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Have Unused 529 College Savings? Roll Them Into a Roth in 2024

In December 2022, Congress passed the SECURE 2.0 Act, bringing significant changes to the world of retirement savings and student loans. Two key parts of the Secure 2.0 Act are set to take effect in 2024, and they could substantially impact your family’s financial future.

In this blog, we explain how the new law affects your unused 529 college savings account and what that means for your future savings.

You Can Now Roll 529 College Savings Into A Roth IRA

A 529 college fund is a tax-advantaged savings account that is designed to help families save for their children’s college education. With the SECURE 2.0 Act, Congress expanded the ways you can use these accounts by introducing a new rollover option, which is especially helpful if the beneficiary has money left over after their education is complete.

Starting in 2024, a 529 plan account beneficiary will have the opportunity to roll over up to $35,000 from your 529 college savings plans into a Roth IRA – and the best part is it’s tax and penalty-free.

But there are some rules you’ll need to follow to take advantage of this retirement fund boost:

01 | Annual and Lifetime Contribution Limits

Any rollover from your 529 account is subject to annual Roth IRA contribution limits. For example, if in 2024 the Roth IRA contribution limit remains the same as in 2023 ($6,500 for individuals under 50), you can roll over an amount up to this limit, including yearly contributions withheld from your income. There is also a rollover contribution limit of $35,000 over your lifetime.

02 | The 15-Year Rule

To qualify for tax and penalty-free rollovers, the 529 plan must have been open for at least 15 years. This 15-year clock starts ticking from the day the 529 plan was initially opened, usually by a parent or grandparent. It’s crucial to remember that changing the beneficiary of the 529 plan at any point may potentially restart this 15-year clock.

03 | 5-Year Rollover Blackout

Funds that were contributed to your 529 plan within five years of the rollover date cannot be rolled over. Only contributions made outside of this five-year window are eligible. But you can continue to rollover funds as time goes on and the 5-year window moves farther away from the most recent contributions.

Here’s an example of how these rules work in real life: Imagine your mother opened a 529 account for you in 2001. She contributed money to the account every year for 20 years, through 2020. When you graduated college in 2022, there were some funds left in the 529 account. You want to roll over these funds into a Roth IRA on January 1, 2024.

In this scenario, the account has been open for at least 15 years, so you can roll over funds into a Roth IRA, up to the annual contribution limit of $6,500 per year. But the funds you roll over from the 529 cannot include funds your mother contributed in the 5 years before your rollover date of January 1, 2024. That means you can’t roll over funds contributed to the 529 account between January 1, 2019 and January 1, 2024.

Let’s look at another example: Your father opened a 529 college savings account for you in 1998 and contributed money to it every year until your graduation from trade school in 2015. Since graduation, you and your employer have contributed a total of $3,000 to your retirement account this year. There is $10,000 left in the account and you want to roll over the funds into a Roth IRA on January 1, 2024.

In this example, the account has been open for more than 15 years and all of the funds in the account were contributed to it more than five years ago, so all of the funds are eligible for a rollover. However, you can only contribute up to $6,500 to your retirement accounts annually. Because of this, you can only roll over a maximum of $3,500 from your 529 account into your Roth IRA this year if you or your employer don’t make any more contributions to your retirement this year. After the rollover, you’ll have $6,500 in your 529 account at the end of 2024.

In 2025, you’ll be able to roll over the remaining $6,500 from your 529 into your Roth IRA (if you make no other contributions from your income that year).

An Extra Bonus For Grandparent-Owned Accounts

In order to be considered for federal financial aid, students must disclose their personal and family financial information on the Free Application for Federal Student Aid (FASFA). Funds in a 529 account created by a parent are counted as a financial asset of the student on the FAFSA application.

But funds in a 529 account owned by a grandparent or other third party have never been counted as an asset for FAFSA purposes. Only money withdrawn from the account is considered untaxed income of the student which FAFSA considers in its application review.

The big news is that with the new Secure 2.0 Act, any withdrawals from a grandparent-owned 529 for education expenses will no longer be considered untaxed income of the student, which means the funds will not hurt the student’s eligibility for federal aid.

Planning for What’s Really Important

While you take steps to secure your financial future, don’t forget to protect everything you’ve worked so hard to build. Your retirement savings is likely the largest asset you own, and making sure it’s managed and passed on in the best way possible is essential for your well-being and the future well-being of those you love.

To make sure there’s a plan for your future, give our office a call. We’d be honored to learn more about your goals for your family and share with you the unique process we use to ensure everything you own and everyone you love is cared for, no matter what.

Schedule a free 15-minute discovery call to get started.

This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.

December 4, 2023
Five Dos and Don’ts of Social Security for Young Adults with Special Needs and Their Families

Young adults with special needs often become eligible for Social Security benefits at age 18 and most parents anticipate this birthday with some trepidation. Among the educational, social, and legal changes that accompany this transition to adulthood are new or different eligibility requirements for Social Security benefits and Medi-Cal programs.

If you feel confused about those programs, you’re in great company. The U.S. Supreme Court declared the Social Security regulations “almost unintelligible to the uninitiated” and described the Medi-Cal statute as “an aggravated assault on the English language, resistant to attempts to understand it.”

Fortunately, applying for Social Security doesn’t require you to dig so deeply into those regulations as the Supreme Court, and after reading the Dos and Don’ts that follow, you’ll no longer be among the uninitiated.

1 | DO Learn Which Type of Benefits Your Young Adult is Eligible to Receive

At age 18, a parent’s income is no longer deemed to the child, as the parent no longer has a legal obligation of support. Most young adults with disabilities then become eligible for Supplemental Security Income (“SSI”), which is currently up to $914 per month. This is accompanied by automatic Medi-Cal eligibility in most states, although in others, one must complete a separate application.

