Busy People Need to Make Time for Retirement Planning
Busy People Need to Make Time for Retirement Planning

Busy People Need to Make Time for Retirement Planning

Busy People Need to Make Time for Retirement Planning.

If you’re a busy mom or dad; are committed to long hours at work or have a successful career, maybe a real estate developer or a physician, you’re too busy to think about retirement. However, just like you had to prepare for your current position, you need to prepare for your life after you stop working, advises the article “Retirement planning for the busy professional” from the New Haven Register. What busy people often don’t realize, is that before they know it, retirement is around the corner.

Making the transition to a successful, fulfilling retirement is not just about saving money, although that is an important factor. Here are a few tips to help you plan a great retirement:

Use your imagination. What would you want your life to look like during retirement? How will you spend your days? Write down goals and be specific. If volunteering is something you don’t have time for now, would you want to become active in your community during retirement? What would that be—running a small organization or pitching in as part of a team? Do you plan on spending more time with your family? If so, what does that look like? Being very detailed will help you set goals and allow you to estimate your retirement expenses.

Run the numbers. There are different scenarios that you can work through. For instance, if your idea of retirement is a schedule of non-stop travel, you can figure out what kind of trips you want to take—Elder Hostels or travelling first class—and what they’ll cost. If you already own a second home and plan to retire there, you have a good idea of what it costs to live in your second community. Consider investment returns, health care costs, taxes and life expectancy.

Review your financial and legal plans. It is never too early to plan for the legal and financial aspects of your retirement. Anyone over age 18 should have an estate plan, both to protect you and your family in the case of death and incapacity. You should have a will, a power of attorney, health care proxy and possibly a trust. A financial plan will give you a roadmap. Are you saving enough? Are there opportunities you are missing? Do you have the correct insurance in place?

Cut expenses and minimize debt. The less debt you have going into retirement, the better. Cutting expenses now will get you used to living within a tighter budget and controlling expenses. Write down your expenses to find out where the money is going. You will likely find some big surprises.

Are your advisors right for you now, and will they be right for you in the future? If you’ve put up with an advisor who never returns your phone calls for a few years, is that the person you want to depend on when hard decisions need to be made about investments and retirement? Your team needs to include an estate planning attorney, a CPA and a financial advisor. Each of them should have a good working relationship with the other, and they should all be making you and your family a top priority.

Reference: New Haven Register (Oct. 13, 2019) “Retirement planning for the busy professional”


Why A Health Care Proxy Makes Sense
Why A Health Care Proxy Makes Sense

Why A Health Care Proxy Makes Sense

Why A Health Care Proxy Makes Sense. Having a Health Care Proxy or health care power of attorney in place before it is needed, is one of the best ideas of estate planning, along with having a Power of Attorney in place before it is needed. Why? This is because taking a pro-active approach to both of these documents, means that when the unexpected occurs and that is exactly how things occur—unexpectedly—the person or persons you have named for these important roles will be able to step in quickly and made decisions.

Why A Health Care Proxy Makes Sense. Time is often of the essence, when these documents are needed.

According to the article “Medical guardianship versus power of attorney” from The News Enterprise, a health care proxy is a document that grants another person the power to make medical decisions for you, when you no longer have the ability to make those decisions for yourself. It is known by a few other names, depending on the state where you live: health care proxy, a medical power of attorney or a health care surrogate.

It needs to have HIPAA-compliant language, which will allow the person you name the ability to review medical information and discuss protected health information with your health care providers.

A health care proxy may also include language for an advance medical directive, which gives instructions for end-of-life decisions. This is often called a “living will,” and is your legal right to reject medical treatment, decisions about feeding tubes and the number of doctors required to determine the probability of recovery and pain management.

A health care power of attorney does not generally empower another person to make decisions, until you are unable to do so. Unlike a general durable power of attorney, which permits another person to make financial or business decisions with you while you are living, as long as you are able to understand your medical situation, you are still in charge of your medical decisions.

A guardianship is completely different from these documents. A guardian may only be appointed, if a judge or jury finds you wholly or partially disabled in such a way that you cannot manage your own finances or your health. The appointment of a guardian is a big deal. Once someone has been appointed your guardian, you do not have any legal right to make decisions for yourself. A court will also appoint a legal fiduciary, who will make your financial decisions.

