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Probably the largest concern that arises when someone wants to sell property is the possible tax implications of such sale. Luckily, the tax code is set up in such way that incentivizes property ownership and transfer. This means that there are procedures by which tax can be avoided that have been built into the tax code. We will explore some of those procedures, but first we will lay some foundation.

Types of Tax

            There are many types of tax (e.g. excise tax, estate tax, etc.). The type of tax you’re likely most familiar with is income tax. The tax that this article is most concerned about is capital gains tax. Similar to income tax, the amount of capital gains tax you may incur is based on the amount of gross income you earn each year. Such rates can be found at IRS.gov, specifically look at Tax Topic No. 409 Capital Gains and Losses.

Capital Gains Tax

            So, what is capital gains tax? Capital gains tax (or cap gains for short) is the tax you incur as a result of selling a capital asset. A capital asset is most anything you own: your house, your car, your toothbrush. The best way to think about capital assets is that everything you own is a capital asset—unless it isn’t. An example of things that aren’t capital assets are patents or copyrights, accounts receivable, and inventory held in a trade or business. Refer to 26 U.S. Code § 1221 for the exact definition.

Calculating Capital Gains Tax

To calculate the amount of capital gains tax you owe on the sale of a capital asset, you must first determine your basis and your gain.

The best way to think of basis is that it’s the baseline value you’ve invested in the asset. There are many ways to establish basis; however, we will discuss the most intuitive method: cost basis. Cost basis is equal to what you pay for an asset. So, if you buy a car for $25,000, your basis in that car is $25,000. Cost basis can increase with further investment. Let’s say you decided to put some after-market parts on the car worth $5,000, your basis in the car is now $30,000.

Your gain, if any, occurs when the asset is sold. The gain is equal to the difference in the basis and the sales price. For example, if I pay $25,000 for a car, my basis is $25,000. If I then sell that car for $30,000, I have a gain of $5,000 ($30,000 – $25,000 = $5,000). In much the same way, if you sell the car for less than your basis, you have a loss equal to the difference in your basis and the sales price.

After you’ve found your gain, you will then apply the applicable capital gains rate to your gain. For example, let’s say your gain is $5,000 and, based on your annual gross income, your rate is 15%, your capital gains tax will be $750 ($5,000 x 15%).

Avoiding Capital Gains Tax

Procedure 1: Sale of Personal Residence IRC §121

            The largest capital asset for most of is our home. Real estate tends to appreciate in value, which is a good thing if you own a home. However, when you go to sell that home, you don’t want the appreciation in your home’s value to lead to a giant tax bill. Thankfully, there is a provision in the tax code that allows you to exclude a certain amount of gain from the sale of a personal residence (see IRS Publication 523).

            Per section 121 of the Internal Revenue Code, you can exclude up to $250,000 worth of gain from the sale of a personal residence if you’re a single individual and $500,000 if you’re a couple.  To qualify for this exclusion, you must have owned and resided at the property for 2 out of the last 5 years leading up to the sale.

Procedure 2: Like-Kind Exchange IRC §1031

            In the past, section 1031 applied to many types of assets. Since 2017, and the adoption of the Tax Cuts and Jobs Act, a like-kind exchange can only be done with real property. A like-kind exchange (or 1031 exchange) is essentially a way to defer taxation on the sale of a piece of real property.

            Let’s say that you own a rental home that you purchased for $100,000 in the year 2000. Over the last 20 years, the property has appreciated to $250,000.  The rent from the property is not what you want, so you decide to sell the property and trade up. However, it’s an investment property, so you can’t use the personal residence exclusion mentioned above. If you sold the property, you’re looking at a $150,000 gain. If your capital gains rate is 20%, your tax would be $30,000. You definitely don’t want that.

            You can avoid this tax altogether by rolling the gain into another piece of real property. When you roll the gain into the new property, you won’t have to pay the tax on your gain until the sale of the new property—unless of course you use another like-kind exchange.

A like-kind exchange can be done in an unlimited amount and frequency. Although, just like any good tax planning tool, it has its rules. The rules boil down to this: you must identify the new piece of real estate into which you’re planning on rolling the gain within 45 days of the sale of your property. This designation must be done in writing. Then, you must close on that new property within 180 days of the sale of your old property. Note, you can also back into a like-kind exchange if you’ve already sold property and purchased new property.

Conclusion

            Don’t let the fear of taxes keep you from investing in real estate or selling your real property. Real property is too good of an asset to be deterred by taxes. After all, it’s the one thing they’re not making more of.

If you have question about tax planning or planning in general, give the experienced attorneys at McIntyre Elder Law a call at (704) 259-7040.

IN PERSON . VIDEO CONSULT . PHONE CONSULT

Book Your FREE CONSULT Today!

Regards,

Brenton S. Begley

Elder Law Attorney

McIntyre Elder Law

“We help seniors maintain their lifestyle and preserve their legacies.”

www.mcelderlaw.com

Phone: 704-259-7040

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There’s nothing more certain than death and taxes, or so it’s been said. And, while there’s nothing I can do about the former, I’d like to talk to you about how to best avoid the burden of taxes in retirement.

Let’s first discuss what I mean by “tax-free retirement”. A tax-free retirement means planning with the goal of tax avoidance but most importantly planning with the goal of getting taxes behind you. A retirement free of the dark looming cloud of potential tax, is a free retirement.

Tax Avoidance

A tax-free retirement is not a retirement that is totally devoid of tax. Rather, a tax-free retirement means that your retired years will not be spent restricted in an attempt to avoid tax that has been deferred over the years, but still needs to be paid. Tax avoidance should mean avoiding taxation period, not deferring taxation and trying to avoid it in the future. Pure tax avoidance is rare. And, while pure tax avoidance should also be a goal, we are going to look at avoiding the restriction of future or delayed taxation.

