Welcome to the Blog

“Micro self-care really matters,” says Lori Mihalich-Levin, partner at a global law firm and founder of Mindful Return, an online community for working parents transitioning back from parental leave. In this episode of the Working Moms podcast, Lori is talking about all her tips and tricks for parents transitioning back to work — from building community to buying noise cancelling headphones so you can work from home without going bonkers.

Lori focuses the conversation around the four pillars of her Mindful Return program: mindset, logistics, leadership, and connection. Those pillars are based on her own experience as a working mom trying to go back to the law firm without any support or guidance. As Lori says, “There were a ton of classes about what my baby needs, but nothing about what I need as a parent.”

Lori shares tons of amazing, tangible, practical tips that you can do, whether you are back in the office or still working from home in this week’s episode, so don’t miss it!

Quotes:

• “People since the dawn of time have been engaged their villages in caring for their children. What we do that’s weird is expect that it’s just one person that’s supposed to be doing it.” (10:59-11:09)
• “My legacy is normalizing working parenthood. I blare it from the rooftops that I’ve got these kids and I’m a kickass partner at a law firm. It is possible to have the street cred and have babies as well.” (16:50-17:05)

Links Mentioned:

https://www.mindfulreturn.com/working-mom-not-abandoning/

Facebook Group:

https://www.facebook.com/groups/theworkingmoms

Pamela Maass on Linkedin:

https://www.linkedin.com/in/pamela-maass/

Law Mother Website:

https://www.lawmother.com

Podcast production and show notes provided by FIRESIDE Marketing

https://www.meetfireside.com/podcast-production-service/

The Netflix movie I Care a Lot provides a dark, violent, and somewhat comedic take on the real life and not-at-all funny dangers of the legal (and sometimes corrupt) guardianship system. While the film’s twisting plot may seem far fetched, it sheds light on a tragic phenomenon—the abuse of seniors at the hands of crooked “professional” guardians.

In this two-part series, we’ll discuss how the movie depicts such abuse, how this can occur in real life, and what you can do to prevent something similar from happening to you or your loved ones using proactive estate planning and our Family Wealth Planning process. For support in putting airtight, protective planning vehicles in place, meet with us as your Personal Family Lawyer®.

Note: This article contains spoilers for the movie I Care a Lot.

At the beginning of the movie, we meet Marla Grayson, a crooked professional guardian who makes her living by preying on vulnerable seniors. A professional guardian is a person appointed by the court to make legal and financial decisions for senior “wards” of the court, who are deemed unable to make such decisions for themselves.

Working with a corrupt doctor, Marla targets wealthy victims and gets a judge to order these individuals unfit to care for themselves and then appoint her as their guardian. From there, she and her business partner/ girlfriend, Fran, move the seniors into a nursing home, seize their homes, and sell all of their assets for their own financial gain.

Marla’s scheme takes a turn for the worse when her latest senior victim, Jennifer Peterson, turns out to be the mother of a Russian mob boss named Roman Lunyov. After Marla has Jennifer placed in a long-term care facility, Roman tries unsuccessfully to get his mother out of the facility, first by bribing Marla, then through the court, and finally by trying to break her out.

While this may seem ludicrous, this kind of abuse actually happens outside of the movies to seniors with significant assets, even those with caring adult children like Roman.

At this point, the movie descends into a violent back-and-forth between Roman and Marla, as they each try and fail to kill one another, until they both decide that rather than murdering each other, they could make more money by going into business together.

Fast forward to several years later, we learn that Marla and Roman have become millionaires after starting a global chain of senior care services, called Grayson Guardianships, which employs thousands of crooked guardians overseeing hundreds of thousands of “clients” all over the world.

Based On True Events

With its over-the-top violence, kidnappings, and Russian mobsters, some might dismiss I Care a Lot as nothing but Hollywood hype and find it hard to believe that an operation as sinister as Marla’s could ever actually exist. But the fact is, the movie’s writer and director, J. Blakeson, came up with the idea after reading news stories about very similar (less the mob and murder) situations. And knowing such things actually happen makes the movie even more terrifying.

“The idea first came when I heard news stories about these predatory legal guardians who were exploiting this legal loophole and exploiting the vulnerability in the system to take advantage of older people, basically stripping them of their life and assets to fill their own pockets,” Blakeson told Esquire Magazine. “They run through their money as fast as possible, store them in the worst care home, and just forget about them. Just park them and then move on to the next one, and that felt almost like a gangster’s operation.”

And while the real-life scams never reached a level on par with Grayson’s Guardians, one crooked professional guardianship business in Las Vegas did manage to bilk hundreds of unsuspecting seniors out of their life savings. As we detailed in our previous article, Use Estate Planning to Avoid Adult Guardianship—and Elder Abuse, a real-life Marla Grayson named April Parks, who owned a Las Vegas-based company called A Private Professional Guardian, was sentenced to up to 40 years in prison in 2018 after being indicted on more than 200 felonies for using her guardianship status to swindle more than 150 seniors.

In her case, prosecutors described how Parks, in a similar fashion as Marla, used a shady network of social workers and medical professionals who helped her track down her elderly victims. On the lookout for wealthy seniors with a history of health issues and few living relatives, Parks was often able to obtain court-sanctioned guardianship during court hearings that lasted less than two minutes.

