Estate & Gift Tax

Tuesday, April 13, 2021

Power to Appoint or Disappoint

The Pros and Cons of Powers of Appointment

An often misunderstood but common estate planning tool that can appear in estate planning documents is the power of appointment. Not to be confused with a power of attorney (the document that allows you to delegate certain powers to an agent to act on your behalf while you are still living), a power of appointment can be an incredibly useful tool if used properly and knowledgeably.

A well-considered power of appointment allows you to maintain significant flexibility in your estate plan now and in the future, even when that estate plan is otherwise considered irrevocable under the law. Though hundreds of pages of books, scholarly articles, court decisions, and tax regulations have been written on the topic of powers of appointment, this blog can help you identify opportunities in which powers of appointment may be useful and recognize cases in which they can create negative consequences.

What Is a Power of Appointment?
Broadly speaking, a power of appointment is a right granted in a legal document, including in a will or a trust, by an individual (the donor) to another person (the donee or the power holder).

Read more . . .

Tuesday, September 29, 2015

30 Things Good San Diego Will, Trust, and Estate Lawyers Want You to Know

30 Things Good San Diego

Will, Trust & Estate Lawyers

Want You to Know

Estate planning is a pretty big field, with lots to take into consideration with your lawyer. There are complexities and confusion; but at the end of it all, there’s no doubt that coming up with a solid plan is one of the best paths for retirement, saving, what you are able to leave behind, and—of course— making things easier on your loved ones.

What follows is a list of things that every credible San Diego will and estates lawyer would want you to know. Items range from funeral arrangements to important documentation to life insurance and IRAs. This list is by no means comprehensive, but it does give you a little insight into the complexities of estate planning.  So, here they are, in no particular order:

  1. Trusts aren’t just for wealthy people.
  2. Trust assets don’t go through the probate process and can be put into action right away.
  3. Trusts keep your family business private.
  4. You should share your plans with those they will affect.
  5. Healthcare directives (Advance Directives) and financial powers of attorney are an important part of your estate plan.
  6. Anyone with minor children in California should have an estate planning lawyer draw up standby guardianship papers.
  7. Make sure your family can find your estate plan.
  8. If you die without a will or trust, pretty much every decision is up to the courts—not you!
  9. Wills and trusts can be contested, but it’s not nearly as common as you might think.
  10. There is a very good chance that you will be physically incapacitated before you die.
  11. Family members don’t always think clearly when an estate is being distributed.
  12. Your ex-spouse may be entitled to your assets if you haven’t changed beneficiaries.
  13. There are trusts to provide for everything from your pets to your family’s ability to travel the world.
  14. You can place limitations on how and over what period of time your heirs get to use their inheritance.
  15. A good San Diego will and estate lawyer can save you an unbelievable amount in probate fees, estate, property and income taxes.
  16. You can use life insurance and other means to supply funds for a trust.
  17. Websites that promise do-it-yourself planning kits are pretty much NEVER the answer – they necessarily need to be “one size fits all.”
  18. Family members are not the only people you can choose as the executor of your estate—there are professionals who can do this job.
  19. You can make annual gifts (currently up to $14,000 per person) tax-free while you’re still living – but if you may need long term care soon there are other restrictions that should be observed when making gifts.
  20. There’s a big difference between a “will” and a “living will” (Both are important).
  21. It’s never too early or too late to start your estate planning (But the earlier you start, the better).
  22. Review your estate plan at least once a year.
  23. Review your estate plan after any major life change.
  24. As you age, your estate planning (and other legal) needs will change focus.
  25. Money cannot ordinarily be left to minor children directly.
  26. Make sure your family knows if you’re an organ or tissue donor.
  27. Make funeral arrangements (and cover expenses) a part of your estate plan.
  28. Small business owners need a succession plan
  29. There are many ways that a San Diego will and estate lawyer can help you increase the value of your estate for your heirs (such as stretch payments for IRAs, avoiding taxes with a trust, etc.).
  30. Your estate will be responsible for debts accrued during your lifetime.

If you have questions about any of these items or you are ready to get started creating an estate plan (or updating your existing plan) that takes into account your wishes for your finances, end-of-life affairs and providing for your family, feel free to contact our San Diego will and estate lawyers at (619) 281-1888 to schedule a consultation.


Friday, June 5, 2015

What happens when a San Diegan dies with debts left behind?


