Salt Lake City Estate Planning

Famous Painter Creates Estate Plan to Benefit Aspiring Artists

Famed painter Jasper Johns is making plans for his rural Connecticut estate to become an artists' retreat after he passes away, as reported by US News in “Jasper Johns to Leave Connecticut Estate for Artists Retreat.”

The 87-year-old painter, who has lived and worked in the town of Sharon for the last twenty years, received approval recently for his property to host as many as twenty-four artists at a time to live, share meals together and work on their craft.

In the small Connecticut town, some see his decision as a boost for the lively local arts scene,  since art studios are present in the community of 3,000 people where Johns is a towering, if seldom-seen, figure.

"I really think that's the best use of that property, because it extends his legacy," First Selectman Brent Colley said. "A lot of us never see him. He never comes out.  However, he employs a lot of people and he's been a great asset to the town."

Johns is thought of as a major influence on pop, minimalist and conceptual art through his work dealing with themes of perception and identity. His textured images of American flags became icons of modern art, and he was honored by President Obama with a Presidential Medal of Freedom in 2010.

The town planning commission approved the proposal this summer, after the artist’s representative asked for the exception to zoning rules now. This was because he knew that the town's position would help with his estate planning, according to the minutes from the planning commission’s hearing.

The estate plan details a design for a retreat, set up as a charitable or nonprofit organization, with twenty employees. The property is close to the town's main marketplace and consists of six parcels of land, including some with residences.

Planners said there’s no additional construction planned, although some barns may need to be converted to studios. In addition to the property, Johns plans to provide an endowment for the artist retreat.

Colley said it is an appropriate plan for the property that Johns has acquired and has steadily improved in recent years.

"He's done a nice job of renovating and renewing that whole portion of town," Colley said.

Reference: US News (September 20, 2017) “Jasper Johns to Leave Connecticut Estate for Artists Retreat”

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Court Decision Cautions Against Net Gifting

Even with a solid estate plan, fluctuating family relationships or unexpected illness or death can hamper an estate plan and result in undesirable transfer tax consequences, reports BNA Bloomberg in its recent article “Net Gifts: When Estate Planning Goes Wrong.”

In Estate of Sommers, the decedent made lifetime gifts to his three nieces by transferring artwork to an LLC and then membership interests to the nieces over a two-year period to take advantage of valuation discounts and annual exclusion amounts. The nieces signed an agreement stating that they’d be responsible for any gift taxes on the gifts of membership interests (otherwise known as a net gift).  The decedent then remarried his ex-wife and died five months later.

Before his death, the decedent started a lawsuit against his nieces arguing that the gifts were not completed gifts. After the court held that the decedent made completed gifts, the nieces paid the gift tax liability of $274,000. Because he gifted the membership interests within three years of his death, both the value of the membership interests and the $274,000 gift tax payment was included in the value of the decedent’s gross estate. But the executor of the decedent’s estate, the surviving spouse, claimed that the gift tax payment was deductible.

The court held that the gift tax payment wasn’t deductible because “an estate is entitled to deduct a claim under §2053(a)(3) only to the extent that the amount owed exceeds any right to reimbursement to which payment of the claim would give rise.” The court found that the estate would have had an enforceable right to reimbursement from the nieces, if they hadn’t paid the gift tax. The court found that the nieces served only as conduits, and the decedent was the ultimate gift tax payer. If not for the three-year claw back, the decedent would’ve withdrawn from his potential estate, the value of the taxable gifts and the amount of tax on the gifts. The gross-up rule is necessary to prevent such excess value (the gift tax on the net gift) from escaping, and, therefore, the decedent’s estate from circumventing, the transfer tax system.

Net gifting can be a very valuable and effective estate planning tool, if done correctly. Talk with your estate planning attorney to understand the potential for risks involved in making net gifts.

Reference: BNA Bloomberg (September 14, 2017) “Net Gifts: When Estate Planning Goes Wrong”

If you need help establishing your Estate Plan, give our office a call for a free consultation, 801-438-7120! 

