by Bill Griffith Bill Griffith No Comments

When to Update Beneficiary Forms

A good time to review and update your beneficiary forms is near the end of the year or after a significant life event.

Beneficiary Designations

A beneficiary is typically a person named or designated to receive proceeds from a life insurance policy or benefits from a retirement plan or IRA after the account owner or insured dies.

If you are contributing to a 401 (k) or 403 (b) plan at work or other retirement plan, such as a traditional or Roth IRA, then you may remember choosing a beneficiary when you enrolled in the plan.

But over the years, many things can happen in life that might require changes to your beneficiary designations, such as a marriage, divorce, birth of children, or death.

Spouse Versus Non-Spouse Beneficiary

Typically, a married couple will name each other as the primary beneficiary of their life insurance policy and retirement plans.

After the first spouse dies, the survivor should change the beneficiary on their life insurance policy and retirement accounts as soon as possible. It’s easy to forget about this. After the funeral, everyone goes back to work and living life and sometimes these things don’t get done.

Know the Rules

Different rules apply to spouses and non-spouse beneficiaries of individual retirement accounts (IRAs). The SECURE Act and SECURE Act 2.0 changed the rules for taking distributions from IRAs. The rules impact spouses and non-spouse beneficiaries differently.

Also, there is a deadline for splitting inherited IRAs if there is more than one designated beneficiary.

There are many choices when you inherit an IRA. Making a mistake when inheriting assets could trigger a huge tax bill and cause you to lose out on an opportunity for many years of tax deferred growth.

Marriage, Death, or Divorce

Naming a beneficiary is not something that you should do once and forget about. In fact, anything that affects your future financial security and that of your family is something that you should review and update regularly.

Imagine a surviving spouse finding out that a former spouse is still named as the primary beneficiary of a decedents 401 (k) plan. The consequences could potentially ruin a survivors’ retirement plan, especially if it was a sizable account.

Unfortunately, this type of thing happens more often than it should. Don’t let it happen to you. Changing the beneficiary after divorce will ensure that a life insurance benefit from a company plan will be paid out to the person you desire.

Working with a CFP® practitioner

If you are working with a CFP® practitioner, he or she should keep copies of your beneficiary forms on file and review them with you at least once each year and/or after significant life events.

If you are not working with a CFP® practitioner, contact us today and we will take care of this for.

Better yet, find out if your overall retirement and estate plan is on solid ground and sign up with us online.

by Bill Griffith Bill Griffith No Comments

Financial Planning After a Family Member Dies

Financial planning is important all through life but even more so after a family member dies. Having someone you trust can help you through the process and relieve stress.

After the Funeral

Dealing with the death of a loved one is stressful enough but not knowing what to do with Social Security, insurance policies, wills or trusts, ongoing bills and living expenses, and transfers of accounts and funds from financial institutions to beneficiaries poses an additional burden on a family.

Did you know there is over twenty-one things to consider doing in just the first month after the funeral?

Most people know about contacting the Social Security Administration and ordering certified copies of the death certificate. But few people know what to do after they receive the certified copies.

In addition to taking care of everything for your loved one, you might also want to seek advice from a Certified Financial Planner® practitioner and consider creating or updating your own financial plan.

This is especially important if you are the spouse or other beneficiary.

Avoid Mistakes

Making a mistake when inheriting assets could trigger a huge tax bill and cause you to lose out on an opportunity for many years of tax deferred growth.

Mistakes can happen even before a loved one dies when trying to retitle real estate and other property to avoid the probate process. If done incorrectly, you could potentially miss out on significant tax benefits.

Benefits of Financial Planning

Financial planning is a 7 step collaborative process of outlining how your income, savings, investments, and other assets can work to help meet your goals.

The cost of hiring a Certified Financial Planner® practitioner may be less than you think. For example, our One-Month Starter Package is $500. This is a good way for you to get started working with a Certified Financial Planner® practitioner. We’ll talk over the phone or meet in person one or more times over the course of one month to answer your questions, discuss your situation, and propose recommendations.

For example, you may have questions like those listed below:

  • How do I transfer and title assets that I just inherited?
  • Do I have enough assets to last in retirement?
  • I’m interested in moving. Can I make this happen?
  • How can I take advantage of Roth conversions?
  • How can I save for my child’s education?
  • How should I pay down my debt?
  • Do I have enough insurance if I were to pass away?