For example, if you put money in a traditional IRA, you won’t have to pay tax now, but you will have to pay tax later. “Later” is when you retire and start pulling that money out. And, while it feels nice to pay zero tax in the present, all you’re doing is burdening your future self and restricting your ability to plan or protect assets in retirement.

 i. Tools:

There are a few amazing tools that you can utilize to ensure that you can save for retirement and avoid the restriction of future taxation. Below are three of those tools:

a. Roth Retirement Accounts

Unlike a traditional retirement account, Roth retirement accounts are accounts where you invest money that has already been taxed rather than pre-taxed money. The result is that you invest a lower amount (because the tax has been taken out) but the money that sits in the account is tax free. Because of the after-tax nature of the account, there are many fewer restriction on a Roth as opposed to a traditional account that I will list below.

• You will not be penalized for early withdrawal of funds from a Roth account.
• There are no required minimum distributions with a Roth account.
• You are not subject to the whims of Congress’s treatment of traditional retirement accounts i.e. Congress can accelerate the tax on traditional accounts. This is something that is discussed every time the US heads for a recession.
• Lastly, you can more plan, spend, and protect your money without the restriction of future tax.

Even if you have already started a traditional account, you can slowly roll-over the funds into a Roth account, spreading out and minimizing the tax burden. This will consequently also lead to the elimination of the restriction of future taxation.

  b. Insurance

Much like a Roth account, you can use insurance as a tax-free investment. The money in the investment grows tax-free and you similarly will not be faced with a huge tax bill if and when you want to pull the money out. Insurance policies geared for retirement are especially useful for those high-earners who may be disqualified from using a Roth account because of their income.

c. Trusts 

Another “future tax” you may want to consider is inheritance tax. Currently, the federal inheritance tax is not a factor for most Americans. That’s because an individual’s estate must give over eleven million one hundred eighty thousand dollars ($11.18M) before it will be subject to inheritance tax. However, this amount is subject to change. The current threshold will automatically revert to the previous amount, a little over five million ($5.56M), in 2025. And it can go lower from there. The federal estate tax or “death tax” has been applicable to estates with a total worth of as little as six hundred thousand dollars ($600,000).

Trusts can be a great tool to help individuals to avoid burdening their heirs with a hefty tax bill. Certain trusts may be use at not only avoiding the estate tax but also protection of assets and qualification of benefits to pay for long-term care.

Tax avoidance means not burdening yourself with future taxes. The time that you will need the most flexibility and when your assets face the most risk is after you retire. Don’t restrict yourself with the straight jacket that is delayed taxation. Get taxes behind you.

Getting Taxes Behind You

Damocles was an admirer of his King Dionysius. He pandered to his King, complimenting him on his great status and wealth. In his gratification, it was clear to Dionysius that Damocles was jealous of the King, so Dionysius decided to offer an opportunity to Damocles. Damocles would take the King’s place, his status, his power, and his riches. The only stipulation was that the position would also come with the danger of being King. To demonstrate the precarious position of monarch, Dionysius suspended a sword over the head of Damocles, being held by the hilt by only a single strand of horse hair.  This way, Damocles could feel the true nature of the power and wealth of the ruler, knowing that at any time the sword would inevitably fall upon him.

The “Sword of Damocles” is not only a “heavy is the crown” type analogy. It is also emblematic of the manner in which government sponsored retirement accounts work.

IRAs are almost too good to be true—almost being the key term there. They have a lot of benefits that are touted by probably every financial planner ever. The reason why is that they seem like a no-brainer. The funds you put into a traditional IRA are pre-taxed and grow tax free. That’s right, you don’t have to pay the tax on the money when it goes in and when it grows. But just like the wealth and power of kingship, the traditional IRA has its own looming danger.

When you’re young and working hard toward a retirement there’s nothing better than seeing than number in the account grow, regardless of its taxable nature. However, when you’re at retirement age, the number you see no longer simply represents years of hard work and saving. It also represents a giant tax bill that someone at some point will have to pay.

The reason why this is so important is best explained within the context of asset protection. Funds in a qualified or pre-taxed account are not protected from the risk of long-term care costs. And if seventy (70%) percent of people over the age sixty-five (65) will need some type of long-term care (costing hundreds of thousands a year), then protection from long-term care is important.

The catch here is that to protect the funds in these accounts, you must take the money out—generating a taxable withdrawal. This seems bad on its face. After all, no one wants to pay tax. However, someone at some point will be required to pay the tax on that account regardless.

Let me give you an example. Let’s say Donald has five hundred thousand dollars ($500,000) in a traditional IRA. He wants to protect this money because he’s getting up there in age and knows of the likelihood for needing expensive long-term care. He also knows that he would rather protect his money and leave behind for his family, than to give it to a facility. He could use something like a Medicaid Asset Protection Trust to protect the money, but he would have to take the money out of the IRA, generating a taxable withdrawal. Donald gets nervous, not wanting to face the inevitable, he avoids protecting the money and ends up needing long-term care. In the end, he pays the balance of the retirement account to a long-term care facility in addition to all the latent taxes.

If Donald would have acted rationally, he would have cashed the IRA out and protected the remaining balance, regardless of the tax consequences. Better yet, if Donald would have planned ahead, he could have started to slowly withdraw the money from the IRA in small increments, spreading out the tax burden over a number of years. Regardless, the best course of action for Donald is to protect his IRA and the only way to do that is to take the money out.

Getting taxes behind you means freedom. You will no longer have the proverbial Sword of Damocles hanging above your head. You can spend, invest, and protect your assets without the fear of the inevitable tax burden.

Conclusion

If you have question about protection of assets or enjoying a tax-free retirement, then it’s important that you speak with a professional. The attorneys at McIntyre Elder Law are happy to sit down and have a straight-forward discussion about the best strategy for you and your family, in a clear and understandable manner. Give us a call at (704) 259-7040 to schedule your consultation today.

IN PERSON . VIDEO CONSULT . PHONE CONSULT

Book Your FREE CONSULT Today!

