Any reason to not use a Certified Specialist in estate planning, trust and probate law?

Any reason to not use a Certified Specialist in estate planning, trust and probate law?  Ok, there isn’t any good reason I admit it.  You MIGHT save a few dollars as some attorneys, who are not specialists, charge less. However, do you really want to entrust all of your hard earned assets and your family’s future to someone who isn’t dedicated to estate planning and probate law?

I actually find that my firm charges less than a lot of non-certified specialists so if it’s simply based on cost there is absolutely no reason to use a specialist because we are likely less expensive for getting a trust, pour over will, durable power of attorney, living will, quitclaim deed and other planning documents completed.  The same goes for living trusts, irrevocable trusts, life insurance trusts, qualified personal residence trusts, educational trusts, charitable trusts, family limited partnerships and the list goes on.  Yes, really! We charge less than most any comparable certified attorney and even less than some non-certified.

In our firm we have three attorneys who have taken, and passed the first time, the Certified Specialist examination. This test is given every two years by the State Bar of California Board of Legal Specialization. After passing the exam the attorney must provide a number of background reports from Judges and attorneys. Lastly, the attorney has to have an extensive number of cases completed in the areas of trusts and estates to qualify.

To hold this certification also requires an extensive amount of continuing education requirements that the non-specialist does not have to do. This is important.  We have to take many more classes specifically approved for specialization credit. Basic classes do not qualify. Thus, if you want a Certified Specialist in Estate Planning, Trust and Probate law contact us and make an appointment with John Palley, Amy Ruggles or Jennifer Rouse.

Beyond our certified specialists we have two attorneys who are former Certified Public Accountants (Irving Joseph and Sasha Collins).  Lastly, our business attorney John Meissner has a masters in taxation and is a certified specialist in taxation law.

At our firm we take pride in our specialties. We do not dabble in this area of law. We are focused and thus best able to serve your needs!

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Probate Timeline

Probate takes seven months minimum in California. Can be longer but a full California probate will not be shorter than 7 months. Let me explain….

Let’s hypothetically say we meet today, June 26, 2012, to sign your probate documents.

I often file documents within 24 hours of the initial meeting so let’s say we file it in Court, June 26, 2012.

Your first Court date is likely to be about 6 weeks out so that will be approximately August 15, 2012.

That starts the four months probate period. This is when property is sold, creditors dealt with, taxes paid, etc….

That period ends approximately December 15th.

Assuming we planned ahead we can file the final probate petition on that day, December 15th.

Our final Court date will be about 6 weeks later, roughly late January or first week of February.

Checks are cut that day!

7 months start to finish!

 

Estate planning can provide asset protection

Estate planning is not just about giving your stuff away when you die. It’s about giving your stuff away when you die in the most efficient manner possible and providing the best protections allowable to your loved ones. This is the most simple asset protection available. Anybody that does not include some form of trust protection, for their loved ones, is missing the boat!

There is no simple way to create a trust for yourself that gives you asset protection. However, when you set up a trust up for a third party it can give them asset protection. That is, creditor protection or liability control or whatever you want to call it. This is estate planning 2.0 to use the current vernacular.

In the “old days” trusts were set up to be distributed to children at age 30 or 35 or some such randomly chosen age. Yes, 30 or 35 is far better than 18, for putting large amounts of wealth into the next generation’s hands.  However, what about putting that next generation in control at 30 or 35 BUT leave it in a trust that can give that child security and protection not otherwise afforded them if they received it free of trust? That is asset protection.

A properly drafted trust will allow your child or other loved one to do the following:

- Have complete discretion on investments;

- Have complete discretion on distributions during their lifetime;

- Have complete discretion on where the money goes when they die.

That sounds a lot like if the assets were not in trust and didn’t have creditor protection!? That’s right!  A properly drafted trust gives all the flexibility but with some protections around it.

The key is to work with an experienced estate planning attorney to get this done right!

Good luck with your family wealth planning!

