Wednesday, August 16, 2017

Charities and IRAs - a Match Made for Tax Savings

Contributing to our own retirement and contributing to charity - in our younger years our first thought would have been that these were two separate alternatives. We knew either course of action could offer tax reduction benefits; we simply needed to decide where and how much to divert in each of those two directions.
Fast forward to age 70½, and those two choices are slightly repositioned. Whether the funds are needed or not, our Geyer Law clients must take minimum withdrawals out of their IRA accounts. At the same time, many are now in a position to make substantial gifts to their charities of choice. The money they withdraw from their IRA accounts is fully taxable as ordinary income; money donated to charity, by contrast, will generate a tax deduction.

While our attorneys offer no tax advice, instead working in cooperation with clients’ tax advisors to coordinate tax saving and estate planning strategy, we found Journal of Financial Planning’s article “How to Use Qualified Charitable Distributions as a Tax Saving Tool” very interesting and instructive.

By way of background, in 2006, the IRS began to allow retirees to make what they termed QCDs, or Qualified Charitable Distributions. With a QCD, IRA owners who have reached age 70 ½ can move money directly from their IRA account to a charity of their choice.  No income is reported, and no charitable deduction is claimed. Originally a temporary benefit which, every two years, needed to receive a new “blessing” by Congress, the QCD was permanently added to the law beginning in 2016.

So why is this direct path from our clients’ IRA account into the charity’s account such a big deal?  Wouldn’t the same result be achieved by pulling out money from the IRA, paying the tax on it, and then contributing to the charity and deducting the contribution on the tax return accomplish precisely the same thing?

Not necessarily, authors Gardner and Daff explain, offering four reasons why QCDs beat the RMD-then-contribute route:

1. Financial institutions are not obligated to withhold taxes from a QCD. The entire distribution can thus go directly to the charity (up to $100,000 is allowed.)

2. The full amount of the QCD can be excluded from income (even when that contribution exceeds the percentage limit of adjusted gross income that normally applies to charitable contributions!)

3. QCDs are allowed for each individual.  If spouses filing jointly are eligible, up to $200,000 can be excluded from income.

4. When the money travels directly from IRA to charity, that avoids raising income above thresholds that affect marginal tax rates, whether Social Security is taxable, Medicare part B premiums, and limits itemized deductions.

Charities and IRA accounts, we agree, that’s a match made for tax savings!

by Rebecca W. Geyer 

Wednesday, August 9, 2017

Good News From the U.S. Department of Veterans Affairs


“On behalf of the Department of Veterans Affairs and the nation’s veterans, I want to commend the leadership of the House and Senate Veterans Affairs Committees on their agreement on legislation that will great benefit veterans.” So began Secretary David J. Shulkin’s  statement, just weeks ago, following the passing of legislation to provide $2.1 billion to avoid a disruption in the Veterans Choice program.”

The new funding will allow for several important improvements, Shulkin explained:
  • authorizing 28 major medical leases
  • bringing new healthcare facilities closer to where veterans live
  • attracting the most sought-after medical specialists
  • establishing innovative human resources programs to strengthen workforce management
(An April 17 decision had temporarily suspended certain parts of the program to allow those to be evaluated and necessary changes made.) “The VA is committed to listening to the voices of those who care for Veterans of all eras and to collaborating to improve services, outreach, and awareness,” the Department announced on July 28th.

At Geyer Law, where Veterans Benefits is a core aspect of our practice, we were particularly encouraged after seeing the beautifully redesigned caregiver program website page on Geriatrics and Extended Care. But, even more important, we applaud some of the benefits David Shulkin describes in the new Veterans’ Choice program. A veteran would first speak with a VA clinician, and, depending on the veteran’s proximity to the right provider, he or she might see either a VA specialist or a provider in the community.

The Veterans Administration remains the primary resource, Shulkin stressed in an recorded interview:
  • “We make sure community providers have all the information they need to treat the veteran.”
  • “We get the veteran’s record back.”
  • “We pay the veteran’s bill.”

- by Rebecca W. Geyer 

Wednesday, August 2, 2017

Pearl Harbor Victim Planned His Own Funeral


Raymond Haerry made a thoughtful decision about his own funeral – he left instructions for his body to be brought back to the sunken USS Arizona ship on which he had served more than 70 years ago. Haerry, only 19 when his ship was attacked at Pearl Harbor, lived in New Jersey, never returning to Hawaii.during his lifetime. But when Haerry died earlier this year at age 94, he left instructions saying he wanted his body interred on ”his ship”.

