ASSET PROTECTION- WHAT DOES THAT MEAN

A person interested in conserving their assets and conveying them to the next generation may have heard of the concept of asset protection. You will find it is not as simple as giving your assets to the kids and hoping for the best.  The tools used vary greatly and one should consider the least costly and most efficient process after evaluation of all the possible solutions.  The difficulty is that asset protection can mean a lot of different processes and legal tools, some simple and some very complex.  This is an area where expert advice is absolutely required.

The general rule is that your assets should be available to satisfy your expenses and payment of your creditors.  In order to shield assets from creditor claims, it is necessary to anticipate and plan in advance the transfer of title to assets before the claims arise.  Otherwise, the transferring party has likely engaged in a fraudulent conveyance, which a court can reverse.  The various forms in which  asset protection can arise might be as simple as incorporation of improvements into personal residential property,  placing property in a limited liability company, forming a family limited partnership, creating a domestic asset protection trust, (which is an irrevocable trust), or creating an offshore trust, held in a foreign country.

The complexity and cost of such transactions varies greatly.  The right choice takes into consideration many factors, including your age, health, trustee selection, potential beneficiaries, potential liability sources, and goals.  When done well, the party creating an asset protection plan can rest knowing that their goal of preservation of property has been accomplished.

EXPLORING PRE NEED FUNERAL PLANNING

 

Pre-Need planning is a wonderful gift to those you love. As a rule of thumb, a pre-need funeral contract refers to the purchase of funeral goods and services before a person passes away. Why would someone want to pre-plan?

The pre-arrangement allows the person to speak directly to the funeral director about his or her own funeral wishes and preferences. By having pre-planning the service, the individual is providing significant relief to surviving family members from having to make decisions during a time of tumult and grieving in addition to relieving the survivors from a financial burden. Additionally, there is a Medicaid planning benefit to planning as well. Persons who currently qualify for Medicaid assistance or who anticipate qualifying may pre-pay their funerals without impacting their Medicaid eligibility. As this is an exempt purchase. The drawback to pre-planning is that the person is tying up the money.

Now there are really two types of pre-need contract: a guaranteed price contract and a non-guaranteed. In a guaranteed price contract the funeral home guarantees the funeral goods and services the planning person selects at the amount of money stated in the agreement. Which means there will be no need for additional payment later.selected for the amount of money stated in the contract. This means that you or your estate will not be required to pay any additional cost for the guaranteed items. The “non guaranteed contract” treats the amount paid for planning as a deposit against the final costs which is determined at the time of the actual funeral services provided.

If the contract does not guarantee the prices charged, the price of the funeral will be determined at the time the services and merchandise are provided. Any amount you pre-pay will be considered as a deposit to be applied toward the purchase price.

Some good questions to ask (in addition to your wishes) during your pre-planning session are:

* Where will the pre-need funds be deposited until they are needed?
* Will I receive verification from the financial institution that the prepaid funds have been deposited in the trust account?
* If the funds are used to purchase an insurance policy, will I receive verification that the policy has been purchased?
* What is covered by the price guarantee?
* Is the pre-need contract irrevocable or revocable?
* If the contract is revocable, how can I cancel the contract?

I have had to handle funeral arrangements for family, friends and client and can tell you. It is a marvelous relief to know a plan was already in place for our loved one.E

THANKFUL

I frequently have opportunity to view people, especially seniors and those taking care of seniors, in situations that are challenging them – financial, health, family situations, etc – and the way they respond to perceived crisis.

For many, challenges early in their life conditioned and toughened them so they can still puzzle through a new challenge.  For those of more fortunate circumstances and few life challenges, the experiences of failing relatives is terrifying and upsetting.  “But Dad has always……” (But Dad can’t any more), or “We might lose all……” (Yes, life has no guarantees to preserve inheritance) or “Why us? (Why not?)

But those with faith in the Lord rise up as on eagle wings, sometimes shedding tears, but smiling internally and eternally as they know the future.  Those clients are more resilient, understanding, and survive by keeping things in biblical perspective. If one trait were used to describe these clients, it is “Thankful” in all things.  Nothing guarantees that we will not have trials or that our children will inherit what we have, but if we are thankful for all we receive, there is a special joy and contentment that you have to see to believe.

In this blessed Christmas season, my hope is that you will be thankful for all, as I am thankful for all of you.

TWO PORTLY GENTLEMEN

In October of 1843, Charles Dickens began writing one of the English languages most beloved stories. What began as his attempt to supplement his family’s meager income has in excess of 170 years, become cherished by many with its tale of special spirits, warmth to others and much of the byproduct of Christmas.

