• Categories

  • Archives

  • Subscribe

  • Archive for the ‘Asset Protection’ Category

    Who needs estate planning?

    Thursday, May 8th, 2014

    You should have a plan if you want to make sure you stay in control of your financial and healthcare decision making in the event of your disability. You should also take the time to plan if you want to make sure your wealth goes to who you want, when you want, the way you want. If you have children who are minors (under the age of 18), parents who are aging, or are married or have a life partner, or anyone else depending upon you,  it makes sense to make plans in the event something happens to you. Finally, if you or your spouse have a chronic condition which may require nursing home care you may want to do a special kind of planning called Medicaid Planning.

    One misunderstanding about estate planning is it only needed if you are very wealthy or if you are old. This is not true. Even young people have responsibilities, can become disabled, or die. Even if you do not have family, or are just starting out, you still need to have “advanced directives” – a Durable Financial Power of Attorney, Health Care Power of Attorney, HIPAA Release and Living Will in place. Even a person who has not accumulated a lot of wealth will want to leave what they have to specific persons.

    So, you can see having a plan for if you were to become disabled or for when you die is truly important for everyone over the age of 18!

    What is estate planning?

    Tuesday, May 6th, 2014

    Estate planning should be a life long process of taking steps to provide for you and the people you love.  You never know when disability will strike. When most people think of estate planning they think about transferring what they own at their death. Another equally important part of planning is thinking about making transfers during your life. Lifetime gifting can have important asset protection advantages and allows you see the impact of your giving on your loved ones.

    A good plan begins with understanding your family, what you own and how you own it and thinking about your goals.

    Should you get professional help filing your Medicaid Application?

    Tuesday, July 30th, 2013

    The answer depends on several variables.

    What is Medicaid?

    ·         Medicaid is the needs-based health care benefit for persons who do not have health insurance, or whose insurance does not cover what they need, as in the example of custodial long-term care. Many people also need Medicaid to help pay for custodial care at home or in a skilled nursing facility.

    Is Age a factor?

    ·         Yes. For people less than 65 years of age, who do NOT need long-term care, eligibility and the application process is much less complicated. In many cases people can apply on their own successfully. However, the process becomes much more complicated with applicants 65 years old and up who require custodial nursing care or other long-term care coverage. In these cases, getting an experienced elder law attorney is often a wise investment.

    Determining Eligibility:

    ·         Nursing home Medicaid has many layers of qualifications and rules. Asset and income caps that change yearly determine whether or not an applicant is eligible. Transferring assets may be done to become asset eligible but complications arise when these are not carried out properly and can cause penalties making the applicant ineligible for benefits for up to five years. “Spending down” is another way many choose to “DIY” to qualify for Medicaid. This not only takes time, but depletes the legacy your family member has worked hard to build up. Consulting with an experienced elder law attorney could save that legacy by permitting you to use legal strategies that will accelerate Medicaid eligibility.

    What’s it cost?

    ·         Consulting with an experienced professional opens the way for expert advice on how best to qualify for benefits as quickly as possible along with offering personal assistance in handling even the most difficult of eligibility questions and navigating the long, grueling process.

    ·         The cost of one month of nursing home care can range between $4,800 and $6,000. Retaining an elder law attorney can often speed up Medicaid eligibility by one or even more months. Thus, spending money on a good elder law attorney can actually save money that would have otherwise been paid to the nursing home, or lost due to other “DIY” strategies. Also you can have peace of mind knowing you have a team on your side who’s been down this road many times before and who are advocating for you. This eliminates much of the stress of the application process so you can spend more time focusing on you and your family.

    Where do I find an Elder Law attorney?

    ·         Georgia Attorney Robert M. Goldberg, member of the National Association of Elder Law Attorney’s (NAELA) has been filing applications and helping families for over 14 years. His firm has offices in Atlanta, Griffin, and Peachtree City.  For a consultation to learn how Mr. Goldberg’s experience can help you, please call 770-229-5729 today!

    Alternatives to Disinheriting a Loved One

    Thursday, July 25th, 2013

     In many cases a parent disinherits a child not because the parent hates the child but because the parent feels hurt.  But, there are alternatives to completely disinheriting a child or other loved one.

