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Articles Tagged with estate planning

LAM-MERITAS-300x284By: Leah Morrison (Read bio; lmorrison@elpolaw.com; 270-781-6500)

One of the most frequent things I hear from potential clients is “I don’t have much, so I don’t need a will.” If you do not have substantial assets, then you may be wondering if this is true. Of course, the answer is unique to you and your family situation. In some cases, where someone qualifies as a small estate and is survived by a spouse or children, then a will is only necessary if you want to change where your assets go under the default law. But in cases where a full probate is required, unintended consequences may arise where Kentucky statutes dictate how your assets are divided and distributed, not your own wishes via a will.

One of the most common misconceptions about Kentucky law is how your property is distributed after your death. Many people assume that your surviving spouse will inherit everything. But while a logical assumption, it is simply not the case in Kentucky – or many states actually. Your surviving spouse is only entitled to half of your assets; the other half go to your heirs-at-law according to Kentucky’s intestate statutes. To determine your heirs-at-law, we follow your family tree – first your children, then grandchildren, then up to your parents, then siblings, and so on. In situations where your spouse is your children’s’ other parent, then not creating a will may not result in a terrible situation for them. Your surviving spouse and children will still split your estate legally, but they’re likely to do so amicably and in a way that won’t burden their surviving parent.

By Leah Morrison            LAM-MERITAS-300x284

Powers of Attorney are a crucial estate planning document and are a critical step in planning for incapacity. A power of attorney allows a person you appoint the written authorization and power to act on your behalf in business, legal, financial, and medical matters. This is usually a trusted family member. If the right power of attorney is put in place, then once incapacitated, the agent (or person appointed under the power of attorney) can step in and take care of the principal’s legal and financial affairs. Without the right power of attorney – or any at all – the incapacitated individual’s family would need to go through the justice system to have a guardian or conservator appointed to represent them.

A power of attorney may be limited or general. A limited power of attorney may only give someone a specific right or two – perhaps the most common place you’ll see a limited power of attorney is in purchasing a car or real estate. Car dealers will often have you sign a limited power of attorney granting them the authority to complete the transaction at the local county clerk. Additionally, you might give someone the authority to sign a deed to property for you on a day that you will be out of town. A general power is comprehensive and usually grants your agent all the powers and rights that you have yourself. This can include allowing your agent to make bank transactions, sign checks, apply for disability, or simply pay your bills.

Nathan VinsonBelieve it or not, the end of 2020 is quickly approaching (insert collective sigh of relief). While I think most of us are ready to start looking forward to 2021 and would prefer to not even have to utter the words 2020 anymore, now is the time to finish off the year strong by reviewing simple, yet important, year-end tax planning and wealth transfer tips.

When most people think of tax planning and wealth transfer, they may have in mind complex estate planning documents and an overload of legal and accounting advice.  But that doesn’t have to be the case.  Here are three simple tips that you can implement with relative ease, though you will want to consult your tax advisor first.

1. The Annual Gift Tax Exclusion. The simplest tax planning and wealth transfer technique involves the all-too-familiar annual gift tax exclusion.  The annual gift tax exclusion is an amount that a person may give to another person without having to file a gift tax return or otherwise report to the IRS.  The current exclusion is $15,000 per person receiving the gift.  The exclusion is indexed for inflation, but it may only increase in $1,000 increments.  Further, married taxpayers may elect “gift-splitting,” which basically doubles the amount of the gift that they may make to one person using the gift tax exclusion; for each person receiving the gift, the limitation would be $30,000 rather than $15,000.  For example, if a married couple has two children and four grandchildren, they can give up to $30,000 to each of these people tax-free and without having to report it to the IRS.  Therefore, the married couple may transfer $180,000 total to the children and grandchildren.  Going further, if the children are also married, the taxpayers may give an additional $30,000 to each child’s spouse, which may be desirable if the child and the spouse hold a joint checking or investment account.  Note, however, that a gift tax return would need to be filed if the taxpayers elect gift-splitting.  The gifts are not taxable at all, but the IRS would like to know that the $30,000 was gifted via gift-splitting.

Nathan Vinson

Nathan Vinson

By Nathan Vinson

Right at two years to the date, Kentucky has again changed its power of attorney law by adopting parts of the Uniform Power of Attorney Act that it did not adopt as part of the changes that went into effect on July 14, 2018.  The new law went into effect on July 15, 2020, and applies to a power of attorney created before, on, or after July 15.  However, acts done before July 15, 2020 are not affected by the new law.

