What happens to my 401K?

We are often asked “What happens to the funds in my 401K when I die?” Whether you have a trust, a will, or nothing at all in place, the answer is the same. The funds will go to your designated beneficiary without the need for probate.

This means the choice is entirely up to you; however, Federal law mandates that the primary beneficiary of your 401K (or another pension plan) is automatically your spouse. If you are married and your primary beneficiary is someone other than your spouse, your spouse must sign a waiver or consent form for you to designate another person.

Other accounts and assets that do not require a probate or special handling upon death:

  • Real Property held in a joint tenancy
  • IRA’s and other retirement accounts
  • Any security or bank account that has a “pay on death” designation
  • Life Insurance Proceeds

Now is a great time to check the designated beneficiaries on your retirement accounts and make sure you have a “pay on death” designation on your security and bank accounts. Any one of the attorneys here at J Johnson Law Office, Inc., in Grover Beach or Huntington Beach, will be happy to discuss these issues with you during your estate planning consultation.

Plan my own funeral?!

For most of us, the idea of planning for our own funeral is off putting, at best. However, advanced planning is one of the best ways for you to ease the stress on your loved ones immediately following your passing, as well as to ensure that your wishes for burial and celebration are observed. Here are a few ways that you can plan.

  • Designate an agent: You can designate a person who oversees the decision-making process for your funeral plans. In California, this is done with an Advanced Health Care Directive.
  • Tell people what you want: You can write a detailed set of instructions for your designated agent so that they know exactly what your wishes are. Do you want to be buried or cremated? Where do you want your remains to be placed? Do you want a traditional funeral service, a special religious ceremony, or a celebration of life? This can be an informal document that can be kept with your Advanced Health Care Directive. You should also tell your family members what your preferences are and where you have left your written instructions.
  • How will the expenses be paid? Funeral costs are expensive. With a little planning, you can ensure that there are funds immediately available for your funeral. One way you can do this is by purchasing a life insurance policy that is designed to cover your funeral costs. Another way to ensure that there is money readily available is to designate a “pay-on-death” account at your bank with enough money to pay for your final arrangements. You direct that upon your death, the account is immediately payable to the person you have designated to make your funeral decisions. At the time of your death, the account becomes immediately payable to the person you designate so that they can begin to make arrangement immediately.
  • An in-depth discussion of planning for your own funeral can be found on Kiplinger.com. https://www.kiplinger.com/article/retirement/T021-C000-S002-how-to-plan-your-own-funeral.html

Planning ahead can ease the burden both emotionally and financially on your loved ones in the immediate days after your passing. If you would like to discuss advanced planning and review your entire estate plan, please contact J Johnson Law Office, Inc., in Grover Beach or Huntington Beach, for a complimentary consultation. We will look over your existing estate plan and ensure that it is up to date, both legally and with your wishes. If you don’t have an estate plan, we can discuss the key components of a comprehensive plan and implement one that is custom tailored to your life situation.

SUMMARY OF THE CALIFORNIA TENANT PROTECTION ACT (AB 1482)

LEGISLATIVE HISTORY OF RENT CONTROL IN CALIFORNIA
Prior to the enactment of the Costa-Hawkins Act in 1995, local governments were permitted to enact rent control, provided that landlords would receive just and reasonable returns on their rental properties. In 1995 the California State Legislature passed the Costa-Hawkins Act. The Costa-Hawkins Act protects landlords from local rent control ordinances. The three main protections under the Costa-Hawkins Act are:

  • Cities cannot enact rent control on housing first occupied after February 1, 1995, and housing units where the title is separate from connected units (such as free-standing houses, condominiums, and townhouses).
  • Housing exempted from a local rent control ordinance before February 1, 1995, must remain exempt.
  • Landlords have a right to increase rent prices to market rates when a tenant moves out (a policy known as vacancy decontrol).

In 2019, tenant advocacy groups managed to get Proposition 10 on the ballot. Proposition 10 was a local rent control initiative aimed to repeal the Costa-Hawkins Act. Fortunately for rental property owners the California voters rejected Proposition 10 with a 60 % “NO” vote.

