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NJ101.5’s article, “How you can fight banks on power of attorney,” says that a bank’s refusal to accept a valid power of attorney has become a big problem everywhere. However, under some state laws, financial institutions are required to accept a power of attorney unless the principal’s signature isn’t genuine or the bank employee has received actual notice that the principal is dead, revoked the document or wasn’t competent to execute the document. Some states’ statutes say that the bank isn’t required to accept a power of attorney that is presented more than 10 years after its execution date or on which it hasn’t acted for a 10-year period—unless the agent is the spouse, a parent or a descendant of a parent of the principal. If the agent or principal has given the bank the agent’s address, the bank has to notify the agent that the power of attorney won’t be honored and give the reason that it has been rejected. Banks will in many case reject a valid power of attorney for a variety of reasons due to their concerns about liability. The bank officer who enforces the bank’s internal policies on powers of attorney is typically not an attorney and may not understand the law—or he or she is adhering to a bank policy, which may violate state law. Because the bank doesn’t want to have to enforce the requirement of two signatures from a power of attorney that requires agents to act jointly, the bank may decide to reject power of attorney documents with joint agents unless the power of attorney document says that either of the agents is permitted to act independently. In the event that a valid power of attorney is rejected, try to talk with the branch manager. If that fails, ask to speak to someone in the legal department. If this also doesn’t work, and the principal is competent, the path of least resistance may be to simply have the principal sign a new power of attorney that permits the agents to act independently. If the principal isn’t competent, the agent may want to contact an attorney to write a letter to the bank explaining the law—or threaten to or actually transfer the assets to a different bank that will be a little more flexible and accept the power of attorney. Reference: NJ101.5 (July 25, 2016) “How you can fight banks on power of attorney” #EstatePlanningLawyer #FinancialPlanning #PowerofAttorney

If you want to keep your vacation house in the family, start planning. If you don’t include it as part of an overall estate plan, it can result in family disagreements. Money’s recent article, “4 Questions to Ask Before Passing Down the Vacation Home to Your Kids,” suggests that you ask yourself about these issues to make sure you’re making the best decision for your family. Who Really Wants It? It’s not uncommon for couples to want to leave vacation homes to their children (or other family members) as a way to preserve the associated memories. Maybe that’s why they miss a critical step—seeing whether family members actually want to own it. What’s the Best Form of Ownership? There are several options. One of the easiest is to leave it outright in your will to specific family members. But this may create more complexities for your heirs—and possibly disagreements. Another option is to pass down the home through a trust, which can help alleviate some of the resentment from outright ownership. Who’ll Pay for Upkeep? Vacation homes can be expensive. Your children might not be able or willing to cover those bills with their own money. A key consideration is whether to set aside additional money to cover the home’s ongoing costs. Many families who set up a trust leave extra money to cover operating costs for at least five years’ worth of expenses. That’s enough to pay for the home in the short term. The children can see if they actually want to keep it, and who really wants it. Keeping the vacation home in your family may not be possible. You can draft your trust so that a sale of the house can be “forced” if, for instance, a majority of the trust beneficiaries want the vacation home to be sold. The trust could give each beneficiary the right of first refusal to purchase the house for its appraised fair market value. And if no one wants to buy it, the trust can require that it be sold to a third party. The proceeds would be divided among the heirs. With a family vacation home, it’s important to take steps to assess whether it’s the right thing for your family to inherit and how it would be cared for over the years. Reference: Money (July 18, 2016) “4 Questions to Ask Before Passing Down the Vacation Home to Your Kids” #AssetProtection #EstatePlanningLawyer #EstateTax #ProbateCourt #FamilyTrust #Inheritance

