Currently, estate taxes are set at 35%, but this number could very well increase in the future.  The attorneys at James F. Roberts & Associates have the experience and the tools to make sure that you pay the minimum taxes on your estate when you pass away.  If your entire estate — including your home, rental properties, bank and brokerage accounts, retirement accounts, and other assets — is valued at $1 million or more planning is essential. If your estate value is above $1 million then you need a trust to protect your assets from probate and potentially paying 35% in estate tax.

It is important to remember that your life insurance policy is also included in your estate for purposes of estate taxation.  If you want to pass down as much wealth to your beneficiaries as possible and give the government the minimum amount of taxes, our attorneys can draft a trust tailored to your needs.

In order to help serve our community we offer a free monthly estate planning seminar in our office classroom and we invite everyone looking to ensure that they are making wise choices in their plan to join us. We know that choosing how to best protect your assets and your family is important and we want to help you make the right choice for your situation and to help you keep your plan updated when needed. To contact us for an appointment or to inquire about our next free seminar please click here.

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Four Reasons to Update Your Estate Plan When Tax Goals Change

If you previously created an estate plan that prioritized tax savings over other goals, you may later find yourself less concerned about this potential issue. It is very common for priorities to change through the years when it comes to an estate plan. A simple modification to your existing plan may be all you need. Following are some of the more common reasons to update your estate plan when you are no longer focused on minimizing taxes:

1. A trust that includes various sub-trusts designed to minimize taxes may be cumbersome to administer if tax savings are no longer a priority.
2. Depending on when you executed your estate plan, there is a good chance that laws have changed. Significant changes have occurred several times over the last decade alone. Your estate plan should be updated to reflect these changes.
3. The administration of a living trust that involves tax sheltering and planning is often more costly to administer than a more straightforward and simplified trust. If your goal is no longer to minimize taxes, you may be able to reduce these costs by modifying your estate plan.
4.  Your estate plan may have been designed to minimize taxes as a top priority. In some cases, this may have meant that other estate planning goals were minimized. If your priorities have changed, updating your estate plan can reshuffle the order of importance of the various goals for your estate plan.

Staying on top of your estate plan is easier when you are familiar with the latest news and tips about this important area. To stay up to date, we encourage you to sign up for our free newsletter today!

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The following are five specific tax considerations that could influence your existing estate plan:

1. The 2014 estate and gift tax exemption amount has increased from 5.25 Million in 2013 to 5.34 Million in 2014.
2. The estate, gift, and generation-skipping transfer tax rate for transfers that exceed this exemption amount is 40%. This represents a substantial tax on your assets if proper Orange County estate planning updates are not made to your trusts.
3. The annual gift-tax exclusion amount for gifts remains at $14,000—the same amount as it was in 2013. For individuals with taxable estates, it is important to take advantage of these tax-free transfers.
4. In 2014, taxpayers can gift up to $145,000 to a non-citizen spouse without triggering a gift tax. This is a modest increase from the 2013 amount of $143,000.
5. With the estate tax exemptions so much higher than in years past, 2014 presents a prime opportunity to review your existing estate plan and search for opportunities to utilize income tax savings techniques.

If your plan is in need of an update, the process is easier than you may think. Trust modifications do not necessarily require you to reinvent the wheel. To learn more about updates to trusts in California, view our free guide, The Ten Things You Must Know Before Creating (or Amending) Your Will or Trust. Call us at (714) 282-7488 today to schedule a consultation.

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What Benefits Does Taking A Five Year Distribution on an IRA Have?

Rather than taking a lump sum, a possible better option for a beneficiary of an IRA or 401k would be to take it over five year distribution. There are benefits for using the five year distribution including stretching out the tax payments, maintaining a lower tax bracket, and allowing what is still held in the IRA each year to continue to grow tax deferred.

So let’s say for example, a beneficiary has $300k coming to them. Over a five year distribution, they are taking out $60k a year, which lets them stay in a lower tax bracket annually and they have stretched out the paying of the tax over 5 years. The part they do not take out continues to grow tax deferred during that time. At the end of 5 years, it is no longer an IRA and they have had to pay the tax on the full amount. Learn more about what types of distributions you can take from an IRA by watching more of our videos on the subject or by contacting our office and meeting with an attorney.

