Don’t Lose Your Savings to Long Term Care Costs

America is aging, and as we get older, more and more of us have health problems that require long term care.  Usually when we think of healthcare, we think of acute care meant to cure or treat a specific illness or ailment, like taking medicine, performing surgery, or receiving treatments over time.  By contrast, long term care is care over an indefinite duration for people who cannot take care of themselves due to physical ailments, such as a severe stroke, or mental ailments, such as Alzheimer’s disease or dementia.  Caretakers often provide custodial care – looking after the person – and help with basic activities of daily living such as eating, bathing and moving around the person’s living space.
Long term care can be provided in several settings:  in a nursing home, an assisted living facility, or at home with home health aides.  The problem with all of these settings is that long term care is very expensive.  In New Jersey, nursing homes typically cost more than $10,000 per month.  Prices are cheaper is some other parts of the country, but still very expensive.  Likewise, assisted living facilities (which provide less intensive care than nursing homes) typically cost around $8,000 per month.  Licensed home health aides often cost more than $20 per hour, which can add up if a person needs full-time care every day.  (Family members can provide long term care, but that often takes a toll and becomes unsustainable over time.)
How do people pay for long term care?  If a nursing home costs $120,000 per year, even a family that has saved significant funds will quickly deplete their nest egg, leaving their spouse impoverished and heirs bereft.
Fortunately, the government will pay for nursing homes and other long term care through Medicaid.  Medicaid is a public benefit program, funded in part by the federal government and administered by each state, that provides healthcare to people.  Medicaid can pay for the full cost of nursing home care, after the person’s income is applied.  However, to qualify for Medicaid’s long term care benefit, you must meet strict eligibility requirements.  Applicants usually must have less than $2,000 in qualifying assets (called resources), must have limited income, and must meet stringent medical requirements.
There are opportunities for Medicaid applicants to preserve assets within their families while qualifying for Medicaid.  Those opportunities are complex – Medicaid has strict rules with which applicants must comply.  If a Medicaid applicant makes gifts within the five year look-back period before applying for Medicaid, the applicant is penalized for those gifts.  So applicants cannot simply give all their money away and then go on Medicaid.
However, there is room within Medicaid’s rules for Medicaid planning in order to preserve wealth and assets for family members that otherwise would have to be spent on long term care costs.  Medicaid planning may involve a trust, annuity, structured gift, exempt purchase, or other technique, with the goal to realize value from property that otherwise would be lost to care costs.
If you’re interested in Medicaid planning, you should speak with an elder law attorney familiar with Medicaid’s complex rules.  The National Elder Law Foundation (NELF), accredited by the American Bar Association, maintains a directory of Certified Elder Law Attorneys (CELA’s, certified by NELF) in every state.  The National Academy of Elder Law Attorneys (NAELA) also maintains an attorney directory.
If you or a loved one may need long term care in the future, it is a wise idea to consult an elder law attorney for guidance on your options.
Thanks to our friends and contributors from FriedmanLaw for their insight into elder law, special needs and trusts and estates law.

Will a personal injury award affect my taxes?

Reaching a favorable settlement in a personal injury case with the help of a personal injury attorney Atlanta GA relies on can be a huge victory. Such a win can give you the compensation you need in order to recover from your injuries without worrying about how to pay for them. However, a personal injury award can have a significant impact on your taxes.


If you pay taxes on your personal injury award is determined by what kind of award you receive, and the size of the award may determine the amount that must be paid.


If the award was for punitive damages, which are damages ordered to punish the party responsible for your injuries, the IRS will view it as income. This means that it will likely be subject to an income tax, but the exact amount you will owe is variable based on the size of the award and other personal details of the case. Similarly, an award for lost wages may be taxed because it is intended to compensate for salary lost as a result of the accident. Since these wages would have been taxed had they been earned, it makes sense for them to be taxed when compensated.


