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Late Film Director's Estate Kept Private, Likely Due to a Trust

In all likelihood, [film director] Nichols had a "revocable living trust," that contained the dispositive provisions of his estate so that his wishes were shielded from the public. 

 

Celebrities and high-profile estates tend to be a hot topic in the media, but sometimes the media doesn't get the full story.

 

An article from The National Review, titled "The Death of Mike Nichols and Estate Planning," sheds some light on why we know so little about the estate of award winning director Mike Nichols.

 

It seems the "[d]etails of the distribution ...are concealed in a private trust that has not been made public."

 

Experts say that, in all likelihood, Nichols had a "revocable living trust" containing the dispositive provisions of his estate. Consequently, with such a trust his wishes were shielded from the public and not part of a court record, which is public.

 

All we can do is speculate. We can’t tell, except for the tangible personal property, if the famous director split his assets between his wife and children—or left them all to his wife, or all to his children, or all to charity, and so on. Those details are in his revocable living trust. He may have also gifted his assets during his life—or he may have passed them by beneficiary designation or title.

 

So, don’t believe everything you read. Remember, just because it’s in print doesn’t mean it’s true, and things aren’t always as they seem. From an estate perspective, the moral of the story according to Forbes is to use a revocable living trust to avoid probate and to provide many advantages over just a will, not just the privacy advantage that Nichols achieved.

 

Contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney, to help determine whether a revocable living trust is appropriate for you.

 

Reference: The National Review (December 9, 2014) "The Death of Mike Nichols and Estate Planning"

Estate Planning without the Stress

Wouldn’t knowing someone will step in if you become incapacitated create a little peace of mind? Wouldn’t knowing that your family is taken care of create even more peace of mind? Wouldn’t knowing there is a plan in place – a plan you developed – if something happens to you take a significant weight off your shoulders?

 

Estate planning can do a lot of things for you, but one of the most valuable takeaways is peace of mind.

 

A recent Forbes article, titled “11 Fundamental Elements of a Stress-Free Estate Plan,” provides practical advice on how to design a plan that protects your assets and provides for loved ones. While everyone’s individual needs are a bit different, there are some basic components you need to examine along with deciding who gets what.

 

Here are some key points to consider from the original article:

 

• Determine who you want managing your affairs if you become disabled, incapacitated, or pass away;
• Plan in the event you have to live in a nursing home or receive significant long-term healthcare, as well as the effect of Medicaid on your financial needs;
• Protect the assets inherited by your heirs from litigation and divorce;
• Provide for the care of children and grandchildren who may be too young or inexperienced to effectively manage money;
• Provide for children or grandchildren with special needs or in special circumstances;
• Prevent challenges to your estate plan; and
• Plan a family estate plan for blended families that ensures everyone is provided for according to your wishes.

 

Start your planning now. Read more about these basics to be covered today … because estate plans are as much about today as they are about the future.

 

Be sure to contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney.

 

Reference: Forbes (December 9, 2014) “11 Fundamental Elements of a Stress-Free Estate Plan”

Holidays on a Retiree Budget

The secret, experts say, is to find a balance between keeping some comforting traditions and letting go of ones that obviously no longer fit.

 

How do you manage the holidays on a retiree budget? If you are a retiree or will be retiring in the coming year or years, then this article may be for you.

 

Experts say that the key is to find a balance between keeping some of the traditions and saying goodbye to those that no longer fit.

 

The first holiday after retirement can be a “golden opportunity” to set new expectations, accordingly to a recent article in the Chicago Tribune titled “Tips for recent retirees to stretch holiday budget.”

 

With new-found additional free time, retirees can offer dinners out or home-cooked meals, rather than spending money on expensive toys for the grown children. They can also write letters to their grandchildren filled with family stories or set spending limits on gifts that focus on creativity rather than on price.

 

Don't force sudden change all at once. If—and only if—you can afford to do so. The original article notes that keeping holiday budgets the same in that first year of retirement can be comforting when you've been hit with a lot of other dramatic changes.

 

However, what must change, is the conversation. With the family gathered, you can begin the discussion about your retirement in general, not just during the holidays. It's a chance to say, “We're retired now, and there are some changes we want to tell you about.” Also, it's the perfect time to talk about estate planning and to tell your kids that you have a solid retirement plan, and that they need not worry.

