Many Californians are permanent legal residents from countries around the world or are married to someone who is. In the tax world, these people are referred to by the rather un-politically correct term “resident aliens.” This is an important term to know when you are developing your estate plan and have a large estate because the taxation rules for non-citizens are different than for citizens.

As of tax year 2016, if you leave an estate that’s valued at more than $5,450,000, the Internal Revenue Service gets 40 percent of the amount over that limit. That’s what’s known as the “estate tax.”

Surviving spouses who are U.S. citizens have an unlimited marital deduction, so are not subject to this tax. However, surviving spouses who aren’t citizens are required to pay it, and it can be substantial on a large estate.

With careful estate and tax planning, people can reduce or even eliminate the federal estate taxes for non-citizen spouses and other heirs. Non-citizen spouses get a considerably larger annual exclusion on gifts than others you may choose to give money while you’re still alive. By keeping your gifts to your spouse under the current annual amount each year ($149,000 in 2016), you can reduce or eliminate your spouse’s tax burden after you die.

If your spouse becomes a citizen prior to the date when the federal tax return needs to be filed for your estate (usually nine months after death), he or she is entitled to the unlimited marital deduction.

Another alternative is what’s known as a qualified domestic trust. You would need to designate in your will that a QDOT be formed by your estate’s executor or by your spouse. The assets that are bequeathed to your spouse are put into the trust. Taxes on the money are deferred until your spouse withdraws them. However, if your spouse becomes a citizen, he or she can withdraw the money with no tax bill.

When you’re preparing your estate plan, it’s essential to discuss these issues with your attorney if your spouse is a non-citizen, regardless of your citizenship status. It’s not necessary to put off estate planning until your spouse gains citizenship. If his or her citizenship status changes, your attorney can advise you about changes you may want to make to your plan.

Source: MartketWatch, “Estate planning with a non-citizen spouse,” Bill Bisichoff, accessed Jan. 30, 2017

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Politics impacts virtually every aspect of our lives, whether we realize it or not. That’s because our elected leaders make and sign the laws by which we all are required to live. The new Trump administration and the Republican-led Congress have indicated that there are a number of areas in which they plan to exert their authority in the near future.

Of course, talking about sweeping changes and being able to implement them are two very different things. The details of some reform plans remain unclear, leaving Americans with a good deal of uncertainty about things like health care, immigration and even estate planning.

According to one estate and wealth planning advisor, “Estate-tax repeal is now a political issue, not a revenue one.” Donald Trump has long talked about his intention to repeal the estate tax (often referred to by those who oppose it as the “death tax”).

As the tax levied on high-value estates, currently, individual estates of $5.45 million and above are subject to estate taxes. It doesn’t impact the vast majority of Americans, but those who are affected can end up paying a good deal of money in taxes on a loved one’s estate.

Estate planning advisors say that people shouldn’t amend their estate plans based on how a potential estate tax repeal and other tax reforms may play out. One says, “Now is not the time to make drastic changes to estate plans.”

There’s a possibility that if the estate tax is repealed, it could be replaced by a capital gains tax, which Trump has mentioned in the past. Whether the tax would kick in only when someone sells an asset in the estate or would apply to unrealized gains remains to be seen.

Of course, those planning their estates and those inheriting them also need to be aware of state laws and potential changes to them. That’s why if you live here in California or are inheriting all or part of an estate here, it’s essential to have the guidance of an experienced estate planning attorney who is up-to-date on both state and federal laws impacting California estates.

Source: CNBC, “Estate-planning pros take wait-and-see approach to Trump,” Andrew Osterland, Jan. 11, 2017

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It can be a huge hassle for an estate administrator to force his or her own family members to move out of a deceased parent’s or other relative’s former home. But this might be necessary to manage the property and get it ready to put on the market. Because of familial ties, these individuals may press all the guilt buttons while continuing to squat on the property.

