Leading by Example and Estate Planning

Posted by on Oct 21, 2016 in Estate Planning | 0 comments

leading-by-example

“THE LEGAL CORNER”

By Sam A. Moak

Leading by Example and Estate Planning

The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

In the past year and a half far too many of my friends have lost young adult children. The loss of a child is hard enough, but the legal mess it can leave only makes matters worse.

Reflecting upon something I learned from my father as a young adult, (and did not appreciate as a young adult, but do now) made me realize he led by example. When I graduated Texas A&M and began my first real job, Pop had me sign a Will, Durable Power of Attorney and Medical Power of Attorney. It didn’t seem necessary at the time. After all, my entire worldly possessions consisted of a ‘67 Ford Mustang, ‘72 Jeep, some old furniture (retired from the Alpha Delta Pi house at SHSU), lots of posters and a bunch of junk accumulated from trips in college. However, it’s never too early to start estate planning. I was going to be working out of state and, if an accident occurred, those instruments put someone in charge while I might not be able to handle things.

Whether or not you already have a family, getting your personal affairs in order is a must. None of us know what life has in store for us. Fortunately, I survived my 20’s, but the losses I have witnessed my friends and clients experience have taught me, the sooner you start planning, the more prepared you will be for life’s unexpected twists and turns.

Unfortunately, death affects us all and does not consider age. Take for example the loss of a 23 year old son. Even if he had no children, what if he had been married? It is one thing if the marriage was good, but what if its not a pleasant marriage? What if the couple was separated, but not divorced? What if he wasn’t married, but had begun purchasing a house, vehicles or accumulating savings? What if his parents were divorced? Because he was “too young” to need a Will, his estate passes pursuant to Texas law, rather than as he may have wanted. The loss of a son is devastating, but to then quarrel about who gets assets, personal effects, or accepts debt can be another blow.

If you have young children, or other dependents, I can not stress enough how important planning is. The less you have, the more important your plan, so that it can provide as long as possible and in the best way for those most important to you. You can not afford to make a mistake.

You should sit down with your family and discuss various “what if” situations. This is important for a couple of reasons. One, so that you have communicated your wishes to those around you and, two, so that you have thought about the many contingencies that can occur (i.e., injury, incapacity, illness and death). This would also give you the opportunity to explain why you may have made a larger gift to someone rather than another or equal division. Many may have a second marriage and therefore children from different relationships and of broad age ranges. This and health can affect how you provide for your family. A frank discussion can help avoid hard feelings later.

However, just talking about it is not enough. Everyone should have the basic estate plan components. A life insurance policy, a Will, a designation of agent to control disposition of remains, a durable power of attorney and an advance directive are all important aspects of an estate plan that should be established at the beginning of the planning process.

Life insurance can provide money in the event of an untimely death and loss of income. This may be especially beneficial to young individuals. Perhaps a young couple has not accumulated enough savings or put aside for retirement. Loss of one or both spouses’ income can have devastating effects. Another factor to consider is that the younger you are when you take an insurance policy, the easier it is to pass required physicals and obtain lower rates.

Drafting a Will allows you to state how you would (or would not) want your assets transferred. A Will can designate guardians of young children and financial account trustees. As a general rule of thumb, the more detailed the Will, the better.

My father’s advice some many years ago, as most of his advice, resonates with me when I see families lose young adult children. It has also set a course for me that everyone should follow. As parents we pass on advice to our children. While my first Will and powers of attorney were very simple, I continued to update them as I grew and my situation in life changed. You should review the plan every five to seven years, to adapt to significant life events, tax law changes, the addition of more children or their changing needs. It is also important to keep tabs on your insurance policies and investments, as they all tie into the estate plan and can fluctuate based on the economic environment.

As older adults, our responsibility is to provide safety and security for our family. It is also to lead by example. Discussing your estate plan with your children lets them know how important it is for them to also plan.

