Cannon Murray Law

Protecting Your Legacy and Their Inheritance

Conversations between estate planning attorneys and clients are as much about how to talk with children about the intentions behind inheritances, as about the legal means of distributing assets.

A lifetime spent creating a family and an accumulation of wealth is an admirable accomplishment. The final note—an estate plan to distribute that wealth—can alleviate the worry of what will happen to the assets after you are gone. Letting go of that control is not easy, but it is also necessary.

WTOP’s article simply poses the question: How do you ensure that your wealth gets distributed to the right people in accordance with your intentions? The article, “How to protect inheritances for future generations,” first suggests that you sit down with your children and talk about your estate planning. Discussing any inheritance can be difficult for the donor, as well as the recipient-beneficiary. This may be the first time you’re telling your kids as adults about your net worth. This can be a lot of new information to process.

Rather than transferring assets directly to children, parents can create a trust to transfer wealth to their kids and get some protection for these assets. Depending on the state and circumstances, trust assets may be more at risk when a beneficiary is the sole trustee and has broad discretionary powers to distribute assets to anyone, including to themselves.

You can add provisions that help restrict the beneficiary’s control over the trust assets to help safeguard a trust as being deemed separate property, such as in a divorce. You can add an independent co-trustee to the trust and give them total authority to withhold or make distributions to the beneficiary at his or her sole discretion. You can also add protection by these methods:

• Adding multiple beneficiaries, instead of only one primary beneficiary;
• Requiring that the “distribution” trustee be a corporate or professional trustee;
• Making certain that the beneficiary doesn’t have general power of attorney to direct trust assets; and
• Creating a trust that lasts for multiple generations, rather than outright age-based distributions.

An experienced estate planning attorney will be able to help set up trusts as part of your estate plan, if that is appropriate for your situation. These are complex legal instruments, so you’ll want to make sure that your attorney takes the time to explain all of the consequences of their use. Talk with your children, and consider having the children meet with your estate planning attorney so that everyone is on the same page.

Reference: WTOP (April 19, 2017) “How to protect inheritances for future generations”

Is College Worth it?

   

College Graduates Do Better When Working Past 65

Almost one in five Americans with a college degree are still gainfully employed. That’s the highest number in more than fifty years. If you’ve got a college degree, your chances of working past age 65 are higher, and you’ll also find it easier to keep working.

Americans are delaying retirement past age 65, and those with a college degree are better able to find work than people who did not graduate from college. It’s harder for them to stay in the workplace, which is not good for retirement security.

The Ledger Dispatch’s recent article, “Working past 65? It’s easier to do if you graduated college,” explains that it’s a crucial distinction. This is because experts believe both groups would benefit from working an extra year or more to improve their retirement security. Older Americans who stay at work a little longer are able to increase their savings and they can let larger Social Security benefits accrue. The rules around Social Security benefits can be complex and confusing.  If you see a seminar in your area, or if you have a financial planner who hosts educational events, this is a great topic to watch out for.

Many older Americans also like the idea of staying engaged by working.  However, less-educated Americans aren’t always able to follow this path. They also typically have less in retirement savings. Many must retire before their mid-60s because of poor health, the inability to do jobs that require a lot of physical activity, or a variety of other reasons.

“If less-educated people were retiring early and comfortable in their retirement years, good for them, but we know they aren’t,” said Matt Rutledge, research economist at the Center for Retirement Research at Boston College. His research shows a widening gap in retirement ages between college and high school graduates. It’s very apparent when looking at the average age of retirement for men. However, the increasing number of women in the workforce in recent decades can skew the overall figures. Men with college degrees are retiring at an average age of 65.7, according to Rutledge’s study based on government data. This is about three years later than men with only high school degrees. That group is retiring at an average age of 62.8.

In comparison, in the late 1970s, the two groups were retiring at nearly the same age: 64.6 for college graduates and 64.1 for high school graduates.

Their ability to earn with or without a college degree, creates a split in retirement savings: the typical households run by someone with a college degree has $116,900 in a retirement account. That’s three times more than the $36,000 median for households run by someone with only a high school diploma.

