Beware The State Estate Tax

An excellent article written by Ashlea Ebeling, Forbes Staff (Dec.21,2017) (Forbes/Personal Finance/#RetireWell) is titled:  “Where Not To Die in 2018”.

There are states that do not ‘follow’ the federal estate tax exclusions amount.

Also, in 2026, the federal estate tax exclusion will revert to the $5 million level (barring future legislation).

And beware individual states with a separate state inheritance tax!

No matter which state you live in – the best advice is to keep your estate plan up-to-date — if taxes matter to you.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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The Scoop on Health Savings Accounts

As we move into 2018, those who are self-employed (or those with a high deductible health plan) continue to be concerned about their healthcare costs.

Individuals who have health savings accounts (and particularly those who do not) will benefit from the article by our friends at Investopedia.  The article is titled:  “How to Use Your HSA for Retirement” and is an excellent synopsis of the advantages of health savings accounts (HSA’s).

A quote from the article: “Thanks to its unique tax advantages, a Health Savings Account may be the best retirement option you never knew you had.”

One terrific advantage:  Your HSA contributions are tax-deductible before you turn 65 and become eligible for Medicare.

Also, keep in mind that some states have different tax laws regarding taxation of HSA accounts. (Consult your tax advisor)

And don’t forget those ‘catch-up’ contributions.. If you have an HSA and you are 55 or older, you can make an extra “catch-up” contribution of $1,000 per year and a spouse who is 55 or older can do the same… however each of you must have their own HSA account.

If you qualify for an HSA, decide to take advantage of this “best retirement option”.

It is not often that I highly recommend an article to my readers…but this is one time that I do.

Here is the entire link for the Investopedia article:   https://www.investopedia.com/articles/personal-finance/091615/how-use-your-hsa-retirement.asp#ixzz55yDX2eus

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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What’s In One Word?

An interesting and cogent article came across the computer that I wanted to share with my readers.  First, I would like to make it clear that I am not a disability claims lawyer. I am an estate planning lawyer.  However, disability insurance does factor into a person’s estate planning.  In previous articles I have noted that a long term disability can ‘trigger’ major changes/adjustments to a person’s estate planning goals.

With that said, I also handle contracts for my clients.  One might suggest that any long term disability (LTD) policy is similar to a ‘business’ contract.  For the most part and simply put; both are written agreements and are binding and both are usually detailed.

In any contract or policy –  the ‘devil can be in the details’ and even one word can make a difference.  An example is the difference between “own” and “any” in a long term disability (LTD) policy.  Yes, that one word can make an enormous difference to a disability claim.

For an excellent synopsis explaining that difference, I refer readers to an article by Gordon Gibb * titled: “LTD Denial: Understanding “Own Occupation” vs “Any Occupation”” (published December 6, 2017. Washington, D.C.)

As Gibbs clarifies – the standard of “any occupation” …Under this standard, total disability is based upon the inability to perform work in any occupation.”

My note – The emphasis is on that single word ANY.

Long term disability insurance is a specialized field of law and for those with a long term disability the best alternative might be to consult with a lawyer in the field of LTD policies when there are questions about continuing long term disability policy coverage.

* “Gordon Gibb is a writer, broadcaster and media specialist who has contributed (to LawyersandSettlements) since 2007. His specialty is getting to the heart of an issue quickly, and complex subjects are more easily understood in his hands. His work has appeared in major international magazines and newspapers, and his two books on Nobel Peace Prize winner Lester B. Pearson were published in 2006 and 2015 respectively…”www.gordongibb.com (The Voice of Versatility) and you can follow him on Facebook.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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Endless Disruption

The term endless disruption is most often seen in articles about technology and the changes that occur (sometimes seemingly overnight) in this digital age. Continuous changes in personal life events, external forces and new legislation can also lead to a type of endless disruption for an individual’s plans for the future.

A recent article about how organizations can learn (and adapt to change) caught my attention.  In his article: Learning How To Learn by Willie Pietersen, the author suggests that the most successful companies instill learning as a habit and embrace change.  Those corporations that cannot recognize change; accept change and respond to it are doomed to fail.

Success means dealing with (and embracing) endless disruption.

