Monday, February 24, 2014
Beware of “Simple” Estate Plans
“I just need a simple will.” It’s a phrase estate planning attorneys hear practically every other day. From the client’s perspective, there’s no reason to do anything complicated, especially if it might lead to higher legal fees. Unfortunately, what may appear to be a “simple” estate is all too often rife with complications that, if not addressed during the planning process, can create a nightmare for you and your heirs at some point in the future. Such complications may include:
Probate - Probate is the court process whereby property is transferred after death to individuals named in a will or specified by law if there is no will. Probate can be expensive, public and time consuming. A revocable living trust is a great alternative that allows your estate to be managed more efficiently, at a lower cost and with more privacy than probating a will. A living trust can be more expensive to establish, but will avoid a complex probate proceeding. Even in states where probate is relatively simple, you may wish to set up a living trust to hold out of state property or for other reasons.
Minor Children - If you have minor children, you not only need to nominate a guardian, but you also need to set up a trust to hold property for those children. If both parents pass away, and the child does not have a trust, the child’s inheritance could be held by the court until he or she turns 18, at which time the entire inheritance may be given to the child. By setting up a trust, which doesn’t have to come into existence until you pass away, you are ensuring that any money left to your child can be used for educational and living expenses and can be administered by someone you trust. You can also protect the inheritance you leave your beneficiaries from a future divorce as well as creditors.
Second Marriages - Couples in which one or both of the spouses have children from a prior relationship should carefully consider whether a “simple” will is adequate. All too often, spouses execute simple wills in which they leave everything to each other, and then divide the property among their children. After the first spouse passes away, the second spouse inherits everything. That spouse may later get remarried and leave everything he or she received to the new spouse or to his or her own children, thereby depriving the former spouse’s children of any inheritance. Couples in such situations should establish a special marital trust to ensure children of both spouses will be provided for.
Taxes - Although in 2011 and 2012, federal estate taxes only apply to estates over $5 million for individuals and $10 million for couples, that doesn’t mean that anyone with an estate under that amount should forget about tax planning. Many states still impose a state estate tax that should be planned around. Also, in 2013 the estate tax laws are slated to change, possibly with a much lower exemption amount.
Incapacity Planning – Estate planning is not only about death planning. What happens if you become disabled? You need to have proper documents to enable someone you trust to manage your affairs if you become incapacitated. There are a myriad of options that you need to be aware of when authorizing someone to make decisions on your behalf, whether for your medical care or your financial affairs. If you don’t establish these important documents while you have capacity, your loved ones may have to go through an expensive and time-consuming guardianship or conservatorship proceeding to petition a judge to allow him or her to make decisions on your behalf.
By failing to properly address potential obstacles, over the long term, a “simple” will can turn out to be incredibly costly. An experienced estate planning attorney can provide valuable insight and offer effective mechanisms to ensure your wishes are carried out in the most efficient manner possible while providing protection and comfort for you and your loved ones for years to come.
Thursday, February 20, 2014
Should you withdraw your Social Security benefits early?
You don’t have to be retired to dip into your Social Security benefits which are available to you as early as age 62. But is the early withdrawal worth the costs?
A quick visit to the U.S. Social Security Administration Retirement Planner website can help you figure out just how much money you’ll receive if you withdraw early. The benefits you will collect before reaching the full retirement age of 66 will be less than your full potential amount.
The reduction of benefits in early withdrawal is based upon the amount of time you currently are from full retirement age. If you withdraw at the earliest point of age 62, you will receive 25% less than your full benefits. If you were born after 1960, that amount is 30%. At 63, the reduction is around 20%, and it continues to decrease as you approach the age of 66.
Withdrawing early also presents a risk if you think there is a chance you may go back to work. Excess earnings may be cause for the Social Security Administration to withhold some benefits. Though a special rule is in existence that withholding cannot be applied for one year during retired months, regardless of yearly earnings, extended working periods can result in decreased benefits. The withheld benefits, however, will be taken into consideration and recalculated once you reach full retirement age.
If you are considering withdrawing early from your retirement accounts, it is important to consider both age and your particular benefits. If you are unsure of how much you will receive, you can look to your yearly statement from Social Security. Social Security Statements are sent out to everyone over the age of 25 once a year, and should come in the mail about three months before your birthday. You can also request a copy of the form by phone or the web, or calculate your benefits yourself through programs that are available online at www.ssa.gov/retire.
The more you know about your benefits, the easier it will be to make a well-educated decision about when to withdraw. If you can afford to, it’s often worth it to wait. Ideally, if you have enough savings from other sources of income to put off withdrawing until after age 66, you will be rewarded with your full eligible benefits.
Tuesday, January 7, 2014
Do I Really Need Advance Directives for Health Care?
Many people are confused by advance directives. They are unsure what type of directives are out there, and whether they even need directives at all, especially if they are young. There are several types of advance directives. One is a living will, which communicates what type of life support and medical treatments, such as ventilators or a feeding tube, you wish to receive. Another type is called a health care power of attorney. In a health care power of attorney, you give someone the power to make health care decisions for you in the event are unable to do so for yourself. A third type of advance directive for health care is a do not resuscitate order. A DNR order is a request that you not receive CPR if your heart stops beating or you stop breathing. Depending on the laws in your state, the health care form you execute could include all three types of health care directives, or you may do each individually.
