The Lawyer Blogs shown below are topical articles written by attorney David L. Crockett on all of the areas of the law that he deals with. Many of these articles are based upon actual and typical situations encountered by Mr. Crockett's clients. New blogs are posted when Mr. Crockett encounters new situations that merit detailed explanations to his clients. There is practical advice and explanations that span the subjects of the probate, trust, real estate and tax laws and court procedures that frequently arise. Because Mr. Crockett is actively advising clients on (i) wills, trusts, taxes and estate planning; (ii) administration of trusts and probate estates; and (iii) litigation about estates and trusts, many of these articles cover and crossover between all three areas of practice. The articles contain information that a person forming a trust, or a trustee or an heir/beneficiary needs to be aware of. The Blogs are organized into topics listed on the left of this page. You can view the posts listed in each topic here.
Frequently we run across situations where parents will leave their residences to one or more of their children in their will or their trust. If they only have one child then the situation is usually okay but when there are multiple children and some are living in the house and some are not there can be problems. Allowing some children to live in Mom’s house messes up the other sibling’s inheritance.
Under our system of federal and state income tax, if the property is sold before death for more than what was pay for it then there is a capital gain. There are special rates which apply to capital gains the penny upon one’s tax bracket. To compute capital gains, you subtract the income tax basis of the property from the net selling price. The income tax “basis” is what was paid for the property in the first place minus any depreciation and adding any expenditures for capital improvements.
California Property taxes are administered by the County in which the real property is located. The County tax assessor determines the amount of property taxes based upon the fair market value of the property at the date of purchase plus a small amount of increase each year is allowed. The value is called the “assessed value”. The yearly amount of tax is roughly 1.2% of the “assessed value”. Thus, if a property is purchased for $100,000, the annual property tax would be about $1,200 and will increase each year. The county property tax year goes from July 1 through June 30. Tax bills are sent out typically in October and are payable in two installments: December 10 for the first installment and April 10 for the second installment
Irrevocable Life Insurance Trusts – These types of trusts are not often thought of as an asset protection device. However, they have many benefits, including:
If you lose a lawsuit that has been filed against you personally then the winning party obtains a court judgment. That judgment is then enforceable against any accounts or property owned in your name. Also, the judgment is enforceable against whomever you transferred the accounts of property to if the transfer was a gift or a sale for less than fair market value.
You can be sued under the law against fraudulent conveyance for improper transfers. Also, whomever you have transferred money or property to can be sued to make that asset transferred available to the creditor. Any transfer of money or property out of your own name and into an entity needs to have a legitimate business purpose. Protection from personal liability is such a purpose.
However, any transfers with intent to hinder, delay or defraud a creditor may be set aside under the law against fraudulent conveyances. Also, transfers without receiving equivalent value and which render you insolvent or put you in the position of being unable to pay your debts would also violate the law. Thus, if you have been sued or are facing a definite liability or claim, it may be too late to make asset protection transfers. The time to do transfers is BEFORE you have any significant claims or lawsuits.
Get your assets out of your personal name AND get your name off of public records associated with the asset.
DANGERS OF OWNING ASSETS IN YOUR OWN NAME
If you lose a lawsuit that has been filed against you personally then the winning party obtains a court judgment. That judgment is then enforceable against any accounts or property owned in your name.
If you lose a lawsuit that has been filed against you personally then the winning party obtains a court judgment. That judgment is then enforceable against any accounts or property owned in your name. Thus, if you operate a business in your individual name (instead of the business being operated in the form of a corporation) and if you lose a lawsuit against that business then the judgment is enforceable not only against the business assets but also against your home and take accounts in your name personally.
We handled a case that spread across decades. It started out uncomplicated as we were the attorneys for a conservator who was handling the affairs of his distant cousin. The conservatee, Linda, was formerly Dr. Smith’s nurse. Linda had married Dr. Smith who apparently had a prior marriage and at least one daughter, but Dr. Smith had died many years ago and left his new wife, Linda, about $500,000 to live on.
The conservatee, Linda, became incompetent so a conservatorship was established to handle her money. We had been filing normal conservatorship accounting reports with the court every two years to prove how her money was being spent. When she passed away last year she had about $50,000 of the original $500,000 left and we had to determine how do distribute the estate and to whom.
What if Your Spouse is Omitted – A Will is a written document which states to whom a person’s belongings, money and property are to be given upon death. A Will is typically effective upon a person’s death and can be changed or replaced any time as long as the Will maker is mentally competent. People who die without wills are said to die “intestate” so their money and property passes under the laws of intestacy. Refer to my blog on “passing without any will.”
A Will is a written document which states to whom a person’s belongings, money and property are to be given upon death. A Will is typically effective upon a person’s death and can be changed or replaced any time as long as the Will maker is mentally competent. People who die without wills are said to die “intestate” so their money and property passes under the laws of intestacy. Refer to my blog on “passing without any will.”
Orange County Estate Planning Lawyer Blog