Asset Preservation Archives | K.T. Williams Law

Long Term Care Insurance: Don’t Overlook It.

Over the years, I’ve worked with countless families. Many of them have been facing what we will probably face at some point: how to pay for nursing home costs, assisted living, or in-home care for an aging family member.

Rarely does anyone want to see their life savings spent on nursing home or similar care. For most people, any other option seems better than that. Estate planning that includes planning to pay for those costs provides some alternatives. And for some people, due to health or other reasons, estate planning may be the only option. But for many others, long term care insurance would be the best option. No one should overlook long term care insurance as they consider how they’re going to pay for care as they age. Just this week, I was reminded of the benefits and peace of mind given a family whose loved one planned ahead with long term care insurance.

Does Long Term Care Insurance Only Pay For Nursing Home Care?

No. Most long term care insurance policies cover the cost of care in a variety of settings, including in-home and assisted living in addition to the nursing home. In contrast, the estate planning/elder law planning options may only result in nursing home costs being covered by Medicaid. The in-home care and assisted living costs that may precede nursing home care remain subject to being paid out of our own savings. The insurance allows us more choices about where our care or our loved one’s care will be provided without incurring significant out of pocket expenses.

Does Long Term Care Insurance Protect Your Assets?

Long term care insurance can protect your assets in a couple of ways. First, it serves as the initial source of funds to pay for care. As a result, you aren’t dipping into your own pocket or your savings to cover the costs. If the cost of care doesn’t exhaust the benefits of the insurance policy, your savings may never be touched.

Additionally, if your insurance policy is part of the state’s long term care insurance partnership program, you get added asset protection. In addition to serving as the first source of payments for care, the insurance benefits paid for care will create asset protection (an asset disregard) in the event Medicaid is needed after exhausting the insurance policy benefits.

The partnership program policies work this way. If you have a policy that is part of the partnership program and it pays $200,000 in benefits before it is exhausted, Medicaid will disregard $200,000 of your assets when you apply for Medicaid. In other words, Medicaid will pretend that you don’t have $200,000 in assets that you really have. That means Medicaid won’t require you to spend the $200,000. Instead, you’ll keep it intact.

I’ve seen this in action recently, and the savings can be substantial. For the $200,000 policy, not only did the policy provide the first $200,000 to cover costs of care, the policy shields $200,000 of your life savings that Medicaid would have required you to spend before Medicaid starts paying. The combined benefit from this type of insurance is hard to ignore.

If You Don’t Use The Insurance, Are You Wasting Your Money?

No, although that is a common concern. When you buy insurance, you are buying a promise: the promise that protection is there if you need it. But do we really want to need this insurance? Probably not.

We would all prefer to live a long, healthy life that never requires in-home, assisted living, or nursing home care. But that is not likely. We know that we’ll probably need care in some or all of those settings. This insurance protects us when that happens.

The scenario with long term care insurance is similar to our automobile insurance and homeowners insurance. We may never file a claim on either of those insurance policies. Yet from the time we’re 16 years old, we’ll probably pay automobile insurance premiums. We don’t think we’ve wasted those premiums simply because we haven’t had a wreck. Instead, we’re glad we haven’t had a wreck. The same holds true for our homeowners insurance except we probably didn’t start paying homeowners insurance premiums until much later in life. Either way, though, we’re happy that we didn’t have to file a claim.

Also, there are many types of long term care insurance policies and several types of insurance that include coverage similar to long term care insurance. To learn about the variety that may be available to you, your financial advisor or a dedicated long term care insurance agent can help. Some policies are similar to your automobile insurance or homeowners insurance described above. With long term care insurance policies like those, there isn’t any remaining or residual value in the policy at death. Other policies containing benefits similar to long term care insurance may retain some residual value at death. You will hear them called hybrid policies.

How Do You Determine If Long Term Care Insurance Is Right For You?

You should get your estate planning/elder law attorney and your financial representative/insurance agent working with you and one another. As a team, you’ll discover what options are available to you and the benefits and costs of those options, and you’ll determine which is best for you. One of the most common regrets I hear when I ask if someone has long term care insurance is that they didn’t look into it soon enough. Our health affects whether we can qualify for the insurance, so don’t delay. Determine today that you will explore the long term care insurance options available to you. You don’t want the regret of having missed a good opportunity simply because you waited too long. I’m here to work with you and your financial representative/insurance agent on this journey. Contact us to get started.

Avoiding Problems: Inconsistent Beneficiary Designations

November 1, 2019/in Asset Preservation, Estate Planning /by KT Williams

At our death, we want our assets to benefit those who receive them. And we want our beneficiaries to receive them both gratefully and peacefully (without controversy from other potential beneficiary candidates). To avoid one problem that would stand in the way of these goals, make sure the beneficiary structure in your Will (or trust) and the beneficiaries on your financial accounts are the same. If they aren’t the same, then your Will (or trust) should say that you meant for them to be different.

Beneficiary Designations Are Good, But May Backfire.

