Salt Lake City Estate Planning

ERs Help Fight Elder Abuse

Those subjected to emotional, physical, or financial abuse often are silent. That makes identifying victims and intervening, a real challenge for doctors and nurses, according to the USA Today’s recent article, “Elder abuse: ERs learn how to protect a vulnerable population.”

ER visits may be the only time that an elderly person leaves his or her home.  Therefore, ER staff  can be a first line of defense, remarked Tony Rosen, founder and lead investigator of the Vulnerable Elder Protection Team (VEPT). It is a program launched in April at the New York-Presbyterian Hospital/Weill Cornell Medical Center ER.

The most frequent types of elder abuse are emotional and financial.  However, when one form of abuse exists, the others are also present. A recent New York study found that as few as 1 in 24 cases of abuse against residents ages 60 and older were reported to authorities.

The VEPT program includes several Presbyterian Hospital emergency physicians. The three doctors and two social workers rotate being on call to respond to signs of elder abuse. They also have access to psychiatrists, attorneys, radiologists, geriatricians and security and patient-services personnel.

“We work at making awareness of elder abuse part of the culture in our emergency room by training the entire staff in how to recognize it,” said Rosen. It’s easy for the ER staff to alert the VEPT team and to begin an investigation, he said.

As part of the program, a doctor will interview the patient and conduct a thorough physical exam. They look for bruises, lacerations, abrasions, areas of pain and tenderness. More tests are ordered if the doctor suspects abuse. The team is trained to look for specific injuries, like radiographic images that show old and new fractures. This may suggest a pattern of multiple traumatic events, and specific types of fractures may indicate abuse,  such as mid-shaft fractures in the ulna, when a person holds his arm in front of his face for protection.

If signs of abuse are found, but the patient won’t cooperate in getting help, a psychiatrist is asked to judge the senior’s decision-making capacity. They offer resources, but can’t do much if the patient isn’t interested. Patients in immediate danger and who want help, or who don’t have capacity, may be admitted to the hospital and placed in the care of a geriatrician, until a solution is found. Adult Protective Services won’t get involved, until a patient has been discharged. Therefore, hospitalization can play a vital role in keeping older adults safe.

The team’s goal is to optimize acute care for these vulnerable victims and to ensure their safety.

Reference: USA Today (August 27, 2017) “Elder abuse: ERs learn how to protect a vulnerable population”

If you need help protecting those you love, give our office a call for a free consultation, 801-438-7120. 

Don’t Make These Major Retirement Mistakes

Retirees need to make their savings stretch as long as possible in retirement. Many folks are surprised by the severe effect that taxes can have on their cash flow. However, Kiplinger’s recent article, “4 Costly Government Penalties Retirees Should Avoid,” says that income taxes aren't the only way Uncle Sam can take a bite out of your life savings in retirement or limit your anticipated benefits. Consider these penalties and try to avoid them:

A Lifetime Reduction in Social Security Benefits for Early Claims. Your age when you begin collecting Social Security benefits has a major impact on the amount of money you’ll ultimately get from the program. You must know your full retirement age. For those born in 1960 or later, full retirement age is 67. You can start collecting Social Security when you turn 62, but if you do, you’ll get a permanent reduction. It could be as much as 25% of your benefit, if your full retirement age is 66.

Another penalty for taking Social Security early is when early claimers who are still working forfeit $1 in benefits for every $2 they make over the earnings limit (2017 is $16,920). When you're past full retirement age, the earnings test disappears, and you can make as much money as you want with no impact on benefits. Any benefits that you forfeited because earnings exceed the limits, aren’t gone forever: at full retirement age, the Social Security Administration recalculates your benefits going forward to take into account benefits lost to the test.

Failure to Take Required Minimum Distributions (RMDs). When you turn 70½, you are required to start withdrawing funds—even if you don’t need the money—from your traditional IRA and employer-sponsored retirement plans, like a 401(k). It’s not hard to figure out what you need to withdraw. Find the year-end balance of every traditional IRA you own, then add them together and divide the total by a factor provided by the IRS that's based on your age and life expectancy.

You typically must take your RMDs by December 31. However, first-timers can delay their initial payout until as late as April 1 of the next year. There’s a big penalty if you don't take your required distribution by the deadline.  It is equal to 50% of the amount you failed to withdraw. But the IRS frequently waives the penalty for taxpayers with a good excuse, like poor advice from a tax preparer or IRA sponsor, or falling seriously ill right before year-end when you’d planned to make the RMD.

