Busting the 10,000 Steps a Day Myth

Many people jumped on the bandwagon and bought fancy (read expensive) electronic gadgets that measured the number of steps they took every day when the “10,000 steps a day” fad hit. However, not many people asked who came up with that number as the guideline. Busting the 10,000 steps a day myth, an article in the medical journal JAMA Internal Medicine, says the guideline never had a scientific basis. Apparently, “10,000 steps” was a marketing idea that the pedometer industry created.

“10,000 steps meter” is the English translation of the trade name of Manpo-kei, a 1965 Japanese pedometer. The authors of the JAMA article say that is likely where the 10,000 steps concept originated. There has been very little research on how many steps people should take each day to be healthy. When the companies that wanted us to buy the various wrist gadgets that measure how much we move around told people they needed to walk at least 10,000 steps a day, the general public merely accepted that statement without question.

Of course, you want to be healthy. No one is going to keep track of every step they take manually. If you walked around counting your steps out loud, they would probably send you for an evaluation. You could estimate the steps, but 10,000 steps a day is a large number. It would be inconvenient to map out everywhere you walked every day.

Therefore, people bought the gadgets to count their steps and let them know when they need to get off the sofa and move around. (Bonus myth buster: those devices do not actually count your steps.) Linking those gadgets to entertaining apps and adding features, like tracking your sleep habits, made many people curious enough to part with their money and purchase the devices.

How Many Steps People Need

Researchers at the Women’s Health Study focused on close to 17,000 women with an average age of 72. The women wore accelerometers, which are devices that kept track of the distance they walked and the speed at which they did so.

The study found there was no health benefit, in terms of longer life, from taking more than 7,500 steps a day. You might not even need half of the much-touted 10,000 steps a day to achieve significant benefits. With an activity level of 4,400 steps a day, older women have a significantly lower mortality rate than people who walk about half that amount.

The study found no connection between the speed of walking and longevity benefits. In other words, a pleasant stroll provides just as much health benefit as a brisk walk, jog, or run of the same distance.

The scientists suggested the non-scientific 10,000 steps a day guideline discouraged many people from exercising. People felt the high goal was not attainable, so it made little sense to try something that would make them feel like a failure. We now know the supposed guideline of 10,000 steps a day was a clever marketing strategy with no scientific basis, and that people can improve their health with far fewer steps a day. This knowledge can motivate people to become more active.

References:

AARP. “10,000 Steps a Day? Maybe You Don’t Need Them All.” (accessed June 20, 2019) https://www.aarp.org/health/healthy-living/info-2019/7500-steps-daily-is-enough.html

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How to Design an Estate Plan with a Blended Family?

There are several things that blended families need to consider when updating their estate plans, says The University Herald in the article “The Challenges and Complexities of Estate Planning for Blended Families.”

Estate plans should be reviewed and updated whenever there’s a major life event, like a divorce, marriage, or the birth or adoption of a child. If you don’t do this, it can lead to disastrous consequences after your death, like giving all your assets to an ex-spouse.

If you have children from previous marriages, make sure they inherit the assets you desire after your death. When new spouses are named as sole beneficiaries on retirement accounts, life insurance policies, and other accounts, they aren’t legally required to share any assets with the children.

Take time to review and update your estate plan. It will save you and your family a lot of stress in the future.

Your estate planning attorney can help you with this process.

You may need more than a simple will to protect your biological children’s ability to inherit. If you draft a will that leaves everything to your new spouse, he or she can cut out the children from your previous marriage altogether. Ask your attorney about a trust for those children. There are many options.

You can create a trust that will leave assets to your new spouse during his or her lifetime and then pass those assets to your children upon your spouse’s death. This is known in the industry as an “AB Trust.” There is also a trust known as an “ABC Trust.” Various assets are allocated to each trust, and while this type of trust can be a little complicated, the trusts will ensure that wishes are met, and everyone inherits as you want.

Be sure you that select your trustee wisely. It’s not uncommon to have tension between your spouse and your children. The trustee may need to serve as a referee between them, so name a person who will carry out your wishes as intended and who respects both your children and your spouse.

Another option is to simply leave assets to your biological children upon your death. The problem here is, however, if your spouse is depending upon you to provide a means of support after you have passed, they may be left to fend for themselves.

An experienced estate planning attorney will be able to help you map out a plan so that no one is left behind. The earlier in your second (or subsequent) married life you start this process, the better.

