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Focus on Forms: Third Party VA Forms – the 21-22a and 21-0845

This post is an installment in the Focus on Forms series, which considers and discusses some of the most common forms associated with Department of Veterans Affairs (VA) pension claims. The goal of this post – like all those in the Focus on Forms series – is threefold: to define the purpose of the forms; to discuss how they should be completed; and to recommend what to file with these forms. Today’s subject is the forms related to third parties that may be involved in a pension claim, specifically, the 21-22a and the 21-0845.

Bigstock-Forms-Concept-with-Word-on-Fol-95979155Purpose of the 21-22A and the 21-0845

The VA forms 21-22a and 21-0845 are used to establish representation of a claimant by a third party and authorize the release of information to a third party, respectively. The VA does not recognize Powers of Attorney and will only speak or release information to a claimant unless a third party has been recognized by the VA as the claimant's authorized representative or recipient of personal information. The only other person who would be able to communicate or obtain information from the VA regarding a claimant would be the person appointed as fiduciary after an award has been adjudicated and when a claimant has been deemed incompetent. These forms do not have any impact on the processing of the VA claim other than to identify to whom the VA can disclose information. If there is no third party representing the claimant, these forms do not need to be submitted to the VA.

Form 21-22a is entitled, “Appointment of Individual as Claimant’s Representative” and is to be used by accredited attorneys, accredited agents, private individuals, or service organization representatives who want to be recognized in the “preparation, presentation, and prosecution of claims for VA benefits for a particular claimant.” It is a two-page form with instructions embedded in the fields. The individual named on this form should be copied on all correspondence issued by the VA regarding the claimant.

Form 21-0845 is the Authorization to Disclose Personal Information to a Third Party and was recently updated by the VA. The current version is dated May 2015 on the lower left corner of the form. The new version is available in the latest release of the Lawyers with Purpose VA software. It consists of a single page with an introductory first page of general information and specific instructions. It is used to identify non-accredited third parties that can be given information about the claim, but it does not imply that these parties in any way “represent” the claimant. For example, a child, home health care company or assisted living facility may be listed as having authority to obtain information.  Note that forms 21-0845 signed by VA beneficiaries who have been deemed incompetent will not be accepted. Therefore, it is best practices to have the claimant sign this form before submitting a claim for benefits, which is a time frame wherein the VA presumes the person is competent.

Completing the 21-22a and the 21-0845

Both of these forms are fairly straightforward. Per the Respondent Burden field in the upper right corner of these files, they should each take no more than 5 minutes to complete. This is an accurate assessment.  What is likely to take more time on the VA form 21-22a is getting all the necessary signatures in the appropriate places. It can be confusing, but the claimant and the representative each sign twice – once on each page. Most of the other fields are self-explanatory. An important feature that may easily be overlooked on the 21-22a is a cleverly hidden field that has no number. It is on the second page in the section called “Conditions of Appointment.” The very fine print here indicates that if the individual named on the form as representative is “an accredited agent or attorney, this authorization includes the following individually named administrative employees of my representative.” In the space that follows, you may list all such non-accredited team members who may need to call the VA regarding the status of a claim.

The 21-0845 has similar fields to those in the 21-22a, with the notable exception that the latest version of the 21-0845 now sports the individual character boxes to aid the VA in computer processing of forms at intake. The 21-0845 also allows you to select a security question and answer that you may need to provide as confirmation that you are the person identified when you telephone the VA.

What to file with the 21-22a and the 21-0845

There is nothing in particular that is required to be filed with either of these two forms. They both should be submitted with an Intent to File a Claim or the Fully Developed Claim. They should also be included with any other correspondence you may need to address to the VA, particularly when the third party is the individual signing the correspondence.

The individual appointed as the claimant’s representative on the form 21-22a will automatically be authorized to receive the information accessible by the form 21-0845. So you may ask, why file the 21-0845 in addition to the 21-22a? Some VA call center agents employ the extra security layer provided by the form 21-0845 and will require the response to the security question before they release any information over the telephone. Furthermore, you cannot have more than one 21-0845 on file with the VA at any one time. By filing one with your client’s claim, you ensure from the outset that your firm is the only third party with access to that claim information. Subsequent 21-0845s that are filed will not replace the active one on file until the claimant has notified the VA that he/she wishes to withdraw it.

As mentioned above, neither of these forms will directly affect the adjudication of a pension claim, but when in place they allow you to manage the claim more effectively. Without the powers these forms bestow, you are dependent on receiving information secondhand and perhaps not in a timely manner, which can in turn lead to unnecessary denials.

If you want to sharpen your VA technical legal saw, we offer a free "VA Tech School" webinar the first Wednesday of every month.  Click here and join us on Wednesday, October 7th at 12 EST.  This month's topic is "Denied Benefits Due to Transfers of Assets: How to Appeal and Win!"  Register today!

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; and Co-Founder of Lawyers With Purpose, www.LawyersWithPurpose.com.   

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Is Your Practice … Uhmmmm, Easy?

Many lawyers are frustrated when it comes to operating the "business" of their practice.  Law school taught us how to think critically and help people, but it did not teach us how to run a business.  As a result, much pain and long hours of work and frustration are created.  Balancing the needs of your clients and operating your business is one of the most frustrating elements of running a law practice.  The good news is, fixing it is not hard, it just requires a basic understanding you never got in law school.  Let's begin by identifying whether you have effective employees.  

