You want to save for your future, but you also want to plan for the future of your family. How can you get your retirement plan to play nice with your estate plan and ensure that you get to enjoy your golden years and still pass on an inheritance to your loved ones? Here are a few things to consider.
Your Retirement Fund Can’t Be Part of Your Trust
Your trust can’t own the retirement fund. That means you have to select a separate beneficiary for your retirement account. You can leave the retirement money and the trust to the same individual, just not with one nested under the other.
When selecting a beneficiary for a retirement fund, remember that there are tax advantages and other financial benefits to leaving these funds directly to a spouse. For example, regardless of who the beneficiary is, retirement funds don’t go through probate. They pass directly to the named beneficiary. However, only a spouse can defer minimum distribution until he or she hits retirement age.
Making Your Retirement Fund Beneficiary Your Trust
Why not simply leave your retirement fund to your loved one? What if he or she was to make the mistake of taking all of the funds at once and ends up paying half of the inheritance out in taxes the next year? That would be an expensive error. But your trustee could ensure that the retirement fund is stretched and distributions are taken at the proper times to maximize the payout.
Leaving Your Estate and Retirement Funds Behind the Right Way
Petrov Law Firm can help you to negotiate the laws that California has in place regarding estate planning and retirement funds. To get the help you need in planning for a better future, call us today at 619-344-0360.Read More
IRAs have become a popular form of retirement account. They offer tax benefits and are also convenient for a person who runs his or her own business. However, there are a few concerns when it comes to estate planning and IRAs. Here are three things you need to protect your retirement account against so your beneficiaries receive their full inheritance.
- Taxes – Sometimes when an IRA account owner dies, the account is liquidated, and the funds are sent as a check to the beneficiary. The problem with this is that accepting that check may subject your beneficiary to paying a ton of taxes, thereby negating any tax benefits you previously received from putting money into the retirement account.
- Divorce – With an IRA, you select a beneficiary. Thus, a divorce will likely mean changing the beneficiary on the account, a fairly simple process but one that is easy to forget. A 401(k) is a little more complicated because it automatically goes to your next of kin. That means if you pass away before the divorce is finalized, your soon-to-be-ex may end up getting the money.
- Creditors – While retirement funds don’t pass the same way a bank account would, it is also very different from a trust. Thus, creditors may have the opportunity to sneak in and get their cut.
Proper Estate Planning to Protect Your IRA, 401(k), and Other Retirement Accounts
To make sure the right person or persons benefit from your hard-earned money, trust the estate planning pros at Petrov Law Firm in San Diego. We offer the premier California estate planning services in the area. Call 619-344-0360 to get started now.Read More
Assigning a durable power of attorney is an important part of estate planning. This is especially true if you ever become incapacitated for a time and do not have either the physical or mental ability to care for your own finances. Here are 6 vital things a power of attorney can take care of for you should you become temporarily incapacitated.
- Bank Accounts – If you are married, your mate is probably on all of your bank accounts. But if he or she usually allows you to take care of the financials for the family, then it is important to have a fiscally responsible person in charge of these accounts and to move around money as needed.
- Loans – A power of attorney (POA) can pay down your loans by either making minimum payments or paying them off completely depending on what is best for the estate in the current financial market.
- Bills – Your POA can also take care of the day to day bills such as utilities, credit cards, insurance, and the like. Much of this may be on an automatic payment system, but for things that are not, it is important to have someone who knows what is due and how it is paid.
- Taxes – This is one of the most complicated aspects of financial responsibilities, so your POA needs to be someone you can trust to be honest and to put in the work to ensure that you don’t miss out on things that could have been written off.
- Real Estate – Whether you have land that is being leased, renovated, or lived in, someone needs to manage all of your properties at all times. If that is usually something you do yourself, you need a POA who can handle it. If you have a property management service, then the POA needs to be in touch with them as regularly as you would have been.
- Lawsuits – Any pending lawsuits for which you may be a plaintiff or defendant would now rest on the shoulders of your POA.
