Estate Planning and Tax Lawyer Blog

it is really just a bucket on paper. A trust is an agreement between the Trustee and the Trustmaker (also called a Settlor or Grantor) whereby the Trustee holds title to the assets for the benefit of the Trustmaker and other named beneficiaries.

A trust is a very flexible document whereby you can control your assets while alive but also control how they are spent after your death. It really is just a bucket though that you carry along while you are alive and if you need an asset, you take whatever you need out of the bucket and as you obtain or purchase an asset, you put it into the bucket. If you become ill, you just hand the bucket off to someone else to take care of he assets. It really is that simple.

Continue reading " What a living trust really is... " »

Your financial plan for the first 15 years of retirement may no longer be right for the next 15 years of retirement. Everyone should check their finances every year, especially those who are in retirement. Around the midpoint of retirement, it is very important to review your long-term history of saving and spending, determining if any big changes should be made before it gets harder to correct. A big surprise for many is that life expectancy may be longer than expected when planning and saving for retirement. If the numbers seem to come up short, then it is time to review if your investments are too conservative. It may be wise to become more aggressive with savings to help stretch retirement savings additional years. A growth component is a part that is wise to include in retirement savings. Speaking with a financial adviser could be helpful to determine what needs to be done for your retirement savings. Do not delay having a hard look at your finances.

To read more on this article, visit Get a Mid-Retirement Checkup .

To learn more about this article, visit Small Business and the Tax Gap .

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It is very important to take a broad perspective to investment and financial planning for individuals with a chronic illness. In reviewing any financial accounts, be sure to pay special attention to the title to the account. Is it owned individually, jointly or by a trust. Each type of ownership has very different results upon the disability and death of one of the owners. For any asset that has a beneficiary designation to it, ensure that the beneficiary is correctly named now. If the owner passes away with an improper beneficiary designation, there is not much that can be done to correct it upon the owner's death.

When looking at account management, does the owner need to have a lot of the bill paying automated or are they capable of taking care of it themselves. Remember, taking too much independence away from someone with a chronic illness could have adverse effects. As a client stated the other day in a meeting with their children..."I'm not dieing tomorrow".

Finally, pay attention to the family member's budget. A budget should be set up now and take into account future expenditures in order to properly save for those expenditures should they not be covered by insurance.

These are just a few aspects of financial planning that should be reviewed and addressed in properly planning for someone with a chronic illness. Although time may not be of the essence now, do not wait until it is.

Continue reading " Financial Planning for a Family Member with a Chronic Illness " »

Today, I will discuss the receipt of insurance payments by someone who is suffering from a chronic illness and whether or not they are subject to the income tax. Payments received under a disability insurance policy are income tax free if the policy premiums were paid by the insured personally and not paid by their employer. Further, long term care insurance payments are generally tax free as well except for policies that have dividends that are paid. The dividends portion is taxable.

Finally, the proceeds from life insurance are income tax free. However, newer policies allow you to borrow against the death benefit prior to death. The amount borrowed is generally income tax free if the client is terminally or chronically ill. However, the definition of "chronically ill" is defined under the IRS rules as: 1) being unable to perform (without substantial help) at least 2 activities of daily living (eating, going to the bathroom, bathing, dressing, etc) for a period of 90 days or more due to loss of functional capacity or 2) requiring substantial supervision to protect from threats to health and safety due to severe cognitive impairment. If you do not fit within the IRS's definition of chronically ill, the borrowed proceeds may be income taxable.

Continue reading " Planning for a Family Member with a Chronic Illness: Insurance Payments " »

As promised, I am going to be doing a series of blogs on planning for clients with a chronic illness. A lot of the information I am using and have received is from a seminar given by Martin Shenkmen, a New Jersey attorney, who is touring the U.S. giving presentations about caring and planning for clients with chronic illnesses. More information can be found at www.RV4TheCause.org.

Currently, over 120 million Americans are living with some sort of illness or disability. 96% of those affected show no signs that they have a chronic illness. Most attorneys instantly think of creating a special needs trust for a client who has a chronic illness. A special needs trust is appropriate for clients whose illness has progressed enough to limit their mobility and who are on some sort of government benefits. A special needs trust is not appropriate for someone who is newly diagnosed and shows no real signs of being affected by a chronic illness.

For the initial meeting with a client, make sure you keep in mind the clients needs. For instance, if they are diabetic, make sure you have food and/or juice available just in case their blood sugar levels would go low during the meeting. You may need to plan frequent breaks for those clients who are not able to concentrate for long periods of time. Also, make sure that a friend or family member accompanies the client so that there are others present to go over what was said in the meeting should the client forget. I always take a lot of notes and write down everything and give it to the client so they have my notes as well from the meeting.

Continue reading " Planning for a Family Member with a Chronic Illness Cont. " »