There are a number of different factors to consider when you are engaged in inheritance planning, and one of them would be details specific to the people who comprise your inheritance list.

It is not always as simple as handing over a lump sum bequest directly, because for one thing there can be estate tax implications that must be addressed.  Some heirs may not be ready to handle a large sum of money, and for these individuals you may want to include stipulations, perhaps through the creation of an incentive trust.

Asset protection is something else you may want to take into account, and this can be especially important for people such as physicians who are especially vulnerable to lawsuits.  One course of action that you could choose to take in an effort to protect assets would be to create a generation-skipping trust.

As the name suggests, you skip a generation when you name a beneficiary, making your grandchildren the beneficiaries.  Your children can however benefit from assets that are placed in the trust, receiving distributions of income and utilizing property that is held in the trust.  Because they don’t legally own the resources in the trust they cannot be targeted by claimants against the children.

Generation-skipping trusts can be a very useful asset protection tool, and they provide tax advantages as well.  To explore this and other options you may want to take action right now and arrange for a consultation with a licensed, experienced, and savvy Indianapolis estate planning attorney.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

When you are planning your estate it is important to consider not just what it is that you have to give, but who exactly it is that you are giving it to.  All of your family members are unique individuals, and they invariably all have their own strengths and weaknesses.  Some of your loved ones are probably well-established, having already demonstrated sound financial judgment as they have gone through life and managed their own affairs effectively.  You may feel no trepidation about providing family members such as these with a direct inheritance that affords them total decision-making freedom.

On the other hand you may have some people on your inheritance list that have not shown a propensity toward effective money management.  Since the passing on of your legacy will be the final opportunity that you have to provide for your loved ones, the sense of finality is a profound one.  If you do have a spendthrift heir the inheritance that this individual receives may be very important to his or her ongoing financial stability.  If it was to be used up quickly a very difficult situation could ensue.

The good news is that there are estate planning tools that are intended to provide a long-term source of financial support, and one of these is the spendthrift trust.  With these vehicles the trustee administers distributions to the beneficiary in accordance with your wishes as stated in the trust agreement; the beneficiary does not have direct access to the the assets in the trust. Since the beneficiary is not the legal owner of these assets, creditors cannot target them so the assets are protected.  If you appoint a professional entity like a bank or trust company to serve as trustee, you can rest assured that the principal will be invested wisely and that your beneficiary will enjoy a long-term financial underpinning once you have passed away.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

As you reach the latter stages of your life the practical implications of your estate plan become all the more apparent to you. Earlier on you may have perceived of your estate plan as being a precaution to have in place to protect your family should the unthinkable take place.  But as you get into your twilight years you generally come to peace with your own mortality and recognize just how important it is to transfer your assets to your loved ones in the appropriate manner so that they are provided for throughout their lives if possible.

Though you can’t be there for them forever, what you can do is arrange for assets to be transferred to your loved ones in a safe manner.  Asset protection is an important thing to think about when you are planning your estate, and one way that this can be achieved is through the creation of lifetime trusts.

You can never predict how your heirs will handle their inheritances even if they have done a good job managing their own affairs throughout their lives.  So it is possible that bad decisions could result in a loss of assets that leaves a loved one or loved ones in a precarious financial situation.  Short of this there is the issue of creditors, claimants, or former spouses targeting the resources that you have left to your family members, and keeping them safe from these sources of erosion is also a part of what successful, prudent planning is all about.

When you decide to create a lifetime trust you must select a competent trustee who can manage the assets effectively while maintaining a good working relationship with the beneficiary.  Since the terms of the trust will provide the legal foundation that is necessary to protect the assets and elucidate your wishes precisely, it is important to work with an experienced estate planning attorney from the outset.  Once the asset protection strategy is in place you can go forward, secure in the knowledge that your loved ones will be provided for come what may throughout their lives.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Asset Protection Planning

Asset protection planning is an important part of your estate plan.  If you’re like most people, you have worked hard your entire life to earn and save your assets.  And, you would like to give a gift to your children during your lifetime or after your death.  Either way, ask your estate planning attorney how to incorporate asset protection planning into your estate planning so that your gift is not taken in a divorce.

More than half of us get divorced. It’s part of our way of life and therefore must be part of our asset protection planning and estate planning.  You can protect your gift to your child by giving the gift in a trust, instead of outright.  Picture a trust like a lock box.  Your child is the only one with the secret combination to the lock box.  She still has full access to the monies for her own benefit (and that of her children, if you’d like), but if she gets divorced… your gift cannot be taken in a divorce property settlement.

