Massachusetts Estate Planning & Asset Protection Blog

What will 2017 bring to Seniors and Persons with Disabilities? - Part II

Posted by Dennis Sullivan & Associates on Tue, Jan 24, 2017

What will 2017 bring to Seniors and Persons with Disabilities? - Part II

In last week's blog 'What will 2017 Bring to Seniors and Persons with Disabilities? - Part I' we discussed some of the key issues to watch out for in 2017 including Medicare and Medicaid reform. In Part II of the blog we continue our review of potential impacts on legislation that affects seniors and persons with disabilities.

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Affordable Care Act

Republicans are already moving to repeal and replace Obamacare. The question is: How much will be repealed? There are several programs included in the ACA, not related to traditional health insurance, that are important to elder law attorneys and their clients. For example, Medicaid expansion, a kind of Medicaid reform, is part of the ACA.

The ACA also includes programs that work toward ending the institutional bias in Medicaid. One is Community First Choice, a state plan that provides home- and community-based services. Currently it has an extremely low-income threshold so it’s a limited population, but it’s a start.

Another is Money Follows the Person, which pays for transition services. For example, it could provide extra funds to help someone leave a nursing home, by paying for a housing coordinator to find an apartment, a roommate, buy basic furniture and so on.

We are moving toward home- and community-based service, which many people favor. How will that interact with Medicaid reforms? Because they are optional, some fear that with per capita caps, these services will be among the first to go. There may be more opportunities to expand these services through block grants because they allow more flexibility in what is offered. Along this line, Senator Chuck Schumer (D-NY) has introduced a bill called the Disability Integration Act, which would make home- and community-based services a civil right.

Other Medicaid-Related Issues to Watch

Limiting home equity: This proposal, H.R. 1361, would take away the state option to expand the cap for single individual home owners. It would not impact people who have a community spouse living in the home or if you have a disabled child or a dependent under 21. 

Medical liability reform: This could impact whether individuals get adequate access to personal injury settlements and funds that can be put into a special needs trust.

Long-Term Care Reform

There has been a lot of discussion on Capitol Hill about picking up the pieces on long-term care. After a decade, the market has completely collapsed. John Hancock just withdrew, and Genworth was bought out by a Chinese private equity firm. Republicans and Democrats agree on the problem, but there doesn’t seem to be common ground yet on a solution. The Senate Aging Committee is starting the process, which is a positive step. There are calls for catastrophic coverage, at least on the back end, and probably some sort of front-end coverage for two or three years. There may be some long-term care reform as part of Medicaid reform.

VA Benefit Rules

The new rules have been delayed again until at least April, 2017. Fixing the VA is a Trump priority. An important piece to what will happen with the VA is who Trump names to head the VA and Veterans Benefit Administration (VBA). 

Nursing home binding arbitration rules

Nursing homes must comply with binding arbitration rules to have access to Medicare or Medicaid funds. NAELA has been working with others to push CMS to ban pre-dispute binding arbitration. The for-profit nursing home industry association is fighting it and recently won a preliminary injunction in a Mississippi district court (American Health Care Association et al v. Burwell). We do not yet know if the Trump Administration will appeal this ruling and continue with banning binding arbitration for nursing home contracts. 

In Kindred Nursing Centers Limited Partnership v. Clark in Kentucky, the issue is whether federal arbitration acts overrule the state’s arbitration acts. The state of Kentucky has a law that says in order to waive the principal’s constitutional right to a jury trial, the agent must be given that specific authority within the power of attorney. Whether this is overturned is likely to hinge on President Trump’s pick to fill Justice Scalia’s vacancy on the Supreme Court.

 Conclusion

There are a number of issues that will be addressed in 2017 that can have significant impact on seniors and their loved ones, Veterans, and persons with disabilities. If you have questions or would like to discuss any of the issues raised here, please don’t hesitate to contact us.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops. Call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

 

Tags: disabled, seniors, Affordable Health Care Act, Veteran, VA benefits, VA, Medicaid, Nursing Home, Estate Planning, Elder Law, elder care, New estate tax law, new regulations, trusts, Nursing Home Costs, social security

What will 2017 bring to Seniors and Persons with Disabilities? - Part I

Posted by Dennis Sullivan & Associates on Thu, Jan 19, 2017

What will 2017 bring to Seniors and Persons with Disabilities? - Part I

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Donald Trump’s election and Republican majorities in both houses of Congress surprised much of the nation. With control of legislative and executive branches of government, the expectation is Republicans will finally be able to push through long-awaited legislation, as well as follow through on promises made by candidate Trump. And they are expected to move quickly.

