Tag: health

Conference Call: Top 10 Estate and Tax Planning Issues in the News

November 8, 2019 - Conference Call

There are several tax and estate planning strategies that high-net-worth individuals (HNWIs) should consider seizing upon before year-end. In a conference call with clients today, John O. McManus, founding principal of McManus & Associates, weighed in on timely topics for the benefit of clients, from legislative initiatives that may impact estate planning to why an estate plan needs to include provisions governing digital assets. Below, listen to the call recording and find an outline of the issues covered during the discussion:  

  1. What legislative initiatives and political current events may impact estate planning? If enacted, the SECURE Act will drastically limit the ability to “stretch” an IRA for your children and the estate and wealth tax proposals of the Democratic candidates for President may suggest urgency in need to complete wealth transfers.
  2. How does being diagnosed with a significant health problem impact the estate plan? It is best to re-focus on the estate plan and have difficult conversations with family members and advisors as soon as reasonably possible because of the elevated concern about incapacity or demise.
  3. Why should major life events cause one to re-visit the estate plan? Marriages or divorces in the family, the acquisition of new assets or investments, starting a business can all serve to undermine the intended estate plan or create a new blind spot or vulnerability. 
  4. What are the important principles in planning for the modern family? Blended families, same-sex marriages, single-parent families, and domestic partnerships each raise their own nuanced considerations, which places a greater emphasis on a specialized and flexible approach. 
  5. Why and how should you discuss your estate plan with your children? Discussing death, taxes, and asset protection may be uncomfortable, but they are essential to best prepare your heirs for their inheritance. 
  6. What is a family mission and how can it be integrated into the estate plan? It is important to consider imparting sentiments in support of the family legacy, such as preserving family traditions and values. 
  7. What are the risks of failing to properly plan for the disposition of a specific asset, such as a home, personal effects, a business, or even frequent flyer miles? Items that may have a sentimental value or disproportionately favor one child over another may cause divisiveness and other complexities. 
  8. What estate planning lessons can be drawn from the Financial Independence, Retire Early (FIRE) movement? Prudently structuring discretionary trusts can avoid an outcome in which children are deprived of their motivation for self-sufficiency and can also provide opportunities for them to amplify their personal wealth. 
  9. Once an estate plan is completed for the time being, what are the practical steps that should be taken to protect the documents and other important information? Current best practices include various options for physical and electronic storage to ensure these materials are readily available during an emergency or tragedy. 
  10. Why must an estate plan include provisions governing digital assets, including web-based accounts and cryptocurrencies? Wills, Trusts, and Powers of Attorney should specifically authorize a fiduciary to have access to all information, including online and digital passwords to ensure efficient access to accounts.

McManus Helps Uncover HSA Pitfalls for MarketWatch Column

June 15, 2017 - Media Clips

Andrea Coombes, Ways & Means columnist for MarketWatch, recently took on the task of identifying “hidden pitfalls” of Health Savings Accounts, which are medical savings accounts with tax advantages. For her piece, she spoke with John O. McManus to learn what happens to HSAs when the accountholder passes away.

The fourth item on Coombes’ list of 10 pitfalls:

Your entire HSA account becomes taxable when you die, unless you’ve named your spouse as beneficiary, in which case your account becomes your spouse’s HSA. So, from an estate planning perspective, what’s the best way to handle these accounts, assuming you’re older and have a hefty sum stashed? “Our view is postpone withdrawals from accounts that are compounding tax-free,” John O. McManus, founder of McManus & Associates, a trusts and estates law firm in New York and New Providence, N.J. Once you’re over 65, you can withdraw money without the 20% penalty faced by those under 65. (If you spend on non-medical costs, you’ll owe income tax, which is the same as withdrawing from a traditional IRA, but health accounts don’t have required minimum distributions, so you have more control.) Letting the money grow is valuable, McManus says, given that people are living into their 90s and nursing-home costs can run “$100,000 just for living quarters and medical assistance.” If you bequeath the account to a non-spouse beneficiary, he or she will owe income tax on its fair market value.

To read Coombes’ full column, “10 hidden pitfalls of health savings accounts,” click here. For guidance on utilization of investment and savings vehicles as part of your estate plan, give McManus & Associates a call at 908-898-0100.

Wall Street Journal Cites Tips on Family Meetings from John McManus

May 16, 2013 - Media Clips

On May 11th, an article by Kelly Greene titled “When It’s Time to Huddle” appeared on page B8 in The Wall Street Journal. Greene’s story discusses an important issue that families across America are facing every day: complicated financial and legal planning for elderly relatives. In the piece, Greene relays key tips for tackling this challenge:

• Be inclusive.

• Don’t delay.

• Hire a professional referee.

• Set an agenda in advance.

• Tap long-distance relatives.

Under “Don’t delay,” Greene captures advice from McManus & Associates Founding Principal John O. McManus that “families should hold meetings before any serious health problems develop.” From the article:

John McManus, an estate-planning lawyer in New Providence, N.J., says there is a “gaping hole” in family planning around preparing for parents’ aging. He considers instituting family meetings among his clients’ families, and in his own, one of his top professional and personal priorities, he says.

“Meetings are critical for getting ideas out on the table,” Mr. McManus says. “There is no one correct answer on how to deal with Mom or Dad’s health issue,” so it’s helpful to have time to think through the choices as a family.

For more tips, check out the full story. And for guidance on how to handle family meetings addressing the health of older loved ones, give McManus & Associates a call at (908) 898-0100.