King & Wood, P.A.

How Can I Up My Social Security Benefits Without Lifting a Finger?

“Chances are, Social Security will be a substantial source of income for you once you retire, so the higher those benefits are, the less financial stress you'll grapple with.”

Read about how you can increase your Social Security benefits, by taking no action at all. Motley Fool’s article, “2 Passive Ways to Boost Your Social Security Benefits,” gives us a pair of passive ways to get more dough from Social Security during your senior years.

1. Do not FILE early. The Social Security Administration (SSA) lets you start collecting benefits at age 62. However, you won't receive the full monthly benefit you're due, until you reach your full retirement age, or FRA. Your FRA is determined based on your year of birth.

Filing early for benefits will usually mean that you’ll see a permanent reduction in benefits. You'll forfeit about 6.67% a year for the first 36 months you claim benefits ahead of FRA, and then 5% a year for each 12-month period after that. Therefore, filing for Social Security three years early will decrease your benefits by 20%. Filing four years early will mean a 25% reduction, and filing five years early will mean a 30% cut. However, if you sit back and do nothing—delaying until your FRA to file—you'll get more money than you would by filing sooner. If you wait on your benefits past your FRA, you'll permanently increase them by 8% a year in the process, up to age 70.

2. Do not RETIRE early. Your Social Security benefits are calculated based on your 35 highest-paid years of wages. However, most people earn more at the end of their career than they do at the start, so if you wait to retire and keep working later in life, you might up your benefits, by replacing some lower-earning years with higher earnings.

If you began working full-time at age 22, and you're thinking of retiring at age 57, you'll still have a full 35 years of work under your belt. You won't risk having any zero income years calculated into your benefits formula. That’s what happens to those who don't have a full 35 years in the workforce. However, if you earned $25,000 a year at age 22, and you're earning $125,000 a year now, by not retiring, you'll have the chance to replace some of those $25,000 years with a higher income. (Note that in calculating your benefits, the SSA will adjust earlier earnings for inflation. Even so, a $25,000 salary earned 35 years ago still can't match a $125,000 salary).

Even if you have a good amount of savings for retirement, there's a decent chance that you'll still need your Social Security income to pay for extra expenses or enjoy the luxuries you've dreamed about for decades.

The good news is that you have the power to increase your benefits by not taking action. You can allow your benefits to grow rather than claiming them early. You can also help your retirement picture, by remaining in the workforce.

Reference: Motley Fool (October 28, 2019) “2 Passive Ways to Boost Your Social Security Benefits”

Why are Fewer Americans Giving Money to Charity?

“Fewer Americans are giving money to charity, and their relationship with God may have something to do with it.”

Did you know that extremely religious people of any faith are more apt to give to charity? However, there are now less very religious people in the U.S.

MarketWatch’s recent article, “Fewer Americans are giving money to charity (and it’s not just because they’re worried about money),” says that the percentage of U.S. adults who donated to charity dropped drastically between 2000 and 2016. That’s according to a recent study from the Indiana University Lilly Family School of Philanthropy and Vanguard Charitable.

In 2016, 53% of Americans gave money to charity. That was down from 66% in 2000. That was steady until the Great Recession, when it started to drop off and took a nosedive after 2010. The drop amounts to 20 million fewer households donating to charity in 2000, compared to 2016, which is the most recent year for available data.

A factor driving the decline is that Americans are becoming less likely to attend religious services or identify with a specific religion. Attending services is linked with giving to religious organizations. However, it’s also correlated with giving to secular groups. Very religious people of any faith are more likely to give to charity, according to a Baylor University study. However, there are fewer very religious people now in the U.S. The percentage of the population who describe themselves as atheists, agnostics or “nothing in particular” is now at 26%. That’s an increase from 17% in 2009, according to 2018 and 2019 surveys by the Pew Research Center in Washington, D.C. Roughly 65% of Americans describe themselves as Christians, down 12% since 2009.

Religious organizations have traditionally received most of Americans’ charitable dollars, but that has dropped off in recent years. They still received the largest percentage of charitable dollars in 2018, at 29% of total giving, but it was the first year that giving to religion fell under 30% of overall giving, according to the Giving USA annual report on philanthropy.

America’s unsteady recovery from the Great Recession is a factor. Households led by people with less than a high school education, less than $50,000 in income and/or less than $50,000 in wealth (a household’s total assets) significantly decreased the percentage they donated to charity after the recession.

The research points out that millennials give less of their income to charity than their older counterparts, most likely because they “entered the workforce during the worst economic downturn since the Great Depression.”

