April 7, 2017

The Aging Wealthy are Making Plans

Much of the world's wealth is in the hands of a relatively small number of super wealthy individuals. Many of them are now elderly and making plans about what will happen to their wealth, after they pass away.

Over the past few years, you may have heard reports about income and wealth inequality in the U.S. Economic data shows that the country's wealth is rapidly being concentrated into fewer and fewer hands, at the top of the socioeconomic scale.

As a result, many politicians like to talk about the top 1%. However, the data shows that wealth is even far more concentrated than that. Actually, it is in the top 0.1%.

This same phenomenon is not just occurring in the U.S. It is happening all over the world.

What will happen to all of that concentrated wealth when the current holders pass away, is a burning question as they continue to get older and older and eventually die?

This was the subject of a recent Private Wealth article "The World's Aging Rich Are Plotting What's Next."

The article provides many examples of what various wealthy people are planning. They naturally wish to keep their wealth away from waiting governments and do not want their families to fight over it.

This has led to various legal methods to avoid estate taxation and other problems.

Some are choosing to transfer the bulk of their assets to family members now. Others are planning to give a large portion of their wealth away to charities, so their families have nothing to fight over.

Since much of the world's wealth is in complicated trusts and other entities, it will be interesting to see how it all gets sorted out when the current holders continue to age and do pass away.

Reference: Private Wealth (March 3, 2017) "The World's Aging Rich Are Plotting What's Next."

April 6, 2017February 23, 2022

Delaware Trusts in Doubt

For decades, Delaware trusts were considered the gold standard for asset protection. A recent case has called that into doubt and many people now prefer Nevada trusts.

When people set up dynasty trusts, one of their goals is to keep assets in the family. That is the primary reason for the trusts. People would rather have their assets go to their children and grandchildren, instead of an ex-spouse of one of the children getting the assets, for example.

For a long time, the preferred way of accomplishing this was to create a Delaware dynasty trust. It was believed that Delaware offered the best asset protection.

A 2014 court decision, however, has led many people to question whether Delaware is still the best option, according to Kiplinger in “Delaware Trust? You May Want to Consider Nevada Instead.”

The case is truly only remarkable because the decision came as a surprise.

The facts themselves are simple.

A man created a Delaware dynasty trust for the benefit of his son, his son’s spouse and his grandchildren. Over the years, the trust assets grew to hundreds of millions of dollars. The son and his wife got divorced.

The court ruled that the now ex-spouse was entitled to a portion of the dynasty trust, so the assets were not kept in the family as desired.

This decision has caused many to look for other states in which to create trusts that better preserve assets in the family. Nevada is the most popular choice, since it allows trusts to be created that shield assets from ex-spouses, even for child support purposes.

Reference: Kiplinger (March 2017) “Delaware Trust? You May Want to Consider Nevada Instead.”

April 5, 2017February 23, 2022

Medicaid Can you Rely On It?

People who plan to rely on Medicaid, if they ever need long-term care in a nursing home, often make a very big mistake.

Nursing home care is one of the most expensive things facing elderly people. It costs a lot of money to get long-term care in a nursing home.

Many older people do not have the money for it and do not have a realistic way of getting that money. Profit Law Firm provides Medicaid crisis planning.

As a result, they look to the government to pay for that care. The government will step up through Medicaid, but only if the elderly person, who is in need of nursing home care, has no assets.

When seeking to qualify for Medicaid, however, many people make a big, big mistake.

This mistake is discussed in the Pauls Valley Daily Democrat article titled “Misunderstandings create traps in planning.”

The mistake is a simple one to explain, but it is important to make sure you understand it so you will not make it. You cannot give your assets to your children, just before you go into a nursing home, at Medicaid’s expense.

Unfortunately, that is just what many people are planning to do and it will not work.

What is the problem?

Medicaid has a five-year lookback window, which means that the program will look at any asset transfers the applicant (or anyone on his or her behalf) made within five years of needing long-term care.

If those transfers were not made at market value, then Medicaid will not pay for care until the expenses start to exceed the value of the transferred assets. There is a formula to calculate the “penalty period” that will be applied.

This simple mistake is a big source of problems for the elderly. Make sure that you understand it and ask an elder law attorney, if you have any questions about it.

Reference: Pauls Valley Daily Democrat (March 8, 2017) “Misunderstandings create traps in planning.”

April 4, 2017August 9, 2024

What Estate Planning Really Is

You can think about estate planning in many different ways. One of the simplest and best approaches is to think of estate planning as a way of telling your family that you love them.

Estate planning is often thought of in cold or detached legal and financial terms. It is a way to decide who will get your assets, after you pass away and what the best legal instruments are for distributing those assets.

Viewed in that way, estate planning might not seem very important to many people, especially if they do not have many assets and do not particularly care about the legal aspects of transferring those assets after they pass away.

