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Jan 1 20

Revocable Living Trusts – Still One of the Best Estate Planning Strategies

by Phil Levin, Esq.
IRA

Your clients trust you with their financial future and the legacy they want to leave behind. They rely on you to anticipate challenges, foresee trouble, and take preventative measures. It is up to the trusted advisor to know what problems are likely to arise and have solutions ready to help avoid conflict in the family, waste of resources, and other common pitfalls.

One useful tool to keep assets safe and to ensure they are distributed in the way your client wants is through the use of a revocable living trust.

What is a Revocable Living Trust?

A revocable living Trust (RLT), sometimes called a revocable trust or living trust, is an alternative to a will. It’s a document that instructs a trustee on how to manage the client’s assets during the client’s lifetime and how to manage or distribute the assets upon the client’s incapacity and death. Diverse assets such as life insurance policies, real estate holdings (including the client’s personal residence), bank accounts, and investments can be managed with an RLT.

An RLT allows a client to name him or herself as the initial trustee and to name a successor trustee in the event that the client becomes incapacitated or dies. By being named trustee, the client retains full control and also retains the benefit of his or her assets.

In addition to serving as the trustee, the client has the ability to alter the trust as he or she sees fit, to add or remove beneficiaries, and use the assets as he or she wishes. Because the assets in an RLT are still under the control of the client, he or she will pay taxes on any income within the trust accordingly.

RLTs Avoid Probate

One major benefit of using an RLT as an estate planning strategy is that it avoids probate. This is accomplished by ensuring that all assets that otherwise would have been in your client’s name at death are funded into the trust. Then, when the client dies, there are no assets in the name of the client and no need for a probate. The terms of the trust will dictate what happens to the assets, not a court or state law.

Probate can be a long and expensive process and can restrict beneficiaries’ access to assets from a few months up to several years. Estates whose assets span more than one state could ened up going through probate in each state. Why put beneficiaries through this process when it can be avoided simply by creating an RLT?

Protecting Inheritances

boatPassing financial security on to the next generation is a popular goal for many clients. However, inheritances can be vulnerable to many life events and changes a beneficiary might experience. Assets can be spent too quickly, devalued, lost in a divorce, seized by creditors, or become vulnerable in a lawsuit.

A properly drafted RLT allows clients to put restrictions in place to ensure their hard-earned money continues to benefit the next generation. Whether it is the use of a spendthrift provision or no-contest clause, or merely establishing an age that a beneficiary has to attain before receiving any distribution, the client is in control.

Providing Privacy

If a client has a traditional will, the terms in the will become public record as soon as the probate is opened. With an RLT, by contrast, assets are distributed privately. Without court supervision, there is no need for the RLT to be filed with the probate court. In turn, the transactions involved in administering the trust are not entered into the public record and cannot be searched, thous providing providing privacy to both the client and the beneficiaries.

What Could Go Wrong?

Most clients have a clear idea as to how they want their estate to be divided, but without proper estate planning, a lot can go wrong. Lack of foresight in estate planning will always come to bear sooner or later. Below are some common shortcuts and their consequences- and how an RLT can help avoid these headaches.

A client’s child is added directly to their bank account. This may seem like a straightforward way of designating a recipient for an asset, but what happens if the child incurs significant debt? The bank account will be seized by creditors, and the child will not see a penny. There is also the added risk that the creditor may decide to take the money as soon as the child is added to the account, despite the fact that the child never made any contributions to the account, and the client is still alive. The creditor will deem the child to be the owner of the account and can use those funds to satisfy the outstanding debt. By contrast, if the bank account is funding into an RLT, it can be protected from the beneficiary’s creditors during the client’s life and after their death.

