Many questions arise when we consider the options for giving to children. Why should we give? When, what and how should we give? Will gifts impact the self-esteem and initiative of the child? Can a gift plan transfer values to children?
These are all very important questions. Clearly there are better ways to give and a prudent parent will consider carefully the manner, nature and amount of gifts. If the gifts are given in a proper way, they can be very beneficial for the child. Alternatively, gifts given at the wrong time or in the wrong amounts can lessen the initiative and even weaken the character of the child. Thus, it is important to make gifts in the optimum manner at the right time.

Why Give to Children?

There are several reasons why you may choose to make gifts to children during life. Some parents wish to start the inheritance process. If they have substantial resources, it is desirable to begin the inheritance while the children are in their 30s, 40s and 50s. Many children can use the help at that time to start careers, purchase a home and assist in the cost of raising their own children.
Another reason for making gifts is to teach conservation. Most parents who have significant resources have been careful to conserve their assets and build them up during life. By making transfers of assets during life, the parents can see how the children handle those assets and, in turn, offer advice and encouragement. In addition, when the parents have the opportunity to see the effect of inheritance on children, it helps to clarify the parents' goals. Goals for inheritance should include the amount transferred during life, the time of transfer, the principal and income amounts and times for transfer of those items to family in the estate.
Starting the property transfer process during life enables parents to understand how to plan for the optimum inheritance for children.

When Should a Parent Start Giving?

There is both an easy answer and a difficult answer to this question. First, parents should start giving to children when they reach the "age of financial responsibility." But what is that age? Some children reach the "age of financial responsibility" at 25, while others might not attain that status at age 75.
Another factor that affects the "when to give" question is the resources of the parent. Many people in our society live to be age 80, 90 or even older. The parents should make certain that they have sufficient assets to provide for long-term care, if that is needed. Some parents may wish to purchase long-term care insurance prior to making gifts to children. Alternatively, other parents of retirement age may determine that they have adequate resources to provide for their long-term care and can make gifts to family members. In making this determination, you will want to consider pensions, Social Security, IRAs and other assets.
If a parent determines that there are sufficient assets and that the children have reached an appropriate age (which in most cases is when children are in their 30s, 40s and 50s), then the parent may choose to start making gifts.

What Should I Give?

In the book The Millionaire Next Door, the authors studied the impact of gifts of cash to children in their 30s and 40s. The essence of their research was that, for most children, gifts of cash are typically spent.
Furthermore, with the exception of elementary school teachers and college professors, children in other professions who received cash gifts actually had less in savings by retirement age than those who received no gifts. Those who received cash gifts not only spent the gifts, but also continued to spend other personal cash and ended up with smaller estates than those who had received no gifts.
If parents are not concerned about whether or not the gift is spent, then the gift of cash is appropriate. However, many parents make gifts to children with the hope that the child will invest and build up some reserve assets. If the hope is that children will invest and begin to build their estates, then gifts of property show much more promise.
For example, many parents hold stock and can transfer shares by gift to the children. Alternatively, some parents hold real property or have created family limited partnerships and can transfer either the real property or the partnership units to children.
If the gifts are less than the annual exclusion amount per parent, per child each year ($14,000 in 2016 and potentially higher in future years), then the gift is not subject to gift tax. It should be noted that the child takes the cost basis of the parent when property is gifted. Thus, if the child were to sell the appreciated stock or land, he or she would have to pay a capital gains tax. Many parents actually look at this as a favorable circumstance, since their intention is for the child to hold the asset. If there is significant appreciation, these parents deem it beneficial since that potential gain could dissuade children from selling the asset, paying the capital gains tax and spending the money.
How much can be transferred using annual gift exclusions? There are cases in which appreciated stock gifts were held by family members and there was significant value transferred. After a ten-year period, the stock transferred with annual exclusions may be worth several hundred thousand dollars. In one case, the parents used gift exclusions over a period of 30 years and the children held the gifted stock. At the conclusion of that gifting program, the children were all multimillionaires—and all with zero gift or estate tax!

Should I Give Different Amounts?

Most parents will attempt to treat all children equally. From the perspective of the child, the gift is viewed as a representation of the love of the parent. Thus, it seems appropriate in most circumstances for there to be equal transfers to the children.
However, most rules have reasonable and logical exceptions. The two most common exceptions in this area are the special needs trust and a family business. If one child has a disability, the rest of the family understands the need for additional provision for that child through what is commonly called a special needs trust. This is a trust with an independent trustee who has discretion to make distributions to the child, but is not normally required to do so. The special needs trust makes provision for the maximum benefit of the child and could potentially allow some beneficiaries to also receive government benefits.
The other exception to equal treatment for children may occur with a family business. If some children are involved in the business and other children are not, it is desirable to provide a substantial inheritance for all children. However, maintaining business viability may require the transfer of a majority of the business interest to the child that is involved in the business.
In addition, many parents believe that transfer is fair because the efforts of the children in the business have contributed to the overall growth of the business and the overall growth of the parents' estate. These are delicate questions to which parents should give careful thought, but in the case of the special needs trust and the family business, it is common for one child to receive a greater benefit than the other children.

