Estate Planning

Living Trust | Pour-Over Will | Durable Power of Attorney | Advance Health Care Directive | Facilitated Family Meeting

Mediation/Family Counseling Services

Kelly Rose Mason is a trained mediator in the field of trust and estate disputes. Conflict around an inheritance dispute or a will contests can often benefit from mediation rather than litigation. 

Trust Administration / Probate Services

When a loved one has passed away, we are here to help guide the executors/trustees through the process of settling the estate.

Family Meeting Facilitation Services

Speaking to loved ones about your wishes can be a challenging and uncomfortable process. Kelly Rose Mason uses her mediation skills to facilitate these conversations between family members.


How Proposition 19 affects your Estate Planning

How Proposition 19 affects your Estate Planning

What is Proposition 19?

Proposition 19 is a measure to change Props 13 and 58 in California. As you probably know, Proposition 13 passed in 1978 and limited property tax increases to 2% annually unless reassessed due to sale or other transfer. Because of Proposition 13, property tax valuation of properties in California is much less than the actual current market value. Proposition 58, passed in 1986, authorized the owners of property to transfer property to their children and grandchildren with the same low property tax basis. This affects the personal residence (regardless of value or who will live there) plus $1Million in additional property.

Current California law also allows a qualified homeowner (aged 55 or over, disabled, or a natural disaster victim) to move to a participating in-state county once, and carry the assessed value of their property with them when moving to a home with a lower assessed value.

How Does Proposition 19 Change Property Taxes?

Proposition 19 amends the current legislation adopted in Propositions 13 and 58. It allows qualifying owners (over 55 years of age, physically disabled or natural disaster victims) to move into a house of lesser value up to three times in the State and to carry their lower property tax assessments. This is great news for homeowners, but you should be aware; Proposition 19 also amends the law on inheriting property. Under proposition 19, all real estate will be reassessed at death, with the exception of a primary residence worth less than $1 million that a child actually moves into (if worth over $1M the balance is reassessed).

Again, before Proposition 19 goes into effect on February 16, 2021, property owners can leave or gift their primary residence and up to $1 million in assessed value of other real estate to their children (and qualifying grandchildren) and the assessed value would transfer with the property. Under Proposition 19 the preferential valuation can only be transferred under the following conditions:

How Will This Look for Me?

Let’s look at a case in point:

Amy owns her first home, now worth $2 Million, with an assessed value of $300,000. She pays $3,600 a year in property taxes. The property tax would be approximately $24,000 a year if it were to be reassessed at current fair market value. Amy also has rental home with a cost basis of $250,000 and $1.2 million current valuation. The property taxes Amy pays are $3,000 a year for the rental, but the property tax would be about $14,400 if it was assessed at current fair market value. Amy is planning on leaving her property to her son David.

Before Proposition 19, if Amy dies, David would pay the same property taxes that Amy had been paying, totaling about $6,600 per year. Just as with Amy, property taxes will increase only 2% per year.  After Proposition 19, once the properties pass to David, they will be reassessed to about $26,400 if David moves into the house, or $38,400 if David does not move into Amy’s house.  

What Can You Do Now?

So what do we recommend someone like Amy do? Proposition 19 will go into effect on February 16, 2021, so before that date, Amy should consider transferring one or both properties to David. If Amy does this, David will not face the reassessment to fair market value of the property and would not have to move into Amy’s home.

Such transfers must be made by February 15, 2021. Any transfers after February 15, 2021 will be subject to the rules of Proposition 19.  There are very serious downsides to making real property gifts. First, you would have to file a gift tax return using part of your $11,580,000 lifetime gift and estate tax credit to avoid paying taxes on this gift. This may be a very good use of the $11,580,000 credit, which is set to drop by 50% in 2025, if not lowered sooner by the new administration.     

The second major consideration is cost basis. When you gift property, the recipient keeps your lower cost basis. When you die, your heirs get a stepped-up basis, which would allow them to sell real property with no capital gains tax, or depreciate income property as it if just purchased. This is a huge tax benefit that must be considered when making gifts. A gifting strategy would clearly work best for a valuable primary residence (worth over $1 Million) that your child plans to live in, then pass along to his or her heirs. You can avoid gift taxes using your lifetime credit, there would be no capital gains tax as the property will not be sold during your child’s lifetime, and your low property taxes have been preserved. 

