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WHAT BLENDED FAMILIES SHOULD KNOW ABOUT ESTATE PLANNING

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA What Are Blended Families? Blended families take several forms: Married couples in which one or both spouses have children from a previous marriage. Families with children who are in second or subsequent marriages and who have children from previous marriages. Families with children whose spouses have children from previous marriages. Blended families can face complex estate planning challenges. Issues can arise between spouses, or between children and their spouses. Typically, individuals in blended families want to provide for the spouse as well as the children from the previous marriage. In some cases, they also […]

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MODIFYING AN IRREVOCABLE TRUST

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by Thomas D. Begley, Jr., CELA Introduction Frequently, clients have established irrevocable trusts that they would like to modify or terminate. Historically, in New Jersey this has meant that a court order was required. This was a somewhat time-consuming and expensive process for the clients and the adoption by New Jersey of the Uniform Trust Code has greatly simplified the process. There are two ways an irrevocable trust can be modified. One through a court order, and the other through consent of the parties using a Non-Judicial Settlement Agreement (NJSA). Court Approval Where court approval is obtained, the process is […]

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ESTATE PLANNING FOR DIGITAL ASSETS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA The Uniform Law Commission has proposed an Act titled “Revised Uniform Fiduciary Access as to Digital Assets Act” (Revised 2015). The Act has been adopted in 20 states.[1] The Act was introduced in 2016 in 12 additional states.[2] Under the Act, a fiduciary is defined as a person appointed to manage the property of another person, subject to strict duties to act in the other person’s best interest. Common types of fiduciaries include executors of a decedent’s estate, trustees, conservators, and agents under a power of attorney. The purpose of the Act is to […]

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Annuities – The Good, the Bad, and the Ugly

Posted by: Begley Law Group

Thomas A. Lane, Jr., ChFC®, CFP® of the Lane Hipple Wealth Management Group “I HATE annuities, and you should too” is a popular marketing campaign utilized by a national investment advisory firm to create uncertainty and fear among annuity owners with the hope they will seek out their firm who will then “rescue” them from these “horrific” products. Is there any basis or truth to such a comment? I can only assume that the owner of that firm probably does hate annuities. That said, he is making a very broad statement inferring that ALL annuities are bad, which, of course, […]

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The Benefits of Bloodline Trusts

Posted by: Begley Law Group

By Thomas D. Begley, Jr., Esquire, CELA When Should You Consider a Bloodline Trust? A Bloodline Trust offers protection to your children from: (1) divorce, (2) creditors, (3) death of children and subsequent remarriages of children’s spouses, and (4) squandering the money. Divorce The old saying, “We can pick our friends, but we can’t pick our family,” is particularly applicable in the case of sons- and daughters-in-law. Often, our children choose wonderful, trustworthy spouses with whom we get along very well. But occasionally, they choose partners who cannot be trusted, leaving us concerned for the emotional and financial well-being of […]

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CORPORATE TRUSTEES HATE THIS! ONE SIMPLE TRICK TO SAFEGUARD YOUR TRUST

Posted by: Begley Law Group

by Kevin M. Buttery, Esquire When planning your estate, it is often advisable to utilize a trust to effect one or more of your goals. The trustee of such a trust can, and in certain circumstances should, be a corporate entity, also known as a corporate fiduciary. However, you may not want to relinquish control of your assets to somebody outside of the family. To overcome this uncomfortable proposition, your attorney may suggest that you appoint a “Trust Protector” for your trust. While a Trust Protector may sound like a super hero wielding unending power, the role is really meant […]

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Depletion Management

Posted by: Begley Law Group

By Thomas D. Begley, Jr., CELA When a personal injury victim settles a case and the plaintiff is receiving certain public benefits such as SSL Medicaid, Medicaid Waiver programs, SNAP (Food Stamps), Section 8 Housing, or any other means-tested program, a Special Needs Trust is required. To qualify for a Special Needs Trust, the plaintiff must be disabled. How Lonn Should the Trust Last? Once the trust is established, the next issue is. How long should the trust last? The answer to that question depends, in part on how large the settlement is. If the settlement is small, the trust […]

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10 REASONS TO SELECT A CORPORATE TRUSTEE

