So You Are Going To Inherit A Windfall

July 30, 2014

Like many baby boomers, you may be about to receive a nice inheritance. Should you just go out and start spending willy-nilly?

(Photo credit: Wikipedia)

(Photo credit: Wikipedia)

Best not to, says a CNBC story posted on

Determining how to deal with a sudden windfall the right way is important.

The first thing you should do, experts say, is nothing.

That’s right.

Take a period of time to think about it. Inheriting all that money may be terrific but it takes planning and analysis and, because you may still be in the grieving process, it may be best to take it slow, the story says.

Among the first things you should do include contacting Social Security and the Dept. of Veterans Affairs, if applicable, obtain a death certificate and, of course, make funeral plans.

After a couple of months, the story says, you should open a checking account, contact your loved one’s life insurance company, close joint checking accounts and pay bills.

Then, after six months or more has passed, you can start thinking about gifting money, moving or starting an investment plan.

People not used to handling large sums may be overwhelmed, the story points out.

And people may come out from under rocks looking for handouts. Best to send each of them a letter saying your financial advisor has said for you not to make any decisions about the money until your situation has been fully assessed and your long-term situation determined.

Choices When A Spouse Inherits An IRA

July 23, 2014

A spouse who inherits an IRA has two choices.

saving and retirement (Photo credit: 401(K) 2013)

saving and retirement (Photo credit: 401(K) 2013)

The surviving spouse can move the account into an inherited IRA to keep the tax shelter. Or he or she can roll the account over into his or her own IRA.

The decision, says a story posted on, depends on whether the survivor has turned 59 1/2 and whether the deceased spouse had turned 70 1/2 before dying.

A spouse who is under 59 1/2 and who needs the money is better off staying a named beneficiary. That means the survivor must rename the account as an inherited IRA. In that way, he or she can tap the account without penalty.

If the surviving spouse rolls the money over into his or her own IRA and then withdraws any of it, a 10 percent penalty will be paid until the person reaches 59 1/2, according to the story.

A surviving spouse who is under 70 1/2 and doesn’t need the money should make the IRA his or her own, the story says. No minimum distributions will be required until the person turns 70 1/2.

If the surviving spouse makes the IRA his or her own it also affects heirs in a more positive way as they will be able to “stretch” the distributions over their lifetimes.

Lou Reed ‘Walked On The Wild Side’ With His Will

July 16, 2014

Filed under: Estate Planning,Inheritance,Trusts,Wills — admin @ 1:52 pm

Lou Reed, singer, songwriter and guitarist and a founder of the Velvet Underground, talked about “walking on the wild side” in one of his most famous songs.


Lou Reed. Schinitzer Concert Hall Portland, OR (Photo credit: Wikipedia)

The rock and roll hall of fame also walked on the wild side when it came to estate planning.

An article in Forbes says the New York rock legend was careless with the planning of his $30 million estate.

Probate court filings since his passing at age 71 show his estate has earned $20 million since his death. The filing showed he had $10 million at the time of his death.

Reed left the $10 million to his wife, Laurie Anderson, and sister, with his wife getting 75 percent.

The rocker relied on a will he signed in 2012. The article questions why someone worth so much would rely on a will and not have a revocable living trust.

If Reed had set up such a trust, the details of his financial life and to whom he left money would be kept private, instead of being splashed all over the pages of the New York tabloids, the story notes. In addition, wills have to go through probate, while trusts do not.

And if anyone were to object to the will, it would be easier to make a challenge in court than if there had been a trust set up.

Reed knew he was sick with liver disease for some time and could have filed a trust but did not do so. Now, all the details are out in public. There’s a lesson there for everybody, not just the rich and famous.

Inherited IRAs Not Protected

July 9, 2014

The Supreme Court has ruled that inherited IRAs are not protected in bankruptcy.


Bankruptcy (Photo credit: LendingMemo)

The June opinion, which has far reaching implications according to a story in Forbes, found that Heidi Heffron-Clark, who inherited an IRA from her mother in 2001 and filed for bankruptcy nine years later, could not shield that money from creditors.

