When Improving Quality of Life Means Ending an Unhappy Marriage

The pandemic has been hard on relationships—the stress of working from home, worrying about health and job security while homeschooling kids has pushed many relationships to the brink. Many of us start the year with a promise to improve the quality of our lives. For some couples, ending an unhealthy marriage is the best way to do this.

What to think about if you and your spouse are planning to Divorce in 2021

“Ben” and “Amy” are a good example of a couple who are getting divorced in the new year. For their Amicable Divorce—no children, neither party is contesting the Divorce–they don’t need an attorney. Because they will be able to work out an equitable division of property themselves, Guideway can save them a lot of money. Best of all, we guide them through it. We prepare the legal documents and file them with the court. In California, a Divorce can be finalized in a minimum of six months.

Ben and Amy have been married for eight years

Ben and Amy got married soon after Amy graduated from college–Amy admits that it was probably too soon. She began working for a nonprofit, and Ben was a fireman with the Oakland Fire Department. Ben is 15 years older than Amy and doesn’t want children, and this has created a growing rift. Amy agreed to this condition when they got married, but it turns out that she wants children after all—she wants to be a family. The couple’s assets include their Oakland home, two cars, Amy’s 401k and Ben’s retirement account.

Our initial session was a Zoom call to review the Divorce process

Ben would serve a petition to Amy, which was the beginning of the Divorce process. From this point, they would need to identify the shared assets and debts that they have acquired over the course of their marriage and reach agreement on how they would divide them.

Creating a financial landscape

Divorcing couples need to provide the financial documents that will create a comprehensive financial landscape. These should show both assets and liabilities. You’ll need to gather:

• A list of your financial accounts–checking, savings, money market, life insurance, investment, 401k, credit cards, retirement accounts, etc.
• Account statements, deeds, copies of insurance policies, and other such supporting documentation.
• Tax returns for the past two years, paystubs or other proof of income.
• Information regarding any business interests in which you are involved.

We’ve been assisting couples with divorce since 2003

Divorce can seem overwhelming because it is often accompanied with upheaval—especially if there are children. Yet it is a methodical process, and we guide you through it. If you are considering Divorce or want more information, contact Guideway today.

We service the entire East Bay and North Bay areas

Berkeley, El Cerrito, Richmond, Pinole, Alameda, San Leandro, Castro Valley Newark, San Lorenzo, Concord, Alamo, Danville, Lafayette, Orinda, Moraga, Pleasant Hill, Martinez, Pittsburg, Antioch, Brentwood, Oakley, Discovery Bay, Pleasanton, San Ramon, Livermore, Tracy and Fremont. Our clients also live in the Napa Valley, Benicia, Vallejo, Martinez, Fairfield.

Divorce and Your Money: A Thoughtful Action Plan

Those in the Divorce business will tell you that they experience an uptick in January. No couple wants to disrupt their family’s holiday, so they push the Divorce off until January. They know that it will be emotional and disruptive, even as they try to minimize the effect on their families.

Here are some thoughts on money matters while preparing for your Divorce

The economic realities

The process of itemizing your property and getting an idea of what will be left after you split it up is routine practice in all 50 states. Some people actually decide to reconcile once they see their financial landscape divided in half. Others use this as a reality check and move forward.

Know that your financial circumstances may change

Certified financial planner Lauren Klein has seen clients make poor decisions such as using retirement funds to help them keep the family home, only to see the house lose value and become an enormous financial burden. Many others overcommit in order to keep the home. They end up with a mortgage that could choke a horse, in a neighborhood that’s beyond their means, with a lavish landscape and gardener. They’d be much better off selling that home, taking the money and buying a smaller home in a modest neighborhood that they can afford.

Waiting too long to separate finances

Do not wait to split joint bank and any other accounts that you share. Change your login information and whatever else you need to do to separate your financial lives. Check your credit report periodically to make sure there aren’t any surprises. Remember that your ex has your social security number and knows your mother’s maiden name. One of my colleagues’ divorced husband died and she inherited nearly $750K of his debt—all of it from accounts that he had not canceled or transferred into his name.

Avoid big ticket, emotional buying

Don’t make any major financial decisions until the divorce is final. Most families deal with varying degrees of financial adjustment as they figure out how to support two households rather than just one. Avoid impulsive purchases until the dust settles.

Do not try to hide money or assets

If you try hiding money or assets to keep them out of the “marital estate,” the risks are serious penalties and possible jail time. Bad idea. This is not worth the risk.

