The Marin Lawyer
The Marin Lawyer
An Official Publication of the Marin County Bar Association
An Official Publication of the Marin County Bar Association
October 2006
Volume 37, Issue 10
GENERAL MEMBERSHIP MEETING
MICHAEL FISH TO SPEAK
PROTECTING AND COLLECTING YOUR FEES:
A Subject Near and Dear to All Attorneys
1 Hour MCLE credit
In order to practice law in a competent manner, attorneys
need to avoid the distractions that necessarily accompany poor
cash flow associated with the collection of earned attorney’s
fees and costs advanced on behalf of the client. On Thursday, October 12, from
12 – 1:30 p.m. at the Seafood Peddler Restaurant, Michael Fish will speak on
Protecting and Collecting Your Fees. See page 2 for reservation form.
This program covers practical suggestions for creating and maintaining
good client relations from the very beginning, increasing the likelihood that the
client will pay agreed-to fees, and that an attorney will receive the requested fees
in any award of judgment. The focus is on significant issues in the attorneyclient relationship that could be the subject of an analysis to the entitlement of
fees question in fee arbitration or other proceedings.
The program begins with the establishment of the relationship itself, from
selecting the right clients and setting the representation and relationship parameters, to memorializing the attorney-client fee agreement, in compliance with the
requirements of Business & Professions Code §§ 6147 and 6148. It brings to
light the potential pitfalls in failing to do so. It also emphasizes the importance
of communications as a part of attorney competency and in the determination
of a reasonable fee.
The program will also address the specifics of how to meet the billing
requirements of the Business & Professions Code as well as the consequences
of failing to do so, how to save a deteriorating attorney-client relationship, and
how to effectively terminate such a relationship when necessary, all with a
focus toward the more effective way to get paid, to avoid a fee dispute, and to
be more successful in any unavoidable fee dispute.
(Continued on page 2.)
In This Issue
President’s Message............................... 2
Elder Law Issues.......................................3
Legal Update.......................................... 4
Douglas Kay........................................... 4
IRS Offers in Compromise.................... 6
Gifts of Real Property............................ 8
Marin County Jury Verdicts................... 9
Sign Up Now!...................................... 12
Section News....................................... 16
New Members/Change of Scene.......... 18
The Marketplace.................................. 19
Michelle C. Lerman was guest editor of
this issue of The Marin Lawyer. Philip
R. Diamond is Series Editor for 2006.
Calendar of Events
October 5th
Barristers’ Social Mixer
5:30 – 7:00 pm
October 10th
Probate & Trusts Mentor Group
12 - 1:30 pm
October 12th
General Membership Meeting
12 - 1:30 pm
October 17th
Family Law Section
12 - 1:30 pm
October 18th
Probate & Estate Planning Section
12 - 1:30 pm
October 19th
Real Property Section
12 – 1:30 pm
October 24th
Elder Abuse Panel
6:00 – 8:00 pm
October 26th
Diversity Section Meeting
12 - 1:30 pm
Look for details each month in
The Marin Lawyer
USING EXCLUSIONS TO AVOID
REASSESSMENT
How to Structure Transactions That
Won’t Increase Property Taxes
By Michelle C. Lerman
This article explains what triggers reassessment of
real property and gives practical advice on what to do and
not do when relying on exclusions to avoid property tax
increases. While this article is not intended as a complete
guide regarding property tax laws, it is intended to highlight the most common exclusions used when structuring
(Continued on page 14.)
The Marin Lawyer
PRESIDENT’S
MESSAGE
A Volunteer Challenge
By Dan Harris
Last month, I wrote about the
good work volunteer attorneys
are doing to help the Family Law
Court lessen its backlog of unresolved cases. I greatly enjoy hearing about how our members are backing up their
words and good intentions with action. Of course, it’s easy
for me to praise such admirable work, and I will continue
to do so, but I thought I would follow their lead and try
something that will hopefully engender more volunteerism:
a Volunteer Challenge.
In the month of October, I will be volunteering at all
of the agencies that comprise the Marin Justice Center (except for the Consumer Law Unit of the District Attorney’s
Office; sorry Ed). Specifically, I will volunteer at Bay
Area Legal Aid, Canal Alliance, Fair Housing of Marin,
Family and Children’s Law Center, Lawyer Referral
Service, Lawyers For One America, Legal Aid of Marin,
Legal Self-Help Center, Marin Advocates for Children,
Marin Family Action, and Marin Mediation Services. I
plan on spending approximately 1-2 hours at each agency
and, although I am not yet sure what I will be doing, I am
confident that my time will be well spent. In addition, I
will be helping the Justice Center’s own volunteer efforts
during Binational Health Week (October 8-14), a series of
health and education activities that takes place throughout
the U.S., Mexico, Canada, Guatemala and El Salvador to
provide immigrant workers and their families with medical
services and information and, where appropriate, related
legal information.
I chose to volunteer at the Marin Justice Center for a
number of reasons:
First, I wanted to heed my own words from my September President’s Message and volunteer as only an attorney can—i.e., by providing legal advice and counseling.
RESERVATION FORM
Some agencies may not be set up for me to have direct client
contact, but I believe nonetheless that my training and skills
as a lawyer will still be helpful for the agency.
Second, I wanted to support the good people at the
Marin Justice Center and their innovative mission to provide a one-stop resource of legal services to those who
cannot afford them. As you may recall, the Marin Community Foundation has changed its funding approach so
that ongoing programs like the Justice Center will have
their funding cut back significantly. Until the agencies
can find alternative funding sources (and even when they
do), I have no doubt that they will greatly appreciate all
the volunteer help they can get.
Finally, I wanted to volunteer where I could increase
the likelihood of future Bar volunteers. After my month of
volunteerism, I plan on updating you on how it went. Hopefully, you will be so moved and inspired that you will jump
right up and start volunteering yourself. The convenience
of the Justice Center should offset any second thoughts or
time constraints you might have, not to mention the fact
that you will be helping your own community.
So that’s my challenge: I plan on doing in one month
what I hope each of you will commit to do each year, at a minimum. After I show you how easy and rewarding volunteerism
can be, you won’t be able to make any more excuses.
(General Membership, continued from page 1.)
Michael J. Fish is a principal attorney with FISH &
SNELL, P.C., established 1991, in Novato, California. The
firm emphasizes civil litigation and transactional work
involving personal injury, family law, wills and trusts,
real estate, and attorney-client fee disputes. Michael is
the incoming chairman of the State Bar’s Mandatory Fee
Arbitration Committee, having served on that committee
for five years, and he serves as chair of the Marin County
Bar Association Client Relations Committee.
Marin County Bar Association is a State Bar of California MCLE
Approved Provider. MCBA certifies that this activity conforms to the
standards for approved education activities prescribed by the rules and
regulations of the State Bar of California governing minimum continuing
legal education and qualifies for one (1) hours of MCLE credit. State Bar
Provider #411.
General Membership Meeting
Speaker: Michael Fish
Please make ________ reservations for me at the Seafood Peddler in San Rafael, on Thursday October 12,
2006: 12-1:30p.m. Please choose one: ____Sole Picatta ___Pasta Primavera
Name or Firm Name:_____________________________________________ Phone:______________________
 Enclosed check for __________($30 MCBA Members; $40 non-members)
 Visa  Mastercard ___________________________________________________ Exp _________________
Please, we must have RSVP’s by Oct 9, 2006
Make checks payable to MCBA and mail to: 30 North San Pedro Road, Ste. 140, San Rafael 94903.
Reservations are non-refundable unless the individual provides at least 24 hours cancellation notice to MCBA.
