New Year’s Resolutions-We Here Highly Resolve…

December 31, 2018

We Here Highly Resolve… New Year’s Resolutions This is the time for starting over, striving to improve. For setting the lofty year-long goal(s) to be the best version of yourself. And by April the goal you started with so fervently is usually out of focus. That’s because we really aren’t wired for focusing for a year, according to Gino Wiseman, in his gripping book (I mean “Getting a grip” book) “Traction”. Instead, he suggests picking one to three goals that are measurable, challenging, but attainable, and do it again and again every three months. That 90-day time range is not so far as to be out of sight. Then take those apparitions and check on progress in small steps them weekly. I have been putting this approach to work for the last two years, with consistent small improvements. As you enter 2019, set yourself up for the doable, and calendar your upcoming revision periods. Traction by Gino Wiseman. https://www.eosworldwide.com/traction

Snowbirds Checklist to Consider

December 28, 2018

Snowbirds Checklist Heading is a good idea but consider legal issues before leaving. If you are a retiree who heads south after the holidays, it might be wise to create a checklist of at least four personal legal business items, according to LimaOhio.com in “Extra checklist before heading south for the winter.” Not that January and February aren’t delightful here in the Baltimore-Washington area… First, make sure that your living will and healthcare power of attorney documents have been updated. Does your family have copies of these documents? Or do you emailed copies to them ? If you have these documents with us, we now scan them and forward a copy to you to send on to your decision makers. If they save that email, they will also have our contact information to access your Property Power of Attorney if needed. Second, discuss the location of your estate planning portfolio with them, and how to contact your estate planning attorney. Update them if changes need to be made and get copies to your children and/or friends. Third, make sure that your last will and testament is updated. Have you had any big changes in your life since the last time it was reviewed? Marriages, deaths, divorces, births, and adoptions are the typical “trigger” events that signal a need for review. Being out of town for an extended time is a good prompt to review how current your documents are, and how they address your concerns. Who will have that document? If your estate planning attorney maintains original copies for clients, then make sure to have another original on your person or safely secured with a loved one. Lastly, and this takes a little time but is well worth doing, create a list of all your assets. Make sure they are properly titled for your situation. Should you have all your bank accounts become Payable on Death to your spouse? When was the last time you checked your beneficiary designations? Chances are good there are beneficiary designations on your bank, investment, and retirement accounts and on your life insurance policies. Wherever you have a beneficiary designation, you should also have a contingent beneficiary. An estate planning attorney can advise you snowbirds on creating an estate plan that fits your unique circumstances and may include a trip in a southerly direction. Reference: LimaOhio.com (Oct. 13, 2018) “Extra checklist before heading south for the winter”

Deadly Sins Can Weaken Your Retirement Plans

December 27, 2018

Many have faced these sins, so it might be a good idea to check them out before they can surface. As the year draws to an end, here are a few thoughts on planning for your eventual transition to retirement. You may have every intention in the world of planning and financing your retirement. However, it is possible that you will run up against some of the common deadly sins that have been known to block other people from reaching their goals, according to The Reader’s Digest in “The 7 Deadly Sins of Retirement Planning.” Look at these and see if you recognize any potential problems that could be your stumbling block. Pride. Sometimes we think retirement planning should be simple, and when it gets complicated, our knee-jerk reaction is to be prideful and refuse to allow anyone to help us. If you’re not a professional retirement planner, how will you know what to watch out for? You won’t. A mistake could make the difference between a heavenly retirement and one that is delayed or never arrives. Swallow that pride about the difficulties of building a portfolio or investment strategy and be open to getting help. Envy. If you spend 30 years trying to keep up with the Jones’ extravagant spending, who knows if you’ll ever be able to retire? Just because a neighbor, friend or relative spends on new luxury cars, or sends their kids to pricey private schools, doesn’t mean you need to do that, unless you can afford to—all while saving for retirement. Live below your means and save for the future. Wrath. This is a dangerous emotion. If you’re angry about a situation at work, for instance, and you leave without good financial planning, you could put your retirement savings at risk. It often takes longer than you think to find a new job. Leaving voluntarily makes you ineligible for unemployment benefits. Paying for COBRA insurance is usually a lot more expensive than an employee group benefit plan. Hate your job/boss/co-workers? Wait until you have a new job lined up before leaving. Greed. Chasing investment trends or listening to your brother-in-law’s latest get-rich quick scheme rarely leads to success. A professional advisor with a long-term plan will almost always yield a better return. Sloth. Lazy about retirement planning? You have to do the planning, the savings, track your expenses and keep an eye on your money and your taxes. Have you made the effort to have a will, power of attorney and health care directive made for you and your spouse with an estate planning attorney? A missed step could doom your retirement and create a crisis for your family. Gluttony. This is kind of like greed’s younger, sloppier cousin. Are you being greedy about making money, to the detriment of any other goals? A goal-oriented investment plan will serve you better. Lust. Are you yearning for a billionaire’s lifestyle, with an income that is more middle class? Leave the lust for the jets, diamonds and