There are record-keeping requirements with a guardianship that do not exist for a power of attorney. The court-appointed representative is responsible for reporting to the court any actions that they have taken on your behalf.

To have power of attorney documents executed, the person must be capable of understanding what they are signing. This means that someone receiving a diagnosis of dementia needs to have these documents prepared, as soon as they learn that their capacity will diminish in the near future.

If the documents are not prepared and executed in a timely fashion, a guardianship proceeding may be the only option. Planning in advance is the best way to ensure that the people you trust are the ones making decisions for you. Speak with an experienced estate planning attorney now to have these documents in place.

Reference: The News-Enterprise (Oct. 13, 2019) “Medical guardianship versus power of attorney”


How Do I Calculate My Executor’s Fee?
How Do I Calculate My Executor’s Fee?

How Do I Calculate My Executor’s Fee?

How Do I Calculate My Executor’s Fee?

An executor’s fee is the amount of money that’s charged by the individual who’s been named or appointed as the executor of the probate estate for handling all of the necessary tasks in the probate administration.

If you’ve been appointed an executor of someone’s estate, you may be entitled to a fee for your services.

The executor or personal representative fee could be based upon a variety of factors. Some of these factors may be dependent upon the law in your state, says nj.com’s recent article, “Both of my parents died. How do I calculate the executor fee?”

In most states, the executor fee is set by statute. For example, in New Jersey, it is 5% of the first $200,000 of assets taken in by the executor, 3.5% of the next $800,000 of assets, and 2% on anything in excess of $1 million. Likewise, California has a sliding scale based on the amount of the estate.

The New York General rule. Under New York Surrogate’s Court Procedure section 2307, executor fees are based on the value of the probated estate. Fees range between 2 and 5% of the total amount of estate money the executor receives and pays out.

Under the NY Surrogate’s Court’s rules, executor fees are calculated as follows:

  • For receiving and paying out money not exceeding $100,000, the executor fee is 5%
  • For receiving and paying out additional money not exceeding $200,000 at the rate of 4%
  • For receiving and paying out additional money not exceeding $700,000 at the rate of 3%
  • For receiving and paying out additional money not exceeding $4,000,000 at the rate of 2.5%
  • For receiving and paying out all sums above $5,000,000 at the rate of 2%

However, in Minnesota and Nebraska, the law states that the fee should be “reasonable.”

The amount of work involved is determined by the specific estate. The executor is generally responsible for collecting the estate assets, paying the debts and taxes (if any) and then giving what’s remaining to the heirs.

If you elect to take the commission, it’s taxable income which must be shown on your personal income tax return.

In New Jersey, if there are co-executors, the statute says that an additional 1% can be included to the commission. However, any one executor cannot receive more than the amount to which a sole executor is entitled.

Note that the executor only receives a commission on what he or she takes control of as executor.

This means that the executor doesn’t get a commission on assets that have beneficiary designations on death or that are jointly owned with right of survivorship. These assets pass outside of the will and the executor doesn’t take possession of these assets.

How Do I Calculate My Executor’s Fee? In many instances, the probate estate of the first spouse to die is less than the second. That’s because many of the assets were held jointly with right of survivorship. As a result, they aren’t probate assets and are not subject to the commission.

If that’s the case, the commission on the first spouse’s estate would be much less than the commission on the second estate.

Reference: nj.com (October 10, 2019) “Both of my parents died. How do I calculate the executor fee?”


Be Prepared: Death Happens when We’re Not Looking
Death Happens when We’re Not Looking

Be Prepared: Death Happens when We’re Not Looking

Death Happens when We’re Not Looking. There are hard topics, like sickness and death, that estate planning prepares for. Then there’s the unexpected, says Wicked Local Dedham in the article “Five Things to consider before getting hit by the bus.”  Be prepared: Death Happens when We’re Not Looking. Without an estate plan in place, families have to cope with the pain of a sudden loss, in addition to managing a funeral and estate minus any advance planning. It makes a bad situation worse.

The solution is relatively simple: have an estate plan and a “just in case” plan ready.

Access to money for expenses. If your family needed to get funds to pay bills and funeral expenses, how would they do that? If you don’t have close family nearby who you can count on, who will take care of these things for you? Note that today, when most banking statements and billing payments are done online, you’ll also need to have a list of online accounts and either name someone to manage your digital property or list your passwords. Plan for how someone you trust, will access this information.

