Tax Planning

2019 Update: Laws Regarding Estate Tax Exemption and Gift Exclusions

Last year we reported on the fact that the estate tax exemption limit doubled between 2017 and 2018. This was a sharp divergence from the usual uptick, which has been gradual for many years. As a result, the number of estates subject to taxation is even less than before. Did the trend continue in 2019? And what about tax exclusions on gifts?

Estate Tax Exemption Regulations

In 2018, any estate with a total value of under $11,180,000 was exempt from taxation under the law. That number has once again increased. While the change was back to a normal increase rather than doubling, the figure for 2019 is $11,400,000. What can you do if your estate is larger than $11.4 million and you want to avoid taxes for your heirs? One option is to distribute some of your estate while you are still alive.

Gift Exclusions in 2019

Gift exclusions have remained the same this year at $15,000 per person per year. What does that mean? You can distribute $15,000 to each person you want to give a gift to this year, and they won’t have to pay taxes on that gift. And remember that this is per person, so you can gift a couple (make sure both names are on the check) $30,000 per year tax-free.

Assistance in Avoiding Tax Penalties on Gifts and Estates

The laws are making it easier than ever to avoid taxes for heirs and the recipients of large gifts. Learn more about how to make sure your estate goes to the people you love rather than on taxes by calling 619-344-0360 to speak with the estate planning professionals at Petrov Law Firm.

The Best Ways to Leave a Gift Via Trust

If you give a gift to a family member or friend that exceeds a specific value, it can be taxed. Because of this, some people decide to leave gifts in the form of a trust. It allows you to leave much more money to a person without a portion of it going to the government. Here are some of the best ways to leave a gift via trust to your loved ones.

• IDGT – The intentionally defective grantor trust is used to leave the family business to another household member, and it protects the beneficiary from the company’s creditors.
• QPRT – A qualified personal residence trust is a great way to transfer a house to your family when you don’t want them to pay the full market value. Your family will receive asset protection as well as tax benefits.
• CRT – A charitable remainder trust is for when you want to leave the gift to a charity rather than an individual. It also provides tax benefits to your estate.
• Gift trust – A gift trust with annual exclusions allows you to give family members the maximum exempt amount per year with the rest going into a trust that will be dispensed later. While the family doesn’t get access to all the funds immediately, they also don’t have to pay half of it in taxes.

Generous Estate Planning Options in Southern California

For more generous estate planning options in southern California, contact the estate planning experts at Petrov Law Firm by calling 619-344-0360. Our experienced attorneys can help you leave assets to your heirs with the minimal tax burden, so your family enjoys your assets rather than the government.

Estate Tax Exemption Limit Doubles for 2018

If you were worried that your beneficiaries would have to pay a lot of your estate in taxes should you pass away during 2018, you just got a lot more breathing room. While the estate tax exemption limit seems to go up a little bit each year, from 2017 to 2018 it doubled! What does that mean for you and your beneficiaries?

Do You Need to File an Estate Tax Return?

In 2018, an estate tax return is not required unless the total value of the estate exceeds $11,180,000. That means most estates are exempt from any taxation at all and beneficiaries will get to enjoy the full use of the funds being left to them. But what can you do if your estate exceeds the exemption limit?

Avoid the Estate Tax

There are a number of ways to ensure that your beneficiaries will experience the least taxation on the assets they receive when you pass on. To get help in planning your estate to leave the funds to your heirs rather than to the government, we encourage you to execute an estate plan and keep it updated by reviewing it annually.

The estate planning attorneys at Petrov Law Firm would be happy to help you execute or review your California estate plan. To schedule a consultation, contact our offices in southern California today by calling 619-344-0360. We look forward to helping you get your future plans down in writing to ensure they will be carried out.

4 Types of Gifting Trusts You Should Know About

Did you know that gifts can be taxed once they reach a certain value in a calendar year? That’s why gifting trusts exist. By sending gifts that exceed the exclusion amount to a gifting trust, you add to a beneficiary’s trust and don’t get hit with a huge tax penalty. Here are four types of gifting trusts that each have specific benefits.

