Taxation on Sale of Rental Properties

Taxation on Sale of Rental Properties

Estate Planning for Newlyweds:

The Essentials

As life settles down after the big day, reality settles in for day-to-day practical issues.  Included in these should be preparing an appropriate estate plan, which is a responsible step in the unfortunate event that one spouse becomes incapacitated or passes away.  Here are essentials to consider:

Meet with a skilled estate planning attorney – Discuss your goals, such as providing for loved ones, mitigating or avoiding probate, minimizing taxes, providing for the orderly asset distribution and stewardship, protecting assets, and planning for incapacity.

Compile documentation – This process will help not just in estate planning but also in other processes you’ll encounter. Centralize (digitally and in print) your marriage certificate, birth certificates, citizenship documentation, social security cards, passports, armed forces IDs, prenuptial and postnuptial documents, and documents for your children.

Gather asset information – Your attorney should provide an asset questionnaire, including: trust deeds of home(s) and rental properties, vehicle titles, and other valuable personal property, banking, retirement, life insurance, and other financial accounts.  Be sure to discuss “Community vs. Separate Property” and “Common Law States” with your attorney, as it applies to your situation.

Review beneficiaries – As you set up new bank accounts, it is important to consider how you list beneficiaries; there are myriad ways to title your assets once you’re married, such as joint-tenancy and Tenants-in-common.  Review all accounts to reflect your spouse as the new beneficiary or transfer on death designation (checking/savings, investments, retirement/pensions, property titles, etc.).

Retirement plan – The distribution of your retirement plan and IRA accounts should be thoroughly considered. If you designate your spouse as the beneficiary, he or she has the advantage of being able to roll over your IRA and take minimum distributions, which is an excellent means of support for your spouse during retirement years.  However, in this case, your spouse may designate new beneficiaries after your death, and any balance in the retirement funds may not go to your children. If you designate your children as beneficiaries, you deprive your spouse of any use of the funds in your plan during his or her lifetime, but ensure that your children will inherit your retirement funds. 

Create wills and trust –  A will is a legal document detailing what an individual wants to happen after they die. This includes their final wishes regarding their remains as well as how they want their money, assets, and property to be distributed (e.g., your spouse named as the primary beneficiary).  It should be noted that if your estate plan consists of a will alone, you are spouse will likely have to go to court if you become incapacitated or upon your death.  Instead, a living or revocable trust does not require going through probate; if your assets are properly titled, they would pass directly to your spouse upon incapacity or death, without the need for any court intervention.

Powers of attorney –  A power of attorney (POA) is a document that allows you to appoint someone to manage your money, property, and medical decisions if you become unable to do so yourself. There are several types of POAs for different situations, so always speak to a lawyer to determine the best option for your situation.

Advance medical directive – This allows a person to dictate how they wish to be cared for in a life-or-death situation.  It lets your physician, family, and friends know your health care preferences, including the types of special treatment you want or don’t want at the end of life; diagnostic testing; approval or disapproval or certain surgical procedures; the location of your primary care facility; medications to avoid; whether or not to attempt cardiopulmonary resuscitation; and organ donation.

Pre- and post-marital agreements – These agreements help protect each party and streamline the process for their families, in the event of a divorce or after they have passed.  Also, such agreements will help ensure that your assets are taken care of in case something unforeseen happens to you.

Second marriage – Merging two families and finances inevitably brings additional challenges. Think through every scenario, addressing issues such as death of either spouse, stepchildren, future children, in-laws, aging grandparents, etc. See “Estate Planning for Blended Families” for details.

Life Insurance – Adequate life insurance can help prevent a surviving spouse’s already difficult situation from becoming worse. Your estate planning attorney should be consulted in the process, such as identifying opportunities to change insurance policies to minimize taxation.

Specialized Estate Planning for Newlyweds

Taking the time and effort to create an estate plan is one of the most thoughtful steps you can take for your family and loved ones.  The attorneys at Mortensen & Reinheimer, PC thoroughly understand the estate planning needs of newlyweds. Please contact Mortensen & Reinheimer, PC at (714) 384-6053 to make an appointment, or use our online contact form. Our website is http://www.ocestateplanning.net.

About the author:
Tamsen R. Reinheimer, Attorney, is a Certified Specialist in Estate Planning, Trust & Probate Law (The State Bar of California Board of Legal Specialization). She has significant experience in all aspects of estate planning, trust administration, and probate. Contact Tamsen at tamsen@ocestateplanning.net.

