Saturday, April 30, 2016

Giving Back to Social Security

“In the first few weeks after the death,” attorneys Liza Hanks and Carol Elias Zolla warn trustees and executors in the book The Trustee’s Legal Companion, “you should pick up the phone and notify the Social Security Administration of the death by calling 1 800-772-1213.  You are required to return any Social Security payment that’s for the month of death, no matter when the death occurred.”

That can be confusing, the authors admit.  Social Security payments are usually made for the prior month.  If a person died June 30, for example, her check for June would arrive in July, and that check and any other that arrive after it must be returned.

What if Social Security checks are being deposited directly into a bank account?  Notify the bank and request that any funds received for the month of death or later be returned to Social Security as soon as possible.  If you’re mailing a check back, Hanks and Zolla warn, use registered mail so that you can get a receipt.  To find the closest Social Security Administration office, go to, they advise.

Since a surviving spouse is entitled to a one-time death benefit of $255 from Social Security and also might qualify for survivors’ benefits, survivors need to call or visit the SSA.

Dealing with Social Security benefits is a very important part of winding up a wage earner’s – or former wage earner’s affairs, because, as Denis Clifford points out in Plan Your Estate, even survivors not entitled to payments based on their own earnings record may be eligible for survivor benefits.

Relatives who might qualify include:
  • Surviving spouse
  • Former spouse (if he/she was married 10 years or more to the deceased)
  • Unmarried minor children
  • Dependent grandchildren and great-grandchildren
  • Dependent parents over 65
Age is a factor in eligibility to collect benefits as a relative of the deceased worker:
  • Widow/widower – full benefits at normal retirement age, reduced benefits beginning at age 60.
  • Disabled widow/widower – benefits may begin as early as age 50

No matter how careful and detailed the estate plan, at Geyer & Associates we remind our clients to contact the Social Security Administration shortly following a loved one’s death.

 - by Corinna A Smith of  Rebecca W. Geyer & Assicuates

Thursday, April 28, 2016

Prince's Copyrights Pose Estate Settlement Challenge

“Prince died without a will, according to court documents filed by his sister on Tuesday, potentially causing big complications for that star’s sprawling financial estate and musical legacy,” the New York Times reports.

Why is a will so crucial in settling an estate? There’s more to estate planning than just a will, isn’t there? However, as our attorneys at Geyer & Associates often explain, the will is the most basic testamentary document.  The main advantage of the will is that it makes a person’s intentions clear.
  • The place of residence named in the will determines which court will be involved in settling the estate.
  • The will names beneficiaries and what should be given to each of them.
  • The will names an executor to carry out all its terms.
  • The will designates how debts are to be paid, including bills, credit card balances, and funeral expenses.
In the absence of a will, none of these issues is addressed.

Tyka Nelson, Prince’s sister, testified to the fact that her brother died without a spouse, children, or surviving parents, and she petitioned the court in Minnesota to list herself and five half-siblings as heirs.

Uniquely knotty issues involved in settling this particular estate left by Prince Rogers Nelson include:
  1. Prince had no long-standing, consistent relationship with a legal advisor, preferring to deal personally with record companies, concert promoters, and digital music services, meaning that no ongoing and consistent record-keeping appears to have tracked the many transactions and agreements.
  2. Prince owned extensive real estate properties in the Minneapolis area, including a studio complex.
  3. Prince’s publishing catalog containing the copyrights for his songs were under his own control and he had a newly renegotiated contract with Warner as well. More than 650,000 albums and more than 2.8 million tracks have been sold in the U.S. since his death alone!
  4. Prince’s net worth has yet to be made clear; given that the size of the estate is probably in the hundreds of millions of dollars.  Under estate tax rules, the IRS will take 40% or more of that amount in taxes.
More needs to be said about the estate planning complications caused by digital property and copyrights. As Benjamin Brunette discusses in the blog, Legal Login, owners who transfer copyrights have the right to terminate those transfers as much as 35 years later. If the original owner dies during that period time, the 1978 Copyright Act disallows the termination of a transfer of copyrights that were transferred by will.  Since no will has been found for Prince, and since there are so many copyrights involved and so few records uncovered, it will be particularly challenging to settle his estate.

