The influential Baby Boomer generation is aging, which means more and more of them are taking on the responsibility of caring for their elderly parents, and the Boomers are beginning to face up to the fact that they will need caregiving themselves in the not-so-distant future.

Large banks are not immune to this trend—and the potential to increase their client base by offering financial elder-care services. The question is, how effective can a bank be at helping you care for your elderly relatives?

According to this article in the Wall Street Journal banks can be helpful with certain financial issues such as helping to “sort out medical bills, hire in-home care or even manage the sale of a home.” Some of the larger banks are even beginning to offer more in-depth services such as “estate planning and setting up powers of attorney… crisis management (triggered, say, by a broken hip or a car accident); health and home assessments; Medicare-coverage selection and claims management; and evaluating retirement communities and long-term-care facilities.”

All of this sounds great, but before you get too excited our firm would like to caution you to be as careful about hiring a bank to do your estate or elder care planning as you would be with any other attorney or professional advisor. After all, as the WSJ article says, “banks and trust companies aren’t doing this solely out of the goodness of their hearts. Providing extra services targeted at the elderly and their family caregivers can bump up the asset-management fees that clients pay each year. . . [or] persuade a few clients to move assets to an institution to meet its minimum deposit requirements.”

So we urge you, before you jump into anything—whether it be with a bank, an attorney, a CPA or other important advisor—do the research and ask all the questions you need to ask in order to find out whether this advisor truly knows their stuff; knows the ins and outs of the law and the care-giving industry; and most important of all, make sure the person or institution you hire will be working for you, will be your advocate and your ally during difficult and confusing times.

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Father has recently remarried. He has his house; she has hers. Both are paid for and cars are paid for. My dad has an IRA which my brother and I are beneficiaries. We begged for a pre-nup, but they didn’t get one. If my father should pass, does his new wife get any of his IRA?

You ask a very interesting question. The answer is…it depends. Federal law says that pensions must pass to the surviving spouse by operation of law. An IRA is not a pension, however, it acts like a pension in many respects.

I agree that your father should have considered doing a pre-nup, but he didn’t. For IRA or pension purposes, it may not have mattered, because only a spouse can give up rights to a pension…not a girl friend or fiance. Tell your father that if he really wants the IRA to go to you and your brother he must take some additional action. I would recommend that he and his new bride go down to the office of the financial advisor and fill out the form which says she gives up her rights to the IRA. The form must be from the financial advisor and it must be notarized. If not, the beneficiary designation may not work.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

With all the estate tax proposals currently floating around the Senate the future of the estate tax is anybody’s guess… but that doesn’t mean we’ll stop trying to figure it out. A recent article in the Wall Street Journal touches on some of the more recent (and more controversial) proposals floating around Washington.

The proposal that is currently getting the most attention comes from Vermont independent Sen. Bernie Sanders and three Senate Democrats who say that “It’s time for multi-millionaires and billionaires to pay their fair share.” And pay they would! According to Sanders’ proposal “the [estate tax] exemption would be $3.5 million for an individual or as much as $7 million for a couple, with a tax rate of 45%. But estates with taxable assets between $10 million and $50 million would pay a 50% rate, and estates valued above $50 million would pay 55%. A further 10% surtax would apply to assets above $500 million.”

Of course, it’s too early to get worked up just yet, Sanders’ proposal is just one of many right now, and the debate still rages in the Senate with no clear winner in sight. Of course, if no action is taken the estate tax will come back in 2011 with a 55% tax rate on estates above a mere $1 million.

Either way, you’ll want to be prepared, and the only way to do that is to keep in contact with your estate planner and make sure that your plan is designed to handle anything. Although it may be tempting to wait to update your estate plan until a clear decision is made, all that really does is leave your family unprepared if something should happen to you while the tax is in flux. Contact our office to find out what adjustments should be made to your estate plan to keep your family protected while lawmakers continue to debate the future of the estate tax.

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“I take you to be my lawfully wedded spouse, to have and to hold from this day forward, for better or for worse, for richer, for poorer, in sickness and in health, to love and to cherish; from this day forward until death do us part.”

These aren’t just sweet words designed to bring a tear to your parents’ eyes on your wedding day, these words mean something—they mean that you intend to take care of your spouse all of your (or their) life. This includes retirement, and it even includes the months or years following your death.

