Decanting a Trust in California

If you are interested in a trust as an estate planning tool, you may have heard the word “decanting” and wondered what it means and why you might need it as a strategy

What does decanting mean?

  • The word “decanting” traces its roots to winery, where a person would decant a wine by pouring it from it’s bottle into another container.
  • Similarly, a 2019 California law allows you to change the terms of an irrevocable trust by “pouring” trust assets from an old trust instrument into a new trust.  
  • This helps you to leave behind the unwanted terms of the old trust, just as you would leave behind the impurities in the wine. 

What law changed the rules for trust decanting? 

  • The California Uniform Trust Decanting Act became effective January 1, 2019. 
  • Before this change, modifying an irrevocable trust was difficult, but now decanting provides an easier way to modify an irrevocable trust. 

How is decanting accomplished?

  • In general, you must still notify trust beneficiaries of the proposed changes and allow them the opportunity to object to the changes. 
  • You must also stay within the limits of which the trust terms can be changed, which depend on the Trustee’s authority in the original trust. 
  • For example, you might want to eliminate beneficiaries, but you wouldn’t be allowed to use this rule to increase Trustee compensation. 

Contact an Experienced Estate Planning Attorney

There are pros and cons to decanting, and it needs to be accomplished properly. At the Law Office of David Knecht, we make it our business to stay current on regulatory changes that impact estate planning. We will customize a plan to help you find creative solutions to meet your estate planning goals, and we will work with you to keep your plan up-to-date and responsive to regulatory changes. Contact us today at 707-451-4502. 

Navigating Divorce During the Holidays: How to Help Your Kids

Whether you are in the middle or a divorce or whether it is now final, the holidays can be a difficult time for the children, and statistics have shown that divorce can be challenging for children emotionally.

This article will share strategies for how a parent can support children emotionally during the holidays to create new happy memories and traditions.

Be more generous and compromising than usual. 

  • We celebrate good will during the holidays, and this provides an opportunity for you to be more compromising with your ex than usual. 
  • Try to be flexible in scheduling so that the children can have contact with both parents. 
  • Avoid putting children in a bind where they feel they have to be loyal to one parent or the other. 
  • Cultivate a mindset of positivity during this time, so that actions from the other parent do not ruin your own mood, so that you can create positivity for your children.
  • Be positive about the other parent’s gifts and events.   

Plan ahead. 

  • Planning in advance is key to creating a positive holiday experience. 
  • Schedule in advance so that you can prepare your children with proper expectations. 
  • Work with the other parent on the gifts so that there are not duplicates. 
  • Avoid competing for gifts by perhaps coordinating with the other parent on a potential budget if the other parent is open to that idea. 

Communicate with your children. 

  • Communication is key with children of all ages. 
  • Discuss with your children some of their hopes or goals for the holidays. 
  • Include your children in the planning. 
  • Brainstorm ideas with your children on how to think of others during the holiday season. 
  • Perhaps even help your children plan a gift for the other parent. 

Contact an Experienced Divorce Attorney

At the Law Office of David Knecht, we understand the challenges that divorced families face, and we can help you with any aspect of your family law case. Contact us today at 707-451-4502. 



Divorce and Holidays: How to Help Yourself Enjoy the Season

The holidays are supposed to be a time of celebration, but they can be a challenging trigger if you are going through a divorce. There is no time of year where self-care is more important than the holiday season, and if you have children, see our companion article to this one about helping your children successfully navigate the holidays as well.

This article will suggest ideas originally shared in a post on PsychologyToday.com to help you take back the power and enjoy the season in spite of the challenges you face, and the memories that may be painful

Recognize your emotions and talk them out. 

  • Accept your feelings and do not feel like you have to bear them alone. Find a family member, friend or therapist to listen to you and provide support. 

Make a plan and do not isolate yourself. 