However, business is business. As estate administrator, you have the duty to preserve the full value of the estate. That may not be possible while unauthorized family members continue to occupy the property.

Assessing the situation correctly is critical

It’s vital to determine exactly what is going on with the property. Did this relative live on the property with the deceased for some time before the person’s demise? Did he or she move in to provide care and supervision during the decedent’s final illness, or had the individual been living there already, perhaps even for decades? Did he or she only move in after the former property owner passed away? Answering these questions allows you to formally define the relationship between the person and the property he or she is occupying.

Is the relative maintaining the property and paying the taxes and other expenses?

If someone is occupying a property and paying for its upkeep, e.g., making necessary repairs or improvements, paying the property insurance and taxes, keeping the grass cut, etc., these contributions could be viewed in the most positive light. After all, a vacant property is more likely to be vandalized or to fall into disrepair. The relative’s contributions may, in some cases, be construed as a form of rent.

Nonetheless, you may still need to insist that he or she relocates, despite the apparent reluctance to do so. But this scenario could affect the strategy you use. Rather than appearing heavy-handed and authoritarian, you might try to approach your relative with a spirit of cooperation. Let him or her know that you appreciate the efforts to maintain or improve the property “to get it ready to put on the market.” Ask whether their intent is to purchase the home from the estate and how you might be able to help facilitate that. This could mean contacting other heirs to discuss a buy-out, among other things.

Are you on the hook financially for all the expenses?

If, as estate administrator, you’re left paying all the household bills, insurance and property taxes, your tone and approach may need to be a bit different. Figure out exactly how much is spent monthly or annually to maintain this property. Put it in writing and show or send it to the occupying relative, requesting that he or she pays you or the estate back for these expenditures. Make sure that you do not use the term “rent” at any point, because you don’t want to establish a landlord-tenant situation when you are trying to sell a property on the market.

Turn to the law to for assistance

One of the difficulties associated with removing a relative from a decedent’s estate property is that you could be dealing with your own sibling or cousin. It’s natural to dread the bad blood your actions will cause. While that is understandable, as the repercussions could be permanent, it doesn’t negate your duties as estate administrator.

Many estate administrators in this situation turn to California probate attorneys to be the “bad guys” who oust these squatting relatives. This allows you to remove yourself from the most difficult of the proceedings, i.e., evicting the squatters, and may preserve what remains of your relationship with your relative(s).

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Developing an estate plan is essential to making sure that your wishes are carried out after your death regarding inheritances and donations to charity. It’s also important for detailing your wishes should you become too incapacitated to speak for yourself.

However, most people have life changes after their estate plan is drafted that require some changes. If you have any of these changes, it’s essential to speak with your California estate planning attorney to determine what updates need to be made to your estate plan.

— Having children: In addition to including your new child in your will or developing a trust for him or her, you should designate a legal guardian who will care for your child if you and your spouse both die or become incapacitated.

— Getting divorced: If your spouse was a beneficiary, executor, trustee and/or power of attorney, you’ll likely want to make changes to your estate plan. The same may be true if your spouse’s relatives are listed in your estate plan. It’s a good idea to discuss this with your family law attorney while you’re going through the divorce process so that you don’t violate any terms of the divorce agreement.

— Getting remarried: Too often, people don’t realize how remarriage will impact their children’s inheritances. Their kids end up getting nothing, while their new spouse gets everything. If you want to ensure that your children inherit what you wish them to, talk with your estate planning attorney about how to do this.

— Change in assets: If you have a significant change in your net worth, whether through income or inheritance, you may want to change the amount designated to beneficiaries if it was a specific amount or if the percentage designated for them is now larger than you think they can handle. You may also choose to spread your increased wealth among more beneficiaries.

— Illness or death: If one of your executors or powers of attorney dies or is no longer able to carry out the designated responsibilities, you’ll want to designate someone else unless you already have secondary people designated.

