Orlando Estate & Elder Law

Giving During the Holiday Season

Now that Thanksgiving is a happy memory and the refrigerator is without leftovers, nonprofits are entering the busiest time of the year with annual fundraising campaigns wrapping up and end-of-the-year giving ramping up. This is the time of year that many employees and donors start thinking about their charitable giving, says the Lebanon Democrat in the article “A few thoughts on charitable giving, taxes.”

Let’s look at a few ways that your generosity can benefit you and your charity of choice:

Bundle your itemized deductions, if you can. If you can time the payment of qualifying deductible expenses, including charitable donations, do so in alternate years. This increases the chances that you’ll be able to itemize your deductions. You may want to notify the charity that your giving this year is a larger gift because it will be covering a two-year period.

Select the right assets to contribute to a charity. For outright gifts made in your lifetime consider using highly appreciated assets, like stocks. This will allow you to bypass owing capital gains taxes on the appreciation and claim the entire value of the assets as a charitable contribution.

If you make a donation using this method to fund an income-returning gift or a charitable gift annuity or charitable remainder trust, you delay the recognition of the capital gain. In most cases you can pay this in smaller amounts over a period of years.

What if you want to make a gift that also generates income? Use a charitable gift annuity or a charitable remainder trust. These gifts typically require significantly higher values, so you may be able to itemize in the year they are funded. However, only a portion of the contribution is deductible. That is because the donor receives income for life or for a certain amount of time. These gifts are usually funded with stock, cash or real estate.

Taxpayers who are 70½ years old or older and required to take minimum distributions from retirement accounts may have distributions made directly from their account to a qualified charity. If this transaction is done properly, the amount of the distribution is not added to taxable income. You will not receive a charitable deduction using this method but you can lower your taxable income for the year and give your charity of choice a much-needed donation.

Lastly, consider adding bequests and beneficiary designations in your end-of-life planning. Part of your legacy can include charitable gifts. There are a few ways to do this: designate a percentage of your estate to be donated to charity, specify a charitable organization as the full or partial beneficiary of a life insurance policy, an investment or bank account or any account that transfers by designation or leave a dollar amount or property to a charity.

Speak with your estate planning attorney about making charitable giving part of your overall estate plan and maximizing the impact that your giving can have on your tax burden. It’s a win-win for you and the causes that matter to you.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Lebanon Democrat (Nov. 21, 2018) “A few thoughts on charitable giving, taxes”

Have A Question for Social Security? Be Prepared to Wait…and Wait…

If you need an answer in a hurry about a Social Security matter, you might have to have a lot of patience, says The New York Times in the article “Have a Social Security Question? Please Hold.” Part of the problem has been an eight-year reduction in the agency’s operating budget. Congress has reduced the agency’s budget by 9% in inflation-adjusted terms since 2010. This is happening at the same time that the number of Americans receiving benefits from Social Security is on the rise—by 17%, according to Social Security Administration data.

The good news is that the agency’s budget is now increasing and it hopes to start decreasing the backlogs. It is hard at work modernizing the agency’s use of technology addressing customer service needs and enhancing online options for the public.

Congress finally started to reverse the downward funding trend in March. Lawmakers ignored the administration’s request for a small increase in fiscal 2018 and instead raised the administrative budget by 4.6%—$480 million. In September, Congress ignored the administration’s request for a $400 million cut and instead gave Social Security a $40 million increase.

That means that in fiscal 2019 the agency’s operating budget will be $11.1 billion.

This government agency touches the lives of millions of Americans and its ability to function efficiently is extremely important to people of all ages. In fiscal 2019, the Social Security Administration projects payments of $1.1 trillion to about 69 million recipients of disability benefits, Supplemental Security, Income and Social Security retirement benefits.

As for calls from Americans with questions, Social Security reports that it will serve about 43 million visitors at the remaining field offices and handle as many as 75 million calls to the toll-free telephone line.

As the nation ages, those numbers are only going to increase. Over the coming decades the agency expects the number of beneficiaries to soar by 45%.

The backlog in appeals cases for Social Security Disability Insurance has grown in the years that the agency’s budget was being cut. The average time to wait for a hearing decision on an appeal in fiscal 2018 was 591 days. That was 39% longer than in 2010, although a slight decrease from 2017.

The service problems also affect people who are simply trying to take care of their Social Security business. The average wait time to see a claims agent was 26 minutes. However, many Social Security offices have people coming in early and lining up to wait to see a representative. Sometimes, those lines wrap around the buildings.