  • If you do not have your children, find something to do that will make you happy. Volunteer at a homeless shelter, support a charity, or donate your time or money to a cause. Devoting yourself to others and being busy in something bigger than yourself will help you heal. 

 Put your legal process aside, if possible

  • The legal battles of a divorce can be a heavy weight, so if possible lay this burden down for the holidays and pick it back up again in January.

 

 Focus on health. 

  • Taking care of your body will help you take care of your soul. Eat good foods, take a walk, dance around the living room. Avoid drowning your sorrows in alcohol, drugs or other behaviors that might temporarily numb your pain, but ultimately not give you lasting satisfaction.

 Consider your purpose

  • The holidays are a good time to reflect on family and friends and to ponder what your purpose is in life. Take time to think long term and set goals and hopes for your post-divorce life. 

Contact an Experienced Estate Divorce Attorney

Self-care is essential during the divorce litigation and after the divorce is final. At the Law Office of David Knecht, we understand the stress and concern that a divorce can bring to the parties and the families, and we want to help you successfully navigate this challenging time in your life. We have helped thousands of clients, and we want to be here for you. Contact us today at 707-451-4502. 

Will Terminating an Irrevocable Trust Affect my Taxes?

A common question relating to trusts is whether terminating the trust will affect taxes.  The termination of irrevocable trusts can be a complex legal topic.

When does an irrevocable trust automatically terminate in California?

  • There are some circumstances where the trust terminates by law:
  • The term of the trust expires.
  • The purpose of the trust is fulfilled.
  • The purpose of the trust becomes unlawful or is impossible to fulfill. 

When can an irrevocable trust be dissolved?

  • When all beneficiaries consent to termination. 
  • If continuing the trust is necessary to carry out a material purpose of the trust, it can’t be terminated unless a court determines that the reason for doing so outweighs the interest in accomplishing the purpose of the trust. 
  • When the Fair market value of the principal of the trust has become so low in relation to cost of administration that continuation under the existing terms defeats accomplishment of its purposes.  
  • For other reasons beyond the scope of this article. 

What are the potential tax consequences of terminating an irrevocable trust?

  • When trust assets are liquidated and distributed those transactions may trigger taxes. 
  • If the trust is a grantor trust, then the person who created the trust is considered the owner of the assets and is responsible for taxes. 
  • If the trust is a non-grantor trust, it gets taxes as a separate entity, and the trust itself and beneficiaries are the ones who will pay the tax bill on distributions. 

What are some general principles for trusts and income taxes, capital gains and estate taxes?

  • An irrevocable trust may hold assets such as stocks or bank accounts that generate income and these gains are taxed as ordinary income. This tax applies to the profits, not the principal. 
  • Assets in the trust that increase in value are subject to capital gains taxes when the profits are distributed, and the beneficiaries will pay the tax rate that equates with their income level. 
  • When assets are transferred to an irrevocable trust, they lower the person’s estate tax liability when they die, but keep in mind that this is something most people do not need to consider since only large estates are subject to the federal estate tax in 2023. 

Contact an Experienced Estate Planning Attorney

This article contains general information about the tax consequences of terminating an irrevocable trust, but consulting a professional about the specific tax liabilities and strategies involved is highly recommended. At the Law Office of David Knecht, we can help you understand the tax consequences of the various tools available for estate planning, and we can customize a plan that is perfect for your goals and your family. Contact us today at 707-451-4502. 

California Divorce: Next Chapters in Kevin Costner Divorce Case

If divorce is in your present or near future, the legal challenges that have arisen in the divorce between Kevin Costner and Christine Baumgartner may provide helpful insight into issues that you may face in your own divorce.  This article will provide highlights from this Hollywood divorce that give insight into discovery issues, child support arguments, tactics and testimony for evidentiary hearings on child support matters. 

Kevin and Christine have discovery issues.

