Trusts Aren’t Just for the Wealthy Anymore!

Trusts Aren't Just for the Wealthy AnymoreMany clients who initially come to visit me regarding their estate plan say “I need a Will” or “I need to update my existing Will.”  They automatically assume that since they don’t have a taxable estate (since the estate exemption amount is over $5 million and indexed to rise with inflation), they don’t need a trust.

 

Blended Families

The trust couldn’t be farther from the assumption.  These days, trusts provide even more versatility in estate planning.  If you have a blended family (e.g. second marriage with children from a prior marriage), trusts are a great tool to ensure that even if you pass away first, the assets you leave behind may be there for the benefit of your surviving spouse during their lifetime while also ensuring that your children from your first marriage receive anything remaining at your surviving spouse’s death.  A trust allows you to “lock in” your estate plan.  If you leave everything to your surviving spouse under a Will, your surviving spouse can spend all of the money to the detriment of your children from your first marriage.  Worse yet, your surviving spouse may choose to get remarried and execute a new estate plan that leaves all your hard-earned assets to someone you never knew.

Asset Protection

Perhaps you want to ensure that the inheritance you leave to your beneficiaries is for their benefit and no one else.  If you leave the assets to them outright, as is the norm under a basic Will, your beneficiaries inherit the assets in their own name.  If a beneficiary is going through a divorce (now or at some point in the future), those assets are subject to the equitable dissolution requirements and may be seized by your beneficiary’s soon-to-be ex-spouse.  By utilizing various trust-based methods, you can ensure your beneficiary receives the full benefit of all assets inherited from you.  This is true not only for a soon-to-be ex-spouse, but also a judgment creditor for a beneficiary who runs into financial distress or is found liable for a car accident or some other mishap.

Beneficiaries with Special Needs

If you have a beneficiary with special needs who is receiving benefits based upon financial need, an inheritance could disqualify that beneficiary from those benefits until all of the inheritance is spent down on permissible items.  Many families intentionally omit such beneficiaries from receiving an inheritance for exactly this reason.  Some even allot an additional amount to a trusted child who will hopefully take care of the beneficiary with special needs by oral agreement (which may/not happen and still subjects that inheritance to that beneficiary’s creditors and potential creditors), but that’s not necessary.  A special trust may be established to ensure your intended inheritance goes for the benefit of your beneficiary with special needs without disqualifying the beneficiary from those much-needed financial needs-based benefits.

Other Considerations

The controls and stipulations you may draft into a trust regarding a beneficiary’s entitlement to inheritance are pretty much only limited by your imagination (and public policy).  If you have certain concerns about a beneficiary receiving their inheritance outright and would like to schedule their inheritance payments out over a specified period in specified amounts, you may do so.  If you would like to require a beneficiary to be gainfully employed or graduate a certain level of education before receiving an inheritance, you may put those “strings” on an inheritance as well.

In sum, the flexibility and creativity allowed by trust-based planning is far beyond what a basic Will allows.  To learn more about trust-based planning, click here.

Posted in Estate Planning & Administration | Tagged , , , , , , , | Leave a comment

Funding Final Expenses

Funding Final ExpensesNo one likes to think about or discuss the “elephant in the room,” but we all know the familiar adage “there’s nothing certain but death and taxes.”  Despite the certainty of death, most Americans don’t plan for it.  Sadly, when the time comes, the family is left with a lot of decisions to make during a time of grief and ultimately a sizeable bill once decisions are made.

Did you know that there are crowdfunding sites specifically geared toward funding a loved one’s final arrangements?  With funerals exceeding $7,000.00 these days, families are having a difficult time finding a way to pay for desired arrangements and look toward these sites for donations from friends and family.  Gone are the days of memorial flowers or a charitable donation; these days, it’s the final arrangements funding that memorializes a lost loved one.  This does not have to be the case; there are numerous options for you to plan ahead for your own death, which may be one of the most endearing decisions you leave behind for your family.