Penalty for Not Signing Up for Medicare at the Right Time. If you already get Social Security benefits, you're automatically enrolled in Medicare. Your Medicare card will be mailed to you three months before your 65th birthday, and your coverage begins the first of the month after you turn age 65. Those not yet getting Social Security benefits must enroll in Medicare. You have a seven-month window to sign up that begins three months before the month you turn 65 and ending three months after your birthday month (the "initial enrollment period"). Sign up before your birthday month to get coverage as early as possible. If you miss your initial enrollment period, you’ll have to pay a late-enrollment penalty of 10% of the Part B premium for every year that you should’ve had coverage. This penalty applies for as long as you receive Medicare benefits. If you have coverage through an employer with 20 or more employees, you don’t have to sign up for Medicare when you turn 65. Your group policy will pay first, with Medicare paying second. Avoid a future penalty and enroll in Part B, within eight months of leaving your job.

The Death Tax. The federal estate tax will impact estates valued at $5.49 million in 2017. The assets left to a surviving spouse aren’t taxable. Along with federal estate taxes for the extremely wealthy, depending on where you live, you might also have state estate taxes for estates valued at only $1 million.

Reference: Kiplinger (July 2017) “4 Costly Government Penalties Retirees Should Avoid”

If you need help planning for retirement, give our office a call for a free consultation, 801-438-7120

Do I Sell and Downsize or Put My House in My Will?

Do you sell your home and downsize to leave more cash for the kids to divide?

Should you deed the house to your adult children now, to avoid fighting after you’re gone?

But then where do you live?

These questions are discussed in the recent New York Times article, “Estate Planning: Leaving a Home to Heirs While You’re Still Alive.” According to a report from the AARP Public Policy Institute and the National Conference of State Legislatures, many seniors want to stay in their homes and “age in place.” That means they may want to make a gift of their home, rather than selling and downsizing. 

A home is typically left to an heir in a will. However, there are also several trusts that can be created to minimize costs and delays that add up in the transfer of your assets after you pass. Although it’s difficult for everyone involved, you should address this issue now.

A will can be used to transfer a home.  However, if there are multiple heirs in different financial situations, fights can erupt over whether to keep or sell an inherited home. That’s where a trust might be a wise option. Creating a trust can reduce costs and be paid for by you upfront. It doesn’t have to go through probate, which makes it easier and quicker. To set up a trust, hire an experienced trust attorney and choose a trustee with good organizational and financial skills. This should be a person who’s comfortable with this responsibility. A trust can be irrevocable or revocable. In an irrevocable trust, the grantor surrenders the right to cancel the arrangement, but a revocable trust lets you appoint yourself trustee, so you can enjoy and control assets while you’re alive.

Aside from a trust, there are some tax and health care savings, if you transfer your property to your children while you’re still alive. It can help you qualify for Medicaid, which can provide long-term health and nursing care.  However, the transfer must be at least five years before your Medicaid application. You can also use a Medicaid Asset Protection Trust. Another type of trust to look into, if your home has a high value is a Qualified Personal Residence Trust. For estates that exceed the tax-exemption limit ($5.49 million in 2017), you can place a primary or secondary home in a Qualified Personal Residence Trust. This lets the homeowner give the property to beneficiaries at a fraction of its value, reducing the estate tax burden. You transfer your home to an irrevocable trust but retain an interest in the home for a period of years. The longer the trust term, the more beneficial the gift is to the beneficiaries.

Help your beneficiaries avoid unnecessary stress during a difficult time and consider what will happen to your home after you die. Consult with an estate planning attorney to see if leaving your children your house is the best choice.

Reference: The New York Times (August 25, 2017) “Estate Planning: Leaving a Home to Heirs While You’re Still Alive”

If you need help deciding the best way to handle your assets, call our office for a free consultation, 801-438-7120

Here's a Simple Estate Planning Checklist

Forbes’s recent article, “The Biggest Estate Planning Mistake People Make,” offers a nice checklist of the key documents to complete as part of your estate planning—perhaps even before drafting your will. The names of these documents vary from state-to-state, but the following are essential ones to ask an estate planning attorney to draft for you.

Advanced Health Care Directive or Medical Power of Attorney. With this document, you designate the individual (known as a “health care agent”) who you want to make decisions about your health care, if you become too ill or injured to make them for yourself.

