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. 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. You must 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 lawyer in LA to walk you through the process.
Consulting with a family law attorney in Los Angeles during this pandemic 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. 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 LA. 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 listing 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 legal professional 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, a lawyer 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
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. 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 schedule regular reviews and updates.
Quarantining has defied and challenged relationships across the U.S. Many married couples are starting to realize that they need to permanently part ways – but during a pandemic, it can seem like an extremely difficult thing to do. Although the divorce process has changed because of limited face-to-face contact, there are alternative ways to file for separation. At Burns Law, we offer virtual meetings to help ease the stress associated with divorce. Contact our attorneys to learn more.
A last will and testament are universally recognized as the legally binding document that enforces the final wishes of an individual after they pass away. As a permanent document, and lasting decision, your loved ones will not be able to make changes once it is in effect. We advise that you consult with an attorney before you make a final decision.
A last will and testament are legal documents establishing an individual’s final wishes after passing away. Unlike a living trust, it will only take into effect after their passing, and a notary is required to ensure validity. If you’ve fallen ill, have a pre-existing illness, or simply want to prepare, you can schedule a virtual consultation with our lawyer.
As COVID-19 continues to progress, many have considered estate planning to protect their assets if something were to unexpectedly happen. There has been a lot of uncertainty about what life will look like post-pandemic, but you can certainly take advantage of this time to plan, finalize or update:
- Estate planning paperwork
- Healthcare directives
- Insurance policies
To learn more about estate planning during the pandemic, you can refer to this article for more information.