Fall 2007 Newsletter

Welcome to the Fall edition of our newsletter.

In this issue we want to share with you our recent expansion of our firm and revamping of our website. Because we have been steadily growing as a firm, the limitations on our physical space had become unbearable. For years there were no offices available all on the same floor of our lovely building. Recently, such space became available on the 3rd floor, so the entire firm is now united in the same area, and we now have a conference room of our own, in addition to the multiple conference rooms supplied by our landlord. We have purchased new furniture and we even have our own private patio to compete with the set on the popular t.v. show, Boston Legal. We also have upgraded our computer system and obtained a wonderful techno-challenging piece of equipment which acts as a copier/scanner/fax/printer/email machine. We have been searching for a year for just the right paralegal to join our firm, since the departure of our last employee. The search has been a difficult one and has occupied a considerable amount of time. We think we have found a wonderful new asset to our firm in Yana Rozovskaya, who has had many years of experience in the family law and estate planning field. We welcome her and will showcase her in our next newsletter.

We also recently hired a new office administrator, Julie Dicterow, who assists us with our accounting and billing, organizing our files, managing our office and generally keeping us all in good spirits. When she is not working for us, she is pursuing her primary love, which is performing her own music at all of the popular venues around Los Angeles. You can find her on www.MySpace.com/ohhalo.

Updates in the current case law and legislation affecting our clients are abundant this quarter.

Our new E-Newsletter will provide content-current data to our readers on a regular basis. New rules regarding the qualifications for and appointment of Minor's Counsel are about to be approved by the California Judicial Council. Our Partner Frieda Gordon was one of the attorneys who helped draft the new rules, due to her long-standing work in the field of representation of minors in family law. There are also a number of family law cases and other pieces of legislation that are now awaiting the Governor's signature of interest to our readers. Please return to our web site periodically to check out in the E-Newsletter the activity in our courts and legislature in the areas of probate, trusts, conservatorships and family law.

We are pleased that our law clerk Nolan Hiett is nearly finished with his last year at Southwestern University School of Law.

He will only be working part time until he takes the bar exam next summer. He has been such an asset to our firm, we are anxiously looking forward to making him our associate. Katherine Su, our current associate, has been learning very quickly the intricacies of family law and probate, conservatorship, guardianship law, as well as the complexities and pitfalls of estate planning. Everyone who has dealt with her has been extremely pleased with her bright spirit, warmth, intelligence and caring nature.

Avery and Frieda have both been very busy litigating.

Frieda just completed a three-day complex family law move-away trial where the client was permitted to move to Virginia with her children. Another trial is about to commence consisting of very difficult change of custody and visitation issues as well as issues related to the transmutation and commingling of separate and community property. Also, in that trial, the parties are embroiled in disputes over the amount and duration of spousal support and the amount of child support following a detrimental vocational examination of the wife.

Prenuptials and postnuptials seem to be the agreements of the day.

Lately, it seems that clients are coming in droves to have one prepared. We have not seen too many cohabitation agreements recently. I guess people just do not want to bother to protect their rights when the relationship may be temporary. This is not the smartest attitude, as a cohabitation agreement can actually preserve the relationship and be converted into the much-needed pre-nuptial agreement.

Avery and Frieda's Mediation Practice is still active,

although Collaborative Law seems to be obtaining better results more quickly and with less expense to the parties, even though the parties think that by employing a mediator, they will be saving money. Actually, the opposite has proven to be true, although in some cases mediation will work just fine. Mediation is appropriate not only in the field of family law, but in probate and civil litigation. Cooper-Gordon LLP is currently handling all aspects of mediation, from full mediation of all issues to mediation of selected issues, not just in family law, where we might mediate such issues as custody and visitation or support or property division, but also issues in probate such as competency, reimbursement claims and the like. The attorney customarily will meet with both parties, flesh out the issues and determine if the parties would be best suited for a mediation team or a single mediator. During the Collaborative process, a team of experts is usually employed. For example, with children's issues, teaming up with a psychologist or marriage and family therapist is quite useful. Sometimes a financial planner or forensic accountant is valuable towards reaching a fair and expeditious settlement. In mediation, we recommend that each party have a consulting attorney, a job for which Avery and Frieda are also available.

Frieda and Avery both continue to be appointed by the Court

to represent children, both in family law matters as well as probate matters. Both areas of law are highly specialized and although often very difficult cases, they usually provide for a highly rewarding practice. Frieda currently represents four boys as they try to find a way to be released from the roles imposed on them by their parents of caretaker, protector, defender and collaborator, who would just like to be left alone to be children.

On another note, since it has come up repeatedly in our estate planning

practice, we thought we would provide a little insight into Retirement Plan Distribution upon retirement. Retirement plan assets may be subject to estate tax as well as income taxes. You may or may not know that the estate tax can be deferred when there is a surviving spouse. Usually the income tax can be deferred when there is a surviving spouse. However, did you know that, if you plan carefully, your retirement plan benefits can be used to generate income for you as a plan participant's beneficiaries long after your death?

