Comprehensive Planning. Lifelong Solutions.

Be aware of the details on required minimum distributions

By Hook Law Center

It is important for taxpayers to be informed about required minimum distributions (RMDs) from IRAs so that they can plan accordingly for their retirement. In the current year, those persons age 70 ½ or older are required to take a RMD from their traditional IRAs (Individual Retirement Arrangements), SEP (Simplified Employee Pension) IRAs, SIMPLE (Savings Incentive Match Plan for Employees) IRAs, or retirement plan accounts. You must also report RMDs for any IRAs that you inherit.

If you do not take distributions in a timely manner, you may have to pay a 50 percent excise tax on excess IRA additions. You should be aware that defined contribution owners may not have to file a report until retirement.

Those who attain the age of 70 ½ in 2016 are required to report a RMD for the year, but they may wait until April 1, 2017 to do so. Individuals who report RMDs for the first time and are waiting until April to do so, must report twice, because they are required to report a RMD for the current year prior to December 31. This could result in an increase in their tax liability.

Following the first year, IRA owners must report RMDs on an annual basis by the end of the year. The life expectancy of the taxpayer and the taxpayer’s spouse will play a role. The IRS provides resources for making calculations of RMDs. However, the main calculation is to divide the taxpayer’s account balance as of the end of the previous year by an IRS life expectancy factor.

Taxpayers who have neglected to take RMDs are advised to take all of them as quickly as possible so as to avoid the aforementioned excise tax. But taxpayers, such as retirees, who do not need their RMDs, may wish to reinvest those funds into a Roth IRA, which will not require the taxpayer to make withdrawals until after the death of the account holder. Or they may consider reinvesting the funds into a 529 savings plan for their grandchildren.

Posted on Tuesday, October 18th, 2016. Filed under Estate Planning.

How to transfer property to a living trust

By Hook Law Center

A living trust is a legal entity that is used to hold title to your assets while you are alive. Upon your death, the assets are then transferred to the beneficiaries named in the trust. You can transfer such assets as bank accounts, stocks, bonds and certificates to the trust. You may also wish to change the beneficiary on your life insurance policy and retirement accounts, and establish a pour-over will that distributes any assets obtained after the creation of the living trust (but prior to your death) to the trust upon your death.

You can also transfer tangible personal property to a living trust. This type of property includes jewelry, furniture, books, artwork, clothing, automobiles and other such items. Personal property does not include real property and intangible property, including money, stocks or bonds.

The transfer of an automobile or other vehicle to a living trust is very similar to transferring it to a third party. You sign the title over to the trustee, who then registers the vehicle. Registration of a vehicle held in trust has the same requirements as does registration of a vehicle held in your own name. You are also required to have an insurance card that shows that the insurance on the vehicle is in the name of the trustee. And if you are behind in the payment of any property taxes, you will be required pay the delinquent tax prior completing registration.

Moreover, most states will require you to have either a duplicate of the trust instrument or a letter from the attorney confirming the name of the trust and the trustee. The letter must also corroborate that the trust is in effect. There are some states that will levy a sales tax on the transfer of a vehicle to a revocable living trust on the basis of the sale price paid by the trustee or the vehicle’s book value, whichever is greater. However, a sales tax is inapplicable when the transferor is the same as the transferee. If your state is insistent, contact your state tax department, and speak with one of its lawyers.

One advantage of a living trust is the avoidance of probate, which can be costly and time-consuming. Another benefit is that a living trust ensures the privacy of your distributions whereas a will is public record. In addition, if you become ill or lose capacity, your trustee can make decisions on your behalf. But if you have a will without a durable power of attorney, the court will designate an individual to manage your financial matters. If you create a durable power of attorney, including one for health care decisions, the court will not select a conservator to handle your affairs.


Posted on Tuesday, September 6th, 2016. Filed under Estate Planning.

Address these essential elements of retirement planning

By Hook Law Center

During your retirement years, you may expect to receive Social Security payments. A few people may also receive payments from public or private pension plans. However, it is best not to rely on such sources to provide a sufficient amount of income to ensure that you retire comfortably. Although you may receive income from both sources, it would be beneficial to have retirement income that is diversified.

