2023

Estate Planning New Year’s Resolutions

New Year’s is fast approaching, which means that many of us are reviewing 2022 and deciding what we can do better in 2023. We’re also identifying new goals based on everything that’s happened this year.

Estate planning should be on everyone’s agenda for 2023: either creating a new one or updating the plan you currently have. It’s easy to do with the help of a Kentucky estate planning lawyer, and you set yourself up for success that goes well beyond the accomplishment of keeping a New Year’s resolution.

Create a New Estate Plan

A recent study by Caring.com suggests that while more people in the 18-24 year age group are setting up estate plans since the pandemic, a significant portion of U.S. adults still don’t have a will or estate plan.

Estate planning has many purposes, and each individual’s or family’s goals should be determined by their personal preferences, financial situation, and other factors.Your specific objectives for estate planning in 2023 might be:

  • Lifelong asset protection and management
  • Identifying heirs and providing for loved ones
  • Establishing beneficiaries, executors, trustees, powers of attorney, etc
  • Nomination of guardians for children or dependents
  • Keeping tax burdens to a minimum
  • Making a plan for charitable giving
  • Business succession planning

After you define your specific goals, an estate planning attorney can help you determine the appropriate legal documents, financial instruments, and planning steps for protecting your assets.

Review Your Estate Planning Goals

Even if you already have a plan in place, you can still make estate planning your resolution for the year ahead. Ideally, you should review your estate plan and documents on a regular basis with the help of an estate planning attorney who can advise you of any changes in state and federal law. 

Those who change or update their estate plans sometimes neglect to talk to their families and heirs about them. You can save your family from unexpected surprises after your death by having this conversation sometime in the New Year, so that they know what to expect when the time comes.

Speak With an Estate Planning Attorney Today

People often fail to keep their New Year’s Resolutions because their goals are unclear or they feel overwhelmed or discouraged. Reaching out to a Kentucky estate planning attorney will give you the confidence and information you need to set realistic goals and determine how you will achieve them. 

At Kentucky Estate Planning Law Center, we understand how sensitive and personal estate law can be, which is why we offer personalized estate planning and administration services. Whether you are looking to draft your first will or update a plan you’ve had in place for years, we are here to guide you through the changes you face. To schedule a consultation, call 270-982-2883 today.

Holidays Siblings

Holidays Are For Estate Planning!

The holiday season is when you see family members who don’t live nearby. That’s one of the main reasons why Christmas and New Year’s are such festive times: the extended family either gathers under your roof or comes into the immediate area so you can all catch up and count your blessings together.

It’s also the ideal time to think about putting together an estate plan or revising your existing one. When you’re all together, it’s a lot easier to take note of everyone’s current situation: your children, grandchildren, and others who will benefit from the plans you’re preparing to put in place. In this blog, the team at Kentucky Estate Planning Law Center explains how holiday conversations can help inform your estate planning decisions in the New Year.

Is Anyone Likely to Get Divorced?

Although Kentucky generally excludes inherited assets from property division during a divorce, there are times when separately owned property becomes commingled with the marital estate. For example, if you leave your Florida vacation home to your son and he renovates it using marital funds, any increase in value is subject to division upon divorce.

If you get the impression that your son’s marriage isn’t as harmonious as it used to be, you can put their inheritance in a trust with an independent trustee, such as a dependable family member or even a bank or attorney. As an additional protection, trusts may be drafted in a way that authorizes an independent third party to temporarily remove your son as a trust beneficiary if a divorce is pending.

Is Anyone Having Debt Problems?

Sometimes, even after all the nurturing, love, guidance, and support you can give a child, they still don’t know how to handle money. There are a variety of reasons why your adult child may have financial problems, including not budgeting or overdoing it with credit. Whatever the reason, if your holiday conversations suggest that the problem isn’t improving, you may want to plan more carefully for them.

This is another situation where a trust can be beneficial. Consider setting up a spendthrift trust that can protect your loved one from financial dangers and temptations. With this type of trust, the beneficiary’s access to assets is carefully controlled. Rather than receiving their inheritance all at once, the funds are released incrementally. In addition, since assets belong to the trust, creditors can’t come after them to satisfy your child’s debts.

