Estate Planning Archives - The Law Office of Kris Mukherji

Potential Reduction in Estate Tax Exemption in 2021 and What We Can Do About it

admin — Mon, 01 Mar 2021 06:46:42 +0000

Potential Reduction in Estate Tax Exemption in 2021 and What We Can Do About it

As explained by the Internal Revenue Service (IRS), the estate tax is a tax on your right to transfer property at the time of your death. Only a small number of estates are subject to the estate tax. The estate tax exemption is $11.7 million for an individual is currently for the year 2021. An estate valued at less than that amount is not taxed.

That being said, the estate tax exemption is scheduled to drop in 2025—and it could be going down even early than that. In this article, our San Diego estate planning attorney provides an overview of the current federal law, discusses the possibility for future reductions in the exemption, and explains your options.

Tax Cuts and Jobs Act (TCJA): Estate Tax Exemption Scheduled to Revert in 2025

In December of 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law by President Trump. Among other things, the tax reform bill increased the estate tax exemption. In 2016 and 2017, the individual exemption was $5.45 million and $5.49 million respectively. The TCJA essentially doubled that exemption amount, with annual adjustments for inflation. However, the TCJA includes a ‘sunset’ provision. In 2025, the estate tax exemption is scheduled to revert to the pre-2018 level.

A New Administration Means New Policies—Possible Reduction Coming

It is not clear that the current estate tax exemption level will make it all the way to 2025. As a candidate, President Biden proposed a significant reduction in the estate tax exemption. Recently, CNBC reported that the Biden Administration wants to reduce the individual estate tax exemption to $3.5 million—a threshold even lower than the pre-2018 level. What exactly will happen to the estate tax exemption in 2021 and beyond remains to be seen. Still, it is reasonable to expect that a reduction in the exemption is possible, even likely.

You Can Plan Ahead to Best Protect Your Financial Interests

With the current estate tax exemption set to expire (in 2025 or sooner), you may be wondering if there are steps to take now to protect your financial interests. The answer is ‘yes’—with a proactive approach you can effectively minimize your overall tax burden. Here is the most important thing you should know:

The IRS has issued guidance clarifying that there will be no “clawback” on lifetime gifts made under the current estate tax rules.

In other words, any gifts made under the current estate tax thresholds will not be subject to additional tax in the future, even if the exemption is eventually reduced. This means that it may be in your best interests to start gifting money/assets/property to your beneficiaries now in order to preserve your access to the tax exemption.

Contact Our San Diego, CA Estate Planning Lawyer Today

At The Law Office of Kris Mukherji, our California estate planning attorney has the skills, knowledge, and experience that you can rely on. If you have any questions about estate tax planning and possible future reductions, we are more than ready to help. Contact us at (858) 442-5747 for a fully confidential initial consultation. From our law office in La Jolla, we provide estate planning services in San Diego and throughout the region.

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Estate Planning for Same-Sex Couples

admin — Mon, 01 Mar 2021 05:54:52 +0000

Estate Planning for Same-Sex Couples

LGBTQ couples have long faced some unique estate planning challenges. However, recent victories for marriage equality have helped to bring some additional fairness and simplicity. In the 2015 case of Obergefell v. Hodges, the Supreme Court of the United States held that the fundamental right to marry is guaranteed to same-sex couples.

For estate planning purposes, a same-sex couple with a lawfully recognized marriage is in much the same position as a heterosexual couple. An unmarried LGBTQ couple should take some additional estate planning measures to ensure full protection. Here, our San Diego estate planning attorney offer four estate planning tips for same-sex couples in California.

1. A Will is Your Core Estate Planning Document

Everyone needs a will. Alarmingly, a recent study found that members of the LGBTQ community are somewhat less likely to have a will than their heterosexual counterparts. It is even more crucial that you have a will if you are unmarried. California law does recognize inheritance rights for an unmarried domestic partner. You must include your partner in your will.

2. You May Benefit From Setting Up a Trust

In some cases, a will is not the most efficient way to transfer assets to your loved ones. LGTBQ couples may benefit from setting up a trust to support the people that they care about the most. If you are considering using a trust to leave money or property to your heirs, contact an experienced California estate planning attorney for help.

