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OCTOBER 2022
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Information on Tax and Estate Planning from the Masonic Charities of the Grand Lodge of Pennsylvania
Masonic Charities then takes 5% of the value of the trust assets each year (which means if the trust grows, the payments to your heirs grow) and either pays your heirs such amount for the remainder of their lives or for a period up to 20 years. You decide which option to use. Most people use the lifetime option for children in their 50s or 60s, since the trust could pay income for 20 years or more, well beyond the 10-year limit of an inherited IRA. For those looking to split the payout from the trust among several heirs, especially grandchildren, cousins, nieces or nephews, the payout period of up to 20 years is popular.
Do you have a TRADITIONAL IRA? (If yes, you really need to consider this planning method!) When I visit individuals across the country or residents at the Masonic Villages, the question I keep getting asked is, “Al, what is your most popular estate planning technique?” My response is pretty straightforward if he or she has a traditional IRA: “You have to consider the Income for Life (or up to a period of 20 years) Trust as part of your planning.” Why? Well, let me explain the basics.
Since 2020, anyone other than a spouse who inherits your IRA upon your passing must withdraw the entire amount within 10 years of your death. They also must take required minimum
distributions during this time. ALL of these withdrawals are fully taxable as ordinary income, which means if your heirs are still working or already have significant income, they could be paying a hefty tax on all of these distributions. Maybe 30% or more! OUCH! But wait; there is a solution to mitigate this problem, and it is our most popular estate planning tool since this law was passed. Instead of giving your IRA to your heirs, you pass the IRA to a trust managed by the Masonic Charities at no cost, with an investment fee of less than 1%. The trust receives your IRA assets tax-free and turns around and invests the funds for your heirs.
Once the last heir passes, if a lifetime trust is chosen or payout period for up to 20 years ends, any remaining funds goes to the Masonic Charities of your choice. In circumstances where the IRA is large enough (usually over $750,000), you can even choose other charities, such as your church, to receive part of the remaining funds.
That’s it! Let’s summarize some of the advantages of this technique: •
Masonic Charities professionally manages your IRA assets for little cost.
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Payouts are usually much longer than 10 years, and over time, can exceed the amount your heirs would get if you left them an inherited IRA.
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The trust assets are protected from creditors and cannot be considered as part of a divorce. The assets grow tax-free until they are distributed to your heirs.
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ou can leave any remaining funds when the trust Y terminates to your favorite Masonic Charities or other charities, if your IRA is large enough.
Best of all, you can change your mind at any time before you die and completely revoke or modify the trust. So, there is no commitment up front. What are you waiting for? Call our office at 1-800-599-6454 or email me at ablitz@masonicvillages.org to get your free Income For Life Trust presentation and a personal illustration.
You have nothing to lose and possibly everything to gain.
HELP!
The Sky is Falling. I was with Brother Joe at his home in Tionesta, PA, the other day, and he was griping about how he was losing all his retirement income in the stock market and how ridiculous the cost of everything, including gas, was due to surging inflation. He quipped, “Al, what do I do with my investments in times like this?” I replied, “Joe. Just take a deep breath and remember: you still have your health, family and friends. Let’s go from there.” For many of us who are old enough (my sons define that as 60 or older), we can remember past recessions. Remember 2008? The market dropped 50% in six months, and many of us saw the equity in our homes go away. It’s just the natural cycle of our economic system. So, the first thing to do is not panic and sell all your holdings. Most people live to regret it when the market recovers. One caveat here: for many of us, time is not on our side, since we are on the downslope of life. With that in mind, I told Joe that there a couple things to keep in mind in these difficult times, based on my past experience with recession and inflation. Here are some of my observations:
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PEND LESS MONEY. Seems obvious, right? But for S the undisciplined, this is a nut too large to swallow. Eat out less. Buy cheaper products. Grow your own vegetables. The sky’s the limit. Or, do the opposite like my wife: spend more on staples you will always need, since it will cost a lot more later during inflationary times. Does toilet paper, mouthwash and detergent come to mind? Get a freezer and stock up on meat and other goods. Get creative. REPOSITION YOUR PORTFOLIO. This may be a little riskier, but for those willing to do it, research shows that in past inflationary times, energy and commodity stocks did best. Be prepared for a volatile ride, though, so this isn’t for everyone. Other suggestions from professionals are short-term bond funds, value stock funds and dividend stocks such as Exxon and Chevron. ONSIDER I BONDS AND TIPS, a.k.a. U.S. C Treasury Inflation Protection Securities. If you’re looking for long-term income protection against inflation, these treasury bonds and securities are a safe investment. Since both investment vehicles are tied to inflation, they can provide some security with rates rising (Schwab TIPS was recommended by The Wall Street Journal).
4 ANNUITIES. For those looking for a level of
security, less volatility and a fixed income, there are always annuities. I say this with caution, since this is a complicated field with many landmines. The fees on annuities can be daunting, and the winner is the person with good genes who lives a long life. Seek the advice of a trusted financial professional before venturing into this area.