Every year the Social Security Administration is asked to do more with less, beneficiaries suffer.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: The New York Times (Nov. 21, 2018) “Have a Social Security Question? Please Hold”

No Clawback—Good News from the IRS

The IRS handed the wealthy a holiday gift just in time. It has come out with proposed rules saying there is no clawback on these lifetime gifts. The wealthy are able to pass on tens of millions of dollars that will be estate, gift and GTS-tax free with no fear of being taxed retroactively. This good news comes from the Forbes’ article “IRS Hands The Rich Certainty On Trump Estate Tax Sweetener: No Clawback On Huge Gifts.”

The Treasury has confirmed that this is a “use it or lose it” situation. This is important not only to avoid the 40% gift and estate tax but also the 40% generation skipping transfer tax exception. It preserves the $11 million-plus exemption not only for children but also for grandchildren and several generations to come.

Before the new tax laws—in 2017—the estate and gift tax exemption was a mere $5.49 million. It’s taken a giant leap: $11.4 million per individual and a whopping $22.8 million for married couples for 2019.

The Tax Cuts and Jobs Act (TCJA) doubled the $5 million base to $10 million through the end of 2025. Estate planning attorneys have encouraged clients to make huge lifetime gifts by using that extra $5 million exemption.

The concern was that if you read the entire law, word-for-word, based on the tax computations, you’d get a nasty surprise. Legally the question was whether the increased exemption was a “loan” to the taxpayer until 2025 when exemptions return to prior levels, or if it was permanently gifted.

Let’s say you made a $9 million gift in 2018, but you died in 2026 after the exemption levels reverted to $5 million. Your heirs would be in for an unpleasant tax surprise owing taxes on that extra $4 million gift.

But the new rules from the IRS now say that the full $9 million is tax exempt—forever.

Congress spotted the problem and gave the IRS authority in the TCJA to solve the problem administratively, which is exactly what the IRS has done. Estate planning attorneys can now let their clients know that their gifting strategies can be worry free.

A hearing to review the proposed rule will take place in March 2019.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Forbes (Nov. 21, 2018) “IRS Hands The Rich Certainty On Trump Estate Tax Sweetener: No Clawback On Huge Gifts”

Is Your Junk Drawer Better Organized than Your Digital Assets?

If your digital estate is not properly cared for, it can lead to problems for your heirs, including an opportunity for hackers to try to get at whatever assets they can, reports the White Mountain Independent in the article titled “Is your ‘digital estate’ in order?”

Think about how many of your personal accounts are online:

• Financial accounts: banking, brokerage, bill-paying utilities;
• Virtual property: credit card points, frequent flyer miles, cryptocurrency;
• Business accounts: eBay, Amazon, Etsy; stock photo accounts;
• Email accounts: Gmail, Outlook, Yahoo;
• Social network: Facebook, Twitter, LinkedIn, Instagram; and
• Online digital storage: Dropbox, Google Drive, iCloud.

Those are many assets to protect. Where do you start?

First, create an inventory. Use the categories above or create your own. However, you should make it organized.

Document your wishes for how you want your digital assets to be managed. If you don’t specify this, you may be leaving a wide-open arena for long legal battles. Your heirs and beneficiaries may never gain access to them. Hackers might go after them and use your identity. Your heirs may also have to engage in an expensive and protracted battle with a social media giant with costs eating into their inheritance.

Name a digital executor in your will. This is a relatively new area, but you can name a person to be your digital executor. Not all states recognize this position, so you’ll want to speak with a local estate planning attorney to find out what the laws are in your state.

You will also need to go through all of your online accounts and learn what each platform requires in the instance of the account owner’s death.

Review your plans, especially as you add new digital assets.

Managing digital assets can be as difficult as managing tangible assets. The laws are still evolving so speak with your estate planning attorney to make sure that your estate is prepared, and your heirs will not face a digital nightmare after you have passed away.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: White Mountain Independent (Oct. 26, 2018) “Is your ‘digital estate’ in order?”

Lessen the Stress of Becoming Widowed

A recent study from Merrill Lynch and Age Wave on widowhood shows that a mere 14% of 3,300 respondents said they were making financial decisions on their own before their spouses passed away. That is a very low number of women in charge of their financial lives as married women, says Press & Guide in the article “Financial planning can help ease impact, stress of widowhood, study shows.”

Widows are tackling major challenges in the days and weeks after the loss of a loved one. That includes everything from funeral costs, mortgage or rent payments, other costs of running a household and for many, medical costs. With nearly half of those in the study reporting a household income drop of 50% or more after the death of a spouse, that is an enormous burden to take on during a time of great grief and upheaval.

