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The answer is through gifting to one or more irrevocable trusts. By gifting to an irrevocable trust now, you may transfer the value of assets out of your estate (up to $12M), report the gift to the IRS (which is tax-free because it would be under $12M) and no longer need to worry about the value of that asset being subject to estate tax at the time of your death.

The type of irrevocable trust to establish would depend on the types of assets you own. After reviewing the composition of your estate assets, our experienced estate planning attorneys will suggest the appropriate type of irrevocable trust(s) to establish. One common type of irrevocable trust is a Qualified Personal Residence Trust (QPRT).

The QPRT is a very common estate tax reduction strategy, and essentially it is an irrevocable trust that you may transfer your primary residence into. You then retain an interest for a term of years (that term can be anywhere from 10-40 years), with the property thereafter being distributed to your children/beneficiaries. The retained interest is considered to have some value, and so essentially you may gift a $2 million home to a trust and only use $500,000 of your estate tax credit because the gift is discounted to account for your retained interest. The appreciation of the home occurs outside of your estate, and you are able to gift it at a discount – meaning substantial estate tax savings to your heirs. For example, if that same $2M home is worth $4M at the time of your death, the entire property passes to your children estate-tax free and you’ve only utilized $500,000 of your $12M estate tax exemption to accomplish that transfer. QPRTs should be strongly considered by any single client who has near or above $6M in assets (and any married clients who have near or above $12M in assets).

In addition to QPRTs, we offer a multitude of irrevocable trust and estate planning strategies to reduce or eliminate estate taxes for high net worth individuals. You may schedule a consultation with our office to learn more – but time is of the essence as we will no longer have a $12M exemption after January 1, 2026, and if that exemption is not utilized through proper planning now, your valuable estate tax credit may be lost forever.

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Here’s Why People with Smaller Net Worth Need Estate Plans Too:

You may not have enough money to make tax planning a primary concern of your estate plan. However, you may have:

• A spouse who wants to remain in your home after your death.
• Adult children who you want to provide for after your death.
• Children with special needs or children from more than one marriage whom you want to provide for after your death.
• Siblings or friends who you want to have certain pieces of property.
• Charitable causes, religious institutions, or schools that you want to make a contribution to after your death.
• Relatives or friends who might fight over the distribution of property if you do not clearly provide for it.
• Ideas about what you want to happen if you are unable to make medical decisions for yourself.

Any of these reasons alone, and all of these reasons together, are enough for you to think about creating the estate plan that is right for you as soon as possible.

How to Get Started

The first step in creating a useful estate plan is to think about what you want to accomplish. You can get ideas by browsing the free videos and articles on our website. Then, when you are ready, contact our experienced lawyer to schedule a meeting to begin the estate planning process. We can be reached by phone at (714) 282-7488 or directly via this website at your convenience.

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If you would like to modify an estate plan in Orange County in order to make a gift to charity, consider taking the following actions:

• Contact an experienced Orange County trust lawyer for guidance.
• Obtain copies of all existing estate planning documents.
• Gather the name of the charitable organization to which you wish to donate. Include the address and other contact information if possible.
• Consider naming a backup charity if for some reason the charity of your choice is no longer in existence at the time of your passing.
• Document whether you would like to change any of your currently existing beneficiaries or the amount of property they stand to receive.
• Consider the amount that you want to leave the charity.
• Determine whether your spouse wants to make a matching contribution, a contribution to a different charity of her choice, or no charitable donation at all.

Donations a gift to charity are a commendable way to incorporate giving into your overall estate plan.For more info contact our office. Laws surrounding charitable donations, estate plans, and taxes are complex and require the knowledge of an experienced professional. Fortunately, our office is here to help. To learn more about modifying an estate plan or charitable giving, contact an experienced Orange County trust attorney at the Law Office of James F. Roberts & Associates, APC, today. Call our office at (714) 282-7488 for a consultation.

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If choosing one person to serve as your successor trustee is not desirable for your estate plan, you can consider appointing co-trustees during the creation of your plan. There are both advantages and disadvantages to utilizing co-trustees when creating an estate plan. Your experienced Orange County estate planning lawyer can help you decide whether a co-trustee appointment is the right move for your particular plan.

