Redkey Gordon P.C.

Are These Books Worth Anything?

Managing an estate can be complicated and overwhelming, but libraries can often be sources of hidden value, and thus should not be ignored. There's always a chance that tucked away in that library are a few rare first editions or hard-to-find antique items. But if you're facing hundreds of volumes and you have little experience with books, where do you start?

Libraries and rare books may not be your idea of a good inheritance, but they can actually be hidden treasures if you do your research. A recent JD Supraarticle, titled “California Estate Planning: What to Do if You Inherit a Library,” warns against failing to value books that are left as part of an estate.

You never know if the library has tucked away an inscribed first edition of “For Whom the Bell Tolls” by Ernest Hemingway. That’s going for $8,500 on Ebay right now. Or maybe a signed J.D. Salinger “The Catcher in The Rye.” Asking price for this is only $55,000 these days. These rare first editions or hard-to-find antique items are out there. If you are left with the responsibility of sorting through a collection containing hundreds of volumes, and you have little experience with books, where do you start?

Robert A. Gordon an experienced Sacramento estate planning attorney at Redkey Gordon P.C. can help you. In addition, you can start be doing some of the preliminary research yourself. Websites such as www.Abebooks.com and www.AddALL.com are extremely detailed and gather data from numerous book sites. There is also the American Book Prices Current database (www.bookpricescurrent.com). This is a valuable tool that about every professional bookseller in North America knows and uses. This database shows you if a book has sold at auction in the past.

If you don’t have the time to catalog and research all those hundreds of book titles and ISBN numbers on a website or go through entire libraries by hand, consult an experienced rare book dealer. He or she can quickly identify rare or unusual items in your library and estimate their worth by taking into account the rarity of a book, its condition, and the book’s provenance (its ownership history).

According to the original article, most rare book dealers are happy to buy books and libraries, as some will want to make you an offer on the most valuable titles. So don’t discount a library collection bequeathed to you in an estate—Earnest or J.D. may be hiding in there somewhere.

Reference: JD Supra (November 3, 2014) “California Estate Planning: What to Do if You Inherit a Library”

Providing for Your Heirs, Regardless of Your Pocketbook Size

“Regardless of how much wealth you have,” says Gregory Popera, a private wealth adviser with Bank of America Merrill Lynch, “having some type of estate plan and financial power of attorney are sort of the financial building blocks to make sure your assets go where you want them to go.”

Making sure your heirs are taken care of once you pass is an important goal of estate planning. And you don't have to be among the wealthy to create financial stability for your loved ones.

The Washington Post recently discussed practical strategies for financial security in an article titled "How to pass money on to your children."

Buy life insurance. Life insurance is designed to ensure that your family will be okay. However, some parents fail to calculate properly when they buy policies. As a result, their families can have a rough time with mortgage payments, college costs, food, and other expenses. You should estimate how much your children would need to cover those expenses until they reach adulthood. Many parents will be OK with estate taxes by naming their children as the beneficiaries of the policy, since the federal estate tax exemption is $5.34 million per taxpayer for 2014. On the other hand, those who are also leaving a separate estate approaching this $5.34 million limit for their children might save on federal estate taxes by putting the life insurance policy into an irrevocable life insurance trust, where the insurance proceeds would go into the trust and would not be counted as part of the parent’s estates. Another consideration is to designate each child as a “co-trustee” after reaching a certain age, so their inheritance held in a properly designed trust would also be beyond the reach of creditors and wouldn’t have to be split with a spouse if the child gets divorced.

Open a 529 account. In this type of savings account money grows tax free until you use it for college. Parents or grandparents can contribute up to $14,000 annually for each child ($28,000 a year per couple) before there’s any gift taxes imposed on the donor. Another great feature on these 529s is that they can be “front-loaded” for up to five years’ worth of contributions all at once (but that’s all you can contribute for the next five years).

Create a trust. Parents and grandparents with substantial assets may consider a trust. Some families may create a revocable living trust, which wouldn’t have to go through probate and could be changed or canceled at any time. Assets are owned by the trust, which is controlled by the creator until he or she died or becomes incapacitated. The trust would subsequently pass to a successor trustee—like a child or other loved one—who then can oversee the trust and use the funds to pay bills and later to disburse the money to family members or others.

