Money-money-money-1241634“Splitting the family business down the middle would make it easy for the index funds to strip the CEO of his executive power. However, the settlement has to come from somewhere.”

Amazon founder Jeff Bezos’ surprising divorce raises the question of how his 16% stake in the $800 billion company will shrink, in order to fund the settlement with his soon-to-be ex-wife MacKenzie. It doesn’t look like there’s a prenuptial agreement in place and she’s been around for all of Amazon’s success.

Wealth Advisor explains in the recent article, “Amazon Achilles Heel: Bezos Prenup Disaster Threatens $800B Behemoth,” that, in Washington State, MacKenzie can anticipate getting half of the community property.

That may be a challenge, when the majority of that wealth is in his $126 billion in stock. Jeff can give her close to 40 million shares and a few of their houses and call it good, but there can be problems with that arrangement, too.

MacKenzie could get half the stock in exchange for giving up the voting rights and the right to sell. This would effectively lock her in as a silent partner, shoring up Jeff’s continued control. Amazon could give her a prestigious but non-executive role on the board. She would certainly be a candidate to serve as director, with her 8% of the stock.

MacKenzie needs a way to liquidate whatever shares she gets, because Amazon doesn’t pay dividends and is unlikely to do so for the foreseeable future.

There’s no simple way to turn that asset into current cash flow, short of selling some stock. In fact, that’s what Jeff does now: he’s been selling a bit of his to fund other investments and the family lifestyle, in addition to paving the way for philanthropic ventures. MacKenzie will need the same authority in her divorce settlement, or she’s still going to need cash.  At some point, a judge may allow her to sell $60 billion in stock.

The goal now is making sure that Jeff keeps control of the company. That should have been the plan years ago. Amazon doesn’t have a real succession plan. There’s no trust holding the stock safe for future generations. The company doesn’t even carry life insurance on him. As a result, they are all subject to his mortal frailty. Divorce hit before death or disease, but it was only a matter of time.

It’s a big lesson: Jeff Bezos never guaranteed that Amazon would continue on its path without him.

Reference: Wealth Advisor (January 14, 2019) “Amazon Achilles Heel: Bezos Prenup Disaster Threatens $800B Behemoth”

Eagle"To give someone the peace of mind that they are in good hands is always our goal. Whether it is legal services or life care services, we want our clients to feel that kind of experience with Van Dyck Law."

Last week, Fiona and I headed to sunny Orlando, Florida for the National Alliance of Attorneys for Alzheimer's Planning conference. The content was fresh, relevant and we were surrounded by attorneys from all over the nation who wanted to make a difference in their clients' lives. Fiona is one of the founding members of this organization and I cannot wait to see where it takes our firm in the future.

I took a lot away so much from this conference. The camaraderie between these professionals was inspiring and the information was exciting to implement to best serve our clients at Van Dyck Law. Something else that I took away from this conference is the reminder that day to day customer service in our society is not what it used to be. How many times do you walk into a store and no one even shares a smile? Does the cashier even look up and greet you as you approach the check out?

Our conference was in the Happiest Place on Earth. It was in Disney World. From the moment of arrival, there were smiles surrounding me from every "cast member" as they greeted me at the counter or passed me in the halls. I felt like an important person when I walked into the Disney Yacht Club Hotel, even though I was there for only days of a 3-day conference. 

I spoke to my husband the evening I landed and said goodnight to my 5-year-old. My husband then said, "Mommy will bring you home Mickey Ears on Saturday!" My little one cheered in the distance on the phone call and once I hung up, I wondered on my limited time, how I would be able to do that with no form of transportation and the formal agenda I was following for my time at the conference in Disney. I went to the gift shop of the Yacht Club Hotel, and they had ears on headbands. But no true "Mickey Ears". I asked the woman at the counter if they had the traditional ones with the cap and the chin strap. She knew exactly what I was speaking of, but she confirmed they do not carry those any longer in that gift shop and it would probably have to be something we would get from one of the parks.

