How Do I Obtain A Parent-Child Exclusion for Property Taxes?

A lot of clients ask us if there are any benefits to inheriting a house from your parents or grandparents. The answer is yes! A huge benefit is that when a home is transferred from parents to child, the property taxes do NOT need to be reassessed!

With the Parent-Child Exclusion, a parent is able to transfer their property from themselves to their children with no consequence to the property taxes that are paid each year. BUT this benefit isn’t automatic - you have to apply for it!

Warfield Law is happy to assist our clients in obtaining a Parent-Child exclusion by completing and submitting a Claim for Reassessment Exclusion for Transfer between Parent and Child. The process of obtaining this exclusion can be daunting, especially with some of the attachments and requirements that must be accompanied by the request. Contact Warfield Law today for your Parent-Child Exclusion!

Legal Separation v. Divorce Revisited

  Should I Choose
Legal Separation or Divorce? 

The breakdown of a relationship is very difficult to process, especially when it comes to the legal aspects of a potential separation or divorce. Sometimes couples come to a crossroad and can’t decide what the right decision is regarding the status of their relationship. In order to make this decision, it is important to first understand the crucial difference between legal separation and divorce. While it may seem obvious, the main difference between the two is that when you are legally separated, you are still married to your spouse and do not sever your relationship or financial ties to each other. 

Otherwise, legal separation and divorce, and their processes, are essentially identical. All issues that are covered in legal separation are also covered in divorce. Such issues include spousal support, asset and property division, child custody, child support, etc. Keep in mind that if you do initially decide to move forward with a separation and later choose to divorce, you will have to go through the process all over again in order to request a dissolution of your marriage. 

The most prevailing reasons why some people choose to be legally separated over being divorced include: 

1. One spouse needs to remain on the others health insurance per terms of eligibility; 

2. You believe there is a chance of reconciliation; 

3. You haven’t lived in the county long enough to file for divorce under their jurisdiction; 

4. There is a federal tax benefit if you remain married; & 

5. Religious or personal reasons prevent divorce. 

While there are some benefits to legal separation, overall it is generally a better idea to choose divorce over separation merely in regards to the emotional toll that the legal process can take. As mentioned above, if you first file for separation and decide later to file for divorce, you will have to go through the same process all over again. This means more stress, more time and potentially renegotiating an agreement. The state of California requires a 6 month cooling-off period, meaning that a judge will not sign off on a divorce until 6 months after the initial divorce paperwork is filed. This allows the parties to truly consider their decision before making it final. It is also important to understand that divorce is beneficial over legal separation when you want to completely financial ties, or desire to remarry at some point. 

At Warfield Law, we want to make the legal separation or divorce process as painless as possible for you and strive to make sure our clients are protected and satisfied with the decisions they make regarding the fate of their relationships 

Coronavirus and It's Effects on Marriage

The Coronavirus pandemic that has been affecting all of our every day lives certainly affects all of us in different ways. In the realm of family law, divorce lawyers have seen a skyrocketing number of divorces in California which they attribute to the pandemic. Specifically, the forced seclusion in the home with your significant other has really given couples no other choice but to look at their marriage in a new light, not to mention the financial struggles many Americans have been navigating over the past year. None of us here in the United States have experienced a time where the government restricts us from leaving our home, so we are all now seeing and/or experiencing the side effects of this, and these side effects unfortunately are not always good.

The strain that the pandemic has on marriages varies depending on each and every person’s specific relationship. Many couples who have been used to separating for the day for work and reconvening at night are now forced to remain in their homes together. This new dynamic does one of two things - it either strengthens your relationship, or it negatively affects your relationship. For those who are able to strengthen and work through any issues arising in your marriage during the Coronavirus, you know it takes work and is not an overnight process. For those who see their relationship in a new light because of this pandemic, and in conjunction with the cited high occurrences of depression due to the pandemic, it certainly takes work to make sure your relationship does not wallow during this stressful time. Sometimes relationships run their course, and for the couples who find this to be their case, take a breath and know that you can work your way back to happiness. Don’t let this pandemic take you down!

