American Legion – Beaver Dam

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ESTATE PLANNING COURSE

Sandy Heiar

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Estate Planning Education Seminars

Guest Speakers Karl and Mike have been conducting Estate Planning Seminars for over 20 years to seniors concerned about financial planning, estate taxes, andnursing home issues. These seminars are invaluable and provides answersto tough estate planning questions. We think you will enjoy this presentation.

Karl Dovnik, Jr.Karl Dovnik, Jr.Elder Law Attorney Elder Law Attorney

Michael K. O’Dell

10 Costly Mistakes Seniors Make:

1. Not Avoiding Probate2. Not disinheriting the IRS from their estate plan3. Not protecting their life savings from a nursing home4. R-I-S-K-Y investments during retirement years5. Procrastination – Not completing their estate plan6. Not Utilizing an Attorney with their planning7. Thinking a “Will” is all they need.8. Not knowing the importance of Power of Attorneys9. How to protect assets with advance planning10. Getting advice from the neighbor

My neighbor told me that all I need is a Will. Therefore, my estate planning iscompleted. My neighbor should know because he is the Used Car Manager at the local dealership.

Goals of Legal Protection

•Control my property while I’m Alive.•Take Care of me and my loved ones if I become disabled.•Give what I have to whom I want, the way I want, when I want while I am alive.•Save every last tax dollar, professional fee, and court cost possible.•Protect assets if I was to enter a nursing home.

Why should our family go through probatewhen we already know that we want the

estate to pass directly to our family.PROBATE CAN TAKE OVER A YEAR

Disadvantage of going through Probate

•Those who do and those who don’t have wills are subject to probate court.•The cost of probate and time delays are significant for the remaining family.•If your estate if over $50,000 in total assets – your estate must be probated.•During probate, you lose control – the court system takes over.•Probate can be very expensive – attorney fees – court costs – 3.5% to 10%•Probate can be a stressful situation for your heirs.•Probate proceeding are public record.•Average probate takes at least 6 months to a year to complete.•During Probate, 20% of all Wills are contested by family members.

Disadvantages of a Will – Court Must Approve It !

•A Will is not a legally binding document until the court approves it.•A Will does nothing if you become incapacitated.•During Probate, the court decides a Will’s validity.•Intestates statutes are for people who don’t have wills.

A WILL GUARANTEES PROBATES

Our Goal is to Pass ourestate to our family without the hassle of probate delays and thecosts associated.

THINGS YOU CAN DO TO AVOID PROBATE THINGS YOU CAN DO TO AVOID PROBATE

1. PAYABLE ON DEATH ACCOUNTS AT BANK – (POD ACCOUNTS) – BANK2. TRANSFER ON DEATH ACCOUNTS – STOCK – BROKERAGE ACCOUNTS 3. IRA’S – PRIMARY BENEFICIARIES – CONTINGENT BENEFICIARIES4. LIFE INSURANCE – PRIMARY BENEFICIARIES – CONTINGENT 5. ANNUITIES – PRIMARY BENEFICIARIES – CONTINGENT6. REAL ESTATE – TOD – TRANSFER ON DEATH – AVOID PROBATE

SIX SIMPLE WAYS TO AVOID PROBATE

WHAT ABOUT THE LIVING TRUST?

• The Living Trust serves several purposes1. Avoiding Probate – Assets are placed in Trust 2. With Estates over $3,500,000.00 – There are Estate Tax Advantages.3. Transfer property from out of state without probate – eliminating multiple probates.

Many times you can use our SIX SIMPLE WAYS TO AVOID PROBATE.

AA LIVING TRUST DOES LIVING TRUST DOES NOTNOT PROTECT ASSETS FROM A NURSING HOME PROTECT ASSETS FROM A NURSING HOME

Revocable Living Trust Revocable Living Trust

When Does It Make Sense ! When Does It Make Sense ! •Trusts avoid probate court and it expenses•Trusts are one means to reduce or eliminate estate taxes.•Trusts can protect special needs dependents.•Trusts are Flexible and can be changed.•Trusts control when beneficiaries receive inheritance•Trusts are difficult to contest.•Trusts keep the details of your estate private.•If you own real estate in other states, eliminates multiple probates.•A-B bypass trust allows for a double federal estate exemption.

Marital Property AgreementMarital Property Agreement

Wisconsin – Husband & Wife

Cost Basis - $ 40,000 or $ 20,000 per spouseCurrent Value - $ 200,000.00

$ 80,000 $ 80,000

Capital Gain Taxes

Simple Way to Avoid Probate – Substitute Will

Estate and Gift Taxes Estate and Gift Taxes

•Estate Taxes are due nine (9) months after death.•The Federal tax exemption for 2009 is 3.5 Million.•If you are planning to die, do it in 2010 – No Estate Tax during 2010•Sunset Provision – December 31, 2010 – Federal Tax is Repealed.•$13,000 – Uniform Gift Tax Exemption.

What are the Federal Estate Tax Issues?What are the Federal Estate Tax Issues?