At the conference the next day, I shared with Fiona that I was not sure that I would find them on this trip. She suggested chatting with the concierge. On our next break, I visited the concierge desk and there was a line of about 5 people. While in line, I thought, "this is such a silly request, maybe I should just check at the airport or simply tell my little boy that where I was for the conference did not have the Mickey Ears he wanted." I told myself that he would understand. And he probably would have. As my mind was imagining how this conversation would go, a lovely concierge named Shannon approached me and smiled. She asked what she could do for me today and that she was happy to assist. I shared my ear saga with her and the fact that I had been to the gift shop to no avail. She said she would be happy to call around to see who carried the ears we were looking for, but she couldn't make any promises that she would find them. I said to her that I would appreciate that so much and gave her my phone number and told her to call me if "The Eagle Has Landed" and by chance she found them, I would make arrangements to pay for them and pick them up from her. 

The conference went on and it was a truly magical day, even in a conference! Great information, great service, great food and great company. All the makings of a great work day. No call from Shannon at that point. "Well I did give it a shot", I thought, as I headed to my room to change my clothing for dinner.  When I walked in my room at 5:30 pm, there on the dresser was a Disney shopping bag with a note that read, "THE EAGLE HAS LANDED" and it was signed by Shannon. Inside of the bag were the classic Mickey Ears that I described to her! I was completely shocked and overwhelmed that she made that happen for me. 

The next morning upon checking out I felt I had to personally thank Shannon. I saw her at the desk, and she was with a customer and I looked at her and thanked her for what she did. A feeling of gratitude came over me and literally brought me to tears. She smiled and we waved goodbye as I headed to the last part of my conference before I headed to the airport. I briefly stopped to store my suitcase at the bell services and Shannon ran up to me and apologized that she was with a customer and couldn't properly respond. I thanked her again and got so emotional that I was moved to tears. She was happy to see my reaction, and we hugged. I told her she made my weekend and I would never forget that kindness that she showed me. 

I understand this is the Disney way of doing things and that Shannon does things like this for people all the time, but the impact this ONE gesture had on me will stay with me for the rest of my life. I told Fiona about my experience and she said that is how she wants her clients to feel. Absolutely taken care of with no worries. She practices this kindness daily with all her clients. It is the culture of our firm. It made me stop and realize we are surely doing some great work in our office, making sure every client feels they are listened to, and truly taken care of with a smile and a hug. To give someone the peace of mind that they are in good hands is our goal. Whether it's legal services or life care services, we want our clients to feel that kind of experience with Van Dyck Law. 

Sheli Monacchio-Director of Life Care Resources

Tax-1501475

“I'm the executor of my mother's estate. She has an IRA where the beneficiary is her estate. When I withdraw this IRA into her estate account, how will this money be taxed?”

 

The executor of a person’s estate must take on the important responsibility of ensuring that the deceased person's last wishes are carried out, concerning the disposition of their property and possessions. There are times when investments and savings are part of that estate.

An individual may have an IRA that designates the beneficiary or her estate as her heir. Inherited IRAs are not like other assets. Executors must be aware of what to do when withdrawing the IRA into the estate account, particularly about how will these funds will be taxed.

nj.com’s recent article asks “Who pays taxes on this inherited IRA?” It explains that the distributions from an IRA are treated as ordinary income by the federal tax code.

The will must be probated, and it may stipulate that the money from the IRA is to be given to the deceased’s children.

These distributions to the children are taxed at their marginal tax rates. However, it is important to note that when an estate is an IRA beneficiary, the entire account must be withdrawn within five years.

If the executor moves the IRA directly into inherited IRAs for each of the beneficiary children, the beneficiaries would be responsible for paying the taxes. If the executor withdraws the IRA assets, then the executor would pay the taxes from the estate assets.

You will need to speak with the custodian of the IRA to find out what is and is not permitted in terms of distribution: are they allowed to roll the IRA into a beneficiary IRA, or can they divide the account into separate IRAs for the beneficiaries? The distribution must take place within five years, so keep that in mind when discussing options and goals for the IRA and the heirs. An estate planning attorney will be able to determine your best tax options for the inherited IRA when settling the estate.

Reference: nj.com (January 7, 2019) “Who pays taxes on this inherited IRA?”

Ticked-checkbox-1245057“After taking inventory of your possessions, including your home, vehicle, stocks, life insurance policies, etc., there are many steps you will need to take to protect these assets -- and yourself. There are many steps and documents that advisors will suggest you put into place immediately for your protection.”

Many people believe they’re too young to begin thinking about estate planning. Others say they don’t have significant enough assets to make the process of planning worthwhile.

