Friday, October 30, 2015

Estate Planning for GenX is No Simple Matter

Estate planning is no longer about just death and death taxes, Seth Kaplan and Josh Goldglantz point out in Financial Advisor magazine. That’s particularly the case with Generation X (those born between the early 1960s and the early 1980s). Just some of the issues Gen Xers have to contemplate, the authors point out, include:
  • Protection from potential claims by creditors
  • Personal income tax planning
  • Access to social media accounts
  • Digital assets, including domain names, email accounts, and bitcoins

Technology has everything to do with complicating Gen Xers’ affairs, as “social media have significantly changed the way we live and communicate with others”, Kaplan and Goldglantz add.

Access during the “virtual afterlife”:
  • Social media accounts often contain personal messages, photos, videos and other information of an extremely private nature.
  • Social media websites have strict privacy policies that bar even family members from having access to the accounts

Determination of assets:
  • With so much banking and bill payment happening online, it has become difficult for executors to determine the extent of a person’s assets after he or she dies.
  • Email services have strict user agreements protecting privacy of the accounts

A person may be in possession of far more digital assets than they realize, as this can include everything from music to movies and books purchased over the Internet, say the attorneys of the New York law firm of Connors & Sullivan.

Despite all these unique issues, “Gen X and Millennials often times consider estate planning to be unnecessary, because they believe they do not have enough assets to justify going through the estate planning process,” Courtney Babiak of Illinois’ Peterman Financial Group observes.

Thinking that dying only happens to old people is a stumbling block when trying to get younger folks to think about estate planning, quips Boston Certified Financial Planner Dee Lee. “No generation gets out of this world alive,” she warns.

At Rebecca W. Geyer & Associates, our lawyers advise members of different generations (and often advise several generations within a single family). We’re keenly aware that unique issues face GenXers.  We know estate planning for Generation X is no simple matter!
- by  Ronnie of the Rebecca W. Geyer blog team

Tuesday, October 27, 2015

IRAs Pose Special Estate Planning Challenges

When it comes to estate planning, you might say assets are assets, except when those assets are in an Individual Retirement Account.  It’s not enough, for example, to simply divide your total assets equally among your three children – at least not if some of those assets are in an IRA. The rather complex laws and rules relating to the distribution of assets out of IRAs demand special care and attention, first in setting up the account, later in distributing the assets to heirs.

Those “special problems” become even more challenging when the beneficiary of the IRA is not a person or people, but an estate.

When an IRA owner dies, it will be necessary to determine if he or she died before or after beginning to take Required Minimum Distributions.  The Required Beginning Date, or RBD, is April 1st of the year after the IRA owner reaches age 70 ½.  Suppose Elise dies after her RBD, but before having taken her distribution, and the beneficiary is her estate.  The personal representative will need to request the distribution and income tax will be owed on it.

If the named beneficiaries of an IRA are individuals, the IRA distribution period can be “stretched out” over that person’s (or over the oldest of several persons’) life expectancy. That, of course, means less tax will be paid because the distributions will be small. If the estate (or a charity) is named as the IRA beneficiary, on the other hand, the assets will need to be distributed over a five year period at the maximum.

Very often, it is the personal representative (who may also be an heir) who is turning to the attorneys at Rebecca W. Geyer & Associates for help sorting all this out.  Of course, the need for additional guidance is motivated by the desire to save on income taxes.

Will it be necessary to keep the estate open for many years if the distribution period is to be based on the deceased’s own life expectancy in order to preserve the tax deferral?  The answer is no. The inherited IRA can be distributed to the beneficiaries of the estate, using the value of the account as of Dec. 31st of the year before the transfers are made.  The beneficiary will still be required to take distributions in accordance with the applicable distribution period for the estate, but the estate itself can be closed.

IRAs can certainly pose special estate planning challenges!