In good times and in bad, San Diego will, trust and estate planning lawyers are intimately aware of their clients’ financial situations.  They see the plain facts; most people carry a heavy debt load.  Whether it is the person setting up an estate plan or one who has inherited from it, there are often questions regarding what happens to that debt.  Does money come out of the estate for medical bills?  Are adult children responsible for credit cards?  What happens to the mortgage?

As with so many aspects of law, the answers are somewhat complex, but here’s a basic look at what you and your San Diego will and estate lawyer might expect to see:

  • Mortgage Debt

When a home is inherited, its mortgage is, too.  Federal legislation forces banks to work with families who have inherited an encumbered (mortgaged) home.  Watch out though, these banks will expect payments to be made and may be resistant to providing inheriting heirs with the information they need to meet their obligations under the outstanding loan.  The exception to this, are reverse mortgages.  Reverse mortgages come due shortly upon the borrower’s death – with a maximum extension of a year from death.  Fortunately, new rules protect surviving spouses, even if they aren’t ‘on the loan.’   In California, all home purchase and most refi loans (except cash out loans) are non-recourse.  This means that in most cases an individual’s other assets aren’t liable if a mortgage is higher than the home is worth.  For Federally insured home mortgages, lenders must allow family members to acquire a property, prior mortgage free, for 90% of the homes appraised value, no matter how high the mortgage.  

  • Taxes

Taxes are sticky.  Most taxes stick to anything a person owing the taxes left behind. When it comes to paying bills left behind, taxes are usually exempt from claim period limitations and one of the highest priorities, needing to be paid before other debts.

  • Medical Expenses

This is an area where things can get a little dicey, so definitely work with a local San Diego attorney with experience in estate administration and probate to minimize the amount of medical debt left behind.  Who pays what and when is a tough question for outstanding bills.  More surprising for many families is that  if a person who has passed away received Medi-Cal benefits, those benefits become a debt on death and may need to be repaid from the estate.   If heirs receive distributions prior to Medi-Cal being repaid, they can become liable for all or part of the debt.  Again, the responsibility for medical and nursing home expenses is very complex and should be taken to a lawyer.

  • Credit Cards

As long as you aren’t a co-signer on a credit card, you aren’t personally responsible for them.  Remember, being an authorized user does not necessarily make you a co-signer. The companies can call the executor in order to collect from the estate, although there is a finite time frame in which to do so.  California law has procedures which can be followed to shorten the amount of time a person’s creditors have to come forward after they have died.  In addition, a good estate administration attorney can often get credit card companies to negotiate down outstanding balances in order to get a more certain and immediate payment.

  • Duty to Not Pay Unenforceable Claims

If you are not the only heir, remember that you must exercise due diligence in confirming a debt before you can pay it.  Remember, too, that when a debt is paid for by the estate, it lowers the overall amount that is left to be inherited.  It is amazing how many companies are unethical in their collection efforts.  Many pursue claims they know are no longer legally enforceable and sometimes, purely fictitious claims show up. 

  • Everyone Needs Help

Some debts must be paid from an estate.  Others do not.  Unfortunately, unethical collectors can haunt family members and it is hard to know what is what without good legal help.  A good San Diego will, trust and estate planning lawyer can help you deal with these issue properly when the time comes, or help your family proactively plan ahead to limit the value of your estate exposed to creditors using legal tools such as trusts.  To discover all of your options when dealing with someone’s debts after they have died, contact our centrally located Weissler Law Group office at (619) 281-1888

Sunday, May 17, 2015

Three California Estate Planning Myths: True or False

Three California Estate Planning Myths: True or False

San Diego estate planning lawyers eat, sleep, and breathe estate planning. They see pretty much every kind of situation unfold.  The families of individuals who have taken the time to create solid estate plans nearly always fare better than those who do not.  Still, there is an amazing amount of misinformation, misconceptions and out and out myths floating around out there that stop people from taking action to protect their futures and families with an estate planning lawyer’s assistance.

Education is the key.  I feel it is incredibly important that San Diego Attorneys, Tax Professionals and Financial Advisors tackle these myths head-on and debunk those that aren’t true.

T or F:  Estate plans are just for those with lots of assets.

The answer is false.  So many people end up unknowingly damaging their estates and hurting their families because they just don’t think they have “enough stuff” to justify an estate plan.  This myth absolutely needs to be debunked!  Estate Planning is about control, both during your lifetime and after you are gone.  If you care about what medical decisions may be made for you if you are unable to make your own decisions – you need to make estate planning decisions. If you own anything and want to direct what those assets can be used if and while you are incapacitated, you need estate planning. If you care about getting as much of your property as possible to your chosen heirs, you need estate planning.

