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San Francisco Estate, Business, and Investor Immigration Law Blog

Oral Promises and Wills

Wills and TrustsPursuant to California Probate Code Section 21700 - Contract to Make a Will - a person is allowed to establish an agreement between the decedent and the child, friend, or caretaker concerning the decedent leaving them assets. However, there are some hurdles. The California Supreme Court has noted that upon a person's death, "the temptation is strong for those who are so inclined, to fabricate evidence giving color to a claim that the parties entered into... an oral arrangement." Notten v. Mensing , (1935) 3 Cal.2d 469, 477.


Under 21700, proof of an oral contract must be clear and convincing evidence of an agreement between the decedent and the claimant or a promise by the decedent to the claimant that is enforceable in equity.

Minimizing the Impact of the Obamacare Surtax on Investment Income

Obamacare's 3.8% surtax on investment income applies to individuals making more than $200,000 adjusted annual income.

With top capital gains tax rates having recently increased from 15% to 20% for individuals with incomes of more $400,000 per year, investors may now be facing a 23.8% tax on net investment income.

This is a fifty-eight percent increase from 2012 tax rates.

A Charitable Remainder Trust may useful in minimizing the impact of this surtax using property that has appreciated.

  • Once the property has been transferred to the trust, it is sold and the proceeds paid out in annual payments of at least 5% of the trust's initial value.
  • The value of the trust at the Trustor's death then goes to the selected charity.
  • The tax advantage is that the trust can sell the appreciated property without incurring the 3.8% Obamacare tax. The beneficiaries are still subject to capital gains owed, but the smaller payments taxed will be spread over a longer period of time. 

EB-5 Immigrant Investor

Immigrant investor based immigration, also known as EB-5s, allows admission of immigrant investors as lawful permanent residents.

  • Potential immigrants are those who invest at least $1 million in a new commercial enterprise employing at least 10 full-time U.S. workers.
  • Immigrants who invest in a targeted employment area (TEA) or a qualified and approved Regional Center are only required to invest $500,000.
  • Immigrants must show that they created at least 10 jobs within two years of an approved I-526 application.
  • Approximately 10,000 visas are allocated to EB-5 investors per year. 

Advantages of Trusts over Wills

family trust protects family membersTrusts are used for many purposes, including dividing ownership of property.

Trustees are the legal owner and may control the property.

The beneficiary holds the right to enjoy the property.

Trusts have several characteristics that make them preferable to wills:

  • Trusts are simpler to update because changing a trust requires fewer formalities than changing a will.
  • Trusts can take effect immediately if you are hurt or incapacitated.
  • Trusts assets typically do not have to pass through probate, and sometimes taxes can be avoided or postponed.

Shielding Investor Property Sales from Capital Gains Tax: DST in 1031 Exchange

Delaware Statutory Trusts allow investors to shield investment property sales from capital gains tax.

  • The participant must invest in a property that costs at least as much as the proceeds from the sale of the first property within 180 days of the sale of the first property.
  • DSTs allow multiple investors to band together own investment real estate that they could not afford individually.

E-2 Treaty Investor

An E-2 investment is an investor placing capital at risk with the objective of generating a profit. The investment may be starting a new business, or purchasing a pre-existing business. In both cases, the capital invested must be substantial.