The Weaver Firm Guide to Trusts

photo of beneficiary checks from trust payout

What the heck is a “trust” and why should I care? Good questions. The answers may save you money, time, and headaches.

To help you understand, we’ve provided a quick and easy overview below for a variety of trusts. Let’s start with a few basic trust terms  and definitions–

Trust Terms & Definitions

  • Trustee: The person designated in the Trust Agreement to take possession of the trust assets and manage those assets. He must also preserve and manage the assets according to the provisions in the Trust agreement.
  • Trust Agreement: The Trust Agreement is the document that creates the Trust and sets out the provisions related to the Trust. For instance, it will generally designate the trustee, the beneficiaries, and the purposes of the Trust. It will also typically include provisions designed to guide the trustee in fulfilling his duties.
  • Grantor: The person(s) who creates the Trust Agreement. In order for the Grantor to create a valid trust, he must designate a trustee and a beneficiary. He must also transfer assets into the Trust.
  • Beneficiary: The Trust Beneficiary is the person(s) who receives the benefit of the assets in the Trust.

Types of Trusts – Overview

Testamentary Trusts 

  • The concepts of wills and trusts combine when you consider the creation of a Testamentary Trust.
  • These trusts are created under your will and control the management of your assets after your death.
  • These trusts have a wide array of uses, but they are very often used to provide for the management of assets for minors and young children in the event they might become entitled to receive property under a will.

Revocable Living Trusts 

  • In recent years, the use of Revocable Living Trusts as a substitute for traditional estate planning has exploded in many states.
  • In Texas, however, these trusts as effective estate planning alternatives have limited usefulness.

Educational Trusts 

  • One of the primary concerns that many parents and grandparents have is setting aside money to provide for education for their children and grandchildren.
  • In spite of this desire, those same parents and grandparents recognize that the best interests of their children is not served by giving large sums of money to minors or young adults who might rather buy a car than pay for an education.
  • As a result, the use of an Educational Trust becomes a very appropriate option for providing money for education while making sure the money is used appropriately.

Spendthrift Trusts 

  • Another concern of people creating trusts is that they want the assets of the trust to be protected from the attacks of potential creditors of either the Grantors or the Beneficiaries of the Trust.
  • Spendthrift provisions can be incorporated into a Trust, which will then protect the trust assets from attack.

Crummey Trusts 

  • People making gifts into Trusts generally make those gifts for a variety of reasons.
  • However, regardless of the reason, they do not want to give up their money and pay gift taxes on top of giving away their money.
  • The Crummey trust provisions make it possible to make gifts to a trust while excluding some portion or all of the gift from potential gift tax complications.

Irrevocable Life Insurance Trusts 

  • Life insurance policies can very often present estate tax problems for the person who owns the policy.
  • To combat the estate tax complications, the Irrevocable Life Insurance Trust provides an alternative to own a life insurance policy while completely excluding the proceeds from the estate for tax purposes.

Medicaid Gifts and Trusts

How Do Assets and Trusts Impact Medicaid Eligibility?

Medicaid eligibility requires minimal personal assets.

Your health care needs will increase as you age.

That is a given.

With this increase, your health care bills will also increase.

That is a given.

Some people turn to Medicaid for financial assistance.

That is not such a given.

What is Medicaid?

Medicaid is a government program managed by states to help with medical and long-term care costs.

It is needs-based, meaning individuals must qualify financially for eligibility.

In order to prevent individuals from merely making transfers of their property, either outright or in trust, to qualify for Medicaid, there is a penalty period imposed on transfers made within five years of applying for Medicaid. 

If an individual establishes a trust using some of his or her own funds, where the individual is the sole beneficiary or one beneficiary in a pool of beneficiaries, the trust may be considered a resource for Medicaid purposes.

This is particularly true if the trust can be revoked — a revocable trust– and the assets can be pulled back into the name of the Medicaid applicant, she said.