Compensatory damages are seen slightly differently under tax law. Compensatory damages are designed to reimburse victims of an accident for any direct expenses that resulted from someone’s negligence. Compensatory damages can include medical expenses, property repairs, and other tangible costs. In most situations, awards for compensatory damages will not be taxed, as they are not income and should not be any more than the bills they represent. An exception to this would be if the victim received a tax deduction for these expenses. However, if the amount awarded for compensatory damages do exceed the value of damaged or lost property, they may be taxed on the extraneous value as income.


As you can surely tell, there is no simple answer to how awards in personal injury cases will be taxed. For a complete understanding of how much of your award you will owe to the government, if any, contact an experienced tax attorney. An skilled tax attorney will be able to apply the intricate tax laws of your state and the federal government to your case, and determine exactly what you should expect.


logo.fw_Thanks to our friends and contributors from Andrew R. Lynch, P.C. for their insight into the effects of a personal injury award on taxes.


What Does Probate Mean?

“Probate” is the term given to the process by which a will is dealt with in a court of law. During the time a will is in probate, an individual is named as the executor of the estate. This means that they are tasked with the responsibility to administer the estate which includes distributing the assets to those  named in the will or to the heirs.
Assets will enter probate if:
  • They are to be distributed according to a will.
  • There is no will or alternative form of ownership.
Assets that are not subject to probate are:
  • Any properties that were jointly owned.
  • Life insurance that has specifically named beneficiaries.
  • Assets that are belonging to an established living trust.
What Is the Importance of Probate?
Many people like to avoid having their will subject to probate for several reasons.
  • Because probate cases are of public record, anyone who would like access to the financial records of the family will have that access as they will be able to review any court records.
  • The probate process often involves an attorney which can be an unexpected expense.
  • The cost of probate itself can be high, as much as 5% of the estate’s value. This price will vary based on the complexity of the case.
  • The probate process can be lengthy.
  • During the time the will is in probate, no heirs will have access to any assets that they inherited.
  • The probate process often takes more than six months to complete.
Estate Planning to Avoid Probate
The process of estate planning is complex, and not one we want to think about. There comes a time, however, when we all need to work through end of life planning. A Peoria IL probate attorney may be able to help in planning for this type of occasion. Ensuring that you have adequately planned your estate not only provides you with a sense of relief but also eases the strain on your family when they are left to handle your estate.
It is possible to work ahead of time to reduce the portion of an estate that will be subject to probate. A few ways to do this are:
  • If you have real estate, consider a joint ownership with the person who you will give it to after you pass. The full title can then be transferred directly to that person, thereby avoiding probate.
  • Name beneficiaries for retirement plans and IRAs to keep these assets out of probate.
  • Create a “revocable living trust.” This is a trust you create while you are still alive. It is revocable and you can amend it as needed.
The Advantages of a Revocable Living Trust
There are many reasons for why such a trust is a popular choice for estate planning.
The trust clearly designates individuals and clearly describes how any assets are to be distributed and handled.
  • Your assets are put into the trust which you will be in charge of. You will be responsible for reporting any income of the trust on your yearly individual tax return.
  • Upon your death, the assets contained in the trust will be distributed as you have previously dictated.
  • A living trust works very similarly to how a will works, with the important difference that a trust is not subject to probate.
The goal of avoiding probate is just one of the many complex issues that can make estate planning a complicated process. However, ensuring that your estate is properly managed and cared for can be simplified with the assistance of an estate planning professional. Enlisting the aid of a professional is especially important if your estate is complex, or large.
smithweerlogo_75Thanks to our friends and contributors from Smith & Weer, P.C. for their insight into Probate Law.

