Are you seeking ways to manage and protect your family’s wealth and assets? A lifetime transfer strategy is an invaluable tool that allows for the planned process of transferring your assets throughout your life instead of upon your death.

What is involved in this comprehensive approach, and how is it crucial for preserving generational wealth?

What Can Be Transferred?

Lifetime transfers are a method of transferring and distributing assets to your designated beneficiaries during your lifetime rather than leaving them as part of an estate after death.

Assets that can be transferred during one’s lifetime typically include tangible items such as real estate, cars, jewelry, and furniture and intangible items such as stocks, bonds and company shares. Additionally, lifetime transfers can also involve the transferring of intellectual property, such as patents, trademarks, and copyrights.

What Are The Advantages and Disadvantages?

The primary advantage of a lifetime transfer is that it allows you to distribute your assets as desired during your lifetime, allowing you to control who will receive them and when. This helps to ensure that your estate planning goals are achieved in the most efficient way possible. Transferring assets during your lifetime often allows for more flexibility than a traditional estate plan.

On the other hand, there can be some drawbacks associated with a lifetime transfer strategy. One of the main drawbacks is that it may involve complex legal documents, which can be challenging to navigate without proper guidance. Additionally, applicable taxes or fees may vary depending on the value or type of assets being transferred. 

It should also be noted that transferring assets during one’s lifetime often means relinquishing control over them and, therefore, can limit your ability to change your estate plan if you choose to do so at a later date. 

Is There a Limit on the Amount You Can Transfer?

Generally speaking, there are no limits on the amount of assets you can transfer during your lifetime. But, any transfers over a specific monetary value may be subject to taxes.

As of 2023, you can transfer up to $12.92 million during your lifetime without incurring a gift tax. However, you can gift any individual $17,000 annually without incurring taxes or affecting the lifetime exception.

Can You Do a Lifetime Transfer Into a Trust?

When doing a lifetime transfer into a trust, it’s essential to understand the different types of trusts available and how they work. Revocable trusts allow the grantor (the person who creates the trust) to make changes or revoke the trust at any time. Irrevocable trusts cannot be changed once they have been created. 

Is a Lifetime Transfer Strategy Right For You?

A good lifetime transfer strategy maximizes the benefits of transferring assets during life while minimizing future tax liabilities and ensuring adequate provision for dependants and other beneficiaries over time. 

Because of the legal requirements and various regulations, it is essential to seek professional advice before proceeding with a transfer. Our attorneys at Lonich Patton Ehrlich Policastri have the expertise you need to create an estate plan that meets your specific needs. Call us today at 408-553-0801 or fill out our online form here to schedule a free 30-minute consultation. By making strategic decisions now rather than later, you can ensure peace of mind knowing that all matters relating to inheritance will be handled smoothly both during and after one’s lifetime.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. 

 

Estate planning for a family is essential to ensure your funds and assets are handled correctly when you pass away or become incapacitated. And, like many people who have spent years building their wealth, it probably upsets you that the government will take a substantial cut of that wealth before distributing it to your heirs.

But it doesn’t have to be that way. A carefully crafted plan will help protect your property, so it passes directly to your beneficiaries.

The Probate Process

There is no inheritance tax in California, and it is only in effect at the federal level on estates valued at more than $12.92 million will have an estate tax.

But what if your estate goes into probate? That is typically a lengthy process that often requires court supervision and involves multiple complicated steps like locating assets and undertaking ownership transfers.

Therefore, California has attorney probate fees based on the estate’s value:

4% on the first $100,000

3% for the next $100,000

2% on the next $800,000

So, a $1 million estate may have a $23,000 attorney probate fee; a number of other fee’s and expenses are chargeable in probate.

The best way to avoid these fee’s is by keeping your estate out of probate, and there are a few ways you can accomplish that goal.

Trusts

Trusts are a common way for people to avoid probate. They are powerful tools in estate planning that can be immensely beneficial. Creating a trust can help ensure your estate passes to your heirs according to your wishes without going through the probate court process.

There are different types of trusts available that may suit particular situations. An irrevocable trust, for instance, is one where the terms cannot be changed once established, whereas a revocable trust allows for alterations of its terms. Other common trusts include charitable trusts and special needs trusts. Each of these serves a specific purpose based on your goals.

Joint Ownership

Joint Tenancy, or Joint Tenancy with Rights of Survivorship, is another arrangement that allows a property to pass directly to co-owners without going through probate court. But it’s important to remember that if your estate plan changes for any reason due to marriage, death, or other circumstances, it is necessary to make modifications accordingly.

Designate Beneficiaries

You can also use payable on death (POD) designations so that your beneficiaries can receive their inheritance promptly without going through the probate process. By setting up a POD designation for your bank accounts, investment portfolios, real estate, motor vehicles, and any other type of asset ownership you may possess, you can expedite the transfer of those assets to your chosen beneficiary or beneficiaries.

Creating Your Estate Plan

There are numerous ways to protect your estate from probate fees, from strategically structuring your assets ahead of time to drafting a will or trust. Our attorneys at Lonich Patton Ehrlich Policastri can provide estate planning advice to ensure money in your family is dispersed according to your wishes.

