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To understand how to protect property, you must first know what risks threaten your property. Among the most significant risks are 1. The cost of long-term care; and 2. probate.

These two risks go hand and hand. The reason is because the risk of long-term care is typically realized in the probate process, as I’ll explain below. First, why are these two risks significant?

Long-term care is a reality of a vast majority of the population. Over 70% of individuals over 65 will need some type of long-term care, which can cost anywhere from $5,000 to $10,000 per month. Most people cannot afford long-term care and either sell off everything they’ve worked for—including their real property—or they rely on some type of benefit to pay fro long-term care. Either way, their real property can be subject to risk, either through using it to pay the cost of care or by recovery of any benefits paid out after death.

This is where probate becomes significant. Let’s say someone racked up a nursing home bill or utilized Medicaid to pay for their care. In either instance, the nursing home or Medicaid would want to get paid. They opportunity they have to get paid, however, is limited to the probate process. North Carolina is a “limited recovery state,” meaning that creditors—such as the nursing home or Medicaid—are limited to recovery from the probate process. Therefore, keeping assets out of probate is a key aspect of protection.

But, how do we protect from both risks? Let’s look at a few ways to accomplish both.

Protect your Home with the Ladybird Deed

You’re allowed to own a home and qualify for benefits like Medicaid or VA Aid and Attendance to pay for long-term care. But you still want to avoid probate with the home. Many people make the mistake of giving their home away (e.g. putting it in their child’s name) to avoid probate. However, the gift of the home will disqualify the giver from benefits for a significant period of time.

Ideally, you would keep the home in your name and under your control for the rest of your life, while avoiding probate with the home. The tool to accomplish that goal is the Ladybird Deed.

Protect your Other Real Property with a Percentage Interest Deed.

You can also own real property, other than your home, and qualify for benefits. However, you cannot own 100%. You also must be careful in how you gift any interest in real property, because you want to maintain the ability to qualify for benefits in the future.

Giving someone a percentage interest in your property can help you qualify for benefits. Additionally, the deed (the tool used to convey the percentage interest) can also convey a “right of survivorship.” A right of survivorship will allow you to avoid probate with the additional real property.

Protect Everything with a Trust

Trusts are essentially pots were you can put your assets fro many reasons, including protection from the risks of long-term care or probate. However, unlike the tools listed above, trusts are good pre-planning tools. This means that they are most appropriately used to plan ahead, not necessarily in an emergency or crisis situation where the need for care is imminent.

Pre planning is incredibly important for this reason. The proper trust can be used to protect all of your assets. The way this is accomplished is that, through the use of a convertible or irrevocable trust, the assets you are seeking to protect are exempted for long-term care benefits purposes. In other words, if you can only have a certain amount of assets and excess assets will “disqualify” you from a benefit, a trust can assist in getting you qualified. A trust will also allow you to avoid probate with any asset placed into trust, thereby avoiding the long, difficult, expensive, and risky process altogether.

Real property is most valuable asset for most people. For many, it’s what is going to help give the next generation a leg up. Don’t be afraid to take control of your future and protect your property. If you have question on asset protection, give the experienced attorneys at McIntyre Elder Law a call at (704)-259-7040 and schedule your free consultation today.

 

 

 

 

 

 

Brenton S. Begley

Attorney at Law

If you have ever lost a loved one, you may recall or be familiar with the grief that accompanies such an event. It is often an unforgettable point in life that creates significant change. It can bring families together…and tear others apart.

Perhaps you have been fortunate enough to avoid such loss up to this point. Maybe your perspective is one that reflects a deeper understanding…one that contemplates the fact that, although your loved one is no longer physically with you, some other part of them lives on.

To memorialize and manifest one’s intent in a legal document is one way that a small part can carry on after death. Whether that be through a traditional Last Will and Testament or through more advanced Trust planning, the final expression of your intent should be carefully considered. That said, here are some common phrases that signal a need for planning:

• “I want a simple Will…”

 

• “What happens if I don’t have a Will?”

 

• “How can I protect my assets…”

 

• “We want to protect our children’s inheritance from an ex-spouse or creditor…”

 

Consider talking through your goals and working to identify what planning tools could readily apply to your life. Confer with your significant other or loved ones, as appropriate, and be proactive in getting your affairs in order.