Estate Planning is a segment of the law that deals with constant change.  The lives of my clients are ever-changing – births, deaths, marriages, divorces; remarriages, formation and dissolution of businesses; fortunes being made, lost or inherited; properties/assets being acquired or disposed of; clients’ changing health situations;  economies that falter; changes in tax laws; job changes and relocations- all are life events in a state of flux.

Changes in legislation and in digital technology are also impacting the estate planning process. (see my articles about digital wills)

Change is scary; information overload is rampant and the rate of change in today’s society is rapid and disruptive.  Taking no action in the face of change and uncertainty is thought to be a ‘safe’ alternative.  But if one stays ‘frozen’ in the face of uncertainty, no decisions are made; change happens around us and we have not adapted to the forces that are affecting our lives.

We also have relinquished the ability to positively respond when the need arises.

Apple co-founder Steve Woznik was quoted (2015):  “…(appoint) someone to look out for what is coming, for what might disrupt you own business…(a Chief Disruption Officer of sorts)”

Interestingly, my tag line – written several years ago – Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World – seems particularly an apt one – to cope with the potential endless disruption of my client’s plans.

Yes, the world is in a state of flux, and Estate Planning is an area of law well-suited to respond to the many and continuous changes happening in a client’s life and in the world around them.

Taking the first step and talking to an estate planning lawyer could help ‘unfreeze’ your decision- making.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

2018 Tax Legislation

Our friends at Investopedia have managed to put the more than 500 pages of the recent tax legislation into a compact and easier to digest form as to the impact on many individual taxpayers.

The Investopedia article: How the GOP Tax Bill Affects You by Amy Fontinelle (Updated January 3, 2018) outlines some of the major effects of the legislation.

The official title of the bill is:  “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” —thus possibly making it a tax legislation bill with the longest title in history.

Many will be reading numerous articles about the new tax bill and attempting to figure out the financial long and short- term effects.

As always, I caution not to rely on any one article or website for information.

Consult a professional about your individual tax situation.

I have learned from one contact that the (hard copy) IRS forms remain on ‘backorder’.

According to an IRS mailing:  “The Federal Tax Products you ordered …are not available at this time. We are holding your order pending availability.  There is no need to reorder. We apologize for the delay.”

(As of this writing, the hard copy of the requested IRS forms had not yet arrived.)

So if you require\order hard copies of tax filing forms, such as Form 1040, Instructions, Schedules, etc. you may be able to access them sooner via the IRS website.

As the IRS notice stated:  “Electronic versions of new tax products are often available several weeks before they are available in print.”  (www.irs.gov)

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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So You Want To Move To A Foreign Country

You have read all the brochures and finally decided that life on the (fictional) island of Guata Gauta will be idyllic.  The island nation has virtually no taxes, beautiful and inexpensive homes to buy; the best climate; friendly people; stable government; wonderful culture; scenic beauty…in short it is Paradise, with a capital P.

One of the last things you are probably thinking about is your estate plan.  You just want to get to your island in the sun and start your new life.

But beware of certain issues when planning to become at expatriate (expat for short) and the difference between tax residence and domicile.

We know that there are significant differences between legal systems in different countries.  To give an example, British people who live in countries of the Middle East are for the most part subject to Islamic law and that law would apply when it comes to how their estate is treated.  This might mean that as an expat the law could divide your estate, your property and your wealth in ways that you never intended. Assets could go to someone that the expat never realized.

Once you establish domicile in a country, then Domicile typically decides where inheritance is paid and how (upon death) an expat’s estate is split.  The laws of that country regarding property, bank accounts, etc. could override any will or estate plan of the United States.

In most countries, expats should prove they have no intention of moving to another country to show their domicile has changed. For example – if you are moving yourself to Guata Guata, the relocation is permanent and you have no intention of returning to Wisconsin. This could mean relinquishing your U.S. passport; closing all U.S. bank accounts and selling Wisconsin property.

It is beyond the scope of this brief article to review all of the possible outcomes of becoming an expat.  The best advice –

Discuss with a professional (financial; legal and international) the long term consequences of a permanent move/relocation to a foreign country. Know before you go, how the laws in that country could affect your estate plan and your beneficiaries.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

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Beyond The Scope

I have been publishing my blog page since 2013.  Over the course of years it became apparent that no matter the extent of research or the narrow focus of any article, it was ‘beyond the scope’ to detail every possibility within the topic.