Despite the vote by California residents against rent control, on October 8, 2019, Governor Newsom signed into law the Tenant Protection Act (AB 1482), which becomes effective January 1, 2020. The Tenant Protection Act imposes state-wide rent control rules on certain residential rental properties, including limits on rent increases, requiring “just-cause” for evictions, and it drastically reduces the “new construction” exemption previously found in the Costa-Hawkins Act. As a rental property owner, this new law may affect you.

WHAT PROPERTIES ARE EXEMPT FROM THE TENANT PROTECTION ACT?

  • Single family residences, condos and townhomes: These properties are exempt from the Tenant Protection Act, so long as they are not owned by a corporation or a real estate investment trust (“REIT”). If your rental property falls in this category, is owned by an LLC, and none of the members are a corporation, the Tenant Protection Act will not apply to your rental property.
  • Duplexes: These properties may be exempt from the Tenant Protection Act. For this exemption to apply one of the units must be owner occupied and must have been owner occupied at the time the other unit was rented to a tenant.
  • Existing City Rent Control Ordinances: If your property is already under a city rent control ordinance1 the Tenant Protection Act does not apply, your existing city rent control ordinance still applies.
  • Certificate of Occupancy issued in the last 15 years: If you own a rental property that is not excepted as a single family residence, condo, townhome, or duplex, it is exempted from the Tenant Protection Act for the first 15 years from the issuance of the certificate of occupancy. After that, it will be subject to the Tenant Protection Act.

SOME ITEMS OF CAUTION:

  • Even if your property is exempt from the Tenant Protection Act, you still need to review any lease agreement that you enter into after July 1, 2020. If there is not a clause that advises the renter that the property is exempt from the Tenant Protection Act, that omission will place it under the act! Our office can help review your lease agreement and suggest language to use to protect you from unwittingly subjecting your unit to the Tenant Protection Act.
  • If your property does not fall under any of the exceptions listed above and you believe it will be subjected to the Tenant Protection Act, you should contact our office to discuss tactical planning to limit your exposure under this new law. The new rules are exhaustive and are not addressed in this mailing.
  • Section 8—On October 1, 2019 Governor Newsom signed into law SB 329, which goes into effect January 1, 2020. SB 329 bans blanket policies against taking Section 8 applicants and requires landlords to treat voucher-holders like any other applicant. The law also will prohibit “No Section 8” advertisements. You may still reject a Section 8 applicant as a renter, but the rejection cannot be based on a “no Section 8” policy or the fact that the applicant is a Section 8 recipient.

We hope that you find this summary of the Tenant Protection Act helpful. If you have any questions regarding this new law or how it affects your rental properties, please reach out to J Johnson Law Office, Inc. and we will be happy to discuss those questions with you. We believe that most of our client’s properties will likely be exempted from the Tenant Protection Act; however, if you are uncertain please contact us before January 1, 2020 to be sure.


1 California Cities with Rent Control Ordinances: Berkeley, Beverly Hills, East Palo Alto, Emeryville, Glendale, Hayward, Los Angeles (& unincorporated Los Angeles), Los Gatos, Maywood, Mountain View, Oakland, Palm Springs, Richmond, San Diego, San Francisco, San Jose, Santa Monica, Thousand Oaks, Union City, and West Hollywood.

What to Expect During a Probate or Trust Administration in California

If you have been named the executor of a will or the trustee of a trust and the time has come for you to perform the duties of executor or trustee, you may be asking yourself, “What in the world have I got myself into?!” While it may all seem a bit overwhelming, you job is rather straight forward. It is your responsibility to locate, maintain, and ultimately distribute the assets of the estate according to the terms of the will or trust document.

Step One: Inventory

One of your first jobs will be to take an inventory of all the estate property. This means that you must diligently go through records, bank statements, past tax returns, etc. to locate all the decedent’s personal and real property that is to be administered through the probate or trust administration.