Rather than depending on pension or Social Security benefits, you should be responsible for your own retirement planning. Here are some measures that you can implement so that you can have more control over your retirement:

  • If you are employed by a company that offers matching through a retirement savings plan, then it is to your advantage to participate in such a plan. Many employers currently offer retirement plans consisting of matching contributions in lieu of a pension.
  • By starting to save early, you can realize the benefits of compound interest. However, even if you begin saving late in your career, you may still be able to retire comfortably. You may have to compensate for the late start by increasing the rate at which you save, reducing your expenses, or working a few more years than you had anticipated.
  • In addition, you may need to change your lifestyle by living below your means, and establishing a budget that permits you to accumulate a savings that is intended for your investment in retirement. Every month, you will have to spend a lesser amount than that which you earn, and invest the difference.

By living below your means, you will realize your objective of applying more funds toward your retirement and choosing a lifestyle that encourages you to live on a reduced budget. This will allow you to realize your retirement goals more quickly.

  • Furthermore, it would be advantageous for you to make full use of your tax deferral options for retirement, including IRAs and retirement plans through your employers, such as 401(k)s, 457s, 403(b)s or the Thrift Savings Plan. In some instances, you can use a health savings account to help fund your retirement.

Tax-deferred accounts help you increase your retirement income more rapidly because no taxes are owed on the funds or the growth until such time as when you make withdrawals during your retirement. Moreover, delaying payment of taxes on the dividends, interest and capital gains every year permits your retirement account to grow at a faster rate. While you will likely be able to benefit from Social Security or a public pension plan, it is recommended that you not rely on either choice, but rather, take control of your retirement planning.

It would be helpful for you to consult a financial advisor who can develop a plan that will enable you to meet your retirement objectives. Some fundamental questions that you should consider are:

  • the age at which you would like to retire;
  • the number of years you wish your retirement income to last;
  • the amount of income you anticipate receiving from Social Security, pension, dividends, rental properties, and other sources.

One rule to keep in mind is that people require 70 percent to 100 percent of their income prior to retirement in order to keep the same lifestyle on a yearly basis. However, this is subject to change, depending on such factors as whether you wish to travel and whether your mortgage is paid off. You should also consider the cost of living and unforeseen expenses, such as health care. A financial advisor can assist you in confronting these issues, and establishing a workable retirement plan.

Posted on Wednesday, August 24th, 2016. Filed under Estate Planning.

Department of Defense Rolls Out a New Retirement Plan

By Shannon Laymon-Pecoraro, CELA

The Department of Defense has unveiled a new retirement plan that will go into effect on January 1, 2018. The new “blended” plan will not impact a majority of the currently enlisted members, but will present a complex financial decision for mid-career service members with less than 12 years of service.

The new plan is specifically limited to service members who “opt-in” to the new plan before January 1, 2019 provided they have less than 12 years of service prior to January 1, 2018, and any individual who enters the military once the new plan goes live. For those service members who have more than 12 years of service or do not opt-in, the traditional retirement plan will remain in effect.

Unlike the traditional retirement plan that provides a fixed pension payout for retirees who serve at least 20 years, the new plan will promote contributions to the Thrift Savings Plan (TSP). Specifically, under the new plan, contributions equivalent to 1% of the annual base pay will automatically be contributed to the service member’s TSP account, and provide additional matched contributions of up to 5% of the service member’s annual base pay. In exchange, the pension payments will be reduced by 20% of the current value. Currently, the Department of Defense does not make any contribution to a service member’s TSP account.

Additional perks to the new plan include lump sum payments. Not only does the plan provide a service member with a mid-career continuity bonus, but upon retirement, a service member will receive a lump sum payment that is equal 25% or 50% of a promised pension benefit. This will then cause a reduction in the monthly pension checks until the retiree reaches age 67.

For service members who do not intend on retiring, the new plan, unlike the old “all or nothing” plan, provides an increased retirement benefit. On the other hand, it is clear that service members who are impacted by the new plan should consult with an experienced financial planner. The failure to develop a proper financial plan at the beginning of a military career could have a detrimental impact on the financial status of the service member upon retirement.

Hook Law Center works with a team of financial planners who have developed plans to maximize benefits under the new plan. Should you need any assistance in determining whether to opt-in, how to allocate your TSP portfolio, or how much you should contribute to the TSP, please contact us and we will help make a connection.

Kit KatAsk Kit Kat – Dog Coming to Scotland

Hook Law Center:  Kit Kat, what can you tell us about the little dog, Gobi, who will be coming to live in Scotland?

