Philadelphia PA Estate Planning Blog

Read the recent article in The Legal Intelligencer about do-it-yourself planning. Law firms are increasingly facing competition from online services that offer do-it-yourself wills and estate plans. However, as Jeremy and other attorneys point out, you are doing yourself and family a disservice by using these services. What really matters is the consultation to ensure that your estate plan is accurate and reflects your true wishes and goals.

Read the article here.

A good legacy plan one made with the following ingredients:

• Clarity - Making sure your instructions and wishes are clear is imperative.
• Customized Plan - Your legacy plan must be crafted by your unique circumstances, personality, portfolio, morals, and more. 
• Consultation - You should consult with a qualified attorney that asks many questions about you, your family and your goals.
• Communication - An open dialogue with your family about your plan is crucial to its success. It makes little sense to me to surprise your loved ones upon your death. 

Many options exist today for how to complete your estate plan. You can do it yourself, hire a professional, or decide to go with the government's plan (intestacy). Here are five reasons why you want to make sure you have a professional estate plan:

1. Small Business: With over 30 million small businesses in America, you may have a business yourself, be involved in one, or will be inheriting one. If you own a small business, it is essential to plan your estate carefully. Not only do you need a well-designed personal estate plan, but you also need a business succession plan and other planning needs. Your personal and business plan should be designed together to ensure they work cohesively.
   
   
2. Complex Families: Families are becoming more complex. Second and third marriages, adoptions, non-traditional marriage, domestic partnerships and more create the need for customized planning. With a twist in every family, it is essential that you work with a professional who can design a plan that fits your needs and circumstances.
   
   
3. Troublesome Heirs: Your loved ones, including your kids and grandkids, may have personal struggles and challenges. You must carefully design your estate plan so that you help them preserve what you've worked so hard for. Examples of issues include divorce, creditor problems, lawsuits, bankruptcy, spendthrift habits, addiction and more. Leaving assets through a simple will without a trust can spell trouble for these beneficiaries. Finally, you never know what will happen in the future so it's best to plan for circumstances like those mentioned here.
   
   
4. Long-Term Care: Your simple will is not enough to take care of your long-term care planning needs. Since we are living longer today, there is a greater chance you will need long-term care. Long-term care costs are significant, but you can help preserve part of your estate for your heirs whether you need long-term care or not if you take the time to plan. Again, your will and powers of attorney are not enough to accomplish this crucial issue.
   
   
5. Non-Probate Assets: Your IRA's, life insurance, annuities and other assets do not pass through your will. These assets are often the most significant assets in one's estate. Consider that if you put together a simple will, you would fail to be planning for a huge portion of your estate. Only a professional can help ensure you have a complete plan. Accounts like IRA's present a lot of opportunity for passing wealth onto the next generation, but you must ensure it's done properly.

A will and a power of attorney is just the tip of the iceberg when it comes to estate planning. Make sure you work with a professional estate planning attorney to ensure that you leave a positive legacy, minimize inheritance taxes and fees, and have peace of mind.

If you need professional assistance with your estate plan, please contact us today at (215) 706-0200.

April 15th is approaching and it is time to begin crossing T's and dotting I's in preparation for paying taxes. As tax time draws near, you want to make sure you file all the proper forms and take all deductions you're entitled to. Following are some things to keep in mind as you prepare your tax form.

• Gifts: Did you give away any money this year? The gift tax can be very confusing. If you gave away more than $14,000 in 2013, you will have to file a Form 709, the gift tax return. This does not necessarily mean you will owe taxes on the money, however. The IRS grants you a $5,340,000.000 lifetime exemption as of 2014.
  
  
• Medical Expenses: Many types of medical expenses are tax deductible, from hospital stays to hearing aids. To claim the deduction, your medical expenses have to be more than 10 percent of your adjusted gross income. (For taxpayers 65 and older, this threshold will be 7.5 percent through 2016.) This includes all out-of-pocket costs for prescriptions (including deductibles and co-pays) and Medicare Part B and Part C and Part D premiums. (Medicare Part B premiums are usually deducted out of your Social Security benefits, so be sure to check your 1099 for the amount.) You can only deduct medical expenses you paid during the year, regardless of when the services were provided, and medical expenses are not deductible if they are reimbursable by insurance.
  
  
• Parental Deduction: If you are caring for your mother or father, you may be able to claim your parent as a dependent on your income taxes. This would allow you to get an exemption $3,950 (in 2014) for him or her.
  
  
• Long-Term Care Insurance Premiums: Premiums for "qualified" long-term care policies are treated as an unreimbursed medical expense. Long-term care insurance premiums are deductible for the taxpayer, his or her spouse and other dependents.
  
  
• Social Security Benefits: Although Social Security benefits are generally not taxable, people with substantial income in addition to their Social Security may pay taxes on their benefits. If you file a federal tax return as an individual and your "combined income," including one half of your Social Security benefits and nontaxable interest income is between $25,000 and $34,000, 50 percent of your Social Security benefits will be considered taxable. If your combined income is above $34,000, 85 percent of your Social Security benefits is subject to income tax.
  
