Estate Planning and Trusts Blog

VA Pays Millions in Home Loan Refunds

VA Home loan form
Roughly 53,000 disabled veterans were mistakenly charged VA funding fees on their home loans.

Officials at the Department of Veterans Affairs said they reviewed 130,000 cases over the summer to look for errors. Many of these were simple clerical mistakes or disability ratings changes, after veterans settled on their loans.

The Military Times’ recent article entitled “VA refunds $400 million in mistaken home loan fees” explains that with the current regulations, veterans and service members must pay a VA funding fee when they apply for a VA home loan. This charge can be between 0.5 and 3.3% of the total loan. The money is supposed to pay some administration costs for the department. Disabled veterans are exempt from this fee.

However, an inspector general report released earlier in 2019 found that roughly 53,000 disabled veterans were charged these fees in recent years.

VA officials announced in May that they would review current and past loans, and contact veterans eligible for refunds.

In a statement, Veterans Affairs Secretary Robert Wilkie explained that the effort stretched back as far as 20 years. “Our administration prioritized fixing the problems and paid veterans what they were owed.”

The total amount of the payouts was significantly higher than the nearly $290 million total investigators estimated earlier this year.

The refunds ranged from a few thousand dollars to more than $20,000 for some vets.

Veterans Affairs officials also announced a new policy guidance for lenders to make certain that they’re asking veterans applying for the loans about their disability status. The VA also has created new internal processes for oversight over future loan applications which may be eligible for waived fees.

The Department of Veterans Affairs has also planned new outreach efforts to help get the word out to veterans about the waivers they’re eligible to receive.

VA officials said they believe that their review of the issue is now complete. However, any veterans who think they may be entitled to a refund for mistaken fees can contact the department’s regional loan center office at (877) 827-3702 or visit the VA’s website for more information.

Reference: Military Times (October 8, 2019) “VA refunds $400 million in mistaken home loan fees”

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Causes of Insomnia in Seniors

Insomnia emoji
Insomnia can rob you of your brain and body health. It’s important to find out its root cause.

Getting enough good sleep is vastly undervalued in today’s society. Younger working people like to brag about being able to function on only a few hours of sleep at night. But researchers have discovered that sleep deprivation can lead to cognitive decline, diabetes, obesity, depression and other problems. If you’re a senior and have trouble sleeping, you need to find the root cause. Here are some of the things that can cause insomnia in seniors:

  • If you experience severe insomnia despite your best efforts, talk to your doctor. Sometimes insomnia is a sign of a medical problem, such as sleep apnea. Treating the underlying cause may reduce or eliminate your sleep issues.
  • Your prescription and over-the-counter medications could be sabotaging your sleep and making you unhealthy. Ask your doctor if any of your medications  – or the combination of them – could be causing or contributing to your inability to sleep well. Find out if there are other drugs you could take that won’t interfere with your nighttime rest.
  • Many people count the days until they can throw away the alarm clock when they retire. But one of the side effects of “late to bed, late to rise” is that your body clock can lose its way. If you don’t keep a regular schedule, your body might release melatonin in the afternoon, making you groggy in the afternoon and making sleep elusive at night.
  • Taking a nap too late in the day or for too long can interfere with your ability to get a good night’s sleep. The ideal time for napping  is between 1:00 and 3:00 p.m. You should also set an alarm so you don’t nap too long. The optimal nap length will vary from one person to the next, but the most effective range to avoid insomnia is between 20 minutes and one hour.
  • Hot flashes and night sweats can cause menopausal women to wake up multiple times during the night. Wear pajamas that wick away moisture. Avoid bedding material, such as memory foam mattresses, that can hold heat. Make sure your sheets, pillows, and pillowcases have cooling technology.
  • The blue light in cell phones, tablets, and computers can interfere with the body’s ability to produce melatonin. Without the appropriate amount of melatonin, you could have difficulty falling or staying asleep. The standard recommendation is to “unplug” by turning off these devices about an hour before you want to go to sleep. For some people, however, blue light exposure during the three or four hours before bedtime can cause insomnia. Sleep researchers say you can still watch television and use your devices in the evening if you wear special glasses that block blue light. And some electronic devices, such as the Kindle Fire, will allow you to block blue light, as desired (I personally set my Kindle Fire to Blue Shade for reading and jigsaw puzzles before bedtime and sleep very well).
  • Some people can drink a nightcap shortly before bed and fall asleep without any difficulty. A glass of wine or a cocktail can help you relax and de-stress, but for some people, an alcoholic drink too close to bedtime can mess up your sleep cycle, causing you to wake up during the night. To avoid insomnia, experts recommend you have that drink several hours before you want to go to sleep.

