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What 529 Can Be Used For — And What It Can’t

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. Named after Section 529 of the Internal Revenue Code, these plans are sponsored by states, state agencies, or educational institutions and are authorized by the Internal Revenue Code. In this blog post, we will delve into the specifics of what 529 can be used for, the federal guidelines governing these plans, and California-specific regulations. By understanding the rules and limitations, you can make informed decisions about utilizing your 529 plan effectively.

What 529 Can Be Used For

Qualified Education Expenses

Under federal guidelines, a 529 plan can be used for a variety of qualified education expenses. These expenses include:

  1. Tuition and Fees: Payments made for enrollment or attendance at an eligible educational institution.
  2. Room and Board: Costs for housing and meal plans, provided the student is enrolled at least half-time.
  3. Books and Supplies: Expenses for books, supplies, and equipment required for enrollment or attendance.
  4. Computers and Internet: Computers, software, and internet access used primarily by the beneficiary during any years the beneficiary is enrolled at an eligible educational institution.
  5. Special Needs Services: Services required by a beneficiary with special needs in connection with their enrollment or attendance at an eligible educational institution.

These qualified education expenses are covered under federal law, making it clear what 529 can be used for without incurring penalties.

What 529 Can Be Used For: K-12 Education

Recent changes in federal law have expanded the use of 529 plans to include K-12 education expenses. Specifically, up to $10,000 per year per beneficiary can be used for tuition at public, private, or religious elementary and secondary schools. This provision provides greater flexibility for families looking to utilize their 529 plans for earlier stages of education.

What 529 Can Be Used For: Student Loan Repayment

Another relatively recent addition to what 529 can be used for is student loan repayment. The SECURE Act of 2019 allows for up to $10,000 to be used from a 529 plan to pay off student loans for the beneficiary and their siblings. This extension helps families manage student debt more effectively while leveraging the benefits of their 529 plans.

What 529 Can’t Be Used For

While 529 plans offer considerable flexibility, there are still restrictions on their use. Understanding what 529 can’t be used for is crucial to avoid penalties and additional taxes.

Non-Qualified Expenses

Expenses that do not fall under the qualified education expenses category are considered non-qualified and will incur a 10% penalty on the earnings portion of the withdrawal, as well as federal and state income taxes. Non-qualified expenses include:

  1. Transportation and Travel: Costs related to commuting or traveling to and from school.
  2. Health Insurance: Even if the institution requires students to have health insurance, these costs are not covered.
  3. Entertainment and Lifestyle: Expenses for activities or items that are not directly related to education, such as sports club memberships, movie tickets, or vacation travel.
  4. Room and Board Beyond Limits: If the cost of room and board exceeds the allowance for off-campus housing set by the school, the excess amount is considered non-qualified.

Penalties for Misuse

Using 529 funds for non-qualified expenses will result in a 10% penalty on the earnings portion of the withdrawal and subject the amount to federal and possibly state income taxes. It is essential to keep detailed records and receipts to substantiate that the withdrawals are used for qualified expenses.

California-Specific Regulations About What 529 Can Be Used For

California aligns closely with federal guidelines regarding what 529 can be used for, but there are specific nuances worth noting for residents of the state.

Tax Benefits and Contributions

California offers state tax benefits for contributions to 529 plans. Contributions to California’s 529 plan, ScholarShare 529, are not tax-deductible, but the earnings grow tax-deferred, and withdrawals for qualified education expenses are tax-free. Additionally, California does not tax the earnings on 529 plan distributions used for qualified education expenses.

ABLE Accounts

California residents can also benefit from ABLE accounts, which are similar to 529 plans but designed for individuals with disabilities. These accounts allow for tax-advantaged savings to cover expenses related to the disability, and they can work in conjunction with 529 plans to maximize financial planning for families with special needs.

Proposition 98 and Educational Funding

California’s Proposition 98, passed in 1988, requires a minimum percentage of the state budget to be spent on K-12 education. This measure underscores the state’s commitment to funding education and may influence how families plan their education savings strategies, including the use of 529 plans.

Final Thoughts on What 529 Can Be Used For

Understanding what 529 can be used for and what it can’t is essential for maximizing the benefits of these education savings plans. While federal guidelines provide a broad framework, state-specific regulations, such as those in California, add another layer of consideration. By adhering to the rules and staying informed about updates, families can effectively use their 529 plans to support educational goals from kindergarten through college and beyond.

