The Family Meeting: How to Share Your Estate Plans with Loved Ones this Holiday Season

The holiday season can be an ideal time to discuss your estate plans with family. By openly sharing your intentions, you help reduce future conflicts and build trust. Here’s a step-by-step guide to organizing a productive family meeting to share your estate plans.

1. Schedule a Convenient Time
Find a time when everyone is comfortable and relaxed, like after a family meal or during a planned gathering. This helps ensure that family members are more receptive and willing to listen.

2. Outline Key Points
Decide in advance what to cover. Key topics might include your wishes for health care decisions, asset distribution, and any specifics about powers of attorney. Sharing high-level decisions can reassure family members without diving into every detail.

3. Encourage Questions and Feedback
Invite your loved ones to ask questions and share any concerns. Their feedback can sometimes help you identify overlooked aspects or clarify decisions. Additionally, a dialogue ensures everyone feels heard, strengthening family trust.

4. Document the Meeting
You might consider recording the meeting’s main points in writing. This not only helps clarify your intentions but also creates a reference that family members can review later.

Having a family meeting is a thoughtful step toward building understanding. It brings peace of mind and demonstrates your commitment to family unity.

Going Home for the Holidays? Key Estate Planning Conversations to Have with Family

The holiday season often brings families together, making it a perfect time to start crucial conversations about estate planning. While these discussions may feel sensitive, they provide a great opportunity to clarify wishes and make decisions that benefit the entire family. Here’s how to bring up estate planning during your holiday gatherings.

1. Approach the Topic Gently
No one wants to feel ambushed over a holiday dinner. Start with a general question, like, “Have you ever thought about your estate plan?” or “Do you have any specific wishes for your future?” This can open the door for a more in-depth conversation.

2. Share Your Own Planning Process
One way to ease the conversation is by sharing your estate planning experiences. This helps normalize the discussion and encourages family members to think about their own plans. Emphasize the value of being prepared, not only for themselves but also for those they care about.

3. Discuss Key Decisions
Estate planning involves critical decisions, like nominating decision-makers and determining healthcare and other preferences. Consider discussing these topics without getting into too many specifics. This lets you focus on the importance of decision-making without pushing family members to disclose sensitive information.

4. Set Future Goals
If the conversation feels productive, suggest setting a family meeting or follow-up in the future. That way, no one feels pressured to finalize details immediately. Families can then agree to revisit the topic in a more formal setting, perhaps even with a legal professional present.

A well-timed conversation can lead to better planning, greater peace of mind, and a stronger family bond—all of which are valuable gifts for the holiday season.

Holiday Travel and Your Estate Plan: Important Steps Before You Leave Home

As the holiday season approaches, many families are preparing for travel, whether it’s a trip across the country to visit relatives or an international getaway. Amidst all the excitement, it’s easy to overlook an essential part of preparation: making sure your estate plan is ready to protect you and your family if an unexpected crisis arises. Here are some important estate planning steps to take before you hit the road or board a plane this holiday season.

1. Confirm Your Trust is Fully Funded

One of the most critical steps in estate planning is ensuring your assets are correctly titled in the name of your trust, often referred to as “trust funding.” If assets like real estate, bank accounts, or investment portfolios are not in your trust, they may be subject to probate, complicating your family’s ability to manage them if something happens to you. Before traveling, take the time to review your trust funding. Confirm that your major assets are titled in the trust’s name, and if any assets are missing, update them accordingly. This will help ensure that your wishes are followed and that your family can manage your estate smoothly, even if you’re far from home.

2. Include Pertinent Notes or Instructions with Your Estate Documents

Sometimes, an estate plan is not just about legal documents but about the context and personal guidance you leave for loved ones. Consider including notes or specific instructions with your estate plan, especially if there are nuances in your wishes or specific guidance for handling this holiday season. Whether it’s instructions for supporting elderly parents, handling finances, or caring for pets, these details provide comfort and clarity to your family in a time of crisis. Make sure your notes are organized and securely attached to your main estate planning documents, so they’re accessible if needed.

3. Communicate with Your Nominated Decision-Makers

Your estate plan likely names trusted individuals, such as a healthcare agent, financial power of attorney, and trustee, to make decisions on your behalf if you are unable to do so. Before you leave, have a conversation with these decision-makers to ensure they know where your estate planning documents are located and how to access them. Clear communication now can prevent confusion later, giving your family peace of mind and ensuring that your wishes are honored if something unexpected happens.

4. Prepare for International Travel with Alerts and Emergency Contacts

If your travel plans include leaving the country, it’s wise to set up measures to alert appropriate individuals back home if an emergency arises. For example, you might leave travel information, including flight details and contact numbers, with a family member or friend, so they’re aware of your plans. You can also arrange for a notification service, such as a mobile app or travel alert system, to inform someone back home if an emergency occurs. Additionally, check that your healthcare power of attorney and other legal documents are valid abroad, as some countries may have specific rules regarding foreign documents.

Peace of Mind for You and Your Family

Preparing your estate plan before holiday travel ensures that your loved ones are prepared and empowered to support you, no matter where you are. From confirming that your assets are in your trust to organizing guidance notes, each step creates a layer of security for you and your family. Taking these simple but meaningful actions provides peace of mind, helping you relax and enjoy your travels knowing that your estate plan is ready for any situation.

