Archives for June 2022

How Do I Make Charitable Giving Part of My Estate Plan?

xIs there a charity or a cause that really speaks to your heart? Do you want to make a difference in the world even after you are gone? If so, you may be wondering how to put your charitable giving desires into effect with your estate plan. This article will give you ideas of how to accomplish charitable giving and where to start. For more information on estate planning.

 

Make an outright bequest.

  • This is probably the easiest method for supporting causes you love through your estate plan. 
  • Typically, this method would involve identifying and exact amount to give to a specific charity and specifying that in your will. 

 

Donations in lieu of flowers when you die.

  • You can ask friends and family to leave a gift to a certain foundation in lieu of flowers when you die. 
  • This can be a good way to not only fund-raise for your favorite charity, but also to bring awareness and public support for the charity also. 

 

Name beneficiaries for non-probate assets. 

  • Assets that do not go through probate include assets held in trust, life insurance policy payouts, and retirement accounts and pensions  
  • You can name the beneficiary on these accounts as the charity or charities that you want to support. 
  • As a note of caution on this one, though, your loved ones may want to inherit these types of assets because tax benefits may be involved.

 

Can I remain anonymous in my charitable giving?

  • Prior to 2021, California had a law requiring nonprofits to file a list of their large donors with the state. The U.S. Supreme Court in a 2021 decision struck down California’s law, thus siding with donors who may have a desire to remain anonymous. Consult the Law Office of David Knecht

 

At the  Law Office of David Knecht, we have extensive experience with estate planning and can help you accomplish charitable giving or a plan that accomplishes the purposes you have in mind. We will perform a one-on-one evaluation to help you create an estate plan that is customized for your needs. Call us at 707-451-4502.

 

Filed Under: Estates

Imputation of Income for Child Support and Alimony in a California Divorce

A common issue in child support and alimony cases in a California divorce is imputation of income. This article will explain the concept of imputation of income and provide an overview of some of the basics in this area of divorce law. For a deep read on these issues, go to this article, “Kids, Custody and Alimony” from the Journal of Contemporary Legal Issues.

When does imputation of income typically become an issue?

  • In child support or alimony cases
  • When one spouse claims that the other refuses to work or is underemployed. 
  • The court has discretion to assign an income to that person consistent with their earning capacity, ability and income earning opportunities

Does imputation only apply to employment? 

  • No, the imputation can also relate to assets. 
  • The court can also look at income producing assets and impute a reasonable rate of return to historically non-income producing investment assets.
  • For example, if money is in the bank and not earning any interest, a family law judge does have discretion to assign a reasonable rate of return to that investment. 

Is the imputed income added to the actual income?

  • Typically the imputed income is not in addition to the actual income but in lieu of the actual income when it comes to employment.
  • However the judge does have discretion to add the imputed income from assets to imputed income from employment.  

Is there a case that can help me understand how imputation works in a divorce case?

  • An interesting case from the California Court of Appeals 2001, In Re Marriage of Cheriton,  involving imputation of income from employment and investments can be found here:  

Consult the Law Office of David Knecht

Cases that involve imputation of income from employment or assets can be complex. If you need help with child support, alimony or any other issue in a California divorce, please contact us at the  Law Office of David Knecht. We have extensive experience with estate planning and can create a customized and effective estate plan just for you. Call us at 707-451-4502.

Filed Under: Family Law

Property and Debt Division in a California Divorce

In a California divorce, even if the parties agree, a judge has to approve the division of property and debts through an order. You don’t necessarily have to go to court because a judge could approve an agreement between you and your spouse. If the parties don’t agree, the judge can make a determination for you at a hearing or a trial. Information in this article will help you better understand https://selfhelp.courts.ca.gov/divorce/property-debtsproperty and debt division in a California divorce with information sourced from online resources provided atx. 

 

  • What is property? 

 

  • Property has a formal definition, but in general it is anything that you can own, buy or sell. This includes real estate, bank accounts, life insurance, retirement and more. 

 

 

  • What are the categories of property and debts?

 

  • Community property is generally what you own together during your marriage and the debts that you owe together during your marriage. 

 

  • Separate property is generally what you each owned individually before you were married or after you separated and any gifts or inheritance or any debts you incurred before or after your marriage. 