The Marin Lawyer
Distinguished Panel to
Address Elder Law Issues
On October 24th from 6 to 8 pm in the Juror Assembly Room (room 244) in the Hall of Justice at the Marin
County Civic Center, a very distinguished panel will present
the current issues in Elder Law. The important issues to be
discussed include civil and criminal elder abuse in Marin,
an introduction to dementia and mental capacity, undue influence and the duties of attorneys to review independently
gifts to caregivers and fiduciaries. The issues are of utmost
importance in Marin County and to all attorneys who work
with elders. This program has been qualified for two
hours MCLE credit.
The panel consists of:
District Attorney Edward S. Berberian, Jr. has
worked in the Marin County District Attorney’s Office
since 1976. Upon the retirement of District Attorney Paula
Kamena, the Board of Supervisors appointed Mr. Berberian
as the Marin County District Attorney on January 12, 2005.
In 1987 Mr. Berberian was presented with the Outstanding
Prosecutor’s Award for Marin County. In 1990 Mr. Berberian
received a Meritorious Service Award from the Marin County
District Attorney. He was nominated in 1991 for the CDAA
Outstanding Prosecutor of the Year Award and received the
Outstanding Trial Attorney Award (Region I) for 1991 from
the Association of Government Attorneys in Capital Litigation. In April 2002 the Jeannette Prandi Children’s Center
presented Mr. Berberian with its Children’s Champion Award
for his work with administrating the day to day activities of
the forensic team assigned to the Prandi Center.
Commissioner Roy Chernus of the Marin Superior
Court joined the bench in March 2006. Prior to his current
position, Commissioner Chernus was Executive Director of
Legal Aid of Marin which provides senior legal services and
under his leadership has been (and continues to be) proactive
in elder abuse issues. Earlier this year he was a presenter at
“Let’s Stop the Bleeding,” the 2006 Elder Abuse Conference
sponsored by Legal Assistance for Seniors. In 2003 Commissioner Chernus was awarded the Lawyer of the Year Award
by the Marin County Bar Association. Earlier this year he was
awarded the Martin Luther King, Jr. Humanitarian Award by
the Marin County Human Rights Commission.
Marc B. Hankin is an attorney in private practice in
West Los Angeles. In the Conservatorship of Levitt, Mr.
Hankin was recognized by the Second District Court of
Appeals in California as “a recognized leader in the field of
elder law and the drafter of the Elder Abuse and Dependent
Adult Civil Protection Act.” In Conservatorship of Levitt, the
Second District also commended Mr. Hankin for the “social
value” of his legislative efforts “to improve access to the
justice system for victims of elder abuse.” 113 Cal.Rptr.2d
294 (2001). Mr. Hankin’s practice revolves primarily around
conservatorships, controversies concerning legal capacity,
elder abuse, will contests, and trust litigation, and estate
planning including Medi-Cal and tax planning and probate.
Mr. Hankin is the father of Welfare and Institutions Code
Section 14006.2,the California law that allows spouses to
avoid nursing home impoverishment by dividing community
property and gifting the home to the healthier spouse.
William J. McMullen Jr., Ph.D. is a Board Certified
Clinical Neuropsychologist in private practice and at California Pacific Medical Center and Mills Peninsula Health
Services where his responsibilities include stroke, dementia,
head injury, brain tumor, epilepsy and other neurological
and/or psychiatric illnesses. Dr. McMullen conducts forensic
neuropsychological (criminal and civil) evaluations at the
request of attorneys and the court and testifies as an expert
witness in cases where neuropsychological impairment is an
issue. Dr. McMullen also performs evaluations of outpatients
referred by both neurology and psychiatry.
Date: October 24, 2006 Time: 6-8 PM
Location: Jury Assembly Room (room 244) at the Civic Center
Cost: $40 for MCBA members/ $50 non MCBA members
Seating is limited. Please make reservations in advance
using the form below.
Marin County Bar Association is a State Bar of California MCLE Approved
Provider. MCBA certifies that this activity conforms to the standards for approved
education activities prescribed by the rules and regulations of the State Bar of
California governing minimum continuing legal education and qualifies for two (2)
hours of MCLE credit. State Bar Provider #411.
 ………………………………………………………………………
To register, please fill out the form below and mail it, with
your check payable to the Marin County Bar Association, 30
N. San Pedro Road, Ste. 140, San Rafael, California, 94903.
Name: ________________________________________
CA State Bar No.: _____________
 Check enclosed for $ _____________
or
 You can bill my VISA or MasterCard
Visa Account No. _______________________________
Exp. _________
MasterCard Account No. _________________________
Exp. _________
elder panel 10/24/06
The Marin Lawyer
LEGAL UPDATE:
Estates and Trusts
By Michelle C. Lerman
PARTICIPANTS AND BENEFICIARIES OF QUALIFIED RETIREMENT ACCOUNTS:
Changes Allow Rollover by Non-Spouse Beneficiaries
For distributions after December 31, 2006, a nonspouse designated beneficiary of a qualified retirement
plan can avoid taking an immediate distribution (or fiveyear payout) from a 401k by rolling over these inherited
amounts, via a trustee-to-trustee transfer, into an IRA
(Section 829 of the Pension and Protection Act of 2006).
In other words, the ability to roll over (thereby delaying
income tax) has been extended to children and other nonspouse beneficiaries. Whereas a child could have been
forced to take immediate distributions from a retirement
plan, the child can instead transfer the retirement plan fund
to an IRA in his/her parent’s name, an “inherited IRA”, and
take distributions over the child’s life expectancy according
to the required minimum distribution rules.
ASSET PROTECTION: Recent Ruling Leaves Us Wondering if All Asset Protection Constitutes a Fraudulent
Transfer
In an overly broad opinion, the Ninth Circuit Court of
Appeals in U.S. v. Townley, 2006 U.S. App. Lexis 12372
(9th Cir. 2006), held that the Townley’s transfer to a trust
to protect their assets from future unknown creditors,
showed an actual intent to hinder, delay or defraud creditors
amounting to a fraudulent conveyance. As often happens,
bad facts make bad law: The Townley’s egregious behavior (putting ALL their assets into the trust, intentionally
understating their income tax for the year before and after
the transfer making the IRS a creditor), led the court to
conclude that protecting themselves from future unknown
creditors constituted a fraudulent conveyance. Although
some experts opine that the Townley decision is more of
an aberration than a restatement of the laws of fraudulent
conveyance, if your goal is asset protection, be sure that
the client has no known creditors, that the transfer does not
render the client insolvent, that accurate income tax returns
have been filed and paid, and that you conduct due diligence
to determine the client’s solvency and obtain the client’s
affidavit of such. It is also a good idea to document other
business and personal reasons and goals for the transfers,
other than asset protection.
MCBA MOURNS PASSING
OF REAL PROPERTY
SECTION CO-CHAIR
JON STEINER Long-standing Marin County Bar
Association member and Real Property
Section Co-Chair, Jonathan Steiner, passed
away Saturday, September 30th, from cancer at age 56. Jon was born and raised on the East Coast and
received his undergraduate degree from Clark University.
He moved to the Bay Area and obtained his law degree from
Golden Gate University. He trained at the Harvard University
Law School as a mediator.
For 29 years, he practiced business and commercial law,
providing quality legal counsel and support to his clients and
skilled dispute resolution services. Before he passed away,
Jon made arrangements to merge his practice with Lerman
Law Partners, LLP of San Rafael. In addition, Jon was an
avid swimmer with the Tamalpais Aquatic Masters and a
prominent professional jazz musician in the Bay Area. Jon’s
jazz trio played every Thursday evening at Larkspur’s Left
Bank Restaurant for many years, and just last month released
his latest CD.