Don’t Fumble Your Future

As the new NFL season gets into full swing, there will be plenty of fumbles across the league. With that in mind, twincities.com recently posted “Your Money: 4 financial “fumbles” to avoid,” spotlighting four financial “fumbles” to avoid.

No Game Plan. Pro football players and their coaches spend hours looking at tape of themselves and their opponents to prepare for game day. Reviewing past games lets them more effectively and efficiently prepare for the next Sunday. The same is true with financial planning: reviewing past performance of certain asset classes and indexes, lets you forecast potential returns for your investments. That can help to dictate an appropriate withdrawal rate that works with your time frame.

Too Many “Hail Marys.” A Hail Mary or the long pass at the end of the game for a score is thrilling, but its success rate is 50-50 at best. Think of a Hail Mary pass like pursuing the hot stock—it can be fun to watch it go up, but its consistency is all over the board. It’s not a strategy for every play, if you want to see long-term, sustained success.  A diversified portfolio should instead be thought of as a well-planned game plan to take you down the field to the end zone. You’ll mix up runs, short passes and a few long bombs in an attempt to outsmart the defense. Your portfolio should also have a mix of asset classes and risk factors to withstand any market volatility.

No Backup or Second-String Team. Every position on an NFL team has a backup, in case of injury or other circumstances. The same should hold true for your financial plan. While it may appear to be rock solid, can it stand a “sack” from another recession? Create a contingency plan for every piece of your financial picture. You should be just as confident in your contingency plan, as in your primary financial plan.

No Specialists on Your Team. There is a reason why NFL teams have 53-man rosters and are constantly on the lookout for specialized positions. A wide receiver has different skills than a defensive end or a safety, and a punter has different skills than a quarterback, but they’re all essential for success. With your finances, you should have specialist knowledge in every area: Social Security, investment management, financial planning, estate planning, insurance and more.

You also need a “coach,” i.e., an experienced estate planning attorney, to help coordinate all of these special areas into a cohesive game plan.

Reference: twincities.com (September 9, 2017) “Your Money: 4 financial “fumbles” to avoid”

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Have You Gotten Around to Making Your Will?

The passing of a loved one is often overwhelming enough, without the added stress of having to handle the financial turmoil that can follow after a death. According to a survey reported in the New Jersey Herald’s article, “Put your plans in writing,” just 42% of U.S. adults have estate planning documents, and for those with children younger than age 18, only 36% have their estate plans in place.

About 47% of those who responded to a survey from Caring.com, said they hadn't gotten around to it. That’s not too surprising, since people are often reluctant to deal with the idea of their own mortality, or they think they have a lot of time to address it before they die.

The first step to estate planning is to get some professional advice. You should hire an experienced estate attorney to assist with setting up a trust, wills, living wills, health care directives and powers of attorney.

One of the biggest mistakes that people can make is thinking they need to have a large estate or be ultra-wealthy to have an estate plan. No, everyone needs an estate plan. If you’re married with kids, you need a will, because without the appointment of a guardian, a judge will make the decision regarding who will care for your children. Surprisingly, relatives may fight over who should rear your children. It’s critical to have this spelled out in your will to keep peace in your family.

People die without a will all the time. Their assets are distributed via the intestacy laws of their state of residence. For example, if a person with a spouse and no children, grandparents or parents passes away, everything will go to the spouse. In some states, like New Jersey, when that couple has children, and  one parent dies, leaving a spouse and children who are also the children of the spouse, the spouse will get the first $50,000 plus one-half of the balance of the estate. The children would receive the other one-half of the balance divided equally among the siblings.

Some people decide to create their wills on the Internet, but an estate planning attorney can make certain that everything is legal and correct. Remember if you do it yourself online, you get what you pay for. You want a will that’s resilient and considers a wide variety of contingencies. Your estate plan should also be reviewed regularly—especially after a life-changing event, such as having a child, marriage, or divorce. New laws can affect your situation differently than others, so an experienced attorney is your best option.

