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Bill Introduced to Allow Military Retirees to Transfer Benefits to Special Needs Trust

25 May

A bill has been introduced in Congress that would allow retired members of the military to transfer survivor benefits to a special needs trust for the benefit of their severely disabled dependents, according to a news report.

The Disabled Military Child Protection Act was introduced by Rep. Jim Moran (D-VA) and would entitle severely disabled children of military retirees to survivor benefits upon the retiree’s death. Currently, civilian federal employees are able to establish special needs trusts for their disabled children, but military retirees are not. Moran, who is the father of a special needs child, said that the new legislation would help more than 1,000 severely disabled military children.

Under the military’s current Survivor Benefit Plan (SBP), a military retiree can set aside up to 55 percent of his monthly retirement pay to provide family members with a monthly stipend upon the retiree’s death. These benefits are counted as income, which can disqualify special needs family members from receiving federal healthcare benefits. The new legislation enables the SBP to transfer benefits to a special needs trust to benefit the disabled child.

The Dorcey Law Firm, PLC is a Florida Estate Planning, Asset Protection and Business Planning law firm with offices in Fort Myers, Florida and Naples, Florida. Our firm is dedicated to its clients, the rule of law and the betterment of the Southwest Florida community.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Living Trust, Irrevocable Trusts, Estate Planning, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today at 239-418-0169 to schedule your free consultation.

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Posted in Florida Estate Planning, Florida Trusts, Fort Myers Estate Planning, Special Needs Trust

A Cautionary Tale: Why People Need Wills

24 May

Financial adviser Don McNay posted a column at the HuffingtonPost.com and it is a wrenching tale about the importance of having a will.

As a seasoned financial consultant and founder of his own financial services company, McNay thought he would be the last person involved in what he calls “an estate planning nightmare” when his mother and sister died, both without wills.

McNay’s mother died first of an unexpected brain aneurysm. Her only asset was her home, where McNay’s sister still lived with her teenaged daughter. The sister was just getting back on her feet after a series of financial mishaps, so McNay was hit for the estate expenses, which included delinquent property taxes on the home.

McNay and his sister agreed that once the estate was settled, they would get an appraisal on the house and take out a new mortgage. This would reimburse McNay for the estate expenses and provide his sister with a way to pay McNay rent for the property until she could afford to buy the home outright from him.

Unfortunately, a few months later his sister died in an accident, leaving no will and no record of their agreement. She also left a husband that McNay though she was divorced from…but she hadn’t obtained a divorce, and the husband wanted his share of the estate. The story gets worse, and more expensive, from there.

McNay writes that this “tedious and expensive mess” could have been avoided if his mother and sister had executed a simple will. As he notes at the end of his column: “People may think that wills and attorneys are expensive. In the overall scheme of things, they really aren’t. I gladly would have paid ten times the average cost for my mother and sister to have had wills.”

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Posted in Florida Estate Planning, Florida Last Will and Testament, Fort Myers Estate Planning

Fort Myers Estate Planning Attorney Shares List of the Top 10 American Tax Havens

23 May

Using tax data from H&R Block, CNBC.com has compiled a list of the top 10 states for low tax burdens:

1. Wyoming – no personal income or corporate income tax, low property and sales taxes, and one of the lowest gas taxes in the U.S. at 14 cents per gallon.

2. Alabama – second-lowest property tax in the nation and low gas taxes.

3. Colorado – low 4.63 flat tax on personal income and low sales tax rate of 2.9 percent.

4. Louisiana – low property taxes (.43 percent) and low sales tax rate of 4 percent.

5. Tennessee – no state tax on wages and salaries; 6 percent income tax on dividends and interest.

6. Utah – 5 percent flat state income tax rate, sales and use tax of 4.7 percent and no estate taxes.

7. New Mexico – top income tax rate of 4.9 percent, sales tax rate of 5.13 percent and gas tax rate of 17 cents per gallon.

