House Rules! If you don’t know the house rules then you are gambling with your families future. Know the House Rules! Learn more in the Elder Law Report.
Greg McIntyre:
House rules. It doesn’t matter if you’re in a Vegas casino or you’re just living day-to-day. There are house rules. That’s what this show’s about. It’s about knowing the house rules, beating the house rules. I guarantee you if you play these slots, and you play these different machines, that you will lose eventually and the house will take your money. Same with income tax system. Same with our gift tax, and estate tax structure. The same with any rules system where you don’t know the rules, yet you continue to play.
Greg McIntyre:
The system that will live under in the United States of America, it’s a great system, but there are rules. We’ll call those the house rules. So we’re going to talk about those rules in this episode, straight from Vegas. So, tune in.
Greg McIntyre:
Hello. This is Greg McIntyre with McIntyre Elder Law, helping seniors protect their assets and legacies. Yes, we just got back from Vegas. Got back from Vegas, we had a convention over the weekend and our seminar over the weekend, and really learned a lot while we were there. Now it’s back to the grind and back to the work. What did I learn about Vegas?
Greg McIntyre:
We’re going to call this show House Rules, or Beating the House. Because not only do you have to gamble in a casino, if you gamble. I did not, I don’t gamble with my money. But if I did, the house is stacked against me. The odds are I’m going to lose. There’s better odds at winning in a casino then you avoiding longterm care if you’re over 65 right now. Everyone over 65 is going to need some type of … Everyone over 65 has a 70% chance of needing some type of longterm care. That means in-home, assisted living, or nursing home care. Those are huge odds.
Greg McIntyre:
The odds are in the favor of your house, not your favor. So, whether you’re in a casino in Vegas like I was when we went to this conference. The conference center was in the Mandalay Bay, or you’re just in the world, living your every day life with your family. You still have rules, you still have house rules. There are tax rules, there are Medicaid look-back periods, three years for assisted living, five years for nursing home care. You need to work to protect assets outside of that period. Even though we have a Medicaid crisis planning department that can help you protect assets even within that period, in the crisis period when you’re struggling to pay for longterm care, or protect assets during that period and pay for longterm care. We can help there.
Greg McIntyre:
Again, if you know what the house rules are, it’s easier to setup your assets ahead of time. That’s what we’re here for. You look around the world, and it’s chaos right now. There’s a lot of things going on. A lot of things going on. I would say, the gamble that you make is not being prepared, is not planning, is ignoring the house rules and thinking you’re still going to win. That’s what keeps Vegas in business, are the people who keep playing even though they know the house rules are against them, and they’re generally not going to win consistently over time.
Greg McIntyre:
Things that estate planning elder law attorneys, our firm, can help offer to help you beat the house rules are starting simple with foundational planning. General durable powers of attorney, financial powers of attorney, which gives someone else, someone you choose not someone the court chooses for you like in a guardianship case, which you would be left with if you didn’t have that document. Right? So those are the house rules there.
Greg McIntyre:
Your spouse, for instance, would be frozen out of assets if you didn’t have that general durable power of attorney in place. Also, I want to be able to appoint who I want to make my healthcare decisions. I have six children. I guarantee you it’d take them from here to Sunday to agree on anything. I don’t want to be laying there while they try to figure out what the right healthcare decision for me is. I want to be selfish there and appoint my wife first, and maybe my oldest son second. That’s how ours are arranged right now. So that it’s no gamble for me. It’s a sure thing that one person’s appointed to make the right decision for me.
Greg McIntyre:
That HIPPA authorization is within that healthcare power of attorney, so we can pull medical records. Right? For me, or I can pull them for my wife, for a number of reasons. To get a second opinion, to check out billing, just because I want to see the medical records. There’s a number of reasons, but you want to have those documents in place. Living wills, wills. Don’t gamble. The state has already chosen a will for you. It’s called the statutes of intestate succession. So, we all trust that the state’s going to pass laws to take care of you, right? No. You have the ability to make those … to go against the house there, and make your own rules with your will, and say exactly who you want to handle your estate if you pass on, and how you want your assets to pass on. That’s fundamentally American. Okay?
Greg McIntyre:
Those are the house rules, and you need to take advantage of those. So don’t just depend on the state. Be proactive. Take care of your hard earned money and property. If you want to look at protecting your hard earned money and property, let’s look at deed protection. Like lady bird deeds or life estate deeds, or one percent deeds as some people call them. Let’s talk about those things. You can generally get with me or one of our attorneys, and have a 30 minute to an hour long conversation. Really, we can figure most things out in that period of time, or at least we can start to get a really good plan together and we can get on the same page. Take the time out. You deserve it. You’ve worked hard your entire life for what you have. You deserve to have great estate planning and legal planning in place for you and your family, and your hard earned money and property, and your hard work for your entire life.
Greg McIntyre:
Some people save and scrimp, and work so hard their entire life. They don’t want to spend a dollar or dime on legal or professional services. That is a mistake. That is a mistake. We are here, we know the rules. We are here to help you know what the house rules are, and to help you survive the way you want to, and your assets survive. For you to do more than survive, thrive. We want you to thrive. We want to help you do that.
Greg McIntyre:
If there are tax implications to transfers or to things that are … your estate plan that you need to know about, we want to inform you. We want to maximize your taxable exemptions. We want to let you know what those are. Trusts do a great job of protecting assets as well. Irrevocable trusts, revocable trusts do a great job of keeping you in control of assets and avoiding probate. That might be right for you. Irrevocable trusts do a great job of avoiding leans and probate, and protecting assets, and making available to you options like longterm care Medicaid.
Greg McIntyre:
Let’s talk about those plans. Irrevocable trusts are a great place to put a house and other real estate. Let’s talk about those implications and how a trust might work for you. Again, I think the only gamble is turning a blind eye, not looking at what’s going on in the world, and not realizing that you’re in that casino and that the odds are stacked against you, and to keep playing the game, man.
Greg McIntyre:
You keep playing the game over and over again without getting with a professional like myself, who’s an estate planning and elder law attorney, and asking about the house rules. Asking about those rules and, “What tools are there that could help me and my family?” I’m Greg McIntyre with McIntyre Elder Law, helping seniors protect their assets and legacies, and we would love to help you and your family. If you would like a consult with us, please give us a call, 704-749-9244 or go online to mcelderlaw.com. That’s mcelderlaw.com, to learn more. Have a great day and know the house rules.
Greg McIntyre:
All right, this is a partnership agreement between Brent and myself. [inaudible 00:09:30]. All right, there it is.
Stephanie:
Congrats, man.
Greg McIntyre:
That’s awesome, that’s awesome.
Stephanie:
Congrats, seriously.
Greg McIntyre:
All right, Stephanie. Are you the queen of Wheel of Fortune?
It’s a question we should all be asking ourselves, no matter what our age or income. Do we have an estate plan in place for our family?
Speaker 2:
Here with more this morning is Greg McIntyre with McIntyre Elder Law. Greg, good morning. Thank you for being here.
Greg McIntyre:
Good morning. Thank you for having me, I appreciate it.
Speaker 2:
Of course. Let’s start with this question. What is an estate?
Greg McIntyre:
Sure. Well, I mean, many people think it’s to the manor born. I have a large estate, this huge house, the dogs and the Jaguar. Which I love, great cars, you know? But that’s a misconception. Let’s talk about what an estate really is. It’s what you acquire during your life. It’s the house that you worked 30 years to pay for, it’s the retirement that you saved for your entire career. That’s your estate, the things that you acquire during your life and most people have an estate. Most people have an estate, not just the uber noble and wealthy.
Speaker 2:
You’re so right though, that word conjures those images.
Greg McIntyre:
Sure, it does. It does.
Speaker 2:
Yes.
Speaker 1:
So why should people protect their estate and their assets and the things they have accumulated? You can spell a little bit more of those things out a little bit more.
Greg McIntyre:
Sure. For me and for my clients, usually it’s because of love of their family. I love my wife. If I pass on, it’s going to cost a bit to send our six children to college, right? Or later on to provide for and help my grandchildren. I love my children. Plus, I’m working really hard and my clients work really hard for what they acquire during their lives. So let’s talk about protecting that, minimizing taxes, maximizing what you pass to your loved ones, and helping to craft a better life for them.
Speaker 2:
Okay, so walk us through that. How do we protect our estates?
