​In a perfect world, everyone would establish a long-term care plan well in advance of needing such care, all the necessary finances to pay for any such needs would be in order and everyone in the family would be prepared to help execute that plan at any given moment. But the reality is that most people procrastinate on any type of planning that focuses on the possibility of serious illness or death.
 
When an unplanned event happens that requires immediate long-term care, and in the absence of an existing plan, long-term care ‘crisis’ planning can help you navigate the days to come. What is Long-term care ‘crisis’ planning? This term is based on the notion that an event occurred that now requires you to make decisions regarding long-term nursing home care, including addressing the cost of such care, in a short period of time. 
 
Your first step might be to seek advice from professionals who are trained in the area of long-term care planning and stay current on the best methods for addressing your situation, as the rules and regulations of Medicaid are complicated and change frequently. Below are a few of the ways a trained professional might help you manage your long-term care crisis situation:

• Education. Maybe you just want more information about long-term care and Medicaid. A trained professional can walk you through the process of what to expect and educate you, so that moving forward you feel confident making educated decisions regarding your loved one’s care.

 

• Spenddown. You are looking to apply for Medicaid. A trained professional can provide guidance on how your assets may impact your Medicaid application approval.

 

• Spousal Division of Assets. You are still living at home and are looking to apply for Medicaid on behalf of your spouse who is in the nursing home. A well-trained professional can provide you with the needed assistance with a division of assets between spouses.

 

• Medicaid Application. You need assistance with a Medicaid application. A professional highly educated in Medicaid and estate planning law can work closely with you and the nursing home while filing your loved one’s KanCare application (KanCare is the program through which the State of Kansas administers Medicaid) to try to make the process as smooth and easy as possible. 

 

• Asset Preservation. Trained professionals develop a plan to preserve your loved one’s assets while also working towards Medicaid eligibility.

 
For more information on long-term care crisis planning, contact Davis & McCann, P. A., Dodge City, KS. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and Elder Law. We focus our practice on providing clients with the best legal advice on estate planning, Medicaid and Long-term Care Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate Transactions, 1031 Exchanges, and related matters.

If you’re one of the many small business owners who thinks estate planning is for wealthy, large business owners and executives, perhaps even multi-millionaires, think again.

Regardless of the size of your bank account or the size of your business, estate planning can be beneficial for everyone, especially for the small business owner. For many small business owners, their livelihood and family’s security are largely dependent upon the success of their business. Proper estate planning for small business owners can help protect both personal and business assets from creditors. Part of that planning involves how you choose to organize your business. The business structure you choose can also have a major impact on your taxes. You would be wise to review your business organization options to ensure your current or proposed business structure provides you with the best tax and asset protection.

Here’s a quick look at some of the business organizational options that are available in the state of Kansas:
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• ​​​Sole Proprietorship. A sole proprietorship is a business with a single owner. There is no separation between your business and personal assets with this type of structure. This means that your personal assets could be at risk if your business is sued and found to be at fault. This type of business is less optimal for most, as it provides little to no tax and liability protection. One upside to this type of business is that there are no annual state filings and no required annual organizational upkeep.
• C-Corporation. Any business that is “incorporated” is automatically categorized as a C-corporation, unless the business files forms with the IRS electing to be taxed otherwise. With this type of entity, you do separate your business assets from your personal assets for liability and creditor purposes. Your business assets, owned under the name of the business, are taxed at a corporate income tax rate. Any distributions of income from the business to the owners is then taxed again as personal income. Annual filings with the Secretary of State where the business is incorporated, as well as any states that it does business in, are required. The business should also have meetings annually that it memorializes in minutes signed by the stockholders and directors of the business. A C-corporation is a good fit for those owners with high income tax rates, or who want to attract investors and foreign ownership.  