If a young adult has a deceased, retired, or disabled parent, however, he or she may instead receive Disabled Adult Child (“DAC”) benefits, according to that parent’s earning history – 50% of a disabled or retired parent’s benefit or 75% of a deceased parent’s benefit.

2 | DON’T Panic About the Application Process and DON’T Worry About Applying Early.

The Social Security application requests basic information about your child’s disability diagnosis, income, and assets. You won’t likely need the help of an attorney at this stage. Parents may be asked about their own income, assets, and expenses, but don’t be alarmed! After age 18, your income and assets won’t affect your child’s eligibility.

Parents often know that benefits begin at 18 and apply early to ensure benefits begin as soon as possible. This is a tempting but inefficient choice.

Instead, on the 18^th birthday, request an appointment to apply for benefits using this link. As long as you submit the information requested and keep the required phone appointment (this is crucial!), benefits will be backdated to the day you submitted the original information – again, the 18^th birthday.

Instead of applying early, gather the needed information listed on this page to demonstrate why your child needs SSI. The process from application to approval will take 3-6 months, after which your child will receive a lump sum for benefits dating back to the date of your original request for an application appointment.

3 | DO Plan to Charge Your Child for His or Her Fair Share of Living Expenses

SSI and Medi-Cal are “means-tested” benefits. Eligibility is granted only to those lacking the “means” to provide basic living expenses and medical care for themselves. Gifts of these basic living expenses – i.e., allowing your adult child to live with you without paying his or her “fair share” of living expenses – will result in a one-third reduction in SSI benefits.

Your family’s total expenses for rent or mortgage, utilities, and groceries will be divided by the number of adults in the household to determine the disabled adult’s “fair share.” You, as the “representative payee” managing your adult child’s Social Security benefits, will need to transfer this amount monthly from your child’s account to pay these expenses.

Assisting with rent expenses for independent living will need to be done in conjunction with an ABLE account and/or special needs trust (“SNT”) to avoid this reduction. We highly advise seeking legal advice in this situation, and we would be glad to assist in making sure you have the right financial accounts set up for your child.

4 | DON’T Be Surprised by Some Bumps in the Road

Sometimes you’ll receive scary letters in the mail or the tone of a Social Security agent while on the phone may seem to imply wrongdoing on your part. Don’t worry.

It’s common for bumps in the road to occur with the report of income and assets submitted monthly to Social Security. Any savings must be done through an ABLE account and should be funded by gifts along with the individual’s earnings – never from SSI. Again, SSI is only for “basic living expenses” as defined above, along with small purchases such as clothing and personal items.

Even when handled appropriately through an ABLE account or SNT, properly answering questions as requested on government forms may trigger an inquiry. You can usually handle these matters yourself, but our office can assist you as needed to clear up any questions and direct agents to the regulations governing your activities and financial choices.

5 | DO Ensure Your Estate Plan Is Updated to Maintain Your Child’s Benefit Eligibility

Without proper planning, receiving an inheritance from well-meaning loved ones will disrupt or even disqualify an individual from receiving Social Security and Medicaid benefits. Because of this, it’s essential to have the right planning tools set up for your adult child with special needs well in advance.

But failing to create a comprehensive estate plan won’t just affect the future of your child with special needs. Without proper planning, any other children or relatives you wish to benefit at your death could find themselves with no inheritance at all, even after your child with special needs passes away.

Thankfully, a key focus of our practice is on preserving family assets while maximizing and maintaining eligibility for these benefits. With our help, you can ensure that your child continually receives the benefits they need without being wholly dependent on them or exhausting all of your family’s assets.

Still Worried about Your Child’s Benefits or Future? – We Can Help

If you have lingering questions, contact our office to set up a special needs planning session today. We can help you build a comprehensive special needs plan that will work within your budget and overtime – at the pace you choose – so that you, your child, and future caregivers can avoid feeling overwhelmed at any stage of your child’s journey.

With a well-crafted special needs plan, your child and his or her caregivers will receive guidance and support throughout your child’s life, and any remaining assets will be distributed to the beneficiaries of your choice.

We will be honored to help you prepare to face the future together.

This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.

November 27, 2023
Own a Business? Do This By December 31st to Get a Year-Long Extension To The Corporate Transparency Act Reporting Deadline
Business ownership is a fulfilling and exciting endeavor, but it also comes with rules, responsibilities, and reporting requirements that can be hard to track. If you own a small business or have a trust that owns a business interest, you’ll need to comply with the Corporate Transparency Act (CTA) come January.

Beginning January 1, 2024, the Corporate Transparency Act (CTA) will require small companies to disclose the names of any owners who hold a 25% or more ownership interest in the company, as well as any individuals who exercise significant control over the company’s activities. This new rule also applies to trusts that own or control a company.

If you or your family own a business or have a trust that owns a business, you’ll be required to file a report under the CTA. If you plan to create a new company next year, your reporting deadline could be as soon as 30 days after the date of its creation.

There’s a way to get more time to file the required report, but you need to act before the end of the year.

In this blog, I’ll share how to get a year-long reporting extension for your business that can give you more time to gather the required information needed to file the CTA report. But before I tell you how to gain the extension, it’s important to understand what the CTA is and how it will affect your business.

What The Corporate Transparency Act Means For Your Business

The Corporate Transparency Act (CTA) was enacted in 2020 to enhance corporate transparency and prevent money laundering, terrorist financing, and other financial crimes. By requiring businesses to report information about their owners and controllers, the Act seeks to make it easier to identify “shell” corporations – companies that don’t actually perform an active business or trade and which are often used to move money around illegally.