Life insurance and other assets with beneficiaries. If you have one or more life insurance policies, does anyone but you know about them? Do your beneficiaries know that they are your beneficiaries? If your employer or former employer offers life insurance, disability insurance or any other benefits, make sure that someone else besides you knows about them. If you receive a pension, does your pension get transferred to your spouse, or do the payments stop when you die? Do you know what your Social Security benefits would be to a surviving spouse, or family members?

End-of-life medical decisions. If you don’t have an Advance Directive in place, it’s time to speak with an estate planning attorney and add this to your estate plan. If you don’t have a will, Health Care Power of Attorney or other documents prepared, now would be the time to get these plans in place.

You should have a named Health Care Agent, named in your Health Care Power of Attorney, who understands your wishes for end-of-life care, if you should suffer a stroke, be critically injured in an accident or experience an illness that leaves you incapacitated. These conversations are not just for you, but for your loved ones. It will give them peace of mind to know that they are following your wishes, if a hard decision, like removing you from life support, needs to be made.

Final arrangements. Does anyone know your wishes for burial or cremation? Do you want a traditional funeral or a memorial service? Who should be notified of your passing? Making this information available for those who will be in charge, is a kindness to them. If they need to get names and emails from your computer, make sure they know how to log into your system. You could also print out a list and tell them where you are placing it.

Last will and testament. The first question is, do you have a will? The second is, does your family know where it is located? Tell your family and the person you have selected as the executor about the existence of your will, where it can be found and where other important documents are located. If you haven’t had your will created or haven’t reviewed your will in three or four years, it’s time.

Be prepared: Death Happens when We’re Not Looking. Death does not come without a lot of paperwork. For some people, a bad health diagnosis serves as a wake-up call and that’s when they decide to put their affairs in order. For others, the death of a close family member or friend is the trigger. Whatever motivates you, speak with an experienced estate planning attorney to have an estate plan created.

Reference: Wicked Local Dedham (Oct. 10, 2019) “Five Things to consider before getting hit by the bus.”


Can I Protect My Daughter’s Inheritance from Her Loser Husband?
Can I Protect My Daughter’s Inheritance from Her Loser Husband?

Can I Protect My Daughter’s Inheritance from Her Loser Husband?

Can I Protect My Daughter’s Inheritance from Her Loser Husband?

It’s not unusual for a parent not to fall in love with their child’s choice for a spouse. They may even go as far as to try and make certain that their daughter- or son-in-law doesn’t get their inheritance.

You can shield your money from your new son-in-law, says nj.com’s recent article “My daughter is getting married. How can I protect her inheritance?”

A good strategy is to create a trust, either as part of a will, or a living trust that would receive the estate assets for the benefit of the child and the child’s children.

A trust is a fiduciary arrangement that lets the trustee maintain trust assets, on behalf of a beneficiary or beneficiaries.

Trusts can be created in many ways and can specify precisely how and when the assets can be allowed to pass to the beneficiaries.

The trustee is a person or company that holds and administers the trust assets for the benefit of a third party. A trustee can be given a wide range of authority in the trust agreement. The trustee makes decisions in the beneficiary’s best interests, and they have a fiduciary responsibility to the trust beneficiaries.

Trust assets can be used for the health, education, maintenance and support of a child. The assets that are left over (if any) at the death of the child and any remainder are directed to go to the grandchildren outright or in trust.

Provided the assets distributed to the daughter aren’t commingled with the assets of her husband, those assets wouldn’t be subject to equitable distribution, if they couple were to one day get divorced.

The daughter can also enter into a prenuptial or postnuptial agreement. With this type of agreement, her spouse waives the right to any assets inherited by the daughter.

Talk these types of situations over with a qualified estate planning attorney.

Reference: nj.com (September 27, 2019) “My daughter is getting married. How can I protect her inheritance?”


