Estate Planning Archives - Page 13 of 22 - Lonich Patton Ehrlich Policastri

Who gets the family pet in a divorce?

October 27, 2014/in Estate Planning, Family Law /by David Patton

If I had to ask you to put a price on your dog, cat or your pet hermit crab, could you? For some, perhaps they could but the vast majority would likely agree that their pets are priceless. However, disputes regarding who gets the family pet in divorce proceedings has become commonplace in family law.

Earlier this year, Melanie Griffith and Antonio Banderas made a statement that they were ending their two-decade marriage but vowed to remain friends and to move forward lovingly. However, shortly after, reports surfaced that a custody battle was flaring up – not over their 17 year old daughter, but over the couple’s three dogs.

Although these days some people treat their pets better than their own children, in the eyes of the law pets are still only considered the property of their owners, much like their furniture is[1]. Legal experts agree that pet owners invest hundreds sometimes thousands of dollars and hours researching proper training, good food choices, and the perfect toys, groomers and veterinarians for their pets. Those same individuals might also take precautions with their estate by writing a prenuptial agreement. But how often do those pet owners think about legal issues associated with pet ownership?

Family law attorneys agree that the best way to handle a situation with a pet is to put it in a prenup. If you came into your relationship with Maxwell, put it in writing that if you are to leave the relationship Maxwell is coming with you. If you and your significant other purchased a pet together during the relationship, but you both agree that one of you should have the pet in the event of a breakup, a post-nuptial agreement would make sure that in the event of a divorce or separation the pet would go with the spouse more bonded with the animal.

Without something in writing, trouble could land you arguing in court. Last year a New York judge granted a divorcing couple the right to engage in oral arguments over pet custody for the first time in the state’s judicial history. The landmark legal showdown was ultimately averted. The couple settled out of court.

In the event of a heated breakup, pets can be protected. If a party feels that he/she and the pet is in danger at the hands of the other party, California law provides for the family pet to be included on a protective order. Since 2008, courts have had the ability to make an order that the restrained person stay away from the pet. Family Code Section 6320 provides that upon a showing of good cause, the court may include in a protective order a grant of the exclusive care, possession, or control of any animal owned, possessed, leased, kept, or held by the spouse or minor child resident in the residence.

Family Code section 6320 makes strides toward addressing the established connection between animal abuse and family violence commonly referred to as the “Link.”[2] One of the first studies that described this Link found that of a survey of women with pets who had entered a shelter in northern Utah, seventy-one percent reported that their partner had threatened or actually hurt or killed one or more of their pets.[3]Another study of fifty of the largest shelters in the United States found that eighty-five percent of battered women and sixty-three percent of children with pets had experienced incidents of pet abuse.[4] An alarming consequence of these studies is that victims may feel that they cannot leave their abuser because they worry for the safety of their pets.

The Certified Family Law Specialists at Lonich Patton Erlich Policastri have decades of experience handling complex family law matters. If you are interested in learning more about prenuptial or post-nuptial agreements, please contact the Certified Family Law Specialists 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.

[1] Kimes v. Grosser (2011) 195 Cal.App.4th 1556

[2] Am. Humane Ass’n, Learn About the Link, http://www.americanhumane.org/site/PageServer?pagename=lk_about (last visited Aug. 4, 2007); see also Senate Judiciary Committee, Committee Analysis of SB 353, at 2-5 (Mar. 27, 2007) (explaining the connection between animal abuse and family violence). There are also several studies that report that children who witness abuse, or are abused themselves, tend to, in turn, abuse animals. See Phil Arkow & Tracy Coppola, Expanding Protective Orders to Include Companion Animals 5 (2007), http://www.americanhumane.org/site/DocServer/PetsinPO2007.pdf? docID=5061 (describing the harmful effects upon children of witnessing domestic violence).

[3] Frank R. Ascione, Battered Women’s Reports of Their Partners’ and Their Children’s Cruelty to Animals, 1 J. Emotional Abuse 119, 125 (1998).

[4] Frank R. Ascione et al., The Abuse of Animals and Domestic Violence: A National Survey of Shelters for Women Who are Battered, 5 Soc’y & Animals 205, 211-12 tbl.1 (1997), available at http:// www.syeta.org/sa/sa5.3/Ascione.html.

