Articles Posted in ESTATE PLANNING

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In San Diego, California many residents are in the military. As we know, deployments are common. In light of the recent call to active duty received by thousands of United States military reservists, employers and employees alike need to know their obligations to each other when employees serve in the uniformed services. The reemployment rights of military members were revised by Congress in 1994. The main thrust of the legislation is to guarantee the rights of military service members to take a leave of absence from their civilian jobs for active military service and to return to their jobs with accrued seniority and other protections.

Estate planning issues always arise and state law is very important in San Diego, California and there is information about necessary powers of attorney. The federal law applies to all Armed Forces members, including the Reserves, National Guards, the commissioned corps of the Public Health Service, and any others designated by the President during a war or an emergency. Employees of both private and public employers are protected when they have embarked on and have been honorably discharged from military service consisting of active duty, inactive duty training, full-time National Guard duty, or absences for fitness examinations. Unlike some other federal employment statutes, the law on reemployment rights of individuals in the Armed Services has no minimum number of employees for there to be coverage.

An employer is prohibited from using a person’s military service or application for such service as a motivating factor in any adverse employment action against that person. Nor can an employer retaliate against an employee who participates in the reporting, investigation, or filing of claims asserting that the employer violated the federal statute.

To receive the benefit of the statutory rights and protections, an employee generally must give the employer advance oral or written notice of military service. Exceptions to this requirement are recognized when giving such notice would be impossible, unreasonable, or contrary to military necessity. One important consideration is the care and protection of minor children left behind and sometimes a guardianship is necessary.

Employees leaving their jobs for military service lasting less than 31 days are entitled to continued health insurance coverage at the same cost, if any, that active employees would pay. An advanced health care directive is really essential for any member of the armed services on deployment in the event they are incapaciated and sent back to the United States under the care of their family. For service lasting more than 31 days, employees may elect to pay for continuation of their health coverage for up to 18 months, or until their reemployment rights expire, whichever comes first. Upon returning to work after military service, an employee is entitled to immediate health insurance coverage, even if returning employees usually face a waiting period.
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In San Diego, many families are using a legal strategy for estate planning. Attorneys use their education, training and experience to suggest strategies and techniques to assist clients in protecting their legal rights and trying to obtain their legal goals. On our website, you can see many different strategies. We encourage you to make an appointment for a complimentary consultation. You can also e mail our firm with any legal questions regarding estate planning.

One of these strategies is a “family limited partnership,” as the name implies, refers to the creation of a partnership business entity among close-knit family members. A family limited partnership does not necessarily have to involve a business. For instance, it can be created for a particular asset, such as real estate or a mutual fund. This structure is a popular estate planning tool because it can provide both tax and non-tax advantages.

Non-Tax Advantages
One obvious non-tax advantage is that when a transfer restriction is made a part of the family limited partnership arrangement, there is assurance that the business will be kept in the family. The structure also allows the operator of the business (presumably a parent) to maintain control of the business assets until retirement or death. This is accomplished by having the parent retain a general partnership interest that includes management control of the business. The children become limited partners. If a particular child were to be groomed to take over the management of the business, the parent could, over time, transfer fractional shares of the general partnership interest to that child.

Another important non-tax advantage is the protection of business assets. Although the personal assets of the general partner can be reached by creditors of the business, the liability of the limited partners is restricted to their interests in the partnership. Also, the assets placed in the partnership by the donor/parent are protected from his personal creditors. His income from the partnership can be reached by creditors, but not the assets.

Federal Income Tax
The primary income tax advantage to be gained from forming a family limited partnership is the deflection of income from the parent, who is typically taxed at higher marginal rates, to the children, who are taxed at lower rates. Where the donor/parent retains control as the managing partner, the strategy is to allocate earned income to the parent at the lowest reasonable level. The unearned income (return from capital investment) is divided among the parent and children as partners in proportion to their capital interests. Our firm does not provide tax advice and we refer to a licensed Certified Public Accountant on tax issues.
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San Diego, California has seen its share of natural disasters over the years. From fires to floods to other disasters, it is important to insure that your estate planning documents are safe. Your revocable living trust and other estate planning documents are most important as are the list below.

