In the intricate web of financial regulations and taxation, one added layer of complexity is inheritance tax. Also referred to as estate tax, this often complex form of tax is essential to understand if you’re dealing with the inheritance of an estate.

So, what exactly is inheritance tax, who does it apply to, and how does it work? In this article, we’ll unravel the complexities surrounding inheritance tax, teaching you everything you need to know about this important tax consideration. 

What are inheritance taxes?

Inheritance taxes are a specific category of taxes imposed by governments on the transfer of wealth from a deceased individual to their heirs or beneficiaries. In the United States, the specifics of inheritance tax laws vary from state to state. 

The tax rates, exemptions, and thresholds are subject to frequent revisions and adjustments by governments, making it crucial for individuals to stay informed about the relevant laws and regulations in their area.

Inheritance taxes vs estate taxes

While they share similarities in their objectives and mechanisms, there are distinct differences between inheritance taxes and estate taxes. 

Inheritance taxes are taxes imposed on the assets or wealth inherited by beneficiaries after the death of the individual who owned those assets. These taxes are calculated based on the value of the inherited assets. The tax liability falls on the heirs or beneficiaries, and the amount owed may vary depending on a number of factors that we’ll discuss shortly.

Estate taxes, on the other hand, are levied on the entire estate of the deceased person before the assets are distributed to heirs or beneficiaries. These taxes are imposed by the federal government and are calculated based on the total value of the estate, including all assets, investments, real estate, and personal property. While inheritance taxes typically have a variable tax rate, estate taxes have uniform rates that apply to the entire estate. 

How is inheritance taxed?

In California, the taxation of inheritances can be a complex and nuanced process, influenced by a variety of factors, including:

• The size and valuation of the estate
• The nature of the assets
• The relationship between the deceased and the beneficiaries

Most states provide exemptions or deductions to reduce the taxable value of the estate. These exemptions often include thresholds below which no inheritance tax is owed, as well as deductions for specific assets or bequests. For example, family homes, small businesses, and charitable donations may be exempt or subject to reduced taxation.

Inheritance tax rates are determined by the government and can vary widely depending on the state and the relationship between the deceased and the beneficiaries. Spouses and close family members may benefit from lower tax rates or even complete exemptions in some states, while more distant relatives or non-relatives may face higher tax rates.

Schedule a consultation to learn more 

Given the complexity of inheritance tax laws, it is highly advisable for individuals and families dealing with estate inheritance to seek the expertise of tax professionals, estate planners, or attorneys. 

At Lonich Patton Ehrlich Policastri, our experts can provide guidance on minimizing tax liability through various legal strategies and ensure your compliance with all applicable regulations.

Contact us today to schedule your free consultation.

 

 

 

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

 

If you recently lost your spouse, you are likely dealing with many emotions – grief, disbelief, and shock, to name a few. In addition to facing this incredibly difficult experience, you probably now have the responsibility of managing the estate and ensuring your financial security.

We’ll explore some of the steps you should take immediately so that your affairs are taken care of from an estate planning perspective.

1. Get several copies of the death certificate

One of the first steps you should take as a surviving spouse is to obtain several copies of your spouse’s death certificate. They will be essential as you navigate legal and financial matters in the upcoming months. You may need them for closing bank accounts, selling property, and distributing assets to beneficiaries. By having multiple copies, you will be sure to have the necessary documentation in hand when you need it.

2. Review your spouse’s estate plan

Even if you believe you know everything about your spouse’s financies, you will want to take some time to review all of their legal and financial documents. These can provide information on the distribution of assets and provide a complete picture of your own financial future. 

It can also help ensure that you are prepared for any unexpected events that may arise. 

3. Notifications

You will need to inform the appropriate parties of your spouse’s passing. This includes Social Security Administration, insurance providers, credit card companies, banks, credit bureaus, and anywhere else your spouse held assets, both separate and joint accounts.

Not only does this assist with a smooth transfer of assets, but it also helps prevent unauthorized access to the accounts, fraud, or identity theft.

4. Review your own estate plan

If you and your spouse had a joint estate plan, now is the time to review and update it. Many couples name their spouse for the financial and medical powers of attorney, executor, and beneficiary. If that is your situation, you will need to revise your estate plan. 

You might also need to change the beneficiaries on your retirement accounts and life insurance policies. Furthermore, if you and your spouse had joint ownership of assets, you may want to update your estate plan to include “transfer on death” instructions.

5. Understand the tax implications

You should know how taxes will impact your inheritance and your shared financial assets. Proper planning can help ease tax liabilities down the road. California has protections in place for widows and widowers, often referred to as widow’s rights.

Navigating the complexities of an estate plan can be difficult, especially when you are grieving over the loss of your spouse. Working with a professional estate planning attorney can help make the task less daunting. Our attorneys at Lonich Patton Ehrlich Policastri have the experience you need. They can guide you through the process and help you understand the legal and financial documentation and tax implications.

You don’t have to go through this alone. Contact us at 408-553-0801 for a free consultation, and let us help you find peace of mind during this difficult time.

 

 

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

Most pet owners consider their pets to be part of the family. This loving bond makes it even more important to consider what will happen to your pets if you are unable to care for them because of illness, disability, or death. Many people assume that family members or friends will step in and take ownership of the pets, but without specific plans in place pets often end up in shelters instead.

