If you and I have spoken about your estate planning strategy, you have probably heard me suggest that Biden and the Democrats were going to make some changes to the federal estate tax law. This week, Biden unveiled some proposed changes.
 
The federal estate tax exemption is currently extremely high at $11.58 million per person. This means that you can leave $11.58 million to your loved ones without estate tax consequence.  The biggest surprise is that the estate tax exemption will not change, as previously discussed, according to Biden’s The American Families Plan.  That leaves many of us untouched by the estate tax.  That's the good news.
 
Now, onto the not so good news. Biden is attempting to remove stepped up basis. This means that currently, when a decedent passes away, the assets they leave behind get a step up in tax basis.  In sum, this saves beneficiaries and heirs a lot of money when it comes to selling those assets.  It can lessen and even completely eradicate capital gains taxes.  Biden’s proposal will eliminate that step-up.  Since this will result in a significant tax for many of us, there are thankfully some exceptions.  Gains of less than $1 million, or $2 million, per couple would not be taxed.

Let's not hit the panic button yet. This proposal is not law yet. The Democrats have a slim margin and this would be a hit for a lot of citizens. So, the answer right now is to wait and see...

Proposition 19 is one complicated piece of legislation. It is difficult to explain without a brief discussion of the backstory.  County assessors administer the assessment of your real property.  Proposition 13, passed in 1978, limits the property taxes to 1% of the assessed value of the property.  It also limits assessment to a 2% increase unless there is a change in ownership or construction – in which case there is an assessment. 

Propositions 58 and 193 exclusions were also created which allowed property to transfer between family members including parents and children (58); grandparent to grandchild (193).  Propositions 60 and 90 allow homeowners 55+ years of age to sell their primary residence and transfer the base year value of that property to a replacement residence if certain conditions are met. Proposition 60 applies to intra-county transfers, while Proposition 90 applies to inter-county transfers under certain conditions

The year that the property is assessed for property tax purposes is referred to as the “base year.”  The assessed value is generally the sales price. Thus, if grandma and grandpa bought their home for $300,000, the base year value is $300,000.  Property tax will be calculated based upon $300,000. If grandma and grandpa sold that same property in 2021 for $1,5000,000 the property would be assessed at $1,500,000.

Prior to Proposition 19 grandma and grandpa could leave the home to a grandchild, and the house would be excluded from reassessment, resulting in an enormous savings on property tax. Now that Proposition 19 is in effect, the grandchild would not be excluded, subject to some exceptions.  The County would assess the property upon the transfer to the grandchild, except under some very narrow circumstances.
 
Questions on how this may affect your home or homes? Call me for a consultation.

I look forward to seeing you at Estate Planning Meeting #1! Please be sure to upload the following documents to Clio at least two days prior to our meeting. 

• Any gift tax returns – Form 709​
• Last two years of filed IRS Form 1040
• Divorce settlement agreement or order (if applicable)
• Bank statements for the last month – to show balance and account numbers
• Life insurance documents showing beneficiaries, account numbers and amount - this may be comprised of different documents. Screenshots also work.
• Corporate/LLC/LLP/Partnership “Binders” for any businesses you have an ownership interest in.  I’ll need to borrow your binders for a bit.
• Property deeds for any real property.  I can also pull the records if you don’t have them.
• Documents showing the estimated worth of any jewelry
• Any estate plan for which you are a beneficiary
• Most recent estate plan

Most recent of the following:

• Brokerage account statements
• Bank statements (personal and for any businesses you own)
• Individual stock account statements
• Any promissory notes from anyone who may owe you money
• Jointly owned property – statements or deeds
• Annuity statements
• Retirement/IRA statements

 
If you have any other investment or business interests that may not be triggered by any of the above requests, please let me know.

2020 has brought so much change for all of us.  The pandemic means that we all have less time and less bandwidth. 

If you have my office's questionnaire in hand, you may have thought to yourself… I should probably finish up that questionnaire so I can get Christie rolling on my estate plan. But, wow is there no time in my day and I am feeling overwhelmed.

If you don't have my office's questionnaire in hand you may have thought to yourself... I don't have time to think about all this stuff! 
 
I have good news... 

I have created a hybrid model in which I will work with you over the phone or video conference to complete your questionnaire with you.  After that, my usual billable rate would apply.   