​November is Long-term Care Awareness Month. Statistics show that between 50%-70% of our population who reach age 65 will require long-term care at some point in their life. Losing all of one’s assets to pay for nursing home care is a legitimate concern for people. With the cost of a private room in a Kansas nursing home at approximately $70,000-$90,000 annually, it’s no wonder why senior citizens are looking for help to preserve at least some of their assets for their heirs.
 
Let’s review some facts about long-term care planning, specifically Medicaid planning. The purpose of Medicaid planning is to preserve your assets and set up your affairs in such a way that the State will pay the majority of your nursing home care costs, if or when the time comes. With good Medicaid planning, you should need only to contribute your income toward nursing home care costs. With Medicaid planning, the goal is to avoid selling your assets to pay for your long-term care. If you have a spouse still living at home, then Medicaid planning may also allow you to preserve income for that spouse rather than paying it to the nursing home.
 
Married Couples:
When married couples consider Medicaid planning, the “best case scenario” is to retain the benefits of all their assets and still have Medicaid pay for nursing home care when the time comes. To accomplish this, all planning and funding should be completed five (5) or more years prior to one of the individuals needing full-time nursing home care. If you have less than five (5) years before an anticipated nursing home admission, other options exist to preserve assets, but those options are more limited and vary, based on circumstances.
 
Unmarried persons:
A single person can also utilize Medicaid planning, although the percentage of assets preserved may vary, again depending on the circumstances.
 
Elder law generally, and Medicaid planning specifically, is a complex body of law and an area that sees frequent rule revisions. The application process can be a paperwork nightmare, so having an experienced professional to guide you through the system is advisable. You are not required to use an attorney to plan for possible nursing home admissions. However, most nursing home and social services professionals are not trained to provide sophisticated Medicaid planning advice, which can protect the greatest amount of your assets. Additionally, not just any attorney is qualified to advise you on your long-term care options. Look for an attorney specifically trained in Elder law and Medicaid planning issues to provide you with a plan of action to preserve the greatest amount of your assets, as allowed by law. 
 
If you have questions about Medicaid or long-term care planning, contact Davis & McCann, P.A., Dodge City, Kansas at 620-225-1674. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.

​Real estate encompasses not only one’s primary residence but also other real property such as a vacation home or a rental house. The ideal form of ownership varies depending on the type of real estate you own. Below, we take a look at the different types of real estate and offer advice about the recommended form of ownership for each.
 
Primary Residence
Because your primary residence receives special tax treatment, you should carefully consider how your home is owned. In some states, tenancy by the entirety offers married couples creditor protection from the creditors of one of the spouses (with a possible exception for federal tax liens) while still preserving relevant tax benefits. It also allows automatic transfer of ownership to the surviving spouse upon the death of the first spouse without court involvement. Transferring ownership of the primary residence to a joint revocable trust may also be an option if you live in a state that allows the tenancy of the entirety protection to transfer to the joint revocable trust. Ownership by the trust also means that the real estate will not go through a lengthy, expensive, and public probate process but will instead be handled according to your wishes as specified in the trust document.
 
If you are single, owning the property in your name allows you to take advantage of tax benefits for primary residences. Transferring ownership to a revocable living trust may also allow you to retain the applicable tax benefits with the added advantage of avoiding the probate process. If asset protection is a major concern during your lifetime, certain types of irrevocable trusts are best suited for your needs but may require you to give up control of the property.

Estate planning—it is an incredibly important tool, not just for the wealthy or those thinking about retirement. On the contrary, estate planning is something every adult should do. It can help you accomplish any number of goals, including appointing guardians for minor children, choosing healthcare agents to make decisions for you should you become ill, minimizing taxes so you can pass more wealth onto your family members, and stating how and to whom you would like to pass your estate to when you die.

​While it should be at the top of everyone’s to-do list, it can be an overwhelming topic to dive into. To help you get started, below are some important terms you should know as you think about your own estate plan.

