I met my attorney at 4:00 to update my will and my Health Care Power of Attorney. It was a good meeting -- both productive and informative. Once again, we spent more time than I'd care to trying to cover the possible scenario of any assets that I leave to my brother being seized by the IRS. It is such a hassle. However, in the course of the conversation I learned some interesting things, which I'm going to capture here, because I'm sure I'll forget them in two weeks.
In regards to assets passing through a beneficiary vs. through the estate: the only difference is that the assets that pass through the will are subject to a probate tax, which is approximately .04%. This means for $100,000, we're talking about $40. For $500,000, about $200.00.
When someone receives an IRA as a beneficiary, they have the choice upon receipt to take all the money at once, or if it's already being distributed (not sure what the case is if it's not already being distributed, but I'm guessing that they could elect to begin distributing -- I'll confirm this with Nathan), they can continue to receive the distribution. I believe he said that though the distribution was probably being done monthly, the beneficiary would receive it annually.
Also about this, the beneficiary can continue this withdrawal of distribution for the difference in the number of years between the person's death date and their "life expectancy date." For example, if the person is 55 when they die, and their life expectancy (calculated from actuary tables) is 75, then the beneficiary can take the distribution over 20 years. It has nothing to do with the beneficiary's age or life expectancy, but the deceased's.
At any rate, when the beneficiary chooses the distribution option, the money is protected from creditors. If they take the lump sum it's not.
This is important because it's one way to give my brother some money that can't be seized by the IRS. The trick is, though, making sure, that upon receipt, he chooses the distribution option instead of the lump sum option.
At this point in the conversation, I joked about trying to be in control even from the grave. It's not like I can make him do anything.
We talked about an alternative, which is to set up a trust, with Vivian as the trustee, to "dole out" money to him as it is needed. The downside to that is that Vivian would then have to cover this situation in her will, which just gets to be a lot of drama.
He said it would be best if my parents set this up in their will, but I'm not waiting for that to happen. They won't even get on the stick to get a basic will done, I just don't see them taking care of this. I have told them in the past, though, that they ought to leave their house to me and Vivian so it can't be seized. We would then make sure he lived there, as we each have our own houses, and are not interested in that Jacksonville house.
We talked about the update to my Healthcare Power of Attorney, which includes my living will, and will re-do the Financial Power of Attorney even though there's no change.
I asked him about two other personal tax situations, and received some advice on those.
At the end of the session we talked a little bit about gay marriage, which he said as an attorney, is one of the two most interesting issues on the horizon in terms of intellectual stimulation and challenge. Drawing up documents for gay people is just "interesting," because it usually involves some element of creativity. The other area he talked about, which I thought was more interesting, was the law with regards to inheritance issues of posthumous kids. Does a baby born posthumously from frozen sperm have inheritance rights? Interesting stuff!
Robert arrived earlier than expected, and didn't feel too good about the test he had just taken in his Sociology class. Nothing a little dose of ZUMA wouldn't take care of. I made him pretzel and cream cheese appetizers, while he drank a beer and played a game. I drank a bourbon and diet, and worked on the crossword puzzle, which I had taken from Steve's Sunday paper when I visited him.
We went to Subway for dinner, and both had the Mediterranean Wrap, which was quite delicious.
We left for dancing at about 8:45. The place was deserted, but eventually got busy, though not crowded. Early in the evening Shawn put his cowboy hat on me, and said, "It's yours," and bowed down to me like I was the queen. (The queen, I said, not a queen!) By the end of the evening, he was really, really drunk, and I tried to insist that he let Robert and I drive him and Josh home. I said, "Robert will drive your truck and you guys can ride with me; that way you'll have your truck in the morning." He wouldn't let me, and Adam assured me before we left that he and Van would get them home. I hope they were able to take care of them.
Earlier in the night I told Shawn that every time I hear that someone has been killed on a motorcycle, and especially when they say the name has not yet been released pending notification of next of kin, I think, "God, I hope it's not Shawn." He was so moved by this, which really took me by surprise as I was expecting a typical reaction like, "Don't be silly, I'm a careful rider." He did assure me that he is very respectful of the motorcycle. I told him that it wasn't him I was worried about, but other drivers. What prompted this conversation was that earlier this week a guy was killed on his motorcycle as a UPS truck turned in front of his path causing him to slide under the truck and be killed.
I'm thinking his being moved by my caring is what prompted the gift of his cowboy hat, which was a nice one he got in Key West. On the other hand (On the hand, there was a foot.), maybe it was just the liquor talking. (Liqour! I hardly know her!) I plan to give him the hat back on Saturday or Wednesday -- whenever I see him next.
At home, Robert grabbed an ice cream sandwich, his stuff, and headed back to Chapel Hill. Courtney was already in bed, so we didn't see each other -- we haven't seen each other -- at all - since she's been here. My question is, "If you have a house guest for two days, and you don't see her, did you really have a house guest?"