Protect Your Inheritance with These Tips

Any estate planning attorney in Palm Desert can quickly confirm that a large inheritance may easily be devoured by state or federal taxes. Although this does not happen in all cases, there are certain times where the worth of an estate is considerably decreased due to tax penalties. Fortunately, if you feel your inheritance is at risk, you can work with your parent or the person from whom you will inherit on ways to significantly lessen the tax bite. Below are some tips on how to avoid having your inheritance consumed by taxes:

Strategic use of Gifts

One individual making a gift to someone else pays a gift tax at the federal level. However, the Internal Revenue Service allows individuals to make gifts of up to $13,000 annually without paying gift taxes. Therefore, if your benefactor gives you $130,000 of your future inheritance, neither of you are obligated to pay federal tax on the money. If this is done for ten consecutive years, the benefactor has trimmed down the estate by approximately $130,000. If you are comfortable speaking to your benefactor on this topic, ask about the possibility of utilizing this approach to protect your inheritance.

Using a Trust

If you know you are inheriting a sizable amount of money or assets from a family member, suggest that the person establish a trust in advance. This allows you to pass assets to beneficiaries after you die. Trusts are somewhat similar to last will and testaments, but the primary advantage is that trusts typically avoid state probate and other expenses associated with receiving an inheritance. There are revocable and irrevocable trusts. If a revocable trust is used, the grantor has access to the assets if they are needed. However, irrevocable trusts generally tie up the assets until the death of the grantor.

Change the Valuation Date

You may also wish to consider an alternative valuation date. In most cases, property in a decedent’s estate is based on the property’s fair market at the time of the person’s death. However, in certain instances, the executor may decide to select a different valuation date, such as six months following his or her death. This option is only viable if it decreases both the estate tax liability and the gross amount of the estate, which results in a larger inheritance for the beneficiaries. All property sold or disposed of during the six month period is valued at the time of the sale. 

Reduce Retirement Account Distributions

Inherited retirement assets are taxed at distribution. For this reason, if you will be inheriting a retirement account from anyone other than a spouse, the funds can be transferred in your name to an inherited IRA. You are required to take minimum distributions beginning the year of or the year following your inheritance being received, even if you have not yet reached the age of 70 1/2. If the person from whom you inherited the IRA was older than you at the time of his or her death, you should consider opting for the “single life” calculation method concerning the required distribution amount. Your minimum distributions are smaller because this option can be based on age. This ultimately means less tax liability because the funds can grow tax-deferred for a longer period. 

Disclaiming the Inheritance

Finally, you may choose to use a somewhat drastic step, although a highly effective one, to avoid excessive taxation. This is called “disclaiming,” and involves turning down your inheritance in lieu of passing it on to the next heir in line. For example, if you have children and are financially secure, disclaiming the estate and allowing a son or daughter to inherit may result in a much lower tax rate. If you know you will be receiving an inheritance in the future, consider discussing these and other options with an estate planning attorney in Palm Desert to ensure the best possible results.

Why Retiring at 62 is a Great Option

elderly man on boatPeople choose their retirement age for a variety of reasons, and some may wonder what is the best age to begin life as a retiree. The Social Security Administration assigns each citizen what is referred to as a “full” retirement age, depending on the person’s date of birth. However, regardless of this predetermined age, you can begin drawing Social Security retirement payments as early as age sixty-two. Many people prefer to start their social security at this age, and our estate planning attorneys in Palm Desert have discovered some reasons why this option is popular:

You May Ultimately Receive the Same Lifetime Benefit Amount

Retiring at age 62 means that your benefit amount may be up to 30% less per month than if you waited until your full retirement age. However, this does not necessarily mean that you will receive less money in the long term. For example, if you retire at 62 instead of 67, you will receive a smaller amount each month, but you will collect five more year’s worth of payments, which sometimes evens things out considerably. The Social Security Administration has even stated that those who live out their average life expectancy for their age group end up collecting approximately the same lifetime benefit amount no matter when they retire.