Will My Gift Decrease Motivation and Self-esteem?

This is a concern of all parents. If an estate is substantial, it is a very important issue to consider. Nearly everyone knows of cases where a large inheritance was transferred to an individual and it was spent in very unhealthy ways. Indeed, sometimes the size of the inheritance contributes to tearing down rather than building up the child's character.
Perhaps the best gift most parents and grandparents should consider is education, which can be used during an entire lifetime. Because one competes with other students in the class, education is also a very good character-building exercise.
A second very fine gift that may not involve significant financial resources is help with a career or business. Many businesspeople are able to assist their children in starting careers or businesses through advice and financing. These opportunities are excellent because the child then has the self-esteem derived from building a career or a business of his or her own.
Another strategy is to wait for a reasonable level of maturity. Some parents wait until the children are in their 40s or 50s to start gifting programs. At that time, values are more likely to be established for the children and they are more likely to make productive use of the property.

Why Don't My Children Think Like Me?

This question surely has crossed the mind of nearly all parents. A parent may consider a particular property or asset and say, "If I had that property, this is what I would do with it."
As all parents know, children quite often hold different opinions. They have generally not been tested in as many different circumstances as their parents. The children need "time to learn." When transferring an inheritance to children, parents need to remember that they have quite often acquired that property over 30 or 40 years. The parents had many opportunities to learn the value of thrift, conservation, investment and careful planning.
Children will not learn these principles from a ten-minute discussion with their parents. They will need to learn some of these lessons out in the real world, operating with real money and real property. It is inevitable that some children will make mistakes. However, their parents also made mistakes along the way. This is the educational part of the gift process.
Parents should be willing to provide "opportunity to make mistakes" property to their children. This does not necessarily mean that the property must have enormous value. However, there must be some value to the property. This "opportunity to make mistakes" property can best be gifted during life. After one or two such episodes, the children may suddenly have a greater understanding of some of the values held by the parents.

How Do I Support Charity and Transfer Values to Children?

One goal of parents is to teach values to children. We all hope that our children will be honest, loving, loyal, faithful, true and upright. How do you teach those values? First, values are caught and not taught. Fortunately, many parents have shared the lesson of the importance of family and extended family with the children. The family includes children and, in some cases, nephews, nieces and other relatives. The extended family includes the wider group of individuals who are helped by charities that the parents support.
One especially effective way to teach the principle of helping others is to model that behavior through support of charities that benefit the extended family. Children realize that they are here on Earth not just to acquire the best homes, fastest cars and most exotic vacations, but also to find a sense of purpose and value through assisting others. The extended family example of the parents is one of the best lessons that encourage children to acquire values similar to the parents. This lesson is taught during life both through contribution of time and gifts of cash and property to charity.
In addition, a very effective teaching method is to use planned giving concepts. These planned giving opportunities can provide benefits for children and a remainder to charity. In using these gift plans, the parent teaches the child to consider both the family and the extended family in planning. If major benefit for the extended family can be realized through tax savings, this becomes a particularly powerful lesson.
Gifts to children during life can accomplish many goals and objectives. Parents need to give careful thought to the children's needs and opportunities. If your assets permit, you may have the ability to give children "time to learn," provide them the "opportunity-to-make-mistakes" property and to facilitate the transfer of values. Truly, these objectives make giving during life an important part of your efforts to "help the child become a better person."