Think about your career and making more money. You’re going to need it

If you’re currently not working, try to get a job, especially one with health insurance. If you are working, look for ways to advance in your career or increase your income because a divorcing individual will likely need a 30% increase in income to maintain his/her standard of living.

California Document Preparers has helped hundreds of families get divorced

Our dedicated team has assisted hundreds of couples with uncontested Divorces. If you and your spouse can agree on division of property and a parenting plan, we can save you a considerable amount of money. 

Guided Divorce: A specially trained, neutral third-party

If, however, your situation is more complex and you and your spouse cannot agree on how to divide your assets and raise your children, CDP’s Guided Divorce may be the right solution for you. We’re a specially trained, neutral third-party who work with divorcing couples to guide them through the issues that have stalled their Divorces. Together we reach a mutually acceptable resolution. There’s no judge, no winning or losing. Instead, our Guided Divorce is based on the principles of negotiation, an open mind and compromise.

We’re responsive and available throughout the process. It starts with an office visit to review the Guided Divorce process. Schedule an appointment today to talk to one of our team. We’re helpful, compassionate and affordable.

Divorce and the New Tax Laws: What You Need to Know

As if Divorce weren’t stressful enough, the GOP Tax Cuts and Jobs Act that was signed into law last December may be creating additional anxiety for divorcing couples. If you’re getting divorced or thinking about Divorce, you should absolutely be paying attention to these changes. Not understanding how they will affect your Divorce can be a very expensive mistake.

 1. Tax rates got lowered and the standard deduction got higher

• The new tax law lowered the tax rate for most taxpayers–generally good news, right? It also doubled the standard deduction that every taxpayer who didn’t itemize deductions used to get. That may make you think your income taxes will drop in 2018, but like everything this Congress does, there’s more to the story, and it’s rarely good news.
• Fewer people are likely to itemize next year because the standard deduction–what you can subtract from your income before figuring out how much taxes you owe–is nearly doubling to $12,000 for single filers, $18,000 for heads of households and $24,000 for married couples that file jointly.
• Despite lower tax rates, some filers who usually itemize could see their taxes rise because many popular deductions are being reduced or eliminated. State and local income taxes, sales taxes and property taxes were fully deductible under the old tax law. Now they are capped at a combined $10,000 annually. There are also limits on how much interesthomeowners can deduct on new mortgages.

2. Personal exemptions

• In the past, when you filed your taxes, you claimed yourself and each of your kids as dependents on your taxes. Known as “personal exemptions” or “dependency exemptions,” these tax breaks allowed you to subtract a certain amount of money from your taxable income for every dependent you claimed. The more dependents you claimed, the more money you could subtract.
• When couples divorced, they often argued over who got to claim the kids as dependents on their taxes. The new tax law has eliminated all of these personal exemptions. Beginning in 2018, and continuing through 2025, no one will get a tax exemption for claiming the kids as dependents.

3. Child tax credit

• Before 2018, the child tax credit lowered the amount of taxes that parents paid by $1,000.00 per “qualifying child.” In the new tax law, Congressincreased the amount of the child tax credit to $2,000. They also dramatically increased the amount of money that parents could make before the child tax credit gets phased out. That’s the good news.
• A child only qualifies for the child tax credit for the parent who can claim him/her as a dependent. In your Divorce settlement you still need to negotiate which parent can claim each child as a dependent. If you don’t identify who can claim the child as a dependent, you risk losing the child tax credit. That can be a big deal because the child tax credit directly reduces the amount of income tax you pay. It doesn’t just reduce your taxable income. It reduces your taxes. And really, who wouldn’t want to pay $2,000 less in taxes per year?

4. Education expenses (529 Plans)

529 Plans are special tax-advantaged savings accounts that parents could create to save money for college educational expenses.

• In the past, 529 Plans could only be used to fund “Qualified Higher Education Costs”–college tuition and certain other college expenses.
• Now, if your kids are going to private school, you or your spouse could use the kids’ college money to pay for it. That will save you from having to pay the private-school tuition yourselves.
• Under the new tax laws, parents can take up to $10,000 per year out of a child’s 529 Plan and use it to pay for that child’s elementary or secondary school tuition.
• Deciding what to do with your kids’ 529 Plans is now one more thing you can negotiate in your Divorce.

5. Moving expenses

When a couple divorces, someone has to move out. In many cases, the person who moved out also gets a new job.

