With PORTABILITY the surviving spouse can now elect to preserve the deceased spouse's $5,000,000.00 (plus the indexed amount) exemption for him/herself.  Within nine months of the first spouse's date of death, the surviving spouse must file an estate tax return.  This return will allow the surviving spouse to preserve the deceased spouse's $5,000,000.00  exemption.  Where before if you did not split the estate into an A B Trust you would lose the  first spouse’s exemption, you are now able to preserve it and use it along with the survivor's  exemption when the last spouse dies.  With PORTABILITY it is imperative that you  preserve the first spouse's exemption regardless of the size of the estate.  This is because you do not know how much your exemption will be when you die.  If the exemption is done away  with, you should still have the exemption amount from the first spouse.  If the exemption were reduced or eliminated and you have not preserved your spouse's exemption within the required nine months, then you would have NO exemption to use.

*For More Information Call Bezaire & Leathers (714)543-6829.

As a married couple, if you plan properly, you can take advantage as a Double Tax Savings.  From 2011 on your estate will not owe a Federal Estate Tax if you have less than $10 million dollars in assets.  Your assets include your real property, stocks, bonds, insurance policies, IRA’s or other retirement plans, personal property, vehicles, bank accounts and anything else over which you have incidents of ownership.  At the death of the first spouse, the surviving spouse can take an unlimited amount from the deceased spouse (there are limits if the surviving spouse is not a US citizen).  

​A-B trusts are written for various reasons, but one of the primary reasons today is the blended family.  At the death of the first spouse, an A-B Trust requires a split into two Sub-trusts, A and B.  The fist deceased spouse's trust, which is B, can be designated to be distributed to that spouse's children only and the second spouse's trust, which is A, can be distributed to his or her children only.  (See also ABC/QTIP Trusts below)

​*With portability there is no longer the requirement to split an estate for federal estate tax purposes unless you choose not to elect portability.



A document that provides for the disposition of a person’s estate after his or her death.  It can be a formal will, witnessed by at least two persons, or it can be a holographic will, which is not witnessed.  A holographic will must be all in the handwriting of the person making it and must dated and signed.  All wills go through probate.

​EXAMPLE: Real estate in Southern California is generally $500,000 or more.  Without proper planning prior to death, at death your home could be subject to probate, regardless of the amount of any mortgage you have.  A $500,000 estate can cost the estate up to $26,000 and more in fees paid to executors, attorneys, and court costs.
A will accompanying a trust , which provides that  assets intentionally or unintentionally left outside of a trust shall be transferred into the trust upon death.  A maximum of $150,000 can be left outside of your trust without requiring the pourover will to be probated.
Pourover Will


An ILIT will provide you with an opportunity to reduce or eliminate estate taxes at your death so that more of your money/assets can pass to your beneficiaries.  If your estate is mostly Real Property an ILIT can be used to pay the taxes due on an estate without having to sell a property.  If you purchase a life insurance policy of $1 million and place it in an ILIT at death the $1 million is tax free and you can pay this amount on the Federal Estate Tax of the estate without selling any property.

​Generally insurance is part of your estate and can be taxed depending on the value of your estate.

EXAMPLE:  With the exemption increase to $5,430,000 in 2015 - a married couple has a $13 million dollar estate and an AB trust.  (An AB trust will allow the couple to keep both spouses exemption for a total of $10,860,000).  This $13 million dollar estate will leave $2,140,000 ($13,000,000 - $10,860,000) subject to estate taxes for about $856,000 ($2,140,000 times the 40% federal estate tax rate).  But, if this couple removes their life insurance policies valued at $750,000, the taxable estate will only be $1,390,000 for a tax of only $556,000. A savings of $300,000! And, of course had there been life insurance for $1 million, the entire amount of estate taxes could be paid off from the life insurance proceeds.

Wills & Trusts

A Qualified Terminable Interest Property (QTIP) trust is primarily used to provide the deceased spouse with a way of ensuring his/her beneficiaries will not be disinherited, while giving the surviving spouse the ability to manage, control and use the deceased spouse’s share of the estateThe A-B-C or Q-Tip (Qualified Terminable Interest Property) Trust is a way to accomplish the following goals with your estate plan:

1. It will ensure that the surviving spouse obtains the full marital deduction.  That is, there will be no Federal Estate Tax due upon the death of the first spouse for any assets remaining in trust for the benefit of the surviving spouse.  Furthermore, if the surviving spouse’s estate does not use the entire Federal Estate Tax exemption ($5,340,000 in 2014 and $5,430,000 in 2015), any unused portion of the exemption is available to the estate of the deceased spouse.

​2. It will protect the estate of the first spouse to die from being attached by the creditors of the surviving spouse.

​3. It can ensure that the assets remaining in the decedent’s estate upon the death of the surviving spouse will be distributed to the beneficiaries chosen by the deceased spouse and will not be given away by the survivor to a new husband or wife or to someone outside the family.

Where neither spouse has an estate over the Federal exemption amount, an A-B trust will also accomplish these goals.  Where one or both have an estate that exceeds the Federal exemption amount, an A-B-C trust is often recommended to accomplish these goals.  The value of the estate is determined at the time of death, so you must allow for growth and appreciation.

