As an estate planning attorney, a question that I am asked -- which I used to be asked much more frequently - is what are some pain free ways (translation: not having to hire an attorney) to shield my estate from estate taxes?
Before I directly answer that question, some recent history is helpful.  Through 1997, the unified credit was $192,800 which equaled an exemption amount of $600,000 per person.  In other words, estate taxes were calculated on the amount of the decedent's assets over $600,000. The following chart shows the growth of the individual credit during the last 30 plus years.



 











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​As can easily be seen there has been a significant growth in the amount that an individual can have before his/her estate is subject to estate tax.  A married couple has double the amount or $25,840,000 estate tax free. 
With that being written, the law is slated to "sunset" on December 31, 2025 and then the exemption reverts to $5.49 million (the 2017 amount) adjusted for inflation.
So, what are some easy things that can be done? Give the money away while alive (must be careful with appreciated assets); leave to charity; utilize the annual gift tax exclusion which in 2023 is $17,000 to give gifts to as many people as one wants; and make payments directly to educational (pay the tuition of grandchildren) and medical providers on behalf of loved one.
Even for extremely wealthy people these are effective ways to reduce the estate tax burden.

11. Warren E. Burger
U.S. Supreme Court Chief Justice Warren E. Burger took a do-it-yourself approach to his estate plan. We have all seen the ads or commercials to make your own Will or Trust, unfortunately those who choose to do so often leave their family and loved ones with the mess that results in a poorly drafted Estate Plan. This was the case for Chief Justice Warren Burger who elected to write his own Will.  
 
The 176 self-typed words of the Will that Burger drafted gave 1/3 of his 1.8 million dollar estate to his daughter and 2/3 of his estate to his son. Despite his close ties to the legal system, the document neglected to address several key factors that a properly drafted Estate Plan must address; the most important of which being estate taxes. Because of this, the estate was taxed a hefty $450,000 and his family had to go to Probate court in order to sell his property.
 
Lesson: Even attorneys and judges are frequently not equipped to create their own Estate Plan. The do-it-yourself approach most often leads to unnecessary taxes on the estate, and even Probate court. Meeting with an experience Estate Planning attorney to ensure that you have created a successful plan is the best way to protect your family and loved ones from these (and other) unnecessary negatives.

10. Marlon Brando
The legendary actor was well known for not aligning with convention and often shocked the industry with his behavior. While this added an edge to his public view, it did not lead to a successful Estate Plan.
 
In the weeks leading up to his death, Brando became paranoid and was of questionable mental capacity. Despite this, he signed a Will, thirteen days before he passed away. The document replaced his personal assistant of 50 years and his business manager of 40 with new executors. After his death, this change resulted in nearly 30 lawsuits. The executors that he appointed made several decisions on behalf of the estate that many believe Brando would not have approved of. This included suing numerous individuals and companies, and building an exclusive resort on Brando’s private island.
 
These changes also led to numerous battles between the estate and individuals who claimed that Brando had made them oral promises to certain assets. In the end both the individuals and the estate lost money and time in the legal proceedings.
 
Lesson: Oral promises that are made are by no means legally binding, and making them without backing them up in an Estate Planning document can lead to unhappy friends and family as well as financial losses for your estate. Advanced planning
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8. Heath Ledger 
Heath Ledger is famously remembered for his chilling performance as the Joker in the Batman movie. When he passed away, due to a prescription drug overdose in 2008, he had a Will. The document had been executed three years prior to his passing and left his estate to his parents and sister.
 
Although Ledger had planned for the future in terms of his estate, he did not take into account the life events that followed in the years after his Will was executed. Failing to update his Will meant that his partner and mother of his child; Michelle Williams, along with his daughter (who was born after the Will was signed) were not mentioned.
 
Due to the laws surrounding this issue and the cooperation of his family, Ledger’s daughter received the assets from Ledger’s Estate. However, it is impossible to know for sure if all of Ledger’s wishes were met in this regard.
 
Lesson: Many people draft their Estate Plans and then after they are put away, also put them out of their mind. When major life events occur, in Ledger’s case having a child, Estate Planning documents should always be re-visited. Although there is not a set time for re-visiting your plan, it is recommended that you review it every three years as well as when major life events occur.  
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5. Ted Williams
Baseball legend Ted Williams is another example of improperly updating an Estate Plan. Williams passed away with a Will in place and a holographic Will that was written after the first document was executed. While the majority of circumstances where conflicting documents surface are related to a dispute over money, in this case the dispute was over the disposition of his remains.
 
