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
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