You might think that caring for your spouse during retirement isn’t any different than caring for your spouse the rest of the time, but that isn’t necessarily true. In many ways retirement requires us to look at familiar things with new eyes. So how can you go about the familiar job of loving and caring for your spouse during a new and unfamiliar time? U.S. News and World Report has some suggestions in this article entitled 5 Ways to Protect a Surviving Spouse in Retirement.

When you choose to retire your financial resources suddenly become finite. You may still have an income in the form of a pension, social security, or withdrawals from savings accounts; but you can no longer count on regular pay raises or bonuses. According to author Mark Patterson, the key to protecting your surviving spouse (or even yourself!) during retirement is with maximization, preservation and planning. People often say they want to enjoy their retirement and spend their last penny on the day they die; but not at the expense of their spouse’s livelihood should he or she live 5, 10, or even 15 years after the first spouse is gone.

The good news is that you can enjoy your retirement and protect your surviving spouse. All it takes is a little bit of forethought and a lot of planning. The forethought you have to do yourself, but we can help you with the planning. Call our office and let us help you show your spouse once again how much they mean to you.

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What if someone wants to give you a Bank Account as a gift. General tax law says that with regard to bank accounts, if your name is added to the bank account and you do not take any money out of the account, there is no taxable gift. The interest earned on the account will be taxed to the person whose social security number is on the account. If the original owner’s social security number has been on the bank account, the interest income will go to the original owner and he or she will be responsible for the taxes on the account. Some things will change if the original owner takes his or her name completely off of the bank account or if you take money out of the account. If the owner takes his or her name off of the bank account, the owner will be giving you the whole bank account as a gift. At the same time, any money that you take out of the account is a taxable gift. The gift tax, if any, depends upon the amount in the account. We each have 2 gift tax coupons. The annual gift tax coupon is $13,000 for each recipient and the lifetime gift tax coupon is $1 Million Dollars. Unless the bank account is very large, there shouldn’t be a gift tax. Also, in general, any gift tax owed, will be owed by the original owner. That being said, if the original owner does not pay the gift tax, the IRS does have the power to go after the new owner for the tax that is due. Finally, when the bank account changes hands and the account is in your sole name, your social security number will be noted on the bank account. At that time the interest income will be taxed to you. This Guide does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

The American Association for Long-Term Care Insurance recently released a report on the costs of long-term care insurance, and the results were surprising. Most people mistakenly believe that long-term care insurance is going to be expensive and difficult; but in fact, according to the report, “over one-fourth [of buyers under the age of 61] paid less than $999-per-year.” And in fact, “fewer than one in 10 (9.3%) pay $3,500 or more.”

This is great news! This means that long-term care insurance could cost you less than $100 per month! The trick is that you have to think about it early. “Age at the time of application plays an important role in determining the cost for long-term care insurance the Association study reports. While 41.5 percent of buyers under age 61 pay between $500 and $1,499-per-year, only 20.8 percent of buyers who are ages 61-to-75 pay within this range.”

This is not to imply that if you’re over the age of 75 you’re out of luck. You’re not likely to get the same great rates as someone in their 50’s, but you still may not have to pay an arm and a leg for long-term care insurance. According to the report, of applicants aged 76 and older only 28.2% end up paying an annual premium of $4,000 a year or higher. Actually, almost half of applicants in this age range still end up paying less than $2,500 a year. This may not be the attractive $500/year you could have gotten in your 50’s, but it also isn’t the thousands of dollars a month most people seem to be afraid long-term care insurance is going to cost them. In fact, it’s only a little over $200/month.

If you’ve been thinking about long-term care insurance, don’t wait any longer. This is one situation where time is not on your side; the quicker you act the better it will be.

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The first answer to this question is always the same; check your divorce decree. The decree should spell out who gets to take the kids as dependents. Here are the general rules if the divorce decree is silent. The first matter to address is whether or not the child is a qualifying child. Under the IRS rules, a qualifying child is a child who is related to you, lives with you for more than one-half of the tax year, hasn’t attained a special age, and hasn’t supplied more than one-half of his own support for the calendar year. The age rule applies as follows: You can deduct the child if the child is no older than 18, the child is no older than 23 and the child is in school; or any age if the child is permanently and totally disabled. If the parent is the non-custodial parent, the child can qualify as your dependent if: The child receives over one-half of his support during the calendar year from you and the child’s parents meet one of the following requirements: The parents are divorced or legally separated; The parents are separated under a written separation agreement; or The parents live apart at all times during the last six months of the year. The best way to make certain that you comply with the rules, is to see a qualified income tax preparer. The preparer can help you through this maze of regulations. This guide does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance. Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

Additional Resources

If you are interested in reading more on this subject, click the link below for IRS Publication 503. This publication discusses child and depend care expenses.

