Sunday, 05 June 2016 02:51

Long Term Care - Part 1

Long-Term Care Part 1

 

The 65-year-old and over segment of our population is growing, and growing faster than those under 65 years old.  From the year 2000 to 2050, those in the age group of 65 years of age and older will grow by 147%, while those younger than 65 will only grow by 49%.  Moreover, on average, 2 out of every 5 persons 65 years of age or older will need some type of long-term care.  If you don’t have the proper planning in place, the high cost of care can force you out of your own home and into a nursing home.  I think it is fair to say this is a result that none of us want.  Forty percent of us will need some type of long-term care, so all of us should plan.

 

 

What is Long-Term Care?

Long-term care is a variety of both medical and non-medical needs that are performed for us by another.  The needs could include help with cooking, eating, cleaning, dressing, bathing, mobility, or medical care provided by a skilled nurse.  This assistance may be provided either in your own home, or in an assisted living facility, or at a nursing home.     

  

What does Long-Term Care Cost?

 There is no simple answer other than to say it can cost a lot.  The cost will depend on the amount of care required.  Is it just help cleaning and cooking?  Or does the person require 24-hour care?  Towards the lower end, the cost can easily be several thousand dollars per month.  Health insurance and Medicare does not cover long-term care in your home, assisted living facility, or nursing home.

  

How Do I Plan for Long-Term Care?

 The good news is that there are a couple of options available to help us plan for long-term care.  Everyone’s situation is different, so I strongly suggest you consult an attorney to discuss options more fully.  Some options include:

  • Private long-term care insurance
  • “Self-Insurance” or paying out-of-pocket for expenses
  • Life insurance to replace depleted assets used for funding long-term care
  • Utilizing a Trust to provide some asset protection
  • Use up all of your assets and live out your days in a nursing home

 

As you can see, some of these options are more desirable than others, and some may be out of reach.  These and other options will be discussed in future blogs.  Thanks for reading.

 

Please feel free to give me a call today and we can review your situation and other Estate Planning goals.  Everyone’s situation is different, and I can help create solutions. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

William Daniel Powell (Dan)

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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ILIT Trusts – Do I give the Policy Proceeds Outright, or in Trust?

 

So doesn’t a life insurance policy usually just pay a lump sum to the beneficiary?  The answer is yes unless the beneficiary is a minor.  If that is the case, the UTMA (Uniform Transfer to Minors Act) or a guardian will need to be appointed which costs time and money.  The guardian will have to control the assets and administer the proceeds until the minor reaches the age of majority.  A lump sum can also be thought of as an outright gift because there is no control or restrictions.

 

Outright, or in Trust?

Outright gifts can present a variety of problems such as:

  • If the beneficiary receives means tested public benefits such as Medicaid or SSI (Supplemental Security Income), the outright gift may put the receiving of these benefits in jeopardy.
  • If the beneficiary of an outright gift is a minor, a guardian will have to be appointed (if one is not already in place) by a court which takes time and costs money.
  • An outright gift can be dangerous if the beneficiary has a substance abuse problem.
  • A lump sum gift may not be the best to protect the beneficiary from a bad marriage, creditors, or predators.
  • Even one that is good with money may experience problems if given a large sum of money all at once.

 

For these reasons alone a gift given in a Trust is preferable.  A Trust (a Revocable Trust or an Irrevocable Trust) can control or guide the proceeds and provide very little control, to a high level of control. 

 

An ILIT (Irrevocable Life Insurance Trust) can be structured just like a Revocable Living Trust in how the proceeds are to be given to the beneficiaries.  The Trust can provide no guidance or control, or the Trust can provide a lot of guidance and control over the distribution of the proceeds. 

 

Please see my Blog for continued discussion of various aspects of ILIT Trusts.

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

Please feel free to give me a call and we can establish your Living Revocable Trust, ILIT, or other Estate Planning goals today.  If you have specific estate planning objectives, I can help create solutions to achieve your specific purpose. 

 

Thanks for reading my blog.

 

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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ILIT Trusts – Who should be the Trustee and Beneficiary?

