The Unknown Danger of Re-titling Your Home the Wrong Way

I recently met a woman, by the name of Alice, who had inherited a family farmhouse from her parents many years ago. Over the years, Alice invested her hard earned money along with lots of love to restore the large Colonial home. To ensure that her son, Jim, would receive the home after she died, Alice transferred the deed of the property from her name to Jim’s. As with all real estate in Chapel Hill, North Carolina, the family farmhouse had greatly appreciated in value over the years. All was fine and well until Jim visited with a CPA at tax time and found out that if he were ever to sell the house, he would face substantial capital gains tax and lose a lot of the equity his family had built up in the house over the years.

Alice could not believe the terrible mistake she had made in trying to put her perfect estate plan in place. At one time, it made sense to do things like this in order to avoid probate, but not anymore, and as this lady told me, it was a hard lesson learned.

The simple, straightforward steps that Alice should have followed to efficiently transfer title of the home and minimize potential capital gains tax for Jim include:

* Establishing a revocable living trust

* Changing the title of the home to the name of the trust

* Naming her son, Jim, as the beneficiary of the trust

Because our attorneys only focus on estate planning which includes, wills, trusts, and probate, we can guide you to avoid an unnecessary loss of assets, allowing you to keep 100% for your family. If you want that peace of mind knowing that your wishes are met and your plans are put into place the right way and at the right time, contact the law firm of Thomas Walters, PLLC at (888) 787-1913 to schedule a free review of your estate plan or to register for a free educational seminar. For more information, visit us www.twestateplanning.law.

3 Common Mistakes When Marrying Later In Life

For people in North Carolina, one of the surest ways to stir up conflict and create legal battles that go on long after you die, is to get married later in life and avoid discussions such as, "Should we have a Pre-Nup?" and "How will getting married affect my estate?"

1. I was working with Elaine a few years ago. Elaine decided to get married again at the age of 60. She had three children and her "husband to be" had two children of his own. Elaine did what most people do and named her husband as the beneficiary of her IRA’s, which is where most of her money was invested. When she died at the age of 70, all of her IRA’s were transferred into her husband's IRA. Then, when her husband died, ALL of the funds went to the husband's children. Elaine's children got nothing...nada...zip!

2. I also worked with a guy named Luther, who felt it was unnecessary to have a Pre-Nup when he married at the age of 72. He kept his money in separate accounts from his new wife, so that when he died, it would be easy to determine what his children would inherit. But, what Luther didn't realize, is that when he died, the stepmother of Luther's children would have a claim to a portion of Luther's accounts.

3. In their golden years, Lita and Vernon recently tied the knot. Lita resisted getting married because she wanted her estate to go to her children when she died. She signed a Pre-Nup and new estate planning legal documents, and was confident she was protecting her estate for her children. Six months after their marriage, Vernon had a stroke and wound up in a nursing home. Even though Lita's accounts were "Lita's and Lita's only" she was forced by Medicaid to deplete all of her accounts to cover Vernon's nursing home expenses.

It's critical that at least several weeks BEFORE you put on your tuxedo or wedding dress, you are advised on how to handle a marriage contract and arrange your estate, so that those closest to you don't get into a big squabble when you're gone. We live in an ever-changing world! We realize that not only will family situations and individual concerns change over time, but future law changes could surely affect your estate plan as well. As a Thomas Walters, PLLC, client, you will receive Complimentary Lifetime Lawyer Benefits that covers estate planning changes you want or need to your documents over your lifetime with no additional legal costs. If you are approaching a new stage in your life, call us at (888) 787-1913 to discuss your concerns or for more information, visit us at www.twestateplanning.law.

Procrastinating Could Be Downright Excruciating for Your Family

Have you heard the saying, “You are just buying time?” The funny thing is, there is no way to buy time, and there is no way to get it back once you have spent it. Even more important is that everyone’s time will come to an end, but no one knows when! All too often, people procrastinate and put off the things that they know are inevitable, like planning for how their estate will pass after they are gone.

Forbes magazine recently coined this as “American’s Ostrich Approach to Estate Planning.”

I met a 95 year young gentleman, who came into my office. He sat down in front of me and stated the obvious “It is way overdue that I get my affairs in order. For some reason, we all think we are going to live forever, or certainly live until we are very old. I am lucky that I have lived this long! However, I know my procrastination in putting an estate plan in place will have a devastating impact on my family. So, I think it is time to take care of things in order to have peace of mind that my family won’t be dealing with what I should have done long before now!”