Historically, IRAs have been protected from creditors in bankruptcy to ensure that people have money to live on during retirement. But the court found that inherited IRAs are different from those you set up and fund yourself. You can’t put more money into an inherited IRA and you can take money out at any time without penalty.

The decision does not affect spouses as long as they roll over IRAs inherited from their deceased spouse into their own IRAs.

Casey Kasem’s End Of Life Care

July 2, 2014

World famous disc jockey Casey Kasem died this year at age 82, but his final days were marred by a legal battle among his family over what would be the best care he could get towards the end of his life.

Photo taken at the 41st Emmy Awards 9/17/89 - ...

Photo by Alan Light. (Photo credit: Wikipedia)

The fight stemmed back years and involved his wife, Jean, and the children from his first marriage, says an article on

 Kasem was incorrectly diagnosed with Parkinson’s disease in 2007, but later was re-diagnosed as having a progressive brain disorder called Lewy body dementia.

In any case, the family feuded in Kasem’s final days over the best way to care for him. The children said they wanted to honor his wishes that he live out his last days comfortably. His wife said they were giving up hope and ending his life too early.

Kasem’s case is typical of what is going on in families all over the country. That’s why it is important to designate a health care agent, or proxy, to speak on your behalf if you are incapacitated.

The article also says seniors should write down specific instructions about what they want for end-of-life care and identify the health agent in a document called a durable power of attorney. It ends the guessing game.

Paul Walker’s Estate And The Lessons Learned

June 25, 2014

Paul William Walker IV, the star of the Fast & Furious movies, died in a car crash Nov. 30, 2013. He was survived by his parents and his 15-year-old daughter, Meadow Rain.

Paul Walker

Paul Walker (Photo credit: Wikipedia)

His father recently filed to open his son’s estate, including his will. It sheds some valuable estate planning lessons, says an article in Forbes.

Walker had assets of about $25 million, the probate filing and will revealed. He also had a revocable living trust benefiting his daughter as the sole beneficiary.

The will named Walker’s mother, not Meadow’s mother, as the guardian and caretaker of the money.

Lessons learned:

  • Setting up a trust meant the probate process would be simpler than it could have been without one. It also means that his daughter will likely receive the money over time, not all at once. In most cases, that’s a good thing.
  • Walker did not fully fund his trust. Instead, he relied on his will and that means more public scrutiny.
  • He named a guardian, his mother. It does not mean that Meadow’s mother will lose custody of the child, but it might were the mother to be found unfit or unable to keep custody. That was a good move.
  • Walker set up his will at age 28. He didn’t wait until he was old. Good move.
  • He did not update his estate planning documents for 12 years. (He died at age 40.) His net worth had increased over the years. What if he didn’t want his daughter to inherit all that money? What about his longtime girlfriend, Jasmine Pilchard Gosnell? Didn’t he want her to get something? Bad move.

Sparing Your Heirs A Fight Over Possessions

June 18, 2014

Filed under: Asset Distribution,Estate Planning,Inheritance,Wills — admin @ 1:17 pm

 Here’s a thorny problem faced by an estate planning attorney in New York: his client wanted a painting owned by his mother, but so did his brother.

West Point painting

West Point painting (Photo credit: Wikipedia)

The client’s mother specified that each of her sons get half of her assets, but she didn’t make special provisions for her personal possessions, and there was a painting that both sons coveted.

One son went to the house and simply took the painting, says an article on The executor of the will offered to give the other son the appraised value of the painting, but he wanted the painting, not the money. So the two sons went to court. Legal fees have so far outpaced the value of the painting and the sons are no longer on speaking terms.

The moral of the story: specify in your will who gets what. In some states, you can add a codicil to your will indicating that you’ve made a separate list distributing your possessions. If you do that, you can update it from time to time without changing your will.

But before you make the list, ask questions. Don’t assume who wants what. If there are conflicts, you can resolve them one way or another. You can even draw straws.

