Wednesday, June 5, 2019

Insights From the Indiana State Bar Association Education Session

Along with Jeffrey S. Dible (Frost Brown  Todd, LLC) and Ellen Deeter (Dale & Eke, PC),        our own Rebecca Geyer was a presenter  at the Indiana State Bar Association’s continuing legal education event reviewing new Indiana probate, trust and guardianship legislation…We featured a whole blog on supported decision making and Indiana guardianship changes, but other legislative changes include:.

  • “Afterborn children” - these are children born after the execution of a will or trust and therefore not mentioned by name in those documents. The changes make the probate and trust codes consistent, so that the definition of “child” includes a child conceived before the death of the parent, and born within 43 weeks after the parent’s death. This has become an important issue due to reproductive technology allowing for conception even after a decedent’s death.
  • Indiana has now amended its Power of Attorney statutes to allow an agent to designate himself or herself as a trusted contact person in accordance with FINRA Rules. The Customer Account Information Rule, had required FINRA financial institutions (brokers and mutual fund companies) to have customers who are at least 65 years old (or those the broker “reasonably believes” have mental or physical impairment that make it impossible for them to protect his own interests)” to name a “trusted contact person” on each account.  The Rule has now been revised to say the financial firm must use its best efforts to encourage the naming of a contact person, but not requiring that as a condition to establishing the account. Effective July 1st, Indiana now gives individuals the right to give their designated attorney-in-fact the authority to designate themselves as a trusted contact person with a financial institution.
  • Effective July 1, 2019, Indiana becomes the 18th state to adopt Legacy Trusts. Legacy Trusts are domestic assets protection trusts (DAPTs), sometimes called dynasty trusts.  These are created to pass wealth from generation to generation without gift tax, estate tax or generation-skipping transfer tax while assets are in the trust. In addition, the creator of the trust may remain a discretionary beneficiary.  If the statute is expressly followed, assets in the trust are free from creditors two years after transfer to the trust.  Safeguards were put in place to prevent a person from listing assets on a financial statement or loan application, then transferring that asset to a legacy trust to avoid paying the creditor. In addition, legacy trusts may now be used as substitutes for prenuptial agreements in accordance with the statute.
 - by Jennifer Hammond

Wednesday, May 29, 2019

Easing of RMD Rules Useful for Estate Planning

Only two months ago, a bill was approved in the U.S. House of Representatives, and is predicted to be approved by the Senate. This legislation is going to make a significant difference, we believe, in both retirement planning and estate planning. Instead of mandatory minimum withdrawals (RMDs) from IRAs and qualified retirement accounts beginning at age 70 ½, the mandatory withdrawals can now be deferred until age 72. In addition, under this new law, the maximum age for making traditional IRA contributions is repealed. “This is the most substantive promotion of retirement savings in the last 15 years,” House Ways and Means Chairman Richard Neal remarked, referring to the Setting Every Community Up For Retirement Enhancement (SECURE) Act.

Meanwhile, additional legislation called RESA (the Retirement Enhancement Securities Act) is being discussed that would actually raise the RMD age to 75. While disagreements remain over various details in both bills, the intent is to recognize that people are living longer.

The key to who benefits from the new law will depend substantially on how much each retiree needs the money, observes. For those who need cash to pay health bills, for instance, deferral may not be a choice; they would see little benefit from the new law. Wealthier retirees, on the other hand, might benefit greatly by deferring withdrawals (which are taxed as ordinary income and can push them into higher tax brackets and into paying a surtax on Medicare and Social Security benefits).

