Kansas and Missouri Estate Planning

Should I have a Will or a Trust?

Wills may not be sufficient in all situations, just as trusts may be too much "legal medicine" for yet other situations.

You are moving forward with estate planning.

You have heard two terms tossed around regarding this topic—a will-based plan and a trust-based plan.

Which one is best for you?

According to a recent Northside Sun article titled “Do You Have a Will or a Trust? Why?,” you will need to carefully evaluate your family situation and understand the differences between these two options.

So, how are wills and trusts different?

A last will and testament only has legal authority after you have died and it is ultimately used to distribute your assets through probate.

A revocable living trust, on the other hand, has legal authority while you are yet living and when it is "funded" with your assets.

This trust then provides protection for you assets from probate while you are alive and after you die.

Both privacy and efficiency are provided through a trust as it bypasses public probate or court proceedings.

These differences make a trust helpful for incapacity planning.

Can you prepare for incapacity without a trust?

Yes.

You would need to have additional documents and protections in place.

What are these?

These include a general durable power of attorney and an advance health care directive.

The former grants authority to a trusted agent to act financially on your behalf while you are incapacitated.

The latter functions similarly, but for medical matters.

What happens if you do not have these in place?

Your loved ones would need to petition the court to appointed as conservators over your financial matters and as guardians over your personal and health care matters.

This is can be costly, burdensome, and invade your privacy.

Instead of titling assets to a trust, why not simply add the names of your children to your asset titles as joint owners?

You could.

Unfortunately, this approach will invite unintended consequences.

If any one of your children/joint owners is facing a divorce, lawsuit, or bankruptcy, then your assets are exposed via their "ownership" interest.

Yikes!

Alternatively, a trusts can avoid these risks by providing for the ongoing management of trust assets should you become incapacitated and protecting the inheritance from the misfortunes of your children when inherited.

Do you have a blended family?

If yes, a trust can also help you to provide greater control over the division and distribution of assets so your children and your new spouse are treated as you provide without triggering unnecessary litigation.

You should not do your estate planning alone.

Limit your DIY projects to minor home improvements.

Work with an experienced estate planning attorney to create either a will-based or trust-based plan to meet the needs of your specific situation and goals.

Reference: The Northside Sun (August 14, 2019) “Do You Have a Will or a Trust? Why?”

What is the "Social Security Scam" I Keep Hearing About?

The world is full of untrustworthy people.

It seems as if con artists are always coming up with new scams.

One favored tactic is fear.

One scam involved scammers posing as callers from the IRS.

This was traced to India and many were arrested.

According to a recent Forbes article “Beat The Latest Scams to Steal Your Identity and Social Security Benefits,” a new popular scam involves Social Security.

People of any age may been targeted.

My 27-year-old daughter has even received these phone calls.

She told me that, because she reads these blogs, she was able to recognize red flags.

What are some of these red flags?

The phone call says the Social Security number of the recipient has been suspended because of fraudulent activity and immediate action must be taken.

The caller will ask the victim to give his or her Social Security number so the caller can confirm the identity of the victim.

Sometimes this comes in email form with a link.

Neither is legitimate.

The goal is simply to get your Social Security number and other important personal information.

The caller may also ask for gift cards.

Do not offer any requested information.

Why?

The Social Security Administration will never inform you of irregular issues over the phone.

According to the Social Security Administration and the Federal Trade Commission, any official correspondence regarding issues will be through a letter.

You will only receive emails to ask you to review benefits.

And this only happens if you have signed up with a “my Social Security” account on the official government website.

What should you do if you receive a suspicious call or email?

Do not click on the link.

Do not give your Social Security number online.

Instead go to the official website and check your history on your own computer.

You also can call the local Social Security office or its national 800-number, which is 1-800-772-1213 (TTY 1-800-325-0778).

Remember, emails and phone numbers can be spoofed.

Yikes!

Some scammers may find out your Social Security number.

With this information, the scammer may create a “my Social Security” account and change your address or financial account information.

If you do not already have an account, it may be wise to do so even if you are not yet ready to receive benefits.

With this account, you can review your earning history, your benefits, and see if someone has tried to change your information, or apply for you benefits.

You should log in regularly to review your account.

Take steps to protect yourself.

Educate your loved ones so they do not fall victim to these scammers.

There are dishonest people out there who cannot be trusted.

Reference: Forbes (August 14, 2019) “Beat The Latest Scams to Steal Your Identity and Social Security Benefits.”

