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Northwest Arkansas Democrat-Gazette - - VOICES -

“Justin, my dad re­cently passed away, and my mom has been hit with a sur­prise that we don’t know how to han­dle. She re­cently re­ceived word from the tax asses­sor that her house is not, and never was, in her name. Ap­par­ently, when my dad pur­chased it decades ago, the ti­tle com­pany put it in his name only. I al­ways thought that when a hus­band died, all his prop­erty au­to­mat­i­cally passed to his wife, but now I’m be­ing told that’s not right and she needs a pro­bate. What can we do to keep the house out of pro­bate?” Steve

An­swer: Steve, I’m sorry to hear about your fa­ther’s pass­ing, and I’m sorry that your mother is run­ning into these le­gal trou­bles on top of that. Un­for­tu­nately, it is un­likely that we’ll be able to do any­thing to keep the house out of pro­bate if it was only in your fa­ther’s name when he died. Even though he left a spouse, and common sense would tell you the house should au­to­mat­i­cally be hers, that’s not how the law works.

Any­time a per­son dies with prop­erty in his or her own name, with no co-own­ers and no death ben­e­fi­cia­ries listed, that prop­erty must pass through pro­bate no mat­ter what his or her fam­ily sit­u­a­tion may have been. You didn’t men­tion whether your fa­ther had a will, but even if he did, hav­ing a last will and tes­ta­ment doesn’t keep a per­son’s es­tate out of pro­bate – it sim­ply guides the pro­bate court in wrap­ping up fi­nal af­fairs. It would have been ideal for your par­ents to have jointly owned this home, but even that would not have been enough to per­ma­nently keep the house out of pro­bate. At your mother’s death, you would still have faced pro­bate court with­out ad­di­tional plan­ning.

Ev­ery week, our firm helps fam­i­lies stay out of pro­bate court, but it takes ad­vance plan­ning. You can­not wait un­til af­ter the loss of a loved one to start your pro­bate avoid­ance plan. We have of­fices in Spring­dale, Ben­tonville, and Fort Smith. For more in­for­ma­tion on es­tate plan­ning and el­der law is­sues please call our cen­tral num­ber of 479.750.1101 and we will get you di­rected to the of­fice near­est you!

“Which Re­tire­ment Plan Is Right for My Busi­ness?”

An­swer: If you own a small busi­ness, there are many re­tire­ment plan al­ter­na­tives avail­able to help you and your el­i­gi­ble em­ploy­ees save for re­tire­ment. For most closely-held busi­ness own­ers, a Sim­pli­fied Em­ployee Pen­sion In­di­vid­ual Re­tire­ment Ac­count (SEP IRA) was once the most cost-ef­fec­tive choice. Then the Sav­ings In­cen­tive Match Plan for Em­ploy­ees (SIM­PLE IRA) be­came a vi­able al­ter­na­tive. To­day you may find that a de­fined ben­e­fit or 401(k) plan best suits your needs. To make an in­formed de­ci­sion on which plan is right for your busi­ness, re­view the dif­fer­ences care­fully be­fore you choose. Sim­pli­fied Em­ployee Pen­sion In­di­vid­ual Re­tire­ment Ac­count (SEP IRA). This plan is flex­i­ble, easy to set up, and has low ad­min­is­tra­tive costs. An em­ployer signs a plan adop­tion agree­ment, and IRAs are set up for each el­i­gi­ble em­ployee. When choos­ing this plan, keep in mind that it does not al­low em­ploy­ees to save through pay­roll de­duc­tions, and con­tri­bu­tions are im­me­di­ately 100% vested.

The max­i­mum an em­ployer can con­trib­ute each year is 25% of an em­ployee’s el­i­gi­ble com­pen­sa­tion, up to a max­i­mum of $270,000 for 2017. How­ever, the con­tri­bu­tion for any in­di­vid­ual can­not ex­ceed $54,000 in 2017. Em­ployer con­tri­bu­tions are typ­i­cally dis­cre­tionary and may vary from year to year. With this plan, the same for­mula must be used to cal­cu­late the con­tri­bu­tion amount for all el­i­gi­ble em­ploy­ees, in­clud­ing any own­ers. El­i­gi­ble em­ploy­ees in­clude those who are age 21 and older and those em­ployed (both part time and full time) for three of the last five years. Sav­ings In­cen­tive Match Plan for Em­ploy­ees (SIM­PLE). If you want a plan that en­cour­ages em­ploy­ees to save for re­tire­ment, a SIM­PLE IRA might be ap­pro­pri­ate for you. In or­der to se­lect this plan, you must have 100 or fewer el­i­gi­ble em­ploy­ees who earned $5,000 or more in com­pen­sa­tion in the pre­ced­ing year and have no other em­ployer-spon­sored re­tire­ment plans to which con­tri­bu­tions were made or ac­crued dur­ing that cal­en­dar year. There are no an­nual IRS fill­ings or com­plex pa­per­work, and em­ployer con­tri­bu­tions are tax de­ductible for your busi­ness. The plan en­cour­ages em­ploy­ees to save for re­tire­ment through pay­roll de­duc­tions; con­tri­bu­tions are im­me­di­ately 100% vested.

