Don’t Ask Heirs to Guess What You Wanted—Have an Estate Plan

Don’t Ask Heirs to Guess What You Wanted—Have an Estate Plan: With an estate plan, you can distribute your assets according to your own wishes. Without one, your heirs may spend years and a good deal of money trying to settle your estate, reports U.S. News & World Report in the article “5 Reasons to Make an Estate Plan.”

If there is no estate plan in place, including a will, living trust, advance directives and other documents, people you love will be put in a position of guessing what you wanted for any number of things, from what your final wishes would be in a medical crisis, to what kind of a funeral would like to have. That guessing can cause strife between family members and worry, for a lifetime, that they didn’t do what you wanted.

Think of your estate plan as a love letter, showing that you care enough about those you love to do right by them.

What is estate planning? Estate planning is the process of legally documenting what you want to happen when you die. It also includes planning for your wishes in case of incapacity, that is, when you are not legally competent to make decisions for yourself because of illness or an injury. This is done through the use of wills, trusts, advance directives and beneficiary designations on accounts and life insurance policies.

Let’s face it, people don’t like to think about their passing, so they postpone making an appointment with an estate planning attorney. There’s also the fear of the unknown: will they have to share a lot of information with the attorney? Will it become complicated? Will they have to make decisions that they are not sure they can make?

Estate planning attorneys are experienced with the issues that come with planning for incapacity and death, and they are able to guide clients through the process.

The power of putting wishes down on paper can provide a great deal of relief to the people who are making the plan and to their family members. Here are five reasons why everyone should have an estate plan:

Avoid Probate. Without a will, the probate court decides how to distribute your estate. In some states, it can take at least seven months to allow creditors to put through claims. The estate is also public, with your information available to the public. Probate can also be expensive.

Minimize Taxes. There are a number of strategies that can be used to minimize taxes being imposed on your heirs. While the federal estate tax exemption is $11.4 million per individual, states have estate taxes and some states impose an inheritance taxes. An estate planning attorney can help you minimize the tax impact of your estate.

Care for Minor Children. Families with minor children need a plan for care, if both parents should pass away. Without a will that names a guardian for young children, the court will appoint a guardian to raise a child. With a will, you can prevent the scenario of relatives squabbling over who should get custody of minor children.

Distributing Assets. If you have a will, you can say who you want to get what assets. If you don’t, the laws of your state will determine who gets what. You can also use trusts to control how and when assets are distributed, in case there are heirs who are unable to manage money.

Plan for Pets. In many states, you can create a Pet Trust and name a trustee to manage the money, while naming someone in your will who will be in charge of caring for your pet. Seniors are often reluctant to get a pet, because they are concerned that they will die before the pet. However, with an estate plan that includes a pet trust, you can protect your pet.

Reference: U.S. News & World Report (October 18, 2019) “5 Reasons to Make an Estate Plan” 

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

 

IRS Issues Long-Term Care Premium Deductibility Limits for 2020

IRS Issues Long-Term Care Premium Deductibility Limits for 2020: The Internal Revenue Service (IRS) has announced the amount taxpayers can deduct from their 2020 income as a result of buying long-term care insurance.

Premiums for “qualified” long-term care insurance policies (see explanation below) are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 10 percent of the insured’s adjusted gross income.

These premiums — what the policyholder pays the insurance company to keep the policy in force — are deductible for the taxpayer, his or her spouse and other dependents. (If you are self-employed, the tax-deductibility rules are a little different: You can take the amount of the premium as a deduction as long as you made a net profit; your medical expenses do not have to exceed a certain percentage of your income.)  Additionally, these tax deductions allowed by the IRS for long-term care insurance premiums are generally not available with so-called hybrid policies, such as life insurance and annuity policies with a long-term care benefit.

However, there is a limit on how large a premium can be deducted, depending on the age of the taxpayer at the end of the year. Following are the deductibility limits for tax year 2020. Any premium amounts for the year above these limits are not considered to be a medical expense.

Attained age before the close of the taxable year

Maximum deduction for year:

40 or less : $430

More than 40 but not more than 50 : $810

More than 50 but not more than 60 : $1,630

More than 60 but not more than 70 : $4,350

More than 70 : $5,430

Another change announced by the IRS involves benefits from per diem or indemnity policies, which pay a predetermined amount each day.  These benefits are not included in income except amounts that exceed the beneficiary’s total qualified long-term care expenses or $380 per day, whichever is greater.

