SSB
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In This Issue
Message from the Partners
Five Considerations When Choosing a Fiduciary
Estate Planning Awareness Week
Key Points About 401(k) Plans and 2015 Updates
Whats New?
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To Contact Us
Samuel Sayward & Baler 
 
 858 Washington Street, Suite 202 
Dedham, MA 02026

 
Phone: (781) 461-1020 
Fax: (781) 461-0916
 
News from  
Samuel, Sayward & Baler LLC

November 2014

Attorneys Suzanne Sayward, Maria Baler, and Steven Joshua Samuel

Message from the Partners

 

Dear Clients and Friends,

 

With the holiday season fast approaching, we have included articles in this issue to help you plan ahead for 2015.  It is our goal to help keep you updated on the most important issues in estate planning, health care decision-making, and financial matters, and to help you make the best decisions for you and your family.  

 

Our feature article, published in The Dedham Transcript in October and written by Attorney Sayward, provides details about one of the most important decisions clients face when creating their estate plan documents, which is deciding who to name to the multiple fiduciary positions that must be filled. Those positions include a Personal Representative (formerly called Executor) of your Will, the attorney-in-fact who will act for you under your Power of Attorney, and the Trustee of your Trust.  She describes the different roles and discusses what to consider when asking different people to take on these responsibilities.

 

Speaking of estate plan documents, the third week in October was National Estate Planning Awareness Week -- designated by the U.S. House of Representatives to remind families how important it is to have an estate plan and also to update it on a regular basis. Attorney Baler provides some interesting statistics and discusses the serious risks of not having a proper estate plan and how it could impact your family and assets.

 

In his financial article, Attorney Samuel offers key details about 401k plans as well as some of the updates taking place in 2015.  Being able to participate in a retirement plan sponsored by an employer is one of the best ways to save over time; however, like any program governed by the IRS, there are important rules to keep in mind. He provides a list of important facts as well as upcoming legislative changes.

 

This issue marks the five-year anniversary of the SSB Newsletter! We are pleased that our readership is growing and encourage you to send us ideas for future articles. As always, please feel free to send us email addresses or forward this newsletter to friends and family members!

 

Wishing you a safe and enjoyable holiday season!

 

Steven Joshua Samuel

Suzanne Sayward

Maria Baler

 
Five Considerations When Choosing a Fiduciary

 

By Attorney Suzanne R. Sayward

 

One of the most important decisions clients face when creating their estate plan documents is who to name to the multiple fiduciary positions that must be filled.  These include the Personal Representative (formerly called Executor) of your Will, the attorney-in-fact who will act for you under your Power of Attorney, and the Trustee of your Trust.  Black's Law Dictionary defines a fiduciary as a person who is granted certain rights and powers to be exercised for the benefit of another person and who must use scrupulous good faith and candor in doing so. 

 

Clients are often inclined to choose one of their children to serve in these roles based on birth order, gender, or geographical location.  These are generally not good criteria for selecting a fiduciary.  Here are five things to consider when deciding who to name to fiduciary positions.

 

  1. Consider choosing different people to serve in the various fiduciary positions.  A comprehensive estate plan will include a Will and a Power of Attorney, and may include one or more Trusts. Each of these documents names a fiduciary to carry out duties and instructions when the maker of the document is unable to do so because of incapacity or death.  Choosing different people to serve in these roles may be appropriate depending upon your situation.  For example, if your daughter lives nearby and is available to help you with bill payment, mail management, insurance claims, etc., she may be your best choice to serve as your attorney-in-fact under your Power of Attorney.  However, she may not be the best choice to serve as your Personal Representative or Trustee if your children do not get along or if estate assets or distribution provisions are complicated.  Naming different individuals to serve in the various fiduciary positions can also provide a good "checks and balance" system, as no one person will be in control of everything.
  1. Consider appointing co-fiduciaries.  You can appoint more than one person to serve as your attorney-in-fact, Personal Representative and Trustee.  Doing so makes sense in situations where:
  • you have multiple beneficiaries
  • your chosen co-fiduciaries can work well together
  • you have a complex situation
  • one of your chosen fiduciaries lives far away

There are of course other considerations when deciding whether to name more than one person to serve as a fiduciary.  However, the ability of your co-fiduciaries to work together is a must. 

