Paul R. Tierney Law

The Elderly Wealthy

IRS data shows that wealthy Americans over the age of 80 have as much wealth as those younger rich people under 50.

It is to be expected that older people, on average, have more money than younger people. A long life makes for more time to generate and grow wealth.

However, in the U.S., a couple of trends have combined to make the elderly rich have an ever greater share of wealth compared to the younger rich than might be expected.

The first of these trends is that, after years of increasing, American life expectancy is beginning to decrease for unknown reasons. The second is that wealthy people are still continuing to live longer.  Their life expectancy is outpacing other Americans.

This has led to rich people over 80 having as much total wealth as rich people under 50, according to IRS data, as Bloomberg reports in "Octogenarians Rule the Rich."

The eventual implications of this could have a significant impact.

Wealthy elderly people will not live forever. In the next couple of decades, an astounding amount of wealth will be transferred from the oldest Americans to younger generations.

If those transfers are done poorly, then considerable wealth could be wasted.

While some might assume the wealthy have the wisdom to get good estate plans to facilitate the transfer of their wealth that is not always the case.

Many do not get those plans or they get plans that contribute to costly legal challenges to their plans by family members.

It is imperative, therefore, that wealthy older Americans get good estate planning advice, if they do not want their wealth to be squandered by their heirs.

Reference: Bloomberg (Aug. 23, 2017) "Octogenarians Rule the Rich."

The Elderly Wealthy

IRS data shows that wealthy Americans over the age of 80 have as much wealth as those younger rich people under 50.

It is to be expected that older people, on average, have more money than younger people. A long life makes for more time to generate and grow wealth.

However, in the U.S., a couple of trends have combined to make the elderly rich have an ever greater share of wealth compared to the younger rich than might be expected.

The first of these trends is that, after years of increasing, American life expectancy is beginning to decrease for unknown reasons. The second is that wealthy people are still continuing to live longer.  Their life expectancy is outpacing other Americans.

This has led to rich people over 80 having as much total wealth as rich people under 50, according to IRS data, as Bloomberg reports in "Octogenarians Rule the Rich."

The eventual implications of this could have a significant impact.

Wealthy elderly people will not live forever. In the next couple of decades, an astounding amount of wealth will be transferred from the oldest Americans to younger generations.

If those transfers are done poorly, then considerable wealth could be wasted.

While some might assume the wealthy have the wisdom to get good estate plans to facilitate the transfer of their wealth that is not always the case.

Many do not get those plans or they get plans that contribute to costly legal challenges to their plans by family members.

It is imperative, therefore, that wealthy older Americans get good estate planning advice, if they do not want their wealth to be squandered by their heirs.

Reference: Bloomberg (Aug. 23, 2017) "Octogenarians Rule the Rich."

Did Louise Linton Jeopardize Tax Reform?

While Americans wait to see what Congress will do with tax reform, the Secretary of the Treasury's wife might have imperiled some planned reforms.

Millions of Americans are currently keeping their estate and financial plans in a sort of limbo. They are waiting to see what tax reforms will come out of Congress this autumn.

Potential changes to the estate tax, gift tax, capital gains tax, deductions, corporate taxes and more could all have great impact on the estate plans of Americans.

These tax changes have the potential to make many estate plans obsolete, so some people are now holding off on making new plans.

A social media post might now change the public debate about what the tax reforms should include, as the Washington Post discusses in "Here's how Louise Linton could change the tax debate."

Louise Linton is the wife of the Secretary of the Treasury, Steve Mnuchin. She posted a picture of the two of them getting off a government-owned plane.  She labeled the picture by listing all of the designer fashion items that she was wearing.

A single mother of three responded to this with "Glad we could pay for your little getaway."

Instead of letting that go, Linton responded by berating the woman repeatedly about how much in taxes she and her husband have paid and how many sacrifices they have made.

Who is right in this debate is not the important issue.

Linton's response was seen as the worst possible response of a tone death, entitled rich person.

 It has the potential to turn the public mood against the tax reforms that her husband is proposing  which would benefit the wealthy, such as eliminating the estate tax.

Reference: Washington Post (Aug. 23, 2017) "Here's how Louise Linton could change the tax debate."

Did Louise Linton Jeopardize Tax Reform?

While Americans wait to see what Congress will do with tax reform, the Secretary of the Treasury's wife might have imperiled some planned reforms.

Millions of Americans are currently keeping their estate and financial plans in a sort of limbo. They are waiting to see what tax reforms will come out of Congress this autumn.

Potential changes to the estate tax, gift tax, capital gains tax, deductions, corporate taxes and more could all have great impact on the estate plans of Americans.

