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Six Things to Consider Before Making Gifts to Grandchildren

Oftentimes, grandparents are generous and want to help their children or grandchildren.

While helping out family members is to be encouraged, it can raise a number of legal issues as well as questions of fairness among family members.  Consider the following before making a gift:

  1. Is it really a gift?

Does the grandparent expect anything in return, (ie repayment or that the money is an advance on the grandchild’s eventual inheritance). Any expectations should be made clear, preferably in writing.

  1. Is equal treatment important?

Not all grandchildren have the same financial needs, and grandparents don’t feel equally close to all of their They need to consider whether unequal generosity will create resentment within the family.

  1. Beware taxable gifts.

Under today’s tax law there’s no gift tax for the first $5.25 million each of us gives away, however any gift to an individual in excess of $14,000 per year must be reported on a gift tax return. Two grandparents together can give up to $28,000 per individual per year with no reporting requirement. And there’s no limit or reporting requirement for payments made directly to medical and educational institutions for health care expenses and tuition for others.

  1. 529 plans.

Many want to help pay higher education tuition for grandchildren. A good option may be to fund 529 accounts for each grandchild. These accounts grow tax deferred; the income and growth are never taxed as long as the funds are used for higher education expenses.

    5.  Don’t be too generous.

Grandparents need to make sure they keep enough money to pay for their own needs. It won’t do the family much good if a grandparent is just scraping by because he’s done too much to support his children or grandchildren.

6. Beware the need for long-term care.

From a legal perspective, the possibility of needing long term care whether at home, in assisted living or in a nursing home should be considered. The look-back period for Medicaid eligibility is 5 YEARS – any gift within this time frame can make them ineligible for Medicaid benefits.

Pirozzi Koler would be happy to sit down with you to discuss your options or answer your questions. Please contact our office at (234) 525-6444 for additional information or to set up an appointment.

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Digital Assets: What You Should Know

What are digital assets?

They include hardware and software along with various social media and other types of accounts (email, photos, personal and financial documents) maintained somewhere in the digital world.

While all of this technology may be a great help to us in our daily lives, it can also cause confusion. For example, what happens if you are attempting to help a disabled loved one who is in the hospital, but don’t know how to access her accounts to pay her bills? Or, you have just been appointed executor of a deceased relative’s estate and you don’t know the password to the personal computer where all of his tax and financial records are stored.

To avoid a troubling result like those described above, we suggest a proactive approach to catalog, organize, and protect your digital assets.

  1. List your digital assets

              Hardware—desktop computers, laptops, tablets, cell phones, digital cameras, and storage devices

              Software—general (ie Word & Excel)& specialized programs (financial, accounting, and tax programs)

              Online Bank and Brokerage Accounts—plus email and shopping sites

              Social Media—along with storage sites for photos or personal documents

For each of these items you should keep a record of your user names, passwords, PIN numbers, and other relevant security information. This record should be maintained in a safe place—not on your computer.

  1.  Decide whom to trust with this information

Provide any specific instructions to be conveyed to that person (or persons) in the event of your disability or death.

  1. Contact trusted person

Let them know you have chosen them for this responsibility and make them aware of what you expect them to do and assure that they are comfortable in that role.

We advise you to include provisions in your estate planning documents or maintain a list with your important documents that deal with the continued management of digital assets. If you wish to learn more about how to preserve and protect your digital assets, please contact our office at 234.525.6444 or via email to Abby Dachille at abby.dachille@p-klaw.com.

Do I Really Need an Estate Plan?

Perhaps you think estate plans are for those who actually live on an estate and have millions of dollars. Truth is, if you have children, elderly parents, a savings account, or a home, an estate plan is right for you.

Estate plans protect your family if something bad happens to you and ensure your property will go to the people you want, in the way you want, and when you want. If there isn’t a plan in place, your assets end up in probate court and that can be time-consuming and expensive.

Estate planning is a detailed process and the plan, itself, can contain various elements. Generally speaking, these components include Wills, Trusts, Healthcare Directives, Powers of Attorney and Beneficiary Designation. Two important planning instruments are a durable power of attorney (DPOA) and a will. The DPOA manages your property during your life, in case you are unable to do so yourself. The will is utilized to manage and distribute your property after death. Revocable (or “living”) trusts are used to avoid probate and to manage estates both during life and once the person is gone.

Taking some time today to properly plan can provide peace of mind for your family in the days ahead.

