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Neither Snow Nor Rain Nor Heat Nor Gloom Of Night Will Make Us Correct Spelling Or Grammatical Errors
(Sprightly Commentary That Is Not Legal Advice!)

I have been living in a family home, caring for a parent and grandparent for 19 years. Can I get compensated monetarily?

In 2003, I received a phone call from my mother in distress, stating she would have to put my grandmother in the nursing home because it was too much for her to take care of. I liquidated my assets, relocated, and moved into my grandmother’s home till she passed. A few years passed, my mother’s husband died, and I was asked to move into her home to help take care of the property. She was diagnosed with cancer, so it was assumed my responsibility to carry on caregiving. I have never been paid for service or compensated. I have not paid rent. By law can I get financially compensated?

Virtue Had Better Be Its Own Reward

Are all good-hearted people puddin’ heads? Surely not! But what person with common sense would abandon their own path in life to serve family members? A kind and generous person, of course. Kindness and generosity are wonderful traits. But so are practicality, prudence, and planning.

An individual sacrificing their own life choices can be truly noble. At least at the beginning. Our letter writer is now learning a bitter 20-year lesson. Caring for grandma and mom does not contribute to the Individual Retirement Account. Nor does it help you with Social Security. Last I checked, the Mom & Grandma Pension Fund was also out of business.

“I have never been paid for service or compensated.” What?! Do you wonder what our writer has been doing for “spending money” these last 20 years? Me too.

Will this story have a happy ending? Do not count on it.

“By Law Can I Get Financially Compensated?”

No. Not a brass farthing. Not a penny. You care for a loved one. Why? Because you love them. Did you do it for money? No. You did it for love. And the Law will hold you to it. You cannot convert a love relationship into a commercial relationship. When you care for a loved one, the law presumes that you are doing so because you love that person. End. Of. Story.

And if Mom or Grandma does pay you? Medicaid will whack them with a PENALTY when they need help with long-term care. Unless you meet the stringent Medicaid requirements for a personal care contract. Which you will not meet because you did not even know that there were such things as Medicaid Personal Care Contracts.

When you care for your parent or grandparent, be sure to have a contract. Your friendly, neighborhood elder law attorney can help. Maybe you can avoid Medicaid penalties. At least you’ll get paid. Eventually. The contract must be in writing. The contract must state the terms of the agreement. The contract must be signed, sealed, and delivered before the services are provided. The contract cannot be signed via Power of Attorney when the caregiver is also the Agent under the Power of Attorney.

But you didn’t do that this time. Better luck next time! Would it be a bad idea to talk with an elder law attorney?

What’s Next?

Maybe your siblings will let you stay in the house. They often do. Maybe your siblings will evict you and sell the old homestead. They often do. You will get your piddling share. Good luck living on those crumbs. Occasionally, brothers and sisters may give you more than an equal share. And that’s nice. But can you count on the generosity of your overworked, underpaid, and extremely busy siblings? Siblings who have bills of their own? You decide, but I doubt it.

But I Want To Take Care Of My Loved Ones!

If you really want to take care of your ailing loved ones, you are in a shrinking minority. Fewer and fewer people are motivated by pure love or guilty obligation anymore. Not so long ago there was a “sandwich generation”. Trapped between caring for parents and caring for little kids, the sandwich generation did double duty. Such family service was expected. Caring for older relatives was assumed. Having kids was no excuse. And spouses offered at least lukewarm support.

Those days (in my experience) are gone. COVID accelerated the process, but it was already happening. Paid care is the way we do it today. Can you get compensated? Yes if you follow the 3 P’s: Practicality, Prudence, Planning. Your elder law attorney can help!

I have a question about Medicaid requirements for my mother who is likely going to assisted living in the near future?

My mother is 81 and psychiatric. She recently became ill… The evaluation of her so far indicates that she’s going to need 24 hour care. She is a widow… Her income level is and always has been under the threshold to qualify for Medicaid (currently $2392.81) and the only other asset she has is her house. I am joint on her checking and savings account as I have been handling all of her bills for the last five years or so. At least half the 115 thousand miles that I have on my vehicle, have come from caring for her, including picking up and administering medication’s, doctors appointments, groceries, meals and so forth. I have paid for expenses in those cases from her account as required. Given that her income level is under the Medicaid threshold regardless , is Medicaid still going to potentially penalize and disqualify her from assisted living?

Who Says Kids Don’t Care? Oh, That Was Me…

Two letters from loving, caring, self-sacrificing kids. Gives you hope. Restores your faith in human nature. And looks like this child caregiver steered clear of the hazards.

2023 Medicaid Income Limit: $2742/Month

There is no Michigan income limit for skilled nursing home Medicaid. Does not matter how much income you have, you can qualify for skilled nursing home care, so long as the care costs more than your income.

There is a Michigan income limit for at-home care and for assisted living care. In 2023, that limit is $2742 per month. Before deductions for Medicare or taxes or insurance.

So. If your gross monthly income is greater than $2742, Medicaid will only pay for skilled nursing care in a skilled nursing facility, i.e. a nursing home. That means Medicaid will not pay for assisted living or at-home care such as the Program of All-inclusive Care for the Elderly (PACE). Our writer’s mom qualifies for assisted living Medicaid, on the income test, for Medicaid. That is because $2392.81 is less than $2742.00. If mom’s gross income was more that $2742, there is no way for mom to qualify for assisted living or at-home care Medicaid. In Michigan. NOTE: In almost all other states in the USA, folks can create a “Miller Trust” or “Qualified Income Trust” to reduce their income. This allows them to qualify for Medicaid benefits and stay home. Or go to assisted living. But not in Michigan. Too bad. So sad.

Income Looking Good… What Else Could Go Wrong?

If mom has given you money, that is a problem. If you have used mom’s money to pay mom’s expenses, that is NO problem. What has me worried (or at least curious) is your statement:
At least half the 115 thousand miles that I have on my vehicle, have come from caring for her, including picking up and administering medication’s, doctors appointments, groceries, meals and so forth. I have paid for expenses in those cases from her account as required.

Many times children caregivers will spend their own money on mom’s groceries, meals, and so forth, then get reimbursed by mom. It does not matter than you took notes or saved receipts. That method creates divestment penalties. That is bad. The better way is to use mom’s debit card or check book to buy her stuff. It is very clear that when mom’s money is used to buy mom’s stuff, there is no problem. But.

What if mom’s money is used to buy stuff for the child caregiver? That is bad. That is a divestment. That creates a penalty period. How many meals were for mom? Were the caregiver’s groceries purchased with mom’s debit card? Mom paid for gasoline. Was all the gasoline used in pursuit of mom’s errands? These are the sort of awkward questions that the Medicaid caseworker may raise. What if the answers are unsatisfactory? Mom will be penalized. Always a good idea for your super expert elder law attorney to take a sharp-eyed look at mom’s Medicaid application before you submit it. And the best bet is to get assistance every step of the way.

Avoid Nursing Home Poverty

You can get long-term care benefits without going broke. Medicaid wants you broke. But you do not have to accept what Medicaid wants. You can protect what you have earned. Here’s how:

How Medicaid Works
What If You Give Away Your Stuff?

What if you give away your stuff and then apply for Medicaid benefits? Medicaid will say, “We will not help you. You had stuff and gave it away. And so we will not pay.” This is called the “Penalty Period.” Medicaid will excuse itself for a period of time. The more you gave away, the longer Medicaid will not pay. Right now, for every $10,000 you give away, Medicaid will not pay for a month. Give away $120,000, Medicaid will not pay for an entire year! But then Medicaid will pay.

In the meantime, while Medicaid is not paying, the nursing home is suing you. And your kids. And your friends, And your first-grade teacher. And anyone else you gave stuff to. You thought you could keep the house? Ha-ha. You thought you could keep an automobile. Yuk-yuk. Whoops! Funny thing, though. What if you gave away your stuff more than five (5) years ago? What if sixty-one (61) months ago you gave all that stuff away? Then you applied for Medicaid? Things are different. Now Medicaid does not care that you ever had that stuff at all. Does not matter. So perhaps you should give all your stuff away. Right now. To the kids. Your neighbors. Your first-grade teacher. Then wait for five (5) years. And if you ever need long- term care after that, no problem! Medicaid does not care that you had that stuff and gave it away. Great Plan!