- by  Rebecca W. Geyer

Friday, October 23, 2015

That Isn't to Say You Should Keep Everything

Yes, you can avoid many problems by securing your important documents, and telling your family where they are stored, concedes Saaabira Chaudhuri, writing in the Wall Street Journal. But that isn’t to say you should keep everything, she warns. “Sometimes people hold onto so many papers that loved ones can’t find the important ones easily.”
To prove the point, Chaudhuri tells the story of Jane B. and her 87-year old mother.  It took the pair an entire year to go through all the mom’s papers, “which included documents from eight bank accounts, utility bills from the 1950s and reams of cancelled checks.”  When the mother died in 2009, Ms. B. estimated that having the documents organized ahead of time “spared me from ordering an additional 15 copies of the death certificate and ‘years of time’!”

In addition to estate planning documents such as:

  • Will
  • Revocable trust
  • Letter of instruction
  • Durable financial power of attorney
  • Healthcare power of attorney,

other documents that can be important in helping family members settle your affairs include:

  • list of financial accounts and online log-in information
  • list of loans you made to others
  • tax returns for the most recent three years
  • safety deposit box information
  • life insurance policies, including those granted by your employer after retirement
  • list of pensions and annuities
  • marriage license
  • qualified domestic relations order (QDRO) from a divorce
  • child support, alimony and property settlements
  • list of important advisors such as accountant, attorney and financial advisor

The attorneys at Geyer Law know that organizing paperwork may mean culling the documents which are important. That isn’t to say you should keep everything; just what is necessary.

- by  Ronnie of the Rebecca W. Guyer blog team

Tuesday, October 20, 2015

Leaving Lessons Along With Assets

Since estate planning is really about the next generation rather than about one’s own, it quite often occurs that our conversations with Geyer Law clients “branch off” into discussions about the best way to pass on wisdom about money management to younger family members.

And since in estate planning, more than in other types of legal discussions, we’re reminded how fleeting life can be and how precious time is, it gives us attorneys the chance to muse on the impact of time on the value of money.

The National Endowment for Financial Education published a document on this very subject, comparing three different hypothetical scenarios:

  1. Scenario #1: Starting Early
    In this scenario, an individual saves $1,000 a year for ten years, starting at age 16 and going through age 25, then puts no more into the account.  By age 50, assuming an annualized 9% rate of return, the $10,000 would have grown to $131,010.
  2. Scenario #2: Starting Later
    This individual does not begin to save until he is 26 years old, but then saves $1,000 every year, investing a total of $25,000. At his age 50, making the same 9% assumption, the account is worth $84,701. With $15,000 more dollars in, the ending value is much, much less.
  3. Scenario #3: A Lifetime of investing
    The individual saves $1,000 each and every year beginning at his age 16 and continuing up to his age 50, investing a total of $35,000.  At age 50, the account would be worth $215.715.

Scenario #2 is missing the earliest ten years.  That is what makes the results of this scenario so disappointing compared to the other two.
When one of our Indiana estate planning clients asks us for wisdom to share with their children – we use this illustration from the National Endowment for Financial Education to teach about the impact of time on the value of money!

- by  Corrina A. Smith of Rebecca W. Geyer & Associates

Saturday, October 17, 2015

Can You Find Your Estate Planning Documents? Can They?

“A simple but important issue involved in estate planning is where to keep your legal documents after they are signed,” observes attorney Richard Silvester. Silvester himself recommends clients keep the originals of their own documents.  “Thirty years from now,” he cautions, “when the estate plan actually needs to be administered, it is almost certainly going to be easier to find your own paperwork than to find the attorney who prepared the documents.”

Be that as it may, when clients of Rebecca W. Geyer & Associates request that we keep their documents, we retain their originals in a fireproof area, plus keep electronic copies that are backed up every fifteen minutes.

Silvester offers an important caution: Once you decide where to put your documents, take steps to remember where they are. Vitally important, he adds, is making sure someone other than yourself is able to find them.

Possible places to store documents include:
  • Safety deposit box at the bank (keeping photocopies in a binder for reference), although ensure some knows the location of the box and has access to it if you die
  • Desk drawer or cabinet at home
  • Fire-resistant lock box at home
One strange-sounding recommendation Silvester has heard is sealing important papers in plastic, then keeping them in the freezer compartment of your refrigerator.  The idea? The freezer is fire-resistant due to the insulation, and thieves would be unlikely to look there.

Whatever your decision, Silvester concludes, write it down, then give that written information to an adult child, friend, or neighbor.  For married couples, it’s important that each spouse knows the location of both wills.