From there, the guardians would force the elderly out of their homes and into assisted-living facilities and nursing homes. They would then sell off their homes and other assets, keeping the proceeds for themselves. Even worse, the guardians were often able to prevent the seniors from seeing or speaking with their family members, leaving them isolated and even more vulnerable to exploitation.

The Most Punitive Civil Penalty

What makes these cases particularly tragic is the fact that for the most part everything these unscrupulous guardians did is perfectly legal. As Blakeson put it, “They had the law on their side, and there was nothing you could do.” Although guardianships are designed to protect the elderly from their own poor decisions, guardianship can turn out to be more of a punishment than a benefit.

In a 2018 New York Times article detailing the state of the guardianship system in New York, Florida congressman Claude Pepper described guardianship as “the most punitive civil penalty that can be levied against an American citizen, with the exception, of course, of the death penalty.”

Indeed, once you’ve been placed under court-ordered guardianship, you essentially lose all of your civil rights. Whether it’s a family member or a professional, the person named as your guardian has complete legal authority to control every facet of your life. While guardianship is governed by state law and varies from state to state, some of the most common powers guardians are granted include the following:

• Determining where you live, including moving you into a nursing home
• Complete control over your finances, real estate, and other assets
• Making all of your healthcare decisions and providing consent for medical treatments
• Placing restrictions on your communications and interactions with others, including family members
• Making decisions about your daily life such as recreational activities, clothing, and food choices
• Making end-of-life and other palliative-care decisions

Additionally, though it’s possible for a guardianship to be terminated by the court if it can be proven that the need for guardianship no longer exists, a study by the American Bar Association (ABA) found that such attempts typically fail. And those family members who do try to fight against court-appointed guardians frequently end up paying hefty sums of money in attorney’s fees and court costs, with some even going bankrupt in the process.

Protection Through Planning

Given the potential for neglect, abuse, and exploitation that guardianship affords, it’s crucial that seniors and their families take the proper steps to prevent any and all possibility of falling prey to such scams. Moreover, because any adult could face court-ordered guardianship if they become incapacitated by illness or injury, it’s vital that every person over age 18—not just seniors—take proactive measures to prepare for potential incapacity.

Fortunately, there are multiple estate planning tools that can prevent such abuse from occurring. With us, as your Personal Family Lawyer®, we can put planning vehicles in place and offer ongoing advisory and support that would make it practically impossible for a legal guardian to ever be appointed—or need to be appointed—against your wishes.

Next week, we’ll continue with part two in this series on the dark side of adult guardianship and offer tips for how you can avoid the potential for abuse using estate planning.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

Signed into law on March 11th, President Biden’s $1.9 trillion American Rescue Plan Act of 2021 (ARP) is the largest direct-to-taxpayer stimulus legislation ever passed, and it came just in time to save millions of Americans whose unemployment benefits were about to expire. In addition to extending unemployment relief, the ARP provides individual taxpayers and small business owners with a number of other vital financial benefits aimed at helping the country rebound from last year’s economic downturn.

Of these benefits, you’ve likely already seen one of the ARP’s leading elements—the $1,400 direct stimulus payments, which went to taxpayers, children, and dependents with incomes of less than $75,000 for individuals and $150,000 for joint filers. But beyond the stimulus, the ARP comes with numerous other provisions that can seriously boost your family’s finances for 2021.

To highlight the ways the ARP can impact your family’s bank account, last week in part one of this series, we outlined three of the legislation’s most important elements. Here in part two, we’ll break down three additional parts of the law that stand to boost your family’s finances. To learn about all the full array of benefits provided by the ARP, meet with us as your Personal Family Lawyer®.

4. Unemployment Benefits

While Congress extended unemployment benefits in December 2020, those benefits were set to expire in mid-March 2021, but the ARP extends unemployment benefits through September 6, 2021, offering an extra $300 a week on top of regular benefits.

The legislation extends two other federal unemployment programs as well. First, the Pandemic Emergency Unemployment Compensation Program, which provides federal benefits for those taxpayers who’ve exhausted their state benefits, is now available for an additional 29 weeks, and you have until September 6, 2021, to apply.

Next up, the Pandemic Unemployment Assistance Program provides benefits to those who wouldn’t normally qualify for unemployment assistance, such as the self-employed, part-time workers, and gig workers. This program is now available for 79 weeks, and as with the other benefits, you have until September 6th to get signed up. For more information on the Pandemic Emergency Unemployment Compensation Program and the Pandemic Unemployment Assistance Program, contact your state’s unemployment insurance office.

Finally, the ARP makes the first $10,200 in unemployment benefits paid in 2020 tax-free for families making $150,000 or less. Note that the ARP doesn’t provide a different threshold for single and joint filers, so both spouses are entitled to the $10,200 tax break, for a potential total of $20,400, if both spouses received unemployment benefits in 2020.

However, if your unemployment benefits exceed $10,200 in 2020, you’ll need to report the excess as taxable income and pay taxes on the amount over the limit. And if your household income is over $150,000, you’ll need to pay taxes on all of your unemployment benefits.