Estate Planning Lessons from Robin Williams

August 22, 2014/in Estate Planning, In the Community, Probate /by Michael Lonich

As many of us mourn the loss of this great comedic genius, new information is still coming forward about Robin Williams. According to ABC News, with more than half of his movies portraying Williams as the leading man, his movies grossed over $6 billion throughout his career. While he was paid $165,000 per episode for his one season of The Crazy Ones, it is unclear whether he returned to television because of alleged “bills he had to pay” following his two divorces.

Robin Williams is survived by his third wife, Susan Schneider, who was married to him for 3 years, and his three adult children from his prior two marriages whose ages range from 22 to 31. The question for them now is what was the state of his financial affairs when he passed away?

While it appears from public record that Williams left real estate with equity of around $25 million behind, it is unclear what else he left for his heirs. What is clear, however, is that Williams appeared to have several estate planning documents which will be invaluable to his family. These include two different trusts. The first is the “Domus Dulcis Domus Holding Trust” (Latin for “home sweet home”). TMZ also reported that someone had leaked a copy of a different trust, which Williams created in 2009. This would have been while Williams was in the middle of his divorce from his second wife, Marsha Garces.

This trust reportedly named his three children as beneficiaries, splitting their trust funds into three equal distributions for each of them, set to pay out when they reach ages 21, 25, and 30. While the Domus Dulcis Domus Holding Trust appears to have been done to minimize estate taxes, this second trust accomplishes the goals of safeguarding privacy for Williams and his family since trusts avoid probate, keeping his affairs private (as long as they are not leaked to the media).

If you would like to learn more about trusts or avoiding probate in general, call Lonich Patton Erlich Policastri to schedule a free half-hour consultation. Our attorneys are passionate about estate planning and have decades of experience handling complex estate planning matters, including wills and living trusts. If you are interested in developing an estate plan or reviewing your current estate plan, contact the experienced estate planning attorneys at Lonich Patton Erlich Policastri for further information.

Tax and Estate Planning for Same-Sex Couples

August 1, 2014/in Estate Planning, In the Community, Probate /by David Patton

Earlier this week, the U.S. Court of Appeals for the 4th Circuit struck down Virginia’s same-sex marriage ban, saying that withholding the fundamental right to marry from same-sex couples is a form of segregation that the Constitution cannot tolerate.

In June 2013, the Supreme Court of the United States in United States v. Windsor, held that the federal government must recognize same-sex marriages and that it is up to state Legislatures to define marriage within state boundaries. Since then, numerous law-suits challenging the constitutionality of state DOMAs on equal protection and due process grounds have prevailed in various federal and state courts. Currently, 19 states, including California, plus the District of Columbia recognize same-sex marriage (recognition states), while 40 states prohibit it (non-recognition states).

The prevailing prediction is that a Supreme Court guarantee of a right to marriage is on its way. American support for same-sex marriage is at a new high of 55 percent, and California support is at 61 percent and increasing, if the trends continue. It is important for all couples to create an estate plan. Additionally, it is important for same-sex couples to be aware of the potentially complicated issues that arise when they move across state lines.

Same-Sex Couples Living in California

Same-sex married couples now living in California enjoy the same benefits and burdens under state and federal law as married opposite-sex couples. Before Windsor and IRS Revenue Ruling 2013-17 (which extended federal tax benefits to married same-sex couples, regardless of their state of residency), many married opposite-sex couples likely took this preferential treatment for granted.

Some of these benefits include:

Property transferred between spouses incident to a divorce is not subject to income or gift tax;
Spousal support (alimony) payments are tax deductible to the paying spouse;
Child support payments are not subject to income tax;
Spouses receive a community interest in 401(k) accounts and other retirement plans; and
Spouses receive all community property and anywhere from one-third to all of the deceased spouse’s separate property for intestate (when a person dies without a will or other non-probate instrument) inheritance purposes.

All couples should be aware of their legal rights at marriage, divorce, and death. It is important for both same-sex couples and opposite-sex couples to consider pre-marital agreements, estate plans, and any tax consequences that arise from marriage or divorce.

The Marital Status of Migrating Same-Sex Couples

When a same-sex couple moves out of California, their marital status will depend on the other state’s law with regards to various issues including, state tax filing status, intestate succession, guardianship and conservatorship appointments, and adoption and artificial reproductive technologies. In other words, a non-recognition state may not recognize the otherwise valid same-sex marriage.

