2017 Estate Planning

A Special Publication of the Messenger-Inquirer • Friday, May 12, 2017

E state P lanning

Your complete guide to anticipating and arranging for the management of your assets to minimize cost and maximize your legacy as you care for those you love.

2 Estate Planning

Friday, May 12, 2017 Messenger-Inquirer

Power of attorney protects loved ones

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ife is full of the unexpected. But just because the future is unpredictable does not mean adults cannot prepare for what lies ahead. Estate planning is important, and establishing power of attorney can be essential for men and women looking to protect their financial resources and other assets.

of attorney. Many of the responsibilities overlap, but there are some subtle legal differences. Durable power of attorney, for example, relates to all the appointments involved in general, special and health care powers of attorney being made “durable.” This means the document will remain in effect or take effect if a person becomes mentally incompetent. Certain powers of attorney may fall within a certain time period.

WHAT IS POWER OF ATTORNEY?

A power of attorney, or POA, is a document that enables an individual to appoint a person or organization to manage his or her affairs should this individual become unable to do so. According to the National Caregivers Library, POA is granted to an “attorney-in-fact” or “agent” to give a person the legal authority to make decisions for an incapacitated “principal.” The laws for creating a power of attorney vary depending on where a person lives, but there are some general similarities regardless of geography.

Why is power of attorney needed?

Many people believe their families will be able to step in if an event occurs that leaves them incapacitated and unable to make decisions for themselves. Unfortunately, this is not always true. If a person is not named as an agent or granted legal access to financial, medical and other pertinent information, family members’ hands may be tied. In addition, the government may appoint someone to make certain decisions for an individual if

WHAT IS COVERED?

no POA is named.

Just about everyone can benefit from establishing an attorney-in-fact. Doing so does not mean men and women cannot live independently, but it will remove the legal barriers involved should a person no longer be physically or mentally capable of managing certain tasks.

Power of attorney varies Power of attorney is a broad term that covers various aspects of decision-making. According to the legal resource ‘Lectric Law Library, the main types of POA include general power of attorney, health care power of attorney, durable power of attorney, and special power

An agent appointed through POA may be able to handle the following, or more, depending on the verbiage of the document: • banking transactions • buying/selling property • settling claims • filing tax returns • managing government-supplied benefits • maintaining business interests • making estate-planning decisions • deciding on medical treatments • selling personal property • fulfilling advanced health care directives Although a power of attorney document can be filled out and an agent appointed on one’s own, working with an estate planning attorney to better understand the intricacies of this vital document is advised.

Friday, May 12, 2017 Messenger-Inquirer

Estate Planning 3

Choosing a beneficiary for your IRA or 401(k) BY: R. MITCH SETTLE

one of your children inherits your taxable traditional IRA and another child receives your income-tax-free Roth IRA, the bottom line is different for each of them.

FINANCIAL CONSULTANT/SENIOR VICE PRESIDENT Hilliard Lyons

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electing beneficiaries for retirement benefits is different from choosing beneficiaries for other assets such as life insurance.

With retirement benefits, you need to know the impact of income tax and estate tax laws in order to select the right beneficiaries. Although taxes shouldn’t be the sole determining factor in naming your beneficiaries, ignoring the impact of taxes could lead you to make an incorrect choice.

NAMING OR CHANGING BENEFICIARIES

PAYING INCOME TAX ON MOST RETIREMENT DISTRIBUTIONS

Most inherited assets such as bank accounts, stocks, and real estate pass to your beneficiaries without income tax being due. However, that’s not usually the case with 401(k) plans and IRAs. Beneficiaries pay ordinar y income tax on distributions (withdrawals) from pretax 401(k) accounts and traditional IRAs. With Roth IRAs and

R. MITCH SETTLE

Roth 401(k) accounts, however, your beneficiaries can receive the benefits free from income tax if all of the tax requirements are met. That means if

Naming or changing your beneficiar y is easy -- you simply complete a new beneficiar y designation form.

A will or trust does not override your beneficiar y designation form.

It is ver y important to update your beneficiar y designations to reflect life changes (i.e. marriage, divorce, death).

Designating primar y and secondar y beneficiaries Your primar y beneficiar y is your first choice to receive retirement benefits. You can name more than one beneficiar y to share in the proceeds.

You just need to specify the percentage each beneficiar y will receive (the shares do not have to be equal). If your primar y beneficiar y dies before

you or declines the inheritance (the tax term for this is a disclaimer), then your secondar y (or “contingent”) beneficiaries receive the benefits. If you don’t have a named beneficiar y who sur vives you, your estate may end up as the beneficiar y, which is not always the best result.

AVOIDING GAPS OR NAMING YOUR ESTATE AS A BENEFICIARY

There are two ways your retirement benefits could end up in your probate estate.

(1) Naming your estate as the beneficiar y (2) If no named beneficiar y survives you, your probate estate may end up as the beneficiar y by default.

If your probate estate is your beneficiar y, several problems can arise.

If your estate receives your retirement benefits, the opportunity to maximize tax deferral by spreading out distributions may be lost.

SEE CHOOSING/PAGE 16

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4 Estate Planning

Friday, May 12, 2017 Messenger-Inquirer

You can leave a legacy of health and well-being BY: J. PATRICK “PAT” SEREY

receive help from the foundation, as well as cancer survivors enrolled in aftercare programs.

And the list of those we help goes on and on. We would enjoy the opportunity to visit with you and share specific examf you could provide a gift to improve ples and stories. the health and overall quality of life In calendar year 2016, the Owensboro So you ask, what would a bequest for our local communities, what would Health Foundation funded 27 programs look like in my estate plan? A bequest it be? Who would you engage to carry that helped 5,158 persons in our region— is simply a designation in your will in out your wishes? And when would you some of the most vulnerable among us— any number of ways—a specific sum of make that gift? through difficult times in their lives. money, a percentage of your estate, a gift These are important questions and These individuals include those withof particular assets (such as shares of ones many of us ask as we are talking out insurance or even who are underinstock) or perhaps the remainder of your over legacy goals with spouses or chilsured, bereaved parents, children with estate after distributions are made to dren and putting together estate planasthma and families experiencing mediloved ones. ning documents. cal crises.