Kit Kat:  Well, this story you’re going to love! Dion Leonard is a distance runner from Scotland who has participated in some unique events. While he was running in the June 2016 Gobi (Desert) March, which is part of the 4 Deserts Race Series, a small dog approached him. There are 6 stages in the race adding up to a 155-mile trek. During the first day, Gobi just followed the group of runners, but on the 2nd day, she seemed to favor Leonard and stuck close to him. He is not sure of the breed, but she’s copper colored and has pointy ears, and was just a puppy at the time. To me, she looks like she’s part Akita, but that’s just my observation. Anyway, by Day 2, it was clear that Gobi had adopted Leonard. She followed him all that day through 23 miles of varying terrain, making it up to 20,000 feet to cross the Tian Shan mountain range, and finally cross into the Gobi Desert. Leonard shared some of his provisions with her, letting her feast on beef jerky and water. He says he’s not sure why she chose him out of the 101 participants in the race. ‘I didn’t do anything in particular to gain her attention. She chose me. I was the one that she was going to stick to.’

Day 3 arrived and she was still with him. At some points, he carried her, like when they crossed chest-high rivers. In all, she completed stages 2,3, and 6 with him, amounting to 105 miles. During stages 4 and 5, race staff drove her to the finish lines for that day, because of extreme heat when temperatures hovered around 125 degrees.

Leonard finished the race in 2nd place, and both he and Gobi received a medal. By that point he was hooked, and he knew he had to get her back to his home in Scotland. What he found out was that it was possible, but she would have to be quarantined and get various shots and clearances. The cost would be more than $6,500. No problem—he and his wife started an online campaign, and the money was raised. Now, they are just waiting for her to arrive, which they anticipate will be around Christmas! (…)

Upcoming Seminars

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at or fax us at 757-397-1267.

Posted on Monday, August 22nd, 2016. Filed under Estate Planning.

The Effect of Divorce on Your Estate Plan

By Hook Law Center

An unfortunate, but common, scenario: You and your spouse get divorced.  You remarry, but die shortly thereafter.  Your loved ones discover that amidst all the excitement of your divorce and remarriage, you forgot to update your estate plan.  Your will and beneficiary designations all leave everything you own to your first spouse.  What happens now?

You may be surprised to learn that in Virginia, unless otherwise provided in the divorce decree or your separation agreement, a divorce automatically revokes some provisions of your estate plan, while having no effect on others.  Here is a summary on the effect a divorce may have on each of aspect of your estate plan.


Va. Code § 64.2-412(A) provides that upon divorce or annulment, any provision in a client’s existing will in favor of a former spouse is revoked.  This includes not only provisions leaving assets to the former spouse, but also provisions conferring a general or special power of appointment or nominating the former spouse as an executor, trustee, conservator, or guardian.  If there is a remarriage between the parties, though, the provisions made for the former spouse in the will are revived.

Relying on this Code section rather than updating your will would be a mistake, however.  Why give your former spouse something else to argue about in the event of your death?  Go the extra mile and update your will following a divorce.


The Uniform Trust Code (Va. Code §§ 64.2-700 through 64.2-808) does not provide for the revocation of a trust or its provisions (including the naming of a former spouse as trustee) either upon the filing of a divorce action or upon entry or a final decree of divorce or annulment.  In other words, if your revocable trust left everything you own to your wife Mary upon your death, but you and Mary are divorced, Mary is nonetheless entitled to receive everything.

Because divorce has no effect on a trust, you must amend or revoke your trust agreement to avoid your assets passing through it to a former spouse and your former spouse serving as trustee.

Power of Attorney

Va. Code § 64.2-1608(B)(3) provides that the authority of an agent under a power of attorney terminates (1) when an action for divorce or annulment is filed, (2) upon the parties’ legal separation, or (3) by either the agent or the principal when an action for separate maintenance from the other is filed, or when the action for custody or visitation of a child in common is filed.

Due to the contentious nature of divorce, you should revoke any existing power of attorney upon your separation rather than waiting for the entry of a final divorce decree, regardless of whether the power of attorney is effective immediately or only on your incapacity, to prevent your soon-to-be former spouse from handling your affairs without your permission.  Give a copy of the document revoking the power of attorney (or your new power of attorney) to any financial institutions and third parties who are in possession of the prior power of attorney, to put them on notice that if the soon-to-be former spouse attempts to use the prior power of attorney, it is no longer valid.  A third party cannot be held liable for accepting a revoked power of attorney, if it has no knowledge that the power of attorney is no longer valid.

