California Estate Planning Blog by Kevin Staker

April 9, 2018

How Home Can Go to One Child and Keep Proposition 13 Low Property Taxes by Kevin Staker

Filed under: Kevin Staker — Kevin Staker @ 2:47 pm
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One way to have home to one child and buy out another is for trust to borrow money secured against the home.  One child gets cash and other child gets home subject to the loan.  Difficult because the third party loan is expensive (at least 4 points).

Two other methods, which involve a right of first refusal.

  1.  Trust gives one child a “right of first refusal”.  In California State Board of Equalization Letter 625.0233 dated August 19, 2013, the BOE states if the Trust gives one child the right to buy the home from the Trust, the purchase qualifies as a parent to child transfer.  Hence, the property taxes remain the same because of Propostion 58.  This occurs even if though it is a purchase and sale.
  2. The trust instrument gives one child the right to include the trust property as part of his or her share, if he or she provides enough cash and assets to the other child(ren) to equalize the distribution distributions from the trust.  See California State Board of Equalization Letter 625.0235.025 dated February 22, 2010.

Hence, we have some alternatives to the expensive loan to the trust option.

By Kevin Staker

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January 16, 2018

Divorce and Estate Planning by Kevin Staker

Filed under: Uncategorized — Kevin Staker @ 1:17 pm
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If you or spouse file for divorce, your assets will still likely go to your estranged spouse.  You likely would not want this.  The follow are the alternatives.

Do Nothing

Your estranged spouse likely get all .  The spouse likely gets all under joint tenancy, beneficiary designatons or your living trust.

Few divorcing individuals would want such a result in their case. What to do?

What Should You Do Instead?

First – Write a new Will and revoke any living trust.

Write a new Will.  Cut out the spouse by name.

If you have a living trust, revoke it. In California you must file notice with the court and then deliver it to your spouse.  Then you can sign a revocation and deliver that to your spouse.  Your Will will then control to whom you share of trust will go.

Second – Sign a new living trust

You can and should sign a new revocable living trust. Make sure you say nothing goes to your estranged spouse.

The problem is you cannot fund the trust until the divorce is final. California law provides for an automatic temporary restraining order (“ATRO”) on both parties. Neither party can transfer any asset. However, your pour over Will will then get your trust share to the new trust.

Third – Sign new durable powers of attorney

Immediately sign new powers of attorney for finance and health care. Of course, name someone other than the spouse. The ATRO does not prevent signing new durable powers.

Fourth: Sever joint tenancies

Next, sever any joint tenancies with the spouse, especially real property. Use the same type of procedure as revoking the living trust. Your Will will then control where your interest will go.

Fifth: Revoke IRA and other beneficiary designations

Use the same notice procedure to revoke all beneficiary designations.  Your Will will then likely control where the account or plan will go (except for the community property interest of your spouse).

Summary

In summary, a divorce is usually very emotionally troubling. In the midst of the maelstrom do not forget to do what you can to make sure your assets do not go to your estranged spouse and will go to whom you really want them to go. Take action now.

For more details on the above go to the Linkedin article by Kevin Staker found at https://www.linkedin.com/pulse/divorce-change-your-estate-planning-kevin-staker-kevin-staker/?published=t.

January 4, 2018

Medi-Cal for Long Term Care 2018 Adjustments for Inflation by Kevin Staker

Filed under: Kevin Staker,Medi-Cal Planning — Kevin Staker @ 1:41 pm
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The Social Security Administration, the Centers for Medicare & Medicaid Services, and the California Department of Health Care Services have announced the cost of living adjustments for 2018.  They will be based on a 2 percent increase for inflation.

2018 Medi-Cal Resources Rates:
Community Spouse Resource Allowance (CSRA):
$123,600
Minimum Monthly Maintenance Needs Allowance (MMMNA):
$3,090
Average Private Pay Rate (APPR):
$8,515 (will be changed in April 2018).
The State of California continues to fail to finalize regulations to implement the United States Deficit Reduction Act of 2006.  Hence a gift of $8,514 will not result in any period of ineligibility from Medi-Cal paying for long term care in a nursing home.
A discussion which is more in depth can be found at the Kevin Staker professional biography website at

By Kevin Staker

December 9, 2017

Differences Between Senate and House Tax Reform Bills by Kevin Staker

Filed under: estate tax,Kevin Staker,Uncategorized — Kevin Staker @ 6:22 am
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Differences Between Senate and House Tax Reform Bills by Kevin Staker

 

The two houses of Congress have passed two separate tax bills:

Major Differences:

  • Medical Expense Deduction – House repeals and Senate actually expands.
  • Mortgage Interest Deduction – House reduces maximum loan amount to $500.000 and Senate keeps at $1,000,000.
  • Graduate Student Tuition Waiver – House treats as taxable income and Senate keeps tax free
  • Pass Through Income – House caps rate at 25 percent but excludes service businesses and Senate adopts a 23 percent income deduction for all businesses, including professionals.
  • Alternative Minimum Taxable Income – House repeals corporate and individual, and Senate retains corporate and retains individual but with higher exemption.
  • Estate Tax – House increases exemption to $10 million indexed for inflation since 2010 with repeal in 2023, and the Senate does the same but no repeal.

