Redkey Gordon P.C.

Retirement and Estate Planning: Unmarried Couples vs Married Couples

Although some couples remain unmarried to protect their estates, that strategy backfires if you end up paying estate taxes. If you choose not to marry, you and your partner need to educate yourselves on your estate planning and retirement options.

If you’re married, you’re able to inherit an unlimited amount of assets from your spouse—without paying any state or federal estate taxes. In addition, you’re permitted to give an unlimited amount of assets to your spouse while you’re alive without filing a gift-tax return.

This exemption doesn’t extend to unmarried couples. Estates of up to $5.43 million are exempt from federal estate taxes. Some states, however, have lower thresholds for their estate or inheritance taxes.

A recent article in Kiplinger’s Personal Finance, titled “Retirement: Estate planning for unmarried couples,” explains that the tax code is also kinder to married couples as far as inherited IRAs. A spouse who inherits an IRA is allowed to roll the account into his or her own IRA, and a surviving spouse can delay taking required minimum distributions until age 70½. As he or she waits to take the RMD, the account will continue to grow tax-deferred. A spouses can also roll an inherited Roth IRA into their own Roth, and they’re not required to take RMDs.

Not so for unmarried partners.

An unmarried partner who is named as an IRA beneficiary can roll the account into an inherited IRA and take distributions based on his or her life expectancy.

Questions about estate taxes can be answered thoroughly by an experienced estate planning attorney. Talk to Robert A. Gordon of Redkey Gordon Law Corp to devise the best strategy for your specific situation.

Reference: Kiplinger’s Personal Finance (April 12, 2015) “Retirement: Estate planning for unmarried couples”

Don’t Make These Two Estate Planning Mistakes!

"The costliest errors are ones we make ourselves, often without realizing how much damage we're doing."

"Estate planning is intertwined with the financial plan," a newsmax.com article explained, and it’s no secret that many individuals fail to prepare for retirement. When doing an estate plan, the article offers some sound advice:

• Make sure an estate planning attorney examines every major financial document;
• Sign a healthcare proxy, living will and power of attorney; and
• Discuss all estate issues with your family, even if it’s uncomfortable

Those that do plan on their own make some major mistakes, and here are two:

1. Skimping on savings. The article cites a recent retirement survey in which about 50% of the near-retirees who were asked what they could have done to better prepare for retirement said they should have saved more. The more and earlier you start saving, the more your money can grow.
2. Overpaying for investments. The more you pay in investment fees, the less you have to benefit from compounding.

"The costliest errors are ones we make ourselves, often without realizing how much damage we're doing," the author notes.

Don’t make any major or minor mistakes when it comes to your future. Talk to an experienced estate planning attorney Robert A. Gordon of Redkey Gordon Law Corp.

Reference: newsmax.com (April 10, 2015) “USA Today: Don't Neglect Estate Plan as Part of Retirement Strategy”

Baby Boomers Are Neglecting Their Estate Planning

"If you are looking at Baby Boomers, they are looking at what their cash flow will be in retirement," says Carol Kroch, managing director, wealth and philanthropic planning at Wilmington Trust in Wilmington, Del. "Can they do the things they want to do? Can they retire? Can they keep the house? They are not focused on death."

Failure to consider wills and estate planning is a frequent issue, and not just for Baby Boomers. People usually think that it’s something they can put off and deal with later.

USA Today recently published an article, titled “Big retirement mistake: Boomers with no estate plan,”that offers several tips for people who might be lagging behind in their retirement savings. The article emphasizes that there are three very important things to think about when you start your estate planning (this week!):

1. Your property and financial assets;
2. Your children (if they are not adults); and
3. Medical decisions.

“Just because you are doing good retirement planning doesn't mean you are doing good estate planning, unless you address all three areas,” the article cautions, and sets out some important things to remember when you create your estate plan:

• Work with an established estate planning attorney to help you protect the safety of your financial plan.
• Get comfortable with the laws in your state, as each state has its own probate laws. Again an estate planning attorney is your best bet here.
• Update all of your beneficiaries. Retirement plan and life insurance beneficiaries don’t pass through your will.  These are totally separate and will pass based on your beneficiary designation.