If you forgo asset protection planning and give the money to your child in her individual name, your gift may be taken from her and given to her ex-husband.  Instead of giving your gift in a lock box, it’s like just tossing a pile of cash at her in hopes that she’ll be able to catch it in the middle of a wind storm.

By including asset protection planning in your own estate planning, you can give a gift to your child that you cannot give to yourself.  If your child gets divorced or suffers bankruptcy, business failure, medical emergencies or is sued, your gift is protected and will be used only for your child’s benefit.

It is in your best interest and the best interests of your children to include asset protection in your estate plan.  Consult with an estate planning attorney to ask how.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

An asset protection trust is essentially a trust fund designed to protect your assets. This might include your home, cars, bank accounts, and any other tangible assets that might be subject to depletion by any number of things.

While an asset protection trust is often utilized in estate planning processes where the estate value exceeds a million dollars, this does not mean you might not want or need this sort of protection if your estate has a value less than that.

Long-term health care expenses, for example, can easily deplete the property and funds you intend to leave to your family. If you required long-term health care, a properly established trust would protect your assets. In other words, the care provider could not lay claim to assets protected by the trust or attempt to seize them in the collection of a debt.

An asset protection trust is often used as an add-on to a last will and testament. In the event of the death of the owner of the estate, properly titled assets inside the asset protection trust prevent these assets from being subject to probate, which is the legal administration of an estate based on the decision of the court.

It is important to have a trust set up before events occur that could prevent the protection of assets. This type of trust fund has to be in place for a specified time period in order for it to be fully protected.

Do you need an asset protection trust? Only an experienced estate planning attorney can provide the proper guidance based on your specific needs regarding an asset protection trust and whether or not this type of protection will benefit you and your family.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Basic estate planning is fine if your estate is simple and doesn’t require a great deal of arrangements. If, however, your estate has any special circumstances, you may want to consider advanced planning. It can help ease the estate settlement process for your family in three ways.

Protect Your Belongings

Through features such as Irrevocable Trusts, Advanced Estate Planning offers protection for your belongings. Asset protection keeps your retirement funds and your property safe from being taken to settle a debt or to pay for a negligent lawsuit. By keeping your belongings safe, you can secure your retirement income and ensure that your loved ones’ will be financially protected after you are gone.

Leave a Special Inheritance

Advanced Estate Planning allows you to create special inheritances. You can construct a Pet Trust to pay for your furry loved one’s medical and daily care. You can also create a Special Needs Trust for a family member who is disabled. You can even leave a legacy to your family via a Lifetime Trust or a Generation Skipping Trust. To help a worthy cause close to your heart, make a Charitable Trust. Trusts provide the flexibility not found in basic Estate documents.

Lower Estate Taxes

If you expect your estate to be above the estate tax exemption level, you may wish to use Advanced Planning to reduce the tax burden for your family. If you are already using Irrevocable Trusts for special inheritances or to protect your assets, you will also have the advantage of estate tax relief.

Trusts can also be used to house a Life Insurance Policy. By moving the policy to Irrevocable Trusts, they will no longer be part of your taxable estate. The Trust will even provide relief on your spouse’s taxable estate.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

A well known financial personality often talks about long term care insurance on his radio program. When people call in and ask when should they start buying LTC insurance, he says at about age 60.

That may make perfect sense, because at age 60, you might be pretty healthy and can still qualify for long term care insurance, and your annual premium (for now at least) would be fairly affordable.

But there are 1 in 2 odds that someday you will need long term care insurance, and you are not guaranteed that this will happen after the age of 60. Young people come down with serious illnesses and have tragic accidents too and need long term care.

There is also no denying that the older you become, the higher your annual premiums. If you buy LTC at a young age, you can lock in the premiums at a cheaper rate. You have the option to buy inflation protection throughout the years, but even with that, it will still be cheaper than waiting until your senior years to buy a policy.

Waiting even five years to buy a policy can cost you thousands of dollars. For example, buying a policy at age 60, with an annual premium of $4,000, and making payments until you are 80 years old, may cost you $30,000 more than if you bought it just five years earlier.

Single people particularly might want to buy LTC, since they do not have a spouse who can care for them.