There is, however, another way to think about estate planning as Lifezette reports in “Estate Planning: A Love Note to Your Family.”

Estate planning is a way to let your family know that you love them.

As the article suggests, it is a love note to your family. You might not care too much about how your assets will be distributed when you are no longer around to worry about it, but it can make a big difference to your family.

Getting a proper estate plan, can spare your family the costs and legal headaches of having to go through the probate process. It can even stop them from fighting over who gets which assets.

When you think about estate planning in those terms, then it should be obvious that everyone should get an estate plan. If you love your family, it is one the best things that you can do for them.

Reference: Lifezette (March 7, 2017) “Estate Planning: A Love Note to Your Family.”

April 3, 2017April 15, 2024

Audrey Hepburn’s Sons Use Mediation to Settle Estate Plan Dispute

Audrey Hepburn’s estate planning mistake has led to a long legal fight between her sons. It appears that they have finally reached an agreement. Like many, she gave vague instructions to her sons about dividing her legacy and did not include any instructions for her sons on resolving disputes.

Audrey Hepburn starred in some of the most beloved movies of all time. She came to symbolize beauty and grace in mid-century Hollywood.

When she passed away in 1993, she left behind a gigantic amount of memorabilia from her acting career, including some of the costumes and jewelry that she wore in her iconic roles. These items have obvious value to collectors, but so far no one has gotten their hands on them.

Why?

The items have been the source of a long dispute between her two sons.

Hepburn specified in her estate plan that everything she owned should be split between those sons equally, but she left no instructions regarding just how that was to be accomplished.

Which son should get which item? This dispute could have been resolved without costly litigation if she included in her will instructions for mediation to resolve such disputes. Michelle Profit, an estate planning attorney, has written an article on how mediation can be used to peacefully resolve disputes.

Hepburn’s will was silent, however, so memorabilia has been contested in court for the last two years, but the sons may have finally reached an agreement, according to the Daily Mail in “Audrey Hepburn’s sons agree to split their late mother’s treasure trove of belongings, including costumes, jewelry, scripts and awards, after two-year legal dispute.”

The sons have agreed to submit the question to mediation and use that process to determine the distribution of particular pieces of memorabilia. However, this will not be the end of all battles concerning Hepburn’s estate, since a charitable fund she founded is now suing one of the sons for interference with its affairs.

Hepburn’s mistake was not including some way for her son’s to resolve any disputes about who gets what in her estate plan. She could have made provisions for a mediator to resolve the disputes. That would have saved a lot of headaches and legal bills for her family. Profit Law Firm, LLC can include dispute resolution in your estate planning documents to avoid these disputes, and reduce the cost of such disputes, when they occur.

Reference: Daily Mail (March 9, 2017) “Audrey Hepburn’s sons agree to split their late mother’s treasure trove of belongings, including costumes, jewelry, scripts and awards, after two-year legal dispute.”

March 31, 2017May 16, 2022

A Common Estate Planning Myth

People who do not have a large amount of assets, think that they do not really need an estate plan. They are wrong.

Not everyone is wealthy. Not everyone has billions, or even millions, of dollars that need to be divided up between their relatives after they pass away. In fact, most people do not have that kind of fortune and never will.

Many of the people who are not wealthy, think that means they do not need estate plans. They reason that if there is little to divide up, then there is little to fight over. Consequently, they believe everything will go smoothly.

Unfortunately, that is a myth.

Even people who do not have a large estate need an estate plan, as the Pauls Valley Daily Democrat explains in “More on estate planning myths.”

You never know when family members will decide to fight over an estate and exactly what they will fight over. While it is true that a large amount of money often leads to a fight, it does not always do so.

Sometimes the most bitter of estate battles are actually over little things. Some estates have even been known to easily settle large fortunes, but have long and bitter feuds over small personal items that are not worth very much.

This means families might choose to argue over estates that do not have anything of value, if there are sentimental items wanted by more than one family member.

It happens a lot more often than you think.

No matter how much money you have, you need to see an estate planning attorney and get an estate plan.

Reference: Pauls Valley Daily Democrat (March 1, 2017) “More on estate planning myths.”

March 30, 2017July 10, 2025

Assisted Living Facilities

Senior citizens who no longer feel safe or comfortable at home alone, have options other than going to a nursing home. Moving to an assisted living facility is one of them.

If you ask any elderly person who is not currently living in a nursing home what they think about moving to one, you are likely to get a negative response. People do not want to move into nursing homes. Most only do so, when they have no other options.

Nevertheless, there are many elderly people living at home who are not able to handle their own day to day needs. They need help which can be hard to come by due to a lack of good caretaker options or because it is not practical to move in with younger family members.