Greg McIntyre:
Sure. You could use trust, irrevocable, revocable trust, accumulation trusts. Those are new terms. Deed planning and protection can be used. We could talk about traditional estate planning, simply having foundational documents in place. All those work together, depending on your plan, to help you protect your assets and pass them along.
Speaker 1:
If you don’t protect your assets, what happens to your assets if you have no plan in place at all? Does the government get it? Who gets it?
Greg McIntyre:
Well, the state has a plan already in place for you, and it may or may not be what you want and you’re not able to necessarily pick your executor for your probate estate, your will, and you would simply be leaving it to what the government already has on the books, it’s called the laws of intestate succession, and chance. So I would suggest taking control. It’s always better if we take control over our destiny and our fate and our estate.
Speaker 2:
People who are watching and listening to this right now, Greg, they can set up a meeting with you and your firm.
Greg McIntyre:
Sure.
Speaker 2:
Tell them what they can expect in a first meeting.
Greg McIntyre:
I had an attorney I was talking with recently and he talked about he and his mom used to sit down at the kitchen table and hash out problems. Anytime he had a problem he could go talk to Mom at the kitchen table. It’s not much different with us. It’s sitting down at the conference table and talking about what your assets are, what your goals are and how we’re going to achieve those. Whether it’s the kitchen table or the conference table, let’s sit down and let’s talk about a plan.
Speaker 1:
Now, you wrote a book called Saving the Farm.
Greg McIntyre:
Right.
Speaker 1:
It probably covers a lot of these issues. How can people get a copy, and what will they find in this book?
Greg McIntyre:
Sure. I spent two years researching and writing that book. They’re going to find all kinds of great content regarding estate planning and it’s going to be a nice guide for them. Somebody I worked with called it a reference book that reads like a novel. You can get that book … We’ve sold tens of thousands of copies and you’re free to buy it for I think it’s 20 bucks on Amazon. However, for our viewers today, you can go to McElderLaw.com/SavingTheFarm and download that ebook or audio book free of charge. Okay?
Speaker 2:
Very good. You’re giving that away for free today.
Greg McIntyre:
I am, absolutely, for our viewers today. I appreciate them watching.
Speaker 2:
Very good. Well, thank you for doing that, Greg.
Greg McIntyre:
Yes.
Speaker 2:
Again, McElderLaw.com/SavingTheFarm. It’s right there on the screen. If you go there today, you can get a free copy of the book Saving the Farm, that outlines all this information that Greg was talking about. You can also call 704-749-9244, again, 704-749-9244. You can call to set up an appointment if you’d like, sit at the conference table with Greg and his team. Thank you so much for being here.
Greg McIntyre:
Thank you very much for having me.
Speaker 1:
[crosstalk 00:04:38].
Speaker 2:
All right, coming up on Charlotte Today, the relaxing experience of float therapy. It’s easily one of the most unique gifts you can give this Valentine’s Day. We’ll tell you about True Rest Float Spa.
Speaker 1:
And whether you’re changing your career or earning your GED, South Piedmont Community College can help you reach your education goals.
Hey guys. This is Greg McIntyre, the Elder Law guy helping seniors protect their assets and legacies. It’s one of my favorite times in the evening when the Roomba is buzzing in the background.
Greg McIntyre:
My buddy, cleaning the floors. Not a creature stirring, but the Roomba and me.
Greg McIntyre:
I just finished writing an article and published it on the Secure Act. The Secure Act was passed into law by the president on December 20th of 2019 and it sounds absolutely amazing, the Secure Act. It’s going to make us more secure. It actually is meant to inspire employers to have a tax deduction and discounted way to implement retirement programs like 401(k) or IRA programs. However, it also severely impacts the way that we might plan or save for retirement. So I would urge you to go to mcelderlaw.com and check out the Secure Act. What you need to know. I actually wrote this and pulled it out of a magazine article I am writing right here. Here’s the magazine article, a spotlight in the magazine called the Secure Act. What you need to know.
Greg McIntyre:
I pulled that out. That is true. Under the Secure Act, there could be significant loss or reduction of actual savings that are passed to a child beneficiary. There’s a few key points and key things that Secure Act affects, and I’m going to show those right now. Key points, age of minimum required distributions. Required minimum distributions, RMDs. That age has now been pushed from that really arbitrary age of 70 and a half to 72. You can now not take deductions until you are 72 starting January 1 of this year. You don’t have to take them at 70 and a half. So as you take deductions out of qualified assets like 401(k)s or IRAs, you have to pay income tax on them. If you pass that IRA because you pass away to your spouse as a beneficiary, then your spouse can spread his or her distributions over their lifetime.
Greg McIntyre:
That leads into what is called a stretch IRA strategy when passing an inherited IRA or a beneficiary to your children, children or grandchildren. How about non spousal inheritors? People who are beneficiaries who aren’t a spouse? And/or say next to kin, say a child, for example? Could take previously, could also spread their distribution over their lifetime. Well, that was significant because, number one, you might have a child that was a spendthrift. You wanted to make sure they didn’t get a lot of money at one time, and then that money could be spread to be taken over that child’s lifetime. Number two, when that child took those distributions the same as you once you’re now 72, previously 70 and a half, once that child starts taking those distributions, then they’re taxed at their income tax bracket for that year.
Greg McIntyre:
I mean, you could be talking about a tax of, I think the highest federal bracket right now is 37%, but really could get into, say 37 to 40-plus percent in tax. I’m talking about taking away that retirement savings that you’re trying to pass to a child and sending a large portion of that to the government. So because you have a child now has to take that distribution over a 10-year period, has to take that distribution over the 10-year period. That’s a huge change. A non-spouse IRA beneficiary must take distribution within 10 years. Traditional IRA owners may keep making contributions indefinitely. So you can keep contributing to your IRA, which is I think a nice bonus. You can keep contributing to your retirement longer even after you start taking distribution.
Greg McIntyre:
So you can keep putting retirement savings that can be invested. I mean, the whole point of a traditional IRA or 401(k) or a qualified annuity, the whole point of … Let’s say an IRA 401(k) was to allow pretax money to go in, it’ll be a larger amount than you would put in post-tax after it was taxed as income. Actually employment taxes were taken out. All the payroll taxes, so to speak, were taken out. After those were taken out, it would be a smaller chunk. It would grow slower, but with a larger amount you can grow faster. Plus, you don’t get taxed on your gains as long as you don’t take it out early. There’s no penalties, you don’t get taxed on gains. You can’t take any money out of an IRA 401(k) before 59 and a half. That’s still the same. But you have to start taking the required minimum distributions at 72 now instead of 70 and a half.
Greg McIntyre:
The trade off with having those large growth gains and not having to pay tax on the gains is that you still have to pay income tax that comes out. Therefore with a child now, they could severely be impacted by having to pay those income tax because of elevated distributions because of taking it over a 10-year period as opposed to their lifetime. Now, you could use what’s called an accumulation trust. Accumulation trust could hold the money and give it to the child over their lifetime. You still take a tax hit, but for the cash out of the IRA or the qualified benefit, the qualified fund. But you could make sure that that child doesn’t get a large amount of money at one time, spread that still over longer than a 10-year period. Could also use disclaimers if it were going into trust and the trust was a beneficiary. There’s specific ways to set that up.
Greg McIntyre:
The trustee in writing can disclaimer the cash benefit that’s coming to a child and pass that to the next generation, and say, “skip that generation.” Because, maybe the child was going to be at a higher tax bracket or would put the child at a higher tax bracket. The child decided to forego that to say, “Give to a grandchild to pay for that grandchild’s college and other things,” who would be in a bottom tax bracket starting out. So there’s a lot of different ways. There’s some exceptions for disabled adults, minors. They don’t have to take over the 10-year period, but minors do. The 10-year period does apply once they reach 18, so there’s some quirky exceptions in there, but they’re very narrow.
Greg McIntyre:
So really, this changes the way we’re thinking about now distributing assets to children or non-spouse inheritors. Especially from a financial planning aspect, but also from a legal aspect and planning aspect as well and whether we’re going to use things like accumulation trust and also disclaimers to give some flexibility and control there to maximize your … How about minimize your tax burden and the tax burden on your beneficiaries and maximize the amount that you save that’s going to actually get to the beneficiaries? So if you have any questions about the Secure Act, please feel free to call our office or go online and chat with us or contact us on one of our forms on our website.
