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Estate planning and the Dysfunctional Family

Asset Protection Planning, Elder Law, Elder Law, Estate Planning , , , , ,

Over my career as an estate planning and elder law attorney, I swear I have seen just about everything.  I cannot remember a fact pattern that surprised me or took me aback.  I am honestly at the point now where I think that dysfunctional is the norm for the common family that we assist.  I’m not sure if it’s because we specialize in estate planning and elder law and we get referrals and cases that are more complex and more advanced than others, or if that is just the norm these days.  My gut says it is probably the latter. 

I did some research to define the word dysfunctional, and there is no clear-cut definition.  But my gut would say that dysfunctional would include families such as second marriages with kids to different relationships, as well as addictions or spendthrift issues, or just family dynamics in in-tact families where people do not care for each other.  Again, I think this is probably the norm more than any exception.  

It is imperative that families are open and honest with their attorney so that the attorney can put a plan in place that addresses what they need for their specific situation.  Dysfunction does not present as the same fact pattern in any two cases, and therefore an experienced estate planning attorney is needed to be able to dot the I’s and cross the T’s.  Be very wary of the do-it-yourself sites or general practice attorneys who don’t specialize in this area if there is a complex fact pattern for you and your family. 

We love assisting any and all families and certainly love putting the fun in dysfunctional. We look forward to providing an estate plan that is unique for you and your family, whether you are dysfunctional or as functional as anyone else. 

Please feel free to give us a call if you have any questions or comments at 717-845-5390.

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Considerations For Trust Type

Asset Protection Planning, Elder Law, Estate Planning , , , ,

Trusts are a major tool in estate planning.  Trusts can be used for disability planning, probate avoidance, asset protection, and/or tax planning.  Given the high thresholds for federal estate tax planning few individuals are concerned about tax planning.  In this article we want to focus primarily on grantor vs. non-grantor trusts.

When we are educating on trusts and the use of trusts in estate planning, people often get a concept confused. There is a difference between a grantor trust and a non-grantor trust. Simply stated, the assets in a grantor trust remain in the grantor’s Social Security number and are reported on the grantor’s personal income tax return.  For a non-grantor trust a separate tax ID number will be obtained to hold the assets and you will file separate trust tax returns, this return is separate and apart from your personal income tax return. 

We will typically use grantor trusts for asset protection trusts and revocable living trusts.  

However, we often use a non-grantor trusts for VA purposes as well as for estates that have a federal estate tax concern. Currently, a person has a federal estate tax issue if their estate is greater than $12.06 million and for a married couple $24.12 million. It is very rare in our practice to use non-grantor trusts, which require separate tax ID numbers and pay at higher trust tax rates, because not a lot of veterans are doing planning where they have to or want to give up complete control of their assets, and not a lot of estates are big enough to need federal estate tax planning. 

In those situations where we use grantor trusts, we intentionally put language in the trust so that is included in the person’s estate, as well as subject to income tax. We include this language because we want to get a step-up in basis at the death of the decedent, and we also want the parent or client to pay the income taxes, because generally retired clients have a lower income tax burden than their children who are still working. 

There are a lot of other factors that go into what type of trust should be used and under what circumstances, but this provides a basic understanding of the difference between grantor and non-grantor trusts. If you would like to learn more about these and other trust concepts, I invite you to come to one of our free in-house workshops to learn more. We would be more than happy to assist. Just call our office or go to our website to enroll in a workshop at a date and time which is convenient for you.

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Comparing Life Care Planning to Traditional Elder Law

Elder Law, Elder Law, Estate Planning , , , , ,

This year, we are getting the word out there about the Life Care Planning we offer that involves a licensed social worker to act as the Client Care Advocate. A question that we keep getting is what is “What is the difference between Life Care Planning and Elder Law and why did you make the change?” The way that I explain it is that a traditional elder law firm prepares documents for an individual and then either waits until the client passes or until they need to go to a nursing home and will qualify them for public benefits.

A life care planning firm is a more holistic approach to providing care. Our licensed social worker, Meg Motter, works with families to assist in figuring out ways to keep their loved ones home and how to receive care in a home or in a less restrictive environment than a nursing home. A licensed social worker will be able to provide different cognitive assessments and evaluate safety and necessity of levels of care, unlike an attorney. The elder care coordinator allows the firm to provide a more comprehensive approach, separate from just estate planning documents or qualification for Medicaid. The care coordinator allows the firm to provide information and advice that was not otherwise available to the firm prior to becoming a life care planning model firm.

