Downs Law Firm, P.C.
Taking Social Security while still working, may sound like a good way to boost your income while you prepare for your impending retirement, but this strategy can have unexpected costs.
You’ve done all you could to draw up the perfect trust to protect your child and help them on the path to recovery. Now you need the right person (or team) to help make it happen.
Be frank about finances before you head to the altar. It’s a key piece of advice for all marriages. However, it takes on a whole new weight when people say “I do” for the second, or third, or fourth time.
Why would you leave an inheritance to a trust for a beneficiary rather than “outright” to the beneficiary? The answer is control.
Scammers work to create weaknesses, including fear. Scammers have increased targeting people who receive Social Security, to the extent that complaints have increased 1,000% over the past year, according to Fox 6 Now in “‘The people who are calling have some pretty good tricks up their sleeve:’ Social security scam calls spiking.” Ketti Bingen received a phone call telling her that someone had found a car by the side of the road somewhere in Texas that was registered in her name. They told her there was blood on the car, and when they went to the address the car was registered to, they found a massive number of illegal drugs. The caller had the last four digits of her Social Security number. They wanted her to divulge her name and date of birth. The caller advised her to file for a new Social Security number. Lucky for her, she knew enough to hang up. Not all Americans are that smart. In 2017, the Federal Trade Commission heard from 3,200 people who were taken hook, line, and sinker–to the tune of $210,000 each in this scam. In 2018, 35,000 people were fooled. The total loss: $10 million. The Wisconsin Consumer Protection agency and agencies across the country repeat the message: the Social Security Administration does not call and demand money from people. It never makes threats, warns of an impending arrest or demands that people send gift cards. If the Social Security Administration wants to reach out to people, they do so by mail. Another reason people fall prey to these phone scams is that the caller IDs on their phones appear to be coming from the government agencies. However, that’s also a scam. It is now relatively easy to “spoof” a phone number, or make it appear that the number the scammer is calling from has a different caller ID number. If you are worried about someone calling your home claiming to be from the Social Security Administration, you can call the Social Security Administration’s dedicated fraud bureau. Reference: Fox 6 Now (Jan. 27, 2019)“‘The people who are calling have some pretty good tricks up their sleeve:’ Social security scam calls spiking”
No matter how smart you are, you can still become a victim of elder abuse as you age. Who you trust to help you can have devastating consequences if you don’t choose wisely. Mary Weiss has endured the violent death of her son, four strokes and a heart attack. Now she is facing the loss of her home and retirement savings, because of suspected financial elder abuse, according to Fox 9 in “Woman, who helped change research protocols at U of M, allegedly loses savings to caregiver.” The person she depended on throughout it all, is the one who is suspected of taking advantage of her trusting nature. She says she was financially ruined and her nest egg of $150,000 is gone. Debt from credit cards and loans taken out in her name without her consent is mounting. Weiss gained international attention for her battle with the University of Minnesota researchers who ran a research study of a psychiatric drug. Her son took his own life, while enrolled in the study. Because of her fight, the University made a number of changes to its research programs. The man she believes has ripped her off stood by her during that battle, speaking to reporters on her behalf. However, now he has been charged with one count of theft by swindle by the Washington County Attorney, following an investigation by the Cottage Grove Police Department. Howard lived with Weiss, although they were not romantically involved, for 10 years and had become her caregiver. She had suffered a series of strokes and gave him power of attorney over her financial matters. Weiss knew that Howard had a record, including a theft by swindle conviction, but she never thought he would do something bad to her. It was Weiss’ niece who discovered the problem this past spring, when she was going through a year’s worth of bank statements. ATM withdrawals, lottery ticket purchases, loans and credit cards were all done in her name. Washington County Human Services did a separate investigation and notified Weiss that an allegation of financial exploitation had been substantiated. Howard denies taking anything without Weiss’ consent. Weiss is currently living in a nursing home and is recovering from a fall. She said that she would like to return to her townhome but is not sure she will be able to afford to do that. She wants others to understand that this can happen to anyone, even with full control of their senses and no dementia. Reference: Fox 9 (Oct. 22, 2018) “Woman, who helped change research protocols at U of M, allegedly loses savings to caregiver”
