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Does your irrevocable trust provide capital gains savings for your heirs?

By Attorney Ted Brown

Irrevocable trusts are commonly used to protect assets from the cost of long-term care and to reduce estate tax liability. However, without the right language, an irrevocable trust can create a potentially crippling and unanticipated capital gains tax problem for your heirs.

Capital gains tax applies to the sale of appreciated assets such as land or stocks. In general, the tax is based on the profit that one earns on the sale. The profit is determined by subtracting the value of the property when you acquired it from the sale price. For example, if you buy a piece of land for $100,000 and you sell it for $225,000, you have a capital gain of $125,000. The $100,000 figure is known as your “cost basis.”

A gift or transfer of property during the owner's lifetime to an irrevocable trust will results in a carry-over in the cost basis to the trust, This means that when the beneficiaries eventually sell the assets given to the trust, they will owe capital gains tax on the difference between the sale price and the price that you paid. Depending on how much the property has appreciated over time, this could result in a stifling capital gains tax problem for the beneficiaries years down the road. In order to avoid this, the trust must contain special language that will pull the value of the trust back into the creator's estate and achieving something known as a step-up in basis.

An irrevocable trust is a very complex estate planning tool. It is very important to understand the many nuances of these trusts and of gifting assets before embarking on such a plan. Call us today to learn about how we can develop a customized plan to protect your assets while still preserving tax benefits for your heirs.  

 

 

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

What Is an Affidavit or Memorandum of Trust?

By Chris Meyer

Screen Shot 2014-04-29 at 12.12.18 PMWhen you or your attorney are funding your trust, you may find that some financial institutions require a copy of your entire trust. Most of us don't want to share the entire trust with these institutions. In order to avoid giving financial institutions the entire trust document, attorneys prepare an affidavit – also known as a memorandum – of trust.

An Affidavit of Trust is a legal document that provides critical information to these institutions such as the legal name of the trust, who set up the trust, who has the authority to act on behalf of the trust (the trustee) and what they can (and can't) do on behalf of the trust. Common elements that are included in an Affidavit of Trust are: the settlors of the trust, the name of the trust, the date the Trust was established, and Trustees of the Trust. An Affidavit of trust generally contains a list of trustee powers.

In addition to funding, there are other times that an Affidavit of Trust is needed. An Affidavit of Trust is prepared to update information when one or more Trustees of the Trust has changed. The trustee may change due to incapacity or death or the trustee may choose not to continue in that role. In this sense, the Affidavit of Trust provides a history of what has happened to those important to the trust.

If you have any further questions about an Affidavit or Memorandum of Trust or would like to learn more about any and all aspects of estate planning, please give our office a call at 1-800-798-5297. Also, be sure to Like us on Facebook to keep up to date with the latest blogs related to Trusts and other Elder Law associated topics.

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

You’re 70 ½ and beginning to take your Required Minimum Distributions (RMDs)

By Robin Crouch

All the hard work you put into saving for retirement is starting to pay off. How long will your nest egg last? Retirement planning doesn't end when you retire. . .

Screen Shot 2014-04-29 at 3.09.46 PMIt's April 2014, so many of you are have had your taxes prepared for 2013. Maybe you had your taxes done by a professional tax-preparer, or maybe you’re doing it yourself – hello Turbo Tax!

Either way, if you were age 70 ½ or older in 2013, you had to take a required minimum distribution (RMD) from your IRA or other Qualifed Plans for 2013. Your RMD is the minimum amount you must withdraw from your qualified account(s) each year. You can withdraw more than the minimum amount but all is taxable and must be reported on your federal income tax return. You are ultimately responsible for calculating and withdrawing the amount of your RMD although your IRA custodian or retirement plan administrator may help you with the calculations.

A 2010 study by the Employee Benefit Research Institute found that 41 percent of Americans in the lowest pre-retirement income level will run short of money after 10 years of retirement. After 20 years, 29 percent of people in the second-highest income level will run out, as will 13 percent in the highest income level.

Think you won't reach 90 years of age? You don't want to make that mistake! Estate planning is an ongoing process and our financial team at Cooper and Adel can assist you with income planning, minimizing income tax, charting your social security benefits for maximum income as well as stretching and protecting your retirement dollars.  

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

What happens if your parents forget to pay their LTC insurance?

