Estate Planning Archives - Page 20 of 22 - Lonich Patton Ehrlich Policastri

Four Tips for Ensuring Your Pet is Cared for After Your Death

January 19, 2011/in Estate Planning /by Michael Lonich

Sue Stevens, a financial planner and founder of Stevens Wealth Management, discusses estate planning for pets in her book, “Put Your Money Where Your Heart Is.” In the book, Stevens lays out four steps that anyone can take to protect their pet after they’re gone.

First, Stevens suggests that you choose a “pet guardian” and name this person in a trust. This should be the person that you want to care for your pets. In addition, make sure to name at least one back-up guardian in case your first choice is unable or unwilling to serve.

Second, decide how much money you want to set aside in a trust for your pet’s care. According to an American Pet Products Association survey, dogs generally cost around $1,400 per year while cats can cost approximately $1,000 per year. One of the best ways to ensure your pet is provided for is to set up a trust for your pet. The trustee of the pet trust does not have to be the same person that you choose as the pet’s caregiver (guardian).

Third, make sure to include provisions in your trust which provide for pet care. Specifically, the trust should include language that details how the money is to be spent (i.e. food, veterinary care, etc). Also, the trust should include a provision for interim care until your pet can be placed in a permanent home. An estate planning attorney can help you draft an effective trust for this purpose.

Lastly, leave written instructions for your pet’s caregiver (guardian). This information should include your pet’s medical record, feeding instructions, a list of favorite toys, and even the names of your pet’s human and furry friends. Please click here for the full article.

If you would like more information about how to plan for your dog or cat’s care after your passing, please contact our experienced Silicon Valley estate planning attorneys at Lonich Patton Erlich Policastri. 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 Changes: Gift Tax, Estate Tax, Portability

January 14, 2011/in Estate Planning /by Michael Lonich

General Overview of 2011 Tax Changes

The “Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010” (TRA) was signed into law on December 17, 2010. The TRA applies to the years 2011 and 2012. This Act was passed to address the expiration of two major tax bills[1]. These two tax-cut bills expired at the end of 2010. The TRA extends certain provisions of these bills and also provides amendments to the tax system.

2011 Gift Tax

Starting in 2011, the gift tax exemption amount will increase from $1 million to $5 million. The exemption for couples is $10 million.[2] Gift tax is again unified with the estate tax. For 2011, the “unified” applicable exemption amount is $5 million per person, and in 2012 this amount is subject to being indexed for inflation.”[3] The tax rate is set at 35%.[4] The annual exclusion for tax-free gifts remains $13,000 per donor.[5] A donor may make an unlimited number of $13,000 gifts as long as they are to different individuals.[6]

2011 Estate Tax

Under the TRA, the “applicable credit amount is the amount of tax with respect to an applicable exclusion amount of $5 million.”[7] Starting in 2012, the applicable exclusion amount will be indexed for inflation, with adjustments rounded to the nearest $10,000. The maximum rate of estate tax is 35%.[8]

2011 Portability

Under the TRA, the new tax structure will “allow a decedent’s estate or a donor to tax advantage of the applicable exclusion amount of the decedent’s or donor’s previously deceased spouse. This ‘portability’ concept is intended to prevent families from incurring gift and estate tax that could have been avoided through planning prior to the death of the predeceased spouse.”[9] Under the new tax law, “when computing the applicable exclusion amount for a donor’s or a decedent’s estate, the [deceased spousal unused election amount] is added to the donor’s or decedent’s [basic exclusion amount].”[10]

For more information about 2011 estate planning, please contact our experience attorneys. 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] Both the “Economic Growth and Tax Relief Reconciliation Act of 2001” (EGTRRA) and the “Jobs and Growth Tax Relief Reconciliation Act of 2003” (JGTRRA) were set to expire at the end of 2010. [2] U.S. Senate Committee on Finance, “Summary of the Reid Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010,” p. 4. The ABA materials did not state the couple exclusion as $10 million, but it makes sense if it is $5 million per person. [3] ABA Summary of Tax Relief Act 2010, p. 6. [4] Id. [5] “Tax Changes for 2011: A Checklist,” The Wall Street Journal, Laura Saunders. [6] Id. [7] ABA Summary of Tax Relief Act 2010, p.9. [8] Id. [9] ABA Summary of Tax Relief Act 2010, p. 11. [10] Id.

The Importance of an Advance Health Care Directive

January 5, 2011/in Estate Planning /by Michael Lonich

An advance health care directive is a written instrument that describes your health care wishes in the event of your incapacity or injury. It serves to inform family members and healthcare professionals about your wishes and desires when you are unable to do so. The importance of having an advanced health care directive is often overlooked.