    The alternative depends on the underlying reason for disinheriting the person. Sometimes, fair does not necessarily mean equal.  Occasionally, I will advise parents to leave more money to a child in need.  For parents facing this type of scenario a “sprinkle trust” may be a good option.  In a “sprinkle trust” an independent trustee assesses the financial situation of the heirs and has the complete discretion to distribute any money in the trust according to each child’s needs.

    Some parents disinherit a child with an addiction or some other difficulty. In this situation the parent is faced with enabling the dependency or disinheriting the child. An alternative to disinheriting the child is creating an “incentive” trust requiring them to go through rehabilitation and agree to random drug testing.  An incentive trust can be used to help the child if they meet the requirements created in the trust agreement.

    Sometimes I meet with a parent who wants to disinherit their child who has a developmental or other disability or a loved one who is in a nursing home so their loved one will stay eligible for Medicaid.  This drastic measure is not necessary. For children or spouses with disabilities such as Down’s syndrome, or Parkinson’s Diseases or Alzheimer’s Disease, a Special Needs Trust can assure their loved one remains eligible for Medicaid benefits.  The trust then pays for things Medicaid will not cover – the additional cost of a private room, private nurses, vacations from the facilities — without causing the patient to lose Medicaid benefits.

    End of Life Planning to Provide for the People You Love: Safeguarding Your Assets for Your Family

    Wednesday, July 24th, 2013

    Creating a Testamentary Special Needs Trust (SNT) is often a good tool to utilize when planning for a spouse or other loved one who may need Medicaid after you are gone.  A Testamentary SNT is a trust created in your will.  Under Federal Law, money in a properly drafted testamentary trust does not count as “resources” of the person applying for Medicaid.  This rule does not apply to revocable trusts.   Assets held in a revocable trust are considered countable resources of the Medicaid applicant.  So, a Testamentary SNT provide a way mechanism for a spouse to leave funds to their surviving spouse or other family member that can be used to pay for services that are not covered by Medicaid without jeopardizing  eligibility for benefits.

    For example, suppose Helen needs to go the nursing home.  George dies first leaving an estate worth $250,000.  If George dies intestate (without a Will) or with the typical “I Love You” Will leaving all assets to Helen, Helen will inherit George’s estate.  Since the Medicaid asset limits are $2,000 for an individual, Helen will no longer qualify for Medicaid benefits.  Helen will have to spend down $248,000 on her nursing home costs until she is below the $2,000 countable resource limit.

    However, if George had created a Will with a SNT for Helen’s benefit, her Medicaid benefits would be protected and there would be $248,000 available for her additional needs not covered by Medicaid.  These may include extra therapy, special equipment, clothing, hearing aids, eyeglasses, dental expenses, transportation services, evaluation by medical specialists or others, legal fees, visits by family members or companions, bed hold at the nursing home, etc.  When Helen dies, any funds remaining in the SNT will pass by the terms of the George’s Will, to his children or other named beneficiaries.  Medicaid is not entitled to any of the funds held in the SNT.

    The information provided above has been a general summary regarding Testamentary Special Needs Trusts for Medicaid planning.   As with any planning for Medicaid, there are many pitfalls and traps for the unwary that must be assessed on a case by case basis. 

    To determine whether a Testamentary Special Needs Trust would be a helpful planning tool for you or a loved one, or if you have other questions about Nursing Home Medicaid, VA Pension benefits, probate, wills, trusts, powers of attorney or health care advance please call Peachtree City Elder Law Attorney Robert Goldberg at 770-229-5729 to schedule your “Discovery Meeting.”

    Lessons Learned from James Gandolfini’s Will

    Wednesday, July 17th, 2013

    No matter how much you have, estate planning is essential.

