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.

No one likes to think about their mortality, but it is essential to plan for the future. It is tempting to put off creating your estate plan, but what happens if you wait too long?

Creating an estate plan is one of the most important things you can do for yourself and your loved ones. This document will dictate how your property is distributed after you die, and it can also provide instructions for health care decisions if you cannot make them yourself. If you don’t have an estate plan in place, it could lead to a lot of stress and confusion for your loved ones during a difficult time.

Elements of Estate Plans

An estate plan is a thorough a set of documents that may include a trust, Powers of Attorney, and advance directives. Each of these tools serves a different purpose, and they can all be customized to fit your unique needs.

A Power of Attorney (POA) can give someone the authority to make financial decisions on your behalf if you become incapacitated and an advance directive can outline your wishes for end-of-life care. Having a POA and an advance directive saves your loved ones from having to make critical decisions under stress.

Trusts are an effective way to plan ahead by letting another party (either a person or institution) manage assets for you. Establishing a trust can be more costly, but it is a way to ensure that your heirs will receive their inheritance without going through probate court. Probate is the legal process of transferring your assets to your heirs, and it can be both time-consuming and expensive.

You might be asking yourself, “Isn’t having a will enough?”  While a will is an integral part of any estate plan, it is not the only component. A will only goes into effect after you die, and it can only address your assets that are subject to probate. In contrast, an estate plan can take effect while you are still alive, and it can cover all of your assets, including those that are not subject to probate.

How Do I Create an Estate Plan?

Creating a comprehensive estate plan requires more than just drafting a few documents. It involves taking a close look at your assets, liabilities, and family situation and then making strategic decisions about how to best protect your interests. Our experienced estate planning attorneys at Lonich Patton Ehrlich Policasti can help you identify and assess your unique needs and create a plan that fits those needs. We have years of experience making estate plans for people throughout San Jose and the greater Bay Area.

For a free consultation, fill out our contact form or call us at (408) 553-0801. No matter what your circumstances, we can help you create a plan that gives you peace of mind knowing that your loved ones will be taken care of after you’re gone.

Very few people want to see an estate end up in probate. It is an expensive and lengthy process that requires a judge to validate and authenticate your will and name an executor. Creditors must then be notified and paid off before distributing your assets to the beneficiaries.

There are a few ways to prevent probate litigation, such as joint ownership and gifting some of your possessions to your loved ones while you are still alive. Another way to avoid probate is by establishing trusts. 

What are trusts, and how can you set one up?

Types of Trusts

A trust is a legal arrangement in which one person (a trustee) manages property of another person (the beneficiary). Revocable, irrevocable, and testamentary trusts may be terms you have heard.

Revocable and irrevocable are living trusts that go into effect and are funded while the grantor is still alive. A testamentary trust is created through a will and does not take effect until after the grantor’s death.

Trusts can effectively manage your property and ensure it is distributed according to your wishes. But, each of them has its benefits and drawbacks.

Revocable Trusts

• A revocable trust can be changed or terminated at any time by the person who created it, called the grantor. In addition to being a way to avoid probate, a revocable can be used to manage assets during the grantor’s lifetime, which can be helpful if the grantor becomes incapacitated.
• Revocable trusts also have some drawbacks. Because the grantor retains control over the assets in the trust, they are still considered part of the grantor’s estate for tax purposes. Additionally, revocable trusts do not offer the same level of asset protection as irrevocable trusts.

Irrevocable Trusts

• An irrevocable trust cannot be changed or terminated once created without the beneficiaries’ approval. This may seem like a drawback, but it provides some distinct advantages:
• An irrevocable trust can help to protect assets from creditors. Once an asset is transferred into the trust, it becomes the property of the trust and is no longer subject to the claims of the grantor’s creditors.
• It can help to minimize estate taxes. Assets in an irrevocable trust are not included in the grantor’s estate for tax purposes, so they are not subject to estate taxes when the grantor dies. An irrevocable trust can help ensure that assets are distributed according to the grantor’s wishes.
• One common issue with irrevocable trusts is that they may not be able to be adapted to changes in the needs of the beneficiaries. For example, if a beneficiary develops a medical condition that requires expensive treatment, an irrevocable trust may not be able to be modified to provide for that need.

How to Navigate Estate Planning Concerns Such as Trusts and Probate

Due to the nuances of setting up a trust, you may want to consider working with an attorney. Our lawyers at Lonich Patton Ehrlich Policastri are experienced at crafting a variety of trusts. Call us at 408-553-0801 to schedule your free consultation.