References: Centers for Medicare & Medicaid. “Can’t Sleep? Here Are 11 Surprising Causes.” (accessed September 23, 2019) https://www.aarp.org/health/conditions-treatments/info-2019/have-trouble-sleeping.html

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Electronic Wills – Should You Have One?

Signing an electronic Will
Electronic Wills are here in Florida. But you might want to take a “wait and see” approach.

Florida is one of the early states permitting residents to have Wills, along with some other types of estate planning documents, signed and completed electronically and online. This will require remote notarizations and witnesses to appear via certain approved secure video chat services, reports News Chief in the article “Electronic wills are coming, but are they a good idea?”

A movement to pass a similar law failed in 2017, as the result of a veto by then Governor Scott. However, a revised and approved version of the bill passed this summer and was signed into law by Governor DeSantis.

Under the new law, notaries who wish to be able to conduct executions of electronic Wills will be required to undergo additional training. Certain qualified and “state-approved” custodians will oversee safeguarding the completed electronic Wills for safekeeping until the creator of the Will dies, at which time the electronic Wills will be electronically filed with the appropriate probate court.

Florida is only the fourth state to implement laws related to the execution and storage requirements for electronic Wills. One concern is whether other states will honor these documents.

If other states won’t accept the electronic Wills, then a deceased person’s assets that are subject to probate administration in other states may not go to the person’s intended beneficiaries. Traditional, hard copy Will executions typically occur in an attorney’s office, with proper procedures and safeguards put into place by a licensed attorney who practices in this area of the law. Many of these same procedures and safeguards won’t be in place for electronic execution of electronic Wills.

There is concern that these Wills present an enticing target and that many family members will argue that the Will is not valid, because of undue influence or a lack of capacity.

The 2019 version of the law has some safeguards that attempt to protect vulnerable adults. However, until these electronic Wills go through probate contests, there won’t be much clarity for estate planning attorneys. A big concern is that if the documents can be executed electronically, there could be greater opportunities for criminals or people with bad intentions to more easily take advantage of vulnerable seniors.

Other concerns include: what fees will be charged by the state-approved custodians to lawyers who wish to create such documents; how much will the recurring custodial fees cost the person who signs the Will; what happens to the Will if the custodial fees aren’t paid; and how will the electronic custodians know someone died if they don’t die in Florida?

Whether you agree that electronic Wills are the future, this is still a very new process that has yet to be tried and tested. There will likely be more questions raised in the next few years about their safety and cases will be taken to court to resolve issues and challenges.

For most people, this is the time to wait and see how the electronic Will scenario works out. It may take a few years before the bumps are ironed out. In the meantime, meet with an estate planning attorney to create an estate plan that is on paper and follows a traditional process.

Reference: News Chief (August 23, 2019) “Electronic wills are coming, but are they a good idea?”

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Handwriting Analysis in Aretha Franklin’s Estate

Aretha Franklin
Aretha Franklin, the Queen of Soul, left two conflicting Wills.

When Aretha Franklin died in August 2018, her family thought she didn’t have a Will. However, then they discovered two handwritten Wills – one in a locked cabinet and the other under a couch cushion – that gave conflicting instructions on how her estate should be handled. One of those Wills is now being examined by a handwriting expert to see if it’s the most recent valid Will. That determination will help decide who controls most of her finances and how her songs and likeness can be used in the future.

