February 2023 Newsletter
February 2023 Issue
How To Protect Your Partner if You Choose Not to Marry?
Although the institution of marriage provides many with built in security for the future, it is not the answer for all modern couples. According to Statista.com, marriage in the United States has experienced a significant decline in recent years. The marriage rate stood at 9.8 per 1,000 people in 1990 and decreased to 6 per 1,000 people in 2021. With less couples choosing to partake in nuptials, many are left wondering how to go about protecting their significant other in the event of an emergency, illness or even death. While only certain states recognize common law marriage1, most do not provide any protections for the unmarried. There are however, proactive measures and legal maneuvers one can take to create security for your loved ones in the future.
Granting Authority in the Event of Incapacity.
In the event of illness or incapacity, you may assume you retain the right to make medical decisions for your partner of many years. Unfortunately, that is not the case. Without the appropriate documents in place, you may not even be able to visit your companion in the hospital. Establishing a Health Care Proxy, HIPAA Release and an Advance Directive and appointing you as their agent will grant the authority to make critical decisions regarding their medical care. More importantly it will lay out their wishes such as preferences for life support and organ donation.
If your better half is rendered incapable of making their own financial decisions, the only way to assist them is by making sure they have a Durable Power of Attorney in place while they are still considered competent. By electing you as their initial agent, you will have the broad authority to dictate financial matters in a manner which serves their best interests. Severe cognitive decline can sometimes occur without warning due to an accident or illness. In that event, you will have agency to act as their voice when they have none.
Naming Your Partner as a Beneficiary of Your Estate.
Without a Last Will and Testament in place naming them as a beneficiary, your partner does not reserve the right to inherit any portion of your assets once you pass away. Without a Will to dictate your wishes, your estate will need to pass through the proper channels in accordance with the laws of the Commonwealth of Massachusetts. This process is called “intestate succession” and is both time consuming and completely avoidable with a little preparation. To circumvent your hard-earned assets from going to distant relatives who you may or may not get along with, consider naming your partner as a beneficiary of your Will. Creating a Will is straightforward process at Lannik Law, LLC.
Creating individual revocable living trusts which can be amended and revoked at any time, may be a viable option for unmarried couples who have chosen to keep their assets separate. As a private document, the trust will avoid probate and can not be contested by relatives who seek to dispute your predetermined wishes.
Properly Deeding Real Estate.
If you deed your home as “Tenants in Common” in Massachusetts your share will only pass through your Will. This might defeat your partner’s right to your share, if there are other beneficiaries in your Will. “Joint Tenants” in Massachusetts, allows you and your partner to own the home simply upon the 1st death. During our planning process we review your property deed to ensure the real estate goes to whom you want upon your death.
Rightsizing in Retirement. Avoid These Common Mistakes.
As we age unexpected things happen. Adjustments must be made to accommodate the natural aging process, illness, or unforeseen limiting circumstances. Do those stairs seem steeper than they used to? Are maintenance costs and hefty property taxes draining your retirement fund?
These are just some of the questions which plague those preparing for or entering retirement. Although filled with priceless memories, there comes a time when the large family home becomes more of a burden than a benefit. If you do find yourself in this predicament, the last thing you want is make decisions in haste. Therefore preparation is the key to avoiding some missteps made by people seeking to downsize. Here are some missteps we at Lannik Law, LLC see on a daily basis.
Not Budgeting for Your Future.
1. Many people find themselves in a financial bind once they find their cost of living doesn’t correspond with a newly fixed income. Finding ways to curb your expenses in advance can significantly increase your expenditure for rightsizing in the future.
2. Begin by estimating your expenses and determining what income you will need to maintain your lifestyle. You may have to make certain sacrifices. Experts suggest an individual estimate 70% to 80% of their annual income as a gage for retirement. Here are some things to ask yourself:
- How much will you be receiving from Social Security, IRAs, and pension?
- Consider both minor and major changes in spending during retirement.
- Will you be eating out more often or traveling?
- Will you need in home care due to illness or changes in mobility?
- How should I adjust my spending plan and test your budget? Make sure to take advantage of the various online calculators designed to assess a retirement savings plan which is tailored to your lifestyle.
3. Ask yourself, how should I adjust my spending plan; and test.
Not Rightsizing Possessions and Heirlooms.
Learn to let go of what no longer suits you. Hoarding heirlooms and treasures may hold sentimental appeal but can become impractical in the long run. Making a proper assessment of what you have and what you can live without will help you get a sense of your future living space. Moving costs are estimated at around $5,000 to $8,000 on average, depending on volume and distance. Selling or giving away valuables in advance can help mitigate these costs. Start by getting valuable items appraised. Research trends and whether items are appreciating or depreciating in value. Determine when and where to sell for maximum profits (auctions, estate sales or online platforms). Do not let your possessions dictate or limit your future endeavors. A decluttered home is a decluttered mind after all. It might be that a senior move manager can be helpful to you.
Missing Out on Maximum Tax Exclusions After Turning a Profit.
If the value of your home has appreciated considerably, you may be subject to significant capital gains taxes. Many people fail to take advantage of worthwhile tax exclusions available to them simply because they fail to read the fine print. Single individuals who profit off the sale of their home may be eligible to exclude up to $250,000 from their income taxes while married couples who file jointly may be entitled to $500,000. Before these exclusions apply, the IRS requires you to meet certain ownership qualifiers. The home must be owned for a minimum of two years and be your main residence (inhabited for two of the past five years but need not be consecutive). There are exceptions to these rules such as “unforeseeable” circumstances, including but not limited to natural disasters, employment changes, or even death of a spouse. If you were an active service member, intelligence or Peace Corps personnel and were not physically living in the residence or if you sold remainder interest in the property to a non related party, you may still qualify. If widowed and have not remarried by the date of sale, you may still be eligible for the married exclusion. Calculate your capital gains by deducting your cost basis from the sale price. Cost basis is measured by totaling any capital improvements or upgrades (does not include repairs or decor), closing fees, commissions or settlements. You may not include any previous tax exclusions received for home improvements.
Not Weighing Your Options. Don’t Rule Out Renting.
While you will miss out on building equity, renting can be a more viable option for those seeking to streamline future costs and responsibilities associated with owning a home. Avoiding property taxes and upkeep comes with significant perks such as accumulating a more sizable retirement fund.
Part of our planning process at Lannik Law, LLC is to analyze your current situation along with your potential future needs. We can make recommendations for professionals in a variety of fields to assist you.
A Personal Note From Susana
Dear Clients, Colleagues and Friends,
Since the Pandemic starting in 2020, most of my business and talks have been conducted through Zoom, even to this day. I discovered that my paralegal and I can work remotely and don’t need to be in the office full time. Therefore, the use of my Needham office—as much as I love it—has become very limited and it is really obsolete. In view of those facts, I will be practicing at Staples Studio in Needham: Address: 163 Highland Avenue, Needham Heights, MA 02494.
They offer a small office, wonderful conference facilities for either zoom or in-person meetings, and a refreshment area for “members” and clients.
I look forward to my association with them commencing March 1, 2023.
My Phone Number will be the same. 617-431-2669.
My Cape office still remains available for meetings as well.
If you have any questions about this “adventure” please feel free to contact the office.