Art of Negotiation: Starting and Pressure Points

Event: ProVisors Panel on Negotiation
Venue: Calabasas Country Club
Location: Calabasas, Los Angeles, Ca
Speaker: Attorney Douglas Schreiber of Anker, Hymes & Schreiber, LLP

Transcription:

Before you go into a negotiation you need to be prepared:

  1. What are your needs?
  2. What are your wants?
  3. What are the other sides weaknesses or pressure points?

I focus a lot on #3.  Here is a great example: My law firm, Anker, Hymes & Schreiber, LLP did some investigation on a matter that has settled within the last few months. We found out that the company we were suing had a deal that they were going to be selling. A very important deal; a very big deal.  Our claim: a thorn in their side.

But we settled this case for more than our value; more than our bottom line because we knew the pressure point of the opposing side. The pressure point was the company had to get this deal out of the way because we were impediment and they stood to make a lot more money from the sale then dealing with us and paying us a little more money.

So there is a situation where the preparation and investigation beforehand got us some information which gave us the exposure or pressure point on the other side that we were able to apply to our advantage.

For more information about our law firm and please contact with our business attorney in Los Angeles.

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Is Your Agreement Worth the Paper it is Written On?

California Supreme Court logoThe California Supreme Court recently answered that question with a resounding “No”.  In one of its early decisions in 2013, Riverisland Cold Storage vs. Fresno-Madera Production Credit Association, the Court rejected what had previously been a long standing exception (since 1935) to what is known as the “parol evidence rule”.  In brief, the parol evidence rule restricts one’s ability to present evidence, in certain situations, that would contradict, alter or add to the terms of a written agreement.

The situation involved a couple who feel behind on their loan payments.  They entered into an agreement which involved the lender agreeing not to take any enforcement action provided they continued to make the newly agreed upon payments.  A representative of the lender told the couple, among other things,  they would have a two year extension on the loan.  When the couple was presented with the mountain of paperwork for them to sign which documented the agreement (which they, not uncommonly, did not read), the actual additional term was three months.

Ultimately the couple sued the lender, claiming that they had been defrauded in that they were told something contrary to what was in the agreement they signed.  The Supreme Court, in a break from precedent that had been in effect for more than 75 years, held the couple could proceed with their claim.  The court did note though that the burden of proving the necessary elements of their claim was significant.

If you have a question regarding this decision or a specific agreement, you can contact our Contract Attorney in Woodland Hills at Anker, Hymes & Schreiber, LLP.

Announcing the Change of Firm Name from Anker Reed HSC to Anker, Hymes & Schreiber, LLP

Anker, Hymes & Schreiber, LLP logoLarry S. Hymes and Douglas K. Schreiber are pleased to announce that Anker Reed HSC has become Anker, Hymes & Schreiber, LLP and will continue the Anker Reed HSC tradition of serving your legal needs in the areas of:

The law firm’s headquarters will remain at its current location:

21333 Oxnard Street, First Floor
Woodland Hills, CA 91367
Phone: (818) 501-5800
Fax: (818) 501-4019

7 Benefits of a Life Insurance Trust

  1. Provides immediate cash to pay estate taxes and other expenses after death.
  2. Reduces estate taxes by removing insurance from your estate.
  3. Inexpensive way to pay estate taxes.
  4. Proceeds avoid probate and are free from income and estate taxes.
  5. Gives you maximum control over insurance policy and how proceeds are used.
  6. Can provide income to spouse without insurance proceeds being included in spouse’s estate.
  7. Prevents court from controlling insurance proceeds if beneficiary is incapacitated.

For more information about Life Insurance Trusts, you can contact our Estate Planning Attorney in Woodland Hills, Los Angeles today.

6 Tips on How to Handle the Responsibility and Potential Liability of Being a Trustee (Part 2) by Rob Cohen

Here are the additional tips continued from “BEING A TRUSTEE IS A THANKLESS JOB: Six Tips on How to Handle the Responsibility and Potential Liability (Part 1)” that might help make your trustee-ship progress more smoothly.

4) Examine the inventory. It is not uncommon for people to set up trusts and then do nothing, assuming that since the documents have been signed the trust is effective. This is not accurate; not only must the trust document be executed, but then the assets must be transferred into the trust, (you must “fund the trust”). Failure to fund the trust is especially common with do-it-yourself websites and computer programs; people mistakenly believe that just having a trust is sufficient. Before a trustee can administer the trust, he or she needs to have assets to administer. When examining the assets, here are some action items to consider.

• If the decedent had a safe deposit box, take possession of it and its contents.
• Consult with banking institutions in the area to find all accounts of the deceased.
• Check for cash and other valuables that may be hidden around the home.
• Locate and inventory all real estate deeds, mortgages, leases, and tax information.
• Provide immediate management for rental properties.
• Locate all household and personal effects and other personal property in order to inventory and protect them.
• Collect all life insurance proceeds payable to the estate.
• Find and safeguard all business interests, valuables, personal property, and important papers.

