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Articles Tagged with estates

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

paperwork-with-pen-1-300x225After you’ve completed your divorce, chances are, you want nothing to do with any more legal documents, courts or attorneys. It’s understandable. It’s a big process that can take a lot of time, and many find it to be exhausting.

But you do have one more step to do as soon as your divorce is complete: change your will. I cannot stress enough how crucial this is – and how much it needs to be attended to right away.

Most people create a will around the time their first child is born as a way of ensuring that their child’s welfare and their assets are protected. Typically, each spouse will leave everything to the other spouse. If you die, and your will is still in place from a time before you divorced, it will still be in force. Your ex will receive all of your assets. When a divorce becomes final, Kentucky law does automatically revoke the provisions of a will which provide for a distribution to a spouse, or appointment of the spouse as executor, trustee, or other fiduciary appointments.  Nevertheless, it is important to update your will after a divorce to designate who receives your assets, who serves as executor, etc. in place of the former spouse.

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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.

Editor’s note: This is the second of two blog posts exploring probate: what it is, how it works and what Kentucky law has to say about this process. You can read the first in the series here.

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

Leah Morrison

Leah Morrison, attorney

Probate is one of those things that people universally dismiss as an unduly burdensome process. In fact, many clients tell me they need a will or estate plan so that they can avoid probate.

Outside of the small estate scenario that we explored in the first blog post, Kentucky law provides additional mechanisms for avoiding probate. Not everyone has a Will. Perhaps most often people do not want to write one because they don’t want to think about dying, or they plan to write one and simply put it off. Some purposefully choose intestacy. Even without any planning not all assets owned by the decedent are subject to the probate process. Probate assets include everything the decedent owned in his or her individual name.

These can include:

  • bank accounts;
  • brokerage accounts;
  • real estate held in the decedent’s individual name or in a tenancy in common;
  • vehicles;
  • furniture;
  • jewelry; and
  • an interest in a partnership, corporation, or limited liability company.

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

Leah Morrison

Leah Morrison, attorney

One of the most frequent reasons clients tell me they want to create a will, trust, or other estate documents is to avoid probate. People have come to see probate as an unduly burdensome process that can cost a lot of money and time, but in Kentucky, it’s not as bad as you might fear.

Before we delve into it, let’s take a moment to review what probate is. Probate is the legal process by which the financial affairs of a deceased person are concluded. It is a court supervised process in which assets are accumulated and distributed in accordance with the decedent’s will or pursuant to the statutory plan of descent, and debts are gathered for payment. Although, in Kentucky, the supervision provided by the court is often times very minimal.

While Kentucky’s probate laws are sufficient to ensure the deceased person’s assets are properly managed and distributed to the appropriate person, the requirements of the probate process are minimal enough that most people navigate it smoothly without incident.

The one thing, though, to know is that probate does make your will public. Your will becomes a public document that is recorded in the court system, and is available to anyone who wishes to view it.

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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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By Nathan Vinson, Attorney
English, Lucas, Priest and Owsley, LLP

will

Prince performing in concert in Louisville, Kentucky. Photo by Bob Young.

It’s been more than a year since music legend Prince died unexpectedly at his home in Minnesota. He was actively touring and working at the time of his death on April 21, 2016, at the young age of 57.

You’re forgiven if you assumed his estate was long settled, since he died more than a year ago. But it’s not done yet – and may not be for quite a while – due to the fact that he died without a will.

It’s astounding to think that someone who is as famous, prosperous and with as many assets as Prince would die without this basic legal document. But as it turns out, he’s no different than anyone else – he probably didn’t want to think about death.

Whether you die a famous millionaire or with few assets, if you don’t have a Will you can leave a large mess. Heirs you would have never wanted to have your property could get it. Your estate will spend more probating your assets as well, and those who you wished to receive items from your estate may never see them.

Prince was a very charitable man, yet none of his millions he had nor future royalties will benefit those he likely would have preferred to benefit. Plus, the estate will shell out much more than anyone would want to pay in estate taxes.

Your children and family will be far happier if you take care of this before you die – and there’s no doubt it will bring you piece of mind, too.

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