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.

For many, divorce is a challenge. You may worry about your children and your future. An opinion piece published by the New York Times presents a different paradigm. From the perspective of the author, divorce for some can be a liberating, refreshing change that propels you to a better present and future. This article will summarize the opinion, Divorce can Be an Act of Radical Self-Love, which can be found here: https://www.nytimes.com/2021/09/30/opinion/divorce-children.html

•  “Everything is my choice, and I am in charge.”

The experience of one newly single mother who works full time and attends graduate school at night was highlighted in the New York Times piece. She said she enjoyed choosing her apartment, decorating it and paying for it. Her quote was, “everything is my choice, and I am in charge.” The ability to make choices independently is an oft overlooked benefit of divorce. 

•  Children may benefit from being released from a toxic environment. 

Many divorcing parents worry how their children may react, but the author of the NY Times opinion piece posits that children may benefit from being released from a toxic environment. She writes: “Children know on an intuitive level what their parents are thinking and feeling. Long frosty silences, screaming matches and unrelenting tension between parents can inflict damage on the well-being of their children.” 

For research that examines the way in which predivorce marital conflict influences the impact of divorce on children, see https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1741-3737.2001.00197.x

See also research on whether children benefit when high-conflict marriages are dissolved , which can be found here.  https://www.jstor.org/stable/353565

•  Freedom from a relationship that “crushes the spirit.”

Personal development can flourish post-divorce with the newfound freedom from a relationship that “crushes the spirit.” 

Research cited in an article on connectedwomen.co supports the idea that you may be happier divorced than married.  https://www.connectedwomen.co/magazine/the-brighter-side-of-single-mom-life-why-more-women-are-living-happily-ever-after-divorce/

• A survey conducted in the US by research firm Avvo found 75% of divorced women reported they had no regrets ending their marriage compared to 61% of divorced men
• A UK study by Kingston University surveyed 10,000 divorced men and women between ages 16 and 60; participants were asked to rate their happiness before and after their divorce, and again the women were found to be much happier for up to five years following the end of their marriages
• The UK study also found that divorced women reported feeling more content than they had in their entire lifetimes; the findings also indicated women were more likely to seek the support of friends, improve their health and lifestyle, seek out new experiences, and discover more about themselves.

Consult with Experienced Divorce Attorneys at the Law Office of David Knecht

If you are considering whether divorce might be the right decision for you, get experienced legal advice. At the Law Office of David Knecht we have extensive experience with family law in California and can help you successfully navigate a California divorce.  Contact us at 707-451-4502 for more information.  

The American Bar Association published an article with tips for a successful mediation, with content inspired by the best-selling book, “Getting to Yes.”  This article will summarize these mediation best practices, and the full story can be found here: 

• Separate the person from the problem.

Both parties almost always have anger, resentment, and distrust of their ex, but for the purpose of negotiation those negative emotions – while often very justified—are not productive to getting what you want out of the negotiation.  Your ex’s personality is not going to change in the divorce.  However, if you can identify specific problems to be solved, then those may be negotiable.  

• Develop options for mutual gain. 

The more options that are presented, the more likely it is that both parties can find an option that is palatable to everyone.  Look for options that are win-win for both people so that instead of a combat position, you are taking a problem-solving tact.  

• Focus on interests, not positions. 

With a position approach, you have a winner and a loser.  With an interest-centered approach, you try to understand the interests of the other party and the goal is to achieve solutions not winners and losers.  When you take time to really listen to what makes the other side tick, then you will understand how to properly incentivize the behavior you want to achieve. 

• Find objective material to lead to common understanding

Both parties can respond to objective material.  For example, if two parties value property or assets differently and neither will budge, then an assessor could be hired to provide data or internet research could be done to get objective information.  

•   Focus on the best alternative to a focused agreement “BATNA.”

If you are trying to get everything you want in a negotiation, you are likely to fail.  If you identify what you really need and prioritize, then you are more likely to achieve those realistic goals through settlement. 

Consult with the Law Office of David Knecht

At the Law Office of David Knecht we have extensive experience with family law in California and can help you successfully negotiate a California divorce.  Contact us at 707-451-4502 for more information.  