The ruling lets same-sex couples file jointly for tax purposes and changes estate planning because now many requirements of opposite-sex couples are placed upon same-sex couples. This means that estate planning should be straightforward and much easier. The Huffington Post article, “5 Estate Planning Tips LGBT Families Need to Follow in 2016,” has a handful of tips for starting a life with a same-sex partner. Make a Will. A will can do several things to protect your assets and wishes when you die. It prevents costly probate issues, properly divides your assets per your wishes and can provide guardianship of your children. If you die without a will in place, intestate succession happens, which varies by state. Look at a Prenup. It’s not too romantic to ask your partner after saying “yes” to a marriage proposal to sign a prenuptial agreement. But this agreement lets you enter into a legal and financial arrangement prior to the wedding, and you can avoid some legal issues if you divorce. Sign a Power of Attorney. If you’re married, don’t just assume that your spouse is automatically granted power of attorney over your affairs. There needs to be a power of attorney created, and it can be for either or both financial and health care control. If your spouse becomes incapacitated, you’ll be able to make financial and health decisions on his or her behalf. Also, note that while a living will lets you state the kinds of health care you wish to have, a power of attorney allows your spouse to make decisions on your behalf. Examine your Estate Tax Liability. The state where you live may have its own estate tax at a low threshold. For federal taxes, estates worth over $5.45 million need to pay federal estate tax. Be Ready for the Unexpected. In case the Supreme Court’s decision is overturned in the future or other laws go into effect, it’s critical that your estate planning strategy contemplates as many eventualities as possible. A few documents to consider are a Domestic Partnership Agreement, a Living Will and a Living Trust. Lastly, your final arrangements should also be detailed while you are alive and should be included in your estate plan. Reference: Huffington Post (July 13, 2016) “5 Estate Planning Tips LGBT Families Need to Follow in 2016” #AssetProtection #EstatePlanningLawyer #EstateTax #SamesexMarriage #ProbateCourt #Prenup #PowerofAttorney #Wills #TaxPlanning

The time, financial and emotional commitment involved with contesting a will can often be much more expensive than the value of the estate in question. The process could deplete the estate itself, leaving little remaining of the estate for the heirs and destroying family relationships. While death is pretty certain for all of us, nobody is quite prepared. This includes those we leave behind, who must deal with the pain and grief of losing a loved one and with legal matters, insurance companies and contentious family members. The Huffington Post’s article, titled “5 Ways to Plan Your Estate,” says you can make this process a lot easier for your loved ones with these estate planning tasks. Pay all your bills. This includes debts and taxes. Your beneficiaries won’t receive a dime until your bills have been paid. The probate court will notify the public, including creditors, of your death and will pay all debts of the deceased Get your will created and executed with an estate planning attorney. Although it might seem unpleasant planning for your death, if you fail to do so, the court will do it for you. A will guides the process and provides clear instructions for your executor. Without a will, the judge appoints an administrator to your estate and decides who gets what based on state law. Create a living trust. This document is not subject to the probate process, is private, is controlled entirely by the family and can be resolved very quickly. Probate can run from nine months to two years, and it could go as long as ten years if there’s a contested will. The probate process is also public. Anyone can discover the value of your estate and how it was distributed at the courthouse. Joint ownership. Typically, if there’s more than one name on the title, the property is deemed to be jointly held, especially if the magic words “joint tenants with rights of survivorship” are used. As a result, the probate process is avoided as long as there is a surviving joint owner. This property is automatically transferred to the other owner. Pay-on-death (POD) accounts. You can complete a form on your retirement or regular bank account designating the beneficiary who inherits the account. Then the money is automatically transferred to him or her upon your death. Speak with an estate planning lawyer to analyze your situation and to determine what’s best for you. Reference: Huffington Post (July 11, 2016) “5 Ways to Plan Your Estate” #AssetProtection #EstatePlanningLawyer #EstateTax #Probate #ProbateCourt #Inheritance #WillContest #PayonDeathPODAccount #JointOwnership #Wills #LivingTrust #estateplanning