Don’t Loss Your Purpose in Your Retirement

December 26, 2018

Think ahead about what you are going to enjoy during the retirement years. Don’t lose you purpose in your retirement.We work with many clients who are about to make the dramatic life altering change or retiring. Many people are very good at planning for the parts of retirement. However, they sometimes forget to include the change of lifestyle that comes without a work schedule, according to Next Avenue in “How to Keep Retirement From Being A Drag.” Most people plan for the financial and legal aspects of retirement: how much they need to save, how much of a bite inflation will take, the cost of healthcare, long-term healthcare, etc. But, what about fun? Work is where many people get their sense of purpose and their identity. Talk to any working parent who steps out of their career trajectory for a few years. It’s a similar shift, except there is no smiling cooing baby to keep you busy. If you don’t have projects, meetings, or deadlines, or the community of the workplace, what defines you? This sense of being adrift occurs to people regardless of their income level and may be even more intense for successful people who are used to running a business, commandeering a company or managing a busy desk. Here are some suggestions for making sure your life during retirement is enjoyable and has purpose and meaning. Set your alarm and have a reason to get up every day. After you’ve taken the big trip, spent time with your grandchildren and organized your closets, what’s next? It’s time for you now, time to do things that you’ve always wanted to but for reasons of time, could not. That might mean taking up a sport, expanding a hobby, becoming an active volunteer or returning to school to explore a subject you love? Consider yourself to be on a fixed salary. The transition from paycheck to drawing down savings can be unnerving. You’re sitting on a huge pile of money—but it must last two or even three decades. Create a post-retirement budget before you retire and don’t forget to include healthcare, taxes and potential emergencies. Also consider which assets to draw from and in what order. Do you use your 401(k) funds first, or start with cash? Avoid this retirement rookie mistake: taking out too much cash in the initial stage of retirement. Talk with your partner and family. Will you both retire at the same time? If one is still working and the other is not, how will you divide up chores? If your work schedules meant you didn’t see each other for more than a few minutes during the week, spending 24/7 together is a big change. Do you expect to spend all your time together, or will there be some “me” time? Will your children expect you to babysit on a regular basis? An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, including your retirement years. Reference: Next Avenue (Nov.