Here is the deal: I wish I could just do the work for you – I really do!  But, the reality is that I cannot do it for you but I can do it with you.

​If you want to cut to the chase on the questionnaire and save a lot of time, I can work with you on the questionnaire for a flat rate.  You’ll be that much closer to peace of mind.  Click below to schedule a meeting and for more details. Easy breezy. 

I have recently received a lot of questions about whether guardians are legally obligated to follow the wishes of the child’s parents.  The answer, in short, is no; however, this does not mean that the guardian can do things that will put the child at risk.
 
The law provides that when the court appoints a non-parent as a guardian, of a child, the authority of the parent ceases.  The guardian becomes responsible for the care, and custody of the child.  But, this power is not limitless.  The guardian is subject to the regulation and control of the court in its role.  The court has continuing jurisdiction over the care of the child.
 
Some interesting questions have popped up over issues such as the duties of a guardian regarding a child’s healthcare.  In the age of the “debate” over the “danger” of vaccinations, a guardian’s failure to provide care can be at issue.  A guardian has the same right as a parent to give consent to medical treatment performed on the child.  Generally, parental consent is required for medical services performed upon a minor. But, if the court determines that a guardian is not allowing life-saving treatment then a court is likely going to sever that guardianship, appoint a new guardian and allow the treatment. These issues, of course, are complex and the outcome of each case will vary.  It is evident though that once the court appoints a guardian, the guardian is not required to follow the pre-mortem wishes of the child’s parents.  So, the moral of the story is, choose your guardian nominations carefully.    

Please register on the REGISTRATION PAGE.

​One of the main goals of drafting up an estate plan is to avoid formal probate proceedings.  A formal probate proceeding can take months to years, and cost a lot of money.  It will also require heirs and/or beneficiaries to file the trust with the court, making the trust public record. Proper planning with the right estate planning vehicles can prevent the headache of a drawn-out formal probate procedure.
 
The goal of estate planning should be to minimize the “probate-able” assets in your estate.  In this way, heirs and/or beneficiaries won’t have to go through the probate process. 
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Probate assets will require a court order to be transferred.  Probate assets, include (and advanced apologies for sounding like a lawyer here) everything but non-probate assets.  Essentially, probate assets are assets that do not come with any instructions – either from the decedent or through operation of community property laws.
 
Non-probate assets are assets that can be transferred to heirs and loved ones without a court order.   These are assets with instructions.  The instructions are from the decedent, or by law such as where one spouse passes away, leaving a living spouse.
 
These assets include:

• Joint tenancy property, which, by law, will transfer to the other joint tenancy property owner(s);
• Life insurance with a named beneficiary, which by operation of the instructions of the decedent will pass to the named beneficiary;
• Pension plan distributions, with a named beneficiary, which by operation of the instructions of the decedent will pass to the named beneficiary;
• Property owned by living trusts, which by operation of the instructions of the decedent will pass to the named beneficiary;
• Money in a bank account that has a named beneficiary or payable-on-death designation, which by operation of the instructions of the decedent, will pass to the named beneficiary;
• Individual retirement plans or other retirement plans that have a named beneficiary, which by operation of the instructions of the decedent will pass to the named beneficiary;
• Real estate that transferred with a transfer-on-death deed beneficiary which by operation of the instructions of the decedent will pass to the named beneficiary;
• Transfer-on-death automobile deed; which by operation of the instructions of the decedent will pass to the named beneficiary.

 
If all assets have instructions and those instructions can be followed, the assets can be transferred without a court order.  But if there is a bump along the road regarding the instructions, a probate court order will be required. 
 
For example, let’s say that the decedent designated her husband as the sole beneficiary of her life insurance policy, but the decedent’s husband passed away.  The life insurance company will not transfer the funds without a court order.
 
A court order can either be a formal process, or a simple one.   If the gross value of probate assets is valued at less than $150,000, then a formal probate is not required. For example, using the same example as above if the life insurance policy is valued at less than $150,000, the decedent’s heirs can use a simplified procedure to request a court order, compelling the life insurance is properly distributed.
 
There is real benefit to drafting up an estate plan to avoid the probate process.  Let me know if I can assist you in any aspect of your estate planning. I am happy to schedule a complimentary 15-minute consultation with you.