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA Attorneys prepare many types of trusts. The trusts are for multiple purposes. They include special needs trusts, standard support trusts, discretionary support trusts, disclaimer trusts, bloodline trusts, incentive-based trusts, retirement plan trusts, and trusts for Medicaid planning purposes. Occasionally, it is appropriate to have a family member serve as trustee. However, in most cases it is better to retain the services of a professional trustee. Ten reasons to employ professional trustees include the following: Target on Individual Trustee’s Back. If something goes wrong, such as the trust (1) makes improper distributions, (2) pays unnecessary […]

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The Future of the Practice of Law

Posted by: Begley Law Group

By Thomas D. Begley, Jr., CELA A Virginia State Bar Association appointed a study committee on the future of the practice of law. Perhaps New Jersey should do the same. A draft copy of the final report is interesting reading. The committee identified a number of external forces affecting the practice of law: Advances in technology; Increasing competition from non-lawyers; Generational pressures as Baby Boomers begin to transition to Millennials; Client dissatisfaction with the billable hour; Increased in-sourcing of legal services by corporate clients; and Accelerated globalization of legal services. Technology Serious efforts are now underway to develop artificial intelligence […]

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WHAT IS A THIRD PARTY SPECIAL NEEDS TRUST?

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA A Third Party Special Needs Trust is usually used in a Medicaid context not for the benefit of the grantor of the trust, but for the beneficiary. The grantor of the trust is typically a parent, but could be grandparent, sibling, other relative or friend. The grantor uses the grantor’s assets to fund the trust. The assets of the beneficiary cannot be used to fund a Third Party Special Needs Trust. In order for the trust to be a Special Needs Trust, the beneficiary must be disabled. Disability is usually determined by the fact […]

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DISABILITY ANNUITY TRUSTS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA The Concept. A sole benefit of trust is a creature of HCFA Transmittal 64.[1] These trusts have traditionally been used in crisis planning. They can be established for the benefit of disabled persons—a Disability Annuity Trust (“DAT”).[2] The idea is that assets would be transferred to an irrevocable trust for the sole benefit of the disabled individual. The assets in the trust were then paid out to the beneficiary on an actuarially sound basis using the actuarial tables contained in HCFA Transmittal 64.[3] However, some states, including New Jersey, maintain that despite the clear […]

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COMPARISON BETWEEN TRANSFERS TO CHILDREN’S TRUSTS AND TRANSFERS TO INDIVIDUALS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA The following chart compares the advantages and disadvantages of an outright transfer of assets and putting assets in a Children’s Trust. Trusts v. Transfers Comparison Issue                    Children’s Trusts      Individuals Look-Back Five Years Five Years Control None None Risk Avoidance Yes No Estate Recovery Maybe No Income Tax Parent Children Gift Tax Maybe Yes Step Up in Basis Yes No Principal Residence Exclusion Yes No    

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CHILDREN’S TRUSTS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA A common Medicaid Planning strategy is to transfer assets to third parties, wait for the five-year lookback to expire and apply for Medicaid. If assets are transferred to children, there are certain risks to be considered. If the child is sued by a creditor, the assets transferred by the parent to the child are subject to the claims of the creditors. If the child is subsequently divorced, the son or daughter-in-law may be able to claim additional funds by virtue of the assets that were transferred by the parent to the child. Basic divorce […]

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COMPARISON BETWEEN TRANSFERS TO INCOME ONLY TRUSTS AND TRANSFERS TO CHILDREN

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA The following chart compares the advantages and disadvantages of an outright transfer of assets and putting assets in an Income Only Trust.   Trusts v. Transfers Comparison Issue           Income Only Trusts      Children Look-Back 5 Years 5 Years Control None None Risk Avoidance Yes No Estate Recovery Maybe No Income Tax Parent Children Gift Tax Maybe Yes Step Up in Basis Yes No Principal Residence Exclus. Yes No  