Reference: University Herald (June 29, 2019) “The Challenges and Complexities of Estate Planning for Blended Families”

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How Can I Minimize the Taxes on My 401(k) Withdrawals?

A simple way to decrease the taxes you have to pay on 401(k) withdrawals is to convert to a Roth IRA or Roth 401(k). Investopedia’s recent article, “How to Minimize Taxes on 401(k) Withdrawals” explains that withdrawals from those accounts aren’t taxed, provided they meet the rules for a qualified distribution. However, you’ll need to declare the conversion when you file your taxes.

The primary issue with converting your traditional 401(k) to a Roth IRA or Roth 401(k) is the income tax on the money you withdraw. If you’re near pulling out the money anyway, it may not be worth the cost of converting it. The more money you convert, the more taxes you’ll owe.

You can divide your assets between a Roth account and tax-deferred account to share the burden. You may pay more taxes today, but this strategy will give you the flexibility to withdraw some funds from a tax-deferred account and some from a Roth IRA account to have more control of your marginal tax rate in retirement. Remember that the five-year rule requires that you have your funds in the Roth for five years before you start your withdrawals. This may not work for you if you’re already 65, about to retire, or concerned about paying taxes on your distributions.

Some of the ways that let you save on taxes also make you take out more from your 401(k) than you actually need. If you can trust yourself not to spend those funds and save or invest the extra money, it can be a terrific way to spread out the tax obligation. If the individual is under 59½ years of age, the IRS allows use her to use “Regulation T” to take substantially equal distributions from a qualified plan, without incurring the 10% early withdrawal penalty. However, the withdrawals need to last a minimum of five years. However, a person who’s 56 and starts the withdrawals must keep taking those withdrawals to at least age 61, despite not needing the money.

If you take out distributions earlier while you’re in a lower tax bracket, you could save on taxes, instead of waiting until you’ll have Social Security and possible income from other retirement vehicles. If you plan ahead and are 59½ or older, you can take out just enough money from a 401(k) (or a traditional IRA) that will keep you in your current tax bracket but still lower the amount that will be subject to required minimum distributions (RMDs) when you’re 70½. The objective is to reduce the effect of the RMDs (which are based on a percent of your retirement account balance, along with your age) on your tax rate when you have to begin taking them.

Although you’ll have to pay taxes on the money you withdraw, you can save by then investing those funds in another vehicle, like a brokerage account. Hold it there for at least a year and you’ll only have to pay long-term capital gains tax on what it earns.

Reference: Investopedia (June 26, 2019) “How to Minimize Taxes on 401(k) Withdrawals”

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What Are Some Smart Second Marriage Planning Tips?

Forbes’s recent article, “6 Second Marriage Planning Tips For You And Your Significant Other Before Walking Down The Aisle,” says it’s wise to provide some reality into your romance.

This begins with practicing good communication, a trait that is needed to help any marriage succeed.

You should begin this conversation well before setting a date to say, “I do.” Let’s look at some tips for making sure your next marriage gets off on the right financial foot:

Be open. This means frank talk about your plans and obligations to any children and former spouses. Talk about your credit history, assets, debts, and any financial support you must provide.

Look at your property. Review the assets that each of you will bring into the marriage and how they ultimately will be used or saved.

Update your accounts. Be sure that all your records are up to date when you remarry so it is clear what assets are held separately and what is owned jointly.

Sign a prenup. This isn’t just to protect the assets of the wealthier spouse. It can be important if you both already have established careers, children, or significant assets. A prenup lets you decide together and in advance which assets you’ll share and those to keep separate, in case you divorce or upon death.

Work with an experienced estate planning attorney. He or she will help you retitle your investments, update your accounts, and modify any beneficiaries on retirement, life insurance, and annuity accounts. Since the probate laws aren’t typically designed for blended families, also be sure you create an estate plan – especially if you or your new spouse have children and grandchildren from previous marriages.

Without an estate plan, most probate laws stipulate that at least some of your assets will pass to your current spouse (and then to his or her children) if you die first.

That’s a great recipe for feuding, bitter feelings, and big legal expenses among your survivors.

Reference: Forbes (June 20, 2019) “6 Second Marriage Planning Tips For You And Your Significant Other Before Walking Down The Aisle”

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What Should I Do When Alzheimer’s Strikes a Family Member?

