Funding Living Trusts- A Major Problem
Funding Living Trusts- A Major Problem
Lately I’m finding many people with un-funded trusts (meaning nothing was put into the Trust). Some are not funded due to refinancing or new purchases while others were never funded, or not prepared properly. No matter what your situation, funding living trusts is important.
Why Is An Un-Funded (empty) Living Trust a Problem?
Without proper funding, the Trust us is invalid. It simply won’t work or do what you think it should.
It is very expensive to fix or fund a Trust after death. To do so requires court involvement and lots of time and money.
We are finding that even some “estate planners” do not understand the rules on funding trusts. This is shocking!
Problems Funding Living Trusts Need to be Fixed Before Death or Incompetence.
Why is it so important to fix funding problems before death or incompetence?
Let me answer that question with a few examples of what often happens if the Trust is not properly funded:
- The house ends up in Probate court in a very expensive and painfully slow procedure called probate. Learn about probate in this post.
- The kids will fight over personal property – like jewelry or china/silverware.
- Money could end up going to the spouse of your child (or ex of your child) rather than your grand children – This situation CAN be controlled that without offending the in-law.
- Personal property not in the trust is a problem that could cause court battles.
- Life insurance not in trust could cause huge tax problems, delay in distribution, and possibly additional, expensive court involvement.
Fund your Trust properly and you can avoid huge problems and heart-aches.
Just a reminder, this and all of our posts are NOT LEGAL ADVICE. We hope these ideas will get you thinking and lead to better Estate Planning. My staff and I would be happy to help you update your plan or answer any questions. Thanks for reading.
GQ
An Entrepreneurs Gift to the World
Merry Christmas and Happy Holidays!
Lights, presents, family, food and more food. Everybody loves the holidays. A time when people seem to be a little nicer and just a little more giving. In light of the holiday season, David Hagenbuch, Associate Professor of Marketing at Messiah College and founder of MindfulMarketing.org gives a shout out to entrepreneurs and their gifts to the world.
The 3 Gifts Entrepreneurs Give to the World
1. Ideas
“We live in a society where it’s so easy to be a critic and point out what’s wrong in what others have done. Meanwhile, it’s much more challenging to create — to come up with a new approach that no one has ever thought of before, or to make an incremental improvement to an already good concept. Such new ideas are golden.
“New ideas also implant a sense of optimism and hope: We don’t need to accept the status quo. Things can be different. Things can be better.”
2. Innovations
“Innovations from entrepreneurs such as Johannes Gutenberg, Henry Ford and Steve Jobs have enriched humanity throughout history and transformed our world. From the minute we wake in the morning until the moment we lay down to sleep at night, entrepreneurial products and services facilitate our work, play and nearly every other activity we perform.”
3. Employment
“Many professions offer extraordinary gifts to individuals and society: physicians give health, teachers impart wisdom, judges bestow justice, counselors offer direction and soldiers provide protection. What do entrepreneurs give of such significance? Jobs.
“To provide another with gainful employment is one of the most profound gifts one can give. While doctors heal people physically, business owners heal people economically. A job allows someone to provide for his/her own needs as well as those of loved ones and even others. Employment is much more than financial security, however. For most people, meaningful work helps provide them with a sense of purpose and supports their self-worth.”
For these three reasons, today GQ Law would like to say ‘thank you’ to all of you entrepreneurs out there. It’s that spirit of innovation, creation and giving that employs our families, drives our economy and gives us opportunity.
From one entrepreneur to another, Merry Christmas and Happy Holidays!
Leadership Series: Negotiating
Leadership Series: Negotiating
“Negotiating? Well, that’s not for me. I’m not a salesman, lawyer or politician. Surely negotiating isn’t important in leadership.”
The authors or “Getting to Yes” disagree. Their best seller starts:
“Like it or not, you’re a negotiator. Negotiation is a fact of life. You discuss a raise with your boss. You try to agree with a stranger on a price for his house.” You negotiate with your co-workers on where capital investment should be allocated and what new products to deploy. Or, to provide two more examples from Getting to Yes, perhaps you’re trying to mutually agree with your spouse on where to go for dinner or with you kids on what time they should go to bed (not so easy when the other party’s position is “never!“)
No matter in what situation you find yourself negotiating, the situation should not end up as a positional “haggle-fest.” An example of which would be opening up with a low ball offer that’s countered with a high ball rejection, only to whittle its way to somewhere in the middle or to end in no agreement at all. Just bitter feelings.
That’s when the authors of Getting to Yes suggest using “principled negotiation.” Principled negotiation is focused on four main things: 1) People – separating the people from the problem; 2) Interests – focusing on interests, not positions; 3) Options – developing multiple options for mutual gain, and; 4) Criteria – insisting that the result be based on some objective standard. Following is a brief discussion on each.