We will summarize some key issues to watch out for in 2017 that affect seniors and persons with disabilities and continue to provide updates throughout the year.

What the Election Outcome Means in Congress

The House has remained in Republican control—about 45% Democrat and 55% Republican. The majority rules, so while the Democrats may have loud opposition, they don’t have a lot of power. Currently, Republicans are mostly united, but those in the Freedom Caucus (Tea Party Republicans) are deciding how they will interact with the Republican establishment. If they split, votes may be needed from Democrats to pass legislation.

The Senate is 48 Democrats and 52 Republicans. 60 votes are needed to prevent a filibuster (where senators can talk for hours and delay votes). But with budget reconciliation, only a simple majority (51) is needed to pass legislation in the Senate. Because they are all budget-related programs, the Republicans will try to reform Medicaid, Medicare and the Affordable Care Act (Obamacare) through budget reconciliation. Individual Republican senators will have a lot of power, as some may insist on additions or deletions to secure their vote. If the Republicans do not stick together for the majority, votes may be needed from Democrats. (Note: Budget reconciliation was used to pass the Deficit Reduction Act of 2005 and OBRA 93, which enacted big cuts that changed elder law—the lengthening of the transfer penalty, the change in the time of when that penalty applies, the move from trust.)

One thing to watch is who is going to run Health and Human Services (HHS), Centers for Medicare and Medicaid Services (CMS) and the Social Security Administration, especially considering how much is related to Supplemental Security Income (SSI). The people now in charge of staffing these agencies are conservative. For example, the person in charge of staffing the political positions at the Social Security Administration has called for privatizing Social Security in the past. Donald Trump has repeatedly said he doesn’t want to change Medicare and Social Security, but that may be changing. (See below.)

Tax Policy

Tax changes are expected as part of the budget reconciliation process. We are not sure yet if 2017 will bring major tax reform or just tax cuts, but tax rates are expected to decrease for both individuals and businesses. Candidate Trump called for elder care and child care tax deductions and/or credits. He has also stated his plan to eliminate the federal estate tax, then charge capital gains tax on everything over $10 million, with exemptions for family farms and small businesses.

We may also see some changes to the ABLE Act (Achieving a Better Life Experience), which passed in December 2014 and amended Section 529 Plans. Currently, ABLE allows people with disabilities developed before the age of 26 and their families to set up tax-exempt savings accounts, which can be used to cover qualified disability expenses such as, but not limited to, education, housing and transportation. Revisions in 2017 may raise the age to 46, allow those working to put in more money, and allow rollovers of these accounts. 

Medicare Reform

President-elect Trump started by saying he was going to protect Medicare and Social Security. After meeting with House Speaker Paul Ryan, he said he will modernize Medicare. Reince Priebus, incoming chief of staff, recently insisted that Mr. Trump won’t meddle with Medicare or Social Security. Instead, he has said he will focus on 1) improving the economy, which will reduce the debt and ease entitlement concerns and 2) save Medicaid, Medicare and Social Security without cuts while eliminating fraud, waste and abuse. 

But he is already encountering resistance from Republicans, who for years have claimed that a major overhaul to Medicare and other entitlements are needed to ensure they don’t go bankrupt; that entitlement reform is critical to reducing debt; and the longer they wait, the harder it becomes to solve the problems. Obama administration officials warned just last year that a central Medicare trust fund is projected to run out of money by 2028.

Yet Republicans are also encouraged by what some of the President-Elect’s Cabinet picks could mean for future entitlement reform. Representative Tom Price (R-GA), who replaced Paul Ryan as Budget chairman and sought to overhaul entitlement programs, is Trump’s pick for Health and Human Services secretary. Representative Mick Mulvaney (R-SC), a fiscal hawk and Freedom Caucus co-founder, will lead his White House budget office.

So, we will have to wait and see if President-elect Trump, his Cabinet members and leading Republicans will find a way to agree. Some reforming of Medicare may be part of the 2017 budget reconciliation, but with ObamaCare repeal and replace, tax reform and infrastructure as the immediate priorities, solving the decades-long problem of deficits in Medicare and Social Security will likely have to wait until after 2017.

In the meantime, we are seeing a tilt toward Medicare Advantage plans. These managed care plans (offered through HMOs) often have lower costs and provide benefits not covered by traditional Medicare and Medicare Supplement Plans, such as health club memberships and preventative educational programs for those with diabetes and other chronic diseases. 

A long-term goal for Medicare, which has been around since its founding in 1964, is premium support. Basically, the consumer would choose a plan from those offered through an exchange. The government would provide subsidies to companies, they would lower the premiums and then people would choose their plans. It’s not likely that this will replace Medicare as we know it, but it is an idea being discussed.