 

 

  • Why is the date of separation important for categorizing assets and debts?

 

  • The date of separation is important because generally, from that day forward, what you or your spouse earned or loans that you take out are no longer community property. 

 

 

  •  What are the rules for the date of separation?

 

  • The separation date is the day that one of you let the other one know (by actions or words) that they wanted to end the marriage, provided that after that day, your or their actions were consistent with wanting the marriage to be over. 

 

 

  •  How can I tell if something is community property?
  • Generally, community property is anything you earned while married, anything you bought while married and debt that you incurred while married. 

 

Consult the Law Office of David Knecht

Property and debt division is one of the most important aspects of a divorce for most people. The information in this article is very general, but an experienced family law attorney can help you make your case to get the property to which you are entitled and fight to prevent your being saddled with debt that isn’t yours. Please contact us at the  Law Office of David Knecht. We have extensive experience with divorce and family law issues and can answer your questions. Call us at 707-451-4502.

 

Filed Under: Divorce Advice, Divorce Attorney, Divorce Lawyer

Inheritance, Estate Planning and Charitable Giving: 4 Strategies to Reduce Taxes Now

MarketWatch recently published a great opinion piece entitled “Inheritance, estate planning and charitable giving: 4 strategies to reduce taxes now.” This article summarizes the strategies share in the article, but the full text can be found at this link:  

 

  • Offsetting Capital Gains

 

  • Capital gains are profit you make from selling an asset that has appreciated since you first obtained it.
  • These gains are taxed.
  • If you hold the asset more than a year, they are taxed at a rate lower than ordinary income. 
  • Losses on your assets can help reduce tax liability. 
  • Take away:  Do not wait to look strategically at how to harvest tax losses to offset gains until the end of the year. Engage in proactive review of your stocks throughout the year to evaluate the best course of action and to see if there are ways to take advantage of market volatility during times of decline.

 

 

  • Evaluating Roth Conversions

 

  • A Roth IRA conversion changes when the taxes are due and Roth IRA conversions are becoming increasingly popular. 
  • With a tradition al 401(k) or traditional IRA, the taxes are paid on the back end when you withdraw the money. 
  • With a Roth IRA conversion, you owe taxes on the amount you convert up front, which is difficult, but then the converted amount is able to grow tax free and you do not pay taxes at the time of withdrawals. 
  • Example from the MarketWatch article:  A client had 1 million dollars in a traditional IRA. She converted it to a Roth IRA, which required her to pay $500,000 in taxes on the front end instead of paying taxes when she taxes a distribution or when her beneficiaries inherit the account. But now, the 1 million in the Roth can grow tax free, which is an asset she can lean on during retirement of pass on to heirs. (Noe, a Roth IRA must be open for five years and the individual must be at least 591/2 years old to take the money out tax free). 
  • Take away:  Evaluate what taxes you can afford to pay up front and determine whether a Roth Conversion makes sense for your goals for retirement or for your goals for your heirs. 

 

 

  • Maximizing Charitable Giving

 

  • There are many ways for clients to be charitable and use new tools for tax exemptions.
  • “DAF” – Donor Advised Funds are third-party funds that are created for the purposes of giving to charity.
  • “RMD”-Your required minimum distribution, “RMD”  is the minimum amount you must withdraw from your Traditional IRA each year. You can give this to charity and reap tax benefits. 
  • Take away:  Consider how charitable giving can accomplish your altruistic objectives while taking advantage of tax exemptions.  

 

 

  •  “Giving While Living” to Family and Friends

 

  • Giving while living is a popular estate planning tool.
  • You can give up to $16,000 to any other person, that money is not taxed, and the person who receives it gets the full amount of the gift. 
  • Take away:  Giving to family and friends while you are alive is a way to enjoy estate planning while you are around to see the joy that your gift brings to your loved one. 

Consult the Law Office of David Knecht

Connecting with professionals who understand tax saving tools, who can explain the options to you, and who can create the right plan for your needs and goals is essential for effective estate planning.  Property and debt division is one of the most important aspects of a divorce for most people. Please contact us at the  Law Office of David Knecht. We have extensive experience with estate planning and can create a customized and effective estate plan just for you. Call us at 707-451-4502.

Filed Under: General