Estate Planning and COVID-19 Presented by GERARD V. KASSABIAN, - PowerPoint PPT Presentation

Estate Planning and COVID-19 Presented by GERARD V. KASSABIAN, J.D., LL.M. Law Offices of Gerard V. Kassabian www.KassabianLaw.com Gerard@KassabianLaw.com (310) 278 - 8001

COVID-19 and Estate Planning • In-Person Meetings – Social Distancing – Masks Required – House calls • Remote meetings – Effectiveness varies • Internet quality and security • Multiple documents • Low tech clients – Execution of Documents • Originals required • Notarization required – No remote notary service in California – Notary must be physically present LAW OFFICES OF GERARD V. KASSABIAN 2

COVID-19 and Estate Planning Scenario with a COVID-19 infected person • Legal Capacity – With valid estate plan • Quickly review plan; and • Amend plan if needed. – No estate plan • Rush to prepare new estate plan; and • Execute documents with extreme preventative precautions. • No Legal Capacity – With valid estate plan • Quickly review plan; and • Notify agents and successor trustees. – No estate plan • Determine if conservatorship necessary; • Rush to prepare and file conservatorship petition in probate court; and • Court closures and limited ex-parte filings (emergency flings). • Death – With proper estate plan avoids probate administration; – Without estate plan, probate administration. LAW OFFICES OF GERARD V. KASSABIAN 3

Basics of Estate Planning • GOAL: Avoid Probate Court – INCAPACITY - Alive but legally unable to make decisions or manage affairs: • Requires Conservatorship - state probate court petition to appoint one or more personal representatives (Conservators) to act as agents on behalf of Conservatee on a limited or full basis. – Required if no estate plan; and – Costly, lengthy and public state court petition. • Avoid Conservatorship with power of attorney and trust (documents included in a basic estate plan): – Durable Power of Attorney (for finances); – Power of Attorney for Health aka Advance Healthcare Directive; and – Trust to manage assets titled in a Trust. LAW OFFICES OF GERARD V. KASSABIAN 4

Basics of Estate Planning • GOAL: Avoid Probate Court (Cont’d) – DEATH: • Requires Probate Administration – petition filed in state probate court to appoint a personal representative (executor (masc.)/executrix (fem.) if named in will / administrator if not named in will) for the estate of the deceased to handle disposition of remains and distribute property. • Avoid Probate Administration with transfers through a trust (documents included in a basic estate plan): – Revocable Trust aka Living Trust aka Family Trust (any transfers via Trust will avoid probate). – Will aka Living Will aka Pour-over Will aka Testamentary Document coupled with a Trust. – CAUTION: a will alone does not avoid Probate Administration in California LAW OFFICES OF GERARD V. KASSABIAN 5

Basics of Estate Planning • GOAL: Avoid Probate Court (Cont’d) – DEATH: • Alternate ways to Avoid Probate Administration: – Beneficiary designation, transfer on death or pay on death. – Joint Tenancy. LAW OFFICES OF GERARD V. KASSABIAN 6

Current Estate & Gift Taxes 2020 Estate, Gift/GST Tax Rates: a. US Citizen: i. $11,580,000 exclusion per person for Estate or lifetime Gift/GST Taxes(unified); ii. $15,000 annual gift tax exclusion; iii. 40% maximum federal estate tax rate; and iv. Spouse may carryover unused exemption. b. Non-US Domiciliary/Non-Citizen (Green card or non-resident aliens): i. $60,000.00 per individual; ii. Qualified Domestic Trust; and iii. No martial deduction. LAW OFFICES OF GERARD V. KASSABIAN 7

Reasons to Plan Your Estate Now! 1. What If You Become Incompetent? Without a plan With a plan – You choose the successor – The courts pick the successor manager of your affairs. manager of your affairs. – Health care decisions about – You choose whom you feel is best suited. you may not be made by the most appropriate person. – You choose the successor – If you have a business, an manager you prefer. inappropriate person may gain control. LAW OFFICES OF GERARD V. KASSABIAN 8

2. Who Raises Your Children? With a plan Without a plan – You nominate the — A judge decides without guardian of the person the benefit of your (basic care for child) insight. – You nominate the — Increased chance of guardian of the estate litigation. (manage finances for child) – Decreased chance of litigation. LAW OFFICES OF GERARD V. KASSABIAN 9

