Category Archives for "Financial"

The Sandwich Generation

For many Americans, the pressures of adjusting to the “new normal” extend far beyond personal responsibility.  The term “Sandwich Generation” was coined in the 1980s to describe the growing number of people in their 40s or 50s who are raising young or teenaged children, and at the same time serving as caregivers to their aging parents.  Members of the Sandwich Generation are the ones that children and parents rely on to handle all problems, from appointments with the pediatrician to appointments with the Alzheimer’s specialist, from finding a babysitter to finding a certified nursing assistant.

Many of those in the Sandwich Generation work full time or part time jobs, are responsible for maintaining a household, and deal with their caregiving duties on top of everything else.  Their to-do lists can be overwhelming, and they do their best to manage it all.

There is one responsibility, though,  that many Sandwich Generation members overlook: putting a plan in place to provide for their children and parents if something happened and the one who handles it all isn’t there to handle it anymore.

Too many people have no estate plan at all, and most who do might have a plan that creates a trust for their young children, but says nothing about Mom or Dad.  If you are responsible for caring for an aging parent, what would happen to them if you died?  If you are providing for them financially, shouldn’t you have an estate plan that makes sure they are comfortable in their old age?  If your parent is living with you, shouldn’t you make sure they’d still have a place to live if you weren’t there anymore?

Some parents do have enough financial resources to provide for themselves, but many are living on Social Security and maybe a small pension, and rely on their children to help cover their expenses.  If a child dies without a plan to provide for the parent, what happens?

Sandwich Generation members need to make sure that all the things they are doing for their children and their parents could still be done even if they are no longer there.

If you’re looking for an expert in helping you plan and protect your children and your parents, then we invite you to contact our office and schedule an appointment today. We can help develop the right estate plan for you and your needs to make sure you are able to take care of all your loved ones.

Protect IRA

Protecting a Vulnerable IRA Beneficiary

Most IRA owners want the person they’ve named as IRA beneficiary to delay the payment of income taxes for as long as possible. For a vulnerable IRA beneficiary, there is a secondary goal of passing the IRA account in a way that protects the income tax deferral, but also ensures the IRA itself will not be misspent.

If the individual you’ve named as beneficiary of your IRA would not have the ability to make good financial decisions because of dementia, other health issues, inexperience, or just a history of poor money management, leaving outright control of the IRA to that beneficiary does not make sense.

A spouse can treat an inherited IRA like their own retirement account, and roll it over into a new or existing IRA, or leave it as an inherited IRA. Either option allows continued income tax deferral. If the spouse didn’t follow the rules on a timely basis, the benefits of the income tax deferral would be in jeopardy.

The same tax concern applies to non-spouse beneficiaries who can elect to take required minimum distributions over their life expectancy.  Incapacity or poor decision making would put income tax deferral at risk.

For many retirees, their IRA is a significant part of their net worth. Why leave something you’ve worked a lifetime to accumulate to a beneficiary who would not understand the importance of income tax deferral, or be able to preserve and protect the IRA?

The way to protect the income tax deferral and protect the IRA itself is to name a qualified trust for the vulnerable beneficiary as the beneficiary of the IRA.  A trust that meets the requirements of a “designated beneficiary” receives the same income tax deferral as if the individual was named as beneficiary, and a trust provides protection against creditors and predators. The Trustee would make the decisions regarding income tax deferral and investment choices, and would distribute appropriate amounts for the beneficiary’s needs either to the beneficiary, or if the beneficiary would not be capable of paying bills, pay them directly from the trust.

Do you need to update your estate planning to protect your beneficiaries? Reach out to schedule an appointment with our expert Estate Planning Attorneys.  Call us at (770) 817-4999 or click here to send us a message.

SECURE Act

The SECURE Act: How It Will Affect You and the Beneficiaries of Your Retirement Accounts

The SECURE Act, which was effective January 1, 2020, is the most impactful legislation affecting retirement accounts in decades.

The SECURE Act has some positive changes: it increases the required beginning date (RBD) for required minimum distributions (RMDs) from your individual retirement accounts from 70 ½ to 72, and it eliminates the age restriction for contributions to qualified retirement accounts.

The SECURE Act also has a very significant change that will impact your retirement account beneficiaries: it requires most designated beneficiaries to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death.

There are exceptions to the ten-year withdrawal rule: spouses, beneficiaries who are not more than ten years younger than the account owner, the account owner’s children who have not reached the “age of majority,” disabled individuals, and chronically ill individuals.

Under the old law, beneficiaries of inherited retirement accounts could take distributions over their individual life expectancy. Under the SECURE Act, the shorter ten-year time frame for taking distributions will result in the acceleration of income tax due, possibly causing your beneficiaries to be bumped into a higher income tax bracket, and receiving less from your estate than you may have originally anticipated. 