You may also choose to make chariOne impactful way to make your gift Then there are the new mothers and table designations when you name benincludes creating a charitable bequest fathers, children admitted to the Owens- eficiaries for your insurance policies or in your will for the Owensboro Health boro Health Regional Hospital for emerretirement accounts.

Foundation—the philanthropic arm gency services, surgery or pediatric care.

By including Owensboro Health of Owensboro Health that is making Low-income cancer patients with Foundation in your estate plan you have a meaningful difference in the lives of your family members, friends and neigh- chronic lung ailments or cancer patients the flexibility to alter your gift should who cannot afford their medicines also your circumstances change. And, in conbors.

I

EXECUTIVE DIRECTOR OWENSBORO HEALTH FOUNDATION P.O. Box 22505 Owensboro, KY 42304 Office: 270-688-2136

versations with your advisers, you may learn of possible tax benefits in your particular situation for yourself or your heirs.

The opportunity to leave a legacy of health and wellbeing for our region comes once in a lifetime. Please consider including Owensboro Health Foundation in your will and, as such, becoming a member of our Heritage Circle through which your generosity and kindness will be recognized.

If you are interested in learning more about giving opportunities with Owensboro Health Foundation, or if you have already included us in your estate plan, I welcome the opportunity to visit with you. Please contact me at pat.serey@ owensborohealth.org or (270) 688-2136.

Owensboro Health Foundation recommends carefully reviewing the terms of your will and other estate planning documents with a professional trained in handling trusts and estates.

Friday, May 12, 2017 Messenger-Inquirer

Estate Planning 5

The winter of 2015 brought Mary a cancer diagnosis.

The next summer, she found encouragement, hope & healing in her LifeSpring cancer support group.

Owensboro Health Foundation funds health-related projects that are making a difference in people’s lives. Those like Care Bears for Kids, Hospitality Suites and the LifeSpring cancer support program, where cancer survivors like Mary and Janet are found encouraging each other forward – and through – what was once their greatest fear.

Join those who are realizing that ‘To Give…is to Receive.’

A simple donation is all it takes to make someone’s day: Yours.

Please remember Owensboro Health Foundation in your will. For consultation, please call 270-688-2113.

6 Estate Planning

Friday, May 12, 2017 Messenger-Inquirer

Get your affairs in order for an orderly estate

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ou may be quite willing to plan an investment strategy for your retirement years. After all, it can be enjoyable to think about traveling the world, pursuing your hobbies or participating in any of the activities you’ve associated with an active retirement. However, once you do retire, you’ll need to “shift gears” somewhat to focus on your legacy.

Specifically, to protect your loved ones and ensure your intentions are clear and carried out, you’ll need to do some more planning – and you’ll need to share your thoughts with your family.

• Choose an executor. An executor is the person or entity you name in your will to carry out your wishes. An executor has a variety of responsibilities, so pick someone who is honest and capable of dealing with legal and financial matters. Talk with an attorney about how best to name your executor.

• Update your will.

You might have written a will many years ago, but, over time, many aspects of your life may have changed. Review your will with your attorney to ensure it reflects your HERE ARE SOME current wishes.

MOVES TO CONSIDER: • Review benefits of a • List your assets and debts. Your family needs to be aware of your assets living trust. A simple will may not be enough to accommodate your estateand debts, so share this information with them while you are alive and well. planning needs. You might want to con• Create a durable power of attorney. sider establishing a living trust, which Give a trusted friend or family member provides you with significant flexibility a durable power of attorney to pay bills in distributing your assets and can help you avoid the time-consuming, expenand make financial choices on your sive and public process of probate. To behalf if you are unable to do so.

Tycen R Brock 270-926-7454

Dathan R Deisher Rusty Burton, AAMS® 270-684-9738

Financial Advisor Mary G Embry, CFP®, AAMS®

Rusty Burton, AAMS® .

270-926-9700 Robynn J Clark 270-240-2968

270-684-2316 2900 Veach Road Ste 1 Brooke Obermann Owensboro, KY 42303 270-852-6627 270-926-9700

create a trust or other estate-planning documents, you will need to work with a qualified legal professional.

• Review your beneficiary designations. The beneficiary designations on your financcial accounts (401(k), IRA, etc.) and your insurance policies can even supersede the directions on your will, so it’s essential that you update these designations to reflect events such as divorce and remarriage.

And make sure your beneficiaries have the facts they need to claim their benefits.

• Share location of your legal documents. Your loved ones should know where you keep documents such as your birth certificate, will and living trust. If you keep these items in a safe deposit box, tell your family where you keep the key.

• Encourage two-way communication. It’s obviously necessary to communicate your final wishes to your

Once you do retire, you’ll need to shift gears somewhat to focus on your legacy.

Kevin J Young Rusty Burton, AAMS® 270-926-9516

Justin M Ray 270-926-3626

Financial Advisor

David. W Renshaw, AAMS® 270-684-4150 2900 Veach Road

Ste 1

TracyOwensboro, B Thacker, AAMS® KY 42303 270-684-5722

270-926-9700

family members – but listen to their wishes and concerns, too. For example, ask your children to agree on who gets those objects such as furniture, mementos and heirlooms.

As you can see, you’ll need to take several steps to fulfill your intentions – and the above list is certainly not exhaustive. So plan carefully, engage the appropriate team – financial advisor, attorney, tax professional – and put your plans in motion. By being proactive, you can greatly ease the burden on your loved ones in the future.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice.

You should consult your estate-planning attorney or qualified tax advisor regarding your situation.

www.edwardjones.com

Member SIPC

Friday, May 12, 2017 Messenger-Inquirer

Estate Planning 7

Navigating the waters of funeral trusts D

iscussing end-of-life issues can be an emotional experience. Making decisions upon the death of a loved one can be challenging, especially if the wishes of the deceased are murky or unknown. Funeral trusts often help families avoid making decisions at times when their emotions may make such decisions more difficult.

trust is exempt as a countable asset from any financial look-back period that helps determine eligibility for government healthcare services, such as Medicaid.

Revocable funeral trusts can be cancelled. According to the National Care Planning Council, a revocable trust can be created by anyone and, at a later date, can be dissolved by the person who originally created it.

Various organizations oversee the investment and management of prepaid funeral trust accounts.