Loose ends in estate planning can lead to lost opportunities, stress, last-minute fixes or—worst of all—failing to designate money to family, friends and charities. This can have a severe impact on your estate. Kiplinger’s recent article, “5 Simple Steps to Decrease Your Estate Costs,” offers some steps to minimize your future estate costs. You should speak with your estate planning attorney if you haven’t already. Update your beneficiaries. When you pass away, some of your estate may not pass by your wil Cash in any physical bonds and stock certificates. Physical securities and government bonds are all too often lost or forgotten—they can be left to mature without paying any more income. With a stock certificate, the stock may have split or paid dividends that weren’t collected properly. Unfortunately, these assets can appear after probate has been settled, which can result in the estate being reopened. Turn in stock certificates and keep them in electronic format. Review property deeds. If you just had your estate planning attorney draft a trust without changing the deed to your real estate to reflect ownership by that trust, most states would not let the real estate pass through your trust. Instead, it will pass through your will and probate when you die. The results of this can be pricey. A trustee can list the house for sale within hours of your passing, but an executor of your will must first collect documents and procure family signatures to begin the probate process, then apply to the court and—in some states—even get court permission to sell the house. You’ll have wasted thousands of dollars paying for real estate taxes, utilities and other carrying costs. Consolidate your accounts. Too many accounts mean more work and more expenses. Consider keeping fewer, larger accounts. Leaving a distant nephew $500 in your will may cost you more than that to deliver it to him. Keep just a few, larger bequests in your will and use TOD accounts for smaller bequests. Keep track of your family. Small families should name all of their nearest relatives because many states require a list of heirs under a will, despite certain family members not getting anything. For example, if a widow has no children but has 20 nieces and nephews living throughout the country, these relatives will all have to be found if she leaves any property to be distributed under probate. The costs for finding these folks may eat up all of her estate. Keeping track of family members and accounts will allow your estate to avoid paying extra expenses. Reference: Kiplinger (July 2016) “5 Simple Steps to Decrease Your Estate Costs” #BeneficiaryDesignations #EstatePlanningLawyer #Stocks #TODAccount

A recent study showed that people in the U.S. fear developing Alzheimer’s disease more than any other major life-threatening disease—including cancer, stroke, heart disease and diabetes. It also found if diagnosed with the disease, most have deep concerns about their inability to care for themselves. Burdening others by losing memory of life and loved ones was the second greatest concern, according to the MarketWatch article, “What to know about Alzheimer’s and retirement planning.” A survey of about 1,000 adults by Harris Interactive showed that the percentage of people who fear getting Alzheimer’s has risen much more since 2006 compared to other diseases. This means it’s critical to properly plan for your retirement years early in case you or a loved one becomes afflicted. Take a look at the breakdown in terms of dollars for care between three common diseases: Cancer: $173,400 Heart disease: $175,100 Dementia: $278,000 These potential medical expenses must be considered in retirement and estate planning. Some of it can be paid for by insurance, Medicare and Medicaid. However, a large amount needs to be paid out of pocket by the family. In most instances, the total cost of care by family caregivers isn’t included in estimates because much of that time is just “helping out,” and there’s no cost figure against this. Similarly, there’s no estimate on the amount of lost income family-care providers would have earned if they weren’t involved in the care giving. Financial planning often gets delayed, but there are many tasks that should be done to make things easier and to avoid complications down the road. Identify family members who should be included in financial plans, like those who can help with routine financial responsibilities. You also should identify the projected costs of care when it comes to Alzheimer’s and dementia because those costs are so high. Review any available government benefits, along with Medicare and long-term care policies. Reference: MarketWatch (July 7, 2016) “What to know about Alzheimer’s and retirement planning” #EstatePlanningLawyer #EndofLifeCare #Medicaid #Medicare #RetirementPlanning