A client leaves their home to their child through the use of a transfer-on-death (TOD) deed. The client intends for the child to receive a certain share of the estate by deeding them the home upon the client’s death. What happens if the home is sold before the client passes away? Instead of an equal share in the estate, the child will receive nothing. By funding all assets into an RLT and designating shares for each beneficiary to receive, you will not have to worry about individual assets. In this instance, if the home is an asset of the trust and is sold, the proceeds will be deposited into a bank account owned by the trust, so even if the child does not get the house, they can still get the value of the house as part of their share.
· A client names a beneficiary directly in their life insurance policy. Again, in this case, there is no protection against the beneficiary’s creditors. And what happens if the policy premiums are not paid? If the policy lapses, there will be no asset for the beneficiary to inherit. This too can be avoided with the care and specificity of an RLT. As mentioned before, having the proceeds payable to the RLT means that the client can stipulate how the funds will be distributed to beneficiary instead of an outright distribution. Also, if the policy lapses, as a beneficiary of the trust, he or she will still receive a share of the overall trust assets.

Honoring the Client’s Wishes

As we have seen, any of these events could disrupt the client’s original intent of dividing assets as desired. An RLT is a much safer and simpler option. Instead of having to worry about how separate assets are titled and making sure beneficiary designations and account owners are updated every time the client changes his or her mind about who is to receive them, an RLT allows for one set of instructions that control everything.

With assets being held in a trust and distributed over a period of time, an RLT encourages the continued management of the estate by qualified financial advisors. If the assets are allowed to be distributed outright, it is highly likely that the beneficiaries will cash out.

Your clients depend on you to help them plan and make sound decisions about their financial health. Working together, we can help develop a comprehensive financial and estate plan that will help build financial stability for today and tomorrow. Do not hesitate to reach out for more information about how we can collaborate to best serve our clients.

When creating an estate plan, you want to make sure that your own needs are met in the form of a healthcare directive and power of attorney. These documents ensure that your financial and medical needs will be taken care of according to your specifications should something happen to you to prevent you from making those decisions yourself.

Your Kids

If you have minor children, even teenagers, you will want to have some type of plan laid out for guardianship in case something happens to you. Make sure that you select guardians who not only have your overall values, but who will also keep your kids’ day to day life stable and secure. This a big decision, so don’t be afraid to take a lot of time to think about who you would want to raise your kids.

This quick list of things to think about when estate planning will help you get some idea of what, out of your giant pile of stuff, is important and should stand out. Talk to your estate planner if you’re feeling overwhelmed and need help, as they can assist you in picking out what you absolutely shouldn’t forget to cover, whether you’re writing a living trust, gifting property, or writing a will.

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Nov 1 19

3 Things to Do After a Scary Health Diagnosis

by Phil Levin, Esq.
doctor visit

A scary health diagnosis can be emotionally and logistically challenging for many reasons. For instance, how can you take care of your family if you’re physically incapacitated? In addition to working closely with your medical providers, consider these three legal tips:

1.Review your estate plan with your attorney to make sure it is up to date.
If you have an estate plan, review it. Maybe one of your heirs got married or died. Maybe you’d like to add or remove people from your plan. Or perhaps your personal representative is no longer capable of handling your estate. Make sure you have designated alternates for your personal representative, legal guardian, or trustee.
You should also review your estate’s assets. If you live in one of the states that allows for the inclusion of a personal property memorandum, you may be able to revise the distribution of personal property by simply revising your list without amending your plan. If you maintain a separate record of account information and essential documents, take steps to update this as well.

2.Consider passing control to your successor trustee/agent so you can focus on your health.
If you find yourself overwhelmed by having to split your focus between managing your health and managing day-to-day responsibilities, consider relying on your successor trustee. By granting your successor trustee the authority to manage the assets in your trust, you can alleviate significant stress and save time. Remember that you trusted this person enough to manage your assets in your absence, you should be able to trust them to manage your assets while you are alive. Keep in mind that you can always take control back if you want in the future.
If you do not have a trust, but other financial matters are consuming your time, consider appointing an agent under a financial power of attorney to assist with managing your finances.

3.Make sure your current assets are properly coordinated with your estate plan and/or funded trust.
Evaluate your assets to make sure nothing is forgotten. Consult with your estate planning attorney and tax professional to make sure you’re avoiding the common mistake of assets not being properly titled. In order for the trust to be funded, the assets need to be titled in the name of the trust. Also, review any beneficiary designations to ensure they match up with your overall estate plan. Because the distribution will be made according to who is listed on the beneficiary designation form, you want to make sure that this does not conflict with your estate plan.
Managing your health should be your top priority. Now is the time to lean on those you trust. If you need any assistance with ensuring your affairs are in order, please contact us to arrange a meeting.

