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Estate Planning is a Philosophy

in Articles by Greg McIntyre Leave a comment

The stoics had a practice whereby they would meditate on the possible negatives that could befall them in the future. This was not in an attempt to garner pity, nor was it a woe is me exercise in self-indulgence. They wanted to be prepared. Preparation isn’t just about having a plan but also knowing what could happen in the future. As the great Mike Tyson once said: “everyone has a plan until they get punched in the face.”

How will life punch you in the face? That is the question you should ask yourself. Too often, folks go through life being surprised by unfortunate events that befall them. That’s the very thing that Tyson was getting at. You may have a plan but that plan falls apart when you’re surprised by that nasty right hook. 

The best boxers don’t just plan to get hit, they also study their opponent. They become to know their opponent and anticipate the impact of their strikes. The best boxers aren’t surprised by the punch to the face because they were prepared to have their world shaken in the first round. 

Mike Tyson also has another great quote. He said that: “if you’re not humble, life will visit humbleness upon you.” An aspect to being humble is recognizing a power greater than yourself, fate. Fate will bring along with it suffering, turmoil, and disaster. It is your choice as to whether these unfortunate events are a surprise or whether you can last a few more rounds

Us attorneys are given a bad rap for always thinking of the worst case scenario. Again, for most of us, this is not an exercise in self pity. Attorneys must be prepared to protect their client from the worst possible contingencies. That’s why we drone on and on in contracts. That’s why we prepare endlessly for trial. And that’s why we look at both sides of every case to poke as many holes in our own argument as possible. 

It’s no different in estate planning. I’ve often been asked about many of the things we include in important estate planning documents. Sometimes I get asked: “well what if that never happens?” My answer is always the same: “what if it does?”

Estate planning is all about preparing for the future. However, the actual tools like wills, trusts, and powers of attorney are only one aspect of it. The other aspect is sitting with the attorney and practicing the same meditation that the stoics did. Imagine the future and try and anticipate what bad things could happen. “Will I need long-term care like the majority of folks out there? Will my assets be subject to medical debt or liens? Will something happen to me or my spouse that will render us unable to make our own decisions? Will someone try and exploit me financially?”

This meditation is important and requires experienced guidance—something that falls by the wayside with auto-generated online forms (but don’t get me started on those). 

Its’s not just the estate planning tools that will benefit you in the future. It’s the consultation, the stoic mediation on the future, that will have similar long lasting benefits as the tools we create for you. 

Don’t be surprised by life’s punches. Come see us for a free consultation today.

 

 

 

 

 

 

Brenton S. Begley

Attorney at Law

The Downside to IRAs: No Such Thing as a Free Lunch

in Articles by Greg McIntyre Leave a comment

Ah the IRA. Now that pension plans have all but gone the way of the dinosaur, the IRA has been the retirement vehicle of choice for the American middle-class. Since it’s inception, the IRA has been touted as a “no-brainer.” Far and wide, financial planners and financial gurus alike feel safe in advising that you “max out” your IRA. 

The IRA does have some great benefits. A traditional IRA is a retirement account that you can contribute your earned income to before it gets taxed. This means that you do not pay the tax on the money you contribute at the time it’s contributed. 

An IRA also gives the benefit of tax free growth on the money you contribute. This means that if any of the money in the IRA is invested, the growth on that money is not taxed—at the time of the growth. Unfortunately, these benefits are only available if you’re willing to lock up your money until age 59 1/2. Pulling money out before that age will result in a 10% penalty. 

An IRA doesn’t so much save you from tax than it defers the tax on the money you contribute. At some point, whenever the money is pulled out, you will pay tax. And by the way, you have to pull money out. You may have heard of the required minimum distribution or “RMD.” The RMD forces you to pull out money and pay tax on it, so that you don’t get to sit on the retirement account and defer the tax until your death.

So, let’s say you’ve contributed your entire career to an IRA. You have a sizable amount saved and you’re depending on it to live off of for the rest of your life. However, you end up needing long-term care, similar to 70% of other individuals who make it past retirement age. You begin to incur cost of anywhere between $5,000 and $15,000 per month. You want to protect what you have in your IRA and you’d rather not see it all go to a facility. 