Health is a big factor in deciding when to retire, and less-educated Americans tend to have worse health as a group than their higher-educated peers. This group is also more likely to be in physically demanding jobs, which are harder to maintain as they get older. (Just think about Tom Brady -- when was the last time you heard someone say "Wow, my banker is still performing well at 41!" -- physical work is hard to keep doing as we get older). For example, 61% of workers without a college degree have to move heavy loads (or people) as a regular part of their job. That’s more than double the 23% rate of their college-graduate peers, according to researchers at Harvard University, RAND Corp. and UCLA. Lower-educated workers also are much more likely to have jobs that require them to stand all the time, do repetitive hand movements or be placed in tiring or painful positions.

The federal government said recently that 19.2% of everyone age 65 and over was employed, as of September. That’s tied for the highest rate since 1962, and it’s nearly double the level of the mid-1980s.

An additional five years of working could mean far more retirement savings than someone who retires at age 62. Those few more years of working makes it more likely that your retirement will be more financially stable and there will be more resources to do the things you want to do.

 

Reference: Ledger Dispatch (October 8, 2018) “Working past 65? It’s easier to do if you graduated college”

 

 

I'm really young, do I need a will?

Millennials, Time to Get a Will

Unmarried, with no children, you still need to have a will. Think of it as a way to make your parents proud of you—and spare them the further pain of what happens, when no will is in place.

It’s not surprising to learn that a recent survey from caring.com revealed that more than three quarters of millennials have not taken the time to prepare a will. It’s a combination of being young adults who can’t quite imagine their own mortality and skirting the issue because it’s uncomfortable. However, what millennials don’t know, and need to learn, is that not having a will, even without a spouse or children or a large estate, can create a lot of problems for loved ones, like parents and siblings.

Kiplinger’s article “Why Everyone Needs an Estate Plan” explains that a will details exactly how you want your property distributed after your death. A will also designates an Personal Reprsentative (aka executor) to handle these transfers. If you die intestate or without a will, state law dictates how to distribute your property and funds. That process generally begins with your parents, if you are unmarried or don't have children (unless an account like your bank account designates a beneficiary or is held jointly). Even if you want to leave everything to your parents, a will can make things a lot easier.

Two other important documents are a durable power of attorney, which names the person who can manage financial matters on your behalf if you’re unable, and a healthcare proxy/HIPPA,  which designates an individual to carry out these decisions on your behalf, and also gives them access to your medical records.  In Massachusetts, a healthcare proxy only works if you are incapacitated (as determined by your doctor).  There may still be situations in which you'd like someone else to be able to talk to your doctors or help with coordinating care which is why the HIPPA is important -- this works even if you are not incapacitated.

Without a legal document that specifies your wishes or that names a health care agent, you run the risk of a situation that won’t end well. If you fall into a persistent vegetative state, because of illness or an accident, you’ll probably be kept alive artificially.

And for  you pet owners, be sure there is someone who can care for your pet, and knows that you have one, if you become hospitalized.  I sometimes give clients a simple "Pet Care Card" to put in your wallet.  It lets someone know that there is a pet at home and gives the name of the neighbor or family member who can get over there and walk the dog or feed the cat.

Stop putting it off. Give thought to who you want to be in charge of your estate, if you should pass—that’s your Personal Representative (aka Executor)—and who you would want to make decisions on your behalf, if you are unable to, both financial and medical. Remember that it does not have to be a parent or a sibling, but it does have to be someone you trust to make decisions and stick to those decisions. It may not be your best friend, but it needs to be someone who you can rely on.

Meet with an experienced estate planning attorney to discuss what needs to be done for your particular situation. You may not need a complex plan, but you should have the right legal documents in place.

 

 

Reference: Kiplinger’s (August 30, 2018) “Why Everyone Needs an Estate Plan”

 

Elder Law -- HELP!

How Will Aging Parent’s Needs Impact Your Family?

We like to think money doesn’t matter when it comes to the ones we love, but if an elderly parent should need skilled nursing care and has no resources, the family will need to know what’s coming next.

At some point, families have to face the grim reality that they cannot care for a parent without help. Where that care is provided, and how skilled that care is, determines the cost. To have an aide come to the house for a day may cost about $200. A low-level of care in an assisted living facility cost averages around $5,500 to $6,000 a month. If your loved one needs skilled nursing care in a facility, expect the cost to start at around $8,500, depending on what kind of care they require.  This can be as high as $14,000 per month in some areas.

