Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, July 5, 1993 TAG: 9307040041
SECTION: MONEY PAGE: A-8 EDITION: HOLIDAY
SOURCE: MAG POFF
DATELINE: LENGTH: Medium
A: You should consult a lawyer who specializes in taxes and estates if your joint estate exceeds $600,000. That includes your insurance, your home and every other asset that either of you owns. This is, of course, true of every couple, regardless of citizenship.
Gary Agee, a certified public accountant with the Roanoke firm of Miller, Morgan & Co., and Charles E. Troland Jr., a lawyer with the Roanoke firm of Glenn, Flippin, Feldmann & Darby, agreed that this is a complicated area.
They said the marital exclusion is eliminated when the surviving spouse is an alien. In your situation, this is certain.
That means the estate would be taxed at the death of the first spouse. When United States citizens are involved, there is no tax until the death of the second spouse. The law is designed to prevent surviving alien spouses from leaving the country with the estate and thus completely escaping taxation.
In your situation, the surviving spouse would be taxed immediately if the estate should exceed the exclusion of $600,000. Every time you took a distribution from the estate, Troland said, you would pay taxes.
Troland and Agee said the situation is complicated when the main asset is insurance. But both recommended creation of a Qualified Domestic Trust, a specific type of trust that is available to aliens. Traditional trusts won't work for aliens because they are built around the marital exclusion with the premise of taxation at the death of the second spouse. Insurance should be paid through the trust rather than directly to the surviving spouse.
Troland said the citizenship of your children will play no part in their inheritance. Citizenship questions relate only to the marital exclusion.
Social Security benefit rate set at retirement
Q: I took Social Security at age 62 in 1982, and I have worked every year since then on different jobs. My Social Security has never been raised except for cost of living.
I saw it stated in the paper that your benefits rise the more you work. I was wondering if mine shouldn't be looked into to determine if I should be drawing more than I do.
Q: When I retired at 62, the Social Security office told me that if I kept working, my benefits would increase after about two or three years.
I am now 67 and have paid in Social Security in the amount of $600-$800 a year for five years. My benefits have not increased except for cost of living raises which everyone gets. My 20 percent discount and the amount I pay in each year amounts to about one-third of yearly benefits.
Am I entitled to an increase in my benefits?
A: You set the percentage of your Social Security benefits at the age you opt to retire.
When you choose to retire at the age of 62, you will receive only 80 percent of the standard benefit for the rest of your life. You will receive 87 percent at age 63, 93 percent at age 64 and 100 percent at the age of 65. If you choose to delay retirement and drawing of Social Security after the age of 65, you will continue to increase your benefits by 4 percent a year.
What matters is the decision to draw Social Security, not whether you then work at post-retirement jobs.
But you suffer there as well. People under the age of 65 can earn no more than $640 a month without paying a penalty on some of their benefits. When you are 65 or older, you can earn $880 a month. After the age of 72, there is no earnings test; you can draw Social Security and your full pay.
If a Social Security representative told you that your benefits might increase in a few years, he or she may have referred to a quirk in the law that applies to widows or widowers.
In this situation, the widow or widower would retire at 62 using the employment record of the deceased spouse. Then at the age of 65, he or she would convert to his or her own earnings record. In such a case, the person would receive the full benefit, or 100 percent of the individual's own earnings record, at the age of 65. This situation does not apply to couples. If it applies to you, however, you must call or visit the Social Security office to file an application under your own earnings record.
If you have a question about your own Social Security benefits, you can call toll-free to 1-800-772-1213. It is answered between 7 a.m. and 7 p.m. any business day. In the alternative, you can visit the Social Security office at the Poff Federal Building in Roanoke during business hours.
Mag Poff covers banking and finance for the Roanoke Times & World-News. She will help find answers to your personal finance questions. Send them to her at the Roanoke Times & World-News, P.O. Box 2491, Roanoke, Va. 24010.
by CNB