Wednesday, March 29, 2017

Estate Planning Flexibility More Important Than Ever

“We just celebrated the 100th anniversary of the estate tax.  It has already been repealed and reinstated four times. This would be the 5th.” observes Susan Rounds, JD, CPA in the Journal of Estate & Tax Planning., referring to the many proposed tax law changes under the new administration, including a possible repeal next year of the estate tax. “We must help clients plan for all contingencies – so no matter which turn is taken, the path is clear,” she adds.

No matter which path is chosen, repeal or no repeal, wealth in motion will be taxed, Rounds reminds readers. Even were the estate tax to be repealed, a capital gains tax increase would probably ensue. “For those clients who have not initiated the planning process, let's get started. For those who have a plan in place, let's review what they have,” Rounds tells fellow practitioners.

At Geyer Law, we certainly agree with that advice.  There are many estate planning pitfalls to avoid that have nothing to do with estate taxes. As we explain on our website, “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.”

One example might be planning for jointly held property when there is a concern that the survivor might squander, give away, or lose the property to creditors, leaving the executor of the decedent with a lack of adequate cash to pay settlement expenses. A well drawn estate plan can ensure a better outcome for everyone involved.

 LifeHealthPRO offers a very good definition of estate planning, we believe: 

                Estate planning is the process of planning the accumulation, conservation,
                and distribution of an estate in the manner that most efficiently and effectively   

                accomplishes your personal tax and nontax objectives.”
Possible changes in estate tax law means there is a need for estate planning flexibility, and estate planning itself is more important than ever!

- by Rebecca W. Geyer

Wednesday, March 22, 2017

Trump Delays Clients' Interests First Rule

There’s been a long, almost six year battle over  the U.S. Department of Labor’s planned fiduciary rule, originally slated to begin implementation on April 10. The news is – the rule is being delayed at least six months. The Fiduciary Rule would require financial advisors and brokers to act in the best interests of their clients when dealing with retirement accounts.
“Should the rule ever become effective,” CNBC reported, “all financial advisors will be required to recommend what is in the best interest of clients when they offer guidance on 401(K) plan assets, individual retirement accounts, or other qualified funds saved for retirement.”

The term “fiduciary”, by the way, is nothing new to us at Geyer Law. Lawyers are used to acting as fiduciaries for their clients, understanding the obligation to protect the confidences of clients and potential clients and to avoid conflicts of interest that may injure them,”  as explained in the William & Mary Law Review (vol.49 Issue 2). . CERTIFIED FINANCIAL PLANNER™ professionals providing financial planning services also must abide by the fiduciary standard, as defined by CFP Board.

 So why the big debate, and why did the President believe it important to delay implementing the rule?
The Pros: DOL and some consumer groups say the rule is necessary to protect consumers’ retirement funds and that the rule will lead to consumers paying less in investment fees. A single standard should encompass the entirety of retirement savings world. The main goal of DoL’s proposed rule is to root out conflicted advice. As defined by the Council of Economic Advisers (CEA), advice becomes conflicted when the adviser’s pay is contingent upon an action taken by the saver.

The Cons: The rule is so cumbersome that it will become more difficult for consumers to access advice altogether. Additionally, getting a company’s paperwork, internal processes and personnel “fiduciary ready” is very costly. This overly cumbersome and confusing rule might result in advisers exiting this market altogether, especially for advisers providing services to small businesses with fewer than 100 employees.The exemption requires new clients to sign a contract before any advice can be delivered. Critics feel this would have a chilling effect on an adviser’s ability to do business.

Several major companies have already left part of their brokerage business rather than deal with the expense of compliance with the Fiduciary Rule,  meaning that many consumers have lost valued financial counsel.  According to the American Action Forum, “The administration says there is good reason to scrutinize every aspect of the rule to determine its full effect on average Americans.”.

- by Ronnie of the Rebecca W. Geyer blog team

Wednesday, March 15, 2017

Fair Compensation for Power of Attorney Agents

Many people wonder if they are entitled to be paid for serving as an agent under a Power of Attorney.  Generally, an agent is entitled to reasonable compensation, but as clarifies, “Regardless of how much time and effort has been spent by the POA… the only way she is entitled to financial compensation is if it is written in the original POA document…No one has any right to make decisions to pay a salary to the POA except your mother.”

A durable power of attorney document appoints someone to act in your place if you are incapacitated.  The POA is allowed to take whatever investment and spending measures which he or she believes the principal (you) would take on your own behalf, including:
  • opening accounts
  • withdrawing funds from accounts
  • trading stock
  • paying bills
  • cashing checks
  • selling assets
  • buying assets
A person acting as a POA agent is a fiduciary, meaning he or she is held to the highest standards of good faith, fair dealing, and loyalty, always acting according to the goals and wishes of the person who appointed them in the first place.