If you have a question regarding Elder Law, Estate Planning, Living Trusts or Probate in the Huntsville area, please contact us at 936-295-6394 or visit our website. Call today and we will connect you with an experienced Elder Law and Probate Attorney. We can schedule you a face to face appointment to discuss your circumstances. If you have questions or are considering any aspect of your estate plan, probate, your health care directives, etc. we can help! Call us now at 936-295-6394 . We look forward to hearing from you and assisting you with any and all elder law and estate planning needs.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas. www.moakandmoak.com

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Estate Planning for the Nontraditional Family

Posted by on Oct 15, 2016 in Estate Planning, Uncategorized | 0 comments


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non-traditional-families-icon

“THE LEGAL CORNER”

By Sam A. Moak

Estate Planning for the Nontraditional Family

The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

We have moved along way in 16 years, and whether you agree with them or not, it is becoming increasingly common in the United States to encounter a group of people who reside in the same household, but who are not part of what might be considered a “traditional family.” The Census Bureau estimates a tenfold increase in the number of unmarried partners’ households since 1970, and this figure does not account for gay and lesbian couples.

In this article, the term “nontraditional family” encompasses the following family groups: (1) unmarried adults who are opposite sex partners, (2) unmarried adults who are same sex partners, and (3) single parents and adults with children, whether minor or adult children. To a great extent, each of these types of “nontraditional families” share similar characteristics for income and transfer tax issues. In addition to the similarities, there are issues which are unique to same sex couples. I will attempt to highlight some of these areas this week.

The first step in determining the rights and obligations of unmarried adults sharing a home, is to determine whether the other person(s) residing in the same household are “family members” or not. Are the other residents (1) spouses, (2) parents, (3) children, (4) domestic partners or (5) dependents? Each has its own unique characteristics and questions to be addressed.

Much of an individual’s tax status and estate planning depends on whether or not that individual is considered married. Three different circumstances come to mind with the term “spouse.”

Texas, as well as several other states, recognizes Common Law Marriage. This is a form of informal marriage that could result in two individuals who share the same household being considered spouses. In Texas, the burden is on the party claiming that a valid common law marriage exists to provide evidence which establishes three elements: (1) an agreement to be married; (2) cohabitation in Texas; and (3) holding out to others that the parties are married.

Unmarried opposite sex couples may either fail to meet the requirements for a common law marriage or simply choose to avoid treatment as spouses under Texas Law. Some opposite sex couples actually choose to remain unmarried in order to avoid what they perceive to be a “marriage penalty.” A common example of this decision can be seen among older adults who are of the age to draw their social security benefits and choose to avoid marriage in order to maximize their benefits, even though they live in a committed relationship.

In June 2015, the U.S. Supreme Court legalized same sex marriages in a controversial 5 – 4 decision. This ruling struck down the bans to same sex marriage many states had put into place. Despite the Supreme Court’s action, same sex couples still may encounter additional burdens when trying to claim benefits from employers.

Both unmarried opposite sex partners and same sex partners will want to provide protection for their relationship and for the other partner in the event one partner becomes incapacitated. Legally married or not, due to the controversial nature of these relationships, these partners will need to create legal documents which allow the non-disabled partner to care for and manage the disabled partner’s affairs. Unfortunately, many families are not ready to accept these lifestyles and the potential for conflict exists.

If you find yourself in any of the above situations, then you should contact an attorney to assist you in your long term planning. Most attorneys will be familiar with devices to assist in this area.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas. www.moakandmoak.com

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What is Philanthropy?

Posted by on Oct 10, 2016 in Estate Planning | 0 comments


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“THE LEGAL CORNER”
By Sam A. Moak

What is Philanthropy?

The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

As defined by the Oxford Dictionary, “philanthropy”is the desire to promote the welfare of others, expressed especially by the generous donation of money to good causes. While most of us may give to charity on a regular basis, many of us do so spur-of-the moment or when we feel we have a little extra money to give. Philanthropy allows a person or groups of people to give to charitable organizations consistently over a long time period. Philanthropy does not mean you have to give money, there are many opportunities to give your time or expertise to a charitable endeavor.

For example, earlier this week the Item ran a story on Huntsville Independent School District seeking volunteers. I strongly urge you to do so, you will find it may change a child’s life and is rewarding. However, this week’s column is on different ways you can financially be philanthropic.

Some of the largest philanthropies have existed for decades and are large enough to provide an endowment of giving to last in perpetuity. While you can give your own money to such large philanthropies to benefit your favorite charities, it’s not necessary to do so. In fact, you can begin your own philanthropic legacy for as little as $5,000. You may say “Sam, I can’t afford that,” but please read on because you or a group may be able to do more than you believe possible as I explain different types of philanthropies.

