The baby boomer generation is getting older, and people who are part of this group are reaching retirement age in droves. There are about 10,000 people applying for Social Security every day, and analysts tell us that this volume should stay in place for the next 20 years.

Because of this, the population as a whole is aging. There is a very interesting statistic that is relevant to the elder law community that was circulated by the United States Census Bureau back in 2010 that underscores this fact.

The segment of the population that is between 85 and 94 years old is expanding rapidly. According to the census report, this group grew faster than any other ten-year age span between 2000 and 2010.

When you reach such an advanced age there is a very good chance that you will require nursing home care. There are other reasons why some seniors require assistance with their day-to-day needs, but Alzheimer’s disease alone is enough to get your attention.

According to the Alzheimer’s Association about 40% of people who are 85 and older are suffering from the disease.

Nursing home care is very expensive. Last year the average cost for a year in a private room in a nursing home in California exceeded $100,000. 10% of the people who require nursing home care remain in the facilities for at least five years.

Medicare doesn’t pay for long-term care so those who are serious about being prepared for the future should take the matter seriously and seek expert advice. If you would like to do just that take a moment to arrange for a consultation with a licensed and experienced elder law attorney.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

The question of whether or not the United States was going to fall over the “fiscal cliff” dominated the news in the weeks and days leading up to the new year. If we would have plunged over the cliff the estate tax parameters would have been quite dramatically affected.

The exclusion would have gone down from $5.12 million to $1 million, and the top rate of the tax would’ve shot up to 55%. The maximum rate was 35% in 2011 and 2012.

What the above means is that the portion of your estate that exceeded $1 million would have been subject to a 55% tax if no deal had been reached to change things as they stood throughout 2012.

Now that we have a deal in place we can breathe a sigh of relief to a certain extent. The estate tax exclusion is not going down to $1 million, and the maximum rate is not rising to 55%.

Under the terms of the budget compromise that was reached by lawmakers, the base estate tax exclusion is $5.250 million and will be adjusted annually for inflation. The maximum rate of the estate tax has risen from 35% to 40% rather than 55%.

While things certainly could have been quite a bit worse for people who have been able to accumulate significant financial resources, a 40% tax is certainly attention-getting.

Fortunately, there are steps that you can take to preserve your wealth. If you have assets that exceed the exclusion amount you would do well to discuss tax efficiency strategies with a licensed and experienced estate planning attorney sooner rather than later.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

People often ask San Diego estate planning lawyers about the taxes that must be paid when gifts are given. A common question involves reporting a cash gift as income when you are filing your tax returns.

The fact is that you do not have to include cash gifts that you receive because they are not considered to be taxable income. But that does not mean that there are no taxes involved in gift giving.

In truth the taxation started when your income was taxed. You may then take some of the remainder and give it to someone as a gift. It would be logical to assume that you have paid your taxes and there should be no further levies pending.

Unfortunately there is indeed a gift tax in place and it is unified with the federal estate tax.

However, there is an annual exemption. You can give someone a gift totaling as much as $13,000 within a given year (increases to $14,000 in 2013) before the estate tax kicks in. It should be noted that you could give this $13,000 to any number of individuals in a tax-free manner.

It is possible to utilize some of your lifetime estate/gift tax exclusion to give gifts above and beyond $13,000 per person per year. However, you must be aware of the fact that you would be reducing the amount of the exclusion that would be left to be applied to your estate at the time of your passing.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Congress did it! The Bush tax cuts have been extended, which means that no one should get a tax increase come Jan 1st..In fact, if you’re working, your social security withholding will be decreased (but it may take til 1/31 to see the results). Most significantly, we have the Obama tax cuts for estate taxes. The new exclusion is $5 million, and you can also give that amount away during your lifetime. Step-up basis is back, and the estates of those who died in 2010 get to choose if they want the 2010 law to apply or the 2011 law. Biggest negative? It’s only good for two years!

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

The Obama-Republican tax deal (an extension of the Bush tax cuts) have enough votes in the Senate. Even better, it includes a $5 million estate tax exemption and 35% tax on the excess. But, like all good things, it comes to an end..this time in two years. The difference is that this time the $5 million can be gifted during life and is also free from Generation-skipping tax..the only problem is whether the House will go along…Stay posted!

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

President Obama and the Republicans agreed today to extend the Bush tax cuts for all and to set the estate tax exemption amount at $5 million. Now the Democrats have to be convinced. Extending jobless benefits is one carrot, wouldn’t be surprised if the compromise reduces the exempt amount to $3.5 million…

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

If you have not included an incapacity arrangement in your estate plan you should do so immediately. Every person needs an incapacity plan to care for their financial assets and medical needs in the event of a mental disability or major physical ailment.

Advance Health Care Directive

An Advance Health Care Directive allows you to plan for your medical needs if you become disabled. This document allows you to name the person(s) you wish to make medical decisions for you if you can’t make them for yourself. It also allows you to state your wishes regarding life support and organ donations.

