Getting in Shape for Work

The practice of law gets harder and harder and I have to think it is not just because I have been doing it for nearly 30 years, but rather because life in general is more complicated.  With every technological advance comes benefits but also additional stress, expense and other difficulties.  All the blessings bestowed on us can also drag us down.  My clients live more insecurely now than in the past.  This makes my job harder and makes it less gratifying because there are fewer opportunities to actually make a difference. I blame this phenomenon in large part on the multi-levels of communication  that implode in our brains and leave imprints like permanent black markers on our souls. Getting the job done, whether as a family law attorney, probate attorney or estate planning attorney, takes longer and costs more than just a few years ago. This makes my clients unhappy and, in turn, makes me unhappy when they either cannot or will not pay their bill.

To counteract this anxiety-ridden profession, I try to take care of myself.  I do not always succeed, because I spend way too many hours responding to emails and working on managing my law firm, in addition to taking care of my clients.  But every once in awhile I find - and take - the opportunity to take care of myself.  This was one of those weekends.  Exercise, yoga, relaxing with friends, playing with my new puppy, reading a good book, thinking about what is important to me, repairing relationships and facing up to my frailties all  packed into a weekend over far too soon.  I am stronger now, heading into a new work week and hope I remember to take time to do it all again soon.

Happy and Healthy New Year

Having refreshed myself over the holidays, I am looking forward to a good year surrounded by good people and looking forward  to helping those that choose that choose to hire our firm.  The new laws, both state and federal, should also help everyone rise up from the dolldrums of the recession and find a comfort level not felt in quite some time.  Look for a review of the important laws affecting family law estates on our website as well as a new article on Special Needs Trusts.  To all our good wishes for a peaceful and joyous new year.

Valuable Estate Planning and Tax Tips from our Friends at the Jewish Community Foundation

10 Important Planning Thoughts for Year-End 2010

The following "10 Important Planning Thoughts for Year-End 2010" are not intended as specific tax advice but rather as a reminder of some of the issues you may want to raise with professional advisors before 12/31/10.


(1) There is no substitute for good professional advice.

Individuals are well-advised to consult with tax and financial planning professionals between now and year-end. Conversations with your estate planning attorneys and/or CPAs are essential. And the discussion should also include your financial planner or broker as well as a philanthropic advisor such as a Jewish Community Foundation planned giving professional. Decisions can be made now and implemented when most beneficial (after Congress acts or fails to act and before year-end).

(2) Run and re-run the numbers under different scenarios.

Tax projections are probably the most common year-end tool used by tax and financial planners estimating taxable income and potential savings using historical data, projected income and expenses and deductions, such as charitable contributions. The wild card this year is determining what the income (and estate and gift) tax rates will be for 2010 and 2011. Alternative scenarios will be necessary and adjustments in both projections and resultant planning strategies should be discussed early to allow for time for change where necessary.

(3) Traditional tax planning is probably not the only answer.

Most years, the mantra from most tax and financial planners is to "defer income to next year and accelerate deductions into this year." This may not be the best approach this year-end, especially if individual tax rates rise in 2011 and future years. The Obama Administration and many congressional Democrats favor letting the 2011 income tax rates rise from 35 percent to 39.6 percent for those making over $250,000 (married) and $200,000 (single). (Note that if Congress fails to act by year-end, income tax rates for all taxpayers would increase.) In addition, there are over 50 other individual income tax provisions in the tax code that could be impacted by tax rate legislation, some of which would have the effect of increasing individual taxes for many. For example, if the "phase-out" to itemized deductions, including the charitable contribution deduction, is reinstated in 2011, this might encourage some donors to accelerate some charitable gifts before year-end 2010. On the other hand, if an individual's tax rate will be substantially higher in 2011, it may be preferable to defer a charitable gift until January.

(4) Accelerate income to 2010.

If tax and financial planners conclude that the best strategy is to accelerate income into 2010 based on specific facts and circumstances, they may suggest certain "one-time-only" strategies such as accelerating receipt of bonus payments traditionally paid in January, generating dividend income or in some cases recognizing gains from certain capital gain assets such as from the sale of stocks and securities.

(5) Those with primarily portfolio income really need to pay attention.