Are Holiday Gifts Taxable?

The short answer: Yup! But, spoiler: you probably won’t end up paying any gift taxes on holiday gifts.

A holiday gift is a donative transfer of an asset from one person (donor) to another (donee). A “donative transfer” simply means that the donee didn’t have to do or pay anything for it. It’s a true gift! It’s also a gift that you’re giving during life (intervivos) - as opposed to a gift that you make after you die (i.e. through a will or trust).

There is a tax that could be imposed, but that requires a little more explanation. Just like the government taxes things from your income (income taxes), to certain goods sold (sales tax), to real estate that you own (property taxes), it also taxes the transfer of items. So the gift tax is a transfer tax.

The gift tax is only imposed by the federal government (think: IRS); California doesn’t tax gifts. And it’s only imposed on the donor (the person giving the gift). If you receive a gift, and you live in California, you’re not on the hook for transfer taxes. If you give a gift, and you live in California, you still won’t owe any gift tax to the State of California and probably won’t owe any gift taxes to the federal government.

Here’s why: The federal government has this nifty rule called the “annual exclusion.” What that means is that each resident of the USA can make a gift up to $15,000, per year, to any other person, and not owe any taxes on that gift. In fact, the IRS doesn’t even want to know about it! You don’t have to report it. Married couples can combine that exclusion amount to $30,000 to one person, per year, and still fall within the same rule. So put another way, you’d have to be awfully generous this holiday season to have to deal with gift taxes.

Well, what if you are that generous?

If you make a gift in excess of $15,000 but less than what is called the exemption amount (currently $11.58 million per taxpayer for 2020; $11.7 million for 2021), you won’t owe any gift taxes. However, you do need to report it to the IRS. Once reported, the IRS will deduct the amount of the gift over $15,000 from your total exemption amount that you’re entitled to when you die. For example, if you give a $75,000 gift to your favorite niece this year, you would report a $60,000 gift ($75,000 - $15,000 exclusion amount) and the IRS would walk over to your file and deduct $60,000 from your $11.58 million unified credit. Only $11.52 million left to give before you pay transfer taxes! (The exemption amount involves estate taxes, which we can explain and discuss with you as part of your estate planning process.) 

Until then, may you have a safe, healthy, and generous holiday season!

Are Holiday Gifts Subject to the Gift Tax?

The short answer: yup! But the more nuanced answer is that if you are giving a gift or receiving a gift in California, you probably won’t end up paying any gift taxes on holiday gifts.

Let’s take a look at the mechanics of a holiday gift. Without getting overly complicated, a holiday gift is a donative transfer of an asset from one person (donor) to another (donee). A “donative transfer” simply means that no one traded you or paid you anything for it (as in, it’s a true gift). Just like the government taxes your income (income taxes), certain goods sold (sales tax), and also real estate that you own (property taxes), it also taxes the donative transfer of assets. So the gift tax is a transfer tax.

A couple of details: the gift tax is only imposed by the federal government--so only the IRS will tax you, not the state of California--and it’s only imposed on the donor (the person giving the gift). If you receive a gift, and you live in California, you’re not on the hook for transfer taxes.

There are two types of gifts: those you give during life (intervivos) and those you make after you die (like through a will or trust). We’re going to focus on intervivos gifts since most holiday gifts are given during life.

Here’s why most of you will not owe any gift taxes on your holiday gifts. The federal government has this nifty rule called the “annual exclusion”. What that means is that each of you can make a gift up to $15,000, per year, per recipient, and not owe any taxes on that gift. In fact, the IRS doesn’t even want to know about it! You don’t have to report it. Married couples can combine that exclusion amount to $30,000 to one recipient, per year, and still fall within the same rule. So put another way, you’d have to be awfully generous this holiday season to have to deal with gift taxes.

Well, what if you are that generous? What happens if you make a gift that exceeds the annual exclusion?

Now we get to the “unified credit” or estate tax exemption amount. The unified credit is an amount the federal government allows you to gift during your entire lifetime, and combine that amount with whatever you own when you die, and not pay any transfer taxes if you are below the unified credit amount. It’s an amount set by law, and it increases every year based on inflation. The credit amount in the year that you die is what is applied. The exemption level for 2018 is $11.18 million. For example, let’s say you die in 2018 (sorry to bum you out!)--if the total of what you gifted during your life, and what you owned at death is less than $11.18 million then you would pay ZERO transfer taxes. For 2019, that number increases to $11.4 million.

Let’s recap: if you make a gift to someone that’s valued at $15,000 or less, per person, you don’t have to report it, and no transfer taxes are owed, and there’s no reduction in your unified credit amount. If you make a gift in excess of $15,000 but less than the unified credit (currently $11.18 million), you won’t owe any transfer taxes, but you’ll need to report it to the IRS. They’ll walk over to your file, and deduct the amount of the gift from your unified credit amount. For example, if you gift $20,000 to your favorite niece this year, you would report a $5,000 gift ($20,000 - $15,000 exclusion amount) and the IRS would walk over to your file and deduct $5,000 from your $11.18 million unified credit. Only $11.175 million left to give before you pay transfer taxes!

Happy Holidays! And don’t forget to send those ‘thank you’ cards!