Estate Planning

Give Your Kids a Gift They Can't Give Themselves, Part II

Last week, I explained how using a spendthrift trust can protect the inheritance you leave to your children from divorces, lawsuits, and creditors that your children may encounter in the future.

However, even in those states that do recognize the validity of a spendthrift trust, there is nothing that you can do to prevent a creditor from attaching (getting their hands on) those assets once they've been distributed to the beneficiary (your child). In order to protect such distributions from the reach of creditors, the creation of a discretionary trust is very effective.

Give Your Kids a Gift They Can't Give Themselves, Part I

What would you say if I told you that you could give your children a gift that they can never give themselves and that this gift could possibly save your family hundreds of thousands, or even millions, of dollars? Sound too good to be true? It's perfectly legal (see the Utah Uniform Trust Code) and fairly simple with an asset protection trust.

Asset Protection Is Not Just for the Wealthy

Because asset protection is commonly associated with offshore planning, such as forming an asset protection trust in the Cook Islands, you might be thinking, "Asset protection? That's only for the ultra rich or for people involved in tax evasion!" But spendthrift trusts (a form of asset protection trusts) are readily recognized by many states and courts (including Utah) as a valid means of protecting assets for third-party beneficiaries (i.e., your children).

Federal Budget Cuts and the Impact on Seniors

The federal government is working frantically to decrease spending in 2011 by making sweeping cuts to numerous federally funded programs, in order to avoid a government shutdown. Unfortunately, many of the changes proposed will negatively impact seniors. The cuts began in House Resolution 1 (HR 1), passed by the House last month as a long term continuing resolution to cut fiscal spending this year and keep the federal government from shutting down. But 2011 spending cuts are only the beginning. Next, focus will turn to the 2012 budget where a new round of cuts will likely take place, with potential far-reaching negative impacts on seniors.

Immediate Cuts on the Horizon

According to the National Council on Aging (NCOA), the proposed spending cuts in HR 1 would harm senior citizens by severely cutting initiatives that help older Americans sustain their economic independence and health. HR 1 includes:

• Cuts of approximately $525 million in services specifically for low-income seniors (including a
  64% cut to the Senior Community Service Employment Program);
• Cuts of approximately $1 billion in funding for Community Health Centers that serve seniors;
• Cuts of $390 million for home energy assistance;
• Cuts of $305 million for Community Services Block Grants that currently assist 2.3 million   seniors;
• Cuts of $1 billion to programs that include senior volunteers; and
• Cuts of $625 million to the Social Security Administration (estimated to be over $1 billion by
   the Social Security Administration as noted below).

Careful With That Bank Account, Eugene

Financial exploitation of the elderly is increasingly common today. Some estimates put the number of individuals who have had money stolen directly from their bank accounts at around 2 million just last year, with an average of $1,200 stolen per person.

As an elder law attorney, I run into this far more than I'd like to. Unfortunately, more often than not, those who are doing the exploiting are the family members of the elderly - children, grandchildren, siblings, etc. So often, when people are placed into positions of trust, it becomes very easy for those people to justify helping themselves to mom or dad's cash. This problem is far more widespread than most people think. Very recently, actor Mickey Rooney testified before Congress about his own abuse and exploitation by a family member.

Special Planning for Special Needs, Part II

Last week, I introduced you to Special Needs Planning and Special Needs Trusts. This week, I'd like to talk about a very important distinction between the two main types of Special Needs Trusts and why it is critical that you know the difference.

Kinds of Special Needs Trusts

There are basically two types of Special Needs Trusts: 1) "First Party" Special Needs Trusts, and 2) "Third Party" Special Needs Trusts.

A First Party Special Needs Trust (also called a "Self-settled" or "Self-created" Special Needs Trust) is a trust established with assets that belong to the person with disabilities. Typically, these assets come in the form of personal injury settlements or judgments, inheritances, lump sum Social Security payments, or other funds belonging directly to the person with disabilities.

Special Planning for Special Needs, Part I

Families who have children with special needs have very little exposure to the legal issues that surround planning for these children. Just as with any type of estate planning, unless we take control and make our own plan that fits our unique family circumstances, the state has its own backup plan for our families. And often, it's not what you would have wanted.

"Who will care for my loved ones when I'm gone?" is something every parent worries about. But for parents of special needs children, this worry can be even more acute.

For families of special needs children, planning for the future involves thinking about a lifetime of care like: where the child will live, if they will have adequate financial resources to support themselves, and who will be involved in their day-to-day care. Answering questions like these requires a comprehensive planning process called Future Care (or Special Needs) Planning.

Estate Planning After a Divorce

Divorce invariably has a major impact on the personal and financial circumstances of the parties involved. Although attorneys are often involved in the process leading up to a divorce, most divorce attorneys are not well versed in the issues surrounding estate planning and the effects that divorce can have on an estate plan. As a result, few people realize that after a divorce, some very serious issues arise with regard to an estate plan put into place during the former marriage.

Far too often, individuals assume that the divorce took care of these issues, but only when there is a death of one of the ex-spouses do they learn that they were much more tied to that individual than they imagined.

Reverse Mortgages: Scam or Godsend?

If you've been watching the local TV stations or have been driving down I-15 in Utah County recently, you may have seen ads with local TV personality Dick Norse endorsing a reverse mortgage company. The ads suggest that Dick Norse would trust this company with his family's future, blah, blah, blah. And maybe that's true. I know nothing about this particular company endorsed by Mr. Norse, but I can give you some information on reverse mortgages that can help you cut through some of the myths that surround this industry.

A reverse mortgage is exactly what it sounds like. Instead of you paying money to the bank over time so that you can live in your home while you build up equity in it, a reverse mortgage allows you to continue to live in your home while the bank pays you. What the bank gets in return, is a mortgage on the equity in your home. So when you and your spouse move out of the home (to go to a nursing home for example) or when you both pass away, the proceeds of the sale of your home will be used to pay back the bank for the money they advanced to you while you were living in your home. Generally, if there is any equity left after paying back the loan, it will go to your heirs.

That's the basic concept. However, the bigger question is this: Is a reverse mortgage right for you?

Where Will Fi-Fi Go When I'm Gone?

You may have heard about billionaire Leona Helmsley, the famous real estate investor, and her dog Trouble. Upon Mrs. Helmsley's death, Trouble inherited $12 million while certain of her human heirs received much less than that.

I've had some people ask me if leaving an inheritance to a pet is legal. The answer in most states is "yes." But it didn't always used to be that way. Over just the last few decades, nearly every state in the Union, including Utah, has passed laws that allow an individual to leave an inheritance to a pet. Click here to see Utah's pet trust law.

People frequently scoff at such a notion. However, many people have dogs, cats, horses, birds or other family pets with whom they share a strong bond. And the thought of that pet carelessly being tossed into an animal shelter to be adopted by a stranger (or more likely, euthanized) is understandably disturbing.

Sweet 16, March Madness, and Coach Dave Rose

When it comes to following sports, I'm not your typical guy. In law school, when all my buddies were filling out their brackets for March Madness or debating their Fantasy Football picks, I was much more interested in reading the NY Times or Wall Street Journal. I'm the kind of guy who would give up Superbowl tickets for Pink Floyd concert tickets in a heartbeat.

Nevertheless, I love BYU sports and this year has been no exception. Our family has been fortunate enough to attend many of the basketball games this year at the Marriott Center to watch Jimmer, Jackson, and company do their thing. It has been a fun, wild ride.

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