What are Some Practical "Asset Protection" Moves for Kansas and Missouri Physicians?

Lawsuits can take a toll on assets and savings.

You are a physician.

You entered the field wanting to help others.

When you were young and idealistic, you did not realize the ever present danger of malpractice suits.

According to a recent Physician Sense article titled “The Dos and Don’ts of Asset Protection for Doctors,” most doctors will be sued at some time if not already.

You should take steps now to protect your personal assets.

If you do it later, the court may rule against your actions as being fraudulent.

What should you do?

For starters, make sure you have malpractice insurance.

Many states require its doctors to carry this if they are going to practice in the state.

This insurance covers damages up to a certain amount.

You should also place money in protected accounts.

These include qualified retirement accounts like a 401(k) or profit-sharing accounts.

But laws differ by state.

For example, assets held jointly by spouses in Missouri are deemed to be held as tenants by the entirety.

In short, the law considers such assets to be owned 100% by each spouse.

The result?

A malpractice suit against the doctor spouse cannot reach the 100% interest of the non-doctor spouse.

In Kansas, your personal residence is considered your "homestead" and is protected, as is life insurance owned for at least one year.

You should also protect yourself from life issues outside of your line of work

You should have disability, auto, and homeowners insurance.

Do you have a personal "umbrella" insurance policy as part of your homeowners insurance?

If no, then you should.

Every day you work to preserve the lives of others.

Take the time now to protect you and your loved ones.

Reference: Physician Sense (August 7, 2019) “The Dos and Don’ts of Asset Protection for Doctors”

Should My Intended and I Have a "Money Talk" Before We Wed?

Money is an important premarital conversation.

You are getting married.

Your life has become a flurry of planning for venue, food, florists, and clothing.

Certainly, the plans are important to the wedding.

However, it is also important to prepare for your marriage beyond the big day.

According to a recent Wealth Advisor article titled “How to Protect Your Assets Without a Prenup,” discussing finances is key to preparing for your marriage.

Marriage involves building a life together.

Unless you are getting married right out of high school or college, you probably will be building off of two distinct lives.

You may have assets saved.

Your spouse may have student debt.

If either of you were previously married, alimony and child support may be a reality.

In merging two separate lives into one, you may consider a prenuptial agreement.

You are not planning on divorce.

You are merely protecting what you have.

For example, keeping certain assets separate could protect at least one of your incomes from creditors.

It becomes a safety net for your life together.

If a prenuptial agreement is not an option, there are still ways to protect your assets.

How?

Keep separate accounts.

The money you brought can remain your money.

You can open a joint account together after marriage as your household "operating" account.

Any money you make after marriage can go to this account and be used for your life together.

Title property separately.

If the home is yours and you choose to keep it under your name, it should be your responsibility.

Any improvements and payments should be paid from your separate account.

Keep organized records.

This can help protect the property as your own.

Record Everything.

If you make acquisitions with your separate account, you should keep records.

This shows the acquisitions are yours alone.

Also do this with gifts or inheritances.

Showing separation of moneys and assets via a detailed paper trail will help establish and confirm ownership should it be required at a later date.

It should be noted that some appreciated assets could be deemed marital property.

How is this determined?

If the property appreciated passively such as a public stock, it is separate if under your name.

If the property appreciates actively, the appreciation could be considered marital property.

A house would be one example of active appreciation.

It is helpful to include others in your financial planning as a couple.

An experienced estate planning attorney or financial advisor can educate you on your options.

Reference: Wealth Advisor (May 19) “How to Protect Your Assets Without a Prenup”

How Can I Protect an Inheritance "For" and "From" My Beneficiary?

Money and immaturity can be a dangerous combination.

You know who you want to have your assets if you die.

There is one problem.

Not all of your beneficiaries could not handle their inheritances should you die today.

According to a recent Kiplinger article titled “Is Your Beneficiary Ready to Receive Money?,” this situation if fairly common.

There are two main reasons for this—age and lifestyle.

If your beneficiary is a minor, he or she will be unable to sign legal contracts.

If there are no plans, the court will take custody of the inheritance until your minor child becomes a legal adult.

At this time, the court must turn over the inheritance ... lock, stock, and barrel.

Do you want your child to have full, unrestricted control over what represents your life's work at age 18?

Likely not.

What if your beneficiary is older but irresponsible.

He or she makes poor choices with drugs or gambling.

Maybe an abusive spouse or looming divorce is the issue.

Perhaps he or she could lose your inheritance through mismanagement or lawsuit.

