Tuesday, July 19, 2011

Oak Lawn Estate Planning | Medicaid Planning

You may anticipate that you or a loved one will have to go into a nursing home in the future. You are worried about how you are going to pay for nursing home care. You know it costs between $4,000 and $7,000 a month.  This cost is well beyond the means that most families have saved to cover their medical needs. At $84,000 a year, most families can not keep up with the rising long term care costs. I have already spoken on the benefits of Long Term Care Insurance in an earlier post with a follow up on Long Term Care Insurance in this post. The problem may arise if you are too late to apply for long term care insurance. Long term care insurance is mostly for those who are health now. If you did not get insurance, medicaid planning is the method for you.

Medicaid planning is a very technical type of planning. I will start off the section on Medicaid planning with this warning, you should consult a professional before doing any type of asset transfer. I know you may be skeptical because I am a professional who does Medicaid Planning, but rest assured there is a good reason to go to a professional on this area. If you improperly transfer assets, you could be penalized for up to three times the amount of the asset transfer. This penalty is converted into a period of time and you will be excluded from Medicaid benefits for that many months. The purpose of this post is not to talk about the penalty for an improper asset transfer, but know that the penalty is much greater than it probably should be.

So how does Medicaid planning work? There are assets that are exempt and non-exempt. In order to qualify, you must have a total of non-exempt assets that are below the threshold allowable by Medicaid. This threshold is state specific because each state administrates the federal Medicaid program In Illinois, the Spousal Impoverishment Act allows a community spouse to keep $109,560 in non-exempt assets. It also allows a community spouse to earn a monthly income of $2,739 without having to contribute any of their income to the cared for spouses bills. There are some ways to ensure that your community assets meet this level, but the order of asset transfer must be precise and exact. An "auditor" for Medicaid will look back on any transaction that is made that transfer assets for the five years preceding the application to Medicaid or entry into a nursing home. The key for qualification to medicaid if to transfer assets from non-exempt property to exempt property in a method and manner that will not disqualify you from Medicaid benefits. The problem is if you transfer property in an improper manner, even if the ultimate goal is a proper asset transfer, you will suffer a severe penalty from Medicaid.

The other aspect of Medicaid planning is timely action. If you plan for Medicaid five or more years before you will need it, you will have many more options for transferring your money. You will have a myriad of trusts available to you .These trusts can transfer your assets to anyone you choose. You will not be limited to your spouse or disabled adult children. This is a big advantage for many reasons. You may not have any disabled children and you want to take advantage of tax breaks when giving money to your family. Additionally, you are not limited and under scrutiny with what you do with the money you earned.

If you would like to speak to a professional about Medicaid planning, call me at:

Law Office of Jonathan W. Cole
5013 W. 95th St.
Oak Lawn, IL 60453
(708) 529-7794

Tuesday, July 12, 2011

Chicago Estate Planning Attorney | What is Probate?

You have heard much about it. Probate. It is such a foreign word. You know the kind. The word you here everyone say, but know one seems to know exactly what it is. Probate. What the heck is Probate? You may have heard people on TV say that you need to avoid probate at all costs. Is probate like a trip to the dentist? What about this word could be so bad that it needs to be avoided at all costs. This post will give you the in's and out's of probate. When you are done, you will be one of the few who is no longer muttering this word like it is the evil bogey man of your nightmares. A "Chubacabra" of sorts.

History: The word probate comes from the Latin word "Probatus" meaning proven. But what is proven? In the case of Estate Planning, and more specifically Wills, the Will is Proven. To Prove a Will.  

Now that leaves the next question, What if their is no Will? If there is no Will, the individual is is considered to die intestate. Intestate means simply without a Will. I will leave the whole intestate discussion to another post, but it is important for you to understand that there are two ways for you to find your estate in probate. 

So back to, - Proving What? We have to prove one of two things. If their is a Will, we must prove the Wills Authenticity, Contents, and the Capacity of the Will Maker (Testator). If their is no Will, you die intestate, we must prove and certify the lineage of the deceased both north and south. North meaning those lineal descendants who came before you. Such as your parents and your grandparents and so on and so forth. The descendants who are south are your children and grandchildren and....on and on and on. This includes lateral descendants such as your brothers children as well. 

How Do We Prove It?  I am so glad you asked. 
  The method of Proving the Will is simpler than the the intestate method. In order to prove a Will, a court will be the judge of the validity of the will. A Will will be submitted to probate and an opportunity for for people to contest a Will will be set. This time will also allow creditors an opportunity to submit their claims against the decedents estate.  If their are no challenges to the Will, a simple "certification" by the executor of the estate claiming that the Will is valid and accurate will usually suffice. If their is a Will contest, the drama really starts. I will leave that explanation to another post, but rest assured it is a messy and dirty ordeal.

   If you die intestate, the proof is in showing all potential beneficiaries under your states intestate statute. In Illinois, the method that the State disposes of your assets in a manner called "per stirpes". The method of distribution is not important for the purpose of this post, but what is important is that all potential beneficiaries under the per stirpes plan must be identified and either receive a myriad of letters or sign a certification about the probate. The proof come in when you must show the judge that you did not leave a single individual out of the search to notify all potential beneficiaries of the passing of the deceased.

So where does all of this information leave me?

This post leaves you a little more educated about the probate process and what probate is. The next post will help you determine if you would like to avoid probate, or if probate is right for you. Hopefully, your mind is a little more open to probate after understanding what probate is and what is involved in probate.

If you would like to speak to a lawyer about Probate, a Will, a Trust, or the Administration of an Estate, call the Law Office of Jonathan W. Cole at (708) 529-7794. The Law Office of Jonathan W. Cole has been helping people in Oak Lawn and the Chicago-land area with their legal needs and would like to help you as well.

5013 W. 95th St.
Oak Lawn, IL 60463
(708) 529-7794

Tuesday, July 5, 2011

Oak Lawn Estate Planning | What is a Trust?

To explain what a trust is and how it works, consider the following example. This example is a common action of a parents throughout the U.S.

You give money to your baby sitter for things that may be needed for your children. You “trust” that she will use the money for the children’s benefit and not for herself. This, in essence, fulfills the four necessary requirements for a trust.

1. Grantor – The person to creates the Trust …i.e. funds the trust

2. Trustee – Some other Person or entity most agree to hold money or property for the benefit of someone else.

3. Corpus – Also known as the “principal” of the trust.

4. Beneficiary – The person or persons who benefit from the trust

This is an example of a basic trust. We will call it a "Babysitter Trust". In this case, you as the parent are the grantor of the trust. You became the grantor when you handed the money to the babysitter. The babysitter is the trustee of the trust when she is holding the money in accordance with your directions. The money you give to the babysitter is the corpus of the trust. This also could have been property that the babysitter had possession and control over. Finally, your children are the beneficiaries of the trust. The children are the ones who the money is intended to benefit.

This is the basic four necessary parts of a trust. It really makes a lot more sense when it is broken down into its four parts in a simple everyday example. Now that you know what a trust is, look for the next post explaining how to categorize a trust. If you need help setting up a trust, contact the Law Office of Jonathan W. Cole at (708) 529-7794. 

5013 W. 95th St.
Oak Lawn, IL 60463
(708) 529-7794