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Tips On Calculating Payments From IRAs

March 24, 2015

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

Many practitioners inquire whether the Social Security actuarial tables or the IRS minimum distribution tables should be used when determining the required minimum distribution (RMD) of an IRA to ensure their client qualifies for Medicaid. So what is the proper tables to use?

In typical lawyer fashion, the answer is, it depends. 42 USC Section 1396(b)(c)(1)(G)(ii) provides for annuity to be actuarial sound, and not considered an uncompensated transfer, the annuity must pay out over the life expectancy of the annuitant "in accordance with the actuarial publications of the Office of the Chief Actuary of the Social Security Administration." The same is true when determining the proper payout on a promissory note or mortgage as outlined in 42 USD 1396p (c)(1)(I). How does this differ from the required minimum distribution tables published by the Internal revenue service and what is the relevance?

Sections 401, 403, and 408 of the Internal Revenue code outlines requirements regarding retirement accounts. Upon attaining age 70½ required minimum distributions are required under the tax laws is based on the RMD tables published. In comparison, the Social Security tables are very different, and in some circumstances the IRS tables require nearly half the RMD that the Social Security life expectancy tables require. So how do you be certain which one you use?

To keep it simple, to remain compliant with the tax laws, the IRS tables must be utilized in determining the required minimum distribution to avoid any adverse tax penalties for failing to withdraw the minimum amount required. Medicaid and benefits planning, however has a different standard is that the Medicaid law specifically refers to the Social Security Administration table in determining the actuarially sound calculation of any annuity owned by a Medicaid applicant.

So the proper table to use will depend not on the law, but on which table your Medicaid department uses. While the law is clear that it requires the Social Security tables, many states allow the IRS RMD tables and some states even exempt an annuity if the IRA is simply in a "payout status. Once you are clear on how your state identifies an “actuarially sound” annuity or promissory note, you will have your answer. So, one final responsibility is to ensure when the Social Security tables are used, the amount required to be withdrawn is equal to or more than the minimum amount required by the IRS RMD tables. That ensures a client’s benefits’ planning is also tax compliant. Conversely, if a client is not doing benefits planning, then relying on the IRS RMD tables may result in a lower minimum distribution requirement.

If you are not a Lawyers With Purpose member, and would like to know more about who we are and the benefits we can bring to your estate and elder law practice, join our FREE Having The Time To Have It All webinar Monday at 8:00 PM EST.

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

How To Tell If You’re A Trust Mill

March 19, 2015

by David Zumpano with No Comment Estate Planning Drafting Software

Sometimes the hardest part of doing something, is getting started and knowing where to begin. Imagine if you had a template to guide you through your day. Wouldn't it be easier. The same is true when drafting estate planning. The challenge becomes how to utilize templates, and not become a "mill". I often ask attorneys if you look at the last ten estate plans you've done, what has changed other than the names and the beneficiaries? If you fall into this trap, you may be a "mill" already.

So how do you ensure you address all the issues with planning and have the freedom to create custom documents without doubling the time it takes to draft the document? Having a document creation system that meets the needs of creative lawyers, ensures all legal technical requirements of today's planning is addressed requires much more than a "fill-in-the-blank" software program. It actually requires your software to have artificial intelligence. When the LWP document creation system was created, it was created with a client-centered approach.

What does that mean? All document creation systems are lawyer centered, that is they ask questions of the lawyer as to what legal provisions they want in the documents. The LWP software was designed in the inverse inquiring of the needs and goals of the client, (estate planning, asset protection, benefits planning, or tax planning), and after identifying the clients personal and financial distinctions, all is entered and the software uses its preset intelligence to integrate all of the proper legal terms into all the various estate planning document to ensure the clients wishes actually occur. Since the software is client centered, a single interview generates all the estate planning documents ( will, HCP, PIA, personal care plan, revocable and irrevocable trusts) that assuring all of them are integrated in all the key needs of the client.

