Special Reports are written on topics that affect various aspects of estate planning and the laws that govern it.
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These reports are published by the American Academy of Estate Planning Attorneys and cover a wide-variety of subjects relating to estate planning. Click on a report title to read more or to order a complimentary copy.
One thing should be clear by now: we do our families and ourselves a great disservice when we fail to plan for every contingency. That’s why a crucial first step in this entire process should be a consultation with an estate planning attorney.
If you own life insurance, congratulations. Sadly, most of us put off this critical element in our family’s financial planning, which may have devastating consequences on the loved ones left behind.
A humorous take on how families pass on businesses, such as family farms, is reflected in this quip: Avenge your children; give them equal shares in your business.
Traditional Estate Planning can certainly address legal technicalities and basic financial concerns, but most people want to pass on much more than just financial assets.
The passing of someone close to you is a difficult and emotionally draining time. The last thing you likely want to deal with is the business of settling your loved one’s final affairs. But, if you are a potential executor, it’s one of those things that must be done, and it’s not as horrible as you may have feared.
By Timothy P. Murphy
© 2018 All Rights Reserved
Recent changes in federal and California laws relating to the availability of benefits under the Medi-Cal program do not bode well for California families struggling with the costs of long term care.
The changes that these laws bring will make it more difficult to establish eligibility for long term care benefits under the Medi-Cal program. The net effect is that many families will need to look to other sources to assist in the payment of care costs which can reach to amounts in excess of $8,500 per month.
Fortunately, for certain veterans and their family members, the Department of Veterans Affairs provides three types of long term care benefits for veterans. This Report will discuss key features of these programs.
Veterans With Service Connected Disabilities
Special benefits are available for this group of veterans. These medically necessary services include home care, hospice, respite care, assisted living, domiciliary care, geriatric assessments and nursing home care. In order to receive the services, a veteran must be enrolled in VA’s health care system. Veterans with service-connected disabilities have priority for health care enrollment acceptance.
Some of these services may be offered to veterans in the health care system who do not have service-connected disabilities but who may qualify because of low income or because they are receiving pension income from VA. These recipients may have to provide out-of-pocket co-pays or the services may only be available if the regional hospital has funds to cover them.
Currently, veterans desiring to join the health care system may be refused application because their income is too high or they do not qualify under other enrollment criteria. Increased demand in recent years for services and lack of congressional funding have forced VA to allow only certain classes of veterans to join the health care system.
State Veterans Homes
The Veterans Administration in conjunction with the states helps build and support state veterans homes. Money is provided by the Federal Government to help with construction, and a subsidy is provided for each veteran using these nursing homes. These homes are generally available for any veteran and sometimes the nonveteran spouse and are run by the states, often with the help of contract management. There is generally a waiting list for these homes.
Most state homes offer nursing home care but some may offer assisted living, domiciliary (a form of supported independent living), and adult day care
State veterans homes are not free but are subsidized and the cost could be significantly less than a comparable facility in the private sector.
The state homes in California are located in Yountville, Chula Vista, West Los Angeles, Lancaster, Ventura, Barstow, Fresno and Redding. Future locations include Fresno and Redding.
Veterans Disability Payments
The third type of benefits for veterans is disability payments. These include Compensation, Pension, survivors death benefits associated with compensation and Death Pension.
Compensation is designed to award the veteran a certain amount of monthly income to compensate for potential loss of income in the private sector due to a disability or injury or illness incurred in the service. In order to receive compensation a veteran has to have evidence of a service-connected disability. Most veterans who are receiving this benefit were awarded an amount based on a percentage of disability when they left the service.
However, some veterans may have record of being exposed to extreme cold, having an in-service non-disabling injury, having tropical diseases, tuberculosis or other incidents or exposures that at the time may not have caused any disability but years later have resulted in medical problems. In addition, some veterans may be receiving compensation but their condition has worsened and they may qualify for a higher disability rating. Veterans mentioned above may qualify for a first-time benefit or receive an increase in compensation amount. Applications should be made to see if they can receive an award. There is no income or asset test for compensation and the benefit is nontaxable.