3 Reasons Why Every Parent Needs A Will

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If you have children, it is imperative that you write a will.  If you don’t, and pass away without a will, state law will decide what happens to your property and who will take care of your children.  Having a will already in place to protect your kids and property will ease your mind should anything happen, but in case you need more of a push, here are 4 reasons to create a will when you have children:

1. You get to decide who takes care of your kids after you pass, instead of the state.
Would you want to leave it up to strangers to decide who will raise your children once you’re gone?  This is what will happen if you don’t leave a will designating a guardian.  Although the courts will try to do what’s best for your children, you won’t get a chance to weigh-in your opinion unless through a will.  It’s not an easy choice to make, but it is incredibly important for the wellbeing of your child.
2. You decide who will look after your child’s finances and manage your property.
You can name the same person as their personal guardian, or you can choose someone different.  This may be important if you think one person would be a better parent, but another has a greater hold on finances and management.
3. You can determine who gets what.
Whether you want your property split between your children evenly or not, this one is crucial.  There may be some things that seem easy to split, but others such as cars, furniture, or jewelry, you will want to decide who specifically gets what.  You can also decide to leave someone nothing, and that must be stated, otherwise they may be able to claim a portion of your estate.

While creating a will may seem like you’re accepting something bad may happen to you, it’s much smarter to be proactive and ready, and leave your family with a plan of your best intentions.  You may want to speak to an experienced wills lawyer Sacramento CA respects to review your options and set up a will or trust today.

Why Do You Need A Trust?

Clients often ask what determines whether they will need a basic will or a trust. These are some of the suggestions I give as a estate planning lawyer Phoenix AZ relies on:

Will You End Up In Probate?

My first question is always, “Are you comfortable with your estate going through probate?” Every estate and client is different, the type of assets are different and the parties involved are different.

For some people the idea of dealing with the court, making court filings and following specific timeframes seems daunting. Some states can have easier processes or more informal probate proceedings, but it can still seem like a tough task. In some cases, a probate may even make sense, there may be a comfort in knowing that the court is involved to make sure things are completed.

Are there people you wish to protect or have assets managed on their behalf?

For clients with minor children, special needs individuals, dependency issues or other challenges, it may be critical to not leave them with direct control of assets. Clients needs to know that without putting a trust together and identifying trustees of their choosing, they will be leaving it up to the court to decide who will be appointed conservator over assets.

Just as one consideration, not using a trust could in an ex-spouse being appointed by the court to be in charge of assets for a child.

What Are Your Assets Like?

Do you have assets in multiple states? Do you have a business? The complexity of the assets can have bearing on whether a trust makes sense. If there are assets in multiple states, a will plan would require probate in multiple states. If there are business assets, there may be a need to maintain seamless continuity to prevent damage to the business. In other cases, a family may wish for assets to remain in a family. For that, a trust would make sense to allow for a long term plan of operation.

What Time Period Are You Planning For?

A will only has a use after someone passes away. Even if they were on their deathbed it would have no function or ability to give authority over assets. If it is important to a client that management be consideration not just for death, but also in the event of incapacity, then a trust would be right vehicle to give authority and responsibility over assets.

Thanks to our friends and contributors from Kamper Estrada LLP for their insight into the trusts and estate planning practice.

Who is Obligated to Participate in a Deposition?

Depositions are an important part of many trials, and there is a lot to understand about their process. If you will be participating in a deposition, or your lawyer is conducting a deposition for your case, then it may be helpful for you to have a general understanding of what will be involved.

What Is a Deposition?

A deposition is the oral testimony of a witness and takes place out of court, usually in a lawyer’s office. The witness’ testimony is documented in writing and can later be referred to in court by either party. A deposition is also called an examination for discovery, or an examination before trial.

  • A deposition is where the attorneys gather information in preparation for the trial.
  • Both attorneys are allowed to ask questions of the witness.
  • The witness must answer aloud, as a recording won’t record a nod or any facial recognition.
  • After the first attorney has asked their questions, the second attorney will have their chance to ask questions in cross-examination.
  • There is a limit of only ten depositions of various witnesses per side allowed.
  • A deposition can only last for seven hours in one day.

Who Is Usually Present in a Deposition?

There are certain people who are almost always present at a deposition. This includes the court reporter to provide the transcription and deposition services and at least one lawyer for each side. There are no limitations on who can attend the depositions unless there is a protective order in place.

  • If there is someone that you don’t want at the deposition, the burden is on you to prove “good cause” for why they shouldn’t be there, according to Federal Rule of Civil Procedure 26(c)(1)(E).
  • Good cause entails that the order is required to protect the person from oppression, embarrassment, undue expense or undue burden.
  • This is different from a trial, where a witness can be excluded as requested by the party.

