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Maximizing the Benefits of a Well-Planned IRA Beneficiary Designation

September 1, 2015

by David Zumpano with 2 Comments Asset Protection Estate Planning Drafting Software

Many attorneys and financial professionals struggle over how to properly designate the beneficiary of an IRA. While it can be confusing, understanding the core elements of the procedure greatly simplifies the designation process and offers multiple solutions. The three key elements one must analyze before designating the beneficiary are as follows: first, what is the overall intention of the IRA owner; second, who is the intended beneficiary; and third, what is the proper language to use on the IRA beneficiary designation form. As we examine and grow to understand these three issues, great practice opportunities will emerge.

The most important element in determining the proper IRA designation is the overall goal of the IRA owner. If the owner’s goal is simply to transfer the IRA interest to someone else at death, then a simple designation to the individual will suffice. The challenge comes when we start to identify more advanced goals. What happens if the IRA owner intends for the beneficiary to receive the IRA protected from the beneficiary’s predators and creditors? What if the owner wants the beneficiary to receive the IRA over a lifetime rather than all at once? These are situations in which a mere direct designation to the beneficiary will not accomplish a client’s goal.

The U.S. Supreme Court, in Clark v. Remeker, ruled that funds held in an inherited IRA do not constitute “retirement funds” and thereby do not derive the same protection benefits as the original IRA. (573 US, 2014). The one exception to this ruling occurs if the beneficiary is the surviving spouse and the surviving spouse rolls the decedent’s IRA into his or her own IRA. However, although the surviving spouse may be permitted to make distributions from the IRA over his or her life expectancy, such withdrawals will not necessarily be protected. Further, while a surviving spouse can maintain the protection of the original IRA owner, the surviving spouse can lose the IRA proceeds to his or her long-term care costs.

If the goal of the IRA owner is to preserve the IRA for the benefit of his or her beneficiaries and protect it from said beneficiaries’ creditors and predators, then a direct designation of the beneficiary must not occur. Currently, the only way to absolutely protect an IRA from the creditors and predators of the beneficiaries is to designate an irrevocable trust as the IRA beneficiary and designate the intended IRA beneficiaries as the beneficiaries of said trust. This two-step approach assures continued protection of the IRA funds after the death of the original plan holder and for the lifetime of the trust. The challenge for practitioners now becomes how to effectively name a trust as the IRA beneficiary and how that designation impacts the individuals intended to benefit from the IRA.

A trust can be a qualified designated beneficiary of an IRA without violating the IRS rules that require a “stretch out” of the payments from the IRA over the lifetime of the beneficiary. The four criteria to ensure compliance with the “stretch” rule necessitate the trust (1) to be valid under state law, (2) to be irrevocable at the death of the grantor, (3) to have all beneficiaries clearly "identified" within the statutory time period, and (4) a copy of the trust must be provided to the IRA plan administrator. These conditions can easily be met, but the most common violation is in having a qualified beneficiary that is identifiable.

An identifiable trust beneficiary must be clearly identified by the terms of the trust prior to September 30 of the year following the IRA owner's death. While this seems simple, it typically is violated in two fashions. First, a nonhuman beneficiary is named, creating a situation where there is no measurable life in being (i.e. a charity). Second, the terms of the trust do not clearly identify a beneficiary that can be named within the statutory time period. This violation typically occurs when the terms of the trust require some condition precedent to the vesting of the beneficial interest. While appearing complicated, once a practitioner has an understanding of these two issues, language can easily be inserted into the trust to ensure that those provisions are not violated. As Lawyers with Purpose members, our client-centered software system has all necessary language to ensure that the provisions are not violated by providing clear and proper warnings when an attorney makes choices that could put the stretch out in danger. Once the trust beneficiaries are properly identified, a trust can be named as beneficiary to maintain the asset protection for a non-spousal beneficiary (or spousal beneficiary if long-term care costs are an issue).

The final step lies in properly naming the trust as the beneficiary of the IRA. This requires an attorney to have a clear understanding of the distinction between outside beneficiary designations and inside beneficiary designations. Outside beneficiary designations reference beneficiary designations made outside of the trust on the beneficiary designation form of the IRA itself. Typical outside beneficiary designations are the trust, a specific article within the trust, or a particular beneficiary within the trust pursuant to a particular article. Examples of these outside designations could be as follows: “Pay to the trustee of the ABC trust dated 1/1/2015,” “pay to the trustee of the family trust under Article Four of the ABC trust dated 1/1/2015,” or “pay to the trustees of each separate share trusts under Article Five of the ABC trust dated 1/1/2015.” These three outside beneficiary designations distinguish which beneficiaries of the trust will receive the IRA. More importantly, these designations will also distinguish the stretch period based on the life expectancy of the oldest beneficiary inside the designated trust (the general trust, the family trust, or the separate share residuary trusts).

