Call us today   (614) 798-9800
- AlerStallings

Receiving an unexpected prognosis happens differently for everyone, but the earth-shattering effects are heartbreaking no matter what. In our practice, we’ve helped many families through these difficult situations. We know that in the wake of receiving the news, it can be hard just to put one foot in front of the other. That’s why we want to share our recommendations for what to do next:



1. Ensure Safety


First and foremost, it’s important that your loved one and those surrounding them are safe. Everything else can wait until you’re confident your loved one isn’t going to be at risk in their daily activities and has the right team in place to support them. That can mean:


– Eliminating trip hazards in and around the home

– Securing the level of support their condition requires, such as in-home or 24-hour care



2. Evaluate Legal Documentation


Once your loved one’s physical safety is secured, it’s time to locate and review their estate plan. You’ll want to understand what documents are in their plan, such as wills, trusts and powers of attorney. Knowing where those documents are will ensure they’re accessible when needed. It also enables you to engage an elder law attorney to update the plan if necessary so your loved one has all the appropriate legal tools in place to protect them. This is a crucial step, as out-of-date or inadequate estate planning could potentially leave your loved one’s finances and final wishes in peril.



3. Achieve Financial Awareness


Speaking of finances, your next step is to understand where your loved one’s accounts are located and who currently has access to them. If your loved one’s significant other relies on the funds in these accounts for financial support, you’ll want to make sure their access is maintained. This will be an important step if your loved one gave someone power of attorney to handle their financial matters.



4. Secure Care


In the first step, the focus was securing your loved one’s safety immediately. Now, it’s time to consider what level of care they’ll need long-term. Navigating the different types of specialists and facilities can be confusing, but your loved one’s physician will likely provide some guidance on options suited for the type of care your loved one will need. In most cases, choosing the exact provider or facility isn’t something the physician can do for you, but that’s why you’re addressing this step now. Doing so gives you more time to do your due diligence and ask the right questions so you feel confident in your decision.



5. Create a Protection Plan


With your loved one’s physical well-being addressed, it’s time to ensure the well-being of their assets. The cost of care—both short-term and long-term—can quickly erode their savings without proper planning. Those who don’t take action may even be at risk of losing their home. Thankfully, there are legal tools that can guard against this, such as an asset protection trust. Assets put in an asset protection trust, including investments and your loved one’s home, are shielded from the cost of care so long as they’ve been in trust for at least five years, which is the Medicaid lookback period. But even if this isn’t an option for your loved one, an elder law attorney can provide other options to minimize their financial risk without compromising the care they need.


Finally, it’s important to know you’re not alone in this difficult time. Our caring attorneys are here for you to provide a listening ear, guidance and comfort in the way forward. As hard as it may be to know what to do next, just by virtue of seeking out this information you’re already well on your way to doing right by your loved one.


- AlerStallings

Spring is here and when it comes to a deep clean, ‘tis the season to leave no stone unturned. Every dust bunny and bit of unnecessary clutter is quaking in its boots. But before you toss that dust cloth in the wash, you might want to give your estate planning binder a quick once over, too.


Proponents of spring cleaning will tell you the practice has a host of benefits, like reducing anxiety, improving focus, and making you happier. In our experience, updating your estate plan has the same effect, too. So why not multiply the “everything in order” good vibes by making your estate plan part of the ritual? Here’s how.


First the Basic


It might seem obvious, but you should first check that the following information is still correct. You’d be surprised how often it’s overlooked:


 –  Has your will been updated in the last 5 years?


–  Do you need to update your address?


–  Have you experienced any changes in your family situation, such a marriage, divorce, birth or death?


–  Are the listed beneficiaries still consistent with your wishes and current circumstances? (This is particularly important if you answered “yes” to the prior question about changes in your family situation.)


–  The same question also applies to your executor, guardian, or trustee, or agent. Have there been any changes that could impact their ability to serve in the role?


