It’s Official: Estate Exclusion to Rise to $5.45M in 2016

The IRS has announced that the basic estate tax exclusion amount for the estates of decedents dying during calendar year 2016 will be $5.45 million, up from $5.43 million for calendar year 2015.  This figure is in line with earlier projections.

Also, if the executor chooses to use the special use valuation method for qualified real property, the aggregate decrease in the value of the property resulting from the choice cannot exceed $1,110,000, up from $1,100,000 for 2015.

The increase in the estate tax exclusion means that the lifetime tax exclusion for gifts will also rise to $5.45 million, as will the generation-skipping transfer tax exemption. The annual gift tax exclusion will remain at $14,000 for 2016.

For details on many of these and other inflation adjustments to tax benefits, go to:https://www.irs.gov/pub/irs-drop/rp-15-53.pdf

[More on Estate Planning]

[Ten Reasons to Create an Estate Plan Now]

Regards,

Brian

 

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Life Events That May Have Tax Consequences for Seniors and Retirees

Many significant life events often come with a related tax consequence. Here are some issues that may be facing seniors and retirees with links to more information on their tax impact.

elder law nycAs listed by the IRS

Planning for Retirement?

Mutual Fund Distributions

Job Loss or Starting a New Career or Job

Persons with Disabilities

Decedents

  • Publication 559, Survivors, Executors and Administrators
  • Form 56, Notice Concerning Fiduciary Relationship
  • Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer
  • Form 4810, Request For Prompt Assessment Under Internal Revenue Code Section 6501(d)

Divorce or Separations

Marriage

Disaster

Moving?

Did You Receive a Notice?

Filing or Paying Late – Information Taxpayers Should Know!

Many people today need more time to prepare their federal tax return. They may want to consider an  for time to file. However, extension of time to file a return does not grant any extension of time to pay a tax liability.

Additional Assistance

News Releases and Tax Tips

Regards,

Brian

The Law Offices of Brian A. Raphan, P.C.

www.RaphanLaw.com

How To Look Out for a Relative in a Nursing Home

The best ways to make sure your loved one gets the care that was promised.

Screen Shot 2015-12-16 at 9.31.06 PMvia U.S.News  Kurtis Hiatt

Finally, after ticking off the last item on a lengthy list of must-haves, you think you’ve found the best nursing home for your mom. The staff seems caring and professional. It’s comfortable, homey, and Mom is OK with it. She might even come to like her new life.

Screen Shot 2015-12-16 at 9.30.51 PM

But your work isn’t over. You want to make sure Mom gets the care you were told she’d receive—and the care she deserves. “The resident’s needs should be met by the facility, rather than having the patient meet the facility’s needs,” says Barbara Messinger-Rapport, director of the Cleveland Clinic‘s Center for Geriatric Medicine.

How do you make that happen?

What to ask
Start with your loved one. Isn’t Dad going to be your best source of information on his own care? “Ask the questions you would want to be asked if the roles were reversed,” says Cornelia Poer, a social worker in the Geriatric Evaluation and Treatment Clinic at Duke University Medical Center in Durham, N.C. Questions such as:

  • Are you comfortable?
  • Is anything worrying you?
  • Do you feel safe?
  • Do you feel respected?
  • If you need help and you push the call button, how long before somebody comes?
  • Have you gotten to know any of the other residents?
  •  Do you like the staff—and any staff member in particular?

That last point may seem small, but whether your loved one clicks with a specific caregiver is important, says David A. Nace, chief of medical affairs for UPMC Senior Communities, a long-term care network in western Pennsylvania that is part of UPMC-University of Pittsburgh Medical Center. It shows he’s making connections, growing in new social relationships. The trust that develops may also mean Dad takes his medication more reliably, or if behavioral issues stemming from dementia are a concern, it may be easier for one nurse than for another to manage them, says Nace.

Show interest and concern and identify major problems, but don’t go overboard. “Inquiries are important, but try to avoid turning every visit into an interrogation,” Poer says. “You will be able to determine if there are areas of concern in normal, everyday conversation.”

[Read: 9 Warning Signs of Bad Care.]

Some questions will be better directed at staff members, particularly if your loved one has a cognition problem such as dementia or Alzheimer’s disease. In the first days and weeks, the focus should be on the initial adjustment. Do Mom’s nurses see any signs of depression? Does she appear to be making the transition smoothly? If not, what, specifically, is being done to help her?