Can you recommend some smartphones that are specifically designed for seniors? My 75-year-old mother is interested in upgrading from a basic cellphone to a smartphone, but will need one that's very easy to operate.
I wrote about this topic just last year, but in the fast changing world of personal technology devices, there's a new crop of simplified smartphones that have recently hit the market that are better than ever for tech-shy seniors. Here are my three top options.
Doro 824 SmartEasy: Offered by Consumer Cellular, the new Doro 824 SmartEasy is one of the best, simplified smartphones available today. It starts with a bright, 5-inch high-resolution touch screen display that offers large icons and text. It also has customizable volume settings. Its simplified design pairs down the options, providing uncluttered, easy access to key and frequently used features right from the home screen, including the phone's calling feature, contacts, text messages, email, Internet and the camera feature. In addition, it provides help as you go along from a built-in coach.
It also offers a unique pre-installed app called "My Doro Manager," which can also be downloaded by family or friends. This app provides a number of tutorials that will show your mom how to enjoy her phone. It will also give her trusted contacts the remote ability to help manage and adjust her Doro smartphone from their own smartphones no matter where they are.
For added convenience and safety, the Doro 824 provides three physical buttons on the front of the phone for quick, one-touch access to the home screen, recently used applications, and a "Back" button that will return to the previous screen. Lastly, there is an "Emergency Alert" button on the back of the phone that will automatically dial a predetermined contact in the event of an emergency.
The Doro 824 is sold online at ConsumerCellular.com, over the phone at 888-532-5366, or at any Target or Sears store for $200 with no contract.
Jitterbug Smart: Offered by GreatCall wireless, the new 4th generation Jitterbug Smart is much bigger than previous GreatCall smartphones. This phone is actually an Alcatel smartphone that's been rebranded and loaded with GreatCall's simplified user interface software.
It has a big, bright 5.5-inch high-definition touch screen. Its simple single-list menu on the home page provides easy access to only frequently used features, along with one-touch access to contacts and other apps.
It also provides convenient voice typing for emails and texts and offers a variety of optional health and safety features, like MedCoach, which can send medication and prescription refill reminders. Another health feature offered is Urgent Care, which provides unlimited access to registered nurses and doctors to answer health questions. Lastly, phone users have the option to install a 5Star medical-alert service that lets them speak to a live emergency-alert agent around the clock. These trained agents will confirm your mom's location via GPS tracking technology and dispatch help as needed.
The Jitterbug Smart is available online at GreatCall.com, or at Best Buy, Rite Aid, Sears and Walmart stores for $150 with a onetime $35 activation fee and no contract.
Samsung Galaxy Note5: While this smartphone isn't designed specifically for seniors, its large size (5.7-inch screen) and unique "Easy" mode setting, which boosts the icon and font sizes and simplifies the home-screen layout, makes it a good option for seniors.
With the Easy mode turned on, the Note5's home screen will display only the time, date and local weather and six frequently used functions. To access the user's 12 most important contacts, the user would simply swipe the home screen to the right. To access the user's 12 favorite apps, he or she would swipe to the left.
The Note5 (see Samsung.com/galaxynote5) is available with 32 and 64 GB of storage from major phone carriers (AT&T, Sprint, Verizon, T-Mobile) and some smaller carriers at prices ranging between $615 and $840 without a contract.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

"Who would take our children? I am not sure anyone would be willing to take them," remarked Shelly to her attorney, Jim. "It's not that they aren't good children. They are all fine, but there are 11 of them! If something happens to Pat and me, who will take them?"

Personal Guardian for Minor Children

One very important decision for you to make when creating a plan is to decide who would be the guardian of your minor children. When you write your first will, it is very possible that you still have minor children at home. While you may not have 11 children and face the challenge that confronted Shelly and Pat, this is still a very crucial and important decision.
Your guardian will raise the children, teach them values, select the schools they attend and perform the functions of a parent. If you do not have a guardian selected in a will, a court may select a person. That person may not share your cultural background, your religion, your general world view, or any other aspects of the character that you think important for the person who raises your children. By selecting a guardian and an alternate in your will, you have a much better prospect of finding someone that you think is the right person to raise your children.

Two Parents

If there are two parents, normally the survivor will be selected as the guardian of the children. But if both were to pass away, then it would be necessary to select a guardian.
Even if you select a guardian, there could still be an objection or contest by other family members. The probate judge usually will approve your selection unless there is strong evidence that indicates the person is not qualified. For example, evidence of alcoholism, criminal background or a history of child abuse could lead the judge to select another person. However, in nearly all cases the person that you select is chosen because he or she is the best possible individual to raise your children.

Single Parent

There are several reasons why a person may be a single parent in our society. A single parent may never have been married, there could have been a divorce, or the spouse could have passed away. In all three cases, it is especially important for single parents to have carefully selected a guardian.

Blended Family

If you have divorced and remarried, it may be your desire to have your new spouse as the guardian for children from your first marriage.
Normally, children are placed with their biological parent. However, if you can show good reasons why it is in "the best interest of the child" for your new spouse to be guardian, the court may permit him or her to raise your children. It is desirable for you to write a letter that is retained with your will to explain your reasons why the biological parent is not a good choice and how your current spouse would be the best person to raise your children.

Property for Your Children

If you have a high level of trust in the person selected to be guardian, it is possible to transfer property outright to him or her. However, if you choose to entrust a guardian with your property, you need to recognize that the guardian will have complete control and may choose to use the property for other purposes. This may be an acceptable solution if you have moderate resources, but if your property is substantial, a trust may be a better choice.