Now for the Deep Cleaning


Easy enough, right? You’re on the home stretch. As you start to leaf through the remainder of your estate plan, ask yourself the following:


–  Have your assets changed– such as a new home or business?


–  Are any applicable financial accounts correctly titled in the name of your trust?


–  Do the beneficiary designations on your assets still match those on your estate plan?


–  Do you need to add or update instructions for the care of your pet(s)?-


–  Are you considering making a large financial gift to charity or another individual this year that could have consequences for your estate plan or tax planning?


Next Steps


Let’s say you’ve found some areas that need to be updated or may require attention later this year (for instance, if you know you’ll be planning to move). What should you do next? That’s the easy part. Get in touch with your estate planning attorney to make them aware of the necessary changes. They’ll take it from there. If your estate plan was created by our team, we offer free lifetime support for your documents and annual check-ins, so you never have to hesitate to give us a call.


Once you have your updated estate plan in hand, it’s time for the final step: shredding the outdated documents. Not only is this important for protecting your privacy, but also to avoid any confusion for your loved ones down the line.


That’s all there is to it! Congratulations on completing your spring cleaning. Now go enjoy your thoroughly clean home!

- AlerStallings

If you follow our blog, you understand why you need an estate plan and how it can provide peace of mind for your loved ones when you’re gone. But what about your own peace of mind? How can you be sure your assets are protected against threats to your estate while you’re alive? That’s where asset protection attorneys come in.


Estate Planning vs. Asset Protection

In estate planning, we’re focused on creating wills, trusts, powers of attorney, and other documents associated with end-of-life planning. These legal documents outline who has legal authority to make decisions on your behalf in the event you become incapacitated, what should happen to your assets and property upon death, and who should be the executor of your estate. These documents are all important, but they don’t address how to protect your assets during your lifetime. For that, you’ll need an asset protection attorney.


An asset protection attorney looks at areas where you may be exposed to liability and utilizes legal tools to protect you. When people think of liability, property damage and personal injury are what usually comes to mind. Certainly, you need to be protected against these, but there’s also a major liability many retirees don’t plan for: long-term care.


The Risk of Long-Term Care

As we mentioned in a previous blog post, out-of-pocket medical expenses incurred in the five years prior to death leave one in four seniors bankrupt. That includes long-term care costs. Despite the risk, many retirees remain unprotected.


That’s why you need an asset protection attorney. Like estate planning attorneys, asset protection attorneys utilize trusts, but they use them to shield your assets from creditors, including nursing homes.


Why is this so important?  Because we simply don’t know what the future holds. We don’t know whether you’ll need long-term care, or for how long. Without an asset protection trust, if your long-term care costs exceed your assets, you could lose your home. For many families that’s a devastating possibility.


The Importance of Planning Ahead

An asset protection trust could prevent this situation, but it requires forethought. That’s why talking with an asset protection attorney early on is so important. Asset protection trusts require assets to be held in trust for at least five years to be fully protected. Other options are available if you’re in a situation where your assets are currently at risk. But if you have the luxury of time, being proactive is the best approach.


At AlerStallings, we understand that estate planning and asset protection shouldn’t exist in silos; they go hand in hand. That’s why we take an integrated approach that makes it easier for you and your family to get the protection you need with just one call. Schedule a 15-minute, no-cost, no-obligation consultation with one of our attorneys to learn more.

- AlerStallings

As estate planning and elder care law attorneys, we’ve dealt with a lot of situations—from common ones many of us will experience to more unusual ones. They all have common threads, specifically, key takeaways that could help other clients avoid sticky situations down the line. Here’s how to avoid 10 of the most common estate planning mistakes: 


1. Sending Your Kid to College Without a Healthcare Power of Attorney 

Twin XL sheets? Check. Bin full of snacks? Check. Healthcare Power of Attorney… wait, what? You won’t find it on any college packing list, but it should be. Many students will be living away from home for the first time—whether that’s across town or across the country. In the event of an emergency, your student—who is now over the age of 18—will no longer be treated as a minor. That means you won’t be able to make decisions for them in the event they’re incapacitated. Putting in place a Healthcare Power of Attorney will provide a safety net. 