Caution: In 2015, the VA announced proposed regulations that would drastically impact the VA Pension Program. There was a public comment period in which over 900 critical responses were received. The VA has indicated that the final regulations would be announced at a future. As of January 2018, those regulations have not been published. For this and other reasons, it is critical to work with an elder law attorney who keeps abreast of these changes so that you can obtain the best results in your planning efforts.
Veterans Pension Payments
Pension is available to all active-duty veterans who served at least 90 days during a period of war. There is no need to have a service-connected disability to receive pension. To be eligible the applicant must be totally disabled if he or she is younger than 65. Proof of disability is not required for applicants age 65 or over. Apparently, being old is evidence in itself of disability.
The purpose of this benefit is to provide supplemental income to disabled or older veterans who have a low income. If the veteran’s income exceeds the pension amount then there is no award. However, income can be adjusted for unreimbursed medical expenses and this allows veterans with household income larger than the pension amount to qualify for a monthly benefit.
Compensation and pension claims are submitted on the same form and VA will consider paying either benefit. Generally, for applications associated with the cost of home care, assisted living or nursing home care, the pension benefit is a better option.
All active-duty veterans who served at least 90 days during a period of war are eligible for pension and additional disability allowances — aid and attendance or housebound allowances. Surviving single spouses of these veterans are also eligible for lesser benefits and for the allowances.
Veterans’ service would include World War II, the Korean Conflict, the Vietnam Conflict Period and the Gulf War conflict.
Pension can pay over $2,800 a month in 2018 under certain circumstances to help offset the costs associated with home care, assisted living, nursing homes and other unreimbursed medical expenses. The amount of payment varies with the type of care, recipient income and the marital status of the recipient. There are income and asset tests to qualify.
VA claims this benefit is only for low income veterans but a quirk in the way the benefit is calculated for recurring medical expenses (long term care costs associated with home care, assisted living or nursing homes) could allow veteran households earning between $2,500 and $5,000 or more a month to qualify.
Estimates are that up to 30% of all Americans over the age of 65 might be eligible for a pension benefit under the right circumstances.
Like other government benefit programs, navigating the world of Veterans Benefits can be difficult and frustrating. Fortunately, help is available.
For routine assistance in completing veterans benefit applications, local veterans support groups and county veterans services officers offer free and helpful services.
However, many will require more personalized legal advice that generally only an experienced and qualified elder law attorney can provide. An often overlooked aspect of this planning involves taking into consideration the possible need for Medi-Cal benefits in the future should a person’s condition later require higher levels of care. Regrettably, most non-attorney advisors just are not knowledgeable about how to best coordinate both types of planning so as to not jeopardize future Medi-Cal benefits while planning for current veterans benefits.
To assist veterans and their families, the Veterans Administration has created an Accredited Attorney program through which only pre-screened and specially trained attorneys are approved to provide specific services and assistance involving Veterans Benefits within the VA system. Mr. Murphy is one of the very few attorneys in Northern California to hold such accreditation. Mr. Murphy also regularly assists families with Medi-Cal long term care planning.
By Timothy P. Murphy
© 2018 All Rights Reserved
Are you worried about being sued? Well, you should be. It is reported that there are 18 million lawsuits in the United States each year. However, that isn’t the whole story. Have you ever heard of the “deep pocket” syndrome? The deep pocket syndrome means that the person claiming to have been harmed files a suit against anyone even marginally connected with the incident. The list includes the shopper who spilled the milk on the supermarket floor; the employee who failed to clean it up quickly; the supermarket that hired the employee, the designer of the “defective” shelf that held the milk and the manufacturer of the “defective” milk carton are all sued. This kind of lawsuit is done to ensure that the person with the money, or “deep pockets,” is covered by the claim for damages.
As you can see, that means there may be as many as 50 or 60 million people who are actually sued each year. What can you do about it? You can create what many consider to be the premiere asset protection entities, the Family Limited Partnership and Limited Liability Company.