“To help relieve their families, an increasing number of people are planning their own funerals, designating their funeral preferences, and sometimes paying for them in advance. They see funeral planning as an extension of will and estate planning,” the Federal Trade Commission Consumer Information page says”, encouraging citizens to make informed preplanning is such a good idea:
  • you can choose the specific items you want and need
  • you can compare prices offered by different funeral providers
  • you spare your survivors the stress of making decisions under pressure
  • you can decide where your remains will be buried, entombed or scattered
Don’t designate your preferences in your will, the FTC cautions (a will is often not found or read until after the funeral).  In Indiana, your designee under a Funeral Planning Declaration or your health care representative is actually charged with carrying out your funeral plans.  Also, avoid keeping a copy of your funeral plan in a safe deposit box (if arrangements need to be made on a weekend or holiday, the family will not be able to get into the box.

At Geyer & Associates, an important area of our practice is Veterans’ Benefits, and we were very touched by Raymond Haerry’s story. We found another Pearl harbor-related story to be very emotionally-laden in a different way:

A group of forensic scientists in Hawaii is still working to identify the remains of those who died in the attack on Pearl Harbor. Thanks to DNA technology, the remains of many of the hundreds of marines and sailors whose remains had been unidentifiable and who had been buried in common caskets, are now able to be identified. Now, 75 years after Navy Seaman 2nd class Raymond Piskuran died at Pearl Harbor, his family was able to bring his remains home to be buried next to his parents in Elyria, Ohio.

Two “lessons” to be learned from these two very different stories:

1. Veterans Benefits, we’ve found at Geyer Law, are the most misunderstood and underutilized resources available. Many veterans and their families are unaware that could be eligible for a wide range of services through the U.S. Dept. of Veterans’ Affairs – even if they did not directly retire from the military or suffer injuries in the line of duty.

2. While nobody wants to think about death, establishing an estate plan, including a funeral plan, is one of the most important steps you can take to protect yourself and your loved ones.

- by Ronnie of the Rebecca W. Geyer  & Associates blog team

Wednesday, July 26, 2017

Estate Planning for the New Millionaire Next Door


More than twenty years have passed since Tom Stanley and William Danko published their best-selling book The Millionaire Next Door, documenting how wealthy households tend to handle their personal finances, making the statement that wealth is not what you spend, but what you accumulate. In fact,” identifying the nuances of wealth accumulation at the household level has been the subject of research and discussion for nearly 100 years,” researchers Kruger, Grable, and Fallaw write in the Journal of Financial Planning.
At Geyer Law, our work often involves the protection and the passing on of wealth. We are always interested in reading materials about wealth accumulation – and about what makes wealth accumulators tick.
The study results reported in the Journal showed that, “overall, affluent households generally reported more frequently taking financial risk in their investment portfolios.” At the same time, the affluent were more likely to understand the nature of the risk in a particular investment and the likelihood of risk and return, and were more discerning about the appropriate level of risk to take for their own investment portfolios.

Interestingly, just two years ago, the CNBC Millionaire Survey came to a totally different conclusion, reporting that “more than one-third of high-net-worth families have not taken the most basic steps to protect and provide for their loved ones when they die.” (True, the researchers found, individuals with a $5 million or greater net worth or greater were more likely to have done planning.) One possible explanation offered for the general lack of estate planning preparedness is the higher federal estate tax exemption amount; $5.49 million for 2017.

But, whether you qualify for the “affluent household” category or not, life’s journey is fraught with change, and estate planning is about a lot more than estate tax avoidance. Life’s changes, including marriage, children, business, retirement, incapacity and death all require careful planning to protect the people most important to you and whatever level of assets you’ve worked for– and taken risks to achieve!



- by Rebecca W. Geyer

Wednesday, July 19, 2017

For Estate Planning, Structure Has to Suit the Situation


“Regardless of the form, federal tax rules are generally the same for all IRAs,” the American Institute of CPAs explains, “But the structure of the IRA agreement, the authors of 360 degrees of financial literacy add, “can have a significant impact on how your IRA is administered.”

At Geyer Law, we often discuss with clients the different options when setting up their IRA in coordination with their overall estate planning goals.
Stretch IRAs
Many find the “stretch IRA” to be useful, because, when the IRA owner dies, the beneficiary is eligible to re-title the account as an inherited IRA, taking Required Minimum Distributions based on his or her own age, thus continuing the tax deferral on the bulk of the money.