If you fail to plan and die owning anything, there will be a legal process in order to determine what to do with it after you die.  It doesn’t take a lot of assets to force a family to endure the probate process.  In California, not only is the Probate process long and drawn out, but it also costs money!  That money comes from the estate itself, meaning that those precious few assets you wanted to pass on could actually end up being sold in order to pay for probate and taxes.  Fortunately, working with an estate planning lawyer ahead of time allows you the opportunity to put in place structures which protect your assets and circumvent probate using whatever tools are appropriate for your situation.

T or F:  You don’t need an estate plan as long as your family knows your wishes.

The answer is false.  There are a couple of problems that San Diego estate planning lawyers encounter with this line of thinking.  First, and probably most importantly, is that just because you and/or your family wants things to happen in a certain way, there’s no guarantee they will.  Without estate planning work, the California legislature’s wishes will be followed.  Your family may not be allowed to follow your wishes and may not be able to follow their own wishes.  Instead, your loved ones will be forced to follow the laws of the state of California—even if these go completely against what you wanted.  Second, and perhaps more importantly. everyone experiences grief differently.  After a death, small token items with emotional connections can become much more important.  Things become a substitute for the love they claim.   The probate process hits the grief sticken hard.  It encourages family members to resolve questions by legal challenges.  Within the probate process you cannot count on your child properly remembering your true preferences and instead not remembering different wishes which can lead them to find ways to subvert them for their own gain.  The best way to avoid both of these kinds of drama is to work with a San Diego estate planning lawyer who knows how to ensure that things go the way you want as a matter of law.

T or F:  Trust funds are for more than passing on money.

The answer is true.  While we may have certain ideas about trust funds as a result of watching too many movies, a whole lot of people aren’t clear on what they can really do.  For example, your San Diego estate planning lawyer can help you set up a trust in order to limit the taxes your estate (and heirs) will have to pay later.  Trusts also provide you with a big say in how your heirs are able to use or lose the inheritance you are leaving behind.  On the one hand, do you want them to have free rein, to pay for  their own or their children’s education, to use going on vacation or fixing their car? On the other hand. do you want your life’s savings to be at risk if they divorce or have their own financial troubles? These are just some of Client’s wishes that trusts are used to handle.

When we look back at our lives, it easy to see that even a small amount of money, useable for the right thing at the right time could have made a big difference. Even if you don’t have a ton of assets, a skilled San Diego estate planning lawyer can help you create a roadmap that will be followed by both the courts and those you’ve left behind.  From avoiding probate and un-necessary taxes to preventing family fights and ensuring that your grandkids go to college, working with an estate planning lawyer in San Diego is the first step in protecting what you hold dear.

Tuesday, January 20, 2015

Estate Planning When You Have Assets, but no Children

For some, it’s all about the kids.  A lot of San Diegans only come in to see an estate planning lawyer to figure out how to take care of their kids once they are gone.    For those with minor children, this might revolve around choosing legal guardians, setting up educational trusts, and making sure there is someone to manage any assets left for the kids.  Beyond that, parents never stop being parents.  Parents want to be certain that their deaths don’t disrupt their children’s lives, and most of all, they want to pass on three things to their children:  memories, advantages in life and financial security.  These are good reasons but they skirt around the real reason which is to maintain control over themselves, their children and their assets.

But what about those who don’t have children?  What do those with money and no kids direct their estate planning lawyers to do?

Who Are These People?

According to a recent Gallup Article, 14% of adults over age 45 are without children.  There are quite a lot of adults without children who are doing their estate planning.  As a group, these childfree individuals and couples tend to be more educated and affluent than the general population.  Forty-five and up is a broad group of people – from dual income no kid couples to singles nearing retirement. 

Big Issues

For individuals without children, some estate planning choices can be more difficult.  The vast majority of individuals with children empower their children to act for them in financial and medical decision making if they do not have a spouse to make those decisions for them.  According to a Bloomberg Article by Rich Miller (analyzing Bureau of Labor Statistics data), 50.2% of all Americans over 16 years and older are now single.  If this is true of individuals without children, then that group of over 7% of the populace faces a doubly daunting challenge in choosing who should act for them if they are incapacitated or have died.

Who do you trust?

Younger adults without children may have their parents or siblings available to step in to act, as well as nieces and nephews.  Unfortunately, it is rarely that simple. 

While our national entrepreneurial and tech booms have created a still growing class of younger men and women who have come into money before they’ve had the opportunity to get married and/or start a family, long work hours are leaving them without large circles of close friends outside of work.  This narrows their range of choices.  We are seeing co-workers serve as executors and successor trustees for individual who they barely knew outside of the workplace. This can be an invitation for surviving family members to get bent out of shape.

