Spring 2010 Estate Tax Update

The 2010 Baseball Season is starting this week which is a sure sign that Spring is upon us. Congress must be more interested in the baseball season and the Nationals because they do not seem intent on fixing the Estate Tax mess they left for us.

According to the Association for Advanced Life Underwriting (AALU), as of April 1, there are not enough votes in the Senate to pass a "permanent" estate tax bill. The Senate is deadlocked, with both the House and the Obama Administration agreeing that the exemption amount should be what it was in the 2009 law, when individuals could protect $3.5 million ($7 million for spouses who properly planned). Although, currently there is no estate tax in 2010 (assuming Congress does not reinstate the estate tax retroactively), the exemption amount drops to $1 million in 2011 if Congress doesn’t act.

Could we again have a $1,000,000 Applicable Exclusion Amount? It seems to be implied that Congress may chose not to act according to an article in the March 29, Daily Tax Report, which began: "The legislative picture in coming months is likely to be dominated by the need for revenue, as the budget deficit worsens and Congress seeks more funding to pay for ..."

ABOUT CHRISTOPHER R. TWINING
Christopher R. Twining, Attorney at Law, based in the Westwood Neighborhood of Los Angeles is an innovative estate planning, probate & trust administration, and elder law attorney, who offers in home services for busy and movement challenged clients. The Law Office of Christopher R. Twining serves the cities of Los Angeles, Santa Monica, Culver City, Beverly Hills, West Hollywood, Pasadena, Burbank and the neighborhoods of West Los Angeles, Westwood, Brentwood, Bel-Air, Pacific Palisades, Palms, Pico-Robertson and Encino. Dedicated to helping individuals and couples prepare comprehensive estate plans according to their wishes; he offers them these services at an affordable price, in the relaxed comfort of their homes. For more information about his services, please visit http://www.twininglaw.com or call (310) 492-5990.

CHRISTOPHER R. TWINING
LAW OFFICES OF CHRISTOPHER R. TWINING
1440 VETERAN AVENUE, SUITE 509
LOS ANGELES, CALIFORNIA 90024
(310) 492-5990 Fax (310) 775-9774
http://www.twininglaw.com

Read more On "Spring 2010 Estate Tax Update"!

What Happens to your Digital Estate on death

A while back I wrote a post on the topic of social networks, online bank accounts and other high tech issues in estate planning today. Specifically, the issue has come up with how do you plan for your death, when you are not supposed to share your passwords. Often, it becomes difficult for loved ones to gain access to a social network or online bank account after someone passes away. In my personal life, I know of a family friend who passed last year who still has a facebook profile.

If you remember there was an article back in July 2009 in the Wall Street Journal that did an excellent job of discussing the issue.
Well now Scott Brown at Wired Magazine has gone along and written about it. Apparently, now a host of companies has sprung up to offer solutions, at a price of course.
Here are three companies mentioned in the article:

• AssetLock.net


• deathswitch


• Legacy Locker

Be advised that this area is so new I have no experience with any of these companies mentioned. I have contacted all three companies to inquire as to more information regarding their services and prices. I will let you know my feelings after I hear back.

And as mentioned in my previous post there are different ways to deal with this. One way might be to leave your personal representative a flash drive
with a .txt file named Online Passwords. Of course, then it would be up to you to update the passwords in .txt file and to ensure that it finds its way to your personal representative when you die. Additionally, you will have to worry about it not falling into the wrong hands until you die.

ABOUT CHRISTOPHER R. TWINING
Christopher R. Twining, Attorney at Law, based in the Westwood Neighborhood of Los Angeles is an innovative estate planning, probate & trust administration, and elder law attorney, who offers in home services for busy and movement challenged clients. The Law Office of Christopher R. Twining serves the cities of Los Angeles, Santa Monica, Culver City, Beverly Hills, West Hollywood, Pasadena, Burbank and the neighborhoods of West Los Angeles, Westwood, Brentwood, Bel-Air, Pacific Palisades, Palms, Pico-Robertson and Encino. Dedicated to helping individuals and couples prepare comprehensive estate plans according to their wishes; he offers them these services at an affordable price, in the relaxed comfort of their homes. For more information about his services, please visit http://www.twininglaw.com or call (310) 492-5990.

CHRISTOPHER R. TWINING
LAW OFFICES OF CHRISTOPHER R. TWINING
1440 VETERAN AVENUE, SUITE 509
LOS ANGELES, CALIFORNIA 90024
(310) 492-5990 Fax (310) 775-9774
http://www.twininglaw.com Read more On "What Happens to your Digital Estate on death"!

Property Tax Estate Planning Errors

Recently I have discovered that many so called "estate planning professionals" have neglected to consider Property Taxes and the affects of reassessment upon survivors.

In California, as many people know, the property tax laws we have today were largely the effect of Proposition 13 and its progeny. Proposition 13 effectively capped how high an assessment could grow on an annual basis. This artificial percentage cap did not keep pace with California's rapidly rising real estate market.