2. Creating Estate Planning Documents Online 

Millions of others have done it, so what could go wrong? A lot, actually. Algorithms can only do so much. You can still end up using the wrong form or editing the document’s language in a way that contradicts other portions of your estate plan. Plus, should you need representation down the line, you won’t have a relationship with an attorney who can help. Bottom line: think twice before using websites that rhyme with Seagull Doom. 


3. DIY-ing the Population & Execution of Your Estate Planning Documents 

Like #2, we don’t recommend DIY-ing your estate planning offline either. Creating documents really ought to be done by an attorney. And, in order for your documents to be properly executed, you’ll need to have witnesses. There are requirements for who can and can’t serve as a witness and they vary by jurisdiction. An attorney can make sure it’s done correctly.


4. Over-reliance on a Will 

A will alone will not help you avoid probate, nor can it implement a schedule for the distribution of your assets or help you reduce your tax burden. It’s a common misconception that a will is all you need, when in fact, wills have a number of limitations. In many situations, additional estate planning is required to ensure your wishes are carried out as desired. 


5. Working with a Firm That Doesn’t Support What They Create 

Many law firms will sell you the documents you need, but not provide the support necessary to ensure those documents work the way they should. For example, a firm might help you create a trust, but leave you to figure out how to adequately put your assets in it. Or, if you buy assets after the trust is put together, there’s no one you can rely on to help you add them. That’s why we provide no-fee phone calls and lifetime support for the plans we create.  


6. Not Updating Your Estate Plan When Someone Passes Away 

Understandably, updating an estate plan isn’t always on your mind following the loss of someone you love. But unfortunately, having an outdated estate plan only causes more heartache, especially if your beneficiaries, powers of attorney, schedule of assets and other critical documents are no longer correct. Even if you haven’t experienced a loss, it’s still important to revisit your plan at least every five years, because laws and procedures change.  


7. Ignoring the Risk of Long-Term Care Costs 

Most plans don’t address long-term care, which is coincidentally the largest risk to your estate. In fact, 70% of people over the age of 65 will need long-term care. Having a plan for how you’ll address those costs can ensure that a surviving spouse isn’t impoverished or at risk of losing the family home. 


8. Using an Estate Planning Attorney Instead of an Elder Law Attorney 

Estate planning attorneys address what happens after you die. But what about when you’re alive? That’s where an elder law attorney comes in handy. Elder law attorneys can address both scenarios and that’s important as you age. They can help with key issues in retirement, like protecting your assets and helping you access benefits you may be entitled to—like VA benefits or Medicaid. 


9. Not Considering the Age of Your Attorney (in Relation to Your Own Age) 

Simply put, you need an attorney who will be alive when you die. Hiring someone older than you could mean they retire or hand off their practice just when you need them most, leaving you in a lurch if you don’t have a relationship with their replacement.  


10. Creating a Life Estate 

A life estate gives you use of your property during your lifetime, then transfers ownership upon your death to the heir you’ve designated. Some people choose a life estate because it helps them avoid probate. However, life estates have serious drawbacks, like relinquishing your ability to make major decisions regarding your home. Additionally, they lack the tax advantages some of the alternative options offer. Many people don’t realize the government will want its cut in taxes before the property transfers.  


What’s the best way to avoid these mistakes? Working with a trusted attorney who will be there to support you through every season of life. Learn more about how we serve our clients with heart, or get in touch to set up a complimentary phone consultation with one of our caring attorneys. 

- AlerStallings

The adage, “where there’s a will, there’s a way” holds true for many things. But when we’re talking about a will in the sense of a legal document, it has its limitations. So how do you know if a will is sufficient for your estate planning needs? Ask yourself these questions: 


1. Do you need to designate who would care for minor children? 

You can use a will to designate who would care for a minor child in the event of your passing. You can even designate a separate person to manage their financial care. For this purpose, a will is enough. However, if you want to specify how the child should be raised—such as preferences for religion or education—you’ll need a trust.  