Jul 3 19

What Does a Healthcare Agent Do and How Do I Choose?

by Phil Levin, Esq.
Man asking questions

Today, I want to tackle two very important questions I receive often: “What is a Healthcare Agent?” and “How do I choose the right person for the job?”
Yet, before I answer these questions, let me start by saying that as an estate planning attorney, I work with families all the time who are literally barred from making medical decisions on their loved one’s behalf because they didn’t have the proper documentation in place when an accident or incapacity occurred.
It’s a devastating situation and, unfortunately, one we are seeing more and more of as strict privacy and HIPAA laws are put into place.
For that reason, I always advise every adult (including 18-year-olds who can no longer rely on mom or dad for help!) to educate themselves on this important subject and ultimately put a healthcare directive in place so someone always has legal permission to act on your behalf in an emergency.
What Does a Healthcare Agent Do?
If you’re not familiar with the role of a healthcare agent, this is essentially the person who will carry out your wishes regarding things like life-support, resuscitation, and feeding tubes if you are incapacitated and unable to speak for yourself. Your healthcare agent will also handle the day-to-day decision making regarding your medical care including (but not limited to):
Medication administration
Blood and blood products
Diagnostic tests
Dialysis
Surgery
Long-term care (e.g., nursing home assistance, home healthcare)
Hiring and firing medical personnel
Determining who can (and cannot) visit you during your hospital stay
Getting court authorization to obtain or withhold treatment if your wishes are not honored by a doctor or other healthcare professionals
How to Choose a Healthcare Agent
The choice of a healthcare agent requires very serious consideration. While it may initially seem like an easy choice, this is actually one of the most common areas people get stuck on when trying to complete their estate plan.
Remember, your healthcare agent could be called on to make some of the most difficult and heart-wrenching decisions they’ve ever faced in their life. The job could also be time-consuming, stressful, and emotionally draining depending on the nature of the emergency.
For these reasons, I would advise you to really take your time and thoroughly evaluate all possible candidates for the job. Here are the top three qualifications I ask my clients to consider when narrowing their search:
1. Location — In a true medical emergency, your healthcare agent may be called upon to make round-the-clock decisions until you are stable. If that occurs, you’ll want someone who lives close enough to meet with doctors and visit the hospital whenever necessary (which of course may also mean excluding people who travel a lot on business or have demanding jobs).
2. Medical Understanding — While your healthcare agent certainly doesn’t need a Ph.D. in science, you do want someone who is capable of understanding your medical condition and the choices presented to him or her by the doctors overseeing your care. That may also require you to weed out candidates who are overly squeamish or emotional about medical subjects to ensure the best decisions are made on your behalf.
3. Loyalty — The person you choose as healthcare agent should feel a sense of loyalty to you and your wishes to ensure your preferences are fully carried out in the face of emotional stress, personal disagreement, or pressure from other family members to make decisions contrary to those you have specified.
Of course, if after going through this brief checklist you still have questions about how to choose a healthcare agent, what an agent can do for you, or even how to limit the scope of your agent’s power during a medical emergency, I invite you to call our office to schedule a planning session. During this session, we can discuss your options and make sure you truly have the right documentation in place to protect your medical wishes if the unthinkable occurs.

Jun 10 19

5 Estate Planning Mistakes to Avoid

by Phil Levin, Esq.
Estate Planning

Unfortunately, most Americans are indifferent to estate planning or completely ignore the importance of having an estate plan. However, when it comes to estate planning, there are some mistakes that you cannot afford to make.

Below are five (5) of the most critical estate planning mistakes:

1. Not Having any Estate Plan. This is the biggest mistake, especially among professionals and young parents who assume they do not need one. Passing away intestate – or without an estate plan – will assure local state laws determine receives all of your assets in the event of your passing. In addition, a Judge will decide who cares for all of your minor children.

