Ruggiero Law Blog

Friday, September 13, 2019

What is a Revocable Living Trust?

There are many benefits to a revocable living trust that are not available in a will.  An individual can choose to have one or both, and an attorney can best clarify the advantages of each.  If the person engaged in planning his or her estate wants to retain the ability to change or rescind the document, the living trust is probably the best option since it is revocable. 

The document is called a “living” trust because it is applicable throughout one's lifetime.  Another individual or entity, such as a bank, can be appointed as trustee to manage and protect assets and to distribute assets to beneficiaries upon one's death. 

A living trust will also protect assets if and when a person becomes sick or disabled.  The designated trustee will hold “legal title” of the assets in the trust.  If an individual wants to maintain full control over his or her property, he or she may also choose to remain the holder of the title as trustee. 

It should be noted, however, that the revocable power that comes with the trust may involve taxation. Usually, a trust is considered a part of the decedent’s estate, and therefore, an estate tax applies.  One cannot escape liability via a trust because the assets are still subject to debts upon death.  On the upside, the trust may not need to go through probate, which could save months of time and attorneys' fees. 

The revocable living trust is contrary to the irrevocable living trust, in that the latter cannot be rescinded or altered during one's lifetime.  It does, however, avoid the tax consequences of a revocable trust.  An attorney can explain the intricacies of other protections an irrevocable living trust provides. 

Anyone who wants to keep certain information or assets private, will likely want to create a living trust.  A trust is not normally made public, whereas a will is put into the public record once it passes through probate.   Consulting with an attorney can help determine the best methods to ensure protection of assets in individual cases.   


Wednesday, August 14, 2019

What is a Power of Attorney?

A power of attorney is an estate planning document that has a variety of uses. There are several types of these documents available, and each one performs a slightly different function. One or more of these plans may be a good idea to include as part of your estate plan.

What is a Power of Attorney?

A power of attorney gives another person permission and authority to make decisions regarding various aspects of your life if you can’t make those decisions yourself or if you just want to hand over control to a friend or loved one for any other reason.

A power of attorney gives someone else, who does not have to be an attorney, the ability to make decisions for you. You are essentially authorizing this other person to act on your behalf either generally or if certain conditions are met.

You must complete a document to give this power to someone else. This document may need to be notarized or go through another type of authentication process.

Types of Powers of Attorney

Several kinds of powers of attorney may be useful for your estate plan. These often overlap in many circumstances.

  • General Power of Attorney. This power of attorney is the most extensive option available. It gives the agent broad authority to make decisions and take action on your behalf. These are often used in situations where you become incapacitated or you are unavailable for any other reason. It is crucial that you trust the person you are granting this power to because this type of document can be prone to abuse.
  • Limited or Special Power of Attorney. This document applies to only very specific aspects of your life. For example, you may want to grant someone control over a property to maintain and manage it while you are out of the country. A document that fulfills this purpose may be limited in both timeframe and scope.
  • Durable Power of Attorney. Powers of attorney are generally only valid as long as you have mental capacity. However, a durable power of attorney will still be active if you lose your mental capacity. These can either remain in effect, or they can become active when you can no longer manage your own affairs.
  • Springing Power of Attorney. This type document only “kicks in” if certain conditions are met. The most common example is one where you lose mental capacity, and you have arranged for a loved one to take care of your affairs if this happens.
  • Healthcare Power of Attorney. A healthcare power of attorney gives someone the authority to make your healthcare decisions if you are disabled due to illness or an accident. This person will provide doctors with permission to operate, for example, and they may even make the decision of whether to “pull the plug” as well. It is critical that you let this person know your expectations regarding how you want your healthcare to move forward in these situations.

Someone who creates a power of attorney must be competent at the time to do so. That means that planning ahead is vital to creating a valid, legal power of attorney document.  

 


Wednesday, July 31, 2019

Medicaid Asset Protection

Medicaid is a healthcare program jointly operated by the individual states and the federal government. Medicaid is designed to help individuals with limited income and resources pay for healthcare costs including nursing home care, assisted living, or in-home care. However, qualifying for Medicaid can be difficult. While eligibility is state-dependent, there are generally four key requirements: (1) you must be 65 years of age or older, permanently disabled, or otherwise qualify depending on your specific state’s class requirements, (2) you must be a resident of the state in which you are applying, and either a U.S. citizen, permanent resident, or legal alien, (3) your income must be within your state’s income limitations, and (4) your assets must be within your state’s asset limitations.

To help individuals qualify for much-needed Medicaid coverage, multiple strategies exist to reduce one’s income and assets to the state threshold without adversely affecting the individual’s life. These include gifting assets to family and friends, transferring assets to a spouse, and investing in exempt assets (exempt assets are assets that do not count as “assets” for Medicaid purposes – most states allow certain home values to be exempt).