He is survived by his wife, Sue Akeson, and two daughters. He will be missed by all who knew him. His family
encourages you to make a donation, in lieu of flowers, to the
Nancy Akeson Fund in care of the Blind Babies Foundation,
1814 Franklin Ave., 11th Floor, Oakland, CA 94612.
MCBA MOURNS PASSING
OF DOUGLAS KAY
Douglas Kay, a young member of the
Marin County Bar Association, passed
away suddenly at his home in Novato on
Tuesday, September 12th, at age 34. Doug was born and raised in Southern California. He received his undergraduate degree from
UC Santa Barbara and his graduate degree from University
of Arizona. He obtained his law degree from Hastings College of the Law and had recently established his Family Law
practice in San Rafael with MacDonald, Praetzel, Mitchell,
Hedin & Breiner. Mr. Kay leaves behind his wife, Kathy, and
a two year old son, Dylan. Our heartfelt condolences go out
to the Kay family.
As a small bar association in a small community,
the MCBA is like a fellowship for our members, and
promotes our respective roles within this community to
promote good will, civility and compassion, particularly
for newer attorneys embarking upon their legal careers. In that vein, we encourage you to make a donation to the
Kay Family Memorial Fund at Greater Bay Bank, 999-5th
Street, Suite 100, San Rafael, CA, 94901.
The Marin Lawyer
HOW TO USE THE MARIN
COMMUNITY FOUNDATION
by Aviva Shiff Boedecker, Director of Gift Planning
The Marin Community Foundation
Marin Community Foundation’s origin is documented
in virtually every Trusts and Estates casebook and is the
stuff of Marin County lore. But in the almost 20 years since
its creation, MCF has become much more than it was at
its birth. MCF is not only the source of over $50 million
annually that is distributed nationally and internationally,
as well as within Marin, it is also a key part of the fabric
of Marin life. As such, you and your clients can benefit
from this unique community resource in several ways.
Here’s how:
Philanthropic services for individuals and families.
MCF offers simple and effective solutions that allow
individuals, families, and businesses to achieve their philanthropic goals. The Foundation’s staff assists donors to
develop their individual giving plans and can work with
donors and their advisors to structure gifts so that they
will meet the donor’s planning and financial priorities and
provide optimum tax benefits.
Donors may choose to be actively involved in the
selection of the grant recipients (which may be located
anywhere in the world) and may involve their families in
grantmaking activities if they choose. Foundation staff can
also advise donors about the community’s most important
priorities, identify organizations that work within particular
areas of interest, and ensure that grants are made to qualified
charities that will use the gift appropriately.
Funds can be established within a single workday,
making a donor-advised fund an ideal solution for those
who find they need a year-end tax deduction. Donors may
claim an income tax charitable deduction in the year they
transfer assets to MCF but recommend grants to charitable organizations at a future date. As a public charity,
we offer maximum federal and state tax benefits. And
starting a fund at a community foundation is significantly
faster, easier and less expensive than starting a private
foundation.
Resources for attorneys. We work as your partner
by providing extensive resources on charitable giving and
helping you offer a full range of services to your clients.
Whether it’s setting up an alternative to a private foundation or putting together a complicated estate plan, or just
by providing you with general or background information, we can help you meet your clients’ particular needs
and help them be as effective as possible in their giving.
Foundation staff can calculate estimates of the tax deduction donors may claim for charitable remainder trusts and
other split-interest gifts, provide sample documents, and
serve as trustee in some circumstances. There is no fee or
obligation for any of these services.
Support for nonprofit organizations. MCF helps nonprofits build organizational and financial stability in several
ways. Nonprofit groups can establish funds at MCF as part
of their overall fundraising strategy, which then can serve
as an effective tool for building endowment or long-term
reserves. Individuals can make contributions of illiquid or
“complicated” assets to these funds, and the organization
receives the benefit of professional investment management and diversification. We make technical assistance
grants to local nonprofit organizations for staff and board
development, media relations, fund development, and
collaboration.
Community meeting space. Three of MCF’s conference rooms are available for use by community nonprofit
groups. There is no charge for the use of our space. To
reserve a room go to the section of our website (www.
marincf.org) called Resources for Nonprofits, or call
415/464-2500.
Making a difference in the community. MCF works
to encourage Marin residents to become more involved
by convening people to work on community problems
and honoring individuals and groups for improving our
community.
MCF houses a resource center to help people and businesses plan their charitable giving, and supports a resource
center at the Center for Volunteer and Nonprofit Leadership
geared toward nonprofit staff, board members, volunteers,
and consultants serving the Marin community. Both centers
have reference librarians and offer a variety of printed and
electronic materials and public workstations with Internet
access terminals for online research. All services are free
and open to the public. More information is available at the
Center’s website: www.centerforleadershipmarin.org.
To learn more about how the Marin Community
Foundation can benefit you and your clients go to www.
marincf.org (in the section called For Professional Advisors), or contact Aviva Shiff Boedecker at 415/464-2516
or aboedecker@marincf.org.
Aviva Shiff Boedecker is an attorney who has worked
in the area of charitable gift planning for over 20 years. She
serves on the Board of the Marin County Estate Planning
Council, is a former member of the Board of the National
Committee on Planned Giving, and is a past president of
the Northern California Planned Giving Council.
The Marin Lawyer
IRS OFER IN
COMPROMISE
PROGRAM
New Obstacles on the
Road to Forgiveness
By Woodford G. Rowland, Esq.
Nuts and Bolts
The IRS offer in compromise program for taxpayers
who are unable to pay the full amount of their tax liability came into widespread use after the Restructuring and
Reform Act of 1998. Congress encouraged the IRS and
taxpayers to use the program, and the IRS took a very constructive attitude in administering the program. Recently,
however, the program has suffered serious setbacks from
the IRS and from Congress. The heyday of the program
seems to be past, due to new bureaucratic barriers and
legislation.
The standard used by the IRS in considering the acceptability pf an Offer in Compromise (OIC) is that the offer
must be equal to or greater than the taxpayer’s reasonable
collection potential (RCP). The RCP is defined as the total
of the taxpayer’s realizable value in real and personal assets, plus his/her future income. An asset’s realizable value
is its quick sale value (amount which could be reasonably
expected through the sale of the asset) minus what the
taxpayer owes to a secured creditor. For instance, if your
assets are worth $5,000 and the IRS concludes that it could
collect another $5,000 from you in monthly payments, your
offer must be at least $10,000.
The IRS bases its review on a detailed financial statement which must be submitted under penalty of perjury
(Form 433-A, Collection Information Statement). The
financial statement must be supported by basic documents
such as bank statements, paycheck stubs, and proof of
monthly expenses. The taxpayer’s allowable expenses
(used in determining ability to pay) are based on allowances
for permissible expenses developed by the IRS. Sometimes
these are based nationally, in other cases locally. For example, the IRS has determined that a Marin County family
of four may be allowed no more than $3,288 per month for
housing and utility costs. The IRS has issued a consumer alert advising taxpayers to beware of promoter claims that tax debts can be
settled for “pennies on the dollar.” Too many taxpayers
have paid sizeable retainers based on “pennies on the dollar” representations, only to find out that their reasonable
collection potential justifies only a much higher offer, or
is too high to justify any compromise. Indeed, some cases
are settled for nominal amounts, but those are cases where
the taxpayer’s demonstrably scanty resources warrant a
compromise at a nominal figure. If the IRS accepts the offer and the taxpayer pays the
compromise amount, the balance is forgiven. However,
the standard agreement provides that the taxpayer must, for
the next five years, pay all tax liabilities on time and timely
file all required tax returns. If the taxpayer defaults, the
original liability is restored, less payments made against
the balance per the compromise. IRS Review Practices
Recently, the IRS has screened and processed offers
with sometimes absurd sensitivity. The result is not only
to weed out the bad offers, but also to reject many good
offers for trivial reasons. With good intentions but bad results, the IRS created
a centralized processing system for offers in compromise. According to one IRS offer specialist, three truckloads of
offers arrive at the Memphis offer unit every day. This
very impersonal system reduces the backlog simply by
the return of offer packets that have only minor omissions
(or perceived omissions) in documentation. For example,
documentation sometimes is simply lost by the IRS. Lost
documentation is treated the same as documentation that
was never submitted. Failure by the taxpayer to provide
the missing documentation in a short time-frame results
in the offer not being processed at all. Another frustrating tactic is when the IRS demands proof of non-existent
(Continued on page 16.)
