Articles Posted in Estate Planning

The State Bar of California has online pamphlets on a variety of topics such as estate planning, living trusts, when to get a will, finding the right attorney, kids and the law, seniors and the law, just to name a few.

On the topic of estate planning, the State Bar website asks the following useful questions if you’ve been thinking about whether or not to contact a qualified California attorney to discuss estate planning:

  1. What is estate planning?

In California, will contests and trust disputes are quite common.  When someone who believes they are entitled to share in an estate or a family member disagrees with how estate property is being distributed, the likely result is probate litigation.  Litigation begins with a petition and that means someone who has an interest in the estate brings their disagreement to the court to resolve. Litigation is sometimes difficult to avoid despite using even the best estate planning techniques.

There are essentially four legal grounds for challenging the validity of a will.  Each of these bases can be difficult to prove because medical records need to be obtained, witnesses’ declarations/testimony needs to be provided and experts may need to be hired for their input.  Contesting a will can also be a very expensive court process, yet that fact does not often dissuade everyone.  The legal bases to challenge a will include the following: (1) there is a question about testamentary capacity, (2) there is a suspicion of undue influence in preparing or executing the will, (3) it was not signed properly, and (4) the testator was fraudulently induced into creating the will or including certain provisions.

A lack of testamentary capacity can invalidate a will.  Under California law, an incapacitated person is defined as follows:

Vesting Title in Real Estate

For investment property, perhaps one of the better ways of owning real property is in a limited liability company (LLC) created either in California or in another state with great asset protection laws and regulations.  The LLC should in turn be owned by your living trust.

For non-investment property, using an LLC may also be appropriate depending on the circumstances.  For example, if you are divorced or single, keeping title in your own name may be too risky and using an LLC instead may be more risk-averse.

My client’s father died after being killed at a convenience store where he worked.  He didn’t leave a Will but my client was his only child so the Los Angeles Court appointed him as administrator of his father’s estate.  My client had heard his father tell him repeatedly that he owned over a million dollars of property (despite his relatively small salary).  Since the administrator was still a student at a local university and had practically no means of self-support, he needed to find that property and ask the Court to permit the distribution of it all to him.  The only problem in administering the estate was that access to the information leading to the discovery of the million dollars of property was locked in his father’s Google gmail account.  Google refused to allow my client access despite having a Court Order and Letters of Administration granting him full authority over his father’s property.  Instead, Google wanted the Court to sign this Order:

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

 

[PROPOSED] ORDER TO PRODUCE CONTENTS OF DECEDENT’S GMAIL ACCOUNT

Dept.:

Judge:

 

Having considered all of the evidence and relevant legal authorities, the Court finds as follows:

  1. Google Inc. (“Google”) provides a free email service, called Gmail.
  2. ____________ (“Decedent”) is deceased.
  3. ____________ (“Administrator or Administratrix”), is the lawful administrator or administratrix of Decedent’s estate under California law.
  4. Decedent is the sole account holder of the Gmail account ___________ (“Account”).
  5. In his/her lawful capacity established under Paragraph 3, Administrator or Administratrix has a legal right to obtain the content of communications stored in Decedent’s Account.
  6. Under the circumstances of this case, and in light of this Order, no law, legal duty, or obligation, including, but not limited to, any provision of California law or the federal Stored Communications Act, 18 U.S.C. §§ 2701, et seq., prohibits Google from disclosing to Administratrix the communications stored in Decedent’s Account.

IT IS HEREBY ORDERED:

  1. Within ten (10) business days of the entry of this Order, Administrator or Administratrix shall cause an email message to be sent to Google at postmortemrequests@google.com. That email message shall attach an electronic copy of this Order as entered by the Court and shall state as follows:

I, _________, obtained the attached court order directing Google Inc. to produce to me the content of any reasonably accessible Gmail communications stored in the Gmail account [Insert Decedent’s Gmail Address] and dated between [date] and [date].

  1. The Consent Email shall further state that the Administrator or Administratrix consents to Google delivering the content to [Recipient’s name and Address]
  2. Within ten (10) business days of receiving the email message described in Paragraph 7, Google shall disclose to Administrator or Administratrix the communications specified in Paragraph 7. Google shall disclose those communications by sending them to Administrator or Administratrix, in an electronic format of Google’s choosing, at the email address that Administrator or Administratrix uses to send the email message described in Paragraph 7.
  3. Google shall have no obligations to disclose any communications under this Order until the Order is entered by this Court and until Google receives the email message described in Paragraph 7.
  4. This Order resolves any request, legal process, motions, or court orders currently directed to or against Google in this matter. Any such requests, legal process, motions, or court orders are hereby DENIED, QUASHED, OR VACATED as moot.