Medicaid Reform

President-elect Trump has called for block granting Medicaid. House Speaker Paul Ryan has called for it, too, and Republicans are looking at whether they can reform Medicaid through budget reconciliation.

Those who want to reform Medicaid are focusing on the FMAP, the federal percentage match that states receive through federal funding. This is based on per capita income of the state. For example, a rich state like New Jersey is a 1:1 ratio, while a poor state like Mississippi is about a 3:1 ratio. This means for every one dollar that Mississippi spends on Medicaid, they will receive three free extra dollars from the federal government. This can impact states’ budget decisions. For example, if the governor of Mississippi needs to cut costs, he will more likely cut education or infrastructure by one dollar, rather than cut Medicaid spending by one dollar and lose the three free extra dollars.

The idea of block grants has been around for about 30 years. They are attractive because there are fewer federal rules to comply with and the states can use the money however they wish. But block grants shift more costs onto the states, and governors tend to oppose that.

Another idea floating around is a per capita cap, which would give the states a fixed dollar amount per individual, based on Medicaid standard lines (the blind, aged, and disabled children and adults). It was first proposed by President Clinton, who also wanted block grants. A per capita cap may force the states to control Medicaid costs over time, but there is also a demographic shift to consider—the medical needs and costs for an 85-year-old are much greater than for a 65-year-old. Nursing homes and aging disability provider groups have a huge stake in this and would likely oppose it, as would some governors.

The cost changes may not be felt right away, but they will be noticeable ten years from now and that’s what Congress must plan for. There may be increased waiver flexibility for the states and provider taxes to offset states’ losses. We may also see reforms to make it easier to manage care.

We will be following changes in legislation very closely and will keep you informed as to how these changes affect seniors and persons with disabilities. Check back next week for Part 2 of this blog where we will discuss more anticipated changes in the law including the Affordable Care Act and VA Benefit Rules!

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

To learn more about elder care and how changes in the law may affect you,attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Nursing home care is more than $180,000 per year! Attend this FREE educational seminar to learn:

  • How to protect your home and assets from the costs of long-term care
  • How to stay out of the nursing home and access in-home care
  • How to make sure your spouse is not left financially ruined if you need nursing home care
  • How to access Veterans benefits to pay for long-term care

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop 

 

Tags: Medicare, Medicaid, seniors, disabled, Elder Law, Affordable Health Care Act, social security, trusts, Estate Planning, New estate tax law, new regulations, retirement plans, Nursing Home, Nursing Home Costs

The Importance of a Well Crafted Power of Attorney

Posted by Dennis Sullivan & Associates on Fri, Jan 23, 2015

The Importance of a Well Crafted POA | Massachusetts Estate Planning Attorney

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As we always tell our clients, a power of attorney is just as important, if not more important to you, as your will.  Yet most people pay far more attention to the drafting of their will and give their power of attorney (POA) little or no thought. 

A last will and testament establishes your desires as to whom and in what manner you choose to leave my possessions and assets when you die.  While meaningful to you, it is more relevant to the persons receiving those assets after you’re gone.  A power of attorney, however, is critical to your well-being while you are still alive. The power of attorney is used at a time when someone is at their most vulnerable, when you can no longer take care of your own affairs and need the assistance of the person or persons who has been designated as your agent(s).

However, setting up a power of attorney has always been an afterthought for many people.  Before computers, a common response to the need for a POA was to pick up a preprinted document from the stationery store, today’s version is to print the document from a website found on the internet, such as LegalZoom.com. Both usually contain language no more specific than “I give my agent the authority to do anything that I can do as a principal”. In fact the fine print on the site informs you that “We are not a law firm or a substitute for an attorney or law firm. We cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies.”  If that is the case, how could you rely on their “non-legal” documents to take care of yourself and your family?

 Even when an attorney drafts the document, many will use a one size fits all approach that can often be detrimental to the client.  I think that the ease with which this document can be created has led to the myth of its low value in the eyes of the general public. Nothing could be further from the truth.

Here is a recent situation that we faced in our office that serves as an example to highlight the importance of the document and how critical a role it plays in achieving our client’s goals and objectives. 

 

We had drafted the client’s power of attorney.  It contains language permitting the agent “to enter any safe deposit box or vault on which [the principal is] a signer and withdraw or add to its contents”.  The agent wanted to close the account and surrender the box.

