Estate Planning Archives - Page 20 of 23 - Lonich Patton Ehrlich Policastri

Estate and Tax Planning for Married Couples

May 6, 2011/in Estate Planning /by Michael Lonich

With the recent changes to the tax law for 2011, there is now a $5M unified tax exemption for individuals who pass away in 2011 or 2012. This has created an opportunity to avoid the payment of Federal estate taxes over the next few years.

If you and your spouse are U.S. citizens, you can leave each other any amount with no Federal estate tax exposure. This is referred to as the unlimited marital deduction privilege and provides a significant Federal estate tax shelter. It is especially advantageous with the current high unified credit over the next two years.

However, if you have a large estate, leaving everything to your spouse may result in your spouse having an estate that exceeds the Federal estate tax exemption when he or she dies. In that case, there are a number of other estate tax saving strategies you should consider, some of which are set forth below.

Giving money to charities is always an approach to lower or reduce your taxable estate.

A frequently used approach is to utilize the annual Federal gift tax exclusion ($13,000 per person) by making yearly gifts up to the exclusion amount which will reduce the taxable value of your estate without reducing your lifetime Federal gift tax exemption. Both you and your spouse can make an annual gift of $13,000 per person.

You can contribute to the education of your children or grandchildren by making payments directly to a school as a method to reduce your estate. Direct payments to the school will not impact your unified estate and gift tax exemption.

Appreciating assets are always a little tricky but with the relatively significant unified estate and gift tax exemption, you can give away up to $5M worth of appreciating assets (stocks, real estate, etc.) without triggering any Federal gift tax. Your spouse can do likewise. Although this reduces your unified exemption and is taken against your lifetime exemption, the gifts are valued on the date of the gift and if they continue to appreciate for years while you are still alive you have avoided that additional appreciation being captured in your estate for estate tax purposes. There are other important considerations when contemplating gifting versus passing assets on your death such as utilizing stepped up basis.

An irrevocable life insurance trust (ILIT) can be an important estate planning tool and assist in paying estate taxes. An ILIT is not in your control and thus not a part of your estate and thus is not taxable upon your death. With a typical life insurance policy, although perhaps income tax free, the proceeds are included in your estate for Federal estate tax purposes.

If you have questions regarding estate and tax planning, 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

Trusts Offer Privacy During Probate

April 5, 2011/in Estate Planning, Probate /by Michael Lonich

Elizabeth Taylor recently passed away with an estate estimated to be worth anywhere from $6 million to $1 billion. Radaronline, an internet based tabloid, has obtained the Notice to Creditors filed with the Superior Court of Los Angeles. This document gives creditors notice that their client has passed away, allowing creditors the opportunity to file a claim against the estate requiring that payment be made before assets are distributed to the beneficiaries. The court filings reveal that Elizabeth Taylor’s trust was created June 23, 1998, a few months after she experienced a number of medical issues and underwent hip replacement surgery. Although information like this has been made public, tabloid sites such as Radaronline cannot obtain a complete copy of the trust from the court because the trust, unlike a will or the Notice to Creditors, does not become part of the public court file in California. Thus, the trust not only helps Elizabeth Taylor’s estate avoid probate, it also offers anonymity and privacy to Ms. Taylor and the trust beneficiaries. The privacy offered by trusts is an additional benefit that should be considered when determining the appropriate estate planning vehicles to use.

If you are interested in learning more about the probate process or how a trust might fit into your estate planning needs, please contact San Jose Probate 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.

Choosing the Right Executor

March 31, 2011/in Estate Planning, Probate /by Michael Lonich

Recently, the New York Times published an interesting article advising individuals on how to choose the right executor for an estate. An executor is an individual responsible for an estate before the estate is closed (transferred to its beneficiaries).

The author indicates how estate planning in 2011 is particularly burdensome on executors because of the recent tax law changes President Obama signed in December of 2010. In short, portability (the ability to pass the federal estate tax exclusion to a surviving spouse, described in a previous post), must be if at all exercised by the executor. This new responsibility coupled with the traditional responsibilities of an executor will require an organized and honest individual who has the best interest of your beneficiaries at heart. The article continues with other practical considerations when choosing an executor including why a professional or a family member may be a more suitable executor, for the full New York Times article click here.

Additionally, it is a prudent idea for individuals to review their estate planning documents because of the recent estate planning changes in 2011. Currently the new tax laws affecting Estate Planning are only set to be active for 2011-2012.