The problem is, the only way to protect the IRA is to pull the money out. If you pull the money out, you get taxed on all of it. However, an even worse option is to use it to pay for long term care. Because, when you pull money out to pay the facility, you get taxed on it and it gets spent. 

In other words, an IRA can put you in a tough spot if you’re trying to protect the hard-earned money from the risks you face as you age. 

I’m not saying that IRAs don’t have their place. However, they might not be all they’re cracked up to be when we look at what happens after retirement. 

If you have an IRA and are not in need of long-term care, you may want to explore an IRA to trust conversion to protect your retirement. Additionally, you can utilize financial instruments like life insurance to save money tax free. 

 

 

 

 

 

 

Brenton Begley

Attorney at Law

How to plan for long-term care…

in Articles by Greg McIntyre Leave a comment

No one wants to go to a nursing home. This is something that I have heard time and time again as an elder law attorney. But what happens if you or your loved one has no other choice?

The reality is that over 60% of all people in the United States will, at some point in their lives, be faced with the reality of long-term care. Such a term, in this context, is used to describe circumstances whereby a heightened level of medical care is necessary. That could mean the need for in-home care aids, an assisted living community, memory care, or nursing home level care.

Since long-term care is a likelihood for many, the predominant question for folks becomes “How will we pay for it?” This is the so-called elephant in the room. With the average cost of nursing home care ranging from $6,000 to $12,000 per month, many families panic when faced with how to budget around the need for care.

Some common questions in these scenarios include the following:

What is the best way forward?

Will we have to spend our retirement and everything that we have worked for all our lives to afford care?

What happens if one spouse in a marriage needs care and the other wants to stay in the home?

What options are available?

How can we protect assets?

What happens to our home?

Is it too late to protect assets if I need care right away?

Is Medicaid coverage for long-term care an option for me?

These are only a fraction of the relevant questions that present themselves during these types of discussions. With so many different factors and considerations, the biggest takeaway is clear: you don’t know what you don’t know.

Avoid the pitfalls of improper planning and the mixed messaging that comes with “research” on the internet. Reach out to our team at McIntyre Elder Law to schedule your free consultation with one of our estate planning and elder law attorneys. Call us at 704-749-9244 or visit our website at www.mcelderlaw.com

 

 

 

 

Therron Causey

Attorney at Law

Privacy

in Articles by Greg McIntyre Leave a comment

In today’s ever more technological world, privacy is becoming more vital to everyone.  In this article I will go through the most common estate planning tools and discuss the privacy implications of each document

There are two foundational documents that are effective during your lifetime. These are the General Durable Power of Attorney and the Health Care Power of Attorney. Both of these documents will allow the individual you name to step into your shoes and make medical and financial decisions for you. As such these documents will need to be presented by your agent when acting on your behalf.

Your Will is a completely private document while you are living. During your lifetime you are under no obligation to share the contents of your will with anyone else. There may be benefits to letting your potential executor know where your will is located but you under no obligation to do so. During your lifetime you are free to share as much or as little information regarding this document to anyone.

This all changes though upon your passing. When you pass, your Last Will and Testament will need to be probated at the Clerk of Court’s office. This process will require your executor to submit an application and the original Last Will and Testament to the Clerk’s office. The Clerk will then open up a probate file for your estate. This file is completely public. Anyone can request to see these records and view all the provisions of your will. Additionally, every asset that is in your estate will be inventoried by your executor. This list of assets will also be public record in your estate file. Once you pass there is no privacy in regards to the terms of your Last Will and Testament and the assets that you have in your estate.

There is a way to keep your assets and wishes private, however. This is through the use of a Trust. A trust is a completely private document. A trust does not need to be probated at the clerk of Court’s office and no public file will be created. Every asset that you transfer into the name of the Trust will be private and the outside world will be unable to view the assets of the trust as a matter of public information.

By taking the correct steps now you can ensure that your wishes and assets are private. This can take a burden from your loved ones and give you peace of mind. At McIntyre Elder Law we can assist you to craft a custom tailored estate plan to fit your unique situation. Please contact us today to schedule a consultation.

Eric Baker

Attorney at Law

Frankenstein Deeds: The Creature that could save your Real Property

in Articles by Greg McIntyre Leave a comment

It’s Alive! Reborn in the lab of a mad law scientist is a creation that will shock and awe. It’s the Frankenstein Deed—a combination of two types of deeds to make one incredible estate planning tool. The Franky Deed is a combination of the tenants in common and joint tenants with right of survivorship to protect property and help qualify for benefits to pay for Long-term Care.

