Dueling Estate, Gift, and Generation Skipping Transfer Tax Senate Bills

Posted on March 15, 2019January 25, 2021 by Lin Law

Earlier this year, two very different bills relating to the federal estate, gift, and generation skipping transfer (GST) taxes were introduced in the United States Senate.

On January 17, 2019, Senator Tom Cotton (R-Ark.) introduced a bill that would reduce the federal estate, gift, and GST tax rates to a flat rate of 20%. Under current law, these transfers are subject to a progressive tax rate that maxes out at 40% for transfers in excess of $1 million (subject to the federal lifetime exemption amount of $10 million, as adjusted for inflation).

Conversely, the “For the 99.8 Percent Act,” introduced by Senator Bernie Sanders (I-Vt.) on January 31, 2019, would reduce the federal estate, gift, and GST lifetime exemption amount to $3.5 million. The federal lifetime exemption amount is currently set at $10 million (adjusted for inflation to $11.4 million for 2019), and will decrease to $5 million when certain provisions of the Tax Cuts and Jobs Act of 2017 sunset on December 31, 2025. In addition, the Act would raise the federal estate, gift, and GST tax rates to 45% for transfers of $3.5 million to $10 million, 50% for transfers of $10 million to $50 million, 55% on transfers of $50 million to $1 billion, and 77% on transfers in excess of $1 billion.

Although neither of these bills is likely to make it through both houses of Congress to become law, it is always worth keeping an eye on legislation that has the potential to impact your estate plan.

If you have any questions on this topic, please contact Lin Law LLC at (920) 393-1190.

Disabled individuals are now ABLE to save – Achieving a Better Life Experience (ABLE) accounts

Posted on March 4, 2019January 25, 2021 by Lin Law

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New year, new estate plan?

Posted on January 8, 2019January 22, 2021 by Lin Law

As we begin 2019, consider adding a review of your estate plan to your list of New Year’s resolutions. For most people, it is appropriate to review your estate plan every two to three years, or whenever a life-altering event occurs (e.g., marriage, divorce, a significant change in job or health, birth or adoption of a child).

In addition, the following are a few non-tax reasons to review your estate planning documents:

Children Need Powers of Attorney. Any child of yours that has attained the age of 18 since you implemented your estate plan (especially those away at college) should have basic estate planning documents in place, especially financial and health care powers of attorney.

Outdated Estate Planning Documents. Estate planning documents may have been prepared prior to a marriage or divorce or prior to the birth of your children. Individuals you have named as trustee, guardian, or power of attorney may no longer be appropriate under the present circumstances.

Specialized Planning / Asset Protection. Each family has its own unique situation that may require specialized estate planning, such as a blended family situation, a desire to make sure the assets you leave to your beneficiaries are protected in asset protection trusts, or a beneficiary’s disability and the considerations it presents in leaving assets to that disabled beneficiary.

In connection with reviewing your estate plan, it is also important to review the beneficiaries named on your life insurance policies and retirement accounts, to ensure that they are coordinated with your existing estate plan documents. Beneficiary designations that are not consistent with your estate plan can result in distributions that are inconsistent with your desires or cause unintended tax consequences to your beneficiaries.

This year, consider reviewing your estate plan to ensure that it continues to meet your needs.

If you have any questions on this topic, please contact Attorney Evan Y. Lin or Attorney Emily E. Ames at (920) 393-1190.

Disclaimer: The information in this blog post is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author. Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation.

Fireside Chats During the Holiday Season

Posted on December 18, 2018January 22, 2021 by Lin Law

As the holidays approach and families gather together, topics like long-term care and estate planning are likely to be the last thing on your mind. However, the holidays are the perfect opportunity to discuss these difficult issues with your loved ones. For older relatives, it is important to discuss whether he or she has planned for future incapacity and/or assisted living or nursing home care needs.

In addition, if you and your older family members already have existing advance health care directives and powers of attorney for finance in place, the holidays are a good opportunity to ensure that your health care agents understand your wishes with regard to end of life care, and that your attorneys-in-fact have a good understanding of your finances, or that they know where to find that information if and when they need it.

