Singles, especially those without children, might think that they don’t need to have an estate plan. However, it is important to remember that estate planning is for when you are incapacitated, as well as asset distribution.
While some tasks for estate and retirement planning for singles are the same as for couples, a recent article in Forbes, “5 Financial Planning Strategies For Singles,” notes that singles need to prepare for medical and financial emergencies. While a spouse is not a guarantee that these issues will be handled to a person’s liking, a single adult needs to be more self-reliant and that means planning in advance.
Read MoreNational Estate Planning Awareness Month
October marks the 8th annual National Estate Planning Awareness month. From selecting guardians for young children, to planning for incapacity, to making sure that your assets pass the way that you intend so that your family is taken care of, to new and developing areas of the law, there are so many important reasons to plan ahead and keep that plan up to date.
Did you know that more than half of American adults do not have an up-to-date estate plan in place? And, of those who do have a plan in place, the percentage with an estate plan and all of assets identified fully aligned with that estate plan is even smaller. Our focus this month will be on the many ways that you can protect yourself while you are alive and take care of your family after you’re gone through estate planning.
Read MoreCharitable Donations from an IRA
Contributing directly to a charity is a great idea. If you are thinking of giving your required minimum distribution (RMD) from an IRA to one or more charities, make sure that you understand the steps you need to take, so you’re not taxed on the RMD.
Kiplinger’s recent article, “How to Ensure Your IRA Donation to Charity Is Tax-Free,” explains that folks older than 70½ can transfer up to $100,000 annually from their traditional IRAs to charity. This move can satisfy the RMD, but isn’t taxable, if they follow the rules for a qualified charitable distribution (QCD).
The gift is not a part of your adjusted gross income, if you make a direct transfer from your IRA to the charity. That means it will not count as a tax-free transfer, if you withdraw the money first and then make the charitable donation. You should speak with your IRA administrator about the required steps. These procedures are different with different firms.
Some will have several options. For instance, if you have check-writing privileges on your IRA, you may be able to simply write a check directly from the IRA to the charity. You may also have the option to use the IRA’s QCD form and direct the money from your account.
You should be timely in submitting the form or writing the check, so it is processed in the current year. November 30 is a good cut-off to give the IRA administrator sufficient time for processing.
If your IRA sends the money, the check will be written out to the charity and include your name. You should give the charity a head’s up that it should expect your donation. You’ll also want to give them your address, so the organization can send you a receipt for your tax records. Another way to go about this is to have the IRA administrator cut the check payable to the charity and mail it to your home address. You can then forward the donation to the charity yourself.
For example, Vanguard requires you to either complete a form or call them to request the transfer, so the donation will be counted as a QCD. Vanguard will make out the check to the charity and send it to you to forward. You should be certain to make your request with ample time to receive the check and deliver it to the charity.
While there may be no limit on the number of charities you can support each year, be aware that IRA administrators typically have a minimum amount you can transfer to each charity. Check with your administrator for the specific details and take note that you can’t transfer more than $100,000 tax-free from your IRAs in any one year.
As with all planning of this type, please be sure to consult with your accountant and estate planning attorney as there are rules that must be specifically followed in order to obtain these tax benefits.
For more information on how this could affect your retirement and estate planning, explore our website and contact us to schedule your consultation today!
Reference: Kiplinger (July 28, 2017) “How to Ensure Your IRA Donation to Charity Is Tax-Free”
For Medicaid and Long Term Care Issues, Speak with an Elder Law Attorney
Elder law attorneys play an important role in the lives of the families and individuals they help. These attorneys focus on the needs of older and disabled adults, as reported in The (Fort Worth TX) Star-Telegram article, “Elder care attorneys can help with long-term care, Medicaid.” Their practices focus on Medicaid planning, guardianship (which often becomes very complex), veteran’s benefits and issues that impact elderly and disabled individuals.
One thing most seniors don’t plan for is long-term care. Many people are trying to pay for long-term nursing care. A focus of elder law is how an elderly person can pay for it. With this in mind, the majority of long-term care is paid for by Medicaid, so understanding how that program integrates with estate planning is important. For example, you wouldn’t want a bequest in someone’s estate planning to adversely impact your Medicaid planning. A family member may be ineligible for Medicaid if they inherit something, which can be an especially big complication for families with a special needs individual.
Completing the Medicaid application can also be a challenge. Elder law attorneys see many of their clients’ applications initially denied. An experienced attorney can help you prepare the application to have the best chance at being approved, or may be able to successfully appeal. It might be a mistake at Health and Human Services (HHS). The best way to do this is to ask for the assistance of an elder law attorney and do it before you try to fill out the application yourself. People who apply on their own may be denied and won’t question it—or even realize that they can question it.
Some people worry that their parent will go broke before they need costly end-of-life care and they’re afraid that Medicaid patients received substandard care. However, they should receive the exact same care as a private pay or short-term disability in the nursing home. Even so, you should look at several facilities, speak with residents and staff, and observe the conditions before making a choice.
There is also a lot of bad information floating around about Medicaid eligibility. Some believe they won’t qualify. However, some assets, like a house and vehicles, are exempt when qualifying for Medicaid. This allows the community spouse — the one remaining at home — to continue to support themselves.
When selecting an elder law attorney, make sure he or she specializes in this area of elder law. At Family Estate Planning Law Group, this is an important part of how we care for clients and their families. For more information, explore our website and contact us to schedule your consultation today!
Reference: The (Fort Worth TX) Star-Telegram (October 14, 2016) “Elder care attorneys can help with long-term care, Medicaid”