Private Foundations
A private foundation is a legal entity established by an individual, family or group of individuals for philanthropic purposes. The Bill & Melinda Gates Foundation is the most prominent and largest example of a private foundation. Corporations can also establish private foundations as well as charitable organizations. The largest private foundations are endowed with billions of dollars in assets.

This is only an option if you have millions of dollars, however, because of the costs to manage and maintain such a philanthropy. As a legal entity, a private foundation has corporate and tax filings to maintain on a regular basis and myriad administrative tasks that go with any corporate endeavor. The overhead costs alone are typically too expensive and time-consuming for most of us, as individuals or as families, to establish such a philanthropic structure. You want your giving to achieve the most bang for the buck.

Charitable Trusts
Charitable trusts are often established by wealthy donors that provide a philanthropic legacy while providing income and/or estate tax advantages to the donor. Typically, a person has an attorney draft a trust document, established for charitable purposes. An asset or assets are funded into the trust and the donor continues to enjoy the use of the asset for a period of years or until the donor dies. After death, charities become the beneficiaries of the trust assets.

The administrative burden with charitable trusts is not as onerous as with private foundations. However, meticulous financial records must be kept as well as the trust filing an annual tax return.

Public Foundations
Public Foundations are legal non-profit entities established to provide grants to a charity or charities from donations elicited from the general public. Public foundations can benefit (or be) a single institution, such as a university (like Texas A&M’s Foundation). However, there are public foundations that benefit a wide variety of interests in a single community. Donations to public foundations usually involve a lager tax break to individual donors than donations to private foundations because the donor does not have ultimate “control” over who will receive the donation or grant.

Public foundations are more beneficial to donors who want to establish an initially modest philanthropic legacy. Initial thresholds to establish a philanthropic fund vary from $5,000 – $50,000. Oftentimes these thresholds can be met over a 2 or 3-year period.

Donor-Advised Funds
However, an often overlooked method of philanthropy is the use of Donor-Advised Funds (DAF). A DAF can be established privately and provide the best combination of private and public philanthropy. With the assistance of your financial advisor and through wealth managers who specialize in managing philanthropic investments, you set up a fund with cash or an asset. Once established, you can make annual or more frequent periodic donations to the charities of your choice.

What is unique about this option is that you can give to your favorite charities anonymously, if you desire, and you can start your philanthropic giving for as little as $5,000. Once the fund is established, you can add assets and cash to it at any time; you can have friends and family add contributions to it; and you can name successor advisors in case you pass away. Establishing such a fund, even in a modest amount, can be a great vehicle for starting a legacy of multi-generational giving in your family.

If you or your family feel philanthropic, then contact an attorney and your financial advisor about how to do so. If you can’t do so financially, contact Huntsville Independent School District or New Waverly Independent School District and make a difference in a child’s life by donating your time.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas. www.moakandmoak.com

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Welcome Angela Shimek Valis to The Firm

Posted by on Jul 1, 2016 in Uncategorized | 0 comments


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We are pleased to announce the addition of Angela Shimek Valis to our firm as an associate attorney.

Mrs. Valis comes to us from Gonzales Texas where she was a partner in the firm of Reese, Escobar, Valis & Symms, LLP.
She is married to Garrett Valis who coaches at Sam Houston State University girls softball.

Mrs. Valis is a native of Shiner, Texas. She attended Texas A&M University where she attained her Bachelor of Arts degree in Speech Communication, graduating magna cum laude with both University Honors and Foundation Honors. After leaving Aggieland, Angela earned her Juris Doctorate at St. Mary’s University School of Law in San Antonio, Texas.

While at St. Marys, Angela was Editor-In-Chief of The Scholar: St. Mary’s Law Review on Minority Issues. Upon graduation from law school, she received the “Law Student of the Year Award” from the National Association for Women Lawyers.

Angela has experience in Real Estate, Trademarks, e-Discovery, Business Organizations, Wills & Estate Planning, Probate, and Oil & Gas.

Please help us in welcoming Angela to our practice.

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Worries of the Sandwich Generation

Posted by on Jul 1, 2016 in Estate Planning, Uncategorized | 0 comments


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THE LEGAL CORNER

By Sam A. Moak

Worries of the Sandwich Generation

The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

The Sandwich Generation is getting worried. Who are they? Adults stuck between young children and older parents, both of them requiring the adult’s supervision and/or financial care.