  • As reported by People.com, discovery propounded by Christine demanded information from Costner on “expenses paid by you, or any person at your request or on your behalf, relating to any extramarital romantic relationships.” 
  • Kevin objected that the discovery was “propounded only for the purpose of harassment, is overbroad as to time period and subject matter, burdensome, oppressive and impermissibly compound.”
  • Kevin objected on the basis of relevance, with the reasoning that there was no community property.
  • After making the objections, Kevin’s legal team responded that he had no responsive documents for “extramarital romantic relationships” in which he engaged, because he engaged in none. 

Christine and Kevin had a child support hearing. 

  • Christine sought $161,592 in child support, but she did not prevail and after a two-day hearing, Kevin was ordered to pay $63,209 per month. 
  • Kevin offered $75,000 a month prior to the hearing, but Christine declined and wanted the judge to decide.  

Both Kevin and Christine testified at the evidentiary hearing about child support.

  • Christine’s attorney argued that the lifestyle the three children have grown accustomed to “is in their DNA at this point.”
  • Christine explained how a decrease in financial status would affect their kids because the ocean is their home and the surf garage at Kevin’s home is 50 steps from “toes in the water.”
  • Kevin testified that while he would not want to live in the $40,000 a month property that Christine is currently rented, he explained that it was not because it wasn’t comparable to his home, but because he raised three children in his home and “their hands are in the stone.”

Contact an Experienced California Divorce Attorney

Divorce can be challenging for the parties and children involved, but having an experienced divorce attorney by your side can help reduce your anxieties and give you confidence that you will not be taken advantage of by the person you once trusted, your former spouse. At the Law Office of David Knecht, we are here to help you! We understand the mental and financial challenges that you will face, and we will use our extensive experience with family law to help support you and walk you through the legal challenges. Contact us today at 707-451-4502. 



California Divorce and AB-957

AB-957 is a bill, which the California Senate and Assembly approved, and as of the writing of this article, September 13, 2023, it is awaiting Governor Gavin Newsome’s signature.

Where can you see the text of the bill?

What does the bill change?

  • The law has been that the court makes a determination in the best interest in the child, which includes considering the health, safety and welfare of the child. 
  • The bill adds that the health, safety and welfare of the child includes, among other factors, a parent’s affirmation of the child’s gender identify or gender expression. 
  • The bill also states that affirmation includes a range of actions and will be unique for each child, but in every case must promote the child’s overall health and well-being. 

 Does this require the court to award custody to the gender affirming parent?

  • According to Scott Alman, who is a family law professor at the University of Southern California, the bill “does not announce any bright line rules forbidding the judge to award custody to a denying parent or mandating that the judge award a child to an affirming parent.” 
  • In Altman’s opinion, as quoted by the AP.com article, while the bill sends signals that affirming is generally better than denying a child’s gender identity, it does not mark a dramatic legal shift because courts have long been tasked with resolving custody disputes involving LGBTQ+ children, and judges already consider multiple factors. 

How impactful will this bill be on custody disputes in the future?

  • As this change is new, it is unclear how extensive, if any, the impact will be in custody cases in California.
  • The arguments for and against are explained in detail and can be viewed by clicking “Assembly Floor Analysis”.

Contact an Experienced California Divorce Attorney

If you are anticipating custody issues in your divorce, contact us at the Law Office of David Knecht. We have extensive experience with family law and can help you navigate the legal system. We will craft compelling arguments in favor of the plan that you think is best for your children and assist you in strategizing how to achieve your divorce goals. Contact us today at 707-451-4502. 



California Divorce and Frozen Embryos

Many couples create frozen embryos either before or during marriage, and then upon divorce issues can arise. This article will discuss the high profile California embryo dispute between Modern Family star, Sofia Vergara and her ex-fiancé and then summarize some best practices to follow if you are thinking of creating embryos. 

Sofia Vergara and Nick Loeb – California court upholds contract. 

