Navigating the Shifting Landscape of Estate and Inheritance Taxes: A Yearly Odyssey
Estate and inheritance taxes have long been a complex and ever-evolving aspect of financial planning. What might have been a sound strategy one year may be rendered obsolete the next, thanks to changes in federal and state tax laws. In this blog post, we'll explore the dynamic nature of estate and inheritance taxes, including how they can change yearly, the impact of retroactive estate tax laws, and the importance of staying informed to navigate this intricate landscape. The Ever-Changing Landscape States in the U.S. retain the authority to set their own estate and inheritance tax laws, leading to a patchwork ... Read More
Restoring Prop 58: The Howard Jarvis Taxpayers Association’s Initiative to Repeal Prop 19
At Botti & Morison, we are committed to keeping our clients informed about the latest developments in estate planning and tax laws. The recent changes brought about by Prop 19 have had significant negative impacts on estate planning for our clients. Virtually every one of our clients regrets that Prop 19 has passed. Our clients want to know what can be done about it. What follows is what can be done by you. The Howard Jarvis Taxpayers Association (HJTA) is taking a significant step to address these issues with an Initiative Constitutional Amendment set for the November 2024 Ballot. Following, ... Read More
IRS Issues New Rules for ABLE Accounts
ABLE accounts were authorized by the Achieving a Better Life Experience Act of 2014 and can be an excellent resource for individuals with disabilities. Let's take a deeper dive into what these accounts are, how they can benefit certain individuals, and some new regulations issued by the Internal Revenue Service (IRS) in order to clarify some rules regarding ABLE accounts. Who is eligible to open an ABLE account? To be eligible to open an ABLE account, one must be a U.S. citizen or legal resident and an individual with a significant disability that began before age twenty-six. Such an individual ... Read More
Proposition 19 and its Dramatic Changes to the Property Tax Reassessment Landscape
This year California voters surprisingly passed Proposition 19 entitled the “Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act.” In a classic case of “don't judge a book by its cover,” its reach extends far beyond those who were unfortunate to lose a home in a fire. This Act amended the California Constitution. It becomes effective on April 1, 2021, for replacement of primary residences and February 16, 2021, for transfers of ownership. Many fear that Proposition 19 may open the door to further weakening, if not outright elimination, of Proposition 13 down the ... Read More
The Secure Act and its Estate Planning Implications
For beneficiaries of an IRA inheritance, the SECURE Act (Setting Every Community Up for Retirement Enhancement) can significantly impact the amount of time they have available to withdraw the funds available to them. The changes to inheritance tax law brought about by the SECURE Act, passed in December 2019 and taking effect in January 2020, do not affect inherited IRAs where the original owner died in 2019 or before. Though once the initial beneficiary has also died and the IRA is passed to another, the rules effective as of January 2020 will take effect with a few built-in exceptions. In ... Read More
How to Defeat Capital Gains Tax
Conventional wisdom holds that a properly crafted and implemented estate plan serves to defeat two horrible outcomes: probate and conservatorship. Probate is a certainty if something is not done to avoid it, since it is a process which occurs after one’s death. It is the formal process by which title is changed on assets left behind by a decedent – but it is truly a nightmarish process. It is a formal court proceeding which freezes all assets, takes at least 18 months (usually considerably longer), makes one’s personal affairs public, and is essentially a court-sanctioned forum for families to fight. ... Read More
Federal Estate Tax
Understanding the Federal Estate Tax system is extremely important to know about for every citizen. "Inheritance Tax" is not a reference to "Estate Tax" –– however, both terms are often used interchangeably. This is because both fall under the (somewhat morbid) umbrella term "Death Taxes". An Estate Tax is levied against a person’s estate (the “transferor”) upon their passing. An Inheritance Tax is levied against an individual (the “transferee”) receiving a distribution from a deceased person. There is no Inheritance Tax in California. While it is difficult to think about emotionally, estate planning is important. A comprehensive and well-thought-out estate plan determines what happens ... Read More
The Dangers of Joint Tenancy
The origins of Joint Tenancy, the most common form of ownership of real property for co-owners (usually married couples), date back to 16th Century England. The primary reason for its continued popularity is its simplicity. The right of survivorship that is at its core renders the transfer of property between co-owners when one dies essentially automatic. In other words, if two co-owners hold title as Joint Tenants, when the first one dies, the property simply becomes the sole property of the survivor. This simplicity has effectively made Joint Tenancy the “default” form of ownership for co-owners. And this form of ... Read More
