Social Security Survivor Benefits in a Divorce Situation

In a divorce situation where one spouse dies, there could potentially be 2 survivor benefits paid. It is important to designate who you want to manage the money for your minor children if you do not want your ex-spouse to be that person.

Where there are  children under the age of 16, the surviving spouse AND the kids would be entitled to separate benefits. If the spouse is under age 60 then he/she would be entitled to 75% and the kids would be entitled to 75%. A “Representative Payee” could be appointed for the kids that  could be a different person than the surviving spouse.  The Representative Payee can receive and manage the funds being paid to kids. The potential Representative Payee would have to apply to social security to become appointed as the official representative payee and they would also have to go to a face to face meeting at the local social security office to become approved. The surviving spouse could also apply. The ultimate decision rests with the social security office. Therefore, I would want a clear provision stating my client’s intent if this situation were to occur somewhere in his will or trust

Inherited IRA Required Minimum Distribution Rules

Given that most people these days own an IRA, I often receive questions about these IRAs work after the death of the IRA owner. Here are some basic rules:


1)  If you inherit an IRA from your spouse then you have a lot more options then if you didn't. In most instances (under current tax laws) if you inherit an IRA from your spouse, you will probably roll your spouse's IRA into your IRA (however this may not always be the best route, it just depends on your cirumstances).

2)  If you inherit an IRA from anyone other than your spouse then you normally need to start taking money out of that IRA by December 31 of the year after the person died. Think about it. IRAs grow tax deferred while you are alive and taxes aren't paid until you take the money out. If someone dies with money in their IRA the IRS stands to lose all the taxes they could have collected if the participant took the money out before they died.  The term "Required Minimum Distributions" ("RMD") is the IRS's way of telling you that they want to tax you annually on at least a minimum amount of the IRA you have inherited (i.e. by December 31 of the year after death).

 How much you need to take out depends on different factors (was the beneficiary designation form correctly filled out at the financial company? even if they didn't fill it out properly you still have options after the death of the participant to try to fix it. If the forms were correctly completed then you probably can take distributions based on your life expectancy which is usually the best option. The worst case scenario is that you have to take it all out in 5 years which could cause a serious tax hit).

3)  Whose tax rate do you use? Whoever receives the distribution puts it on their tax returns therefore you use their rate.

4)  If you have inherited multiple IRAs from the same decedent, you may choose to combine life-expectancy distributions for those inherited IRAs and withdraw the total from one inherited IRA.However, you may not combine your RMD's from your own traditional IRA with your inherited IRA. Basically, if you have 3 traditional IRAs where you are the owner and 3 IRAs that you inherited you can take all of your own IRA required minimum distributions from 1 of your own IRA accounts (if you so choose) and all of your Inherited IRA distributions from 1 of the IRA inherited accounts (again if you so choose). You can't take your distributions from just 1 of the 6 accounts. Clear as mud? Don't you love the IRS?

All of the above is not intended to be used as tax advice or constitute legal advice. The above are a description of general issues I see in my practice and is for informational purposes only. Consult your lawyer or CPA if you want specific advice regarding your situation.

Another day another chance to get it right.

I am writing this blog at 8:18 am in the morning and already today was a good day. Like most other days, driving into work I thought about how this day would look like. Unlike most days, I received a jolt of energy in my heart and no. . .it wasn't from my morning coffee. It came about when I started thinking about the interview I was going to have with one of my clients and how much that interview means to me. I am doing a video legacy project for one of my clients. The purpose of the interview is to record his views on topics ranging from where his grandparents grew up to his favorite movie. I want to ask him what he admires most about his kids and major turning points in his life. I am not sure if my client knows it or not but this interview today is why I started my practice. You see, I never had the opportunity to interview my dad about these topics and there are no audio or video recordings that focused on his reflections about his life. My dad was a humble man but humility has nothing to do with it. I wish someone would have taken the time to interview my dad so I could understand his views now that I am a 40 year old man. I want to give this opportunity to as many people as I can because this gift is priceless. It is why I do what I do. Yes, today is a good day…

Why Does the Name of a Trust Matter?

As an estate planning attorney, a large percentage of my practice is devoted to creating trusts for my clients.  Normally, the name of the trust would be the name of the client along with the date of the trust.  For example, my trust reads the "Robert A. Feisee Living  Trust dated January 1, 2002".  I think that we are missing an opportunity in passing on more than just a sterile legal document when we pick the name of our trust.

A colleague of mine, John Warnick, Esq., is a visionary in this field who has really made me rethink the way I work with my clients. I went to a conference a few months ago where he explained that naming your trust is a great way to pass on your legacy and values to your beneficiaries.  It makes perfect sense and I am hoping to implement this technique with my clients this year and hopefully long into the future.

Here is my first draft of my new trust name:

"The Feisee Possibility Trust -   This name has been chosen to reflect our family’s heritage and belief that anything is possible if you put your mind to it and you believe in yourself.  My mother and father escaped from Iran and came to this country not knowing the language and less than a $100 to their name. They built successful medical practices through hard work and a belief in themselves.  I was a young boy who had a dream to play in the lacrosse national championship game and I did it.  I had a clear vision of my dream, I practiced every day and I believed in myself. Now I own my own law practice using the same tools that were taught to me by my parents.  Don’t ever lose your faith in yourself or your family.  You can do whatever you put your mind to. The possibilities are endless. . ."

 I think the new name of my trust has a better ring to it than my previous name. I am going to go with that one for now until I think of something better.  How about your trust? Do you like the name?  Do you think you can put more of YOU into that name?

Capturing and Transferring What Matters Most?

A few days ago was the 1 year anniversary of my father's death.  He battled alzehimer's for over 10 years.  This weekend I reflected on some of my most favorite memories of my father and I realized all those memories are in my head.  They are not written down or recorded anywhere.  My father had a great smile that could light up a room and he told great stories about how he struggled growing up.  How I wish I could hear his voice just one more time.  The problem is, no ever thought about recording his stories. There was always an excuse (we'll do it later, we don't have a recorder, i'm busy).  Those excuses pale in comparison to the powerful impact those stories would have had on me a few days ago.

By chance, I had a conversation with my mother a few months ago where she revealed another of my dad's stories that he never told me. He was a young doctor working in a small "village" hospital.  He was in charge of one of the sick wards and he was tired of the lack of funding for the patients' care.  The rooms were unsanitary and there was an inadequate inventory of medicine. He became very frustrated with the Hospital Administration's rejection of his repeated requests for better conditions for his patients.

My mom then looked at me in the eye, and with a smile she said. . . "Do you know what your father did for his patients? He went on a Hunger Strike! That's right, he refused to eat until his patients were given adequate care.  He almost lost his job, his medical license, basically his whole career over this incident. He was willing to sacrifice it all for what he believed in.  Well, it caused such a commotion at the hospital that the higher ups looked at the situation more closely and they upgraded the beds as well as the medicine."

Then my mom looked at me again. . . ."Bobby, what are you willing to do for your clients? Will you be as dedicated as your father?"

I had tears in my eyes when my mom told me that story. It gave me more strength and energy than any amount of money or material assets could give me. This lesson is priceless and it is what matters most about my dad...his integrity.

The scary thing is that I may have never heard that story unless my mom and I happen to stumble on that conversation.  These stories are priceless on the one hand, but on the other hand, they are fragile and fleeting if not preserved.  One of my missions for the people I work with is to capture, preserve and protect their stories as a guardian.  These stories are what life is about. They are real and it is what brings families together during difficult times.

Don't wait until it is too late. Capture your stories now while you can remember and enjoy them!