You should let your final wishes be known, whether you discuss your wishes with family or simply leave a writing.  Let them know whether you would prefer to be buried or cremated, where you would like your remains to rest and any other preferences you have.  Better yet, once you’ve made your decisions, go ahead and prefund your final expenses.  You can pay a funeral/cremation home directly or you can purchase a pre-need policy to fund your final arrangements.  By prefunding your decisions, you set aside funds today at today’s prices, so you can be certain the money will be available to pay for your services in the future without having to worry about inflation and rising costs of the future.

Posted in Estate Planning & Administration | Tagged , , , | Leave a comment

Kelly M. Shovelin Appointed to NC NAELA Board of Directors

Kelly M. ShovelinFour Pillars Law Firm is excited to announce that Kelly M. Shovelin has been appointed to the Board of Directors of the North Carolina Chapter of the National Academy of Elder Law Attorneys!

Posted in Firm News | Leave a comment

Funding Long Term Care

Funding Long Term CareMany people don’t think about their potential long term care needs until they’re faced with the need for long term care.  When faced with the emotional and physical turmoil of a loved one’s long term care needs, families quickly learn how costly long term care is.  Sadly, long term care can easily devastate an entire life’s savings in a short period of time.

Even sadder still, families pay out-of-pocket for the high cost of long term care without realizing that there may be other options and possible financial assistance available to supplement those high costs.  All too often, families go online and research the disease afflicting their loved ones and look for support groups.  Families rarely consider meeting with an elder law attorney to discuss asset protection strategies.

If there is ever a time to reach out to an elder law attorney, it is when your loved one requires long term care.  An experienced elder law attorney may help protect your loved one’s life savings from devastation, while your loved one continues to receive the level of care you desire and expect for them.

As with many of life’s decisions, the decision to buy long term care insurance or to implement proactive asset protection strategies is preferable, but they are not the only options.  If you or a loved one is faced with the need for long term care, whether at home or in a facility, contact an experienced elder law attorney to discuss your options based upon your particular situation.

For more information on long term care asset protection planning, click here.

Posted in Elder Law & LTC Planning | Tagged , , , , , , , , , | Leave a comment

Do You Have an Inheritance “Right”

Do You Have an Inheritance RightEver seen the bumper sticker that says “I’m spending my children’s inheritance”?  You may have laughed about it when you saw it, but would you still be laughing if it were true?

Most children believe they will receive some form of inheritance from older generations, but the reality is that notion is quickly changing.  With medical advancements enabling people to live longer and the financial strains that are hitting everyone hard, the truth of the matter is that many aging Americans will not leave behind an inheritance.  Worse yet, you may spend some of your own savings trying to properly care for your parents later in life.  So, don’t think you have an inheritance “right” that will be fulfilled.

Moreover, even if your parents are able to leave you an inheritance, don’t fail to consider that they may have chosen to do otherwise.  If you haven’t provided them the love and support they expected through the years, they may intentionally omit providing an inheritance for you.  Even if you are on good terms with your parents, perhaps they have charitable notions that extend beyond leaving a legacy to their children.  Having provided for children during life, some parents decide they would rather satisfy charitable inclinations upon their passing which may supersede children’s presumed inheritance.  In a nutshell, just because you’re a child doesn’t mean your parents have to leave you an inheritance.  There is no such thing as an inheritance “right,” especially when your family members intentionally provide otherwise.

Posted in Estate Planning & Administration | Tagged , , , , , , , , | Leave a comment

Is Guardianship Necessary?

2014 Tax Filing Requirements for SeniorsAs parents age, many children have to grapple with the fact that they may have to begin making financial and healthcare decisions on behalf of their parents.  Normally this comes about due to cognitive issues from which a parent is suffering, but it could simply be a matter of course that parents can’t stay on top of bills and payments the way they used to be able.  For others, it could be a parent’s unwillingness to surrender a driver’s license or accepting that the home may not be the safest place to live anymore.

In the face of trying to talk to parents regarding these concerns, many children automatically come to the conclusion it will be safest and easiest to have the courts determine their parent(s) incapacitated so a child can be appointed guardian and a parent no longer has a legal right to make such decisions.