2. Failing to make Proper Beneficiary Designations.This typically happens by not updating beneficiary designations on your life insurance, annuities, and retirement plan accounts. In fact, many clients are surprised to learn that beneficiary designations supersede or override instructions left in their Last Will and Testament or under the terms of a Trust Agreement.

3. Not Reviewing Legal Documents Regularly. An estate plan should be reviewed whenever there are significant personal, financial, for tax law changes, and especially upon marriage, divorce, death of a loved one, receipt of an inheritance, upon birth of a child, relocation to a new state. Such updates to your estate plan can ensure that you and your family are protected in the future because of changes in circumstances, which often change over time.

4. Not Funding Your Living Trust. A properly designed Living Trust has no operative effect if the Trust is not funded during your life. These type of Trusts must be funded to operate correctly. If you pass away and leave an unfunded Trust, there may be significant costs, delays, and publicity which occur due to the need to raise a probate proceeding with the Court – which is what you were trying to avoid by creating a Living Trust in the first place. As a result, your estate would need to go through the probate process and any Trust you desired to establish for specific beneficiaries would need to be funded after your death.

5. Giving All of Your Property Outright to Beneficiaries Too Soon. As much as 75% of inheritances are squandered away within 12 – 18 months after being received. Therefore, in order to protect and preserve your assets for your family, you may wish to establish a Trust so that your beneficiaries receive their inheritance over a period of time, or over the course of the beneficiary’s lifetime, to reduce the risk of their inheritance being exposed to the potential claims of creditors, predators, tax liens, and bankruptcy.

You can prevent making these five (5) estate planning mistakes by working together with a competent and experienced estate planning attorney to establish a comprehensive estate plan.

We can work together with you to design and implement a well-crafted estate plan in order to protect you during your life, and ensure that you leave your family a lasting legacy.

May 8 19

How Much Will You Receive From Social Security?

by Phil Levin, Esq.
socialsecuritycards

It can be difficult to predict how much you will receive from Social Security, especially if you are more than a few years away from retirement. But familiarizing yourself with how your benefit will be calculated can help you budget for retirement and even boost your future Social Security payments.

Here’s how to estimate how much you will get from Social Security in retirement.

Consider the averages. The average Social Security benefit was $1,413.37 per month in June 2018. The maximum possible Social Security benefit for someone who retires at full retirement age is $2,788 in 2018. However, a worker would need to earn the maximum taxable amount, currently $128,400 for 2018, over a 35-year career to get this Social Security payment.

Familiarize yourself with the calculation. Social Security payments are calculated using the 35 highest earning years of your career, and are adjusted for inflation. If you work for more than 35 years, your lowest earning years are dropped from the calculation, which results in a higher payment. Those who don’t work for 35 years have zeros averaged into the Social Security calculation and get smaller payments.

Factor in your retirement age. Your age when you start Social Security plays a big role in your payment amount. Your monthly Social Security benefit is reduced if you claim payments before your full retirement age, which is typically age 66 or 67, depending on your birth year. You can boost your monthly payments for each month you delay claiming between your full retirement age and age 70.

Subtract Medicare premiums. Many retirees have their Medicare Part B premiums deducted from their Social Security checks. The standard Medicare Part B premium is $134 per month in 2018, although some retirees pay a different amount. Medicare Part B payments are prohibited by law from decreasing Social Security payments for existing beneficiaries, so a Medicare Part B premium hike can’t be more than your annual Social Security cost-of-living adjustment.

Factor in income tax withholding. Many retirees have to pay income tax on their Social Security payments, especially if they have other sources of retirement income.

Create a My Social Security account. You can get a personalized estimate of your future Social Security benefits at various claiming ages by creating a my Social Security account. These estimates are based on your actual earning history and tend to be most accurate for those approaching retirement age. Your estimates might change from year to year, especially if you have a significant salary change or gaps in your earnings history.

 At The Levin Law Firm, we do not just draft documents; we ensure that you make informed and empowered decisions for yourself and the people you love.It can be difficult to predict how much you will receive from Social Security, especially if you are more than a few years away from retirement. But familiarizing yourself with how your benefit will be calculated can help you budget for retirement and even boost your future Social Security payments.