Although you may have read newspaper stories about people leaving millions of dollars to their cats, the truth is, in the eyes of the law, pets are property. Rather than naming your pets as beneficiaries of your estate, you will need to designate a caregiver in your will and include guidance for your pets’ care in your estate plan.

Things to think about when estate planning with pets

There are several factors to consider when planning for your pets’ needs after you are gone. The following are some tips to help you plan.

1. Develop a short-term plan: If you are unexpectedly injured or called away from home, who has access to your house and knows about your pets? Write out instructions about feeding, hiding places, daily routines, etc. to smooth a transition for both the temporary caregiver and your pets. Make sure that one or two trusted individuals (or a pet sitting company) have keys or know how to get in your house.
2. Decide on a long-term caregiver: Make sure to ask the person before you designate them as the caregiver for your animal in your will. If you can’t find anyone, look into animal sanctuaries or perpetual-care programs. Perpetual-care programs help find suitable homes for pets after an owner’s death.
3. Life expectancy of your pet: When thinking about who will care for your pet in the long-term and how much money you should set aside for that care, don’t forget that different breeds and animals may live longer than others. For instance, caring for a horse, parrot, or tortoise will likely involve a commitment of decades rather than a year or two.
4. Annual costs: Deciding how much money to set aside can be tricky, since the costs of owning pets rise as they get older, but there are many online calculators to help you get a general idea. Be sure to include estimates for food, veterinary bills, dental care, toys, pet insurance, etc. 

Consider establishing a pet trust

Many states, including California, recognize pet trusts as a viable option for pet owners to pass caretaking responsibilities to someone else. Because a pet trust is a legal arrangement, you can provide detailed instructions for how you want your pets to be cared for and know that your wishes will be carried out. Working with an estate planning attorney is a good way to ensure your pet trust will stand up in court.

As with other trusts, you will name an individual or group as the trustee who will oversee and distribute funds to the beneficiary who is directly responsible for caring for your pet. Many pet owners fund the pet trust with life insurance benefits. 

Call for a free consultation about your estate planning needs

The Estate Planning Group at Lonich Polich Ehrlich Policastri (LPEP Law) specializes in all aspects of estate planning, including the administration of trusts. Call us today at 408-553-0801 or complete this form to schedule a free, 30-minute consultation to discuss your goals and needs. Not only can our attorneys help you protect the future of your family members, even your four-legged ones, but we can also help you get the most out of your estate now. Don’t wait to start planning. Start today to protect your tomorrow.

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

As a parent, ensuring the well-being, safety, and future of your child is one of your biggest concerns. Although it can be an uncomfortable subject to think about, it’s very important to plan for unforeseen circumstances and make sure that your children are taken care of in the event of your untimely demise. 

Appointing a guardian for your child is a vital aspect of comprehensive estate planning, offering peace of mind and a sense of security. The process of appointing a guardian involves careful consideration and legal procedures. In this article, we’ll take a look at how to appoint a guardian for your child to give yourself the peace of mind that their future is in safe hands.

What is a legal guardian?

A legal guardian is someone who is entrusted with the responsibility of caring for and making decisions on behalf of a minor in the absence of their parents or when the parents are unable to fulfill their parental duties. 

A legal guardian assumes all the rights and responsibilities typically held by a parent, including making decisions about the child’s healthcare, education, religious upbringing, and general welfare. They act as a surrogate caregiver, stepping into the parental role to ensure that the child’s best interests are prioritized and protected.

How to choose a legal guardian for your child

Choosing a legal guardian for your child is a weighty decision that requires thoughtful consideration. Here are some key steps to help guide you through the process:

1. Assess your values and parenting priorities: Understanding your own priorities will help you identify a guardian who aligns with your vision for your child’s upbringing.
2. Consider your child’s best interests: Consider their relationship with potential guardians and evaluate how well the guardian would be able to care for your child. 
3. Evaluate the potential guardian’s qualities: Look for individuals with a genuine love for your child. Can they provide a stable and nurturing environment? 
4. Seek legal advice: An attorney specializing in estate planning and family law can help you draft a testamentary guardian designation or include the appointment in your will.
5. Remember that circumstances change over time: Regularly review your choice of guardian and make updates as needed. 

Choosing a legal guardian for your child is a deeply personal decision. Take the time to carefully evaluate potential candidates, seek advice when needed, and communicate your intentions clearly with both the chosen guardian and other relevant family members. 

How to appoint a guardian in case of death

The first step in appointing a guardian is to draft a testamentary guardian designation. Work with an attorney to prepare a legally binding document that clearly states your choice of guardian. This document, often referred to as a testamentary guardian designation, will outline your wishes regarding the care and custody of your child in the event of your death.

From the initial consultation to drafting legal documents and providing ongoing assistance, the law attorneys at Lonich Polich Ehrlich Policastri we aim to make the process as smooth and stress-free as possible. We will work closely with you to ensure that your child’s future is secured and that their well-being is prioritized.

Contact LPEP today at 408-553-0801 for a free, 30-minute consultation. 

 

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

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.