Had there been a will, at least it would have made clear how Prince wanted his affairs to be handled.  Make sure you have proper estate planning in place to avoid issues after your death, and to ensure your estate is left to the people of your choosing.

 - by Ronnie of the Rebecca W. Geyer blog team

Wednesday, April 27, 2016

Saying "No, Thank You" to an Inheritance

“There are several reasons why a beneficiary might disclaim a bequest,” Theodore Hughes and David Klein explain in The Executor’s Handbook. Those reasons include:
  • Another survivor has a great need. (If Robert Smith’s brother leaves him $100,000, and Robert doesn’t accept the money, it goes to Robert’s daughter Jennifer, who needs it more than Robert does.)
  • An heir owes money to creditors, who will simply grab the inheritance as soon as he receives it.  By disclaiming, he takes the money out of the creditors’ reach.
  • The heir is elderly and financially self-sufficient.  He/she does not want to inherit assets that would go to his or her own heirs, anyway.
  • To reduce estate taxes. Any property that is disclaimed by a beneficiary is never legally owned by that person and cannot be taxed upon his/her later death.
  • To fine-tune gifts.  Disclaimers allow beneficiaries to make adjustments and avoid problems of owning a piece of property or a business together, where one might need to come up with cash to buy out a co-owner.
  • To allow beneficiaries to make adjustments for unforeseen circumstances.  An example Denis Clifford offers is children who disclaim an inheritance from their father to help their widowed mother have more financial resources.

This saying “No Thank you” involves certain rules, we caution our estate planning clients. Federal law requires disclaimers to be “qualified”, which means:
  • The disclaimer must be in writing.
  • The disclaimer must be completed within nine months of the death (if the heir is a minor, the disclaimer must be done within nine months of that minor reaching age 21)
  • The person doing the disclaiming may not first benefit from the property
  • The person doing the disclaiming cannot direct where the gift goes (the deceased’s will or trust document will dictate that)
Are all disclaimers done “after the fact”, initiated after the person who created the will or trust has died? Not at all, says Denis Clifford.  In fact, he advises, “You might help your inheritors by directly incorporating your wishes concerning disclaimer of gifts into your estate plan.” There are two important reasons for doing so:
  1. Including a clause permitting beneficiaries to disclaim gifts tells them you know about this option.  “That way,” Clifford points out, “a beneficiary does not need to worry about going against your desires.”
  2. Not all beneficiaries or even executors know about disclaimers, so authorizing them in your documents is a way of alerting your heirs that this is a choice they may make.
One caveat about disclaimers is that the law doesn’t allow trustees who have any power to allocate or distribute trust income or principal to disclaim. If one of the beneficiaries is also the trustee, that might cause the IRS to consider the disclaimer invalid.

 - by Rebecca W. Geyer

Monday, April 25, 2016

Wills - What They Will and Will Not Cover

“Once you place property in one of the following forms of ownership, listing that property in your will has no effect,” Denis Clifford explains in Plan Your Estate. Clifford is referring to:
  • Living trust
  • Joint tenancy property
  • Pay-on-death bank accounts
  • Life insurance policies with named beneficiaries
  • Funds inside 401(k), profit-sharing, IRA accounts
  • Property promised to someone in a prenuptial or partnership agreement
Simply put, assets in these accounts don’t need a will to “tell them where to go” – the trust, insurance policy or pension plan already has that set in motion.

Even if an estate plan has both a will and a trust, assets not actually in the trust will be distributed by the executor according to the terms of the will, and those terms might be very different from the terms of the trust. Unless there was a “pour-over will” directing the executor to transfer property into the trust after the person’s death, whatever is not in the trust will follow the directions in the will.

“If we are to believe what we see in the movies or read in contemporary novels,” say Theodore Hughes and David Klein in The Executor’s Handbook, the reading of a will and the settling of an estate are rather simple processes”.  In real life, the two authors point out, the process is not that simple at all, because a will does much more than leave assets to specified beneficiaries.

