Amy & Dan Smith's Planning for Life: Early Returns - How U. S. Markets Reacted to the Presidential Election

On November 8, 2016, Republican candidate Donald J. Trump won a closely contested election for president of the United States.  Late on election night, when it became evident that Trump was likely to win, despite consistently trailing in the polls, foreign markets went into a deep dive. (fn. 1.) Many observers expected a similar reaction when the U.S. stock market opened on November 9, but after an initial drop, the S & P 500, Dow Jones Industrial Average, and NASDAQ rose throughout the day; and all three indexes closed up more than one percent. (fn. 2.) Although this was unexpected after the late-night surprise, it actually continued a two-day surge that began when Democratic Hillary Clinton was expected to win the election. (fn. 3.)

The market was mixed but steady the following day, November 10, with the Dow again up more than one percent, a small increase in the broader S & P 500, and a moderate decline in the NASDAQ which tends to be more volatile due to its inclusion of smaller, technology-driven companies. On November 11, the NASDAQ recovered its loss, the Dow was slightly higher, and the S&P 500 was slightly lower – not unusual after a week of rising stock prices. (fn.4.)

On the other hand, bond prices fell steeply the day after the election, and the yield on the benchmark 10-year Treasury note, which rises as prices fall, jumped more than two percent for the day. This, too, was a surprise, because Treasuries are generally seen as a safe haven in times of uncertainty. But on the day after the election, investors were more interested in selling Treasuries than buying them. (fn. 5.) The Treasury sell-off continued on November 10. (fn. 6.) (Bond markets were closed on Nov. 11 in honor of Veterans Day.)

The conciliatory tone of Trump’s acceptance speech, Clinton’s concession speech, and remarks by President Obama all indicate there will be an orderly transfer of power, which may have helped calm the markets.

Here are some additional implications that might be drawn from the initial market reaction:
First, although the Trump presidency was unexpected and his economic policies are untested, rising stock prices suggest that investors may be optimistic that his promised pro-business agenda could help the upward market trend of the last few years. Investors like clarity and consistency; and the fact that the same party will control the White House and Congress might create a more productive and predictable working relationship. (fn. 7.)  At the same time, fundamental differences between the president-elect and the Republican Congress suggest that any changes may be more measured than originally anticipated. (fn. 8.)

Second, in this initial transition stage, money flowing out of Treasuries suggests that bond investors may see a Trump presidency as leading to higher inflation and higher interest rates, due to a combination of more protective trade policies and heavier government borrowing to fund infrastructure spending, and reduced taxes for individuals and corporations. Declining bond prices might also reflect a belief that the Federal Reserve may raise interest rates at its December meeting, despite the political surprise. (fn. 9.)

Is the U.S. Economy strong enough to withstand any headwinds that arise from a changing administration? That remains to be seen, but fundamental economic indicators have been solid, and overreacting to political events is unwise. The most stable approach in changing times is generally to maintain a well-diversified portfolio using a strategy appropriate for your time frame, personal goals and risk tolerance.

1) CNN Money, Nov. 9, 2016. 2), 5), and 7) MarketWatch, Nov. 9, 2016. 3) and 4) Yahoo! Finance, Nov. 11, 2016. 6) Marketwatch, Nov. 10, 2016. 8) New York Times, Nov. 9, 2016. 9) CNBC.com, Nov. 9, 2016. 

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.

 

Amy & Dan Smith's Planning for Life: Guns and Estate Planning "Gun Trusts"

Due to the growth of gun ownership in the United States, there is the increased likelihood that estates will include guns. A thorough discussion of the application of federal and state gun laws is not possible in this article. However, responsible estate administrators can unknowingly violate gun laws, leading to “accidental felonies.” Thus, some information may be helpful.

