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Inheritance Rights

Posted by on May 15, 2018 at 4:45 PM

From the Nolo Wills, Trusts and Estate Planning Center

Inheritance Rights

Some very close relatives -- a surviving spouse and sometimes children or grandchildren -- have the right to claim an inheritance, and in some cases this can override what it says in your will. Here's how it works:

A Spouse's Right to Inherit

In most circumstances, a surviving spouse cannot be completely cut out of a will.

Community property states

The community property states have their own rules about what spouses own and can claim. Basically, each spouse automatically owns half of what either one earned during the marriage, unless they have a written agreement to the contrary. Each spouse can do whatever he or she likes with his or her own half-share of the community property and with his or her separate property.

Other states

In all other states, there is no rule that property acquired during marriage is owned by both spouses. But to protect spouses from being disinherited, most of these states give a surviving spouse the right to claim one-third to one-half of the deceased spouse's estate, no matter what the will provides. In some states, the amount the surviving spouse can claim depends on how long the couple was married.

These provisions kick in only if the survivor goes to court and claims the share allowed by law. If a surviving spouse doesn't object to receiving less, the will is honored as written.

Ex-Spouses' Rights

In most states, getting divorced automatically revokes gifts made to a former spouse in your will. But to be on the safe side, if you get divorced, make a new will that revokes the old one. Then you can simply leave your former spouse out of your new will.

Children's Right to Inherit

Generally, children have no right to inherit anything from their parents. In certain limited circumstances, however, children may be entitled to claim a share of a deceased parent's property. For example, the Florida constitution prohibits the head of a family from leaving his or her residence to anyone other than a spouse or minor child if either is alive.

Most states do have laws to protect against accidental disinheritance. These laws usually kick in if a child is born after the parent made a will that leaves property to siblings, and the parent never revises the will to include that child. The law presumes that the parent didn't intend to freeze out the newest child, but just didn't get around to revising the will. In that situation, the overlooked child may have a right to a significant part of the parent's assets.

In some states, these laws apply not only to children, but also to any grandchildren of a child who has died.

If you decide to disinherit a child, or the child of a deceased child, your will should clearly state your intention. And if you have a new child after you've made your will, remember to make a new will.

This information does not constitute legal advice or an attorney client relationship*

Solutions to your Tax Issues

Posted by on February 21, 2018 at 4:00 PM

I think it is safe to say that we all hate dealing with tax related problems. When having to deal with the IRS, people believe they have to pay the entire amount at once. However, the entire amount is never due upfront and there are various solutions for your specific type of tax issue. It is crucial for taxpayers to know what options they have to aid them when dealing with the IRS.

Depending on the personal tax situation, we generally suggest the following solutions to our clients:

1. Penalty Abatement

You may seek relief by qualifying for a penalty abatement if you filed all currently required tax returns or properly filed an extension, have paid or arranged to pay any tax that is due, and have had no penalties for three tax years prior to the tax year in which you received a penalty or you did not previously have to file a return. A penalty abatement may be proper only if you are seeking relief from penalties for failing to file a tax return, timely pay, and/or deposit taxes when due under the Service's First Time Penalty Abatement policy.

2. Offers in Compromise

An offer in compromise permits a taxpayer to resolve his or her tax issue by negotiating with the IRS to agree to accept less than the full amount owed. We encourage the use of an offer in compromise in situations where a taxpayer is going through financial hardship.

3. Innocent Spouse Relief

If your spouse or former spouse failed to report income, improperly reported income or claimed improper deductions or credits, innocent spouse relief may provide you relief from additional tax owed.

4. Installment Agreement

An installment agreement allows you to pay off your tax debt throughout an agreed period of time by making reasonable monthly payments to the IRS. An attorney can negotiate an installment agreement with the IRS.

5. Reduction in Penalties

In specific situations, penalties may be abated or reduced.

6. Audit Representation

An audit representation is where a taxpayer is represented by a tax or legal professional on behalf of the taxpayer.

This information does not constitute legal advice or an attorney client relationship*

Limit Your Liability

Posted by on October 16, 2017 at 3:25 PM

Owning a small business can be rewarding but there are great risks involved in doing so. In today’s litigious society, a lawsuit can cause financial havoc for a small business by leading to its closure, or far worse, placing your personal assets in jeopardy.