If you are considering divorce, you may have reached out to friends or family to get their advice.  Many people may have shared with you the do’s and don’ts to help you navigate the divorce process effectively.  This article will add to the advice, with a cautionary list of things not to do. 

• Don’t necessarily keep the house.

A home can have a lot of sentimental value, but when evaluating it in the divorce, you need to look at it as simply an asset or a liability.  Determine whether you have sufficient resources not just for the mortgage and utilities but for any maintenance. Consider whether it meets your needs now. Evaluate with logic not emotion.

• Don’t ignore potential tax consequences or retirement accounts. 

Make sure you understand how your taxes will be impacted going forward and how any deductions or stimulus for the children will factor in.  Talk to an accountant or lawyer to plan taxes ahead of time so that you aren’t caught by surprise. Additionally, make a plan for splitting the retirement so that you aren’t left without those resources later on.

• Don’t forget about health insurance. 

If you or your children have been covered by your ex’s policy, you need to determine how health insurance will work going forward. 

• Don’t spend lavishly out of spite. 

You may be receiving support pending the divorce, but generally you should spend money the same way that you did during the marriage.  Spending lavishly out of spite could interfere with the asset division.

•  Don’t roll over all of an ex’s retirement account into an IRA if you need some of the money for divorce expenses.

If your divorce settlement allocates assets under a qualified domestic relations order (QDRO), then any withdrawal a QDRO alternate payee takes from a 401(k) or 403(b) is exempt from the 10% early withdrawal penalty—even if you’re under age 59½. The bottom line is if you think you’ll need money now, you might want to make a withdrawl before the rollover. But, do this with caution, because you will owe income tax on the amounts withdrawn.

Consult with Experienced Divorce Attorneys at the Law Office of David Knecht

At the Law Office of David Knecht we have extensive experience with family law in California and can help you successfully negotiate a California divorce.  Contact us at 707-451-4502 for more information.  

This article will explain some basic principles relating to holographic wills in California.  What is a holographic will?

The definition of a holographic will found at is a holographic will is a will that is handwritten, dated and signed by the person writing the will.  See https://www.courts.ca.gov/documents/Common_Words_Probate_Cases.pdf

Where can I find the law relating to holographic wills in California?

CA Prob Code § 6111 (2017) contains the black letter law relating to holographic wills.  It can be found here:  https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=6111.&lawCode=PROB#:~:text=%29%206111.%20%28a%29%20A%20will%20that%20does%20not,as%20to%20the%20date%20of%20its%20execution%20and%3A

What does Section 6111 say?

(a) A will that does not comply with Section 6110 is valid as a holographic will, whether or not witnessed, if the signature and the material provisions are in the handwriting of the testator.

(b) If a holographic will does not contain a statement as to the date of its execution and:

(1) If the omission results in doubt as to whether its provisions or the inconsistent provisions of another will are controlling, the holographic will is invalid to the extent of the inconsistency unless the time of its execution is established to be after the date of execution of the other will.

(2) If it is established that the testator lacked testamentary capacity at any time during which the will might have been executed, the will is invalid unless it is established that it was executed at a time when the testator had testamentary capacity.

(c) Any statement of testamentary intent contained in a holographic will may be set forth either in the testator’s own handwriting or as part of a commercially printed form will.

What kind of attorney can help me with a loved one’s holographic will?

An attorney who has experience in estate planning law can help you with the probate process and understanding whether a holographic will is enforceable.

At the Law Office of David Knecht, at 707-451-4502, we have extensive experience with estate planning in California and can answer your questions relating to a holographic will.

The SECURE ACT (Setting Every Community Up for Retirement Enhancement ACT) is legislation designed to adapt to the changing needs of the US retirement system.  People are generally living longer, more people are working contract or freelance jobs, and the nature of work is changing.  This article will highlight some of the key points of this ACT, some of which may impact your California estate planning objectives.  For information from a financial planning point of view, see this article from Forbes:  https://www.forbes.com/sites/davidkudla/2020/01/10/four-major-highlights-of-the-secure-act/?sh=32dd845476b1

1. Inherited Retirement Account.  

Previously, the rules allowed a nonspouse-IRA beneficiary to “stretch” required minimum distributions from an inherited account over their own lifetime.  The advantage of this old rule was that the funds could  grow for years tax-free.  The SECURE Act changes this old rule and now upon the death of the account owner, distributions to non-spouse individual beneficiaries must be made within 10 years.  