There are two categories of weapons as to which different restrictions apply. The highly regulated category is referred to as “NFA Weapons.” These include short-barreled rifles and shot guns, fully automatic machine guns, silencers and components to build them, any other weapon (eg, pen and cane guns), and destructive devices (eg, grenades and missiles). All transfers of an NFA weapon must be approved by the ATF (Bureau of Alcohol, Tobacco, Firearms and Explosives). Thus, if an executor innocently delivers an NFA weapon (or even loans such a weapon) without ATF approval, he/she has committed a felony which carries possible imprisonment and significant fines.

All NFA weapons must be registered. An unregistered NFA weapon (eg, a German machine gun grandfather brought back from WWII) is contraband and cannot be registered by the estate. The local ATF office should be contacted to arrange for abandonment.

Virtually all household guns, such as hunting rifles, sporting shotguns, revolvers and semi-automatic pistols, are non-NFA weapons. However, regulations still apply and can be traps for the unwary. For example, it is unlawful for certain persons, known collectively as “prohibited persons,” to possess firearms, and it is a felony to transfer a firearm to a person who the transferor knows or “has reasonable cause to believe” is a “prohibited person.” The prohibited person list includes anyone who has ever been convicted of a crime punishable for more than a year; is an unlawful user of or addicted to any controlled substance; has been adjudicated as a mental defective or committed to any mental institution; has ever renounced his/her US citizenship; is subject to a court order restraining the person from harassing, stalking or threatening an intimate partner or child of the intimate partner; or who has been convicted of a misdemeanor crime of domestic violence.

As an example, assume that Dad’s estate contains some non-NFA shotguns which Dad used for hunting. The transfer of these shotguns does not need to be registered with the ATF because they are not NFA weapons. However, the estate administrator, one of Dad’s sons, gives one of the guns to his brother who the administrator has reason to believe is abusing a controlled substance. In such case, the administrator is guilty of a felony.

The Gun Trust is a trust created to purchase and hold firearms. Usually a Gun Trust is used for NFA weapons, although it can hold non-NFA weapons as well. The Gun Trust is designed to prevent inadvertent violation of gun laws. It will include requirements for Trustee conduct, specifically to conform to existing state and federal laws, and will contain directions for the transfer of weapons following the death of the grantor of the trust.

An ATF official stated to your writer recently that, in his estimation, it is likely that only 4-6 percent of all weapons privately possessed in the US are NFA weapons. The vast majority of guns are of the household type. Accordingly, the need for Gun Trusts is rather limited. He also stated that there is a proliferation of Gun Trust forms being downloaded and submitted with applications for transfers of NFA weapons. The forms are the same, even to the point of having the same fictitious beneficiaries. (See this column, Do It Yourself Legal Products – Bargain or Trap, June 1, 2016).

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.

Amy & Dan Smith's Planning for Life: Are Your Estate and Financial Plans Shock-Proof?

Don’t wait until “what if?” becomes “what is.”

Where will you live as you age?

Think about your housing options now, so you have choices and won’t have to make a hasty decision should an unexpected health event force you to move or modify your home.

Staying Put
Most of us prefer to stay in our homes as we age.  If that sounds like you, plan in advance for modifications you might need to make your home safer or more accessible (e.g. ramps, wider doorways, grab bars.)  Think about whether family members can take you to doctor’s appointments, buy groceries and help with home maintenance.  If you don’t have a support system, you’ll need a plan and budget for transportation, home repairs, and in-home health and personal care services.  Hiring a personal aid, for example, costs an average of $21 per hour.

Sources: Legg Mason, longtermcare.gov

Moving Out
While it may be hard to imagine today, if you can’t stay in your home due to a health event, consider other housing options that could provide more personal, social and healthcare support.

Assisted Living
Among the benefits of an assisted living facility: social connections with other residents and help with everyday tasks like laundry, taking medications and transportation.  Some amenities are included in your rent and some cost extra.  Your monthly rent could be as high as $4,500, depending on the facility and care needed, so tour facilities in your price range and develop a short list.  Ask about additional fees for services like help with dressing if you were to become less mobile.