 

It’s a nice idea to also set up some new expectations. The original article also advises speaking with, or perhaps coordinating with, the other set of grandparents on the presents for children and grandchildren. No sense creating a sort of unnecessary “gift-giving arms race.”

 

Getting a plan together for your retirement is always a good idea and worthwhile. Talk with your local Sacramento County estate planning attorney Robert A. Gordon of Redkey Gordon Law Corp to help coordinate a sound strategy with your financial advisor.

 

Reference: Chicago Tribune (December 8, 2014) “Tips for recent retirees to stretch holiday budget”

Retirement Planning Changes in 2015: What You Need to Know

There were five changes that occurred in 2014 that everyone planning for retirement needs to know about.

 

The phrase "roll with the changes" may be 2014's retirement planning motto. While we could review political, economic and international, those affecting IRA planning have been especially interesting for retirees and the estate planning attorneys who advise them. Not surprisingly, Forbes has weighed in with an article chock full of advice titled “5 Biggest Retirement Planning Changes for 2015”.

 

A Change in Creditor Protection for Inherited IRAs. Overall, qualified retirement accounts, such as 401(k)s, pensions, and IRAs, have good creditor protections. However, in 2014 the Supreme Court cut back on some protection for IRAs. Typically, up to $1.25 million are protected from creditors if it’s in a Roth or Traditional IRA under federal bankruptcy laws. But the U.S. Supreme Court, in Clark v. Rameker, held that inherited IRAs are not “retirement funds.” So these don’t get creditor protections afforded under federal law. This might change how you want to bequest assets to your heirs. You should speak with a qualified estate planning attorney if you have questions.

 

Qualified Longevity Annuities to 401(k)s. Annuities have long been an important part of ERISA qualified retirement plans. The primary form of payment for married participants in a defined benefit plan is a qualified and joint survivor annuity. However, longevity annuities—which can be used to pay for long-term care expenses and protect against outliving your assets—haven’t had a big part in qualified plans even though there’s a natural fit with retirement planning. The United States Treasury changed its rules in 2014, and now longevity annuities can be used in 401(k)s and IRA markets. Individuals are now allowed to hold a qualified longevity annuity contract, or “QLAC” within an IRA or 401(k) that’s worth up to the lesser of 25% of their account balance or $125,000. Under the new Treasury rules, QLACs are excluded from the retirement account balance when calculating required minimum distributions, which gives people looking at retirement one more way to create a solid income plan for when they stop working.

 

IRA to IRA Rollovers. Individuals can receive an IRA distribution and roll those funds over to another IRA, or the same IRA, within 60 days to avoid tax issues. The old position of the IRS was that this rule applied to each IRA. As a result, if you had five IRAs, you could take a distribution from each of the five IRAs and roll it over to the same or another IRA within 60 days without any issues. However, the law said that a rollover from an account was allowed only once in a 12-month period. After the Tax Court decision in Babrow v. Commissioner, the 12-month rollover limitation now applies to all IRAs.  This mean that only one 60-day rollover is allowed in any 12-month period, regardless of the number of IRAs an individual owns.

 

Increased Access to Annuities in Target Date Funds. Another way to give qualified defined contribution plan participants more access to a guaranteed income source, Treasury granted expanded access to annuities inside of 401(k) plans. The new rules allow 401(k)s to offer target date funds that have deferred income annuities as the default investment option. The target date fund can have annuities that start payments at retirement or later, giving people another way to produce guaranteed retirement income and protect themselves from going broke later in retirement.

 

Read more about these changes and talk to your local Amador County estate planning attorney, Robert A. Gordon of Redkey Gordon Law Corp about how they may affect and benefit you and your estate.

 

Reference: Forbes (December 8, 2014) “5 Biggest Retirement Planning Changes for 2015”

Estate Planning for Singles: What You Need to Know

“For those who are single, whether they’ve always been single or they find themselves single again, there are some unique [estate-planning] issues,” says Doug Rothermich, managing director, wealth-planning strategies at TIAA-CREF.

Married couples usually can see the benefit of having an estate plan, but single people mistakenly think estate planning does not apply to them.

