Estate Tax Planning for 2011, 2012, and Beyond

As we enter 2012, time is running out to make all of your gifting, planning, and other tax-related decisions which will impact tax year 2011. With the start of the new year, it is also time to consider planning for the 2012 tax year. There is a sunset on the horizon, but it is not as pretty to look at as most. It is the sunset of the "Bush tax cuts," which were extended through 2012 by legislation in 2010. What lies beyond 2012 is too far beyond the horizon to see just yet, and much depends on how Congress deals with the impending change, assuming Congress deals with it at all.

Estate and Gift Tax Exemption

For 2011 and 2012, a $5 million exemption from estate and gift taxes is in place. This unified tax credit is per person, so proper planning between married couples can create an effective $10 million exemption. Estates above the exempted amount are taxed at a 35% top rate. If nothing changes, however, for 2013 and thereafter, the exemption would drop to $1 million, with a top tax rate of 55% for amounts above the exemption.

Will Congress continue the current exemption beyond 2012, or allow it to drop to the $1 million level of a decade ago? Will Congress eliminate the estate tax altogether, as it briefly accomplished for 2010, or will some compromise figure be reached, such as a $3.5 million exemption with a 45% tax rate? It may be too early to tell, but it is not too early to plan. If your estate lies between $1 million and $10 million in value, it may be wise to consider reducing the size of your taxable estate through charitable giving, the establishment of trusts, and other available mechanisms. Schedule some time to talk over your estate plan with a knowledgeable and experienced estate planning attorney, who can advise and assist you with immediate and long-term planning. In San Diego, contact the Casiano Law Firm for assistance.

Removing Assets From the Probate Estate

Probate is the court-supervised process used to determine whether a will is valid and to distribute the property of the estate according to the terms of the will or state laws of intestate succession for property not otherwise disposed of by will, trust, or other testamentary instruments. While court supervision is sometimes necessary, such as when there is a challenge to a will, a complaint about the executor or administrator of the estate, or other dispute among the intended heirs or beneficiaries, probate is generally a process to be minimized or avoided altogether if possible. This is because probate can take a long time to complete while the process winds its way through the legal system, while the cost of probate is taken out of the estate, reducing the value of the estate that would otherwise be distributed to intended heirs and beneficiaries.

In California, probate can be avoided altogether if the value of the estate is less than $100,000. Even if you have a larger estate, there are many ways to convert your property to non-probated assets, which will reduce the size of your estate for probate purposes. Below are some of the most popular instruments and vehicles used for removing assets from the probate estate:

Revocable Living Trusts - Assets properly placed in a living trust do not need to be probated. Living trusts have many other benefits as well, such as certain tax advantages, avoiding conservatorship of your assets, and generating income during your lifetime.

Jointly-Titled Property - When property is titled in the names of two people jointly, title to the property passes to the surviving spouse or other named party upon the passing of the other party. This could apply to your house, car, or any other investment property. There may be other reasons not to place the property in joint title; discuss this issue with attorney before making any major changes.

Insurance Policies, 401(k) plans - Any type of insurance policy or retirement plan that has a named beneficiary can automatically transfer the benefit to the beneficiary or beneficiaries upon death, without having to go through probate.

These are just some of the ways you can minimize or avoid probate of your estate. When forming or revising your estate plan, raise the issue of probate with your estate planning attorney to discuss the mechanisms which will work best with your overall estate plan. In San Diego and Southern California, contact the Casiano Law Firm to speak with an experienced estate planning and probate attorney.

Tony Curtis Estate Dispute: Children Allege Undue Influence, Duress, Fraud

Few disputes have the potential to be as emotionally-charged and contentious as trust and estate disputes, especially those pitting the children from the decedent’s prior marriage against a stepparent. When actor Tony Curtis died in September of last year, following years of poor health, he left behind an estate plan that completely disinherited his five children. In his will dated in May of last year, just months before his death, the actor named each of his five children-including actress Jamie Lee Curtis-and specifically and intentionally disinherited each of them. No explanation was given in the will. The will left the actor’s entire estate to his widow and fifth wife, Jill Vandenberg Curtis, with a small portion of the estate going to the couple’s charity.

Lawsuit Filed Contesting their Father’s Will

The actor’s daughter, Kelly, has filed a lawsuit alleging that their father was the victim of “duress, menace, fraud or undue influence” by his widow, Jill, which resulted in his changing the dispositive provisions of his estate plan just prior to his death. Kelly contends that she and her siblings were completely blindsided by the disinheritance and that their father would never have eliminated them entirely from his estate plan.

Auction of Personal Items Yields Over One Million Dollars

Earlier this month Tony Curtis’ personal effects were sold by his widow in an online auction which yielded over $1 million. Over 500 items were sold, ranging from cars to personal letters. The actor’s children were upset by the auction as they were not offered any personal effects from his estate, not even a personal item to remember their father by. In accordance with the terms of his will, the auction proceeds went to his widow, with a small portion to the couple’s charity. The auction served to only raise the ire of the actor’s children even further, and they were vocal about their displeasure in the media.

Families Feud When Children Disinherited in Favor of Subsequent Spouse

Whenever an estate plan completely disinherits children in favor of a subsequent spouse, a trust and estate dispute is likely to follow. In this case, the disparity in the age of Jill and Tony hasn’t helped matters-Jill is 42 years younger than Tony, and 11 years younger than Tony’s oldest daughter, Kelly.

Regardless of the size of the estate, estate planning involving blended families or children from previous marriages involves additional complexity and concerns. It is important to consult with an experienced estate planning attorney to ensure that your wishes are properly carried out, with minimal exposure to potential litigation. For experienced estate planning assistance in the San Diego area, contact the Casiano Law Firm.

The Importance of Funding Your Trust & Periodically Reviewing Your Estate Plan

You signed your estate planning documents and placed the original documents in a safe place. You're done with your estate plan, right? Not quite…you'll want to ensure that if you've created a trust as part of your estate plan, that your trust has been properly funded with the appropriate assets. You'll also want to periodically review your estate plan to make sure it still comports with your wishes and that it takes into consideration changes that may occur in your personal or financial situation.

Funding Your Trust

Your trust will control the distribution of those assets which are held in the name of the trust. Title to your assets must be properly transferred to your trust in order to avoid probate. If an asset is not transferred into the trust, a probate proceeding may be required. Transferring real estate to a trust involves preparing a deed and accompanying documents transferring title to the trust. Some assets, such as life insurance policies and retirement benefit accounts, are contractual in nature and controlled by beneficiary designations. Careful coordination of beneficiary designations is required to make sure these assets will be distributed as you intended.

Events Triggering the Need to Review Your Estate Plan

There are many changes in your personal or financial circumstances that could have an impact on your estate plan. A few examples include:

• A change in your marital status (marriage, separation, or divorce)
• Death or incapacity of a fiduciary or beneficiary named in your documents
• A change in your health condition
• Retirement or job loss
• Receiving a substantial inheritance

San Diego Estate Planning, Probate and Trust Administration
Thank you for reading our blog. If you have any questions regarding estate planning, or need assistance with the administration of a trust or estate, contact the Casiano Law Firm for experienced advice and representation.