By Robin Crouch

  1. The policy lapses resulting in no coverage. This may happen when they need the coverage the most!

  2. They would not qualify for a new policy if they had developed health problems since the policy was originally issued.

  3. Your parents may end up “spending down” everything they have taken a lifetime to earn before they can qualify for public assistance, or

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  4. Unless you are independently wealthy and can ensure they have care when needed, they may not receive the care they need.

The good news is this may all be avoided by purchasing asset based long term care insurance. A one time premium can provide long-term care benefits if care is needed. If you never need care, your asset passes to the next generation and becomes part of your legacy — making asset-based long-term care an innovative alternative to traditional long-term care insurance.

For answers to specific questions and before making any decisions, please consult a qualified attorney at Cooper, Adel & Associates.

 

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

Earth Day 2014

Going green is good for the planet and good for your wallet. Here are some changes that can make a big impact.

 

$23-38

If the average household lowers the thermostat by two degrees, from 70 degrees to 68, they could save $23-$38 a year. 

 

$270

Switch all the light bulbs in your home to compact fluorescent light bulbs. You can save about $270 in one year. 

 

$200

Unplug appliances and electronics that glow when you’re done using them. You could save $200 a year. 

 

$150

For someone who typically buys a $1.50 bottle of water twice a week, the annual saving of drinking from a reusable BPA-free water bottle can top $150. 

 

$109

Repair a leaky toilet and you can save $109 a year with water at $1.50 for every 1,000 gallons. A leaking toilet leaks up to 73,000 gallons a year. 

 

$900

By upgrading the insulation in your attic, walls, and basement to R-50 standard, you can save up to $900 a year. 

 

$650 – $1,000

By car pooling with just one friend, you can each save about $650 a year. If four of you carpool, you can each save nearly $1,000. 

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

Is divorce a good solution if my spouse goes into a nursing home?

By Attorney Nathan Simpson

Screen Shot 2014-04-08 at 12.45.07 PMMany clients come into the office asking if their only option when faced with a catastrophic medical situation is divorce. They have heard that this is the only way to not be required to spend everything in the Nursing Home. Thankfully, that isn't the only way. While there may be a rare case where divorce is the best option, for the vast majority of people there are more palatable ways to protect assets from a Nursing Home spend down. Through strategic use of the rules relating to Medicaid and Veterans Benefits, an elder law attorney can protect assets without resorting to divorce.

Additionally, Medicaid rules even have special exemptions and benefits that only apply to married couples. Hastily filing for divorce in a Nursing Home situation can eliminate your eligibility for these benefits, and actually harm you financially. The best course of action when facing long term care expenses is not to call your divorce attorney. The best plan is to talk to an Ohio Elder Law attorney, and schedule a free consultation to create a plan that protects your assets, qualifies you for benefits, and does not force you into any unnecessary legal proceedings.

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

Your Estate Plan Should Reduce Your Legislative Risk, Not Increase It

By Senior Associate Attorney, Dan Vu

Too often estate planners do not consider their client's legislative risk. In other words, they plan without consideration to the very high probability that the current rules will change. In Washington and Columbus, every new bill passed by the legislature is touted as the new permanent law of the land, but in reality it is only “permanent” until the next time they decide to change it. So if your plan does not provide the flexibility for the changing rules, you can actually be in a worse position than you would without any plan.

Let's review an example that just recently occurred in Ohio. Governor Kasich was able to defeat the odds stacked against him when he was able to repeal the Ohio Estate Tax, effective January 1, 2013. Few thought this would actually occur, since Ohio, like most states, is facing budget constraints. For many Ohioans, this law made their current estate plan obsolete. Tradition revocable trust planning contained provisions that were meant to shelter the estate from the Ohio Estate Tax. These types of trusts were called A/B Trusts. But now that the Ohio Estate Tax has been repealed these these older trusts are not only not helpful but they can even now be hurtful. For example, an A/B Trust would now have a less favorable capital gains treatment than having no trust at all!

Screen Shot 2014-04-08 at 12.37.12 PMHowever, just as it is not a good idea to keep an obsolete trust, it is also not a good idea to pretend that the repeal of the Ohio Estate Tax is permanent. A trust should be flexible. We have for many years used “Spousal Options Trusts.” These trusts allow our clients to utilize the traditional benefits of an A/B trust if an estate tax is in effect at the time of death. If there is no Ohio Estate Tax at death, the same trust can instead opt into obtaining favorable capital gains treatment and ignore the estate tax provisions.