Likely the most important thing to know is that the insured should not act as the Trustee in order to preserve the Irrevocable Life Insurance Trusts benefits.  If the insured’s spouse is also an insured and not the beneficiary, he or she could serve, or even perhaps an adult child, however whomever is chosen must have the time and sophistication to manage the ILIT Trusts responsibilities.  When policy premiums are due, the Trustee must send out Crummey Letters (from the case of the same name), wait the required amount of time, then pay the policy premium.  The Trustee also must file tax returns manage the ILIT’s bank account if necessary.

 

 

Who can be the Beneficiary of my ILIT?

 

Basically anyone you choose can be the beneficiary of your Irrevocable Trust.  Of course most people normally select their children or other loved ones. 

  

Can’t I just Name Someone else as the Policy Owner Instead of Creating an ILIT?

 Well, the problem with this method is similar to the problems that are created if you put your child’s name on the deed to your house to avoid estate planning.  One problem is that if your child passes away before you do, the value of the policy will be included in the child’s estate for federal estate tax purposes which may be a problem.  Also, you will lose control over the policy and the child can cash the policy out, cancel it, or even change the beneficiary to another without even having to ask you.  Creditors may even have access to the policy should the child get into trouble. 

 

 

Please see my Blog for continued discussion of various aspects of ILIT Trusts.

 

See lots of estate planning information on my website at: www.myestate-plan.com 

 

Please feel free to give me a call and we can establish your Revocable Living Trust, your Irrevocable Life Insurance Trust (ILIT), or other Estate Planning goals today.  If you have specific estate planning objectives, I can help create solutions. 

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

****************

This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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Advanced Estate Planning – An Overview to ILIT Trusts

 

What is a Trust?

As discussed in my other Blog posts, a Trust is a means of passing property to other persons.  A Trust is an advantageous method of passing property for several reasons.  With a Trust, you can help yourself in planning for your potential incapacity.  Also, with a Trust, you can better control how your beneficiaries receive what you leave them and can help protect those you choose as beneficiaries from bad marriages, predators, and the like.  Trusts don’t need to go through Probate and therefore save time and money.  A Trust – be it a Revocable Living Trust, or Irrevocable Trust – is a private document where a Will becomes public record when Probate is opened. 

 

 

What is an ILIT?

 

ILIT stands for Irrevocable Life Insurance Trust.  An Irrevocable Trust is just that – Irrevocable and thus not able to be changed like a Living Revocable Trust can be.  Sounds kind of scary and final doesn’t it?  Well, there are great reasons to use an Irrevocable Trust.  One reason to use an Irrevocable Trust is to create a Special Needs Trust to protect means tested public benefits like Supplemental Security Income (or SSI), or Medicaid and others.  Another great use of an Irrevocable Trust is to create an ILIT or Irrevocable Life Insurance Trust – the subject of this blog. 

 

An ILIT is typically used as an advanced estate planning technique.  When a person wishes to leave money to a person, but is either over the federal estate tax exemption amount (in 2016 it is $5.45 million for an individual, and $10.9 million for a couple), or close to reaching the federal estate tax exemption amount, the use of an ILIT is a great option.  The reason it is a great option is because properly structured, an Irrevocable Life Insurance Trust means that the proceeds of the life insurance are not includable in the insured’s estate for federal estate tax purposes.  Therefore, tax savings are realized.

 

 

How does an ILIT (Irrevocable Life Insurance Trust) work?

 

For the rest of the explanation of ILIT Trusts and how they work, please see Part 2 of this Blog.  Thank you.

 

See lots of estate planning information on my website at: www.myestate-plan.com 

Please feel free to give me a call and we can establish your Living Revocable Trust, ILIT, or other Estate Planning goals today.  If you have specific estate planning objectives, I can help create solutions to achieve your specific purpose. 

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

****************

This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

****************

Using Life Insurance in Estate Planning for small estates or young couples.

 

Many young people and young couples don’t think much about estate planning because in our early life, we don’t have much property or funds with which to plan!  For those young couples or individuals with children, money is probably even more thin.  These young people and young couples likely need estate planning more than they know.  What happens to your kids or spouse should something happen to you?  Admittedly, it is not fun to think about, but why leave the burden to your loved ones?  So many couples now have both spouses working and removing one of the streams of income can be devastating.  I know I wouldn’t want an unexpected fifty percent reduction in my income – no matter what point I was at in my life.  Not only is an income stream now gone, but there will likely be other short-term expenses such as medical, funeral, living expenses, and other bills. 