3. How Does Your Family Inherit Your Assets? Without a plan With a plan — Assets pass according to – Your family members enjoy state probate intestacy the benefits of the plan you laws. set up for responsible — Beneficiaries receive your management of your assets assets without the benefit . of your direction. – Your plan can take all these — State law does not take into family issues into account. account problem marriages, – You Decide distribution substance abuse, • WHO spendthrift heirs or • WHEN immaturity. • HOW LAW OFFICES OF GERARD V. KASSABIAN 10

4. You Have a “Blended” - Multiple Marriage - Family Without a Plan With a Plan – Your wishes/priorities are – Your wishes/priorities not considered. prevail: – Children from different – You decide what goes to marriages may not be your current spouse and to treated according to your children from different wishes. marriages. – Your surviving spouse and – You decide where, when your children may become and how each member of adversarial. your family receives assets. – Higher chance of litigation. – Lower chance of litigation. LAW OFFICES OF GERARD V. KASSABIAN 11

5. You Have a Special Needs Child With a Plan Without a Plan – Medicaid and SSI benefits – Medicaid (Medi-Cal) and SSI can be preserved: benefits are at risk: – A Special Needs Trust can – Your child may be disqualified hold assets f/b/o of child from receiving Medicaid and so that the child can SSI benefits and forced to use qualify for Medicaid and your assets for basic care. SSI benefits. – Assets inherited by special – Assets remain available for needs child may be claimed child’s other non -covered by the state. expenses. LAW OFFICES OF GERARD V. KASSABIAN 12

6. You Want Your Money to Stay in Your Family Without a Plan With a Plan – Your child’s spouse may – Your child can direct assets benefit from your assets. and benefit from asset protection. – If your child passes away – A trust can ensure that your prematurely, your daughter/son-in-law and a assets stay in your family, new spouse may receive e.g., pass to grandchildren. your assets. – You protect your spouse – Your spouse’s new husband and your children from or wife may receive assets dangers arising from the re- that were yours. marriage of your spouse. LAW OFFICES OF GERARD V. KASSABIAN 13

7. Can Your Spouse and Children Survive Financially? Without a Plan With a Plan – Non-Liquid Estate (Assets – Plan for Non-Liquid Estate that do not have an Assets (Assets that do not income stream). have an income stream). – Forced sale of assets, if – Prevent forced sale or any; or downscale of lifestyle. – Forced downscale of – Life Insurance and Annuities lifestyle because family are an option in this case. may not have the funds to maintain their current standard of living. LAW OFFICES OF GERARD V. KASSABIAN 14

8. You Have an IRA With a Plan Without a Plan – You choose the optimal – Your beneficiary designation beneficiary based on advice form may not effectively reflect and counsel of your Financial your current wishes Advisor, Attorney and CPA – Your beneficiary may – Your beneficiary may be able experience burdensome income to minimize the income tax tax consequences because of bite by “stretching” out large required distributions distributions over time and within a short time frame enjoying the benefits of tax- – You and your beneficiary may deferred compounding not gain the advantages created – You and your beneficiary can by new IRA distribution rules. take maximum advantage of new distribution rules. LAW OFFICES OF GERARD V. KASSABIAN 15

8. You Have an IRA (cont.) Without a Plan With a Plan – There may be no cash to – You can plan for stretch out pay estate taxes, so the IRA of the IRA must be liquidated and – You can ensure that the cannot be stretched out beneficiary cannot waste – Your beneficiary may waste the IRA the IRA assets LAW OFFICES OF GERARD V. KASSABIAN 16

9. You Own a Business Without a Plan With a Plan – There is no succession – You plan succession. planning . – You choose the successor. – No successor is named. – You prevent unwanted – Your children could be results. forced out of the business. – The business may have to be sold to pay estate tax or to equalize your other children. – Your “husband -in- law” may assume control of the business. 17

10. Estate Administration Process Without a Plan With a Plan – Probate Administration - – Your assets may avoid your estate will be subject to probate entirely. delays and fees. – Your family may save time, – Your assets become a matter money (fees) and family of public record. privacy. – If you own real estate in a state other than your state of residence, there will be multiple state probate proceedings. LAW OFFICES OF GERARD V. KASSABIAN 18