WHAT IS PREPLANNING A FUNERAL?

Preplanning a funeral can save family and friends from having to make difficult decisions. It also enables people to choose their burial space, services and transportation. Preplanning also allows people to pay for or arrange payment for their funeral costs ahead of time.

WHAT IS A FUNERAL TRUST?

Funeral trust can be a smart investment for people who have not spelled out their wishes in a will or conveyed them in writing to someone who will be managing their estate.

Funeral trusts may be referred to as

p

WHEN IS A TRUST UNNECESSARY?

In certain instances, a funeral trust will not be needed. Those who have the means to fund long-term care services and will not need assistance later in life may not want their money locked up in a revocable or irrevocable. An irrevocable not be withdrawn or refunded, and funds trust. Others opt for life insurance policies to pay for funeral needs. funeral trust, or IFT, is a tool people who must be used for funeral expenses.

Taking care of funeral planning in are facing the high cost of skilled nursIn the United States, an IFT is often advance can relieve families of the stress ing care can consider. An IFT establishes considered an eligible expense during an account into which money for funeral the social services spend-down process. of making funeral decisions in the wake of a loved one’s death. expenses is deposited. The money canThat means the money deposited in the

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8 Estate Planning

Friday, May 12, 2017 Messenger-Inquirer

Yes, you do need an estate plan – even if you’re not rich

BY RICK HOBGOOD

SENIOR VICE-PRESIDENT, HILLIARD LYONS

AND JEREMY EDGE

W

VICE-PRESIDENT , HILLIARD LYONS

hen learning that a newspaper had printed his obituary, Mark Twain quipped, “Reports of my death are greatly exaggerated.” The same could be said about the need to have a current estate plan. After the purported repeal of the federal estate tax in 2001, many people concluded that most families no longer need to have estate plans. That would be true if the only reason to have an estate plan was to save taxes, but it’s not.

Although tax savings has traditionally driven most estate planning, you have the other important non-tax reasons for main-

In addition to your will, your estate plan should include personal documents such as a durable power of attorney, a health care surrogate designation and a living will. taining an estate plan. For instance, without an estate plan, who decides who gets grandma’s wedding ring? Without a will, state law will dictate who gets what, and it is safe to say that legislators’ decisions on who will get your family heirlooms likely don’t agree with yours.

For parents of young children, probably the most important reason to create an estate plan is to leave clear instructions regarding their care. A properly executed will can name a guardian for minor children and direct how he or she should use

At BB&T Wealth, we’ve spent more than 140 years sharing knowledge and strategies to help clients build, preserve and transfer wealth. Getting to know you and your family as well as we know your life goals. With the strength of our experience on your side, you have the confidence to make the best financial decisions, from one generation to the next. BBT.com/Wealth

inherited assets for their care.

In blended families where one or both spouses have children from a previous marriage, a well-crafted estate plan can help avoid strained relations after a death.

For example, each spouse can initially ensure their individual assets are available to provide for their surviving spouse.

After the second spouse has passed away, identified assets would go to their own children rather than their spouse’s.

In addition to your will, your estate plan should include personal documents

such as a durable power of attorney, a health care surrogate designation and a living will. A power of attorney gives someone you trust the ability to manage your affairs if you become incapacitated or disabled. A health care surrogate designation is similar to the power of attorney, but gives someone the ability to make medical decisions on your behalf.

The living will tells your relatives and health care professionals your preferences as to whether you want to be kept alive by artificial means.

These are only some of the reasons why you should establish an estate plan and keep it current. Your own circumstances may present other important reasons, so you should consult your attorney regarding your personal estate plan.

“Life gets complicated; how can complicated; money I keepLife upgets with the estate taxis tight. I need to get smarter about law changes everyone is talking about?ourI finances need a–plan to protect and taxes.

Not just my family and someone to help for April 15th, but for our future. me make the right decisions.”

Alexander spends years preparing for moments just like these.

Debra Barany Personal Trust Specialist 270.689.2551 DBarany@BBandT.com

Cary Hearn Wealth Advisor 270.688.7878 CHearn@BBandT.com

Andrea Crabtree Client Specialist 270.688.7878 ACrabtreeBBandT.com

BB&T Wealth is a division of Branch Banking and Trust Company, Member FDIC. Only deposit products are FDIC insured.

Investment solutions are provided by Branch Banking and Trust Company and BB&T Investment Services, Inc., a wholly owned broker-dealer subsidiary of Branch Banking and Trust Company, Member FINRA/SIPC. Securities and investment products or services are: not a deposit, not FDIC insured, not insured by any federal government agency, may go down in value, not guaranteed by the bank. © 2017, Branch Banking and Trust Company. All rights reserved.

For tax & financial advice based on exceptional knowledge, experience & education, ask Alexander.

•Need help planning your estate? Ask Alexander •Does your estate plan need amending? Ask Alexander •Looking for gifting strategies? Ask Alexander •Do loved ones need assistance with daily finances and business duties? Ask Alexander •Need Estate and Trust tax preparation? Ask Alexander

2707 Breckenridge St., Suite 1 270-684-3237

Serving Owensboro for over 90 years

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Estate Planning 9

A complicated path made easier by life & legacy planning remaining years but have not planned it.

Those married fear a sudden illness ATTORNEY will leave their spouse impoverished; 3201 Alvey Park Drive West those widowed fear being a burden on Owensboro, KY 42303 270-684-8400 their children. A life & legacy attorney oe is a widower, retired plumber, will review a client’s circumstances and and Vietnam-era veteran. He draws help them consider possibilities, costs of a small pension, retirement and various crises, and ensure a legacy and owns his small farm with his house. Joe estate remains. purchased long-term care insurance, A good life & legacy attorney will thinking it would take care of his family. coordinate with their clients’ financial At 70 years old, Joe has a stroke. His advisors, tax preparers, trust administrachildren cannot provide the 24 hour tors, and funeral planners. The life & special care he needs. legacy attorney drafts their personal, Joe’s daughter, Mary, discovers his comprehensive plans and documents to long term care insurance only covreflect educated client choices. ers one year in nursing home and its Retirees without a comprehensive daily limit is too small. Even with Joe’s plan leave their family wondering in a income Joe will not have enough to crisis. The family faces this difficulty not cover his care. Mary has no idea where knowing their loved ones’ preferences the money will come from to pay for for medical treatment, gifting, finances, everything while she liquidates the funeral arrangements, life insurance or house and farm. estate plans. Unfortunately, their chilWhen families are faced with decidren are routinely faced with the finansions about the future, it is important cial dilemma of paying for their mom or they know where they’re going. Typical dad’s care and maintaining their house.