When is A Deposition Necessary?

This usually depends on the circumstances and various facts of the case. If the case hinges on proving certain circumstances and the details of what happened, a deposition is a common part of the discovery process. Sometimes, the information obtained from the deposition opens the door for a settlement to take place. A settlement agreement negates the need to go to court and can be a cost and time savings. If you would like to know more about what you’re likely to experience in a deposition for your case, consult your attorney. If you do not have an attorney, contact a law firm as soon as possible.


Thanks to our friends and contributors from Veritext for their insight into depositions

What Is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

Bankruptcy refers to a federal law that helps people or companies get out of debt. Individuals who need to file bankruptcy may qualify for either a Chapter 7 or Chapter 13. Both types of bankruptcy just refer to chapters, or sections, of the bankruptcy law.

If you’re overwhelmed with debt, you may want to know the difference between Chapter 7 and Chapter 13 bankruptcy before you decide how to file. The best option depends on your specific situation.
 
When to File Chapter 7 Bankruptcy
 
Chapter 7 bankruptcy forgives your debts without requiring you pay the balance. It also stops wage garnishment and creditor harassment.
Many people choose Chapter 7 bankruptcy when they are current on their home or car payments, but can’t possibly pay other types of debt. Those debts could include:
  • Credit card debt
  • Medical bills
  • Utility bills
  • Money owed on an apartment lease
  • Payday loan debts
  • And more
Chapter 7 has a lot of advantages. It frees you from debt very quickly, and it doesn’t come with a lot of obligation. But it also isn’t designed to protect your assets. That’s where Chapter 13 comes in.
When to File Chapter 13 Bankruptcy
 
Chapter 13 bankruptcy helps you get out of debt while still protecting your assets. It stops wage garnishment and creditor harassment, just like Chapter 7, and it also stops foreclosure and repossession.
Many people choose Chapter 13 when they have some income but are behind on their home or car payments. Because it has the force of federal law behind it, Chapter 13 instantly stops creditors from taking someone’s property.
During a Chapter 13, your attorney works with the courts and your creditors to set up a reasonable payment plan for your debts. They design it around your specific financial situation, so you can follow the plan without falling behind. At the end of your bankruptcy, you will be current on your home and your car will be paid off.
Deciding on the Right Type of Bankruptcy
 
As a Memphis bankruptcy attorney, I’ve found many clients don’t know exactly which type of bankruptcy they need until they speak with a bankruptcy lawyer. A qualified and experienced bankruptcy attorney will talk with you about exactly what debts you have and what your priorities are. They will help you figure out whether you qualify for each type and what you would need in order to file.
Look for an attorney with a free consultation who has experience with the type of bankruptcy that interests you. Make sure they don’t charge extra for complications that may come up.
And finally, whichever bankruptcy type you end up filing, remember both offer the chance to get a fresh start and rebuild your financial life. Chapter 7 and Chapter 13 have that in common, so don’t be afraid if one turns out to be better for you than the other.


Thanks to our friends and contributors from Darrell Castle and Associates, PLLC, a Memphis-based bankruptcy and personal injury law firm dedicated to helping people in the Mid-South get through hard times when they happen.

Financial Advisor Talking To Senior Couple At Home

Estate Planning Under Trump: 3 Key Takeaways!

Regardless of where you are on the political spectrum, the fact remains that it has been an exciting campaign.  Now that President Trump has taken office, there are some clear indicators that estate planning may change under his administration.  Here are some high level takeaways:

  1. Repeal of the Death Tax: President Trump’s campaign website made clear his intention to “repeal the death tax, but capital gains held until death and valued over $10 million will be subject to tax to exempt small businesses and family farms.”  If this is borne out, then there will be a great impact on the wealthy.  There may also be a repeal of the gift tax.
  2. Capital Gains: President Trump also made clear that he intends to retain the current 20% capital gains rate. The impact of this is that for large estates, there may be a reduction in the total tax paid, in relation to the size of the estate.
  3. Anti-Abuse Provision: Trump’s plan also puts into place prohibitions on transfers of appreciated assets to closely held family charities.  This likely means that there will be strong incentives to keep taxable estates within the family, usually via various trust vehicles.