The bank employee reading the clause concluded that this power did not include the ability to close out the box (although he agreed the agent could close the bank account).  This is a situation we have come across frequently, an evaluation of the document limited to the express language, rather than examining the document as a whole.  Courts have reasoned that the whole document must be examined, and each clause should be used to interpret the others.

If the agent has the power to remove and add contents to the safe deposit box then he has the power to “deal with” the box and therefore has an implied power to open and close the box.  We could have had relied in this argument with the bank, however, there was another paragraph in the document that permitted the agent to conduct any banking transaction authorized by a specifically referenced Massachusetts statute.  I pointed out to the bank employee the specific language in that law authorizing the agent to open and closed safe deposit boxes.  What could have been a long, drawn-out problem was solved quickly through a carefully worded power of attorney.

In our 27 years helping people and their families, I have had numerous instances in which third parties, usually financial institutions, question the language in our documents.  As a result, we are constantly updating them.  The take away here it to make sure you have a detailed, well drafted power of attorney.  Don’t opt for the vague, 2 page, cookie-cutter documents printed off the internet.  It could easily be one of the most costly mistakes you ever make.

 

For more on the mistakes and oversights that can affect people and their families, take a look at our new book: The 10 Biggest Estate Planning and Asset Protection Mistakes People Make and How to Avoid Them! 2nd edition, now including the special bonus chapter, The Biggest Long Term Care Planning Oversights and Opportunities for Long Term Care

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: probate, durable power of attorney, trusts, power of attorney, transfer of assets, Wills

Supreme Court Case Puts Inherited IRAs at Risk!

Posted by Dennis Sullivan & Associates on Thu, Jan 15, 2015

Supreme Court Case Puts Inherited IRAs at Risk | Massachusetts Asset Protection Attorney

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A landmark case before the U.S. Supreme Court holds that Inherited IRAs are not protected from creditors. One June 12, 2014 the U.S. Supreme Court handed down its opinion in Clark v. Rameker, which questioned whether or not an inherited IRA could be shielded from Bankruptcy. Heidi Heffron-Clark inherited an IRA from her mother in 2001 and filed bankruptcy 9 years later, the question was whether she could keep the assets held in the IRA.

The Court unanimously held that retirement funds inherited by a beneficiary from the original plan participant are not considered to be “retirement funds” within the meaning of the federal bankruptcy exemptions found at 11 U.S.C. §522(b)(3)(c).

A clear legal distinction was drawn between an inherited IRAs and those that you set up for yourself. An inherited IRA has several unique features that suggest they are not retirement assets, which were noted by the Court. Unlike IRA owners, inheritors can’t add additional funds to the account, but they can take out money at any time without penalty. Usually a participant’s own IRA is subject to early withdrawal penalties if taken out early, unlike an Inherited one. Generally, non-spousal beneficiaries of an IRA must either withdraw the entire amount within five years of the original owner’s date of death, or take out a minimum amount each year, starting by December 31 of the year after the date of death. This is true for both Roth and Traditional IRAs.

What You Can Do To Protect The Inheritance For Your Beneficiaries:       

The upshot is that Clark v. Rameker argues very strongly in favor of setting aside retirement accounts that will pass upon the death of the plan participant into a special type of trust designed to both protect inheritances from future creditors of the beneficiary, but also to ensure that the trust will qualify as a Designated Beneficiary under the Internal Revenue Code.

A Retirement Plan Trust can be created to protect all of your inheritable retirement accounts. In creating this type of trust, you are using the trust as your beneficiary instead of the individual. The beneficiary of the trust will be the original individual you wanted to benefit from your protected retirement account. This is what many would call a “work around”, which is possible even with the new supreme court case.

For more information on how to protect your IRAs, click here to download our Free Report on the IRA Protection and Maximization Trust.

 

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Protective Trusts, trusts, Tax on IRAs, trust, IRA, Inheritance, Supreme court

A Tale of Two Plans

Posted by Dennis Sullivan & Associates on Mon, Nov 24, 2014

A Tale of Two Plans | Massachusetts Elder Law Attorney

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Lifestyles of the Rich and Famous

Estate planning attorneys and their clients alike are interested in the lives of the rich and famous. From star athletes to established Hollywood super stars to up-and-coming musicians; we’re all guilty of reading up on other people. There is one thing that estate planning attorneys know that their clients probably don’t: that the type of estate plan you have dictates just how much information about your life, health and financial affairs will be publicly available about you after you pass on.

Everyone Will Know

George Washington’s Will is available to anyone who walks into the Fairfax County, Virginia, courthouse, or with a short search, anyone with an internet connection. It’s not just the Wills of historical or political figures that are available either.