If you are interested in learning more about Estate Planning, please contact San Jose Estate Planning Lawyers 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.

Does Your Loved One Need a Conservator?

March 29, 2011/in Estate Planning /by Michael Lonich

A conservator is a person appointed by the court to manage the health care and/or financial matters of an adult (the conservatee) who is found to lack the legal capacity to care for themselves. A conservatee does not lose all of his or her rights. The conservatee retains the right to be treated with understanding and respect, have his or her wishes considered, and to be well cared for. In addition, conservatees retain the right to ask a judge to end or change the conservatorship.

There are two types of conservatorships: conservator of the person and conservator of the estate. A conservator of the person arranges for the conservatee’s care and protection and decides where the conservatee will live. The conservator of the person is also in charge of health care, food, personal care, and housekeeping. However, a conservator cannot move the conservatee out-of-state. In addition, the conservator cannot put the conservatee in a mental health treatment facility. A conservator may be able to move the conservatee into a special residential care facility provided certain protocol is met.

A conservator of the estate is responsible for managing the conservatee’s finances, protecting his or her income and property, compiling a list of everything in the estate, making a plan to make sure the conservatee’s needs are met, paying the conservatee’s bills, and other duties. A conservator must remember to keep his or her own assets separate from the conservatee’s assets.

For more information on conservatorships, please visit 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.

New York Times Article Urges Aging Parents to Talk to Adult Children About the Potential Need for Financial Supervision

March 22, 2011/in Estate Planning /by Michael Lonich

The New York Times published an interesting article advising aging parents to keep the lines of communication open with responsible, adult children. The article points out that while it is extremely difficult for elderly parents struggling with memory loss or the onset of dementia to give up autonomy, it is important that responsible children step in to help care for their parent’s financial responsibilities.

While initiating a conversation about your parent’s possible future need for financial supervision is a challenge, the New York Times author suggests opening the dialogue in the doctor’s office. Your family physician may be a supportive moderator of the conversation as he or she is likely aware of the dynamics of the situation. For the full New York Times article, please click here.

In addition to talking with your parents about financial supervision, it is highly recommended that aging parents update their necessary legal documents. If your parents are in good mental health now, it is recommended that they start thinking about who would be a good person to appoint as a power of attorney. A power of attorney is an individual chosen to represent someone in relation to health care and property matters. The power of attorney can act to make important decisions for the individual they are representing when that individual is unable to make those decisions for him or herself. When selecting someone to act as a power of attorney, a person should make sure the chosen representative is responsible, loyal, and consents to acting in this capacity.

If you are interested in learning more about a power of attorney, please contact 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.

Should You Leave a Gift to Your Pet in Your Will or Provide For Your Companion Animal Through a Trust?

March 18, 2011/in Estate Planning /by Michael Lonich

An outright gift to an animal is void under the ruling of Estate of Russell. In that particular case, the testator left a gift to her dog, Roxy Russell, via her will. The court ruled that a dog could not be a beneficiary of a will under the California Probate Code. However, this ruling does not preclude an owner from pursuing other options that will ensure the pet is well taken care of after its owner’s death.

First, an owner can set up a trust to care for his or her beloved animal. In 1991, the California legislature enacted a probate code provision that allows individuals to create trusts for the care of a “designated domestic or pet animal.” However, the problem with the 1991 version of this code section was that a beneficiary could not take action against a trustee who failed to administer the trust according to its terms. The legislature addressed this problem by enacting a new version of the code section in 2009. Currently, any trustee or beneficiary of the trust, person interested in the animal’s welfare, or a nonprofit animal welfare organization, may petition the court regarding the affairs of the trust.

The use of a trust to care for an animal has several benefits. It is a flexible method for managing financial assets for the benefit of the pets until the last surviving pet departs. Another benefit is that a living trust can include provisions for pet care that would be operative during an owner’s life-time incapacitation. In addition, the trust provisions can include very specific instructions for the care of companion animals.

If you choose to create a trust, it should provide for the payment of all final medical and disposition expenses for your pet. In addition, you should nominate a trustworthy caretaker, and alternates, or leave instructions on how to find a suitable home and caretaker for your pet.

Another way in which an owner can provide for a pet after the owner’s death is by choosing to leave the pets (and the money to care for them) as an outright “gift” to a responsible and trustworthy individual. An owner can do this either through a will or a revocable trust. However, before choosing this option, an owner should make sure that the chosen care-taker is willing and able to care for the pets after the owner’s passing.