After we’ve decided upon a course of action, we’re available to help you implement your decisions and answer follow-up questions. After the first month, you can decide if you want to continue with an ongoing financial planning relationship.

For those desiring a continuing relationship where we can help implement your plan and monitor your progress over time, our ongoing financial planning fee is $400.00 per month.

                                             Get started today.  

by Bill Griffith Bill Griffith No Comments

Updating Your Power of Attorney

Updating your Power of Attorney is something that you should consider doing if there have been changes in your life or to Pennsylvania law.

If you set up your estate plan through our firm, your Living Trust Package includes one set of state-specific ancillary documents per person.

The following ancillary documents are included in your trust binder:

  • Durable Power of Attorney for Assets
  • Durable Power of Attorney for Healthcare or Advance Directive
  • Living Will
  • Nomination of Conservator or Guardian

We recommend that people review their estate plan, which includes their ancillary documents, every five years to determine whether one or more of their powers of attorney should be updated based on changes in the law, their life, or other circumstances.

Life can be very unpredictable; you never know when something might happen. A sudden health emergency can happen anytime without warning and require immediate action.

Serious emergencies can upend a person’s entire life in a matter of days. We all know of someone who was living at home one day and then, due to a sudden emergency that caused a subsequent disability or incapacitation, went directly from the hospital to the assisted living/nursing home facility.

In the event of an emergency, a trusted family member or friend who is your appointed Attorney will then be able to act on your behalf. But, if you established your trust years ago, the person you named as the Successor Trustee of your Revocable Living Trust (RLT) and/or the appointed Attorney of your POA’s may no longer be available.

If you recently updated your Durable Power of Attorney for Healthcare or Advance Directive, the appointed Attorney will be able to make important and sometimes life-saving decisions on your behalf.

By reviewing your estate plan, you will be prepared for such an occurrence by deciding when the power granted to the appointed Attorney of your POA for Healthcare goes into effect.

For example, if you initialed the box that says, “This power shall not be affected by my subsequent disability or incapacity,” your appointed Attorney will be able to make decisions regarding your healthcare and personal finances immediately.

Due to the cost of long-term care (LTC), the Successor Trustee may also need to make decisions about your assets currently titled in the name of your Revocable Living Trust.

But what about assets NOT titled in the name of the trust? The Durable Power of Attorney for Assets “may” apply to assets NOT titled in the name of the trust. It is important to know what documents will be needed when the time comes. Having updated POA’s will make the process so much easier. For instance, when it comes to signing a real estate listing agreement, agreement of sale, and a deed, will the Successor Trustee be required to provide the Abstract of Trust along with proof showing that he or she is now the Successor Trustee? Or will the appointed Attorney be required to provide the Durable Power of Attorney for Assets?

Matters can be complicated when it is unclear whether a person may or may not still be able to serve as the Trustee of the trust. For example, what if a person becomes disabled, but is still competent?

The trust might state that, “Upon the death, resignation, disappearance, or incompetency of the Original Trustee, or if for any reason the Original Trustee is unable to serve, or to continue to serve as Trustee hereunder, the Trustor nominates and appoints someone to take over and serve as Successor Trustee of the Trust without the approval of any court.”

These are all important questions that should get answered sooner rather than later. By being proactive and getting your questions answered ahead of time, you will know whether the Successor Trustee can act automatically by virtue of the language in the Trust, or if anything will be needed prior to taking over as the Successor Trustee, such as a letter from a doctor.

Now that you know why reviewing and updating your Power of Attorney is so important, consider taking the time to update your own plans, especially if it has been over five years since setting up your estate plan.

by Bill Griffith Bill Griffith No Comments

COVID-19 Update

Over the last nine months, we have received many calls from people wanting to know if and how they can meet with us to pre-plan for their funeral or cremation, set up a Living Trust, and protect their home and life savings from unanticipated long-term care expenses. Maybe you are wondering the same thing.

We wanted to keep our community, especially those whose families we have been honored to serve, informed about how we have adjusted to continue to help people prepare for and feel more reassured about the future.

We wanted to let you know that yes, you can still work with us to ensure that your wishes for funeral arrangements are documented ahead of time.  Despite the ongoing changes that we are all facing, we make it easy and safe for you to plan for your funeral and cremation.

