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March 29, 2015 - April 4, 2015
04/04/2015
04/03/2015
Retirement Pitfalls to Avoid
In nearly every way you could make a mistake -- for example, saving too late -- you can also make up ground by availing yourself of all resources at your disposal (say, your employer's 401(k) matching program). With that in mind, here’s a list of 28 major retirement pitfalls to avoid -- and what to do if you end up taking some missteps.
Retirement planning is tricky, no? When and where and how much … there is no “one size fits all” when it comes to retirement.
Experts say that the right retirement plan involves timing and opportunity. But nobody’s perfect. We all are apt to make a mistake, but we can usually make things right. With that in mind, The Motley Fool compiled a list of 28 major retirement pitfalls, how to avoid them—and how to correct them if you take a detour in an article titled “28 Retirement Mistakes People Make.”
Here are a few:
No Retirement Plan. Major disaster in the making! Neglecting your retirement planning is one of the first and biggest mistakes you can make. Consider what you want your future to look like and how much money you can reliably set aside, then find a deposit product that will get you there. Employers often offer 401(k) plans, and you can also open an IRA without an employer sponsoring the account. These are a great way to kick off your retirement savings.
Thinking You’ll Want to Keep on Working. Oh sure. You love your career and can’t dream of life without it. However, things change, like your health, and you might be ready to take it easy and retire. You shouldn’t skimp on your saving because you think you can work until you're 90 and earn more than you do today. There will always be a youth movement in the offing—those folks will be willing and eager to work for less. Think about buying that fishing boat or taking your spouse on a nice cruise. That’s why you worked so hard all those years!
Transfer on Death and Payable on Death Designation Issues. If you have a trust or estate plan, the original article says experts recommend you check your "transfer on death" and "payable on death" designations to make certain they match your will. These designations will impact who gets your retirement account assets when you die. "Transfer on death" registrations trump your will’s directions.
Faulty Trusts. If you have some money for your children or beneficiaries to inherit, then you should analyze your trusts. Every situation varies, but designating a trust as the beneficiary of a retirement account could be a problem if it’s not drafted correctly.
Talk to Robert A. Gordon of Redkey Gordon Law Corp, a qualified estate planning attorney and take a gander at the other 25 mistakes discussed in the article.
Reference: Motley Fool (March 11, 2015) “28 Retirement Mistakes People Make”
04/02/2015
Medicaid Rules in Connecticut Could Be Changing in Regards to Asset Levels
In all states, federal Medicaid law provides special protections for the spouses of Medicaid applicants. But states decide how much the non-institutionalized spouse may keep, within a range. Connecticut's allowance -- $23,844 -- is the lowest. And legislators are calling for an increase.
If this legislation succeeds in reducing the amount of money assigned to the institutionalized spouse, he or she would become eligible for Medicaid assistance more quickly.
The CT Post report, in an article titled “Legislature asked to raise asset level for Medicaid spouses,”says that the bill would affect couples with assets of about $24,000 to $100,000. Right now, when a person tries to qualify for Medicaid, couples will split their assets evenly, and the nursing-home-bound spouse must spend down his or her portion to $1,600. This means if a couple has $60,000, each spouse is attributed $30,000, and the one heading to the care facility must get his or her share down to $1,600. [Note: These numbers can and do vary state by state.] This is typically accomplished by paying for initial nursing home care. Under the state’s new proposal, the community spouse would be able to keep $50,000 in assets.
The original article says that advocates believe that in allowing the community spouse to keep $50,000, it might help him or her stay out of poverty, off government programs, and in the couple's home.
Raising the allowance for spouses could save money in the long run: it could keep the spouses off public assistance longer by giving them some money for health or other emergencies that could impoverish them.
In all states, federal Medicaid law provides special protections for the spouses of Medicaid applicants. However, it’s the states that determine the amount of money the non-institutionalized spouse may keep (within a range). Connecticut's allowance of $23,844 is the lowest in the country. States like Massachusetts, Vermont, Maine and Illinois are much higher. The highest is reported to be $119,200.
Medicaid nursing home costs average an estimated $6,000 a month in the state, so it can be quite an expense. See how your state is handling the Medicaid spend-down, and if there are any changes on the horizon. Make an appointment to see a qualified elder law attorney to discuss Medicaid in your state.
Contact your local estate planning attorney, Robert A. Gordon of Redkey Gordon Law Corp for further assistance.
Reference: CT Post (March 10, 2015) “Legislature asked to raise asset level for Medicaid spouses”
04/01/2015
Estate Distribution among the Kids – Who Gets What?
In the book The Charles Schwab Guide to Finances After 50, author Carrie Schwab-Pomerantz poses the following scenario: “I’m confused about how to divide my estate between my children, who have different needs and financial resources. Is it best to divide it into equal parts?”