The Marin Lawyer
2007 SLATE OF OFFICER/DIRECTOR
NOMINEES PROPOSED BY MCBA
NOMINATING COMMITTEE
The MCBA Nominating Committee’s slate of 2007
Office and Director Nominees was announced at the September general membership meeting. The nominations
will be voted on at the November general membership
meeting.
The Officer nominees are: Ed Berberian (President
Elect), Marlene Getchell (Treasurer), Beth Jordan (Secretary), Myron Greenberg (Five Year Past President).
The nominees for Director are: Frederick Bradley
– 3 year term, Elizabeth Brekhus - 3 year term, Timothy
Chambers - 3 year term, Houman Chitsaz - 3 year term,
Jordan Lavinsky - 3 year term, and Louis Franecke - 2
year term.
YOU ARE ORDERED TO TURN
YOURSELF IN FOR
“DISORDERLY CONDUCT”
……SAVE THE DATE
DAVID BROWN
APPOINTED TO
BOARD
President Dan Harris announced that, pursuant to his
powers under the Bylaws, he
has appointed David Brown
to serve on MCBA’s Board
of Directors. Mr. Brown will
replace resigning Board member Michael Marowitz, and
will serve through 2007. Mr. Brown is a graduate of Stanford Law School and
serves as Chief Deputy of the Marin Public Defender’s
Office. “I’m very excited to have someone of David’s
caliber and experience joining our Board,” said President
Harris. “I felt it was important to have a representative of
the criminal defense bar on the Board, and I am very glad
David accepted the invitation.”
MARIN COUNTY BAR ASSOCIATION’S
PAST PRESIDENTS’ PARTY AND
2007 BOARD INSTALLATION
For the first time ever, MCBA is combining its Past
Presidents’ recognition with its annual Board Installation event for one big party. Our goal is to make this
the biggest MCBA fundraiser with all net proceeds
going to the Marin Justice Center, a conglomerate of
indispensable organizations which make legal assistance
available to the public. Get ready to party at the event,
aptly called DISORDERLY CONDUCT: AN EVENING
DEDICATED TO DISTURBING THE PEACE, where
we will honor the past “Criminals” (i.e. past MCBA
presidents) and book the new “Suspects” (i.e. new 2007
board members). Your Subpoena to Appear should
arrive in early December. So that we can meet our
goals, we’ve added you to our “WANTED” list. Solicit
a Corporate Sponsor for the event at the Supreme Court
level ($5,000), the Court of Appeal level ($2,500) or
the Superior Court level ($1,000) and be our guest at
the event. Contact Michelle C. Lerman at michelle@
lermanlaw.com for a Corporate Sponsor Form detailing
all the benefits of sponsorship. Thank you in advance
for turning yourself in for “Disorderly Conduct.” SAVE THE DATE
Saturday evening, January 6, 2007,
at the Mill Valley Community Center
The Marin Lawyer
GIFTS OF REAL PROPERTY TO
PUBLIC CHARITIES
By Ted Hellman
1. What types of real estate are appropriate to give
to a public charity?
Most improved or unimproved real property may be
an appropriate gift to a public charity. Property that has
appreciated in value since its acquisition is ideal because
the Donor will receive an income tax charitable deduction
for the full fair market value of the property if the donee is a
public charity rather than a private foundation. The income
tax deduction will offset up to 30% of the Donor’s adjusted
gross income for the year of the gift, and any unused deduction amount may be carried over for five years.
Contributed property should be unencumbered by debt
at the time it is given to the public charity. Contributing
property subject to debt will reduce the amount of the
charitable deduction and will cause some capital gains tax
to be incurred under the “bargain sale” rules. Also, property subject to debt should not be used to fund a charitable
remainder trust (discussed below). From the standpoint
of the public charity, contributed property should be free
of environmental issues or impediments to sale of the
property.
An interest in real property can be split between an
interest retained by the Donor for the Donor’s life or a term
of years and a “remainder” interest following the retained
life or term interest. The Donor will receive an income tax
deduction for the actuarial value of the remainder interest
that will pass to the public charity in the future even though
the Donor retains the current and future economic benefits
of the property. Such a transaction can be structured by
using a charitable remainder trust (discussed below) or by
a direct gift to a public charity of the remainder interest in
a personal residence or farm.
2. Is it better to give real estate today, or through
one’s estate?
With a gift of real estate at death, the fair market value
of the property at that time is excluded from the Donor’s
taxable estate such that no tax (federal estate tax or capital
gains tax) is payable with respect to the property. Because
the federal estate tax that applies above a threshold exclusion amount (currently $1.5 million of net asset value) is
about 45%, a testamentary charitable gift saves estate tax
in the amount of 45% of the value of the property, and
the effective “cost” to the Donor or the Donor’s family is
therefore 55% of the value of the property.
By giving real estate today rather than at death, one
still obtains the benefits noted above because the property
will not be included in the Donor’s estate. In addition, the
Donor receives a current income tax charitable deduction
that offsets a portion of the Donor’s current taxable income,
in the manner described in the response to Question 1
above. As noted above, the deduction is based on the full
fair market value of the property, and capital gains tax and
federal estate tax on the property is avoided altogether.
Of course, with a current gift of the property, the Donor
does not retain the beneficial enjoyment of the property as
an asset. A solution that allows a Donor to retain beneficial
enjoyment in the property, to obtain the tax benefits of a
charitable contribution of a gift of appreciated real property, and to provide a meaningful gift to a public charity is
to give the property through a charitable remainder trust,
discussed below.
3. How is the value of a real estate gift determined?
The value of a real estate gift to a public charity is the
fair market value of the property, which is the price that a
willing buyer and a willing seller would agree on for the
purchase and sale of the property, neither of them being
under a compulsion to buy or sell the property. Thus, the
value would take account of any limiting restrictions or
conditions (e.g., restrictive covenants or other factors).
The value of real estate is not objectively ascertainable the way that the value of marketable securities is. For
that reason, and because of substantiation that is required
to claim a charitable deduction, a professional appraisal
of the real estate is ordinarily required. Depending on the
nature of the property, the appraiser’s analysis will be based
primarily on comparable sales or on an “income approach”
by which an appropriate multiple is applied to the historical
income stream (capitalization rate) or to anticipated future
cash flows (discount rate). To substantiate the charitable
income tax deduction for a gift of real estate, a qualified
appraisal is required; and an appraisal summary must be
attached to the income tax return on which the deduction
is claimed.
In calculating the charitable deduction, the amount of
the deduction must be reduced by any appreciation in the
property (value in excess of the Donor’s cost basis) that
would not be long term capital gain if the property were
sold. For example, a reduction would be applied if the
Donor held the real estate for less than a year (making it
short-term rather than long-term property) or if accelerated
depreciation had been taken on the property.
4. How would a charitable remainder trust be used
for a gift of real estate to a public charity ?
By using a charitable remainder trust, a Donor can
obtain the income tax benefits of a current charitable gift
(Continued on page 17.)