Third Party Trust

If the trust is created by a third party, with third party funds, for the benefit of the Medicaid applicant, then the answer would depend on the specific terms of the trust and whether or not the settlor — the person who created the trust — is the spouse of the Medicaid applicant.

That’s because income and asset limitations are imposed on the community spouse in order for the applicant spouse to qualify for Medicaid.

The state may also have the right of recovery against the estate of a deceased Medicaid recipient for Medicaid benefits paid to such individual during his or her lifetime. Always use a ladybird deed or a transfer on death deed for real property.

For starters, you cannot simply transfer (gift) assets to your loved ones to become eligible.

In fact, the transfers would need to occur more than five years before the Medicaid application.

Work with an experienced elder law attorney to determine if Medicaid is a viable option for you.

Contact us at 817.638.9016 

Elder Law 101: Nursing Home Care vs. Assisted Living

How Do Nursing Homes Differ from Assisted Living

Nursing home lawyers provide assistance in making an advanced plan to get you care required as you get older or if you experience illnesses or injuries that make you unable to care for yourself any longer.  

As you experience age-related sickness or the affects of illness, there is a substantial chance you will some day require care in an institutional care environment.  

In fact, as Wall Street Journal explains, more than 70 percent of people who reach the age of 65 will require nursing home care at some point in the future.  

You’ll need to make sure you are prepared to move to the right environment — and to pay for the care you require.

Most nursing homes cost upwards of $5,000 a month for care.

The Weaver Firm attorneys can help you understand your options for nursing home care or other care you might require.

In particular, you should consider the differences between nursing homes and assisted living facilities so you can make a fully informed choice regarding which environment is right for you.

If you want help in understanding the different options for senior living when you cannot live alone any longer, you can give us a call at any time to talk with nursing home lawyers at our firm.

Assisted Living vs. Nursing Homes

Assisted living and nursing homes both provide an option for seniors who can no longer live independently but as the New York Times explains, there are important differences.

Assisted Living Facilities

Assisted living facilities generally provide a more home-like environment while nursing homes have a more institutional or hospital-like feel.

These homes may involve seniors living more independently in their own rooms or their own apartments, while nursing homes generally provide semi-private or private rooms with much less privacy and autonomy than assisted living facilities offer.

While an assisted living facility can feel more like living independently for seniors, this independence makes assisted living facilities unsuitable for many seniors who require more hands-on help.  

Assisted living facilities may offer housekeeping services, meals, activities, and some help getting medical care, assisted living facilities typically do not provide the same level of supportive services that a nursing home does. 

The New York Times also indicates that nursing homes are more heavily regulated than assisted living facilities. 

Assisted living facilities are covered by VA aid and attendance. The rules for this program are complex but are not nearly as intense as Medicaid rules.

Some facilities have an assisted living section and a nursing home care section for seniors who are attracted to the idea of assisted living but who may need nursing home care in the future.

If you think this could be an option, you should make sure to find out what the rules are for when and how different kinds of care can be paid for. 

Getting Help from Nursing Home Lawyers

How much does it cost to stay in a nursing home?

The average cost of a private room in a nursing home is more than $90,000 a year.

What are ways to pay for a nursing home stay?

There are four main ways to pay for a nursing home stay:

  1. Cash out of your pocket
  2. Medicaid
  3. Private Long Term Care Insurance
  4. Medicare

How does Medicaid pay?

Medicaid is a joint federal and state government program that helps people with low income and little assets pay for their nursing home cost.

Generally, to be eligible for Medicaid, your income and asset levels can’t exceed levels set forth in your state.

Medicaid officials will “look back” at your financial information over a certain number of years to determine if you have been getting rid of property in order to receive Medicaid.

However, if you have assets over the allowable level, you are permitted to “spend down” or decrease your assets before you receive Medicaid.

Typical spend down costs include medical expenses, mortgages and other debts, and funeral expenses.

Also, your house and car are generally not counted against you for qualification purposes, and therefore don’t have to be spent down.

States vary in their eligibility requirements, so you should check with your state social services office or an elder law attorney for specific information.