If you already filed your 2020 return and paid taxes on your unemployment benefits before the passage of the ARP made those benefits tax-free, the IRS plans to automatically process your refund. This means you won’t have to tax any extra steps, such as filing an amended return, to secure the refund.

5. Student Loan Relief

Under the CARES Act, federal student loan payments were paused until January 31, 2021, but the ARP extends the pause on those payments and collections through the end of September 2021. While Biden has repeatedly stated his support for $10,000 in federal student loan forgiveness, there was no student loan forgiveness included in the final version of the ARP.

That said, the ARP does offer some relief for those federal student loan borrowers who have their debt forgiven under already existing programs. Currently, federal student loan borrowers can enroll in programs that allow forgiveness after 20 or 25 years of on-time payments, but those borrowers have to pay income taxes on the amount that gets forgiven.

Under the ARP, student loan debt forgiven between Jan. 1, 2021 and Jan. 1, 2026 will be income-tax free. This means that if the government forgives a portion of your student loans during this period, that amount will no longer be considered taxable income.

This provision applies to those taxpayers who are enrolled in the Income Contingent Repayment (ICR) plan, which was started in 1993 and requires 25 years of repayment to qualify for forgiveness. However, this benefit does not apply to other federal student loan repayment plans, which require 20 or 25 years of repayment, but started in later years.

Additionally, thanks to the ARP, if you are a small-business owner who has defaulted on your federal student loan or are delinquent in your payments, you can now qualify for a loan from the Paycheck Protection Program (PPP), which received $7.25 billion in additional funding under the ARP. Moreover, Congress recently extended the deadline to apply for a PPP loan from March 31, 2021 to May 31, 2021. For more details or to apply for a loan, visit the Small Business Administration’s PPP website.

6. COBRA Continuation Coverage Subsidy

The ARP provides a 100% COBRA subsidy for up to six months for those workers who lost their health insurance coverage due to involuntary termination or reduction of hours during the pandemic. The ARP also allows for an extended election period for those who would be eligible to receive the subsidy but did not initially elect COBRA as well as those who let their COBRA coverage lapse.

Employees who are eligible for the subsidy, known as Assistance Eligible Individuals (AEIs), include those eligible for COBRA between November 1, 2019, and September 30, 2021, who are 1) already enrolled in COBRA, 2) those who did not previously elect COBRA, and 3) those who elected COBRA but let their coverage lapse. The subsidy does not apply to those who voluntarily terminate their employment or who are terminated for gross misconduct.

The ARP COBRA subsidy lasts from April 1, 2021 through September 30, 2021, and it applies to both insured and self-insured plans subject to COBRA, as well as self-funded and insured plans that are not subject to COBRA but are subject to continuation coverage under state law.

Note that the ARP subsidy is only available to those whose initial COBRA period ends (or would have ended if COBRA had been elected/did not lapse) either during or after this six-month period. The subsidy does not lengthen the COBRA period, which typically expires 18 months after coverage was lost. This means that if an AEI’s 18-month COBRA period begins after April 1, 2021, or ends before September 30, 2021, the subsidy will be shorter than six months.

The AEIs will not receive the subsidy directly from the government. Instead, the AEIs’ COBRA premiums will be considered paid in full during this period, and the employer must pay 100% of the AEIs’ COBRA premiums. From there, the employer will receive a refundable tax credit on their quarterly payroll tax filing. If an employer’s COBRA premium costs for AEIs exceed their Medicare payroll tax liability, they can file to get direct payment of the remaining credit amount.

COBRA beneficiaries who have elected COBRA and are covered under COBRA on April 1, 2021, do not need to enroll to be covered by the subsidy. For AEIs who did not initially elect COBRA or who let COBRA lapse, there will be a special enrollment period during which employers must inform AEIs of this benefit and allow them to elect coverage. This special enrollment period begins on April 1, 2021 and ends 60 days after the delivery of the COBRA notification to the employee.

A New Year Offers New Hope

With 2020 firmly in our rear-view mirror, the economy appears to be on the rebound, and things are slowly getting back to some semblance of normalcy. That said, many families continue to struggle financially, and if this includes you, you may be able to find some relief from the American Rescue Plan.

While the six elements of the legislation we covered here are among the most popular, there may be other provisions we haven’t touched on that could benefit your personal situation. Watch for upcoming webinars (and even in-person events!) we’ll be hosting to support you in making wise legal and financial choices for your family. Until then, contact us, as your Personal Family Lawyer®, for guidance on your family’s estate planning strategies by scheduling a Wealth Planning Session today.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

“You do not need to be a millionaire to have a millionaire mindset,” says financial life coach Annette Schmidt. This week, Pam is talking with Annette about cultivating a millionaire mindset and how to become an intuitive budgeter — but this isn’t about spreadsheets and tedious tracking. It’s all about making financial goals for yourself, and then making sure your money habits are in alignments with those goals.

Annette says she “grew up” in finance because she became a banker at eighteen. She left corporate America when she became a mom, but she never lost her passion for helping people manage and grow their money. Annette shares her philosophy on wealth, and reminds us that at the end of the day, money management can’t be separated from our other life goals. She talks with Pam about finding your “why,” getting out of three common money cycles, and learning how to align your spending with what you actually enjoy.