Using Trusts for Asset Protection

Estate planning is more than planning for after death. You can use trusts, and other entities, to create asset protection.  The key is planning AHEAD. Do not wait until you have a problem. Take reasonable precautions by planning ahead.  You can use revocable trusts to create creditor protection for your kids.  You can use irrevocable trusts to create creditor protection for you and your spouse.  Let’s talk about some options for you.  -John

IRS Portability – Bulletin 2011-42 – Estate Tax

This is a very useful bulletin issued by the IRS for anybody with taxable estates having one spouse die. The issue of portability is of keen importance to those people where one spouse has died.  Read up and ask your attorney for clarification!  -John
Internal Revenue Bulletin: 2011-42

October 17, 2011

Notice 2011-82

Guidance on Electing Portability of Deceased Spousal Unused Exclusion Amount

Table of Contents

PURPOSE
BACKGROUND
DISCUSSION
GUIDANCE
REQUEST FOR COMMENTS
EFFECTIVE DATE
DRAFTING INFORMATION
PURPOSE

This notice alerts executors of the estates of decedents dying after December 31, 2010, of the need to file a Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, within the time prescribed by law (including extensions) in order to elect to allow the decedent’s surviving spouse to take advantage of the deceased spouse’s unused exclusion amount, if any, pursuant to section 303(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, P.L. 111-312 (124 Stat. 3302) (TRUIRJCA) and section 2010(c)(5)(A) of the Internal Revenue Code (Code). In particular, for the executor of the estate of a decedent to elect under section 2010(c)(5)(A) (a “portability election”) to allow the decedent’s surviving spouse to use the decedent’s unused exclusion amount, the executor is required to file a Form 706 for the decedent’s estate, even if the executor is not otherwise obligated to file a Form 706. This notice also alerts executors of the estates of decedents dying after December 31, 2010, that the estate of such a decedent will be considered to have made a portability election if a Form 706 is timely filed in accordance with the instructions for that form. For those estates filing a Form 706 that choose not to make a portability election, this notice addresses how to avoid making the election. This notice also reminds taxpayers that a portability election can be made only on a Form 706 timely filed by the estate of a decedent dying after December 31, 2010, and any attempt to make a portability election on a Form 706 filed for the estate of a decedent dying on or before December 31, 2010, will be ineffective. Finally, this notice alerts taxpayers that the Treasury Department and the Internal Revenue Service (Service) intend to issue regulations under section 2010(c) of the Code to address issues arising with respect to the portability election, and anticipate that those regulations will be consistent with the provisions of this notice.

BACKGROUND

Sections 302(a)(1) and 303(a) of TRUIRJCA, enacted on December 17, 2010, amended section 2010(c) of the Code. Section 2010(c), as amended, generally allows the surviving spouse of a decedent dying after December 31, 2010, to use the decedent’s unused exclusion amount in addition to the surviving spouse’s own basic exclusion amount. Thus, sections 302(a)(1) and 303(a) of TRUIRJCA eliminate the need for spouses to retitle property and create trusts solely to take full advantage of each spouse’s basic exclusion amount.

Section 2010(c)(1) of the Code provides that the applicable credit amount is the amount of the tentative tax that would be determined under section 2001(c) if the amount with respect to which the tentative tax is to be computed were equal to the applicable exclusion amount. Thus, generally, the applicable credit amount effectively exempts from federal estate and gift tax a person’s taxable transfers with a cumulative value not exceeding the applicable exclusion amount.

Under section 2010(c)(2), a person’s applicable exclusion amount is the sum of (A) the basic exclusion amount and (B) in the case of a surviving spouse, the deceased spousal unused exclusion amount, if any.

Section 2010(c)(3) sets the basic exclusion amount at $5,000,000 in 2011, to be adjusted annually for inflation after 2011.

Section 2010(c)(4) defines the term “deceased spousal unused exclusion amount” to mean, with respect to the surviving spouse of a decedent dying after December 31, 2010, the lesser of (A) the basic exclusion amount, or (B) the excess of (i) the basic exclusion amount of the last such deceased spouse of such surviving spouse, over (ii) the amount with respect to which the tentative tax is determined under section 2001(b)(1) on the estate of such deceased spouse. The unused exclusion amount of a deceased spouse who died before January 1, 2011, cannot be used by the surviving spouse, regardless of the date of the surviving spouse’s death.

Under section 2010(c)(5)(A), a deceased spousal unused exclusion amount may be taken into account by a surviving spouse in determining the surviving spouse’s applicable exclusion amount only if the executor of the deceased spouse timely files a Form 706 for the deceased spouse’s estate, on which the executor computes the deceased spousal unused exclusion amount and makes a portability election. An election, once made, is irrevocable. However, no election may be made if the Form 706 is filed after the time prescribed by law (including extensions) for filing a Form 706.

