The Law Office of Steve Lopez assists clients in all aspects of their estate planning needs. If you have assets you are looking to preserve for your family or have a recent death in the family, call our office today for a comprehensive consultation.
What is Estate Planning?
Estate planning involves making arrangement for the most efficient and beneficial management and disposition of assets, both during life and after death. The planning “team” may include legal, tax, investment, financial planning and insurance professionals. The Law Office of Steve Lopez takes an active role in assisting clients with both the legal and tax aspects of estate planning. By anticipating death and inheritance taxes, estate planning can help you keep your assets out of the government’s hands. Estate planning enables you – rather than the government – to determine the beneficiaries of your wealth. This planning not only provides you control over how, when and to whom your assets are distributed, but also over who will administer those assets (executor, trustee, etc.). If you were to die without a will – or “intestate” – the state you reside in would determine the distribution of your estate without regard to you and your family’s needs and desires.
Below are some of the Estate Planning Services we provide:
- Probate and Litigation
- Living Trusts
- Power of Attorney
- Health care Directives
- Instructions for Survivors
- Wills & Pour Over Wills
- Tax Planning Trusts
- Life Insurance Trusts
- Family Partnerships
- Federal Estate Taxes
- Estate & Trust Litigation Issues
The Law Office of Steve Lopez offers services in the administration of decedent’s estates, including Estate and trust litigation issues. We understand the grief process that the survivors go through when a loved one has passed on, and therefore, both attorneys and staff offer a caring, personalized approach to make the process as easy as possible. Please feel free to contact us if you have any questions in this area of law.
Even when a probate proceeding is not required, it is advisable to seek competent legal advice regarding the distribution of a decedent’s assets. Certain tax advantages can be lost if procedures are not followed, as well as certain time requirements that relate primarily to real estate and property tax increases.
Various types of trust arrangements may be very beneficial, and can be individually suited to meet each specific need or desire. Trusts are very commonly used when minor children or other dependents are involved, when a business exists which will need continued management, for tax planning purposes, and to avoid or minimize probate.
Living trusts come into being during lifetime, whereas testamentary trusts only come into being upon death. Testamentary trusts do not avoid probate, but are an effective method of providing for management of assets for beneficiaries, and for tax planning. One of the most common estate planning tools is a revocable living trust. A revocable living trust allows you to avoid the expensive and often time consuming process of probate. It also avoids conservatorship proceedings in the event of incapacity. This allows you to incorporate estate tax planning (discussed below) and provides you with the flexibility of being able to amend and update your planning periodically in order to keep abreast of your current circumstances. And lastly, living trust also allowsyou to hold title to your assets in the name of your trust rather than your own name, therefore keeping your affairs private.
In summary, A Living Trust is an estate planning document which can:
- Avoids probate of the estate, so no court is involved.
- Eliminates the requirement of public notices.
- Keeps your plan of distribution private.
- Is acceptable in all states, so avoids probate of out-of-state property as well as property located in the state of residency. (A will requires probate in each state where real estate is owned and in the state where the decedent lived on the date of death.)
- Provides for management of assets by a family member or an institution (whichever you select) if you are unable to manage assets due to health problems and avoids proving in competency in a court proceeding.
- Helps in organizing lists of assets for personal financial planning and helps beneficiaries in locating assets.
- Allows for optimum tax planning using federal and state income, gift, and estate tax law, yet requires NO extra tax returns or filings.
- Does not affect your ability to manage and control your own property and does NOT require management fees to be paid to anyone unless you wish to appoint an outside manager.
Power of Attorney
Power of attorney gives another person the power to act in place of the principal (the person signing and authorizing the power of attorney). The power of attorney can be drafted so that it would only become effective upon the disability or incapacity of the principal, or so that it is effective immediately. However, powers of attorney which only become effective upon incapacity may create issues in determining when incapacity occurs.
The power of attorney allows someone else to handle affairs such as payment of bills, cashing checks, and selling assets. A specific power of attorney may be drafted which grants only very specific, limited powers to the person named as agent (the person given power to act for the principal). This could include the power to manage a particular piece of real estate, or a particular account, investment, or business.
Powers of attorney terminate upon the disability or incapacity or the principal unless the power of attorney is durable, specifically stating that it will remain effective after the disability or incapacity of the principal. Powers of attorney terminate upon death, so are not effective to manage or transfer assets after the principal’s death.