One possible strategy is available for other property, such as rentals, commercial property and land. Consider transferring the property into a corporation or LLC, then your children or grandchildren can inherit shares of the business and there will be no change of ownership on the actual deed to trigger reassessment. This is a current loophole that the counties will try to close, and may or may not be an effective tool for avoiding reassessment.

Other benefits of this strategy are (1) asset protection (2) advanced gifting opportunities by giving stock/shares (3) possible estate tax reduction in the value of the property owned by the business entity if you do not own 100% of the shares/stock by gifting shares/stock to your heirs, and (4) no February 2021 deadline. This is a complicated and important issue. Proceed carefully and make informed decisions together with an attorney and CPA. Personal residence gifts must be made before February 16, 2021, to take advantage of Prop 13.

Will Proposition 19 affect your family? Consider if it makes sense for you to gift your home or move the property into a business entity.

Understanding How the new SECURE Act Affects Your Retirement and Estate Planning

Understanding How the new SECURE Act Affects Your Retirement and Estate Planning

The Setting Every Community Up for Retirement Enhancement Act, called the SECURE Act, was signed into law on December 20, 2019 and went into effect on January 1, 2020. It is the most impactful legislation affecting retirement accounts in decades.

The SECURE Act as a whole brings some simple, straightforward, beneficial changes: 

  1. It delays the age for required minimum distributions from retirement accounts from 70 ½ to 72 years of age for distributions required to be made after December 31, 2019; and
  2. It repeals the maximum age for contributing to traditional IRAs, allowing you to keep contributing to an IRA if you are still working or your spouse is still working over age 70.5. 

This is good because we are typically working longer as our longevity increases, and so we may want to keep contributing to our retirement accounts and accumulating tax-free growth. 

However, (and this is a big “However”), the SECURE Act offsets these beneficial changes by requiring less favorable distribution requirements for most beneficiaries, meaning the people who will get your retirement account after you die.

Under the old law, the beneficiaries of your inherited retirement accounts could elect to stretch distributions over their own life expectancy. For example, an 18-year old beneficiary with a 65-year life expectancy could stretch out the distributions from an inherited retirement account over 65 years. This allowed a beneficiary to minimize the amount withdrawn in any year, and allowed for the assets left in the account to continue to grow without being subject to income tax.

The SECURE Act, in contrast, requires most designated beneficiaries to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death.

The SECURE Act does provide a few exceptions to this new mandatory ten-year withdrawal rule:

  1. A surviving spouse named as an outright beneficiary of a retirement plan still has the option of rolling over the benefits to his or her own IRA or taking distributions based on his or her own life expectancy.
  2. Beneficiaries who are less than ten years younger than you can still take distributions based on the beneficiary’s life expectancy.
  3. Your minor children, who have not reached the “age of majority” don’t have to deplete the account until 10 years after they reach the “age of majority.”  But that still would be a much shorter “stretch” than previously available.
  4. Disabled individuals and chronically ill individuals can take distributions based on their life expectancy.

Apart from these exceptions, opportunities for stretching the IRA over an extended period of time will no longer be available.

Depending on the value of your retirement account, you may have addressed the distribution of your accounts already in your Will, Revocable Trust, or you may have already created a Standalone Retirement Trust to handle your retirement accounts at your death.

Your Will or Revocable Trust may have included a “conduit” provision. Under the old law, a trustee of a trust that included a conduit provision would only distribute required minimum distributions or RMDs to the trust beneficiaries, allowing the continued “stretch” based upon their age and life expectancy.  A conduit trust protected the 

account balance, exposing only the RMDs–much smaller amounts– to creditors and divorcing spouses.

Under the SECURE Act, the shorter ten-year time frame for taking distributions will result in the acceleration of income tax due, possibly causing your beneficiaries to be bumped into a higher income tax bracket, and therefore receiving less of the funds contained in the retirement account than you may have originally anticipated.

Additionally, because all funds in your retirement account will need to be withdrawn within 10 years after your death, under the SECURE Act, trusts drafted as a “conduit trust” would cause all retirement assets to be distributed outright to the beneficiary within ten years, causing the asset protection you may have built into your plan to be lost.