Greg McIntyre:
You can reach our office by dialing (704) 749-9244. Or, again, go online to mcelderlaw.com. That’s (704) 749 9244 or online at mcelderlaw.com. The Secure Act, I don’t know that it makes us actually more secure. I think it gives us sometimes some more problems. Plus, it’s troubling when the federal government can go back and rewrite the rules, even though we’ve already given our money based on what we thought the rules were. But that’s the deal, so the Secure Act. Check out the article on mcelderlaw.com on the blog.
The Secure Act. Federal legislation that changes the way we pan retirement.
The Secure Act was signed into law by the president on December 20th, 2019.
The Secure Act… Sounds great, right! Sounds like something that absolutely makes us more secure by simply reading the title. But this title, like many others, can be deceiving. For years we have heard rumors of a piece of legislation that may change the way that IRAs and other qualified assets function and finally, the “Secure Act” is it.
Qualified funds are those that are saved, pre-tax, before the money hits your paycheck and is diverted straight into a qualified fund like a 401k or IRA. These funds are allowed to grow, be invested, and with the additional buying power of securities within the environment of a traditional IRA, for example, can accumulate more wealth (theoretically) over time than if you purchased investments such as stock after payroll taxes were deducted. Many employers also participate in matching plans that is essentially “free money” that can help you accumulate more wealth to be used for retirement. When you pull money out of a traditional IRA you do not pay taxes on the gains but do pay income taxes on the distributions. So, this is a great deal for retirement savings but what if the government can simply vote to change those rules? Well, that is what they just did with The Secure Act. How can these changes impact you?
Previously the age where you were required to start taking Required Minimum Distributions or RMDs as industry jargon refers to these mandatory distribution was 70 1/2 years old. The Act pushes back the age at which retirement plan participants need to take required minimum distributions (RMDs), from 70½ to 72, and allows traditional IRA owners to keep making contributions indefinitely.
Non-Spouse Beneficiaries, generally children, of Traditional IRAs and 401(k)s could previously spread the distributions from that qualified asset over their lifetime to maximize the total distribution and minimize the income tax the beneficiary would have to pay on all distributions in any given year. This strategy was often referred to as the “Stretch IRA”. However, the Act forces these distributions to non-spouse beneficiaries to be spread over a maximum of a 10 year period. Under the Act, there could be significant loss or reduction in actual savings that are passed to a child beneficiary of a retirement asset. Each distribution the child takes during a year is taxable as income. Large annual distributions could force the child’s income to be taxed at the highest level which could take a large chunk of the intended distribution. So, now that the Stretch IRA strategy has been all but eliminated when passing wealth to the next generation, what is the new strategy?
ACCUMULATION TRUSTS: Accumulation trusts would allow for the IRA distributions to be deposited into the trust for pay outs to a beneficiary over periods longer than 10 years. This may be very important when there is concern as to how a beneficiary may spend large distributions unwisely or in a short period of time.
DISCLAIMER: There is a procedure by which a Trustee of which the IRA is a beneficiary may disclaimer the inherited IRA benefit and pass that benefit to the next generation. For example, disclaimer the benefit from child, presumably due to being in a higher tax bracket, to a grandchild.
KEY POINTS:
Age of Required Minimum Distributions is now 72 years.
Traditional IRA owners may keep making contributions indefinitely.
Non-Spouse IRA beneficiaries must take distributions within 10 years.
NEXT STEPS? Those using individual beneficiaries for their IRAs may want to reconsider their beneficiary designations and consult with an estate planning or elder law attorney to reconsider their estate plan and how the IRA beneficiaries and their overall plan may be impacted under the Secure Act If you would like to sit down and discuss your estate plan with an attorney at McIntyre Elder Law please call: 704-749-9244 or online at: mcelderlaw.com.
If your trust isn’t convertible then maybe it should be…
Estate planning is all about flexibility. If you cannot anticipate future contingencies and adjust accordingly, then you’re going to be stuck. When you’re stuck, you cannot protect either your assets or yourself. So how do implement flexibility in your estate plan to prevent from getting stuck? The answer is it’s all about the tools you use.
Trusts are one of the most valuable estate planning tools simply because of their ability to be flexible. Specifically, trusts allow you to integrate terms to anticipate just about any significant risk. But not all trusts are created equal. Just because a trust can be flexible, does not mean that all trust are flexible. Before we dive into what we mean by flexibility, let’s take a look the two main types of trusts.
The Revocable Trust
You may have heard this type of trust called the “living trust” or the “family trust”. Ultimately, regardless of the name, they tend to have a similar function. The best way to explain a revocable trust is it’s just a pot where you can put your stuff. Just like a pot, you can put things in and take things out as you please. The principal benefit of having a revocable trust is twofold.
First, the revocable trust avoids probate. And, while all trusts allow for probate avoidance, the revocable trust is the simplest method to consolidate assets for probate avoidance without otherwise tying those assets up.
Second, the revocable trust allows for you to plan creatively. You may have a plan for your estate that is more ambitious than the plain ol’ transfer of assets to spouse or children. For example, you may want to set up an education fund for your grandchildren. Maybe you have a farm and want to make sure it stays a farm for generations to come. A trust is the easiest and most efficient way to accomplish these goals.
The Irrevocable Trust
An irrevocable trust does everything a revocable trust does. The primary difference is who holds the power. In a revocable trust, the Trustee, the person who manages and administers the trust, is typically the Grantor, the person who made the trust. The result is that the Grantor’s ownership interest and power over the assets does not change once assets are deposited into the trust. For example, if you transfer your home into a revocable trust, where you are also the trustee, it is still your home and you have all the power to occupy, manage, sell, etc. that you had before. The asset transferred to the trust is still “in your name”.
Irrevocable means that the Grantor does not hold power over the trust and cannot retain power in the assets held by the trust. Since the Trustee is the person who manages the trust and therefore has power over the trust assets, the Grantor and Trustee cannot be the same person. Although, the trustee can be anyone other than yourself or your spouse, they can even be a child or sibling.
When a Grantor transfers an asset to the irrevocable trust, that transfer is a gift to the trust. The trust becomes the owner and the Grantor’s ownership interest in the asset is extinguished. The asset is no longer in the name of the Grantor once transferred; however, that does not mean that the Grantor cannot still benefit from the asset. For example, assets in an irrevocable trust can generate income and that income can be enjoyed by the Grantor. Likewise, the Grantor can occupy real property held by the trust.
Irrevocable Vs. Revocable
So why would anyone create and fund an irrevocable trust? The simple answer is protection of assets. A revocable trust is an amazing tool, but it does not always provide a comprehensive level of protection that may an individual may need based on the risks their assets face. Thus, when evaluating whether you may need a revocable versus irrevocable trust, it is first necessary to understand what risks your assets may face.
Probate
Probate is the process by which a Decedent’s assets pass to his or her heirs. This process is court mandated if the Decedent’s assets are not otherwise designated to pass directly to the Decedent’s heirs e.g. a trust or beneficiary designation.
The risk of probate is twofold: time and money. Let’s start with time. On average, a probate case can range anywhere from six months to two years. If any of the heirs sue or challenge the will, it can drag out the process considerably.
With regard to money, probate can be expensive. Probate can be demanding, and any executor will want to pay an attorney to take the burden off his or her shoulders. Further, probate is open season for creditors to come in and take a piece of the inheritance. Many people pay their bills as they come due, so they tend to not worry about creditors. However, most people’s probate creditors are from those debts incurred right before their death e.g. medical bills and nursing home bills. Both revocable and irrevocable trusts avoid the probate process.
Long-term Care
Let me throw some numbers at you. Currently, 70% of individuals over the age of 65 will need some type of long-term care in their lives. This number is steadily rising because of the ageing of our population and the advancement of medical technology. With that being said, long-term care can range anywhere from $5,000.00 to $10,000.00 per month. Most individuals cannot afford that kind of bill and, even if they can, they will likely not leave anything behind for their loved ones.
A good option for many people, who do not have comprehensive long-term care insurance, is to utilize Medicaid to pay for long-term care. However, you first have to qualify for Medicaid and Medicaid can pose a risk to assets after you pass away. Not only does Medicaid set an asset threshold or ceiling for qualification i.e. a maximum amount of assets you may own and still qualify, they also want compensation for the money they pay out. The manner by which they receive this compensation is to take the Medicaid recipient’s remining assets when they die (we call this the Medicaid Death Penalty). In North Carolina, Medicaid is limited to only taking those assets passing through the probate process above. However, it is important to note that, among trusts, only an irrevocable trust can avoid the Medicaid Death Penalty.
