Window Closing for Couples to Use ‘Claim Now, Claim More Later’ Social Security Strategy

Spouses who are turning full retirement age this year are the last group who can choose whether to take spousal benefits or to take benefits on their own record. The strategy, used by some couples to maximize their benefits, will not be available to people turning full retirement age after 2019.

The claiming strategy — sometimes known as “Claim Now, Claim More Later” — allows a higher-earning spouse to claim a spousal benefit at full retirement age by filing a restricted application for benefits. While receiving the spousal benefit, the higher-earning spouse’s regular retirement benefit continues to increase. Then at 70, the higher-earning spouse can claim the maximum amount of his or her retirement benefit and stop receiving the spousal benefit. To use this strategy, the lower-earning spouse must also be claiming benefits. Workers cannot claim spousal benefits unless their spouses are also claiming benefits.

A 2015 budget law began phasing out the strategy. If you were 62 or older by the end of 2015, you are still able to choose which benefit you want at your full retirement age. You do not have to make the election in the year you turn full retirement age. If your spouse is still working, you can wait to collect benefits until your spouse begins collecting. For example, if your spouse does not begin collecting benefits until you are 68, you can wait to collect benefits and file a restricted application at age 68. However, when workers who were not 62 by the end of 2015 apply for spousal benefits, Social Security will assume it is also an application for benefits on the worker’s record. The worker is eligible for the higher benefit, but he or she can’t choose to take just the spousal benefits and allow his or her own benefits to keep increasing until age 70.

The budget law’s phase-out of the claiming strategy does not apply to survivor’s benefits. Surviving spouses will still be able to choose to take survivor’s benefits first and then switch to retirement benefits later if the retirement benefit is larger.

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Picking the Right Estate Planning Attorney for You

Choose an attorney who specializes in estate planning.  

Other attorneys simply don’t have the knowledge, skill, judgment or experience to plan your estate properly.

Choose an attorney you trust. 

Nothing is more important in a lawyer/client relationship than having a lawyer you trust.

Choose an attorney who creates your estate plan himself. 

If the attorney has an assistant create your estate plan, then why hire the attorney?  Note, it’s not uncommon for lawyers in solo practice to ask a funding coordinator to transfer property into your trust.  Even so, funding is a fairly routine function and you are well protected as long as the lawyer supervises the process.

Choose an attorney who provides excellent service.  

Anything less is not acceptable.

Choose an attorney who welcomes your questions

Who structures meetings by allowing enough time to answer your questions.  High-volume practices have short appointments so they can move clients quickly through the process.  I don’t know about you, but this is not the level of service I expect when I hire a lawyer.

Choose an attorney who will return your phone calls quickly.  

You should never hire a lawyer who won’t respond promptly to your needs.

Choose an attorney who has roots in the community.  

This attorney cares about his reputation and is more likely to be available in the future when you need help.

Choose an attorney who is a respected source of information

One who has dedicated his practice to helping people understand their estate planning alternatives.

Choose an attorney who charges fair fees. 

At best, you get what you pay for.  Most people do not shop for the cheapest doctor.  Instead, they focus on the doctor’s qualifications and experience.  You should apply the same principle when selecting an estate planning attorney.  If the fee is too low, the lawyer may be leaving something out.  Make sure the fee you pay and the services you receive are of equal value.

Choose an attorney who offers free initial consultations. 

Shouldn’t you be able to talk with the lawyer for free before you decide whether to hire him?

Also, ask specific questions about your estate and your objectives, such as:  “How do I protect my children from abusive relatives if something happens to me?”  “Can I keep my kids from controlling their entire inheritance at age 18?”  “Can I protect my children’s money from creditors?”  “How can I leave money for my child’s education?”

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Why do I Need a Power of Attorney?

What is a Power of Attorney?

A power of attorney is a legal document in which you name somebody else (agent or attorney-in-fact) to manage your legal and financial affairs for you.  You can limit the power or make it unlimited.  You can also set a time limit or other conditions which make the power of attorney inactive.

Why a Power of Attorney?

Military Deployment

Before deploying for military service, you will want to sign a power of attorney so your family or spouse can take care of your local financial and legal affairs.  Without this, your family may not be able to do simple things like renew your care insurance.

Travel

If you travel frequently for your work, you will want a power of attorney for the same reasons as somebody on active military deployment.  Your spouse or family should be able to handle your local affairs.

Preventative

You should have a power of attorney on file in case of sudden mental incapacity.  This isn’t the same as dementia.  This would be in the case of an accident or healthcare incident like a stroke or heart attack.  You can setup a power of attorney so that it is only active after your incapacity, not before.

 

 

 

 

 

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Can I Give My Kids $15,000 a Year?

If you have it to give, you certainly can, but there may be consequences should you apply for Medicaid long-term care coverage within five years after each gift.

The $15,000 figure is the amount of the current gift tax exclusion (in 2019), meaning that any person who gives away $15,000 or less to any one individual in one particular year does not have to report the gift to the IRS, and you can give this amount to as many people as you like. If you give away more than $15,000 to any one person in a single year (other than your spouse), you will have to file a gift tax return. However, this does not necessarily mean you’ll pay a gift tax. You’ll have to pay a tax only if your reportable gifts total more than $11.4 million (2019 figure) during your lifetime.

Many people believe that if they give away an amount equal to the current $15,000 annual gift tax exclusion, this gift will be exempted from Medicaid’s five-year look-back at transfers that could trigger a waiting period for benefits. Nothing could be further from the truth.

The gift tax exclusion is an IRS rule, and this IRS rule has nothing to do with Medicaid’s asset transfer rules. While the $15,000 that you gave to your grandchild this year will be exempt from any gift tax, Medicaid will still count it as a transfer that could make you ineligible for nursing home benefits for a certain amount of time should you apply for them within the next five years. You may be able to argue that the gift was not made to qualify you for Medicaid, but proving that is an uphill battle.

If you think there is a chance you will need Medicaid coverage of long-term care in the foreseeable future, see your elder law attorney before starting a gifting plan.

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Elder Law Attorney – What do they do?

Types of Power of Attorney

What is a Power of Attorney?

Simply put, a power of attorney is a document (contract) that allows somebody else to do business for you and make decisions for you. It is written authorization to represent a person or act for them in private matters without the need for a guardianship.

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