Also, keep in mind that not all nursing homes accept Medicaid, so you’ll need to ask about a particular nursing home’s policy. 

Nursing home lawyers at the Weaver Firm can provide assistance with the process of making a plan to get nursing home care or to get care in an assisted living community.

We can also provide guidance on reviewing nursing home facilities and assisted living facilities to find the right care environment for your particular circumstances.

Because the costs of care can be expensive and are not covered by Medicare or by most private insurance, we also provide assistance with the creation of a Medicaid plan so you can protect assets while getting Medicaid to cover the costs of your care. 

Contact us today at 817.638.9016 or RWeaver@weaverlegal.net

Providing for Special Needs Kids–Using Special Needs Trusts

As the mom or dad of a special needs child, your heart and hands are already full. With a Special Needs Trust, your child continues receiving government benefits and enjoys an enhanced life–with the trust funds paying for the extras including:

  • Paying you for providing care to your child
  • Paying for fun trips and activities for your child
  • Setting aside savings for your child’s future needs

To schedule an appointment with Travis Weaver, attorney, or Rick Weaver, attorney, about creating a Special Needs Trust, call 817-638-9016. To learn more about this essential legal tool, check out our extensive Q & A below: 

Why is a Special Needs Trust essential?

If you leave money or property directly to your special needs child, either in a will or through intestacy (dying without a will), the inheritance your child receives will endanger his or her ability to receive benefits under government programs such as Supplemental Security Income (SSI) and Medicaid.

What is a Special Needs Trust?

A Special Needs Trust, also known as a Supplemental Needs Trust, is created to hold cash or property for your special needs child. Funds from the trust can be used to help your special needs child–yet still allow the child to receive government benefits like Medicaid or SSI. As described earlier, if the child owns these assets outright, he or she may not qualify for government benefits. 

Funds from the Special Needs Trust may also be used to pay yourself and other family members for caregiving duties. This helps make up for a parent’s lost income. Since many special needs children require around-the-clock care, making it impossible for a parent to hold a job, this benefit may help relieve financial stress and ensure your child receives the best possible care–from you.  

What does my special needs child gain with a Special Needs Trust? 

A properly drafted and executed Special Needs Trust shelters assets for a special needs child or other disabled person, while allowing the child to benefit from government programs offering support to disabled individuals. 

Your special needs child may be eligible for Supplemental Security Income (SSI), Social Security Disability Insurance (SSD), Medicare and Medicaid. Consider this brief summary about qualifying for these programs:

  • SSI is a needs-based program available if certain income and resource limitations are met.
  • In most states including Texas, people receiving SSI are automatically entitled to Medicaid.
  • To qualify for SSI and Medicaid, a single person must own less than $2,000 of countable assets.
  • Those with countable assets greater than $2,000 can lose their eligibility for benefits. 

Won’t any trust work? Unfortunately, no. 

Here’s why — support trusts (most common trusts are support trusts), which direct that funds be used for the health, welfare, and support of a beneficiary like a special needs child, will usually disqualify a the child from receiving government benefits. This is because the assets in a support trust are counted as the child’s resources.

A Special Needs Trust allows a parent (the trustee) to use trust funds to add to, not replace, the government benefits for which your special needs child qualifies.

Here’s how it works: 

  • To maintain eligibility for needs-based support, your special needs child (the beneficiary) cannot have control over the assets in the Special Needs Trust.
  • Your special needs child cannot manage the assets, have the right to demand distributions of income or property from the trust, name the Trustee or change the terms of the Special Needs Trust.
  • The use of the Special Needs Trust’s assets for the benefit of a special needs child is determined by the parent (Trustee).
  • Because your special needs child (the beneficiary) does not have a claim to the assets in the trust, this means the trust assets are not countable resources and do not affect the special needs child’s eligibility for benefits.
  • As a result, the special needs child continues receiving government benefits, while still enjoying the benefits of the funds or property in the trust–for things like travel, entertainment, and other  supplemental needs that may greatly enhance your child’s quality of life. 