Publication 503

We’re all about equality, but the fact is that women have different estate planning needs than men. Whether they’re single or married, have children or no children, women have different things to think about when it comes to estate planning. This means that women need to be involved in the planning process: Express their own wishes, voice their own concerns, and ask their own questions. Here are three of the ways that women are different from men—and how it affects their estate planning.

1. Women live longer than men. Among the senior citizen population (65 and older) more than three times as many women as men are widowed. This longer life expectancy means two things; first of all it means that women are the ones who will likely have to deal with taxes. When a married person dies their assets can transfer to their spouse tax free. This doesn’t avoid taxes it merely delays them, and the surviving spouse (the woman) will have to be the one to minimize the tax burden on the children. Second of all, women have to worry more about their retirement savings lasting them to the end. Estate planning is partially about distribution of your remaining assets when you die—it takes careful planning to ensure that you’ll have remaining assets after a long and active life.
2. Women are the caregivers. This includes taking care of young children and elderly parents. Statistically, women are the ones who will initiate the estate planning process—mainly because they are concerned about the guardianship of young children. Women are also the ones who will eventually have most need of a caregiver agreement or help navigating the Medicaid application process when they’re caring for their older relatives.
3. Women need to be most concerned about loss of primary income. Because men are still generally the primary breadwinners in a family, women are the ones most often left out in the cold when their spouse passes away and they lose that income stream. Women need not only to make sure they and their partner both have adequate insurance policies, they need to plan to keep those insurance proceeds and to avoid heavy taxes upon death.

All of these things can be discussed and planned for with your estate planning attorney—and it doesn’t take away from your spouse or children. In fact, having your own plan in order actually helps the important people in your life. So don’t wait any longer, plan to protect yourself today and in the future.

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There seems to be some confusion nowadays about whether “a dog’s life” refers to a life of ease or toil, but for these wealthy canine heirs life is definitely the former! Whether it’s a wealthy eccentric leaving millions to a dear canine companion or whether it’s a lover of animals leaving a portion of their estate to charity, more and more dogs (and other animals) are being included in wills and trusts.

Naming your pet in your will or trust may be odd, but it’s perfectly legitimate. Unfortunately, disinherited family members may not always agree. When Leona Helmsley passed away in 2007 she left $12 million to her dog Trouble, but that amount was reduced by Judge Renee Roth of the Manhattan Surrogate Court to a mere $2 million. The current canine court battle is over the will of Miami heiress Gail Posner, which leaves $3 million to her dog Conchita, as well as $26 million split between seven of her bodyguards, housekeepers and other personal aides.

Naming your pet in your will may be perfectly legitimate, but the truth is that there is nothing to stop disgruntled family members from contesting your wishes. If you choose to do something “unusual” in your will or trust, or if you know of family members who are likely to make trouble, it may be necessary to take extra precautions to ensure your wishes are followed. Inform your estate planning attorney of the potential conflict and discuss what steps can be taken to prevent it. In some cases “no contest clauses” can be added to a will or trust to discourage court battles. In other cases a simple meeting of all family members with your attorney to explain your wishes and reasoning will do the trick. Talk to your attorney or call our office to find out what can be done to keep the peace in your family—canine or human.

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What are the steps in doing so?

It may be challenging getting a power of attorney for your mother who has a mental illness. I would recommend that you take your mother to an appropriate physician to determine her mental state, such as a physiological neurologist. The neurologist can help to determine her capacity to sign a power of attorney.

If she is competent, she can sign the document as prescribed by law in your state. If not, you may have to begin a guardianship/conservatorship in your state so that you will be able to manage her assets for her. You will then be authorized by the court, to manage her financial and health issues.

Contact an estate planning attorney in your area for the name of a qualified physician. In addition, the attorney will be able to help draft the power of attorney forms, or begin the guardianship/conservatorship process.

This answer does not constitute legal advice and does not and is not intended to create an attorney-client relationship. The law may vary depending on the state in which you reside. It is intended only to give some direction in which to seek assistance.

Circular 230 Disclosure: Pursuant to recently-enacted U.S. Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.