An advance health care directive can address several key issues, including whether or not you want doctors to resuscitate you if you stop breathing or if your heart stops, if and when to use breathing machines or dialysis, and whether you wish to be an organ and tissue donor. While many people prefer not to think about their own mortality, it is important that your loved ones know your desires before it is too late for you to express them. In addition, an advance health care directive allows you to choose an agent to act as your attorney-in-fact. Your attorney-in-fact is the person you designate to make health care decisions for you. Appointing such a person in advance often helps alleviate family tension during difficult times.

To find out how you can protect your family by incorporating an advance health care directive into your estate plan, please contact our estate planning attorneys at Lonich Patton Erlich Policastri for more 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.

Two Reasons Why Your Family Business May Need a Business Succession Plan

December 29, 2010/in Estate Planning /by Michael Lonich

According to the Small Business Administration, about 90 percent of all U.S. businesses are family owned and controlled. Unfortunately, only about 30 percent of these businesses pass successfully to the second generation. What is worse is that only about 15 percent of those then pass to the third generation. A comprehensive business succession plan can ensure that your business continues in the family for generations to come.

There are two important reasons why you should have a business succession plan in place. First, a business succession plan provides liquidity for owners. While some business owners have sufficient savings to transfer their business to the next generation, others rely entirely on their business for income. For those relying on business income, it is important to ensure the company will be able to fund the owner’s retirement plan. If the owner desires to transfer the company to a younger generation, periodic gifts and sale of stocks to these individuals over the years should be part of their business succession plan.

Second, a business succession plan may allow a client to minimize the impact of transfer taxes. For example, if successors to the business include grandchildren, the federal generation-skipping transfer (GST) tax might be imposed in addition to the estate tax. As the tax implications can be quite large without a business plan, your family may be forced to sell off company assets in order to pay the transfer taxes. However, careful planning and use of estate, GST, and gift tax exemptions are essential to minimizing the aggregate affect of taxes on your business.

Please contact our firm, Lonich Patton Erlich Policastri, for more information on how to create a successful business succession plan. 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.

“Do It Yourself” Estate Plans Can Be Problematic

December 20, 2010/in Estate Planning /by Michael Lonich

Are you a person who is intrigued by a deal? If so, you should understand that a “bargain-priced” estate plan may really not suit your needs nor save you money in the end. While there are many online templates for wills, you need to be very careful when creating an estate plan without an attorney. Each state has different rules and regulations on what makes a will valid and enforceable. In addition, the differing financial and personal goals of individuals call for unique estate plans.

The need for caution when looking for a “bargain” estate plan was expressed in an article by the Morgan Law Group that wrote that regardless of whom you designate as a beneficiary to your IRA in your estate plan, the proceeds of your IRA will actually pass to whomever the beneficiary is on your IRA beneficiary designation document. Although you may be able to create a trust online, in order for it to be effective, you must follow very specific steps to fund your trust.

For more information about estate plans tailored to your specific needs, 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.

Do You Need a Revocable or Irrevocable Trust?

December 10, 2010/in Estate Planning /by Michael Lonich

If you are confused about the difference between a revocable and irrevocable trust, you are not alone. In fact, they do have some similarities. For example, both revocable and irrevocable trusts allow the settlor (person putting assets in the trust) to distribute or transfer their property as provided for in the trust document.

The main difference between the two trusts is related to the settlor’s control over the trust assets. The settlor of an irrevocable trust generally gives up a large degree of control over the property that he or she transfers into the trust. In addition, the settlor may often derive tax benefits from creating an irrevocable trust.

On the other hand, a revocable trust can be canceled (revoked) at any time. However, the revocable trust often has less significant tax benefits. You may wish to create a revocable trust, regardless of any decrease in tax benefits, if you desire to maintain a large degree of control over the trust property. It is important to work with an experienced estate planning attorney to create an estate plan that fits your lifestyle and goals.

For more information about trusts, 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.

Unsettled Law Makes Estate Planning for Same-Sex Couples Challenging

December 1, 2010/in Estate Planning /by Michael Lonich

Not all states recognize the rights of lesbian, gay, transgender, or bisexual (LGTB) partners to make end-of-life care decisions for their significant others. This can lead to distressing situations where a loved one’s wishes are ultimately disregarded. However, in California, most of the rights and responsibilities that apply to married couples also apply to same-sex registered domestic partners. Estate planning for same-sex couples remains complicated because there are many areas of unsettled law. For example, it is not clear if a certain provision of the California Family Law code imposing the same rights and responsibilities of marriage on domestic partnerships will be validly applied retroactively. This particular legal question makes it difficult for estate planning attorneys to properly characterize same-sex couples’ assets. In addition, there are legal distinctions for validly married same sex couples and registered domestic partners. [To date, same sex couples married in California between June 16, 2008 and November 4, 2008 as a result of the ruling in In re Marriage Cases, remain validly married.] An example of one such distinction is that the law is not clear on whether same-sex married spouses will be able to report their earnings as community property income on federal income tax returns. Currently, domestic partners are not allowed to report income as community property when filing federal returns.