The beauty of this type system is that when speaking with clients you're not asking whether they want a power of appointment, but you're asking them questions about whether they would like their spouse or someone else to be able to change the planning upon their incapacity or death and if so, then you even have the ability to determine when and how (during life, after incompetency, after death, after remarriage, ect.)

The significance of this software is that it knows the questions relevant to each of the four categories of planning a client chooses and has created the decision trees internally to make the drafter of issues they may not have considered or if they choose confliction provisions. The greatest advantage, however is, different choices the client is able to make to be confident in their plan. Perhaps the greatest advantage of the client-centered software is for the attorney is that it has over 4,900 combinations of occurrences and allows the attorney to customize any individual part of the plan.

Assume two people are buying a car. While they may both buy the same model, each typically chooses different options on the car. This is how typical estate-planning software works. What makes the LWP software different is it is like going to a web site and choosing a car or an SUV or a pickup truck and then identifying what particular things are important to you on that car and then go through and design every part of it as you deem appropriate. For example you can opt the A package which has power windows and door locks or you can opt to customize the color of the knobs on the radio if you so desire.

Sound complicated? Well, it is, if you're the programmer developing the artificial intelligence (already done!), but it's quite simple if you're the attorney using it. All you need is a template. As you go through the template it helps identify all the triggering events in the decision tree and allows you to use preselected choices most commonly used by attorneys (typically three to five) or allows you to customize any particular provision to your specific desire. Now that's client centered!

I get two typical responses from lawyers that use the client-centered software. One is "This software doesn't do X." That typically comes from the attorneys who are unwilling to take the time to become familiar with client centered approach. The other answer we typically receive is holy moly, I cannot believe how much I can do with this software and it’s amazing how it all integrates. It’s amazing! Once you go client centered, you’ll never go back to lawyer centered. If you're a non-member and want to know more about our estate planning drafting software, click here for a live demo of our client centered software.

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

Time Equals Money In Networking

March 18, 2015

by Lawyers With Purpose with No Comment Legal Marketing Systems & Processes

Do you sometimes feel like you're in a rut when it comes to networking and working your Relationship Management System? If so, I hope you joined me along with special guest Dr. Ivan Misner on our past Marketing Roundtable and got a shot in the arm to pump up your RMS.

Welcome Dr. Misner for a follow up Special Guest Blog on "Time Equals Money In Networking" which is based on the study he talked about on the Roundtable on how effective your time is spent on networking.

_______________________________________________________________________________________

Dr. Ivan Misner:

The secret to getting more business through networking is . . . spend more time doing it! OK, well, it’s a little more complicated than that because you have to spend time doing the right things. However, based on the Referral Institute study on business networking, we finally have a definitive answer about how the amount of time spent networking impacts the amount of business that is generated.

The most dramatic statistic I have found shows that people who said “networking played a role” in their success spent an average of 6.5 hours a week participating in networking activities. On the other hand, the majority of people who claimed that “networking did NOT play a role” in their success spent only 2 hours or less per week developing their network.

What does this mean? It means there is a direct correlation between the amount of time you devote to the networking process and the degree of success that you realize from it. To illustrate this further, the graph to the left demonstrates the “average” percentage of business generated from someone’s networking efforts in comparison with the amount of time spent on networking activities. Here you can clearly see that people who are spending between five to nine hours a week networking are generating (on average) 50 percent of their total business from this activity.

People who spend, on average, more than 20 hours a week networking are getting almost 70 percent of their business through referrals.

Based on this study, it is clear that people who devote six hours a week or more to networking are generating a large percentage of their business through their efforts. So, it’s time to ask yourself . . . how much time are you spending developing your personal network and what kind of results are you starting to see?

Ivan Misner, Ph.D., Founder & Chief Visionary Officer www.bni.com

I would like to personally thank Dr. Misner for taking the time to join us and sharing with us his insights on networking like a professional to grow your practice.

Roslyn Drotar – Lawyers With Purpose, Internet Marketing Specialist

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How To Completely Understand The Rule Of Halves

March 11, 2015

by David Zumpano with One Comment Asset Protection Estate Planning Drafting Software

Many Medicaid planning practitioners are aware of the rule of halves, but it is an area of confusion for many attorneys newer to the practice. Where does the rule of halves come from? Is it codified? Well, sort of. To understand the rule of halves you have to first understand the Medicaid law and then understand math.

