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>> Good evening.

I'm so glad you are watching us here on PBS Fort Wayne.

I'm Sandy Thomson, the host of this show tonight which is called LIFE Ahead and I'm really glad you're watching because we have some tips on you tips for you on how to save money.

Who doesn't want to do that?

In fact, our general topic this evening is about protecting your assets and we have an expert in that area tonight.

We have an elder law attorney Brian Nugent as he's been with this many times.

>> So perhaps you know him already if not meet him.

Hi, Brian.

Hi, Sandy .

>> Thank you for that.

I appreciate it.

We always have such good good shows when you're here and a lot of information and a lot of education which is what the purpose of this show is is to educate you all so that when you have to make choices for your LIFE Ahead, get out.

>> That's why the show for your LIFE Ahead you'll have some knowledge and Brian's going to share that with you this evening.

>> Please give us a call if you have any questions at all.

This is your opportunity to get some legal answers here tonight the phone number (969) 27 twenty and if you're out of the 260 area code , just put a one eight eight in front of that and it'll be toll free for you.

So talk to you later we hope.

>> OK, Brian, until they start calling you for questions and you always get a number of phone calls, I want to talk about protecting your assets in terms of when you start to plan to do that.

>> I mean as people start maybe I don't know when you start getting close to retirement or when do people start planning to protect their assets?

>> I think there are probably two areas that are we're talking about in protecting assets.

One area is in your general estate planning.

So people are oftentimes coming into estate planning, elder law attorneys offices and they're concerned about tax that they may pay in their estate when they're passing their assets to the next generation.

So what I'd like to tell people is in Indiana there is no inheritance tax.

You don't have responsibility to pay any inheritance tax when you pass.

And then secondly as far as federal estate taxes are concerned, your you would have to have assets in excess of 12 million dollars and as a couple you could get those credits, those 12 million credits you can actually tack on to your spouse's credits.

So as a couple passed twenty four million and slightly more than that.

So as far as your estate planning and protecting assets worrying about tax, not so much of an issue in regard to elder law though when we're looking at protecting assets, should you need help in the home?

Should you be going into a nursing home memory care unit or something like that?

Generally there are two times that we're thinking about trying to protect those assets.

One, we want as much time in advance of when you need that extra care as we can get.

So preferably five years or more we can shelter assets so that if you were for example out of out of out of home placement you are in a nursing home that you could look to other programs to provide payment for your care, their programs typically like Medicaid or Veteran's Administration benefits.

>> So ideally we want to have that preplanning I call it pre care planning at least five years or more in advance.

However, even if you didn't plan ahead and you didn't have those assets set aside in a particular type of a trust to protect them that five years or more even if you were going into a nursing home or you needed that help in the home or going to an assisted living facility, it's never too late to protect assets.

We may go through a process we call it crisis care planning but we may go through a process of making gifts to kids and and making appropriate expenditures and then making yourself available to benefits like Veterans Administration or Medicaid.

So the idea of protecting assets from the estate planning side typically is we're looking at taxes.

Do we have a taxable state or we're concerned about that if taxes and a concern for us do we maybe want to avoid probate ?

So we're looking at beneficiary designations using things like revokable living trusts so that assets pass at the time of your death and you don't have to pay guys like me.

You don't have to pay a probate attorney.

The assets automatically go then on the other side if we're concerned about our health declining and needing some assistance, yeah, we may do get a very unique type of a trust that we want to have in place for five years or more or even as I say, if you're going into a nursing home it's never too late.

We still can protect assets you said that you'd have in place for five years or so if you happen to set up a trust five years there's some Medicaid has something called a look back period.

>> OK, five years or so for Medicaid it's five years for Veterans Administration it's three years.

But if the money is out of your hands for a period of five years or more, the the the concept of the trust is the money isn't going anywhere.

It's safe and secure.

It's there and protected and it would permit you then if the money is out of your hands as I say six months or more to apply for benefits in order to provide payment for your care in the facility so you're not needing to sell your home or cash in your investments.

>> We protected that in advance and that's a big worry for people and that's I wanted you to tell me more about that five year plan because if you waited until next month I'm going into assisted living.

>> Yeah, it's too late or not too late to protect your assets .

>> It's never too late.

The ideal and my in my opinion is that if you protect those things in advance you don't have that crisis moment, that panic protecting if it's a married couple normally an elder law attorney can protect all of your assets generally if it's a single person I'd like to say generally 50 percent or more of one's assets can be protected so it's never too late.

For example, I had a client in my office two weeks ago that's been privately paying for loved ones care in a facility for the past two years and so she came in and she was talking to me about one topic and that conversation morphed into the fact that she had been caring you know, providing payment for her mother for a period of two years in a facility.

