General Information

Illinois Emergency Contact Database
January 20, 2014 no comments in General Information by

 

Illinois Emergency Contact Database

 

Did you know that you can sign up for the Illinois Emergency Contact Database free of charge?  The database was established in 2009 and allows residents with a state license or ID to enter the name, address, and phone number of two emergency contacts.  In the event of an emergency, if you are unable to effectively communicate with health care professionals, law enforcement may access the database to help reach your designated contact.  You can sign up today by visiting the website below:

http://www.cyberdriveillinois.com/departments/drivers/ECD/home.html

Record Keeping
May 13, 2013 no comments in General Information by

Record Keeping

Many families are busy spring cleaning their homes this time of year, making it a great time to declutter those financial records by following these helpful guidelines:

Records to keep for one year:

  • Paycheck stubs
  • Bank statements (including cancelled checks)
  • Brokerage statements(keep longer for tax purposes if they show a gain or loss)
  • Credit card receipts
  • Receipts for health care bills (in case you qualify for a medical deduction)
  • Utility bills to track usage (but keep for 7 years if you deduct a home office)

Records to keep for 7 years:

  • Monthly investment account statements
  • Income tax returns
  • Supporting documents for taxes, including:
    • W-2s
    • 1099s
    • Receipts or cancelled checks that substantiate deductions

Note that although the IRS has up to three years after you file to audit you, it may look back up to six years if it suspects you substantially underreported income or committed fraud.

Records to hold while active:

  • Contracts
  • Stock certificates
  • Property tax records
  • Warranties
  • Disputed bills
  • Pension and retirement plans
  • Home improvement records

Records to keep indefinitely:

  • Tax returns with proof of filing and payment
  • IRS forms that you filed when making contributions to a traditional IRA or Roth conversion
  • Receipts for capital improvements that you have made to your home until seven years after you sell the house
  • Retirement and brokerage account annual statements
  • Receipts for big-ticket purchases for as long as you own the item (to support warranty and insurance claims)
  • Wills
  • Life insurance information
  • Mortgage data

Records to toss:

  • ATM receipts once recorded
  • Bank deposit slips once the funds show up in your account

Finally, if you’re having trouble getting organized for taxes, try purchasing a 13 folder accordion file.  Label each tab with that month’s name, and keep that month’s bills, credit card receipts, and bank statements in that file.  Once you’ve completed your tax returns, add a copy in the 13th folder for future records.

 

Proposed Settlement Could Expand Medicare Coverage
November 1, 2012 no comments in Elder Law, General Information, Health Insurance by

Proposed Settlement Could Expand Medicare Coverage

 A proposed class-action settlement may help tens of thousands of people with chronic conditions and disabilities qualify for Medicare coverage.

 Presently, Medicare guidelines indicate that coverage should be denied if a patient reaches a plateau and is not improving.  As a result, if a patient suffering from a chronic condition could not demonstrate a likelihood of medical or functional improvement, Medicare would not pay for home health care, skilled nursing home stays, or outpatient therapy.  Since many families could not afford these services out-of-pocket, many patients ultimately did not receive the recommended treatment.

 Under the proposed settlement, Medicare will pay for those services needed to “maintain the patient’s current condition or prevent or slow further deterioration,” regardless of whether the patient’s condition is likely to improve.  The focus would be on the patient’s need for skilled care, rather than his or her potential for improvement. 

 The proposed settlement was submitted on October 16, 2012 to the Federal District Court in Vermont.  If approved, it is expected that the court will takes several months to finalize the settlement, and that Medicare will take an additional year to formally implement the policy change.

Withdrawals from Qualified Plans for Those under Age 59 ½
January 5, 2012 no comments in Elder Law, Estate Planning, General Information, Supplemental Needs Trust Planning by

Withdrawals from Qualified Plans for Those under Age 59 ½

Retirement plans often represent the largest asset an individual may own.   In these unsettling economic times, an individual may want to access this asset to pay bills or for other needs.   Typically, if an individual under age 59 ½ wants to withdraw monies from a qualified plan, the IRS will impose a 10 percent penalty.

There are a series of exceptions to the 10 percent penalty, but the exceptions can vary depending on whether the retirement plan is an IRA or 401(k) plan or other qualified plans.

The following rules for a penalty free withdrawal are the same whether the withdrawal is from an IRA or from a 401(k) plan, if the account owner: 

  1. Becomes totally disabled;
  2. Is required by court order to give money to a spouse as part of Divorce or legal separation (i.e. a QDRO);
  3. Has medical expense that exceed 7.5% of adjusted gross income;
  4. Is separated from service (through termination, permanent layoff, quitting or early retirement) in a year when the account owner turned 55 or later; or
  5. Subject to certain conditions, takes withdrawals in substantially equal amounts over owner’s life expectancy.

There are other means of penalty free withdrawals from IRAs, (but not 401(k)s): 

  1. To pay health insurance premiums during a period of unemployment lasting 12 consecutive weeks;
  2. To pay for tuition, room and board and books (net of scholarship) for spouse, child or grandchild;
  3. To pay up to $10,000 to purchase first home.

There are also hardship withdrawals from 401(k)s which would include costs  (subject to certain condition) related to purchase of principal residence not to exceed $10,000, payment of tuition, funeral expenses and the like.

Interestingly, an owner can take a loan from a 401(k) plan (but not from an IRA).  There are many conditions that must be met, but there are certain advantages; particularly, no credit checks, low interest rates, no financial hardship requisites, and interest paid on the account is paid to the account owner’s account, not to a bank or credit card company.  

Potential job loss poses the biggest disadvantage.  The loan must be immediately paid back (within 60 days) if account owner loses his or her job or changes employers.

