Do you have a Living Will? To Living Will or to not to Living Will. These questions lend themselves to more questions: How well do you know and trust your loved ones? How confident are you that they understand your core values and views on what your final wishes are? Are you really sure they will respect the passing comment you made regarding your wishes in the case of terminal illness or vegetative state?
LIVNG WILL: WHAT IS IT?
The answer to these questions can often be resolved with a Living Will. A Living Will is a type of Advance Directive that outlines your treatment wishes should you become terminally ill or fall into a persistent vegetative state. While you have the option of making your Living Will oral or written, it is advised to have a written Will in case you are unable to communicate at the time when the Living Will is to be carried out.
A Living Will outlines to a healthcare professional which services you do and do not want. You can state that you do not want cardiopulmonary resuscitation, or a respirator, but you do want feeding tubes to provide you with necessary nutrition and you want to die at home.
Living Wills are often written in vague terms because you are trying to cover a variety of circumstances which are unknown to you when the Will is drafted. You may choose to sign a more restrictive Living Will, known as Do Not Resuscitate which prohibits the use of cardiopulmonary techniques to keep you alive during cardiac arrest.
It should be noted that unless you are wearing a special identifier such as a bracelet, your Living Will does not apply to the efforts of an Emergency Medical Team (EMT). There has been much debate in the news involving contrasting views on Living Wills, and most people will remember the Terri Schiavo case as an excellent example for debating the issue for drafting a Living Will.
PROS OF A LIVING WILL
A Living Will, as with a standard Will, is a legal document and must be signed in the presence of witnesses and notarized. The importance of having a Living Will is that it clarifies to family and healthcare professionals which treatments you do and do not want if you are unable to speak for yourself. Although the wording in a Living Will is often ambiguous to cover a variety of situations, you might be surprised what can happen without one.
In the absence of a Living Will, most states will elect someone close to you (usually a family member) to make decisions for you. This person (sometimes referred to as the surrogate) may have no idea what your personal beliefs are regarding artificial nutrition and resuscitation, but if you are unable to speak for yourself this individual must act in what they feel is your best interest.
In some states the appointment of this surrogate will only occur when you are determined terminally ill, and all treatments leading up to this diagnosis are up to your doctor who has taken an oath to preserve life. If you have a Living Will you can alleviate indecision in your family by outlining the terms of your treatment.
You are never too young to draft a Living Will, and you may want to consider writing one “just in case”. The future can be unpredictable and it is better to be prepared than suffer an accident and leave others to decide your fate, especially if your religious beliefs conflict with artificial medical treatments such as feeding tubes.
CONS TO A LIVING WILL
There are limitations associated with Living Wills. A Living Will is often written in vague terms. What “heroic measures” mean to you may not be the same as what it means to your doctor. Your definition of “heroic measures” might mean that you do not want feeding tubes used to sustain your life if you are unable to eat unassisted, but your doctor may not feel that use of a feeding tube is a “heroic measure”.
In addition, a Living Will is often not enacted until a person is deemed terminally ill. Doctors may disagree on when your condition falls into this category, and you may receive treatment which goes against your values as outlined in your Living Will. It is possible to be as specific as you want when drafting your Living Will, but keep in mind that the more specific wording you use, the greater the chance of excluding a wide range of scenarios in which you would want your Living Will applied.
One of the more common downsides to a Living Will is that it is not readily accessible to your healthcare provider. Some people choose to keep their Living Will locked up in a safety deposit box or another secretive location in their home. If you fail to provide your doctor with a copy of your Living Will, and you become unable to communicate, they will treat you as if you never had a Living Will drafted.
FREE LIVING WILL FORMS: HOW TO DRAFT A LIVING WILL?
Although you may be uncomfortable talking to your doctor about drafting a Living Will, your healthcare provider has access to free living will forms which are state specific. The Internet can also be used as a source for finding free living will forms, although it is wise to check with an attorney when using these forms or if you move to a different state to ensure your Living Will is in accordance with state laws.