In most cases, a POA agent is a family member who does not expect to be paid at all. But, if the principal agrees to pay the agent, that should be agreed upon ahead of time and put into the document itself.

The Consumer Financial Protection Bureau, which has a special federal Office for Older Americans, published the very useful handbook “Help for Agents Under a Power of Attorney”.

On our Geyer Law website, we emphasize how central a role your General Durable Power of Attorney plays in your estate planning. “Without a Power of Attorney in place, your family’s only option is to obtain a legal guardianship over you to handle financial affairs in the event of your incapacity.”

You may or may not choose to provide “reasonable compensation” to your Power of Attorney Agent, but the Power of Attorney document itself – that’s a priceless piece of your estate plan!

- by Rebecca W. Geyer

Wednesday, March 8, 2017

Gray Areas in Estate Planning for Gray Divorces

Whenever married individuals divorce, their estate plans likely need some updating. When it comes to “gray divorce”, there is a definite need-to-change. Americans over 50 are getting divorced at a record rate, ICLEF notes in its “Law Tips” website.  The special challenge for Indiana estate planning attorneys lies in the fact that in a “gray divorce”, each spouse is likely to leave the marriage with more assets than couples who divorce at a younger age.

Issues typical in gray divorces include:
  • The parties have little or few remaining years of earning potential.
  • The financial planning done for retirement is often jeopardized (two living separately definitely cannot live as cheaply as one).
  • When either the husband or wife has not yet retired and has a defined benefit pension plan, those assets require professional valuation.
  • The marital residence may be too expensive for either member of the couple to maintain.
  • Healthcare issues may complicate the divorce, particularly when one spouse had been relying on the other’s employer plan.
Steve Harnett of the American Academy of Estate Planning Attorneys remarks that “It is no longer widowhood that dominates the landscape, as it once did. These days, it is more likely than not that a single senior is a product of divorce.” Besides a reduced income, there are other issues that a newly-divorced senior would need to address, Harnett points out, including:
  • revising their estate plan
  • examining beneficiary designations
  • revisiting health care directives
“Divorce is a life-changing event.  Sometimes it is a good thing and sometimes it isn’t,” writes Christopher Yugo in the New York Times.  In either case, it’s important to have a plan that addresses the change in your life.  At Rebecca W. Geyer & Associates, our attorneys know that in “gray divorce” situations, a plan for each of the parties can make all the difference in their respective situations going forward.

 By Ronnie of the Rebecca W. Geyer blog team

Wednesday, March 1, 2017

Estate Planning Attorney Explains the 4 Cs

“Now comes the hard part,” Liz Skinner wrote in Investment News last year, when the Labor Department came out with new fiduciary rules for financial service providers. The DOL fiduciary rule, set to take effect next month, basically states that all financial advisers will be required to recommend what is in the best interests of clients when they offer guidance on 401(k) plan assets, individual retirement accounts or other qualified monies saved for retirement.

The term “fiduciary” is nothing new to us at Geyer Law. Lawyers are used to acting as fiduciaries for their clients, understanding the obligation to protect the confidences of clients and
potential clients and to avoid conflicts of interest that may injure them,” as explained in the William & Mary Law Review (vol.49 Issue 2).

“Lawyers do not have the option of looking out for number one,” is the way Fraser Sherman puts it in an article in Chron about attorneys’ fiduciary duties to clients. The attorney-client relationship is one of trust, and our actions are governed by the 4 C’s:

1. Competence
This describes how attorneys use specialized legal knowledge and skill on behalf of clients, keeping up with changes in the law, and referring matters outside their own specialty areas to other professionals.

2. Conflict avoidance
Attorneys must avoid conflicts of interest. Not only must the client’s interests come first, but conflicts of interest between different clients of the same attorney must be avoided (think ex-spouses, siblings, business partners who might wish to engage the services of the same attorney).
3. Communication
Our attorneys at Geyer Law know we must provide our clients with enough information to make good decisions. We understand the challenges, fears, and family dynamics that often come into play with legal issues, and so we are committed to being responsive to client needs in a timely manner, even offering  house calls and flexible appointment time in order to ensure that good two-way communication is taking place.

4. Confidentiality
Our clients trust us with their confidential information, and we know how precious that trust is. Confidentiality is essential in any fiduciary relationship, and when it comes to the kind of sensitive estate planning decisions that affect different family members, confidentiality is particularly crucial.
All professionals have a relationship of trust with their clients. At Geyer Law, where we provide counsel on estate planning and elder law matters including Medicaid planning, facility placement and financing, probate and estate administration, special needs trusts, guardianship, and advanced directives,– it’s all the “hard part”, all built on a foundation of trust!