To comply with the Act, certain businesses including some corporations and LLCs will need to disclose the names of anyone who owns 25% or more of the company and any members of the company who have “substantial control” over the company’s activities to the Financial Crimes Enforcement Network (FinCEN). This includes anyone who owns or controls a company through their trust.

In order to comply, a business must file an annual report with the following information on each owner or controller of the business:
- Business name and current business address
- State in which the business was formed and its Entity Identification Number (EIN)
- Owner/controller’s name, birth date, and address
- Photocopy of a government-issued photo ID (such as a driver’s license or passport) of every direct or indirect owner or controller of the company
If a company doesn’t file an annual report, it may be penalized with a $500 fine for every day the report is late and its owners could even face imprisonment for up to two years.

What Businesses Need to Report Under The CTA?

The new CTA rule applies to any company that is created by filing a formation document with the Secretary of State or a similar office, such as corporations and limited liability companies (LLCs).

Since money laundering and terrorist financing are usually conducted using small businesses, the Act largely aims to collect information on these companies, so entrepreneurs and small business owners should take extra care to meet the filing requirements.

Publicly traded companies, non-profits, and regulated companies like financial firms, accounting agencies, and banks are exempt from the rule. Large companies are also exempt if they have 20 or more full-time employees in the U.S. and generate $5 million in sales. An LLC or corporation that isn’t actively performing a business or service is also exempt due to its inactivity.

When Do Businesses Need to File Their Report and How Can You Extend Your Deadline?

Here’s the thing about filing your annual report for the Corporate Transparency Act: If your company was created after January 1, 2024, you’ll need to file your report within 30 days of the company’s creation. But if your company’s formation occurred on or before December 31, 2023, you have until January 1, 2025, to file its CTA report.

So if you already have a business entity created, you have until January 1, 2025, to submit your report. This means if you’re thinking of creating a new company or changing the entity structure of an existing company, doing so before January 1, 2024 will give you a year-long grace period to file the report. Otherwise, once January 1 rolls around, it’ll be too late to take advantage of this extension.

Why does this extension matter?

The extension provides a valuable window of time for business owners to understand the reporting requirements thoroughly, gather the necessary information, and engage with legal professionals to ensure they’re in compliance with the Act without the pressure of a 30-day deadline.

The Act’s reporting rules seem straightforward, but the penalties for non-compliance can be substantial. Creating your new business entity by year-end provides a cushion against potential penalties and risks associated with overlooking or misunderstanding reporting requirements. It’s a proactive step that gives your business the advantage of time.

Helping You Make Strategic Moves for The Wellbeing of Your Family

If you own a family business or you’re thinking of creating a new business entity soon, I encourage you to do it NOW before the end of the year so you can take advantage of the year-long window to file your Corporate Transparency Act report for existing businesses.

Don’t wait until the end of December to get started, as we anticipate there will be a rush of new business entity filings at the end of December as business owners and their professionals rush to file their creation documents before the new year. If you need assistance filing your report or aren’t sure whether the CTA rule applies to your company, we can help.

Our goal is to guide your family through every stage of life and every change in the law through an ongoing relationship with you. Our approach to serving clients doesn’t end when the paperwork is filed. We keep in touch with you and keep you abreast of any changes in the law so you can have peace of mind knowing that your family and assets are well cared for now and in the future.

Schedule a complimentary call with me to learn more.

This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.
November 27, 2023
What You Must Know About Your Right to Your Spouse’s Retirement Benefits
If you’re part of a blended family (meaning you’re married with children from a prior marriage in the mix), you’re no stranger to the extra considerations and planning it takes to keep your family’s life running smoothly – from which parent your children will be with for the holidays to figuring out the schedule for a much-needed family vacation. You’ve also probably given some thought to what you want to happen to your assets and your family if something happens to you.

But what you might not have realized is this: If you don’t create a plan for your assets before you die, the law has its own plan for you that might not reflect your wishes for your assets, especially your retirement assets. If you’re in a blended family, this can have a significant financial impact on the ones you love and even create expensive, long-term conflict.

This week, I explain how the law affects retirement distributions for married couples, and why you need to be extra careful with your retirement planning if you’re in a blended family to ensure your retirement account assets go to the right people in the right amounts after you’re gone.

Be Aware of How ERISA Affects 401K Distributions

If you’ve remarried, you and your new spouse have probably talked about updating the beneficiary designations on your retirement accounts to reflect your blended family arrangement. If you haven’t talked about it, you need to talk about it ASAP. Sometimes, people who are remarried decide to leave their retirement funds to their children from a prior marriage and leave other assets like their house and savings accounts to their current spouse. You may do this to avoid future conflict between your spouse and your children over your assets.

But even if you want to leave your retirement for just your children, if you’re married and your retirement account is a work-sponsored account, your children won’t inherit the entire account even if you name them as the sole beneficiaries.

That’s because the federal Employee Retirement Income Security Act (ERISA) governs most employer-sponsored pensions and retirement accounts. Under ERISA, if you’re married at the time of your death, your spouse is automatically entitled to receive 50 percent of the value of your employer-sponsored plan – even if your beneficiary designations say otherwise.

The only time that your surviving spouse wouldn’t inherit half of your ERISA-governed retirement account is if your spouse signs an official spousal waiver saying they’re affirmatively waiving their right to inherit 50 percent of the account, or if the account beneficiary is a trust of which your spouse is a primary beneficiary.

IRAs Have Different Rules Than 401Ks

If you want your children to inherit more than 50 percent of your work-sponsored retirement benefits, and completing a spousal waiver isn’t an option, consider rolling the account into a personal IRA instead.

