Probate Litigation Lawyer |Estate Litigation - Lewman Law

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Clarification to November 2020 Newsletter

In our efforts to quickly provide you with the most up to date information on the potential tax ramifications stemming from these unique election events, we did not include the 2018 update of the Tax Cuts and Jobs Act (TCJA) limiting Section 1031 like-kind exchanges to real property.  

Under current law, exchanges of real property used in a business, trade, or investment enjoy Section 1031 like-kind exchange treatment, whereas, as a result of the change made by the TCJA, like-kind exchanges of personal or intangible property are now a taxable event. A transition rule allowed for like-kind treatment in some exchanges of personal property if the taxpayer disposed of the personal or intangible property before the law went into effect. Please note that it will not constitute a like-kind exchange when the real property is held primarily for sale.  

Now that more states have declared Joe Biden as the President-elect, we will continue to keep you updated on his proposed tax plan and laws that will impact you.  

Interested to Learn More?

Our sincerest apologies for any inconvenience or confusion this may have caused. If you have questions about estate planning, please contact us at Lewman Law by calling (925) 447-1250.

Filed under Estate Planning Tips, Uncategorized

Election Update: Planning Under the Biden Administration

After several days of counting ballots, Joe Biden has been declared the winner of the 2020 Presidential election by many major news outlets. Although we await the official certification of the election by each state, an official concession by President Trump, and the outcome of several pending lawsuits–which could take us into December or even January–the 2020 election and its aftermath promise significant changes in how Americans will be taxed. While it is unlikely that every proposal discussed during President-Elect Biden’s campaign will become the law of the land, we can still glean essential details from all the campaign rhetoric to help us prepare to weather these possible changes.

Proposed Policy Adjustments Under a Biden Presidency

Here is what we know so far about some of President-Elect Biden’s key proposals that are most relevant to your estate planning:

Estate, Gift, and Generation-Skipping Transfer (GST) Taxes

For 2020, the estate and gift tax exemption is set at $11.58 million (indexed for inflation), with any wealth over that amount taxed at 40 percent as it passes to heirs. This exemption amount is scheduled to be lowered in 2025 to $5 million (also indexed for inflation) unless new legislation is passed before then.

President-Elect Biden suggested during his campaign that he would support legislation that would reduce both the estate and GST tax exemptions to $3.5 million per individual and would lower the lifetime gift tax exemption to $1 million. President-Elect Biden has discussed other proposed legislation, favorably proposed by Senator Bernie Sanders, that aims to place annual, aggregate donor limits on gifts to certain types of entities such as irrevocable life insurance trusts and certain pass-through entities such as family limited partnerships.

In addition to reduced transfer tax exemption amounts, several Democratic tax reform proposals have suggested returning estate tax rates to historical norms. What does that mean? In the 1940s, the top estate tax rate was 77 percent, and under 2001 federal tax law, it was as high as 45-55 percent. As a result, we may well see an upward adjustment in the estate and gift tax rates.

Capital Gains Taxes

Our current law taxes capital gains as regular income if those gains are realized on property held for less than one year. For long-term capital gains (gains on property held for a year or longer), there is a graduated tax rate depending upon the tax filer’s income level (0 percent, 15 percent, or 20 percent). For individuals and couples who earn more than $200,000 and $250,000 per year respectively in net investment income, there is an additional 3.8 percent surtax added to their capital gains tax rate.

The current law also allows for a step-up in basis of appreciated property if the property is held until the owner dies. This allows for inherited property to be sold or liquidated shortly after the owner’s death with little to no capital gains taxes assessed on the sale of the property.

Today’s law also allows for like-kind exchanges on appreciated property such as artwork and rental properties. This allows people to reinvest the gains that they earn on appreciated property into similar types of property without ever having to pay capital gains taxes when the property is sold. If the individual keeps making such like-kind exchanges on appreciated property until the individual’s death, the capital gains built up in that property will be erased by the basis step-up rules.

Proposed changes under a Biden presidency would either (1) eliminate the step-up basis rule for inherited property and impose a carryover basis rule for inherited property or (2) impose recognition of gain on property at the owner’s death. Additionally, the Biden tax plan proposes eliminating like-kind exchanges and imposing a 39.6 percent long-term capital gains tax rate on individuals earning more than $1 million per year. And if the 3.8 percent surtax on net investment income remains in place, the effective federal tax rate on long-term capital gains could exceed 43 percent.