Take a Fresh Look at Estate Plan If You Relocate

December 22, 2018

An estate planning attorney in your new state of residence should go over your estate plan. We have noticed a distinct trend: Many people are choosing to leave Maryland and to relocate for retirement and often relocate to a warm, sunny state. The weather an retirement friendly tax environments make this easy to understand. If you decide to relocate, it would be a good idea to have an estate planning attorney review your estate plan, according to TC Palm in “Should new Florida residents update their out-of-state estate planning documents?” An example of why it’s a good idea to have an estate plan review is that in the State of Florida, as long as your will from another state is valid under that state’s law, it will be honored in Florida. That is generally true. However, there may be laws in Florida that could cause some problems with the out-of-state will. That applies to other states as well. Here’s a good example. Let’s say you now own a home–known in Florida as a “homestead”—and your out-of-state will transfers your residence at the time of your death to a trust for the benefit of your spouse and your children. The only person who can receive a homestead in Florida is the spouse. If your will from out-of-state was used, the house would result in a life estate going to the spouse with a vested remainder to your children. This doesn’t achieve the result you wanted: to have the property controlled by a trustee and not your spouse and children. If this was a second marriage, the potential could be a family blow up, even litigation. Even in a first marriage, if the children and their mother differ on what should happen to the family homestead, there would be trouble ahead. Taking that example further: What if your out-of-state will directs the sale of your home in Florida and the distribution of proceeds in equal shares to your children? If you die with creditor claims, you lose the homestead exemption for creditor protection purposes. Your children’s inheritances could then be at risk. More food for thought: if your out-of-state will appoints a non-relative who is a resident of the state where your will was originally executed to serve as your personal representative, they won’t be able to do much in Florida. That’s because they are not eligible to serve as a personal representative under Florida law, which only allows a nonrelative to serve, if they are a Florida resident. Maryland has its own unique rules, including a 10% inheritance tax for assets left to people who do not qualify as close relatives, such as nephews and nieces. Every state has its own laws, and while some issues are fairly consistent from state-to-state, that is not always the case. To take advantage of the laws in your new home state, an plan review should be done. If you decide to relocate it would be a good idea to meet with an estate planning attorney, in

Save for Retirement over Many Decades

December 20, 2018

A 40-year saving plan can go a long way toward a healthy financial retirement. A key to financial security in retirement is to begin saving early. An example of success is Orville Rogers, who was flying around the country to attend master’s level track meets during his retirement, according to Money in “This 100-Year-Old Has Been Retired for 40 Years, Has a Healthy Savings Account and Is a Track Champion. Here’s His Impressive Path to a Rich Retirement” Starting early and savings often combine as a powerful force. He started saving in 1952, 25 years before the creation of the retirement savings plan, we know today as a 401(k). Back in the day, companies provided their employees with pension plans and those without a pension plan lived on Social Security when they retired. Life expectancies were shorter, so you didn’t need quite so much money. Rogers was born in 1917, and his peer group’s life expectancy was about 48.4 years old. By saving for retirement and using his downtime between flights to educate himself about money, he started investing and says that his account is now worth around $5 million. He says he wasn’t particularly frugal either and supported his church and other Christian causes throughout his life. However, he had time on his side, making periodic investments over an extended period of time. Another practice that extends life: exercise. Rogers took up running at age 50 and hasn’t stopped yet. Studies have shown that anyone, at any age or stage, is helped by a regular schedule of physical activity, tailored to your personal needs. Even people who are wheelchair bound and living in a nursing home can benefit from a chair exercise program. Among older seniors, the ability to walk a quarter mile (one lap around a track), is linked to better health outcomes. Until recently, Rogers ran five to six miles a week. He’s in rehab now and working his way back to his prior running and training schedule. When you live as long as Rogers has, you outlive a lot of family members and friends. Rogers moved into a retirement community two years after his wife died, making new friends because, as he says, “… if I don’t, I’d have none left.” Faith has also been a strong force in his life over these many years. At 98, he wrote a book, The Running Man: Flying High for the Glory of God. When he was starting out in his retirement years, he flew church missions in Africa. An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances. Reference: Money (Nov. 2018) “This 100-Year-Old Has Been Retired for 40 Years, Has a Healthy Savings Account and Is a Track Champion. Here’s His Impressive Path to a Rich Retirement”

