Estate Planning Blog

End of Life Planning for Loved Ones
End of life care for loved ones

End of Life Planning for Loved Ones

End of Life Planning for Loved Ones

It’s definitely an uncomfortable thing to do. However, making funeral arrangements for yourself eliminates a lot of stress and anxiety for the family members, who are left to guess what you may have wanted. This, says the Leesville Daily Leader in the article “Planning for the end of your life” lets you make the decisions.

When considering end of life care for loved ones here are some of the things to consider:

  • Do you want to be buried or cremated?
  • Do you want a funeral or a memorial service?
  • What music do you want played?
  • Do you want flowers, or would you prefer donations to a charity?
  • Do you want people to speak or prefer that only a religious leader speak?
  • What clothing do you want to be buried in?
  • Have you purchased a plot? A gravestone?
  • Who should be notified about your death?
  • Do you want an obituary published in the newspaper?

There are also estate matters that need to be attended to before you pass. Do you have a will, power of attorney, healthcare power of attorney, or a living will? Make sure that your family members or your executor know where these documents can be found.

If you do not have an estate plan in place, now is the time to meet with an estate planning attorney and have a plan created.

Your family will also need to be able to access information about your accounts: investment accounts, credit cards, utility bills, Social Security, pension, retirement funds and other assets and property. A list of the professionals, including your estate planning attorney, CPA and financial advisor, along with the names of your healthcare providers, will be needed.

If you are a veteran, you’ll need to have a copy of your DD-214 in your documents or let family members know where this is located. They will need it, or the funeral home will need it, when applying for burial benefits from the Department of Veterans Affairs and the National Cemetery Administration.

If you wish to be buried in a national cemetery, you’ll need VA Form 40-10007, Application for Pre-Need Determination of Eligibility for Burial in a VA National Cemetery. This must be completed and sent to the National Cemetery Scheduling Office. Include a copy of the DD-214 with the application.

End of life care for loved ones grieving in your family may find discussing these details difficult, but when the time comes, they will appreciate the care that you took, one last time, to take care of them.

Reference: Leesville Daily Leader (May 1, 2019) “Planning for the end of your life”

End of life care for loved ones.

Estate Planning When a Family Member Is Disabled
Estate Planning When a Family Member Is Disabled.

Estate Planning When a Family Member Is Disabled

Estate Planning When a Family Member Is Disabled.

This kind of mistake can wreak havoc on many lives, which is why it is so important to work with an experienced estate planning attorney who is knowledgeable about special needs planning. The article, “Crafting an estate plan to include disabled family members” from The Ledger explains what is involved in special needs planning.

Supplemental Security Income (SSI) is a federal program that pays monthly benefits to disabled or blind adults and children. To qualify, an individual must have fewer than $2,000 of countable assets and very limited income. Medicaid is a Federal and State health insurance program that helps people with limited assets and income pay for their medical costs.

While it is common for people to name their spouse or children as beneficiaries in their estate plan, if your spouse or child is disabled and receiving government benefits, an inheritance will result in their loss of benefits, unless special planning is done.

Estate Planning When a Family Member Is Disabled. Special Needs Trust (SNT) is designed for disabled beneficiaries so that cash, real property, or any other assets are available for the person’s benefit, while still allowing the disabled person to receive their means-based government benefits.

There are several different ways to accomplish this, depending on your family’s situation. One way is to have a testamentary Special Needs Trust created within a will or trust that goes into effect, when the creator of the trust or the will dies. A SNT can also be created while you are living and can be funded, instead of waiting for it to go into effect at your death.

A third-party SNT can be named as the beneficiary of life insurance policies and retirement accounts, investment accounts or real property. The third-party SNT assets that are not used for the disabled beneficiary during their lifetime, can pass to non-disabled beneficiaries upon the death of the disabled beneficiary.

These assets will be free from Medicaid recovery liens, since the property in a third party SNT does not belong to the disabled beneficiary

Estate Planning When a Family Member Is Disabled. A first party SNT is set up and funded with assets that do belong to a disabled person, and no other funds can be contributed to this type of trust by any other donors. These are often used when a large settlement following an injury is awarded. In Florida and in other states, first-party SNTs are subject to Medicaid recovery to reimburse the state.