Fortune’s recent article, “How a Forensic Handwriting Expert Will Examine Aretha Franklin’s Will,” reports that in the Will thought to have been written in 2014, Franklin named her youngest son, Kecalf, as the executor of the estate. It looks like she first wanted another son, Teddy, to be in charge. However, his name is crossed out, with Kecalf written on the same line, followed by the name of Franklin’s niece, Sabrina Owens, whose name is also crossed out.

Now, in the middle of the dispute over the estate’s control, Kecalf has hired a forensic document specialist, Erich Speckin, to affirm to the court that the Will was, in fact, written by Franklin in 2014 and hasn’t been altered since. The other parties—Owens, who’s the current executor as decided before the discovery of the Wills; Teddy; and another son, Clarence—can also enlist their own handwriting experts, if they wish.

There are several steps an expert will take in making this determination. What Aretha Franklin left behind is known as a “holographic” Will, meaning that she wrote it entirely by herself, then signed and dated it. Holographic Wills are not valid in all states (such as Florida), but are valid in Michigan, provided that “material portions are in the testator’s handwriting.”

Because handwriting can change as a person ages and declines in health, the expert will try to compare the writing in the Will to as many contemporaneous sources as he can find. This may include Franklin’s lyrics, handwritten notes, birthday cards, or any other writing she might have done. The expert will use these to compare and look for anomalies. In most cases of fraudulent Wills, a forger will type out the text and forge a signature because writing out a full page in someone else’s handwriting is nearly impossible.

Once Speckin’s findings are revealed, the next skirmish in the estate battle will be based on his findings and the parties’ ability to come to an agreement. Kecalf now has only the support of his brother, Edward, in his bid to become the executor.

This is just one more reminder that everyone should have a valid Will at all times. Work with a qualified estate planning attorney to be sure make your Will is much clearer than the Queen of Soul’s.

Reference: Fortune (August 13, 2019) “How a Forensic Handwriting Expert Will Examine Aretha Franklin’s Will”

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Be a Smart Snowbird

Florida snowbird
The snowbirds are coming…  If you’re a snowbird, a little planning can make your stay even more pleasant.

The interstates get busy in September, when retirees take to the highways to leave the north behind and head to their southern or southwestern homes, reports Next Avenue in “7 Tips for Being a Successful Snowbird.” Some snowbirds have a more enjoyable experience than others, in part because of their preparation.

Here are a few lessons from the experienced snowbirds:

Choose a location that suits you. Don’t confuse a cold-weather home with a vacation spot. You’ll be living your daily life here. Therefore, you want to find the activities that you enjoy on a regular basis. If your regular life at home is busy and you like it that way, moving to a laid-back beach town or an isolated cabin in the woods may not be a good fit for more than a few days.

Look before you leap. Rent a place for a month or two, before committing to spending an entire winter there. You can’t know if you love a place before you live there for an extended period of time. If you’re not happy, you can try someplace else. Once you find the right spot, book the whole winter. Book the whole next winter as well. Good spots go fast.

Switch bills to be paid online. Before everything was online, it was tricky to take care of your home bills while living somewhere else. Make all your bills payable online or put them on autopay. If your bank doesn’t have a branch nearby, open an account in a nearby bank and link with your home bank, so you can easily move money between accounts.

Make new friends and new connections. One of the adjustments of snowbird life is leaving family and friends back up north. If you are in a community with lots of snowbirds, they are likely to be in the same position as you. Introduce yourself, join clubs and get active.

Don’t overbook your time with guests. You may love having friends come down, but being a frequent host takes a lot of time and energy. Don’t turn your winter residence into a bed and breakfast. Don’t be afraid to limit the number of nights for your houseguests. This is your home, not a hotel.

Make it a second home if you own it. If you buy rather than rent, it’s easier to keep some things there. Therefore, you are not lugging quite as much back and forth. However, even in a rental, you may be able to store some items, or rent a small storage unit nearby. Doing so will make traveling easier, and your snowbird nest will feel more like home.

