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instead. in /home/kelleypb2002/public_html/wp-includes/functions.php on line 5475The post What things can be done to avoid probate? first appeared on Knapp Law Firm, PC.
]]>A second thing you can do is to make an asset payable on death. An example is life insurance, an IRA, a 401k, or an annuity. As long as you don’t name your estate or fail to name any beneficiary the property will pass outside of probate to the person you designate. You should name a contingent beneficiary in case the first person you select predeceases you.
Likewise you can use payable-on-death (POD) accounts. These are also sometimes called multiparty accounts. POD accounts do not provide the beneficiary with immediate access to your financial accounts, such as checking and savings accounts. The funds are given to the named beneficiary after you die. With a multiparty account the other person on the account can have immediate access while you are alive and after you die it belongs to the other person and does not pass thru probate. This can be a useful way for loved ones to have quick access to funds to pay for funeral expenses, last bills, and even support themselves.
Similar tools are called transfer on death (TOD) accounts used for stocks, bonds and other securities. Some states do not allow this form of designation, but South Carolina does.
Joint ownership with right of survivorship or a life estate are often used with real property, vehicles, and mobile homes to avoid probate. These types of ownership create various rights and limitations such as needing the other owner’s permission to mortgage the property or sell it. You need to understand the drawbacks before creating any changes to your real property. This change in title is a gift and subject to the five-year-look-back-period for Medicaid eligibility.
Living trusts have grown in popularity because they avoid probate and let you retain control as long as you are competent. These kinds of trusts can hold your real property in multiple states, including time shares. Said trusts can also hold household goods, vehicles, cash, accounts, etc. They can work in conjunction with some of ideas above.
Do not act on any of these ideas if you feel pressured by someone or are confused. You should consult with an elder law attorney well versed in Medicaid law before gifting away property and assets, changing your beneficiaries, or even creating a living trust.
Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column.
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]]>The post What happens to my belongings and accounts if I die without a will? first appeared on Knapp Law Firm, PC.
]]>Not all assets are part of your probate estate, for example if you own a house as joint tenants with right of survivorship with a spouse the house belongs solely to your spouse upon your death. Multiparty bank accounts usually belong to the survivor. Likewise IRAs and life insurance may be payable on death to a named beneficiary. These are not all the things that could pass by contract outside the probate estate.
Let’s assume all assets are solely in your name. When you die, 50% goes to your spouse and 50% to your children. Spouse have some elective rights that are not covered in this answer. If there are no children all goes to the spouse. If your spouse has predeceased you or you are divorced or never married, then all to your children as defined by statute in substantially equal shares.
One problem of the State’s plan for you is the children could be minors so that a conservator may have to be appointed and the probate court will control and oversee assets until the children are adults. Real property may not be able to be easily sold. Your spouse has to pay off the mortgage alone while the kids get ½ the home and land later as adults. You might have preferred for your spouse to get it all, especially if this is a second marriage and your children live with your ex-spouse or they don’t get along. The adult children could force the house to be sold. Part of your assets could pass to a special needs child who could be disqualified from public benefits.
Another potential problem could be you are estranged from an adult child for a good reason like his or her drug or gambling addiction and the last thing you want is for him or her to get a large amount of cash. Or maybe your children don’t get along with one another and because you left no instructions in a will they become further divided as they fight it out in court. From my experience, arguments cause delays and increase the expenses for all the parties involved.
A will allows you to name someone to handle things at your death who is known as the personal representative or executor. Failure to nominate someone in your will as personal representative means the State’s priority list will be applied by the court to appoint someone to probate your estate. It might not be who you would have chosen given your insight into your relatives, their characters and relationships with one another. Bonding will likely be required adding to the cost of probate administration. Additionally, probate costs will be higher.
Intestate succession is rarely the plan you would have made. You have much better options. Seeking the help of an estate lawyer can be crucial in formulating a valid will that expresses your specific wishes and protects your loved ones according to your instructions.
Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column. 10/2021
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]]>The post As a small business owner, how do I begin to plan for retirement or my untimely death? first appeared on Knapp Law Firm, PC.
]]>Most succession plans involve six steps:
1. Survival – First, buy appropriate business continuation, disability, and life insurance for yourself and set aside something each month for your own retirement. This is as important as you showing up to work every day and making a five-year business plan.
2. Choose a Direction – Determine whether you really want the business to pass within the family as opposed to selling it to another tradesman or professional, or simply dissolving the corporation. Once you are sure continuation is in everyone’s best interest, you must create opportunities for others to learn all aspects of the business so someone can step into your shoes.
3. Recruitment – The person saying he or she wants the business is not necessarily the one who has the capability to lead. You may have a unique set of characteristics that your offspring lack. Sometimes it is best to split responsibilities to take advantage of individual strengths and hire key persons to fill in the gaps.
