What You Need to Know If You Intend to Work Longer

Up to two-thirds of baby boomers intend to work beyond age 65. Some of these never expect to retire at all. Some of the most common reasons of delaying retirement or continuing to work after your retirement age include the health benefits sponsored by your employer and the need for additional income. Many people plan to stay involved in their career simply because they enjoy what they do. It is essential to take positive steps towards staying healthy, keeping your job skills up to date, getting further education and networking. It is also important to regularly monitor your projected retirement income need.long term care planning

These could be subjected to long-term care health expenses if you were to have a long-term care health event. It is also essential to have a contingency plan in the event that you’re compelled to retire for reasons other than you expected such as your health. A contingency plan can give you peace of mind that no matter when you ultimately enter retirement, you will have the resources necessary to support yourself.

Many people are forced into retirement earlier than they expected but an estate planning attorney help you navigate this complex situation can give you further peace of mind as well as the backup plan should something happens to you before you anticipated. Looking ahead to long-term care needs and projecting your retirement income are just a couple of the things you can do to protect your future as well as the value of any assets set aside for your beneficiaries.

It is never easy to consider the prospect of what might happen to your if you were to become incapacitated but having all of your legal documents in line makes things much easier for your loved ones.


This Estate Planning Mistake Could Leave You with Significant Consequences

If you realize after the fact that you and your spouse did not have your account set up properly, all of the estate planning that you have done prior to that point may become invalid. If you have a will as well as a trust, bear in mind that nay beneficiary designations you have on separate accounts will override what your trust and your will says.

It is simply not enough to set aside a meeting with an estate planning lawyer to talk over your options and to determine who you want your assets to be passed down to when it’s from your 401(k), IRA or from your life insurance policy. That’s because these companies keep their own records of your beneficiary designations. You’re still eligible to make your own decisions about who should receive these benefits should something happen to you. But all of the good planning in the world associated with your trust and your will can fall apart relatively quickly if you do not have these other elements in place.

Make sure that you set aside time to analyze your beneficiary designations on all of these accounts on an annual basis. It is as simple as contacting the company and identifying your current beneficiaries. In the event that you need to update this material, you can use the forms provided by these companies. Make sure you also provide a copy of this information to keep one for yourself as one to your estate planning attorney. Your estate planning attorney can assist you in putting together a plan that is aligned with your individual needs as well as the beneficiary designations you have listed on these separate accounts.


The Dangers of an ‘I Love You’ Will

In the event that you want to ensure that your spouse gets access to your wealth after your death, this may be referred to as an ‘I love you’ will. In this situation your spouse will receive the assets outright and it will initially appear as if those assets will be handled according to the spouse’s current estate plan when he or she passes away.

However, that surviving spouse could alter their estate plan at any time. That means that any verbal agreements about what will happen with those assets could disappear immediately.

There are several other negative aspects of ‘I love you’ wills that should prompt you to consult with an experienced estate planning attorney about other strategies. These include:

  •       These wills will still have to go through the probate process.
  •       Basic planning could mean very little or no asset protection.
  •       Basic plans put more assets into survivor’s estate, possibly leading to increased taxes.
  •       Inadvertent disinheritance can occur.
  •       Conservatorship or guardianship involvement may be necessary.

A lifetime beneficiary trust is a better option than outright inheritance because it avoids all of the disadvantages associated with ‘I love you’ wills.
Your New Jersey estate planning lawyer can help you with this process.

What You Should Know About Revoking Your Will

One of the most common ways for a will contest to emerge is to have a track record of changing or revoking your will. This is not to say that you cannot update materials you’ve put together previously, but simply that you should do so with care. Your will should be reviewed on a regular basis to ensure it’s still in line with your wishes, but it’s important to verify that you’re following the best practices in the industry when revoking your will so that it would be difficult for someone to argue down the road that your current will is invalid. last will NJ

One of the primary reasons why you might want to change your will is because your relationship with charities, friends, and family members are capable of changing all the time. When you initially put your will together, it may be part of a clear plan to leave behind certain assets to particular people. Over time, however, these needs may evolve. An old will that is mostly full of outdated information should be revoked. The good news you should be aware of is that it’s typically easier to revoke a will or to change one than to create one from scratch. Sitting down with your estate planning attorney can help prompt questions about why you want to revoke the old will and what your new document should contain instead.

Revoking a will makes the old one invalid. It’s a good idea to set up an appointment with your estate planning lawyer if you intend to move forward with this step. If you do not put together a valid will, people may allege after you pass away that your new will is inaccurate and therefore your old will may still remain viable for pursuing the distribution of your property. Making a big change like revoking your will is something that should be done with the guidance of an experienced estate planning lawyer in NJ who can tell you more about what you need to consider both when terminating the old will and putting together the new one. Details matter in this process, so it’s important to have a lawyer you can trust.

