The IRS recently announced the 2021 federal estate tax rate limits, which are $11.7 million for individuals and $23.4 million for married couples. This is increased from $11.58 million and $23.16 million respectively in 2020.
Under this new guidance, wealthy Americans will be able to leave up to $23.4 million to their heirs without being subject to federal estate tax rates, which top out at 40%. The federal gift tax exemption will remain at $15,000 annually, meaning gifts made up to that amount will not be taxed by the federal government.
Will There Be Changes Under the Biden Administration?
While estate tax rates have stayed fairly consistent over the past few years, estate planning attorneys across the country are being asked by their clients how the presidential election may affect future federal tax limits.
During the campaign season, the Biden/Harris team proposed reducing the estate tax exemption to $3.5 million for estates and $1 million for gifts. The ability to pass such measures, however, appears to be a long shot, considering the current makeup of the Senate. The Democratic party now holds a very slim majority and lowering the estate tax threshold is not particularly popular on the Republican side. It would be difficult, if not impossible, at this point to get a majority of Senators to agree to such legislation.
Complicating matters further is the coronavirus pandemic. It’s anticipated that Congress will spend the next few months working on financial relief packages for individuals and businesses impacted by COVID-19. As such, major overhauls to the estate tax are anticipated to take a backseat in 20201 in favor of more pressing matters.
However, when it comes to the whims of Congress, estate planning lawyers “never say never.” That’s why we are continuing to keep a watchful eye on Congress should support begin to emerge for estate tax reform in 2021 and beyond. For real-time updates, be sure to follow our estate planning blog, or subscribe to our newsletter. Finally, if you have specific questions about the federal estate tax or how to avoid “death taxes” on your estate when you are gone, please contact us at (615) 846–6201 to schedule an appointment.
Estate planning offers legal protection for families and individuals through all of life’s transitions. Wills, trusts, powers of attorney, and healthcare directives are the most common estate planning tools we use to help clients protect their wishes, safeguard their assets, and ensure provision and care for their loved ones following their death or incapacity.
What Does My Estate Plan Have to Do with My Divorce?
Your estate plan can be impacted greatly if it’s not updated after a divorce. For example, if your ex-spouse has been named as a beneficiary on your life insurance policy, they may still be able to collect the proceeds if you suddenly pass away without updating your documents. Your ex-spouse may also retain authority roles as your power of attorney or healthcare agent unless you revoke such power. As a single adult, you must also name the people you now want to act on your behalf or manage your affairs in an emergency once the role is no longer filled by your ex-spouse.
Won’t a Divorce Automatically Stop My Ex-Spouse from Having Such Power?
While this topic has been introduced in the Tennessee General Assembly, no laws have been passed yet to prevent it. Although a divorce decree will remove your ex-spouse from inheriting under your will or serving as Personal Representative/Executor, it does not remove them from serving under other documents like your power of attorney or healthcare directive. And it doesn’t remove them from inheriting anything they receive as a beneficiary outside of probate such as life insurance, bank accounts, retirement accounts, or trust funds. That is why you must update your documents after a divorce to be certain that your ex no longer has this power.
What Documents Should I Update?
During your divorce, the law prevents you from making many changes to your financial situation or medical insurance. Once the decree is signed though, you will want to review and update the following documents:
- Power of Attorney
- Healthcare Directive
- Beneficiary Designations on Life Insurance Policies
- Beneficiary Designations on Retirement Plans
- Beneficiaries on any accounts with Payable on Death Provisions
Tennessee has laws that dictate when documents can be updated or altered as you move through the divorce proceedings. It’s important to speak with an experienced Davidson County will and trust lawyer before you make any changes, as any unapproved transfers or changes to your documents could be considered fraudulent. If you need help getting started, we are here to assist you with your planning. Contact our office by calling (615) 846–6201 or click here to schedule an appointment.
In part one of this series , we provided a general overview of the ways that seniors are preyed upon by scammers and those who would seek to gain control of the elderly person’s finances for their own benefit. However, in order to stop fraud, it’s important to know the specifics. The following post will walk you through questions to ask your loved one in order to discover if fraud or exploitation is occurring.
1. Ask older loved ones about suspicious phone calls.
Swindlers often cold-call seniors to get personal information. Here are a few common scams your loved ones should be aware of:
- Sweepstakes scams: An elder receives a call that they have “won” a sweepstakes and must provide bank account information for a direct deposit or send a check to pay taxes on their “winnings.”
- Grandchild scams: An elder receives a call saying something like, “Grandma, it’s me… please don’t tell my parents.” The caller then claims they are out of town and need to be wired money to make bail, pay for travel expenses, etc.
- Voter registration scams: Someone calls about registering the elder to vote, asking for their address, birthday, Social Security Number, or a password or PIN code.
- Healthcare scams: An elder may get a call offering discounts on health insurance or a call from someone claiming they work for the government and need a Medicare number or Social Security Number to issue a new card.
