Staff, Clients and Friends of the Firm can check here for regular updates on the status of the firm in the face of the fires and evacuations affecting our area. For information about areas under mandatory or recommended evacuation, go to Ventura County Fire Information.

As a precaution to ensure the safety of our clients’ files and other materials, we have removed all essential documents from the office on Thousand Oaks Boulevard. Most clients’ original signed documents are stored at our off-site fire-protected storage facility. The few files that we were working with actively at the office have all been removed from our Westlake Village located to safe locations away from the fire. All electronic files have been saved to our remote backup system.

Currently, the firm is in an “Area of Concern” under voluntary evacuation with mandatory evacuations nearby, as shown on the map from the Los Angeles Times.

We invite those clients of the firm who are facing evacuation or who have family members serving in the fire department to contact Diedre by email for legal and logistical assistance. Clients and others who have space or other resources to offer to evacuees may likewise contact diedre@wachbrit.com .

“When Jessie O’Neill was 28, her mother died unexpectedly, leaving her with a windfall of more than $2 million and absolutely no clue how to handle it.”

Her inheritance triggered every parent’s nightmare:

“It took her three years of booze, cocaine and wild living in Miami before she got a grip and found advisers she could trust to do the financial work that was beyond her ken. By then, her marriage was history.”

Take a peek inside the world of a child who inherits more money than she is prepared to handle in an article published today on the web. How to Leave Your Kids a Healthy Inheritance does a great job of acknowledging the plight of inheritors, whose problems are rarely taken seriously. After all, wouldn’t we all want to have a couple of million dollars free and clear? But for many kids it’s a curse in the disguise of a blessing.

“Your relationships change so drastically,” O’Neill says. “You go from whatever normal life you had to people wanting to hang around you for all the wrong reasons. Relatives want to borrow money. If you have not been prepared, you just don’t handle any of those situations well, and you make poor choices.”

As the article highlights, you can plan to protect and guide your children when you are not there to help them. The first step is to realize just how much money your kids are likely to receive upon your death. Almost all clients we’ve worked with have underestimated the money that will go to their kids; often because they fail to consider life insurance death benefits from private policies and employer-provided policies.

Multi-million dollar inheritances are not just for Rockefellers. To an 18 year old, even $300,000 may seem like enough wealth to retire immediately: “no need for college!” (Many people don’t realize that the plan created by the State of California (the “Do Nothing” plan that you have now if you haven’t taken steps to create something better) turns all of your money over to your kids at age 18.)

Note for Firm Clients Only: If you wish to hold a Family Meeting with your kids (these work best when the kids are at least 18; we don’t want to scare younger kids with their parents’ mortality) to discuss how their estate plan protects them, please call Linda Pohlman at the office to schedule a meeting at (805) 778-0600.

The credit reporting agencies are now required to provide you with a free copy of your personal credit report upon request (up to once a year). It’s a great idea to check your credit report every year because you can spot mistakes, identify credit rating issues, and catch fraud or identity theft. To check even more often, spread the three reports available over the course of a year by checking just one at a time instead of all three at once.

The free report does not include your credit score, which you can purchase for $5 to $8 depending upon which agency you buy it from.

To obtain your free reports, go to http://www.annualcreditreport.com/.

The firm’s office is no longer in a voluntary evacuation area. We will have limited staffing today due to the poor air quality at the office but will be open today and resuming full staffing tomorrow, Saturday.

However, email service has been affected by the fires and may result in delays in our receipt of your emails and response to them.

Above, an image of the burned areas from the Los Angeles Times.

For great up-to-date maps of the fire areas anywhere in California, check out California Wildfire Information.

Nolo Press, publisher of a wide array of self-help books, has recently released Special Needs Trusts: Protect Your Child’s Financial Future by Stephen Elias. Not a specialist in this area, Attorney Elias has written a number of books for Nolo on a wide range of legal topics including How to File for Chapter 7 Bankruptcy, Getting Paid: How to Collect from Bankrupt Debtors, The Independent Paralegal’s Handbook: Everything You Need to Run a Business Preparing Legal Paperwork for the Public, and Collect Your Court Judgment (How to Collect When You Win a Lawsuit), A Dictionary of Patent, Copyright and Trademark Terms, and The Living Together Handbook.

While the book provides a user-friendly overview and can be helpful in illustrating the effects of inheritances and income on government benefits, it has a number of serious shortcomings.

The shortcomings are perhaps related to the limited target audience of the book: people with small special needs trusts. Of sixteen examples that mention specific dollar figures, not one is over $300,000. The average example cited has less than $125,000 in it.

The book is filled with warnings including the repeated suggestion that readers keep up with legal changes and may want to work with a lawyer to do so. It also mentions the fact that trusts should take account of the many differences between states.

The author also acknowledges several situations where the Nolo boilerplate trust won’t work, most notably:

• If you want the trust to be able to receive gifts from other members of your family
• If your child has money of his or her own (such as from an inheritance or settlement)
• If you want to customize your trust in any way. Nolo says don’t change the trust language at all.
• If you want to name a corporate trustee in your trust (always a good idea at some point in your child’s life because most of the people that you think will be good trustees will be too old to take care of your child long after you are gone).

Unfortunately for readers, the author fails to acknowledge many other situations where the trust won’t work. Here are a few of the traps for the unwary that the author does not warn the reader about.

• Many worthy pooled trusts that are available only through attorneys
• The Nolo boilerplate trust includes avoidable risk that trustee will foolishly terminate the trust while your child still needs it
• Your child cannot benefit from your retirement accounts such as IRAs and 401(k)s using the Nolo trust without negative (and perhaps severe) consequences for taxes and benefits eligibility.

The Nolo boilerplate trust is a scant 6 pages. The trust I created for my own brother is 65 pages. I didn’t make it long as an excuse to write late into the night every night. It’s long because it’s complete.

When the author acknowledged that “Almost without exception, special needs trust lawyers think people shouldn’t create special needs trusts themselves,” I was left to wonder why readers would scrimp on the one tool that will provide for their child’s lifetime care after they are gone and can do nothing more for that child.

Lots of action is expected at the federal level on estate and gift taxes over the next few weeks. While few expect full reform, a compromise bill that gives us predictability may be possible. However, the compromise may include the end of certain awesome planning techniques. One of the strategies in danger is the Tax-Free Forever Trust that I told our firm’s Client Care members about earlier this year.

Until Congress acts, you can put money into a trust that will never ever be subject to estate tax and that can last forever – just like the Rockefellers and Kennedys did before Congress imposed the Generation-Skipping-Transfer Tax.

It works because you can put a limited amount of assets into a trust that is exempt from Generation-Skipping-Transfer Tax. And as long as you invest it in the right trust (not your revocable living trust) before Congress changes the law, that money will always be exempt. Forever. Within 3 generations, no matter what rate of return you assume the money gets, your family will have six times more money than if you had not protected it from tax.

The Congressional proposal will impose a limit on how long the trust can be exempt from Generation-Skipping-Transfer, Estate and Gift taxes, limiting this technique only to those who took advantage of the strategy before Congress acted.

If you’ve been thinking about using the legal and effective technique for your grandchildren and great-grandchildren, now is the time to learn more. If your parents are regularly gifting money to you or your kids, talk to them about this strategy soon.

To learn more, call our office for a memo on the technique.