Will We See a Bump in the COLA for Social Security Next Year?
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Will We See a Bump in the COLA for Social Security Next Year?

Experts anticipate roughly a 1% increase beginning in January 2021, and possibly less. The actual amount of the COLA depends on the economy, which has picked up in the past month.

AARP’s recent article entitled “Social Security COLA Forecast for 2021” reports that other experts’ projections are in the same area.

It’s small, as far as a COLA. Based on the average Social Security retirement benefit of $1,514.13 a month, a 0.5% increase would be $7.57 a month, and a 1% increase would amount to $15.14.

Social Security COLAs have been pretty rare in the past 10 years. The average COLA over the decade has been a 1.52% increase. The biggest was a 2.8% bump that went into effect in January 2019. There were no COLA increases starting in January 2011 or January 2016.

A reason for a possible small COLA for next year is that inflation has been low. The COLA is determined by the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, from the third quarter of 2019 to the third quarter of 2020. The COLA calculation looks at the average CPI-W index numbers for July, August and September of 2019 and compares them with the same third-quarter numbers for 2020. The percentage change between the two quarterly averages is the COLA for the next year. If there’s no change, or if there’s a decline in the CPI-W, there’s no bump in Social Security.

The Social Security Administration typically announces the amount of the COLA in October.

The impact of the COVID-19 pandemic, which has depressed the economy, has made inflation forecasting extremely hard.

For example, some grocery items, such as meat and chicken, have gone up in price. However, the price of a gallon of regular gas has dropped from $2.608 twelve months ago to $2.188 today.

If the increase in Social Security is small enough, some retirees may get a small discount on their Medicare Part B premiums.

The law says that if the COLA for Social Security is less than the increase in Medicare Part B premiums, the premiums would be decreased to prevent a drop in Social Security retirement benefits.

As a result, it could prevent as many as 43 million beneficiaries (about 70%) from having increases in Medicare Part B premiums larger than their Social Security COLA.

Those who have monthly benefits of about $900 or lower would also be protected.

Reference: AARP (Aug. 25, 2020) “Social Security COLA Forecast for 2021”

Suggested Key Terms: Elder Law Attorney, Medicare, Social Security, Elder Care

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How Far Did Ross Emmick Go to Get His Grandparents’ Trust Funds?

A 36-year-old Phoenix man, named Ross Emmick, stands accused of threatening to kill his brother to get his inheritance from his grandparents. Fox 10 (Phoenix) News’ recent article entitled “Lawyer details ‘murder,’ ‘kidnapping’ plan over an inheritance between brothers” says that Ross Emmick has been charged with extortion, stalking and conspiracy to commit murder.

There are three brothers in this case. Two, including the suspect, were adopted out of the family when they were small, and the other says he had no idea he had brothers. The trouble started when changes were made to their grandparent’s trust. Documents showed scratched out names and clear changes made to a trust created back in 1998 by James and Jacqueline Emmick, the grandparents.

They were diagnosed with dementia in 2019, a few weeks before changes were made. The beneficiaries were their sons, who died before they’d ever get the inheritance. That is when the changes were made by Ross.

Ross Emmick is said to have talked his grandparents into naming him as the successor trustee, which allows a person to manage the assets for the benefit of the beneficiaries. However, Ross’ only job was to provide information to the beneficiaries—his two brothers, Patrick and the victim (who asked to remain anonymous).

Ross thought he could simply change the names of the beneficiaries. Patrick claims that in addition to the changes to the will, Emmick allegedly stole thousands of dollars before his grandfather died in June 2019.

Ross actually stole a bunch of money from James before he died and then walked out with $50,000 after his death, Patrick said.

“He tried to get some forms notarized for Power of Attorney, and the witness on the original, which was a housekeeper, said that they were in a stable condition and mentally, they weren’t, and even the notary had said that,” said Patrick.

A large part of that was gambled away by Ross, an attorney for one of the brothers said. It wasn’t a well-administered trust, he said.

