Not as Much Time as You Think (Part 3)
A few weeks back I wrote about Mary’s call to our office regarding her dad who wanted to make a change to his will. He wanted to leave his home to Mary and everything else split equally between Mary and her sister Kate (See 5/20/19 and 5/27/19 posts.) Dad, however, died before he could change his will. Kate and Mary agreed that Mary should have the house as their dad had wanted. Because the will says otherwise, Kate will need to transfer her 50% interest in the home to Mary – what would be considered a gift. The house is valued at almost $500,000 so this would be a gift of almost $250,000. I explained to Mary that New Jersey does not have a gift tax, but there is federal gift tax to consider. Gifts greater than $15,000 per person per year carry a tax, however, there is also a lifetime gift exclusion amount that is tied into the estate tax exclusion. Current federal law says that a person can pass up to $11.4 million during lifetime or at death without paying gift or estate tax. Kate could use part of her $11.4 million exclusion now to transfer her interest
The Dreaded Diagnosis – Part 2
In my blog post last week I was discussing the answer to the question “when is the right time to plan for long term care.” I also noted that we are seeing more people dealing with long term care at a younger age, often in their 50’s and 60’s – and sometimes even younger than that. A failure to address the issue of long term care can have a devastating effect on the ill person and his or her family from an emotional, psychological and financial perspective. In many ways, however, younger families face their own challenges. Unless you experience it personally with a family member, it is hard to understand. 60 Minutes did a piece on frontotemporal dementia. Part of the report profiled Mark Johnson, a 40 year old suffering from FTD. Mark has a wife and 4 children. He is no longer able to live at home and now resides in a long term care facility an hour away from his family, whom he often does not recognize. Mark was the primary financial provider for his family when the illness hit. His wife, Amy must raise young children alone
The Dreaded Diagnosis – Part 1
In this week’s blog post I want to revisit a question that I am asked often when I tell people what I do. They ask, “when is the right time to plan for the possible need for long term care?” For most people I think the optimum time is when they are considering, or have just reached, retirement. What I mean is the healthy active senior depicted in commercials and ads for financial products and prescription drugs that promote an active lifestyle such as Viagra and Cialis. I do, however, add in my answer that if there is a family history of illness such as early onset dementia or an early diagnosis of an illness, my first answer is not really applicable. In fact, in our office we are seeing more and more of what I call crisis planning cases – in which families call when a loved one already needs 24/7 round the clock care – in which that person is in their late 50’s or early 60’s. Upon further inquiry, we learn that the diagnosis causing the need for care was made 5 to 10 years earlier. I think there are
Not as Much Time as You Think (Part 2)
In last week’s blog post I started to tell you about Mary’s call to our office. She reached out because her dad, who was in the hospital, wanted to make a change to his will to leave his home to Mary. It’s something he had told her he would do several years ago but just never got around to it. We scheduled an appointment but he died the next day. The next week Mary called back to discuss Dad’s wish and the probate of his will. She related to me that while his will left everything equally to Mary and her sister, Kate, both of them were aware of Dad’s wish. “Kate has agreed to honor Dad’s wish”, Mary told me. “Can’t we transfer the title directly to me”, she asked. I explained to Mary that the will needs to be probated. As the named executor, it is her job to carry out her dad’s wishes as set forth in that will. Even though he communicated to both Mary and Kate his desire to leave the home to Mary he did not put it in writing in a form that would qualify as
Not as Much Time as You Think (Part 1)
A part of what we do as elder law attorneys involves drafting the essential legal documents that will help clients set forth clearly their wishes and help family members assist them in accomplishing their goals. This usually includes a power of attorney, health care directive, last will and testament and in some cases trusts. A common impediment to planning is the tendency to think that there is time. “It’s on my ‘to do list’ and I’ll get to it eventually.” There is often a lack of urgency if everything is fine for now. “I’ll need these documents in place if something happens down the road.” As I always say to prospective clients, “no one will tap you on the shoulder to tell you that now is the time to get that plan in place”. A recent call reminded me of just how true that is. We received a call from Mary who had moved into Dad’s house after Mom had passed away to help care for him. Dad had discussed with Mary and her sister that he wanted to leave the home to Mary when he died, however, he had never formalized that wish by updating his will. Mary
Required Minimum Distributions – Part 2
In last week’s blog post I covered the basics of how required minimum distribution (RMD) rules work for IRAs and other tax deferred retirement accounts. To summarize you must take out a minimum amount from your account each year. That’s RMD and it starts in the year you turn age 70 and ½. If you have more than one IRA you don’t have to take out a proportional amount from each account. You total all your IRA balances and calculate the RMD. As long as you withdraw at least that amount from any of your retirement accounts, the IRS does not care which ones. In other words, you can withdraw your RMD all from one account and nothing from another as long as the total withdrawn is at least the minimum. And what happens if you don’t withdraw enough? The IRS assesses a pretty hefty 50% penalty on the amount you should have withdrawn but didn’t. (and of course, you still have to withdraw the rest of your RMD.) Many people are reluctant to withdraw more than their RMD because they know they will have to pay 35 to 40% in federal and state income taxes on most of the