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An article from CNBC, “Lessen your tax bite with savvy year-end strategies,” says that working with a knowledgeable professional who knows what they’re doing really helps because they can tailor a strategy that fits with your overall financial plan. It is best to work with an estate planning attorney in your state because state tax laws vary considerably. Here are some strategies to consider before the end of the year. Harvesting Tax Losses: This involves selling securities in your portfolio at a loss to offset capitals gains. In a turbulent market, this should be a priority and is particularly important this year for people who own mutual funds in taxable accounts. Portfolio managers may have to sell appreciated securities to meet redemptions. This triggers a capital gains distribution on which investors must pay taxes. Selling other securities in your portfolio at a loss can offset those gains and decrease or wipe out that tax burden. Catch Up On Contributions: If you haven’t maxed out contributions to your 401(k) or 403(b) retirement plan, do so before the year-end to lower your taxable income. Also, if your employer offers a match, take advantage of it. Failing to do this is leaving free money on the table. Other things to take advantage of before the end of the year are “cafeteria plans,” which let you withhold some of your pretax salary for certain expenses, and 529 plan contributions. Charitable Giving: Consider giving stocks that have appreciated. If you bought a stock for $5, and it’s now worth $10, you could donate it and get credit for the full $10 (even though you only paid $5), and the recipient charity gets the full value. Give Your Big Gifts Now: The two types of gift exemptions are the annual gift exemption and the lifetime exemption. Get in your annual gifts before the year is over if you haven’t done so already, and then make next year’s gifts right away on January 1st to maximize the time the money has to grow in the recipient’s account. The article also suggests making larger gifts now (to go toward your lifetime exemption), in case the exemption amount is lowered in the future. One strategy is gifting into a Grantor Retained Annuity Trust (GRAT), which lets you, in effect, loan assets to loved ones, which they pay back with interest. An estate planning attorney can help you with the details. Settle Estimated Taxes with an IRA: If your taxes aren’t withheld through payroll, you’re probably paying “estimated taxes,” which are due each quarter. If you don’t pay these on time you can be hit with interest charges and penalties. But if you catch up on your payments in the last quarter of the year, you can avoid paying any additional fees if you settle up using IRA distributions. Don’t delay. These strategies are time-sensitive. Reference: CNBC (November 17, 2015) “Lessen your tax bite with savvy year-end strategies” #CapitalLosses #HoustonAssetProtection #EstateTax #IRAs #CharitableGiving #TrustsandEstates #401k #HoustonEstatePlanning #GiftTax #403b #CapitalGains #Wills #TaxPlanning

These findings were highlighted in the Barron’s article, “Preparing for Inheritance: How to Avoid Losing It All,” which also notes that smart financial, tax, and estate plans by themselves don’t create good stewards of wealth. Senior generations have to teach their heirs about the legacy they’re going to inherit, uniting the family unit around its accomplishments and civic engagement. When it does this, it has a better chance to preserve the family fortune as well as the family bond. Communication lets heirs have an understanding of their predecessors’ values, responsibilities, and choices. This may reveal ideals, beliefs, values, and shared visions that might otherwise have been left unsaid and allows the family to foster a common vision to support a common purpose for future generations. Annual family meetings should be scheduled with a goal of promoting family harmony. Eventually the family’s principal advisors, including those for legal, tax, and financial concerns, should receive a copy of a “heritage statement.” This is a formal document of the family’s story, values, and vision, and when it’s updated, the advisors should also get a new copy. A heritage statement should sharpen the family’s vision as it is to be shared outside the family. With a clearly defined vision, advisors’ recommendations can be coordinated with the family’s goals, beliefs, and values. Your family can up its chances of maintaining wealth rather than destroying it with the use of family meetings and the heritage design process for wise financial and estate planning. Contact a qualified estate planning attorney to assist you. Reference: Barron’s (November 7, 2015) “Preparing for Inheritance: How to Avoid Losing It All” #AssetProtection #HoustonEstatePlanning #HeritageStatement #Inheritance #HoustonEstatePlanningLawyer #TaxPlanning #HoustonProbate #HoustonTrustsandEstates #HoustonProbateAttorney

