Wealth Preservation, Trusts and Estates

The Family Caregiver Exception is one opportunity available to protect the family home from nursing home spending. Generally, there is a 5 year ineligibility for Medicaid qualification that results from a transfer of the family residence to a child. However, there is no penalty for a transfer of a primary residence if a son or daughter lived with mom or dad for the two years preceding mom or dad moving to a nursing home. Further, the child must prove that he or she provided care that allowed them to stay at home and prevented mom or dad from going to a nursing home during that two year period.

I recently answered a question posed by a reader on AVVO regarding this family caregiver exception and thought you might like to take a look at that commentary here. Here is the relevant federal statutory provision 42 U.S.C. §1396 p (C) (2)(A)(iv). This is an important provision and could provide significant economic protection if utilized properly.

Please feel free to contact Douglas L. Kaune, Esq. any time at 610-933-8069 or dkaune@utbf.com to discuss your particular Medicaid Asset Protection, Nursing Home or Elder law case to determine the appropriate planning for you and your family.
Wills * Trusts * Elder Law * Probate * Asset Protection * Power of Attorney * Estate Planning
Unruh, Turner, Burke & Frees, P.C. his a full service law firm with offices in Malvern, Phoenixville, West Chester and serving surrounding areas such as Royersford, King of Prussia, Wayne, Media, Paoli, Exton, Downingtown, Norristown and other towns in Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).

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Do you have a son or daughter in college or entering college?

If you’d like more information or resources about paying for college, or the tax and gift tax consequences surrounding college educational expenses then read on.

We know that paying for one or more children’s college educations can be a real hardship for many of our clients and for families in Pennsylvania generally.

So, we periodically try to find articles, resources and information for our clients and our blog readers as a way of adding value, and helping out.

For more information from the IRS and Dave Frees about tax issues surrounding college educations, gifting and loans, you should review IRS FORM 970 at www.PaEstatePlanners.com
There are also numerous considerations in your will, trust, and/or estate planning as children get to college and toward the college years.

Do you have enough life insurance for the next few years of high college expenses?
Should the college money go into trust or into a trust under your will?
Should your spouse be the trustee? What if that caused higher taxes?
Is your power of attorney updated in case of accident or illness rather than death?

If you or a loved one need a review of your will, trust, power of attorney or of any estate planning documents, you can s also receive a complimentary telephone or personal consultation.

To receive your review just call 610-933-8069 and mention FREE WILL REVIEW.

David M. Frees III, Esquire.

IMPORTANT BONUS: For the first twenty readers who call, comment below, or email Dave Frees at dfrees@utbf.com for a free consultation, you will also receive a copy of Paying For College an interview with a college funding expert.

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By: David M. Frees III Pennsylvania Trust and Estate Lawyer

Is A Bank Ever The Best Trustee?

There are many reasons to set up a trust (either during life or under your will). Some people set up a trust to protect a young child from having access to money at a young age. Others use a trust to protect and to provide for a child with special needs.

Many trusts are established to provide income and assets to a surviving spouse and then to pass on the assets to family members such as children and grandchildren.

Some of our clients set up GRATs and or nursing home trusts to move assets to the next generation, or to protect them from being lost to a nursing home.

And, with each situation where a trust is the best solution another equally important question arises: Who should be the trustee of this trust?

There are many possible trustees to choose from. For example, you can select the following a trusts of your Pennsylvania trust:

you
a friend
a family member
a professional adviser
a bank or trust company

However, depending on the purpose of the trust, you may need to limit cases where you name yourself or family members as trustees since a trust is often taxable or reachable by creditors in a lawsuit, when a family member, spouse, or parent is the trustee. In fact, there is a specific section of the IRC (Internal Revenue Code) (Section 672) that will cause such trusts to be included in a beneficiary’s estate and then taxed.

So, it may be that you want to avoid family members or at least make them a co-trustee. Also, family members are often unaware of all of the new rules which apply to trusts under the UTA (Uniform Trust Act) and the Prudent Investor Rule. Family members also often fail to file income tax returns for the trust or to keep the trust records properly. Accordingly, family members might actually end up exposed to liabilities and law suits that they never anticipated.

But, if you want to avoid using a family member as trustee, what are the alternatives?

Friends, Advisers, and Banks.

