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Phone: (408) 553-0801 | Fax: (408) 553-0807 | Email: contact@lpeplaw.com
LONICH PATTON EHRLICH POLICASTRI
Phone: (408) 553-0801
Fax: (408) 553-0807
Email: contact@lpeplaw.com
1871 The Alameda, Suite 400
San Jose, CA 95126
Located in San Jose, Lonich Patton Ehrlich Policastri handles matters for clients in northern California, specifically San Jose and Silicon Valley. Our services are available to anyone within the following counties: Santa Clara, San Mateo, Contra Costa, Santa Cruz, Monterey, San Benito, and San Francisco. For a full listing of areas where we practice, please click here.
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Tennessee Supreme Court Prohibits Lifetime Alimony for Ex-Spouse
/in Family Law /by Mitchell EhrlichOn September 16, 2011, the Supreme Court of Tennessee held that a woman who earned $72,000 a year was not entitled to lifetime alimony (permanent alimony) from her higher-earning ex-husband.
In Gonsewski v. Gonsewski, 2011 WL 4116654 (Tenn. Sept. 16, 2011), Johanna and Craig were married for twenty-one years with two adult daughters. Johanna earned $72,000 a year in an IT position and Craig earned more than $137,000 a year as an accountant. At the trial level, the court declined to award spousal support of any type to either party. The Court of Appeals reversed the trial court’s judgment and ordered the husband to pay the wife lifetime alimony in the amount of $1,250 per month until her death or remarriage. The court reasoned that, although there was no need for economic rehabilitation given that Johanna was a college graduate and had a steady career, alimony in futuro was ‘necessary to mitigate the harsh economic realities of divorce’ due to the disparity in the parties’ incomes. Craig appealed.
The issue before the Tennessee Supreme Court was whether permanent alimony should be awarded to a spouse who has a college degree, good health, a stable work history in a relatively high paying job, and a lack of demonstrated need for such long-term alimony. The court reversed the appellate court decision, noting that it is unlikely that both parties will be able to maintain their pre-divorce lifestyle given two persons living separately incur more expenses than two persons living together and there was no abuse of discretion by the trial court. Thus, Johanna should not be awarded permanent spousal support.
This decision affirmed Tennessee’s traditional analysis of considering both ability and need in making permanent alimony determinations. While Craig may have had the ability to pay lifetime alimony, Johanna did not have the need. In California, courts consider need and ability to pay when setting temporary spousal support, which may be ordered after separation pending trial. However, when setting permanent spousal support, the court must consider approximately fourteen statutory factors, including need and ability to pay, when determining permanent spousal support. As such, it is likely that the Gonsewski case would have been similarly decided in California grounds given the higher standard provided by the fourteen factors set forth in section 4320.
The Certified Family Law Specialists* at Lonich Patton Erlich Policastri have decades of experience handling complex and heavily disputed divorce and support issues. If you are contemplating divorce, please contact the Certified Family Law Specialists* at Lonich Patton Erlich Policastri, who can provide you with an in depth analysis of your issues. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
*Certified Family Law Specialist, The State Bar of California Board of Legal Specialization
Update: Gifts to Caregivers Prohibited
/in Estate Planning /by Michael LonichRecall that gifts to caregivers are generally prohibited by law under California Probate Code section 21350. (See blog: Gifts to Caregivers Prohibited noting what activities constitute “caregiving”). However, section 21351, enumerates several exceptions to this general rule. One of the exceptions—found in Section 21351(a)—provides that section 21350 does not apply if the transferor is related by blood or marriage to, is a cohabitant with, or is registered as a domestic partner of the transferee. Cal. Prob. Code § 21351(a) (West). The issue in a recent California case was whether this provision applied to a stepdaughter by marriage.
In Hernandez v. Kieferle (October 31, 2011), the Second Appellate District of California reviewed a probate court decision which invalidated an amendment to a trust designating stepdaughter Claudine Kieferle as the trustee and sole beneficiary of her stepmother Gertrude’s estate. The designated beneficiary of a prior amendment, Gertrude’s next-door neighbor Florentina Hernandez, challenged the validity of the second amendment removing her as the trustee and principal beneficiary of the estate. The probate court found for Florentina noting that section 21350 established a presumption that transfers to care custodians are the product of fraud, duress, menace, or undue influence and, since Claudine lived with Gertrude and cared for her in the evenings, Claudine was disqualified from taking under the trust.
In reviewing the lower court ruling, however, the Appellate Court reversed this decision and concluded that it was an error not to apply the exception found in section 21351(a). The Court rejected the argument that the exception did not apply to Claudine because she was not an “heir”—where her stepmother’s estate did not actually contain property attributable to her father (who passed away eleven years prior)—and found that a person is the transferor’s heir if some intestate rule identifies the person as the transferor’s successor, regardless of whether the transferor’s estate includes the type of property distributed under the rule. Therefore, the section 21351 exception applied and the second amendment was deemed valid allowing Claudine to remain as the trustee and sole beneficiary of Gertrude’s estate.
If you are interested in learning more about making amendments to a trust or creating an estate plan, please contact the San Jose estate planning attorneys at Lonich Patton Erlich Policastri, LLP. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
2011 Tax Laws Affecting the Inheritance of Real Property
/in Estate Planning /by Michael LonichIn 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act (Tax Relief Act) of 2010 extended the sunset of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) for two years through 2012. For those who may be inheriting real property in 2011, it is important to note that the “step up in basis” rules will remain through 2012.
In order to adequately explain what this concept entails, here is an example from the Wall Street Journal:
Suppose your Uncle Joe died earlier this year and left you some valuable stocks, bonds and other items. Those assets have risen in value over the years. You’re thinking of selling them to buy a new home or to invest in something else. How would you figure out your tax cost for capital-gains tax purposes?