4. Development – Invest time in training key people. Don’t let family shirk business responsibilities if you expect them to take over.
5. Select trusted professionals – lawyers, a CPA or accountant, an insurance agent, and a financial planner — to help you formulate a business succession plan and make it legally enforceable in the event of your disability, retirement, or death. You may need to update your business plan, create a buy-sell agreement, revise your will, create a limited financial power of attorney for the business, and/or create and fund a living trust. There may also need to be funding vehicles like key-man life insurance put in place.
6. Implementation – Once a well thought out plan is in created, you need to take the steps to put it in place. You can modify it, but at some point, you must be ready to step aside so set a trial date. Actually, let those you have selected run things for a week or two on their own. Listen to their ideas on changes and allow them some opportunity to make plans on their own, with your oversight, guidance with an eye on profitability. This does not mean you have to retire, but you may look forward to limiting your role and taking some well-deserved vacations.
Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column. December 2021
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]]>The post What is the scoop on charitable giving this year? first appeared on Knapp Law Firm, PC.
]]>Donors age 70 ½ and older may direct lifetime distributions from a traditional or Roth IRA to a nonprofit that counts toward your taking of the required minimum distribution. You effectively bypass income tax on the contribution! You can also avoid estate taxes with death time distributions to nonprofits. The cap for a death time retirement plan contribution is $100,000. There is no charge to update a beneficiary designation form if you decide to add a charity as one of you beneficiaries. These designations can be separate from your will or trust.
Creating a charitable gift annuity or a testamentary charitable remainder trust lets the non-spousal beneficiaries (i.e., children and other issue) of your IRA receive fixed payments of over a longer span of time than the 10-year distribution required by Congress as of January 1, 2020.
If you make a gift of stocks, bonds, and mutual funds you receive an immediate tax deduction for the fair market value on the date of transfer to the nonprofit with no capital gains! You can gift to a specific nonprofit and designate a particular project you like.
When gifting a paid-up life insurance policy, you receive an immediate tax deduction for the cash value of the policy. You have satisfaction knowing you made a significant gift without it affecting your cash now.
Likewise, you can gift a vacation home, commercial building, or undeveloped land. The IRS requires an independent appraisal to establish fair market value and there are additional IRS procedures. If interested check it out online. With these kinds of real property gifts, you can give up to 30% of your adjusted gross income and carry the deduction forward for up to five years. Good news after the gift you are free of property taxes, insurance, maintenance costs AND CAPITAL GAINS TAXES. You can also keep a lifetime interest and pass the property at death via a life estate deed.
Some fun gifting ideas I have noticed this year are The Church of Jesus Christ of Latter-day Saints donation machines – it is like putting money in for a candy bar, but instead you buy a pair of gloves for a homeless person. They are also promoting The Light the World with Love Campaign that encourages you to do some act of kindness each day from December 1st until Christmas. You can find this online at LighttheWorld.org. I have a sign in my kitchen that reads “Kindness Begins with Me.” And I believe it does.
I really like buying a cow, goat, some rabbits, or chickens for a family who then learns to raise animals for their milk or meat at Heifer International and eventually they earn enough to sell the excess and further their self-sufficiency. Oh, and it’s just not Christmas without something for children. Over the years we have been involved through various programs – Secret Santa, Angel Trees, the Smile Train, Make a Wish, and Toys for Tots. This year our ladies’ group at church made fleece blankets for at risk children.
I practice elder law and my office fills shoe boxes with small gifts for home bound seniors through our local programs on Aging.
I read a book a few years back titled Christmas Jars and started saving all my change to give jars of coins at the holidays to whoever my heart directs. I see people all around who need to be lifted with a little cash.
Here’s the final tip: Count your blessings at Thanksgiving. I do which always opens my heart to prepare for Christmas.
DISCLAIMER The information given in this article is of a general nature and does not create an attorney-client relationship. You should always consult with an attorney one-on-one regarding the specific facts of your situation. November 2021
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]]>The post Probate, Estate Planning first appeared on Knapp Law Firm, PC.
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]]>The post I heard something about funds to help with COVID-19 deaths? first appeared on Knapp Law Firm, PC.
]]>The post I heard something about funds to help with COVID-19 deaths? first appeared on Knapp Law Firm, PC.
]]>The post My Mother just inherited $60,000. first appeared on Knapp Law Firm, PC.
]]>A. Medicaid is a federal program with some state variables. It has medical, income and asset qualifications. Likely your Mother will qualify with some careful planning, but not at present. It’s not even clear if she meets the level of care requirements. Facts and figures drive all Medicaid application situations. I can’t give you specific advice even in my office without knowing the details and your Mother’s goals and preferences.
