Wills, Trusts & Estates Prof Blog

Happy New Year!!

To my Valued Readers,

Happy New Year and Best Wishes for 2015!!!

Gerry

Financial Trends To Watch For 2015

With 2014 coming to a close, many of us look forward to the possibilities of 2015—and for the financial market, the New Year may bring many things.  With the legislative cycle, market regulators, industry disputes and geographical angst, 2015 will be a busy year.  Below are a few topics that are likely to surface:

• The IRS remains a wild card.  While the tax situation in 2015 looks settled, the IRS has $346 million less to work with, meaning customer service and enforcement are going to be operating under resource constraints.
• Technology fatigue sets in.  Until a particular iWatch, data band, or next-generation phone opens up new professional vistas, incremental productivity gains are what is at stake. 
• Generation Y gets serious.  The oldest members of “Generation Y” turn 35 this year and the rest of the “echo boom” coming up behind them are ready to settle down and start their financial planning. 
• Oil slick helps some, hurts others.  Although petroleum may not stay at $55 a barrel for long, cheap fuel is a relief for 90 percent of the U.S. economy that is not focused on energy extraction.  With low gas prices, odds are good that consumer inflation will be put off for a while. 
• Data security becomes real.  Global enterprise has become easy to infiltrate.  Many banks have already failed to keep their customer accounts from not only being hacked but exposed to public scrutiny as well.  Apple’s payment system might be a slow fix to these data breaches. 

See Scott Martin, Predictions for 2015: 10 Wealth Management Trends to Watch, Trust Advisor, Dec. 28, 2014.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

Paul Walker Family Demands $2 Million From Crash Driver's Estate

Actor Paul Walker died tragically in a car crash a little more than a year ago, and now his family is demanding nearly $2 million from the estate of Roger Rodas, who was the driver of the Porsche Carrera GT in which the two men were killed.  According to filed legal papers, the issue is that Rodas’ heirs have yet to turn over $1.8 million worth of Walker’s exotic car collection that they still have in their possession. 

Walker and Rodas co-owned the car shop, Always Evolving.  In documents submitted by Walker’s dad, it is alleged several of the cars being held by Rodas’ family actually belong to the late Fast & Furious star.  Rodas’ side is contesting this, so a court battle may occur between the two families of the deceased men. 

See Michael Lewittes, Paul Walker Family Demands Nearly $2 Million From Crash Driver’s Heirs, Gossip Cop, Dec. 30, 2014. 

2014 Tax Savers for Businesses

With the clock ticking on the end of 2014, employing some last minute tax strategies that expire along with the 2014 year may lower the tax burden for businesses. Here are some to consider :

• Possibly accelerating or deferring income and deductions where possible to create even income over the years.
• Taking advantage of the Section 179 small business expense election before the limit goes down in 2015.
• Getting the bonus 50% depreciation for certain new tangible property purchased and placed in service during 2014.
• Looking into whether the accelerated depreciation period of 15 years applies to any business property, such as leasehold improvements.
• Doing a cost segregation workup to separate items of differing depreciation periods.

See Steven J. Fromm, 2014 Year-End Tax Planning Guide For Businesses: Discover 9 Proven Tax Planning Strategies, Philadelphia Estate and Tax Attorney Blog, Dec. 26, 2014.

 

New Year's Resolutions for Estate Planning

While prepping the New Year's resolutions for tonight, take time to consider  making  an annual estate planning resolution to take a look through and update relevant documents. Here are some steps to help with the resolution to review:

• Take inventory of any life changes that occurred in the past year, or since the last update.
• Take a look at any planning documents, such as a will or revocable trust, and check to see if the executor and trustee designations, and beneficiaries are still accurate and if any newly acquired property needs to be accounted for.
• Give thought to whether the individuals designated as financial and health care power of attorney are still a good fit.
• Make sure a living will is in place with current wishes for health care decisions.
• Review and reconsider if necessary all beneficiary designations for life insurance plans and retirement accounts.

See Linsey Glosier & Doug Stanley, Your Estate Planning New Year's Resolution Checklist, Bryan Cave, Dec. 30, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Step-Family Finance Planning

According to the Pew Research Center, four in ten American adults have at least one step-relative in their family.  While many step-families operate harmoniously, adults often “feel a stronger sense of obligation to their biological family members than they do to their step-kin.”  Because of this, blended family finances can get messy. 