42 USC 1396p (c) (1) (e) provide a penalty period shall be imposed on any individual who transfers assets for less than its fair market value (uncompensated transfer). The law further states the penalty shall be calculated by taking the amount of the uncompensated transfer and dividing it by the average cost of one month's nursing home in the region in which the Medicaid applicant resides. That is all the law states, so the question becomes where does the rule of halves come from? That's where math comes in. In essence in light of the law identified, if you take any amount of money and divide it by two, the half you gave away will create a penalty period equal to what the half kept will pay.

If an individual has $100,000.00 of excess assets, and gives half away, the $50,000.00 transfer will create a penalty period that will always equal the period the retained amount will pay thru. Assuming a regional divisor of $5,000.00, the penalty on the $50,000.00 transfer would be 10 months, and the $50,000.00 retained would thereby pay 10 months in a nursing home ($5,000.00). While the rule of halves, in its purest form, makes sense in practice, it's a little more complicated because one of the fallacies in using rule of halves, is it presumes that the regional divisor actually equals the cost of care (even by law it supposed to, it often doesn’t).

In the same example if you gave away $50,000.00 in a location the divisor is $5,000.00, it would create a 10-month penalty period, but, if the cost of care was actually $6,000.00, then the $50,000.00 retained would not pay through the 10-month penalty period (you would need $60,000). The federal Medicaid law requires the state to publish at least annually, the average cost of one‑month's private paid nursing home (regional divisor). Each state however, has their own way to calculate this and most facilities are above (rarely below) that regional rate. A few states (Illinois for example) have made the divisor the actual cost of care at the facility where care is being provided. That negates any concerns about the effectiveness of the rule of halves calculations.

Finally, when planning using the halves calculation, one must also consider the income of the Medicaid recipient. When a cost of care in excess of the divisor, creates in a shortfall of retained funds needed to pay through any penalty period, failing to take income into account, often creates excess resources for the client at the end of the penalty period, which will render them ineligible.

To illustrate, assume again an individual had $100,000.00 excess assets and transferred $50,000.00 with a monthly divisor was $5,000.00. The $50,000.00 transferred would create a 10-month penalty and the $50,000.00 retained would pay through the 10‑month penalty. All other things being the same, at the end of 10 months, with the recipient in a nursing home, they're not spending their monthly income (assume $1,200.00 Social Security) the client would have accumulated an additional $12,000.00 ($1,200.00 a month times 10 months) and have excess resources and therefore not be eligible for Medicaid until additional spend-down and penalty may be created.

Proper planning utilizing the rule of halves assumes an analysis of the actual cost of care, the actual regional divisor and the actual income of the recipient are considered. The LWP Medicaid Qualifying software automatically calculates the optimal client assets to transfer and retain considers the actual cost of care, the regional divisor and the clients actual income.

To learn more about Lawyers With Purpose and what we have to offer your estate or elder law practice, please join us THIS THURSDAY for our "Having The Time To Have It All… Three Time Strategies To Have A Practice With Profit And Purpose." Click the link for registration information and to reserve your spot now.

David J. Zumpano, CPA, Esq., Practicing Attorney, just like you & Founder of Estate Planning Law Center & Lawyers with Purpose LLC

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Think “Differently” About Your Time & You’ll Get More Done

March 10, 2015

by David Zumpano with No Comment Estate Planning Drafting Software Legal Marketing Legal Technical

In a speech, Steve Jobs said, “You must think differently about what you do.” In fact, it has become the brand of Apple – Think Differently. So I ask, “What are you doing to think differently about how you spend time in your practice?” Are you frustrated that your growth is stagnant or not at the rate you'd like? If you continue doing what you've always done you will always get what you've always gotten.

That's why you must think differently, and that's why on Thursday March 12^th at 4PM EST and then again at 7 PM EST I am hosting a one-hour webinar entitled, “Having the Time to Have it All – Three Time Strategies to Have a Practice with Purpose and Profit”.