A nursing home is a facility that provides 24-hour healthcare, rehabilitation, and personal care services. Assisted living is an independent living facility that gives patients personal care and other personalized services. Adult day care services is a type of program that provides health and social support in a supervised setting during the daytime. In-home care is when a certified professional visits the home or lives there with the elderly person to provide services such as bathing, grooming, or physical therapy. They also assist with housework. Finally, home modifications can be made to adapt the senior’s home to allow for wheelchair ramps, railings, and grab bars. Paying and qualifying for a long-term care policy depends on a variety of factors, such as your age and health at the time of purchase. Many policies are less expensive if you buy them when you are younger and still in relatively good health. Most advisors recommend buying a policy in your 50s or early 60s. Another variable is the maximum amount you choose for your policy to pay per day, and the length of time it will pay. In addition, there are optional benefits you can select to add to a basic plan. Many policies offer different coverage options, so since it’s difficult to know what your long-term care needs will be, you might want to consider buying a policy with flexible options. You may not qualify if you’re in poor health or already receiving similar benefits through Medicaid. Likewise, if you have any preexisting conditions, you may be not eligible for long-term care insurance. There are certain conditions that must occur before you can start receiving long-term benefits. Benefits will begin when you need help with at least two activities of daily living, such as bathing, eating, dressing, or walking. Finally, the most important thing to know when choosing a policy is to select one that allows a cognitive impairment as a trigger—a senior suffering from Alzheimer’s may be able to do day-to-day physical activities, but still may need help to do them cognitively. Reference: Quicken (November 8, 2015) “What is Long-Term Care Insurance?” #PayingforaNursingHome #HoustonLongTermCareInsuranceEstatePlanning #HoustonEstatePlanning #ElderLaw #LongTermCarePlanning

District Attorney Wolfson said that aging people are some of the community’s most vulnerable citizens. Crimes against them can devastate families and have far-reaching effects in the community, he explained. Crimes can include physical and mental abuse, neglect, isolation and financial exploitation. Criminals might loot a victim’s bank accounts, steal belongings or property, as well as ignore the basic medical needs of seniors. They also will isolate the victim in order to hide the crime. Nevada classifies elderly people as older than 60. The District Attorney’s Office prosecution team will be staffed by deputies who will then be able to detect and process elder abuse cases from beginning to end. This new unit is the tenth special prosecutorial team in the Clark County (Las Vegas) District Attorney’s Office. The Office also has teams for special victims and sex crimes, domestic violence, gangs, weapons, vehicular crimes, fraud, bad checks, major violators and drugs. District Attorney Wolfson believes that giving responsibility for elder abuse cases to these two deputy district attorneys won’t affect his office’s budget. Reference: ksl.com (November 5, 2015) “Prosecutor setting up team to handle elder abuse cases” #HoustonElderAbuse #HoustonElderLaw

In the past, the only way single people could avoid having their home avoid probate—without adding someone to the title while they were still alive—was by creating a trust. This could be time-consuming and expensive. Starting in 2016, homeowners who want to use the new option will simply sign an instrument called a Simple Revocable Transfer on Death Deed. This will name who will receive the property. They must have it notarized and record it with their county within 60 days but can change their mind and revoke the deed at any time. This new law expires January 1, 2021 in order to allow time to study its effects. Transfer on death deeds that are executed between now and then would not be impacted, but would still be in effect and could be revoked at any time. However, new ones can’t be executed after that date unless the law is extended. The law requires the California Law Revision Commission to study and make recommendations regarding the new deed to the Legislature by January 1, 2020. Reference: The San Francisco Chronicle (November 9, 2015) “Californians have a new way to keep homes out of probate” #AssetProtection #ProbateAttorney #HoustonEstatePlanning #LeagueCityTrustsandEstates #SimpleRevocableTransferonDeathDeed #Probate #ProbateCourt #Inheritance #PowerofAttorney #HoustonEstatePlanningLawyer #Trusts

Robo-advising, as it’s been called, has increased in popularity over the past few years. It’s being popularized by companies like Betterment LLC. Launched in 2010, this service essentially allows high earners under age 50 to enter their information and goals, after which, algorithms suggest investment opportunities, typically at low-risk. Banks are interested in robo-advising because these systems could be very beneficial in cutting costs. Banks wouldn’t have to hire as many employees. With full-service brokers typically charging annual fees of at least one percent on a $100k investment, the difference could be more than $50,000 in savings over 20 years, given the same annual returns. Human advisers will still need to manage more nuanced situations, especially when it comes to high-end clients. These will include things like estate planning and tax advice. Reference: Tech Times (November 6, 2015) “Bank of America Wants Robots To Be In Charge Of Giving Financial Advice” #HoustonAssetProtection #HoustonEstatePlanning #RoboAdvising #TaxPlanning

