February 9, 2012
The family limited partnership (FLP) and the limited liability company (LLC) are excellent estate planning techniques to reduce the taxable estate. The estate planning advantages of the FLP also apply to the LLC so this article will simply refer to FLP’s for clarity. A FLP is a limited partnership comprised of family members. FLPs have become very popular during the last few years because the valuation discounts of FLP assets have been so substantial. (more…)
December 22, 2011
Lifetime gifting is a simple but surprisingly effective way to reduce the value of an estate. Every person has a gift tax exemption of $5,000,000 which allows for the transfer of gifts up to this amount during life without incurring any gift tax. Even gifts made in excess of the $5,000,000 gift tax exemption may have beneficial tax results because the payment of the gift tax is preferable to the payment of the estate tax. (more…)
December 15, 2011
An Irrevocable Life Insurance Trust (ILIT) is an irrevocable trust established in order to own life insurance on the life of the settlor of the ILIT. Normally, the proceeds of the life insurance policies on an individual’s life are includable in that person’s gross estate when a person dies. If the ILIT owns the policy and the settlor holds no incidents of ownership, the proceeds of the life insurance policy are not includable in the settlor’s estate. The reason for this is because the ILIT is a separate entity from the settlor.
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December 12, 2011
Internal Revenue Code Section 412(e)(3) Plans (formerly known as 412(i) Plans) can be an appropriate alternative retirement vehicle for certain wealthy small business owners. A 412(e)(3) Plan is a defined benefit plan which is funded with annuities or a combination of annuities and whole life insurance. The primary difference of 412(e)(3) plans and traditional defined benefit plans is that they are capable of creating larger tax-deductible contributions for the plan sponsor, the employer. (more…)
November 3, 2011
A grantor trust is established by the grantor irrevocably transferring property to a trust during his or her lifetime while retaining an interest for a number of years with the remainder to the beneficiary. The remainder interest to the beneficiary is subject to gift tax and its value is ascertained per the tables provided by Internal Revenue Code Section 7520. (more…)
An unprecedented number of Californians are faced with the realization of losing their homes, either through short sale or foreclosure. Many Californians took advantage of generous financing to purchase homes with little to no down payment while home values were at record highs. A large number of these homeowners can no longer afford to keep these homes due to personal circumstances such as divorce or a loss of employment. Additional homeowners are simply choosing to “walk away” from their homes believing that it makes little economic sense to continue to pay for a mortgage which far exceeds the value of their home. (more…)
A review of Masry v. Masry (2008) 166 Cal.App.4th 738
Edward and Joette Masry created a revocable living trust (Family Trust). The property transferred to the trust was community property as it was acquired during marriage. The trust named Edward and Joette each as a trustor (settlor) and trustee of the trust and reserved the right of each to revoke the trust “by written direction delivered to the other Trustor and to the Trustee.” (more…)
The primary role of an attorney in providing counsel to a client is to represent the client’s interests. However, there may come a time when the client becomes incapacitated and is no longer capable of acting in his or her best interest or following the advice of the attorney guiding the client to proceed in the client’s best interest. Incapacity can result from mental illness, substance abuse, or physical ailments which prohibit the client from exercising sound judgment and protecting his or her interests. Lack of capacity issues are of particular concern to trusts and estates attorneys as many of their clients are elderly and may have medical problems, particularly the onset of dementia. (more…)