Curious about how California's new law, AB 2016, could affect real estate and estate planning in 2025?
Joshua Vigo-Fas of Josh V. Realty sat down with Sedric E. Collins, Esq of Legacy One Law Firm, APLC to break it all down for you—what the law means, who it impacts, and how to stay prepared.
Click here to watch the full video now!
This is a must-watch for homeowners, real estate professionals, and anyone planning for the future.
Beneficiary designations are more powerful than a will. Once a person is named as a beneficiary on a retirement account, investment account, or life insurance policy, this designation overrides any instructions in a will. This easily avoided mistake is a frequent cause of litigation.
Beneficiary designations are critical in the world of pensions and retirement accounts. These kinds of accounts are governed by federal law, with strict rules about spousal rights. When accounts are first established, the spouse’s name is often required to be the primary beneficiary.
What happens if there is no beneficiary named on an account?
Assets in accounts with no beneficiary named usually become part of the probate estate. This is a missed opportunity. Beneficiary designations are an excellent way to transfer assets to heirs without going through probate, maintaining privacy and avoiding estate taxes.
What is a primary, secondary, or contingent beneficiary?
Just as a trust should have a primary, secondary and contingent trustee, any accounts with a named beneficiary should have more than one person named. As people age, so do their beneficiaries. Therefore, having three levels of beneficiaries makes it more likely someone of your choosing will inherit the asset. The asset goes into the probate estate if beneficiaries have all passed or cannot be located.
Who can be a beneficiary?
Most beneficiaries are surviving spouses or adult children, siblings, or family members. For pensions and retirement funds, your spouse will have to sign an agreement waiving spousal rights if you don’t want them to receive the asset. Minors are not permitted to inherit assets, so if they are beneficiaries, the court will name a custodian to oversee how the funds are used. The court has no obligation to name a family member for this role.
Who should not be a beneficiary?
People who receive means-tested government benefits, like Medicaid or Supplemental Social Income (SSI), should never be left an inheritance. Why? The inheritance will be considered a countable asset, and the person will lose their eligibility. A Special Needs Trust should be created, and the trust may be the beneficiary but not the individual with special needs.
Deciding who to name as a beneficiary.
Carefully consider who you want to be a named beneficiary. The beneficiary is not obligated to distribute any funds to anyone else. If you name one child to be a beneficiary and there are siblings, your estate plan and the children’s relationship could be undone.
Review beneficiary designations when creating or revising an estate plan.
Every account, from life insurance to investment portfolios, should be reviewed every few years to ensure that the beneficiary designation reflects the account owner’s wishes. Over time, it is easy to forget who was named on accounts, especially retirement accounts from a prior employer or bank accounts opened many years ago. Make a complete inventory of all financial accounts and place it with essential documents to prevent assets from being lost. You’ll also save your executor countless hours of searching for missing assets.
Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends and favorite charities. For more information, be sure to visit our website where you can explore details about our firm, gain access to our informative blog and enjoy a complimentary newsletter subscription.