Whether you want to eliminate the costs and delays of probate to ensure that your loved ones will receive their inheritance promptly or protect your home and life savings from unanticipated long-term care expenses, we can help you organize your financial affairs to ensure your long-term security and independence.

Though we are taking extra precautions with respect to physical distancing, masking, and sanitizing for in-person meetings, we are also available to work with you remotely, either via telephone, on the web, or via email.

We can still help you plan so that everything is taken care of no matter how you prefer to meet with us.

For example, our new cremation center is the premier online cremation resource for families choosing cremation services in Pittsburgh, PA, and surrounding communities.  You can choose the cremation package and merchandise that you prefer at your convenience and in the comfort of your own home.  You can make your own selections and provide the required biographical information entirely online. 

If you would like to eliminate anxiety and uncertainty over your affairs during this challenging time and make things easier for those you love, please schedule an appointment today. 

We can help you organize your financial affairs to ensure your long-term security and independence.

It’s all about your future™

by Bill Griffith Bill Griffith No Comments

Required Minimum Distribution (RMD) After Death

What is the required minimum distribution (RMD) that must be taken if an IRA owner dies on or after the required beginning date?

For the purposes of this article, we will be discussing traditional IRAs.  More specifically, we will be discussing the required minimum distribution (RMD) that must be taken for the year that an IRA owner dies.

If your loved one passed away in 2019, you will need to know what the options are when inheriting an IRA.

Required Beginning Date

First, what is the required beginning date?  Any discussion about retirement topics or IRAs typically includes a reference to the required beginning date. 

The required beginning date is simply the deadline for taking the first required minimum distribution (RMD).  The deadline is April 1 of the year following the year that you become age 70 ½.

For example, an IRA owner who turned 70 in February 2017 was 70 ½ in 2017.  The required beginning date will be April 1, 2018.  An IRA owner who turned 70 in November 2017 did not reach 70 ½ until 2018.  The required beginning date was April 1, 2019.

If IRA Owner Dies on or After the Required Beginning Date

An IRA owner who dies after the required beginning date should have been taking RMDs.  If not, he or she would have been subject to a 50% penalty tax on the amount not withdrawn.

A required minimum distribution must also be taken for the year of death just as if the IRA owner was still living.  The questions are, how is the RMD calculated and who must take it?

Calculating the RMD

The RMD for the year of death is calculated the same as if the IRA owner was still living.  In most cases, the Uniform Lifetime Table is used unless the beneficiary is a spouse and more than 10 years younger than the IRA owner.

For example, the RMD for a person who dies in 2019 at the age of 72 would be calculated by using a distribution period of 25.6.   

Who Takes the Required Minimum Distribution?

It is very important to know who must take the RMD for the year of death.  This depends on whether the IRA owner already took the RMD in the year of his or her death.  If the IRA owner did not take the RMD in the year of death, then the beneficiary must take it. 

For example, if your spouse died in 2019 before taking the RMD, then you will take the RMD if you are the named beneficiary.

If you are the named beneficiary of your parent’s IRA, then you must take the RMD for the year of death.

IRA Rules Can Be Confusing

There are many rules regarding IRAs. Sometimes, the rules and deadlines can be confusing. 

Hopefully, you now have a better understanding of the rule regarding the required minimum distribution (RMD) that must be taken if an IRA owner dies on or after the required beginning date.

As always, do not sign any beneficiary claim forms until you fully understand the company’s contractual and/or IRS tax ramifications.  A mistake could trigger a huge tax penalty. And make sure that you contact your advisor (estate attorney, CPA, CFP®) for professional advice.

by Bill Griffith Bill Griffith No Comments

Finding Unclaimed Money and Property

Finding unclaimed money and property can be daunting and very time consuming. Save yourself time and potential losses in value by knowing when escheatment occurs.

According to the state treasurer, one in ten Pennsylvanians has unclaimed property that can be applied for. While more and more residents are becoming aware of the process of searching for unclaimed property, the process of finding unclaimed money and property can be daunting and very time consuming.

Unclaimed Property Search

Since we regularly help people with claims paperwork, we know what the process entails.  The claims process begins with a search, requesting a claim form, and furnishing documents such as death certificates, affidavits, proof of address, POA documents, and other evidentiary documents requested by the Bureau of Unclaimed Property.

The department then reviews claims documents, which can take months or even years to complete.

