We believe that the most successful estate planning is done in the context of a close professional relationship with you as our client—one built around excellent mutual communications and a thorough understanding of your situation. We want to be your San Francisco estate planning attorneys for life.
Gaining a clear picture of your values and goals is the first and most important step in the planning process. We will work closely with you and your other advisers at every stage in order to provide a customized estate plan that meets your specific planning challenges. We believe that we should only propose planning solutions that are fully consistent with your family’s culture and incorporate the wisdom of your other advisers. Our goal is to enable you to protect yourself and your loved ones, and, if you desire, establish a legacy that will last for generations.
Living Trust Planning
The most basic estate planning involves forming a revocable living trust. Transferring your assets to a revocable living trust during your lifetime enables your family to avoid probate at death. Probate is the court-supervised process whereby assets are distributed after a person dies. Even if you have a will, your estate will go through probate. In California, probate is expensive and can take months if not years to complete. When your will is probated, there is no privacy; all information about your assets and beneficiaries is made public.
By contrast, if your assets are held in a living trust, the transfer process at death is completely private, less expensive and usually takes significantly less time. A living trust can also provide for the seamless transition of asset management and decision-making should you become incapacitated. By creating a living trust with your estate planning lawyer, you can decide ahead of time who will make decisions for you and how your resources will be used to take care of you and the ones you love.
Fundamental estate planning also includes powers of attorney for financial management and healthcare decision-making and the nomination of guardians for minor children.
Estate Planning for Non-Citizen Spouses
An important planning tool for married couples is the unlimited marital deduction for estate and gift taxes. This deduction allows for the tax-free transfer of assets between spouses during life and defers any estate taxes that would otherwise be due at the death of the first spouse. While the unlimited marital deduction is available for transfers to spouses who are citizens of the United States, it is not available for transfers to non-citizen spouses even if they are permanent residents of this country.
Special rules apply for spouses who are non-citizens. There are limits on how much can be transferred to a non-citizen spouse tax-free, both on an annual basis and at death. For maximum flexibility, we encourage those of our clients who are married to non-citizens to establish qualified domestic trusts through their revocable living trusts.
Some non-citizens (and U.S. citizens) may also have foreign assets and careful consideration of how to plan for those assets is important to avoid inadvertent tax consequences. We work with families from around the world and with assets in many countries.
Lifetime wealth transfer may be important for you to consider if you have a taxable estate (more than $5.43 million in total assets for 2015). Your estate also includes life insurance proceeds. Lifetime wealth transfer tools generally provide for leveraged gifting while making use of your lifetime gift tax exemption which is $5.2M. Here are some examples of gifting mechanisms:
- GST Exempt Gift Trusts
- Qualified Personal Residence Trusts
- Grantor Retained Annuity Trusts
- Grantor Retained Income Trusts
- Intentionally Defective Grantor Trusts
- Irrevocable Life Insurance Trusts
- Family Limited Partnerships
- Family Limited Liability Companies
These are all tools that can be used individually or in combination to minimize or eliminate taxes while also helping you realize your ultimate goals. As always, we will work closely with your other advisers to coordinate a wealth transfer plan that reflects your values and wishes.
Call us today at our San Francisco Office at (415) 693-0550 or our Santa Rosa location at (707) 544-8462 to inquire about a consultation. We look forward to hearing from you!