Have a plan; either you decide or someone else does.
Year-end is a great time to evaluate your estate planning goals! This timely topic was the theme of a recent article in the Pittsburgh Post Gazette titled "Holiday season is the best time to update your estate planning."
Here are some questions you ought to ask yourself as 2015 draws near:
Leave it to Beaver? Or do you prefer to leave your estate to someone else? Today’s families are a lot different than Ward and June Cleaver. There are more families today with non-traditional situations than ever before. This makes financial and estate planning all the more important.
If your family looks nothing like the family of Ward and June Cleaver, you are not alone. Families today are very different compared to the days of Leave It to Beaver. Our so-called modern families leave much to consider when it comes to financial and estate planning.
A recent article in The Patriot Ledger, titled "Estate planning for non-traditional relationships," takes a practical look at a common personal, financial and legal challenge.
“Why do we care about these perpetual trusts?” Mr. Sitkoff said. “Because there’s a lot of money in them. Billions of dollars is pouring into these jurisdictions.”
Perpetual trusts: good or bad? The principle of this tool is up for debate.
Perpetual trusts allow trust creators to maintain some control after they pass, and help protect fortunes from taxes and creditors. However, people who set up these perpetual trusts in states where they’re legal could have some headaches as lawsuits brought in a state where the trusts are prohibited could mean the out-of-state assets could be counted in any settlement.
These three questions merely scratch the surface of other factors that may need to be considered. Keep in mind that your estate at age 45 is likely very different from the one you’ll have at age 65 and 85 — your accounts change, you spend/inherit assets, and you gain/lose family members. The more complex your situation, the more you’ll benefit from working with a skilled financial adviser, tax specialist, and estate attorney.
If you are considering a Roth IRA, ask yourself these three questions:
1. Will your Roth outlive you? In estate planning, the top two reasons for Roth conversions are to bequeath tax-free assets and to reduce your taxable estate. It’s critical to project your spending lifestyle relative to your net worth to understand how your assets may be used in retirement. This allows you to see what assets are likely to be part of your remaining estate.
Through a series of legal maneuvers and Iowa's then-blind eye toward financial elder abuse, his caregiver betrayed the World War II Navy veteran's trust and drained his savings over a number of years, according to friends and court documents.
According to an article reported in The Des Moines Register, titled "Caregiver's $700K theft shakes elder advocates," the cost of financial exploitation against seniors is more than $2.6 billion a year in our country, and one in 10 financial abuse victims turns to Medicaid as a result.
Cases like World War II VeteranJames Ruby's are, unfortunately, not uncommon. Seniors fall victim to financial abuse every day.
Irrevocable trusts, which are virtually unchangeable once established, have decreased in use, but revocable trusts, over which the grantor retains control, still flourish.
A recent Cincinnati.com article, titled “Trusts remain useful tool in estate planning,” addressed some confusion over the use of trusts in light of recent changes in the law.
One very popular estate planning tool, the revocable trust, remains very much the foundation for many estate plans and is used frequently. In this arrangement, the maker of the trust (the person planning his or her estate) retains total control over the assets, but bypasses probate should the trust maker become incapacitated or die.
By keeping even modest sums of money protected, trusts can ensure that your wishes for your money will be honored into the future.
A recent article by the Motley Fool,titled "5 Things You Didn't Know — but Should! — About Trusts," sheds some light on common misperceptions of trusts.
Here are a few beneficial takeaways from the article for Houston families:
"During their careers, their 'acquiring wealth years,' many people live in places that have lots of jobs – and the higher cost of living that goes along with that," Friedman says. "In retirement, many of them want to move to a state where they can enjoy the same or an even better lifestyle with less money. For that, it's essential to consider not only the cost of living but the state laws that affect your accumulated wealth and income."
Pre-retirees need to consider a lot more than snow days and tradition, according to a 2014 Bankrate report and a recent Investor Ideas article titled "3 Tips for Retiring Out of State."
States have different tax laws and other regulations that can significantly affect your retirement funds. Be aware of these as you plan for where you want to live and how you want to live.
Recently, I attended the American Association Attorney-Certified Public Accountants (AAA-CPA) symposium at the United States Tax Court in Washington, D.C. I heard U.S. Tax Court Chief Judge Michael B. Thornton discuss court operations in the context of assisting taxpayers "get their day in court." Chief Judge Thornton stressed that the Tax Court is considered a "people's court" and the operations of the court strive to be user-friendly for taxpayers.
A few facts about the U.S. Tax Court:
1. A tax case can be filed in the U.S. Tax court without the taxpayer paying the contested tax PRIOR to the proposed Tax Court hearing.
This case has drawn plenty of attention due to its legal and financial implications. Essentially, the case has escalated to the point of a federal judge warning state regulators that she would consider issuing an order to drop Ohio from Medicaid enrollment altogether, leaving the Buckeye State without federal funds to provide medical care for its elderly residents.
The State of Ohio is penalizing seniors by refusing to grant them long-term care benefits because a spouse or close relative has purchased a Medicaid-compliant insurance annuity. Medicaid administrators in Ohio say that an elderly nursing home patient is not entitled to long-term care benefits as long as he or she has a relationship with an individual who has purchased an annuity.
Other cases have been filed in federal courts in Ohio, and one federal judge has warned Ohio officials that she may hold them in contempt if they don’t follow federal law. The latest lawsuits filed against Ohio’s Medicaid administrators were brought by three elderly women whose husbands used their retirement accounts to buy annuities, which State Medicaid investigators say is illegal.