What are they worried about? Well, a lot of things, but in specific: how to pay for their parents’ medical care now while also planning for their own future long-term care costs. (Not to mention taking care of the little kids too.) According to a new Associated Press poll, nearly 10% of adults age 40 or older are currently supporting at least one child while also providing regular care for an older relative. In other words, they’re “sandwiched.” Understandably, that gives rise to financial fretting.

Unfortunately, the worrying doesn’t seem to translate to action. The same poll finds that 54% of those sandwiched Americans have done “little or no planning.” Worrying but not planning is a recipe for unhappiness and misfortune. Proactive measures are surprisingly easy to take, and they can afford you tremendous peace of mind — not to mention a better forecast for the future. So why not make those next steps? Or at least look into them?

You might say, “Sam, we don’t have kids.” Procrastination is common across all walks of life, but studies show that those without children are the most likely to postpone planning for the future. That’s curious, given that providing for one’s progeny accounts for only one small part of a comprehensive estate plan.

No one is immune from worst-case scenarios. Being childless doesn’t make you any less likely to suffer from sudden tragedy, nor does it make the legal realities of what will happen after a tragedy any less complex. In other words, an estate plan is equally important for all adults, regardless of whether they have kids. Just this week a friend of our family had a younger brother working on some playground equipment and a pipe swung, hitting him in the head. He is now in ICU and facing a tough battle.

That’s an unsettling thought and an uncommon scenario, but it makes a point. None of us know what tomorrow may bring. Should we end up in an accident, we may face urgent healthcare decisions, choices we may no longer have the capacity to make. And should we unexpectedly perish, we will have assets that must pass to someone else. If today were your last day on earth, who would get your stuff? When it comes to what you’ll leave behind, there are only three buckets: Uncle Sam, charity, or individuals. Generally speaking, Uncle Sam is the least appealing. That concern is as pressing for the young and childless as it is for parents.

I urge you, whether you find yourself taking care of parents and young children or even if you have no children, make the time to sit down with an attorney experienced in estate planning. Such an attorney should be trained and familiar with estate planning and probate. The advice they provide will assist you in making the best and least complicated plan to take care of both parents and children if that is the need.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

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IS A CHANGE TO THE ESTATE TAX ON THE HORIZON?

Posted by on Feb 6, 2015 in Estate Planning | 0 comments


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“THE LEGAL CORNER”

By Sam A. Moak

IS A CHANGE TO THE ESTATE TAX ON THE HORIZON?

The information in this column is not intended as legal or tax advice but to provide a general understanding of the law.  Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

Well President Obama has come out with a comprehensive plan for changes that could take away many of the strategies that save families estate taxes.  Annual exclusion gifts, generation skipping trusts, grantor retained annuity trusts (GRATs) and many more estate tax vehicles are in his target.  Obama would like to turn the clock back to 2009 when the estate tax exemption was $3.5 million per person (currently $5.43 Million), the lifetime gift/GST exemptions were just $1 million per person and he wants to raise the estate tax rate (currently topped at 40%).

This all seems to boil down to our government’s inability to manage money.  Obama sees these changes as an opportunity to bring in an estimated $214 billion dollars over 10 years.  Just reverting how estates and gifts were taxed in 2009 would bring in $189 billion of that.  Republicans are not on board with this and are actually still trying to kill the federal estate tax entirely.  Let us hope they prevail.

The proposal to restrict GRATs has been around awhile.  This is a type of trust in which you can put an asset you expect to appreciate a lot, and any appreciation over a low Internal Revenue Service hurdle rate (just 2% for February 2015) goes to the heirs tax free.

Another proposal that could impact life insurance needs is a so called “simplification” of the gift tax exclusion for annual gifts.  Currently individuals can make a gift of $14,000 to as many people as he/she wants without having to worry about estate or gift taxes.  However, under the new proposal, a $50,000 overall limit for certain gifts such as transfers to trust or family limited partnerships would be put into place.  If this is enacted, then the change would limit life insurance trust planning through irrevocable life insurance trusts to $50,000.

Another very troubling proposal is the elimination of the stepped up basis.  When property is passed upon death to another, then the basis (cost) of the property passed is “stepped up” to the current fair market value.  This eliminates years and potentially thousands of dollars in gain.  Thus, when the property is sold by the heirs they have to pay a greatly reduced capital gains tax.  Elimination of the stepped up basis would me heirs have to pay more capital gains tax.  Oh, and yet another of Obama’s proposals is to increase the capital gains tax from 20% (it has already been increased from 15%) to 28%.