The Marin Lawyer
MARIN COUNTY JURY VERDICTS
Complete Title of Plaintiffs/Cross-defendants: MCCE
DEVELOPMENT, LLC and MCCE INVESTORS, LLC
Complete Title of Defendant/Cross-Complainant:
CITY OF NOVATO
Case Number: 024679
Plaintiff Attorney(s) PH#: Scott M. Phillips, San Rafael,
415-453-9999
Defendant Attorney(s) PH#: Michael D. Senneff, Santa
Rosa, 707-526-4250
Judge: Hon. James Ritchie
Date & Time of Incident: Winter 2001
Type of Action: Breach of Contract (Subdivision Improvement Agreements between plaintiff developer and City).
Location of Property: Fairway Drive, Novato
Facts of Case: Plaintiff is the owner and developer of a 37home subdivision in Novato. Plaintiff and the City entered
into a series of 3 Subdivision Improvement Agreements
(“SIA’s”) whereby plaintiff agreed to build only 7 homes
and to donate the remaining 30 lots to an open space organization. Plaintiff also agreed to implement certain drainage
improvements along the Arroyo San Jose Creek that runs
through the property. A landslide occurred during the site
preparation work. The slide fell into the creek, prompting
the California Regional Water Quality Control Board to
initiate a regulatory action against the plaintiff and the City.
The City suspended plaintiff’s home construction pending
resolution of the slide and creek restoration work. Plaintiff
sued the City seeking reinstatement of the home construction on the property and sued the grading subcontractor for
damages caused by the slide and the resulting suspension
of construction. The City cross-complained against the
plaintiff seeking to terminate the subdivision improvement
agreements and to recover as damages ($706,000) the City’s
cost to repair the slide and restore the creek.
Plaintiff settled with the grading subcontractor before
trial ($865,000). Unable to reach a settlement with the
City, plaintiff dismissed its claims against the City. The
City pursued its cross-complaint (damage claims) against
the plaintiff developer, and the individual LLC members,
through trial.
Cross-Complainant City’s Contentions as to Liability:
Cross-defendant developer was in breach of contract, which
entitled City to terminate contract, take over the project and
recover costs and attorney’s fees from developer.
Cross-Defendant Developer’s Contentions as to Liability: City was prevented by waiver/estoppel from asserting
developer’s breach in failing to meet contractual deadline,
since City encouraged the developer to continue and complete work, and City suffered no damages.
Length of Jury Trial: 23 days. Jury Deliberated: 2 days
Plaintiff/Cross-defendant Attorney asked the Jury to
Award: No damages.
Defendant/cross-complainant Attorney asked the Jury
to Award: $750,000 under the various agreements.
Settlement Talks: City had proposed that developer pay
City $500,000 and resume the project. Developer agreed,
but City withdrew proposal after members of public expressed disapproval to City Council.
Result: City recovered a total of $44,772 under one of
the agreements and $0 under the balance of the claims and
agreements.
Poll Result: 12-0
Verdict Date: May 4, 2006
Note: This information was provided solely by counsel
for plaintiff/cross-defendant Developer. Counsel for defendant/cross-complainant City did not respond.
The Marin Lawyer
INSURANCE LAW SEMINAR
On November 2, 2006 at the Corte Madera Inn from 4:00 – 6:00 pm, the Marin County Bar
Association will offer a seminar offering 2 hours MCLE credit, on insurance law presented by Guy
Kornblum, Certified Civil Trial Advocate, National Board of Trial Advocacy, member Million Dollar
Advocates Forum, Member, International Society of Primerus Law Firms, who has a plaintiff’s firm in
San Francisco. Joining him will be Irene Yesowitch, a partner with Long & Levit LLP in San Francisco
who will provide the insurance industry perspective. Ms. Yesowitch , who has been specializing in
insurance coverage and bad faith litigation for almost 25 years, is one of the leading insurance experts
in California. Her current practice includes representing both insureds and insurance companies.
HIGHLIGHTS of SEMINAR
Some basic concepts of insurance that you need to know, think you know, but maybe don’t.
The construction of an insurance policy; what you need to evaluate whether the company has
made a wrong decision. You may think you have it all, but probably do not. How do you get it
and ensure that it is complete?
Industry issues vs. individual coverage problems in your cases? Does it make a difference?
Broker and agent issues: Who is really responsible when the coverage is not what your client
expected? Is the intermediary yours, theirs or ours? How is this affected by direct writers?
“Due diligence” for lawyers who do business counseling on monitoring the commercial liability
coverages. Agent/broker malpractice suits – under what circumstances should they be sued?
Hot issues in property coverages. Public adjuster involvement and appraisal hearings.
Hot issues in liability coverages – the duty to defend. When can the carrier settle and run?
Are there any failure to settle cases left?
Interesting issues relating to UM/UIM coverages
Cumis issues that have emerged.
Bad faith cases – where are they today? Concepts and Realities. The three tiers, and rules as
to each; cost considerations in pursuing such; issues pertaining to punitive damages in bad faith
cases. Limitations on recovery and economic realities of litigating a bad faith case.
Misconceptions about ambiguities in policies.
The “must sue” lawsuit.
Date: November 2, 2006
Time: 4 - 6PM
Location: Best Western Corte Madera Inn, 1815 Redwood Hwy, Corte Madera
Cost: $50 for MCBA members/ $75 non MCBA members
Seating is limited. Please make reservations in advance using form below.
Marin County Bar Association is a State Bar of California MCLE Approved Provider. MCBA
certifies that this activity conforms to the standards for approved education activities prescribed
by the rules and regulations of the State Bar of California governing minimum continuing legal
education and qualifies for two (2) hours of MCLE credit. State Bar Provider #411.
 ……………………………………………………………………………………………………………
To register, please fill out the form below and mail it, with your check payable to the Marin County Bar
Association, 30 N. San Pedro Road, Ste. 140, San Rafael, California, 94903.
Name: ________________________________________ CA State Bar No.: _____________
 Check enclosed for $ _____________
or

You can bill my VISA or MasterCard
Visa Account No. ___________________________________________
Exp. _________
MasterCard Account No. _____________________________________
Exp. _________
10
ILS 11/2/06
The Marin Lawyer
SIGN UP NOW TO SERVE ON AN MCBA STANDING COMMITTEE
To: Members of the Marin County Bar Association
From: President-elect Jeff Lerman
Re: The year 2007 Standing Committees
Each year the Marin County Bar Association seeks members to serve on its Standing Committees.
In order to maintain continuity on our committees, the president is allowed to make one appointment for
a three-year term to each Committee, and to name the chairperson of each Committee for a one-year
term.
With this in mind, we ask you to volunteer to assist in the operation of the Marin County Bar
Association. Listed below are the Standing Committees of the Association. Please mark three
committees in your order of preference. If you have no preference but are willing to volunteer your
services, please state so.
It is my hope to make appointments to the Committee in late November. Therefore, please return
this form to MCBA, 30 North San Pedro Rd., Ste. 140, San Rafael, CA 94903, or for your convenience
you may FAX it to MCBA at (415) 499-1614 no later than November 15, 2006.
If you have any comments or suggestions regarding Bar activities, please do not hesitate to
contact me personally or use the comment lines below to express your thoughts. I thank all our members
for their continued support and service.
___ Membership
___ Administration of Justice
___ Program/Entertainment
___ Insurance
___ Lawyer Referral Service
___ Continuing Legal Education
___ Legislation
___ Public Information
___ Library
___ Client Relations
___ Bylaws
___ Law Day/Public Education
___ Marin Justice Center
___ Judicial Liaison
(must be a Past President of MCBA)
___ Ethics/Unauthorized Practice
Name:___________________________________________________________
Comments: _______________________________________________________
________________________________________________________________
________________________________________________________________
11
The Marin Lawyer
(Using Exclusions, continued from page 1.)
real property transactions. Information in this article has been
derived in part from written and oral opinions from the State
Board of Equalization (the “SBOE”). Since county assessors
are not bound by the SBOE’s opinions, use caution when
relying on information contained in this article.