3. Protect Yourself With a Power of Attorney

Your estate plan should protect you in the unfortunate event that you become incapacitated or otherwise unable to manage your own legal or financial affairs. You can protect yourself by assigning a power of attorney to a trusted loved one. Whether you are married or unmarried, it is still a best practice to formally grant your partner power of attorney. It will make it a lot easier for him or her to manage your affairs if necessary.

4. Consider Advance Health Directives and a HIPAA Release

Finally, members of the LGBTQ community should consider setting up advance health directives. If you have specific instructions for your own care, a health directive will ensure that those wishes are known. Additionally, a HIPAA release is also a useful estate planning document. The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that provides strong legal protections to your sensitive medical information. An unintended consequence of the law is that doctors sometimes cannot share key medical records/information with the family members of a vulnerable/incapacitated person. A HIPAA release allows you to grant your partner (or other loved ones) access to your medical information when necessary.

Get Help From a San Diego Estate Planning Attorney

At The Law Office of Kris Mukherji, our California estate planning lawyer is driven to help clients find peace, security, and stability. If you have concerns about estate planning for same-sex couples, our team is here as a resource. Contact us at (858) 442-5747 for a confidential, no obligation initial consultation. With a law office in La Jolla, we represent clients in San Diego and throughout the surrounding communities.

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Jeffrey Epstein’s Last-Minute Will: Impact on Victims Looking to Collect From the Estate

admin — Tue, 01 Oct 2019 23:20:52 +0000

Jeffrey Epstein’s Last-Minute Will: Impact on Victims Looking to Collect From the Estate

Unless you have not had to access to social media, a newspaper, or television in recent weeks, it is likely you have heard the name, Jeffrey Epstein. Epstein is now widely known for his alleged sexual assault of underage girls spanning a number of years. Allegations include assaulting girls in New York, Florida, and other locations, and more recently, he was charged with one count of sex trafficking of a minor and one count of conspiracy to commit sex trafficking. He pled not guilty to these crimes and was being held in jail in New York.

Two days before committing suicide in his jail cell, Epstein signed a will. Victims who allege assault by Epstein have filed a lawsuit against his estate. In his will, Epstein left his estate to a private trust. It is estimated that his estate is worth more than $577 million. The victims of Epstein suing the estate might have a difficult time making a claim on his assets now that they have been left to a private trust.

The use of a private trust in an individual’s estate is not new. Using a trust is often a strategic move based on the needs and wants of the individual preparing the estate documents. Accusers who filed a civil suit against Epstein’s estate face a tough legal battle for monetary damages. The criminal suit against Epstein died with him, but his estate is still subject to civil suits. If the criminal case had gone to court and Epstein had been convicted, it would have likely been easier to collect monetary damages in a civil suit. The elimination of the criminal suit does not eliminate the possibility of recovering in a civil suit, however.

One possible scenario for those suing Epstein’s estate is that they will be locked in a legal battle for many years. Epstein’s will was filed in the Virgin Islands. There will be no money leaving the trust until all claims are settled.

While the use of a trust could create some legal roadblocks, there is the possibility that all of Epstein’s assets were not transferred into the trust before his death, especially since it was signed only two days before his death. Additionally, even if all assets were transferred before his death, there is a possibility that the transfer could be deemed fraudulent. This is because Epstein was facing criminal charges when the transfer was made and the courts could rule the transfer of property as fraudulent and therefore the assets would be available to those pursuing damages because they are not a part of the trust.

While your estate plan will likely never be as contested as Jeffrey Epstein’s, it is important to have a solid and legal plan nonetheless. Knowing that your assets will be handled in your preferred way after death provides peace of mind to most people. The estate planning attorneys at the Law Office of Kris Mukherji are here to help you create an estate plan specifically tailored to your needs and wants. Contact us today for a consultation.

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What You Should Know About Charitable Remainder Trusts

admin — Sat, 19 Jan 2019 19:16:28 +0000

What You Should Know About Charitable Remainder Trusts

Both individuals and businesses make donations to charities. While donations are generally always welcomed, there are financial implications and considerations surrounding a donation that must be considered. A donation does not need to be an outright gift; there are other options available for donation purposes. It can be beneficial to set up a charitable remainder trust to donate to charity. A charitable remainder trust is an instrument that provides for donations to charity, while still allowing the donor to make income off of the property in the trust. A charitable remainder trust is an essential part of a financial plan that should be considered before making a large charitable donation or gift.