If someone dies with only a Will in place, it is very easy to find out all about their assets and final wishes. Except in the rare instance of a local law to the contrary, the Will of every person (who died with one admitted to probate) is available for inspection in the locale in which they resided at death. The assets controlled by the Will are inventoried and that inventory is also a public record.

Unless You Have a Trust

While some clients may not care about privacy, others would be startled to think that a listing of their assets would be available to their nosy neighbors, distant relatives, and anyone trolling through public records.

With a trust, the terms are private and your assets are private. Some clients may not care about costs or delays their heirs may encounter after their death, however, many of those will care about their ongoing privacy as well as their families. This can be especially useful in preventing predatory lawsuits and leaving assets to someone who is going through hard times who may not wish to advertise an unexpected influx of cash.

Two Different Approaches

Recently, the privacy of differing plans was illustrated by the unfortunate deaths of actress Lauren Bacall and comedian Joan Rivers. Bacall’s estate plan utilized a Will as the primary vehicle, while Rivers’ plan used a Trust as the primary vehicle for her assets. By using a Trust to pass on her assets to her heirs, Rivers plan and the extent of her assets are not available for anyone but her attorney and her those she left her assets to. Bacall’s plan on the other hand, left her instructions, plans and assets laid bare for anyone with an interest to see. Her assets will be inventoried and that inventory, along with her Will, shall be available in the “Surrogate’s Court” in Manhattan, where she lived.

Research shows that 86% of trust & estate plans fail! In Our Newest book we reveal what the ten biggest estate and asset protection mistakes are and how to avoid them. Learn where problems may exist in your current plan, and where there may be hidden opportunities in your plan to protect your home, spouse family and life savings. Click here for more information.

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click here for more information on  Estate Planning and Asset Protection

Tags: Estate Planning, probate, trusts, Wills, privacy

A Lack of understanding with Wills

Posted by Dennis Sullivan & Associates on Fri, Nov 21, 2014

A Lack of Understanding with Wills | Massachusetts Estate Planning Attorney

6.18.12

 

A Common Misconception

Many people think a Will, will control how their assets will pass after they’re gone, yet most assets today pass outside of Wills. For example, assets held in joint tenancy pass to the surviving joint tenant. If there is a surviving named beneficiary (as there are on retirement accounts, POD, TOD and life insurance plans), then those assets held as such will pass to the surviving named beneficiary. Your other assets that do not have those designations pass pursuant to your Will.

 

Example A

Joe’s Will left his estate equally to his four children with each getting 25%, however, Joe named his oldest child, Todd, as the sole beneficiary on his life insurance policy. As a result, Todd got all of the life insurance and 1/4 of the Probate estate. The other three children each get 1/4 of Joe’s Probate estate, but none of his life insurance. Todd refused to share the money from the insurance policy, leading to bitterness and estrangement from his siblings. Joe had made the all too common mistake of assuming that his Will would control everything, and as a result his children were left confused and angry by his poor planning.

 

Example B

When she was younger and still single, Jill named her sister Mary as the beneficiary on her retirement plan at work, and her life insurance policy. Jill and Mary purchased a first home with joint tenancy; both sisters lived in and shared the house. A few years later, the sisters had a falling out and Jill got married. Subsequently Jill changed her Will to leave everything to her husband.

However, because Jill never changed her beneficiary designations on her retirement plan or on her life insurance, or the joint tenancy on the house she and her sister had purchased; the bulk of her estate passed to Mary on Jill's death and not to Jill's husband. An additional complication came in when Jill's husband sued Jill's sister to assert a spousal community property interest in Jill's retirement and the house.

 

The Solution

These problems, and many others, can be avoided by properly using a Living Trust as the basis of your estate plan. Aside from the greater control a Living Trust provides, greater privacy, more flexibility and it is harder to challenge since it avoids the ordeal of probate. While a Living Trust may not be the best solution to every estate planning problem, it is a wonderful tool to have at hand. As always, we recommend consulting an estate planning professional when drafting your estate plan and documents. We also highly recommend updating these documents at least every three years to make sure that your assets will be going to the right people in the right amounts.

 

Research shows that 86% of trust & estate plans fail! In Our Newest book we reveal what the ten biggest estate and asset protection mistakes are and how to avoid them. Learn where problems may exist in your current plan, and where there may be hidden opportunities in your plan to protect your home, spouse family and life savings. Click here for more information.

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

 

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Estate Planning, probate, trusts, transfer of assets, Wills, joint tenancy

Is Your Will Doing What It's Supposed to?

Posted by Dennis Sullivan & Associates on Mon, Oct 20, 2014

Is Your Will Doing What It’s Supposed To Do?

