Chris Cooper & Company
Chris Cooper is a passionate advocate for people trying to meet the often crushing costs of medical care. He found his passion early on, while working in nursing homes and hospitals. After completing paramedic training and obtaining a nursing degree, he pursued his interest in how people could finance health care, primarily acute care. He realized that chronic long-term care leads to financial devastation for many people, especially retirees.
Chris is a professional fiduciary licensed with the state of California. As a professional fiduciary, Chris works with seniors, disabled individuals and others who can’t manage their affairs on their own. He assists them with everything from day-to-day financial issues to investment and estate management. Chris is also the founder of Eldercare Advocates, which provides geriatric care management and long-term-care consulting.
Chris holds a Masters of Science in financial services with specialization in estate planning and a graduate certificate in Gerontology. He is a CERTIFIED FINANCIAL PLANNER™ certificant and is enrolled to practice in audit and administrative proceedings before the Internal Revenue Service and state and local taxing authorities.
Chris is a member of the National Association of Personal Financial Advisors, and an associate member of the California Society of CPA’s, the Los Angeles County Bar Association, and the San Diego County Bar Association.
Chris has been a regular guest on CNBC, and is regularly quoted in newspapers and magazines nationwide.
MSFS, American College
Licensed by the California Fiduciary Bureau
This is a horrible estate plan. First of all, you figured out that if you die before your sister, and you hadn't distributed her estate before you died, then your sister's estate and your estate would be distributed by YOUR WILL or the laws of intestacy, if you don't have a Will.
But a worse thing that could happen is this: you become imcompetent, and a probate court appoints a guardian or conservator over you and your estate (which now includes your sister's estate if she died before you but after you became incompetent.) The probate court does not know of your verbal instructions from your sister, NOR DOES IT CONSIDER ANY SUCH VERBAL ORDERS, so your sister's estate will then be used to care for you, even if it is all gone!
So, get your sister to a competent estate planning attorney and have her write a proper Will that spells out what she wants to happen after her death. Also, have the attorney review her Durable Power of Attorney and health care directives as well. And while you're at it, review your own estate planning documents!
Your payment received would be self employment income, subject to the self employment tax, federal income tax, state income tax (if your state has one), and possibly city income taxes in your city of residence (if your city has one). This because you as an individual are on a cash basis.
Contact a CPA or Enrolled Agent who is competent in this matter. You will want to reserve about 50% of this payment all these taxes.
You report it in 2018, even tough it was for 2017, that is how your IRA custodian will report it. Don't worry, this area of tax law is poorly policed, I haven't seen a penalty on not taking an RMD in my 35 year career.
You sound like you have met a few "advisors" but are not comfortable with whom you have met. Let's review whom you may have met.
First, there are registered representatives of securities broker/dealers. We used to call these reps "stockbrokers" but they don't broker much anymore, as their companies became manufacturers of "packaged products" such as mutual funds, limited partnerships and variable annuities. These reps don't charge for advice, but sell you products and collect a commission (thus their advice is conflicted.)
Next there are registered investment advisors. This group didn't use to deal with retail investors, rather they managed assets for mutual fund companies, pension plans and other large investors. Registered investment advisors are held to the fiduciary standard, but it is limited (they don't guarantee you against losses), but they are to act in your best interests.
In recent years, most (close to 80%) of registered investment advisors are also registered representatives, thus they are employed by a product manufacturer/distributor (a broker/dealer, a hidden employer). Thus this group is conflicted, as registered representatives are NOT fiduciaries and are not held to the fiduciary standard, and thus do not act in your best interest.
Trust companies also offer investment advice and management, but can have conflicts as most trust companies are owned by banks, which manufacture financial products such as bank accounts and mutual funds.
So, what is it you are finding is making you uncomfortable selecting a financial advisor? The lack of transparency? The hidden employer? Not understanding the costs? Or as one couple, who is very risk adverse, I met thought they could invest in the stock market and have the "advisor" save them from market losses with a market timing approach? (this never works).
The best advisor is one who does not offer investments or investment management and helps you evaluate the different approaches and the good, the bad and the ugly of each approach. And you pay this advisor like a lawyer, by the hour.
You blew it!
Your sister should have been named as a beneficiary of this IRA (regardless of what kind of investment it was in, annuity or custodial account) as well as you if the intent was to split this IRA.
You must have created a beneficiary IRA account Now you have the whole IRA and the only way to transfer half of this amount is to make a taxable distribution from the IRA and YOU ARE STUCK PAYING THE INCOME TAXES ON THIS DISTRIBUTION!!!! Why? Because this is your IRA now.
The correct way to have handled this if your sister was not named a beneficiary of your late sister's IRA WAS to disclaim half the IRA, only receiving your portion into a beneficiary IRA. The your sibling could receive the other half through the probate estate (assumes she was named a beneficiary under your late sister's Will).
Who told you to do the way you handled this?