A recent article from the National Law Review shares 2022 year end estate planning updates and strategies for clients to consider. This article summarizes this publication, which can be found in its entirety here:

Gifts for 2022 

• A person can make gifts up to $16,000 per recipient to an unlimited number of persons free from gift tax. 
• For a married couple splitting the gift, this means they can gift up to $32,000 per recipient. 
• Gifts are within an annual exclusion amount, so they do not reduce the tax payer’s lifetime federal estate and gift tax exemption. 
• This creates an easy and effective way to pass wealth to family members or others. 
• The gift must be made by December 31, 2022 to qualify. 
• All gifts made outright can qualify and certain gifts made to a beneficiary in trust can qualify also if properly structured. 
• In 2023, the annual amount will increase to $17,000 per recipient. 

The gift exclusion is a tool that is used by many of clients because it is a straightforward and easy mechanism for passing wealth to family members and others without a gift tax consequence for the giver. For clients with greater resources, the lifetime federal estate and gift tax exemption amounts should be considered in estate planning.

What is the lifetime federal estate and gift tax exemption?

• This is the combined amount a person can transfer during life without 
  • triggering a current gift tax 
  • or upon death, transferring free from estate tax. 
• However, transfers to U.S. citizen spouses and qualified charitable organizations are not generally subject to tax. 
• Annual gifts within the gift exclusion described above do not “count” against this lifetime number
• Other lifetime gifts, however, will reduce the amount of estate tax exemption available at death. 
• Currently the lifetime exemption is $12,060,000 per taxpayer estate.
• In 2023, this number will go up to  $12,920,000 per taxpayer estate.
• This allows opportunities for estate planning in 2023 with these new numbers in mind.  

Contact an Experienced Family Lawyer

Whether you are just embarking on building your wealth or whether you have significant assets, estate planning can be helpful in utilizing tax advantageous tools and planning for the outcomes you seek. At the Law Office of David Knecht we have extensive experience with estate planning in California and can help you successfully prepare the right estate plan for you and your family. We look forward to assisting you.  Contact us at 707-451-4502. 

 

Last month, we wrote an article about the insightful estate planning lessons that could be derived from the Anne Heche case, and this article will provide updates on the saga of her estate and the custody of her minor son. The take home lesson is PLAN AHEAD. Many people do not want to prioritize estate planning, but this celebrity saga is one that shows the importance of proper planning and follow through when it comes to estate planning and guardianship. This article references information reported by usa.com at the article.

Who was Anne Heche and what happened?

• Anne was an actress known for various movie roles including starring in the movie “Seven Days Seven Nights” along with Harrison Ford.

• As reported by Fox News, the actress died in August in a car crash, leaving behind two sons, one an adult and one a minor.

• The family indicated that she was “peacefully taken off life support” on Sunday August 14, 2022, after being declared brain-dead.  

Who is involved in the dispute?

• As of October 15, 2022, a family legal battle is still underway. The players are Homer Laffoon, Anne’s adult son and her ex-husband, James Tupper, who is the father of her minor son, Atlas. 

• Laffoon, the adult son, made a claim to his mother’s estate as the oldest heir. Tupper, the ex-husband, filed an objection declaring the Laffoon was not suitable for appointment over the estate. 

Did Anne have a will?

• Did Anne have a will? That is the “Million Dollar Question” so to speak. Laffoon believes there was no valid will, but Tupper has claimed there is a will based on an email from 2011 establishing Tupper as the person in “control” of her assets and an email to her attorneys at the time with that the message should “go into my records as my word until further papers are drawn up.” 

 What are the latest developments? 

• As of October 15, 2022, as reported on Yahoo.com, Tupper and his son Atlas, appeared in court to determine the next steps in their ongoing dispute with Laffoon. According to the article Court found that Tupper did not present enough evidence to halt Laffoon from becoming his half-brother’s guardian ad litem. When Tupper shook his head in disapproval of the judge’s decision, the judge reprimanded him with the statement: “We’re not here to pick the best person. I’m here to decide if he’s qualified, or disqualified.”

Consult the Law Office of David Knecht

While celebrity estate disputes can be fascinating to the public, they also provide a cautionary tale to all of us that death can come unexpectedly to anyone at any age. They are a beacon of warning telling us to prepare early to avoid the messes that can ensue when proper planning is not undertaken and documents are not finalized appropriately and lawfully. Contact the Law Office of David Knecht at 707-451-4502. We have extensive experience in estate planning and can help you prepare to avoid heartbreaking disputes. 

 

There are many kinds of life insurance that can be used in an estate plan. One type, survivorship life insurance, covers two people on a single policy. Another name for survivorship life insurance is second-to-die joint life insurance. It pays out a death benefit once both policyholders have died. This article will examine the benefits of this type of policy and how survivorship life insurance works.

What triggers the payout?

• This policy pays out only after both people have passed away.

Do you have to be a married couple to purchase survivorship life insurance?

• No, although married couples are often the ones who do purchase this type of coverage, the joint policyholders are not required to be married.

 What are some of the situations where survivorship life insurance is typically used? 