Considering that there are some major benefits to having assets transferred out of a possible Medicaid recipient’s name and likewise avoiding probate, an irrevocable trust can be an amazing tool for asset protection.
Protection Vs. Control
The main consideration you must make in crafting your estate plan is: what’s more important for you, protection or control? The, perhaps, most valued aspect of a revocable trust is the amount of control the Grantor retains in the assets transferred to the trust (100%). Although, retention of all that control comes at a price, your assets still exposed to most risks.
Exposure to risk is not a good reason to brush the revocable trust off as a useless tool. In fact, depending on your particular situation, the revocable trust may be a better fit for you. For example, a young professional with a child, some assets, and fledgling retirement fund is a perfect candidate for a revocable trust. This person does not face the same risk for long-term care that someone retirement age would. They would need to ensure that they have their affairs in order if something were to happen to them i.e. distribution of assets and avoidance of probate. But they would not necessarily need to begin to transfer assets out their name to avoid the risks posed by nursing home bills.
Compare that example to someone retirement age who, over a lifetime, has built a retirement and acquired a significant amount of assets. This individual has more to lose and more opportunity for loss.
Let Them Have Cake and Eat it Too
The main goal in estate planning for any attorney is to get the best of both worlds for your client (also known as the “Hannah Montana approach” to estate planning). The thing is, you may currently benefit more from a revocable trust but you may also want the ability to benefit from the protection of the irrevocable trust in the future. In comes the Convertible Trust.
A convertible trust is one that converts from revocable to irrevocable upon a triggering event. With a convertible trust, you can have both control and protection. This type of trust allows you to start out revocable, so you can maintain all control and flexibility while your risk exposure is low. And, when your risk exposure is high—because of your age, health, or legal position—the trust converts, and you benefit from the protection of the irrevocable trust.
The conversion must be triggered by something that indicates you have a higher risk exposure than before. The trigger is built into the terms of the trust, so that the trust can automatically covert upon the triggering event. Some possible triggers that could be built into a convertible trust are: admission to a nursing facility; diagnosis of a debilitating physical ailment, such as Parkinson’s, or Multiple Sclerosis; or diagnosis of a cognitive illness, such as Alzheimer’s or severe Dementia. Note: you would not want to build in triggers that could be considered a fraudulent evasion of payment for debts or liability on litigation. For example, filing of bankruptcy or having someone obtain a civil judgement against you should not be triggers built into the trust.
Conclusion
No matter where you are in life, you should have a plan that works for you now and in the future. That plan could include a convertible trust or any of the other important estate planning tools that are available to you. To learn more about convertible trust and other estate planning tools, give us a call at (704) 259-7040 or look us up on the web at Mcelderlaw.com.
What is an Estate? The RETURN of Hayden Soloway to the Elder Law Report is EPIC as the team discusses what an estate is. Do You Have An Estate?
Greg McIntyre: Hi, this is Greg McIntyre with McIntyre Elder Law, and this is the Elder Law Report. The Elder Law Report is a show that we do every week. It comes out on Facebook and YouTube, and we send it out by e-newsletter. So if you want this, go to our website, mcelderlaw.com. That’s mcelderlaw.com, and sign up for the Elder Law Report. And I have back by popular demand, Hayden Soloway, the famous Hayden Soloway. Right? Homecoming queen, Hayden Soloway.
Hayden Soloway: Oh, Greg.
Greg McIntyre: That’s who’s in the house today, radio star Hayden Soloway. We’re going to talk about what is an estate. We’re going to define what an estate is, so Brenton, myself and Hayden, we’re going to talk about what is an estate. And when I think of an estate, I think of… (music)I want to cross my legs when I think of estate, and I want to smoke a pipe. That’s right. Don’t you?
Hayden Soloway: Yes.
Greg McIntyre: That’s what I want to do.
Hayden Soloway: Lovely home-
Greg McIntyre: Yes.
Hayden Soloway: And beautiful grounds.
Greg McIntyre: Can you please go fetch the dogs?
Hayden Soloway: Yes, and the Mercedes.
Greg McIntyre: Yes.
Brenton Begley: Jeeves.
Hayden Soloway: This and this is actually one of the definitions is for just this.
Greg McIntyre: Do you have any Grey Poupon?
Hayden Soloway: I do.
Greg McIntyre: Can we say Grey Poupon?
Hayden Soloway: Yeah.
Greg McIntyre: Okay. I don’t want to get in trouble for saying Grey Poupon.
Brenton Begley: It rolls off the tongue.
Greg McIntyre: I mean, perhaps you don’t have any Grey Poupon. And perhaps you don’t fetch the dogs or have-
Brenton Begley: A butler named Jeeves.
Greg McIntyre: A butler names Jeeves, and a house in the Hamptons, right? Nothing against people who do-
Hayden Soloway: Oh, no.
Greg McIntyre: Right, nothing against people who do. However, I think there’s a misconception out there about what is an estate, right? I’m going to keep playing the song throughout, while we’re talking.
Hayden Soloway: Can we do a little maybe…
Greg McIntyre: We can quiet it down a [crosstalk 00:02:09].
Hayden Soloway: George Strait or something.
Greg McIntyre: Yes, that’s a good point.
Hayden Soloway: something a little bit more mainstream.
Greg McIntyre: Mainstream? I think I might get in trouble for copyrighting. I don’t think I’m going to get in trouble for copyright [crosstalk 00:02:22]. Straight up. I’m such an attorney, I’m scared to get sued.
Hayden Soloway: Something that represents an estate maybe a little more like this. A little two bedroom, one bath house….
Greg McIntyre: So that’s what most people have, is… most of us have normal lives, right?
Hayden Soloway: Just [inaudible 00:02:41] rental property…
Greg McIntyre: We know all about rental property, that could be rental property? And now, Brenton before, when we were pre-gaming the show, we were talking about it, you made a great point about most lawyers.
Brenton Begley: Yeah, they say that 95% of lawyers represent 1% of the people, right?
Hayden Soloway: Yeah.
Brenton Begley: And the context in which we were talking about that is that, you have wealthy individuals, right?
Greg McIntyre: Right.
Brenton Begley: People who you think would have an estate, they have all that free legal advice, or discounted legal advice. Because we’re just knocking down their doors to give them help right?
Greg McIntyre: Sure. [crosstalk 00:03:25]
Brenton Begley: Yeah, tax breaks, or asset protection-
Hayden Soloway: You’re probably getting those random phone calls, at 9 o’clock at night, “Come in and see attorney Joseph and do your business with me because we know you want to protect your property…”
Brenton Begley: Exactly.
Hayden Soloway: But when you get to when you get to real life-
Greg McIntyre: Right.
Hayden Soloway: That you’re not pursued and perhaps the perception is of this being an estate as opposed to your own property, which is probably more valuable to you.
Greg McIntyre: I think there’s a misconception that the estate and estate planning, is for the rich.
Hayden Soloway: Yeah. I think that’s-
Brenton Begley: Mm-hmm (affirmative).
Greg McIntyre: Then why do I need to do anything, right? Why do I need to do anything with what I have, when… really, I talk about middle-class guilt a lot and I talk about the middle class getting hammered in this country. And we are a law firm of the people, we are working for everyone. Not that we don’t have wealthy clients, we do. And we have nothing against that. I’m fully, all in favor, of somebody being able to make their fortune. However, we also provide estate planning for everybody in between, right, for all spectrums-
Hayden Soloway: And all ages.
Greg McIntyre: Yeah, and it’s affordable. People don’t understand that… or how about I see people get jammed up or in frustrating situations for the family, because they have worked their whole life to get a house or some monies and savings.
Hayden Soloway: Making payments for 30 years.
Greg McIntyre: Yeah making payments for 30 years, paying the bank back three times as much as they bought the house for on the mortgage.
Brenton Begley: Right, exactly.
Hayden Soloway: And that’s not far off the statistic.
Greg McIntyre: That’s about correct. And when they do that, sometimes lose it all in the end because of liens, or longterm care situations, because they didn’t properly manage or do any estate planning ahead of time, or thought it was unavailable to them because they weren’t the one percent.
Brenton Begley: Yeah.
