Set Up a Trust as Part of Your Estate Plan for Smooth Transfer of Property When the Inevitable Occurs

As a follow-up to our previous discussion about how to transfer the title of real estate that is community property when the owner of the property dies, we were recently asked a question similar to this: Why should my spouse and I set up a trust to own our property when the title for it contains both of our names and it already clearly states we each have the right of survivorship?

The primary reason to transfer ownership of your property to a trust, as part of your estate plan, is to avoid probate should the unthinkable happen. With all of the stories in the news lately about married couples or families involved in fatal automobile, airplane, and cruise ship accidents, it really is not hard to imagine the possibility of multiple family members dying simultaneously. It happens all of the time and could happen to any of us.

We discussed this on our weekly radio and web broadcast on KDOW, along with another question about who is responsible for paying taxes on family assets that will be inherited from a trust this year.

The current laws regarding the federal estate tax, also known as an inheritance tax, expires at the end of 2012. If you should unfortunately die this year, no inheritance taxes are due on estates of less than $5 million.

Regardless of how the law changes for 2013 and beyond, we are confident that Uncle Sam will collect what he is legally due. If estate taxes are not paid by a trust, you can be sure the IRS will eventually contact the beneficiaries of the estate to collect the taxes from them.

We then focused primarily on trusts as part of an estate plan during this broadcast. One of the points we discussed was about possible ways to set up a trust.

If you work for a corporation of substantial size, you may have access to a pre-paid legal services plan as one of your employment benefits. These legal plans usually contain an estate planning package, so if it is available we recommend you consider acquiring this optional benefit during your next open enrollment period.

These days, many legal services and estate planning packages are available on the Web for a fairly low cost, but we advise that you use considerable caution when considering paying for these online services, because the “plans” offered are a cookie-cutter set of forms that are not tailored to any specific state and are not tailored for the specific circumstances of your life.

When setting up a trust, you can conduct great research on the Internet, to become more familiar with the legal and financial landscape you want to enter, but as always we suggest you work with a professional who can add a layer of real-world experience and advice to the process, and who can make sure all of the needed paperwork and procedures are completed and filed properly.

After a trust has been properly established, we like to think of it as a basket into which personal assets can be placed for proper distribution at a later date. A trustee can dole out the assets that have been accumulated in the “basket,” in accordance with a living trust, to any beneficiaries of the estate.

Be sure to have a title company properly transfer the title and ownership of your real estate to the trust. An attorney can help you transfer ownership of other property or assets, such as a land lease, to the trust.

Your banker can help you transfer bank accounts to the trust, if you provide the official trust documents. A representative at your brokerage firm can provide the necessary paperwork to transfer those accounts to a trust.

Retirement accounts, such as a 401(k) or an IRA, are not usually in trusts, because those already have primary and contingency beneficiaries assigned to them.

Some counties require that you file a Certificate of Ownership Report to finalize the transfer process, so be sure you know your local regulations. You can verify the transfer of ownership to the trust by seeing who is listed as the owner on the next property tax bill you receive from the county.

If your attorney has set-up a trust for you, he or she should also have properly transferred your property into it. However, you should carefully review the grant deed to make sure it is correct and legal. The “Right of Survivorship” should be clearly stated and the document should have an official stamp from the recorder’s office, because years later the consequences of not being precise and completely legal can be severe.

Also make sure you notify the successor trustee, so that person understands and is prepared to fulfill the responsibilities of the position.

A trustee’s duties at minimal include administering the trust to keep it legal and to perform the fiduciary tasks needed for the beneficiaries. Trustees are not expected to be legal and financial experts, so they can consult with an attorney or financial adviser to help them properly maintain the entity.

During our broadcast, we also discussed other aspects of trusts and being a trustee, including a Revocation of Trust, a trustee’s Duty of Loyalty, a Realtor’s possible conflict of interest when serving as a trustee, and a trustee’s need for impartiality.

