How Can I Protect My Children’s Inheritance Of My Home If I Have Creditors?
Video Summary
How can I protect my home for my children and their inheritance if I have creditors? Well, under our Florida constitution, your home is protected from creditors. It’s called homestead and that’s a different part of our Florida constitution than when you file for homestead exemption, but you have to be a Florida resident and your residence must be less than a half an acre if inside the city limits and less than 160 acres outside a municipality.
And if you’re a resident of Florida and you pass away, then the property will pass to your children unless direct it to be sold under your will, or you can leave it to your children and your creditors will not have a claim against it even if they have a judgment against you, it will not attach to your homestead property. The word that’s used in the Florida constitution is this exemption from for sale of your creditors of your home in nours or passes through to your children. So your home is protected from creditors during your lifetime so that you don’t have to worry about credit card companies coming in and getting a judgment and taking your home and neither do your children if you even have judgments.
There is an exception, of course, in the event that the federal government has a lien, a tax lien, or a judgment against you, they can take your home and you cannot protect it from the claims of the United States of America. But your home is protected if you go through a bankruptcy, you can exempt out your homestead property and reaffirm your mortgage debt and preserve it; or if it’s paid for, you may even be able to keep it out of bankruptcy and be protected from the claims of creditors, and then whenever you pass away, it’s not subject to any judgment you have against you when it passes through to your children. You do have to leave it to your children or their heirs or grandchildren in order for them to get this exemption from the claims of creditors.
If you have any other questions about your homestead property and your creditors, give me a call at (727) 847-2288.
What Is A Joint Trust And Can I Establish One?
Video Summary
What is a joint trust and can I establish one? A joint trust is whenever usually husband and wife sign a trust agreement. Thereby you’ve gotta have two people, of course, to have a joint trust, particularly whenever they own all their assets jointly, and it’s not – you just need to contact an attorney to be able to establish a joint trust.
If the purpose of the joint trust is to avoid probate, you can do that through titling your assets as husband and wife and that way you avoid probate when the first one passes away. If the purpose of the joint trust is to establish a… who you want to receive the asset when both the husband and the wife passes away, that is very, very remote on a simultaneous death, and I really don’t recommend it on that basis.
Also if you do set up a joint trust, do not put your homestead property into a joint trust. There’s all sorts of problems that are associated with that. Also joint trust destroy what they call tenancy body entirety is to give you a certain amount of protection from creditors if there is a judgment against either husband or wife under Florida law. So I am not a big fan or I don’t usually recommend folks to set up joint trust. I think you can title your assets so that they can go to the survivor rather than having a joint trust. If you don’t want your assets to go to your spouse, you have a prenuptial agreement; you have a second marriage or something like that; then I suggest you have separate trust, one for the husband and one for the wife as far as that’s concerned. And again, not putting the homestead property in either trust.
So if you have any questions about establishing a trust, joint or otherwise, give me a call at (727) 847-2288. Thank you.
Ask Jaleh: How To Pay For Elder Care.
Video Summary
Paying for elder care. If you are looking for care for yourself or a loved one, you must understand how you’re going to pay for it. Many people have a misperception that Medicare, social security or Medicaid will pay for their long-term care needs. Medicaid does cover nursing facility care for the impoverished and Medicare may cover some of the costs of nursing center care for those who require short-term rehabilitation. But both require individuals to meet certain physical and medical standards. Generally speaking neither covers the entire cost of long-term home health care and assisted living care.
Personal resources. Most personal care home residents and roughly 20 percent of nursing center residents pay for costs out of their own savings and assets. Frequently when people enter a nursing center for extended long-term care, they first pay for their care out of their own assets and then expend their resources and apply for Medicaid. This can be prevented by properly planning for long-term care in advance. There are many estate planning tools that will enable one to utilize their resources for their own benefit prior to expending their resources in order to exhaust them to meet the income and asset standards required for Medicaid coverage.
Private insurance. For the most part unfortunately private medical insurance does not cover the cost of personal care or nursing center care except in very specific circumstances. Long-term care insurance. Long-term care insurance can be purchased to provide some payment for nursing center care and home healthcare as well as assisted living care. Some Medicare supplementary insurance policies which are often referred to as Medigap insurance also may provide some limited payment. Many health maintenance organizations, also known as HMOs and other coordinated care plans participate in the Medicare and Medicaid programs. These healthcare plans often cover certain benefits in addition to those required by Medicare and Medicaid and are experienced in coordinating a member’s healthcare.