    When James Gandolfini, the actor who played mob boss Tony in HBO show “The Sopranos”, died of a heart attack at 51 last month, he left an estate valued at roughly $70 million. Commentators have declared his estate plan a “disaster” because the lack of planning leaves a significant estate tax bill. This means the people he loved will receive less money while the government will get a big chunk of his money to use as it sees fit. This violates the first principle of estate planning – staying in control. You only have three choices where your money goes when you die: Your family, charity and the government.  With better planning less money a smaller check would have to be made out to the IRS and Gandolfini’s loved ones and favorite charities would have ended up with more. While many people will not have to worry about paying estate taxes there are other lessons to be learned.

    The next problem is that because Gandolfini had a will based estate plan, in order to pass title to his property to his beneficiaries, his will had to be probated in New York. Once that happened, his will became a public record and now anyone can see who he left his assets to.  To better protect his privacy it would have made sense to have a trust based estate plan. That way probate would not have been necessary and the whole world would not have been able to learn the names of his beneficiaries and how much he left them.

    http://cbsnewyork.files.wordpress.com/2013/07/gandolfiniwill.pdf

    Another mistake in Gandolfini’s planning is that assets were left outright to his sisters. Because his sisters will own the assets outright , they are subject to being taxed twice: first at their brother’s death and again when they die. To avoid having to pay estate tax twice each sister should have been left her share in a continuing trust. Had this been done the money left to them would not have been in their own estate when they die and wouldn’t be subject to estate tax a second time. Each sister could have been named as trustee of her own trust with broad powers to use the money for their “health, education, or maintenance.”  In addition, through a “power of appointment” each sister could have determined who the trust would benefit and who would act as trustee if there were any assets remaining when they died. Finally,  leaving money to his sisters in a trust rather than outright would have protected the gift from both creditors and predators who might be attracted by his sisters’ new found wealth.

     

    Another problem is how Gandolfini left assets to his two children- Michael, from his first marriage, and Liliana, who is less than a year old. Under the terms of their trusts, each child gets complete control over millions of dollars the day they turn 21.  It is not a good idea to have a trust end at a certain age because you don’t know what the child will be like. Is a 21 year old mature enough to make decisions on how to spend money? What if they have a drug or alcohol problem?  It would have been better to have a continuing “discretionary” trust with professional trustees to manage and distribute money to the children.

    Facebook Founders Use GRATs to Avoid Excessive Taxation; You Can Too

    Wednesday, April 11th, 2012

    News sources recently revealed that Facebook founder Mark Zuckerberg—as well as other Facebook top brass—use Grantor Retained Annuity Trusts to protect their assets and investments from excessive taxation. Grantor Retained Annuity Trusts (more commonly called GRATs) are a perfectly legal—and very efficient—way to protect and pass significant assets from one person to another without incurring an exorbitantly high tax bill.

    According to the article cited above, “GRATs offer a perfect vehicle for wealthy investors who put money in start-ups, while other trusts don’t.” But we don’t recommend GRATs only to wealthy startup investors. GRATs are “an excellent way to shift wealth to others at little or no tax cost and with minimal legal and economic risk.” As such, they can be the perfect tool for business owners, professional investors, and many others.

    Setting up a GRAT allows the investor/grantor to give assets over to the trust for a pre-determined number of years. During this time the assets appreciate and the grantor receives “annual payments adding up to the asset’s original value plus a return based on a fixed interest rate determined by the Internal Revenue Service.” At the end of the trust term the assets (at their new value) are transferred to the beneficiary named in the trust with none of the usual gift or estate tax on the appreciation.

    This makes GRATs sound like the perfect (and perfectly simple) tool, but nothing is perfectly simple. The pre-determined lifetime of your GRAT will depend on your individual circumstances, as well as the tax laws at the time, so you’ll want to make sure you have the help of an experienced and knowledgeable attorney helping you design your trust. Contact our office for more information.

    2012 Could be the Year You Start Your Own Business

    Wednesday, January 4th, 2012

    Before we move away from the topic of New Year’s resolutions, there’s one more New Year’s Resolution we’d like to address—that of taking control of your destiny and starting your own business. The desire to move away from corporate America and work for oneself is not at all unusual. Unfortunately, not all who make this resolution will follow through with it. This is not because these brave entrepreneurs can’t make it, but because they get discouraged. Branching out on your own is a scary venture, especially if you aren’t sure where or how to start; but making that start is a lot easier if you have a plan and know that you’re not alone.