The following is a general overview of how co-trustees work with living trusts in California:

• Co-trustees may have equal powers, or their powers may be divided in accordance with the trust instrument.
• Two trustees can be required to obtain the consent of the other trustees before taking certain actions, or you can authorize one co-trustee to act alone.
• Co-trustees are responsible for disclosing trust information to the beneficiaries. They do not need the permission of the other trustees to do so.
• All of the co-trustees will have certain fiduciary duties.
• A breach of one co-trustee could create a legal liability for the trust.
• In some cases, a co-trustee can be liable for the breaches of another trustee.
• Co-trustees can demand full disclosure from each other.
• They are required to report any suspected breaches immediately.
• Co-trustees can sue each other if they reasonably believe a breach has occurred.
• Both trustees can resign from their position or can decline to accept the appointment.

Looking for more information about appointing co-trustees when creating an estate plan for your living trust? View here for more from an estate planning attorney. Fortunately, the experienced Orange County estate planning attorneys at the Law Office of James F. Roberts & Associates, APC can help you decide whether to appoint one trustee or several co-trustees to work together. Call our office today at (714) 282-7488 for a consultation.

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To discuss estate planning may not be the first thing that comes to mind when you think of the holidays, but with the family all together, it’s actually an opportune time to discuss end-of-life care, asset distribution, and personal arrangements. While you may worry that discussing these serious issues could put a damper on the holiday festivities, a conversation about the future might be easier if every family member is present. Consider taking advantage of the holiday togetherness to begin this important discussion about your future.

What Is an Estate Plan?

You can think of an estate plan as a final to-do list from you to your family. It’s a group of legal documents that outlines your wishes to your loved ones and provides detailed instructions for how those wishes should be carried out should you become incapacitated or after your death. A California estate plan covers a wide range of topics, including property distribution, the care of any minor children, and end-of-life healthcare decisions.

A comprehensive estate plan includes:

• Revocable living trust. This document provides a fast and private way to transfer property to your beneficiaries after your death, without involving the court. With a revocable living trust, you determine who will get your property and assets when you die, and you manage this trust  until you are no longer able to do so. If you become incapacitated or die, your named successor trustee takes over. These trusts can be altered or revoked while you’re still living to reflect changes in assets and relationships.
• Last will and testament. When used with a revocable living trust, a will serves as a legal back-up to protect assets not currently included in the trust. Known as pour-over wills, these documents allow the transfer of those items to the trust, where they can be managed and distributed by your successor trustee.
• Durable power of attorney over financial affairs. If you were suddenly incapacitated and unable to manage your own finances, a durable power of attorney document gives someone you trust the legal authority to make financial decisions on your behalf.
• Advance healthcare directive. This document takes the guesswork out of end-of-life medical decisions, letting your family know your exact wishes regarding life-sustaining treatments, organ donation, and other healthcare issues.

The Consequences of Delaying an Estate Plan

An estate planning discussion with your loved ones may feel uncomfortable, but putting off this conversation can have serious consequences. Without legal documents detailing asset distribution or how end-of-life care should be handled, family members may argue about how assets should be divided or disagree about your intentions. Clear-cut instructions can offer you and your loved ones much-needed peace of mind.

More importantly, if you die without an estate plan in place, California law will decide who receives your assets through the court-supervised probate process. Probate is lengthy, expensive, and causes the value of your assets to become public record. The goal of a well-crafted estate plan is to avoid the probate process altogether.  It is to allow you to distribute your assets on your own terms and with discretion.

Tips for a Productive Ways to Discuss Estate Planning

A discussion about estate planning doesn’t have to ruin a holiday get-together. The following tips can help keep the atmosphere lighter and less emotional:

• Don’t make the discussion a surprise. Let everyone know in advance that you plan to hold an important family meeting after the regular holiday meal and activities.
• Include all family members. If possible, include family members who couldn’t make it in person via video chat or conference call.
• Explain the purpose. Let the family know that talking about estate planning issues is important. You love them and want to ensure they’re cared for after your death.
• Ask loved ones which items hold sentimental value. This can help you decide how to distribute your smaller assets—particularly those with little economic value. This question can help keep positive family memories at the forefront of the discussion.
• Be brief. Keep the initial conversation relatively brief, especially if emotions are running high. However, let family members know that you will continue the estate planning conversation with them in the future.

