2025 Social Security Cost of Living Adjustment
When we get to the end of the year, it’s time to look ahead to what numbers may change in 2025 for the government programs from which our clients receive benefits. It starts with the Social Security Administration, which announces its cost of living adjustment (COLA). Other government programs then adjust their numbers, often using the same COLA as Social Security. Since inflation hit a 40 year high in 2022, the rate has dropped. After a COLA of 8.7% in 2023, the adjustment dropped to 3.2% for 2024. Inflation, has continued to decline this year and consequently so has the COLA. For 2025 Social Security payments will increase by 2.5%. This bump up will be first be seen in January, 2025 monthly payments. Medicare numbers will also change next year, although not tied to the same adjustment. Similar to last year, the standard Medicare Part B premium that most people pay will increase. While that number has not yet been finalized, it is anticipated to increase by almost 6% to $185 per month.. Certain Medicare deductibles and copays will increase next year. The Part A hospitalization deductible is expected to increase by $52 to $1684 and the copay for days 61 through 90 is expected to increase from $408 to $421 per
What Qualifies as a Last Will and Testament? Part 3
In my last 2 blog posts I have explained the elements of a last will and testament. New Jersey law clearly sets out the requirements which, if followed, make the probate process much easier than when the law is not followed. While I am always an advocate for consulting with an experienced estate planning attorney because “you don’t know what you don’t know”, there is still the temptation to print a form off the internet or just write one up yourself since it doesn’t cost anything. That might be true if we only consider the upfront cost to prepare the document. After the person dies, however, is when the real cost can be seen. When it comes to the execution of a will, I have seen too many instances in which even the simplest elements of execution are not followed. As I laid out last week, the will must be signed by the testator before two witnesses. A self proving affidavit should also be signed. In our office we have had numerous cases in which these elements were not all present. For example, one will had the testator’s signature in one place but in a second location it was blank. In another instance, the self executing affidavit did not have
What Qualifies as a Last Will and Testament? Part 2
In my blog post last week, I explained the elements of a validly executed will. When someone dies with a will, it must first be admitted to probate before the executor named in the document can begin to do what is required to administer the decedent’s assets. In New Jersey, if the required elements are followed and the will is a “self proving” one, the process is very simple and does not need to involve a judge. The will can be submitted to the Surrogate, who examines it to be certain all the elements are there before accepting it and issuing Letters Testamentary. It is these letters that allow the executor to act on behalf of the estate. If the elements are not present, then an application needs to be made before a judge who must determine whether to permit the written document to be probated as the last will or not. So, what makes a will “self proving”? As I explained last week, a will must be signed by two people who either witnessed the signing or the testator’s acknowledgement of the signature. A self proving will contains an affidavit stating that the witness observed the testator sign it willingly (or someone else sign it at the
What Qualifies as a Last Will and Testament? Part 1
What Qualifies as a Last Will and Testament? Part 1 In my first conversation with family members after a loved one dies, not infrequently someone will tell me that the decedent (person who died) verbally expressed his or her wishes about how they wanted their estate to be distributed. In some cases there is no will and in others there is something in writing but the person tells me it contains directions different than the verbal instructions. When someone dies, state law provides a method by which that person’s assets are to be distributed. We can pass our estate on to the persons or organizations that we wish, however, there needs to be an orderly manner in which to do that. Of course, after I die I won’t be able to then say or direct that distribution. A will accomplishes that task. But, how do we know what I really want? And what if I change my mind? New Jersey probate law sets out the elements of a will. A will must be in writing, signed by the testator (person making the will) or in the testator’s name by someone else but in the testator’s conscious presence and at the testator’s direction. The document must also be signed by at least
Social Security Benefits and Taxes (Part 2)
In last week’s post I talked about Social Security. I specifically focused on how, for many Americans, Social Security benefits are the sole source of income but most of these benefits are subject at least in part to income tax. That is the case for a single person who has more than $24,000 of income and for a married couple more than $34,000. In fact, when you think about it, Social Security benefits are actually subject to taxation twice. Contributions are taxed before they are deducted from your wages and then the benefits you receive in retirement are subject to tax a second time. Two Congressman introduced a bill last year to eliminate that double taxation, however, it has been met with resistance. With many predicting that the Social Security system will be insolvent in 10 years, those opposed to the bill believe that making benefits tax free would only worsen the problem. But would it? Currently the tax on benefits contributes only 4% of the funds needed to cover payments to retirees. 90% comes from the deductions from payroll for those currently employed. Another bill recently introduced in Congress attempts to eliminate the resistance to tax free Social Security benefits by raising the Social Security wage base. Currently payroll deductions
Social Security Benefits and Taxes (Part 1)
Social Security benefits are the primary source - and in some cases the sole source - of income for a majority of Americans. Many Americans have little to no retirement savings. Company pension plans have become rare and even when available, most people do not stay with a single company long enough to qualify for much. Then there are people - most often women - who were not in the work force for many years for reasons such as raising a family. On top of that, most Social Security benefits are taxable, which further reduces the amount received. This wasn’t always the case until the mid 1980’s. Trying to address a funding problem (which has not been solved but instead has only worsened over time), in 1984 Congress subjected a portion of benefits to federal income tax. (Some but not all states exempt Social Security from state income tax). Taxpayers at higher income levels pay more tax. Today, beginning at income of $25,000 for a single person and $32,000 for a married couple, 50% of Social Security benefits are taxed. Once income exceeds $34,000 for a single person and $44,000 for a married couple 85% of benefits are subject to tax. To make matters worse, these thresholds do not