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Articles Tagged with trusts

By: ELPO Law Attorney Leah Morrison (lmorrison@elpolaw.com; 270-781-6500; Read bio) LAM-MERITAS-300x284

The end of the year is just around the corner! That means most of us are focused on spending the holiday season with friends and family and looking forward to what the New Year may hold.

If you’re planning on celebrating the holiday season with friends and family, you may notice some changes. Your parents might seem older and more fragile. Maybe there are new spouses, in-laws, children, or grandchildren. And, sadly, some beloved family members may not be with you anymore. These changes can be a reminder that your estate plan should also change to keep up with your life and family. While the topic of estate planning may not typically at the top of our list of talking points during this time, the holidays are actually a great time to start the conversation with your family.

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.

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.

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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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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

just married photoAs early as 2000, states began grappling with the issue of same sex marriage. Some states allowed unions. Some allowed marriage. Some didn’t allow either. Now, with the U.S. Supreme Court’s decision in Obergefell v. Hodges, all states must allow and recognize same sex marriages. So moving forward, what happens at tax time if you’re married in one state but live in a state that previously didn’t recognize same sex marriages?

The American Bar Association offered an online Continuing Legal Education seminar by attorneys Patricia Cain and George Karibjanian recently to help tax attorneys sort through some of the more difficult legal issues surrounding same sex marriage.

It’s been a mess, frankly, for same sex couples.

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Broken Heart by Prawny on MorgueFileHardly anyone goes through the process of putting together a comprehensive estate plan with the intentions of getting divorced from their current spouse thereafter. It is, however, a fact of life that becomes reality for a large portion of society. Divorce can affect more than just a person’s emotions and wallet. Here is a brief overview of the effect of divorce on your estate plan.

The Will

In Kentucky, a divorce or annulled marriage “revokes any disposition or appointment of property made by the will to the former spouse, any provision conferring a general or special power of appointment on the former spouse, and any nomination of the former spouse as executor, trustee, conservator or guardian, unless the will expressly provides otherwise.”  KRS 394.092.  The statute goes on to provide that property that would have passed to the former spouse by will now passes as if the former spouse predeceased the decedent.  Put simply, Kentucky law basically “removes” the former spouse from your will, unless you expressly provide otherwise.

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Morguefile photo by Ricorocks

Having a child can be exciting (and stressful).  Probably the last thing you might think to do when having a child is to update an estate plan, but it’s absolutely necessary.  Here are 6 things to consider when you have a child.

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