Tenants in Common (TIC)

If you own property along with someone else other than your spouse, you will hold the property as tenants in common. As tenants in common, you have an undivided interest in the property. This means that you may own a one-half or one-third interest in the property, but you still have an equal right to use and occupy the property. This arrangement of ownership can break down to just about any proportion e.g., a common set up is one owner holding ninety-nine percent and the other owner holding one percent.

When one of the tenants passes, their property interest will pass to their heirs. Their heirs will assume their place as a co-tenant. This method of ownership does not avoid probate and the interest/title in the property must pass through the estate to vest in the heirs.

Joint Tenants with Rights of Survivorship (JTROS)

JTROS is very similar to tenants in common. A very important distinction, however, is the right of survivorship. Specifically, the difference is what happens to the property interest when one of the owners dies. Let’s say that A and B own a home as JTROS. When A dies, her property interest will immediately go to B. B will be the sole owner of the property immediately upon A’s death.

Another difference is that each owner must have an equal share in the property, which can make planning difficult.

This method of ownership avoids probate. The interest in the land does not pass through the probate estate of A because her interest immediately vested in B when A died through the right of survivorship.

The Frankenstein Deed: Tenants in Common with Right of Survivorship

How Does Medicaid Treat this Deed?

Under the current rules for Long-Term Care Medicaid, a Medicaid applicant can own real property, other than their home, as long as they own less than one hundred percent of the property. In other words, they can own other property as long as it’s set up as tenants as a common interest.

Thus, a property that normally would count against an individual is exempt if an owner gives as little as one percent of the property to a loved one.

The avoidance of probate, because of the right of survivorship, will also allow you to avoid the Medicaid Estate Recovery. Thus, you can keep the property, qualify for benefits, and the property remains protected from being taken.

Brenton S. Begley

Attorney at Law

A Story About Jane…..

in Articles by Greg McIntyre Leave a comment

I wanted to share a story about Jane. Jane is a spirited young lady at the age of 80. When Jane was younger, she took care of her three children, she was a teacher, and she loved to cook and keep a tidy house. Jane was always a giving person and played an active role in her community. Jane was very blessed and owns her home and a second home that she inherited from her mother.

Now retired and widowed, Jane has needed a little help maintaining her own care and properties. Over the last couple of years, Jane’s three children and two grandchildren help her clean her home, maintain her second home, grocery shop and prepare meals, cut the grass, take her to doctors appointments, and help administer her medications. Jane knows how busy her family is with jobs and household duties of their own, so she insists that she compensates her family for all of the help they give.

Over the last two years, she has paid each of her three children $500/month. Jane also gave each of her two grandchildren $10,000 toward their college education. Jane had an extra car that she did not use that was worth around $5,000 and she gave it to one of her grandchildren when their car broke down last year. Maintaining two houses was also very difficult and Jane considered selling the second home a few years ago. The house she inherited from her mother was very sentimental and she wanted it to stay in the family. As a solution, Jane’s daughter decided that she wanted to purchase the home three years ago. The home was worth $200,000, but because her daughter was willing to purchase it and keep it in the family, Jane sold it to her for $100,000. Jane cannot take part in her community as much as she likes, but she tries to provide support when able. Jane wrote a check to her church last year for $5,000 when the church was raising money for a new addition to the building. Jane’s family and community were always there to support her, and she wanted to give back in the way that she was able to.

Lately, Jane’s health has been declining and she is confined to a wheelchair and needs help getting in and out of bed, bathing, and dressing. At her last doctor’s appointment, Jane’s doctor recommended that she needs 24-hour care. Her children don’t want to place her in a skilled nursing facility, but they cannot provide the care that she needs. They toured a few skilled nursing facilities and found out that the average monthly private pay rate is around $7,500. Jane’s income is only $3,000 and she would quickly run out of her savings trying to pay the difference.

