For more information about the author, click to view their website: Sechler Law Firm
People often ask our law firm about taxes, and we understand their concern. We appreciate they don’t want to pay any more money in taxes, and we certainly don’t want to give the government any more money. We are sure many people feel they would prefer to give the money to their kids. That is why it’s important for you to know more about the four death taxes that apply to Pennsylvania residents. Only three of the taxes apply in other states, but Pennsylvania also has inheritance tax.
The four taxes I want you to know about, with regard to your estate plan, are the Federal Estate tax, the Pennsylvania Inheritance tax, the Capital Gains tax and the Secure Act.
The Federal Estate Tax does not apply to middle-class Americans. The current exemption allows for you to die with up to $12.9 million each. That would be $26 million for a married couple. Everybody asks about federal estate tax because in the 1990’s, the lifetime exemption was below 1 $million. As a result, many people were affected in the 90’s. Fortunately since then the exemption allowance has been increased.
The Pennsylvania ‘death’ tax is an inheritance tax, owed by the people inheriting the money. Your relationship to the person who passed away, determines the amount of tax you pay. When you leave money to your descendants, including your kids and grandkids, they will pay 4.5% tax. Leaving money to your ascendants such as your parents or grandparents is also 4.5% tax.
If you don’t have kids, and you leave money to your siblings, they will pay 12% tax. Leaving money to anyone else, including nieces, nephews, friends or neighbors, requires they pay 15% inheritance tax. This is substantial amount of tax to pay. However, to avoid your heirs paying any tax, you have to give up control of your money, which I advise my clients not to do. Pennsylvania inheritance tax rates for siblings or nieces and nephews, is discriminatory. Essentially, we are also discriminating against couples who can’t have children. This is particularly relevant in families where a couple without children, who wants to leave money to their nieces or nephews. It doesn’t seem fair that the inheritance tax rate is 15%.
There is this idea among seniors, who think that putting their house in their kid’s name to save their kid paying 4.5% inheritance tax, is a good idea. What they don’t realize is that it is preferable to pay the Pennsylvania inheritance tax, compared to paying capital gains tax. I believe that if your child is going to inherit $100,000, he can afford to pay the 4.5% inheritance tax. You should not have to be concerned about saving him 4.5%.
A capital gains tax is due upon the sale of an asset that has grown in value. If dad bought his primary residence for $100,000 and he sells it for $300,000, the gain of $200,000 is largely exempt from capital gains tax. If dad gives the house to his son, his kid owns it for $100,000. Assuming that dad has to go to the care home a few years later, his son sells the house to pay for dad’s care. Since the house is not the son’s primary residence, he has to recognize a $200,000 capital gain. The same principle applies to rental properties if they are not the primary residence of the person selling the property. Essentially, this family made a $54,000 tax mistake, given that the rate of capital gains tax is 18%.
If you leave assets in your estate until you pass away, and it is held in a trust, your kid inherits the assets at date of death. While your child will pay Pennsylvania’s inheritance tax which will be $13,500, the stepped up basis is applied. This means that the house that Dad bought for $100,000, is now worth $300,000. His son has inherited the house for the date of death value, which is $300,000. He is allowed to sell it for $300,000 without having to pay the capital gains tax.
Another tax you need to know about is the Secure Act, which passed in October of 2019 and became law in January of 2020. This is the biggest tax hike against the middle class.
Most middle class Americans have all of their money in home equity and retirement accounts. If you have a retirement account, an IRA, or a 401k, this Secure Act will affect you.
Before the Secure Act was implemented, if my dad passes away, leaving me his retirement account, it becomes my retirement account, known as the inherited IRA. This meant that money could stay in the stock market with tax deferred growth for several decades. I would need to take distributions at regular intervals, but most of the money would stay in the fund.
Since the Secure Act, the rules have changed significantly. Now, when you pass away and you leave your retirement account to your kid, he has to pull all the money out of the account, within 10 years. This means that one loses out on many decades of tax deferred growth. In addition, if you inherit the money when you are 55, you are likely still working and paying high income tax. Now you have to add your dad’s 401k which means you’ll be paying even more income tax.
If you want to learn more about how to protect yourself and your legacy, come to one of our Three Secrets Workshops. Call 724-564-6615 to register.
