Salt Lake City Estate Planning

Simple Community Property Protection Strategy

Despite [some] admitted shortcomings of Community Property Divisions, they can be a fantastic asset protection tool for those who currently have no significant debts or creditors, and have a strong and lasting relationship.

In any marriage, and in any relationship, there is going to be a question of what’s “his stuff,” “her stuff” and “our stuff.” Question: how can you protect those assets that are not owned solely by you or solely by your spouse, but rather by the two of you as “community property?”

Community property is a unique form of ownership between spouses in only nine states (AZ, CA, ID, LA, NV, NM, TX, WA, and WI).. A recent article in Forbes titled “Community Property and Creditor-Debtor Law Explained” provides a nice overview of the asset protection features of community property.

The article is not only informative, but is also replete with color-coded charts. Basically, whenever an asset falls into the category of “our stuff,” a community property couple should consider a community property division. As a result, each spouse will own his or her separate property, plus one-half of what was community property before the division. From an asset protection perspective, doing so may reduce the couple’s potential risk to creditors and litigation.

However, there are a number of difficulties that can arise with this kind of planning. After all, you are dividing assets long before any potential divorce or any estate property shift. In other words, asset protection is a particular attitude with which to approach planning more generally, and community property divisions have to be understood in that context. For more information on how to protect your assets and manage your estate, contact a competent estate planning attorney. 

Reference: Forbes (May 20, 2012) “Community Property and Creditor-Debtor Law Explained”

Indigent Parents and the Financial Responsibility of Adult Children

Some 30 states currently have laws making adult children responsible for their parents if their parents can't afford to take care of themselves. These “filial responsibility” laws have rarely been enforced, but six years ago when federal rules made it more difficult to qualify for Medicaid long-term care coverage, some elder law attorneys predicted that nursing homes would start using the laws as a way to get care paid for.

There has been a recent stir in Pennsylvania regarding one man being forced to financially care for his ailing mother. As a recent Pennsylvania appeals court case dramatizes, many of us with elderly loved ones receiving expensive care may just end up footing the bill.

The case is Health Care & Retirement Corporation of America v. Pittas (Pa. Super. Ct., No. 536 EDA 2011, May 7, 2012), and the law at issue is a type of “filial responsibility law” on the books in as many as 30 states. Both the case and the law were addressed in a recent blog post titled “Son Liable for Mom's $93,000 Nursing Home Bill Under 'Filial Responsibility' Law.”

If you haven’t yet heard of “filial responsibility,” it is the cornerstone of Confucius’ Analects, the Bible, and much of modern estate law. That noted, in this Pennsylvania case and the laws of numerous states, filial responsibility is a way to ensure someone comes up with the payment.

In this Pennsylvania case, John Pittas’ mother entered a nursing home after a car crash and later left both the nursing home and the country once she recouped. She recovered well before Medicaid was able to process her application and assume payment for the nursing home. As a result, the nursing home saw $93,000 appear in its accounts receivable column.

Rather than wait for Medicaid to consider payment, the nursing home filed a lawsuit against Mr. Pittas for his mother’s bill under the state’s filial responsibility law. Note: the nursing home didn’t care that there were a number of family members – other children and a spouse – and neither did the court. Why? Because under the doctrine of filial responsibility, the nursing home could simply pick its target to receive payment, and they chose John Pittas.

While this horror story is specific to Pennsylvania law and its court system, the basic concepts of this law and its application are shared by many states. It is important to note, also, that this case only existed because Medicaid (or Medicare) hadn’t reviewed and approved the bill. If Medicaid (or Medicare) had paid the tab, then the no claim would have been established against John Pittas. If you have any questions or would like more information regarding filial responsibility, be sure to contact a competent elder law attorney. 

Reference: ElderLawAnswers.com (May 11, 2012) “Son Liable for Mom's $93,000 Nursing Home Bill Under 'Filial Responsibility' Law”

Are Prenuptial Agreements in Vogue?

More people are getting married later in life, or for a second or third time. As a result, they have more income, assets, and obligations when they arrive at the altar. So it is no surprise that prenuptial or premarital agreements are becoming a more frequent topic of discussion among to-be-weds.