Stan Lee Faced Challenges in Last Years of His Life

December 19, 2018

A solid estate plan can help avoid many of the challenges presented in the news lately. There have been a number of celebrities such as Stan Lee, Aretha Franklin and Prince in the news in recent years, who have passed away with controversies surrounding either estate plans or lack of estate plans. However, that does not have to be the case as long as a few steps are followed, according to MarketWatch’s article “Stan Lee’s tangled web of estate planning and how to avoid this mess.” Lee, publisher, and chairman of Marvel Comics, died at age 95 after a year-long illness. He is survived by his 68-year-old daughter, J.C., and has faced a number of unpleasant and public challenges in the last few years. His wife of nearly 70 years died in 2017, and earlier this year he was accused of sexually harassing nurses and home aides. Lee also reported that about $1.4 million were missing from his bank accounts and that $850,000 was stolen to purchase a condo. Lee had also retained and fired a number of business managers and attorneys in recent times. He said he had handled most of his money management by himself in his early years but then realized he needed help. Unfortunately, some of the people he trusted were people who later proved to be untrustworthy. This is the sad realization that many families face as the leader ages and capacities falter. It is yet unclear whether Lee had a will or any trusts in place. Many celebrities do not have these documents, putting heirs and potential beneficiaries in a position where they have to battle it out in a courtroom setting. Aretha Franklin and Prince are just two examples of high-profile, mega-million estate disasters. For the rest of us, estate planning is fairly straight-forward, as long as we get it done. There are a few steps everyone needs to take, including planning for incapacity or disability, getting important documents prepared, such as a will and power of attorney, and reviewing beneficiaries. What often happens is that as people age, they suffer cognitive decline in varying degrees and there’s a professional or a family member who believes this is occurring. In Stan Lee’s case, he signed a document stating that his daughter spent too much money, yelled and screamed at him and had befriended three men with intentions to take advantage of him (from the Hollywood Reporter). A few days after the document was notarized, Lee took it back. As people become less confident in what they’re doing, they are susceptible to being manipulated by other people. Having an estate plan set up years in advance of any cognitive decline, is one way to protect against these kinds of situations. For Lee’s estate, the sheer volume of documents will be a challenge. There may be many lawyers and business managers and accountants showing up, all claiming to have been brought onto the team with specific directions upon his death. Regular people can avoid a

Getting the Best Results from Charity Giving

December 17, 2018

End of the year is the busiest time for charities. As the holidays near and the New Year approaches, people often think of charitable giving. Charities certainly do. There are ways to have your donations get the best results, according to the Lebanon Democrat in “A few thoughts on charitable giving, taxes.” Here are a few ways that your generosity can maximize the benefit you and your charity of choice: Bundle your itemized deductions, if possible. If you can time the payment of qualifying deductible expenses, including charitable donations, do so in alternate years. This increases the chances that you’ll be able to itemize your deductions. You may want to notify the charity that you are giving this year is a larger gift, because it will be covering a two-year period. Select the right assets to contribute to a charity. For outright gifts made in your lifetime, consider using highly appreciated assets, like stocks. This will allow you to bypass owing capital gains taxes on the appreciation and claim the entire value of the assets, as a charitable contribution. If you make a donation using this method to fund an income-returning gift or a charitable gift annuity or charitable remainder trust, you delay the recognition of the capital gain. In most cases, you can pay this in smaller amounts, over a period of years. What if you want to make a gift that also generates income? Use a charitable gift annuity or a charitable remainder trust. These gifts typically require significantly higher values, so you may be able to itemize in the year they are funded. However, only a portion of the contribution is deductible. That is because the donor receives income for life or for a certain amount of time. These gifts are usually funded with stock, cash or real estate. Taxpayers who are 70½ years old or older and required to take minimum distributions from retirement accounts, may have distributions made directly from their account to a qualified charity. If this transaction is done properly, the amount of the distribution is not added to taxable income. You will not receive a charitable deduction using this method, but you can lower your taxable income for the year and give your charity of choice a much-needed donation. Lastly, consider adding bequests and beneficiary designations in your end-of-life planning. Part of your legacy can include charitable gifts. There are a few ways to do this: designate a percentage of your estate to be donated to charity, specify a charitable organization as the full or partial beneficiary of a life insurance policy, an investment or bank account or any account that transfers by designation or leave a dollar amount or property to a charity. An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and can include charitable giving. Reference: Lebanon Democrat (Nov. 21, 2018) “A few thoughts on charitable giving, taxes”

