Passing assets through a generation-skipping trust

Passing assets to your grandchildren can be a great way to ensure their future is provided for, and a generation-skipping trust can help you accomplish this goal while reducing estate taxes and also providing for your children. A generation-skipping trust allows you to “skip” over the generation directly below you and pass your assets to the succeeding generation. While this type of trust is most commonly used for family members, you can designate anyone who is at least 37.5 years younger than you as the beneficiary (except a spouse or ex-spouse). One purpose of a generation-skipping trust is to minimize…..

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What you can’t do with a will

While a will is one of the most important estate planning documents you can have, there are things that it won’t cover. It’s just one part of a comprehensive estate plan. A will is a legally-binding statement directing who will receive your property at your death. It is also the way that you appoint a legal representative to carry out your bequests and name a guardian for your children. Without a will, your estate is distributed according to state law, rather than your wishes. Property distributed via a will goes through probate, which is the formal process through which a court…..

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Washington first state with public long-term care

Earlier this year, Washington State’s Long Term Care Trust Act went into effect, creating the nation’s first publicly funded long term care benefit. Washington lawmakers developed the LTC Trust Act in order to protect their state budget from the exorbitant costs of Medicaid-covered long-term care. The trust will be funded by a mandatory 0.58% payroll tax on all W2 wage earners. The Washington trust has a lifetime benefit maximum (annually adjusted) designed to cover approximately one year of long-term care. Washington residents who had previously purchased LTC insurance had the option to opt out. However, short notice of the deadline…..

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How to protect your child’s inheritance from their spouse

One concern we hear in the estate planning process is how to protect an adult child’s inheritance from their spouse. Sometimes this stems from a place of animosity or concern over a child’s problem partner. Some people are concerned about divorce-proofing the assets they’ll leave behind for their kids. Still others simply believe that inheritances are best kept in the “family.” Naming your child alone as inheritor. The most basic option you have is to leave your inheritance to just one spouse. Even if your child lives in a community property state, an inheritance would be considered individual property. However,…..

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Making it easier for loved ones to settle your estate

For many people, estate planning is about more than transferring assets after you’re gone. It can be about making life easier on your survivors and smoothing the way for your loved ones at what is sure to be a difficult time. If that’s one of the “gifts” you’d like to leave behind, consider taking the following steps. Work with an attorney: Consult an attorney who will help you prepare a correctly executed will and/or living trust. Depending on your situation, some people choose a living trust as a beneficial way for their heirs to avoid the probate process. With a…..

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Using intrafamily loans in your estate plan

Interest rates are still at historic lows, despite an expected Federal Reserve rate hike. At times like these, families have a unique opportunity to transfer wealth via an intrafamily loan. An intrafamily loan is a way for family members to loan money to each other at a special rate. They might be used to help a relative buy a house or finance a startup, for example. But for some families, they’re a tool to transfer assets outside the lifetime gift tax exemption. When making an intrafamily loan, interest rates are typically lower than those from commercial lenders. However, the IRS…..

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How you can end up in Medicare’s ‘doughnut hole’

Medicare prescription drug (Part D) plans can have a coverage gap — called the “doughnut hole”— which limits how much Medicare will pay for your drugs until you pay a certain amount out of pocket. Although the gap has gotten much smaller since Medicare Part D was introduced in 2006, there still may be a difference in what you pay during your initial coverage compared to what you might pay while caught in the coverage gap. When you first sign up for a Medicare prescription drug plan, you will have to pay a deductible, which can’t be more than $445 (in…..

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Social Security benefits for spouses and ex-spouses

A little-known feature of the Social Security system is that in addition to paying benefits for a retired worker, it may provide benefits to the worker’s spouse, an ex-spouse if the marriage lasted at least 10 years, and dependent children and grandchildren, depending on the circumstances. Here is a general description of the benefits for spouses and ex-spouses. Your spouse is entitled to an amount equal to one-half of your full primary insurance amount (PIA). In order to receive this benefit, your spouse must be at least 62 years of age or caring for your child, who is entitled to…..

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The dangers of using an online power of attorney form

A recent Pennsylvania case involving a power of attorney demonstrates the problem with using online estate planning forms instead of hiring an attorney who can make sure your documents are tailored to your needs. Mercedes Goosley owned a home in Pennsylvania. In 2013, she named one of her six children, Joseph, as her agent under a power of attorney using a boilerplate form that Joseph downloaded from the internet. Unbeknownst to Joseph, the power of attorney required Mercedes to be declared incompetent for Joseph to act as her agent. Powers of attorney can be either “immediate” or “springing.” An immediate…..

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Using trusts in Medicaid planning

With careful planning, you may be able to preserve some of your estate for your children or other heirs while meeting Medicaid’s low asset limit. The problem with transferring assets is that you have given them away. You no longer control them, and even a trusted child or other relative may lose them. A safer approach is to put them in an irrevocable trust. A trust is a legal entity under which one person — the “trustee” — holds legal title to property for the benefit of others — the “beneficiaries.” The trustee must follow the rules provided in the trust instrument. Whether…..

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