Property Escheated to the State

Though it is possible to re-claim property that has been escheated (property deemed lost, abandoned or unclaimed and then turned over) to the state, it is important to try to understand when escheatment occurs to avoid having to go through this process in the first place.  This saves you not only time, but also from potential losses in value that might occur as a result of escheatment.

Holders of property, such as financial institutions, are required to send due diligence notifications to the owners of any property before escheating it.

Holders of property subject to escheatment are bound by the state’s rules regarding dormancy periods and must turn over any “abandoned” property to the state after a specified period.  In Pennsylvania, the dormancy period is most often 3 years, but can vary based on the type of property (e.g. 2 years for wages or commissions, 7 years for money orders).

For example, suppose you have stock certificates in a safe.  If you move to another house and forget to notify your stock transfer agent, it is possible that your stock transfer agent might lose contact with you.  If the stocks (which are generally sold immediately, often at a loss) are turned over to the state after the dormancy period, you would have to go through the process of filing a claim for the value of the stocks when they were sold. This is a waste of time and could cost you any gains that you may have earned had the stocks not been escheated.

Abandoned Property

The same scenario can play out if a financial institution such as a bank has not contacted you for several years.  If they never receive updated contact information and mail is being returned to them, an account may be deemed lost, or a safe-deposit box considered abandoned, at which point the contents would be escheated to the state. This scenario is particularly concerning with priceless tangible property kept in a safe deposit box, which the state will liquidate after three years, rendering it impossible to recover.

Keep Your Estate Planning Up to Date

It is important as a part of your estate planning process to keep a list of all financial institutions with whom you do business, including banks, brokers, transfer agents and insurance companies. Review this list and update it regularly (at least once per year) and include it with your other important estate planning documents such as a living trust or a will so that your family members will know where to locate it when it is needed.

When compiling this list, take the time to reach out to the institutions that you don’t deal with regularly to make sure that they have your current address and telephone number. It is wise to note the last time that you’ve reached out to each institution, so that you can remember to touch base every year or so.

Protect Your Assets From Being Escheated

Remember that while your financial institutions are required to perform due diligence efforts to contact you before escheatment occurs, they are still required by law to report abandoned property. 

Keeping your accounts active by updating your contact information, making a transaction, logging in to online banking services, or even calling customer service, will help you protect your assets and prevent future headaches and loss that can occur when assets are turned over to the state.

Finding unclaimed money and property can be daunting and very time consuming. Save yourself time now and potential losses in the future by knowing when escheatment occurs and how to prevent your property from being deemed lost, abandoned or unclaimed and then turned over to the state.

by Bill Griffith Bill Griffith No Comments

Damage to Headstones and Monuments

What do you do if a headstone or monument that you own is damaged or vandalized at a local cemetery in Washington or Allegheny County?

Very few people think about it but what can you do and who pays for the damage?

One of the many considerations involved with planning for a burial is the selection of a headstone or grave marker, often made of bronze or granite, which can range in price from a few hundred dollars to several thousand.

We are often asked about the longevity of different types of grave markers, how the cemetery will take care of them, and what would happen if it was damaged or vandalized.

Some cemeteries may tell people that markers purchased through third parties will not be covered if they are damaged, but what the average consumer doesn’t know is that headstones, grave markers and monuments are usually covered by an individual’s homeowner’s insurance policy.

Damage to Headstones Caused by Vandalism

Every once in a while, there will be story in the news about vandalism at a local cemetery. When a bronze marker is involved, people might be more concerned about theft, as even bronze vases could be stolen and sold as scrap or be melted back down.

The good news is that many homeowners’ policies explicitly state “Cemetery Property” as a covered item in the Personal Property section of their policy, and if not, these memorials may still be considered “contents” of one’s home.

Even though they are not physically in the home, it is typical in standard policies for there to be coverage of up to $5,000 for damage to grave markers, including loss caused by various perils including vandalism.

Damage to Headstones Caused by Machinery

A cemetery might tell you that the grave marker would be covered by them if damaged as a result of machinery used to cut grass, open and close graves, etc., but that you would be without recourse if a marker is vandalized or stolen.

In reality, it is worth knowing whether or not your physical property in cemeteries is covered by your homeowner’s policy regardless, because in the event that a grave marker is damaged, the cemetery may ask that you prove that the damage was caused by their equipment, which is often impossible to do. The easiest way to determine your coverage would be to read through your homeowner’s policy, or to call your insurance agent.