Regardless of who you are, what you do, who your loved ones are, and what you own, planning for your family and for your assets is a necessary and ongoing activity. Estate planning is a process, not an event.

This is especially true when you and your family situation happens to be a little more complicated than most. In that case, proper planning is absolutely vital. What may be a trend for a new generation of complexities and one that is making headlines anew, believe it or not, is the prenuptial agreement.

The recent murmurs about prenuptial agreements come like most financial news these days, by way of Facebook’s newlywed Mark Zuckerberg. A recent article in CBS MoneyWatch titled, “Why Mark Zuckerberg needs a prenup,” makes the case for his need for a prenuptial agreement.

Zuckerberg and his millions (or whatever his net worth) aside, the prenuptial agreement has its place in an era of mixed families, divorces, remarriages, and all the other increasingly common family structures today. In addition, as pointed out in the original article, people are getting married later, or otherwise remarried, when they already have complicated assets. Divorces aside, complicated assets often necessitate complicated planning. In the mist of so many complicated familial relationships, it is important that you consult with a competent attorney regarding your estate plan. 

Reference: CBS MoneyWatch (May 19, 2012) “Why Mark Zuckerberg needs a prenup”

Business Entity Selection Secrets

If you have a corporation—one you formed or inherited—should it be S or C? What does this alphabet soup even mean?

A business is what you make of it, and that’s not just a marketing tactic or a business school platitude. When it comes to structuring your business, your selection of “entity” is key.

Do you own, stand to inherit, or are just plain curious about how to start a business (especially if you have been downsized in this economy)? If yes, then you should read a recent article in Forbes explaining the differences between a “C” and an “S” corporation. It is titled “C or S Corporation Choice is Critical for Small Business.”

Spoiler alert: the main distinctions between the two basic corporate structures are all about the tax code. Yaaaawn. That noted, however, there are other significant differences between the two. Not to muddy the already murky waters, the article explores the terrain between these old standards and the new standard that is the LLC, or Limited Liability Company.

LLCs are, by and large, simpler entities, but that doesn’t mean they are ideal in all situations. For some current reading on the capabilities of the LLC, it’s worth taking a hop over to the Wall Street Journal, which recently published an article titled “An Inspired Financing Choice for Artists and Patrons.

These articles only scratch the surface regarding what you need to know about the veritable alphabet soup of available business structures. Ultimately, you will need to bite the bullet and obtain qualified legal counsel to help you select and structure the appropriate entity for your unique circumstances and objectives.

Reference: Forbes (May 3, 2012) “C or S Corporation Choice is Critical for Small Business”

                 The Wall Street Journal (May 21, 2012) “An Inspired Financing Choice for Artists and Patrons”

 

Alzheimer’s Miracle Cure on the Horizon?

In a clinical trial that could lead to treatments that prevent Alzheimer’s, people who are genetically guaranteed to develop the disease — but who do not yet have any symptoms — will, for the first time, be given a drug intended to stop it, federal officials announced Tuesday.

In today’s world, planning for old age can be a challenge- both financially and legally. Additionally, supporting an elderly loved one who is almost certain to be diagnosed with Alzheimer’s becomes even more troubling.

Are you or someone you love at risk for Alzheimer’s in the future? What if the disease could be “cured” before it struck? There may be hope on the horizon, as reported in a New York Times article titled, “New Drug Trial Seeks to Stop Alzheimer’s Before It Starts.”

While nearly two years away from having even preliminary data, researchers have isolated the genetic family bearing the Alzheimer’s blueprint and are working on a new experimental drug that could cure the problem before it strikes millions bearing the offending gene. These breakthroughs take time.

In the meantime, it’s necessary to make financial and legal plans as if the miracle drug won’t come to pass. Accordingly, long-term care financing (e.g., long-term care insurance and/or elder law planning) ought to be considered, along with implementing (or refreshing) your most fundamental legal instruments (e.g., powers of attorney and advance health directives).

As always, consult competent financial and legal counsel before proceeding. This is not a DIY (do-it-yourself) exercise. Too much is at stake.

