Wanderpolo & Siegel, Counselors at Law

Judge Rules that Glen Campbell’s Kids Can Contest his Will

When Glen Campbell passed away, he intentionally left three of his children from his second marriage out of his wills. These children have just won a court decision allowing them to proceed with a challenge, reports Wealth Management.com in the article “Glen Campbell’s Kids Come After the Rhinestone Cowboy’s Estate.”

The two wills at the heart of the case are from 2001 and 2006. The 2006 will names Campbell’s fourth wife Kimberly, who is the executor of the estate, and five of Campbell’s other children as his beneficiaries. Campbell went public with his Alzheimer’s diagnosis in 2011, but it’s not known when he began to decline. The legal burden facing his children: prove that he lacked the needed capacity to execute his wills.  If the 2006 will is deemed invalid because of lack of capacity or undue influence, the immediately preceding will is resurrected.

It was also reported that one of his daughters, Debbie Campbell-Cloyd, has filed for a complete accounting of all payments made by the estate, as well as payments to and from a previously undisclosed bank account. She alleges that royalties that should have been deposited into an account controlled by Campbell’s estate, were instead deposited into an account controlled by Campbell’s widow.

Children from multiple marriages make estates complicated, even if you aren’t a legendary country music singer. For blended families, estate planning that includes family meetings can sometimes help prevent misunderstandings and estate battles.

Veterans: Do Not Miss This Important Opportunity to Protect Assets

The Veterans Administration has issued new rules which drastically change the eligibility rules for the Veterans special medical pension commonly known as Aid & Attendance benefits.  This pension provides income of approximately $2100 for a veteran with limited assets who needs assistance with his or her basic activities of daily living.

The agency will now impose a three year lookback period similar to the Medicaid five year lookback.  However, the VA has announced that it will not penalize any transfers that take place before October 18^th – the new rules effective date. Therefore a veteran or widow of a veteran can act now to protect their savings.   

However, it is important to speak with a knowledgeable elder law attorney because gifts made to qualify for a Veterans pension could make you ineligible for Medicaid in the future.

The new rule includes a number of important changes.  It raises and clarifies the amount of assets and income that a veteran can retain and still be eligible for the pensions (to $123,600). It also exempts transfers to trusts for a disabled child.  The rule expands the allowable medical deductions and reaffirms that veteran's homes are excluded from consideration.

Avoiding the new SALT tax limit through multiple trusts

The new tax laws that were passed in December of 2017 are especially harmful to those of in blues states with high property taxes.  New Jersey property owners are the hardest hit by the new $10,000 limit on state and local tax deductions.  Reports indicate that it will result in tax increases for more than 10% of New Jersey homeowners, particularly those of us in high tax counties like Essex, Bergen and Morris. 

Initially, some state governments and towns like Montclair tried to figure out a way around the limit for their citizens, but the IRS shot most of those down. Several states have also filed a lawsuit opposing the tax as well. Meanwhile estate planning can also provide a work around, as discussed in the Bloomberg news. "How the Rich Can Dodge Trump's Property Tax Hike."

The idea is to create an LLC in a non-tax state such as Delaware or Alaska. Real estate ownership is then transferred to the LLC. After that, several non-grantor trusts are created. Ownership of the LLC is then divided up and transferred to the new trusts. When tax time comes around, each non-grantor trust can take a $10,000 deduction for any property taxes that were paid by the LLC. However, this is not a silver bullet. There are substantial costs associated with setting up the scheme. In addition, the trusts have to generate income to offset the deduction.  There are also negative tax consequences upon sale of the property.  However, for some individuals the tax savings will be substantial and would therefore justify the complexity and expense.

Social Security Myths

Even in a liberal bastion like Montclair, often when I meet clients and mention retirement, they reflect a common myth that Social Security is on the verge of bankruptcy and are convinced that the program will not be there for them.  This view has been advanced largely by Social Security opponents or those who favor privatization. They then normally use this piece of information to advocate for drastic changes in Social Security whether privatization or increasing the age of retirement.

