estate planning Archives - Page 3 of 9 - Lonich Patton Ehrlich Policastri

Tax and Estate Planning for Same-Sex Couples

August 1, 2014/0 Comments/in Estate Planning, In the Community, Probate /by Lonich Patton Ehrlich Policastri

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, 2014/0 Comments/in Business Law, Estate Planning /by Lonich Patton Ehrlich Policastri

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 Ehrlich 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 Ehrlich 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, 2014/0 Comments/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 Ehrlich 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.

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

March 27, 2014/0 Comments/in Estate Planning, Probate /by Lonich Patton Ehrlich Policastri

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 Ehrlich 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, 2014/0 Comments/in Estate Planning, Probate /by Lonich Patton Ehrlich Policastri

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 Ehrlich 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, 2014/0 Comments/in Estate Planning /by Lonich Patton Ehrlich Policastri

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 Ehrlich 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 Ehrlich 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

Philip Seymour Hoffman’s Will (Part 2): More Than Just Nickels and Dimes

March 7, 2014/0 Comments/in Estate Planning /by Lonich Patton Ehrlich Policastri

This is the second part of our series examining Philip Seymour Hoffman’s estate plan.

In the wake of Philip Seymour Hoffman’s untimely death, his estate planning documents have given us some insight into the actor and father of three. Hoffman’s estate plan was executed in 2004 and his will included some unique requests.*

Hoffman requested that the guardian of his children raise his oldest child, his son Cooper, in Manhattan, Chicago or San Francisco. He stated that “If my guardian cannot reside in any of such cities, then it is my strong desire, and not direction, that my son, Cooper Hoffman, visit these cities at least twice per year throughout such guardianship.” And the reason that Hoffman preferred these cities? “[S]o that my son will be exposed to the culture, arts and architecture that such cities offer.”

Hoffman’s will serves as a reminder that a will can be about more than just money and property. Your will can be a place to memorialize your wishes for your family, pets, property, or anything else your desire. Although wishes like Hoffman’s are not legally binding, your family may appreciate the chance to act on your desires in your absence. Your words could help your family make tough decisions in the future.

Hoffman’s will is a great reminder to get creative with our estate planning documents, for our family’s sake. If you’re interested in updating the language in your will, or would like to learn more about estate planning in general, call Lonich Patton Ehrlich 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 Ehrlich 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.

*Read the original article that inspired this post, after the jump: http://celebrity.yahoo.com/blogs/celeb-news/philip-seymour-hoffman-s-will-revealed–did-not-want-son-raised-in-los-angeles-220210762.html

Philip Hoffman’s Will: What Should He Have Changed?

February 27, 2014/0 Comments/in Estate Planning /by Lonich Patton Ehrlich Policastri

In a previous blog, we stressed the importance of updating your estate planning documents as your life changes. Using actor Paul Walker as an example, we explained how he made many excellent estate planning decisions during his young life. Yet, his estate plan still had substantial shortcomings due to a failure to update. Likewise, actor Philip Seymour Hoffman’s final will has recently been submitted into court with a similar, avoidable pitfall: his last will was signed in October 2004. Multiple significant life changes have occurred in the past 10 years that ought to have been, but were not, addressed in his will.

One particular final wish that stands out in Hoffman’s will is that the actor does not want his son, Cooper, to grow up in Hollywood. The late Oscar winner requested that Cooper – who was his only child at the time the document was written – to be “raised and reside in” Manhattan, Chicago, or San Francisco.

“If my guardian cannot reside in any of such cities, then it is my strong desire, and not direction, that my son, Cooper Hoffman, visit these cities at least twice per year throughout such guardianship,” Hoffman explained in the 13-page document. “The purpose of his request is so that my son will be exposed to the culture, arts and architecture that such cities offer.” This provision was the result of smart estate planning, because noticeably absent amongst those cities is Los Angeles, where Hoffman spent much of his working life. However, Hoffman leaves no question as to his intent for Cooper: he bolstered this provision in his will by explaining why those particular cities were chosen. A well-written will leaves no room to question the signor’s intent; no reason to think: “Maybe Mr. Hoffman simply forgot to include Los Angeles.”

Sadly, however, because Hoffman failed to update his will for so long, his intentions for his two daughters were not addressed. Hoffman went on to have two daughters after 2004, but no one will know what Hoffman wanted for his daughters Tallulah, 7, and Willa, 5. As we suggested in our previous blog, you should consider your estate plan to be a living and breathing document; as your life changes, your estate planning documents should accordingly change with it. The top three red flags that should signal you to update your will are:

A change in your family,
A change in your estate, and
A change in the estate tax laws.

Since your estate plan should be constantly evolving along with your life and the law, having a good relationship with a reputable estate planning attorney is imperative. If you are interested in creating an estate plan or have any questions regarding your current estate plan, please contact the experienced estate planning attorneys at Lonich Patton Ehrlich Policastri for further information. The attorneys at Lonich Patton Ehrlich Policastri have decades of experience handling complex estate planning matters, including living wills and 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.

Source: http://celebrity.yahoo.com/blogs/celeb-news/philip-seymour-hoffman-s-will-revealed–did-not-want-son-raised-in-los-angeles-220210762.html

What is Probate and Why Should I Avoid It?

