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