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A $500,000 Mistake

Rebecca called after her husband, Peter had died.   She had questions about his will and his 401k.   Rebecca was Peter’s second wife and he had two daughters from his first marriage.  Between his first and second marriages, Peter had designated his daughters as the beneficiaries of his life insurance and 401k and had changed his will to leave everything to them as well.

After they married, Peter changed his will to leave some of his assets, including his $500,000 401k, to Rebecca.  The home he and Rebecca lived in, but which he owned, he left to his daughters, but provided Rebecca with the legal right to live there.  The life insurance he didn’t change.  His daughters remained the beneficiaries.   So just what was the problem?

Rebecca was told by the 401k custodian that Peter never changed the beneficiary designation to her.  As such, she was told, they must pay Peter’s daughters, not Rebecca, despite what the will says.  Understandably, Rebecca didn’t like that answer. This unfortunate result could have been prevented with #3 in our unique 19 Point Trust, Estate & Asset Protection Review.

Wills On Their Own Aren’t Enough

The reason Rebecca couldn’t get the money Peter had meant for her was because wills do not automatically control how all property passes.  The Will only applies to what are called probate assets, those that pass by way of the will.  Non-probate assets, such as retirement accounts and other assets which have beneficiaries designated upon death, are not governed by the will.   That was why Rebecca wasn’t able to get the 401k that Peter had intended for her. For more information on this subject take a look at the Special Bonus Chapter The Biggest Long Term Planning Mistakes in our new book, The 10 Biggest Estate and Asset Protection Planning Mistakes People Make And How to Avoid Them! Available soon on Amazon.com soon

She asked me if I thought a lawsuit could force the 401k custodian to pay the account to her because the will clearly states Peter’s intent to leave it to her.  She even showed me the paragraph in Peter’s will which makes reference to the 401k and his desire to leave it to her.

 

All Too Common A Problem

I told her about a case I had read about several years before which had many similarities to hers.  Just like in Rebecca’s case, a husband had died leaving his 401k to his wife, Sarah, via his will. Also just like Rebecca, Sarah couldn’t collect it and contacted an attorney. Sarah’s attorney filed a lawsuit to try to get a court to order the IRA custodian to pay a surviving spouse even though the beneficiary designation on file named someone else.  Not surprisingly he lost the case because the beneficiary designation trumps the will.  Retirement accounts are referred to as contract property.  There is a contract with the custodian that when you pass away they will pay the beneficiary whom you have designated and if there is none then the company has a predetermined set of beneficiaries (usually the “estate”) that they will pay.

So Now What?

In that other case, the only option Sarah had was to file a malpractice claim against the attorney who drafted the will because he should have known that leaving contract property by way of a will is impossible.  Unfortunately, that was the only option Rebecca had at this point as well.  I couldn’t say whether she had a good malpractice claim.  She would need to speak to an attorney who does that kind of work.  But as far as getting it from the 401k account, I told her she’d lose out on the $500,000, a very costly mistake indeed.

This is why we always tell our clients that a will by itself is never enough on its own. Less experienced attorneys will often make the mistake of listening to this common misconception, and it is their clients who wind up paying the price.

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: Estate Planning, trusts, Wills, Beneficiary

Ten Estate Planning Success Tips

Posted by Dennis Sullivan & Associates on Mon, Oct 20, 2014

Ten Estate Planning Success Tips

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Have You Planned for the Future Yet?

So you’re worried about the future, you want to make sure that not only your spouse, family and property is taken care of when you pass, but you want to make sure you’re taken care of while you’re still here. There is a lot of information out there to sort through, some of it is conflicting, and all of it is confusing. Here are some basic tips to help you get started: 