Yikes!

An outright inheritance could also be an issue if your beneficiary has a disability but is perfectly capable of handling money.

How?

An inheritance could disqualify your loved one from government benefits.

What do you do in these situations?

Work with an experienced estate planning attorney.

He or she can create a "trust" specifically tailored to the unique needs of your beneficiary.

For example, depending on whether your child is a responsible or irresponsible adult, then a long-term discretionary "spendthrift" trust can protect the inheritance "for" or "from" him or her.

With any trust, you will need a trustee to manage the trust.

If the trust is large or you have a more complex situation, such as a drug addicted beneficiary or a beneficiary with special needs, then a professional trust company may need to be engaged.

The trustee, as a fiduciary, is required to act in the best interests of the trust and only allow disbursements according to the guidelines stipulated in the trust.

Like all estate planning, you cannot do it once and forget it forever.

You should review your estate plan every few years or after major life changes to ensure it still meets your specific goals and circumstances.

Reference: Kiplinger (April 1, 2019) “Is Your Beneficiary Ready to Receive Money?”

Why is the Michael Jackson Estate Suing ABC/Disney?

Disney and ABC may have used songs without proper permission during a recent television special.

Did you watch the special “The Last Days of Michael Jackson”?

I did not, but if you did, then you may have witnessed the improper use of song and music video material.

How so?

According to a recent Fox News article titled “Michael Jackson's estate sues ABC, Disney over 'Last Days' TV special,” the estate of Michael Jackson brought a lawsuit against Disney and ABS listing at least 30 violations.

Why?

The special apparently used excerpts from several songs and music videos illegally.

Disney and ABC claim they are vindicated because it was a "journalistic" piece.

The lawsuit claims there is no merit in this defense.

The estate also claims Disney received and ignored a number of warnings before the show was aired.

The estate is seeking an injunction against further use of the intellectual property of the Michael Jackson estate as well as unspecified damages.

Intellectual property is an especially important and valuable asset to the estates of creative individuals.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Fox News (June 1, 2018) “Michael Jackson's estate sues ABC, Disney over 'Last Days' TV special”

So, Why do I Need an Estate Plan?

Estate planning is key to avoiding a big legal and financial mess for your family after you pass.

Estate planning.

It does not sound like fun.

But it is important.

According to a recent Wealth Advisor article titled “The 3 Reasons Why People Do Estate Planning,” the majority of Americans do not make this a priority.

Bad idea.

At the very least, you will need a last will and testament to help direct the distribution of your assets.

You should work with an experienced estate planning attorney.

Why?

Reduce taxes

If your assets exceed a certain amount (i.e., $11.18 million), you may have to pay a federal estate tax.

There may be separate estate taxes and even inheritance taxers for your state.

Fortunately, for Kansas and Missouri residents this is not the case.

A plan to reduce these taxes will look different from one state to the other.

You will want to work with an experienced attorney who can walk you through the laws of your state and the options you have to reduce fees or taxes.

Asset protection

If you are considering Medicaid to help pay for future nursing home expenses, you should know there is an asset spend down requirement.

By planning early, you may be able to protect your assets or avoid the need to apply for Medicaid.

An elder law attorney is the right go-to professional when it comes to any Medicaid matters.

Control your estate

Do you know how you want your estate to be managed and divided?

You will need a valid estate plan to accomplish your wishes.

If you do not, your estate may be distributed according to the laws of the state where you died a resident.

Not having a plan in place will also create more headaches for your family.

Do not do this.

Instead, work with an experienced estate planning attorney to create a plan to meet your specific goals.

So, how do you find an "experienced" estate planning attorney?

First, ask around. Friends, family and other professional advisors are trustworthy sources.

Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").

Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.

How?

Two helpful online resources are just a mouse click away to assist with your due diligence:  Avvo.com and Lawyers.com.

Check any Avvo ratings, client ratings/testimonials and attorney endorsements on Avvo.com and any "peer ratings" by judges/other attorneys and any client ratings/testimonials on Lawyers.com.

In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Wealth Advisor (May 29, 2018) “The 3 Reasons Why People Do Estate Planning”

How do Trusts Impact Medicaid Eligibility?

Medicaid eligibility is subject to certain asset requirements.

Health care expenses only increase as you age .

You have run the numbers.

It looks as if you will require Medicaid assistance.

You are concerned about having to become destitute to qualify.

Can you keep your assets in a revocable land trust and still receive Medicaid?

