Author: Sirkin Law Group

Intra-Family Loans and Estate Planning: As we plan our lives, parents and family can be the most important source of intra-family loans, estate planning, and emotional resource we have during our entire life, more so than our estate. By providing love and support to our family members, we help to reinforce the strength of that net.  In some circumstances, that support comes in the form of giving a financial boost to our family members in need.  When deciding how and when to provide loans to your family member, you need to make sure you keep your estate plan in mind, as the two issues are closely linked.

Loans to family can have serious tax ramifications on discharge.  If you decide to make a substantial loan to your family member, but decline to charge any interest, the Internal Revenue Service will likely interpret this loan as a gift.  This has tax consequences for both parties.  In order to make sure that the IRS does not treat a loan as a gift, you need to charge at least the applicable federal interest rate for the loan.   As a result, it is an important step for estate planning to make sure you have a signed loan agreement with your family member clearly stating out the terms of the loan and the interest you are charging.

Despite the fact that there can be taxes associated with intra-family loans, this can also be a good way to help build a family’s overall wealth.  Where there are conflicts of interest, a trustee can be removed and replaced to implement the proper plan. If the recipient of the loan is able to make more money by investing the money from the loan than is charged through interest, that recipient will not owe gift taxes on the excess.  For example, if parents lend a million dollars to their child, charging the mid-term AFR rate of 2.72%, the child will owe $1,272,000 back to the parents at the end of the loan.  If the child can invest the funds from the loan and generate more than $1,272,000, the child can retain the overage without owing gift taxes on that amount.  In this way, family members can use intra-family loans to shift wealth and help build the family’s overall net worth.

Where trustees may have trouble and make mistakes, is where a trustee without authorization loans money to himself against the terms of the trust and against fiduciary duties.  Always consult counsel on loans.

Our counsel have extensive experience in family loans in Los Angeles, helping our clients understand estate planning and how to achieve their goals for their family.  Call us today at 818.340.4479 for a consultation about Intra-Family Loans and Estate Planning.

How do I know if It is the right time to file an application for a Conservatorship?  We take steps every day to help protect and assist our friends and family members, and look for ways to avoid conservatorships.  These measures can range from a simple phone call to providing daily transportation to medical appointments or errands to our elder parents and disabled loved ones.  In some unfortunate circumstances, this type of informal help may not be enough.

A conservatorship is a legal tool you can use to help people who will not accept informal help, or cannot protect themselves from their circumstances or from others who want to take advantage of the.   When you apply for a conservatorship in court, the order of the conservatorship court lets you formally take over the financial or daily affairs of your friend or family member who is no longer able to care for him or herself.

Becoming a conservator is serious business.  It is a serious responsibility, as the conservator will be responsible for the conservatee with some supervision by the probate court.

Remember what a power of attorney does?  Well, a conservator in Los Angeles does all that an agent under a power of attorney does, plus more, all under the view of the court.   The conservatorship takes away the informality of a power of attorney and makes the conservator report to court for his or her actions.

When you have a young adult who has turned 18, or above, and who cannot make medication decisions, or manage his or her life, a limited conservatorship may be useful.  A limited conservatorship is generally favored by the court, as they will be narrowly tailored to provide as little restriction as possible for the conservatee.    There are usually limited powers.  One thing that a limited conservatorship and a probate conservatorship cannot do for people under 65, is to administer psychotropic medication against the conservatee’s wishes.  That is reserved for LPS conservatorships.

A general conservatorship is a higher level of protection and typically provides that the conservator is responsible for all aspects of the conservatee’s physical and financial care.  In cases of older adults, over 65, the conservator may ask for dementia medication orders, and even secured perimeter orders to protect the elder adult.   It is important to keep in mind when it is appropriate to ask for a conservatorship.

The essence of a conservatorship is that the potential conservatee is unable to care for him or herself properly.  Occasional errors are not good cause for conservatorships. This does not include when you simply disagree with a person’s life choices, such as when your college aged child is taking out too many student loans or your sibling is accruing too much credit card debt.  Rather, for a conservatorship to be appropriate, the conservatee must be unable to make his or her own informed life decisions.

