Estate Planning Law Changes
There are often changes within the law, some are insignificant, and others can be life changing changes, and updates regarding Living Trust documents, at HM&M we feel it is our duty to inform our clients of such matters. For example:
The no contest provision is intended to avoid conflict and litigation by unhappy heirs or beneficiaries. California has taken the heart out of the “No Contest” provision. So we have had to update it several times to itemize what actually constitutes a “Contest”. Is your “No contest” clause current.
Historically most people wisely created an A-B Trust for tax reasons. An A-B Trust allowed you to have two (2) deductions against the Federal Estate Tax which is at 40%. Since the deduction has now been raised to 11 million dollars most clients are getting rid of the A-B provision to help save money in anticipated administration costs in creating the A-B; having to file a separate tax return for Trust B every year, without the A-B trust your beneficiaries would be a second increase on step-up in the Income tax basis. This could be a significant benefit to your beneficiaries.
A CRT allows you to act on your charitable intentions while reducing your estate taxes by removing a highly appreciated asset, such as stock or real estate, from your estate. With this type of trust, you as the grantor, make a charitable gift of a highly appreciated asset to the CRT’s Trustee (who can be you), and the Trustee sells the asset (without paying capital gains taxes because the trust is a charitable entity) and reinvests the proceeds. At least once each year for the term of the trust you receive a fixed dollar amount or a fixed percentage of the asset’s value, revalued each year. After the term expires, the balance goes to the charity you have named. Because you are able to sell an appreciated asset inside the CRT without paying capital gains taxes, you are able to enjoy a higher income stream for life from the earnings of the CRT assets, which are undiminished by income taxes while invested inside the trust.
Most of our clients need to update their Paragraph V (or III if a Single Trust) to give the successor trustee the greatest tools possible to reduce the taxes and other costs as much as possible. New trustee powers would cover the Generation Skipping tax, the stretch IRA provisions for tax deferred assets, the S chapter provisions, the HIPPA provisions, the MediCal provisions, the HECM provisions and more.
Creating the trust does not automatically mean that your assets are in the trust and protected by the trust! There are steps that the trustors must take, to avoid probate. Reviewing your trust gives the attorney an opportunity to review your progress in funding your trust (i.e. putting assets in the trust.)
Some of the older Powers of Attorney documents had, by law, a seven (7) year expiration from the time the POA was signed.
Due to the significant law changes over the past years, our office strongly advises that pre 2015 Living Trusts are reviewed by an estate planning trust attorney, and, regardless if HM&M created a Living Trust or not we offer complimentary Living Trust reviews.
HM&M offers a complimentary Living Trust review, to check that your trust can do what you established it to do. This offer is to anyone who currently has a Living Trust/estate plan, regardless if we originally created your trust or not. During this review, you will meet with one of our attorneys to discuss how changes in laws or family circumstances may affect your Trust. Your appointment can be held at any of our offices locations throughout Southern California.
To schedule your complimentary Living Trust review
Call (800) 529-5570 or email firstname.lastname@example.org.
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The information you obtain on this website is not, nor is it intended to be, legal advice. You should consult with an attorney for individual advice regarding your own situation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.