The bottom line is that no matter how high your premiums, long term care insurance is still a bargain compared to paying $60,000 to $108,000 out of pocket a year for care. Without insurance, you can go through your life savings quickly and possibly lose everything. Ask your estate planning attorney for suggestions on long term care insurance or other instruments to protect you in these circumstances.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Medicaid is a program for those who cannot afford medical care. It is managed by the state and funded by both state and federal government funds, and is the largest source of funding for medical and health services for people with limited resources. It is often confused with Medicare, but Medicare is a Federal program that is not income based and is only for those 65 and older or those who have certain medical conditions.

Medicaid however, is “needs” based and serves those with limited income and resources. A person may be eligible for both Medicare and Medicaid.

There are two general types of Medicaid:

• General or community Medicaid which assists income eligible families or individuals with little or no medical insurance.
• Nursing home coverage through Medicaid which assists an individual with the costs of nursing home care.

Since Medicaid is a state run program, each state sets its own guidelines regarding income eligibility and the services that are covered. But in order for a state to received matching funds from the Federal government, they must provide certain services under their Medicaid program. These services include:

• Prenatal care;
• Vaccinations for children;
• Inpatient hospital care;
• Laboratory and x-ray services;
• Doctor’s services; and
• Pediatric care.

Most states provide additional services under Medicaid, such as:

• Physical therapy;
• Prescription drugs;
• Diagnostic services;
• Eye care and eyeglasses;
• Prosthetics; and
• Clinical services.

Medicaid does not pay money to the covered individual, but sends payments to the health care providers. States make these payments based on a fee-for-service agreement or through prepayment arrangements. Each State is then reimbursed for a share of their Medicaid expenditures from the Federal government.

While states are permitted to charge a copayment or a deductible for certain services, the Federal government requires that minors, pregnant women and nursing home patients be excluded from these payment requirements. Co-pays for emergency and family planning services are also not permitted.

Medicaid may also be needed by the aged who enter a nursing home. For those who are eligible, Medicaid covers room and meals, nurses, therapists, doctor’s visits, some prescription drugs, dental care, and medical equipment. Medicaid often enters the picture when an elderly patient has exhausted all resources to pay for a nursing home.

Medicaid can be a confusing system to navigate, particularly when it comes to the care of a senior citizen who is also Medicare eligible. It helps to have an advocate who is familiar with the coverage and benefits of both systems to best serve the patient.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Divorce is one of the most painful, disruptive life experiences you can have. Given the emotional stress and turmoil that goes along with many divorces, dealing with financial details may be the last thing you want to tackle. Paying attention to the details, however, can mean the difference between making a new start and having your past haunt you far into your future.

Besides finding a good divorce attorney, you’ll also want to enlist the help of a financial advisor and estate planning attorney. These professionals may be able to see your situation more clearly than you can, and they’ll help you to look out for your own interests. They also will have enough experience to warn you of pitfalls you might not even know you’ll be facing.

Next, you’ll want to take stock of your financial situation. It’s important to know what you and your spouse are working with, so that you can reach a fair and equitable division of your assets and debts. This is especially important for you to do if you have not been the one in charge of the money during your marriage. Find out exactly what property you each own, including retirement accounts and investments. Also find out what you owe – including mortgage debt, credit card debt, and loan balances. To help with this, you can request copies of your credit report from all three credit reporting agencies. These reports will list your accounts and the payment history for each.

Once you know what your financial picture looks like, it’s time to start separating your accounts (after consulting with your attorney, of course). You’ll want to close joint checking and savings accounts, and you and your spouse will want to open individual accounts. The same is true for any joint credit accounts – close your joint accounts and decide what to do with your joint debt. You may even want to consider transferring existing debt to your new account and paying it off yourself. This is because missed or late payments on a joint account will hurt the credit of both account holders, regardless of who is responsible for making the payments.

You’ll want to consider the tax implications of your financial decisions – selling property or investments can result in capital gains or losses, and moving money from one retirement account to another can also trigger tax consequences. You’ll want to work with your attorney and/or your financial planner to make sure you don’t end up with unintended tax bills.

Once the divorce is final, check your credit reports once more to make sure that the actions you took as part of the divorce were accurately reported. You may want to meet with a financial advisor to make a plan for your new, individual financial goals. If you take precautions to protect your finances during your divorce, you should have a solid foundation to build on.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.