The responsibility for credit card debt after a loved one has passed away depends on various factors such as joint ownership, co-signers, and sureties. In community property states, the surviving spouse is typically responsible for the debt. In contrast, in separate property states, the surviving spouse may not be responsible for the debt unless they were a co-signer or surety. The blog also discusses what happens when there isn't enough money in the estate to cover debts and the order of priority for paying off debts.

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Attorney Andrew Bethel discusses the best way to manage your real estate. The baseline rule for any real estate, including primary and investment properties, is to put them in a trust to avoid probate and maximize estate value. If the property is generating income, it may be best to hire a property management company and obtain liability insurance. For multiple properties generating income, an LLC structure may be more appropriate. If investing in out-of-state properties, it is recommended to put everything in one trust to avoid creating unnecessary complexity. Bottom line: put everything in a trust, including LLCs managing real estate empires.

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Attorney Andrew Bethel discusses spendthrift trusts and the creditor protection they can provide. A spendthrift trust is a type of trust designed to protect the beneficiaries from their own bad choices and creditors. This type of trust prevents the beneficiary from voluntarily or involuntarily transferring the trust assets and does not require special wording as long as the intent of the settlor is clear. It makes it so that if someone is a beneficiary of the trust, their creditors cannot collect from the trust that beneficiary’s share of the trust estate to satisfy that beneficiary’s debts. However, there are exceptions to spendthrift trusts. Additionally, self-settled trusts, where the settlor retains an interest in the trust assets and management, are illegal in most states.

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Attorney Andrew Bethel, discusses whether real estate assets should be placed in a trust or a limited liability company (LLC) for estate planning purposes. The baseline rule is to make sure the real estate assets avoid probate by putting them in a trust, which is the simplest and least expensive method. A land trust is a type of trust that specifically manages real estate assets, but for most people, an LLC is a better option for real estate investing as it offers a higher level of legitimacy, separates business and personal assets, and makes it easier to sell the business. However, people may easily overcomplicate and overspend when creating multiple LLCs for each asset. There are specific factors to keep in mind when deciding whether to use a trust or an LLC.

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Attorney Andrew Bethel discussed how trust debts are to be addressed and whether a trustee is liable for a trust's debts. Trustees do not have an obligation to pay trust debts personally, but where they choose to do so, they are entitled to a reimbursement for out-of-pocket expenses paid by the trustee. The same holds true for beneficiaries. There are other methods to create liquidity such as selling real estate held in trust. Ultimately, trustees have a duty of care and a duty to safeguard the trust assets meaning they don't have to personally bankroll a trust, but they must work to the benefit of the trust and the beneficiaries above their own interest.

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Wrapping up the estate of a loved one can be a cumbersome and stressful task, especially when dealing with the emotional stress of loss. The process involves gathering information and documents to determine what assets are included in the estate, verifying assets and their values, filing an estate tax return, and transferring non-probate assets to beneficiaries. The first step is to gather information and documents, such as bank statements and bills, to understand what assets are included in the estate. Next is to verify assets and their values, which includes listing them, determining the date of death value, and whether they were held jointly with another person or had a beneficiary or pay-on-death designation. This is useful for organization and is required to be submitted to a probate court if necessary. After verifying assets, an estate tax return may need to be filed if the gross value of the estate exceeds the estate tax exclusion amount. Lastly, non-probate assets such as those with beneficiary designations can be transferred to beneficiaries without court involvement.

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Estate planning attorney Andrew Bethel will discuss the different ways to plan for a child with special needs, with the goal of leaving money to them while still preserving their public benefits. Three options are presented: custodian accounts, which allow someone to manage a child's money until they turn 25; setting aside funds in a normal revocable living trust, which has more flexibility in terms of when and how funds are distributed; and a Special Needs Trust (SNT), which is a separate, irrevocable trust where money is set aside specifically for the benefit of the special needs child, and the trustee has control over the funds. The main advantage of an SNT over the other options is that the beneficiary never has control over the funds, and the money cannot be considered as an asset or income to that beneficiary.

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New Years is where we look forward and focus our goals on what we want to accomplish in the future. As you look forward to the new year and chart your goals, keep in mind these tax changes so you can maximize your 2023: Estate tax exemptions are increasing. Inheritance taxes are the same but only apply in a few states. Gift tax exemptions are also increasing. The Small Estate threshold in California increased in 2022, and will change again in the future. The California Homestead Exemption has also increased and is tied to inflation and sales values. Finally, most Americans don't have an estate plan, meaning they are leaving their estates in Uncle Sam's hands.

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