If you are 18 or over, it’s time to establish your health care directives. Although no one thinks they will be in a medical situation requiring a directive at such a young age, it happens every day in the United States. People of all ages are involved in tragic accidents that couldn’t be foreseen and could result in life support being used. If you plan in advance, you can make sure you receive the type of medical care you wish, and you can avoid a lot of heartache to your family, who may be forced to guess what you would want done.
Many people do not want to do health care directives because they may believe some of the common misperceptions that exist about them. People are often frightened to name someone to make health care decisions for them, because they fear they will give up the right to make decisions for themselves. However, an individual always has the right, if he or she is competent, to revoke the directive or make his or her own decisions. Some also fear they will not be treated if they have a health care directive. This is also a common myth – the directive simply informs caregivers of the person you designate to make health care decisions and the type of treatment you’d like to receive in various situations. Planning ahead can ensure that your treatment preferences are carried out while providing some peace of mind to your loved ones who are in a position to direct them.
Friday, August 16, 2013
So you missed your deadline to file an appeal. What do you do next? Start over? There may be a better solution. Often, I receive calls from individuals (aka "claimants") who have applied for, and have been denied, Social Security Disability Insurance and/or Supplemental Security Income. The problem is, the deadline to file an appeal has passed. The scenarios vary but the end result is the same.
Social Security claimant files an application for disability benefits. The claimant waits five to nine months for a decision. During that waiting period, the claimant goes through financial struggles; they’re dealing with their physical and/or mental impairments; or, they are moving from one place to another, with some ending claimants living on the streets or in homeless shelters. Social Security then issues a Notice of Disapproved Claim(s) and gives the claimant 60 days to appeal. Some claimants never receive the denial notice because they have moved or because the address they are using is just a mailing address and is thus unreliable.
By the time the claimant calls my office (or another attorney), some days, weeks, or months (beyond the 60 days to appeal) have gone by. The claimant feels betrayed by “the system” and now the claimant feels as if the last nine months have been a waste. I encourage anyone who has missed a deadline for an appeal to seek the assistance of counsel (or a non-profit organization) to evaluate your situation.
Admittedly, Social Security is very strict with deadlines. But, it also recognizes a claimant’s unfortunate circumstance. At each level of appeal (Reconsideration, Hearing, Appeals Council), the Social Security Administration has rules that outline the reasons, or “Good Cause”, for filing an appeal late. First thing that needs to be done is to file your appeal. Then, submit your written explanation of why you filed your appeal late. Social Security has provided a list of reasons you can use as “Good Cause”. Please keep in mind, the list is not exhaustive. If you have a reason that does not fit nicely within one of the categories, pick the closest one.
Examples of circumstances where good cause may exist include, but are not limited to:
(1) You were seriously ill; (2) There was a death or serious illness in your immediate family; (3) Important records were destroyed/damaged; (4) You were trying very hard to find necessary information to support your claim; (6) Social Security gave you incorrect information; (7) You never received the Notice of decision; (9) Unusual or unavoidable circumstances exist . . . which show that you could not have known of the need to file timely, or which prevented you from filing timely.
See 20 CFR § 404.911(b). My favorite reason is (9). “Unusual or unavoidable circumstances exist” can be used for a variety of circumstances. If all else fails, use (9) and make your case. When possible, provide supporting evidence of your “Good Cause” such as medical reports, witness statements, police reports, etc. You will need to submit a written explanation which should be signed under penalty of perjury. Or you can use Social Security’s form: www.socialsecurity.gov/online/ssa-795.pdf . Always, ALWAYS, keep a record of what you send to Social Security. So don’t let any more time go by. File your appeal and get the benefits you deserve. See below for more information.
Request for Reconsideration – If you have received a Notice of Disapproved Claims, Social Security will decide whether you meet the “Good Cause” standard. 20 CFR § 404.909. If your reason is accepted, Social Security will move forward with your appeal. If your reason for filing late is rejected, you may consider filing a new application and request a reopening of the prior application (we’ll save this topic for another day).
Request for Hearing; If you have received a Notice of Reconsideration, but filed your Request for Hearing after the 60 days, an administrative law judge will decide whether you have “Good Cause” for filing your appeal late. 20 CFR § 404.933. It is often the case that the judge will be more sympathetic to your situation, especially because you have already waited a very long time to get to where you are at this level.
Request for Review: If the administrative law judge dismisses your Request for Hearing for filing your appeal late, you can file a Request for Review of the Hearing Decision/Order with the Appeals Council. Social Security can provide you with the form. Or you can cut and paste the following link: www.socialsecurity.gov/online/ha-520.pdf . Submit the completed form to Social Security and to the Appeals Council. The address for the Appeals Council is on the form.
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Peña & Bromberg, a Professional Law Corporation serves clients throughout Central Valley CA including San Francisco Bay, Oakland, Bakersfield, Madera, Stockton, Fresno, Sacramento, & Modesto.
The office assists Social Security Disability & Veterans Disability clients nationwide.