Typically, your tax cost is the fair market value of the assets on the date your uncle died — or, in certain cases, their value six months later. That means you don’t have to worry about figuring out what Uncle Joe originally paid for them. You don’t have to rummage through his old records or search the Web.
All that should matter is their fair market value on the date he died (or, in certain cases, six months later). This is known as “step up in basis” because your tax basis on those appreciated assets typically gets stepped up to the date-of-death value.
The General Basis Increase (the sum of the aggregate basis increases) is the maximum allotted amount the Tax Code will allow to be “stepped up.” The EGTRRA of 2001 preserved the step up in basis for up to $1.3 million dollars (plus an additional $3 million for assets given to a spouse) through 2010. Then the Tax Relief Act of 2010 extended the EGTRRA to 2012. Thus, the General Basis Increase for 2011 will remain at $1.3 million, and if assets are given to a spouse, up to $4.3 million. Therefore, if the value of assets inherited totals more than $1.3 million, assets beyond that sum will not be “stepped up.”
While creating an estate plan, it is always important to consider tax consequences on the estate, any named beneficiaries, and the planner himself. Any named beneficiaries who have an interest in real property should also be aware of the taxes they will be responsible for after inheriting real property. The Tax Code is intimidating and daunting; however, the Estate Planning Attorneys at Lonich Patton Erlich Policastri can help clarify the process. If you are interested in learning more about taxes on your estate plan or how you may be affected by receiving an inheritance, please contact the experienced estate planning attorneys at Lonich Patton Erlich Policastri for further information. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
Gifts to Caregivers Prohibited
/in Estate Planning /by Michael LonichAn estate plan may be created to do almost anything a person desires. For example, a will can distribute the decedent’s personal and/or real property; passing on specific items to a relative, friend, or organization. A trust can hold specific property or funds for a designated beneficiary; any and all terms of which may be determined by the trustor. While drafting these estate planning documents, it’s important to keep in mind restrictions that state laws impose on to whom transfers can be made. In California, an important restriction is outlined in Probate Code section 21350.
Section 21350 outlines California’s limitations on transfers to “drafters, care custodians, and others.” Specifically, provisions that make donative transfers (i.e. gifts) to (1) the person who drafted the instrument, (2) any person who has a fiduciary relationship with the transferor, or (3) a care custodian, among others, are strictly prohibited. Despite the statute’s clear restrictions, there have been issues relating to who exactly qualifies under these categories. In Estate of Austin, 188 Cal. App. 4th 512 (2010), the Fifth District California Court of Appeal needed to decide whether a former stepdaughter should be considered a “care custodian” under the statute and thus disqualified from receiving gifts. The former stepdaughter took her former stepfather to his doctor appointments, prepared meals for him, and helped out whenever she could after he broke his hip and while he recovered from triple bypass surgery. Decedent’s daughter filed a lawsuit seeking to disqualify her former stepsister from receiving gift transfers totaling about $185,000.
Earlier in the case, the Fresno County Superior Court ruled that the gifts to the former stepdaughter were valid. The Appellate Court affirmed. A care custodian is defined by California case law as someone who provides care or services to elders or dependent adults, whether paid or as a result of preexisting personal friendship. Health or social services were defined as including cooking, gardening, running errands, assisting with banking, and driving to doctor’s appointments. The Appellate Court found that the former stepdaughter’s “services” could not be reasonably characterized as providing substantial, ongoing health or social services and she was thus not a care custodian. Further, the decedent made the gift transfers to the former stepdaughter while he was residing in a nursing home, when the former stepdaughter was not providing any services to him. Therefore, the gift transfers were valid and the former stepdaughter was not disqualified from receiving them.
Statutes do not always clearly define who falls into certain categories, the courts are able to make decisions based on specific factual scenarios. If you care for an elder relative and think you may be considered a care custodian, an attorney can help clarify what, if any, impact this may have on your ability to inherit from that relative. If you are interested in learning more about individual gift transfers or estate planning, please contact the San Jose estate planning attorneys at Lonich Patton Erlich Policastri, LLP. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
No-Contest Clauses in Trusts
/in Estate Planning /by Michael LonichTrusts are incredibly useful estate planning instruments (see Testamentary versus Inter Vivos Trusts blog). They can be drafted and administered in almost any way you want; they can even protect your heirs’ inheritance from creditors (see Spendthrift Clauses blog). Another useful way to ensure that your estate is administered in a particular way is to include a “no-contest” clause in your estate planning documents.
A no-contest clause is a “provision in an otherwise valid instrument that, if enforced, would penalize a beneficiary for filing a pleading in any court.” California Probate Code sections 21310-23315 govern these provisions and define a contest as a “pleading filed with the court by a beneficiary that would result in a penalty under a no-contest clause, if the no contest clause is enforced.” The Probate Code also defines a “direct” contest, which, if brought with probable cause (as defined by statute) does not violate the no-contest clause.
Direct contests allege the invalidity of a protected instrument or one or more of its terms based on forgery; lack of due execution; lack of capacity; menace, duress, fraud, or undue influence; revocation of a will by statute; and/or disqualification of a beneficiary by statute. However, it is important to note that a no-contest clause will only protect the instrument containing the no-contest clause and other instruments only if they were already in existence and expressly identified in the no-contest clause. Accordingly, it is important to consult an experienced estate planning attorney to ensure your estate is protected from contests.
If you are interested in learning more about estate planning and protecting the administration of your estate, contact the San Jose estate planning attorneys at Lonich Patton Erlich Policastri, LLP. Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results. While this post may include legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.