For more information, refer to the IRS website, “Retirement Plans FAQs Regarding Hardship Distributions,” www.irs.gov/retirement/article/0,,id=162416,00.html  and “Retirement Plans FAQs Regarding IRA Distributions,” www.irs.gov/retirement/article/0,,id=111413,00.html.

IRA Charitable Rollover Provision Set to Expire 12/31/2011
October 5, 2011 no comments in Elder Law, Estate Planning, General Information by

IRA Charitable Rollover Provision Set to Expire 12/31/2011

Individuals 70 ½ or older are eligible to make a tax-free transfer from their Individual Retirement Account (IRA) to a qualified charity, but this opportunity is set to expire 12/31/2011.  The maximum amount which may be transferred is $100,000. Distributions must be made directly to the charity through the plan administrator and not to a philanthropic fund, split interest trust, charitable gift annuity or a supporting foundation.

Illinois And Civil Unions
April 26, 2011 no comments in Elder Law, Estate Planning, General Information, Health Care Decision Making by

Illinois And Civil Unions

Effective June 1, 2011, pursuant to P.A. 96-1513, Illinois will join several other states that permit registration of a civil union between two consenting adults of the same gender.   The law specifically states that a party to a civil union shall be included in any definition of the term “spouse”, “family”, “immediate family”, “dependent” and the like that denote a spousal relationship.    In addition, Illinois will recognize as civil unions similar relationships entered in other jurisdictions (other than common law marriage).  For example, some states recognize “same sex” marriage” or “domestic partnerships.”

From an estate planning perspective, partners in a civil union will receive the same protection as a spouse under the Illinois Probate Act, meaning that a partner will have priority to act as in matters related to intestate death administrations, the same rights as a surviving spouse to inherit intestate property and to claim against the will.

Tax issues will remain in flux.  The Illinois Civil Union Act stands in contrast to the 1996 federal Defense of Marriage Act.  For the time being, there will be continuing issues in connection with the different tax treatment afforded spouses at the federal level than will be available to partners in a civil union registered under Illinois law.

What and When to Shred
April 22, 2011 no comments in Elder Law, General Information by

What and When to Shred

Certain documents should be shredded now, such as credit card applications or expired documents, including credit cards, passports, visas, and identification cards.

Tax returns and the supporting documentation i.e. cancelled checks/ receipts; charitable contributions, mortgage interest, retirement plan contributions, and records of tax deductions taken, should be kept at least 7 years.     The IRS has 3 years from your filing date to audit your return for good faith errors and 6 years to challenge a return for under-reported income.

For seniors, retaining these records will be critical if a loved one ever needs long term nursing care.  Medicaid can require five years of canceled checks, bank and brokerage statements, and other financial documents.

If you have made nondeductible IRA contributions, those records should be kept for as long as necessary to establish that you have already paid tax on the money when it comes time to withdraw.

Brokerage statements and other documentation such as purchase or sales slips from your brokerage or mutual fund should be retained until the security is sold so you can establish capital gain or loss.

REVERSE MORTGAGES
April 8, 2011 no comments in Creditor Protection, Elder Law, Estate Planning, General Information by

REVERSE MORTGAGES

On April 4, HUD published Mortgagee Letter 2011-16 which reinstates its original non-recourse policy for the Home Equity Conversion Mortgage (HECM) reverse mortgage program. Now the HECM borrower, as well as the Estate of a deceased borrower, are protected by the non-recourse provision of the program no matter who purchases the home at the time of repayment, even if that homebuyer is a surviving spouse, family member or relative. This is a very important change.     Non-recourse means that the lender cannot seek a deficiency judgment against the borrower, his or her estate, or a family member who might purchase the home from the estate. Mortgagee Letter 2008-38 (issued in 2008) limited this non-recourse feature to arms-length purchases.

$250,000 FDIC Insurance Now Permanent
November 11, 2010 no comments in Estate Planning, General Information by

$250,000 FDIC Insurance Now Permanent

On July 21, 2010, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the current maximum FDIC deposit insurance amount was permanently raised to $250,000.   FDIC insurance covers all deposit accounts at insured banks and savings associations up to the insurance limit.  The FDIC does not insure money invested in stocks, bonds, annuities, and the like, even if purchased from an insured bank or savings association.

A depositor can have more than $250,000 at one insured bank or savings association and still be fully insured provided that the depositor owns accounts in different ownership categories.  Most common account ownership categories include single accounts, joint accounts, revocable trust accounts and certain retirement accounts.

Our estate planning clients may re-register an existing bank account or open a new account at a bank as follows:  “Client’s name, as Trustee of the Client’s Trust dated _________, 20__.”   The level of FDIC insurance coverage depends on the number of beneficiaries.  If five or fewer beneficiaries, each owner’s share of the revocable trust deposit is insured up to $250,000 for each beneficiary (i.e. $250,000 x the number of different beneficiaries), regardless of the actual interest provided to the beneficiaries.  When the trust has six or more beneficiaries, each owner’s share of the revocable trust deposits is insured for the greater of either (1) coverage based on each beneficiary’s actual interest in the revocable trust deposits, with no beneficiary’s interest to be insured for more than $250,000, or (2) $1,250,000.

To illustrate, husband and wife have a joint revocable living trust leaving all assets equally to their three children upon the death of the surviving spouse.  All deposits held in the name of the trust at one FDIC-insured bank would be covered up to $1,500,000  Each owner receives $750,000 of FDIC insurance coverage because they each have three beneficiaries who will receive the trust deposits when both owners have died.

For more information, visit: http://www.fdic.gov/.