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Biden Administration’s Proposed Federal Tax Changes Relating to Estate Planning

Celaya Law keeps up to date with what is going on, on both the local and federal level. Your Estate Planning attorney at Celaya Law can help answer questions about what new bills have been passed or on their way to review that might cause big Changes. Below is just one current change that is coming:

With a new administration comes new proposed tax changes. One of the biggest changes that may take place with this next administration is with the federal estate tax provisions.

On September 13, 2021, a tax bill was sent to the House Ways and Means Committee that included provisions to reduce the federal estate tax. The bill included language to reduce the unified credit. Specifically,  the language reflected the unified credit against estate and gift taxes would be reduced to the 2010 level of $5,000,000 per individual. This would be effective for estates after December 31, 2022. Currently, the federal  estate tax applies to assets over $11.7 million. If this proposed tax change did occur, it would have a significant impact on individuals’ estate plans.

While this is a proposal and not yet signed into law, it does reflect the intent of the committee; therefore, every person should have their estate plans reviewed to ensure it is up to date. Contact Celaya Law, to have your current estate plan reviewed.

 

 

Though it is critical for your family, assets, and legacy- estate planning tends to fall to the bottom of people’s to-do lists. Even with an estate plan in place, it’s a good idea to have your estate plan reviewed, especially if you have experienced significant life changes (marriage, divorce, you have moved, etc.) Below is checklist to use in determining if and when you should have your estate plan reviewed:

Changes in Residency

Have you moved to a new state? Estate laws vary in different states, so it’s a good idea to review your estate plan to make sure it complies with local laws and regulations. You should also update your address and keep your family informed of where your documents are held.

Changes in the Law

Estate laws change over time. You should have your estate plan reviewed to see if it has been affected by changes to any state or federal laws.

Power of Attorney and Advance Healthcare Directive

Is your Power of Attorney and Advanced Healthcare Directive Up to Date? You should make sure the designations are up to date and accurate as well as your wishes.

Trusts

If you have a revocable trust in place then you should review trustee and successor trustee appointments. Also, you should have your trust reviewed for the estate and inheritance tax limit as that changes from time to time.

Contact Celaya Law to have a qualified estate planning attorney review your estate plan to make sure it is up to date with the current law and your wishes.

As with any subject, there tends to be common misconceptions. One subject that tends to have a ton of misconceptions is the topic of nursing homes and your assets.

Knowing the truth about the following misconceptions regarding nursing homes and your assets will help you and your family plan better for an elder care situation.

 

Misconception #1: “If I Put My Assets in the Joint Names with my Children, the Assets Will Be Exempt For Nursing Home Purposes”

The truth is, you are considered the owner of any assets that you add your children’s names to and this includes assets that were put in joint names years ago. Certain creations of joint assets will disqualify you from receiving Medi-Cal benefits for a period time.

 

Misconception #2: “ I Can Give Away $14,000 Per Person Per Year Without Any Penalty”

The truth: This amount is a Federal gift taxation limitation. It has nothing to do with Medi-Cal eligibility as the rules for Medi-Cal gifting are entirely different. All gifts that are divestments (no matter the amount) will create a penalty.

 

Misconception #3: “I Was Told My Only Choice Was to Spend Down My Estate”

The truth: It is almost unnecessary to spend down. There is an advanced way to plan to protect your assets and that is through proper Medi-Cal planning that an experienced estate planning attorney can discuss with you.

 

Misconception #4: “If I Am In A Nursing Home Already, It is Too Late to Protect My Assets”

The truth: You can ALWAYS protect your assets, no matter how long you have been in a nursing home. We have assisted lots of clients in getting qualified for Medi-Cal, who were actually in a nursing home, privately paying. If you or your spouse are in a nursing home and the other spouse lives at home, you can usually protect almost all of the assets for the stay at home spouse. You will need to consult with an experienced estate planning attorney in order to protect your assets for Medi-Cal qualification.

Contact Celaya Law to speak with a qualified estate planning attorney to learn how you can protect your assets and still get qualified for Medi-Cal.

There are several reasons why you need an experienced elder law attorney.

An elder law attorney focuses on array of specific needs of aging adults, which include:

Your loved one may need assistance in Medi-Cal planning and protecting their assets. Some people are mistaken in thinking they have to spend down all of their assets to qualify for Medi-Cal. If you seek the assistance of a qualified elder law attorney, you can plan early and have more options.

An elder law attorney can also provide a wide range of estate planning options. It is important to update your estate plan and have it reviewed often to ensure that it accurately reflects your wishes. Also, it is important to discuss long-term care options with an elder law attorney so that you can make important key health decisions before any health complications arise.

Contact the experienced elder law attorneys at Celaya Law to discuss your elder care concerns.

A common misconception about estate planning is that only married couples with children need to create an estate plan. Not true!

A person with assets who cares about their future financial and medical needs should have an estate plan. Even as a single person, or someone without children, you most likely have possessions that matter to you. Though you may not be concerned with your assets; without an estate plan, your assets are subject to California’s intestate succession rules in which a court will decide which relatives are the most deserving of your possessions. The court will not take into account what type of relationship you have with your parents, siblings, aunts, uncles, nieces, and nephews. A trust will ensure that your possessions go to the people you want and it will ensure you stay out of court. A trust also allows you include specific requests or conditions to make sure they are carried out.