Mediation or Litigation?

Mediation is the collaborative process of informally resolving all issues between the parties without the need to go before the Court and litigate their case. Instead, the parties sit with a neutral mediator who facilitates the resolution of all issues. As many people may have already realized, resorting to litigation may cause you more of a headache than you want to take on. Some people choose to mediate their cases rather than litigate their cases for a variety of reasons., including:

  • Mediation is generally cheaper than litigation

  • Mediation is confidential whereas litigation generally is public record

  • Generally, mediation can be as short as an hour or can last for a few weeks. On the other hand, litigation can be as short as a few months to, more likely, as long as a few years

  • Mediation is less formal than litigation since the parties do not have to go before a judge but instead discuss and negotiate the issues at hand between themselves, giving the parties more control of the outcome of their case

  • In mediation, the parties are more likely to retain their relationships with each other due to the collaborative nature of mediation

  • Mediation focuses on allowing the parties to come to a fair, common ground agreement whereas litigation focuses on winning in court

Legal Separation v. Divorce

It’s important to note the difference between legal separation and separation. Legal separation occurs when one or both of the parties has petitioned the Court for a legal separation, whereas separation typically means you are no longer living together and have no intention of getting back together. If the Court is not petitioned, then the parties are simply just separated, but no paperwork has been filed with the Court. There is great importance of filing for a legal separation as opposed to simply separating. With legal separation, the Court and the parties will be able to set a formalized order regarding the stipulations and arrangements of your separation. Without this order or agreement, there is truly no guidance regarding how each party should act and their respective obligations.

Some reasons why parties tend to legally separate rather than divorce include, but are not limited to:

  1. Moral or religious reasons;

  2. To maintain health insurance benefits;

  3. Tax benefit;

  4. Possibility of reconciliation; &

  5. Neither party has reached the jurisdictional requirement for filing divorce.

Your Divorce May Take Longer Than You Think

A lot of times new divorce clients will come into our office wishing for their divorce to be finalized as soon as humanely possible. We’ll hear comments like “so, can I be divorced by next week?” The truth is that California has a waiting period before a judge will officially and legally divorce the married couple. The waiting period isn’t short either - a married couple has to wait at least 6 months before a judge will officially declare the couple divorced. This waiting period is sometimes known as the “cooling off” period, and its purpose is for the couple to seriously think through their decision to divorce. California implements this rule mainly to ensure the couple is not just making a rash, quick decision, among other reasons.

CALIFORNIA ESTATE TAX

Many clients ask us about whether taxes are affected by estate planning. And, well, here’s the lawyer’s favorite answer: it depends. If your estate is under the federal exemption, then the answer is generally no. For example, you will still pay the same amount in property taxes and income taxes, and because of California’s other tax laws, estate planning in general isn’t going to affect them. However, if you have a hefty estate, say over at least $11.58 million, then yes, your taxes are going to be affected by estate planning.

California, like a majority of the states in the United States, does not levy an estate tax on your estate upon your death, or ever, for that matter. Also like a majority of states, California does not levy an inheritance tax if you are inheriting property or assets from a decedent. In addition, California does not apply a gift tax on any gifts given to loved ones.

While this all great, don’t forget that although California does not have these categories of taxes, there is still a federal estate tax applied by the Internal Revenue Service that could potentially be applied to your estate. This tax applies to an estate if it is valued at or over $11.58 million for an unmarried person, or $23.16 million for a married couple. If your married estate is equal to or greater than $23.16 million, it’s important to take advantage of the unlimited marital deduction. This deduction allows you to leave your estate to your surviving spouse without the government levying any federal estate tax on the estate. Keep in mind that, in addition to the federal estate tax, there is also a federal gift tax which essentially states that any amount you gift over $15,000 will be taxed.