We also answered a couple of excellent questions, from listeners who called in during the live show, about joint tenancy and how to handle an ineffective trustee. If you missed the original broadcast, you can listen to a podcast of this episode of Wealtlh Management and You with Connie Yi.

If you are considering establishing a trust and would like a free consultation with Connie Yi, a California Trust Attorney, please contact us. We have four conveniently located offices around the Bay area: San Francisco, San Mateo, San Jose, and Pleasanton.

Community Property vs. Separate Property in California: Why the Facebook IPO Makes This Topic Relevant

It is fairly well-known that one of the primary reasons for divorce is a downturn in a married couple’s financial situation. The hardship of survival without enough money to pay your bills will put a strain on even the happiest marriages. A less-than-happy marriage stands even less chance of surviving tough economic times, especially if the couple was previously accustomed to a much higher standard of living.

On the other hand, it is not so well-known that sudden wealth can put an equal strain on a marriage and is also a major cause for divorce. In the Silicon Valley area, where our offices are located, we have seen the results of both financial boom and bust. Likewise, we have seen almost as many divorces due to sudden wealth as we have from sudden financial hardship.

We suspect that shortly after Palo Alto-based Facebook’s stock goes public, many Bay Area residents will suddenly be worth millions – on paper at least. This looming event, and the expected divorces as a result, brings us to the topic of the difference between community property and separate property in California, which we discussed this past Saturday afternoon on our weekly KDOW 1220 AM radio show and webcast.

California is one of ten states that recognize community property. In a nutshell, what that basically means for a married couple, or registered domestic partners, is that from the date of marriage to the date of legal separation, all income earned by either person becomes community property. Regardless of which partner earned the money, both partners “own” an equal 50% share of it.

The exceptions to what is community property in a marriage or partnership are known as separate property. The separate property exceptions include gifts from parents and inheritances, but those assets need to be handled properly to ensure they do not become community property through commingling and transmutation.

Clear lines of distinction need to be established between community property and separate property, so it is important to keep separate financial accounts and good records of all your transactions related to each set of property.

For example, if you are married and you inherit a house that you want to keep as your own separate property, put the property in your name only and pay any taxes or maintenance expenses for it from a separate bank account. Otherwise, expenses paid from a joint bank account indicates a willingness to share ownership of the property, which can (and probably will) be consider commingling and part of a transmutation process.

If a portion of a mortgage remains on the inherited property, be sure to also pay that from the separate bank account. In this example, a spouse or partner may be required to sign a document that indicates a willingness to disown any interest in the newly acquired property.

If one member of a couple owns some separate property, they can still file a joint tax return, but all of the facts and finances about the separate property need to be properly detailed and filed.

One of the most important aspects regarding ownership of real estate is how the title to the property is held. The primary issue is the concept of Joint Tenancy versus Tenancy in Common, which determines who owns the property when a legal partner dies.

If the property is held under a Joint Tenant title, the surviving partner gains full ownership automatically. The surviving partner will need to file an Affidavit of Death with the local Recorder’s office.

With a Tenancy in Common title, the heirs inherit the deceased partner’s percentage of the property. In a business partnership, the percentage of ownership can vary according to the terms of the title.

If Joint Tenancy or Tenancy in Common is not written in a title, then Tenancy in Common will be in effect. The transfer of property to survivors will need to occur in probate court, so, for example, the right of ownership can be determined for a surviving spouse and child whose names were listed on the title, but without a percentage of ownership indicated.

If you need to make a legal change to a title, we highly recommend that you avoid the serious problems that can occur, if it is done incorrectly. We suggest you hire a title company or an attorney. Our preference is to use a title company, because it can re-insure the new title.

During this past weeks’ radio show, we also discussed a few other issues related to the distribution of property to beneficiaries, as well as a few of the advantages and disadvantages of establishing a living trust to manage the distribution of an estate. You can download or stream a podcast of this show, which originally aired on February 11, from our Radio Show Podcasts archive.