2. Do you wish to specify distribution schedules? 

A will can specify who will receive your assets when you pass away, but it won’t control the timing and cadence of distributions, or how the inheritance is handled. If that’s not a concern, a will could be fine. But if you’d like more control, you’ll need a trust. 


With a trust, you can space out distributions so your beneficiaries won’t receive it all at once. Or you can specify that a distribution happen at a specific age or once certain conditions are met. In some cases, you may also specify that the inheritance pass in trust to a second generation—say a grandchild—should something happen to the original beneficiary. These are just a few examples of how a trust can provide a greater measure of control and customization. 


3. Are you hoping to avoid or reduce estate taxes? 

If so, a will won’t do the trick. We all want to maximize what we’re able to provide our heirs. Yet, unfortunately, many families underestimate just how much federal and state taxes can eat into the inheritance they leave behind. If this is a concern for you, there are certain trusts that can reduce or eliminate your tax burden and that of your heirs. Among the options are life insurance trusts and asset protection trusts. More on those here. 


4. Do you want to avoid probate? 

You might have heard that wills can avoid probate, but that’s actually not the case. All wills go through probate. If you really want to avoid probate, you’ll need—you guessed it—a trust.  


Why would you want to avoid probate? It’s expensive, which can cut into the inheritance your loved ones receive. And it can be time consuming, which means your loved ones could experience a delay in receiving what you’ve left them. Further, it’s a public process, where your will must be validated by a judge. People who were not included in your will, but feel they should have been, can contest your wishes. A trust can help you avoid this by making it possible for assets to pass to your heirs privately outside of probate. 



5. Do you have jointly owned property or property with designated beneficiaries? 

There are certain classes of property a will can’t address. One of those is jointly owned property, which is anything that’s owned equally by two or more parties. In this situation, property automatically passes to the other surviving owner, so it cannot be left to someone else in your will. 


Another class of property that you can’t put in a will is anything that already has a beneficiary clearly stated, such as retirement plans, insurance policies, or stocks and bonds set to transfer to someone else upon your death. 


Does that mean for these classes of assets your options for avoiding probate, taxes, and controlling distributions are limited? Not necessarily. If the asset is placed in trust, you could still enjoy the benefits mentioned above.  


If your answers to these questions have you wondering if you might need a trust, we have some resources to help. In our Estate Planning 101 series, we walk you through some of the scenarios where a trust makes sense and explain why. We also recommend you check out our Cheat Sheet to Understanding Trusts in Retirement, which breaks down some of the most common terms you’ll hear and what various types of trusts can and can’t do.  


Finally, while we know the world of trusts can seem complicated, the right attorney can make it much easier to navigate. If you think you may need a trust, or have questions about creating one, we’d be happy to help. Schedule a complimentary phone consultation with one of our attorneys today.  

- AlerStallings

If you’ve read any of our previous articles, you know the importance of having an estate plan. But what happens when you’re not sure if your elderly parents have one? How should you approach the topic with them? 


Chances are estate planning isn’t your family’s preferred Sunday night family dinner topic. And let’s face it: though you may be an adult, your parents will always see you as their child. Taking advice from your kid can be a hard pill to swallow. That’s why it’s important to approach the topic with sensitivity and tact, acknowledging their lifetime of hard work and giving them a gentle nudge in the right direction. To help relieve some stress, read on for our tips.  



Respect Their Desire for Privacy 

Boomers and their children (many of which are millennials) differ in many ways, but one of the starkest contrasts is their openness about money. One study found that while 46% of millennials discuss their finances with their parents, the communication channel doesn’t go both ways. Only 24% of boomers indicated they talk to their kids about their finances.  


For much of their lives, talking about finances was (and for some boomers still is) a taboo topic. Millennials on the other hand, having come of age during the Great Recession, believe that talking about finances can be beneficial. The best advice for bridging this divide is to tread lightly. Understand that you can’t tell your parents what to do; instead, make them want to do it on their own.  