For many participants of retirement plans,

the objective of their estate plan would be to distribute as little as possible as late as possible. It stands to reason that the longer you can postpone distribution of the plan assets, the greater the additional wealth that will accumulate. Unless the estate is exempt from federal estate tax or the surviving spouse is the sole beneficiary, you must plan to make funds available outside your retirement plan in order to pay the estate taxes while maximizing the assets in the plan available for tax-deferred status. Income tax on distributions from a retirement plan cannot be avoided unless the beneficiary of the plan is a charity. Nonetheless, by extending distributions from IRA's and other qualified plans many years after the participant's death, payment of taxes not only can be minimized, but they can be spread out over such a long period of time that the effect of payment will be minimal compared to the benefits.

For example, a plan participant must begin receiving distributions from the plan no later than April 1 of the calendar year after the calendar year in which the participant attains age 70½ or, if an employer maintains the qualified plan, until April 1 of the calendar year following the year in which the individual terminates employment. Later distributions must be taken no later than each successive December 31st. The amount of each distribution must be at least the amount obtained by dividing the plan assets at the end of the year preceding the distribution year by the participant's life expectancy during the distribution year.

Life expectancies are determined from a table prescribed by the IRS that is generally favorable to the taxpayer.

A person at age 72 is expected, for example, to have a life expectancy of 25.6 years. Strangely enough, this table is based upon the joint life expectancy of the participant and a hypothetical spouse who is ten years younger than the participant. (How sexist can the government be?) One good reason to marry someone more than ten years younger than you is that an even more favorable divisor is available with regard to the remaining life expectancy.

If it is possible, it is always most beneficial

to name a spouse as plan beneficiary because plan assets will not be subject to federal estate tax (except that, if you are married to a non-citizen, the plan or IRA assets must be distributed to a Qualified Domestic Trust, commonly known as a Q-Dot, in order to obtain a marital deduction from estate tax. If the surviving spouse has rolled over the plan assets to the spouse's IRA, the spouse will have the right to designate beneficiaries of that IRA and if children are designated, they will be able to take distributions over the life expectancy of the oldest child starting in the year after the spouse's death, thus possibly extending distributions another forty years or more! Each child must be able to control the investment of the assets held for that child's benefit and use his or her own life expectancy to govern distributions. A potential risk of such a plan is that the spouse will be able to withdraw the assets and use them however he or she wishes, so that little or nothing will remain at the time of the spouse's death. Additionally, the spouse can change beneficiaries and name a new husband and/or other children or even strangers or charities as beneficiaries, thus thwarting the wishes of the first spouse to die.

If the participant wants to limit the amount that surviving spouse

or other beneficiary can withdraw or assure that a certain recipient will receive a specific amounts on the death of the surviving spouse or another beneficiary's death, the participant must designate a trust as beneficiary. A trust would be most appropriate where the participant the plan assets to be used for the benefit of minor children. If the trust becomes irrevocable on the death of the participant and satisfies certain other requirements set forth in the IRS regulations, then the oldest beneficiary of the trust is used to determine the minimum distributions that the plan must make to the trust. Make sure that to review who the beneficiaries are of that trust, because if the spouse is named as a plan beneficiary then the spouse's life expectancy would be used to determine the minimum distributions. You could designate as plan beneficiary a special trust of which only the children are beneficiaries in order to obtain a longer period of distributions. If the beneficiary is a charity, the minimum distributions will be determined based upon the participants life expectancy under the IRS tables at the time of his death. You can arrange to name a charity as beneficiary of only a portion of the plan or IRA and then the balance can be placed in trust for individuals which may still be used for the balance without jeopardizing the stretch-out on the amount payable to the trust.

Until the enactment of the Pension Protection Act of 2006 (PPA),

charitable gifts from retirement plans were treated as distributions to the participant followed by contributions of the same amount to charity. Now an IRA participant may transfer $100,000 per year to a charity directly from the IRA during 2006 and 2007 without having the distribution included in income and without having the amount transferred to the charity counting toward the individual's limit on charitable contributions, provided the individual has attained age 70½. Also, effective January 2007, participants other than surviving spouses can make rollover elections to IRA's. The rules for non-spouse beneficiaries are not as favorable, however.

In sum, if a trust is named as beneficiary and the trust satisfies the requirements of the minimum distribution rules, then the IRA can be opened in the name of the trust as beneficiary of the decedent, but the IRA documents must be reviewed to assure that only the trustee of the trust has the right to withdraw funds from the IRA. Participants who have credit problems would be better off staying in the employer plan, rather than rolling over to an IRA, because the employer plan generally enjoys greater protection form creditors' claims than an IRA.