If you have questions or need further assistance with your 529 plan or any other legal matters related to education savings, don’t hesitate to contact Lewman Law Firm. Our experienced attorneys are here to provide the guidance and support you need to navigate these complex issues.

About Lewman Law Firm

Lewman Law Firm is dedicated to providing expert legal counsel with a focus on education law, financial planning, and tax-advantaged savings plans. Our team brings extensive experience and a deep understanding of the legal intricacies surrounding 529 plans, and many other complex legal and estate issues, ensuring that our clients make informed decisions to maximize their peace and help them thrive. Lewman Law Firm offers personalized solutions to your legal concerns, and we are committed to helping families achieve their goals while safeguarding their financial investments. Contact us today to learn how we can assist you with your 529 plan.

Filed under financial planning, Uncategorized

Navigating the Aftermath: Can a Will be Changed After Death?

In the complex and often emotionally charged arena of estate planning, one question frequently arises: “Can a will be changed after death?” The nature of this question can be pure legal curiosity, a concern for and desire to advocate for your family members during a complicated family moment, or a desire for a more equitable distribution of a deceased person’s assets.

The straightforward answer is no, a will cannot be changed after the testator has died. However, the reality surrounding this issue is nuanced, involving legal mechanisms that, under certain circumstances, can alter the effect of a will or its distributions without changing its actual terms.

Understanding the Finality of a Will

A will is a legal document that expresses the testator’s wishes regarding how their estate should be distributed upon their death. Once the testator passes away, the will becomes a fixed document; its terms are meant to be executed as written, reflecting the deceased’s final wishes. This principle underscores the importance of drafting a will carefully and updating it as circumstances change throughout one’s life.

However, the inquiry into “Can a will be changed after death?” opens the door to exploring mechanisms like probate challenges, the role of estate laws, and agreements among beneficiaries that can impact how, and to whom, assets are ultimately distributed.

Challenging a Will

One of the primary avenues through which the outcomes dictated by a will can be contested or modified involves legal challenges during the probate process. Probate is the legal procedure through which a will is validated by a court. During probate, interested parties can challenge the will’s validity on several grounds:

Undue Influence

Undue influence refers to a situation where one person manipulates or exerts excessive pressure on another individual, typically someone vulnerable or in a position of dependence, to gain control over their decision-making, especially regarding the drafting of a will or estate planning. This manipulation is aimed at benefiting the influencer at the expense of the true intentions of the person making the will (the testator) and often occurs in relationships where there is an inherent power imbalance, such as caregiver-patient, attorney-client, or between elderly individuals and their family members or friends. 

Legally, proving undue influence can invalidate a will or specific provisions within it, as it demonstrates that the document does not accurately reflect the testator’s free will and intentions. Courts scrutinize such claims closely, requiring substantial evidence to demonstrate that undue influence was indeed exerted, affecting the testator’s decisions regarding their estate. 

can a will be changed after death

Lack of Testamentary Capacity

Lack of testamentary capacity is relevant in the event that an testator does not possess the mental capacity to understand the nature and implications of the estate planning documents they are executing, specifically a will. This legal pillar protects testators from being exploited 

To challenge a will based on lack of testamentary capacity, evidence must be presented to show that at the time the will was made, the testator was unable to make decisions for themselves, regarding their estate. Courts consider such claims seriously, as they can lead to a will being declared invalid if testamentary capacity is indeed proven to be lacking.

Other Issues With Execution 

Several other issues with the way a will was executed can be cause for challenging a will. If a challenge is successful, the will might be declared invalid, and the estate would then be distributed according to the state’s intestacy laws, unless a prior valid will takes precedence.

Family Settlement Agreements

Another scenario where the question “Can a will be changed after death?” becomes relevant is through family settlement agreements. In some jurisdictions, if all beneficiaries agree, they can redistribute assets in a manner different from what is stipulated in the will. These agreements can be used to resolve disputes amicably without a lengthy court process. However, such arrangements must consider the rights of all beneficiaries and, sometimes, the intentions of the testator, as inferred from the will and other estate planning documents.