And, while many families have family members and friends that will undertake the risks of being a trustee, and who will seek the right advice to make sure that they follow the new legal compliance requirements of trustees, it may be that a bank or trust company offers a viable alternative and may be the best choice.

Banks are well insured, are highly regulated, have procedures and specific policies, and they regularly file the returns and keep the records accurately.

I know that almost everyone has heard about a beneficiary that did not like their bank trustee, but banks can be the best choice and that can be especially true when a family member or friend is appointed as a co trustee or a trust protector and can fire and hire bank trustees to ensure that the bank is charging appropriate fees, getting good investment returns and is looking out after the beneficiary.

Of course, there are advantages and disadvantages to each approach. But make sure that you discuss trustee selection with your lawyer and accountant because the wrong choice of trustee can mean that the trust will not work to accomplish your tax and planning goals.

For more on trust protectors and trustee alternatives click here and watch for upcoming posts.

David M. Frees III, Esquire
610-933-8069
dfrees@utbf.com

P.S. If you would like to create a trust now or under your will, please call

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David M Frees Esq on Pennsylvania Inheritance Tax, The Federal Estate Tax and What Worries You?

For the next few months, there is no federal estate tax. Many states ( including Pennsylvania) still have an inheritance tax, and the federal gift tax laws remain in effect. But soon, estates of more than 1 million dollars will be subject to the federal estate tax with a starting marginal rate of 42%. The top rate (after January 1st 2011) will be 55%.

Opponents of the federal estate tax call it the death tax. And those who support the death tax call the opponents shrewd liars (click here for the recent estate tax piece in the Atlantic)

But, interestingly enough, in an article where the author calls opponents of the death tax “liars” he also distorted the truth. In the Atlantic article, the author claims that the first $3.5 million dollars of each American’s estate will be free from tax.

But, unless Congress acts soon, the tax will start after the first $1 million dollars and that will include insurance and retirement accounts as well as the value of your home.

We’d like to know what you think about the federal estate tax? Please leave a comment below and tell us what you think.

And, if you have questions about the Pennsylvania Inheritance Tax, or concerns about the Federal estate tax and what to do about it, feel free to post them below in the comment section or to email them to dfrees@utbf.com

David Frees, Esq. helps affluent families and individuals to achieve their estate planning goals and objectives in the areas of will, trusts, estate tax and inheritance tax planning. The firm also works with clients facing nursing home and elder law issues.

The firms offices are located in Malvern, Phoenixville, and West Chester and serve many surrounding communities such as Exton, Berwyn, Collegeville, Downingtown, Devon, Wayne and others.

For a complimentary appointment or phone conference call 610-933-8069 and mention PAEstatePlanners to qualify.

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What Is A Trust Protector and Why You Might Need One ?
By: David M. Frees III Esq.
Unruh, Turner, Burke and Frees

There is a new sheriff in town and the sheriff’s name is the “Trust Protector.” By naming a trust protector, you can select a person, in advance, who can make hard decisions, change the terms of the trust (within certain preset limits and for certain purposes), and who can hire and fire trustees.

The job of the trust protector varies significantly depending on the nature and purpose of the trust. However, there are certain jobs that you may not want to assign to a trustee or a beneficiary and they can instead be assigned to a specific person named as the protector.

For example, it may not be desirable for a child (even an adult child) to be able to fire and replace trustees. However, if a trustee is not performing, it may be important for them to be discharged and replaced without the need and expense of court petitions. So what can you do? If you plan in advance, in steps the trust protector who can make these decisions.

In many cases, you can draft a trust to create the role of trust protector and then give that person the right to review financial transactions, to discharge and replace trustees, to resolve disputes, and more.
This can save money, protect your beneficiaries, limit court intervention, and make sure that the assets are not taxed again in a child’s estate because he or she had too much power over the trust. Trust protectors can also make sure that a corporate trustee’s fees are reasonable and their performance is effective.

For more information on trust protectors and specifically:

How, when and why to create a trust protector,
Who should act as a trust protector, (often lawyers, CPAs and other independent and trusted advisers)
The pros and cons of a trust protector, and
Why the trust protector is more important than ever in a changing tax environment,

please come back to this blog or sign up for our RSS feed to be automatically notified when we publish new articles on this topic.

And, for more information on trusts and trust planning please click here to order our Enhanced Estate Planning workbook.