Estate planning will ease the burden on the family you leave behind.

Reference: New Jersey Herald (September 8, 2017) “Put your plans in writing”

If you want to get your Will drafted, call our office for a free consultation, 801-438-7120!

High-Net-Worth Individuals Need Advisors Who Can Handle the Tough Stuff

People turn to financial advisors for help on how to invest their money, but for high-net-worth clients, wealth management is more than investing money. Those advisors who specialize in working with these types of clients must know how to handle issues that traditional brokers and financial advisors usually aren’t equipped to address.

Motley Fool’s recent article, “High-Net-Worth Wealth Management: 5 Tough Issues Most Advisors Can't Handle,” provides us with a look at issues that frequently arise for high-net-worth individuals and that an expert in wealth management must be comfortable addressing.

Insurance. Once a person has enough money, the greatest challenge is managing the risks that threaten to take it away. Traditional insurance products can only help high-net-worth individuals to a certain extent. That’s because the high policy limits required for true protection, often require customized underwriting from insurance companies. In addition, special kinds of insurance are necessary to provide full protection against the wide variety of risks that high-net-worth individuals can face.

Asset Protection. High-net-worth clients, like all of us, want to protect their assets from potential creditors and other claims.  However, for high-net-worth wealth management, there’s no need to make risky investments.  Therefore, threats such as litigation, theft, and damage are even more significant. This is particularly true for those in risky professions, like medical professionals. Creating creditor-protection trusts and understanding the protection bankruptcy and debtor-rights laws grant to high-net-worth individuals can ensure that they retain their wealth.

Estate Planning. With the estate tax exemption at about $5.5 million, the threat of estate taxation isn’t an issue for many wealthy individuals.  However, high-net-worth individuals still face the potential for estate tax rates of up to 40% on the federal level, plus some state estate and inheritance taxes. That’s where access to a qualified estate planning attorney comes into play.

Family Interpersonal Relationships. High-net-worth can create opportunities for discord and misbehavior that can threaten family relationships. Consulting with trained professionals allows wealth management advisors to play a deeper role in working with high-net-worth families. It enables them to become a type o family counselor to help create a unified vision of the strategic goals and what's necessary from each member of the family to make that vision a reality in the future.

High-net-worth individuals need an advisor who can give more than simple investment advice. He or she must be able to address these challenging issues.

Reference: Motley Fool (September 8, 2017) “High-Net-Worth Wealth Management: 5 Tough Issues Most Advisors Can't Handle”

If you want more information, please call our office for a free consultation. 8010-438-7120!

Make Your Philanthropic Efforts Count

Most family wealth is earned and lost in just three generations. One way to thwart this, is to engage the members of the younger generation in philanthropic efforts to prepare them for future financial responsibilities, while at the same time passing on your family values of charitable giving.

The Pacific Coast Business Times, in its recent article, “Involve your children in philanthropy,” notes that the best way to involve your children in philanthropic activities, is to start early. You should identify opportunities at every age to include them in your family’s giving and volunteer work.  Many younger families are already giving of their time and money, with 84% of millennials making a charitable donation and 70% volunteering their time in 2014.

Creating a more formal charitable giving plan helps emphasize the impact of giving and can create a culture of philanthropy that will carry on the family’s legacy. Start by laying the groundwork with these ideas:

Document the family’s giving history. This will lead to better engagement by the family of your philanthropic strategy and help to build interest for family causes.

Create a family mission statement. Developing family mission statements can be valuable. Work with your children to define the family’s mission and purpose for giving, and use it to outline the principles and behaviors that will guide your charitable giving now and in years to come.

Include everyone in philanthropic work. Start involving kids in volunteer work and decision making, as early as possible. Allow children to direct philanthropic funds. You can ask your kids to select a cause they’re passionate about and encourage them to research charitable organizations to develop a plan focused on how they will use donation dollars. Do research on charities and then, as a family, discuss a charity’s merits to decide whether or not to donate your funds.