For these and other inflation adjustments from the IRS, click here.  For tax year 2019 deductibility limits, click here.

What Is a “Qualified” Policy?

To be “qualified,” policies issued on or after January 1, 1997, must adhere to certain requirements, among them that the policy must offer the consumer the options of “inflation” and “nonforfeiture” protection, although the consumer can choose not to purchase these features. Policies purchased before January 1, 1997, will be grandfathered and treated as “qualified” as long as they have been approved by the insurance commissioner of the state in which they are sold. For more on the “qualified” definition, click here.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

VETERANS DAY: HOW IT’S DIFFERENT FROM MEMORIAL DAY

VETERANS DAY: HOW IT’S DIFFERENT FROM MEMORIAL DAY.  Two holidays, Memorial Day and Veterans Day, are dedicated to the nation’s service members, leading, at times, to confusion as to how they’re different. While they’re both focused on the military, one day is meant to thank living veterans and the other is intended to pay tribute to those who gave their lives for their country.

America’s veterans, those who served in the military and weren’t dishonorably discharged, as defined by the Department of Veterans Affairs, are thanked on the aptly named holiday Veterans Day. Included under the umbrella of the term “veteran” are those who served their country and passed away, although the holiday is predominately geared toward the living.

It occurs annually on November 11, six months after Memorial Day, which, as its name indicates, is intended to be a way of memorializing those who gave their lives serving America.

Originally called Armistice Day, the holiday commemorated the day the Allied forces and Germany put into effect an armistice on November 11, 1918, signaling an end to the fighting of World War I. It became an official holiday in 1938, according to the Department of Defense.ds by scrollerads.com

By 1954, Americans had served in World War II and the Korean War, causing veterans service organizations to urge Congress to change Armistice Day to Veterans Day. This way, service members from all wars would be honored and not just those who served in World War I.

Just as Veterans Day wasn’t always called Veterans Day, it wasn’t always commemorated on November 11. In the beginning, people celebrated veterans on November 11, but the passage of the Uniform Holiday Act in 1968 moved the holiday to Monday, regardless of the date. The goal was to create guaranteed three-day weekends, which, theoretically, would spur travel and family activities, therefore boosting the economy.

From October 25, 1971, until 1977, Veterans Day was celebrated on the fourth Monday of October. However, in 1975, President Gerald Ford signed a law and the holiday was returned to November 11 in 1978.

To celebrate Veterans Day, towns and cities will often have parades and businesses will offer discounts to service members and veterans. Unlike on Memorial Day, when it may be more appropriate to tell veterans to have a “meaningful day,” according to NPR, on Veterans Day, it’s entirely acceptable and encouraged to tell a veteran, “thank you for your service.”

Another free way to acknowledge a veteran’s service on Monday, as recommended by Military.com, is to ask them about their past. Instead of just thanking them for serving, inquire as to what their role in the military was and why they chose the branch they did. For some veterans, “thank you for your service,” can come off as hollow due to its widespread use, so taking time to listen can show a deeper appreciation.

Also, if you’re planning on making a card or sending someone a digital message for Veterans Day, be sure to spell it “Veterans Day.” People sometimes refer to it as “Veteran’s Day,” but the proper spelling does not include an apostrophe.

We don’t know them all but we owe them all.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

 

Most Are Taking Social Security at the Wrong Time

Most Are Taking Social Security at the Wrong Time: A new report finds that almost no retirees are making financially optimal decisions about when to take Social Security and are losing out on more than $100,000 per household in the process. The average Social Security recipient would receive 9 percent more income in retirement if they made the financially optimal decision.

When claiming Social Security, you have three options: You may begin taking benefits between age 62 and your full retirement age, you can wait until your full retirement age, or you can delay benefits and take them anytime up until you reach age 70. If you take Social Security between age 62 and your full retirement age, your benefits will be reduced to account for the longer period you will be paid. If you delay taking retirement, depending on when you were born, your eventual benefit will increase by 6 to 8 percent for every year that you delay, in addition to any cost-of-living increases.

The new report, conducted by United Income, an online investment management and financial planning firm, found that only 4 percent of retirees make the financially optimal decision about when to claim Social Security. Nearly all of the retirees not optimizing their benefits are claiming benefits too early. The study found that 57 percent of retirees would build more wealth if they waited to claim until age 70. However, currently more than 70 percent of retirees claim benefits before their full retirement age. Claiming before full retirement is the financially best option for only 6.5 percent of retirees, according to United Income.