Consequently, there are many people, especially older Californians who have lived in their homes for decades, who find that there homes are assessed at 1/3 or 1/4 of the Fair Market Value, even in today's bad real estate market.

Most people do not realize but the death of an owner is considered a "change in ownership" for property tax purposes. A change in ownership ordinarily means that a property will be reassessed all the way up to fair market value, unless the survivors can make use of one of the few "exclusions" in the Revenue & Taxation Code which exclude the transfers from "change in ownership treatment"

The most common Property Tax Reassessment Exclusions are:

• Inter-spousal transfers
• Transfers between registered domestic partners
• Parent-child transfers
• Grandparent-grandchild transfers

Of late I have seen both confusion in the way the Grandparent -Grandchild Transfer works and the failure of a same sex couple to take advantage of the exclusion between registered domestic partners ( by failing to become registered domestic partners to qualify for the exclusion).

ABOUT CHRISTOPHER R. TWINING
Christopher R. Twining, Attorney at Law, based in the Westwood Neighborhood of Los Angeles is an innovative Estate Planning, Probate & Trust Administration, and elder law attorney, who offers in home services for busy and movement challenged clients. The Law Office of Christopher R. Twining serves the cities of Los Angeles, Santa Monica, Culver City, Beverly Hills, West Hollywood, Pasadena, Burbank and the neighborhoods of West Los Angeles, Westwood, Brentwood, Bel-Air, Pacific Palisades, Palms, Pico-Robertson and Encino. Dedicated to helping individuals and couples prepare comprehensive estate plans according to their wishes; he offers them these services at an affordable price, in the relaxed comfort of their homes. For more information about his services, please visit http://www.twininglaw.com or call (310) 492-5990.

CHRISTOPHER R. TWINING
LAW OFFICES OF CHRISTOPHER R. TWINING
1440 VETERAN AVENUE, SUITE 509
LOS ANGELES, CALIFORNIA 90024
(310) 492-5990 Fax (310) 775 - 9774
http://www.twininglaw.com

Read more On "Property Tax Estate Planning Errors"!

Repeal of Estate and GST Tax Provides Opportunities

December 31, 2009 , and Congress never acted as all ( including myself) expected to reinstate the Estate and Generation Skipping Transfer Taxes. The closest it came was when the House passed H.R. 4154 on December 3. The Senate read it once and placed it to be read again on December 24. The Senate won't be back in session again until January 19, 2010. It is unclear whether the Senate will take up the bill or not. Some members of the Senate apparently favor a $5 million estate tax exclusion and a top estate tax rate of 40%. Interested persons can monitor any action from the Senate Finance Committee which Democrat Max Baucus of Montana chairs.

What is also unclear as other blog commentators point out is the legality of making a tax act retroactive. Some extremely wealthy persons with large estates and no plans to die in 2010 will certainly try and take a chance.

To summarize the current status of the law and opportunities:

• No Estate Tax (period)
• Gift Tax rate of 35% (down from 45% in 2009)
• Still lifetime $1,000,000 Gift Exclusion ( rate above applies to gifts above $1,000,000)
• No Generation Skipping Transfer Tax

A Forbes Article Today sums it up well:

"Meanwhile the rich are racing to make taxable gifts. Taxable? Yep. Under the Bush tax cuts, the gift tax, which is paid on wealth of more than $1 million transferred while you're alive, did not disappear as of Jan 1. But the gift tax rate fell from 45% to 35%. Absent a political compromise, it too will rise to 55% in 2011."

Additionally, the Article mentions but doesn't do a great job of explaining the consequences of the Generation Skipping Transfer Tax being repealed ( at least for right now). What this means is that its a great year (potentially) for the wealthy to make large gifts to grandchildren. Because instead of paying an additional tax for any transfers to skip persons on top of any gift tax, there is none ( for the time being).

Some planners for extremely wealthy clients are trying to make use of the repeal of the Generation Skipping Transfer Tax in their GRAT and CLAT instruments. Usually these instruments can't have a generation skipping component because of so called ETIP ( estate tax inclusion period) rules, but if there is no GST in effect when its time for them to distribute the remainder it makes sense for them to go to Grandchildren, particularly if the Grantor's own children are already well off.

It should be an interesting year. Stay tuned for updates!

ABOUT CHRISTOPHER R. TWINING
Christopher R. Twining, Attorney at Law, based in the Westwood Neighborhood of Los Angeles is an innovative estate planning, probate & trust administration, and elder law attorney, who offers in home services for busy and movement challenged clients. The Law Office of Christopher R. Twining serves the cities of Los Angeles, Santa Monica, Culver City, Beverly Hills, West Hollywood, Pasadena, Burbank and the neighborhoods of West Los Angeles, Westwood, Brentwood, Bel-Air, Pacific Palisades, Palms, Pico-Robertson and Encino. Dedicated to helping individuals and couples prepare comprehensive estate plans according to their wishes; he offers them these services at an affordable price, in the relaxed comfort of their homes. For more information about his services, please visit http://www.twininglaw.com or call (310) 492-5990.