Nursing Home
If you face a chronic illness or injury that requires 24/7 medical care, your next step may be a nursing home, also called a “long-term” or “skilled-care” facility.  Tour facilities and talk to staff.  Ask residents and their families (if you can) about the level of response and care they receive.

Keep in mind these facilities are often part of a continuing care retirement community, so residents already in a community’s independent or assisted care facility will get first preference on long-term housing.  Ask if there’s a waiting list for non-community retirees.

Continuing Care Retirement Communities
If you’re thinking about the levels of care you may need as you age and prefer to minimize changing neighborhoods and providers, a CCRC may be your best option.  These communities progress in cost and care, from independent apartments to assisted living and finally, long-term care.  Ask whether there are buy-in costs that guarantee you first preference if, for example, you have to move form an independent apartment to the assisted living facility.  Tour each facility within the CCRC and budget accordingly.

Tips
Visit at different times of day, including mealtimes.  Talk to residents and visiting family members.  Review fees for rent and additional services.  Ask about average response time to assist a resident.

Next Steps
Think about if you’ll need transportation or live close enough to walk to shopping and medical facilities.

Learn what fees are required upfront to buy into a continuing care retirement community.

Calculate how much to set aside should you need long-term care.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.

Amy & Dan Smith's Planning for Life: What Happens to My Stuff When I Die?

Only in the rarest of circumstances will the state receive the property of a decedent.

Joint Tenancy. If you hold property jointly with another person “with survivorship,” it is presumed that the survivor is entitled to all the property upon the death of the first to die. Typically, a deed or investment account will indicate “joint tenants with right of survivorship.” Joint ownership by a husband and wife with survivorship rights is called a “tenancy by the entireties.” Property owned by two or more people without survivorship is called a tenancy in common. This intention should be clearly stated in the title to avoid conflict upon the death of the first tenant.

A bank account in two or more names is presumed to be the property of the survivor(s) even if “right of survivorship” is not set forth.  TOD or POD. A “Pay on Death” or “Transfer on Death” designation may be added to an account; in which case the designated payee will be entitled to the account balance upon the death of the account holder.

Beneficiary Designations. Many assets routinely have named beneficiaries who will take the balance upon the death of the asset owner. Common examples are life insurance policies, annuities, and retirement plan accounts. If no beneficiary is named, the account will be paid to the estate of the decedent.

If an asset is jointly titled with survivorship or has POD, TOD or a beneficiary designation, a contrary provision in a will or trust will not control.

Trust. If the decedent created a trust during his/her lifetime and transferred assets to the trust during lifetime or at death, then the assets will pass to the beneficiaries named in the trust. (See this post on Trusts, November 17, 2015)

Will. Assets which do not pass by any of the foregoing methods are disposed of in a properly executed will. (See this column Explaining Process of Probate, January 2, 2015)

Intestacy. If none of the foregoing methods of transfer exist, then the decedent’s assets will pass according to a list of beneficiaries set forth in the Virginia Code for persons dying “intestate” (ie, without a will). The surviving spouse of the decedent is entitled to all of the assets unless the decedent is survived by descendants at least one of whom is not descended from the surviving spouse. In that case, the surviving spouse is entitled to one-third of the estate and the decedent’s descendants two-thirds. If there is no surviving spouse, the entire estate is distributed to the decedent’s descendants. If there is no surviving spouse nor descendants of the decedent, then the estate passes to the parents (or surviving parent) of the decedent. If none of the above is surviving, then the estate passes to the brothers and sisters of the decedent or their descendants. If no one in the above categories is surviving, then half to the decedent’s paternal kindred and half to the maternal kindred; if none, then to the kindred of the decedent’s most recent spouse (who predeceased the decedent), provided that the decedent was married to him/her at the time of that spouse’s death. Only if no one in any of the foregoing categories is surviving, does the estate go to the state.

Transporting the Estate. Indications are that you can’t take your estate with you.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.

Amy & Dan Smith's Planning for Life: Your Retirement Plan B

Take the time to design an alternative retirement plan should retirement come earlier than expected.