1. No Age Restriction for Contributions to Traditional IRA’s.  

Previously, individuals had to be under the age of 70 ½ to contribute to a traditional IRA.  Now, there are no age restrictions.  This greatly expands the number of people who may be eligible to contribute.  However, on caveat is that the individual still has to have eligible compensation which includes wages, salaries, tips, professional fees, bonuses and other income generating streams received from working.  Commission, self-employment income, nontaxable combat pay, and military differential pay are also eligible compensation.  Certain stipend, fellowship and similar payments to graduate students and difficulty-of-care payments to caregivers can also be considered income for the IRA contribution purposes.   

• Required Minimum Distributions Start at Age 72, not 70 ½.  

Prior to the SECURE Act, an individual was required to withdraw money from traditional IRA’s and employer tax deferred accounts such as 401 (k)’s at age 70 ½.  The new rule allows individuals to wait until age 72 to withdraw money, thus allowing the funds a little longer to grow.

Consult with the Law Office of David Knecht

If you are interested in learning more about how the SECURE Act changes can impact your estate plan, contact the Law Office of David Knecht, at 707-451-4502. We are an

For many families, their house is the most valuable asset, so the question of what happens to the house is extremely important.  The answer can depend on many factors, so this article will give an overview of some of the possibilities and considerations.  If you’d like to understand how the law will impact your specific circumstances, contact  us at the Law Office of David W. Knecht for a consultation.  We have extensive experience in family law and can help you understand how the factors discussed in this article will apply to you, your property and your family. 

• Determine whether the home is separate or community property.

• Home purchased prior to marriage, generally separate.  If the home was purchased prior to the marriage by one spouse and no community assets were used to make payments on the home, then it would typically be separate property. This is a general rule and there may be exceptions which are beyond the scope of this article.   

• Home purchased during marriage, generally community.  If the home was purchased during the marriage, it is likely community property.  In California, the presumption is that property acquired during the marriage is community property and not separate property.

• Separate property means one spouse will get it, community property means it is a shared asset. If the house is separate property, the owner will get the house.  If the house is community property, the house can be divided between the couple by agreement or court order.   See https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=FAM&sectionNum=2550 and https://codes.findlaw.com/ca/family-code/fam-sect-2581.html

which state that the presumption is that community property is divided equally. 

• Sell and divide profits.

The most obvious option is to sell the house and divide the profits between the spouses.  This is clean and is often perceived by the parties as equal.  This is a good option when neither spouse can afford the house alone. 

• Buy out.  

A buy out option is where one spouse pays the other their share of the value of the home and keeps the home.  This can be advantageous if the home if financed with a favorable interest rate, or if the home has special value in terms of sentimental value or location or design that can’t be duplicated by an alternative house. The spouse considering a buy out should weigh various factors such as the mortgage payments, interest, utilities, insurance and maintenance costs. There can be important tax implications to this decision.  For example, if by court order or agreement one spouse pays the mortgage as a form of spousal support, then the spouse paying the mortgage can claim a tax deduction for support payments, and the spouse receiving would need to claim the payments as support income.  Consulting a tax professional or your attorney on the tax consequences of the division of the house is a important step in the divorce process. 

• Deferred Sale

A court can enter a deferred sale order to benefit their minor children as a way of lessening the impact on the children.  With a deferred sale order, one spouse and the children stay in the home but both own the home jointly for a certain length of time.   (See https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=3800.&lawCode=FAM)

There are many important considerations when contemplating a divorce, and the division of the home is one of the most vital aspects to plan out in advance.  If you are interested in more information about how your home would be divided in a divorce, please contact the Law Office of David W. Knecht, at 707-451-4502.