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Is Your Legacy Leaving A Tax Burden?

in Articles by morgan morgan Leave a comment

 

Many people are under the false assumption that when they pass their loved ones will receive a large tax bill in the mail. This doesn’t have to be the case. To avoid probate many will gift their real property directly to their loved ones.  There are reasons why you may not want to directly give the property ought right to your loved ones. If you gift the property outright, you lose full control over the property; you can no longer make decisions for the property. The person who receives the property can sell, mortgage, or rent the property without your consent.  Another thing to consider is the tax ramifications of gifting property. 

If you gift your property to your loved ones outright, prior to your passing, your loved ones will receive what is called a Gift Basis in the property. The Gift basis will be the same basis that you have on the property. For example, If you bought a house for $100,000 then your basis on the property will be $100,000. This will mean that if you later sold the property for $400,000, you will have to pay tax on the difference of the selling price and your basis. In this example this will mean that there will be $300,000 worth of gain ( $400,000 sales price – $100,000 basis = $300,000 in gain). When you gift your property to a loved one then they receive that same basis in the property. If they later sell the property, they will receive the same basis in the property. 

If you leave your property to your loved ones as a result of a death event, they will receive what is called a step-up in basis. If the property is left via a will; a trust; a deed with survivorship rights; or a Lady Bird deed, then the property will receive a step-up in basis tax treatment. When a property receives this treatment, the basis becomes the fair market value of the property at the date of your death. For example, if you bought the property at $200,000 your basis is $200,000. If the property appreciates in value to $500,000 then your basis will remain at 200,000. When you pass and you leave your property to loved ones via one of the methods listed above; their basis becomes whatever the fair market value was at the time of your death, in this example $500,000. So when your loved ones sell the property immediately; then under this example, they would not pay tax ( $500,000 sells price – $500,000 their new step-up in basis = $0 in gain). 

By taking the right steps now you can ensure that your loved ones receive the best tax treatment for the legacy that you leave to them. We would be glad to talk to you about this or any other estate planning needs that you might have. Please feel free to contact us today to schedule your free consultation.

 

Eric Baker 

Estate Planning & Elder Law Attorney

Avoid the Gift/Estate Tax with the Crummey Trust

in Articles by Greg McIntyre Leave a comment

The estate and gift tax work hand-in-hand. There is a set limit on the amount you can either give during your life or at your death before the gift/devise will be taxed (lifetime exclusion). The current limit is $12.6 million (which will go back down to $5 million, before inflation, in 2025). This means that if you give over $12.6 million during your life, you will pay gift tax; if you leave an estate worth more than $12.8 million at your death, your estate will be subject to estate tax; and if you both gift and and leave behind assets over $12.6 million, there could be estate or gift tax.

The way the IRS keeps track of gifts, is that they require that any gifts given over a certain amount per year be reported. Your lifetime exclusion will be reduced by the amount reported. Thus, if you give reportable gifts over the lifetime exclusion amount, you will pay gift tax.

The gift tax is not so much a concern as the estate tax. Most people give the majority of their wealth away as an inheritance rather than a gift during their lives. Consequently, the amount given at death, tends to be much larger than the gifts given along the way.

A goal then, would be to attempt to lower your taxable estate without:

1. Chipping away at your lifetime exclusion; and

2. Giving up control over the money you gift.

A strategy to avoid the estate and gift tax is to give an annual gift per year. Currently, the gift tax exclusion is $16k per person, per year. If someone is looking to lower the size of their taxable estate, they can choose to gift an amount up to the annual gift tax exclusion annually.

For example, let’s say George wants to avoid having his estate taxed. He is over the estate tax exemption of $5 million (he doesn’t think he will die until after 2025) and every dollar over that amount is subject to tax. He can lower his net worth by giving away $16,000.00 to each of his children per year for the rest of his life and he would not be required to report the gift.

The problem with gifting in this manner is that the money/asset has been given away. When it comes to money you’ve worked hard to earn, most want to be able to control the assets and also be able to determine when the assets will be distributed.

If George were to gift directly to his children, they could do whatever they want with the money. If they have poor financial habits, an addiction, or a greedy spouse, that money could vanish very quickly. George may want to set that money aside for their college, wedding, retirement etc.

Placing the annual gift into a Crummey Trust will allow George to both make the gifts, which will lower his taxable estate, and control how the money will be distributed to his children. Additionally, if George is married, the trust would allow him and his spouse to double the exemption to $32k per year ($25.2 million for life).

