The use, conservation, and transfer of one’s wealth should always include a well-thought-out estate plan that takes into consideration: (1) The increase in value of an existing estate so that the needs of the family are met; (2) The preservation and protection of the estate from unnecessary taxes and costs; and (3) The orderly administration and disposition of assets upon the death of the owner.Will lawyers can assist with the components of an estate plan.

The typical documents in an estate plan are:

Last Will & Testament

Declaration stating the disposition of your property to be performed after your death and nominating the person to act as the personal representative.

Designation of Healthcare Surrogate

Appoints another person as an agent and confers authority on that person to consent to your medical treatment.

Living Will

Governs the withholding or withdrawal of life-sustaining treatment from an individual in the event of an incurable or irreversible condition that will cause death within a relatively short time.

Durable Power of Attorney

Appoints another person as an agent and confers authority on that person to perform certain acts or kinds of acts on your behalf.

Trust

Declaration created by a grantor for the benefit of designated beneficiaries which appoints a trustee to manage the trust assets and income for the economic benefit of all the beneficiaries. Such a trust may be revocable or irrevocable. Sometimes a revocable trust is called a “Living Trust.” By creating a trust, one can generally avoid the probate process and the statutory fees charged by by probate attorneys. California Probate Code §10810 sets the maximum on the fees, which vary according to the size of the estate. A California will, however, is often subject to probate.

Basis Rules:

• Transferred Basis: A person who receives property as a gift has the same basis as that of the transferor.
• Stepped-up Basis: A person who receives property from an inheritance has a basis equal to the fair market value of the property at the decedent’s death.
• From the perspective of the recipient of the property, the higher the basis of an asset the lower the gain that would be recognized upon a subsequent sale; therefore, a recipient usually prefers receiving property from an inheritance. However, this benefit must be evaluated against the donor’s estate tax rate which could be substantially higher. In such a case, it may be more advantageous to gift the property during the donor’s lifetime.

Fundamental Strategies:

• All Persons – Under $5,250,000
• Objective: Avoid probate and guardianship, minimize clearance costs, and attain step-up in basis upon client’s death.
• Solution: Establish and fund a Revocable Living Trust.

Married Couples – Greater than $5,250,000, less than $10,500,000

• Objective: Eliminate estate taxes from both estates, avoid probate and guardianship, minimize clearance costs, and attain step-up in basis for assets owned by each spouse upon death.
• Solution: Each spouse establishes a Revocable Living Trust containing provisions to maximize each spouse’s Unified Credit and funds each trust with one-half of the marital estate.

For information on Tax And Estate Planning For Same-Sex Couples, click here.

For answers to your questions about estate planning or for estate tax help, contact the Law Offices of Jeffrey B. Kahn, P.C. For a prompt evaluation of your situation, we encourage you to complete our Estate Planning Questionnaire or call us toll-free at 866.494.6829 to schedule a consultation.