Redkey Gordon P.C.

Selling urine?

http://blogs.findlaw.com/legally_weird/2015/02/man-pleads-guilty-to-selling-fake-urine-to-circumvent-drug-tests.html

New Legislation Enacted in Certain States to Protect Elderly Investors

After a long and high profile life of philanthropic endeavors, socialite Brook Astor died in 2007 with an estate worth $200 million.  Two years later, her son Anthony Marshall was convicted of stealing millions from her. Astor suffered from dementia, and Marshall was paying himself from her assets. While not all families enjoy this level of wealth, the fact pattern is not all that unusual.  A large and growing number of Americans suffer from dementia-type illnesses and a equally large number of them will be taken advantage of by family members.

 

States are now trying to provide greater protection for elderly investors, according to a recent Reuters article titled “Protecting dementia sufferers from scammers gains ground in U.S.” Retail brokers – in three states thus far, have been permitted to help deter scams against people with dementia.

 

The laws, which are being examined by other state legislatures, allow brokerages to halt an older client’s request to transfer money to others (at least temporarily) if a wealth manager suspects that his or her customer may have dementia and may be unknowingly be the victim of a scheme.

 

More than 5 million Americans over the age of 65 have Alzheimer's disease, which is the most common form of dementia, the article says. Citing the Alzheimer's Association, that figure accounts for roughly 1.5% of the U.S. population. Experts say this could grow to 7.1 million by 2025. 

 

The elderly are often easy targets for con artists and unscrupulous family members. In fact, U.S. seniors lose approximately $2.6 billion annually to financial exploitation. And more than half of this financial exploitation is committed by friends, family members, or caregivers.

 

Elder financial abuse is frequently hard to detect, but the article explains that requests for large, "questionable" sums of money can often be a clear sign.

 

Philip Marshall (Anthony's son and Astor's grandson) commented that these new laws might have helped protect his grandmother. The younger Marshall is a professor of historic preservation in Rhode Island who recently went on sabbatical to devote more time to elder protection issues.

 

Brooke Astor was an heir to the Astor family fortune that started back in the 18th century. She passed away in 2007 at age 105, and had a $200 million estate. Most of this was earmarked for charities. Unfortunately, her son exploited part of her estate that was to be used for her personal expenses. He paid himself roughly $1 million for managing her affairs in 2006, as was revealed in a court proceeding.

 

Some have concerns about these laws and think that perhaps the government could empower wealth managers to interfere with legitimate transactions and keep elderly people from their investments, the article reports. FINRA, an industry watchdog, is also developing guidance on the issue, with input from the SEC, as brokerages have asked for clarity on this because of rules that require them to execute a customer’s transaction.

 

Roughly half of the states have laws that require employees of financial institutions to contact state agencies if they suspect an elder customer is being financially exploited. However, many of these laws do not include retail brokerage employees or allow those institutions to delay withdrawals.

 

Brokerages are often put in a tough position when this situation arises. Contacting concerned family members to question an elderly client's instructions could run afoul of laws about protecting privacy, as well as rules that require processing transactions on time. That said, following the client's instructions can help the customer who otherwise may fall victim to a con or abusive caretaker. As it stands in most states, brokers could be liable for taking action or honoring such a transaction.

 

Contact Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney for guidance on how trusts may be used to help curb this abuse.

 

Reference:  Reuters (July 1, 2015) “Protecting dementia sufferers from scammers gains ground in U.S.”

Be Proactive concerning an Advance Notice of a Change to Popular Planning Strategy

The word is out in the estate planning bar that the IRS is looking at making an announcement this September about a favorite tax benefit gained from the use of family partnerships and LLCs.  New regulations would effectively raise the taxable value of assets transferred into these entities, which currently enjoy a generous discount. Wealthy clients are being advised to set up partnerships now to capture what remains of these discounts before the new rules take effect.

 

According an article in Barron’s titled “IRS Considers New Tax on Wealthy Families,” any changes to tax benefits affection family partnerships and LLCs could have significant consequences.

 

The article explains that partnerships and LLCs currently let families pass on a minority stake in the family business or in a pool of privately-held investments to their children with little or no tax consequences. This is because minority shares in a private business are illiquid, or unable to be easily sold or exchanged for cash without a substantial loss in value. They are worth less, from a tax perspective, than their stated market value. This is a big help to families who want to lower the taxable value of their assets, and in some cases below the $5.43 million gift-tax exemption. It also works even if the underlying investments getting passed on are liquid. The discount could be as much as 20% to 25%.

 

The article gives this illustration: the family business is worth $25 million and is entirely private owned by the family. You decide to pass on a 25% minority holding in it to your daughter via a partnership or LLC. The current IRS rules let you to discount the shares up to 35%, because they are illiquid. This works to your benefit, as the IRS discount means that instead of passing on $6.25 million in shares—and paying taxes—you’re only passing on shares valued by the IRS at $4.1 million. That amount makes the transfer tax free because it’s under the $5.43 million gift-tax exemption.

