does that protect your…

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LLC Charging Order Protection

We typically do not recommend that our clients use LLCs to operate a business because California imposes an additional tax on LLCs - the gross receipts tax. In most cases, we recommend an S corporation for an operating business. However, we like LLCs for owning rental properties because LLCs provide significant asset protection, and there usually isn't a gross receipts issue with rental properties. Here is what the California Education of the…

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I Don’t Have Any Assets – Do I Need an Estate Plan?

Many of our clients were laid low by the great recession and lost a lot of their net worth. Many are just starting a family and getting established in their careers. If you fit into one of these groups, you may ask if you even need an estate plan. You do. Why? You need to have a will to name guardians to raise your minor children if something happens to you and…

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Practical Asset Protection – Part 5 Living Trust

Revocable living trusts do not give you asset protection. But if your attorney drafts them correctly, your revocable living trust can significantly protect the inheritance you leave your children from divorce claims or lawsuits that could be filed against them. Most parents do not want to leave their assets outright to their young children. Do you want your 18 year old to have control over his inheritance? Probably not. With good planning,…

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New Tax Law – Game Changer

The American Tax Payer Relief Act (ATRA), enacted into law on January 2, 2013, is a game changer for estate planning. The experts are just now sorting out how much of a game changer it really is. The new law significantly increased the the estate tax exclusion amount. The estate tax exclusion amount is the amount each US person could die with before the 40% estate tax kicks in. During the last decade,…

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