CHRISTOPHER R. TWINING
LAW OFFICES OF CHRISTOPHER R. TWINING
1440 VETERAN AVENUE, SUITE 509
LOS ANGELES, CALIFORNIA 90024
(310) 492-5990 Fax (310) 775 - 9774
http://www.twininglaw.com

Read more On "Repeal of Estate and GST Tax Provides Opportunities"!

Estate Plans Need Updating

Not too long ago I wrote an article indicating that for many people because of the $3.5 million dollar estate tax exclusion , that they needed to revise their estate plans.

Specifically, if you have a marital deduction aspect to your revocable living trust and it was drafted when the estate tax exclusion was far lower ( it was around $675,000 in 2001) then a surviving spouse could see themselves entirely cut out of an estate plan.

Normally one reserves a life estate in income to the surviving spouse along with a right to invade principal for Health, Education, Support and Maintenance in the BYPASS trust. If this is the case there is no great danger. However, for many people who may have children from different marriages it is possible that such a provision does not exist and your kids would take all. It really depends on the terms of the bypass trust.

The Wall Street Journal is at least bringing up the issue, even if they don't discuss it in detail.

ABOUT CHRISTOPHER R. TWINING
Christopher R. Twining, Attorney at Law, based in the Westwood Neighborhood of Los Angeles is an innovative estate planning, probate & trust administration, and elder law attorney, who offers in home services for busy and movement challenged clients. The Law Office of Christopher R. Twining serves the cities of Los Angeles, Santa Monica, Culver City, Beverly Hills, West Hollywood, Pasadena, Burbank and the neighborhoods of West Los Angeles, Westwood, Brentwood, Bel-Air, Pacific Palisades, Palms, Pico-Robertson and Encino. Dedicated to helping individuals and couples prepare comprehensive estate plans according to their wishes; he offers them these services at an affordable price, in the relaxed comfort of their homes. For more information about his services, please visit http://www.twininglaw.com or call (310) 492-5990.

CHRISTOPHER R. TWINING
LAW OFFICES OF CHRISTOPHER R. TWINING
1440 VETERAN AVENUE, SUITE 509
LOS ANGELES, CALIFORNIA 90024
(310) 492-5990 Fax (310) 775 - 9774
http://www.twininglaw.com

Read more On "Estate Plans Need Updating"!

How to Make Beneficiary Designations

Ensuring that your life insurance policies, individual retirement accounts and pension accounts have the proper named beneficiaries is an essential part to any comprehensive estate plan. As recently as October 2008 the U.S. Supreme Court weighed in on the importance of beneficiary designations.

Karri Kennedy, the daughter of a former Dupont Inc. employee had sought her share of her father's retirement plan benefits. She claimed that he had said that he wanted it to go to her but had never changed his beneficiary designations despite getting a divorce from Karri's mother. Instead the court ruled that the mother was entitled to the retirement plan as the designated beneficiary.

A recent online guide from Yahoo Finance, entitled "Naming Beneficiaries of Insurance Policies and Retirement Plans" answers some questions and gives some advice for naming beneficiary of various policies and retirement accounts. Read more On "How to Make Beneficiary Designations"!

House Votes to make permanent 2009 Estate Tax

The U.S. House of Representatives passed a bill today which would make this years $3.5 million dollar per person estate tax exclusion permanent.

You can see a Bloomberg story on this event here.
The bill that passed is H.R.4154, entitled "Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009."

Next the Senate will take up the Estate and Gift Tax Issue. All indications are that the Senate will keep the $3.5 million estate tax exclusion as well.

Indeed in a previous article I noted that all current proposals pending before Congress would have made the $3.5 million Estate Tax Exemption permanent. There are some important differences between the bills involving the use of intra-family discounts, new limitations on GRATS (Grantor Retained Annuity Trusts), and portability of the exclusion.

Stay tuned. When a new bill passes both houses I will write on what changes were enacted.

ABOUT CHRISTOPHER R. TWINING
Christopher R. Twining, Attorney at Law, based in the Westwood Neighborhood of Los Angeles is an innovative estate planning, probate & trust administration, and elder law attorney, who offers in home services for busy and movement challenged clients. The Law Office of Christopher R. Twining serves the cities of Los Angeles, Santa Monica, Culver City, Beverly Hills, West Hollywood, Pasadena, Burbank and the neighborhoods of West Los Angeles, Westwood, Brentwood, Bel-Air, Pacific Palisades, Palms, Pico-Robertson and Encino. Dedicated to helping individuals and couples prepare comprehensive estate plans according to their wishes; he offers them these services at an affordable price, in the relaxed comfort of their homes. For more information about his services, please visit http://www.twininglaw.com or call (310) 492-5990.

CHRISTOPHER R. TWINING
LAW OFFICES OF CHRISTOPHER R. TWINING
1440 VETERAN AVENUE, SUITE 509
LOS ANGELES, CALIFORNIA 90024
(310) 492-5990 Fax (310) 775 - 9774
http://www.twininglaw.com

Read more On "House Votes to make permanent 2009 Estate Tax"!