Checklist for 2018 and New Tax Regime

As the realities of the new tax law are being discovered, we’ve selected those we feel either have the biggest impact or are necessary to take action on as soon as possible for the benefit and protection of your family’s estate and business interests.

  1. Evaluating your children’s Health Care Directives, HIPAA authorizations and Durable Powers of Attorney. They may not have much, but at 18 you cease having access to their information by virtue of being a child’s parent. Therefore, a part of the checklist before children age out of your legal case, is to set up these documents. Many of our clients have them executed in both the state they are planning to attend college and in CA, their home state. These are low cost documents that allow mom and dad to step in if a child is ever in an accident or cannot speak for him or herself. Additionally, some families may need to have other powers of attorney executed for at-home affairs that may need children’s signature while they are away at college or abroad.
  2. Evaluate any contracts that may need to be re-negotiated or have adjustments made between entities, especially when you are wholly owned or have the majority interest in one entity.
  3. Review your estate planning documents and the titling of the assets owned in your trust. Refinancing and account transfers may cause unintentional transfer of title back into individual names, something that should be periodically checked. Additionally, estate planning documents may need to be updated for changes in heart, divorce, children coming of age, larger estate size, death of trustees or beneficiaries and even for changes in the law. Many of our clients are coming in to simplify their estate plan based on the new $11.2 million ($22.4 million per couple) exemption, which can greatly reduce stress and save administrative costs in the future.
  4. Formalize your business structure by converting it into an “organized entity” rather than a sole proprietorship or general partnership. Its best to do this at the beginning of the year or you may file after 12/15 of every year and not have to pay the CA FTB $800 annual fee for the current year. Contrary to the modern trend to form Limited Liability Companies or S-Corporations, you may want to closely evaluate the benefits of forming a traditional C-Corp under the new tax regime.
  5. Updating your annual meeting minutes, unanimous written consents and other business documents that help memorialize significant events and ratifies individuals further of company business. This important step also helps prevent personal liability of business owners and managers by bolstering the argument that the structure is not just a veil for your personal pocket book under a legal theory called piercing the corporate veil.
  6. Building owners/occupants should evaluate getting a cost-segregation analysis.  A “cost segregation” study identifies and reclassifies personal property assets to shorten the depreciation time for taxation purposes, which reduces current income tax obligations.
  7. File your Statement of Information with the Secretary of State and update any changes to officers, directors and the principal place of business. This can be done quickly and easily online. If you have an LLC then you are only required to file this bi-annually, not annually.
  8. New legislation of the Affordable Housing and Jobs Act, which became effective January 1, 2018, mandates County Recorders to charge an additional $75 per recording Title per transaction (up to a maximum of $225) at the time of recording on every qualifying real estate instrument, paper, or notice except on any real estate instrument, paper or notice recorded in connection with a transfer subject to a documentary transfer tax, or in connection with the transfer of a real property that is a residential dwelling to an owner-occupier. See below for more information on this topic.
  9. Beginning July 1, 2017, the State Board of Equalization was be broken into two agencies. One department will collect taxes and the other will hear disputes from taxpayers. Taxpayers who want to contest decisions from the administrative judges would have to file lawsuits against the State in civil court. For now, the BOE website and resources are functional. Expect to see changes implemented throughout this year.

Contact the experienced trust and estate planning attorneys at NM Law, APC (949-253-0000) to go over the necessary action items that are right for you.


Disclaimer: This article is intended to provide a general summary of laws in the State of California and should not be construed as a legal opinion nor a complete legal analysis of the subject matter. Noelle Minto is an attorney at NM Law, APC in Tustin, California, a law firm specializing in Trusts & Estates and Business Transactions.

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