Trust for Children

With a moderate to substantial amount of property, it is quite common to create a trust. One person is selected as trustee to manage the property. He or she then transfers the income and, if required, principal to the guardian. The combination of one person managing the property and the guardian raising the children provides checks and balances that achieve the best result for the child.

I'm approaching 65 and am interested in a Medicare Advantage plan to cover my healthcare and medications. What tips can you provide to help me pick a plan?
Medicare Advantage plans have become increasingly popular among retirees over the past 10 years, as more than 30% of Medicare participants are now enrolled in an Advantage plan. Here are some tips and tools to help you pick a plan that fits your needs.
First, let's start with a quick review. Medicare Advantage plans (also known as Medicare Part C) are government approved health plans sold by private insurance companies that you can choose in place of original Medicare. The vast majority of Advantage plans are managed-care policies such as HMOs or PPOs that require you to get your care within a network of doctors.
If you join an Advantage plan, the plan will provide all of your Part A (hospital insurance) and Part B (medical insurance) coverage. Some plans even offer extra benefits like vision, dental and hearing, and most plans include Part D prescription drug coverage too.
You also need to know that the monthly premiums for many Advantage plans are cheaper than if you got original Medicare, plus a separate Part D drug plan and a Medigap policy, but their deductibles and co-pays are usually higher. That makes these plans better suited for healthier retirees.

How to Pick

To help you pick a plan, a good first step is to call the office managers of the doctors you use and find out which Advantage plans they accept, and which ones they recommend. Then go to the Medicare Plan Finder tool at Medicare.gov/find-a-plan and type in your ZIP code or your personal information to compare health plans with drug coverage in your area.
This tool also provides a five-star rating system that evaluates each plan based on past customer satisfaction and quality of care the plan delivers. When comparing, here are some key points to consider:
Total costs: Look at the plan's entire pricing package, not just the premiums and deductibles. Compare the maximum out-of-pocket costs plus the copays and coinsurance charged for doctor office visits, hospital stays, visits to specialists, prescription drugs and other medical services. This is important because if you choose an Advantage plan, you're not allowed to purchase a Medigap policy, which means you'll be responsible for paying these expenses out of your own pocket.
Drug coverage: Check the plan's formulary - the list of prescription drugs covered - to be sure all the medications you take are covered without excessive co-pays or requirements that you try less expensive drugs first.
Dental, vision and hearing: Some Advantage plans come with dental, vision and hearing benefits, but are often limited. Get the details on what exactly is covered.
Coverage while traveling: Most Advantage plans limit you to using in-network doctors only within a service area or geographic region, so find out what's covered if you need medical care when you're away from home.
Out-of-network coverage: Check to see what's covered if you want to see a specialist in a hospital that is not in a plan's network. You can get a list of doctors and hospitals that take part in a plan on the plan's website.
Retiree benefits: If you have employer-based retiree health coverage, be sure you speak with the benefits manager, because signing up for Medicare Advantage may void your coverage.

How to Enroll

Once you've selected a plan you can enroll either on the Medicare.gov website, over the phone at 1-800-MEDICARE, directly with your chosen plan or through an insurance broker.
If you need some help choosing a plan contact your State Health Insurance Assistance Program (SHIP) at Shiptacenter.org. Also see the HealthMetrix Research Cost Share Report at MedicareNewsWatch.com that lists the best Advantage plans based on health status.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

"How can I plan?" asked Mary. "We just sold our home and bought a retirement condo. Our older child just moved across the country and our younger child will be getting married later this year. With so much change, how can we make plans?"

Life Changes Quickly

In each of our lives, change comes very quickly. You are going to face new circumstances every year.
Yet planning exists to prepare for life—and to give your family members better lives. It is essential to create goals that help your family live better in the midst of new circumstances.
Planning for the future is a key part of a successful life. Even if you or your family are going through major changes, there are several basic steps that will help you succeed in your plans.

Set Goals

Step one for a successful life is to have goals. It has been said, "If you don't know where you're going, you're not likely to get there." This is very true about goals for your family and for your estate.
Often, single persons or couples meet with a professional advisor and have not considered setting specific goals. Your advisor in this circumstance will try to be helpful and suggest "typical" goals.
However, think about goal-setting as though you are purchasing a birthday gift for a family member in a clothing store. You might look at many different shirts or pants for that person. A clothing store might have 20, 30, or even 50 different sizes. One size does not fit all in the area of clothing, and it also doesn't work for your family and estate plan.
How do you find the "right size?" That shirt or slacks for a family member must fit properly. In your planning for family, it's important to decide the right time and amounts for an inheritance to be most beneficial for your children, nephews and nieces. Your other goals may include the age for heirs to receive property and reducing costs and death taxes.

What Do You Own?

