Elder Law Issues

Signing tax returns can be difficult — or even impossible — for someone who is incapacitated. Can someone else sign for them? Who — and how?

To be clear, we’re not talking about an amanuensis signing. But we do like to use the word. That kind of signing involves a completely competent — but physically challenged — person directing someone else to sign on their behalf. Federal and state law recognize the ability to use that approach.

But what if the signer is mentally incompetent, or incapacitated? And who decides that, anyway?

And it’s not just about signing tax returns — though that problem is much on the minds of many of us in this tax season. There are all sorts of documents that might need to be signed.

In this podcast episode we try to give you some general information about signing for someone else. Do you hold a written, signed, power of attorney for them? Has a court appointed you as guardian of their person, or conservator of their estate? Let us explain some of the mechanics of signing for someone else.

Qualified charitable distributions (QCDs, to the initiated) are a relatively recent addition to the federal income tax rules. Using them can make a real difference in the income taxes some IRA owners have to pay.

If you are over age 72 (or younger, if you inherited an IRA from someone else) you may know at least a little about required minimum distributions. Every year you must withdraw at least a minimum amount from your IRA. You can withdraw more, of course. But you pay tax on every dollar you withdraw.

There are exceptions and some special rules. If you have a Roth IRA, there are no minimum distribution rules (unless you inherited it). To the extent the IRA contributions were taxed before going in, withdrawals might not trigger taxation. But still, the income tax effect can be pretty overwhelming — particularly to a retiree who doesn’t actually need the minimum distribution to cover living expenses.

Imagine, for example, that you had $400,000 in your IRA on December 31 of last year. This year you turn 75. You’ll have to withdraw almost $18,000. If you have plenty of other income, you could be paying as much as about $6,500 of additional tax. And that is on income you didn’t really need at all.

Now imagine that you have a favorite charity, and last year you gave them $20,000. Unfortunately, you couldn’t deduct the contribution last year. Especially with an expanded standard deduction, a lot of taxpayers find that they don’t get any specific income tax benefit from charitable gifts — even large ones.

Eureka! This year you can order your IRA custodian to send your minimum distribution directly to your charity! You don’t get a deduction at all — but you get something much better. You get the entire $18,000 out of your taxable income in the first place.

Join us for a discussion of this concept. Then ask your tax preparer or estate planning attorney if you benefit from using qualified charitable distributions.

For clients with some types of assets, we frequently encounter questions about LLCs and trust funding. Should your trust be a “member” of each limited liability company, or should the LLC manager be a trustee? Do you need to change your LLC operating agreement? How do you get these interests into your trust’s name?

Not every estate planning client needs to worry about this issue. But those with rental real estate, for instance, might have already set up LLCs to hold those investment properties. They might even have established a separate LLC for each property. They wonder if they need to make changes to each LLC operating agreement, or rearrange the LLCs’ ownership interests.

In this week’s podcast we discuss the interrelationship of LLCs and trust funding. We describe some of the choices, and the usual approaches we consider. Spoiler alert: as is so often the case with legal questions, the answer begins with “it depends.”

Are you thinking about making changes to your estate plan? If you’re already our client, or you are in Southern Arizona, we’d like to help. But we have some advice for you in any case.

In this podcast episode, we discuss some of the common mistakes we see people make. Changing your estate plan isn’t as simple as scribbling out one name, writing in a new one and initialing. That kind of “change” is almost certainly ineffective (well, in Arizona, anyway).

How about writing out a new note: “here’s what I really mean to do —“. Another fail. Don’t do it. Just don’t do it.

We see so many instances of people worrying their estate plans like the proverbial dog worrying a bone. There’s a high likelihood that the change you want to make is straightforward and uncomplicated. But there’s also a high likelihood you’ll add cost and confusion if you try to do it yourself.

Here’s one thing that lawyers are actually good for: we can ask you questions, figure out what you’re really trying to accomplish, and make it happen. It’s what we do. Well, that and recover from the disasters that you might inflict if you try making changes to your estate plan without good legal counsel.

What are UTMA, 529 and ABLE? And which is better for your situation?

The difference can be confusing. How to make a gift, but not cause other problems because of the recipient’s youth, immaturity or limitations?