Talk with Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney to review these points and others as you create your strategy for the future.

Reference: USA Today (April 8, 2015) “Big retirement mistake: Boomers with no estate plan”

Seniors Often Make These Retirement Planning Mishaps

Here are a few of the most common mistakes we’ve seen seniors make in regards to their retirement planning.

Sometimes knowing what NOT to do is just as important as knowing what to do. So it is with retirement planning.

Physician’s Money Digest lists some of the most common mistakes that the authors have seen seniors make in a recent article titled “Top Mistakes Seniors Make”:

1.  Misinformation about Medicare.  Some seniors believe that once they qualify for Medicare, they are 100% covered without any gaps. Unfortunately, there may be issues, such as nursing homes and assisted living for long-term care. These are not covered under Medicare.

2.  Failing to consider mental incapacity. Many seniors don’t address how they want health care and property decisions handled in the event they are incapacitated. Remember, a will doesn’t take this scenario into account.

3.  Drawing from retirement accounts too soon. Withdrawing money from your retirement accounts too soon or too late can really affect your savings. Speak with an estate planning attorney about the retirement account rules to get the most from your assets.

4.  Mis-timing life insurance decisions. You should assess your life insurance needs and current premiums to determine what is appropriate in your circumstances.

5.  Relying on annuities. Whether an annuity is the right choice depends primarily on your specific financial situation. Conduct an in-depth assessment of the product and your overall financial plan with estate planning attorney.

As you can see, there are many issues that need to be addressed when it comes to retirement planning. Do not go it alone. Get appropriate professional counsel. Speak with Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney.

Reference: Physician’s Money Digest (April 8, 2015) “Top Mistakes Seniors Make”

We should have paid more attention in Physics class...

http://blogs.findlaw.com/law_and_life/2012/04/ca-man-fights-traffic-ticket-with-physics.html

Learn Key Financial Lessons from Fox’s “Empire”

Empire is based on fictitious music company called Empire Enterprises. Lead character Lucious Lyon (played by actor Terrence Howard) is racing to name a successor for his company after learning he has months to live due to an ALS diagnosis. His sons Jamal, Hakeem, and Andre duke it out to see who will become the new head of the company. Meanwhile, Lucious’s ex-wife Cookie (played by actress Taraji P. Henson) fights to keep the brothers from destroying their father’s legacy.

What can we learn from this show? Here are a few financial lessons, as reported in a recent article by The Cheat Sheet titled “Top 4 Financial Lessons to Take from Fox’s ‘Empire’.”

Always take the money. When Jamal rebuffs Lucious’s attempt to offer him money for living expenses, Lucious says: “You’re disobeying the very first rule of music, son. Always take the money.” For those of us not in the record biz, we should take advantage of our employer’s retirement plan match program. The article says that only about 77% of employees contribute enough to receive a match, according to a recent survey. Contribute up to the amount required by your employer in order to receive the match. Once fully vested, all of the matching funds are yours. Always take your money.

Watch your assets when going into business with a significant other. Lucious has a very complicated love triangle where he’s in business with both his ex-wife and his fiancée. Cookie helped fund the business while they were married. The couple divorced while Cookie was in prison, but upon her release, she demands that Lucious make her co-owner of the company or she will tell everyone that the cash she contributed was actually drug money. At the other side of the triangle is his fiancée, who after a lover’s quarrel, attempts to destroy Empire Enterprises by stealing its big artists and telling them to go work with a competitor. The article reminds us that it’s important to protect financial assets when entering marriage. Drafting a prenuptial agreement helps protect assets by outlining each person’s property rights after the wedding ceremony. If you don’t have a prenuptial agreement you can do a postnuptial agreement—drafted after tying the knot.

Set up an estate plan. Lucious has just a few months before he passes away from ALS (Lou Gehrig’s disease), but his estate plans look to be up in the air. The article says that before you pass, make sure your affairs are in order. Start by working with an experienced estate planning attorney to draft your will, along with a health care proxy to help with medical decisions. Also, a financial power of attorney is critical for your finances to be properly managed if you become incapacitated.