These senior citizens do have an option available, short of prematurely going into a nursing home, as Yorktown News points out in “What Is an Assisted Living Facility and Is It the Right Place for You?”

An assisted living facility is just what it says it is.

It is a facility that assists an elderly person with daily functions, but not to the extent that a nursing home does. In an assisted living facility, residents will get help with laundry, cleaning, transportation, medication management etc.. Facilities also usually offer community meals for residents.

While an assisted living facility is not right for all seniors, it is a great option for some. Most will find such an arrangement more enjoyable than a nursing home.

Reference: Yorktown News (March 2, 2017) “What Is an Assisted Living Facility and Is It the Right Place for You?“

March 29, 2017November 29, 2022

Millennials Also Need Estate Plans

Many articles are written about what the Millennial generation wants and needs. Not enough articles are written about their need for estate plans.

Whatever field you are in, you have undoubtedly heard a lot of talk about how it relates to the Millennial generation. No one hears about it more than Millennials themselves. They like to discuss what their generation needs and their elders like to tell them about what they think they need.

With all of the talk about how Millennials live, behave and even vote, there is not much room left for talk about what will happen if they pass away.

It might seem premature to have those discussions, because Millennials are young and expect to live for a long time. However, many of them will pass away long before they think they will.

That means they need to think about their mortality and get estate plans established, as the Christian Science Monitor points out in “Millennials, don’t forget estate planning.”

One of the most important things estate planning can do for Millennials is to get them to think about what happens to their belongings and their children after they pass away. Estate planning focuses the mind on how the decisions we make, can have a long-term impact on our loved ones.

If done properly, estate planning also gets young people to think about their need to save money for retirement, emergencies and the possibility they might pass away while they have minor children.

If you are a Millennial, then seek out an estate planning attorney.

You should go ahead and get your first estate plan, just in case something does happen. That will get you started on making important plans, which is a good habit to get into.

Reference: Christian Science Monitor (March 7, 2017) “Millennials, don’t forget estate planning.”

March 28, 2017May 15, 2022

Hire the Right Estate Planning Attorney

Most attorneys are specialists in their particular practice areas. For your estate planning, you should hire an attorney who is a specialist in estate planning.

Human beings can only become truly knowledgeable in a limited number of areas. We cannot all be experts on everything. This is true even within disciplines.

For example, if you wanted to learn something about the history of 16th century Britain, you would be unlikely to learn very much by asking a historian who specializes in the Roman Empire. You would want to ask a historian who specializes in English history. Even better would be asking someone who only studies 16th century Britain.

A similar need for specialization is even more obvious, when you think about your health.

If you need heart surgery, you would not seek the services of an ear, nose and throat specialist. You would not even want a neurosurgeon. You would want a cardiac surgeon.

The same thing is true with legal matters and estate planning, as the Norman Transcript points out in “The right attorney is needed for wills and estate planning.”

Estate planning is a complicated and specialized legal field.

Only attorneys who have dedicated their lives to studying the field can be guaranteed to give you the services that you need. You might know someone who is excellent in criminal law or who excels at writing contracts. While he or she might even be willing to help you with your estate planning, you would be better off going to an estate planning expert.

Many avoidable mistakes are made when people do not seek out the services of an estate planning attorney. Do not let those mistakes happen with your estate plan.

Reference: Norman Transcript (March 5, 2017) “The right attorney is needed for wills and estate planning.”

March 27, 2017October 2, 2024

IRS Audit Strategy Targets the Wealthy

In 2017 it is expected that the IRS will focus its auditing efforts on the wealthy, in order to get the most that they can out of their limited enforcement budget.

It used to be that the IRS was actually more likely to target middle class taxpayers for an audit than wealthy people. It is more difficult to audit the wealthy because they can afford to hire expert lawyers and accountants to fight the auditors.

However, years of cuts to the IRS budget have led to a change in tactics.

The IRS now prefers to target the wealthy for audits, so the agency gets the most bang for its buck. There is simply more money that the IRS can get by auditing the wealthy than by making sure middle class Americans have filed all of their taxes correctly.

This trend is expected to continue in 2017, according to Private Wealth in “This Year’s Audits Are Bad News For The Rich.”

The IRS is expected to go after common ways the wealthy often lower their tax bills and challenge them to prove that they have done everything correctly.

For example, a charitable deduction over a certain limit might trigger the IRS to send a letter demanding proof of the donation. Reporting that money was put into a 529 education savings plan over a certain amount, could also trigger an automatic letter as could a whole lot of other common practices.

It is important that wealthy people get together with their estate planning attorneys and accountants to make sure they have done everything correctly to lower their tax bills, if they want to avoid problems with the IRS.

Reference: Private Wealth (Feb. 28, 2017) “This Year’s Audits Are Bad News For The Rich.”

Building Legacies that Last Estate Planning and Elder Law

Author: Profit Law Firm