Beneficiary designations for banking and investment accounts, such as Pay On Death (POD) or Transfer On Death (TOD) designations, have many uses, and they can be a helpful part of an estate plan. Those designations, like the beneficiary designations on your retirement accounts, tell the financial institution who the new owner of the account will be at the moment of your death. An account with a beneficiary designation doesn’t have to pass through your estate and won’t be subject to the probate process. That sounds like a good thing. Right? But the convenience you hoped to create by having beneficiary designations on your investment and banking accounts could instead backfire and cause problems among your beneficiaries, unless certain steps are taken.

Generally, the beneficiaries named in your Will (or trust) are the same beneficiaries you want to share in your accounts. But it’s not necessary that they be the same. The law doesn’t require them to be. Because the beneficiaries are usually the same and because the Will (or trust) is viewed as an expression of how you want your assets to pass, if the Will (or trust) and the beneficiary designations on your accounts are different, your beneficiaries are left to wonder why there is a difference.

The beneficiary who receives less than expected because an account’s beneficiary designation is different from the beneficiary structure of your Will (or trust) often presumes that a mistake was made or that you were unfairly influenced by the person who got more. If the beneficiary structure of your Will (or trust) and the beneficiary designations on the accounts had the same distribution pattern, there wouldn’t be the basis for the presumption. To avoid this problem, you should be careful to make the beneficiary structure in your Will (or trust) and the beneficiary designations on your accounts match. If you want them to be different, that isn’t a problem as long you take steps to make it clear that you knew there was a difference and that you intended it. In other words, if you want to avoid these problems, your Will (or trust) should say that you have intentionally created a different beneficiary structure through the beneficiary designations on your accounts. That will help show that someone didn’t take advantage of you or influence you unfairly to make an inconsistent beneficiary designation.

Working Together To Prevent Problems.

You, your financial advisor, and your estate planning attorney should work together to make sure that what you want to happen with your assets will happen with your assets. When you, your financial advisor, and your estate planning attorney work proactively as a team, you can avoid problems that might otherwise arise. If you have questions or want to be sure your Will (or trust) and the beneficiary designations on your accounts won’t pose a problem for you or your family, contact us. We will work with you and your financial advisor so that your beneficiary structures won’t stir up any unnecessary controversy.

Special Needs Trusts: The Basics – Continued.

October 11, 2019/in Asset Preservation, Estate Planning /by KT Williams

It’s difficult to overstate the benefits of a Special Needs Trust when one is needed. Often it covers a loved one’s unmet needs that remain after government benefits and family resources are exhausted. And it accomplishes this without causing the loved one to lose their government benefits, which might include SSI (Social Security Income), Medicaid, or housing benefits. You can find a deeper discussion of this here in an earlier article about Special Needs Trusts. In this article, I continue the explanation of Special Needs Trusts, describing the three (3) most common: First Party Special Needs Trusts, Third Party Special Needs Trusts, and Pooled Special Needs Trusts.

What Is a First Party Special Needs Trust?

A First Party Special Needs Trust is a Special Needs Trust created with the assets, or property, of the special needs beneficiary. In other words, the person with special needs owns or receives assets. If the assets would disqualify them from SSI, Medicaid, or other similar program, the assets can be placed in a First Party Special Needs Trust. When properly drafted, a First Party Special Needs Trust will permit the beneficiary to receive benefits from the trust without losing their government benefits, such as SSI or Medicaid.

While the First Party Special Needs Trust is a helpful tool, it comes with a trade-off. At the death of the special needs beneficiary, any assets left in the First Party Special Needs Trust must reimburse Medicaid for the benefits Medicaid provided the special needs beneficiary. In most instances, this payback obligation could have been avoided with careful advance planning. The assets could have been better preserved if a Third Party Special Needs Trust was used.

What is a Third Party Special Needs Trust?

A Third Party Special Needs Trust is a Special Needs Trust created with the assets, or property, of someone other than the special needs beneficiary. In other words, the person who wants to benefit the special needs beneficiary transfers assets, or property, into a trust established to benefit the special needs beneficiary. Through this Third Party Special Needs Trust, the special needs beneficiary can derive all of the benefits that he or she could derive from a First Party Special Needs Trust without the obligation to reimburse Medicaid at the special needs beneficiary’s death. Instead, the remaining assets can be distributed without restriction to other beneficiaries or charities, exactly as the family would want.

What is a Pooled Special Needs Trust?

A Pooled Special Needs Trust is similar to a First Party Special Needs Trust, but its unique characteristics make it a better option for many people. Occasionally, it’s difficult to find someone to serve as trustee of the special needs beneficiary’s First Party Trust. Perhaps, it’s difficult because the family is small or doesn’t have anyone capable of tending to the beneficiary’s needs. Or maybe it is difficult because the amount to be placed in the trust is so small that it isn’t practical to create a single trust for such a small amount. In those instances, a Pooled Special Needs Trust may be the best option.