This episode is full of incredible, actionable ways to change your relationship with money — you are going to want to tune in!

Quotes

• “I really wanted to start coaching to help women start to break the money cycles we get stuck in. (2:17-2:25)
• “The biggest piece when it comes to creating the millionaire mindset is going to be to start to look at money differently. And in order to start to look at money differently, you need to know how you look at it now.” (9:15-9:26)

Links

www.facebook.com/groups/financiallysavvymoms

www.instagram.com/thefinsavvymom

www.thefinsavvymom.com

Podcast: https://open.spotify.com/show/4hLjgNzQnPP5axQ9SVopN3?si=mHsN-9Q5RmWc3Vf5QTdnHQ

Facebook Group:

https://www.facebook.com/groups/theworkingmoms

Pamela Maass on Linkedin:

https://www.linkedin.com/in/pamela-maass/

Law Mother Website:

https://www.lawmother.com

Podcast production and show notes provided by FIRESIDE Marketing

https://www.meetfireside.com/podcast-production-service/

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

Signed into law on March 11th, President Biden’s $1.9 trillion American Rescue Plan Act of 2021 (ARP) is the largest direct-to-taxpayer stimulus legislation ever passed, and it came just in time to save millions of Americans whose unemployment benefits were about to expire. In addition to extending unemployment relief, the ARP provides individual taxpayers and small business owners with a number of other vital financial benefits aimed at helping the country rebound from last year’s economic downturn.

Of these benefits, you’ve likely already seen one of the ARP’s leading elements—the $1,400 direct stimulus payments, which went to taxpayers, children, and nonchild dependents with incomes of less than $75,000 for individuals and $150,000 for joint filers. But beyond the stimulus, the ARP comes with numerous other provisions that can seriously boost your family’s finances for 2021.

To highlight the ways the ARP can impact your family’s wallet, here we’ll break down six of the legislation’s key elements. To learn about all the full array of benefits provided by the ARP, meet with us, as your Personal Family Lawyer®.

1. Child Tax Credit

If you have minor children, the ARP enhances the Child Tax Credit (CTC) in some major ways. Not only does it significantly increase the amount of the credit, but it also changes the way you can receive the money.

Under the current CTC, parents can receive a maximum tax credit of $2,000 for each qualifying child under age 17, with $1,400 of that credit being refundable. The ARP increases that credit to $3,000 a year for each child aged 6 to 17 and $3,600 for each child under 6—and both amounts are fully refundable.

Parents who qualify for the full amount of $3,000 or $3,600 per child include single filers earning less than $75,000, and joint filers earning less than $150,000 annually. After this, the credit begins to phase out. However, parents who file singly and earn less than $200,000 ($400,000 for joint filers) could still claim the original $2,000 credit.

In addition to increasing the credit, the ARP also changes the way parents can access the money. Instead of applying the full amount of the credit to your income taxes at the end of the year and possibly getting a refund, you can now opt to receive the credit up front in monthly payments of $250 per qualifying child or $300 for children under age 6.

This means you can get half of the credit in the form of monthly cash payments and claim the other half when you file your 2021 taxes in April 2022. If you opt for the monthly payments, the IRS expects to send those out starting in July 2021 and lasting through December 2021. The ARP directs the Treasury Department to create an online portal that allows parents to opt out of advance payments and report any changes in income, marital status, or number of eligible children.

Note that these increases are only in effect for 2021 and will revert back to the original amounts in 2022. However, there’s currently support in both Congress and the White House for making them permanent. Check our weekly blog and IRS.gov for updates to the legislation.

2. Child and Dependent Care Tax Credit

In order to provide financial assistance to those families who pay for child care or care of an adult dependent, such as an elderly parent, the ARP increases the Child and Dependent Care Tax Credit for 2021—and for the first time, it makes the credit refundable.

For 2021, the ARP provides a tax credit for the expenses associated with the care of qualifying dependents (kids 12 or younger or a disabled adult) for a total of up to $4,000 for one dependent and $8,000 for two or more dependents. This is an increase from the max credit amounts for 2020, which are $3,000 for a single dependent and $6,000 for multiple dependents.

The IRS allows you to claim a fairly wide range of qualified expenses for such care, including the following:

• Daycare
• Babysitters, as well as housekeepers, cooks, and maids who take care of the child
• Day camps and summer camps (overnight camps are not eligible)
• Before and after-school programs
• Nursery school or preschool
• Nurses and aides who provide care for a disabled dependent

The ARP also makes more people eligible for the credit by raising the income limit for the full credit from $15,000 to $125,000 per year. Those making between $125,000 and $400,000 are eligible for a partial credit.

As an added bonus, the credit is fully refundable for 2021, so you could get a refund for the credit even if your tax bill is zero. However, as with the changes to the Child Tax Credit, these updates are only available in 2021, unless additional legislation is passed.

There are special rules for divorced couples looking to claim the Child and Dependent Care Tax Credit, so if that’s you, meet with usor a financial advisor for support.

3. Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is a refundable tax credit for low- and middle-income workers that’s frequently overlooked—and the ARP makes the credit more valuable for many taxpayers in 2021 than ever before. The amount you can claim for the EITC depends on your annual income and the number of kids you have, but people without kids can qualify, too.

