Tustin Estate Planning Law Blog

Having an estate plan is an excellent step toward establishing one's legacy in California. But like so many things in life, estate planning is meant to be an ongoing process. The plan should be reviewed and revised as needed every few years. The current fluctuations in the market can be viewed as a time to perhaps review one's plan.

While the market downturn can cause a person to have indigestion it can also present certain opportunities. One option a person may wish to consider regards converting a traditional IRA to a Roth IRA. This may be particularly true if one has a large IRA that is intended for one's children or grandchildren. Converting an IRA to a Roth IRA requires that the taxes be paid on the converted amount as if it were income for the tax year. With the value down the taxes due will be less and the proceeds from Roth IRA will not be taxable as the taxes have already been paid.

People make plans and set goals in order to achieve success in life. Plans and goals can also be established in order to effect a smooth transition that will simplify matters after death for the person's loved ones. Successful planning can reduce costs of estate administration in California, particularly if one does not have the appropriate estate plan documents in place.

A will can be an effective tool but one should make sure it is up to date and appropriately signed and witnessed. When a person passes away and leaves behind a will, the will must go through the probate process. This involves authenticating the will in probate court and securing formal appointment of the executor named in the will. During this period, creditors may make claims against the estate and potential heirs may also challenge the validity or contents of the will. While some people may be reluctant to consult a professional regarding writing a will out of concern over costs, failure to have a will could be even more costly to one's heirs -- in money and time.

Figuring out how individuals want their worldly affairs handled after their deaths can be daunting. For this reason, many people in California and across the country create their wills and think they are finished with the difficult process of estate planning. However, nearly everything in life is constantly changing, and an outdated estate plan could cause problems.

If it has been a while since looking at an existing estate plan, it is wise to dust off the documents and give them a review. Some people may find that they still have guardians named for their children who have long since grown and started families of their own since the plan was created. While this bit of outdated information may not cause much issue when the time comes to execute the will, other outdated information could set surviving loved ones up for delays and complications.

The advent of a new year often means new tax laws that will have an impact on estate planning strategies. January of 2020 was no exception with the enactment of the Setting Every Community Up for Retirement Act, known as the SECURE Act of 2019. The act has implications for the disbursement of funds from certain retirement accounts and may impact plans for protecting assets in California.

Under the prior law, non-spousal beneficiaries of a 401(k) or IRA account could hold on to the account until the beneficiary reached the age when required minimum distributions (RMD) would begin. Under the old law, the RMD age was 70½, and the SECURE Act raises the age to 72. In addition to waiting until only age 70½, a recipient could stretch out disbursements over his or her lifetime under the old law.