• Gift Trust with Annual Exclusions – This is how you get around the gift exemption amount. You put anything that you gift above the exclusion amount into a trust for the individual. The money isn’t immediately available, but it also doesn’t get taxed into oblivion.
• Intentionally Defective Grantor Trust (IDGT) – This trust can be used to transfer a family business to another member of the family and offer protection from creditors for the beneficiary.
• Charitable Remainder Trust (CRT) – Are you looking to leave money to a charity rather than family? This is a form of gift trust that is specifically designed to gain tax benefits for the estate when you leave money to the charity of your choice.
• Qualified Personal Residence Trust (QPRT) – This is a way to transfer a home to your children at a value that is far lower than the current market value. It provides tax benefits as well as asset protection for the house.

More Generous Gifting Solutions in California

If you are making generous gifts to your beneficiaries or you want to plan for your future in other ways, the estate planning attorneys at Petrov Law Firm are happy to help. Contact us today at 619-344-0360 to get started on your estate plan.

Making Your Estate and Retirement Plans Work Hand in Hand

You want to save for your future, but you also want to plan for the future of your family. How can you get your retirement plan to play nice with your estate plan and ensure that you get to enjoy your golden years and still pass on an inheritance to your loved ones? Here are a few things to consider.

Your Retirement Fund Can’t Be Part of Your Trust

Your trust can’t own the retirement fund. That means you have to select a separate beneficiary for your retirement account. You can leave the retirement money and the trust to the same individual, just not with one nested under the other.

When selecting a beneficiary for a retirement fund, remember that there are tax advantages and other financial benefits to leaving these funds directly to a spouse. For example, regardless of who the beneficiary is, retirement funds don’t go through probate. They pass directly to the named beneficiary. However, only a spouse can defer minimum distribution until he or she hits retirement age.

Making Your Retirement Fund Beneficiary Your Trust

Why not simply leave your retirement fund to your loved one? What if he or she was to make the mistake of taking all of the funds at once and ends up paying half of the inheritance out in taxes the next year? That would be an expensive error. But your trustee could ensure that the retirement fund is stretched and distributions are taken at the proper times to maximize the payout.

Leaving Your Estate and Retirement Funds Behind the Right Way

Petrov Law Firm can help you to negotiate the laws that California has in place regarding estate planning and retirement funds. To get the help you need in planning for a better future, call us today at 619-344-0360.

3 Things You Need to Protect Your Retirement Accounts Against

IRAs have become a popular form of retirement account. They offer tax benefits and are also convenient for a person who runs his or her own business. However, there are a few concerns when it comes to estate planning and IRAs. Here are three things you need to protect your retirement account against so your beneficiaries receive their full inheritance.

1. Taxes – Sometimes when an IRA account owner dies, the account is liquidated, and the funds are sent as a check to the beneficiary. The problem with this is that accepting that check may subject your beneficiary to paying a ton of taxes, thereby negating any tax benefits you previously received from putting money into the retirement account.
2. Divorce – With an IRA, you select a beneficiary. Thus, a divorce will likely mean changing the beneficiary on the account, a fairly simple process but one that is easy to forget. A 401(k) is a little more complicated because it automatically goes to your next of kin. That means if you pass away before the divorce is finalized, your soon-to-be-ex may end up getting the money.
3. Creditors – While retirement funds don’t pass the same way a bank account would, it is also very different from a trust. Thus, creditors may have the opportunity to sneak in and get their cut.

Proper Estate Planning to Protect Your IRA, 401(k), and Other Retirement Accounts

To make sure the right person or persons benefit from your hard-earned money, trust the estate planning pros at Petrov Law Firm in San Diego. We offer the premier California estate planning services in the area. Call 619-344-0360 to get started now.

6 Things a Durable Power of Attorney Can Take Care of for You

Assigning a durable power of attorney is an important part of estate planning. This is especially true if you ever become incapacitated for a time and do not have either the physical or mental ability to care for your own finances. Here are 6 vital things a power of attorney can take care of for you should you become temporarily incapacitated.

1. Bank Accounts – If you are married, your mate is probably on all of your bank accounts. But if he or she usually allows you to take care of the financials for the family, then it is important to have a fiscally responsible person in charge of these accounts and to move around money as needed.
2. Loans – A power of attorney (POA) can pay down your loans by either making minimum payments or paying them off completely depending on what is best for the estate in the current financial market.
3. Bills – Your POA can also take care of the day to day bills such as utilities, credit cards, insurance, and the like. Much of this may be on an automatic payment system, but for things that are not, it is important to have someone who knows what is due and how it is paid.
4. Taxes – This is one of the most complicated aspects of financial responsibilities, so your POA needs to be someone you can trust to be honest and to put in the work to ensure that you don’t miss out on things that could have been written off.
5. Real Estate – Whether you have land that is being leased, renovated, or lived in, someone needs to manage all of your properties at all times. If that is usually something you do yourself, you need a POA who can handle it. If you have a property management service, then the POA needs to be in touch with them as regularly as you would have been.
6. Lawsuits – Any pending lawsuits for which you may be a plaintiff or defendant would now rest on the shoulders of your POA.

