California Tax Attorney Blog

An irrevocable trust is one that usually cannot be amended, changed or revoked. Trusts can become irrevocable in several ways.

Some trusts for married couples become irrevocable at the first spouse’s death. A common example is an A/B trust, sometimes called an Exemption Trust or a Bypass Trust. With this type of trust, the deceased spouse's trust becomes irrevocable after the first death and cannot be amended, changed or revoked.

Irrevocable life insurance trusts and qualified personal residence trusts are made to be irrevocable at the time they are created. The life insurance trust is a type of trust that is created to hold life insurance and pass the insurance death benefit to the beneficiaries of the trust without any income or estate taxes on the placement of the policy in the trust or upon the insured’s death. Such a trust cannot be revoked, changed, or amended after it is created except by court order.

There are some times, however, where an irrevocable trust can be modified by court order. California Civil Code Section 3399 permits a contract like a trust to be reformed when the writing, through mistake or fraud, fails to express the intent of the parties. For instance, reforming a trust might be appropriate when due to a drafting error or scrivener's error.

California Probate Code Section 15409 also permits a trust to be changed if “owing to circumstances not known to the settlor (person creating the trust) and not anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially limit the accomplishment of the purposes of the trust.” In this situation, what the court can do is extensive. The Probate Court can authorize acts that are forbidden by the terms of the trust or not authorized.

Under California Probate Code Section 15403, when all beneficiaries of an irrevocable trust consent to modification or termination of a trust the court can permit that to occur unless the court finds that a material purpose remains for continuance of the trust and that purpose outweighs the arguments for termination or modification.

Speak to a tax attorney about amending, changing or revoking an “irrevocable” trust. Call Mitchell A. Port at (310) 559-5259.

Posted by Mitchell A. Port | Permalink | Email This Post

Posted In: Estate Planning

Bookmark: TOP

As a solo tax and probate lawyer in Los Angeles, I read an interesting article in the February 15, 2010 issue of the Los Angeles Times that clients believe they get better service and value from solo attorneys and small firms than they get from the large firms. Here are some of the article's highlights:

Solo and small boutique law practitioners across the country have been better able to adapt to a shifting legal landscape than big law firms that had to shed more than 4,600 lawyers nationwide last year….

In an inverse demonstration that size matters, small firms able to quickly reinvent themselves have benefited despite shrinking spending on legal services and a more demanding clientele….

Boutiques flourish because they deal on a more personal level with the legal consumer and they tailor services to individual needs. Smaller firms also have less overhead and can be more flexible and affordable….

Clients perceive that they will get more efficient legal services and more bang for their buck in the context of a small, more agile firm….

Some of the big firms went overboard, charging upward of $700 an hour, and when the economy changed, their clients were no longer in a position to pay that. The rainmakers left and started their own firms. One told me he tells his clients, “I'm not any dumber but now I'm $400 an hour less….”

There is a preference among some lawyers to create a better work-life balance than that experienced by attorneys struggling to stay on a partnership track at the huge corporate entities of the American Lawyer 100, firms with as many as 4,000 attorneys….

A solo practice satisfies an attorney’s quest for meaningful practice, community involvement and quality time for home and family….

The defections from big law firms to boutiques to attorneys' recognizing “the path to riches is through niches.”…

“The age of the generalist is dead. Clients are requiring attorneys to know more and more about less and less. Everyone wants to be treated by a specialist.”…

Call me to discuss your probate issues, IRS and California Franchise Tax Board tax problems, wills and living trusts as well as business transactions in which you are involved. Call (310) 559-5259.

Posted by Mitchell A. Port | Permalink | Email This Post

Posted In: Probate

Bookmark: TOP

During income tax filing season, there are a lot of IRS impersonation schemes. These schemes may take place by email, phone, fax, internet sites and social networking sites.

The IRS will not send you unsolicited e-mails about your tax situations, tax accounts or personal tax issues. If you receive such an e-mail, most likely it's a scam.

Some impersonations may be commercial internet sites that you unknowingly visit, thinking you’re accessing the genuine IRS Web site, IRS.gov. However, such sites have no connection to the IRS.

Many impersonations are identity theft scams that try to trick you into revealing personal and financial information that can be used to access your financial accounts. Some email scams contain links or attachments that download malicious code (virus) that infects your computer or direct you to a bogus form or site posing as a genuine IRS form or Web site when you click on them.

Posted by Mitchell A. Port | Permalink | Email This Post

Posted In: Tax Controversy

Bookmark: TOP

The New York Times ran an article last month describing the effect of suspending the estate tax so that no death tax is owed for those dying in 2010. Concepts like losing the step-up in basis and the application of capital gains taxes are explained. The article advises readers to update their wills, living trusts and other estate planning documents to take into account the changes in the laws applying to death taxes.

Call your California estate planning attorney now.

Posted by Mitchell A. Port | Permalink | Email This Post

Posted In: Estate Planning

Bookmark: TOP

There exists an official YouTube channel of the Internal Revenue Service. It features videos produced by the IRS on various tax administration topics. Information is available about all kinds of topics, including the the appeals examination process, appeals collection process, tax tips, record keeping, choosing a tax preparer, how to track your tax refund, how to check your tax withholding and the homeowner credit claim.

Posted by Mitchell A. Port | Permalink | Email This Post

Posted In: Tax Controversy

Bookmark: TOP

A post on January 23, 2010 in Wills, Trusts & Estates Prof Blog provides a chart listing the best states for trusts. The ranking factors considered are (1) state income tax in the state, (2) directed trust statute, (3) asset protection trust availability, (4) dynasty trust ability, and (5) the number of trust companies in the state.

The top four states include Alaska, Delaware, Nevada and South Dakota.

The next best include three states: Florida, New Hampshire and Wyoming.

Finally, the last group of states include: Colorado, Idaho, Ohio, Utah and Wisconsin.

Posted by Mitchell A. Port | Permalink | Email This Post

Posted In: Estate Planning

Bookmark: TOP