Kentucky retirees have definite opinions The unimaginable catastrophe hapabout how they want to live out their pens quickly without a plan. For most

J

BY M. MICHELE CECIL

navigating the life & legacy path, the biggest shock is discovering the costs for assisted living & long term care.

In Kentucky, assisted living averages $3,000-$4,000 per month and nursing home care averages $7,000 to $8,500 without specialized medical care.

The next shock comes when confronted with the reality that Medicare will not pay for assistance in the home, assisted living, or nursing home care.

Instead, the only sources of payment are: 1. personal income and resources; 2. supplemental use of special insurance; and 3. government benefit programs including Veterans Pension & Medicaid.

Many retirees do not understand the need to plan because they do not understand the financial consequences and emotional burdens for caregivers.

Joe and his daughter soon discover once the house and farm are sold -everything will be gone within two and half years. The long-term care insurance will terminate and everything must come from Joe’s family. In the meantime, Mary

needs to cover the difference while the farms are sold. Mary does not have a power of attorney so she also faces court guardianship proceedings.

After everything is spent Mary submits Joe’s Medicaid application.

Medicaid reviews Joe’s application and determines Joe’s payments of grandchildren’s tuition and Joe’s donations to his church for the past five years leave him ineligible for Medicaid for at least six more months. Joe’s family will be penalized for his generosity.

Joe and Mary are unsure how to proceed. Their path is complicated and they need legal help.

Consulting with a Life & Legacy attorney when Joe was at retirement age could have prevented most of their problems. Even if Mary consulted a Life & Legacy Attorney after Joe’s stroke or before his Medicaid application was made, the attorney could have solved some issues.

Life & Legacy Planning, more than estate planning, offers peace of mind today and takes the worry out of tomorrow.

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10 Estate Planning

Friday, May 12, 2017 Messenger-Inquirer

What is nursing home spend down and how can you stop it?

T

he term spend down is often used to describe the process of using up assets of an individual in a nursing home to qualify for state sponsored coverage for their care.

Although spend down is an accurate description of what is occurring during this stage, when families are paying out $7,000 - $9,000 per month for care for an institutionalized individual, what many people still do not realize is that it is not a requirement to obtain nursing home Medicaid coverage. How can this be so? The answer is three words — asset protection planning.

This process, asset protection planning, is complex due to the intricate nature of the nursing home Medicaid laws and practices in each state. Let’s look at some of the foundational concepts involved to get a better understanding of exactly why this solution is the most valuable, and least widely known, form of prudent financial planning in a nursing home crisis situation – when someone already requires home care, assisted living or skilled nursing facility care.

There are only three ways (or phases) of paying for nursing home care: 1. Medicare Medicare is defined by Medicare’s official declaration as the federal health insurance program for people who are 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).

Medicaid is designed to cover your medical costs if you need hospital care (Part A), and to help you stay healthy or become healthy again (such as short term rehabilitation and treatments) (Part B). There is a “replacement version of Medicaid, called “Part C” which combines the benefits of both Parts A and B at a much lower cost to the recipient, but also with far fewer benefits for nursing home care.

What is Medicare not designed to do? It is not designed to cover your nursing home stay long term. Long term nursing care is any amount of time past the point at which your rehabilitation has “met its goals” or the point when you have reached the max-

imum amount of covered days (100).

Therefore – Medicare does not pay for your nursing home long term. One hundred days is the most coverage you are ever going to get out of Medicare for your nursing home stay – and many times you won’t even make it that far. So, what happens when Medicare ends – or if it never starts at all due to a lack of a qualifying three day hospital admission?

Let’s discuss the second phase of paying for nursing home care: 2. Private Pay Now, private pay is exactly what it sounds like. You pay privately from whatever you have for as long as you can to cover the cost of the nursing home. This amount is an average of over $215 per day per person – PLUS the cost of medicines, medical supplies and any other specialty items that are needed to care for the nursing home resident. (Such as oxygen equipment).

The total cost of care averages out to about $7,500 per month per person.

The only way to help alleviate the impact of the private pay phase of paying for the nursing home is to attempt to reimburse the “medical expenses” of the patient. This is where Long Term Care Insurance (LTC) can come into play. However, many of my clients do not have the luxury to have a LTC policy in place for one reason or another.

Another fantastic avenue to help with the private pay phase is Veteran’s

Benefits. (See our article regarding the many VA benefits available to wartime veterans and their spouses to pay for nursing home care on page 14.) Depending on the circumstances of the case, the nursing home resident may qualify for anywhere between $1,153 and $2,127 per month to help offset their care costs.

But ultimately, the payor source that ends up paying for most nursing home care, is Medicaid.

3. Medicaid (Specifically for nursing homes) If you want help to pay that large monthly nursing home bill each month, you can apply for nursing home Medicaid.

When you go to the Medicaid office to make the application, there are two very important questions that you will be asked: • Does the nursing home resident have total combined assets below $2,000 dollars?

If your answer is “no”, you will be told to come back when they do, but If your answer is “yes”, then the next question will be asked…

• Have any assets been given away or sold for less than they were worth in the last five years in order to get to this point (of having less than $2,000 dollars) NOTE: This five year period is referred to the look back period. You may have heard that it was increased to seven years or that it is only three years, but it is, in fact, still five years.

The most important thing to note about “gifts” or “transfers” during the look back period is that while they must be disclosed to the Medicaid agency, they are not illegal. This is America – you can still do what you want with your own things – including giving them away. However, if

Medicare does not pay for your nursing home long term. One hundred days is the most coverage you are ever going to get out of Medicare for your nursing home stay – and many times you won’t even make it that far. So, what happens when Medicare ends – or if it never starts at all due to a lack of a qualifying three day hospital admission?

you have divested yourself of assets within five years of applying for nursing home Medicaid, you must disclose how much you gave away and who you gave it to.