Your estate planning goals likely include more than just tax considerations. You might be concerned with protecting a beneficiary’s inheritance from their creditors, future lawsuits, and a divorcing spouse. In order to protect your hard-earned retirement account and the ones you love, a trust is a great tool to provide continued protection of a beneficiary’s inheritance.

Although this new law may be changing the way we think about retirement accounts, there are still some tools to minimize the impact of the accelerated income tax:

If you are charitably inclined, now may be the perfect time to review your planning and use your retirement account to fulfill these charitable desires, while providing a life time income to your beneficiaries through a Charitable Remainder Trust. 

In past years when many estates were impacted by federal estate tax, a common technique was to purchase life insurance through an irrevocable trust to fund the tax payment. This technique can now be used to replace the inheritance lost to income tax acceleration.

We will be holding a presentation in our office on the impact of the SECURE ACT for our Maintenance Plan clients.  If you would like information on joining our Maintenance Plan, please call our office at (770) 817-4999.

If you would like to schedule an appointment with one of our attorneys to review the impact of the SECURE Act on your beneficiaries, please call (770) 817-4999 to schedule that appointment.

Power of Attorney for Dad

You Are Named As Dad’s Power of Attorney, What Does That Mean?

As our population ages, more and more adult children find themselves having to help a parent or other elderly relative deal with legal and financial matters. To legally authorize that help, the senior should have a valid Power of Attorney.

The Georgia Power of Attorney statutory form explains that when someone accepts authority under a Power of Attorney, a special legal relationship is created between the agent and the person signing the document, who is called the principal. That relationship imposes legal duties on the agent.

If the agent knows what the principal’s expectations are for the agent in dealing with the principal’s affairs, the agent is supposed to carry out those expectations. If the principal has not communicated any expectations, the agent is supposed to act in the principal’s best interest and in good faith.

An important rule in acting as an agent is the rule against self-dealing. Don’t benefit yourself to the detriment of the principal. Avoid conflicts that impair your ability to act in the principal’s best interest.

Keep careful records of all receipts, disbursements and transactions.

If it becomes your responsibility to manage the principal’s investments, the principal’s financial advisor could be a helpful resource. If there is no financial advisor and you don’t have experience with investments, see if the Power of Attorney authorizes you to retain professional help.

If you are not the principal’s health care agent, communicate with the health care agent to make sure the principal is receiving proper care, and that you and the health care agent are in agreement on the long term care plan, based on expenses the principal can afford.

When you are signing on behalf of the principal, be sure to disclose your identity as agent by signing the principal’s name, and your name as agent.

Georgia law authorizes an agent to be reimbursed for reasonable expenses. For the agent to receive compensation, the Power of Attorney must specifically authorize compensation.

If you have questions or concerns regarding your responsibilities, you should consult with the attorney who prepared the Power of Attorney.  If you need help in creating a Power of Attorney or have more questions about how to properly create the right Estate Plan for your parent or yourself, please click here to contact.

Protect IRA Taxes

Protect Your IRA For Your Young Beneficiaries

Because the income tax on an IRA is deferred, a beneficiary who inherits an IRA is required to either:

  • withdraw all the funds within 5 years of inheriting and pay the income tax due on the entire account; or
  • take annual required minimum distributions (“RMD”) and pay income tax only on the annual distributions (“stretching” an IRA).

The reality is that most young people who inherit IRAs aren’t thinking of their future, so they withdraw all the funds and pay income tax on the entire account. All the benefits of income tax deferral are lost.

If your beneficiary is under 18, you’ve added more costs and complications to the mix. A minor child can’t legally manage assets, so a Conservator would have to be appointed by the Probate Court. Unless there are other funds available to pay the attorneys fees, court costs and the premium for the required surety bond, at least some of the IRA would have to be liquidated, resulting in additional income tax plus the 10% penalty. At age 18, the child becomes a legal adult, takes control, and probably chooses to liquidate the balance of the IRA. That means the entire IRA is subjected to income tax and the 10% penalty, on top of the court costs, legal fees and bond premium that were already paid for the Conservatorship.

Even if a beneficiary over age 18 is tax smart, and chooses to stretch the IRA and take only the RMD, the IRA is still at risk. In 2014, the US Supreme Court ruled that an inherited IRA does not have creditor protection. That means the entire IRA would still be at risk to the beneficiary’s creditors or an ex spouse in a divorce.

There is a way you can protect the tax deferral, avoid the costs of a Conservatorship, and provide creditor protection for your young beneficiaries. A trust with the right provisions allows the RMD stretch, avoids a Conservatorship, and protects the account from creditors and divorce.

Not sure exactly what you need for you and your family?  Does a trust even make sense for your situation?  Reach out to schedule an appointment with our expert Estate Planning Attorneys.  Call us at (770) 817-4999 or click here to send us a message.

Help Your Executor Out

Help Your Executor Out

When putting together your estate plan, you need to choose an Executor, the person responsible for administering your estate. Once you’ve decided on who that should be, there are things you can do to help your Executor out.