Enjoy the ride back and forth. There’s no need to rush, if you’re going to be staying for a few months. If you’ve always travelled by interstate, maybe a side trip along local roads will break up the monotony and create some new memories. Stop by to visit with relatives along the way, or the national park that you’ve been meaning to experience. Make the ride an enjoyable part of your journey.

Reference: Next Avenue (Sep. 13, 2019)  “7 Tips for Being a Successful Snowbird.”

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Demystifying Probate

Death and probate
Probate is the orderly distribution of a deceased person’s assets after all lawful debts are paid, and it is overseen by a judge.

Probate can be avoided with proper estate planning.

The Street’s recent article on this subject asks “What Is Probate and How Can You Avoid It?” The article looks at the probate process and tries to put it in real-life terms.

Probate is an estate administration process that works within a probate court with a probate judge presiding over the proceedings. Usually, surviving families and other interested parties initiate the process to address issues relating to the deceased individual’s estate settlement. These include:

  • The handling of the deceased’s valid will;
  • Properly citing and categorizing the deceased’s assets;
  • Appraising the deceased’s estate and property;
  • Paying off any of the deceased’s existing debts; and
  • Distributing the deceased’s property to those directed by the will (or, if there’s no will, the probate court will direct the distribution of estate assets, according to the laws of intestacy).

The personal representative (also known as an executor) handling the deceased’s estate will typically start the process with the help of a probate attorney. Here are the basic steps:

File a Petition. The estate’s personal representative will file a request for probate where the deceased resided.  Once all the required paperwork is in order, the probate judge will officially open the case.

Notice. The personal representative must send a legal notice to all applicable beneficiaries, heirs, debtors, and creditors that the deceased’s estate is officially in probate.

Inventory Assets. The personal representative will then collect, list, and provide a value for all of the deceased’s assets and supply this to the court.

Pay the Bills. The personal representative will need to pay all outstanding debts owed by the estate.

Complete Any Tax Returns. The estate may also have existing tax returns that need to be filed. An accountant can be hired by the personal representative to work on this, or the personal representative may choose to file the taxes on his or her own.

Pay the Heirs. The personal representative can now distribute the remainder of the estate to any heirs, according to the will’s instructions.

Close the Estate. Finally, the personal representative will file paperwork with the court and file to close the estate.

An experienced estate planning attorney licensed to practice in your state will be able to explain what strategies are used to avoid probate, how to remove certain assets from the process, or whether it needs to be avoided at all. In some regions, probate is swift, while in others it is long and tiresome. A local estate planning attorney is your best resource.

Reference: The Street (July 29, 2019) “What Is Probate and How Can You Avoid It?”

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Roth IRA Tips and Tricks

Roth IRA
Roth IRAs are powerful tools in your retirement planning arsenal.

There’s a lot that most people don’t know about Roth IRAs, as detailed in the article “9 Surprising Facts About Roth IRAs” from the balance. Some of them may surprise you.

Roth IRA contributions can be used for emergencies. In a perfect world, no one would ever need to use retirement money for anything but retirement, but because Roth contributions are not deductible, they can be withdrawn at any time, for any reason, without taxes or penalties. A Roth IRA can serve as an emergency fund. However, it needs to be noted that the funds you can withdraw do not include amounts that were converted to a Roth IRA or investment gains. Therefore, if you put $5,000 into a Roth IRA that grew to $6,000, you may only withdraw the $5,000 without taxes and penalties.

You might be able to use a non-deductible IRA to fund a Roth. If you make over a certain limit, you can’t contribute to a Roth IRA—or can you? Some people who keep other retirement money inside qualified retirement accounts are permitted to make a non-deductible IRA contribution every year and then convert that into a Roth. This is sometimes called the “backdoor Roth.” However, you’ll need to be careful, and you may need help. In some cases, you can even roll a self-directed IRA back into a company plan, so in future years you could use the backdoor Roth strategy without having to pay taxes on the converted amount. Get a professional to help you with this: mistakes can be expensive!