Inside designations refer to the specific beneficiaries named inside the trust document. When the proper inside designations are made after the correct outside designation, meaningful and comprehensive protection is afforded the client. Typically, a family trust will name the spouse and children of the client as beneficiaries. In such a situation, the oldest beneficiary would likely be the surviving spouse and therefore trigger a much shorter stretch-out period. In addition, a second stretch period at the death of the surviving spouse would be lost because it was not rolled into the surviving spouse’s IRA. Alternatively, when a residuary trust is named as outside beneficiary, the IRS would then examine all beneficiaries inside the residuary trust and choose the oldest beneficiary for the measuring life of the stretch. Finally, when the outside beneficiary is designated as separate share trusts, each separate share trust under the particular article would be analyzed to identify the oldest beneficiary therein. Typically in each separate share trusts there is only one beneficiary, so each beneficiary would use his or her age as the measuring life for stretch calculations.

Disclaimers are an important tool to consider in conjunction with outside and inside designations in IRA planning. Disclaimers may be effectively used on both outside and inside beneficiary designations. The use of disclaimers can create a variety of options to meet the overall goals of the client after death.

Proper inside and outside beneficiary designations together with the effective use of disclaimers are powerful planning tools. As an example, let’s analyze a situation in which a client desires to leave his IRA to his spouse of the same age, while still getting the most return on his investment for his wife and children. In this scenario, the client’s outside IRA beneficiary designation form names a family trust as the primary beneficiary and the surviving spouse as the contingent beneficiary of the IRA.

When the client names the family trust on the outside beneficiary designation form, the trustee of the family trust accepts the IRA designation. The surviving spouse, as sole inside beneficiary of the family trust, may choose not to benefit from the IRA. In accordance with the terms of the family trust, she can disclaim her interest in the family trust within the trust document. The IRA must then be paid in accordance with the trust terms to the residuary trust and the oldest of the residuary trust beneficiaries (in this scenario, the client’s oldest child) becomes the measuring life for the stretch.

Alternatively, as primary outside beneficiary, the trustee could disclaim the trust’s interest in the IRA in accordance with the outside beneficiary designation form before it is ever transferred into the family trust, resulting in the IRA going directly to the contingent outside beneficiary designation, the surviving spouse. The surviving spouse could then roll the inherited IRA into her own IRA and get all the benefits associated therewith. As evidenced, this plan permits an examination of the surviving spouse's health and income with regard to long-term care costs at our client’s death. In doing so, we have given our client and his spouse the greatest opportunity to ensure that the overall protection goals of the IRA owner (client) are met.

By understanding and implementing the three key elements in determining IRA beneficiary designations (the overall intention of the IRA owner; the intended beneficiary; and proper language to use on the IRA beneficiary designation form), we as LWP attorneys are able to provide our clients with the best IRA distribution plan to fit their desires and needs.

For a deeper understanding of Lawyers With Purpose and what we have to offer your estate planning and/or elder law practice, join us in Phoenix, AZ, in October. If you are even considering coming to this event register today – The first 2.5 days of the program are officially SOLD OUT and the room is at capacity. We still have a few spots left for the BIG Tri-Annual Practice Enhancement Retreat that kicks off Wednesday afternoon. For registration information contact Amanda Ross at aross@lawyerswithpurpose.com or call 877-299-0326.

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder and Senior Partner of Estate Planning Law Center

Before You Share – Be Aware

August 28, 2015

by Lawyers With Purpose with No Comment Coaching & Implementation Legal Marketing

As business owners who are trying to make authentic connections with our clients and communities, we are taught to share more about ourselves on a personal level. Let the people get to know us. If they know us, they will like us. If they like us, they will hire us and refer friends to us.

That is all true, but we must also be mindful of our audience. For example, I have taken three vacations this year. I always include in my quarterly newsletters where I’ve been, what my family has done, and the fun we have. It had never occurred to me that my main audience is my clients and their adult children. These are people who are rarely able to take a vacation due to disability or because they are the sole caregiver of a loved one. Instead of being personal, my sharing may seem more like boasting, separating me from my clients. How do I share and mitigate possible damages? After sharing travels, then share tips on how elderly people can travel safely, and how caregivers can plan a trip away and feel secure in their decision and plans. Provide guidance and a way for them to take a vacation themselves.

Another example is when I share my business travel schedule and post pictures on Facebook and other social media outlets. My clients and constituents may feel that I am never in the office to actually see clients and help them. How do I overcome that? I make sure to constantly highlight my office team members and their roles within the office. The message is that the clients are taken care of by all of us, not just me.

I am a huge proponent of being personal and sharing information with clients and professional contacts. But, be aware that when you share, your messages may be perceived differently than you intended. Always consider the audience and their experiences and expectations when sharing yours. You want to strengthen the relationships with your clients, not alienate them.

If you have ever wondered what it would mean to your practice to become a Lawyers With Purpose member, consider joining us in Phoenix, AZ, the week of October 19-23 for our Tri-Annual Practice Enhancement Week. It's THE ONLY event for estate planning, asset protection and elder law professionals AND the teams that support them. You can check out the full agenda here. The room is filling quickly so register today!

Victoria L. Collier, Co-Founder, Lawyers with Purpose, LLC, www.LawyersWithPurpose.com; Certified Elder Law Attorney through the National Elder Law Foundation; Fellow of the National Academy of Elder Law Attorneys; Founder and Managing Attorney of The Elder & Disability Law Firm of Victoria L. Collier, PC, www.ElderLawGeorgia.com; Co-Founder of Veterans Advocates Group of America; Entrepreneur; Author; and nationally renowned Presenter.

