Avoid Estate Planning Scams With The Help Of Elder Law Lawyers

Everyone wants to safeguard their property and assets and there seems to be no limit to the number of seminars or salespeople available to help you do so. But how do you know the service or product is legitimate? What can you do to protect yourself from an estate scam? Common Types Of Estate Scams Many estate scams target retirees and the elderly. They often involve the purchase of annuities or trusts. Many of these scams are the result of unsolicited sales calls and visits from door-to-door salesmen or they are follow-up from an "estate planning" seminar attended. An annuity scam often requires you to sell your current investments and place them into an annuity fund. The problem with this is you'll probably pay high taxes and fees on the money you transfer out and you're almost certainly guaranteed to be paying hefty amounts to the "advisor" or salesman of the annuity. Trust scams fall into two categories: Scam Trusts and Mill Trusts. Scam trusts involve transferring your assets into business trust entities controlled by you as a way to avoid paying taxes on the money. The promoter of the trust often makes his money by, again, charging you a hefty fee for the "plan" and then leaves you high and dry to deal with the IRS when they discover your illegal trust and demand back taxes owed, plus interest, and assess serious penalties.

Mill trusts are contracts that purport to save you from estate taxes and/or probate if you sign on the dotted line. The contracts are not usually presented to you by a lawyer, but the salesperson may assure you it has been reviewed by an attorney and is legal. The problem with mill trusts isn't necessarily that they are illegal. It may simply be a greater waste of money than anything else. Mill trusts often have a limited scope, focusing only on avoiding probate and neglecting other issues. The lack of access to a qualified attorney for document review means you might not be considering all aspects of your assets and property holdings. Worse still, a mill trust often typically does not get funded, which renders it useless. Heed The Warning Signs Like any other type of scam, those relating to your estate or property will have similar warning signs. A salesman may approach you first, without seeking out the information yourself. The salesman will probably be able to offer you a "great deal" that "won't last long" or there will be some kind of pressure tactic involved to get you to sign the contracts quickly without reviewing them with your attorney, accountant or financial advisor first. If it sounds too good to be true, it probably is.

The old adage "The Devil is in the details" is good advice. Pay attention to the fine print, anything left unsaid, and questions unanswered or evaded. If you are at all unsure about the offer, ask if you can think about it or review it with a trusted legal advisor of your choice. If you're told no or advised that the deal won't last, then you are probably better off passing on the "great deal." If you are ever told that your attorney doesn't need to look at the documents you are signing, or worse, that you don't even need to tell your attorney about them, it is a safe bet that you're involved in a scam. An Estate Lawyer Can Help If you are at all unsure about a document you may have signed or think you might have fallen victim to an estate planning scam, contact your attorney right away. Licensed elder law lawyers or litigation attorneys can help you get to the bottom of the problem and start you on the path to recovering your assets. Kerry Peck is a managing partner at Peck Bloom, LLC, a renowned firm of Chicago litigation attorneys. At Peck Bloom, you will find an expert will attorney or Chicago estate lawyer for all your estate planning needs.

A Little-Known Community Spouse Medicaid Compliant Annuity Planning Technique

The legislation regarding annuities contained within the Deficit Reduction Act of 2005 ("DRA") seems to apply only to the "annuitant who has applied for medical assistance." However, most post-DRA states apply the provisions also to an annuitant that is the spouse of an individual who has applied for medical assistance. Notwithstanding the above, a handful of post-DRA states do not requires an annuity purchased by a community spouse to be irrevocable, non-assignable, actuarially sound, and provide equal payments. The provisions pertaining to designating the state Medicaid agency as a remainderman still apply. This means community spouse can take advantage of balloon-style Medicaid Compliant Annuities in the select states that do not apply DRA in its entirety to spousal annuity purchases. A balloon-style Medicaid Compliant Annuity is an immediate annuity structured with very small monthly payments, with the exception of the last payment which is very large. Upon maturity, the final payment is paid to the insured. Why would a community spouse want to take advantage of a balloon-style Medicaid Compliant Annuity? In light of the very small monthly payments derived from the balloon-style Medicaid Compliant Annuity, the community spouse may receive a large income diversion from the institutionalized spouse. Of course, this will vary depending on the community spouse's income level and the applicable monthly maintenance needs allowance.