Section 6075(a) requires the executor of a decedent’s estate filing a tax return to file the Form 706 within 9 months after the date of the decedent’s death. Section 6081(a) provides that the Secretary may grant a reasonable extension of time for filing any return; however, generally, no such extension may be for more than 6 months. Section 20.6081-1(b) of the Estate Tax Regulations grants executors of decedents’ estates an automatic 6-month extension of time to file the Form 706. Executors currently may request the automatic extension of time to file Form 706 by timely filing Form 4768, “Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes.”

Section 2010(c)(5)(B) allows the Secretary to examine a return of the predeceased spouse, even after the time has expired under section 6501 for assessing tax under chapter 11 or 12, to make determinations with respect to the deceased spousal unused exclusion amount, notwithstanding any period of limitation in section 6501.

Section 2010(c)(6) provides that the Secretary shall prescribe regulations as may be necessary or appropriate to implement section 2010(c).

DISCUSSION

The Treasury Department and the Service anticipate that, as a general rule, married couples will want to ensure that the unused basic exclusion amount of the first spouse to die will be available to the surviving spouse and, thus, that the estates of most (if not all) married decedents dying after December 31, 2010, will want to make the portability election. As indicated above, because the election is to be made on a timely-filed Form 706, the Treasury Department and the Service anticipate a significant increase in the number of Forms 706 that will be filed by the estates of decedents dying after December 31, 2010, and that many of those returns will be filed by the estates of decedents whose gross estates have a value below the applicable exclusion amount.

As a result, the Treasury Department and the Service believe that the procedure for making the portability election on the Form 706 should be as straightforward and uncomplicated as possible to reduce the risk of inadvertently missed elections. To that end, the Treasury Department and the Service have determined that the timely filing of a Form 706, prepared in accordance with the instructions for that form, will constitute the making of a portability election by the estate of a decedent dying after December 31, 2010. Thus, by timely filing a properly-prepared and complete Form 706, an estate will be considered to have made the portability election without the need to make an affirmative statement, check a box, or otherwise affirmatively elect, on the Form 706. Until such time as the IRS revises the Form 706 to expressly contain the computation of the deceased spousal unused exclusion amount, a timely-filed and complete Form 706 that is prepared in accordance with the instructions for that form will be deemed to contain the computation of the deceased spousal unused exclusion amount, thereby satisfying the requirements in section 2010(c)(5)(A) for making an effective election.

The Treasury Department and the Service acknowledge that an estate may not want to make the portability election. Not filing a timely Form 706 will prevent the making of that election. However, if such an estate is obligated to file a Form 706 because the value of the gross estate exceeds the applicable exclusion amount, or files a Form 706 for another reason, the executor must follow the instructions for Form 706 that will describe the necessary steps to avoid making the election.

The Treasury Department and the Service recognize that the due date for filing Form 706 for those decedents dying in the first quarter of 2011 is fast approaching and remind executors of the ability to request an automatic 6-month extension by filing Form 4768 before the due date for filing Form 706. See § 20.6081-1(a) and (b) of the Estate Tax Regulations.

The Treasury Department and the Service intend to issue regulations, pursuant to the specific authority provided in section 2010(c)(6), to address various issues arising with respect to implementation of the provisions of section 2010(c).

GUIDANCE

1. If the executor of the estate of a decedent dying after December 31, 2010, intends to make the portability election to allow the decedent’s surviving spouse to use the deceased spousal unused exclusion amount, the executor must file a complete Form 706 within the time prescribed by law (including extensions), regardless of whether or not the gross estate has a value in excess of the exclusion amount or otherwise is obligated to file a Form 706.

2. The estate of a decedent dying after December 31, 2010, will be deemed to make the portability election to allow the decedent’s surviving spouse to use the deceased spousal unused exclusion amount by the timely filing of a complete and properly-prepared Form 706. To ensure the correct exclusion amount and tax rates, executors should use the Form 706 issued for the year of the decedent’s death. Until such time as the IRS revises the Form 706 to expressly contain the computation of the deceased spousal unused exclusion amount, a complete and properly-prepared Form 706 will be deemed to contain the computation of the deceased spousal unused exclusion amount.

3. The executor of the estate of a decedent dying after December 31, 2010, that timely files a complete Form 706, but that chooses not to make the portability election to allow the decedent’s surviving spouse to use the deceased spousal unused exclusion amount, must follow the instructions for Form 706 that will describe the steps the executor must take to notify the Service that the decedent’s estate is not making the portability election. If the executor of such an estate chooses not to make the portability election and is not otherwise obligated to file a Form 706, not timely filing a Form 706 will effectively prevent the making of that election.