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Why Clients Are So Confused (and Their Lawyers too)

August 26, 2015

by David Zumpano with No Comment Estate Planning Drafting Software

When people come into my workshop, the first thing I ask is, “What do you want to learn?” The response is almost immediately, “I want to learn how to protect my assets.” Ninety nine out of 100 lawyers would stop there and say, OK, let me show you the way. But a Lawyers with Purpose attorney knows to ask the next question: “What are you afraid of losing your assets to?”

That's when the answers start to vary. Predominantly the No. 1 answer is that people are afraid of “the government.” Interestingly, they're not really sure what this means, but typically it tends to relate to taxes or probate. Often, they're not even sure what taxes they're concerned about or the difference between income taxes, estate taxes or gift taxes. They're just afraid of taxes overall.

Secondly, they're afraid of losing everything to long-term care costs or Medicaid. We know Medicaid doesn't take any of their money, but some of it may have to be applied to the cost of care before Medicaid will pay for their long-term care costs.

The third most common response is family members. Most people who are concerned about family members have family members they are afraid will challenge their estate or cause havoc for the remaining family members. We as attorneys know that it's the family members we don't anticipate who cause the greatest damage. Finally, clients want to protect from lawsuits. They are keenly aware of the possibility of lawsuits and they want to make sure that everything they've worked for is not lost to one.

As we analyze each of these separately, it becomes clear why people are so confused. They are trying to distinguish between estate planning, tax planning, asset protection planning, Medicaid or benefits planning, and general asset protection strategies. To keep it simple, at Lawyers with Purpose we teach four layers of planning.

First, estate planning is ensuring that what you have gets to whom you want, when you want, the way you want, without unnecessary cost or delay.

Second, asset protection planning is ensuring that your assets are protected from predators and creditors. The key distinction we train our members on is between obtaining asset protection after death, by way of post-death trust planning, and asset protection while alive by way of the IPUG™ protection trust. These trusts ensure that clients are able to create them, control them, change them, and even benefit from them, without the threat of being lost to predators, creditors, nursing homes, family or any other potential threat.

The third level of planning is needs-based benefits planning. This often includes Medicaid benefits, Veteran's benefits, and other needs-based benefits available to pay for a client's care if needed. Planning for these needs-based benefits is a level above and beyond general asset protection planning, but it is usually distinguishable and identified when using the LWP™ client enrollment system and documentation creation system.

Finally, there is tax planning. This only applies to two-tenths of one percent of America, but it's the No. 1 reason why people want to protect their assets. So, while it is important and necessary to some, the vast majority (99.8 percent) really don't need it. That's why the Lawyers with Purpose training on its TLC™ estate planning process is essential to ensure clients are properly educated on how to achieve the estate plan most meaningful to them.

If you want to learn more about Lawyers With Purpose consider being in the room with us and our members and experience it first hand! We'll be in Phoenix, AZ, October 19th – 23rd! Click here to review the full agenda. If you register by August 28th you can still snag a seat at Early Bird pricing! This is THE estate and elder law event you DO NOT want to miss.

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder and Senior Partner of Estate Planning Law Center

When Is It Too Late to Protect Assets?

August 21, 2015

by David Zumpano with No Comment Asset Protection Estate Planning Drafting Software

Many people are accustomed to the concept of "protecting their assets," but few are clear on the details of how to do it. The primary concern for clients is the loss of their assets to long-term care costs. Most people believe they need to wait five years to protect their assets, and once they enter a nursing home, they believe it's too late. The truth is, it's never too late to protect assets. As the LWP™ Medicaid Calculation software shows, individuals can qualify immediately for Medicaid, even if they have assets in excess of half a million dollars. The trick is to know the Medicaid laws and rules and how they apply to each client fact pattern.

I'll use Mary as an example. Mary called my office frantic because her mother was admitted to a hospital, and she was advised that mom would be going to a nursing home. She immediately contacted her dad's lawyer to see what to do. Dad's lawyer was swift to give them advice on protecting their assets from the threat of mom's impending long-term care costs. Mary was thrilled that the lawyer showed them how to protect $175,000 of their $450,000. Although they were losing $275,000, they were thrilled to protect the balance.

Mary eventually called me because her sister knew me and insisted she get a second opinion. When we put Mary's mom's fact pattern through our Medicaid qualification software, we were quickly able to determine that, in fact, Mary's mom qualified for Medicaid immediately and all $450,000 of her assets were safe and protected for dad, who still resided at home. In fact, I run into dad frequently at breakfast, and six and a half years later, mom is still in the nursing home and he's still at home with 100 percent of his assets protected. So, the question is not whether it is too late. The question is, how much can we protect and how soon?

It’s easy with the LWP Medicaid Calculation software. It shows you how. If you would like a FREE demo of our Estate Planning Drafting Software click here to schedule a call now!