The consequences of claiming Social Security too early can be big. The report found that collecting benefits at the wrong time causes retirees to collectively lose $3.4 trillion in potential income (an average of $111,000 per household). The report also estimates that elderly poverty could be cut in half if retirees claimed benefits at the financially optimal time.

One reason most people do not optimize Social Security is because waiting to collect benefits means their overall wealth may fall during their 60s and 70s. They also may not be aware that collecting benefits before full retirement age means that their benefits will be permanently reduced. According to the report’s authors, policy changes are necessary to get retirees to wait to claim benefits. The report recommends that early claiming be made the exception and reserved for those who have a demonstrable need to collect early. Another recommendation is to change the label on early retirement and call it the “minimum benefit age.”

To read the full report, click here.

For a CBS News article on the report, click here.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

Special Ownership for Married Couples: Tenancy by the Entirety

Special Ownership for Married Couples: Tenancy by the Entirety: Married couples have a special way to jointly own property in some states that has advantages over regular joint ownership. If you are married and own property jointly, you should make sure you have the right form of ownership.

Joint tenants must have equal ownership interests in the property. If one of the joint tenants dies, his or her interest immediately ceases to exist and the remaining joint tenant owns the entire property. The advantage to joint tenancy is that it avoids having an owner’s interest probated upon his death. The disadvantage is that creditors can attach one tenant’s property to satisfy the other’s debt.

Some states give married couples another option to own property jointly and avoid probate, but also have protection from creditors. Tenancy by the entirety has the same right of survivorship as a joint tenancy, but one spouse cannot sell his or her interest without the other spouse’s permission. The creditors of one spouse cannot attach the property or force its sale to recover debts unless both spouses consent. Creditors may place a lien on property held in tenancy by the entirety, but if the debtor dies before the other spouse, the other spouse takes ownership of the property free and clear of the debt. This is why if you have a tenancy by the entirety, both the husband and wife are required to sign the mortgage on their property for the mortgage to be valid.

Tenancy by the entirety is available in half of all states and the District of Columbia. Some states recognize it for all property; other states only recognize it for real estate. States with tenancy by the entirety are: Alaska, Arkansas, Delaware, Florida, Hawaii, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, and Wyoming.

If you own joint property with a spouse in a state with tenancy by the entirety, you should check to make sure the property is owned as tenants by the entirety. In addition, unmarried couples who buy property and subsequently marry each other should check if they can re-title the deed as tenants by the entirety to avail themselves of the greater protections this form of tenancy offers.

For more information about joint ownership, click here.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

Six Things to Consider Before Making Gifts to Grandchildren

Six Things to Consider Before Making Gifts to Grandchildren: Grandparents often are particularly generous to grandchildren as they see their family’s legacy continuing on to a new generation. In many cases, grandparents feel they have ample resources and their children or grandchildren may be struggling financially. Assistance with summer camp fees, college tuition, wedding costs or the down payment on a first home, can relieve pressure on the next generation and permit grandchildren to take advantage of opportunities that otherwise would be out of reach. Some grandparents also don’t feel it’s right that children and grandchildren should need to wait for an inheritance, when they have more than they need.

Helping out family members is to be encouraged, but can raise a number of legal issues involving taxes and eligibility for public benefits, as well as questions of fairness among family members. Here are six issues grandparents should consider before making gifts to family members:

  • Is it really a gift? Does the grandparent expect anything in return, for example that the funds be repaid or that the money is an advance on the grandchild’s eventual inheritance? In most cases, the answer is “no.”  But if it’s “yes,” this should be made clear, preferably in writing, whether in a letter that goes with the check or, in the case of a loan, a formal promissory note.
  • Is everyone being treated equally? Not all grandchildren have the same financial needs, and grandparents don’t feel equally close to all of their grandchildren. While it’s the grandparent’s money and she can do what she wants with it, if she’s not treating all of her grandchildren equally, she might want to consider whether unequal generosity will create resentment within the family. Many elder law clients say that what they do with their money during their lives is their business. They may help out some children and grandchildren more than others based on need, with the expectation that this will be kept private. But they treat all of their children equally in their estate plan.
  • Beware taxable gifts. While this is academic for most people under today’s tax law, since there’s no gift tax for the first $11.4 million each of us gives away (in 2019), any gift to an individual in excess of $15,000 (in 2019) per year must be reported on a gift tax return. Two grandparents together can give up to $30,000 per recipient per year with no reporting requirement. And there’s no limit or reporting requirement for payments made directly to medical and educational institutions for health care expenses and tuition for others.
  • 529 plans. Many grandparents want to help pay higher education tuition for grandchildren, especially given the incredibly high cost of college and graduate school today. But not all grandchildren are the same age, making it difficult to make sure that they all receive the same grandparental assistance. Some grandchildren may still be in diapers while others are getting their doctorates. A great solution is to fund 529 accounts for each grandchild. These are special accounts that grow tax deferred, the income and growth never taxed as long as the funds are used for higher education expenses. Click here to read more about 529 accounts.
  • Don’t be too generous. Grandparents need to make sure that they keep enough money to pay for their own needs. While small gifts probably won’t make any difference one way or another, too many large gifts can quickly deplete a lifetime of scrimping and saving. It won’t do the family much good if a grandparent is just scraping by because he’s done too much to support his children or grandchildren.
  • Beware the need for long-term care. In terms of making certain that they have kept enough of their own savings, grandparents need to consider the possibility of needing care, whether at home, in assisted living or in a nursing home, all of which can be quite expensive. In addition, those seniors who can’t afford to pay for such care from their own funds need to be aware that any gift can make them ineligible for Medicaid benefits for the following five years.  For details, click here.

There are even more issues to consider that may involve specific family situations. Some grandchildren shouldn’t receive gifts because they will use them for drugs, or the gifts may undermine the parents’ plans for the grandchild or their authority. In some instances, grandparents may want to consider “incentive” trusts, which provide that the funds will be distributed when grandchildren reach certain milestones, such as graduation from college or holding down a job for a period of time. Communication with the middle generation can be key to making certain that gifts achieve the best results for all concerned.

Talk to your attorney about devising the best plan for yourself and for your grandchildren.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

What To Do When a Loved One Passes Away

What To Do When a Loved One Passes Away: Whether your spouse has just passed away or you have lost your mom or dad, the emotional trauma of losing a loved one often comes with a bewildering array of financial and legal issues demanding attention. It can be difficult enough for family members to handle the emotional trauma of a death, let alone taking the steps necessary to get these matters in order.

If you are the executor or representative of the will, you first should secure the tangible personal property, meaning anything you can touch such as silverware, dishes, furniture or artwork. Then, take your time while bills need to be paid. They can wait a week or two without any real repercussions. It is more important that you and your family have time to grieve.

When you are ready, you should meet with an attorney to review the steps necessary to administer the will. While the exact rules of estate planning differ from state to state, the key actions include:

  • File the will and petition in probate court in order to be appointed executor.
  • Collect the assets. This means that you need to find out about everything the deceased owned and file a list of inventory with the court.
  • Pay the bills and taxes. If an estate tax return is due, it must be filed within nine months of the date of death.
  • Distribute property to the heirs. Generally, executors do not pay out all of the estate assets until the period for creditors to make claims runs out which can be as long as a year.
  • Finally, you must file an account with the court listing any income to the estate since the date of death and all expenses and estate distributions.

While some of these steps can be avoided through trusts or joint ownership arrangements, whoever is left in charge still has to pay all debts, file tax returns and distribute the property to the rightful heirs.

For more information about an executor’s duties, click here.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

What to Do If You Are Appointed Guardian of an Older Adult

What to Do If You Are Appointed Guardian of an Older Adult: Being appointed guardian of a loved one is a serious responsibility. As guardian, you are in charge of your loved one’s well-being and you have a duty to act in his or her best interest.

If an adult becomes mentally incapacitated and is incapable of making responsible decisions, the court will appoint a substitute decision maker, often called a “guardian,” but in some states called a “conservator” or other term. Guardianship is a legal relationship between a competent adult (the “guardian”) and a person who because of incapacity is no longer able to take care of his or her own affairs (the “ward”).

If you have been appointed guardian, the following are things you need to know:

  • Read the court order. The court appoints the guardian and sets up your powers and duties. You can be authorized to make legal, financial, and health care decisions for the ward. Depending on the terms of the guardianship and state practices, you may or may not have to seek court approval for various decisions. If you aren’t sure what you are allowed to do, consult with a lawyer in your state.
  • Fiduciary duty. You have what’s called a “fiduciary duty” to your ward, which is an extremely high standard. You are legally required to act in the best interest of your ward at all times and manage your ward’s money and property carefully. With that in mind, it is imperative that you keep your finances separate from your ward’s finances. In addition, you should never use the ward’s money to give (or lend) money to someone else or for someone else’s benefit (or your own benefit) without approval of the court. Finally, as part of your fiduciary duty you must maintain good records of everything you receive or spend. Keep all your receipts and a detailed list of what the ward’s money was spent on.
  • File reports on time. The court order should specify what reports you are required to file. The first report is usually an inventory of the ward’s property. You then may have to file yearly accountings with the court detailing what you spent and received on behalf of the ward. Finally, after the ward dies or the guardianship ends, you will need to file a final accounting.
  • Consult the ward. As much as possible you should include the ward in your decision-making. Communicate what you are doing and try to determine what your ward would like done.
  • Don’t limit social interaction. Guardians should not limit a ward’s interaction with family and friends unless it would cause the ward substantial harm. Some states have laws in place requiring the guardian to allow the ward to communicate with loved ones. Social interaction is usually beneficial to an individual’s well-being and sense of self-worth. If the ward has to move, try to keep the ward near loved ones.

For a detailed guide from the Consumer Financial Protection Bureau on being a guardian, click here.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

How Current is Your Estate Plan?

How Current is Your Estate Plan? If “nothing has changed” in your life, then you shouldn’t need to update your will. However, estate planning is more than your will. The chances that “nothing” truly has changed after even a few years is unlikely.

Forbes’ recent article, “Old Estate Plans May Be Harmful To Your Wealth,” explains that if you haven’t updated your planning after the 2017 Tax Act, a more accurate comment would be to say that “everything” has changed. That legislation made significant changes by increasing the estate tax exemption, eliminating personal itemized deductions and many other details.

There could be another change in the state or federal tax or probate law.

On your end, you or an heir may experience marriage or divorce—or a death in the family or of a vital person named in documents. Maybe you moved to a new state or welcomed a new child or grandchild. Another change is a substantial change in economic circumstances, like a change in jobs or careers. You may now have new or worsening health issues. Finally, you may have second thoughts about a bequest, or there’s been a change in relationship with a fiduciary or beneficiary.

Don’t focus on a list of the changes that should trigger an update to your estate plan. Those types of changes are often obvious. It’s the less obvious changes that don’t make the lists and that you might not even consider as requiring you to update your planning and documents.

You might not even be aware of a major change in your state’s tax laws or whether it applies to your circumstances.

It’s best to meet with your estate planning attorney any time you believe something important has occurred, like one of the events listed above. However, regardless of having a particular reason, you should meet every few years.

The bigger and more complex your estate is, the more complex your family, the more often that should be. For many, meeting every year is very prudent, certainly every year or two makes sense.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

Reference: Forbes (September 27, 2019) “Old Estate Plans May Be Harmful To Your Wealth”

 

The 2020 Social Security Increase Will Be Smaller than 2019’s

The Social Security Administration has announced a 1.6 percent increase in benefits in 2020, nearly half of last year’s change. The small rise has advocates questioning whether the government is using the proper method to calculate the cost of living for older Americans and those with disabilities.

Cost-of-living increases are tied to the consumer price index, and a modest upturn in inflation rates and gas prices means Social Security recipients will get only a small boost in 2020. The 1.6 percent increase is lower than last year’s 2.8 percent rise and the 2 percent increase in 2018. The average monthly benefit of $1,479 in 2019 will go up by $24 a month to $1,503 a month for an individual beneficiary, or $288 yearly.

The cost-of-living change also affects the maximum amount of earnings subject to the Social Security tax, which will grow from $132,900 to $137,700.

For 2020, the monthly federal Supplemental Security Income (SSI) payment standard will be $783 for an individual and $1,175 for a couple.

The smaller increase may mean that additional income will be entirely eaten up by higher Medicare Part B premiums. The standard monthly premium for Medicare Part B enrollees is forecast to rise $8.80 a month to $144.30. According to USA Today, advocates are questioning the method used to calculate cost-of-living increases. The Bureau of Labor Statistics uses the Consumer Price Index for Urban Wage Earners and Clerical Workers to set the inflation rate. This method looks at prices for gasoline, electronics, and other items that younger workers rely on. The advocates suggest using a different index (the Consumer Price Index for Elderly) that puts greater emphasis on medical and housing expenses.

Most beneficiaries will be able to find out their cost-of-living adjustment online by logging on to my Social Security in December 2019. While you will still receive your increase notice by mail, in the future you will be able to choose whether to receive your notice online instead of on paper.

For more on the 2020 Social Security benefit levels, click here.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Probate, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.