For 2021, the ARP revises a number of EITC rules, and makes an increased credit available to more childless taxpayers. While in past years, childless filers could only qualify for a relatively small credit, for 2021 the ARP boosts the maximum EITC for those without children from around $540 to just over $1,500.

The legislation also reduces the minimum age for a childless taxpayer to qualify, from 25 to 19, and it also eliminates the maximum age of 65 for the credit, so seniors of any age can qualify, as long as they meet the income requirements. The above changes from the ARP are only for 2021, but the law makes some permanent changes to the EITC as well.

In prior years, you couldn’t qualify for the EITC if you had more than $3,650 in investment income for the year. But thanks to the ARP, starting in 2021, you can have up to $10,000 of such “disqualified” income without losing the EITC, and for 2022 and beyond, this limit will remain and be adjusted for inflation.

Below are the maximum EITC amounts for 2021, along with the maximum income you can earn before losing the credit altogether.

2021 Earned Income Tax Credit

Number of kids

Maximum earned income tax credit

Max earnings, single or head of household filers

Max earnings, joint filers

0

$1,502

$15,980

$21,920

1

$3,618

$42,158

$48,108

2

$5,980

$47,915

$53,865

3 or more

$6,728

$51,464

$57,414

Additionally, just for 2021, you can calculate your EITC using either your 2019 earned income or your 2021 earned income and use whichever number gets you the bigger credit. And don’t worry—if you go with the 2019 number, it has no effect on any of your other 2021 tax calculations. For example, if some or all of your income is from self-employment, using your 2019 income to calculate your 2021 EITC won’t increase your 2021 self-employment tax.

Finally, no matter the year, the EITC is fully refundable. This means you can collect the money even if you don’t owe any federal income tax. That said, calculating the credit can be quite complicated, so if you need a referral to a CPA to support you, please feel free to contact us for our favorite referrals.

Next week, we’ll cover the remaining three ways the American Rescue Plan can boost your family’s finances in 2021.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

2020 was a nightmarish year for many families. But thanks to recent legislation, you could see a silver lining in the form of major tax breaks when filing your income taxes this spring. First up, although it’s technically not a tax break, the IRS recently announced that the deadline for filing your 2020 federal income taxes has been pushed back from April 15 to May 17, 2021, which gives you an extra month to get your tax return handled.

The postponement applies to individual taxpayers, including those who pay self-employment taxes. But the extension does not apply to first-quarter 2021 estimated tax payments that many small business owners file. So if you file quarterly taxes, contact your tax advisor now, if you haven’t already done so.

Additionally, the CARES Act passed in March 2020 provides individual taxpayers with several hefty tax-saving opportunities, many of which are only available this year. What’s more, President Biden’s new relief package, known as the American Rescue Plan (ARP), which went into effect in March 2021, not only offers additional stimulus payments to most Americans, but it also includes significant tax relief for those taxpayers who lost their job and had to rely on unemployment benefits in 2020.

While there are dozens of potential tax breaks available for 2020, last week in part one of this series, we highlighted the first three of seven ways you can save big money on your 2020 tax return. Here in part two, we’ll discuss the remaining four ways you can save.

4. New Rules for Early Withdrawals From Retirement Accounts

If your finances were seriously impacted by last year’s economic turmoil, you may have needed to withdraw funds from your retirement accounts to cover your expenses. And thanks to new rules under the CARES Act, you have more flexibility to make an emergency withdrawal from tax-deferred retirement accounts in 2020, without incurring the normal penalties.

Typically, permanent withdrawals from traditional IRAs or 401(k) accounts are taxed at ordinary income rates in the year the funds were taken out. And pulling out money before age 59 1/2 would also typically cost you a 10% penalty.

But thanks to the CARES Act, you can avoid the 10% penalty (if under 59 1/2) on up to $100,000 in pandemic-related distributions from your retirement account in 2020. You are also allowed to spread such distributions over three years to reduce the tax impact. Or better yet, you can opt to put this money back into your retirement account—also within three years—and avoid paying taxes on the money all together.

However, because early withdrawals can negatively impact your retirement savings down the road, if you are looking to take advantage of this provision, you should consult with us, as your Personal Family Lawyer®, and your financial advisor first. Also, note that employers are not required to participate in this provision of the CARES Act, so you’ll also need to check with your plan administrator to see if it’s available at your workplace.

5. Medical Deductions

If you had hefty medical bills in 2020, you might be able to get some tax relief using increased deductions. Under the CARES Act, you can deduct any medical expenses above 7.5% of your adjusted gross income (AGI). Your AGI is your total income minus any other deductions you’ve already taken.

For example, if your AGI was $100,000, you can deduct qualified unreimbursed medical expenses that exceeded $7,500 in 2020. However, you have to itemize your deductions in order to write off these expenses, so meet with us to determine if this would make sense for your situation.

6. Earned Income Tax Credit

The Earned Income Tax Credit (EIC) is a refundable tax credit for low- and middle-income taxpayers that’s often overlooked. The amount of credit you can claim depends on your annual income and the number of kids you have—but people without kids can qualify, too.