What Is an FLP?
A Family Limited Partnership, or FLP for short, is one of the most popular estate tax and asset protection planning devices. An FLP is simply a limited partnership similar to the real estate or business operating limited partnerships with which many are familiar.
How Is An FLP Formed?
The estate planning attorney prepares a limited partnership agreement for you. Once the FLP is properly formed, you can transfer certain business and investment assets into the FLP in return for:
General Partnership Interest¾You receive general partnership interests. Generally, you only receive 2% of the total partnership interests in the form of general partnership interests. That means that you control all of the decision making for the FLP’s activities. We find that control is very important to our clients.
Limited Partnership Interests ¾You receive the remaining 98% of the FLP in the form of limited partnership interests. Limited partnership interests do not give the limited partner any rights in partnership income or activities. While the general partners may not treat a limited partner unfairly, a limited partner essentially has no control or rights.
You are now the proud owner of your very own FLP. You are the 2% general partners and control the partnership. Now what happens? You will give your children some of your limited partnership interests. That means that the partnership has partners other than just you.
What Is An LLC?
A Limited Liability Company, or LLC for short, is another popular estate tax and asset protection planning devices. An LLC is a form of business/investment entity not unlike the limited partnership (similar to the real estate or business operating limited partnerships) with which many are familiar. However, there is one important difference – all owners of an LLC, called members, are protected from liability caused by the LLC’s business/investment activities. With a family limited partnership, however, the general partner(s) of the FLP are liable for partnership liabilities unless certain additional planning is done.
How Is An LLC Formed?
The estate planning attorney prepares an LLC agreement for you. Once the LLC is properly formed, you can transfer certain business and investment assets into the LLC in return for:
Managing Member Interest
You receive a managing member interest. Generally, you only receive 2% of the total LLC interests in the form of a managing member interest. That means that, like the general partner of an FLP, you control all of the decision-making for the LLC’s activities.
You receive the remaining 98% of the LLC in the form of a member interest. Member interests do not give the non-managing member any rights in LLC income or activities. While the managing members may not treat a non-managing member unfairly, a non-managing member essentially has no control or rights.
You are now the proud owner of your very own LLC. You are the 2% managing member and control the LLC. Now what happens? You will give your children some of your LLC interests. That means that the LLC has members other than yourself.
Enter The Creditor
If you are successfully sued, all the creditor can obtain from your interests in your FLP or LLC is what is called a charging order. A charging order is a judgment against the FLP partner or LLC member that tells the partnership or LLC that any distributions of profit that would otherwise be made to the debtor partner or debtor member must instead be paid to the creditor. The creditor has no power to interfere in partnership or LLC matters. The charging order can be a very hollow victory. Because the general partners and managing members decide if profit is to be distributed to the partners or members, they can withhold distributions from all of the partners and, in such case, the partners, members and the creditor receives nothing.
What Does The Creditor Do?
Obviously, the creditor does not just go away, but because the charging order provides so little leverage, creditors frequently settle the claim for less than face value. Those who might consider filing a unjustified lawsuit may change their minds when they realize that all they will receive is a hollow charging order.
What Happens To The Money In The FLP and LLC?
As general partner or managing member, you have complete control and access to the assets and income of the FLP or LLC. If you have given your children 10% of the FLP or LLC, they are entitled to 10% of any distributions that you decide to make, but they cannot force you to make any distributions.
A properly designed and operated FLP or LLC can be a formidable deterrent to unjustified lawsuits and a formidable negotiating advantage against a successful creditor. While an FLP or LLC cannot be used to defeat the bona fide interests of an existing creditor, as that would constitute a fraudulent conveyance, which is illegal, the sooner you create your own FLP or LLC, the safer your family is from the “deep pocket” syndrome.
As citizens of a culture that worships youth, most of us find it nearly impossible to admit our own mortality, much less make plans for that eventuality. Denial, however, offers no protection from the inevitable.
While often maligned as a headache, in reality probate offers a solid legal framework with advantages for those who have properly prepared prior to death and who have retained skilled legal counsel.