Massachusetts is one of the more expensive areas for long-term care. As a result, when looking at paying for that care and trying to protect assets, it’s important to work with an attorney who specializes in elder law. That person can draft the legal documents and also handle counseling issues on housing, placement and level of care.

Many people think they’ll have to spend their parents’ entire savings or assets, before becoming eligible for some type of government assistance. However, there are four ways to pay for elder care: your own money, long-term care insurance, Medicaid or the VA. You should ask an experienced elder law attorney to try and protect as much of their individual assets as possible. The sooner you begin the planning process, the more options you’ll have as far as the type of care and how long you’re able to pay for it.  There are planning strategies you can use in Massachusetts if there is a healthy spouse who is able to stay at home, that a nursing home might not tell you about.

An elder law attorney will discuss ways to protect the assets of someone going into long-term care. Strategies usually focus on leveraging the Medicaid/MassHealth and VA regulations.

An elderly person who requires 24/7 care can exhaust all of his or her financial resources. MassHealth/Medicaid can help, but getting qualified is a time consuming and difficult process.

In some situations, an elderly parent requires a significant amount of care, and his or her assets must be used to pay for assisted living or a nursing home. That can make things tense. The children may be anticipating inheritances to help with their own retirements, and they could be resentful when that money's being spent on mom’s care.

It's important for families to know that they can ask for help, when facing a crisis with an aging parent. Meet with an elder lawyer to learn about what options are available to help with the cost of care, and what resources exist in your community to help, as you and your parent adjusts to this phase of life.

CannonMurrayLaw, llc can help with advance planning for asset protection, as well as crisis planning, and assisting with the confusing process of applying for MassHealth.  Attorney Leslie Starritt is our in-house specialist and works directly with clients, nursing homes/facilities, and MassHealth personnel. 

 

 

 

 

Reference: New Jersey 101.5 (August 20, 2018) “Mom or Dad Goes to a Nursing Home: Will You Go Broke?”

 

If Your College Student is Coming Home for Thanksgiving -- get these things in order

By now, the dorms are filled, and a new fall semester is underway. However, you can still take care of these often-overlooked details for your college student.

If you were so busy focusing on the logistics of getting your student off to college, that you didn’t have time to get to the details below, now is the time to get it done. As listed in this article from nj.com, “Don't let your kid go to college without these 10 things,” these are important for your student and you to have in place.

1. Health Insurance Information. Most colleges offer some free health services to students. However, that might not be enough for most healthcare needs, especially for emergencies. Even if the student is on your plan, the coverage may not be enough, if the student goes to college in a different state. The possible need for out-of-network care could get very pricy. Ask your insurance company to calculate how the student’s bills would be covered. You should also take a look at any insurance offered by the school.
2. A Local Providers List. An out-of-state student can get an annual check-up when she’s home for the summer, but some medical needs may not conform to the times when they’re home. Before students get to campus, prepare a list of local care providers who take your insurance.
3. Durable Power of Attorney and Healthcare Proxy. When your student was a minor child, as the parent, you had the right to receive information about his medical care, and you were authorized to make medical decisions on his behalf. Remember that, when your child reaches the age of majority, you lose those rights. That’s why it’s critical for your student to sign durable power of attorney and healthcare proxy documents. These two documents will authorize you to make financial and healthcare decisions for your student, and to get information about his care. Ask an estate planning attorney to create these documents for you. It’s well worth it.  Also have them create a HIPPA release that allows you to speak to the medical providers and to access medical records.  Take a picture of these documents and have them on your cell phone.  If there is an emergency, you will be able to show them to the medical provider and get right in to see your child.
4. A Budget. Aside from how to pay tuition, students need to have a plan for other expenses, like textbooks, pizza, and toothpaste. Create an estimated budget with all possible expenses and examine discretionary costs.
5. A Money Back-Up Plan. You know that even with a great prepared budget, there may be times when Junior calls home asking for money. A slick way to transfer funds to your student is to have a linked bank account. You can easily transfer money from your account to his.
6. A Credit Card. Credit cards in college take some discipline. Help your student find one credit card with a low available balance. She can use the card for a few regular expenses each month, which are accounted for in your budget. You should stress the importance of paying on time, every time. That will help to build a strong credit score. With a solid credit history, after graduation it will help her get an apartment or a car loan.
7. Renter's Insurance. Ask your homeowner’s insurance company about how and if your student’s possessions will be covered by your policy when she moves into a college dorm. Most policies will give coverage but be sure it’s not limited. If it’s not as comprehensive as you’d like, you should consider purchasing an additional renter’s policy, especially if the student is living in an apartment instead of a dorm.
8. An Emergency List. Create a shared online document that has all the student’s essential information, so you can both easily access it. It should include the student’s bank and credit card account numbers and how to contact the bank, if the cards are lost or stolen. You should also have college contact information, like a student ID number and account information for financial aid and student loans.  Think about a more comprehensive listing for your student to keep track of passwords and account information.  If there's a time that they need you to access their information, it may be difficult without password information.
9. A Local Buddy. If your kid’s going to college far from home, see if you can find a friendly face for her near the college. It could be a Facebook friend from high school who lives near campus. Maybe your sister’s college roommate has a relative there. It’s reassuring to have another responsible adult as an emergency contact, particularly if the parents are many hours away from campus. Introduce your student to this person, even if it’s only over email, and make sure they have each other’s numbers—just in case. Your student may even get a couple of free home-cooked dinners from it. You should also be sure that you have a phone number for your student's roommates or friends—just in case you urgently need to contact your student, but he is not answering your texts.
10. Absentee Ballot. When your student turns 18, she’s a prospective voter. Make sure your student applies for an absentee ballot and exercises her new right!