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TAX AND ESTATE RECOVERY ISSUES IN CONNECTION WITH INCOME ONLY TRUSTS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA An Income Only Trust can be designed as a grantor trust. The trust assets are unavailable for Medicaid, but there are some potentially significant tax benefits to the grantor. The Internal Revenue Code contains certain requirements for a grantor trust.[1]  Income Tax. Income is taxed at the grantor’s individual tax rate, which is usually less than the trust’s compressed tax rate. Capital Gains Tax. Capital gains tax treatment is maintained. This is particularly important if the trust is funded with a primary residence. The §121 exclusion from capital gains tax can be maintained. The […]

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IRA Trusts

Posted by: Begley Law Group

INTRODUCTION The United States Supreme Court in a 9-0 unanimous ruling held that an inherited IRA is not protected in bankruptcy under federal law.[1] Heidi Heffron-Clark inherited an IRA from her mother in 2001 and filed for bankruptcy nine years later. The court held that the IRA was not shielded from her creditors, because the funds were not earmarked exclusively for retirement. The Supreme Court indicated that creditor protection does not apply to inherited IRAs for a number of reasons: Beneficiaries cannot add money to an inherited IRA like IRA owners can to their accounts; Beneficiaries of inherited IRAs must […]

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WHY A WILL?

Posted by: Begley Law Group

by Thomas D. Begley, Jr., Esquire, CELA Wills are designed to transfer property on death. If there is no Will, the State writes a Will for the deceased individual. While those Wills make sense for many people, they do not make sense for everyone. Assuming a client has mental capacity, the first step would be to review any existing Wills and bring them up to date, or, if there are no Wills, then to put them in place. Wills can contain appropriate tax planning techniques. Typically, the beneficiaries of Wills include a spouse, children, and other family member, friends or […]

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WHY A LIVING TRUST?

Posted by: Begley Law Group

by Thomas D. Begley, Jr., Esquire, CELA A revocable Living Trust is designed to avoid probate on the death of the individual. If the individual owns real estate in more than one state, the real estate can be transferred to a Living Trust to avoid probate in multiple states. Some states have very difficult and expensive probate procedures, and a Living Trust can be used to avoid the process entirely. In these cases, the Will simply leaves everything to the Trust, and the Trust spells out to whom the assets are to be distributed. The Trust can be funded during […]

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WHY A FINANCIAL POWER OF ATTORNEY?

Posted by: Begley Law Group

by Thomas D. Begley, Jr., Esquire, CELA The Financial Power of Attorney is also known as a General Durable Power of Attorney. The principal designates an individual to serve as an Agent to transact financial decisions on the individual’s behalf. The document should be state specific, because laws in different states vary. It should also be detailed as to exactly what powers are included. Some states have statutory forms of powers of attorney, but these are generally not as effective as individually-customized documents. If a Power of Attorney is not in place, a guardianship may be required in order to […]

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MEDICARE SET-ASIDE ARRANGEMENTS IN THIRD PARTY LIABILITY CASES

Posted by: Begley Admin

by Thomas D. Begley, Jr., CELA Medicare Secondary Payer Act. While there is still some controversy as to whether a Medicare Set-Aside Arrangement is appropriate in a Third Party Liability (TPL) case, there is significant authority with a proposition that Medicare’s interest must be considered in a TPL case in the same manner that it must be considered in a Worker’s Compensation (WC) case. The question is really not whether the law applies, but rather will it be enforced. How much risk is the Personal Injury attorney willing to assume on behalf of his client and on his own behalf […]

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Estate Planning: 5 Things You Should Consider

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA Grandchildren Many grandparents would like to leave something to their grandchildren. Frequently, the grandparents have not thought of this idea, but are enthusiastic when it is presented to them. One way to remember the grandchildren in a Will is to leave a flat sum of money, i.e., $10,000 per grandchild, another is to leave the grandchildren a separate share. For example, grandparents with three children may want to divide their estate into four shares, one for each of the children and one to be divided equally among the grandchildren. Some grandparents want to establish […]

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BABY BOOMERS AND RETIREMENT

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA Nothing is likely to have greater impact on public policy and programs for the elderly than the aging of the Baby Boomers (“Boomers”). Boomers represent 76 million persons in the United States born between 1946 and 1964 – 31% of the total population. Boomers are divided into two waves. The first wave was born between 1946 and 1954 and is currently between 61 and 69 years of age. The second wave was born between 1955 and 1964 and is currently between 51 and 60 years of age. By the year 2030, all surviving members […]