The purpose of establishing how much was given away is simply to establish what is known as the “Disqualification Period” for Medicaid benefits. In other words, Medicaid has an idea (a wrong idea, as it is much too low in its estimate) of how long you could have paid for your own nursing home care if you had kept the previously gifted money – and therefore, you will be restricted from receiving any Medicaid benefits to pay for your nursing home for that amount of time. This period could be as short as one day – but it could also be several years. It all depends on how much was “gifted/transferred”.

So, many times, when setting a plan in place for asset protection planning, we do, in fact, transfer assets. This is not “hiding assets”. On the contrary – we operate on a full disclosure basis with the Medicaid agency. However, we know the Medicaid regulations so intimately that we can save the maximum amount of assets possible while complying with those regulations and obtain Medicaid qualification as quickly as possible. Working with experienced professionals, it is not only possible, but common, to save more than 50 percent of your assets that would otherwise be lost. (In the case of a couple with only one spouse in the nursing home, we can save nearly 100 percent of the potential “spend-down” assets) In essence, when setting out to accomplish asset protection planning, it’s all about having expertise and experience on your side. Depending on the Medicaid agency to give you advice on how to maximize your protection of assets, is not unlike asking the IRS for help to maximize your allowable deductions for income tax planning.

It is essential to have knowledgeable advocates on your side to assist you in this endeavor. There is nothing simple or easy about nursing home Medicaid. If you need confirmation of this – just ask the nursing homes themselves.

Friday, May 12, 2017 Messenger-Inquirer

Estate Planning 11

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12 Estate Planning

Friday, May 12, 2017 Messenger-Inquirer

Straight talk. Honest answers.

Trusted colleagues you can rely on.

I

t’s remarkable how something so simple can become so complicated.

It doesn’t have to be that way, and at Glenn Family Ser vices, it’s not.

That’s because preplanning with Glenn Family Ser vices is a straightfor ward process that requires nothing more than a bit of your time. Planning today provides the luxur y of time; time to think it over, time to discuss it with your family, a friend, your trusted advisors.

Glenn Family Ser vices encompasses both Glenn Funeral Home & Cremator y and Owensboro Memorial Gardens Cemeter y & Mausoleum.

Together, our two companies provide your family with a full range of service options.

You deser ve the care and attention of those who listen carefully, suggest thoughtfully, and guide with concern and openness. Those who truly want to know what you find important and meaningful.

You’ll find our planning specialists to be knowledgeable professionals who are fully committed to our policies of straight talk, honest information, direct answers, and never ever any pressure.

Never.

Ever.

You should expect from us the widest range of traditional, contemporary and creative farewells, each thoughtfully planned around that which is most important to you and your family.

We are your exclusive providers of meaningful farewells, uniquely personal tributes honoring the stories of a lifetime.

Payment options are flexible for Glenn Funeral Home and Owensboro Memorial Gardens. Payment may be made all at once or over time.

Like everything here, it’s up to you.

Our attitude is clear.

If you’re pleased, we’re pleased.

Simple as that.

Friday, May 12, 2017 Messenger-Inquirer

Estate Planning 13

Privately paying for nursing home care?

— You need a Medicaid plan T

BY DARRON L. BRAWNER

ATTORNEY AT LAW Western Kentucky Elder Law, PLC 1302 Frederica Street Owensboro, KY 42301 270-684-4811

oo many nursing home residents ultimately end up spending all of their assets privately paying for nursing home care. Medicaid planning is an area of law in which elder law attorneys advise clients about how to legally use Medicaid laws to their own advantage to qualify clients for Medicaid benefits. A good Medicaid plan allows clients to preserve their assets for a spouse or children while qualifying them for Medicaid to pay for nursing home care.

Many people falsely believe that once a person is in a nursing home that it is too late to do Medicaid planning. That is certainly not true. In fact, every per-

Every person in a nursing home who is privately paying for nursing home care needs a Medicaid plan before all of their assets are exhausted. Medicaid planning is divided into two groups: planning for someone who is married and planning for someone who is single. son in a nursing home who is privately paying for nursing home care needs a Medicaid plan before all of their assets are exhausted. Medicaid planning is divided into two groups: planning for someone who is married and planning for someone who is single.

For married persons, there are many important protections that can be used to make sure that the spouse who is not in the nursing home (“community spouse”) does not become impoverished. For example, if a spouse enters a nursing home, the community spouse

gets many exemptions. It is important to have an elder law attorney to guide you through this process because the nursing homes and Department for Medicaid Services do not always tell families about the exemptions or how to obtain the exemptions. For most married persons, an elder law attorney can use the Medicaid laws to preserve most all of the assets for the community spouse.

For single individuals, Medicaid laws do not allow as many exemptions.

However, an elder law attorney can use

a divestment plan that I call the “half-aloaf” plan. Under the “half-a-loaf” plan, an elder law attorney uses gifting laws to the client’s advantage and is able to legally protect typically half of an institutionalized person’s assets for the client’s children.

There is no need to spend all of your assets privately paying for nursing home care. If you are someone you know is privately paying for nursing home care, then they need to contact an elder law attorney for a Medicaid plan. Without a Medicaid plan, all assets could be ultimately exhausted paying for nursing home care.

Brawner is the founder of Western Kentucky Elder Law, PLC, an accredited attorney with the Department of Veterans Affairs, and a member of the National Academy of Elder Law Attorneys.

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14 Estate Planning

Friday, May 12, 2017 Messenger-Inquirer

Once a soldier, always a soldier

I

’ve heard it time and time again during my years of assisting Veterans, their surviving spouses and their adult children — military service changes you. It changes your mind, your heart, and the way that you interact with the world and people around you. Once you have served defending our nation, you never go back to who you were before your service. Never. Once a soldier, always a soldier.

As an accredited Department of Veterans Affairs (VA) Agent, I am charged with the duty of making sure the military veterans that cross my path are aware of all potential benefits that they may be eligible to receive due to their time in military service. I’m consistently astounded at just how many veterans, or their surviving spouses, do not realize that they could qualify for monthly income or even paid home health care due to their declining health.

