The biggest damage that you can do to your family and for your loved ones is failing to put in place a well-designed and updated estate plan. The following is a story about a wonderful couple from Nashville that did all the right things when it came to planning their estate and protecting their children and grandchildren.
Joe and Melissa had been married for nearly forty years. During that time Joe and Melissa had lived all over the country, but eventually settled in Nashville, specifically, the Green Hills area and had lived there for the last 25 years. They had raised three children together and now have nine grandchildren that they get to see on a regular basis. In addition, Joe and Melissa always watched their finances and had saved up approximately $5.5 million in assets including their home. In addition, Joe and Melissa have $2 million life insurance policies naming each other as the primary beneficiaries and their three children equally as the contingent beneficiaries. However, the one thing that was always missing was a will and some carefully drafted and customized estate planning for their loved ones.
Therefore, one day, Joe and Melissa visited with a Rabalais law estate planning lawyer at one of the many educational events put on by Rabalais law each month. After attending, Joe and Melissa realized that they were in trouble. Joe and Melissa realized that when they passed away their three children would be forced to go through a long and drawn out probate matter to settle each of their estates which would last from six months to two years and cost upwards of $20,000 in expenses. In addition, Joe and Melissa realized that without proper estate planning, their children would be left with unnecessary taxes to be paid. You see, Joe and Melissa learned that the $2 million in life insurance benefits to their three children would be considered part of their taxable estate. Therefore, Joe and Melissa realized that it was a possibility that the second spouse to die could die with $9.5 million in assets, creating a potential tax bill of $1.64 million.
In addition, Joe and Melissa realized that if they ended up going into a nursing home in their final years, they could spend a considerable amount of their assets on nursing home expenses and their estate could be reduced by as much as $500,000 in just a few years of nursing home expenses.
After sitting down with a Rabalais law estate planning lawyer, Joe and Melissa put in place an Irrevocable Medicaid Trust, Last Will and Testaments, Living Will, Durable Financial Power of Attorney, and Health Care Power of Attorney. You see, Joe and Melissa realized, after sitting down and having a discussion with their estate planning lawyer, that they could put an Irrevocable Medicaid Trust in place, maintain control over all of their trust assets, and if they went into a nursing home more than five years from now, their assets would be completely protected from nursing home expenses, and they would qualify for Medicaid.
In addition, Joe and Melissa also realized that by putting all of their assets into a trust, they would avoid the probate delays, costs, and expenses, everything would pass smoothly and immediately to their three children equally, and their children wouldn’t need to worry about hiring any lawyer, talking with any judge, or dealing with any probate court orders after their deaths. In addition, Joe and Melissa realized that the trust could be customized to reduce and possibly even eliminate their projected $1.64 million estate tax bill with proper planning.
As it came to happen, Joe and Melissa both ended up going into the nursing home around roughly the same time about 12 years after all of this was set up. As a result, Joe and Melissa immediately qualified for Medicaid while preserving all of their assets for their children and being protected from Medicaid spend down. In addition, a few years into their nursing home stay, Joe passed away. As a result of their proper planning, Melissa remained in complete and immediate control of all of the family assets, and a probate estate did not even need to be opened up with the probate court. About 3 years after Joe died, Melissa passed away. In addition, as a result of all of this proper planning, all of the family assets passed immediately, smoothly, and equally to the three children. There was no probate, no judges, and no lawyers that had to be involved. Quite simply, because of all of Joe and Melissa’s advanced planning, their assets were preserved and costs of administering their estate were completely eliminated for their children.
If you have questions about estate planning in Tennessee, establishing a revocable living trust or an irrevocable Medicaid trust, avoiding nursing home poverty and Medicaid planning, or any other estate planning topics, then I encourage you to attend one of our free live educational events scheduled this month. At these events, you will hear a lot of real life stories about families that paid thousands of dollars in unnecessary expenses, families that were able to avoid unnecessary expenses, and families that were able to protect their assets from unnecessary nursing home costs and expenses.
I look forward to speaking with you at one of our live upcoming events.