One of the most common situations where a conservatorship is appropriate is where an aging relative has dementia or Alzheimer’s Disease.  As these illnesses progress, it can become difficult for a person to maintain appropriate day-to-day care, household maintenance, or timely paying of bills, just to name a few complications.  If your loved one is no longer able to adequately look after his or her daily needs, it may be time to talk to an attorney about getting a conservatorship for your relative.

Another common reason to request a conservatorship is when a close family member suffers a traumatic accident or injury, or illness which renders him or her unable to attend to daily needs.  Car accidents, strokes, or other injuries resulting in catastrophic brain injury can mean that you need to request a conservatorship over your loved one.

Timing is very important in a conservatorship.  Ask us when it is appropriate to apply and get a conservatorship in Los Angeles for your loved one.  The most important inquiry is whether your friend or family member is capable of looking after his or her daily needs and affairs.  If he or she is not able to do so, a conservatorship may be appropriate. We have experience in assisting our clients with conservatorships.  Contact us at 818.340.4479 or email us at info@sirkinlaw.com today for an appointment.

Our daily lives are becoming more enmeshed with digital data, paperless accounts, social media, and electronics with every passing day.  Millions of Americans use Facebook, Instagram, and Snapchat many times a day to keep in contact with friends and family members who live across the globe.  In addition to social media, an enormous amount of our daily business and financial transactions are conducted online.  Most of us depend on these services to pay bills, transfer funds, and make purchases.  Despite the fact we use these services almost daily, many people do not account for their digital assets in their estate plans.

In January 2017, the Revised Uniform Fiduciary Access to Digital Assets Act took effect in California.  This law defines “digital asset” as “an electronic record in which an individual has a right or interest.”  This means your photos on Instagram, posts on Facebook, or access to online past bank statements, for example, would all fall under the umbrella of “digital asset.”  This set of laws provides that the executor of the estate will have access to these digital assets.  Part of an executor’s responsibilities is to gather an inventory of all assets belonging to the decedent.  However, before this law came into effect, executors sometimes encountered significant difficulties when attempting to gain access to a decedent’s online accounts.  The Revised Uniform Fiduciary Access to Digital Assets Act provides that executors or other fiduciaries, such as trustees, must be given access to and control of digital assets just as they must be given access to physical, tangible property.  The law does have some restrictions.  A provider is not required to produce records if the production would impose a significant burden.  In addition, the provider is not required to produce information that has already been deleted by the original user.  Providers are not required to decrypt devices and are not required to disclose passwords.  Trustees and executors must exercise the same high level of care with digital assets as they do with physical assets.  They must take care to guard the property and privacy of the decedent and beneficiaries.  Finally, some platforms provide a “legacy” option for their users, wherein the users can designate a particular person to be the recipient of their data from that platform.  If the user makes such a designation, that will override any designation of executor or trustee made in other documents.

Let us help you with your digital assets.  We are familiar with the specific issues associated with digital assets, estate planning, and probate.  Call us at 818.340.4479 today for an appointment.

 

 

 

The structure of the American family, especially with respect to California estate planning is rapidly changing.  While it used to be frowned upon to divorce, the practice is now fairly common.  Similarly, it is common to have children out-of-wedlock, and even more common to have step-children.  People often choose to cohabitate and start a family without the benefit of marriage.  The legal status of your relationship with your family is very important when considering their right to inherit from you and how that interacts with your estate plan.

One of the most common parts of any estate plan is a last will and testament.  With a will, you can specifically provide which person will receive which of your assets.  Moreover, you can completely disinherit any one of your family members.  This holds true even with regard to your children, whether they are from during your marriage or outside of your marriage.