Reference: MarketWatch (October 28, 2019) “Fewer Americans are giving money to charity (and it’s not just because they’re worried about money)”

What are the Major Changes to Social Security in 2020?

“Four changes are taking effect for Social Security in 2020. Knowing the facts about those changes and what they mean for typical recipients will help you take maximum advantage of the Social Security program.”

Social Security supports millions of Americans, giving them vital benefits in retirement or if they are disabled. For many of those recipients, Social Security contributes most or all of their income.

Motley Fool’s recent article, “4 Must-Know Facts About Social Security for 2020,” says that to get as much as you can from Social Security, you need to understand how each year's changes will impact you. With benefit checks, retirement age, maximum benefit calculations and Social Security payroll taxes, there's quite a bit for people to monitor with Social Security in 2020. Let’s look at few big changes:

1. Next year’s cost-of-living adjustment. Every year, Social Security gives those receiving benefits a cost-of-living increase in their monthly checks. The amount varies from year to year, based on inflation figures. The SSA recently announced that it would increase benefit checks by 1.6% at the start of 2020. This bump will impact seniors in different ways. The typical retired worker will see monthly benefits rise from $1,479 to $1,503. For couples receiving two benefit checks, the typical total will rise by $40 to $2,531 per month. If you're receiving Social Security benefits based on a family member's work history, you'll also see increases. Widowed parents with two children will see $46 more per month ($2,934). Surviving spouses without eligible children will receive a $22 per month increase to $1,422, while the typical disabled worker will see checks go up $20 to $1,258 per month.
2. Early retirees in 2020 will see a higher full retirement age. The SSA figures your benefits using a formula that anticipates that you'll claim Social Security when you reach full retirement age. If you claim earlier, then you'll receive less than if you had waited. However, for those turning 62 in 2020, full retirement age will be slightly higher than it was for those turning 62 in 2019. Those born in 1958 will have a full retirement age of 66 and eight months—two months older than it was for people who were born in 1957 and reached 62 in 2019. Thus, 2020's 62-year-olds will take a 28.33% reduction in their monthly payment, compared to what they'd get at full retirement age. That's a little more than the 27.5% reduction that applied to 2019's 62-year-olds.
3. High earners can anticipate a larger maximum Social Security benefit. If you retire in 2020 and qualify for the maximum benefit, you'll see a bigger check than those who retired this year. If you work to full retirement age before collecting benefits, your maximum amount for Social Security benefits will be $3,011. That’s an increase of $150 from 2019.

However, not every increase will be that large, because receiving the maximum depends significantly on exactly when you elect to retire and take benefits. For those claiming Social Security at 62, the maximum monthly benefit will go up $56 to $2,265. Those retiring at 65 will see a $100 increase to $2,857 per month. However, for those retiring at age 70, the increase will be minimal, increasing only $20 to $3,790 per month. Even if you end up short of the absolute maximum, those earning higher incomes can generally expect to see a boost to what they'll receive.

4. High-income workers can plan on paying more in Social Security taxes. Payroll taxes are the main source of revenue for Social Security, and the maximum Social Security payroll tax is going up. In 2020, $4,800 more in earnings will be subject to payroll tax, maxing out at $137,700. Between the 6.2% employee portion and the matching 6.2% employers have to pay, a total of 12.4% of your earnings will be taken by federal government.

Those earning in excess of $137,700, will have their withholding increase by $297.60. Self-employed workers will see their maximum taxes rise by $595.20. However, most workers won't see any change at all, because typical Americans earn far less than $137,700, and the same 6.2% rate will continue to apply on total earnings below that amount.

Reference: Motley Fool (October 27, 2019) “4 Must-Know Facts About Social Security for 2020”

What is a Special Needs Trust?

“Special needs lawyers can work with clients to set up individualized special needs trusts.”

Supplemental Security Income and Medicaid are critical sources of support for those with disabilities, both in benefits and services.

To be eligible, a disabled person must satisfy restrictive income and resource limitations.

That’s why many families ask elder law and estate planning attorneys about the two types of special needs trusts.

Moberly Monitor’s recent article, “Things to know, things to do when considering a special needs trust,” explains that with planning and opening a special needs trust, family members can hold assets for the benefit of a family member, without risking critical benefits and services.

If properly thought out, families can continue to support their loved one with a disability long after they’ve passed away.

After meeting the needs of their disabled family member, the resources are kept for further distribution within the family. Distributions from a special needs trust can be made to help with living and health care needs.

To establish a special needs trust, meet with an attorney with experience in this area of law. They work with clients to set up individualized special needs trusts frequently.