  
• Home Sale Exclusion: Married couples can exclude from income up to $500,000 in profit on the sale of a home ($250,000 for single individuals). If a surviving spouse sells the home, he or she can still claim the exclusion as long as the house was sold no more than two years after the spouse's death.
  
  
• Elderly or Disabled Tax Credit: Some low-income elderly or disabled individuals are entitled to a special tax credit. To be eligible, you must meet income limits.
  
  
• Tax Refunds: Getting a federal tax refund should not affect your Medicaid or Social Security benefits. For a year after recieving a tax refund from the federal government, the refund will not be considered income or resources for SSI or Medicaid purposes. You can also transfer the refund within a year without incurring a penalty. For more information, click here. 

The IRS's Tax Counseling for the Elderly (TCE) Program offers free tax help to taxpayers who are 60 and older. The IRS also publishes a Tax Guide For Seniors.

If you need tax assistance for your tax returns in 2014, please contact our office today at (215) 706-0200.

PA Inheritance Tax is a major part of settling any estate upon one's death. Unfortunately, mistakes are regularly made when Executors or Administrators don't know the rules. Read further for five helpful tips.

Jeremy A. Wechsler, your estate planning and asset protection attorney is proud to announce a new radio show, titled "Your Retirement Quarterback" beginning to air on three Philadelphia area radio stations this weekend. Jeremy will be on air with Peter R. Wechsler, Philadelphia's retirement quarterback and planner. Read more about the new radio show here: https://www.prweb.com/releases/2014/02/prweb11581136.htm

A Trust Mill is a service that lures seniors and others into paying significant amounts of money for a revocable living trust-based estate plan. However, the client never sees a real attorney, and the estate plan produced is simply 'boilerplate' language with wrong, missing or incomplete information. 

You should always talk face to face with the attorney working on your estate plan, and make sure you are able to meet with the attorney to discuss the specifics of your plan, review drafts and ask questions. Otherwise, your plan will not likely work the way you want it to work.

Yesterday, the Minnesota Attorney General charged a trust-mill company with alleged fraud. Read the story here. There is nothing wrong with going to dinner seminars, but be careful who you choose to work with. Always check the company and/or individual credentials. and go with your gut. If something doesn't feel right, it probably isn't. 

The federal government has tightened the rules regarding reverse mortgages, making it harder for some seniors to get these types of mortgages and reducing the amount of their home’s value that they can tap. The new rules are an effort to strengthen the federal Home Equity Conversion Mortgage (HECM) program, which insures almost all reverse mortgages and which has seen default rates rise.

A reverse mortgage allows a homeowner who is at least 62 years old to use the equity in his or her home to obtain a loan that does not have to be repaid until the homeowner moves, sells, or dies. In a reverse mortgage, the homeowner receives a sum of money from the lender, usually a bank, based largely on the value of the house, the age of the borrower, and current interest rates. Seniors sometimes use the loans to pay for long-term care.

The loans are expensive and controversial. In recent years there have been complaints over problems with reverse mortgages, including large costs, aggressive marketing techniques, and the danger of default if insurance and property taxes aren't paid on time. Encouraged by lenders, more homeowners withdrew the entire loan amount all at once, straining the HECM program’s reserve funds.

The government began addressing these problems last year by eliminating one of the most popular types of reverse mortgage, the HECM Standard fixed-rate, lump-sum reverse mortgage. The new rules make changes to who can take out loans, the amount they borrow, and the pricing, among other things:

• Who can borrow money. Borrowers are now required to undergo a financial assessment to ensure they can make insurance and property tax payments. If a lender determines you are a risk to default on insurance or tax payments, you may be required to set aside money to make those payments.
• Amount you can borrow. Before the new rules, homeowners had the choice of two programs: HECM standard, which allowed for higher loans, and HECM saver, which had smaller loans and smaller fees. The government has merged these two programs, and the new maximum loan amount is about 10-15 percent less than in the standard, but slightly higher than in the saver.
• Fees. Previously, the upfront fee to take out an HECM standard was 2 percent of the property's value, while a HECM saver was .01 percent. The new fee is .5 percent on smaller loans, but individuals who take out a loan that is more than 60 percent of their home's value will pay a 2.5 percent fee.
• First-year limit. During the first year of a loan, homeowners can only withdraw up to 60 percent of the loan amount.

"The changes really put the product on track as a long-term financial planning tool as opposed to a crisis management tool," Ramsey Alwin, senior director of economic security at the National Council on Aging, told The New York Times.

For more information about these rules, click here and here.

Are those forms you fill out listing beneficiaries for certain accounts really all that important? Absolutely. Read why...

In 2014, the price of long-term care is apparently dropping, at least if you are a 55 year old male according to a recent report...

Many people think that estate planning is just for the wealthy, but the truth is, we all need an estate plan. If you don't have a plan, the government's plan (intestate laws) will control how your estate is administered.