If these changes are implemented along with the changes to the estate tax laws discussed above, many estates could see significant tax bills at the death of the estate owner.

What to Do in the Meantime

Although it may be too early to know exactly what the tax laws will look like in 2021, we can still take some concrete steps to prepare while we wait for answers. Tax issues, while certainly important, should not overshadow the need to get your affairs in order in case of an untimely death or disability. If it has been some time since you reviewed your estate planning documents such as wills, trusts, powers of attorney, and healthcare directives, now is a great time to do so. Reviewing these important aspects of your estate planning can go a long way toward creating peace and security for you and your loved ones in these uncertain times.

We are Here to Help

No one knows for sure what the future holds for our country. However, what is certain is that we will continue to monitor the latest tax law developments closely and keep you updated as they unfold. In the meantime, if you have any questions or concerns, please do not hesitate to contact us at (925) 447-1250. We are here for you.

Filed under Estate Planning Tips, Uncategorized

Wills and Estate Planning Concerns for Parents

Estate planning most often refers to the legal process that is used to protect how your belongings are distributed after your death. As you can imagine, wills and estate planning are especially important for parents, so let’s review some common concerns.

Careful Planning

Wills and estate planning allow you to put everything in writing, which means there’s no ambiguity about your wishes after you’re gone. Of course, it’s not enough to simple draft a document on your home computer. You need legal guidance because there are proper steps that need to be taken to ensure your estate plan is valid in the eyes of the law. This also helps to prevent future conflict over the division of assets or any sentimental belongings you leave behind. All in all, careful planning is the best way to protect your loved ones, and hiring an attorney you trust is an important part of that process.

Child Custody

While it’s uncomfortable to think about, parents of young children need to name a guardian in the event that something were to happen to both of them. Obviously, this is a major responsibility that requires a lot of thought and discussion. It’s also important to determine who would administer the estate.


Wills and estate planning can be a complex process because there’s often so much to take into account. And, of course, you don’t want to leave any loose threads. A trust is another option for parents who are concerned about securing the future of their children, and may also help to reduce estate taxes.

It’s important to note that there are different types of trusts, each with it’s own advantages. Reviewing your situation with an estate planning attorney can help you make the best decision for your family.

Help With Wills and Estate Planning

When you’re ready to review the estate planning options that are best for you and your loved ones, contact our office at Lewman Law by calling (925) 447-1250, or fill out the contact form on our site by clicking here. It only takes a moment.

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Estate Planning Basics for Beginners

Proper estate planning provides an individual with choices about issues like their medical care, legal representation, and the distribution of assets after their passing. Planning allows individuals time to consider and discuss estate matters, and to prepare a detailed financial plan in order to avoid possible future conflicts. It’s important to work with an experienced lawyer when creating legal documents, but it’s still useful to be familiar with these estate planning basics.

Estate Planning Options

The first step is to consult with a qualified professional to discuss your main concerns. For example, how your assets will be distributed among family members. This is a topic that can become difficult to manage on your own, but a skilled estate planning lawyer can help you make the best choices by guiding you through your options. Working with a professional also provides you with peace of mind.

Your attorney can assist you with making the proper tax preparations, as well as filing necessary paperwork. An estate attorney can also help you to determine things like whether or not it would be best to establish a trust for your loved ones, as well as how it should be managed. These are complicated matters that a good estate planning attorney can simplify for you.

Estate Planning Basics

Some of the most important estate planning basics include creating a will, a living will, naming someone as power of attorney, and potentially setting up a trust. Note that granting someone durable power of attorney remains in effect until your death, or until you revoke their power to act on your behalf. Also, it can be difficult to discuss your healthcare wishes, but this is another important matter to settle.

Additionally, estate planning basics should account for health care coverage and costs during the remaining years of life. This includes prescription drugs, home care, and any medical bills. It’s also important to be aware of any possible changes to your eligibility for health insurance.

Making a Plan

If you’re ready to discuss your estate planning needs, you can contact Lewman Law at (925) 447-1250, or fill out our online form by clicking here. Talk to John Lewman, APC today to go over your questions and concerns, and secure a bright future for your loved ones.

Filed under Estate Planning Tips, Uncategorized