November 5, 2020
To my Clients, Friends and family,
Last month, I discussed how beneficiaries on an asset will avoid that asset going through Probate on the death of the owner. Property held by two or more joint owners will also avoid going through Probate on the death of one of the owners. However, unlike beneficiaries, there are a number of problems that joint ownership creates. Here are some of them:
Assume after the death of a spouse, the surviving spouse decides to make a bank account joint with a child or add the child to a deed.
The child can withdraw all the money from the bank account.
If the child files for bankruptcy, the bankruptcy court can take part of the money in the account.
If the child has creditors, they can take money from the account.
If you want to sell your house, the child must agree to sign the deed to the new buyer.
If the child has creditors, they can put a lien on the house.
Finally, joint ownership will only avoid going through the probate court process as long as there are at least two joint owners. Otherwise, when the last joint owner dies, the asset must go through probate.
Several years ago, Congress increased the standard deduction from $12,400 to $24,850. When that happened, the number of taxpayers who continued to itemize deductions instead of using the new standard deduction dropped from 30% to 5%.
With the drop in taxpayers itemizing deduction, there has been a drop in charitable contributions. However, there are two ways to make a charitable contribution and have it reduce your taxes even if you do not itemize.
The CARES Act passed in March, 2020, allows an individual to deduct up to $300 and a family up to $600 per year for cash contributions made to a charity even if they do not itemize.
Make a Qualified Charitable Distribution (QCD). Required minimum distributions are not required in 2020. However, you may take one if you want. You also can make a QCD. Contact your IRA custodian (they are the ones holding you r stocks and funds) and tell them to transfer part or all of your RMD to a charity. (The limit is $100,000.) You do not get a charitable deduction but you will not be taxed on the distribution of your RMD. This is a great way to support your favorite charity or your church on a tax free basis.
Our office remains open to serve past and future clients. We have instituted COVID 19 precautions for the protection of everyone:
Only one client or family in our office at a time. Please call from the parking lot when you arrive to make sure the earlier clients have left the building.
Sanitizing the conference room between clients.
Temperature taken at the door.
We are also working to reduce the number of in-office meetings. Other than when it is necessary to sign documents, we would like to avoid an in-office meeting. We will accommodate meetings with you by phone, facetime or zoom.
My mother is 97, in independent living and has not lost a single brain cell. In the last two years, she has taken up a real interest in Michigan scratch off tickets. To date, her biggest winning has been $25 on a $5 ticket.
However, some of you may have bigger dreams for bigger winnings. We all have dreams about what we would do if we won big. I will leave how you spend your winnings to your imagination but I will share some of the legal and tax ramifications if you do.
Your social security is not taxable if your taxable income is under $25,000 for an individual or $32,000 for married taxpayers. If your winnings push you over those numbers then you are taxed on the winnings and up to 85% of your social security.
Your Medicare premium (deducted from your monthly social security check) is based upon your income. For most people it is $144.60 per month. However your winnings will increase your income and therefore increase your Medicare premium to as much as $491.60 per month.
Winnings may push your income high enough that you lose existing medical deductions, child care credits, child tax credit and the earned income tax credit.
Gambling losses can only be deducted to the extent you had winnings and only if you itemize. If you take the standard deductions, you cannot deduct your losses.
On the other hand, if you win a million dollars or more, who cares!
Many of you have asked about my wife, Susan. This fall she finished 22 months of 4 surgeries, chemo and radiation treatments. Two weeks ago we met with her doctors and learned that all three of her cancers were in remission. No treatments are scheduled. We are blessed. Thanks to all of you that sent your thoughts and prayers.
All of the senior centers and libraries that had previously scheduled seminars this year have requested that we resume the seminar schedule in August. Here is the current schedule:
All seminars will be at 10:30am
Northville Community Center: 303 W. Main St. Northville, MI 48167
Please call (248) 305-2851 to reserve a seat
November 17 New Laws Affecting your Estate Plan
December 15 What You Need to Know about LTC and Medicaid
All seminars will be at 1:30pm
Plymouth Friendship Station: 42375 Schoolcraft Plymouth, MI 48170
Please call (734)354-3222 to reserve a seat!
November 12 Wills, Trusts and Ladybird deeds
All seminars will be at at 2:00pm
Westland Friendship Center: 1119 N. Newburgh, Westland, MI 48185
Please call (734)722-7632 to reserve a seat
November 19 Wills, Trusts and Ladybird deeds
Please feel free to forward this newsletter to anyone you feel would benefit from it.
Very truly yours,