Houston Estate Planning and Elder Law Attorney Blog

Employers Now May Help Employees with Tax-Free Direct Disaster Relief Assistance

Published on: March 16, 2020 | By McCulloch & Miller, PLLC

On March 13 President Trump declared a national emergency due to extraordinary circumstances resulting from Coronavirus. This Declaration opens up new methods for employers to provide tax-favored financial assistance to employees affected by the virus.

As the coronavirus pandemic emergency unfolds, it’s clear that increasing numbers of employees will likely suffer financial impacts … from quarantines, illnesses, workplace closings, etc. President Trump’s declaration of a national emergency on March 13, 2020 now allows employers to make direct disaster-relief payments to assist employees affected by the virus.

These types of payments are not treated as income/wages to the employees and are deductible to the employer as ordinary and necessary business expenses. There is no specific cap on the amount of assistance that may be provided to an employee other than it must be “reasonable and necessary” and must not be for an expense reimbursable by the employee’s insurance.

COVID-19 UPDATE: Emergency Estate Planning Decisions to Make Right Now

Published on: March 13, 2020 | By McCulloch & Miller, PLLC

6a019b003fe4d5970b025d9b3d243e200c-600wi-300x143 “Don’t panic” has been a common refrain from government leaders, public health professionals, and across social media from well-meaning people trying to keep everyone calm during the coronavirus pandemic.

Though it may be hard not to panic when the grocery store shelves are empty, the number of confirmed cases of COVID-19 keeps rising, and we see sobering statistics across the globe … we will not overcome this challenge with a panicked response.

Nonetheless, there are certain things we all need to be doing right now – and your public health officials are the best resource on how to stay personally safe and help prevent the virus from spreading.

What Should I Know about Beneficiary Designations?

Published on: February 28, 2020 | By McCulloch & Miller, PLLC

Many people have tens of thousands–even hundreds of thousands–of dollars in their IRAs. If you have an asset that large, shouldn’t you devote more effort to planning for its ultimate disposition?

A designated beneficiary is named on a life insurance policy or some type of investment account as the individual(s) who will receive those assets, in the event of the account holder’s death. The beneficiary designation doesn’t replace a signed will but takes precedence over any instructions about these accounts in a will. If the decedent doesn’t have a will, the beneficiary may see a long delay in the probate court.

If you’ve done your estate planning, most likely you’ve spent a fair amount of time on the creation of your will. You’ve discussed the terms with an established estate planning attorney and reviewed the document before signing it.

Under 40, Do I Need a Will?

Published on: February 27, 2020 | By McCulloch & Miller, PLLC

It's never too early to start estate planning. If you already have a family, getting your personal affairs in order is a must. The sooner you start planning, the more prepared you will be for life's unexpected twists and turns.

Estate planning is a crucial process for everyone, no matter what assets you have now. If you want your family to be able to deal with your affairs, debts included, drafting an estate plan is critical, says Wealth Advisor’s recent article entitled “Estate planning for those 40 and under.”

If you have young children, or other dependents, planning is vitally important. The less you have, the more important your plan is, so it can provide as long as possible and in the best way for those most important to you. You can’t afford to make a mistake.

Fixing an Estate Plan Mistake

Published on: February 25, 2020 | By McCulloch & Miller, PLLC

Sometimes, despite best intentions and best efforts, an estate plan leaves unintended problems for heirs, trustees and others to solve. For example, a trust may have become outdated because of changes in tax laws, the birth or death of family members, or special circumstances like an heir’s disability.

When an issue arises, you need to seek the assistance of a qualified and experienced Houston estate planning attorney, who knows to fix the problems or find the strategy moving forward.

For example, an irrevocable trust can’t be revoked. However, in some circumstances it can be modified. The trust may have been drafted to allow its trustees and beneficiaries the authority to make certain changes in specific circumstances, like a change in the tax law.

You Could Be Hit with Penalty for an Early IRA Withdrawal

Published on: February 20, 2020 | By McCulloch & Miller, PLLC

Most financial experts would agree that it is rarely, if ever, a good idea to take an early withdrawal from a traditional IRA or Roth IRA. This is due in part to the high cost of penalties that can hit an account holder for an early withdrawal (not to mention losing out on years of potential earnings).