So now I'm working with this client to get her on public benefits and protecting as much of her mother's estate as as possible.

>> Even two years later she can move in to me it's really is never too late.

The point though is if you do that pre care planning, if you can use those appropriate trusts in advance then you don't have that panicky moment oh my gosh mom's going in tomorrow.

We didn't plan for it and I'm concerned I'm going to lose the farm.

I'm going to have to sell the lake house so you would want to speak with an elder law attorney about techniques in order to protect those assets.

>> Then let us talk about kids .

>> Your kids you know, people talk about well, I I think that maybe in a few years I might need a nursing home or home care or whatever.

So I'm going to start titling my house and car and things to my kids.

>> Yeah that's a good idea.

I'm not a big fan of using that technique to protect assets so the court the Fords I call for D so if your child once I've put an asset into a child's name so I said OK child I'm going to title the lake house in your name.

The first concern we have with him taking the lake house is debt.

So if the child has debt the creditors and the creditors are pursuing the child.

>> Your lake house is now up for grabs if the child has a disability, an unexpected disability let's say they're in a car accident and they have some type of traumatic injury, a traumatic brain injury.

So now they have disability.

They're going to be looking for benefits and they own your home if a child goes through a divorce that's the third child goes through a divorce.

>> The spouse I assure you is going to be looking for half of it, half of out and debt divorce, disability.

>> Oh my gosh.

I'm forgetting my fourth one.

But the point is by using those trusts we can set money aside.

The children could still benefit from the trust that could be a beneficiary of it.

But it wouldn't be as prone to being taken by other parties if there's something unexpected that happens in the child's life .

So by using the trust it's there that children are going to be getting it at the time that you pass.

So we've we've secured it for them but we haven't endangered it by risking the child having changes in their life that were unexpected.

I will also touch base on something called capital gains tax.

>> So if you were to make a gift to a child the lake house stocks, whatever it may be for appreciated assets so assets that go up in value over time and when you sell those assets there's something called capital gains tax so that if you bought the lake house for will say ten dollars and we sell it for thirty dollars so many years later there's that twenty dollars difference is called gain and that that that gain would be subject to tax.

But if you were to pass that lake house to your children at the time of your death, the children's basis is no longer that ten dollars I was using before their basis is now thirty dollars.

>> So if the child wouldn't be capital no capital gains tax or even if they do sell it they're capital gains tax wouldn't be so dramatic.

>> So instead of going from ten dollars as a basis I'm going to go from thirty dollars as a basis.

Is it true that you have a one time capital gains forgiveness?

>> No name no no on your on your house on your primary residence there you have credits for your primary residence if it goes up in value but there is no one lifetime if I if I bought that lake house for ten dollars and I sold it for one hundred dollars you can't say Oh I'm going to take my kid out of jail free card and not pay any capital gains tax.

No that doesn't work that way.

>> You do get some credits exemptions for your primary residence but nothing else.

>> OK, all right but but if you were to give the primary residence to your children they would take your original basis.

They don't get that credit.

It's just if you're selling your primary residence I mean you would get that credit.

>> I see.

Yep.

OK, it's very complicated.

So if you have questions again, just give us a call here (969) 27 twenty .

You can see that Brian has a lot of information that he can share and answers to give to you.

Meanwhile, how about an answer on this?

Well how is the process different in terms of protecting my assets, whether it's money or property or whatever else ?

>> How is that different?

If I'm fine, I'm home.

Nothing's wrong with me.

I'm just planning ahead or I'm already admitted to a nursing home or assisted living so they're radically different approaches.

>> OK, so if you're healthy and you feel like I've got that five years or more yeah.

We typically typically are going to be using I call them asset protection trusts and you'll hear that phrase again from other elder law attorneys .

So once it's in that trust it's sheltered.

So if versus if someone is going into the nursing home they don't have that trust or they formed the trust and and within a year let's say they go into a facility, there are different techniques that an elder law attorney would use to protect your assets.

It could involve making a loan to a child that could be gifting to a child.

It could be purchasing income producing property.

Any number of things which would be unique to each client.

So you shouldn't think that one size fits all every different cases unique.

OK, all right.

That's that's a good explanation.

We've had a phone call from Kathleen and I appreciate you watching LIFE Ahead tonight.

Kathleen, I know you can't give a specific to every case that's going to be different but Kathleen inquires for a single woman with with no children.

What kind of cost is she looking at to plan on protecting it?

>> That's a great question, Kathleen.

I know we've gotten that question on the show previously.

How much does it cost?

We aren't allowed to talk about costs and even if I were outside of this arena and I we're speaking publicly which oftentimes do I don't like to talk about costs in that setting because every client is unique and their situation is unique and what you're wanting to get accomplished is unique.

