Wednesday, July 11, 2018

Estate Planning Around Social Security


“Social Security is known as the ‘third rail’ of politics: American voters are so protective of the federal retirement program that they’ll electrocute any politician who messes with it,” quips Richard Stolz in Employee Benefit Advisor.  The problem for advisors, Stolz emphasizes, is the “yawning gap” between clients’ expectations of the benefits they will receive when they retire and the benefits they actually will receive. “We’re usually saying that, if you’re 50 or older, you’re probably going to get what you think you’re going to get,” a CFS Investment Advisory Services partner says. If you’re younger, you’ve got to monitor it, he adds. Some advisors are running retirement scenarios for their clients with and without Social Security.

“Isn’t this a great system we have? In order to get your fair share of Social Security, you have to bring in a Ph.D. and a programmer,” William Baldwin remarks sarcastically in Forbes, referring to the many considerations - and configurations – through which couples can plan the claiming, and the suspension – of benefits.

In our Indiana estate planning law offices, discussions about our clients’ social security benefits are part and parcel of their estate planning.  Why so? Here's a typical scenario: With social security benefits providing an important – even if hardly primary - source of her own regular income, June Brown feels more comfortable making substantial current gifts of cash and assets to her three children (as opposed to waiting and leaving those assets as an inheritance).

Most people can give away property without needing to pay federal gift taxes, Kiplinger.com points out, since most states do not have gift taxes and the federal gift tax limit is $11.18 million. And, as Maryalene LaPonsie adds in U.S. News, one of the best ways to ensure your money stays in the family is to simply give it to your heirs while you’re alive.”  One factor to take into consideration, of course, is one’s own income needs. Social Security benefits already being collected make up an important component of that income flow.

While the attorneys at Rebecca W. Geyer & Associates do not offer tax or retirement planning advice, estate planning overlaps both these areas. Our goal is to coordinate our efforts with those of other advisors in order to address all aspects of a clients’ financial plan. Meanwhile, we can assist you in maximizing your Social Security benefits, with the reassurance of regular income allowing for flexibility in designing a gifting plan.

- by Rebecca W. Geyer


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