If you do not have a valid will at the time of your death, your assets will pass according to the laws of intestacy.  The California probate code has specific instructions for who will inherit your assets.  Importantly, the probate code does not differentiate between a child out-of-wedlock and a child from during a marriage.  However, if the decedent was male, there are other conditions which must be met to prove paternity, such as a paternity order that was entered during the parent’s life time; “clear and convincing evidence” that the father “openly held out the child as his own;” or “clear and convincing” evidence of paternity, but it was impossible for the father to acknowledge the child.  “Openly” holding a child out as your own typically means there needs to be an “affirmative representation” in open view.

Sometimes, you have a trustee or executor which needs to be removed with neutral, professional fiduciary.  Count on us to be able to guide you through the removal process.

Note that there is no automatic right of a step-child to inherit if the step-parent did not formally adopt the step-child.  However, California has created a statute to allow a step-child to be treated as an heir, just like a biological child.  California probate code § 6454 states that if 1) the stepparent/stepchild relationship began when the stepchild was a minor and continued until the stepparent died; and 2) there is clear and convincing evidence the stepparent would have adopted the child but for the existence of a legal impediment, the stepchild may still be treated as a child for intestate succession purposes.

Our attorney handles heirship cases in California.   Let us help you understand intestacy laws and how estates could be distributed.  Call us at 818.340.4479 today for a consultation to discuss your family.

Owning your own home can be a good step to building wealth and securing your future.  Purchasing the right real estate can be a good investment, if you buy at the right time in the right area.  Your estate plan should work hand in hand with your real estate purchases, as for most people, their residence is one of their most valuable assets.  There are many choices regarding how to best handle your real estate in your estate plan.  A Qualified Personal Residence Trust, or “QPRT,” is just one possible solution you may want to consider.

A QPRT may be the right trust for you and your estate plan if you plan to leave your home to a particular person in the future.  Typically a QPRT is used when parents want to make sure to pass their home on to their children.  With a QPRT, the person who creates the trust chooses a specific time limit during which he or she will continue to reside in the home.  At the end of that specific term, the home is transferred directly to the named beneficiary.  If the trust creator wants to continue to reside in the home after it is transferred from the trust to the beneficiary, then he or she will need to pay rent to the beneficiary.

The primary benefit to using a QPRT is to reduce potential tax liability.  For tax purposes, the value of the home is fixed at the time it is transferred into the trust.  The value of the home will count toward your lifetime gift tax exemption, not your overall estate tax limit.

There are a few drawbacks to using a QPRT.  The most obvious is that if you pass away before the end of the time limit specified in the trust documents, then the trust is destroyed and your home will revert to being part of your estate.  If you have a high number of assets, this could create an estate tax liability.  Moreover, if the home has significantly increased in value since the purchase, the beneficiaries of the trust could face a significant capital gains tax in the future, which could possibly erase any gift tax savings enjoyed because using the QPRT.

QPRT planning can be beneficial when done properly. We have extensive experience in assisting our clients choose the right estate planning tools to fit their needs.  Call us at 818.340.4479 today for a consultation.

If you have started to think about your future and your family’s future, you have doubtless started to give serious thought to your estate plan.  Estate planning can help provide security and certainty to your family after you are gone.  Every estate plan will be different, as every family and its goals are different.  Accordingly, there are a wide variety of documents you can use to make sure you achieve your goals.  One option that can help you provide confidence for your family is a pour-over will.

Like any other type of will, a pour-over will generally works to pour the assets into the trust, if they were not so titled.  However, unlike an ordinary will, a pour-over will works in conjunction with a revocable, or “living,” trust.  In this type of estate plan, you will have already established a living trust before your death.  The living trust will name trustees and beneficiaries, provide specific instructions as to how your beneficiaries will receive the assets from your estate, and dictate how the trustee should administer and distribute those assets.  Once you pass away, your revocable trust will automatically convert into an irrevocable trust.  If you also have a pour-over will, the will transfers all your remaining assets immediate to the trust at the time of your death.  The assets will then be distributed according to the provisions contained in your trust documents.

Wills are public documents, so anyone can read your will and see which family member inherited which assets when you die.  Trusts, however, are not public documents, so distributing your assets through a trust provide a high degree of privacy.  In addition, transferring all assets to the trust means that just one document will govern the distribution of assets, simplifying the process and reducing the risk of conflicts.