If and when the Supreme Court guarantees a right to marriage, moving across state lines will no longer be an issue for same-sex couples. However, in the interim, it is important to be aware of the possible legal consequences.

For example, under Florida law, the definition of “heir” does not include same-sex spouses for intestate inheritance purposes. This means that a same-sex couple that was married in California, but permanently living in Florida, will not inherit from each other under the Florida intestate system. Some courts in non-recognition states are willing to recognize same-sex marriage in certain contexts through the doctrine of comity, which is where a court gives deference to another state’s laws. However, most surviving spouses want to avoid litigation because it can be a headache, requiring time, money, and mental energy.

In some cases, it might be worthwhile for same-sex spouses to opt out of the intestate system with non-probate instruments, such as estate plans. A same-sex couple’s estate plan needs to be drafted with precision, specifically naming beneficiaries, rather than using general terms such as “spouse.” This becomes especially important if a same-sex couple moves to a non-recognition state, where the court may not interpret a same-sex spouse to qualify as a spouse or heir. If any other blood related heirs of the deceased spouse were to contest the non-probate instrument, they could end up inheriting property that would have gone to the same-sex spouse in California or another recognition state.

If you are a same-sex couple and are considering marriage, or need to create or update an estate plan, please contact our California Certified Family Law Specialists. Our attorneys have decades of experience handling complex family law and estate planning matters and offer a free consultation.

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.

Your Business Exit strategy should start today

July 15, 2014/in Business Law, Estate Planning /by Michael Lonich

If you draft a will in order to ensure that your heirs are taken care, developing a business succession plan will ensure your company continues to thrive after you are gone.

As the economy slowly emerges from the shadow of The Great Recession of 2009, businesses are also starting to thrive again. While storefront businesses are still a staple of the American dream, use of the internet and the relatively low cost of creating a website and selling a unique product or idea has lowered the barrier to entry for entrepreneurs who wish to start a family business.

If you own or are starting a family business, you are in good company: Forbes estimates that family businesses account for 50 percent of the current Gross Domestic Product in the U.S. This includes 35 percent of Fortune 500 companies (the top 500 U.S. publicly and privately held companies ranked by their gross revenue and published by Fortune magazine) that are controlled exclusively by families.

However, there is a problem with the family business model. According to a Pricewaterhouse Coopers survey, only 52 percent of family businesses expect members of the next generation to be able to run their business. Junior members lack of experience for running a company coupled with poor succession planning are the main culprits.

Get a Prenup for Your Business

If a premarital agreement can reduce headache and anxiety in the event of a divorce, then a similar mechanism for a family business – labeled a Shareholder’s Agreement* – will reduce anxiety and hard feelings when it becomes necessary to distribute assets or make tough decisions regarding the family business.

An agreement among shareholders or family owners lays the ground rules of a family business in terms of important topics such as governance, succession, transfer of assets, liquidity and taxes among others. A Shareholder’s Agreement may address such questions as:

Board composition:
- Will each sibling be represented?
- Will there be a board of directors?
- Will executives from outside the family be allowed?
- What training experience will be required?
Decision-making process:
- What is the number of votes needed to approve key issues?
- What is the method for dispute resolution?
- What are the rights of family members?
- Family members not involved in the business?
- Non-family involved in the business?
Business and Owner Estate Plan:
- Who are the business successors (both managers and owners of the business)?
- What is the compensation for owners?
- What is the remaining profit distribution?
- What are the taxation implications upon sale or transfer of ownership?
- Is there an estate plan? Is it in writing? Is there a timeline for implementation?

Although many small businesses fail, by addressing these issues a small business owner takes steps towards ensuring his or her family’s interests while saving money, and avoiding conflict.

Careful estate planning can ensure that a family business continues to benefit family members and that ownership of the business is not diluted until the business is ready to accept outside investors. Owners’ estate plans should use trusts or other mechanisms to restrict the ability of their heirs to transfer shares. A successful family business is an excellent means to provide financial security for the small business owner and his or her loved ones as well as employment opportunities for interested family members.

Estate planning is a complex field. Whether you are concerned with devising a plan for either a family estate or that of a business, it is important to get good advice. The attorneys at Lonich Patton Erlich Policastri have decades of experience handling complex estate planning matters including business succession plans, wills, and living trusts. If you are interested in developing an estate plan or reviewing your current estate plan, contact the experienced estate planning attorneys at Lonich Patton Erlich Policastri for further information as we are happy to offer you a free consultation.