Can you write down a list of all the property you own? A single person will often own items outright, although there may be a mortgage or other debt obligation against real property. However, married couples have at least three different types of potential ownership. Property could be owned individually by spouses or owned jointly. In some states, the property could be held in a type of joint ownership called community property.
Understanding your property starts with listing all of your assets including your savings account, certificates of deposit, home, IRA, 401(k) and personal assets.

Children, Nephews and Nieces

Your plan to benefit family through your estate will vary greatly, depending upon the ages and circumstances of your children and their needs. For parents with minor children, a key decision is to select a guardian. Minor children also need to have property held in trust, so there is appropriate investment and expenditure of those funds. For adult children, it's important to think through the right time, right amount and right type of inheritance. Many families find that a trust that pays income for a number of years to adult children is also a very helpful method to provide added security for them.

Wills and Trusts

Do you have a will? Is it current? You should review your will periodically and discuss your plan with your attorney. If you have a substantial estate, a will with a trust may be appropriate. Because a will does not provide for your care in a medical emergency, you will want to make sure that your estate planning includes a will, a durable power of attorney for healthcare and a living will to handle end-of-life issues.

Planning for Probate

How can you avoid probate? Generally, most individuals can avoid probate for a large portion of their assets.
The probate process is important because when a person passes away, his or her property must first be used to pay bills, expenses and debts. An executor or personal representative is appointed to gather an inventory of all assets, conserve assets for all beneficiaries and make certain to carry out the decedent's intentions as written in his or her will.
The probate process specifically applies to assets transferred under your will. However, many types of assets are transferred through other means. Trusts, IRAs and insurance are subject to the terms of the agreement or beneficiary designation. Property held in joint tenancy with right of survivorship is transferred to the survivor whose name is on title.
Pay-on-death and other types of accounts can also avoid probate. However, all parts of your entire plan need to work together. When a plan has not been carefully developed to meet your goals, there may be an expensive and heart-rending fight over property by your heirs.
A good plan will give one of the best possible gifts to your family—the gift of peace.

I'm interested in getting my 78-year-old mother a tablet for video calls and email but want to get her one that's simple to use. What can you recommend?
There are several different ways you can go about getting your mom a simplified tablet that's easy for her to use. Depending on how much help she needs and how much you're willing to spend, here are some different options to consider.

Simplify a Tablet

If you or your mom already has a tablet, but it's too difficult for her to use, you can install a free senior-friendly software application on it like Oscar Senior (OscarSenior.com), which works on Apple iPads and Android tablets.
This app will change the appearance and performance of your tablet into a simplified device with big understandable icons for only commonly used features (video calls, photos, instant messages, Internet, news, weather, reminders, contacts, etc.) with no clutter. It even offers remote access capabilities so you can gain access to your mom's tablet from your smartphone, so you can see what she sees, and help her if she gets stuck.

Limited Tech Skills

If you're interested in purchasing your mom a new tablet that's specifically designed for seniors, you have options here too, depending on how simple it needs to be.
For seniors with some, but limited computer/tablet skills, there's AARP's RealPad, which is an Android Intel tablet with a 7.85-inch touchscreen that provides a simplified home page with large text icons for frequently used functions. It also comes with 24/7 phone support and a "Real QuickFix" tool that connects users to technology support agents over the Internet who can access the tablet and fix problems. Available at AARPrealpad.org for only $60, AARP recently announced that the RealPad will be discontinued when inventory sells out in a few months, but they will continue offering customer/technical support throughout the life of the product.

No Tech Skills

If your mother is completely unfamiliar with technology, two simpler options are the GrandPad and Claris Companion.
GrandPad is a 7-inch touchscreen Android tablet that is designed for seniors, ages 75 and older. It comes with a stylus, charging stand and Verizon 4G LTE built-in so it works anywhere within the Verizon network - home Wi-Fi is not necessary.
This tablet provides a simplified menu of big colorful icons and large text for only essential features, giving your mom clutter-free, one-touch access to make phone calls and video calls, send voice emails, view photos and videos, listen to personalized music, check the weather, play games and more. To simplify usage and avoid confusion, it does not offer Web browsing.
GrandPad also has a "Help" button that offers 24/7 phone/tablet remote assistance to help your mom with any facet of her tablet and it provides damage and theft insurance so if your mom breaks or loses her tablet it will be replaced at no additional cost. It is available at grandPad.net or you can call 800-704-9412. The GrandPad leases for $60 per month, or $53/month if you pay one year in advance.
Another option is the Claris Companion (ClarisCompanion.com, 866-284-4939). It offers Wi-Fi and 4G tablets that cost $549 and $649 respectively, plus a $29 and $49 monthly subscription fee.
These tablets are designed specifically for elderly seniors living at home so their family can connect with them socially via video calls, email, text messages and photos. It also gives caregivers the ability to receive alerts and monitor compliance with medications, treatments and important appointments.
Claris Companions are 10-inch Android tablets that have big buttons and text to only essential functions. They come in a thick bamboo frame, with a charging stand that prop them up and can be customized to fit your mom's needs and abilities. Claris also offers a lower cost tablet option for $349 and an Android app for $29.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