For your protection, it is important to legally separate your personal assets from your business and minimize liability. This is done by incorporating your business or forming a limited entity, such as an LLC. Upon formation, the business will legally be a separate entity that operates independently from you. This means, in the case of a lawsuit against your business, although the business can be sued, your personal assets (ie. your home and savings) will not be subject to recovery.

In addition to shielding your personal assets from your business, both a corporation and an LLC offer “limited liability.” Limited liability means in the case of a lawsuit, your liability will be limited to the total investment and assets in the name of the business.

More traditional ways to operate a business are as a sole proprietorship or partnership. Operating as a sole proprietorship or partnership does not offer legal separation between your business and personal assets, nor does it offer limited liability. By operating in this manner, your personal assets can be recovered against to satisfy a judgment if your business is sued.

To illustrate, take a business with a total investment and assets of $50,000 that is sued for $100,000. If the business is formed as a corporation or LLC, it can only be held responsible for a maximum of $50,000. There is no personal liability on behalf of the business owner. However, if the business was operated as a sole proprietorship or partnership, the business would be responsible for $50,000 and the owner would be personally liability for the remaining $50,000 from their personal assets.

This information does not constitute legal advice or an attorney client relationship*

Hold on to Your Tax Money!

Posted by on September 3, 2017 at 11:30 AM

Hefty capital gains and Federal income tax liability are things all of us want to avoid. But, when selling appreciated property, you will find yourself subjected to both. Luckily, the IRS provides a way to defer recognition of such taxes through a Section 1031 Like-Kind Exchange. This allows you to relinquish your appreciating property in exchange for a new like-kind property that is of greater or equal value, deferring the recognition of any capital gain or income taxes.

What is “Like-kind?”

“Like-kind” refers to the nature of the investment rather than the form. Meaning, any type of investment property can be exchanged for another type of investment property. For example, a single-family residence can be exchanged for a duplex or even raw land. Further, you can exchange multiple properties for one new property or one property for multiple new properties.

What Property Qualifies?

To qualify for a 1031 Exchange, property must be held for productive use in a trade or business, or for investment. You cannot trade your personal residence, partnership shares, notes, stocks, bonds, certificates of trust of other such items, or property held as “stock in trade”. However, property held as an investment qualifies, such as a rental property.

How does the process work?

In short, a Qualified Intermediary (QI), such as an attorney, must facilitate a 1031 exchange. The QI steps into your place as the principal in the sale of the relinquished property and the subsequent purchase of the new property. At the close of escrow, the QI will retain the sale proceeds and hold them in a segregated trust or escrow account. Within 45-days from the close of escrow, you must identify in writing, one or more possible replacement properties to purchase with the sale proceeds. Within 180-days from the close of escrow of the relinquished property, purchase of the new property must be completed. Once these requirements have been met, you will be able to defer having to recognize any capital gain or income tax.

This information does not constitute legal advice or an attorney client relationship*


Posted by on July 19, 2017 at 6:30 PM

Our non-profit organization clients are constantly stressing over a common issue: how to raise funds? Of course, the main goal of a nonprofit is to accomplish its public mission and not to make money. But, it is necessary for the non-profit to raise money to accomplish its public mission. Along with raising funds for its public mission, non-profits must raise funds to satisfy administrative costs, management, and advertising. So, when a non-profit organization client comes to us, we often recommend applying for a grant.

What is a grant?

A grant is a monetary award of financial assistance.The main purpose of a grant is to transfer money from a funder to a recipient who undertakes to carry out the proposed activities to fulfill a public purpose.

Why is it important to get a grant?

Since there is so much funding available for non-profits, it should be able to find funding to satisfy any type of need through a grant. Because the grant application process is complicated, having an attorney who is a qualified writer will help in attaining a grant. More specifically, the attorney must be able to create persuasive, creative, and fact-intensive grant applications. Also, the attorney must be able to understand the funder, its goals, the non-profit’s goals, follow the grant application rules by answering all questions, timely submitting needed information in the instructed format, and make sure the organization follows the rules with obsessive precision.

Where can you apply for a grant?

