Dear Clients and Friends,
Here is what has been going on around the law office this month.
Little known social security rule
A recent meeting with a couple included a discussion about social security. The husband had retired at the full retirement age (66 for him) and was receiving approximately $2,400 per month. That amount was based on his earnings. His wife, who had worked sporadically was receiving $700 per month based upon her earnings. Many women find themselves in this situation due to a variety of reasons: disparity of income between men and women, the years of not working while having children; the time off to work as a homemaker, etc. There is a little-known Social Security rule that is applicable in this situation. The basic rule is that if one spouse has a social security benefit less than the amount being received by the other spouse, that the spouse receiving the smaller benefit may elect to take a benefit based on earnings or a benefit equal to 50% of benefit received by the other living spouse, whichever is larger. In this case, she could take either the $700 based upon her earnings, or 50% of her husband’s $2,400, or $1,200. Easy decision, right? If her benefit from earnings had been more than $1,200, then she would have chosen to keep that amount.
This example has both parties starting to receive benefits at full retirement age. If the wife had started taking her benefits earlier, (like age 62) then the 50% would be reduced by as much as 25% to offset the early start. And if the husband dies, the wife, of course, receives 100% of his social security, or $2,400.
If you think you should be getting more, please contact the Social Security Administration. They have all the records to tell you what you should be getting.
New Office Cases (Facts have been modified to simplify the explanation and to protect the privacy of the clients)
Mom has a well-executed estate plan utilizing beneficiaries on all her assets. She will avoid probate on death. Then her son moves to Arizona and needs financial help. Mom buys a house in Arizona for him to live in. The home title is in her name only. Mom passes away. Now we must open a probate in Arizona. She needed to plan for avoiding probate in Arizona. The moral of the story is to constantly be vigilant to insure all your assets have a joint owner or a beneficiary.
Dad has a well-executed estate plan using joint owners and beneficiaries to avoid probate. His bank statement comes each month showing his balance in his checking account and his savings account. The bank statement is addressed to Dad and his son. Dad passes away. Son goes to bank to close the two accounts. The bank tells the son that only the checking account is joint. The savings account is not. The bank claimed that papers were only signed to make the checking account joint. No papers were signed to make the savings account joint. We will have to open a probate to access the savings account. The moral of this story is that you cannot rely upon the names on the statement to be accurate for all accounts. You need to set down with the banker and review each account to make sure it is joint or has a beneficiary.
Son and daughter came to see me about their dad who needed an estate plan. He had beneficiaries on all his assets except his home. They asked me to prepare a ladybird deed to keep the house from going through probate. They could not locate the deed that I needed in order to draft the ladybird deed but I was able to order a copy from a friend at a Title Company. It came in late on a Friday so we set a signing time of 9am Monday morning. The son and daughter arrived promptly at 9 am but to advise me that their father had passed on Sunday night. Now the house will have to go through probate. You know the moral of this story: don’t procrastinate.
A client this month brought up the subject of income taxes. He offered up his disdain for filing income taxes and took pride in the fact that he had not filed since 2016. He was aware that he had a refund coming so he would not be liable for any penalties or interest. He said he would get around to filing for his refunds someday but he was too busy now. He was surprised when I informed him that there was a statute of limitation for filing for a refund. The statute would normally have been April 15 of this year to file for a 2017 tax year refund. Due to Covid-19, that has been extended to May 17. If you have not filed for a refund of your 2017 taxes, you have until May 17 to do it. After that date, the IRS keeps the refund.
Many of you ask or email to question how my wife is doing. After 22 months of chemo and radiation treatments, all three of her cancers appear to be in remission. She is not undergoing treatments at this time. She has quarterly CT Scans and blood tests to determine if any of the cancers have returned. She is extremely tired most of the time and the doctors told her it will take up to a year to get back to normal from all the treatments she received. I hope to get her back on the golf course this summer.
Our seminars remain in a state of flux due to the variance in the rules of the senior centers regarding social distancing. Please check our website for the latest information: https://gfalawfirm.com/events/.
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Very truly yours,