Hayden Soloway: Think about how much they pay for insurance. Fire insurance, flood insurance, and things like this. Over a period of years, I don’t know how much insurance runs a year, I’m fortunate my husband-
Greg McIntyre: Its not cheap.
Hayden Soloway: -Pays our bill. And where you can protect your home or others-
Greg McIntyre: I should have been in insurance.
Hayden Soloway: And all these other casualties in catastrophes with a one time visit with an attorney, doing this, the estate work necessary and then its done. You don’t pay every month.
Brenton Begley: You know, the misconception that estate planning is for rich people, right, is dangerous because if a rich person fails to do some planning, they usually have enough wealth to where they can transfer something, do their heirs the next generation, right. Where they can benefit from it. But for normal individuals, in the middle class, they work all their lives to save something so that they can give that to the next generation. Right. And those assets can be taken very, very easily in a lot of different ways. I mean, the cost of longterm care one is probably one of the biggest risks out there. Individuals like you and I face. So that’s.
Greg McIntyre: And that’s probably part of the dilemma and the knock on long term care insurance sometimes is it’s just out of reach. As far as affordability. They don’t feel like they can budget.
Brenton Begley: Right.
Greg McIntyre: So you don’t, and then you wind up in a situation where you’re, you’re scared, you’re going to lose the house or not be able to pass that on or, lose all the retirement. Those are tough situations. That’s really what we’re sub set up to do is to help people permit that.
Hayden Soloway: Well, they are people we sub set up, rather than establish a dynasty.
Greg McIntyre: How do you like the ON AIR sign by the way.
Hayden Soloway: I absolutely love that.
Greg McIntyre: That is false.
Hayden Soloway: Yes.
Greg McIntyre: Okay. You go ahead and I’m going to, I might, I’m going to turn it.
Greg McIntyre: Yeah. When you talk, when you spit fire like that, I got to.
Hayden Soloway: I grew up where, one my grandfather left and then here with this, my father, my father grew it a little, left an inheritance to his children, that’s a lot of people want to do it that way but they’re families and I know a mom said one family, two families. I think did very well, there’s picking it all. They carry your children, I’m giving you a good education. Go out and get a job.
Greg McIntyre: Heres the middle class guild that I’m talking about, here’s what I’m talking about. Is it’s this thing that’s ingrained in us, from somewhere. It’s either from our parents or the environment or it’s just there. It’s, and I hear this, we’re going to spin down every dime we’ve ever made because we’re proud and we’re going to do that because that’s what we need to do.
Greg McIntyre: Do you think that wealthy people think that way?
Hayden Soloway: Sometimes.
Greg McIntyre: Sometimes?
Hayden Soloway: I don’t know if it’s Bill Gates or several of the multi billi-
Greg McIntyre: Look at my wife coming in. Get a shot of her.
Hayden Soloway: God, what.
Greg McIntyre: The Queen of [inaudible]. Lets bring her, I’m bringing her in. Hey Steff, Steff, yeah come in this way.
Hayden Soloway: Just to finish our point, there are billionaires who are not leaving a significant amount of their money to their children. They made their money and they want to incentivize their children to go into work. [Crosstalk 00:08:38]
Greg McIntyre: Thank you for coming in today.
Steff: Hey, yeah sure.
Greg McIntyre: Steff’s visiting us today. Yes.
Steff: Hey good morning guys, I missed you [crosstalk 00:08:49].
Greg McIntyre: She’s coming in to, Steff are you doing the books today?
Steff: I am.
Greg McIntyre: Is that what you’re working on?
Steff: Yes.
Greg McIntyre: Well, thank you for coming. I appreciate it. You’re doing a great tern-around.
Steff: Sure, is this live?
Greg McIntyre: It is live.
Steff: Oh hey
Hayden Soloway: What do you think Steff? What’s an estate?
Steff: Oh wow, that’s a big question for just walking in the door.
Hayden Soloway: Do you have one?
Greg McIntyre: Do you have an estate?
Steff: Yes.
Hayden Soloway: What is your estate?
Steff: My home, my assets, cars, bank accounts, investment accounts.
Hayden Soloway: If heaven forbid we passed, is our estate taken care of?
Steff: Yes. Yeah. We have the plan.
Greg McIntyre: We’ve got a client, because we signed the plan, Brenton actually drafted our estate plan.
Steff: Yes.
Greg McIntyre: How did it feel after you signed that estate plan?
Steff: Good. It felt like, its always good to have a plan in place. It gives you this sense of peace.
Greg McIntyre: To me it was like a weight lifted off my shoulders, that’s taken care of. That is really taken care of. I mean we have people that sometimes are so anxious and worried. I mean literally I have people, I don’t know if you sat down with some of your clients, Brenton, but then say, “I’ve been up at night worrying about that.”
Brenton Begley: Oh please, yeah.
Greg McIntyre: That’s, I hear that a lot. “I’ve been up at night really worried about things”. By the end its “thank you so much. I’m so glad we’ve gotten this or getting this taken care of. I’ve been up at night, I’ve been so worried about this.” Right.
Brenton Begley: Right. So I mean yeah, that’s the peace of mind that you have when you know that at the end of the day your assets are being protected. Right? I mean it’s a big deal too because we’re talking about estate, you mean assets in general [crosstalk 00:10:38]. [inaudible 00:10:36]
Greg McIntyre: This stuff on how estates, estates during life versus in death.
Brenton Begley: Okay.
Greg McIntyre: Right. Because that factors in and relates to estate planning versus permit. I’ve got to [inaudible 00:10:52] I’m going to the toilet.
Brenton Begley: So just to finish up, saving assets in general is a good thing for the next generation, but it’s not all about leaving an inheritance. Sometimes it’s, Hey, look, I don’t think it’s right that I should give everything that I worked hard for to the government or to some facility that for no real good reason is charging the amount that they charge, right. So, but I mean, kind of going into what Greg mentioned, here’s your estate while you’re living, right, and your estate when you pass away. Okay. And those two things aren’t really any different. I think what a lot of people don’t understand is that a lot of people think that you don’t have an estate until you die, That only happens right when you’re dead.
Hayden Soloway: And did they not realize the possibility but lawsuit or something like that can devastate an estate. Just a raw, a bad wreck, in a bad place, it can be severe.
Brenton Begley: Right? And so when we talk about estate planning, we’re talking about more than what happens after you pass away. We’re talking about protection of assets during your life and after your life.
Hayden Soloway: Some people don’t realize what can happen. Should they become totally disabled and need nursing care. I think they all think that their Medicare is going to, or Medicare and Medicaid are going to pay for their expenses and a lot of people think, Oh well I’m going to hit, they’re going to take my house. And they think that’s automatic, where you say you had just enough education to understand that we can protect the house and you can have the money that you need to go into nursing home. Once your your property’s protect and say, what’s the saying, have your money and then eat it too? Or.
Brenton Begley: Have your cake and eat it too, that’s right, yeah. If you want to eat money, you can do that. That’s [inaudible 00:12:50] the thing is to say, I mean you can get Medicaid to pay for your long term care. That is an option. There’s other options out there and you can save more than just the home too. It depends on when you plan. Right. I mean, [crosstalk 00:13:03]
Hayden Soloway: I think the 1960s era, of Jaguar everywhere.
Brenton Begley: Yeah, absolutely, you have to give up the jag. Yeah. The gold coins, any of that, all of that. That can absolutely be protected. The risks that you face when it comes to paying for longterm care because they can cost anywhere from $5,000 to $10,000 a month, hundreds of thousands of dollars a year, right? And that doesn’t count all the other medical costs that you have up to that point. You know, a couple that’s 65 years old or older. All right. Retirement age, they’re expected to spend, both of them, $300,000 in medical expenses. Now, that doesn’t necessarily count longterm care. Those are unreimbursed medical expenses.
Hayden Soloway: I have a friend who, within the past 30 days, she and her husband had to go into a longterm care facility and it’s one of these, it’s flexible. You can move from one level to another. Well, they are at the beginning level where they are both confident they can take care of each other. So they have their meals in there. It’s a beautiful place. It’s $3,000 a month. I mean, he becomes, he’s a paraplegic. He gets to the point where he needs more care than she could give him. They, move to the next level, and let’s just estimate that it’s another $3,000 a month. But when you get to the Alzheimer’s units, the locked units, they can be $100,000 a year without question.
Brenton Begley: Oh yeah.
