Articles Posted in Asset Protection

What many of our clients do not realize is that long-term health care is expensive, and will only get more expensive with time.  Many people are shocked when they learn about the actual costs of long-term health and feel helpless because they cannot afford it.  The good news is that long-term health care can be affordable with careful estate planning.

So just how expensive is long-term health care?  Lets look at the average costs both in the United States and in Florida. The median cost of a private nursing home in the United States as a whole increased by 1.24 percent from 2015 to $92,378 a year according to studies performed by genworth.com

The median cost of living has also grown in Florida.  The cost of private nursing home care has also risen significantly in the past few years.  The median cost of a semi-private room is $89,060, while the median cost of a private room is $100,375.  Nationwide, Genworth reports that the median cost of a semi-private room in a nursing home is $82,125, which is up 2.27 percent from 2015.

A Florida Asset Protection Trust Is a Great Gift for an 18-Year-old that can be used for the rest of their life.

Almost every parent can remember the way he or she felt on the day their child turned 18.  It’s the day their son or daughter takes their first steps into adulthood.  Officially, they are no longer the baby you used to hold in your arms or the toddler that just learned to walk.  They are adults living in the real world with all of its risks and rewards.

Parents know this mixture of feelings very well.  They are excited for their child’s future but also nervous because they are still so young and apt to make mistakes.  Many parents want to celebrate the child’s birthday by buying them a new car or sending them on a trip.

While these gifts are great, we often tell our clients the best gift you can give your child is an asset protection trust.  A trust that can last the rest of the child’s life, which allows the parents to invest in the child, protect the investment from creditors, and allows the parent to retain some control over how the child uses the assets, after all, they are only 18 and most professionals would agree that young adults do not start making good decisions until at least 25.

In a few months my son will turn 18.  One of the first things I will have him do is create a Florida Asset Protection Trust.

What is a Florida  Asset Protection Trust?

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I have recently become acquainted with a bank who does business very different than traditional banks.  As we do Trust funding for many of our estate planning, elder law, and asset protection packages, we have the opportunity to interact with many banks around the area.  One of the recent banks that I have been impressed with because of their understanding of revocable and irrevocable trusts is Seacoast Bank.  There interest rates much higher than many of the local banks and offer trust services at a good value.  They recently interviewed me about Florida estate planning and asset protection and here is the link to the interview.

Remarriage Protection

Many lawyers proclaim to have remarriage protection in their estate planning documents, but few estate plans deal with these issues completely. A traditional trust that deals with remarriage will include language that permits or limits the surviving spouse rights to benefit in the event of future marriage.  While this may seem like a good way of dealing with this potential conflict, it is often insufficient to protect the surviving spouse and kids from the numerous methods that can be used to gun a trust prior to the marriage.  In the end, your kids are the ones that loose out.
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Like many deaths, the death of the legendary pop star Prince came as a shock and surprise for the world.  What shocked estate planning attorneys even more so is the possibility that Prince may have died without a will or an estate plan, which could have huge ramifications for his estate and heirs.

Estate planning has many benefits that include allowing a person the peace of mind of knowing how their assets will be divided among his or her heirs.  Estate planning is also one of the best ways a person can preserve his or her wealth, avoid costly taxes, and ensure friends and loved ones are provided for.  Many individuals also choose to protect their assets with certain types of trusts.

Prince died at the age of 57 and his estate is estimated to be worth around $300 million.  What many people do not realize is that when a person’s estate goes through the probate process without any estate planning, the estate will be taxed by the federal and state government.  It is likely that his estate will be hit by a federal estate tax rate of 40 and state tax rate of 16 percent.  This means Prince’s estate may have to pay more than $120 million in taxes before it can be passed to his heirs.

Trust FundingTrust Funding

Trust funding is one of the most important aspects of an estate plan or asset protection plan. Attorneys, and clients, hear so much about trust funding, but rarely is it truly understood or implemented properly. Given how important trust funding is, it is a wonder why most estate planning lawyers leave the funding to the client. We regularly see clients who bring us copies of the parents fancy estate planning binders where the plan or many of the benefits to the plan fail because the trusts were never funded or even worse were funded improperly. That is why many of our estate plans and asset protection plans include trust funding.  It is important to understand proper trust funding to ensure that the planning works the way it was intended.
The first key step in trust funding is to identify what type of estate plan the client is pursuing.  Is the client looking for a traditional estate plan with revocable trusts, an asset protection plan that uses one or more irrevocable trusts, or a plan to protect assets from disability or long term care costs.
A traditional revocable living trust is an estate plan wherein the client identifies who gets to benefit from the client’s assets when the client is well, disabled, and after death. A critically important point to funding a revocable living trust is if all assets funded in the trust are still 100 percent available to creditors, predators, and long-term care costs of the grantor while alive. The assets can continue to be made available to the creditors and predators of the beneficiary after the death of the grantor without proper planning.

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Can a grantor be a trustee?

The Irrevocable trust is one of the most valuable tools for estate planning and Florida asset protection that is available. These trusts are not only a great way to pass assets outside of probate, but also allow assets to be protected from creditors. For an irrevocable trust to be valid, a person or entity must serve as the trustee, or manager, of the trust. The Trustee is a person who is responsible for accounting and managing the trust’s assets for the beneficiaries of the trust. Naturally, a question our firm often receives is can I (the grantor/creator of the trust) serve as the trustee?

Can a grantor be a trustee of an Irrevocable Trust? The now outdated school of thought was that a grantor should never serve as the trustee because it could potentially make the trust’s assets available to the grantor’s creditors – thus defeating the asset protection benefits offered by an irrevocable trust. The belief came from section 2036 of the tax code, which states any trust where the grantor retains the right to possess or enjoy the property or designate who will possess and enjoy the trust property will make the principal of the trust includable in the grantor’s estate at death for estate tax purposes.

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Florida Asset Protection Trusts: Can they be changed?

In Florida, both revocable and irrevocable trusts are valuable estate planning tools that permit individuals to organize and protect their assets from creditors.  The Florida Asset Protection trust is not used by many estate planning lawyers.  Asset Protection is an important part of estate planning in Florida. While the name irrevocable would seem to indicate that the trust cannot be revoked, there are many ways of accomplishing the same effect as revoking a trust.

Generally when one discusses revoking a trust, they are referring to doing one of the following:

Most financial planners are unfamiliar with some of the modern twists available with irrevocable trusts.  They tend to be familiar with the older style of irrevocable trust that can pose several problems for those who use them. These problems include:

  1. Loss of control over the management of the assets;
  2. A separate EIN number for tax reporting purposes;
  3. A larger tax bills because of the way traditional irrevocable trusts are taxed;
  4. A loss of the step up in basis available to assets owned by an individual upon the death of the settlor; and
  5. The inability to change provisions or beneficiaries in the future.

The irrevocable trust, you have chosen does not suffer from any of the traditional problems discussed above.  It is an Irrevocable Pure Grantor trust  (IPUG™). With the iPug™ many of the advantages that are traditionally only found with a revocable trust can be provided in an irrevocable trust.  Some may ask, why should we use an irrevocable trust instead of a revocable trust.  Here is a summary of the reasons that the iPug™ trust is superior to the revocable trust and does not pose the problems that a traditional irrevocable trust presents:

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