As discussed in Forbes in "Fake News: Why Social Security Isn't Going Broke" there is a lot of misinformation about the program. Social Security currently takes in more money every year than it pays out in benefits. That has created a surplus in the Social Security Trust Fund. In 2022, the program will not be bankrupt but will for the first time start paying out more than it takes in, due to demographic changes. However, without any changes in the program, the surplus will cover the outgoing benefits needed through 2034. Even in 2034, if the program was not changed in any way, Social Security benefits would not disappear. Benefits would have to go down slightly in order to ensure the program will only be able to pay out as much money as it takes in.

This means that politicians have a lot of time and options to fix Social Security, if they are willing to do so. They could raise the retirement age, modify benefits or tinker with funding for the program through reducing cost of living adjustments, raising the payroll tax rate or cap or modifying the indexing.

Financial Illiteracy and Retirement

There are a few lucky people who do not have to worry about saving for retirement.   They have sufficient money that they can choose to stop working anytime and never worry about money. However, for most of us, it is important to invest and save wisely for retirement.

Researchers recently decided to see how much people in the U.S. and 15 other countries knew about investing properly for their retirements. The results were not encouraging, as Bloomberg reports in "The World Isn't Prepared for Retirement."  Over half of the Americans surveyed, did not know that it is better to invest in a mutual fund than in a single company's stock. Americans also lacked a basic understanding of the impact of inflation. 

In addition to financial illiteracy, other important knowledge gaps were noted. Many respondents did not seem to recognize the major impact that basic changes in the labor force, technology and the climate could have on their retirement plans.  The global trend that worried individuals most was the reduction of government benefits.  While this is certainly a threat, other factors such as globalization and the loss of jobs to automation were widely underestimated. 

Interestingly, Americans were also hesitant to identify some of the positive uses for robotic technology.  For instance, only 6% agreed with the idea that they might have a robot to help them in their older age.  

Understanding global economic trends and basic financial concepts are important to adequately preparing for longevity. As a society we have some work to do.

The New Tax Law and Your Estate

Whenever a major piece of tax legislation passes, many experts begin talking about what the new law means for estate planning and how estate plans should adapt to it. That appears to be happening with the recent tax cuts that President Trump signed into law.

It is important to adapt your estate plan for the new laws.  However, much of the expert advice may lead you down the wrong path.

The advice that you read will not take into account the specific circumstances of your family and estate.

A good estate plan does not work in a vacuum, but avoids generalizations about tax laws and creates a unique plan that will work for your family, as Financial Planning points out in "Avoid 'dangerous' planning generalizations after new tax law."

One of the more important things to keep in mind is that public opinion polls suggest that the tax cuts are unpopular. If they remain so, then it is possible that in 2020 things could easily swing back the other way.

The tax cuts could be reversed and there might even be tax increases.

 Therefore, you might want to be cautious in making too many sweeping changes to your estate plan, especially if they are irreversible. In adapting your estate plan for the new laws, make sure that you go to an estate planning attorney who can create a cautious plan tailored to your unique circumstances.

Dealing with Scams

Along with the growth of America's elderly population, has come a less welcome population growth.

The number of scammers.

This unwelcome “population” has increased, as unscrupulous people seek to make easy money by duping the elderly.

There are many types of scams that target the elderly, ranging from large ones meant to make millions to very small scams meant to cheat an elderly person out of a few hundred dollars.

The smaller ones can be very difficult to prevent because they often consist of someone calling the elderly and pretending to be someone else, such as a charity or a debt collector.

These callers lie and sweet talk their way into getting the elderly victim's bank or credit card information.

If you know someone who has been a victim of such a scam recently, there are some things that you can do as My San Antonio discusses in "How to handle a scam against elderly parent."

The first thing that needs to be done is to contact the financial institution and make sure it is aware of the scam.

The institution can even block the transaction, if it is not too late.

The local police should be called as well to make sure the crime is reported.

It is also a good idea to contact an elder law attorney to help you figure out how to protect yourself or your loved one in the future.

When the elderly are scammed, it is not always possible to get their money back.  However, it is wroth the effort to try.  And you can usually prevent further damage.