​If you and your spouse have different beneficiaries, it is extremely important to have an A-B-C rather an A-B trust if there is any possibility that either estate could exceed the Federal Estate Tax exemption.  The reason for this is that with an A-B Trust, the excess of the decedent’s estate over the Federal Estate Tax exemption would be allocated to Trust A (the survivor’s trust), to be ultimately distributed to the surviving spouse’s beneficiaries rather than the deceased spouse’s beneficiaries.  For example, with an A-B Trust, if the combined estate was valued at $13,000,000 at the time of the death of the first spouse, assuming there are no changes in value, when the second spouse passes away the family of the first spouse to die would inherit $5,000,000 and the family of the second spouse to die would inherit $8,000,000.  With an A-B-C Trust, each family in the example would receive equal inheritances.

There are some burdens that go along with the A-B-C Trust: each of the three trusts must have a Tax Identification Number and must be administered as a separate trust for as long as the surviving spouse lives. 

​*For More Information Call Bezaire & Leathers (714)543-6829.

Families, or individuals, in all income brackets use a variety of trusts to plan their estates in order to minimize taxes and to avoid the costs and the lengthy delays of probate. 

There are a variety of trusts that can be used to meet your specific individual or family needs.  An estate plan begins with a well-drafted revocable living trust.  With a Revocable Living Trust, as the trustor, or person making the trust, you have the flexibility to make many changes during your life-time.  Again there are a variety of trusts to meet your needs. 

A Living trust is a legal document that allows you to transfer ownership of your property from your individual name to your name as trustee of your trust so that all of your assets are "owned" by the trust.

​A revocable living trust is completely amendable, and as the creator and trustee of the trust, you have absolute, 100%, control of the property in the trust during your life and capacity.
Instead of the beneficiary owning the assets, a trust will own them, and pay out to the beneficiary for the beneficiary’s lifetime. The Lifetime Benefit Trust and its terms are set out in the trust of the deceased person who left the assets.

​The Lifetime Benefit Trust will have its own Federal Tax Identification Number, which will be used instead of the social security number of the beneficiary to report income earned by the trust assets.  Title to the trust assets will be in the name of the trustee of the trust in his or her capacity as Trustee of the Lifetime Benefit Trust.
How Does a Generation Skipping Trust Work?
When a spouse is not a United States citizen, the U.S. government will not allow the surviving non-U.S. citizen spouse to take the entire estate before taxes.  The U.S. government assumes the surviving non-citizen spouse will take the estate and leave the country before paying taxes. A special marital trust can be set up to allow the non-citizen to qualify for the marital deduction and avoid the immediate taxing of the estate. 

*For More Information Call Bezaire & Leathers (714)543-6829.


An unlimited amount can be transferred from one spouse to another spouse without any Federal Estate Taxes.  A special trust known as a Qualified Domestic Trust (Q-DOT) can be used to defer federal estate taxes if the surviving spouse is not a U.S. citizen.

A-B Trusts
It is important that all individuals and couples understand the need for an Estate Plan.  A Basic Revocable Living Trust allows the individuals to plan the distribution of their estate following their death without State interference, or the cost and lengthy delays of probate.

​A married person with separate property may want a separate trust with its own instructions and directions.
A Special Needs Trust is for anyone with a disabled beneficiary.  You are torn between leaving them money and interfering with their Public Benefits (SSI, Medicaid, Medical), or, not leaving them anything.  Thus, keeping them at the same standard of living they are currently at.

Now you can leave an inheritance to a disabled beneficiary in a carefully drafted trust that should not interfere with their public benefits.

Because the disabled persons income and asset level determines the availability of public benefits for the disabled individual, a properly drafted Special Needs Trust will allow your beneficiary to take advantage of the extras they were receiving during your life time.

With a Special Needs trust, you designate a trustee that will ensure your money is spent for your beneficiaries “care & benefit.”

​A Special Needs Trust can be created during the lifetime of your disabled beneficiary until they are 65 years old.  Or can be established for them at your death through your trust document.

Qualified Domestic Trust (QDOT)

IV. Life Insurance Trust (ILIT)
Generation Skipping Trust (G-Skip)
For Federal Estate Tax purposes, the general rule is that family wealth is taxed at the end of each generation.  This means that the assets parents leave to their children will generally be taxed again as part of the children’s estate when they pass away.  A way to avoid this retaxation is by using a Generation-Skipping Trust. 

​Beneficiaries are often puzzled when they learn that their inheritance left in a Generation-Skipping Trust.  The name of the trust seems to imply that the decedent meant to “skip” them.  Actually the decedent left the assets in this fashion to skip a generation of estate taxes when the beneficiary dies and to provide other protections for the beneficiary during his or her lifetime.  These are some of the ways a Generation-Skipping Trust benefits the beneficiary:

1. The assets in the trust are protected from certain liabilities such as car accidents and certain other types of lawsuits.

2. The assets in the trusts remain separate property and are protected from division in divorce.

3. If the beneficiary becomes incapacitated, the assets can be managed by the successor trustee for the beneficiary’s benefit  without necessity of a costly court conservatorship.

4. When the beneficiary dies, the assets pass on without necessity of a costly and time consuming Probate Court proceeding.

​5. When the beneficiary dies, the assets will not be subject to estate taxes in their estate; they will “skip” a generation of taxes.  

​A trustor is only allowed to leave up to $5,000,000 plus the indexed amount in this fashion without penalty tax.  Therefore, Generation-Skipping Trusts generally provide for any amount beyond this exemption from penalty tax to go directly to the beneficiary.  Once the assets are in the Lifetime Benefit Trust, however, they can grow in the value to over the yearly exemption level.
Special Needs Trust (SNT)