Advance Medical Directives

The Virginia Health Care Decisions Act (Va. Code §§ 54.1-2981 through 54.1-2993) does not provide for the automatic revocation of an advance medical directive (sometimes referred to as a “living will” or “medical power of attorney”) upon separation or divorce.  Therefore, if you become separated or divorced, you should revoke any existing advance medical directive which names your former spouse as an agent.

split heartDesignation of Individual to Make Arrangements for Disposition of Remains

Va. Code § 54.1-2825(A) gives individuals the authority to name someone who will be responsible for the “arrangements and be otherwise responsible for his funeral and the disposition of his remains, including cremation, interment, entombment, or memorialization, or some combination thereof, upon his death,” in a signed, notarized writing.  Divorce has no effect on the naming of a former spouse as the agent under this document; therefore, if you have signed a designation naming your spouse to handle these arrangements, be sure to revoke it.

Beneficiary Designations

Under current Virginia law, upon entry of a divorce decree, “any revocable beneficiary designation . . . that provides for the payment of any death benefit to the other party is revoked.  A death benefit prevented from passing to a former spouse by this section shall be as if the former spouse had predeceased the decedent” (Va. Code § 20-111.1(A)).  This includes payments from life insurance policies, annuities, retirement accounts, compensation agreements, and any other contracts which provide for the payment of benefits to a spouse at death.  This does not apply, however, if the divorce decree provides otherwise, or if the law is preempted by federal law.  For example, federal employees’ group life insurance (FEGLI) that names a former spouse as beneficiary will be paid to the former spouse regardless of whether a divorce decree has been entered.  Don’t rely on the Virginia statute providing for the revocation of a beneficiary designation upon divorce; provide for your loved ones by updating beneficiary designations to name the individual(s) you wish to inherit your assets at your death.

As you can see, divorce affects different aspects of your estate plan in different ways.  Don’t rely on Virginia’s default rules about which portions of your estate plan will be revoked automatically upon your divorce; take matters into your own hands by meeting with an estate planning attorney to make all changes necessary in the event of your separation or divorce.

Kit KatAsk Kit Kat – Bear in a Bucket

Hook Law Center: Kit Kat, what can you tell us about the bear who got its head stuck in a plastic cheese puff bucket?

Kit Kat: This was one lucky bear! It happened in Glenwood Springs, CO during the week of July 18. It was a 2-year old bear, and somehow he got his head stuck in a cheese puff bucket. Those tasty snacks were just too much to resist. When anyone tried to help, he would scamper off. A local Good Samaritan, Jim Hawkins, age, 66, decided to take things in his own hands. He got some heavy duty gloves and some rope and waited for the bear to show up again. Hawkins owns a bed and breakfast, and the bear walked right into the B & B’s backyard. Hawkins lassoed the bear around its middle, and a tussle ensued. The bear then ran up a tree, and Hawkins tied the rope, so the bear couldn’t move. Hawkins suffered minor scrapes on his forearms. Next, Hawkins called Colorado Parks and Wildlife. Personnel from the agency came, tranquilized the bear, and removed the bucket. They also relocated the bear to a less populated area 12 miles away.

Hawkins, a retired firefighter, was quite brave! He himself doesn’t think his gallantry was so unusual. He definitely made a calculated decision. He weighs 200 pounds, and he estimates the bear weighed about 100 pounds. He laughs off his actions with this quote, “This was a little bear with a big problem.” (…)

Upcoming Seminars

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at or fax us at 757-397-1267.

Posted on Tuesday, August 16th, 2016. Filed under Estate Planning.

How net investment income can affect tax planning

By Hook Law Center

There are two ways in which the 3.8 percent net investment income tax (NIIT) can have an impact on your estate plan. It can raise your tax on capital gains, taxable interest and other investment income, thereby lowering the amount of wealth that is accessible to your family. The tax is also especially severe toward specific trusts used in estate planning.

The NIIT is applicable to net investment income that high income people earn. It is also applicable to trusts and estates to the degree to which their adjusted gross income (AGI) is greater than the low threshold amount of $12,300 in 2015.

Investment income includes the following:

  • taxable interest;
  • dividends, both qualified and non-qualified;
  • capital gains, both short and long-term, with the exception of those used in an active trade or business;
  • rental income;
  • royalty income;
  • non-qualified annuity income;
  • income derived from passive business activities;
  • income derived from trading financial instruments or commodities.

Investment income does not include the following:

  • wages, self-employment income, or income earned from non-passive business activities;
  • tax-exempt interest, an example of which is interest on municipal bonds;
  • distributions from IRAs or specific qualified retirement plans;
  • proceeds from life insurance;
  • alimony;
  • Social Security benefits;
  • Veterans’ benefits;
  • gain on the sale of an active interest in a partnership or S corp.;
  • nontaxable gain on the sale of a principal residence.