Can you tell me how to go about replacing important lost documents? My wife and I recently downsized to a retirement community, and somewhere in the move we lost our Social Security and Medicare cards, birth certificates, marriage license and passports.
Replacing important documents that are lost, stolen or damaged is pretty easy if you know where to turn. Here are the replacement resources for each document you mentioned, along with some tips to protect you from identity theft, which can happen if your documents end up in the wrong hands.
Birth certificate: If you were born in the United States, contact the vital records office in the state where you were born (see cdc.gov/nchs/w2w.htm for contact information). This office will give you specific instructions that will explain how to order a certified copy and what it will cost you. Birth certificate fees range between $9 and $30.
Social Security card: You can replace a lost or stolen Social Security card for free. If you live in the District of Columbia, Michigan, Nebraska, Washington or Wisconsin, you can do it online at ssa.gov/ssnumber. If you live outside these areas, you'll need to fill out Form SS-5 (see ssa.gov/forms/ss-5.pdf to print a copy) and take it in or mail it to your nearby Social Security office, along with either your U.S. driver's license, a state-issued non-driver ID card or a U.S. passport (photocopies are not accepted). Any documents you mail will be returned to you. To find the Social Security office that serves your area, call 800-772-1213 or see ssa.gov/locator.
You also need to be aware that losing your Social Security card puts you at risk for identity theft. If you find that someone uses your Social Security number to obtain credit, loans, telephone accounts, or other goods and services, report it immediately to the Federal Trade Commission at IdentityTheft.gov (or 877-438-4338). This website also provides specific steps that you'll need to take in order to handle this problem.
Medicare card: To replace your Medicare card for free, just call the Social Security Administration at 800-772-1213 or contact your local Social Security office. You can also request one online at ssa.gov/myaccount. Your card will arrive in the mail in about 30 days.
Since you lost your Medicare card, you also need to watch out for Medicare fraud. Check your Medicare Summary Notice for services you did not receive and, if you spot any, call the Inspector General's fraud hotline at 800-447-8477 to report them.
Marriage certificate: Contact your state's vital records office to order a copy (see cdc.gov/nchs/w2w.htm). You'll need to provide your full names for you and your spouse, the date of your wedding, and the city or town where the wedding was performed. Fees range from $10 to $30.
Note: Divorce certificates can also be ordered from your state's vital records office (fees range from $5 to $30), and divorce decree documents can be obtained from the county clerk's office in the city or county where the divorce was granted.
Passport: A lost passport also puts you at risk for identity theft, so you need to report this as soon as possible to the U.S. State Department. Go to travel.state.gov/content/passports/en/passports/lost-stolen.html and fill out Form DS-64. You'll receive an e-mail acknowledging that your report was received. Within a couple of days, you'll receive another e-mail (or letter, if you request that option) confirming that your passport has been entered into the Consular Lost or Stolen Database.
You can apply for a replacement passport at a Passport Application Acceptance Facility. Many post offices, public libraries and local government offices serve as such facilities. You can search for the nearest authorized facility at iafdb.travel.state.gov. The fee for a replacement passport is $135.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

The American Taxpayer Relief Act of 2012 created permanent rules for federal estate planning. These principles are helpful in creating estate plans, since there now is reasonable certainty.
Estate Exemption – There is an applicable exclusion amount of $5 million plus indexed increases. For 2016, the exclusion amount is $5.45 million. This amount also applies to gifts and to generation skipping transfer taxes.
Estate Tax Rate – Those estates over the exclusion amount will be taxed at 40%. Estate tax equals $345,800 on the first $1,000,000 and 40% of the excess over that amount, reduced by the applicable exclusion amount. This amount for 2016 is calculated based on a $5.45 million estate and will be $2,125,800. The $5.45 million number will be adjusted for inflation in future years.
Marital Portability – Under "marital portability," a surviving spouse may have both exclusion amounts available. The applicable exclusion amount for a surviving spouse will be the basic exclusion amount of $5 million with cost of living increment plus the "deceased spousal unused exclusion amount." The unused exclusion will be the exclusion amount of the deceased spouse in excess of the basic exclusion amount used in the estate of that spouse. The unused exclusion amount will not be adjusted further for inflation. In order to benefit from this provision, the deceased spouse must die after 2010 and the executor must make an irrevocable election on the federal estate tax return.
If the deceased spouse transfers all assets to the surviving spouse using the unlimited marital deduction, then the surviving spouse should have available the full value of both exclusions. The amount of exclusion cannot exceed twice the basic exclusion amount and only the remaining exclusion of the last deceased spouse may be utilized.
Gift Taxes – There are two exclusions for gifts during life. Present interest gifts qualify for a $14,000 (in 2016) annual exclusion. This gift exclusion is intended to cover birthday, holiday and other gifts. There is one exclusion for each donor and each donee. For example, a couple with two children may give up to $56,000 to their children in 2016 by using four gift exclusions.
Each person also has a lifetime gift exclusion amount equal to the estate exclusion amount for that year. If the gifts exceed annual exclusion amounts, the balance will be reported on the IRS Gift Tax Return Form 709. The amount of gifts reported on Form 709 will reduce the available estate exemption. Gifts in excess of both the annual exclusions and the lifetime gift applicable exclusion amount will be subject to a 40% gift tax.
Generation Skipping Tax – If a donor transfers property to a grandchild during life or through an estate, there is potentially another transfer tax. The generation skipping tax (GST) is 40% on transfers to grandchildren or great-grandchildren that exceed the GST applicable exclusion amount. This GST exclusion is the same as the estate exclusion for the year of the transfer.

