Salt Lake City Estate Planning

Elder Financial Exploitation Comes in Many Forms

It is estimated that seniors who’ve been scammed have lost an average of $430. The national overall total is more than $9.5 billion. Law enforcement and eldercare agencies say financial scams targeting the elderly have become so common, they’re now “the crime of the 21st century.”

The Dayton Daily News reports in its recent article, “Phone scams of elderly ramp up for holidays,” that the ways elder consumers can fall victim to financial exploitation may come in many forms.

Some research indicates that seniors make twice as many purchases over the phone than the national average. As a result, it’s a very common practice to target the elderly in telemarketing fraud.

New widows or widowers who have recently assumed the role of managing their finances, may be more susceptible to being targeted by a scamming telemarketer.

Maggie Flowers from the National Council on Aging says, “Scam artists know that many older adults have fixed incomes, which may make them more susceptible to fraud, because there may be an openness to learn about ways to make money and pay their bills.”

Financially secure elders are also at risk for fraud, because criminals may presume that years of saving could mean a healthy checking account. Older adults who are socially isolated or who are unaware of a decline in cognition may also be at increased risk for financial exploitation. Older adults who get multiple daily telemarketing calls are likely to experience three times as much financial loss, as a person who receives an occasional telemarketing call.

The FBI says elder victims of scams often don’t report telemarketing fraud because these victims feel shame for being scammed. An elder may also not care to talk about a fraudulent act because they think their family may act aggressively and make the elder feel that their independence may be threatened.

To help minimize the risk for fraud, remember the adage that if it sounds too good to be true, it probably is. Don’t share information that could be used to access to financial information over the phone, and speak with an elder law attorney to learn about the most effective practices for protection from potential scams.

Reference: Dayton Daily News (November 27, 2017) “Phone scams of elderly ramp up for holidays”

If you would like more information please call our office for a free consultation 801.438.7120!

 

How to Tackle RMDs in Your IRA

 

RMD season is in full swing, with the Dec. 31 deadline approaching for those who are 70½ and have IRA money that they have to withdraw or else face the 50% IRS penalty.

Kiplinger’s recent article, “3 Tax-Planning Ideas to Help Take the Bite Out of RMDs,” says that before making that withdrawal, review these three tax-planning possibilities:

1. Gifting the RMDs to a qualified charity. If you’re over age 70½, a RMD isn’t counted as taxable income for federal income tax purposes, if it’s paid directly to a qualified charity. That’s referred to as a qualified charitable distribution (QCD). Currently, the limit is $100,000 per taxpayer annually.

This may be a big help to those who want to keep their adjusted gross incomes (AGIs) lower, because the withdrawal is not counted toward their AGI. That’s important because AGI impacts your ability to take itemized deductions, eligibility for Roth IRA contributions and taxes on Social Security, as well as Medicare premiums and more. IRA owners with pretax contributions receive the QCD treatment, but the non-deductible contributions aren’t eligible for the QCD. Optimally, the charity should receive the cash by Dec. 31.

2. Qualified Longevity Annuity Contracts. Buying a QLAC in an IRA means that money used to purchase the annuity is excluded from the RMD calculation until age 85. Therefore, if an IRA owner has total assets of $500,000 and buys a QLAC for the maximum $125,000, that QLAC is excluded from the RMD calculation.

In that example, the RMD calculation is based on $375,000, not on the full value of the IRA at $500K. Using the Uniform Lifetime Table, the RMD for a 70 ½-year-old with a $500,000 IRA is $18,248, vs. $13,686 for the IRA with the QLAC. That’s an RMD savings of about $5K.

Thus, with this strategy you’re putting off paying income tax on a portion of your IRA money. Though the return rates on QLACs are low right now, this strategy may make sense as part of a diversified portfolio.

3. Use IRA RMDs to buy life insurance. If you don’t have a current need for an IRA RMD, rather than reinvesting the withdrawal, you may think about expanding the distribution for your heirs by buying a life insurance policy.

These three ideas can help reduce the burden of required minimum distributions.

Reference: Kiplinger (November 2017) “3 Tax-Planning Ideas to Help Take the Bite Out of RMDs”

If you would like more information, please give our office a call for a free consultation 801.438.7120! 