All of our trusts have similar types of built-in flexibility. For example, our Heritage Trust is a trust that allows you to leave to your children a protected IRA “stretched” over their individual lifetime. But since we know that the IRA rules may change, it has built-in provision that allows for tax changes to be made even after you and your spouse have long passed away.

So, of course, not planning at all is not the answer. You just need a plan that builds in flexibility so that as the laws change you can always avail yourself to the advantages that the new laws provide and protect yourself from the disadvantages that new laws might impose.

How can you tell if your plan has built-in flexibility? Consider meeting with an experienced elder law attorney for a review.

 

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

Don’t Go Broke in a Nursing Home

By Lori McBride

Over the past few months, we have been rolling out a new seminar to help education seniors and their families throughout Ohio, most recently in Chillicothe, Johnstown and Delaware. Here are some of the topics:

  • In a Nursing Home NOW? …. You may still protect your assets
  • Hidden Medical Taxes
  • New Rules for Assisted Living Waiver
  • Can You Give Away $14,000/Year Without a Medicaid Penalty?
  • Veteran's Benefits to Cover Healthcare Costs
  • Medicaid Planning for Home Care Coverage
  • ​Will you lose your home to Estate Recovery?

Certified Elder Law Specialists Thom Cooper and Mitch Adel will be holding a series of workshops informing Seniors that it's never too late to preserve and protect your assets. For a list of upcoming workshops in your area, please call me, Lori McBride at 1-877-401-2175 for more information.

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

Scam Alert: Bogus Funeral Notifications

By Carmen Potterton

Screen Shot 2014-04-08 at 11.55.47 AMIt seems that every time you turn on the news, there is yet another scam being reported and unfortunately, many of them tend to target senior citizens.

Senior Planet recently posted a scam alert concerning funeral notifications. An email is sent that is supposedly a notification that a friend has died. In order to get the details, you have to click on the link provided and once you do, the scammers infect your computer with malware. Malware generates viruses and spyware that allows the scammers access to your computer.

What you can do to avoid the scam:

  • If you get an email with the subject line “Funeral notification,” put it straight in the trash. Contact the funeral home or the family if you’re concerned the email might be for real.

  • If you get any email from someone you don’t personally know that has a link in it, do not click on the link.

  • Call or write the person or business who sent the email – or supposedly sent it – and get the information from them directly. If it’s a business, you can use Google to track down contact information.

  • Same goes for an email from someone you do know that sounds a little fishy. Call before you click!

http://seniorplanet.org/another-scam-alert-funeral-notifications/

 

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

Purchasing A New Life Insurance Policy – Two important questions

By Senior Law Clerk, Steve Wright

Shopping for a new life insurance policy can be daunting with all of the options available. Not only do different rules apply to each policy, but the premiums that you will have to pay will vary depending on a multitude of factors. Choosing the wrong policy could have negative financial consequences, so knowing what you need out of a life insurance policy can mean the difference between purchasing the correct policy for you and your family or shelling out large amounts of cash for premiums on a policy that may expire or provide inadequate benefits for those you leave behind.

With that in mind, there are some important things to consider and keep in mind before you purchase a life insurance policy?

Screen Shot 2014-04-08 at 11.33.21 AMThe first thing you need to know before you purchase a policy is how much coverage you actually need. This will allow you to ensure that when you talk to an insurance agent, you will be able to have the agent show you the correct range of products that will suit your need. Knowing the amount of coverage you require will depend on what stage of life you are in when you purchase the policy. For example, if you are retired with no kids left at home that are under 18 or that depend on your income for support, then the amount of coverage that you will need should be less then a person that is still working age with minor children. However, do not overlook the need to support your surviving spouse which may cost more with age.

Second, you should know how long you want your policy to be in force. Are you seeking a whole life policy that will be in force for your entire life? On the other hand, do you only need more coverage for a limited period of time, such as when you have mortgage payments and small children who might need that support if something happens to you?

Knowing these two important questions will allow you to find not only the policy that fits your needs, but also a premium that is affordable so that your policy does not lapse causing you to loose valuable cash assets. Of course, you should approach the life insurance question as part of a comprehensive estate plan. An experienced elder law attorney can help you answer these questions in the context of your overall life plan.

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.



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