To avoid individuals taking advantage of these strategies at the last minute to qualify, however, the federal government implemented a “lookback period.” This is a period of time for which financial transactions involving the applicant will be reviewed. The purpose of the lookback period is to identify assets, such as money or cars, that may have been gifted or sold below market value in an effort to reduce the applicant’s assets to within the state’s Medicaid asset limitation.

For all states except California, the lookback period is 60 months (5 years). For California, the lookback period is 30 months (2.5 years). The lookback period begins on the day that the individual applies for Medicaid. Thus, when an application is filed, the government will review all financial transactions to look for transactions that violate Medicaid eligibility provisions, such as certain gifts and transfers.

If the reviewing agency identifies transactions within the lookback period that violate the eligibility rules, the applicant will be assessed a penalty. The penalty for violating a transaction during the lookback period is ineligibility for a certain period of time. To calculate the length of the penalty, the government will divide the amount of the transaction in violation by the average monthly or daily private care costs in a nursing home. For example, if an individual gifts $40,000 in a violating transaction during the lookback period and the state’s monthly private care cost for nursing home care is $4,000, then the individual will be assessed a penalty of 10 months of ineligibility. Here, the individual would be assessed a penalty of 10 months to begin from when the individual became eligible for Medicaid.

Given the harsh penalties for violating transactions during the Medicaid lookback period, having proper legal representation can help to ensure that your planning complies with all state and federal law.

 


Monday, July 22, 2019

The Effects of Gifts on Medicaid Planning

Medicaid is a healthcare program designed to help individuals with limited income and assets afford needed medical care. Importantly, Medicaid covers long-term healthcare services such as nursing home costs and costs for at-home personal healthcare. Because Medicaid is intended to benefit those with limited income and assets, there are strict eligibility requirements based on income and assets. Although Medicaid is a federal creation, it is jointly operated by the federal and state governments. As a result, the specific income and asset eligibility requirements for each state are different and you should consult with a Medicaid planning attorney in your area for specific eligibility advice.

As an example, a state may limit Medicaid eligibility for a married couple with a single spouse applying to $3,000 per month in taxable income for the couple with an additional income allowance for the non-applicant spouse. Similarly, the couple may be limited to $4,000 in non-exempt assets in the applicant’s name, and an additional exclusion of $100,000 of assets that may be owned by the non-applicant spouse. Additionally, most states provide for certain asset exclusions when determining Medicaid eligibility, such as exempting a certain value of the primary residence. Thus, when planning for Medicaid, the value of assets can be a major complication.

To reduce an individual’s assets, the first thought may be to gift: cash to your soon-to-be married niece, the family farm to your children, or an old car to your grandchild. However, gifting assets can have a serious impact on your eligibility for Medicaid. Under federal law, Medicaid has what is known as a five-year lookback period. This means that if you’re applying for Medicaid, the past five-years of your life will be investigated to look for gifts or other non-exempt asset transfers that reduced your assets.

When considering asset transfers in the prior five years, the only exempt transfers which will not affect your Medicaid eligibility are transfers to: (1) your spouse; (2) your child if he or she is permanently disabled or blind; or, (3) a trust for the sole benefit of anyone under 65 years of age and permanently disabled. Additionally, the transfer of your home in the following situation will not affect your Medicaid eligibility: (i) transferring your home to your child if he or she is under 21 years of age; (ii) transferring your home to your child if he or she has lived in the home for at least two years prior to you moving to a nursing home where your child’s stay at the home provided needed care so that you could stay at home during that time; or, (iii) transferring your home to a sibling if that sibling already has an equity interest in the home and has lived there two years to your moving to a nursing home. Thus, the exceptions for which a gift will not affect your Medicaid eligibility within five-years of application are extremely limited.


Wednesday, May 29, 2019

Caring for Parents with Dementia

Ever increasing life expectancies mean we get to spend more time with our loved ones, but it also means facing greater health problems as we age. One of the most challenging health issues for aging adults is dementia. Dementia is not a specific disease, but rather describes a group of symptoms that are associated with a decline in memory and cognitive function. In severe cases, those suffering from dementia may not remember their family members, or who they are, and may generally not be able to continue to live independently. As a result, many families take on a caregiver role for parents who suffer dementia. The following legal issues should be considered by families when caring for parents with dementia at any stage:

Ability to Make Important Decisions

Each state has differing standards of mental capacity required to make binding legal decisions, such as entering into a contract or executing a written will. If the parent retains mental capacity as defined by the state’s law, then the parent can execute legal documents such as a durable power of attorney as a precaution for losing their mental competency. A durable power of attorney allows a trusted person to make decisions on the grantor’s behalf, such as financial and medical decisions.

