I previously reported briefly on the Medicaid changes required by the Deficit Reduction Act of 2005. The effective date in North Carolina has been postponed several times, and it now appears that the new rules may not take effect until next year. The reason is that North Carolina has yet to come up with final "undue hardship" exemptions as required by federal law.
This article on the website of the National Consumer Law Center provides a glossary of living trust related terms, description of common scams, educational resources, and more.
Living trusts can be great estate planning tools for some, but only if they are sophisticated, personalized documents prepared by a qualified estate planning attorney. I use them often in my practice, but it's not uncommon for me to recommend against them for certain clients for whom living trusts are not a good fit.
This article from the Dallas Morning News discusses the use of a "Memorandum of Understanding" by siblings to formulate and record their agreement on how to care for an aging parent. Careful planning and open communication by a parent prior to incapacity may avoid the need for such an agreement, but not always.
While I think Sibling Agreements can be a great tool in minimizing family conflict, the drafting attorney would have to be careful to communicate to the parties whom he or she represents. Just like with a prenuptial agreement, one attorney should not represent two or more parties with potentially differing interests. I personally would only prepare such an agreement on behalf of one of the siblings, and would have the agreement state that the other siblings were advised to and given the opportunity to retain their own counsel. Ideally each sibling would have his or her own attorney, which might or might not make the negotiations more contentious, but would certainly help if the enforceability of the agreement was later questioned .
I think it would be difficult to for an attorney to serve merely as a scrivener, just recording the agreement but giving no advice.
Click "Continue Reading" for the full text of the article.
Continue Reading...I recently attended a two day seminar by nationally recognized IRA expert Ed Slott, CPA. If the protection of a trust for IRA beneficiaries is desired, Slott says that the best way is to have the IRA paid to a Standalone IRA Trust. He cautions that IRAs should not be mixed with non-IRA assets.
Slott also recommends that for married couples, spouses with large IRA balances should use the distributions to pay for life insurance to be held in trust for the other spouse, and then make the children (or a trust for their benefit) beneficiaries of the IRA. This leverages funds that are subject to income and possibly estate tax into completely tax-free monies, and provides optimum "stretching" of the IRA, allowing maximum growth. I think this strategy should be used for any couple with large IRA(s) and a total estate exceeding $2 million.
Robert Keebler, CPA, MST reports on Private Letter Ruling 200708084:
Designated Beneficiaries of See-Through-Trusts and the Life Expectancy used to
Determine the Payout Period of the IRA Distributions
In PLR 200708084, the IRS ruled that a trust is a qualified “see-through trust” and the
decedent’s son and daughter are the only individuals who have to be considered
“designated beneficiaries” because the trust pays outright to them. The lesson to take
from this PLR is that when there are beneficiaries who receive their trust benefit outright,
you do not have to look beyond those beneficiaries for potential contingent beneficiaries
in determining the oldest trust beneficiary.
In an October 2006 posting, I reported that North Carolina attorney Rick Graves was indicated for tax fraud. I am pleased to report that last week he was found "not guilty" by unanimous jury verdict, and acquitted of both charges of federal tax fraud.
To view Mr. Graves' Press Release, click "Continue Reading."
Continue Reading...A new poll conducted for the lawyer directories Martindale-Hubbell and lawyers.com found that 55% of Americans do not have a will. Many of those who have done no planning simply don't want to think about their incapacity or death or feel that they do not have enough assets to justify a will. I call this denial of reality the "ostrich" approach to estate planning - hide your head in the sand and hope that everything turns out okay. There is an old Steppenwolf song called "The Ostrich" with that line in it - one of my favorites by them.
Just like taxes, death is inevitable - you might as well do your best to protect your family and make things as easy and inexpensive as possible for them.
In 2007, qualified North Carolina taxpayers may deduct contributions to North Carolina's 529 College Savings Plan up to $2,500 for individuals and $5,000 for married couples filing jointly. Earnings used for qualified college expenses are income tax free.
To qualify for the deduction, for taxpayers must have adjusted gross income below $60,000 (single), $100,000 (joint), $80,000 (head of household), or $50,000 (married filing separate). You should consult your financial, tax, or other advisor to learn more about how this may apply to your specific circumstances.
For more details, visit the NC College Savings Plan website.
More helpful information on IRAs from expert Ed Slott:
Financial advisors should make sure they know the following about the IRAs they advise clients about:
The answers are in the IRA custodial document that set forth the rules that govern the IRA.
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