If you and your family will be gathering together for the holidays, remember that the most difficult conversations are often the most important, and that when it comes to long-term care and estate planning, the earlier you begin planning, the better.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Evan Y. Lin Named to the 2018 Wisconsin Super Lawyers List

Posted on November 19, 2018January 22, 2021 by Lin Law

Evan Y. Lin, an attorney and managing member of Lin Law LLC, has been named to the 2018 Wisconsin Super Lawyers list by the publishers of Super Lawyers® Magazine. Each year, only 5% of attorneys in Wisconsin are named a Super Lawyer. Evan was previously named to the 2015, 2016 and 2017 Wisconsin Super Lawyer list and was also named five times to the Wisconsin Rising Star list in Estate Planning and Probate by the same publication.

Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The selection process includes independent research, peer nominations and peer evaluations.

Up the river without a paddle – is one power of attorney as good as the next?

Posted on November 15, 2018January 22, 2021 by Lin Law

Not all powers of attorney are created equal. When planning for future incapacity, particularly if you anticipate requiring governmental benefits such as Medicaid, it is important that your financial power of attorney provide your agent(s) with all the powers he or she might need to provide for your elder law or special needs objectives. These powers may include, but are not limited to, the ability to:

– Create and fund revocable, irrevocable, or supplemental needs trusts;

– Make gifts above the annual exclusion amount or to him or herself, if necessary;

– Execute estate planning documents and other agreements, such as a caregiver agreement; and

– Change beneficiary designations on life insurance policies and retirement assets.

If you are planning for your future incapacity, make sure that your power of attorney grants your agent the powers he or she will need to accomplish your elder law and special needs objectives, so that your agent does not find themselves up the river without a paddle.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

We get by with a little help from our friends – Supported Decision-Making Agreements for functionally impaired adults.

Posted on November 5, 2018January 22, 2021 by Lin Law

In April 2018, the Wisconsin State Legislature passed legislation to create Chapter 52 of the Wisconsin Statutes, authorizing the use of Supported Decision-Making Agreements in the State of Wisconsin. Wis. Stat. § 52.01(6) defines “supported decision-making” as “a process of supporting and accommodating an adult with a functional impairment to enable the adult to make life decisions… without impeding the self-determination of the adult.”

Accordingly, a Supported Decision-Making Agreement can authorize the principal’s supporter (or supporters, if the principal desires more than one) to assist the principal in a number of ways, including:

a. Providing supported decision-making to the principal, including assistance in understanding the options, responsibilities, and consequences of the principal’s life decisions, without making those decisions on behalf of the principal;

b. Assisting the principal in accessing, collecting, and obtaining information that is relevant to a given life decision, and in understanding said information; and

c. Assisting the principal in communicating his or her decisions to the appropriate persons.

A Supported Decision-Making Agreement cannot be used as evidence of incapacity or incompetency of the principal, and is revocable by the principal at any time. Because of their flexibility, Supported Decision-Making Agreements may (and in many cases, should) be used in conjunction with powers of attorney for finances and healthcare. Importantly, Supported Decision-Making Agreements must now be considered as a potentially less restrictive alternative to guardianship, and may also be used in conjunction with a full or limited guardianship.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Medicare vs. Medicaid: Do you know the difference?

Posted on October 1, 2018January 22, 2021 by Lin Law

When speaking about public benefits, people often confuse Medicare and Medicaid. After all, they do basically the same thing, right? Not exactly…

Medicare is available to all individuals age 65 and older, in addition to chronically disabled individuals of any age, irrespective of resources (i.e., assets). It is federally administered and beneficiaries are often responsible for co-pays and premium payments. Medicare has four parts, each providing distinct benefits:

1. Part A (Hospital Insurance) – provides coverage for hospital costs and related

services (e.g., skilled nursing facility care, home health care, and hospice care).

2. Part B (Supplementary Medical Insurance) – provides coverage for physician services

and certain outpatient services that are not covered by Part A.