Regards,

Brenton S. Begley

Elder Law Attorney

McIntyre Elder Law

“We help seniors maintain their lifestyle and preserve their legacies.”

www.mcelderlaw.com

Phone: 704-259-7040

     

            This country has survived and thrived over two hundred years, expounding the values upon which we were created: freedom and liberty. The extent of our freedom and liberty have changed over the years. For the most part, every one of us have enjoyed more freedom and more liberty as our country has grown. However, there is more growth that needs to happen. 

            Freedom and liberty mean having individual rights. Individual rights shouldn’t stop at what you see written in the Constitution. It should extend to protect all individuals and ensure a decent quality of life and preservation of property.

            This country is in the midst of a silent crisis. While the twenty-four-hour news cycle is occupied with stories of the pandemic, riots, and the election, a perhaps more sinister calamity is brewing. This calamity has been brewing for some time. You see, this country’s population is aging. The baby boomer generation was so named because of the large amount of children born right after the second World War. That generation is now either approaching retirement age or are already above age sixty-five.

            Here’s why the aging of our country’s population is not only concerning but is also already causing a crisis nationwide: over seventy percent of individuals over age sixty-five will need some type of long-term care. With the increase in medical technology people are living longer and longer, but the quality of life isn’t necessarily increasing. This means that people are staying longer in longer-term care facilities (an average of four to seven years). At a cost of anywhere from five to fifteen thousand dollars a month, an average stay at a long-term care facility would result, for most individuals, in a loss of everything for which they’ve worked hard their whole lives.\

            As an Elder Law Attorney, I have witnessed the beginning of this crisis, a crisis that will only continue. We can’t stop the advance in medical technology, and we can’t stop the aging of the population, but we can help to stop the wholesale deprivation of money and property one individual at a time.

            Everyone deserves freedom and liberty. Included in that should be the freedom to live your life, work, and retire without fear of losing everything you have earned. That’s what Elder Law seeks to do. We have tools to help you protect yourselves, your family, and your property. We also help people pay for expensive long-term care while preserving their assets. In short, we are here to defend your rights.

            While you’re celebrating Independence Day with your family this year, I want you to reflect on the fight for freedom this country has endured. I want you to also reflect on the benefits that freedom has bestowed upon you and your family. Lastly, I want you to think about what you would do to preserve that freedom.

            If you want to fight for your freedom, give McIntyre Elder Law a call at (704) 259-7040.

IN PERSON . VIDEO CONSULT . PHONE CONSULT

Book Your FREE CONSULT Today!

Regards,

Brenton S. Begley

Elder Law Attorney

McIntyre Elder Law

“We help seniors maintain their lifestyle and preserve their legacies.”

www.mcelderlaw.com

Phone: 704-259-7040

     

What is true independence from an individual perspective? Being independent can mean different things to different people at different points in their life. When I was young, leaving home and joining the Navy was my version of rebellion and independence. I was on my own, bald from bootcamp but skinny, fit and ready to take on the world. I got 3 squares a day and I had my own place to stay. I was young and independent.

As I aged, I got married, bought a house, had children (not necessarily in that order), graduated from law school and started my career as a young attorney. Scared to death, in debt, but ready to take on the world, I was independent.

As I aged, I had more children, paid off some debt, incurred much more, started my own business, incurred much more debt, and set off as proud and headstrong as ever to conquer the world and take care of my family. I was independent.

As I aged, Stef and I continued to have kids, work hard, help people with our business which we now called McIntyre Elder Law, incurred much, much more debt, grew the business, bought another house and sent our oldest son to college. Sending my son to college is probably one of my proudest moments and I was amazed I could afford it. So far, so good. I am independent… Or am I?

I am a slave to debt. As much as I strive to pay it off, another need for debt rears its ugly head. College, cars, a home, all require debt for me and most everyone else in the world. Does that make me truly independent? No, it doesn’t. It makes me beholden. It exerts a certain amount of stress over my everyday existence; a debt cloud, so to speak, that follows me around. It affects me. To be free, to be truly free and independent, I know, would require some tough decision making. It would require me to pay off everything. It would require me to stop using debt leverage to buy things. There is a school of financial thought that glorifies debt as leverage to be used to acquire assets we could otherwise not afford. Obviously, most of us subscribe to that school. Can a person achieve wealth, assets, raise a family without using large amounts of debt? That is a question I have been asking myself lately. Oddly enough, I have also been reading the biography of Warren Buffet who abhorred debt. He has only been the richest man on the planet in the past so yes, it is possible. Although, I’ll note that Warren was extremely talented in a bizarre, financial genius from Omaha sort of way.

I find myself thinking about debt, taxes and other anchors that weigh down me and weigh down my clients as I peruse their assets and dispense legal advice concerning their estate and estate plans. Sometimes I just simply want to comment frankly on these things.

“Dump the debt”, I want to say.

“You are in retirement; you don’t need that mortgage. Pay it off and enjoy the additional income each month.” I think.

“Liquidate that IRA and protect the money in a trust. You may get taxed to death in coming years on the income you pull out. That IRA is totally unprotected and the coming long-term care costs you might pay is going to take it all!” my mind screams.

But alas, we are mostly all in the same boat. The only thing that sets us apart are our decisions; our decisions over time. Will I be independent as I continue to age? Will I find the tax free and debt free life I so long for? Perhaps. Sometimes we just need to look in the mirror and take our own advice. Sometimes the tough decisions are the right decisions. Most of the time they are. In fact, there is a voice inside of me, of all of us, that knows the right answer and always has. The problem is we sometimes ignore that voice or remember its whispers after it is too late. I am not waiting until it is too late. I am taking steps to pay down debt, to put myself in a better tax position and to protect my hard-earned money and property for myself and my family for years to come. The meaning of what independence truly means has changed for me over the years as I am sure it has for you. Let me know if we can sit down and discuss your independence together. Whether it be taking control of decision making with powers of attorney or getting the peace of mind that comes with finally completing your will, I can help you with these things. Maybe it is talking through reallocating assets to be more debt free, independent and protect assets with a trust. Whatever the conversation I enjoy working with my clients and friends. Call me today: 704-749-9244 or book your free conversation today at mcelderlaw.com/bookfreeconsult.

