Decisions that you make during your lifetime can have a substantial impact on which property relatives will inherit from your estate. It is important to review your estate plan carefully with a knowledgeable attorney to make sure your decisions line up with your wishes. Here are a few ways that your choices now will matter later.
Do you own your house yourself, do you have a joint tenancy, or is the house community property with your husband or wife? Many estate planning clients do not know. The way you own your house affects who will receive it after your death. A joint tenancy passes to the other owner(s) who survive you. Community property passes to your spouse. You cannot leave property held by joint tenancy or as community property in your will to other relatives.
Other types of property besides real estate can be owned as joint tenants or as community property, such as vehicles, bank accounts, and securities. Talk to your lawyer about how to carry out your wishes. This might involve either changing the ownership method or transferring the property to a trust.
Do you know who the listed beneficiaries are on your IRA, 401(k), life insurance, annuities, and pension? Like some types of property ownership, beneficiary designations usually cannot get changed in your will. If you do not change the beneficiary designation before your death, any account beneficiary listed in your will does not make a difference. After you select appropriate beneficiaries such as relatives or possibly your trust, you need to speak to the account administrators to make the designations.
Gifts and Gift Tax
The lifetime gifts that you make to relatives may affect the amounts they ultimately inherit. The IRS assesses an estate tax on higher-value estates that factors in the gifts made during life and the value of the estate on death. An estate exceeding $11 million dollars may owe substantial estate taxes, which reduce the inheritances of heirs. Planning for gift and estate taxes can be legally complicated, so talk to an estate planning lawyer about your options.
Racking up substantial unpaid debts during your lifetime may lead to little to no inheritance for family members. Your estate will have to pay off debts to creditors before heirs receive anything. Keep this in mind when making financial decisions.
Planning your estate? Angela Klenk, Esq. and the team at Beach Cities Estate Law couple personalized attention to your estate plan with big law firm experience for a winning combination to give you peace of mind. To schedule a case evaluation, visit Beach Cities Estate Law online or call Angela’s office at (424) 400-2125.