People:
Negotiations are always centered around some sort of problem but the person on the other side of the table is not that problem. We must neither be soft and weak in fear of hurting a relationship, which usually ends in feelings of unfairness on the part of the party who gives up most, nor should we take a brash, harsh, bullying approach. We must separate the people from the problem and address them both separately.
Interests:
When we focus on what both parties are interested in, we don’t need to take ego building positions that give a sense of winning or losing to each side. We can focus on mutual benefit and gain. And this step is essential to frame the next principle.
Options:
Rarely is there only one “perfect” option to agree upon. So, invent multiple and discuss them with the other party. This helps both sides know that the best option for mutual gain has been searched for and selected.
Criteria:
Finally, the result can’t be based on feeling or what is perceived to be fair but should be based off of some sort of what the authors call “objective standards.” This might be determined by “market value, expert opinion, custom, or law” or any other number of criteria that remove personal opinion and introduce facts, evidence or support.
Now, armed with these principles, you’re better prepared to separate the people from the problem, focus on the interests of both parties, come up with multiple options and base your negotiating on objective criteria.
Good luck and we wish you the best this holiday season.
Merry Christmas and Happy New Year!
Ten Essential Tasks for Every Trustee
Ten Essential Tasks for Every Trustee
So you’re the trustee, now what? Here are the ten things every trustee is responsible to do.
What is a Trustee?
Merriam-Webster’s dictionary defines a trustee as “one to whom something is entrusted.”
In a legal sense, we’d define a trustee as a person or organization that has been given responsibility for managing someone else’s property or money through a trust.
What does a trustee need to do?
1 – Invest and manage the assets. Trustees have an obligation to invest trust assets with minimal risk of loss. If an investment is too risky, any loss could be charged to the Trustee. California law is very strict about how to handle trust assets.
2 – Pay for health, education, and maintenance of minor beneficiaries, if required.
3 – File IRS Form 56 – File Form 56 once to indicate that a Personal Representative has been appointed to handle the Trust estate, and a second Form 56 to indicate that the Personal Representitve’s duties have been fulfilled.
4 – Prepare and file income tax returns for Trust and Decedent. The IRS needs to know that the Decedent will no longer be required to file tax returns. The Trustee will have to file a tax return for the Trust if there is any money earned by the Trust. Earnings include rental income, interest income, or investment income.
5 – Notify creditors by actual notice and publication. Without this notice being sent to the creditors or being published, the Trustee could be liable for claims against the estate until the statute of limitations on any claims have expired.
6 – Notify Department of Health Services.
7 – Manage Accounts. Prepare and get approval of an accounting of all assets in the Trust estate assets before distribution of any money or other assets.
8 – Distribute assets and get receipts from beneficiaries – write checks, change titles, complete transfers, etc.
9 – Terminate the trusteeship at the appropriate time.
10 – Close the Trust.
Remember, I’m NOT giving you legal advice here. This information is designed to get you started on the right track. That way you can ask the right questions and do your research to be a good Trustee. A good Trustee is one who obeys all the rules and stays out of trouble.
I’m available to answer questions or to give you a hand. Give me a call. Thanks for reading! GQ
Leadership Series: Emotional Intelligence
Leadership series: Emotional Intelligence
Today’s topic will be introduced by a thought provoking fact: people with average IQs outperform those with the highest IQs 70% of the time (source).
Wait, you got that backward, right?
So, if it isn’t smarts that drives success, what is it?
Research suggests that it’s emotional intelligence.
Emotional intelligence is “the capacity to be aware of, control, and express one’s emotions, and to handle interpersonal relationships judiciously and empathetically” (source).
This is an indispensable capability of any true leader. Leaders inspire, uplift, understand, guide, build and grow. They discover the natural strengths of others and invest in their success. And all of these things require emotional intelligence to make happen. A leader must be aware of his/her position and how they can help others along and know the delicate differences in those they work with.
If you don’t feel like you’re a very emotionally intelligent person, don’t worry, it’s not a “have or have not” like many might describe IQ. Emotional intelligence can be developed.
Here are two suggestions that you can start applying today:
Become self-aware
When you start to feel emotionally heightened, ask yourself, “What emotion am I experiencing.” Label the emotion with a specific term (i.e. I’m feeling…sad, frustrated, deceived, excited, happy, nervous, etc.) and accept the fact that you feel that way. At the same time, realize you don’t need to act out negatively (if you’re experiencing a negative emotion) according to how you’re feeling. As you do this you will feel empowered to address your emotions and control your own behavior. Denying the way you feel often evokes a more heightened sense of the emotion
Become aware of others
This step requires empathy, or “the ability to understand and share the feelings of another” (source). The ability to step back, put yourself in someone else’s shoes and feel how they feel is incredibly enabling and ennobling. It will help you to know what others need and feel empathically for them. This doesn’t mean that you’ll be soft on them, although you may need to, but it means that you’ll better address the situation with a more personal understanding because you have seen the situation from their eyes. You’ll then know if you need to be firm and direct or soft and encouraging.