Irving Duke created a “holographic” (i.e., hand written) will under which his wife was to receive all of his property. However, the will dictated that if Duke and his wife died at the same time, then his property was to be divided amongst various charities. What Duke did not contemplate in his will is the possibility that his spouse would pass away before he did, which is exactly what happened. As Duke had never redrafted his will after his wife passed away, the trial and appellate courts declared that his property should go to his relatives under the laws of intestacy. However, the California Supreme Court ruled that an unambiguous will can be reformed by the court if it can be established by clear and convincing evidence that a mistake was made in expressing the testator’s intent at the time the will was drafted. The Wills, Trusts & Estates Prof Blog reported on this case in “Unambiguous Will May Be Reformed Because Of Mistake.” It is difficult to determine what a deceased person intended to do. While it might seem clear that Duke intended his property to either go to his wife or to the charities, it could also be the case that he intended to rewrite his will if his wife did pass away before him. Consequently, this is the reason courts have generally been unwilling to rewrite potentially mistaken wills. It now appears probate courts in California will need to determine what a deceased person intended when the will is silent on an issue. If you have had changes in your life or in the lives of your loved ones, then do not delay that phone call to a qualified estate planning attorney to review and update your estate plan. Reference: Wills, Trusts & Estates Prof Blog (October 23, 2015) “Unambiguous Will May Be Reformed Because Of Mistake.” #HoustonEstatePlanningMistake #ProbateCourts #WillMistakes #HoustonEstatePlan #HoustonEstatePlanningAttorney #CharitableGifting #HolographicWill #HandwrittenWill

Consequently, this approach lowered the size of the surviving spouse’s eventual estate and lessened the estate tax burden for the married couple. However, as Kiplinger’s Retirement Report points out in “Old Trusts Create Tax Issues for Heirs,” estate tax laws have changed significantly since the time when many of these trusts were created. The estate tax exemption is far higher than it used to be, and spousal portability now allows a married couple to double its estate tax exemption. The problem for irrevocable bypass trusts is that assets in them do not receive the step up basis for purposes of the capital gains tax. What this means is that for many families, efforts to get around the old estate tax laws are actually creating a greater tax burden now and they would be better off without the bypass trusts entirely. This is just one example of why it is important to review your estate plan with an attorney every few years. You want to make sure your estate plan is always ideal given the current estate laws, not older out of date laws that may not be relevant to your unique circumstances. All that noted, every family situation is different. For example, in blended family situations, the irrevocable bypass trust may be the appropriate solution to avoid disinheriting your own children! Make no estate plans or changes to your current estate planning without the prudent guidance of a qualified estate planning attorney. Reference: Kiplinger’s Retirement Report (October, 2015) “Old Trusts Create Tax Issues for Heirs“ #CapitalGainsTax #HoustonEstatePlanning #EstateTaxBurden #Heirs #HoustonTrusts #EstateTaxLaw #HoustonTrustPlanning #HoustonEstatePlanningAttorney #TaxPlanning #EstateTaxExemption

Publisher’s Weekly reported on this development in “Court Punts Salinger Copyright Case to New Hampshire.” The details of this lawsuit are complex. The stories in the book are part of the public domain in the United States, which means they do not have copyright protection and anyone can publish them. The publishing agency contends that, according to an international treaty called the “Berne Convention,” if a work does not have copyright protection in its country of origin, it does not have protection in other countries. Thus, under this theory, the Salinger Literary Trust has no right to try to block the book’s publication outside the United States. On the other hand, the trust claims that the Berne Convention is more complicated and the copyright laws of foreign countries must be taken into account when determining if a work has protection in those countries. A recent decision by a German court lends credence to this position. The publisher’s lawsuit is expected to have a difficult battle in New Hampshire courts. Other estates that hold copyrights will want to watch this case closely to determine whether or not they have the right to protect works in foreign countries even after those works fall into the public domain in the United States. Contact a qualified estate planning attorney if you own any intellectual property rights. Reference: Publisher’s Weekly (October 22, 2015) “Court Punts Salinger Copyright Case to New Hampshire.” #HoustonTrust #LeagueCityTrustPlanning #IntellectualPropertyRights #Copyright #HoustonEstatePlanningAttorney