An especially important subject worth mentioning is one that most people mistakenly believe could never happen within their own family. The possibility that a dispute could arise out of the estate and between those that are left behind. These are some examples of questions that follow:

• Who gets what?

 

• What if certain promises were made while that person was still alive? Are they legally enforceable?

 

• What if the language in the Will or Trust is unclear and the meaning is misunderstood?

 

• What if there are two Wills?

 

• What were the circumstances at the time of signing?

 

• What if certain people have plans for an inheritance that are different from the express instructions provided?

 

• Can a Will be challenged?

 

• What rights do I have as an heir or beneficiary?

 

As the title of this article suggests, the death of a loved one is often the catalyst for long-lost relatives and friends to “come out of the woodwork.” Their sudden appearance prompted by some perceived financial gain. This can lead to added time and further expense.

Take the offensive early by using clear, concise language in your legal documents and set up a plan that is tailored to your personal needs and designed to achieve your stated goals.

If you have questions related to Estate Planning or Probate, we can help. Give us a call at 704-749-9244 or visit us online to schedule your consultation today.

 

 

Therron Causey

Estate Planning & Elder Law Attorney

“How does tax value versus appraised value of real estate in the probate estate effect heirs?”

As an attorney that handles probate cases I deal with issue all the time. Clients and heirs of an estate may know little about how to assess the value of real estate flowing through an estate and why it matters. Not knowing could cost you later.

If there is real property (real estate) associated with this probate estate, then the way the property value of that real property is listed can have effect taxing of the heirs at the time of the sale of that real property. Taxable basis for capital gains tax purposes is calculated by the amount placed on inventories within the court probate file. Tax value as of the date of death of the decedent may be used to calculate the heirs tax basis in the real property. Alternatively, privately appraised value contemporaneous with the decedent’s date of death may be used. Depending on markets a private appraisal may yield a higher tax basis and fair market value than tax value.

For example:

            Tax Value at Date of Death: $100,000.

            Private Appraised Value at Date of Death: $200,000.

            Sales price of the house after heirs inherit and sell the property: $200,000.

In the above example if tax value was used in the estate process, then the heirs would share a capital gain of $100,000 which they would proportionally report on their tax returns for the year of sale of the real property. If private appraisal value is used, then there would be $0 gain so no capital gains to report on the heirs’ tax returns.

There could be a situation where a property is sold for less than tax or private appraisal value in which case the heir would take a capital loss.

These are some considerations when choosing to use tax value or appraisal value for real property in a probate estate. We are very proud of our amazing probate team and would be glad to handle and advise on your probate estate. When a loved one passes away we want to be there for you. Please contact our office for your free consult today.

Estate Planning & Elder Law Attorney

Call me sentimental, but I’ve always been one to root the little guy. Powers tends to be a zero sum scenario, where those who have it benefit, and those who don’t . . .don’t. Even in a free democracy, we have instances of unfairness and inequity. One of the reasons I decided to become an attorney is my desire to balance the scales. That’s what justice is all about. 

To help ensure inequality, I first had to determine who the “little guy” was. It turns out, it’s the everyday, middle class American citizen. The middle class is truly the backbone of the United States. We pay most of the taxes, provide must of the opportunities, and work most of the jobs. However, despite the incredible positive impact of the everyday nine to five man or woman, the folks in the middle class are facing a huge crisis that no politician is addressing. 

Specifically, over 70% of individuals retirement age and older will need long-term care. That percentage is going up as medical technology is getting better. As it turns out, people are living longer but their quality of life isn’t necessarily increasing at the same rate.

These odds are a HUGE deal because long-term care costs hundreds of thousands dollars a year. Most middle-class individuals cannot afford to pay five to ten thousand dollars a month. Folks in this situation face losing everything they’ve worked hard all of their lives to earn. Sadly, a large number of individuals face this reality. Luckily, don’t have to be one of them. 

There are many tools that you can use to protect assets and qualify for benefits to pay for long-term care. These tools include trusts, like irrevocable trusts to protect money, or deeds, like Ladybird deeds, to protect your home. 