The attorney will both know the law, options available and focus on your mother’s best interests. Professional long-term care planning tools include: personal dependency, medical deductions, home transfers after accounting for basis and capital gain issues, annuities, converting interest income, domestic help, sale of property, sale of the home, owner financing, purchasing a new home or condo, commercial and family held reverse mortgages, owner occupancy rules and using a Medicaid waiver on the back side, partial sales, gift tax rules, life estates, private pay using long-term care insurance and other options, Medicare, Veterans Benefits, Medicaid, dozens of spend-down strategies, promissory notes, life insurance loans and cash ins, legal separations and divorce, QDROs, bankruptcy, income trusts, special needs trusts, housekeeping and caregiving contracts, and various asset transfer options including special consideration for IRAs, 401K, deferred pension plans and other retirement plans. One plan does not fit all situations.
I can tell you, do not listen to the common knowledge on the street from friends and family or even nursing home staff, if you are looking at placement. Get competent legal advice from someone that focuses on Medicaid, Veterans Affairs benefits and long-term care planning. This is money well spent as just one month of private pay nursing home care in South Carolina averages $6,500. The national average is $8,000 plus.
Consider just these five common myths.
1. There is a five-year look-back period. If you have given away anything in the five years preceding an application for nursing home Medicaid you will be denied. Yes, there is a five-year look-back period but it is not the same as a penalty period. A person could be disqualified for 60 months or one month. Don’t you want to know if it’s one month or sixty?
2. One has to get rid of all assets to qualify to receive Medicaid. No. A single person can have $2,000 in countable assets, but every asset is not counted toward eligibility. There are different rules for married couples, who are able to protect more assets. Provide the details and ask an expert.
3. If I qualify everything I own is safe from a Medicaid lien when I die. No, there is another set of rules when the receptant dies. You need to know present and future consequences of any financial actions you opt to take.
4. Planning isn’t possible once the crisis hits and someone is already in a nursing home. Not true. Options might be limited, but we frequently can save a family money even after admission.
5. I am over the income limit so I will never qualify. Not true. Income over the limit can be allocated into an irrevocable Medicaid Income Trust. Any monies remaining after the person dies become the property of the State. Typically these accounts are set up with just a few hundred dollars with pension, RMDs and possibly Social Security being directly deposited each month.
These strategies are legal.
Not all attorneys that advertise elder law offer Medicaid asset preservation or applicant processing services. Some firms focus more on nursing home abuse litigation and traditional estate planning.
Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column. 1/2021
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]]>The post Does a revocable trust replace a will? Do all assets have to go into the revocable trust? And how much do trustees typically get paid? first appeared on Knapp Law Firm, PC.
]]>IRA and other retirement accounts often don’t go into a trust to order to preserve the payable-on-death tax benefits. Many people opt to leave their cars or a small checking account out of their trust. Your attorney will be able to help you decide which assets should go into the trust.
A lessor know reason for having a will involves claims against the estate. Under probate you can limit the time period when creditors can file a claim. In South Carolina that time is usually 8 months. Without probate barring creditors, creditors may come after assets for years. Assets in a living trust are not necessarily safe from creditors just because the estate is probated.
A third reason for having a will is to be able to name a guardian for minor children, an incompetent adult child or spouse with diminished capacity. These are things you cannot do in a revocable trust.
While in most cases it will cost more to create a trust and a pour-over will than just a simple will, trustee fees are typically lower than those charged by personal representatives for assets probated through a will. In South Carolina a Personal Representative can charge 5% of the probate estate, which only includes real property if the land is sold as part of administration of the estate. Trustees fees are typically 1-2% of the total assets, but depend on the size and complexity of the estate. Often family members who serve as trustees do not charge fees, only seek reimbursement for actual costs, including hiring professionals to assist and advise them as needed. Family members or friends serving as personal representatives are not required to charge fees. Trustees and personal representatives who do charge fees often must report the monies paid to the IRS as earned income.
Another benefit of a living trust is that each named beneficiary adds $250,000 to the total FDIC protection available to the account for a maximum of $1,250,000. If you plan to have more than five beneficiaries check with your attorney because there are added requirements such as each beneficiaries must having an equal interest in the trust assets.
Disclaimer: Information contained in this column is meant to be of general information on frequently asked questions concerning disability, elder law, estate planning and probate law, and does not contain specific legal advice to a client. No attorney-client relationship is created by reading this column.
The post Does a revocable trust replace a will? Do all assets have to go into the revocable trust? And how much do trustees typically get paid? first appeared on Knapp Law Firm, PC.
]]>The post Does a Health Care Power of Attorney cover Medicare? first appeared on Knapp Law Firm, PC.
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