Early distributions from IRAs—before you reach 59½—typically are hit with a 10% tax penalty, and you may owe income tax on it. The IRS uses the penalty to discourage IRA account holders from dipping into their savings before retirement. However, the penalty only applies if you withdraw taxable funds, says Investopedia, in its new article entitled “Early Withdrawal Penalties for Traditional and Roth IRAs.”

If you withdraw funds that aren’t subject to income tax, there’s no penalty for distributions taken at any time. The issue of whether the funds are taxable depends on the type of IRA. Early distributions from traditional IRAs are the most likely to incur significant penalties. That’s because you make contributions to this type of account with pretax dollars. These are subtracted from your taxable income for the year, which will decrease the amount of income tax you'll owe. As a result, since you get an upfront tax break when you contribute to a traditional IRA, you have to pay taxes on your withdrawals in retirement.

Dad’s Will and Trust at Odds?

Published on: February 17, 2020 | By McCulloch & Miller, PLLC

A will and a trust are separate legal documents that typically share a common goal of facilitating a unified estate plan. While these two items ideally work in tandem, since they are separate documents, they sometimes run in conflict with one another–either accidentally or intentionally.

A revocable trust, commonly called a living trust, is created during the lifetime of the grantor. This type of trust can be changed at any time, while the grantor is still alive. Because revocable trusts become operative before the will takes effect at death, the trust takes priority over the will, if there is any discrepancy between the two when it comes to assets titled in the name of the trust or that designate the trust as the beneficiary (e.g., life insurance).

A recent Investopedia article asks “What Happens When a Will and a Revocable Trust Conflict?” The article explains that a trust is a separate entity from an individual. When the grantor or creator of a revocable trust dies, the assets in the trust are not part of the decedent grantor's probate process.

How Can I Retire Without Paying a Mortgage?

Published on: February 13, 2020 | By McCulloch & Miller, PLLC

Admit it: Whether you're 35 or 65, the prospect of retiring without a mortgage is an attractive one. No more monthly mortgage payments to your home lender means extra money to spend on having fun in retirement. After years of punctual principal-and-interest mortgage payments, it's the least you deserve, right?

An increasing number of Americans are still carrying a mortgage when they hit retirement. According to a 2019 report from Harvard's Joint Center for Housing Studies, 46% of homeowners ages 65 to 79 have yet to pay off their home mortgages. Back in 1990, that number was just 24%.

Kiplinger’s November article “7 Ways to Retire Without a Mortgage” says that there are a few wise ways to retire without a mortgage. Let’s review these seven ways to retire sans (without) a mortgage.

What’s the Best Thing to Do with an Inherited Investment?

Published on: February 11, 2020 | By McCulloch & Miller, PLLC

“Receiving an inheritance can be a double-edged sword. On the one hand, it's overwhelming, thanks to the intense emotions associated with losing a loved one combined with the confusion about what to do with the newly acquired assets. On the other, an inheritance can re-invigorate your finances and create new opportunities for you and your family.”

Wealth Advisor’s recent article entitled “How to Handle Inherited Investments” provides us with some of the top inheritance considerations:

Consider Cash. Besides cash, the most common inheritances are securities, real estate and art. These assets usually go up in value, but another big benefit is their favorable tax treatment. The heirs won’t pay capital gains on unsold investments that went up in value during the lifetime of the deceased (estate taxes would apply). Those taxes would only apply to the gains that happened after they took possession. There’s a good reason to hang onto these investments. These types of property carry some risks, so you may consider putting some of your inherited investments into cash, cash equivalents, or life insurance with a guaranteed payout to avoid exposure to undue risk.

Some BIG Estate Planning Actions for 2020

Published on: February 7, 2020 | By McCulloch & Miller, PLLC

This time of the year is a great time to revisit your estate plan, so you can ensure your legacy is protected for years to come.”

Many of us set New Year’s resolutions to improve our quality of life. While it’s often a goal to exercise more or eat more healthily, you can also resolve to improve your financial well-being. It’s a great time to review your estate plan to make sure your legacy is protected.

The Tennessean’s recent article entitled “Five estate-planning steps to take in the new year” gives us some common updates for your estate planning.