Living Will. This details the kinds of medical care and treatment you want and don’t want to receive, if you’re close to death and there is no prospect of a recovery. Your health care agent will have the power to make sure your wishes are followed. A living will may be part of an Advanced Health Care Directive, but in some states, they’re two separate documents. A living will lets your family know exactly what you want to happen for your treatment.

Durable Power of Attorney. In the event you become incapacitated, your debts need to get paid, like the mortgage and the car loan. Your investments must also be managed. A Durable Power of Attorney names a person during your incapacity to manage your finances. He or she can write checks and speak with your financial companies.

A Durable Power of Attorney is different from a plain old Power of Attorney. The POA is no longer legally valid, when you become incapacitated. When that happens, you need a Durable Power of Attorney.  Ask your financial institutions and real estate title companies about their requirements for this, because some are rigid. They might want you to use theirs.

Revocable Living Trust. Some people with larger holdings elect to avoid problems with Powers of Attorney and create a revocable living trust. This acts like a super power of attorney. Banks must comply with their terms. With a revocable living trust, you transfer title of your assets to the trust and name yourself as trustee, so you can continue to manage and benefit from those assets as you did before they were in the trust. If you can’t act as the trustee because you become incapacitated, your designated successor trustee will manage the trust. This doesn’t eliminate the need for a Durable Power of Attorney—you’ll still need that document to identify the person you want to manage your retirement accounts, because those types of accounts cannot be transferred into a living trust.

HIPAA Release. This is the federal Health Insurance Portability and Accountability Act, which prohibits your doctors from discussing your medical condition and treatment with anyone, except those you name on your HIPAA form.  Only these individuals will have full access to your healthcare team.

Organ Donation Authorization. If you want to donate your organs when you die for the benefit of others, make your wishes known on your driver’s license or register with an organ bank or hospital. Let your family and your health care agent know about this choice.

Reference: Forbes (August 16, 2017) “The Biggest Estate Planning Mistake People Make”

If you would like help planning your Estate, please call our office for a free consultation 801-438-7120 

Should I Be Worried That Trump Will Ruin My Retirement Plans?

Many Americans, who are nearing retirement, are becoming worried about their finances with the Trump administration. They may be concerned about their portfolio with stocks going up. The new president also has some people worrying about Medicaid and Medicare, the value of their home, their pensions and their tax exposure.

The Jewish News of Northern California says in a recent article, “Retirement planning in the Trump era: same as it ever was,” that folks need to slow down. Here are some guidelines to help secure soon-to be retirees’ finances now and through future administrations.

Don’t make an investment or personal finance decision based on politics. Your financial plan should drive decisions based on your needs, objectives, risk tolerance and financial values. It is designed for the long term, not in response to a political event.

Diversify your portfolio. It is recommended that you combine different asset classes, because they gain or lose value at different times based on changing economic factors. You can live with losses offset by gains that produce a long-term increase in the value of a well-planned portfolio. Separate asset classes are stocks, bonds, real estate and commodities.

Plan the funding of any lump-sum purchases.  This could include a European vacation, a new car or a new home. You should look at how you’ll generate regular income. It’s okay to have some fun early in retirement, but keep in mind that you’ll need a sufficient and steady cash flow to replace your earned income.

Keep track of what you spend now and estimate your spending in retirement. Be prepared to reduce your lifestyle a bit, but you also may find yourself eliminating some expenses, which means more spendable income than you thought you’d have.

Analyze your retirement income and spending annually. Be sure that you’re on track and keep up with variables, such as market return and life expectancy.

Finally, if you’re married or have a life partner, be certain to have an up-to-date estate plan.

Reference: The Jewish News of Northern California (August 14, 2017) “Retirement planning in the Trump era: same as it ever was”

If you would like help planning for retirement, give our office a call for a free consultation, 801-438-7120.

Retirement Planning Takes More Than Guesswork

Even if you’ve saved, invested and paid down debts, if you’re using traditional strategies, you still might find yourself coming up short in retirement.

Kiplinger’s recent article, “1 Critical Mistake to Avoid When You Retire,” explains that preparing for your financial future means thinking about things that aren’t always within your control. While it’s not that difficult to choose your target retirement date or to budget what you’ll need for monthly income, projecting portfolio returns, life expectancy, taxes, inflation and health care needs requires some strategic guesswork. The thing that creates the most problems is the assumed average rate of return on your investments.