Simplify. If your family members are all “singing from the same songbook” as far as saving and finances, consider designating one child to be responsible for dividing assets among the family. Another way to do this is to set up a joint tenancy with one child—he or she can use the money to cover bills while their parent is still alive and then would be tasked with splitting up the assets after the parent passes. This approach has many pitfalls and should only be used in unique circumstances and only after a full discussion with an estate planning attorney. On the other hand, an estate planning attorney may counsel you to consider what is called “a transfer on death deed”—this passes real estate to one child when the last surviving parent dies. This transfer leaves the parents in full control until both of their deaths. But it’s important to remember that both of these arrangements can put just one individual in control of the estate after the parent dies. This can be a potential powder keg and could cause fireworks in the family if that person decides not to share what’s inherited with the others, or has creditor problems, marital problems or dies before making things right. Some parents try to avoid this by naming all of their children in the tenancy or in the transfer of death deed, however, all of the kids would have to agree on how to treat the assets. If it’s likely there might be issues, one should put detailed instructions in a will or trust.

Your Amador and Calaveras County estate planning attorney can answer these questions and plot a strategy that works best for you and your family.

Reference: Washington Post (November 3, 2014) "How to pass money on to your children"

Planning for Death Is Unpleasant, but Critical Nonetheless

Once someone dies there is much work to be done. These are a few suggestions to help you get administratively organized for death.

To make death easier for all involved, it’s critical to plan some of the issues related to death far in advance with some contemplation to make everything go as smoothly as possible when a loved one passes away.

When a loved one dies you have to remember IRS deadlines, Social Security Administration requirements, compliance with state laws, and dealing with other grieving family members. There’s also the chance you might have some relatives who feel entitled to more or different assets.

While you should work with your own estate planning attorney, a recent MarketWatch article, titled “9 steps to getting your estate plan in order,” offers some ideas to help you start the process.

Although it’s not easy, discuss the issue of death with your family and determine what each person's end of life wishes are. Experts say that it’s sometimes more comfortable to do this when someone outside the family has died. You want to build a foundation for a smooth transitional experience to make things be as painless and well-organized as you can for your family—as well as for yourself.

Get to know the inheritance laws in your state, and don't assume that, if you have a will, your wishes are set in stone. Some idea of how property passes on death in the state where you live will be helpful. The laws governing property division can get tricky, so consult with an estate attorney. Select an estate planning attorney who’s experienced in estate, probate, and tax planning, and head to the meeting prepared with your questions.

Your attorney will ask you questions about your real property, personal property, and all other assets, guardianship decisions, medical preferences, end of life bequests, and more. You’ll talk about a will, the possible need for a trust, and deciding on an executor of your estate.

Remember that all of your life insurance, annuities, 401(k), 403b, and IRAs are passed to your named beneficiaries, not through your will in probate. It’s important that your beneficiary designations are current and accurate. Speak with the administrators of the investments and get a copy of the beneficiary assignments currently on file­—if you need to update or change your beneficiaries, do it right away! Once you’ve submitted the changes, be sure to request confirmation of the change and keep it with your records. Remember that the release of money to the designated beneficiary is contingent on producing an accurate and legible death certificate.

Start a joint checking account with the executor you select. This will give them funds that may be required to pay for funeral expenses, travel for family members, paying for people to help with immediate needs, and bills that come due while waiting for accounts to be released and settlements to be completed.

Set up a secure filing system. This needs to be easily accessible and should contain important documents like birth certificates, Social Security numbers, military discharge papers, marriage license (or a copy of your divorce decree if applicable). You should also provide the location of the safe-deposit box keys, a list of benefits from your current or past employer (such as a benefits brochure), the contact info for your estate planning attorney, CPA, financial adviser, and insurance agent.

Think through what would happen to your investment portfolio if your spouse, child or significant other isn't able to keep up with the activity or isn't knowledgeable to interview and hire a good person to get into the portfolio accounts due to the absence of passwords.

Don’t allow your estate to be drained because it’s not getting proper attention. Be prepared and consider carefully who will handle this for you. Work with an experienced Sacramento estate planning attorney who can coordinate this essential planning.

Reference: MarketWatch (November 3, 2014) “9 steps to getting your estate plan in order”

Helpful Estate Planning Add-Ons: A Letter of Instruction

Where there’s a will, there’s a way—and sometimes an ugly family feud. Families are consumed with grief when a loved one dies, but unfortunately certain legal and organizational tasks that arise can’t be ignored or put off for long. But you can ease the burden on your loved ones by making some simple preparations in addition to a will.

Sometimes your family may need more detail than what is normally included in a will. To get in front of hard feelings and potential conflicts over your personal possessions, think about adding a letter of instruction to your will. This is an informal document you can draft which isn’t legally binding, but can be a helpful guide for your family.

A recent article in The Wall Street Journal, titled “When a Will is Not Enough,” suggests that you organize your letter into three sections: funeral arrangements, financial and personal affairs, and distribution of personal effects.