There are many ways to give, from volunteering time, donating directly to a charitable organization, or using donor-advised funds. Partner with an experienced estate planning attorney to learn the benefits and limitations of each strategy. That will help you better focus your resources to drive your family’s efforts towards philanthropic causes and maximize the impact of your generosity.

Reference: Pacific Coast Business Times (September 8, 2017) “Involve your children in philanthropy”

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How Will You Fill the Gap in Medicare Coverage?

Many people believe that most of their health care costs will be covered by Medicare after they turn 65. Not so! Seniors are on the hook for a lot. Most likely will still have to pay some out-of-pocket costs. How much can you expect to pay for health care in retirement, and is there anything you can do to lower those costs?

Kiplinger’s recent article asks, “How Much Will You Spend on Health Care in Retirement?” According to the article, even though Medicare covers the majority of a person’s health care costs after they turn 65, there still may be a lot of out-of-pocket expenses. A new study by Fidelity Investments found that the average 65-year-old couple retiring this year will need $275,000 to pay for medical expenses during retirement. This includes Medicare premiums, co-payments and deductibles (or a policy to fill coverage gaps). They will also need Medicare Part D prescription-drug coverage, plus out-of-pocket drug costs over the next 20 years for the man and 22 years for the woman. That number doesn’t include the potential costs of long-term care.

Medicare premiums can be as much as several thousand dollars a year. Medicare Part A, which covers hospitalization, is free for most people.  However, you'll pay a monthly premium for Part B (doctor visits and outpatient care). Those who sign up for Medicare in 2017 will pay about $134 per month for Part B, while individuals who have had Medicare premiums deducted from their Social Security benefits in previous years pay less.

If your adjusted gross income plus tax-exempt interest income is more than $85,000 for singles or $170,000 for married people filing jointly, you'll have to pay even more. The monthly premiums can range from $187.50 to $428.60 per person per month in 2017.

Remember that, along with these numbers, Medicare will leave gaps. You will need to pay deductibles and co-payments for hospitalization, doctors' visits, procedures and other medical care. Medicare also doesn't cover prescription drugs. Some fill in these gaps with retiree health care coverage from a former employer. However, that is not that common today. Instead, you'll need to buy a Medigap policy to cover these out-of-pocket expenses, as well as a Part D prescription drug policy to cover drugs, or purchase a Medicare Advantage plan to pay both medical and drug expenses.

You can reduce these extra costs by implementing these strategies:

Shop for a Medigap policy, when you're first eligible. You have six months after signing up for Medicare Part B to choose any Medigap plan. Insurers can charge more or deny coverage because of preexisting conditions. Plans with the same letter provide the same coverage, but the price can vary significantly by insurer.

Select the best Part D policy. This can vary every year, because your prescriptions change, and insurers revise their coverage. You can change Part D prescription drug policies every year during open enrollment from October 15th to December 7th for coverage starting on January 1st.

Look at your Medicare Advantage plans every year. If you choose a Medicare Advantage plan, you can also shop for a policy every year during open enrollment. Use the Medicare Plan Finder to compare the cost for drugs and health care for plans in your area.

Medicare surcharges. Your Part B and Part D premiums will be higher if your income is higher (more than $85,000 if single or $170,000 if married filing jointly). The Social Security Administration uses your most recent tax return to figure the premium. However, if your income has dropped since that time because of certain life-changing situations, like divorce, death of a spouse, or retirement, then you can substitute your more recent income.

Use generics or cheaper treatments. With Part D prescription-drug coverage, you will still have some out-of-pocket costs for your medications. You could also pay thousands of dollars for your share of the cost of expensive specialty drugs. Ask your doctor if there are cheaper generic drugs, or if there are therapeutic alternatives to treat the same condition for less.  You should also check if you can save money by using a preferred pharmacy or a mail-order pharmacy.