 

 

Life Insurance and Estate Planning to the Rescue!

 

Life insurance is a brilliant Estate Planning tool.  For the young person or young couple (or anybody really), life insurance can be utilized to provide funds where none may otherwise exist. 

 

Life insurance can create an estate that was not otherwise present.    

 

Life insurance can “fund” a Living Trust for the benefit of your family and used to help take care of a variety of things including:

  • The creation of the estate itself
  • Payment of taxes
  • Replacement of an income
  • Paying medical and funeral costs
  • Pay for college
  • Or just about anything else that money is used for

 

While you can designate a beneficiary of the life insurance policy without creating an Estate Plan, there are other considerations.  Having the Trust as the beneficiary of the policy proceeds provides all of the normal protections that a Revocable Living Trust provides.  Utilizing a Living Trust (or potentially an Irrevocable Trust) is better than naming a beneficiary for several reasons.  What happens of you and your spouse die simultaneously?  What if your kids are minors?  Without a proper Estate Plan, court proceedings will need to be instigated where there are minor children that are to receive property.  A Living Trust can help protect your beneficiaries from losing half their inheritance due to a bad marriage, or other predators.

 

Please feel free to give me a call and we can establish your Living Revocable Trust or other estate planning objectives today.  If you have specific estate planning goals, I can help create solutions you may not be aware of. 

 

See lots of estate planning information on my website at: www.myestate-plan.com

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

****************

This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

****************

Wednesday, 04 May 2016 23:35

Advanced Estate Planning Overview

Advanced Estate Planning – An Overview

 

What Do You Think of When I Say Advanced Estate Planning?

 

Some people think advanced estate planning is just for the rich or wealthy.  Well, it’s not quite that easy.  Certainly there are advanced wealth transfer techniques that are available to high net-worth persons.  One of the easiest estate plan situations is a single person, never married, one or two beneficiaries, and a relatively small estate (under the federal estate tax exemption).  Things tend to get a bit more advanced as situations and goals get more complicated.  Planning can get a bit more complicated when a people with children from prior relationships marry and create the so-called “blended family”.  Often in these circumstances, each partner wants to make sure that their kids don’t get cut out of the estate should they be the first to pass away.  Another way things can get complicated is with an intricate and detailed distribution structure.

 

 

Life Insurance for Advanced Estate Planning

 

A wonderful technique for estate planning is the use of life insurance.  On one extreme, life insurance can be used in high net-worth estates to pay estate taxes.  On the other side, life insurance can be used to create the estate itself.  For a young parent or young family, life insurance may be the best way to make sure the kids or family is taken care of in the event that the primary money earner passes away or becomes incapacitated.  In most families today, both spouses work and may be equal money earners.  Even in this situation, the use of life insurance is advisable because maintaining the lifestyle on only one salary can be difficult or impossible.  Aside from lifestyle, there are other expenses life insurance can provide for such as college expenses, weddings, and the like.

 

Advanced techniques will be discussed here in my blog.  These techniques include:

  • The use of life insurance in Estate Planning
  • A/B Trust or Bypass Trust
  • Trusts for couples where one spouse is not a U.S. citizen
  • Using the Unlimited Marital Deduction
  • Using the Federal Estate Tax Exemption
  • Utilizing the yearly gift exclusion amount
  • Plus more

 

Please feel free to give me a call and we can establish your Living Revocable Trust or other estate planning objectives today.  If you have specific estate planning goals, I can help create solutions you may not be aware of. 

 

See lots of estate planning information on my website at: www.myestate-plan.com 

 

Thanks for reading my blog.

 

William Daniel Powell

619-980-2297

This email address is being protected from spambots. You need JavaScript enabled to view it.

 

****************

This document is for informational purposes only.  Nothing in this is to be considered legal advice.  Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship.  If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction.  I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information

Also, please remember that I speak in generalities in my blog and my website. There are so many different factors that can contribute and completely change the outcome that it would be impractical to discuss all of them here.

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