If you have concerns about the status of your property titles and would like a free consultation with Connie Yi, a California Estate Planning Attorney, please contact us. We have four conveniently located offices around the Bay area: San Francisco, San Mateo, San Jose, and Pleasanton.

Timely Tax-Filing Topics: Divorce, 1099 Forms, Brokerage Accounts, Living Trusts, Elder Abuse

As we head into the heart of the tax-filing season, we have received many questions about a wide variety of related topics. Because we are so focused on taking care of clients during the work-week, we usually try to answer a couple of these questions during our weekly KDOW 1220 AM radio program, Wealth Preservation and You.

We received so many questions this past week, we spent the entire hour of our radio show (podcast available here) just on Q&As, instead of focusing on a single topic, like usual. Therefore, for this post, we will just present sample questions and answers about topics we covered in the broadcast:

Q.: Why did I receive a 1099 form from my brokerage firm for 2011, when I had never received one of these for previous years?

A.: Two basic types of brokerage firms exist: full-service and “warehouse.” Like the big-box retail warehouse stores, a warehouse brokerage firm offers lower rates in exchange for a do-it-yourself type service. Traditionally, a full-service firm would file a Form 1099 with the IRS on your behalf, so you did not have to take the time and effort to determine that year’s cost basis yourself.

In an attempt to account for all possible sources of taxable revenue, the IRS implemented a new regulation for 2011 that requires all brokerage firms to submit 1099s to the government for all accounts. Because many warehouse brokerage firms did not already have a system in place to mass distribute these 1099s, you can probably expect that some of these might arrive in the mail later than anticipated.

If you inherited any stocks or other financial securities during the 2011 tax year, you may have to deal with some 1099 issues.

Q.: I received a Form CP-2000 from the IRS about some stocks I sold a few years ago. Why did I receive this now and what do I need to do?

A.: Taxpayers are required to report all income to the IRS, including stock sale transactions, as part of itemizing your capital gains and losses. You received a CP-2000 because the IRS received additional information about your income, from one of your employers, banks, brokerage firms, or other payers, which does not match their records.

If you received a CP-2000, we recommend you visit the IRS website and carefully read the CP 2000 Frequently Asked Questions (FAQs) and act accordingly by the indicated deadline. In some circumstances, in which proper IRS procedures may not have occurred within the required amount of time, you may be eligible to have the interest reduced or removed on the back taxes you owe.

Q.: I am a certified financial planner and I suspect one of my clients has not reported a substantial foreign bank account to the IRS. Do I need to do anything about my suspicions or is it not my problem, because I do not prepare this person’s taxes?

A.: As an ethical professional, you do not want to be in a position that will compromise your integrity or hurt your reputation. Because you do not prepare and sign this client’s tax return, your exposure and liability is not as great as an accountant who does sign a client’s tax form.

Obviously, knowingly signing a false tax return is illegal, whether it is your own or someone else’s. I recommend, if you do find your self in a compromising and potentially illegal position regarding any unreported income or assets – in the U.S or abroad – that you quickly withdraw from the case and tell your client to seek counsel from a legal adviser.

Q.: My parents recently retired and now they frequently receive invitations to attend seminars about setting up a living trust. Is a living trust a good financial instrument for retirees?

A.: We have frequently spoken and written about estate planning and living trusts. Without fully knowing your parent’s financial situation, I cannot say whether or not a living trust is appropriate for them. However, elder abuse is a real problem, so we can recommend that you try to ensure your parents do not fall prey to they many types of scams that target vulnerable senior citizens.

In some cases, grown children who need money take advantage of elderly parents by dipping into their savings. A fine line can exist between a parent knowingly helping a child and a child helping themselves to a parent’s nest egg.