If you’re unsure whether changes in your life warrant a change to your estate plan, your attorney can advise you. If you have a well-drafted plan, you’ve probably provided for such changes already. Even if you haven’t, changes to an estate plan are generally relatively easy to make.

Source: Forbes, “6 Reasons To Revise Your Estate Plan As Soon As Possible,” Mark Eghrari, Jan. 02, 2017

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Often, when people do their estate planning, they include their grandchildren only as alternative beneficiaries. That means that they receive an inheritance only if their parent (the grandparent’s child) dies before the grandparent. Even if someone dies without a will and has no living children, grandchildren will receive the assets that would have gone to those children.

Some Californians choose to include provisions in their will to designate inheritances specifically for their grandchildren. They may want to provide for their education. That can also be accomplished by setting up a College Education Savings Plan (commonly known as a 529 Plan).

Some people trust their grandchildren to spend the money more wisely than their parents would. They may also be concerned that their grandchildren’s parents won’t have anything to leave them.

Regardless of the reason for making your grandchildren primary beneficiaries, doing so requires skilled planning and knowledge of California’s estate laws to ensure that your intentions are codified accurately.

When leaving money or other assets to a minor, there are special procedures that need to be followed. Many people open a Child Uniform Transfer to Minors Act account. The assets in a CUTMA account can be used only for the minor’s benefit. The minor is the owner of the account, but the account is managed by a designated custodian. When the minor reaches 18 or another designated age, the custodian is required to close the account and give the funds to the owner.

When grandparents want to leave a sizable amount of money or property to a minor, it’s generally best to set up a trust. Unlike with a CUTMA account, a separate trust is not necessary for each child. In addition, the assets don’t have to be given to the child when he or she reaches a particular age. Grandparents can designate when and how much of the money will be distributed. They can make changes if they feel as their grandchildren get older that they aren’t yet ready for the responsibility of handling the assets in the trust.

Your California estate planning attorney can provide more detailed information about your options for bequeathing money and/or other assets to your grandchildren and discuss the pros and cons of each option based on your unique situation.

Source: Lake County News, “Estate Planning: Gifts and inheritance for grandchildren require planning,” Dennis Fordham, Jan. 07, 2017

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A recent blog touched on the topic of getting a parent to accept that he or she can no longer live alone and requires the care assisted living can provide. This entry will delve deeper into the topic while detailing how adult children can get an accurate – yet informal -assessment and evaluation of their parent’s cognitive state.

Those who see their parent frequently in the familiar environment of the parent’s long-time home environment may miss early signs of cognitive impairment. Remember that it is relatively easy for someone to function normally at least for a short while when there are no distractions or unfamiliar territories to navigate. It’s the adult children who see their parents only infrequently (due to distance, work schedules or whatever reasons) that can be alarmed by the obvious physical and mental deterioration between visits.

Beware of parents’ compensating behaviors

In the early phases of the disease, while it can be incredibly frightening for them to confront, most dementia patients are aware that they are losing mental ground. Because this is so alarming to them, they may go to great lengths to conceal these slippages from others, including spouses, who may also be grappling with the same frightening symptoms.

Approximately 10 percent of those age 60 and over have a degree of significant memory loss. Most of us of all ages have moments where we simply blank out and can’t remember what we did with the car keys or the TV remote. That’s not dementia. If all of a sudden we can’t remember what happened to our car or forget the name for the screen with pictures of the people on it, that would be a good indicator of a memory problem linked to dementia.

Pay attention to the way your parents go about their daily tasks. If your mom baked a loaf of banana bread from scratch without a recipe every week for the past 50 years but now suddenly must revert to a recipe, or worse, can’t manage to bake it at all anymore, she could be suffering from the early symptoms of Alzheimer’s disease.

Watch out for a decline in hygiene, housekeeping and pet care

Maybe your father retired from the Navy and always kept the house in shipshape order, wore clean clothes and close-cropped hair. But on this visit, the house is unkempt, his clothes are unwashed and for the first time in your lifetime, you’ve seen his hair longer than his ears. He might smell a little musty, too, from neglecting to take a daily bath or shower.