Then drill down to her day-to-day routine:

  • When is she up?
  • Are her meals appropriately prepared—soft or pureed food if she has trouble chewing, low in fat and salt if she has a heart condition?
  • Is she taking her medications when and as often as she should? (The timing of each medication should be documented.) If there’s been a consistent problem, how is that being addressed?
  • Is there a reason to change any of her medications?
  • Is she exercising or participating in other physical activities?
  • Is she social?

“I like to see if the patients are usually in their rooms,” says Susan Leonard, a geriatrician at Ronald Reagan UCLA Medical Center. “Not being in their rooms means they are participating in activities, dining, or in the hallway socializing with others, which may suggest a better social environment for residents.” But you’ll want to see for yourself whether empty rooms might only mean residents are parked on sofas and in wheelchairs elsewhere in front of TVs.

Don’t be afraid to broach more sensitive topics. If you were recently alerted of a behavioral issue or medical emergency, talk to both Mom and the staff to figure out whether it was handled properly. You want to know what the staff did and what changes in care they’ve made.

It’s helpful to have a main point of contact during the day’s various shifts. You should feel like you can call at any time, but Nace observes that it’s good to know up front what the best times are for getting general updates. And don’t settle for less than you need to know. If you don’t get an answer, head up the chain of command to a unit supervisor, assistant director, or director.

What to inspect
Getting a feel on your own for the overall environment goes a long way, says Audrey Chun, associate professor of geriatrics and palliative medicine at Mount Sinai Medical Center in New York. Are common areas, rooms, and residents’ clothes clean? What about lighting and temperature? These are especially important to older adults, says Poer. Does the room feel homelike? If you send cards, are they hanging on a bulletin board in the room?  If cards and drawings are up and Mom couldn’t put them up herself, that’s a great sign. “It means the staff took the time to do it for the resident,” Nace says. “The staff cared enough to do this.”

Look around. Do you see any safety hazards—a hanging TV that isn’t strapped down or blocked exits? What about bruises, such as on the upper arms where staff may have handled Dad too roughly? Watch the staff—are they affectionate, genuine, and helpful?

Use your nose. Are there odors in the hallways and rooms? “Yes, bowel movements happen—this is a long-established fact of life—but it should not be the thing that greets you every time you are in the hall,” says Nace.

Listen. Do you hear birds, music, laughter? Or do you hear creaky floors and clanging pipes? Constant small annoyances can affect a person’s mood and eventually her day-to-day demeanor.

How often to check in—and what to do if you can’t
Some homes have a “care conference” shortly after admission and then quarterly to give you and your loved one a regular time to talk with staff, says Nace. But stopping by on various days and at various times is smart. You can ensure Mom or Dad isn’t “overmedicated or spending time sitting in front of the TV,” says Messinger-Rapport. When you do check in, swing by the nurses’ station to signal to the staff that you’re actively involved in Dad’s care.  If distance keeps you apart, staff might be able to send you photos or videos of Dad or set up a videoconference with Dad and his caregivers. If you’re abroad, staff might be able to print out an email for Mom if she doesn’t have a computer, Nace says.

Better still, says Poer, “having someone on the ground to be your eyes and ears can be very useful.” Enlist a local family member or close friend. Or consider a case manager or ombudsperson to advocate for you and Mom.

What the staff needs from you
Make sure the home’s staff has a number where they can receive a prompt response if necessary. And while staff has a professional responsibility, your appreciation—particularly if someone worked with you to resolve a concern, and even if it meant you had to compromise—will go far. “Be respectful of the staff and their time; their job is very demanding,” Poer says.  Let the nurses and other caregivers into your and your loved one’s lives by sharing personality quirks, interests, preferences. But above all, stay optimistic about Dad’s future and his ability to accept and adjust to his new life. Flycasting for bass on the Susquehanna River, Nace’s dad’s longtime passion, faded into a treasured memory after he moved into a nursing home, traded in for newfound pastimes: baking and painting.

[See our other posts on legal issues and nursing homes]

Regards,

Brian

http://www.RaphanLaw.com

Choosing a trustee and an executor

The requirements for a trustee and how to choose one

How do you choose a trustee? What qualities should a trustee have? Alisa Shin and Sarah Price of Vanguard Advice Services discuss the requirements for a trustee and how to go about choosing one.

