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January 15, 2009 Planning for Eldercare New Year's Resolution - Plan for Long Term Care According to some sources, 60% of us will need long term care sometime during our lives. It is important for all of us to prepare for that day when we will need to help loved ones with elder care or we will need elder care for ourselves. It is simply a fact of life to prepare financially for unexpected disasters by covering our homes, automobiles and health with insurance policies and to provide funding for our retirement. But no other life event can be as devastating to our lifestyle, finances and security as needing long term care. It drastically alters or completely eliminates the three principal retirement dreams of elderly Americans, which are: 1. Remaining independent in the home without intervention from others According to the National Care Planning Council the majority of the American public does not plan for the devastating crisis of needing elder care. This lack of planning also has an adverse effect on the older person's family, with sacrifices made in time, money, family lifestyles and even affecting the family's or caregiver's medical and emotional health. Because of changing demographics and potential changes in government funding, the current generation - more than ever -- needs to plan for long term care. If you have spent time helping a parent or loved one cope with a disability resulting from aging, you know the frustration of balancing what you feel they need to do and what they want to do. Communication is strained at times, because after all, you are the child and they the parent, yet physically and mentally the rolls have changed. When you make directives, assignments and arrangements in advance of needing elder care, then everyone involved can follow the prearranged care plan. As an example, Jefferson Simpson wrote in his care plan that if dementia or Alzheimer's inhibited his mental abilities to communicate or recognize his surroundings, he wished to be in a respectable facility and only asked that he be visited and brought chocolates. To his children this request seemed silly at the time, but when his mental capacities did diminish, the instructions were there. No one had to wonder if they should try to take care of Father Jefferson at home and how they would do it. Without guilt or question they placed him in a respectable facility that took care of his needs. All they had to do was make loving visits, and of course they brought chocolates. In order for Jefferson's simple request to happen, he had made financial, legal and personal long term care plans years before. What do you want your children or friends to do on your behalf? When it comes time for them to help, what if you can't say what you want because of a physical or mental disability? This is where a written long term care plan comes into effect. Do you have a financial plan or long term care insurance? Retirement savings can disappear quickly when used for care services. Where is your paperwork; insurance policies, living will, medical directives, Armed Services discharge or disability papers? Is there someone designated to know the location? What are the legal documents that are needed for power of attorney, estate planning and disbursement of assets? When do they have to be completed? What types of care services and facilities are available and what are the costs? What will government programs pay for and how do you qualify? There is a lot you can do now to put together a plan for your own long term care. You may have limited resources in the future or health problems that will inhibit your ability to take care of things you could do now. For example. James and Cindy want to be able to stay in their home as they age. In order to do this, when they were in their 40's they took out a long term care insurance policy that will pay for home care if it is needed. The policy will also pay for nursing home costs as a care option. With taking the policy at a younger age and in good health the monthly payments are low. Extra funds can now be put away for retirement without worries of having to deplete savings for care costs. Or consider Sarah's following experience: After taking care of her own parents for many years, Sarah realized the importance of making, in advance, a plan and preparations for herself. She saw all of her parents' assets dissipated in order for her father to qualify for Medicaid nursing home coverage. She did not want the same thing to happen to her. She took the time to create her own plan on paper-- expressing her wishes for her own care. A trip to her attorney provided all the legal documents and estate planning she wanted to be in place to insure care for her and an inheritance for her children. There is much to learn about long term care and there are a lot of new services and programs available to draw from. The National Care Planning Council has gathered together an overall review of government and private long term care services both on the Council website, http://www.longtermcarelink.net/and in their book The 4 Steps of Long Term Care Planning. The 4 Steps of Long Term Care Planning provides comprehensive information about long term care planning. The design also allows you to record personal information, family agreements and directions on 20 planning sheets at the back of the book. Using this book as a single-source repository for information and directions makes it much easier for you or your care coordinator to carry out your wishes when the need for care occurs.