Special needs trusts are complicated trusts and require the knowledge of an experienced attorney who devotes most, if not all, of their practice to SNTs and trust and estate planning.

Reference: The Ledger (May 2, 2019) “Crafting an estate plan to include disabled family members”

Estate Planning When a Family Member Is Disabled.

Can I Correct an IRA RMD Mistake?

Can I Correct an IRA RMD Mistake?

Can I Correct an IRA RMD Mistake?

It’s not uncommon for an individual to inaccurately calculate their required minimum distribution (RMD) for their account. Maybe you forgot that your brokerage firm divided the account in two and they didn’t tell you. This mistake may result in a person failing to withdraw the mandatory amount from an IRA.

What can a person do at this point? If the mistake was caused by an oversight at the brokerage firm, can you avoid the 50% penalty, if they admit the error in a letter to the IRS?

Kiplinger’s recent article, “How to Correct a Mistake on Your RMDs from IRAs” advises that you don’t need to send the IRS a letter from the brokerage firm, but you do need to take some action immediately to ask the IRS if it will waive the penalty.

You need to first figure out the exact amount you should’ve withdrawn as your RMD and withdraw the money right away, if you haven’t already. You should then file a separate Form 5329 immediately for each year’s RMD you missed.

You should fill in lines 52 and 53 with the amount you should have withdrawn, then write “RC.” This means “reasonable cause.” Also write in the amount of the penalty you want waived in parentheses on the dotted line next to line 54. You should include a brief note that says the RMD was omitted by the brokerage company and was withdrawn immediately upon discovery. Keep it brief—don’t go into all the details.

You shouldn’t send any penalty money, unless the IRS denies your request for a penalty waiver.

Denials are pretty rare, especially for someone who withdrew the money as soon as she realized the mistake and filed Form 5329 proactively with reasonable cause.

Retain the letter or any communication in your files from the broker saying that the firm made a mistake, but don’t send it to the IRS.

Can I Correct an IRA RMD Mistake? Yes you can. You can review the Instructions for Form 5329 for more information about the procedure.

Reference: Kiplinger (March 22, 2019) “How to Correct a Mistake on Your RMDs from IRAs”


Protecting Kids from Too Much, Too Fast, Too Soon
Protect kids from too much too fast

Protecting Kids from Too Much, Too Fast, Too Soon

Protecting Kids from Too Much, Too Fast, Too Soon.

Protecting your children from frittering away an inheritance, is often done through a spendthrift trust but that trust can also be used to protect them from divorce and other problems that can come their way, according to Kiplinger in “How to Keep Your Heirs from Blowing Their Inheritance.”

We all want the best for our kids, and if we’ve been fortunate, we are happy to leave them with a nice inheritance that makes for a better life. However, regardless of how old they are, we know our  children best and what they are capable of. Some adults are simply not prepared to handle a significant inheritance. They may have never learned how to manage money or may be involved with a significant other who you fear may not have their best interests in mind. If there’s a problem with drug or alcohol use, or if they are not ready for the responsibility that comes with a big inheritance, there are steps you can take to help them.

Protecting Kids from Too Much, Too Fast, Too Soon. Don’t feel bad if your children aren’t ready for an inheritance. How many stories do we read about lottery winners who go through all their winnings and end up filing for bankruptcy?

An inheritance of any size needs to be managed with care.

A spendthrift trust protects heirs, by providing a trustee with the authority to control how the beneficiary can use the funds. A trust becomes a spendthrift trust, when the estate planning attorney who creates it uses specific language indicating that the trust qualifies as such, and by including limitations to the beneficiary’s control of the funds.

Protecting Kids from Too Much, Too Fast, Too Soon. A spendthrift trust also protects assets from creditors, because the heir does not own the assets. The trust owns the assets. This also protects the assets from divorces, lawsuits and bankruptcies. It’s a good way to keep the money out of the hands of manipulative partners, family members and friends.