Who can serve as a trustee of a Special Needs Trust? 

  • The Trustee can be a parent, family member, friend, or private professional trustee.
  • In the case of a self-settled special needs trust, the person making the gift to create the trust can also serve as trustee. A self-settled special needs trust requires a payback provision for any governmental benefits received. All other special needs trusts do not require such payback provisions. 

Want to schedule an appointment to talk with us about setting up a special needs trust? Call Travis Weaver, attorney, or Rick Weaver, attorney, today at 817.638.9016. 

VA Aid and Attendance: Rewarding Our Servicemen and Servicewomen

The VA Pension benefit numbers just came out, increasing 2% for those veterans who qualify.

The VA has many different programs, but two dealing with monthly payments.

The first program for monthly payments is called “Compensation,” which helps those injured while serving their country.

The second program is called “Pension,” which generally provides payments to help veterans and their dependents with high medical costs (very useful in the elder law arena). This is the area we primarily deal with in our practice. Both of our attorneys are certified VA planning attorneys.

The following represents the maximum payments available under the Pension program.

Veteran with One Dependent

Basic Pension:                           $1,436/m

Housebound:                             $1,679/m

Aid and Attendance:                 $2,169/m

Single Veteran

Basic Pension:                          $1,096/m

Housebound:                            $1,340/m  

Aid and Attendance:                $1,829/m

Surviving Spouse of Wartime Veteran

Basic Pension:                         $ 735/m

Housebound:                           $ 898/m

Aid and Attendance:               $1,176/m

This increase is good news for anyone looking to help an elderly or disabled veteran who served in an applicable time of war.

How can a veteran use these benefits?

Pension benefits are best used to help pay for an elderly or disabled veteran’s out-of-pocket medical costs. 

For example:

Mom, age 78, is the unmarried surviving spouse of a wartime veteran. Mom needs in-home care to assist with her activities of daily living (ADLs) due to her failing health. In this scenario, mom may qualify for up to $1,176/m to assist with her in-home care costs.

Pension benefits can also be used to pay for the cost of an assisted living facility as well. 

Call today to schedule a VA planning meeting with one of our attorneys. Don’t leave money on the table.

817.638.9016 or RWeaver@weaverlegal.net

Your Income Will NOT Disqualify You From Medicaid Nursing Home Benefits

hammer breaking a piggy bank

How a “Miller Trust” Works As a Tool–
Breaking Open Qualification for Medicaid Nursing Home Benefits

In Texas, if your income is more than the monthly amount Medicaid permits, special rules allow you to re-direct your income to a legal tool called a Miller Trust or Qualified Income Trust (QIT).  This legal planning document allows you to meet income eligibility rules for Medicaid nursing home benefits.  If you don’t set up this type of trust,  your income cannot be more $2,250 per month in order to meet Medicaid’s 2018 eligibility requirements. 

The document is known as a“Miller Trust” for the family that brought the court action resulting in this planning solution for families.

Big thing to remember: income will never disqualify you for Medicaid nursing home benefits in Texas.

How Qualified Income Trusts or Miller Trusts Work In Texas

A Qualified Income Trust or “Miller Trust” is set up for one reason and one reason only. In it’s most basic form, you use this tool to gain income eligibility for Medicaid nursing home care by depositing your income into a checking account titled in the trust name.

Here’s how it works–

  • The trust is used to process your income as a Medicaid applicant, so that you meet Medicaid’s income rules ($2,250 per month in 2018). The trust must follow special rules for managing the monthly income of the person seeking Medicaid’s help.
  • The instructions contained within the document make up the trust. Only income may be deposited into these types of trusts. The trust bank account is prohibited from accepting anything other than income. That is why these are also generically referred to as income trusts.
  • Regulations require depositing income into a “Miller Trust” checking account authorized by the trust. Rather than using an existing account, I recommend fresh bank accounts with a zero balance. You can use a current account, but it’s too risky. In our practice we always help clients set up a new account.
  • When deciding eligibility, the Medicaid caseworker ignores the income deposited into the Miller Trust bank account. Using this approach reduces countable income. The apparent income reduction helps you meet the strict income rules.
  • To wrap up, Medicaid policy limits the monthly income you can receive and still qualify for nursing home benefits. The Federal government adjusts this upper limit for inflation each year.  In 2018, the monthly limit for income is $2,250. If your income exceeds the limit, special rules allow this income to be put into a Qualified Income Trust (QIT) or “Miller Trust.”