Some HMOs may also offer more medical or supportive services. Others may not require a hospital stay before approving a nursing facility admission. Medicare. Medicare is a federal health insurance program for people age 65 and older as well as certain people with disabilities younger than 65. Historically Medicare was never intended to provide the kind of extensive support required by today’s elderly population. Medicare pays for acute, episodic and rehabilitative care as well as some preventative care. It does not provide a comprehensive long-term care component and generally does not cover personal home care costs but may pay for some short-term services, for example physical and other therapies. But it is also contracted through a home healthcare agency and provided to the resident at their home.
Medicare covers only those nursing center services rendered to help someone recover from acute illness or injury. Medicare is administered by the Federal Medicaid Services and is divided into two parts: hospital insurance which is commonly referred to as Part A and medical insurance which is commonly referred to as Part B. Eligibility for Medicare. Nursing center coverage falls under Part A of Medicare and is very, very limited. If certain conditions are met, Medicare only pays for the first 20 days of care in a skilled nursing center. For the 21st through the 100th day the patient must share or co-pay for the cost of care by paying a daily co-insurance rate which does change yearly. This is typically what a Medigap policy will cover.
Medicaid. Medicaid is a joint federal state government program designed to provide healthcare assistance to low income people with limited assets and it has become the major player for services for care in skilled nursing centers across the country. Eligibility. Medicaid will pay for nursing center care for those individuals who meet a state determined poverty level and certain health-related criteria, provided the nursing center is certified and meets a stringent set of government standards.
The Florida Medicaid Program. In Florida the Agency for Healthcare Administration, also commonly referred to as AHCA, is responsible for Medicaid and has implemented the statewide Medicaid Managed Care Program. Long-term care insurance. Long-term care insurance can protect personal assets and inheritance for the family, provide greater choice in the selection of long-term care settings such as home care, nursing care, etcetera and generally provide for financial security. Because cost for long-term care policies can vary widely, even for similar policies, shopping and price comparison is very important.
Long-term care insurance policy premiums are set based upon several factors such as age, health, length of deductible period, the amount paid and the duration of the benefits. Higher daily benefit and optional features such as inflation protection and non-forfeiture benefits do increase the premium. According to the Health Insurance Association of America, the annual premium for a low option policy for a person at age 50 is about $850 annually. For a person at age 65, that same policy costs about $1,800 and a person at age 79 about $5,500. You should consult with your local insurance or financial advisor on the current costs in your area. Counseling services may also help you select a policy which is most appropriate to your specific needs.
People purchase long-term care insurance for several reasons. If you are deciding whether and when to buy long-term care insurance, you should consider the following questions. Will you income cover long-term care expenses along with other ongoing expenses? If you purchase such insurance, can you pay for the deductible period and coinsurance? Can you pay the premiums now? Can you pay it if the premiums rise? Will you be able to pay the premium if your spouse dies? Will you be able to pay for upgrading benefits to meet inflation? Would you become eligible for Medicaid if you have large medical bills or entered a nursing home where your average yearly cost could run up to almost $30,000?
According to the Centers for Medicare and Medicaid Services, before signing a long-term care insurance policy, you should also ask if you have a period during which to cancel the policy and receive a refund for the first premium. Reverse mortgages are also a way to fund long-term care for seniors who are desirous in staying in their homes. Seniors who live at home and have a low or no mortgage balance can use a portion of their home equity for in-home care through a federally-insured loan program.
Veterans’ benefits may also be a way to fund long-term care. Aid & Attendance, a largely unknown benefit provided through the VA provides monetary assistance to qualified veterans who have served during times of war as well as their surviving spouses. This benefit can be used to fund long-term care.
Life insurance. Life insurance may also be a way to fund long-term care. Private third party organizations now allow seniors to use a life insurance policy to help pay for home health by converting a portion of the policy’s death benefit into a long-term care benefit paid directly to a care provider.