However, the truth is that everyone needs estate planning. If you have any assets, and you intend to give those assets to a loved one, you need to have a plan.

Forbes’s article, “Reviewing Your Financial And Estate Planning Checklist,” examines some important topics in estate planning.

The first of topic is a durable power of attorney for property, finances and health care. This document allows you to designate a trusted individual to make decisions and take action on your behalf with matters relating to each of the three areas above.

In addition to the importance of having all powers of attorney readily available, in case you become incapable of making decisions, beneficiary designations should also be looked at frequently to update any changes to family situations, like a birth or adoption, death, marriage or divorce.

Another topic to address is a living trust. A trust will give direction regarding where and how the assets are dispersed when you die. A great reason to use a living trust is that the assets in a trust do not pass through probate court, which can be an expensive and time-consuming process.

Another area is digital assets. It’s critical for your heirs to have access to digital files, passwords and documents. This can be easy to overlook. Create a list of your digital assets, including social media accounts, online banking accounts and home utilities you manage online. Include all email and communications accounts, shopping accounts, photo and video sharing accounts, video gaming accounts, online storage accounts, and websites and blogs that you manage. This list should be clear and updated for your heirs to access.

If we fail to plan for these somewhat uncomfortable topics, the outcome will be stressful and expensive for our heirs.

Reference: Forbes (January 4, 2019) “Reviewing Your Financial And Estate Planning Checklist”

Question-mark-1236555“The beneficiaries of an inherited IRA are bound to IRS rules.”

With an inherited IRA, in many cases the parent is the original beneficiary and the children are the successor beneficiaries. Both the original owner and beneficiaries need to follow some strict rules.

nj.com’s recent article, “Inheriting an inherited IRA? Your payout choices will be limited,” explains that per IRS rules, if you die prior to withdrawing all the funds from an inherited IRA, then the beneficiaries are bound by the same Required Minimum Distribution (RMD) schedule that they’d chosen, when they inherited it.

A person will typically choose either his own life expectancy or the life expectancy of the original plan participant, whichever’s longer. The successor beneficiaries must then keep withdrawing what’s left, according to that same schedule.

However, it’s different if you leave your own IRA to your children. In most circumstances, children who inherit an IRA would be able to withdraw the funds over their own life expectancies.

Note: this is the general rule. The IRA rules are quite complex, and there are many exceptions to the general rules. Ask the financial institution where the IRA is held, if they have any rules concerning their IRAs that may change the general rules.

With an inherited IRA, you need to take annual distributions no matter what age you are when you open the account. This doesn’t apply, if you've simply transferred another IRA to your own IRA. Again, as a general rule, you must take distributions during your lifetime or within five years after the original account holder passed away.

If you inherit a Traditional IRA, you’ll pay taxes on any distributions you take. Rollover, SEP, and SIMPLE IRAs become Inherited Traditional IRAs. In contrast, with an Inherited Roth IRA, you don’t pay taxes on distributions. To evaluate the potential effect an inheritance might have on your overall tax situations, talk to an experienced estate planning attorney.

Reference: nj.com (December 20, 2018) “Inheriting an inherited IRA? Your payout choices will be limited”

Rose-of-death-1193521“We all know our days are numbered and there is nothing that we can do to prevent it.”

Many of us recently watched the funeral of former President George H. W. Bush. There must have been considerable planning done ahead of time to make sure everything ran as smoothly as it did. The president’s funeral is a reminder that we will all eventually pass and how important it is to be prepared.

Hometown Life’s recent article, “Planning your funeral can help ease loved ones’ burden,” explains that the first issue when it comes to planning for when we’ll no longer be here, is to make certain we have an up-to-date estate plan. You may want a will or trust, and you should ask your estate planning attorney to help you decide and keep it current. Remember that a variety of family events can impact your estate plan. If you don’t have an estate plan, you need to get one!

When preparing your estate plan, you must address certain realities you may not want to deal with. However, just kicking the can down the road or doing nothing can create significant issues for your family.

Another issue to consider is whether to pre-plan your funeral. Death always occurs at the wrong time, and it’s always emotional and stressful for those left behind.