You can lower or remove NIIT by decreasing your modified adjusted gross income (MAGI) below the threshold or by reducing your NII. Here are some of the strategies you can use:

  • contributing the maximum amount to IRAs and qualified retirement plans;
  • deferring income with the use of an employer’s nonqualified deferred compensation plan;
  • transferring investments into tax-exempt municipal bonds;
  • transferring investments into growth stocks that pay few dividends or none at all;
  • “harvesting” losses through the sale of securities at a loss and the use of them to counterbalance gains;
  • Making investments in life insurance (there is an exemption from NIIT for an accumulation of cash, and proceeds are subject to an exclusion from both MAGI and NII

Be mindful of the fact that mutual funds usually make distributions of capital gains on a yearly basis, close to the end of the calendar year or, in some instances, more frequently than once a year. In order to reduce the effect of the NIIT, it is recommended that you avoid buying fund shares a short time before a fund distributes capital gains.

Upon reviewing your estate plan, it is advisable for you to speak with your attorney about how you can lower or remove your NIIT. This will require a consideration of tax, estate and financial matters.

Posted on Wednesday, August 10th, 2016. Filed under Estate Planning.

Net gifts can be used to reduce gift tax rate

By Hook Law Center

One strategy to lower your taxable estate is lifetime giving. However, there is a gift tax rate of 40 percent. If you have exhausted your $5.43 million gift and estate tax exemption, and you wish to lower your gift taxes, consider the possibility of making net gifts. This method obligates the recipient to pay the gift tax as a condition of accepting the gift, thereby lowering the value of the gift for gift tax purposes.

An example that reveals the ability of the net gift to save taxes is as follows. A grantor intends to make a $2 million gift to his son. Having used up his gift and estate tax exemption, he would like to reduce the tax. Applying a gift tax rate of 40 percent, if he were to make an outright gift, he would have to pay $400,000 in tax.

However, if his son agreed to pay the tax, there would be a reduction in the value of the gift, and thus, the gift tax liability. The formula that is used to calculate the tax on a net gift is: gift tax = tentative tax / (tax rate + 1). The tentative tax is the amount that would have been owed if the gift had not been arranged as a net gift. In this scenario, the tentative tax is $800,000. An application of the formula to this example results in a gift tax of ($800,000 / 1.4), or $571,429, which represents an effective rate of approximately 28.6 percent.

In order to make certain that his son receives the entire $2 million gift, the father can use a financed net gift. He lends his son $571,429 to pay the tax bill, which bears interest at the applicable federal rate (AFR), and is evidenced by a promissory note in writing.

What if, in this example, the father gave the son real estate with a fair market value of $2 million and a cost basis of $500,000? If the son pays $571,429 in gift tax, the excess of that amount over the father’s basis ($71,429) is a taxable capital gain to the father. You can avoid paying capital gains tax by engaging in a financed net gift transaction with a grantor trust instead of the beneficiary.

When participating in a net gift transaction, the recipient is required to sign an agreement expressing a promise to pay gift and estate taxes upon receipt of the gift. Prior to signing the contract, the recipient is advised to consult an estate planning attorney.

Posted on Wednesday, June 8th, 2016. Filed under Estate Planning, Investments.

Andrew Hook talks to Stretcher about revocable living trusts

By Hook Law Center

In an interview for, Attorney Andrew Hook explains the meaning of a revocable living trust by dividing the term into its main parts: “revocable,” “living” and “trust.” He describes a revocable living trust as a legal agreement in which a person, who is referred to as the “settlor” or “grantor,” transfers property to a trustee, who manages the property for the benefit of specific beneficiaries. You can consider the trust agreement to be a list of directions from the settlor to the trustee regarding the way in which the trustee will manage the property.

The “living” part of the term, “revocable living trust” signifies that the trust was drafted while the settlor was alive. This concept can also be described by the term “inter vivos.” The “living” element of the trust is that it is not “testamentary,” which means that a trust was created under a will, or arose upon the death of the settlor. The advantage of a living trust over a testamentary trust is that a living trust is established during the settlor’s lifetime, and the terms of the trust may dictate that the trustee manage the administration of the trust property in case the settlor becomes incapacitated or dies. However, a testamentary trust only applies upon the settlor’s death, and thus, it will not become effective in the event of the settlor’s incapacity.