As you begin to become self-aware and aware of others, you will develop emotional intelligence. And as you develop emotional intelligence you will become a more effective leader. We wish you the best in your pursuit of becoming the best you can be!
Leadership Series: Change Management
Leadership Series: Change Management
John F. Kennedy once taught an important principle:
“Change is the law of life. And those who look only to the past or present are certain the miss the future.”
Inviting change, handling change and perhaps most importantly leading change are essential capabilities of influential leaders. So today, we’ll discuss five principles of what business strategists and behavioral economists have called, “Change Management.” See more at http://www.strategy-business.com/article/rr00006?gko=643d0
- Address the “human side” systematically
When change occurs, people react. Some react by embracing, others by waiting for others to move first and others reject change altogether. For this reason, it’s essential that leadership has a structured release of the change plan resulting implications across the board.
- Involve every layer
Since organizational change requires support at all levels, it’s essential to identify key leadership and individuals at all levels of the organizations to initiate and sustain execution of changes from the top down. These people will serve as role models to inspire those near them and be a fast resource for trust and communication.
- Make the formal case
People will not likely change unless they know why they should. Be sure to clearly and simply answer the three fundamental questions: What is being changed? How are these changes going to affect me and the organization? And, why is this change necessary. Always remember, “The ‘what’ informs and the ‘why’ transforms” (Dieter F. Uchtdorf).
- Create ownership
When key leaders and individuals at every level begin to embrace change, it’s vital that there is more than mere agreement with the new direction—there must be ownership. As senior leaders seek for others to own the new organizational changes, these change owners begin to expand their influence and support others that are struggling and need support throughout the process—people that leadership won’t readily be able to reach.
- Speak to the individual
Someone once said, “Organizations don’t change, people do.” This is the critical element of change management. No matter how “perfect” a strategy may be or how much capital has been invested, an organization will not change, unless the people do. With that in mind, it must be understood that people cannot be changed, they can only be invited or inspired to do so. The actual change must come through conscious decision and constant effort by the thoughts and actions of those that make up the organization. Focus on the individual and you will find the source of change.
In review: have and communicate a plan, involve people at all levels, teach the “why,” create ownership and speak to the individual. As you do so, you will have the depth and breadth of leadership needed to move forward into the future.
We hope this post has been insightful and inspiring and wish you the best as you and those in your organization embrace change, “the law of life.” We look forward to your success!
Leadership Series: Storytelling
Leadership Series: Storytelling
A key role of any leader is to inspire. A very effective way to inspire is through storytelling.
Think of some of the most compelling accounts from history and how they’ve shaped us. The amazing tale of the forefathers and how they claimed the independence of the United States as the pilgrims immigrated across the ocean and began a new life. The great leadership of George Washington, Abraham Lincoln and others and their incredible histories. All of these stories engender in US citizens a spirit of values, self-reliance and independence.
Now think of your family history. What stories shape your core beliefs and have motivated you to become who you are?
Now, what about entertainment? The vast majority of the most famous movies and books of all times, all contained incredible stories.
But storytelling isn’t just for history and entertainment. It has great business application as well.
Let’s consider what’s known as “The Hero’s Journey.” This is the pattern that makes the best stories come to life. Below is an image detailing this process.
For a more detailed understanding of each element, see the website linked here.
So how can this apply to you as a business leader? Consider the story of your company. Undoubtedly you lived in an ordinary world, perhaps working for someone else. But then you had the idea put on your mind that you could “do your own thing” and call your own shots. You thought through the idea but became apprehensive about the uncertain income. All until you decided to call a trusted friend, adviser or mentor who encouraged you to take the leap, and so you do. Since then you’ve run into trials, you’ve found business partners and you’ve discovered your competitors.
Then perhaps you had to discover something more to grow you company and make an investment that was either going to make or break the business. Lo and behold, just before losing it all, that investment becomes the pivotal part of your company and the key to success in the future. You now continue a newly equipped enterprise with the wisdom to continue growing.
This is a model for telling any story and it will communicate your stories to your employees, customers and stakeholders.
We encourage you to use this model throughout presentations, in your marketing or in your day to day with those you work. It works and you’ll see the results!