A Pooled Special Needs Trust is a Special Needs Trust that is made up of the assets of many different special needs beneficiaries. The assets are “Pooled” and managed as a single trust with subtrusts, or accounts, set up for each beneficiary who contributed assets to it. Through the accumulation of many small contributions from a variety of special needs beneficiary’s, a Pooled Special Needs Trust is able to cover the cost of managing the assets and the special needs beneficiary’s needs at a lower cost to each beneficiary than if the beneficiary’s assets were the only assets in the trust.

Like the funding of the First Party Special Needs Trust discussed above, the Pooled Special Needs Trust is usually funded with the special needs beneficiary’s own assets, or property. And the similarity between the First Party and Pooled Special Needs Trust doesn’t stop there. In addition, at the special needs beneficiary’s death, the beneficiary’s family will not have control of the funds remaining in the subtrust, or account, or be able to direct where they are spent or distributed. Instead, the funds remain in the Pooled Special Needs Trust to cover operating costs, fees, and other administration expenses so that the cost to the other trust beneficiaries remains as low as possible.

Which Special Needs Trust Is Right For Your Family?

A Third Party Special Needs Trust is the best way to benefit a special needs family member or friend. It has all of the benefits of the First Party and Pooled Special Needs Trusts, yet allows remaining assets at the beneficiary’s death to pass to whomever the family directs rather than reimburse Medicaid (First Party Trust ) or remain in the trust to cover ongoing trust expenses (Pooled Trust). The First Party and Pooled Special Needs Trusts have their place and provide valuable benefits, but we only resort to those when we must. Be that as it may, we’re fortunate to have them available. If you want to learn more about how to set up a Special Needs Trust or simply have questions about other ways to benefit someone with special needs, contact us. We want to help.

Revocable Living Trusts: The Basics.

September 20, 2019/in Asset Preservation /by KT Williams

The Revocable Living Trust (Living Trust) is the most common trust-based estate planning tool. Compared to other planning options, it provides more flexibility and control for you. But that’s not all. There are other reasons why a Living Trust may be appropriate. We’ll explore some of those reasons in this article.

Misconceptions About Living Trusts.

Before we get too far in this article, I want to address some misconceptions about Living Trusts. Whether a Living Trust is right for you has little to do with your wealth, the size of your estate, or the type of assets you own. Anyone who says that you don’t need a Living Trust unless you are wealthy doesn’t know what they’re talking about. And they probably aren’t a dedicated Estate Planning/Elder Law attorney. We must be careful about where we get our legal advice, the same as we must be careful about where we get our health care advice. The truth about Living Trusts is very simple: whether a Living Trust is right for you is based on your goals and whether the Living Trust is the best way to achieve them. So a thorough evaluation of your goals and the ways to achieve them must occur before anyone can say whether a Living Trust is right for you.

What Is A Living Trust?

A Living Trust is a trust that is created during your lifetime outside of your Will. A trust created in your Will is called a Testamentary Trust. A Testamentary Trust doesn’t come into existence until after your death and your Will is probated in Court. A Living Trust comes into existence the moment you sign it and transfer an asset into it. The Living Trust can hold just about any asset you might want to transfer to it including bank accounts, investment accounts, personal property, and real estate. The Trustee of the Living Trust will hold and manage those assets according to the instructions contained in the Living Trust agreement. And the Trustee will distribute those assets according to the instructions, too. For example, the Living Trust might say that some of the assets in the Living Trust should be distributed to certain beneficiaries shortly after your death. The Trustee will follow those instructions and make the distribution. In this way, the Living Trust functions like a Will in that it directs distributions of your assets to beneficiaries. But unlike a Will, the Living Trust comes without the extra time and expense of court involvement and estate administration. Another advantage to the Living Trust explained in more detail below is the ability to distribute the assets over time rather than all at once.

Does A Living Trust Avoid Probate (Estate Administration)?

Probate, or estate administration, is the court-based process by which a person’s assets are collected, managed, then distributed after death by the Estate’s Executor or Administrator to the person’s beneficiaries or heirs. Probate can be time consuming, costly, and open to the public. If you want privacy, convenience, and lower costs, probate is not where you’ll find it. A Living Trust can avoid probate for you. To achieve this, you place your assets in the Living Trust so that they are in the trust that you control at your death rather than in your sole name which would require court involvement as part of your estate.

When Is A Living Trust Helpful?

People find Living Trusts helpful in many instances, but some instances are more common than others. For example, if the person you would want to be your estate’s executor has a busy life, isn’t local, or might find being in court stressful, the Living Trust is a simple way to allow them to handle your assets without the stress and extra time commitments of court involvement.

A Living Trust is also helpful when you want to benefit people over time rather than give your assets to them all at once. Many people want their assets to flow to the beneficiaries at intervals. With the Living Trust, you can structure the distribution so that the assets are distributed at whatever intervals you think will be best for your beneficiary. Also, a Living Trust is helpful when you want to protect your assets.

How Does a Living Trust Protect Assets?