Posted December 31, 2009 BUY-SELL AGREEMENT FOR PROFESSIONAL PRACTICES AND CLOSELY-HELD BUSINESSES © 2008 Heather K. Van Nuys Van Nuys Law Office PLLC Businesses that fail to plan an exit strategy for their partners or shareholders are simply asking for trouble. A buy-sell agreement should be implemented in every business. Eventually, everyone leaves a business, whether through death, retirement, or simply closing up the shop. The death or disability of a partner or shareholder of a professional practice or other closely held business or entity can cause hardship or the financial ruin of an otherwise solid business. A properly structured buy-sell agreement will enable the remaining partners, members or stockholders to continue with the business and avoid costly litigation over disputes and money. There are two main types of buy-sell agreements. The first one is the cross purchase agreement whereby the withdrawing partner or his/her heirs agree to sell his/her share to the remaining partners. The second type is the entity-purchase whereby the withdrawing partner or his/her heirs agree to sell his/her share to the entity. If you died tonight, a buy-sell agreement could:
for the estate tax.
Methods of funding a buy-sell agreement
The cash method rarely works well because most people either have their money invested or they don't have any.
The sinking fund method may not work if you or your partner dies before a fund is accumulated. A sinking fund may also cause an accumulated tax problem for corporations.
The installment method might work, but it could be disrupted by divorce, bankruptcy or some other unforeseen hardship.
This method might work if a bank is willing to lend the practice money while the practice is down one partner, but this method entails much risk and stress for all parties.
In most cases, life insurance is by far the best method to fund a buy-sell agreement. The deceased partner's share of the business will be bought out at full price for just pennies on the dollar invested. Every buy-sell agreement is riddled with tax traps. You should consult an attorney knowledgeable about the tax implications before you enter into such an agreement.
Holiday Blues - Depression in the Elderly Posted November 6, 2008
Living Trust or a Will - What is the Best Approach? © 2008 Heather K. Van Nuys Van Nuys Law Office PLLC
What is probate? Probate is the legal process by which the title to your property will be transferred
to those people you wish to benefit upon your death. Probate is also the process by which your Last Will and Testament is
submitted to the court, and those having a legally-recognized interest in your estate have the opportunity to "contest"
your Will if they have a valid reason to do so. Probate is also the process by which your creditors must submit claims for
payment, which claims must be submitted within certain time limits.
1. Property owned as "Joint Tenants With Rights of Survivorship," 2. Property subject to a beneficiary designation other than your "estate" such as life insurance, annuities, IRA's, other retirement plans, 3. Property with a "Pay on Death" or "Transfer on Death" designation (usually available for bank accounts), 4. Property subject to a Community Property Agreement that specifically states that such property passes to your surviving spouse upon your death, 5. Property titled in a revocable living trust.
1. You own out-of-state real estate (including most interests in timeshare condominiums); 2. You are very concerned about privacy (you may be in a "non-traditional" relationship and do not want certain family members knowing the particulars of how your property is passing; you may be a public figure); or 3. One or more of your children or some other trusted person is actively assisting you with your financial affairs.
You can accomplish these goals using a trust. But, you have the choice of having the trust be part of your Will, or have the trust stand alone as a Living Trust. Sometimes the best approach is to have both a Living Trust and a Will, with the Will handling the odds and ends that are overlooked in the Living Trust. You can have your Will dump left-over assets into your Living Trust. This is called a "pour-over" Will. What is the most important
factor in establishing a trust? No matter what kind of trust is used, the most important factor is
who you select to be trustee. Will the trustee really be capable of fulfilling his or her duties? Is he or she
both capable and trustworthy?
Posted February 26, 2008 Trustee’s Duties After Death of Grantor/Beneficiary © 2008 Heather K. Van Nuys, Van Nuys Law Office PLLC What are the Trustee’s duties following the death of the grantor/beneficiary? While many of a trustee’s duties in settling a trust are similar to those of an executor, certain formal requirements necessary to probate a will and handle an estate can be avoided.
There are three main duties of the trustee: (1) Assembling the assets of the trust; (2) Paying debts, expenses and death taxes; and (3) Distributing the assets to the beneficiaries.