Hayden Soloway: And so right now they’re paying $36,000 a year just to live there. And just to make, essentially, where are you going to get the money? It’s going to come out of your estate, you’ll want to protect it. Then you go on Medicare and I mean, excuse me, on Medicaid and Medicaid can pay for it once your assets are gone. So we want to protect the assets. So that you go straight to the Medicaid.
Brenton Begley: Right, that middle-class guilt that Greg was talking about is a lot of people think themselves, well, I have this money. I might as well use it to pay for longterm care because I don’t want anyone else to pay for me. You know, I don’t want to be on anyone else dime. But the reality is, is that you pay for Medicaid. We all pay for Medicaid. Every time you got a check, a little right. A little part of that goes towards Medicaid. So I mean, the thing is that mindset is toxic for individuals who want to save their assets because Medicaid is not living off someone else’s dime.
Greg McIntyre: So we’re having that debate and that discussion about the viability of using Medicaid for longterm care plans [crosstalk 00:15:39] and whether the ethics of doing it, okay, and that’s very political. You’re a very political person. Hey, so there’s some political aspects to that, right?
Brenton Begley: Yes.
Hayden Soloway: Yes, such as.
Greg McIntyre: So yeah. [crosstalk 00:15:56].
Hayden Soloway: So I’ve worked and paid taxes and.
Greg McIntyre: Hey, hey you know what? My grandfather, who passed away with nothing, had that exact same mentality and worked his whole life to get a small farm house and worked everybody else’s land, and paid the government. Why Was this country founded?
Hayden Soloway: It was actually, it was founded on a religious [inaudible 00:16:20] basis. And when they found out that the people who didn’t work caused the people who do work to not work as hard ,and thousands of them died they realized they needed to take all of the
Greg McIntyre: I don’t know about that. Here’s what I would say. I’m not saying you’re wrong. How about, how about this, it was a revolt against British charity. And what was the charity?
Hayden Soloway: It was taxation.
Greg McIntyre: It was taxation. It was taxes man, it was the whole thing was over control and taxation without representation, right? So the people were overtaxed, they couldn’t keep their money. Right? Part of the reasons this, part of the founding, written into the constitution kind of , fabric of our country is that you can obtain property during your life. You can own property, you can own money, right? You don’t have to be a noble to own land and you can pass that land. You don’t have to be the 1%, you don’t have to have a estate like that to own land. You can be anyone at all [crosstalk 00:17:22] and then pass that on to your kids.
Hayden Soloway: Self Sufficiency and self responsibility.
Greg McIntyre: If you look at history and the Boston tea party and the things leading up to the American revolution, it was all about taxation without representation. And the fact that the common man like Ben Franklin who could be self educated, right? People like that deserve to own property and were on par. And we’re the same as getting one with livability, the same as the 1% in the world of this country. And estate planning, be there to hold on to property and give that away when you pass away, it’s fundamental to our core.
Brenton Begley: and you know what can ruin an economy is when each generation has to start over from zero, sir. Nothing. That’s how you ruin an economy. Yeah. I mean, look at any country that has a [crosstalk 00:18:18] traditional wealth, the smooth transition of wealth from generation to generation ensures stability and stability ensures a good economy.
Greg McIntyre: Sure.
Brenton Begley: I mean.
Greg McIntyre: and to your point, to independence, we want families to be independent. Should your kids always have to take out student loans and have hundreds of thousands in debt every generation or to the home that you bought and you pass on, that you didn’t lose when you had to go to a nursing home and Medicaid had to pay because that paid for a grandchild’s college. Right. And they might be able to escape some of that debt. And I don’t think we should be in this debt mentality economy.
Brenton Begley: Well, you bring up a good point too, because there’s this bubble, right? That student loan debt, we’re in debt trillion dollars, right?
Greg McIntyre: [crosstalk 00:19:08] that housing bubble that burst in 2008 and put the world in this economy.
Brenton Begley: there’s two that are going on right now. The two big bubbles, right? The longterm care bubble that no one’s talking about. People who are losing assets because guess what? We’re aging as a nation, right?
Greg McIntyre: Sure.
Brenton Begley: Baby boomer generation has gotten past that retirement age, the next generation after that, that was a large generation too. I mean we have that silver tsunami coming and we have not planned for it. Just like we hadn’t planned for student loans. So if we have all these people losing assets, they’re not going to transfer it to the next generation who has trillions of dollars in student loans. What’s going to happen to our economy? I mean, so it’s fundamental not only for you personally to have an estate plan in place, but it’s fundamental for everyone in the United States to have that plan to make sure we have a stable transition of wealth and make sure the economy runs the way it should.
Hayden Soloway: Right.
Greg McIntyre: I just think.
Hayden Soloway: I never really thought about it like that.
Greg McIntyre: People like you, you are so political. You do such a great job at what you do and I respect that. I also, I just think people deserve to be able to protect what they have during their life and what they worked so hard for. Because you did give so much to the government during your life that’s taken out of every paycheck. You should be able to hold on to some things and you do pay for that Medicaid benefit during your entire life. That’s what you do, right?
Hayden Soloway: [crosstalk 00:20:41] We talk about Medicaid as the owner of the most wrecks committed in one year by anyone, even
Greg McIntyre: Tiffany was talking about art. Tiffany or Taylor were talking about some of the wrecks they’ve in been with you when they were going to signings.
Hayden Soloway: Just one.
Greg McIntyre: Just one?
Hayden Soloway: Just one. We were coming back in from via Seattle. (laughter)I didn’t haver anything to do with it. Anyway,
Greg McIntyre: Its nice [inaudible 00:21:06].
Hayden Soloway: And one of those wrecks was all that did some serious injury that could’ve been a catastrophe that I may not have been able to avoid had I not known you, [crosstalk 00:21:17]
Greg McIntyre: Brent was bringing up estate planning, proper estate planning trust, things like that can shield assets from liability. Minimum limits, car insurance in North Carolina, anybody know what it is? 3,800 so 30-60. 30,000 for an individual, 60,000 for all. I have a family of eight. If we were all in that Honda Pilot sitting right there and some bad car, I mean there would be some big bills if we were all seriously hurt or worse.
Hayden Soloway: And lawsuits, liability.
Greg McIntyre: So that, so that insurance, if you had a 30-60 plan, I guarantee a $60,000 is not going to cover all those medical bills for me, my wife and our six children.
Hayden Soloway: So again, if I were the [inaudible 00:22:03] responsible. [crosstalk 00:22:03].
Greg McIntyre: What’s the first one your attorneys coming at? They’re coming after your personal assets. They’re coming after your retirement.
Hayden Soloway: Your home.
Greg McIntyre: They come after your home.
Hayden Soloway: Your car, whatever you got
Greg McIntyre: It’s all on the table, That’s right. So how do we forbid that? Our suppliers demand that.
Hayden Soloway: Really, really just plan ahead, I mean, trusts are a great,
Greg McIntyre: sure.
Hayden Soloway: I personally love a trust just because of how flexible that they can be. Right. So one thing that we use to protect assets is a trust and they protect assets, not only if you get sued in the future. You don’t want to put assets in the trust after you’ve gotten sued. You know, [crosstalk 00:22:42]
Greg McIntyre: That’s why I don’t like putting a car in the trust fund with other property.
Hayden Soloway: Why is that?
Greg McIntyre: Well, okay, so let’s say I want to separate my home in other months, from other monies from the car that might have the wreck and hit something and hit a car load full of eight people. If that liability is there remote, the trust is to help stop that extinction of liability to recover assets. If we put the car inside of the trust with the other assets, then it’s in that snow globe environment with them and that’s all tape still, right. So I just think putting a deadly weapon, [crosstalk 00:23:18].
Hayden Soloway: And another thing.
Greg McIntyre: putting a deadly weapon and something that really has a ton of liability attached here with the other assets is a dangerous thing.
Brenton Begley: A few of the other assets are a [crosstalk 00:23:35] idea. Yeah. Well, yeah, I mean that’s the thing is a trust can cover a plan, I mean, not only getting sued, but planning to longterm care, planning for medical debt, just paying old medical debt. Right? I mean, you inherit that in North Carolina, right? Dr necessary is old antiquated. Don, doctor [crosstalk 00:23:45]
Greg McIntyre: as a spouse, I could be on the hook for
Brenton Begley: Exactly.
Greg McIntyre: your spouses medical bills as well as nursing. [crosstalk 00:23:54].