The reason why a transfer to a Crummey Trust qualifies for the annual gift tax exclusion is because the transfer to the trust is treated as a completed gift. You can imagine that a transfer to a regular revocable trust, where the beneficiary has no rights, would not constitute a complete gift. The difference in the Crummey Trust is that the beneficiaries have the right of withdrawal.

The idea is that the beneficiaries will have a right to withdraw contributions made to them in the trust for a period of at least 30 days after having been given notice of the right. However, the expectation is that the beneficiaries will not exercise this right. This tends to be the case, given the leverage the trust maker has over the beneficiary I.e., “if you exercise the right to withdraw, I will just stop making transfers to the trust.”

As long as everyone is on the same page, the Crummey Trust allows for the gift to be made and stay in trust. The money gifted will then be distributed for the express purpose written in the trust document I.e., payment for education. The trust can also control how much the beneficiaries get when the trust maker dies. For example, let’s say that George set aside $500k for his child Chuck. He could mandate, in the trust terms, that Chuck gets his $500k in yearly increments for the next 10 years after George’s death. Thus, George can still control how and why the money he is gifting will go to his beneficiaries.

In conclusion, a Crummey Trust is a great way to lower your taxable estate and take advantage of the annual gift tax exclusion without giving up control over how your assets will pass to the next generation.

 

 

 

 

 

Brenton S. Begley

Estate Planning & Elder Law Attorney

Planning and Mental Health

in Articles by Greg McIntyre Leave a comment

With the turn of the century, a light now shines on mental health. Still, many people are not accustomed or even comfortable discussing their mental health with their friends or family. There is a lingering perception that difficulties with mental health and struggles with related diagnoses are somehow the fault of the afflicted. Western society suggests avoidance of uncomfortable feelings and so we, as individuals, build walls in response to protect ourselves (or so we think). Consider this short writing an opportunity to let the walls down.

As we age, we often must consider critical life decisions and significant milestones that we never would have contemplated in our earlier years. Do I have my affairs in order? What happens to me in the case of an accident, illness, or injury? What about my spouse or children? What happens if I suddenly passed away? Am I leaving behind a mess for others to clean up?

What about the legal implications of starting a new job or career, getting married or divorced, having children, going to college, or buying a home? While some folks have the good fortune of newfound wealth at a young age, most people ultimately build their wealth over the course of their lifetimes and begin to consider protective measures somewhere in the middle. So, what makes the most sense? And where does mental health fit in?

As I’ve said time and time again, there is no “one size fits all” for estate planning. It is a highly individualized conversation that considers various factors and client goals. The earlier you begin planning, the better. That said, the diagnosis of a mental illness can often be the catalyst for beginning that very same planning. However, this can be a double-edged sword. For instance, what if it is too late? How will you know?

As a general matter, the diagnosis of a mental illness is not dispositive on the issue of capacity. In other words, just because you have been diagnosed, does not necessarily mean you are prohibited from engaging in estate planning. It is not the fact that you have been diagnosed that is the deciding factor, but rather, the degree to which you are affected by the underlying diagnosis.

For example, what if you are one of the hundreds of thousands of people recently diagnosed with Alzheimer’s Disease? Alzheimer’s Disease is one of the most debilitating and disabling afflictions commonly found among the elderly and is often progressive in nature. It is known as a “slow killer.” To that end, Alzheimer’s Disease is often accompanied by dementia related symptoms. Gaps in memory, confusion, difficulty with abstract thinking, etc. So, does that mean, if you have been diagnosed with that kind of disease, that it is too late to do any planning? In short, it depends. It depends on many different factors, the most important of which should be discussed with competent legal counsel.

The conversation does not stop at Alzheimer’s Disease either. Depression, anxiety, and a number of other various disorders fall under the umbrella of mental health. And while their presence serves as the catalyst to begin planning for some, they act as planning deterrents for others. The point is, do not let the involuntary override the voluntary. Take control of your life now, or risk moving past the point of being able to manifest your own will into existence.

That said, early planning leads to goal satisfaction. We often watch professional athletes deliver stunning results and make unbelievable plays on television. The untrained eye might ask, how in the world they could possibly do that!? To the learned, there is a realization that it is merely a product of proper planning and preparation. Practice, practice, practice. By the time gameday hits, they’ve already been through the motions a hundred times and relived it in their head a hundred more.

The same principles can be applied to your life and your plan moving forward. Whether you are facing a recent or current diagnosis, or whether you’re looking toward the future, I encourage you to consider the value of planning. If there is a diagnosis in place, it is all the more important that you consider consulting with an attorney to understand your rights and what options may be available.

Please do not hesitate to contact us directly at 704-749-9244 or visit us at www.mcelderlaw.com to schedule your free consultation today. We welcome the opportunity to serve you.