Many people neglect to think about the comfort and relief they feel when a comprehensive estate plan is in place. They refuse to consider the consequences forced upon their family of not having a Will or Trust in place. On the contrary, by addressing your estate and planning for your wishes, when death knocks on your door, your family would not have to struggle with the court system and lawyers. The family would not spend time and money trying to figure out what to do. Nevertheless, for those who still want to procrastinate, never fear- the State has a plan for you! But it will never truly meet your wishes, and it does not make anything easier for your family.

Let us help you remove the procrastination factor and put the perfect plan in place to relieve your concerns for you and your family. Contact the law firm of Thomas Walters, PLLC at (888) 787-1913 to schedule an appointment or to register for a free educational seminar. For more information, look us up at www.twestateplanning.law.

5 Perfect Situations to Bring up Estate Planning with your Parents

Even though we all know there is no way to avoid death, it is understandably an unpopular topic of conversation. As your parents age, it will make things easier on everyone if they have an estate plan in place, particularly for the unexpected events in life. The following five situations are opportunities that would be perfect ice-breakers for discussing with your parents the necessity of possessing an estate plan.

1. If someone you know was injured and needed medical treatment, particularly if it was long term care, it would be the perfect time to approach this subject with them. This opens the door to find out if your parents have planned for situations when they may become disabled or go into a nursing home. This type of planning is imperative because of the fact that many people lose their hard-earned money due to medical costs and long term care.

2. If someone you know becomes engaged, this would be an opportunity to bring up the importance of married couples establishing a will. Then you could segue into a discussion with your parents about the status of their own estate.

3. When someone passes away, people often reflect on how short life truly is. Take this opportunity to find out if your parents have their affairs in order. Focus particularly on discussing if their estate plan has been recently updated and reviewed by a reputable lawyer.

4. If your parents are avid travelers and enjoy taking long vacations, this is a wonderful opportunity to not only find out the location of important documents, but to make sure they have plans in place, in the event that something unexpected happens.

5. Retirement is the perfect time to discuss necessary decisions involving financial advisors, CPA’s and lawyers. These decisions will impact how your parent’s finances and estate assets will be preserved throughout the rest of their lives. This will most certainly be viewed by them as a caring gesture on your part.

At Thomas Walters, PLLC, we understand the importance of having the right estate plan in place for a family. Call our offices for a free consultation at (888) 787-1913 or to register to attend an upcoming educational seminar. For more information visit our website at www.twestateplanning.law.

2 Reasons an Outdated Trust Will Leave Your Spouse Broke and Helpless

I recently met a lady in Raleigh who said that she and her husband had separate trusts drafted about 15 years ago. She wondered if they needed to be updated. I knew right away that since they were set up many years ago as separate trusts, the goal at that time was to avoid estate tax. But the tax laws significantly changed starting in 2012. Currently, the first $11 million dollars of a married couple’s assets are exempt from federal estate tax. But relying on those separate and very complex trusts, which were appropriate a few years ago, a cumbersome maze for the assets is created where a surviving spouse has lots of asset transfer to do when one spouse dies and where the surviving spouse may no longer have complete control and access to all the assets!

Old trusts that need to be reviewed and updated:

* The "Pre-Portability" Trust. Trusts written prior to 2013 required complicated estate tax planning provisions which made things burdensome when the first spouse died. These trusts required that all or a portion of the revocable trust become irrevocable upon the first death, in order to avoid estate taxes while the surviving spouse loses control of the assets. With portability provisions in our federal estate tax that were made permanent in 2013, it is often no longer necessary to have all of these complications in estate planning legal documents. Truth be told, most couples want the surviving spouse to keep complete control and access, but that usually does not happen with those pre 2013 Trusts.

* The "I Hoped My Old Trust Protected Me From Nursing Home" Trust. Historically, most people established trusts to avoid probate and estate tax. Now that they are approaching their “golden years,” their concerns have changed to losing their hard-earned assets to nursing home expenses. Because their original Trust did not address that issue, it is likely necessary to revise the old Trust in favor of a new one. Most people want a Trust that will avoid probate and prevent their home, property, and life savings from being lost to nursing home costs, which average $6,300 a month!

