Attorneys in the Los Angeles Law Offices of
David A. Solitare are experienced in all types of estate planning
techniques and their tax implications. We begin by consulting with
you to analyze the extent of your assets and clarify your objectives
in conserving and transferring them. Based on your situation, objectives
and family dynamics, we identify estate planning options and help
you evaluate their benefits. We take care of the details to implement
your estate plan.
We realize that the distribution
of personal assets can be a source of friction in the best of family
and business situations. We assist you in thinking through steps
to avoid possible conflicts.
services include Estate Planning, Post-Death Estate Administration,
and Probate Matters:
Retained Income Trust
Health Care Directive
and Gift Tax Planning
and Probate Matters
Learn more about
Trusts: Life Insurance Trust, Charitable Remainder Trust, Grantor
Retained Income Trust, and Qualified Personal Residence Trust.
Situation: Client is a Los Angeles double income married
couple in their early forties with three minor children. Their
estate is currently (2005) valued at $1,400,000 asfollows:
& Marketable Securities
They expect their estate to continue to grow, especially in
light of Southern California real estate values. Their objective
is to minimize future estate taxes and transaction costs.
Solution: Establish a revocable living
trust (also known as an inter vivos trust or a family trust).
As the name suggests, the trust is revocable at any time. The
couple will be able to manage their own assets in the trust.
All trust assets pass to designated beneficiaries without probate.
Benefit: If the client's estate continues
to grow at a conservative 5% a year, while adding $10,000 to
savings annually through earnings, it will be worth $2,050,000
in 2011. If both spouses were to pass away at that time, with
a revocable living trust the client receives the following benefits
over the do-nothing approach:
tax savings. In 2011 in a do-nothing approach, they would
pay $459,500 in estate tax under existing law. Their taxes would
be $20,500 with living trust.
probate transaction costs savings, usually estimated at
5% of the estate's value. They would, however, have to pay some
transaction costs with the trust.
readily available to provide for their children. In a do-nothing
approach, their estate would likely be in probate for two years or
more, tying up many of the assets.
care of by designated guardians. In a real do-nothing approach,
without a will, they would not have designated their preferred
guardian for their three children.
family wealth transfers. All probate actions are a matter
of the public record.
if the clients are incapacitated:
designated trustee manages the assets.
If the clients are incapacitated without a trust, their children
will have to petition the court for a conservatorship to manage
the assets, a time-consuming and expensive process.
Client is a married couple in their late thirties with two young
children in 2005. They are planning to have another child in 2006.
Client owns a Los Angeles business which they expect to grow at a rate of 10%
per year. They would like to transfer a portion of the ownership
of the businesses to their children now, while the value is relatively
low, to leverage the reduction in the size of their taxable estate.
If possible, they would like to make the gift to the class composed
of their children (including the planned child).
Solution: Establish an irrevocable trust. Use
the maximum statutory gift tax exclusion of $11,000 per donor per
recipient per year to transfer trust assets to the children. The
portion of the assets transferred, and any appreciation of those
assets, will be excluded from estate tax.
Benefit: The business is currently worth $2,500,000
and is expected to be worth about $5,000,000 in 2011. Each year
the two existing children are gifted a combined total of $44,000.
If the third child is born in 2006 and is gifted $22,000 annually,
the total value of the children's portion of the trust with 10%
appreciation is about $646,000 in 2011. If both parents were to
pass away at that time, the $646,000 would be excluded from
estate tax at a rate of 49%. The resulting savings is $316,000.