A common form of coordinated and intentional elder abuse is a “trust mill” that sells living trust packages for $399, which is one dollar below the amount at which this ruse becomes a felony. Many times these packages are presented at seminars that offer free lunch as an incentive. After the seminar, where personal information was gathered about the attendees. a sales representative will call on attendees in their homes to con them into buying a trust package. The problem with the package is that it does not include any instructions or means to fund the trust or move money into and out of it, so it ends up being a worthless entity.

Other scams include a medical qualification program, where a salesperson actually tries to sell annuities to the susceptible senior, and a home improvement program, where non-licensed contractors convince seniors to use a home equity line of credit to finance work up-front that never gets done.

Q.: I am researching setting up a trust as a part of my estate plan. Who should I consider as the trustee?

A.: The main trait that we believe a trustee needs is a propensity for paperwork, especially if there are multiple beneficiaries. Because of the fiduciary responsibility a trustee has to all of the beneficiaries, quite a bit of communication will be involved when financial decisions are made for the trust, such as selling property or making investments. Written notifications should be delivered by the trustee to all beneficiaries when major decisions are made, as a means of avoiding confusion and conflict, as well as the appearance of self-dealing.

If you have any timely questions that we can answer for you on our next broadcast, please submit them by using the form on the Contact Us page on our website.

What To Do With Your Underwater House: Options Include Loan Modification, HARP, Short Sale, Foreclosure

We have written before about the current situation across the country in which so many homeowners have mortgages that are underwater. The coming tsunami of foreclosures on distressed properties is bound to have an impact on the slowly recovering real estate market.

If you owe more on a mortgage than the real estate is currently worth on the open market, what can you do to try to avoid losing your property in a foreclosure procedure?

Because so many people are and will be affected by this problem, we spoke about this topic again on our weekly KDOW 1220 AM radio program, Wealth Preservation and You, in an episode called What To Do With Your Underwater House? If you missed this broadcast, you can listen to an MP3 podcast of it in our Radio Show Podcast archive.

A major factor in the collapse of the real estate market was that a few years ago many homeowners used the equity in their primary home to invest in a second property, back when “leveraging assets” was all the rage. When residential property values plummeted, those investors were left with two houses they could not sell.

In response to the collapse of the housing market, many property owners have tried to modify the terms of their mortgage, a strategy known as loan modification, in which the lending institution makes a permanent change in one or more of the terms of the loan, such as eliminating the overdue payments and/or lowering the monthly payments.

A loan modification is difficult to obtain, because several factors exists to determine if you are a good candidate and some of these are out of your control. These factors include your income level, the fair market value of your property, the loan amount, and – perhaps most importantly – who owns the note.

Unlike with previous generations of homeowners whose notes were often held by local banks, today’s mortgages are bundled into a package and sold, along with other loan notes of several types, much like a stock or other security.

The package that contains your loan might have a mix of loans of various levels of risk, from “liar” loans (secured without a statement of income to support its viability) to “A Paper” loans (homeowner has excellent credit), along with a security agreement attached to it that limits the percentage of a particular type of loan that can be modified — for example, only 10% of liars loans in a specific bundle can adjusted.

So, for example, if your loan modification application is received a day after an allowable maximum limit has been reached for that type of loan in the bundle that contains your note, your application will not be approved, regardless of the quality of all of your other eligibility factors.  Therefore, if you own distressed property, you should begin your research as soon as possible to find the best solution out of your underwater situation.

A good place to start your research is the Making Home Affordable (MHA) website, where you can learn about the various government initiatives available to help “struggling homeowners get mortgage relief through a variety of programs that aid in mortgage modifications, interest rate reductions, refinancing, deferred payment or transitioning out of your home while avoiding foreclosure.”

As part of your research, you can learn your current credit score from the three major agencies at AnnualCreditReport.com, “the official site to help consumers to obtain their free credit report.”

We suggest you do not get your hopes up for a loan modification, if you really do not qualify. You will be better off using your time and energy on a viable solution, because in these tough times it is better to come to grips with the reality of your situation sooner rather than later.