Ultimately, do your best to make sure that the trust’s assets are actually in the trust. If you identify assets that were not transferred to the trust, ascertain whether they should have been.

5) Take emotion out of the equation.In many situations you can be asked to be a trustee for clients, parents, brothers, sisters, and other family members or friends. When the emotional ties are close, you cannot play favorites. As a trustee you have a huge responsibility and significant exposure. Your actions will be scrutinized and challenged by those beneficiaries who feel they were treated unfairly. Your best bet to avoid personal liability is to be unbiased when dealing with trust matters. If you are not sure about your actions and whether they reflect any bias, ask your attorney.

6) Obtain adequate liability and fidelity insurance. No one is immune to lawsuits, and that includes you in your role as a trustee. To protect yourself, obtain errors and omissions insurance, which protects against claims by beneficiaries that you failed to fulfill your fiduciary duty in the management and administration of the trust. Without the protection of errors and omissions insurance, your personal assets could be “exposed” if a disgruntled beneficiary sues you. It is better to have insurance to protect you and your assets.

Being a trustee is not always an appreciated job, but it certainly is a job with tremendous responsibility. Just remember to be mindful of your duties and ask for advice when in doubt. Trusts contain valuable assets, and as dysfunctional families do not get better when someone passes away, trustees easily can become embroiled in nasty litigation. You may not be able to avoid it, but at least you’ll be able to protect yourself.

For more information on trusts, wills, probate, and the role of trustees, contact Rob Cohen at (818) 501-5800 or emal him at rcohen@ahslawyers.com.

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Understanding Living Trusts: How You Can Avoid Probate, Save Taxes and More FAQ (Part 2)

This is part 2 of the blog series entitled “Understanding Living Trusts: How You Can Avoid Probate, Save Taxes and More FAQ” discussing frequently asked questions about living trusts, probate, taxes and more.

Doesn’t joint ownership avoid probate?
Not really. Using joint ownership usually just postpones probate. With most jointly owned assets, when one owner dies, full ownership does transfer to the surviving owner without probate. But if that owner dies without adding a new joint owner, or if both owners die at the same time, the asset must be probated before it can go to the heirs.

Watch out for other problems. When you add a co-owner, you lose control. Your chances of being named in a lawsuit and of losing the asset to a creditor are increased. There could be gift and/or income tax problems. And since a will does not control most jointly owned assets, you could disinherit your family.

With some assets, especially real estate, all owners must sign to sell or refinance. So if a co-owner becomes incapacitated, you could find yourself with a new “co-owner” — the court–even if the incapacitated owner is your spouse.

Why would the court get involved at incapacity?
If you can’t conduct business due to mental or physical incapacity (Alzheimer’s, stroke, heart attack, etc.), only a court appointee can sign for you – even if you have a will. (Remember, a will only goes into effect after you die.)

Once the court gets involved, it usually stays involved until you recover or die. The court, not your family, controls how your assets are used to care for you. This public process can be expensive, embarrassing, time consuming and difficult to end if you recover. And it does not replace probate at death – your family could have to go through the court system twice!

Does a durable power of attorney prevent the court’s involvement at incapacity?
A durable power of attorney lets you name someone to manage your financial affairs if you are unable to do so. However, many financial institutions will not honor one unless it is on their form. And, if accepted, it may work too well — giving someone a “blank check” to do whatever he/she wants with your assets. It can be very effective when used with a living trust, but risky when used alone.
What is a living trust?
A living trust is a legal document that, just like a will, contains your instructions for what you want to happen to your assets when you die. But, unlike a will, a living trust avoids probate at death, can control all of your assets, and prevents the court from controlling your assets if you become incapacitated.
How does a living trust avoid probate and prevent court control of assets at incapacity?
When you set up a living trust, you transfer assets from your name to the name of your trust, which you control — such as from “Bob and Sue Smith, husband and wife” to “Bob and Sue Smith, trustees under trust dated (date of trust).”

Legally you no longer own anything (don’t panic: everything now belongs to your trust), so there is nothing for the courts to control when you die or become incapacitated. The concept is very simple, but this is what keeps you and your family out of the courts.

For additional questions about trust law, speak with our experienced Estate Planning Lawyer in Los Angeles today.

Continue to: Understanding Living Trusts: How You Can Avoid Probate, Save Taxes and More FAQ (Part 3)

Understanding Living Trusts: How You Can Avoid Probate, Save Taxes and More FAQ

In this blog series, we will be going through frequently asked questions regarding various aspects of estate planning including living trusts, probate, taxes and more.

I have a will. Why would I want a living trust?