Do You Own Business Holdings?

How to Make it Easier for your Survivors

If you or our spouse own a business, it is important to fully address ownership and taxation issues in your estate plan.  This is a complex area but we’ll address some of the more common concerns.

What Should an Estate Plan for Business Owners Include?

An individual’s estate plan should include wills, will substitutes, trusts, power of attorney, medical directives, and tax considerations.

Business owners will also want to discuss these items with their estate planning attorney:

• Trusts – A trust can help business owners to minimize tax consequences and pass on assets outside of probate.  It can also address management issues such as the process for appointing a successor and requiring shareholders’ consent in order to take certain actions.  Also, consider whether it should be revocable (can be changed, altered or even terminated completely during your lifetime) or irrevocable (permanent); if you were to transfer business assets to an irrevocable trust, you could not take them back out.
• Financial Power of Attorney – This can help to ensure continued business operations if you are unable to run it yourself.
• Insurance – A life insurance policy can help to ensure your family has liquidity (a source of income) if they lose access to the company’s funds when you pass away.  “Key person insurance” is designed to protect a business from losses in the event of death.  Consider buying both short-term and long-term disability insurance if you’re concerned about getting hurt or developing a debilitating illness.

Who Gets It?

As with other assets in your estate plan, deciding what will happen to your business is crucial for your heirs.  Some considerations:

• Buy-sell agreement – A buy-sell agreement is a contract that specifies how the ownership portions of a business may be reassigned upon death or retirement.  It also should determine the valuation method.  Depending on the documentation and specific circumstances, your heirs may decide to buy out the co-owners or sell it to them.
• Fully-owned business – If you own 100% of your business, it makes ownership transfer easier:
  • Selling the business: Depending on the situation, either the trustee or a person who inherits the business will have the right to sell it.
  • Retaining the business within the family: There are a number of items that should be clarified in advance, in order to ease the transition and avoid family squabbles.  These include:
    • Fairness in distribution – While the perception might be that “fair” clearly means an equal split of all assets to beneficiaries, this isn’t necessarily the case. In some circumstances, fair/equitable distribution (unequal distribution) better suits the trustor’s goals.  For example, a business might have substantial assets (i.e., valuable if sold) but poor cash flow (in which case, the heir may be forced to sell the business in order to have a similar a cash distribution as compared to other heirs).
    • Multiple owners – Some business owners want to split ownership, such as half to the spouse and half to the children. In this case, it is important to consider who will be in charge of your business; some or all of your family members may not be appropriate selections but perhaps there is a key employee or business colleague that could help run the business.
    • Support for surviving spouse – If your spouse will rely upon income from the business, it is important to set up a long-term structure to support those needs (whether that means keeping the business as a going concern or selling it and managing the proceeds). 

What is Succession Planning?

In order to ensure a smooth transition of ownership and management in case of incapacity or death, a “succession plan” should be considered in conjunction with your estate plan.  This will help in preventing disruptions to company operations, minimizing potential estate taxes, and providing financial security for heirs or chosen successors.

Succession planning involves how your business will be continued after your death.  This might include management structure, tax planning, operational plans, financing (especially if you have a personal guarantee for bank loans/lines of credit), etc. It typically, but not always, addresses ownership.  Without this planning, your heirs can become absorbed with figuring out bank loans, outstanding accounts receivable, different business divisions or entities, real estate holdings, or various partnership arrangements.  Succession plans are typically developed with your CPA firm in conjunction with your estate planning attorney.

On the other hand, estate planning determines who gets ownership of your property when you die.  If you own a corporation, stock in that corporation can be distributed to heirs, while if you own a sole proprietorship, your business assets are personal property and will be distributed according to your estate plan.

Specialized Estate Planning Expertise for Business Owners

As a business owner, taking the time and effort to create an estate plan is one of the most thoughtful steps you can take for your family and loved ones.  For many families, the less decisions that are left for your heirs, the better it is for all concerned.

If you need legal expertise in addressing your specific estate planning needs, please contact Mortensen & Reinheimer, PC at (714) 384-6053 to make an appointment, or use our online contact form. Our website is http://www.ocestateplanning.net.

