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Securing Your Future at Every Life Stage

Estate planning might sound like something reserved for older or wealthier individuals, but it’s a crucial step for young adults as well. Understanding the importance of estate planning early on is not just about managing assets; it’s about taking control of your future and ensuring your wishes are respected, no matter what life throws your way.

Why Estate Planning Matters for Young Adults

Estate planning is vital for young adults, offering a structured way to manage future uncertainties. It’s not just for the wealthy or older individuals; young adults have significant reasons to consider estate planning:

Preparing for the Unexpected: The unpredictable nature of life underscores the importance of estate planning. It’s not just about who inherits your assets; it’s about making sure your healthcare preferences are followed and that your financial affairs are in order, even if you’re temporarily or permanently unable to communicate your wishes. Estate planning offers a sense of security, knowing that you are prepared for unforeseen circumstances.

Asset Protection: Regardless of the size of your estate, you likely have assets and belongings that hold value, whether monetary, sentimental, or both. Estate planning is the process of deciding the future of these assets, ensuring they are distributed or managed according to your desires. This includes everything from your car and savings account to digital assets like social media accounts and digital files. Estate planning allows you to control the narrative of your legacy, ensuring your assets are protected and passed on as you intend.

Healthcare Directives: A healthcare directive, or living will, specifies your medical care preferences if you become unable to make such decisions. This is crucial for maintaining your autonomy over health decisions.

Beneficiary Designations: Estate planning allows you to specify who will receive your assets and in what manner. It prevents state laws from arbitrarily deciding the fate of your estate. Additionally, it involves appointing trusted individuals to manage your affairs, be it financial decisions through a power of attorney or medical choices through a healthcare proxy. This ensures that the people making decisions on your behalf are those you trust and who understand your values and wishes. 

Starting Simple: For young adults, beginning with estate planning can seem daunting. Yet, starting with a basic will is a straightforward step that can bring immense peace of mind. It’s about laying the foundation for a secure future, both for yourself and for those you care about. Regularly reviewing and updating your plan, including beneficiary designations and considering the management of your digital legacy, ensures that your estate plan evolves with your life.

An Investment in Your Peace of Mind

Estate planning is an investment in your future and peace of mind. It’s not just about assets; it’s about making your wishes known and protecting yourself and those you care about. As a young adult, taking this step ensures that you’re prepared for whatever comes your way. Start simple, educate yourself, and consider seeking professional advice to create a plan that suits your needs. Remember, estate planning is a dynamic process, and as your life changes, so should your plan. The legal team at the Kentucky Estate Planning Law Center is here to provide guidance and support as you embark on this chapter of your life. Call (270) 982-2883 today, to schedule a consultation.

Kentucky Estate Planning

Does Your Long-Term Care Plan Include Protecting Your Assets?

It’s important to have an estate plan in all phases of our lives, but as we age, planning for the future becomes a necessity. Finding ways to protect your assets and prepare for the possibility of long-term care will ensure that you and your family will be taken care of. There are several ways to use estate planning tools to maintain your quality of life and have enough to leave behind for your beneficiaries. 

Elder Law and Estate Planning

Elder law encompasses a wide range of legal matters that address the needs of seniors and their families. It’s a holistic approach to estate planning that includes strategies for long-term care, guardianship, healthcare directives, powers of attorney, and protection from potential exploitation. The goal is to protect the rights and best interests of the elderly and preserve everything they’ve worked so hard to achieve. 

The True Cost of Long-Term Care

One of the most common concerns for many people is the potential cost of long-term care. The rising costs of goods and services can bring anxiety to even the most organized planners. It’s not always possible to tell exactly how much long-term care in a nursing home or assisted living facility will cost 10-20 years from now. It’s always advisable to plan well in advance to give your estate enough time to adjust to developments in your life. 

Medicaid planning is a great way for individuals to qualify for necessary benefits to cover the financial burden of long-term care while preserving their assets. Medicaid is a government program that provides eligible low-income individuals with essential healthcare coverage. However, the eligibility requirements have strict limits on income and assets, which makes it challenging for those with substantial estates to qualify.

