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What are the most essential estate planning documents I need?

While a complete estate plan is recommended, we highly encourage all our clients to have, at least, a General Durable Power of Attorney, a Health Care Power of Attorney, HIPAA Medical Release, Living Will, and a Last Will and Testament. These documents designate who will have the ability to handle your finances and make health care decisions for you when you are unable. A Living Will is also essential as it specifically states your preferences when it comes to extraordinary life-sustaining means, such as artificial nutrition. Finally, a Last Will and Testament is important so your legacy can pass to whom you wish.

Why won’t the power of attorney I have work?

Some powers of attorney are limited in scope on what you may do for your loved one who is incapacitated. We provide our clients with a broad power of attorney that specifies everything that can be done, so the third party does not have any doubts that the power of attorney has the definitive authority to do for your loved one what they would, but can no longer do, for themselves.

I have a will. Why do I need a trust?

While it is true that a will allows you to designate who receives what assets at your passing, a trust gives you more control in the manner in which your assets are distributed, protects your assets from creditors once it is passed to your loved ones, and avoids the overwhelming process and fees of probate for those you leave behind.

How much does a will or trust cost?

It depends on your situation. We don’t “rubber stamp” our services since each client and their situation is unique. Every estate plan we do is customized to each client’s individual, familial, and financial needs.

I have a disabled child. What can I do to provide for his/her future?

Providing for a child or loved one who is disabled once your gone is essential to giving you peace of mind. In order to accomplish this, our firm sets up a special needs trust that will allow your loved one to be provided for, while not disqualifying them from government assistance, if need be. Another benefit of this is that you will be able to choose who will oversee your loved one’s trust when you are no longer able.

My loved one just died and I was told I have to go through probate. What is that?

Probate is the process of presenting a deceased person’s assets to the state in which they reside or own property. In general, this involves collecting all of the decedent’s assets, liquidating those assets to pay liabilities/ debts, paying applicable taxes, and distributing property to heirs. This does not include miscellaneous costs, such as attorney’s fees, and all the valuable time your loved ones will spend organizing and gathering documents to work through this process. This must be done whether there is a valid will or not. A properly funded trust avoids probate.

Will the State take my home if I end up in a nursing home?

When applying for Medicaid the state has you sign a document that allows it to make a claim against your estate to recover payments made by Medicaid during your life time. For most people, this amount will only be covered by the value of their home. This will cause the home to be sold to pay the state of North Carolina back for what Medicaid has paid for the nursing home and medical expenses. However, we offer our clients multiple solutions to this problematic outcome, so their legacy will pass intact to their loved ones.

Long-term insurance is so expensive, how can I afford it?

On August 17, 2006 the President signed into law the Pension Protection Act (the “Act”). The Act allows the cash value of an annuity and/or other “pots” of money, such as an IRA to be transferred into a larger pool of money to use for long-term care insurance. Individuals owning annuity contracts can now have long-term care riders with special tax advantages, as the Act allows contracts without long-term care riders to be exchanged for contracts with a rider in a tax free transfer under Section 1035 of the Internal Revenue Code of 1986. This provision may prove beneficial to individuals who own annuities with a large cost basis who are not in the best of health.

What about the conversion of life insurance policies into long term care policies?

If the client is unable or unwilling to pay the premiums, they may be able to convert it into long term benefit to use the funds tax-free to pay for home care, assisted living, memory care, nursing home care, or hospice.

I have a sizable net worth in my IRAs, is there anything I can do with them now?

Yes, you can take a portion of your IRA and under the Pension Protection Act, do a trustee-to-trustee transfer to an IRA-based, long-term care policy. This will provide a monthly benefit should you ever need home healthcare, assisted living, adult day care, or skilled nursing care. In addition, if the money is not used it will create a tax free death benefit payable to your loved ones.

I’ve heard I can give away $14,000 a year, is this true?

Yes, the Federal Gift Tax allows you to give away $14,000 per year without gift tax consequences. However, those gifts, no matter the amount, could result in months or years of ineligibility for Medicaid. If a gift has already been made, and you or a loved one are applying for Medicaid, our office can help you avoid the penalties and assist you in getting qualified.