December 2018 Update
The California Supreme Court revised and renumbered the California Rules of Professional Conduct, effective November 1, 2018. All the Rule changes have been highlighted and updated throughout the publication. See chap 2 (Ethical Considerations). See also §§4.7, 4.8, 4.18, 4.21, 11B.2, 11B.4, 12.2, 12.64.
The Tax Cuts and Jobs Act (Pub L 115–97, 131 Stat 2054) was signed into law on December 22, 2017, and has sweeping changes relating to income taxes, but only affects the estate, gift, and generation-skipping transfer tax by an increase in the applicable exclusion amount (AEA) to $11.18 million for the year 2018. The AEA will continue to be adjusted through 2025, but in 2026, it will revert back to the provisions under the American Taxpayer Relief Act of 2012. The maximum estate and gift tax rate remains at 40 percent. Chapter 3 highlights the changes made under this Act. See also §§5.22, 5.57, 6.1– 6.30, 11.6, 11A.7, 11B.15.
The annual gift tax exclusion under IRC §2503(b) has increased to $15,000 for 2018 and adjusted annually for inflation. Rev Proc 2018–18, 2018–10 Int Rev Bull 392. See §§3.13, 3.20, 3.58, 6.3, 6.55A, 7.40, 11B.16.
Nonqualified stock options (NQSOs) receive slightly less favorable income tax treatment than incentive stock options (ISOs). However, under the Tax Cuts and Jobs Act (Pub L 115–97, 131 Stat 2054), a “qualified employee” may elect to defer the income attributable to “qualified stock” under a NQSO of an “eligible corporation” for up to 5 years. IRC §83(i). See §5.42 for a detailed explanation of the new election.
An increasingly important issue is the handling of a client’s digital assets and accounts. The Revised Uniform Fiduciary Access to Digital Assets Act, codified at Prob C §§870–884, provides procedures for a decedent’s personal representative to access and manage digital assets and electronic communications and requires a custodian of digital assets, except under certain circumstances, to comply with the personal representative’s request for disclosure of digital assets or to terminate an account. See Prob C §877. See §§5.55–5.56.
Forms, samples, and Medi-Cal limits have been updated to reflect recent legislation and trends. See §§5.56, 6.44, 6.70, 7.34, 8.10, 9.40, 9.42, 10.32, 10.34, 10.36–10.37, 12.24, 12.33, 12.66.
In our 2017 release, we added a new chapter (Estate Planning for Companion Animals and Pets) to the publication and received a good response. This chapter offers a comprehensive legal overview and suggestions for drafting companion animal trust provisions. See chap 6A.
Effective January 1, 2018, for costs associated with probate, an additional $75 is charged at the time of recording for every real estate instrument, paper, or notice under the recent Building Homes and Jobs Act. See Govt C §27388.1 and Health & S C §§50470–50475. See §§9.10, 12.52.