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Estate Taxes: 2011 and beyond

Thursday, December 23rd, 2010

For most of 2010, several of my clients were worried that the estate tax exemption would be set at $1 million dollars with any amount in excess of $1 million being taxed at 55 percent.  Those individuals with even a $2 million dollar estate were faced with the possibility of paying a large tax bill upon their death to the federal government.  During the last few weeks in Congress, some fears have been removed concerning estate taxes while others still remain concerning the health of our economy.   Here is a summary of the actions Congress has taken concerning estate taxes for 2011 and 2012:

Estate and gift taxes. For 2011 and 2012, the top estate-tax rate falls to 35% and the exemption rises to $5 million an individual.

The bill also allows executors of 2010 estates to elect whether to use 2010 rules or 2011 rules. The choice will help heirs who would pay more as a result of the lapse of the estate tax in 2010 and a corresponding rise in capital-gains taxes.

Also for the first time, estate, gift and generation-skipping taxes will be “unified” so that one $5 million exemption per individual applies to all three.

While most of you may think that your estate will never reach $5 million and now may tune out when you hear the phrase estate planning, there are additional concerns for drafting an estate plan even for estates that do not reach the $5 million mark.   Look for my next post in 2011 for practical legal solutions for estates less than $5 million.

I wish everyone good health and prosperity in the new year!

Secrets to Estate Planning

Thursday, June 17th, 2010

While many people focus on documents such as a living trust, Will, power of attorney or Advance Health Care Directive when considering an estate plan, I believe you should focus on a few more details in addition to the estate planning documents.

First, most people need a plan for their estate in addition to the estate planning documents.  Most attorneys will draft an estate plan, but the plan does not accomplish the intended goals.  A true estate plan includes writing instructions to family members on distribution of funds, ensuring that all assets are properly controlled by the living trust document and communicating financial or medical desires to family members so that true intentions are followed.  Simply drafting a Living Trust, Will, Power of Attorney or Advance Health Care Directive is typically not enough unless they are customized to your goals.

Second, your assets are not protected from probate court unless re-titled in the name of your living trust.  Again, simply drafting a living trust does not protect your assets from probate.  Unfortunately, many attorney’s do not offer the service of “funding” a living trust which means re-titling assets or changing beneficiaries to the name of your trust.  Without properly giving the living trust control over your assets, your family members may not avoid probate.

Third, some assets should not be re-titled to the name of your trust such as an IRA or 401K.  However, these assets can still be protected through a living trust but should be carefully examined and reviewed by an estate planning attorney.

Drafting an estate plan is more than just cookie cutter documents.  An estate plan, if drafted correctly, can preserve the value of your assets, avoid probate, reduce unnecessary estate taxes, ensure that your loved ones will receive what you intend them to receive, manage your estate for yourself in the event that you become disabled and can protect your privacy.   Make sure your estate plan accomplishes your goals.

Welcome to the Roseville Estate Planning Blog

Thursday, June 17th, 2010

Welcome!  I hope you will find the information posted in this blog to be informative concerning estate planning and issues related to estate planning such as probate, conservatorships, durable power of attorney and Advance Health Care Directives.   Please keep in mind that the information in this blog is not legal advice, and your use of it does not create an attorney-client relationship.  Any liability that might arise from your use or reliance on this blog or any links from this blog is expressly disclaimed. This blog is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice.  My practice is limited to the State of California and my office is located in Roseville, California.

With the legal disclaimers out of the way, I hope this information is useful for you.  You can find additional information at my website