By now, the sharpest knives in the drawer have spotted the problem with this brilliant approach, right? If you give your stuff away, then you have no stuff. And you like your stuff. What to do?

What If You Give Away Your Stuff Without Giving Away Your Stuff?

How can you give away your stuff without giving away your stuff? By using a particular kind of trust, that’s how. For Medicaid purposes, you gave your stuff away. For federal tax purposes, state tax purposes, common sense purposes, you did not give your stuff away.

The IRS doesn’t think you did anything when you put your assets in this type of trust. Medicaid says you “divested” those assets. Medicaid says you gave those assets away. Medicaid starts the Five-Year Clock. Five (5) years after putting those assets into that trust, Medicaid will not count those assets as yours. And you will qualify for the Medicaid benefits you have paid for. Without sacrificing your lifesavings, cottage, other stuff.

Why Should You Want To Qualify For Medicaid Benefits And Keep Your Stuff? Why? Do you like paying for the same thing twice?

Are you opposed to getting any return on your tax dollars? Does the government know what to do with your money better than you do? Would it be dreadful to receive the government benefits you’ve paid for? And to have additional lifesavings to purchase additional goods and services? Is it awful to get the same deal from the government that irresponsible folks get? Would you prefer to be flat, busted broke and forced to go to a nursing home than to supplement at-home Medicaid with lifesavings to remain at home? Are your kids and grandchildren so undeserving and ungrateful that you’d rather give your money to the government?

This Is Too Good To Be True! Tricksy Stuff Like This Never Works For Regular Folks!

Plus, It Must Be Wrong Or Immoral Or Something Else That’s Bad Or My Planners Would Have Told Me All About It! And What If I Move Out Of State? And Give Me A Minute And I’ll Think Of Something Else…

On February 8, 2006, Congress overhauled the Medicaid system. Congress replaced 50 states going in 50 different directions with some general principles that apply to everybody. Seventeen years ago, I was shocked when this happened. The Medicaid landscape was rewritten, much to the distress of our long-term care clients. Tools and techniques that had been proven reliable were wiped out. But there was a silver lining to this dark cloud of Medicaid reform.

No longer did it make sense to wait-and-see. The environment was different. Now we had some assurance that a Michigan plan could work in Florida. Or Texas. Or South Carolina. But not California, nothing works in California.

Not only did we have a legal structure that worked from coast to coast, but we could also rely on that structure to be stable. And so, it has proved. Over the last 17 years, thousands of these LifePlanning™ trusts have been implemented by regular folks. And they have worked. Every time. Saving millions of dollars. For regular folks. To maintain dignity. To preserve families. To keep the promise that hard work, saving, planning, and doing the right things will have good consequences for you, your spouse, your family.

For every Medicaid application involving these trusts, we submit a full copy of the trust and all the supporting documents. Total disclosure. Candid honesty. Written evidence. Full documentation. This stuff works because we scrupulously, thoroughly, exhaustively comply with every law, rule, precept, and policy.

Going broke is a choice. Your choice. It is not chance, bad luck, or misfortune.

Why Don’t You Deserve A Little Payback For All The Taxes You Paid In?

Why Do You Want To Spend Your Last Nickel On Long-Term Care?

Why Shouldn’t The Government Spend Your Money For You?

Traditional estate planning is concerned with avoiding probate, saving taxes, and dumping your leftover stuff on your beneficiaries. After you die. Nobody cares what happens to you while you are alive. How does that help anyone? Stupid.

Traditional estate planning fails because the overwhelming majority of us will need long-term skilled care. 70% of us. For an average of 3 years. And we will go broke paying for it.
Is it surprising that thousands of recreation properties: cottages, cabins, hunting land, are lost to pay for long-term care? Why is your estate planner hurting you and your family? It is evil intent? Or stupidity?

LifePlanning™ defeats Nursing Home Poverty. Keep your stuff. Get the care you have already paid for. Good for you. Good for your family. Good example for society,

When my mother suffered from the dementia which led to her death, over 10 years ago, their estate plan preserved their lifesavings. Mom’s months in the nursing home did not mean Dad’s impoverishment. Dad spent the last years with security and peace of mind.

Is Now A Bad Time For A Real Solution?

Perhaps you think you already have an answer to this problem. Maybe you do not see this as a problem at all. It is possible that you do not believe in the passage of time or its effects on you.

Peace of mind and financial security are waiting for everyone who practices LifePlanning™. You know that peace only begins with financial security. Are legal documents the most important? Is avoiding probate the best you can do for yourself or your loved ones? Is family about inheritance? Or are these things only significant to support the foundation of your family?

Do you think finding the best care is easy? Do you want to get lost in the overwhelming flood of claims and promises? Or would you like straight answers?

Well, here you are. Now you know. No excuses. Get information, insight, inspiration. It is your turn. Ignore the message? Invite poverty? Or get the freely offered information. To make wise decisions. For you. For your loved ones.

The LifePlan™ Workshop has been the first step on the path to security and peace for thousands of families. Why not your family?

NO POVERTY. NO CHARITY. NO WASTE.
It is not chance. It is choice. Your choice.

Get Information Now. (800) 317-2812

The post Letters, We Get Letters, We Get Lots & Lots Of Letters appeared first on Carrier Law.

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$750 Billion Is Hi-Test Gasoline On The Inflation Bonfire

Inflation Is Baked In The Cake – You Knew That
Destruction Of 60 Million Independent Contractor Businesses– See That Coming?

America dodged a several trillion-dollar bullet when the Build Back Better plan was rejected. Did rampant inflation caused by trillions in spending already approved by Congress play a role? We can only hope. Now we have the IRA, which everyone agrees will do nothing to reduce inflation. Seven hundred fifty billion of new spending. For a football stadium full of IRS agents. Enforcing new rules that they are pretending are the old rules. But they are not.

Government does not like independent contractors, freelancers, small businesses, gig workers, or others who do not operate within highly regulated industry structures. Nontraditional workers are too hard to find, tax, and regulate. Everything a bureaucrat hates.

Independent workers, who are small businesses unto themselves, are about 35% of American workers, in whole or part. That’s about 60 million Americans. Sixty million small businesses. And that is about to change. Why do you think they want another 87,000 IRS agents? To go after rich people? Ho ho ho. And hah!

Americans like working independently. Especially younger Americans. For flexibility. To be your own boss. Other good, American-type reasons.

And if you are worried about the younger generation… and who isn’t? You might find some hope in the fact that they seem even more dedicated to personal responsibility in their employment.

It is too soon to tell how bad all this will be. But it will be bad. Very bad. Just look at California which implemented this scheme in 2020. Why is the supply chain so screwed up? Could whacking 70,000 owner/operator truckers with new taxes, fees, and regulations by reclassifying them as employees rather than independent businesses have some effect? Millions more are suffering. From yoga instructors to hairdressers. Entrepreneurs who rent space for their business are now employees.

The American Dream is under assault as never before. From inflation to stifling regulation, to inviting low-cost labor competition by abandoning our borders. Middle class Americans must fight back. Your children want the independence of their own business. We must work together to keep that dream a reality.

The post What You Did Not Know About The Inflation Reduction Act appeared first on Carrier Law.

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Like Driving Past A Car Wreck… Glad It Did Not Happen To You (Not Edited For Spelling Or Punctuation Or Anything Else) (Warning: Not Legal Advice!)

QUESTION: Can our disabled brothers legal guardian (also a family member and remainderman) terminate disabled brothers life estate?

Disabled brother is now in nursing home and will not return to family home which he has life estate in and is also in an irrevocable trust. There are many remaindermen, (large family) and all are in agreement to sell family home including our disabled brothers guardian. Another family member/remainderman wants to buy us out and move into home, hoping that we can all just sign off of house/ trust and quitclaim the property to her. Not sure if this is “allowable” or advisable. We also have concerns about potential “Medicaid recovery” if life estate is terminated while life estate holder is still alive.