Williams executed the original Will in 1996, and it stated that the baseball star wanted to be cremated and have his ashes dispersed in the ocean near Florida. However, after his death two of his children from his second marriage came forward with a reportedly grease stained note that had been signed while Williams was in the hospital three years after he executed his Will. The note claimed that Williams desired to be cryogenically frozen instead.
 
The debate caused a split in the family, and even after William’s was frozen, his eldest daughter fought to have his remains unfrozen and cremated. When she ran out of money she was forced to give up on the case.
 
Lesson: When your wishes change, it is crucial to have them properly adjusted to reflect the changes, especially when it comes to something as sensitive as burial or cremation.
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4. Jimi Hendrix 
The music legend and rock icon passed away at 27 without having an Estate Plan in place. At the time of his death his potential heirs included, his father Al, brother Leon, step-sister Janie, a girlfriend who he had been living with, a woman who claimed to be his fiancé, and two children that were born out of wedlock. With no Estate Planning documents, Hendrix’s assets were decided upon in court and went solely to his Father.
 
Al put together his own Estate Plan and sold the rights to Hendrix’s music (making him a reported eighty million), a move he later claimed to have no part in. In the years that followed, he updated his Estate Plan to remove Leon as a beneficiary in order to give his share to his adoptive daughter, Janie. Janie also became Trustee at this time. Because Jimi and Leon were very close growing up, and even toured together after Jimi Hendrix became a house-hold name, this change sent shock waves through the family, and in the end left Leon with nothing.
 
In 2004, Leon sued Janie on grounds of undue influence, and claimed she was taking advantage of Al and pressuring him to remove Leon from his beneficiaries. The attorney’s fees ended up costing Leon a reported three million, and during the trial Janie revealed that Leon was a former drug addict. This not only became public knowledge, but resulting in the court disinheriting Leon.
 
Lesson: Do not procrastinate when it comes to Estate Planning. The battle over Jimi Hendrix’s estate lasted over thirty years and could have easily been avoided with the creation of an estate plan. Many of those who were closest to Hendrix did not receive anything from his estate, which speaks to the unfortunate consequence of neglecting to create a plan.  
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1. Paul Walker 
The star of the Fast and the Furious franchise, Paul Walker, died tragically in a high speed car accident at age 40. The actor was survived by his parents and his teenage daughter, Meadow. At the time of his death, Walker had a Trust as well as a pour-over Will, designed to keep his estate out of Probate and the public eye.    
 
The documents listed Meadow as the beneficiary of his 25 million dollar estate, and appointed Walker’s mother as her legal guardian. Because he had a Trust in place, further details have not been made public, and we only know that Meadow is a beneficiary from the mention of the Trust in his Will.
 
Lesson: While Walker’s Trust was set up in order to keep his assets out of the public eye, because he did not fully fund it – some things were made public. Funding a Trust once it has been created is arguably as important as creating the documents. The vast majority of Estate Planning attorneys do not fund their client’s Trusts. However, when the Trust is signed the attorney should review the funding process and the client should make the steps that are outlined a priority. ​

Like almost anything in life, reverse mortgages can be great if utilized correctly and can result in financial chaos if used incorrectly. 

Reverse mortgages are marketed to older Americans as a means for people to have some extra money so that they may live comfortably.  Borrowers must be at least 62 years of age and must live in the home.  With a reverse mortgage, the homeowner always retains title to their property.  However, they may have little to show for it.

The negative to reverse mortgages is that while the borrower most of the time is not required to repay the loan provided they are living and stay in the home, upon death or moving from the home, the lender frequently becomes the virtual owner of the home.

Usually what happens is that in exchange for giving the borrower money, the lender places a lien on the property.  This allows the lender to be repaid for the loan, fees and interest.  Obviously, this will reduce, sometimes significantly the amount of the inheritance to the heirs of the borrower.  In any event, it is a nonrecourse loan – therefore the lender may not go after the heirs for payment.

As a probate attorney in Culver City, which is just outside of Los Angeles, who handles probates throughout the state of California, I see what happens after someone has passed.  Like anything else, all of the options should be considered before entering into a reverse mortgage.  For some people, it will be the best option.  Others will find that they can do something else and ultimately get a better bang for their buck.  