To determine the current value of your property, you can use the FDIC’s Net Present Value Calculator. If the calculator determines you are not eligible for a loan modification, the next recommendation for your distressed property could be the HMA’s Home Affordable Refinance Program (HARP).

If you are current with your mortgage payments, but are struggling to keep your head above the water line, you may be eligible for HARP. If not, your next option might be a short sale, a topic we have discussed and written about frequently in the past few months.

Not all lending institutions will agree to a short sale, accepting less for the property than is currently owed on the mortgage, but in some cases that is a better solution for all parties than foreclosure.

Short selling was a strategy that many investors used at the beginning of the housing market downturn, with the help of a real estate agent, to unload distressed properties. However, that option became increasingly difficult as the lending institutions became overwhelmed with all of the short sale applications. As a result, many homes were lost when investors’ mortgages were instead foreclosed.

For more valuable information and insights about this situation, we recommend that you read Underwater Home: What Should You Do if You Owe More on Your Home than It’s Worth? by Brent T. White, a law professor at the University of Arizona.

You can also find, at online or retail bookstores, several other publications about short sales and foreclosures, which may also provide useful information regarding your current situation.

As we stated above, we fear that we will soon be hit by another big wave of foreclosures, as a result of balloon payments becoming due or too-high adjustable rates kicking in, as well as because so many of the government initiatives and other options have been exhausted from the over-abundance of distressed properties across the nation, especially here in California and a few other hard-hit regions.

If your home or other real estate property is underwater, or you think you may be headed in that direction, you should determine your legal rights and realistic options, as well as the financial  consequences and tax implications of the the choices you make.

If you disposed of an underwater property in 2011 and you have already received a Form 1099C for the cancellation of debt (COD), you may have a tax liability for the amount of the loan written off. For this type of transaction, we definitely recommend that you have a professional assist you with preparing your taxes for last year.  Form 1099A is the correct form if you abandoned a property.

The current COD legislation expires at the end of 2012, so that is another fact worth considering if you have tough decisions to make about your underwater property.

As always, we recommend you consult with a tax or legal professional to ensure you understand your options and the related ramifications of each. Create a strategy and a step-by-step plan to achieve your goal, so you can eliminate the stress caused by the property and then move on with your life accordingly.

If you would like a free consultation with Connie Yi, a California real estate attorney and a CPA, about your underwater home, please contact us. We have four conveniently located offices around the San Francisco Bay area.

Offshore Voluntary Disclosure Initiative is Revised Indefinitely for Undeclared Offshore Bank Accounts and Overseas Assets

The Internal Revenue Service has reopened the very popular and lucrative Offshore Voluntary Disclosure Initiative (OVDI) for an indefinite period, according to the IRS Newswire release on January 9.

If your middle name is “Revenue” and you discover a way to collect an extra $4.4 billion, it is not hard to believe you are bringing back the program responsible – especially when you can raise the penalty rate by 2.5% for future collections.

We have recently written other articles about the OVDI and have been following this situation closely, because it affects so many people living in California, including many who are not even aware they are subject to taxes on offshore bank accounts and other overseas assets.

The new version of the OVDI does not have a set cutoff date, yet, like the previous two  offshore initiatives, but it also does not have a permanently set penalty rate, so that could rise without notice.

If you are still not in compliance with the law regarding reporting your overseas assets, you do not want to know how much the penalty rate has risen since the first program in 2009, but you should know that the penalty rate to become compliant will probably continue to rise as the program is extended, as an incentive to motivate you to act sooner rather than later.

The IRS has been extremely focused on this issue for a couple of years, and the program is generating so much new revenue, that the agency will also keep increasing the pressure on all of the financial institutions and mechanisms that assist with hiding assets on foreign soil.