Video: https://personal.vanguard.com/us/insights/video/3437-Retail-Exc3

Transcript:

Liz Tammaro: And, Alisa, what are the pros and cons of creating a trust?

Alisa Shin: That’s a great question. People hear the word “trust,” and they automatically think of controlling people, and that’s not necessarily true. There are a lot of different types of trusts. I think most trusts that people are familiar with are trusts that are irrevocable, trusts that can’t be changed. And for a lot of people, that’s scary because they end up—They think they’re going to create this document that will date back to the dinosaur age, and, you know, they can’t ever change it again, and so they have to live with it. And that’s not necessarily true.

Trusts, irrevocable trusts, are really used for many reasons. One, obviously, if you have children or beneficiaries who are young and who can’t manage the money, a trust is a way to protect that money, to put a structure in place for the investment management and the management of how the assets are distributed to the beneficiary. And you can time it out so that a 15-year-old isn’t getting a large sum of money, and they can get it at a more appropriate time.

The more common reasons why people also use trusts is, one, to provide asset protection. A properly drawn irrevocable trust can protect those assets from future creditors in case the beneficiary gets sued, and a future creditor can also mean a divorcing spouse. So even if a beneficiary doesn’t have a prenuptial agreement, an irrevocable trust, if it’s drawn up correctly, could protect those assets so the divorcing spouse could not get those assets.

Liz Tammaro: And I’m hearing you say irrevocable doesn’t necessarily mean not changeable, right?

Alisa Shin: Correct. So there’ll be restrictions as to who could make the change, but a lot of times, when we talk with clients here at Vanguard, we really encourage clients because we just don’t know what the future is going to entail, to empower a beneficiary to have the ability to change the terms of the trust and determine who should get it at the beneficiary’s later passing, at their death.

And that’s typically called a testamentary limited power of appointment. It’s limited because you can decide who could receive the money. You could say that your child could give it to anybody they would like, or you could say that they can only give it to their descendants or charitable organizations. You can make it as broad or as restrictive as you would like.

Liz Tammaro: Okay, so you talked about some of the benefits of a trust. How about, are there any drawbacks to creating trusts?

Alisa Shin: You know, the drawbacks of creating a trust, it creates a little bit of a complexity in your life. When someone has a trust, that trust is a separate taxpayer, technically. It will have a second taxpayer identification number. So that means that that trust will have to file its own income tax returns, meaning the trustee will do that for them. It will have a separate account that won’t be combined into your own personal account because you want that to make sure that it stays protected from future creditors and so forth for the reasons we discussed.

Sometimes, depending on who your trustees are, there are additional costs associated with the trust. You need to, if you have a professional trustee serving, they might charge a commission. Clearly, if you have an accountant who’s preparing the tax return, there’s going to be one additional tax return that needs to be prepared for that trust.

Liz Tammaro: And one other thing, I’ll just open this up to both of you. I heard you say that it’s really important that it’s drawn up properly. Talk to me a little bit more about what you mean there?

Alisa Shin: In terms of, I assume, asset protection and so forth?

Liz Tammaro: Yes, the trust. You said it’s really important that it must be drawn up properly; the document must be— What do you mean by that?

Alisa Shin: There are certain provisions, something called a spendthrift provision that would need to be included in the document. I would say, in today’s day and age, a spendthrift provision is almost always in every trust document. But the other part of drawing it up properly is understanding what impact guaranteeing money from the trust would have for your beneficiary.

So if you create a trust that says, “Pay the income to my beneficiary every month,” because that’s a guaranteed income stream, that income stream loses its protection from a future creditor. Whereas, if the trust said, “The trustee has the discretion to use the income for my beneficiaries’ benefit,” that gives it a more solid layer of protection from a future creditor or a divorcing spouse.

So when you think about asset protection, divorce protection, it’s really a balancing game between giving your beneficiary access to the money and some comfort knowing that he or she might be able to get the money that they needed versus leaving it to a trusted advisor, a trusted family friend to make sure those assets are protected.

Important information

All investing is subject to risk, including the possible loss of money you invest. Diversification does not ensure a profit or protect against a loss.

This hangout is for educational purposes only. We recommend that you consult a tax or financial advisor about your individual situation.

Read more on the subject: Download Free Probate Guide.