Step Two: Proper Management of The Assets

Once you have figured out exactly what assets are there, you must properly manage those assets. This means that you must keep very good records, make prudent investments, and keep the estate assets separate from other assets. In general, there can be a lot of restrictions on what you may and may not do with the estate assets. You should not spend any of the money from the estate unless you have discussed it with an attorney and/or have a court order to do so. You should also make certain that certain assets are properly insured in case of a loss. If you do not follow all the proper policies and procedures, you can be removed as the administrator of the estate or the trustee, and you may even be held financially liable by the beneficiaries for any mismanagement of the estates assets. It is important to have an attorney on your side that will guide you through this process.

Step Three: Administer the Estate

There are legal notices that should go out to heirs at law and even creditors, whether you are administering a trust or a probate. Additionally, you may be required to sell real or personal property and make distributions of the estate assets to the beneficiaries. This process is fraught with pitfalls that you may innocently fall into without the guidance of an experienced estate attorney. The California Court system agrees and includes in the “Duties and Liabilities” for the probate administrator the instructions “When in doubt, contact your attorney.”

If you are faced with a probate or trust administration, we have a team of experienced attorneys and legal staff that are on standby waiting to answer your questions and ensure that you handle your duties properly. Contact us now for a complimentary consultation to see how we can help you navigate though the administration of an estate.

5 Must Have Estate Planning Documents

law-placeholder3BY
AUG 11, 2015  – 1:30pm ET

In order to implement a careful estate plan for their clients, advisors must ensure that certain documents are in place.

CEO Tony D’Amico of the Fidato Group, an RIA in Strongsville, Ohio, often tells clients about a couple who did not have the essential estate planning documents before they became his clients. The husband was starting to become forgetful.

“My advice early on was to get their estate planning documents in order,” says D’Amico. “Thankfully, they did.” Later, when the husband had to be put into an assisted living center, they were well prepared; his wife had signed on as power of attorney for his financial and health care matters.

Here are the five crucial documents that estate planning professionals agree are needed for a successful plan.

1. Will

The fundamental estate planning document is a will, which establishes the individual responsible for administering the client’s estate, as well as the beneficiaries. Without this document in place when the client dies, state intestacy statutes will take effect and create an estate plan on behalf of the client, which may not be what the client had in mind.

“If no one under the statute can be found, the decedent’s assets may end up going to the state,” warns Kirsten Waldrip, associate professor of estate planning and taxation at the College for Financial Planning in Denver.

2. Durable General Power of Attorney

A durable general power of attorney authorizes someone to act on a client’s behalf in financial and personal business and tax affairs, in the event that the client is incapacitated and not able to make such decisions for him or herself. If the power of attorney is “durable,” it remains effective through the client’s subsequent incapacity, explains D’Amico. It ends with the client’s death.

3. Health Care Proxy

Another basic document that should be included in estate plans is a health care proxy. By executing this document, the client appoints a person to act as an agent for his or her medical decisions if a time comes when the client is unable to make such decisions, according to Waldrip.

For example, “If the principal is under anesthesia and the doctor requires an immediate decision as to treatment, an agent under a medical power of attorney may make such a decision,” Waldrip says. “It’s important the principal and agent discuss the principal’s wishes.”

4. Living Will

Unlike the powers of attorney documents, a living will does not appoint a person to act on behalf of the client. Instead, a living will documents a client’s wishes about being kept alive “in case of a terminal condition or a persistent vegetative state,” says Waldrip.

In some states, the operative document is the living will while in others the courts will only enforce the health care proxy. In either case, it is common to have both prepared since the living will provides guidance to the health care agent on the patient’s wishes.

5. HIPAA Authorization

Generally, a medical power of attorney will include a provision, known as a HIPPA authorization, under the Health Insurance Portability and Accountability Act, granting an agent access to the client’s medical records. Without this specific authorization it is unlawful for a health care provider to disclose health-related information to a third party.

Without these five basic estate planning documents, D’Amico warns, “things can become difficult and stressful.”

Bruce W. Fraser, a New York-based financial writer, is a contributor to Financial Planning and OnWall Street magazines. 

This story is part of a 30-day series on estate planning strategies.

http://www.financial-planning.com/30days-30ways/5-estate-planning-documents-clients-must-have-2693832-1.html