Archive of entries posted on February 2010

CPI-U, CPI-W, CPI-E: WHAT IS ALL MEANS

25 February 2010, 12:01 pm

By Shelley Ocaña, Private Fiduciary

The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a representative market basket of consumer goods and services. The Bureau of Labor Statistics publishes the measures of price change for population groups on an annual basis. Rents go up based on the CPI rates published in January of every year; food prices rise, transportation costs, wages, commodities and all manner of goods and services are increased based on published CPI rates.

The CPI for all urban consumers is known as CPI-U and represents 87% of the US population. CPI for wage earners and clerical workers is known as CPI-W and represents about 32% of the population.

CPI-E (E is for experimental) represents changes in costs of goods and services for a special group of Americans. In 1987 policymakers began calculating the prices of goods and services consumed by a third significant segment of the population – older Americans (62 and above). As our population ages, economic issues facing the senior community have become critical, not the least of which is a disproportionate inflation rate.

Alarmingly, over the past 25 years, the CPI rates for the elderly rose significantly higher than the other two population sectors. CPI-E rose 126.5% from 1982 to 2007 – this largely because the money spent on medical care by senior citizens far out paces the younger population groups. Medical care inflation increased far more rapidly than most other goods and services in the same period. Additionally, seniors spend more on shelter relative to the other population groups. Factor local price index increases into the equation and you have considerable economic issues drastically affecting aging citizens. (Think New York, San Francisco, Los Angeles, Chicago – urban centers where goods and services are already higher than in rural American communities.) Fuel oil and heating costs have outpaced overall inflation during this time period as well. Older Americans spend a higher proportion of their income on fuel oil and heating costs than average consumers, for example.

When planning for retirement dollars needed over the average 30 years of retirement, baby boomers will have to factor in those increased rates, just for the basic costs of living. Fiduciaries budgeting trusts and estates to adequately provide for housing, medical care, care services and myriad expenses associated with retirement years for their clients will be well served to take a serious look at the long term effects of CPI-E.

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5TH ANNUAL COLLABORATIVE PRACTICE CONFERENCE April 23-25

24 February 2010, 3:08 pm

For fiduciaries and estate planning professionals practicing in California there is a great opportunity to get some interesting and innovative continuing education at the upcoming Collaborative Practice statewide conference.  The Nikko Hotel in San Francisco is housing the fifth annual CPC conference on April 23-25.  Continuing education credits are offered for private fiduciaries, attorneys, MFTs, LCSWs, psychologists, CFPs and others.

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Keynote speakers and programs are being offered by an impressive array of professionals and the subject matters are diverse and relevant to those of us practicing in the Elder Law arena.  18 workshops of three hours each teach a wide variety of skills to participants and cover subjects such as recognizing and assessing high-conflict personalities early on in the estate planning and administrative process; how to approach interest-based negotiation and advocacy without getting locked in power struggles; how to defuse defensive responses; and exploring attractive alternatives to families facing litigation conflicts about probate and concerning  incapacitated elders.

One particular workshop offered is dubbed “Grief Matters” and it explores the significant impact grief plays in the administrative process.  Grief is a pervasive and powerful component of both family law and probate cases and understanding its manifestations in your clients and families will provide a significant advantage to professionals practicing in these areas.  It is a complex process that warrants close examination and understanding.

For more information about the conference contact Paula Jackson, conference coordinator, at paula@gneo.net.

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WILL SOCIAL SECURITY BE THERE FOR US?

21 February 2010, 2:38 pm

By Shelley Ocaña, Private Fiduciary

For those of you new and seasoned private fiduciaries who are planning for your own financial future, you might want to take a second look at the health of the Social Security system. Whether your benefits will be there for you when you finally retire is a big question.  Most of us know that our accumulated Social Security benefits were never meant to be the only source of income in our retirement years, but the sad state economy is in may change this perception.

The stock market decline last year and it’s continuing volatility coupled with the staggering unemployment rates, cost of living increases and plunging real estate valuations has eroded nest eggs previously thought to be our future financial security.   Senior citizens all over the country are seeking or returning to work in some capacity just to make ends meet. There are some who will find themselves dependent on their Social Security benefits as their only source of income later on in life.

The serious financial problems facing the Social Security system is no secret.  In fact, in 2016 the Social Security Administration will begin paying more out in benefits to retirees than it is collecting in taxes from the younger working generations.  Without changes to the system, the Administration reports that by 2037 the Social Security Trust Fund will be exhausted.  That is only 27 years from now.

Without serious changes and reforms soon, Social Security benefits will not be available  through retirement years  to those of us who have paid into the system our entire working lives.

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HAITI RELIEF CONTRIBUTIONS 2009 TAX DEDUCTIBLE

6 February 2010, 1:27 pm

President Signs Bill into Law Allowing 2010 Haitian
Relief Contributions to be Deducted on 2009 Returns
On January 22, President Obama signed into law H.R. 4462, a bill that allows donors to accelerate the income tax benefits of charitable contributions for the relief of victims of the earthquake in Haiti.
The bill allows individuals who make charitable contributions to aid Haitian earthquake victims to elect to claim an itemized charitable deduction on their 2009 tax return (instead of having to wait until next year to claim the deductions on their 2010 tax return). The election applies only to Haitian relief contributions made in cash after Jan. 11, 2010, and before Mar. 1, 2010.  If the election is made, Haiti relief donations are deductible on the 2009 return, not the 2010 return. The bill also relieves recordkeeping requirements for Haitian relief contributions.  For these contributions, a telephone bill satisfies the Code Sec. 170(f)(17) recordkeeping requirements if it shows the name of the donee organization, the date of the contribution, and the amount of the contribution.

On January 22, President Obama signed into law the H.R. 4462 bill allowing contributions for quake victims in Haiti to be considered charitable income tax benefits.

The bill allows individuals who make charitable contributions to aid Haitian earthquake victims to elect to claim an itemized charitable deduction on their 2009 tax return (instead of having to wait until next year to claim the deductions on their 2010 tax return). The election applies only to Haitian relief contributions made in cash after Jan. 11, 2010, and before Mar. 1, 2010.

If a deduction claim is made, Haiti relief donations are deductible on 2009 tax returns but not on 2010 returns. For recordkeeping contributions, a telephone bill satisfies the Code Sec. 170(f)(17) recordkeeping requirements but must show the name of the donee organization, the date of the contribution, and the amount of the contribution.

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