These tax changes have the potential to make many estate plans obsolete, so some people are now holding off on making new plans.

A social media post might now change the public debate about what the tax reforms should include, as the Washington Post discusses in "Here's how Louise Linton could change the tax debate."

Louise Linton is the wife of the Secretary of the Treasury, Steve Mnuchin. She posted a picture of the two of them getting off a government-owned plane.  She labeled the picture by listing all of the designer fashion items that she was wearing.

A single mother of three responded to this with "Glad we could pay for your little getaway."

Instead of letting that go, Linton responded by berating the woman repeatedly about how much in taxes she and her husband have paid and how many sacrifices they have made.

Who is right in this debate is not the important issue.

Linton's response was seen as the worst possible response of a tone death, entitled rich person.

 It has the potential to turn the public mood against the tax reforms that her husband is proposing  which would benefit the wealthy, such as eliminating the estate tax.

Reference: Washington Post (Aug. 23, 2017) "Here's how Louise Linton could change the tax debate."

A Document That College Students Must Have

There is a lot to do when first preparing for college. One of those things that should be done is to visit an estate planning attorney to get a power of attorney drawn up.

It might seem a little strange or even morbid to suggest that new college students should see an estate planning attorney. When people go to college, they do not normally think that something bad could happen to them anytime soon, and certainly nothing that will lead to death.

However, there is nothing morbid about it.

People should see an estate planning attorney as part of their college preparations. If for no other reason, this should at least be done to get a power of attorney, as Financial Advisor points out in "College Students Need A Power of Attorney."

It is not that something will happen to new college students. However, it could. Consequently, it is best to be adequately prepared.

For most people, as they grew up, they never had to worry too much about what would happen if they had a serious accident.

If anything did happen, then their parents would be able to manage everything.

That changes once students are adults.

Parents cannot legally do things, such as take money out of a bank account to pay bills or make medical decisions, if necessary.

Therefore, how do parents get that legal authority?

The young adults in their life should sign powers of attorney giving them (or someone else) the ability to manage things, in the event there is an accident or illness causing incapacity.

While it is unlikely that it will ever be necessary, preparing for the possibility is a good idea.

Reference: Financial Advisor (Aug. 22, 2017) "College Students Need A Power of Attorney."

Robot Led Funerals

As funerals continue to get more and more expensive, people are looking for ways to make them cheaper for themselves. In Japan, there is now a new option that might eventually make its way to the U.S.

You do not need to look very far to find discussion of a potential future, where humans do little work and have been replaced by robots. While such discussion was once mainly limited to science fiction stories, it is now a hot topic in the mainstream news.

Tech companies and car companies are engaged in a race to develop self-driving vehicles, which could put millions of drivers out of work. Grocery chains are looking to automate. Restaurants are automating some services.

The list goes on and on, as people look for ways to save on labor costs by replacing humans with robots.

There is now even the surprising twist that robots could eventually put funeral directors and priests out of work, according to The Guardian in "The future of funerals? Robot priest launched to undercut human-led rites."

A company in Japan has developed a robot that can perform the rites of a Buddhist priest at funerals, for a quarter of the cost a human priest would typically charge.

If people start using the service, it is likely the idea will spread to other countries before too long.

However, it is not certain that people will accept religious functions conducted by a robot.

For now, no one needs to think about this for their own funerals.

Nevertheless, in the future, it might be one more thing elderly Americans need to think about.

Will they still want a human to conduct their funerals or will they prefer a cheaper robot?

Reference: The Guardian (Aug. 23, 2017) "The future of funerals? Robot priest launched to undercut human-led rites."

Assisted Living for the Wealthy

Assisted living facilities come in all different sorts of varieties to meet the income of different groups of the elderly. The wealthy will soon have facilities especially for them.

Assisted living facilities are not inexpensive for most people. Whatever amount of money an elderly person has, there is normally an assisted living facility designed to make moving there just affordable enough to attract the elderly person.

In that way, they are like residential homes. The more money people have, the more expensive homes they purchase.  This makes it so almost no one gets a home that is not a significant investment, relative to their overall assets.

However, there has been one group of elderly people who do not have many assisted living facilities designed specifically for them - the wealthiest Americans.

That is about to change,  since developers plan on building new luxury facilities in Manhattan, N.Y., as the Wills, Trusts & Estates Prof Blog reports in "Manhattan Gets $20,000-a-Month Homes for New Breed of Seniors."

The wealthy will be able to live in these new facilities for $20,000 a month. For that amount, they will get homes that contain all of the expected trappings of luxury and all of the expected services available in assisted living facilities.

