Estate Planning

Joan Rivers’ Dream Hollywood Funeral – Is It Tax Deductible?

Published on: September 23, 2014 | By McCulloch & Miller, PLLC

On September 4, 2014, comedy icon Joan Rivers passed away. It's no secret that Rivers hoped for a funeral that rivaled her lifestyle: big and over the top.

Craft services. Paparazzi. Meryl Streep crying in five different accents. These are just a few of the wishes the late Joan Rivers had for her Hollywood funeral. Those arrangements, Forbes reports–Meryl Streep notwithstanding–would be easy to arrange with the late Joan Rivers’ money. The article is titled"Saying Goodbye To Joan Rivers: The Bigger The Funeral, The Bigger The Tax Deduction?"

Rivers' income from book royalties, appearance fees and salary at E! Television, plus sales of her QVC merchandise may have exceeded $1 billion. So, Joan could afford the big farewell.

Plan Now for the “What Ifs” of Life in Houston

Published on: September 16, 2014 | By McCulloch & Miller, PLLC

The most important thing for any patient with a long-term illness is to focus on his overall health and mental outlook. Having financial plans in place allows a patient to set other worries aside.

How do you plan for future illnesses or tragedies? The "what ifs" of life are all too real, so get your financial plans in place ahead of time.

Life Insurance is extremely important if you have young children who depend on your income. A recent Time article, titled "When Tragedy Strikes a Young Family," suggests a 20- to 30-year level term policy as a good start to help support your family through the children’s school years. Another often overlooked part of this type of planning is Disability Insurance. As many people have discovered, being unable to go to work due to an injury or sickness can be more financially catastrophic than death. Expenses typically increase with treatment and recovery, but your income stops. A disability policy either through your employer or through a private insurer can be a real wise move and offers a good deal of protection—it provides a portion of your income while you are unable to work.

Houston Boomers – Beware of These Estate Planning Blunders

Published on: September 12, 2014 | By McCulloch & Miller, PLLC

David Cutner, partner at Lamson & Cutner, attorneys for the elderly and disabled offered the following tips for both estate planning and long-term care for boomers.

A recent Fox Business article reported that the majority of seniors are completely in the dark on one of the biggest financial risks they are facing. The article, titled "Estate Planning Mistakes Every Boomer Should Avoid," sheds some light on the catastrophic costs of long-term care.

According to the U.S. Department of Health, 70% of the U.S. population over age 65 will require long-term care, and over 40% will need nursing home care for some period of time. Most people do not have insurance coverage for this risk and believe inaccurately that Medicare covers their long-term care. That is just not the case, and without planning, if care is needed, life savings are quickly wiped out. Fortunately, there are solutions that will protect an individual's assets and income, and at the same allow access to Medicaid benefits. An experienced elder law attorney will have the knowledge and background to provide you with needed advice and the skills to design a strategy that will achieve your goals. A well-drafted estate plan is a wise investment to ensure that your assets are passed to your beneficiaries efficiently—in a manner that avoids conflicts among your heirs and that minimizes costs.

Partial Roth IRA Conversions May Reduce Tax Impact for Houston Investors

Published on: September 8, 2014 | By McCulloch & Miller, PLLC

Today, ordinary income plus various other taxes could boost the effective tax rate on those second-level RMDs well over 40%. Who knows what tax rates might be in effect when current clients eventually pass their IRAs to future generations?

Some individuals choose to have partial Roth IRA conversions so they remain in their current income tax bracket and decrease other taxes and charges, according to a recent article in Financial Planning titled "Estate Planning: Smart Roth Conversion Trick." Along with a Medicare surtax and deduction phase-outs, Medicare Part B premiums are also part of the mix.

Medicare enrollees typically pay about $105 monthly for Medicare Part B. This covers doctor bills and some other medical expenses. However, seniors who have a modified adjusted gross income (MAGI) above $85,000 (or $170,000 on joint returns) will pay anywhere from roughly $145 to $335 a month for that same coverage. This is because Roth IRA conversions increase an individual's MAGI. The original article advises those in this situation to take an annual series of partial conversions now to thereby limit future taxes, as well as “stealth” taxes like extra Part B premiums.

Estate Planning Must-Dos For Houston College Students

Published on: September 2, 2014 | By McCulloch & Miller, PLLC

After traveling to Mexico for spring break, Alex developed a severe intestinal bug that landed him in the college infirmary. Franc rushed to visit him there, only to find that doctors refused to discuss his son’s condition, citing privacy concerns.

If you have a college-aged child, you may need to get their estate planning started sooner than you think.