Jane’s friend is in a skilled nursing facility and receives Long-Term Care Medicaid to pay for her room and board. Jane applied for Medicaid and was told that she needed to provide financial records for the last 5 years, as that is the “look back” period. Jane provided all of the requested information and was told that not only could she not have more than $2,000 in countable assets, but that there would be a penalty period for paying her children for care without a Medicaid compliant written agreement, giving a car to her grandchild, paying toward her grandchildren’s education, for the lump sum donation, and for selling a house to her daughter for less than the home was valued at. Jane was confused and didn’t understand how she worked her whole life and how doing what she thought was right by her children and grandchildren could cause her to be ineligible for benefits that she needed.

So what does this penalty period actually mean?

The penalty period is a period of Medicaid ineligibility. It is calculated by totaling the value of all gifts and/or uncompensated transfers and dividing it by a rate set by the State of North Carolina, which will give you the number of months that an applicant is ineligible for long-term care Medicaid benefits.

In Jane’s situation, the following would be the value of her gifts/uncompensated transfers:

$500/month x 3 children x 24 months of care = $36,000

$10,000 contribution for college x 2 grandchildren = $20,000

Value of the vehicle given away = $5,000

$200,000 value of the home sold for $100,000 = $100,000 uncompensated value

Contribution to the church = $5,000

Total = $166,000 in gifts and/or uncompensated transfers

The current divisor set by the state is $7,110

$166,000/ $7,110 = 23.3 months that Jane is not eligible for Medicaid. What makes this situation even more difficult is that the penalty period doesn’t begin until an applicant is in a skilled nursing facility, has a form from the facility doctor stating that she needs skilled nursing, AND the applicant has less than $2,000 in countable assets. So how do you pay $7,500 out of pocket for 23 months with only one’s income and less than $2,000 in countable assets? It’s almost impossible unless the family can contribute, or unless you have someone with knowledge and skill in Medicaid Crisis Planning to help guide you.

In Jane’s story, there were many pre-planning steps that she could have taken to set herself up for benefit eligibility, while still achieving all of the same goals. 70% of seniors will require long-term care and the majority won’t be able to afford it with their income alone. There are available estate planning options to prepare for situations just like Jane’s. Luckily, even if pre-planning is no longer an option, there are crisis planning strategies to achieve benefit eligibility.

McIntyre Elder Law specializes in both long-term care pre-planning and crisis planning. Please come sit down with one of our Estate Planning and Elder Law Attorneys and allow us to hear YOUR story and help you plan for your current and future needs and goals.


 

 

 

 

 

 

Mary Kales

Benefits Director

Inflation: How does inflation impact my estate plan?

in Articles by Greg McIntyre Leave a comment

Estate planning is about both planning to take care of yourself during your life with legal tools like powers of attorneys and living wills. It is also about taking care of your family, money and property should the unexpected happen. There is no denying that we are in an inflationary economic period. How does this impact your estate plan? In this article we will touch upon the following ways that inflation can impact your estate plan:

Can inflation help me in some way? How? How do I protect my assets that have increased in value?

Could inflation put me at risk of increased taxation? Are there ways to deal with or maximize my taxable exemptions?

What assets do well during inflationary times? Hands down, hard assets. Hard assets are tangible assets with fundamental value. Assets like land, real estate, consumer goods. Investopedia.com lists some examples of hard assets to include[1]:

  • Buildings
  • Vehicles such as trucks or cars
  • Machinery and equipment
  • Office furniture

 

Can inflation help me in some way? For most of us, hard assets mean real estate, our home. For others hard assets could include the home and rentals or a vacation home. For business owners, hard assets could mean their machinery, desks, computers, etc. If you are a real estate investor you stand to see an increase in value in all the real estate in your portfolio. This is great from the standpoint of increased value of the assets but also presents some other challenges in protecting and passing those assets.

How do I protect my assets that have increased in value? Trusts do a great job at avoiding probate with any asset and the long, drawn out, and often costly court process associated with probating a will. Irrevocable Trusts also have the added benefit of protecting assets for our use during our lives, while adding a separation between the person and the assets for liability reasons and are not countable assets to that individual in situations where benefits like Medicaid are tapped to pay for assisted living or nursing home care.

