Financial Planning

Sobering News from Retirement Accounts Study

Published on: July 19, 2013 | by Ettinger Law Firm

Retirement saving–it is a topic on the minds of many New York families. The days of working in the same spot for several decades and then enjoying retirement on a defined benefits pension plan are long gone for most residents. With Social Security offering only the barest funds, it instead falls to everyone to take steps on their own to plan for their golden years. Individual Retirement Accounts (IRAs), 401(k)s, and similar tools are used by most to accomplish this goal.

However, the latest research on retirement trends suggest what many estate planners know: many families have no saved nearly enough to last their entire planned retirement. As discussed in a MarketWatch story this week, a new research projects gives most people less than a 50% chance of having their retirement last for 30 years. That is based on current stock and bond markets with a typical withdrawal of 4% per year (with a hypothetical portfolio of 60% bonds and 40% stocks).

In short, it is still tough out there in the world of retirement planning.

Are “Stretch IRAs” Going to be Phased Out?

Published on: July 17, 2013 | by Ettinger Law Firm

Structuring an estate plan to account for taxes can be a complex task. While state and federal estate taxes make up the majority of discussion about taxation, there are other issues to consider. For example, there are ways to structure disbursement of various assets–insurance policies, retirement accounts, and more–so that Uncle Sam takes as small a bite as possible.

Adding to the complexity is the fact that laws frequently change which either open up more opportunities or take away previously available tax-saving options. For example, last week Forbes discussed a U.S. Senate vote that may eliminate a commonly-used tax strategy.

Stretch IRAs

Same-Sex Marriage Rulings Coming Soon – May Cause More Complications

Published on: June 18, 2013 | by Ettinger Law Firm

Anticipation is building among marriage equality supporters (and opponents), as decisions from the U.S. Supreme Court on two major same-sex marriage related cases are set to be released either this week or next. As we have previously discussed, one case relates to the Defense of Marriage Act (DOMA) which has direct implications on the rights (and estate planning) of all same-sex couples in New York.

DOMA prohibits even same-sex couples who are legally married in states that allow it (like New York) access to all federal benefits pertaining to marriage. This includes well over a thousand distinct items, like Social Security, preferred tax breaks, immigration privileges, and more.

Many are hoping that the Court strikes down the portion of DOMA which denies those benefits, finally placing all married same-sex couples on the same footing as their opposite sex counterparts. The court may release its ruling on that case, Windsor v. United States, as soon as this Thursday.

“Financial Caregiving” for Ailing Senior Parents

Published on: June 14, 2013 | by Ettinger Law Firm

One overlooked aspect of elder caregiving is the difficulty of the transition time itself. While some seniors may suffer serious medical events (stroke, heart attack, etc.) which require adult children to manage affairs overnight, in many cases the need for support happens only gradually. This presents a challenge as children must delicately broach the topic with parents who may be uninterested in change. At the same time, sibling rivalry, hurt feelings, misunderstood intentions, lack of information about savings, and many other details are thrown into the mix.

Put another way, before even deciding the best way to provide “financial caregiving” for an elderly parent, one must first figure out when to begin and how to get the parent to concede that help is needed.

A CNBC article last week examined this sensitive subject. The article provides reasonable advice while noting that “the shift [to financial caregiving by adult children] can be less stressful if everyone takes it slow, seeks advice and remembers that helping to maintain a loved one’s well-being is the primary goal.

U.S. Senate Report on Proposed Tax Changes May Affect Retirement Planning

Published on: June 13, 2013 | by Ettinger Law Firm

It is notoriously foolish to take Congressional reports, proposed legislation, and similar matters as anything more than mere possibilities which may change federal law. For every piece of legislation that actually makes it into law, there are a hundred others that end up nowhere. Still, those who have an interest in certain issues, like retirement planning, may find value in examining the different ways that elected officials are considering modifying current rules.

For example, recently staff members of the U.S. Senate Finance Committee issued a report that outlines many different tax reform ideas that members of the committee will consider when they debate proposals this cycle. The report introduction explains that “The options described below represent a non-exhaustive list of prominent tax reform options suggested by witnesses at the Committee’s 30 hearings on tax reform to date.”

A full online copy of the document can be found online here.

Estate Planning Becoming Reality Show?

Published on: June 5, 2013 | by Ettinger Law Firm

Epic estate planning battles–particularly involving the wealthy and famous–have long been fodder for newspapers. There have even been a few high-profile movies touching on the topic, like the recent George Clooney film, “The Descendants.” But now it appears that the sagas may make their way into yet another medium: television.