Some of the other tasks accomplished through a will are:
  • Paying debts.  These include credit card balances, personal loans, mortgage payments, final bills, and funeral expenses.
  • Designating a guardian for minor or incompetent children
  • Naming a conservator to handle the inheritance of minors or incompetents
  • Naming an executor to carry out all the terms of the will
But, before any will can do its work, it must get found. That is why it is so crucial to leave directions for survivors. Why is the will so crucial in settling an estate?
  • Depending on the person’s state and county of residence mentioned in the will, that’s where the probating of that will takes place.  “I, John Doe, being a resident of Columbus, Indiana…” will determine the court that will be involved in probating the estate.
  • The will names the beneficiaries, each of whom has an interest in the process.
Besides distributing assets to beneficiaries and paying debts, there are several other vital functions for a will to perform, as Liza Hanks and Carol Elias Zolla explain in The Trustee’s Legal Companion. Two of those are:
  • Giving instructions about handling digital assets (online accounts and files)
  • Providing for the care of a pet (You can’t leave property directly to a pet, but you can use the will to leave money to someone’s who’s agreed to care for that pet)
If you prepare a thorough estate plan and arrange to avoid probate for all your property, do you still need a will? Yes, says Denis Clifford:
  • Some types of property (cars, for example) don’t lend themselves to leaving through a trust
  • A person might end up acquiring property shortly before death and not have time to put that property into the trust.
As is true about any tool, we like to point out to our Geyer & Associates clients, it’s important to understand what a will, as an estate planning tool, will and will not accomplish.

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

Thursday, April 21, 2016

How Set In Stone is an Irrevocable Trust?

“Irrevocable trusts, by their very nature, do not change – at least that’s what we tend to think,” Trevor Chuna, CPF®, observes in the Journal of Financial Planning.

But since a trust is a vehicle used to transfer and manage assets to meet the objectives of the grantor at the time the trust is created, what happens when goals and objectives change with changing circumstances? As financial planners, Chuna writes to his colleagues, “we can’t see into a crystal ball that shows us all the circumstances and events around which we should be planning.”

Chuna offers a few examples of planning that once fit the bill but no longer do:
  • A married couple created an irrevocable life insurance trust to help pay estate tax.  Since the tax law now allows couples to pass millions of dollars to heirs estate tax-free, such trust may no longer be needed if no estate tax is due.
  • Distributions out of a trust have brought assets down to a level that no longer justifies the cost of administering the trust.
  • A trust giving income to a beneficiary dictates distribution to the children upon the beneficiary’s death leaving the spouse without a source of income.
Modification options for trusts that are no longer economically viable include:
  1. Decanting – the trustee distributes trust assets from an old trust to a new one with different terms. Indiana is one of more than half of U.S. states to allow decanting.
  2. Private settlement agreement – this modifies trust provisions moving forward, but doesn’t change beneficiaries or terminate the trust.
  3. Reformation of the trust – all beneficiaries must have legal representation to do this and a court determines if the trust should be changed to reflect differing circumstances.
Whatever changes are made in an irrevocable trust, they cannot change the basic purpose of that trust by:
  • Restricting currently exercisable withdrawal rights
  • Reducing a fixed income or annuity
  • Adding new beneficiaries

As Geyer & Associates, we might discuss making changes to a trust for one or more of the following reasons:
  • To save taxes by changing the situs (location) of the trust administration
  • To combine trusts for efficiency
  • To allow the trustee to change investment options
  • To transfer assets to a special needs trust
  • To adapt to a beneficiary’s substance abuse or marital  or credit issues
“Circumstances change, feelings change, and it’s inevitable that laws and the tax code will change,” Chuna points out. The irrevocable trust must become – in fact is becoming – a more flexible estate planning tool.

 - by Rebecca Geyer

Monday, April 18, 2016

If-Only Estate Planning Story #3: Joint Tenancy With Right of Survivorship Planning May Not Be Good For Children

Cinderella’s real parents were not bad people;they simply failed to properly plan, explains California attorney Ahmed Shakh.  And proper planning for stepchildren has to involve estate planning attorneys, Shakh points out.  After all, state legislatures and the Federal Government cannot write laws to protect families they have never met.

