Jim Porter
Special to the Sun

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November 30, 2012
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Jim Porter: Estate Planning 101 A

TRUCKEE, Calif. - More often than not our parents' estates and financial affairs are not in order. Last week we explored how the kids' involvement in the family's estate planning can be beneficial.

Of course, on the illness or death of a parent, the lack of a current will or trust and inadequate life and medical insurance comes as a surprise - after it's too late to do anything about it.

Everything Is Handled

Resist the temptation to assume "everything is handled," and explore with your parents or family the basics of what needs to be done to protect the family from financial disaster, severe tax consequences, nursing home costs, ineligibility for Medicaid or Medi-Cal and other governmental assistance, and family disagreements after a parent's illness or death.

There's no magic list of what you need to know to avoid surprises in your parents' financial future, but here are a few things to consider discussing with Mom and Pop:

Health care Directive

An easy transition is to ask your parents whether they have a signed Power of Attorney for Advance Health Care or Health-Care Directive. Either of these documents ensures that proper health care decisions are made in case they become incapacitated (call or e-mail to porter@portersimon.com for a free form).

We should all sign one of these forms. I can't tell you how important that is - unless you don't mind someone else making life or death decisions on your behalf.

Questions, Questions

• Is there a will or trust? Is it current? Has anyone died since the last will or has there been a divorce or have properties been sold? Still want the same executor to administer your estate? Have your parents' assets appreciated such that a trust might be advantageous? It doesn't take much to be able to benefit from a simple trust and avoid probate and taxes. Remember it doesn't do any good to lament after the fact how much of the estate went to the government. At the very least, encourage your parents to meet with an estate-planning lawyer, preferably a certified specialist. Like Kelley Carroll in our office.

• If your parents (or you!) don't have a will, call a lawyer today (not tomorrow). If you have minimal assets and no children and want to save money, consider making a will yourself by checking out www.nolo.com or go to an office supply store. Don't just talk about it.

• Where are your parents' estate-planning documents kept? Who has the key to the safe deposit box? Is there a safe deposit box? Where's the original will or trust?

• What type of life and medical insurance do your parents have? Does it cover long-term care? Nursing home? In-home coverage? What are the limits? Are the premiums current and are your parents mentally and financially capable of continuing the payments? Should late payment/cancellation notices also be sent to a family member?

Asset Protection

• What assets do your parents have, including cash, home, investment properties, investments, IRAs, Social Security, banking and savings accounts, retirement plans, and stocks and bonds? Who is on title to the real estate? Have you taken advantage of the California law that allows husband and wife marital properties to be held as "community property with right of survivorship," which can avoid probate and save on income taxes? I bet most of you haven't and it's a very simple process. (Call or e-mail and we will send you a Law Review on what needs to be done. No questions asked.)

• Is there a complete list of business, financial and family records, with addresses, account executives, home care providers, accountants, estate planning lawyer, deeds, bank account numbers, stocks, promissory notes, insurance policies, Veteran's benefits, retirement plans, health records, and a home inventory? (Call or e-mail for a free asset list form.)

• Are the beneficiaries on life insurance policies and 401(k) plans up to date? You would be surprised how many ex-spouses remain on policies.

• Are your parents still driving and has anyone evaluated their driving skills? An unfortunate, under-insured accident is a good way to lose everything. What are their auto policy limits? Get more than the minimum. Consider an umbrella policy for additional coverage - generally not that expensive - especially if they have assets.

• Do your parents have enough income for their support or will assets have to be sold? Can steps be taken today to qualify for Medicaid (or Medi-Cal, as we call it here in California)? I can't tell you how important that is. Ask my wife's family. Tax-wise, real estate transfers are perfectly legal but must be done timely and properly to qualify for governmental exemptions or assistance. Often three years before death.

Check the Basics

• Have you or your parents considered charitable trusts and other philanthropic plans that allow you to give to your favorite charity (with write-offs) rather than to the government - and still provide for the kids? The proverbial "win-win" - even if your estate is modest. A donation in our small community goes a long way.

It's a lot easier to talk to parents about grandchildren then it is to delve into financial planning, but maybe they will surprise you. It can be reassuring for the entire family. At least make sure the basics are covered.

By the way, have you taken care of YOUR estate planning? If you don't have a will, you deserve the consequences.

How would you feel if your assets went to your ex-spouse, to Uncle Sam or completely contrary to your wishes? (And don't answer that question with: "After I'm dead, I don't care.")

Next week we will discuss how to improve our communities with charitable giving and explore some of the steps that can be taken to protect the family's assets.

Jim Porter is an attorney with Porter Simon licensed in California and Nevada, with offices in Truckee and Tahoe City, California, and Reno, Nevada. He may be reached at porter@portersimon.com or at the firm's website www.portersimon.com.


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Tahoe Daily Tribune Updated Nov 30, 2012 12:24PM Published Nov 30, 2012 12:23PM Copyright 2012 Tahoe Daily Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.