Houston Estate Planning and Elder Law Attorney Blog

When “The Talk” isn’t About the Birds and Bees

Published on: November 8, 2016 | By McCulloch & Miller, PLLC

Conversations about money, death and dying wishes become tangled up in strong emotions surrounding these matters. A strategic approach might be helpful.

Every family is different, but almost every family struggles with conversations about wills, estate planning and money. A recent article in The Chicago Tribune, “Have the estate planning talk,” advises a thoughtful approach while letting you know that this is hard for everyone.

This is a tough topic because feelings and money get tied up. Money in many instances can conjure feelings of control (or lack of it), dignity, shame, fear, or a lack of confidence. Many conversations go south quickly. For example: if an adult son asks his mother if she and his father have recently updated their wills, he might be met with a response such as, "Why? Are you hoping we’ll die soon, so you can use your inheritance to finally pay off that huge mortgage we warned you not to take?"

When Naming a Guardian for Minor Children, Don’t Stop at One

Published on: November 7, 2016 | By McCulloch & Miller, PLLC

Many people put off doing their wills because of the difficulty of deciding on a guardian for their minor children. But if choosing one is difficult, choosing two might actually make the process easier.

This is the situation no one wants to even think about: both parents dying unexpectedly and young children being raised by someone else. But it does happen. That’s why having a will and naming a guardian is so important for anyone who has children. Usually the problem is deciding between someone who is really good with your kids but who might not be so good or experienced with handling money and investments. But there is another way, as explained by NJ 101.5 in “Choosing guardians for your minor children.”

Yes, you can appoint one person as a guardian of the person—he or she will care for your child—and designate another person as a guardian of the estate—this person will care for your child’s assets. Typically when minors are part of estate planning, the parents’ assets are put into trust until the minor reaches a specified age(s) when distributions are authorized or required to be made. As an illustration, the trust can dictate that a third of the balance be distributed when the beneficiary reaches age 25, a third when he or she reaches age 30, and the remainder when the beneficiary reaches age 35. At that point, the trust will be terminated.

Will You Need a Will in Texas if the Estate Tax is Eliminated?

Published on: October 28, 2016 | By McCulloch & Miller, PLLC

Regardless of which candidate becomes president and what changes are made in coming years, there will still be a need for estate planning in Texas, and that includes regular folks as well as the ultra-wealthy.

If the U.S. federal estate tax were to be eliminated, there will still be plenty for single family offices and estate planning attorneys to do, according to a Forbes article, “If the U.S. Federal Estate Tax Goes Away, What Will Single-Family Offices Likely Do?” Wills are still going to be needed to provide direction as to how assets are to be distributed, and all estate plans will likely need to be reviewed and revised in light of changes to the law. For the single family office, there will still be much to do.

Life insurance purchased to pay estate taxes will also need to be reviewed. One way to do this is to convert permanent policies with meaningful cash values into private placement life insurance policies (PPLI).

Don’t Bury Your Tax Returns, Use Them for Informed Financial Decisions

Published on: October 26, 2016 | By McCulloch & Miller, PLLC

Most Houstonians like to stash away our tax forms as soon as we file our taxes, but that’s a mistake.

When it comes to making financial decisions, you want to arm yourself with as much information as possible. One often overlooked source is your Form 1040, advises CNBC in “Use your tax return for more than paying taxes.” Sharing this document with your Houston estate planning attorney will allow them to get a clearer picture of your situation as well.

Lines 1-5 (Filing status). If you need to check a different box for your filing status, you should review your estate plan. If you get married or divorced, you'll need to update your will and the beneficiaries for life insurance and retirement plans.

How a Taxable Investment Account Can Be Good for Your Retirement

Published on: October 24, 2016 | By McCulloch & Miller, PLLC

We’ve been so inundated with the idea of tax-free investment accounts that the taxable investment account’s role in retirement planning is underutilized and overlooked.

If you’re like most Americans, you’ve got at least one and maybe a few retirement accounts. You like the tax benefits that come from having IRA's, 401k's, 403b's, 457b's and defined benefit plans. You know you’ll have to pay income taxes when you start taking distributions from them, except for the Roth accounts, but seeing those accounts grow makes you feel good. And if you have a Roth, you like knowing that even if you aren’t getting a deduction now, distributions will be tax free. But there are other kinds of investment accounts for retirement planning.