Leadership Series: Strategy
Leadership Series: Strategy
Today we’re going to discuss a leadership topic of great importance—strategy. We’ll talk about the “What” and“Why” of strategy and how to apply it to your life and business. But first, a quote from legendary Japanese swordsman Miyamoto Musashi:
“Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.”
What is strategy?
Michael D. Watkins, Chairman of Genesis Advisers, in his HBR article, Demystifying Strategy: The What, Who, How, and Why, defines the subject perfectly:
“Strategy is…about how people throughout the organization should make decisions and allocate resources in order accomplish key objectives. A good strategy provides a clear roadmap, consisting of a set of guiding principles or rules, that defines the actions people in the business should take (and not take) and the things they should prioritize (and not prioritize) to achieve desired goals” (emphasis added).
More than just a mere plan, a company’s strategy arms it’s people with the ability to make guided decisions on the most important priorities of the organization when and even before, situations occur.
So, how does a strategy differ from a company’s mission, vision, or value network? Watkins continues:
“In a nutshell…mission is about what will be achieved; the value network is about with whom value will be created and captured; strategy is about how resources should be allocated to accomplish the mission in the context of the value network; and vision and incentives is about why people in the organization should feel motivated to perform at a high level.”
Why is it important?
So, with a better understanding of what strategy is and what it’s not, why is it so vitally important? The answer is short. Without a strategy, an organization becomes like one serving of butter spread over an entire loaf of bread. The limited resources and the endless possibilities leave an organization dry, bland and undesirable to consumers.
Now, we encourage you to think, “What is my company’s strategy? What principles, rules and guidelines should we establish to help us know where should we prioritize our resources, what actions we should take and what decisions we should make?”
If you feel overwhelmed, take courage from the words of Roger Martin, professor at and former dean of the Rotman School of Management:
“In strategy there is no single right answer to find. Strategy requires making choices about an uncertain future…The best strategists aren’t intimidated or paralyzed by uncertainty and ambiguity; they are creative enough to imagine possibilities that may or may not actually exist and are willing to try a course of action knowing full well that it will have to be tweaked or even overhauled entirely as events unfold. The essential qualities for this type of person are flexibility, imagination, and resilience.”
Be flexible. Be imaginative. Be resilient.
We look forward to hearing about your success!
News Flash: Gary’s New Radio Show
News Flash: Gary’s New Radio Show
After six years on the radio with Marty Schneider on 1210AM KPRZ, I am excited to announce, starting October 25th, we will be broadcasting live each week on 1170 AM KCBQ!
The past six years on the air with Marty Schneider have been amazing. We have helped countless San Diegans with their financial needs. On the show we’ve talked estate planning; wills, trusts, and guardianship. We’ve answered your financial questions and helped you plan for retirement. With more air time and now broadcasting from 1170 KCBQ, one of San Diego’s top radio stations, we look forward to connecting with even more of our friends and neighbors here in America’s finest city and beyond.
Want to tune in? We will answer your financial and estate planning questions live on our show! Here’s where to find us:
Tuesdays 5-6pm: KPRZ 1210 AM- “Word on Wealth”
and online www.kprz.com
*NEW*
Starting October 25th
Tuesdays 2-3pm: KCBQ 1170 AM
and online am1170theanswer.com
Leadership Series: Sharpen the Saw
Leadership Series: Sharpen the Saw
As we discuss the topic of leadership it might be easy to become overwhelmed with a list of skills, capabilities and practices of effective leaders; enough to make us put our feet to the floor more hours each day and more days each week. But today we’ll discuss another essential and even invaluable habit of great leaders. This is what the famous Dr. Stephen R. Covey calls “sharpening the saw.”
Abraham Lincoln, an experienced axman, taught a powerful life lesson that illustrates well this idea when he said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”
In other words, you can hack at a tree for hours on end and make very little progress despite much hard work. Or you can make the investment to sharpen your saw, which also may take some time and effort but your effort in felling the tree will return true productivity and real results.
Following are the four main areas that Stephen Covey, author of the famous 7 Habits of Highly Effective People, suggests we focus on and under each are suggestions on how to “sharpen the saw.”
Physical: Beneficial eating, exercising, and resting
Social/Emotional: Making social and meaningful connections with others
Mental: Learning, reading, writing, and teaching
Spiritual: Spending time in nature, expanding spiritual self through meditation, music, art, prayer, or service
Covey writes:
“Feeling good doesn’t just happen. Living a life in balance means taking the necessary time to renew yourself. It’s all up to you. You can renew yourself through relaxation. Or you can totally burn yourself out by overdoing everything.”
So now it’s your turn to sharpen your saw. Pick an area, invest some time and watch how you come back to the tree, ready to bring it down. Enjoy!