Accordingly to a recent Wall Street Journal article titled “Estate-Planning Essentials for Single People,” single people face some unique estate planning issues. This is true whether they have always been single or now single again.

The original article reviewed several areas that should be of concern when it comes to estate planning for singles, to include:

Heirs. If you die and don't have a will or trust, your property may be divided up by the probate court according to the laws of your state. While that might work for some married couples who have children, it rarely works for single people. Typically, if you're married and you die without a will or trust, your spouse inherits most if not all of your assets. On the other hand, if you're single and die intestate, your estate could get distributed in unintended ways. Generally it passes first to your children (if any), then to your parents (if they're alive), any siblings, then more-distant relatives. Last, if no living relatives can be found, the state will take it!

So you can see how important it is to at least create a will and/or a revocable living trust that states specifically how you want your assets to be distributed after you die, as well as to name an executor and/or trustee to carry this out.

Decision Makers. If you don't designate an individual to take care of your financial and medical affairs in the event of your incapacity, your assets and care could fall into the hands of a distant relative or a stranger appointed by a judge. Be sure to sign a general power of attorney, an advance health-care directive, and an authorization for federal HIPAA laws to empower trusted individuals to make financial and medical decisions on your behalf in the event you become incapacitated. For those without spouses or children to fill these roles, it's especially important for single people to take care of this.

Estate Taxes. Any tax liability for your estate depends on how you are single. If you never married or you're divorced, any of your estate that's more than the federal individual exclusion is subject to tax. If you are a recent widow or widower, your federal exclusion amount includes—not only the individual estate-tax threshold—but also may include any unused portion of your deceased spouse’s exemption amount, which is termed “portability.” This is true even if you remarry. While the federal estate-tax exemption has risen in recent years, 19 states plus D.C. impose estate taxes of their own and/or inheritance taxes on the heirs who receive these assets.

Just a few states follow the federal portability rules, so you might need to create a special trust to make use of two exemptions. An experienced estate planning attorney can assist you with this.

If you are single or know someone who is, then these estate planning moves should be made without delay. This is not a do-it-yourself project either. Get help by contacting an experienced estate planning attorney, Robert A. Gordon of Redkey Gordon Law Corp.

Reference: Wall Street Journal (December 7, 2014) “Estate-Planning Essentials for Single People”

Ring In the New Year with a Roth IRA

Sharron Epperson, who is CNBC’s senior personal finance correspondent, stressed the importance of retirement planning in the coming year — with two products in particular.

Need a financial resolution for 2015? Save as much money as you can in a Roth IRA. One of the best things you can do to set yourself up for financial success in the future is to be strategic with your savings.

According to a recent article at gobankingrates.com, titled “CNBC’s Sharon Epperson on Why You Need a Roth IRA in 2015,” in the event of an emergency make sure you're able to withdraw your contributions at any time without incurring penalties or fees. This is also a terrific way to save for retirement, because you might be in a higher or lower tax bracket when you’re in your 60s. Who knows?

With a Roth IRA, typically you can withdraw money tax-free after age 59½. If you qualify for a Roth, you could save up to $5,500 in 2015, or $6,500 if you’re 50 or older. Don’t forget that you have until April 15th to make your contributions for 2014.

Another type of Roth account for retirement savings is a Roth 401(k). This version doesn't have any income limits. If your job has this type of retirement plan (many large employers are expected to offer a Roth 401(k) option in 2015), you can contribute up to $18,000 next year (or $23,000 if you’re 50 or older).

Unlike a traditional IRA or 401(k), Roth contributions won’t reduce your taxable income; however, your overall tax savings (tax-free withdrawals) are likely to be much greater when you retire.

Get additional information by contacting Robert A. Gordon, an experienced estate planning attorney.

Reference: gobankingrates.com (December 6, 2014) “CNBC’s Sharon Epperson on Why You Need a Roth IRA in 2015 ”

Forget the Store-Bought Presents, Give Assets Instead!

Gifting can be an estate planning tool, for you can save on future estate taxes and have the pleasure of watching your dollars work for your children or grandchildren while you are still alive.

If you're tired of the standard store-bought items for gifts, you may consider a different spin on gifting. What about giving away some assets to your children or grandchildren?