In many cases, it makes sense to do some planning for your funeral. Perhaps it’s nothing more than selecting the funeral home you’d like and also the casket. That can be a big help to your family, because in the midst of grieving and not wanting to look cheap, many families overpay for a funeral. If you pre-plan your funeral and choose the type of casket and other services you want ahead of time, you’re eliminating those decisions from your family and most likely saving your family a significant amount of money.

If you do ahead and pre-plan your funeral, here a few other issues you should consider:

  • Do you want to be buried? If so, where?
  • If you want to be cremated, what do you want to happen to your ashes?
  • What type of service do you want (if any)?

If you do want to pre-plan your funeral, put your preferences in writing and give it to your family (funeral wishes typically aren’t put in the will and trust, but in a separate document).

If you do a bit of pre-planning, you’re making things much easier for your loved ones, which can be a real blessing and relief.

Reference: Hometown Life (December 12, 2018) “Planning your funeral can help ease loved ones’ burden“

Suggested Key Terms: Estate Planning Lawyer, Wills, Funeral Wishes, Letter of Last Instruction, Trusts

Tropical-1545109“Young adults can often feel like they’re immortal, but nobody really knows how long they’ve got left, and that’s why estate planning is key at any age.”

Those in their 20s and 30s are strongly encouraged to create an estate plan. A lot can be accomplished in a few simple steps, says Wealth Advisor in the recent article, “Estate Planning Isn’t Only for the Old and Wealthy.”

First, people can draft a will to provide directions regarding what happens to their assets, such as who will inherit both financial and personal items. Virtual assets like social media accounts should also be included. You should make a list of usernames and passwords for all your accounts and be sure that a trusted relative or friend has access to it.

Another important part of estate planning is to designate the beneficiaries for all company-sponsored life insurance and 401(k) plans to avoid probate issues. You can also set up a payable-on-death account from your bank.

As part of estate planning, you should also name a healthcare proxy and a general durable power of attorney. These two documents allow your trusted agent to make medical and financial decisions, in the event you’re incapacitated. If you want to give your proxy specific instructions, create an advance directive, known as a living will.

As you work through these actions with your estate planning attorney, you’ll see that estate planning is not just for the old and wealthy. It can bring you peace of mind and provide clarity to your loved ones and family, if you should pass away unexpectedly.

Make a point in the New Year of sitting down with an experienced estate planning attorney and addressing your estate plan.

Reference: Wealth Advisor (December 20, 2018) “Estate Planning Isn’t Only for the Old and Wealthy”

Present-1443957“Estate planning can be morbid, and no one wants to think about the end of life during the holiday season. However, that's all the more reason to start planning now. We'd like to change your perspective on estate planning and we ask you to think of it as more of a gift than an obligation.”

As the Brainerd (MN) Dispatch reports in its story, “Give the gift of estate planning to loved ones this holiday season,” estate planning is a gift for your family in the form of peace of mind. By preparing for what will happen after you're gone, you can eliminate the stress and guilt of having to guess at the type of funeral service you want, where you want your assets to go and how they can honor your memory.

When you pass away, your family will be dealing with stress, pain and emotional hardships. If you fail to create a will or other legal documentation, the process for your family to access your assets will be long and expensive. The probate process can take many months and money to distribute assets to your spouse, children, and grandchildren.

Without a will, there's also no guarantee that your assets will pass as you intended. For example, if you have a stepchild you reared as your own or aren’t married but in a serious relationship when you die, then many states do not recognize that stepchild or your significant other. These individuals may not get any of your assets, because there's no legal documentation linking them to your estate.

Lifetime giving is a great way to see the money you are donating goes to good use. There are also tax deductions that go along with these gifts. You may not consider charitable giving as a part of your estate plan right now but discussing how much and when to give with your estate planning attorney, can decrease your taxable estate. That could result in more money for your family in the future.

If you do plan to leave a donation after you're gone, there are several options to accomplish this. You can create a trust, scholarship fund, or donor advised fund to leave a legacy of giving to the causes you support. Because there are so many options available, your estate planning attorney is your best resource to help you decide which course of action will fit your circumstances and best meet your needs.

There are a number of decisions to make, when preparing your estate plan. Nevertheless, the process shouldn't be difficult or intimidating. Your estate planning attorney knows you and your situation. She can help you take the next step and navigate the planning, by asking the right questions and guiding you along the way. In the end, you will know that you’ve set yourself and your loved ones up for success.

