Raleigh Estate Planning and Corporate Law Attorneys

Estates and Trusts

2019 Changes To Retirement Plan Contributions

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There are some key retirement plan contribution changes going into effect in 2019. While major tax reform went into effect last year, there are some changes that hit retirement contributions in 2019. Looking at the changes and making adjustments now can help you make the most of the coming year – most workers can save more across all income levels. Here’s what’s changing for 2019 401k contribution limits and other 2019 retirement contribution changes: 

How much can you put in a 401k in 2019?

You can put up to $19,000 in a 401k in 2019. That’s up from $500 from last year’s limits. While it’s only a slight increase, for workers who want to make the most of their retirement savings or get caught up, every little bit makes a difference. In addition, lower-income earners can claim a savings tax credit in addition to the tax deduction that everyone gets for contributing to a 401k. 

The contribution changes apply not only to 401ks, but also to 403b plans, many 457 plans and the Thrift Savings Plan for government workers. You can adjust your monthly contributions to add another $500, or you can make the additional contribution all at once. If you make the contributions monthly, it’s an extra $42 per month. 

401k catch-up contributions for older workers

While the contribution limits for general 401k contributions have gone up a little bit, the 401k catch-up limit has not changed. Employees 50 and older can contribute more to their 401k than the annual limit. The extra contribution is called a catch-up contribution, but it’s really just a higher limit for older workers. 

The 401k catch-up contribution in 2019 is $6,000. That means if you’re 50 or older, you can contribute an extra $6,000 to your 401k account. If you’re 50 or older, you can contribute a total of $25,000 to your 401k in 2019. 

What is the IRA contribution limit in 2019?

In addition to 401k contribution limit changes in 2019, there are also changes to IRA contribution limits. An IRA allows you to save for retirement on a tax-free or tax-deferred basis. Like the 401k contribution limit, the IRA limit is also inching up by $500 in 2019. It’s the first time the IRA contribution limit has gone up since 2013. There’s also an IRA catch-up contribution limit, but it’s unchanged for 2019 at $1,000. 

Income limits for retirement savings in 2019

In 2019, there are limits to IRA contributions based on your income. There are a few things to keep in mind when you’re sorting out whether the income limits apply to you. First, if you don’t get a 401k through your employer, you can contribute to the IRA no matter how much you earn. Even if you earn over the income limits, the limits don’t apply to you because you can’t do an employer-sponsored plan. Your filing status matters, too, so if you’re filing joint, you may have a higher income limit than if you file single. 

Even if you can’t deduct your IRA contributions from your income, there may be benefits to you of contributing to an IRA. Your contributions may still grow with tax-deferred status. You can still come out ahead even if you can’t take the tax deduction on your 2019 taxes. 

There are a lot of moving parts when it comes to determining whether you qualify to contribute to an IRA and whether you can take a 2019 tax deduction for your contribution. Your income and whether you have an employer-sponsored 401k are both factors that might change your IRA tax deductions. If you have an employer-sponsored 401k, you can still take tax deductions in 2019 for an IRA if you earn $74,000 or less as an individual. The joint income cut-off for IRA contributions in 2019 is $123,000. These limits represent a $1,000 and $2,000 increase from 2018. There are also phase-outs which start at $64,000 for a single and $103,000 for a couple. There are different phase-out limits that apply if one spouse can do a 401k through work and the other spouse can’t. 

2019 Roth IRA contribution income limits

In 2019, the income limits are going up for Roth IRA contributions. A Roth IRA is a special kind of IRA where you pay the taxes up front when you make the deposits. Later on, you get to withdraw your contributions tax-free. The income limit for Roth contributions goes up $2,000 for singles in 2019 and $4,000 for couples. 

The cut-off in 2019 is $203,000 for a married couple and $137,000 for a single. If you make over these amounts, you can’t contribute to a Roth at all. If you make $122,000 as a single or $193,000 as a couple, you can still contribute some to a Roth account, but there are phase-outs that apply to what you can contribute. Because withdraws in retirement aren’t taxed from a Roth account, a Roth can be a fantastic savings vehicle for people who qualify. 

Saver’s credits in 2019

In addition to other 2019 retirement contribution changes, there are also increases to saving tax credits for lower-income workers. Workers who earn $32,000 or less as individuals and $64,000 as married couples get an additional 10-50 percent deduction from their 2019 taxes for 401k and IRA contributions. The limit is up to a $2,000 credit for singles and $4,000 for couples. 

Retirement savers with the lowest incomes are eligible for the biggest tax credit which can be worth as much as $1,000 for individuals and $2,000 for couples. The saver’s credit can be claimed in addition to the tax deferral for saving in a traditional retirement account. The workers with the lowest incomes get to claim the highest percent deductions. 