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder and Senior Partner of Estate Planning Law Center

Big Brother is Watching: Fiduciary Accounting

August 19, 2015

by Lawyers With Purpose with 3 Comments Estate Planning Drafting Software VA

What is it?

When the Department of Veterans Affairs (VA) determines that a claimant is incompetent and needs assistance managing their VA pension, it approves the nomination of a fiduciary to do just that. The fiduciary is responsible for opening a dedicated bank account for VA funds only and for spending VA funds according to an agreement that the VA field examiner arranges and approves. In order to ensure that the fiduciary is doing what he or she is supposed to be doing, the VA may require the fiduciary to submit an annual accounting that documents how VA funds were spent.

Who completes it?

There is more than one type of fiduciary. The most common type you may encounter is the federal fiduciary, as opposed to a court-appointed fiduciary. Federal fiduciaries can be a spouse or other family member, a legal custodian, or even an organization like a state/local government entity or a health care facility.

When do you complete it?

It is up to the field examiner to decide whether a fiduciary should be required to submit an accounting, and if so, how often. For example, an accounting should not be required of a spouse payee unless there are unusual circumstances. If it does need to be completed, it is generally required annually, although the VA can request one at any time. For a regular annual accounting, the fiduciary should receive a letter a few months before the deadline explaining that the accounting is due. The due date is 30 days after the end of the accounting period, which is generally a one-year period that begins with the anniversary of the date on the letter appointing the fiduciary. You can request an extension if necessary.

How do you complete it?

The fiduciary accounting is fairly straightforward, although it can be confusing the first time you do it. The VA should send you two forms to complete: the VA form 21-4706b Federal Fiduciary’s Account and the 21-4718a Certificate of Balance on Deposit and Authorization to Disclose Financial Records. The second form is to be completed by the bank where the VA account was set up and is used to document the current balance plus any interest earned. Once completed by the bank, the form 21-4718a also needs to be signed by the fiduciary. These two forms should also be filed with copies of all bank statements for the VA account during the one-year accounting period.

The VA form 21-4706b, which is to be completed by the fiduciary, is used to report all activity of the VA account during the accounting period. It should not include any other accounts that the claimant may own. Despite the fact that the form requests “Amount received from Social Security” or “Amount received from other sources,” these are not reported on this form unless this income is being deposited in the VA account. Section I – Statement of Account on the first page comprises the following five parts:

Money Received
Money Spent
Total Estate at End of Period
Assets at End of Period
Total Assets

In part 1, “Money Received,” where it states under Item A, “Total Estate at beginning of period,” you must enter the balance of the VA account at the start of the accounting period. If this is the first fiduciary accounting, that balance may have been $0. Once you fill in this starting balance, you itemize what monies were received in the VA account in the boxes below. Any regular, monthly VA benefits should be listed under Item 1B, where you are provided with two lines in case the monthly benefit changed during the accounting period. Any lump sum deposits of retroactive VA benefits should be listed separately as items 1E to 1H and classified as VA lump sum.

In part 2, “Money Spent,” you list any expenses that were paid for the claimant during the accounting period from the VA account. Most of the time these expenses are medical in nature and can be listed under items 2G to 2L, since none of the pre-printed categories include medical. By subtracting the total spent in part 2 from the total received in part 1, you obtain the figure in part 3, “Total Estate at End of Period.” Part 4 is then where you list all current assets, which is usually what is contained in the VA account. If savings bonds were purchased with VA funds, you would also provide the total value of such bonds under item 4D and list those bonds individually on the second page. By totaling the assets in part 4, you obtain the figure in part 5, “Total Assets.” The goal of the fiduciary accounting is that the figure in part 3, “Total Estate at End of Period” matches the figure in part 5, “Total Assets.” If they do not, then review your entries and calculations, because you are missing something.

Result

Once the fiduciary hub has audited and approved the accounting, you will receive a letter stating as much, which may also tell you if future yearly accountings will be necessary. If you do not complete the accounting on time, you risk a temporary termination of benefits, the appointment of an alternate fiduciary, and even an investigation for possible misuse of funds. For more information, visit http://www.benefits.va.gov/FIDUCIARY/references.asp for a list of further resources regarding the VA fiduciary program.

If you want to learn more about what it means to be a Lawyers With Purpose member, consider joining us for the only event for estate law, asset protection and elder law professionals AND the teams that support them! Our Tri-Annual Practice Enhancement Retreat is October 19-23rd. Registration is open and you can still grab a spot at Early Bird Pricing. To register contact Amanda Ross at aross@lawyerswithpurpose.com or 877-209-0326 x 103.

By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC and Director of VA Services for Lawyers With Purpose.

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation; Author of “47 Secret Veterans Benefits for Seniors”; Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit” Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; Co-Founder of Lawyers with Purpose; and Co-Founder of Veterans Advocate Group of America.

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Looking forward to Phoenix for so many reasons …

August 17, 2015

by Lawyers With Purpose with No Comment Estate Planning Drafting Software Systems & Processes Team Building

As the Education Director for LWP™, it has been my privilege to take part in the development of the TAPER programs and to work with the amazing staff that makes these events unique. We’ve all been to the (yawn) lawyer conferences that should be advertised as a cure for insomnia. Our goal at LWP was to create a unique experience that advances the members to the next level by providing the tools to create a dream future, gain energy, engage the team and get focused. It only takes a moment to feel the energy in the room and know that you are not at an ordinary legal training event!