8. Delaware – top income tax rate of 5.95 percent and low property tax rates.

9. South Dakota – no personal income tax, sales tax rate of 4 percent and no state estate tax.

10. Florida – no personal income tax, sales tax rate of 6 percent and gas tax of 17 cents per gallon.

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Posted in Florida Estate Planning, Fort Myers Estate Planning, Retirement Planning, Tax Planning

Should You Pay Off Your Mortgage Before You Retire?

22 May

Conventional retirement planning wisdom put paying off your mortgage before you retire at the top of the “to-do” list. However, according to a recent Reuters article, that may no longer be the case.

With mortgage rates approaching historic lows, keeping your mortgage may be a better decision. In making a decision, pre-retirees should look at a variety of factors, including their tax situation, how long they plan to be in their homes and what else they might do with the money. Here are some ways to help make the decision:

Future cash flow – a traditional fixed-rate mortgage is less expensive than a reverse mortgage, so if you plan to live on some of your home equity in retirement, you are better off stretching your mortgage.

Market or mortgage – historically, stocks return about 10 percent annually, so pulling money out of the market to payoff a low fixed-rate mortgage charging less than half that in interest may not be the best move.

Peace of mind – if you worry about paying bills and have a large sum of cash in the bank, you may be better off paying off your mortgage, since bank savings only returns 0.8 percent on your money and paying off a 4 percent interest rate mortgage would net you an additional return of 3.2 percent.

Taxes – financial experts warn against taking money out of a retirement account to pay off your mortgage, since you will have to pay income taxes on the withdrawal and may be bumped into a higher tax bracket as well.

Staying or going – if you plan to move within five years, don’t bother paying off your mortgage; you’ll pay it off anyway when you sell, and the greater flexibility you gain is worth the small cost.

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Posted in Florida Estate Planning, Fort Myers Estate Planning, Retirement Planning

How to Protect Your Children’s Inheritance With a Castle Trust

21 May

One of the major reasons for creating a Florida estate plan is to pass assets on to children and future generations while at the same time protecting those assets from adverse tax consequences. What many people neglect to consider is protecting inherited assets from credits, bankruptcy, business failure or divorce, all of which can easily diminish an inheritance even more than taxes.

While there are trust instruments to help your protect assets while they are still in your control, once those assets pass to your children, those assets cannot be protected by the same trust that worked for you.

However, future inheritances can be protected by what is called a Castle Trust – sometimes known as an Inheritor’s Trust – which protects the inherited assets while still allowing the beneficiary to use the trust assets. A Castle Trust also removes the current and future appreciated value of the trust assets from the taxable estate of the beneficiary, so no federal estate taxes will be due when the beneficiary dies.

If properly structured, a Castle Trust can be used to protect assets and pass them on from generation to generation, free from federal estate tax.

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Posted in Complex Estate Planning, Florida Estate Planning, Florida Trusts, Fort Myers Estate Planning

Beware the Unintended Consequences Of Unequal Inheritances

18 May

A Fort Myers estate planning attorney says that parents with multiple children should think carefully about the emotional legacy they want to leave before making final decisions about who gets what, since unequal inheritances can have unintended consequences.

To maintain family harmony, parents should focus on two primary considerations when making inheritance decisions: how you want to be remembered and how your decisions will affect relationships among family members. Even when decisions to leave one child more than another may be based on very good reasoning, that decision could negatively impact the sibling relationship permanently.

It is not unusual for parents to want to leave more for a child who may be struggling financially, especially if other children are well-off. Unfortunately, children often regard inheritances as a measure of the love their parents have for them – and shorting one child in favor of another can lead to lasting hurt feelings.

Estate planning experts advise parents in this situation to discuss their inheritance plans first with an estate planning attorney. If parents then want to proceed with leaving disparate amounts to children, they should discuss with their children the reasons they are doing so, to make their intentions clear. Aligning parental wishes with children’s expectations may not always be possible, but informing everyone of how you arrived at your decision could help alleviate future family conflict.