The brothers agreed to drop the case and divide the rest of the trust. However, that is when investigators say Ross began threatening the other two brothers.

Reference: Fox 10 (Phoenix) News (Aug. 22, 2020) “Lawyer details ‘murder,’ ‘kidnapping’ plan over an inheritance between brothers”

 

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What Needs to Happen for a Deceased Spouse ?

Deceased Spouse – Making funeral arrangements, paying medical bills and closing down accounts are just the start of the tasks that a surviving spouse must take charge of, advises the recent article “Checklist for Handling the Death of a Spouse” from U.S. News & World Report. It can be overwhelming, especially with the intense emotions that come with such a large loss.

Having a checklist of specific tasks for your deceased spouse may make this difficult time less stressful. This is because you will be able to see what has been accomplished, and what is yet to come.

Start by getting organized. Make a list of what you need to do and add to it as you think of new tasks. You should also track what you are doing, using a notebook to keep a record of who you spoke with and when. If you need help, don’t be afraid to ask a family member or trusted friend. Being organized is a big help, when there are so many things that need to be done during such a hard time.

Review your deceased spouse ’s will and estate plan. Gather all the documents, from their last will and testament to insurance policies, trust paperwork and related documents. Call your estate planning attorney, since she can help you with settling the estate.

Identify the executor. If you are the executor, then you are the person in charge of managing the estate, including distributing assets. If someone else has been named, contact the person and be sure they are still willing and able to undertake the responsibilities.

Obtain original death certificates. All of the financial, legal and property matters will require an original death certificate, with a raised seal. It’s easier to have more than you need, so order ten to fifteen.

Talk with other professionals. The financial advisor, CP, and insurance broker, in addition to the estate planning attorney, will need to know that your spouse has passed. You will also need to notify the Social Security Administration. If your spouse was receiving benefits, depending upon when in the month they died, you may need to return money.

Avoid any big decisions. This is not the time to sell the house, move to another state or make any other large decisions, unless you must for financial reasons.

Carry out your deceased spouse ’s wishes. There is comfort in carrying out your loved one’s wishes. Giving money to a charity as per the will’s direction or handing a prized possession to a family member who will treasure it can be heartwarming, since it reminds you of the values that your spouse held dear.

Take time for yourself and your loved ones. Mourning and healing from loss are not easy times. Take the time to process the loss and grieve with other family members. Find comfort from those you love.

Reference: U.S. News & World Report (Aug. 28, 2020) “Checklist for Handling the Death of a Spouse”

 

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What Is a Qualified Personal Residence Trust (QPRT)?

A Qualified Personal Residence Trust takes your personal residence out of your estate, and has some advantages, especially when it comes to taxes. The QPRT is a type of irrevocable trust, so once it is created, it is permanent and cannot be reversed. The QPRT is also a type of grantor trust, meaning that the trust creator or grantor may take advantage of gift tax exemptions for property placed in the trust, explains the article “Qualified Personal Residence Trust (QPRT)” from yahoo! finance.com.

As a grantor, you can live in the home for a period of time, with a retained interest in the property. Once the QPRT term ends, ownership of the property gets transferred to the beneficiaries of the trust.

When you establish a Qualified Personal Residence Trust, you take your personal residence, a primary or secondary home, out of your estate and place it in the trust. While the trust is in place, you and your family may live in the home, and you continue to be responsible for maintaining the property’s upkeep. You also still have to pay property taxes.

Any appreciation that occurs after the transfer takes place is also removed from your estate. Because you retain an interest in the residence, you can reduce the amount of property’s value that is subject to estate and gift taxes from your estate.

However, there is one rule you need to know before setting up the QPRT—you must outlive the term of the trust. If you don’t, the entire value of the residence may be included in your estate, which destroys the key reason for setting up the trust.

This is a complex tool for estate planning, and it isn’t for everyone. A QPRT can be good for creating a financial legacy for beneficiaries, helps your estate avoid taxes after your death and if you are paying rent to trust beneficiaries, creates another path to minimize estate taxes.