Use your tax-free health savings account. You can't contribute to an HSA after you enroll in Medicare.  However, the money you’ve accumulated in the account can be withdrawn tax-free to pay medical expenses. After age 65, you can also use the money to pay premiums for Medicare Part B, Part D, and Medicare Advantage plans, but not for Medigap.

Reference: Kiplinger (September 20, 2017) “How Much Will You Spend on Health Care in Retirement?”

If you need have any additional questions about medicare or how to best cover yourself, please call our office for a free consultation, 801-438-7120!

Common Estate Planning Mistakes You Can Avoid

With no estate plan, you can leave your family to pay thousands of dollars in extra taxes or fighting bitterly with each other. Senior Homes’ recent article, “7 Common Mistakes to Avoid When Planning Your Estate,” shares some of the most common mistakes.

1. No estate plan. Everyone should have some type of estate plan, including a will and related documents to protect your spouse, children and assets. It’s common for families in crisis to only begin to scramble and create a plan when it’s too late. Make these decisions before there’s a crisis, when parents have capacity and when it's possible to act to accomplish their goals.
2. Failing to keep your will up-to-date. Many people “set it and forget it” when making an estate plan, but this is another common mistake. You should regularly review your estate plan, especially after major life events, such as divorce, adopting or having another child, or buying or selling real estate. Estate and tax laws change, but not as fast or as often as family dynamics.
3. Ignoring state taxes. If you move out-of-state, you need to consider your new state’s taxes. Although the federal estate tax exemption is $5.49 million, many states have their own estate and inheritance tax laws. Their exemptions are much lower than the federal amount, so you could be impacted.
4. Leaving everything to your spouse. Leaving everything to your spouse outright and relying on his or her word to take care of the children might be a mistake, especially if your spouse remarries. If that were to occur, your spouse’s new partner could grab a much larger share of your assets—leaving your children with less. You may want to create a trust as a solution.
5. Assuming your kids will all continue to get along. Family fighting can be worse, when there’s a death of a family member. Even if your family is getting along now, things can change. This is especially true when money is involved. If you don’t have a clear plan, your family could battle over control of assets. There might also be hard feelings over the way things were divided. A lack of guidance on family assets can lead to fighting.
6. No communication or a lack of specificity. Communication is critical, and you should make certain you’re as specific as possible—even about organ donation and burial or memorial services.
7. Identity theft. Unfortunately, schemers target older Americans, especially when they start losing their capabilities. Some even try and take advantage of the death of a family member, by reviewing obituaries for personal details to exploit.

Reference: Senior Homes (September 6, 2017) “7 Common Mistakes to Avoid When Planning Your Estate”

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Discussing Your Estate Plan with Your Family

Regardless of how we do as investors, savers, and planners, other people are nearly always impacted by our decisions and actions.

MarketWatch’s recent article, “How to talk to your family about your estate plan,” says that frequently those most affected are the ones about whom we care the most. Children, grandchildren, spouses and partners, perhaps even our own parents, all have an interest in our finances.

People are uncomfortable talking about financial matters, even with those loved ones and family members who have a legitimate right to know about it. Families will ask about what’s in a person’s will, who you want to make healthcare decisions if you’re unable, and what are your thoughts on end-of-life options and choices.

It’s hard to envision how you would actually sit down with your heirs and explain what’s contained in your will. If you have a “blended” household with multiple generations, you’ll need to attempt to peacefully negotiate the division of expenses and responsibilities.

What’s the secret to a successful family financial meeting?

Unfortunately, there are no magic answers to make this easy. However, you can move the ball by taking the time to consider what’s most important to you. Although they seem to be about money, many critical family conversations center upon about values. This makes it a bit easier, because it’s much easier to talk about “values” than to talk about money.

You’ll still need to think about the specific bequests in our wills, because you may have children and grandchildren with varying circumstances and stations in life. You also need to think about whether to make one-of-a-kind gifts to each child and grandchild, according to what you believe would be best—or try to be “fair” and give each person an equal share.