According to a recent nj.com article titled “What revocable land trusts mean to Medicaid eligibility,” this is not an option.

Why?

The "revocable" nature of the trust means you can determine to terminate it at any time.

Medicaid considers the assets in the trust as yours since you can reclaim them and access them at any time.

Medicaid will require any assets you have—including those in this trust—to total no more than $2,000.

Are there any other trust options?

Yes.

You can create an irrevocable trust.

This would need to be created and any assets transferred into it more than five years before you submit a Medicaid application.

This will enable you to avoid the look-back period and attending penalty provisions for Medicaid.

If you need more help understanding Medicaid rules and application requirements, you should work with an experienced elder law attorney.

The National Academy of Elder Law Attorneys has a directory of elder law attorney you may search online.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: nj.com (April 9, 2018) “What revocable land trusts mean to Medicaid eligibility”

How do I Qualify for Nursing Home Medicaid?

Long-term care is expensive and will take planning.

As people live longer, their chances of needing long-term care increase.

If you believe Medicare will help, you are wrong.

You will need alternative means.

One such alternatives is Medicaid.

Medicaid is primarily intended for those of limited financial resources who quickly become eligible for the program by spending down those resources on their own care.

However, some seniors with more than limited resources, also look to Medicaid as a way to "legally" maximize the protection of their financial resources from the costs of nursing home care.

For this second group, Medicaid qualification itself requires planning.

Careful planning.

According to a recent CNBC article titled “Here’s a surprise source you can tap for long-term care services,” if you are in this second group of seniors, then assembling a team to help you with this is planning is well worth the time and money.

Why?

Individuals must qualify for Medicaid.

The general rule is you must have $2,000 or fewer in assets as an individual.

The rules become rather complex for married couples, too.

By planning ahead and working with professionals, you may be able to "legally" shift your money into annuities or trusts to be able to qualify.

If this is your objective, then this should be done sooner rather than later.

The reason?

There is a “lookback” period of five years.

These transfers must be made before this time.

Otherwise, you would could be ineligible for Medicaid for a probationary period or incur other penalties.

During this time, your care would be funded out-of-pocket.

Even transferring assets to loved ones can be tricky.

Why?

They would forfeit a step-up in basis at your death.

What does this mean?

Your loved ones may be subject to substantial capital gains taxation if they chose to sell your gifted assets.

But it gets worse.

If your loved ones have creditors, an outright gift could be collected to pay their debts.

What options do you have?

One is to create an irrevocable trust.

This serves the dual purpose of shielding assets from creditors and not being under your control.

A second option is be to buy annuity with an asset.

This annuity would then distribute income to your spouse.

If your financial advisor or elder law attorney is not familiar with Medicaid annuities, then consider referring them to the national experts at Krause Financial Services based out of De Pere, Wisconsin.

These options are by no means exhaustive when it comes to paying for Medicaid.

 

Work with an experienced elder law attorney, if you require (or desire) Medicaid qualification assistance.

 

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: CNBC (February 27, 2018) “Here’s a surprise source you can tap for long-term care services”

Are You Prepared for a Financial Emergency?

Preparing for emergencies should be a priority.

You see it on the news all the time.

Wildfires.

Tornadoes.

Floods.

Hurricanes.

Car accidents.

These can leave horrific consequences in their wakes.

Recovering and starting over can be costly, too.

According to a recent NASDAQ article titled “5 items for your financial 'go-bag',” you should never assume tragedy will not strike.

How do you prepare?

Create a safety net.

You do not want to put large expenses on your credit card when tragedy strikes.

Why?

You will eventual need to pay it all back.

You should have money set aside for when you need it.

How much?

You should have at least enough set aside to cover 2 to 3 months of your living expenses.

Have some cash available.

Sometimes credit cards and ATMs are not an option.

You should at least have a $100 in bills and coins around.

Get insured.

Insurance helps take the financial burden off of you in an emergency.

No one wants to be in a situation where they will need it, but if disaster strikes you will be happy you have insurance.

Document.

Use your camera to snap pictures in an insurance claim.

Take pictures of items you own and store them should you need to show what you owned if it burns up or floats away.

Keep records.

You should have copies of important documents.

These include but are not limited to medical information, financial accounts, tax returns, estate planning documents, personal IDs, and insurance records.

Keep digital files or scans and also secure a safety deposit box.

By planning ahead, any emergency will become less tragic.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: NASDAQ (February 14, 2018) “5 items for your financial 'go-bag'”