Short Answer: Oh what a tangled web we weave, when first we practice elder law without a firm grounding in the fundamentals. Imagine sorting out this fact pattern after the family house was sold, money distributed, Medicaid denied, recriminations on all sides, nursing home lawsuit against disabled brother, allegations of fraudulent transfer against siblings, and a family feud ripe with recriminations echoing through eternity. In other words, the usual case.
Is it crazy to think it is not too late? Is it impossible for sweet reason and angelic actions to save the day? Must this family suffer?
Long Answer: There are several threads here that need to be disentangled. Let us begin with brother’s life estate.

LIFE ESTATE
In Michigan, “life estate” means that the person can use and live on the property for their entire lifetime. A life estate is valuable. How valuable?

Back in the day, we used to have hearings with expert witnesses and do future value projections based on life expectancy and then present value regression analyses. But in today’s modern world, Michigan makes it easy to figure out how much a life estate is worth. Get a copy of the Bridges Eligibility Manual 400, Exhibit II – Life Estate and Life Lease Factor Table (BPB 2022-07) (available online!). This Table lists ages from birth to 109 years old. For each age, there is a 5-digit life estate factor. You look up the factor that corresponds to the age of the person. Multiply the factor by the value of the real estate. Voila! That is the value of the person’s life estate.

IMPORTANT POINT: Life Estate values have nothing to do with the actual health of the Life Estate holder. Life Estate Value is all about chronological age. Birth certificate and calendar. Healthy or on hospice? Irrelevant.

A few examples. Let us suppose the family home is worth $100,000.

At age 2, the life estate factor is .99017. So, a two- year old’s life estate is worth $99,017. ($100,000 X .99017)

At age 109, the life estate factor is .04545. That means that the 109-year-old’s life estate is worth $4,545. ($100,000 X .04545)

At age 70, the life estate factor is .60522. How much is a 70-year-old person’s life estate worth? Correct! $60,522. ($100,000 X .60522)

What this means is that “if life estate is terminated while life estate holder is still alive” the life estate holder must be paid the value of the life estate as determined by the BEM 400 Life Estate Factor Table. Easy!

Let’s consider the flip side… the remaindermen.

If 70-year-old disabled brother’s life estate is worth $60,522, what are all the remaindermen’s interests worth, collectively? Correct again! $39,478. ($100,000 – $60,522) Divided by the “many remaindermen” of a “large family.” Betcha didn’t see that coming!

DISABLED BROTHER’S GUARDIAN
Disabled brother has a guardian. Does that mea we are in probate court? Yes! Does that mean that any sale of the property must be approved by probate court? Yes! Does that mean that we will have to pay an attorney to help us ask the probate court for permission to sell? No! Like plumbing and electrical work on your home, probate can be a “Do-It-Yourself” adventure. Emphasis on “adventure.” Can you steer your automobile with your feet? Sure! But that does not make it a good idea. Like do-it-yourself electrical work, plumbing, or probate. Jes’ sayin’.

Probate is required even if disabled brother also has a conservator for management of his assets.

MEDICAID RECOVERY
Remember how disabled brother got the money from the sale of the family home? If disabled brother was already on Medicaid, getting the money will boot him off. Until the money is all “spent down.” Or until the money is stashed in a Medicaid payback trust. Or a charitable pooled income fund. Or somewhere else where the other family members will not benefit.

Are there worse ideas than selling the family home before disabled brother’s death? Sure! You could invade Ukraine, expecting a liberator’s welcome. You could dump trillions of dollars into the economy, expecting no inflation. Spit into the wind. Tug the mask off the ole Lone Ranger. Mess around with Jim. Bad ideas.

When disabled brother dies, his life estate is over. No compensation. No estate or Medicaid recovery. The remaindermen get the remainder. All the remainder. Yay!

But in the meantime… You want to keep the family house occupied. Vacant houses have a way of burning down. Vacant house insurance is hugely expensive. Plus you still have to pay the taxes. And utilities. Mow the grass. Plow the snow. Paint it.

Why not let sister move in now, provided she pays all expenses? Subject to a written agreement? Give her a right of first refusal (not an option) so she may purchase the place after disabled brother’s death?

There are other possibilities. Leasing/subleasing.

Etcetera. But do not accept the assertion that it must be sold pronto. The family has options.

IRREVOCABLE TRUST

What’s going on with this?

Somehow there is an irrevocable trust blended into the mix. It is not obvious how that trust is being used, if at all. There are several possibilities. But a review of the trust would be essential to knowing what is going on.

Question: Can my father’s caretaker accept his entire estate? Can she be sued for selling everything? He is still alive. My dad signed over his house to his caretaker before she put him into an assisted living home. She then quickly sold it. He has 2 living children. Do I have any recourse now?

Short Answer: No, you do not “have any recourse now”. Sadly, a properly executed deed has consequences which cannot be undone. Even a deed that reverses the prior transfer has real world consequences that cannot be ignored. What consequences? [WARNING: LAWYER ANSWER TO FOLLOW] It depends.

Longer Answer: Is it possible that the caregiver may be sued or prosecuted for financial abuse of the elderly? Is it possible that Father was incapacitated or mentally incompetent at the time he signed the deed? Could those be grounds to throw it out? What if Father was coerced into signing by undue influence, would those be grounds as well? Perchance. Maybe. Possibly. Mayhap. Hmmmmm, tugs at goatee…

How can you prove that Father was consistently and continually mentally incompetent? Or coerced? Were you there the whole time? When he signed? These are difficult cases. Difficult to forget about apparent injustice. Difficult to remedy the injustice. Difficult to know if there was any injustice at all. Difficult to reconcile when the “bad actor” is a family member.

Is it crazy to think that it might just possibly be helpful to have had some professional assistance in this sort of situation? Maybe possibly a few bucks and hours now to avoid big bucks and years of woe in the future? Asking for a friend…

Father, it seems, was mentally competent and had the legal ability to sign. Adults can choose. Poorly. With disastrous consequences.

You may not believe it, but some folks with signs of developing dementia are propped up by gangs of greedy grasping gargoyles intending to gorge on ill-gotten gains. Despicable devils who deny demonstrable incoherence, impulsiveness, and inconsistency. For their own putrescent purposes. How can such evil exploiters exist? Trust the evidence of your own eyes if you doubt it.

Actions have consequences.

Question #1: Can my durable POA withdraw from my IRA and sell my home if I become incapacitated?

Question #3: Can I specify in my will what accounts the POA would have access to withdraw from? I am concerned about abuses as I have heard some horror stories and I have no children of my own or close friends. Question #4: Would I be better off getting a bank to manage my affairs?

Answer #1: Powers of Attorney always depend on the authority you write into them. You can limit the ability of the Agent under the POA however you choose. Generally, to be effective, you want your Agent to be able to access your Individual Retirement Account and to deal with your home.

Answer #2: Yes, you can limit the Agent’s access to specific accounts.

Answer #3: Horror stories are real. Financial abuse of older folks is also all too common. The good news is that there are professional trustees and fiduciaries who will not steal your money. So if you do have some question about the stepchildren, do not appoint them as your trustees or executors or agents or patient advocates or any other position of responsibility.

Answer #4: You may “be better off getting a bank to manage [your] affairs.” Professional trustees vary widely in their commitment to service and delivering value. Your friendly neighborhood elder law attorney (should) have plenty of experience with a range of professional trustees and banks. Why not ask? However, do not use an attorney as your trustee. The trustee function is fundamentally different than the lawyer function, in my opinion. A focused, professional trustee will do that job with much greater efficiency and at less cost than the typical attorney. But you still need to take care that you have the right trustee, and your attorney can be very helpful in that regard.

Is Now A Bad Time For A Real Solution?

Peace of mind and financial security are waiting for everyone who practices LifePlanning™. You know that peace only begins with financial security. Do you want to get lost in the overwhelming flood of claims and promises? Or would you like straight answers?

No excuses. Get the information, insight, inspiration. It is your turn. Ignore the message? Invite poverty? Or get the freely offered information. To make wise decisions. For you. For your loved ones.

