pennsylvania asset protection planners

Why would a person ever liquidate retirement funds and put them in a trust?

This is a question that I receive quite frequently from financial professionals with whom we work very closely.  The typical answer is, they would not.  However, there are times when this makes sense, as seen in a recent case where the financial advisor, the accountant and I all agreed that it made sense to do so in light of the individual’s circumstances.

A client was referred to us who had worked with other attorneys and was not pleased with the results, and a friend of theirs mentioned our workshops.  I began by asking the family the simple question of what brought them in to us today and what were they hoping to accomplish?  As I listened, it became apparent that the only reason that the husband and wife were in my office was to make sure that their assets were protected for their children.

The husband explained that both his and his wife’s parents ended their lives in nursing homes and all totaled, the bills were about $750,000.  In both family situations, the parents exhausted their assets and ended up on Medicaid, and there were no assets left to pass on to the children.  The husband was adamant and said repeatedly that this will not happen in my situation and I want a solution.  As we dove into their situation, it became apparent to me that there was approximately $500,000 of assets that were funded in retirement accounts such as 401(k)s, IRAs and 403(b)s. 

At the conclusion of the meeting, I explained to the client that generally we never liquidate retirement accounts during a person’s lifetime, because not only will it trigger significant tax consequences but could also have unintended consequences such as Medicare premiums and other such things.  The client would not accept that as an answer and did not believe that leaving $500,000 exposed was the right decision.  After three meetings with the advisor and the accountant and me, we were able to come up with a plan that was satisfactory to everyone, and with the clients in their early 60s, time was definitely on our side. 

In this situation, we ended up liquidating his retirement account over five years at $100,000 a year, and took the remainder of the assets after taxes and funded them in an Asset Protection Trust.  The downside of this plan was that in year five when he liquidated the last $100,000, in order to have it fully protected, they had to stay out of a nursing home for an additional five years, which would be a total of 10 years.  In light of their age and circumstances, it was certainly a risk that we were willing to take.  Ultimately, this compromise allowed the advisor and the accountant to also be very comfortable that it would accomplish their objective, but at the same time, not exacerbate any unintended consequences such as taxes and surcharges and premiums, etc. 

Although the client wanted the assets to be protected immediately, he understood that at best it would have to be done over five years, as liquidating 100% of those assets in one year would trigger much higher income tax rates, and was definitely not an avenue that any of us really could support.  I was very pleased that we were able to accomplish the client’s objective in this case, while at the same time making the financial professional and accountant happy. 

The father then called a family meeting and we had a phone conversation with the entire family to explain to all of the kids why we did what we did and what the rationale was behind the plan.  Everybody was on board and was excited that we were able to come to a compromise that pleased everybody.

Estate planning and elder law is absolutely not a one-size-fits-all approach.  Every case is very different, and, done properly, works best with a team approach.  We relish working with financial professionals and accountants to accomplish the clients’ goals in a way that is not only acceptable to them, but also to their families. 

Thank you to this family and the many more whom we have helped over the years to accomplish their estate planning goals.  

If you want to get the process started on your estate planning or asset protection join us for an upcoming workshop.  Just click here to RSVP and grab your seat today.

Jeffrey Bellomo

What Estate Plans do Parents Need?

This is a question that I’m often asked by young clients with young children.  The basics of the plan are very similar to what a lot of individuals would expect.  I always encourage people to have a financial power of attorney, a medical power of attorney, a living will, and Last Will and Testament.  

Incapacity is something that often occurs, and older age is not always a factor. Even young individuals should have a financial power and medical power of attorney in place if they are over 18.  I have gone at length in other blogs and in my workshops to explain the importance of financial powers of attorney, and I certainly cannot stress them enough. However, this article is specifically going to discuss whether a family with young children needs more than just a base Will.  

Our office offers both base and enhanced Will plans for families.  Our base wills are approximately 23 to 25 pages and typically will cover everything that a family would need from an understated age trust to a trust in case anyone has a loved one with special needs who upon inheriting assets would be disqualified from receiving benefits, which is called a special needs trust.  We put both of those on standby, or “what if”, trusts in every document to ensure that families will be protected in the unlikely event that they were to die with beneficiaries under a specified age (at a minimum 18) and/or with any beneficiaries who are incapacitated or disabled.

These plans are able to cover most situations, but our enhanced Will plan provides something that our base plan cannot, which is the ability to protect inherited retirement accounts and other assets for children.  Although our base plan provides an understated age trust in it, which allows a family to be able to set the age at which a child is able to receive a lump sum distribution, it cannot put a retirement account into that trust without triggering tax consequences.  