A quick background: Under Proposition 13, the assessed
value of real property for calculating property taxes was
rolled back to March 1, 1975 values (“Base Year Value”),
increased annually by an inflation factor, not to exceed 2 percent annually. Completion of new construction or a change
in ownership (“CIO”) triggers a reassessment to a new Base
Year Value equal to the current fair market value, usually
resulting in higher property taxes. A CIO is a transfer of a
present beneficial interest in real property when the interest
being transferred is equal to the value of the fee interest. The
key to avoiding property tax increases is to either avoid a
CIO or qualify for an “exclusion” under the Revenue and
Taxation Code (the “Code”). This article focuses on using
the most common exclusions in the Code to avoid property
tax increases.
USING THE LEGAL ENTITY EXCLUSION TO
AVOID REASSESSMENT
Section 64(a)(c) and (d)
• A transfer of an interest in a legal entity is not a CIO
of the real property owned by the entity except as provided
in sections 64(c) and (d). In other words, if AB Corporation
owns real property and 50% of the shareholders transfer
their interest to Corporation X and 50% of the shareholders
transfer their interest to Corporation Y, there is no CIO or reassessment of the real property (assuming no one individual
or entity obtains control of AB Corporation as a result of the
transfer).
• ADVICE: When transferring an interest in an entity
that owns real property, always trace the prior ownership of
real property. A transfer of more than 50% of the interests
of “original co-owners” in a legal entity is a CIO of the real
property owned by the entity. For example, assume A and B,
50/50 owners of AB Corporation, transferred real property
to Corporation AB. A and B cannot then transfer all of their
Original Co-Owner interest to Corporation X and Corporation Y, without the property being reassessed.
• ADVICE: Before transferring more than 50% of
the voting stock of any entity, determine if the entity owns
real property that might be reassessed. A transfer of more
than 50% of an interest in a legal entity could trigger a CIO
and property owned by that entity will be reassessed. For
example, if A is an “original co-owner”, A representing 51%
of the voting stock cannot transfer her interest in Corporation AB to Corporation X, without the property being reassessed.
USING THE PROPORTIONAL INTEREST EXCLUSION TO AVOID REASSESSMENT
12
Section 62(a)2
• Whereas the Legal Entity Exclusion prevents reassessment in transfers between legal entities, the Proportionate
Interest Transfer Exclusion is the ONLY exclusion that can
avoid reassessment for transfers to or from an individual
to a legal entity. So long as the individuals and the legal
entity have the same proportional ownership interests, the
real property will not be reassessed when transferred to
or from the entity or the individual. A and B can transfer
property owned by them 50/50 to an LLC owned by them
50/50 without reassessment. Mom, Dad and Son owning
real property 40%, 40% and 20% can also transfer the real
property to an LLC in which the Mom, Dad and Son have
the same proportionate interests.
• ADVICE: To avoid property tax reassessment, do
not transfer real property from individuals to a legal entity
unless the individuals have the same proportionate interest
in the legal entity as they had in the real property. No exclusion will apply if Mom and Dad as 100% owners transfer
real property to an LLC owned 45% Mom, 45% Dad and
10% Son. Instead, Mom and Dad should first transfer a
10% interest in the real property to Son (qualifies for ParentChild Exclusion), and then transfer the property to the LLC
owned 45% Mom, 45% Dad and 10% Son. Caution: The
step transaction doctrine may apply and the property could
be reassessed if the Parent-Child Exclusion did not apply in
the above example.
USING THE ORIGINAL TRANSFEROR RULE TO
DELAY REASSESSMENT Section 65 and amended Rule
462.040
• The Original Transferor rule will delay reassessment
when one joint tenant dies and is survived by a joint tenant
who is an Original Transferor. The exclusion applies when a
joint tenant transfers real property to a living trust in which
the other joint tenant is a beneficiary. For example, if A and
B Joint Tenants form a revocable trust with each other as
beneficiaries, A and B both become Original Transferors.
When the property passes to the other upon the death of A
or B, the real property is not reassessed. The exclusion also
applies when only one joint tenant forms a revocable trust
and the other (former) joint tenant dies. For example, if Joint
Tenant B transfers his share of real property into a trust for
the benefit of A, then B becomes Original Transferor: If A
dies and the property passes to B, the property avoids reassessment since B is Original Transferor.
• ADVICE: In a purchase-sale transaction or in a trust
distribution, transfer title to co-owners as tenants in common
(“TIC”), and then transfer the property from TIC to Joint
Tenants. Then, the co-owners become Original Transferors:
If one of them dies, the property will not be reassessed. If
the co-owners had originally taken title as joint tenants and
one of them dies, the real property will be reassessed (unless
(Continued on page 15.)
The Marin Lawyer
(Using Exclusions, continued from page 14.)
another exclusion applies like Parent-Child or Spouse-toSpouse). Consider having joint tenants transfer property out
of joint tenancy (from joint tenants to tenants in common)
and then back into joint tenancy (from tenants in common to
joint tenants) and then into the trust for each other’s benefit
so that the transaction qualifies under the traditional Original
Transferor exclusion rule (because the transfer back into joint
tenants made each of them “original transferors”) as well as
under amended Rule 464.040. However, depending on the
facts and circumstances surrounding each of these transfers,
an assessor may apply the step transaction doctrine, resulting
in a CIO.
USING THE DOMESTIC PARTNER EXCLUSIONS TO AVOID REASSESSMENT Property Tax Rule
462.240(k) and Section 62(p)
• For all deaths and transfers that occur on or after
July 1, 2003, Rule 462.24(k) applies so that property left to
a Registered Domestic Partner by intestate succession will
not be reassessed. Note that although the SBOE has indicated
that this rule should apply to all on-death transfers (those by
will or trust), assessors might limit the exclusion to intestate
transfers only. For example, Partner 1 dies without a will or
trust, and the property passes to Partner 2 by intestate succession. The property will not be reassessed upon transfer
to Partner 2.
• New Section 62(p) of the Rev. & Tax. Code excludes from reassessment most transfers between Registered
Domestic Partners, whether during life or on death, if the
transfers occur on or after January 1, 2006. For example,
Partner 1 creates a trust naming Partner 2 as beneficiary.
Partner 1 dies. The property will not be reassessed upon
transfer to Partner 2. Partner 1 can also transfer title during
life to Partner 2 without triggering reassessment.
• ADVICE: Do not transfer real property from Partner
1 to Partner 2 without addressing the gift tax consequences
with a tax attorney. Even though under section 62(p), the
property should avoid reassessment for property tax purposes, it is unclear whether Partner 2’s community property
interest in the property under the Domestic Partnership laws
will be recognized to avoid the transfer being classified as a
gift.
USING THE PARENT-CHILD EXCLUSION TO
AVOID REASSESSMENT
Section 63.1
• The Parent-Child Exclusion allows parents to
transfer a principal residence and up to $1M of the full cash
value of other real property to their children without reassessment (Claim for Reassessment Exclusion Form BOE-58
required).
• ADVICE: Since the exclusion does not apply to
transfers to legal entities, always transfer real property to
Child before transferring the property to an entity. See ex-
ample above under Proportional Interest Exclusion.
• ADVICE: The exclusion does not apply to grandchildren unless both parents are deceased. Therefore, consider not having living grandchildren as trust beneficiaries
unless both parents are deceased. Otherwise, each time a
new grandchild is born, the property will be reassessed.
Instead of allowing a trustee to sprinkle income to “issue”,
either include only Spouse and Child as trust beneficiaries, or
use a trust protector or special trustee to sprinkle income to
grandchildren, but only under circumstances that would not
result in a reassessment of real property held in the trust.