Funding long-term care takes proper planning. And Waller & Mitchell has the tools to assist you and/or your loved one with this endeavor. Please contact us at 727-847-2288 to set up an appointment to discuss all of your planning needs and we will be happy to assist you.
- Published in Medicaid Planning, Videos
Can I Use Renovations Done To My Home Office As A Tax Write Off?
Video Summary
Can I use renovations done to my home office as a tax write-off if I’m not self-employed?
This is an issue that you need to talk to your CPA about is whether or not you can write off a portion of your home as far as the expenses, the utilities and depreciate a portion of your improvements as a home office. I don’t necessarily believe that you have to be self-employed to do the write-off. However you do need to devote it to your particular job as far as that’s concerned as being a requirement.
But the answer to the question lies between you and your certified public accountant as to whether or not you can write it off and how much you can write off and there is a certain, I don’t think a bright line test but it’s more of a feel for the CPA to be able to tell you what percentage of the utilities and the renovations that you would be able to write off. So I urge you to call and speak to your CPA about that issue. But if you have any other issues well give me a call at 727-847-2288.
- Published in Real Estate, Videos
What Are The Homestead Laws in Florida?
Video Summary
What are the homestead laws in Florida? The homestead laws were provided for in the Florida Constitution. The one that people are most familiar with is in Article XV that deals with real estate taxes. And it provides that if you’re a resident of Florida and you live in your home and you move in and own it before the end of any particular year, you can apply for homestead exemption by March 1st of the following year and obtain homestead exemption on taxes. That means if you were granted homestead exemption, you get exempt the first $25,000 of your assessed valuation or taxable valuation from taxes which saves you about $500. You have to pay taxes on the taxable value of the property from $25,000 to $50,000. You get to exempt from $50,000 to $75,000 all taxes except school taxes and that will save you about another $300 and then you pay for all the tax on anything above $75,000.
There is an added benefit to having homestead exemption. It’s under Save Our Homes and I’m not sure where that’s provided for in the Constitution, but the net effect of it is that if you have homestead exemption the tax value of your property will not increase by more than three percent or the cost of living index, the lesser of the two. In years past that’s gone up very, very little and the longer you own the property the more you can appreciate it. So if your tax valuation does not go up every year, well then your tax bill should remain approximately the same since it’s only a millage rate and hovers around two percent in the county. It’s a little bit more if you live in a city.
So homestead exemption is really a great benefit and the longer you live in your home the more you appreciate it. The other nice thing about homestead and if you decide to sell your home and move to another house, whether you’re upsizing or downsizing, be sure you go whenever you apply for a homestead exemption on your new home, take your old tax bill with you and advise the property appraiser when you apply for homestead exemption that you had homestead on your prior home and there is something about portability, meaning they’ll prorate your old assessed valuation against the new assessed valuation and you can get to carryover some of the benefits from having homestead exemption on your original home.
So that’s I believe under Article XV as far as the tax valuation. Under Article X, Section 4 of the Florida Constitution, it provides that the creditors cannot place a lien or a claim on your homestead property. That’s property that you live in and you can protect that from the claims of creditors. It doesn’t matter how much you owe your credit card company or doctors or anyone else other than the United States Government, they cannot take away your home. Now there is an exception for the Internal Revenue Service and the federal government in that they can attach your home even though it’s homestead property. If you file for bankruptcy, there are certain rules as far as be able to exempt it as homestead. Here again that’s governed by federal law and will tell you how long you’ve lived and if you’ve owned the home for a certain number of days which I think comes to about two or three years, well then you can exempt the property. A lot also has to do with how much your homestead is worth as far as how much the exemption can be. But the Florida Constitution does protect your home from creditors.
Another thing that you don’t want to think about but if you pass away and you leave your home to your children or your grandchildren or your heirs, that exemption says inures or passes down to your children. So if you leave a bunch of credit card debt or any kind of medical bills, whatever you leave behind as far as bills are concerned and you leave your home to your children other than a mortgage, they don’t have to pay the creditors any money and the house or your homestead passes to your children.
This is a very complicated subject and so I might do another video about whether or not to put your homestead in a trust or a joint trust as far as that’s concerned and also the effects of transferring your home during your lifetime on Medicare and Medicaid. So if you have any questions about homestead, give me a call at 727-847-2288.
- Published in Real Estate, Videos