Prepare a list of assets, including real estate, bank and investment accounts, insurance and retirement accounts. Include account numbers and contact information. Years ago, if an executor couldn’t find account statements, it might take a month or two of waiting for the statements to show up in the mail. Hard copy statements sent by regular mail are becoming more and more rare. If your asset and account information is stored online, how will your Executor find it?

You may not want to share information with your Executor now, but you can still assemble it, and let your executor know where to find it. Whether you use a password manager, or have your own system for storing and updating passwords, your executor is going to need your user names and passwords. While it is important to keep such information secure, it is also important not to keep it so secure that the person you’ve chosen to carry out your estate plan can’t get access to the information needed to do the job.

Another list to prepare is people to contact. This includes your accountant, your attorney, and your insurance agent. It also includes your next of kin. To probate a Will in Georgia, the Executor has to provide the Probate Court with the names and addresses of your next of kin. If you don’t have a spouse, children or grandchildren, that list could include living parents, siblings, or nieces and nephews if a sibling is deceased. Even if you haven’t had contact with someone on that list for years, the Executor will still have to track that person down.

Serving as an Executor is a job that requires time and effort. You can help your Executor out by making sure the information needed to do that job is easy to find.

If it’s time for you to make an update to your estate plan, or you are not even sure where to begin, click here to schedule a time to come and meet with our experts who can support you through the entire process.

Georgia’s New Power of Attorney Law

A Power of Attorney is a legal document that names another person as agent to handle financial and business affairs for the person who signed the Power of Attorney.  On July 1, 2017, Georgia implemented a new law on Powers of Attorney that should make it easier for families to use a Power of Attorney when needed.

Under the old law, banks and financial institutions often refused to accept a Power of Attorney because  they said it was too old.  That caused hardship for many families.  It was a common occurrence for a parent to sign a Power of Attorney naming a child as agent, but when the child tried to use it several years later because the parent had dementia, the bank refused to honor the document. That meant going above local bank managers to higher ups or even hiring an attorney to argue with the bank.  Sometimes the family ended up having to go to court to file for Guardianship and Conservatorship, which was what having the Power of Attorney was supposed to prevent.

The new Power of Attorney law says that a Power of Attorney can’t be rejected simply because time has passed since it was signed.  There are methods to establish that it is still a valid document.  If a bank still refuses to accept a Power of Attorney after the steps outlined in the new law to prove its validity are followed, a court can order them to accept it and to pay for the costs of  having to file that court action, as well as damages.

This is great news for families, because they can now have confidence that a Power of Attorney using the new form, signed after July 1, 2017, will work when it is needed.  Because the new law only applies to Powers of Attorney that are signed after July 1, 2017, and the old law will still apply to Powers of Attorney signed before that date, people with old Powers of Attorney should be sure to update them using the new form.

If you want to make sure that you are secured with the right Power of Attorney with the new law change, then make sure and contact us today.  We will help you update your Power of Attorney so it will be effective!

Is a power attorney of attorney enough?

Is A Power Of Attorney Enough?

A Power of Attorney is a legal document giving someone, known as the “agent”, the authority to handle financial and legal matters for the person who creates the Power of Attorney, called the “principal”.  A Power of Attorney can be limited: an elderly mother gives her son Limited Power of Attorney to handle the sale of her house.  A Power of Attorney can be general, giving the agent broad authority to handle all financial and legal matters.

A Power of Attorney is an important part of an estate plan, but unfortunately, families are being frustrated trying to use them.  Banks and financial institutions will often refuse to honor a Power of Attorney.  They may reject it because it’s too old. There’s no way of knowing how old is too old. A financial institution recently rejected a Power of Attorney that was thirteen months old. Very commonly, they insist that their customer sign a new Power of Attorney using the institution’s own Power of Attorney form.

Families usually don’t try to use a Power of Attorney until the principal is no longer able to manage, and at that point, may be incompetent to sign legal forms.  What happens if the bank says the Power of Attorney is too old, or they simply won’t accept one that isn’t on their own form, but the principal isn’t legally competent to sign a new one?

Sometimes it requires going above local managers to higher-ups, and sometimes it requires the intervention of an attorney.

It is wise these days to be proactive, and make sure that the bank or brokerage firm will honor the Power of Attorney while the principal still has capacity.  That can be daunting if the principal has accounts at multiple institutions.

If the principal is elderly, or if there are signs of dementia, another approach is to include a Trust in the estate plan, rather than relying on a Power of Attorney.  A valid Trust will be accepted no matter how old it is, and the financial institution isn’t going to have its own form for a Trust.

Are you wondering what is exactly right for you and your needs?  Attend one of our Free Workshops to educate yourself on how you can protect your stuff in 3 easy steps.  We invite you to register today and take the first step in knowing the right documents you need to protect you and your loved ones.