How Your Income Flows Through the Trust

A “Miller Trust”or Qualified Income Trust (QIT) helps you qualify for Medicaid in Texas–but it doesn’t shelter income. Money deposited into the trust bank account typically flows out of the trust to pay the nursing home. It’s designed to cover part of the care costs. The balance of the nursing home payment comes from Medicaid. If any money remains in the trust after death, the state keeps it to help defray their costs. 

Here’s an Real-life Example of How a “Miller Trust” works in Texas

Let’s say your mom needs nursing home care. She gets a monthly Social Security payment of $2,400. Her income exceeds the Medicaid eligibility limit of $2,250 for a single person, but is not enough to pay for the care she needs. The rules say that she doesn’t qualify for Medicaid, but the Miller Trust provides a workaround. Here are the steps we recommend for qualifying for Medicaid nursing home benefits in this example–

  1. Hire an attorney. The first step is to hire an attorney to create a Medicaid Qualified Income Trust or “Miller Trust.”  At Weaver Firm-Attorneys , we focus  on “Miller Trusts” and have for more than two decades
  2. Deposit mom’s Social Security check into the account. This drops the amount of income the state counts against her eligibility. Her Social Security income will pay part of her care. Medicaid makes up the difference. 
  3. The Medicaid agency figures out how much of the long term care costs an individual must pay. They add up the amount of income received each month. From that they allow payments for health insurance premiums. Examples include premiums for Medicare Part B, Prescription Drug plans, group retirement health insurance and dental coverage.
  4. Payment of medical expenses not otherwise covered by Medicare and Medicaid is also allowed from through the trust. The trustee (the person managing the trust) cannot use trust funds for any other purpose–except those allowed by Medicaid. 
  5. Your mom keep $60 out of the $2,400 for her personal needs.  
  6. If your mom is married, the trust may be able to distribute part of the income to the spouse.  This allotment is called the Minimum Monthly Maintenance Needs Allowance. The size of this monthly allowance is determined by the Spousal Income Protection rules. For 2018, the largest allocation in Texas is $3,090 per month.
  7. The trust will typically distribute all deposited funds each month to cover the items detailed above. There is little chance any money will grow in the trust. It is rare for a Medicaid recipient to die with a balance left in the qualified income trust account. If it happens, the state can recover what it spent on the applicant’s care. After the state is repaid, the trustee can distribute the rest to beneficiaries named in the document.

Setting up and managing a Miller Trust is not a “do-it-yourself” project. The rules are too complicated. 

Set up the wrong way, you face a real risk of losing thousands of dollars’ worth of benefits. Bear in mind once you lose those benefits, they are lost to you forever. If you have income that’s too high to qualify for Medicaid, a Qualifying Income Trust makes sense.

Call 817-638-9016 for an appointment today with Rick Weaver, attorney, or Travis Weaver, attorney, for guidance in setting up a “Miller Trust.” If you don’t call us, find another experienced attorney to assist you. A skilled attorney will prepare the specific instructions needed for the trust. You’ll get advice on how the trust should be set up and how to fund it. It’s the best way to avoid the pitfalls and get all the benefits out of “Miller Trusts” or Qualified Income Trusts in Texas.

The Weaver Firm – Attorneys
817.638.9016 

How A Lady Bird Deed, Nursing Home Medicaid Benefits, & Your Home Are Important

bird and birdhouse

A “Lady Bird” deed preserves the homeowner’s ability to immediately qualify for Medicaid benefits including payment for nursing home care.