Make It Relatable 

One of the best ways to do that is to keep the conversation relatable but simple. Bring up a real-life example of someone you know—such as a family member or friend—who passed away and discuss how their affairs were handled. If they had an estate plan (or didn’t) talk about the impact of that choice and how things could have been different. It’s a good way to broach the subject without putting your parent on the spot. 



Walk in Others’ Shoes 

Considering the impact estate planning could have on other loved ones can be a powerful motivator. For instance, if something happens to mom, the burden of sorting through matters of their estate would shift to dad (or vice versa). If both pass away without an estate plan, the burden could shift to you. Their estate could be stuck in probate (yes, even with a will), racking up attorney fees, with decisions on inheritance being decided by the court. Your parents may not feel comfortable discussing their finances, but they might feel even less comfortable with the idea of leaving one spouse to go it alone or, in the latter example, leaving you in a lurch.  



Bring the Facts 

Did you know only 44% of adults 55 and older have a will? That’s unfortunate for a couple reasons. First, having an estate plan is crucial for helping you avoid some of life’s most difficult situations. Second, a will is simply not enough to avoid probate or protect you from long-term care costs. Many retirees need additional estate planning to adequately safeguard their assets. 


Estate planning is an emotional process; understanding what’s at stake can be the catalyst to forward motion. Share with your parents any of the above links to start the conversation. Let them know what thoughts it spurred for you and let them share their thoughts as well. If they’re open to estate planning, make it easy for them to follow through. Set up the appointment and let them know that you’ll go with them or drive them there if they want. 


And remember, sometimes less is more. That’s why we offer complimentary 15-minute phone consultations with our caring attorneys, so clients can dip their toe in the water and better understand the process with no obligation. If that feels like a comfortable next step for your family, schedule a time that works best for you. We’d be happy to help. 

- AlerStallings

Get the Facts on What it Will (and Will Not) Cover 


Wouldn’t it be great if Medicare were like an all-inclusive resort and whatever you needed was included? It’s probably not as fun to envision as cocktails poolside, but it’s still better than reality. In fact, what Medicare doesn’t cover may catch you by surprise, leaving you in a tough situation. 


While you can always cut back on cocktails that cost extra, you can’t forgo care you need, especially when it comes to critical services like long-term care. The best remedy is being in the know about what Medicare does and does not cover so you can plan now and be prepared. 



But First, a Clarification 


Before we dive in, it’s important to distinguish the difference between Medicare and Medicaid. While both programs involve government healthcare, they’re administered by different entities. Medicare falls under the purview of the federal government, while Medicaid is a joint program between the federal government and the states. It is possible to be eligible for both Medicare and Medicaid; this is called dual eligibility. Depending on your income, you may find Medicaid will pay your Medicare Part B premiums, or you could continue to receive full benefits. 


Speaking of Part B, let’s take a quick look at the Medicare alphabet soup. Your basic Medicare coverage, also called Original Medicare, consists of Part A and Part B. Part A provides hospital coverage. If you worked 10 years or more and paid Medicare taxes, Part A won’t cost you anything (aside from your deductible, coinsurance, and annual benefit caps).  


Part B covers services deemed medically necessary (like doctor office visits, wheelchairs, x-rays, and lab work). It also covers preventative services—like your annual flu shot—and disease screenings. Your income determines how much you’ll pay in premiums and there is a small deductible as well as coinsurance. 


If you want to receive hearing, vision, and dental benefits, you’ll need to purchase a Part C plan. These are offered by private companies approved by Medicare. Some Part C plans have prescription drug coverage, but if you purchase one that does not, it’s also available through Medicare Part D. 



So, What’s Missing? 


While that might sound fairly comprehensive, there’s one important service that’s not covered: long-term care. That’s a problem because long-term care has the greatest potential to throw a wrench in your retirement finances. 


