taxes

New Estate Tax Exemption Limits for 2020

It seems like every year, the amount of an estate that is exempt from taxes increases. While the largest increase in recent history occurred between 2017 and 2018, this is the second year in a row with a more moderate increase. How much of your estate is now exempt from taxation? Have there been any changes to the gift tax exclusions?

2020 Estate Tax Exemption Limit

For 2020, the estate tax exemption has increased from $11.4 million to $11.58 million. That’s an increase of $180,000 that won’t be taxed if you are passing a massive estate on to the next generation. But what if you have more than that to give, or what if you want to be generous and see your family enjoy part of their inheritance while you are still alive?

Annual Gift Exclusion Laws

The annual gift exclusion amount is holding steady at $15,000 this year. However, if you get creative you can still give a lot more without affecting your overall estate tax exemption of $11.58 million. For example, you and your spouse can each give $15,000 per year to the same person. You can also each give $15,000 tax-free to that person’s spouse. So if you to dispense $60,000 to a couple, as a couple, all you have to do is divide it up into four $15,000 checks with the right names on them, and all of it will be tax-exempt!

Pass on Your Inheritance to Family, Not the Government

Petrov Law Firm can help you understand how to pass on your estate without it being subject to heavy taxation. Call 619.344.0360 today to schedule an appointment.

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.

Don’t Make These 3 Common Estate Planning Mistakes

Estate planning is about being as prepared for the future as you possibly can be. With that in mind, we’re going to tell you about three of the mistakes people commonly make, so you can avoid them.

Mistake #1 – Not Planning at All

The biggest mistake you can make is deciding estate planning is not for you. People make all sorts of excuses – I’m too young, I’m in good health, I don’t have that much money – but the fact is that it hurts the ones you leave behind if you don’t have a plan in place.

Mistake #2 – Not Keeping the Estate Plan Up to Date

There are certain events that should always trigger a review of your estate plan. These would include life-changing events such as a marriage, divorce, birth, adoption, the death of a successor, and the like. It would also include major financial events like suddenly receiving or losing a large asset or sum of money.

Mistake #3 – Not Preparing for Incapacitation

Many people only make plans for death and not for temporary incapacitation during life. Should you be affected by mental illness, become unconscious due to an injury or accident, or even suffer from dementia later in life, you want plans in place for the sake of both your finances and your medical care. That means appointing individuals to implement your wishes for you.

Getting Your Affairs in Order in Southern California

If you live in San Diego or any of the surrounding communities, the Petrov Law Firm would be happy to help you plan effectively for your future. Talk to our estate planning attorneys now by calling 619-344-0360. We can help you to avoid the pitfalls of trying to plan for your estate on your own.

5 Tips for Reviewing Your Estate Plan

Even once you have an estate plan in place, your job isn’t over. You need to regularly maintain and review your estate plan to make sure it accurately conveys your present wishes. We’re going to give you five tips to help you review your plans successfully without making it a burden.

1. Scan the Plan Annually – Every year you should at least look over your estate plan to make sure you don’t need to change beneficiaries, power of attorney, or other vital things such as these.
2. 3 to 5 Year Review – Every few years, you should do a more thorough review to go over your financials. Make sure you haven’t taken on any new assets that have not found their way into the plan somehow.
3. Review Income Changes – If you have a sudden influx of income or suddenly have significantly fewer assets, you will want to review your plans to make sure they still make sense.
4. Major Life Changes – Marriage, the birth of a child, the death of a successor or beneficiary, or any other major life event will require changes to your estate plan.
5. Change of Mind – Any time you change your mind about anything related to your estate plan (who gets what, funeral arrangements, medical wishes, etc.), you will want to look over your estate plan again.

Help in Making Estate Plan Adjustments in California

If, after careful review, you discover that you need to make adjustments to your estate plan, contact Petrov Law Firm in San Diego. Our estate planning attorneys can provide you the assistance you need to keep your future plans up to date with your current wishes. Call 619-344-0360 today to schedule an appointment.

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.