The Need for an Income

Taking retirement early is sometimes the best course of action simply because you need the money. According to a Transamerica Retirement Survey conducted in 2018,  56% of survey participants said they “had to retire” due to family related issues, health problems, or the loss of a job that was too difficult to replace. Therefore, if you have reached age 62 and find that you need the monthly income, it makes sense to explore this option.

A Sensible Choice if You are Debt Free

On the other side of the coin, retiring early can be a good decision if you are not facing financial difficulties: if your debts are paid off or almost paid off, then you may wish to give some thought to enjoying the retirement for which you worked your whole life. If you don’t have significant financial obligations and your retirement income is in line, there is little or no reason to keep working unless you prefer to do so for personal reasons.

You Can Enjoy a Longer Retirement

Finally, a great reason to retire at 62 is because you get to enjoy a longer retirement. You will be younger than the average retired person, and perhaps more capable of participating in the activities that make you happiest. Although this is not the case for everyone, it is worth considering if you are relatively healthy and enjoy traveling, sports, spending time with grandchildren and would like more time to do such things.

The aforementioned suggestions are merely a handful of reasons why it may be wise to begin collecting your Social Security benefits early. You may wish to speak to one of our estate planning attorneys in Palm Desert for more information about the pros and cons of this option.




Top American Cities for Retirement Living

seniors on bikesKeeping living costs under control is a top priority for many soon-to-be retirees. Fortunately, there are many pleasant US cities that currently offer a low cost-of-living and a manageable tax burden. The following are some terrific places that any estate planning attorney in Palm Desert would feel proud to recommend:

Rejuvenated Pittsburgh

Northern retirees searching for a revitalized city that is convenient and affordable should consider Pittsburgh, Pennsylvania. If a warm climate is not a top priority, seniors will find that this area offers the best of both worlds: it boasts one of the lowest tax burdens for seniors nationwide, and residents enjoy a cost-of-living that is well below the country’s average. The city also offers free train and bus rides for seniors on a daily basis. Additionally, due to Pittsburgh’s investment in the medical world, an easily accessible healthcare system is also close at hand.

Comfortable Kendall

Kendall, Florida makes the list of top 2019 retirement cities due to beneficial characteristics such as convenience and safety. Retirees have stated that they feel safe in the city day or night, which is probably because of its low crime rate. In addition, restaurants, medical offices, supermarkets, pharmacies, beauty salons and a post office are all within walking distance from the center of the town. Boasting a lower than average cost-of-living and an easy tax burden, retirees can enjoy less financial stress in Kendall than in many other US towns.

Harmonious Palm Coast

Retirees looking for a cost-effective, safe and tranquil Florida city should definitely consider Palm Coast. This serene community has a relatively low tax burden for retirees, as well as an agreeable economy and a very low crime rate. Although a thriving community, much of the natural beauty of the area has been well preserved, making it a picturesque place to live. As an added benefit, there is no state income tax in Florida.

Flourishing Austin

The state capital of Texas is known for its interesting culture and outstanding music. With a diverse economy, numerous top-notch medical facilities, and a great range of terrific amenities, Austin is a prime choice for anyone retiring in the Southwest. Although living costs in Austin are a bit higher than they are in some of the other top cities on the list, they are significantly less than those of similar towns in the same part of the country.

Affordable Fayetteville

The cost of living and tax burden in Fayetteville, Arkansas are considerably lower than the national averages. The area also boasts myriad low-cost activities and attractions for seniors. This makes it perfect for those who want to retire, yet remain as active as possible. In addition, free fare on the city’s easy to use public transportation system is available to senior citizens who permanently reside in the county.

Charming Fort Myers

Fort Myers recently found top ranking on the list of the best retirement cities for 2019. This is due, in part, to an increase in happiness and contentment among residents of this Florida city. Located near the Caloosahatchee River on Florida’s Gulf Coast, it is a cost-effective choice for virtually any retiree in search of a warm and friendly area in which to live.