• High net worth household – after the second spouse dies, the benefit from this policy can be used to pay estate taxes so that the heirs do not have to worry about selling assets to pay the estate taxes.

• Business succession – this policy can be used to transfer business ownership if both partners die.

• Special needs child – This policy can be used to fund a trust to provide care for a special needs child.

• Leaving a legacy –  The death benefit from the policy can help any beneficiary you select, which can include a charity.
  

 Is survivorship life insurance different from joint life insurance? 

• First to die vs. second to die – Joint life insurance can refer two any policy that covers two people under one policy. There are two types of joint insurance, first to die and second to die (survivorship life insurance). So, survivorship life insurance is really a subset under the general umbrella of joint life where the trigger is the second death.

• Different goals – The main goal of the first-to-die joint life insurance policy is to cover the surviving spouse to provide that person with enough funds to replace the lost income from the spouse that passed away. The second-to-die policy has a goal to provide heirs or a charity with the benefit rather than the spouse.

CONSULT THE LAW OFFICE OF DAVID KNECHT

There are many estate planning tools to choose from, so it is vital to create a customized plan that is right for your goals, assets and loved ones. If you want to get started on an estate plan, contact the Law Office of David Knecht. Call us at 707-451-4502. We have extensive experience in estate planning.

When you pass your loved ones can face many expenses, which may include funeral expenses, debts that may reduce the assets for your heirs and final taxes, which can include back taxes and taxes for the year in which you die. Life insurance can help your loved ones cover these expenses, which can be very advantageous if the estate holds real estate or other assets that take time to be liquidated to cash. As reported by moneygeek.com, even though over 70% of Americans surveyed think life insurance is a necessity, only about half of Americans actually have some kind of life insurance. As with other types of estate planning, the statistics often show that there is more commitment to the idea that it needs to get done than to the effort to follow through, but in the case of life insurance, the work to get it is often fairly minimal, with some sites offering instant policies . This article will highlight some of the ways life insurance can be part of an estate plan.

• Payment of Estate Taxes

Federal estate tax applies to the gross estate of the person who has died and must be paid within 9 months after the death of an owner. Proceeds of a life insurance policy can pay these taxes. Life insurance policies are generally not subject to income taxes.

• Estate Equalization

A life insurance policy can help fill in the gap where there are assets that are not liquid but you want each child to get an equal share. For example, if one child received a farm or a home, where the child receiving that asset does not want to sell it or break it up, then the life insurance policy can help the other child or children get an equal share, where liquidating the asset would have a negative consequence to its value.

•  Business Asset Coverage

If you die, the surviving business owners will receive death benefits and your family will get the payment for your interest in the company.

•  Quicker Payouts.  

The death benefit of a life insurance policy can be claimed immediately, which makes is helpful for paying out expenses and lessening the financial burden on your family.

•  Special purposes

Life insurance proceeds can be dedicated for a special purpose, like divorce obligations for spousal or child support or to providing continuing support for a minor, a child with special needs or an aging adult.

CONSULT THE LAW OFFICE OF DAVID KNECHT

Life insurance is one of many estate planning tools to choose from, so it is important to create a customized plan that is right for your goals, assets and loved ones. If you want to get started on an estate plan, contact the Law Office of David Knecht. Call us at 707-451-4502. We have extensive experience in estate planning.

 

A recent article published on Kiplinger.com was authored by an estate planning attorney whose own mother received a terminal cancer diagnosis. It was a poignant perspective from a woman who was a veteran in the estate planning field, only to have to call on that knowledge for her own family member.  

This article will summarize the takeaways from the unique perspective of an estate planner who had to plan for her own family member.  

 

How has the Schiavo case influenced estate planning?

• Terri Schiavo was a woman who suffered a massive heart attack in 1990 and was left in a permanent vegetative state. Her husband and parents had a complicated and bitter legal battle over whether she would have wanted to be maintained in that vegetative state. 
• This case was a horror story of what can happen in the absence of a clear advance medical directive. 
• The number one lesson from this case is that the battle between the husband and the parents was preventable, had Schiavo properly prepared by making her wishes known and documented. 
• Here you can see more details about the Schiavo case.  

 

Why might estate planning be particularly important for those of a particular faith?

• In the Schiavo case, the role of faith played prominently in the push and pull of the end of life debate. 
• Similarly, the author’s mother was part of a faith-based community and therefore had very strong beliefs about what her end-of-life care should look like and how her body should be treated in the final moments. 
• The takehome lesson here is that family members can benefit from directives as to what the person wanted, what customs to follow, and what preferences to adhere to.   
• The author’s experience with her mother helped her realize that the stress and emotion of a tough diagnosis are draining, so it can be particularly challenging to start on estate planning when someone’s health is in the declining stages.
• It’s much easier to plan ahead during times of health.

CONTACT THE LAW OFFICE OF DAVID KNECHT TO GET STARTED ON ESTATE PLANNING

If you need help getting started on estate planning, or if you are looking to update or expand on work already completed, contact the  Law Office of David Knecht. We have extensive experience with estate planning in California. Contact us at 707-451-4502 for more information.  