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 detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

*Source

The Surprising Tax Benefits of Holding Title as Community Property with Right of Survivorship

May 30, 2014/in Estate Planning /by Michael Lonich

A married couple in California can hold title to their real property in various forms. Historically, many couples took title in joint tenancy without first consulting with an attorney, merely because their real estate agent would suggest it. However, the way that a couple holds title to an asset can have significant consequences in the event of divorce or the death of a spouse.

Community Property with Right of Survivorship is a relatively new way for married couples to hold title to property in California. Under Section 682.1 of the California Civil Code, property clearly titled “Community Property with Right of Survivorship” and deeded after July 1, 2001 will pass to the surviving spouse upon death of one of the spouses.

Depending on your situation, there may be significant benefits to holding title as Community Property with Right of Survivorship. When title is held in this manner and a spouse dies, their interest in the property is extinguished and it passes to the surviving spouse, avoiding probate. This can benefit the surviving spouse by eliminating any stress associated with probate procedures, family disputes, and attorney’s fees. For more information regarding the probate system and why people choose to avoid it, see our previous post.

Additionally, this form of title allows the surviving spouse to obtain the tax benefits of community property upon the death of the other spouse. Consider the happily married couple, Hank and Wendy, who bought a home in 2004 for $100,000. This is their basis. Now, the house is worth $1,000,000. If Hank and Wendy were to sell the house for $1,000,000, they would be taxed on the difference between the sale price ($1,000,000) and their adjusted basis ($100,000), or $900,000. Now let’s assume that Hank unfortunately dies and Wendy wants to sell the house. In this scenario, the amount of taxable profit will depend on how title is held.

If the parties hold title to the house as Joint Tenants, each spouse owns a 50% interest in the house. When Hank dies, Wendy automatically inherits his half share of the house. The basis of inherited property is adjusted to the value of the property at the date of death. Wendy’s basis will stay the same ($50,000) and the share she inherited from Hank will be adjusted to the value of his share of the property at his death ($500,000). Wendy’s new adjusted basis in the house is $550,000. If Wendy sells for $1,000,000, she is taxed on the difference between the sale price ($1,000,000) and her adjusted basis ($550,000) or $450,000.

However, if the parties hold title to the house as Community Property with Right of Survivorship, each spouse owns the entire property rather than a 50% interest. Upon Hank’s death, both his interest and Wendy’s interest receive a stepped up basis. Thus, the basis of the home is adjusted to the date of death value for the entire property ($1,000,000). If Wendy sells for $1,000,000, she is taxed on the difference between the sale price ($1,000,000) and her adjusted basis ($1,000,000), or nothing.

In the event of a divorce, the house is treated as community property. If you have any questions regarding how your current property is titled or are considering changing your current estate plan, feel free to contact the experienced estate planning attorneys at Lonich Patton Erlich Policastri for further information.

Remember that each individual situation is unique. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

A Cautionary Tale of Fill-in-the-Blank Wills: Not So E-Z After All

April 9, 2014/in Estate Planning /by Michael Lonich

Online platforms like Legal Zoom and Rocket Lawyer, as well as form wills marketed by companies like E-Z Legal Forms, are gaining popularity in the estate planning world. However, a recent Florida decision* serves as a fresh reminder that using one of these one-size-fits all approaches to estate planning could land your family in court despite your wishes.**

In a recent case, a Florida woman created a will through E-Z Legal Forms, leaving all of her property to her sister and finally to her brother if her sister predeceased her. The sister died first, so the brother claimed the entire estate. That would have been the result that fit with the deceased woman’s wishes. However, because the document was made without attorney oversight, the document lacked a residuary clause (important in Florida) and opened the door to disagreement over the interpretation of the will. Two of the woman’s nieces sued for a share of the estate.