In this first section on funeral arrangements, include a list of people to notify upon your death, and also include relevant organizations, government agencies, your estate planning attorney and CPA. You can also state if you want to be an organ or tissue donor (add the donor organization’s contact info), specifics on burial (cremation, for example), and any details about your funeral service. Also, if you’ve paid in advance for funeral arrangements, attach those details and cemetery information or where you want your ashes to be placed. You can also add in this first section any charitable donations in your honor, and you can sketch out an obituary in advance.

Keep this first section where it is readily accessible, perhaps with other important personal papers, and make sure a family member or your executor knows where it is.

The second part of the letter is for up-to-date information on your personal financial affairs for a family member or executor. Here is where you should list the contact information for your employer, attorney, financial planner, insurance agent, and stockbroker.List all financial accounts and the contact info for your account beneficiaries, and ensure that your designations are up-to-date. These designations trump any terms about this in your will if the two conflict.

The original article also suggests that you retain an up-to-date list about debts owed to you, like a mortgage, car loans, or credit cards. Another list should be all of your computer passwords and passwords to online accounts, and provide the location of safe-deposit or post-office boxes and where you keep the keys or the combinations. Given that the second section of your letter contains sensitive and personal information, keep it in a locked fire-proof box in your home. Give the combination or a key to the box only to your executor.

Third, you can go into greater detail than in a will to designate who should receive all of your important possessions. You can even add individual notes to family members with the main document.

It’s important to plan ahead now. Work with Robert A. Gordon an experienced Northern California estate planning attorney with Redkey Gordon P.C. to get organized and have the peace of mind that you’ve done everything you can to have your affairs in order.

Reference: Wall Street Journal (November 15, 2014) “When a Will is Not Enough”

Plan Wisely for Medi-Cal and Medicaid or Else! One State's Warning

This case has drawn plenty of attention due to its legal and financial implications. Essentially, the case has escalated to the point of a federal judge warning state regulators that she would consider issuing an order to drop Ohio from Medicaid enrollment altogether, leaving the Buckeye State without federal funds to provide medical care for its elderly residents.

The State of Ohio is penalizing seniors by refusing to grant them long-term care benefits because a spouse or close relative has purchased a Medicaid-compliant insurance annuity. Medicaid administrators in Ohio say that an elderly nursing home patient is not entitled to long-term care benefits as long as he or she has a relationship with an individual who has purchased an annuity.

Other cases have been filed in federal courts in Ohio, and one federal judge has warned Ohio officials that she may hold them in contempt if they don’t follow federal law. The latest lawsuits filed against Ohio’s Medicaid administrators were brought by three elderly women whose husbands used their retirement accounts to buy annuities, which State Medicaid investigators say is illegal.

A recent Insurance News article, titled “Medicaid Asset Protection Plan Causes Ohio Judge To Tell Ohio Medicaid to "Follow the Rules" or Lose Federal Funding,” reports that more and more seniors are concerned about Medicaid planning and other retirement planning issues such as Medicaid, and some states are tending to be more heavy-handed than others in the administration of their Medicaid program.

Gentle or severe, it’s important to understand and think through your plans for Medicaid. For example, single Ohio seniors are required to first spend down their assets to $1,500 and receive less than $45 in monthly income before Medicaid's long-term care benefits will apply. Married couples, like the plaintiffs in the cases mentioned above, must split their assets in a way that the healthy spouse retains no more than $117,240, but the spouse in the nursing home cannot have more than $1,500 or monthly income higher than $45.

These kinds of drastic thresholds for income create frustration and anxiety when seniors try to plan the Medicaid spend-down. While some seniors are relieved when they are able to purchase Medicaid-compliant insurance annuities, which gives them some income even when they are in a nursing home, Ohio and some similar states don’t care for these financial solutions. The result is that the elderly can become completely destitute before entering a Medicaid nursing home.

The original article says that planning early—at least five years in advance—is critical in Medicaid planning. Although no one has a crystal ball as far as when a person might need to move to a nursing home, Medicaid spend-down provisions in your state may be restrictive like Ohio, and a qualified Medicaid Planning attorney can assist you in managing this before it becomes an issue, as it did for those involved with the lawsuits in Ohio.

Early planning with a Medi-Cal Planning attorney at Redkey Gordon P.C. is essential to make sure you qualify for Medi-Cal benefits and still are able to enjoy the life you worked so hard to make for yourself and your family in your younger years.

Reference: Insurance News (November 18, 2014) “Medicaid Asset Protection Plan Causes Ohio Judge To Tell Ohio Medicaid to "Follow the Rules" or Lose Federal Funding”