Brenton Begley: That person.
Greg McIntyre: that debt you might owe the state of North Carolina for a Medicaid debt or something like that. You can think you [inaudible 00:24:01] for that person and then all of a sudden you find out can attach to yourself or your estate when you pass away.
Brenton Begley: That’s right.
Greg McIntyre: So protect the home, Ladybird deeds, trusts, those things. All elements that are designed to protect the common man woman and protect your assets.
Hayden Soloway: One thing that I wanted to ask is there are right ways and wrong ways to do things and I know we have run across clients who have had [crosstalk 00:24:25]
Greg McIntyre: I know there’s a colleague in Eugene from WCC, Charlotte Tanisha. Every once in a while they’ll look at the camera and smile. Okay, so they’ll be talking, right. We’re talking look at each other. Then every once in a while, that must be training in journal or Anchor school, or something. Or TV school.
Brenton Begley: They have that?
Greg McIntyre: Yeah, in TV school and you learn to look at the camera and smile.
Hayden Soloway: maybe if I just positioned myself in this way, because I’m usually [crosstalk 00:24:54].
Hayden Soloway: Well what are the things, that you could do things the wrong way without guidance as in some of the clients that we have had who have put their homes into their children’s names and they may have protected the home but their children don’t get sold it and left with nothing. So there are ways to protect the property its also to protect your interest in that property as well, so.
Brenton Begley: That’s such a good point. Over exploitation is a real thing. I mean it happens all the time and I mean we see it, we see it all the time and we help try to protect against that. So empowering individuals with the right tools to protect themselves because [crosstalk 00:25:32].
Greg McIntyre: How about employing right people to take care of everyone in your property if something happens.
Brenton Begley: That’s right.
Greg McIntyre: Just to get estate planning earlier on. with foundational docs. So the general journal, arbitrary healthcare power of attorney, living wills, those are the four. And even we could look at more complicated things like trust. Is it snowing outside?
Brenton Begley: It looks to be,
Greg McIntyre: it is snowing outside
Hayden Soloway: It is.
Speaker 5: It is snowing
Hayden Soloway: Wait, I don’t know where you live [crosstalk 00:25:53], but around here there’s a little bit of smoke can create a great deal of excitement.
Speaker 5: You see it a little bit. Yes.
Brenton Begley: And liability.
Speaker 5: We’ll talk about car wrecks.
Greg McIntyre: I mean, some people, if you are out on the roads today, give me a call. (704) 749-9244 in all seriousness, man, what a great topic, great topic Taylor. I’ll give Taylor Shelton our office credit cause she says, I never give her any credit and I steal her ideas. She had the idea of talking about “What is an estate”, because a lot of people don’t know. An estate is what you have during your life while you’re alive, but also, when you pass away. So to probate an estate, nothing is better… than having a good estate plan during your life to avoid a bad experience when you pass away. Protect your property from Leins when you pass away. Hey, you guys did a great job this morning. Thank you. I’ve missed the overall report.
Hayden Soloway: Me too.
Greg McIntyre: and I’ve missed doing the show with you. [crosstalk 00:27:07]
Greg McIntyre: Yeah. So, to cover that. We’ve got, I’ve got the table, I’ve got the podcast tables set up right.
Hayden Soloway: and the ON AIR sign.
Greg McIntyre: And the ON AIR sign, and I just want to get back to basics, keep that going.
Hayden Soloway: So there’s so much to say.
Greg McIntyre: there’s so much to say. that’s kind of where we started when you started out writing blogs and do the other wall report every week. Then doing the radio show, kind of miss the radio show too.
Hayden Soloway: Me too. Of course I’ve seen you on TV. You’re getting to be a household name.
Greg McIntyre: Those are really short clips, on TV, like a four minute or five minute job [crosstalk 00:27:45]. I like long form a little better. So how about there’s a place for both, but long form, let’s just talk and get more than in depth on subjects. We can talk for another 30 minutes.
Hayden Soloway: If you’d done a TV show, We’d probably be a little more rehearsed and more notes and things like that, this is kind of an around the table discussions. Kind of share it with people things [crosstalk 00:28:02]
Brenton Begley: I don’t know it will end up being more organized because we have a, yeah, we have a lot of spitball type conversation and that’s the way to really do it. I mean that’s my favorite consultations. Those are the ones that have no format, right? People ask me questions, we jump around from topic to topic. That’s how you learn, right?
Greg McIntyre: You learn and then, and then we have tools and experience to format that or put that into a nice plan for you or give you some nice options. So, Hey, if you have any questions about estate planning, organizing your assets, protecting them from Leins, paying for long term care, out of pocket with longterm care insurance or you know, the Medicaid option. Give us a call at McIntyre Elder Law. You can call us by calling our main number. It’s (704) 749-9244 or you, in addition, I will direct you to our website. It’s a time, there’s a wealth of knowledge. They’re both writing in blogs, research, Elder Law TV, Elder Law radio. You can find all that there. That’s MCelderlaw.com M in Mike, C as in Charlie and then elderlaw.com like McIntyre, right? So mcelderlaw.com and you can look at our estate planning pages, but really I’d love you to sign up for that.e-newsletter.
Greg McIntyre: The elder law report is the way you get really, really awesome information like we’re talking about today. We don’t all have the same point of view on this show or in this office. We all have different political points of view. We all have different things that feed in. But I think we forced each other to look at things in different ways, which IS beneficial and we can talk, unlike politics today, I’ve always wanted to do a political setting.
Brenton Begley: You know that’s right.
Greg McIntyre: I mean, I’ll, if I’m in a political show, it will be the number one show in the world. Okay. In the world,
Hayden Soloway: It would.
Greg McIntyre: I would probably, I might not say [crosstalk 00:30:07] who’s that guy they pulled off YouTube or whatever? Alex Jones. Right.
Hayden Soloway: Yes.
Greg McIntyre: I don’t know if my show would stay on [crosstalk 00:30:10].
Hayden Soloway: They banned him [crosstalk 00:30:07].
Greg McIntyre: I would be banned, for multiple reasons. But here, we keep it PC and we keep it within line, but we have a lot of good discussions. So anyway, I appreciate it. [crosstalk 00:30:18] Yeah. If you want to do a political side. Oh, okay. It would be cause I would shout, you know, I would throw out some challenging questions.
Hayden Soloway: Of course you would.It’d be fun.
Greg McIntyre: It’d be fun.
Hayden Soloway: I’m prepared.
Greg McIntyre: And feisty.
Hayden Soloway: I’m prepared.
Greg McIntyre: I know.
Hayden Soloway: It would be different. I mean this is really off the cuff. It’s spontaneous. None of this. We came up with a general plan and one idea, maybe three or four basic things we wanted to discuss and then we expand on it from there. If we had a political show, we would have much more organized notes written. At least I would. We’ll do one one day.
Greg McIntyre: [crosstalk 00:30:54] is killing it on his review show. You ever listen to [crosstalk 00:30:57] ? I.
Hayden Soloway: I think I do occasionally.
Greg McIntyre: I Don’t think you really organize the plans. I think he just [crosstalk 00:31:01] Oh God. Oh God. Sorry. I’m not with her.
Hayden Soloway: No he said so.
Greg McIntyre: I’m just kidding.
Hayden Soloway: He ran a good campaign
Greg McIntyre: Right, right.
Hayden Soloway: He had good ideas. An he announced [crosstalk 00:31:15]
Greg McIntyre: Sure.
Hayden Soloway: From a point of view a Republican would take ,he had really a good,
Greg McIntyre: Do you think it was in the bag?
Hayden Soloway: I think so.
Greg McIntyre: He didn’t think [inaudible 00:31:28] was going to be such a contender. [crosstalk 00:31:28]
Hayden Soloway: But he said that himself [crosstalk 00:31:29] and he said he was considering running for office again. I think possibly Senate.
Greg McIntyre: He’s talked about that. He’s talked about [crosstalk 00:31:35]
Hayden Soloway: So we’ll probably see him in another. [inaudible 00:31:42]
Greg McIntyre: I mean isn’t that true? Like the political realm or anything? How, see all of everything relates back to estate planning.
Hayden Soloway: I want to see where this goes.
Greg McIntyre: The organized plan wins.
Hayden Soloway: Yes.