 

The Treasury Department has put the estate planning community on notice that this may change and has hinted that new rules on family partnerships could be released before the fall. The rules would restrict definitions and possibly decreasing narrowing discounts for certain assets.

 

The article suggests that you speak with an attorney if you are thinking about forming or making changes in the organization of a family entity. With all of these changes in the wind, this may be a great time to get going with these discussions, as any stricter rules that are created could be made effective immediately, with the fine details sorted out later.

 Contact Robert A. Gordon of Redkey Gordon Law Corp, an experience estate planning attorney for assistance.

Reference: Barron’s (June 30, 2015) “IRS Considers New Tax on Wealthy Families”

Looking for Revenue Sources, Some Savvy Retirement Loopholes May Be Changed

Savvy individuals, estate planning lawyers and financial advisors are not averse to finding unintended benefits when Congress makes changes to laws regarding retirement accounts and Social Security payments. Unfortunately, when too many of these techniques are discovered and shared widely, the government sees revenue slipping away. Three of these loopholes have drawn the attention of various government agencies and may be changed in the near future.

 

A recent Reuters article, titled “3 Retirement Loopholes That Are Likely to Close,” discusses some of the loopholes that can be found, as an unintended result, due to changes in law.

 

Back-Door Roth IRA Conversions. Congress created this loophole by lifting income restrictions from conversions from a traditional IRA to a Roth IRA, but not placing such restrictions from the contributions to the accounts. As a result, those whose incomes are too high to put after-tax money directly into a Roth IRA so it can grow tax-free, instead are able to fund a traditional IRA with a non-deductible contribution then convert it to a Roth. Taxes are usually expected in a Roth conversion, but this work-around doesn’t cause much liability, the article explains, provided the contributor doesn’t have other money in an IRA.

 

President Obama’s 2016 budget proposed that future Roth conversions be limited to pre-tax money only, which would close the loophole for most back-door Roth IRAs.

 

The Stretch IRA. People who inherit an IRA can chose to take distributions over their lifetimes, and wealthy families converting IRAs to Roths also can potentially provide tax-free income to their heirs for decades because Roth withdrawals are generally not taxed. This loophole irks some lawmakers who believe that retirement funds should be for retirement, rather than an on-going generational inheritance.

 

Most of the recent tax-related bills introduced in Congress contain a provision to kill the stretch IRA and replace it with a law requiring beneficiaries other than spouses to withdraw the money within five years. Anyone thinking about a Roth conversion for the benefit of his or her heirs should speak with an experienced estate planning attorney and decided if this strategy makes sense if those heirs have to withdraw the money within five years, the article advises.

 

Social Security and “Aggressive” Tactics. President Obama’s budget also proposes getting rid of “aggressive” Social Security claiming strategies. These tactics can let upper-income beneficiaries maneuver the timing of the collection of Social Security benefits in order to maximize their delayed retirement credits. The President didn’t say which strategies he is eyeing, but the article cites experts who believe he may be alluding to the “file and suspend” and “claim now, claim more later” techniques.

 

“Claim Now, Claim More Later”

 

Married people can now claim a benefit based on their own work record or a spousal benefit of up to 50% of their partner’s benefit—dual-earner couples may be able to do both! Those individuals who choose a spousal benefit at full retirement age (age 66) are now able to switch to their own benefit when that maxes out at age 70. This is the “claim now, claim more later” technique. It can up a couple’s lifetime Social Security payout by tens of thousands of dollars, according to the article.

 

“File and Suspend”

 

This trick is used typically when one member of a couple has to file for retirement benefits for the other partner to get a spousal benefit. A person who reaches full retirement age also has the option of applying for Social Security—then immediately suspending that application so the benefit continues to grow—with their spouse still claiming a spousal benefit.

 

Talk to Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney about retirement options and strategies as we move into 2016.

 

Reference: Reuters (June 30, 2015) “3 Retirement Loopholes That Are Likely to Close”

Not All Millionaires Are the Same When It Comes to Estate Planning

A recent survey from CNBC.com shows that there are differences in how the wealthy perceive the need for estate planning, and not all millionaires behave the same way.  There are differences between families at the $1 million - $5 million level and those with $5 million and more.  However, a significant number of millionaires do not have an estate plan, and part of that may be due to estate planning fatigue.

 

According to a poll of 750 millionaires, individuals with $5 million or more (68%) were more likely to seek help with estate planning, compared to individuals with $1 million to $5 million in assets (61%). The survey, conducted by CNBC.com, reports their findings in a recent article: “Wealthy suffer from 'estate-planning fatigue'.”

 

The political break down was as follows: Republicans (68%) were more likely to use an estate planning expert to create an estate plan than Democrats (61%) or Independents (58%).