The last nationwide survey by the VA determined (in 2015) that there were approximately 7,206,000 veterans in our nation from either the WWII, Korean War or Vietnam War eras. Of those veterans, only about 50 percent are have accessed even one single benefit that is available to them because of their service. This percentage is made up of veterans accessing any form of VA benefits (including only healthcare) and has no possible way of assessing the total number of veterans who are receiving some benefit but potentially a far lesser benefit than what they deserve.

Veterans with active duty service of

just 90 days (and only one of those days during a declared wartime) could qualify for income or services to help them remain in their homes as long as possible. It can even help to pay for assisted living or nursing home care if that is their need. Unfortunately, most veterans or their surviving spouses are unaware of these potential benefits, or in some cases, feel guilty about seeking them out.

I have heard veterans say things like, “I know that other people probably need it more than I do” or “I didn’t serve to get something in return, I did it because it was the right thing to do.” These statements, while admirable, often deter

The last nationwide survey by the VA determined (in 2015) that there were approximately 7,206,000 veterans in our nation from either the WWII, Korean War or Vietnam War eras.

veterans from seeking out the help that our nation’s VA program can give them to help pay for care that they desperately need to “age in place”.

If you are a veteran, the surviving spouse of a deceased veteran, or the family member of a veteran who could benefit from additional funds to help pay for the care that he or she needs, please contact an accredited agent to discuss the possibilities of obtaining these benefits. Our soldiers, airmen, marines, seamen and other veterans were forever changed by their service to defend our country and our freedom.

Let’s make sure that they know how much we appreciate them – and do all that we can to help them now.

Nicole Hawkins is the founder, president and CEO of Elder Advantage, LLC and a VA accredited agent with the Department of Veterans Affairs. She is also a certified senior advisor (CSA) in good standing with the Society of Certified Senior Advisors.

Attention Veterans!

Many veterans or their surviving spouses are eligible for a monthly cash payment to help offset their care costs!

It’s not as simple as just signing up for this program - we know how to help you to qualify - call us today for your FREE consultation!

Check out our actual client testimonials at

270-684-6757 • elderadvantage.org

Friday, May 12, 2017 Messenger-Inquirer

Estate Planning 15

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16 Estate Planning

Friday, May 12, 2017 Messenger-Inquirer

Estate planning — an introduction

B

y definition, estate planning is a process designed to help you manage and preser ve your assets while you are alive, and to conser ve and control their distribution after your death according to your goals and objectives. But what estate planning means to you specifically depends on who you are. Your age, health, wealth, lifestyle, life stage, goals, and many other factors determine your particular estate planning needs.

For example, you may have a small estate and may be concerned only that certain people receive particular things. A simple will is probably all you’ll need. Or, you may have a large estate, and minimizing any potential estate tax impact is your foremost goal. Here, you’ll need to use more sophisticated techniques in your estate plan, such as a trust.

To help you understand what estate planning means to you, the following sections address some estate planning needs that are common among some ver y broad groups of individuals. Think of these suggestions as simply a point in the right direction, and then seek professional advice to implement the right plan for you.

MARRIED COUPLES

For many years, married couples had to do careful estate planning, such as the creation of a credit shelter trust, in order to take advantage of their combined federal estate tax exclusions.

For decedents dying in 2011 and later years, the executor of a deceased spouse’s estate can transfer any unused estate tax exclusion amount to the sur viving spouse without such planning.

You may be inclined to rely on these portability

CHOOSING FROM PAGE 3

NAMING YOUR SPOUSE AS A BENEFICIARY

When it comes to taxes, your spouse is usually the best choice for a primar y beneficiar y. A spousal beneficiar y has the greatest flexibility for delaying distributions that are subject to income tax. A sur viving spouse can generally decide to treat your IRA or 401(k) as his or her own IRA, which can provide more tax and planning options. If your spouse is more than 10 years younger than you, then naming your spouse can

rules for estate tax avoidance, using outright bequests to your spouse instead of traditional trust planning. However, portability should not be relied upon solely for utilization of the first to die’s estate tax exclusion, and a credit shelter trust created at the first spouse’s death may still be advantageous for several reasons: • Portability may be lost if the sur viving spouse remarries and is later widowed again • The trust can protect any appreciation of assets from estate tax at the second spouse’s death • The trust can provide protection of assets from the reach of the sur viving spouse’s creditors • Portability does not apply to the generationskipping transfer (GST) tax, so the trust may be needed to fully leverage the GST exemptions of both spouses

WEALTHY AND WORRIED

Depending on the size of your estate, you may need to be concerned about estate taxes.

For 2017, $5,490,000 is effectively excluded from the federal gift and estate tax. Estates over that amount may be subject to the tax at a top rate of 40 percent.

Similarly, there is another tax, called the generation-skipping transfer (GST) tax that is imposed on transfers of wealth made to grandchildren (and lower generations). For 2017, the GST tax exemption is also $5,490,000, and the top tax rate is 40 percent.

Whether your estate will be subject to state death taxes depends on the size of your estate and the tax laws in effect in the state in which you are domiciled.

also reduce the size of any required taxable distributions (RMD) to you from retirement assets while you’re alive.

Although naming a sur viving spouse can produce the best income tax result, that isn’t necessarily the case with death taxes. If your spouse’s taxable estate for federal tax purposes at his or her death exceeds the applicable exclusion amount, then federal death tax may be due. In other words, one possible downside to naming your spouse as the primar y beneficiar y is that it may increase the size of your spouse’s estate for death tax purposes, which in turn may result in death tax or increased death tax when your spouse dies.

TARA ESTES HILLIARD LYONS

NAMING OTHER INDIVIDUALS AS BENEFICIARIES

and there may be income tax complications. Seek legal advice before desYou may have some limits on ignating a trust as a beneficiar y. choosing beneficiaries other than In general, naming a charity as your spouse. Federal law dictates the primar y beneficiar y will not that your sur viving spouse be the pri- affect required distributions to you mar y beneficiar y of your 401(k) plan during your lifetime. However, after benefit unless your spouse signs a your death, having a charity named timely, effective written waiver. Keep with other beneficiaries on the same in mind that a nonspouse beneficiar y asset could affect the tax-deferral cannot roll over your 401(k) or IRA possibilities of the noncharitable bento his or her own IRA. However, a eficiaries, depending on how soon nonspouse beneficiar y can directly after your death the charity receives roll over all or part of your 401(k) its share of the benefits. benefits to an inherited IRA.