S Corporations and Shorter Built-in Gains Periods

S corporations are most popular as a tax vehicle because it allows for only one layer of tax instead of the double layer of tax usually imposed on a typical corporation. Rather than the S corporation paying tax, the S corporation’s taxable income passes through to the shareholders and is reported on those shareholders’ personal tax returns.shutterstock_304978883

The corporation generally is able to distribute a company in profits to the shareholders free of federal taxes. To avoid corporations attempting to convert over to an S corporation and then sell their assets off, the internal revenue code mandates a 10 year built-in gains tax on S corporations. If the S corporation sells assets within this period, the corporate level tax normal rate is paid.

In early January, legislation was introduced to officially reduce this 10-year period down to 5 years, retroactive to tax year starting on January 1, 2015. For S corporations, this is great news and highlights an important time to return to your planning attorney to discuss your options.             

Is a Revocable Living Trust the Best Way to Provide Asset Protection?

Although a revocable living trust is one of the most commonly recommended by an attorney when you are crafting your will or taking other estate planning steps, you need to carefully consider the own circumstances of your estate to determine whether it’s truly the best fit for you. The primary purpose of a revocable living trust is to avoid the frustration and expense of probate after you pass away. While this is a worthy goal for your beneficiaries, you need to consider whether a revocable living trust goes far enough if one of your goals is to protect assets. Don’t let your loved ones find out too late that creditors can relatively easily access assets inside a revocable living trust. Even though the trust is a legal entity, for legal purposes you are established as the owner of the trust assets allowing creditors’ potential access to these assets. If you set up a typical revocable living trust, you will name yourself as the trustee. This gives you complete control over the assets transferred into the trust so that you can take property in the trust, take it out, sell it or give it away without any restrictions.shutterstock_264000620

For legal and practical purposes, the property is still yours. Bear in mind though that having control over these assets also means that a creditor might be able to tap into it in the event of a lawsuit. You may need to speak specifically with your asset protection planning attorney to shield assets from creditors. Planning for asset protection has become of increasing importance in recent years and finding a law firm that can help you do this is easier than ever.

Make sure to ask questions about their experience in asset protection so that you feel confident about the role they are playing for you.

3 Questions About Safe Deposit Boxes

As I speak with clients about their wills and trusts, I find that many people are confused about what a safe deposit box should be used for.

I’ve created a video that will answer the three most common questions regarding safe deposit boxes:

  1. Do I need a safe deposit box?
  2. What should I keep in a safe deposit box?
  3. Who has access to my safe deposit box in the event of my death or incapacity?

First, Watch This

Then, Call Me

For more information or for help with your will or trust, visit my website or call us today at: 866-925-9797

~ Ronald Morton


Estate Planning Parent Fears: Passing On Assets Without Spoiling Children

This is an issue that many of our clients express during their first meetings with us. Parents with wealth are concerned about leaving just enough to their children to allow the children to succeed without leaving too much so that the heirs would become “spoiled”.  shutterstock_113853856

When it comes to setting children up for success without making them too spoiled, parents can do a lot to install traits and virtues that promote behavior the opposite of spoiled. These virtues include generosity, thriftiness, patience, curiosity, perspective, and perseverance. How can parents promote this from birth? According to financial columnist Ron Lieber, who developed this list, parents can select balanced vacation options, reduce materialism on a daily basis, provide allowances that are not based on chores, and have clear conversations about money with children from an early age.

It’s not just about selecting the right estate planning tools, but determining what tools will work in combination with the example set forth for children. The first stage of doing this involves putting in the time and the effort to think about this fear of having spoiled children and what can be done to avoid it. The second stage is in developing clear statements about goals and values for the children. Once you have accomplished this, it’s time to put together an action plan that lays out how these goals can be achieved.

Working together with establishing goals and confronting fears, estate planning can be an empowering process that puts parents in the right perspective to think about their legacy. We can help you accomplish this process- call us today at (601) 925-9797.


Think Before You Purchase – Not all Funeral Plans are Exempt

When Elizabeth received the call from her brother telling her that he had just placed their mother, Gertrude, into a Mississippi nursing home, she took the first available flight to Jackson. Elizabeth was her mother’s durable power of attorney for financial decisions and knew there were a number of things she needed to do to make sure her mother’s financial affairs were in order.

Elizabeth knew quite a bit about Medicaid coverage for nursing home costs, as her aunt had entered a Mississippi nursing home just a few months ago. Elizabeth remembered the exempt assets her aunt was able to keep, as well as those things her aunt purchased with her non-exempt assets, as part of her “spend down” in order to qualify for Medicaid.

Elizabeth knew that her mother would be able to purchase a funeral plan as part of her spend down. Her aunt had an irrevocable funeral plan she purchased when she lived in Florida, which included flying her to Florida to be buried next to her husband. The cost was over $12,000. The entire plan was exempt. So, Elizabeth purchased a funeral plan for Gertrude in Kansas, in the amount of $10,000 (an amount much greater than she thought she would use, because the funeral home explained that they would refund to Elizabeth any unused funds).