Imagine this. You’ve spent decades working, saving, and planning for your version of the ideal retirement. Your company was just acquired, and your boss is now strongly encouraging you to take an early retirement – five years before you’re ready.

So, What Now?

Well, first recognize that you’re not alone. Less than a quarter of American workers plan to retire before age 65, but almost half end up doing just that, according to the Employee Benefit Research Institute’s 2014 Retirement Confidence Survey. And most of them retire early through no choice of their own. The reasons vary – a personal or family health issue, loss of a job, burnout. The good news is you don’t have to be a victim of your circumstances should this happen to you. But, you will have to make some adjustments.

That retirement plan may need to be revised to account for poor health, higher expenses, lower income, or simply having to stretch your nest egg over a few additional years.

Here’s what you can do to help yourself rebound financially and find a new path to the retirement you envisioned for yourself.

Adjust To Your New Normal: The retirement transition can be difficult for anyone, but especially so for those who feel unprepared. During what may be a stressful time, it’s important to step back and take stock before making rash decisions. You should:
Breathe: Don’t panic and make a quick decision you might regret, like immediately filing for Social Security, or putting everything on credit, which could land you with a lot of high-interest debt later.

Get Health Insurance: If you’re under 65 when you leave your job, your first priority should be finding health insurance since you likely are not eligible for Medicare. You may be able to join COBRA, a spouse’s plan, or find coverage through an Affordable Care Act healthcare exchange.

Evaluate Your Savings And Income Sources: These include retirement assets, spouse’s income, Social Security, pensions, rental income, disability or life insurance policies. You’ll need to determine if those sources can cover your current living expenses.

Think Twice About Social Security: Deferring Social Security Benefits typically increases your payments, so it may make sense to spend from other savings accounts first, although you’ll need to account for taxes and potential early-withdrawal penalties if you use your retirement accounts. But if you really need a source of reliable income, talk to your financial advisor about applying for Social Security benefits sooner rather than later. He or she can help you determine the best withdrawal- and filing-strategy for your new circumstances.

Revise Your Spending Strategy: A long retirement means your savings must last longer than originally intended, and you’ll have fewer years to fund it; so it’s critical to create a new budget to match your income. Look carefully at each essential and discretionary expense, and determine where you can make adjustments to save costs. Certain adjustments may be easier, now that you have more time to plan meals and cook for example. If you were originally planning to spend 4 percent or 5 percent of your savings each year after retiring, you may need to adjust that percentage downward.

Rethink Your Asset Allocation: Any time you experience a major life change, you should revisit your asset allocation and investments. Talk to your advisor about alternative sources of secure income that meet your particular risk profile.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.

Amy & Dan Smith's Planning for Life: Time to Add Discipline to Your Good Money Habits

For many, their 30’s is a time to build a family and a stronger financial future.
That 30th birthday can be a somewhat traumatic event, but with people living longer, they say 50 is the new 30. If that’s the case, then you’re just a kid!

That doesn’t mean, however, that you should be childlike about your finances. If your 20’s are the years when you lay the foundation for good financial habits, then your 30’s are when you build on that foundation.

By now you’re likely employed in your field, possibly married or in a committed relationship, and thinking about building a family. It’s important to factor in these life events when you are planning. A financial advisor can work with you to create a solid plan and provide objective guidance no matter how investment savvy you are.

Your priority should be saving and avoiding non-mortgage debt. Without debt, saving seems easy. And there’s a lot to save for: the wedding, starting a family, buying a house, sending your kids to college and retirement. Not to mention all the surprises in between. This is where the long-term plan you and your financial advisor create comes in. It’s important to stick to it.

Another key element is to review your financial plans periodically to make sure they still meet your goals. If you are part of a couple, consider making “financial dates” with your spouse or partner to proactively talk about money. It’s a good way to make sure both parties in a relationship are aware of the other’s goals for the future.