Greg McIntyre: The person who plans, the person who has the defined goal, the person who …maps out their plan for success will achieve their goals, he who adheres to that plan wins, every single time. Okay. In politics or in life or in estate planning and probate. Right. So its important to plan, so right now this episode is brought to you by [inaudible 00:32:22] (laughter).
Greg McIntyre: Who would tell you? Planning is extremely important. I didn’t say that about Hayden. So anyway, thank you.
Hayden Soloway: He’s a good guy.
Greg McIntyre: He’s a great guy.
Hayden Soloway: Whether you’re a Democrat or a Republican [crosstalk 00:32:35].
Greg McIntyre: Yeah, Democrats and or both.
Hayden Soloway: He’s the one to listen to.
Greg McIntyre: Sure, sure. Anyway, thanks for listening guys and watching and we’ll be back. So I’m going to try to persuade Hayden to come back. I don’t know if you want Hayden to come back. Give me a thumbs up or a shout out in the comments. Okay. Cause I’m miss her. Anyway, have a good day. Goodbye.
I think planning gives you clarity. In that respect, Elder Law is Clarity. It helps families plan, think about the future, protect assets and gain peace of mind. As we head into the new year, everyone is making and breaking resolutions. I love this time of year because of the planning aspect.
I have been planning for our firm, my wife and I have been planning our goals for our family this year. This is a perfect time of year for people, families to get their affairs in order, make plans like Estate Planning and gain the clarity and peace of mind that comes along with that.
Review What You Have. Talk about past documents that may be out of date. For example, 25 year old Wills. In Probate, we see it daily, invalid Wills, Named executors who have passed on, etc. Revamp documents. Know what you want to leave to your loved ones that is existing now. Sometimes people will name specific things in Wills, that no longer exist..Then it’s a hassle when it comes time to probate the Will.
Take Inventory. Take Inventory of both people and things. Once you think about all that you have and the people that matter in your life things become much clearer.
Define Your Goals. What are your plans?… to take a cruise for 10 years? To spend all money down? To preserve money for the children and/or grandchildren? To send them to college? To protect assets in the event of long term care? The retirement… The house?
Meet & Discuss. Meet with your spouse… Family if need be… Communication is great here! Meet with a professional to discuss how to accomplish your goals and make a plan. Now you practice Estate Planning & Elder Law…. That is what your firm does…
Q. You can help? Absolutely…. We would be glad to help.
Q. What is a planning session like with you? Very easy… We sit down with the client or family and walk through the assets, define goals… flush out what is most important? Control of assets for example or protection of assets. Then we use our legal knowledge, tools and experience to help the client plan for the future. It’s really that simple. AND… Once their planning is done you can see the peace of mind it gives people. That’s what I love.
Q. So how might people get in touch with you and your firm, Greg? Call us at: 704-749-9244 or online at mcelderlaw.com/estateplanning… That’s mcelderlaw.com/estateplanning. We would love to help people kick off 2020 with peace of mind and estate planning in place. It is a perfect time of year to get this done!
In this Elder Law Report we are providing all Estate Planning, Trust Planning and Lady Bird Deed Maps all in one place just for you for FREE. These maps can really help in planning your strategy for how to protect your hard earned money and property.
The Estate Planning Map can be used to route assets through or around the probate estate and to examine how long term care and liens may attach to your estate. There are various tools to protect and pass assets outside of the probate estate built right into this map.
What do you value more? Protection or Control? Perhaps a little of both. See if a trust is right for you and if so which kind with this map.
Know how a Lady Bird Deed works? Curious? These deeds can mean the difference in losing or saving a home when long term care is needed. See just how they work with this map.
Making a Will is an extremely common concept. You own stuff and you want to make sure a certain person or persons get that stuff when you die. What’s not commonly considered, however, is what will happen when that transfer of assets takes place. There’s some good, there’s some bad, but all are things you should be aware of.
The “Oops” Transfer
Let’s say you’re a gun owner. You’ve purchased a couple firearms over your lifetime that are good quality and will serve as part of a decent inheritance. Let’s say you want to leave on or all of these firearms to your son Chuck. Now Chuck was a little wild growing up. He and his buddies got popped in high school by the local Sheriff for driving around in the bed of a truck, smashing mailboxes with a baseball bat—a state and federal offense. Now Chuck, as the main perpetrator of the smashing, got charged and convicted of a felony. Chuck cannot legally own or possess a firearm because of this felony. If he is found to be in possession of a firearm, he is in big legal trouble.
What was originally a gift out of the kindness of your own heart, turned into another felony charge for ol’ Chuck. . . Oops. What could have been done? Well, a little preplanning would have allowed you to set it up so that the firearms go to someone else or to be held in trust until Chuck gets his rights to own a firearm back.
Lifelong Loans
Let’s say you own a home with a mortgage. You refinanced a couple time and refurbished a couple rooms in the home. So, your mortgage is pretty high. High enough that you may not pay it off during your life. Let’s say you pass away and leave the home to your child still owing $60,000.00 on the mortgage. What happens to it?
Well, it’s no surprise that somebody has to pay it. In this case there is really two options: 1) Maybe you had insurance on the mortgage such that if you died owing a balance, the insurance would pay that balance so that your heirs would not have to. Most people do not have this type of insurance; 2) If you don’t have mortgage insurance, then the beneficiary who received the property must pay it. It is important to note that the beneficiary is not personally liable for the mortgage. But, if they want to keep the home, it must be paid. Also, if they sell the home, part of the proceeds must go toward paying off the mortgage.
Finally, the beneficiary has the option of refinancing. If they do, they will become personally liable for the mortgage. This really is not a great option unless the beneficiary can get a better rate and/or the beneficiary wants to get some of the equity out of the property.
Death and Taxes
What are the tax implications of dying? Well, there’s a few but I’m going to focus on one: basis. Okay, we’re gonna get technical here, so stay with me. Let’s say you bought a vacation property for $100k. Your basis in that property is $100k, what you paid. If you sold that property for $300k, you would have a gain. The gain is the difference between the basis ($100k) and the profit ($300k). Thus, the gain here is $200k. You would be required to pay capital gains taxes but only on the gain. So, here you would apply your capital gains rate (let’s say 15%) to the gain of $200k. The capital gains tax would equal $30,000. Quite a large chunk of change.
Let’s say you decide to give that property away during your life. The person who receives the property will have the same basis you have and will suffer the same tax consequences if they sell the property. However, if you were hang on to that property and your beneficiary were to receive as an inheritance, they get a “step-up” in basis. This means that their basis in the property will be fair market value at date of death. That eliminates all the gain built into the property. And, unless the property appreciates significantly, there will be little to no tax consequences of selling the property once received.
Conclusion
A little bit of preplanning can prevent the assets you leave behind from being a burden. I f you have questions, call the experienced attorney at McIntyre Elder Law: (704) 259-7040.
The Value of Using Irrevocable Trusts in Medicaid Planning
People often wonder about the value of using irrevocable trusts in Medicaid planning. Certainly gifting of assets can be done outright, not involving an irrevocable trust. Outright gifts have the advantages of being simple to do with minimal costs involved, including the cost of preparing and recording deeds and the cost of preparing and filing a gift tax return. Many financial institutions have their own documents they use for changing ownership of assets so there are typically no out-of-pocket costs for the transferor.
So, why complicate things with a trust? Why not just keep the planning as simple and inexpensive as possible? The short answer is that gift transaction costs are only part of what needs to be considered. Many important benefits that can result from gifting in trust are forfeited by outright gifting. These benefits are what give value to using irrevocable trusts in Medicaid planning.
Prior to state implementation of the federal Deficit Reduction Act of 2005 (DRA) in recent years (with the exception of California), federal Medicaid law contained a bias against trusts: Most transfers of assets to trusts had a 5-year lookback period, whereas there was a 3-year lookback period for non-trust transfers. This different standard induced many clients to elect outright gifting in preference to gifting in trust. The DRA leveled the playing field by imposing a 5-year lookback period for ALL transfers. Removal of the bias against trusts shifted the discussion of elder law attorneys with clients to the real benefits of gifting in trust versus gifting outright.
Key benefits of gifting in trust are:
Asset protection from future creditors of beneficiaries
Preservation of the Section 121 exclusion of capital gain upon sale of the settlors’ principal residence (the settlor is the trustmaker)
Preservation of step-up of basis upon death of the settlors
Ability to select whether the settlors or the beneficiaries of the trust will be taxable as to trust