• ADVICE: Whereas the Parent-Child Exclusion
applies to non pro rata trust distributions from Mom to Son
and Daughter, it does not apply to transfers between Son
and Daughter. Therefore, it is preferable to give the trustee
discretion in distributing assets to Son and Daughter and allow non pro rata distributions rather than to require trustee to
give Son or Daughter a specific property. Otherwise, if Son
and Daughter want to swap properties after trust distribution,
the properties will be reassessed.
Property tax planning is a complex area of the law.
Without a complete understanding of the issues, one could
easily trigger a reassessment of property that could have
been avoided with proper planning.
Attorney Michelle C. Lerman, a board member of the
Marin County Bar Association, practices in estate planning,
probate, trust administration and co-ownership issues. She
and her husband, Jeffrey H. Lerman, are partners of Lerman
Law Partners, LLP, which has offices in Los Angeles and San
Rafael. In addition to estate planning, the firm has expertise
in business, real estate transactions, litigation, and finance.
www.lermanlaw.com.
STATE BAR COURT SEEKS
HEARING JUDGE
The California Supreme Court’s Applicant Evaluation
and Nomination Committee is seeking qualified candidates
to serve as a State Bar Court Hearing Judge. The State Bar
Court is the independent, adjudicative entity acting as an
administrative arm of the California Supreme Court to hear
and decide attorney disciplinary and regulatory proceedings and to make recommendations to the Supreme Court
regarding those matters. The position will be located in
San Francisco. The deadline for receipt of applications
is Friday October 13, 2006. For more information or to
request an application packet go to www.calbar.ca.gov or
call 415-538-2015.
13
The Marin Lawyer
(Offer in Compromise, continued from page 6.)
facts. Examples include requiring a business which never
had employees to file a “zero balance” tax return; another
is when the IRS demands current statements on a closed
bank account to prove that the account has been depleted. This unconstructive attitude is inconsistent with the express
Congressional desire to liberalize the compromise program
and to encourage reasonable collection alternatives.
Likewise, many low level IRS employees who process
offers refuse, in direct contravention of the law, to consider
individual facts and circumstances when applying allowable
expense standards for offers in compromise. Later in the
process, the IRS Appeals Office may take a more enlightened
approach to the case but it should not be necessary to go to
the Appeals level to receive fair consideration of an offer. The IRS has recently taken the position that if a taxpayer
can pay the tax debt, based on his or her current monthly
income and expense extrapolated over the entire remaining
ten-year statute of limitations for collection, an OIC will not
be available. Formerly, the IRS took the more pragmatic
approach that the focus should be on the taxpayer’s ability
to pay in the next four or five years. In fact, as a condition
of approving an OIC, some Area offices have insisted that
the statute of limitations be extended up to five additional
years, both for purposes of determining the acceptable offer
amount and the term for its payment. While it is obvious that
some baseline period is necessary to determine collectibility,
these are unrealistic measurement standards and they reflect a
very different approach to compromises over what prevailed
just five years ago.
In the long run, the IRS must balance the desire to
collect the maximum amount of tax possible against disincentives to future compliance that are being created by
oppressive OIC policies.
New Legislation
Under a new federal law, taxpayers submitting a new
offer must make one or more nonrefundable, up-front payments. The recently-enacted Tax Increase Prevention and
Reconciliation Act of 2006 (TIPRA) made major changes to
the OIC program, tightening the rules for lump-sum offers and
periodic-payment offers. These changes become effective for
all offers received by the IRS starting July 16, 2006.
The amount of these partial payments depends on the
taxpayer’s proposed offer and its terms. Taxpayers submitting requests for lump sum offers must include a payment
equal to 20 percent of the offer amount with the application.
Taxpayers submitting requests for monthly payment offers
must include the first proposed installment with their application, as well as each monthly installment as it would come
due. The fact that these payments are non-refundable may
make it more difficult for a taxpayer to borrow the amount
from a well-meaning friend or relative. The non-refundability feature also gives the IRS an incentive to reject the
offer and keep the non-refundable payments. 14
While the heyday of the Offer in Compromise program
may be in the past, the program still exists and some offers
will be acceptable. However, it is all the more important
that a taxpayer secure a representative who knows the rules
and the administrative practices. Woodford G. Rowland, Esq., is a Certified Tax Specialist, Board of Legal Specialization, State Bar of California,
and is a name partner in Rowland & Chambers, San Rafael,
California. Mr. Rowland has practiced tax law for over 25
years. You can contact him at (415) 459-3100, or at Woody@
Rowlandchambers.com. SECTION NEWS
Oct. 5th
The Barristers will be having a mixer at Rafters, 812
4th St. San Rafael, 5:30 – 7 pm.
Oct. 10th
Probate & Trusts Mentor Group
802 B ST., San Rafael
An informal forum to further discuss issues addressed
at the monthly estate planning section meetings or any other
issues. Bring your lunch and interesting estate planning/
trust administration/probate issues to discuss, and snacks
will be provided. Parking is available in the City of San
Rafael parking lot on B Street south of 4th Street. Brown
Bag Lunch 12 - 1:30
Oct. 17th
The speaker at the October meeting of the Family
Law Section will be Barbara McEntyre. The topic will
be the new bankruptcy law. Contact David Block for more
information at 485-2200.
Oct. 18th
The Probate & Estate Planning Section Meeting
will be at Whistlestop, 930 Tamalpais Ave, San Rafael 12
– 1:30
Oct. 19th
The Real Property Section Meeting will be at the
Seafood Peddler, 100 Yacht Club Drive, San Rafael. 12
– 1:30 pm.
Oct. 26th
The Diversity Section Meeting will be a Noon/brown
bag lunch at the Law and Mediation Offices of Matt White,
1000 4th St. #600, San Rafael.
The Marin Lawyer
(Gifts, continued from page 8.)
and the future estate tax benefits of a charitable gift at
death while retaining ongoing economic benefits from
the contributed property. A charitable remainder annuity
trust provides for the payment to the Donor (or others) of a
specified percentage (at least 5%) of the initial value of the
property; the amount so determined is paid to the Donor as
a fixed annuity regardless of fluctuations in the trust income
and in the value of the trust assets. A charitable remainder
unitrust provides for the payment of a specified percentage
(at least 5%) of the value of the trust re‑valued each year. A
unitrust will provide a variable payment, will be responsive
to economic changes and will be less vulnerable to erosion
caused by inflation.
• A charitable remainder trust is tax-exempt. The
transfer of appreciated real estate to the trust will not result in taxable gain to the Donor; and the sale of the real
estate by the trust will not result in taxable gain to the trust.
Therefore, the full sales proceeds, undiminished by any
capital gains tax, remain in the trust.
• The effect of the tax-exempt status of a charitable
remainder trust is that the Donor’s appreciation in the real
estate can be “unlocked”: the trust can sell appreciated
property tax-free and diversify or reinvest the proceeds in
higher yield investments for the Donor’s benefit (as lifetime
beneficiary) without the usual capital gains tax cost.
• The trust distributions paid to the Donor will be
taxed as ordinary income to the extent that the trust (which
itself pays no tax) earned ordinary income for the year, then
as capital gains tax to the extent that the trust had capital
gain in the current or any prior year (including the initial
sale of the real estate contributed to the trust).
• During the lifetime of the Donor, the Donor may be
the trustee of the trust or may engage professional management. On the death of the Donor, the trust assets will not
be subject to probate administration, and will not generate
any estate tax in the Donor’s estate unless persons other
than the Donor and the Donor’s spouse are beneficiaries.
Example: A Donor, age 65, funds a charitable remainder unitrust with real estate valued at $500,000 for which he
paid $100,000 ten years ago, reserving the right to receive
8% of the value of the unitrust each year for life. At the
Donor’s death, the assets in the unitrust will be distributed
to a public charity .
