Retirement Plans

Start your retirement planning early. Ask Olga Karman; she had to start her retirement plan in a hurry, because before she knew it she was 48 years old wondering where she was going to get her retirement money from.
"I really had to cut back," said Karman, "I sacrificed like you wouldn't believe, and I was not shy about buying secondhand clothes."

Retirement planning; Elder Law Attorneys; Boston, Raynham and Andover Massachusetts

As soon as Karman realized she was so close to retirement, she hurried and started making very large contributions to different savings and investment accounts. She even bought a long-term care insurance policy. For any normal person to do this would not be easy. Sacrificing and cutting back on everything is a very hard thing to do.

Social Security fate concerns Elder Law Attorneys Cohen & Oalican

Nobody knows the fate of Social Security right now, and almost all employer-paid pensions are no longer existent. More and more people are starting to wonder if they will be fit for retirement or not. For many people, that is a very scary thing to think about.

Don’t let this happen to you. Start planning for your retirement as soon as possible.

Preview of the Proposed New Tax Relief Act of 2010 - Part 3

 

 

Once again.. this is a preview of what is currently under discussion.  It is NOT law, and should not be looked at as political, legal, or financial advice.  This is only  a brief look at some of the currently debated act, as it impacts our senior clientele.

 

Estate Tax
Top on the list for most of our elder law clients, is preserving their estate.  Below are the changes, verbatim, on what we may expect to see in tax relief in Estate Taxes.

Temporary Estate Tax Relief
Temporary estate, gift and generation skipping transfer tax relief. The EGTRRA phased-out the estate and generation-skipping transfer taxes so that they were fully repealed in 2010, and lowered the gift tax rate to 35 percent and increased the gift tax exemption to $1 million for 2010. The proposal sets the exemption at $5 million per person and $10 million per couple and a top tax rate of 35 percent for the estate, gift, and generation skipping transfer taxes for two years, through 2012. The exemption amount is indexed beginning in 2012. The proposal is effective January 1, 2010, but allows an election to choose no estate tax and modified carryover basis for estates arising on or after January 1, 2010 and before January 1, 2011. The proposal sets a $5 million generation-skipping transfer tax exemption and zero percent rate for the 2010 year. 5 of 12

Conservation Gifts & Capital Gains
For those clients considering the philanthropic disposition of property for purposes  of conservation, the following is being contemplated.

Extension of provision encouraging contributions of capital gain real property for conservation purposes. The bill extends for two years (through 2011) the increased contribution limits and carry forward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes.

 

To be continued…

 

Your friends at…

Cohen & Oalican, LLP

Boston Elder Law Attorneys
Raynham Elder Law Attorneys
Andover Elder Law Attorneys

MEDCottage or Granny Pod–Part 2

The actual name for the “granny pod” is MEDCottage and it is a type of mobile residential unit that can be rented on a monthly basis. It can be parked in your backyard, you can connect your water and electricity to the unit and it transforms into an independent room for your elderly relatives. This innovative concept is becoming quite popular all over the country, especially in the state of Virginia where the zoning restrictions have been relaxed for these hi-tech homes by the government, which are expected to be available next year.

The MEDCottage has vinyl siding on the exterior and French doors with a white trim around them, while the interiors are fully equipped with a comfortable suite of rooms, with a kitchen and toilet. In short, the MEDCottage is a complete home in itself with all amenities needed to live a safe, comfortable life and ideal for the elderly.

What makes the MEDCottage even more suitable for the elderly is that inside the unit there is state-of-the-art health monitoring equipment and a lift to take an incapacitated person from the bedroom to the bathroom. There is also a camera installed just a foot above the floor that is adequate to view the person’s feet, so if he/she fell down it would immediately be seen. It has been estimated that falls in the home are one of the primary reasons elderly people have to be taken to hospitals and nursing homes, so having this “Feet Sweep” camera would be a big help in the timely assistance in case of such accidents. In addition to these useful conveniences, the MEDCottage has lighting along the floors that would help the elderly in easy movement around the unit. There are monitoring systems that offer regular updates on the medical status of the occupant, like heart rate and temperature and also provide information about medicine intake and other details.