Assets we pass all at once to our children or other beneficiaries through inheritance are immediately available to them to use in whatever fashion they desire. Perhaps, that is what you want. But problems can arise from such distributions. For example, if the beneficiary divorces after receiving the inheritance, the assets you passed to them could be lost to the divorcing spouse. Also, if your beneficiary dies after receiving all of the assets, the surviving spouse is likely to receive all of the assets and make them available to their new significant other who might not be favorable to your family. Most of us want our assets to benefit our family – that is, our children, grandchildren, and so on. We don’t want our assets lost to people outside our family. A Living Trust, with careful tailoring of its instructions and terms, can protect the assets you place in the trust from these scenarios while allowing your beneficiaries to reap the benefit of the assets you allocate to them.

Also, if you want to leave an inheritance for someone with special needs or who is receiving government benefits, the inheritance could cause them to be ineligible for future benefits or to lose their current benefits. You don’t want that to happen. Or they may be required to spend the inheritance within a very short time, perhaps a single month or less, to retain their government benefits. And you don’t want that to happen either. Fortunately, you can leave their inheritance in the Living Trust with terms crafted to address this unique situation so that the inheritance in the Living Trust could serve to provide important supplemental benefits to them without affecting the program benefits which may be vital to them.

Is A Living Trust Right For You?

A Living Trust could be right for you. But it depends. It depends on your goals. It depends on what matters to you. It depends on what you want to achieve with your assets. It depends on how you want your assets to affect the people who matter to you. Simply put, the only way to know if a Living Trust is right for you is for us to look at it together. We’ll explore the answers to the questions, then we’ll look at the different estate planning options that are available to you. Often this process occurs with input from your financial advisor, your CPA, and your insurance agent so that we can each continue to serve you best. Contact me to learn more about a Living Trust and other options to achieve your Estate Planning/Elder Law goals.

Elder Law: What Is It and Why Do I Do It?

September 13, 2019/in Asset Preservation /by KT Williams

You may regularly hear about Elder Law and think you need it. And you would probably be right. But you may wonder what it is. Elder Law is many things, but here is some of what it is:

• Protecting your assets and income from nursing home and other age-related costs;
• Navigating the maze of rules and laws that govern how nursing home care is paid, including Medicaid, so you don’t have to navigate it alone;
• Protecting your friends and family from abuse or substandard care by caregivers;
• Helping you or your family understand and qualify for Medicaid;
• Working with you and your financial advisor, CPA, and insurer to coordinate an asset and income structure that will keep you and your family comfortable for your lifetime;
• Helping you stay at home and avoid the nursing home if staying home is important to you;
• Many more….

You can see that Elder Law is about more than nursing homes and applying for Medicaid. It is also about more than protecting your assets. While Elder Law often includes these things, it also includes much more, such as the quality of your golden years.

Elder Law Is More Than Applying For Medicaid.

Many people think Elder Law is simply applying for Medicaid. And Elder Law often includes applying for Medicaid. We’re here to help when Medicaid is needed and to apply for the Medicaid benefits to which our clients are entitled. But Elder Law also involves more than the application. It involves understanding Medicaid and other programs to which senior citizens and the elderly are entitled so that, long before Medicaid benefits are needed, we can prepare our clients to maximize those benefits and get what they are entitled to receive.

Elder Law is More Than Estate Planning.

Estate Planning is traditionally aimed at helping you pass assets to the beneficiaries that matter to you. If those beneficiaries need help managing the assets or if you want to protect the assets for them, trusts are often involved. Elder Law is that and more. Elder Law prepares us for the future we are likely to face before we pass. But it’s a future we sometimes don’t want to consider: in-home and nursing home care when we aren’t able to care for ourselves. Elder Law considers the rest of your life and how you want to pass your assets after your death.

Elder Law Considers Our Future Needs.

You want to be comfortable with the amount of assets and income you saved. Also, you want to be comfortable that your assets will pass to the beneficiaries who matter to you. But there are other important questions to consider: are you certain you will have enough assets and income to cover your needs before you pass? And are you certain there will be assets left over to pass to those who matter to you? In other words, are you sure your assets and income won’t be lost to pay for nursing home care as you age? If you go to a nursing home without proper planning, your hope to pass your assets to loved ones may be misplaced. Nursing home costs quickly consume assets and income, leaving nothing.

While we may think we won’t go to a nursing home, nursing home care for us is almost inevitable. Studies show that at least 70% of us are likely to require nursing home care. And with costs nearing $8,000 per month and higher in some areas, few can afford it. Elder Law guides you toward an asset and income structure that will help make sure you remain comfortable, well taken care of, and in the place you want to live.

Elder Law Helps Us Live Where We Want.

You want to be comfortable where you live as you age. Perhaps, that is your home. You want the comfort of your own home as you age. Or maybe assisted living appeals to you. You know it can be costly, but you realize the benefits of assisted living can’t be overstated. Either way, you don’t want to be forced into a nursing home because you lack the funds to get care in your home or to cover assisted living costs. Through Elder Law planning, we work to make that happen if it’s possible.

Why Do I Do Elder Law?