Overall Economics. In the first year, the Donor will
receive $40,000 from the unitrust. In future years, the
payout will vary according to the value of the trust principal. The Donor will also receive an income tax charitable
deduction of $160,000, which can offset up to 30% of the
Donor’s adjusted gross income for the current year and (if
not all used) for five additional years. At a 35% income
tax bracket, the deduction will reduce the Donor’s taxes
by $56,000. The long‑term economics will depend on the
actual investment performance of the trust assets. As an
example, if the assets produce a total return (income plus
growth) of 9% per year, the Donor will receive payments
aggregating $858,000 over the Donor’s life expectancy;
and $579,000 will be distributed to the public charity on
the Donor’s death.
Tax Benefits. On sale of the property, no capital gains
tax is payable on the $400,000 of appreciation in the property, thereby avoiding federal and state net capital gains
tax of $80,000. This is true even though the income tax
charitable deduction is determined by reference to the full
fair market value of the real estate.
Increase in Cash Flow. If the real estate had been nonincome producing or generating a low yield, the increase
in yield to an 8% payout rate would substantially increase
the Donor’s cash flow. The Donor could have sold the
real estate and reinvested the proceeds in higher‑yielding
investments; however, the proceeds to be reinvested would
have been diminished by the capital gains tax, so that only
$420,000 would have been available for reinvestment.
With a unitrust, the full value of the property is reinvested,
undiminished by capital gains tax.
In sum, a charitable remainder trust makes it possible
to unlock appreciation and reinvest the full value of real
estate or other appreciated assets without diminution by
capital gains tax. Subsequent appreciation inures to the
benefit of the Donor for the Donor’s life or for a term of
years. The growth is tax-free and payments to the Donor
may be partially capital gain rather than ordinary income.
As a result, although the Donor gives up access to the principal contributed to the unitrust, if the Donor expects not to
need the principal, the Donor can be better off economically
by using a unitrust than by either retaining the real estate or
selling the real estate and incurring a capital gains tax.
Ted Hellman directs the Estate Planning and Administration Section of Hanson, Bridgett, Marcus, Vlahos &
Rudy, LLP, with offices in Larkspur, San Francisco and
Sacramento. He was the Co-Chair of the Marin County
Bar Association Estate Planning and Probate Section for
four years, 2000 - 2004.
© 2006 – All rights reserved. Theodore A. Hellman
15
The Marin Lawyer
New Members
change of scene
Daniel Bakondi
137 Clark,
San Rafael, CA 94901
Tel: 589-2246 Fax: 485-6236
danielbakondi@yahoo.com
Kevin C. Coleman
369 – B Third Street, #127
San Rafael, CA 94901
Tel: 458-8821
kcolemanlaw@comcast.net
Allison B. Friedman
Freitas, McCarthy, MacMahon & Keating, LLP
1108 5th Ave.,
San Rafael, CA 94901
Tel: 456-7500 Fax: 456-0266
Charles H. DeLacey, Esq.
Maple · DeLacey, LLP
333 Sacramento Street
San Francisco, CA 94111
(t) 415.834.9667
(f) 415.834.9714
charles@maple-delacey.com
J.E.B. Pickett
Wynne Law Firm
100 Drake’s Landing Rd., #275
Greenbrae, CA 94904
Tel: 461-6400 Fax: 461-3900
JEBPickett@WynneLawFirm.com
N. Rebecca A. Turner
Freitas, McCarthy, MacMahon & Keating, LLP
1108 Fifth Ave., 3rd Flr.
San Rafael, CA 94901
Tel: 456-7500 Fax: 456-0266
rturner@freitaslaw.com
Michael O. Glass
900 Fifth Ave., Ste. 100
San Rafael, CA 94901
Tel: 454-8485 Fax: 454-8423
mikeglass@inreach.com
Richard R. Kuhn
Brayton Purcell
P O Box 235
Novato, CA 94948-0235
Robert M. Levy
Brayton Purcell
P O Box 235
Novato, CA 94948-0235
robertmlevy@comcast.net
***SAVE THE DATE***
THE MCBA HOLIDAY PARTY
WILL BE ON Wednesday,
December 13TH
5:30-7:30PM
AT the HANSON BRIDGETT
OFFICES IN LARKSPUR
16
Russell K. Marne
Attorney At Law
30 North San Pedro Rd., Ste. 195
San Rafael, CA 94903
Tel: 499-8100
Russell@marne.com
Deadline for submission of articles, ads,
inserts, and announcements
are due on the 15th of each month.
Thank you
The Marin Lawyer
THE MARKETPLACE
Anyone wishing to advertise in the Marketplace should
send their text ad to MCBA, 30 N. San Pedro Rd, Ste. 140,
San Rafael, CA 94903 with payment of $25 per month, or
you may email to: rgaspar@30nsp.org . The ad should be no
longer than 25 words and paid in advance.
CONTRACT ATTORNEY – research, writing and
appearances in civil, criminal, family law. Experienced.
Reasonable. Admitted to the bar 1988. References. Call
Carol, 238-1673.
ATTORNEY OFFICE SPACE – full service, kitchen, conference room, parking. Possible future association.
Novato. $750/month/deposit. 898-8290, e-mail Steve@
Turkmail@aol.com.
TAX AND FORENSIC ACCOUNTING SERVICES – James Lee, Certified Public Accountant, 169 Miller
Avenue, Mill Valley, CA 94941-2713 - 388-1980.
TWO DOWNTOWN S.R. OFFICES - Nov 1st: Unique & cheery @ 912 Lootens, 2nd Fl. $1175 ea; convenient to parking/restaurants/freeway. Call 721-2040 or
email jfgeorge@idiom.com.
CONTEMPORARY, VIEW OFFICE SUITE TO
SHARE OR SUBLEASE - 1-5 Offices, conference room,
secretarial; furnished/unfurnished; rent competitive; 1050
Northgate Dr., San Rafael; Call Ken @ 472-8010.
LEAST EXPENSIVE SPACE IN “A” CLASS
BUILDING NOW AVAILABLE!! - $800-$1,100/month
including full time receptionist. ONLY 2 LEFT. Executive Suites- beautifully remodeled, prestigious, on-line law
library, storage, kitchen/break room and more. “Virtual
Offices”, and daily/hourly office and conference room use
available also. Call Krista (415) 454-0455 X 239.
Mission Statement of the Marin
County Bar Association
To involve, encourage, and support bar
association members,
to serve as a liaison to the Marin County courts,
and to educate the community and enhance
access to legal services.
17
The Marin Lawyer
Marin County Bar Association
30 North San Pedro Road, Ste. 140
San Rafael, CA 94903
published by
The Marin County Bar Association
415-499-1314 Fax 415-499-1614
www.marinbar.org
MCBA Officers
Daniel Harris
President
Jeff Lerman
President-Elect
Marlene Getchell
Secretary
Edward Berberian
Treasurer
Leonard Rifkind
Past President
Board of Directors
Renee Giacomini Brewer Otis Bruce
Timothy Chambers
Al Cordova
Royda Crosland
Phil Diamond
Lisa Goldfien
Beth Jordan
Michelle Lerman
Michael Marowitz
Lisa Spann Maslow
Andrew McCullough
Ed Rockman
Michael Samuels
Neil Sorenson
Eric Sternberger
Executive Director
Robynn Gaspar
Production
Express Printing
Advertising
Pat Stone
MCBA encourages submission of articles that may interest the
legal community. Letters to the Editor are also welcome and may
be published if space permits. Submissions will not be returned.
The Editor reserves the right to publish, decline to publish, edit or
otherwise modify any submission. Editorial material should be sent
to the Marin County Bar Association at the above address.
18
FIRST CLASS
U.S.POSTAGE
PAID
permit #26
san rafael ca
Dated Material