Wealth Preservation, Trusts and Estates

One of the Irrevocable Trusts we prepare for clients who enter into

Nursing Home Asset Protection planning is referred to as the Medicaid Intentionally Defective Grantor Trust (MIDGT).  One of the tax features of the MIDGT is that the person, usually an elderly parent, who transfers assets to the irrevocable trust will continue to be responsible for paying the income tax due on the trust earnings even though he or she has severed all other ties to the assets.  One of the significant benefits of the parent, in this scenario, retaining the responsibility to pay the income tax is that he or she will be able to offset the income earned by the trust using possible long term care costs.

Below is a brief review of the Medical Care Costs that you or a loved one might incur and which might be used to offset income or gain.

It is important to maximize all income tax deductions available to you or a loved one.  Medical expenses are deductible only to the extent they exceed 7.5% of a taxpayer’s adjusted gross income (AGI). You can only use medical expenses that are not reimbursed through insurance or other means.  It is infrequently the case that the common medical expenses can be used as deductions because either the costs are covered by insurance or they do not rise to the necessary percentage of gross income.

That being said, the entire cost of a long-term care facility, including meals and lodging, can be a deductible medical expense. The care cost is fully deductible if the principal reason for entrance into the facility is the provision of medical care.  The retained ability to take such a large deduction could result in significant income tax savings.

A person living in an assisted-care facility can only deduct a portion of the cost of the payment to the care facility.  The IRS does not view the entire payment as a medical care cost considering the taxpayer is only being “assisted” and is not receiving complete care.

You can also take medical deductions if you are spending significant dollars to upgrade your home in order to remain at your residence comfortably.  Equipment and home modifications to accommodate the handicapped (no age limit) that do not increase the market value of the home are deductible as a medical expense.  Examples of such deductible improvements include additions of handicap accessible bathrooms or hospital beds.

So you can see, the income tax savings could be significant if the care recipient is claiming the income and offsetting it with care costs.  This would potentially let the trust assets to grow income tax free for years.

As a side note, these medical deductions can even be taken at the estate level after a person’s death.  When a person dies owing medical expenses, and those expenses are paid by the estate within one year, a medical expense deduction can be taken on the decedent’s final income tax return (Form 1040) or on the federal estate tax return (Form 706).

For a more detailed review of the Medicaid Intentionally Defective Grantor Trust click here.

For additional information on Elder Law Planning and the use of Elder Law, asset protection planning please contact Douglas L. Kaune at 610 933 8069 to schedule a client conference to determine if the Firm can be of assistance. For a review of Doug’s bio page click here.

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Learn What To Do To Successfully Obtain Guardianship.

If you have exhausted your options and you are not able to obtain a general financial power of attorney (FPOA) and medical power of attorney (MPOA), it might be necessary to seek guardianship of an elderly or disabled person.  It is important to know that the guardianship is not automatically granted.  The local Orphans’ Court in Pennsylvania (PA) will oversee the process and make a final determination as to whether or not guardianship should be granted.

Any time you have a court process and adjudication there is an opportunity for someone to file a contest and seek a different result.  It is very important for you to foresee the possibility of a guardianship contest and to prepare to answer the challenges.  For guardianship over the elderly or disabled persons, make sure that the medical records and testimony can substantiate the need for guardianship.  Have concrete examples of why the guardianship is needed and how harm will come to the person without the guardianship.  Finally, be ready to demonstrate why you are the best person for the job.  Have all of the necessary witnesses, evidence and answers ready in advance of filing.  It is always easier to gain success when you are properly prepared.

Please contact Doug Kaune at 610 933 8069 or dkaune@utbf.com if you would like assistance with your guardianship matter.

Doug is a Partner with Unruh, Turner, Burke & Frees, P.C. with office locations in Phoenixville, Malvern and West Chester serving all of the counties and towns in South Eastern Pennsylvania.

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Many people use rental real estate as part of a diversified investment portfolio for growing family wealth. We explore the issues relating to the ownership of rental properties with clients as we are preparing their wills, trusts and financial power of attorney documents. We are privy to the concerns that these rental property owners voice to their advisors. On the top of the more recent concerns was 2010 Small Business Jobs Act.

Among other things, the 2010 Small Business Jobs Act required landlords to use Form 1099 to report a number of rental property expense payments equal to or greater than $600 made after December 31, 2010 and reported in 2012 and beyond. The requirement applied to virtually all landlords. Reporting requirements would have applied to payments to, among others, contractors, roofers, painters, plumbers, electricians, accountants and attorneys.