IN PERSON . VIDEO CONSULT . PHONE CONSULT

Book Your FREE CONSULT Today!

Greg McIntyre Elder Law Attorney

written by:

Greg McIntyre

Elder Law Attorney

704-749-9244

greg@mcelderlaw.com

 

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I want to talk to you today about a problem many of my clients are facing. They want to protect their assets, including retirement funds, in a trust like an irrevocable or convertible trust. Many Americans have much of their savings tied up in traditional Individual Retirement Accounts (IRAs) or 401ks painting an asset picture that is “Qualified Fund Heavy”. That means their funds are locked in tax qualified funds like traditional IRAs or 401ks. These retirement savings products seem like a great idea at first.  They allow you to set aside money each paycheck, pre-income tax, and allows that money to grow. You are not taxed on the gains or in other words, there are no capital gains taxes on the growth of the investments inside of the IRA package. However, you are penalized 10% for any withdrawals you make prior to age 59 and you must start taking distributions from the IRA at the age of 72. The distributions from your qualified retirement assets can provide much needed income well into your retirement. However, these types of assets (401ks and IRAs) cannot be legally protected with estate planning tools like trusts. Simply put, your traditional IRA or 401k cannot be moved into a trust to be protected; not in their current form, at least. To be placed into a trust they would need to be liquidated first.

Why use a trusts to protect assets like retirement funds?

I know a statistic that should scare you. Seventy percent (70%) of those over sixty-five (65) years old today will need some type of long-term care during their lives. Long-term care costs can be in excess of $100,000 per year. For most of us, those costs far exceed what we can save during our lives. Therefore, our savings, retirement and homes can be threatened by this high cost of care. Trusts can be great legal, estate planning tools in which assets can be placed to be preserved for a family during their lives and then the remaining assets passed on to the children and grandchildren. Certain types of trusts can protect assets from being spent down to pay for long-term care if a benefit like Medicaid is used.

What types of trust are effective at protecting assets?

1. Revocable Living Trust: When we are looking at activating a Medicaid benefit to pay for long-term care you need to use the right type of trust. A revocable trust is a trust where you are the trustee and have the right to revoke or otherwise cancel the trust. Because of this control over the trust and therefore the assets in the trust, when applying for a Medicaid benefit to pay for long-term care, those assets in this type of trust is still a countable asset to you and thus subject to the so-called “Medicaid Spend-Down”.

 

2. Irrevocable Trust/Medicaid Asset Protection Trust: An Irrevocable Trust, however, let’s say one written specifically for long-term care Medicaid qualification, called a Medicaid Asset Protection Trust, would be a trust where you would not be the trustee and would not have the ability to revoke or cancel the trust. You are not in control of the assets, so to speak, but the trust has specific instructions written within for the trustee to maintain the assets within the trust for your use and benefit during your lifetime. You may also draw the income off any invested assets within the trust. The benefit of this type of trust is protection. The drawback is that you are not in control of the assets within the trust. You are not the trustee. Many clients will appoint the duty of Trustee to a trusted child or family member. In some cases this duty is undertaken by an attorney. In either case, there is a legal, fiduciary duty written within the trust for the trustee to maintain the investments and real estate within the trust for the use and benefit of the Grantor(s), you or you and your spouse, during your life or lives. Then the property in the trust would avoid probate and pass directly to beneficiaries of your choice or be held in trust for their use and benefit also under your instruction. This type of trust can be a great asset protection tool to protect retirement benefits, homes and other savings and real estate.

 

3. Convertible Trust: Want the control of the revocable living trust with the asset protection of an irrevocable trust? A convertible trust may be for you. Some clients aren’t ready to relinquish control of their home and other assets to a third party trustee but they still yearn for the asset protection qualities, long-term, of an irrevocable trust. A convertible trust allows a couple or individual to be their own trustee and then, like the name implies, converts to an irrevocable trust when either the grantor (you) elects by signing a short amendment or a grantor becomes incompetent or incapacitated. In the case of a grantor becoming incompetent or incapacitated the trust will shift to become irrevocable to protect the assets within for the use and benefit of the grantor but also to protect the assets from a future long-term care Medicaid spend-down. This trust can present a great option for those who are not yet ready to give up control but also want future asset protection for assets within the trust. It can truly present the best of both worlds.

 

Why won’t Qualified Funds like IRAs and 401ks fit into a trust?

Tax qualified funds like traditional IRAs and 401ks are already wrapped in a “special deal” where there are advantages for keeping the money, an early withdrawal penalty of 10% prior to 59 years old and a mandatory annual withdrawal starting at 72 years old. Withdrawals are taxed at the income tax rate of the individual that particular year. Traditional IRAs or 401ks cannot be placed into a trust mainly because the money has to be moved out of those assets prior to the leftover, post-taxed funds being placed into the trust. Once in the trust the money can be invested into most any investment vehicle like stocks, bonds, etc. These investments can then be managed by yourself or a financial planner. The grantor of the trust, even if the trust is irrevocable, can still take the income distributions from the invested assets in the trust. So the question becomes: Do I leave the retirement funds alone and vulnerable to a long-term care spend down or do I liquidate those funds and move them to an irrevocable or convertible trust? 

What is the best plan?

We work with clients daily to develop comprehensive plans to protect homes, other real estate, savings and yes, retirement. Here are some key points to focus on when deciding to move your tax qualified retirement funds to an irrevocable or convertible trust:

1. Tax rates are historically low right now and may rise in the future. Tax rates have recently been at historically low levels. Due to recent crises do you think an income tax increase is in the cards for the future? The government controls the income tax rates and therefore how much of a bite they can take out of your traditional IRA or 401k distributions. If you wait until income tax rates are higher to withdraw your funds then you could be sacrificing a larger portion to taxes than if you acted to start taking withdrawals and moving funds into a trust now. If you did start now that would certainly put you in control and take you out of the position of falling victim to higher tax rates later.