Meet Clarence and Martha. After a long struggle with Alzheimer's, Clarence entered a Florida nursing home on January 1, 2012. Together, he and his wife Martha have a home, standard furniture and personal property, one car, prepaid funeral plans, and $245,000 in non-IRA bank accounts. Clarence has monthly income from social security and pension of $2,300 while Martha has monthly income from social security of $500. Clarence's nursing home bill is expected to be $6,200 per month. Martha would like to immediately qualify Clarence for Florida Medicaid benefits. The Balloon-Style Medicaid Compliant Annuity. Of the countable resources, Martha is allowed to keep no more than $113,640 as her community spouse resource allowance, and Clarence is allowed to keep $2,000 as his institutionalized individual resource allowance. After the protected resources are taken into consideration, the spend-down amount is $129,360. With Martha being 79-years-of-age she is allowed to purchase a balloon-style Medicaid Compliant Annuity with a period certain of 1194 months. With an investment amount of $129,360, the balloon-style Medicaid Compliant Annuity will provide income to Martha of $116.32 for 188 months, with the final balloon payment of $128,286.32 occurring in month 119.

Medicaid Eligibility. If Martha purchases the annuity in February of 2012, the spend-down amount is eliminated and Clarence is immediately eligible for Florida Medicaid benefits. As a result, in February of 2012 and each month thereafter Clarence's Medicaid co-pay is $40.32. This amount was determined by reducing Clarence's monthly income of $2,300 by the $2,224.68 that was shifted to Martha, and his $35 monthly personal needs allowance. Economic Results. With Clarence and Martha expecting to pay $6,200 per month for Clarence's nursing home care, by immediately qualifying for Medicaid benefits Clarence and Martha will save $6,159.68 in February of 2012, and each month thereafter. Advantages of the Balloon-Style Medicaid Compliant Annuity Plan. Clarence obtains immediate Medicaid eligibility and is able to contribute to Martha's income so that she may continue to reside in the community as long as possible. Had Martha opted to proceed with a level-pay Medicaid Compliant Annuity in lieu of the balloon-style Medicaid Compliant Annuity, Clarence's co-pay would have been $1,066.05, resulting in a monthly savings of $5,133.95. This is $1,025.73 less per month than the balloon-style Medicaid Compliant Annuity plan. Disadvantages of the Balloon-Style Medicaid Compliant Annuity Plan. If Martha predeceases the 119-month period certain of her balloon-style Medicaid Compliant Annuity the Florida Medicaid program will be entitled to be reimbursed for the Medicaid expenses paid on behalf of Clarence. In such an event, Martha's balloon-style Medicaid Compliant Annuity may leave little or no residual benefits to intended heirs. Alternate Balloon-Style Medicaid Compliant Annuity Option. In that the Florida Medicaid program does not have a restrictive definition of "actuarially sound" Martha may want to reduce the period certain of her balloon-style Medicaid Compliant Annuity to ensure that she will outlive the term. Unlike a level-pay Medicaid Compliant Annuity, decreasing the term of a balloon-style Medicaid Compliant Annuity changes the monthly pay-out on a very miniscule basis - usually only pennies. Should Martha opt for a 60-month term instead of the previously outlined 119-month term her monthly pay-out would only increase by $0.49. Interesting Planning Points. Should Martha decide not to proceed with the aforementioned balloon-style Medicaid Compliant Annuity plan and instead continue to privately pay for Clarence's nursing home care, Clarence and Martha will exhaust their entire spend-down amount in approximately 33 months. Should Martha's financial needs change (i.e. her health deteriorates and she transfers to an assisted living facility) she may require a greater amount of income than the balloon-style Medicaid Compliant Annuity provides. At any time during the pay-out period of the balloon-style Medicaid Compliant Annuity, Martha may elect to convert the balloon-style Medicaid Compliant Annuity into a level-pay Medicaid Compliant Annuity; this is a one-time election. If Martha's balloon-style Medicaid Compliant Annuity is nearing maturity and Martha decides it is not in her best interest to receive the final balloon payment, she may elect to continue/rollover the balloon-style Medicaid Compliant Annuity into another policy, taking her new life expectancy into consideration.