In contrast to 401(k)s and similar employer-sponsored plans, IRAs are controlled by state law instead of ERISA. That means that your spouse isn’t automatically entitled to any part of your IRA.

When you roll a 401(k) into an IRA, you gain the flexibility to name anyone you choose as the designated beneficiary, with or without your spouse’s consent.

On the other hand, if you want to ensure your spouse receives half of your retirement savings, make sure to include them as a 50 percent beneficiary or better yet, have your individual retirement account payout to a trust instead. With a trust, you can:
- Document exactly how much of your retirement you want each of your loved ones to receive.
- Control when they receive the funds outright.
- Easily update and change the terms of your trust without having to remember to update your financial accounts.
Beneficiary Designations Always Trump Your Will

Whether you have an employer-sponsored 401K or an IRA you manage yourself, there is one critical rule that everyone needs to know: beneficiary designations trump your will.

A will is an important estate planning tool, but most people don’t know that beneficiary designations override whatever your will says about a particular asset.

For example, if your will states that you want your retirement account to be passed on to your brother, but the beneficiary designation on the account says you want it to go to your sister, your sister will inherit the account, even though your will says otherwise.

Similarly, let’s imagine that you get divorced and as part of your divorce decree your ex-spouse agrees that they won’t have any right to your retirement fund. However, after the divorce, you forget to take their name off the beneficiary designation for the account. If you die before updating the beneficiary designation, your former spouse will inherit your retirement account.

If you forget to update your ERISA-controlled account and have remarried, your current spouse would receive half of the account and your former spouse would receive the other half. That’s why it’s so important to work with an estate planning attorney who can make sure your accounts are set up with the proper beneficiary designations and ensure that your assets are passed on according to your wishes.

Work With An Attorney Who Makes Sure All Your Assets Will Be Passed On How You Want Them To

Understanding how the law affects different types of assets is essential to creating an estate plan. But there’s more to it than just having a lawyer – you need an attorney who takes the time to really understand your family and your assets so they can design a custom plan that achieves your goals for your assets and your legacy.

That’s why we help our clients create an inventory of all of their assets to ensure that every asset they hold is accounted for and passed on to their loved ones exactly as they want it to.

To learn more about how we serve our clients differently than most lawyers, schedule a complimentary call with us. We’d be honored to share how our unique process can help your family.

This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.
November 20, 2023
Special Needs Planning in Five Steps – Part 2
Special needs planning can seem like a daunting task. Sometimes fear can rise up and cause a freeze response as parents contemplate what may seem like an uncertain future for a vulnerable child. If you sense this could be the case for you, we encourage you to always remember that neither you, your loved one with special needs, nor future caregivers need to face this future alone.

Our firm can guide you in each step along your path to achieving peace through special needs planning, and to help our clients avoid feeling overwhelmed, we break our planning process into five steps.

We previously looked at the first two of those steps:
1. Learn How Special Needs Planning Can Benefit Your Family
2. Identify the Best Level of Support for Your Child
Now, let’s get started with step 3:

3 | Develop Future Budget Estimates for Your Loved One with Special Needs

A focal point of special needs planning is providing assets to meet the financial needs of your loved one after your death – usually through a combination of government benefits, life insurance, family savings, and investments including retirement planning. Clients can begin to estimate expenses by completing our circle of support and fiduciary manual, noting the monthly, quarterly, and annual costs associated with the support categories listed in each section.

Our firm can also provide information regarding current public benefit programs that help meet some of these needs so that clients can budget for other needs and quality-of-life measures beyond the scope of those programs. Working with a financial advisor during this process is strongly encouraged, and some families choose to work with a chartered special needs consultant or other financial advisor focusing on serving the special needs community.

We’d be happy to work alongside your financial advisor to ensure that your special needs planning and overall financial planning coordinate in the best way possible for your entire family’s care and support.

4 | Align Your Financial and Legal Affairs for the Support of Your Child with Special Needs

This step forms the core of special needs planning.

Inheritances and sizable lifetime gifts should be directed into a third-party special needs trust (SNT). Gifts under $17,000 annually may be placed into an ABLE account for those who qualify. Parents or other relatives must establish these SNTs during their lifetime or through their wills or living trust.

Inherited assets not directed into an SNT will disqualify the individual with disabilities from SSI, Medi-Cal, and other means-tested benefits until funds are either “spent down” or placed into a first-party SNT after the person with disabilities inherits the funds.

However, a first-party SNT (established with funds that have already passed to the person with disabilities) is subject to Medi-Cal payback upon the death of the disabled beneficiary. This means that every dollar Medi-Cal has spent on an individual with a disability must be paid back from the first-party SNT after that individual’s death – before any assets are passed on to other family members.

By contrast, assets directed into a third-party SNT can be used to supplement the quality of life of the disabled individual and any remaining funds can be passed on to other family members upon the beneficiary’s death – with no Medi-Cal payback or estate recovery. This can be especially meaningful for sibling caregivers whose careers were impacted by caregiving responsibilities and whose parents felt it necessary to leave all or most of their estate to care for a child with special needs.

5 | Establish a Decision-Making Process and Implement a Lifelong Support System

After designing a special needs plan, we generally find it best to begin to implement the plan gradually, while our parent clients are still healthy.

For example, a special needs trust may require the development of an annual distribution plan by the trustee with input from various circle of support team members. Clients may want to model this process at least every few years to identify any potential issues with implementing their plan. These issues could involve anything from a team member who dominates the discussion to one who just never manages to show up.

Likewise, if the plan is for your child to live with a family member and future conservator one day, we would suggest starting routine overnight visits to that person’s home. This provides needed respite for parents, helps identify any allergies or other environmental concerns, and helps the child come to feel “at home” with the extended family.