Retirement contributions and estate planning in 2019

Addressing retirement contributions should be part of your estate planning in 2019. Estate planning is so much more than just drafting a will. As you plan for your future and for your loved ones, maximizing tax benefits and determining optimum retirement contributions is an important consideration. One of our experienced estate planning attorneys can help people of all income levels maximize their retirement benefits and overall estate planning strategy in 2019.

Protecting Your Wishes With A Living Will

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Creating a living will

Planning for the future is important for everyone. While you might know that it’s important to make a last will and testament, you may not know how important it is to also write down your wishes for medical treatment. You can create a legally binding document that details what medical care you want in the event that you’re unable to communicate your wishes. Making a living will keeps you in control. Here’s what you need to know about protecting your wishes with a living will:

How do I go about protecting my wishes with a living will?

A document that details what you want to happen with your medical care if you can’t take care of yourself is called a living will. Even though it’s called a will, it has to do with your wishes while you’re living. A living will writes down what medical care you’re okay with in the event that you’re unable to communicate your wishes. Generally, it states whether you want life-saving efforts like CPR and hydration or you don’t want those efforts. With a living will, you can decide what medical care you want ahead of time so that you can have your wishes followed if you’re incapacitated.

What are the rules for a living will?

Your living will has whatever rules you want to have. Your living will can state that you want all life-saving efforts, or it can state that you don’t want life-saving efforts. It’s up to you what you put in your living will. You can make your living will as general or specific as you’re looking for.

When you make a living will in North Carolina, you need to comply with a few things to make it effective under the law. Once you comply with North Carolina’s rules to make a living will, what you put in it is up to you. A living will makes it clear what you want to happen with your medical care, so you get to decide what you put in it.

How do you make a living will?

To make a living will, you list out how you want your medical care to go in the event that you’re unable to speak for yourself. You can decide what to include, but there are some things that you usually talk about like CPR and life-sustaining hydration. For your living will to be effective, you must follow the rules in your state. When you write out the medical care you want in a way that’s legally effective under the rules of your state, you create a living will.

What do I need to do to make an effective living will in North Carolina?

To make your living will effective in North Carolina, it must be signed by two witnesses and notarized. You must make sure that the witnesses aren’t related to you. The witnesses can’t be people that get paid for your medical care. It’s important to make sure that you talk about all of the important things in your living will in order to make sure that it has the effect that you’re looking for.

Is an advance directive different than a will in North Carolina?

An advance directive in North Carolina is the same as living will. An advance directive is what it sounds like: it writes out your wishes ahead of time. When you’re incapacitated and unable to speak for yourself, it determines what health care you’re going to receive according to your wishes. Essentially, advance directives and living wills are the same in North Carolina.

What is a patient advocate in a living will?

In a living will, you can name someone as your patient advocate. That’s the person who makes choices about your medical care. Their ability to make decisions for you begins when you’re unable to make decisions for yourself. You can tell your patient advocate they can override your written wishes, or you can make them follow the wishes that you set out. You may want to let your patient advocate make a different decision in case unforeseen circumstances arise, or you may want to make sure that everyone honors your wishes no matter what. In any event, the patient advocate is a person who speaks and acts on your behalf according to your wishes when you’re unable to communicate what you want to happen.

Who do I choose for my patient advocate as part of my living will?

For your patient advocate, you can choose anyone who wants the job. Most people choose a family member, but you can choose anyone you like. Be sure to choose someone that you trust, and talk to them about your wishes when you create your living will.

Why do I need a living will?

You need a living will in order to make sure that your wishes are honored when you’re unable to speak for yourself. Without a living will, someone else makes the decisions for you. A living will lets you stay in control and live the life that you choose. A living will can be flexible, and it gives you choices as you and your loved ones face difficult decisions.

What are some things that you should include in a living will?

In a living will you should talk about the major decisions that your loved ones may have to make for your care. Whether or not you want CPR is a good thing to talk about. Whether or not you want life-sustaining hydration and nutrition are also important directives. You should also say whether you want to be an organ donor. Your attorney can help you make sure that you address all of the important points when you make your living will.

Are there any times where a living will isn’t applicable?

There are times where a living will isn’t applicable. A living will applies when a person has health problems that are likely to bring death. In an emergency, a living will doesn’t apply. Emergency medical professionals have to give life-sustaining treatment like CPR. Usually, in cases of illness, a living will applies to carry out your wishes. In some emergency cases, health-care professionals must provide emergency treatment.

Protecting your interests with a living will

A living will works to honor your wishes. By creating a living will, you can have the peace of mind to know that your wishes are going to be honored if you’re unable to advocate for yourself. Our estate planning attorneys can help you create your living will in North Carolina, and can help you make sure that you prepare an effective living will that talks about all of the things that are most important to you.