“It is common for spouses to own their property jointly, even widowers who remarry.  Married couples like to:
  • name each other as beneficiaries in their retirement plans and life insurance
  • structure ownership of their homes in such a way that all of the real estate passes to the surviving spouse bydeed
  • title financial accounts jointly
“There is no probate, no trust administration, and no notice to anybody. The surviving spouse just gets everything.”

We often forget the backstory of Cinderella, Shakh says:
  1. Cinderella’s mother dies when Cinderella is still a child.
  2. Cinderella’s father decides to marry a woman who has two girls around the same age as Cinderella.
  3. Cinderella’s father dies, leaving the estate to his widow.
  4. The stepmother takes advantage of the estate assets for the benefit of herself and her two natural daughters.
  5. Cinderella is treated as a servant in her own home.
What is interesting about this story is how common it is, Shakh laments. Using an orphan’s own assets by stepparents is a situation based on “the inherent structural problems of asset succession, he points out. In the non-Disney world, the “wicked stepmothers” may be brothers and sisters, uncles and aunts, or judgment creditors.

If both parents die, the law requires a minor child to have a personal guardian to step in and in effect become the child's parent. Who would be the guardian for your children? Many people haven't given this question enough thought, according to American

At Geyer & Associates, we know that for parents estate planning is about a lot more than money.  We discuss issues of guardianship, financial management, and family dynamicswith all parents, including the following questions:

  • Who would provide the best care for your children if you die?
  • Will their guardians have enough money to provide your children with the kind of education and environment you prefer?
  • What happens if just one parent dies, leaving the survivor to bring up the children?
Child-proofing your estate plan can avoid a Cinderella situation!

 - by Kimberly Lewis of Rebecca W. Geyer & Associates

Friday, April 15, 2016

If-Only Estate Planning Story #2: Keeping Mastery of the Kingdom

“King Lear’s tragedy can teach us about estate planning,” observes California attorney Ralph Hughes. The estate planning lesson Hughes suggests we need to keep in mind is simply this: You won’t always be master of your kingdom.

But these are your assets. Shouldn’t you have the right to control who receives those assets after your death?  Shouldn’t you be able to put some stipulations and conditions into your estate plan, so that particular beneficiaries will receive an inheritance only if they meet certain expectations?  The legal answer is “yes.”

King Lear, Hughes reminds us, wanted to implement a thoughtful estate plan that divided his kingdom among his three devoted and loving daughters, so that, as Shakespeare puts it, “future strife may be prevented now” (Act I Scene 1).

But we are fools, Hughes asserts, if we believe that any estate plan that ignores the human beings involved will stand the test of time.  In King Lear’s case, the daughters threw Lear out and  he never regained his power.  The members of the younger generation exiled Lear and began implementing their own agendas in the kingdom.

Conditions in a will can be divided into two general categories:
  1. Conditions precedent make a gift contingent upon the happening of a specific event. Not unless and until the event occurs will the gift take place. One condition for an heir might be achieving a certain level of schooling.
  2. Conditions subsequent make the gift contingent on the continuation of a particular situation, such as abstaining from alcohol or drug use.
The point Hughes makes is that human relationships are not static, and the younger generation will not always follow the path that parents or grandparents envision, even when conditional clauses are included in carefully thought-out estate plans.
At Rebecca W. Geyer & Associates, including conditional provisions in wills and trusts and creating spendthrift trusts to protect assets from beneficiaries’ creditors are just two examples of estate planning strategies we use to help our clients keep control of “the kingdom”. 

Still, as estate planners must understand, a healthy view involves a willingness to let go and to trust the younger generation to pursue their own path in life.

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

Wednesday, April 13, 2016

If-Only Estate Planning Story #1: Where There's a WIll, There's Less Need for Litigation

It’s been almost twenty years since attorney Larry Inlow was killed by a helicopter blade, but the disputes about his estate went on for fourteen years, all the way to the Indiana Supreme Court. Anyone who’s put off creating a will needs to hear the Inlow story again.
When the long legal war between Inlow’s widow Anita and his four children from a previous marriage began, the estate was worth $180 million. Only a fraction of that amount remained after legal fees and the bankruptcy of the insurance company for whom Inlow had worked.