The Basics of Charitable Remainder Trusts

A charitable remainder trust is made by the settlor (the person setting up the trust) and transferring the property that is intended to be in the trust into the trust. The charity intended to receive proceeds from the trust is the trustee. The principal of the trust is invested and the settlor receives a portion of the trust in the form of an annuity. If the settlor dies, or the period of time specified for the trust elapses, the remainder of the trust is then distributed to the charity.

A charitable remainder trust is irrevocable, meaning that the trust cann ot be changed. When the property or assets are transferred into the trust, the trust is then the owner of the assets or property. Legal control of the property is transferred the trust. The charity must be an approved charity. Approved charities are usually those that are a tax-exempt organization under IRS definitions.

Types of Trusts

There are two main types of charitable remainder trusts:

Charitable Remainder Unitrust: The annuity amount that is paid to the settlor is calculated annually as a percentage of the fair market value of the property donated in the trust.
Charitable Remainder Annuity Trust: The annuity amount is a fixed percentage, meaning the settlor receives the same amount throughout the life of the trust

Benefits of a Charitable Remainder Trust

There are many reasons you might choose to set up a charitable remainder trust for donations.

Tax Breaks: There are tax implications of a charitable remainder trust. The settlor is able to take a deduction over five years for the value of the gift being given through the trust. Additionally, there are no capital gains tax when the asset or property is sold.
Receiving Income: The settlor is able to receive income over the life of the trust.
Pursuing Philanthropic Goals: The settlor is encouraged to make charitable contributions, but is able to still generate income for themselves.
Creditor Protection: Assets in the trust are generally protected from any creditors.

If you want to set up a charitable remainder trust, consult with an experienced attorney at the Law Office of Kris Mukherji. All of the benefits of the trust do not eliminate the complex process of setting up the trust. Contact us today to get your trust set up in the correct manner.

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The Advantage of an Asset Protection Trust

admin — Thu, 20 Dec 2018 20:44:53 +0000

The Advantage of an Asset Protection Trust

An asset protection trust is a tool that is used to hold assets in a separate vehicle so that they cannot be taken by creditors. When an issue arises that could result in a lawsuit, the party seeking compensation will try to sue the party with the deepest pockets. An asset protection trust is an option for assets to be legally held in a separate tool so that the owner can still enjoy the benefits of the assets, but does not have direct ownership. There is both Domestic Asset Protection Trusts (DAPT) and Foreign Asset Protection Trusts (FATP). There are many advantages to an asset protection trust.

Legal Opportunity to Protect Assets

When facing a lawsuit and the possibility to paying a large sum of damages, there may be the temptation to conceal assets. This is illegal, and failure to disclose assets during a lawsuit could be considered perjury. An asset protection trust allows the owner to transfer ownership of their assets and avoid criminal charges. Creditors do extensive research to find assets. If you think that you will be able to successfully hide assets, you are wrong and will likely be caught. It is best to utilize legal means of asset protection.

Becoming a Less Favorable Subject of a Lawsuit

When someone is filing a lawsuit, they are likely going to target the party with the deepest pockets. When your assets are placed in an asset protection trust, you become a less favorable target for lawsuits. If the party being sued does not have assets that are available for creditors, the likelihood of being sued decreases. Plaintiff’s attorneys in civil lawsuits often work with a contingency agreement in place. This means that they do not collect money upfront for work to be completed, but instead will take a percentage of the damages awarded. The plaintiff’s attorney will likely conduct a preliminary search before taking on a case. If the attorney discovers the adverse party does not have assets to collect upon, then he or she is not likely to take the case.

The motivation behind most lawsuits is money. Having less money or fewer assets than other parties involved in a case may put you at an advantage. The less money you have, the less likely you are to be pegged an easy target to collect upon at the end of a lawsuit.

Hire an Experienced Asset Protection Attorney

We live in a litigious society. No one is immune to lawsuits. You do not have to be a billionaire to be concerned with protecting your assets and wealth. Speaking with an asset protection attorney can be a life-changing move. The attorney at the Law Office of Kris Mukherji is a member of the Asset Protection Council. This is a group of attorneys, CPAs, and Financial Advisors committed to asset protection. Contact us today to find out how we can help you protect your assets.