It remains to be seen just how many people there are, who will want to live in facilities that cost more per month than several live-in nurses might.

Of course, most people will not be able to afford these new facilities and they still need affordable assisted living facilities for themselves.

Whatever your income level is, you should be able to find an appropriate place for yourself, if you check around.

Before signing any contracts, however, have an elder law attorney look them over to make sure there are no hidden expenses.

Reference: Wills, Trusts & Estates Prof Blog (Sep. 2, 2017) "Manhattan Gets $20,000-a-Month Homes for New Breed of Seniors."

Double Euthanasia in the Netherlands

As the debate over whether a terminally ill patient should be allowed to end his or her life continues in the U.S., it has been settled in the Netherlands for a while. In that country, they even allow elderly couples to die together.

In the U.S., a handful of states allow people who are terminally ill, and who do not have long to live, to choose when they want to pass away.

They do so by asking a doctor to prescribe a lethal dose of medication, which the patient then takes when he or she wishes to do so.

This is known as “physician assisted suicide”. California recently became the latest state to allow the practice. In a few countries, the laws go even further.

Those countries allow the practice of euthanasia in which the physician kills the patient at a predetermined time.

One of the countries that allows euthanasia is The Netherlands.

The Washington Post reported on how the law can work there in "Elderly couple got 'deepest wish' -- to die together -- in rare euthanasia case."

Nic and Trees Elderhorst were both 91 years old.  They had been married for 61 years. He suffered from a stroke and she was diagnosed with dementia.

Their wish was to die at the same time, so they applied to be euthanized together. Their wish was granted and after sharing a final kiss they were killed by doctors on July 4, 2017.

As the U.S. continues to debate this issue, it might be helpful to keep in mind couples like the Elderhorsts and want they wanted.

Reference: Washington Post (August 17, 2017) "Elderly couple got 'deepest wish' -- to die together -- in rare euthanasia case."

Downsizing Can Be Expensive

Elderly people who are moving from a large home to a smaller, more manageable one, often have trouble shedding some of their possessions in the process.

Many elderly people who live in large homes need to move to something smaller. The larger homes are more difficult to maintain and they often require navigating too many stairs.

As part of this downsizing process, the elderly need to get rid of many of their possessions, since their new homes do not have the capacity to hold everything. One way this can be done is to let children and grandchildren come over and take the items they want.

However, elderly people who do that often find that their younger relatives do not want or cannot take very much, since their own homes are already filled or they just have different tastes than their elders.

The New York Times reported on this problem in "Aging Parents with Lots of Stuff, and Children Who Don't Want It."

One solution to this problem is to contact an estate sale company to auction off unwanted items.

Nevertheless, some people on fixed incomes might find that option unaffordable, since many estate sale agents charge high hourly fees and fixed fees from the sale in the thousands of dollars range.

Another potential solution is to donate unwanted possessions to charity.

More and more people are using this option.

It can even come with the benefit of a tax deduction for those elderly people who itemize their deductions.

If you are considering downsizing to a smaller home and need help finding an estate sale company or reputable charity in your community, then you might consider calling your local elder center.

Reference: New York Times (August 18, 2017) "Aging Parents with Lots of Stuff, and Children Who Don't Want It."

Valuing Jerry Lewis' Estate

Jerry Lewis recently passed away. Even though he owned all the rights to his most famous movies, his estate might be worth much less than people would expect.

Comedian Jerry Lewis was particular about the legacy of his life's work on camera. He purchased all of the rights to his most memorable films, including everything from the scripts to negatives, when they were not worth very much.

Lewis even insisted on complete control over any possible remakes of the movies.

Now that he has passed away, it is not clear how valuable those rights might be.

One potential clue might be an old real estate transaction, as Wealth Advisor discusses in "Jerry Lewis May Leave Shockingly Modest Estate Behind."

Lewis purchased his Las Vegas home through a family trust. However, in 2002 he did something very unusual.

Lewis and his wife purchased the home from the trust.

It is not a particularly lavish home by celebrity standards.  It is probably worth less than $1 million. There does not appear to have been any estate tax reason for the transfer.

There are two possible explanations.

The purchase might have been made to wind down the trust. It also could have been made to cover the costs of transferring the rights to his movies to the trust.

 It means that it is not clear who now really owns the movie rights and what restrictions, if any, have been placed on how those rights can be handled.

Since Lewis was so particular about maintaining control of any remakes, it could be that he has given directions that no remakes be made after his death.  This would make the rights worth far less, than if remakes could be made.

Reference: Wealth Advisor (August 20, 2017) "Jerry Lewis May Leave Shockingly Modest Estate Behind."