I want my client’s wishes to be carried out. If they want to pass assets to their family, I want to help them make sure they preserve those assets to pass. Also, I want them to get the benefits to which they are entitled. Unfortunately, many programs designed to benefit the elderly and their family aren’t user friendly. And the customer service aspect of some of the programs has been lost. Rather than helping people understand the programs and the available benefits, the culture in these programs seems aimed at blocking people from the benefits they should receive. That’s not acceptable. And it means people need an advocate, someone who will listen to them, care for them, and help them. They deserve to receive what they’re entitled to receive without being mistreated, ignored, or abused. And their family is entitled to be heard, too. So I do Elder Law to make sure voices are heard, to make sure people get the benefits to which they are entitled, and to make sure their wishes are carried out. I enjoy what I do. Contact us to see how I can help you or your family.

How To: Prepare for your Estate Planning meeting

September 6, 2019/in Asset Preservation, Estate Planning /by KT Williams

Important appointments like those for our annual physical with our physician or for going over our tax returns with our accountant can be intimidating and stressful. You might feel that way about your upcoming estate planning meeting, too. But you shouldn’t feel that way. Instead, realize that the meeting is a great step toward securing and controlling your future. And to make the most of the meeting, here are a few tips to help you prepare for it.

What Do You Want To Accomplish? What Are Your Goals?

One of the first things I plan to ask you is what you want to accomplish through our working together. Is it to make sure your assets pass to certain beneficiaries? Is it to limit taxes? Is it to protect your assets from nursing home costs? Is it to make sure your children or spouse are protected in the event you die young or otherwise unexpectedly? Is it a combination of several of these goals? Give it some thought before the meeting. It’s not necessary that you are certain of your goal. But it’s helpful if you have given it some thought. We will explore it more deeply in the meeting and help focus our attention on achieving your goal.

Consider Your Family’s Unique Dynamic.

All of us are unique, and our families are unique. So, you and your family should be treated uniquely. You deserve it. You shouldn’t be treated as if you were no different than everyone else who wants to plan their future. When we meet, I’ll ask you about your family. And it’s important for you to be honest. If you have someone who isn’t good with money, you should say so. If you have someone with substance abuse problems, you should say so. If you have someone, perhaps a child, whose spouse is overbearing, untrustworthy, or deceitful, you should say so. This will help us form a structure for your estate plan that will provide benefits without the risk that their uniqueness will cause problems.

Know Your Assets.

Identify your assets, their value, and how they are titled. In other words, have a good idea about what you have and in whose name it is owned. That will help us determine the best way for your assets to be protected and passed to your preferred beneficiary.

Think About Who You Trust and Want In Important Roles.

Who do you trust to do what is in your best interest? Will they take care of your family members, too? The executor of your estate identified in your Last Will and Testament should have good organization skills, be able to handle finances, and not give in to undue pressure that might come from someone who doesn’t have the estate or its beneficiaries’ interests as a priority. Your Attorney-in-Fact under your Power of Attorney should possess the same qualities as your executor, and they can be the same person. The authority of the Attorney-in-Fact will end when the person who gave the authority dies. If you have a trust, your trustee should possess these qualities, too. The trustee will manage the trust assets, handle them for the trust beneficiaries, and follow the directions contained in your trust. Obviously, the trustee must be someone who is trustworthy. You should be confident the trustee will do what you want and will follow the instructions in your trust for the trust’s beneficiaries.

It will help us with your planning if you have the contact information for your family members and any non-family members who you want to serve in an authority position like those identified here. Having that information at the planning meeting isn’t necessary, but it will be needed before the planning is completed.

Keep An Open Mind.

The planning that was done for your friends or family might be similar to what is appropriate for you. But don’t count on it. You are unique. Your assets are unique. Your goals may be unique. So, your planning should be appropriate for your unique circumstances. That means you need to keep an open mind about what planning may be most appropriate for you and strongly consider the recommendation that is made by the expert who is evaluating your situation and recommending the best way to handle it.

Ask Questions.

Ask questions if you don’t understand something about your estate planning or that is discussed in the estate planning meeting. I always try to fully explain the topics we cover in the meeting, but some of the topics are more complex than others and more difficult to explain and understand. Your questions may be the only way for me to know you don’t understand. I want you to be confident about what you’re doing and why you’re doing it. But it is hard to be confident if you don’t understand what is being done and why it is being done. Always feel free to ask questions until you have a solid understanding.

Make An Appointment.

Getting ready for your estate planning meeting starts with making an appointment. The goals that matter to you will not be achieved if you don’t begin the planning process. So, schedule your estate planning appointment. We’ll take you through the process and make it painless and enlightening. When we’re finished, you will have taken care of an important and necessary task for you and your family, and you will have relief and confidence that you’ve done it well. Contact us to get started.

Preparing For The Unexpected… Sickness, Death, Or Expense: What Should You Do – Part 2.

August 23, 2019/in Asset Preservation, Estate Planning /by KT Williams

The benefits of preparing for the unexpected are wide ranging. Avoiding delay, saving money, and earlier care in a health crisis are just a few. In Part 1 of this series, we talked about important first steps to prepare for the unexpected. These steps included making lists of important information such as your bank accounts, investment and retirement accounts, insurance policies, real estate and other assets. Also, you were encouraged to compile a list of all of your electronic login credentials with the corresponding password. Our electronic footprint and widespread use of electronic media, accounts, and storage (our photos in the cloud for example) makes it necessary for us to keep our account login credentials handy for our use and for use by those who may need to help us one day.

