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May 4 18

Importance of Medical Directives: End-Of-Life Wishes Reflected in Barbara Bush’s Passing

by Phil Levin, Esq.

Former First Lady Barbara Bush died at her Houston home on April 17, surrounded by her family. She had chronic obstructive pulmonary disease, heart failure, and had been hospitalized multiple times in recent weeks. Following an Easter weekend in the hospital, the 92-year-old decided to let nature take its course. She rejected additional life-prolonging measures, which likely would have included being attached to a breathing machine. The family announced her choice for “comfort care” only and supported her decision. She died with her husband of 73 years, President George Herbert Walker Bush, holding her hand.

The timing of her decision and passing has particular significance given that National Healthcare Decisions Day was April 16. Established in 2008, the purpose of NHDD is to encourage Americans to complete advance directives and to talk to their family about their healthcare wishes, including their end-of-life wishes. According to a 2013 survey by the Conversation Project, only 27% of Americans have done so — even though 90% say it’s very important!

Conversation Project

Nathan Kottkamp created National Healthcare Decisions Day as a result of his experiences serving on hospital medical ethics boards. He writes on the NHDD website: “Time and time again, families, providers and health care administrators struggle to interpret the wishes of patients who never made their healthcare wishes known (or who failed to create an advance directive to record their states wishes.)” Kottkamp applauds the Bush family for going public with this most personal decision and hopes it will encourage others to create health care documents and to discuss these issues with family. And Ellen Goodman, chair of the Conversation Project, which provides tools for families to talk about these sensitive issues, said of Bush: “It sounds like this forthright, outspoken woman has made her wishes known and the family is standing by her.”

Creating Advance Directives for Healthcare

Under Pennsylvania law, a competent adult has the right to make his/her own health care decisions. That includes the right to reject unwanted medical procedures. You also can name people to make your decisions if you are incapacitated and cannot do so yourself. Creating advance directives for healthcare can give you peace of mind and do the same for your family, making them confident they are doing what you want if they are called on to make decisions on your behalf.

An Advance Directive for Patients with Dementia

Please see an excellent article in The New York Times, on April 30, 2018, entitled, “An Advance Directive for Patients with Dementia” – Getting choices on end-of-life care recorded can help patients feel secure that their wishes will be respected, experts say.

We firmly believe having up-to-date Healthcare Powers of Attorney, including Advance Medical Directives, is an extremely important component to a comprehensive estate plan. Please feel free to forward our Estate Planning Matters newsletter to your valued clients.

Remember: It always seems like it’s too early, until it’s too late.

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Apr 2 18

April 2nd is World Autism Day

by Phil Levin, Esq.
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April 2, is World Autism Day.

The purpose of World Autism Awareness day is to encourage early detection and intervention. If your child or grandchild seems to be showing signs of speech delay or is not interacting with you, I am pleased to let you know has some tools to help determine if your child or grandchild needs to be evaluated for autism.

While a diagnosis of Autism is scary, there have been great advances in therapies, education and even some medications which give significant hope for a happy life despite the autism diagnosis.

Our clients who have a child or grandchild with Autism are concerned about their future and there is good reason for great concern. For example, budgets for state and federal social services are always subject to cuts. Many children and adults with Autism receive public benefits which will be lost if the person inherits money outright, which is not placed into a Special Needs Trust. Losing public benefits can mean losing housing, caregivers and health insurance. The loss of public benefits can be devastating.

Special Needs Trusts can ensure that your loved one continue to receive all these important public benefits. Additionally, a Special Needs Trust can supplement theor government provided benefits, since the Trust is allowed to provide your loved one with supplemental benefits, to augment the quality if their life, without losing valuable public benefits they need and rely upon, so long as the Trustee follows the rules set out by the Social Security Administration and the specific terms contained in the Trust Agreement.

If you have a child or grandchild with Autism, and do not have a Will or Trust drafted by an attorney who concentrates in planning for children with special needs, or you do have a Special Needs Trust which has not been reviewed or updated to reflect your current personal, financial circumstances, along with recent changes in the law, or you are not certain the Trust was written correctly, your loved one is at risk of losing important public benefits in the event of your passing.

If you want to leave your estate to a loved one with Autism, you need to establish an appropriate Special Needs Trust which meets the current requirements set forth by the Social Security Administration. However, the federal rules and regulations are complex and if your Special Needs Trust is not written correctly and in compliance with relevant laws, your loved one could lose valuable financial benefits.