At McIntyre Elder Law, we provide our potential clients with a free hour to sit down with an experienced elder law attorney to determine the tools that will help you protect your hard earned money and property. We discuss your goals (such as providing an inheritance for children and grandchildren) and analyze your potential risks. We also provide an in-depth explanation of the methods that will meet your goals. 

At McIntyre Elder Law, we believe in protecting the little guy and we would love to give you the opportunity to be a part of our family of clients who have a plan and peace of mind. Schedule your free consultation today at (704)-259-7040. 

Estate Planning & Elder Law Attorney

Blockchain technology is a revolutionary development, yet the law is, once again, stuck in the time of the dinosaur. As we lawyers chisel stone, the world around us is advancing at lightspeed. It’s time to pull our heads out of West’s Digest in print and embrace the new digital world around us. 

You don’t know it yet but everything has changed with the invention of the blockchain and the  smart contract. Eventually smart contracts will be the method by which the transfer of all assets occur, whether the transfer is a result of a business agreement or some type of estate planning. Additionally, the blockchain will be the place where all assets exist, whether digital or physical. 

The smart contract is a function of the blockchain. The blockchain is where crypto currency lives. However, the functionality of the blockchain is not limited to currency. The emergence of the non fungible token or NFT has demonstrated that the blockchain is a platform that has quite a bit of potential. Namely, we now know that the blockchain will house more than just currency.

The smart contract aspect of certain blockchain platforms allows for “if/then” logic to be built into a transaction. For example, let’s say that we agreed to have me change your car’s oil, upon completion of the oil change, you could keep your wallet in your pocket because the funds would automatically transfer. Although, the transfer would only occur upon completion of the negotiated task. 

Despite the abundant potential, there will likely be slow adoption. The smart contract will, in many ways, take work away from attorneys. Simple, and in the future, complex agreements will be programmed into a transaction with all terms and caveats contemplated in the programming logic. 

We should embrace rather than reject this technology. It has the potential to clear up a significant amount of litigation. It will also hasten the speed of transactions, bringing business squarely into the twenty-first century as contemplated by science fiction. 

Transfers of Assets other than Currency/NFTs

Let’s say you want to transfer your home to your child. To do so, you would need to have an attorney draft a deed, which includes the legal description of your property and the amount of interest you intend to convey (in this case, 100%). You would then need to sign that deed in front of a notary public (and possibly witnesses, depending on your state). Lastly, the deed would need to be recorded in the register of deeds in the county where the property is located. 

In other words, we have much the same process of transferring real property as did jolly ol’ England from whom we inherited our common law. The only update we’ve made is that we now have a digital registry of deeds to accompany the physical one (truly futuristic). 

What if real property transfers could happen instantaneously will all the same (and more) safeguards that we currently have in place? Imagine, instead of a register of paper deeds, we have every property “minted” on the blockchain, property description and all. Once on the blockchain, real property transfers would happen via smart contract rather than through the antiquated deed transfer we still deal with today. 

Blockchain Trusts

Assets on the blockchain are currently held in a “wallet.” This wallet is not much different than a bank/brokerage account and the “wallet ID” is not much different than an account number. Wallets are set up to not only hold assets but to also allow for the seamless (and almost instantaneous) transfer or swapping of assets. These wallets are allso incredibly secure, since they exist on the blockchain and have a unique and encrypted identity. Currently, the only assets that can be held in a wallet are those assets that exist on the blockchain. However, there’s nothing saying we can’t put other assets in our wallets. 

It would not be difficult to assign an asset, such as real property or a vehicle, a digital identification that exists on the blockchain. If so, physical assets with a digital identification could exist in our digital wallets. The ownership of such assets would be evidenced through their association with whatever wallet they exist in. Further, transfer of such assets could occur instantaneously, whether for purposes of gift, sale, or testamentary devise. 

The future is here. Attorneys around the world have a duty to embrace the new technology to make asset ownership, transfer, and protection easier and more effective for our clients. A push for adoption of blockchain technology is needed. The future is a place where attorneys and digital blockchain engineers work together to bring the law into the twenty-first century. 

SCHEDULE YOUR FREE CONSULTATION

Brenton S. Begley

Estate Planning & Elder Law Attorney

Is not exactly visionary to say that crypto is the wave of the future. Crypto currency has already changed the financial world since the inception of Bitcoin BTC in 2009. Far from an esoteric digital asset, crypto currency has created a new world of decentralized finance. Other currencies are controlled by governments and their policies, which can, in turn, control the ebb and flow of a particular currency. The thing about centralized currency, is how closely governments can monitor it–mostly for tax purposes. 

Crypto has gone mostly unregulated and, therefore, untaxed. However, that is likely going to change. The new infrastructure bill is going to add reporting requirements for crypto currency. This means that platforms where you can buy, sell, swap, and otherwise hold crypto (of which there are many) will be required to report transactions to the IRS. 

What will the Tax Look Like?

Ever willing to put the cart before the horse, the government wants to institute these reporting requirements without giving clear guidance on how they intend to tax crypto. However, we can draw some conclusions based how other assets are taxed. 

Capital Gains Tax

Crypto will likely be classified as a capital asset. Capital assets (like stock) are taxed when they are sold. The tax is calculated based on the price you paid and the price you sell it for (this is somewhat of an oversimplification but indulge me). 

Therefore, if you buy $100 worth of ethereum ETH and it appreciates in value to where you now own $300 worth of ETH, you have a $200 gain. You may be taxed on that gain if it is “realized” i.e., when the asset is sold. If you hold the asset, and you don’t realize the gain, then you will not have capital gains tax (under the current tax laws). 

 Interest Income and Staking

It’s still possible to be taxed on the crypto that you are holding if that crypto is earning you interest. Those who own crypto currency can earn interest in a number of ways. Some platforms automatically give interest based on the level of assets you own. Other methods allow you to “stake” your crypto, essentially locking it up for a period of time to reduce volatility. Crypto owners can also “lend liquidity” to certain coins or crypto assets and earn interest by doing so. 

This interest will likely be taxed as ordinary income like interest earned off of other capital assets. 
Crypto currency is a novel thing but the taxes on it may not be so novel. What remains to be seen is how the government plans to enforce taxation of this “cryptic” asset. Stay tuned for more crypto tax developments to come.

Brenton S. Begley

Estate Planning & Elder Law Attorney 

How do I pass on my cryptocurrency? Plus the Digital Blockchain Trust (DBT) explained.

Schedule your FREE CONSULT today!

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💻Online at: mcelderlaw.com/scheduling.

Theoretically, a Digital Blockchain Trust or DBT for short, is a type of digital instrument that holds information. The information tracks your crypto holdings and acts based on certain information. For example, if you were to pass away, the DBT, once it verifies your demise as a Verifiable Death Event (VDE), would instantly preform a set of preset instructions. You may set up the DBT to instantly split 20% of your crypto holdings and send it to a charity of your preselected choice. The other 80% being split amongst your children who will receive an email, text, or additional type of communication that prompts them to set up a password to access their Sub Trust Wallet (STW). The STW would require them to verify their identity through a set of pre-scripted identity verification points (IVPs) and set up their password and two factor authentication methods to access their very own digital crypto wallet. An alternative to this would be to send their percentage of your crypto in the DBT to their existing crypto wallet. Let’s say you have college age children and don’t want to give them everything all at once. You can easily build your DBT to make deposits to the STW for each child over time, let’s say a period of years. You may choose to giver the 10% of their share per year for the next 10 years starting when they reach 25 years of age. Walla, your trust has been administered.

What is missing here? Well, a human trustee would generally handle all the trust administration. However, in a DBT the trustee is essentially the information or set of instructions encoded in the DBT. The DBT acts on your preset instructions. This avoids any chance of fraud or misuse of funds by a trustee and ensures that the instructions encoded in your DBT are carried out exactly as you intended. You are essentially acting as the trustee through the DBT after you have passed away. This is a massive improvement over traditional trust documents and is the future of estate planning.

As more and more assets move to a digital blockchain world the ability to safely and securely administer these assets when the asset owner passes away will become increasingly important. We intend to be at the forefront of this new(ish) blockchain frontier. You may put off planning for the future, but the future has a plan for you either way. It’s your digital choice.

Greg McIntyre

Crypto, Estate Planning & Elder Law Attorney