As estate planning attorneys in Palm Desert, we are always looking for new ways to help our clients, and the seniors in our community. If you have a topic you would like us to cover on our blog, please feel free to email us at

Tips on How to Create a Digital Estate Plan

Even if you have an estate plan in place, you have probably found yourself wondering what happens to your digital property after you pass away. You may be surprised to discover that digital property can be handled in much the same way as tangible property in an estate plan. However, there are certain differences between the two, and how they can be distributed after your death. An estate planning attorney in Palm Desert can go over these differences with you to make the process a bit easier to understand. The following are some important steps to take regarding your digital assets:

Generate a List of Your Assets and How They can be Accessed

Your first step should be to create a list of all your digital assets, including any home utilities you manage online, online banking accounts, social media accounts, and any online businesses you own or in which you have an interest. To ensure thoroughness, you should also include certain hardware, such as computers, digital music players, smart phones, tablets and other digital devices, as well as flash drives and external hard drives. You should also include any data or information that is electronically stored, regardless of whether it is stored on a physical device, in cloud, or online. Do not forget any websites or blogs that you manage, domain names you own, and any intellectual property, such as codes you have written, trademarks, or other copyrighted materials.

You must also determine how to share the passwords required to access the aforementioned devices and accounts in the event of your death. An estate planning attorney in Palm Desert can help you determine the best way to handle this matter.

Determining How to Distribute These Assets

Depending on the nature of the digital property, the method you use to manage it may vary. You will likely want certain assets to be saved and archived, others transferred to business colleagues or family members, and still others erased or deleted.

Name A Digital Executor

Your Digital Executor is a person you designate to help settle your digital estate. However, in many parts of the country, a digital executor is not an enforceable or legally binding designation. Nevertheless, this person can be designated by the executor of your estate plan to follow your instructions or at least assist your executor with the digital part of your estate. If you live in an area of the country where a digital estate plan is a legally binding document, it is typically created as a codicil to your Last Will and Testament. However, never include passwords or PIN codes in your Will, as information in such documents eventually becomes public.

Properly Storing Your Digital Estate Plan

Your digital estate plan should be stored in a location that is both secure and accessible. You can store it in a traditional locked safe or file cabinet or store it online. Alternatively, you can give it to your estate planning attorney to be kept with your other essential paperwork, such as your Will and your traditional estate plan. Creating a plan for your digital assets is not a time-consuming activity, but it can give you substantial peace of mind. Regardless of what type of digital assets you have, creating an estate plan for them helps to ensure that these assets will not be at risk after your death.

Common Pitfalls of a Do-It-Yourself Estate Plan

elderly couple doing paper workPutting your affairs in order without the help of an estate planning attorney is typically unwise. If you attempt to do so, you may inadvertently put your finances and assets at risk. The following are some of the many pitfalls associated with do-it-yourself estate planning:

Confusion Over Legal Terms

Legal language can be confusing at best for those who do not have a background in law. Therefore, the possibility of making mistakes when filling out such documents is quite high, even if the actual forms were obtained from a reliable source. Ambiguity about terms and how they are used may result in your children or heirs losing property, assets, or being responsible for exorbitant tax rates.

Missing Documents

Although writing your own estate plan may appear to save time and money in the short-term, it may have the opposite effect later: due legal process must be followed when an estate plan is created and if any part of this process is omitted, even accidentally, complications will almost certainly arise in the future. For example, signatures from witnesses and the appropriate supportive documents are things that are sometimes overlooked when a DIY estate plan is created. These errors sometimes lead to the estate plan becoming null and void, which causes unnecessary stress, anxiety and expense for your loved ones.

Unanticipated Tax Problems

If you are like most people who own various properties or an estate, you have probably occasionally complained about high taxes. There is a significant amount of confusion surrounding tax laws, the latter of which sometimes change frequently. For this reason, creating a DIY estate plan may ultimately lead to your heirs or children having to pay taxes that may have been avoided if a knowledgeable attorney helped you create your plan.

Failure to Update Your Estate Plan

Although drafting a will may seem simple, you may inadvertently produce a document that, legally speaking, is “full of holes.” For instance, when making out a will without an expert’s guidance, you may not make provisions for unforeseen circumstances, such as the birth of new children, a divorce, or how you want your assets distributed should your children predecease you. Any unexpected complication makes it difficult to implement your document the way it was written. Failing to update your estate plan when anything in your life changes can create confusion and an entire host of problems for your heirs.

