Alternate Methods of Estate Planning - San Diego Estate Planning Attorneys

· Why can’t I just give my property away while I’m living?
There are several reasons. First, by giving your property away, you give up control of your property. Regardless of your good intentions, and the good intentions of the person you give the property to, you no longer have any guarantee that the property will be used as you wish or that the property will be used to take care of you.
If you give the property away, it becomes subject to the claims of the recipient’s creditors, including his or her spouse. Also, if the recipient predeceases you, the property will pass in accordance with that person’s estate planning. If no planning is in place, the property will pass to the recipient’s spouse or children. If the children are minors, their share cannot be used for any purpose other than the care of the children. If the recipient divorces, his or her spouse will have a valid claim against the property.
Also, if the property you give away is valued at more than the gift tax annual exclusion, you must file a federal gift tax return and pay the appropriate taxes.

· If I taped the names of family members to the bottoms of different items in my home, such as lamps and paintings, to show who is to get the items at my death. Is this okay? How can I make sure that my favorite niece receives the cameo my grandmother left me?
Tape might be okay for the first relative who gets into your home after you pass away, but it would be hard to predict what the slower relatives will get! There are better ways, with appropriate documentation, of ensuring that the right individuals receive what you want them to.

Some states allow personal property to be passed by means of a personal property memorandum. This is a document, separate from your will or trust, in which you specifically identify the items of personal property and the individuals who are to receive the items. Your trust or will must refer specifically to the personal property memorandum, but you can prepare the memorandum at your leisure, and you don’t have to sign it in front of a notary. Since you can change the memorandum whenever you want, your will or trust should state that if your heirs discover two personal property memorandums which conflict, the provisions of the one dated last will control.
If your state does not allow the use of the personal property memorandum, your attorney will draft the appropriate documentation for transferring your personal items to the individuals who should receive them.

· Someone told me that a good way to avoid probate is just to sign a quitclaim deed giving my real estate to my kids and then place the deed in a safe deposit box so that they can record it when I die. Is this a good idea?
This is a bad idea. The problem it attempts to solve (probate) may not be as bad as the ones it creates.
First, it may not be necessary (depending on your own state) to record the deed to have a completed transfer. If this is the case, your children could claim that you have actually given them title now, and they could gain control of your property.
Next, the Internal Revenue Service could claim that your children received the property as a gift from you. If your children receive property from you by gift, their basis in the property will probably be less than what it would be if they inherit the property from you. In this case, they may be forced to pay greater capital gain tax than they would if they inherit the property from you.
You are much better off creating a revocable living trust and transferring title to your real estate to the trust. In this way you retain control of the real estate during your life, your disability trustee can manage your real estate for your benefit if you become disabled, and the property can pass to your children when you die, without its having to go through probate.

· My husband and I lease a safe deposit box in which we keep all sorts of things for our children and grandchildren. We have written a letter in which we say that everything in the box belongs equally to our children. Will this technique allow our children to receive its contents tax-free?
The Internal Revenue Service is likely to take one of two positions: (1) You have made an incomplete gift and the property will be taxed in the estate of the surviving spouse. Or (2) you owe back gift tax and interest and penalties for not filing a gift tax return.

I have a number of collectibles, including coin and stamp collections, antiques, and paintings. I have specifically listed some of these items for coverage on my homeowner’s insurance policy. Would I be wise to give these items to my adult children, within the annual gift tax exclusion, under custody agreements by which they would ask me to safe-keep them in my home until my death?
Whether this arrangement would withstand an attack by the Internal Revenue Service (for gift tax or estate tax purposes) or by creditors (for enforcement of claims against you) depends upon the answer to two questions:

· Will your estate be filing an estate tax return? If a federal estate tax return is filed, it is likely that the IRS will try to tax the value of the tangibles on the theory that you really did not relinquish control and that you did not make a complete gift that would remove the tangibles from your taxable estate.

· Does your estate have obligations that can be satisfied only from the proceeds of a sale of the assets? If, at your death, you owe money that could be paid only out of the value of the tangibles under this arrangement, your creditors will most likely ask a court to compel your personal representative to retrieve the tangibles, sell them, and apply the proceeds to the satisfaction of your debts.
Both questions might be answered differently if you should actually store the tangibles in a way that prevents you from enjoying them or if they were scheduled on each child’s homeowner’s policy.

· If I have a Swiss bank account, will my estate have to pay a U.S. estate tax on the account?
As long as you are an American citizen or resident of the United States, the IRS will require that the assets in the Swiss bank account be included on your federal estate tax return. The attorney and other professionals assisting in the preparation of the return cannot lawfully permit the person responsible for filing the return to omit the account.

· Is there a way to eliminate the capital gain tax on the sale of a gift?
If you give property directly to charity or to one of several types of charitable remainder trusts and the recipient subsequently sells the property, you and the charity or charitable remainder trust can avoid paying the capital gain tax on the in-crease in value.

· What is the best way to plan for community property?
If spouses are interested in acquiring the survivorship right and avoiding probate, they should seriously consider creating a revocable living trust. The revocable living trust has all the advantages of joint ownership and then some, with none of the disadvantages of joint ownership.