• Before this year, if you were moving because of a new job, you could deduct your moving expenses from your taxable income.
• Now, you can’t, and moving can be expensive—this may be something you negotiate in your Divorce settlement.

6. Mortgage interest and HELOC payments

Under the current tax law, you can deduct the interest you pay on your home mortgage. You could deduct that interest if it was on any kind of a mortgage or home equity loan. It didn’t matter if you actually used the money to pay for your home or pay off your credit cards.

• That’s all changed now. The new tax law limits the mortgage interest deduction to interest paid on the first $750,000 of your loan—not $1,000,000.
• To be deductible, the loan must also be used to buy, build, or substantially improve the home that secures the loan. That also applies to home equity loans and lines of credit.
• The IRS has now closed a potential means of cash flow that often made settling your Divorce easier.

7. Medical expenses

The changes to the medical expense deduction are positive. Before, you could only deduct medical expenses that exceeded 10% of your adjusted gross income. Now you can deduct medical expenses that exceed 7.5% of your income. There’s a bigger chance that you’ll be able to deduct medical expenses on your taxes. Congress made this change retroactive to 2017 so that you can take advantage of this tax deduction immediately. But before you get too excited about this, be aware that there’s an insidious component to this tax change.

• From 2019 on, the deduction threshold goes back up to 10%. But get this: Congress just gave us a two-year reprieve on the medical expense deduction.
• In order to deduct medical expenses at all, you must itemize your deductions. Since fewer people will be able to itemize their deductions in 2018, fewer people will be eligible to use this deduction.

8. A repeal of the deduction for alimony payments

In a previous article, we discussed the repeal of a deduction for alimony payments, effective 2019. Potential divorcees have the rest of 2018 to use the alimony deduction as a bargaining chip in their negotiations with estranged spouses. Many believe that removing this deduction will make Divorces more acrimonious, that people won’t be willing to pay as much alimony. Since it is women who tend to earn less and are most often the recipients of alimony, many believe this tax change could disproportionately hurt women.

Consulting a tax professional

Even if you are just thinking about Divorce, it’s wise to consult an accountant or financial planner who can identify problems and opportunities for deductions that may not be apparent to you.

We’ve assisted hundreds of couples with their uncontested Divorces

If you and your spouse are in agreement about your Divorce—including division of property and a parenting plan–we can assist you and help you save a significant amount of money. Contact us at one of our three Bay Area offices to schedule an appointment. Our dedicated team is helpful, compassionate and affordable.

Contemplating Divorce? An Incentive to Finalize by Dec. 31

If you and your spouse are thinking about Divorce, and if there’s a likelihood that your Divorce will include an alimony payment, it’s time to get busy. Last winter’s GOP Tax Cuts and Jobs Act will eliminate a tax break for alimony payments finalized after Dec. 31.

Americans who finalize or modify Divorce agreements in 2019 or later will no longer be able to deduct alimony payments. The loss of the deduction has large financial implications for those couples where one partner earns substantially more per year than the other.

The breakdown: $1 of alimony is actually costing just 60 cents

What does the deduction mean for divorcing couples? For those in the highest income-tax bracket, it means that every dollar someone pays to support a former spouse is actually costing him/her a little more than 60 cents. Potential divorcees have the remainder of 2018 to use the alimony deduction as a bargaining chip in their negotiations with estranged spouses.

An increase in acrimonious Divorces that disproportionately target women

Many believe that removing this deduction will make Divorces more acrimonious, that people won’t be willing to pay as much alimony. More couples will end up fighting in court because they won’t be able to agree on alimony terms. Since it is women who tend to earn less and are most often the recipients of alimony, many believe this tax change could disproportionately hurt women. One family law attorney believes that the repeal reduces the bargaining power of vulnerable spouses, mostly women, in achieving financial stability after a Divorce.

For decades, alimony has been tax deductible

For decades, Americans paying alimony to a former spouse have been able to deduct the payments from their taxes. Depending on the size of the payments and the earning gap, they gave themselves a generous tax break. According to the IRS, an estimated 600,000 taxpayers claim this deduction each year. The Joint Committee on Taxation estimates that elimination of the tax break will increase federal revenues by $7 billion over the course of a decade.

There is evidence that some high-net worth clients are devising complicated workarounds in the event they cannot complete their agreements before the Dec. 31 date.

Leverage to negotiate lower spousal support in 2019

Divorce professionals expect that there will be less money for the spouse receiving alimony — or, at the very least, a major source of contention in negotiations between parties. ”The payer is going to have a lot of leverage to negotiate lower spousal support in 2019,” said Jeremy Runnels, a financial planner at West Coast Financial in Santa Barbara, Calif.