Preparing Your Estate Plan in California

If you live in or near the California area, Petrov Law Firm would be happy to help you set up or review your estate plan. Appointing a power of attorney is just one element in this process. To get started, call us at 619-344-0360.

What California Residents Absolutely Must Know About Estate Taxes

If you are a resident of the state of California, there is something you need to know about present estate tax laws and the possibility of future federal and state regulation changes. Before addressing these changes, it is important to note that this article is for informational purposes and is not an editorial opinion on the part of our law firm.

Here are the facts:

• There presently is no state tax on estates in California. California does not impose any additional taxes on top of the federal estate tax.
• 2017 federal estate tax exemption is $5.49 million. That means your heirs will not pay federal taxes on inherited assets including either estate tax or gift tax.
• Federal estate tax could potentially be repealed. The current president of the United States has suggested that he wants to repeal the estate tax entirely so that the federal government does not take any taxes on inherited funds regardless of the sum.
• If the federal estate tax is repealed, California may implement a state estate tax. State Sen. Scott Wiener has already introduced a bill to introduce an estate tax for the state of California. The idea is that the state can recapture this money freed up by tax cuts offered to the wealthy by the federal government for use by the state, especially for use in education, healthcare, and public transportation and roadways according to a statement made by the senator.

How Estate Tax Changes May Affect You and Your Family

If you are leaving a large estate to family or other heirs, planning your estate properly is more vital than ever. As of now, the federal estate tax on funds exceeding $5.49 million is at 40%. If that number is eliminated by the present administration, it is not known whether California will adopt a statewide estate tax. If this occurs, it is not yet known the percent that will be taxed or how much of an estate will remain tax-free. As this situation continues to develop, working together with an estate planning attorney with your best interests at heart may become even more vital.

Petrov Law Firm would be happy to help ensure that that your heirs receive the maximum amount of your estate. Please call 619-344-0360 today to schedule a consultation.

How the New Year Affects Estate Planning

Does your estate planning reflect how the law has changed for 2017? The primary thing that changed as the hundreds of millions of people across America rang in the new year this week was the estate tax. Why is this the case? What changed? How does this affect your estate plans? Read on to learn more.

How 2017 Affects the Estate Tax

Over the past several years, the IRS has been in the habit of announcing changes to the estate tax threshold just a few months before the end of the calendar year, and this past Autumn was no exception. This increase is due to inflation. Thus, as inflation occurs, the IRS places a higher limit on how much of an estate is tax exempt when it passes on to a person’s heirs.

In 2016, the figure stood at $5.45 million. However, as has been the custom, that figure was increased for the start of the new year. In fact, this year’s increase was double that of last year. An additional $40,000 means that the estate tax threshold is now at $5.49 million.

How Does the Change in the Estate Tax Threshold Affect You?

If you are wondering how this change in the estate tax threshold affects you, or if this change results in the desire to alter your current estate planning, come and see the estate tax experts at Petrov Law Firm. We can help you maximize tax benefits, thereby ensuring that your estate goes to your loved ones rather than the IRS. Call 619-344-0360 to get started.

Reducing Taxes on Your Estate for Heirs

Disclaimer Trusts Help Avoid Estate Tax

One way around being taxed if an estate is over the $5.45 million mark is a disclaimer trust. Everything beyond the $5.45 million tax-free amount can be disclaimed as a gift and put directly into another trust. Therefore, the direct heir (usually a surviving spouse) receives $5.45 million in assets without paying taxes, and the rest goes into a further trust for future heirs to enjoy without taxes being removed. It provides a healthy sum for a surviving mate and ensures that additional funds that will go to children who can receive regular payouts from the disclaimer trust if this provision is made in advance.

Get Help to Learn How Estate Taxes Work

The Petrov Law Firm will be happy to help you develop an estate plan that ensures your money and assets are left to the people you love rather than being picked apart for government use. Call 619-344-0360 to get started today.