Bypass Trusts

Because there is an estate tax with an exemption of $5.45 million in 2016, it will continue to be important for individuals with large estates to create "bypass trusts." The bypass trust is a trust created in the estate of the first spouse to die. It typically will benefit the surviving spouse and the trust principal may then be transferred to children without further estate taxation.
There are two general types of bypass trusts. The conventional bypass trust pays income to the surviving spouse. When he or she passes away, the trust is distributed to children. For individuals who have large IRAs, 401Ks or other qualified pension plans, another option is a "bypass charitable remainder trust."

Bypass Trust Potential Tax Savings

For a couple with larger assets, a bypass trust is created in the estate of the first spouse to pass away. It is typically funded at the amount of the estate exemption. The bypass trust saves future estate tax because the tax in the first estate is offset by the exemption of the first spouse. Because the bypass trust is subject to tax in the first estate (but covered by the estate exemption), it is not taxable in the second estate. While the portability of the marital deduction permits the first spouse to use a simple will and transfer assets to the surviving spouse, a bypass trust permits the appreciation of trust assets during the lifetime of surviving spouse to escape taxation. The savings on this appreciation could be quite substantial in a larger estate.
Assume that there is a $5.45 million exemption per person and Joe and Jane have a $10.9 million estate. They have a simple will with all to the survivor. Joe passes away and transfers his half of the estate to Jane. She then owns all $10.9 million in assets. There is no tax because of the unlimited marital deduction. Joe's executor elects to pass to Jane the $5.45 million "deceased spouse unused exemption amount (DSUEA)."
In the ten years before Jane's death, the estate grows to $14.45 million and Jane's exemption is increased by indexing from $5.45 million to $6 million. When Jane passes away ten years later, her exemption plus the DSUEA total $11.45 million. However, the estate is $14.45 million and $3 million of her estate is taxable. The estate tax at 40% is $1.2 million.
Bill and Betty also have a $10.9 million estate. However, both of them create plans with a bypass trust. Bill passes away in 2016 and his entire $5.45 million estate is transferred to a bypass trust. The trust is exempt because of the $5.45 million estate exemption. Therefore, Bill's estate pays no estate tax. Betty receives income from the bypass trust for her lifetime. When she passes away, the bypass trust and her estate are each $7.17 million. Only her estate is subject to tax. With a $7.17 million estate and a $6 million exemption, the tax is $468,000. The bypass trust saved $732,000 in estate tax.

Bypass Trust Powers

The bypass trust is designed to use the exemption in the first estate and to avoid any tax in the second estate. In order to do this, the trustee must have limited powers to transfer assets to the surviving spouse. If the trustee, who may also be the surviving spouse, can simply transfer the property from the trust for his or her comfort or well-being, there is not an "ascertainable standard" and the trust will be included in his or her estate.
Therefore, the bypass trust typically has a requirement to pay income to the surviving spouse and a permission to transfer principal to the surviving spouse under a "health, education, maintenance and support" standard. In essence, there is an "ascertainable standard" that governs the circumstances in which assets may be transferred to the surviving spouse.
It is also permissible to give the trustee a power to invade the trust to the extent of the greater of $5,000 or 5% of trust assets each year. This power is used fairly infrequently because the assets transferred from the bypass trust to the surviving spouse will be subject to estate tax when he or she passes away.