The women are also facing the tasks of juggling Social Security, pensions, life insurance and making sure that their late spouse’s retirement accounts are all correctly transferred into their names.

There is often a lack of preparation for this situation. Many are simply not prepared for how complicated it is to deal with the loss of a spouse.

The study reports that couples who plan for this situation have their level of worry cut in half. Only 38% of the widows in the study who had conducted financial planning worried about not being able to support themselves immediately after the death of their spouse. That compares to 64% of widows who had not planned at all.

Widowers (men whose wives have passed) face unique challenges. If their wives pass first, they may be faced with taking on their own caregiving. Statistically, women outlive men, so the widowers have to adjust to losing a caregiver. There may be new financial costs they would not have had to bear if their wives were still alive.

The first step: meet with an estate planning attorney. Make sure that a will and power of attorney are created along with any other necessary planning documents. Both spouses should be familiar with all accounts and both names should be on the accounts and all deeds. Don’t forget to organize all important papers in a file drawer at home or in a safe deposit box. Know where everything is and how to access it.

Having long-term care insurance in place and making sure there are assets available for caregiving should be a part of everyone’s plan for longevity. Even if you don’t need home health care or to live in an assisted living facility, someone will eventually need to provide some level of care.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Press & Guide (Nov. 19, 2018) “Financial planning can help ease impact, stress of widowhood, study shows”

More than a Will: What Else Should Your Estate Plan Include?

A will is the cornerstone of an estate plan but it is by no means the only document needed to distribute assets and prepare for both incapacity and death. The Island Now reviews a number of things that an estate plan should address in the article “Five things that will impact your will.”

How are your bank accounts structured? If you have a bank account set up as “joint with right of survivorship,” when one of the owners dies, the other owner automatically inherits the whole account. Remember that this will occur no matter what is stated in the will. If you have added a child to that account for convenience, is it your wish that the child should inherit the entire account? That’s exactly what will happen. You may be better off letting a child help you, using Power of Attorney rather than structuring the account that way.

When was the last time you reviewed beneficiary designations? Like titling bank accounts, as explained above, the beneficiary designation takes precedence over anything in your will. If you opened an IRA at your first job and now two decades—and two marriages—have passed, that IRA will still be passed on to the person who you named two decades ago, unless you have updated the beneficiary name. Accounts that often pass directly to beneficiaries include life insurance, annuities, 401(k), 403(b), brokerage accounts and some bank accounts.

Each asset that has a beneficiary should also have a contingency beneficiary in the chance that the primary predeceases you or does not wish to receive the asset.

Are you prepared for the cost of a health crisis? The cost of a health crisis can, and often does, wipe out a family’s years of retirement savings. There are several strategies that an estate planning attorney can help you with to plan in advance for this. Long-term care insurance may be an option and placing assets in an irrevocable trust may be another, depending on your situation. There is a five-year look-back for any Medicaid benefits, so planning in advance is critical.

For many families, placing their primary residence into a trust while retaining the right to live in the home, retaining any STAR or Veteran’s exemptions and possibly even securing capital gains advantages for heirs is a possibility but requires the help of a skilled estate planning attorney.

Is gifting part of your estate plan? Most people know about the annual exclusion gift, which allows anyone to make a gift in the amount of $15,000 per year to a beneficiary with no gift tax consequences. However, if you need to apply for Medicaid coverage within a five-year period, any gift will trigger a waiting period before you can be eligible for Medicaid. Therefore, you can make a gift for tax purposes but it’s not something you can do for Medicaid planning. This is an expensive mistake. Talk with an estate planning attorney to make sure you get this one right.

Who is your Power of Attorney? Everyone should have a Power of Attorney. This is a person who is your legal representative, if you become incapacitated. The durable power of attorney gives your agent the authority to handle banking matters, real estate transactions and other financial matters. You’ll also need a health care proxy and a living will.

All these issues are part of a comprehensive estate plan, which is best created with an experienced estate planning and elder law attorney.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: The Island Now (Nov. 12, 1018) “Five things that will impact your will”

Who Gets Mom’s E-books When She Dies?

Including digital assets in your estate plan is not just for Bitcoin owners. What about less complicated digital assets like a library of e-books or family photos that were stored in the cloud? There are a number of steps everyone needs to take, says The Eagle in the article “Your digital estate: 3 tips for the seasoned crowd.” Even if you don’t consider yourself “seasoned,” these are important steps to take to protect your online life from fiction to finance.

Knowledgeable boomers know they need to double check their account titles, wills, trusts, insurance policies and powers of attorney. However, they don’t all realize how much of their lives is conducted online and how important those assets are to their estate plan.