In certain states, the estate exemption is just $1 million, not the $5 million (indexed for inflation) as at the federal level. CBS Boston's recent posting, titled “All About Gifting Assets,” warns that things can get complicated pretty fast and you should have a good estate planning attorney to help you.

The annual gift exclusion for anyone is $14,000. That means you can transfer this amount this year (and then next) to as many recipients as you want, provided you have the money to make the gifts. If married and your spouse joins in, then you can gift a total of $28,000. What's more, you can pay medical or school bills for an individual and not incur a gift tax. In other words, such “gifts” are not counted toward that gift exemption amount.

Taking advantage of these opportunities is a great idea, so why not give away some money to help the next generation accomplish their goals (or to pare down your estate so you won’t owe estate taxes). For instance, if you have an estate worth $1.2 million, there will be no federal estate taxes but (depending on where you live) some state estate taxes. Would you rather give it away to your family or to the government?

If any of your grandchildren are in college or grad school you can pay their tuition and medical insurance, but you need to pay it directly to the school or insurance company. And after paying the bills (if you still have some money left), you can still hand over a check to them for $14,000, or with your spouse, you can make it $28,000.

Want to find out more? Contact your local Amador County experienced estate planning attorney Robert A. Gordon of Redkey Gordon Law Corp.

Reference: CBS Boston (November 27, 2014) “All About Gifting Assets”

Recent Survey Says 80% of Americans Failed Retirement Literacy Test

“We’re not surprised by the fact that people don’t know a lot about retirement income planning,” says David Littell, program director at the American College. “I was surprised at how badly they did.”

Could you pass a retirement literacy test? Apparently, 80% of Americans surveyed did not.

These Americans were polled on 38 retirement literacy questions on basics like Social Security, life expectancy, IRAs, life insurance and investments, and the mechanics of bonds. Sadly, only 20% were given passing grades, the college said. This isn't the first survey to raise concerns about Americans’ retirement readiness. In an article titled “Americans fail in retirement literacy,“ The (Palm Springs, CA) Desert Sunnoted similar shortcomings in a 2011 report.

However, the findings of that earlier report weren’t nearly as bad.

According to the article, retirement literacy and planning are critical today more than ever because Americans are on their own when it comes to retirement. Company pension plans typically have been replaced by company-sponsored 401(k) plans and IRAs.

The original article reports that many Americans — of all ages — didn’t have the best financial role models in their parents, nor do we get any formal training or teaching in the area of investments, Social Security, long-term care and related topics.

Here are a few highlights of the new report:

• Only 1 in 4 have a written financial plan;
• A significant minority have never figured out how much they need to retire;
• Only 31% know that $4,000 is the most they can afford to withdraw per year from a $100,000 retirement account to make it last 30 years;
• More than half underestimate the life expectancy of a 65-year-old man, meaning they might not know how long their assets must last; and
• Just 54% realize that Social Security benefits increase each year you delay retirement up to 70 and don't know that it is best to wait until 70 to claim Social Security if you expect to live to 90.

The article states that many people lack important knowledge about financial products and investing in general: this collective financial ignorance threatens to undermine the security of retirees. Talk to an experienced estate planning attorney to make sure you are getting good grades regarding your retirement knowledge or can start now on some extra credit to ace this all-important test. 

Need more information? Contact Robert A. Gordon of Redkey Gordon Law Corp for experienced advice.

Reference: The (Palm Springs, CA) Desert Sun (December 6, 2014) “Americans fail in retirement literacy”

Forget the House - Who Gets Grandma's China?

There is no magic formula or solution available for transferring personal property because each family and their possessions are different. However, the Extension program "Who Get's Grandma's Yellow Pie Plate?" suggests there are some factors for every family to consider whether planning for the transfer an individual's own personal property or working together to plan the transfer of items belonging to a family member.

While an estate plan is critical in dealing with titled property, there are few individuals who take the time to plan ahead regarding the items in their household.

An article recently published in the Hays (Kansas) Daily News, titled “Discussion might ease transfer of family heirlooms,” looks into this issue and offers some advice.