 

2. If you do not have long-term care Insurance your traditional IRA and 401k assets are exposed and unprotected. Certainly, seeking long-term care insurance would be a great answer if available to protect retirement assets and to allow you to private pay for any in-home, nursing home or assisted living care you may need as you age. However, the reality is that many can simply not afford long-term care insurance. Long-term care insurance may turn you down as you reach a certain age limit or with pre-existing conditions. If you do not have long-term care insurance and your retirement assets are not protected in a legal, estate planning tool like an irrevocable trust, then know that it is exposed. The retirement assets are subject to being used to self-insure against a long-term care crisis or be subject to a Medicaid spend down if that benefit is to be used.

 

3. Developing a plan to move the money into an irrevocable trust now or over a few years may save the money in the long run and the taxes paid on withdrawals now may be lower than taxes paid after a tax increase. The benefit being protecting the retirement asset versus losing it to a long-term care crisis. Planning and taking control is essential to peace of mind and to financial health over the long term. A move of assets from a tax-qualified asset into a trust may be immediate or it can be planned and spread over a period of years. Consider the chart below:

 

 

* this chart does not factor or show income tax payments based on withdrawals. For an estimate of income tax payments due after withdrawals from a traditional IRA or 401k please consult your income tax professional.

Is it time to start a move from an unprotected retirement asset to a protected trust investment fund?

We at McIntyre Elder Law would be glad to meet and discuss just that question in an effort to help you reach the right answer for you. We are offering FREE consultations to discuss these matters. Please call out office at 704-749-9244 or go online to: mcelderlaw.com/bookfreeconsult to schedule a FREE consult with an attorney.

IN PERSON . VIDEO CONSULT . PHONE CONSULT

Book Your FREE CONSULT Today!

Greg McIntyre Elder Law Attorney

written by:

Greg McIntyre

Elder Law Attorney

704-749-9244

greg@mcelderlaw.com

 

 

 

What you will learn:

✅ Why Start with Foundational Planning?

✅ Can Protective Deeds Save My Home?

✅ Are Trusts Right For Me?

 

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Hi, this is Greg McIntyre with McIntyre Elder Law. Good morning. I wish we could do seminars right now. I love speaking to groups and crowds of people, but right now we’re doing our civic duty and wear a mask and stay home and not really go out into mass gathering. So I wanted to give you a seminar, but not something that was going to take 30 minutes or an hour of your time. A seminar in 10 minutes. So here we go. Normally, we sit down and we do a 45 minutes seminar. We do question and answer. Please feel free to send me your questions at the end of this seminar. You can list your question and comments or message me directly if you want to private message me, and I’d be glad to address any of your questions or concerns. Also, if you’re watching this seminar, we’re offering a free consult. So you can go to mcelderlaw.com/bookfreeconsult to sign up for your free consult. That’s mcelderlaw.com/bookfreeconsult.

So many people start with estate planning and they go straight to complicated issues like trust, deed protection, and those are important issues. However, let’s start with foundations. That’s where we should start, and sometimes the most important things you should have in place during your life. Right now, I mean, we’re in a pandemic. We’re scared. There’s financial uncertainty. I may not want to spend money on anything, much less estate planning. Let me tell you why estate planning allows you to take control of your financial future and your future in general. If, heaven forbid, I became incompetent or incapacitated because of accident, illness, or injury, my wife, if I didn’t have a Financial Power of Attorney in place, a General Durable Power of Attorney, would have no way to manage our assets to do anything with real estate. So the first thing that’s important for us to get in place is that Financial Power of Attorney. A Financial Power of Attorney also avoids having her have to go after guardianship for me through the courts and the courts being in control of our assets.

Second, we want to put substitute players, or subs, in there to come in and play our position as our agents for each other. So, if my wife can’t handle my affairs because we’re in a mutual accident, or maybe she passes away before I do, then I want to make sure our oldest son, for example, can come in and step into that role. So on each of these positions, for agents for powers of attorney, for executors and wills, we want to have a substitute. So the second estate planning foundational document we’ll talk about is healthcare Power of Attorney. It’s extremely important you have a Healthcare Power of Attorney in place. It could be argued that it’s more important than the General Durable Power of Attorney, than the Financial Power of Attorney, because it’s making important decisions for you, but only when you can not make your own healthcare decisions for yourself.

So when I’m incompetent or incapacitated, I’m unable to make those healthcare decisions, who’s the one person I want to appoint to make important decisions for me? And I say one person for an important reason. I have six children. You may have children. It’s hard for them to reach the same decision. Sometimes they argue about decisions, important or not. And I don’t want to lay there suffering or not having a decision made that needs to be made in a snap decision or in the moment, it needs to be a quick decision, because I didn’t appoint one of them to be the quarterback, to huddle up the family, make a decision, and then running that play to the doctor in the hospital and the medical staff. It’s important to appoint that one point person, that one quarterback, to make your important healthcare decisions. It could be the most important thing to do in your entire life is to set up that Healthcare Power of Attorney. You also want it well-written, legally drafted in North Carolina, so that it’s HIPAA compliant and medical records can be pulled. Extremely important.

Now, kind of sister document or brother document to the healthcare Power of Attorney is a Living Will, and we want those documents to communicate with each other. A living room well is also called a Declaration for Desire for a Natural Death, and that’s the third foundational document, different than a Do Not Resuscitate Order. That’s a document you make with your healthcare provider, your doctor, that if you’ve been through a lot, maybe you’ve been resuscitated before and you say, “No more.” But if I have a heart attack right now, I would ask you to please revive me because I have kids to feed. I have to work, I have to continue my life. A Declaration for Desire for a Natural Death, a Living Will is different than that. It’s for that last situation where you’re terminal, incurable, you’re being maintained by artificial respiration, for example, artificial nutrition, hydration. How do you want to be treated in that situation? Is it okay to let me go, if the only medical procedures that can be done or what I prolonged my suffering?

