Indiana Estate Planning & Elder Law

About our visit with Clearvista Lake Health Campus in Northeast Indianapolis...

We recently visited with Clearvista Lake Health Campus located in Northeast Indianapolis to talk about what makes the Clearvista Lake Health Campus community unique, this is what she had to say:

The facility offers a warm, welcoming place to call home. The staff has a team attitude and they come to work every day wanting to take care of the residents. Patients needing rehab are known for coming back to Clearvista Lake Health Campus after another hospital stay, because they feel at home during their stay. They offer Short-Term Rehab, Respite Care, Transitional Care, Skilled Nursing, and Memory Care.

The Short-Term Rehab known as "Home Again" is a comprehensive, post-acute rehabilitation program that helps patients return home following an illness or injury. Rehabilitation services provided are Physical therapy, Occupational therapy, Speech therapy, Orthopedic recovery, Cardiac recovery, Stroke recovery, and IV therapy.

Skilled Nursing Care provides 24-hour skilled nursing and comprehensive long-term care services that meets the specific needs of the residents. They recognize they are caring for individuals, each with different wants, needs, beliefs and expectations.

Their Health Center combines a state-of-the-art facility with a safe and caring environment. They accept private pay along with Medicaid for Skilled Nursing.

The event calendar at Clearvista Lake Health Campus is packed with activities including Entertainment, Bingo, Men's Group, Happy Hour every Friday, Movie and Popcorn, Crafts, and much more. They will also be hosting a Father's Day event for the Men to enjoy with their family. They have a program called Live a Dream, the program helps residents fulfill their dreams, they have granted wishes such as a retired 2nd grade teacher was able to go back and teach for a day.

They also offer transportation to Physician Appointments, Shopping and Trip Outings.

Thank you for visiting with us and sharing how unique Clearvista Lake Health Campus is!

E$TATE TAX TIDBIT$

It’s graduation time of year, so I decided to dig out one of my law school graduation presents—my Black’s Law Dictionary for a couple of fancy definitions:

Estate: The amount, degree, nature, and quality of a person’s interest in land or other property (your “stuff”).

Tax: A monetary charge imposed by the government on persons, entities, transactions, or property to yield public benefit (the government “taking” your stuff).

Recently, there has been an abundance of discussion about President Trump’s plan to repeal the Estate Tax (the tax imposed on the transfer of property upon an individual’s death). We all have an estate, and we’re all subject to tax (we are, right?). So, it’s easy to see why the concept of the Estate Tax can bring about quite a public outcry.

Most of you are probably aware of the current Estate Tax Exemption amount (or the value your estate must surpass in order to be subject to the tax), which for 2017 is $5.49 million for an individual and $10.98 million for a married couple. That’s a pretty large number. Let’s take a look at a few more numbers:

• $19.3 Billion of Estate Tax revenue was generated in 2014 according to the U.S. Office of Management and Budget. That’s a big number, too; however, overall federal tax revenue was over $3 Trillion—translation;
• 6 % of our federal tax revenue was derived from the Estate Tax;
• 4,700 Estate Tax returns filed in 2013 had Estate Tax liability (out of 2.6 million total deaths in the U.S, according to Congress’s Joint Committee on Taxation), which equates to roughly;
• 1 out of every 500 people who die have Estate Tax concerns;
• 2% of Americans are subject to the Estate Tax.

So, what about repealing the Estate Tax? For 99.8% of Americans, it’s not really a monetary issue (based on the numbers—though we’re all allowed to object to it conceptually if so chosen). Some of those that aren’t subject to the tax may view it as another way for the extremely wealthy to avoid further taxation and see it as the rich to get richer and not contribute to and yield public benefit. Again though, we’re talking about 0.6% of our federal tax revenue. Everyone is entitled to their opinion on the matter. If you’re curious about my opinion, well, I don’t really have one either way. It exists right now, and may not exist in the future. Sure, I’ll always remain educated on the topic, and watch the political trends; but remember, we’re talking about less than 1% of our tax revenue.

In the end, and whatever your individual opinion is, I wanted to throw these numbers out there for this reason: if you happen to be sitting at a bar (or in any social situation) and the topic of Estate Taxes comes up, you may dazzle the person that is on an Estate Tax rant with some of these simple numbers. And maybe someone will buy you a drink!

We are always here for you if you have any questions or just wanting to keep up with all you need to know about estate taxes.  If you have any questions please don't hesitate to reach out.  Pick up the phone and call us (317) 863-2030.  Or complete the short form here and we'll call you!

Cheers! --Kyle

When Can You Use An Estate Tax “Portability” Exemption?

Just when is the DSUE [Deceased Spouse Unused Exemption] available to a surviving spouse or the estate of a surviving spouse for use in determining the surviving spouse’s applicable exclusion amount?