Your student may want to wave away your concerns about these details, but if an emergency occurs you and your child will be better prepared. They will be home for Thanksgiving, and that is a great time to get some of these documents in place.

 

 

 

 

Reference: nj.com (August 13, 2018) “Don't let your kid go to college without these 10 things”

 

Should You Worry About Estate Taxes?

Where You Die Matters, If You Want to Minimize Your Heir’s Tax Burden

Depending on where you die, you may be able to leave a relatively large sum to your heirs, tax-free, since some states have tied their state estate taxes to the federal amount.

If you die in 2018 in Hawaii, Maine or Washington, D.C., you will be able to leave $11.2 million tax free to your heirs. If you live a few years longer, you’ll be able to do the same in Maryland (2019) and Connecticut (2020). That’s because the recent tax bill doubles the base federal estate tax exemption to a little over $11 million, indexed for inflation for tax years 2018 - 2025.  The federal estate tax is 40% on assets above $11.2 million. This tax affects just 1,800 estates in the US next year.

Forbes notes in its recent article, “Where Not To Die In 2018,” that along with this news, there are two states that are eliminating estate taxes in 2018: New Jersey and Delaware. New York is set to match the current federal exemption amount—a base of just over $5 million indexed for inflation—in 2019.

Massachusetts and Oregon now tie for the lowest estate tax exemptions at $1 million per person.  Because of high property values, it is very easy for a couple with a primary residence, some retirement savings, and a life insurance policy to have a taxable estate in Massachusetts.  Unlike many other states, Massachusetts does not seem to have any plan to reduce or eliminate this tax burden.

The amount of money you can leave to your heirs without any state death tax depends on where you live and own property, to whom you’re leaving the money and whether your estate planning is current. The highest rates are about 16%, and for inheritance tax states, the tax can apply to the first dollar of assets, meaning there’s no credit like there is on federal estate taxes. 

Some taxes can be  avoided with fairly straightforward planning, and if you are significantly above the taxable amount, there are other planning strategies worth considering.  In addition, you’ll want to designate a guardian for minor children, name someone to act on your behalf to make medical and financial decisions if you are unable to, and have a will that delineates what you want to happen to your assets, when you have passed.

You’ll also want to make an appointment to meet with an experienced estate planning attorney, if you haven’t updated your planning lately. There may have been changes in your life or in the law that should be addressed.

Reference: Forbes (December 21, 2017) “Where Not To Die In 2018”

 

Medicaid Annuities

 

What is a Medicaid Annuity?

This financial product isn’t without some controversy. However, it may be a smart move, and can alleviate worry about your home and income if your spouse needs nursing home care.

