Recently, we just completed the November 3rd elections. Some people are happy while others are sad. One thing is for sure- things have changed. Some changes are for the better while others are not. Set forth below are several important topics with major ramifications.
1. Proposition 19 passed in California. Now, seniors can move from one county in California to another and keep their low property tax basis. They can do it three (3) instead of just once. However, the negative to those positives is that children will be hurt.
Prior to the effective date of Proposition 19, parents could leave their residence to their children and the children would keep the parents’ low property tax basis. That will be going away very soon.
ACTIONS TO BE TAKEN ASAP-
Parent(s) must decide if they want to give their homes away today so the children can use the old rules. CHILDREN should ask their parents to consider making a gift today so that the kids can keep the MASSIVE benefits of the old rules.
2. The IRS has changed the rules for IRA rollovers to children. In the old days, in many cases, the children could inherit an IRA and take the distributions over their own life time. That has changed.
ACTIONS TO BE TAKEN ASAP-
Children need to ask their parents right NOW if they are beneficiaries of one or more IRAs. If they are, then the parents should be asked to review their options and perhaps modify the way the IRA (s) will be distributed.
3. Quite often parents do not discuss their estate planning with their children. Most of the time, the kids are left out of the discussions at together. Truthfully, no one likes to even talk about the possibility of death. However, it is part of life and we need to deal with it.
ACTIONS TO BE TAKEN ASAP-
The parents need to tell the children exactly how their estate plan is going to work. The children will not see the paperwork, but they will understand the overall plan. There should be an opportunity for the children to provide their input(s). Perhaps the plan documents can be modified. Sometimes, the parents do not really understand their own plan. In some cases, there are errors that can be fixed before the first parent passes away. Children should ask their parent(s) to care about the children enough to let them know how the process is going to work. Sometimes, children can make suggestions to make the estate plan work better for everyone.