I would say yes. And I want to make sure I absolve and relieve from liability the hospital, the doctors, as well as my healthcare agent for complying with my wishes. It’s my voice in the room when I can’t speak. It also allows me to incorporate religious preferences, such as to be ministered to before I pass, and it allows me to not be stuck in limbo indefinitely. If I don’t have a healthcare agent or if there’s something wrong, a court has to come in and try to decide what happens to me. It allows me to take control. In estate planning, everything we’re talking about allows you to stay in control and not be a victim of circumstance, not be a victim of what’s happening around you, not be a victim of time passing.

Even if you’re incapacitated, incompetent, you can appoint the agent who’s in charge of your finances, healthcare, your voice can be in the room to decide that last moment, if you’re ever in that situation, which is a horrible situation to be in where, say, brain death has occurred, you’re being maintained by respirators, and I want to say that it’s okay to let me go and I don’t want my body to linger on and suffer indefinitely.

And last but not least for foundational planning, a will. A will is a document that’s been around for thousands of years, literally. It used to be oral now written. It allows you to decide who’s in charge, your executor, who’s in charge of executing your will, making sure that the money, property that has to change title and get to heirs, get to the kids, for example, the grandkids, make sure that’s handled properly at the courthouse. That’s the executor. We want to have a backup in there that can handle that job if the primary executor you appoint can’t do that job for any reason. Also, that allows you to appoint who gets money and property or designate who gets money and property as a bequest who’s an heir of the estate. You may want your husband, your wife to get everything first and then secondarily your children. You may want to set aside some for grandchildren.

You may want to say that we want to designate some to go into trust, just in case someone is not 18 or we want to make sure we set out money in discretionary trust coming out of the will to make sure college is paid for and that what could be a blessing doesn’t become a curse by cursing a young person with too much money. And you may have seen that it happened to young people before where they had too much, much too early before they had it the advantage of life experience and education to help guide them through that, through how to properly spend the money you gave them. So General Durable Power of Attorney, Healthcare Power of Attorney, Living Will, and Will extremely important to have. Foundations are extremely important. A house built on sand shall fall, so you want a firm foundation, and then we can start stacking on things like deep retention, like a life estate deed, or ladybird deed to fully protect your house against a Medicaid recovery in case you need long-term care and Medicaid has to pay.

Also, not accountable asset transfer for the ladybird deed that can protect the home. And or we might want to look at trust to put liquid assets, retirement assets, to place the home or any other real estate in a trust. We may want that trust to be irrevocable so that it’s not an accountable asset for a Medicaid recovery and Medicaid qualification if we want Medicaid, or maybe that’s a possibility, they might have to come in and pay for long-term care or assisted living later in life. We may want to look at a convertible trust. That allows the assets to be under your control right now and then convert either at your election or because of, say, a healthcare event, a very threatening healthcare event that threatens longterm care, converts it to an irrevocable trust to protect those assets. It could be the house, other real estate, other liquid assets.

That is a summary in under 10 minutes of some great estate planning tools that we offer and that you should think about for you and your family. During this time, you have the ability to take control of your estate plan, to take control of what happens to you hard earned money and property. And we at McIntyre Elder Law are here to help you. We offer consults by phone, by video chat, or in person, and we set those up easily all the time. And I’m going to hand over you the ability to set that up yourself. You can go to mcelderlaw.com/bookfreeconsult to schedule that free consult today. During this time, as our civic duty, we’re offering free consults to our clients and potential clients. Once you’re a client of ours, you also receive free e-docs access, which is bank level security system storage of all documents, a case manager that reviews all documents for spelling mistakes, address corrections, name spellings before we sit down at the signing table because we respect your time and we believe in quality and control and we want to deliver a quality service and product to our clients.

You also receive free annual reviews every year, because we know your life will change and we want your estate plan to grow with you as you age and as life changes. We’re here to help you at McIntyre Elder Law. Give us a call, 704-749-9244 to ask any questions or set up your free consult today. Have a great day.

 

$$$ Is price your concern? We are flexible. Taylor explains our pricing plans and the cool 😎 services our clients enjoy for FREE. Speaking of FREE. Schedule your FREE consult today: mcelderlaw.com/freeconsult.

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Rachel:

I’m like, who is that?

Greg McIntyre:

Just another day at the firm. And we’re talking about Love Island. Right, Taylor?

Taylor:

Yeah.

Greg McIntyre:

And The Firm, which is a movie that I assigned Elise and Rachel to watch-

Taylor:

[inaudible 00:00:20].

Greg McIntyre:

… they have already watched what? They already watched Fracture? Fracture, which is a great movie in relation to double jeopardy. So just the firm experience here. And Taylor and I were talking about pricing and flexibility and the value that we offer as a firm. Taylor, what do you think people are concerned with in regards to price?

Taylor:

It’s too much and that it’s just coming to paying that money out of pocket. Even if you have the money, you still want to have a safety net. You don’t want to just give it all away and not have anything to go on until your next paycheck. I think that’s [inaudible 00:00:55].

Greg McIntyre:

So for some people, it can be too much upfront. Is that what you’re saying?

Taylor:

Yes.

Greg McIntyre:

So what do we offer to help with that?

Taylor:

We offer two types of payment plans. You can play half now or half later when you come in for the signing, or you can pay half now and do a five month payment plan with a debit or credit card.

Greg McIntyre:

So there you heard it, folks. In addition to being able to pay upfront to us to handle estate planning, we also offer payment plans. It’s rare that there’s somebody out there that we can’t help. We offer many ways to get into our different estate plans, including complex trust, things that can really help your family. Lady bird deeds, healthcare powers of attorney, general durable power of attorneys, living wills, just a myriad estate planning tools at our disposal. And Taylor really helps our clients. If you haven’t figured out, Taylor’s very straightforward and matter of fact, and she really helps people work things through and make sure that they can get their affairs and their estate plans in order. Taylor does a great job for our firm, and we’re lucky to have her.