Once the money is paid from the trust, the protections are gone. However, while the money is in the trust, it enjoys protection.

The trustee in a spendthrift trust has a level of control that is granted by you, the grantor of the trust. You can stipulate that the trustee is to make a set payment to the beneficiary every month, or that the trustee decides how much money the beneficiary receives.

For instance, if the money is to be used to pay college tuition, the trustee can write a check for tuition payments every semester, or they can put conditions on the heir’s academic performance and only pay the tuition, if those conditions are met.

For a spendthrift trust, carefully consider who might be able to take on this task. Be realistic about the family dynamics. A professional firm, bank, or investment company may be a better, less emotionally involved trustee than an aunt or uncle.

An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances.

Reference: Kiplinger (June 5, 2019) “How to Keep Your Heirs from Blowing Their Inheritance.”

Protecting Kids from Too Much, Too Fast, Too Soon.

Celebrity Estates are Like Dynamite: Kaboom!
Celebrity Estates are Like Dynamite: Kaboom! Celebrity explosives

Celebrity Estates are Like Dynamite: Kaboom!

Celebrity Estates are Like Dynamite: Kaboom!

Dividing his estate between 11 different people was quite a task for pop star George Michael’s lawyers. He left out his ex-boyfriend Fadi Fawaz and his friend Kenny Goss, raising a lot of eyebrows, says The Irish Sun in the article “Most explosive wills in Hollywood history which left families feuding for decades after George Michael document revealed.” However, he’s far from the only celebrity to cut out loved ones from their estates.

Mickey Rooney—When movie star Mickey Rooney died in April 2014, at the lofty age of 93, most people assumed that this wife and eight children would be his heirs. Rooney had a long career, starring in many movies with many bold face named stars. However, he had a surprise—he left behind just about $18,000 to his stepson Mark Aber and disinherited his wife and other children. Several of his biological children objected to the will, which was signed just a few weeks before his death. The case was later dropped, because it was too small an amount to litigate over.

Tony Curtis—He is another movie star who left absolutely nothing to his biological children, when he died in 2010. One of his children is Jamie Lee Curtis, a successful actress and author. Instead, the star of “Some Like It Hot” and many other movies left approximately $39 million to wife number six, Jill Vandenburg Curtis. Making matters worse, she turned around and auctioned off his personal belongings, adding another million to her pile. His daughter said they were “blindsided” by his decision, and her sister Kelly started a lawsuit, but later dropped it.

James Brown—This is an estate battle that is just about as legendary as the soul-singer himself. Thirteen years after he died, his last will and testament is still unsettled. Lawsuits, murder accusations and a battle for ownership of his music catalog is still going on. About a dozen lawsuits have been filed by his nine children and grandchildren, who are suing his widow and claiming that she was married to another man when she wed Brown. That estate is estimated to be worth $99 million.

Joan Crawford—Made infamous by her daughter Christina’s tell-all book, “Mommy Dearest,” Crawford left more than $2 million to two of her adopted children, when she died in 1977. She made it very clear in her will that her son Christopher and Christina were not to receive anything. However, the two contested the will and won about $50,000 each.

Marlon Brando—With 10 children to his name, he recognized all but one—adopted daughter Petra—and left out his teenage grandson, son of his late daughter Cheyenne Brando—in his will. With an estate estimated at $20 million, Brando passed away at age 80.

Michael Jackson—The “gloved one” cut his father out of his will, before he died from a drug overdose in 2009. His father tried to contest the will but failed. Michael did not include his famous siblings either. It is thought that several of his brothers and sisters are now engaged in an estate battle, which is worth more than $1 billion. Michael took good care of his mom and his three children, Prince, Paris and Blanket.

To speak with attorney Frank Bruno, Jr. about your individual situation, please schedule a telephone call or appointment.

Reference: The Irish Sun (June 5, 2019) “Most explosive wills in Hollywood history which left families feuding for decades after George Michael document revealed.”

Celebrity Estates are Like Dynamite: Kaboom!

Planning on Disinheriting a Child
Planning on Disinheriting a Child? Best to Be Careful!

