A timely Financial Planning article reminds us that the timing of making year-end gifts is important because a transfer of property is only counted as a gift once a donor has unconditionally relinquished all control over it.  Here are the rules concerning gifts:

Gifts by Check – the check must be cashed or deposited into the recipient’s account by Dec. 31 to count as a 2011 gift, so if you have given a gift via check, be sure the recipient follows through by cashing or depositing the check before the end of 2011.

Gift of Securities – the securities must be physically transferred into the recipient’s account by year-end.

Large Gifts – gifts above the $13,000 annual exemption count toward your lifetime exemption, which is $5 million in 2011 and $5.12 million for 2012.  The gift exemption could potentially revert back to $1 million in 2013, so you should consult with a California estate planning attorney about the tax consequences of gifting more than $13,000.

Charitable Gifts – if you are making a donation by check, it must be mailed by Dec. 31.  If you are making a donation via credit card, you must also make it by Dec. 31, even though you will not pay for it until 2012.

Our California asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.

Happy New Year to our clients, friends and readers!  We look forward to providing you with more estate planning insights in 2012.

An Eastern District of California judge has given the IRS permission to serve a “John Doe” summons on the California State Board of Equalization in an effort to track down state taxpayers who transferred property without paying gift tax.

According to a Forbes article, Judge Morrison C. England, Jr. initially turned down the government’s request for the summons last May, saying that the IRS had not proven that it could not reasonably obtain the information from the state’s 58 counties.  The U.S. Department of Justice filed the case again two months ago, and Judge England said in a December ruling that the government had shown that it would not be able to obtain the information from some of the counties, making the BOE “the most reliable and least burdensome option.”

The IRS has targeted intra-family property transfers in several states to uncover taxpayers who have made transfers but failed to pay gift tax on those transfers.  A “John Doe” summons allows the government to get information about a specific class of taxpayer it suspects may have broken the law.

U.S. taxpayers may give anyone up to $13,000 annually without that gift counting against their lifetime exemption, but gifts about this annual exclusion amount must be reported to the IRS via a Form 709, which the IRS uses to keep track of an individual taxpayer’s lifetime exemption usage.

Our California asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.

It may sound a little redundant, but assessing your assets is an essential part of the estate planning process and it’s an activity that you and your California asset protection attorney should get into early on in the estate planning game.

A basic inventory of your assets will make it easier when they time comes to decide who gets what, as opposed to trying to do it off the top of your head. The inventory of your assets should include everything from real property to retirement accounts, 401(k), pension, life insurance, and any other investments or property.  Some of these things can come as a surprise — your personal library of medical books may have real worth — do you give them to a grandchild in medical school or do you give them to a charity or another entity?

Decide what your estate includes, what it worth, and decide as best you can who should receive what. Make sure the language is clear to avoid a will contest and to lessen the complexity of probate.

And last of all, don’t be afraid to discuss with heirs and beneficiaries what may (or may not) be coming to them. Doing this while you’re alive will help people you love understand your reasoning rather than leave them wondering why you decided what you did after you’re gone.

Bottom line: inventory your assets, know their worth, let beneficiaries know where they stand, and of course, do all you do with the guidance and counsel of your California estate planning lawyer.

Our California asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.

Estate planning can often be complex and that’s why California estate attorneys are always warranted when planning your estate and organizing your assets. Planning your estate, creating a living will and planning for a healthcare surrogate or medical power of attorney are all wise choices. But these choices and all the work you and your attorney put into them may fall by the wayside if continued revision is not attended to regularly. It is recommended that estate plans and decisions about your health care in the event you cannot communicate should be revisited every one to three years.

By reviewing and revising your estate and the medical options in a living will, you will stay on top of changes within the law that could prevent your plans from being effective. In addition, matters within your family can change, and as such, your estate and living will should be changed as well. Wealth transfer planning should be revised for a number of reasons in the event of changes in family or in personal assets; many of these reasons are personal while others may be caused by factors such as economic decline or incline, changes in retirement assets and changes in tax law associated with taxable estates.

Many wills include a federal applicable exclusion amount that helps to eliminate or lessen the amount of federal taxes on the estate. As estate law changes, the size of an estate can change how well it is protected against this type of taxation. A surviving spouse, children and others will be grateful for this protection, so be sure that your will and estate plan are revised to reflect the current laws regarding federal applicable exclusion.

Our California asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.

Many people who enact an estate plan for themselves and their families make the mistake of thinking that once the estate plan is drawn, that’s it. The fact is, estate planning is an ongoing process.  Relocation, divorce, marriage, the death of a spouse or child who would have been beneficiaries, illness, moving out of the country, changes in wealth for better or worse — all of these are reasons to revisit your estate plan as well as your will.

Anytime you move, let your estate planning attorney know. Estate and will laws change from state to state, and there are also statutes in place for those who leave the country, with or without their families. To keep your estate and assets safe from taxation or from being interpreted incorrectly in the event of your passing, make sure you revisit your will with your lawyer whenever you think a change in your financial or personal life may affect your estate. This is especially important for those whose estates are more than several million dollars; taxation laws from state to state can wreak havoc on your estate and assets if you haven’t taken the necessary precautions.