Now What? You compiled all the information. What do you do next? In this, Part 2 of the series, let’s cover what you should do after gathering the information.

Keep the information current and updated. You spent valuable time locating, sorting, and compiling the information. Make sure your efforts pay off. Keep the information handy, easily accessible, and up to date. Otherwise, your efforts could end up wasted if the information can’t be found when needed or if it isn’t updated regularly. None of us want to waste our effort. You should check the accuracy of the information every six (6) months or sooner if you get a new electronic account or if your login ID or password changes for any account.

Build Your Professional Advisor Team and Use It. Most people rely on trusted professionals to guide them. Each advisor plays a vital role. And just like other teams that have players with unique skill sets, the members of this team have unique skill sets that serve an important purpose. Leaving a member out of this team could leave you unprepared. If you don’t have a full team, build it. It’s easy. It only takes a call, email, or message. And if you aren’t sure who should be on your team, get suggestions from the other advisors you use.

Financial Advisor, Insurance Agent, CPA, And Estate Planning/Elder Law Attorney. This is your team, and they should work together for you. We each have unique skills and experience, and we use these skills and experience to help you and those who matter to you. When you talk to your team members, tell each one you want them working together.

Preparing for the unexpected in your life justifies spending a little time with these professionals who see the unexpected every day. Your financial advisor, insurance agent, CPA, and estate planning/elder law attorney have seen unexpected and surprising life experiences in their clients and friends and have learned from them. We use that learning to better advise you so that you can avoid the problems others have faced so that you can take advantage of opportunities others have missed. Preparing ahead and being proactive about your future is time, effort, and money well spent. It’s the kind of investment that pays off for a lifetime.

Inform Your Spouse or Power of Attorney. If you are married, you and your spouse may have worked together in gathering all of this information. That’s good. It’s easy to forget in our busy life to tell our spouse something they should know, such as details about retirement options, beneficiary designations, and insurance elections that we may have available. Gathering the information together can help bridge the gap and make sure each of you are aware of your property, accounts, insurance, and retirement benefits. Even if you didn’t gather the information together, you should tell your spouse how to find the information if you intend your spouse to use it one day. If you aren’t married or if you don’t intend for your spouse to access the information, make sure your Attorney-in-Fact (that is the person you named as your agent in your Durable Power of Attorney) can access it. They may need it to help you.

Make Sure You Can Answer These Questions. There are several questions that you should be able to answer. They help determine if you are well prepared for the unexpected. If you can’t answer these questions or if you aren’t certain of the answer, contact your team and get to work. It’s not OK to simply say “some of these questions don’t apply to me because I’m too old or because I’m young and I have plenty of time to worry about it later.” These questions are too important to ignore. Here are a few of them.

1. How are you going to pay for nursing home care? Statistics show that at least 70% of adults will need nursing home care. Nursing home care costs approximately $7,000 per month in our region, and the cost is increasing rapidly. You could use all of your savings and hard-earned assets. That doesn’t sound good to me, and it probably doesn’t sound good to you either. There are plenty of other options. The other options may not be available if you don’t plan ahead.

2. Who is going to assist you and make decisions for you if you become incapacitated? You need a capable, trustworthy person who will take care of your financial and health care needs.

3. Has your estate planning, including your Power of Attorney, been updated to comply with changes in the law and with advances in technology. For example, your Attorney-in-Fact should have authority to access the electronic accounts and memberships you’ve created. If that authority isn’t specifically stated in your Power of Attorney, your Power of Attorney should be updated.

4. Are you taking all of the tax deductions and income exclusions that are available to you? The tax code is complex, and its complexity continues to grow.

5. At what age will you retire and what will your retirement income be when you retire? These questions can be answered even if you are many years from retirement. Helpful tools exist to calculate these figures and to forecast important trends. And this isn’t only for people who are near retirement. If you are young, answering these questions will help you boost your income later and, perhaps, put you on the right track for higher income soon.

6. Do you have the insurance coverage that you need? Insurance is often overlooked, but it is an important part of preparing for the unexpected. The amount and type of health insurance, Medicare supplemental health policies, life insurance, long-term care insurance, or home and automobile coverage that we need varies from person to person and with our stage in life. Reviewing this regularly with your agent and professional team is important. You want the right coverage, not too much and not too little. Be proactive in managing your insurance coverage.

Planning ahead and preparing for the unexpected is time well spent. We never regret planning ahead. But we regret when we don’t. Time is available. Take action now. Don’t wait for the unexpected to happen. Contact us for help.

Preparing For The Unexpected. . . Sickness, Death, or Expense: What You Should Do – Part 1.

August 9, 2019/in Asset Preservation, Estate Planning /by KT Williams

It’s easy to be get caught up in everyday life. And when that happens, it’s easy to forget that life is more than what it happening to us at the moment. If we don’t prepare for what lies ahead, we may miss some important opportunities. Here is a list of steps you should take to be better prepared for some of life’s unexpected twists and turns.