It’s not an unusual scenario: one spouse has moved to live in a nursing home and will never be able to return home. There was no long-term care insurance in place, and the couple does not qualify for Medicaid. Medicare won’t cover the cost of the nursing home, and at $10,000 to $15,000 per month, the cost will quickly drain the couple’s retirement savings. Is there anything that can be done now?

In case you missed it, Kiplinger’s article from last fall, “Medicaid Annuities Help Protect Savings,” explains that a Medicaid-compliant annuity might rescue your retirement.

If you purchase an immediate annuity owned by and payable to you that meets several requirements, it will transform cash that would otherwise prevent your ill spouse from qualifying for Medicaid into an income stream that helps you to preserve your quality of life. With the annuity, Medicaid starts covering the nursing home expenses, and your monthly bills are manageable.

If you have the time to plan ahead, you can address these long-term-care costs, such as with long-term-care insurance or aggressively saving with the aim of self-insuring any long-term-care costs. However, for couples in crisis, who’re watching their life savings evaporate as they pay nursing-home bills, a Medicaid-compliant annuity may be the only way to preserve a livable income for the spouse who remains at home.

Medicaid recipients typically can’t have more than $2,000 in cash. When one spouse goes into a nursing home, and the other stays at home, there are some special rules that apply. Generally, the principal residence is not counted, although some changes to ownership may be appropriate to avoid a Medicaid lien.  The healthy spouse can keep a certain amount of assets, which varies by state. The Massachusetts amount for 2018 is $123,600 and this usually changes each year. The healthy spouse’s income isn’t counted when determining Medicaid eligibility. The Medicaid recipient must use his available income to pay for his care costs, but the healthy spouse can keep some or all of that income, if she otherwise would not have enough to live on.

Those trying to meet Medicaid’s asset limits can spend down their life savings, which gives the healthy spouse very little on which to live. They could also give away the money, which will mean there’s a period of Medicaid ineligibility, if the gift is made less than five years before applying for Medicaid. However, a properly structured Medicaid-compliant annuity can reduce the need for these drastic actions.

It’s important to note that some states want to limit their use. A bill introduced in Congress last year would count half of the income from a healthy spouse’s annuity, when determining the Medicaid eligibility of the institutionalized spouse. However, the bill didn’t get much traction.

You might consider a Medicaid-compliant annuity if you have moderate savings—perhaps $500,000 or less—and must pay for nursing home bills out-of-pocket. For those who are not in a crisis situation, these may not be the wisest investments. This is because they’re designed for people in dire straits. They generally offer minimal returns, such as 1%. Those with more wealth are much better off earning a market rate of return on their money and paying the nursing-home bills themselves.

Since you don’t want to tie up money that could be needed for other expenses, you should only purchase a Medicaid-compliant annuity when you know your spouse has moved to a facility permanently. The amount you should invest in the annuity is determined in part by your finances on the “snapshot date”—the date your spouse has spent 30 consecutive days in the facility.

Before going forward with a Medicaid annuity, sit down with an elder law attorney. The attorney will be able to help you determine whether a Medicaid annuity will help your situation. You will also need to update your estate plan and powers of attorney at this time.

Reference: Kiplinger (October 2017) “Medicaid Annuities Help Protect Savings”

 

Conversations now minimize problems later

Consider sharing your plans and information about finances with your family now.  Some folks feel the need to let their doctor figure out what’s wrong with them, claiming that it’s the doctor’s job. They’re often the same ones who won’t tell their heirs everything. However, as Vanguard advises in the article, “The final keys to successful wealth transfer,” honesty can spare your family a lot of trouble.

It’s hard for many of us to easily disclose personal details about our finances. That’s because money can represent a variety of complex feelings and concepts, like security, control, comfort, selfishness and power. However, it’s imperative to have this important conversation.

You can start by relaying stories about your successes and losses (financial and otherwise). That way, your heirs can learn from your experiences. In addition, even if you detail specific conditions regarding when and how heirs can use their inheritance, you should look at the wealth transfer process with trust and an open mind. You should educate your heirs to make smart financial decisions after you’re gone, by showing them materials to prepare them for the future now.

Have the talk with your heirs when it’s right. If information about a future inheritance might distract them from making wise decisions about their future, you don’t have to disclose specific dollar amounts. Every family is unique, so there’s no one-size-fits-all solution to the question of when you should have “the talk.”