Preparing Your Estate Plan in California
If you live in or near the California area, Petrov Law Firm would be happy to help you set up or review your estate plan. Appointing a power of attorney is just one element in this process. To get started, call us at 619-344-0360.Read More
If you are a resident of the state of California, there is something you need to know about present estate tax laws and the possibility of future federal and state regulation changes. Before addressing these changes, it is important to note that this article is for informational purposes and is not an editorial opinion on the part of our law firm.
Here are the facts:
- There presently is no state tax on estates in California. California does not impose any additional taxes on top of the federal estate tax.
- 2017 federal estate tax exemption is $5.49 million. That means your heirs will not pay federal taxes on inherited assets including either estate tax or gift tax.
- Federal estate tax could potentially be repealed. The current president of the United States has suggested that he wants to repeal the estate tax entirely so that the federal government does not take any taxes on inherited funds regardless of the sum.
- If the federal estate tax is repealed, California may implement a state estate tax. State Sen. Scott Wiener has already introduced a bill to introduce an estate tax for the state of California. The idea is that the state can recapture this money freed up by tax cuts offered to the wealthy by the federal government for use by the state, especially for use in education, healthcare, and public transportation and roadways according to a statement made by the senator.
How Estate Tax Changes May Affect You and Your Family
If you are leaving a large estate to family or other heirs, planning your estate properly is more vital than ever. As of now, the federal estate tax on funds exceeding $5.49 million is at 40%. If that number is eliminated by the present administration, it is not known whether California will adopt a statewide estate tax. If this occurs, it is not yet known the percent that will be taxed or how much of an estate will remain tax-free. As this situation continues to develop, working together with an estate planning attorney with your best interests at heart may become even more vital.
Petrov Law Firm would be happy to help ensure that that your heirs receive the maximum amount of your estate. Please call 619-344-0360 today to schedule a consultation.Read More
Does your estate planning reflect how the law has changed for 2017? The primary thing that changed as the hundreds of millions of people across America rang in the new year this week was the estate tax. Why is this the case? What changed? How does this affect your estate plans? Read on to learn more.
How 2017 Affects the Estate Tax
Over the past several years, the IRS has been in the habit of announcing changes to the estate tax threshold just a few months before the end of the calendar year, and this past Autumn was no exception. This increase is due to inflation. Thus, as inflation occurs, the IRS places a higher limit on how much of an estate is tax exempt when it passes on to a person’s heirs.
In 2016, the figure stood at $5.45 million. However, as has been the custom, that figure was increased for the start of the new year. In fact, this year’s increase was double that of last year. An additional $40,000 means that the estate tax threshold is now at $5.49 million.
How Does the Change in the Estate Tax Threshold Affect You?
If you are wondering how this change in the estate tax threshold affects you, or if this change results in the desire to alter your current estate planning, come and see the estate tax experts at Petrov Law Firm. We can help you maximize tax benefits, thereby ensuring that your estate goes to your loved ones rather than the IRS. Call 619-344-0360 to get started.Read More
When preparing your estate for future heirs, one concern you may have is taxes that may apply and reduce the benefits to your family. As of now, your estate would have to exceed $5 million in order to be subject to taxes. Republicans strongly oppose the estate tax altogether, so it is possible that recent elections may lead to the elimination of the estate tax. However, rather than relying on that to occur, it’s a good idea to prepare your estate properly for your loved ones.
Disclaimer Trusts Help Avoid Estate Tax
One way around being taxed if an estate is over the $5.45 million mark is a disclaimer trust. Everything beyond the $5.45 million tax-free amount can be disclaimed as a gift and put directly into another trust. Therefore, the direct heir (usually a surviving spouse) receives $5.45 million in assets without paying taxes, and the rest goes into a further trust for future heirs to enjoy without taxes being removed. It provides a healthy sum for a surviving mate and ensures that additional funds that will go to children who can receive regular payouts from the disclaimer trust if this provision is made in advance.