Ok, this isn’t how you should plan your estate or manage a business. Talk to Robert A. Gordon of Redkey Gordon Law Corp, an estate planning attorney, and get sound advice and a good strategy for your empire.

Reference: The Cheat Sheet (March 22, 2015) “Top 4 Financial Lessons to Take from Fox’s ‘Empire’”

Retirement Planning Advice for Farms and Ranches … and Any Small Business

Small businesses, including self-employed taxpayers, have two choices after year end (2014) to establish and contribute to a retirement plan. Those two choices are the Simplified Employee Pension (SEP) plan and the individual retirement arrangement (IRA).

A recent article in The (Great Falls MT) Prairie Star, titled “Review estate, tax and retirement planning issues now,” argues that a farm or ranch operation should include retirement savings for the owner and/or employees as a part of annual budgeting. These retirement funds provide tax savings now and may provide liquidity and income when the decisions for retirement and/or farm transition take place.

Small businesses, including self-employed taxpayers, have two choices after the end of the year to establish and contribute to a retirement plan. These two choices are the Simplified Employee Pension (SEP) plan and the individual retirement arrangement (IRA). A taxpayer has until the due date of the business federal tax return (including extensions) to set up and fund a SEP, but IRAs can’t be funded after the due date of the taxpayer’s personal federal income tax return.

The SEP allows self-employed individuals to contribute and deduct 20% of the net income up to a max of $52,000 for 2014 ($53,000 for 2015). If the owner is contributing for an employee, the percentage is maxed out at 25% of the employee’s gross income—up to $52,000 in 2014 and $53,000 in 2015. IRA contributions are the lesser of $5,500 or 100% of earned income for 2014 (the same in 2015). IRAs also have a “catch up” provision for individuals age 50 or older to contribute an extra $1,000 each year for 2014 and 2015. The article advises that before you contribute to a traditional IRA, you should see if those contributions are deductible. If not, you might look at a Roth IRA.

Although the required minimum distribution (RMD) rules apply to both SEPs and IRAs after taxpayers reach age 70½, the SEP permits contributions to continue as long as the taxpayer has income. As far as the traditional IRA, contributions can’t be made after age 70½, regardless of income. Each of these offers both advantages and disadvantages to a taxpayer, and there are conditions and regulations that apply, so it’s very important to work with an experienced estate planning attorney. Contact your local experienced estate planning attorney, Robert A. Gordon of Redkey Gordon Law Corp for further assistance.

Reference: The (Great Falls MT) Prairie Star (April 1, 2015) “Review estate, tax and retirement planning issues now”

What Happens to Debts When a Loved One Dies?

Anyone can die leaving debt behind. Spouses and families should help prepare or revise estate plans to address current credit issues and create an action plan for the possibility of remaining debt after the borrower dies.

If you aren’t sure what to do with a loved one’s debts after they pass – or what to tell others to do with your own debts – you may want to read a recent article in The Huffington Post titled “Debt and the Deceased: How Should Spouses and Heirs Proceed?”

Be honest about your financial situation. It’s not that easy for some family members to discuss debt issues, especially older Americans who hoped for better at the end of their lives. Even so, parents and their adult children or spouses should thoroughly talk about any outstanding debts that could affect the borrower's estate.

Get qualified advice. It’s easy to see that a young couple probably has a different set of debt issues than a retired couple. The article advises borrowers to speak with a qualified estate planning expert for ways to extinguish or manage debt issues as part of current financial and estate planning. Contact Robert A. Gordon of Redkey Gordon Law Corp, an experience estate planning attorney, for assistance in this matter.

Organize your documents. The article urges you to consolidate all of your loved ones’ important financial documents in one centralized location. Ideally, all of the asset, debt, and tax documents would be included in an organized filing system… and it needs to be kept current!