The nieces, who were born to another brother who had already passed away and who were not mentioned in the will, walked away with a portion of the estate because they argued that they should receive part of any property that the deceased earned after signing the original will. The Florida Supreme Court agreed, determining that all property earned after the will was signed must go through probate and be distributed based upon the State’s intestacy laws. (Intestacy laws govern who will receive property when a person dies without a will). Because she had a will, this was clearly not what the deceased woman intended, and one Justice shared a word of caution:

“I therefore take this opportunity to highlight a cautionary tale of the potential dangers of utilizing pre-printed forms and drafting a will without legal assistance. As this case illustrates, that decision can ultimately result in the frustration of the testator’s intent, in addition to the payment of extensive attorney’s fees—the precise results the testator sought to avoid in the first place.”

The court also acknowledged that people want to avoid dealing with lawyers and spending additional money, but sometimes making an investment in legal counsel will help the party and their family avoid even greater legal feels and turmoil in the future.

Creating a will doesn’t always have to be complicated. Nevertheless, it is best to create yours with the aid of an experienced estate planning attorney if you wish to avoid probate and future disputes over your estate. If you need estate planning advice, call Lonich Patton Erlich Policastri to schedule a free half-hour consultation. Our attorneys are passionate about estate planning and have decades of experience handling complex estate planning matters, including wills and living trusts. If you need a will or would like to review the will you currently have, 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 detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

*FlascBlog: The Florida Supreme Court Blog reports on the opinion (PDF).

**To see the original article that inspired this post: http://www.abajournal.com/news/article/e-z_legal_form_proved_to_be_complicated_in_litigation_over_wills_missing_re/?utm_source=maestro&utm_medium=email&utm_campaign=weekly_email

Trust Administration: The Basics

April 3, 2014/in Estate Planning /by Michael Lonich

Trust administration is the process used to ensure that a trustee complies with California law and is carrying out the mandates of the trust as written. For example, a common task in trust administration is ensuring that the title to assets held in the trust is properly transferred. Trust administration also includes the process by which a trust creator’s (also known as the “trustor” or “settlor”) estate is distributed following his or her death. Following the creator’s death, the successor trustee(s) takes over management of the trust. The trustee must take multiple steps to properly administer the trust assets.

After the death of the trustor, the trustee of any trust has a number of fiduciary duties with regard to the trust and its assets. Here are some important examples:

Locate the deceased’s important documents, including the will, trusts, tax papers, and funeral directives.
If deceased was living alone, change locks and secure the house.
Check on insurance for the property and any cars the deceased owned to be certain the assets within the trust are protected.
Arrange to have certified copies of the deceased’s death certificate from the city or county where the death occurred.
Take an inventory of all assets and the value of those assets, because the value will affect the new tax basis of the items going forward. The value of all these items at death may need to be considered when evaluating federal state tax liability (if any).
Make a list of any household items that will be distributed to beneficiaries, and consider photographing the items to help with organization.
Take an inventory of bank accounts and the like. It may help to streamline the accounts and consolidate them into one place so that it is easier to keep a record of all trust activity, including bills paid and deposits made.
As trustee, you are responsible for paying any remaining debts or bills. If these are not paid you, and not the estate, may be personally liable.
You may need to obtain a Tax ID number for the trust if the trust will generate more than a few hundred dollars between the date of decedent’s death and when all of the assets are distributed. This step can be complicated and you may want to refer to an attorney or a tax professional for advice.
Make sure that all tax returns are filed in a timely fashion.
File any claims for life insurance, IRA’s or other assets that require claims. Also be sure to liquidate any assets that need liquidating, but get advice before you act because there may be serious tax consequences.
Accounting is required of trustees by law. Keep a record of all assets in existence at death and show all additions to the trust, subtract all expenses, and be prepared to show current assets within the trust. Place the assets into a non-interest bearing account to make sure the value does not change after the final accounting is complete.
Distribute the trust assets. Have a lawyer or other professional create a receipt and release form for each beneficiary, memorializing that each person received their inheritance and that the trustee is released from further liability.

While trust administration is generally handled outside the court system, breach of any of the trustee’s fiduciary duties can result in a court action being brought by a beneficiary. For this reason, it is important that a trustee seek out the help of a qualified trust attorney for guidance as needed.

The attorneys at Lonich Patton Erlich Policastri are experienced in the area of trust administration and can advise the trustee regarding their duties and responsibilities while guiding them through the trust administration process. In addition, our attorneys have experience assisting beneficiaries who believe the trustee is not acting properly. We invite you to contact our office to schedule a free consultation, with no obligation, to discuss your trust administration needs.