On the other hand, a QPRT is irrevocable. Therefore, if your circumstances change, it may not be useful for you but you won’t be able to undo it. If you die before the end of the term, any benefits for gift or estate taxes are lost. If there is a mortgage on the property, mortgage payments might be counted against gift tax exemptions.

Attempting to refinance a home that’s owned by a QPRT is difficult, and in many circumstances, not even possible. You don’t own the home, the trust does. Therefore, the property cannot be used as collateral. Selling a home that is owned by a QPRT is also far more complicated than selling the property if you owned it outright.

An estate planning attorney will analyze your estate and tax situation to determine if a QPRT is a useful tool for you and your family.

Reference: yahoo! finance.com (July 29, 2020) “Qualified Personal Residence Trust (QPRT)”

 

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What are the Important Medicare Deadlines ?

Here are the important Medicare Deadlines for enrollment:

  • You can initially enroll in Medicare during the seven-month period that begins three months before you turn 65.
  • If you continue to work past 65, sign up for Medicare within eight months of leaving the job or group health plan or penalties apply.
  • The six-month Medicare Supplement Insurance enrollment period starts when you’re 65 or older and enrolled in Medicare Part B.
  • You can make changes to your Medicare coverage during the annual open enrollment period, from Oct. 15 to Dec. 7.
  • Medicare Advantage Plan participants can move to another plan from January 1 to March 31 each year.

Yahoo News’ recent article entitled “Medicare Enrollment Deadlines You Shouldn’t Miss” takes a look at when you need to sign up for Medicare and the penalties that can be imposed for late enrollment.

Medicare Deadlines for Parts A and B. Individuals who are getting Social Security benefits, may be automatically enrolled in Parts A and B, and coverage starts the month they turn 65. However, those who haven’t claimed Social Security must proactively enroll in Medicare. You can first sign up for Medicare Part A hospital insurance and Medicare Part B medical insurance during the seven months that starts three months before the month you turn 65. Your coverage can start as soon as the first day of the month you turn 65, or the first day of the prior month, if your birthday falls on the first of the month. If you fail to enroll in Medicare during the initial enrollment period, you can sign up during the general enrollment period between January 1 and March 31 each year for coverage that will begin July 1. Note that you might be charged a late enrollment penalty when your benefit begins. Monthly Part B premiums increase by 10% for each 12-month period you delay signing up for Medicare, after becoming eligible for benefits.

If you or your spouse are still working after age 65 for an employer that provides group health insurance, you must enroll in Medicare within eight months of leaving the job or the coverage ending to avoid the penalty.

Medicare Deadlines for Part D. Part D prescription drug coverage has the same initial enrollment period of the seven months around your 65th birthday as Medicare Parts A and B, but the penalty is different. It’s calculated by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2020) by the number of months you didn’t have prescription drug coverage after Medicare eligibility and rounding to the nearest 10 cents. That’s added to the Medicare Part D plan that you choose each year. As the national base beneficiary premium increases, your penalty also goes up.

Medicare Deadlines for Supplement Insurance Plan. These plans can be used to pay for some of Medicare’s cost-sharing requirements and some services that traditional Medicare doesn’t cover. The enrollment period is different than the other parts of Medicare. It is a six-month period that starts when you’re 65 or older and enrolled in Medicare Part B. During this open enrollment period, private health insurance companies must sell you a Medicare Supplement Insurance plan, regardless of your health conditions. After this enrollment period, insurance companies can use medical underwriting to decide how much to charge for the policy and can even reject you. If you miss the open enrollment period, you’re no longer guaranteed the ability to buy a Medicare Supplement Insurance plan without underwriting, or you could be charged significantly more, if you have any health conditions.

Medicare Deadlines for Open Enrollment. You can make changes to your Medicare coverage during the annual open enrollment period from October 15 to December 7. During this period, you can move to a new Medicare Part D prescription drug plan, join a Medicare Advantage Plan, or stop a Medicare Advantage Plan and return to original Medicare. Changes take effect on January 1 of the following year.