Careful planning ahead of time can ease the stressful process of responding to and recovering from natural or man-made disasters. In the middle of an emergency, when time may be short and the stakes high, is not the time when individuals should be thinking about important papers and safety for the first time. A safety deposit box or other fireproof storage is recommended for your important financial documents.

Good recordkeeping makes sense any time, but becomes especially important in the aftermath of a disaster. Official documents and financial and estate planning papers should be kept together as a comprehensive file in a secure location. The following are some of the documents that should be easily retrievable:

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San Diego, California has seen fluctuations over the years in regards to the value of personal residences. It is important to have an estate plan which considers this advanced estate planning. Our office of Law Office of Scott C. Soady, A Professional Corporation can assist you with the preparation of this estate plan.

Cash may also be put into the trust, but the trust instrument must limit such additions to amounts needed to pay trust expenses, to make improvements to the residence, and to enable the trust to purchase a replacement residence. Please feel free to e mail our office if you have any questions.

The residence must be used by the grantor as his principal residence, although he may use the premises secondarily for business purposes. A vacation home can qualify for purposes of the QPRT provisions if certain requirements are satisfied.

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San Diego, California has many personal residences as well as rentals and other uses of property. San Diego has been a military and retirement town for many years however this is changing. It is important to understand the disadvantages as well as the advantages of any legal strategy. The Qualified Personal Residence Trust is an example of advanced estate planning.

The most obvious disadvantage of creating a QPRT is that the grantor of the trust has a predetermined limit on his right to occupy the residence, after which time he must give up ownership while he is still alive. The remaindermen (normally the grantor’s children) then will have ownership of the residence, and the grantor will have to pay rent to them. Since many people may find this to be an awkward situation, the QPRT requires a personal decision that should be given careful consideration. It is essential to hire an attorney who understands this complicated estate planning procedure and please feel free to e mail our firm with any questions.

A second disadvantage concerns the amount of income tax liability that will result if the grantor’s children (or other remaindermen) later sell the residence. As the laws change constantly by the IRS, it is imperative that any estate plan take into consideration income tax implications. If no trust is created and the residence passes at the grantor’s death, the heirs or beneficiaries get a “step-up” in basis, meaning that the gain on the sale will be measured against the value of the residence as of the grantor’s death. If a QPRT is created, however, there will be no such step-up and the gain will be measured against the price that the grantor originally paid for the property. Please feel free to contact our firm if we can assist.

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In San Diego, many persons use their San Diego home as both a retirement and a tax savings. Per the disclaimer below, this firm does not give tax advice however is it common knowledge that interest on a prinicipal residence can be used as an advantage for tax deductions. The Qualified Personal Residence Trust also can have tax advantages however in a different manner.

Many people’s assumption that their estates will escape federal estate tax may be incorrect because they often underestimate the worth of the most valuable asset that they own, their personal residence. Federal estate tax law provides a means for reducing the tax consequences of transferring the family home. The device that is used to accomplish this goal is known as a “qualified personal residence trust” (QPRT). A combination of an experienced estate planning attorney and certified public accountant are a necessity in the preparation and implementation of this advanced estate planning strategy.

An individual creates a QPRT by transferring his residence to a trust (usually for the benefit of family members) but retaining the right to use the residence rent-free for a specified period of time. The tax savings occur only if the grantor of the trust survives the period of his retained interest. Again, this firm does not give tax advice.

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San Diego, California has many beaches and often bathers and sun bathers lose valuable items. In addition, San Diego homes have been remodeled for years in certain areas due to the lack of available land to build additional housing. It is imperative to protect your estate plan as well as your valuables. San Diego, California has many banks such as Washington Mutual, Wells Fargo, Bank of America, San Diego County Credit Union and others and almost all have safe deposit boxes. Do not incur legal fees to defend your rights to your own property as happened below. While the result in this matter was for the owner of the residence there is never any guarantee of any legal result.

While installing a new driveway for a customer, the owner of a paving company and his employee unearthed a glass jar containing rolls of gold coins wrapped in paper. They collected, cleaned, and inventoried the gold pieces. The coins were worth many thousands of dollars.

At first, the finders agreed to split the coins between themselves, with the company owner retaining possession. After the two had a falling out over ownership of the coins, the company owner gave them to the customer on whose land they were found. The other finder then sued for possession of the coins.

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