Wednesday, August 30, 2017

How Portable Are Your Estate Planning Documents?

At Rebecca W. Geyer & Associates, PC,  a full service estate planning and elder law firm, we serve the people of central Indiana. But, if you move to another state, must you get rid of your estate planning documents and start over from scratch? The answer? “Yes and no”.
First off, all your documents do need to be reviewed to make sure they meet your new home state’s legal requirements. Although estate laws are similar throughout the United States, they may differ in some details.

Power of Attorney documents:
Whenever real property is involved (a house, a condo, a vacation or rental property), where the land is located, controls.  That means you need a specific power of attorney for each property you own, written in compliance with that jurisdiction. In general, although states may have their own requirements, they do generally recognize valid powers of attorney that are created in another state.

Health Care Power of Attorney documents:
Your healthcare power of attorney document names someone to make healthcare decisions for you when you’re too sick to do that yourself, giving that person the power to decide on all aspects of your medical treatment. While every state’s documents must be written to conform with federal law and Supreme Court decisions, healthcare providers in your new state may not be familiar with the form you have. Most state laws contain a “reciprocity provision”, recognizing directives from another state.

Wills and revocable living trusts:
The state to which you relocate will almost always accept your document as valid.  Still, it makes sense to have a local attorney amend the documents to comply with local law.

Beneficiary Designations on Retirement accounts
Retirement accounts and federal benefits are governed by federal law, regardless of where you’re living.

Changes in circumstances make it necessary to tweak your documents:  Other than relocation, specific estate-plan review triggers might include:
  •  a change in marital status
  • an addition to the family
  •  a death in the family
  •  an inheritanceretirement 
  • sale of an important asset

An estate document review will give you peace of mind and alert you to any changes that might need to be addressed, as 360degrees of Financial Literacy points out.

Whether you’re moving to another state or not, estate planning documents need to go for a “checkup” every so often!

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

Wednesday, August 23, 2017

Charlie and Rita Match Charity with a QCD

The names in this story have been changed to protect the charitable, but at Geyer Law, we believe that using QVCs to channel IRA distributions directly to charity is a story worth sharing.
As we explained in our blog post last week, when you reach the age of 70 ½, whether the funds are needed or not, you must take minimum withdrawals out of your IRA.  It’s possible that you, like many of our Geyer Law clients, might now be in a position to make substantial gifts to one or more charities. You understand the general rule: money you withdraw from your IRA accounts will be fully taxable as ordinary income, and, conversely, money you donate to charity will generate a tax deduction.

Last week we shared a particular article we had found in the Journal of Financial Planning about ways Qualified Charitable Distributions (QCDs) can create tax savings. With a QCD, IRA owners who have reached age 70 ½ can move money directly from their IRA account to a charity of their choice.  No income is reported, and no charitable deduction is claimed.

The authors of the Journal article offered several important reasons why the direct IRA-to-charity QCD tactic was better than first taking a Required Minimum Distribution, then contributing the proceeds to charity.  Out of the specific examples that were offered, one (the article refers to them as Jack and Jill) most closely resembles a composite of some recent situations faced by Geyer law client couples. (It’s important to remind readers that we don’t offer tax advice; instead we work in cooperation with clients’ tax advisors to coordinate tax saving and estate planning.) For instructional purposes, I’ll assign the pseudonyms Charlie and Rita.

Charlie and Rita, a high net worth couple, are both in their early 70she’s a retired business owner, she’s a retired professional practitioner). When Charlie wanted to use his IRA Required Minimum Distribution as the source of a $100,000 contribution to their church, we worked alongside the couple’s tax advisor to create the most tax-effective way to accomplish their estate planning goal of reducing the size of their taxable estate. A Qualified Charitable Distribution turned out to work well in Charlie and Rita’s situation. 
  • Less of their of social security income was subject to tax
  • They avoided a hike in their Medicare Part B premium
  • They lowered their federal income tax
  • They reduced the size of their taxable estate
  • The full amount of the QCD was able to be excluded from income, even though the contribution exceeded the percentage of AGI that would normally have been applied to their charitable contributions
For Charlie and Rita, a QCD beat the first-take-RMD-then-contribute route!

by Rebecca W. Geyer 

Wednesday, August 16, 2017

Charities and IRAs - a Match Made for Tax Savings

Contributing to our own retirement and contributing to charity - in our younger years our first thought would have been that these were two separate alternatives. We knew either course of action could offer tax reduction benefits; we simply needed to decide where and how much to divert in each of those two directions.
Fast forward to age 70½, and those two choices are slightly repositioned. Whether the funds are needed or not, our Geyer Law clients must take minimum withdrawals out of their IRA accounts. At the same time, many are now in a position to make substantial gifts to their charities of choice. The money they withdraw from their IRA accounts is fully taxable as ordinary income; money donated to charity, by contrast, will generate a tax deduction.

While our attorneys offer no tax advice, instead working in cooperation with clients’ tax advisors to coordinate tax saving and estate planning strategy, we found Journal of Financial Planning’s article “How to Use Qualified Charitable Distributions as a Tax Saving Tool” very interesting and instructive.

By way of background, in 2006, the IRS began to allow retirees to make what they termed QCDs, or Qualified Charitable Distributions. With a QCD, IRA owners who have reached age 70 ½ can move money directly from their IRA account to a charity of their choice.  No income is reported, and no charitable deduction is claimed. Originally a temporary benefit which, every two years, needed to receive a new “blessing” by Congress, the QCD was permanently added to the law beginning in 2016.