As an LWP trainer, the Tri-Annual Practice Enhancement Retreats (TAPERs) offer the opportunity to “pay it forward” and pass along some of the lessons that experience has taught. I’m particularly excited to be presenting a focus session on adding an Associate Attorney to your LWP firm.

As an LWP Mentor Coach, there is incredible satisfaction in watching from the sidelines as teams break through the barriers and find the road to success. The TAPERs are an opportunity to touch base with those teams, put names with faces, and really see the energy develop around their own futures.

As a member of LWP, the Practice Enhancement Retreats have always been a highlight, something that goes on our annual calendar the moment we learn the dates. We look forward to them as a team because we are anxious to shift focus and work ON the practice rather than IN the practice. The retreats are aptly named “retreats” because they are truly a time to get away from our day-to-day world, reflect on where we’ve been AND set the course for the future (whether that means the next weeks, months or years).

There is no denying the energy burst that comes from attending an LWP Retreat, and that is why LWP is doing them more often. If we could get an energy burst once a year, imagine how powerful three of those bursts per year would be! Triple the impact! For the last two years, I have shut down my law firm not once, but three times each year – and I really mean “shut down,” since the ENTIRE TEAM attends every retreat. That is the value of these events – every single member of the team gets a customized experience with the opportunity to focus on both professional and personal growth. What a difference! The team has taken ownership of the firm, and ownership of its own growth and development.

As a business owner, the thought of shutting down the business for any reason is scary. We ask: “What about the lost revenue?” “What about the expense of flying everyone around the country and putting them in hotel rooms?” “What about feeding them?” “Dollars seem to be flying out the window!” All of that is real. It IS expensive to attend three retreats every year, until you realize that this is NOT an expense – it is an investment. It is an investment in the future of the business made without hesitation because the ROI is exponential. The payoff is a team committed to the firm’s future, a team working together for common goals, a team dedicated to personal and professional growth, a team poised to push each other toward personal goals, a team that understands the power of teamwork!

And it shows in the bottom line. Despite and because of the three weeks per year of shutdown, our revenues have never been higher. That is the power of the LWP Tri-Annual Practice Enhancement Retreat.

Don’t take my word for it; find out for yourself. Join us in Phoenix and feel the power!

Early Bird registration is open! If you're ready to reserve your spot now email Amanda Ross at aross@lawyerswithpurpose.com or just call 877-299-0326 and she's standing by to help get you're seat reserved!

Susan Hunter

VA Aid and Attendance Benefits Qualification Worksheet

August 14, 2015

by Lawyers With Purpose with No Comment Asset Protection Estate Planning Drafting Software VA

What is it?

The VA Qualification Worksheet is an invaluable tool for estate planning when your client is a wartime veteran or the surviving spouse of a wartime veteran. It allows you to input a client’s income, medical expenses and assets to determine not only whether he or she will qualify for VA benefits, but also how much exactly the client would receive each month from the VA after approval. This tool is essentially mathematical in function, as it does not take into account whether there is eligibility based on wartime service or character of military discharge. The calculations that form the basis of the worksheet are the same used by the VA.

When the VA evaluates a claimant’s income and assets for eligibility, it is considering certain factors. First, gross income cannot exceed the given maximum annual pension rate (MAPR) for any year. The VA usually updates MAPRs each year and publishes them on its website at http://www.benefits.va.gov/pension/rates.asp. Not only can they change every year, but MAPRs also vary according to whether the claimant is a veteran or a surviving spouse, and also with the number of dependents, if any. Fortunately, one can use unreimbursed medical expenses to help offset gross income so that it is lower than the MAPR. Gross income minus these medical expenses is called Income for VA purposes, or IVAP. To get the maximum pension, the IVAP must be $0. IVAP between $1 and the MAPR will only result in a partial benefit.

Second, the claimant cannot have excessive net worth, even though there is no specific asset limit. As the VA Adjudication Procedures Manual Rewrite M21-1MR, Part V, Subpart iii, 1.J.70.a states: “No specific dollar amount can be designated as excessive net worth.” Nevertheless, because the manual M21-1MR, Part V, Subpart iii, 1.J.70.b goes on to state, “A formal administrative net worth decision is required if the beneficiary has net worth of $80,000 or more,” $80,000 has become the widely acknowledged asset limit for VA eligibility. This asset limit applies to both single and married claimants.

In rare cases, the VA will apply what is called age analysis when evaluating assets pursuant to the VA Adjudication Procedures Manual Rewrite M21-1MR, Part V, Subpart iii, 1.J.70.a, which states that “a number of variables must be taken into consideration when making a net worth determination.” These variables include income, expenses, and the claimant’s life expectancy. By applying an age analysis, the VA is attempting to determine whether “a claimant’s assets are sufficiently large that the claimant could live off these assets for a reasonable period of time,” at which point the VA can “deny pension for excessive net worth” (M21-1MR, Part V, Subpart iii, 1.J.67.g). While the adjudicators rarely apply this tool, you should be aware of the possibility.