Deeds of Variation

In some countries like the United Kingdom, deeds of variation (also known as deeds of family arrangement) allow beneficiaries to redirect their inheritance to other individuals or entities. This mechanism can be used for various reasons, including tax planning, providing for someone who was omitted from the will, or rectifying what beneficiaries perceive as an unfair distribution. Although this process does not change the will itself, it alters the distribution of the estate in a way that can reflect posthumous wishes or agreements among beneficiaries.

The Importance of Estate Planning

The question “Can a will be changed after death?” underscores the critical importance of comprehensive estate planning. Regularly updating your will to reflect changes in relationships, financial situations, and personal wishes is crucial. Estate planning is not a one-time task but an ongoing process that should adapt to new life events, such as marriage, divorce, the birth of children, and significant financial changes.

Moreover, clear communication with potential beneficiaries about your wishes can prevent misunderstandings and disputes after your death. Estate planning tools like trusts can also offer more flexibility and control over asset distribution, potentially reducing the likelihood of challenges and disagreements among heirs.

So? Can a Will Be Changed After Death?

While the direct answer to “Can a will be changed after death?” is no, the nuances of estate law and the possibilities for beneficiaries to agree on different outcomes introduce shades of complexity to this question. The finality of a will is a principle that protects the testator’s wishes, but the legal frameworks in place recognize that circumstances and relationships continue to evolve even after a person’s death. 

Understanding these mechanisms should be plenty to convince you that engaging in thorough estate planning is an essential step to ensuring that your own wishes are honored in the future, and that your loved ones are provided for according to your intentions. This approach not only honors the spirit of the question but also the spirit of the law and the wishes of those who have passed on.

Lewman Law Can Help You

Ready to take the next step in securing your financial legacy? At Lewman Law, we specialize in crafting comprehensive estate plans tailored to your unique needs. Our team of experienced professionals is ready to guide you through the intricacies of marital trusts and estate planning. Contact us today for a personalized consultation and discover how Lewman Law can empower your financial future. Let’s build a legacy that stands the test of time – together.

Filed under Estate Planning, financial planning, Legal Services

Ask an Estate Planning Attorney: How To Talk To Your Aging Parents About Wills and Estate Planning

Planning for your estate is a crucial task, yet many of our aging parents find it emotionally challenging to start the process. Our mortality brings up a lot of complex emotions, and so it makes sense that the subject would be a difficult one to broach, especially with the people who raised you and took care of you for so long. Finding a compassionate estate planning attorney can be challenging, but with 30 years of experience, Lewman Law can help. 

Some older parents believe that they don’t need an estate plan because they’re not old enough or don’t have significant assets to worry about. However, estate planning isn’t just about distributing wealth; it is also the place to make important medical decisions that preserve autonomy and quality of life. Regardless of age, everyone should have an estate plan to protect themselves and their loved ones.

Be Gentle.

In particular though, it’s important that we know how to have compassionate conversations with our aging population, so that they feel supported and empowered to preserve their wealth and help their family’s future legacy, rather than overwhelmed by the morose affairs of death and money.

We put it bluntly because it’s that simple: Contemplating mortality can be uncomfortable, and as humans we like to avoid uncomfortable things whenever possible. Some folks go as far as to associate discussing death with hastening its arrival. However, the reality is that avoiding estate planning won’t prevent death, it only makes it more complicated. Estate planning involves legal documents, tax considerations, and family dynamics, so surely some people procrastinate because they perceive it as complex or overwhelming; but mostly it’s the whole avoiding-talking-about-death thing.

If you’re the loving child of an aging parent, here are some tips to help you ease into and navigate a conversation about speaking with an estate planning attorney that everyone will feel good about, when it’s over.

Initiate the Conversation Early

estate planning attorney

Start discussing estate planning with your parents sooner rather than later. While it might feel uncomfortable, it’s essential to communicate to them that you value their wishes and preferences, and want to honor those wishes after they are gone or are unable to advocate for themselves. Encourage open communication about their assets, healthcare preferences, and end-of-life decisions, and share your own with them too! This will go a long way towards opening the conversation, and removing any perceived power dynamics.

Remind Them Of Their Autonomy

Instead, remind them that they have the power to make choices about where their money goes when they are gone, and that you are glad to help them. Offer them privacy, too; tell them that you’re happy to help support making appointments and finding resources and that no one else but them and their estate planning attorney needs to know what is in their will. This may help to ease anxiety they may have about family conflicts. 