For 2015, the exemptions were set at $5.43 million for a single person and $10.86 million for a married couple. The exemptions for 2016 have been raised to $5.45 million for a single person and $10.9 million for a married couple. It is important to note that the gift tax exemption is the total amount of gifts that may be made during a person’s lifetime. The amount that may be given to any individual in a single year in 2016 will remain the same as it is in 2015 at $14,000. Forbes reported on this announcement in “IRS Announces 2016 Estate And Gift Tax Limits: The $10.9 Million Tax Break.” To take advantage of these exemptions you will want to speak with qualified attorneys and accountants to make sure all paperwork is filed properly. For example, the higher exemption only applies to married people if a surviving spouse files correctly when his or her spouse passes away. There are also certain gifts that do not count against the limits if properly made, including gifts for medical and educational expenses if made directly to the provider. Thus if your spouse passes away or before giving someone a gift, consult with an expert so the estate can transfer and the gift can be made with as little applicable tax as possible. Reference: Forbes (October 22, 2015) “IRS Announces 2016 Estate And Gift Tax Limits: The $10.9 Million Tax Break.” #EstateTaxExemptions #GiftTaxExemptions #HoustonEstatePlanningAttorney #HoustonEstateTax

Because an irrevocable trust is typically a separate legal entity, it’s not part of the estate of the person who created it. Its creation is usually a taxable gift that requires a gift tax return, which can have implications for eventual estate tax liability. Nonetheless, heirs receive the benefit of avoiding estate tax on the trust asset’s appreciation in value. One caveat is life insurance trusts. If the person creating the trust retained incidents of ownership in the policy (retaining power to change beneficiaries, canceling or transferring the policy, putting the policy up as collateral for a loan, or borrowing money against the policy’s value), it will be included in the person’s estate—regardless of the irrevocable trust’s ownership. If this is the case, estate taxes may be due, and your inheritance could decrease. The impact of income taxes also depends on the terms of the irrevocable trust. If the trust terminates at the person’s death and the trust distributes assets to the heirs, your tax basis in those assets will be that of the trust. Make sure you have detailed information from the trustee before making plans to sell those inherited assets. But if the trust continues beyond the death of the person who created it, then some complex trust tax rules apply. There may be regular distributions that the trust makes to you which will be treated as taxable income. You’ll receive a year-end informational return that shows how much income is taxable and if it’s ordinary income, capital gains, or other specialized types of income. Every trust is different, so get sound advice from a qualified estate planning attorney. He or she will guide you through the tax issues and make sure you’re in good shape. Reference: The Motley Fool (October 24, 2015) “Tax Consequences of an Inheritance From an Irrevocable Trust” #AssetProtection #EstatePlanningLawyer #EstateTax #HoustonGuardianship #ProbateAttorney #IrrevocableTrust #TrustsandEstates #HoustonEstatePlanning #WillChanges #HoustonWills #GiftTax #IncomeTax #Probate #ProbateCourt #Inheritance #HoustonTrusts #PowerofAttorney #LivingTrust #TaxPlanning

Most families just aren’t prepared for the financial burden of dementia. They assume that Medicare cover all of the expenses. Not so. Patients and their families don’t realize that isn’t the case. Plus, everything gets more complicated when an individual has dementia. For example, if a dementia patient in a nursing home gets a fever, the staff may say that they aren’t equipped to handle it. They call 911. The patient is then admitted to the hospital. This can lead to complications for the patient suffering from dementia. They may get delirious and confused, slip or fall out of bed and sustain injuries, or they choke on their food. This can cause medical costs to sky-rocket. There are large disparities in out-of-pocket costs for the three diseases. Medicare covers discrete medical services like office visits and acute care, including hospitalization and surgery. These are the types of expenses experienced by cancer patients and heart patients. Those patients usually don’t need full-time home or nursing home care until the very end of their life, if at all. As a result, they don’t see that continuing cost. On the other hand, dementia patients need constant care for years. In addition, these dementia patients may not be sick enough for a nursing home, but they still will need supervision and care. When dementia patients are sick enough for a nursing home, the cost is not covered by health insurance. More than half of patients with dementia— with three-quarters of those from racial minorities—spend down, using savings to pay for the nursing home until the money is all gone. After that, Medicaid takes over. Talk with an experienced elder law attorney about care for the elderly, Medicaid, and dementia. He or she will have ideas on how to best address your family’s situation. Reference: The New York Times (October 26, 2015) “Costs for Dementia Care Far Exceeding Other Diseases, Study Finds” #PayingforaNursingHome #HoustonAssetProtection #MedicaidTrustPlanning #MedicaidPlanning #HoustonElderLaw #HoustonElderLawAttorney #Medicaid #HoustonTrustPlanning #Dementia #MedicaidNursingHomePlanning #LongTermCarePlanning