Here’s how it works:  Transfers of assets within a “look-back” period may disqualify Medicaid applicants from immediately qualifying for benefits—but creating a Lady Bird deed, also called an enhanced life estate deed, is not considered a transfer for Medicaid purposes because the homeowner retains the right to sell the property or revoke the deed. No gift is ever made.

This deed is nicknamed “Lady Bird” because the Florida attorney who first drafted the deed used the name in his example. Sorry, Texans, we don’t get to claim this Ladybird.

What are the legal details?

A Lady Bird deed, technically called an enhanced life estate deed, allows a property owner to transfer a remainder interest in a home to the beneficiaries named in the deed, while reserving a life estate (a right to occupy and use the property during his or her lifetime) The grantor (or person who creates the deed) also keeps the right to sell or mortgage the property, change the remainder beneficiaries at any time, or cancel the deed altogether.

If the owner dies without revoking the deed, the property passes outright to the remainder beneficiaries without going to court.

Pretty neat.

How is an enhanced life estate deed different from a traditional life estate deed?

With both the enhanced life estate deed and the traditional life estate deed, a property owner transfers a remainder interest in the property to the ultimate beneficiaries and retains a life estate. However, a property owner using a traditional life estate deed does not reserve the right to sell or give away the land without the consent of the remainder beneficiaries.

The enhanced life estate deed allows the property owner to reserve those rights. That’s why it’s enhanced I guess.

Plenty of benefits to enhanced life estate deeds

Enhanced life estate deeds offer many advantages over traditional life estate deeds:

  1. They preserve the homeowners ability to immediately qualify for Medicaid benefits. Transfers of assets within a “look-back” period may disqualify applicants from immediately qualifying for benefits. However, executing an enhanced life estate deed is not considered a transfer for Medicaid purposes because the homeowner retains the right to sell the property or revoke the deed. No gift is ever made.
  2. They provide homeowner the flexibility to change the remainder beneficiaries at any time.
  3. They allow the homeowner to sell or mortgage the property without the consent of the remainder beneficiaries.
  4. They protect the property from the creditors of the remainder beneficiaries during the homeowner’s lifetime.
  5. Because the owner of the property retains the right to take back the property during his or her lifetime, the transfer will not count as a gift for federal gift tax purposes.

Beneficiaries receive a stepped-up basis

Because property will remain a part of the grantor’s estate, the cost basis of a property transferred using an enhanced life estate deed would be “stepped-up” to the value of the house on the date of death. This may significantly reduce the amount of capital gains taxes owed when the property is sold.

Can a trust be a beneficiary? 

Yes, a trust can also be a beneficiary. If you love your family but don’t want them to have property outright for whatever reason, sometimes we create a revocable trust to hold the property.

Need help creating a Lady Bird deed or qualifying for Medicaid nursing home benefits? Give us a call at Weaver Firm – Attorneys at 817-638-9016 to schedule an appointment. 

Travis Weaver, Attorney

Travis Weaver, Attorney

What is the “Death Tax”? Don’t let it scare you!

Who Pays Estate or “Death” Tax?

Don’t be afraid! One of the first questions we get asked when discussing estates and probates is, “Will my loved ones pay ‘death’ or inheritance tax after I die?”

The short answer. Probably not.

The estate tax—a.k.a. the “death” tax to those who want it repealed—is a federal tax on assets (including cash and securities, real estate, insurance, trusts, annuities, business interests and other assets) upon one’s death.

In 2017, anyone who died leaving an estate larger than $5.49 million paid 40 cents on the dollar for every dollar over $5.49 million. As you can imagine, this is an unpleasant conversation to have with people.

After the new tax plan passed in 2018, the estate tax exempt amount jumped to $11.2 million per person.

Unlimited amounts pass between spouses. The $11.2 million amount applies to beneficiaries like children or grandchildren.