Certain types of deeds can also be employed to protect real estate assets while also maintaining control of those assets. Ladybird Deeds are great tools to maintain control of the home, avoid probate, and pass the asset to children or those whom we choose. For properties other than the home, Frankenstein Deeds (also technically called Tenants in Common with Rights of Survivorship Deeds) can function in much the same way as a Ladybird Deed while also having the benefit of keeping a person qualified for Long-Term Care Medicaid to pay for nursing home care. I will introduce and discuss Frankenstein Deeds in a subsequent article.

Could inflation put me at risk of increased taxation? With a rise in value of real estate there is more concern about reaching an estate and death tax exemption limit. In addition, certainly, there is also an annual increase over time in property taxes on the value of that real estate as well that should be budgeted and accounted for.

Are there ways to deal with or maximize my taxable exemptions? Yes! Trusts!!! Trusts, when properly drafted, allow you to double the taxable exemption of the trust estate. If your real estate and other asset holdings are titled in the name of the trust the trust can be written to double the taxable exemption of the estate and death tax. This could be the difference between decreasing an estate by almost one-half (1/2) for assets that exceed the estate and death tax exemption. This can be avoided by utilizing trusts as part of your estate plan.

In inflationary times, with hard assets like real estate increasing in value it is smart to take inventory of the value of our assets and to plan accordingly lest we fall prey to probate, excessive taxation and disqualification for needed benefits. Our firm is built to help with these estate planning matters, and we would be glad to offer a FREE consultation to discuss protecting your assets and maximizing your taxable exemptions and availability for benefits if needed. Schedule your FREE consultation today at: mcelderlaw.com/scheduling or call: 704-749-9244.

[1] Investopedia. Hard Assets. https://www.investopedia.com/terms/h/hard_asset.asp

 

Gregory S. McIntyre, J.D., M.B.A.

Estate Planning & Elder Law Attorney

 

DIY Estate Planning

in Articles by Greg McIntyre Leave a comment








How do you come up with your own estate plan? That said, the better question to ask might be, should you come with your own plan? While I personally agree that having some plan is better than having no plan at all…estate planning is a BIG area, full of pitfalls for the unwary.

When it comes to estate planning, plenty of folks might try the “do it yourself” method. Practical reasons like cheaper costs, available online services, or at-home software touting easy to use interfaces are among a few of the common answers we find. And while true, to a very small extent, most of the reasoning, in this author’s opinion, rings hollow.

For example, consider the following questions:

How could you know which powers to activate or withhold under a general durable power of attorney? What may seem obvious or well-intended now could become detrimental and limiting down the road.

What about a healthcare power of attorney? When does that take effect? Can your agent overrule you? How is competency determined?

Have you protected your home? Will it pass down to your loved one or be at risk to a creditor or a state agency? Will there be unintended tax consequences?

Do you know and understand the legal ramifications and the rules of construction in preparing your own legal documents?

How do you know what you’ve created will be effective when it is needed?

In reality, the big question is: How do you know what you don’t know? The answer is: you don’t. Even the internet has its limits and the last thing you want to do is roll the dice on something as important as your livelihood.

To that end, estate planning is concerned with planning for the disposition of assets during a person’s lifetime and after their death. It involves a complex set of laws and overlaps with a good number of other practice areas such as family, tax, and property law. It enables and empowers an individual to take control of their lives by predesignating decision-makers, protecting assets, and taking steps towards preserving a legacy. In sum, estate planning concerns itself with not only an individual’s livelihood, but the extent that a person’s livelihood is passed on to the next generation in accordance with their intent.

Taking the time to meet with an attorney that focuses in estate planning can be instrumental in creating a sound plan. The right attorney will serve as your guide and bring awareness to important topics you might not have even considered. The right attorney will start by listening to your concerns and stated goals. From there, a prudent discussion should be had about the applicable law, available legal tools, and the presentation of a comprehensive plan that meets a client’s objectives. If you’ve gotten this far, I would say you’re on the right track.

Take the time to invest, not only in yourself and your future, but your loved ones as well. Maybe your goal is simple. Maybe it’s to leave everything to your children in the most stress-free way possible. Good! Let’s talk about it. Maybe your plan is more complex and should consider certain provisions from the tax code. Good! Let’s talk about it. Maybe you’ve got an existing plan, but it needs some updating. Good! Let’s talk about it. Whatever the goal may be, the attorneys and team members at McIntyre Elder Law are ready to talk about it.