The max­i­mum salary de­fer­ral limit to a SIM­PLE IRA plan can­not ex­ceed $12,500 for 2017. If an em­ployee is age 50 or older be­fore De­cem­ber 31, then an ad­di­tional catch-up con­tri­bu­tion of $3,000 is per­mit­ted. Each year the em­ployer must de­cide to do ei­ther a match­ing con­tri­bu­tion (the lesser of the em­ployee’s salary de­fer­ral or 3% of the em­ployee’s com­pen­sa­tion) or non-match­ing con­tri­bu­tion of 2% of an em­ployee’s com­pen­sa­tion (lim­ited to $270,000 for 2017). All par­tic­i­pants in the plan must be no­ti­fied of the em­ployer’s de­ci­sion.

De­fined ben­e­fit pen­sion plan. This type of plan helps build sav­ings quickly. It gen­er­ally pro­duces a much larger tax-de­ductible con­tri­bu­tion for your busi­ness than a de­fined con­tri­bu­tion plan; how­ever, an­nual em­ployer con­tri­bu­tions are manda­tory since each par­tic­i­pant is promised a monthly ben­e­fit at re­tire­ment age. Since this plan is more com­plex to ad­min­is­ter, the ser­vices of an en­rolled ac­tu­ary are re­quired. All plan as­sets must be held in a pooled ac­count, and your em­ploy­ees can­not direct their in­vest­ments.

Cer­tain fac­tors af­fect an em­ployer’s con­tri­bu­tion for a plan, such as cur­rent value of the plan as­sets, the ages of em­ploy­ees, date of hire, and com­pen­sa­tion. A par­tic­i­pat­ing em­ployee with a large pro­jected ben­e­fit and only a few years un­til nor­mal re­tire­ment age gen­er­ates a large con­tri­bu­tion be­cause there is lit­tle time to ac­cu­mu­late the nec­es­sary value to pro­duce the stated ben­e­fit at re­tire­ment. The max­i­mum an­nual ben­e­fit at re­tire­ment is the lesser of 100% of the em­ployee’s com­pen­sa­tion or $215,000 per year in 2017 (in­dexed for in­fla­tion).

401(k) plans. This plan may be right for your com­pany if you want to mo­ti­vate your em­ploy­ees to save to­wards re­tire­ment and give them a way to share in the firm’s prof­itabil­ity. 401(k) plans are best suited for com­pa­nies seek­ing flex­i­ble con­tri­bu­tion meth­ods.

When choos­ing this plan type, keep in mind that the em­ployee and em­ployer have the abil­ity to make con­tri­bu­tions. The max­i­mum salary de­fer­ral limit for a 401(k) plan is $18,000 for 2017. If an em­ployee is age 50 or older be­fore De­cem­ber 31, then an ad­di­tional catch-up con­tri­bu­tion of $6,000 is per­mit­ted. The max­i­mum amount you, as the em­ployer, can con­trib­ute is 25% of the el­i­gi­ble em­ployee’s to­tal com­pen­sa­tion (capped at $270,000 for 2017). In­di­vid­ual al­lo­ca­tions for each em­ployee can­not ex­ceed the lesser of 100% of com­pen­sa­tion or $54,000 in 2017. The al­lo­ca­tion of em­ployer profit-shar­ing con­tri­bu­tions can be skewed to fa­vor older em­ploy­ees, if us­ing age-weighted and new com­pa­ra­bil­ity fea­tures. Gen­er­ally, IRS Forms 5500 and 5500-EZ (along with ap­pli­ca­ble schedules) must be filed each year.

Once you have re­viewed your busi­ness’s goals and ob­jec­tives, you should check with your Fi­nan­cial Ad­vi­sor to eval­u­ate the best re­tire­ment plan op­tion for your fi­nan­cial sit­u­a­tion.

***

This ar­ti­cle was writ­ten by/for Wells Fargo Ad­vi­sors and pro­vided cour­tesy of Trey Cole­man, Fi­nan­cial Ad­vi­sor in Spring­dale AR at (479) 756-0600.