Below are the maximum EIC amounts for 2020, along with the maximum income you can earn before losing the credit altogether. Note: You can’t claim the EIC if you are a married individual filing separately.

Number of children

Maximum earned income tax credit

Max earnings, single or head of household filers

Max earnings, joint filers

0

$538

$15,820

$21,710

1

$3,584

$41,756

$47,646

2

$5,920

$47,440

$53,330

3 or more

$6,660

$50,954

$56,844

Additionally, for the 2020 tax year, there are special rules for the EIC due to the pandemic: You can use either your 2019 income or your 2020 income to calculate your EIC and use whichever number gets you the bigger credit. This doesn’t happen automatically, though, so be sure to ask your tax professional to run the numbers both ways and choose the option that offers the most savings.

7. Child Tax Credit

If you have minor children aged 16 or younger, the Child Tax Credit is one of the most effective ways to reduce your federal income tax bill—and there are special rules for 2020 that can save you even more.

For your 2020 taxes, you can claim up to $2,000 per qualified child as a tax credit, and under rules due to the pandemic, you can use either your 2019 income or your 2020 income to calculate your credit—whichever year offers the most savings. The credit begins to phase out when your AGI reaches $75,000 for single filers, $150,000 for joint filers, and $112,500 for head of household filers.

What’s more, with the passage of Biden’s new ARP this March, the child tax credit is set to get even bigger in 2021. When you file your taxes next year, the per child credit will go up to $3,000 or $3,600, depending on your child’s age. Look for a future blog post detailing all of the new tax saving opportunities available under the ARP for 2021 and beyond.

Maximize Your Tax Savings for 2020

These are just a few of the numerous tax breaks available for 2020. Indeed, there are plenty of other deductions and credits that might be up for grabs depending on your situation. Meet with us, as your Personal Family Lawyer®, to make sure you don’t miss out on a single one. Contact us today to schedule your visit.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

2020 was a nightmarish year for many families. But thanks to recent legislation, you could see a silver lining in the form of major tax breaks when filing your income taxes this spring. First up, although it’s technically not a tax break, the IRS announced this week that the deadline for filing your 2020 federal income taxes has been pushed back from April 15 to May 17, 2021, which gives you an extra month to get your tax return handled.

The postponement applies to individual taxpayers, including those who pay self-employment taxes. But the extension does not apply to first-quarter 2021 estimated tax payments that many small business owners file. So if you file quarterly taxes, contact your tax advisor now if you haven’t already done so.

Additionally, the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020 provides individual taxpayers with several hefty tax-saving opportunities, many of which are only available this year. What’s more, President Biden’s new relief package, known as the American Rescue Plan (ARP), which went into effect in March 2021, not only offers additional stimulus payments to most Americans, but it also includes significant tax relief for those taxpayers who lost their job and had to rely on unemployment benefits in 2020.

While there are dozens of potential tax breaks available for 2020, here are 7 of the leading ways you can save big money on your 2020 tax return.

1. Stimulus Payments

As part of the CARES Act, millions of Americans received stimulus checks in 2020, and those payments were an advance refundable tax credit on your 2020 taxes. This means that no matter how much you owe (or get back) on your 2020 taxes, you get to keep all of the stimulus money and won’t have to pay any taxes on it.

Because the IRS didn’t have everyone’s 2020 tax returns when they issued the stimulus checks, they based the stimulus payments on your 2018 or 2019 returns, whichever one you had most recently filed. Using data from those years, the stimulus payments from 2020 phased out at an adjusted gross income (AGI) of $75,000 to $99,000 for singles and at $150,000 to $198,000 for married couples filing jointly.

Given that the stimulus payments were based on your AGI for 2018 or 2019 but technically apply to your 2020 AGI, you may find that your payment was either too much or too little. But there’s good news—even if your financial situation has improved since 2018 or 2019 and you received too much stimulus money based on your 2020 income, you get to keep the overage.

By the same token, if you received too little or only partial payment on your 2020 stimulus, you can claim what you missed in the form of a recovery rebate credit when you file your 2020 taxes. Not sure how this would work? Here are three scenarios where you may be entitled to additional stimulus money.

• If your AGI for 2018/19 is higher than your AGI in 2020, you can claim the additional amount owed when you file your 2020 taxes this April.
• If you had a child in 2020, but didn’t get the $500 credit for dependent children in your stimulus payment, you can claim the child when you file in 2021.
• If someone else claimed the child based on 2018/19 returns, but you can legitimately claim that child on your 2020 return, you can get the $500 tax credit when you file in 2021, and the person who got it based on 2018/19 returns will not have to pay it back.

2. Unemployment Benefits

When the pandemic stalled out the economy, many Americans lost their jobs and were forced to rely on unemployment insurance to pay the bills. That said, unemployment benefits are generally taxable, so if you took them, without having taxes automatically deducted, you were looking at having to pay income taxes on that money when you file your 2020 return.

However, taxpayers who received unemployment benefits in 2020 were provided with significant relief with the passage of President Biden’s American Rescue Plan (ARP). Under the ARP, the first $10,200 of your 2020 unemployment benefits are tax-free if your annual household income is less than $150,000. The ARP doesn’t provide a different threshold for single and joint filers, so both spouses are entitled to the $10,200 tax break, for a potential total of $20,400, if both spouses received the benefits.