You may roll after-tax 401(k) contributions into a Roth IRA. Many employer plans let you make after-tax contributions and then, at retirement, these after-tax contributions can be rolled into a Roth IRA. Any investment gain on the after-tax contributions can’t go into the Roth, but the contributions can.

Roth IRAs have no RMDs (Required Minimum Distributions). There aren’t any age requirements for when you take money out, so there are no delayed tax bombs lurking. However, non-spouse heirs will have to take required distributions from an inherited Roth. The nice thing: they will be tax free.

You can contribute to both a SIMPLE IRA and a Roth IRA. As long as your income is within the Roth IRA limits, then you can contribute to both the SIMPLE and the Roth. The contributions to the SIMPLE IRA will be deductible, the Roth contributions will not be. This dual funding strategy lets you reduce taxable income now and have funds in the Roth accumulate for tax-free benefits in retirement. For the self-employed person, who is diligent about saving for retirement, this is a good plan.

Your employer plan may allow Roth contributions. Many 401(k) plans let you make Roth contributions. They are called “designated Roth accounts.” Check with your HR department to see if their plan let you choose which type of contribution to make. Some may be all or nothing, while others let you do some of each.

Age is not the key factor in determining whether or not to use a Roth IRA. The primary deciding factor here is your income bracket, your tax rate now and your expected tax rate during retirement. If your expected tax rate during retirement will be lower, the deductible contributions may be better. If your tax rate during retirement is going to be the same or higher in retirement, which is often the case for people with large IRAs or 401(k)s, then a Roth IRA may make a lot of sense, regardless of your age.

You might be able to make a spousal Roth contribution. Even if your spouse has no earned income, as long as you have an earned income, you can make an IRA contribution on their behalf. Many couples can double their tax favored retirement account savings by doing this.

Be careful about Roth conversions. As stated previously, mistakes here can become expensive, so don’t rely on online Roth calculators to manage conversions. Talk with an experienced professional who can help make sure that your numbers and your strategy fits with your personal retirement scenario. Every person and every situation is different, so planning needs to be specific to your needs.

Reference: the balance (August 13, 2019) “9 Surprising Facts About Roth IRAs”

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Florida’s Troubled Guardianship Program

Guardianship program - DNR
Florida’s guardianship program is under scrutiny after a professional guardian signed DNRs for people who allegedly didn’t want them.

Legislators and officials from Governor DeSantis’ administration met with judges, guardian trade groups, state attorneys and representatives from the Elder Law section of the Florida Bar to discuss how to protect seniors from exploitive and neglectful guardians, as reported in the article “DeSantis, Florida lawmakers consider changes in troubled guardianship program” from the Orlando Sentinel.

The Department of Elder Affairs Secretary Richard Prudom said that more must be done to enhance the accountability of guardians and be sure they are acting in the best interest of their wards. He added that the matter extends beyond the Department of Elder Affairs, and that families, communities, and public officials need to work together.

This past summer, reports surfaced about a professional guardian who was responsible for more than 400 wards. She reportedly signed “Do Not Resuscitate” orders for clients against their wishes. She also double-billed a healthcare company for nearly $4 million over a ten-year period.

Florida has 550 registered guardians.

Some of the suggestions made included capping the number of wards a person could take on and requiring a judge to approve a DNR order. Sen. Kathleen Passidomo, R-Naples, and Rep. Colleen Burton, R-Lakeland said that increased standards for guardians and more thorough monitoring was called for.

More stringent penalties for guardians who violate the law may be in the works. However, judges would have to approve the removal of any guardian from the state registry, and that action could be appealed.

Lawmakers said that more money to address the caseload isn’t the issue. Monitoring of guardians needs to be increased, said Passidomo.

As yet, there is no concrete plan in place to address this issue.

The Department of Elder Affairs houses the Office of Public and Professional Guardians, which currently has four employees. Prudom took charge of the department when the agency’s director, who was in charge when the guardian mentioned above was asked to resign.

The governor’s administration will publish a budget request for the Department of Elder Affairs, which could include more funds for investigators to review complaints.