In the end, I told Joe that inflation requires discipline, something we have been lacking in today’s “live for the moment” society. If you watch your spending, adjust your lifestyle to what you can afford and make some sound adjustments to your investments, you will be fine. Joe agreed, and then suggested we go to McDonald's for lunch instead of the expensive restaurant down the street. Now, that’s a real adjustment.
Masonic Village at Sewickley
Scholarship & Music Therapy Programs Recently, a group of residents at Masonic Village at Sewickley helped raise funds to provide scholarships for dining staff at their campus.
The purpose was to attract more staff and retain the current staff. The residents raised $63,000 for current scholarships and $170,000 for a fund for future scholarships. Quite impressive! The resident committee for the program has awarded 11 scholarships to staff totaling $44,000. Thank you, residents! A Masonic Village at Sewickley resident and fellow Mason has recently stepped up to make a gift of over $25,000 to help the campus’ Music Therapy Program. This program provides a critical service for our residents at end-of life and those who have dementia in the Sturgeon Healthcare Center. The program was originally supported by a threeyear grant from a local foundation. The funds are now exhausted, and we are seeking support from residents, fellow Masons and Masonic widows to keep this program alive. If you are able, we ask your support of this worthwhile program. For more information on the program or to make a gift to it, please contact me or Eric Gross, executive director at Masonic Village at Sewickley, at 717-741-1400.
Neither Masonic Charities of the Grand Lodge of Pennsylvania, nor Alvin H. Blitz, Esq., provide legal, financial or tax advice. None of the information in The Blitz should be deemed legal, financial or tax advice or acted upon by any person without prior consultation with appropriate professional advisors.
What to do with those digital assests? I was visiting with Brother Tom, who lives in the personal care area at the Masonic Village at Sewickley the other day. As he was searching on his iPhone for restaurants in the area for me to take him to, he looked up at me and asked, “Al, what happens to all my online accounts when I die?” I paused and said, “Good question, Tom. It’s not your problem, but it would help to make life easier for your executor if you did something now.” Tom replied, “Al, you seem to know all about this techie stuff. What do you recommend?”
While I am not as good a techie as Tom proclaims, I did go over the basics with him. Here is what I recommended: 1 CREATE A LIST. Creating a list of your digital assets and how to access them will help your fiduciary gain access as quickly as possible to protect your assets. It also prevents your fiduciary from overlooking an asset which could be lost. Since we are constantly adding new accounts and changing the passwords to our accounts, this requires diligence in updating the list. I find it easier for the executor or a person you appoint to have the current password to your phone and your password account on the phone, which is constantly updated.
2 KEEP THE LIST SAFE. Lists of digital assets should
be printed out and kept with your estate planning documents in a safe place or stored with a password manager online. 1Password, Dashlane and LastPass are three of the most commonly used password managers.
3 CHOOSE THE RIGHT SETTINGS. Some online
companies such as Apple (go to digital-legacy.apple. com), Google (go to Inactive Account Manager) and Facebook (go to Memorialization settings) allow the user to appoint individuals to decide what happens if you pass away. It is wise to make sure these settings are consistent with your estate plan and the executor who is appointed to handle your digital assets.
4 COORDINATE YOUR DIGITAL ASSETS
APPOINTMENTS. Make sure you coordinate who has access to your digital assets with your agent appointed as your financial power of attorney; your executor in your Will; and your trustee, if you have a living trust.
5 FIND THE RIGHT ESTATE PLANNING ATTORNEY. Pennsylvania enacted the Revised Uniform Fiduciary Access to Digital Assets Act (Act 72) in 2020. It amends the law to allow any agent appointed as your financial power of attorney (POA) to access your electronic communications and digital assets. This requires a specific grant of authority. Thus, such a power is not granted to your agent unless specifically stated in your POA. I would suggest you ask your attorney to provide for this specific grant of authority to digital assets the next time you update your POA. Likewise, your Will should be updated to provide access to digital assets by your executor. After going over these recommendations with Tom, he looked at me and quipped, “All this digital assets stuff is making me hungry. I just found a great Italian Restaurant in Wexford on my iPhone for lunch. Then, you can help me reach out to my attorney to update my Will and POA.” I replied, “Thanks, Tom. You seem to be quite the techie yourself, when someone else is buying.”
1-800-599-6454 | MasonicCharitiesPa.org
Masonic Charities One Masonic Drive Elizabethtown, PA 17022
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Blitz
Join Me for Lunch Please see the dates below where I will be holding upcoming luncheons. To RSVP, call 1-800-599-6454 or email ABlitz@masonicvillages.org.
Jupiter, Florida Nov. 1
Englewood, Florida Nov. 29
Palm Harbor, Florida Nov. 15
Bradenton, Florida Nov. 30
Brother Alvin H. Blitz, Esq., Carlisle Lodge No. 260, serves the Masonic Charities of the Grand Lodge of Pennsylvania, which consists of the Masonic Villages, the Masonic Children's Home, the Pennsylvania Masonic Youth Foundation, The Masonic Library and Museum of Pennsylvania and the Grand Lodge of Pennsylvania Charity Foundation.
OCTOBER 2022