Generally, there are public sector funders and private sector funders. Public sector funders are all governmental funders. In order to get this type of funding, a non-profit must have a credible track record for implementing, evaluating and managing funding from all sources. Private sector funders are foundations and corporations. These funders look at the non-profit’s evaluation plan, structure, and finances. Every grant funding entity publishes specific types of funding it awards to prospective grantees. You can determine whether your request fits with a type of funding the entity has available when you know what your organization wants to use funds for.

This information does not constitute legal advice or an attorney client relationship*

Are You Overpaying on Property Taxes?

Posted by on June 9, 2017 at 1:30 PM

 In California, most property is over-assessed and most property owners pay too much in property taxes. With the constant activity in our neighborhood real estate market, values can fluctuate dramatically; leaving the possibility for our home values to be over-assessed.

Fortunately, there is a solution for homeowners who feel their home’s value has been over-assessed, known as a “Proposition 8 Reduction”. This can result in significant savings.

Proposition 8 Reduction

California Proposition 8, also known as the Post Disaster Taxation Act, was passed statewide in November of 1978. To summarize, Proposition 8 states that when property values in an area decline due to a declining real estate market, property tax assessors are obligated to conduct “decline in value reviews,” to ensure that the tax assessed value of a property is set at a lower rate if the value of the property has declined. Assigning a property a lower value as a result of such review, is knows as a “Proposition 8 Reduction.”

What does this mean for you?

To determine if your home’s value is being over-assessed, evaluate recent comparable neighborhood sales (i.e. square footage, age and features), and determine if your home’s assessed value is greater than the current market in your neighborhood. If it is, you can request a Proposition 8 Reduction though your local county assessor’s office. If approved, your home will receive a temporary reduction (of at least 1 year) in value for property tax purposes, with the potential to save you thousands.

This information does not constitute legal advice or an attorney client relationship*

Caring for Loved Ones Under Unique Circumstances

Posted by on April 17, 2017 at 3:00 PM

If you care for a person with special needs, there is no doubt you have thought about what will happen when you are no longer able to look after him or her. Fortunately, there are many legal and governmental tools that can help. Individuals with special needs are often entitled to benefits, including social security, Medicaid, and/or disability. Legally, safeguarding these benefits by creating a Special Needs Trust (SNT) is essential.

Generally, there are two types of SNT’s. A First Party SNT is funded by the beneficiary’s own funds. Oppositely, a Third Party SNT is funded from other sources. First Party and Third Party funding sources can collectively fund a SNT as well.

Benefits of Establishing a SNT

Attorney’s often recommend making a SNT for an individual with special needs because this allows a beneficiary to enjoy use of property that is held in trust for his or her benefit while continuing to receive government benefits. For instance, it may be used for supplemental care over what the government provides. Although certain Medicaid rules say a SNT cannot be used for housing or food, these rules have certain exceptions that an attorney would know.

Additionally, you can hold and manage property intended for a beneficiary who lacks legal capacity to handle finances just as in an ordinary trust.

A SNT may be established any time before the beneficiary turns 65 years old. Many individuals establish SNT’s during the start of a child’s life to begin funding as a long-term goal. Furthermore, the cost of creating a SNT is tax deductible.

Do you need a SNT if your family is wealthy and not in need of government benefits?

A general trust cannot protect a special needs individual because funds in a SNT remain non-countable assets and allow the beneficiary to qualify for certain benefits. A general trust, however, makes assets countable and disqualifies a member from benefits. 

So, the best thing you can do for your special needs loved one is to establish a SNT, guaranteeing a fulfilling life with all the protections you can possibly provide during and after your lifetime.

This information does not constitute legal advice or an attorney client relationship*

Beware of Legal Landmines In Contracts

Posted by on March 30, 2017 at 8:55 PM

How many of us have signed the online Facebook agreement when creating our profile? How many of us were then astonished that we agreed to let Facebook use all of our personal information and pictures by signing the agreement? I know we do not like to admit it, but many of us enter into legally enforceable agreements without proper interpretation and reading of terms because we think nothing will happen or simply based on a relationship of trust.

While it is easy to overlook the importance of contract law, it is the most common trap our client’s fall into. Most of it confusing and boring paperwork that, if not handled correctly, could result in serious legal consequences. Therefore, we should consider getting our contracts reviewed or written by a qualified professional for these reasons:

1. You do not want people to get the wrong idea. First, you want to make sure you know what you are signing. If you are drafting a contract, you want the contract to be precise, concise, and professional. You do not want vague or unclear terms.