If the plan is for aunts, uncles, and cousins to rotate taking your adult child on an outing each month in the future, starting that practice at least 3-6 times per year now can help these events become reliable routines for your child and strengthen these crucial relationships for your child’s future.

Moving from Great Start to Next Steps

At times, seeking proper diagnosis, therapy, and educational support must take priority over planning. You may need to secure the present before you can secure the future. But it’s crucial to be aware that the financial results of delaying special needs planning can be consequential for your entire family.

When you’re ready to check special needs planning step 1 off your to-do list, give us a call. We’d be honored to walk alongside you on your special needs planning journey and connect you with financial planners and other professionals who focus on serving families impacted by special needs.

This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.
November 13, 2023
How to Talk Money With Your Family Over The Holidays

The holidays are right around the corner, which means more time to gather with family and relatives than any other time of the year. If you’ve been meaning to talk to your family about money, inheritance, end-of-life decisions, estate planning, and creating a plan for your whole family’s wealth – now and in the future – having everyone in the same room is ideal.

But asking your relatives how they want their assets handled when they die or if they become incapacitated might not go over well while opening presents or carving a turkey.

To keep your family from feeling blindsided and to make the most of your conversation, consider the following three tips.

01 | Share Your Intention Ahead of Time

Many people feel uncomfortable talking about their finances. They may have grown up in a family where money talk was considered taboo or perhaps they simply don’t want the details of their finances to create family tension. Some people also feel like talking about estate planning and making a plan for their money is plain bad luck (but we’re happy to report that planning for your assets doesn’t increase your chance of dying, as you’ve already got a 100% chance of death, but it does increase your chances of leaving behind a happy, well-adjusted family).

To help your loved ones feel at ease, don’t bring money talk up for the first time while the family is gathered around the TV watching football. Instead, approach the topic weeks ahead of time if possible.

If you have regular visits or phone calls with your loved ones, let them know you’ve been thinking about creating a plan for your own money and the care of the family in case something happens to you. Casually mentioning that it’s on your mind will help plant the seed for a future conversation with your loved ones and likely get them thinking about their own plan or lack of a plan.

As your family gathering approaches, bring up the subject again, this time with more intention and detail. Consider asking the host of your family gatherings, whether it’s your sibling, parent, or adult child when the best time would be to have an all-family conversation about money for 90 minutes. Schedule it and let everyone know that you’ve got something meaningful planned.

If the host pushes back against the idea, respond with curiosity about their experience, what they feel apprehensive about, and if there’s a way that you could mitigate their apprehension perhaps by speaking with other family members in advance.

If you’ve already completed your own planning, use your experience as a springboard for the conversation. More on this below.

02 | Set Aside a Time and Place to Talk

Discussing money while opening Christmas gifts isn’t likely to have the results you want. Your best bet is to schedule a time to gather to talk without distractions or interruptions.

Be upfront with your family about the meeting’s purpose so no one is taken by surprise and so they come prepared for the talk. Choose a setting that’s comfortable, quiet, and private. The more relaxed everyone is, the more likely they’ll be comfortable opening up.

Begin by sharing the context of why it’s important to you that your family begin having conversations about money, life, and death. You may even want to share that the topic is uncomfortable for you, but that it’s important enough that you’re willing to be uncomfortable because you know these conversations can bring your family closer together, create more family resilience, and ensure you’re all financially well-cared for.

Finally, as part of setting context, set a start and stop time for the conversation. Remember, the goal is to simply get the conversation started, not work out all of the details or dollar amounts, so don’t expect this to be the one and only conversation you have – it’s a start.

03 | Share Your Planning Experience

If you’ve already created your own plan, and it included an inventory of your assets, a look at what’s enough, and what would happen to it all when something happens to you (which is what we do during our first Planning Session with you), you can start by explaining how you felt during the process, how easy it was, and how you feel now knowing that your assets and loved ones will be cared for the way you want if something happens to you.

If you’ve worked with us, describe how the process unfolded and how we supported you to create a plan designed for your unique wishes and needs.

Share any concerns or doubts you initially had about planning and how we worked with you to address them. If you have loved ones who’ve yet to do any planning and have doubts about its usefulness, empathize with them in a supportive and understanding way, and share your own journey learning the benefits of planning for your money and your wishes.

If you haven’t created a plan yet, or have doubts about a plan you created with another attorney, be open about why you want to create a plan for your life and death, such as a desire to avoid family conflict, to ensure that a child, disabled relative, or senior parent is cared for in the future, or to build generational wealth and a legacy for your family. Focus on the benefits that planning will have for both your immediate family and your extended family as a whole.

Bringing Families Together

Talking to loved ones about money and estate planning can be difficult, but we can guide and support you in having these intimate discussions with your loved ones. When done right, planning can put your life and relationships into a much clearer focus and offer peace of mind knowing that your assets will be protected and that the people you love most will be provided for no matter what.

If you’ve already created a plan with us, be sure to share our library of blog resources with your loved ones. If you haven’t created your own estate plan, doing so before you talk with your family can help your loved ones be more open to the idea and can help them see the incredible benefit of planning from one of their own family members.

Schedule a complimentary call with us to learn more.

This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.

November 13, 2023
Transition to Adulthood: What Happens Legally When My Child Turns 18?

Soon after the challenges of puberty and the excitement of high school, an even larger milestone looms: the 18^thbirthday. It marks your child’s transition from childhood to adulthood, and with it new responsibilities and rights. From a legal standpoint, this milestone also brings significant changes that every parent should be aware of.