If you are able to estimate the value of a marker that has been damaged, the insurance company would treat it at it would treat any other lost property claim and pay for the cost of repair or replacement minus your deductible.

It is important to note that while these standard types of policies generally cover the headstone or grave marker of spouses or children, they may not explicitly state coverage of markers on the graves of other family members such as siblings or parents. But if you as the policy owner paid for or otherwise own the marker, it should be covered. Again, your best course of action is to consult your policy documents or contact your insurance agent for clarification.

by Bill Griffith Bill Griffith No Comments

Reviewing Your Estate Plan

Reviewing your estate plan periodically will ensure that your Revocable Living Trust and other estate planning documents are properly aligned with your most important goals.

Are you confident that your estate plan is designed properly? Do you know how your estate will pass to your beneficiaries?

If not, you can gain a better understanding of how your estate plan is designed and the level of stress that your loved ones may incur if something where to happen to you.

One of the main goals of estate planning, for many people, is to minimize the burden of estate settlement.  One way of minimizing the burden of estate settlement is by avoiding probate.  One way of avoiding probate is with a living trust.

How Does a Living Trust Avoid Probate?

After a living trust is created for our clients, we help them transfer the title of their assets to their trust.  Although the title of their assets has been transferred to their trust, they still control the living trust during their lifetime.  As the Trustee, they still manage their assets for their own benefit during their lifetime.  They can still use their assets just as they did before they set up their trust.

Since their trust owns the assets, and not them personally, their estate does not have to go through the probate process when they die.

Funding a Living Trust

Transferring the title of assets to a living trust is really a simple process.  It is called funding the trust.  To minimize the burden of estate settlement by avoiding the probate process, the Revocable Living Trust must be funded properly.

By reviewing your estate plan periodically, you can be sure that your living trust is properly funded upfront to avoid the unintentional expense of probate.

Changes in Personal Circumstances

Another reason for reviewing your estate plan is to account for changing laws and changes in personal circumstances.

Do Your Powers of Attorney Documents Need Updated?

Every so often, the state will change the laws for the Durable Power of Attorney.  In addition to changing laws, some financial institutions may not accept a POA that was drafted many years ago.

The cost for updating powers of attorney and other ancillary estate planning documents is minimal.

It is highly recommended that people review their estate plan at least once each year to make sure that their estate plan remains current and to ensure that any new assets were properly titled in the name of the trust.

An even better and easier way to keep on top or your estate plan is by using our interactive estate planning program. You’ll be able to keep your information up to date and allow other authorized users, such as your child, to view your Pre-Paid Funeral Expenses, your legal and other documents right online.

To login for the first time to begin an estate plan, simply click My Estate Plan at the top of the screen. We’ll send you a separate email with a link to complete an interactive questionnaire.

by Bill Griffith Bill Griffith No Comments

Correcting an Excess IRA Contribution

The deadline for correcting an excess IRA contribution for the 2018 tax year is coming up. If the excess amount is not removed according to a special formula, a penalty tax of 6% will accrue on excess amounts that remain in the owner’s IRA.  

An excess IRA contribution occurs when an IRA owner contributes more than the statutory limit to their IRA in a given year.  For the year 2018, the IRA contribution limit was the lesser of $5,500 or 100% of earned income.  An additional catch up contribution of $1,000 is available for individual’s age 50 or older.

An excess contribution can occur when an IRA owner simply contributes too much to their IRA in one tax year, such as by contributing more than the lesser of $5,500 or 100% of earned income. 

For example:  Say that in 2018, Mr. Smith, age 62 and single with earned income of $5,000 and rental income of $34,500, contributed $6,500 to his traditional IRA.  Mr. Smith has made an excess contribution of $1,500 to his IRA ($6,500 minus the $5,000 limit). The contribution limit is the lesser of $6,500 or 100% of earned income.  In this case, the rental income of $34,500 is not earned income.

Correcting an Excess IRA Contribution After Due Date

Individuals who contribute too much to their IRA have until their tax-filing deadline, including extensions, to correct any excess contribution.  Individuals who file their tax returns by April 15th and file for an extension have six months to remove the excess amount, which for calendar year taxpayers is October 15, 2019. 

If the excess amount is not removed according to a special formula, which determines the amount of the excess contribution plus interest or other income earned on the excess contribution, a penalty tax of 6% will accrue on excess amounts that remain in the owner’s IRA.