Alzheimer’s Disease International predicts that 44 million individuals worldwide have Alzheimer’s or a similar form of dementia, and 25% of those living with it never receive a diagnosis. Newsmax’s recent article, “5 Insurance Steps After Alzheimer’s Strikes Loved One” says that although the patient may not yet need one-on-one care, the day will come. Healthcare, including assisted living, memory care, and in-home care is expensive. You should plan now for later needs. Health insurance is an important component of managing the ongoing expenses of living with Alzheimer’s. The disease is progressive, and most people live an average of three to eleven years after diagnosis.

Look at your existing policies. There are different types of coverage, depending on the policy type and company. Review current insurance policies to determine if the level of coverage is acceptable and how much will be required to be paid out-of-pocket. See if there’s existing coverage for long-term care, hospital care, doctors’ fees, prescriptions, and home health care.

Maintain those policies. The Patient Protection and Affordable Care Act does offer some protections for those diagnosed with early onset Alzheimer’s. They can now access government subsidies to help them purchase health insurance and the Affordable Care Act prohibits pre-existing condition exclusions and cancellation, because the policyholder is considered high cost.

Look into long-term care insurance. This is a way to protect the patient and the family financially when the day arrives when long-term care is necessary. When diagnosed with Alzheimer’s, a person isn’t eligible for long-term care insurance.

In addition to verifying and reviewing insurance coverage, there are some additional tasks that every family should address in the early stages of a diagnosis.

Sign an advance directive. This document allows patients to voice how they want their healthcare and decisions handled, before they are no longer capable of making decisions for themselves. In addition, they should have a living will that states their wishes for medical treatment, a designated power of attorney to can make financial decisions and a DNR (Do Not Resuscitate) order, if that is their wish.

Complete estate planning. Estate planning documents should be reviewed or, if none have been done, started as soon as possible with an experienced estate planning attorney. At least three documents are needed: a will, power of attorney for financial decisions, and perhaps a living trust to describe what happens to property after death.

Reference: Newsmax (June 28, 2019) “5 Insurance Steps After Alzheimer’s Strikes Loved One”

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What Does an Elder Law Attorney Really Do?

A knowledgeable elder law attorney will make certain that he or she represents the best interests of senior clients in a variety of situations that may occur in an elderly person’s life.

An elder care attorney will also be very knowledgeable about several different areas of the law.

The Idaho Falls Spokesperson’s recent article, “What is an Elder Law Attorney and What Can They Do for You?” looks at some of the things an elder care attorney can do.

Elder care attorneys address long-term care issues, housing, quality of life, independence, and autonomy—which are all critical issues concerning seniors.

Your elder law attorney knows that one of the main issues senior citizens face is sound estate planning. This may include planning for a minor or adult child with special needs, as well as probate proceedings, which is a process where a deceased person’s assets are collected and distributed to the person’s beneficiaries and creditors.

The probate process may also involve the Uniform Probate Code (UPC). The UPC is a set of inheritance rules written by national experts. A major responsibility of the probate process is to fully administer the entire estate, including appointing Personal Representatives or Executors and ensuring that all assets are disbursed properly.

An experienced elder law attorney can also assist your family to make sure that your senior receives the best possible care arrangement, which may become more important as his or her medical needs increase.

An elder law attorney also sometimes helps clients find the best nursing home to fully satisfy all their needs. Finally, they often will also work to safeguard assets to prevent spousal impoverishment when one spouse must go to a nursing home.

A qualified elder law attorney can be a big asset to your family, as you journey through the elder care planning process. Working with an attorney to set up contingency plans can provide peace of mind and relief to you and your loved ones.

Reference: Idaho Falls Spokesperson (May 20, 2019) “What is an Elder Law Attorney and What Can They Do for You?”

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What Do I Need to Know About Special Needs Trusts?

One of the hardest issues in planning for a child with special needs is trying to determine how much money it may cost to provide for the child, both while the parents are alive, and after the parents die.

A recent Kiplinger’s article asks “How Much Should Go into Your Special Needs Trust?” As the article explains, a special needs trust, when properly established and managed, lets someone with a disability continue receiving certain public benefits.

Even if the child isn’t receiving benefits, families may still want the money protected from the child’s financial choices or those who may try to take advantage of them. A trustee can help manage the assets and make distributions to the child with special needs to supplement his lifestyle beyond what public program benefits provide.