>> What I would encourage you to do, Kathleen, is to schedule a time with an elder law attorney, sit down, explain to them what you want to get accomplished, explain your unique situation and ask them what's the cost of doing this.

And what I would say is as a single person I think it's especially important that you have some other documents in place not only worrying about asset protection but you also have very basic documents in place durable power of attorney.

I think I say this every time I'm on the show a health care representative designation, a hippo waiver form those those documents in my opinion are as important as any of your estate planning documents, your will, your trusts if Kathleen is a single person you have an admission to a hospital we need to give direction to the hospital to the doctors about your care and what's appropriate for you and if you haven't lined up in place in advance who it is it's able to speak to the doctor on your behalf.

It's a tough situation.

We may need a guardianship in that instance.

Nothing wrong with guardianships but if you can avoid that and avoid court involvement and the cost that's involved with the guardianship, I would encourage you to do it.

That power of attorney let's say that you need to make a mortgage payment or someone needs to speak to your financial adviser.

You would want that in place so somebody can do that on your behalf.

Things happen.

>> Our health doesn't just change in an organized fashion or in a way that we would anticipate health changes very rapidly and you want to have those basic documents in advance of a medical emergency, a financial emergency, a huge change in your life .

So I don't think I answered your question about the cost of it but I would say is that schedule the time speak with an elder law attorney, explain to them what you want to get accomplished and you make the decision based upon the service that they are providing and what you're wanting to your goal of what you're wanting to get accomplished is that cost worth it?

>> I would also point out that this is your life savings that we're dealing with and this is your person that we're dealing with.

It is appropriate to have those things in place.

I always find it curious when I get a client in that their children know they've had children, the children are out of the house.

You know, they're mature people.

They're starting to think about retirement and they've never had any estate planning in place.

They haven't considered elder law protecting assets or what all that's about.

So I would encourage you to schedule a time, Kathleen, and find out on your own if that cost is worth it to you for the services that that attorney is providing.

>> OK, could I assume then in Kathleen's case she said she's single no children now that cost would be likely less than somebody that had a complicated family.

>> A lot of children or blended family or does it really depends on her assets.

>> It honestly for me I can only speak from my own experience and it really the cost our services is really dependent upon what the client wants to get accomplished on the cost our services is not dependent upon.

How much do you have in the bank?

How much do you have under advisement?

What's the value of your home?

That is not how Attorney are generally pricing the services that they're providing.

It really is the value of the service and what's appropriate for that client.

And I would like to think that fellow members of the VA have that same philosophy.

>> OK, guess what?

We have two more all ready so we want answer be sure and help the incoming calls and ask this.

She says Can a trust be funded by a traditional IRA or a Roth IRA?

>> Thanks and great question.

>> So the answer is technically you could take all of the money out of a traditional IRA and put it into a trust.

>> I would be very surprised though if anybody would advise you to do that.

Typically we don't touch IRA as far as asset protection before someone goes into a nursing home.

We don't address IRAs or tried to protect them until the time that someone goes into into a nursing home as far as traditional IRA is concerned Roth IRAs we could take the money out of a Roth IRA and put that into the trust.

So a Roth IRA if we were looking to protect assets in advance, that's an asset that we could do that with traditional IRA.

It would be a very rare instance that we would encourage a client to cash in an IRA and in order to fund their trust so that the traditional IRA this is money that's put into an IRA it's called qualified money.

It was put in there pretax.

So when you take it out you pay tax.

So let's say I take one hundred thousand dollars out of an IRA.

My income for that year just went up by one hundred thousand dollars.

It's probably going to push you to a different tax bracket, a higher tax brackets.

>> You pay a lot of tax on that.

So rarely do we do that.

Just a note.

I know we have another call but just another note on that IRA.

>> So we normally elder law attorneys will talk about a community spouse and then institutionalized spouse or spouse that's going to be getting benefits like Medicaid.

What you should know is that in Indiana and this is not the case in every state in Indiana if you're looking for those public benefits the community spouse, the well spouse, their IRA would be ignored by Medicaid so it may be that we never even need to to try to protect that IRA if only one spouse is in a facility like a nursing home or an assisted living facility that takes Medicaid or memory care unit, the community spouse, the healthy spouse we may not even need to try and protect their IRA because Medicaid ignores it.

>> Yeah, yeah I see.

OK, I hope that helps you out and in the decisions that you need to make.

Bill, thank you also for watching us here on LIFE Ahead and Bill, as this question reaches, how does a Todd Time of Death title transfer work?

>> I place my daughter on my title.

OK, so transfer on Death Deeds I you call it Bill Time of death but transfer on death deeds.

So the idea of a transfer on death deed in Indiana and every state handles these some states have them.