An out-of-state example of a same-sex couple’s wishes not being honored arise from a case involving Janet Park. Park wanted to be cremated after she passed. However, instead of following the direction of Park’s partner of 22 years, the funeral home followed the instruction of Park’s aunt. Loss of a partner can be especially devastating to lesbian and gay partners who are not officially recognized as “widows” or “widowers.” In addition, many LGTB individuals are ostracized from their deceased partners’ family and left to grieve alone.

If you are a lesbian, gay, transgender, or bisexual individual, it is very important to have a strong estate and end-of-life plan in order to ensure that your wishes are followed upon your death. Don’t leave your partner powerless in making key financial and health care decisions for you when you are unable to make them for yourself.

For more information about securing your future, please contact us, Santa Clara, California Wills & Trust attorneys, at Lonich Patton Erlich Policastri. 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.

Please click here to read the full article.

Lifetime Gifts May Have Significant Tax Advantages

November 30, 2010/in Estate Planning /by Michael Lonich

An estate planning attorney can help you develop a plan that maximizes your assets and helps you take advantage of the estate and gift tax system. If you are considering leaving an asset to someone upon your death, you may be interested in learning about the tax benefits of an “inter vivos” gift. An inter vivos gift is a gift that is transferred during the giver’s lifetime.

Lifetime gifts have several tax advantages. These advantages are particularly helpful to individuals whose estate will likely be subject to federal estate taxation. Also, lifetime gift plans are particularly important for people whose estates will exceed the applicable estate tax exclusion ($3.5 million for decedents dying in 2009).

The main advantage of an inter vivos gift is that some, or all, of the gift may not be subject to transfer tax. The Internal Revenue Code provides that individuals may make gifts of $13,000 per year per donee without incurring gift tax liability and without having to file a gift tax return.

In addition, interspousal gifts provide the donee spouse with an adequate estate and also allow the donee spouse to use his or her annual exclusions and estate and gift tax exclusion amounts. The gift tax marital deduction is unlimited for a donee spouse who is a United States citizen. For non-citizen spouses, there is an inflation adjusted annual gift tax exclusion that totaled $128,000 in 2008.

For more information about lifetime gifts, 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.

The Proper Estate Plan May Help You Avoid the Expense and Hassle of Probate

November 23, 2010/in Estate Planning /by Michael Lonich

If you are trying to decide what estate planning instruments you need in order to meet your goals and to avoid the cost of probate, you might want to look into the revocable trust. A revocable trust is the primary testamentary transfer device used by professional estate planners in California. A revocable trust can be used not only to manage your property during your lifetime, but it also serves to distribute your assets upon your passing.

There are several key advantages of a trust. First, it avoids probate. Probate is the court-supervised process of distributing a deceased person’s assets according to their will or California intestacy law. This process can sometimes take over 6 months to complete and can be expensive. For example, the estate of a person with only a will operating to distribute their assets after death would have to carry the costs associated with providing and preparing the initial petition, petitions for instructions, and the petition for final distribution. In addition, costly court hearings to discuss creditor (and other) issues may be required.

Second, a trust can help to maintain confidentiality regarding your assets. Probate proceedings are a part of the public record. This means that anyone is able to access the information in the record regarding your assets and their distribution. If privacy is important to you, a trust can help you achieve greater (but not necessarily complete) confidentiality.

Third, a trust also serves property management functions during your lifetime. With a trust in place, there is no need to incur the costs and inefficiency associated with a formal conservatorship in the event of your lifetime disability or incapacity. In addition, a trust is useful as it provides for long-term continuity for handling your assets.

For more information about wills and trusts, please contact our San Jose estate planning lawyers at Lonich Patton Erlich Policastri for more 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.

Selecting a Successor Trustee for Your Revocable Trust

November 22, 2010/in Estate Planning /by Michael Lonich

A “trustee” is a person who is responsible for managing the trust assets. Many individuals choose to name themselves as the trustee of the trust so they can exercise control over the trust during their lifetime. In addition, it is wise to add a successor trustee who will manage the trust assets if you ever become incapacitated or die.

When choosing a person to serve as your trustee or successor trustee, make sure you pick someone who is reliable and honest. The trustee has a vast amount of authority and will not be required to act under the court’s direct supervision.

Just recently, the individuals in charge of the estate of 104 year old heiress, Huguette Clark, have come under attack for some questionable dealings with her estate. A criminal investigation is pending regarding the attorney and accountant in charge of handling Clark’s money. The investigation is looking into the sale of her Stradivarius violin for $6 million and a Renoir painting for $23.5 million. Click here for the full article.

To learn more about successor trustees, 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.