A child with special needs can have multiple expenses, and the amount of money needed for appropriate support will depend on the needs and lifestyle of the family, as well as the child’s circumstances. One of the biggest unknown expenses is the future cost of housing. If the plan is for the child to live in a private group home-type situation, there are options. Some involve the purchase of a condo in a building with services for those with special needs. Many families also add into the budget eating out once a week, computers and phones, and other items.

When the parents pass away, this budget will need to increase because what the parents did to support their child must be monetized.

Fortunately, public benefits can usually offset many of the basic costs for a child with special needs. For example, the child may be eligible for Supplemental Security Income (SSI), as well as a Section 8 housing voucher and SNAP food assistance. When the parents retire, SSI is typically replaced with Social Security Disability Insurance (SSDI), which is one-half the parent’s payment.

When the parent dies, this payment becomes three-quarters of that amount. Adult Family/Foster Care may be available. That will depend on the group housing situation.

The child may also be working and bringing in additional income (minus whatever benefits may be offset by this income).

It’s vital to complete a thorough analysis of the future costs to provide for a child with special needs, so parents can start saving and making adjustments in their planning right away.

The laws on this planning may vary from state to state, so be sure to contact an experienced elder law attorney.

Reference: Kiplinger (June 10, 2019) “How Much Should Go into Your Special Needs Trust?”

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What Do I Do With My Dad’s Timeshare When He Passes Away?

When a timeshare owner dies, the timeshare will usually be part of the deceased owner’s estate, according to nj.com’s recent article, “My dad had a timeshare and died without a will. I don’t want it. What do I do?” The contractual obligations of the timeshare owner may become the responsibility of the next-of-kin or the beneficiaries of the estate.

When the timeshare company hears of the owner’s death, they may keep sending letters to him for his expenses. Is there any way that the owner’s children could be held responsible for the timeshare expenses?

Legally speaking, a timeshare is an agreement or arrangement in which parties share the ownership of or right to use property. Each owner is entitled to use the property for a specific period of time. Some examples of timeshare ownership are a vacation club at a tropical resort or a villa at a ski destination.

There are three basic types of timeshare programs: fee simple, leasehold, and right-to-use (‘RTU’). In addition, there are variations of RTUs, like points systems and fractional/private residence clubs.

The Personal Representative, Executor, or administrator of the estate will need to contact the timeshare company and/or locate a copy of the owner’s contract to find out what the financial and legal obligations are under the contract.

In addition, the Personal Representative, Executor, or administrator of the estate may decide to contact an estate planning attorney, especially if the timeshare is out-of-state. This is important as the laws concerning timeshare agreements and inheritances vary from state to state.

The next-of-kin and estate beneficiaries likely have the option of declining their inheritance, including a timeshare, if they wish. If they want to do this, they’ll typically be required to sign and file an inheritance disclaimer document.

If the timeshare is disclaimed, it would pass to the next individuals or entities with a right to inherit.

If the estate fails to make the payments on the timeshare while the owner’s estate is being probated, fees and penalties may accrue. At that point, the timeshare company and/or the property manager may file a lawsuit against the estate to receive any delinquent payments due to them pursuant to the timeshare agreement.

However, if the property is disclaimed by all of the potential beneficiaries, the timeshare company and/or property manager may foreclose on the timeshare, so any accrued debt would be paid from the estate’s assets. That foreclosure shouldn’t impact the credit of any person who disclaimed the timeshare, so long as they had not signed on to the contract or obligation originally.

Reference: nj.com (June 3, 2019) “My dad had a timeshare and died without a will. I don’t want it. What do I do?”

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What Debts Must Be Paid Before and After Probate?

Everything that must be addressed in settling an estate becomes more complicated when there is no will and no estate planning has taken place before the person dies. Debts are a particular area of concern for the estate and the Personal Representative or Executor. What has to be paid, and who gets paid first? These are explained in the article “Dealing with Debts and Mortgages in Probate” from The Balance.

Probate is the process of gaining court approval to manage the estate and pay bills and expenses before property can be transferred to beneficiaries. Dealing with the debts of a deceased person can usually be started before probate officially begins.