Do photocopies have value? Possibly.  If nothing else, copies of a document held in different places can be compared against each other to prove that the original is legitimate.

“It isn’t enough to sign a bunch of papers establishing an estate plan and other end-of-life instructions.  You also have to make heirs aware of them and have the documents where they can find them, concludes Saabira Chaudhuri, writing in the Wall Street Journal.

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

Wednesday, October 14, 2015

Life Insurance Can Be a Lifesaver if Paid at the Right Time

There is such a thing as doing the right thing, and for the right person, but at the wrong time; there is also such a thing as doing the right thing, but in the wrong way.

In the area of estate planning, life insurance is one of those right things that can go very wrong.  At Rebecca W. Geyer & Associates, we know how mistakes in planning can cause good intentions to have unwanted results.
“The proceeds of life insurance are often payable to a beneficiary at the wrong time,” writes Stephan Leimberg in How does Leimberg define “wrong” when it comes to the timing of a beneficiary’s receiving life insurance proceeds? “Before that person is emotionally, physically, or legally capable of handling it,” Leimberg explains.

Beneficiaries often receive proceeds in “the wrong manner,” he adds, meaning outright rather than being paid over a period of years or paid into a trust. 

And what if the beneficiary is no longer alive? Leimberg questions.  Often, no contingent beneficiary has been named.  The “Rule of 2” should be applied here, he advises.  In any legal instrument that will transfer property at death, there should be at least one backup recipient named.

Yet another “wrong thing” often found in using life insurance as part of an estate plan is naming the insured’s estate as beneficiary. Doing that, Leimberg explains, needlessly subjects the proceeds to claims by the insured’s creditors, and also can result in increased probate costs.  “In most estate planning situations, life insurance should be payable only to a named beneficiary, a trust, or a business entity,” he cautions.

One of the issues commonly seen at Geyer & Associates is the designation of minor children as life insurance beneficiaries.  Under Indiana law, if a minor child receives more than $10,000 in assets from a decedent, including life insurance proceeds, a guardianship must be opened for the child.  The inherited funds are typically placed in a restricted account, and the guardian must provide receipts to be reimbursed from the collected funds.  Any funds which remain in the account when the child turns 18 are paid directly to the child, which likely was not the decedent’s intent.  Properly designating beneficiaries and understanding the consequences of those designations is extremely important.

“Traditionally, insurance companies have required beneficiaries to file claims to receive benefits from life insurance policies.  That has meant that claims sometimes are never filed – perhaps because policy documents were lost, or because beneficiaries did not know a policy existed,” wrote Ann Carrns in the New York Times. A multistate task force was created by the National Association of Insurance Commissioners to combat this very problem by routinely matching policyholder records with the death master file, but “the best way to avoid problems with life insurance claims is for policyholders to discuss policies with their beneficiaries,” she notes.

At Rebecca W. Geyer & Associates, PC, our estate planning attorneys know our clients all want to do the right things in the right way.  An important area of our work involves using life insurance as an estate planning tool.

With proper planning, life insurance can turn out to be a life saver for beneficiaries!

- by Rebecca Geyer

Monday, October 12, 2015

"Just Between Us" Intra-Family Loans

It is not uncommon for families to make loans to children or other family members in need of funds.  “Wealthy families often run a ‘family bank’ with advances to various family members as they have liquidity needs,” explains While it may be tempting to not charge interest when loaning funds to a family member, the IRS will impute interest if it is not charged.  The rate of interest on intra-family loans is generally lower than the prevailing market interest rate in commercial transactions, attorneys Steve R. Akers and Philip J. Hayes explain. The interest rate is based on AFR, the applicable federal rate, in turn based on market yield on Treasury bonds.

