San Diego Estate Planning Lawyer Blog

Estate planning for some reason is a task a lot of people put on their “To Do” list but it never seems to work its way to the top of the list. Why is that?

People have many reasons for procrastinating. For some, estate planning causes them to have to think about their deaths, which is uncomfortable. For some, they don’t want to have to make important decisions about who will be their successor trustee or receive their assets. Another reason is that while many people realize the importance of estate planning, they don’t feel the urgency of it.

Estate planning is not just “important”, but it is also “urgent” if:

1. You own a home.
2. You have children under the age of 18.
3. You own a business.
4. You own property out of state.
5. You have assets valued at more than $100,000.
6. You have concerns about who would handle your financial affairs if you were incapacitated.
7. You feel strongly about health care decisions that might be made for you if you were unable to make them for yourself.

This list, as you can see, covers pretty much everyone. If you have questions as to why you need an estate plan such as a will or a trust, contact us. If you have put estate planning on your “To Do List” but it didn’t make it to the top of your list in 2009, put it at the top of your “Urgent To Do List" for 2010. Call us at Pinkerton, Doppelt, & Associates, LLP to schedule your appointment for the new year and have a Happy New Year!!

Back in October, we reported on the case of Brooke Astor's estate where prosecutors alleged that Brooke Astor's son Anthony Marshall and his lawyer cheated Brooke Astor out of an estimated $60 million by convincing her to change her will when she was suffering from Alzheimer's disease. The two were convicted and have now been sentenced to jail sentences of 1 - 3 years.

The sentences did not answer the question of where the $60 million in assets will ultimately go. The judge in sentencing Marshall commented that he wished he had the power to order a different sentence, that the money all go to charity. It will be the probate court in new York that will answer the question of how much Marshall will receive from his mother's estate.

What the case has done is heighten people's awareness of elder abuse. It is estimated that between one and five million elderly people in the United States are the victims of financial elder abuse. Many cases go unrecognized and unprosecuted. We all need to be on the alert to recognize elder abuse in our aging population and protect against what seems to be a growing trend.

Circumstances of elder abuse can arise through a misuse of a power of attorney, changes to wills or trusts, unauthorized withdrawals from elder's accounts, and many other ways. Contact us at Pinkerton, Doppelt, & Associates LLP if we can help with any elder abuse concerns.

In the 1950's there was a TV program called "The Millionaire" where an anonymous millionaire gave away a million dollars each week to people he never met. The money was conditioned on the donee not revealing how he got the money or how much he received. I guess no one thought about things like gift tax, gift returns, or the IRS. It was TV!

A new documentary about real life situations involving wills and trusts is filming now for airing on Discovery Investigation. It will chronicle true stories about will, trusts, and estates and how they affected the people who created the will or trust, beneficiaries, or those cut out of a will. The program will interview everyone involved and show both sides of the controversy.The program is appropriately called "The Will."

At Pinkerton, Doppelt, & Associates, LLP we know the importance of creating an estate plan. Without a will or a trust, the California Probate Court will determine who inherits your assets and will do so through probate administration. Maybe such a documentary as "The Will" will help viewers to understand the importance of wills and trusts and encourage people who do not have an estate plan to create one.

Recently several reports have come out predicting that life expectancy is on the increase. Males born in the 1900's could expect to live into their 60's. A male born in 2005 can expect to live into his late 70's. Mac Arthur Research Network on an Aging Society estimates in a recent report that Americans will live longer in the next 40 years. They estimate that women will live to be 89 - 93 on an average by the year 2050 and men 83 - 86 years. Another study which was published in the medical journal Lancet estimates that more than half of babies born since 2000 can expect to live to be over 100 years old.

What implications will these extra few years mean to our society? Longer lives (and presumably healthier) lives will change the traditional cycle of education, employment, and retirement. There will be more older persons living longer which surely will affect health care, health insurance, and medical providers that specialize in elder care. Older workers may need to stay in the work force longer and plan for retirement a little differently. The outlays which will be necessary for Medicare and Social Security could rise by $3.2 million to $8.3 million by 2050. Maybe people won’t want to retire at age 60 - 65 if they still have another 40 years to live. A postponed retirement may affect the types of investments that should be included in your portfolio. It also could affect rules about distributions from retirement accounts, pension plans, and IRA’s.

For estate plans, a longer life expectancy may lengthen the length of the relationship you have with your estate planning attorney and alter the way estate planning is done to address these challenges. The next few decades will be interesting.

In many San Diego communities, and especially at the beaches of La Jolla, Del Mar, Cardiff, Encinitas, and Carlsbad, there are people who own a home but make their residence in another state. Or maybe you live here in California and own a second home in Colorado, Oregon, Utah or some other state. Why is estate planning especially important for you?

If you own real estate or even tangible personal property in more than one state, each state will be involved in the distribution of your property upon your death unless you do estate planning. The state where real property or other assets is located has the authority to resolve issues of title to property. So if you make your residence in California but own a timeshare in Hawaii, a timeshare in Florida, and a cabin in Colorado, probate proceedings called ancillary probate will have to be set up in each of those states and in California. Ancillary probate could be necessary if you have cars, boats or airplanes registered in another state or oil, gas, and mineral rights. With the filing of a probate, comes additional costs and probate fees and additional time to conclude each probate.

There are several ways to avoid ancillary probate of property in another state. The best way to transfer title to out of state property upon your death is to have a revocable trust and record each piece of property in the name of your trust. Upon your death, there will be no probate, just the administration of your trust in California, a process that can be accomplished without multiple probates.