Start by making a list of all of the decedent’s liabilities and look for the following bills or statements:

  • Mortgages
  • Reverse mortgages
  • Home equity loans
  • Lines of credit
  • Condo fees
  • Property taxes
  • Federal and state income taxes
  • Car and boat loans
  • Personal loans
  • Loans against life insurance policies
  • Loans against retirement accounts
  • Credit card bills
  • Utility bills
  • Cell phone bills

Next, divide those items into two categories: those that will be ongoing during probate—consider these administrative expenses—and those that can be paid off after the probate estate is opened. These are considered “final bills.” Administrative bills include things like mortgages, condo fees, property taxes and utility bills. They must be kept current. Final bills include income taxes, personal loans, credit card bills, cell phone bills and loans against retirement accounts and/or life insurance policies.

The Personal Representative, Executor, or heirs should not pay any bills out of their own pockets. The Personal Representative or Executor deals with all of these liabilities in the process of settling the estate.

For some of the liabilities, heirs may have a decision to make about whether to keep the assets with loans attached. If the beneficiary wants to keep the house or a car, they may have to also obtain the debt. Otherwise, these payments should be made only by the estate.

The Personal Representative or Executor decides what bills to pay and which assets may be liquidated to pay final bills.

A far better plan for your beneficiaries is to create a comprehensive estate plan that includes a Will or Trust that details how you want your assets distributed and addresses what your wishes are. If you want to leave a house to a loved one, your estate planning attorney will be able to explain how to make that happen, while minimizing taxes on your estate and avoiding a lot of the uncertainty that results from not having a plan in place.

Reference: The Balance (March 21, 2019) “Dealing with Debts and Mortgages in Probate”

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Summer is Here: Should Your Small Business Have a Vacation Policy?

There is no legal requirement for businesses to offer paid or unpaid vacation time to employees, but it is common knowledge (and common sense) that employees who occasionally take time off are more productive and engaged when they return to work. If you decide to offer vacation time to your employees, a well-drafted vacation policy will help to ensure that it works well for both your small business and your employees. Here are some important tips to consider.

  • Consider offering paid vacation time. Although offering paid vacation time will be an expense for your business, it is likely to be a benefit over the long term. Employees who are able to take a break tend to come back refreshed and rejuvenated–and ready to work productively for your company. In addition, it is a benefit that will help your business attract and retain stellar employees. According to the Bureau of Labor Statistics, three-quarters of workers had access to paid vacations in 2018, so offering this benefit will help your business compete with others seeking the same well-qualified employees.

Note: There is no legal requirement for employers to offer paid or unpaid vacation (though some states require paid family, parental, or sick leave for certain employees), but when paid vacation is offered, some states have applicable statutes regulating, for example, whether an employer can establish a “use-it-or-lose-it” policy or whether an employer must provide compensation for unused accrued vacation time upon the termination of employment. Check with a well-qualified business law attorney to make sure your policy complies with applicable legal requirements.

  • Make sure your policy is clear. If you offer paid vacation time (or paid time off, which includes vacation time, personal days, and sick days), make sure your employees understand how it works. Some businesses offer a fixed number of vacation days per year that roll over if they are unused, and others provide a specific number of days that are forfeited if the employee fails to use them (although, as mentioned above, a few states prohibit this policy). Additionally, there are a number of states that require employers to pay employees for unused paid vacation time. Include a clear explanation of your vacation policy in your employee handbook and require your employees to sign a statement that they have read the policy. This will help prevent disputes that could lead to litigation.
  • Require notice in advance. Many employees want to take a vacation in the summertime, and for small businesses with only a few employees, this can create a problem if several of them request time off during the same period. While you can still be flexible about when your employees take their vacation, requiring notice gives you the opportunity to plan for those absences by arranging for and training other employees or temporary workers to cover their essential duties.
  • Consider a “rota” system. Karen Dillon, in an article for the Harvard Business Review, suggests creating a rotating list of employees and allowing the employees at the top of the list to choose their vacation days first. The next year, those employees move to the bottom of the list, and other employees move to the top so that all employees eventually have their first choice of vacation days. This suggestion is especially helpful for small businesses that are unable to function when multiple employees are away at the same time or those that have difficulty finding temporary employees to fill in.

Give Us a Call

If you are considering offering vacation time to your employees, we can help you draft a clear, well-thought-out vacation policy that will accomplish your goals and comply with the law, as well as provide answers to any other benefit-related questions you may have. Please call us today at 605-275-5665 to set up a meeting.

 

 

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