Parents and grandparents often delay establishing or funding a Special Needs Trust because they might be concerned that the Trust will impede their loved one if they are able to function like other adults in tbe future. However, a competent Special Needs Trust attorney will know how to properly design, draft, and implement a Special Needs Trust which complies with all legal requirements to make sure that if your child or grandchild with special needs requires public benefits, now or in the future, your loved one will be guaranteed to receive their financial benefits, and if the individual is able to become self-supporting during tbeir life, he or she will be able to receive the full benefits of their inheritance, in accordance with your wishes and estate planning desires.

Please note that when a person turns eighteen (18), the age of majority in most states, they have all the rights of an adult regardless of their ability to make their own financial decisions. Therefore, prents of a child with Autism (or other disability) must decide whether or not their child needs assistance with making adult decisions, including making arrwngementd for the management of their financial affairs.

If your child or grandchild has special needs, it is vitally important that you consult with an estate planning attorney who fully understands and appreciates the needs of people living with disabilities, in order to guide families through the process of establishing and funding the appropriate type of Special Needs Trust.

Mar 5 18

A Simple Will is Often Not Enough

by Phil Levin, Esq.

While some clients often believe that a “Simple Will” is sufficient, in many cases, a basic Last Will and Testament cannot accomplish each of their estate planning goals. This fact often surprises people who are going through the estate planning process for the first time.

As detailed below, in addition to a Last Will and Testament, other important financial and estate planning techniques and actions are necessary to ensure that your estate planning wishes are honored.

Beneficiary Designations –

Do you and your clients have a pension plan, 401(k), life insurance, a bank account with a pay-on-death directive, or investments in transfer-on-death (TOD) form?

When you established each of these accounts, hopefully, you designated at least one primary beneficiary of the account in the event of your death. However, you cannot use your Will to change or override the beneficiary designations of such accounts. Instead, you must change them directly with the bank, brokerage company, or custodian of the financial institution that manages the account.

Special Needs Trusts –

Do you have a child or other beneficiary with special needs, including physical and/or emotional disabilities?

Leaving money, in addition to other assets, directly to a beneficiary who has long-term special medical needs may threaten your beneficiary’s ability to qualify for government benefits. Such action may also create an unnecessary burden and hardship to other family members who are not capable or do not desire to provide ongoing care and investment management services for a disabled family member. In many situations, an estate planning vehicle called a Special Needs Trust is a more effective way to care for an adult child with special needs and can be established under the terms of a Will or Living Trust.

Conditional Giving with Living Trusts or Testamentary Trusts –

Do you want to place positive incentives or specific conditions on your bequests?

If you want your children, or other designated beneficiaries, to receive an inheritance only if they achieve or continually meet certain prerequisites, you should utilize a trust, either one established during your lifetime, called a Living Trust, or a trust created under the terms of your Will, called a Testamentary Trust.

Estate Tax Planning –

Do you expect your estate to owe estate taxes?

A basic Will, with no tax planning provisions, cannot help you lower the potential estate tax burden on your assets after death. If you think your estate may be liable to pay transfer taxes, at the state or federal level, you can take steps during your lifetime to minimize that burden on your beneficiaries. Certain trusts are very effective for this purpose and specifically designed to operate for the purpose of minimizing or eliminating estate taxes. Gift-giving strategies, during your lifetime, may also be a very effective strategy for transferring assets to the next generation, and reducing the value of your estate for transfer tax purposes.

Pet Trusts –

Do you want to protect and care for your pets or companion animals?

Pets are generally considered property, and you cannot use a “Simple Will” to leave assets to other property (pets). Instead, you can establish a specifically designed legal entity, called a Pet Trust, created under the terms of your Will, to designate a Caretaker for your animals, and to leave a specific sum of money to that person for the care and needs of your pets who survive you.

Joint Tenancy with Right of Survivorship –

Do you own a house with one or more people “in joint tenancy”?

“Joint tenancy” is the most common form of house ownership with a spouse. This form of ownership is also known as “joint tenancy with right of survivorship,” “tenancy by the entirety,” or “tenancy in common.” in the event of your passing, your ownership share in the house may distribute directly to your spouse, or the other co-owner, or under the terms of your Will or Trust, and which is dependent upon the type of ownership arrangement for the property. For example, if your real estate is owned as tenants by the entirety, even a specific provision in your Will devising your ownership share to a third party will not have any legal impact or effect.