The LifePlan™ Workshop has been the first step on the path to security and peace for thousands of families. Why not your family?

The post You Never Call, You Never Write! appeared first on Carrier Law.

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You Scream, I Scream, We All Scream For Ice Cream!
We Also Scream To Avoid Planning

“We have forty million reasons for failure, but not a single excuse.”
—Rudyard Kipling

“It is better to offer no excuse than a bad one.”
—George Washington

Are You A Failure At Making Excuses?

Poor Rudyard Kipling. He is like you. Forty million reasons, but not a single excuse? Perhaps he lacked skill. Or talent. Not even a single excuse in a gigantic 40 million straw haystack of reasons? And you are in the same boat. Have you ever come up with an excuse that satisfied your spouse? Me neither.

George Washington, Founding Father, spoke with the voice of experience: “Better to offer no excuse than a bad one.” How could it be that George Washington, “First in war, first in peace, and first in the hearts of his countrymen.” failed so miserably at making excuses? And fail at excuses he did… How else could he learn that bad excuses are the worst? And when George failed to excuse failure, what did he do? Founder the United States. Revolutionary. Beat the British. Farmer. Inventor. Statesman. Stuff like that.

You have 40 million reasons to avoid LifePlanning™. But when your dearly beloved suggests planning ahead, your 40 million reasons to do something else strangely evaporate. Like mist in the morning sun. Dense fog one minute, clear day the next. What is this phenomenon? The answer is obvious!

It is not reasons that you lack, but excuses. And we are here to help. As a public service. No charge. Expert excuses, here for the reading. High quality, too. When it comes to shirking important responsibilities, ordinary, everyday dodges will not suffice. You need professional help.

Tip-Top Training And Practical Preparation In The Art Of Avoidance

Otter: No, I think we have to go all out. I think that this situation absolutely requires a really futile and stupid gesture be done on somebody’s part.
Bluto: And we’re just the guys to do it.
—Animal House, 1978

Four years at the University of Notre Dame, majoring in Philosophy and English. Juris Doctor from the Boston University School of Law.

Master of Laws, Taxation from Georgetown University Law Center. Judicial clerk. Five years in the Army Judge Advocate General’s Corps, mostly on the Army General Staff, at the Pentagon. Topped off by a couple years with BigLaw. Then 32 years of growth: from one guy answering the telephone all alone to a firm of 50 persnickity professionals. Need know-how? Get know-how. Now.

We don’t just solve problems, we observe how folks run away from problems, too! Flee from foul facts. Dismiss, diminish, deride loved ones’ concerns. Deny, discount, deflect their own painful predicaments. Years of daily experience with responsible, middle-class, hard-working men and women who would prefer to chew their arm off than submit to the terrible torture that is estate planning.

Who else has seen it all? Who else can help you escape? You are in good hands. You came to the right shop. It is not an easy job. And we’re just the guys to do it.

Loudly And Firmly Proclaim These Affirmations Three (3) Times:

• Only Nerds Want To Retire Comfortably Financial Security Is Bad. And Impossible
• I Want To Die Broke, Splurging My Last Nickels On Long-Term Care
• I Look Forward To Nursing Home Poverty My Spouse Can Look Out For Herself. Or Himself.
• My Kids Don’t Need Money And Would Waste Any Inheritance Anyway

Take a deep breath. Excellent! You have achieved the correct state of mind. Remember, last week we covered the first four Excellent Excuses. Let us get down to this week’s Decisive Defenses to avoid any attempt at making you look ahead.

LifePlanning™ Is Unnecessary And A Total Waste Of Time & Money Because

Don’t loudmouths always impress you? So always lead off with an audacious affirmation!

Number One: Raise your voice and daringly declare: “LifePlanning™ is Stupid, Superfluous, and a…”

Number Two: Quickly follow with one of these Negative Nuggets:

#5 … Waste Of Time Because I Only Have A House And An IRA!

Are you opposed to draining your Individual Retirement Account (or 401(k) or 403(b) or Thrift Savings Plan or other retirement account) for long-term care? Of course not! Money in a retirement plan account is just a number, it does not reflect years of working and saving, right? Besides, what would you do with that money anyway? Might as well shoot it out the door at $10,000 to $15,000 per month. And you might get lucky. Maybe you only need assisted living services that cost $5,000 to $10,000 per month. Happy Days! And home care services are only $25 per hour and up. Foolish to worry about preserving that retirement money for your spouse when the government knows so much better than you do about how to spend it.

And everybody says that the homestead is “PROTECTED” so nothing to worry about there! Of course, even without planning, the house will go through probate to your family. And when everybody was explaining how the house was “PROTECTED”, everybody also told you that if you need help (Medicaid) with long-term care, the state wants its money back. And when you go through probate, because you are too smart to waste money on planning, the state will collect its payback. From your house. Which maybe isn’t so “protected”, after all…

Of course your kids would never sell your house while you need care, right? That’s why you do not even have to think about having cash instead of a house anymore. Cash that must be “spent down.” That is not a problem because you can keep $2,000 of it. More Happy Days!

So don’t worry! There is no way you would be one of the 70% of folks who the federal government says will need skilled nursing long- term care services for an average of 3 years or one of the 20% who will need services for 5 years or more. And neither would your spouse. So you should not be concerned about $360,000 to $900,000 of skilled care costs. Never happen.

#6 … Waste Of Time Because I Hate Medicaid

Since everyone always has saved enough money to pay for long-term care, there is no need for any government long-term care program. So Medicaid is bad and wrong. It is just like Social Security.

Everyone always has saved enough money to pay for their retirement. There’s is no need for any government retirement income program.

But wait! Social Security is different! You paid in. With every paycheck, the government skimmed off 15.3% FICA (employer and employee) to pay for Social Security. So getting some return on your payroll taxes is OK!

Help me out here… Is Medicaid different? Did you ever get a paycheck where you didn’t pay federal and state income taxes on every nickel you earned? Does the government run Medicaid for free? Did you somehow skip out on paying for Medicaid? With every paycheck. And Social Security check too?

Why are you opposed to getting something back for all the dollars you paid in? It is OK to get Social Security because you paid taxes for it. But it is bad to get long-term care Medicaid because you paid taxes for it?

There are lots and lots of Medicaid programs – dozens of them. Most Medicaid programs provide for our fellow Americans who have very little.

But there is a slice of Medicaid, middle-class Medicaid, that pays for long-term care. For all Americans. Even you.

For most Medicaid programs, you have to be broke. Middle-class Medicaid lets you keep your house, up to $700,000. And your stuff, no limit on value. And your “motorized vehicle”, also no limit.

So, Medicaid is bad and you hate it. You hate it so much that you will spend all your money. Then, sell the house and all your stuff, spend all that too. And then wind up on Medicaid anyway. Sounds like a plan to me! Good luck with that.

#7 … Waste Of Time Because Medicaid Nursing Homes Are Lousy Nursing Homes!

Medicaid nursing homes, long term care facilities, skilled nursing facilities, assisted living facilities, and anyone else who provides Medicaid care are just the worst! If a facility accepts Medicaid, the place smells bad, the staff is rude, the management is poor, and the care is awful. God forbid that you or a loved one is ever condemned to a Medicaid facility or is forced to receive Medicaid services. Great excuse!

Gee, I wonder what percentage of skilled nursing facilities accept Medicaid? 10%? 30%? 50%?

Actually every skilled nursing facility accepts Medicaid. All of them. 100%. Do you have enough money to pay $10,000 – $15,000 per month for skilled care? For an average of 3 years. With a good chance of 5 years? Is it ridiculous to think that nursing homes would like to get paid when you go broke? Are you opposed to caregivers getting paid? Do nursing homes get everything for free?

Not so fast! Everybody knows that there are very few “Medicaid beds”. You know, the ones that they seal with plastic. So the bedbugs cannot escape. Just a few Medicaid beds.

Funny thing, though. About 70-80% of long-term, skilled nursing facility residents are paid for by Medicaid. How did that happen? Maybe because all beds are Medicare-certified. And all Medicare beds can be paid with Medicaid dollars.

#8 … Waste Of Time Because Medicaid Is For Poor People!