 

  1. Consider the term of your Trust and the value and character of your assets when choosing a Trustee.  If your Trust will continue during the lives of your children and then grandchildren, you need to consider your Trustee provisions carefully.  If you name an individual Trustee, how old is that person and for how long will he or she be able to competently serve as Trustee?  Who will serve when that person cannot?  Will you give your children the right to appoint successor Trustees?  If they fail to do so, how will your successor Trustee be appointed?  If your estate includes a business, or multiple pieces of real estate, or a very large investment portfolio, consider carefully whether any of your family members have the skills to manage those assets when you are not around to do so.
  1. Sometimes a professional Trustee is the best choice.  If your family members do not get along, if your children are too busy to devote the time that will be needed to settle your estate, or if you do not have a family member who is well-suited to serve as your Personal Representative or Trustee, consider naming a professional Trustee.  A professional fiduciary is typically a bank, trust company, lawyer, or accountant.  Some of the advantages to using a professional fiduciary are:
  • A professional is experienced in estate settlement and trust administration
  • A professional carries insurance to make the estate or trust whole in the event of malfeasance
  • A professional does not have a personal stake in the situation

The disadvantage to hiring a professional fiduciary is there will be a fee.  However, if designating a professional means that your estate is settled promptly and efficiently, and that your Trust is properly administered, then the cost of a professional fiduciary is money well spent.

 

  1. If selecting a non-professional as a fiduciary, look for these traits.  A fiduciary owes the highest duty of good faith and fair dealing to those he serves.  When considering your family members for fiduciary positions, look for someone who has the following character traits:
  • Organized
  • Diplomatic
  • Even tempered
  • Responsible
  • Financially astute

The person you choose to serve as your fiduciary can "make or break" your estate plan so choose wisely.   Your estate planning attorney can help you make the best decision based on your particular family situation, assets, and distribution plan. 

Estate Planning Awareness Week

 

By: Attorney Maria C. Baler

 

 

The third week in October each year is National Estate Planning Awareness Week, officially designated as such by the U.S. House of Representatives in 2008.  The Resolution passed by the House in 2008 noted that "it is estimated that over 120,000,000 Americans do not have up-to-date estate plans to protect themselves or their families in the event of sickness, accidents, or untimely death."  Assuming the numbers remain approximately the same as they were in 2008, slightly less than 50% of adults in this country do not have an up-to-date estate plan.  We see the results of failure to plan or failure to update every day in our practice.  These include delay and expense that could have been easily avoided, strained family relationships that could have been preserved with proper planning and communication prior to death, and assets lost to taxes, fees and other costs that could have been protected and preserved with proper estate tax or asset protection planning.    

 

It is better to prepare for a major life event before it happens, rather than to deal with it when it's happening.  A good and thoughtful estate plan is one that is done in advance, when you are healthy and can think clearly about what you would want and who would be best to assist you if and when you are not.  The plan that is right for you depends on your family situation, your planning goals, and your assets.    If you have a young family, your priorities are likely to include creating a Will naming a guardian to care for your children and creating a trust to ensure your children do not receive their inheritance at age 18 when they are too young to handle it responsibly.  If you are nearing retirement, perhaps you are concerned with saving estate taxes for your heirs and protecting the assets you have worked hard to accumulate from a child's creditors or divorcing spouse.  If you are in your senior years, you may want to be sure you have named people to assist you with financial and health care decisions as you age. You may also want to better understand how to pay for long-term care.

 

If you need a refresher on the purpose of various estate plan documents, visit our website (www.ssbllc.com) and read about estate planning.  If you are among the 120,000,000, we hope to see you soon to get your estate plan in order, whether you are just starting or need to update your existing plan. 

 

Key Points About 401(k) Plans and 2015 Updates 

 

By Steven Joshua Samuel JD, MBA, AIF®

 

 

 

A retirement plan sponsored by an employer -- named for Section 401(k) of the Internal Revenue Code -- is one of the best ways and most common ways to save for retirement. The 401(k) plan offers some important advantages over Individual Retirement Accounts (IRAs), such as the convenience of contributing via payroll deductions. Like any other program governed by the IRS, there are important rules to remember.

 

Here are some 401(k) plan key rules and recently announced updates for 2015:

 

Who is Eligible to Participate in a Company 401(k) Plan?