Jan 8 18

Have You Considered a Dynasty Trust for Your Family?

by Phil Levin, Esq.
January 8, 2018

When most people hear the term “Dynasty Trust,” they assume it is an estate planning technique for only the wealthiest of families. However, Dynasty Trusts are being implemented today by families and are often used by many families of a greater wealth spectrum.

Demystifying Dynasty Trusts:

Dynasty Trusts are established to keep your wealth within your family for a longer time frame than traditional trusts. When properly designed, they can last for multiple generations, depending upon the law of the state where the trust is established. Upon the passing of the client, a Dynasty Trust becomes irrevocable, and are therefore perceived by some clients and financial advisors to be inflexible. However, through the appointment of a Trust Protector, and including flexible distribution provisions, adjustments to these type of trust are possible, and in fact often result, due to changes in future personal, family, and financial circumstances, along with changes in tax policy and legislation. Of course, it is always important to secure a full understanding of the estate planning goals and objectives of the family before creating a Dynasty Trust for the family.

For many families, the value of a Dynasty Trust is evident since this estate planning technique offers many practical and tax planning benefits, some of which are detailed below:

They consolidate and build intergenerational wealth, allowing you to create long-term security for your family.They help avoid estate, gift, and generation-skipping transfer taxes. Although these taxes are unpopular with the current President, and Congressional Republicans, history reveals that tax policy can change after any election.Therefore, any comprehensive estate plan must consider the possibility of reinstatement of federal estate taxes, even if such tax is temporarily repealed.They protect your beneficiaries’ inheritance from creditors, predators, and divorcing spouse.When creatively designed, they can even incentivize desirable behavior from your trust beneficiaries.

How Does a Dynasty Trust Differ from Other Types of irrevocable Trusts?

Simply put, a Dynasty Trust is designed to consolidate and build intergenerational wealth over a long period of time. Other common types of irrevocable trusts you may have heard about (i.e., GRATs, ILITs, QPRTs, CRTs) are created to achieve a particular tax result. However, Dynasty trusts build on these planning strategies and are appealing because they allow you to take a long view of estate planning for your family.

Why is Now the Time to Explore this Estate Planning Option?

In today’s favorable tax and legal environment, Dynasty Trusts can make more sense than ever – especially if your family has significant life insurance policies, a small business, anticipated inheritances, along with other assets that might increase in value significantly (like founder’s stock, a vacation residence, or vacant land in a fast growing area).

In the past, families have not always had such wide opportunities to explore Dynasty Trusts. Today, many states have enacted laws abolishing perpetuity type trusts, which had prevented trusts from lasting for multiple generations. While these laws still exist in some states, there is a trend toward less rigid application, or even outright removal of these rules. Admittedly, one reason for the growth in popularity of these trusts is that financial institutions stand to benefit from management fees associated with them. However, your clients and their family members benefit as well because wealth that’s consolidated and managed (as in the case of a Dynasty Trust) is more likely to be preserved and successfully passed from one generation to the next, versus wealth that is simply divided and distributed outright to children, as in the case with many estate plans.

Is a Dynasty Trust the Right Choice for You and Your Family?

Most people think of Dynasty Trusts are a planning strategy available or indicated only for the highest net worth families. And while they do require the help of a skilled estate planning attorney, who can navigate the complex interplay between state and federal laws, along with the dynamics of the family, such trusts can be an attractive option for your clients and their families. In fact, Dynasty Trusts offer an excellent method to pass along lifelong financial security to your loved ones for generations to come, in an asset protected manner.

The Levin Law Firm can work together with you in order to build the right type of trust to protect your clients and their families through whatever the future may bring. We can also ensure that the trust established for your clients fully complies with all applicable state and federal laws, and provides maximum protection for the legacy goals of your clients. 7sq

Dec 28 17

Tax Planning Opportunities to Take Before 2018

by Phil Levin, Esq.
tax opportunities

With 2017 coming to an end and sweeping tax reform legislation (Act) having been signed into law, some last-minute opportunities should be considered while the current law still applies. There are steps that taxpayers can take before the Act takes effect in January that could lower their tax bills for the 2018 tax season. Following are several suggestions on how to implement these strategies before the window of opportunity closes at the end of December.