THV11’s recent post, “The importance of beneficiary designations,” explains that designating beneficiaries is a very important part of the proper handling of many documents—like life insurance, retirement accounts, bank accounts and investment accounts. Each of these may ask you to designate a beneficiary in the event that something happens to you. A beneficiary designation is your legal direction to the account administrator regarding who should get the money in your account if you were to die prior to using the money yourself. Many name a spouse or a child as a beneficiary but don’t realize that there can be legal issues to consider when making this selection. Also, it’s important to keep these choices up-to-date with changing circumstances. As an illustration, some folks who have owned life insurance policies for a very long time haven’t looked at their policies in many years. When they review the policies, items of concern often pop up—like an ex-spouse or a dead relative still named as a beneficiary. Retirement accounts—like IRA accounts, 401(k)s, and 403(b)s—require up-to-date beneficiary designations to be on file with the plan sponsor. With retirement accounts, typically the best primary beneficiary will be your spouse and the secondary beneficiaries will be your children. However, if you have a trust created as a part of your estate planning strategy, the trust may be a beneficiary of last resort. That’s because there’s a difference in tax treatment of living persons vs. trusts. Also, a living person is generally the right designation for a beneficiary of a retirement account, but a qualified charity could be a beneficiary of a retirement account. Speak with your estate planning attorney for help naming beneficiaries. Reference: THV11 (July 5, 2016) “The importance of beneficiary designations” #401ks #BeneficiaryDesignations #EstatePlanningLawyer #IRAs

The long-term outlook for Social Security old-age and disability benefits is still good, with promised benefits payable until 2034. Without any changes to the law, 79 % of promised benefits will be payable through 2090. However, the trust fund that finances Medicare’s hospital coverage is fully funded until 2028—that’s two years less than projected a year ago. Social Security annually weighs whether to give beneficiaries a cost-of-living adjustment based on inflation compared to the last year that a cost of living allowance (COLA) was awarded. Beneficiaries didn’t receive a COLA for 2016 because the inflation rate fell, which is the third time since 2010 they didn’t get an increase in payments. The 0.2% COLA that the trustees project for 2017 still could change with inflation. We’ll need to wait for the final word to come in October. Medicare beneficiaries want to know what will happen to the Part B premium in 2017. With no COLA for 2016, about 70% of Medicare beneficiaries were “held harmless” from cost increases and are paying the same standard premium as they did in the previous three years at $104.90 a month. The remaining folks are required by law to share the load of increased costs; they must pay much more. But Congress came through with a solution that limited the impact of the increases for this year. The small COLA now projected for 2017 would still have an effect on Part B premiums. Standard premiums for most of those in the 30% not currently held harmless would jump by about $27.00 to $149.00 a month next year. The other 70 % would pay $107.60 a month in 2017, which is $2.70 more than they pay now. Among the 30% impacted next year are those who didn’t have their premiums deducted from Social Security checks in 2016, including those new to Medicare in 2017, and those who already pay higher premiums because they have higher incomes. The higher-income beneficiaries would see even higher jumps in premiums next year. Those look to increase from $166.30 to $204.40 a month for the lowest affected tax bracket and from $380.20 to $467.20 for those in the highest. One other group, which includes low-income people whose states pay their Part B premiums, aren’t personally affected. However, their states will face some additional costs. Part B premiums are to cover 25% of total costs. The federal government will contribute the remaining 75% out of general revenues. The increased income-related premiums are set to cover 35%, 50%, 60% or 80% of the costs, depending on income level. The increase in Medicare costs, which means increases in Part B premiums, is primarily due to the high prices of some recently developed prescription drugs. “High cost drugs are a major driver of Medicare spending growth,” said Medicare’s acting administrator, Andy Slavitt. “For the second year in a row, the spending growth for prescription drugs dramatically outpaced cost growth for other Medicare services.” Reference: AARP.org (June 22, 2016) “Social Security COLA Projected for 2017” #Insurance #Medicare #SocialSecurity

If you have multiple grandchildren with 529 college-savings accounts, can you move some money from one grandchild’s account into the oldest grandson’s account, since he’s starting college in the fall? Kiplinger says you sure can in “How to Transfer Money Between 529 College-Savings Accounts.” As the owner of the account, you have the ability to change the beneficiary on the account from one eligible family member to another without any type of penalty or tax. The definition of an “eligible family member” is based on the individual’s relationship to the beneficiary. This will include the beneficiary’s spouse, child or stepchild, sibling or step-sibling, parent or stepparent, aunt or uncle, niece or nephew, an in-law, the spouse of any of those relatives, or a first cousin. You can review the entire list in IRS Publication 970, Tax Benefits for Education. The way that you make the transfer will vary by plan, but in almost all cases, you should be able to move any amount of money from one beneficiary to another—such as transferring 50% of the money from one grandchild’s account to another grandchild’s account. For example, at Fidelity, you’d need to complete a beneficiary change form with both of the account numbers. You would have to open up a new account if you didn’t already have one for the new beneficiary. Also, if you decide to do a partial rollover, you can designate the specific amount of money to move from each investment within the account. You also have the ability to say where that money should be invested for the new beneficiary’s account if different from the allocation directions on file for the account. 529 accounts don’t have a limit on how much you can transfer or how often you can transfer funds between beneficiaries, provided the account balance is within the plan’s maximum contribution parameters. The maximum contribution limit will vary by plan, but they’re typically between $235,000 and $370,000 in most states—with a few states having higher limits. Be proactive and don’t wait until the last second when college bills are due to make these changes. Contact the plan administrator to talk about your options before you’ll need the money. You never know if the paperwork will be delayed longer than you expect or if there are unforeseen administrative requirements. Reference: Kiplinger ( June 28, 2016) “How to Transfer Money Between 529 College-Savings Accounts” #529EducationSavingsPlan #estateplanning #Inheritance

If you turned 70½ in 2015, you were required to take your first required minimum distribution from your IRA by April 1, 2016. But do you need to take another RMD by the end of this year? Kiplinger’s article, “RMD Tips for Retirees Taking Their First Required Minimum Distributions,” explains that, generally speaking, you need to take your required minimum distributions by December 31st every year. However, your first RMD may be delayed until April 1 of the year after the year you turn age 70½, but you have to take a second RMD (the one for age 71) in the same year by December 31st. If you have to take two RMDs in one year, as many do, it could cause an individual to experience an unexpectedly large taxable income for the year. This could put you into a higher tax bracket and also impact the amount of your Social Security benefits subject to taxes. Also, note that if your adjusted gross income plus tax-exempt interest income rises above $85,000 if you are single or $170,000 if married and filing jointly, you’ll pay more for Medicare premiums—$170.50 to $389.80 per person each month for Part B premiums and an extra $12.70 to $72.90 per person each month for Part D. The IRA required minimum distribution you take on April 1st is based on the balance in your traditional IRAs as of December 31, 2014, and the second RMD of the year is based on the balance in your IRAs as of December 31, 2015. Even so, you can decrease the taxable amount for the current year by making a tax-free transfer to charity of up to $100,000 from your IRA anytime during the year, but it’s too late to make a tax-free transfer for your 2015 RMD. That amount will count as your required minimum distribution for the year, but it isn’t included in your adjusted gross income. The law allowing for such transfers has been extended permanently. As a result, you don’t need to wait for Congress to approve it at the end of each year before taking action. Speak with your IRA administrator and the charity for more information about how to make the transfer. Reference: Kiplinger (March 31, 2016) “RMD Tips for Retirees Taking Their First Required Minimum Distributions” #AssetProtection #estateplanning #IRAs

