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The Key Differences Between a Will and a Trust

1/15/2020

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In the State of California there are currently three major ways your property will be inherited, with significant differences.

  1. If you die before having a will or Living Trust created, the State of California will create a will for you after your death. If this happens, your assets will be frozen while your “estate” goes through the probate process (if your assets are over approximately $125,000 or you own any real estate). This is a public court action.  In San Bernardino county, this often takes in excess of two years and will cost 8 percent or more of the estates assets. Public announcements are made to ensure all creditors have an opportunity to collect any money owed by you at the time of your death. Also, if there are minor children, the court will determine who will act as their legal guardian. At the end of probate, the assets are then divided according to a State statute called the “Law of Intestate Succession”. This statute determines who gets your possessions after the cost of probate, and valid claims against the estate have been paid.
  2. If you want to determine who inherits your property, then at minimum, you should execute a will. It follows the same probate process mentioned above, but you are able to determine who your beneficiaries are.
  3. The third way of transferring your property at your death is to create a Living Trust. A trust is its own “legal entity”. After the trust is created, you transfer your assets into the trust so that the trust has ownership of your possessions. Therefore, you are no longer the legal owner of your property, the trust is, however, you still have complete control over the trust and everything that has been transferred into it. While you are the “trustee” during your lifetime, you also name a successor trustee who will take over your property at your death. However, the trust is now an irrevocable, meaning that the successor trustee can only accumulate and distribute your possessions according to your instructions. This process avoids the probate process and can be accomplished as quickly as possible. In addition, it insures your minor children are raised according to your wishes.
A living trust can only be created by an attorney, and the upfront costs are greater than the other two options, but costs to settle your estate may save your children or other beneficiaries tens of thousands of dollars and a significant amount of time during the process.
 
If you would like to learn more about creating a Living Trust and how it might benefit your specific situation, you are invited to a free Seminar featuring a highly respected estate planning attorney, Randy Spiro, on the evening of January 23, 2020.
Registration can be made at https://www.russmorrisfinancial.com/trustseminar.html or by calling 909/599-2800.
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How To Discuss Finances At Family Gatherings

12/21/2018

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Andy Williams' 'It's the Most Wonderful Time of the Year' holds true for many. While the holidays can be hectic, this is also one of the few times of the year when families come together. Assuming that you like your family, this can be one of the “wonderful” aspects of the season. Along with food, games and laughter, these family get-togethers also present an opportune time to bring up important topics such as estate planning, life insurance and other financial matters that don’t normally get discussed. 
 
Sixty percent of Americans lack any type of estate plan. And, of those who have one, many have not discussed the details with their heirs. Truth be told, “end of life” plans are topics that many people do not want to deal with, which often leads to unfortunate circumstances such as having no plans at all and/or family misunderstandings. The pain from never addressing is usually much greater than the temporary discomfort of having “the talk” (and I’m talking about the birds and the bees…). 
 
As a Financial Advisor and Life Underwriter Training Council Fellow (LUTCF), I recommend that everyone consider having a plan for their finances, life insurance and estate. It doesn’t matter if you just turned 21 or 91. You’re never too young and it’s never too late; however, you’ll usually have more options when you’re younger than when you’re older.
 
Estate Planning
Two ways of settling an estate are a Will and a Living Trust. 
 
Everyone in California has an estate plan! Either, an individual has established his or her own Will or Living Trust (usually through the help of an attorney), or, the State of California has written a Will for you. In the latter case, you may or may not like the provisions stated in the California statues regarding persons who die “intestate”.  This simply means people who have not written their own wills.  Luckily, there is an alternative. An individual can create their own will or a living trust.
 
Many people mistakenly believe that a living trust is just for the wealthy. But this is not the case.  Other Living Trust misconceptions such as; “I’m too young to have a trust” and “I don’t own enough” prevent beneficiaries from receiving the full value of the assets they inherited. Click here to learn the differences of a Will and a Living Trust. 
 
 
Life Insurance
The cost of life insurance is determined by age and health. You will never be younger and may not be healthier than you are today. When it comes to finances, the cost of waiting can be detrimental. You’ll hear very few people say, “I wish I hadn’t started to save so early.” Whereas, one of the biggest and most frequent life regrets is that savings didn’t happen soon enough. This scenario holds true for any type of savings - whether it be for emergencies, retirement or life insurance. 
 
Sadly, I’ve had clients come to me either after waiting until their term life insurance has expired or they are in financial despair after their spouse has passed away. Situations such as these are consequences from having inadequate or no life insurance. 
 
Nearly everyone should have life insurance – whether you’re single, married or divorced. 
 
Finances & Retirement
Most Americans close to retirement have saved only 12% of what they need. Having too little retirement savings often impacts other family members. Regardless of your age, if you haven’t started saving for retirement, you need to start as soon as possible. And, if your parents are still living, you should discuss their retirement plans with them, as well. Don’t wait and don’t assume.

According to a 2015 Genworth study, 75% of all people over the age of 65 will end up spending time in a skilled nursing home. Many people think that Medicare will pay for long term care, and they will to a very limited extent under certain circumstances, but after Medicare is exhausted, most individuals will be required to “spend down” his or her estate (assets) to less than $2,000. Click here to learn more facts about Long-Term Living. 
 
These topics can be difficult things to talk about. They can be easy topics to want to ignore or put off for another day. However, I urge everyone to not wait. The cost of waiting can negatively impact you and your family later. If discussed in a thoughtful and sensitive manner, your family is likely to appreciate you taking the time to discuss this with them.  

For a complimentary financial or life insurance consultation, please contact me at 909-714-1830 or at russ@russmorrisfinancial.com.
   