  • Modern Family star, Sofia Vergara and her ex-fiancé created embryos prior to their break up in 2014. 
  • In 2016, Vergara sued Loeb seeking a court order that any attempts to bring the embryo to life would be a breach of their contract.
  • Vergara and Loeb created an embryo disposition contract in 2013, where a party seeking to use the embryo needed the other’s written consent. 
  • In a seeming effort to gain a jurisdictional advantage, Loeb sued Vergara in Louisiana, where destruction of embryos is prohibited by statute but the case in Louisiana was dismissed. 
  • Loeb’s lawyers argued that the contract was a “form directive” that is void and against public policy because it does not comply with California law since it lacks a provision dealing with what happens in case of divorce or separation. 
  • Loeb also argued that he had a valid separate enforceable oral agreement with Vergara authorizing him to have the embryos implanted in a surrogate, and he argued the contract was invalid for duress because she had yelled at him prior to the contract execution.
  • The court made a judicial determination that the form directive entered by the parties was a valid enforceable contract and rejected Loeb’s arguments, so Vergara won the case. 

Best practices for protecting your interests when creating embryos. 

  • First, know that the law relating to embryos is still in flux, as many of the embryo cases in California and throughout the country are scare and new. For this reason, there are no hard and fast rules for protecting your interests with regard to embryos, but this article will suggest ideas that are supported by cases in California and throughout the U.S. 
  • A contract with the any parties involved in writing that clearly defines all possible scenarios and the agreed upon outcome may help protect your interest.
  • Each party to the contract should be represented by their own attorney. 
  • Consider not only the people creating the embryos, but also any egg donors or sperm donors that may be involved. 
  • Think through who will be paying for creation and storage fees and any financial terms that should be included relating to money. 
  • Generally, embryos cannot be sold, so consider the market value of the embryo as zero. However, embryos can be donated, and costs can be involved in donation, such as legal fees, medical facility transfer fees, family match fees through agencies, etc.)

Contact an Experienced California Divorce Attorney

If you are considering creating embryos or if you are divorcing and need help fighting for your interests relating to embryos, contact us at the Law Office of David Knecht. We have  extensive experience with family law to help support you and walk you through the legal issues relating to embryos or any other divorce or family law issue. Contact us today at 707-451-4502. 



Estate Planning Ideas: Transfer Wealth by Helping Your Children Buy a Home

People commonly think of estate planning as only being relevant after you have passed, but there are many tools for transferring wealth during your lifetime. This article will summarize three ways that you can transfer wealth to your children through helping them purchase a home.

Lend money as an intrafamily loan. 

  • A family loan can greatly benefit family members purchasing a home because they can avoid the high interest rates that are currently market standard.  
  • One common challenge is that a loan to one family member may strain relationships with other family members who were not given the opportunity for an intrafamily loan. 
  • Another challenge to be aware of is the complication of a intrafamily loan to a married family member who may subsequently get divorced.

Give money as a gift. 

  • A gift can be used outright or in the form of loan forgiveness. 
  • The lifetime gift exemption is cumulative and applies to all recipients, and under federal life that amount is $12.92 million per person, or $25.84 million for a married couple. (Numbers scheduled to change in 2026.)

 Co-sign a loan. 

  • Another common way for a parent to assist is to act as a guarantor or co-signer on a loan. 
  • This helps a child who may not have established credit and may help the child secure a better loan. 
  • The risk is that the parent is likely obligated under the terms of the loan if the child does not pay. 

Contact an Experienced Estate Planning Attorney

If you are interested in learning more about methods and tools for transferring wealth during life or after death, contact us at the Law Office of David Knecht. We have extensive experience with estate planning and can help update an old plan or create a new one that meets your needs. Contact us today at 707-451-4502. 



Final Chapter in Kevin Costner California Divorce?

In previous articles, we have following the legal divorce battle between Hollywood legend, Kevin Costner, and his wife of nearly 19 years, Christine Baumgartner. Now the couples has reportedly reached an amicable settlement,  and this article summarizes what appears to be the final chapter of the divorce saga as reported by USA Today.