Proposed Skilled Nursing Facility Changes

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hospital planning
Moving a loved one into a skilled nursing facility (SNF) can be a stressful event for the patient and family. Many feel rushed and make rash decisions about placement because of the lack of information and perceived options. It is not always possible to plan for these life changes – sometimes, the need sneaks up without warning. This crisis can be further complicated with the lack of guidance excused as “patient choice”.

Using an estate planning attorney can help decipher the resident’s rights and hospital’s responsibilities. Traditionally, hospitals have cited legal restrictions as the force behind the lack of information and simply provided a list of nearby facilities for the struggling family.

Our professionals can help you sort through the language and stand firm on the resident rights for long-term treatment services. When moving a loved one from a hospital to a skilled nursing facility, you should expect more than a geographically relevant list.

The Centers for Medicare & Medicaid Services have proposed changes starting with a developed discharge plan within the first 24 hours of admittance. This plan needs to be comprehensive with the medications listed and the completed plan in place. The simple proposed changes keep a transparent communication line open from one facility to another. Patients and family members have the opportunity to review the plan in a less stressful timeframe over the course of the stay rather than making an immediate decision.

Traditionally, the decision to transfer to a patient to a skilled nursing facilities has happened in a short period – many times, even the day before. The patient and family did not have time to process the new plan let alone make a good decision, which creates a feeling of hopelessness through the lack of guidance and time. The structured collaborative plan prepares all involved for the possibility and transition.

With the openness of these revisions, the patient can be referred to a high-quality nursing home. Historically, the industry is known for overworked and stressed out nurses and staff. We can guide you through facility ratings – our team knows that the gamut of paperwork, finding quality measures, staffing history, and health inspections can be daunting.

Long-term nursing facilities usually mark the end of living in one’s home, and your loved one deserves the dignity of a voice. The increased sharing of patient information will help reduce the stress level and improve the difficult transition. Because patients, family, and health care providers work together to develop the plan, the patient and family are able to take more ownership in the decision making process.

These improved decisions improve a previously negative experience. With options, patients and their families can self-advocate and weigh the importance of a quality home that is further away versus one with a location closer to the family home.

How A “Gray Divorce” Can Affect Your Retirement Plans

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gray divorce

More and more married Baby Boomers are opting to face their golden years not as part of a couple but as a single individual.

With their children grown and raising children of their own, many older adults can’t see spending another 20 or 30 years with a spouse they no longer love or even have anything in common with.

What Is A “Gray Divorce”?

Although retirement is often thought of as the season of life when couples get to spend time together doing what they have planned for years, for some this period doesn’t live up to what they expected and a parting of the ways occurs. Dubbed “gray divorce”, the number of couples who are aged 50 and older who are splitting up has nearly doubled since the 1990s, according to a recent report by the Pew Research Center. The divorce rate has nearly tripled for those aged 65 and older over the same time period.

The dissolution of these long-term marriages not only impacts the family, but the retirement savings of the couple involved, who must now make changes to their financial plans.

Couples who opt for a gray divorce may find themselves suddenly having to live off half of the income they are accustomed to. That can leave them feeling hurt and resentful, especially since those going through a gray divorce often have less working years in which to rebuild their financial assets. Money that has been accumulated over a lifetime of saving in 401(k) plans, IRAs, or 457 or 403(b) accounts is often split between the couple during the divorce proceedings. The greatest fear of many retirees is that they will run out of money before they run out of life, and divorcing later in life will certainly impact how you spend your retirement years.

Update Your Beneficiary Designations

A gray divorce also impacts the couple’s estate planning. Often, married couples who have been together for a long time have executed estate planning documents such as wills, trusts, powers of attorney and advanced medical directives naming each other as the executors of the document. During a divorce, the couple can overlook changing the beneficiary and executors of these documents, which can lead to future legal problems.

It is vitally important for a divorcing couple, no matter their age, to update their estate planning documents in order to guarantee that their final wishes are adhered to and carried out. An estate planning attorney can craft these documents with language that allows your plan to stay as it is in the event of a divorce should you neglect to change your beneficiary and executor. The documents can also be drawn up in a way that spells out what happens in the event of a divorce.

As with most situations in estate planning, an ounce of prevention is worth a pound of cure – contact our team today for a consultation about your specific situation and to see how you can protect yourself and your future.

What You Need To Know About Wills And Trusts In North Carolina

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Many people don’t realize that almost everyone has an estate, regardless of their wealth. Your estate is considered to be everything that you own such as vehicles, furniture, bank accounts and even your clothing and personal items.

Although it’s unpleasant to imagine something happening to us, it is a fact of life that accidents happen and we grow older. What will happen to all of your property and personal possessions in the event something happens to you? Planning the final disposition of your estate is wise whether you are young or old and especially if there are children involved. Estate planning is not difficult and an estate planning lawyer can advise you in all manner of wills and trusts and can make drawing up a will or trust simple and easy.