The primary dispute had to do with the bill for Inlow’s funeral and for a $250,000 private mausoleum. These expenses had originally been paid for by Anita out of the wrongful-death insurance settlement paid to her. Later, she was reimbursed by the estate for these expenses.

The Supreme Court ruled against Anita, saying that the wrongful death insurance settlement was meant to cover funeral expenses and that the money should be put back into the estate.

Complicated? Yes. Long and drawn out? Yes. Expensive? Yes. Necessary? No. All of the fighting stems from the simple fact that Inlow died at age 46, without a will.

There’s more to estate planning, of course, than just a will. However, as our attorneys at Geyer & Associates often explain, the will is the most basic testamentary document.  The main advantage of the will is that it makes your intentions clear, including the topic of how funeral costs are to be paid. We take a lifetime planning approach, and our objective is to take the mystery out of the estate planning process so that individuals and families have peace of mind rather than confusion when facing the disability or death of a loved one.

When Larry Inglow died, he was only 46 years old, He had been healthy and active, and certainly no one could have anticipated the sudden tragedy. Even if Inlow had been single without children, he would have benefited from having a will dictating who would be in charge of his affairs. Estate planning documents were even more important in Inlow’s case – he was a wealthy corporate executive, married, with five children (four from one marriage, one from the second marriage).

Where there’s a will, there’s less need for costly litigation.

by Rebecca W. Geyer

Sunday, April 10, 2016

Don't Let a House of Trouble Be Your Legacy

“Dividing a home among siblings takes planning and cooperation,” cautions Caroline E. Mayer, writing in the AARP Bulletin. Mayer recounts the 17-year family rift created among Olivia Boyce-Abel and her three siblings when their mother died, leaving an old family vacation home as part of their inheritance. The legal dispute among the siblings prompted three lawsuits and divided family members for almost two decades. “Despite parents’ best intentions to assure future generations of family togetherness, an inherited home often triggers lifetime grudges, and, at worst, lawsuits, Mayer concludes.

A growing number of boomers will likely go through an experience similar to the Boyce-Abel’s, she predicts, because:
  • boomers are expected to inherit $8.4 trillion in assets
  • a large portion of that is likely to be real estate given the high rate of home ownership among older Americans
By way of contrast, Caroline Mayer offers an example of four adult heirs to a vacation home who avoided all the contentiousness of the Boyce-Abel saga. Robert Smith and his siblings wanted to make sure the house stayed in the family, but also wanted to avoid disputes.  They drew up a notarized agreement setting out conditions:
  • Only their parents’ blood relatives could ever be owners
  • Decision making was limited to a 4-member management committee
  • Each family gets two weeks during July and August; in May, June, and September the house is open to anyone; the rest of the year, it’s closed.
Vacation property is hardly the asset posing the greatest number of potential disagreements among heirs CPA Jordon Rosen told Mayer.  Frequently, he says, an adult child may be living at home, taking care of the aging parent or having nowhere else to go.  The ensuing problems:
  • Parents want to leave the home to that child – who lacks the resources to maintain it
  • Siblings don’t want to maintain the home if they aren’t benefitting from it 
  • Parent believes the child will do what’s fair and share the proceeds, but that often doesn’t happen
At Geyer & Associates, our estate planning attorneys stress the importance of having those family discussions, difficult as they may be, while the parents are still alive. As Boyce-Abel ruefully remarked, “If my mother had been able to sit down and have a conversation with all of us, that would have made a huge difference.”

- by Kimberly Lewis of Rebecca W. Geyer & Associates

Thursday, April 7, 2016

Post-Death Social Security Benefits

Social Security benefits are typically seen as a source of retirement money for workers, but children, grandchildren, spouses caring for children, and parents of deceased workers may also qualify for Social Security aid, explains Paul Norr, writing in Financial Planning .com.