Get Help to Learn How Estate Taxes Work
The Petrov Law Firm will be happy to help you develop an estate plan that ensures your money and assets are left to the people you love rather than being picked apart for government use. Call 619-344-0360 to get started today.Read More
If you own a large piece of property, especially one untouched by much development, you might consider a conservation easement as part of your estate planning. Conservation easements are a way of keeping property in the family while potentially reducing the tax burden of passing that land from generation to generation.
When you create a conservation easement on your property, you are reducing the value of the land. You are handing over development rights to a public or non-profit organization. Because you or future owners can no longer subdivide or redevelop the land, its value decreases.
The public agency or non-profit organization that holds the development rights through the easement doesn’t own the land. You still own the land. And you can even sell the land. However, because there are significant restrictions on the land, the property value generally decreases significantly. With a decrease in property value comes a decrease in risk for estate taxes as you and further generations pass the land along to the subsequent heirs.
Conservation easements are a great option for those concerned about the effects of a deteriorating environment and encroaching development on a family’s property. Consult with an estate lawyer to see how this unique estate planning option could help preserve wild lands for your future generations.Read More
It is not always necessary to create a trust prior to your death. In fact, it is quite common to stipulate that a trust will be created upon your death. There are several reasons for creating a trust, but generally the purpose of the trust is to protect your assets and to ensure continued use of your accumulated wealth for a specific purpose.
If the beneficiary of your estate is likely to have significant debts, the trust can help protect your assets from becoming part of collection efforts levied again the beneficiary.
If your beneficiary is a minor, has special needs, or is likely to waste the principle, a trust can ensure a life-long stream of income. You can protect the money while allowing your beneficiary to use any earned interest. Annuities are commonly used as an investment tool with a guaranteed monthly or annual payout.
You can also use your trust to stipulate the use of your assets. For example, you could set aside a specific amount of money to be used for education or a real estate purchase.
A trust is a significant tool for generational tax planning. When you have valuable cash assets and real estate, a series of trusts for the benefit of the entire family will ensure your great-grandchildren benefit from your assets.
Consult with your estate planner and discuss the possible use of your assets. And don’t forget to account for the growth of your wealth for the length of your life — however long that may be.Read More
Generally, if your child is hurt while playing a high school sport, you might be wasting your time and money trying to sue the school for the injury. State laws and case history support the premise that there are inherent risks in playing sports, therefore, the school (or the school’s insurance company) is not responsible for costs when your child is injured. There are, however, a few avenues to investigate if you suspect there might be underlying problems. Both negligence and custom can be the basis of a personal injury lawsuit. Before you approach the school or a lawyer, you should already have solid, well-documented evidence.
Proving injury is quite easy, but proving negligence is not. To claim negligence as the real cause of the injury — not the game itself — you need to show a pattern of behavior by the coach that allowed for dangerous circumstances. For example, if a coach is absent at a majority of practices and leaves an aggressive team captain in charge, then you and your lawyer might be able to show that the school and the coach allowed the players to be misguided into dangerous, unsportsmanlike behavior.
The school also could be held responsible for the injury if a coach was acting under specific policies or customs that made for dangerous instructions by the coach. There are few to no schools that would have an official policy that advocated for extreme aggression as a method of play. However, if you notice that the coach is regularly and excessively pushing players to be aggressive on the playing field, you might have a basis for a personal injury lawsuit.
In either circumstance (neglect or custom), your evidence needs to be well-documented and you need to be patient. Typical personal injury claims take years to come to conclusion, but with the reluctance of the courts to side with a frustrated parent, a personal injury case against a high school could end well after your child has finished college.Read More
- On June 7, 2001, President Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001, which made significant changes to Federal estate, gift and generation-skipping transfer taxes.
- Generally, the government assesses estate taxes when the gross value of your estate exceeds the applicable federal exclusion during the year of your death. Currently, the following exclusion amounts apply:
Year Decedent Dies
2006, 2007 and 2008
This means that if your gross estate is less than the applicable exclusion amount during the year of your death, your estate will pass to your heirs estate tax-free. If your estate exceeds this amount, your estate will pay significant estate taxes prior to distribution to your heirs.