Managing the Many Moving Parts of Retirement

There are a LOT of moving parts when it comes to transitioning into retirement. That includes plenty of key decisions—many of which don’t have easy answers. Kiplinger’s June article, “How to Generate Income in Retirement” says one of the most critical issues in transitioning to retirement is income planning. You’ll need to balance investment risk, longevity, and your lifestyle, which is not so simple

Having a budget in place is the foundation of retirement planning. Start by determining your expenses, and then make some modifications by considering these retirement-specific issues:

• Lifestyle plans. Will you travel extensively or settle down in a less expensive community?
• Life expectancy. Today, the average 65-year-old will live almost 20 years, but that’s an average.
• Health care. There’s more to it than just paying Medicare premiums. Don’t forget about long-term care, prescription drugs, and other out-of-pocket expenses. These all need to be in your budget.
• You’ll still be filing a return, so plan ahead.
• It will impact your normal, everyday expenses, and your dollar may not stretch as far year after year.

Once you have the estimates based on your own lifestyle costs and what may happen, start strategizing for your income. First, look at your income sources. Most retirees get their incomes from a combination of the following:

• Social Security benefits;
• Employer pension plans or annuities;
• Qualified retirement accounts and other financial investments;
• Income-generating investments like property or a privately held business; and
• A part-time job, if necessary.

Some income sources are static, while others are discretionary. Consider how your “guaranteed” or static income sources relate to your budget. Will it work or will you need to supplement them with money from your investments?

That is the tough question for retirees and their financial assets. You want to generate income for as long as possible, but you also want to know that your savings are secure. To balance these competing priorities, you may need to assume more investment risk than you anticipated.

If your investments are growing at a low but steady rate that keeps up with inflation, you won’t have fluctuating returns, but you’ll be losing money every year with withdrawals. You could outlive your assets. If you assume more investment risk, you’re more likely to achieve higher long-term growth, and you’re less likely to outlive your savings. But that means you also have higher investment account volatility and a greater chance of losing principal in down markets.

The best thing may be a diversified approach that uses investments suited for an individual’s needs. This depends on a number of financial and personal factors, such as the degree to which you’ll need to rely on your investment accounts for income; the stability of your other income sources; and your lifestyle and anticipated longevity.

Reference: Kiplinger (June 2017) “How to Generate Income in Retirement” 

If you would like help planning for your retirement, please give us a call for a free consultation at: 801-438-7120 

Is My Utah Trust Valid in Wyoming and Arizona?

Generally speaking, trusts are valid across the country. That means the trust beneficiaries can be located in any state or move to any state, as can the trustee.

In fact, a recent nj.com article addresses this very matter, in “Is a trust valid in all states?” According to the article, were there an issue that led to litigation, the litigation would be in the state identified in the trust.

Your estate planning attorney will have included a clause along the lines of "Governing law: This agreement and the trusts established hereunder shall be governed by the laws of the State of Utah."

Likewise, the trust will be taxed pursuant to the laws of the governing state.

Most trusts won’t wind up in a legal fight over their terms or the trustee’s actions, and the trustees are rarely required to appear in court in the home state.

There are some exceptions, such as in the event of a death of the trustee, the trustee resigns, or for whatever reason stops acting as the trustee, and there’s no successor trustee named in the trust agreement. In those situations, a legal action needs to be brought in the home state for the appointment of a successor trustee.

If for any reason there was a need to amend the terms of the trust agreement after the trust maker’s incapacity or death, then such a proceeding would need to be initiated in the state governing the trust agreement.

Some attorneys will add a clause to trust agreements that stipulates that the trustee has the authority to apply to transfer the trust to another estate, if the trustee relocates and if in his or her opinion, the laws of the new state are more favorable for the purposes of the trust.

Reference: nj.com (May 19, 2017) “Is a trust valid in all states?”

Moving to Utah? Give us a call at 801-438-7120 for a free review of your current estate plan to make sure it conforms to all of Utah's Estate Planning laws. 

 

Reasons for Going “Offshore” With Your Accounts

If you're not running for president, and don't have to worry about public relations, what are the legitimate reasons for moving money offshore?

Offshore accounts have been in the news recently and not without reason. For one thing, the IRS has been gunning for foreign accounts for some time. It just doesn’t like them.

Likely, you have seen a discussion (or two… or three) of the topic in connection with Mitt Romney and his use of such accounts. The truth is that such accounts are not all illegal or unpatriotic, and indeed, might just be a good idea.

If you’re interested, there are a few ideas to be gleaned from a recent article through SmartMoney regarding offshore accounts. Is the real reason tax minimization? Not always. The article suggests that taxes truly aren’t the sole motivation. Although it should be said that there are advantages, even though the U.S. government still thinks it’s owed a piece on everything you own internationally.