Reference: The New York Times (May 15, 2012) “New Drug Trial Seeks to Stop Alzheimer’s Before It Starts”

Using Easements to Preserve Posterity Property

If you have property that you would like preserve in its present form, there is nothing so close to a free lunch as the donation of an easement. Out in the country, you will call it a conservation easement. In the big city it is a facade easement. In either case, the principle is the same.

Sometimes one of the greatest charitable gifts you can bestow is the mere promise not to do anything with, or to, what you own. Of course, this common conundrum occurs most frequently when you happen to be sitting on a piece of history.

Whether the property is in the country or in the city, the challenge is the same: how to protect the property from development in perpetuity. Sometimes, however, the key is convincing the IRS of the charitable value of the property itself. If you have an asset worth this kind of consideration, and the hope to preserve it, then an “easement” may be necessary.

In the city there are “façade” easements, and in the country there are “conservation” easements. Both are worthwhile means to a charitable end.

Consider Peter Reilly’s recent post in Forbes, titled “Donating TriBeCa Facade Easement Is Like Renouncing Your Super Powers,” about an illustrative case in TriBeCa, Manhattan. The story highlights some possible, practical complications that may arise when the situation seems too good to be true. After all, an easement is a unique way of giving to charity and your neighborhood, but only when the IRS agrees.

A practical concern, if successful in obtaining the easement with IRS approval, is in finding a charity to enforce your charitable gift and the easement of your property.

Ultimately, the end result may be worth the work if you preserve your posterity property in perpetuity from development in the hands of an inevitable McDonalds or Starbucks franchisee. The charitable tax deduction can come in handy, to boot. For more information regarding the use of easements to protect your property, contact an estate planning attorney. 

Reference: Forbes (May 7, 2012 “Donating TriBeCa Facade Easement Is Like Renouncing Your Super Powers”

“Death Puts” May Secure Income and Estate Value

A little-known strategy called a 'death put' can help you lock in higher returns -- without stiffing your heirs.

Are you concerned about the return on your investments or the return of those investments en route to your heirs? If yes, then you might consider an “estate put.”

When it comes to later-in-life investments, yield and time can be unfortunate obstacles. In order to secure the highest yield, you must make long-term investments. Unfortunately, when making such long-term investments, fearing they’ll survive you and fall apart without your guidance is common.

Fortunately, a recent SmartMoney article featured the “death put,” or “estate-feature put,” as known in more dignified circles.

The article, titled “Yield-Hungry Retirees Turn to 'Death Puts,’” describes how the put is just a built-in device that allows heirs to redeem the investment at face value and recoup all that went into the original investment. You can find it on many investment vehicles, even CDs purchased through brokers. Sound attractive? There’s more.

A “death put” can guarantee an investor that an investment won’t eventually turn south or clutter up their estate for their survivors, but it will still secure a decent yield (in a world of low yields) today.

In substance and in form, “death puts” are an add-on and, although comparable to a form of insurance, this means they are subject to the manner in which your broker or investment company writes them. Translation: the devil is in the fine print.

For more on “death puts,” investment ideas, and some of the numbers involved, read the original article. Regardless, this subject matter is another reminder for you to carefully consider (and even reconsider) your investments in the context of your present income needs and future wealth transfer to your heirs.

Like any strategy, a “death put” should only be put in play after thoughtful advice and counsel from a competent estate planning attorney. 

Reference: SmartMoney (May 1, 2012) “Yield-Hungry Retirees Turn to 'Death Puts”

Helpful Advice for Non-Profit Entrepreneurs

These times are not only good for starting “for-profit” enterprises, but they’re also good for starting non-profits. Here are some easy steps to start a charity.

Giving to charity can be a particularly taxing activity even when you’re doing it for all the right reasons. Whether it’s picking the right charity or the right assets to give, it can be a daunting task. If you haven’t found just the right charity, perhaps you should consider starting one yourself.

Starting a charity is no walk in the park. Worthwhile goals are rarely reached without a bit of elbow grease. Still, for many business-savvy philanthropists, it’s not enough to think solely about the goal and the gift; you’ve got to be the leading edge as well.