Since Social Security is a target, it is best to be prepared and to be protected. Unfortunately scammers are relentless and merciless. Theft from Social Security is increasing. One way to help prevent it, is to create your account now, according to Next Avenue in “Protect Yourself Against Social Security Identity Theft.” Opening your account can be considered as a preemptive strike against theft. The advice is relative, because everyone should go to the Social Security website and create an account, if they haven’t already. It’s a gateway to many online services from the Social Security Administration. If you don’t set up your account, there is a greater chance that someone can set one up using your name. One woman took this advice, since anyone who is older than 18 and has a Social Security number, and email and a mailing address, is allowed to open an account, even if they are decades away from claiming any benefits. However, within nine months of doing so, she received an email from the Social Security Administration saying they were deactivating her account. What happened? She hadn’t done anything. No one else, as far as she knew, had access to the account. Therefore, she called the Social Security Administration and requested a direct deposit block on her account. This did two things: it prevented changes to direct deposit information through a financial institution or through the Social Security website. It also stops anyone who might be trying to change a mailing address. Some further research resulted in information about what might have happened. The U.S. Public Interest Research Group website reports that with a name, birth date and Social Security number, a thief can try to open an account in your name and then change your direct deposit information to their checking account. It’s not that hard to gather that information online. A 2018 report from the Javelin Strategy and Research firm found that nearly 30% of Americans were notified of a breach of their accounts in 2017. That’s up from 12% in 2016 and cost $16.8 billion dollars. Scammers have shifted tactics. One consumer helpline reports that there have been fewer complaints about people impersonating IRS agents demanding money and an increase of complaints about people impersonating Social Security Administration representatives. How can you protect yourself? If you haven’t already done so, sign up for a “my Social Security” account. Check it on a regular basis to monitor your address information or date of birth. If you see any information that has changed or is wrong, contact the Social Security Administration immediately. If there’s any fraud or identity theft, you may also want to contact fraud hotlines at the Social Security Administration, Office of the Inspector General, the Federal Trade Commission and the Senate Select Committee on Aging. Reference: Next Avenue (Jan. 17, 2019) “Protect Yourself Against Social Security Identity Theft”
If you don’t marry someone close in age, your estate plan may require a closer look. When a couple has an age gap, there may be some special challenges ahead, when it comes to estate planning, according to The Washington Post in “How will a couple’s retirement look when there’s a big age gap?” Not only are men who have recently remarried more likely to have a spouse who is younger, said one researcher, in many cases they are marrying women who are much younger. Twenty percent of newly married men wed women who are at least 10 years younger than themselves and another 18% marry women who are six to nine years younger. By comparison, just 5% of men in their first marriage marry women who are 10 years younger. For women, the likelihood of having a far younger spouse is very low. That big age gap can be a big factor in decisions about when you retire, when spouses take Social Security and in planning how much money the couple needs to save and how to invest their savings. Since women tend to outlive men, it’s especially important for retirement savings to last longer, when the wife is much younger than her husband. When to retire is one of the big questions. Long-term care considerations, health insurance and other health costs become more significant, when there’s a younger spouse. Couples with big age gaps need to have a plan that accommodates the partner with the longest life expectancy. Therefore, a 70-year-old husband and a 56-year-old wife need to plan for their portfolio to last over the wife’s longer life span. That could be 30 years, especially if she has good health and a family history of longevity. If the older partner had a higher income level over his working career, delaying Social Security filing past full retirement age to age 70 could be extremely important. It will enlarge the higher-earning spouse’s benefit and it will also enhance the lifetime benefits for the surviving spouse. If there is a big age gap between you and your partner, you’ll need to have a lot of discussions about the issues that retirement and retirement planning brings. An estate planning attorney, coordinating with a financial advisor well versed in Social Security options, can advise you in creating an estate plan that fits your unique circumstances. Reference: The Washington Post (Oct. 22, 2018) “How will a couple’s retirement look when there’s a big age gap?”