Assets:  Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, furniture, jewelry, art, clothing, and collectibles.
Beneficiary:  A person or entity (such as a charity) that receives a beneficial interest in something, such as an estate, trust, account, or insurance policy.
Distribution:  A payment in cash or asset(s) to the beneficiary, individual, or entity who is entitled to receive it.
Estate:  All assets and debts left by an individual at death.
Fiduciary:  A person with a legal obligation (duty) to act primarily for another person’s benefit, e.g., a trustee or agent under a power of attorney. “Fiduciary” implies great confidence and trust, and a high degree of good faith. 

We all have reasons for procrastinating when it comes to estate planning. However, before you put this important life decision back on the shelf again, you might want to know a few of the things that can happen to your money and possessions upon your death if you haven’t planned. These Kansas probate rules may encourage you to move just a little quicker to finish or update your estate planning.

Did you know?

• Kansas probate law states that if you are married and die without a will, your spouse may not inherit all of your property? If you have children, regardless of their age, your spouse is limited to receiving only one-half (1/2) of your solely owned estate property and your children will split the remaining one-half (1/2). This is also true even if your children are minors. If this is not what you want to have happen upon your death, you need to set up beneficiary designations or have a Last Will and Testament or Trust immediately prepared for you that clearly states your wishes.
• If you and your spouse are living separately but you are not legally divorced, upon your death, your spouse may still receive the same estate share as described above. Even if you sign a Last Will and Testament attempting to completely disinherit your spouse from your estate, if your spouse has not consented to that document, then unless you have a divorce decree or other written, legally binding agreement, by law your spouse will be entitled to a certain percentage of your estate depending on the number of years you were married before your death and the value of your aggregate estate. Your spouse is also entitled to your homestead.
• If your spouse predeceased you and you had no children and you didn’t update your Last Will and Testament to name a new beneficiary of your estate after your spouse died, when you die your entire estate will pass to your parents. If your parents are still living, this inheritance could present a taxation problem for them depending on the size of their estate and what they would inherit from you. If your parents have been trying to reduce their own estate value to avoid unnecessary estate taxes, this new inheritance may create a taxable estate for them. Additionally, if you have a parent who is in the nursing home and receiving state aid, then your estate may be claimed by Medicaid. If your parents are no longer living, your estate will be divided among your living siblings. If you prefer that other beneficiaries benefit from your estate, you should put planning in place now.

​These are just a few of the Kansas probate laws that control what happens to your money and property after your death. If you have questions about probate or estate planning matters, contact Davis & McCann, P.A., Dodge City, Kansas at 620-225-1674. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.

​Q:        My husband and I have amassed a nice bit of real estate during our marriage. We have been looking at doing an estate plan, but we aren’t sure how to address an issue we have with our son. Our eldest son is in a rocky marriage and none of us are convinced that the marriage will last, although he and his wife have been together for more than 10 years. My husband absolutely does not want our daughter-in-law to inherit any of our property if their marriage does last and our son dies before she does. Is there anything we can do to ensure that our son receives his inheritance, but upon his death, his remaining share would be redirected to our other children? Our other adult children are in stable, long-term marriages. If this was your family, what would you do?

A:        You might be surprised to know that this is a fairly common dilemma for families, and it shouldn’t stop you from moving forward with estate planning. Given your situation, you would be a good candidate for a living trust. In a living trust you can easily stipulate that your son’s inheritance be held in an asset protection trust for his lifetime and upon his death, distributed outright or in trust to your other children. You can name a trusted individual to act as trustee over your son’s trust to ensure that distributions to your son are done prudently and in keeping with your wishes.
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You may even want to consider putting ALL of your children’s shares into asset protection trusts. Your son may mend his relationship and one of your other children may have an unexpected divorce, bankruptcy or end up in a legal battle with a creditor due to an accident. Without the trust, your child’s inherited share would be vulnerable to their creditors. Additionally, if any of your children were to become disabled, either mentally or physically, and require government benefits, that child’s inherited share, if required to be held in a special needs trust, would be available to your child without preventing them from receiving their benefits.