 

 

 

 

 

 

Therron Causey

Estate Planning & Elder Law attorney

Do You Need Some “Tough Love”?

in Articles by Greg McIntyre Leave a comment

If I could travel back in time, what would I tell myself when I was 20 years old? Would I do the obvious investment tips, or would I tell myself the important things, the most important things?

  1. Be true to yourself.
  2. Never fear.
  3. Have faith in your vision, in your dreams.
  4. Start investing in real estate right away.
  5. Don’t worry about what others say.
  6. Plan… Stick to the plan.
  7. Be disciplined with your life, schedule, and body.

 

I have 6 children so in a way I do get to have these conversations. I give them freedom. I don’t want them to be co-dependent on me. I want them to develop their own interest. I want them to become their own little people. I want them to be confident and pursue areas where they are talented and have passion.

My son, Tucker, just graduated from high school. He is going to college and pursuing a science/biology degree. He also has a passion for acting, directing and comedy. I know that he will be successful in anything in life where he has a passion, but I want him to have a “burn the ships” mentality. I want him to go 100% after his biggest passion. Once he has success in that area, he can use his resources to also pursue other interests. I think the problem with myself when I was younger was that I thought I could do anything and everything and it took me awhile to focus on one thing. That one thing was the law. Within that career field I pursued estate planning and elder law. Once I established myself in that field, I was able to also acquire and manage real estate, pursue my passions for business, writing, video, media, and marketing. All these things are passions of mine. However, I couldn’t have pursued them all at once. To quote my long-time business coach and friend, Bob Demers, “You can only hit one homerun at a time.” Sometimes my focus is better than others. When I am laser focused, I can attack complex tasks with ease. However, I must settle, think, meditate, and plan to achieve that level of focus. I am trying to impart this lesson on a younger version of myself, Tucker, right now. I want him to focus on one thing intently. I want him to not make the mistakes that I made. However, if he is like me, he may have to learn life’s hard lessons for himself. Regardless, I know that he will be amazing because he is already.

Instead of what would I tell my younger self, perhaps the better question is:

What would I tell myself today?

This is an important question, conversation, and reality check to have with ourselves in the mirror from time-to-time. Let’s review the earlier advice I would give my younger self and see if that applies to me, right now:

Be true to yourself. Absolutely!!! Be true. Know yourself. Know that your aims are true. Know that you are enough for any situation. Know that in the end, everything will be okay, no matter what.

Never fear. Never fear others. Never fear what they think. Never fear criticism. Never fear failure. In fact, do bigger things now. Things you fear. Fail!!! Fail faster!!! It is the quickest way to learn. It is the quickest way to find the right answers.

Have faith in your vision, in your dreams. Your ideas, your vision, your dreams are the only thing that is truly yours. You don’t have to patent them because they live inside of you. In fact, you should share them with the world. Be like Jesus in this way. Don’t argue with others over your vision. Just present it. Bring it to life. The more attention, positive or negative, you get, the more energy will surround your creations.

Start investing in real estate right away. I never wanted to be one to sit around and lament the property I “could have” bought for $5,000 back in 1942. If I run the numbers in my head, my gut tells me a deal is right, I do it. There are even an infinite number of ways I can fix a mistake. I DO NOT believe in bad deals. The failure comes in not acting, analysis paralysis, or just not having the guts to believe in yourself (revert to #2, Never Fear). The worst thing that could happen is I learn, and that is actually a great thing, so there is zero downside to action. I wish I had woken up, conquered my fears, and been more disciplined younger and I may own 100 times the real estate I own today. However, I don’t like this type of thinking. Looking backwards hurts my neck and I want to keep looking forward. I also know that without going through life exactly as I have done so thus far down to the minutest detail, I would not be the person I am today, and I am cool with myself. I am grateful for my successes and for my failures.

Don’t worry about what others say. This is a HUGE one. I spent so much of my earlier years really caring, dwelling on, and giving myself a hard time about what others said or thought. I felt it as if it were a physical force. I stressed over it. I worried about the comments and thoughts of friends, spouse, parents, coworkers, other lawyers, judges. I played them back repeatedly in my head and gamed out strategies to control what others thought and their perceptions of me. The BIGGEST freedom my soul has ever known is not caring at all what others think (revert to #1, Be true to yourself… NO ONE ELSE!!!).

Plan… Stick to the plan. Plans should be flexible, but I take that as a given. The point is to have a target, a goal, a bearing so you know where you are headed. You can strategize the steps to getting to that goal over time and you can limit your time in which to achieve those goals, but life happens. When life happens that doesn’t mean you scrap the plan, that means the plan is a source of stability, a framework or skeleton by which you can play jazz around it while life happens and while progressing toward your goal. Setting goals and planning is something I spend a large amount doing in many areas of my business and personal life.