Even if you have grown a nest egg that could provide the funds for long-term care, there are no guarantees that it will sustain through unexpected circumstances. For example, expensive medical procedures or the rising cost of living could cause the funds to deplete prematurely. No one wants to wait for a crisis in order to qualify for Medicaid. Thankfully, with appropriate planning, there are methods of preserving your assets and fulfilling Medicaid requirements.  

Medicaid Planning

Working with an experienced elder law and estate planning attorney will open the doors to protecting your best interests. If you have concerns that your assets will not cover the cost of long-term care, your attorney can assess your unique circumstances and develop a personalized estate plan that addresses those needs. 

Your attorneys can help guide you through Medicaid eligibility requirements and develop practical strategies that enable you to qualify for benefits without exhausting your remaining funds. Offsetting the costs of long-term care may require setting up a trust to shield your assets from consideration during eligibility review. Qualifying for Medicaid will cover the costs of your long-term care and enable you to leave your hard-earned assets to the next generation. 

Start Planning Today

If you haven’t started developing your estate plan, there’s no better time to start than now. No matter the size of your estate or your assets, you have things worth protecting. Planning early and amending as necessary can safeguard your rights and help you retain control even if you’re no longer able to live alone. At the Kentucky Estate Planning Law Center, our legal professionals are passionate about giving you peace of mind by protecting what matters most. Call (270) 982-2883 to schedule a free initial consultation and get your plan started.

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Did the IRS quietly change the rules on your children’s inheritance?

There have been recent news articles about some changes the IRS made concerning inheriting assets from trusts.  According to the article, in March the IRS issued Revenue Ruling 2023-2.  The new Ruling states that property held in an irrevocable trust is not included in the taxable estate at death will no longer receive a step-up in basis.  That ruling is consistent with the existing law.  In short, assets in a trust that are part of your gross estate (like assets in the ipug and revocable trusts my office does for clients) get an adjusted basis upon death.  Assets in trusts that have taken the assets out of the client’s gross estate (like the trust in the subject IRS case) don’t get an adjusted basis.

At our office, Kentucky Estate Planning Law Center, we typically use a specific type of irrevocable trust that does not remove the assets from the client’s gross estate.  Thus, if you have an irrevocable trust that does not remove the asset from your taxable estate then you can rest assured knowing the new IRS ruling does not relate to your type of trust.  There are many benefits to the kind of trust that we use.  The trust protects assets from lawsuits and future creditors like a nursing home and protects the assets you have worked so hard to save for your family.  Another great benefit is that the assets in the trust, such as the home or farm, will still receive the adjusted step-up in basis upon the death of the grantors of the trust.

If you have questions about the new IRS ruling call our office at 270-982-2883 and we will schedule you for a free workshop that covers all of the potential threats to your estate plan, which includes information about the taxes and how they could impact your estate plan.

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Keep Valentine’s Day Romantic With a Nuptial Agreement

Valentine’s day can be a subject of excitement and joy for some couples, and a sore reminder for others. One of the easiest ways to keep things romantic is to eliminate the worry surrounding assets in a marriage is through a prenuptial or postnuptial agreement. You may be wondering: “What’s romantic about a legal document?” We’re here to tell you that it’s not the document; it’s about the piece of mind it can provide.

What are prenuptial and postnuptial marital agreements?

A prenuptial agreement is a legal document that a soon-to-be-married couple files that outlines how they want their assets to be shared or divided during their marriage and after death. The agreement becomes valid and goes into effect as soon as the marriage is completed. 

A postnuptial agreement is essentially the same as a prenuptial agreement, except that it occurs after the marriage has already taken place. It can happen days or even years after the wedding, but usually comes up when a couple understands their individual needs a little better, or when new circumstances arise.

I feel secure in my relationship, do I need a marital agreement?