 

A recent article published on CNBC.com highlighted a surprising trend:  although the Covid-19 pandemic has greatly increased awareness and conversations regarding estate planning, Americans are still not taking action, with 67% of Americans without any estate plan according to sources cited by the CBNC.com article.  See This article will summarize the CNBC report on what Americans are missing and how to get started on planning for the future. 

What does the research show as the reason why 67% of Americans are leaving what happens to them and their assets in the case of disability or death up to others?

• A study from Caring.com showed that the main reason for the apathy toward estate planning is just procrastination (approx. 40%). 

• Meanwhile, about a third of respondents didn’t think they had enough assets to pass on to their loved ones, and about 10% said that estate planning was too expensive or that they didn’t know how to get a will. 

How has Covid impacted estate planning motivation?

• Those who have had a serious case of Covid are 66% more likely to prioritize estate planning.  See 

• 41% of people age 18-34 report seeing more need for estate planning after the pandemic. 

• Even with Covid providing increased motivation, there are opportunities to do better: the Caring.com study found that only 48% of people who had severe Covid have an estate plan in place. 

What is the recommendation from the CNBC report on how to get started on estate planning?

• The first step is to become as informed as possible and consult with a financial advisor or estate planning attorney. 

• For those with fewer assets, online resources may be useful for planning.

• California Residents – With online resources, be sure to confirm whether they are valid and binding in California 

CONTACT THE LAW OFFICE OF DAVID KNECHT TO GET STARTED ON ESTATE PLANNING

If you need help getting started on estate planning, or if you are looking to update or expand on work already completed, contact the  Law Office of David Knecht. We have extensive experience with estate planning in California. Contact us at 707-451-4502 for more information.  

 

Some would assert that the pandemic and shifting landscape around wealth transfers is fueling increased trust and estate disputes.  This article will summarize a podcast with an interview of the Honorable Glen Reiser, a judge who serves as educational trainer for all trust and probate judges throughout California.  He spent more than 20 years with the Superior Court in Ventura County, California, and before that, more than two decades as a civil litigator.  The full transcript of the podcast can be found here:  https://www.jdsupra.com/legalnews/podcast-jams-neutrals-on-the-evolution-5378200/

Contested cases have risen dramatically over the last five years, and particularly recently due to COVID. 

• With Covid, we are seeing a high number of unexpected deaths.

• There is an increase in the will disputes, with issues relating to blended families and sibling rivalry.

• More people are dying without a will due to the unexpected nature of Covid.

• In the “old days” more wealth was earned individually, but now we are seeing that more frequently, wealth is transferred through family deaths and trust and estate matters, so that seems to be where large amounts of capital are exchanged.  Contests in that area have risen dramatically.

The Court system is increasingly encouraging mediation over trial.

• With Covid, we are seeing a high number of unexpected deaths.

• There is an increase in the will disputes, with issues relating to blended families and sibling rivalry.

• More people are dying without a will due to the unexpected nature of Covid.

• In the “old days” more wealth was earned individually, but now we are seeing that more frequently, wealth is transferred through family deaths and trust and estate matters, so that seems to be where large amounts of capital are exchanged.  Contests in that area have risen dramatically.

 

•  Mediation has advantages the court cannot offer.

Mediation can save time and money.

• Attorneys can work with the mediator and other parties to craft often creative solutions.

 

• Mediation can allow for more customized solutions, since they can be tailored specifically to the parties.

Capacity tends to be a significant issue and cases require a lot of court resources. 

• Will and trust contests tend to be judge decided not jury
• The burden on judges for these types of cases is large because the cases require trial and long opinions, so judges generally would like to encourage settlement
• The testamentary instrument is either a trust or a will. That document in most cases, not always, was drafted by an estate planner or a lawyer who dabbles in estate planning.  Thorough preparation would be to interview the estate planner to see what their recollection is, even if it relates to issues such as capacity, undue influence, document interpretation or intent.
• With capacity cases, a geriatric psychiatrist or PhD psychologist with expertise in geriatrics should be consulted.

 

The role of undue influence in estate disputes. 

• In our mobile society, many family members move away, but someone stays to help take care of the elderly person.  So, when the elderly person changes their instrument to benefit the person taking care of them, then that’s a common circumstance where undue influence will be alleged.

• Undue influence is a particularly fact specific factor, and questions that should be asked are:  Is the person isolated?  Are they competent to write emails?  Who is taking them to the lawyer’s office?  Whose lawyer is it?  Who is sitting in on meetings with an estate planner?  These issues and more are the type of fact-specific inquiry needed on these cases.

 

 Tips for successful mediation of estate disputes.

• Preparation is key.

• Consider spending money on the science up front.  There is a lot of development in the science of cognitive deficits with scientific evidence that can be relevant to undue influence and capacity, and it may be that spending money on the science up front will make the negotiating position stronger.

• Find a mediator who will read everything, understand the positions and get involved.

• Avoid selecting a mediator who is just a “carrier pigeon” to take the offers back and forth.  Look for a mediator who has the skill set to add to the discussion.

Conclusion

At the Law Office of David Knecht, at 707-451-4502, we have extensive experience in estate planning and litigating estate disputes.   Contact us today!