Medicare Advantage Open Enrollment Deadline. Participants can move to another plan or drop their Medicare Advantage Plan and return to original Medicare, including purchasing a Medicare Part D plan, from January 1 to March 31 each year. You can only make one change each year during this period, and the new plan will begin on the first of the month after your request is received.

Reference: Yahoo News (July 27, 2020) “Medicare Enrollment Deadlines You Shouldn’t Miss”

Suggested Key Terms: Elder Law Attorney, Medicare, Social Security

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What is Fiduciary Duty in Estate Planning?

One of the reasons people uses trusts in their estate planning, is that the person named as a trustee has a legal duty to put the trust’s interests first, rather than their own interests. This is called a “fiduciary duty,” and it becomes very important when planning for the future of your assets and family. It’s an enforceable legal obligation says the article “Fiduciary Duties in Trusts and Estate Planning” from yahoo! finance.

A trustee is the person appointed to be in charge of a trust. There are many different kinds of trusts, created to own assets, including money, life insurance policies and homes. The person named as trustee in the trust document makes decisions about the trust assets to benefit the beneficiary’s best interests.

Trusts created while a person is living are known, appropriately enough, as living trusts. There are people who choose to be their own trustees and manage their trusts for as long as they are able. Married couples may be co-trustees on their trusts. The trust documents should be prepared, so that upon the death of one spouse, the surviving spouse becomes the trustee and manages the account.

The person creating the trust should also name a successor trustee. This is the person who will manage the trust when the trustee or the co-trustees are no longer competent to manage the trust. That might be because they have died or because they have become incapacitated due to an injury or illness.

The fiduciary duty of a trustee is to act in the best interest of the beneficiaries. These are some guidelines:

  • The assets a trustee manages do not belong to them, and the trustee must not mix personal assets with assets in the trust.
  • A trustee may not use the trust’s assets for their benefit.
  • The trustee must not favor one beneficiary over the other.
  • The trustee must follow the directions in the trust document.
  • The trustee must keep accurate records, file tax returns and report to beneficiaries, as directed in the trust.

There are three fiduciary duties when it comes to a trust: loyalty, care and full disclosure. The trustee(s) must act in the best interest of the trust and its beneficiaries. This is a high standard and why the decision on who to name as a trustee is so important.

The terms of every trust vary, depending on the type of trust and the needs of the estate plan. The trustee needs to be familiar with the trust and its directions, so they can perform correctly.

An estate planning attorney is needed to draft trusts, so they reflect the wishes of the person and their goals. Using a downloaded form or even a standard legal form is a big risk for families.

Reference: yahoo! finance (July 8, 2020) “Fiduciary Duties in Trusts and Estate Planning”

 

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Why Did Spain’s King Felipe VI Renounce His Inheritance from His Father?

In addition to saying no to his father’s money, King Felipe VI of Spain has also renounced his right to any shares, investments, or financial vehicles that “may be inconsistent with the law or the standards of honesty and integrity which govern his institutional and private activities and should inform the activities of the crown,” according to a statement from the royal household.

CNN’s article entitled “Spain’s King Felipe VI renounces his inheritance from his father” explains that Juan Carlos abdicated in 2014 amid scandal. Felipe pledged to improve transparency around the royal family, with the country becoming more frustrated by its expense to the public during a financial crisis.

The statement is an attempt by King Felipe VI to distance himself, and the institution, from media reports that the royal family had benefited from two financial funds linked to Juan Carlos. The former monarch will also no longer receive an annual grant payment from the royal family budget.

King Juan Carlos ended his 39-year reign under suspicious circumstances. There were accusations of corruption and excess plaguing the royal family. That was a great fall from when Spaniards held him in high regard for leading the country into democracy, after the death of the dictator Francisco Franco.

However, Juan Carlos’ popularity took a blow in 2012 over a controversial elephant-hunting trip to Africa, while the nation was in the middle of a deep economic crisis. He resigned from public life in June 2019, as several scandals were made public.