Gertrude remained private pay until she spent down to $4,000 and then applied for Medicaid. However, Gertrude was denied Medicaid coverage due to excess resources. Elizabeth called our office, certain that the application was wrongfully denied. When we asked Elizabeth what assets her mother had, she said, “Nothing. My mother has a checking account with only $1,800, a funeral plan of $10,000, and a life insurance policy with a face value of $10,000.” When we explained the state was correct in denying her mother for benefits, Elizabeth said her aunt had $1,900 in her checking account and a funeral plan worth $12,000 when she qualified for benefits only three months ago!

I told her there were two distinguishing circumstances: 1) her aunt had an out of state funeral policy that was irrevocable, and 2) her aunt did not have a life insurance policy. I then went on to explain how Mississippi Medicaid treats funeral plans and insurance policies.

With regard to the funeral plans, I explained to her that her aunt’s funeral plan was exempt because there is no limit on irrevocable funeral agreements from other states. Gertrude’s plan, however, is subject to certain restrictions because it was purchased in Mississippi. One of the problems with the plan Elizabeth purchased for Gertrude was that it was not irrevocable. Secondly, in Mississippi there is a limit of $6,000 for funds set aside for prepaid funerals, but no limit on funds irrevocably set aside for funerals. We advised Elizabeth to ensure that the funeral contract was irrevocable and therefore unavailable during Gertrude’s lifetime.

I also informed Elizabeth that if the funeral home did have excess funds after rendering her mother’s funeral services, the excess would be claimed by Medicaid Estate Recovery. So, there was no benefit to her buying excess services in hopes that she would shelter some of her mother’s resources.

Next, I explained to Elizabeth that in Mississippi, although life insurance policies are exempt only as long as the total face value of all the policies is less than $10,000. However, the exemption for life insurance policies allowed is reduced by funeral funds set aside, but not for funds irrevocably paid for funerals.

Here the face value of her policy is $10,000, and the funeral plan will not reduce the permitted amount because it is irrevocable. So the cash value of the policies is not counted.

Individuals entering the nursing home are often told to meet their “spend down” for Medicaid by purchasing a funeral plan. That’s not always as easy as it sounds. When purchasing funeral plans, it is important to know the state specific allowances for services and merchandise so that you or your loved one is not disqualified from receiving Medicaid. For more information, click here.

Commonly Asked Medicaid Questions

Q:Once I qualify for Medicaid, will the quality of care I receive be sub-standard?

A:No. It is illegal for a facility to discriminate against someone receiving Medicaid benefits. By law, Medicaid patients are to receive the same level of care as private-pay residents.

Q:Is a married couple always required to spend down all of their assets before qualifying for Medicaid?

A:No. In fact, where there is a spouse who remains outside of the nursing home, that spouse is entitled to retain $113,600. Additionally that spouse may also keep the monthly income up to a maximum of $2,841, for their additional support. Also, in some cases it is possible for the at-home spouse to retain additional assets if it can be shown that they need it for their support. Although there are income and asset criteria a couple must meet before one of them qualifies for benefits, federal and state laws were written to protect individuals from becoming impoverished if their spouse needs nursing home care.

Medicaid planning is like tax planning in that legislation has provided legal exceptions to the general rules that, with good advice from a knowledgeable professional, can save Medicaid applicants and their families thousands of dollars.

Q:Is it true that under current Medicaid laws, a parent cannot make financial gifts to their children once they have entered the nursing home?

A: No. In fact, a proper gifting program is a great Medicaid planning technique. At the time an applicant applies for Medicaid, the state will “look back” 5 years to see if any gifts have been made. Any financial gifts or transfers for less than fair market value during the five year look back may cause a delay in an applicant’s eligibility. A proper gifting program requires calculating the penalties prior to making gifts and designing a way to privately pay during the penalty period.

Q:Is $13,000 per year the maximum an individual can give away if they are going to apply for Medicaid?

A: No. The $13,000 per year gift people ask about when discussing Medicaid Planning is a tax law figure and not relevant with respect to Medicaid’s specific asset transfer rules. The maximum monetary figure Medicaid applicants need to concern themselves with is the “penalty divisor.” The penalty divisor is the state

assessed average cost for nursing home care by which the state assesses Medicaid penalties. The penalty divisor is $5,700 in Mississippi.

Q:A Medicaid applicant’s house is considered “exempt” under Medicaid laws. Can an applicant give their house away without incurring penalties?

A:Sometimes. Any assets which are given away (personal property or real property) are considered gifts. Usually, if an applicant gives their house away, the state will assess a penalty based on the fair market value of the house at the time it was transferred. However, there are some exceptions to this rule that a qualified elder law attorney can explain.

Q:Once my spouse is approved for Medicaid, can I gift my assets away?

A:No. In Mississippi, however, any gifts made by the community spouse would incur penalty which may result in the termination of Medicaid benefits for their spouse.There are a number of steps a Medicaid applicant can take to preserve their assets, ranging from gifting strategies, personal care contracts, private annuities, raising the Community Spouse Resource Allowance, etc… What you need to remember is that the laws are constantly changing and the planning your neighbor did for their mother six months ago may not be proper for your mother tomorrow. Consult a knowledgeable elder law attorney for advice.

For more information on Medicaid Planning, click here.