Bypass Trust Pitfalls

There are many benefits of a bypass trust, but there are also some cautions. First, if the family residence is transferred into the bypass trust, it will usually receive a stepped-up basis to the value when the first spouse passes away. If the home does not appreciate, the bypass trust could sell it without paying capital gains tax. However, if the house is held for a period of years and appreciates, the bypass trust does not qualify for the $250,000 capital gain exclusion for sale of a principal residence. Therefore, there could be substantial capital gains tax payable on that residence if sold by the bypass trust.
Second, if there is a blended family that is going to receive the bypass trust remainder, the spouse may attempt to use the "health, education, maintenance and support" standard to invade the trust. For example, if the surviving spouse is the second husband or wife and the remainder of the bypass trust is going to children of the first marriage, he or she may attempt to invade the trust and then transfer it to his or her own children.
Finally, there could be conflict between the surviving spouse and a child. If the surviving spouse becomes ill and a child takes over as trustee, the child may be reluctant to provide high quality and expensive care for surviving spouse. This expensive care would deplete the trust and reduce the inheritance of the child. Therefore, this conflict of interest could cause problems.

Rights of the Surviving Spouse

In most cases, the surviving spouse will be trustee and will receive all income from the bypass trust. The surviving spouse will have the right to control the property. If there is a family residence in the trust, he or she will be able to live in the home.
Following the standards set up under the health, education, maintenance and support rule for invasion of principal, a surviving spouse may (with appropriate justification) invade principal. Finally, some trusts permit the surviving spouse the greater of $5,000 or 5% invasion power to take principal from the trust.

Bypass Formula Clause

The bypass trust normally is funded with a formula clause in the estate of the first person to pass away. Within that estate, there will be a fractional share or fixed dollar clause that is designed to allocate the maximum amount to the trust that will avoid federal estate tax. If the exemption equivalent is $5.45 million, that amount is generally allocated to the bypass trust.
The spouses and their counsel should also consider the impact of potential state inheritance or estate taxes. For most states, there will be tax that may be levied even on the first estate. Because the state inheritance and estate tax rates are lower than the federal tax, it may still be appropriate to fully fund the bypass trust. However, counsel and the two spouses should review the state tax impact on their plan.

Retirement Funds to Bypass Trust

If the first spouse to pass away has a majority of his or her estate in taxable retirement funds, it may be necessary to use those assets to fund the bypass trust. It is quite easy to do so through a beneficiary designation for the IRA, 401K or other qualified plan. For a 401K or in a community property state, it is necessary to have a spousal consent to fund the trust. In most cases, counsel will require a spousal consent if a trust is to be funded with an IRA, 401K or other qualified retirement plan.
The potential disadvantage of funding the bypass trust with a taxable retirement plan is that it is a wasting asset. That is, as the qualified plan is paid out to the bypass trust, it is subject to income tax. The federal and state income tax may exceed 40% on the plan payouts.
For example, with a $2 million IRA paid to the bypass trust over a 12 year expectancy of a surviving spouse, there could be $800,000 in federal and state income tax. The $2 million IRA could be reduced to $1.2 million after tax.

Bypass Charitable Remainder Unitrust

If the estate is fairly substantial, it may be preferable to transfer the IRA, 401K or other qualified plan into a bypass charitable reminder unitrust (CRT).
The bypass CRT is usually a 5% payout unitrust. It may exist for the life of spouse and lives of children, or it may exist for the life of surviving spouse plus a term of up to 20 years for children.
Because the bypass CRT qualifies for the use of the estate exemption and there is a charitable estate deduction for the value of the remainder interest, it may be larger than the typical bypass trust. For example, with a $5.45 million exemption and a $750,000 present value of the remainder interest, it may be possible to fund the bypass CRT with $6 million and still have zero estate tax.
The CRT has the benefit of tax-exempt status. It may receive the full distribution from an IRA, 401K or other qualified plan tax free. The full value of the plan may then be invested for the benefit of the surviving spouse and children. The value of the total income distributed over a long period of time may actually be similar to the value of income plus principal in a regular bypass trust. With a regular bypass trust, the IRA or 401K will be depleted by payment of a very high income tax rate.

$3 Million IRA to Bypass Trust or to Bypass CRT?

Mary has a $3 million IRA and $3 million in other assets. She passes away and transfers those assets into her $6 million bypass trust for the benefit of husband Joe. The IRA is paid out over the 12 year expectancy of her surviving spouse, Joe. There is $1.2 million in income tax paid on the $3 million IRA, leaving $4.8 million in the bypass trust. Husband Joe and the children receive income from $4.8 million for their lifetimes.
Martha also has a $3 million IRA and $3 million in other assets. She transfers both assets into a bypass charitable remainder trust. The $6 million trust receives a $3 million IRA distribution, but it is tax-exempt. All $6 million is invested to earn income for family for the duration of the lives of surviving spouse Mitchell and their children. This trust will eventually be transferred to charity, but the increased life income to family makes up for the future gift to charity.