The Golden State Pooled Trust
Acts-Laws-Regulations
The Lanterman Developmental Disabilities Services Act
The Lanterman Developmental Disabilities Services Act, known as the "Lanterman Act,” is an important piece of legislation that was passed in 1969. This is the California law that says people with developmental disabilities and their families have a right to get the services and supports they need to live like people without disabilities.
The Lanterman Act outlines the rights of individuals with developmental disabilities and their families, how the regional centers and service providers can help these individuals, what services and supports they can obtain, how to use the individualized program plan to get needed services, what to do when someone violates the Lanterman Act, and how to improve the system (description provided by The Frank D. Lanterman Regional Center website - www.lanterman.org)
The Lanterman Act outlines the rights of individuals with developmental disabilities and their families, how the regional centers and service providers can help these individuals, what services and supports they can obtain, how to use the individualized program plan to get needed services, what to do when someone violates the Lanterman Act, and how to improve the system (description provided by The Frank D. Lanterman Regional Center website - www.lanterman.org)
Click on the following link to see a video overview of the Lanterman Act
by Chad Carlock, Attorney at Law from Davis, CA
entitled "Planning for Clients with Developmental Disabilities"
held October 2010
The Lanterman Act
Co sponsored by:
The Arc of California, the Golden State Pooled Trust, Wells Fargo and The Dale Law Firm, PC
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by Bradley J. Frigon, Attorney at Law, Englewood, Colorado
For many months, professionals in the estate planning field, and their clients, have waited in anticipation to learn how the estate tax exemption would reappear in 2011. Over the past 10 years, estate planning and probate attorneys have been working with the estate tax rules of the Economic Growth and Tax Relief Reconciliation Act of 2001. Under this Act, the estate tax exemption gradually increased from $675,000 in 2001 to $3.5 million in 2009 and then was repealed for 2010, meaning that if a person died in 2010, no matter how large his or her estate, there would be no estate tax due. All good things had to come to an end, though, and the estate tax was scheduled to reappear in 2011 with an exemption amount of only $1 million! This means that if an estate was valued at under $1 million no estate tax would be due, any assets above $1 million would be taxed
On December 17, 2010, President Obama signed a new act into law: the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The estate tax exemption for 2011 is now $5 million per person. This exemption means that a person can transfer $5 million in assets at his or her death without estate tax consequences.* The new Act also includes a provision offering something new in the world of estate planning: portability of the federal estate tax exemption between spouses for 2011 and 2012. But what exactly does portability of the exemption mean? To answer this question, it is helpful to understand how estates were taxed under the former law.
Begin with the understanding that transfers between spouses are not taxable; this is called the unlimited marital deduction. Prior to the new Act, one of the main goals of estate tax planning was to allow each spouse's estate the opportunity to use his or her estate tax exemption amount. Without planning, the assets of the first spouse to die would pass tax-free to the second spouse because of the unlimited marital deduction. When the second spouse died, however, the second spouse's estate would include his or her assets and the remaining assets of the first spouse to die. To allow both spouses' estates to take advantage of the estate tax exemption, estate planners often used a marital and family trust designed to take advantage of the exemption: upon the death of the first spouse to die, a family trust would be established and would provide for the surviving spouse's needs during his or her lifetime, but the ultimate beneficiaries would be other people (usually the couple's children). Since the ultimate beneficiary was not the spouse, but other people, the assets transferred to the trust would be part of the taxable estate of the first spouse to die. The amount transferred to the family trust was usually equal to the estate tax exemption amount. Remaining assets were transferred to a marital trust, again for the benefit of the surviving spouse. This trust, however, named the surviving spouse as the ultimate beneficiary and because it was considered a transfer between spouses, there was no estate tax liability when the first spouse died because of the unlimited marital deduction.
Under the new portability rules, even without a trust, if the first spouse to die does not use his or her entire estate tax exemption, the surviving spouse can use any remainder in addition to his or her own exemption amount. For example, assume John and Ann are married and have a combined estate worth $6 million. John dies first without a marital trust and leaves everything to Ann in his will. Since he leaves everything to Ann, his spouse, there are no estate tax consequences when John dies because of the unlimited marital deduction. Ann then dies and leaves her estate, worth $6 million, to her children. Ann has a $5 million exemption herself and can use John's unused exemption. The result is neither John nor Ann have a taxable estate.
So are trusts no longer necessary? While portability makes it more convenient for married couples to fully take advantage of the estate tax exemption, there are still some compelling reasons to use trusts:
- The portability of the estate tax exemption applies to people passing away in 2011 and 2012. We do not know if the portability of the estate tax exemption will continue after 2012.
- In the case of remarriage later in life, trusts can be useful in providing for a second spouse during his or her lifetime, while ensuring that remaining assets will pass to the children of the grantor (maker) of the trust and not the spouse's children.
- Trusts are also helpful in providing for the health, education, maintenance, and support of children and young adults (or anyone who doesn't manage money well) in lieu of giving a large amount of assets outright.
- Trusts may help protect funds from a beneficiary's creditors.
Some trust models are outdated and may not be as flexible as possible to ensure that a client's wishes are carried out while allowing for the uncertain future of the federal estate tax. Now is a good time to have an "estate planning checkup" to ensure that your estate planning will continue to function as designed and to review any changes in your life that may affect your estate planning.
* Large gifts (currently over $13,000 per year, per recipient) given during the person's lifetime may reduce the estate tax exemption.