To Help You Get Started on your Journey, Here’s a Checklist for 30-Somethings:

Save for retirement. Are you taking advantage of the retirement plan offered by your employer? It allows you to invest a portion of every paycheck before taxes –or after taxes in the case of a Roth 401(k). While you’re at it, analyze other employer benefits. Are you taking advantage of all the benefits your employer offers? Look at everything, from flexible spending accounts to group discounts.
Pay off personal debt. Have you paid off all your high-interest debt? Paying off a credit card that charges 25 percent interest means substantial savings.

Write a simple will and also a living will. How will your property be handled if you die? A simple will can keep your loved ones from having to decide. What do you want to happen if you become seriously ill? A living will records your wishes and removes that burden from your family.

Name a guardian for your children, if you have any. Who will be responsible for your children if you and your spouse/partner die? Protect them by legally naming a guardian.

Review your insurance. If you’ve recently married or started a family, are life and disability insurance adequate given your new status? Also, the younger you are, the less long-term care and disability policies cost. It’s also a good idea to review your auto and home policies to ensure your family and property are fully covered. You may also be eligible for package discounts.

Start a college fund for your children if you have any. As soon as you are out of debt, begin an education fund. The costs for education are soaring, so the earlier you can begin saving the better.
Think about your future housing needs. Is your family going to outgrow your house? Will your parents eventually move in with you? A separate savings fund for housing can accommodate these possibilities.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.

Amy & Dan Smith's Planning for Life: Do It Yourself Legal Products: Bargain or Trap?

The proliferation of online vendors offering legal documents and services for fixed fees is causing a real stir in the legal community. On the one hand there can be no question that the pricing of legal services puts personalized legal counsel out of reach for many people. On the other hand, most legal problems do not lend themselves to over-the-counter solutions.

The North Carolina State Bar Association tried to close down LegalZoom charging it with the unauthorized practice of law. A court order reversed the action. In the meantime, Rocket Lawyer, a competitor to LegalZoom, is teaming with the American Bar Association to offer legal advice to small businesses. The Virginia State Bar is carefully reviewing the situation in Virginia.

The Virginia State Corporation Commission provides forms for all the basic business entities online for your use. Go to www.scc.virginia.gov/clk and click on “Forms and Fees.” You can file to create a limited liability company or corporation immediately by clicking on “SCC eFile” and completing the forms provided.

Where does all this leave the non-lawyer who needs legal services? Basically, you travel at your own risk. The problem is you don’t know what you don’t know.

Granted, it sounds self-serving for lawyers to oppose online services, but, if it were all that simple, then three years of graduate study and the successful completion of a two-day bar examination would be unnecessary.

A simple LLC? – no problem: fill in the blanks and hit “file.” But, uhh, how do you intend to classify the entity for tax purposes? What are the differences? What form do you use? Do you need an “operating agreement?” Separate bank account? How about an EIN?

Your author has seen what can happen to a “simple will” created online. In an actual case recently, because of some conflicting wording downloaded into the form, the estate administrator was forced to go to court for clarification. Two years and nearly $30,000 in costs and fees later, the estate was settled in a manner which was inconsistent with the testator’s intention.

Often there are different but related legal matters occurring at the same time, as, for example, with a marital dissolution and will revisions. There is a need for wise counsel and, sometimes, more than one lawyer with different specialties. Of course, fees escalate. Would that it were not so. Unfortunately, it is the system in which we live.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.

 

 

Amy & Dan Smith's Planning for Life: Planning for Life Disclosure and Other Family Issues in Estate Planning

               

What do we tell the kids?

Questions of how much and what type of information to give the children often arise during consultation.  The answers depend on the circumstances of each family – the ages and maturity of the children being the most obvious factors.  As a general rule the ideal is to advise the children as to the extent and nature of the parents’ assets and plans.  This can lead to a smoother transition to the next generation.

Issues of entitlement, sibling rivalry (where there is more than one child involved), and perceptions of fairness may naturally surface with regard to the parents’ estate.  Feelings may be particularly acute where one child has provided more care and attention to a parent than the other children, as is often the case.