The estate tax related matters I have discussed are not the only items targeted, here is a list of more:

Limiting the Duration of the GST tax exemption

Limiting certain tax expenditures like home mortgage interest by capping their value at 28%

Close the S corp payroll tax loophole

Repealing Coverdell education savings accounts

Repealing workplace child and dependent care spending accounts

And for those college sports fans, eliminating the deduction for charitable contributions that entitle donors to a right to purchase tickets to sporting events.

You should always keep an eye on what your government is doing, particularly with your money and taxes.  Do not rely on this article, but instead watch what is going on and seek the assistance of a tax professional like your CPA.

If you have a question regarding Elder Law, Estate Planning, Living Trusts or Probate in the Huntsville area, please contact us at 936-295-6394 or visit our website. Call today and we will connect you with an experienced Elder Law and Probate Attorney. We can schedule you a face to face appointment to discuss your circumstances. If you have questions or are considering any aspect of your estate plan, probate, your health care directives, etc. we can help! Call us now at 936-295-6394 . We look forward to hearing from you and assisting you with any and all elder law and estate planning needs.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

www.moakandmoak.com

 

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Medicaid Estate Recovery Program MERP

Posted by on Aug 22, 2014 in Elder Care Law, Estate Planning | 0 comments

“THE LEGAL CORNER”

By Sam A. Moak

Medicaid Estate Recovery Program MERP

The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

There is no free lunch. These words ring true when it comes to Medicaid. Since 2005, the state is allowed to recover some of the Medicaid money spent on individuals by tapping patients’ estates after they die. In most cases, the most valuable asset is the home.

On March 1, 2005, Texas implemented the Medicaid Estate Recovery Program in compliance with federal Medicaid laws. The program is managed by the Texas Department of Aging and Disability Services.

Under this program, the state may file a claim against the estate of a deceased Medicaid recipient, age 55 and older, who applied for certain long-term care services on or after March 1, 2005. Claims include the cost of services, hospital care, and prescription drugs supported by Medicaid.

The Texas Health and Human Services Commission may not file a claim if one of the following conditions exist:

There is a surviving spouse.

There is a surviving child or children under 21 years of age.

There is a surviving child or children of any age who are blind or permanently and totally disabled under Social Security requirements.

There is an unmarried adult child residing continuously in the Medicaid recipient’s homestead for at least one year before the time of the Medicaid recipient’s death.

An undue hardship waiver may be filed when:

The estate property is: a family business, farm, or ranch; is the primary income producing asset of the heirs; produces at least 50 percent of the livelihood for heirs for at least 12 months prior to the death of the Medicaid recipient; and recovery by the state would affect the property and result in heirs losing their primary source of income.

Beneficiaries of the estate will be eligible for public or medical assistance if recovery claim is collected.

Allowing one or more heirs to receive the estate enables them to discontinue eligibility for public or medical assistance.

The Medicaid recipient received medical assistance as the result of being a crime victim.

Additionally, the Medicaid Estate Recovery Program claims will only be filed when it is cost-effective. Claims that are considered not cost-effective are those where:

The value of the estate is $10,000 or less.

The recoverable amount of Medicaid costs is $3,000 or less.

The cost of the sale of the property would be equal to or greater than the value of the property.

For more information you can log onto the Texas Health and Human Services Commission website at www.dads.state.tx.us

Remember, nothing from the government comes for free. There are always strings attached and before you blindly apply for Medicaid, know all the facts so that you can make an informed decision. There are a lot of myths and untruths out there about Medicaid, seek legal advice from somewhere other than the coffee bar.

If you find yourself in the age group of 50 to 70 you should start researching long-term care insurance. The younger you are when you apply the better. Why should you consider buying long-term care insurance? The most common reason is to insure against impoverishment. However, you may just want to ensure that you do not have to use any of your life savings or assets to pay for your living expenses. Finally, you may want to leave an inheritance to your children or grandchildren. Another common belief is you can’t take it with you, so you might as well spend it all before you go. Your choice to purchase long-term care insurance can only be determined by your personal values and goals.

I hope the information provided here is helpful. If you have any questions regarding this, please consult with an attorney.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

www.moakandmoak.com

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