Thursday, February 23, 2012

GRATs and Mitt Romney's estate planning

No one really knows what will happen with the estate and gift taxes in 2013--if Congress does nothing, we're back to a $1,000,000 exemption.  President Obama's proposed budget sets it at $3,500,000.  We do know that the $5,120,000 exemption we have this year is a great planning tool to move assets to the next generation, something that several of my clients are finding useful.

Mitt Romney took advantage of great advice and used a grantor retained annuity trust (GRAT)  to transfer appreciating assets to future generations of his family free of gift tax.  The grantor must survive the term of the GRAT for the asset to be excluded from his estate, but the term can be very low (although Obama's budget proposes a minimum 10-year term, which is another reason to do your planning now).  The grantor receives annuity payments during the term of the GRAT, and the rest goes to future generations and avoids a lot of taxes.  Combined with a Delaware trust, this strategy can provide security for beneficiaries for decades to come.

If you'd like more information regarding advanced planning strategies and the value that a professional trustee and trust company can provide at little or no additional cost, please contact me at U.S. Trust, Pasadena.

Tuesday, February 7, 2012

Two new conservation easements

I've written before about conservation and preservation easements, and I'm pleased to see that the Pasadena Heritage organization has received two new easements--one on the historic Freeman House, designed by Alfred and Arthur Heineman, and the other on a commercial building in the Playhouse Historic district.

I wasn't aware that Pasadena Heritage holds 82 easements, making it one of the largest easement holders in the West.  They conduct annual inspections of the properties to be sure the easements are being honored.

There may be tax breaks available, and you can feel good about preserving a piece of history and architectural art.

Thursday, February 2, 2012

My talk on estate planning and probate basics

I'll be speaking this March 28, 2012, on wills, living trusts, irrevocable trusts, estate taxes, trust administration and probate--it's a webinar by LawReviewCLE that I'll be giving with Rhode Island attorney Anthony Mignanelli. Click here for more information.

Sunday, January 22, 2012

RIP Bob Burnett, chart-topper and trust lawyer

I've been a Senior Trust Officer with U.S. Trust in Pasadena almost a year now, after a 16-year career as a trusts and probate lawyer, and am also a fan of folk music.  So, I was pleasantly surprised to read the obituary of Bob Burnett, who died last December.  It turns out he was a trusts lawyer for U.S. Trust/Bank of America and a folk musician.

He came to Wesleyan University in 1958, and was told by his fraternity to get an entertainment act together.  He did, and with Dave Fisher, Steve Butts, Chan Daniels and Steve Trott — became the Highwaymen.  In 1961, they had a number one single, "Michael," their version of "Michael, Row the Boat Ashore."  More success followed, but they disbanded in 1964 as Bob went to Harvard Law School and others to schools elsewhere.

He went on to work in various bank trust departments, eventually retiring from U.S. Trust. He did take a break to perform with the original group members in 1990 and release more albums--they came out of retirement after settling with Waylon Jennings, Johnny Cash, Willie Nelson and Kris Kristofferson, who misappropriated the "Highwaymen" name.

Not everyone would walk away from a successful music career to work with trusts, but he did, and that's my kind of guy.

Saturday, January 21, 2012

Don Schweitzer in San Gabriel Valley Tribune

Congratulations to a fellow lawyer and great guy in Pasadena!  Donald Schweitzer practices family law, estate planning and criminal law, and I've had the pleasure of knowing him for several years now, along with working with him on some cases as well.  This article in the San Gabriel Valley Tribune profiles him.

If you have questions about planning and protecting your estate, both now and for future generations, contact me at U.S. Trust.

Wednesday, March 16, 2011

Found money!

Worthless assets could turn into gold during probate or trust administration.You never know what you'll find in the probate process, or in this case, the trust administration process.  After much searching for a client, today I found the contact information for a corporation that the client's father had shares in--shares they'd written off as worthless decades ago.  Part of the problem was that letters and phone calls to the company's last known address and phone numbers went unanswered for years.  Web sleuthing uncovered better information, and now they'll get $30,000 for their "worthless" stock!  That's better than laminating the shares for use as place mats.

I always include searches in unclaimed property databases as part of a probate or trust administration, but sometimes I have to dig deeper, as in this case. If you're in the middle of the administration process, it also means hang on to whatever worthless stuff you find until you verify it's worthless.

For probate or trust administration questions, please contact me at (888) 503-7615 or

Monday, February 14, 2011

Why is probate a bad thing?

Avoid Probate!  Norman Dacey's 1960s book started the living trust revolution, and people took away at least this much of his message:  don't go to probate court.  Beyond that, most people aren't really sure why they're supposed to avoid probate.  

The main reason is its cost.  The court costs and other costs are not too high, maybe $1,500 to $3,000, but the main expenses are the fees for the attorney and the executor.  They're based on the size of the gross estate (debts and liens are not subtracted from the total) and are $7,000 each to the attorney and executor for the first $200,000 of gross assets, 2% each of the next $800,000, 1% of the next $9,000,000, and 0.5% of the next $15,000,000. The court rules on the fee for estate amounts over $25,000,000. 

The court can also allow "extraordinary fees" in addition to the fees above, usually for more complicated matters like selling assets, tax planning or dealing with disputes.

Probate is generally required in California when one dies with or without a will, and the assets outside of trusts or beneficiary accounts are more than $100,000 in value.

By contrast, the fees involved in settling living trusts are usually less.  Trustees, whose role is similar to that of executors, typically charge 1.5% to 0.75% on a sliding scale, with the percentage charged decreasing as the estate gets larger.  Attorneys can charge hourly or on a percentage basis, and their fees average between 0.5% and 1% of the value of the estate, with most being on the lower end of that scale.  Given the size of most estates in California, the administrative costs and fees for a trust will be less than those for a probate.

The other advantage to trust administration is that it usually takes less time than a probate to settle.  There are still statutory waiting periods, but trustees can move faster without having to be tied to the court's schedule in getting hearings or waiting for orders to be approved and entered.

So, probate is not a bad thing, and I've handled hundreds of probate matters, but given the choice, I'd say trusts and trust administrations are better, with less cost and stress for clients in most situations.
Contact us at (888) 503-7615 or with your probate and revocable living trust questions.