In the eyes of the law, an individual is considered a legal adult at the age of 18. This means that your child gains certain rights and privileges, including the ability to enter into contracts, vote, buy property, and make medical decisions for themselves. While this newfound independence is a crucial part of growing up, it can also pose challenges for parents, especially when adult children need their parents’ help or need someone to make decisions on their behalf.

In this blog post, we’ll explore what happens legally when your child turns 18, what it means for your ability to make legal, financial, and healthcare decisions on their behalf, and what tools you’ll need for a smooth transition to adulthood.

How The Law Changes Your Role As A Parent

On the day your child turns 18, your ability to make legal, financial, and healthcare decisions for them essentially disappears in a blink. To give you a sense of how impactful this can be, if your now 18-year old or older child is hospitalized and unable to communicate their wishes, healthcare providers won’t even legally be able to share your child’s medical information with you. Similarly, financial institutions won’t permit you to access your child’s accounts or make financial decisions on their behalf without their consent – or unless you’re a co-owner of their accounts.

This shift in decision-making authority can feel unsettling and can be particularly challenging if your child is still financially dependent on you, is in a medical emergency, or requires assistance in managing their affairs due to a disability. Thankfully, there are legal tools that can help parents and young adults navigate these new challenges.

Have Their Back With Powers of Attorney

A power of attorney is a legal tool that allows your child to designate the person they choose to make legal or healthcare decisions on their behalf. There are two common types of powers of attorney that can be valuable in this situation: a general durable power of attorney and a power of attorney for healthcare.

A general durable power of attorney allows your child to appoint someone to manage their financial affairs in the event they become incapacitated or if they just want help managing their finances. With this in place, you can continue to assist your child with financial matters, even after they turn 18.

The important thing to remember however is that not every financial institution will honor a power of attorney, so while every adult should have this legal tool, it’s important to check with your specific institution and possibly set up your child’s accounts in a different way to ensure you have immediate access to them if needed. We’d be happy to discuss which options are best for you and your adult child.

A power of attorney for healthcare grants someone the authority to make medical decisions on your child’s behalf if they’re unable to do so, such as medication and treatment options, nutritional needs, and life-support measures. This is crucial to ensure that your child receives the care they want, even if they cannot communicate their preferences.

Only your child can put these measures in place, but encouraging them to create these legal documents is a proactive step in maintaining your ability to assist them when they need it most.

Stay Informed With a HIPAA Waiver

The Health Insurance Portability and Accountability Act (HIPAA) is a federal law that protects the privacy of individuals’ medical records. Once your child turns 18, their medical information is protected under HIPAA, and healthcare providers are prohibited from disclosing it to anyone without the patient’s explicit consent – parents and family members included.

To maintain access to your child’s medical information, they must complete a HIPAA waiver. This document permits healthcare providers to share medical information with individuals specified in the waiver, such as parents or trusted family members.

Having a HIPAA waiver in place can be invaluable during medical emergencies when swift access to medical records is critical. It can also be a valuable tool for young adults who may simply appreciate a parent’s ability to speak to their doctors when they aren’t feeling well or are overwhelmed with the demands of work, college, or both.

Support Their Journey Into Adulthood Through Open Communication

Transitioning to adulthood is a significant step for both parents and children. While legal documents such as powers of attorney and a HIPAA waiver are essential, it’s equally important to have open and honest conversations with your child about their wishes and the responsibilities that come with adulthood.

Discuss their healthcare preferences, financial decisions, and their expectations from you as a parent. Encourage them to consider creating these legal documents not only for your peace of mind but also for their own protection.

We invite you to reach out to our firm at any time, but if you have a teen who is approaching adulthood, reach out to us right away to ensure your child has the legal support and protection they need no matter what adulthood brings.

If you aren’t sure how to talk with your adult child about these legal tools, we can help you start the conversation from a place of love, compassion, and collaboration.

Schedule a complimentary call today to get started.

This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.

November 6, 2023
Transition to Adulthood: What Happens When My Child with Special Needs Turns 18?

Soon after the challenges of puberty and the creation of a new high school Individualized Education Program, an even larger milestone looms: the 18^th birthday. If you’ve begun wondering what happens when your teen with special needs becomes an adult, read on to find out what to expect.

The best news is that you’ll continue to employ the same skills you’ve been using for years – just in a slightly different context.

Let’s jump right into the details of how you can apply your lifetime of caregiving skills in the transition to adulthood.

1 | Learn About Post-High School Education Options

Hints of what lies ahead are probably already cropping up all around you – perhaps in IEP meetings. The first step in the transition to adulthood is to simply listen for an explanation of the ongoing educational opportunities your child is entitled to pursue after they turn 18.

Individuals with disabilities can continue attending high school until age 22, but universities and other providers like vocational rehabilitation (“voc rehab”) offer a growing number of college programs geared for young adults with special needs. Some are day programs only, while others are residential – more like the traditional college experience. Either way, your child can receive additional support and programs tailored to meet his or her needs.

Your child’s high school may also offer driver’s training, but if not, specialized programs offered by private providers permit your teen to practice driving skills in a safe environment. Medi-Cal waiver or grant programs may fund this life-enhancing education.

2 | Explore Careers and Supports

Vocational rehabilitation (“voc rehab”) usually enters the IEP conversation by high school, if not earlier. It starts as a class your child attends to explore potential jobs and learn skills necessary for every employee.

After a few weeks of classroom instruction, the class begins visiting potential employers who appreciate the reliability and work ethic that individuals with disabilities bring to the workplace. Short rotations through various jobs help each teen identify the types of employment that do – and do NOT – work for them.

At age 18, your young adult with a disability becomes a household of one for Social Security and Medi-Cal purposes. Most then receive Supplemental Security Income (SSI) of up to $941 per month – and our firm can help you learn how to effectively maximize this benefit.