Financial Power of Attorney

If you should become disabled, someone must be available to manage your finances. A financial power of attorney (POA) allows you to name an agent to sign documents on your behalf, use your funds and income to pay bills, manage your personal and retirement accounts, and invest your accounts for extra income. With the help of your attorney, you can tailor your POA to fit your financial needs.

When you create a POA, you can choose between an Immediate and a Springing POA. An Immediate POA allows your financial attorney-in-fact to assist with your assets immediately. With a Springing POA, your attorney- in-fact can only manage your affairs after you become incapacitated.

Revocable Living Trust

A Revocable Living Trust has many benefits including the fact that it can be used for incapacity planning. Every asset that you fund into your Trust can be handled by your successor trustee during your time of disability.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

When you create a financial plan for your retirement, saving is essential, but investing your savings is equally significant. As your retirement plan takes form, watch out for these common investment errors.

Not Diversifying

Diversifying your investment means putting your capital into a variety of money making opportunities. If you prefer safe investments, focus on money market accounts, and government bonds. If you are also concerned with inflation, the stock market is a place to potentially grow your funds over a long time horizon. With any investment, remember to diversify. Investment diversification can help provide both safety and growth. Asset Allocation and/or Diversification of your overall investment portfolio does not assure a profit or protect against a loss in declining markets

Removing Funds Early

When you have a retirement account, you should leave the money in there until you retire. If you take any or all of it out early, you may be assessed a penalty, and you may also lose some of your investment earnings. For example, if you have invested part of an IRA in a Certificate of Deposit, and you pull it out before the five year required investment period, you will lose three months of earnings.

Not Investing

Another common retirement savings error is not investing your savings. When your funds sit for a long period of time in just one account, you run the risk of the interest earnings from that account being less than the rate of inflation. When this occurs, the value of your funds will decrease over time. Investment isn’t just about growing your reserves; it is also about keeping the value of your money above the rate of inflation.

Securities offered through 1st Global Capital Corp., Member FINRA, SIPC.

Investment advisory services offered through 1st Global Advisors, Inc.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

An Advanced Medical Directive is a legal device commonly used in incapacity planning that allows you to name a person to make medical decisions for you in case you should become disabled. You may have also heard this legal document referred to as a Medical Power of Attorney or a Durable Power of Attorney for Health Care. The person that you name to make medical decisions for you may be called your agent or advocate.

Along with your medical decisions, the Directive also lets your health care advocate and doctors know your wishes regarding how long you should be left on life support, if it is needed.

Helps Avoid Conservatorship

The main benefit of a medical directive is that it helps you to avoid a conservatorship, which is a court decision that declares you mentally disabled and names someone to make choices for you. A conservatorship takes your choice of medical agent out of your hands and places in the hands of a court who may not know you and therefore may not be able to decide what it best for you. Often in a conservatorship, your chosen guardian may make a medical decision such as leaving you on life support, when you would prefer to be removed from it. To avoid this, make sure to legally document your medical wishes.

Must Comply With State Laws

In order to create an advanced medical directive, you must be an adult and mentally stable at the time that you sign. If a court deems you were already mentally disabled when you created your Directive, a conservatorship may be instituted instead.

You should speak with your attorney to determine what other rules apply including: who can sign as a witness and what provisions you can include.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.

Have you been named as an executor for a loved one’s estate? As an executor your job is to organize and settle the affairs of your family member. Whether you have been named by a Last Will and Testament or by a court of law in the case of an estate without a Will, it is important to understand your duties.

Organize the Estate

The first step is to identify what the estate includes. Try to locate all estate documents. If you have been appointed by the court, you may not have to worry about this step since it may have already been determined that no estate documents exist.

If a Will does exist you should use it to list all beneficiaries. If no Will exists, heirs will be determined by state law. In either case, you will have to locate assets and debts on your own.

Probate the Estate

Once you have a general idea of the estate, you should meet with an attorney to begin probate. Probate is the court-supervised process by which you will settle the decedent’s affairs.

Every estate asset must be appraised for the date of death value. Next, with the help of an attorney, you must contact all known creditors. In case any creditors are unknown, you will place a notice in the local newspaper.

You will use estate funds to pay debts. If funds are not available, you may have to sell property. You will also be responsible for paying all taxes associated with the estate from its assets. You must file the final income tax return for the decedent, as well as the estate tax return if estate and inheritance taxes are applicable. You may wish to contact an accountant for assistance.

When all taxes and debts have been paid, the Court will order you to give the beneficiaries what remains of the estate. If there was no Last Will and Testament, your attorney can help you determine who the heirs at law are based upon the state intestacy laws.

It is very important to make sure all taxes and debts are paid and you receive a Court order before you hand out inheritances. If you do not, you will be financially responsible for unpaid debts and taxes.

Armstrong, Fisch & Tutoli is a member of the American Academy of Estate Planning Attorneys.