Couples planning to blend families need to make financial arrangements that respect previous relationships with ex-spouses.  Issues range from childcare and eldercare to complex matters involving businesses, investment assets and real estate.  Below is a list of issues and solutions potential partners should consider:

• Credit Reports and Credit Scores.  Extensive loans or bad credit for one or both partners can endanger future purchasing plans for auto, home or tuition. 
• Assets and Liabilities.  Potential partners should k now each other’s financial assets and liabilities and any issues connected with them. 
• Legal Issues.  Full disclosure is essential for matters such as divorce, child custody, foreclosure, bankruptcy, or other civil or criminal legal proceedings.
• Business and Estate Issues.  If partners have significant estate or business assets assigned to children, former spouses or family members, those commitments need to be factored into the finances of the planned marriage or partnership. 

See Jason Alderman, Yours, Mine and Ours: Planning Step-Family Finances, Pleasanton Weekly, Dec. 29, 2014.

Incorporating Faith and Values Into Your Estate Plan

Rather than worrying about where assets will go, some people put more emphasis on incorporating faith and values into their estate plan.  Fortunately, there are several different ways this can happen. 

For some people, this means including one or more charities into their plan as a beneficiary.  It could be a charity you have supported during your lifetime that you want to continue to support.  You could leave a dollar amount or percentage, or establish a trust to provide income or principal distributions to the charity for years to come. 

Establishing distribution provision for loved ones is another way to add faith and value to your plan.  You may want distributions to your children or grandchildren to be for education or something important to you, thus, personalizing the way the money can be used.  Some people choose to limit distributions to encourage hard work and self-sufficiency. 

If your medical and end-of-life wishes are tailored around your faith or other values, it is important to name an agent who shares those same values.  It is also a good idea to put those wishes in writing and discuss them with your agent. 

See Carissa Giebel, Ways to Incorporate Faith, Values Into Your Estate Plan, Green Bay Press Gazette, Dec. 29, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

Time Is Running Out To Make 2014 RMDs

December 31^st is just hours away, yet, thousands of people have not withdrawn their 2014 required minimum distributions from their individual retirement accounts.  These individuals are facing one of the steepest IRS penalties—a fifty percent excise tax.

While many people think of RMDs as senior only issues, they are not.  Not only do IRA owners who are 70 ½ need to withdraw money to satisfy their RMDs, as do beneficiaries of any age.  The beneficiary has no RMD requirements until the owner dies.  At that time, the beneficiary inherits the IRA, which triggers RMD requirements.  The rules and timing are complicated by different requirements based on the owner’s age at death and whether the beneficiary is a spouse, other person or an entity, such as a charity or an estate.

The number of people who miss an RMD is tracked by the Treasury Department.  According to a report issued by the Treasury Inspector General for Tax Administration, noncompliance is growing.  So, withdraw your RMDs to avoid any penalties.

See Julie Jason, Julie Jason: Be Sure to Withdraw IRA Distributions by Dec. 31, Times Union, Dec. 27, 2014.

Bela The Dog Gets A New Life At Animal Sanctuary

I have previously discussed Connie Ley’s will, which provided that her dog Bela could either be euthanized or sent to Best Friends’ no-kill sanctuary. 

For those worried about the nine-year-old German Sheperd’s fate, it will be a very happy new year for Bela, as she arrived Sunday at the animal sanctuary.  “It’s wonderful to be able to welcome Bela here.  It speaks to our principle of valuing all animal life.  In this case, there was potential for something terrible to happen, but we are set up to give him a great life and all indications are that he is a beautiful and wonderful dog.” 

See Arin Greenwood, Bela The Dog, Sentenced to Death In Owner’s Will, Gets A Great New Life At Sanctuary, The Huffington Post, Dec. 29, 2014.

Retirement Study Reveals Predictors for Retirement Planning

A combination of two recent studies that looked at how prepared Americans are for retirement showed that in addition to only one-fifth of the population feeling ready, according to the Financial Finesse study, various demographics are strong predictors of preparedness levels, according to the Vanguard How America Saves 2014 survey. Here are some of the predictive factors for level of retirement preparation:

• Income. Just under half of employees that bring in at or below $30,000 annually were participating in an employee retirement plan that they were eligible for. That number jumped to 87% for those with an annual income of at least $100,000.
•  Industry. Finance sector employees participated in their employer retirement plans at a rate of 98% compared to just over half of retail employees.
• Seniority. The length of service at a job also was a strong predictor of retirement plan involvement, with rates jumping from around 50% for those in their first year to 77% for those with over a decade on the job.
• Age. Millennials are behind the pack on retirement plan participation, and a split exist between Millennials under and over the 25 year line for age.
• Gender. The gender difference is twofold, with woman more likely to participate in their employer's retirement plan, but men accumulating 50% more retirement savings.

See Sean Williams, 5 Critical Findings About Saving For Retirement, The Motley Fool, Dec. 27, 2014.