The estate planning attorneys at Geyer Law might help clients use these “just between us” loans in any of the following situations:
  • Non-recourse loans to children
  • Sales to children of property or business interests in exchange for a note
  • Loans to an estate
  • Loans to life insurance trusts
  • Home mortgages for family members
  • Loans as vehicles for gifts (payments on loan are forgiven)
Besides the fact that “just between us” loans typically carry an interest rate that is lower than that charged by commercial lenders at the time, what are the main reasons for using intra-family lending?
  • To keep interest payments in the family rather than having them be paid to outside lenders.
  • A family member may have such a poor credit history that he/she can’t qualify for a loan from a commercial lender
  • Borrowing from outside lenders may entail substantial closing costs and other expenses
  • The child borrowing the money might be able to invest it and earn much more of an after-tax return than the AFR rate on the note itself.
If the parent doesn’t need the money back, wouldn’t it be better to simply make a gift to the child rather than setting up an intra-family loan? Yes, in many cases:
  • There would be less of an accounting burden (no need to keep track of the interest as it accrues to make sure it is paid regularly or reported as income) 
  • Gifts remove assets from the parent’s estate for estate tax purposes
Each family’s situation is unique, and regardless of your financial status, our goal at Rebecca W. Geyer & Associates is to accomplish your objectives and to provide for your family in the best way possible.

Intra-family loans are just one tool among many to be considered in the estate planning process.
- by Corrina A. Smith

Monday, October 5, 2015

Geyer Law Offers Special Seminar on Special Needs Children

Parents of special needs children face unique challenges and legal issues. Is your child eligible for governmental benefits?  Which ones? What educational opportunities are available for your child? How do you handle an institution which is non-compliant with your child's IEP (Individualized Education Program)? How do gifts and inheritances affect the governmental benefits for which your child is eligible? Among the most challenging questions is this one:  Who will care for and financially support your child following your death?

The law firm of  Rebecca W. Geyer & Associates is hosting a free seminar, "Children with Special Needs: a Time to Plan" on Wednesday evening, October 14, from 7-8:30 PM. The seminar will be held in the conference room of Geyer & Associates at 11550 North Meridian, Suite 200.  The panel of local professionals leading the discussion will include:

  • Board Certified Indiana trust and estate lawyer Rebecca W. Geyer
  • Estate planning attorney Corrina Smith
  • Evia financial advisor Dan Reichart
There is a complex maze of federal and state laws regarding governmental benefits for special needs individuals.  One important topic which will be covered at the seminar will be Supplemental Needs Trusts, unique planning devices that help provide for people with disabilities while still protecting their government entitlements.

It is reassuring to know that the lives of special needs children can be improved through the use of special needs trust planning strategies!

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

Friday, October 2, 2015

Geyer Team Walks to End Alzheimer's

October 10th will find the attorneys and staff of Rebecca W. Geyer and Associates on the move at the Walk to End Alzheimer’s.  The world’s largest event to raise awareness and funding for Alzheimer’s care, support and research, the Walk is held annually in more than 600 communities across the nation.

Over the past sixteen years, as they’ve assisted clients with their estate planning and elder law needs, the Geyer Law attorneys and staff have come to appreciate the overwhelming challenges faced by Alzheimer’s patients and their families. A natural offshoot of the Geyer team’s empathetic and compassionate approach to elder law is their support of the Alzheimer’s Association through participation in the Walk.

“The Walk to End Alzheimer’s unites the entire community,” the Association explains.  That includes family, friends, co-workers, social and religious groups and more, in “a display of combined strength and dedication in the fight against this devastating disease.”

As part of their work as a full service estate planning and elder law firm in central Indiana, Rebecca Geyer, Corinna Smith and Kimberly Lewis have helped many family members of those afflicted with Alzheimer’s deal with guardianship, advanced directives, and end-of-life issues.  More than ever, they are committed not only to the advancement of research to eliminate Alzheimer’s, but to enhancing the care and support of all affected by this terrible disease.

Rain or shine, the Walk will begin at Bankers Life Fieldhouse on the morning of October 10th.  Thousands will participate as volunteers or walkers.  All registered walkers will receive a Promise Garden flower:
  •  Blue flowers represent those with Alzheimer’s or dementia
  • Purple is for someone who has lost a loved one to the disease
  • Yellow represents someone currently supporting or caring for someone with Alzheimer’s
  • Orange is for everyone who supports the cause

On October 10th, watch for Rebecca Geyer, Corinna, Kimberly Lewis, and Maria St. Clair as they walk because they envision a world without Alzheimer’s!

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