Estate Planning

The term “estate planning” involves a multitude of legal techniques and solutions to organize and to protect legacies for individuals and couples, their loved ones and their preferred charitable causes. Estate planning touches upon the areas of estate taxes and income taxes, wills, trusts, gifting, special needs planning, creditor protection, powers of attorney, health care documents, HIPAA planning, and more.

Palm Desert estate planning lawyers Sanger & Molever know that proper estate planning requires (a) an understanding of the Federal and state estate tax and inheritance tax issues, and the various tools to address the “hard” issues of planning a client’s estate; and (b) the oftentimes more sensitive “soft” issues relating to the psychological challenges within a family, and the obvious conflicts that arise when blended families (second marriage situations) are involved.

Blended families, where children from prior marriages are beneficiaries, require extra careful planning. The typical A-B-C form trusts will surely satisfy the various tax requirements. But the typical A-B-C form trust, standing alone, is not the estate planning required for a couple with a family owned business, with a child “in” and another child “out” of the business. Palm Desert estate planning lawyers Sanger & Molever can explain with today’s $11,400,000 federal estate tax applicable exclusion amount (i.e. $22,800,000 for a married couple), estate planning for most people can focus on what’s best for the family, and not focus on, and not be driven by, or even be concerned with estate taxes.

Example: The Smith family own a family business. Mr. Smith and one of his two children run the business. To avoid post death issues between the child “in-the-business” and the child not “in-the-business”, Sanger & Molever can isolate the business in a separate entity, perhaps a limited liability company (“LLC”). Sanger & Molever can draft an LLC operating agreement (a) that allows the husband’s children in-the-business, to continue to run the business following the husband’s/father’s death, and (b) that require fixed cash distributions to the widow- stepmother. This permits the children from the prior marriage to operate the business without interference, and simultaneously guarantees the widow fixed cash distributions which her stepchildren can’t avoid paying because the children from the first marriage want to expand the business, by reducing distributions to their stepmother widow, Sanger & Molever can help you think through the best estate planning (a) for a blended family, where there are children from prior marriages; how the testamentary plan (and not just the will or the trust) can address typical blended family conflicts per the above example; as well as (b) for family held businesses, where some children are in-the-business, and other children are not involved with the family business.

For blended families or families with businesses where some kids are in-the-business and some have nothing to do with the business, as estate planning lawyers Sanger & Molever will explain, estate planning is not just typing a typical A-B-C trust. In the typical situations that involve blended families, or estates with a family owned business where not all the children are in-the-business, careful estate planning can mitigate future conflicts and litigation over control of the business. Careful Estate Planning provided by Palm Desert lawyers Sanger & Molever can also preserve family harmony.

Further, as the below example illustrates, even if you do not have a blended family or a family owned business, the 2017 tax act changes to the estate tax law, should cause you to review, and perhaps change, your pre-2017 tax act, boilerplate A-B-C trust estate plan … for income tax basis tax planning. Contact the experienced lawyers at Sanger & Molever to explain.

Example: New Law/Bypass Lead Trust; Clayton Election. When your current estate plan documents do not involve a blended family or a family business issues, BUT antedate the 2017 tax act, you should have estate planning lawyers such as those from Sanger & Molever review the documents. Why? Because likely your old estate plan documents have a “formula clause”. That formula clause probably funds the Bypass Trust with the applicable exclusion amount with today’s $11,400,000 Applicable Exclusion Amount. You should consult tax attorneys Sanger & Molever to learn why your under $22,000,000+ old estate plan probably should be updated, for income tax basis purposes, to avoid funding the Bypass Trust.

Many (most?) clients hope that their estate planning needs remain static. Clients sign a will or a trust, and “hope” they are done with “it” forever. The lawyers at Sanger & Molever know better. Clients should review their estate planning regularly – at least every 3-5 years -- due to both law changes and to personal family changes. Maybe you, your spouse or your child should not be in a position of fiduciary power anymore? Maybe a child who was too young when you signed your will or trust would be the “perfect” one to manage your affairs now. Maybe your primary beneficiary is caught in a nasty divorce. Maybe due to law changes or significant fluctuations in your wealth, your will or trust has “too few” tax provisions or sometimes even worse “too many” or “the wrong” tax provisions.

Experience matters. Howard Sanger and Jeff Molever have counseled thousands of single individuals and couples, both in traditional marriage situations and those in a variety of non-traditional lifestyle arrangements. Guiding folks through the pitfalls of improper planning provides satisfaction to Howard Sanger and Jeff Molever, and peace of mind to the clients.