“Beware the quiet threat, laying in wait…”
It’s always the quiet ones, right?
When it comes to your legacy and your assets, the threats are real. Those threats lie in wait, watching and listening, quietly, calmly….
And, when it’s the perfect time, they pounce – and it can hurt, bad!
Living and growing up in Western Pennsylvania has given me an appreciation for some ‘threats’ more than others. A few times I’ve had to run away from wild turkeys reminding me ‘human’ doesn’t mean I ‘own it’. I’ve had an occasion to spin out my tires on a snow-saturated hillside. And, the biggest threat… watching the Steelers miss the AFC game… ouch!
Today, I want to talk to you about some secret threats rarely discussed.
If you want to just ‘jump in’, sign up for our free video course that details and explains the “7 Threats To Your Family’s Financial Health And Your Legacy” today. Now, you don’t have to be from Pennsylvania or Neshannock or New Castle to make use of this information, but it can help for all of the other freebies I offer during the course!
Today, I want to talk about probate, lawsuits and Medicaid.
And, I know what you are likely thinking…
Threats? How are these threats?
‘Nobody likes lawsuits, but they rarely happen.’
‘Medicaid is paid health insurance, right?’
‘And probate… wait.. What’s that?’
Well, if you are an average Pennsylvania citizen, when you pass away, your estate is likely worth around $250,000 (if you own a house, have bank accounts, vehicle(s) and other investments).
I’m going to show you how these secret threats above can eat $25,000, $50,000 and, in the worst case scenario, EVERYTHING from your estate. Without knowing about these jerks, what you want to leave will be miles away, in a negative direction, from what you actually do leave your loved ones.
Before we get into the cooking, let me tell you about the beef
My job as an estate planning lawyer means that I do plan out how you want your estate to be handled when you die.
Sounds simple, right?
But, what I really am trying to do, is to make sure every single cent that you have broken your back to make, the wealth that you have built, is available for you to leave to your loved ones, family and important organizations when you die. I don’t want the government, health care, a random long-distance relative or something out of the blue to come along and threaten those wishes you have.
Estate planning also means having some legal documents and legal planning in place ‘before you die’. Things like sudden illness and injury, skilled nursing care needs and and other health related emergencies are real issues that we could face.
At the very least, have the discussion. We need to talk about and have a plan ready to deal with those needs when we cannot.
No lies here – in fact, I’m going to be very frank with what I’m going to say…
The plan you have in place right now, no matter how “rock-solid” you feel it may be, can fall apart in two seconds!
It happens all the time. I’ve heard a ton of stories of families in New Castle, Neshannock, Butler, Slippery Rock, Hermitage… all of Western Pennsylvania, going about their lives and BOOM!
Think about this…
What if you get into a car accident, and it’s not your fault at all. But, you are medically incapable of operating the business you own. Well, now what?
Well, your spouse cannot simply go to the bank for you. That’s what a lot of people think, but that is 100% incorrect.
Another example involves an unknown brain issue. I’ve known families that have had the healthiest wives and husbands, easily long-distance running, weight-lifting health nuts. And, one day, they have a stroke.
Well…now what? Now they have to file for Medicaid, making their home, investments and vehicles at risk.
Or, what about the simple problem of not declaring specific instructions in a Will? You might be married, or unmarried. You might have no children, or a dozen. But, without a clear set of instructions in your will, all of your wishes are up in the air.
This is what is meant by correct estate planning. It means creating a plan before, during and after you are at your time of death or severe illness, or injury.
You are protecting your assets for you, your family, your loved ones, your legacy.
To do that planning, to correctly have the right plan in place, to fulfill your wishes with complete clarity and speed, we need to know those threats that are out there, waiting to pounce.
We need to know that there are legal entities and actions that are ‘ok’ with taking away from us.
And, we need to know that we can actually do something about it!
So, let’s get this started with the first secret threat…
Secret Threat #1 - Probate, and those d#*& taxes
Probate is a, well, it’s a piece of work. Probate affects both the amount of money in your estate, and can lengthen the time to let your beneficiaries have access to those funds.
In many ways, you can think of it as the legal service fees for death.
I know, I know… ‘ewwww’, right?
Probate, by definition, is the legal process of distributing a dead person’s assets.
Usually, when someone dies, they leave behind assets to distribute and debts to pay. Even among those who have a will detailing who gets what, like the furniture or the house, all of those assets go through probate.
Probate, while protecting the deceased property from fraud, is legitimate. It’s also costly.
Here’s a small secret – it can also be COMPLETELY unnecessary.
How much can probate (and frankly, taxes and lawyer’s fees) cost you in the end?
Try anywhere from 5% to 10% of your total estate’s value. Add onto that months of time to find a full resolution.