Families with income generated primarily from dividends, capital gains, and other investment income should pay close attention to the year-end tax debate. The effective tax rate on significant dividend and capital gain income could more than double from 2010 to 2011 under some scenarios and as such, income acceleration techniques to maximize potential savings this year-end may be most appropriate. Some thoughts to consider: the after-tax cost to net $1.00 from long-term capital gain increases from $1.18 in 2010 to $1.25 in 2011 and $1.31 in 2013 and later years. The after-tax cost for $1.00 of dividend income could increase to $1.77 in 2013 under current tax rate proposals.

(6) Take advantage of stock market gains, if there are any.

If you have a donor advised fund or family support organization, a great way to add funds to it is through appreciated stock. With the tax rate on capital gains almost certainly set to increase as of January 1, 2011, tax and financial planners may recommend selling stocks and bonds that have appreciated in value. (Remember: for stocks with gains, there is no rule prohibiting investors from buying back the same asset shortly after the sale without adverse tax consequences for those who think there is a potential for future growth.) At least two other points to consider: (a) it is often more advantageous to gift appreciated assets to charity rather than selling the asset; and (b) capital loss carryovers will be more valuable when tax rates are higher (2011 and later years). Bottom line: review your entire portfolio when considering capital asset planning.

(7) This could be the year for a Roth IRA conversion.

There has been much written about converting traditional IRAs to Roth IRAs in 2010 as there is no income limit this year on who can qualify for this transaction. As with other income and estate tax planning, it is essential to run the numbers to see if this strategy makes sense. A further point to consider is that charitable giving can offset some of the additional taxes that will be generated by the Roth IRA conversion. Making significant charitable contributions before the end of 2010 may be a tax-efficient strategy, especially for those who have sufficient assets to pay the Roth IRA conversion and who will consider making what could be a larger than normal charitable donation this year.

(8) Don't forget basic estate planning, even in times of uncertainty.

Continued congressional deadlock over the estate and gift tax makes most crystal ball prognostication over the final outcome cloudy at best. But don't forget the basics such as taking advantage of the annual gift tax exclusion amount of $13,000 per donee ($26,000 where a spouse joins the gift). In addition, a variety of other estate planning techniques remain very attractive in the current low-interest rate environment including charitable lead annuity trusts.

(9) Don't forget about the alternative minimum tax.

For many middle and high-income taxpayers, the alternative minimum tax is an additional factor in tax planning scenarios, often requiring strategies that differ from those for the regular income tax. All things being equal, the AMT may be less of a factor in 2011 and future years if individual income tax rates increase. Again, it is essential to sit down and run the numbers to determine which planning strategies are most appropriate.

(10) Start the conversation with advisors as soon as possible.

Use the remaining weeks before year-end as a time to sit down with trusted advisors to review both short- and long-term charitable giving strategies and objectives. From a tax perspective, 2010 may represent the best time in almost a quarter-century for individuals to address their overall tax, estate, and philanthropic portfolio.

Who Has Standing to File a Petition for Nullity of Marriage?

This year our firm has been working on a nullity proceeding which has raised interesting questions of law with regard to third parties who have standing to file the Petition on behalf of a spouse. Our client filed a Petition for nullity on behalf of his grandmother, based upon the fact that at the time of the purported “marriage” to the 27 year old purported husband, his 80 year old grandmother was of “unsound mind,” and lacked mental capacity to enter into a marriage contract. A deposition of the Reverend who officiated the marriage revealed that upon request by the “husband,” he had issued a “confidential marriage license” to the couple. Several months after filing the Petition, our client’s grandmother passed away.

When we appeared in Court on this matter, the Court, on its own motion, posed the following question: Whether, during the pendency of a nullity proceeding and before entry of Judgment, upon the death of a Party, does the Family Law Court lose Jurisdiction to enter a Judgment of Nullity of Marriage. At that hearing, the Court asked the Parties to brief the issue and pay particular attention to the recent case of Pryor v. Pryor (2009) 177 Cal.App.4th 1448, which involved the well known actor/comedian Richard Pryor.

In the Pryor case, Richard Pryor had married Jennifer Lee Pryor in 1981 but then divorced her in 1982, without having any children with her. Twenty years later, on June 8, 2001, Richard and Jennifer remarried pursuant to a confidential marriage license. On December 10, 2005, Richard passed away, leaving behind six children. At some point after his death, one of his children, Elizabeth, discovered her father's 2001 remarriage to Jennifer and on July 17, 2007, a year and a half after his death, she petitioned to annul the marriage on the grounds of fraud.

As we successfully argued in our brief, the pertinent statutes, Family Code § 2210 and Family Code § 2211 reflect that our client clearly has standing because, as differentiated from the facts in the Pryor case, in our case (1) the Petition for nullity was filed several months before his grandmother’s death and (2) the nullity action was based on “unsound mind” and not on “fraud.”