Understanding and utilizing the RMD rules is part of the estate planning process, Fidelity points out, naming several specific tie-ins:
  • Beneficiaries may be able to take an income tax deduction for estate tax paid on your retirement account, which can substantially reduce the income tax they will owe when they withdraw the assets.
  • Consider an irrevocable life insurance trust.  The liquidity can be used to pay federal estate tax on your retirement account, so beneficiaries will not need to accelerate distributions to cover the tax.
  • If you’re concerned about creditor protection for any of your beneficiaries, you need to know that an inherited IRA is not eligible for bankruptcy protection, and you may wish to consider trusts.
At Geyer Law, we applaud any legislative initiative that helps retirees gain flexibility in their retirement and estate planning.  We often discuss with clients the different options when setting up their IRA in coordination with their overall estate planning goals, discussing the pros and cons of:
  1. Stretch IRAs (beneficiaries can retitle the accounts as inherited IRAs, taking RMDs based on their own ages)
  2. Trusteed IRAs (you specify contingent beneficiaries that cannot be changed by the primary beneficiary).
At Geyer Law, our attorneys are dedicated to providing in-depth counseling to individuals and families. Recommending the appropriate structure for IRA assets is just one aspect of the work we do, helping our clients accomplish practical estate planning solutions.
 - by Rebecca W. Geyer

Wednesday, May 22, 2019

Supported Decision-Making Enables the Disabled

There may not be “a new sheriff in town”, but there is a new law in our state. Here at Geyer & Associates, where we support families with  special needs children by helping them navigate through the complexities of laws and connecting them with resources, we welcome the new law, which requires Indiana judges to consider less restrictive alternatives to guardianships and recognizes Supported Decision-Making Agreements as an alternative to guardianship.

Until now, Indiana law did not require that a person petitioning for guardianship prove that guardianship over the alleged incapacitated person was the least restrictive alternative for providing that individual with assistance.  Indiana’s new law, contained in Senate Enrolled Act 380 and effective July 1, 2019, adds as a required element of a guardianship petition, an allegation describing “the petitioner’s efforts to use less restrictive alternatives before seeking guardianship, including a description of the less restrictive alternatives that were considered but ruled out, and why those alternatives won’t work for the individual.  

Among the least restrictive alternatives identified in the new legislation are the creation of a power of attorney, the appointment of a health care representative, the appointment of a representative payee (e.g. for Social Security benefits), appropriate technological assistance, and a supported decision making agreement.

Supported decision-making allows individuals with disabilities to make choices about things affecting their own lives, with help from a team of people they know and trust.  Rather than appointing a guardian to make all the decisions, supported decision making allows the person with the disability to make his or her own decisions. 

The individual with disabilities puts an agreement in place naming people to help the individual in the decision-making process to make, communicate and effectuate life decisions without impeding the individual’s rights to make his or her own decisions. Supported decision making agreements can be made to cover specific topics such as finances, physical health, mental health, legal matters, services and supports, education, work, and housing decisions.

Under Indiana’s new law all options may be combined in a way to best meet the needs of the person. At Rebecca W. Geyer & Associates, we are excited to see these changes to our guardianship laws to ensure that individuals maintain as much independence and autonomy as possible.

 - by Rebecca W. Geyer

Wednesday, May 15, 2019

VET TECH Provides New Options in Planning for Veterans

Since helping veterans and their surviving spouses obtain the benefits they deserve is a very important initiative at Rebecca W. Geyer & Associates, our attorneys were very interested to learn about VET TEC, the newest pilot program from the Department of Veterans Affairs. VET TEC stands for Veteran Employment Through Technology Education Courses. The purpose - equipping veterans with the skills and expertise needed to land jobs in the high tech industry.

The main difference between this new program and the Post 9/11 GI Bill is that VET TEC, which consists of computer coding “boot camps” and other intensive high-tech training courses, is designed to move vets into the job market much faster than traditional college programs.

In this very innovative “public-private” arrangement, companies actually providing the training will be industry-leading commercial tech firms, not government agencies. “Preferred providers” will have agreed to return all money received from the VA if their attendees do not find meaningful employment within 180 days of course completion.

In discussing these new possibilities with vets and their spouses, we explain that not only is the training itself paid for by the VA, but that monthly housing is also provided during the training. The program does not use or take away any benefits to which the veteran is entitled through the GI Bill. In fact, veterans will be paid a partial housing stipend even if they choose to take the training online!

