The advantages of making a list of assets and debts

Have you ever considered writing down a list of all your assets (with account numbers, passwords, and so on), as well as debts and recurring payments?

Making such a list and putting it in a secure place can be a godsend if something ever happens to you and you become incapacitated, because your family will have a much easier time looking after your affairs.

In a recent article in the Wall Street Journal, a middle-class couple described the extraordinary difficulties they faced when the wife’s parents developed medical problems and could no longer handle their own finances. The couple had no idea what assets the parents owned, what insurance they had, where to find records, what bills needed to be paid, and so on. Handling the parents’ affairs became a nearly full-time investigative job. [Read more…]

Charitable donations from your IRA could save taxes

Congress has revived a law that lets you make charitable donations directly from your IRA, which might provide you with some significant tax advantages.

The “IRA charitable rollover” was discontinued at the end of 2014. But Congress has now resurrected it, made it permanent, and also made it retroactive to the beginning of 2015.

If you’re over the age of 70½, you’re required to take minimum distributions each year from your IRA, and you have to pay income tax on those distributions. But the “charitable rollover” law lets you transfer assets from your IRA to a charity, and whatever amount you transfer reduces the amount you’re required to withdraw. So if you’re required to withdraw $20,000 in 2016, but you instead donate $20,000 to charity, you don’t have to withdraw any funds for yourself, and you don’t have to pay any income tax. [Read more…]

‘Spendthrift trust’ gets divided at divorce

Even though a wealthy family put assets in a trust for their children in order to protect them from creditors, a child’s interest in the trust could be divided in a divorce, says the Massachusetts Appeals Court.

While this result is unusual, it goes to show that even a solid spendthrift trust might not be perfect if a creditor – in this case, a spouse – is sympathetic enough.

Curt Pfannenstiehl was a beneficiary of a family trust worth some $25 million. He and his wife Diane had a son with dyslexia and ADD and a daughter with Down syndrome. [Read more…]

Financial advisors have more responsibility to clients

Stockbrokers, financial planners and insurance agents who provide advice regarding IRAs and other retirement accounts will have new responsibilities toward clients, and the way they bill their clients may change, under new rules announced by the U.S. Labor Department.

Under the rules, advisors must now act in their clients’ best interests when they make recommendations. In the past, many advisors merely had to make recommendations that were “suitable” for a client, even if what they recommended wasn’t the best possible option.

In addition, advisors must now disclose if they have a conflict of interest (for instance, if the advisor is being paid by a third party to recommend a particular investment), and must adopt procedures to limit such conflicts. [Read more…]

New problem for some executors and heirs

Executors who have to file a federal estate tax return, and some heirs who receive assets from an estate that is subject to the federal estate tax, may be facing a significant new problem as a result of rules just issued by the IRS.

The problem only affects larger estates – generally those where the deceased person’s assets, large lifetime gifts, and life insurance proceeds total more than $5.45 million. But for those estates, it’s a serious issue.

The problem stems from a law passed by Congress last year. The law says that an executor who files an estate tax return must now also fill out a form – called Form 8971 – identifying all heirs to the IRS as well as the value of the assets to be distributed to them. Each heir must also be given a related form (called Schedule A) identifying the assets they will receive and their value. [Read more…]

Be careful if different people handle your finances and health care

It’s not uncommon for seniors to name one person in their power of attorney document to handle their finances if they become incapacitated, and to name someone else to make decisions for them in their health care proxy.

For instance, a senior might live with one child or be very close to him or her, and trust that child to make medical decisions – because the child is familiar with the senior’s day-to-day health issues. On the other hand, that child might be bad with finances, or another child might simply have a much more helpful financial background or a greater willingness to handle bills, taxes and investments.

That’s fine – as long as the two get along and agree on everything. A problem can arise, though, if the two ever disagree. That’s because a child making health care decisions might not be able to put them into effect unless the other child agrees to pay for them. [Read more…]

Social Security can be seized to pay debts – sometimes

If you don’t pay your debts, creditors can generally obtain a court order to garnish your wages. But what if your income comes from Social Security? In that case, the answer is a bit more complicated.

For most types of debts (including credit cards, medical bills, and personal loans), Social Security benefits cannot legally be garnished to pay them off. But how this actually works in practice can be tricky.

Suppose you receive $1,500 a month in Social Security, and have it directly deposited in your bank account. If a creditor tries to freeze your account, the bank must allow you access to any Social Security funds deposited within the last two months. So the bank would have to allow you access to $3,000 in your account. [Read more…]

Long-term care premiums dip for men, rise for women

On average, long-term care premiums are decreasing for men and increasing for women, according to a study by the American Association for Long-Term Care Insurance, an industry trade group.

For instance, a healthy 55-year-old man can expect to pay an average of $1,015 annually for a new policy offering $164,000 in long-term care benefits, which is down 4.2 percent from last year, according to the group.

But for a woman in the same situation, the average premium would be $1,490 – an increase of 7.2 percent over last year.   [Read more…]

Medicare now covers conversations about end-of-life care

Did you know that 40 percent of people over age 65 haven’t written down their wishes regarding life support and other end-of-life treatment? One reason for this may be that people haven’t had a conversation with their doctor about the options that are available.

In the past, Medicare didn’t cover these doctor-patient conversations – except during the patient’s initial “Welcome to Medicare” visit, a time when the topic might not seem very relevant.

Under new regulations, however, Medicare will cover these conversations at any time. [Read more…]

What you need to know if you’re an agent under a power of attorney

If someone has named you as an agent under a durable power of attorney, you’ll be allowed to handle that person’s finances. (The person who signs the power of attorney is known as the “principal”; you’ll be known as the agent or “attorney-in-fact.”) Here are answers to some questions you might have:

What are my duties?

You’re responsible for handling the principal’s financial affairs. Generally, you can step into his or her shoes and take whatever investment and spending measures the principal would ordinarily take. This may include opening bank accounts, withdrawing funds, trading stocks, paying bills, and cashing checks. Read the power of attorney document carefully; it might give you other powers (such as making gifts), or place certain limits on your powers. Note that any financial steps you take must be consistent with your role as a “fiduciary.” [Read more…]

The Key to Victory

David Beliveau’s expert testimony on trust law and Florida fiduciary law was the key to a trial victory for my client.  I represented a Massachusetts trustee who was administering a Florida trust.  The lifetime beneficiary of that trust filed suit against my client who was a highly regarded trust attorney.  The case was complicated as it covered myriad aspects of Massachusetts and Florida trust law.  As the case headed towards trial, I realized that I would need an expert witness to testify on trust law and fiduciary law.  Attorney Beliveau’s testimony at trial was clear, concise and informative.  His ability to testify knowledgeably and confidently was the key to victory after a seven day superior court trial and having the claims against my client dismissed.  I would highly recommend Attorney Beliveau to any attorney in need of an expert witness on trust law or Florida fiduciary law

~Leonard A. Frisoli, Esq.