Wells Fargo Ad­vi­sors does not pro­vide le­gal or tax ad­vice. Be sure to con­sult with your tax and le­gal ad­vi­sors be­fore tak­ing any ac­tion that could have tax con­se­quences.

In­vest­ments in se­cu­ri­ties and in­sur­ance prod­ucts are: NOT FDIC-IN­SURED/NOT BANK-GUAR­AN­TEED/MAY LOSE VALUE

Wells Fargo Ad­vi­sors is a trade name used by Wells Fargo Clearing Ser­vices, LLC and Wells Fargo Ad­vi­sors Fi­nan­cial Net­work, LLC, Mem­bers SIPC, sep­a­rate reg­is­tered bro­ker-deal­ers and Wells Fargo Clearing Ser­vices, LLC.

0617-02614

“I am think­ing about re­tir­ing soon and there’s so much to think about. Can some­one like you help me an­swer all my ques­tions?”

An­swer: Con­grat­u­la­tions on your (al­most) de­ci­sion to re­tire! You are right - there are many things to think about be­fore you de­cide to re­tire. If you haven’t al­ready been work­ing with an ad­vi­sor, don’t worry, it’s not too late. As far as my be­ing able to an­swer “all” your ques­tions, I have to say I prob­a­bly can’t. But I can cer­tainly an­swer the ones in my ex­per­tise and help you get any other an­swers you need.

One of the first things peo­ple worry about when they think about re­tir­ing is their in­come. Ob­vi­ously if you are go­ing to quit your job, you are go­ing to need to re­place that in­come. Be­ing on a fixed in­come re­ally is a scary thought to al­most ev­ery­one so don’t think you are alone with any anx­i­ety you feel. It’s nor­mal.

How much in­come will you need in re­tire­ment. It in­volves some se­ri­ous dis­cus­sions about what your life­style will look like. Also, are you go­ing to con­tinue work­ing part-time? Are you start­ing to draw so­cial se­cu­rity? What kind of in­come can you get from your re­tire­ment plan, IRA, or other sav­ings? Your ad­vi­sor needs a de­tailed pic­ture of your cur­rent fi­nan­cial sit­u­a­tion.

Let’s talk about ex­penses. I’ve heard that in re­tire­ment, “ev­ery day is Satur­day.” That sounds great un­til you re­al­ize that you spend most of your money on Satur­days, right? We all see those com­mer­cials with peo­ple re­tir­ing to ex­otic lo­ca­tions or tak­ing lux­ury va­ca­tions. The re­al­ity for most of us looks like down­siz­ing from your cur­rent home to some­thing smaller. And for many, that ex­otic va­ca­tion in­volves see­ing some shows in Bran­son. And that’s ok! What­ever the plan, you need to make sure it’s some­thing you can live with long term. Al­ways re­mem­ber it’s “Your” plan, not your ad­vi­sors.

Just be­ing hon­est here… if you haven’t started pre­par­ing and you are near­ing 60 or 65, your op­tions are lim­ited. And that’s why it’s very im­por­tant that you visit with some­one you trust be­cause you have no mar­gin for er­ror. The longer you wait, the harder it gets. If we can help get this con­ver­sa­tion started, please give us a call.

If you have ques­tions about Medi­care, or health in­sur­ance in gen­eral, please give our of­fice a call at 479-855-6334. Get­ting the right in­for­ma­tion is crit­i­cal to mak­ing the best de­ci­sion. For ad­vice on all things re­lated to life af­ter 60, please tune in ev­ery Wed­nes­day at 9am to our ra­dio pro­gram, “Medi­care, Med­i­caid, and Long Term Care.” Lis­ten live on KURM-AM 790 or on­line at www.kurm.net. Also, on Au­gust 10th at 10:30 a.m. I present, “Wel­come to Medi­care”, an in­for­ma­tive hour of in­for­ma­tion at the Sch­mied­ing Cen­ter, 2422 N. Thomp­son St. in Spring­dale. There is no cost and you don’t have to pre-regis­ter.

“Mom and Dad will be need­ing as­sis­tance soon in their home. I have heard about a pro­gram that helps peo­ple at home. I be­lieve it is funded through Med­i­caid. Do you know about this?”