Individuals receiving SSI usually qualify for Medi-Cal as well. In addition to providing health insurance, this opens up more opportunities for job discovery and coaching, community integration, transportation, day services, and even respite and residential care. All of these support services can contribute to your family’s well-being, but successful employment through job coaching brings immense pride and a critical sense of belonging in the wider community for many adults with special needs.

And as always, listen to your child and observe. What activities bring your child exceptional joy? A teen who loves movies may thrive as a theater usher. A young artist may create and market their wares online and at craft and resource fairs. The best career for anyone may be tied to a beloved hobby, and Medi-Cal waiver and grant programs play a vital role.

3 | Find the Best Supported Decision-Making Process for Your Child

At least one critical decision awaits parents of teens with special needs, and that is whether to pursue supported decision-making or a conservatorship or guardianship for their child. The answer for most may be both!

In a conservatorship or guardianship, certain rights and responsibilities that come with adulthood are removed from a vulnerable individual and transferred to another person, often one or both parents. Courts don’t take removal of rights lightly, nor do most parents. A medical report from a psychologist or physician documenting its necessity will be needed. However, for many individuals with intellectual disabilities, this protection is a critical step in mitigating their vulnerability.

For individuals who have the capacity to sign legal documents, a supported decision-making process can suffice. First, your young adult will name agents under powers of attorney to assist as needed in managing financial and medical affairs. Next, our firm can help you and your teen identify the specific process and types of support most helpful in guiding their decisions.

With or without a conservatorship or guardianship, supported decision-making processes can and should be utilized to help individuals exercise their autonomy to the greatest extent possible – within necessary safeguards.

4 | Keep Advocating for Your Child – and All Individuals with Special Needs

Your days as an advocate for your child in IEP meetings and in your community have prepared you to address challenges that can arise while supporting an adult with special needs. Your child may be waitlisted for a critical Medi-Cal waiver program, or your local government may need encouragement to participate in federal grants that could enhance your child’s life. Whatever situation may arise, your experienced voice can make a difference in your child’s life and the lives of so many others.

We suggest making contact with at least one state or national disability coalition such as the ARC of the United States, and with one nonprofit organization that focuses on your child’s specific needs. Watch for advocacy opportunities in our newsletter as well, and if your schedule permits, try to join an annual disability lobbying effort.

Most legislators listen closely as families impacted by special needs share their experiences, and sometimes you get to share the celebration of a win. But the most meaningful result of these efforts can be the friendships that emerge among families who share common struggles.

Supporting Your Next Steps in the Transition to Adulthood

We hope this article leaves you reassured in your skill set for facing the challenges and opportunities ahead, and no matter what, our firm is here to help. We can connect you with resources to help in this exploration process – from available programs to the legal tools needed to foster your young adult’s independence.

We invite you to reach out to our firm at any time, but if you have a teen with special needs who is approaching adulthood, reach out right away. We can help you preserve family resources, balance your child’s protection and autonomy, and help them find career and lifestyle support.

Schedule a complimentary call today to get started.

This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.

October 30, 2023
The Scary Truth: Naming Godparents Does Not Create Legal Guardians

As a parent, your top priority is the well-being and future of your children. You plan for their education, health, and happiness, and often this planning includes the tradition of choosing godparents to guide and mentor your children if something happens to you.

While selecting godparents is a meaningful tradition in many cultures, it’s important to understand that naming a godparent is not the same thing as naming a legal guardian for your children.

To put it bluntly, even if you have named godparents, if something happens to you, your children could end up in the care of strangers, child protective services, or in the long-term care of someone you would never want raising your children.

In this blog, we’ll explain the roles of a godparent and legal guardian and how to ensure your kids are always cared for by the people you choose – no matter what.

Godparents

A godparent is traditionally someone you name to watch over your child and help them live according to your morals and values. Godparents are meant to be mentors and role models, guiding your child in matters of faith, morality, and character. The role of a godparent is deeply rooted in religious and cultural traditions, and they often participate in religious ceremonies such as baptisms or confirmations.

Whether your family is religious or not, godparents may also play a supportive role in your child’s life by offering emotional support, advice, and friendship. They can be someone your child can turn to for guidance and a listening ear, but their responsibilities are largely informal and non-legal.

Legal Guardians

In contrast, naming a legal guardian for your child is a formal, legal process. A legal guardian is someone who has the legal authority to make decisions on behalf of your child, especially if you, as the parent, are unable to do so. This could occur due to your passing, incapacity, or any situation in which you cannot provide care or make important legal, financial, healthcare, or education decisions for your child.

The responsibilities of a legal guardian encompass every area of your child’s life that you would normally manage as a parent. This includes everything from feeding and clothing your child to deciding where they go to school, attending parent-teacher meetings, and which extracurricular activities they participate in. Legal guardianship also includes the decisions about where your child lives and what medical treatment they should or should not receive.

A legal guardian may also help manage your child’s financial assets and resources, ensuring their financial well-being. In some cases, if you’ve planned ahead, you may choose to have a different person act as a financial trustee of the assets you leave for your child, and your chosen trustee will work alongside the legal guardian to ensure your child is financially supported. In some cases, your guardian and trustee may be the same person. This is a decision we can help you make during a Life & Legacy Planning Session, based on the specifics of your family dynamics.

Why Naming Godparents Isn’t Enough

While godparents may be deeply caring and involved in your child’s life, they have no legal authority to make decisions for your child unless they’re officially appointed as a legal guardian by the court. That means that until that happens, (if it happens) your child’s godparents aren’t legally able to make any decisions for your children, including their basic care needs, education, and medical care.