Mark Pirozzi Receives Accredited Estate Planner (AEP) Designation

Mark Pirozzi Receives Accredited Estate Planner (AEP) Designation

Mark Pirozzi, owner & partner with Pirozzi Koler LLC, received the designation of Accredited Estate Planner (AEP) in August 2014. The designation was given by the Estate Law Specialist Board, Inc., an attorney-run subsidiary of the National Association of Estate Planners & Councils in Cleveland, Ohio.

Receiving such designation acknowledges Mark Pirozzi’s experience and specialization in estate planning. Candidates who are awarded with the AEP designation meet special requirements of education, experience, knowledge, professional reputation, and character.

 

 

INHERITED IRAS – WHAT YOU NEED TO KNOW

Do you know how to securely pass along your individual retirement account (IRA)? Knowledgeable and detailed planning is extremely important when determining how financial assets will be distributed at the end of a life.  Many people build considerable wealth in these retirement accounts and knowing how to securely pass along this asset is half the battle.

Whether you name a child or other close relative or friend, naming beneficiaries to inherit an IRA is common. However, an inherited IRA is not immune to your children’s creditors. All of your hard work to save and pass along this incredible asset to your children could be taken by creditors.

To protect inherited IRA funds from potential creditors, the IRA can be left to a “spendthrift” trust, rather than directly to the beneficiary. Within a spendthrift trust, a third party, selected by the person who is passing along their IRA, is entrusted to decide how the inherited funds may be spent in the best interest of the beneficiary.

In order to avoid a well-intended inheritance from being preyed upon by creditors, it is important to meet with an attorney who is familiar with issues specific to inherited IRAs.

Contact Abby Dachille at abby.dachille@p-klaw.com to schedule an appointment to create a spendthrift trust and protect the beneficiaries of your IRA.

Heading Back to School with an Eye on the Future

Heading Back to School with an Eye on the Future

By: Abby Dachille

The days will soon become shorter, the leaves will begin to change and the school hallways will fill with kids as they return to the classroom. Whether you’re ready or not, it’s back to school time.

A new school year presents an opportunity to evaluate the well being of your family and plan for the future.

Have you ever wondered what would happen to your children if something unforeseen happened to you and your spouse? Who would care for them? Would they have a financial foundation? At Pirozzi Koler LLC, we understand the importance of answering these questions and establishing peace of mind.

It is strongly encouraged for parents to sit down with a legal professional and create a Will and/or Trust agreement. These documents outline the parents’ wishes in the event of an untimely death.

Within a Will, parents are able to appoint a guardian for their children. When choosing a guardian, consider who will honor your wishes for your children’s future. Other considerations include naming a person with shared values, financial stability, and longevity. If the parents do not choose a guardian, it will be up to the courts to decide who will care for their children.

Additionally, setting up a Trust is a way to protect assets and control their distribution. A Trustee is named and he or she will be in charge of holding the assets on behalf of the beneficiaries. If a child loses both parents at a young age, the Trustee will ensure they receive their parent’s assets as specified in the Trust at the time intended. One option is to have the assets distributed over a number of years once a child is of a certain age. This protects the child from depleting their funds prematurely.

Whether this information reminded you to get these documents written or you already have a Will and/or Trust and it has been more than two (2) years since you last had it reviewed, the attorneys at Pirozzi-Koler LLC would be happy to discuss these planning tools with you.

Contact Abigail Dachille at abby.dachille@p-klaw.com to schedule an appointment to create or review your Will and/or Trust.

The Importance of Estate Plan Reviews

A recent Ohio case highlights the importance of reviewing your estate plan on a regular basis.  The case involved a Transfer on Death Designation (TOD) Affidavit signed by Verna Blausey, granting title to her property upon her death to the Van Nesses, who lived next door.  She signed the Affidavit in 2001 at the same time that she executed her other estate planning documents, including a will.  The will provided that the Van Nesses were to be the beneficiaries of her estate.

Over the years, the parties had a falling out and Verna Blausey executed new estate planning documents specifically stating that the Van Nesses were to receive nothing.  Unfortunately, no new TOD Affidavit was signed or recorded and when Verna Blausey died in 2008, the property transferred to the Van Nesses.

Several years of expensive litigation ensued that could have been avoided if Verna Blausey and her estate planners had reviewed her plan and her beneficiary designations, especially when she made the change to her will to remove the Van Nesses.  While in hindsight this seems obvious, the reality is that many people think they know their beneficiary designations but unless a review is done thoroughly and on a regular basis, nightmare situations like this case can occur.

The estate planning attorneys at Pirozzi Koler~LLC can help you review your estate plan and establish a system to review your plan on a regular basis.  Contact one of our estate planning attorneys for an estate plan review today.