After a lifetime of hard work, you want to enjoy a good retirement. You want to do more than just pay the bills and survive. If so, sound retirement planning is a necessity—not flying by the seat of your pants. If there’s any place where “just winging it” is a bad idea, it is retirement, says Kiplinger in its recent article “Americans Need to Stop Winging It with Their Retirements.” Solid retirement planning is more sophisticated than just putting a few dollars into an individual retirement account or 401(k). Saving money is very important if you want to accomplish your retirement goals. However, if you want to keep as much as you can, saving money is just one part of a retirement plan. If you are five to ten years away from retirement, consider these reminders to help you keep on track when working to meet your retirement goals: Calculate if you’ll have enough money to cover your expenses. Look at your income when you retire—like Social Security, pensions or rental income. Then calculate what your approximate monthly expenses will be. If you have more monthly expenses than monthly income, you’ll need to work to close that gap. Without enough income, there’s really no retirement. Remember taxes and inflation. Unless your assets are in a Roth IRA, when you start withdrawing your money from other sources, there will be taxes. In addition, inflation can melt away some of your spending power. Take taxes and inflation into account. Watch market volatility in your investment portfolio. As you get close to retirement, it’s important to look at your risk tolerance when allocating your retirement assets. If you’re younger, you can recover from a downturn in the market; however, if you’re 60, you will have less time and more difficulty recovering from a major loss. Create an estate plan. Way too many people don’t have a thorough estate plan. Work with a qualified estate planning attorney to build in significant protection for the next generation. A properly created trust will help to avoid probate for the assets in that trust. Your attorney will have other strategies to help mitigate the estate taxes your beneficiaries might pay. If you start thinking and planning well ahead of time, winging it won’t be necessary. Reference: Kiplinger (July 2016) “Americans Need to Stop Winging It with Their Retirements” #AssetProtection #EstatePlanningLawyer #EstateTax #IRAs #401k #Inheritance #PlanningfortheFuture #TaxPlanning #RetirementPlanning

Generation X is hitting middle age! Bummer, to be sure. However, there’s still plenty of time to boost retirement security. If you need to get going, torque up your efforts to be on top when you retire. Kiplinger’s recent article, “7 Savvy Retirement Steps for Generation X,” has some strategies to get you there. Rein in Your Carefree Lifestyle. As you enter the middle part of your career, you may have built up some assets and may be making good money. Don’t give in to the temptation to spend it all on things like fancy vacation trips, luxury cars, or over-the-top upscale homes. Some of that is ok, because you’ve earned it. But don’t let your cost of living rise with an increased salary. Take a look at your budget and track your spending for a month or two to see where your money goes. Living below your means is not as sexy, but you’ll appreciate it if you hit a speed bump in your career. Clear Up Outstanding Debt. It’s time to start eliminating debt you’ve accumulated and to pay it down aggressively! With less debt, you can put more toward building your assets. Attack the Mortgage. Housing is often your biggest expense, especially if you own your own home. One way to become debt-free is to increase your principal payments. The faster you pay off the mortgage, the lower interest charges you’ll pay in the process. Up Your Emergency Fund. This can help you stave off credit card debt when an unexpected expense pops up and can keep you from withdrawing from your retirement account. As your salary climbs, up the emergency fund and have at least three to six months’ worth of expenses in a savings or money market account. Review Your Insurance. Now is a perfect time to review your insurance, and in some instances, you might be able to cut some costs. If your kids are grown, perhaps you can lessen your life insurance. There are policies that can help cover you if a severe event strikes, like a disability insurance policy. If you end up unemployed due to a major health crisis, this will help you cover your costs and protect your financial security. You should also look at long-term care insurance. Do this in your fifties because the premiums will be cheaper and you’ll have protection if you need care when you’re older. Get a Roth IRA. If you don’t already have a Roth IRA account, consider adding one for tax-free income in retirement. You can make after-tax contributions to a Roth IRA or convert traditional IRA money to a Roth IRA if you make more than the limitations for direct Roth contributions. You can also see if your employer has a Roth 401(k). The money will go in after-tax, but you can contribute a higher amount to a Roth 401(k)—plus there’s no income limit to contributions. Take Care of Your Nest Egg. Hopefully, you’ve been adding in 15% or more of your income to your nest egg for years and maxing out your 401(k) contributions. But if you haven’t, start ASAP—the earlier you can put more money into your retirement fund, the longer it’ll have to grow. Reference: Kiplinger’s (June 2016) “7 Savvy Retirement Steps for Generation X” #AssetProtection #IRAs #401k #Insurance #TaxPlanning #estateplanning