A Living Will is revocable and you can change your mind at any time. You can obtain new forms from your doctor or attorney and change your mind whenever you want by completing a new free Living Will form. Once you have completed your Living Will it is important to provide a copy to your doctor, a potential surrogate, and other family members so there is no doubt what your final wishes are if or when a situation arises.
Rocco Beatrice, CPA, MST, MBA, Award-winning trust & estate-planning expert. 71 Commercial Street #150 Boston, MA 02109 toll-free: 888-938-5872
Watch a FREE video & learn how you can reduce your taxes, protect your assets & secure your privacy. Free consultation. No Obligation, no risk, no sales pressure. Read more articles on: Irrevocable Trust, Asset Protection, Estate Planning, Tax Sheltered Annuity
Private Annuity Trust, Ensured Installment Sale (Structured Sale)
Warning: As of October 18, 2006 Private Annuity Trusts (PAT) are no longer recognized by the Internal Revenue Service (IRS) as legal means for managing assets tax deferred! The Private Annuity Trust has been replaced with The Ensured Installment Sale (Structured Sale), which will be discussed later. The following information applies only to Annuity agreements funded prior to October 18, 2006, which are still honored by the IRS.
PRIVATE ANNUITY TRUST: WHAT IS IT?
A Private Annuity Trust works very similar to an Immediate Annuity, although you will use assets other than money to fund this Annuity. Typically, you transfer ownership of a home or land with high value to a Trust. The Trust agrees to make lifetime payments to you, and can then sell the asset you gave them and use the money to fund this Annuity agreement through investments.
You cannot use other retirement funds such as a 401k to fund a Private Annuity Trust, but you can add multiple properties to increase your tax break and Annuity payment. If you decide to add an additional property to your Private Annuity Trust you must create a new Annuity agreement for each property, unless your original agreement contained a provision to include additional assets at a later date.
Each new agreement will have a different deferral period which creates an added benefit to you by providing both immediate and long term income. The withdrawal period from a Private Annuity Trust must begin by age 70 ½, but you can always choose to receive payments sooner.
When structuring a Private Annuity Trust, you must name a Trustee who will be responsible for controlling the investments of your assets in the Private Annuity Trust. The Trustee can be an adult child, relative, close friend, attorney, or anyone else other than you or your spouse. By law, the annuitant is not allowed to have any direct control over the investments of their Annuity. You may make council to the Trustee but cannot have any direct contact with the assets once they are transferred into the Private Annuity Trust, and your transfer of ownership is irrevocable.
ASSETS TRANSFERRED TO A PRIVATE ANNUITY TRUST: HOW TO ESTIMATE THE ANNUITY PAYMENTS
It is fairly easy to estimate what your Annuity payments will be for the asset transferred into a Private Annuity Trust. The IRS uses the following factors to determine your payment:
1. Your life expectancy
2. The selling price of your asset
3. The Annual Federal Mid-Term Rate (AFMR) effective when your property was transferred (this rate will be the rate used for the duration of your Annuity)
4. The length of time you defer payments
Using these factors, the amount you will receive from an Annuity is a fixed amount and you cannot start and stop payments from a Private Annuity Trust. Once the withdrawal period begins you will continue to receive payments for life.
The “life expectancy” factor is only used by the IRS to help determine what your payments should be and is not to be confused with a payment “cutoff” age. If you live beyond what the IRS factored as your life expectancy, you will continue to receive payments for life.
JOINT ANNUITY FOR SPOUSE TO RECEIVE PAYMENTS
Owning a joint annuity will allow your spouse to continue receiving Annuity payments should you die first. After your spouse dies, payments will cease and your beneficiaries will inherit any surplus money remaining in your Private Annuity Trust created by wise investment options of the Trust’s reserve.
By law there must be enough money set aside for the Trust to fulfill its Annuity agreement with you, and there will usually be a reserve account established of five to ten percent of your asset’s value as a safety precaution. Remember, your Annuity payment is fixed and will not increase regardless of profit your assets create via the Private Annuity Trust.