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 detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

Estate Tax Portability: A Valuable Asset You May Not Know You Had

March 27, 2014/in Estate Planning, Probate /by Michael Lonich

Have you heard about the “portability provision?” Believe it or not, your estate (or your spouse’s estate, if you were to pass first) could benefit tremendously if the executor of your estate elects this provision. In short, the portability election allows the transfer of any unused estate tax exclusion amount of the first spouse to die (commonly referred to as the “deceased spouse’s unused exemption” or “DSUE”) to the surviving spouse, who can then utilize the remaining amount to benefit his or her gift or estate tax purposes. Essentially, this provision operates as a safety net for couples with joint assets exceeding the exemption amount for the estate of the first spouse to die because the surviving spouse can reduce his or her estate or gift tax liability. Depending on the size of the estate, electing this provision can mean saving a significant amount on estate taxes.

Although this portability provision technically expired after 2012, Congress passed the American Tax Relief Act of 2012 (“ATRA”), which made the “portability” of the applicable exclusion amount between spouses permanent. This favorable estate tax rule should be incorporated into estate plans because as previously mentioned, the potential impact of the portability provision can be quite substantial.

For example, suppose the following: A husband and wife each own $2 million individually and $3 million jointly with rights of survivorship, bringing their estate to a total of $7 million in assets. Suppose their wills instruct that all assets pass first to the surviving spouse and then to the couple’s children. If the husband dies in 2014, his $2 million in assets is covered by the unlimited marital deduction. His $5.34 million exemption remains unused (his DSUE). When the wife dies, her estate can use that leftover DSUE amount, in addition to the exemption for the year in which she dies, to shelter the remaining $7 million of assets from tax. ATRA has permanently set the top estate tax rate at 40 percent. As such, if the wife died later in 2014, $1.66 million in assets would have been subject to estate tax without the portability provision. Therefore, the family saves $664,000 in federal estate tax (40% of $1.66 million).

Not only is the portability provision an excellent tool to use for estate and gift planning considerations, the provision can also be used as a negotiation tool during marital agreement negotiations. The portability provision can be viewed as a highly valuable asset that attorneys and their clients should consider when drafting marital agreements. However, there are also certain limitations to be aware of. For example, the executor of a deceased spouse’s estate must elect portability for the provision to take effect, and the election must be made on an estate tax return filed within nine months of death.*

If you or your loved ones are in the planning stages of creating an estate plan, take the necessary steps to ensure that you and your family members are maximizing the benefits available to you by an experienced, knowledgeable estate planning attorney guide you through the process. Estate planning laws are constantly evolving and having a trusted estate planning attorney by your side can prove to be invaluable. The attorneys at Lonich Patton Erlich Policastri have decades of experience handling complex estate planning matters, including wills and living trusts, and we are happy to offer you a free consultation.

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 detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

Sources: http://www.bizactions.com/n.cfm/page/e120/key/259853661G1005J3585631N0P0P2268T2/;http://www.forbes.com/sites/lewissaret/2014/02/25/estate-tax-portability-and-marital-agreements-a-new-consideration/

Elder Abuse: Protect Your Loved Ones From Financial Exploitation

March 24, 2014/in Estate Planning, Probate /by Michael Lonich

Financial exploitation of the elderly is a growing – and mostly silent – epidemic in our country. In fact, one study estimates the amount lost by exploited seniors to be nearly $5 billion every year. One prime example occurred in 2007, when renowned New York society queen and philanthropist Brooke Astor left behind a coveted estate of nearly $200 million dollars. Though her will appeared to be adequately in place, the three codicils that followed turned out to be anything but.

Under Astor’s will, her only son, Marshall, stood to take tens of millions of dollars – with the condition that remaining funds after his death be given to charity. Marshall, however, had other plans, and the country watched as the truth behind Ms. Astor’s will began to unravel: Marshall, along with his lawyer, had convinced the elderly Astor – while she was suffering from dementia – to sign a series of codicils allowing him to leave much of her fortune to whomever he wanted. Rumor has it that Marshall wanted to share his mother’s fortune with his much-younger wife – whom Astor reportedly detested.

