Elder Law Update – August 2008
Rising Gasoline Costs & Economic Uncertainty –
3 Biggest Requests by Clients for Service from Our Law FirmIn the face of the economic slow down and increased fuel costs, we are advising our clients to not be stymied or paralyzed by negative news. Rather, the economic news is a wake up call we can all learn from and use to improve our circumstances. Over the last year, even in the face of economic uncertainty, the following areas are those in which clients have expressed the most demand for our services. I recommend you consider these three asset protection strategies: 1. IRA Stretch-Out Trusts – Stretch Out Taxes and Protect Assets. Instead of leaving an IRA outright to children, think about leaving it in an IRA Stretch-Out Trust. This kind of trust can stretch and also protect the IRA that you leave to children. This will prevent a beneficiary from withdrawing the entire IRA at the time of death. If that IRA is distributed right after death, the child may automatically lose 35% of it to income taxes alone. Instead, if you leave the IRA in an IRA Stretch-Out Trust, this allows beneficiaries to: a. Stretch tax payments over their own longer life expectancies and allow earnings to compound tax-free; b. Protect the IRA from divorces and lawsuits; and c. Create a legacy for children and grandchildren when the parents are gone. You should also be aware that leaving an IRA to a revocable living trust may not help. As a matter of fact, it can force children to pay the taxes on the IRA faster than necessary. If you have an IRA or 401-(k) may one day rollover to an IRA, call us regarding the advantages of an IRA Stretch-Out Trust. 2. Creditor and Divorce Proofing your Children=s Inheritance – Asset Protection Trusts Protect Against Economic Uncertainty, Rising Divorce Rates and Rampant Business Failures. Instead of just leaving everything to children outright at death, we find that leaving assets in an asset protection trust can prevent the assets from being lost to the children’s creditors. What if a child is in the middle of a divorce, a lawsuit, or a business failure at the time of a client’s death? What happens to their inheritance? A client spends a lifetime accumulating it, the children lose it overnight. Contact us if to find out more about asset protection trusts for children and how they can protect the inheritance of children and other beneficiaries. 3. Revocable or Irrevocable Trust? Have Our Firm or Your Financial Advisor Fund It. It cannot be overstated that fully funding a trust is important. If a trust is unfunded or partially funded, the assets that exist outside of that trust will probably require probate or result in more taxation. Funding a trust can be done with a list of instructions that our office can prepare. Please contact our office if we can assist you in the funding of a revocable or irrevocable living or testamentary trust. If a trust has not been reviewed for 2 to 3 years, then contact our office for a review. At that time we can advise on how effectively a trust has been funded and what is left to be done. We can assist with funding or you can do the funding with our guidance. Better yet, have your Financial Advisor do the funding with our guidance. Next Step These are areas that our clients are expressing a lot of interest in. Don’t get behind the asset protection learning curve. Please call Lori at (847) 563-4887 for a review appointment. At that time we can provide our “15 Point Estate Audit”of the adequacy of any Will, Trust or Powers of Attorney and discuss the above issues. P.S. Our Special Workshops. As a notice to our readership, please be aware of the following upcoming dates for our free workshops entitled “The Elder Care Journey…. How to Get Medicaid Coverage For Your Nursing Home Care…Without Selling Your Home Or Leaving Your Family Without a Dime”:
August 14, 2008 at 4:00 pm (completed filled)
August 28, 2008 at 7:00 pm (completed filled)
September 3, 2008 at 4:00 pm
September 23, 2008 at 7:00 pm– Call (847) 563-4887 to make a reservation in our training room. – You don’t want to miss this workshop!
AEducate to Motivate@
The 3 Phase Lawyers
Legal Counsel Assisting You in the 3 Phases of Your Life:
– Maturing Years
– Senior Years
– Post Death YearsAnthony B. Ferraro Attorney-CPA The Law Offices of Anthony B. Ferraro, LLC Columbia Centre I 5600 N River Road, Suite 764 Rosemont, IL 60018 PH(847)292-1220 firstname.lastname@example.org abferrarolaw.com Note: Pursuant to federal regulations imposed on practitioners who render tax advice (“Circular 230”), we are required to advise you that any tax advice contained herein is not intended or written to be used for the purpose of avoiding tax penalties that may be imposed by the Internal Revenue Service. This document is for discussion purposes only and is not intended to be, nor should it be, considered as legal advice. You should never attempt Medicaid planning, Estate planning, Probate, or Estate and Trust Administration without the advice of competent legal counsel.