 It can be very challenging to stay on top of federal estate tax law changes. For instance, experts and taxpayers alike are grappling with the ins and outs of “portability.” How and when can it be used?

The temporary regulations governing portability are now on the books. While there is some guidance regarding how a “Deceased Spouse Unused Exemption” (DSUE) actually works, a recent Forbes article, titled “Estate Tax Portability - Date DSUE Amount May Be Taken Into Account,” provides some practical advice.

As many know, “portability” refers to the new ability of a deceased spouse to pass along their unused unified exemption amount (the amount in a lifetime that you can either transfer without gift tax or can pass through your estate without estate tax) to their surviving spouse without implementing traditional estate tax planning techniques.

The question many surviving spouses might face is when to make use of the exemption. What if they have a gifting strategy, especially if there is little time to spare? Does the DSUE pass immediately or does the estate tax return have to be filed?

As a rule of thumb, the DSUE passes immediately. In turn, this can buy some time given how long it could take to file an estate tax return. As with all tax matters, be sure to consult with your professional advisors before making a move you cannot undo later.

Reference: Forbes (January 14, 2014) “Estate Tax Portability - Date DSUE Amount May Be Taken Into Account”

Protect Your Beloved Pet With A "Pet Trust"

"Pet trusts aren't just for the wealthy," says Frances Carlisle, a trust and estates attorney in New York. For most pet owners, she adds, the goal "is to make sure a plan exists for the care of the animal."

Do you own a pet? It seems as though more and more people are taking in pets these days. In fact, from 2010 to 2012, the number of pet-owning households increased from 62% to 68%. Consequently, more pet owners are taking their beloved pets into consideration when it comes to their estate plans.

Maybe you have heard the term “pet trust” before. Even if you have, The Wall Street Journal has provided the latest information on planning for your pet and some noteworthy statistics in a recent article titled “More Americans Are Writing Their Pets Into Their Wills.”

You see, with human family members, you can take care of them by giving them an inheritance. On the other hand, you cannot give property to your pet because your pet is property. Nevertheless, you can provide financially for your pet with a pet trust.

After all, the needs of a pet can be simple, but someone needs to care for them. A pet trust is a legal vehicle that can be designed to be there for your pet when you are not, providing a caretaker and financial resources according to your instructions.

Reference: The Wall Street Journal (January 12, 2014) “More Americans Are Writing Their Pets Into Their Wills”

No Beneficiary Designation? An IRA "Uh-Oh"

We say it over and over again. Check your beneficiary forms! Don't let your retirement funds go down the drain.

 Anything involving the court system is rarely quick and painless (probate anyone?). Fortunately, IRAs can easily be transferred to your loved ones outside of probate simply by completing a beneficiary designation form. But what if there was no beneficiary designation form completed? Uh-oh, what now?

The slightly messy situation of an IRA left without a beneficiary was tackled recently by Ed Slott’s blog, The Slott Report. The article, titled “There is No Beneficiary on the Retirement Account: Now What?,” is the perfect encouragement to ensure that every beneficiary form is filled out and up to date.

The good news is that many accounts have a built-in default to the surviving spouse or children of the owner. Problem: What if that runs contrary to your estate plan? Alternatively, what if the account has no default? In all likelihood the account will then default to your probate estate and will be treated as any old bank account going through probate.

Aside from probate itself, there are lots of rules regarding how IRAs can be inherited and used by the inheritor. They must take distributions just like you do, but when the IRA defaults to your probate estate it gets messy – and fast.

The IRA can be assigned/transferred into a properly titled new account, but then again some IRA custodians simply refuse to do this, making the irreversible and catastrophically taxable choice to distribute the entire account to the estate.

Simply put, an IRA not acting like an IRA within the estate plan is messy. It is easily avoidable by filling out the beneficiary form and keeping it up to date. In some situations this requires being proactive. For example, when a surviving spouse inherits an IRA but passes before naming a new designated beneficiary to the account.

Reference: The Slott Report (January 9, 2014) “There is No Beneficiary on the Retirement Account: Now What?”

Six Unique Trusts For Unique Circumstances

You might be a candidate for a trust that you never needed before.

 A trust is a great tool within an estate plan, one with unique goals depending upon the one making the plan. Some goals are very common, while others don't exactly follow the mainstream.

A recent lighthearted Forbes article titled “Six Trusts For The Person Who Has Everything Else” pulled back the curtain for a look into the world of unique trusts for unique circumstances. [Spoiler alert: There are really four trusts, one special bank account, and one misguided attempt to emulate the trust format.]