In this webinar you will think differently about how you utilize your time. You will re-examine the best use of your time and how to use your strengths and abilities to ensure marketing time, client time, and planning time you need, is achieved. I will also show you how to ensure your time provides consistent cash flow while being able to help more people.

Jeff Bellomo of York, Pennsylvania recently declared, “I was doing it all already, I just wasn't utilizing it in the right way. Just a few of the concepts you have opened me up to have allowed me to help more people, make more money, and have a greater impact on my community.” You can begin to think differently about your practice. I look forward to sharing with you.

Click here to register now and discover how to have the time to have it all.

If you have a great work ethic, a passion for helping people, are a lifetime learner, and value relationships; this webinar will get you thinking differently about how to actually get what you've always hoped for in the same time you have now.

If you are an existing Lawyers With Purpose member, you already have access to this valuable information. Simply reach out to us and we'll tell you how to access it on the members section of the website.

Cheers to helping people,

David J. Zumpano, CPA, Esq., Practicing Attorney, just like you & Founder of Estate Planning Law Center & Lawyers with Purpose LLC

Rules For Networking Like A Pro – Special Guest Dr. Ivan Misner, Founder of BNI Joins Our Marketing Roundtable!

March 6, 2015

by Lawyers With Purpose with No Comment Legal Marketing

Join our Marketing Roundtable Friday, March 13^th. at 12 EST with SPECIAL GUEST Dr. Ivan Misner, Founder & Chief Visionary Officer of BNI, the world’s largest business networking organization. Dr. Misner is a New York Times Bestselling author who has written 20 books including his latest release: Who’s In Your Room?. He is also a columnist for Entrepreneur.com and Fox Business News.

Dr. Misner will talk about how to “Network Like A Pro!” and turn your contacts into connections. We will also have a live Q&A session at the end of our call so you can get your questions answered about networking and how to deepen the relationship with your own power partners.

You don't want to miss this presentation and the ability to get your questions answered by what CNN calls the “Father of Modern Networking” and one of the “Top Networking Experts to Watch” by Forbes. Dr. Misner is considered one of the world’s leading experts on business networking!

For registration information please contact me directly at rdrotar@lawyerswithpurpose.com.

We can't wait to see you then!

Roslyn Drotar – Coaching, Consulting & Implementation / Marketing & Social Strategist for Lawyers With Purpose

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Conduit Or Accumulation Trust

March 4, 2015

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

The question of whether an attorney uses a conduit or accumulation trust in regards to an inherited IRA is a question of simplicity versus protection. Recently, the U.S. Supreme Court in Clark v. Remeker, ruled an inherited IRA is not "protected" from the reach of creditors.

As practitioners, we can still protect an inherited IRA by ensuring the beneficiary is a trust, not an individual. They key question when utilizing a trust is whether to make it a conduit trust or an accumulation trust. What factors should you consider? If the practitioner wants simple for both himself and the client, a conduit trust is the answer. Conduit trusts provide that any and all distributions that come into the trust on an annual basis must be distributed out in the same year to the rightful beneficiary.

Therefore, the trust is merely a "conduit" to hold the IRA for the benefit of the beneficiary. While this provides asset protection of the underlying principal of the IRA, it does not provide any protection of the required distributions from the trust to the beneficiary.

Alternatively, practitioners can elect to provide for an accumulation trust. In an accumulation trust, the RMD (or other IRA distributions) is distributed from the IRA to the trust, but, the trustee has the option to "hold" the distribution and accumulate it with the principal of the trust. The major downside to an accumulation trust is if the RMD is held and accumulated, the trust must pay the tax on the income from the IRA and trusts are traditionally taxed at a much higher rate than individuals.

Why would one do this?