Three common mechanisms are the topic of this podcast episode. We talk about (among other things):

UTMA — the Uniform Transfers to Minors Act (a state law, adopted in Arizona and 48 other states — this may be the year that South Carolina joins the rest of the states).

§529 (education) accounts — a federal tax-favored way to set money aside for future college education costs (and some other expenditures). Though they are based on federal tax law, most states have created 529 programs in accordance with that law.

ABLE Act accounts — another federal tax law that encourages states to set up specialized investment alternatives. This time, though, the intended beneficiaries are people with disabilities — regardless of age (though their disability must have existed before they reached age 26).

Join us for a discussion of UTMA, 529 and ABLE. We hope to break down the jargon and clarify the differences.

The “Lost Art” of codicils? What makes it lost?

A listener asked several questions:

In this podcast episode, we review these deceptively simple questions. It gives us an opportunity to talk about language, typing (including our first use of the venerable phrase “carbon paper” in years) and the utility of seeking legal counsel.

Can you make a codicil? Yes, but you might just as well sign a whole new will. In fact, Arizona law eliminates the distinction between a will and a codicil (see the definition section of Arizona law, and scroll down to the definition of “will”).

This is why we call it the “lost art” of codicils. It’s because virtually no lawyers prepare codicils any longer. Why not? Hint: it has more to do with computers than art.

We’re pretty pumped. We’ve been podcasting for two years now, and that means this is our 100th episode!

We started in March, 2019, with an initial podcast describing the then-recent addition of a new partner (Jacque Mingle) and the then-imminent retirement of founding partner Tom Curti. Tom’s doing fine, by the way — thanks for asking.

Join Fleming & Curti, PLC, partners Elizabeth Noble Rollings Friman and Robert Fleming this week while they discuss some of the changes they’ve seen, the lessons they’ve learned and the topics they get asked about. At the end of the 100th episode, there should be cake, right?

Do you need to keep every document you’ve ever collected in connection with your estate planning? Of course not. Let us help you with shredding your estate plan — or at least the parts you don’t need to keep around.

Of course you should keep the originals of your current estate plan. But what about those drafts you got from our office? And what about the previous will and powers of attorney?

In this Elder Law Issues podcast episode, we talk about the value of culling your old documents. We also discuss where we think you should keep original documents (spoiler alert: we don’t think it’s at our office, or in your bank safe deposit box).

Shredding your estate plan — just not the current originals — can be liberating. You can get rid of a lot of useless paper, and simplify your files. We offer free shredding services for our clients, and we can help.

Sometimes the very public lives (and deaths) of famous people can give us some insight into elder law issues. Take, for instance, the Larry King estate.

Larry King died on January 23, 2021, after a bout of COVID-19 — though his cause of death was listed as sepsis as a result of kidney and respiratory failures. He was 87.

What caught our attention, though, was that he handwrote his will — what the law calls a “holographic” will. We also were struck by media reports that his estate was worth $2 million, though we immediately suspected that his net worth was considerably higher.

Does the Larry King estate provide any information that might help less-famous people complete their own planning? Yes, we think it does. Join us for this week’s Elder Law Issues podcast as we discuss holographic wills,  non-probate assets — and Larry King.

If you leave your estate to your child, what interest does your child’s spouse acquire in the inheritance? What happens if your child (god forbid) dies before you? Will their inheritance go automatically to their surviving spouse?

We get these questions all the time. When we’re asked, the short answer is always: “what would you like the answer to be?” Because we can write any arrangement you prefer into your estate plan.

But when you do not include a specific provision, there are some default rules that apply. It’s not unlike the rules about whether adopted children are included (they generally are, unless you say otherwise), or the presumption (in Arizona) that you have to live five days before inheriting.

How are they similar? In both of those illustrations, as in the effect of leaving things to your children, there are presumptions built into the law. But you can change the presumption. Join us for this week’s podcast episode, and we’ll explain the default rules about your child’s spouse (at least the Arizona version, anyway).

But Arizona is a community property state. Doesn’t that mean that half of anything you leave to a child automatically belongs to your child’s spouse? (Spoiler alert: no.)

These are some of the questions we discuss in this week’s podcast episode. We hope to explicate and uncomplicate the topic.