Wednesday, August 31, 2016

When Assistance Flows Down the Generatiions

“When parents are absent or unable to raise their children, grandparents are often the ones who step in,” explains HelpGuide.org While raising a second generation brings many rewards, it also comes with many challenges, requiring adjustments in both financial and estate planning.
In the United States, family assistance typically flows down the generations, and an important type of assistance involves caring for the next generation. “We found limited evidence that grandmothers caring for grandchildren in skipped-generation households are more likely to experience negative changes in health behavior, depression, and self-rated health,”  researchers Soldo & Hill explain.

How common is it for families to be headed by one or both grandparents?  The 2010 U.S. Census counted more than 2.7 million “grandfamilies.” Reasons for the arrangement included:
  • Parent with an addiction
  • Parent with emotional problems
  • Child neglect
  • Parent in jail
  • Death of parent
  • Domestic violence in the home
  • Military deployment
“When you were making your decision to raise your grandchild, you probably didn’t think too much about the legal implications,” observes “But if your grandchildren live with you for any length of time, it’s important that you understand the laws that affect grandparents raising grandchildren.
  • Do you have physical custody with a court order or an informal arrangement?
  • Are you authorized to register the grandchildren at school?
  • Can you make medical decisions for them?
  • Can you add them to your own health insurance plan?
Consult with a tax professional who can help you claim the right credits, allowances, and deductions for the new dependents in your household, advises Kate Ashford of
“Find an attorney who specializes in family law,” she adds.

At Geyer & Associates, we know.  In all estate planning, our focus must be on planning for our clients’ current needs and planning for potential disability and death. In “grandfamily” situations, delicate and complex adjustments must be made to grandparents’ estate plan to provide for "assistance flowing down the generations”!

- by  Rebecca W. Geyer

Wednesday, August 24, 2016

Candidates' Positions on Estate Taxes


According to the Tax Foundation, tax policy is shaping up to be one of the major issues of the 2016 presidential campaign.

Let’s first review the basics of estate tax law as it now stands:

The IRS website defines the tax on estates:
“The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death…..The total of all these items is your ‘Gross Estate’.  The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets. …Certain deductions are allowed in arriving at the ‘Taxable Estate’”, the IRS continues.

For the 2016 tax year, filing an estate tax return (Form 706) is required for estates with combined gross assets (and prior taxable gifts) of $5,450,000. Amounts that exceed that limit will be taxed at a rate of 18% - 40%.

As Selena Maranjian writes in The Motley Fool, “It’s worth taking some time to see where the presidential candidates stand on taxes – because depending on who wins, there’s a good chance your taxes will go up or down.”
Estate taxes:
  • Hillary Clinton, according to Maranjian, “would tax more estates, but only those valued at more than $3.5 million, and only on the value above $3.5 million.  That means the Clinton plan would affect more estates.
  • Donald Trump would eliminate the estate tax entirely, Maranjian reports.  “This will help wealthy people pass a lot of money on to their heirs tax-free,” she says.

Charitable contributions:
  • Hillary Clinton, explains Forbes, wants to cap all deductions, including charitable deductions, at 28%.
  • Donald Trump’s tax plan would reduce itemized deductions (including the one for charitable giving) by 3% for couples earning more than $309,900

At Rebecca W. Geyer & Associates, we often remark that life's journey is fraught with change - marriage, children, a new business, retirement, incapacity, death. These changes require careful planning to protect the people most important to you and the assets you worked a lifetime to achieve.

With the upcoming change in our country’s administration, we expect changes.  And, no matter which candidate wins the election, at Geyer & Associates we’ll continue to offer a full range of options for families as they adjust their planning to those changing circumstances.
- by  Ronnie of the Rebecca W. Geyer  & Associates blog team

Wednesday, August 17, 2016

Don't Wait for a Vacation or a Friend's Death to Plan Your Estate

“I’ve found that the two most common times clients revise an estate plan are when a vacation is coming up and when a friend or family member has just died or received a bad diagnosis,” writes Patricia Annino in the CPA Insider. Pointing out the obvious, Annino observes that neither of these events represents a good time to do proper planning.

 “It may be helpful for you to bring up certain key issues with clients who are on the fence about estate planning,” Annino tells accountants.  “You don’t want to have to deal with a death, a serious illness, or other unforeseen event without a proper estate plan in place,” she cautions.