If the beneficiary is in the middle of a lawsuit or becomes subject to alimony or other liabilities, any income distributed to the beneficiary would be lost. So the question becomes what is the bigger loss, a potential twenty-five to forty percent income tax, or a 100 percent loss creditors or other legal obligation. An accumulation trust can also serve to protect a beneficiary from themselves. In addition to protecting the income and assets "for" the beneficiary. A properly drawn accumulation trust also protects the IRA and distributions "from" the beneficiary. Many of us are aware of individuals with children who inherit IRAs and their first item to purchase is a fancy new sports car that costs $50,000.00. To do this, requires the beneficiary has to withdraw $71,500.00 assuming a 30% tax rate which leaves $50,000.00 to purchase the car that's worth $40,000.00 when they drive it off the lot. Great way to turn $71,500.00 into $40,000.00 in a single act! In cases of spendthrift or other concerns, a accumulation trust provides the greatest option.

Perhaps the greatest advantage of an accumulation trust is you can have the best of both worlds, that is if you choose to distribute all RMD out in the year received to have it operate like a conduit trust. A conduit trust, however cannot hold money to be protected or distributed later like a accumulation trust. Accumulation trust also is a better choice if the beneficiary is in the maximum tax bracket, so any accumulation would not create any additional tax loss. When properly drawn both conduit and accumulation trusts can provide for all of the RMD be calculated on the age of one beneficiary, but the distributions of the RMD can be distributed out to other beneficiaries who are in a lower tax bracket (i.e. the children of the beneficiary).

So determining whether to use a conduit or accumulation trust is deciding whether simple is the goal or ultimate protection is the goal. It is critical that you properly educate your client so they can advise you of what's most important.

If you would like to know more about Lawyers With Purpose and discover three tried and tested time strategies to get a practice that allows you to help more people and be profitable join us on Thursday, March 12th for our "Having the Time to Have it All…Three Time Strategies to Have a Practice with Profit and Purpose" webinar.

Here's just some of what you'll discover in this practice-transforming event…

How to effectively utilize your time to enroll your team to help as many people as you choose and profit from it too
To work effectively with your team
How to balance your work life and your personal life to ensure you are able to create the maximum amount of value in both
How to have sufficient time to market consistently which will ensure consistent cash flow and free up the time you're currently spending chasing dollars.

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

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“Time” Is The Difference Between Surviving & Thriving

March 3, 2015

by David Zumpano with No Comment Coaching & Implementation Systems & Processes

The thought of thriving is ideal, but most attorneys I work with are overwhelmed and are just surviving. The reality is, as I discover their worlds, they're working long hours and weekends just to survive, just to keep their head above the water. Despite themselves, some are even thriving, but the personal cost is higher than they anticipated or want to pay. Again, the lack of time seems to show up in each of their challenges.

That's why on Thursday March 12^th at 4PM EST and then again at 7 PM EST I am hosting a one hour webinar entitled, “Having the Time to Have it All – Three Time Strategies to Have a Practice with Purpose and Profit”.

In this webinar I will prove you do have enough time. The truth is, you're already doing it all, just in the wrong order. I will show you how to get the right help from others so together you can get it all done with less time required of you.

I will show you how I got my work-life balance back and how you CAN run a law practice that helps a lot of people, not at the expense of you, but rather with your skills being utilized effectively.

What would it be worth if one hour could save you ten hours a week for the rest of your practice life? Imagine if in the time you have, you could help more people, without increasing the amount of time required of you?

This is possible, but you must know and implement these three time strategies, so CLICK HERE TO REGISTER NOW for this one hour event to identify what all successful people use to share their value and help more people in an organized manor.

I hope you can join us so you begin to thrive instead of just survive!

Here’s to making the time,

David J. Zumpano, CPA, Esq., Practicing Attorney just like you & Found of Estate Planning Law Center & Lawyers With Purpose

Congratulations To Sergio A. White, Lawyers With Purpose Member Of The Month

March 2, 2015

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

What is the greatest success you’ve had since joining Lawyers With Purpose?

Thanks to the Lawyers With Purpose systems and processes, our biggest success has been being able to get up to speed very quickly in an area of law that is so important. The support from Lawyers With Purpose in the form of the Live ListServ for any practice related questions; and and the webinars designed to keep us abreast of changes in the area of elder law and estate planning have made the transition back into full time practice smooth for me and beneficial for my clients.