In order for a retirement account to be inherited by a child and still be able to stretch out the tax benefits, it has to be put into a qualified trust called a see-through trust. Our enhanced plans are equipped with qualified see-through trusts which allow you to protect your retirement accounts without triggering any negative tax consequences.  This is essential when dealing with young children because, if we use a base plan, then we must name the beneficiary outright in the retirement account.

Once we name a beneficiary outright, the beneficiary is able, at the age of 18, to force liquidation of the entire account, pay all the tax consequences, and do what they wish with the remainder of the retirement account.  This is often not what parents want; rather, they want the money to be able to stretch out over the child’s life expectancy from a tax perspective, but also keep it asset protected so that an 18-year-old cannot force distribution. Such trusts also protect the retirement account from the child’s creditors.

We at Bellomo and Associates have had great success at protecting young families with our enhanced plans so that we can stretch out tax benefits over the children’s life expectancy and also keep the money protected from any unforeseen creditors.  Please come to one of our workshops or contact our office to learn more about these benefits.

Jeffrey Bellomo, Esq.

bellomo & associates 10th anniversary

Bellomo & Associates is proud to be celebrating its 10th anniversary

Bellomo & Associates is proud to celebrate its 10th anniversary on February 16, 2019.  

Ten years ago, my close friend Attorney Nate Platt and I opened Bellomo & Platt, LLC. I remember the morning of February 16, 2009, well.  We both walked into our new office and looked at each other with excitement and utter terror. We were pleased to be able to serve the estate-planning and elder law community with top-notch legal service but also realized that going on our own when both of our wives were pregnant was probably not the most intelligent idea.  

We had a very clear vision of the future, and, although Nate wasn’t able to stay very long, he definitely got me over the hump and over my fear. Prior to Nate and me talking about the future, I was not able to envision opening my own firm, and I credit him with giving me the confidence to do what we have done. I was very sad to see Nate have to go back to Pittsburgh to take care of his family, but, at that point, I knew that I had the foundation necessary to continue forward on my own.

Now we are in 2019, celebrating our 10th anniversary!

We have grown tremendously, and have moved Bellomo & Associates into our “forever” headquarters at 3198 East Market Street in York, Pennsylvania.  No matter where our offices have been located over the years, many of our clients have commented on the sense of family that we have. Nate and I envisioned a firm where team members would love to come to work and clients would be excited to call them their attorneys.  

Ten years later, we are still serving the estate-planning and elder law community, and we still receive the same compliments and comments from team workers and clients alike. It is truly an honor 10 years later to keep doing what we started out to do. To Nate, who gave me the confidence in myself, and to every client who has come through the doors and entrusted their estate planning needs to us, thank you for your support and trust.

Here’s to another 40 years!

Jeffrey Bellomo, Esq.

Join us for one of our upcoming workshops: www.bellomoassociates.com/workshops

Mom’s Cheesy Potatoes

Have you ever seen one of those cookbooks where many people contribute favorite recipes which are then collected and compiled into a best of recipe book?  My mother loved these books and always said the “best of the best” recipes were held there.

This past Christmas, I visited family back in Western Pennsylvania. We had a wonderful time reminiscing, celebrating and an even a better time eating our way through some of our favorite recipes. Most of our dishes came from the old recipe box my Mom loved. The recipes were usually modifications of a recipe she found in a best of cookbook.

I know some of you will not recognize some of our favorites, but that’s the point. Over the course of the next few months, I will share some of my family’s favorite recipes.

Many of my family’s favorites are from my Mom’s recipe collection. I was fortunate on this visit to find her recipe box. Over the next few months, I’d like to share some of these recipes not only because they represent great eating,  but also because they always give me an excuse to fondly think of her. We used to look forward to special occasions because Mom would always let us kids pick our favorite dish for her to make.

As my first recipe submission, I offer my mother’s cheesy potato recipe, one of my favorites. Give it a try and let me know what you think.

Cheesy Potatoes from Gwen Bellomo

Ingredients:

  • 1 can cream of mushroom soup
  • 1/2 cup milk
  • 4 cups sliced potatoes
  • 1/2 cup sliced onions
  • 1 cup shredded extra sharp cheese
  • 1 tablespoon butter
  • Salt and pepper to taste
  • Paprika

Blend soup, milk, salt and pepper in a bowl. In buttered 1.5 quart casserole arrange alternate layers of potatoes, onions, soup mixture and cheese. Dot top with butter and sprinkle with salt and paprika. Cover and bake for 1 hour at 375 degrees. Uncover and bake for an additional 15 minutes or until potatoes are soft and cheese is bubbly.

We never made this dish without doubling or even tripling the recipe. The potatoes taste great and even better as a leftover.

Bon apetit!

Jeffrey Bellomo, Esq.