Reference: Orlando Sentinel (September 16, 2019) “DeSantis, Florida lawmakers consider changes in troubled guardianship program”

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What Happens to Eddie Money’s Money?

Eddie Money
Eddie Money’s money – what happens to it now?

“The Money Family regrets to announce that Eddie passed away peacefully early this morning,” his family said in a statement (via Variety). “It is with heavy hearts that we say goodbye to our loving husband and father. We cannot imagine our world without him. We are grateful that he will live on forever through his music.”

Wealth Advisor’s recent article, “How Much Is Eddie Money’s Estate Worth?” said that earlier this year, Money revealed on his Real Money reality TV show that he’d been diagnosed with stage 4 esophageal cancer.

“I thought I was just going in to get a checkup, and he told me I got cancer,” he said. “Am I gonna live a long time? Who knows, it’s in God’s hands,” he continued. “But you know what? I’ll take every day I can get. Every day above ground is a good day.”

However, TMZ reported that Money died of complications from a heart valve procedure that he underwent a few months ago.

Eddie Money’s road to rock stardom was a strange one. He was the son of an NYPD police officer and originally wanted to stay in the family business. Money served on the force for two years, before quitting and pursuing his rock and roll dreams.

“I would have been a very lenient cop,” he told Rolling Stone in 2018.

Money struggled with drug addiction during his career, and in the early ’80s, his life almost ended. According to People, Money overdosed on fentanyl in 1981. This led to him badly damaging his sciatic nerve. His 1982 album, “No Control,” was written about the experience.

Money had eleven Top 30 hits on Billboard’s Hot 100 and earned a Grammy nomination for his hit “Take Me Home Tonight.” According to Celebrity Net Worth, he may have been worth about $20 million at the time of his death.

Money is survived by his wife and five children. However, the terms of his Will are not yet clear. As a California resident since 1968, his family won’t be subject to a state inheritance or estate tax because the state doesn’t have these taxes. Depending on what form his fortune takes, his estate could liable for several million dollars in federal estate taxes. It’s not known who owns the rights to his music catalog.

While his success peaked in the mid-’80s, he still had a strong fan base and made several concert appearances each year, in the years before his death.

Reference: Wealth Advisor (September 17, 2019) “How Much Is Eddie Money’s Estate Worth?”

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Titling Property Correctly for Your Estate Plan

Titling assets is like putting together a puzzle.
Titling assets properly is an important part of the estate planning puzzle.

The way you title your real and personal property and who you name as your beneficiaries is just as important in your estate planning as your Will or Trust, says The Black Hills Pioneer’s recent article, “Titling of property is just as important as your Will or Trust.”

There are some kinds of property that, depending on how they’re titled or who’s the named beneficiary, will flow outside your Will or Trust.

For instance, if you designate a beneficiary on your life insurance policy or on your retirement account, that money goes directly to the named beneficiary at your death—not in accordance with your Will or Trust (provided you haven’t named your estate or Trust as the beneficiary).

In addition, you could designate another person as payable on death (POD) designee or transfer on death (TOD) designee on your investment account or your bank account. These types of accounts also transfer automatically to the named designee and not with any regard to your Will or Trust (unless you named your estate or Trust as the designee).

Jointly owned real estate, bank accounts, or investment accounts will typically flow to the surviving joint owner, not pursuant to your Will or Trust. However, the fact that two people own one piece of real estate doesn’t mean the property will flow automatically to the survivor. It depends on how the property is titled. For example, in many states, language needs to be included in the deed conveying that real estate to both individuals as “joint tenants with rights of survivorship.”

So, you can see how critical it is that you discuss these issues with your estate planning attorney. In addition to questions about Wills and Trusts, you should also be discussing the titling of your property and the beneficiaries you’ve named on your life insurance and retirement accounts, along with any POD and TOD designees you’ve named on your investment accounts or bank accounts.

If you don’t, you could create unintended consequences for your loved ones.

Reference: Black Hills Pioneer (August 5, 2019) “Titling of property is just as important as your Will or Trust”

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