Some Spaniards have called for the monarchy to be scrapped for the establishment of a republic. Resentment in Spain has grown over the cost of the royal family to the public, despite the monarchy’s relatively austere reputation compared with other European royals.

Of the 10 main royal families in Europe, nine still get public funding for carrying out their duties. The one exception is the Princely House of Liechtenstein, which doesn’t get any taxpayer money to cover its expenses.

Spain’s royal family has the third-smallest budget of the group.

Taxpayers pay the royal family $9 million a year—much less than the $107 million given to the British monarchy or the $54 million spent on the royal family in Monaco.

Reference: CNN (March 17, 2020) “Spain’s King Felipe VI renounces his inheritance from his father”

 

 

 

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What Does CNN’s Anderson Cooper ’s Estate Plan Look Like for his New Baby?

Wealth Advisor’s recent article entitled “Anderson Cooper Needs A Vanderbilt-Strength Estate Plan For A Me-Too Future” explains that Anderson Cooper is a single dad, who’s worth an estimated $100 million. He can afford the best care, education and parental support for his son Wyatt, as long as he’s around.

With no stay-at-home parent, Wyatt is either going to have to become a frequent flyer to go with his famous dad on reporting assignments or live with a flock of nannies. This may sound familiar to those who recall how Cooper’s mother Gloria Vanderbilt grew up and the helicopter style around the way she raised her boys. His mom’s early drama centered on who would get custody of her and her trust fund, which at the time was worth a little less than what Cooper has amassed today. Gloria’s father was dead. Her mother was controversial. Her relatives fought over how Gloria would be raised and how her money would be spent.

Anderson Cooper will be 53 next month, and although life expectancies vary, there’s a decent chance he won’t be around to see Wyatt graduate from high school. When there are two parents, the surviving partner can step in as legal guardian. Otherwise, relatives or family friends can be designated as the guardian, if something goes wrong. However, Cooper is not close with his half-brothers, and they’re much older in any event. So, even if they shared a continuing connection, they’ll probably predecease him.

Note that if Cooper passes before Wyatt reaches legal adulthood, he’d need to pass on any inheritance through a trust. The control over the trust may be just like the fight over Gloria. Because of this, the trustees and alternatives should be named, and air-tight procedures should be drafted for resolving disputes.

If Anderson has a will, the arrival of Wyatt means that it needs to be revised again. You never know, Anderson may decide to leave his estate to charity and make Wyatt fend for himself.

With a younger dad, the estate planning would be more straightforward. However, Anderson’s issue of life expectancy requires a little more thought. Therefore, Anderson’s estate plan needs a way to address care for Wyatt, if Cooper dies early. Guardianship and financial support must be included.

If Cooper lives to see Wyatt’s adulthood, this won’t be an issue, because then the guardianship and associated trusts no longer apply.

Reference: Wealth Advisor (May 4, 2020) “Anderson Cooper Needs A Vanderbilt-Strength Estate Plan For A Me-Too Future”

 

 

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What is the Verdict on the Will of Carole Baskin ‘s Long-Missing Husband?

Hillsborough County (FL) Sheriff Chad Chronister recently announced that two different experts have deemed Don Lewis’ will, husband of Carole Baskin , of the Tiger King-Joe Exotic saga “100 percent a forgery,” Tampa Bay CBS station WTSP reported.

“We knew that before,” Chronister said. “Because the girl who came forward and said ‘Hey, I was forced to witness and say that I witnessed this signature.’ The problem was the statute of limitations had already expired. The will had already been executed at that point.”

People’s recent article entitled “Will of Carole Baskin’s Missing Husband Was ‘100 Percent a Forgery,’ Says County Sheriff” reported that Sheriff Chronister also said that the “only reason” a lawsuit hasn’t been initiated, is because the statute of limitations has run out.