Our team of knowledgeable professionals can walk you through every step of the estate planning process.  We will craft an effective estate plan that meets your needs and goals. For more information or to schedule a consultation, contact us today at 714-282-7488.

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You Will Feel Better After You Make the Call

Think about the peace of mind that you will have after your estate plan is modified. Think about the gifts that you can provide for your children, your partner, and the rest of your family. You and your estate planning lawyer can:

• Name a guardian for your child should anything happen to both you and your child’s other parent. Who will raise your child? This is the single most important thing you need to take care of as a new parent. You want to make sure that, even in your absence, your child will be raised with your values and by someone who loves him.
• Make sure that your child is provided for financially. You want to make sure that all of your assets go to benefit your child. You may want to consider how you will pay for your child’s day-to-day expenses as a minor and his or her education expenses as a young adult.
• Make sure that your family knows your medical preferences and honors them. It is important to have health care directives so that nobody has to make the agonizing decision about when, or if, to remove life support.

If you do not modify your will, trust, other estate documents, then your child may go into the custody of a court appointed guardian, not have the funds for education or other things you deem important, and have to live with the uncertainty of whether the adults in his or her life made the right decisions when you died.

Being a Good Parent Isn’t Always Fun—Yet, it Is Always Worth it

As a new parent of a newborn you have many exciting milestones to look forward to over the next few months and years. As you anticipate your child’s first giggle, first steps, first day of school, and other achievements, you deserve to have the peace of mind that comes from knowing that you are doing everything in your power to care for your child.

To find out more about how to modify your estate plan to include your plans for your child, or children, start a live chat with us today, or contact us HERE. If you know any other new parents, then we encourage you to share this FAQ on Facebook so that they can have the information that they need to protect their children.

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What is a common pot trust?

“Common pot trust” is a term used to describe a trust that holds the trust property in one lump sum until all of the beneficiaries reach a certain age or until some other pre-determined event occurs. For example, if your beneficiaries are your three children, the trust assets can be held in this trust until the youngest child reaches age 25. At that time, the assets can be divided into three separate shares.

What is unique about this type of trust?

A common pot trust allows your chosen trustee to distribute the assets in a manner that may not be equal to all beneficiaries. While this may seem like a negative trait, it allows your trustee increased flexibility. For example, if one child has a learning disability, the trustee could use funds from the common pot to pay for special tutoring without having to set aside equivalent amounts for the other children.

Is a common pot trust right for everyone?

No. Just like with all other estate planning documents, every situation is unique. Your California living trust should be tailored to meet your specific needs. Fortunately, an experienced Orange County trust lawyer can help guide you through this decision-making process. We can create the trust that best fits your family.

For more information about living trusts, view our free guide, Understanding the Revocable Living Trust – In Language that Anyone Can Understand in 8 Minutes. To learn more, contact the Orange County trust attorneys at the Law Office of James F. Roberts & Associates, today. Call our office at (714) 282-7488 for a consultation.

Related Links

• Consider a common pot trust for minors
• Using trust assets for education
• Items to consider when creating a trust

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Here’s What You Can Do if There are Trust Problems and You are the Beneficiary 

It is important to address your concerns with the trustee before significant and irrevocable damage is done. Here are three tips to help you work in a positive way with the trustee:

• Ask questions. Miscommunication is common and may be resolved if you ask questions and get clear and accurate answers about how the trustee is handling the trust.
• Ask for a trust accounting. Asking for paperwork, receipts, or written documents will provide transparency, and can help you understand how the trustee works on behalf of the trust. Seeing written statements and documents is helpful in resolving issues.
• Make your case. Some trustees have significant decision making power over how beneficiaries spend trust money. If you believe that your request for funds is reasonable and fits the terms of the trust, make a well-reasoned argument in writing. The trustee may be more likely to consider it.

How to Resolve Trust Problems If You Are a Beneficiary. If you find that your attempts at open communication and compromise aren’t successful, you might consider asking the trustee to resign; taking steps to have the trustee replaced; or contacting an estate planning lawyer for help. Learn more about your rights by reading our related links and watching our free videos HERE. You may also schedule a consultation to speak with an estate planning attorney at (714) 282-7488.

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