If your current challenge has been bested or if you’re moving onto a second career, there are few things that can beat the sensation of creating a thriving charity. That being said, you may need some planning and advice. Why? A charity is essentially a business (with extra effort and sans profit).

Never fear. A recent article in Forbes titled “How To Start A Charity” can help jumpstart the process and get your charity up and running.

Be sure to engage in competent legal and tax counsel before you leap. There are plenty of landmines awaiting the unwary that could impede on good your intentions. 

Reference: Forbes (May 7, 2012) “How To Start A Charity”

Easing Wealth Transfer Worries

Younger members of ultra-wealthy households are grappling with their forebears for a say in wealth planning, and women are concerned about how money affects their relationships, the study found, after surveying 53 families with a net worth of $100 million or more earlier this year.

Planning your wealth transfer can be complicated. While there are many elements to consider, forgetting the “family factor” could be detrimental.

Obscure laws, politics, budgets, financial markets, returns, etc., are all important elements of wealth transfer. Unfortunately, for many planners, it’s a sad irony that they oftentimes overlook the true object of the process – the inheritors. So, how do inheritors factor into planning?

Financial Planning magazine recently weighed in on this issue with an article titled, “Younger Inheritors, Women Concerned About Pitfalls of Wealth.” The article featured the results of a new survey by Campden Wealth and Morgan Stanley Private Wealth Management. This survey examined multiple generations within high-net worth families for their opinions on their family estates and their roles in planning for the future. The results are telling.

79% of next-generation inheritors responded that they wanted to be good stewards of the family wealth. In fact, they want more involvement in the finances. Although these respondents diverged regarding what they would do with the investments, most were enthusiastic.

It’s clear that families planning for wealth transfers should consider bringing the inheritors to the table sooner rather than later. The educational opportunity is profound when an interest is present.

Interestingly, 79% of female inheritors indicated concern over how the impact might affect them. They also expressed concern over potential mismanagement of wealth outside of their control. Education is certainly essential regardless of gender, but perhaps more so for females. Traditional stereotypes still remain relevant.

In either case, the biggest takeaway from the original article is this: today’s inheritors are eager for information and inclusion.

Whether your estate is monstrous or modest, when it comes to the ultimate inheritors, a little foreknowledge will go a long way toward ensuring the success of your wealth transfer. Contact an estate planning attorney for guidance on how to keep potential inheritors informed. 

Reference: Financial Planning (May 8, 2012) “Younger Inheritors, Women Concerned About Pitfalls of Wealth”

Meeting The Legal Needs Of Your Aging Loved Ones

Increasingly, my friends and I are starting to see the same thing: elderly parents who are grappling with memory loss and finding it difficult to manage their finances. And most of us, I'm learning, are making the same mistake: we're waiting too long to act.

Baby Boomers are discovering that one of life’s most difficult passages is when the child becomes the caretaker for his or her parents. Tough subjects and hard choices can leave us paralyzed when we need to act quickly.

Communication, early and often, is critical.

The primary problem with understanding and caring for elderly loved ones lies in recognizing a deteriorating mental condition. Alzheimer’s, for one, affects one in eight persons over the age of 65. Simple dementia, on the other hand, is difficult to define, but far more Americans within that age group suffer from it.

If your elderly loved ones may be susceptible to Alzheimer’s or dementia, there are certain warning signs to recognize and steps to take. While there is no consensus on exactly how to approach the problem, a recent SmartMoney article titled Talking to Mom About Alzheimer’s and Her Money provides some practical advice on understanding and discussing the problem.

Simply put, there are red flags that cannot be ignored. It is necessary to address this subject with your elderly loved one and begin to take steps to provide for their interests and care. At a minimum, make sure fundamental legal documents are signed while your loved one is mentally capable of understanding. Such documents should include Advance Health Directives, a Living Will, a Financial Durable Power of Attorney and a Last Will.

Here’s the bottom line: if you and your loved one wait too late to have “the conversation” and take action, then the result may be unnecessary legal fees, courts and costs. To avoid unnecessary legal fees and costs, contact an elder law attorney sooner rather than later. 

Reference: SmartMoney (May 7, 2012) Talking to Mom About Alzheimer's and Her Money