Because of recent federal legislation, overseas banks and financial institutions are forcing account holders who are U.S. taxpayers to either submit the required IRS offshore asset declaration forms or take their money elsewhere.

Soon, there will be no place left to hide illegal foreign assets and the OVDI penalty rates will be even higher, so now is the best time to seriously consider coming clean, because eventually tax rate penalties can turn into criminal penalties. You cannot spend illegal assets while you are in jail.

If you would like a free consultation with Connie Yi, a California tax attorney and a CPA, about your overseas assets, please contact us. We have four conveniently located offices around the San Francisco Bay area.

How to Select a Good Tax Preparer to Help You File Your 2011 Tax Return

We do not normally recommend that you should find a new tax preparer, unless you want to upgrade from unpaid assistance to an experienced professional. The primary reason to maintain a relationship with a tax preparer is that the longer one person prepares your annual tax returns, the more familiar he or she becomes with your financial affairs, which improves their ability to serve your needs. Like any positive long-term relationship, the results get better as each person involved becomes more familiar with the details of the situation.

Another good reason to not switch to a new tax preparer is the hassle of securely moving your financial record archive to a new location. Change is hard, so be prepared to deal with the stress of finding the right person, setting up your new account, and familiarizing your new tax preparer with your financial past and present, as well as your future intentions.

However, if you do need to find a new professional to help you file your 2011 taxes on-time, then you should understand a few basics about selecting a good tax preparer. We discussed this topic on our most recent Saturday afternoon radio broadcast on KDOW 1220 AM. Some of the points we covered on the show were:

• Check the preparer’s professional qualifications. All paid tax preparers need to be registered with the IRS as an enrolled agent. To be an enrolled agent, you need to be a licensed attorney or CPA, or you need to have passed the IRS’s Special Enrollment Examination (SEE) and a background check.
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• Conduct your own secondary background check of the preparer on the official websites of the American Institute of CPAs, the California Society of CPAs, and the State Bar of California (or the corresponding professional organizations in your state).
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• The cost for the services of your tax preparer should be a flat fee, not based on a percentage of your refund. You might find a large difference in the cost of hiring one preparer versus another, so keep in mind that you get what you pay for. If you are audited by the IRS, which professional do you want representing you in front of the government’s hired guns?
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• Is your CPA, attorney, or other tax preparer accessible during tax season? It is often difficult to immediately contact tax preparers during tax season, because they are doing a year’s worth of work for many clients in just a few weeks time, but your tax preparer should be available within a reasonable amount of time (48 hours) if you try to contact them via phone or email. Get your questions in as early as possible, because the closer it is to April 15, the more difficult it will be for your preparer to respond to the questions you should have asked weeks ago.
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• Your tax preparer is required to conduct due diligence regarding the expenses you declare, which means they cannot prepare a tax return for you to sign if they suspect it contains illegitimate expenses, so it is good – even desired – if a prospective tax preparer asks you up front about your expenses for 2011.
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• Never sign a blank tax return, even at the last minute. No further explanation should be necessary about this concept.
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• Never assume your tax return is 100% accurate, because tax preparers are only human. During tax season, they are usually working long, tedious, and stressful hours, almost every day for close to four straight months, so they do ocassionally make honest mistakes. Be sure to avoid making a costly mistake yourself, by closely reviewing your tax return before you send it to the IRS. You, not your tax preparer, will pay for any mistakes you submit.

We also discussed a few other points about how to select a good tax preparer, so if you missed the original airing of this episode of Wealth Management and You with Connie Yi, you can stream or download a podcast of this program from our Radio Show Podcasts archive.

Remember, April 15 gets closer every day, so choose your new tax preparer soon to receive all of the attention you need, before crunch time suddenly, but not unexpectedly, arrives.

If you would like a free consultation with Connie Yi, a California tax attorney and a CPA, about filing your 2011 tax return, please contact us. We have four conveniently located offices around the San Francisco Bay area.