If you want to maximize tax deferral and provide asset protection for your retirement account assets, we should discuss the benefits of an “accumulation trust,” an alternative trust structure through which the trustee can take any required distributions and continue to hold them in a protected trust for your beneficiaries.

Note, however, that drafting a trust as an accumulation trust has its own drawbacks. Although a Trustee is not required to make distributions to beneficiaries and can retain distributions from retirement plans in trust, retained distributions from traditional IRAs would be exposed to compressed income tax rates that apply to trusts. Currently, trusts reach the maximum 37% tax bracket with undistributed taxable income of $12,950, so plans should be made to address taxes if we opt for this solution.

Feel free to call our office so we can look at how your retirement accounts are impacted by the SECURE Act, and what changes are now necessary to ensure your assets make it to your loved ones in the most tax-advantaged, least risk manner. You’ve worked too hard for these assets to have them lost, squandered or not passed on in the way that you choose.

The Perfect Solution for Choosing Your Child’s Guardian

The Perfect Solution for Choosing Your Child’s Guardian

If you have minor children and have not yet selected a guardian, you are not unlike many parents who put off this critically important task while waiting for the perfect solution to present itself.

Or perhaps you and your spouse/partner cannot agree on who would be the ideal guardian for your kids.

Here is your solution: Done is better than perfect. Especially here.

If you do nothing, the decision about who would raise your children (if something were to happen to you) would be left up to a judge to decide. A judge who doesn’t know you, doesn’t know what’s important to you, and doesn’t know your children will make all the decisions about who cares for the people who are most important to you in the world.

Recent Superstar Death Brings Estate Planning to the Forefront of Discussion

Recent Superstar Death Brings Estate Planning to the Forefront of Discussion


First I must personalize this blog to say I have been a long time fan of Prince and his music and was truly sad to hear of his death. I just returned from Jazz Festival in New Orleans where musicians and fans from all walks of life were honoring him with moving tributes and it was very beautiful and poignant.

Among other things, the untimely death of superstar Prince has brought a surprising issue to American living rooms: estate planning. If current reports are correct that Prince died without a will, state law and the Court system will dictate who controls and inherits his sizeable estate. It is also likely that taxing entities will take a bigger bite out of his estate – costing his family millions, unnecessarily — before anyone inherits anything. All of this could have been avoided and there’s an important lesson here for you and your family. (more…)

5 Reasons Why You Need to Review Your Estate Plan

5 Reasons Why You Need to Review Your Estate Plan


Creating an estate plan to protect your financial future and that of your family is just the first step in the estate planning process. Once those documents are executed, you will still need to review your plan annually to ensure it continues to reflect your needs and achieve your goals. Here are 5 reasons that can trigger the need to review your existing estate plan:  (more…)

Did you know a Mental Health Professional and a Lawyer make a really good mediation team?

Did you know a Mental Health Professional and a Lawyer make a really good mediation team?

Integrative Mediation is a co-mediation model that provides a holistic approach to conflict resolution so that all aspects of the dispute can be addressed. As the parties are supported in uncovering deeper issues that held the conflict in place, they are able to experience deeper resolution of the conflict.

Both mediators, the lawyer and the mental health professional, are neutral facilitators. Integrative mediation helps people disentangle their emotional and psychological reactions from their legal and financial facts. (more…)

Digital Life After Death

Digital Life After Death

Have you ever thought about what happens to your social media accounts after you die? According to the Pew Research Center, 74 percent of Internet users maintain a social media presence using websites like Facebook, LinkedIn, Instagram, and Twitter. The far majority of those use Facebook. (more…)

Legacy Planning: Leaving More to Your Loved Ones Than Money That Will Be Lost Quickly

Legacy Planning: Leaving More to Your Loved Ones Than Money That Will Be Lost Quickly

The assets you leave to your loved ones can either be a source of relief or, sometimes, a source of panic if they don’t know how to manage those assets. Unless properly prepared, your loved ones may not know how to deal with sudden wealth — even just fifty thousand dollars can either be squandered quickly or built into a true legacy of love. Your loved one’s may lack trusted advisors to help them, and they may not always share your values or your vision on how to put the money to good use or ensure it lasts for future generations. (more…)