Some financial plans will create a false picture in relying on average rates of return. A solid plan needs to take into account market volatility. Your retirement strategy is most sensitive to market swings during the five years before and after your target retirement date. That’s because your savings are at their height and most susceptible to a market correction. If you take on losses near your target retirement date, it can have significant consequences. Even though people are aware of this fact, they will still rely on “age-appropriate” mixes of stocks and bonds to attempt to mitigate this risk.  However, this solution, which is designed to deliver an average target rate of return over time, may not be effective if the market doesn’t follow your projection and delivers an actual negative return when timing is crucial.

Market volatility can be a consequence based almost exclusively on timing. If you’re working, a market drop can be an issue, but you don’t need that money immediately. You have the time to ride it out, and your contributions will help your recovery. But when you’re close to or in retirement, it’s different. A market drop directly impacts your primary sources of income, and you’re not adding to those accounts. You’re using them to pay for living expenses.

A wise retirement plan needs to be designed to withstand volatility and to provide desired income when needed, regardless of market conditions. Mitigating this volatility risk is a must to keep your plan on track and on time.

There’s no need to exit the market entirely, but you should consider allocating some of your portfolio to assets that are linked less to the market, like bonds.

Look at the potential impact that a market reversal may have on your plan, and determine the rate of return your portfolio needs to provide sustainable income during retirement. That’ll help you see how much risk exposure is necessary to achieve that goal.

Reference: Kiplinger (August 2017) “1 Critical Mistake to Avoid When You Retire”

If you want help preparing for retirement, give our office a call for a Free Consultation, 801-438-7120 

Repeat After Me: Everyone Needs an Estate Plan

A will is not just for the rich.

The Huffington Post’s recent article confirms that “You Don’t Have to Own an Estate to Do Estate Planning!” As the article notes, estate planning concerns creating your directions, so your family understands what to do and when, if you’re not around to tell them.

More than money, an estate plan is about making sure your family is protected, making sure your wishes are executed and providing peace of mind for all.

The parts are very straightforward, but every plan is different. You need an advance directive that includes a living will. This document identifies the medical care you want to receive, if you are unable to communicate and a medical power of attorney, which designates an individual to coordinate your wishes. Failing to do this could mean your care could be left to the interpretation of healthcare professionals and family members. You should also draft a financial power of attorney.

Work with an experienced estate planning attorney to help you create a plan that protects you, while maximizing your investment potential and minimizing your tax liability.

Here's another way to be sure your intentions are known by your family—an ethical will. An ethical will is different than your living will. In fact, it’s not really a will, but a statement that expresses your love, your hopes, your dreams and your wishes. It may be a letter or letters to individual people you love. You can also create a video or a scrapbook.

An ethical will can contain your advice for the future. This can include direction and advice to guardians for the care of your minor children.

Repeat after me: estate planning isn’t just for the rich. It’s about protection for your loved ones and your legacy.

Reference: Huffington Post (August 7, 2017) “You Don’t Have to Own an Estate to Do Estate Planning!”

If you would like help drafting your Estate Plan, please give our office a call for a free consultation. 801-438-7120 

Do-It-Yourself Wills Have Big Drawbacks

Using online sites to craft estate-planning documents like wills, trusts and powers of attorney can be tempting for some who can’t or don’t care to spend the money for a qualified estate-planning attorney, or for those who need these kinds of paperwork settled quickly. However, there can be significant risks with DIY (Do-It-Yourself) estate planning, particularly if it’s a complex financial situation or the person’s situation requires legal assistance.

The Wall Street Journal reports in its recent story, “DIY Estate Planning Has Its Risks,” that DIY estate planning may work okay for those with uncomplicated estates and who don’t need any trusts or tax planning.  However, it depends on what you would call “uncomplicated.”

Those with significant and complicated assets or complex family situations (like blended families) need more-sophisticated advice from a qualified estate planning attorney than what an online site can provide. Trusts, in particular, should be left to an estate-planning attorney.

Much depends on what you’re trying to accomplish and your business and legal knowledge level. Even for an experienced businessman, although the legal terminology might not be confusing, a review by an estate planning attorney would be a good idea.

Are you comfortable knowing that you could be missing something? Many do-it-yourselfers overlook simple and seemingly small things, such as failing to designate a contingent executor or beneficiary. These things become problems, if they’re not addressed. The money you spend on an attorney is for his or her expertise and knowing that you’re not overlooking anything.