You may want to consider a foreign asset protection trust if you move to a state where the minimum estate worth for taxation is lower (for example you lived in a state where the minimum was three million and moved to a state where the minimum is 2.3 million). Talk to your asset protection attorney to see if foreign asset protection is a sensible choice for your estate.

Going over your estate plan and your will with your attorney once a year is a simple matter of exercising good common sense. Make that appointment today to keep your family’s interest protected.

Our California asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.

Earlier this year, a California Court of Appeals decision made it more difficult for Californians to contest “rogue” wills, which are wills that seemingly come out of the blue and often lead to family discord and court battles.

In the case of Estate of Stoker, the court upheld the validity of an informal will that decedent Steven Wayne Stoker dictated to a friend after burning his original will.  Witnesses did not sign the informal will; nevertheless, the court found that Stoker intended it to be his will.  The informal will left Stoker’s estate to his two children; the original will had favored an old girlfriend.

The Stoker case is the first appellate decision to test the 2008 harmless error rule to protect against court challenges that are based on small procedural mistakes in form.

However, as is often the case, a lot of expense and delay (Stoker died in 2005) could have been avoided if Stoker had executed simple estate planning documents that revoked the original will.

As the California appeals court noted in its decision on Stoker, “nothing endures but change.”  If you need to make changes in any of your estate planning documents, our Newport Beach estate planning law firm can help.

With everyone in a gift-giving frame of mind this time of year, it’s good to revisit the rules when it comes to gift splitting.

Not the kind of gift splitting that perhaps bedeviled you in your youth, when you had to share gifts with siblings.  We’re talking about gift splitting for tax purposes.

Married couples use gift splitting to double their gift tax exclusions, by making joint gifts to third parties.  Here are a few basic rules:

• The gift must be made to a third party
• Both spouses must be U.S. citizens or residents
• Spouses must be married to each other at the time the gift is made
• If a gift is made jointly, then the spouses divorce that same year, they cannot remarry and still enjoy the tax benefits of gift splitting
• Both spouses must agree to the gift splitting
• The spouse who makes the gift cannot give their consenting spouse power of appointment over the gift

Generally speaking, once a couple elects to gift-split during the year, all successive gifts that year must also be split.  There are some ways around this, which your estate planning attorney can explain.

Also, for GST tax purposes, if gift splitting is elected for the tax year, the deemed allocation rules for the GST exemption will be applied equally to each spouse unless both spouses file a gift tax return that allocates the exemption differently.

Our California asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.

Between purchasing that perfect gift for a loved one and unpacking the holiday decorations, you should take a few minutes to ensure you’re taking advantage of every opportunity to lower your 2011 tax bill before the clock strikes midnight on December 31.  Here’s how:

Max out 401(k) contributions ($16,500 if you’re under 50, $22,000 if you’re over 50).

If you’re self-employed, invest in an individual 401(k) plan – you have until Dec. 31 to set one up and until April 15, 2012 to fund it.

Max out your health savings account contributions ($3,050 for an individual, $6,150 for a family; those over 55 can contribute $1,000 more if they are not yet enrolled in Medicare).

Make contributions to a 529 college plan to get a break on state taxes – that is, unless your plan is in California, which doesn’t currently offer any deductions for 529 contributions.

If your income dropped this year, do a Roth conversion.

Sell off the losers in your taxable investment accounts for a capital loss that can offset up to $3,000 of ordinary income on your tax return.

Make charitable donations with a credit card – you get the credit for the donation in 2011, but don’t have to pay until 2012.

If you’re over 70 ½, make a charitable contribution directly from your IRA.

Donate household items – you can take a deduction of up to $5,000 without a formal appraisal for the value of the donated items.

Our California asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.

The folks at MoneyNing.com and GoBankingRates.com put together this interesting infographic as a guide for figuring out how much someone who wants to withdraw $100,000 a year in retirement (assuming an inflation rate of 2.5 percent annually) will need to save to reach that goal:

The holidays put all of us in the giving mood, and December is indeed the most charitable month, with more than $28 billion in donations recorded last December, according to the Atlas of Giving.

A CNNMoney.com article last week notes that there are ways to be charitable that can also be better for you tax-wise, including:

Gifts of appreciated securities – donating stocks, bonds or mutual fund shares directly to a charity will save you from having to pay capital gains taxes – and if you’ve owned that donation for more than a year, you can deduct the full market value instead of just the amount you invested.

Give from an IRA – if you’re 70 ½ or older and haven’t taken your required minimum distribution from an IRA, you can do an IRA charitable rollover (up to $100,000), which saves you from having to pay income taxes on a RMD.

Give to a community fund – according to the Council on Foundations, California has 71 community funds that accept donations.  Giving to a community fund can result in both state and federal tax savings.

Charge it – if you’re cash-strapped during the holidays, you can still donate via credit card and pay it off in January.  The IRS allows you to take the deduction in December when the donation is made, rather than when it is paid.

Our California asset protection and estate planning law firm has been a trusted source for estate planning, asset protection and business transactions for more than 35 years.  Contact us today for asset protection and estate planning strategies to meet your unique needs.