Ok, so that’s a very general statement. Let’s instead make things personal to you!
First, add up the value of your home, property and vehicles. Add in the value of your savings and checking accounts. Now, add in the value of your investments like stocks, businesses, etc. Finally, how much is everything worth inside of your home?
This total is your estate’s value.
Just asking these above questions lets people see that they aren’t worth only a few thousand dollars. In most cases, like the average Pennsylvanian, your net worth is about $200,000 to $250,000.
Now, whatever your number is, multiply that by 10%. That is the cost for probate, taxes and lawyer fees.
How much is being taken from probate and taxes and lawyer’s fees based on your totals? Is it $10,000? $20,000? Or is it over $25,000?
Believe it or not, full estate planning and asset protection is actually a fraction of this cost. Meaning, your planning could not only save you that total, but it would pay for itself and then some!
Secret Threat #2 - Lawsuits, or the fine art of trying to take something with a gavel
Sorry for my self-deprecating humor, but… lawyers?… Am I right?
So, let’s talk about a lawsuit.
First, you need to realize a lawsuit doesn’t necessarily mean one good guy versus one bad guy. In some situations, a lawsuit is the next action someone needs to take for a legal end to be met.
Next, you should know that a lawsuit can be brought by just about anyone for just about anything. This also means, that no matter how stupid or without merit the lawsuit could be, your estate could be ‘locked’, allowing your family and loved ones no ability to touch the funds and assets they need.
Finally, lawsuits can eat away at your estate. An estate locked up in a lawsuit, even if they win, can still see 10% or more being lost.
And, the good news is that even the people that you have trusted to handle your estate when you die can have legal disagreements with each other and your beneficiaries.
Things can get messy very fast, and can stay messy for a long, long time.
Probate Litigation is also an issue. Probate litigation refers to a legal dispute between an Executor and a Beneficiary during the probate administration process due to various claims such as:
- Misappropriation of Funds
- Undue Influence
- Breach of Fiduciary Duties
- Lack of Transparency
These are only a few possible issues with lawsuits.
Secret Threat #3: Medicaid’s dance with estates, assets and money
First off, let’s get one thing out of the way…
Medicare and Medicaid are two different things. Medicare is health care for more short-term needs. Break an arm? Need therapy? Emergency care?
Ok! That’s Medicare. And you are, like everyone else, entitled to it.
But Medicaid is for long-term, end-of-life health care needs. When you need skilled nursing care and/or a nursing home stay, you are talking about Medicaid.
Medicaid also wants paid back. If you have a serious medical injury, have long-term medical needs and have those that lead to your eventual death, Medicaid wants to be paid back.
Now, I’m not going to go heavily into the rules of Medicaid here, but I can say a few things.
First, the average cost for a nursing home stay is about $9,000 per month. And, the length of the stay is about 2.5 years (or 30 months). This means that the total cost for an end-of-life stay at a nursing home is about $250,000 to $275,000!
With that said, your home, your vehicles, your money can be saved from Medicaid trying to claim it. Well, by “claim it”, I mean forcibly taking back money and value from your estate to be paid back.
In fact, if you give me 5 years, I can protect 100% of everything that you want saved when you die. We can protect your home, your vehicles, your property, your finances… everything.
Now, with all of that said, I can tell you this…
There is a method, that is completely legal and public, to protect it all.
When it comes to protecting your estate from Medicaid, that is…
Meet the irrevocable trust!
An irrevocable trust is a legal entity that holds all of your assets for your beneficiaries. When you die, these beneficiaries receive what is inside of the trust in the version of gifts.
So, do those assets get taken by Medicaid? Nope.
Do those assets go into probate? Not at all.
Are taxes an issue? No they are not.
If you are sued, can someone get what is in the trust? Nope.
Is this illegal? No, not at all.
In fact, the IRS and the U.S. government know about irrevocable trust when it comes to estates and they are completely legal, accepted and will not get you into trouble.
Check out this video below for a really clear explanation of a legal trust…
But, these aren’t the only threats to your family and your estate
There are more threats to your family’s financial health and your legacy than probate, lawsuits and Medicaid.
If you want to learn more about these threats, how to avoid them, and how to really guarantee that every single penny that you have earned in this life is passed on when you die, sign up for my free video course today. You will learn about other threats like asset knowledge, listening to the right people, common pitfalls people make using DIY estate planning and more.
Plus, we have a really exciting and free offer just for watching the whole video course!
As well, you can contact me anytime to schedule a free, one-on-one consultation concerning your family’s financial health and well-being, and your legacy when you pass. We can discuss your wishes, common solutions to your issues and what a true estate plan and asset protection plan will look like.