According to a 2015 report from Congress’s Joint Committee on Taxation, 4,700 estate tax returns reporting tax liability were filed in 2013, out of 2.6 million deaths in the United States. That’s around 0.2 percent of Americans, or roughly two out of every 1,000 people who die.

And once the tax bill passed, the studies estimate that around 1,800 estates will be affected this year.

Estates Often Pay Less Than 17%  in Taxes — Not Top Rate of 40%

The top statutory rate is 40 percent, however the effective tax rate— or what the estates actually paid—was less than 17 percent in 2017, according to the Tax Policy Center.

If the tax rate is 40 percent, how is it estates pay less than 17%? Here are reasons:

  • Remember, estates only owe taxes on the amount above the exempted amount, which, again, is $11.2 million in 2018.
  • There are plenty of deductions and loopholes thrifty accountants and lawyers can use.
  • GRATs (grantor retained annuity trust) – a type of trust created to transfer assets tax-free.  We recently implemented a plan involving a GRAT for a client.  The estate owner put money into a trust designed to repay the estate the initial amount, plus interest at a rate set by the Treasury, typically over two years. If the investment — typically stock — rises in value any more than the Treasury rate, the gain goes to an heir tax-free. If the investment doesn’t rise in value, the full amount still goes back to the estate.

State Inheritance Tax – Texas Doesn’t Have It

Some states have state inheritance taxes. Luckily, Texas has no such tax. Below is a handy guide to your state’s inheritance tax.

Inherited Retirement Account Taxes – Some Apply

If you inherit a 401(k) or IRA, you may be taxed on any distributions and you may pay the capital gains tax on the gains if you inherit stocks or real estate and sell them.

Gift Taxes – Give Away $15,000 Tax-free To You

Finally, individuals are allowed to give away $15,000 per year (in cash, stocks, cars, etc.) without being taxed, and that’s $15,000 per donee. So if you have three kids, you can gift each of them $15,000 per year, for a total of $45,000. If you give more than that amount, you will need to file a gift tax return so you aren’t taxed on the excess amount.

Again, if you’re gifted stocks, know that you’ll pay taxes on the gains should you sell them.

Tax Attorney Could Help Cut Taxes On A Large Estate 

If you’re likely to inherit (or give away) a sizable estate, you should meet with a tax attorney to figure out how everything will go down in your state.

You can afford it, after all.

Come see the Weaver Firm Attorneys today to discuss estate taxation issues and planning techniques.

Rick Weaver, Attorney  or Travis Weaver, Attorney

Office: 817.638.9016 

Email: RWeaver@WeaverLegal.net

Email: TWeaver@WeaverLegal.net

Don’t Leave Life Insurance To Your Ex-Spouse!

Quote "Not all the people in your life are meant to stay"Ever heard horror stories about accidentally leaving an inheritance to an ex-wife or ex-husband? Here’s how it
happens–

Suppose you have a life insurance policy issued as part of an employee benefit plan that identifies your spouse as your primary beneficiary and your adult child as the contingent beneficiary. Maybe you even have a portion of the policy passing to your dog–this happens, too. 

Years down the road, your marriage ends and you get a divorce.

Your divorce decree provides that your ex-spouse is divested of all right, title and interest in any proceeds from your insurance policies. This solves that problem . . .right?  Nope.

Quick Answer –Why Is This Important To You? 

In layman’s terms, you need to re-name your beneficiaries under your insurance policy after a divorce unless you want your ex-spouse getting that money when you die.

The easiest way to avoid any of this happening is to make sure you review your beneficiary designations regularly and to update your beneficiary designations as your life changes.

  • Get married . . .change the beneficiaries
  • Have kids . . .change the beneficiaries
  • Divorce . . .change beneficiaries

There is case law to support the idea that a lawsuit could be brought against the ex-spouse to enforce the ex-spouse’s waiver of those benefits in the divorce decree; however, that may lead to protracted litigation and significant expense.

What does Texas Law Say?

Under Texas law, a designation in favor of a spouse is not effective after a decree of divorce or annulment is rendered unless the decree designates the ex-spouse as a beneficiary or the owner of the policy re-designates the ex-spouse as the beneficiary after the decree becomes final.