Make a List of Your Accounts, Insurance, and Automatic Transactions

Make a list. That seems simple enough. But you would be surprised how few people do this. Nevertheless, it is one of the easiest ways to locate missing money and to identify unnecessary expenses. Here’s what you should do.

Gather the most recent monthly statement for each of the bank accounts and credit card accounts that you have. Print the newest statement for any accounts that only come electronically. Now, make a list of each account number, the account balance at the last statement date, the name of the account owner, the address, telephone number, and location of the financial institution holding the account, and the financial representatives who help you with the account. If you have a username and password to access an account electronically, make sure you have it listed in a safe place, too.

Follow a similar listing process for your investment accounts. Then, focus on your insurance. On the list for insurance, identify your insurance coverage and policies that are in force. Make a list of the type of insurance it is, the policy number, the agent, and the insurance company. If you have life insurance, include the amount of the death benefit, the identity of each designated beneficiary, and the cash value if the policy has cash value.

Finally, while you have your account statements handy, review them for automatic payments, such as monthly membership fees or premiums. Automatic payments that are deducted from our accounts usually stop when we cancel the service that generated the payment, but mistakes happen. If we’re not proactive about reviewing our monthly transactions, we might overlook a recurring withdrawal that shouldn’t occur any longer. So take a moment to review your statements for recurring charges that are in error. If you find any, immediately follow up with the vendor who charged your account and request a refund of over charges.

Make a List of Your Real Estate

If you don’t own any real estate or own very little real estate, this part of the list will be short. Include the owner’s name, property address, value, and mortgage amount. Include with this list a copy of the deed you received when you acquired the property and a copy of the mortgage, too. If you own multiple pieces of real estate, include all of them on the list.

Make a List of Your Personal Property

Yes. Make a list of your personal property, too. How detailed you make it is up to you, but the more detailed it is, the easier it will be to identify value. For example, items holding nostalgic value today may have seemed like junk just a few years ago. Vintage signs, dolls, toys, and action figures are just a few of the items that may have seemed worthless years ago, but may be nearly priceless today. I encourage you to keep a detailed list.

Include on this list any tools, equipment, and raw materials that you may have accumulated over the years. Whether as a job or a hobby, you might purchase special tools or equipment. And when your interest is highest, you might purchase extra raw materials or inventory for the activity. As your interest changes, it’s easy to forget about this equipment or material. But it’s value may remain or increase. So be certain to consider the hobbies and outside interests that you’ve pursued over the years. You could have quite a bit of value sitting on a shelf or resting in a storage building or warehouse.

Meet With Your Financial Advisor, CPA, and Attorney

Preparing for the unexpected in your life justifies spending a little time with the professionals who see the unexpected every day. Your financial advisor, CPA, and estate planning/elder law attorney have seen unexpected and surprising life experiences in their clients and friends and have learned from them. We use that learning to help us better advise you so that you can avoid the problems that others faced and so that you can take advantage of opportunities that others missed. Preparing ahead and being proactive about your future is time, effort, and money well spent. It’s the kind of investment that pays off for a lifetime. For help in preparing for the unexpected in your life, contact us, and stay tuned for Part 2 where we’ll explore other steps you should take.

Tough Questions Prompt More Thorough Estate Planning: Protecting Our Family.

July 19, 2019/in Asset Preservation, Estate Planning /by KT Williams

When thinking about assets and their estate plan, most people focus on who they want to receive the assets at death. And that is an important question to consider. Everyone should know who they want to receive their assets, and everyone should take steps to make sure the assets will reach them. But if we stop there, some unexpected and unfortunate outcomes may occur. Instead, we should consider some tough questions that may prompt more thorough planning.

What If Your Surviving Spouse Remarries or Finds a “Friend”: Will Your Assets and Family Be Protected?

It’s common for married couples, especially those couples who have enjoyed a long marriage, to say they want their spouse to receive all of their assets. Often, the beneficiary designations on retirement accounts and life insurance policies mirror this idea. One spouse is named as the beneficiary for the other. The end result will be that the surviving spouse owns and controls all of the property the couple accumulated.

The surviving spouse as the sole beneficiary may work out well. They may be a thoughtful, caring steward of the property. And perhaps the surviving spouse will only use the property for their needs and the needs of the couple’s children and grandchildren. But what if, unsuspectingly, the surviving spouse meets someone, and a relationship grows. This relationship could blossom into marriage or a deep “friendship.” How does the new relationship affect our estate planning perspective? Usually, it makes a big difference.

Because of the enormous impact a marriage or deep friendship could have on a surviving spouse’s perspective and use of the property, most people want their estate plan to protect what they leave behind. The protections will not deprive the surviving spouse of anything. The surviving spouse will benefit from the assets and have access to the assets for their needs. But the protections will limit the ability of the new spouse or “friend” to take the property for themselves. The end result is that the assets won’t be lost to this new spouse or friend, and the surviving spouse will benefit from the assets as intended.