We are ecstatic to have Meg Motter onboard as our elder care coordinator and we look forward to assisting you and your family in the future.

Please feel free to give us a call if you have any questions or comments at 717-845-5390.

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How to Help Your Loved One Avoid Isolation

Asset Protection Planning, Asset Protection Planning, Elder Law, Elder Law, Estate Planning, Estate Planning , ,

Isolation is something that many seniors experience on a regular basis. However, with the COVID pandemic, that isolated feeling is more common than ever. Today, we want to encourage the individuals who know someone living alone to take some small steps to help your loved one socialize.

We always encourage our clients to incorporate video conferencing or video chat to allow the family member to see their loved ones on a regular basis. This could be on a scheduled date and time each week where you have a conversation and catch up, or maybe schedule meals together where you leave the video on while everybody eats. You have to eat anyway and giving the opportunity for your loved one to spend their mealtime talking with their family and seeing familiar faces is a small gesture that could go a long way! Not only will it help them, but it will also give you the chance to assess whether your loved one is having any hearing or sight issues that should be addressed.

Encourage your loved one to join clubs. Many of them are now virtual to allow as many people possible to partake. Having them be a part of these groups will give them interactions outside of your conversations and have stories to bring you when you visit or call.

Although these are very minor suggestions, they can go a long way in helping your loved one not feel so isolated. Please feel free to give us a call if you have any questions or comments at 717-845-5390.

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Do You Need a Trust?

Asset Protection Planning, Current Affairs, Estate Planning, Family Business , ,

This question is by far the most asked question that we receive in our office. However, there is absolutely no standard or right answer for everyone. Trusts are typically used for either probate avoidance purposes, tax avoidance purposes, or asset protection. Trusts are often used for disability planning but generally, that is not the sole reason for people’s use of trusts.

Currently, the federal estate tax limit provides an $11.7 million exemption per person. This means that an individual currently will not pay federal estate tax unless their estate, per person, goes over $11.7 million or $23.4 million for a husband and wife. This law is set to go back to $5 million in 2025, set for inflation which predictions are that it will end up being around $5.8 million. Even with the reduction in 2025, most people in our local community will not need to do a trust for tax purposes. Certainly, there are rumors each and every day about Congress changing the laws and lowering the exception amounts, but until that happens, I would not make plans for something that may or may not occur. History tells us that all of the rumors that we are hearing, probably none of them will actually look like the actual law if it is ever enacted, and we have always taken the position to plan for the law as it is in effect, and if and when it changes, then we can pivot. With that said, there is not a high percentage of people who will need to do trusts for tax purposes as we sit here today in May of 2021.

Probate avoidance is usually a situation where there are properties in several different states across the country. While every state has different laws as to whether a person needs to open an estate in their specific state, generally speaking, if the property is in a person’s name alone at the time of their death, the state will require them to go through that state’s probate process. We find that many people like to avoid probate in these situations so that they do not have to hire attorneys in each state to finalize for their families. In a situation where a family does not have properties in multiple states, generally, probate avoidance is not something that people are overly concerned about unless they’re in a state that the probate process is very burdensome and overwhelming, which currently, it does not happen to be in the Commonwealth of Pennsylvania.

Asset protection is one reason that people will often do trusts in the Commonwealth of Pennsylvania, to avoid potential creditor issues and long-term care costs. These are a very specific animal of trusts and the rules are very unique to these trusts alone since they are not being set up for tax purposes. It is our recommendation that you speak to a professional well-versed in these types of trusts before completing one. They are very unique and there are very simple rules; however, it is very easy to make mistakes in this area. An elder law attorney well versed in these types of trusts will be able to provide advice as to whether this type of trust makes sense for you. There is no one size fits all answer to the question of “do I need a trust?”. It is important to get very clear on your personal goals and what your goals are for your family. Once you have a very clear picture of that, then a professional will be able to advise you, based upon your current situation, as to whether it makes sense. We would certainly be honored to assist you through this process, and we offer weekly workshops which will give you insight into the thought process in regards to whether trust is right for you. We look forward to seeing you in the future.

If you are looking for advice in regards to estate planning, please call our office at 717-845-5390 or click the link here and we will contact you.

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