Fast forward to 2009 after 6 months of trial and many millions of dollars later, Marshall (then 85-years-old) and his attorney were convicted of 14 counts out of 16 for financially exploiting Astor. But after 8 weeks in jail, Marshall was out – the parole board found his age, ailing health, and hundreds of support letters from some of New York’s most influential people compelling and released him. With these turn of events, Marshall’s financial exploitation of his mother (to the tune of tens of millions of dollars) essentially went unpunished.

The highly-publicized financial exploitation of Ms. Astor is only one of the millions of cases of financial elder abuse that goes on quietly behind closed doors each year. When a family member manipulates a person with dementia, it is undue influence. California Civil Code § 1575 explains that undue influence comprises of:

The use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him;
The taking of an unfair advantage of another’s weakness of mind; or
The taking of a grossly oppressive and unfair advantage of another’s necessities or distress.

Financial abuse of an elder or dependent adult can occur through various ways – undue influence is only one of them.* Sadly, many greedy individuals will find their elderly family members to be easy targets for financial gain, particularly when the elderly individual’s mind is stricken with a degenerative disease like Alzheimer’s or dementia. The undercover coercion and undue influence to change an estate plan can be hard to notice because these manipulative acts are generally covert and completed with no witnesses around. Even if the coercion is discovered in time, proving it in court can often be an uphill battle.

If you or your loved ones are in the planning stages of creating an estate plan, take the necessary steps to ensure that you and your family members are protected by having an experienced, knowledgeable estate planning attorney guide you through the process. If you suspect undue influence, consult an experienced estate planning attorney for an objective assessment to ensure the decedent’s assets are distributed as they intended. Estate planning laws are constantly evolving and having a trusted estate planning attorney by your side can prove to be invaluable. The attorneys at Lonich Patton Erlich Policastri have decades of experience handling complex estate planning matters, including wills and living trusts, and we are happy to offer you a free consultation.

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 detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

* California Welfare and Institutions Code §15610.30(a).

The Disclaimer: An Arrow in the Savvy Planner’s Quiver

March 21, 2014/in Estate Planning /by Michael Lonich

We won’t all be lucky enough to inherit a large sum of money upon the death of a loved one. But, if you do, you may want to consider disclaiming that inheritance under special circumstances. When you disclaim an inheritance, you are refusing to accept it.

Some of you reading this are probably thinking, “You’ve got to be crazy if you think I am ever going to flat out refuse any money that I have coming to me.” Nevertheless, for others who already own plenty of property or are looking to reduce gift or estate or gift taxes, disclaiming an inherited gift could be in the best interests of you and your family.

Let’s say you already have a healthy estate of several million dollars when your father dies, leaving $400,000 to be split evenly between you and your sister. You know that your sister, a single mother, could really use the money and you would like to help her out. In this situation, disclaiming could be beneficial for in two ways.

First, by disclaiming your half of the gift, the entire $400,000 can be transferred directly to your sister. This kind gesture ensures that the person who really needs the property can have it with little difficulty or complications, since a disclaimant never truly owns the property. Furthermore, disclaiming a large gift could help minimize the size of your estate for the benefit of your family at the time of your death. Estates beyond a certain size have to pay steep estate taxes* before your money can go to your beneficiaries. By disclaiming gifts you don’t need, your family can avoid those taxes and enjoy more your hard-earned wealth.

Second, by disclaiming your half of the gift, you will not have to pay gift taxes on any amount you want to give to your sister. In 2014, the IRS limits the amount of cash that can be given tax-free to a particular individual. In this situation, if you were to accept the $200,000 and then try to give it to your sister as a cash gift, any amount over $14,000 given to your sister in a given year would count towards your lifetime gift limit.** Any amount of cash gifts which exceed that limit—$5.34million in a lifetime—will be subject to a gift tax of up to 40 percent. Ouch. To keep things simple and tax-free, disclaiming the inheritance is your best bet.

Deciding whether or not to disclaim is a big decision that can have serious benefits or consequences. In order to make the decision that is best for you and your family, speak with an experienced estate planning attorney before you act. If you need estate planning advice, call Lonich Patton Erlich Policastri to schedule a free half-hour consultation. Our attorneys are passionate about estate planning and have decades of experience handling complex estate planning matters, including wills and living trusts. If you are interested in developing an estate plan or reviewing your current estate plan, 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 detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

*To learn more about estate taxes, click here: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estate-Tax

**This is known as the “annual gift exclusion.” For those who are interested in learning more about the exclusion, click here: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Gift-Tax

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