How to use it

The VA Qualification Worksheet is part of the Lawyers with Purpose VA software and is also available as a standalone document, in either Microsoft Excel or Microsoft Word format, that you can complete by hand. Both versions are available for download from the members-only section of the LWP website. The worksheet is composed of six sections: VA Countable Income, Deductible Medical Expenses, Assets Countable in VA Net Worth, Maximum Applicable Pension Rate (MAPR), VA Allowable Net Worth without Age Analysis, and VA Allowable Net Worth with Age Analysis. Once you enter the appropriate information in the first three sections, the calculations will give you the results for the other three sections.

When to use it

The VA Qualification Worksheet’s value at the beginning of the VA planning process is obvious, as it helps identify how much of a benefit a client can expect to receive, if any. However, it is also valuable to run once you have completed a claim but before you file it, in order to verify that the results are what you expected. This can increase the success rate of your claims. If the claimant does not qualify for the maximum monthly benefit, there may still be time to correct it or, at the very least, you can inform your client of the issue to minimize any surprise or disappointment with the outcome. The worksheet should also be used at every annual review to confirm the monthly benefit given the claimant’s most recent income, assets, and medical expenses, and to determine whether any further planning needs to be done to ensure continued VA eligibility.

If you're not a Lawyers With Purpose member and want to learn more about the VA Proposed 3 Year Look Back, join our FREE WEBINAR on Wednesday, August 19th at 4 EST by clicking here to register. (Members – you already have access to the webinar on the Members Only section of the website!).

By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC and VA Production Coordinator for Lawyers With Purpose.

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation; Author of “47 Secret Veterans Benefits for Seniors”; Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit”; Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; Co-Founder of Lawyers with Purpose; and Co-Founder of Veterans Advocate Group of America.

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Communicating with the VA

August 12, 2015

by Lawyers With Purpose with No Comment Legal Technical VA

There is one sure thing when it comes to communication from the VA: They don’t do much of it. And when I use the term “communication,” I don't mean the dreaded, generic form 20-8992 that the pension management centers will sometimes spit out stating that “We have received your application for benefits. It is our sincere desire to decide your case promptly. However, as we have a great number of claims, action on yours may be delayed.”

Substantive correspondence from the VA in regards to a pension claim generally boils down to three or four letters during a typical claim process. If you submit an intent to file a claim on VA Form 21-0966 (which is not actually filing the claim itself), you should receive an acknowledgment as well as directions on how to file a formal, fully developed claim. Once the formal claim is filed, you may receive a request for information. As long as you respond within the allowed 30 days, the claim should remain within the fully developed claim track (which is intended to produce quicker decision times). Otherwise, the next notice from the VA is a decision letter, often accompanied by a rating decision on blue paper. After an approval, there may be some additional letters regarding a proposal of incompetency. Assuming that is resolved, that is the extent of it and the client should not expect any other correspondence.

There are essentially three ways to communicate with the VA: mail/email, fax, and phone.

Mail / Email

Traditional mail is the default way to reach the VA and has the advantage of being traceable, whether you use certified mail with return receipt or prefer FedEx or UPS. U.S. mail is also the default way that the VA will communicate with you. You are promised by IRIS – the Inquiry Routing and Information System, which is the VA’s Internet-based public message management system – that you can use it to ask questions and submit complaints, compliments, and suggestions. You access IRIS by completing an online form at https://iris.custhelp.com rather than by directly emailing an inquiry. You can specify that the VA respond in one of three ways: email, telephone, or U.S. mail.

Fax

Faxing to the VA should be a backup method to mail rather than an alternate. It allows you to respond promptly when a deadline is involved. You should ensure, of course, that some record of the fax confirmation is kept with the file. The three pension management centers have their own dedicated fax lines that were updated in July 2014 to the following:

Philadelphia: (215) 842-4410

Milwaukee: (215) 842-4430

St. Paul: (215) 842-4420

Phone

Calling the VA National Call Center at the number (800) 827-1000 or the pension management centers at (877) 294-6380 may be the most direct way to make inquiries regarding a particular claim. To do so, the proper forms naming you as an authorized caller must be in the VA file. You are warned that calling cold, without an appointment time, will result in a lengthy wait time. It is better to call after hours, when you are prompted to schedule a phone call so that the VA calls you back at a specific date and time. This can be done a week in advance, but slots fill quickly, so keep your schedule flexible. Once you speak to an agent, there is little direct information that they can tell you about a claim other than to state what phase it is in (Development, Decision, or Notification). They may also disclose that a decision has been made or that a request for information is pending, but they will not go into specifics.

The point of following up by phone is to track that a claim has been logged in and that it is moving through the process, even if there may not be much more to learn than that. At the very least, it forces somebody at the VA to look at the claim, and if there is anything off base about the claim, it’s better to know sooner rather than later.

Phone calls from the VA to the client or representative are much less common. Once in a while an employee will call with an inquiry; however, they are more likely to call an assisted living facility or family member for confirmation of some fact, rather than the attorney’s office.