High demand training areas for the VET TEC program will include:
  • computer software
  • information science
  • computer programming
  • media application
  • data processing
A very important part of our law practice at Rebecca W. Geyer & Associates is providing assistance to veterans and surviving spouses of wartime veterans. The Department of Veterans Affairs is made up of three areas, but our firm’s focus is with the Veteran’s Benefits Administration.

While it is commonly known that certain benefits are available for the brave men and women who served in our armed forces, many veterans (and their families) are unaware of some of those benefits. We want to do our part to make sure this new training program helps as many vets as possible find new careers in the high demand high tech industry.

 - by Rebecca W. Geyer

Wednesday, May 8, 2019

Special Needs Planning

“Ongoing advances in medical research and technology will result in children with development disabilities of all kinds living well into adulthood,” Webber Barton Roscher reports on the American Bar Association website.  What that statistic means is that, as estate planning attorneys, we must help clients with special needs adult children provide for those children on a long-term basis, while still tending to their own retirement needs and planning for the inheritances they would like to leave to other children.

Special needs trusts
  • Assets held in a properly drafted special needs trust are not considered to be resources that are “available” to the beneficiary. Therefore, the benefits an adult child is receiving through the Social Security Supplemental Security Income program (SSI) and/or through Medicaid will not be jeopardized.
  • Special needs trusts can be funded during the life of the parent(s) or come into existence upon the death of the parent(s). Sometimes the funding for the trust comes from a life insurance policy on the parent, while the parents’ other assets become the inheritance left to the other children.
  • Funds that are held in a special needs trust are available for many different needs:

    • medical and dental expenses not covered by government programs
    • equipment
    • special dietary needs
    • insurance
    • education
    • vacations
    • recreation
  • When a child reaches adulthood, parents are no longer allowed to either make medical decisions on behalf of that child or manage assets on that child’s behalf. For that reason establishing a guardianship is a crucial step in the planning. Then, looking ahead, a successor guardian (or a series of guardians) will need to be named to take over in the event the parent becomes incapacitated and after the parent(s)’ death.
  • In the ABA article, Roscher makes a point about special needs planning that we, in our practice at Rebecca W. Geyer & Associates believe is especially important:
“Any parent providing care has accumulated a wealth of knowledge about the programs and benefits for which his or her child is eligible.  Passing this information on to the next caregiver will ease the emotional transition that certainly will occur on the loss of a parent. All individuals who may be involved with the transition of care should be given a copy of the letter or statement of wishes.”

 - by Rebecca W. Geyer

Wednesday, May 1, 2019

Stepping Up Your Estate Plan

“Step-up in cost basis is a pivotal factor in deciding whether your clients should gift during life as compared to bequeathing assets,” Philip Herzberg, CFP®. CTFA, AEP® advises financial planners. How true - at Geyer Law, tax basis is one topic that must be thoroughly discussed whenever client are discussing assets they wish to pass on to someone else. Why?

1. If an asset is gifted during the lifetime of the owner, the tax basis is generally the original purchase price. At some point, the recipient will be paying capital gains tax on the difference between that cost basis and the sale price.
2. If the present owner waits and arranges for the asset to pass to the recipient as an inheritance, the cost basis will ‘step up” to the fair market value at the time the inheritance is received. (Unless the asset appreciates further before the heir before the heir sells it, there might be no capital gains tax to pay.)

A step-up in basis, Investopedia explains, reflects the changed value of an inherited asset, and the step-up in basis rule changes tax liability for inherited assets in comparison to other assets. Investopedia offers a simple example: An investor purchases stock at $2 per share, and the shares grow to a value of $15 per share.  If those shares pass to an heir after the original investor dies, the cost basis for each share becomes the current market price of $15. Any capital gains tax paid in the future will be based on the increase over that $15 cost basis, not based on the increase over the original purchase price of $2. Had the investor gifted the shares when he or she was still alive, the recipient would have a cost basis of $2 per share and pay capital gains tax on any amount over $2 per share realized on the sale!