Intra-family struggles are painful and can continue long after the parents are gone.  Lawsuits over estates are often more about replaying family wounds than issues of legal substance.  To the extent that parents can confront potential conflicts during their lifetimes and head them off, they will go far in providing a more meaningful legacy for their progeny.  An investment in professional family counseling during the parents’ lifetimes may be the best use of family resources.

Essential Information for Estate Administration

Accessing information for survivors can be difficult.  If no effort has been made to organize financial and estate documents during one’s lifetime, the survivors must search for necessary information to conduct estate administration.  In the digital age, mail may not bring statements indicating asset values and locations.  The Virginia General Assembly has enacted legislation to empower the estate administrator to obtain access to digital accounts; however, the process is tedious and problematic. The survivors need to have access to passwords.

Where one spouse does all the financial management for the couple and he/she is the first to die, the surviving spouse feels particularly vulnerable.  It is recommended that the money-manager spouse regularly share with the other spouse his/her routine with the family finances.

Who Should be in Charge?

Parents often ask whether their estate or trust should be left in the control of one or more of their children after they are gone.  As a rule, professionals (lawyers, CPA’s, or bank trust departments) do not need to be appointed as personal representatives of an estate or trustees of a trust.  Lay people may serve in these capacities and consult with professionals as needed.  The staffs of the Probate Department of the Circuit Court and in the Office of the Commissioner of Accounts are generally available to provide assistance to people serving in these capacities.

There are situations, however, where appointing a child or children may not be advisable.  For example, if there are several children, singling out one or two for authority may lead to ill feeling among the others.  If a parent leaves the share of a child in trust for that child – instead of an outright gift – out of concern that he/she is irresponsible or that he/she may be particularly vulnerable to a spouse or other source of undue pressure, it is generally not wise to appoint a sibling as trustee of such a trust.  It could lead to friction between the siblings.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.

Amy & Dan Smith's Planning for Life: How To "File and Suspend" Before It Is Too Late

With the recent changes to Social Security rules, filing and suspending will soon be phased out, but there’s still time to take advantage of the strategy.

Here’s a quick guide to maneuvering this rule while it still lasts, but as always, you should work with your financial advisor to discuss further how you can use this and other strategies in your financial plan.

The phasing-out of the file and suspend strategy:

Before these changes, filing and suspending offered a great opportunity for many couples to maximize their benefits. According to Social Security rules, spousal benefits can only be paid off a worker’s record who has already filed for benefits. However, with the file and suspend strategy, one spouse who has reached full retirement age can file for Social Security Benefits and then immediately suspend the payment of those benefits. Using this strategy, the suspending spouse can file without having to receive their benefits-allowing their benefits to continue to grow (via delayed retirement credits until age 70), while their spouse can begin receiving spousal benefits.

Unfortunately, with the rule change, filing and suspending will no longer allow a spouse (or minor dependent) to claim benefits on the suspending spouse’s earning records. The person who is filing will actually have to begin taking benefits in order for his or her spouse or dependent children to be eligible for spousal or dependent benefits.

Who can file and suspend?

Trying to figure out if you make the cut? Here’s what to know. The new law takes effect on April 29, 2016, so if you turn 66 by April 30, 2016 (Social Security deems you have attained your age one day before your birthday), you can file and suspend. If you make the deadline, your spouse will be able to collect benefits off your earnings while your own benefits are left to grow.

If you were born between April 30, 1950, and August 29, 1950:

Some experts believe that the April 29, 2016 deadline does not necessarily mean that a beneficiary must turn age 66 by then in order to “file and suspend.” They argue since the Social Security Administration permits people to file their benefits application as much as four months in advance and there is a regulation that says if you’re not yet entitled to a benefit you may still request that benefits be suspended. What they’re saying in effect is that a worker reaching age 66 by August 29, 2016, could still effectively implement the file and suspend strategy.