February 21, 2014/0 Comments/in Estate Planning, Probate /by Lonich Patton Ehrlich Policastri

Probate is a court process that is known for being time-consuming and expensive. It is also a public process that makes personal information about your assets and debts part of the public record. If you die without a will, the probate process can be a nightmare for your family. However, even if you have a well-written will, the probate court still must oversee the payment of your debts and distribution of your property. These are just a few of the reasons why many people want to avoid sending the estate, and oftentimes their family, through the probate process after their death.

To avoid the probate system entirely, you will need to use an estate planning vehicle other than a will to transfer property after your death. For example:

Life insurance: Life insurance policies generally pass outside of probate as long as there is at least one named beneficiary.
Retirement accounts: Similarly, retirement accounts, including IRAs and 401(k) plans, pass outside of probate as long as there is at least one named beneficiary.
Joint tenancy real property: If you own a home with your spouse (or any other individual) as joint tenants with right of survivorship (as opposed to tenants in common), your ownership interest will be “extinguished” upon your death and the remaining owner will own the property outright as a matter of law.
Joint tenancy bank accounts: Bank accounts may also be held in joint tenancy so that when one spouse (or account holder) dies, the other spouse (or account holder) is automatically the sole owner of the account.
Pay-on-death accounts: Selecting a pay-on-death beneficiary for bank accounts or investment accounts allows you to designate who your accounts will be transferred to upon your death without the need for probate.
Trusts: A living trust is a legal document that, much like a will, contains instructions for what you want to happen to your property when you die. But, unlike a will, a living trust can avoid probate at your death. While you place your property and assets (i.e., your family home) in the trust, you maintain control over all trust assets during your lifetime. When you are no longer alive, your property can be transferred to your designated beneficiaries in a timely manner without going through probate.

Trusts are a favorite of estate planners because they are simple, flexible and effective. Trusts can be used to easily transfer property to family members or charitable organizations at death. In some circumstances, trusts can also be utilized to decrease or minimize estate taxes.

If you would like to learn more about trusts or avoiding probate in general, call Lonich Patton Ehrlich 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 Ehrlich 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.

Wise Beyond His Years: Paul Walker’s Estate Plan

February 13, 2014/0 Comments/in Estate Planning, Probate /by Lonich Patton Ehrlich Policastri

Paul Walker was not known for being one of the more prolific or intelligent actors of his era. Even so, the young actor made some sharp estate planning decisions during his short life, probably due to top-notch legal advice. Even so, his estate plan could have been better. Regardless of whether your estate is anything like Paul Walker’s $25 million estate, there are some great lessons* to be learned from Mr. Walker’s estate plan.

The Good

Paul Walker died at the much-too-young age of 40. However, he was smart and recognized that even young people need estate plans. Walker signed his will at 28 years old—an age when most young men still believe they are invincible. He should be commended for taking control of his future for the benefit of his loved ones. Walker realized that accidents happen, and he was prepared. You should do the same.

Walker was survived by his 15-year-old daughter, Meadow, and he privately provided for her future with a trust. Unlike a will that must be processed through the state court system, trusts are completely private and avoid the onerous probate process. Trusts are relatively easy to create, are protected from public scrutiny, and most importantly, can help your loved ones get the assets they need much faster than in the case of a will.

The Bad

Although it is great that Walker named a guardian for his minor child (he named Meadow’s grandmother—his mother), he should have updated his choice with the passage of time. In 2001, his mother was 13 years younger and probably the most appropriate option. However, today, a younger family member could have been a better option in the event that his mother was not up to the task or physically incapable of being Meadow’s guardian.

Walker had both a will and a trust, which was smart at the time. Nevertheless, when he first created those documents, Fast and Furious had not become the monstrous success it is today. His financial picture has changed and his estate planning documents should have reflected those changes. Over a decade ago, he probably had no idea how much money he would be leaving his daughter; he couldn’t have. Furthermore, Walker’s estate will have to cover significant tax obligations before his beneficiaries receive their share; this obligation could have been avoided or reduced with some creative estate planning and trust creation.

The Ugly

Walker’s long-time girlfriend, the woman he reportedly wanted to marry, was apparently left with nothing. Boyfriends and girlfriends have no legal relief in this sad scenario, and it happens far too often. It goes without saying that Walker would have wanted to take care of his girlfriend for the rest of her life. However, since he failed to update his estate plan, she probably will not receive a penny.

You should consider your estate plan to be a living and breathing document; when your life changes, your estate planning documents should change along with it. This is why having a great relationship with a reputable estate planning attorney is so important. If you are interested in creating an estate plan or have any questions regarding your current estate plan, please contact the experienced estate planning attorneys at Lonich Patton Ehrlich Policastri for further information. The attorneys at Lonich Patton Ehrlich Policastri have decades of experience handling complex estate planning matters, including living wills and 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.

*Post inspired by: Danielle and Andrew Mayoras, “Five Estate Planning Lessons From The Paul Walker Estate,” from Trial and Heirs: The Legacy Experts. Find the original article here: http://trialandheirs.com/blog/celebrities/paul-walker-estate-good-estate-planning-lessons

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