Find out the most common reasons why it is important to do estate planning such as avoiding probate, protecting your assets and designating someone who will manage your affairs after your pass away. These are all important matters that should not be ignored.
Many people think of estate planning as a life event. You spend some time with your estate planning attorney and talk about your goals, plans, dreams, and fears for the future.
Why create an estate plan? As 2013 started, the estate planning world had a new law: The American Taxpayer Relief Act of 2012 (ATRA), enacted January 2, 2013.
For Seniors, the debate over Wills versus Probate holds special meaning, because the vast majority of Probate cases revolve around the affairs of those Americans ages 60 and over.
This report describes the estate tax valuation benefits available to owners of farms or other business real property.
Some people mistakenly believe that drafting a will avoids the costly, time-consuming legal process called probate. Read this article to find out about wills, probate and Living Trusts.
Terri Schiavo’s voice can still be heard, just in a different manner than before. Want to make sure you have the final say in your life? This report will tell you how the proper estate planning tools can guarantee that your end-of-life decisions are carried out.
Who will care for your pets if you can no longer do so? If you have a dog, cat or other pet, you know that the unconditional love and affection our pets devote to us improve the quality of our lives in ways nothing else can.
For most of our lives the greatest risk to our well-being isn’t death. It’s the ever-growing likelihood of becoming seriously ill or injured.
Trust Administration is the process people often find themselves in unexpectedly, after the death of a spouse or parent who created the trust prior to passing on.
Joint tenancy ownership of property is sometimes used as a substitute for an effective estate plan. Is this a good idea? Read this article to find out.
Incapacity planning is a broad area of law that covers how you are cared for if you become physically or mentally unable to care for yourself.
Chances are you’ve already heard a lot about the attributes of Living Trusts: avoiding probate and legal quagmires, sometimes lowering estate and/or income taxes and protecting privacy.
The question of what will happen to your children without you or their own partner will be answered someday. In preparation for the unexpected and the inevitable, it is important to set up a proper estate plan.
At first glance, the concept of an Individual Retirement Account (IRA) seems simple enough: a structured way to save for your golden years while deferring taxes on your growing nest egg.
Problems often arise when a parent with minor children passes away with no estate plan in place, leaving behind potential hardship on the emotional and financial future of their minor children.
There is so much conflicting information regarding estate planning options, it’s difficult to know whom to trust. Don’t be fooled by the most common myths that have been used to scare the public.
Americans are some of the most generous givers on the face of the planet. They reach into their pockets and take out their checkbooks on behalf of others more often than any other industrialized nation.
Estate planning is an essential part of life and death. In planning for our future and our family’s future, we must take stock of who we are, what our goals are, and how we want our estate distributed.
Every American adult shares a dubious characteristic—each is a walking litigation target. Part of your birthright is that you may be sued at any time, for any reason, and for any amount.
While planning for the care of a special needs child certainly tops the list of emotionally-charged topics, the peace of mind parents gain from a well-designed estate plan is immeasurable.
Our firm has found that looking after these financial assets is only a part of planning for passing on your legacy. Typically speaking, non-financial assets are more valued and often omitted when passing an estate to future generations.
For surviving family members, the hours and days following a loved one’s death is no time for weighty decisions. For many Americans, however, this will be the first time they think about the preparations for their loved one’s funeral.
This report informs the reader of what FDIC actually is and explains the basic coverage FDIC offers.
This report can help familiarize you with some important concepts about being prepared for divorce, should it come your way.
Are you worried about being sued? Well, you should be. There are 18 million lawsuits in the United States each year. But that isn’t the whole story. Have you heard of the “deep pocket” syndrome?
Are you worried about being sued? Well, you should be. It is reported that there are 18 million lawsuits in the United States each year. However, that isn’t the whole story.
If you or your loved one is a wartime Veteran in need of daily assistance due to any disabling medical condition you may qualify for monetary benefits from the Veterans Administration’s Aid & Attendance Special Pension.