David M. Frees III
Unruh, Turner, Burke and Frees has law offices of it’s Trust, Estate, and Wealth Preservation Section in Malvern, West Chester and Phoenixville, Pennsylvania.

These offices provide legal services to clients in the greater Philadelphia area including Wayne, Devon, Berwyn, Malvern, Phoenixville, Exton, and many other local communities.

For a complimentary consultation please call 610-933-8069 and mention PAESTAEPLANNERS for your free estate planning materials and resources.

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As a result of the more lenient Roth conversion rules, we have been reviewing the federal estate tax,

income tax and distribution issues relating to Roth IRA conversions with clients. I thought this article provided a nice synopsis of the distribution rules facing beneficiaries of a Roth IRA. Here is another article with some additional considerations. Please note that these articles are not exhaustive of the issues, but serve to give you a good starting point for understanding decisions to be made as an IRA owner and as someone inheriting an IRA.

Please feel free to contact Douglas L. Kaune, Esq. any time at 610-933-8069 or dkaune@utbf.com to discuss your particular IRA and ROTH IRA estate planning issues or issues you are facing as a beneficiary of one of these accounts to determine how best to proceed.
Wills * Trusts * Elder Law * Probate * Asset Protection * Power of Attorney * Estate Planning
Unruh, Turner, Burke & Frees, P.C. is a full service law firm with offices in Malvern, Phoenixville, West Chester Offices serving Wayne, Paoli, Downingtown, Radnor and the following counties: Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).

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Elder Law: Medicaid Asset Protection Trust Series.  Many of our clients want to guard against losing large portions of or even their entire estate to the costs of long term nursing care.  They recognize that the

ever rising cost of nursing care coupled with increased life expectancies could result in significant expenditure of estate assets.  Clients cite the desire to preserve assets, protect a spouse and pass an inheritance to their children as overriding rationale for Medicaid Asset Protection Planning (MAPP).  As many know, the sooner you start planning, the greater the likelihood you will be able to protect significant assets.

During the planning process, we will typically suggest using one of the irrevocable trusts in our Medicaid Asset Protection Trust Series.  The trusts can be written to be flexible but, unlike outright gifts, the gifts made to the irrevocable trust will be protected from the creditors, spending habits and divorce of the future beneficiaries.  Please read this information on the use of the Medicaid Irrevocable Trust by a fellow elder law attorney in Virginia.  The Pennsylvania Medicaid laws will apply in much the same way, but I thought it would be good for you to see that other attorneys in other states are employing similar strategies.

Please feel free to contact Douglas L. Kaune, Esq. any time at 610-933-8069 or dkaune@utbf.com to discuss your particular Medicaid Asset Protection, Nursing Home or Elder law case to determine the appropriate planning for you and your family.
Wills * Trusts * Elder Law * Probate * Asset Protection * Power of Attorney * Estate Planning
Unruh, Turner, Burke & Frees, P.C. has offices located in Malvern, Phoenixville, West Chester Offices also serving surrounding areas such as King of Prussia, Media, Kennett Square, Typical Counties Served:  Chester County, Montgomery County, Delaware County, Bucks County, Berks County, Philadelphia County Pennsylvania (PA).

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Although there there will likely be no federal estate tax in 2010, the beneficial “step-up” in capital gains tax basis on property owned by a decedent at death, is now limited to $1.3 million. The limited “step-up” may be allocated among the decedent’s assets by the Executor or Administrator unless otherwise directed in a decedent’s last will. As a result of the limited basis step-up, the heirs of a decedent dying in 2010 might owe capital gain taxes that they would not have previously owed. This process will be very challenging when having to sift through historical splits, mergers and dividend reinvestment. Read this article to learn more about the accounting nightmare that will result from these tax law changes. In reality, this may leave many heirs of estates that fall between $1.3 million through $3.5 million in 2010 paying more in capital gain taxes than would have been owed in estate taxes.

Please contact Douglas L. Kaune, Esq, at dkaune@utbf.com or 610 933 8069 to discuss your particular case and to determine how the federal estate tax laws of 2010 impact your planning.

Unruh, Turner, Burke & Frees, P.C. is a full service Pennsylvania (PA) law firm with offices in Phoenixville, Malvern and West Chester and serving surrounding areas such as Collegeville, Exton, Media, Norristown, Devon, Wayne, Royersford and Paoli.

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