Among survivors of deceased workers, the most common recipients of post-death Social Security benefits are the millions of U.S. children who qualify because they are:
  • unmarried
  • under age 18
  • under age 19 and enrolled in secondary or elementary school
  • a dependent either by birth, marriage or adoption
If a worker has died, the child can receive up to 75% of the worker’s benefit the worker himself would have received had he/she continued earning wages until retirement.

What happens when there are several children?  Every child in the family may qualify for benefits, subject to a total ceiling on dependent benefits for a family. That maximum ranges from 150% to 180% of the deceased worker’s full retirement benefits calculated by the Social Security Administration at filing time.

Even grandchildren may qualify for benefits if both parents are deceased and the child  became a dependent of his/her grandparent(s). Great-grandchildren do not qualify.

Under what circumstances do the widows or widowers of workers become eligible to collect benefits?
  • They remain unmarried
  • They do not qualify for retirement benefits based on their own work histories
  • They are at least 60 years of age (or 50 if disabled)
Parents of working children may qualify for Social Security benefits, provided:
  • they are 62 or older
  • they do not collect benefits based on their own work history
  • they were dependent on the worker when he/she died
Florida financial advisor Tony Kendzior, CLU, ChFC lists some primary differences between Survivor benefits and spousal benefits:
  • Survivor benefits are much higher, as much as twice as high
  • Survivor benefits are based on the deceased’s Full Retirement Age benefits plus any delayed retirement credits the worker may have accrued by waiting to claim (spousal benefits don’t consider delayed retirement credits)
  • The minimum length of marriage required to qualify for spousal benefits is 12 months (9 months for survivor benefits)
“Social Security has become a fundamental element in the lives of virtually every American on the planet,” says Kendzior.

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

Friday, April 1, 2016

Giving Less to the IRS

Most people tend to delay taxes as long as possible, but this can backfire when it comes to IRAs, Eileen Ambrose, writing in the AARP Bulletin, points out. For retirees in their 60s, Required Minimum Distributions haven’t yet kicked in, plus the disbursements are likely to be taxed at a lower rate because the recipient isn’t working. The advice: take out just enough money each year from your tax-deferred accounts to stay in your tax bracket.  You’ll pay income tax on the money, but future Required Minimum Distributions (beginning at age 70 ½) will be lower. 

The other tactic might be converting part of your traditional IRA each year to a Roth IRA, suggests IRA expert Ed Slott. You’ll owe income taxes on the amount converted, but it will probably be at a fairly low rate if you’re retired.  The Roth has no RMDs, and money in the Roth can continue growing, with any future withdrawals tax free to you and your heirs.

Roth IRAs can be very effective as an estate planning tool, emphasizes. “Seniors who convert a regular IRA into a Roth account can reduce their estate taxes and eliminate the income tax their heirs would otherwise have to pay on withdrawals take from an inherited regular IRA.”

In fact, by paying the conversion tax bill (the tax on traditional IRA assets that are moved into a Roth are due the year of the conversion), you are effectively prepaying income tax for your heirs The beauty of the conversion move, marketwatch points out, is that is has three benefits:

  • You pay no gift tax on this indirect “gift” you’ve made to your heirs
  • You’re not using up any of your unified federal gift and estate tax exemption ($5.45 million for 2016)
  • The income tax prepayment you make as part of the conversion reduces your taxable estate
Handled with skill, marketwatch adds, the Roth IRA can be the gift that keeps on giving. How?  While the heirs will need to take mandatory annual withdrawals out of the Roth accounts they’ve inherited from you, they can string out the withdrawals over their life expectancies, continuing to earn tax-free income on the remaining balances!

As Indiana attorneys, we’re always aware that different fields of the law overlap ours. Tax law and estate planning are similar in that they share ever-changing rules of a highly personal nature. And just as tax attorneys must take into account their clients’ estate planning goals, we at Geyer law have to consider the tax ramifications of our clients’ estate plans.

You might say the goal at Rebecca W. Geyer & Associates is giving “more and less” -  more to heirs, less to the IRS!

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