No one wants to think about estate planning, but it’s a critical part of life. As you grow older, it becomes increasingly important to have a solid plan. A well-drafted plan can ensure your assets are distributed according to your wishes after you pass and help minimize the tax burden and emotional stress on your loved ones. 

What to look for in a law firm

If you’re looking for a law firm to help you with estate planning, it’s crucial to select one with experience and expertise. When looking for a reputable firm, your local bar association or the Better Business Bureau is a great place to start. They will be able to tell you if there have been any complaints against the law firm. 

Also make sure the firm you choose has experience in estate planning. Not all lawyers specialize in this area of law. Therefore, it is important to find a firm that is well-versed in all aspects of estate planning, including estate and trust administration, litigation, and probate, to ensure they can properly advise you. 

After selecting a law firm, set up a consultation to ensure that you are comfortable with your attorney and feel confident that they can properly provide guidance and represent your interests. 

What to expect during the estate planning process

Estate planning can be complex, but with the help of a knowledgeable lawyer, it doesn’t have to be daunting. The main components can include preparing a Last Will and Testament that outlines who will serve as the executor of your estate and designating your beneficiaries and what they will inherit. This document also outlines how your property and assets will be handled. 

You may also want to set up a Durable Power of Attorney or POA, which allows designated agents – usually family members or close friends – to act on behalf of an incapacitated person if necessary. You can also designate a Healthcare Power of Attorney to authorize an agent to specifically make medical decisions if you cannot communicate your wishes in an emergency. 

You may also want to consider setting up a Living Trust, which allows you to create a trust and transfer assets for your beneficiaries while you’re still alive, or a Living Will, which outlines your directives for how medical treatments should be handled if you are unable to advocate for yourself. 

The importance of estate planning

Every person should consider having an estate plan in place in case something happens and they cannot make decisions for themselves. If you don’t have a plan in place, your loved ones may have to go to court to sort out your affairs. This can be a costly and time-consuming process, so it’s best to take care of this important task ahead of time.  

LPEP can help

There are many firms out there, and it’s essential to choose the right firm for you. Our team at Lonich Patton Ehrlich Policastri has decades of combined experience navigating complex family law and estate planning cases in the Bay Area. We are ready to help you navigate your unique situation. Call us at 408-553-0801 to schedule a free consultation today. 

When most think of an estate plan, they typically consider it something that is only for the wealthy, but that couldn’t be further from the truth. An estate plan is an important part of any individual or family’s financial security. It determines how your assets will be distributed after your death and can also dictate who will handle your affairs if you are incapcitated. Understanding the components to include in an estate plan is vital to making sure your wishes are carried out properly.

Important Components to Include in an Estate Plan:

• Wills and Trusts
  One essential part of an estate plan is the will, a legal document that details the distribution of your assets after your death. This includes things like property, money, and possessions. You will also want to have a trust that will allow someone else to manage your assets on your behalf. A trust can be helpful if you cannot handle your own affairs or if you want to provide for someone after your death.
• Powers of Attorney
  A power of attorney is a legal document that gives someone else the authority to make decisions on your behalf. You can give someone power of attorney for financial matters, healthcare decisions, or both. Powers of attorney can be revocable, meaning you can cancel them at any time, or irrevocable, meaning they cannot be canceled. If you become incapacitated without a power of attorney in place, your family will have to go to court to get the authority to make decisions on your behalf. You should appoint someone you trust to act on your behalf, and you should review your power of attorney regularly to make sure it still meets your needs.
• Healthcare Directives
  A healthcare directive allows you to specify your wishes for medical treatment if you cannot make decisions for yourself. You can use a healthcare directive to appoint a healthcare agent to be responsible for making decisions on your behalf and specify your preferences for medical treatment, including end-of-life care. If you do not have a healthcare directive in place, your family won’t know what you want and will have the make difficult decisions.
• Beneficiary Designations
  Beneficiary designations determine who will receive your assets after you die. You can name individuals, charities, or even trusts as beneficiaries. It’s important to carefully consider your beneficiary choices, as they can significantly impact your estate taxes.
• Letter of Intent
  A Letter of Intent spells out your wishes for your estate in the event of your death or incapacity. It can include instructions for dividing your assets, funeral arrangements, and any medical directives you may have. While it is not legally binding, a Letter of Intent provides valuable guidance to your loved ones during a difficult time.

Why You Need an Estate Planning Attorney

Creating an estate plan requires a lot of legal paperwork, and when it comes to your assets, you don’t want to leave anything to chance. Our attorneys at Lonich Patton Ehrlich Policastri will work with you to create a solid estate plan that will give you peace of mind.

If you live in San Jose or the greater Bay Area, contact us for a free consultation by calling (408) 533-0801.