What About Joint Tenancy?

CCan’t We Avoid Probate by Putting Our Son As the Owner of Our Accounts or Property?an’t We Avoid Probate by Putting Our Son As the Owner of Our Accounts or Property? •If a Joint tenant becomes incompetent, a court ordered Guardianship might be required.•IRS Gift Tax may result.•Son goes through divorce, bankruptcy, credit problems, Law Suit•The cost of stepped-up values may be substantially affected.•Under joint tenancy, one can’t sell or borrow money without permission of the other joint tenants.

POWER OF ATTORNEYS

THE CORNERSTONE DOCUMENTS OF EVERY ESTATE PLAN1. Durable Financial Power of Attorney2. Healthcare Power of Attorney

Should be prepared with an Elder Law Attorney – Special Language

Next SpeakerNext SpeakerMichael K. O’Dell Michael K. O’Dell

•Always review your documents each year•Have Power of Attorney for Health and Financial•Funeral Trust Completed•Living Trust•Wills•Always work with an attorney that specializes in Estate Planning.

Thank You,

Nursing Home Issues Nursing Home Issues

Advance Planning Advance Planning

A NURSING HOME CAN WIPE-OUT A A NURSING HOME CAN WIPE-OUT A LIFETIME OF SAVINGS ! LIFETIME OF SAVINGS !

93% OF SENIORS OVER 65, DON’T HAVENURSING HOME INSURANCE !

Without Planning, You Could Lose Everything !Without Planning, You Could Lose Everything !

•AVERAGE COST- $6589.00 –NURSING HOME•50% OF US WILL ENTER A NURSING HOME.•70% OF SINGLES WILL REACH POVERTY WITHIN 33 WEEKS.•7 0UT OF 10 COUPLES WILL HAVE ONE SPOUSE ENTER A NURSING HOME.•A NEW CASE OF DIMENTIA ARISES EVERY 7 SECONDS.

The Legal planning that you do today…could determine if your childrenand grandchildren inherit anything from you. Asset Protection is possible.

Advance Planning Can Protect Assets ! Advance Planning Can Protect Assets !

Medicare and MedicaidMedicare and Medicaid

MEDICARE COVERAGE MEDICARE COVERAGE

Medicare will cover the first 20 days at 100% as long as the Medicare will cover the first 20 days at 100% as long as the person came from a 3 day minimum hospital stay. The nextperson came from a 3 day minimum hospital stay. The next80 days will be covered by Medicare and Supplement Insurance.80 days will be covered by Medicare and Supplement Insurance.To continue coverage past 20 days the person must showTo continue coverage past 20 days the person must showimprovement with therapy and rehab. improvement with therapy and rehab.

MEDICAID COVERAGE IF ELIGIBLE MEDICAID COVERAGE IF ELIGIBLE

MeMedicaid will cover dicaid will cover allall of your nursing home expenses. However, you of your nursing home expenses. However, youmust prove that you are eligible for this coverage. You must apply atmust prove that you are eligible for this coverage. You must apply atHealth & Family Services to prove you are eligible. On the next slideHealth & Family Services to prove you are eligible. On the next slideyou will see what it takes to become eligible.you will see what it takes to become eligible.

MEDICAID ELIGIBILITY RULES MEDICAID ELIGIBILITY RULES

YOU MUST FILL OUT A MEDICAID APPLICATION ANDYOU MUST FILL OUT A MEDICAID APPLICATION ANDAPPLY AT THE COUNTY IN WHICH THE NURSING HOME IS LOCATED.APPLY AT THE COUNTY IN WHICH THE NURSING HOME IS LOCATED.

This process can be complicated and stressful.This process can be complicated and stressful.

•$$2000 – Allowable Assets2000 – Allowable Assets•$1500 – Life Insurance$1500 – Life Insurance•$4500 – Automobile $4500 – Automobile •Personal PossessionsPersonal Possessions•Wedding RingsWedding Rings•Funeral Trust- Up to $12,500 per spouseFuneral Trust- Up to $12,500 per spouse•Family “Estate Trust”Family “Estate Trust”If completed 60 months in advance.If completed 60 months in advance.

Single/Widowed Single/Widowed Married Couple Married Couple Spousal Impoverishment Protection Spousal Impoverishment Protection

$ 2000 – Confine Spouse $ 2000 – Confine Spouse Plus Funeral Trust if planned in advance.Plus Funeral Trust if planned in advance.

Confined spouse Confined spouse

Community spouse Community spouse •$50,000 – 109,560 – Liquid Assets$50,000 – 109,560 – Liquid Assets•Unlimited Value – AutomobileUnlimited Value – Automobile•IRA, 401K, Qualified Plans Exempt.IRA, 401K, Qualified Plans Exempt.•$1500 – life insurance$1500 – life insurance•Funeral Trust - $12,500 Funeral Trust - $12,500 •Home – Exempt - $500,000Home – Exempt - $500,000•Family “Estate Trust” Family “Estate Trust”

Income - $45.00 per month Income - $45.00 per month

Income- $ 2,739.00 for spouse Income- $ 2,739.00 for spouse

Things to Remember about Medicaid ! Things to Remember about Medicaid !