Consider these two fundamental estate planning documents – the durable power of attorney and the health care proxy. Even though they are usually thought of as only for older adults and seniors, younger people need them just as much. If a young adult does not have these, typically parents will not have the authority to make health care decisions or manage money for their kids after they are 18. It does not matter if they pay their college tuition, include them on their health insurance, and claim them as dependents on their taxes. In fact, without these fundamental documents, parents might need to seek court approval to act on behalf of their young adult children in the event the children are in an accident and become disabled.

Houston Estate Planning Step 1: Identify Your Assets

Published on: August 25, 2014 | By McCulloch & Miller, PLLC

Your first step? Take stock of all your assets. These include your investments, retirement accounts, insurance policies, real estate and any business interests.

According to CNN Money's "Identifying your assets" (i.e., part of its Money Essentials Series), a good first step for estate planning is to review and inventory all of your assets. This includes your investments, pensions, retirement accounts, life insurance policies, real estate, and businesses. While you are at it, be sure to categorize your important papers, like birth and marriage certificates, Social Security cards, insurance policy numbers and current statements, and mortgage information, along with updated contact information for each.

The second step is to determine what you want to accomplish with those assets—do you want to pass them to your children, set up a trust for a favorite charity, or a combination of these? Maybe you want to go in a different direction all together.

We Like the Idea of a Purposeful Life in Houston

Published on: August 20, 2014 | By McCulloch & Miller, PLLC

As we age, we begin to reflect on where we've been and what we've accomplished. Do we leave an imprint on our family's lives? Do we live life to the fullest? What is our purpose in life?

Results of several studies indicate that a sense of living a purposeful life has a profound effect on our well-being and our life span.

A recent New York Times post, titled "Living on Purpose," by Paula Span highlights a study that noted those older adults claiming to pursue high purpose lives may delay the onset of Alzheimer's. Also, Span noted that studies drew a correlation between individuals living purposeful lives were less likely to develop disabilities and less likely to die earlier than those who defined their lives as low purpose.

Beneficiary Designations: Do Houston Families Update Key Documents?

Published on: August 14, 2014 | By McCulloch & Miller, PLLC

You may have made a giant estate planning mistake without even knowing it — forgetting to update the names of your beneficiaries for your employer-sponsored retirement plans, IRAs, life insurance policies, mutual funds, bank accounts, brokerage accounts, annuities and 529 college savings plans.

The recent MarketWatch article, titled “Don’t make the No. 1 estate-planning goof,” outlines several reasons for updating your beneficiary designations. Here are a few:

A change of jobs. A job change can mean that you will need to roll over your retirement plan. If this happens, beware! Moving money from your former employer’s retirement plan into your new one or into an IRA could eliminate your beneficiaries’ claims to those assets. You should make sure you have them as beneficiaries on the new account, too.

If You Can Dream It, You Can Do It in Houston…Unless the Trustee Says No

Published on: August 8, 2014 | By McCulloch & Miller, PLLC

Your plan is only as good as the people who implement it. When they aren’t competent, don’t pay attention to details, or decide to pursue their own interests, disaster can ensue. The latest case involves the Walt Disney estate.

"If you can dream it, you can do it." Walt Disney shared great inspiration with the world, and no doubt with his own family. But ever since Disney passed away in 1966, problems with his estate plan have continued to mount.

At issue is a trust he left for his grandchildren. The trust itself is fairly standard in that trust principal was to be distributed to the grandchildren in stages. For one grandchild, everything went according to plan. However, for the other two, problems have arisen.

Houston Heirs vs. Credit Card Debt: Who Gets Paid First?

Published on: August 5, 2014 | By McCulloch & Miller, PLLC

When people die, their assets (cash, real property, investments, savings, car and so on) become the property of their estates. And each estate is obliged to pay all debts, costs, taxes and other liabilities due before it distributes what's left over, according to the deceased's wishes, to the beneficiary or beneficiaries.

Credit card debt is no stranger to the American family. In fact, it's no longer surprising to find out that someone has more credit card debt than assets. But how does that impact one's estate? Unfortunately, credit card debt does not automatically disappear when the debtor passes away. It still needs to be paid by the estate if possible.

The Deseret News discusses the different possibilities in a story titled “What Happens to Credit Card Debt When Someone Dies?” Basically, any credit card debt will have to be paid out of any assets the estate has. The debt must be paid before any heirs can inherit. The good news is that in most cases no one will inherit the debt. If there are not enough assets in the estate to pay the debt, then in essence the debt ceases to exist. However, there are some exceptions. In community property states, a surviving spouse will be responsible for any unpaid credit card debt. A joint owner of the credit card account would also still be responsible for paying off any remaining debt in the account.