Here is an overview of how the article described these six trusts:

1. Totten Trusts: These are specialized bank accounts rather than actual trusts, often known more appropriately described as “payable on death” accounts.  The account allows the depositor to name a beneficiary for the account, and such beneficiary receives the account upon the passing of the depositor entirely outside of probate or, if you are careful, outside the knowledge of your other heirs. The article notes that Totten Trusts are especially well-suited secret heirs, paramours, lopsided giving or other hushed motives, unless the wronged someone has access to bank statements or tax returns.

 

2. Purpose Trusts: These trusts are not designed for people but for a “purpose.” In this sense it is actually a class of trusts, and amongst the most common purposes is the health, happiness, and continued well-being of a prized and/or pampered pet. Think Leona Helmsley. Then again, the maintenance of a collection is also a strong purpose behind setting up a purpose trust.

 

3. Funeral Trusts: Like the name itself, these trusts are solely designed to ensure the payment of funeral expenses because you believe either your heirs should not be so burdened or you do not trust them to be responsible about it. Basically, you want to make your passing a non-issue. You can always pre-pay for a burial plot or other accoutrement, but the trust gives discretion to a trustee while still footing the bill.

 

4. Blind Trusts: This is a trust that leaves you, the trust settlor, blind regarding what your own trust owns, how the investments are doing, or any other information that may compromise you. Namely, you would be compromised if you could accidentally get tagged for an insider trader (an executive holding stock in their own company) or the fact that healthy investments can be politically disadvantageous (note the use of the Blind Trust by many a politician, not least of which being the former presidential nominee Mitt Romney).

 

5. Rabbi Trusts: No, these trusts have nothing to do with Judaism. On the other hand, they do have everything to do with timing of compensation – salary, bonuses, or other compensation from an employer – to stash that money away while limiting the income tax hit in any given year.

And finally,

6. Secret Trusts: In the estate planning world, secrets can be manageable if often ill-advised (secrets breed distrust, and distrust breeds long and painful lawsuits for heirs). In reality, the secret trust is not even a trust at all, even if you do keep it secret. Essentially, this is the attempt to emulate a trust by getting an executor to agree, outside of the will, to disperse estate funds in any particular way. That is a tricky spot to be for an executor, a nasty secret for an excluded heir to discover, and an easy way to see everything go downhill after that.

That is a quick list and explanation of unique trusts, and one non-trust as a lesson in what not to do. Read the original article for more in-depth coverage of the topic. So, have you made appropriate estate planning arrangements with a trust or two designed with your goals in mind?

Reference: Forbes (January 2, 2014) “Six Trusts For The Person Who Has Everything Else”

Inherited Homes And The Challenges Ahead

The process of selling a relative’s home is likely going to be emotional, from the sorting of the personal belongings to the finalization of the sale at the closing table. Expect that. And surround yourself with professionals who will be empathetic and helpful.

 Many would agree that selling a home is a stressful process, maybe even claiming a spot on the "top 10 most stressful life moments" list. Even if it sells fast, there is still the hassle of moving itself. What about when it is not your home at all? What if it is the home of your parents, and perhaps your sole inheritance, with or without siblings?

When it comes to selling an inherited home, there are some complications to ride out and with which you must deal. For guidance, consider reading are recent MarketWatch article titled “How to sell an inherited home.”

Get past the practical facts of getting to the home (maybe you live states away) and moving out all of the possessions or figuring out what to do with them. Get past the emotional problems, too. How do you even go about selling it? Can the property move on the market to begin with or, alternatively, is there a better market for a rental and can you manage it? Who owns it exactly and, especially if it is in probate, when will those who will own it actually own it? Are there any liens on the property or a mortgage that may or may not be underwater?

The simple truth for some families is that it may be best not to inherit the house at all and to let it go into foreclosure. Are there creditors in line to receive from the estate? If yes, then you cannot take ownership from the estate until bankruptcy proceedings have finalized.

A few of these issues are drawn out in the article and worth the general advice offered. In the end, inheriting and selling the family home can be the uncomfortable intersection of estate law, tax law and real estate law.

Without a plan, a family can find themselves in a mess. Without competent counsel, they may have trouble getting back up and away from the problems. If you are planning your estate, real estate -- especially your home -- is an essential component that may be overlooked to the peril of your loved ones later if not properly addressed from all angles now.

Reference: MarketWatch (January 13, 2014) “How to sell an inherited home”

What About Those Pesky State Death Taxes?

Even if you live (and, well, die) in a state that doesn't have an estate tax, your estate could be nicked if you own property or other tangible assets (such as a plane or a boat) in a state that does.

 We tend to spend so much time talking about the federal estate tax, it seems we may forget about the pesky, often dangerous, state estate tax. Do your know if your state has a death tax?