Contrary to what you’ve probably heard, a will may not be the best plan for you and your family – primarily because a will does not avoid probate when you die. A will must be verified by the probate court before it can be enforced.  Also, because a will can only go into effect after you die, it provides no protection if you become physically or mentally incapacitated. So the court could easily take control of your assets before you die – a concern of millions of older Americans and their families.

Fortunately, there is a simple and proven alternative to a will–the revocable living trust. It avoids probate, and lets you keep control of your assets while you are living – even if you become incapacitated – and after you die.

What is probate?

Probate is the legal process through which the court sees that, when you die, your debts are paid and your assets are distributed according to your will. If you don’t have a valid will, your assets are distributed according to state law.

What’s so bad about probate?

It can be expensive. Legal/executor fees and other costs must be paid before your assets can be fully distributed to your heirs. If you own property in other states, your family could face multiple probates, each one according to the laws in that state. Because these costs can vary widely, be sure to get an estimate.

It takes time, usually nine months to two years, but often longer. During part of this time, assets are usually frozen so an accurate inventory can be taken. Nothing can be distributed or sold without court and/or executor approval. If your family needs money to live on, they must request a living allowance, which may be denied.

Your family has no privacy. Probate is a public process, so any “interested party” can see what you owned and who you owed. The process “invites” disgruntled heirs to contest your will and can expose your family to unscrupulous solicitors.

Your family has no control. The probate process determines how much it will cost, how long it will take, and what information is made public.

For additional questions about trust law, speak with our experienced Estate Planning Attorney in Los Angeles today.

Continue to: Understanding Living Trusts: How You Can Avoid Probate, Save Taxes and More FAQ (Part 2)


Summary of The 2010 Tax Act

To summarize, the 2010 Tax Act makes significant estate and gift tax changes.  Almost every estate plan needs to be rewritten immediately.  The key points discussed above in the blog series include the following:

  • The estate tax exclusion amount increase to $5 million per person for 2010 through 2012.
  • The gift tax is reunified with the estate tax, and up to $5 million in lifetime gifts will be exempt (over and above the annual gift tax exclusion of $13,000 per donor for every donee each year).  Taxable gifts would be taxed at a top rate of 35 percent.  One would certainly have to make a very large gift to fall into the taxable range.
  • The maximum estate and gift tax rate is reduced from the 55 percent maximum rate under prior law to a maximum estate and gift tax rate of 35 percent for 2011 and 2012.
  • A “portability” provision is included, which allows surviving spouses to use any applicable exclusion amount that is not used by the first spouse to pass away.  This is not only true of very large estates, but also of those smaller estate plans that were drafted when the exemption was smaller and credit shelter trusts and outright bequests were drafted with maximum language.  The net result when such documents are interpreted under the new rules would be to pass entire estates into credit shelter trusts and not provide for other beneficiaries, perhaps not even for spouses.
  • The GST exemption amount is increased to $5 million for 2010 through 2012.
  • The Act sunsets at the end of 2012, thus making the foregoing changes temporary in nature.

As always, we recommend that clients review their estate plans periodically and/or whenever a significant life event occurs (e.g., birth of a child, death of a spouse, purchase of new home, etc.).

For clients with substantial amounts of wealth and with closely held businesses, we highly recommend that such clients consider using lifetime gifts to take advantage of the current $5 million lifetime gift tax applicable exclusion amount, which will expire absent further Congressional action at the end of 2012.

As more becomes known about this Act, we will be available to discuss it further.  If we can be of assistance to you in the area of income tax or estate/gift tax planning, or, if you have any questions or wish to discuss your estate plan in light of the Act, please do not hesitate to contact us.

Please call our office at (818) 501-5800 at your earliest convenience, and we will gladly schedule time to meet with you and review your estate planning documents.  In some cases, no changes will be required.  In others, we will recommend changes.  We cannot know, in advance, whether your documents will require changes to best take advantage of the current state of the estate tax law until we have a chance to review your documents with you.

Nonetheless, we strongly believe that it is important that your estate planning documents produce the result you want.

Start reading from the beginning of this blog series on the 2010 Tax Act:

Important Estate Tax Aspects of the 2010 Tax Act (the “Act”)

Gift Taxes, GST and Misc Effects of The 2010 Tax Act

Gift Taxes

A “gift” is considered any transfer of property (real or personal) without receiving its full value in return.  For gifts made in 2010, the maximum gift tax rate is 35 percent and the applicable exclusion amount is $1 million. For gifts made in 2011 and 2012, the Tax Act limits the maximum gift tax rate to 35 percent and increases the applicable exclusion amount to $5 million.   As discussed below, this change provides an opportunity to move significant amounts of wealth free of estate and gift taxes.