When a beneficiary inherits property from a decedent, Michael Kitces explains, the asset receives a step-up in basis to its value on the date of death – which is both a tax perk for inheritors, and a form of tax simplification (as beneficiaries otherwise may not know what the decedent’s original cost basis was anyway). In most cases, determining what the cost basis of the inherited property will be is fairly straightforward – the executor determines the value, and reports it on the Form 706 estate tax return. In fact, Kitces adds, there is a new Internal Revenue Code section, #6035, requiring executors to file a new Form 8971 to notify the IRS who the beneficiaries are, along with a Schedule A that informs both the IRS and the beneficiaries what their inherited cost basis will be.

Our experience at Geyer Law has been that unless proper planning was done by the person who has died, the heirs simply do not know where to begin, and we must provide estate administration services to guide families through the process. Those services include:

* commencing probate proceedings
* assisting with the evaluation and orderly payment of claims
* advising clients regarding title issues
* assisting with trust funding
* preparing tax returns
* valuation and taxation of property
* closing the proceedings

Proper estate planning not only puts you in charge of your finances, it can also spare your loved ones expense, frustration – and possibly, capital gains tax!.

 - by Rebecca W. Geyer

Wednesday, April 24, 2019

Estate Planning to Avoid the Snow White Effect

Getting married for a second time is fairly common, but the financial and estate planning issues that result from remarriage can be anything but, Mark Eghrari points out in Forbes

To illustrate that very point, Lexology published the piece “A Cautionary Fairy-Tale – If Only Cinderella’s Father Had an Estate Plan", making the observation that it was the parents’ failure to plan for the future that put Cinderella in the terrible predicament in which her evil stepmother stole her inheritance and enslaved her in her own home.

Why are there so many fairy tales that depict evil stepmothers? Is it true that stepmothers today are still resentful or do they love their stepchildren like their own? “I suspect the folk tale step-mother is centrally worried about the original child inheriting all the father’s fortune, and her own children getting nothing,” writes Mary Gentle of the University of London.

At Geyer Law, the fairy tale of Snow White comes to mind.  That story, we learned, was based on the true tale of Maria Sophia Margarethe Catharina, Baroness von und zu Erthal, born in 1725. Maria Sophia’s father was the local representative of the Prince Elector of Mainz.  After his first wife died, Philipp Christoph remarried.  The stepmother used her position to the advantage of her own children from her first marriage.

“Date two years before deciding to marry, then date your future spouse’s children before the wedding,” advises From an estate planning point of view, avoiding family conflict, both now and later, takes quite a bit of thought, as well as quite a bit of legal backup in the form of documents.

Among the many things a couple must consider are these:
  • What legal documents are already in place for each?
  • Does either have support obligations to a former spouse?
  • What debts are owed by either or both?
  • Do family members of either require more support (due to age or disability)?
  • Who owns the home in which the couple will live?  If the home is owned by one, will the other be allowed to stay in it after that person dies?
  • If there are minor children and their parent dies, what living arrangements are in place for them? Will the children live with their surviving parent?  Stay with the survivor of this marriage?  What funds will be available for their support?
Had either Cinderella’s or Snow White’s father lived in Indiana and visited with our estate planning attorneys at Rebecca W. Geyer & Associates, we would have discussed creating a trust for the daughter’s benefit, stating that certain assets were to be the separate property for her, apart from assets left to Wife #2.  As an “and/or”, a life insurance policy could have been established on the father’s life, with the benefits payable to a trust for the benefit of the daughter or Wife #2.
Establishing an estate plan is one of the most important steps you can take to protect yourself and your loved ones. Proper estate planning puts you in charge of your finances, spares your loved ones the expense, delay and frustration associated with managing your affairs when you pass away or become disabled. With proper planning, all those stories about wicked stepparents can fade into fairy tales!