Reach out to our office at (704) 749-9244 or visit www.mcelderlaw.com to schedule your free consultation today.

 

 

 

 

 

 

Therron Causey

Estate Planning & Elder Law Attorney








Don’t Plan!

in Articles by Greg McIntyre Leave a comment








Don’t worry about the future. None of us have a crystal ball and none of us can determine what might happen. So why worry about it?

While you’re at it, you shouldn’t worry about protecting your assets from probate or the cost of long-term care. Seventy percent of individuals over sixty-five will need some type of long-term care. But whatever, you’re probably not going to fall into that seventy percent figure.

So what if care costs five to ten thousand dollars a month? You might not even ever need care in the first place.

And probate. Why worry about that long and expensive process after you pass away? So what if creditors, like medical creditors, can come after your hard-earned property in probate? After all, you won’t be around for that anyway.

What if you become incompetent or incapacitated? Your loved one won’t be able to act on your behalf. But that’s what the state is there for.

Forget about doing a will as well. You don’t need to pick who will receive your assets after you die. The state will take care of that as well.

Why spend the time and money on an estate plan when you may be one of the lucky ones? Maybe you should just let Lady Luck do her thing. . . APRIL FOOLS!

 

 

 

 

 

BrentonS.Begley

Estate Planning & Elder Law Attorney








Protecting your children’s future

in Articles by Greg McIntyre Leave a comment








A premature passing of a parent is a traumatic event that can affect a child for their entire life. While nothing will ever replace the parent, by creating a unique estate plan, you can ease this transition if you pass prematurely.

If you have minor children, one of the most important documents you can execute is a statement of who you would want to be your child’s guardian after you pass. If you do not name anyone to serve as the legal guardian for your children, it will be completely in the Court’s discretion as to whom they appoint to serve in this role. Your voice will not be heard at this critical time. By drafting this statement in your estate planning documents you can ensure that your input is heard at this critical juncture.

Another great question that parents need to keep in mind is “If you leave your children funds when will they receive them?” The answer is that it will depend. If you have no estate planning documents in place, the State will determine when your children have access to these funds. According to the State, your children will receive full access to their funds upon reaching the age of 18. It goes without saying that allowing an eighteen-year-old to have access to large sums of money can create many problems.

However, there is a solution. You can create a trust which will hold the funds for the benefit of your children. Trusts are highly flexible vehicles that will allow you to ensure that your legacy is given to your children in stages and at a time they are more financially responsible.

For example, the trust can include a clause that your child will not receive access to the funds until they graduate college or reach the age of 25. This language will allow your child to become more financially savvy before having access to any funds.

This is just one example however, there are an infinite number of different ways that you can structure any gifts to your children. Another, example would be to give each child a certain percentage of the trust assets each year. This can be great way to ensure that your child has a stream of revenue each year. Each situation is unique, we would love to work with you to craft a plan that meets your specific needs.

Many parents worry that if they put such a rigid structure in place, it will cause potential problems. For example, if a unique need arise (such as an unexpended medical bill) their children will not have the funds available to them. This does not need to be the case. The Trust can include language that the trustee can distribute funds from the trust for the care, maintenance, and education of your child. These distributions will be in the Trustees discretion, but it does allow for your child to be cared for if an unexpected need arises.

On the topic of needs, one situation that no parent wants to think about but should plan for, is what will happen to your legacy if your child becomes disabled. If your child is receiving government benefits, any funds that flow to them directly can affect their eligibility to receive government assistance.  Language can be included in your estate planning documents to account for this unexpected situation. Rather than receive the funds directly, your documents will direct that any funds that would flow to a disabled child be distributed to a special needs trust. In this situation the funds never become titled in your disabled child’s name, and the child can continue to receive government assistance. Additionally, these funds will be used to pay for any additional care that your disabled child needs. This will preserve your legacy for a longer period of time by allowing your disabled child to continue to receive government benefits and be supplemented by your legacy.

Planning for the future is something that more parents need to consider. It is a great opportunity to provide for your children’s health and welfare. Additionally, planning can ensure that your legacy is available to your children in an appropriate time and manner.  We would love to talk to you about this or any other estate planning needs that you might have. Schedule your FREE consultation with us today.

 

 

 

 

 

 

Eric Baker

Estate Planning & Elder Law Attorney

 








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