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LONICH PATTON EHRLICH POLICASTRI
1871 The Alameda, Suite 400, San Jose, CA 95126
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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Estate Taxes Cause Some to Plan their 2010 Death
/in Estate Planning /by Michael LonichEstate Taxes Cause Some to Plan their 2010 death.
Recently the AP press reported, U.S. Rep. Cynthia Lummis says her constituents are planning to die just to avoid estate taxes.[1] Currently, there is no estate tax for individuals who pass away in the year 2010. However, if legislators do not act quickly then the estate tax will revert back to a one million dollar exclusion with a 55% top rate. Many had speculated with recent current events that Congress would not be able to pass any estate tax legislation prior to the November elections. Now that the November elections are finished, it is hopeful that some guidance will be given to the future of estate taxes.
Sometimes the Estate Tax is nicknamed the Death Tax. In reality the tax is imposed on the inheritance of wealth. For much of the country a one million dollar exclusion is generally enough to exclude their inheritances from being taxed. However, in the Silicon Valley area where detached single family homes are nearly a million dollars this exclusion can be used up rather quickly.
Bay Area Estate Value Much Higher then Average
Take for example, an estate valued at $1.5 million dollars. Although mere mention of the word million suggests this is not the type of estate that affects the majority of the population. It is actually very common in the Bay Area. Home values in the Bay Area are much higher than national average values. In a recent report, Cupertino, CA median home value is over $1,000,000.00. The median home value in Sunnyvale, CA is reportedly over $750,000.00. Since the value of a home is much more in California the one million dollar exclusion does not allow for much of the estates to transfer without tax.
Practical Calculation How Estate Tax is Applied
To calculate the Estate Tax on $1.5 million dollar estate, we must examine the Estate Tax Tables below.
In 2010, the estate would incur no estate tax and the inheritance would be the full 1,500,000.00.
In 2011, the estate would have a $1,000,000.00 exclusion, and the balance would be taxed. The table below shows my tax calculation on a $1,500,000.00 estate in the year 2011.
In 2010, the estate would be free of estate tax but in 2011 the estate tax would be $210,000.00. Estates of even higher values would have even more drastic tax differences in 2011. Simply put a 2 million dollar estate would have to pay nearly a million dollars in estate taxes.
This is only a theoretical computation and many people are hopeful that Congress will pass new estate tax legislation, while others argue that estate tax relief is not an important issue. Although there is no way to be certain if Congress will act, many believe that the only certain thing in life is death and taxes. However, no one says that you have to pay the maximum tax rate. In fact, each individual is permitted a $13,000.00 gift tax exemption per year. That is only one of the many ways an attorney can assist in your estate planning.
For more information about Estate Planning, please contact us. 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.
[1] CHEYENNE, Wyo. (AP) — U.S. Rep. Cynthia Lummis says some of her Wyoming constituents are so worried about the reinstatement of federal estate taxes that they plan to discontinue dialysis and other life-extending medical treatments so they can die before Dec. 31. The Associated Press: US rep.: Estate tax rise has some planning death, http://www.google.com/hostednews/ap/article/ALeqM5iE6x5QNARlHHqT8EKF-KUYWflVpg?docId=01c363eeccd542fe9dc9f9742699686b (last visited Nov. 4, 2010).
Legal Separation vs. Annulment vs. Dissolution
/in Family Law /by Julia LemonWhen spouses wish to terminate or alter their marital status, they have three options for doing so- legal separation, annulment or dissolution. If spouses choose annulment or dissolution, the marriage is terminated and the spouses become single persons. If they opt to obtain a legal separation, the marital status is not terminated and they are unable to remarry unless or until the marriage is terminated by a later judgment of dissolution; however, legal separation does deal with property rights, child/spousal support, and custody and visitation issues.
Dissolutions terminate existing marriages on grounds arising after the marriage (such as irreconcilable differences). In contrast, annulments are based on the theory that no valid marriage ever occurred (i.e., the marriage was void or voidable (incestuous, bigamous, induced by fraud, one party was under the age of consent, etc.). It can be difficult and/or costly to prove these grounds.
Generally speaking, people who choose legal separation rather than dissolution do so for religious or other personal reasons, such as retaining eligibility for medical insurance that would otherwise be lost by a termination of the marriage.
If you are considering terminating your marriage, please contact Lonich & Patton to set up a free 30 minute consultation with an attorney to discuss which option may be right for you.