This saves you . . .right?

Maybe not.

State law applies to insurance policies acquired independent of your employment. If you die owning such a policy and you named your spouse as the primary beneficiary and then got divorced, the designation in favor of your ex-spouse would not be effective and the proceeds would pass to the alternate beneficiary.

What Does Federal Law Say?

However, insurance policies issued as part of an employee benefit plan are controlled by the Employee Retirement Income Security Act of 1974 (ERISA). This federal law trumps state law with respect to most employee benefits. Under ERISA, a plan administrator must distribute benefits to a beneficiary named in the plan regardless of the state law divesting the ex-spouse of his or her right to the benefits.

So if you obtained your insurance policy through your employer, your ex-spouse would be entitled to the proceeds.

Call our office for help or questions

We’re glad to visit with you about updating your will to change or add beneficiaries and to advise you on more changes to protect your family’s inheritance.  Give us a call at 817-6389016 to schedule an appointment or email us at Tweaver@WeaverLegal.net.

Travis Weaver, Attorney

Travis Weaver, Attorney

Our Guide to Disability Planning

A temporary or permanent disability can affect anyone. Sometimes the disability is sudden–like a car wreck or heart attack. Sometimes a serious illness like Alzheimers’, advanced cancer, or ALS  causes a slow, but steady health decline. 

How Your Life May Be Altered By a Serious Disability

  •  You may be unable to work your normal job or unable to do any kind of work
  • You may be unable to make your own decisions, communicate your wishes, or manage your own affairs
  • If you have children, you may not be able to properly care for them on your own
  • You may not be able to create a will or change your estate plan if you are not of sound mind

Combating These Problems – The Basics

Create a Power of Attorney and Health Care Directive

The most important step you should take to plan for your incapacitation is to have a valid statutory durable power of attorney and healthcare power of attorney.

  • The power of attorney gives your designated agent the power to pay your bills, access your bank accounts, and keep your financial matters in order if you are unable to do so.
  • The health care power of attorney allows you to designate authority to a person of your choice to make medical decisions on your behalf.
  • You should also include a health care directive that states your wishes regarding certain treatments, such as whether you wish to remain alive on life support in certain situations.
  • These documents put financial and health care decisions in the hand of those you trust, if you cannot make decisions for yourself.

Our Estate Plan recommendation includes all of the previously mentioned documents as well as a Last Will and Testament.

Prevent Financial Disaster Due To Disability

A disability could prevent you from working ever again. Here ways to strengthen your resources to help avoid financial issues due to a disability: 

  • Be aware of your disability insurance options, including employer-provided insurance, Social Security Disability benefits, and private disability insurance. Consider buying disability insurance to help replace your income, if this benefit is not offered by your employer.
  • Your existing insurance probably doesn’t cover long-term care. Long-term care planning should be considered in any estate plan, as the costs can be very high and deplete your assets quickly.
  • Medicaid planning to pay for nursing home care may be an option for some people, while others should consider long-term care insurance. Medicaid planning is one of our specialties at Weaver Firm – Attorneys. The average nursing home cost in 2018 is over $6,000 a month per person or about $72,000 per year. Our planning sessions cost less than $1,000. You do the math.
  • If you have minor children, you should already have a guardian designated to care for them. If you are disabled, you may not be physically able to care for your children and you may not have the mental capacity to choose a guardian at that time.
  • Even if you are healthy now, planning for disability can give you peace of mind and protect your family.

Consult an estate planning attorney to discuss your disability planning concerns or call  us at 817-638-2022 to schedule an appointment. At Weaver Firm – Attorneys, we focus on estate planning and elder law.  Rick Weaver, attorney, is board-certified in estate planning and probate, with decades of experience. Travis Weaver, attorney, focuses on helping families with legal planning for disabilities, Medicaid nursing home qualification, and setting up wills. 

817.638.2022 or RWeaver@weaverlegal.net