As Physician’s Money Digest says in “10 Reasons You Need a Taxable Investment Account,” taxable retirement accounts are ignored because we’re so focused on IRS-approved retirement accounts. But you might think about supplementing your savings with a taxable retirement account. This can be a regular, old-school investment portfolio that’s not linked to any government regulations and that you’re building for retirement.

Fearing Loss of Control is One Reason People try to Hide Alzheimer’s

Published on: September 23, 2016 | By McCulloch & Miller, PLLC

Planning for life with Alzheimer’s includes selecting trusted family members or friends who can assist with legal and financial matters.

It was at least three years after his diagnosis that comedic actor Gene Wilder revealed he was suffering from Alzheimer’s disease. This is not unusual, according to experts discussing his situation in the Investment News article, “Hiding Alzheimer's, like Gene Wilder did, is natural, so prepare for it with all clients.” Wilder, star of Blazing Saddles, Willy Wonka and the Chocolate Factory and many other classic comedies, died at age 83 from complications of Alzheimer's disease. He wanted to leave his audiences laughing, rather than being sad that he was suffering from this dreaded disease.

Most Alzheimer's patients will hide their symptoms as long as they can because they fear losing control of their lives if family or friends are under the impression they can’t take care of things on their own.

Social Security’s Less Known Customer Services

Published on: September 21, 2016 | By McCulloch & Miller, PLLC

Certain organizations are known for providing amazing customer service. Social Security is not usually one of them. However, there are some services that Social Security does offer that are not well known and that could make life easier for many.

Good news is hard to find when it comes to dealing with large government bureaucracies, including Social Security. That makes this information provided by AARP’s article, “Discover Little-Known Social Security Benefits,” especially welcome.

Some years ago, Social Security officials saw that the long waiting time for decisions on disability applications was resulting in severe hardship for the seriously ill. As a consequence, the agency established the Compassionate Allowances List.

Collecting Death Benefits from Life Insurance Policies

Published on: September 20, 2016 | By McCulloch & Miller, PLLC

If you are the beneficiary of someone’s life insurance policy, you should know that there are options as to how the policy funds, known as death benefits, can be distributed.

In most situations, the beneficiary of a life insurance policy does not have to pay income taxes on death benefits, according to a recent article in Forbes, “Are Life Insurance Proceeds Subject to Taxes?”

But depending on your situation, you might want to consider different options for that money that may be more productive in the long term. The insurance company can cut a check, but you can also have the insurer hold on to all or some of the funds and distribute them at a later date or in periodic distributions. If the money is held by the insurer, it will continue to earn interest—and that interest is taxable.

Too Old for an IRA? You Can Still Be Tax-Smart

Published on: September 9, 2016 | By McCulloch & Miller, PLLC

If you are working after 70 ½, there are still ways to save money tax-free.

Wage earners are not permitted to put money into a traditional IRA in the year they turn 70 ½ according to the Kiplinger article, “Tax-Smart Ways to Save When You're Too Old for a Traditional IRA.” But you would still be able to contribute to a Roth IRA, as long as your income in 2016 is less than $132,000 if single or $194,000 if married and file taxes jointly. In addition to the money growing tax-free in the Roth IRA with no time limit, you don’t have to take any RMDs (required minimum distributions).

You can contribute up to the amount you earned for the year (your net income from self-employment), with a maximum of $6,500—that’s $5,500 for everyone under age 50, plus $1,000 for people age 50 and older. If your earnings are well over the $6,500 maximum, you can just contribute that amount. However, if your earnings are near or under the maximum, you’ll need to know what is considered compensation and how to calculate your allowed contribution.

When the Heir is Not A Family Member

Published on: September 8, 2016 | By McCulloch & Miller, PLLC

A cautionary tale ends with a will being declared invalid, firings at the local police station and a lesson in elder abuse.

A wealthy 92 year old woman suffering from dementia left a $2 million estate to a local police sergeant but after three years of legal wrangling, her will was found to be invalid and the police officer and his supervisor were both fired from their positions. In New Hampshire Magazine’s September 2016 issue the article “Navigating Non-Relative Inheritance,” explains how vigilant professionals must be, especially in cases where children or other family members are being disinherited.

Just about all of the inheritances in a typical estate go to family members or to the deceased’s favorite charities. But when an unrelated individual is the beneficiary of a valuable asset or a large sum of money, it can raise questions and perhaps suspicions from those who felt they had a right to the inheritance. The issue may become how to balance the wishes of the testator—by distributing his or her assets as he or she sees fit—with the right of the bequeathed or the beneficiary of the will to accept it without creating a conflict of interest or violating the essential trust.