Divorce and debt issues are only two considerations when you’re creating a new estate plan or updating an old one. Others include a child or grandchild who has been diagnosed with special needs (making a special needs trust advisable), the arrival of a new grandchild, and more. 

Make an Appointment With an Estate Planning Lawyer

Estate planning requires action as well as planning. Once you know what your goals are, it’s time to discuss them with an estate planning lawyer. At Kentucky Estate Planning Law Center, our goal is to help you prepare for the future your loved ones deserve. Whether you need a brand new plan or want to update an existing one, we’re here to help. To schedule a consultation, call 270-982-2883 today.

Holidays

End-of-Year Estate Planning Goals

While it’s impossible to predict the future, one thing is for certain. If we don’t plan for it, life can be difficult for our loved ones when we pass. This is why creating an estate plan is something we should do sooner rather than later.

Many people hold off on estate planning because they believe they don’t have a big enough estate or are simply too young to worry about things like wills and retirement. The truth is that everyone should have a plan, regardless of age or net worth. Conversely, other people create an estate plan, but fail to update it even after their life circumstances change. This results in a plan that does not reflect their new or changed wishes and relationships.

Below are some reasons why you should put together an estate plan or revise your existing one before 2023 rolls in!

You Got Married or Divorced

A spouse’s presence or absence could have a profound impact on how your assets are distributed after your death. If you get married, it’s likely you’ll want your spouse to inherit your estate, or if it’s a second marriage, you may want your children from a previous marriage to inherit your estate as well. When you get divorced, you will usually want to remove your former spouse from your estate plan as well as from your retirement assets, pensions, and insurance policies.

You Welcomed Children into Your Family

There are many ways that you can welcome children into your family, and you’ll want to ensure that their future is protected. While birth and adopted children are heirs at law, foster or stepchildren must be named in your estate plan to be beneficiaries. If you have a child with special needs, they should be provided for differently in your estate plan, especially if their condition is a lifelong one. Review your trust, will, and other documents to ensure that your children are cared for appropriately, especially if you pass while they are still minors.

You Bought or Sold Property

Your estate’s value can be dramatically affected by the purchase or sale of real estate. Establishing a revocable living trust after purchasing real estate can help you avoid probate. Living trusts allow your property to pass directly to your beneficiaries after your death and to be divided proportionally, taking into account any outstanding mortgages or equity lines of credit. 

You Started or Sold a Business

Business succession planning specifies who will take over the management or ownership of your business after you retire or pass away. If you want to avoid confusion when your business leadership changes, you may need to update or establish your estate plan to include a business succession plan.

You Were Diagnosed With a Medical Condition

You should review your estate planning needs immediately following a serious medical diagnosis or sudden accident. Perhaps you should change your designations for who will handle your health care and financial decisions in the event you become incapacitated. Ensure that your current wishes are reflected in your estate plan, that you have completed all the documents you need and have them on file with all the medical and financial institutions who will need them if you become incapacitated.

Speak With an Estate Planning Attorney Today

With estate planning, sooner is better than later. At Kentucky Estate Planning Law Center, we will sit down with you, discuss your current family and financial situation, and help you create a plan that gives your loved ones security and you peace of mind. As your life changes, we will also update your plan to reflect those changes. To schedule a consultation, call 270-982-2883 today.

Revocable Trust

Revocable Trusts: Easiest Way to Not Pay Twice!

When you’re looking to reduce your probate tax and preserve as much of your estate as possible for your beneficiaries, a revocable trust can help you achieve both goals. Unlike their irrevocable counterpart, revocable trusts can be amended or revoked at any time and without anyone’s permission. You retain control of all trust assets for as long as you are competent and, after you pass, they can be distributed to beneficiaries according to the terms of the trust document.

Benefits of a revocable trust include: 

  • Avoid probate. A revocable trust permits assets to pass to heirs without going through probate, which can be costly and time-consuming. In most cases, a successor trustee takes over without court oversight.
  • Avoid ancillary probate. In the case of out-of-state property, shifting it into a revocable trust and registering the deed to the trust can avoid certain probate issues.
  • Protection in the event of incapacitation. If a grantor becomes incapacitated, a successor trustee can take over, and that trustee has a fiduciary responsibility to manage trust assets.

Another advantage that is often overlooked is the ability to avoid double taxation. More on that below.