Contact us for a free 30-minute consultation by filling out our online form here or calling 408-553-0801. Together, we will create a secure future for you and your loved ones.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.

You have worked hard to get where you are in life. Maybe you started a business, own a home and property, or have made wise investments. As you think about the future, it’s important to decide how you want those assets distributed and to make a plan to ensure those decisions are implemented. Sometimes people choose to establish a living trust, which is a written, legal document that helps protect your assets while you are still alive and provide for your family after your death. Essentially, you put your assets into a trust and assign a trustee (which can be yourself) to manage the trust property and administer your estate for your benefit during your lifetime and to manage the distribution of those assets after your death. 

Although there are several benefits to having a living trust, arguably the most important is that you will protect your estate from the probate process, which can take over a year and incur significant legal fees. A living trust, on the other hand, can usually be settled within weeks. Other advantages include avoiding the probate process in other states if you own out of state property and providing the opportunity for a trusted family member or friend to manage the trust if you become incapacitated. In addition, some individuals choose living trusts because they are more difficult to contest than a standard will.  

What assets should be in a living trust?

Generally speaking, you will want to include several different types of assets in your living trust, including: 

• Bank accounts – checking, saving, and money market
• Real estate – homes and property
• Investments – stocks, bonds, and mutual funds
• Personal property – family heirlooms, jewelry, furniture, etc.
• Life insurance policy

Revocable vs. Irrevocable Living Trust

There are two types of living trusts – revocable and irrevocable. Each has its own advantages and drawbacks. The main differences between revocable and irrevocable living trust are: 

1. Flexibility: Revocable living trusts are most commonly used in estate planning since they allow you to amend, add to, or even completely revoke your living trust as the need arises, if your circumstances or finances change. As the name suggests, an irrevocable living trust is less flexible than a revocable living trust, requiring court or beneficiary approval for any changes once it has been notarized and executed.
   
2. Ownership: In a revocable living trust, the person who created the trust continues to have ownership or control over the assets in the eyes of the law. Trust property in an irrevocable trust, on the other hand, belongs to the trust itself, rather than the individual.
3. Asset Protection: Because assets in an irrevocable trust are controlled by the trust rather than the individual who set up the trust, they are better protected against creditor claims than assets in a revocable trust, which are still owned by the individual. If you don’t need to worry about creditors, however, revocable trusts are usually a better choice since you maintain control and can make changes easily.
4. Tax Savings: Once assets are transferred into an irrevocable living trust, they are no longer considered a part of an individual’s taxable estate. Therefore, your beneficiaries may pay less estate tax after your death. This benefit is especially important for people with more extensive estates or assets. 

We Can Help You Protect Your Family’s Future

Estate planning is one of the most important things you can do to protect your loved ones and ensure your long term wishes are carried out. If you’re wondering whether a revocable or irrevocable living trust is right for you, or have other questions about estate planning, our attorneys at Lonich Patton Ehrlich Policastri can help. Please call us today at (408) 553-0801 to set up a free, no-obligation consultation and discuss how our estate planning attorneys can customize our services to your unique situation and needs.

The short answer is: it depends. Navigating what happens after inheriting an IRA (individual retirement) account can seem overwhelming, but we at Lonich Patton Ehrlich Policastri are here to help you know your options and determine your next steps. Estate planning is one of our areas of expertise, and we are more than happy to help you make decisions regarding your new inheritance.

Know what kind of IRA you have inherited.

The very first thing to do upon finding out you have inherited an IRA is to figure out important details such as what type of account it is. There are multiple types of IRAs, but the most common two are a traditional IRA and a Roth IRA.

• With a traditional IRA, you contribute money before you are taxed on it. The money contributed might be able to be deducted from your taxes, and the money invested grows tax-deferred until withdrawing the money. Oftentimes retirees are in a lower tax bracket when they were working, the money might be taxed at a lower rate when they do begin withdrawing funds.
• With a Roth IRA, you are taxed in your contributions before investing them. This means that when you do begin withdrawing money, you will not pay taxes on it, as long as you meet certain requirements.

Knowing the account type is significant because the tax treatment remains the same for the heir as it was with the original owner. The beneficiary will typically have to move the assets from the original account over to a newly opened inherited IRA in their name.

What type of beneficiary are you?

Anyone is able to inherit an IRA, but the rules for what they can do with it differ depending on whether the heir is the spouse of the deceased or not. Due to the passage of the SECURE Act of 2019, non-spousal heirs who inherit an IRA on or after January 1, 2020, now have even more limited options than before. Funds must be spent within 10 years of the original account owner’s passing, regardless of account type. Spouses tend to have more freedom with how they manage their inherited IRA.

Other factors that come into play include when the account was opened and if the original investor had begun taking out their required minimum distributions (RMD) for a traditional IRA.

There is no one-size-fits-all explanation for inheriting an IRA.

Each situation is different, and every heir faces different circumstances. Here at LPEP Law, we have highly qualified trust and estate lawyers on staff who are eager to help you determine your next steps once you inherit an IRA. Click here to schedule a free 30-minute consultation with us, or give us a call at 408-553-0801. We are more than happy to equip you with the knowledge of how to proceed as a beneficiary. We are committed to treating every individual client with the utmost respect and professionalism, and to making this journey as easy as possible for you.