Just a few of those issues to keep in mind when helping clients with their estate planning, advises the Dallas Bar Association, include:
  1. Minors do not have the legal capacity to manage property. (Assets generally should not be left directly to them unless one desires an expensive and burdensome guardianship proceeding.)
  2. Clients who own interests in S corporations and who use trusts in their wills must have special provisions to avoid jeopardizing the S corporation election.
  3. Non-probate assets are sometimes overlooked in the planning process because they don’t pass through the client’s will.  That includes IRAs, 401(k)s and other pensions, life insurance, annuities, plus POD and TOD accounts. These assets need to be properly coordinated with the client’s estate planning.
  4. In order for both spouses’ exemptions from Federal estate tax to be used without needing to include a so-called “bypass trust”, a special Form 706 must be filed to make the portability election within 9 months of the death of the first spouse to die.
When clients request an appointment at Geyer & Associates, telling us that an upcoming vacation was what motivated them to “have their will done”, we appreciate that they’re doing the right thing, even if the timing isn’t the best. And, if the fact that someone close to them has been confronted with a life-altering diagnosis has forced them to confront their own mortality, that’s a motivating factor that can launch their own estate planning process.

Certain things should be taken care of before you leave on that trip, we advise. Basic documents include:
  • A will
  • A power of attorney
  • A healthcare power of attorney
  • A living will
  • Guardian assignments for children
  • Guardian assignments for pets
When it comes to estate planning, any reason is a good reason to get started!

Wednesday, August 10, 2016

Estate Planning With Purpose

“The wealthy make a difference in many ways,” the U.S. Trust "Insights on Wealth and Worth 2016" survey revealed, including:
  • Donating to not-for-profit organizations
  • Volunteering time, skills, and service
  • Serving on boards
  • Considering societal and environmental impact when investing
According to U.S. Trust, the wealthy use “impact investing” because they consider their investment decisions a way to express their personal values.
“A growing body of research indicates that social screened portfolios can do every bit as well as non-screened investments,” asserts Kathy Kristof, writing in the July issue of Financial Planning magazine. (What, exactly, constitutes socially conscious investments – which might exclude alcohol, tobacco or defense stocks, or which might emphasize sustainable foods and environmentally-friendly products – might be in the eye of the beholder.) A 2015 study by Morgan Stanley, Kristof relates, found that mutual funds that screened for sustainability issues had equal or higher returns than those that didn’t, and – those funds achieved their results with less volatility.

At Geyer & Associates, we’ve found, investors who have firm opinions about which policies and practices have a positive or negative effect on society and who have worked on building investments that align with their personal values, have a strong interest in passing those values along to the next generation.

We agree with what Richard B. Schneider, writing in Legal Resources, has to say: “Not only can you leave a legacy of your actions, since those certainly speak louder than words, but you can incorporate those values into your estate plan itself.”

One way to pass along values is through what is called an ethical will. The purpose of an ethical will isn’t to serve as a legal document, but “to bequeath the intangibles – lessons learned by the grantor over a lifetime, personal history, and wishes for the family’s future.”

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

Wednesday, August 3, 2016

Toxic Succession Plans

It’s really too bad. The relationships among family members may have been very loving and congenial. The estate plan may have been developed with the greatest care and fairness towards all heirs. But, when property passed on from one generation to the next turns out to be contaminated, that may well “poison” the entire inheritance process.
“The problem’s root,” explains Ingrid Case in Financial Planning, “is the federal Superfund law that makes current and past owners and operators jointly and individually liable for contamination.”  If there’s contamination on a property and it’s a hazardous substance, the current owner is responsible for cleaning it up.

Years ago, for example, Mr. and Mrs. Smith may have bought a property to use in their business. Unbeknownst to them, the property once held a gas station. Now, that same property has been passed down to their son John. Unfortunately, the old underground tanks are leaking, causing contamination, not only on John’s property, but on neighboring land as well.

John didn’t cause the problem, but as current owner, he’s responsible for the cleanup. John might even face lawsuits from neighbors for cleanup costs, health problems, and diminished property values.

Financial Planning quotes Kevin J. Daehnke, an attorney in Newport Beach, Florida, who is spearheading a campaign to raise awareness of the problem of toxic inheritances. With property passing haphazardly from generation to generation, Dehnke warns, that not only leaves heirs holding the bag for unanticipated cleanup costs, but might also leave financial service providers liable.

At Geyer & Associates, we believe a well-crafted estate plan should provide for your loved ones in an effective and efficient manner, minimizing headaches and delays. For that very reason, when we’re discussing passing land or real estate property to heirs, one important consideration is making sure the property is not contaminated, and if it is, investigating to what extent. 

Sometimes, the property has already passed to the next generation and it’s the heir asking for our help. Since the services Geyer & Associates provide include advising clients regarding the valuation and taxation of property interests, dealing with possible contamination issues is part of handling the estate.

How can owners (both clients creating an estate plan and then the heirs themselves) “vet” their property for possible contamination? Investigate the property’s history: Was it ever home to a dry cleaner, junk yard, auto shop, gas station, oil well, or mine? Are there chemical odors? Old machinery? If some of these “red flags” are present, environmental contamination remediation experts might need to be called in.

“An owner who is unsure whether a property is contaminated or how much it might cost to clean up may want to segregate the assets from the rest of the estate,” Daehnke says. Then, from the heirs’ point of view, he adds, “You can always disclaim things that someone has willed to you.”

by Ronnie of the Rebecca W. Geyer blog team