Do’s & Don’ts of Status Only Dissolution
/in Family Law /by Gina PolicastriUnder California Family Code Section 2337, a party may obtain what is called a “Status Only Judgment,” which is a judgment that terminates the marriage only, leaving all other issues (division of property, support, custody) to be decided at a later time. The most common reason that a party seeks a status only judgment is because that party wants to remarry. In other cases, the reason is psychological: a party feels that obtaining the divorce will help them move on from the relationship. Whatever the reason may be, it is important to understand the serious consequences that stem from a status only judgment.
1.Loss of Health Care Coverage: Once you are divorced, you are no longer eligible for health care benefits as a “spouse” under your spouse’s employer-sponsored health care plan. The cost of COBRA or an individual heath care plan can be astronomical. If you have any pre-existing conditions or current illness, it may be wise to wait for all issues in the case to be resolved to lengthen the time for which you are eligible under your spouse’s plan. If your spouse demands the status only, he or she will have to agree to continue coverage at his or her own cost until the divorce is final.
2.Loss of Surviving Spouse Retirement Benefits: Similarly, once you are divorced, you are no longer considered a “surviving spouse” for purposes of surviving spouse retirement plan benefits. Accordingly, it is critical that you obtain a Qualified Domestic Relations Order preserving your rights in the retirement plan before agreeing to the status only.
3.Application of Probate Rules: Should your spouse die at any point after the status only but before the final judgment that divides the community estate, the probate code, not the family code, will apply. This could mean the loss of your rights in property that is held in the deceased party’s name alone even if it would otherwise be a community property asset by virtue of the date of purchase or other agreement between the spouses.
These are just a few of the possible consequences of a status only judgment. In recognizing these and other significant consequences, the legislature recently modified the statute governing status only judgments to provide more protection for the spouse whose rights are adversely affected. Typically, the party seeking the status only will be required to “indemnify and hold harmless” the other party; this means that should there be any adverse consequences as a result of the status only, the requesting party will be required to pay for any such losses incurred by the other party.
Proactive Steps to Take if You Are Contemplating Divorce
/1 Comment/in Family Law /by Julia LemonIn California, both spouses have fiduciary duties towards one another that require them to act in good faith in their dealings with each other and to disclose all material facts and information regarding community assets and debts. While there are several formal and informal methods of obtaining necessary information from the other party during a divorce, being proactive can cut down on the amount of time and expense needed to evaluate and prepare your case. The Minnesota Divorce and Family Law Blog has a helpful list of documents to gather upon deciding to file for divorce. Specifically, it suggests gathering:
1.Copies of financial statements;
2.Copies of tax returns;
3.Copies of computer hard drives;
4.Copies of insurance policies;
5.Copies of wills and/or trusts;
6.Inventory of safety deposit boxes, with a witness;
7.Copies of deeds and/or titles to real property;
8.Copies of small business ledgers, financial journals, payroll, sales tax returns and expense account records;
9.Copies of appraisals for art, antiques, jewelry and collectibles;
10.Record the contents of each room in your home through video;
11.Copies of retirement account statements; and
12.Copies of your spouse’s pay stubs for the last few months.
http://www.mnfamilylawblog.com/2009/12/articles/contested-divorce/staying-ahead-of-the-curve-12-proactive-steps-to-take-if-you-are-contemplating-divorce/
North Carolina Woman Awarded $9 Million from Husband’s Mistress
/in Family Law /by Mitchell EhrlichSuspecting her husband of 32 years was having an affair, Cynthia Shackelford of North Carolina hired a private investigator who confirmed her fear: her husband was involved in a longstanding liaison with a woman whom he’d met at a local college. Shackelford took legal action, suing her husband’s mistress for “alienation of affection.” She won, and was awarded $ 9 million in damages. Shackelford says the lawsuit wasn’t about the money; it was about sending a message.
The little-known law, which doesn’t exist in California or 42 other states, allows for aggrieved spouses to bring a claim in civil court – separate from family law proceedings – against third parties who knowingly have an affair with a married person. Generally, the plaintiff in such actions must show: 1) the marriage entailed love between the spouses in some degree; 2) the spousal love was alienated and destroyed; and 3) the defendant’s malicious conduct contributed to or caused the loss of affection.
Critics of “alienation of affection” and similar laws consider them to be archaic relics of a bygone era. Jacob Appel of Huffington Post describes them as “vestiges of legal codes that also prohibited divorce and criminalized premarital sex, … a consummate example of the sort of private controversies in which the government has no business meddling.” Likewise, some attorneys feel that such laws unnecessarily escalate family law proceedings and are inconsistent with the policies behind “no fault” divorce, which seek to minimize inquiry into the he-said-she-said interpersonal drama that is often behind the breakdown of marriage. Nevertheless, a handful of states still have “alienation of affection” laws on the books, something to make would-be-marriage-meddlers think twice.
Sources: People Magazine, Huffington Post