In Kentucky, just by being married, your spouse is entitled to half of your stuff. There is also a Dower and Courtesy Interest right which means that your spouse has the right to half of your property even if you want to buy it in your own name. These include instances where you are part owner of a business or are in line to inherit assets from your family. A marital agreement can help give stakeholders in your business peace of mind knowing that even if you are getting married, you still respect their investment and initial business agreement. 

A marital agreement can also protect children from a previous marriage. If you have assets that you want to leave for your descendants, a marital agreement can assist in drawing a legal boundary to protect their futures. A marital agreement also cannot be unbalanced one way or the other, so both you and your spouse are guaranteed to benefit in some way. 

Do we need a lawyer to sign a marital agreement?

First and foremost, for any and all legal matters, a lawyer should be involved. In order for the pre or postnuptial agreement to be equitable, certain parameters should be met. Both you and your spouse need to agree that you need a marital agreement. It might be a difficult subject to bring up when you’re excited about an engagement, but you should be able to talk about anything with your spouse-to-be.

When a marital agreement is in the process of being drafted, both spouses are required to disclose all assets and liabilities. This can be a really stressful situation if either spouse is only just now becoming aware of the other’s bad financial situation. A lawyer can use their expertise and experience to advise both you and your spouse on how best to navigate this difficult topic. 

Conclusion

One of the most important requirements for a court to enforce a marital agreement is that the document was made and signed willingly by both parties. If you or your spouse feels as though they are being pressured to sign, then it may not meet the requirement. In these scenarios, sometimes it’s best for you and your spouse to seek separate legal counsel to ensure equal footing. The marital agreement also doesn’t require a court filing, which means that a notary will be present while filing and it’s up to you and your spouse to maintain the document. A lawyer can make sure that the agreement is in compliance with court requirements and help update the documents in the event that your financial situation changes.

If you’re still on the fence, you’re actually not alone. Prenuptial agreements weren’t even legal in Kentucky until 1990 because many people believed that they were made with the assumption the marriage would fail. Now, marital agreements are not only the norm, they’re recommended for couples to create peace of mind and confidence about their financial futures. If you are ready to start working on a marital agreement, contact the Kentucky Estate Planning Law Center for a consultation. 

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Medicaid Planning & Protecting Your Assets

At this time, the average cost of a nursing home in Kentucky is between $70,000-$80,000 a year. The national average for a private room is over $100,000 a year. Typically, the people who require these types of facilities are retired, live on a fixed income, and are not in a position financially to cover the significant costs associated with long-term care. The unfortunate reality is that many families exhaust the entirety of their savings within two years of entering a nursing home. 

Medicaid may appear to be the solution and problem for anyone in this position. It provides the financial assistance you need to pay for the long-term care facility, but you may have too many assets to qualify. From the onset, these same people begin to view the assets that they spent a lifetime accumulating are what is preventing them from getting the assistance they need. Because of the stress and urgency of the situation, they may make very costly mistakes. 

This includes selling their home for less than market value to a friend or relative or simply giving away their assets. In extreme cases, some people may give away everything they own and realize it wasn’t what they needed to do to qualify. When you work with a qualified attorney who understands Medicaid planning, you will discover that you can be eligible and retain your assets. 

Exemptions, Spend Downs, & Transfers 

Before you apply for Medicaid, your attorney will ensure that your assets are either exempt, have been spent, or have been transferred appropriately. For example, Medicaid cannot take your family home if your spouse lives in it. Even if you pass away in the nursing home, your spouse can continue to live in it. The same extends to a car and an IRA. These are examples of exempt assets.

Although Medicaid allows you to “spend down” the money, it must be spent on either the person entering the nursing home or their spouse. Medicaid has a five-year lookback period and can actually penalize you for improperly giving away assets and money during it. An elder law attorney can advise you on how to “spend down” your money correctly and legally. 