About the author:
Tamsen R. Reinheimer, Attorney, is a Certified Specialist in Estate Planning, Trust & Probate Law (The State Bar of California Board of Legal Specialization). She has significant experience in all aspects of estate planning, trust administration, and probate. Contact Tamsen at tamsen@ocestateplanning.net.

Continuing our series on weight loss after medications, many patients notice extra skin in the abdominal region. Also, sometimes in the inner arm and thigh regions.

Fortunately, there are effective surgical options available to help address these concerns.

What is Body Contouring?

Body contouring after weight loss can be the next step in the journey of self-improvement and well-being.

Body contouring, also known as body sculpting, involves surgical procedures to remove extra skin and/or liposuction to remove unwanted body fat.

• Excess skin removal – Many women and men who have had significant weight loss opt for removal of excess skin with a tummy tuck. This body contouring procedure allows you to lead a more active, fulfilling life, as well as boost self-confidence, satisfaction with your appearance, and overall well-being. Other potential benefits can include improved comfort and mobility, and reduction in rashes and fungal infections between skin folds.

• Liposuction – Liposuction is a cosmetic procedure used to remove excess body fat from specific areas of the body, such as the hips, abdomen, arms, and thighs. It can change the body’s shape and contour.

Why Do Body Contouring?

When you’ve done a lot to get yourself healthy and reduce weight, the next step toward improved appearance and quality of life might be body contouring.

We invite you to come in for a consultation with Dr. Zeineh.  Please call us at 657.722.1400.

We look forward to seeing you.

---

 

About Linda L. Zeineh, M.D., FACS

Dr. Zeineh is an active member of the American Society of Plastic Surgeons and the American Society for Aesthetic Plastic Surgery. She combines over 18 years of experience with cosmetic and reconstructive surgery in private practice with new technology and techniques in the care of her patients. Her first priority is the satisfaction and well-being of her patients, providing compassionate and personalized care.

A complete range of non-surgical and minimally invasive rejuvenation procedures are personally performed by Dr. Zeineh on her patients to achieve and maintain a youthful, refreshed, and natural appearance, including facial injections, skin tightening and facial/body contouring. Surgical procedures that Dr. Zeineh performs include: facial rejuvenation, body contouring, reconstructive and cosmetic breast surgery, and reconstructive surgery.

Will vs. Living Trust vs. Living Will: Key Differences

When an estate plan is developed, some of the key components include a will, living trust, and living will.  Since these terms are frequently confused, let’s look at each and explain the differences.

What is a Will?

A will is a legal document detailing what an individual wants to happen after they die. This includes their final wishes regarding their remains, as well as how they want their money, assets, and property to be distributed. It also allows individuals to name a personal guardian to care for minor children, and a person to manage property if it must be left to minor children. However, a will does not allow you to entirely avoid formal probate in California (except in cases of Small Estate Affidavits or Spousal Set Aside). Instead, a will may allow streamlining of the probate process.

What is a Living Trust?

Much like a will, a living trust (also called a “revocable living trust”) documents how you want your affairs handled after you pass away.  The major difference between a will and a living trust is that living trusts do not require going through probate (i.e., Probate Court).  Additionally, a living trust will take effect as soon as it is created – it allows you to control your assets (real property, personal property, investments, cash, etc.) while you are still alive, but then have it distributed to beneficiaries upon your death.

There are numerous considerations to having a living trust, so consider the pros and cons with your attorney.  In addition to not requiring going through probate, a living trust can also: safeguard your assets if you become mentally incompetent; provide more flexibility and control over the timeline and disbursement to beneficiaries; and maintain privacy, since it is managed by the trustee and not entered into public court records.  On the con side, a living trust is more complex than a will, and involves paperwork and record-keeping, which can be costly and time-consuming.

What is a Living Will?

Another name for a “living will” is an “advance healthcare directive.” This allows a person to dictate how they wish to be cared for in a life-or-death situation.  It lets your physician, family, and friends know your health care preferences, including the types of special treatment you want or don’t want at the end of life.  It also specifies your desire for diagnostic testing; approval or disapproval or certain surgical procedures; the location of your primary care facility; medications to avoid; whether or not to attempt cardiopulmonary resuscitation; and organ donation.

Do You Need Some or All of Them?