Note that if your unemployment benefits exceed $10,200 in 2020, you’ll need to report the excess as taxable income and pay taxes on the amount over the limit. And if your household income is over $150,000, you’ll need to pay taxes on all of your unemployment benefits just like you would before the passage of the ARP.

If you already filed your 2020 return and paid taxes on your unemployment benefits before the passage of the ARP made those benefits tax free, the IRS plans to automatically process your refund. This means you won’t have to tax any extra steps, such as filing an amended return, to secure the refund. The IRS will release further details on this issue in the coming weeks.

3. Waived RMDs

You are typically required to take an annual required minimum distribution (RMD) from your IRA, 401(k), or other tax-deferred retirement account starting in the year when you turn 72, but the CARES Act temporarily waived the RMD requirement for 2020. The waiver also applies if you reached age 70½ in 2019, but waited to take your first RMD until 2020, as allowed under the SECURE Act.

RMDs generally count as taxable income, so taking this waiver means that you may have lower taxable income in 2020 and therefore owe less income taxes for 2020.

However, there are a number of factors to consider, including the state of the market and your living expenses, when deciding whether or not to waive your RMDs. Given this, consult with us, as your Personal Family Lawyer®, or your tax professional before making your final decision.

Next week, in part two of this series we’ll cover the remaining four ways you can save big money on your 2020 tax bill.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.

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Even though there are now vaccines for the pandemic and the number of new cases is on the decline, becoming infected is still a very real possibility. And for parents who suffer from any debilitating illness, it can be a colossal challenge to navigate your typical parenting responsibilities, while trying to recover.

This is especially true for single parents who are the sole caregiver, with limited outside child-care options. That said, plenty of single parents have faced the same challenge and successfully recovered, while raising their young children. Fortunately, you can learn from their experiences, ask for support, and take steps to prepare for and manage your illness and your role as a parent.

Last week, in part one, we discussed some key legal issues that parents of minor children should address in order to deal with the risks of the coronavirus or any other serious medical condition that can leave you totally incapacitated or worse. Specifically, we talked about the need for naming legal guardians to care for your kids in the event you become unable to look after them. If you have not already legally documented who you would want to look after your children should you become unable to do so yourself—even for a short period of time—go to this free website right now get it done.

In addition to naming legal guardians for your kids, we also talked about the need to create a medical power of attorney and living will. These legal documents are advance directives that describe your wishes for medical treatment and end-of-life care in the event you become incapacitated and unable to express your own wishes.

Here, in part two of this series, we are going to discuss proactive measures that single parents debilitated by the coronavirus or another illness can take to improve your chances for a smooth recovery and better manage your parenting duties at the same time. Additionally, we are going to discuss additional estate planning steps for you to consider now.

Practical Tips For Recovering From The Coronavirus

If you develop symptoms that aren’t serious enough to warrant hospitalization, your main priority is recovering from your illness, but unless you can find an alternate caregiver, you’ll still need to look after your kids. As with any other challenge, planning ahead for this situation will greatly improve your chances of having a smooth recovery.

The more you prepare yourself, your home, and your children for your illness before you start feeling sick, the easier it will be to manage things when your symptoms reach their worst. The coronavirus affects people in a variety of different ways, so until you know exactly how your body will react, it’s best to prepare for a broad range of symptoms.

Identify Support. As a single parent, having backup support to care for your kids, in case you become ill or in the event of your death, is critical. While we discussed naming legal guardians for your children in our previous article, on a practical level, now is the time to consider who in your life would you be able to call on for immediate support if you need help.

As you make this list of potential immediate supporters for you and your kids, have a proactive conversation with those people now, letting them know you hope to not have to call on them, but if you do, you want to know if they would be open to being available to support you and/or your children.

If they say yes, create legal documentation giving them authority to stay with your kids and make medical decisions for your kids, in the event that you cannot make those decisions for any reason at all. This way, if something does happen, and you are too sick to care for your children, the authorities would have your written authority to leave your children in the care of the people you’ve identified, and they wouldn’t have to take your children into the care of strangers or “the system” while they figure out what to do.

In the even that you do become seriously ill, you should take the following steps to help prepare yourself and your family:

Plan to get lots of rest. Constant fatigue is one of the most common symptoms of the virus, and this can seriously affect your ability to care for your kids. Given this, you should do everything you can to keep your kids safe and occupied, so you can rest. This might mean gathering games, videos, books, music, toys, and snacks to keep them entertained. And if you have small children and are worried about them wandering off, consider using a playpen or play gates to keep them in the same room as you while you rest.

Stock up on food. You should stock up on food for both you and your kids. Your best bet are easy-to-prepare meals, such as canned soup, microwave meals, energy bars, meal-replacement shakes, and frozen pizzas. While you should be able to stock up on at least a couple of weeks worth of food beforehand, you may find that you need additional food or other essential supplies once you get sick. To prepare for this, reach out to family and friends to see if they can drop off groceries, and if that’s not an option, look into delivery services such as TaskRabbit or Instacart.

