Family Wealth Management Outline

I.      California Property
A.   Characterization
1.      Community Property
a)    CPC 760 – community property
(1) all property, wherever situated, acquired during marriage when domiciled in CA
b)    CPC 761 – revocable trusts as community property
(1) (a) so long as the trust is controlled by the spouses jointly and the corpus was originally CP, it remains CP regardless of the trustee’s identity
(2) (b) unless the trust says otherwise, either spouse may revoke alone, and any distributions or withdrawals remain community property unless validly transmuted
(3) (c) so long as it is within the terms of the trust, a trustee’s managing of the trust does not change the characterization of the property
2.      Separate Property
a)    CPC 770 – separate property
(1) (a) separate property of a married person includes
(a)   property owned before marriage
(b)   acquired by gift/bequest/devise/descent
(c)    rents/issues/profits from separate property
(2) (b) no need to get spouse’s permission to convey separate property
b)    CPC 771 – earnings/accumulations while living separate & apart; minor child’s earnings under specified types of contracts
(1) (a) earnings of spouse and minor child in custody of the spouse while separated is separate property of the spouse
(2) (b) certain contracts are sole legal property of the minor (child actors, musicians, etc.)
3.      Quasi-Community Property
a)    all personal property, wherever situated, and all real property situated in CA that would have been CP had the couple been domiciled in CA when acquired
b)    purpose is to take care of the spouse w/o property
4.      Transmutation of property: agreement to characterize certain property
B.   Intestacy
1.      CPC 6400 – intestate estate
a)    any property not disposed of by will
2.      CPC 6401 – intestate share surviving spouse, dom. prtnr.
a)    (a) 1/2 of CP
b)    (b) 1/2 of D’s QCP
c)     (c) SP divided as follows
(1) (1) 100% to spouse is D left no issue, parent, sibling, or sibling issue
(2) (2) 1/2 of intestate estate to surviving spouse if
(a)   (A) D leaves 1 child or 1 child’s issue
(b)   (B) no children, but parent(s) or issue of both or either parent
(3) (3) 1/3 of intestate estate to surviving spouse if
(a)   (A) D leaves more than 1 child
(b)   (B) D leaves 1 child + issue of 1+ deceased child
(c)    (C) D leaves issue of 2+ deceased children
3.      CPC 6402 – intestate share of heirs other than surviving spouse
a)    (a) to D’s issue by representation
b)    (b) no surviving issue, then to D’s parents equally
c)     (c) no surviving parents, then to each surviving parent’s issue by representation
d)    (d) if none of the above, then to grandparents, and if no grandparents, to their surviving issue by representation
e)     (e) if none of the above, then to issue of predeceased spouse (i.e. step-children) by representation
f)      (f) if none of the above, then next of kin, with preference for those who claim through nearest ancestor
g)    (g) if none of the above, then to the in-laws or their issue/kin
4.      CPC 6403 – 120 hour rule
5.      CPC 6404 – escheat
II.   Estate Tax Overview
A.   General calculation
1.      Gross Estate
a)    sect. 2031 – 2046
2.      Deductions
a)    sect. 2051 – 2058
b)    This gives one the Taxable Estate
3.      Adjusted taxable gifts are added to determine the ESTATE
4.      Calculate tentative tax
5.      Subtract tentative tax attributed to gifts
6.      Apply credits against the tax