Reference: Brainerd (MN) Dispatch (December 8, 2018) “Give the gift of estate planning to loved ones this holiday season”

Football-1437517“Here are five things you should be doing for success, as you enter the retirement red zone.”

Investopedia’s recent article, “5 Things to Do 10 Years from Retirement,” explains that there's a red zone both in football and retirement planning. In many instances, that zone is where the game is won or lost. In football, the red zone is 20 yards from the goal line. For retirement, it's 10 years from your target retirement date. As you move towards your goal, you may need to “huddle up” and look at your game plan.

  1. Figure Out What Retirement Means to You. Before you start making financial plans, be clear on what retirement means to you. It may mean working 40 hours instead of 60 or never working another day for the rest of your life. Whatever you like, it's important to have some idea of what you want to do every day. From there, you can start to shape a financial plan to support your retirement vision.
  2. Determine How Much Money You’ll Spend Every Month. Once you've defined what your retirement will look like, you can begin planning for it financially. First, determine how much you'll be spending every month on your retirement budget. Many pre-retirees just don’t know how much they need to live on a monthly basis. An accurate retirement plan will be based on your monthly household expenses.
  3. Examine Your Sources of Income in Retirement. While looking at your spending, be aware of all the types of income you'll have during retirement, such as Social Security, a pension, a 401(k) or an IRA. There are choices that will have to be made, if you have a pension. The timing for collecting Social Security payments is also important.
  4. Rework Your Investment Strategy. The way you’ve been investing for the past 30 years, is not how you should invest for the next 30. Younger people focus on accumulation, but when you’re in or nearing retirement, you need to concentrate on income and keeping pace with inflation. Diversification is important, but what's more powerful than diversification is asset allocation.
  5. Consider Hiring a Financial Professional. You can do-it-yourself, since there are many inexpensive funds and research information available. However, there's much more that goes into creating a comprehensive retirement plan than just investments. Your retirement plan should address your need for income, estate planning, survivorship planning, insurance needs, business continuation, inflation, and other points.

As in football, the team that wins the game, is often the team who played well in the red zone. Don’t fumble the ball at the goal line or settle for a field goal. Score a touchdown with smart retirement planning.

Reference: Investopedia (September 7, 2018) “5 Things to Do 10 Years from Retirement”

Old-man-1-1236821“You may have an aging parent with a few memory problems. Your parent may seem to be slipping in a few areas of life but seems OK with everything else.”

It can be hard to tell if your dad is still in a proper frame of mind. He may be used to being in charge. He's stubborn and never wants help with anything. However, you may see that he’s making some risky choices with money, that are out of character. These changes come slowly but steadily.

Other examples can be if he forgets to pay a bill…. or he forgot that he spoke to you yesterday. You recognize all this and ask him to get some help. He refuses to even talk about it.

Is there anything you can do? No one would ever say, at this time, that he's legally incompetent to make decisions, because he presents himself well. That’s the issue discussed in Forbes’ recent article, “Aging Parents At The In-Between Stage: Partially Competent and Partially Not.”

Here are some strategies to consider to help you to address this situation:

First, both the senior parent and the adult child must be in agreement that something has to change, and fast. Next, examine the parent’s legal documents, specifically the Durable Power of Attorney. In some cases, the daughter is appointed as the agent, and her power is unrestricted. She has legal authority to take over management of the father's accounts. Nevertheless, the daughter may not have discussed this with her father and, likely, she has not exercised any authority as agent. The daughter should review the Durable Power of Attorney with any siblings. She should then access her father's accounts, so she’d know if her father is giving away money or perhaps caught up in an elder fraud. If there’s a significant problem, she needs to approach her father.

The father might refuse any help in managing his finances. However, gentle and respectful persistence can win the day. The Durable Power of Attorney can be used to move most of his assets out of accounts where he had access. He still could give away money, but she then could restrict what he had available.

This shows the importance of doing estate planning and having at least one responsible person, the daughter, to act as the agent with power of attorney.

A partially incompetent elder who presents well, may not have any sound financial judgment remaining. The affected elder shouldn’t be permitted to endanger finances, when you can help protect him and his assets. The protection is usually a signed Durable Power of Attorney.

Reference: Forbes (December 3, 2018) “Aging Parents At The In-Between Stage: Partially Competent and Partially Not”

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