At the law firm of Thomas Walters, PLLC, we know that in the future, not only will laws change, but life circumstances and individuals’ concerns change. As clients, you will be a part of our Lifetime Lawyer Benefits which will allow for any future changes in your estate plan to be made at no additional cost. Call (888) 787-1913 to schedule a complimentary appointment to review your estate plan.

Scary Facts about Nursing Home Poverty

I met a couple recently, Rose and John, who had been married for over 50 years. Rose informed me that they were recently divorced. I am sure by the look on my face, she could tell I was shocked and confused, since they were standing together in front of me.

Rose explained that John had been diagnosed with Alzheimer’s and eventually he would have to go into a nursing home. She indicated that the cost for the memory care unit was $10,000 a month. Because they did not put a plan into place to protect their assets, they knew that they were going to lose everything. They felt their only option was to divorce, so that Rose could take over all of the assets and they would not lose everything to nursing home care.

That certainly is not the ideal plan and I am sure it is not one this couple ever envisioned for their marriage. Rose and John should have worked with an estate planning attorney to set up things the right way and at the right time so they could protect their assets from the nursing home and avoid divorce. By placing assets into a trust at least five years prior to entering a nursing home, you can avoid losing everything because Medicaid will pay for the nursing home expenses.

Contact the law firm of Thomas Walters, PLLC, to discuss the specifics about how you and your spouse can act ahead of time to protect your assets from nursing home poverty or attend one of our free educational events to learn more. Just call us at (888) 787-1913 or or for more information, visit us at www.twestateplanning.law.

Warning: Your Children’s Futures are at Stake

Have you ever thought about what would happen to your minor children if you died without a Will? Many young families do not think about the consequences of such a tragedy. We all assume that we will live forever into our golden years, all the while running the risk that our children may become wards of the state.

At the very least, every couple should have a Will in place when they start a family. A Will provides provisions for who would take legal responsibility and care for your children should such an unthinkable tragedy occur. Without that, the grandparents may fight each other in court for guardianship. A Will provides clear directions as to whom you would trust and rely upon to love and care for your child in the event of your untimely death. Children do not have any say about who they want to be their guardian to take care of them until they are in their teens. So just imagine if your child were put with a stranger, with a family member you did not trust, or worst yet, one that lived far away from where your child has established friends, only to ripped away in the midst of tragedy.

Guardianship proceedings are costly and emotional. When a guardian is appointed by a Court, the Court can require the guardian to make periodic reports back to the Court. All of this can easily be avoid by setting forth the guardianship provision for your children in your Will.

And did you know, that any assets that your child would inherit would be held in Trust by the Court until the minor reached age 18, at which time all of the assets would be turned over directly to your child! No one would be able to access those assets to use them for your child’s needs. When you die without a Will, there are no options left for your family. They have to follow the plan that the State has for your assets and estate.

You can have great peace of mind in knowing that should something unpredictable happen, a Guardian can access money from your estate to provide for your children, and your children will not be at the center of a controversy amidst the grief and heartache they are already suffering by losing their parents. Call (888) 787-1913 to schedule an appointment or to register for an educational seminar with Thomas Walters, PLLC. For more information, go to www.twestateplanning.law.

The Real Truth about Medicaid Planning

With the recent find of a $1 million in gold coins while scuba diving, I was reminded of a story someone once told me. Their father had several hundred thousands of dollars in coins. Many years ago he had created a trust to protect his hard earned money from nursing home poverty, but he chose not to put the coins into his trust. When the time came to apply for Medicaid, his family was faced with either telling the truth about the coins as one of his countable assets, or intentionally omitting them in the Medicaid application. If Medicaid was made aware of it, the family would have to spend those funds on nursing home care before Medicaid would cover the nursing home expenses.

The consequence of not disclosing the asset to Medicaid could result in fraud charges against the family members that completed the application. All the gentleman had to do to protect his coins was to include them in his irrevocable trust. Now, his family was faced with losing a valuable treasured family heirloom, or potential prison time if they were caught withholding information about a countable asset.

It is easy to list valuable assets like jewelry, paintings, coins, guns, and have them protected in an irrevocable trust for Medicaid planning purposes. To do anything else is to knowingly accept the risk of losing the asset. Make sure when you plan to protect your life savings from nursing home poverty, you consult a reputable estate planning attorney. To learn more, go to www.twestateplanning.law. To register for one of our estate planning seminars in cities throughout North Carolina, call (888) 787-1913.