Digital estate planning focuses on organizing digital assets of all kinds and making the correct arrangements for what will happen to them after you either pass away or become incapacitated.

You don’t own any cryptocurrency? Do you have a Facebook page? Have you ever created a website or a blog? What about a LinkedIn profile? See—you have digital assets. You need a plan.

The best way to start is similar to what you do with tangible assets. Start with a list:

• Hard assets, including computers, laptops, digital readers like Kindle or Nook, smart phones and external data storage drives.
• Social media and networking sites—everything from Facebook, LinkedIn, Twitter, Instagram, Snapchat, etc. Be sure to also include any gaming websites.
• Online data storage accounts, like Dropbox.
• Domain names, regardless whether you built a website for the name.
• Intellectual property

There’s sentimental value to many of these accounts, like the photos stored in the cloud. There’s also practical value. If you pass away and your family is widespread and connects regularly on social media, would it be helpful for a family member to log into your social media accounts and share information about your passing? We used to have obituaries published in local newspapers, but today we post information online.

There may be financial value as well. If you own a website that contains copyrighted material or intellectual property, you will want an executor to gain access. You’ll also want to address the issue of your emails, especially if you are a business owner.

The next step is to review the list and see what, if any accounts, you don’t use anymore and would like to shut down. Then begin looking at each digital account you have and find out how each platform addresses access after the owner has died or become incapacitated. Facebook allows users to memorialize the account and preserve the space for friends and families to share memories. Twitter allows immediate family members to deactivate the account, as long as proof-of-death can be documented. Google has an Inactive Account Manager service that permits the account to be transferred to a designated person, after a certain period of account inactivity.

Social media websites are increasingly aware of the issue of account owners dying and every platform has its own process, so you’ll need to go through each, one by one.

Next, you’ll need to name a digital executor. This is not, as yet, a legally enforceable role, but it will make winding things down much easier. Your digital executor will need your passwords and user names, but they will not be able to simply log in and make changes using that information.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: The Eagle (Nov. 8, 2018) “Your digital estate: 3 tips for the seasoned crowd”

Creator of Captain America and Spiderman Could Have Used Superpowers of His Own

Stan Lee, publisher and chairman of Marvel Comics, died at age 95 after a year-long illness. Survived by his 68-year-old daughter, J.C., he faced a number of unpleasant and public challenges in the last few years. His wife of nearly 70 years died in 2017, and earlier this year he was accused of sexually harassing nurses and home aides. According to MarketWatch’s article “Stan Lee’s tangled web of estate planning and how to avoid this mess,” Lee reported that about $1.4 million were missing from his bank accounts and that $850,000 was stolen to purchase a condo.

He had also retained and fired a number of business managers and attorneys in recent times. He said he had handled most of his money management by himself in his early years but then realized he needed help. Unfortunately, some of the people he trusted were people who later proved to be untrustworthy.

It is yet unclear whether Lee had a will or any trusts in place. Many celebrities do not have these documents, putting heirs and potential beneficiaries in a position where they have to battle it out in a courtroom setting. Aretha Franklin and Prince are just two examples of high-profile, mega-million estate disasters.

For the rest of us, estate planning is fairly straight-forward, as long as we get it done. There are a few steps everyone needs to take, including planning for incapacity or disability, getting important documents prepared, such as a will and power of attorney and reviewing beneficiaries.

What often happens is that as people age they suffer cognitive decline in varying degrees and there’s a professional or a family member who believes this is occurring. In Stan Lee’s case, he signed a document stating that his daughter spent too much money, yelled and screamed at him and had befriended three men with intentions to take advantage of him (from the Hollywood Reporter). A few days after the document was notarized, Lee took it back.

As people become less confident in what they’re doing, they are susceptible to being manipulated by other people.

Having an estate plan set up years in advance of any cognitive decline is one way to protect against these kinds of situations.

For Lee’s estate, the sheer volume of documents will be a challenge. There may be many lawyers and business managers and accountants showing up, all claiming to have been brought onto the team with specific directions upon his death.

Regular people can avoid a lot of this by focusing on these questions:

• How are my assets going to be simplified and organized?
• Who will work with a trusted contact while I am still well. Who will do that while I am too sick to do so or after I die?
• Who will decide whether I am able to make decisions on my own behalf?
• How will my finances and assets be monitored as I age?
• How often will I review beneficiary agreements and estate planning documents?
• Who are my trusted advisors and who is responsible for what tasks?
• Should my family members and/or beneficiaries be a part of these conversations?