Consult an unbiased person.  Sometimes an Estate Planning or probate attorney may be helpful. 

In a related vein, people need to think about how they wish to inform their successor trustee/executor of their various passwords.  Once again, there are a variety of ways this can be accomplished.  It just needs to be thought out!

As an Estate Planning attorney, it is my job to point out issues that may arise and help you determine the solution that works best for you and your heirs.  A Living Trust and Will sound so basic, but they can answer so many questions and well-drafted and thought out documents will assist in the legacy of the testator being preserved.

Topics included identifying assets that are subject to the United States transfer tax; planning ideas for the non-citizen client or couple; pre-immigration planning; choosing a guardian for minor children when all of the family is overseas; Canada’s laws and the Canadian citizen; and more!

On the estate tax and gift tax fronts, the laws and rules are different depending on whether someone is a domiciliary; non-domiciliary; or a citizen.  People have to take the time to understand the law as it applies to them; have their Trusts drafted accordingly; and undertake their income tax and Estate Planning based upon their citizenship, domicile, and plans for the future.

From time-to-time, I will write about specific international Estate Planning issues, but just know that it makes the planning puzzle a bit more complex.

We encourage our older clients to be proactive and if they wish to be buried to think about purchasing their burial plot and their casket.  For those that want cremation, we ask them to think about making the arrangements and to detail that information in the estate planning binder that we provide.

For those that do not wish to pre-pay the expenses, we encourage them to make sure their estate has the liquid assets available to make payment.  This can be done in a variety of ways including earmarking an account for the purpose or even purchasing insurance. 

In 1986 Congress passed a tax law that included the federal generation skipping tax (GST).  In a nutshell, the GST only permits an individual to pass a certain amount of money to someone more than one generation removed from him/her without incurring a tax on the transfer.  The tax on the transfer is in addition to any estate tax that might have to be paid and is generally at the same rate as the estate tax rate.  The purpose of the GST is to discourage wealthy people from skipping a generation.  The idea is for Uncle Sam to get estate tax at every generation.

Congress when they passed the law specifically exempted any trusts that were both in existence and irrevocable on September 25, 1985.  Therefore, families like the Kennedys play by a different set of rules than the Gates’ and the Bloombergs.  You see, families inheriting new wealth, have to pay a federal estate every generation; while “older” wealthy families do not have to pay Uncle Sam if they had created irrevocable trusts prior to 1985.

What do you think?  Should families who created irrevocable trusts prior to 1985 continue to get this advantage of a grandfathered GST tax?  Should legislation be passed abolishing the distinction? 

Estate Planning attorneys are sometimes asked to prepare premarital agreements.  When I am asked, it is usually because at least one of the spouses is “older” or is because it is a second marriage for at least one of the spouses.

People often attempt to take shortcuts in the execution of premarital agreements.  Shortcuts can invalidate the agreement.  In California, premarital agreements have to meet certain requirements for them to be considered valid by the court in the event the marriage dissolves and one party seeks to implement the agreement. 

The Agreement should be in writing.  Husband and wife should each have been represented by a different attorney.  Full and complete disclosure of all assets must be made by each spouse.  Moreover, the Agreement should not contain provisions that are hugely unfair.  If so, the entire Agreement is at risk of being thrown out.

The Agreement should be signed at least a week before the marriage; ideally it would be executed much earlier than that.  Moreover, each spouse must have had time to read the Agreement and discuss with his or her attorney.

When people come to me to do their Will or Living Trust, one of the questions I ask is whether they have a premarital agreement.  It is possible that it will impact the way I draft their Estate Planning documents.  

There needs to be a mechanism in place that provides for the orderly transfer of the business.  Some estate planning attorneys are recommending the creation of a special asset trust to manage the business immediately after the death of the owner of the business.  This allows for key business decisions to be made by individuals pre-selected by the owner.

An estate planning attorney with experience in business succession planning is essential to the smooth continuation of a “small” business.

The State  Bar of California’s review department did not “buy” Ms. Lowney’s explanation.  They found that she had been given the money as a fiduciary, and therefore committed an act of moral turpitude by taking the funds.  The review department recommended that Ms. Lowney be disbarred.

I am not sure what the moral of this story is as events like this one do not happen every day.  Very few estate planning or probate attorneys enter into relationships with their clients.  Nevertheless, there are unscrupulous attorneys and we should all be cognizant of that fact.