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Posted in Florida Estate Planning, Florida Last Will and Testament, Fort Myers Estate Planning

Advance Planning for Selling a Business Yields Better Results All Around, Part 2 of 2

17 May

A recent Wall Street Journal article noted that the wealth of many baby boomers is tied up in businesses they own, and this could become a problem when it’s time for retirement unless they do some advance planning to smooth the transition. The article listed six of the most common mistakes that business owners make when selling the business and how to avoid them; here are the last three:

Mistake #4: Rushing to accept a rich offer

Fix #4: Don’t become fixated on the best offer since large numbers are sometimes used as a distraction. Consider all aspects of the transaction, including how employees will be treated and how the buyer will finance the purchase.

Mistake #5: Hiring a relative to do the deal

Fix #5: Interview five or six law firms early in the process and ask questions about how the deal would be structured, how the attorneys can help with negotiations, the length of time to close and structuring compensation packages for family members who want to stay involved in the business.

Mistake #6: Underestimating the emotional impact of selling a business

Fix #6: Plan your post-exit lifestyle before a sale; if you want to stay involved, this could include consulting work or a scaled-down schedule that will allow you sufficient time to transition into retirement.

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Posted in Business Planning, Buy-Sell Agreements, Florida Estate Planning, Fort Myers Estate Planning

Advance Planning for Selling a Business Yields Better Results All Around, Part 1 of 2

16 May

Mistake #1: Creating a business that is too dependent on the owner.

Fix #1: A business that is largely dependent upon its owner for its success is likely to make potential buyers nervous. Delegate responsibility well before selling the business to ensure a smooth transition.

Mistake #2: Ignoring the tax benefits of planning ahead

Fix #2: If you anticipate transferring ownership within five years, do it sooner at a lower valuation to avoid larger gift taxes.

Mistake #3: Incorrectly valuing the business

Fix #3: Get a realistic appraisal of the business well before retirement ; if selling the business won’t result in the returns you need for retirement, then adjust your plans or come up with a strategy to increase your income.

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Posted in Business Planning, Florida Estate Planning, Fort Myers Estate Planning

Florida Trusts Can Protect Your Child’s Inheritance

15 May

Perhaps the most important aspect of creating and planning an estate in Florida is preparing a trust for your children, especially for those children under the age of 18. As a part of your living trust, ensuring that your children receive their inheritance in the manner in which you intended, a trust for children with monthly distributions is a good option.

By planning a separate trust for your children’s inheritance, you can choose when and how they will receive the money. Perhaps you don’t want them to get any of their inheritance until they are 25, or perhaps you want them to have a monthly amount given to them in the event of your untimely passing until they are 30, and receive the rest upon their 30th birthday.

The bottom line is, setting up an inheritance trust for your children will allow you to make the rules. This is important because if your children’s inheritance is lumped in with the rest of the estate, they are not guaranteed to get what you may have intended for them.

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Posted in Florida Estate Planning, Florida Trust Code, Florida Trusts, Fort Myers Estate Planning

Why Women Should Consider a Prenuptial Agreement

14 May

The busiest time of the year for weddings is approaching, and if you are a woman who is getting ready to say, “I do” to marriage, you may also want to considering saying the same to a prenuptial agreement.

Of course, nothing is less romantic than a prenup. Unless, of course, it’s divorce. Since women are waiting longer to get married, they usually have more assets to bring to a marriage than ever before. For example, there are now twice as many single women as men buying homes.

Marriage is not just a union of souls, it is also a financial union that should be protected. Here’s some sound advice for women entering marriage:

Protect property – a prenup will help ensure that you can exit the marriage, if it comes to that, in the same financial shape as you entered into it.

Protect your investment in yourself – if you earned a degree and have to leave a high-paying job to raise the children, consider writing a prenup that includes some sort of payout for compensating you for the career interruption.

Protect yourself – if your husband runs up a lot of debt or files bankruptcy, a prenup can protect you from his creditors being able to come after your assets.

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Posted in Florida Estate Planning, Fort Myers Estate Planning

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