Living Trust And Estate Tax Laws May Change. Will Your Estate Plan Still Be Appropriate?

We have recently written about living trusts, and their impact on estate taxes, but we feel the need to address this topic again, because of the uncertainly concerning the current federal estate tax laws, which expire at the end of 2012. We also focused on this topic this past Saturday on our weekly radio broadcast on KDOW 1220 AM.

If you have a living trust, the current uncertainty about this issue is a very good reason to take the time to understand the nuances of the subject, as well as to review with your attorney the current and potential future validity of your estate plan.

Some of the points we touched on during our broadcast include the flexibility of your trust, abandoning property, trustee powers, the impact of revised tax laws on your trust, the power of termination, and the complexities of trusts in relation to a non-traditional family structure.

Because we cannot be sure of the changes that may take place to the current estate tax laws, we believe an estate plan’s flexibility is the key to minimizing the taxes you ultimately pay. As a result of the current $1-million and $5-million estate tax-rate thresholds, your estate plan should account for the variances of the value of your trust fund.

Your estate plan should include contingencies for when the market is up or down at different points during the tax year. Due to the increasing prevalence of sudden spikes in stock market valuations, it is more-important than ever to understand your potential tax liability in relation to both the average daily value and the maximum value of your portfolio on any particular day during of the year.

It is also important to give ample flexibility to the trustee of a living trust or an estate, so that he or she can make decisions based on the current market conditions – especially if a trust fund could exist over an extended period of time.

An example of this type of flexibility might be a trustee’s ability to decide whether or not to abandon a piece of property, to cut operating expenses or future losses. It might be best financially for an estate trustee to just let go of a 40-year-old condominium that has lost most of its value and would be nearly impossible to sell in the current market, but which still carries the annual expense of a substantial maintenance fee. The ability to legally make that type of decision at the right time, instead of needing to confer and reach a consensus with all beneficiaries, is usually beneficial.

Other examples of sufficient flexibility would be a trustee’s ability to transfer the trust from one state to another or to divide an estate among heirs, so that physical assets are not split in half. For instance, a trustee could give a piece of real-estate to one sibling and an equal amount of cash and stocks to another sibling, so that the property could remain in the family rather than being liquidated. Or a trustee could split one trust fund into two, so each heir can manage their own assets.

A trustee should have the power to take advantage of any new tax laws, as well as the power of termination, so that a fund can be closed if the cost and effort of maintaining it would be more than its ability to significantly grow. For example, maintaining a trust fund might not be a good idea if it was established for five grandchildren and would exist for 20 years as written, until the youngest one turned 25, but which is only worth $50,000. An option available to a trustee with the power of termination would be to close the trust and disperse the remaining assets ahead of schedule, instead of spending lots of time and money maintaining it.

We also discussed, as part of setting up a trust, the need to establish a trustee protector, a mutually-agreed-upon person who would referee any disputes between a trustee and trust fund beneficiaries, as well as the option to establish a “No Contest” clause, which helps to prevent lawsuits by beneficiaries.

In the final segment of our weekly broadcast, we mentioned that a non-traditional family structure can add layers of complexity to setting up an estate plan that satisfies all beneficiaries. People who have children with multiple partners have several types of former and current relationships to consider – like when a wife from a third marriage continues to live in her deceased husband’s house until she dies, as a result of a “life trust” in the husband’s estate plan, even though, according to that plan, the house will eventually become the property of the first son from his second marriage.

During this election year, the status of estate tax laws will be a topic discussed in many forums, so we are sure to be speaking and writing about the subject again soon. In the meantime, we believe that, if you have not recently done so, this is an important time to review your estate plan with an attorney, especially if it includes a trust, so you can establish appropriate contingencies for the current period of uncertainty.

If you have any questions or concerns about your estate plan or trust fund tax law, please contact us to schedule a free consultation at one of our four conveniently-located offices in the San Francisco Bay area.