Team Up With Other Family Members

Sometimes there’s power in numbers – but choose wisely. Enlist the help of your other siblings, cousins, or anyone whom your parents trust. This is not the time to bring in anyone who has a complicated relationship; imagine that you’re building a team of support, not a conflict-style intervention. You probably know exactly who not to invite. If your parents value their privacy, this might not be a helpful move, so be thoughtful. 

As people age, they can experience a loss of independence and autonomy as their body and mind slow down. This can be pretty emotionally challenging, and so you’ll want to enter the conversation from a place of compassion and empowerment, and not control. For example, don’t say, “I need you to write a will, and then give it to me.” 

Bring in the Professionals

Estate planning involves legal complexities. Encourage your elders to consult with an estate planning attorney. A professional can help create essential documents like wills, trusts, and advance healthcare directives. They’ll ensure everything aligns with your parent’s desires and state laws. If you’re in the Alameda area, we’d be honored to help

Set Aside a Designated Time to Talk

It can be tempting to have these kinds of conversations during family get-togethers like holidays, since it’s so rare to be in the same place. Resist the urge; these kinds of conversations should have time set aside out of respect for the importance of the topics. 

How to Help Prepare to Meet With an Estate Planning Attorney

After you’ve successfully had the conversation, it’s time to get ready for your meeting with us, so that it can be as fruitful and affordable as possible. The more you prepare, the smoother and faster ($!) things will be. IIt can be overwhelming to know what you need. Here’s a few things to discuss beforehand:

Document All Assets

Help your parent compile a comprehensive list of their assets. Include bank accounts, investments, real estate, insurance policies, and personal belongings. Knowing what they own simplifies the planning process.

Discuss Healthcare Decisions

Discuss healthcare preferences with them. Encourage them to create a durable power of attorney for healthcare. This document designates someone (usually you or another trusted family member) to make medical decisions if they become incapacitated.

Financial Power of Attorney

Different than a medical directive, this allows someone to manage their financial affairs if your parents become unable to do so. It’s crucial for paying bills, managing investments, and handling day-to-day finances. 

Guardianship for Minor Children

In the rare case that your parent is the guardian of minor children (for example, raising your sibling’s child) discuss who would care for the child if something happened to your parent. Naming a guardian in their will ensures the children’s well-being. 

Review any current beneficiary designations on retirement accounts, life insurance policies, and other assets. These designations override the will, so it’s important to keep them up to date. 

We’d Love To Help

We know just how difficult it can be to have these conversations, and we are here to help however we can. It’s our greatest aspiration that choosing us as your estate planning attorney provides a little peace of mind, knowing that your loved one’s affairs are in order.Remember, estate planning isn’t just about finances; it’s about ensuring your parent’s legacy and well-being. By actively participating in this process, you’re supporting them in a very meaningful way, and making your future life a little easier, so you can concentrate on family when it’s time for that. Click here to get in touch, and schedule your consultation.  

Filed under Estate Planning, financial planning, Legal Services

Looking for an Estate Planning Attorney Near Me? How They Can Help

When you’re thinking about your future, your family, and your finances, it’s natural to wonder how you’ll protect your assets and your loved ones. Part of this might be wondering if there’s a way to protect your family from financial burdens and unknown risks in the future. An estate planning attorney near me can help you with these concerns and devise a plan to protect your loved ones and your assets. For more information, please review the article below.

What is an Estate Planning Attorney?

The term “Estate Planning” can be confusing to the average person. It seems like a lot of legal mumbo jumbo. So what is an estate planning attorney? An estate planning attorney is someone who specializes in helping individuals, couples, families, and businesses plan their financial affairs. 

Estate planning is the process of making sure that your assets are handled properly before you pass away. It involves having a clear understanding of your personal and financial goals, as well as your family’s future needs and expectations. An estate planning attorney can help guide you through the process.

Looking for an Estate Planning Attorney Near Me? How They Can Help

Pros of Estate Planning

The pros of estate planning can be summarized in three main points: 

-Estate planning helps you plan for your future  

-It prepares your family for what happens after your death  

-Estate planning is a necessity 

Estate planning allows you to take control of your future. For example, if you’ve built a successful business, you have the opportunity to choose how its sold or transferred to the next generation. You may also want to protect the value of your assets so they can pass on to your loved ones without being taxed heavily by the IRS. Whatever your goals are, estate planning gives you an opportunity to plan ahead of time and make sure that everything goes as planned.