Greg McIntyre:

So Taylor, what is the value of hiring in our firm? We were talking about that in terms of flexibility. I was flexible. I want to put some picture of a contortionist because we try to be as flexible as possible.

Taylor:

Yoga poses.

Greg McIntyre:

Yeah, yeah. Yoga poses. We try to be as flexible as possible with estate planning attorney yoga poses. That’d be a good post. Right?

Taylor:

Yep.

Greg McIntyre:

So how are we flexible also? Not only are we flexible with payment plans, but also in helping our clients even after they hire us. what do we offer in services we offer that you know that some people don’t maybe?

Taylor:

If you can’t come to us, we’ll come to you with travel signings. We have a lot of clients that are in nursing homes or are not able to leave the home. So we will come to you if you can’t come to us. I think that’s a huge thing. And I think that makes us stand out. For [crosstalk 00:02:53]-

Greg McIntyre:

Just like the doctor on Little House on the Prairie, which I used to watch as a kid.

Rachel:

Case managers.

Taylor:

You have your own case managers, your point of contact. We’re always available by phone.

Greg McIntyre:

Case managers, that’s right. So what are case managers?

Taylor:

So we have one for every department for estate planning, Medicaid, VA, probate. So they are your point of contact. So you will have someone to talk to 24/7. They’re available for you. They’re there to serve you. They help with the case. They work one-on-one with the attorneys and make sure the case is going smooth [crosstalk 00:03:21].

Greg McIntyre:

We do spelling.

Taylor:

Spelling, addresses.

Greg McIntyre:

Addresses.

Taylor:

All of those [inaudible 00:03:26].

Greg McIntyre:

Because when we sit down at a signing table, I’d rather not have to reprint the document five times. I’d like to have it ready to go. Or if we’re going to a travel signing at somebody’s house, it better be correct when we get there.

Taylor:

And I think it’s important that you can review the documents before you actually come in for the signing. I think that’s a huge value that we offer, is sending out draft documents for you to review so we can do those workups so you’re not here for five hours in the signing where we have to do [inaudible 00:03:50].

Greg McIntyre:

So we respect your time.

Taylor:

Mm-hmm (affirmative).

Greg McIntyre:

But we also want you to understand what you’re signing and review it ahead of time.

Taylor:

Mm-hmm (affirmative). Another thing is, for instance, Medicaid, that is a lot of stress for certain people. They’re just not sure what to do, or they just don’t understand. So basically, they’re washing their hands free of that complications and allowing one of your case managers and Medicaid to do that whole entire application for you. So-

Greg McIntyre:

And that case manager is going to work with you to get all the information that’s needed.

Taylor:

Review, work with DSS social worker, the banks, everything.

Greg McIntyre:

All the information. And be the go-between between the social worker. Everything at the direction of the attorney. And they’re very good and very good at doing that. What about did we talk about recording all documents, making sure those get back to you?

Taylor:

Mm-hmm (affirmative). We are very good at recording. So we always have a system, backups in our system. So you’ll have the originals. We actually have the backups here. We’re very helpful [inaudible 00:04:51] phase. A lot of people don’t like to deal with DSS or even handling the clerk of courts for probate or things like that. We do all that for you, so you’re not doing all the running around. We do it for you. So I think that’s very cool.

Greg McIntyre:

Agreed. We want to do as much for you as possible. We really believe that when we’re your attorney, that’s our responsibility to do those things. And we want to help you as much as possible. Also, once you’re in our family of clients, we schedule free annual reviews for you because we know that your family is going to grow. It’s going to change over time. Things are going to happen. If you win the lottery, we definitely need to redo your estate plan. We might talk about trust. If you get new assets, if somebody passes away, if you get married, things happen. We want to be able to grow with you and change with you over time. So we want you to be our clients for life. We want to take care of your children, your grandchildren. I don’t know if I’m going to be alive that long, but I plan to be around for a long time. I try to stay healthy. Taylor bought me a great healthy lunch today. I appreciated that, Taylor.

Taylor:

You’re welcome.

Greg McIntyre:

It was salmon salad. So it was good. It really was.

Taylor:

After the complaining.

Greg McIntyre:

I wasn’t complaining. I was just asking why it’s smelled like it did, but it’s good. It’s good. It was great. Yeah. And I ate it. What else do we? Free e-Docs access for life. Tell them what e-Docs access is.

Taylor:

E-docs access system is an online vault. So it’s online banking. So if you’re ever out of the country, out of state, at the bank, at the doctor’s office and you don’t have those original documents with you, you’ll be able to pull it up straight from your phone, a computer, a tablet and be able to print or email those documents straight from there. So I think that’s really cool to have.

Greg McIntyre:

So that’s just part of just the value of what I call the value of being our client.

Taylor:

[crosstalk 00:06:39].

Greg McIntyre:

We build a lot of value in there. It does save you time.

Taylor:

And then you don’t have to go back home and get the documents. You can just [crosstalk 00:06:44]-

Greg McIntyre:

I promise you that I, and she knows this, I’m constantly thinking of how I can bring you services better, more efficiently, easier and at a great price point. As Taylor said, it’s too much money. Everything costs too much these days, but-

Taylor:

It’s worth it.

Greg McIntyre:

… it’s worth it.

Taylor:

Mm-hmm (affirmative).

Greg McIntyre:

You know what really costs a lot of money?

Taylor:

Not planning.

Greg McIntyre:

Not planning, losing everything because of a longterm care situation, losing your home.

Taylor:

[crosstalk 00:07:13]. Procrastinating.

Greg McIntyre:

Procrastinating. What about people who say it’s COVID-19 , it’s coronavirus right now. I don’t know. It’s uncertain. Things are uncertain. The future’s uncertain. Well, the future’s always uncertain. And the cost, the real cost is not planning. Taking control is the right thing to do, in my opinion.

Taylor:

Who doesn’t like to be in control?

Greg McIntyre:

Not being a victim and just being subject to the tide, to liens, to the government, to the panic that’s peddled to you every night on the news to taking control.