Couples looking beyond alimony to reach equitable solutions

Financial planners say some spouses may choose to forgo alimony payments and explore alternatives such as lucrative real estate, larger shares in tax-deferred retirement accounts or some complex combination of the two that maximizes tax advantages. Options include a Qualified Domestic Relations Order (QDRO) that sets up future payments to a lower-earning spouse from a higher-earning spouse’s retirement account, taxed at the lower earner’s rate.

We’ve assisted hundreds of couples with uncontested Divorce

If you and your spouse are in agreement about your Divorce—including division of property and a parenting plan–we can assist you and save a significant amount of money. Contact us at one of our three Bay Area offices to schedule an appointment. Our dedicated team is helpful, compassionate and affordable.

The Grown Kids of Divorce Look Back

For parents considering divorce, their already busy lives just ratcheted up a few notches. They’re now worrying about the economics, whether they’ll need to sell the family home; they’re wondering how they’ll manage being a single mom or dad. Most of all, they’re worried about how divorce will affect their kids.

The HuffPost published a Reddit thread that asked the now-grown kids of divorce to look back and think about Divorce and the impact it’s had on their lives.

1. Acted out at school; took on more responsibility at home.

   One ten-year old kid admitted to bullying tendencies. Seeing his parents’ marriage dissolve made things worse.“My parents’ divorce increased my bullying tenfold. After a couple of weeks, I started feeling depressed and became really quiet and shy. It was tough not understanding why your dad has to leave and why your mother cries herself to sleep at night. The good news: I stepped up and became a fiercely protective and loving big brother to my younger sister.”

2. Felt a sense of relief.

   This one was fairly common. Many said they spent their teen years wishing their parents would divorce. “My parents wouldn’t divorce because they’re Catholic. Once my mom finally did leave my dad, I was relieved. I remember thinking that I hated my dad and wished he would just disappear. I had to wait until my early 20s for it to happen.”

3. The financial strain of living in a single-parent household.

   Money struggles were a constant in many households. After the divorce, one kid, his mom and sister moved into a one-bedroom apartment. His mom worked two jobs to make ends meet, sometimes picking up a third. “It was all about giving us a good life, which she absolutely did. We may not have had the best clothes or everything we wanted, but she always tried to give us everything she could, and we never went hungry. My mom is incredibly heroic for raising us on her own. I don’t even care that I barely hear from my dad.”

4. The blame game.

Life as you know it changes when your parents split up. Rebellion is common. “I went off the rails. I refused to take responsibility for my own actions and blamed my parents for everything. I bought into the pity and coddling of those around me.”

5. Struggled with the divorce, even as adults.

   Those families who waited to divorce until the kids are grown/out of school don’t necessarily have it any easier.“I was 29 when my parents divorced, and I’d been living away from home for much of that time, but it still hurt because my father is a jerk who waited until my youngest brother turned 18 to officially leave my mother.”

6. They didn’t take kindly to one parent badmouthing the other.

   One kid’s mom had primary custody, and she began to dread weekends with her dad. “The hardest part was listening to all the crap he said about my mom and still does. My dad always told me that I was manipulative and playing games with him. It took me more than 18 years to figure out that I wasn’t a manipulative, game-playing control freak. I was the daughter of one!”

7. They were happy to see their parents thrive after the divorce.

   One child, whose parents’ divorce was distressing at first, became convinced it was for the best by seeing how happy they were without each other!“My dad seems to be excelling at life now. He is more outgoing and independent. He likes to tell me about all the new things he’s doing and the friends he’s making. This is the best thing they could have done for themselves.”

California Document Preparers has helped hundreds of families get divorced. Our dedicated team is responsive and available throughout the process. It starts with an office visit to review the Divorce process, responsibilities and costs. If you’re contemplating Divorce, schedule an appointment today to talk to one of our team. We’re helpful, compassionate and affordable.

7 Ways One Can Benefit from Divorce!

Whether you’re in the process of getting a Divorce or still just thinking about it, you understand the toll that it will take on you and your family. Divorcing couples are faced with the stark reality that they will be starting a new life as a single person, often a single parent, and on a single income. As couples divide their lives, property and parental responsibilities, they are relieved to be ending what is generally a troublesome relationship, but that ending can leave them with significantly fewer assets and retirement savings.

Most of the articles about Divorce are endless discussions of the negative effects on budgets and families. But here’s a look at seven financial benefits that could help make a sad situation a little brighter.