If you are interested in learning more about how to properly plan out your beloved animal’s care after your passing, please contact the San Jose estate planning lawyers 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

Federal Tax Implications for Same-Sex Couples’ California Estate Plans

March 15, 2011/in Estate Planning /by Michael Lonich

California same-sex couples deal with many of the same estate planning issues as opposite-sex couples. However, they also face several unique challenges relating to the federal tax system. Therefore, when developing an effective estate plan for a California same-sex couple, the federal tax system should be considered.

One of the most glaring distinctions between married opposite-sex partners and domestic partners under federal tax law is in relation to the federal marital tax deduction. Domestic partners and same-sex couples legally married in California are not eligible for the unlimited federal marital deduction for property passed outright to a surviving domestic partner or same-sex spouse. Under the federal Internal Revenue Code (IRC), this deduction is only permissible between “spouses.” The IRC defines a “spouse” as an opposite-sex married couple. A qualified California estate planning attorney can advise same-sex couples on transferring assets in a way that minimizes federal taxation.

It is not uncommon for same-sex couples’ estate plans to be challenged by family members. If there is concern that someone will contest the estate plan, it is best for each party to have their own attorney to avoid an invalidation of the estate plan on grounds of duress or conflict of interest. Because of many legal uncertainties in characterizing same-sex couples’ income and tax consequences, California domestic partners are best represented by attorneys who have a strong background in family law as well as estate planning law.

For more information about estate planning, please visit the Lonich Patton Erlich Policastri website. 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.

How Can Business Succession Planning Help You Pass Your Company On to Your Children?

March 11, 2011/in Estate Planning /by Michael Lonich

A business succession plan can help you hand your business over to your family’s next generation by looking at whether or not your company has adequate resources and potential. If your business does not presently have the qualities required to pass on to your children, an attorney can help you investigate whether the necessary resources and potential can be developed.

An estate planning attorney can help you develop a quality business succession plan that meets your needs. Specifically, an estate planning lawyer can help you use instruments such as revocable trusts, irrevocable trusts, and charitable trusts to own and control the equity interests of your business. In addition, your attorney can help you minimize the impact of local, state, and federal taxes on business and estate planning transactions to conserve the assets of the company.

For more information on developing a successful plan to pass on your business after your death, please visit the Lonich Patton Erlich Policastri website. 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.

Special Rules that Regulate Transfers to Non-U.S. Citizen Spouses Can Affect Estate Planning

February 18, 2011/in Estate Planning /by Michael Lonich

Estate planning can be particularly challenging for couples if one spouse is the citizen of another country. It is important for California residents, who are married to non-citizen spouses, to consider the special regulations surrounding estate tax marital deductions when creating an estate plan.

First, there is no standard estate tax marital deduction for a spouse who is not a U.S. citizen. While this may seem unfair, the rationale behind the estate tax marital deduction was to defer the tax until the death of the second spouse. If the non-citizen spouse moved out of the country after the death of the first spouse, he or she could not be subjected to the deferred taxation. However, if the non-citizen spouse becomes a citizen before the federal tax return is filed, the standard unlimited marital estate tax deduction will apply.

Second, while there is no gift tax marital deduction for lifetime transfers to a noncitizen spouse, there is an annual gift tax exclusion. The exclusion amount allowed for transfers during life to a non-citizen spouse was $133,000 in 2009.

For more information on how to create an effective estate plan, please contact our 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.

Charlie Sheen’s Family May Seek Conservatorship

February 8, 2011/in Estate Planning /by Michael Lonich

News of Charlie Sheen’s intense lifestyle revolving around drugs, alcohol, and parties, has been circulating around the press for months. Just recently, an article published by NY Daily News, discusses the possibility of Sheen’s parents trying to obtain a conservatorship over the party boy actor.

A conservator is a responsible individual who is appointed by a judge to care for another adult who cannot care for either himself or his finances. A person who believes they would make an effective conservator for a loved one, can file for conservatorship in court. A spouse, relative, or state or local government agency, friend, or any interested person can file for conservatorship.

There are two types of conservators. The first type is known as the “conservator of the estate.” A conservator of the estate handles the finances of the conservatee. The second type of conservatorship is the “conservator of the person.” This is a conservator who looks after and protects a person in relation to their healthcare, living arrangements, etc.

If you are interested in learning more about California conservatorships, please contact our 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.

Source:

New York Daily News