Planning on Disinheriting a Child

Planning on Disinheriting a Child? Best to Be Careful! The law is very specific when it comes to disinheriting your child, so it is a good idea to be perfectly clear on your wishes or it can backfire, according to the Santa Cruz Sentinel in “No shortcuts when planning estate trust.”

Let’s consider this example: A couple has a son and a daughter. Both are named beneficiaries on a revocable trust. The parents decide they want to change the revocable trust, naming the daughter as the sole beneficiary. They also want to revoke the son’s power of attorney. The trust is simple, and the assets include a home and some bank accounts.

Anyone has the right to leave their assets to anyone they choose, but the couple (and the daughter) should expect the son to challenge this disinheritance and if that is truly what they wish, they need to plan in advance for litigation.

For starters, the couple needs to meet with their estate planning attorney, privately, with the daughter nowhere in sight. She should not even give them a ride to the attorney’s office. There will be questions about “undue influence” directed at her.

Undue influence is a legitimate reason to challenge an estate plan. The three factors in undue influence are:

“Confidential relationship”—meaning that the parents trust and confide in the daughter;

“Active procurement”—for instance, if the daughter made the appointment, joined in the meeting and spoke on behalf of her parents; and

“Unjust enrichment,” which means that one person is trying to get more than a “fair” share.

If these three conditions are met, the changes in the estate could be found to be invalid. The burden of proof would be on the daughter to prove that this was what her parents wanted and not what she devised. It would not be an easy case.

This couple needs to meet with their estate planning attorney and amend their trust. The attorney and their staff members will be considered “disinterested witnesses” who will be able to speak to the parents’ mental capacity and whether it was truly their intent to favor the daughter. The attorneys in this case need to be extra careful to take thorough notes. If there is a lawsuit, the daughter might have the opportunity to say why the change was made, but her testimony may be disregarded as self-serving.

Planning on Disinheriting a Child? Best to Be Careful! Another question that comes up when people want to disinherit a child, is whether they should simply change the name on the deed to the home, thinking that this will avoid an estate battle. That becomes problematic on many levels. If they decide they want to sell the home, or borrow against it, or get a reverse mortgage, then the deed must be retitled again. If the daughter gets title to the home and has some kind of legal trouble, a judgement lien could be recorded against the house.

Reference: Santa Cruz Sentinel (June 9, 2019) “No shortcuts when planning estate trust.”


Six tips for Small Business Planning
Six tips for Small Business Planning.

Six tips for Small Business Planning

Six tips for Small Business Planning


Failing to conduct long-term personal planning can create a reality, where a business owner under-insures and underinvests outside her own companies.

Think Advisor’s recent article, “The 6 L’s of Small-Business Planning” says that a successful business essentially becomes a security blanket. That’s because business owners don’t adequately prepare for events that could change the course of their financial well-being. It’s critical to address the important events that can disrupt everything personal and business.

Liquidity: If a business owner has to write a big check for some unexpected repairs after a storm, the money must come from somewhere. Small businesses rarely have substantial liquidity, because so much of their capital is tied up in the company. Therefore, a line of credit is the most frequent solution for owners with this situation.  You should instead try to ensure that you have access to cash in the short term, if necessary.

Long-term disability: In many instances, business owners are the main contributors to their small company’s success. If they can’t work, the whole company can suffer. She should have a plan to protect against this scenario. First, it is important to identify who can step into a leadership role for a short time. If the disability is long term, examine the ways in which it might affect the company’s value and succession plan. You can purchase business overhead insurance or policies that offer income replacement. You can also create buy-out agreements, so key employees can buy out the disabled business owner.

Loss of life: In the event that an owner suddenly dies, you should have life insurance to fund a buy/sell plan. Without a plan, you may become forced to work with your deceased business partner’s spouse.

Long-term care: Baby boomers with business wealth may wonder what will happen if they need significant medical care, which is a legitimate concern. There’s an additional consideration: the elderly parents of business owners. If an owner steps away to help provide care for an ailing parent, the potential disruption to the company may be significant. Look at where the capital is going to come from, to offset the cost of long-term care for family members, because you don’t want a forced liquidation of business assets.