1. Easier budgeting and more control over money

The end of a marriage can mean the end of fights over money. If one spouse is a carefree spendthrift and the other is thrifty, the relationship will inevitably run into serious conflicts. The expenses you and your partner prioritize and the way you spend money are fundamental to a relationship. If this is one of the issues that has driven a wedge between you and your spouse, and ultimately caused your Divorce, you are looking forward to freedom from having to plead with your spouse to rein in spending.

Nancy Hetrick, a senior financial advisor with Better Money Decisions in Phoenix is an example. In the six months after her Divorce to a spendthrift husband, she accumulated $20,000 in savings, while her ex racked up tens of thousands in debt over the same period. This is a dramatic example of different priorities about how to spend money. In this case, it drove a couple to Divorce.

2. Early access to a retirement fund, penalty-free

A Divorce is one of the few times a person can pull money out of a retirement account early and not be slapped with an early withdrawal penalty. If a Qualified Domestic Relations Order is reached as part of a Divorce, it allows for an early withdrawal from the account. This money is exempt from the typical 10% penalty assessed to those younger than age 59 ½. Note that income tax still needs to be paid if the money is not rolled into an IRA.

Cashing out part of a retirement account can be a risky move, and should only be considered after receiving sound financial and tax advice, but it gives the newly divorced some much-needed cash-flow flow at a difficult time when money may be tight.

3. Potentially better investment returns

Divorce could mean better investment returns, at least for women. Men usually take a more aggressive approach to investments and take more risks. After a Divorce, women have the opportunity to take over their own retirement planning, which ultimately can be advantageous.

4. More college financial aid for the kids

Divorce can be hardest on children, but there is one place where they come out ahead–college financial aid. The Free Application for Federal Student Aid (FAFSA) only requires financial information from the custodial parent rather than both parents. However, child support and alimony received from the noncustodial parent must be included on the FAFSA application. Additional financial aid is a little-known benefit of Divorce, but one that can be significant.

5. Social Security perks for older divorcees

Divorced spouses may be eligible to file for Social Security spousal benefits at retirement. If you were married to your spouse for at least ten years, you’re entitled to these benefits. This is something the ex-spouse doesn’t know you’re doing, and it has no impact on the benefits the ex-spouse receives.

If you were 62 by Jan. 1, 2016, you can file a restricted application for Social Security spousal benefits once you hit full retirement age. No longer allowed for younger workers, this application will allow you to receive half of your spouse’s benefit, while you defer your own and let it grow until age 70. For married couples, this only works if a person’s spouse has already started his/her benefit. For divorced couples, you don’t have to wait until your ex-spouse turns on Social Security.

6. Opportunity to reset financial priorities

Many divorced couples end up resenting the lifestyle changes necessitated by their Divorces. Divorce often means selling the family home; membership in the country club may no longer be affordable. Moving to a more modest neighborhood or apartment may be unsettling. Financial experts point out that a Divorce gives people the opportunity to rethink their priorities. It well may be that giving up a family home is a good thing—families are often significantly overextended with huge mortgages, spending more than they can afford, constantly challenged to keep up with their neighbors. Downsizing and living an affordable lifestyle can be a relief.

7. A better bottom line

Divorce doesn’t have to mean a depleted bank account. Even on a lower income, divorced people can build wealth by making smart use of their resources. Not everyone’s financial situation will improve with Divorce, but some people are surprised to learn that it does.

Getting a Divorce isn’t something to rush into, but if you find yourself in the midst of a crumbling marriage, don’t despair. You can still come out ahead. While it is always disruptive and emotionally draining, many couples enjoy new lives that are free of constant tension and bickering.

Are you contemplating Divorce? 

If it’s uncontested, we can help you. Our dedicated team is helpful, compassionate and affordable. Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment.

Summary Dissolution: A Simplified Divorce Process

Remember the old thing about “what happens in Vegas stays in Vegas?” 

Our client, “Matt”, spent a wild weekend in Vegas and ended up married. He and his wife, “Zoe”, realized that whatever happened in Vegas clearly stayed right there. By the time they got home, Matt and Zoe knew they had made a very bad mistake.

Annulments are granted in very limited circumstances, and the court does not consider short-term marriage as grounds for annulment, so they were exploring their options. Zoe was leaving for Mexico in two months, and they wanted to complete any necessary paperwork before she left.