Older adults without children may find that their best choice of a person or company to act for them may be a professional trustee.  Professional trustees range from Trust Companies with nationwide reach to individuals who are licensed Professional Fiduciaries, Attorneys or CPAs.

Who do you love?

Of course, many of the people described above will want at least a portion of their estate to go to family members.  Aunts and uncles may want to set up college funds for their siblings’ kids or grandkids.  Adult children may want to leave support behind to make sure that Mom and Dad are set for retirement and beyond. 

Young or old, many people seem to be showing an interest in leaving some of their wealth to charitable causes.  Many individuals without children are choosing to leave more than a tithe (10%) of their assets to support their causes or make a difference when they are gone.  San Diego will and trust lawyers sometimes refer to this as “legacy planning.”  Their client identifies a cause that he or she is particularly interested in supporting and then names that cause as a beneficiary in their will, trust or on certain accounts or policies.  A growing approach for public good minded individuals is the use of donor-advised funds.  Funded during lifetime (creating a current charitable deduction), or at death, these alternatives to the foundations created by the very wealthy hold and invest funds to be given to charities selected by the donor immediately or at a later date.  By using a donor advised fund, you can provide for charitable gifts to be made and causes to be supported, long after you are gone.

Planning Early Is Key

The fact that an individual does not have children does not make the need for estate planning any less important.  The California Probate Code has a plan for your assets if you don’t make a plan.  Arguably, men and women without children have more incentive to make their wishes legally binding and known. They cannot just “leave everything to the kids.” 

We all spend a lifetime building our nest eggs.  We don’t want those eggs tossed about without care.  Most individuals want a say in what happens to the money they’ve accumulated over their lifetimes.  Equally importantly, almost everyone wants a say in who can make medical and financial decisions for them in an emergency if they cannot do so for themselves.  There may be charities you want to benefit and there are choices to be made in the best way to support the causes you believe in.  

If you are an adult without children, it is important that you meet with an estate planning attorney.  An estate planning lawyer can create for you the tools and structures needed for you to control your property and insure that your medical treatment wishes are followed. 

When friends ask when they should see an estate planning attorney, I tell them “we all drive on the freeway; we don’t know which day is ours.”  See one before your family needs for you to have seen one.  Attorney Joel Weissler and Attorney Damien Snow can be reached at (619) 281-1888.


Saturday, January 10, 2015

2015 Annual Tax Free Gifting Limits to Non-Citizen Spouses Change – But Many Will Still Fall Into the Trap

2015 Annual Tax Free Gifting Limits to Non-Citizen Spouses Change – But Many Will Still Fall Into the Trap

Estate and Gift Tax Basics: 

Our tax code imposes a substantial tax on all transfers of wealth within the United States. Each U.S. Citizen has access to two or three exceptions to this tax regimen.

First, each citizen has a shield from gift and estate taxes which, starting in 2015, will protect up to $5.43 million dollars from transfer tax. This is an increase from 2014 when only $5.34 million was exempt. This is sometimes called the unified exclusion amount because it can be used in whole or in part against either gift taxes during your lifetime or against estate taxes after your death.

There are also category exclusions which exclude certain types or amounts of gifts from being subject to estate tax. These category gifts neither count against your unified exclusion amount nor are they subject to tax. These category gifts include annual gifts. Each U.S. person may make up to $14,000 in current gifts to any person they want without tax. They can also make gifts of this amount or less to as many people as they want, all without tax. A second category are favored direct gifts for the benefit of a person. Under this category, payments made to pay another’s medical bills or educational expenses are not considered gifts.

The third and, perhaps the most generous category, are transfers to spouses. If the recipient spouse is a U.S. Citizen, the donor/giver spouse may give to them any amount without tax. Unfortunately, this unlimited spousal gift exclusion does not apply if the recipient spouse is not a U.S. Citizen. The spousal gift exclusion for gifts to non-citizens goes up next year to $147,000, up from $145,000 for 2014. Any gifts from a U.S. spouse above that amount will chip away at their unified exclusion amount. After that unified exclusion amount is fully consumed, all additional gifts are taxable and of course a gift tax return is required.  With proper planning gifts may be made through a qualified domestic trust and thereby delay when tax is levied until after the non-citizen spouse passes away.  

The biggest surprise tax challenge for non-resident non-citizens is often how to pass their U.S. property onto their children without being walloped with taxes – I will talk about that in a future post.

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