The two houses will next have a conference committee to hash out the differences.  I suspect the final bill will be closer to the Senate version because they can afford to lose only one more Republican senator.

We shall see.

By Kevin Staker

November 30, 2017

The Professional Bio Website of Kevin Staker, www.kevinstaker.com, is Back Online

Filed under: Kevin Staker,Uncategorized — Kevin Staker @ 3:23 pm
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The Professional Bio Website of Kevin Staker, http://www.kevinstaker.com, is Back Online.

The http://www.kevinstaker.com website, the professional biography website of Kevin Staker is back online.  This website of Kevin Staker can me found at kevinstaker.com.

Kevin Staker is a living trust attorney and probate and trust mediator in Camarillo, Ventura County, California.

See also https://twitter.com/kevinstaker

By Kevin Staker

November 6, 2017

Estate Planning and the The Tax Cuts and Jobs Act, 2017 Tax Reform by Kevin Staker

Filed under: estate tax,estate tax news,Kevin Staker,Uncategorized — Kevin Staker @ 4:56 pm
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Estate Planning and 2017 Tax Reform

The Republicans in Congress have introduced the The Tax Cuts and Jobs Act, H.R. 1.  The is the 2017 attempt at tax reform by the Republicans in Congress.

The changes proposed include the following:

  • The exemptions from the Estate Tax and the Generation-Skipping Transfer Tax are doubled from $5 million (as of 2011) to $10 million, which is indexed for inflation. This provision would apply to tax years beginning in 2018.  Hence, with inflation the exemptions for 2018 will be $11.2 million.
  • Beginning in 2024, the estate and generation-skipping taxes are repealed.
  • The step up in income tax basis is maintained.
  • The gift tax is lowered to a top rate of 35 percent and retains a basic exclusion amount of $5.6 million for 2018, again indexed for inflation.
  • The annual exclusion of $14,000 increases to $15,000 in 2018 and is also indexed for inflation.

The stated reasons are:

• The estate and generation-skipping taxes impose additional levels on tax on income and
assets that have generally already been subject tax. By repealing the estate and
generation-skipping taxes, family businesses that would pass from one generation to the
next would no longer be subject to double or even triple taxation.
• By repealing the estate and generation-skipping taxes, a small business would no longer
be penalized for growing to the point of being taxed upon the death of its owner, thus
incentivizing the owner to continue to invest in more capital and hire more employees.

Current law provides property in an estate is generally subject to a top tax rate of 40
percent before it passes to the estate’s beneficiaries. When property is transferred during the life of a donor, it is subject to a top gift tax rate of 40 percent, with the first $14,000 being excluded from the gift tax on a per-donee, annual basis. Additionally, property that is transferred beyond one generation, whether by bequest or by gift, is subject to an additional generation-skipping tax
Transfers between spouses are excluded from these taxes, and when an individual dies
without his or her assets exhausting the basic exclusion amount, any unused basic exclusion amount passes to his or her surviving spouse, with a top basic exclusion amount of $10.98 million for 2017. When a beneficiary receives property from an estate, the beneficiary generally takes a basis in that property equal to its fair-market value at the time the decedent dies, which is known as taking a step-up in basis. However, when a donee receives a gift from a living donor, that donee generally takes the donor’s basis in that property, which is known as taking a carryover basis.

Please note: for the Act to pass, only two Republican senators can oppose it.  Otherwise, the Act will be defeated just as was Obamacare repeal.

By Kevin Staker

October 20, 2017

IRS Announces Increased Estate and Gift Tax Exemptions and Increased Annual Gift Tax Exclusion for 2018 – By Kevin Staker

Filed under: estate tax,estate tax news,Kevin Staker — Kevin Staker @ 8:32 am
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The Internal Revenue Service has announced adjustments for inflation in the estate/gift tax exemption and the annual gift tax exclusion for 2018.  In IRS press release IR-2017-178, released on Oct. 19, 2017, announced a number of adjustments for inflation.  The press release can be found at https://www.irs.gov/newsroom/in-2018-some-tax-benefits-increase-slightly-due-to-inflation-adjustments-others-unchanged.