Failing to Thoroughly Fill Out Documents

Do-it-yourself estate plans often end up with blank spaces where the estate owner has not explicitly named the person he or she wants as the beneficiary. If you unknowingly leave a blank space of this kind in your documents, it is essentially an invitation to unethical individuals to fill in their names and ultimately go against your final wishes. In cases where there is confusion of this kind regarding beneficiaries, the courts may decide that your closest legal relative should inherit your assets and property, even though this may not be what you wanted.

Document Revocation

Regulations mandate that your will must be given to a custodian to be produced at the time of your death. If you pass away while still in possession of your will, the document may be revoked, as the court takes the position that it does not exist. The original copy should have a custodian and be on file with your attorney to avoid this unpleasant scenario.

Cohabiting Partners

Domestic partners in long-term relationships but who are not married may have limited rights when it comes to the deceased’s property. A comprehensive, estate plan and properly executed will is vital in such circumstances, and these documents should never be left to chance, as is the case with a DIY estate plan.

We understand that a DIY will or trust is an attractive option for some folks who are looking to save a few bucks. But we can assure you that the investment you make in hiring an estate planning attorney in Palm Desert will save money, time, and heartache for your loved ones in the long run.




Why You Absolutely Need an Estate Plan

husband and wife meet with estate planning attorneyThe notion that estate planning is only something that wealthy people should worry about is a very common misconception in America. As an estate planning attorney in Palm Desert, it’s my duty to inform you that this notion is categorically false! Regardless of your income, net-worth, or social standing, those who do not have a proper estate plan in place are risking long-term, negative consequences for their heirs should they pass away. In an effort to dispel this myth, our elder law attorneys at Cal Elder Law have put together the following list of reasons why you absolutely need an estate plan in place!

Protects Families With Young Children

 Even though no one enjoys thinking about the possibility of their untimely demise, parents of small children must prepare for this scenario, however unlikely. To ensure that minor children are cared for in a manner approved of by the parents, guardians are named in the estate plan. It is these individuals who will care for the children until they turn 18, in the event the natural parents pass away. No one wants the courts determining who will raise their children, which is exactly why we regard this as the top reason having an estate plan is necessary.

Eliminates Probate

Probate is something to be avoided at all costs. This is because it is a long and expensive process, during which the courts decide who receives which assets. A stranger may not make the same decision the deceased individual would have made, but after the person’s death — it is too late. If a suitable plan has been drafted, probate and all the problems with which it is associated can be completely avoided.

Prevents Heirs From a Significant Tax Burden

Estate planning was designed to protect loved ones from a variety of negative situations after the owner of the plan has passed away. Protection from the IRS falls under this umbrella. Transferring assets to heirs in a manner that creates the smallest possible tax burden for them is an essential part of estate planning. In the absence of any aforethought to this matter, the amount heirs may owe to Uncle Sam could be substantial.

Prevents Assets From Going To Unintended Beneficiaries

Regardless of the net worth of one’s assets, no one wants his or her property or money going to a person for whom it was not intended. Even if it is simply a modest bank account or a small home, all people should be in control of who receives their assets in the event of their death. Those who have considerable assets must also have such a plan in place, as long lost relatives have a tendency to suddenly reappear when a wealthy individual has passed away.

Protects Assets

Asset protection planning is undoubtedly a very important reason why many individuals meet with an estate planning attorney to create or update their plan. Anyone who even suspects that a lawsuit may be forthcoming should immediately put a plan in place to protect his or her assets. Such a plan protects assets not only for the person while he or she lives, but also for beneficiaries and heirs following the person’s death.

Eliminates Family Turmoil and Court Fees

Another reality that few individuals want to think about is arguments between family members that occur when a person dies in the absence of a will and without having named beneficiaries in advance. Such wars over money and assets can quickly get ugly and often they are solved through the courts, with the deceased person’s loved ones pitted against each other. This not only creates a significant amount of debt in the form of court costs and attorneys fees, it can also create bad family relations for many future years. This is just another reason why estate planning is a vital financial tool that should never be overlooked.