While you should seek the advice of your attorney on the appropriate selection of these documents for your situation, some generalizations can be made.  Most people who wish to have an estate plan are thinking about the impact of their passing on their loved ones.  As such, a living will/advance health care directive is typically recommended to ease decision-making in a life-or-death circumstance.  As for a will, your attorney can advise whether to include both it and a living trust in your estate plan, which can allow you to take advantage of each tool’s benefits.  The use of a living trust is less clear-cut, so discuss the pros/cons and your specific situation with your attorney.

Specialized Estate Planning Expertise

Taking the time and effort to create an estate plan is one of the most thoughtful steps you can take for your family and loved ones.  For many families, the less decisions that are left for your heirs, the better it is for all concerned.

At Mortensen & Reinheimer, PC we have decades of experience in helping clients to navigate through myriad issues in estate planning.  If you need legal expertise in addressing your specific estate planning needs, please contact Mortensen & Reinheimer, PC at (714) 384-6053 to make an appointment, or use our online contact form. Our website is http://www.ocestateplanning.net.

About the author:
Tamsen R. Reinheimer, Attorney, is a Certified Specialist in Estate Planning, Trust & Probate Law (The State Bar of California Board of Legal Specialization). She has significant experience in all aspects of estate planning, trust administration, and probate. Contact Tamsen at tamsen@ocestateplanning.net.

Breast Lift and Implant Options

Weight loss medications are in high demand in the United States. With the success of weight loss comes the after-effect of excess skin, and with it many women are drawn to plastic surgery to improve the appearance of their breasts.

As with other parts of the body, changes seen in the breasts due to major weight loss may hinder a woman from feeling good about her appearance.

Many women have been coming in to our office for an evaluation to improve the position and volume of the breasts after weight loss. Options include a breast lift and/or an implant. Of course, the changes that have occurred in skin quality (sagging), and volume (size) vary, so Dr. Zeineh discusses with each patient the best way to achieve their goals.

Men – Gynecomastia/Breast Reduction

Male patients may also notice extra tissue in the chest region after significant weight loss. Quite often this excess tissue is not responsive to additional dieting or exercise, and the visible impact can understandably affect body image.

Surgical options to resolve these concerns include liposuction and also skin removal and lifting the tissue. This surgery is performed as an outpatient procedure. Most patients return to work within a week.

Book Now to Fit Your Schedule!

We invite you to come explore your options for your best look.  Book now for your appointment – contact us now at 657.722.1400 to lock-in a time that is convenient for you.

We look forward to seeing you.

---

 

About Linda L. Zeineh, M.D., FACS

Dr. Zeineh is an active member of the American Society of Plastic Surgeons and the American Society for Aesthetic Plastic Surgery. She combines over 18 years of experience with cosmetic and reconstructive surgery in private practice with new technology and techniques in the care of her patients. Her first priority is the satisfaction and well-being of her patients, providing compassionate and personalized care.

A complete range of non-surgical and minimally invasive rejuvenation procedures are personally performed by Dr. Zeineh on her patients to achieve and maintain a youthful, refreshed, and natural appearance, including facial injections, skin tightening and facial/body contouring. Surgical procedures that Dr. Zeineh performs include: facial rejuvenation, body contouring, reconstructive and cosmetic breast surgery, and reconstructive surgery.

Are You a Caregiver? What You Need to Know About Estate Planning

(Editor’s note: This article will deal primarily with caregiving for the elderly, particularly as it relates to family members providing for daily care and helping with estate planning concerns).

Along with the many other day-to-day duties of a caregiver, attending to estate planning for those they look after can help give peace-of-mind for all concerned.

Quite often caregivers are the same family members who make sure the parents (trustees) have an estate plan, as well as preparing contingency planning for health care.  Further, it is important to complete estate planning while the trustees still have the capacity to do so.  This can help ensure that the trustee’s wishes are respected and their affairs will be managed in the best way for their needs.

So, it is important for family caregivers to know what should be included in an effective estate plan, in particular, as it impacts themselves and the person for which they are providing care.  The following key components should be evaluated and discussed with an estate planning attorney:

• Will – A will is a legal document detailing what an individual wants to happen after they die. This includes their final wishes regarding their remains as well as how they want their money, assets, and property to be distributed.
• Living Trust – Much like a will, a living or revocable trust also documents how you want your affairs handled after you pass away. The major difference between a will and a living trust is that living trusts do not require probate. Additionally, a living trust will take effect as soon as it is created.
• Advance Health Care Directive – This allows a person to dictate how they wish to be cared for in a life-or-death situation. It lets your physician, family, and friends know your health care preferences, including the types of special treatment you want or don’t want at the end of life, your desire for diagnostic testing, surgical procedures, cardiopulmonary resuscitation and organ donation.
• Power of Attorney (POA) – This document that allows you to appoint someone to manage your money, property, and medical decisions if you become unable to do so yourself. There are several types of POAs for different situations, so always speak to a lawyer to determine the best option for your situation. 