A NEW CALIFORNIA LAW THAT COULD AFFECT YOUR ESTATE

As of January 1, 2020, California has increased the probate threshold from $150,000 to $166,250. This means that if the value of your gross estate is over $166,250 at your death, your estate will be forced through the California probate court process. This means the court is forced to intervene in distributing your estate which means not only spending a lot of time but also money! Unfortunately, the San Diego probate court is extremely backlogged, and probate cases are taking approximately 1-2 years to finalize. This means that your beneficiaries will have to wait 1-2 years to receive their inheritance. But - you’re in luck!

One great way to avoid your estate being forced through the probate court is to have a Trust drafted. A Trust will ensure that your estate avoids the probate court, therefore allowing your beneficiaries get their assets in approximately 6 months - a much shorter time than if your estate was forced to go through probate! Another downside of probate court is the expensive fees and costs associated with probate. For example, if your estate at death is worth $500,000 gross, then the statutory fees and costs will be approximately $30,000. Why force your estate to pay $30,000 when you can avoid this by having a Trust in place for a much more reasonable price. It pays to plan!

Remote Estate Planning - It's Nothing New to Us!

At Warfield Law, we always provide our clients with the option to work with us remotely. Over the years we have found that many, if not most, of our clients prefer to work with us remotely in order to spend their valuable time on other important things like family and work. Our track record of working remotely with our clients means we understand the detail, communication, and specificity that need to be utilized when practicing remotely. During the current Pandemic, Coronavirus, we understand the desire to stay home - but that doesn’t mean you can’t get important things done. Now it is more important than ever to address your estate planning needs, whether it’s establishing your first Trust, or making necessary changes to your current estate documents.

Our remote estate planning process makes it easy for our clients. In fact, it’s just a 3 part process. First, our attorneys will have a telephone call with you to ensure we address all of your desires and questions about the estate planning process. It is our goal to make sure we meet your estate planning needs and want to discuss the different options with you. Next, we will e-mail you an electronic, straight-forward Questionnaire. Once you have completed the Questionnaire, our attorneys have a two week turnaround time at which point you will receive a draft of your estate plan for review. Along with this draft, we will provide you with a summary of your estate planning documents in order to ease your review. After review, we will mail your estate plan by first-class mail along with an instructional letter and colored tabs instructing signatures on all required areas of your documents. Once you have signed your estate planning documents, they are yours to keep in a safe place, and your estate planning process is over! So easy, our clients always wonder why they hadn’t looked into our remote estate planning sooner!

Take control of your life today and contact us at Office@WarfieldLegal.com.

Estate Planning – It’s Not Just For The Elderly

All you have to do it turn the television on to hear about another young death. A person who died far too suddenly and far too young. A person who never thought it would happen to them. So many people delay their plans to get an estate plan- so many people think “it’s never going to happen to me.” Others question, “I barely have any assets, why do I need an estate plan?”

Estate planning isn’t just about how much money you have. Estate planning allows you to manage your life and finances, and protect not only your current assets but your future assets as well. Specifically, estate planning allows you to: 

1)    Save money on probate, taxes, and other expenses of settling an estate. Remember, should you be required to participate in probate because you did not have an estate plan, these expenses are set by statute;

2)    Avoid the 1-2 year backlog of the probate court, ensuring your beneficiaries receive their distribution soon after your death, rather than waiting for the probate to complete over a one to two year period;

3)    Void the current state laws which dictate where your assets will go if you don’t have an estate plan in place;

4)    Determine whether your business will remain intact after your death, and how it should be managed;

5)    Have the ability to elect the person you want to manage your estate upon your death, and your health in the event of incapacity;

Most of all, estate planning allows you to be in control of your own life. Who wants a third party judge dictating how your estate will be distributed upon your death? Take control of your life today and contact us at Office@WarfieldLegal.com.