Pooled trust organizations can provide another option, especially in serving lower to more moderate-income families, where assets may be less and yet still affect eligibility for vital governmental benefits and services.

Talk to an elder law attorney to discuss what public benefits are being received, how a special needs trust works and other tax and financial considerations. With your attorney’s counsel, you can make the best decision on whether a special needs trust is needed or if another option is better, based on your family’s circumstances.

Reference: Moberly Monitor (October 27, 2019) “Things to know, things to do when considering a special needs trust”

How Will Student Loans Change Next Year?

“There may be major changes to your student loans on the horizon.”

Forbes’s recent article, “Expect These Student Loan Changes In 2020” says that Congress is the branch of government that will have the biggest (or smallest) effect on the future of student loans.

Here are a few of the issues being discussed concerning student loans:

Student Loan Forgiveness. 2020 presidential candidates Senator Bernie Sanders and Senator Elizabeth Warren both are in favor of loan forgiveness. However, the U.S. Secretary of Education Betsy De Vos is against wide-scale student loan forgiveness and said it would be “crazy.” Her big concern is who will pay for student loan forgiveness. DeVos believes that, ultimately, federal taxpayers will pay.

Free College. While many Democratic presidential candidates are in favor of “free” community college, others are divided on tuition-free public colleges, which would need federal funding and state cooperation.

No Origination Fees on Student Loans. House Democrats have proposed The College Affordability Act, which would update the Higher Education Act of 1965. The bill would get rid of origination fees, when taking out student loans.

Income-Driven Repayment. An income-driven repayment plan, like PAYE and REPAYE, limits your monthly student loan payment, based on your discretionary income and then allows for student loan forgiveness after 20 to 25 years of on-time payments.

Former Vice President Joe Biden wants to simplify income-based repayment for federal student loans. He proposes that if you make less than $25,000 per year, you’d owe no payment on your undergraduate student loans and also no interest would accrue. If you make more than $25,000 per year, you’d pay only 5% of your discretionary income over $25,000 toward federal student loan payments.

After 20 years of student loan repayment, the rest of your federal student loans balance would be forgiven. That amount wouldn’t be subject to income tax.

Public Service Loan Forgiveness. President Trump proposed to eliminate this program, and instead wants a single income-driven repayment plan that would limit monthly student loan payments to 12.5% of discretionary income and forgive federal student loans after 15 years. Biden says this is broken, and he’d create a new program that offers $10,000 of undergraduate or graduate student loan debt relief for each year of national or community service (up to five years). If you work at a school, in the government, or for a non-profit, you’d be enrolled automatically in this program.

Discharge of Student Loans in Bankruptcy. There’s a bipartisan proposal to let borrowers discharge their student loans in bankruptcy.

Student Loan Refinancing. The College Affordability Act would allow borrowers to refinance their existing student loans to today’s interest rates. The federal government now doesn’t refinance student loans, you have to use a private lender.

Reference: Forbes (October 28, 2019) “Expect These Student Loan Changes In 2020”

What Did Chicago PD Actress Marina Squerciati Receive from her Mom’s Boyfriend’s Will?

What Did Chicago PD Actress Marina Squerciati Receive from her Mom’s Boyfriend’s Will?

“A new court filing designed to prevent the mistress of John R. Jakobson from testifying that he promised to leave Chicago PD actress Marina Squerciati some of his $100 million fortune, states the Wall Street mogul said she would get a 'big surprise' in his will.”

Millionaire John R. Jakobson's son, who is the executor of his father’s estate, is attempting to stop Marie Squerciati from speaking out by using the dead man's statute, which protects the assets of the dead from claims of communication by the living to serve their interests.

Wealth Advisor’s recent article, “Wall Street mogul John R. Jakobson promised mistress that their love child Marina Squerciati would get a ‘big surprise’ in his will--then left Chicago PD star Nothing” reports that documents filed with the Manhattan Surrogate Court state vague terms the man who died aged 86 in April 2017— and who reportedly had many affairs—allegedly used when stating plans for his will.

'I’m a gentleman and you may read into that only good,” the senior Jakobson purportedly told his mistress in 1981 about their alleged daughter, now 37, who went on to star as Officer Kim Burgess on Chicago PD.

The mogul's widow, Joan Jakobson, said she didn’t know about Mariana, who kept her family life a secret, until she found out she was left out of the will. Jakobson's three living children from his marriages were included in the will. However, the family of the man, who at 25 became one of the youngest people to buy a seat on the New York Stock Exchange in 1955, has refused to acknowledge her as one of his children.