Do you need help with a trust or a will?  Calling our experienced lawyer can ease your when you choose the right estate planning document to suit their needs.  Call us at 818.340.4479 today to talk about your estate and your goals.

Real estate ownership is a cornerstone of many peoples’ American dream, as is protecting one’s assets from catastrophic illnesses and judgments.  Investing in our futures and that of our family is an essential step to ensure future stability, and purchasing the right real estate can be a key piece of that future estate plan.  While the first big real estate purchase for most families is the marital home, it is becoming more and more common for families to purchase and maintain rental properties as a supplemental source of income as well as an investment for the future.  When purchasing rental properties and acting as a landlord, you should keep in mind how these investments fit into your estate plan and your long-term plan for asset protection.

One common strategy used by rental property owners to protect assets is to form a Limited Liability Company, or “LLC.”  An LLC is one of the most simple type of business structures.  The primary advantage to setting up an LLC and handling your landlord affairs like a proper business is that you can insulate your assets.  Any landlord knows that lawsuits are common, ranging from housing discrimination to property damage after a water pipe bursts.  If you do not have the proper business structure, the tenant can sue you personally.  This means that if he or she is successful in the suit, then any judgment awarded will have to come out of your personal assets.  However, if you have set up an LLC, the tenant will have to sue the LLC instead of you personally.  The tenant will not be able to recover any damages against your personal assets, including high value assets you intend to pass on to your friends and family such as your family home.

While a revocable living trust is usually not a creditor protection plan, it helps when it is irrevocable.  With a revocable trust, you can be the person placing the property into the trust, the trustee, and also the beneficiary.  Your tenants can pay their rent directly to the trust.  When you pass away, the real estate can pass immediately to your intended heirs without having to have the real estate pass through probate.  However, unlike an LLC, a living trust does not provide insulation from law suit liability.  If this is your chosen strategy, you should consider purchasing more insurance to make sure potential lawsuits are covered.

We have extensive experience helping our clients understand their options for protecting their assets and estate planning.  Contact us at 818.340.4479 today to talk about your plans for the future.

Everyone we speak with says they want to avoid going into a nursing home and want to protect their assets, if they are forced to go there.  Looking forward to retirement is an exciting time. During retirement, we will have the time to invest in our hobbies and spend time with our families.  Unfortunately, when our health starts to fail, it may become necessary to reside in a nursing home to ensure the appropriate level of medical care.  What many people do not realize, however, is that Medicare and most regular health insurance policies do not cover the cost of long-term nursing home care.  With the cost of nursing homes soaring past $8,000 per month or even more, it is important that you understand how your potential nursing home requirements fit in with your plans for asset protection.

Assuming your private insurance does not cover long-term nursing home stays, and you do not have a long-term care policy, you will need to pay for this care out of pocket.  This means that the assets that you would like to pass on to your friends and family will have to be used to pay for the costs of your extended residential care stay.  After your assets are sufficiently drained, you may be able to apply for Medi-Cal, which provides health insurance care to adults with low incomes and few assets, as does Medicaid.  Medi-Cal and Medicaid will provide coverage for your nursing home requirements, as well as other medical services, but in order to qualify for coverage under these programs, you will have to have assets and income under specific levels.  This means that if you have too many assets, you will have to use these assets to fund your nursing home care out of your own pocket.  Only after all of your assets are depleted down to $2000 (single) and $3000 (married) under the threshold eligibility requirement can you receive Medi-Cal benefits.  There are some other ways and programs under which you may qualify for Medi-Cal which are unrelated to assets.

With proper estate and Medi-Cal planning, however, you can pass on your assets to your heirs and beneficiaries while maintaining your ability to apply for Medi-Cal.  Timing of this estate planning is very important.   It is also important to note that some assets are exempt from the total asset calculation, including the family home if at least one spouse will continue to reside there.

If you have questions about protecting your assets while you require long-term nursing home care, contact us today.  Our experts in Medi-Cal planning can discuss your estate and what we can do to help protect your assets or qualify you for Medi-Cal. Call us at 818.340.4479 or email us for a complimentary consultation appointment at Info@SirkinLaw.com.