Taylor:

The fear.

Greg McIntyre:

The fear. I agree. Believe it or not, we had just finished having an hour long spirited debate and discussion about some of these issues. And I just wanted to talk to you about them. If you need anything, I’m Greg McIntyre, McIntyre Elder Law. We have great attorneys if I don’t say so myself. We have great people here at our firm, great service. That’s what makes the firm. Taylor, why do we get such great reviews, and why are people so happy? You said it earlier. It’s because of our case managers.

Taylor:

[crosstalk 00:08:30].

Greg McIntyre:

It’s because of the people in our office that care.

Taylor:

We want to get to know you. We want to be involved in your life. I think that’s a huge thing. We had someone today that came in. And they just moved here not too long ago, and they like walking. So I think it’s really cool to talk about that and being able to explore different parks and things like that. So I think that’s pretty cool.

Greg McIntyre:

Yes. So if you need us, right now, we’re offering free consultations as our civic duty during this time. It’s a tough time for everybody. If we can help you in any way during this time to plan during the crisis to help you and your family, we say our slogan is helping seniors protect their assets and legacies, and we really mean it. So if we can help you or your family, give us a call. We’ll schedule one of those free consults for you. Call 704-749-9244. Or you can go online to mcelderlaw.com and schedule your free consult right there, literally right there. Check it out, mcelderlaw.com. Have a great day.

 

CHARLOTTE TODAY SHOW! Special Needs & Estate Planning: Greg & Colleen chat about the importance of planning for special needs family members.

       

         The root of the word “protection” comes from the Latin “protectus”, which meant to “cover” or be “in front of”, implying that the protector is in front of the danger before the danger happens. Thus, protection is all about planning ahead to anticipate possible risks before they happen.

         If you need to plan ahead to protect, then it stands to reason that the best tools to use are those that give you the greatest flexibility in planning. You must be able to adapt as situations arise. Mike Tyson said is best when he said that “everybody has a plan until they get punched.”

         So, what tools do you need to make sure you can adapt when life throws punches your way? Each and every one of your foundational estate planning documents are important—let’s not forget that everyone should have a General Durable Power of Attorney, a Healthcare Power of Attorney, a Living Will, and a Will. However, I’d like to highlight a couple estate planning documents that will give you the most flexibility to ensure that you’re protected.

Powers of Attorney

         Both the General Durable Power of Attorney and Healthcare Power of Attorney allow you to appoint a trusted individual to act on your behalf as if they were you. Powers of attorney give that trusted individuals the ability to make decisions with regard to healthcare, finances, assets, and legal rights.

         Why is this important? Well, it’s best to think in terms of what may happen in the future. If, God forbid, you were to become incompetent, incapacitated, or otherwise unable to act because a stroke, illness, or debilitating disease, you’ll need someone to act on your behalf. That person will not only serve to ensure that your wishes are carried out, they will also ensure that your assets are protected and you receive the type of care that you need.

         Without the Power of Attorney, no one will be able to act on your behalf without getting a court to enter an order finding you incompetent through a Guardianship proceeding. A successful Guardianship proceeding will not only render you a ward of the state, it also takes precious time and is inefficient.

         A good example to demonstrate the importance of a Power of Attorney is that of the office of the President of the United States. In the US, we elect a president. However, if something happens to that president, then someone—like the Vice President—automatically steps in and fulfills that role. If something happens to the VP, then the Speaker of the House becomes president and on down the line until we run out of politicians.

         Imagine if we didn’t have that fail safe. Imagine if we had to do another election every time something happened to a president. No one would be able to make the important day to day decisions to run the country the whole time we’re picking a new president. That seems absurd, doesn’t it? It is likewise absurd to not have a Power of Attorney in place if something happened to you.

Trusts

         In terms of flexibility, trusts are basically Stretch Armstrong—extremely flexible. A lot of people don’t understand trusts but they are conceptually pretty basic and let you plan for pretty much anything that could happen.

How Trusts Work

         Trusts are a pot where you place your assets. Those assets are held in trust for you and your beneficiaries. The terms of the trust are dictated by the person who creates it. . . you. The terms of the trust can be just about as creative as you are. Thus, you can easily structure a trust to anticipate future risks.=

         To understand trusts, it’s best to know the history of how they developed. Trusts began in the medieval times.  When knights would go off to battle, they knew that they had a substantial chance of dying and they wanted to ensure that they’re assets went to the correct person i.e. their family, if they did in fact die on campaign. So, they would place their assets in the hands of a trusted individual who would make sure the correct people got the Knight’s assets if he died and give the assets back if he lived. This trust person or “trustee” would be given instructions depending on what happened at home. For example, if the wife of the Knight remarried, the bulk of the assets may be given to the eldest son to continue the Knight’s legacy.

         An important function of this “trustee” role is that the trustee didn’t have to go through some type of court process to get the assets to the correct person. They just distributed them immediately upon learning of the death of the Knight.

         Trusts nowadays operate in the same way, except you don’t need to go to battle to benefit from one. You can create a trust, place your assets in trust, and structure that trust in such a way that it protects your assets no matter what happens. And, on top of that, when your day comes, all your assets pass to your beneficiaries outside the court process, saving you from wasting time, wasting money, grief, and significant risk.

Conclusion

         If you want to protect assets, make sure you have the right tools to do so. If you have questions about protection of assets give McIntyre Elder Law a call at (704) 259-7040 or visit our website at www.mcelderlaw.com.

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Regards,

Brenton S. Begley

Elder Law Attorney

McIntyre Elder Law

“We help seniors maintain their lifestyle and preserve their legacies.”

www.mcelderlaw.com

Phone: 704-259-7040

Happy Anniversary to my wife of 21 years, Stefanie! I love this evening. Perfect! Good weather, good food and great company. Our lives have changed over the years. Yours will too. Let us know if we can help you and your family. Schedule your FREE CONSULT today. mcelderlaw.com/freeconsult.