Avoid Double Taxation

From an income tax perspective, revocable trusts are the simplest trust arrangement. Trust income is taxable during the lifetime of the creator, who retains full control over the trust’s terms and its assets. Taxpayer identification numbers of trusts will typically be the same as the creator’s Social Security numbers during their lifetime. The trust itself will not file a tax return, and all income, deductions, and credits will be reported on the creator’s personal income tax return. In other words, a revocable trust is technically invisible to the IRS and Kentucky state taxing authorities. 

Pay Close Attention to Trust Funding

Although revocable trusts can help you avoid double taxation, extra costs can arise if you don’t transfer all assets that may be subject to probate after you pass. If this happens, all property outside the trust becomes subject to probate. Your estate ends up in probate court and you technically pay twice: first, to set up the revocable living trust to avoid probate; and second, to have non-trust assets probated after your death. Being aware of this potential outcome can help you plan accordingly.

Questions About Revocable Trusts? Speak to a Kentucky Estate Planning Lawyer

While this guide is an excellent starting point for understanding revocable trusts, it doesn’t cover all of the details of setting one up, transferring assets, and managing it. An experienced estate planning attorney can help you understand the advantages (and disadvantages) of revocable trusts as estate planning vehicles, so you can make an informed decision. To schedule a no-obligation consultation, contact Kentucky Estate Planning Law Center today.

Probate

Your Guide to Administration of a Probate Estate

If your loved one died with an estate, and you were designated as the administer of that estate while it goes through probate, it is important to understand your legal rights and responsibilities. Probate is the process of settling an estate by distributing the assets to the beneficiaries according to the will. Although both processes can be overwhelming at first, with a little assistance, it becomes manageable. To help you navigate the probate and trust administration process, we have provided an overview of some of the most common tasks involved as well as tips for getting through the process as smoothly as possible.

How to Probate an Estate

The first step in administering an estate is to file a petition for probate with the local probate court. The court will notify any creditors with an interest in the estate. Creditors have six months from the time of notification to file claims seeking payment from the decedent’s estate. During this time, you should ensure that any outstanding bills are paid and that the estate has adequate funds to pay the claims after the claim period expires. Once the probate petition has been filed, the court will appoint an administrator for the estate who will be responsible for managing and distributing the assets of the estate to the beneficiaries according to the terms of the will. The administrator will also have the responsibility of notifying the beneficiaries of the decedent’s death and preparing any necessary tax forms.

Managing the Estate After the Creditors’ Claim Period Expires

Once the creditors’ claim period has expired, the administrator will be responsible for closing out the decedent’s accounts and paying any remaining debts associated with the estate. If the estate has no outstanding debts at the time of the decedent’s death, nothing will need to be paid and those assets can be distributed to the beneficiaries according to the terms of the will. The administrator is also responsible for making arrangements for the transfer of assets. Typically, this will involve placing real estate in the name of the heirs and selling any other major assets if necessary. Some assets may need to be sold for the benefit of the estate in order to cover expenses such as taxes and debts. The administrator will need to notify all interested parties before a property is sold in order to ensure that their interests are protected. After the property is sold, the proceeds will be deposited into an estate account and all expenses incurred during the administration of the estate will be deducted from the account before they are distributed to the beneficiary(ies). When the assets are to be distributed, the administrator will prepare a final report listing all of the assets that were transferred and the costs associated with the administration of the estate. This report will be presented to the court for approval before it is presented to the beneficiaries for their review.

While this guide is a great start to the probate process, it doesn’t cover all of the ins and outs of the probate process. In order to ensure that you are fully prepared for your role as an executor or administrator, it is highly recommended that you consult with an experienced estate planning attorney prior to starting the process. Kentucky Estate Planning Law Center is here to help make probate simple – contact us today for assistance in your own probate process.

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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.

Fiance 8

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.

Home 8

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.

Estate Planning 9

What’s the Big Deal With Going Through Probate Court?

If you’ve taken a look around a few estate planning websites, you’ve likely heard claims of how detrimental or painstaking probate court is. In fact, one of the most common reasons for creating an estate plan is to avoid probate. Very few of those websites, however, take the time to explain exactly why probate should be avoided and how to ensure that your estate stays out of probate. That’s something we’re seeking to remedy today by clearing up some misconceptions about avoiding probate and detailing the benefits of doing so.