Longevity: Consider the impact to the company, if the owner has an unusually long life. This should include an examination of how that person’s role will change and who will succeed them through phases of potentially decreasing interest and capacity.

Legacy/legal: Look at what the business owner envisions as her legacy for the future. There are numerous types of trusts, gifts and legal vehicles can be used to help make certain that the business won’t be ruined by taxes, when ownership is passed to the next generation. Talk to an estate planning attorney about doing this the right way.

At each annual business review, review your plans to see if they can still be effective responses to the six Ls of small business planning.

Reference: Think Advisor (May 28, 2019) “The 6 L’s of Small-Business Planning”

Six tips for Small Business Planning. The six points of discussion are liquidity, long-term disability, loss of life, long-term care, longevity, legacy and legal.

Aging? Will You Need Long Term Care?
Aging and long term care

Aging? Will You Need Long Term Care?

Aging? Will You Need Long Term Care? Many people will end up needing assistance to care for themselves, as they become elderly and that help may not be provided by their children. It might be wise to look into long term care costs now, according to The Detroit News in “What to know about aging and long-term care costs.”

Here’s what often happens:

  • More than a third of seniors will need to stay in a nursing home, where the median annual cost of a private room has skyrocketed to more than $100,000.
  • Four out of 10 people will opt for paid care at home. The median annual cost of a home health aide is more than $50,000.
  • More than 50% of all seniors will incur some kind of long-term care costs, and 15% of those will incur more than $250,000 in costs, according to a study by Vanguard Research and Mercer Health and Benefits.

Medicare doesn’t pay for long-term care. Medicare does not cover what it terms “custodial” care. For most Americans, who have a median of $126,000 in retirement savings, that’s an immediate financial wipeout. They will end up on Medicaid, the government health program that pays for about half of all nursing home and custodial care.

Those who live alone, are in poor health, or have chronic conditions are more likely than others to need long-term care. For women, there are special risks, since statistically women outlive husbands and may not have anyone to provide them with unpaid care.

Aging? Will You Need Long Term Care? Well, everyone approaching retirement needs a plan and that may need to include long term care. The options are:

Long-term care insurance. The average annual premium for a 55-year-old couple was $3,050 in 2019. The older you are, the higher the cost, and if you have chronic conditions, you may not qualify.

Hybrid long-term care insurance. Life insurance or annuities with long-term care benefits now outsell traditional long-term care insurance by a rate of about four to one. This requires committing a large sum of money up front but is a way to obtain long-term care insurance.

Life Insurance Policy with a long-term care rider.

Home equity. Selling a home to pay for nursing home care is not the best solution. However, it may be the only solution, particularly if it’s the only asset. Reverse mortgages may be an option.

Contingency reserve. A wealthy family with assets may simply earmark some assets for long-term care, setting aside a certain amount of money in an investment that can be liquidated without penalty.

Spending down to Medicaid. People with little or no retirement savings could end up depending on Medicaid. There are ways to protect assets for spouses, but it requires working with an elder law estate planning attorney in advance.

Reference: The Detroit News (June 10, 2019) “What to know about aging and long-term care costs”


Why Do Even the Middle Class Need Estate Planning?
Why Do Even the Middle Class Need Estate Planning?

Why Do Even the Middle Class Need Estate Planning?

Why Do Even the Middle Class Need Estate Planning?

When it comes to estate planning, you may think that you don’t have the wealth that would require you to engage in extensive estate planning. If you have a will, you might think that’s good enough.

Forbes’ recent article, “Why Estate Planners Aren’t Just for the Ultra-Rich,” says that nothing could be further from the truth.

Although some estate plans are more complicated than others, just about everyone can benefit from having one. Let’s examine the main reasons why:

Avoiding probate. This is a big reason why the importance of estate planning is for everyone. You don’t have to be part of the 1% to want to avoid putting your family through the stress and expense of probate. Creating a trust and strategically placing assets within its control, eliminates many headaches.