Family Code § 2210 reads in pertinent part, as follows:

“A marriage is voidable and may be adjudged a nullity if any of the following conditions existed at the time of the marriage:...(c) Either

party was of unsound mind, unless the party of unsound mind, after coming to reason, freely cohabited with the other as husband and wife.

(d) The consent of either party was obtained by fraud, unless the party whose consent was obtained by fraud afterwards, with full

knowledge of the facts constituting the fraud, freely cohabited with

the other as husband or wife....” [Emphasis added].

Furthermore, under Family Code § 2211, the legislature has clearly delineated provisions for who has standing to file a nullity petition, and has provided different limitations periods, depending on the ground for annulment. These distinctions are expressly stated in Family Code § 2211, which reads in pertinent part, as follows:

“A proceeding to obtain a judgment of nullity of marriage, for

causes set forth in Section 2210, must be commenced within the

periods and by the parties, as follows:....(c) For causes mentioned

in subdivision (c) of Section 2210, by the party injured, or by a

relative or conservator of the party of unsound mind, at any time

before the death of either party. (d) For causes mentioned in

subdivision (d) of Section 2210, by the party whose consent was

obtained by fraud, within four years after the discovery of the facts constituting the fraud....” [Emphasis added].

In our brief to the Court, we argued that Family Code § 2211 reflects the legislature’s

intention that standing for nullity actions based on “fraud” [Family Code § 2210(d)] be limited to “the party whose consent was obtained by fraud.” By contrast, standing for nullity actions based on “unsound mind” [Family Code § 2210(c)], is extended to include relatives.

Additionally, the period in which to commence the action is limited differently for each cause upon which the nullity may be based. Specifically, a nullity action based on fraud is delimited by the period “within four years after the discovery of the facts constituting the fraud...." By contrast, a Nullity action based on “unsound mind” can be brought, “at any time before the death of either party.”

In our case, because our client was a relative and had filed the Petition within his grandmother’s lifetime and the nullity action was based on “unsound mind,” the trial court ultimately found that our client had standing to file the Petition for Nullity.
However, the trial court also ruled that although his grandmother was personally served with a copy of the Petition prior to her death, our client should have joined his grandmother (or her conservator) as a Party and had failed to do so. Accordingly, the Court ordered the case stayed until we joined the grandmother’s (as of yet, unappointed) personal representative. Appointing a personal representative for a person now-deceased is unusual, and, as explained below, in our case, this task fell to the Probate Court to accomplish.

In addition to the family law matter, our client is also in the midst of several probate cases concerning his grandmother’s $8 million estate. In the probate matters the salient issue is whether his grandmother had mental capacity to execute certain amendments made to her trust several years before her death. We have recently learned that our client’s probate attorney has successfully petitioned the Court to appoint a personal representative, and the Court has appointed a neutral party to so act.  We are grateful that the issue of third-party standing is now behind us and we look forward to taking this complex and interesting case to Trial.

Not So Happy Wanderer

Traveling to a new venue to argue against a motion in civil court. Has been 20 years since my law & motion days. I hope for a smart judge who has read my opposition and wish the best for my well-deserving clients.  This case arose from a probate case in an attempt to get a creditor's claim for funeral expenses paid.  The costs of litigation will soon be more that the amount of the claim, which is why, I guess, the defendant simply refuses to pay the bill.

Saddened by Mindless Killings of Medical Teamin Afghanistan

I read that members of a medical team gunned down in Afghanistan brought some of the first toothbrushes and eyeglasses villagers had ever seen and spent no time talking about religion as they provided medical care.  What has happened to people to be so callous about life?  And, on the other hand, what possesses other people to put the needs of others less fortunate in front of their own safety? Plus ca change, plus ne change pas.

Great Week for Acknowledging Freedom We Take For Granted

This week, Elena Kagan was confirmed as a centrist U.S. Supreme Court Justice without mention of her gender or religious preference in the midst of one of the most contentious partisan lack of sensibility in modern times.  Also, this week a Republican conservative federal judge upheld the concept of freedom as set forth in our federal constitution and included gays and lesbians as a suspect class subject to the protections of the 14th Amendment.  We also remember the 65th anniversary of the bombing of Hiroshima, a dark day for humanity, but a bright light for the future of democracy.  Take a moment to contemplate the true meaning for each of us on the passage of these events.