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

California Blended Families Face Unique Challenges When Developing Comprehensive Estate Plans

February 1, 2011/in Estate Planning /by Michael Lonich

Creating a successful estate plan for blended families can be extremely complicated for a number of reasons.

First, it is often challenging for spouses to identify and agree on who should be the named beneficiaries. For example, a spouse who has children from a prior marriage may want those children to share in his or her estate at death. Yet, if there is a tense relationship between the stepparent and the children from the prior marriage, the stepparent may resent or discourage naming those children as beneficiaries.

One of the most important tasks for spouses of a blended family is to reach an agreement on their priorities. For most spouses with modest estates, the primary goal of the estate plan is to provide for the care of the widowed spouse and minor children from the current marriage. The decedent’s older children are often considered secondarily. However, if the spouses have a larger estate, their goals may focus on a more equal division of assets between surviving family members.

In order to meet the estate planning needs of a blended family, a “bypass trust” may be used. A bypass trust is an irrevocable trust that is funded with the deceased spouse’s separate property and his/her share of the community property. The surviving spouse would be the lifetime beneficiary of this trust with the deceased spouse’s children often designated as the remainder beneficiaries. Essentially, the proceeds of the bypass trust would be available to meet the lifetime needs of the surviving spouse while ensuring that the deceased spouse’s remaining property is ultimately distributed as the deceased spouse wanted. However, a bypass trust is not appropriate for every blended family as the surviving spouse may deplete the trust assets during his/her lifetime and leave nothing for the stepchildren.

For more information on what types of estate planning instruments can best meet the needs of your blended family, please contact Bay Area wills and trusts 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.

Passing Your Vacation Home to the Next Generation

January 27, 2011/in Estate Planning /by Michael Lonich

A family vacation home is more than just a piece of real property. It is a place where cherished memories are made by the dozens. It is also an asset that some individuals hope to pass down from generation to generation. If you feel this way about your vacation home, you can develop an estate plan that accomplishes your goal of keeping your valuable property in the family.

A California estate planning attorney can help you transition ownership of your valued home to the next generation while reducing tax implications. You may be interested in tailoring an estate plan that slowly transfers ownership of the home to the next generation of family members during your lifetime. This option utilizes federal tax law so that you can reduce your estate tax by taking advantage of lifetime gift tax deductions.

For more information about estate plans tailored to your specific needs, please contact our San Jose 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.

New Federal Regulations Increase Hospital & Visitation Rights for Same-Sex Couples

January 25, 2011/in Estate Planning /by Michael Lonich

Earlier this month, new federal regulations pertaining to hospital visitation became effective. These regulations require hospitals receiving federal Medicare or Medicaid money to have written visitation policies in place. The new law also requires hospitals to inform patients (or a patient’s representative) of their rights regarding visitors.

The new regulations require federally funded hospitals to allow patients to designate their own visitors. The new law also requires hospitals to allow patients the right to make personal decisions regarding whom they will appoint to make medical decisions on their behalf, regardless of gender or sexual identity. Hospitals refusing to comply with these new regulations will risk losing funding. These new regulations largely increase the rights of same-sex couples in relation to medical decisions.

If you live in California, and if you are interested in protecting your right to appoint a representative to make healthcare decisions during your incapacitation, you may be interested in learning more about an advanced healthcare directive or a durable power of attorney. An advance healthcare directive allows you to appoint a specified individual to make healthcare decisions based upon your specific wishes in the event you become incapacitated. A durable power of attorney allows your appointed agent to address your financial and property issues when you are unable to do so.

For more information on a durable power of attorney or an advanced health care directive, 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.

Sources: The Huffington Post; The Columbia Dispatch

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.

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 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.

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.

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