Here’s how to estimate how much you will get from Social Security in retirement.

Consider the averages. The average Social Security benefit was $1,413.37 per month in June 2018. The maximum possible Social Security benefit for someone who retires at full retirement age is $2,788 in 2018. However, a worker would need to earn the maximum taxable amount, currently $128,400 for 2018, over a 35-year career to get this Social Security payment.

Familiarize yourself with the calculation. Social Security payments are calculated using the 35 highest earning years of your career, and are adjusted for inflation. If you work for more than 35 years, your lowest earning years are dropped from the calculation, which results in a higher payment. Those who don’t work for 35 years have zeros averaged into the Social Security calculation and get smaller payments.

Factor in your retirement age. Your age when you start Social Security plays a big role in your payment amount. Your monthly Social Security benefit is reduced if you claim payments before your full retirement age, which is typically age 66 or 67, depending on your birth year. You can boost your monthly payments for each month you delay claiming between your full retirement age and age 70.

Subtract Medicare premiums. Many retirees have their Medicare Part B premiums deducted from their Social Security checks. The standard Medicare Part B premium is $134 per month in 2018, although some retirees pay a different amount. Medicare Part B payments are prohibited by law from decreasing Social Security payments for existing beneficiaries, so a Medicare Part B premium hike can’t be more than your annual Social Security cost-of-living adjustment.

Factor in income tax withholding. Many retirees have to pay income tax on their Social Security payments, especially if they have other sources of retirement income.

Create a My Social Security account. You can get a personalized estimate of your future Social Security benefits at various claiming ages by creating a my Social Security account. These estimates are based on your actual earning history and tend to be most accurate for those approaching retirement age. Your estimates might change from year to year, especially if you have a significant salary change or gaps in your earnings history.

 At The Levin Law Firm, we do not just draft documents; we ensure that you make informed and empowered decisions for yourself and the people you love.It can be difficult to predict how much you will receive from Social Security, especially if you are more than a few years away from retirement. But familiarizing yourself with how your benefit will be calculated can help you budget for retirement and even boost your future Social Security payments.

Here’s how to estimate how much you will get from Social Security in retirement.

Consider the averages. The average Social Security benefit was $1,413.37 per month in June 2018. The maximum possible Social Security benefit for someone who retires at full retirement age is $2,788 in 2018. However, a worker would need to earn the maximum taxable amount, currently $128,400 for 2018, over a 35-year career to get this Social Security payment.

Familiarize yourself with the calculation. Social Security payments are calculated using the 35 highest earning years of your career, and are adjusted for inflation. If you work for more than 35 years, your lowest earning years are dropped from the calculation, which results in a higher payment. Those who don’t work for 35 years have zeros averaged into the Social Security calculation and get smaller payments.

Factor in your retirement age. Your age when you start Social Security plays a big role in your payment amount. Your monthly Social Security benefit is reduced if you claim payments before your full retirement age, which is typically age 66 or 67, depending on your birth year. You can boost your monthly payments for each month you delay claiming between your full retirement age and age 70.

Subtract Medicare premiums. Many retirees have their Medicare Part B premiums deducted from their Social Security checks. The standard Medicare Part B premium is $134 per month in 2018, although some retirees pay a different amount. Medicare Part B payments are prohibited by law from decreasing Social Security payments for existing beneficiaries, so a Medicare Part B premium hike can’t be more than your annual Social Security cost-of-living adjustment.

Factor in income tax withholding. Many retirees have to pay income tax on their Social Security payments, especially if they have other sources of retirement income.

Create a My Social Security account. You can get a personalized estimate of your future Social Security benefits at various claiming ages by creating a my Social Security account. These estimates are based on your actual earning history and tend to be most accurate for those approaching retirement age. Your estimates might change from year to year, especially if you have a significant salary change or gaps in your earnings history.

 At The Levin Law Firm, we do not just draft documents; we ensure that you make informed and empowered decisions for yourself and the people you love.