One of my favorite scenes is the oft overlooked part in Chapter One where the “two portly gentlemen” are let into the miser’s counting house by his employee, Bob Cratchit. They engage Mr. Scrooge to solicit resources for the poor and destitute. He summarily does not like the entreaty and presses them on their perspective. I wonder: what are the legal implications of their presence in his office that fictitious night? The laws impacting the scene if it occurred today could include: premises liability (what if one slip and fell?); propriety of their solicitation (were they registered with the State? would the donation be tax deductible?); agency (did the employee have the right to let them in?); trespassing (Scrooge would argue it.); hostile work environment we would need to ask Bob Cratchit); employment (was Bob an “at will” employee, independent contractor or salaried under contract?); fraud (were the two guys honorable at all or something akin to the IRS phone scammers we have today?); and the list goes on.

As we consider our lives and how they are impacted by an almost innumerable number of regulations and laws (state, federal and international), we can know well that life can be a complex bag of rules, tensions, met and unmet expectations. I hope this Christmas season we can all understand in our heart of hearts the question put forth by the two portly gentlemen from the pen of Charles Dickens. “A few of us are endeavoring to raise a fund to buy the Poor some meat and drink, and means of warmth. We choose this time, because it is a time, of all others, when Want is keenly felt, and Abundance rejoices. What shall I put you down for?”

DEPRESSION AND THE CAREGIVER GUILT

I regularly meet with sons, daughters, and spouses of an elder client who is failing. These close relatives often attempt to be the “care giver” for the failing elder, fulfilling their wish to remain at home.
While that is a laudable goal and one that many share, I always caution the caregiver to be very careful about burnout from trying to do too much, both mentally and physically. Care giving for a failing elder is stressful and when it is an around-the-clock obligation, the health of the caregiver is sometimes at risk.
Solutions are very family specific, depending upon who is available. One important theme is for a caregiver to be self-forgiving. I like the myths that my friends at Right at Home, a home health agency recently listed. Each of these (with my paraphrasing) is not true:
• I need to be perfect – no;
• I should only have positive thoughts about what I am doing – no;
• I shouldn’t talk about what I’m experiencing – no;
• I shouldn’t let others know about what is going on – no;
• My needs need to take a back seat to the services I am providing –no;
• Other caregivers are better at this than me and have a better attitude –no;
• I should do it all myself – no.
Caregivers – protect yourself. Dark, cold winter days will increase the chance for depression. Get some relief and thank you for what you do.

Protecting Americans from Tax Hikes Act of 2015 (aka PATH Act)

On December 18 last year, the above named act was signed into law. The PATH Act made permanent dozens of provisions which were set to expire. These provisions are no longer subject to expiration. This is not to be taken as tax or legal advice but merely to focus a light on the possibilities which exist for tax and legal planning toward the end of the year. Here is a sampling of the newly permanent benefits which might be of interest to different taxpayers.

1. Above the Line Deduction for Teachers’ Classroom Expenses. Kindergarten thru 12 grade teachers can deduct up to $250 of unreimbursed expenses relating to books, equipment, supplies and even some software. While that does not sound like a lot to many educators, just remember the old adage, “it all adds up” or “a nickel richer.”

2. Deduction of Mortgage Insurance Premiums. 2006 Legislation created an itemized deduction for premiums paid or accrued on qualified mortgage insurance. Generally, this type of insurance is acquired in connection with debt on a qualified residence.

3. Qualified Charitable Distributions from IRAs. In years past, persons age 70 ½ or older can exclude from gross income up to $100,0000 in “qualified charitable distributions” from either a traditional IRA or a Roth IRA. These distributions are not deductible as charitable contributions, but the exclusion from gross income is even a better result for the taxpayer. A qualified charitable distribution is any distributions from an IRA made by the trustee directly to the public charity.

4. College Tuition. Through 2016 there continues to be an above the line deduction for “qualified tuition and related expenses”. The deduction limit is $4,000 with the full deduction only available to taxpayers with adjusted gross incomes of $65,000 or less (or $130,000 for married filing jointly). If income exceeds the aforementioned limits then the maximum deduction is $2,000.

5. Conservation Easements. The limitations for contributions of property for purposes of conservation have also been expanded. It used to be in exchanged for placing qualified property into conservation like a land trust, the taxpayer could deduct 30% for any one year and carryover up to five years. Now, the he or she may deduct up to 50% of his or her contribution base with a carryover of 15 years. If he or she is what is a called a “qualified farmer or rancher” the 50% limitation increases to 100% with the 15 year carryover. To be “qualified”, the farmer or rancher’s gross income from farming or ranching concerns must exceed 50% of their total gross income. You can see where there may be opportunity for planning in situations where the taxpayer does not have an aversion to these types of conservation efforts.

These are just a few expansions available to individual taxpayers. The purpose of this article is not for tax or legal advice. Again, we are simply focusing a light on the possibilities which exist for tax and legal planning as we come toward the end of another tax year. All readers should consult with an independent professional prior to taking any action. We hope your fall continues to be wonderful as you bring in your harvest.