An estate plan also allows you to plan for your future both medically and financially. A Power of Attorney allows you to appoint an individual as your agent to act on your behalf for financial obligations should you lose capacity while you are living. Your agent will be able to step in and pay your bills and manage your finances the way you want them handled. If you don’t appoint an individual as your agent, the court will appoint an individual that they think will act in your best interest and it may not be the person you would have chosen yourself. An Advance Medical Directive will allow you to appoint a person to make medical and end-of-life decisions for you should you be deemed incapacitated.

Without an estate plan, you have no control over your affairs when you’re hurt or incapacitated. The state could appoint a distant relative to oversee your finances if you’re in the hospital or distribute your possessions to relatives that you barely know or have an estranged relationship with.

Contact Celaya Law to discuss the steps in setting up your estate plan so that you are taken care of.

Going on a Summer Vacation? Pre-travel estate planning should be at the top of your to-do list! Here are 7 items that you will want to add to your checklist:

Living Revocable Trust

Make sure you have a Revocable Living Trust in place that appoints a person to settle your affairs, designates who will receive property and proceeds, and most importantly avoids probate.

HIPAA Authorization

Due to the HIPAA Privacy Rule, you will need to give consent for a friend or family member to receive medical information should anything happen to you.

Durable Power of Attorney

If you are unable to make financial decisions, you will want to appoint an agent to step in and make these decisions for you. This document covers everything from legal to financial claims.

Advance Healthcare Directive

In the event that you are not able to make medical decisions for yourself, you will want to appoint an agent who will make medical treatment decisions on your behalf.

Guardian Designation

Do you have children younger than 18? Make sure you appoint a guardian plus an alternate guardian if your first choice is not able to fulfill his/her duties.

Updated Beneficiaries

If you haven’t update your Trust in years, it might not reflect your wishes about beneficiaries, especially if you are divorced.

Financial Login Information

Make sure someone you trust has login information for your financial and other online accounts. It is is important to record all logins, passwords, and other relevant information securely should something happen to you.

An estate planning attorney at Celaya Law can make sure you’ve got these and other documents in order before you take your new trip.

A durable power of attorney (DPOA) allows or authorizes another individual (your agent) to handle certain financial obligations on your behalf should you fall ill or become mentally incapacitated. The Durable power of attorney can ensure that financial and lifestyle matters are property managed so that it eliminates uncertainty, fighting, or confusion.

Should you become mentally incapacitated, your agent it able to handle the following transactions:

Though there are many online resources that offer a do-it-yourself power of attorney, it is best for an estate planning attorney to prepare the durable power of attorney so that there are no potential issues with the document. A simple error can result in the durable power of attorney being invalid. Contact Celaya Law to discuss your specific needs and wishes and our experienced attorneys can recommend documents that will work best for your particular situation.

Did you know that California is one of several states that allows residents to create a Pet Trust to ensure a pet is well cared for after their owner passes away?

If you are a pet owner and you consider your pet a member of your immediate family, it is important to understand how you can provide for your pet when you pass away.

In 1991, California enacted two additions to its Probate Code: Sections 15211 and 15212. Both sections allow pet owners to create special trusts for their pets. Specifically, Probate Code Section 15211 allows Californians to establish a special trust that ensures a pet receives the proper care for up to 21 years. Probate Code Section 15212 allows the creation of a trust that will offer lifelong care to an animal.

Some things to think about when creating a Pet Trust are as follows:

Contact the experienced estate planning attorneys at Celaya Law to discuss setting up a Pet Trust for your beloved pet.

A pay on death (POD) account allows a person to pass money to family or loved ones without the necessity of probate when he or she dies. The issue with pay on death accounts is that there is no asset protection for the beneficiary. Meaning, if after the death of the owner, a beneficiary files for bankruptcy or has creditors after him/her, the beneficiary runs the risk of losing their POD inheritance because there is no protection. After the account is transferred to a beneficiary, the POD account is owned by the beneficiary and there is no legal protection. Thus, a creditor can garnish the account.

A living trust is a far mechanism to protect beneficiaries from creditors. A beneficiary should inherit an account through a trust, so that there is asset protection and his/her inheritance cannot be accessed by any potential creditor. Contact Celaya Law so our experienced attorneys can evaluate your assets and income to determine what is at risk of collection from a creditor. We can help develop a plan to protect your beneficiaries from losing their inheritance from potential creditors.

The timeframe after a family member dies, usually is confusing and traumatic with family members and friends having to act quickly in planning a funeral, paying bills, taking care of pets, etc. As the family members navigate through these tasks, they often realize they need access to important documents, like an estate plan that had been (hopefully) prepared by decedent before he/she died and often times these documents are located in a safe deposit box. The question arises, how does a person gain access to a safe deposit box after the person who owned it has died?

California Probate Code 331 controls access to a safe deposit box after the death of decedent. If the decedent owned the safe deposit box with a spouse or another person, then that person will have access to it. If the decedent was the only person on title to the box, then any person who has a key to the safe deposit box can access it as long as they provide the financial institution with the following:

A personal representative or successor trustee of the decedent’s estate shall also have access to the safe deposit box as long as they show the financial institution a copy of the estate planning document that reflects they are the executor/successor trustee of the estate.

Depending on the circumstances, a safe deposit box may or may not be the best place to store your originals of your estate planning documents, especially on the limitations that California places on access to safe deposit boxes after death.