Guardianship, however, comes at a cost.  It’s not simply a financial cost.  Once a guardian is appointed by the courts, the courts oversee any payments out of the incompetent person’s (ward’s) money and often prevent the ability to do asset protection planning in the face of the long term care needs and expenses of the ward.  Perhaps most important of all, however, is that being determined incompetent by the legal system diminishes the self-worth and autonomy of an individual and should serve only as a last resort.

If a parent has not performed proper estate planning by executing a Durable Power of Attorney and Healthcare Power of Attorney, the family may be left with no other resort than the courts.  However, if a parent has performed proper estate planning, it is often feasible and in everyone’s best interests to stay out of the courts and guardianship proceedings.  With a proper estate plan, parents entrust children (or other agents they authorize) to make financial and healthcare decisions should they no longer be able to do so.  Oftentimes, by working with a parent’s physician and an experienced elder law attorney, children can understand their role and even become empowered in fighting for their parent’s best interest through proactive advocacy without court intervention.

Elder law issues parents and children face such as the ones mentioned above are best handled privately through family and a parent’s trusted medical and legal professionals.  If your parents have executed proper estate planning documents and you are grappling with how best to become empowered so as to manage and protect their best interests, don’t jump directly into guardianship.  Instead, seek the counseling and guidance of an experienced elder law attorney.

Posted in Elder Law & LTC Planning | Tagged , , , , , , , , , | Leave a comment

Happy Fourth of July

The Disabled Military Child Protection ActHappy Independence Day from Four Pillars Law Firm!

Posted in Firm News | Leave a comment

Supreme Court Rules Inherited IRA’s not Bankruptcy-Protected

Supreme Court Rules Inherited IRAs Not Bankruptcy-ProtectedIn a sweeping decision in Clark v. Rameker, the U.S. Supreme Court held that funds in an inherited IRA are not protected in bankruptcy.  The Court’s analysis focused on key legal distinctions between the type of IRA you set up and fund yourself and the type that you inherit as a beneficiary from someone else upon their death.  In making this ruling, the Court clearly holds that an inherited IRA is an asset of the bankruptcy estate and may be used to satisfy creditors’ claims.

In making this holding, the case clearly favors establishing special trusts as beneficiaries of retirement accounts that do allow for the creditor protection not afforded individual beneficiaries.  For more information on this type of trust, please visit:

Four Pillars Law Firm- IRA Inheritance Trusts

Four Pillars Law Firm- Advanced Estate Planning

For more information on the holding of Clark v. Rameker, click here.

Posted in Estate Planning & Administration | Tagged , , , , , , , , | Leave a comment

All Things Considered

All Things ConsideredWhat’s the fastest growing group of individuals in the United States? Those who are 85 years and older. And what’s one of the key needs for this group? Social support.

Read more here.  Or listen to these clips from All Things Considered, the flagship news program on National Public Radio.

When Older People Walk Now, They Stay Independent Later

‘Silver Tsunami’ And Other Terms That Can Irk The Over-65 Set

A Cartoonist’s Funny, Heartbreaking Take On Caring For Aging Parents

Why Bring Up Death When We Could Talk About ‘Something More Pleasant’?

Posted in Four-Cast | Tagged , , , | Leave a comment

Kelly Answers the $64 Question

Kelly with Tom PecharDid you know that The $64 Question was a popular radio quiz show? During the 1940s, “That’s the $64 question” became a common catchphrase for a particularly difficult question or problem.  When the show moved to television, it became The $64,000 Question!

Recently, Kelly was interviewed on the Cape Fear Seniors Radio podcast.  She donned her best ‘radio voice’ and had a great time chatting with host Tom Pechar.  She answered all sorts of “$64 questions,” such as how she came up with the name Four Pillars, why we think creditor-protected trusts are the best way to set up inheritances, and the reason we personalize our services for the individual families with whom we work.

You can listen to the 25 minute interview here.

 

 

Posted in Four-Cast | Tagged , , , , , , , , , , , , , , , , , , | Leave a comment