“There’s no recourse,” the sheriff explained. “A judge deemed it valid, so the civil side of it would be execution of the will, the disbursements of the funds is one thing. But then you have the criminal side of it, it’s unable to be prosecuted because of the statute of limitations.”

The sheriff added that the determination that Don Lewis’ will was deemed a forgery “certainly cast another shadow of suspicion” on his disappearance.

“Investigators have some great leads, they’re working through them. I hope something pans out,” Chronister commented.

Fans of the Netflix docuseries Tiger King remember that Carole Baskin’s previous husband mysteriously went missing in 1997 and was declared dead five years later. Some fans of the TV show think that Baskin was responsible for Lewis’ disappearance, but the Big Cat Rescue founder denied she had anything to do with it.

“Don was not easy to live with and like most couples, we had our moments,” Carole Baskin said in a statement on the Big Cat Rescue website after Tiger King was released on Netflix earlier this year. “But I never threatened him, and I certainly had nothing to do with his disappearance. When he disappeared, I did everything I could to assist the police. I encouraged them to check out the rumors from Costa Rica, and separately I hired a private investigator.”

Sheriff Chronister’s comments come a day after Carole Baskin was granted control of the Oklahoma zoo property formerly operated by Joseph Maldonado-Passage, widely known as “Joe Exotic.” He was convicted last year of paying a hitman $3,000 to kill Baskin, in addition to being found guilty on multiple charges of violating both the Lacey Act for falsifying wildlife records and the Endangered Species Act. Exotic was sentenced to 22 years in prison and is currently being held in a Dallas-Fort Worth medical center, after he was exposed to the coronavirus.

Reference: People (June 3, 2020) “Will of Carole Baskin’s Missing Husband Was ‘100 Percent a Forgery,’ Says County Sheriff”

 

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Can Kobe Bryant’s Widow Amend Trust?

A report from TMZ Sports says that the late NBA legend Kobe Bryant created a trust to provide for his wife Vanessa and family in 2003.

The trust was amended a number of times, most recently in 2017. It looks like every time one of their four children was born, Kobe and his wife amended the trust to include them.

Wealth Advisor’s recent article entitled “Vanessa Asks Judge To Include Capri In Kobe’s Trust” notes that the issue now is that daughter Capri was born nine months ago.

However, Kobe and Venessa weren’t in a huge rush to see their estate planning attorney and change the trust once again. Who thought that there’d be a problem? Kobe had recently retired from pro basketball and was in good health.

However, no one could have predicted the horrible tragedy that the family sustained, when both Kobe and his daughter Gigi were killed in a helicopter crash last January.

Vanessa, along with co-trustee Robert Pelinka, Jr. (the general manager of the Los Angeles Lakers and Kobe’s old boss) petitioned a probate judge to allow her to include Capri. She contends that it was clearly Kobe’s intent to provide for his children.

When Kobe’s died on January 26, 2020, the Kobe Bryant Trust was divided into two separate trusts for tax reasons. However, both are for the benefit of Vanessa and the three oldest Bryant daughters—but not Capri.

She notes that Kobe even said this generally in one on the documents.

California Probate Code states that the court is not permitted to modify a trust, where the continuation of the trust is required to carry out a material purpose of the trust, unless the court believes that the reason for modification outweighs the interest in accomplishing a material purpose of the trust.

Most observers believe that the probate court will likely permit the amendment, if it finds allowing the addition of Capri as a beneficiary is consistent with the material purposes of the trust, or if the interest in modification to add Kobe’s youngest as a beneficiary outweighs the interest in accomplishing the material purposes of the trust.

According to the trust agreement, Vanessa, Natalia, and Bianka can use the principal and income in the trust during Vanessa’s lifetime. After she passes away, the children will receive the remainder. Vanessa wants to include Capri in that distribution.

Reference: Wealth Advisor (March 24, 2020) “Vanessa Asks Judge To Include Capri In Kobe’s Trust”

Suggested Key Terms: Estate Planning Lawyer, Probate Court, Inheritance, Trusts

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