Your best strategy is to plan in advance of any cognitive changes. Meet with an estate planning attorney who will be able to create an estate plan and all the necessary documents to protect you while you are alive and if you become incapacitated, as well as your loved ones.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: MarketWatch (Nov. 14, 2018) “Stan Lee’s tangled web of estate planning and how to avoid this mess.”

Did You Relocate for Retirement? Add This to Your To-Do List

Maybe you have moved to Arizona or another nice warm sunny state. Here’s a question: do you need to get your estate planning documents redone? Maybe. Should you have them reviewed by an estate planning attorney in your new retirement state? Definitely advises TC Palm in the article that asks “Should new Florida residents update their out-of-state estate planning documents?”

When it comes to your will, in the state of Florida, as long as your will from another state is valid under that state’s law, it will be honored in Florida.

However, there may be laws in Florida that could cause some problems with the out-of-state will. That applies to other states as well.

Here’s a good example. Let’s say you now own a home–known in Florida as a “homestead”—and your out-of-state will transfers your residence at the time of your death to a trust for the benefit of your spouse and your children.

The only person who can receive a homestead in Florida is the spouse. If your will from out-of-state was used, the house would result in a life estate going to the spouse with a vested remainder to your children. This doesn’t achieve the result you wanted: to have the property controlled by a trustee and not your spouse and children. If this was a second marriage, the potential could be a family blow up, even litigation. Even in a first marriage, if the children and their mother differ on what should happen to the family homestead, there would be trouble ahead.

Taking that example further: What if your out-of-state will directs the sale of your home in Florida and distribution of proceeds in equal shares to your children? If you die with creditor claims, you lose the homestead exemption for creditor protection purposes. Your children’s inheritances could then be at risk.

More food for thought: if your out-of-state will appoints a non-relative who is a resident of the state where your will was originally executed to serve as your personal representative, they won’t be able to do much in Florida. That’s because they are not eligible to serve as a personal representative under Florida law, which only allows a non-relative to serve, if they are a Florida resident.

Every state has its own laws and while some issues are fairly consistent from state-to-state, that is not always the case.

Once you’ve settled into your new home, make an appointment with an estate planning attorney who has the experience in your new state. They may not have to completely overhaul your current plan but there may be things that need to be addressed.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: TC Palm (Nov. 14, 2018) “Should new Florida residents update their out-of-state estate planning documents?”

A Four Decade Retirement Plan? Here’s How

Not everyone gets the good genes or good fortune that has Orville Rogers flying around the country to attend master’s level track meets, but he is an inspiring example to follow. Money describes Rogers in a title that says it all: “This 100-Year-Old Has Been Retired for 40 Years, Has a Healthy Savings Account and Is a Track Champion. Here’s His Impressive Path to a Rich Retirement”

Longevity in savings that aligns with his years is a powerful force. He started saving in 1952, 25 years before the creation of the retirement savings plan we know today as a 401(k). Back in the day, companies provided their employees with pension plans and those without a pension plan lived on Social Security when they retired. Life expectancies were shorter, so you didn’t need quite so much money. Rogers was born in 1917 and his peer group’s life expectancy was about 48.4 years old.

By saving for retirement and using his downtime between flights to educate himself about money, he started investing and says that his account is now worth around $5 million. He says he wasn’t particularly frugal either and supported his church and other Christian causes throughout his life. However, he had time on his side making periodic investments over an extended period of time.

Another practice that extends life: exercise. Rogers took up running at age 50 and hasn’t stopped yet. Studies have shown that anyone, at any age or stage, is helped by a regular schedule of physical activity tailored to your personal needs. Even people who are wheelchair bound and living in a nursing home can benefit from a chair exercise program. Among older seniors, the ability to walk a quarter mile (one lap around a track) is linked to better health outcomes.

Until recently, Rogers ran five to six miles a week. He’s in rehab now and working his way back to his prior running and training schedule.

When you live as long as Rogers has, you outlive a lot of family members and friends. Rogers moved into a retirement community two years after his wife died, making new friends because as he says, “… if I don’t, I’d have none left.”

Faith has also been a strong force in his life over these many years. At 98, he wrote a book, The Running Man: Flying High for the Glory of God. When he was starting out in his retirement years, he flew church missions in Africa.

“I’m enthusiastic about life,” Rogers says. That kind of inspiration is a lesson to us all.

For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Money (Nov. 2018) “This 100-Year-Old Has Been Retired for 40 Years, Has a Healthy Savings Account and Is a Track Champion. Here’s His Impressive Path to a Rich Retirement”