If the beloved family dog suddenly is growing thin from not being fed regularly, and the water bowl is dry when you visit, these are additional signs that Mom or Dad just can no longer get it together to maintain themselves and their pet.

Other worrisome indicators

Offer to take your father out for a shave and a haircut to his favorite barber. Maybe he is simply unable to get around as well as before and neglected his appearance because of that. But watch as he interacts with the man who has jovially “lowered his ears” for the past three decades. Does your dad appear to know the man and interact appropriately with him or does he mumble his answers and avoid eye contact with his former friend? That could be a sign that he no longer has any idea who the barber is or why he is even there.

Repetition of stories is part of many older folks’ method of communicatio n, but if they repeat themselves only minutes after saying something or become hopelessly lost at following a conversation, dementia may have set in.

What to do when there are red flags waving

This is the hardest part of all. Whatever response you have should come from a place of love. It may be time to get mom or dad conserved through the California courts, but perhaps a heart-to-heart talk could achieve the same results. Should you need to initiate conservatorship proceedings, first develop a plan with an attorney who is experienced in handling such matters.

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Virtually every adult, no matter how young and healthy, should have a will and possibly other estate planning documents. An estate plan, even a simple one, can save loved ones time, stress and money if something happens to you.

An estate plan lets you designate how you want your assets distributed. They may not appear valuable to you, but you never know what kind of emotional value they may have to family or friends. You can also designate whom you want to handle your estate and to make decisions for you if you’re unable to do so for yourself. With an estate plan, you can designate under what circumstances you want to be kept alive — saving loved ones that burden and conflicts that can rip families apart.

If all of that isn’t enough to convince you to have an estate plan, the birth of a child should. Many Californians don’t consider drafting a will or other estate planning documents until they have a child.

One of the most important considerations for new parents is who will take guardianship of their child if both of them should die. This may not be an easy decision, and people’s feelings may get hurt. However, it’s one that needs to be made. Of course, it’s essential to make sure that whomever you choose is willing and able to take on that responsibility.

Often, the people chosen to be guardians are also the ones chosen to manage the money you leave for them. However, that doesn’t have to be the case. You can designate one couple or individual to care for your child and another one to manage his or her money. Of course, it’s important that those people get along and will work in tandem to do what’s best for the child.

Developing an estate plan, particularly when there are guardianship issues for children involved, can involve some difficult conversations — not just between the couple, but with family and close friends. Experienced California estate planning attorneys can help guide you through these.

Source: NerdWallet, “Congrats on Your New Baby! Now It’s Time for an Estate Plan,” Brian McCann, Dec. 22, 2016

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Every day in California and around the country, people die without a will. Some of these deaths are through accidents and therefore unexpected. Others involve older people who never got around to putting an estate plan in place because they didn’t want to contemplate death or just didn’t think that they had enough assets to worry about.

However, regardless of the value of a person’s assets, there are state laws under the California Probate Code that must be followed when a person dies without a will. This is known as dying “intestate.” Therefore, surviving family members will have to deal with these intestacy laws in probate court.

Here are a few important things to know:

— When people die intestate in California, the assets are divided among the spouse, children, grandchildren and other descendants, parents and siblings.

— If the person had no living parents, children or siblings, but was married, the spouse gets the entire probate estate.

— If the person who died had descendants but no living spouse, those descendants get the entire estate.

— If the person had a spouse and children, the spouse gets half of the estate and a third of the decedent’s separate property. The children will get a portion of the separate property as well.

If there is a surviving spouse and parents and/or siblings but no descendants, those other family members will get a share of the separate property.

— If there are no descendants, parents, siblings or spouse, other family members will divide up the estate.

Of course, in some cases, family members don’t actually inherit anything because the decedent’s debts were greater than his or her assets. Further, the costs of dealing with an estate in probate need to be paid. Therefore, those will cut into any assets left by a decedent.