Increase and Accelerate Deductions
Arguably, one of the most controversial provisions in the Act is the limitation on the deduction for state and local taxes (SALT). Under the Act, individuals cannot deduct more than $10,000 of combined property, income, and sales taxes. The obvious reaction would be to maximize the SALT deduction under current law by pre-paying now as much of next year’s taxes as is currently allowable. Anticipating that taxpayers may take advantage of this loophole, the Act provides that any amount paid in a taxable year beginning before January 1, 2018, for income taxes imposed for a taxable year beginning after December 31, 2017, are treated as having been paid on the last day of the taxable year for which the tax is imposed.

However, some taxpayers may have outstanding income tax bills for 2017, which should be paid before the end of the year and can be deducted for this year’s taxes. Additional estimated payments that might otherwise be due in April 2018 for 2017 state taxes could also be paid before the end of the year.

There is no such corresponding restriction applicable to pre-payment of property taxes. So, for example, winter property tax bills that would normally be paid in 2018, could be paid before the end of 2017.

Mortgage interest remains deductible under the Act, whereas interest on home equity loans would not be. Clients should consider paying off as much of their home equity loans as is practical while the deduction is still available under current law. In both instances, an early monthly payment that would otherwise be due in January could be made in December to increase the deductions available for the 2017 return.

Employees should pay as many unreimbursed expenses as possible before the end of December, since these deductions will disappear in January. The same applies for work-related moving expenses, which will no longer be deductible under the Act.

The deduction for professional fees, such as attorney and accountants’ fees, is also disappearing under the new law. Taxpayers should see if their advisors will accept early payment for anticipated services, so that the deduction can be taken in 2017 while it is still available.

Giving to charity is tricky. Although the charitable deduction remains in place under the Act, the lower income tax rates next year may make a charitable deduction more valuable for 2017 than for 2018. Clients may also consider setting up donor advised funds before the end of the year, which will allow them to maximize the charitable deduction, while preserving the right to determine how to donate the funds at a later time. Other charitable giving strategies, such as charitable remainder trusts, could also be considered, but setting up a trust may require more time than is available before the end of the year.

Although the foregoing are viable strategies that would maximize deductions for 2017 that are either limited or unavailable as of next year, they generally only make sense if a taxpayer itemizes deductions. While it is more likely that a taxpayer will itemize for 2017 when the standard deduction is relatively low, the much higher standard deduction as of 2018 (from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples, both indexed for inflation), will make itemizing less likely. So, things like the charitable, mortgage, and the limited SALT deductions, even though they will still be available next year, are less likely to be utilized in 2018 than in 2017. However, for taxpayers who still plan on itemizing next year, an analysis should be done to determine in which year the deductions that are still available under the Act and can be paid in either year will be most beneficial.

Businesses, also, should consider accelerating expenses for 2017, since they might prove more useful to offset the higher income tax rates under current law. However, a careful analysis must be made to see how the figures work out, because next year will allow for the immediate expensing of capital investments, as well as more beneficial depreciation.

Defer Income
While accelerating deductions before the end of the year is probably a good strategy for most taxpayers, the reverse is true for income. Considering the 2018 reduction in income tax rates, most taxpayers, individual and businesses alike, will likely benefit from deferring income until next year. This technique has generally already been implemented by those wishing to defer the payment of taxes on a portion of their income for another year. However, this might prove particularly beneficial in this end-of-year planning phase for those taxpayers expecting to see a drop in their tax rates next year.

Deferring income, however, may not make sense for families with three or more children. Personal exemptions have been eliminated as of 2018. So, families with three or more children will theoretically pay less in taxes on income earned in 2017 by utilizing the high number of personal exemptions available under current law, than with the increased standard deduction in 2018.

Although not an income deferral strategy, per se, taxpayers should also look closely at their IRAs before year-end. Roth recharacterization, which essentially provides taxpayers with the opportunity to undo a Roth conversion, will no longer be available as of 2018. Any conversion from a traditional IRA to a Roth IRA that is being considered before year-end should be scrutinized more carefully than before, as it cannot be undone under the new law.

The general rule of thumb is to increase and accelerate deductions, and to defer income. Since the tax rates are dropping as of next year, a deduction in 2017 to offset the higher current rates is more valuable than it will be next year. In addition, most itemized deductions have been eliminated, while others have been limited. Income should be deferred and taxed under the lower rates effective as of next year.

Although these are general principles, each taxpayer’s situation should be assessed to determine the most beneficial approach. There is very little time left to take advantage of these strategies. And especially now, during the holiday season, taxpayers want to spend time with their families, not worrying about taxes. But the effort of spending a few hours this week with your tax advisor could result in a significant savings on your tax bill next year.