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Choosing the Trusts in Your Estate Plan

There are a number of important issues which every couple must consider when deciding how to structure their estate plan. These include: (i) who will be the trustees; (ii) when should the children have access to the estate when both parents are gone; and (iii) how should the spouses allocate the trust assets and what trusts should be established after the death of the first spouse. There are a number of responses to these questions, and the proper response for each set of clients will be dependent on the unique facts and circumstances of each family. The purpose of this memo is to give clients some general information about their choices in allocating trust assets.

Summary of Relevant Provisions of Proposition 19

California recently approved Proposition 19, which, effective February 16, 2021, (1) eliminates the $1 million parent-child and grandparent-grandchild exclusion for transfers of real property other than a primary residence; and (2) modifies the manner in which the taxable value of a primary residence is calculated following transfer.

2020 Tax Updates Affecting Estate and Gift Taxation

In light of the recent election, the nature of the tax code may be changing significantly in the near future. As 2021 approaches, it is crucial to understand potential changes to estate, gift, generation-skipping and related income taxes, and consider planning options immediately. In some cases, it may be advantageous to complete certain planning techniques prior to the end of calendar year 2020. However, it is important to keep in mind that, with the exception of Proposition 19 (which is now law), the matters discussed in this memorandum are potential changes. Future tax law and its effect on estate planning matters remains uncertain.