Contact a Lawyer For Estate Planning and COVID-19
Because of its complexity, most people need an attorney for estate planning–someone who can clarify the legal code and who can be an objective guide in an often emotionally sensitive process. In order to make sure your final wishes are documented in a fashion that is recognized by the California state courts, you should consult with an estate planning lawyer in Los Angeles.
If you pass away without a will, you will be considered to have died “intestate”. This can lead to your property not being distributed according to your preferences. This is equally true with your retirement plans, annuities, and life insurance policies. It is important that you have a designated beneficiary for each of these vehicles.
With the health care crisis going on today due to COVID-19, it is more crucial than ever to make sure that you have taken care of estate planning and have designated your beneficiaries. Yet this crisis makes it harder to focus on what is necessary to create sound financial plans. Therefore, it’s even more important that you have an estate planning and coronavirus attorney in Los Angeles to walk you through the process.
Consulting with a Los Angeles lawyer for estate planning and COVID-19 will make it easier for you to protect your assets in these uncertain economic times. Composing your will and going through a beneficiary designation review is a sensitive matter. Therefore, it is essential to have a top-notch estate planning lawyer in Los Angeles. Fortunately, our team can provide the expertise and attention you deserve in this difficult time. While you may be tempted to simply name your spouse or child as your heir, it’s best to first discuss the situation with a qualified estate planning and coronavirus attorney in Los Angeles. Your lawyer will be able to explain the consequences of your designation.
Naming Primary and Contingent Beneficiaries
Your life insurance policies, annuities and retirement plans typically have you name a beneficiary when you first open the account. Often you are asked to name both a primary and secondary beneficiary. If you die, your primary beneficiary (or beneficiaries) will inherit; however, if they are also dead, then your secondary (or contingent) beneficiaries will do so.
Who Can Be a Beneficiary?
The following is a list of possible beneficiaries:
- Spouse, children and other relatives
- Friends and associates
- Charities and institutions
You will need the full legal names for each heir. If you have more than one listed per account or policy, you will need to assign a percentage to each.
Since your pet cannot sign legal documents or own property, you can’t list your pet as a beneficiary; however, you can establish a trust to care for your pet and designate the trust as a beneficiary.
Overriding Your Will
Sometimes what is designated in your will can contradict the heirs listed in your retirement accounts, annuities and life insurance policies. Due to the complexities involved, you need an attorney for estate planning to help you avoid confusion and keep your documents up to date. A Los Angeles lawyer for estate planning and COVID-19 can guide you through this process and ensure that nothing has been overlooked. You might want to schedule regular reviews of the paperwork, particularly after major life events.
Despite the complications involved, your heirs will appreciate being named as designated beneficiaries since they will typically receive access to your retirement accounts, etc., immediately upon your death instead of having to go through probate.
Taxes on Inherited Retirement Accounts
Most people need an attorney to understand the tax ramifications associated with inherited assets. While a spouse usually does not pay taxes, an estate planning lawyer in Los Angeles can verify this and ease your mind about the rules for mandatory taxable payouts, which can be complex. An attorney becomes even more important if you wish to designate an heir other than a spouse.
You’ll need to consider the federal tax penalties your heirs will accrue. In 2019, estates that exceeded $11.4 million were federally taxed. Some states also assess inheritance taxes. By working with a qualified Los Angeles lawyer for estate planning and COVID-19, you can minimize such taxes.
Because of these potential complications associated with your estate, you will also want to keep your heirs informed so they know how to plan.
Requirements to Cash out the Retirement Fund
Some forms of retirement plans, such as traditional individual retirement accounts (IRAs) and 401(k)s will force your designated beneficiaries to immediately cash out. That means they will have to take a lump sum payment. Consequently, they will face a tax liability. Roth IRAs, on the other hand, have the benefit of having been funded with after-tax dollars. Since the tax has already been paid upon these retirement vehicles, your heirs will not have to pay when they cash out.
Another option if you would like to avoid taxes is to designate a charity or non-profit foundation as your designated beneficiary. This prevents taxation on the funds transferred.
Creating a Trust for Minor Children and Others</p
There are some categories of people that cannot directly inherit assets from a life insurance policy, annuity or retirement plan. These include minor children. In some states, individuals up to the age of 21 are listed in this category. In order to provide for them, you will need to create a trust.
Other heirs for whom you might want to create a trust include any dependents with mental disabilities and the aforementioned pets.
To sum it up, when you are considering how to name your heirs for any retirement accounts, annuities and life insurance policies you have, it is best to discuss your plans with an attorney. It’s also a good idea to talk to your loved ones so they can make plans, and to schedule regular reviews and updates.