Estate planning begins when you draw out a will or a living trust. If you do not have one when you die, the laws of your state will govern the distribution of your estate, even if you always wanted your 100-year-old porcelain doll, given to you by your grandmother, to go to your daughter. That classic car you have put a lot of love and care into was always intended to be your son’s car one day, but will it?

In North Carolina, any person 18-years of age and older can make a will or living trust, and that will or trust will be recognized by law.

Whatever debts you owe upon your death, whether it is a car loan or fees owed for personal services, this will come from the assets of your estate. Once your debt has been satisfied, if you do not have a will or trust explicitly stating your final wishes, the courts will determine who in your family gets what. Most states split assets between a surviving spouse and any children.

You may have wanted to split your assets between your two children and a trusted lifelong friend, but without your wishes being known, the court usually distributes assets according to the laws of your state. If you have jointly-owned assets, these may not be controlled by your will. For instance, if you have a 401(k) or life insurance policy where a beneficiary has been named, it may transfer directly to your beneficiary without being heard in probate.

Many families and professionals of all types prefer Revocable Living Trusts as this type of trust prevents the court from controlling your assets in the event you are incapacitated by having an appointed trustee act on your behalf according to your wishes. These trusts can be changed at any time, and the person you appoint as trustee can also change.

With a will, your assets are distributed how you have stated you wish them to be and once the wishes of the will have been performed, that is the end of it. With a living trust. if you have substantial wealth or inheritance, your children can inherit your wealth at whichever age you wish them to inherit, in the meantime, your assets are protected by the trusted person you have appointed. Perhaps you have a loved one who is horrible at managing money and you don’t feel comfortable giving them a lump sum of your estate but you want to provide for them. You can appoint any person or entity as your trustee, and that person can distribute payments to them over a period of time or for the remainder of their lives.

There are many different wills and trusts and aspects to them that are designated by you so that you can provide for your family and loved ones or even show your love and thoughtfulness. A few of the things that estate planning can involve besides providing wealth include:

  • Instructions for your care in the event you become unable to manage your affairs
  • Name guardians and trustees for minor children
  • Provide for the transfer of your business
  • Minimize the burden of taxes, court fees or other legal fees on your loved ones
  • Provide for pets
  • Provide for disabled minors so that there is no disruption in their government benefits
  • Name the locations of important papers, passwords and other information of this nature

It is always wise to consult with an estate planning lawyer who has the expertise to advise you in the matter of wills and living trusts. One of our experienced estate planning attorneys can help you navigate the laws of North Carolina and are able to advise you of all the pros and cons of each type of will or trust so that you can find the best option for you and your family.

Do You Need An Estate Plan?

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Do you need an Estate Plan? The short answer is “Yes, if you are age 18 or older, you need an estate plan.” It doesn’t matter if you are old or young, if you have built up considerable wealth or if you are just entering adulthood —you need a written plan to keep you in control and to protect yourself and those you love.

  • It is important that every adult, regardless of age or wealth, have both a lifetime plan and an after-death estate plan.
  • Planning for incapacity will keep you in control and let your trusted loved ones care for you without court interference – and without the loss of control and expense of a guardianship or conservatorship proceeding.
  • Every adult needs up-to-date health care directives.
  • It is important to leave written instructions to make sure you are the one who selects who’s in charge of when and how your assets will be distributed.

What is an Estate Plan?

Your estate is comprised of the assets you own, including your car, home, bank accounts, investments, furniture and personal belongings. No matter how large or how small your estate, you can’t take it with you when you die, and you probably want certain people to have certain things you own.

To make sure that happens, you need to provide written instructions stating who you want to receive your assets and belongings, what you want them to receive, and when they are to receive it—that is the essence of an estate plan. If you have young children, you will need to name someone to raise them in your place and to manage their inheritance.

Without an estate plan, state law will govern who your assets will go to and how your estate is handled, and this can often lead to a surprising and undesirable result for your loved ones.
A properly prepared estate plan also will have instructions for your care (and the management of your assets) if you become incapacitated, even for a short time, due to illness or injury. Without the proper documents in place, your family will have to ask the court for permission to use your assets to take care of you and to oversee your care. That process is out of your control and it takes time and costs money, making an already difficult situation even more difficult for your family.

Having a plan in place is very important even for families of modest means because 1) they can least afford to pay unnecessary court costs and legal fees and 2) state laws, which take over in the absence of planning, often distribute assets in an undesirable way.

It is important to have the counseling and assistance of an experienced estate planning attorney who knows the laws in your state and has the expertise to guide you in making difficult decisions such as who will raise your children and who will look after your care at incapacity. Contact the attorneys at Wilson Ratledge to discuss any estate planning questions that you may have.