How To Find Care For An Aging Family Member

June 11, 2014

Filed under: Caregiving,Elder Care — admin @ 9:00 am

While it can be costly to hire somebody to care for an aging or ailing family member at home, there’s at least one consolation — the fees charged have been relatively stable for years.

85 years

(Photo credit: jaded one)

It costs, on average, $19 per hour for a hired homemaker and slightly more, about $20 per hour, for a home health aide.

These prices have remained steady for at least five years. They may jump slightly in the future as demand increases due to more aging baby boomers needing help, but not too much, according to an article in The New York Times.

How do you determine what kind of caregiver your loved one needs?

First, you should assess the person’s needs by determining his or her ability to handle the daily activities of living such as dressing, eating and bathing, the story says. You can also find a professional to make this determination if you don’t think you are up to doing it. They can be found through local agencies on aging.

What is the best way to find a home caregiver?

You can use a home care agency that will handle paying the caregiver. You pay the agency. Or you can find someone on your own. That may be a little cheaper. But you  will have to deal with payroll and possibly taxes. If you want to do it on your own, word of mouth is a good place to start.

Enhanced by Zemanta

Medicare Changes Coverage Of Long Term Care

June 4, 2014

Filed under: Elder Care,Long Term Care,Medicaid/Medicare,Nursing Homes — admin @ 9:00 am

There has been an important change in what Medicare will pay for in terms of long term care. It is the result of the settlement of a class action suit.

English: Centers for Medicare and Medicaid Ser...

(Photo credit: Wikipedia)

Before the settlement, Medicare would cover skilled nursing care only when patients were deemed likely to improve.

Now, the key criterion for coverage is a demonstrated need for skilled care even if the patient isn’t expected to improve, says a Reuters article.

As a result, patients enrolled in Medicare Part A (hospitalization) who need care to maintain their current condition but who aren’t likely to improve now qualify for Medicare’s standard benefits.

The change has been off to a bumpy start because many beneficiaries and even providers didn’t know about it, however.

Many people think Medicare generally pays for long-term care but the benefits are limited. Part A will cover a stay of up to 100 days in a nursing home following a hospital admission, but there is a $152 daily co-pay after 20 days. It also covers skilled home care, such as physical therapy, if a doctor certifies it is needed. It will cover 100 home visits after a hospital stay.

Medicare Part B covers home care without a prior hospitalization with no limit on visits.

Enhanced by Zemanta

Live Longer And Your Heirs Will Prosper In New York

May 28, 2014

Filed under: Estate Planning,Estate Tax,Gift Tax — admin @ 2:08 pm

If you die in five to eight years, the tax consequences in New York will be lower than if you die now.

New York

New York (Photo credit: Photochiel)

In the meantime, a new estate and gift tax that went into effect April 1 is going to create all kinds of complex financial planning problems, says a story in the New York Times.

Gov. Andrew M. Cuomo said the goal was to eliminate the incentives for wealthy New Yorkers to move elsewhere to die.

But he only partly succeeded, the article says.

That’s because changes in the law will be phased in over time. The details will be different every year until 2019.

Before the new law was passed, New Yorkers whose estates were valued at $1million or less were exempt. But many who were exempt from federal estate taxes, where the exemption is now $5.34 million, still had to pay state taxes. And the top rate is 16 percent.

The new law will raise the exemption each year until 2019, but it leaves the top rate at 16 percent.

The exemption is now $2,062,500. It is set to rise by $1,062,500 each April 1 until 2017 when it jumps to $5.25 million. By 2019 it will match whatever the federal exemption is — nearly $6 million.

The law is written so that the state estate tax is applied gradually once the estate amount exceeds the exemption. Once your estate amount exceeds the exemption, though, New York will tax you on the entire estate as if there were no exemption.

It is complicated and will require New Yorkers who might not have had to worry about estate planning to have to start doing some, at least for the next five years, the story says.

Enhanced by Zemanta
Older Posts »
Contact Information: