So, you went to your lawyer and had her draft you a shiny new trust. What now? Now you need to put your assets into the trust. This is also known as funding the trust. So, how do you do that? Well, the answer, similar to any other answer you’ll get from a lawyer, is: it depends.
The manner in which you out a particular asset into a trust depends on the nature of that asset. Below are some of the more common assets along with a description of how they are placed in trust.
Every piece of real property has some sort of deed associated with it. The type of deed depends upon how the property is owned. Most people own property outright. In that case, you would simply convey the property to the trust by executing a deed from you to the trust (in the name of the trust). If you do not own the property outright, you may deed whatever interest you hold to the trust; however, if you want to place all ownership interest in trust, you will need the signature of the other owners.
To convey the property to the trust, you can use a simple quitclaim deed. A general warranty deed is a deed that conveys property with a promise that there are no blemishes on the title of the property. These deeds are typically used in the sale of real property. Conversely, a quitclaim deed is a deed that conveys property with no guarantee as to the state of the property’s title. Since you already own the property and are using it to fund a trust, whether revocable or irrevocable, it is not necessary to use a general warranty deed.
One consideration that must be made when conveying property to a trust is whether it is encumbered by a mortgage. Most mortgages have a “due on sale” clause. This is a provision whereby if the property is transferred, the full amount of the loan will become immediately due and payable. However, not all transfers trigger the due on sale clause. One such transfer is a conveyance to a trust where the borrower is and remains a beneficiary. It is important to note that the borrower does not need to be the only beneficiary.
If you have stocks and bonds, then you have a transfer agent. This is the person who keeps track of the securities that you own. You need to request the permission of the transfer agent to transfer your securities into a trust. This can be done by filling out a securities assignment form. Note that if the securities are publicly traded, the stockholder’s signature will need to be guaranteed by a commercial bank—similar to a notarization.
Tangible Personal Property
Tangible personal property is personal property of a physical nature. E.g. vehicles, art, jewelry etc.
Pieces of personal property such as art and jewelry can be easily put into trust. You simply must draft an “assignment of personal property” document to the trust. Such document must name the trust and must specifically describe the item you wish to transfer. It must also be notarized.
Anything that has a title associated with it can also be easily transferred into the trust. For example, cars, tractors, RVs, and mobile homes (that have not been transferred to real property) all have titles. To put these items in trust you simple re-titled the property in the name of the trust.
There are very few things that cannot be put into trust. If you have questions about trust funding, the attorney at McIntyre Elder Law are happy to assist you.
I’m Greg McIntyre of McIntyre Elder Law helping seniors protect their assets and legacies. Today we’re going to talk about International Powers of Attorney and answer the question:
Are Powers of Attorney valid outside the United States of America?
The simple answer is, Yes, they are.
If you wanted us to draft a General Durable Power of Attorney and you asked, ‘Will this still be valid in Guatemala, or the Virgin Islands, or even the British Virgin Islands?’
My answer would be, ‘Yes it will.’
It all goes back to the Hague Convention. The Hague Convention brought about the Hague Compact. Those countries who joined, participated in good faith and agreements to honor each-others civil laws. Powers of Attorney are subject to that compact.
If you are visiting another country where you own property, for example, and you want to designate someone from that country to take care of your property, what do you do?
You can draft the Power of Attorney in the United States, in this case North Carolina, and because of the Hague Compact, you can have the document stamped with the Hague Apostille, which costs about $220 with overnight fees. For that cost, your Power of Attorney will be stamped with the Hague Apostille and will be valid in any country that complies with the Hague Compact.
If a country is not a member of the Hague Compact, you would need to take your Power of Attorney to the consulate or embassy in that country and they should have a method to register the Power of Attorney in that country. That way, it would still be valid in that country.
If you have any questions about Powers of attorney or any other area of estate planning and elder law, please call our office at 704-259-7040 or visit our website mcelderlaw.com.
I’m Greg McIntyre of McIntyre Elder Law helping seniors protect their assets and legacies. Today’s show is about family business. There are a lot of family businesses out-there, the difference here is there’s very little separation between our family and our business.
I’m here with my wife Stefanie, at our Charlotte office, located at 112 S. Tryon. She’s been out looking at new furniture for the waiting room. Until then we’ll just use it as we have it, because I’m past the point in my life where I’m trying to put on a show, it is what it is. We’re past the point were everything must be perfect to move on. If we had waited until we’d made perfect choices and decisions and the stars aligned, we wouldn’t have anything.
I’ve heard people say leave it at the office, but I don’t see how you can do that if you’re passionate about what you do. How can you unplug from your life?
Well, there are different people and different work styles. Some people can go to work at eight in the morning and be done by five. Their life and business are totally separate, but when it’s your own business, you can’t treat it as separate from your life, a kid free zone, not family friendly and things like that. I believe you must live by who you are. Also, when you’re an idea’s person, you can’t switch it off. Inspiration knows no hour.
Nine to five doesn’t work as a business because you’re competing against other people and businesses that put in the effort of open-all-hours time. Now, in the same breath, I don’t like to think about competition. It’s a waste of my time thinking about it. We just do what we do.
There are dichotomies to this: When working long hours, for example, there are so many benefits to taking a break, stepping back, recharging your batteries. You must do that to keep balance, but the work has to be done. There’s no fifty-fifty there.
It’s been a long road getting here. Our Shelby office is awesome, we brought up our kids at the office and we live in the Shelby community, but we also grew up around the Charlotte area, so I love that we now have a second office in Charlotte to help and serve that community.
I’m proud to be where we are now. We’re lucky to have our clients. I want to thank all our clients for allowing us to handle your estate planning, asset protection, qualifying your loved ones for Medicaid benefits to pay for long-term care, qualifying veterans for aid and attendance pension benefits and disability, and handling probate cases when a loved one passes.
We’re expanding our business into McIntyre Financial which is coming soon. Also, McIntyre education is now getting off the ground. I am so excited about what I do. If you love what you do and work hard at it, then you’re golden.
I just wanted to introduce you to our new office because I am so excited about it. If you are one of our clients and would like a tour of the Charlotte office, we can arrange that. We’re here to create raving fans, that’s our goal and again, I’m just so proud and thankful for what we’re building.
If you want to contact McIntyre Elder Law, you can call at 704-259-7040 or go to our website, mcelderlaw.com.
Estate Planning is a hugely important process that is often put off or ignored. Unfortunately, even for the well-meaning pre-planners out there, there are many pitfalls for the unwary. Below are the three major pitfalls you should avoid.
I. Failing to Do the Necessary Tax Planning
Currently, the gift and estate tax won’t affect most individuals, considering the threshold is $11.18 million for a single individual and double that for a couple. However, there are many other tax factors to consider when entering into retirement and creating your estate plan.
A. Social Security
Depending on your income level, you may be taxed on up to 80% of your Social Security (SS) income. The key to determining whether or not you will owe tax on your SS income, is to look at how much other income you receive in addition to your SS income. That number is known as your combined income. If your combined income is over the limit, you may be liable for tax on a certain percentage of your Social Security.
The limit for a single filer, head of household, or qualifying widow/widower with a dependent child is $25,000. The limit for joint filers is $32,000. If your combined income (or you and your spouses’ if married filing jointly) exceeds the limit, you must pay tax on some of your SS income, but never more than 85%.
If you are concerned about owing tax at the end of the year, you can adjust your withholding to ensure you do not underpay your tax bill. You can use Voluntary Withholding Request Form W-4V. You will have the option to withhold either 7%, 10%, 12%, or 20%. Over-withholding is a good planning option to guarantee you are not surprised by a hefty tax obligation come April 15th.
B. Tax on IRAs
i. How it works
IRAs are effective vehicles for saving for retirement; however, they do not allow for flexibility and can present issues down the road.
Traditional IRAs are tax deferred accounts. This means that you put pre-taxed funds into the account and you do not pay the tax on those funds until the money is pulled out in the future. The benefit of this type of account is that it allows you to put more money in the account, which increases your compounding interest. But, the Tax Man giveth and he taketh away.
Case in point, is the minimum distribution requirements (RMDs). The government will allow you to sit on pre-tax money and let it build, but only until you reach a certain age (70 ½ years). Thereafter, you will be required to start taking money out of the account—and, thus, pay taxes on it. The amount you must take out on a monthly basis as a RMD is calculated by dividing the balance of the IRA by your life expectancy. Thus, the more you have saved, and the older you are, the more money you will be required to take out.
This can present significant issues if not planned for. For example, your RMD counts toward your combined income in calculating whether you will be required to pay tax on your Social Security. It can also be an issue if you are trying to qualify for long-term care benefits, such as Medicaid or Veteran’s Pension Benefits.
ii. IRAs and Long-term Care
When planning for long term care, you will need to ensure you meet the requirements for income or asset levels. An IRA can count against you for both. There are options for spending that money down; however, a traditional IRA presents issues. To spend the money down, you will need to pull the money out of the IRA. This can result in a significant tax bill. Depending on your need for care, you may be able to spread the tax hit out over a number of years. However, not everyone has the luxury of time.
Depending on your situation, a traditional IRA may not be right for you. That does not mean you should avoid using a traditional IRA. You can utilize the benefits of a traditional IRA without incurring the full brunt of the downside by diversifying your retirement funds in more than one retirement vehicle. Furthermore, even though a traditional IRA may not be the best option, it could be your only viable option e.g. Roth IRA’s have an income and contribution limit.
Just because you no longer work, it does not mean you are out of the reach of the IRS. In fact, you may face more tax related considerations than ever. Planning for the future and retirement should include a comprehensive tax plan.
II. Not Considering Long-term Care Needs
Seventy percent of individuals over the age of 65 will need some type of long-term care in the future. With those type of odds, it is best to plan for the future as if the need for long-term care is a certainty rather than a possibility. The odds will only increase as medical technology improves and life expectancies rise. Ignoring the inevitability of the need for long-term care will surely result in disaster down the road.
So, what are the options?
A great planning option for long-term care is long-term care insurance (LTCI). LTCI is similar to any other insurance policy where you pay a monthly premium and you receive a payout upon the happening of some event—in this case, the need for long-term care. Every policy is different based on the individual. The monthly premium, the term of coverage, and the amount of coverage depends on the individual. Additionally, there are options for hybrid plans e.g. a life insurance plan with a long-term care ride.
What if you don’t qualify for LTCI or you cannot afford the monthly premiums?
If you do not have the safety net of LTCI, then you may want to structure your plan to allow you to qualify for means tested government benefits (i.e. Medicaid & Veteran’s Aid and Attendance) in the future.
How do you set yourself up to qualify for benefits?
The key here is having flexible assets. Medicaid and VA both have a rather low asset threshold for qualification. However, there are many ways to preserve these assets. To ensure that your assets can be preserved to the largest extent possible, your assets should not be locked up in a manner that makes it difficult to roll them into an exempt status. For example, the use of a traditional IRA, as mentioned above, essentially locks the funds in the account. They cannot be preserved without taking a significant tax hit. Another example is real property (excluding the home). While deed work can be done to preserve most, if not all, of your real property while allowing you to qualify, it is much easier to preserve liquid funds or funds that can be easily liquidated. Furthermore, depending on the type of long-term Medicaid you need, deed work may not be the solution.
Your estate plan should not neglect the inevitability of the need for long-term care. Ignoring this possibility can result in catastrophic financial and emotional turmoil. The best way to preserve your assets for future generations, is to contemplate the need for long-term care in the future.
III. Choosing the Wrong Estate Plan
There is a huge amount of misconceptions regarding estate planning. Estate planning is similar to taxes in that everyone deals with it, but no one quite understands it (except hopefully your lawyer). So, what should you think about to avoid choosing the wrong estate plan?
Your plan must be personalized:
No matter how tempting it may be to print out a fillable form from the web and get the process over with in an evening, your estate plan requires much more attention to detail. Prefabricated documents can lead to a variety of problems. There are many specific requirements associated with legal documents that have developed over years of legislation and case law. These requirements are technical and can vary on a case by case basis. In short, it takes an individual who has had these legal concepts hammered into their head for three years of law school to adequately ensure that the documents are correctly drafted.
Besides the obvious issue with prefabricated documents, another problem is they are not tailored to your needs and goals. Every individual has separate concerns about the future. Some of these concerns are not always explicit or obvious. It takes individual evaluation by an expert to determine what safeguards should be in place for each individual. For example, you may have a special needs individual in your family who will inherit your property. How do you ensure their inheritance is protected? Maybe, you have young children and want to appoint a guardian if something were to happen to you. How do you ensure your wishes are followed? The answer? Meet with a professional.
Your plan must be practical:
In additional to contemplating your goals, your estate plan should be practical. It should address your needs in a straightforward manner without undue complication. To illustrate, you may want a trust, but do you need one? There are many benefits of forming a trust. One of those benefits is probate avoidance. But if, for example, you have modest assets and income, you may be able to achieve the same goal without needing to create a trust.
Practicality means also means that the plan adequately contemplates the future or is flexible enough to adapt to future events. Let’s say you have a will drafted with your young children as heirs. You put a provision in the will that puts their inheritance in trust if you pass away before they reach the age of 21. You pass away while your oldest is 17, the money is put in trust, and it is responsibly managed by a trustee, rather than outright given to a minor. This is the sort of flexibility your estate plan should have—because, after all, the future is a mystery.
Creating an estate plan can be a very involved process, both mentally and emotionally. But, just like everything else in life, putting the time and work in will make the plan more practical, more personalized, and ultimately more effective. The best gift we can give our loved ones is our time. Some of that time should be used planning for a future without you in it.
Do not fall for the common estate planning pitfalls. Start the process, stay informed, and speak to an attorney about what is right for you.
I’m Greg McIntyre of McIntyre Elder Law helping seniors protect their assets and legacies.
Today we are going to discuss Special Assistance and Long-Term Care Medicaid. This is for people who are being hurt by long-term care payments, including nursing home and assisted living care payments. These payments might be draining your bank account rapidly and threatening to force the sale of real estate, including your home.