  1. Update your documents regularly. We honestly cannot stress this one enough. Keep your legal residence address, marital status, children and their potential guardians, and other documents updated. 
  1. Keep track of beneficiaries for all of your IRAs, qualified plans and insurance policies. Do you know who your beneficiaries are for these assets? If you don't, they may be going to someone you no longer wish to receive them, such as an ex-spouse. You can easily change the name of the person who will receive their benefits by filling out a form and submitting it. 
  1. Maximize the liquidity of your estate. Liquidity is defined as the ability to quickly turn assets into cash. Without sufficient cash to pay taxes, funeral, and other expenses, your family may have to sell illiquid assets - such as a family business or other property - at an inopportune time, and for less than full value. 
  1. Maintain an Appropriate Mix of Investment Risk. It's not the best idea to have too much money allocated to risk in stocks or mutual funds, as you age. Over time, more risky investments should be moved into safe and stable investments such as Annuities to ensure you are leaving an inheritance. 
  1. Name a dependable executor and/or trustee. Executors are called upon to collect assets, pay obligations, and distribute your assets. Your trustee must enforce all the provisions of any trusts you created. Choose someone who will have the knowledge, integrity and stamina to fulfil these obligations in the face of pressure from family members and lawsuits. 
  1. If you have minor children, consider naming one guardian for your minor children and another for the property you've left to support them, this will help ensure that your child will receive the full amount you’ve left them when they come of age. 
  1. Estate planning for your spouse or other sole survivor scenarios. If your net worth is high enough, your estate may be subject to taxes. A simple estate plan using trusts can save some individuals hundreds of thousands of dollars in estate taxes. 
  1. Make sure you are leaving the right assets to the right people with the right protections and provisions. If your child or other dependent has special needs or has been irresponsible with money in the past, you may not leave wish to leave them with the money to handle on their own. Make sure any minors receive much needed management assistance along with the cash. 
  1. Planning is even more difficult for business owners, who must plan for the succession and/or the buy-out of their business after they pass. Make sure any preparations that are needed for a smooth transition are taken care of. 
  2. Consult a professional. This may seem obvious, but we do have to say it. Estate Planning is a complex and difficult subject for most people to take care of on their own, and simple mistakes can cost you and your family tens or even hundreds of thousands of dollars. 

But Wait, There’s More!

Got all those taken care of? Well don’t relax just yet; there are still dozens of other questions you need to take care of before you’re done. Have you protected your assets from all unnecessary taxes? Have you established trusts that will be safe from predatory lawsuits? Are your documents up to date with the ongoing changes in laws, policies and eligibilities? Have you made sure to secure a portion of your assets in case you need nursing home care or are you planning to try and give everything away beforehand? These are things you need to take care of before your planning is truly complete.

 

At the Estate Planning & Asset Protection Law Center, we provide a unique education and counseling process which includes our unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click here for more information on  Estate Planning and Asset Protection

Tags: Estate Planning, probate, trusts, protection, Wills, Estate Planning Tip, 2014

Times Are Changing, So Are Tax Laws

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, Aug 26, 2014

The Tax Game Has Changed | Massachusetts Estate Planning Attorney

 

Tax planning, estate tax, trust, congress

 

The Old Ways Don’t Work Anymore

For years, estate planners have done what is considered traditional estate planning. They drafted plans primarily concerned with minimizing future estate tax liability and gave minimal attention to income tax consequences.

This was perfectly fine years ago when the estate tax was much more severe than the potential for income tax. This was attributable to relatively high estate tax rates, low estate tax exemption that was not indexed for inflation, and comparatively low capital gains rates.

However, Congress has tinkered with the tax system in a huge way. Accordingly, the income tax impact of estate planning is taking on greater significance, especially for Massachusetts residents.

 

The Tax Man Cometh

More attention shall now be directed toward the importance of income tax basis considerations in estate planning due to the narrowing between the estate tax rates and the income tax rates. In fact, in most estates worth less than $5.34 million, estate taxes are no longer an issue. Now, income taxes loom large, primarily because of the lack of attention on the income tax basis (i.e. cost or adjusted basis) of capital assets. Also state estate taxes have become critically important because of the lower $1 million threshold for estate taxes in states like Massachusetts.

 

Failing to Update Could Cost You

The bad news for most middle-class taxpayers is that for years they've been fed a steady diet of estate tax minimizing wills and trusts. Worse yet, they hang onto outdated documents for many years, thinking they are done with their estate planning and not wanting to be bothered. Sadly, these old documents will no longer serve their intended purpose of estate tax minimization. A major problem is also created when federal estate tax minimization plans, unless they are updated, will cause a completely avoidable Massachusetts estate tax for a married couple. While there may be no federal estate tax savings with these documents, because very few middle-class taxpayers will ever pay estate tax, the documents will increase income taxes for their heirs upon sale of appreciated assets. Moreover in Massachusetts, there may not only be a completely avoidable estate tax on an additional 1 million dollars, but it may also trigger a large, completely avoidable Massachusetts estate tax on the first death.