Luckily for some landlords in PA and throughout the country, on April 5, 2011 the Senate approved a bill (H.R. 4) to repeal the expanded landlord reporting on Form 1099. The next step is to President Obama for final approval of the repeal. As a result of the repeal of Section 2101 of the 2010 Small Business Jobs Act many landlords need not identify specific expenses for rental property expense reporting. Unfortunately, landlords with rental activities that are considered a trade or business would still likely have to report payments of $600 or more made to service providers.

We suggest reviewing the status of your rental activities as a landlord with your income tax professionals should this appeal be finalized.

You can contact Douglas L. Kaune, Esquire at 610-933-8069 or at dkaune@utbf.com to discuss the most advantageous way to own your rental real estate when considering lawsuit, divorce and creditor protections. We can also assist with the best way to integrate the rental real estate ownership into your will and trust planning. The UTB&F offices are located in Phoenixville, Malvern and West Chester PA.

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Many clients prefer to remain in an assisted living setting rather than make the move to a nursing home. The Veteran’s Administration Aid and Attendance Benefit can help extend your or your family member’s stay in an assisted living facility and delay the transition to a nursing home.

Assisted living facilities cannot receive Medicaid payments from the Pennsylvania Department of Public Welfare (DPW). Therefore, when a resident runs out of money they must move out of the assisted living facility and into a Medicaid eligible nursing home regardless of their health status. In order to extend your ability to privately pay for an assisted living stay, residents should apply for the Veteran’s Aid and Attendance benefit when available. Generally, you or your spouse have to have served in the military in active duty during wartime. Review the Veteran’s Administration Website here for further details. You can also review this Aid and Attendance article on PAElderLawSolutions.com. The benefits for a spouse of a deceased Vet will be less than for the Vet himself or herself, but still likely in excess of $1000/month. The benefits for a husband and wife where one is a qualifying Vet will be close to $2000/month. This is a substantial benefit and one that can help you to stay in the assisted living setting of your choosing.
Please contact Douglas L. Kaune, Esq. at 610-933-8069 to discuss your case further and for assistance as necessary. Mr. Kaune is a partner with the law firm of Unruh, Turner, Burke & Frees, PC, a full service firm with offices in Phoenixville, West Chester and Malvern, PA serving Chester, Montgomery, Delaware, Philadelphia, Bucks and Berks Counties.

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Many spouses express fear and grave concerns that they would not
know what to do if a spouse or loved one dies.  They are terrified
when you don’t have a will, trust, or estate plan and a list of
people and instructions to guide them.

And, if you are the primary bread winner and/or have responsibility
for handling finances or investments, then this fear and concern can
be even more profound.

And you, like many clients are justifiably so busy with work, paying
tuition, mortgages, and in some cases the demands of running a
business, professional practice, or corporation that you just can’t
find the time to get to a will, trust, or estate planning.

But, deep down you know that getting this done is a reasonable
request by a spouse.

And, you certainly want to protect yourself, and your minor or adult children.
If you have just been waiting for a way to make this happen that is easy,
methodical and turn key then your wait is over. And the price is a fixed
fee.

Find our more about our risk free, simple, easy, and refreshingly effective
estate planning by clicking one or more of our programs:

Enhanced Estate Planning (TM) (for basic family needs) which
also can include our Elder Law Solutions for those facing nursing
home care.

Business Class Estate Planning(TM) (for those with businesses,
professionalpractices or more complex planning needs), and

Our premier First Class Estate Planning (TM) (for families
planning to pass on substantial wealth, complicated business or
real estate interest or for those with major philanthropic goals).

You can also schedule a risk free appointment for any one of these programs
or to find out which is right for you.

Simply call 610-933-8069 or contact David Frees at dfrees@utbf.com
and ask for your free materials and a no risk appointment with David Frees or
Douglas Kaune and mention the New Year’s Resolution Offer.

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Think Your Estate Is Now Protected From Federal Estate Tax?
According To The Tax Lawyers Studying The New Law -
Think Again

The Heckerling Institute is one of the premier estate planning programs
and “think tanks”dedicated to effective estate planning.  The lawyers
appearing  at the institute and those in attendance focus on planning
to minimize federal estate taxes and on issues of how to protect assets
and estates of all sizes for the benefit of your heirs.

After the first day of this five day intensive, David Frees’ review was
that all speakers and presenters agreed, that this year, with changes to
the federal estate tax laws being both radical and profound, the Institute
is more important than ever.