Social Media and Seniors: Connecting and Staying Safe OnlineIn todays digital age, social media is a great way for seniors to stay connected to friends and family. With the right guidance, seniors can join platforms such as Facebook, Twitter, Instagram, LinkedIn, and YouTube to create connections online. Although some may be hesitant to start using social media, it is important that they understand how beneficial it can be for finding new ways to connect with those they care about.Getting Started with Social MediaFor those who have never used social media before, the first step is to find what will work best for them. There are many platforms available for seniors to choose from; however, the most popular options are generally Facebook and YouTube. Both of these sites offer easy-to-navigate interfaces that allow users to quickly get up and running without needing any prior experience. Additionally, both sites have dedicated support teams that can answer questions or provide help if needed.Once signed up, seniors can start sharing messages with friends and family members all over the world in just a few clicks. Through instant messaging apps like Facebook Messenger or WhatsApp, seniors can stay in touch with loved ones no matter where they are located. This makes it easier than ever before for seniors to stay connected even when they cannot physically meet up in person due to distance or other factors such as health concerns.Building Connections OnlineIn addition to connecting with those who are already part of their lives, social media also provides an opportunity for seniors to make new connections. For example, on Facebook, there are numerous groups available for people in similar life stages or situations who want to share experiences or ask questions from other members of the group. This type of networking not only provides valuable knowledge but offers a great way for seniors to build relationships with others outside of their immediate circle of friends and family members.Social media is an invaluable tool that allows seniors to stay connected and make meaningful connections onlineno matter where they live! From staying in touch with loved ones through instant messaging apps to joining interest groups on Facebook and YouTube dedicated specifically towards baby boomers or adults aged 50+, social media offers a plethora of opportunities for anyone looking to strengthen their online presence while enjoying the convenience of connecting virtually from anywhere in the world! While staying active on social media is fun and rewarding, there are certain risks that all users should take into accountespecially when it comes to seniors. Read on to learn more about the potential pitfalls of social media for seniors and how best to protect yourself online.Keep Information PrivateWhen creating a profile, its important to make sure your personal information is kept private and that your passwords are secure. Sharing too much information or using weak passwords could leave you vulnerable to hackers or scammers.Be Careful Who You Interact WithAnother important safety measure is being careful who you interact with online. In todays digital world, it can be difficult to know if someone is who they say they are--which means you should always exercise caution before engaging with strangers online or accepting friend requests from people you dont know in real life. AKeep Your Software Up-to-DateFinally, one of the most effective ways for seniors to stay safe online is by making sure their software is up-to-date at all times. This includes things like anti-virus software, firewalls, browsers, etc., which help protect against malicious attacks and hackers trying to gain access to sensitive data or personal information stored on your devices. Make sure all your devices have the latest version of any necessary software installed so you can rest easy knowing your data is safe and secure at all times.Social media has many benefits for seniorsfrom staying connected with loved ones near and far away to exploring new interests allowing everyone to stay safe when using these networks. By understanding the risks associated with using social media platforms, carefully monitoring who interacts with you online, and keeping all software up-to-date, seniors can better protect themselves while still enjoying all the perks that come along with being active on social media!
What is Dementia?Dementia is actually not a disease in and of itself but, rather, a syndrome that is characterized by a collection of symptoms affecting cognition and memory, making it hard to remember, think clearly, and make decisions. Alzheimers disease is the most common cause of dementia, although its important to note that not all people who have been diagnosed with dementia necessarily have Alzheimers Disease. Some other types of dementia typically identified are vascular dementia, Lewy body dementia, frontal temporal and mixed dementia.What Are Some Dementia Symptoms?All of us have occasional problems recalling a name, accessing an old memory, or remembering where we may have parked our car. But someone living with dementia will exhibit a range of troubling and persistent symptoms that get worse and may include: Changes in mood and personality Decreased or poor judgment Problems speaking or writing Confusion with time or place Disruptions in daily life due to memory loss Difficulty managing everyday tasks Repetitive behaviorsIf your loved one is exhibiting any of these symptoms, its important to know that it does not necessarily mean a dementia diagnosis; infections and dehydration, vitamin deficiencies, and depression can present many of these signs. However, if any of these symptoms persist or worsen, its essential that you consult a physician who can make a diagnosis. Its also helpful to know that no single test can make a determination; a diagnosis is based on a range of medical tests, creating a baseline, and an individuals medical history.How Quickly Does the Disease Progress?Dementia is a progressive condition it gets worse over time, not better. For some, the disease progresses rapidly; in others, it takes years to get to the point where outside help is required. The progression depends largely on the underlying cause, whether it be Alzheimers disease, Lewy body disease, Parkinsons disease, or some other root condition. While people will experience the stages of dementia differently, most will exhibit some of the symptoms. On average, dementia patients will live four to eight years after their diagnosis, although some live as long as 20 years after being diagnosed.Does Dementia Only Affect Seniors?Dementia is more commonly diagnosed in people over 65, but it can affect people in their 30s, 40s, or 50s. The estimated average age of onset of dementia in the U.S. is 83+ years old.How Can We Help After A Dementia Diagnosis?If someone has been diagnosed with dementia, its important to know there are expert resources available to both you and your family members that can help you navigate the progression of the disease. The sooner you familiarize yourself with them, the better. As Certified Dementia Practitioners, the advisors at Senior Care Authority can help you decide on the right help at the right time, including setting up in-home visits, scheduling respite care, learning important communication skills, and helping you decide on an assisted living situation, should that be warranted. It is so important to remember that you are not alone. We have helped hundreds of families respond to the challenges of a dementia diagnosis, and we can do the same for you, too. To find out more about the symptoms of dementia and how we can help, get in touch with Senior Care Authority today.
