The "Real" Costs of Planning vs. Not Planning

We often take calls from potential clients asking, "How much will this cost?" At that very early point in the relationship, such a question is impossible to answer. We don't know the circumstances, we don't know what will be involved, we don't even know if we can help. To ask us the cost of an estate plan is like telling the doctor you have a stomach ache and asking if it is cancer. Some additional information is required.

But, unlike most areas of your life, Estate Planning has both monetary costs and personal costs. Costs to you and costs to your family. So what are the "real" costs?

When considering estate planning, you must look at the whole picture. don't ask "how much is this going to cost to set up?" Rather, ask "how much will it cost to set this up, keep it current over my lifetime, and settle my estate after my death? The "perfect" plan you set up this year may require some tweaking over time.

Then there is the personal cost to your family. If your plan is not comprehensive, this can be the biggest cost of all. Everyone says, "my family will all get along and there will be no arguing after my death." experience tells us that point of view is unrealistic.

Don't ask "how much is this going to cost me today?" . . . Ask "how much is this going to cost now, how much will it cost to maintain for the rest of my life, and how much will it cost my family after I'm gone?"

Probate......How Does it Really Work?

We’ve all heard of “probate”, and we’ve all heard that it “should be avoided”, but do you really know what it is you are avoiding? And is it really necessary to take steps to avoid the process?

Frequently, when a loved one dies, probate becomes necessary . . . whether an individual dies with or without a Last Will & Testament. Under Indiana law, if a person owns anything in their individual name (with no joint owner or named beneficiary), and those assets exceed $50,000 in total value, that person’s estate MUST be probated. The good news is that the probate process is manageable with the assistance of a qualified attorney, who should help you through every step of the way.

Probate is the legal procedure for administering and distributing an estate (the “probate estate”). The Probate Estate consists of all the assets of a deceased person that were not owned jointly, are not held in a Trust, and do not designate a beneficiary. The Probate Estate is governed by the Last Will & Testament of the deceased. If the deceased did not leave a Last Will & Testament, then the distribution of the probate estate is governed by the law of “intestacy.” All of these factors determine the identities of the estate “beneficiaries” (those who are entitled to receive all or a portion of the deceased’s probate estate).

The process requires that a Petition be filed with the appropriate Court requesting that a case be opened, and a Personal Representative (or Executor) be appointed. The Personal Representative is the individual who is responsible for administering the probate estate (i.e. paying the bills of the decedent, filing and paying any necessary taxes, and distributing the estate to the beneficiaries). Depending upon the circumstances, the Probate process may be “supervised” or “unsupervised” by the Court. Likewise, every county in Indiana has local rules that may impact the procedures necessary for the probate process. Your probate attorney can assist in determining the proper procedures to follow.

Whether your Estate requires probate or not depends upon your personal Estate Plan. Discuss the pros and cons with your planning attorney to determine whether you deem “probate avoidance” important in your case.

Navigating the probate process can be daunting, but we will be with you every step of the way . . . it’s part of what we do.

Hunter Law Office, PC helps families protect their assets against loss from the unforeseen (and foreseen) events in life that inevitably take us off course. We are unique in that our practice is focused on each individual client . . . we design a plan around you and your family . . . because that’s what Estate Planning is supposed to be!

Teamwork.......Do you have a team working for you?

The Butler University Men’s basketball team just showed the entire country what teamwork can do . . . and how far it will get you . . . now put that lesson to work in your own life . . .

You have a financial advisor . . . you have a tax preparer or CPA . . . you have an Estate Planning attorney . . . but, do they work together?

Having a team of professionals working for you is a vital element of estate planning.

1. Your financial advisor is setting up a plan for your retirement, or you’re already implementing that plan;
2. Your CPA or tax consultant is helping you get all the best tax advantages; and
3. Your Estate Planning attorney is creating the documents necessary to ensure the best protection for you and your loved ones.

But, if these three professionals are not communicating with each other, your plan has no chance of success! What you really need is a comprehensive plan that covers all the bases. Think about how productive a meeting would be if you had all of your advisors in one room at the same time . . . working out all the issues that impact you and your family . . . and developing solutions that WORK!

The team approach is one of the most important elements to estate planning. If you create a Trust, and your financial advisor doesn’t know about it, how can they possibly be effective? What if you’re trying to protect your assets and your CPA has no idea what the attorney has put in place?

If your advisors are not working as a team, start asking questions . . . after all, it’s really about you and your family and getting the best possible results from the planning you do. They’re all working for you, so get them working together!

The estate planning team at Hunter Law Office is ready, willing and able to work with an ever-expanding network of financial and tax professionals . . . get everyone in one room and increase the brain-power exponentially!


Hunter Law Office, PC helps families protect their assets against loss from the unforeseen (and foreseen) events in life that inevitably take us off course. We are unique in that our practice is focused on each individual client . . . we design a plan around you and your family . . . because that’s what Estate Planning is supposed to be!