And, added Frees, “There are many many opportunities for estate tax
planning, gifting, and other planning techniques but some may be here
for a limited time only AND, many surviving spouses must now
file returns who never had to before.” Under the new law, if a
surviving spouse fails to file a 706 (estate tax return) he or she will not
inherit the deceased spouse’s remaining exemption and this can mean
much higher taxes for many families.

With several of the changes in the new law, there are unprecedented
opportunities to make gifts, to pass on wealth, to protect assets, and to
carry out your estate planning goals.  However,  according to most of
the high level estate planning lawyers in attendance, there is a mis-
perception among many people that real planning is now automatic.
and that planning, wills, trusts and good powers of attorney are no
longer needed.

However, many of the provisions of the new law may be a use it or
lose it proposition since they expire in 2 years and many people mis-
understand the “portability provisions”of the new law.

According to David Frees “Many people think that they can rely on
“inheriting” their spouse’s exemption to shelter even more assets for
their heirs. But, trusts and flexible disclaimer plans remain vitally
important to avoid taxation, lose of family wealth to nursing homes,
protection from divorce, and to making sure that taxes are minimized
and estates are protected from state inheritance taxes and even federal
estate taxes.”

Stay tuned for more specific tools and ideas for estate planning such as
new uses for the QPRT (Qualified Personal Residence Trust) and other
ways to protect assets for the next generation while protecting yourself
and a surviving spouse.

David Frees is Chairman of the Unruh, Turner, Burke and Frees -
Trusts, Estates, and Wealth Preservation Section.

He can be reached at 610-933-8069. or at dfrees@utbf.com

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The Will, Trust, Estate and Probate Section of Unruh, Turner, Burke & Frees Invites You To Our Upcoming Client Appreciation and Educational Events

Doug, Jennifer, and I enjoyed hosting and getting together with you to say thank you for being our clients, and in 2011 we will also be hosting a series of social and educational but fun events for clients and friends of the firm.

If you’re interested in attending one or more of the events that are being considered please let us know by sending me an email at dfrees@utbf.com or by calling Donna, Beth, or Denise at 610-933-8069.

Also, if you have an idea or suggestion for another event or an educational event please let us know by email or by leaving a comment below.

The Napa Wine Tasting Event

Just recently, we hosted a very nice wine tasting event at the Frees house where we shared some wines that Robin and I discovered during our anniversary in Napa and then served a light supper (fillet, salad, and home made deserts by Robin).

The weather was perfect and everyone had a great time. If you are interested in any future wine tasting events, please let us know that you wish to be added to the list. E-mail dfrees@utbf.com, dkaune@utbf.com, or call 610-933-8069 and mention that you want to be added to the wine events list.

So what else do we have in store for our friends and clients?

Winter/Spring Auction Event & Cocktail Party

Many clients have expressed interest in attending one of the famous
Freeman’s Auction House Auctions in Philadelphia.

This local and family run business has been in operation since colonial times, is America’s oldest auction house,  and they have invited us to host a cocktail reception for our clients before an auction.

So if you’re interested in bidding at an auction, selling at an auction, or just learning more about the world of art, jewelry, and antique auctions, let us know that you would like to join us when this event is scheduled.

To sign up for this event, just email dfrees@utbf.com or call us at 610-933-8069.

Fall/Winter Educational Events

Why January 1st Matters and What To Do About Your Estate Planning To Be Ready for The New Law

October 3, 2010 Dave Frees will be appearing as part of a panel including an accountant and financial adviser to help you to deal with the radical changes coming in the areas of federal estate tax and estate planning in 2011. This event is being hosted by Phoenixville Federal Bank and Trust. To register call 610-933-8069 and we will add you to the list.

Nursing Home Protection and Obamacare Update

Want to know how to lock your assets up to keep them safe from a nursing home?

Worried about Obamacare changes to medicare, taxes and insurance law and how it affects you?

Date To Be Determined: At this event, Douglas Kaune and David Frees will help you to understand what Obamacare changes in insurance, medicare, and taxation mean to you.  This program will also review how you can lock your home and assets up in a Family Wealth Protection Trust(TM) for your heirs, rather than seeing them dissipated for nursing home care.

Spring/Summer Picnic Event

In 2011 we have a picnic planned for the late spring or early summer. The date and location are yet to be determined, but we are already working on the menu, the music, and all of the things that make a great picnic.