Medicare will pay for the first 20 days in a skilled nursing facility, and days 21-100 with a co-pay of $185.50 per day. After that, you’re responsible for all costs. Ideally, you’d be rehabilitated and return home. But some patients are unable to return home because their condition is not expected to improve. Instead, they’ll need to move to a long-term care facility.  


In this situation, it’s important to talk to an elder care attorney as soon as possible. You may qualify for programs that could help with the cost of care, like Medicaid, PASSPORT, and VA Aid & Attendance benefits. An experienced elder care attorney can navigate the application process and help you avoid errors that could result in delays or denials. 



Planning Ahead 


While no one can know for sure whether they’ll need long-term care, you can take actions now to protect your hard-earned savings from the possibility. An elder care or estate planning attorney can help you examine which options may best fit your situation, including legal tools like trusts. One popular trust for protecting against the cost of long-term care is aptly named the asset protection trust. It’s important to note, however, that your assets must be in the trust for at least five years to be fully protected. That’s why it’s never too early to consult a trusted attorney to develop your plan. 


Now that we’ve taken the mystery out of Medicare coverage, let’s not take away all the fun. Feel free to resume your poolside cocktail daydream. And remember, should you need help demystifying Medicare and protecting yourself from long-term care costs, our caring attorneys are here to help. Get in touch anytime to set up a complimentary phone consultation. 

- AlerStallings

Not only is home care expensive, but it can be difficult to know where to begin when you need to set it up. Thankfully, we have resources to make the process easier and less expensive. Let’s take a look at what to consider. 


In-home care can be an attractive alternative to a long-term care facility if you’re eligible. The first step in making that determination is a Level of Care Assessment, which our team at AlerStallings can help you complete. Level of Care Assessments are a requirement for benefit programs that can help you pay for care. The assessment identifies your needs for care and assistance—physically, mentally, and in terms of daily living.  


When it comes to obtaining assistance with home care support, you have a couple options: Veterans Administration Aid & Attendance (A&A) benefits and PASSPORT (Medicaid). Both will help provide the care and comfort you desire but have some key differences. In this table, we’ve made it easy to compare the details: 



While the above table lays out the major details, it’s important to note that each program has its complexities. As such, it’s not a bad idea to enlist the help of an attorney. Errors or difficulty navigating the application requirements could make it harder to get the benefits you need in a timely fashion. For example, when applying for VA A&A, an incomplete or incorrect application can be delayed for months. 


Or in the case of PASSPORT, what many people don’t realize is that there is a five-year lookback period for gifts or transfers that begins at the date of your application. That means if you gave away assets or sold them for less than fair market value during that time period, it could render you ineligible for Medicaid. This underscores why it’s important to work with an attorney who understands eligibility requirements and can help you ensure you’ve dotted every “i” and crossed every “t.” 


It’s also important to note that in some cases, home care simply isn’t enough. We understand the desire to remain in the comfort of your own home, but we also know that it’s important to have a plan for when it’s no longer an option. This too is an important step to undertake with your attorney. Doing so now will provide you and your family with a clear path forward during a difficult time.  


At AlerStallings, we’ll be with you every step of the way. We’ll help you get the care you need, when you need it, and be ready to assist should your needs change down the line. Here, you don’t just have an attorney to solve the matter at hand; you have a relationship for life.  

- AlerStallings

Have you gotten an email from a Nigerian prince promising a generous reward if you helped him get his money out of the country? We all have. While those emails have become one of the most well-known examples of financial scams, the truth is financial abuse of the elderly has taken a far more sophisticated and subtle shape. The perpetrator may not be someone in a far-off land; instead, it could be someone much closer to home. Here’s what to know to protect yourself and your loved ones.



How Widespread is Elder Financial Abuse?


The American Bankers Association estimates that elder financial abuse cost victims nearly $3 billion last year. According to other organizations the amount could be as high as $36.5 billion annually. Why the discrepancy? Most of the crimes fly under the radar. In fact, just 1 in 44 cases gets reported. Some seniors don’t realize they’ve been scammed, while others are too ashamed to alert the authorities. Worse, some fear retaliation from their abuser, furthering the heartbreaking cycle of exploitation.