To be fair, there are still lot of unknowns. That said, in order to fully understand the impact under the current law, it is important to seek out counsel to determine how best to help you plan your estate transition!

Who Needs a Copy of Your Estate Planning Documents?

If you died today, would your spouse or your children know how to carry out your wishes?  Would they know who to call or what first steps to take? While you do not have to tell your family about every single detail of your financial situation or last wishes, it is important that they know where to find your estate planning and health care documents. You can easily make the process simple for the people you love by equipping them with the information they will need in case of an emergency.

As an Estate Planning Attorney, Memphis TN trusts, we’d like to share with you a few tips about what you should share with your loved ones now to make it easier on them if you should unexpectedly die or become incapacitated:

(1) Who to Call. Family members should also know who to call, such as your attorney or accountant.

(2) Where to Look.  Organize your Estate Plan and make certain your loved ones know where to find it if needed. Keep all original documents in one secure place, such as a fireproof safe or safe deposit box. Make sure the correct people have proper and legal access to your important papers.

(3) What to Do. Many Estate Plans include instructions for loved ones with detailed information and instructions for funeral and memorial arrangements, as well as where to find accounts, life insurance, etc. Take the time to complete instruction documents.

(4) Distribute Copies of Health Care Documents. Give copies of your signed health care documents to your doctor and to the people you have appointed as your health care agents. As a general matter, we don’t recommend distributing copies of your Will or other major documents in case you later decide to make changes.  For those documents, just make sure your loved ones know where to find the documents.

Many of us do not like to think about what will happen when we die. Death and incapacitation are not pleasant things to think about, and many people put off planning for this very reason. But, don’t delay! Your loved ones will appreciate the care you took to help guide them in handling your affairs.

If you need help with your estate plan, or have questions about how you can plan ahead now for the future, contact the trusted lawyer today.


WBThanks to our friends and contributors at Wiseman Bray PLLC who have significant experience in Wills, Trusts, and Estate Planning.

Wills vs. Trusts

As almost everyone knows, a Will is a written document, which puts forth your wishes regarding your estate after your passing. It has to be signed by you, as well as two disinterested witnesses. You get to appoint a person you trust as an executor of your will. You have to be careful when you appoint this person because he/she is going to be disposing of your assets after your passing according to the will. Below are pros and cons that can help you determine if need a trust or a will.

Pros and Cons about Wills:

Pros: Drafting of a will is cost effective. It costs generally $350-$400 to get a will drafted. A will allows you to dispose your property according to your liking.

Cons: Upon your passing, the executor of your will has to hire a probate lawyer Arlington TX trusts to probate your will. It takes about $2,500-$3,000 to probate your will (without a will contest). You have to retain the original copy of the will so it could be filed with the Court.

A trust document disposes of your property also according to your wishes by putting your property in a trust. A trust bypasses the court’s involvement. This means, your trustee does not have to hire an attorney after your passing to dispose of your property.  There are two different types of trusts: Revocable Trust and Irrevocable Trust. A common misconception most people have about trust is that it is used only for huge estates. This is untrue.

Pros and Cons about Trusts:

Pros: A trust is helpful if you have a minor child because you can establish special provisions for your child’s need or education. You can create a trust if you are worried you may become incapacitated and need someone to manage your assets. Unlike a will, a trust keeps your assets outside of the public disclosure.

Cons: A trust can protect only the assets that are placed in the trust itself using a certificate of trust. A trust requires you to manage your assets. A creation of trust costs approximately $3,500.

At the end of the day, a trust or a will will generally end up costing you the same amount. It is your decision whether you want to spend the money up front or wait. Everyone’s estate is different. One size does not fit all. To get a customized estate planning for your individual matter, please contact a  experienced attorney.


BAThanks to our friends and contributors from Brandy Austin Law Firm PLLC for their insight into probate law.