For one thing, an offshore account has a measure of “jurisdictional safety,” or more simply put, the U.S. courts have a harder time seizing your assets to satisfy litigation against you. Whatever the reason, it’s a growing trend.

One more offshore and growing trend: expatriation. As pointed out in a recent Forbes article, the rate of expatriation has soared 16% in 2011 over 2010. In many ways, the use of offshore accounts and some form of expatriation work together. One thing they do share is that neither is easy and both involve further layers of taxation (like the government would allow such an easy out).

If it is something worth thinking about – say if there are foreign and golden sands in your retirement future - it’s worth planning now, especially in light of global politics.

Reference: SmartMoney (February 13, 2012) “The Real Reasons the Rich Are Moving Cash to the Caymans”; and

                Forbes (February 14, 2012) “Celebrity Leavings: Bidding Stars Adieu” 

Please contact us today to discuss how to best manage your assets and investments.

 

 

Appropriate Estate Planning For A Globalized World

"Do you own a vacation home in Mexico? Have a bank account in Hong Kong? Has your spouse retained Canadian citizenship? Are you a long-term U.S. resident who was born in the U.K.? Is your brother-in-law, who is a citizen and resident of Ireland, the successor trustee of your revocable trust?

Each of these scenarios raises complex tax issues that, without proper planning, could easily have disastrous and costly consequences."

-From SmartBusiness (June 1, 2011) “Tips for estate planning and tax law compliance in a global    economy”

The fact is that we live in a globalized world: technology and commerce allow us to move about as we please, even across several continents. But remember that technology and commerce do not eliminate the legal borders of nations. Even if your life transcends those borders, your legal status, your tax obligations, and your estate do not. Settling estates, trusts, and the other related taxes can become an expensive headache if you and your family are stretched across the globe.

Last week, SmartBusiness issued a short list of common problems “global citizens” may encounter. For example, it has become increasingly common for a U.S. citizen to own a house in Mexico, but to do so may have involved a “fideicomiso”, which the IRS considers a trust subject to all foreign trust reporting requirements. So, if you purchased a condo in Cancun, you must file both IRS Forms 3520 and 3520-A annually or be subject to significant civil penalties. To make matters worse, after March 18, 2010, if you actually use the condo or let a relative use the condo, the fair rental value for the period of use is subject to U.S. income tax.

What if your spouse is not a U.S. citizen? Spouses are generally able to transfer assets to each other, both during lifetime and at death, without tax consequences. But if our spouse is not a U.S. citizen, things get a little more complicated. You may want to consult a qualified estate planning attorney to avoid unexpected (and unnecessary) gift and estate taxes.

If your estate and your life are spread across the globe then you need to account for some complex issues in your tax and estate planning. For more tips about how to stay out of the IRS’s crosshairs, read the information on the estate tax planning section of our website. 

Set Up Your Business To Maximize Your Mobility

 "With today's tablet technology and smartphones you can be anywhere…You don't have to be in a corporate office."

-Reuters.com (May 4, 2011) “Winnebagos and Sailboats: Entrepreneurs Going Mobile”

The modern office runs on technology, and so too does the modern business, large and small. For the capable entrepreneur, as Reuters reports, mobile technology may even offer the means for a mobile workplace.

“Telecommuting” has been around for awhile, though not always favorably (especially by employers). As the internet and mobile devices continue to shrink the globe, however, the process has become a snap and telecommuting has become a more acceptable and more popular way to work. With mobile technology, you can do your work at home, and even run your end of a business there… but why not jump in the Winnebago or the sailboat instead?

That’s the decision many have made already, and an increasing number of people are traveling for leisure even as they work for their income. "With today's tablet technology and smartphones you can be anywhere…You don't have to be in a corporate office" says Charles Grantham social scientist and co-founder of the Work Design Collaborative, who also estimates that more than 15 percent of knowledge workers engage in some form of mobile office behavior. It may depend on your industry, of course, but many fields simply no longer require a physical presence.

This fact is especially meaningful for future and current retirees. Indeed, the trend is for an increasing number of retirees to remain on as consultants in their previous industry or to start their own business with the skills and knowledge they already possess. If it’s right for you, consider taking your work on the road … or the seas … and keep the adventure in your retirement even as you continue working. For help setting up a business model that allows you the freedom to manage your business where and how you want, contact an experienced business attorney.