Assembling the Trust Assets In most cases, it is easier to assemble the assets of a revocable living trust than an estate, since all property held in trust must be clearly identified as such. For example, a bank account or stock held in trust by the grantor as trustee for himself could be titled “Stanley Jackson, Trustee, U/D/T dated April 2, 2005, F/B/O Stanley Jackson.” If the grantor has named a different trustee, then the assets would be titled “Sally Johnson, Trustee, U/D/T dated April 2, 2005, F/B/O Stanley Jackson.”
Some attorneys or institutions use different wording, but the main features are consistent: naming of the trustee, the date of the execution of the trust and the beneficiary. The designation F/B/O means “for the benefit of” (or “for and on behalf of”), and the U/D/T means “under deed of trust” (or “under declaration of trust”).
There are trust assets that can be titled in an individual’s name during his or her lifetime and at death are payable to a beneficiary. For example, Uncle Stan might have owned a $100,000 life insurance policy, payable to “Sally Johnson, Trustee, U/D/T of Stanley Jackson, dated April 2, 2005.” Other assets paid to beneficiaries at a person’s death can include IRAs, pension and profit-sharing plans and other work-related benefits. (But there are very important tax consequences which must be considered by tax counsel.)
It is possible that the trust records contain no information concerning these assets, so it is necessary for you to have access to the grantor’s personal records and to work closely with the executor of the grantor’s estate to make certain that the trust receives all of the benefits to which it and its beneficiaries are entitled. You then file claims for all of the benefits and proceed to collect the other identifiable assets of the trust.
For accounting, and especially for tax purposes, you need a date-of-death balance sheet indicating the value of all trust assets at the grantor’s death. You therefore have to contact banks and stockbrokers for a breakdown of the decedent’s assets held with their institutions, including date-of-death balances for each bank account and security. If the trust is the owner of real estate, obtain appraisals of any real property as well as any personal property in the trust at the decedent’s death. Also obtain all past checking accounts of the trust and copies of all fiduciary income tax returns filed by the trust during the grantor’s lifetime. If any prior accountings had been made to the beneficiaries, you should have this information as well.
Payment of Debts, Expenses and Death Taxes Because the grantor had the right to revoke the trust at any time prior to death, the federal and state governments impose death taxes on the trust assets (See chapter 6). You must be familiar with the deadlines for filing these returns, and with the death tax laws of the trust’s state (determine whether there are discounts for early payment).
You are also responsible for the payment of any outstanding obligations of the trust, including fees, commissions, and expenses incurred in the administration of the trust assets. It’s also possible that trust assets will be needed to satisfy obligations of the decedent’s estate. Therefore, coordinate your activities with those of the executor of the estate (of course, the trustee can be named as executor).
Distribution When you are satisfied that all of the assets of the trust have been identified, assembled and correctly inventoried, and all outstanding obligations have been satisfied, prepare an accounting of receipts and disbursements and then make distribution to the beneficiaries. This presents you with two major decisions: (1) How formal an account is necessary, and (2) should you file the account in court in order to be formally (and legally) discharged of your duties and responsibilities?
In a close family situation, where the composition of the trust is not complicated, the size of the trust is relatively small, and the relationship between the trustee and beneficiaries is a good one, an informal account and distribution on the signing of a release can be used. This simplifies the distribution process and avoids publicity.
However, if you have any concern about potential outstanding obligations of the trust (such as future income tax problems, a federal estate tax audit, or conflict with the trust’s beneficiaries), then file a formal court accounting. Send notice of the accounting and the date it will be submitted to the court (certified mail, return receipt requested) to all beneficiaries and other interested parties (according to local court rules), so they will have the opportunity to appear in court and present any objections to the account and proposed distribution.
Once the account and schedule of distribution have been approved by the court, you can be formally discharged from your duties. In many instances, it is advisable to hold a certain sum in the trust for a period of time after distribution, in the event of any additional claims against the trust following distribution (a future audit of income tax or estate tax returns might indicate a deficiency).
Instead of an outright distribution to beneficiaries, the trust may have provided for the trust to continue after the death of the grantor for a certain period of time (for example, until the beneficiaries reach their twenty-first birthday). It is then necessary for you to continue to hold the funds allocated to these trusts in further trust for the beneficiaries and continue to administer the trust until the indicated distribution date. At that time, you can make distribution to the beneficiaries in a manner consistent with the above provisions. |
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