2. You do not want to break the law. Contracts, in nature, are a big deal. When signing a contract you have to be sure you are not breaking the law. It may be irresponsible to sign a contract that could result in a lawsuit, or sign a contract without reading the rights you may be entitled to.

3. You do not want to spend more money than you have to. Lastly, it is best to pay a small legal fee to have a contract drafted or analyzed and be safe rather than having to pay enormous legal fees when something goes wrong. Also, when the other person is informed that a qualified professional has analyzed your contract, your credibility and trustworthiness towards them will escalate. They will be more persuaded to work with you because of their perception of your business's character and ethics.

Of course, you will not want your Facebook agreement analyzed by a professional, but these daily agreements should be read with caution.

This information does not constitute legal advice or an attorney client relationship*

How to Minimize Your Estate Tax

Posted by on March 14, 2017 at 3:50 PM

You work hard, pay your share of taxes, yet even after your death, Good Ol’ Uncle Sam still comes knocking for more! Even after a lifelong commitment to paying taxes, the federal government wants to collect more by way of estate tax. The good news is that for the majority of individuals and married couples, the current federal estate and gift tax exemption limit allows for the transfer of wealth to heirs tax-free.

Still, informing and familiarizing yourself with estate tax is crucial. The federal estate and gift tax exemption is at an unprecedented $5.45 million per individual (which adjusts for inflation) for 2016, with a tax rate of 40% for any amount in excess of this limit. This means that an individual can leave $5.45 million to heirs and pay no federal estate or gift tax, and a married couple can effectively transfer $10.9 million tax-free (assuming a proper election is timely made upon the death of the first spouse, known as “portability”). Those with net worth’s in excess of the estate and gift tax limit require special planning to minimize and possibly eliminate their tax liability.

Current IRS regulations have been under heavy criticism for allowing the transfer of large amounts of wealth tax-free. President Donald Trump wants to repeal the tax altogether. Further, House democrats have proposed to slash the estate tax exemption from $5.45 million down to $3.5 million, and raise the tax rate to 45%. Most recently, the Treasury has enacted regulations to limit the favorable valuation discounts that are used in Limited Family Partnerships and Family LLC’s, an effective estate planning strategy to protect wealthy family businesses.

Given the uncertain future of the federal estate tax, it is important to plan ahead and have an estate plan drafted that will not only maximize current regulations, but also be adaptable for changes to come.

This information does not constitute legal advice or an attorney client relationship*

What Happens When You Don't Make a Will or Trust- Don't Let What Happened to Prince, Happen to You

Posted by on July 9, 2016 at 5:10 PM

Take a look at this information from the ABA Journal and CNN News

Prince reportedly may have had millions in assets when he died at age 57, at his suburban Minneapolis home. But his sister said in a probate filing in Minnesota’s Carver County District Court that he does not have a will. Citing an emergency need for someone to manage his business interests, Tyka Nelson, his sister, is seeking the appointment of a special administrator.

Prince was a multimillionaire, with a valuable brand, a successful record label called NPG and the Paisley Park recording studio. He made most of his money from royalties from his songs and songs he wrote for other artists. What's clear is that Prince's estate is worth more now than it was the day he died.

Prince had no children, spouse or surviving parents. Five half-siblings of Prince were also listed on the document as interested parties. Half-siblings are treated the same as full siblings under Minnesota law. Since he died without a will, Minnesota law states that his estate would go to his sister and his half-siblings. Without a will, control of Prince's brand, including his record label and thousands of unreleased songs, would likely be transferred to his siblings. People close to Prince stated that he had strained relationships with his siblings.

Prince had a “revolving circle” of lawyers and business advisers. Lee Phillips—a senior partner at Manatt, Phelps & Phillips who was Prince’s lawyer in the Purple Rain era—told the Hollywood Reporter’s THR, Esq. blog last week that he hoped Prince had an estate plan. It could get very chaotic because by not having a will or estate plan, he left it up to chance.

What does this mean?

This means we should all have an estate plan or a will, at minimum. Simply contact an attorney and diminish all costs in probating your will after your death, suffering from tax implications and have full control as to who your assets go to.

Contact our office today at (209) 529-1004 to schedule a consultation.

This information does not constitute legal advice or an attorney client relationship*