A Tax-Smart Strategy for Managing Retirement Withdrawals

Here is a link to a  Morningstar interview of Vanguard retirement expert Maria Bruno in which she discusses strategies for managing retirement withdrawals to minimize tax consequences. Maria explains which accounts (i.e. taxable investments, IRAs, 401ks, Roth IRAs) should be used before others in order to minimize your taxes.

Tom

 

Help Prevent Identity Theft After-Death

You can help prevent a loved one’s identity from theft after their death by contacting the credit reporting bureaus (Equifax, Experian and TransUnion). You will have to provide their Social Security number, and tell the credit bureau that the person has died. Request that their credit report be flagged with the note “Deceased. Do Not Issue Credit.”

If you are in charge of settling the estate you can, also, request a copy of the deceased’s credit report so you know what accounts need to be closed. You might have to provide the credit bureau with a death certificate and your Letters of Authority.

New Medicaid Planning Alert for Married Couples

As of August 2014, the Michigan Department of Human Services (DHS) has started rejecting “solely for the benefit of” trusts. There hasn’t been a change in the law, but in the way that DHS interprets policy. Previously, a married couple could utilize a “solely for the benefit of” trust for the spouse not entering a nursing home and preserve a majority of a couple’s estate, while the spouse entering the nursing home still qualified for Medicaid coverage. This tool was not employed until a married couple knew which spouse would need nursing home care (i.e. when said spouse went into the nursing home). However, DHS has begun treating assets in these trusts as countable for Medicaid eligibility purposes. This means that the assets are not excluded and may have to be spent before the spouse requiring care will qualify for Medicaid.

For now, planning with a “solely for the benefit of” trust is not a practical solution. As such, it is even more important to discuss and consider other Medicaid planning options ahead of time.

Potential for Social Security Benefits after Divorce

Although you are divorced, you may be surprised to know that you still may be entitled to receive social security benefits on your former spouse’s work record. Even if your former spouse has remarried! However, if you have remarried, you normally cannot collect benefits on your former spouse’s record unless your subsequent marriage ends. According to the Social Security Administration, you can receive benefits if:

• Your marriage lasted 10 years or more;
• You are 62 years of age or older;
• You are unmarried;
• Your former spouse is entitled to Social Security retirement or disability benefits; and
• The benefits that you are entitled to receive based on your own work record are less than the benefits you would receive based on former spouse’s record.

What if your former spouse hasn’t applied for benefits?

If your former spouse has not applied for benefits, you still may receive benefits on his or her record if (1) your former spouse qualifies for them, and (2) you’ve been divorced for at least two years.

What if you are eligible for benefits?

If you’re eligible for benefits, Social Security will pay that amount first. However, if your former spouse qualifies for a greater amount, you will receive a combination of benefits equivalent to the greater amount (reduced by age). If you have reached full retirement age and you qualify for a former spouse’s benefit and your own benefit, you will have a choice to receive only the former spouse’s benefits and delay receiving retirement benefits until later.

What if your former spouse is now deceased?

If your former spouse has died, you may still be able to receive benefits just as a widow or widower would. Your marriage to the worker must have lasted 10 years or more. If you care for a child who is (1) under 16 or is disabled and (2) is getting benefits on your former spouse’s record, the length of the marriage doesn’t matter. The child must be a natural child of your former spouse or legally adopted by your former spouse.

Two Documents Your College-Bound Student Should Have

If you are about to send a child off to college, please consider having them sign a Durable Power of Attorney and a Health Care Power of Attorney before they go. Without them, if your child is 18, you don’t have any authority to make health care decisions for them, or manage their money, if something happens to them. Once they are 18 they are adults under Michigan law. Without a Durable Power of Attorney or Health Care Power of Attorney, you can find yourself in probate court if they have an accident and need your help.

We would be pleased to meet with you and your child in order to have these important documents prepared. Or, alternatively, they can order them from us online at EstatePlansDitect.com.

Supreme Court Rules Inherited IRA Not Protected In Bankruptcy

The U.S. Supreme Court recently ruled that inherited IRAs are not protected in bankruptcy.

Although this ruling does not affect your own IRAs (your retirement funds are still protected if you file for bankruptcy) it will cause problems for any child who inherits an IRA from you and files for bankruptcy. The Court has ruled that the inherited IRA will not be protected from the child’s creditors.

New Department of Veterans Affairs Accreditation

I am pleased to report that as of February 24, I am now an accredited attorney for the preparation, presentation, and prosecution of claims for veteran’s benefits before the Department of Veterans Affairs (VA). If you are the surviving spouse of a veteran, and in need financial assistance, please call and set a time for us to get together to see if veteran’s benefits might be available to you.

Don’t Just Plan for Disability – Avoid It!

Chronic illness… it’s a major cause of disability for seniors, and can be a retirement dream-killer. Travel. Golf. A retirement home in the country. It sidelines daily passions. Walks. Painting. Knitting. Crossword puzzles. Playing on the floor with grandchildren.

One way you can help yourself live a “disability-free” or “disability-reduced” life in your senior years is exercise in midlife. A recent study reported in the Archives of Internal Medicine indicates that being physically fit in midlife (over 50) may do many important things for us not just now, but down the road. Being physically fit can:

  • prevent some seniors from ever developing chronic conditions;
  • let other seniors live longer while healthy before developing chronic illness.

The study also shows that midlife fitness may actually shrink the number of years seniors spend coping with chronic illness altogether. It may help us live better and longer, more healthy years and fewer sick ones.

So what can you do to help avoid disability? Start exercising. Of course, you should consult your physician before getting started, especially if you have any known medical issues. If you already have a regular exercise routine, the study suggests that increasing the intensity of your workout can help even more. If you usually go for a walk, try going for a jog instead. Stay on the treadmill a little longer. Put in a little more effort now and reap the benefits later on.

Can Someone Access to Your Google Account After Your Death?

One of the growing challenges with estate planning is how to handle digital assets (i.e. e-mail accounts, facebook® accounts, etc.) in your plan. This can be particularly troublesome in settling the estate if you have bank statements or financial account statements electronically sent to your e-mail address without a mailed paper copy. Without the ability to access your e-mail account, your Personal Representative or Trustee might not even know that you have the bank or financial accounts.

Unfortunately, Michigan’s probate code does not give your Personal Representative or Trustee authority to access your e-mail account after your death. And, historically, service providers such as Yahoo® refuse to give password information to someone other than you per their Terms of Service.

If you have a Google® account, however, you are in luck. You now have the ability to set up your Google® Inactive Account Manager. By setting up your Inactive Account Manager, you can designated someone to access to your Google® account if you have not logged in after a designated period of time.

To set up Inactive Account Manager, login to your Google® account, and then go to: https://www.google.com/settings/account, which will take you to your Google® account set-up page. Select Data Tools from the top menu, and then go to set-up Inactive Account Manager.

Through your Inactive Account Manager, you will be able to set the timeout period, after which your account will be treated as in active, and designate trusted contacts who are to be notified if your timeout period expires. You can, also, give them access to your Google® account. Optionally, you can instruct Google® to delete the account once the timeout period expires.

Hopefully, other online service providers will follow Google®’s lead in giving users the ability to provide others with access to their accounts in the event of their death. Meanwhile, if you have a Google® account, then be sure to set up your Inactive Account Manager. And, if you don’t have a Google® account, perhaps this would be a reason to consider setting one up.