Who are the Perpetrators?


One of the reasons so many cases of financial abuse go undetected is because the perpetrator is someone close to the senior—perhaps a family member, friend or caretaker. In some cases, this is someone who has been entrusted to assist the senior with their finances and may hold a power of attorney. They’ll take advantage of their access to the senior’s accounts and siphon off money or make purchases for their own benefit.


Other times, the abuse begins as a seemingly innocent request. A family member asks to borrow money from the senior promising to pay it back, but they never do. The situation spirals to the point that the senior has lost so much money they no longer have enough to support themselves. Should the senior apply for Medicaid, especially if they need long-term care they no longer can afford, they’ll be in the difficult position of trying to convince the government the money was stolen and not given away, since the latter could be a disqualifying factor in the application process.


Sadly, 90% of abusers are family members or someone the senior trusts. In some cases, the abusers are the last people the senior would expect: pastors, doctors, nurses, and yes, even attorneys. This underscores the importance of staying vigilant.



What are the Signs and Risk Factors?


Some signs pop up and quickly raise suspicion, like:


-Notification of a sweepstakes win

-Contractors requesting to perform unsolicited repairs

-A friendship that develops quickly



Other signs may require investigation to uncover, especially if someone has Alzheimer’s or dementia. Look for:


-Large, frequent, or unusual withdrawals, wires, or transfers from bank accounts

-Unpaid bills or insufficient funds

-Change of mailing address on accounts or missing bank statements

-Altered legal documents, such as a will, a trust, or power of attorney the senior can’t explain

-New friends, caregivers, or nursing home staff suddenly accompanying the senior to the bank or ATM

-Money given as a loan or gift, or checks with a signature that appears forged or different

-Physical injury, threats, or evidence of withheld medical assistance or personal care, which may signal that a caregiver is using harm or neglect to coerce money from the senior



What Can You Do to Protect Yourself or Your Loved Ones?


When it comes to preventing financial abuse before it begins, diligence is the name of the game. Here’s how to stay safe:


-Invest in a good cross-cut shredder (the ribbon kind won’t cut it!) and shred all sensitive documents like credit card offers, bank statements, and anything with your personal identifying information that you no longer need to keep on file.

-For the documents you do need to keep on file, make sure they’re securely locked away.

-Similarly, lock up your check book, especially when you’ll have visitors in your home.

-Order an annual credit report and review it for any strange activity.

-Always check the references and credentials of those you plan to hire.

-Don’t pay money to release winnings or a sweepstakes prize. It’s likely a scam.

-Never rush into a financial transaction and if you have questions or suspicions (no matter how small), ask a trusted third party who isn’t involved to give it a second look.


Finally, there are legal tools that can help prevent financial abuse and protect you if you do become a target. From wills to various trusts, power of attorney, and more, an estate planning or elder law attorney can help you create a strategy that ensures your assets are only accessible to those you trust.


Preventing financial abuse takes a team. It’s one of the reasons we conduct our annual review meetings—to make sure you still have the right protection in place, year after year. When you work with AlerStallings, you can be confident that someone’s looking out for you. To ensure that you and your loved ones are protected, set up a complimentary consultation with one of our caring attorneys.

- AlerStallings

When it comes to monetary gifts, nearly everyone is worried about the tax man. But actually, the tax man isn’t what should concern you most. Instead, it’s whether gifting is the right strategy for what you want to achieve. Here’s what we mean. 



Will You Pay the Gift Tax? Only if You’re Really Generous 


The number to remember is $15,000. That’s the amount you can give annually to any number of loved ones without needing to report the gifts to the IRS. And remember, that amount is per person, so you and your spouse can each give $15,000 per recipient, for a total of $30,000. 


Now, here’s where people tend to get confused. That $15,000 figure is not the total limit on what you can give tax-free per recipient. It’s simply the limit for what you can give without disclosing it to the IRS.  