There are several straight forward methods to help save your money and property, and if we can employ those methods, we can help.
Special Assistance Medicaid
Special Assistance can pay for assisted living and assisted living with a special memory care unit. The income limit for regular assisted living is $1248.50 per person, and for assisted living with memory care is $1548.50 per month per person.
Nursing home care that’s Long-Term Care Medicaid has a different set of rules, and we will talk about it in a moment.
There is a three year look back period for the transfer of assets for assisted living Medicaid under Special Assistance. You can have one car and one home and two-thousand dollars ($2000) in your name as a single person.
Ladybird Deeds can be employed to save the house, and there are other ways to save liquid assets such as money and vehicles so you can pass those on.
Long-Term Care Medicaid
Nursing home care is under Long-Term Care Medicaid. Long-Term Care Medicaid has a five year look back period for the movement of assets. Assets should be repositioned or dealt with within or outside the five year look back period. If it’s within the look back period, five years for nursing home and three years for assisted living, then it must be done within the rules.
There is a five year look back period for general transfer of assets.
A Ladybird deed can absolutely protect your home and surrounding property up to $572,000 this year. In addition, you can use Tenants in Common Deeds to protect other real estate, which is a little more complicated.
To talk to us you can call our firm at 704-259-7040, or go to mcelderlaw.com/mcp. You can also check out McIntyre Education and Elder Law University at mcelderlaw.com/store. This has a tremendous amount of information available, from ecourses on estate planning and elder law to top podcasts, videos and books that can help you on your journey.
The Medicaid program is something you’ve paid for your whole life. Much like Social Security, you pay into Medicaid with each paycheck. However, unlike Social Security, even though you’ve paid in, you’re not entitled to recoup your money unless you meet the income and asset thresholds. In that way, Medicaid is rather restrictive. Thankfully, Elder Law attorneys have creative methods to get you qualified regardless of your income and asset levels. But even though you’ve paid into Medicaid your whole life, and you’ve finally become qualified to recoup your investment, Medicaid will still try and recover any money they paid on your behalf.
This is called the “Estate Recovery Lien” or the “Medicaid Death Penalty”. The way it works is that Medicaid will attempt to recover any amount paid on your behalf from the property in your estate after you die. Therefore, one way or another, Medicaid gets to keep the money you paid to it.
So, the question is: how do you avoid this penalty?
Let’s first talk about the common misconception that bankruptcy will eliminate the death penalty. To discharge debt in a bankruptcy that debt must have been previously incurred. In other words, the debt must have already “attached”. The Medicaid death penalty isn’t a debt that attaches during life. Instead, it is a method for recovery that allows Medicaid to calculate the amount of debt after your death and recoup the amount from your estate. This makes sense because Medicaid doesn’t know the amount of the debt until you’ve passed since they are paying for your long term care up to that point.
So how do you avoid the death penalty? North Carolina is what’s called a “limited recovery” state. This means that Medicaid is only allowed to recover what it has been paid by taking it out of the property that passes through your estate and therefore through probate. This means that they can only place a lien on property that passes through your will or through intestate succession if you don’t have a will.
Thus, you want your property to pass outside your will. This can be done in a number of ways. You can place beneficiaries on accounts, create trusts with assigned beneficiaries, or create survivorship rights in your property e.g. re-titling your vehicle “jointly titled with rights of survivorship”
If none of your property is passing through your estate i.e. the probate process, then Medicaid has nothing to take to recoup their payments.
What about the Home?
Thankfully, the home does not have to pass through your estate. You can do deed work to ensure that your home passes outside of your will and directly to your heirs at the moment of your death.
The best way to do this in North Carolina is through the utilization of a Ladybird Deed (LBD). The LBD allows you to essentially place a beneficiary on the home. This means that the home will automatically pass to the beneficiary upon your death and avoid probate altogether. Because the home is not passing through probate (or through your estate), Medicaid cannot place a lien on the property. The added benefit to the LBD is that it does not trigger the lookback period for Medicaid. Thus, the LBD allows you to predesignate who will inherit your property while avoiding the lookback period and any death penalty.
You can avoid the Medicaid death penalty by avoiding probate and allowing Medicaid to reach the property in your estate. To learn more about probate avoidance and Ladybird Deeds, contact McIntyre Elder Law at (704) 259-7050.
Brenton S. Begley
Elder Law Attorney
McIntyre Elder Law
“We help seniors maintain their lifestyle and preserve their legacies.”
This website is attorney advertising and does not establish an attorney-client relationship, which is only formed when you have signed an engagement agreement. We cannot guarantee results; past results do not guarantee future results.
McIntyre Elder Law 112 S. Tryon St. STE. 760 Charlotte, NC 28284