What if the caregiver is giving up their livelihood or lifestyle?

Family caregivers often devote a great deal of their lives to caring for a loved one, giving up their other life interests and even stopping working.  Quite often, the caregiver is also a beneficiary, so it is common for these contributions to be acknowledged through compensation while providing the care and/or a special allocation from the trust assets (which sometime involves gifting the residence).  This should be explained to other relatives while your loved one is still able to convey their wishes, as well as being clearly detailed in estate planning documents. 

How are long-term care costs handled? 

If you are the primary caregiver for a loved one and it is determined that a long-term care facility better suits their specific needs, the estate plan can designate specific funds from the estate to cover those costs.  Of course, this possibility should be addressed in advance while the trustee has the capacity to work with legal counsel in preparing the estate plan. 

There are many other estate planning-related concerns that caregivers may have, such as: 

• What are my legal responsibilities?
• How do I interact with the executor?
• If something happens to me, who will take over my role?
• What if the loved one has dementia?
• If the loved one dies, what do I need to do?
• Who will take care of the possessions?

Talk with an experienced estate planning attorney about these and other concerns.

Decades of Experience Working with Caregivers and Trustees

The role of a caregiver in today’s world is increasingly important, especially since many elderly people prefer to stay at home instead of moving to a senior care facility.  As can be seen, there are many issues and questions to be addressed in order for a caregiver to clearly understand and fulfill his or her role.  Further, attending to these items can be crucial in heading off family conflicts.

It is important to document one’s wishes before it’s too late, so whether you are the trustee or a family caregiver,  we invite you to contact Mortensen & Reinheimer, PC at (714) 384-6053 to make an appointment, or use our online contact form. Our website is http://www.ocestateplanning.net.

About the author:
Tamsen R. Reinheimer, Attorney, is a Certified Specialist in Estate Planning, Trust & Probate Law (The State Bar of California Board of Legal Specialization). She has significant experience in all aspects of estate planning, trust administration, and probate. Contact Tamsen at tamsen@ocestateplanning.net.

Leap Year Specials on 4 Popular Procedures

ONLY 2 WEEKS LEFT FOR 30-DAY SPECIAL!

2024 is a special year because it is a leap year, a once-in-4-years event.  In celebration of leap year, we are offering a 30-day special on 4 of our most popular facial rejuvenation procedures:

• BOTOX® 
• DAXXIFY® 
• RHA® Collection, the “Designer Filler”
• Threadlifts

5th Option! As an added bonus, we are including the new injectable SkinVive^TM from Allergan, as part of this 30-day special.  SkinVive^TM is an injectable gel to improve skin smoothness of the cheeks, “The first and only FDA approved hyaluronic microdroplet injectable in the US to improve skin smoothness of the cheeks, increase hydration, and provide a lasting glow.”

Book Now to Fit Your Schedule!

We invite you to come explore your options for your best look.  Book now for your appointment – the special runs from Feb 29 through March 31^st, so contact us now at 657.722.1400 to lock-in a time that is convenient for you.

To accommodate your schedule, Saturdays are also being offered in March!

We look forward to seeing you.

---

 

About Linda L. Zeineh, M.D., FACS

Dr. Zeineh is an active member of the American Society of Plastic Surgeons and the American Society for Aesthetic Plastic Surgery. She combines over 18 years of experience with cosmetic and reconstructive surgery in private practice with new technology and techniques in the care of her patients. Her first priority is the satisfaction and well-being of her patients, providing compassionate and personalized care.

A complete range of non-surgical and minimally invasive rejuvenation procedures are personally performed by Dr. Zeineh on her patients to achieve and maintain a youthful, refreshed, and natural appearance, including facial injections, skin tightening and facial/body contouring. Surgical procedures that Dr. Zeineh performs include: facial rejuvenation, body contouring, reconstructive and cosmetic breast surgery, and reconstructive surgery.