On December 17, 2010, the congress of our Great Country booted the tax issue down the road by two years; however, rest assured this is not over. However, I was predicting sun-setting of the Bush Era tax cuts, and I was wrong. So while not being perfect in my predictions i don’t really think I am wrong just as usual prescient in my out look.
The clock has already started running, I have to go and set my clock.
Tic. Toc … Tic Toc
This is the end,
EGTRRA,
my twisted little tax act,
the end.
The end of uncertainty and pain,
producing a year when estate attorneys
and accountants may once again earn.
EGTRRA you strange and bitter tax law
you are way past ripe, and into the rot,
ready from the tangled tree of our Federal Tax Code to drop.
This sunset certainly will make a lot of people richer – if you consider only people who are eligible to pay the estate tax to be rich; i.e. In 2009, a rich married couple would have $7,000,000.00. However, in 2011 a married couple will be rich at $2,000.000.00, opening wide the entrance to the ranks of the rich to tens of thousands, or maybe 100,000′s of people who last year were thought of as only marginally well off.
That is a truly red-bulls!!t economic tonic;
We add hundreds of thousands of rich people to our economy in one fell-inaction.
The newly minted rich will trickle down their wealth to the working folks on main street. The economy perks up and grows much faster,
because we all know when hundreds of thousands of people trickle out little streams of cash they unleash an economic flood. And remember a flood wrecks all boats, and homes and businesses too.
Oh, and if they would sunset the war on drugs some of that money might actually stay in country.
The above micro-farce is only a derivative-micro-farce made up of slivers of old and blurry macro-farces mashed together — Get it, a derivative, (a la TBS – Very Funny)
Also the California Pick up tax will be reinstated, a gray lining on a dark cloud.
Don’t rely on this as legal or tax advice, but if you want you can hire me and I will provide you with excellent legal service. Don’t use any of this information to avoid paying taxing penalties, publication 230 warning
Now is the best time to get your estate in order or even started if you do not have one. Talk to Jerry @ 714 985-9025
There are many entities that you may use in estate planning. The following are only some of the estate planning tools you may use. Trusts of many varieties must be considered and then some may be used. Last Wills must be considered. Corporations are often used in estate planning. This article however focuses on revocable Trusts. Irrevocable Trusts. Supplemental Trusts. Spend thrift trusts and more.
1
Wills
Wills are documents that allow a person to have their estate managed and distributed under court supervision through a process called probate. Probate has an undeservedly bad name, because at times it is extremely beneficial. It can be time consuming and it can be expensive but sometimes the cool and impartial head of a judge prevents many problems. You should not rule out the benefits of proceeding under probate until you have discussed your particular situation with an attorney. More often than not a Revocable Living Trust based plan will provide you with greater flexibility and will be the option of choice, however if the family likes to feud probate may make administration much easier
2
Trusts
There are many different kinds of trusts and they have many different uses. The most common elements of trusts are flexibility and utility during life. A Will is only effective at death. A trust can be effective the moment that you sign it. The trust may be understood as serving two functions. First it is an entity that is used to hold title Second it is a set of instructions.
3
Irrevocable Trusts
Give away property and it can not be taken from you. You can make outright gifts but then the property will not be there for you. But when you settle your property in a trust which can not be revoked and fund it with property that can not come back to you, as the owner, you have a vehicle which will allow for your exclusive use and enjoyment. Would you rather own something that can be taken from you or use something that can’t.
4
Charitable Trusts
Most inherited money is spent within two years of its receipt. It doesn’t matter if the inheritance is large or small, the inheritor, old or young, male or female, educated or not. Found money burns holes in people’s pockets. So if it will all be gone in less than twenty-four months would skimming 20% for a favorite philanthropic cause hurt anyone? We think not. Charity in fact benefits not only those who receive but those who share the community and the giver herself. There is a great variety of vehicles for charitable giving. Finding the one that suits you best, is very important. We can explain each of your options and show you how they fit into your estate plan.
5
Special Needs and Supplemental Needs Trusts
The miracles of modern medicine have made staying alive more possible then ever, but being alive and being able to manage your estate are two entirely different things. A special needs trust is the vehicle of choice for use when a person, man or woman, adult or child can not manage their estate due to injury, illness, or disability. The special needs trust provides, while allowing the disabled person to receive government services.
6
Trusts within Trusts: Subtrusts
A revocable living trust [RLT] can be drawn so that it creates sub-trusts as needs arise. For the children there are separate trusts, education trusts, pot trusts, special needs trusts and more. The married couple can have individual trusts, joint trusts, separate property trusts, etc. A joint RLT can split into marital deduction trusts, bypass trusts, survivors trusts, family trusts and more.
Additional Resources
Cornell’s Legal Information Institute (LII) for: California Probate code California Civil Code California Code of Civil Procedure Internal Revenue Service Web Site (IRS) for Internal Revenue Code Internal Revenue Code
Legal Information Institute
The Internal Revenue Service
The sooner the decision is made to keep the business in the family as opposed to selling it to a third party the sooner the present leaders can begin the process of training possible successors
Amending a revocable living trust is easy and should be inexpensive even with the help of a lawyer.
Normally the trust will contain a reservation of rights and among those rights it usually says “I reserve the right to amend my trust.”
You need to do the amendment in writing and you should not cross out the amended section in the original trust document.
Most people also include a reaffirmation of the trust as to all of the articles and clauses that have not been amended.
If you have a joint trust you will need all trustors and Trustees to sign the amendment, and if the trust is irrevocable you will need all beneficiaries, living trustors, trustees and possibly a judge to make an amendment. However, more on that at a later date
Traditionally a Will or a Last Will and Testament is the document a person would create for the distribution of their property at the time of their death. The will could also include how estate taxes if applicable would be paid, how other taxes such as final income taxes would be paid, and from what property, also conditions on distribution of assets were also included to attempt to control heir’s behavior should they want to inherit. Today, the will remains one of the most widely used and effective means of distributing wealth and providing a means for closing the decedent’s estate.
A Pour-over will is a last will and testament that incorporates an existing Trust so that the Pour over will is governed by the terms of the trust. The pour-over will is usually drafted as part of an estate plan based on a revocable or other type of trust, with its main purpose being to put assets of the decedent that were inadvertently not included in the trust into the trust after the death of the trust maker.
A living will is health care document in which the maker sets forth his or her desires for end of life decision making. The normal form living trust which most people sign has a main feature of prohibiting heroic measures in the event of imminent death or a prolonged and irreversible coma, or persistent vegetative state.
Should you have any questions about the preparation and use of these documents do not hesitate to call the author.
Your POLST and your other end-of-life decision documents don’t do much good if you do not let those most likely to need them know that you have prepared them.
Keep in mind a POLST provides for all levels of treatment from maximum life sustaining treatments even those which will merely prolong dying to minimum treatment for comfort and provision of pain relief even if that provision of medication shortens life.
It is wonderful if you can start your succession plan, when you start your business. However, it is still possible to achieve success if you begin your planning a year before you want to make your exit; it is just more expensive and harder.