The thought of relegating your older relative in a separate unit in the backyard may not sit easy with most people, but Rev. Dupin says that it is in line with the independent nature of most Americans. The space of the MEDCottage with the family and yet apart is symbolic of American self-reliance and independence. It is not that we can declare loudly that we do not want our older family members in our home, but neither would they wish to live with us. The MEDCottage is an acceptable alternative where the elderly are near their family but are not stepping on anyone’s feet in the process. It is a wonderful way for the older generation to remain part of the family, enjoy the company of their grandchildren and feel safe and content, without being any sort of a burden on others.

Rev. Dupin does not think that his parents would be living in a “granny pod” but certainly visualizes a future where he might be living in the backyard of one of his children.

 

Call one of elderlaw attorneys at Cohen & Oalican, LLP Boston, Andover and Raynham to see if this fits into your  long term care plan.

Your Retirement - Part 3 - FAQ

The Roth IRA

As if the rules described above were not complicated enough, as part of the Taxpayer Relief Act of 1997 Congress created two new planning vehicles: the Roth IRA, named after Senator William V. Roth (R-Del.) And the Education IRA. The Roth IRA, in effect, turns a traditional IRA on its head. While traditional IRAs permit the taxpayer to shelter pre-tax earnings but taxes them upon withdrawal, the Roth IRA is for after-tax savings, but both the original deposits and the earnings on them are not taxed on withdrawal. In addition, unlike traditional IRAs, Roth IRAs are available to taxpayers already contributing to a plan at work and to taxpayers who continue to work after age 70 ½. Finally, there is no minimum distribution requirement upon reaching that age.

Eligibility for the Roth IRA is limited to taxpayers with an adjusted gross income of under $110,000 if single and $160,000 if married (to be adjusted for inflation after 1998). The contribution is limited to $2,000 a year, with smaller limits for taxpayers with income of between $95,000 and $110,000 if single and between $150,000 and $160,000 if married and filing a joint return.

Financial experts calculate that for many Americans a Roth IRA will save more money than a traditional IRA. This is because the future value of the interest earned, which will never be taxed, often far outweighs the value of deferring taxes on the investment itself. Remember, traditional IRAs may be converted to Roth IRAs this year only! Consult with your financial advisor to help decide if a Roth IRA makes sense for you.

The Education IRA

Similar to the Roth IRA, the new education IRA permits individuals to save up to $500 annually with the earnings accumulating tax free. This may be of special interest to parents and grandparents who can contribute this amount annually to accounts owned by their children and grandchildren. Although $500 a year isn't a lot of money given the size of college tuition, over time it can make a difference. It is only available to taxpayers whose adjusted gross income is under $110,000 for single taxpayers and $160,000 for married taxpayers filing a joint return, with limits on contributions for taxpayers with income between $95,000 and $110,000 and between $150,000 and $160,000, respectively (all numbers to be adjusted for inflation after 1998). If the parents' income exceeds these levels, grandparents and others with lower taxable incomes can contribute to the accounts. But only $500 can be added per child per year.


Funds can only be added to the accounts while the child is under age 18 and must be withdrawn by the time he or she reaches age 30 or turned over into an account for another family member. An advantage with these accounts over most accounts created for children is that the funds do not have to be turned over to the child at age 18. But a word of caution: if you expect that your child or grandchild will apply for financial assistance for college, it may be wiser to invest the money in your own name. The financial aid application process for college has become increasingly complex, but, in general, colleges treat assets held by the family -- especially a grandparent -- differently from assets held by the student.

Only a portion of family assets are expected to be used for a specific student's education, while all of the child's assets are expected to be used before the student draws on financial aid.


Conclusion


While the rules regarding retirement plans are complicated (and the summary above only brushes the surface) the most important lesson is to always name a designated beneficiary and to make sure that you name individuals only. (You can also name a trust that meets certain requirements beyond the scope of this article.) The second lesson is to consult with a qualified professional advisor when you reach 70 ½, if not before.

Cohen & Oalican, LLP provide a full spectrum of services for the elderly, for disabled adults, and for the families.