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INCOME TAXATION OF LITIGATION PROCEEDS

Posted by: Begley Law Group

by Thomas D. Begley, Jr., Esquire, CELA Generally, “all income from whatever source derived” is considered gross income by the Internal Revenue Service (“IRS”).[1] However, income received as a result of a personal physical injury or a physical sickness is not considered income by the IRS.[2] However, punitive damages are considered taxable income.[3] The determining factor with respect to the treatment of litigation recoveries is the “origin of the claim” test. “The origin and character of the claim upon which an expense was incurred rather than the potential consequence upon the fortunes of the taxpayer” is the controlling test.[4] The […]

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SPECIAL PROBLEMS AFFECTING THE ELDERLY – PART 1

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA As the population of the United States tend to age and Baby Boomers begin retiring in large numbers, there are a number of problems that will affect the elderly that need to be addressed. Retirement Income. In 2012, people age 65 and older had an average income of $31,742, but the median income was less than $19, 604. About 30% of older Americans receive pensions. The median was $12,000. Only 46.5% of older Americans reported income from personal savings, but half receive $255 or less per year. The mean was $3,233 per year. Only […]

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PROTECTING YOUR ASSETS FROM CREDITORS: ARE YOU BULLET-PROOF? PART 3

Posted by: Begley Law Group

by Thomas D. Begley, Jr., CELA This is the final article in a series devoted to protecting assets from claims of creditors. (The other articles in the series are here: Part 1 and Part 2.) The main issue in this type of planning is the Fraudulent Transfer Act. Previous articles have discussed insurance, titling of assets, retirement plans, assets used in a profession or business, Domestic Asset Protection Trusts (DAPTs), and Off-Shore Trusts. This article will discuss the Elective Share, the Fraudulent Transfer Act, and whether you are a good candidate for asset protection strategies. DIVORCE Divorce often subjects assets […]

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MEDICAID AND MEDICARE 2015 COLA NUMBERS

Posted by: Begley Law Group

CMS has released the Medicare and Medicaid numbers for 2015. They are as follows: Medicaid Income Cap[1] $2,199 Maximum Community Spouse Resource Allowance (CSRA)[2] $119,220 Minimum CSRA[3] $23,844 Maximum Minimum Monthly Maintenance Needs Allowance (MMMNA)[4] $2,980.50 MMMNA (July 1, 2014 until June 30, 2015)[5] $1,966.25 Excess Shelter Allowance (July 1, 2014 until June 30,   2015)[6] $589.88 Maximum Resource Limit (Individual)[7] $2,000 Minimum and Maximum Cap on Equity in the Home[8] $552,000 –  $828,000 Medicare Part A Medicare Co-Payment – Skilled Nursing Facility (SNF)[9] $157.50 Hospital Deductible[10] $1,260 Per day Co-Insurance – Day 61 -90[11] $315 Per day Co Insurance – […]

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PROTECTING YOUR ASSETS FROM CREDITORS: ARE YOU BULLET-PROOF? PART 2

Posted by: Begley Law Group

[This article is a continuation of an article appearing in last month’s issues of The Barrister concerning protection of assets from creditors.  The other articles in the series are here: Part 1 and Part 3.] Many lawyers and other professionals and owners of business are subject to suit by creditors, often because of the nature of the business activities in which they engage. This series of articles is designed to discuss various steps that can be taken to protect assets from claims of these creditors. Under the Fraudulent Transfer Act, it is critical that steps be taken well in advance […]

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The Role of Court Appointed Counsel In Guardianship Proceedings

Posted by: Ethen Ordog

While an initial Guardianship consult provides a client a substantial amount of information pertaining to the process and requirements for such a filing, it is important to recognize and explain the role of Court Appointed Counsel.  Pursuant to Rule 4:86-4(b), the Court is obligated to appoint legal counsel to represent persons who are alleged to be mentally incapacitated.  At a minimum, the Court Appointed Attorney, in representing his or her client, has the responsibility of meeting with the alleged incapacitates person, make inquiries of persons having knowledge of the individual’s circumstances, including but not limited to family, friends and professionals, […]

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