Two of the adjustments are important for estate tax planning.

The figure for the estate tax exemption, the gift tax exemption, and the generation-skipping transfer tax exemption will be increased from $5,490,000 in 2017 to $5,600,000 in 2018.  Hence, a couple can pass along a total of $11,200,000 in assets to individuals without incurring any death tax.  A couple can do this using what is commonly called an “A-B Trust” or just relying on what is called estate tax portability.

By Kevin Staker

September 20, 2017

Some of the Most Popular Golf Courses in California

Filed under: Kevin Staker,Travel — Kevin Staker @ 5:05 pm
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Los Angeles Country Club pic

Los Angeles Country Club
Image: thelacc.org

A Camarillo, California-based attorney with more than three decades of experience, Kevin Staker is the president of STAKERLaw Tax & Estate Planning Law Corporation and principal at Kevin Staker Probate & Trust Mediation. When he is not functioning as a living trust attorney or providing clients with mediation services, he enjoys golfing.

California is home to a number of the most popular golf courses in the United States. According to America’s 100 Greatest Golf Courses, an annual list maintained by Golf Digest, eight of the nation’s most enjoyable courses can be found in the Golden State. A few of California’s most desirable golfing destinations include Los Angeles Country Club, the Olympic Club in San Francisco, the Valley Club of Montecito, and the San Francisco Golf Club.

The Riviera Country Club in California’s Pacific Palisades has long ranked as the state’s finest course. The club maintains a 7,040-yard, par-71 course that placed at No. 24 on Golf Digest’s 2017-2018 list. The course was first built in 1926, but has undergone major renovations numerous times, as recently as 2012. Best known for its compact design, the course has been ranked among the top 100 courses since 1966, peaking at No. 18 on the 1985-1986 list.

August 6, 2017

The Free Legal Clinics of Ventura County Legal Aid

 

Ventura County Legal Aid  pic

Ventura County Legal Aid
Image: vclegalaid.org

An experienced attorney and accomplished probate and trust mediator, Kevin Staker operates two successful businesses in Camarillo, California. He has been president and principal of StakerLaw Tax and Estate Planning Law Corporation since 1985 and principal of Kevin Staker Probate and Trust Mediation since 2016. In his free time, he volunteers his professional legal services through Ventura County Legal Aid (VCLA).

Serving low-income residents throughout Ventura County since 1996, VCLA provides free legal assistance by connecting qualifying individuals and families with volunteer attorneys who offer pro bono legal services. The organization primarily accomplishes this through its regular free legal clinic.

VCLA clinics take place at the Ventura County Law Library at the Ventura County Government Center on Victoria Avenue. Seeing people on a first-come-first-served basis, the volunteer attorneys who staff these clinics cover a diverse range of legal areas, including collections, expungement, and immigration. VCLA attorneys also can assist with landlord/tenant and family law issues.

VCLA clinics occur the first and third Tuesdays of each month from 4 p.m. to 7 p.m. The organization sponsors no clinics in the third week of June and throughout July in its entirety.

July 25, 2017

Medi-Cal and Long Term Care

Filed under: Kevin Staker,Medi-Cal Planning — Kevin Staker @ 10:38 am
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StakerLaw Tax and Estate Planning pic

StakerLaw Tax and Estate Planning
Image: staker.com

As the principal attorney and president of the StakerLaw Tax and Estate Planning Law Corporation, Kevin Staker helps clients allocate their assets to protect themselves and their families. Kevin Staker offers advice not only on estate planning but also on the funding of long-term care through Medi-Cal.

Unlike Medicare, which pays for only 100 days of skilled nursing for patients coming from acute care, Medi-Cal can fund care in the long term for eligible individuals. Medi-Cal is available to any California resident whose income does not exceed 138 percent of the federal poverty level and who has limited nonexempt assets. These assets must be below $2,000 for individuals or below $3,000 for couples.

Medi-Cal coverage may also be available for those whose income is above the specified maximum if the person in question has high health care costs. These individuals may be able to participate in Share of Cost Medi-Cal, which requires recipients to allocate a percentage of their monthly income to medical expenses. For long-term care residents, the recipients must pay their full monthly income minus a personal needs allowance.

Similar coverage may also be available to some people through the Assisted Living Waiver, which requires that individuals require a level of care that would necessitate nursing home care without the waiver. Recipients must live in a state-approved facility.

If persons would prefer to live at home and can safely do so, they may receive coverage of medically necessary services from Medi-Cal. Any nonmedical support may be covered through the In-Home Supportive Services (IHSS) program, which is available to people who meet Medi-Cal income eligibility guidelines.

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