Summary Dissolution: A simplified Divorce process

Fortunately, the California courts offer a Summary Dissolution, a simplified Divorce process. If the parties meet the qualifications, the Summary Dissolution involves fewer steps and less paperwork than a Divorce. The couple submits a joint Petition to the court, and the court sends them a filed judgment order approximately six months and one day from the day the Petition is submitted. (By California law, a Divorce must take at least six months and one day to finalize.)

Qualifications for Summary Dissolution are fairly stringent:

• Fewer than five years between the time the couple got married and the time they separate.
• No children have been born to the two of them before or during the marriage.
• They have no adopted children under 18 years of age.
• Neither is pregnant.
• Neither owns any part of any land or buildings.
• Their community property is not worth more than $40,000 (excluding vehicles).
• Neither has separate property worth more than $40,000 (excluding vehicles).
• The total of their community obligations (other than vehicles) is $6,000 or less.
• At least one of them has lived in California for the past six months or longer and has lived in the county where the filing is occurring for the past three months or longer.
• They have prepared and signed an agreement that states how their possessions and debts are to be divided (or they have no community property or community obligations)
• Both are willing to sign the joint Petition and all related documents to carry out the agreement.

Fortunately, Matt and Zoe qualified for a Summary Dissolution, and they completed our workbook together. We prepared the legal document, the Joint Petition, within a few days, and they came in to sign it and have it notarized. After paying our fee and the county court’s fee, we took the Petition to be filed with the court. After the required six-month window had passed, we called Matt and Zoe and confirmed that they had received their order from the court. Their Dissolution was final, and their brief marriage was officially over.

Family law is an important legal document assistance area for us. We’ve helped hundreds of couples get divorced. For those who may be contemplating Divorce, we are happy to answer questions and explain how we work with our clients. Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment. We’re helpful, compassionate and affordable.

Distribution of Assets: Beware Property Tax Consequences

A recent experience with a Living Trust client brought up an issue that frequently surfaces for those who are dividing their estates among their children. “Joe” and “Marilyn” were planning to gift real property equally to their son, “Tony” and daughter, “Sarah”. In the beneficiary section of the Trust, they also were granting the residue (the remaining assets after all specific gifts have been made) of their Trust estate to Tony and Sarah equally.
In each case they named an alternate beneficiary in the event something happened to either Tony or Sarah. For both the property and the residue, the alternate beneficiary was the other sibling. This seems straightforward, but it creates potentially significant property tax ramifications for Tony and Sarah.

Background: Prop 58 excludes transfer of real property from reassessment

In 1986, voters in California approved Proposition 58, which excludes real property from being reassessed when it is transferred from parent to child. When the primary residence is transferred, there is no limit on the value of the property. For property other than the primary residence, there is a limit of $1 million per transferor.
This means that instead of reassessing the property at its current value, the assessment of the current Prop 13 value results in significantly lower property taxes. For Joe and Marilyn and their family, this means that when the property is transferred equally to Tony and Sarah, there will be no reassessment at that time (if they wish to exercise their exemption).

Sarah and her family are living in the primary residence

The situation gets a little more complicated with this family, as it does with many of our clients. Sarah and her own family are currently living in the property and plan to remain there after Joe and Marilyn die. Sarah can buy Tony out, but the assessor will treat the transfer this time as that of one sibling to another—which means that this time it will be without the exemption, so that 50% of the property would be reassessed at current values. In today’s inflated real estate market, this could result in an increase of a few hundred thousand dollars in assessed value and skyrocketing property taxes.

This scenario caused our clients to reconsider

Joe and Marilyn began rethinking how they would split their estate between their children. If they included the property as part of the residue of the estate, this gave Tony and Sarah additional options. If the Trustee valued the total of the estate and then split the estate, one half could include the home that one child wanted and the other half would include a total of equal real and liquid assets. With this scenario, the transfer of the home to Sarah would qualify for the exemption on the entire value of the home. No buyout would be required and no transfer from one sibling to the other would be necessary—avoiding the potentially huge property-tax burden. Tony could receive real property and assets equal to the value of the property that Sarah was inheriting.
California Document Preparers assists clients with the creation of Living Trusts, transferring property into the Trusts, and assisting Successor Trustees in transferring properties to beneficiaries. We also can assist in transferring property to your children now. The implications of the Parent-Child Exemption should be considered in any Deed transfers between parents and children.
Contact California Document Preparers at one of our three Bay Area offices today to schedule an appointment or to get more information to help make informed decisions. We’re helpful, compassionate and affordable.