June 2013      

Team Tisser Foundation (TTF) is a non-profit corporation founded by Doron M. Tisser and his wife Laurie. TTF raises money for various charitable purposes and does not focus on any one charity or charitable purpose. The goal is to raise as much money as possible to "Help Make A Difference" by "Improving Life for Others." TTF has made donations to Memorial Sloan-Kettering Cancer Center, Leukemia & Lymphoma Society, Challenged Athletes Foundation, as well as charities helping people affected by natural disasters such as Hurricane Katrina and the Tsunamis. Since 2000, TTF has donated over $250,000 to over 40 different charities. Friends and clients generally donate money to TTF to support Doron's participation in triathlons and marathons. If you would like more information about TTF, please contact Doron at doron@tisserlaw.com, or visit www.teamtisser.org

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About
Doron M. Tisser

Doron M. Tisser has specialized in estate and gift planning, tax planning, trust and probate administration, charitable giving, buy-sell agreements, and related areas for over 30 years. Mr. Tisser is one of less than 100 attorneys in California who has been designated as both a Certified Specialist in Probate, Estate Planning and Trust Law, and as a Certified Specialist in Taxation Law by the State Bar of California Board of Legal Specialization.

Mr. Tisser has been chosen by his peers as a Top 100 Super Lawyer in Southern California since 2011. In addition, he has been selected by his peers as Super Lawyer for Southern California since 2009. Mr. Tisser has also been awarded the highest possible rating by his peers, an “A.V.” rating, for the Martindale-Hubbell Law Directory. This rating is based on ethical considerations and legal skills.

Mr. Tisser has been quoted and referenced in many magazines and newspapers across the country including Forbes Magazine, US News and World Report, Wall Street Journal, Los Angeles Times, and Entrepreneur Magazine.

Doron competes in triathlons, including Ironman races, and raises money for charities through Team Tisser Foundation, a non-profit corporation he co-founded with his wife Laurie.

 

What’s Happening

Tisser Law Group is proud to announce the hiring of Patricia Rosman, Esq., as an associate attorney in the area of estate planning.

If you would like Doron M. Tisser to speak to your group or organization about the new estate tax laws, trust administration or other estate planning subjects, please contact Laura at laura@tisserlaw.com or call Laura at (818)226-9125.

The End of the Decedent’s Trust?

For many years, one of the foundations of an estate plan for a married couple was the establishment of a Decedent’s Trust (also known as a bypass trust, credit shelter trust or exemption trust) upon the death of the first spouse (the “Decedent”).

The main purpose of a Decedent's Trust was to prevent the loss of the Decedent’s estate tax exemption. At the Decedent’s death, all or a portion of the Decedent’s share of the assets could be placed into the Decedent’s Trust. The surviving spouse could generally use the assets during her lifetime, but at her death, the assets would pass to the ultimate beneficiaries of the trust without being subject to estate taxes.

As we discussed in our January Newsletter, the current estate tax exemption amount means that a very small minority of people will be subject to estate taxes. In addition, with the extension of Portability – the ability for the surviving spouse to use the Decedent’s unused estate tax exemption – many people are asking whether there is any reason to continue using Decedent’s Trusts upon a Decedent’s death.

We believe there are many reasons to continue using a Decedent’s Trust in the estate plans of married couples.The following are six of the most important ones.

  1. Portability is not automatic. The only way to preserve the Decedent’s estate tax exemption is to file a timely estate tax return with the IRS after the Decedent’s death. If the surviving spouse does not file an estate tax return within 9 months of the Decedent’s death, the Decedent’s estate tax exemption will not be available for the surviving spouse at her death.

  2. There is no guarantee that Portability will be extended. While it is true that President Obama’s 2014 budget proposal includes Portability, we simply do not know what the estate tax laws will be in the future. If an estate plan does not provide for a Decedent’s Trust, there is no way to go back and create one after the Decedent’s death if the law changes.

  3. Appreciation of assets in the Decedent’s Trust will not be subject to estate taxes. For example, if a building worth $5 million is placed into the Decedent’s Trust at the Decedent’s death and the value rises to $7.5 million by the time the surviving spouse dies, the entire $7.5 million will pass to the children estate tax free. If, instead, the building passed to the surviving spouse, she would still have the Decedent’s exemption amount of $5 million (assuming she filed an estate tax return to preserve Portability), but the excess $2.5 million would be taxed.

  4. The generation-skipping tax (GST) exemption is not portable. In addition to estate taxes on the net value of your estate, there are also taxes on transfers to generations lower than your children (i.e., grandchildren). These apply whether you leave assets directly to grandchildren or in lifetime trusts for your children which eventually pass to your grandchildren. There is an exemption from GST, which is currently the same as the estate tax exemption, but the surviving spouse cannot preserve it through Portability. If a Decedent’s Trust is not established, the Decedent’s GST exemption is lost.

  5. Protecting assets for children. In cases where the Decedent has his own beneficiaries after both spouses are gone (e.g., children from a prior marriage), he would want his assets in a Decedent’s Trust so the surviving spouse cannot change the ultimate distributions. If assets are given outright to the spouse, she would not have to honor his wishes and could give those assets to her own beneficiaries at her death.

  6. Asset protection for the surviving spouse. The surviving spouse obtains asset protection through use of a Decedent’s Trust. Assets in a Decedent’s Trust are not owned by the surviving spouse, so if she is sued, those assets have greater protection from her creditors.

Of course, there are certain downsides to establishing a Decedent’s Trust, including filing annual tax returns for the trust during the surviving spouse’s life and not receiving a second step-up in income tax basis for the children at the surviving spouse’s death.

In the case of the tax returns, we view these costs as an insurance policy guaranteeing the preservation of the estate tax exemption and the spouse’s increased protection from creditors. In the case of the second step-up in basis, there may be ways to achieve this without sacrificing use of a Decedent’s Trust. We will be exploring this topic in a future newsletter.

Tisser Law Group, A Professional Corporation | 5425 Farralone Ave, Suite 100 | Woodland Hills | CA | 913677

doron@tisserlaw.com – Doron M. Tisser, Esq.
brian@tisserlaw.com – Brian H. Standing, Esq.
patricia@tisserlaw.com – Patricia C. Rosman, Esq.
judy@tisserlaw.com – Judy Schwarz, Paralegal

erica@tisserlaw.com – Erica Opperman, Paralegal

 

laura@tisserlaw.com – Laura Stein, Admin. Director
amber@tisserlaw.com – Amber McBride, Practice Coordinator
allison@tisserlaw.com – Allison Shorr, Client Service Coordinator
heather@tisserlaw.com – Heather Lanet, Admin. Assistant
zion@tisserlaw.com – Zion Dungo, Admin. Assistant
jesus@tisserlaw.com – Jesus Esteves, Admin. Assistant  
This Newsletter is intended to provide legal information only; legal information is not legal advice and you should consult with qualified legal counsel prior to implementing any estate planning. The transmission or receipt of information to or from this Newsletter is not intended to create, and does not create or constitute, an attorney-client relationship. No portion of this Newsletter may be reproduced or used in any manner other than for the private information of the reader without the express written consent of Tisser Law Group, A Professional Corporation. The testimonials throughout this Newsletter were provided by actual clients. To maintain their privacy their names may have been abbreviated. Please note that testimonials do not warrant, guarantee or predict your particular results. Copyright Tisser Law Group, A Professional Corporation 2010. All Rights Reserved.