What Happens to Your Property if You Die Without a Will in California? (Infographic)

If you die without a will, your property will be distributed to your heirs according to the laws of your state. Lawyers call this “intestate succession.” The result may or may not coincide with your own wishes, but will almost always cost your loved ones an unnecessary amount of time and money as they navigate the probate process. Below is an infographic that shows what happens to your property, in California, if you die without a will, trust, or estate plan. (click image for larger view) Download our FREE California Estate Planning Guide. Embed this infographic on your site. Copy and…

Revocation of The Family Trust by One Spouse

A review of Masry v. Masry (2008) 166 Cal.App.4th 738 Edward and Joette Masry created a revocable living trust (Family Trust).  The property transferred to the trust was community property as it was acquired during marriage.  The trust named Edward and Joette each as a trustor (settlor) and trustee of the trust and reserved the right of each to revoke the trust “by written direction delivered to the other Trustor and to the Trustee.” Edward executed a Notice of Revocation of Trust shortly before his death but did not inform Joette.  Edward created a separate trust naming his children from a prior marriage…

Reduction of the Taxable Estate with GRATs

A grantor trust is established by the grantor irrevocably transferring property to a trust during his or her lifetime while retaining an interest for a number of years with the remainder to the beneficiary.  The remainder interest to the beneficiary is subject to gift tax and its value is ascertained per the tables provided by Internal Revenue Code Section 7520. There are three types of grantor trusts.  Grantor retained annuity trusts (GRATS), grantor retained unitrusts (GRUTS), and grantor retained income trusts (GRITS).  This article focuses on the use of GRATS in conjunction with the use of tax-free gifts to reduce…

The Irrevocable Life Insurance Trust (ILIT)

An Irrevocable Life Insurance Trust (ILIT) is an irrevocable trust established in order to own life insurance on the life of the settlor of the ILIT.  Normally, the proceeds of the life insurance policies on an individual’s life are includable in that person’s gross estate when a person dies.  If the ILIT owns the policy and the settlor holds no incidents of ownership, the proceeds of the life insurance policy are not includable in the settlor’s estate.  The reason for this is because the ILIT is a separate entity from the settlor. The two most common ways for the ILIT…

Reducing the Taxable Estate with Qualified Personal Residence Trusts (QPRTs)

A qualified personal residence trust (QPRT) is an estate planning tool utilized to transfer assets out of a wealthy individual or couple’s estate in order to reduce or eliminate the amount of estate taxes due upon their death.  A QPRT operates by an individual or couple transferring a personal residence into a grantor trust while continuing to enjoy the use of the residence for a specified number of years before the residence transfers to the children as beneficiaries.  The QPRT results in the gift tax being calculated at the time of the transfer upon the value of the remainder interest. …

Utilizing Fractional Share Discounts to Reduce the Taxable Estate

Fractional share interest discounts are a relatively simple technique to reduce the taxable estate.  Fractional share interest discounts work well where an estate is only slightly above the lifetime estate tax exclusion or as a first step to reduce an estate greatly in excess of the lifetime exclusion.  Fractional share interest discounts are generally used to reduce the value of real property or business interests. The basis of the fractional share interest discount is relatively straight forward.  There is a limited market of buyers willing to purchase only a portion of an asset with the remainder of the asset owned…