Reality TV continues to captivate audiences, and now some are looking to cast a new television show based on unique, intense, and interesting inheritance fights. The Trust Advisor recently shared information on the project which, if it becomes popular, is sure to raise awareness of common estate planning issues even more.

The show is still in the early stages of development, but it is clear that a large TV production team is looking for families to be filmed as their inheritance issues and planning details are sorted out. These early reports suggest that the show will center on inheritance and trust disputes among wealthy families. The purpose, one presumes, is to find families with the most unique issues, including family businesses, generations-long dynasties, and large personalities. The filming (and packaging as a television show) will likely highlight both the characters themselves as well as the unique processes involved in settling estate fights. While it may seem common knowledge to those of us working on these affairs, it is easy to forget that for most community matters, estate planning issues are foreign.

New Study: Marriage Boosts Retirement Security

Published on: April 22, 2013 | by Ettinger Law Firm

Do I have enough to retire? Countless New Yorkers ask their financial advisers, estate planning attorneys, and other professionals that very question each and every day. There is no one-size-fits-all response, as retirement is a personal matter based on individual expectations, goals, and perspective.

Mountains of pages have been written about how much money you should have before retiring and what you should do with it. Perspectives abound.

Interestingly, there is less disagreement about general characteristics that make one more or less likely to be financially secure enough to retire. For example, the Wall Street Journal pointed to a new study last week which found that married couples are far better positioned to make the leap and officially enter retirement.

Becoming a “Paradigm” of Financial Health

Published on: March 21, 2013 | by Ettinger Law Firm

Money is always at the top (or near it) of lists describing issues that most commonly bring stress into our lives. It’s cliche to say that “money is the root of all evil,” but its obvious that dealing with financial issues is a common concern for families of all shapes, sizes, and even income levels. There is so much different advice out there about what you should be doing or could be doing as it relates to money matters that it is hard to distinguish between the useful and the fluff.

One such story posted in Yahoo Finance this week offers a somewhat helpful distillation of seven basic concepts that can be used for those of all income levels and at different life stages. They are referred to as “paradigms” of financial health. The entire list is worth browsing, but a few of the items on the list include:

***If you are a couple with two incomes, you can pay for “essentials” with only one spouse’s income. Those essentials are things like the mortgage, insurance, child care , and similar items that cannot be cut easily. Essentially this is one way to check whether you may be living above your means. It is an easy shortcut to figure out if you can survive in the event of a lost job or other emergency.

Editorial Calls for Preserving Medicaid Spousal Refusal in New York

Published on: March 12, 2013 | by Ettinger Law Firm

It is not easy for many local residents to understand all of the ins and out of the Medicaid program. While Medicaid is a critical tool that provides support for local seniors who need long-term care, it can be a whirlwind of stress, anxiety, and frustration when families attempt to navigate the administrative waters and understand what they need to do to join. Making matters worse is that fact that Medicaid qualification is based on income, and so most families are forced to “spend down” assets before receiving aid. Without proper planning, this means that many families are forced to shed most of their assets just to receive the extra care they need–loosing property and savings built up over a lifetime.

This situation seems particularly damaging for certain families, including those with one healthy spouse and the other in need of care. Fortunately, in those situations the option of “spousal refusal” exists. This essentially allows a healthy spouse to divest property from the other, such that the sick spouse qualifies for care without the healthier spouse losing most everything as well.

Eliminating the Refusal?

WSJ on “Downton Abbey” Planning Lessons

Published on: March 6, 2013 | by Ettinger Law Firm

It is not everyday that important retirement and estate planning issues make their way into popular entertainment drama. One of the few exceptions was the movie “The Descendants” a few years ago which garnered widespread acclaim–and some Oscar awards–in a tale focused on a man who unexpectedly comes into control of vast land holdings in trust following his wife’s surprising death. The main character, played by George Clooney, is forced to grapple with a range of issue while dealing with feuding in-laws and uncertainty about his wife’s wishes.

One of the other exceptions is the massively-popular British drama Downton Abbey. The BBC program has been running for several seasons, with the most recent batch of episodes just finishing to high rating here in the United States. The story is set over the course of several years in the first part of the 20th Century, including the first World War and the decade or so afterward.

Much of the drama revolves around one family living off “old wealth” and the challenges presented in maintaining a large estate and transitioning for its transfer to another generation. Recently, a Wall Street Journal article offered an interesting take on some estate planning lessons that viewers can glean from the ups and downs depicted in the show surrounding the inheritance drama.