Medicaid is for poor people (meaning people without any money or stuff). And you have money and stuff, so Medicaid is not for you! Logical!

Makes sense!

Question: How long will you have any money or stuff if you are paying $10-15,000 per month for long-term care?

Are you opposed to not going broke? Is it ridiculous to think that you (or your loved one) might get better care if your life savings had not melted away like a snowflake on a hot griddle? Are you against paying for the extra services you want?

You get a shower a week in a long-term care facility. How often do you shower now? Are you against paying some of your hard-earned savings to get a shower more frequently?

If your long-term care “insurance” (also known as Medicaid) paid for the $10-15,000 cost of basic services, and, if your lifesavings were intact, would you choose to spend some of those savings to make your days more pleasant? Do you want to be poor? Is poverty more noble? Is it honorable to spend down a lifetime of work in a matter of months? Does it make sense to believe that the government knows best? Is it foolish to plan for your future?

#9 … Waste Of Time Because I Am Not Getting Older, I Am Getting Better!

Yesterday I was looking in the mirror. I felt depressed. I said to my bride of 15 years, “Honey, when I look in the mirror I see an old, fat, bald guy, and it depresses me. “Honey,” I said, “I need your help.”

“Well,” said my soulmate, “Your eyesight is damn near perfect!”

Since I have been wearing glasses since the 8th grade, my wife’s compliment was exactly what the doctor ordered. I felt better immediately. So, when I ask you, “Is it ridiculous to think that you are not getting older, you are getting better?” Remember this little love tale of mine. And draw your own conclusions.

And the hits just keep on coming! More great excuses are on their way!

Here’s A Sneak Preview Of The Next Fabulous Five Excuses To Avoid Planning:

#10 … Waste Of Time Because It Is Overkill!
#11 … Waste Of Time Because I Will Spend It All Anyway!
#12 … Waste Of Time Because Medicaid Won’t Work When I Need It!
#13 … Waste Of Time Because Every Other Attorney Must Be Doing This!
#14 … Waste Of Time Because If This Worked, Every Other Attorney Would Be Doing This!

Is Now A Bad Time For A Real Solution?

Perhaps you already have all the answers. Maybe this is no problem at all. Possibly you do not believe in the passage of time.

Your habits and values have earned you peace of mind and financial security. LifePlanning™ is the easy part. You worked for the peace that only comes with financial security. What is most important, legal documents? Avoiding probate, is that the best you can do? Is family about inheritance? Or are the deeper things most significant?

Is any of this easy? Do you want to get lost in the overwhelming flood of claims and promises? Or would you like straight answers?

Well, here you are. Now you know. No excuses. Get the information, insight, inspiration. It is your turn. Ignore the message? Invite poverty? Or get the freely offered information. To make wise decisions. For you. For your loved ones.

The LifePlan™ Workshop has been the first step on the path to security and peace for thousands of families. Why not your family?

NO POVERTY. NO CHARITY. NO WASTE.
It is not chance. It is choice. Your choice.

Get Information Now.
(800) 317-2812

The post Estate Planning Is Dumb, A Waste Of Time appeared first on Carrier Law.

Close Your Eyes And Tap Your Heels Together 3 Times…
There’s No Account Like An Ira Account, Unless It’s A 401(K)…

NOTE: You have stumbled upon one more in our continuing series answering your Frequently Asked Questions about traditional and ROTH Individual Retirement Accounts. Most middle-class Americans rely on these accounts for retirement security. These are the questions folks like you ask folks like me over and over again. So if you think they are boring, ask more interesting questions! As if there were anything more interesting than retirement security.

I Just Like Watching It Grow…Why Do I Have To Withdraw $$$ From My Ira?

You Earned The Money. You Saved The Money.Now You Have To Spend The Money.
Growing Old Is Like Being Increasingly Penalizedfor For A Crime You Have Not Committed
— Pierre Teilhard De Chardin

Middle Class Michigan has billions invested in traditional Individual Retirement Accounts, Simplified Employee Plans (SEP) and Savings Incentive Match PLan for Employees (SIMPLE). Those billions cannot stay there forever. You must start pulling your money out at age 72. Happy Birthday! Nobody cares if you do not want to take the money. Does not matter that you are still working. The Law says “Thou Shalt Take Thy Required Minimum Distribution (RMD)!”

How much to take? You have an IRA custodian, the company running your IRA. Your custodian tells the taxman that you must take the RMD. Your custodian also tells you how much you must take (or offers to calculate it). Your custodian told you this last January. Remember? It was in that flood of financial mail you always get at the beginning of the year. Let’s hope you didn’t throw it out…

Somebody Died And Left You An Ira… Now What?

Books Are The Treasured Wealth Of The World And The Fit Inheritance Of Generations And Nations
— Henry David Thoreau

You did not get a book. You were named beneficiary on an IRA. By somebody you did not marry. You have until New Year’s Eve in the year after that generous person’s death to empty that inherited IRA account.

Love & Marriage, Go Together Like A Horse & Carriage

Your spouse dies. You are named IRA beneficiary. You did not roll over the IRA into one of your own. You can wait to take distributions until (what would have been) your dearly departed’s 72nd year.

Different Strokes For Different Folks

IRA Custodians are like snowflakes… All different. Distribution options vary widely. You do not like your IRA custodian? You can arrange a “custodian-to-custodian” transfer. It can be a pain, but worth it!

And what if you are not a human? What if the IRA is left to a charity or trust or estate? Special Rules for you! The IRS is ready to help with Publication 590-B. Check it out! Fascinating reading.

Danger Danger

Never forget! There is a 50% Penalty Tax on top of any regular income tax if you fail to take a Required Minimum Distribution. You do not want to need Form 5329. But if you just made an innocent mistake, IRS might forgive the penalty. But don’t count on it.

I Want A Roth Ira Like Everybody Else. But I’m Stuck With This Stupid Traditional Ira. What Can I Do?

Calm Down… You Can Convert! After You Pay The Taxes.

You can convert pretty much any traditional IRA, SEP IRA, or 401(k) to a Roth.

SIMPLE IRAs are different. You must wait for 2 years. If you do not wait, there is a 25% penalty. So do not be a simpleton and do wait the 2 years.

You can only convert your employer plan if eligible to take a distribution.

I Want My Money Now! From My Roth. How?

You Earned It. You Paid Taxes On It. Now You Want It.

Roth IRAs are great because you can take the money out tax-free! That’s because you paid tax on the money when it was going in. Except for the money the money earned. You have 3 kinds of money in a Roth IRA.

Contributions: Money you paid tax on, then put into the Roth.

Conversions: Money you had in another IRA or 401(k), then paid tax on, then put into the Roth.

Earnings: Money that your Contributions and Conversions earned while in the Roth.

You can take your Contribution back at any time. You can withdraw your Conversion money at any time if you are over 59 ½. Why not? You already paid the tax on it. Technically, you take out Contributions first, then Conversions.

But what about those sweet, sweet tax-free Earnings? You can have those:

1. 5 years after setting up your Roth, and,
2. You are 59 ½ or Dead or Disabled, or,
3. First Time Home Buyer Exception.

10% Penalty Tax on Earnings if you are under 59 ½. 10% Penalty Tax on Conversions if you are under 59 ½ and your Conversion money was in the Roth for less than 5 years.
Easy, huh?

Everything Is Easy Until It Isn’t!

When The Going Gets Tough, They Call For The Sons Of Bitches
— Fleet Admiral Ernest J. King, Usn

Most folks want to work and save and enjoy. They do not live their lives raking through the Internal Revenue Code or the Bridges Eligibility Manual or the Social Security Act or any of the other Niagara Falls torrent of rules and regulations spewing out of the Government. Desperately and without hope seeking some semblance of common sense. Trying to keep head above water. No, most normal, well-adjusted, happy, healthy people wisely wish to wander on the sunny side of life.

Aren’t you glad there is an abnormal, mal-adjusted, neurotic fanatic like me to focus like a laser beam on the stuff that drives most people crazy? Stop the madness? I don’t think so… Only by digging deep do we find the nuggets of knowledge that keep you from Nursing Home Poverty. That allow you to receive some payback for all the taxes you paid in. That deliver dignity and respect.