PREPARING FOR WINTER – AND SAVING MONEY

It has been part of the cycle of life to do certain things in season.  As we enter the fall, we see the farmers gathering the harvest, the boats of summer being put in storage, our furnace filters being replaced, leaves being raked and a host of other “fall” action items.  The holidays and family-gatherings are just around the corner.

Fall is a good time to also get your affairs in order so you can spend a comfortable, content winter by the fire or go south.   And everyone has a best way to do that – some with simple account registration changes, others with wills and powers-of-attorney, and some with trust arrangements.  Each family situation is different and what is a good fit for one might be too complex or too expensive for someone else.

Yes, trusts are great and the best tool in some situations, but don’t buy the sales pitch “You need a trust” until you meet with us, to explain where trusts work best and whether it fits your situation.   A Corvette is a great, fun car to drive but try driving to work in one through the snow.  When you have the right vehicle, you save money.

We can survive the winter that is coming but it will be much easier if we prepare now.

Is That A Loan or A Gift?

My dad always said, “Do not loan it, unless you are willing to give it away.” You know the scenario. Your neighbor or brother borrows your bolt cutters and “man they’re gone!” You have a better chance of retrieving keys from a river of molten lava than seeing those bolt cutters or your mom’s cake pan return to their proper place. Now imagine what it looks like when the receiver thinks the property (i.e. cash, vehicle, even house) is a “gift”, while the giver thinks it is a “loan.”

 

 

Yep, I’m sure you’re chuckling but you know it’s true. As attorneys we experience this all the time. I had a client whose ex-in-laws demanded repayment of a “loan”. The exes gave some property to the client and client’s spouse during the marriage. Now that the marriage was no more, the exes are calling the gift a loan, demanding repayment with interest in an amount pulled out of thin air. The problem was there is nothing in writing.

 

 

There are numerous practical problems in gifting. First, will the contested amount be worth your time and money with an attorney. Think of a $500 lawnmower. Who is going to engage a lawyer at $200-400/hour for the hope, as there are no guarantees of winning any suit in court, to get a used $500 lawnmower or $500 back. Second, they say relationships are the only thing you take to heaven. How many relationships have been ruined over “stuff”? I will not represent someone whose core purpose is to harm others.

 

 

Remember this: If you are loaning it out, be willing to give it away. If you are not willing to give it away, get it in writing and preferably secure your loan with right to the borrower’s property in a proportionate amount. If the amount is significant to you, engage an attorney in the beginning. It will save you a lot of future angst. Finally, if it is a gift, there are scenarios where memorializing it in writing is not only prudent but wise.

AGE in PLACE- WHERE?

“Aging in Place” has become a preference I often hear from clients. It is usually shorthand for a fear of spending last days in an institution like a nursing home.

The reality, as shown by joint study done by an investment firm and AgeWave, shows many seniors have already moved or planned to move to a place they will own – a newer home with modern appliance, no steps, and much less maintenance, such as a condominium. And why are they moving? As reported by Caring Right At Home, a major supplier of home health care, many move to be closer to family (29%), reducing home expenses (26%) and because of changes in their health (17%).

It is not just “downsizing” but what I call “right sizing”, as people realize the large house with stairs and a lawn to maintain isn’t necessary after the kids have left. Because of modern medicine, we are living longer and tend to be more active – not just my grandparents sitting on the porch in a rocking chair. Why spend the time maintaining a home?

Regardless of location, the majority of seniors want long-term care in their home for as long as they are able, so watch for the continued growth of the home care agency. Since, in Ohio, licensing is not required, check out carefully the experience and customer satisfaction stats for any potential caregiver, or see us about making a family member that designated person. Live until you die!

INSIDE JOB

Today, we mark the onset of a New Year. While we all get used to writing or typing 2015 and not 2014, this day presents us a fresh marker to number the days in our lives. We are stewards of our lessons going forward. One lesson I take from 2014, and all the years prior, is that failure is an inside job. In an era where no one takes personal responsibility for their actions, I have concluded that I am the best person to sell Me a bad idea. When a friend convinced me to play dodgeball in front of one of our large garage windows as a junior higher, I said, “Self, that is a great idea! You will have a lot of fun. Now where’s the ball?” You get the picture, and so you have been your best salesperson for many of those significant decisions in life.

This past year our law firm has helped bridge poor planning by “do-it-yourselfers” and peace for their families. In those instances, the planners may have received their bad planning ideas from the internet, a co-worker, a less than persnickety uncle, or a bank teller. However, the individual is the one who ultimately approved and took confidence in their bad idea.

In the spirit of a fresh start, let’s plan with a purpose and be ever leery of those bad ideas. If you need solid, well-constructed estate planning, contact our office. I have heard it said that “Ninety percent of all those who fail are not actually defeated. They simply quit.” You see, it is an inside job. Let 2015 be a year where you have been intentional in meeting goals for your marriage, your children, grandchildren, business, church, synagogue or work. Have a great year!     broken window