Before you sign up:

If your birthday falls between April 30, 1950, and August 29, 1950, and you want to file and suspend, there are a few potential risks to be aware of. The SSA may not interpret the law changes to allow applications for people turning 66 after April 30, 2016, so there is a chance it will process your retirement benefit, while ignoring the request to suspend.

Additionally, if the SSA sees the timing as a missed deadline, it may grant your request to file and suspend, but not permit your spouse or children to collect on your work record, while your retirement benefits remain suspended.

TIP: Should you choose to attempt to take advantage of this strategy, pay close attention to your awards notice to ensure that everything has been processed and is working as you intended. If your request to file and suspend is denied, you can appeal the denial all the way up to the federal district court if necessary, however, this could be a long, messy process.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.

Amy & Dan Smith's Planning For Life: There If (Or When) You Need It

Long-term care is one of the biggest and often unexpected expenses in retirement. Thinking about funding a long-term care plan now can save you later.

It seems we don’t pay much attention to long-term care until it directly affects us. Sure, it may pop up on our radar when consoling a friend who’s bearing the weight-physically and financially – of a loved one’s care or through the trials and tribulations of funding an aging parent’s assisted living needs. However, there may come a time when you or your spouse could face these challenges and decisions.  Few Americans place long-term care needs high on a list of concerns. In fact, more than half don’t have a plan for when they’re unable to independently bathe, dress, eat or get around, according to the 2012 State of Planning Survey.

Of course, it’s hard to think of ourselves in need of care, whether that’s adult daycare, assisted-living services or nursing home care. And, it can be hard to plan for future unknowns, when immediate costs demand your attention. But timing is critical when it comes to funding long-term care, and most consider mid-50’s the ideal age to consider long-term care insurance. Waiting much longer could bring much higher premiums.

Thinking about it now also gives you time to see how it fits into your overall retirement plan and could help protect your assets, preserve your independence, and ensure quality care. Plus, having that safety net could potentially relieve friends and family from the stress of unexpected financial and emotional burdens.

Don’t Underestimate Long-Term Care Costs
Long-term care is one of the biggest and often unexpected expenses in retirement. Most healthcare insurance policies, Medicare and Medigap/Medicare supplemental insurance don’t really cover what you’ll need, and only limited assistance is available from government programs. Like Medicare, healthcare insurance policies only pay benefits for short-term rehabilitative care. For a true long-term care plan, you need insurance that offers comprehensive coverage spanning years. And while an ample portfolio might absorb future long-term care costs, most people prefer to rely on quality insurance rather than pay out of pocket.

Funding Your Plan
Traditional long-term care policies can create a financial safety net should you become incapacitated and relieve your family of the burden of providing for your care-physically and financially. Covered costs can include round-the-clock home care, assisted living, adult daycare, and nursing home care. The premiums depend on many factors, including the type of policy and your age at the time of purchase. For business funded plans, long-term care premiums can be tax-deductible.

Funding your long-term care plan lets you make your own choices, while you still can, takes the burden off your children’s shoulders and, should the most expensive scenario occur, it would not devastate your retirement income plan for you or your spouse. There are many details to ponder when choosing the right policy. Talk to your financial advisor to help determine what coverage you may need and how you’ll fund it.

Guarantees are based on the claims paying ability of the issuing company. Long Term Care Insurance or Asset based long-term Care Insurance Products may not be suitable for all investors. Surrender charges may apply for early withdrawals and, if made prior to age 59-1/2, may be subject to a 10 percent federal tax penalty in addition to any gains being taxed as ordinary income. Please consult with a licensed financial professional when considering your insurance options. Investing involves risk and investors may incur a profit or a loss. Past performance may not be indicative of future results. Diversification does not ensure a profit or protect against a loss. The foregoing contains general information only and is not intended to convey investment advice.

From "Amy & Dan Smith's Planning for Life" column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice.  For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D. Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (Tel: 703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm.  Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC.  Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176.  (Tel: 703-669-5022, www.amysmithwealthmanagement.com). Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James.  Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice.  Dan Smith is not affiliated with Raymond James.