Regardless of the method you choose to communicate with the VA, you must remember that you are often the most vital link for your clients to the VA and often their only way of understanding what the VA is trying to communicate in regards to their pension claim.

If you aren't a Lawyers With Purpose member and want to learn about the nuts and bolts of the proposed VA changes…and what it means for your practice join our FREE WEBINAR on Wednesday, August 19th at 4 EST. Click here now to register.

By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC and Director of VA Services for Lawyers With Purpose

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation; Author of “47 Secret Veterans Benefits for Seniors”; Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit”; Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; Co-Founder of Lawyers for Wartime Veterans; and Co-Founder of Veterans Advocate Group of America.

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Focus on Forms: VA Form 21-527EZ

August 9, 2015

by Lawyers With Purpose with 2 Comments Estate Planning Drafting Software VA

This blog post will focus on one of the most common forms used in VA improved pension (with aid and attendance) claims. As an introduction, I will start with some general comments on the use of VA forms. Like most well-established bureaucracies, the Department of Veterans Affairs is partial to its own forms. There are very few scenarios involving VA pension claims that do not call for at least one form. Using the wrong form or the wrong version of a form, or completing the right form incorrectly, can have serious unintended consequences to your claim. It could be delayed or outright denied.

Because it is so important that you use the most current version of a form, the software developed by Lawyers with Purpose to complete claim forms is regularly updated to incorporate form revisions. Otherwise, to ensure that you are using the most up-to-date versions, we recommended that you go to the source: namely, the VA website at http://www.va.gov/vaforms/, which has 517 forms in its database. The goal of this post will be threefold: to define the purpose of the form; to discuss how to complete it, section by section; and to recommend what to file with the form.

The VA form 21-527EZ Application for Pension, which is used by a veteran to apply for non-service-connected pension benefits. The form is only for veterans filing a claim. If the claimant is a surviving spouse, then you would use the counterpart VA form 21-534EZ. When you download the 21-527EZ from the VA website, the document has eight pages – four pages of instructions and four pages of form. The first two pages of the instructions explain what it is and how to file a Fully Developed Claim (FDC), which is a relatively quicker claim process in comparison to the Standard Claim Process. Page 3 of the instructions discusses what evidence you should supply to support your claim, depending on the level of benefits being sought: Base Pension, Housebound, or Aid & Attendance. The last page of instructions relates to benefits for a helpless child of a veteran, validity of marriages, and the effective date.

There are 13 sections to VA form 21-527EZ, numbered with Roman numerals; 10 of these are labeled “Must Complete,” while the other three sections are to be completed only if applicable. Sections I and II are for the Veteran’s Personal and Service Information, respectively. Most of the fields here are self-explanatory. If the veteran previously filed a claim with the VA or you already filed an informal claim/intent to file a claim, you may have the VA file number to put in field 6; otherwise put “Unknown.” The question in field 9, “What disability(ies) prevents you from working?”, can be answered by putting “over 65.” Section III is for the Veteran’s Work History, which, unless they are currently working, you will complete by putting “Retired” in the first block of column 17A. The next three sections relate to the veteran’s family; specifically, marital history (IV and V) and dependent children (VI). You are required to complete Section IV regarding marital status. However, you should only complete Sections V and VI if the veteran is currently married or has dependent children, respectively, otherwise they can be crossed off as non-applicable.

The next three sections (VII to IX) relate to finances. The associated section names are a little misleading. For example, Section VII: Income Verification – Net Worth is for reporting net worth and not income, as the name may lead you to believe. All countable assets of the veteran and any dependents should be listed here as of the effective date. Sections VIII and IX are both for reporting income of the veteran and any dependents as of the effective date, the difference being that Section VIII: Income Verification – Monthly Income should be used to report income that is received in fixed, monthly payments, such as Social Security or retirement pension, while Section IX: Expected Income is for reporting annual amounts of income that are not received in fixed, monthly payments. The effective date is the date that the informal claim or intent to file a claim was filed, or if not filed, the date the formal claim was submitted. Every source of income received by the veteran and any dependent should appear in either section VIII or IX, but never in both.

Section X is for reporting unreimbursed medical, legal, or other expenses. However, since the VA has a more extensive form to report medical expense, VA form 21P-8416 Medical Expense Report, we recommend you use that form instead and only cross-reference VA form 21P-8416 in Section X. The last page and the three last sections of form 21-527EZ consist of Direct Deposit Information (XI), Claim Certification and Signature (XII), and Witnesses to Signature (XIII). You must complete the first two of these sections, and specifically, the veteran must sign Section XII. The VA does not recognize Powers of Attorney. The final section is only applicable if the veteran signed the previous section with an “X.” In that case, two witnesses must also sign to document the identity of the signer.

When you file VA form 21-527EZ, you must also file verification documents. Simply put, what you file should support the data you entered in the 13 sections of the form. Whenever possible, provide photo identification, birth certificate, and military discharge paperwork. Moreover, and just as important, include marriage certificates and any divorce decrees or death certificates to document the proper dissolution of prior marriages. Their omission will almost certainly delay a claim when the VA has to request this information, wait to receive it, and then continue processing the claim. It is also recommended to provide financial statements to support the net worth and income as of the effective date reported in sections VII to IX.