If you enjoy a great cook out, then let us know that you’d like to be on the invitation list for this event.  To let us know, email dfrees@utbf.com or dkaune@utbf.com or call Donna, Denise, or Beth at 610-933-8069 and tell them that you’d like to be on the client picnic list.

For more information on any event or to suggest a new event or educational topic, just email us: Attorney David Frees dfrees@utbf.com or Doug Kaune dkaune@utbf.com or call 610-933-8069.

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I know that the title to this article: “Resources for Building and Protecting Your Estate and Your Estate Plan” is both long (imagine that, a long winded lawyer) and apparently silly.

How do I know that it sounded silly?

This is a suggestion for a resource sent to me by one of my sons when he read the draft of the title-

“Get a battle team then when hordes of marauding lawyers attempt to raid your party you can fight them with karate and such techniques.”

Well Josh, true enough. But I really do have some great resources for the readers that don’t maintain “battle teams.” but who want to avoid financial fraud and marauding hoards of lawyers.

I have always maintained, that an estate plan that focuses only on what happens to your assets when you die is, while important, a boring estate plan and one not likely to be of much help to you and your family while you’re alive.

For that reason, many of the resources and ideas we provide are designed not only to help you with your will and trust, but also to help you to build, protect and to maintain your assets and your lifestyle.

In that vein, I recently came across a new government blog site that seems to have some great information for consumers.

In this installment, I have selected a few resources for you related to avoiding financial fraud.

Just click the links below for more on each topic related to protecting yourself from financial fraud:

Notices and information about types of fraud

Protecting yourself from identity fraud

Protecting Yourself from tax fraud and other types of fraud

How to report fraud

Keep an eye out for more installments of resources to build and protect your assets and your estate plan right now.

David M Frees III is an attorney with law offices in Phoenixville, Malvern, and West Chester Pennsylvania serving the communities of the Main Line as well as the West Chester, Exton, Downingtown and surrounding areas.

Frees is a partner of and Chairs the Trust, Estate, and Wealth Preservation Section of Unruh, Turner, Burke and Frees – Telephone and in person consultations are available by calling 610-933-8069.

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Federal Estate Tax Reform and Certainty Is Needed
by: David M. Frees III, Esquire

Congress failed, at the end of the year to enact any estate tax reform. As a result, the tax was eliminated for a one year period. This might seem like a blessing, but currently, many people’s documents no longer function as they were intended to work. To add insult to injury, in just a few more months it is scheduled to return with a vengeance.

On January 1, 2011, absent congressional action, the tax will return and American tax payers will only be able to shelter one million dollars. A couple could, with careful planning, shelter up to two million dollars but that would require the use of trusts prepared during the lifetime of each spouse. And, as if that is not bad enough, the tax rate is going up to a maximum rate of 55%.

However, since this tax includes retirement accounts, the value of a house and business, and life insurance proceeds, the one million dollars may not go as far as it might otherwise.

We need and deserve clarity on this issue.

Yet, just a few weeks ago, negotiations between Republicans and Democrats broke down and Estate Tax reform disappeared from the legislative agenda.

This is not a political or partisan column. And, for my money, both parties have failed to deal effectively with this issue. I simply believe that Congress owes certainty and clarity to the American people. Right now, careful and rational estate and tax planning for families with substantial assets is almost impossible.

Clarity is essential and now requires congressional action.

Here is video of a recent statement on the Senate floor.

David M. Frees, III
is an attorney focusing his practice in the areas of trusts, estates, probate, and estate and asset protection planning. His firm, Unruh, Turner, Burke and Frees also offers elder law planning for families facing nursing home care and the related issues.

The firm maintains law offices that serve many local communities including Devon, Wayne, Malvern, Phoenixville and West Chester.

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So many clients are interested in purchasing long term care insurance (LTCI), but are scared to pursue the coverage because of the perceived prohibitive cost. There are so many different types of policies and levels of coverage that there may be a policy to fit your budget. That being said, you should become an educated consumer of the LTCI products available to you and the average cost for coverage. This will make it easier for you to enter into the marketplace in order to protect you and your family. Start with this article by the American Association of LTCI which I have linked for you. The article gives some data on the average LTCI cost paid by U.S. purchasers. Please keep in mind if LTCI is not appropriate for you or if the cost does not fit your budget, you might want to initiate Medicaid/Nursing Home asset protection planning in order to safely put away your assets for you and your family.

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. is a full service law firm with offices located in Malvern, Phoenixville, West Chester and also serving surrounding locations such as King of Prussia, Newtown Square, Media, 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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