Estate Planning
Wills
A will is the most basic of all estate planning
documents. When someone dies, his or her estate must be settled.
This means that bills must be paid and property (including personal
belongings, household goods, cars, bank accounts, securities, real
estate) must be given to the beneficiaries. If no beneficiaries
are named in a will, California state law provides a formula
for distribution to living relatives.
Trusts
There are many types of trusts. Three of the
more common are:
Revocable Living Trust
A frequent estate planning tool is the Revocable
Living Trust. With a revocable living trust, property ownership
is transferred from the individual to the trust and is managed
by the trustee, usually the same individual. The benefits include
the avoidance of probate in most cases, the designation of the
person or persons to act on your behalf if you are no longer able
to manage your personal or financial affairs, often estate tax
reduction and control over your investments even after death.
It provides the maximum flexibility to control your wishes and
provide for your loved ones.
Irrevocable Life Insurance Trusts
Many people set up an Irrevocable Life Insurance
Trust (ILIT) to provide liquidity, after their death, for their
loved ones. An ILIT may significantly lessen estate taxes by utilizing
the gifting rules established by the government.
Education (Children’s) Trusts
We work with our clients to establish and manage
trusts set up specifically to finance the education of their children
or grandchildren.
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Powers of Attorney
Generally, there are two kinds of Powers of Attorney
– financial and medical.
A Financial Power of Attorney, Appointment of Attorney-in-Fact, designates the person or institution to act on all financial matters. An Advance
Health Care Directive designates the person or institution to act
on all health care matters.
Powers of Attorney may be effective immediately or when certain conditions
are met some time in the future.
Asset Titling
It is important that whatever is owned is titled
properly. Improper titling can have disastrous ramifications including
risk to ownership and unnecessary taxes. For example, if a daughter
is on the title to the family home as a joint tenant, even if it
is merely for convenience, any financial obligation of the daughter
could be exercised against the parents’ money. The parents
could be responsible for the daughter’s debts and lose their
home if they were to add her name to the title. There are better
ways to hold property.
Gifting
Many people wish to make gifts to their children,
grandchildren or favorite charitable organizations. This latter, in addition
to helping an organization, can create significant income and estate
tax savings. Our firm works with people to maximize the benefits
of gifting.
Estate Tax Minimization
Although much has been done to the estate tax structure, many estates far exceed the current $2,000,000 per person applicable exclusion and may owe up to 46% of the estate in taxes to the state and Uncle Sam. Again, proper advance planning often can save hundreds of thousands of dollars in taxes.
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Disclaimer
We gladly provide the materials on this
web page for informational purposes only. The information provided
is a summary of important California related information, does not
represent a complete discussion of the topics covered, does not
relate to any particular person, entity, situation or occurrence,
and does not constitute the formation of an attorney-client or other
professional relationship.
The information provided does not constitute advertising, a solicitation,
or legal advice. If you need assistance with a legal issue, you
should seek advice from a licensed attorney in your state of jurisdiction.
Kramer Radin, LLP expressly disclaims all liability relating to
actions taken or not taken based on any or all materials on this
web page.
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