What If Your Children Get Divorced or Die Much Younger Than You Expect: Do You Want Their Inheritance To Stay In The Family?

When considering where their assets should go upon the death of the surviving spouse, most people with children want the assets to go to them. That makes sense. We want our children to benefit from our efforts. But what if your child gets divorced: will the inheritance be at risk in the divorce? Or what if your child dies much younger than you expect: will the inheritance you left to your child benefit your grandchildren or will it, instead, go to your child’s surviving spouse.

The law tries to protect an inheritance in the event of divorce. Rather than being treated as marital property to be split, an inheritance should be treated as non-marital property of the person who inherited it. But does it always work that way? No. That’s why it is wise to protect the inheritance from the risk of a child’s divorce. You can plan your estate so that your child benefits without losing the inheritance if the child divorces.

Even if the child doesn’t divorce, the inheritance could still end up in the hands of their surviving spouse. This happens when the child dies younger than we expect, and their own estate plan directed all of their assets to their surviving spouse. As we mentioned above, a surviving spouse may find a new spouse or “friend” whose intentions are not pure and who may want to get a piece of the inheritance. To avoid this risk, you can add protections into your estate plan so that your property stays in the family and benefits those in the family who you want to benefit: your surviving spouse, children, and grandchildren.

How Do You Protect Your Assets For Those You Love?

There are estate-planning tools that we can use to protect your assets from the risks mentioned. The most simple and effective one is a trust. Although some people may think of a trust as a one-size-fits-all concept, it is not. A trust is infinitely flexible. We can tailor it to meet your own unique needs and concerns. And through the trust, we can protect your assets for your surviving spouse so that benefits flow to them without losing all the assets to a new spouse or “friend.” And we can use a trust to protect the assets from a child’s potential divorce or their untimely death. That way, the assets stay in the family and benefit your children and grandchildren the way you want. Contact me to explore this and other ways to make sure your property will pass to those you want. We don’t want to see your property lost to others who may not care for your family the way you do.

New Retirement Account Rules: Are You Ready For A Change?

May 31, 2019/in Asset Preservation, Business /by KT Williams

The U.S. House of Representatives just passed a bill to change many rules about retirement accounts, such as Individual Retirement Accounts (IRAs). The bill now heads to the Senate for consideration. Although the Senate may change the bill, the retirement account rules will be changed sooner rather than later. There is simply too much support for change. Evidence of that can be found in the fact that the bill passed the U.S. House of Representatives on a 417 to 3 vote. That is an overwhelming margin. With so much support behind changing the rules, very little can stand in the way. So lets explore the proposed changes. They may not all make it into law, but reviewing them will give us a sense of the changes we may face.

Later Age For Taking Required Minimum Distributions (RMDs)

The law currently requires that a retirement account owner begin taking minimum distributions from their retirement account by the time they reach age 70 ½. Otherwise, severe penalties will be imposed.

Under the proposed law, an account owner can delay minimum distributions until they reach age 72. This will allow those who do not need distributions for their living expenses to keep their retirement accounts intact longer. As a result, it delays the income tax that must be paid when distributions begin. And it means the retirement accounts will not be as depleted at the owner’s death, so larger retirement accounts pass to beneficiaries. This proposed change may be a good one. But there are other proposed changes that offset it.

Mandatory Withdrawal of Inherited Retirement Account Balances: 10-Year Rule

The law currently allows the owner of an inherited retirement account to take distributions from the account in a variety of ways. With few exceptions, the owner must take distributions from the account each year. But rather than use the age of the deceased owner to determine the amount of each distribution, the age of the new owner is used to determine the amount of each distribution. Because the new owner is typically younger than the previous owner, the distributions and resulting tax burden are smaller than they would be if using the previous owner’s age.

Under the proposed law, the owner of an inherited retirement account must withdraw the full balance of the retirement account within 10 years of inheriting it. The effect of this change could be huge. For example, it will force the complete distribution of the account over a shorter span than under current law. This means a higher tax burden created more quickly, especially if the distributions from the retirement account push the account owner into a higher tax bracket. Additionally, if the inherited account owner planned to pass the account to their own beneficiaries, the account will not exist if the owner lives at least 10 years after inheriting it. And, after the full distribution, the funds remaining will be much smaller because of the higher taxes generated from the accelerated distribution schedule (10-year rule).

What Should You Expect?

You should expect change. With the eye of legislators aimed at retirement accounts, it is simply a matter of time before changes occur, and the changes are likely to be large. Although these proposed changes may not become law, changes are coming.

The best way to protect yourself from surprises and higher taxes is to be proactive. Evaluate your retirement accounts at least quarterly. And stay informed about how the retirement account laws affect you and how they will affect the beneficiaries of the accounts. Lower taxes and better protection for you and your family are just a few of the benefits you get from being actively involved with your Estate Planning/Elder Law Attorney, financial advisor, and accountant. Estate Planning/Elder Law attorneys, like me, along with your financial advisor and accountant are your financial team. We are here to help you each step of the way. Contact us. And let your friends know we are here to help them, too.