See what needs to be repaid. It’s important for borrowers and their executors to know what categories of the deceased's debts will most likely need to be repaid after his or her death and which ones might be canceled. Some types of unsecured debt held in the deceased's name alone, such as credit cards or federal student loans, typically may be discharged.

Educate the executor. The article reminds us that collection agencies have the right to try to collect on any outstanding debt they are hired to pursue—even when the survivors may not be legally bound to pay the debt. You’ll need to know what debt is left behind and whether the estate or individual family members might be liable. An experienced estate planning attorney can help. Once this is done, the executor should be told of this, and if possible, the borrower should leave good notes about how the executor should respond.

Be prepared and review estate plans to address current credit issues and create an action plan for any remaining debt after the borrower dies.

Reference: The Huffington Post (April 1, 2015) “Debt and the Deceased: How Should Spouses and Heirs Proceed?”

Oregon Could Get More Help on Elder Abuse from Proposed Prosecutor

The elder abuse resource prosecutor would be in the Oregon Department of Justice's Criminal Justice Division. The person named to the proposed position would be the third full-time resource prosecutor in the state, alongside those for domestic violence and driving under the influence of intoxicants.

Funding for the new full-time position is being requested as part of the Oregon Department of Justice's appropriations bill, which is moving through committees.

A recent article in The Oregonian, titled “State prosecutor for elder abuse is proposed for Oregon,” says that in recent years the number of suspected and confirmed cases of elder abuse has been steadily increasing in that state. In fact, in 2013, the Oregon Adult Protective Services received 28,449 reports of potential abuse involving older adults and people with physical disabilities.

The director of consumer education and outreach for the Department of Justice said in the article that "[t]here's a gap there and we want to fill that with the prosecutor and the two investigators."

Likewise, a former county elder abuse prosecutor in Georgia told The Oregonian that it makes sense to create a position at the state level if a state has a significant rural population. "Then you've got the resources that could reach out to a small rural area that would never ever be able to afford a specialty prosecutor," the former prosecutor said.

The article explains that victims of elder abuse are two times as likely to die within a year of the abuse being reported than those elders who haven’t been the victim of abuse, citing research published in the Journal of the American Medical Association.

In the more than 28,000 complaints of potential abuse in Oregon in 2013, the state deemed 14,250 worthy of investigation. It confirmed 5,024 victims of abuse, wrongdoing, or self-neglect. The number of abuse complaints has been increasing as Oregon's senior population grows, according to the report. Growing awareness of the issue of elder abuse also is a factor.

The senior population is growing in many other states as well. Talk with Robert A. Gordon of Redkey Gordon Law Corp, a qualified elder law attorney, if you have questions or want to take action to protect a loved one.

Reference: The Oregonian (April 3, 2015) “State prosecutor for elder abuse is proposed for Oregon”

Estate Planning Attorney Search – Where to Begin?

Having experienced advisers who know the best way to protect your hard-earned property and find the most appropriate ways to lower the taxes owed can make all the difference.

How do you find a good attorney?

While many lawyers can prepare simple wills, estate planning can be complex, making a simple will inappropriate in many situations, says a new article in The (Huntington, WV) Herald-Dispatch titled “Finding the right help with estate planning is crucial.”

This article discusses how to find a good estate planning attorney, and suggests working with a member of the nearest estate planning council … or the estate planning practice section of the state bar association.

Members of these organizations include lawyers for whom estate planning is a significant part of their practice. When you contact an attorney for estate planning work, the article suggests that you might ask whether he or she is a member. Also, you can ask whether the attorney attends continuing education seminars on estate planning, as specialists in estate planning will typically look for workshops and seminars that will add to their knowledge base and better serve their clients.

Using these ideas, like inquiring about estate planning council membership and attendance at appropriate seminars, are among many factors that may help in your selection of a quality estate planning attorney.

Look no further as Robert A. Gordon or Redkey Gordon Law Corp is an experienced estate planning attorney that can assist you with all your estate planning needs.

Reference: The (Huntington, WV) Herald-Dispatch (April 3, 2015) “Finding the right help with estate planning is crucial”