The high profile Los Angeles divorce trial of Frank and Jamie McCourt that could decide the ownership of the Los Angeles Dodgers got underway yesterday with the testimony of an estate planning attorney the couple had engaged in 2008 to revise their marital agreement.

According to an Associated Press story, Leah Bishop testified that Frank McCourt told her in May of 2009 that he would not sign a revised marital agreement that shared ownership of the Dodgers with his wife, Jamie.  Bishop said the couple had originally requested that a new agreement be drawn up that would keep all their homes in Jamie’s name but make everything else jointly owned.  The original agreement had their real estate assets in Jamie’s name and their business assets in Frank’s name, which he said was done at her insistence, to protect their properties from potential business creditors.

The original agreement is at the center of the McCourt’s divorce dispute and could determine the ownership of the MLB team.  Frank says he is the sole owner of the team; Jamie says the Dodgers are community property.  Bishop, the estate planning attorney, testified yesterday that both Frank and Jamie told her in 2008 that they did not intend to keep their assets separate forever and wanted the Dodgers to be part of their community property.

So what’s at stake?  According to one of Jamie’s attorneys, if the original agreement is enforced, Frank’s asset share would be worth $1 billion, while Jamie’s would be worth “only” $70 million.

And the moral of the story?  Clarity in all things.  Especially estate planning.

For a clear understanding of how estate planning can help you protect your assets, contact our California estate planning law firm.

According to a Reuters article, many financial planners are urging wealthy clients to give assets away to children and grandchildren, calling 2010 “the golden era” for gifting assets.

Why?

The estate tax is still gone for 2010 and taxes on generation-skipping transfers were also eliminated this year.  However, next year both come back – the estate tax at a higher 55 percent rate and the generation-skipping transfer tax at up to 55 percent.  Moving assets out this year through tax-free gifts, intra-family loans and trusts makes sense the more the clock runs out on 2010 and Congress does nothing to reinstate a retroactive estate tax – which many experts say will not happen.

However, Congress is expected to make a move on the GRAT, or grantor-retained annuity trust.  Currently, you can transfer any assets that are expected to rise in value to a GRAT and receive payments for a minimum of two years.  Gains in the GRAT assets go to beneficiaries tax-free.  Congress is expected to start making some distributions taxable and extend the minimum term to ten years.

Gift taxes fell to 35 percent this year, from 45 percent in 2009, but will vault back up to 55 percent in 2011.

If all this uncertainty has your head spinning, contact our California asset protection law firm for help in developing the perfect estate plan for your family and these uncertain times.

Earlier this year Congress passed the Foreign Account Tax Compliance Act (FACTA), which imposes stricter IRS filing requirements on those who have overseas assets of more than $50,000.

While CPAs and tax advisors still await direction from the IRS on compliance, those taxpayers who must now abide by the new FACTA rules should be aware of the additional reporting they will need to do to comply.  And in some cases, it may be duplicate reporting.

For example, if you have more than $10,000 in an offshore bank account, you were already filing a Report of Foreign Bank and Financial Accounts with the IRS.  If you have more than $50,000, you will have to report it separately on your 2010 return.

If you own foreign real estate, you will also need to file a new FACTA form in addition to the IRS forms you may have already been filing if the real estate was held by a foreign corporation or partnership.  And, if you have a family villa outside the U.S. that is owned by several family members, the property must be valued and if that value exceeds the $50,000 limit per person, it will need to be reported to the IRS.

If the new FACTA reporting rules have your head spinning, don’t worry.  Contact a California asset protection attorney to learn what the new rules may mean for you and your estate.

Forbes has graded each of the 12 U.S. states that provide Domestic Asset Protections Trusts, awarding anywhere from an A+ for the best protection to a D for poor protection.

Here are the ratings:

New Hampshire:  B-. The newest state to enact DAPT legislation, New Hampshire gets graded down for not protecting the trust from pre-existing tort claims, a divorcing spouse, alimony or child support obligations.  The assets also have to be in the trust for a minimum of four years before protection kicks in.

Tennessee: B.  Offers only partial protection like N.H., except it does protect assets from pre-existing tort claims.

Wyoming: C. Partial protection, and if trust assets are used on a credit application, they can be seized to collect the debt.

South Dakota: A-. Your assets must be in the trust for only three years before the statute of limitations expires.  Still, no protection from pre-existing tort claims, a divorcing spouse, alimony or child support.

Missouri: C. This state’s trust laws left some basic issues unaddressed.

Oklahoma: C-. Can only protect up to $1 million in assets.

Utah: C. More exceptions to what is protected than other states.

Nevada: A+. The most debtor-friendly state requires your assets to be in the trust for only two years before the statute of limitations expires, it includes protection from pre-existing tort claims, a divorcing spouse, alimony and child support.

Rhode Island: B.  Same provisos as New Hampshire.

Delaware: A-. Assets must be in the trust for four years before the statute of limitations expires.

Alaska: A. The first state with a DAPT law, Alaska does protect assets from pre-existing tort claims.

Colorado: D. Has the oldest asset protection law on the books, but many lawyers disagree over whether it really protects assets since it is so ambiguous.

If you have assets to protect and are interested in learning more about a Domestic Asset Protection Trust, contact our California asset protection law firm.

Last weekend, the Wall Street Journal had a prescient article entitled, “Too Rich to Live?” Three days later, another billionaire – Yankees owner George Steinbrenner – died at age 80, taking the 2010 billionaire death tally to three (Dan Duncan and Walter Shorenstein being the other two who passed in this, the year of no estate taxes).

Tax historian Joseph Thorndike was quoted as saying that there is a “death incentive” every time Congress raises the estate tax, but with the potential estate tax “re-set” next year to a top rate of 55 percent and only a $1 million deduction, 2011 could see the largest increase in a major tax in history – and a potential escalating number of “gruesome” cases as the clock runs out on 2010.

Many estate planning advisers are telling clients to look carefully at their powers of attorney documents this year, and to also pay close attention to their health care proxies.

The WSJ article said that many Washington insiders think that Congress will not act this year because of an already crowded legislative agenda and the fall election.

The Senate is currently divided between three possible solutions – the pre-Bush rate of 55 percent, a 35 percent rate with a more generous exemption and a return to the old 45 percent rate and $3.5 million exemption per individual.