What is your favorite Lawyers With Purpose tool?

My Favorite Lawyers With Purpose tool is by far the LWP-CCS (estate planning drafting software). I really enjoy sitting down in front of the computer and punching in the numbers to help come up with a Medicaid-Qualification strategy for my clients. Then going through the client questionnaire to build the trust and other estate documents is also something I enjoy doing very much.

How has being part of Lawyers With Purpose impacted your team and your practice?

Being a part of the Lawyers With Purpose team for me has been transformative. Having returned to practicing law after several years in education, I have found in Lawyers With Purpose a family of likeminded individuals who truly care about the work they are doing and the clients they serve. It is very satisfying to me to be able to help a family in crisis preserve the legacy that they worked so hard to build, and ensure that it will be there for their family. Through Lawyers With Purpose, I have met and befriended many people who will be part of my life for many years to come.

What You Need To Know About Using Personal Care Plans

February 25, 2015

by David Zumpano with No Comment Estate Planning Drafting Software Legal Technical

How does a personal care plan differ from a healthcare proxy, healthcare power of attorney or a living will? There are two distinctions between the various healthcare directives offered; One, grants authority, expression of personal wishes. A healthcare proxy or healthcare power of attorney grants legal authority to someone else to make medical and healthcare decisions on one’s behalf. A living will and personal care plan, on the other hand, are a mere expression of the wishes one would like to have happen in the event of their inability to make their own healthcare or medical decisions but does not grant authority to anyone to do anything. It is also important to further distinguish the difference between a living will and personal care plan. A living will traditionally identifies as want end of life healthcare preferences. Typically these relate to resuscitation, blood transfusions, incubation, and the like. Typically one initials each treatment you do not want or signs an overall statement states none be performed. The shortfall of a living will is it only deals with "end of life" medical decisions. A personal care plan, on the other hand, identifies your preference regarding lifetime care, after one becomes unable to make their own decisions.

The LWP™ client centered personal care plan allows clients to identify how often they would like their hair done, the maintenance of their oral hygiene, what they would like to do for entertainment, and hobbies, what to watch on TV, favorite books or authors, foods they commonly eat or do not like to eat, drinks, or continuation of habitual patterns accustomed to (i.e., a glass of wine at night with dinner).

A personal care plan also expresses wishes for attending family events and the terms and conditions of attending them. Most provide that, in attending family events, they are not a "burden" to their loved ones and are able to "derive enjoyment" from it. A personal care plan also provides instructions regarding end of life and integrates all wishes expressed with the authorities granted in the healthcare proxy or healthcare power of attorney. A properly drafted personal care plan also addresses the client's feelings on organ donation, and even funeral and burial instructions. Another great use of personal care plans are for disabled children, created by their parent or guardian to ensure their needs are provided after the parent’s ability to do so.

Now that we are clear on what a personal plan is, is it enforceable? Most states have laws providing that written expression of wishes shall be considered in the care of those who write them. The real question is can you ensure someone will do it? The best way to ensure the plan is followed is to integrate the personal care plan with the clients trust to require the trustee to carry out all of its terms set out in the personal care plan. Allowing the trustee to utilize the assets of the trust, can ensure one’s wishes are maintained. But on a more practical level, a personal care plan serves as a set of instructions for the family so they feel helpful in the care provided for their loved one. A properly drawn personal care plan is a great tool to ensure the client is receiving the care designed as outlined in the personal care plan and more importantly alleviates the stress and guilt for those that love the individual to help provide them what the individual had hoped. Having a personal care plan, clearly beats hanging out in a wheelchair all day in front of a TV.

Don't you agree?

If you want to learn more about Lawyers With Purpose and what we have to offer, join our Thursday, March 12th at 4EST or 7EST for our "Having The Time To Have It All… 3 Time Strategies To Have A Practice With Profit And Purpose".

If you're a Lawyers With Purpose member you already have access to this information on the members website!

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