Marina is the allegedly product of his affair with her mother Marie Squerciati, who was a television writer in the 1970s and 80s and reporter for the Village Voice, as well as The New York Times. The affair was said to have lasted for a year and led to Marina's birth in 1981. For her whole life, Marina kept her father's identity a secret, as he allegedly paid her mother $1,200 a month for more than 20 years. That monthly check was used for Marina's nanny and for her apartment in New York City. Jakobson also reportedly paid for Marina's schooling including the $175,000 tuition for Dalton School, then $131,000 for her education at Northwestern University, where she graduated from in 2003 with a bachelor's degree in theater.

Even though Jakobson made oral promises that he'd provide a “substantial” trust for Marina in his will, it looks like he didn’t. When Marina got engaged, her mother allegedly asked Jakobson for a gift to which he allegedly reaffirmed that she “would receive money under his will.”

In her court filings, Marina contends that the price of her silence was “extraordinary” and that she missed out on the opportunity to build a relationship with her alleged father and was denied “any relationship whatsoever with her half-siblings.”

The Squerciatis contacted his estate last fall to ask if Marina was named a beneficiary, according to court papers.

Attorneys for the family say Marina's claims have “no basis in fact or law” and “amounts to nothing more than an avaricious attempt to enforce an alleged, vague oral promise made to [her] mother, rather than to herself, and which resulted in no legally recognizable injury to her.” They note that even if Marina could prove that Jakobson was her father, she had no written evidence of his promise to leave her money in his will… and that she had “ample opportunity as an adult” to have her father put his word in writing.

Marina was offered a $50,000 settlement by the Jakobson lawyers.

Reference: Wealth Advisor (October 14, 2019) “Wall Street mogul John R. Jakobson promised mistress that their love child Marina Squerciati would get a "big surprise" in his will--then left Chicago PD star Nothing”

Should I Use a Trust to Protect My Children’s Inheritance?

“We have approximately $1.5 million in cash and investments, mostly in Certificates of Deposit (CDs). Our mortgage is paid and we have no debt. We have three adult children. Should we put out assets into a trust to better protect them for the future?”

Parents with savings have several options for their children’s future inheritances.

nj.com’s recent article answers this question: “We have $1.5 million. Should we get a trust for our children’s inheritance?” According to the article, parents could create lifetime trusts or trusts in their wills for the benefit of the surviving spouse during the spouse’s lifetime.

After that, they can have the remainder of the assets pass in trusts for each of the children, until they reach a certain age or ages.

A lifetime trust is a type of trust that’s created during an individual's lifetime. This is different from a testamentary trust, which is a trust created after a person's lifetime through the operation of that person's will.

Usually the individual who settles the trust (the "Grantor") will retain control over the assets in the trust, including the right to revoke the assets during his or her lifetime. These forms of lifetime trusts are known as grantor trusts.

Another option is to have these types of trusts continue for the benefit of the grandchildren.

The children’s trusts can have instructions that the assets and income are to be used for the health, maintenance, education and support of the child.

The parents would need to name a trustee or co-trustee. This is the person who’s responsible for investing the assets, filing tax returns and paying taxes (if necessary). He or she will also distribute the assets, according to the terms of the trust.

Trusts are complicated business, so meet with an experienced estate planning attorney to determine the best strategies based on your circumstances and goals.

Reference: nj.com (October 16, 2019) “We have $1.5 million. Should we get a trust for our children’s inheritance?”

What Do I Need in My Estate Plan in Addition to a Will?

“This time of year, families gather to celebrate the season, offering an opportunity to air your plans for the inevitable.”

American Legion’s recent article, “Planning beyond the will” says that it’s important that your estate planning papers are synced with your wishes and the current law, but you should also look at some items outside of the fundamental documents:

Beneficiary designations. This includes life insurance policies, IRAs, current and former employer retirement plans and annuities. A beneficiary designation supersedes any instructions in a will or trust. As a result, it’s important that your designations reflect your current wishes and are synched with the rest of your estate plan.

Property title. Be sure that you know how your property is titled. If the family home is titled as joint tenants with rights of survivorship, then it will pass seamlessly to the surviving owner. There are also potential income-tax implications. Ask your estate planning attorney about this and the best way to address title concerns.

Personal property plans. This could be as simple as giving your trustee or executor the authority to make decisions, designating instructions with respect to specific property in your will or trust, or incorporating a personal property memo into your plan. The guidance you give can alleviate major problems, when you’re no longer around to settle disputes.