Get homework help. If your kids are attending school remotely, it might be a good idea to coordinate with a friend or tutor to be available via FaceTime or Zoom to help you kids with their schoolwork should you be laid low by your symptoms.

Preparing for the Worst-Case Scenario

While most adults don’t experience severe complications from the coronavirus, there’s always the chance that you could be among those who do. Should the absolute worst happen and you end up passing away from the illness, it’s critical that your estate plan be completely up-to-date with the latest documents, beneficiaries, and administrators. Here we’ll outline some of the most important aspects of your estate plan that you should have covered to ensure your kids are properly cared for following your death.

Ensure your will distributes your assets properly: As a single parent of minor kids, you’ll likely want most, if not all, of your assets to pass to your children in the event of your death, and for this reason, you may have named them as beneficiaries in your will. However, as minors, they wouldn’t be able to access those assets until they reach the age of majority. Until they come of age, the court would appoint a guardian, which could be someone other than the person you’ve chosen, to manage their inheritance.

To avoid this, if you only have a will, you should ensure that your will establishes a testamentary trust for the benefit of your kids, with a financial guardian named by you to care for the assets, until your children reach the age you choose for them to receive their inheritance.

But for a variety of reasons we’ll cover below, using a will alone is not the ideal option for protecting and transferring your assets to your kids. Instead, you should seriously consider creating a trust to ensure your children’s inheritance passes to them in the most advantageous way possible.

Use a trust to protect and control the distribution of your children’s inheritance: Using a revocable living trust to pass your children’s inheritance to them offers a number of important advantages over a will. For one, assets included in a will must first pass through the court process known as probate before they can be transferred to the intended beneficiaries. This means that the guardian you’ve named to care for your kids would have to first go through the probate process before they could get access to any of your assets for your children’s care.

Probate can not only take months or longer to complete, but it can also be expensive and confusing. In contrast, if your assets are held in a properly drafted trust, the person you name as financial guardian could work with your lawyer for ease of management of your assets, and the people you name to care for your children could access those assets much more easily and directly as needed.

The trustee you name could be the person you’ve named as your kids’ legal guardian, or it could be a different individual, who could oversee the management of your children’s inheritance, freeing the guardian from the responsibility of caring for your kids and worrying about managing their money at the same time. Alternatively, you could make the guardian and another individual co-trustees, so there would be two individuals overseeing the assets for increased accountability.

Another advantage a trust has over a will is the level of control they offer you when it comes to distributing assets to your kids. By using a trust, you can specify when and how your kids will receive your assets once they come of age. For example, you could stipulate in the trust’s terms that the assets can only be distributed upon certain life events, such as the completion of college or purchase of a home. Or you might spread out distribution of assets over their lifetime, releasing a percentage of the assets at different ages or life stages.

In this way, you can help prevent your kids from blowing through their inheritance all at once, and offer incentives for them to demonstrate responsible behavior. Plus, as long as the assets are held in trust, they’re protected from the beneficiaries’ creditors, lawsuits, and divorce, which is something else wills don’t provide.

Furthermore, a will does not cover assets that pass directly to a beneficiary by contract, such as life insurance and retirement accounts. Given this, make sure your insurance policies and retirement accounts are directed to your trust, instead of listing your children as designated beneficiaries. Naming minors or even young adults as the beneficiaries of insurance and retirement accounts is a sure-fire way to ensure they unnecessarily get stuck in a court process, with a judge deciding how your assets are managed for your children, which you can easily avoid by designating your trust as the beneficiary of your life insurance and retirement accounts.

That said, if an asset hasn’t been properly funded to your trust, it won’t be covered, so it’s critical to work with us, as your Personal Family Lawyer®, to ensure the trust is properly funded. We have systems in place to ensure that transferring assets to your trust and making sure they are properly owned at the time of your incapacity or death happens with ease and convenience.

Finally, in addition to the above documents, it’s essential that your estate plan also include a comprehensive inventory of your assets.

Create a Personal Resource Map: Maintaining a regularly updated inventory of all your assets is one of the most vital parts of keeping your plan current. By creating such an inventory, those named in your will and/or trust will know what you have and how to find everything should something happen to you, so none of your assets end up in our state’s Department of Unclaimed Property. This task is so important we’ve created a free online tool called a Personal Resource Map to help you get your asset inventory process started right now by yourself, without the need for a lawyer.

After getting your inventory started there, meet with us, as your Personal Family Lawyer®, to incorporate your inventory into a comprehensive set of planning strategies that we will develop with you to keep your plan updated throughout your lifetime.

Minimize Your Risk With Planning

While the pandemic has been an extremely trying time, it seems we’re finally rounding the corner in containing the virus and getting our lives back to normal. Although it’s impossible to totally prevent you or your loved ones from getting seriously ill, by putting the type of proactive planning measures described here in place, you can significantly minimize the level of stress, suffering, and conflict that can result if you do become sick.

Whether you have yet to create these documents or need yours updated, meet with us, as your Personal Family Lawyer®, right away to ensure your family and your assets are as well-protected as possible. Contact us today to schedule your appointment.

​Proper estate planning can keep your family out of conflict, out of court, and out of the public eye. Are you ready to protect your loved ones and legacy? Check out my next presentation.