If you are looking to create a legacy, estate planning isn’t a one-and-done task. Your financial situation at the time and your life circumstances will influence your estate plan. However, there is no guarantee that your plans will remain the same.
You may experience additions or subtractions to your family over the years. This can lead to the need for an estate planning update. Divorce is a common outcome of many marriages. This can impact your plan.
For a layperson, estate planning for blended families can seem confusing. There are ways to achieve any goal. Talk to an estate planning attorney to learn more about your options.
A qualified terminable property trust (QTIP), for example, is a legal tool that parents who are getting married again can use.
For a quick explanation, you would name a trustee and fund the trust. Your spouse would become the first beneficiary and your children would become the successor beneficiaries.
The trustee will distribute the trust’s income to your spouse if you are the spouse who has died. They may also use trust property.
Your children will inherit assets in the qualified terminable interests property trust after your spouse dies.
When you plan your estate, consider adding alternate beneficiaries to your individual retirement accounts, life insurance policies, or other accounts with beneficiaries.
If you choose an alternate name, that person would be the beneficiary. This would avoid a complicated situation.
Many people view an estate plan as something that will be in place after your death. You should actually take steps to preserve your legacy for your loved ones.
The federal estate tax is one source of asset erosion. The federal estate tax has a maximum rate of 40 percent and is only applicable to the amount of the estate that exceeds this exclusion.
The exclusion this year is $11.7million, a record. This year’s exclusion is due to a provision in the Tax Cuts and Jobs Act, which was passed in 2017.
It will expire at the end of 2025 and the exclusion will be reduced to $5.49million dollars by January 1, 2026. This figure is reasonable when you consider the real estate value in Los Angeles.
The 99.5 Percent Act, which has been introduced by Senator Bernie Sanders, would reduce the exclusion at $3.5 million and raise the rate to 45 percent for the first $10,000,000. For estates worth more than $1 million, the rate would be 65 percent.
There are steps that you can take to reduce your estate tax burden. This can be a problem if you have financial success and the exclusion has been reduced.
Your legacy is also at risk from rising nursing home costs. Medicare doesn’t pay for nursing homestays. You can expect to spend more than $100,000 a year at a local nursing home.
Medi-Cal covers long-term care. You may be eligible if your assets are in the best possible position at the right time. We can help you create a nursing home asset preservation strategy that will preserve your legacy.
This article was written by Alla Tenina. Alla is one of the best estate planning attorneys in Los Angeles California, and the founder of Tenina law. She has experience in bankruptcies, real estate planning, and complex tax matters. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.