Some states don't.

In Indiana statutory.

>> So there's a very particular way in which those deeds are drafted and the deed.

>> So Bill, you've named your daughter.

We'll call your daughter Susie.

So Sunnis Susie is put on the deed as a beneficiary.

She has no equitable interest in the real estate.

She has no claim of title to the real estate.

It's simply a beneficiary designation.

So at the time of your passing the property automatically goes to your daughter.

What I would say to you if you have a single child and you're giving the property to a single child, I think that's a perfect scenario for a transfer on death deed.

>> However, when clients have two children, three children, four children and a bring to me the idea of a transfer on death deed I've heard this is a good thing to do.

>> It can be a good thing to do but you also have to recognize the time of your death that property would pass to hypothetically for children so one child is having financial issues.

The next child is very well heeled to their children or ambivalent.

>> So you take the house right and we decide oh the furnace in the home isn't working or the roof needs to be replaced.

So who's going to pay for that?

So those four people own that so how are they going to manage that property together?

So although conceptually the transfer on death is a great solution many times not always I think that as an attorney we need to advise our clients of the pros and cons of using those.

So it may be that perhaps a simple revokable trust or even an asset protection trust as I'm talking about before would be the right vehicle to transfer that asset to your child.

>> So inside that trust you could say the property the trust is going to maintain the property until it's sold and then the money is divided between my children.

If the trustee determines when the property is to be sold, et cetera.

>> So transfer on deeds great tool I think used very frequently in Indiana but I always like to have my client think ahead to when if that property is transferring to these children, how do the kids get along?

Are they going to be able to decide on which realtor to use what's the price to sell the home at?

Sometimes that can be a very complicated and can be quite angst producing especially if it's property like a lake house or a farm.

We're going to give the farm to four kids by a transfer on death.

These two kids are on the farm.

Two kids have left the farm.

The two kids have left the farm can't wait to sell it and cash in.

The other two kids are saying I want to hold onto the farm ground forever.

If you are familiar with folks in the agricultural business whatsoever, they never want to sell real estate.

It's like it's like blood and we have to respect that in our farming community they don't want to transfer that real estate.

So yeah, sometimes a transfer on death deed is a great idea.

I use them with regularity but I always like my clients to know the pros and cons of using those.

>> All right.

That makes sense and good luck to you and thank you Brian for giving us some instruction.

>> We have just about two minutes left here.

Brian, what are the most important two things you would tell people in helping them protect their assets protecting assets?

I think number one, the earlier you plan for Sandy the better.

OK, I generally I have a better result for my clients if they come in to me earlier and they're looking ahead, we're structuring everything in an organized fashion.

So if you're really sincerely looking at asset protection, the earlier the better.

I think the next take away my number two would be it's never too late.

It always give you the example a few moments ago a real life example I had a client that's privately paying for her mother for two years.

An estate is just depleting, depleting, depleting.

She can get the same level of care by having a governmental program like Medicaid provide payment for her stay.

The CSA will be the same, the facility will be the same, the meal will be the same.

The bed will be the same.

It won't change.

So it breaks my heart when folks come in and they say Oh my gosh, we sold Mom's farm or we sold Dad's farm had to sell the lake cottage so the no to take away to in response to your question Sandy is it really is never too late.

>> OK, all right.

That's a good statement.

It's never too late for for whatever.

Yeah.

And especially when it comes to legalities you mentioned that you know the savings were depleting and again very quickly it's so hard to know how much you're going to need.

>> I mean we don't know how long we're going to live.

>> No well so in Indiana sixty five percent of our residents living in nursing homes have their state paid for by Medicaid oh.

Sixty five percent.

So that's one of two reasons.

Number one, they planned in advance and protected their assets.

OK, or number two , they didn't plan ahead.

They number one and they didn't even plan that crisis mode.

They just spent everything down and then when they spent everything down then they go on Medicaid.

>> So it really is it's a shame when those things happen sometimes people consciously make that decision to spend their wealth in that way.

>> But oftentimes if people are educated they opt not to do that.

All right.

Good price.

We really appreciate you all watching us here this evening on LIFE Ahead.

>> Brian, thank you so much.

Thank you.

So you've been here a couple of times this summer, right?

Yep.

We really appreciate as do the viewers the education and information.

>> My pleasure to be here.

Get here on the head.

>> I know he has some travel plans ahead so I do have a really good time.

Thank you.

I'm going to continuing legal education conference so a little fun but a lot of education as well and you'll be a little smarter when you get back and maybe a little more tan as well.

>> Who knows?

Well, meanwhile we're going to see you all next Wednesday night here at seven thirty when we have a new topic and new guests.

Meanwhile, stay safe.

Stay healthy.

Good night tonight