Fact: there are state-level estate taxes in many states. The exemption limits on these state estate taxes are often set at levels low enough to tag even middle class families. Consequently, it can be a big mistake to ignore these state estate taxes to your peril. So, do you have a false sense of security?

The problem with state taxes is that there are, at any given time, 50 moving pieces. Fortunately, Kiplinger sheds important light on the subject of state death taxes in a recent article titled “10 States With the Scariest Death Taxes.”

Even if you are living outside of the 20% of estate taxing states, you may own assets that cross into these death tax states. This could be a problem. For that matter, assuming you are still around and kicking, you may retire from your estate tax-free state to a state that has an estate tax.

The original article breaks down estate taxes state by state. However, the scariest state-level death taxes come out of New Jersey, Rhode Island, Minnesota, Oregon, Maryland, New York, Massachusetts, Connecticut, Maine, and Washington.

Do you, your family, or your assets enter into these states? And if so, how do you plan for both the state and the federal estate taxes? More importantly, how do you plan for all 50 state legislatures looking for additional revenue and a highly unpredictable Congress and White House?

Reference: Kiplinger (December 2013) “10 States With the Scariest Death Taxes”

A Check-Up For Your Trust

... Make sure that you understand what is in your trust. Other issues, particularly those related to tax issues, will require consulting with an estate planning professional.

 Do you have a trust? Trusts are powerful estate planning tools, those of which should be properly established and properly maintained. When it comes to revocable trusts, also known as “living” trusts, ElderLawAnswers offers a convenient and instructive checklist of the things to watch and the things that can go wrong in an article titled “9 (Potential) Problems with Your Trust.”

These nine (potential) problems reside in these questions:

1. Do you have the right successor trustees?
2. Who can remove trustees?
3. Can your spouse change the ultimate distribution of trust assets after you have passed away?
4. Does your trust protect your children and grandchildren from lawsuits and divorces?
5. Have you “funded” your trust?
6. Who is named as beneficiary of your retirement plans and other investments?
7. At what age will children and grandchildren receive their inheritance?
8. Does your trust have provisions providing for maximum tax deferral if it is named the beneficiary of a retirement plan?
9. Is your trust up-to-date for estate tax purposes?

Some of these nine questions touch on structural issues to get your trust right at the outset, while still others are “maintenance” matters to ensure your trust is still accomplishing the goals for which it was established. Remember: your life, the lives of your loved ones, and the relevant laws will likely change across the years.

Either way, reflecting on these nine touch points are worth understanding if a trust is important to your estate plan. They certainly demonstrate just how vital competent counsel is in setting up, administering and guiding your trust.

So, is your existing trust still up-to-code? Are you ready to create your trust as part of your New Year’s resolutions for 2014?

Reference: Elder Law Answers (December 17, 2013) “9 (Potential) Problems with Your Trust”

New Year, New Estate Plan

Estate planning is a difficult topic to address because it requires you to think about a world without you in it. No one likes to reflect on their own demise, which is why many people simply put estate planning off for another day and only get around to it when the chips are down.

 A new year means a new start -- another "go" at those to-do lists. Will estate planning make the list this year? Estate planning is not always easy think about, but it is oh so necessary.

Understandably, musing over matters of your own disability and death are not at the top of anyone’s list of “fun things to do,” they are a matter of personal, adult responsibility. In addition, plans can get rather complex when it comes to complex lives, complex families, and complex assets. As with most complex but essential matters in life, it is best to start with the basics.

Fortunately, U.S. News & World Report has helped you jump-start your estate planning basics with a recent article titled “4 Steps for Simple Estate Planning.” What are the four?

1. Prepare a master information document. Think of this as a single collection of all the information your heirs will need from the location of important documents, to bank accounts, passwords, and lists of assets. Such information allows your heirs to step in when the time comes and to quickly assume command of what needs to be done, to the benefit of all of your loved ones.
2. Purchase a term life insurance policy. Calculate the financial costs your loved ones might bear in your absence. Oftentimes, as good solution is life insurance which provides instant liquidity just when needed most.
3. Write a will to ensure the right persons receive your possessions. Not only do you need to draft a will, but you need to keep it current. If you have a will with a few years on it, then it is time to dust it off and bring it up-to-code.
4. Include guardianship plans in your will for your dependents. Assets aside, the most important “assets” for the parents of minor children are those children. Who would rear them to adulthood in your absence?

Take a look at the original article. You will enjoy the stories and bits of advice it offers as you consider your own plan. Although these four steps are important, they are by no means exhaustive. What issues arise when you ponder your own estate plan and how can they be resolved? Procrastination is simply not an option. Once you understand and appreciate what is at stake, bring in competent counsel to assist you and your family.

Reference: U.S. News & World Report (December 17, 2013) “4 Steps for Simple Estate Planning”