Peace of mind and security are waiting for everyone who knows what work really is. It is a choice. Despite what “everybody else” says.

Well, here you are. Now you know. No excuses. Get the information, insight, inspiration. It is your turn. Ignore the message? Invite poverty? Or get the freely offered information. To make wise decisions. For you. For your loved ones.

Happy Days Are Here Again…

It Is Morning In America
Everything’s Coming Up Roses
All Good News All The Time

Can’t Get Enough Of This Wonderful Stuff
Your ring-side seat to the glorious success that is the United States of America today! Amazingly wonderful, super, duper, wonderfulness like you have never seen! Cherry-picking only the very best, for your prideful pleasure.

Making Every Boy’s Dream Come True

You already knew that in today’s America every little boy can dream of growing up to be a champion female track star, weightlifter, or mixed martial artist. Shamefully, the ranks of 4-star female admirals in uniformed federal service have always been tightly shut. No longer! Thanks to the brave courageousness of the courageously brave, one of the few remaining doors to young boys’ dreams has been battered down. Without serving a minute of military service, former pediatrician and political health bureaucrat Rachel Levine has bravely vaulted courageously to be one of the few 4-star flag rank, admiral general officers of America. Courage!

Back in 2014, the U.S. Navy promoted Michelle Janine Howard to full Admiral. Four stars. After 32 years of active duty including extensive sea time. First woman. First African American. First woman captain of a U.S. Navy ship. But. Born a woman. So, y’know… no biggie.

Boat Parades Are Back!

Spontaneous Outpourings Of Joy, Affection & Respect For America, From The World

You may recall a new phenomenon that arose during the recent political pugilism.

Boat Parades! Enthusiastic Americans took to the waterways to celebrate affection, respect, and admiration for their choice. In the best traditions of American democracy, light-hearted conglomerations of watercraft arose spontaneously in good-natured advocacy. A water-wonderful time was had by all!

And now the world has chosen to honor American Greatness with a boat parade for all of us! Handsome ships from around the world, flying every flag, have gathered off our mighty port cities to celebrate us! Packed with containers, they refuse to land. Why? They prefer steaming back and forth to salute you and me with affection and good spirit. Nothing says “We Love You, America!” like a boat parade. And “We Love You, too, World!”

Finally, Gasoline Prices We Can Be Proud Of!

For almost four years Americans suffered the stark, staring, humiliation of gas prices that belonged in the 1970’s. The traumatic embarrassment of $2 gas. Sometimes less. Oh, the humanity!

More painful to all right-thinking people was the effect on Russian oil oligarchs, oil barons, oil sheiks and the Canadians. Thoughtlessly, we deprived them of their chokehold on America. Think how they must have felt! All right-thinking people burned with shame…

But all is right again! It was super easy for Administration Wise Ones. Barely an inconvenience. Simply shut down a few pesky American pipelines. Revoke a few permits, leases, approvals… And now? Europe still on top. But American Oil Prices and Dependence are on the upswing. Yay for us! Thank you Thank you Thank you…

No Poverty. No Charity. No Waste. It is not chance.
It is choice. Your choice. Get Information Now.
(800) 317-2812

The post Individual Retirement Accounts Hold $40 Trillion appeared first on Carrier Law.

IRAs… Yes, This Will Be On The Test

WE’LL GET THERE WHEN WE GET THERE… DON’T MAKE ME STOP OR SO HELP ME…

WOULDN’T IT BE NICE IF WE WERE OLDER?
THEN WE WOULDN’T HAVE TO WAIT SO LONG
AND WOULDN’T IT BE NICE TO LIVE TOGETHER
IN THE KIND OF WORLD WHERE WE BELONG?

WOULDN’T IT BE NICE, BEACH BOYS

Financial security was probably not what The Beach Boys were singing about. But wouldn’t it be nice to have a few bucks of your own? A little independence? Isn’t that “the kind of world where we belong”? Maybe not completely relying on Social Security?

You choose from two types of Individual Retirement Account: Traditional or Roth. Traditional IRA, you deduct contributions when the money goes in and pay income tax on distributions when the money comes out. Roth IRA, you pay tax on contributions when the money goes in and do NOT pay income tax on distributions when the money comes out.

Concerned about skyrocketing income tax rates? Roth IRA for you! Want to dump more money into the account now and worry about taxes later? Traditional IRA at your service.

How to make it happen? Middle class workers and savers (that’s you) have been pumping money into tax-advantaged accounts since the 1980’s. How much? Nobody seems to know for sure. Probably somewhere between 30 and 40 trillion dollars. And even today, that’s real money. So how can you get into the game?

You Must Have Earned Income

Only folks with “earned income” get to contribute to an Individual Retirement Account. Did you get a W-2? Then you have earned income. For sure. No question. “Safe Harbor.” But nowadays, in this “gig economy” many folks are getting Form 1099s for earned income. Hello UBER drivers! Earned Income includes wages, salaries, commissions, self-employment income, taxable alimony. Earned Income does not include rent, royalties, annuity payments, pension, deferred comp.

How much can you contribute? All of your “earned income”… up to the contribution limit. For 2021 (no change from 2019 or 2020) the contribution limit is $6000, $7000 if you are 50 years old or more.

But If You Have Too Much Earned Income — No Roth For You!

You worked your butt off. Income tax biting hard. But you see even higher taxes on the horizon… Wouldn’t it be nice to dump some dough into a Roth and not worry about those higher taxes? Obviously. But you poor sap… if your income is over $124,000, your contribution is limited. And if you make more than $139,000, you are skunked! No Roth at all! Really? Nope…

Too Much Earned Income and Still Get the Roth? How Can This Be?

You put in the overtime. You worked a second job. You sold GRIT, greeting cards, and flower seeds door-to-door. Too much income! You cannot have a Roth! Or can you?

You paid the income tax. You are not eligible for a Traditional IRA income tax deduction. You are not eligible for a Roth. Now what?

Your income is “too high” for a Roth. (Hello doctors, nurses, foremen, engineers!) But you can still make contributions to a Traditional IRA. Taxable contributions. Contributions that are NOT tax deductible. How much can you contribute? Same as anyone else, see above. The difference is that you cannot take an income tax deduction for those contributions.

OK. So now you put the maximum leftover money into a Traditional IRA. “How does that help with the Roth?”, you ask. Good question. The answer is that you can convert a Traditional IRA that was established with taxed money into a Roth IRA. You can even convert untaxed IRA money into a Roth, if you pay the income tax. You can do this…whenever you want.

“Allowable conversions. You can withdraw
all or part ofthe assets from a traditional
IRA and reinvest them (within 60 days) in
a Roth IRA. The amount that you withdraw
and timely contribute (convert) to the Roth
IRA is called a conversion contribution.”
IRS Pub. 590-A, page 27.

To Sum It All Up: You cannot establish a Roth IRA because you have too much income. But you can still establish a Roth IRA anyhow, despite too much income, if you take this extra step.

I told you this stuff was nuts. Believe me now?

I Do Not Work Outside the Home, But I want to Retire Too… Can My Spouse Contribute to My IRA?

Yes! Even if you do not work for money outside the home, your spouse can contribute on your behalf. Yay domestic partnership! Wedded bliss!

Just like your working-for-money spouse, you can put $6000 per year into your own IRA. And beginning when you are 50 years old, you can put an additional $1000 per year into your IRA. Pretty great!

Beware: All the same rules for income, retirement plans, contribution limits and so on apply to you as to your working stiff spouse. Sauce for the goose, sauce for the gander. Same rules apply to both. Including that Traditional to Roth Conversion thing that nobody can believe actually works. But does!

Can I Get Deductions for My IRA Contributions? Elementary My Dear Watson! If This Stuff Were Easy, Everybody Would Do It

RULE #1 You can never deduct contributions to a Roth IRA. Remember, the whole point of a Roth is pay tax NOW so no tax LATER.

RULE #2 You can always deduct contributions to a Traditional IRA, no matter how much income. Within the $6000 + $1000 limits. Unless you or your spouse are covered by an “employer retirement plan.”

