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Protecting assets to assure loved ones are secure

On Behalf of | Dec 26, 2019 | Estate Tax

Another year is ending and many people take the opportunity to review estate plans as they head into the new year. One question that frequently arises concerns any tax changes to be aware of and any steps that can be taken regarding protecting assets and reducing estate taxes. There is a new law taking affect that may have an impact on Californians.

The law, called the Secure Act, is an anagram for Setting Every Community Up for Retirement Enhancement. Included in the law is a change regarding the manner in which IRA beneficiaries are required to draw down the account. In the past, IRAs that were inherited could be stretched over a person’s lifetime. Under the new law, the account must drawn down and income taxes paid within 10 years. The one exception to the new rule is when the surviving spouse inherits the IRA it can still be stretched over his or her lifetime.

There are steps that can be taken to lessen the impact of the change. If a person has multiple grandchildren and wants them to inherit his or her IRA, each grandchild could be named a beneficiary. The IRA would still need to be drawn down within a decade but spreading out the benefit would also spread out the tax burden.

Estate planning is not a task one undertakes and never revisits. As life and taxes change, steps should be taken for protecting assets in California. A knowledgeable attorney can review one’s current situation and advise the client as to what changes might be needed.


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