IT IS SO ORDERED.

Martindale-Hubbell Peer Review Ratings recently came out with it’s rating of me. The Ratings are an objective indicator of a lawyer’s high ethical standards and professional ability. Attorneys receive a Peer Review Ratings based on evaluations by other members of the bar and the judiciary in the United States. I have been honored with an “AV Preeminent” rating which is a significant rating accomplishment- a testament to the fact that a lawyer’s peers rank him or her at the highest level of professional excellence. My piers gave me a rating of 5 out of 5 in all possible areas analyzed: Legal Knowledge, Analytical Capabilities, Judgment, Communication Ability, Legal Experience. I’m pleased and honored.

On November 9, 2012 the Joint Committee on Taxation released a report which, among other issues, examines the potential impact to the Treasury from potential changes to the estate tax, including the Obama administration’s proposals. Importantly, if the 2012 estate tax regime is extended into 2013, the Joint Committee estimates that there will be 3,600 taxable estates. Under the Obama administration’s proposed 45-percent estate tax and $3.5-million exemption, the number of taxable estates in 2013 is estimated to be 7,200. If the estate tax regime in 2013 reverts back to the 2002 regime (as it is currently scheduled to do), the number of taxable estates is estimated to be 55,200.

2012 provides a unique opportunity for making gifts using the federal estate, gift and generation skipping transfer (“GST”) tax exemption of $5,120,000 (reduced by any prior use of such exemption).

Unless Congress takes action, the exemption decreases to $1 Million on January 1, 2013 and there is a possibility that those who miss the opportunity will have lost the ability to make significant tax free gifts.

· Based upon the existing estate and gift tax rate of 35%, the additional taxes from not taking advantage of the gift exemption of $5.12 Million that could expire on January 1, 2013 as compared to the $1 Million gift tax exemption that is scheduled to be effective on January 1, 2013 could be over $1.4 Million.

Are you married?

Estates of married individuals dying after 2010 must file an estate tax return to pass along their unused estate & gift tax exclusion amount to their surviving spouse.

Available for the first time this year, the new portability election allows estates of married taxpayers to pass along the unused part of their exclusion amount, normally $5 million in 2011, to their surviving spouse. Enacted in December, 2010, this provision eliminates the need for spouses to retitle property and create trusts solely to take full advantage of each spouse’s exclusion amount.

In November, 2010, a court action was filed in the U.S. District Court, Southern District of New York, seeking a refund of the estate tax levied on a married same-sex couple, which would not have applied to a married straight couple and which arguably violated the United States Constitution. The plaintiff in that action, Edith Schlain Windsor (“Edie”) challenged the constitutionality of section 3 of the Defense of Marriage Act (“DOMA”) which required Edie to pay federal estate tax on her same-sex spouse’s estate.

Edie met her late spouse, Thea Clara Spyer (“Thea”), nearly a half-century ago at a restaurant in New York City. Edie and Thea went on to spend the rest of Thea’s life living together in a loving and committed relationship in New York.

After more than forty years, Thea and Edie were finally legally married in Toronto, Canada in 2007. Having spent virtually their entire lives caring for each other in sickness-including Thea’s long battle with multiple sclerosis-and in health, Thea and Edie were able to spend the last two years of Thea’s life together as married.

Currently, on account of the enactment of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the “2010 Tax Act”), the Federal estate tax exemption is $5.12 million, or twice that for a married couple.

It was and is common practice for a married person to provide if his or her surviving spouse survives to have his or her estate to be divided into two broad portions. One part is made equal to the estate tax exemption. That part is exempted from estate tax when that spouse dies on account of the so-called unified or applicable estate tax credit (which may be translated into a dollar exemption of $5.12 million). That part may be placed into a trust of which the surviving spouse is a beneficiary but need not be included in the gross estate of the survivor. Typically, that trust is called the “credit shelter trust” (because it is protected from type by reason of the unified credit), “estate tax exemption trust” or a “bypass trust” (because it “passes by” the estate of the surviving spouse for estate tax purposes).

The second part of the estate of the surviving spouse usually passes to or in a marital deduction trust for the surviving spouse and avoids estate tax when the first spouse dies by reason of the estate tax marital deduction. The property that passes to or in trust for the surviving spouse under the protection of the estate tax marital deduction is included in the gross estate of the survivor (unless consumed, given away or dissipated before the survivor dies). (In some cases, this second part of the estate is also divided by directing an amount equal to the otherwise unused generation skipping transfer tax (GST) exemption of the first spouse to die to pass into a separate qualified terminable interest property (QTIP) trust described in Section 2056(b)(7) of the Internal Revenue Code (Code). A QTIP trust qualifies for the estate tax marital deduction only by affirmative election.