NAMING A TRUST AS A BENEFICIARY

You must follow special tax rules when naming a trust as a beneficiar y,

Mitch Settle is a Financial Consultant and Senior Vice President with Hilliard Lyons. To contact, please call: (270) 9264747 or e-mail: MSettle@hilliard.com.

Friday, May 12, 2017 Messenger-Inquirer

Estate Planning 17

OWENSBORO ESTATE PLANNING COUNCIL King Solomon said that in an abundance of counselors one finds both victory and safety. His advice reflects the goal that the Owensboro Estate Planning Council strives to achieve by encouraging and mentoring one another.

For more than 50 years, this group of professional advisors has met regularly to study and educate themselves on a variety of estate planning subjects.

Bo Ivey President

Gordon Wilkerson Vice President

ATTORNEYS Jesse Mountjoy

SULLIVAN, MOUNTJOY, STAINBACK & MILLER 100 St. Ann St. 270-926-4000 • jmountjoy@smsmlaw.com

John D. Meyer

MEYER & MEYER, LLP 100 East Veterans Boulevard 270-926-2621 • jdmeyerlaw@bellsouth.net

K. Timothy Kline

SULLIVAN, MOUNTJOY, STAINBACK & MILLER 100 St. Ann St. 270-926-4000 • tkline@smsmlaw.com

Nick Volk

THACKER, HODSKINS & KNIGHT, LLP 209 W. 4th St. 270-926-4500 nvolk@thkllp.com

Russel Jones Lifetime Member Retired

Scott Plain, Jr.

401 Frederica St., Suite 204D 270-926-2525 • wwp1@bellsouth.net

Sean Land

Mark W. Starnes

STEVENSON, LAND & TIERNEY 100 West Third St., Suite 302 270-688-8500 seanslandatty@bellsouth.net

Matt Tierney

THOMAS E. NEAL, PLLC 530 Frederica St. 270-926-9911 tomneal1554@gmail.com

Michele Cecil

MEYER & MEYER, LLP 100 East Veterans Boulevard 270-926-2621 tommeyerlaw@bellsouth.net

SULLIVAN, MOUNTJOY, STAINBACK & MILLER 100 St. Ann St. 270-926-4000 • mstarnes@smsmlaw.com STEVENSON, LAND & TIERNEY 100 West Third St., Suite 302 270-688-8500 mctierneyatty@bellsouth.net CASLIN & CECIL 3201 Alvey Park Dr. 270-684-8400 Michelececil@caslin.org

Tom Neal

Thomas J. Meyer Worth Mountjoy

SULLIVAN, MOUNTJOY, STAINBACK & MILLER 100 St. Ann St. 270-926-4000 wmountjoy@smsmlaw.com

INVESTMENT ADVISORS & FINANCIAL PLANNERS

Cindi Ashley Bosley ASHLEY WORTH, LLC 1601 Frederica St. 270-686-7671 cbosley@financialguide.com

Marcus W. Bosley

MARCUS W. BOSLEY & ASSOCIATES, INC. 1601 Frederica St. 270-686-7671 mbosley@financialguide.com

Phil Clark

FINANCIAL FREEDOM PARTNERS, LLC 101 East 2nd Street, Suite 200 270-686-8114 • phil@ffponline.net

Tara Estes

HILLIARD LYONS 1035 Frederica St., Suite 100 270-926-4747 • tbestes@hilliard.com

Rick Hobgood

HILLIARD LYONS 1035 Frederica Street Suite 100 270-926-4747 • RHobgood@hilliard.com

Larry O’Bryan

HILLIARD LYONS 1035 Frederica Street, Suite 140 270-926-4747 • LOBryan@hilliard.com

CERTIFIED PUBLIC ACCOUNTANTS Martha Clark

1826 Lexington Ave. 270-683-3272 • fittsclark@aol.com

Jeff Ebelhar

EBELHAR WHITEHEAD, PLLC 100 West 3rd St., Suite 200 270-926-2922 • jebelhar@ew-cpa.com

Pamela M. Hagan

RINEY, HANCOCK CPAs PSC 2900 Veach Rd., Suite 2 270-926-4540 • phagan@rineyhancock.com

Joe Hayden

HAYDEN & CO., P.S.C. 404 West 7th St. 270-684-8826 • joehaydencpa@bellsouth.net

Call us today with your questions, needs and estate planning concerns.

Jennifer Rone Treasurer

Jerry Keller

ALEXANDER & COMPANY 2707 Breckenridge St., Suite 1 270-684-3237 • jekeller@acocpa.net

Joshua D. Meyer

EBELHAR WHITEHEAD, PLLC 100 West 3rd St., Suite 200 270-926-2922 • jmeyer@ew-cpa.com

Rebecca R. Whitehead

EBELHAR WHITEHEAD, PLLC 100 West 3rd St., Suite 200 270-926-2922 • rwhitehead@ew-cpa.com

Michael R. Wurth

CLEMENS, GUTHRIE & WURTH, LLP 123 West 4th St., Suite 201 270-684-6271 • mike@cgwcpa.com

Heath Greenwell

Align Wealth Management Ameriprise Financial Services, Inc. 2708 New Hartford Rd. 270-684-8424 Health.b.greenwell@ampf.com

Greg Longtine

WELLS FARGO ADVISORS 1925 Frederica St., Suite 100 270-684-6823 gregory.longtine@wfadvisors.com

Greg Moore

RIVERCITY ASSET MANAGEMENT, LLC RINEY, HANCOCK CPAs, PSC 2900 Veach Rd. 270-926-4540 GMoore@RineyHancock.com

Christina Vittitow O’Bryan BEACON ASSET MANAGEMENT 4075 Pine Lake Court 270-688-0840 Christina@Beaconassetmanagement.com

Bo Ivey

HILLIARD LYONS 1035 Frederica St., Suite 100 270-926-4747 bivey@hilliard.com

Shannon Yeand Raines

HILLIARD LYONS 1035 Frederica Street, Suite 100 270-926-4747 • sraines@hilliard.com