 

The 401(k) plan document states which employees may participate in the plan and how long they must be employed before they may contribute. Eligibility to participate in a company retirement 401(k) plan may begin on the first day of work, a few months later or as long as a year later. Participation may be restricted to employees who work at least half time (1,000 hours per year), and there may be other requirements.

 

All eligible employees may contribute up to $17,500 in 2014 and those over 50 may contribute an additional $5,500. For 2015, the maximum contributions are $18,000 and $6,000. These contributions are significantly larger than those allowed for IRAs. Small business owners may contribute as much as $52,000 for 2014 and $53,000 for 2015 in special accounts known as SEP IRA or 401(k) plans containing special features.

 

Key Benefits to an Employee: Tax Deferral, Employer Matching Contribution and Vesting

 

Deferring income taxes is a key feature. Employee contributions to a 401(k) plan are tax deductible. The value to the employee is the amount contributed, multiplied by the individual's income tax rate. For example, an employee who contributes $1,000 and is in the 20 percent tax bracket has a $200 income tax deduction. In addition, any investment growth on the $1,000 grows with no income taxes paid until the employee withdraws money during retirement.

 

Some employers make matching contributions. For example, an employer may contribute 50 cents for every dollar the employee contributes up to six percent of the employee's pay. For an employee whose salary is $30,000 and contributes 6 percent of her pay ($1,800), the employer would contribute $900 to the employee's retirement account. Many 401(k) plans require that the employee work at the company for three to five years before the employer contribution (the $900 in this example) is fully credited to the individual's retirement account. This is called "vesting" of the employer contribution.

 

What Happens If an Employee Changes Jobs?

 

An employee may move his account to an IRA, transfer it to his new company's employer 401(k) account, or in some cases may choose to leave it with the prior employer. Moving the account is sometimes called a "rollover" and is often the choice that allows the employee the most control and reduces the chances of losing track of the account. Rollover of any retirement account is subject to several rules and time restrictions beyond the scope of this article. It's a good idea to consult with financial professional to fully understand the details of each option. 

 

Withdrawals from a 401(k) Plan

 

Company 401(k) plans are designed to be most beneficial when money is taken out at retirement and not before. Otherwise, withdrawals are restricted or penalized. For example, an employee who leaves a job and is under 55 years old would pay income taxes plus a 10 percent penalty on the amount withdrawn. This is slightly better than the IRA's age 59˝ for penalty-free withdrawals. It is still better to allow 401(k) money to grow tax deferred until 70˝ when the IRS requires withdrawals to begin for both IRAs and 401k accounts. An exception to these mandatory withdrawals is for employees who continue working after 70˝ and own less than 5 percent of the company in which they work.

 

Roth 401(k)

 

A plan may have a Roth account if the company chooses to add this feature.  Company 401(k) accounts are allowed to have Roth accounts that work the same way as Roth IRAs.  Employees may choose to have some or all of their contributions be either traditional tax deductible or Roth contributions. Roth contributions do not receive an income tax deduction in the year the contribution is made. On the other hand, Roth contributions grow income tax deferred, there is no income tax when the money is withdrawn, and there are no mandatory withdrawals.

 

Company 401(k) plans are a great way to save for retirement for every employee. For an employee who starts in her 20s or 30s, regularly contributes to a 401(k) plan, receives employer matching contributions and income tax-deferred growth, a 401(k) plan can make a major difference in quality of life during retirement. This article is intended only as a reminder of some key features of 401(k) plans. As always, consult a trusted financial advisor if you have questions.


Samuel Financial LLC is located at 858 Washington Street, Dedham, MA 02026 and can be reached at 781.461.6886.  Securities and advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment adviser.  

What's New?

 

  
Welcome Mackenzie Sayward!

Mackenzie Sayward (yes, she is Attorney Sayward's daughter) recently joined Samuel, Sayward & Baler LLC as a legal secretary. Kenzie answers the phone and directs client calls, and she greets clients who come to our office. Kenzie can assist you if you need copies of documents from your file, or if you would like to update your contact information with us. You can reach Kenzie at kenzie@ssbllc.com or 781/461-1020 ext. 200.

 

  

 

 

 

 

Congratulations!

Our congratulations go out to Attorney Sayward who has been selected as a Super Lawyer for the 5th year in a row!