Why Should I Avoid Probate?

To start, the probate process usually consists of verifying the decedent’s will, appointing an executor to the will, and then following the process of determining which assets should be distributed to the beneficiaries after paying the decedent’s debts. Depending on the size of the estate, this process could take a lengthy period of time. With more time and complexity comes more expenses in handling the probate of the estate, and this reason alone is enough to convince most to do their best to avoid probate. 

Keeping an estate out of probate also means that your assets will not become part of the public record. This may or may not be a significant selling point for you, but to some with large estates, keeping the details of their assets away from the public eye is essential – leading them to undergo the effort of ensuring that their estate will not need to go through probate.

Avoiding Probate Can Be Difficult

How difficult it is for you to avoid probate depends heavily on the size and complexity of your estate, but for some, will be automatic. If the total value of an estate in Kentucky is less than $30,000, it will not enter into probate and instead will enter into an expedited process. For those who want to avoid probate entirely, a trust is often used to transfer assets out of the control of the owner, and into the control of the trust. Legally, the individual no longer owns those items, and so they won’t be included in the value of their estate.

Some items are considered non-probate property, and also won’t be included in the valuation of the estate. This mainly includes jointly-owned property which is passed onto a partner automatically upon the death of the other, such as shared houses or bank accounts. In order to avoid probate, every asset which is considered probate property is transferred into a trust, effectively leaving no items (or less than the minimum required for probate) to be distributed in your will. 

With this process, avoiding probate is possible; however, it can become difficult for some to stay on top of transferring every necessary asset into the trust. This method poses a significant risk, as the costs of upkeeping a trust could be for naught if not kept up to date. If enough property is left out of the trust, the estate will be forced into probate regardless, which means that we’ve effectively cost ourselves more money by paying both to upkeep the trust and for the probate process. 

If you’re seeking to avoid probate, you’ll need the most experienced estate planning attorneys around. Look no further than Kentucky Estate Planning Law Center. Our team approach means that we’re able to create a comprehensive plan that will work for you, and we offer ongoing updates to your estate documents, ensuring that your plan is never out of date. To get started with your own estate plan, contact us today

 

Power of attorney

Creating Effective Power of Attorney Documents

It’s an unfortunate reality that injuries and illnesses often come unexpectedly. When they do, power of attorney documents are useful tools to ensure that your wishes are followed, even if you’re unable to make those decisions yourself – but these documents can only be as effective as they’re written. As such, it’s important to work with an experienced attorney who knows these common pitfalls, and how to avoid them.

Planning is Primary

Your primary power of attorney, also known as your agent, will be the first to act on your behalf in the case that it is needed, and a successor agent may also be named to ensure that you always have an agent available. If the person elected in your primary (the “agent”) becomes sick, unable, or unwilling to fulfill their duties, your primary power of attorney will not be able to act on your behalf. Only the person named has the authority to act on it, and if they’re unable to do so, the privileges provided by the power of attorney document cannot be transferred to anyone else unless that person is named as a successor agent in the Power of Attorney

The person nominated should also sign the document. This way, we have a written acknowledgment of their duties and what your power of attorney entails, which holds them to the execution as it’s defined in the document. This is just another step in ensuring that your wishes are followed, and one which is often missed by estate planning attorneys, sometimes resulting in issues known as “trustee malfeasance”. 

Planning for Contingencies

Often, the deciding factor between an effective power of attorney document and one which is useless to your situation comes down to proper planning. For instance, Kentucky recently implemented new laws restricting how an agent may make gifts on behalf of the principal (the original owner of the estate). These restrictions prevent an agent from making any gifts from the assets of the principal without explicit permission to do so, and with the specificity of which assets they’re allowed to gift. This may cause problems in cases where distributions from the estate are necessary to pay for bills or to support the principal’s family while they’re incapacitated. Without an experienced estate planning attorney, these details could easily be missed.

We frequently see cases with issues stemming from a lack of proper power of attorney documents. These are just some of the many problems that stem from poor estate planning, all of which are avoidable with the expertise of the Kentucky Estate Planning Law Center. Contact us today to see what we can do for you.