A continuity book. In the military, it’s common that just as you’re getting used to your responsibilities, it’s time to PCS (Permanent Change of Station) or switch jobs. Many leaders require a continuity book that helps bridge that knowledge gap, so your successor has an idea of what to do. You can adopt this practice in your personal affairs. This can include an inventory of your assets, liabilities and insurance policies. This “continuity book” should also include your social media account passwords, key contacts, funeral wishes and the location of your key estate planning documents. This is an important resource for trustees and executors, as they assume their duties.

Enjoy the holidays, and this year, work on making sure that your family spends many more happy holidays together.

Reference: American Legion (October 18, 2019) “Planning beyond the will”

What Was in Comedian Rip Taylor’s Will?

“Rip Taylor, known as the “King of Confetti” and “The Crying Comedian,” who became an icon of 1970s game shows with his outrageous, flamboyant style and fondness for confetti, has died at the age of 84.”

Comedian Rip Taylor’s publicist, Harlan Boll, confirmed that Taylor died on Sunday in Beverly Hills.

Taylor was known for dousing his audience with buckets of confetti. Anyone attending a Rip Taylor performance expected to be wearing confetti by the end of it.

Born Charles Elmer Taylor on January 13, 1935, in Washington, D.C., Taylor became a regular on game shows like Hollywood Squares, late-night TV shows and sitcoms. He launched his own show, The $1.98 Beauty Show, designed to be a parody of beauty pageants, in the 1970s.

Wealth Advisor’s recent article asks pointedly: “Rip Taylor net worth: How much was he worth when he died?” The article notes that Taylor’s career spanned more than 40 years, first trying comedy after serving in the Korean War. When he enlisted in the U.S. Army, he was sent to the Signal Corps but wound up in special services, where he entertained the troops in Tokyo and Korea.

His first role was as a voice actor for The Jetsons TV series in 1962. In 1963, he made his first national television appearance on The Ed Sullivan Show, where he earned the nickname the crying comedian, as he pretended to cry on stage imploring the studio audience to laugh at his jokes.

“I sat on a stool telling jokes, and nobody was laughing,” he said during an interview with UPI in 1992. “In desperation, I pretended to cry as I begged them to laugh. That killed ’em.”

Throughout his career, Taylor made as many as 2,000 guest appearances on shows like Match Game, The Gong Show and Super Password.

Taylor also appeared in Tom and Jerry: The Movie, Scooby Goes Hollywood, The Brady Bunch Hour and To Tell The Truth.

With his long and successful career, the actor and comedian managed to earn a good amount of money doing what he loved.

According to CelebrityNetWorth, at the time of his death, Taylor’s net worth was believed to be approximately $3 million.

Reference: Wealth Advisor (October 14, 2019) “Rip Taylor net worth: How much was he worth when he died?”

What Will New Acts of Congress Mean for Stretch IRAs?

“I am concerned about the SECURE and RESA acts currently being considered in Congress. If either of them passes, my children will lose the inherited stretch IRA ability and face a much higher tax bill upon my demise.”

The SECURE and RESA acts are currently being considered in Congress. These acts may impact stretch IRAs. A stretch IRA is an estate planning strategy that extends the tax-deferred condition of an inherited IRA, when it is passed to a non-spouse beneficiary. This strategy lets the account continue tax-deferred growth over a long period of time.

If a parent doesn’t need her Required Minimum Distributions, does it make sense to do a gradual Roth IRA conversion and use the RMDs to pay taxes on the conversion? Or should the parent invest the RMDs in a brokerage account?

There are several options in this situation, according to nj.com’s recent article, “With Stretch IRAs on the way out, how can I plan for my children’s inheritance?”

Congress is considering legislation with the SECURE and RESA Acts, that would eliminate the ability of children to create a stretch IRA, one that would let them to stretch distributions from the inherited IRA over their lifetimes.

Under the proposed SECURE and RESA Acts under consideration, the maximum deferral period will be 10 years. If the beneficiary is a minor, the period would be 10 years or age 21.

The best planning strategy for a parent would depend on her overall finances and what she wants for her children’s inheritance.

The conversion to a Roth may be a good planning move, depending on her tax bracket. Putting the money in a brokerage account is also an option.

A parent may also want to think about using the RMD proceeds to purchase a life insurance policy held by an irrevocable trust for the benefit of her children.

It’s best to contact an experienced estate planning attorney, so he or she can review the details of the parent’s finances and help her choose the best options for her situation.

Reference: nj.com (October 15, 2019) “With Stretch IRAs on the way out, how can I plan for my children’s inheritance?”