You should also use the counsel of an experienced estate planning attorney who doesn’t have a stake in your legacy and can facilitate the wealth transfer discussion. That will take some pressure off and ensure that all topics are discussed.

A final key to a successful wealth transfer is philanthropy. All family members should be able to participate in the giving process. Finding a charity that matches up well with your family’s values can help your heirs learn how to make decisions, motivate others, and develop confidence. These are attributes that will help them be respected stewards of your wealth, when the time arrives.

 A successful transfer of wealth and family values requires clear and honest communication among family members and planning in advance.

At our office, we often conduct "Fire Drills" or meetings that include the family and the attorney who drafted their estate plan.  The attorney can explain the specific documents and heirs can ask questions and understand what the plan will do, and how they may be responsible for executing certain parts of it.  The parents can share as much or as little detail on dollar amounts as they are comfortable with, but if a son or daughter ever has to act as a Trustee, at least it won't come as a total surprise.  It can also give the family some level of comfort to have met the attorney involved in the process so if a family member passes away, they are not calling on a complete stranger for help.

This process is also helpful in the event that a client suddenly needs help managing finances during a medical crisis.  It can be very hard to step in and manage assets and pay bills with no idea of where the money is kept or how much there is.  Sooner is better than later to start talking as it seems to get more difficult as we age.

 

Reference: Vanguard (September 26, 2017) “The final keys to successful wealth transfer”

What will happen to your pets?

 

Does Your Estate Plan Include Care for Your Pet?

Animal shelters know all too well what happens when plans for pet care are treated informally.

If your idea of planning for your animal companion’s well-being after you pass is asking a family member if they will take Spot and Flurry, think again.

As MarketWatch reports, “How to provide for your pet in your estate plan,” many people do just that: ask a relative and hope for the best. But others set up a formal estate plan for pets to ensure that they get continuing quality care, if their owner dies before they do. Most importantly, a pet estate plan could keep them from the shelter, which happens to many pets after their owners die. These items should be considered when pondering the best future for your pets.

1. Designate a caregiver. When considering a caregiver for your pets, evaluate whether that person is willing, capable and responsible enough to have the pet long-term. In addition, to be safe, name a contingent caregiver.
2. Earmark funds. Pet owners should list all their pet-care costs, and consider the pet’s expected lifespan. One pet owner added up the annual expenses for veterinary care for her two dogs, as well as their medications, monthly grooming, food, toys and a contingency for unanticipated expenses. She multiplied the annual total by what she thought to be the average life expectancy for the dogs and arrived at a budget of $25,000 for lifetime care. Determine how the funds should be set aside. You could create a trust, a bank account controlled by an executor (or by the guardian) or life insurance. Note that the beneficiary of a life-insurance policy can’t be a pet, but it can be a trust that includes provisions for a pet’s care or a trust specifically created for the benefit of the pet.
3. Draft a care plan. Set out clear, detailed instructions on how to care for your pet. That will make it easier for future caregivers to comply with your wishes. Your list may include the food your pet eats, how often he’s fed and his veterinarian.
4. Formalize your agreement. After you have made the basic decisions about your pet’s care, legally document them to help ensure that your wishes are executed. In fact, you can create a pet trust. This legal arrangement is available in all 50 states, but the specifics can vary. A pet trust can stipulate very specific directions for the care and funding of such care for your pet, after you pass away. Talk to an experienced estate planning attorney about creating this arrangement. You can also provide for your pets in your will. If you go this route, make sure that someone can step in immediately to care for your pet, because executing a will takes time. After the administration of an estate is completed, the will’s executor doesn’t have any continuing obligation to ensure the pet’s well-being.

To be certain that your beloved animal companions will have a comfortable and secure life if you die before they do, create a formal, legal plan and fund it. Even if you create a plan, if you neglect to fund it, your beloved pet may not enjoy the kind of life without you that you imagine.

We also have "Pet Care Cards" at the office that we encourage pet owners to keep in their wallets.  This basically tells a hospital or first responder that there is a pet at home and gives the name of a neighbor or family member who can look after your pet if you wind up in a hospital.

 

 

Reference: MarketWatch (November 30, 2017) “How to provide for your pet in your estate plan”

 

Where the Wealth is...