We all know that planning for the future security is an essential component of creating a trust.  Having a solid and comprehensive estate plan with the essential components, is the best way to go about that planning.  If you are thinking of beginning to build your estate plan, you should understand hat estate planning is not a do it yourself project.  There are many reasons you should consider hiring an estate planning attorney.

First, there are many different types of estate planning documents and vehicles.  These tools range from a simple will, to a pour over will, to a living will to an irrevocable trust.  Most people mistake a living will and confuse that with a living trust. A skilled estate planning attorney will be able to speak with you about your needs and desires for the future and help you to choose the best types of estate planning tools for your goals.

Second, the repercussions of faulty estate planning documents can be severe.  There is no one to protect you, if you draft your own trust and it fails.  Even wills drafted with the best intentions, sometimes fail.  Read about it in Estate of Duke.    Failing to adhere to the logistical, procedural, and administrative requirements for crafting and executing your estate planning document can result in the entire document being declared void.  For example, if your will is executed incorrectly and declared void, all of your specific wishes in your will, and decisions to grant friends and family members particular assets will not be honored.  Instead, your property will be distributed according to the California laws of intestacy.

Third, by not using an estate planning lawyer, you may not full grasp the tax implications or options in your estate plan.   People often make mistakes by gifting assets to their children, which creates a low tax basis for the child, if the parent acquired the assets at a low price.   Leaving all of your assets through your will could seem like the easiest way to go, but if you have substantial assets, it could result in your estate being assessed heavy estate taxes.  Estate planning lawyers have different options and strategies to help make sure that will not happen.

Finally, by not contacting and discussing your plans with an estate planning lawyer, your estate plan could have unintended consequences.  For example, if you leave substantial assets to your disabled sibling who receives state benefits such as Medicaid or Medi-Cal, the substantial gift could result in the sibling no longer being eligible to receive those benefits.  Moreover, using the wrong estate planning tool could result in unintended distributive consequences for the recipient.  For example, many times, hand-written wills do not include residuary clauses which complicates the distribution of the asset, as some pass by will, and some pass by intestacy.

We have extensive experience in all types of estate planning matters.  Contact us today at 818.340.4479 so we can talk to you about you, you kids, your estate and your goals.

Planning for the end of your life is an important step to ensure the financial security of your friends and loved ones after your passing.  Estate planning is the process through which you can make provisions for how your assets will be distributed, whether that is to friends, family members, caregivers, or even charitable institutions.  Probate is the process that your will goes through to make sure your debts are paid and your assets are distributed according to your wishes.  In planning for your estate and drafting your will, it is important to understand which assets actually go through probate in California.

There are several types of assets that will go through probate in California.  If you are married, then all of your separate property will go through probate.  Separate property includes assets you owned before marriage, assets you received through inheritance during the marriage, assets received as a gift from someone outside the marriage, and certain types of personal injury awards.  Half of the decedent’s community property will also go through probate.  Finally, any portion of an asset that is titled as tenants in common with other people will also go through probate.

It is important to note however, that even if property falls into the above categories, it may not be subject to probate.  Assets that are held in revocable or irrevocable trusts are not part of the estate, and therefore not subject to probate.  If the assets are transferred out of your ownership properly before your death, such as if you make a gift to your child.  Any accounts that are titled as “payable on death” or “transfer on death” will also not be part of the estate.  Any real estate that is titled as “joint tenants” will not be subject to probate, as your interest will immediately pass at the time of your death to your joint tenant, as is most often the case in real estate held by married couples.  Finally, if you have a life insurance policy or retirement account, you can name a beneficiary on those accounts.  The proceeds of those accounts will then pass directly to your named beneficiary without first having to pass through probate.

If you have questions about what is included in probate or about California probate, in general, contact us today.  We can talk to you about your assets and your plans for the future.  Talk to Los Angeles California attorney, Mina Sirkin at 818.340.4479.