 
 
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The Reasons Why a Living Trust Benefits Most Homeowners

2/5/2018

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Many people mistakenly believe that a living trust is just for the wealthy. But, this is not the case.  Other misconceptions such as; “I’m too young to have a trust” and “I don’t own enough” prevent beneficiaries from receiving the full value of the assets they inherited.
 
Many middleclass couples and individuals, especially those that are homeowners in California, would benefit from a Living Trust.
 
There are many benefits to a Living Trust:
 
  • The assets from a Living Trust does not go through probate, a court-supervised process of authenticating the instructions and assets in a will. The average length of time for probate in the county of San Bernardino is two years. The average cost of probrate with court fees, etc., is 10% of the total value of the assets.
  • A Revocable Living Trust allows a substitute trustee (a person that you assign) to manage your affairs if you become incapacitated; such as from a coma or Alzheimer's.
  • A Living Trust is private. On the other hand, once filed, wills become part of the public record and can be accessible to almost anyone.
  • A Living Trust can include provisions to financially protect beneficiaries that have special needs.
 
A Revocable Living Trust can be revoked or amended during your lifetime. For example, you should consider amending your living trust if:
 
  • You get married or divorced
  • You have, or adopt, a child
  • You move to another state 
  • Your financial status changes significantly 
  • One of your trust beneficiaries dies 
  • One of your named trustees dies or is incapacitated
  • You have an AB Living Trust that written prior to 2000. Contact Russ Morris Financial if you’d like to have an existing Living Trust assessed at no charge. 
 
 Learn more about a living trust and/or to find out the options that may be best for you.
 
Click here to request more information about a Living Trust or to schedule a complimentary consultation with Russ Morris. 
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Estate Planning:  Which is better, a Will or a Trust?

3/29/2016

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One of the most common questions I’m asked is “Should I have a Will or a Trust?”

An old adage states that the only certainties in life are death and taxes. When a person dies in the State of California, his or her estate is valuated, and if he or she owns any real estate appraised above $20,000 or has liquid assets in excess of $100,000, their estate must go through the probate process.  This process is a court proceeding that looks at their will, determines their assets, and their creditors (debts owed at time of death), settles the debts through the liquidation of their property, and distributes the remaining assets to the named heirs according to the provisions of the will. This is a lengthy process, taking in excess of 20 months on average, costly to the estate, the statutory attorney and executor fees alone start at 8%, and do not include the actual court fees. Many times the total cost is between 8 and 10% of their entire estate. For example, in California, a person who owns a house appraised at $500,000 with additional assets of $100,000 (total estate of $600,000) dies, the cost to probate his/her estate would exceed $50,000, take nearly two years to finalize, and be public record.  Wills are also used to name custodians of minor children if any, but the final determination is subject to approval of the probate court.

Everyone in California has a will! Either, an individual has written one (usually through the help of an attorney), or, the State of California has written one for you. In the latter case, you may or may not like the provisions stated in the California statues regarding persons who die “intestate”.  This simply means people who have not written their own wills.  Luckily, there is an alternative. An individual, or husband and wife, may through an Attorney, create a living trust.

According to the California State Bar Association, “A living trust is a written legal document, that partially substitutes for a will. With a living trust, your assets (your home, bank accounts and stocks, for example) are put into the trust, administered for your benefit during your lifetime, and then transferred to your beneficiaries when you die."

Most people name themselves as the trustee in charge of managing their trust’s assets. This way, even though your assets have been put into the trust, you can remain in control of your assets during your lifetime. You can also name a successor trustee (a person or an institution) who will manage the trust’s assets if you ever become unable or unwilling to do so yourself.

“The living trust is a revocable .trust (sometimes referred to as a revocable inter vivos trust, revocable trust or a grantor trust). Such a trust may be amended or revoked at any time by the person or persons who created it (commonly known as the trustor(s), grantor(s) or settlor(s)) as long as he, she, or they are still competent.

Your living trust agreement:
  • Gives the trustee the legal right to manage and control the assets held in your trust.
  • Instructs the trustee to manage the trust’s assets for your benefit during your lifetime.
  • Names the beneficiaries (persons or charitable organizations) who are to receive your trust’s assets when you die.
  • Gives guidance and certain powers and authority to the trustee to manage and distribute your trust’s assets. The trustee is a fiduciary, which means he or she holds a position of trust and confidence and is subject to strict responsibilities and very high standards. For example, the trustee cannot use your trust’s assets for his or her own personal use or benefit without your explicit permission. Instead, the trustee must hold and use trust assets solely for the benefit of the trust’s beneficiaries.
“At the death of the person or persons who made the trust, the ‘successor trustee’ simply liquidates the assets of the trust, pays the debts of the deceased, and distributes the remaining proceeds to the named heirs according to the terms listed in the trust. This can be accomplished as quickly as the successor trustee is able to do so, and the terms of the trust, assets of the estate, and distribution remain private information to those involved (not public record). A trust may also give guidance as to who will be responsible for surviving minor children.”

For more information on estate planning, please contact Russ Morris.  

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    Russ Morris, LUTCF

    In 1995, I became a licensed financial advisor and Life Underwriter Training Council Fellow (LUTCF) because I believe that next to our physical health, our financial health is the most important factor in our lives. For over twenty years, my goal has been to be a "financial doctor" that my clients can trust.  

    As a financial doctor, I take the time to listen, assess and understand each of my clients’ unique situations, goals, and concerns. I help grow assets for retirement and protect families from the financial loss that can occur after a premature death.  I truly enjoy helping my clients develop financially healthy lives.


    ​Along with my passion for helping all clients achieve strong financial health, I enjoy tennis, hanging out at Rancho Cucamonga's Bad Ass Coffee and meeting new people.

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