If your employer sponsors a retirement plan, your IRA contribution will be limited or eliminated by the “Deduction Phaseout.” Limited or Eliminated. Depends on how much income you have. Same deal, but different limits if your spouse’s employer has a retirement plan. It gets complicated.

So, pick yourself up a copy of IRS Publication 590-A, Contributions to IRAs, for today’s numbers. Only 60 pages long, IRS Pub. 590-A is riveting reading. And if 590-A does not put you to sleep, may I suggest IRS Publication 590-B, Distributions from IRAs. A real page-turner! Sixty-six pages, that is…

Wondering if you are covered by an employer plan? Your W-2 Form has a box for that. If it is checked, you are covered.

You cannot deduct, but still want to contribute to your traditional IRA? File IRS Form 8606 with your tax return to fess up!

Changes in Tax, Medicaid, Business and Other Laws Make Lifeplanning™ a Necessity for Any Middle-class Family to Succeed

You have built a significant and successful life and family.

Of course, your success comes from hard work and talent. But continued success depends on how quickly one can respond to life’s changes.

And, as I am sure you are keenly aware, circumstances are putting pressure on the entire American middle class, and middle-class seniors in particular. I am referring, of course, to the frustrating jumble of COVID laws and executive orders, along with the trillions of social spending draining Medicare and Social Security trust funds. Not to mention today’s financial turbulence.

First, the infamous executive orders that required nursing homes to admit vulnerable seniors with COVID. Only 16% of Americans are over age 65. Yet according to the Centers for Disease Control and Prevention, this small group suffered 78% of all COVID deaths. The number goes to 94% when people over age 50 are included.

Hyper-inflation is already back. You are already paying double at the gas pump. I shudder to think what your heating bill will look like this winter.

With Congress and the President shoveling money out the door, how will Social Security and Medicare survive? You already know that their priorities are not your priorities.

Hence the necessity to recognize these new realities – threats, even – and act accordingly, by increasing awareness, effectiveness, and avoiding nursing home poverty. You can live your best possible life and still be justly proud of the legacy you leave.

LifePlanning™, of course, cannot be the only solution to all this, but it is definitely an important part of it.

And let me emphasize one highly relevant fact.

Pressed by the need to get legal advice and documents quickly and cheaply, a few seniors (and their kids) have started using some of the free resources available on the Internet. This “shortcut” may all too easily result in great financial and medical losses to the detriment of your wealth and health.

Quite an unnecessary risk, given the availability and affordability of a comprehensive, cost-effective, personalized solution like LifePlanning™.

The benefits of this approach are so clear and overwhelming that thousands of families and hundreds of millions of lifesavings have already been protected.

Nevertheless, I doubt if anyone in your family will appreciate its value and implications better than you.

Nothing is more compelling than evidence. Go to the website: www.davidcarrierlaw.com. A quick review will take only a few minutes.

If you like what you see, call our LifePlan™ Hotline at 800-317-2812 or email me at david@davidcarrierlaw.com for an online or live Workshop. In a very short time indeed, you and your family can verify the claims I have made.

Success in life has always depended on knowledge. Those who are better informed, or informed before others win for themselves and their families. That is really the overwhelming reason why LifePlanning™ is not just important but, I believe, essential.

Why not invest 5 minutes and see for yourself?
(800) 317-2812

The post I Want to Reture Some Day… Can I Contribute to an IRA? appeared first on Carrier Law.

USEFUL, WHO SAID ANYTHING ABOUT USEFUL? GOOD THINGS TO KNOW!

SPOUSE DIED: TRAGIC, UNAVOIDABLE TOO MUCH TAX ON IRA: TRAGIC, UNNECESSARY

YOUR SPOUSE DIED, LEAVING YOU AS BENEFICIARY OF A TRADITIONAL OR ROTH INDIVIDUAL RETIREMENT ACCOUNT.
WHAT CAN YOU DO? WHAT CAN YOU DO?

BASIC: All IRAs are held and managed by an “IRA custodian.” The IRS gives 3 options to surviving spouses. But your IRA custodian’s policies and procedures determine which of the 3 possible options are available to you.

OPTION 1:
LEAVE IT ALONE

Don’t Upset the Apple Cart #1. Keep the IRA Custodian in Place. Be treated as beneficiary, not spouse. Probably a bad idea. But not always…

Why You Might Be Beneficiary: Are you less than 59 ½ years old AND you need the IRA money right away? Avoid the 10% penalty tax on early withdrawals by taking required minimum distributions (RMDs) over your life expectancy starting now. Or you can wait and take RMDs when your spouse would have become 72 years old. If spouse was already 72, you must start the RMDs now. Payments are accelerated, but hey, you need the money now!

Downsides: When you die, your beneficiaries will not get the 10-year stretch-out of payments, but will be limited to whatever period of time was remaining for you. Also, the Supreme Court has held that IRA assets held for a beneficiary are not “retirement plan assets.” This means that if you were to be sued, the “inherited IRA” assets would be available to judgment creditors! That means you could lose the inherited IRA assets. But who then gets to pay the tax? Right! You. But you have no money because that bad ole judgment creditor took it all. Right again! Bad news.

More Bad News: A beneficiary- inherited Roth IRA must pay out RMDs, just like a Traditional IRA.

Bottom Line: Consider carefully. No “obvious” or “always” solutions.

OPTION 2:
ROLL TO YOU, BUT LEAVE WITH CUSTODIAN

Don’t Upset the Apple Cart #2. What if the current IRA Custodian is a whiz? Great service! Stunning Investment Performance! Returns Phone Calls! You like them, they like you. Don’t screw up a good thing. Roll it over. Let the IRA continue to dance with the folks what brung it. If they let you (but they may not!).

If the IRA Custodian allows, the account rolls over to your name. Your social security number, too. Your personal information substitutes for that of your deceased spouse. Age, children.
The 10% penalty if you take the dough before age 59 ½ applies. Traditional IRA: RMDs at 72. Roth IRA: No RMDs at all! And you have full “retirement plan” asset protection. Your beneficiaries may use the full 10-year stretch-out.
What if the IRA Custodian goes sour on you? Well, it is your very own IRA. So, you can change to another IRA Custodian as you wish.

OPTION 3:
ROLL OVER, ROLL OVER, SO THEY ALL ROLLED OVER…

Perfectly Clear Fresh Start! Create a new IRA account. With a new IRA Custodian. Roll the deceased spouse’s funds to this new account. As with Option #2, it’s just like a brand-new account. And who doesn’t like brand-new?

Modified Limited Hang-out. On the other hand… You are happy with your existing IRA Custodian. You do not want to be responsible for cutting down hundreds of trees for double the paperwork. A simple life and a happy one is your motto.

Stick with whom you know and direct the roll-over funds to your existing IRA. All existing rules apply. You simply increase the amount of money in your well-established Individual Retirement Account.

BY THE WAY…
CONTINUING CONSIDERATIONS OF CONCERN

1. The rules apply to Traditional IRAs and Roth IRAs. But you cannot use the roll-over alone to convert a Traditional IRA to a Roth IRA. Traditional to Traditional. Roth to Roth.
2. Revisit your beneficiary designations. Should you name individuals? Perhaps a Tax Advantaged Legacy Trust would be the best choice? Your LifePlanTM attorney can help!
3. Bad News: Choose Option 1 for an inherited Roth IRA, and you will have to take Required Minimum Distributions, just as if it were a Traditional IRA. Good News: Options 2 and
3. As a spouse beneficiary, you do not have to take any RMDs.
4. Mind the deadlines! Remember that failure to take a timely RMD distribution will result in a 50% penalty tax. Ouch!
5. Major changes to Traditional and Roth IRAs laws, rules, and regulations have occurred over the last few years. Many more can be expected. It’s not easy, so watch this space!

NON-SPOUSE LOVED ONE DIED: TRAGIC, UNAVOIDABLE
TOO MUCH TAX ON IRA: STILL TRAGIC, UNNECESSARY
YOUR MOM, DAD, BROTHER, SISTER, SAINTED AUNT, CRUSTY UNCLE, BEST BUDDY DIED, LEAVING YOU AS BENEFICIARY OF A TRADITIONAL OR ROTH
INDIVIDUAL RETIREMENT ACCOUNT.
WHAT CAN YOU DO? WHAT CAN YOU DO?