    The following article from Kiplinger.com, Six Steps to Starting Your Own Business, can help you with the first part, and your attorney can help you with the second.

    That’s right; your attorney can help you start your business, and in fact should help you start your business. Although the idea and impetus behind this new venture will be all yours, you should absolutely talk to your attorney about the formal incorporation and formation. Many attorneys are small business owners themselves, and can also help with the challenging and daunting tasks of structuring and formalizing a business plan. Once your business is off the ground and making money (as it undoubtedly will) your attorney can also help you protect it from creditors and lawsuits.

    With a clear plan, and a friend in your corner, starting a business seems almost too easy.

    If you’ve ever considered starting your own business, this could be the year to do it. Make a plan, call your attorney, and take control of your own destiny.

    The Pros and Cons of a Crummey Trust

    Monday, October 3rd, 2011

    If you are looking for a reliable way to leave financial gifts to family members you may find that a Crummey trust is the right estate planning strategy for your family. A recent article in the Wall Street Journal explains that “Crummey trusts are used in many circumstances, but are best suited for making gifts to minors—especially when a parent is giving money to a young child who isn’t ready to handle a large sum.”

    While it’s true that Crummey trusts can be a very convenient and reliable estate planning tool, they do require a certain amount of annual attention and maintenance, and may not be the right strategy for everyone.

    Crummey trusts can be used for many different kinds of assets, but they are most commonly used to protect life insurance policies from estate taxes. Your estate planner can help you set up the Crummey trust and use it to purchase a life insurance policy. Then you “fund the premiums with annual gifts… That gets money out of the estate while skirting the gift tax. Since the trust owns the policy, the death benefit ultimately goes to the trust, shielding it from federal estate taxes.”

    Once the initial work of setting up the trust and buying the insurance policy is done, “The trustee must send out ‘Crummey letters’ each year, informing beneficiaries that they can withdraw the gifted amount during a window of time, say 30 days. Usually, the beneficiary leaves the money in the trust. But the IRS considers it a tax-free gift only if the person has the right to take it in the short term, and the Crummey letter proves that he has that right.”

    Sending letters once a year isn’t a difficult task, but forgetting even once can lead to consequences with the IRS. Our advice is to be very careful to select a trustee you can count on to be timely and detail-oriented with the Crummey letters. Alternatively, the estate planner who set up your trust will often be willing to take over the administrative task of sending annual Crummey letters as well. Contact our office for more information.

    Make Financial Decisions a Family Activity

    Wednesday, June 22nd, 2011

    When it comes to chores many families are not so different from businesses, with members tending to “specialize” in something they enjoy or are good at. Certain chores will often become the domain of one family member or another, lessening the daily burden all around. This may work well for tasks such as cooking, doing the laundry, mowing the lawn, etc.; but when it comes to finances this “specialization” can create long term problems.

    While it may be convenient for one partner to pay bills every month, if both partners aren’t aware of the family budget and month-to-month financial status there can be a tremendous disconnect in spending habits, leading to resentment and often a slow decline into debt. Even more frightening, disaster can strike quickly if the “accountant spouse” dies or becomes incapacitated. Quite often the surviving spouse has no idea what the family financial status is, or even where accounts or investments are located and how to access that money.

    The best solution is for couples to talk about their finances often, or take turns being the family CFO. You may even want to consider involving the kids in the family financial planning once they’re old enough. Having a regular allowance or earning pocket money for chores not only teaches kids about money management, but also helps them understand when they have to wait to get that new video game, or when the family may have to cut back on certain luxuries.

    Furthermore, children are natural problem solvers and activists, and including them in financial decisions such as which charities the family should support, or how to spend surplus cash can make them feel useful and important, as well as teaching them financial accountability.

    Many of us look upon our finances with dread; but it doesn’t have to be that way. Skill with money matters can bring us just as much pride and joy as skill with a paintbrush, tennis racquet, or any other skill that must be acquired with practice and hard work. With a little education, and the involvement of the entire family, we can all become the masters of our own financial futures.