 

The article says that the constant changes to the federal estate-tax law for nearly 10 years (until this was made permanent in 2013) left many rich folks in "estate-planning fatigue." Those estate planners interviewed in the article point out that our country has had quite a bit of uncertainty with estate taxes. Each of the changes led attorneys and advisors to contact their clients and encourage them to keep their documents up-to-date and to incorporate the changes as needed. Finally, clients said they’d had their fill.

 

In addition to this, the higher federal estate-tax exemption amount—now at $5.43 million per person—has also made estate planning less of a priority for many wealthy families. Many people believe estate planning is just for reducing estate taxes, the article explained. So if they don't have to pay estate tax, they may feel like there’s really no reason to do any estate planning.

 

However, bear in mind that there are still 15 states that impose their own estate taxes, and these can become applicable at much lower thresholds. For instance, the exemption for New Jersey is $675,000 and Rhode Island's is $921,655. Based on where you live, estate taxes may still be an issue.

 

So there’s a lot to cover with an estate planning attorney.

 

Speak with Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney because there’s a lot more to this than the size of one's taxable estate.

 

Reference: CNBC.com (June 29, 2015) “Wealthy suffer from 'estate-planning fatigue'”

Prior Planning for Financial Bumps before and during Retirement Should Be a Priority

With two-thirds of Americans experiencing disruptions to their retirement planning resulting from divorce, major illnesses, unemployment or business troubles, the road to retirement has become bumpier than ever, according to a new TD Ameritrade survey. The challenges add up to $2.5 trillion in lost retirement savings. The news is gloomy, but knowing that there are and will be problems on the road to retirement reminds us that planning should include these kinds of problems, and responding to financial disruption in a timely manner is necessary for successful retirement planning.

 

The website Real Deal Retirement gives us three ways to stay on track during our journey toward retirement. The article, titled “Retirement Interruptus: 3 Ways To Prevent Disruptions From Derailing Your Retirement Plans,”gets right to the point:

 

1. Consider Alternate Retirement Realities. Remember that an assessment of your retirement prospects from a retirement calculator, doesn’t mean that your retirement’s going to go precisely to that plan. Just like the weather forecast, things can change. “The best-laid plans of mice and men…”

 

With that in mind, you should run through a variety of different scenarios to get a feel for how you might do under a variety of different conditions, such as higher inflation or lower investment returns. The article suggests you look at some worst-case scenarios like extended unemployment when you aren’t able to save, forced early retirement, or an accident with large medical bills or other expenses in retirement that can take a big bite out of your nest egg.

 

2. Make Certain You Have a Safety Net. Once you have an idea what one of these alternatives may look like, look for ways to alter your planning to mitigate some of the possible damage. The thought most people have is to boost savings balances by investing more aggressively. This may be okay if you’re currently investing very conservatively (for example, with CDs and bonds). However, if you already have a very well-balanced portfolio that works with your risk comfort level, getting more aggressive could backfire and leave you even more vulnerable to a market crash.

 

If you’re still working, the article advises that a better route is to look for opportunities to save more—even if you’re very near retirement. You can still try to save a little more of your salary each year, which can significantly boost retirement account balances and make it easier for you to recover from a setback. This is backed up by the survey, which found that people who’d experienced a financial disruption said that saving a greater proportion of income (44%) and getting an earlier start on saving (36%) were the things they suggest to others in a similar situation.

 

If you’re already retired, spending less is the focus, instead of saving. Examine how you can eliminate spending without creating a major negative impact on your standard of living. Create a retirement budget that divides your spending into essential and discretionary categories to see what kind of wiggle room you have and identify possible areas to cut.

 

3. Get Going! If you have had your retirement planning disrupted, take corrective action right away. Waiting with the hope that the setback may just be temporary or that you might be able to fight your way through without changing things is just going to make it worse. The article suggests reducing spending, and that’s what 79% of the people in the survey did. However, for many—particular those who are unemployed—the retirement contributions may be one of the first things to go. Using your savings should always be a last resort, and if you must do this, try to pull money out of your non-retirement accounts first. If you are forced to tap retirement accounts, try to minimize your taxes and early withdrawal penalties.

 

If you have a set-back when you’re retired, immediately analyze your retirement budget and pinpoint ways to cut back your withdrawals. The article warns that if you experience a hit to your nest egg—especially early into retirement—you can significantly increase the odds of running out of money during your lifetime. Remember to work those retirement calculations to get a sense of what level of spending you can reasonably expect to maintain without going through your money too quickly.

 

We all know that every road has some bumps and potholes, and some can’t be avoided. Talk with Robert A. Gordon of Redkey Gordon Law Corp, an experienced estate planning attorney and create a solid plan with some “what ifs” baked in for your retirement. If you add these into your planning and respond quickly if they occur, you should be able to minimize the damage.

 

Reference: Real Deal Retirement, “Retirement Interruptus: 3 Ways To Prevent Disruptions From Derailing Your Retirement Plans.”