Estate Plan Checklist

THE "LERMAN LEGACY PLAN"

Custom Estate Planning for Optimum Peace of Mind

You deserve an estate plan that satisfies your unique goals so you have optimum peace of mind. The "Lerman Legacy Plan" does just that. We explain the critical issues below in great detail to identify your goals and customize an estate plan to meet those goals.

  • Do you want your beneficiaries to have full control of your assets?
  • How will your family heirlooms, jewelry and art be identified and distributed?
  • Will the trustee be allowed to retain assets even if the trust assets are not diversified?
  • Do you want to limit the trustee's obligation to account to your beneficiaries?
  • Who should be your trustee? Your kids? Or, a bank, sibling or friend?
  • Who should be included in the definition of your "issue"?
  • Will your retirement accounts and life insurance be integrated into your trust?
  • Do you want a "No Contest Clause" to dissuade your beneficiaries from contesting?
  • Do you need to address California community property law with your family law attorney?

In addition to customizing your plan to fit your particular needs, we pride ourselves on state-of-the-art technology. You will keep your original fully executed Lerman Legacy Plan, and we provide you with a computer disk with your executed documents in pdf format enabling you to easily transmit your signed documents to your family and advisors. And, since we save your entire file electronically, we can instantaneously access your records to answer any future issues that you ask us to address. No need delay to retrieve dusty files from storage!

We look forward to providing you with the most efficient and up-to-date planning possible. Thank you for the opportunity to be of service!

The Lerman Team
Michelle C. Lerman
Lerman Law Partners LLP

ESTATE PLAN CHECKLIST

FOR THOSE WE LOVE

  • Do we need a living trust so that our estate avoids probate?
  • Do we have a Bypass Trust or QTIP trust in our living trust so that estate taxes are minimized and our children are protected?
  • Does our living trust or will create a trust for our children if something happens to both of us?
  • Do we need a life insurance trust so that our family (not the IRS) receives the proceeds?
  • Is the amount and type of life insurance we have adequate for our family's needs?
  • Do we have a buy-sell agreement for our business so our family will not suffer a financial hardship?
  • Are all of our assets (house, bank accounts, partnership interests and personal property) in our living trust?
  • If we owned any property as "joint tenants", did we consider changing the ownership to "community property with right of survivorship" as allowed by new legislation?
  • Who is the beneficiary of our retirement plans (spouse, a charity or the living trust)?
  • Does our estate plan fulfill our charitable goals?
  • Have we reviewed our estate plan within the last 2 years?
  • Have we put our estate planning documents in a safe place (a safe deposit box or fireproof safe)?

Michelle Lerman of Lerman & Lerman is a well-known estate-planning attorney with offices in Marin, San Francisco and Los Angeles. Ms. Lerman speaks on estate planning topics and writes articles to inform parents about protecting their family with an estate plan. She obtained her undergraduate degree magna cum laude from the University of California, Los Angeles, in 1980, and her law degree in 1983, from the University of Southern California. Visit her website at www.lermanlaw.com

MAKING GIFTS TO MINORS

Parents and grandparents often want to provide for their children and grandchildren. The benefits of gifting to minors are:

  1. The gift may provide funds for education or medical needs;
  2. The gift shifts assets out of the parent/grandparent's estate so that it grows in the child's estate;
  3. The gift allows each parent/grandparent to transfer $11,000 annually without paying any transfer taxes. Instead of lifetime exclusion for estate taxes of $3,000,000, with annual gifting, parents and grandparents can more than double the size of their estate excluded from estate taxes.

Knowing the benefits of gifting, parents and grandparents ask, should they give an outright gift, put money in a bank account in joint names, or pay college tuition directly to a school? The chart below lists the various forms of gifts and the advantages and disadvantages of each.

FORM OF GIFT

ADVANTAGES

DISADVANTAGES

Outright gift to the child

Simple and inexpensive.

Child is not mature enough to handle to the money.

A Multi-Party Bank Account i.e. Totten Trust, P.O.D. (Pay on death), or a joint tenancy- Each of these bank accounts transfers account ownership to the child on the death of the parent/grandparent

Simple and inexpensive.

Child may receive the assets when he or she is still very young requiring the appointment of a guardian by the court. The funds in the account remain in the parent/grandparent's estate and are subject to estate tax. Parent/grandparent does not obtain the benefit of the gift tax $11,000 annual exclusion.

Direct payments to a financial institution or medical provider

Simple and inexpensive. Can give an unlimited amount and is not subject to the $11,000 annual gift tax exclusion limitation.

Can provide for tuition only. Delays the benefits of gifting if the child is not ready for college.

Custodianship- Parent or grandparent appoints a custodian under the California Uniform Transfers to Minors Act

Simple and inexpensive.

Must terminate when the child is 25. A custodial account can only have one beneficiary.

Guardianship- A court procedure to appoint someone to act for the child

None. A last resort.

Requires close court supervision. The court must authorize investments. Guardianship terminates at age 18.

Irrevocable Education Trust I.R.C. Section 2503©

Flexibility for one trust to provide for the needs of multiple beneficiaries. Trust funds may be used for tuition, room and board and supplies. Obtain annual $11,000 gift tax exclusion for each parent/grandparent and for each child beneficiary. Parent/grandparent will not be taxed on the income of the trust. Trust funds will not be included in parent/grandparent's estate. Trust can be tailored to the needs of the child and can continue until the age of 21. No fees or cost once the trust is established.

Parent/grandparent cannot use the assets transferred and the trust is not revocable. Costs to establish range from $2,000 to $3,000.

Irrevocable "Crummey" trust

Same advantages as educational trust except trust can continue beyond the age of 25. Use when the trust assets will exceed educational needs.

Trust is not revocable. Costs range from $2,000 to $3,000 plus additional annual costs to prepare the "Crummey" notice