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Protecting your Separate Property

February 25, 2020

Often, we have clients who desire to protect their separate property before a marriage, or their gifts from parents later in life. One way to do this is with a prenuptial or postnuptial agreement. These agreements are difficult to do, for all of the obvious reasons. Another way to maintain separate property is to create Separate Property trusts to hold assets that are separate property. Separate property assets are those assets that you owned before marriage and have not been commingled, and also any inheritance that is received as separate property. This can be accomplished as a part of overall estate planning using a three-trust setup, two Separate Property Trusts and a Community Property Trust to hold jointly owned assets. The benefit is that the Separate Property trust assets are not subject to division in the event of a dissolution of the marriage. The income and value from the assets may be used to determine the ability to pay spousal and child support, but the assets continue to be separate property. In this trust, you can still fulfill your bequests upon passing. Usually, the desire is to give the assets to your surviving spouse and/or your children, but it could also be to share certain Separate Property Assets with others. An added benefit is that separate property of one spouse is not liable for the obligations of the other spouse. It can be quite effective for asset protection. Also, Community Property may be converted to Separate Property with a fair and equitable Transmutation Agreement between the parties. If you are married, at some point before passing away, it is advisable to place all of your accumulated assets into the Community Trust in order to obtain a full step-up in basis on the entire value of the property upon the passing of the first spouse. Similarly, if property is held in Joint Tenancy, it is advisable to change title to the Community Trust to obtain the full step-up in basis upon the passing of the first spouse. With a full step-up in basis, the surviving spouse can sell the property, after the first passing, for its value at the date of death without paying income taxes on the sale.

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The Durable Power of Attorney and Living Will Protecting your health, dignity and assets

April 5, 2019

At some point in your life, you may be confronted with various situations, such as deteriorating health, an accident or other  unforeseen circumstances, which may cause you to be unable to make decisions about your own medical care and personal finances. However, by executing a Durable Power of Attorney and Living Will, you can ensure that any medical wishes you have will be respected and your personal and business affairs will be kept in order. Advance preparation and comprehensive estate planning is the key.

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TRANSFERRING ASSETS TO YOUR TRUST

April 5, 2019

Most people are aware that one of the major benefits of establishing a trust is that a trust avoids the expense and delay of probate. Unfortunately, too many people establish a trust, and then defeat one of the major reasons for having the trust by failing to transfer all of their assets into the trust. Probate proceedings can only be avoided if all of the assets of the deceased have been placed in the trust.

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THERE MIGHT BE A WILL, BUT IS IT THE WAY?

April 5, 2019

If you are like most people, you believe a simple Will is all that is needed to transfer your property to your loved ones in the event of your death. While it is in fact one way to accomplish this goal, it often times is not the best way or most cost efficient approach.

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THE NEW TAX LAW and YOUR ESTATE Is a change of strategy in your future?

April 5, 2019

On May 25, 2001, both the House and the Senate passed the Economic Growth and Tax Relief Reconciliation Act of 2001 (“Act”) which President Bush quickly signed into law. A significant part of the Act is the gradual phase-out of estate taxes with full repeal coming after 2009. Currently, an individual can make tax-free transfers, during life or at death, of assets totaling $675,000. This sum is known as the “unified credit” and can be made in addition to yearly tax-free gifts of no more than $10,000 per donor per donee. Under the Act, the unified credit is increased and tax rates are decreased and eventually repealed as follows:

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