If you do make the decision to have your children’s inheritance held in trust for them, you may want to talk with them to explain why their inheritance will be administered in this way and the benefits to them. This extra step of transparency can help alleviate possible friction that may arise if your children are under the impression that they will inherit their share outright.

If you have questions about type of estate plan, contact Davis & McCann, P.A., Dodge City, Kansas at 620-225-1674. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.

Don, age 82, and his wife were married for 45 years before she died. Don had no children but was very close with his extended family. After his wife died, Don revised his estate planning to name his sisters, Rita, age 72, and Catherine, age 78, as the sole beneficiaries of his estate. Rita was never married had no children and Catherine and her husband had 3 children. Don was especially concerned about how Rita might be cared for in her later years as she had no family of her own. He was relieved knowing that she would receive one-half of his approximately $200,000 estate when he died. It gave him peace knowing that she would be able to live a more comfortable life using this inheritance, perhaps going on several nice trips or enjoying a few luxuries.

While this sounded like a wonderful plan, Don didn’t anticipate that Rita’s health would decline rapidly and she would need full-time nursing home care a short time later. Rita qualified to receive Medicaid benefits after only a few short months and she was well cared for in the local nursing home. Don died two (2) years later and his estate was divided between his sisters just as he had instructed. Unfortunately, what Don didn’t understand was that Rita’s share of the inheritance automatically disqualified her from receiving her Medicaid benefits and she was forced to use her inherited money to pay for her nursing home care, instead of using it to make her life more comfortable. Within less than two (2) years, Rita’s inheritance was gone and she had nothing to show for it. Her level of care at the nursing home did not change and she was unable to use the money for any of the things that her brother wanted.

No one can predict the future but if Don had understood that Rita’s inheritance would only be used to pay her nursing home expenses previously being paid by Medicaid, he most likely would have made a different estate planning decision. If Don had revised his estate plan once Rita entered the nursing home to include a Special Needs Trust (SNT) a/k/a Supplemental Needs Trust, for Rita’s benefit, her share of the inheritance could have been held in trust to provide her with the extras that her brother had intended. The Trustee of the SNT would have been able to provide Rita with the things that she wanted or needed to make her life more comfortable, without the trust share disqualifying Rita from receiving Medicaid benefits.
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This scenario illustrates why it is so important to review your estate planning regularly with your attorney, at least every 3-5 years. Be sure to inform your attorney if one of your intended beneficiaries is receiving government benefits or may be a recipient in the foreseeable future. By adding language to your estate plan that creates a SNT upon your death, your loved one can be guaranteed to receive their inheritance without disqualification from government benefits.

If you have questions about of special needs planning or any type of estate plan, contact Davis & McCann, P.A., Dodge City, Kansas at 620-225-1674. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.

Are you unwittingly making mistakes as an Executor of an Estate? If so, you could be in for a legal battle of your own! To help protect you in your role as Executor, we’re sharing a few of the most common mistakes we’ve seen made by Executors, that you’ll want to avoid.
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1. Rushing to pay Estate bills. Out of habit, an Executor may be inclined to pay Estate bills and invoices as soon as they receive them, just as he/she might do for their own personal bills. However, as an Executor, your job is not that simple. In fact, paying some bills, like credit cards, before other Estate debts, such as taxes and funeral expenses, may expose you to personal liability for a breach of fiduciary duty. We advise seeking guidance from a probate attorney before paying any Estate bills, to ensure that Estate creditors are paid in the proper order according to your State laws.
   