This question is directed at people who have children at different levels of personal and financial success, according to a recent Millionaire Corner’s article titled “Dividing the Estate: Treat Your Children Well.”It suggests that the parent in this scenario may want to do more for the struggling child than for the successful one as far as designating heirs for their estate assets.
The original explains that it makes sense for parents to treat their children equally. While one may think about providing extra assistance to a child with fewer resources, or for a child with special needs, you need to do so cautiously. The article also reminds us that the status of the children can change over time, making a strong argument for equal distribution.
However, if you do decide to divide your estate unequally, it’s a good idea to explain your plan to all of your children right away—be honest about any of your concerns for each of them.
If you choose an unequal distribution, you might consider giving more money to the children who need it the most, and the more successful children could have some of the family heirlooms with emotional value and maybe a high resale value. To make sure your estate wishes are executed as you want, contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney who can make certain everything is legally binding and proper.
Some people choose adult children to serve as executor or trustee for the estate, and the article warns against this. The size of the estate and the complexity of assets are two things to consider, along with the emotional stability of the family members who will be benefitting from the estate.
When one person in a family is given authority or power over others, there’s always a chance problems could arise. Children may all get along now—but could that change when money is involved or issues of control arise? It might.
When choosing an heir to execute the estate, you should think about whether that person is going to be paid from the estate for the services he or she provides. Once you make a decision, you should talk to your children and be open about your estate plan. This includes what’s in it for each of them and why you’ve chosen a specific person. They’ll be happy to know that you trust all of them with this and that they’ll honor your wishes without discord.
Reference: Millionaire Corner (March 12, 2015) “Dividing the Estate: Treat Your Children Well”
03/31/2015
Multiple Advantages of Charitable Giving
Lifetime gifts may carry considerable advantages over charitable bequests, according to Atlantic Trust, the U.S. private wealth management division of CIBC (NYSE: CM) (TSX: CM).
Lifetime gifting allows you to see your donation make a difference. In addition to this giving advantage, there’s also the goals of receiving an income tax deduction or estate tax savings, explains the PR Newswire article titled “Benefits of lifetime charitable gifts can outweigh bequests.”
For instance, individuals who give cash to public charity typically are entitled to an income tax deduction of up to 50% of their adjusted gross income (AGI) or up to 30% of their AGI for donations of other appreciated assets that are held for at least a year. What’s more, these deductions can be carried forward for up to five years if they can’t be taken in the year the gift was made.
There a few factors that come into play when creating a giving plan. Donors need to consider the pros and cons tax-wise of donating various types of property—and also the manner and timing of the gift.
There are other ways to give besides writing a check, accordingly to the original article, like structured giving vehicles. These types of strategies include a donor-advised fund, a private foundation, or a charitable remainder trust. These can give you additional benefits such as convenience, control, and anonymity. In addition, donors are able to leverage multiple giving vehicles to maximize the effect of their charitable giving.
Gifting real estate or tangible property, like a valuable piece of art or a classic car, are also terrific ways to make a sizable contribution to a charity. However, these types of donations may be a little more complicated. The timing of your gift or charitable donation can also be a critical element in your decision making process, as a donor's financial profile and tax outlook could influence when you make the gift and whether you do it in a single year or you start a multi-year gifting program.
Contact Robert A. Gordon of Redkey Gordon Law Corp, a qualified estate planning attorney who will know how to best structure your giving intentions to maximize your gift for both you and the recipient.
Reference: PR Newswire (March 12, 2015) “Benefits of lifetime charitable gifts can outweigh bequests”
03/30/2015
Is It Necessary for a Trust to Last 360 Years? Several Mississippians Think So.
Legislation allowing Mississippians to place their assets in a trust for up to 360 years passed the state House and is now pending before Gov. Phil Bryant.
How long should a trust really last?
According to the Northeast Mississippi Daily Journal, Mississippi’s House Judiciary Chair Mark Barker said many states were passing laws allowing for the establishments of trusts for 360 years or longer. He also commented that this is actually the process already since there are loopholes in the existing state rules against perpetuities.
In general, though, current state law allows a person to set up a trust that would last to a point where a person’s grandchildren were young adults; however, at that point they would, in effect, own the property or assets and could do with them as they wanted. The grandchildren would have the authority to control the property and assets.
Under the state’s bill heading to the Mississippi governor, a trust for real estate could last for 110 years. But a trust for assets, such as money and investments, would be allowed to last 360 years. The reason for making these rules is that trusts usually are more protected from paying taxes on assets and property.
Talk to Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney, about the length of trusts and how they are taxed in your state. He will have the know-how to best set up a trust so that your needs and intentions are satisfied, and everything is legal and sound.
Reference: Northeast Mississippi Daily Journal (March 13, 2015) “Bill allowing trusts for 360 years heading to governor”