Government employeesGovernment employeescan’t give you advice. can’t give you advice. They only score yourThey only score yourapplication for Medicaid application for Medicaid coverage. coverage.

County Case Workers County Case Workers

•The current look-back period on asset transfersThe current look-back period on asset transfers or gifts is 60 months. Since 02/08/06 or gifts is 60 months. Since 02/08/06

•Gifts prior to 02/08/06 are grandfathered underGifts prior to 02/08/06 are grandfathered under the 36 month rule.the 36 month rule.

•You should always seek professional advice on You should always seek professional advice on the Medicaid application process. Planning is the Medicaid application process. Planning is important! important!

Planning Strategies to Protect AssetsPlanning Strategies to Protect Assets

Since most seniors don’t have Since most seniors don’t have nursing home insurance, whatnursing home insurance, whatplanning strategies should we planning strategies should we be doing? be doing?

IT’S NEVER TOO LATE TO PROTECT YOUR LIFE SAVINGS! IT’S NEVER TOO LATE TO PROTECT YOUR LIFE SAVINGS!

Advance Planning is Essential inAdvance Planning is Essential inPreserving Your Assets For The Preserving Your Assets For The Future. Let’s Take A Look At The Future. Let’s Take A Look At The Planning We Should Be Doing. Planning We Should Be Doing.

PLANNING STRATEGIES YOU SHOULD DO NOW! PLANNING STRATEGIES YOU SHOULD DO NOW!

Irrevocable Funeral Trust Planning Irrevocable Funeral Trust Planning FUNERAL TRUSTSFUNERAL TRUSTS

•Medicaid Exempt•Up to $15,000•Growth on Trust•WCCU will help you set up trust•Can be used with ANY funeral home•Flexible and Portable•Protected from Nursing Home

REAL ESTATE STRATEGIES REAL ESTATE STRATEGIES If a single person or a surviving spouse If a single person or a surviving spouse enters a nursing home and he/she is enters a nursing home and he/she is unable to pay their way, the state is unable to pay their way, the state is will put a Medicaid lien on property. will put a Medicaid lien on property.

Life Estate Planning with Children Life Estate Planning with Children

•A huge mistake is the outright gifting or transfer of one’s A huge mistake is the outright gifting or transfer of one’s property to ones children.property to ones children.•A Retained life estate gift reduces the exposure to legal A Retained life estate gift reduces the exposure to legal claims, probate, provides stepped up cost basis to heirs.claims, probate, provides stepped up cost basis to heirs.•Protects property from a nursing home after 60 months.Protects property from a nursing home after 60 months.•Can be used for home, land, cabin, etc. Can be used for home, land, cabin, etc.

•In 2001, when Mildred was 70 she had $100,000 in the bank. In 2001, when Mildred was 70 she had $100,000 in the bank. She wanted to pass at least $50,000 to her children or She wanted to pass at least $50,000 to her children or grandchildren at death.grandchildren at death.•Her financial planner advised Mildred to do an “Estate Planning Her financial planner advised Mildred to do an “Estate Planning Trust” with $50,000 naming her children as beneficiaries. Trust” with $50,000 naming her children as beneficiaries.•After 60 months this trust would be exempt from the nursing After 60 months this trust would be exempt from the nursing home and avoid probate.home and avoid probate.•For some reason this planning was never completed. In For some reason this planning was never completed. In January, 2007 – Mildred entered the nursing home with theJanuary, 2007 – Mildred entered the nursing home with the $100,000.00 in the bank – Nursing home costs - $6900 $100,000.00 in the bank – Nursing home costs - $6900 monthly.monthly.•February, 2009 – Mildred’s estate is at $1800.00 and she February, 2009 – Mildred’s estate is at $1800.00 and she applies for Medicaid. applies for Medicaid.

Lack of Planning eliminated the inheritance to Mildred’s children and grandchildren. Don’t let this happen to you. Planning could have saved the inheritances for her family.

MILDRED’S STORY

The Estate TrustRequires Advance Planning

•Grandchildren - $ ____________•Children - $ ____________•Church - $ ____________

•$ 1000 •$ 5000•$ 10,000•$ 15,000•$ 20,000•$ 25,000•$ 50,000

WE CAN HELP YOU SET UP THE ESTATE TRUST

WE NOW OFFER WE NOW OFFER OFFERS: OFFERS:

FUNERAL TRUSTSFUNERAL TRUSTSESTATE TRUSTSESTATE TRUSTSESTATE REVIEWSESTATE REVIEWSINVESTMENT REVIEWS INVESTMENT REVIEWS

FREE CONSULTATION FREE CONSULTATION

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DEAN & JERRY DEAN & JERRY

When I was 17

When I was 21

When I was 35

Autumn of the Year

1964 is here again !

1964

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