Mark Twain’s Estate Plan Went South, Despite His Efforts
Mark Twain’s Estate Plan Went South, Despite His Efforts

Mark Twain’s Estate Plan Went South, Despite His Efforts

Mark Twain’s Estate Plan Went South. Despite His Efforts.
“I came in with Halley’s Comet in 1835. It is coming again next year, and I expect to go out with it. It will be the greatest disappointment of my life if I don’t go out with Halley’s Comet.” Mark Twain

Mark Twain was right. He was born the same year that Halley’s Comet appeared and he passed away one day after the comet’s closest approach to earth. A month later, his last will and testament was admitted by a Connecticut probate court appointing three friends as executor trustees to administer his estate. According to the article “Who will advocate for your estate?” appearing in 83 degrees, his choices turned out to be a terrible mistake.

Twain thought long and hard about his estate. He selected a railroad executive, a businessman and a banker to be his executors. He had two concerns: to protect his only child and sole heir, Clara Clemens, and to keep his money in the family.

He understood the complexity of his estate, which included manuscripts, stocks, bonds, copyrights, real estate, book deals and the management of The Mark Twain Company. He also knew that his daughter was a spendthrift. The three executors, he thought, would advocate for him and protect his daughter.

His trust specifically directed quarterly income payments to Clara, “free from any control or interference from any husband she may have” because of her tendency to marry, divorce and remarry.

However, three executors were not enough. One died, another quit under duress and the third was forced to resign. Without having named perpetual successor trustees to implement Twain’s wishes, the estate was up for grabs. Clara remarried and her next husband borrowed $350,000 against the estate. Clara then disinherited her own daughter before dying. This promoted Nina to file an undue influence lawsuit against her stepfather. A probate judge eventually awarded Clara’s second husband 65% of Twain’s estate for life.

Mark Twain’s Estate Plan Went South. Despite his efforts. How was it possible that this happened? Who was looking out for Mark Twain’s wishes? Sadly, no one.

Whether estates pass via a last will and testament or revocable trust, selecting the right executors and trustees—and naming successor executors and trustees–is a key step to a successful estate plan. Our heirs today include minor children, grandchildren, stepchildren, half-siblings, dysfunctional relatives and ex-spouses. The challenges they present to executors and trustees have only become more complex, since Twain’s time.

Twain had one heir, and he was aware of her weaknesses. He planned right, but selected the wrong individuals to be his executors. They were not up to the task of managing his complex estate and his daughter’s life decisions. This is a case where a professional executor and trustees would have likely been a better option.

Speak candidly with your estate planning attorney about your potential executors and trustees. Will they be able to manage the necessary decision making and personalities in your family? Consider whether an impartial and trustworthy professional might be a better option.

Reference: 83 degrees (August 27, 2019) “Who will advocate for your estate?”


Should I Get an Attorney if I Have to Fight Over my Mom’s Estate?
Should I get an attorney if I have to fight over my mom's estate

Should I Get an Attorney if I Have to Fight Over my Mom’s Estate?

Should I get an attorney if I have to fight over my mom’s estate?

Blended families are common these days. With blended families may come some estate planning issues. One of these is when a step-sister is appointed as executor of your mom’s will.

nj.com’s recent article, “I’m fighting with my mom’s executor. What can I do?”, looks at this situation where there are two homes involved—one in which the executor sister lives and the executor’s other sister lives in the second house. The daughter here has been denied access to anything other than a few photos, she must share with her only full sister.

While many people believe they can’t afford an attorney, in a battle over an estate, you’re probably going to need one.

Let’s assume the daughter is an heir entitled to a portion of her mother’s estate.

While the daughter says she’s been denied access to the homes, an attorney will check to see if the will gives her a right to possession and/or ownership.

If the daughter doesn’t have a copy of the will, the executor must provide one to her.

She can also get a copy from the surrogate’s office or county court, where the will was probated.

The will likely describes what her rights are and the appropriate action the attorney can take on her behalf.

The will might provide her stepsisters with the right to live in the homes, it may provide them with ownership of the homes, or it may simply provide that the estate is to be divided between the beneficiaries in certain percentages or dollar amounts.

Should I get an attorney if I have to fight over my mom’s estate? Yes. The first step is to retain a qualified estate planning attorney and to take a look at the terms of the will.

Reference: nj.com (September 19, 2019) “I’m fighting with my mom’s executor. What can I do?”


What Can I Do with Unspent Money in a 529 Plan?
What Can I Do with Unspent Money in a 529 Plan?