More than 6 million Americans are living with Alzheimers, and that number is expected to reach 13 million by 2050. Although dementia treatment can lessen the impact of symptoms on daily life (and promising new drugs may slow the progression of dementia), currently there isnt a cure or a way to prevent the disease that affects memory, thinking and behavior.Common dementia treatment options include:Medication options for dementia treatmentMedications are commonly used to treat symptoms of Alzheimers disease and other dementias. Symptoms include cognitive (memory and thinking) issues, behavioral changes and sleep problems.Recently, there have been exciting breakthroughs in dementia treatment. New medications are showing promise at slowing the progression of dementia. These include anti-amyloid antibody intravenous (IV) infusion therapies for people in the early stages of dementia.When considering medication options for dementia treatment, questions to ask your loved ones doctor include:How does this medication treat the symptom(s)?How will you measure its effectiveness?What are the potential side effects? When should we contact you if we notice changes?How will this drug interact with existing treatments for other conditions?What options are available if insurance does not cover this drug?A Person-centered approachA person-centered approach complements medical dementia treatment by addressing behaviors that often stem from an unmet human need. Executive Director of Memory Support Services for Country Meadows Retirement Communities, Joel Kroft, explains, All behavior has purpose and meaning, and all humans use behavior as part of our normal communication with others. When we recognize that behaviors are often expressing an unmet need, either physical or emotional, then we can work toward understanding instead of frustration. If we meet the unmet need that is being expressed, then that behavior often goes away. Through this person-centered care lens, we can minimize or eliminate many challenging behaviors that are really just our residents expressing their needs, without the use of medications, and improve the quality of life for our residents living with dementia.Validation MethodThe Validation Method is a technique and a philosophy for dementia care created from the person-centered care practice of the late, Naomi Fell. This approach accepts the reality of the person with dementia rather than trying to force him/her to accept ours.Family, friends and caregivers learn how to listen with empathy and ask questions that allow the person with dementia to more fully express frustrations and concerns with dignity. By being accepting and compassionate, these conversations can help reduce anxiety and worries in the person with dementia and often improve connection with others.Learn how Country Meadows has embraced the Validation Method in our commitment to quality memory care.Technological toolsTechnology is offering exciting new tools for dementia treatment. The innovative Tovertafel (Tover Table) is an interactive game console that projects dynamic images onto a table or floor for participants to touch.At Country Meadows, use of the Tover Table has been shown to increase alertness and focus, reduce restlessness and tense behaviors including sundowning and promote social and physical activity in residents with dementia. For families, it enhances connections in a fun and meaningful way.
At Sechler Law Firm, LLC, our mission is to help families make great plans. A great estate plan is more than just a set of documents. It is a comprehensive and well thought out written strategy on how to deal with lifes unfortunate twists and turns. Our process first provides you with the education necessary to make informed decisions with regard to your planning. Then we put the proper documents and legal framework in place to respond to lifes unfortunate changes.Our Estate Planning law office is headquartered in Cranberry, PA. From this office, we happily serve the residents of Cranberry, Mars, Wexford, Pittsburgh, Butler and the residents of surrounding communities. As one of the regions only Certified Elder Law Attorneys, Tim Sechler and his team often assist families from across Western Pennsylvania.We understand that the pursuit of health, wealth and happiness is the goal of most families. We want you to be able to pursue these goals, or whatever goals you may have, knowing that you have a back up plan if life throws you a curveball like a death, disability or nursing home need. With education as our foundation, we will work with you to make decisions to Shield What Matters Most to you.Practice AreasEstate PlanningCustomized planning doesnt have to be difficult for you. We strive to make the process easy. The first step is to identify your concerns so that we can make suggestions regarding your plan.Elder Law Crisis PlanningA significant percentage of our practice is dedicated to helping families navigate the long term care maze. We help with Asset Protection and eligibility for Medicaid and Veterans Benefits.Trust And Estate AdministrationIf you have lost a loved one, we can help you take the necessary steps to help handle their affairs.Tims estate planning practice is focused on guiding clients through the complicated maze of balancing transfer strategies, wealth preservation, and family values in the planning process.Tim is a Combat Veteran, having served in Afghanistan as a member of the West Virginia Air National Guard. Prior to leaving the military, Tim had attained the rank of Staff Sergeant. His experiences in the military have led him to thoroughly enjoy working with Veterans and their families.Tim received his law degree from Duquesne University School of Law, and his Master of Business Administration from the Duquesne University Donahue Graduate School of Business. He received his Bachelor of Science in Business Administration from West Virginia University, majoring in Finance. Tim is licensed to practice Law in Pennsylvania and West Virginia.Recently, Tim has been seen frequently as a guest on KDKAs Pittsburgh Today Live, and has been quoted in several local print publications. For the last several years, he has been honored to be chosen as a Super Lawyers Rising Star, an award given to less than 2.5% of Tims peers. Tim enjoys educating the public about Elder Law and Estate Planning. He has spoken to thousands of people regarding estate planning and has averaged more than 50 speaking events per year.Tim became a Certified Elder Law Attorney* in 2017. A CELA is more than just an attorney who specializes in the field of elder law. CELAs are committed, through certification, to maintaining and improving their proficiency with continual practice and continuing legal education. Becoming certified in elder law validates a lawyers specialty to handle issues that affect senior citizens.Tim and his wife, Robyn, are raising three beautiful children in their home in Mars, PA.*Certified as an Elder Law Attorney by the National Elder Law Foundation.