So why is this direct path from our clients’ IRA account into the charity’s account such a big deal?  Wouldn’t the same result be achieved by pulling out money from the IRA, paying the tax on it, and then contributing to the charity and deducting the contribution on the tax return accomplish precisely the same thing?

Not necessarily, authors Gardner and Daff explain, offering four reasons why QCDs beat the RMD-then-contribute route:

1. Financial institutions are not obligated to withhold taxes from a QCD. The entire distribution can thus go directly to the charity (up to $100,000 is allowed.)

2. The full amount of the QCD can be excluded from income (even when that contribution exceeds the percentage limit of adjusted gross income that normally applies to charitable contributions!)

3. QCDs are allowed for each individual.  If spouses filing jointly are eligible, up to $200,000 can be excluded from income.

4. When the money travels directly from IRA to charity, that avoids raising income above thresholds that affect marginal tax rates, whether Social Security is taxable, Medicare part B premiums, and limits itemized deductions.

Charities and IRA accounts, we agree, that’s a match made for tax savings!

by Rebecca W. Geyer 

Wednesday, August 9, 2017

Good News From the U.S. Department of Veterans Affairs

“On behalf of the Department of Veterans Affairs and the nation’s veterans, I want to commend the leadership of the House and Senate Veterans Affairs Committees on their agreement on legislation that will great benefit veterans.” So began Secretary David J. Shulkin’s  statement, just weeks ago, following the passing of legislation to provide $2.1 billion to avoid a disruption in the Veterans Choice program.”

The new funding will allow for several important improvements, Shulkin explained:
  • authorizing 28 major medical leases
  • bringing new healthcare facilities closer to where veterans live
  • attracting the most sought-after medical specialists
  • establishing innovative human resources programs to strengthen workforce management
(An April 17 decision had temporarily suspended certain parts of the program to allow those to be evaluated and necessary changes made.) “The VA is committed to listening to the voices of those who care for Veterans of all eras and to collaborating to improve services, outreach, and awareness,” the Department announced on July 28th.

At Geyer Law, where Veterans Benefits is a core aspect of our practice, we were particularly encouraged after seeing the beautifully redesigned caregiver program website page on Geriatrics and Extended Care. But, even more important, we applaud some of the benefits David Shulkin describes in the new Veterans’ Choice program. A veteran would first speak with a VA clinician, and, depending on the veteran’s proximity to the right provider, he or she might see either a VA specialist or a provider in the community.

The Veterans Administration remains the primary resource, Shulkin stressed in an recorded interview:
  • “We make sure community providers have all the information they need to treat the veteran.”
  • “We get the veteran’s record back.”
  • “We pay the veteran’s bill.”

- by Rebecca W. Geyer 

Wednesday, August 2, 2017

Pearl Harbor Victim Planned His Own Funeral

Raymond Haerry made a thoughtful decision about his own funeral – he left instructions for his body to be brought back to the sunken USS Arizona ship on which he had served more than 70 years ago. Haerry, only 19 when his ship was attacked at Pearl Harbor, lived in New Jersey, never returning to Hawaii.during his lifetime. But when Haerry died earlier this year at age 94, he left instructions saying he wanted his body interred on ”his ship”.

“To help relieve their families, an increasing number of people are planning their own funerals, designating their funeral preferences, and sometimes paying for them in advance. They see funeral planning as an extension of will and estate planning,” the Federal Trade Commission Consumer Information page says”, encouraging citizens to make informed preplanning is such a good idea:
  • you can choose the specific items you want and need
  • you can compare prices offered by different funeral providers
  • you spare your survivors the stress of making decisions under pressure
  • you can decide where your remains will be buried, entombed or scattered
Don’t designate your preferences in your will, the FTC cautions (a will is often not found or read until after the funeral).  In Indiana, your designee under a Funeral Planning Declaration or your health care representative is actually charged with carrying out your funeral plans.  Also, avoid keeping a copy of your funeral plan in a safe deposit box (if arrangements need to be made on a weekend or holiday, the family will not be able to get into the box.

At Geyer & Associates, an important area of our practice is Veterans’ Benefits, and we were very touched by Raymond Haerry’s story. We found another Pearl harbor-related story to be very emotionally-laden in a different way:

A group of forensic scientists in Hawaii is still working to identify the remains of those who died in the attack on Pearl Harbor. Thanks to DNA technology, the remains of many of the hundreds of marines and sailors whose remains had been unidentifiable and who had been buried in common caskets, are now able to be identified. Now, 75 years after Navy Seaman 2nd class Raymond Piskuran died at Pearl Harbor, his family was able to bring his remains home to be buried next to his parents in Elyria, Ohio.

Two “lessons” to be learned from these two very different stories:

1. Veterans Benefits, we’ve found at Geyer Law, are the most misunderstood and underutilized resources available. Many veterans and their families are unaware that could be eligible for a wide range of services through the U.S. Dept. of Veterans’ Affairs – even if they did not directly retire from the military or suffer injuries in the line of duty.

2. While nobody wants to think about death, establishing an estate plan, including a funeral plan, is one of the most important steps you can take to protect yourself and your loved ones.

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