There is also a lifetime gifting limit of $11.7 million before the gift tax kicks in. The first $15,000 of each gift is exempted. So, for example, if you were to gift $16,000 to each of your 3 children this year, $3,000 would count toward your lifetime limit (that’s 3 x $1,000, which is the amount over the $15,000 limit on each gift). The $3,000 will also count toward your estate tax exemption (more on that below). As you can see, you’d have to be really generous for the gift tax to affect you. 


Now, it’s important to note that gifts to charity, your spouse, or a political organization are always exempt from the gift tax no matter the amount. So too are gifts to cover someone’s medical expenses, if paid directly to the provider. Gifts to cover someone’s tuition are also exempted so long as the funds are paid directly to the school. Room, board, and books aren’t included. 



What About Gifting After Death? 


It depends on what you’re gifting, because now you have both the estate tax and tax basis to consider. Any gifts less than $15,000 you give during your lifetime won’t count toward your estate tax exemption, which for tax year 2021, is also $11.7 million.  


But let’s say you decide to wait until your passing to distribute your wealth via your will. In that case, the entirety of what you gift after you die will count toward your exemption. However, could it cause some tax headaches for your recipients? Absolutely. This is where the kiddo’s penalty becomes a problem. That’s when your heirs—likely in their peak earning years and therefore in the highest tax bracket of their lives—end up paying taxes on their inheritance at a higher rate than the one you enjoyed during retirement. 


There can be some advantages to gifting after death, however. Take for example, leaving real estate like your home or vacation property to a loved one. This is where something called a stepped-up basis comes into play. If your loved one were to sell the inherited property at some point in the future, their tax bill would be calculated on the property’s appreciation since the date of your death, not since you purchased it. That could yield substantial savings, especially if you’d held the property for quite some time. 



Should You Get Gifting or Get a Trust? 


You might be thinking, “Oh, the kiddos tax sounds bad. I’m going to give away my money while I’m still alive.” There are a couple reasons why that might work against you. 


First, it’s hard to know whether you might need long-term care, and if you do, for how long. estimates a 70% chance you’ll need long-term care if you’re 65 or older. If you do, you’ll want to have a decent cushion to protect you from the cost. The national average for a private room in a nursing home is $7,698 per month. 


So, if you have enough money to give freely and still have a comfortable cushion left over to self-fund long-term care if the need arises, then by all means gift away! But that’s a small percentage of the population. For most of us, large gifts aren’t the norm, and long-term care costs are a source of anxiety. 


Further, most of us (over 60%) go on Medicaid to cover the cost of long-term care. Which brings us to our second point on why gifting may not be the best strategy to reduce your wealth: because Medicaid has a five-year lookback period. If it’s found that you gave away wealth during that period to reduce the value of your estate to become Medicaid eligible, you may not qualify for coverage.  


You do, however, have one other choice to consider: an irrevocable trust. For this situation, one of the most popular is an asset protection trust. An asset protection trust is a vehicle that holds your assets (including real estate) and effectively shields them from the nursing home and other creditors. While it can help you qualify for Medicaid should you need it, it’s not something that can be hastily put together. It requires forethought. Remember, the five-year lookback period still applies.  


When an asset protection trust is formed, you appoint a trustee to manage the assets for you. Relatives and adult children are often utilized as trustees. After your passing, any assets that remain in the trust after settling debts will go to your beneficiaries. From a gifting perspective, an asset protection trust offers the advantage of helping your heirs avoid probate, saving them time and money. 


An asset protection trust may enable you to ensure that a surviving spouse is cared for, or that you’re able to financially support loved ones after you’re gone without putting you at risk of losing everything to a nursing home while you’re still alive. That said, this is just one type of trust, and certainly not a one-size-fits-all solution. When it comes to gifting and planning for long-term care, the best strategy for your circumstance is the one you develop with a caring elder care or estate planning attorney. If you’re looking for someone with heart who can help you and your family, set up a complimentary consultation with one of our attorneys today.