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The following are three reasons why:

1. An accounting keeps the beneficiaries informed about the trust administration process. Often, disagreements during a trust administration arise due to confusion or lack of information.
2. A beneficiary can insist upon an accounting anyway by requesting that the probate court order it. Generally, if a beneficiary wants an accounting, the successor trustee will be required to produce and prepare it.
3. Providing regular accountings may protect you from potential liability if your actions are challenged later on, such as an allegation of co-mingling of funds, self-dealing, or misappropriation of assets.

Opting not to keep accurate records and prepare these regular accountings could be a risky decision, even if the trust instrument allows it. It is vital to consult with an experienced attorney before deciding not to prepare an accounting. Even if you choose to prepare the accounting, an experienced Orange County trust administration attorney can help you create a thorough and satisfactory account. For more information, contact our office today at (714) 282-7488.

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Even without an estate changed tax laws issue, there are many valid reasons for putting together an estate plan in California. For example, a recent article published in the New York Times points out the fact that many people tend to forget to go back and change their beneficiary designations on insurance policies and retirement accounts, even after life circumstances change. In addition, families with young children should have a Will that appoints the guardian of their children, should something happen to them.

Families with children who have spending issues or substance abuse problems could also benefit from setting up an estate plan. These families may be able to create a trust that can protect some or all of the assets while still benefiting the troubled child. This may also apply to people who are concerned about the stability of the marriages of their children.

Furthermore, it is important to note that in California, even having a Will does not prevent you from needing the state to be involved with the estate administration process. A Will must be approved by the probate court. To get around this, many clients set up living trusts to avoid the need for a formal probate proceeding upon their passing.

Clearly, even with the passing of the American Taxpayer Relief Act in January, there are many reasons for setting up an estate plan.Under the new federal estate tax law, individuals with estates valued at $5.25 million or above are subject to the changed tax laws. Contact the experienced Orange County estate planning attorneys at the Law Office of James F. Roberts & Associates, APC for more information and guidance. Call our office today at (714) 282-7488.

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How Taxes Play A Role In Why You Should Be Naming Your Spouse as Primary Beneficiary for an IRA Account

One of the issues that often comes up is who should be the primary beneficiary of your 401k and IRAs. 401ks are referred to as qualified funds because they are qualified under ARISA which means you’re never paid income tax on it by definition if you are married your spouse has to be your primary beneficiary of any qualified funds unless your spouse signs the consent form waving their right to be the beneficiary. For most people we want the beneficiary of your 401k and IRAs to be your spouse there are some exceptions and we will talk about that in later videos.

We also offer a regularly scheduled seminar in our office to help people determine what the best options are for them in their estate planning needs. We hope you sign up for one of our seminars to help you find your best options. We regularly conduct free seminars designed to teach about the benefits of creating an estate plan. The seminars are held on-site at our Anaheim office inside of our “classroom”. We offer light snacks and refreshments to the attendees and the group is often small and intimate, which allows for questions to be asked comfortably and for a very relaxed environment. Please encourage your loved ones to attend the seminar so that they may learn more about the estate planning process and benefits.

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Why should you consider a trust amendment following a move to California? The following are key reasons why changing the location of your Anaheim trust may benefit you:

• You may be able to avoid paying state income taxes on the trust’s income in multiple states.
• You may be able to avoid the trust having to pay capital gains taxes in multiple states.
• California may have more favorable trust laws than your previous state with regard to duration of the trust, creditor protection for beneficiaries, or the trustee’s ability to improve investment performance of trust assets.

You must do a trust modification if you recently moved to Anaheim after previously living out of state.for more info read here. A knowledgeable professional should oversee the actual process of amending your trust. An excellent starting point as you begin the process of updating your trust is to view our free guide, The Ten Things You Must Know Before Creating (or Amending) Your Will or Trust. To learn more, contact the Law Office of James F. Roberts & Associates, APC. Call our office of experienced Anaheim trust modification attorneys today at (714) 282-7488.

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