Be disciplined with your life, schedule, and body. I find that the older I get the more my vices negatively affect me. Part of my life has become self-evaluation and identifying what habits and behaviors positively and negatively impact my life. I work well on a schedule and making lists. I know this so I schedule most everything. I function best when I routinely workout. I function best when I sleep adequately. The biggest areas I am working on right now is nutrition and sleep. The more tuned up I can stay the better I preform personally and professionally. The more impact I can have on my family, my clients, and my team at the office.

I would encourage you to also evaluate your life. What would you tell your younger self? What would you tell yourself today? I am a planner. It is not only what I do for myself in my personal life, but it is what I do professionally for others as an estate planning and elder law attorney. One of the ways we can have a big impact on our own lives and the lives of our families is by getting our affairs in order both during our lives, planning for big life events like long-term care, and leaving a legacy for our children and grandchildren. Imagine if everyone did this. Imagine if all our ancestors would have done this. The only person I can control is myself. I would encourage you to have that “mirror” conversation with yourself and evaluate if you truly have a plan in place?

If you would like to sit down and have a conversation with me about planning I would be glad to make it easy. In under an hour, we can usually flush out goals and develop a great plan to protect your hard-earned money and property. Click the link below to schedule your FREE consult today.

 

 

 

 

 

 

Greg McIntyre

Estate Planning & Elder Law Attorney

What Assets have to flow through Probate?

in Articles by Greg McIntyre Leave a comment

The goal of many is to ensure that their assets do not have to flow through probate. This ensures that assets are not tied up in the legal process and saves many headaches for your loved ones. There are many tools that we can employ to ensure that assets do not flow through probate. However, certain assets have unique ways that they will pass to your loved ones and great care needs to be taken to ensure that that these do not unnecessarily pass through probate. In the article below I will address 3 different categories of assets and the implications of each.

The first category will be assets that are retitled into the name of a trust. Assets that are retitled into the name of a trust are not considered part of your probatable estate. This is true if the trust is an irrevocable trust or a revocable trust.

Trusts can be a great way to have your assets avoid the probate process. You must ensure though that these assets are titled in the name of the Trust itself and not in your individual name. For real property this can be accomplished by recording a quit claim deed that transfers title of the property in the name of the trust. For financial accounts this can be accomplished by signing the appropriate forms with that institution which transfers title in the name of the trust. When it comes to trusts, no matter the asset, you must transfer title to the name of the trust or the asset will most likely have to pass through probate.

Assets in your individual name that has no beneficiary designation (sometimes referred to as payable on death) will certainly have to go through probate upon your passing. This includes any bank accounts, your house, and investment accounts that do not have beneficiaries.

One asset in your individual name that many people forget about is your vehicle. The default position of the DMV is to have a vehicle in your individual name solely. Even if there are two people on the title this still does not mean that the vehicle does not have to go through probate. If the title does not “JTWROS” (Joint Title with Right of Survivorship) stamped on it then each named person only owns a percentage interest in the vehicle. This means that the owners partial interest in the vehicle will have to pass through probate. This potential headache can be removed however if the joint owners have the DMV issue a new title showing that the ownership is joint title with right of survivorship.

Assets that that have a beneficiary designation or are payable on death will not have to pass through probate. Examples of these assets are Life insurance and investment accounts.  Care needs to be taken to ensure that the beneficiaries on these accounts are in place. There are many examples of individuals believing that they have designated a beneficiary only for the family to discover later that paperwork was not filled out correctly or was never filed. In these unfortunate incidents these assets are treated assets in the individual name of the decedent and must pass through probate. We always recommend that you check with your bank and financial institution to ensure that your accounts have the named beneficiaries that you want to receive your legacy.

There are other assets that will pass automatically to beneficiaries as well. These are real property that is owned via a life estate, joint title with a right of survivorship, a ladybird deed, or a home owned by married couple as tenants by the entirety. All of these forms of ownership ensure that the interest is passed to their loved ones automatically and will avoid the probate process.

Great care needs to be taken when ensuring that your assets are protected and will avoid probate. One wrong designation can have disastrous consequences to your estate plan and your loved ones. Always make sure that you talk to a licensed attorney when planning your estate to avoid potential pitfalls. We would to talk to you about this and any other needs that you might have. Please feel free to contact us today to schedule a free consultation.

 

 

 

 

 

 

 

Eric Baker

Estate Planning & Elder Law Attorney

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

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