Maintaining control from the grave. Even after death, you can still impact how your assets are distributed, as well as to whom and when.

Protecting your legacy. When you consider leaving a legacy for the next generation, it may have lofty pursuits. However, those aren’t necessarily reasonable goals for everyone. Leaving a legacy can also mean making certain that heirs properly respect all the effort and sacrifice that it took to save and create a retirement fund—whatever its size.

Creating a business succession plan. Among the countless small businesses in the U.S., most will continue to remain viable after the legacy owner dies. A business owner can plan for this within an estate plan, which details exactly what they want to happen, if they die unexpectedly. That could include outlining specific roles and responsibilities for surviving heirs or putting into place a buy-sell agreement with a business partner and directing the distribution the proceeds of the sale.

Be sure to revisit your estate plan regularly, especially if your life includes big events, like a birth of a child, a divorce, or an irreconcilable difference with a loved one.

It’s a myth that estate planning is something only wealthy people do. It’s for everyone.

Reference: Forbes (April 15, 2019) “Why Estate Planners Aren’t Just For The Ultra-Rich”


Employer Match on my Employee 401(k)
Employer Match on my Employee 401(k)

Employer Match on my Employee 401(k)

Employer Match on my Employee 401(k)

Based on the specifics of your employer’s 401(k) plan, your contributions to your retirement savings may be matched by employer contributions in several ways. Employers usually match a percentage of employee contributions, up to a certain portion of their total salary. Other employers match employee contributions up to a certain dollar amount, regardless of employee compensation.

Investopedia published an article, “How 401(k) Matching Works,” that explains the mysteries of employer match contributions.

The specific terms of 401(k) plans vary considerably. Other than the requirement to adhere to certain required contribution limits and withdrawal regulations of the Employee Retirement Income Security Act (ERISA), the sponsoring employer decides on the specific terms of each 401(k) plan. Whatever the match amount, it’s free money added to your retirement savings. Don’t neglect to take advantage of it!

Employers typically match employee contributions, up to a percentage of annual income. However, this limit may be imposed in one of a few different ways. You employer may elect to match 100% of your contributions, up to a percentage of your total compensation, or to match a percentage of contributions up to the limit. Although the total limit on employer contributions remains the same, the second situation requires you to contribute more to your plan to get the maximum match possible.

Some companies match up to a certain dollar amount, regardless of income. This limits their liability to highly compensated employees.

A partial matching scheme with an upper limit is common. If your employer matches 50% of your contributions that equal up to 6% of your annual salary, and you earn $60,000, the contributions equal to 6% of your salary, or $3,600, are eligible for matching. However, your employer only matches 50%, so the total matching benefit is capped at $1,800. Under this formula, you must contribute twice as much to your retirement to reap the full benefit of employer matching. However, if your employer matches a certain dollar amount, you have to contribute that amount to maximize benefits, regardless of what percentage of your annual income it may represent.

All deferrals are subject to an annual contribution limit dictated by the IRS. For employers in 2019, the total contributions to all 401(k) accounts held by the same employee (regardless of current employment status) is $56,000, or 100% of compensation, whichever is less. However, elective salary deferrals made by employees are limited to $19,000. Thus, an employee can contribute up to the annual salary deferral limit to their 401(k) each year, and an employer may contribute up to the IRS annual limit via match or additional compensation. The sum your employer matches doesn’t count toward your annual salary deferral limit.

The IRS also allows those over age 50 to make additional “catch-up” contributions to motivate employees close to retirement to ramp up their savings. For 2019, the annual catch-up contribution limit is $6,000.

In addition to reviewing your 401(k) plan’s matching requirements, learn about your plan’s vesting. This dictates the degree of ownership you have in employer contributions, based on the number of years of with the company. Even if your employer has a generous match, you may forfeit some or all of those contributions, if your employment is terminated (either voluntarily or involuntarily) prior to a certain number of years has elapsed. How does my Employer Match on my Employee 401(k) Work? All contributions you make to your retirement savings account are 100% vested at all times and can’t be forfeited.

Reference: Investopedia (February 4, 2019) “How 401(k) Matching Works”