Put Not Your Trust in Money, Put Your Money in Trust

December 14, 2018

“Put not your trust in money, put your money in trust”, per Oliver Wendell Holmes, Sr. is embraced by estate planning lawyers and shows that trusts are not a passing fad. Everyone needs an estate plan, and when you understand what a trust does, your plan should probably include one, at least conditionally. According to The New York Times in “Life After Death? Here’s Why You Should Have a Trust.” It turns out that many people who are not wealthy can also benefit from having a trust. I consider a trust essentially a box to manage assets. There are many different kinds of trusts which serve different purposes and can be effective now or at death. One is a revocable trust, which the owner can change. They are considered by many to be the “work horse” of modern estate planning. A revocable trust can avoid the need for a public probate court proceeding after the person dies, saving time and keeping money from being immediately available to heirs and executors alike. Such a trust is created and holds assets during your lifetime. Other considerations regarding revocable trusts: You should have any type of trust set up by an estate and trust attorney. A house, real property, bank or investment accounts can be placed into a trust. A revocable trust does not always end at the death of the original owner. However, just how long it may last, depends upon the laws of your state. People also use trusts to protect their assets from others or to assure the long-term care of someone who is disabled. You can have a professional manager, family member or friend as a trustee or co-trustee of a trust. Sometimes having a licensed professional who has federal reporting requirements can provide an extra layer of protection. They are not a public record, unlike your will. Trusts are also useful for times when people become incapacitated and need someone else to take care of their finances. Because many more people are living longer and the number of people with dementia is increasing, there are more situations where trusts are useful to the family and caregivers. A trust can also be created in your Last Will and Testament. We rarely create a will without a trust. A trust created in a will is a “Testamentary Trusts” because it is within your Last Will and Testament, but it can manage assets in much the same way as a revocable trust would. The difference is mechanical: the Testamentary Trust receives asset often through a probate process, because wills work through probate. A Testamentary Trust can be a designated beneficiary of life insurance, retirement plans and annuities. Care should be taken in drafting and when doing so because of issues like stretching out IRA withdrawals. An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and may include taking a close look at trusts. Reference: The New York Times (March 22, 2018) “Life After Death? Here’s

The Queen is Gone, and She Didn’t Have an Estate Plan

December 11, 2018

We all procrastinate about something. The time may never seem right to deal with your inevitable death. Aretha Franklin. the “Queen of Soul” has passed away, leaving an $80 million estate and no estate plan, according to Investment News in “Aretha Franklin estate echoes planning problems of Prince.” Franklin was not married so the estate will pass to her four children. It’s similar to the situation that occurred when Prince died unmarried and without a will in 2016. Had she been married her estate could have passed tax-free to a spouse and there would have been planning opportunities available at that time. Franklin’s four kids will now receive equal shares of her estate. However, they will have to pay a considerable amount in taxes. She was a resident of Michigan, which does not have an estate tax, so there won’t be a state estate tax. However, the federal government takes 40% of portions of the estate valued over $11.18 million. In other words, a $27.5 million tax bill. Without the benefit of a trust being established by a will, those assets will be taxed again by the federal government at the time that the four heirs pass, when the money moves to her grandchildren. Celebrity estates, like that of Franklin, must undergo a complex valuation process to correctly assign an approximate future value of income. Like Prince, there are image rights and music royalties, and the buzz surrounding her death is likely to inflate its value and the tax that will be levied. While Michigan does not have an estate tax, the state does have a “postmortem right of publicity,” meaning that her heirs have the right to legally protect her image for commercial use. Her postmortem rights of publicity are expected to be extremely high, because of her iconic stature as a musician, songwriter and cultural touchstone. Estates of celebrities and creative artists are required to be valued and the appraisal must be reconciled with a parallel appraisal conducted by the IRS. Remember Michael Jackson’s situation? The estate initially valued his name and image at $2,015, while the IRS valued it at more than $434 million. One of Franklin’s children reportedly has special needs. This could put him in a precarious position. If he inherits a large sum of money, he will no longer be eligible for any government programs. Given the size of his inheritance that will not be a problem. For those with less wealth, however, that is why estate planners encourage the use of special needs trusts. This not only protects the child’s eligibility but protects them from misusing the money or being scammed by unscrupulous individuals. Even if you are not an entertainer with assets that total in the millions, an estate planning attorney can advise you in creating an estate plan that fits your unique circumstances. Reference: Investment News (Aug. 22, 2018) “Aretha Franklin estate echoes planning problems of Prince”

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December 2018