Families struggle with the damages created by alcohol or drug habits. Most families have had to work with a member or more with substance abuse issues. It is something that knows no boundary of age, gender or race. Now the leading cause of death of Americans under the age of 50 is now from opioid addiction and this is having an impact on estate planning, according to MarketWatch in “How to leave money to a family member with an addiction.” Addiction has been known to drive even good people to steal and lie to get money to support their habits. Parents of children are wracked by guilt and anger. The stories of families spending hundreds of thousands of dollars in an effort to help their children are growing in number—as are the number of families who exhaust their retirement savings paying for rehabilitation and related services. Trusted family advisors, including estate planning attorneys and financial advisors, find themselves working with families to protect the family finances and the well-being of their addicted family members. The fallout from addiction creates many secondary problems for families. Estate planning for a family grappling with addiction addresses many different issues, not just inheritance. For starters, deciding whether someone has a drug or alcohol problem is itself often a source of great discord and disagreement. Substance abuse issues often run in families, and across generations. The discord can be a huge impediment to putting planning in place. Lump sum distributions or full bequests to an adult struggling with addiction can be deadly, if the person uses the funds to purchase large quantities of drugs. At the same time, writing someone out of the will completely and withdrawing all support, can be devastating to the addicted adult and the family. Creating a trust can help to protect assets and ensure that there is some degree of accountability in how the distributions are made. Incentive trusts, where a certain behavior or accomplishment markers are determined, can be used to encourage behaviors. This may mean that the addicted adult does not receive funds, until after passing a drug test, attending a certain number of treatment sessions or entering a residential rehabilitation program. Incentive trusts are part of a special area of estate planning. Therefore, it is necessary to work with an attorney who has experience with trusts and with incentive trusts. Ideally, the attorney who helps your family, will be one who is also familiar with the impact of addiction on families. Creating incentives for positive outcomes includes having consequences when the person fails to meet the terms of the trust. In this situation, a trustee who is extremely trustworthy and not prone to being manipulated is necessary. They will need to make sure the person adheres to the requirements and while they may be given certain levels of discretion, this person needs to be strong-willed enough to withstand an addict. Naming one sibling to be trustee over another is a choice many clients make, but one we
When a remarriage takes place late in life, potential problems can arise over an existing home. It may be hard to broach the subject of death when you are getting married later in life. If you have children from a prior marriage, what will happen with assets and control is a necessary difficult conversation. It’s not always an easy situation when a spouse moves into the home of their spouse when they marry. Would the surviving spouse receive the home when the other dies? Does the home go to children from a previous marriage or previous arrangement? A good estate plan can resolve many potential problems in a remarriage situation, according to the Times Herald-Record, in “How to preserve your home’s value when remarrying.” With poor planning, you might end up with your assets going to your second spouse and then, to his or her own children, leaving your own children empty-handed. A common approach is to leave the surviving spouse the right to use and occupy the residence, with a provision in a trust or a will that the surviving spouse pays taxes and home insurance costs and maintains the house. The right to live in the house can be for a limited number of months or years or until they pass away or enter a care facility. When the surviving spouse dies, or the time limit is reached, he or she leaves the house, the house is sold and the proceeds are divided among the children of the owner’s spouse. Some questions to consider: What if the house needs to be sold? Can the spouse use the proceeds to purchase another house? How long is the usage of time? Who can be there? There are other ways to provide more flexibility to the surviving spouse. If the house is too large or expensive to maintain, he or she may be given the right to use and occupy a substituted property, which may be purchased with the proceeds from the owner spouses’ home. Another arrangement allows the owner spouse’s home to be sold with the surviving spouse using the income from the proceeds of the sale of the house to pay for a rental. When the surviving spouse dies (or when the term expires), the children of the first spouse inherit what is left. A few important things to consider: how well the surviving spouse will be able to maintain the house, either for financial or physical reasons. If the surviving spouse is not taking care of the house and it falls into disrepair, the children may have to file an eviction proceeding. If the trust or will does not specifically instruct the surviving spouse to pay for home maintenance, the children of the owner spouse would be responsible for those costs, and depending on how long the surviving spouse lives, that could be a large burden for a long period of time. This situation requires thoughtful planning, with many “what if’s” to be asked. An experienced estate planning
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