 

What to Do About a Completely Avoidable Massachusetts Estate Tax

Bottom line:  the game starts anew. Let's focus on income tax minimization for most taxpayers and forget about estate tax minimization. Unless your estate is worth more than $5.34 million, your biggest risk is Massachusetts estate tax as well as overpaying income taxes due to inattention to income tax basis planning in your wills and trusts.  Don't make that mistake. Review your documents today so that you eliminate these lurking tax problems

 

At the Estate Planning & Asset Protection Law Center, we provide a unified education and counseling process which uses a unique 19 Point Trust, Estate and Asset Protection Review to help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones, click here for more information. We provide clients with a unique approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Tags: massachusetts estate planning strategies, trusts, Nursing Home Costs, Mistakes, Tax on IRAs, Massacusetts Estate Tax, social security, Tax Savings, tax deductions, tax liability, tax exemption, tax reform, taxes, Massachusetts estate tax, transfer of assets, tax, trust, Nursing Home

Happy Holidays From Dennis Sullivan & Associates

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Fri, Dec 20, 2013

Happy Holidays, Estate Planning
Happy Holidays
Don%27t forget

 

How You and Your Loves Ones will benefit from the Special Features of your plan from the Estate Planning & Asset Protection Law Center

  • The Unique "Personal Asset Trust" (enhanced protection for your beneficiaries' inheritance from the claims of spouses and creditors, lawsuits, loss of government benefits, and estate taxes when they pass down their inheritance)

  • Unusual Flexibility (your Trust can adapt after your disabled or gone, to the changed needs and circumstances of you and your beneficiaries and to change in the laws-to help ensure your Trust carries out your original intent)

  • Often Overlooked HIPAA Provisions (so your spouse and other Successor Trustees won't be forced into court to gain access to your important medical information when you become ill or disabled  and important financial  and medical decisions need to be made right away)

  • The MassHealth "Trap Door" (The tools your Trustee may need to qualify you more quickly for government nursing care benefits should you ever need them, possibly without requiring your family to later pay them back, please note this planning must be coordinated well in advance)

  • The Lifetime Protection Program (free phone calls, follow-up notices, special invitation members only events, review meeting every year with you and your Successor Trustee, if you wish to invite them, to be sure your plan is properly maintained and carried out)

  • The Owners Manual (including everything you need to properly understand and implement your trust plan, such as a Trust Flow Chart, Funding Instructions, Location and Contacts List, Personal Property Memorandum)

  •  The Trustee Manual (so your spouse or other Successor Trustee knows exactly, step-by-step, what to do and not to do, if you become ill,disabled or pass away)

  • Veteran's Benefit Planning (for qualified veterans including free application coordination, which may be helpful for in-home care or assisted living facility expenses)

  •  The Beneficiary Manual (so your beneficiaries may properly "drive" their Personal Asset Trust "vehicles" to maximize its protective benefits)

  • The Health Document Emergency Card (so you know your Health Care Decision Documents will always be readily available if you're rushed to a hospital)

  • The Trust ID Card (so you can be sure to properly get and keep your assets in your Trust and avoid costly Court conservatorship and probate proceedings)

 Below is a way to help spread holiday cheer this year! Here's a recipe that every generation will have fun making!

Cocoa Thumbprints

Recipe courtesy Food Network Magazine

Total Time: 1 hr 15 min
Prep: 1 hr 0 min
Cook: 15 min
Yield: about 3 dozen cookies
Level: Easy


Ingredients
1 1/2 cups all-purpose flour
3/4 cup granulated sugar, plus 1/2 cup for rolling
1/2 cup unsweetened Dutch-process cocoa powder
1 teaspoon baking powder
1/2 teaspoon salt
6 tablespoons unsalted butter, melted
2 large eggs, lightly beaten
1/2 cup confectioners' sugar
Sprinkles, mini marshmallows, mini candies or dried fruit, for filling

Directions
Whisk the flour, 3/4 cup granulated sugar, the cocoa powder, baking powder and salt in a medium bowl. Add the melted butter and eggs and stir until combined. Cover and refrigerate the dough until firm, about 30 minutes.

Preheat the oven to 325 degrees F. Line 2 baking sheets with parchment. Place the confectioners' sugar and the remaining 1/2 cup granulated sugar in 2 separate small bowls. Roll scant tablespoonfuls of dough into balls; roll in the granulated sugar and then in the confectioners' sugar. Place 1 inch apart on the prepared baking sheets. Lightly flatten each ball with your fingers and make a deep 1/2-inch-wide indentation in the centers with your thumb. Place your choice of filling in the indentation.

Bake the cookies until puffed and slightly cracked, about 10 minutes. Let cool 3 minutes on the baking sheets, then transfer to racks to cool completely.

Click Here to Register For Our Trust, Estate & Asset  Protection Workshop

Recipe: Here

 

 

 

Tags: Estate Planning, trusts, Estate Planning, Estate Planning Tip, estate, VA benefit, Estate Planning Recommendations, 2014, Dennis Sullivan

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