An­swer: Yes, you are prob­a­bly re­fer­ring to the ARChoices Pro­gram. ARChoices is a home- and com­mu­nity-based pro­gram funded by Med­i­caid as an al­ter­na­tive to nurs­ing home care. Ben­e­fi­cia­ries can be 21 and older with cer­tain fi­nan­cial and med­i­cal need re­quire­ments. An ARChoices re­cip­i­ent may re­ceive a com­bi­na­tion of ser­vices based on med­i­cal need and the avail­abil­ity of ser­vices. Ser­vices that could be covered are: Adult Day Care, Adult Day Health Care, At­ten­dant Care, En­vi­ron­men­tal Adap­ta­tions, Home De­liv­ered Meals, Per­sonal Emer­gency Re­sponse Sys­tem, and Respite Care. Some ar­eas of the state of­fer Adult Fam­ily Homes. A per­son who is an ARChoices re­cip­i­ent also is el­i­gi­ble for all other reg­u­lar Med­i­caid ser­vices, such as pre­scrip­tion med­i­ca­tions, doc­tors, and hospi­tal ser­vices. Some of the ser­vices in­cluded un­der At­ten­dant Care in­clude: help with light house­keep­ing, meals, med­i­ca­tion re­minders, trans­porta­tion, er­rands and per­sonal care ac­tiv­i­ties such as bathing, dress­ing and groom­ing. If you need as­sis­tance or have any other ques­tions re­gard­ing the ARChoices pro­gram, I would be happy to help you.

Call us for a free, no obli­ga­tion con­sul­ta­tion with de­tailed in­for­ma­tion on care­giv­ing as­sis­tance, con­tact our Fayet­teville of­fice at 2208 Main Dr. – 479-587-9551; or our Rogers of­fice at 104 N. 37th St. – 479-636-7700.

“What is the main rea­son for com­pres­sor fail­ure?”

An­swer: There are sev­eral rea­sons for com­pres­sor fail­ure, but the main rea­son is ne­glect. Poor fil­ter main­te­nance starves the unit for air across the evap­o­ra­tor coil, thus caus­ing low suc­tion pres­sure and high pres­sure on the high side. This low suc­tion will flood liq­uid Freon back to the com­pres­sor caus­ing dam­age. Even­tu­ally, poor fil­ter main­te­nance will cause the evap­o­ra­tor coil to be covered with lint and air can barely pass through the coil.

An­other rea­son is low Freon lev­els. This will cause the unit to die an early death. The unit runs hot and will cook the oil. This is harder to di­ag­nose with a heat pump. When an air con­di­tioner unit is low on Freon and you come home to a hot house, some­thing is wrong with the A/C unit. In the win­ter when your heat pump is low on Freon, it is harder to tell be­cause it might be run­ning on the heat strips. This is bad and will give you a high elec­tric bill, but it’s worse if it’s sit­ting out there self-de­struc­t­ing.

I have seen bad con­denser fan mo­tors take out com­pres­sors. Even run ca­pac­i­tors have done the same.

The hard­est thing to di­ag­nose for com­pres­sor fail­ure is poor in­stal­la­tion of the unit, like a Freon line that is too long with too much lift in a two or three story house. Also, di­ag­no­sis is hard for a re­turn air or duct­work that is too small.

In fact, I was shocked to find out that new con­struc­tion, which tra­di­tion­ally uses bot­tom grade equip­ment, has a lesser rate of fail­ure of com­pres­sors than retro-fit or re­place­ment units. This is ac­cord­ing to man­u­fac­turer’s sta­tis­tics. I have thought about this and be­lieve the guys that put in the re­place­ment units have prob­lems adapt­ing the new size to the old fit­tings. Or, they fail to change what needs to be changed - such as proper Freon lines.

But the im­por­tant thing is clear. The money you pay for a checkup is very im­por­tant for the longevity of your unit. Please call Bella Vista Heat­ing and Air if you have any ques­tions and for all your HVAC needs. (479) 273-9640.

#3 Pruitt Lane, Ben­tonville, AR 72712 Phone: (479) 273-9640 • Fax: (479) 273-9702 Owner of Bella Vista Heat­ing & Air, Inc., Since 1979 Bach­e­lor of Science de­gree from Arkansas Tech Mas­ters of Ed­u­ca­tion de­gree from Univer­sity of Arkansas Bella Vista Heat­ing & Air Larry Pruitt

Wells Fargo Ad­vi­sors 6815 Isaac’s Or­chard Rd, Suite C Spring­dale AR 72762 479-756-0600 Vice President-In­vest­ment Of­fi­cer RobertW.“Trey”Cole­man III

Byretta H. Fish 2208 Main Drive Fayet­teville, AR 72704 479-587-9551 Su­pe­rior Se­nior Care

Cor­poron In­sur­ance & Fi­nan­cial Ser­vices 1801 For­est Hills Blvd. #124 Bella Vista 479-855-6334 AR/NPN Li­cense# 7463967 President and CEO Will Cor­poron

El­der Law At­tor­neys Cer­ti­fied El­der Law at­tor­neys Spring­dale, Ben­tonville, Fort Smith 479.750.1101

Todd What­ley

Justin S. El­rod

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