You’ve probably heard the saying, “You don’t know what you don’t know.” Unless you’re a legal professional practicing in this discipline, there will be many nuances and state-specific issues that an experienced estate-planning attorney knows that won’t be part of a generic online program. It can be hard to get comprehensive advice online and apply it to your specific circumstances, such as tax considerations and strategies to avoid probate.

A lay person is more likely than an experienced lawyer to make a mistake in drafting a will, a trust, or power of attorney form. This makes a DIY estate document more susceptible to a challenge by another party. An experienced estate planning attorney will help you navigate more-complex and nuanced issues. He or she will help you to create a comprehensive plan tailored to your needs.

A do-it-yourself will definitely isn’t for everyone.

Reference: The Wall Street Journal (August 6, 2017) “DIY Estate Planning Has Its Risks”

If you would like help drafting your Estate plan, give our office a call for a free consultation, 801-438-7120. 

A Guide to Charitable Giving with Potential Tax Reform Looming

 

There are many reasons that motivate charitable giving. They include a moral obligation, religious tithing, a desire to improve the world, or to create a legacy. One other factor is the tax benefits for giving. This may soon change, if Congress is successful with tax reform legislation.

While few people donate just for the tax breaks and are unlikely to stop giving altogether, the Congressional Budget Office and other analysts say tax incentives increase how much you donate, both in life or at death.

CNN Money recently reported in the story, “How tax reform could hit charitable giving,” that Republicans are proposing to reduce or eliminate key tax breaks for giving, which some note has worried charitable organizations.

Republicans have proposed to nearly double the standard deduction, lower income tax rates and repeal the estate tax. Most believe the charitable deduction would remain, but an increase in the standard deduction would result in fewer people itemizing deductions and being able to claim the break. Lowering tax rates also would make the deduction less worthwhile for those who still take it.

The double impact of doubling the standard deduction and decreasing the highest tax bracket to 35% from 39.6% could reduce giving by between $5 billion and $13 billion a year, or up to 4.6%, according to research by Indiana University.

An increase in the standard deduction would have the greatest negative impact because it would reduce those who itemize to just 5% of filers, compared to about 30% currently. This is because the main reason to itemize, is when your deductions are more than the standard deduction.

The 25% who used to itemize will probably give, but maybe less.

Many charity groups have asked Congress to make the charitable deduction "universal," so that everyone can take it even if they don’t itemize. Lawmakers say they are considering this, but a universal deduction would cost the federal government between $191 billion and $515 billion in lost revenue over ten years.

Reference: CNN Money (August 6, 2017) “How tax reform could hit charitable giving”

If you would like help with you Charitable giving taxes, give our office a call for a free consultation, 801-438-7120 

Facts On New Jersey’s Inheritance Tax

New Jersey is one of the few states that still imposes an inheritance tax. In that state, the inheritance tax isn’t based on the size of the estate. It depends on who receives the estate, says NJ.com in its recent post, “Will domestic partner owe inheritance taxes?”

In the Garden State, there are different classes of beneficiaries. Each class is given different treatment for inheritance tax purposes.

First, there’s no inheritance tax imposed on transfers to Class 'A' beneficiaries. This group includes a parent, grandparent, spouse, child or step-child.

Because of the New Jersey Domestic Partnership Act that was enacted in 2003, domestic partners are also now included as Class 'A' beneficiaries who are exempt from inheritance tax (for any partners who die on or after July 10, 2004).

The Domestic Partnership Act also allows same sex couples to register as domestic partners in New Jersey.

The Act also lets opposite sex couples who are at least 62 years of age to register as domestic partners. What is required for this registration is meeting the established legal requirements and having a local registrar issue what is called a “Certificate of Domestic Partnership.”

This inheritance tax exemption works, even if the domestic partnership was entered in another state or DC.

Documentation of the domestic partnership is important to avoid the inheritance tax because common law marriage is not recognized in the state.

Under the laws of New Jersey, it can be an unwelcome surprise to the survivor of an unmarried couple in a long-term relationship, if they didn’t qualify or register as a domestic partner. The bequest that he or she receives from their partner, will then be subject to an inheritance tax at a rate of 15%.

Reference: NJ.com (August 28, 2017) “Will domestic partner owe inheritance taxes?”

If you want  help with your inheritance taxes, give our office a call for a free consultation, 801-438-7120