While it can be difficult, having conversations like these can be one of the best gifts you can give your family.

Reference: MarketWatch (September 9, 2017) “How to talk to your family about your estate plan”

If you need assistance with you Estate Plan, call our office for a free consultation, 801-438-7120!

Advice for Unpaid Family Caregivers

Many caregivers of elderly parents and loved ones need financial help. There’s the constant pressure of emotional and physical stress, but caregiving also can bring money issues. These can include things like paying for medical supplies and drugs that aren’t fully covered by insurance, transportation to doctor offices and therapy, home adaptations, home care and many other expenses. These expenses can destroy a caregiver’s budget.

It’s not surprising that many family caregivers wonder if they can get paid for taking care of their parent.

Next Avenue’s recent article asks “Can You Get Paid to Take Care of Your Mom?” The short answer? “It depends.” The reason it depends is because there are a variety of programs and resources that are eligible to caregivers based on eligibility requirements, as well as the state where you live, the age or condition of the senior for whom you’re caring, your relationship to that person, his or her income and assets, plus other criteria.

While none of the state and federal programs discussed below would replace a full-time salary with benefits, for some caregivers, the extra resources would be welcome.

1. Long-term care insurance. If your parent has long-term care insurance that provides for in-home care, it may allow a family member to be paid.
2. A private contract with a family member. Your parent or family member may have the resources to pay you if they choose. If so, a private contract or a personal care agreement may be the answer. However, this may cause family conflict and legal issues. Consult an elder law attorney to draft a contract that details your wages and your responsibilities. He or she will make sure that any effect on inheritances is noted. All interested parties, like siblings and other relatives, should also be informed and approve the arrangement in advance.
3. Consumer-directed Medicaid programs. Every state, except South Dakota, has Medicaid programs that allow an eligible senior to hire, fire, and train their home care aides. These programs are called “Cash and Counseling.” Every state has its eligibility requirements. Family members or friends can be hired, but only 12 states allow spouses to be paid. When the request is approved, the state Medicaid agency creates an individualized budget based on needs and available resources.
4. Paid family leave. The federal Family Medical Leave Act protects workers’ employment, when they take time off for the birth or adoption of a baby, or to care for a seriously ill family member. But it’s unpaid leave. A few states, like California, New Jersey, and Rhode Island, have programs that give employees the right to paid leave for these major life events. The states all have different payment schedules and eligibility requirements.
5. Caregivers of veterans. The U.S. Department of Veterans Affairs (VA) has several caregiver support programs. For primary caregivers of veterans injured in military conflicts after 9/11, there are monthly stipends, and other benefits to caregivers to include travel expenses, access to health care insurance, mental health services and 30 days of respite a year. Caregivers of other veterans, who require assistance and are housebound, may be eligible for the VA’s Aid and Attendance Pension Benefit. Some states also have programs for veterans.
6. Vouchers for employed caregivers. Hawaii became the first state to provide financial assistance to full-time employed caregivers of older adults this past summer. The Kupuna Caregivers Act (kupuna means “grandparent” or “elder” in Hawaiian) provides up to $70 per day in vouchers for eligible caregivers. The voucher can be used to pay for services available through one of Hawaii’s Aging and Disability Resource Centers. The services include adult day care, case management, home-delivered meals and transportation.
7. Tax credits. Twenty-three states have some type of tax credit for caregivers of dependent older adults. Tax credits can be deducted from their state tax bill, and sometimes a percentage of the amount on their federal tax return.

There are also other sources of support, like Supplemental Nutrition Assistance Program (SNAP) or Meals on Wheels to help provide food. There are other programs that pay for paratransit or homemaker services.

Finally, consider that caregiving that lasts for years presents financial challenges. You should have a comprehensive plan. Speak to an elder law attorney about the options for your situation.

Reference: Next Avenue (September 19, 2017) “Can You Get Paid to Take Care of Your Mom?”

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