People who don’t have a lot of assets don’t generally need an elaborate estate plan. A simple will can help ensure that what assets they have are distributed as they choose. Further, it can save loved ones time and money during at a difficult time in their lives. If a family member died without a will, an experienced California estate planning attorney can provide valuable advice for handling the probate estate and dealing with probate court.

Source: The Balance, “Dying Without a Will in California,” Julie Garber, accessed Dec. 29, 2016

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California seniors move into assisted living communities for a variety of reasons. Sometimes they just want to be free of responsibilities like home maintenance, cooking and cleaning. Many newly widowed people feel isolated and want the socialization that these communities provide. Some people need a little help with activities of daily life (ADL) like bathing and dressing as they get older.

Whatever brings you to this move, don’t forget that it will likely require an update to your will and other estate planning documents — particularly if you’re selling your home. If you’re purchasing a home in a senior community, make sure that the new home is included in your estate plan.

Are you selling or giving away other property as you move and downsize? It’s important to remove those items from your estate plan.

If you’re moving to another state, whether into or out of California, you’ll need to update your will and all of your estate planning documents to ensure that they conform with state laws. Estate planning laws vary significantly among states, and many California laws are considerably different than those in other states.

This is a good time to do a thorough review of your estate plan and make sure that everything is current — including things like your address, emergency contact information, advanced health care directive and the fiduciaries you’ve chosen. Are you still comfortable with your executor, trustees and those to whom you’ve given power of attorney (POA)? If you’re moving some distance, you want to make sure that the people you’ve chosen are within a reasonable geographical range or at least willing and able to travel if they have to.

Any move is a significant life event that warrants a review of your estate plan. With experienced legal guidance, you can help ensure that all of the necessary changes are made and that it reflects your current wishes.

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You’re growing worried about your parent. Alzheimer’s has set in, and memory issues have turned into safety issues. Maybe a stove was accidentally left on. Maybe your parent got lost outside of the house and couldn’t get home. You think it’s time for mom or dad to go into an assisted living center, just for the sake of safety.

You may have all of the good intentions in the world, but what if your parent doesn’t want to go?

You can suggest that it’s time to live in a home, you can point out the reasons why, but you can’t force your parent’s hand. If you bring him or her to an assisted living center, and your parent decides to leave, the staff often can’t do anything about it.

Focus on the end goal

One option you may have is to seek to become your parent’s legal guardian. If you’re given this power, you can then make the best decisions for your parent, which could include forcing him or her to move out of the family home and into an assisted living facility. This is tough. It’s emotional. You may feel terrible about it. But you can do what must be done to keep your parent healthy and safe. Focus on that end goal.

It is hard to get this power, though. Typically, judges allow people to have individual rights and freedoms for as long as possible. They don’t want to encourage on this too soon. If your parent doesn’t want to move and is lucid enough to show the judge he or she can make rational decisions, your request may be denied.

Sometimes, elderly people sign away these rights voluntarily. You may be given a power of attorney to make decisions for your parent if he or she can’t do so. You can get the rights to make medical decisions, financial decisions, and legal decisions. Many parents do this as part of their estate planning, knowing both that it may be necessary and that it’s best to do it in advance.

Knowing your options

When this really becomes a tough situation, though, is when your parent has not planned ahead and you think you need to force his or her hand for one’s own good. It is possible, but it’s far harder to do. This is why it’s so important to know about the legal options you have, when to build a case, and how to build it. A lack of rational decision-making ability must be demonstrated.

No child wants to be in this position, but it’s sometimes imperative to help those who, due to the unfortunate impact of aging, can no longer help themselves. If you’re looking at the future and wondering how to make the best possible decisions for your parent, make sure you know how the legal process works. As tough as it is to talk about, the key is to do what you know is right and to provide the help your parent needs when it is so desperately needed.

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