Another way is to title the real estate or personal property is to put the property in the joint names of you and your spouse with rights of survivorship, however if both you and your spouse die together, the property will need to be probated. If you want to title property in your name and some other individual as joint tenants, there are disadvantages. The joint owner can be sued and a judgment placed on the property which could keep you from selling the property. Also if you put another indidivual on title with you, the IRS could consider the transfer a gift, to which a gift tax may be applicable.

The bottom line is if you have real or personal property in different states, you need to plan carefully. If we can help with your estate planning, contact us.

Seniors, especially women, are more vulnerable to elder abuse of all forms. Statistics show that more women than men fall prey to financial abuse.Financial elder abuse can be the taking of money or property from an elder. It can be misusing a power of attorney. It can be changing an elder's will or trust using undue influence. It can include all sorts of schemes to sell something to an elder or failing to provide agreed services such as caregiving, home repair, or financial services.

Part of the reason more women than men are targeted is that there are more women than men in this country. In 2006 for example there were 21.6 million women 65 years of age or older and 15.7 million men over 65. San Diego county in particular has many men and women who are seniors.

Older Americans in general are susceptible to cognitive decline and health problems. These conditions can lead to frailty, difficulty making decisions, and being easily influenced. Also widows are sometimes in the position of becoming responsible not only for finances but also for home maintenance and tasks that formerly were managed by the husband. They may easily become victims of home repair scams, re-finance, or other financial scams.

Believe it or not, the largest percentage of perpetrators of elder abuse are trusted professionals, family, and caregivers but strangers and home repair scams are also becoming prevalent.

Some of the warning signs family members may notice are an unusual fear, isolation, withdrawal, anxiety, “new best friends”, missing money or property, reluctance to discuss matters that once were routine, and confusion about financial matters. The California Dept. of Justice has an excellent brochure online which discusses the prevention and reporting of elder abuse.

If you believe you or someone you are close to has been the victim of elder abuse, there are many remedies. Pinkerton, Doppelt, & Associates LLP, handles such cases and can advise you as to how to report and remedy the abuse. Feel free to contact us for a complimentary consultation.

When you give money or property to another person as a gift, you may have to pay a gift tax. The tax is paid by the donor. The person receiving the gift does not have to pay the tax The exemptions for gifts and the gift tax rates are established by the IRS. In 2009 the gift tax exemption threshold is $13,000 meaning that all gifts to one person are not taxable if added together they do not exceed $13,000. Staying under this number means that no gift tax will be due and no gift return has to be filed.

As the holidays and year end approach, many people like to give gifts of money or assets. One important point to remember is that the IRS considers a check to be a gift in the year that it is cashed. Therefore if you are thinking about giving a hefty check to someone for Christmas or some other reason before year end, be sure they cash the check before the end of the year, if you want the amount to count for your 2009 gift tax exemption.

Also remember that the gift exemption is per person so if you are married, you can both give $13,000 to your son, for example, for a total of $26,000. Also you could give a gift to your son in December and then again in January of the following year and as long as your total gift amount does not exceed the exemption amounts for those two years, the gifts would not be subject to gift tax.

There are some gifts that are exempt from the gift tax. Those are gifts made to pay for education tuition and/or medical expenses, gifts to your spouse, and gifts to charity. Tuition payments and medical expenses need to be paid directly to the qualified institution and to the medical provider, not to the individual. Gifts can be made between spouses in an unlimited amount. Also, gifts to charity are unlimited. The donee has to be a qualified charity, however, and you can find out whether a particular organization is a qualified charity by contacting them.

If you are considering giving a very large gift, one over the exemption amount, it is a good idea to contact your estate planning attorney or CPA. If we can help, contact us at Pinkerton, Doppelt.& Associates LLP.

The U.S. House of Representatives will vote perhaps as early as this week on legislation to extend the current estate tax rates permanently. Currently the tax rate is 45% of any estates in excess of $3,500,000. As previously discussed in past blogs, $3,500,000 was the tax exemption for 2009. In 2010 there will be no estate tax at all which means that no one will have to pay estate taxes no matter how large their estate is. In 2011, however, without some new legislation, the estate tax will go back to a rate of 55% on assets in excess of $1,000,000. This makes people a little nervous, especially in San Diego where home prices and values are much higher than elsewhere in the country.

All of this stems from the major tax overhaul enacted by President George W. Bush in 2001. Prior to 2001, the top tax rate on inheritances was 55% on estates in excess of $675,000. The law gradually decreased the tax rate and increased the tax exemption amount to the 2009 figures of 45% on estates over $3,500,000.

The bill in the House was introduced by Representative Earl Pomeroy from North Dakota. The bill would make permanent a 45% tax rate on inherited assets in excess of $3,500,000. It is predicted that the bill will pass in the House but whether it has enough support to pass the Senate is debatable. Many people favor a full and permanent repeal of the death tax. If the Senate does not pass the bill by the end of the year, the federal estate tax is scheduled to die for one year only to reappear on estates in excess of $1,000,000 in 2010.

The death tax affects a surprisingly small number of Americans. According to the IRS, in 2009 less than one-quarter of 1% had estates big enough to pay estate taxes. One of the reasons is undoubtedly that the wealthy take advantage of advanced estate planning techniques to reduce or eliminate estate taxes. Even the middle-of-the-road estate can benefit from some sort of estate planning. Contact us to see how. Look for furture blog postings on whether this new legislation becomes law.