4. The estate of a decedent dying on or before December 31, 2010, is not entitled to make a portability election. Any attempt to make a portability election on a Form 706 filed for the estate of such a decedent will be ineffective.

5. The Treasury Department and the Service intend to issue regulations to implement the provisions of section 2010(c).

REQUEST FOR COMMENTS

Comments are invited on the following specific issues, which have been identified for consideration in proposed regulations to be issued under section 2010(c):

1. The determination in various circumstances of the deceased spousal unused exclusion amount and the applicable exclusion amount;

2. The order in which exclusions are deemed to be used;

3. The effect of the last predeceasing spouse limitation described in section 2010(c)(4)(B)(i);

4. The scope of the Service’s right to examine a return of the first spouse to die without regard to any period of limitation in section 6501; and

5. Any additional issues that should be considered for inclusion in the proposed regulations.

Comments will be considered if submitted in writing by October 31, 2011. All comments will be available for public inspection and copying. Comments may be submitted in one of three ways:

By mail to CC:PA:LPD:PR (Notice 2011-82), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

Electronically to Notice.Comments@irscounsel.treas.gov. Please include “Notice 2011-82” in the subject line of any electronic communications.

By hand-delivery Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (Notice 2011-82), Courier’s Desk, Internal Revenue Service, 1111 Constitution Ave., NW, Washington, DC 20224.

EFFECTIVE DATE

This notice is applicable with respect to the estates of decedents dying after December 31, 2010.

DRAFTING INFORMATION

The principal author of this notice is Karlene M. Lesho of the Office of Associate Chief Counsel (Passthroughs and Special Industries). For further information regarding this notice, contact Karlene M. Lesho at (202) 622-3090 (not a toll-free call).

California Probate Form DE 350 Petition for Appointment of Guardian Ad Litem

California Probate Form DE 350 Petition for Appointment of Guardian Ad Litem is important for cases where a minor needs representation. This can be any cases where a minor’s financial interests may be at stake. In those instances Form DE 350 is used to ask the Court to appoint a guardian ad litem to protect the child’s interests. In most counties the guardian ad litem will be a probate attorney taken off a list the Court keeps. The goal is to have an outside, disinterested, party to watch over the youngster’s interests so nobody takes advantage of them on purpose or even unknowingly. It’s a good safeguard the system has in place.

The Importance of Original Documents in Probate

People sign their wills, put them in a safe place and then forget about them.  Many people put their will, or trust, in such a safe place that they forget where it is. Sometimes it’s so safe, and so secret, that their family members can’t find it. This can be a problem after death.  I had a case a while back where the husband died.  The husband and wife had been married about 15 years and built some assets up but for the most part their assets were “separate property” assets from before marriage and held separate.  The wife could not find her husband’s original will.  She was certain her husband would want to take care of her as the will provides she would get 100% of the estate. However, she couldn’t find the original.  Plus, to make matters worse, her step-children resented her and thus didn’t want her to inherit anything.

By law, if the will could not be proven, she would get 33% (1/3rd) of the separate property. The husband’s kids would get the other 2/3rds.  This was a decent size case and thus the different for this widow was several hundred thousand dollars.

By law it was her burden to prove the will was not revoked by her husband before death. She really couldn’t prove it.  The Court’s hands were tied as they have to follow the law.

At the 11th hour she called me and said, “you won’t believe it….”   Yes, she found the original will in her late husband’s backyard work shed.

So I guess the moral to this story is put your original will in a safe place but don’t make it so safe that nobody knows where it is when you die!

California Probate Form DE-315 Order Determining Succession to Real Property

California Probate Form DE-315 Order Determining Succession to Real Property is the order that goes with the DE 310 petition.  That is, first you file the form 310 petition and if it’s approved the Judge would sign a form 315 order. Of course you have to complete the order, to match the petition, and then submit it to the Court. Since this generally involves real property you will need to get a certified copy of the order and record it with the county recorder. Also, as a side note, remember if this is a parent to child exclusion you must file your parent to child exclusion form, with the county assessor within 3 years of death and BEFORE any transfer to a third party. This is a common problem that can cause a large tax bill increase or a large supplemental property tax bill.