VA Benefits...YOU DO NOT HAVE TO BUY AN ANNUITY TO QUALIFY FOR AID & ATTENDANCE

I just took a call from a trusted financial planner who was concerned about a client. It seems the client was “advised” to contact a VA Expert to help them qualify for VA Aid and Attendance benefits. The “Expert” is advising them to liquidate everything they’ve worked their whole lives to save and put it all in an annuity in their children’s names.

Unfortunately, this is happening everywhere – because we have failed to get the word out and share the truth about VA planning. So here it is:

1. Yes, the annuity plan described above will work – and the “expert” will make thousands of dollars selling the annuity – win, win, right? Wrong!
2. What if something happens to one of the children . . . divorce? . . . lawsuit? . . . any number of unforeseen events could cost this parent everything!

VA aid & attendance is a terrific benefit for our war-time veterans . . . they deserve everything we can give them . . . but they do not have to give up everything they’ve earned to get these benefits.

VETERANS . . . you can qualify for the benefit WITHOUT AN ANNUITY! And you can qualify without transferring your assets to your children.

You can maintain ownership, control and customized access to ALL of your assets and still qualify for these benefits . . . but you need a qualified attorney to assess your situation, not an annuity salesman!

The VA benefit should be a part of your total Estate Plan, not the whole thing – don’t fall victim to a salesman who is chasing a big commission!

Hunter Law Office, PC helps families protect their assets against loss from the unforeseen (and foreseen) events in life that inevitably take us off course. We are unique in that our practice is focused on each individual client . . . we design a plan around you and your family . . . because that’s what Estate Planning is supposed to be!

Debunking the Myths...Who is in Charge When Mom Dies?

What, exactly, is the difference between a Power of Attorney, an Executor or a Trustee? Aren’t they all basically the same thing? . . . NO, they are not.

What, exactly, is probate? Should we avoid it? . . . Maybe.

Do I need a Will or a Trust? . . . It depends

Confusion reigns when it comes to these terms, and the powers associated with each of them. Here’s a brief glossary of some of the basics:

Power of Attorney (attorney-in-fact): Grants authority to another person to act on your behalf (sign your name) during your life. Power terminates at death.

Durable Power of Attorney: Same as Power of Attorney but the power continues in the event you become mental incapacitated at any time. Power terminates at death.

Executor (Personal Representative): The person named in your Last Will & Testament who will be in charge of your “estate”.

Estate: All of the stuff (property, money, bank accounts, etc.) that you owned in your name alone at your death.

Probate: The process of administering your estate and appointing your executor or personal representative. The process requires a Court to grant authority to your executor, and may be “supervised” by the Court, or “unsupervised” depending on the circumstances.

Trust (Living Trust): A separate legal entity that you can create to own your estate. If you have a “living” trust (created during your lifetime), and have properly funded the trust, your estate will not go through the probate process.

Don’t be a victim of misinformation – the circumstances that happened to your neighbor’s-cousin’s-daughter’s-husband’s-mother might not be the same as yours. Talk to a qualified professional and get the real facts.

Hunter Law Office, PC helps families protect their assets against loss from the unforeseen (and foreseen) events in life that inevitably take us off course. We are unique in that our practice is focused on each individual client . . . we design a plan around you and your family . . . because that’s what Estate Planning is supposed to be!

2010 Estate Tax Repeal. Is it really as good as it sounds?

Once again, Congress has created a monster and waited too long to fix the mess! The year 2010 has been anticipated in Estate Planning circles ever since the 2001 tax act, signed into law by then-President George W. Bush (the “Act”). The Act called for a gradual reduction in the maximum rate of the federal estate tax from 55% to 45%. It also gradually increased the amount you could pass tax-free from$675,000 in 2001 to $3.5 million in 2009. That meant that a husband and wife could pass up to $7 million to their heirs completely free of estate tax if they both died in 2009.

However, in 2010 only, the Act completely repealed the estate tax-which sounds like good news at first…except there is a catch…. in order to pay for the lost tax revenue, the 2010 estate tax was replaced with an increased income tax on inherited property. Prior to 2010, heirs received inherited property with a “step-up” in basis. For instance, if you bought a stock for $1.00 per share (your basis), and it had increased to $10 per share prior to your death, your heirs could receive the stock at its current fair market value of $10 per share (their basis). When they sell the stock, they pay capital gain tax on the difference between their basis of $10 and the value they receive at sale. The net result was that the growth that occurred during your life was not taxed. This rule also applied to real property (i.e. your house).

In 2010, property that passes at death does not automatically receive this step-up in basis. Instead, each individual has a limited amount of property that can be “stepped-up” in value at the time of death. Property that does not receive this step-up value will be subject to income tax on all increase in value from the date you first acquired the property.

Interestingly, Congress tried to institute a similar law in the 1980s, but ended up repealing it because it was impossible to properly administer. Due to that past experience and the difficulty in calculating the tax, it was widely believed that Congress would change the law before January 1, 2010, but it didn’t. There is some speculation that Congress may yet act on this law and retroactively implement a “fix”, but we can never be sure.