The biggest change created by the 2018 law was the requirement that the power of attorney be witnessed by two disinterested persons, though a power of attorney validly executed before that law went into effect remained valid.  The new law brings about three major changes – one of them being no more witnesses required!  Just two years after that requirement came into effect, it is again changed to take us back to prior law.  However, practitioners may decide it is best practice to continue to require two witnesses.  Further, some states require that the power of attorney have two witnesses, especially when used to transfer real estate.  On the flipside, the new law makes executing a power of attorney in urgent situations much easier.

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Leah Morrison

By: Leah Morrison

Number One: Medicaid is not Medicare.

Medicare is a federal health insurance program for people 65 years of age and older and for people under 65 who are totally and permanently disabled. Medicare is not means tested.  Medicare provides limited coverage for nursing home stays- only up to 100 days, after meeting eligibility requirements.

Medicaid is also a federal program that provides insurance coverage, as well as in-home, assisted living, and nursing home benefits.  Medicaid is a means tested program, meaning the applicant must have income and resources below a certain threshold.  Medicaid eligibility depends on meeting both financial and non-financial requirements.

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peace-of-mind-meditation-photo-pexels-1-300x200By Heather Coleman, Attorney

English, Lucas, Priest & Owsley, LLP

Sweet summertime.  The sun shines bright, schools are out, and with no better time for a vacation, the roads and airports are jam-packed with travelers.  Whether scheduling a beach trip, a lake outing, or a mountain getaway, careful planning is necessary to nab the best spot to unwind from the stresses of everyday life.

By Leah Morrison, Attorney
English, Lucas, Priest and Owsley, LLP

trustsWhen it comes to planning to avoid or minimize Federal Estate tax, there are four (almost) magic words that frequently appear in trust documents: health, education, support and maintenance, known in the trust and estate law industry as HEMS. Outside of the tax advantages of including HEMS in a trust document, these words also impact the administration of the trust. When a trust includes HEMS language, beneficiaries from the trust may receive funds from the trust for those type of expenses, and those only.

A trustee is placed in charge of the trust. That trustee usually has broad latitude in determining how many distributions are made from the trust and in what amounts – but HEMS language is included to limit what those distributions may be used for. Trustees must ensure that the distributions fall under those categories. Trustees are often a lay person, and in many cases, a family member. This can make things particularly sticky and confusing, especially if there are disagreements among family members.

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tax booksEach year, the Treasury Department examines the cost of living in the U.S. and adjusts limitations for retirement plans and many other similar items that affect taxpayers throughout the U.S. As has happened previously, the Treasury raised the limits for contributions to pensions and other retirement plans such as 401(k)s, 403(b)s and most 457 plans.  All of this helps today’s workers save for retirement with pre-tax dollars, which is a tremendous benefit.

Our tax code requires the Secretary of the Treasury to make this adjustment.

The biggest news is that the contribution limit to employer-sponsored retirement plans, such as the above-mentioned 401(k)s, etc., has gone from $18,000 for calendar 2017 to $18,500 for calendar 2018. If you were bumping up against this limit in 2017, you can now adjust and put in just a little bit more, which is always good news.

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2016.04.12 Rebecca Simpson - resizedWe’re pleased to welcome Rebecca Simpson, who joined our firm as a senior attorney on April 18, 2016. Rebecca was most recently an attorney for Kentucky Legal Aid. She ran for Warren County Family Court Judge in 2014. She will serve as an estate planning attorney, among other roles.

For ELPO, Rebecca will be practicing in estate law, family law and will offer mediation services. Her family law practice will encompass adoption, business valuation, child support, custody issues, divorce, parent relocation and property division, among other services. She will also provide mediation services in family law and estate cases.

Rebecca is a Bowling Green native. She graduated from Western Kentucky University with highest honors and earned a full academic scholarship to Brandeis School of Law at the University of Louisville. After graduating with honors from Brandeis law school, Rebecca began her legal career in Louisville, Kentucky where she focused her practice on family law and enjoyed a thriving private practice.

By Elizabeth McKinney
Attorney, English, Lucas, Priest and Owsley, LLP

DeathtoStock_Wired4Most people don’t give much thought to who will be their estate executor. Often, the automatic choice is a spouse or a child. The person chosen is often the person closest to the person creating the will.

But this isn’t always the best strategy. As we know, and you have no doubt seen at some point in your life, emotions run high after a death, and items that were near and dear to the decedent’s heart become prized possessions, and sometimes, those items are worth a lot of money. A prized piece of art may have much more than sentimental value.

The executor of your estate may not be prepared to deal with all of these emotions, and if they’re someone close to you, they may find that they’re processing their own grief while trying to meet the demands of friends and family waiting to receive inherited items or money.

This is why we recommend that those creating a will take a long, hard, objective look at who they choose as the executor of their estate and really examine if the person they’ve chosen is capable of carrying out your wishes without creating long-term problems for your family and friends.

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