What Can I Do with Unspent Money in a 529 Plan?

What Can I Do with Unspent Money in a 529 Plan? Here are some ideas for how to spend money saved in a 529 plan to avoid taxes and the 10% penalty.

Los Altos Online’s recent article, “How to use up leftover money in a 529 college savings plan,” says there several ways to use unspent money in a 529 plan, while avoiding the taxes and/or penalties. Here are some options to consider.

Graduate school. If your child is interested in an advanced degree, the money can be used tax free, just as it was for college. Any school that gets financial aid qualifies.

Another child. You can change the beneficiary of the 529 plan to another qualifying family member, without any tax implications. If you have other children, the funds can be used to pay for their qualified expenses—even if you have other 529 plans for them. Money in 529 plans can now also be used for elementary and secondary education.

Another relative. You can change the beneficiary to parents, aunts, uncles, nieces, nephews, stepparents and even first cousins. There’s no deadline for using the funds, so you can keep it as a gift for a future grandchild. However, avoid skipping a generation, because that could trigger a tax penalty.

Your own or your spouse’s career. If you’re interested in changing your career or just want to get a new degree in retirement, using leftover 529 funds will let you avoid using other savings.

Estate planning. You can choose to give a 529 account to an heir. You keep control of the account until you pass away and can continue to make annual tax-free contributions up to the gift-tax exclusion amount, provided the account value doesn’t exceed the state’s maximum limit. After you die, the value isn’t counted as part of your estate for estate taxes.

Offset any scholarships. You can withdraw any amount from the 529 plan, up to the value of all scholarships and the 10% penalty is waived, even if you apply years after the scholarship was earned. The earnings are taxable, but because distributions include both earnings and contributions, only part of this will be taxed.

Give the money to your child or spend it yourself. You could just pay the taxes and the 10% penalty and use the money as you please. The earnings are taxed at your child’s rate.

Reference: Los Altos Online (September 18, 2019) “How to use up leftover money in a 529 college savings plan”


When are You Done with Estate Planning?
When are You Done with Estate Planning?

When are You Done with Estate Planning?

When are You Done with Estate Planning?

A family has set up their estate plan. Two sons are already in the farming business and are thriving. Their daughter will receive the proceeds from a second-to-die life insurance policy and their considerable savings. The amounts are not equal in amount, but they are an equitable inheritance, and it seems like the couple has done its homework.

However, asks an article in The Courier, “The will is done, you’re sitting pretty—but are you?”

Estate planning is a lot like putting together a jigsaw puzzle. Like farming, it gets put together over time, piece by piece. Each piece represents something that needs to be done. For instance, a key part of the puzzle is having a last will and testament. That functions like building the outside frame of the puzzle, for those who start their puzzles by building the perimeter first. It frames the rest of your estate plan.

Other pieces are included within the will, like naming a personal representative, or executor. This is the person who is in charge of distributing your assets and making sure that the directions in your will are followed, when you pass away.

Do you have a plan for what happens when you die? For instance, if a husband dies, is there a plan for the wife to maintain the farm, or will she sell machinery and other transitory assets?

When are You Done with Estate Planning? For the couple mentioned above who has the will, a transition spelled out in the will and a second-to-die policy in place to supplement the daughter’s inheritance, congratulations: they have many pieces of the puzzle in place. However, that’s not everything.

The other parts of the puzzle have to do with issues while the couple is still living. What happens if one or both are injured, or become ill? Who should take over the farming in the short or long term? Who will care for the spouse or spouses? Will they depend on each other for caretaking, or their daughter?

The number one worry for seniors is whether they have enough money to last until they die. However, by taking a portion of their savings and investing in a long-term care insurance policy, they can rest assured that they or their spouse will get the care they need—in a nursing home or at home—without burning through the family’s savings.

This piece of the estate planning puzzle—preparing for illness or disability—is often missing, and it can turn the rest of the estate plan into a pile of unattached pieces.

Speak with an estate planning attorney today to make sure your estate plan does not have any missing pieces. If you have not recently reviewed your estate plan in the last three or four years, schedule a review. Changes in the law and changes in your own life may make your old estate plan out of date and may no longer achieve the goals you had in mind.

Reference: The Courier (Sep. 4, 2019) “The will is done, you’re sitting pretty—but are you?”