Donors continue to be able to use the annual gift tax exclusion before having to use any part of their applicable exclusion amount. For 2010 and 2011, the annual exclusion amount is $13,000 per donee (married couples may continue to “split” their gift and may make combined gifts of $26,000 to each donee).

Generation Skipping Transfer (“GST”) Tax

The Act provides a $5 million GST exemption amount for 2010 (equal to the applicable exclusion amount for estate tax purposes) with a GST tax rate of zero percent for 2010. For transfers made after 2010, the GST tax rate would be equal to the highest estate and gift tax rate in effect for the year (35 percent for 2011 and 2012). The Act also extends certain technical provisions under prior law affecting the GST tax.

Miscellaneous

The Act also extends through 2012 several modifications enacted as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).

These include:

  • Expanding the availability of installment payments for estates with interests in qualified lending and finance business;
  • Clarifying installment payment provisions, requiring that only the stock of the holding companies, not that of operating subsidiaries be nonreadily tradable.  (Estates taking advantage of these two provisions would have to make the required payments over five years rather than fifteen);
  • Expanding the availability of estate tax installment payments by broadening the definition of an interest in a closely held business; and
  • Allowing a deduction of estate taxes paid to any state or the District of Columbia for decedents dying after December 31, 2009.

The Act further grants extensions of time for the filing of a tax return for certain estates, making tax payments, or making a disclaimer with respect to an interest of property passing by reason of the decedent’s death.  In the case of an estate for a decedent dying after December 31, 2009, and before the Act’s date of enactment, the due date for this compliance will be the date nine months after the date of enactment.

Contact our Estate Planning Attorney in Los Angeles to review your estate plan today.

Continue reading blog series:

General Observations Regarding The 2010 Tax Act

Why (almost) Every Estate Plan in the U.S. Needs to be Rewritten Immediately

Almost every estate plan in the United States needs to be rewritten immediately.  Before the 2010 Tax Act, the federal estate tax was gradually reduced over several years and then eliminated for decedents dying in 2010.  Prior law provided that the estate tax, with a maximum tax rate of 55 percent and a $1 million applicable exclusion amount, would be reinstated after 2010.  Additional changes scheduled for years after 2010 affected the gift and generation- skipping transfer (“GST”) taxes.

The Act reinstates the estate tax for decedents dying during 2010, but at a significantly higher applicable exclusion amount of $5 million, and a lower maximum tax rate of 35 percent.  The exemption will be indexed for inflation, beginning in 2012.  This estate tax regime continues for decedents dying in 2011 and 2012. Unfortunately, this new regime is itself temporary and will sunset on December 31, 2012 and the prior estate tax regime, with a 55 percent maximum estate tax rate and a $1 million applicable exclusion amount, will be reinstated at that time.  There is no guarantee that the rules will remain in place permanently.  Among the range of possibilities is another complete repeal (highly unlikely) or a tightening of the rules.  However, Congress has shown that it has a difficult time generating a consensus on tax issues, so the status quo could continue beyond the next two years.

The Act also eliminates the modified carryover basis rules for 2010 and replaces them with the stepped-up basis rules that had applied before 2010. Property with a stepped-up basis generally receives a basis equal to the property’s fair market value on the date of the decedent’s death. Under the modified carryover basis rules that applied during 2010 before the Act, executors could increase the basis of estate property only by a total of $1.3 million (plus an additional $3 million for assets passing to a surviving spouse, for a total increase of $4.3 million), with other estate property taking a carryover basis equal to the lesser of the decedent’s basis or the property’s fair market value on the decedent’s death.

Leave it to Congress to create a “ginormous” loophole, a historic rift in the entire time-space continuum through which several billionaires waltzed on their way out of this mortal coil, even while TSA agents were frisking, x-raying, and imaging elderly people boarding airplanes.  The Act gives estates of decedents dying during 2010 the option to apply (1) the estate tax based on the new 35 percent top rate and $5 million applicable exclusion amount, with stepped-up basis, or (2) no estate tax and modified carryover basis rules under prior law.

The Act also provides for “portability” between spouses of the estate tax applicable exclusion amount for estates of decedents dying in 2011 and 2012 if both spouses die before 2013. Generally, portability allows surviving spouses to elect to take advantage of the unused portion of the estate tax applicable exclusion amount (but not any unused GST tax exemption) of their predeceased spouses, thereby providing surviving spouses with a larger exclusion amount.   Special limits apply to decedents with multiple predeceased spouses.  To preserve the first deceased spouse’s unused applicable exclusion amount, the executor for such spouse must file an estate tax return and make an election on such return, even if such an estate tax return would otherwise not be required.

Now is the time to take advantage of the increased exclusion amount. Contact our Estate Tax Planning Attorney in Los Angeles today.

Continue reading blog series:

Gift Taxes, GST and Misc Effects of The 2010 Tax Act
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