Attention must be paid to certain crucial details when setting up a “stretch”. 
  • The new account must be properly titled: “Jane Doe IRA (deceased Feb. 27, 2017) FBO Susan Doe”.
  • Jane Doe’s Required Minimum Distribution must be take out before the amount is transferred to the inherited IRA.
  • The funds must be transferred before the end of the year following the year of the original IRA owner’s death.
Trusteed IRAs
An increasingly popular option is a trusteed IRA. Under this arrangement, the IRA itself becomes a trust, with the financial organization acting as the trustee. In a recent article in Financial Planning Magazine, IRA expert Ed Slott explains that a trusteed IRA might be most suitable for clients whose IRA is their largest asset by far.

Advantages to a trusteed IRA arrangement include:
  1. greater control for the IRA owner and less control to the beneficiaries. (In the typical IRA, the beneficiary can take control of the IRA assets and there might be a concern that the assets might be squandered)
  2. greater control over the ultimate beneficiaries (A trusteed IRA lets 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 Ronnie of the Rebecca W. Geyer & Associates blog team

Wednesday, July 12, 2017

In Indiana Estate Planning, the Times They Are A-Changing - Part Two

There are new realities to deal with in estate planning, as families become increasing varied in their dynamics. The Raymond James Point of View names several of those new realities, including the legalization of same-sex marriage, the general increase in non-married couples, and the steady divorce rate.

One modern family estate planning situation that has the potential to turn into a “dilemma” has to do with what Point of View calls “accounting for the kids”. “These days, children can become part of a family in seemingly endless ways” in addition to “traditional” situations; the Raymond James authors observe, including:
  • adoption (by both heterosexual couples and same sex adoptive parents)
  • remarriage
  • in vitro fertilization
  • implantation via surrogate
  • foster parenting
  • posthumous reproduction (father dies after a child is conceived but before it is born)
At our Indianapolis estate planning and elder law firm, we help clients create an individualized estate plan in every one of these “non-traditional” situations.  Fortunately, today a full range of legal options can be explored, options that were not available even a generation ago.

Adoption
Adopted children, by law, are to be treated the same as biological children, but since that has not always been the case, at Geyer Law, we carefully review older estate planning documents to see if new language needs to be inserted.

Assisted Reproductive Technology
Contracts are usually put into place before such procedures are done; still, there is the potential for surrogate mothers or sperm donors to claim rights under the estate unless these issues have been properly addressed in parents’ estate planning documents.

Since Rebecca W. Geyer & Associates practices law in the state of Indiana, we should point out that there are certain important and detailed differences in the way our courts consider certain nontraditional family matters. Just two examples include: 
  1. Surrogacy arrangements have two separate aspects: contract enforceability and parentage establishment with the court, therefore there are two separate legal processes involved.
  2. LBGT individuals can adopt the child of their same-sex partner and can also be named on the birth certificate.
At Geyer Law, our goal is always to combine expertise in the law with highly individualized and compassionate recommendations. The times they are a-changing, and estate planning must accommodate those changes.

- by Rebecca W. Geyer

Tuesday, July 11, 2017

In Indiana Estate Planning, the Times They Are A-Changing

“As times change and social norms continue to evolve, families are becoming increasingly varied in their dynamics," observes the Raymond James Point of View, listing new realities, which include:
  • legalization of same-sex marriage
  • increase in non-married couples
  • reproductive technology (in vitro fertilization)
  • steady divorce rate
  • adoption
“Your estate plan should address your family in its entirety – however large or complicated it may be, Point of View concludes. “The key is to think through who should inherit what in a way that feels equitable.”

At our Indianapolis estate planning and elder law firm, Rebecca W. Geyer & Associates, PC., we absolutely agree. A full range of options must be considered by families today; in fact, there are many legal options that were not in existence a generation ago.

Just one situation requiring special planning involves couples living together without getting married, sometimes to avoid the need for a prenuptial agreement.  In fact, the U.S. Census Bureau estimates that the number of live-in couples in the U.S. rose 25% from the year 2000 to 2010.  At Geyer Law, we see many clients in that situation, and the goal of our work is to put certain safeguards in place to ensure that neither companion is left out of each other’s estate planning when it comes to:
  • staying in the house they shared but did not own together after one dies
  • tax savings
  • disposing of assets
  • end-of-life decisions
  • healthcare
  • financial security for heirs
Important possible steps include:
  1. naming each other as beneficiaries on pensions, retirement accounts, and insurance policies (one or both partners might have children to consider or divorce decrees that dictate otherwise)
  2. creating revocable transfer-on-death deeds to real property
  3. giving each other durable power of attorney and healthcare power of attorney
  4. creating a co-habitation agreement to determine who is responsible for what and who gets what in the event of a break-up
At Geyer Law, our aim is to be a resource for clients, combining clear and concise legal recommendations with responsiveness and compassion in times that most definitely are a-changing!

. by Ronnie of the Rebecca W. Geyer blog team