3. Part C (now known as Medicare Advantage) – provides expanded coverage beyond

Parts A and B.

4. Part D (Voluntary Prescription Drug Benefit) – provides prescription drug coverage

through private insurance companies.

Medicaid, commonly referred to as Medical Assistance (MA), receives federal funding but is administered by the individual states. Unlike Medicare, Medicaid is a needs-based program, and beneficiaries are subject to strict financial eligibility requirements. Medicaid covers a broad range of health services, but is primarily known for providing long-term care (i.e., nursing home) coverage. Individuals may be eligible for both Medicare and Medicaid, and receive benefits from both programs at the same time.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

What is guardianship and how do you avoid it?

Posted on August 23, 2018January 22, 2021 by Lin Law

Guardianship is a court procedure in which an individual is appointed to make certain decisions for another person (the “ward”). The purpose of a guardianship is to protect or assist an individual who, due to mental incapacity, is unable to make decisions, defend him or herself against exploitation, or otherwise provide for his or her needs.

The proposed ward may require a guardian of the estate and/or a guardian of the person. A guardian of the estate handles the ward’s financial matters, similar to a power of attorney for finances, whereas the guardian of the person handles day-to-day matters such as the ward’s living arrangements, medical care, etc. In addition, the person petitioning the court to appoint a guardian for the proposed ward may request a temporary or permanent guardianship. A temporary guardianship can generally be established within a few weeks and lasts for sixty days, with up to one sixty-day extension. A permanent guardianship, on the other hand, remains in effect until removed by the court. In order to establish a guardianship, the proposed ward must be found legally incompetent by two physicians or one physician and one psychologist.

The ultimate goal of a guardianship is to impose as few restrictions on the ward as possible (i.e., remove as few of the ward’s rights as possible), while also ensuring that his or her needs are being met. However, even the most minimally restrictive guardianships results in the loss of some of the ward’s rights. One way to prevent a guardianship from becoming necessary is to plan ahead and execute a Financial Durable Power of Attorney and Power of Attorney for Healthcare. These documents will usually provide the principal’s power of attorney or health care agent with sufficient authority to protect or provide for the principal’s needs without petitioning the court to establish a guardianship, thereby avoiding the time and expense of a court proceeding.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author. Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation.

Special Needs Trusts

Posted on August 2, 2018January 22, 2021 by Lin Law

Are you planning to leave assets to a disabled beneficiary upon your death? If so, consider establishing a special needs trust (“SNT,” also known as a supplemental needs trust) for your beneficiary’s benefit.

An SNT is an irrevocable trust (i.e., the trust cannot be revoked or amended) established for the benefit of a disabled individual and managed by a trustee. Because the trust is not owned by the beneficiary, the trust assets can be used to provide for the disabled person’s needs over and above the essential primary care provided to the disabled person through public assistance programs such as Medicaid or SSI, without compromising his or her eligibility for those benefits. SNTs are divided into two general categories, first-party or third-party, depending on who the trust is funded by.

First-party SNTs are, as you may expect, funded with the disabled person’s own assets. A first-party SNT is established by the disabled person or on his or her behalf by a guardian, parent or grandparent, or the court. While a first-party SNT is a good option for a disabled person who wants to preserve assets he or she already has, upon his or her death the State can recover against the disabled person’s estate for benefits paid during his or her lifetime, including recovery against non-probate assets.

Third-party SNTs, on the other hand, are created by a third-party’s Will or Revocable Trust for the benefit of the disabled person and funded upon the third-party’s death from the proceeds of the third-party’s estate. There is no limitation on who may create a third-party SNT for the benefit of a disabled person, and upon the beneficiary’s death there is no estate recovery by the State.

While many SNTs are privately managed, they can also be created as a pooled and community trust (PACT) which is run by a nonprofit entity. While each PACT beneficiary has a separate account, the assets of all participating beneficiaries are pooled for investment purposes. PACTs, like private SNTs, can be either first- or third-party.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.