Health Care Directives
Health Care Directives contain directions regarding prolonging life by artificial means if the condition is terminal. These documents provide family members or others appointed by the document with authority to make medical decisions for you if you are unable to do so.
Instructions for Survivors
It is a very good idea for everyone to make a list of assets and directions for loved ones to use in case of death or incapacity. This list can include instructions for funeral arrangements and memorial services, location of documents including insurance policies, deeds, securities, and evidence of other assets, location of bank accounts, and names and addresses of professionals who would have information regarding the estate, including the attorney, accountant, insurance agent, and other financial advisors. Location of the records, safe deposit box, wills, trusts, and any other pertinent documents should also be listed: This is not a legal document, but certainly is a practical one. Some estate planning attorneys provide binders which include copies of estate planning documents as well as pages for instructions and location of information.
Along with the increasing use of the revocable living trust as an estate planning arrangement, pour over will also has become a popular tool. The pour over by will of probated assets into a intervivos trust is a useful device when a settlor of the trust wants to establish an intervivos trust of some of his assets and wants to merge other assets after his death, such as his testamentary estate, insurance proceeds and other assets into a single receptacle subject to a unified administration.
Tax Planning Trusts
Incorporating federal estate tax planning provisions (so-called “A/B trusts”) in your living trust can maximize the amount of your estate because this is exempt from federal estate tax. Variations in trust tax planning include generation skipping tax planning and provisions designed to ensure that subsequent amendments do not defeat the intent of the original creators of the trust.
This allows you to give assets to family and others during your lifetime, thus reducing your taxable estate. The size of the gift may trigger a gift tax, so you may want to develop a multi-year gifting strategy.
This estate-planning tool is used to provide liquidity to pay estate taxes. According to federal law, estate taxes must be paid within nine months of death, which often results in heirs either having to sell valuable assets at reduced prices or borrowing money to pay their tax debts. With advanced planning, life insurance can be purchased to pre-fund the estate tax liability, preserving the estate’s assets for the intended heirs.
Partnerships created within a family are often an excellent means of accomplishing the dual goals of reducing estate tax liability via gifts, while at the same time maintaining control over partnership assets.
Probate is the process of administering an estate through the court system. As a rule of thumb you will spend approximately five percent of the gross estate to take an estate through probate, after adding up court costs, attorneys’ fees and executor’s fees. The probate process is also time consuming, typically taking nine months or more to complete. With proper estate planning, probate proceedings (and the attendant costs and delays) can be avoided.
Federal estate tax is federal tax on the estate itself. Many estates are exempt from the tax. A transfer between spouses is always exempt if there are no restrictions placed on the interest inherited by the spouse and that both spouses are U.S. citizens. The amount of property which may be transferred free of federal estate tax varies depending upon the year in which death occurs. It would be a mistake to assume that tax planning is not necessary because of these exclusions. Almost all assets are includable in the taxable estates, and substantial appreciation will like occur between now and the time taxable estate will be valued for tax purposes (either the date of death or six months thereafter).
With appropriate planning, a married couple can transfer assets using two exclusions since each spouse is entitled to transfer their applicable exclusion amount free of tax. However, wills or joint tenancy designations often give all property of one spouse to the other spouse. If the total asset of the couple exceeds the amount of one applicable exclusion amount, the effect of an estate plan can be very costly. Some planning techniques may be utilized upon the first spouse’s death, but options are more limited after death than if planning is completed during lifetime.
In order to receive the federal estate tax credits of both spouses, upon the first spouse’s death an estate plan can provide that assets be transferred to a credit shelter trust which makes use of that spouse’s credit. During the lifetime of the surviving spouse, all income of the credit shelter trust and access to trust principal may also be provided to the spouse as long as Internal Revenue Code requirements are followed. When neither spouse survives, the assets of the credit shelter trust are distributed according to 1he plan of distribution designated by the estate planning documents of the first spouse to die. Assets retained by the surviving spouse are tax exempt up to the applicable exclusion amount available to the surviving spouse. With careful planning, you and your spouse can save hundreds of thousands of dollars in federal estate tax.
Estate & Trust Litigation Issues
Alternative Dispute Resolution; Settlement; Accounting and Surcharge; Fiduciary Resignation or Removal; Actions by and Against Personal Representative; Contesting Appointment of Personal Representative; Will Contests; Proceedings to Determine Entitlement to Estate Distribution; Resolving Title Disputes; Trust Contests; Breach of Trust; Actions By and Against Trustee; Statutorily Disqualified Donees and Trustees