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Things Everyone Should Know About Estate Planning

admin — Tue, 11 Dec 2018 01:09:41 +0000

Things Everyone Should Know About Estate Planning

Think about all the ways you try to protect your safety in day-to-day life – wearing a seatbelt when you are driving, making sure that the airbags in your vehicle function properly, having working smoke detectors in your home, and having renters/home insurance. These are just a few of the ways that average people protects themselves from injury, accident, or other unexpected life events. You are prepared for day-to-day emergencies, but are you prepared with someone to make medical decisions if you can not? Or someone who can take over your finances when you are unable to manage them? An estate plan can deal with these issues and more.

What is an Estate Plan?

Before you can have an effective estate plan, it is important to understand what that is. An estate plan is the method by which a person can dictate how his or her estate should be administered after death. It can also include contingencies for what should happen during one’s life should a person be unable to care for him or herself or make important decisions.

The most common part of an estate plan is a will. This is the document executed during one’s lifetime that dictates the way that assets will be distributed after death. The execution of a will has many strict requirements in the state of California. To ensure that it is properly prepared and executed, an estate planning attorney can help you.

While a will is the most commonly thought of estate plan, there are other components. A power of attorney is also part of an estate plan. This is legal documentation giving another individual power of attorney, or the ability to make decisions on behalf of another person. For example, a power of attorney can give another the ability to make financial determinations and health decisions.

How do I Set Up an Estate Plan?

The first step to establishing an effective estate plan is talking to an experienced attorney. An attorney will be able to explain the requirements needed for each element of an estate plan. The preparation of an estate plan begins with a discussion about what you want to happen with your assets following death. Your attorney will make sure that the documents are executed properly and will stand up to scrutiny of the court should there be any challenges.

Why Have an Estate Plan?

When people die without a will or any legal documentation describing what they want to be done following their death, they are leaving those decisions up to the courts. Probate is the process by which the courts will settle a deceased individual’s estate. If the deceased has a will, the court will verify the will and then the terms of the will are followed. Without a will or plan, the court decides how assets will be distributed. Without a will, or estate plan, you are leaving the future of your assets up to the courts. It is important to have an estate plan so that your wishes can be carried out after death.

The estate planning attorney at the Law Office of Kris Mukherji is here to help you with an estate plan. Do not wait on this important documentation and planning, contact us today.

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Do I Need More Than a Will?

admin — Mon, 19 Nov 2018 22:59:00 +0000

Do I Need More Than a Will?

For most people, planning for their death is not an enjoyable activity. However, we must all come to terms with our mortality and make sure that we put a plan is in place for how our estates will be handled following our death. An estate plan can encompass many different documents and plans. When most individuals think of an estate plan, they think of a last will and testament. Is a will enough to protect your assets and save your family from struggling to deal with your assets? It might not be.

While a will can cover many assets and account for potential problems that might arise, there is no way to guarantee that it will cover any and all contingencies. This is not to say that a will is not beneficial. For any California resident, having a will in place is a great start to their estate planning process. A will can not be ignored. It is essential to include a will in your estate plan because it includes a lot of important information about your wishes after death.

Wills in California

A will is a legal document that outlines the way you would like your assets to be dispersed following your death. It provides written directions for the handling of your estate and provides a step-by-step process for your loved ones. Additionally, a will can include any final words that you wish to tell your loved ones. While the will provides the basic directions, there are additional documents that are needed to complete an estate plan.

Additional Estate Planning Documents

A will provides for the distribution of assets, but it does not provide for incapacitation or consider tax implications or benefits. Therefore, additional documents are necessary to complete you estate plan. There needs to be a plan in place in the event that you are suddenly unable to care for yourself. The following are additional documentation that should be included in an estate plan:

Healthcare power of attorney: This is a legal document that names a person who will be responsible for your medical care in the event that you are unable to make decisions for yourself. This saves time and confusion during medical emergencies so that there is no delay in life saving decision making.
Financial power of attorney: Similarly to a healthcare power of attorney, the financial power of attorney names a person to take over your financial decision-making when you are unable to.
Healthcare Directive: A healthcare directive states what you wish to be done if you are incapacitated in the hospital. This is different than the power of attorney. This is prepared by you to dictate whether you want to be resuscitated, how long you want CPR to be performed, and etc.

The estate planning attorney at the Law Office of Kris Mukherji is here to help you create your estate plan. We want to help you create a complete estate plan to give you the reassurance that your affairs will be handled as you wish following your death. Do not wait on this important documentation and planning; contact us today.

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