2. Trying to increase Estate funds. It can be tempting to invest Estate assets in an investment opportunity you believe to be a “sure thing”. No matter how convinced you are in the return on the new investment, unless you are willing to personally cover any losses the Estate may suffer, it’s just not worth the risk. Your role as Executor is to CONSERVE the assets; not necessarily grow them. If you elect to invest the Estate funds in a manner inconsistent with the decedent’s existing investment plan and decrease the value of the Estate, you could open yourself up to a lawsuit for breach of fiduciary duty.
3. Mismanaging Estate real estate. If the Estate you are managing owns real property, you need to determine whether the property requires security or needs any maintenance to preserve its current value. We recommend that you consult the property’s insurance agent to ensure proper coverage remains in effect until the property is sold or distributed. If someone is currently living in the Estate home, you may need to negotiate a rental agreement with them or seek assistance for eviction purposes. Additionally, you likely will need to arrange for an appraisal of the property. If the property is a residence, your job may include arranging for the clearing of any personal property and a cleaning of the home. You also will be charged with determining whether improvements should be made to the home in preparation for a sale. 
4. Losing track of Estate personal property items. Would you notice if a few of Grandma’s favorite rings disappeared? Once you are appointed by the Court to your position as Executor, making an inventory of all Estate assets should be a priority. Failing to do a timely inventory of assets, specifically personal property, will make it difficult to determine if items go missing. It is not uncommon for family members to “help themselves” to personal items of a deceased family member, without obtaining the required permission from the Executor. It is often recommended that the Executor change the locks on all properties containing personal items as soon as possible to avoid anything going missing. This move will help protect you from being sued by beneficiaries who may claim they did not receive their full distribution because you did not responsibly protect the Estate assets.
5. Distributing Estate assets too quickly. You must reserve sufficient assets to pay any Estate bills, such as creditor claims, utilities, professionals (i.e. accountants, attorneys, and realtors) and taxes. Executors are often pressured by heirs to distribute some or all of their inherited share as soon as possible, sometimes within weeks of the funeral. We advise taking a very cautious approach to asset distribution as you will be held personally liable if the distribution is mishandled. Your Estate accountant and attorney will be helpful in deciding how much and when to make distributions. Your role does not require you to meet the distribution demands of the beneficiaries. Instead, your job is to oversee the Estate in such a way that the assets are preserved, Court requirements are fulfilled, final Estate bills are paid, and THEN distributions can be made.
   
   If you have questions about Kansas probates, contact Davis & McCann, P.A., Dodge City, Kansas at 620-225-1674. We are members of Wealth Counsel, a national consortium of Estate Planning Attorneys and the National Academy of Elder Law Attorneys (NAELA). We focus our practice on providing clients with the best legal advice on Estate Planning, Medicaid and Long-term Care Planning, Special Needs Planning, Family Business/Small Business Succession Planning, Probate, Trust Administration, Real Estate, 1031 Exchanges, and related matters.

You may find a point in time when your parent needs assistance with their finances. Taking over financial responsibility for a parent can be a touchy topic, but if done properly, can often provide a great sense of relief.

If you have been appointed as your parent’s financial power of attorney and the time has come to begin assisting them, here are a few pointers to ease the transition:
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• ​​​​Begin the conversation early. Do not wait until your parent begins to show signs of senility or other serious health complications to talk about how they would like their business affairs handled. Ask your loved one to prepare a list of their assets. This list should include other information such as locations of assets, helpful business professionals, passwords, etc. If your parent is willing, you might begin by working together to pay bills, review bank accounts, balance checkbooks and prepare taxes.
• Understand your role. As a financial power of attorney, you owe a special duty to care for your loved one’s assets called a “fiduciary duty”. This means that you have a legal obligation to act in their best interest and to do everything in your power to preserve the assets under your control. An intentional failure to do so can have you facing legal consequences.
• Be respectful to your loved one. Accepting help from someone, even a child or other trusted individual, is difficult for many people. Once you assume full responsibility for their finances, make an extra effort to maintain an open line of communication with your loved one to reassure them of their financial status.
• Keep good records. As a financial agent for someone else, your record keeping needs to be clear and concise so you can provide quick and accurate answers regarding the current state of your loved one’s finances. If you are not an organized person, you may want to reconsider accepting the role as financial power of attorney. Banks with a trust department are usually willing to act as financial power of attorney for a fee if a family member is not able or willing to serve in that capacity.