That’s why you should consult with an expert whose job is to understand the rules and figure out the best planning strategies for you and your family.

Hunter Law Office, PC helps families protect their assets against loss from the unforeseen (and foreseen) events in life that inevitably take us off course. We are unique in that our practice is focused on each individual client… we design a plan around you and your family… because that’s what Estate Planning is supposed to be!

Medicaid Changed the Rules Again? What Does the 5-year Look-Back Mean?

You may have heard that a new Indiana law was implemented in November, 2009, and you may be wondering if the changes have made it impossible to pre-plan for possible nursing home care. Rest easy, because we’ve been working on this for years, and there are many planning strategies available to save your hard-earned assets from catastrophic loss due to nursing home admission.

We’re taking calls every day from concerned clients and hearing questions like, “Now I have to wait 5 years to get Medicaid, right?” The simple answer is, “it depends”.

DRA (Deficit Reduction Act) was put in place last year (in Indiana) and made some major changes to the processing of Medicaid applications. DRA also changed the way we plan for Medicaid. Fortunately, we had plenty of notice prior to this law taking effect, and have been safeguarding our clients’ assets against the new rules for some time now.

Trying to understand the Medicaid rules can make your head spin! For example: One of the new rules is that the “look-back” period has been extended from 3 years to 5 years. This does not necessarily mean that you will wait 5 years to obtain benefits. The look-back period is determined by starting with the “look-back date”, which is simply defined as the date on which 2 things are true . . . first, you or your spouse are a resident of a long term care facility, and second, you have filed a Medicaid application. When both are true, you have established a look-back date. Now, go back in time 5 years from that date (but stop if you get to November 1, 2006 whether it is 5 years or shorter). This is your “look-back period”. If you transferred any assets and did not receive anything in return for that transfer, during the look-back period, the transfer is subject to a penalty and may disqualify you for benefits for a certain period of time.

But don’t give up there, because there are “cures”, and “partial cures” . . . and many other strategies for planning that can save you thousands of dollars! It’s a complex series of rules . . . and you shouldn’t be expected to wade through these waters alone.

That’s why you should consult with an expert whose job is to understand the rules and figure out the best planning strategies for you and your family.

Hunter Law Office, PC helps families protect their assets against loss from the unforeseen (and foreseen) events in life that inevitably take us off course. We are unique in that our practice is focused on each individual client . . . we design a plan around you and your family . . . because that’s what Estate Planning is supposed to be!

Will Your Parents’ Poor Planning Cost You? Are You the Next Sandwich Generation victim?

Do you know anything about your parents’ estate plans? Most of us assume our parents have taken care of these matters, but do you really know? Have their Wills been updated since you were a kid? Do they have a trust? Is it funded? Have they taken any steps to protect their assets in the event of catastrophic illness? Do they have Long Term Care Insurance, or are they counting on you to support them when the money runs out?

Many of us are so busy with work, home, family, kids, etc., etc., that we don’t really take the time to talk to our aging parents about their situation. But if you did take the time, you might be surprised. I see clients every day who say, “I have a Will, so everything will be fine”, only to discover that the Will was written 20 or 30 or more years ago, and has never been updated. I’ve even seen Wills that name guardians for “children” who are now in their 50’s and 60’s.

Don’t assume that because your parents have a Trust, all will be well. Many trusts are insufficient when it comes to protecting the family nest egg. While there are a multitude of different types of trusts, the most popular are Revocable Living Trusts, which are designed to avoid probate. These trusts offer NO PROTECTION against the losses that can occur during life. Planning for death is important, but planning for LIFE is vital.

In today’s environment of spiraling health care costs, and the increased likelihood of time spent in a nursing facility, poor planning can end up costing your parents’ life savings, your inheritance, or even your life savings . . . risking your children’s future. Approximately 1 in 2 Americans over the age of 65 will spend time in a nursing facility. The monthly cost of this care will be between $4,500 and $8,000 (or more), and the cost will not be going down over time! Can your parents afford it? Is their income sufficient? How long would it take to spend their entire life savings at this extraordinary rate of spending: a year, two years, maybe five years? Then what happens?? Will you be responsible for paying the bill?

If you find yourself in the “Sandwich Generation” – caring for aging parents at the same time you are raising your own family – life can become very complicated. Imagine how much more difficult it will become when your parents’ nest egg is depleted by the costs of care.

Don’t Panic! There are solutions available. Asset Protection planning is the key to effectively protecting an estate against loss to a nursing home. Hunter Law Office, PC has trademarked strategies to fit every situation.

We help families protect their assets against loss from the unforeseen (and foreseen) events in life that inevitably take us off course. We are unique in that our practice is focused on each individual client . . . we design a plan around you and your family . . . because that’s what Estate Planning is supposed to be!