Some parents may already lack the mental competency necessary to enter into legal agreements. If a parent lacks mental competency and has not executed legal documents to ensure their care going forward, the courts must be petitioned to grant a legal guardianship to allow such legal, medical, and financial decisions to be made on their behalf.

Existence of a Will

If a parent is suffering from dementia, it is crucial to determine whether the parent has a validly executed will. If not, and the parent has testamentary capacity (the legal capacity to execute the will), then a will should be drafted and executed to ensure that parent’s wishes materialize. If the parent lacks testamentary capacity, then an experienced elder law attorney should be consulted to determine what legal avenues are available within the state.

Elder Abuse

Those with dementia are at a high risk for elder abuse due to their diminished mental capacity. When caring for a parent with dementia, caregivers need to keep a vigilant eye out for others (including family) taking advantage of the parent through means of fraud, scams, and intimidation. Any out of the ordinary activity, such as transferring large sums of money, should be immediately reported to an experienced elder law attorney and relevant state and national agencies.


For more information on caring for a loved one, join Ruggiero Law Offices LLC in Paoli for a caregiver support group beginning May 30 at 11:30 a.m.


Tuesday, April 16, 2019

Estate Planning - Save on your taxes

Many people are under the misconception that estate plans are only necessary for those with substantial wealth. In fact, estate plans are important for everyone who wants to plan for the future. For those unfamiliar with the concept, an estate plan coordinates the distribution of your assets upon your death. Without an estate plan, your estate (assets) will go through the probate system, regardless of how much or how little you have. There are many reasons that everyone needs an estate plan, but the top reasons are:

1. Protecting You and Your Family

Most people associate an estate plan with death, but an estate plan also comes into play if you become incapacitated. Through a proper estate plan, you can designate who will be responsible for making your financial and medical decisions, the authority they will have, and restrictions you would like placed on their power.

2. Distributing Your Assets as You See Fit

Without an estate plan, your estate will go to the probate courts, and your assets will be distributed according to the state’s intestacy laws, which generally prioritize spouses, children and parents. In addition, not having a will or trust in place lends itself to the potential of disputes between surviving family members. The best way to ensure that your beneficiaries receive the inheritance you intend for them is by having a well-conceived estate plan.

3. Reducing Taxes

Whether married or single, having an estate plan can significantly reduce taxes owed upon the transfer of your assets to your heirs.. Without proper planning, any transfers from you to a beneficiary may be subjected to federal and state taxation. Trusts, one of the most well-known, but least understood, estate planning tools, present  excellent opportunities for reducing taxes associated with inheritance.

Through a system of trusts and transfers, you can reduce the overall tax burden associated with the inheritance. For those with substantial assets, more advanced tax planning strategies will be necessary. Regardless of your current wealth, you will likely be able to reduce the taxation of your estate’s assets with the help of an experienced estate planning attorney.

4. Providing for Your Family as You Believe Best

By combining the ability to distribute assets with other estate planning tools such as trusts, you can include conditions for each recipient. This ensures that the money you want to give your nephew for college will actually be used for college, even if that is still 10 or 15 years away.

As noted, estate planning is for everyone – not just the super-wealthy. Whether it’s avoiding a future family dispute, helping a loved one later in life, or reaching any other goals or objectives, having an estate plan is the best way to protect your interests.


Tuesday, January 8, 2019

Do you Need a Living Trust?

Wills and trusts can be extremely complicated, especially when they relate to one another or feed off of each other. You can certainly have both tools as part of your estate  plan. Depending on your unique financial circumstances and personal preferences, it may make sense only to have a will. Moreover, there are some things that a will cannot do that a trust can, and vice versa. Are there ever situations where a trust can completely replace a will? Probably not.

Why Would I Want a Trust Instead of a Will?

The main reason that people prefer trusts instead of wills is that trusts  do not have to be probated, which can be an expensive and time-consuming process. It can also be difficult for your loved ones in some situations. A probated will is also a matter of public record, which may not be desirable for some people. For these and  and other reasons, some individuals choose to use an estate planning tool that will avoid the probate process -- a living trust.

In some situations, using a trust can also reduce or eliminate estate taxes, and a trust is especially helpful if you own real property in several states. Placing all of that property into the trust allows your loved ones to avoid opening probate in each of those states.

To set up a living trust, you simply draft the trust documents and then fund the trust. Preparing the materials alone will not ensure that your property avoids the probate process. You must then transfer property into the trust, or  “fund the trust” to obtain this benefit.

The Connection Between Trusts and Wills

While trusts can be extremely useful, there are  limitations. As a general rule, your living trust cannot  and should not replace a will. If nothing else, your will provides a “catch-all” for any property that is not in your trust. That way, you can still dictate who gets what instead of relying on state intestacy laws to divide your property.