If you become incapacitated or die, and haven’t legally nominated a guardian (and, ideally, more than one, which is one of the 6 common mistakes families and even lawyers make when naming guardians), there could be a complex and expensive custody dispute among your family members. Grandparents, aunts, and uncles may assume you would want your children to live under their care rather than the people you named as godparents. This is especially likely if the people you’ve named as godparents aren’t related to you by blood or marriage.

Without a legal guardian designation in writing and signed with the formalities of a will, godparents may find themselves in an expensive court battle over custody rights, and they may not even be named as the legal guardians of your children at all. In fact, the court could name someone you would never want raising your kids as their legal guardian.

Life-long Legal Protection for Kids

While godparents hold a significant place in your child’s life as mentors and role models, they don’t possess the legal authority to make critical decisions for your child or provide for your child’s physical and financial well-being on their own.

Instead, consider combining the roles of godparents and legal guardians into one. If you’ve already chosen people you trust to serve as lifelong role models and spiritual guardians for your children as their godparents, why not give those people the legal authority to truly perform those duties if something happens to you?

If you aren’t sure who the best guardian or godparent is for your children, we can help. We’ll walk you through a heart-centered process for choosing guardians who genuinely care for your child’s well-being and share your values. Plus, we’ll ensure they have the financial and legal tools needed to give your child the best life possible if you can’t be there.

The best way to keep your children safe and secure is to create a comprehensive Kids Protection Plan that keeps your children in the care of the people you choose in any situation, out of the care of anyone you wouldn’t want, ensures your children can receive prompt medical care, and that the authorities know who to contact in an emergency so your children are never placed in protective custody – even for a minute.

To learn more and get started today, schedule a complimentary call with my office.

This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.

October 30, 2023
Year-End Tax Planning Starts Now: 8 Things To Do Now to Lower Your 2023 Taxes – Part 2

Last week we looked at four different ways to lower your tax liability for 2023, from adjusting your tax withholding to strategically planning your medical procedures. In this week’s blog, we discuss four more tax-saving methods you can use right now to owe fewer taxes come April 2024.

Make Charitable Gifts

Giving back to your community or supporting causes you care about is not only rewarding but can also provide tax benefits if your family’s tax deductions are close to exceeding the standard tax deduction.

The standard deduction for 2023 is $12,950 for individuals and $25,900 for married couples filing jointly. Remember that the total of your itemized deductions, including charitable contributions, must exceed the standard deduction for your filing status to provide a tax benefit.

If you’re nearing the top of the standard deduction threshold, this year may be a great time to contribute to a charitable organization that’s important to you. Doing so will help support a good cause and allow you to make itemized deductions for an extra reduction in your taxable income for the year.

If you make any charitable donations, keep detailed records of your donations, including receipts and acknowledgments from the charities. If you donate non-cash items (such as clothing or household goods), make sure to document their fair market value.

If you aren’t sure how to document your donations or aren’t sure if a charitable donation will be advantageous to you this year, be sure to discuss this with your tax professional.

Consider Tax-Loss Harvesting

Tax-loss harvesting is a strategy designed to offset capital gains by selling underperforming investments. This technique can help you minimize the taxes you owe on your investment gains.

The first step is to identify investments in your portfolio that have experienced losses and then sell those investments to realize the losses. After all, you haven’t actually lost or gained capital until the money enters or leaves your portfolio.

By selling underperforming investments, you can now use the lost capital to offset any capital gains from other investments that are doing well. Losses can be used to offset up to $1,500 for individuals filing separately or up to $3,000 for couples filing jointly.

It’s important to remember that there are rules and limitations when it comes to tax-loss harvesting. Consult with a financial advisor or tax professional to ensure you execute this strategy correctly and in a way that aligns with your overall financial goals.

Pay Your January Mortgage Payment in December

If you’re a homeowner with a mortgage, making your January mortgage payment in December can provide a valuable tax advantage. Mortgage interest is deductible on your income tax return, and prepaying your January mortgage payment in December gives you an extra month of interest to deduct on your 2023 taxes.

However, before implementing this strategy, check with your mortgage lender to ensure that they apply the payment correctly. Some lenders may automatically apply extra payments to your principal balance rather than counting them as interest for the next month.

Max Out Your IRA (Individual Retirement Account) or Roth IRA

Retirement planning is crucial for long-term financial security, and IRAs are excellent vehicles for saving for your golden years. For the 2023 tax year, the maximum contribution limit for both traditional and Roth IRAs is $6,500, with an additional $1,000 allowed for those aged 50 or older. It’s essential to understand the differences between these two types of IRAs to choose the one that suits your needs best.

Traditional IRA contributions may be tax-deductible, potentially reducing your taxable income for the year. However, withdrawals in retirement are subject to taxation.

Roth IRA contributions are made with after-tax dollars, so they don’t provide an immediate tax deduction. However, qualified withdrawals in retirement are entirely tax-free.

By maximizing your contributions to your IRA of choice, you can secure a more comfortable retirement and possibly reduce your tax liability for this year.

The Foundation of Life-Long Support and Security

Proactive year-end tax planning can significantly impact your financial well-being. By implementing these eight tax-saving strategies, you may be able to keep more money in the bank and take a step toward a brighter financial future.

But good money management is only one part of the equation for a life you love and a legacy that will guide and support your family for generations to come.

Making the best strategic decisions to protect your family’s health, finances, and happiness is equally, if not more, important. If you want to make sure that both your financial and personal life are in order today and structured to give your family the best support possible tomorrow, give us a call.

We would be honored to help you protect everything you own and everyone you love through our heart-centered estate planning services.

This article is a service of Jeannette Marsala, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life and Legacy Planning Session and mention this article to find out how to get this $750 session at no charge.

October 23, 2023