Tuesday, May 19, 2015

Estate Plan? Me?

*  My assets are really simple, and there are not that many of them.
    *  I’m married; doesn’t everything go to my spouse, then my kids?
*  I have plenty of time to get this together.
*  My family gets along really well; they won’t have any problem dividing things up.
*  After I’m gone, why do I care?
These are among the many reasons I hear when I ask if someone has taken care of putting together an estate plan.  For many, “estate plan” sounds complicated and entirely too sophisticated for what they view as their simple circumstances. 
But “estate plan” is an all-inclusive term to describe the documents needed to adequately protect you and your family and loved ones in situations of illness, incapacity and after death.  An estate plan will address:
·        Distribution of assets
·        Holding assets in “trust” if needed for minor children or others not financially capable.
·        Directions for health care if you are incapacitated, temporarily or permanently.
·        Instructions regarding end of life decisions
·        Choosing someone to make business and financial decisions if you cannot.
·        Guardians for minor children.
·        Final instructions re memorial services, gifts to charities, and disposition of your body.

An example of large scale unexpected death is the terrorist attacks on September 11, 2001.  Not only was this a sad and tragic series of events because of the loss of life and the change it wrought in our sense of security within our borders, it demonstrated how unprepared most families are. 
The buildings and airplanes involved in the attacks held primarily people of working age, most in the prime of life.  There were some children, some seniors, but most were people going about their daily work routine, as were the hundreds of emergency personnel who responded and also lost their lives.   
Accountants, financial consultants, restaurant workers, security personnel, building engineers, police, firefighters, military men and women and yes, lawyers, did not have Wills or Trusts designating what would happen to their assets.  Lawyers were among the most prevalent of those without plans.  The shoemakers’ children go without shoes. 
      Not only did approximately 70% not have written plans, most did not have adequate financial coverage for families through life insurance or other means.  70% is the approximate national average of those dying without an estate plan.
This is an extreme example, but just last month I heard from a family whose loved one is critically ill and there are no instructions about end of life care.   I recently have been visited by the adult children of a parent who told the kids everything was taken care of but they cannot find any of the paperwork. 
In my own extended family, there were emotional disputes about what type of service a beloved sister wished to have.  When a young couple was killed in a car accident on a weekend get-away for their anniversary, their three young children were the subject of turmoil among family factions, each of whom thought he or she should be appointed guardian.
An estate plan is the kindest gift you can leave your family and loved ones.  Don’t make them guess what you want.  Have it written down and let them know where the papers are. 
            I can help you reduce your wishes to writing and can make it affordable to do so.  Contact Kathleen Wright at kathleen@kswrightlaw.com

Monday, March 30, 2015


Effective January 1, 2015, each Notary Acknowledgement and Jurat (where a person is required "to be duly sworn to tell the truth") must now contain the following statement: 

A notary public or other officer completing this certificate verifies only the identity of the individuals(s) who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

This language must be inserted in a box immediately preceding the caption which contains the State of California and the county in which the notary is performing the service.

The California Legislature calls this language a "consumer disclosure" and stated that the purpose is to reduce fraud.

The law was passed in August, 2014, and I was taken by surprise.  Usually, there are many services and various continuing education classes which bring these types of changes to the attention of practitioners.

I learned the hard way.  Clients delayed signing papers until January 5, 2015, and my standard Notary Acknowledgement from 2014 did not contain the new box.  Back came the documents from the Recorder's Office.  Clients had to sign again because there was no room to insert the box language before the Notary Acknowledgement - and the disclosure purpose to the consumer would not be accomplished.

If you are preparing or signing documents which require a Notary Acknowledgement or Jurat here in California, check to be sure the new box is in place.  Apparently there were people who relied on the Notary to tell them whether what they were signing was true or correct.  The only purpose for the Acknowledgement is to verify the identity of someone.  The Jurat is more formal and requires the Notary to "swear in" the signer by asking the individual to raise his or her right hand, and "swear that the statement he or she makes therein is the truth."  Contact an attorney if there is a question about the accuracy, truth or validity of a document.

Thursday, February 26, 2015

2015 Federal Estate and Gift Tax Exemptions

2015 arrived with a gift from the Internal Revenue Service to both individuals and professional advisers.  Estate and gift tax exemptions increased or stayed the same.  

Estate Tax:  The estate of each individual who dies in 2015 may transfer up to $5,430,000 without paying estate tax ($90,000 more than the 2014 amount of $5,340,000).  Generation Skipping Tax exemption also increased to $5,430,000.

Portability:  A married couple may combine the individual exemptions to transfer $10,860,000 through a technique called "portability" with the filing of an estate tax return by the surviving spouse or estate executor.  A box is checked on the return and that simple act reserves the right to transport the exemption and add it with the exemption of the second spouse to die.  This is a much simpler process than the establishment of multiple trusts and segregation of assets which was necessary prior to portability.   

Gift Tax Exemption:  This remains the same as in 2014: $14,000 per year per person without impacting the lifetime estate tax exemption (currently set at $5,430,000 as described above).  A married couple may transfer twice the exemption amount, $28,000, to a single recipient.   There is no limit to the number of recipients.  Neither the recipient or the giver pays a tax.  Annual gifts are a method to reduce total estate value and can be very effective if undertaken systematically over many years.

At the current exemption amounts only an estimated 3,700 estates, 0.12% of the total number of decedent estates, will owe estate tax. Estate tax, also known as the "death tax", has become a non-issue for most residents and citizens of the United States.  After years of uncertainty in Federal estate and gift tax and last hour Congressional votes and Presidential signings, the stability over the last 3 years is refreshing.  There are so many other issues pending before Congress, it is unlikely estate and gift tax will be added to the mix, at least until a new President takes office in January, 2017.

If you have questions about how any of these taxes and exemptions apply to your estate, please call attorney Kathleen Wright at 408.499.2159 or email kathleen@kswrightlaw.com