It may not be practical to put some assets into a trust. For example, moving items that are not titled, , such as jewelry or furniture, is difficult or sometimes impossible. Additionally, you cannot name a guardian  for your minor children in a trust document; this can only be done in a will. Finally, some retirement plans do not permit trusts to be owners. You may be able to set out the trust as the beneficiary of the plan, but changing ownership often is not possible. Setting the beneficiary as a trust rather than a spouse, however, may have complicated tax consequences that need to be considered.

Can a Trust Replace a Will?

If you are wondering whether you can establish a trust and forego a will, the answer is likely no. Living trusts and wills pair nicely together, and both are beneficial tools to be included in your estate  planning.


Thursday, August 30, 2018

Upcoming Medicaid Planning Seminars


Ruggiero Law Offices will be Presenting Three

Medicaid Planning Seminars this September

 

You are invited to join us for an informative presentation by Jim Ruggiero.

Please register online atwww.paolilaw.
Read more . . .


Tuesday, August 28, 2018

Guardianships & Conservatorships and How to Avoid Them

Guardianships & Conservatorships and How to Avoid Them

If a person becomes mentally or physically handicapped and can no longer make rational decisions about their person or their finances, his or her loved ones may consider a guardianship or a conservatorship whereby a guardian would make decisions concerning the physical person of the disabled individual, and conservators make decisions about the finances.

Typically, a loved one who is seeking a guardianship or a conservatorship will petition the appropriate court to be appointed guardian and/or conservator. The court will most likely require a medical doctor to make an examination of the disabled individual, also referred to as the ward, and appoint an attorney to represent the ward’s interests. The court will then typically hold a hearing to determine whether a guardianship and/or conservatorship should be established. If so, the ward would no longer have the ability to make his or her own medical or financial decisions.  The guardian and/or conservator usually must file annual reports on the status of the ward and his or her finances.

Guardianships and conservatorships can be an expensive legal process, and in many cases they are not necessary or could be avoided with a little advance planning. One way is with a financial power of attorney, and advance directives for healthcare such as living wills and durable powers of attorney for healthcare. With these documents, a mentally competent adult can appoint one or more individuals to handle his or her finances and healthcare decisions in the event that he or she can no longer do so. A living trust will also allow someone to handle your financial affairs – you can create the trust while you are alive, and if you become incompetent someone else can manage your property on your behalf.

In addition to establishing durable powers of attorney and advanced healthcare directives, it is often beneficial to apply for representative payee status for government benefits. If a person gets VA benefits, Social Security or Supplemental Security Income, the Social Security Administration or the Veterans’ Administration can appoint a representative payee for the benefits without requiring a conservatorship. This can be especially helpful in situations in which the ward owns no assets and the only income is from Social Security or the VA.

When a loved one becomes mentally or physically handicapped to the point of no longer being able to take care of his or her own affairs, it can be tough for loved ones to know what to do. Fortunately, the law provides many options for people in this situation.  
 

Call Ruggiero Law Offices today at 610-889-0288 to see which alternative planning method is right for you.

Friday, June 29, 2018

How a Prenuptial Agreement Can Protect Your Estate


There are many circumstances that can impact an estate plan, not the least of which is divorce. While ending a marriage is complicated, it is not only crucial to arrive at a fair and equitable distribution of the marital assets, but to preserve your estate as well.

While the laws vary from state to state, it is important to understand the difference between separate and marital property. Generally, separate property includes any property owned by either spouse before the marriage, as well as gifts or inheritances received by either party prior to or after the marriage.

Marital property, on the other hand, is any property that is acquired during the marriage such as houses, cars, retirement plans, 401(k)s, IRAs, life insurance, investments and closely held business, regardless of who owns or holds title to the property.
Read more . . .


Friday, June 15, 2018

Why Should I Incorporate my Small Business


Why Should I Incorporate my Small Business?

Not every small business needs to form an LLC in order to function. A child selling lemonade by the side of the road has no use for a Tax ID number. It doesn’t seem practical to set up a new business entity to host a garage sale or a Tupperware party. As a venture starts to grow from a hobby to a full-time job, however, there are questions every business owner should ask to determine whether it is best to incorporate the business into a legal entity.
Read more . . .


← Newer12 3 4 5 6 7 8 9 Older →

Archived Posts

2019
2018
2017
2016
2015
2014
2013



© 2019 Ruggiero Law Offices LLC | Disclaimer
Paoli Corporate Center - 16 Industrial Boulevard, Suite 211, Paoli, PA 19301
| Phone: 610-889-0288

Estate Planning | Estate Planning/Non-Traditional Families | Special Needs Planning | Probate & Estate Administration | Elder Law | Veterans Benefits | Guardianships | Business Law | Purchase/Sale of a Business | Real Estate | Pet Trusts | About | Media

Attorney Website Design by
Amicus Creative