How an Estate Planning Attorney Near Me Can Help You

Estate planning attorneys can advise you on all aspects of estate planning, including asset protection and estate administration. They will help you create a strategy to protect your family and your assets so your loved ones will be in a good position should anything happen to you. The main areas that an estate planning attorney can help with are:  

– Weaving together the right documents to protect your property  

– Providing legal advice on tax implications, trusts, and wills  

– Advising you on what type of trust best suits your needs  

– Drafting up documents like living wills or advanced healthcare directives  

– Taking care of financial matters like paying bills and settling debts after death

How an Estate Planning Attorney Can Protect Your Assets

An estate planning attorney can help you protect your assets, your family, and your business in the following ways:

– Estate Planning Attorneys can help you protect your assets by drafting wills and trusts that dictate how to distribute your wealth upon death. This can include specifying which people or charities will receive certain items, such as a house or car, in the event you pass away. It might also include setting up trusts for minor children until they reach adulthood.  

– They can also help you protect your family from financial burdens by naming guardians for minor children and setting up life insurance policies. An estate planning attorney can also provide guidance in case one spouse dies and the other is left with a small income to provide for their surviving spouse and children. 

– Your estate planning attorney could also help protect your business by drafting agreements that limit future liability if someone were to buy the company after you die.

How an Estate Planning Attorney Can Protect Your Loved Ones

An estate attorney can help you protect your loved ones by drafting a will, preparing for incapacity, implementing trusts and powers of attorney, and other measures. He or she can help you choose the right beneficiaries for your retirement funds and assets. An estate planning attorney can also help you create trusts, including charitable trusts that are designed to provide income to family members or designated charities. 

This type of lawyer is a specialist who helps clients protect their assets through wills and trusts. Estate attorneys draft wills and other legal documents to ensure that the person who created them has the ability to control where their property goes after they die. They also help families cope with unexpected events like accidents or illnesses by creating legally binding documents to ensure that your loved ones are taken care of if anything happens to you.

How to Choose an Estate Planning Attorney

When it comes to choosing an estate planning attorney, you want to take the time to find a good fit. Some factors you may want to consider are: 

Qualifications

When choosing an estate planning attorney, it’s important to find someone that’s qualified. While there are many legal aspects involved in the process, such as drafting a will or trust, you need to first find someone that’s knowledgeable on taxes and other financial matters. 

Flexibility

It’s also important to find an attorney who can work with your schedule. You most likely have a demanding job or other obligations that may make it difficult for you to meet during business hours. When you choose an estate-planning lawyer, make sure they offer evening and weekend appointments. That way you don’t have to take time off of work or book travel just to see them!  

Reviews

One thing you should do when looking for the best estate planning attorney is to check reviews online. This way, you can get a good idea of what people’s experiences are and whether or not they recommend the lawyer. You’ll also be able to see what other clients think about their experience with the lawyer.

Asking Questions

It’s important to ask questions of a potential lawyer. For example, you might want to find out if they have experience in your specific area of concern (e.g., estate planning). You may also want to know how often they meet with clients, and whether or not they offer face-to-face consultations.

If you already know what you need and are looking for a lawyer to help you, ask them if they can help. For example, if you want to set up your will, find an attorney who specializes in wills. They should be able to tell you that right away. If they can’t help you specifically, they might recommend someone else.

Availability to Meet

When you first call or email an attorney’s office, a receptionist will likely answer the phone or email. You should ask them if the attorney is willing to meet with you for a free consultation before you commit to anything. If they are not willing to meet with you, this could be a red flag.

Conclusion

When it comes to estate planning, the decisions you make can have a huge impact on your loved ones and your legacy. An estate lawyer can help by providing you with counsel, legal documents, and filing services. We hope this guide has helped you choose an estate planning attorney and informed you on how they can help protect you and your loved ones.

Connect with an Estate Planning Attorney Near Me

If you have any further questions, or you would like to get started today, please contact us now. We look forward to learning how we can help you and your loved ones.

Filed under Estate Planning, financial planning, Legal Services