Many of my article/blogs state:  “It is beyond the scope of this article…” and some readers might say, then why write the article at all.  If you cannot give definitive answers to a problem, then stay mute!

However, the true purpose of my blog and series of articles is to cover topics that are being discussed in the field of estate planning law.  Also, I want to draw attention to unique topics and issues that the ‘general’ public might not even be aware exist.

There is usually the caution at the end of my articles to consult a qualified legal or financial professional.  I do not take that caution lightly.  The laws of our land change and the consequences of not staying ‘on top of’ legislation can be disastrous.

One expert in estate planning law had quipped – “I love people who draft their own wills or trusts based on website forms – they are the backbone of my firm.”  He went on to say that a portion of his large client base was people who had attempted to draft their own legal documents, to disastrous long term and unforeseen effect. His ‘business’ was based upon untangling the messes!

There are few people who would attempt major surgery on themselves – they seek the advice and medical services of a doctor of medicine.  However, those same individuals might not hesitate to undertake the process of drafting a legal document on their own using a website form.

So, yes, often the information in a blog is ‘beyond the scope’ of the article to cover and for any individual legal situation/question – it is indeed wise to seek the advice of a qualified professional.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

 Please read my full Disclaimer and How I Can Help You

Visit my website:  www.attorneybarbaradalvano.weebly.com for over 200 articles and printable infographics

The Art of the FICO Score

As we move into 2018, many of us are seeking more information about how the recent changes in tax legislation will affect us.  I have often written that changes like births, deaths, divorce and yes, even tax law changes can affect an estate plan.

If you have an existing estate plan, now might be a good time to seek the advice of a financial specialist to get the real data of how recent tax legislation could impact your future plans.  Then consult an estate planning specialist to determine whether any ‘improvements’ to an existing estate plan might be beneficial given the recent legislation.

Another resolution for the coming year might be to ‘clean up’ your credit.  We know that when planning a large purchase using credit, it is wise to know your credit score.  But do you fully understand the actual components of that mysterious FICO score?

An article in Investopedia titled” “The 5 Biggest Factors That Affect Your Credit” by Amy Fontinelle (Investopedia, Nov. 20, 2017) might unlock some of the mystery.  The article mentions ‘credit utilization ratio’ and the difference between making a ‘hard inquiry’ vs a ‘soft inquiry’.

Another recommendation is to start working on improving your credit score BEFORE that major purchase in order to get the most beneficial interest/lending rate.

Lastly….In 2018, I plan to be:

“Working to Preserve Your Wealth and Protect Your Future…in a Constantly Changing World”

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Top 5 Retirement Challenges…

Our friends at Wiser Women (www.wiserwomen.org) posted their top 5 retirement challenges facing women in the United States.  Among the five challenges:  only 45% of women between 21 and 64 years of age participate in a retirement plan.

To view all five ‘top challenges” use their website.

The Wiser Women website also offers helpful advice about social security; financial scams; health care; caregiving; divorce and widowhood; and the very useful “Your Future Paycheck” calculator.

You can also subscribe for free to the Wiser Women newsletter.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full Disclaimer and How I Can Help You

Visit my website: www.attorneybarbaradalvano.weebly.com for more than 250 articles and printable infographics

 

Infographic – Median Retirement Savings by Age Group

Most recent articles about retirement agree that American have fallen woefully behind on their retirement savings goals.

With the new year coming, now is a good time to review your end-of-year retirement and savings goals and make adjustments.

I have just posted on my website a helpful chart (printable infographic) titled: Median Retirement Savings by Age Group.  See how you compare with the “Recommended” Goals.

It is never too late to increase retirement savings, either through 401(K) or individual retirement accounts or through a change in lifestyle.

At the end of my infographic there are some suggestions about how to achieve an improvement in saving for retirement – whatever your age group.

For the ’20 Somethings’, this might mean setting realistic goals and establishing a new retirement account.

In your 30’s to 50’s, it is time to review your financial situation with an eye to having a more stable savings plan for retiring.

In your 60’s, it can be a time to review your investments and make lifestyle changes for a healthier lifestyle with an eye to reducing medical costs.

Each age group has a Recommended Retirement goal, and you can meet that goal through a disciplined savings plan.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full Disclaimer and How I Can Help You

Visit my website:  http://www.attorneybarbaradalvano.weebly.com for over 200 articles and printable infographics