Encourage your loved ones to never give out personal information to strangers (or even people claiming to be friends or loved ones) over the phone.
2. Talk with them about their finances.
It’s a wise idea to meet with the senior’s financial advisors, accountants, attorneys, and other advisors so those people know you and can potentially contact you if they believe something suspicious is going on.
But be careful: becoming too involved in a loved one’s financial life may create the appearance of undue influence. It is important to help keep loved ones from being exploited, but you also don’t want to find yourself the subject of a lawsuit claiming that you are the one committing financial exploitation.
3. Keep abreast of changes to their estate plan.
Check to see if a non-relative has been included as a representative or beneficiary, or if any relatives have been cut out of the estate plan since the last time you reviewed it. There may be perfectly reasonable explanations for these changes. However, they could also indicate that someone is trying to manipulate your loved one.
4. Ask about caretakers or sudden “best friends.”
Has a non-relative, long-time friend, or neighbor started spending a lot of time with your loved one? Do they suddenly have a new “best friend” or someone who takes care of them at home?
These developments could be a sign that someone is trying to work their way into an elder’s life in order to exploit them, financially or otherwise. It might seem innocent enough (and even generous!) for a new friend to “hang out” with an elder and to take care of their medical and financial needs. But because of the potential for abuse, we recommend hiring caregivers through a reputable agency. Obtain reviews and make sure they have the proper licensure and training.
Making new friends and meeting people is fine, and even encouraged to minimize isolation that many older adults face. However, it’s important to communicate with your loved one to make sure they are not giving un-vetted people undue control over their life.
5. Investigate sudden missing items or extravagant new purchases.
It is important to talk with your elderly loved ones about finances so that, if they consent, you can regularly review their statements and stay up to date on other financial developments.
Have there been any large cash transfers? Vehicles suddenly missing or new ones showing up unexpectedly? Heirloom household items that have disappeared? Fancy or expensive new gadgets showing up that are out of character for your loved one? This can indicate that someone has convinced the elder to give them assets or that they have duped the elder into buying something they don’t need.
A strong estate plan can help prevent elder fraud.
Keep an open dialogue with neighbors, friends, and advisors connected to older relatives or other loved ones. The more people you have looking out for your loved one, the less likely it is that someone can take advantage of them without your knowing.
Finally, you should encourage your loved one to meet privately with an experienced Nashville elder law attorney to determine what they can do to protect themselves from bad actors. Having a legal document in place naming a trusted advisor, or agent, to help handle finances can help protect them. An experienced elder law attorney also knows what questions to ask and the warning signs to look for in suspected elder exploitation. If you would like help creating these documents or navigating your next steps, please call our Nashville elder law firm at (615) 846–6201 or schedule a consultation .
Elder fraud and financial exploitation have become an epidemic. As a Nashville elder law attorney, I am seeing more than ever before, con artists and family members alike taking advantage of their elderly relatives, friends, or neighbors.
The best defense against elder fraud is having caring friends or family with the senior’s best interests at heart. But those friends and family can only prevent elder fraud if they know how to spot it.
What is Elder Fraud?
Broadly defined, elder fraud is when someone improperly (or illegally) uses or steals a vulnerable senior’s assets. Every state has a different definition of “elder fraud” or “financial exploitation” of an elderly person. In Tennessee, financial exploitation of elders or other vulnerable adults can be prosecuted under criminal and civil laws.
A recent survey identified the three most common scenarios of financial exploitation:
- Theft or diversion of funds or property by family members.
- Diversion of funds or property by caregivers.
- Financial scams perpetrated by strangers.
In the two most common scenarios of financial exploitation, the fraud is committed by someone who knows the elderly person. Most people think of fraud as emails from Nigerian princes or telephone scams. In reality, however, financial exploitation is commonly perpetrated by family and friends.
Another common misconception is that adults are only susceptible to elder fraud if they have a condition that can affect memory and reasoning skills. According to the Alzheimer’s Association, 15-20% of elders 65 and older have some type of mild cognitive impairment. But it is important to recognize that any senior can fall victim to elder fraud.
How Can I Prevent Financial Exploitation?
There are a number of things you can do to help prevent your loved one from being taken advantage of. Start by educating them on the tell-tale signs of elder fraud and how to protect themselves.
In part two of this series, our attorney will dive into the most common ways that seniors are targeted and how to help your loved ones from falling victim to such scams or acts of manipulation. Most importantly, if you are concerned that a loved one is being targeted by a financial predator or a loved one with bad intentions, you should seek help as soon as possible. That may mean calling the police, your loved one’s attorney, and in some cases, even the FBI.
Our attorney, April, is here to guide you through any of the issues that you may be facing. To schedule an appointment, simply call our law firm at (615) 846–6201 or click here and we’ll call you at a time that works best for you.