The “revocable” part of the term “revocable living trust” means that the trust can end or be modified if the settlor has capacity, and wishes to terminate or make changes to the trust. If a trust is terminated or revoked, the trust property will be placed back into the name of the grantor. The trustee has a legal duty to manage the trust property for the best interests of the trust beneficiaries. If a trustee cannot serve, another person assumes the role of trustee, and manages the property. Therefore, if the grantor is able, the grantor resumes control of the trust property. If the grantor loses capacity or dies, the trustee will take over management of the property, thereby avoiding court intervention.

Click here to read the full interview on

Posted on Tuesday, June 7th, 2016. Filed under Estate Planning.

What you should know if you inherit your parent’s home

By Hook Law Center

Many people will inherit the house in which their parents lived. Deciding what steps to take with respect to the house can cause you to confront some financial and emotional concerns, and matters can become even more complicated if you have siblings. You have the option to sell the house, move into the house or rent it out.

If you decide to sell the house, view listings of comparable homes that have sold in the neighborhood and adjacent towns, and decide upon a minimum price. Make certain that the homeowner’s insurance is paid and current, and that the estate or trust is designated as the insured in the event anything happens to the house after your parents’ death and prior to the sale. The same applies to mortgage payments, property taxes and utility bills. Upon the sale of the property, you will be required to pay the balance of the mortgage, real estate commissions, transfer taxes and other closing costs. If you move into the house, there may be a rise in property taxes for you, as the house may be worth more than before. However, any special property tax break for seniors may not apply to you.

Nevertheless, if you subsequently decide to sell the house, and the house has increased in value, you may be eligible for the capital gains exclusion. Thus, if you are single, you will not have to pay capital gains taxes on a maximum of $250,000 profit, and if you are married, you will not have to pay capital gains taxes on a maximum of $500,000 profit. In order to qualify for this exclusion, you must reside in the house for a minimum of two of the last five years prior to the sale.
You may, instead, wish to rent out the house to generate income while still using the property during certain times of the year. For instance, the house could be a vacation rental, and at other times, you and your family could use it for family get-togethers. If you live relatively close by, you could serve as property manager rather than hiring one, thereby realizing savings of 10 to 30 percent of the rent.

In addition, you will have to switch the insurance coverage to a landlord policy that covers the structure and personal property along with medical and legal liability in the event a tenant is injured and files a lawsuit against you. This type of insurance also covers loss of rent in case the property can no longer be inhabited because of a covered loss.

You will also realize a tax benefit by modifying the house into a rental. The depreciation expense will help to lower your taxable rental income. Regarding tax savings, the house is a depreciable asset, and a certain portion of its value can be subtracted each year. Furthermore, you can depreciate improvements, such as a new roof, if they add value and lengthen the life of the property. However, in the event you sell, you will have to repay the depreciation to the IRS, and you will not be eligible for the capital gains exclusion because the house is not your main residence.

Posted on Wednesday, March 30th, 2016. Filed under Estate Planning.

How working after retirement affects Social Security

By Hook Law Center

There are people who wish to work when they have reached their 60s, 70s and beyond, but are concerned that their income will adversely affect their Social Security benefits. However, there is no cause for concern because according to the Social Security Administration (SSA), you do not run the risk of losing any Social Security benefits if you work past full retirement age, regardless of the amount of your earnings.

The SSA considers earnings to consist of the income earned from your job or your net income from self-employment. Earnings also include bonuses, commissions and vacation pay because they are relevant to employment. But pensions, investments and other retirement income are excluded.

If you are employed after you have attained full retirement age, your Social Security benefits can increase. The calculation of your Social Security benefits is based on the 35 years in which you earned the greatest amount of income. If your earnings past full retirement age replaces one of those 35 years, then the SSA will recalculate your benefits, and you could receive increased monthly benefits.

However, if you collect Social Security benefits prior to reaching full retirement age, and you keep working, then your benefits could be lowered. If you are under full retirement age for the whole year, the SSA will reduce your benefit payments by $1 for every $2 you earn in excess of the annual limit. In 2014, that limit was $15,480, and in 2015, it was $15,720.

In the year in which you attain full retirement age, the SSA reduces your benefits by $1 for every $3 you earn in excess of a different limit. In 2014, your earnings were limited to $41,400, but only the earnings prior to the month in which you reached full retirement age were counted. In 2015, your earnings were limited to $41,880.

Posted on Thursday, March 24th, 2016. Filed under Estate Planning.
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