Personal belongings like holiday decorations, jewelry, stamp collections, furniture, photo albums, quilts or sports equipment are referred to as non-titled property—which means there's no legal document (such as a title) to indicate who owns the item.

As the original article states—and you can imagine that this is the case most of the time—the decisions about non-titled property are not often made during ideal circumstances. Many times these decisions are made in times of transition, like remarriage, the downsizing of the family home, or during a family crisis like a death or moving an elderly family member to a health care facility.

This whole decision-making process is more challenging and sensitive when family members are emotional and focusing on these other events. While not easy, the original article says decisions about the transfer of personal property have the potential to be a time to reminisce, share memories, or work together through the grieving process.

Unfortunately, there's no magic formula or solution available for transferring personal property, as every family and their possessions are different. However, you should bear in mind some critical factors, to include:  

• Understanding the sensitivity of the issue for both owner and heirs.
• Determining what you want to accomplish in the transfer process.
• Deciding what's "fair" in your family.
• Recognizing that belongings have different meanings for different people.
• Exploring distribution options and consequences.
• Agreeing to manage conflicts if they arise.

Property owners have the legal right to decide when and how to transfer their non-titled property. When this is before death, it allows the owner to consider the wishes of recipients and enjoy the gifting process. If this is done after a death, there's a chance that the disbursal might not reflect the wishes of the owner. When you add to this emotions and an individual's sense of entitlement, then it's hard to know in these circumstances what's "fair." This can be the source of real conflict. Disputes about an inheritance might cause siblings to break off relationships with each other.

Transferring non-titled personal property takes time, as well as physical and emotional energy. This holiday season might be a good time to begin conversations about family belongings.

More open and honest communication among the people involved is always a good thing and can make these arrangements smoother with less conflict.

For further information regarding this contact Robert A. Gordon, an experienced estate planning attorney, of Redkey Gordon Law Corp.

Reference: The Hays (Kansas) Daily News (November 27, 2014) “Discussion might ease transfer of family heirlooms”

Estate Planning Tips from Santa: Make a List and Check It Twice!

Yes, nobody relishes thinking about the day when they will no longer be around. But with a little effort and foresight, you can give your family the ultimate gift: a piece of mind. Here's a quick checklist of estate planning essentials.

Not really ready for an estate planning talk around the fire this holiday season? It's definitely not a pleasant conversation when considering the end of one's life. Yet, if you could give your family the gift of "peace of mind", would you? Probably so. What does this gift look like?

The Street’s recent article, “The best holiday gift for your family: estate planning,” gives us a quick checklist of estate planning essentials:

Wills and Trusts. These legal documents state how you'd like to distribute your estate after you are gone. You can also appoint a legal guardian if you have minor children. Without a legal will that’s up-to-date, your assets might be divided by the probate court according to state law, rather than how you would want. Dying “intestate” can create problems for your heirs, and it can be a long and expensive process.

Living Trusts. Some people prefer creating a living trust. A living trust is a legal document that places your assets into the trust for administration during your lifetime. You can name yourself as the trustee and even appoint someone else in the event you become incapacitated. When you die, the assets are transferred to your beneficiaries as you provide. The great thing about a living trust is that it is much more difficult to challenge by a claim on your wealth. Also, a living trust isn’t a public record, so your privacy is protected, and your wealth can be divided up without state oversight.

Living Wills. If you become seriously ill and are unable to make decisions for yourself at the end of your life, you will be glad you have a living will. This, along with a health care directive and power of attorney, will make sure your medical care is as you wish.

Durable Power of Attorney. Estate planning attorneys will advise you to have a trusted individual who can handle your finances and property if are disabled and are unable to take care of your own affairs. 

Life Insurance. If you own a home with a substantial mortgage and have young kids, you want to make sure you have enough life insurance to pay for their educational expenses.

Crucial documents. The original article also advises that you make sure your spouse, family, and estate planning attorney know the location of the documents they need to execute your estate according to your wishes.

So be jolly this holiday season, and take these important, practical steps to make sure your estate passes easily to the next generation when needed. To find out more, contact your local Amador County experienced estate planning attorney Robert A. Gordon of Redkey Gordon Law Corp.

Reference: The Street (December 4, 2014) “The best holiday gift for your family: estate planning”