If you begin your Medicaid planning early, you and your attorney can discuss the possibility of placing your assets in an irrevocable trust. The downside of these trusts is that once your assets go into the trust, you will be unable to take them out. (Do not confuse these with irrevocable income-only trusts.) The tremendous advantage of an irrevocable trust is that once you fund the trust with a specific asset, that asset is no longer counted as yours. 

Contact the Kentucky Estate Planning Law Center 

Medicaid laws are constantly changing and are complex. The attorneys at the Kentucky Estate Planning Law Center study and follow them, so we will be in the best position to advise how to retain your assets legally and still qualify for Medicaid. Contact us today to schedule your consultation.

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Remarriage Protection in Estate Planning

For those who are divorcees and considering remarriage, estate planning can provide a safe and secure way to protect one another’s assets. By creating a prenuptial agreement alongside other estate planning documents, spouses can also decide how assets should be distributed among both sides of their new family. People who choose to remarry often have significantly more assets than in their first marriage, so the protection of these assets is crucial.

How Does a Prenuptial Agreement Work?

It’s a common misconception that a prenuptial agreement keeps all of the property separated between spouses. While this can be done, it’s not the only thing that an agreement can do for you. Spouses can decide on what should happen to each other’s property upon death, whether or not they have the right to specific pieces of property, and even establish alimony for one another. Postnuptial agreements are also available for couples who have already married and can provide all of the same benefits.

Your estate plan should also be updated to account for a new marriage and prenuptial agreement. While the prenuptial can manage how property is distributed between a married couple, a will or trust can determine how the property that is retained should be distributed to other loved ones. This can be in any manner that you like, including passing down assets to family members of your spouse’s side. 

A common issue in remarried couples without a comprehensive estate plan is that the assets of a deceased spouse are often transferred to their surviving spouse, instead of their children. Without a plan in place, assets will have to go through probate. By default, these assets will likely be transferred to the surviving spouse. By making use of a prenuptial agreement, spouses are able to ensure that some of their assets are set aside for their own children, while still providing their surviving spouse with financial security. An estate plan can also provide the benefit of avoiding probate, which can cause conflict in deciding how assets should be distributed, especially in the case of blended families.

If you’re considering remarriage, or want to start your own estate planning to protect your assets for the future, contact Kentucky Estate Planning Law Center today to get started on a plan that meets your needs.

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How You Can Effectively Protect Your House From Medicaid Estate Recovery

If you or a family member is making use of the Medicaid program, it’s important to keep in mind that states will attempt to recover the costs of that care from the estate of the Medicaid recipient. Unfortunately, in most cases, the only substantial asset remaining at death is the personal home – often leaving families and would-be beneficiaries without the largest item of intergenerational wealth. Those utilizing Medicaid aren’t necessarily stuck in this predicament, however. With some proactive estate planning, you can ensure that your house will remain safe from Medicaid estate recovery.

A Trust Can Provide Protection

The primary method by which we can protect your home is with an irrevocable trust. These trusts can protect your home from estate recovery, liens, and lawsuits by effectively separating it from your own property. After placing an asset, such as your home, into an irrevocable trust, it is essentially separated from your own property. It should be noted, however, that irrevocable trusts are just that – irrevocable.  Even though the trust is irrevocable you can still change your beneficiaries and the trust can also distribute assets out of the trust those persons named as lifetime beneficiaries. There are many different considerations that have to be accounted for in establishing an irrevocable trust, so working closely with an experienced estate planning attorney is always recommended to ensure the viability of your trust.

The Benefits of an Irrevocable Trust

The benefits of an irrevocable trust don’t stop at protection from recovery. Transferring the family home into a trust also protects from a higher tax burden on your beneficiary, as simply giving the house to a beneficiary during their lifetime could result in capital gains taxes if the beneficiary sells the house during their own lifetime.  The trust will also provide a much safer transfer of the home to your beneficiary, without the troubles of using a direct deed. 

The security of your family’s biggest asset shouldn’t be taken lightly. If you’re ready to take the next steps in protecting the family home from Medicaid recovery, contact the Kentucky Estate Planning Law Center today.