Joshua E. Miller

NORTHWESTERN MUTUAL 100 W. 3rd Street, Suite 301 270-663-0607 • joshua.e.miller@nm.com

Gordon Wilkerson

WELLS FARGO ADVISORS 1925 Frederica St., Suite 100 270-684-6823 gordon.wilkerson@wellsfargoadvisors.com

Randal King

INDEPENDENCE BANK 2425 Frederica St., P.O. Box 948 270-688-0591 • randal.king@invpro.com

Mitch Settle

HILLIARD LYONS 1035 Frederica Street, Suite 100 270-926-4747 • msettle@hilliard.com

Lisa Schmidt

HILLIARD LYONS 1035 Frederica Street, Suite 100 270-926-4747 • lschmidt@hilliard.com

TRUST OFFICERS Debra Barany

Jennifer Rone

Alan Hamilton

Josh Searcy

Ruben Hayden

BB&T INDEPENDENCE BANK INDEPENDENCE BANK 100 West Third St. 2425 Frederica St., P.O. Box 948 2425 Frederica St., P.O. Box 948 270-689-2551 • dbarany@bbandt.com 270-689-9861 • jrone@1776bank.com 270-689-9861 rhayden@1776bank.com INDEPENDENCE BANK 2425 Frederica St., P.O. Box 948 270-689-9861 ahamilton@1776bank.com

INDEPENDENCE BANK 2425 Frederica St., P.O. Box 948 270-689-9861 jsearcy@1776bank.com

Dylan Cecil

Steve Divine

Gerald Saunders

Patty Drury Ray

INDEPENDENCE BANK 2425 Frederica St., P.O. Box 948 270-689-9861 dcecil@1776bank.com INDEPENDENCE BANK Retired

INDEPENDENCE BANK 2425 Frederica St., P.O. Box 948 270-688-0591 sdivine@1776bank.com INDEPENDENCE BANK 2425 Frederica St., P.O. Box 948 270-689-9861 • pray@1776bank.com

Tom Lilly

Old National BANK 123 West 4th St. 270-686-3068 tom.lilly@oldnational.com

18 Estate Planning

Friday, May 12, 2017 Messenger-Inquirer

Get jewlery appraised accurately

W

e have sold our downtown building and are closing our current location after 80 years.

We are so grateful for the constant support of all of our local customers, as well as the many visitors to Owensboro for our continued success.

According to Craig Grant, “M&M Jewelers is a constant source of moments to memories.”

We are both saddened and excited to move toward a new direction in Owensboro.

Your future depends on what you have and what you accumulate between now and retirement. Be confident your jewelr y appraisals are accurate and reflect their current value. Visit Craig Grant, the only graduate gemologist in Owensboro.

Let our reputation speak for itself.

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The Hobgood Financial Group of Hilliard Lyons 1035 Frederica Street Owensboro, KY 40507 270-926-4747

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Friday, May 12, 2017 Messenger-Inquirer

Estate Planning 19

Loss of a spouse, family member – now what?

BY SHANNON RAINES

MBA, FA, CRPS Chartered Retirement Plan Specialist

W

hen your spouse or a family member dies, you’ll need to handle numerous financial and legal matters. Even if you’ve always handled your family’s finances, you may be over whelmed by the number of matters you have to settle in the weeks and months following your loved one’s death.

PLANNING A FUNERAL

A funeral allows the family and friends of the deceased to both celebrate that person’s life and mourn their death. Funerals often take into account religious and social traditions. There may be readings, music, and words spoken about wish to hire a funeral director to help you, particularly if you are planning a funeral on short notice. He or she can help you coordinate the details and help you apply for death certificates and certain sur vivor’s benefits.

GETTING ORGANIZED

SHANNON RAINES

PAYING INCOME AND ESTATE TAXES

To settle your loved one’s estate or apply for insurance proceeds or sur vivor’s benefits, you’ll need to have a number of documents. Locating these documents (and applying for certified copies of some of them) should be your first step in getting your finances organized. You’ll also need to set up files to keep track of important documents and paperwork, keep a phone and mail list to record important calls and correspondence, and evaluate your shortterm and long-term finances.

You may have to file city, state, and federal tax returns, including Form 1040 (U.S. Individual Tax Return), Form 1041 (Fiduciar y Income Tax Return), and, if the gross estate is large enough, Form 706 (U.S. Estate Tax Return). In addition, your state may impose a state death tax or an inheritance tax.

SETTLING AN ESTATE

JONES INSURANCE AGENCY

A spouse or family member may have named you executor of his or her estate. Settling an estate means following legal and administrative procedures to make sure that all debts of the estate are paid and that all assets are distributed to the rightful persons.

If you are named executor in a will or if you are appointed as the personal representative or administrator of an estate, you will be responsible for carrying out the terms of the will and settling the estate directly or with the help of an attorney.

automatic; you have to file a claim for them. Ask your insurance agent to begin filing a life insurance claim.

If you don’t have an agent, contact the company directly. Although most claims take only a few days to process, contacting an insurance agent should be one of the first things you do if you are the beneficiar y of your spouse’s or family member’s policy.

You should also contact your spouse or ex-spouse’s employer as well as the Social Security Administration (SSA) to see if you are eligible to file a claim for sur vivor’s or death benefits.

Tip: If your spouse was a federal, state, or local employee, then you are likely eligible for government-sponsored sur vivor’s benefits. In addition, children under age 18 or parents who are dependent upon their children for financial support are sometimes eligible for Social Security sur vivor’s benefits.

Tip: Dependent children or depen-

dent parents are sometimes eligible for benefits from employer-sponsored plans or Social Security.

AVOID HASTY DECISIONS

• Don’t think about moving from your current home until you can make a decision based on reason rather than emotion.

• Don’t spend money impulsively.

When you’re grieving, you may be especially vulnerable to pressure from salespeople.

• Don’t cave in to pressure to sell or give away your spouse’s possessions. Wait until you can make clearheaded decisions.

Don’t give or loan money to others without reviewing your finances first, taking into account your present and future needs and obligations.

Shannon Raines is a Registered Financial Associate with Hilliard Lyons. To contact her, please call (270) 926-4747 or e-mail SRaines@ hilliard.com.

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20 Estate Planning

Friday, May 12, 2017 Messenger-Inquirer

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