Wealthy Americans are most likely to be Over 80 Years Old

People in their 50s can buy as big a house and as fancy a car as they want, but when it comes to real wealth, that’s in the hands of Americans who are 80 and older.

When it comes to wealth measured in billions and millions, a recent article in Bloomberg, “Octogenarians Rule the Rich,” reports that of the 25 richest people in America, six of them are well over 80 years old. New IRS data reveals that that people over 80 may make up only 3.7% of the total population, but they control a far larger share of the national’s wealth than people who are under 50.

The wealthy have most likely always been older than the general population, because it typically takes some time to amass great wealth. Facebook’s Mark Zuckerberg, the world's fifth-richest person at age 33, is the exception to the rule.

The IRS regularly analyzes the wealth of the richest Americans in its Personal Wealth Study. This research looks at those potentially subject to the estate tax, which is imposed on individual fortunes of $5.5 million or more. The most recent study estimated personal wealth in 2013. It found that 584,000 Americans, or about 0.2% of the U.S. population, have a combined net worth of $6.9 trillion. People in their 80s and 90s control $1.2 trillion of that wealth. Adults under 50 (about 43% of the population), have only $1 trillion.

Research from the University of California-Berkeley found that the share of U.S. wealth held by the top 0.1% has more than tripled from 1978 to 2012. That’s an increase of 7% to 22%.

Wealthy people in their 80s have the highest average net worth of any age bracket in the U.S. These richest Americans may be far wealthier than the IRS estimates. This is because wealth managers and estate planning attorneys use strategies like trusts to help the rich pass money to their heirs tax-free before they die.

The IRS research provides a unique insight into the portfolios of the wealthiest Americans. For example, the richest Americans invest heavily in businesses and non-public stock. Their personal residences also make up a small part of their wealth—just a little more than their art collections.

Octogenarians are living longer into their 80s and 90s and are outliving poorer Americans by growing numbers. There is now a marked disparity between the death rates of the rich and “regular” Americans. In the 1980s, these numbers were about the same, but in recent years, the wealthiest men in their 80s and 90s had mortality rates 40% lower than average. It is another reason why it’s good to be a billionaire!

Reference: Bloomberg (August 23, 2017) “Octogenarians Rule the Rich”

Planning with Children

If You Have Minor Children, You Must Have an Estate Plan

It’s heartbreaking, but it does happen: both parents die unexpectedly, and there’s no will, and no one has been named a guardian. Who decides who will raise your children?

Being a good parent means being responsible for the well-being of every member of the family.  That includes planning for catastrophe. In a best case scenario, you all live happily ever after. But in the event that unpleasant things happen, you will have made a plan for who will raise your children, how your assets will be distributed and your family will have less stress as they move through the process of adjustment.

The more complicated your life, the more involved your planning needs to be.

A caring.com survey found that just 42% of adults currently have estate planning documents, including a will or living trust. For those with children under 18 living at home, that number is an astonishing 36% with an end-of-life plan in place.

Parents do their best to keep their children from harm. However, as the numbers show, many don’t do the same when it comes to keeping them safe if the parents should die. At a minimum, a parent should have a will that designates guardians for minor children in the event something happens to both parents. Without a will, there will be a messy situation for the individual appointed by the court.

 If there’s life insurance involved with a decent amount of money, even your no-good, irresponsible younger brother will gladly offer to take the kids.

It’s convenient to delay estate planning when you’re unsure who to name as guardian for the kids and, if we don’t talk about dying, maybe it won’t happen!

Unfortunately, no one gets out of this life alive, so the smart move is to make these important plans now. Life can be complex, and it gets even more complicated when you throw in blended families. That can make the decision as to who will rear your minor children a lot tougher.

A wise choice for the guardian may be an adult brother or sister, a close cousin or your best friend who lives nearby. However, these may not be options in every case. Grandparents might seem like a good selection, but because of their age they may be too old to rear young children.  However, if they’re fairly young, don’t rule them out. Speak with those members of your family and your friends about the possibility of caring for your kids.

If nothing unexpected happens, no one will know if you do not do any estate planning. But if you live long enough, you learn that life sends curveballs all the time. Sit down with an estate planning attorney today, so that your loved ones will know you cared enough to plan with them in mind.

Reference: CBS Boston (August 24, 2017) “Catastrophe Planning: Where There’s A Will There’s A Way!”