 

The terms of the divorce settlement were not disclosed. 

  • The terms of the divorce settlement were not publicly disclosed, but it likely included terms relating to child support and legal fees. 

 

 The settlement resolved a contentious court battle. 

  • Baumgartner reportedly requested $175,057 in child support payments during a two-day Santa Barbara court hearing in August, according to People Magazine

 

  • The couple shares two sons, age 14 and 16, and a 13 year-old daughter. 

 

  • In the end, per People (see above), Kevin was ordered to pay $63,209 in monthly payments. 

 

 What is next for Christine?

  • During the child support hearing, Christine testified that she was going to have to find a job outside the home to support herself and her children. 

 

  • Although at the hearing, she did not specify the job that she planned, there are reports that she is considering a role on the Real Housewives

 

 Divorce lessons from Kevin and Christine.

  • Even with a prenuptial agreement in place, a divorce is not necessarily simple or inexpensive. 
  • As reported by Insider, Kevin was ordered to advance his wife $200,000 for attorney fees and $100,000 for expert costs. 

 

 

 

  • Some experts speculated that the money and the publicity were reasons why Kevin and Christing may have settled. The take-home lesson is that the cost and other downsides of litigation may be important factors in any divorce. 

Contact an Experienced Divorce Attorney

Whether your divorce is a high-profile, contentious litigation or a simple, more amicable split, we can help you here at the Law Office of David Knecht. We have extensive experience with family law, so we have can help you regardless of the issues that you face in your California divorce. Contact us today at 707-451-4502. 



Uncertain Times Call for Creative California Estate Planning Strategies

For many people, today’s uncertain times can be a source of anxiety, with inflation, international conflict, and political uncertainties creating a question about whether decisions today will still be wise in future years. Estate planning in these uncertain times calls for thoughtful and creative estate planning. This article will summarize thoughts on how to do this as published at Kiplinger.com, see 

 

Recognize that regulatory frameworks can change. 

  • The Tax Cuts and Jobs Act of 2017 increased the estate tax exemption.

 

  • The Secure Act 1.0 and 2.0 made changes to inherited IRA’s, minimum distributions, trusts and more. 

 

  • The 2024 Presidential Election may have implications for your estate plan. 

 

  • Navigating these changes can create challenges for your estate plan, but it can also create real opportunities for strategic and advanced planning. 

 

Creative Estate Planning Requires an Understanding of How the System Works

  • Many tax-advantaged estate planning strategies involve giving up some control of your money to protect it. 

 

  • After spending years accumulating money and property, it may be difficult to give up that control, especially when times of turmoil may have decreased its value or may make you worry about future drops. 

 

  • One strategy is to focus on long-term planning and concentrate on the signals (for example, markets generally rise), and not the noise (daily fluctuations in value). 

 

 What Is the Focus of Effective Strategies 

  • Flexibility is the key to long-term planning. Know what your goals are to make sure that your documents are drafted in a way to accomplish your goals and provide flexibility to adjust for changes in those goal. 

 

  • Balance is a second key to long-term planning. Be reactive but not over-reactive. Many proposed changes do not come to fruition, so be aware that you may need to silence some of the media noise of proposed changes that may never be realized. 

 

  • Staying diligent is the third key to long-term planning. Many people wish that estate planning were a one-time event that they could check off their list, but the most effective estate plans are re-evaluated regularly. Revisit your estate plan regularly to make sure that it is still aligned with your goals and regulatory changes. 

Contact an Experienced Estate Planning Attorney

At the Law Office of David Knecht, we make it our business to stay up-to-date on regulatory changes that impact estate planning. We will customize a plan to help you find creative solutions to meet your estate planning goals, and we will work with you to keep it current and responsive to regulatory changes. Contact us today at 707-451-4502.