BASIC: All IRAs are held and managed by an “IRA custodian.” The IRA custodian’s policies and procedures determine which options are available to you.

No Stretch-out for You! The 2019 SECURE Act (so-called IRA “reform”) applies when the loved one died in 2020 or later. Previous law allowed IRA beneficiaries to stretch out their inherited IRA payments over their life expectancy. Government, however, likes to get its money sooner rather than later. (Why is it their money?!) Rather than wait to get bits and pieces over your lifetime, they want it now. So, new rule: Inherited IRA must be exhausted, fully withdrawn, emptied within 10 years.

Exceptions. If the IRS decides that you are: minor child of the owner; 10 years or less younger than the owner; disabled, or; chronically ill, special rules will apply and your mileage may vary.

AIN’T IT GREAT TO FIND OUT HOW THINGS REALLY WORK?
UNCOVER THE ELEPHANT!

Seems like we are surrounded by elephants… Each one cleverly disguised by the global investment industry, the legal profession, government, and others. But you can’t hide an elephant forever, no matter how hard you try. When you want to find out what is really going on… come on down!

Isn’t long-term care the biggest elephant in the herd? How can you get the straight story? Learn accurate information. Find out what you truly need to know.

Like most families you are busy. Lots of stuff going on. So, we make it easy. Get the information, insight, inspiration you need. To live your life. Make smart decisions. Cut through the fog. It is your turn. For you. For your loved ones.

NO POVERTY. NO CHARITY. NO WASTE.
It is not chance. It is choice. Your choice.
Get Information Now.
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The post Fun Stuff to Know and Tell — Individual Retirement Accounts appeared first on Carrier Law.

Things Nobody Told You… But Probably Should!

What If You Did Not Get Your Required Minimum Distribution?

Maybe You Forgot… Maybe The Company Screwed Up… Maybe It Was The One-Armed Man… Who Cares? What Happens Now?

You were supposed to take $2000 as a “required minimum distribution” from your Individual Retirement Account. For reasons that remain shrouded in mystery, you only got $1000. Now what?

The RULE: There is a 50% penalty tax on any shortfall. You were $1000 short, so the penalty tax is… $500. Ouch! And it doesn’t matter whose fault it was.

STEP #1: Fix the problem ASAP! As soon as you realize your distribution is short, take the distribution.

STEP #2: Report the Shortfall and Penalty. Use Form 5329 to report the shortfall and the penalty. You could pay the penalty immediately, but don’t. Go to STEP #3.

STEP #3: Plead for Mercy. They say it is easier to beg forgiveness than get permission. Probably right. IRS penalties can be waived or forgiven if there is “good cause.” So when you have taken the distribution, STEP #1. And filed your IRS Form 5329 to report the late payment and the penalty, STEP #2. Write a nice letter to the nice folks at the nice IRS explaining how none of this was your fault and probably due to COVID or something. Ask them nicely to just forget about the penalty. Maybe they will. Maybe not. But if you do not ask, you do not get. So ask. Nicely.

What If Dad Died Before Taking His Required Minimum Distribution In The Year Of Death?

Dad Died… He Did Not Take His Rmd For That Year… How Much Is The Rmd? And Who Gets It?

RULE #1: The Required Minimum Distribution is the amount Dad was supposed to take in the year of death.

RULE #2: Required Minimum Distributions are what the IRS calls “income in respect of a decedent” and must taken by the beneficiary of the IRA. The distribution Dad already received shows up on Dad’s last tax return. The remaining balance of the RMD goes to the beneficiary of the IRA. If there is no beneficiary or the estate has been named as beneficiary, then the RMD goes to the estate.

DANGER! DANGER! What if the RMD is not taken in the year of death, what with all the confusion and so forth? Whoops! There is a 50% penalty tax on any shortfall. Go to the previous question and file your IRS Form 5329, pronto! Also the letter where you ask to be forgiven the 50% penalty tax.

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The House of Representatives has passed a bill that could mean changes for all Americans with the most common type of retirement plan, such as a 401(k) or Individual Retirement Account (IRA). Proposed changes to retirement reflect the realities facing many workers today.

The SECURE Act is being proposed as an improvement to the retirement system, and stands for “Setting Every Community Up for Retirement Enhancement Act of 2019”. Interestingly, most of the changes either highlight the difficulty of saving for retirement, or the challenges faced by many workers today who are facing a future with a shaky Social Security System, and insufficient retirement funds. While there are some positives, some of the changes proposed would simply make it easier for people to retire with less money and less security than before.

Access to Retirement Plans for Part-time employees

With the rise of the “gig” economy, more people are working part-time jobs. This bill would allow long-term part-time employees the opportunity to participate in retirement plans, if their employer offers one.

Disclosure of Estimated Retirement Income

Employers would be required to disclose an estimate of future retirement income on 401(k) statements. This would hopefully show employees how much more they need to save, if the assumptions used for those estimates are realistic. The assumption for the estimates will be set out by the Treasury Secretary.

Use of Retirement Savings for Student Loan Debt

With the rising costs of higher education, this bill would provide some relief for those who find themselves with crippling student loans that can’t be discharged in bankruptcy. They could now also reduce their retirement savings to pay off those loans.

Access to Retirement Plans for Small Employers

Another change would make it possible for small employers to group together in offering a retirement plan. This would be helpful, since 42% of private-sector workers don’t have access to a workplace retirement plan.

Reduced Regulations on Annuities

More 401k plans will be able to offer plans to convert retirement savings into annuities. This should greatly benefit insurance and annuity companies by increasing their market and reducing the regulations for offering annuities as part of retirement plans.

Extended Retirement Contribution Age

As more people need to keep working well past normal retirement age, this bill would allow people to continue adding to their retirement plans after age 70-1/2 and would allow people to hold off on withdrawing from their plans until age 72. This also reflects the fact that many people probably haven’t saved enough for retirement by the time they hit 70-1/2.

Use of Retirement Savings for New Children

Many new parents find that their health insurance plan still leaves them with thousands of dollars of out-of-pocket expenses for the birth of a child. Rather than making any changes to the health insurance system, or increasing entitlement programs for families, this bill would allow these parents the opportunity to reduce their future retirement savings by spending some now on these expenses for new children. This will probably not help increase the falling birth rate in the country.

Restrictions on Stretch Distributions

With the US budget deficit in the trillions, this bill would bring in additional revenue in the form of increased and accelerated income taxes paid by beneficiaries of retirement plans. Rather than being able to stretch out inherited retirement money over their lifetime, beneficiaries (your children) will have to take out money over 10 years, likely bumping them up to a higher tax bracket, and increasing the percentage of the inheritance that goes to taxes. What does this mean? Let’s look at an example.

A single 45-year-old making $100,000 inherits a $1,000,000 Traditional IRA from her parents. She can either cash it out immediately (which is what the vast majority of children do) or she can stretch out the distributions.

Cash out: Based on her income and 2018 tax rates, she would be taxed at an effective rate of 33.48%, leaving her with $665,200 of inherited cash.

Current Stretch Rules: She can opt to take the required minimum distributions over her life expectancy. After 10 years, she has paid a total of $243,000 in taxes, received approximately $368,000 in required minimum distributions, and has $1.64 million left in the IRA.

Proposed Stretch Rules: She can opt to take the required minimum distributions for a maximum of 10 years. After 10 years, she has paid $615k in taxes and inherited a total of $865,000.

Below is a graph that visually represents the difference in these rules, assuming the child invests the required distributions after paying taxes and has normal living expenses and Social Security Income:

Image credit: “The Hidden Money Grab in The SECURE Act” James Lange, Forbes Contributor

As usual, all parties involved will continue to look for ways to maximize their benefits under any changed law. We will continue to look for ways to protect and preserve your assets for you and your family. There are options involving trusts that could still preserve a lifetime income stream for children who inherit your retirement savings.

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