In summary, VA Form 21-527EZ is the primary application form for a veteran seeking non-service-connected pension benefits. It is best practice to complete all 10 mandatory sections of this form and any of the remaining three sections, if applicable, and to provide all documents that support what is declared on the form. Keep up to date with changes to VA forms by updating your LWP-CCS software whenever new releases are available and by checking the VA website regularly.

If you want to learn more about VA benefits planning, or you are not a member and want to join us for our "Veterans Administration Proposed 3 Year Look Back And Other Law Changes" on August 19th at 4 EST register and reserve your spot by clicking here now.

By Sabrina A. Scott, Paralegal, The Elder & Disability Law Firm of Victoria L. Collier, PC and VA Production Coordinator for Lawyers with Purpose.

Victoria L. Collier, Veteran of the United States Air Force, 1989-1995 and United States Army Reserves, 2001-2004. Victoria is a Certified Elder Law Attorney through the National Elder Law Foundation; Author of “47 Secret Veterans Benefits for Seniors”; Author of “Paying for Long Term Care: Financial Help for Wartime Veterans: The VA Aid & Attendance Benefit”; Founder of The Elder & Disability Law Firm of Victoria L. Collier, PC; Co-Founder of Lawyers for Wartime Veterans; and Co-Founder of Veterans Advocate Group of America.

How To Compete With LegalZoom The Right Way

August 6, 2015

by Lawyers With Purpose with No Comment Estate Planning Drafting Software Legal Marketing

Technology over the past two decades has radically reworked the way we purchase and read books, watch movies, and listen to music. Amazon, iTunes, Spotify, and Netflix have sprouted from nowhere and dominate the entertainment industry. That’s fantastic for those who enjoy their affordable convenience, but what about those left in their wake of progress? Remember Blockbuster Video?

The one-time rental goliath could have purchased Netflix back in 2000 and adopted the fledgling company as its mail rental arm. Instead, it challenged it head-to-head and was demolished. Blockbuster’s folly was that it assumed it would be successful because it had always been successful.

Those industry disruptions were initially concentrated around retail and media, but the impact now expands well beyond. Look at Uber, AirBnB, and yes, that elephant staring at us all from the corner, LegalZoom.

LegalZoom is offering a “Basic” Last Will for $69. A Living Trust is $249. That’s madness, right? LegalZoom’s home page features glowing praise from the Huffington Post, Forbes, and The Wall Street Journal. It runs national TV commercials in prime-time spots. Millions of people are using LegalZoom and assuming the documents they’re getting are “good enough.”

Of course those documents may not have all the provisions and protections that your documents provide, but that’s a difficult argument to make to a person without a law degree. Local pizzerias can charge $14 for a pizza because anyone with a tongue can tell the difference between their pies and Domino’s $7 boiling-hot slabs of cardboard. But, most people don’t understand the nuances that make one set of documents better than another.

Plus, it’s safe to assume that the documents are only going to improve as technology advances. Netflix didn’t crush Blockbuster with its online mail DVD service, but once technology advanced, its streaming service made Blockbuster as obsolete as an 8-track.

DocuBank has been working with estate planning attorneys for more than 20 years, and we’ve watched attorneys adapt to new technologies. How do you compete with this new threat? There is no easy solution, but it’s important to change the perception of what you’re selling; change the conversation. You can’t compete head-to-head selling documents: their prices are too low, and their quality will eventually truly approach “good enough.”

The way you can compete with LegalZoom is by providing the one thing they can’t: a relationship. You can provide a level of service and that surpasses the cold, impersonal monolith. It’s up to you to make your office a warm, inviting place that exudes personality. That might include a smiling assistant to greet your clients in your well-lit reception area, freshly brewed coffee, cookies (or some other local treat) from a local bakery, or complimentary trinkets such as a mug (branding opportunity!). The more you can do to distance yourself from a souless website, the better.

Of course, you are your firm’s greatest asset. Whether it’s through newsletters or through a formal maintenance program, your clients need to feel like you’re there for them after they walk out your door. You aren’t just an attorney facilitating a transaction of documents; you’re their advisor: someone they can approach with problems and who looks out for them.

You can also enhance your client packages beyond the bare-bones documents available at LegalZoom with additional services, such as DocuBank. DocuBank lets your clients (or their medical providers) access their advance directives and emergency information 24 hours a day, anywhere in the world. Providing a DocuBank membership with your client’s estate plan lets you market yourself as not just an attorney, but an advisor that wants to be sure your clients’ documents actually work when they’re needed. Plus, there are numerous touch points built into the service that remind clients of your relationship.

As the list of industries the Internet transforms continues to grow, the one thing that remains certain is that those who ignore the change will be left behind. The law industry is now at the same crossroads the music, print, and video rental industries faced a decade ago. Don’t repeat their mistakes and ignore the elephant.

If you're a Lawyers With Purpose member and want to learn more about Docubank and the benefits you get under your membership, join the webinar on August 11th at 2:00 EST by clicking here now.

Mike Wall, Marketing Manager, DocuBank