NO ESTATE TAX, INCOME TAX OR GIFT TAX ON PRIVATE ANNUITY TRUST TRANSFER
When you establish a Private Annuity Trust, you are not subject to estate, income, or gift taxes. The transfer of ownership of an asset to a Trust is “paid for” by the Annuity agreement. The IRS cannot accurately determine your life expectancy, and therefore cannot determine how many payments you will actually receive.
Taxes will be deferred on the transfer until you start receiving payments, and a portion of your payment will be taxed based on your income amount. The transfer of ownership involving your assets is not considered a gift to the Trust because they are agreeing to pay you for the asset at a later date, and as a result you will not have to pay a gift tax.
Once your asset is transferred to the Trust, it is removed from your taxable estate. This is of particular benefit to your beneficiaries who will not be held responsible for paying estate taxes when they receive excess funds from your Annuity. After your death it is the responsibility of the Trust to cover any unpaid taxes due on the assets.
ENSURED INSTALLMENT SALE (STRUCTURED SALE)
The Ensured Installment Sale was developed by the Allstate Insurance Company in 2005 and works in a similar manner to the Private Annuity Trust. The major difference between the two is that when you sell your assets, the Annuity is purchased directly from an insurance company. The insurance company, and not the Trustee for a Private Annuity Trust, is responsible for making investment decisions and ensuring you receive Annuity payments for life.
Rocco Beatrice, CPA, MST, MBA, Award-winning trust & estate-planning expert. 71 Commercial Street #150 Boston, MA 02109 toll-free: 888-938-5872
Watch a FREE video & learn how you can reduce your taxes, protect your assets & secure your privacy. Free consultation. No Obligation, no risk, no sales pressure. Read more articles on: Irrevocable Trust, Asset Protection, Estate Planning, Charitable Gift Annuity
Guide To Proper ATM Use
Using an ATM is something that most people do on a regular basis, and most of the time they are perfectly safe. However, there are dangers if you use an ATM, and unless you are careful you could end up having your card or PIN stolen. If you want to remain safe and secure whilst using an ATM, then here are some tips on what to look out for when using an ATM.
Driving to an ATM
If you are driving to an ATM, make sure that you always lock up your car whilst you use the ATM, and that you have your keys to hand so that you can quickly and easily get back into your car afterwards.
Shield your PIN
When using an ATM, make sure that you always shield your PIN as you type it in so that no one can read it. Also, make sure that you look behind you to make sure that no one is trying to read your PIN.
Keep your distance
It can be unnerving to use an ATM if someone is standing very closer behind you when you enter your details. Make sure that the person behind you is keeping their distance, and that when you are waiting in line you do the same for other people. This will help to keep your PIN and account details secure.
Be ready
Before you get to the ATM, have everything ready that you need. Have your card in your hand and any other paperwork that you need. Fumbling around at the ATM for your card will not only delay other people but will make you more vulnerable because you will be distracted.
Never keep your PIN
If you have a new card or find it hard to remember your PIN, do not make the mistake of writing down your PIN and taking it with you to the cash machine. By having your PIN written down near your card you are making it easy for potential thieves. Simply remember your PIN and never give it out or write it down.
Take all receipts
Many people are in a rush when they go to an ATM, and forget to take their receipts. Always take receipts with you as they could contain information that can be used to commit fraud against you. If all of your paperwork is secure then you are much less likely to lose money to fraudsters.
Look out for devices
Fraudsters are now using small cameras or electronic card copying devices to steal information from cash machines. If you see anything suspicious at the ATM at all, then do not use the machine and report the problem immediately.
Check your statements
Even the most careful person can become a victim of theft or fraud. Whether you think your card has been copied or stolen or not, you should check your statements regularly to make sure that all ATM use is in order. If you are careful and take these precautions then you should be safe and secure whilst you are using an ATM.
Peter Kenny is a writer for creditcards-gb.co.uk Please visit us at Credit Cards and Low Interest Rate Credit Card
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