Bigstock-Easy-Way-To-Success-73438723In coaching hundreds of law firms over the past 15 years, I have a question I ask consistently: "Is it occurring?"  What does that mean?  Essentially, if what you want to be happening is happening, then it's occurring.  If what you want happening is not happening, then it's not occurring. Simple enough?  So let's analyze this in your practice.  If you're frustrated with a certain part of your business, like hiring employees, because it's not being done effectively, then it's not occurring.  If it's not occurring, then the person responsible for doing it does not have the proper skill set.  Unfortunately, in a small practice that's usually you.  So you must find others who know how to do it so you can get the employee hired effectively.  This can be someone in your firm, or you can reach out to others and outsource your need. (LWP has many system services for estate planning attorneys; that’s what distinguishes this organization from most others.) 

The interesting thing is, for those individuals you reach out to for help, it's really easy for them, which amazes most attorneys because we don't get it and it's so frustrating to us. (I personally hate it.)  But for those who have the skill set, it's easy and it occurs!  So as you look around your practice, if there's an area causing you pain, it is a clear message that you lack someone with a natural skill set to perform that task or duty.  If drafting is not happening effectively, then you need to get someone who does it easily.  They're out there and you can't stop until you find someone, because once you do, your life and your practice will change dramatically. 

In building companies over the last 15 years, the level of pain I have endured along the way sometimes was unbearable. But now, as I have reached a point where many of those companies are operating without me, I look back at what the key issues were that I had to overcome.  The answer?  It all came down to skill set and ease!  

What was difficult and frustrating for me was very easy for other people with the right skill set.  To identify what five skill sets you need, your role and what roles you need to fill to support you, join us at our Tri-Annual Retreat in October.  So the stress of running your business can subside and you can focus on what you do best and what is "easy" to you, and leave the other roles to the people who find them "easy" to do.  Doors close October 2nd and we will NOT have any seats remaining, I promise you that!.  It's not hard. Let Lawyers with Purpose show you how. Click here to register now.

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

 

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Ground Zero

I don’t know about you, but when I hear the term “ground zero,” I think about the World Trade Center and September 11.  Like many, I watched it on television as it was happening. It changed our world and our daily lives, even today, years later.  I had the benefit of visiting Ground Zero recently. The reflecting pools are a beautiful tribute to the men and women who died there. 

Bigstock-NEW-YORK-USA--AUGUST------102362141How is that relevant to you today?  The term ground zero has a broader meaning – the point of a disaster that suffers the most severe damage. For me, it also means starting over, often from the ground up.

As with the terror of 9/11, recovering and starting over can be devastating.  But, beginning again can be a fresh introduction to opportunities not yet discovered. Rebuilding with knowledge and experience from the past can create stronger futures.

Again, how is this relevant to you?  Consider a few scenarios.

Losing an employee: Every day I get compliments from clients about how wonderful my receptionist is.  She truly is and I love her. She knows my quirks and anticipates my next need, and then fulfills it. But she won’t much longer, because she gave me her “notice.”  She’s moving on to her higher calling. While I support her completely, I am devastated because I have to start over. Begin again. New interviews. New training. New personality. Ground zero.  It will be hard and I don’t like the thought of any of it. However, I know that when I hired my assistant two years ago, I went through the same thing, and hiring her made my firm stronger, as will hiring our new candidate.  

Terminating a partnership: Working as a sole practitioner is hard. Making a business work with partners is even harder, in my opinion, and I’ve done both very successfully and unsuccessfully.  When you are alone, you can make all the decisions, good or bad. You own your successes and your failures.  When you have a partner, you share a lot but usually don’t have total control of anything.  It’s like a marriage. You give to get and weigh the benefits and consequences of each decision and action.  Like marriages, partnerships may end in the big “D” – dissolution. Where do you go from there? From Ground zero? 

What is your Ground zero?  What makes you feel as if you have to “start again?”  Do you run, hide, or give up?  You can, or you can find the new opportunity. Release the inhibitors of the past.  Find the strength and grow from the experience. Build something bigger, stronger and better.

Visit Ground Zero and find the blessing in the tragedy. Build your Freedom Tower.

If you haven't registered for our Tri-Annual Practice Enhancement Retreat, there's still time.  But hurry!  The hotel is actively working on finding us an "overflow hotel" since there are only a few rooms left at the event hotel.  Click here to register.

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, Co-Founder of Veterans Advocate Group of America.    

 

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Annuity or Promissory Note?

I'm intrigued with how many lawyers use Medicaid-qualifying annuities when doing crisis Medicaid planning.  Medicaid-qualifying annuities address a core issue in crisis Medicaid planning for applicants with excess resources. The annuity acts as a “spend down,” which often leads to immediate eligibility for the client.  The promissory note has the exact same impact and use in this fact pattern, but interestingly, it is used less often, even though it’s much easier to achieve eligibility, which will disqualify the individual for benefits for a period of time.  The question becomes which to use and why. 

Bigstock-Debate--Two-People-Speaking-D-14929292The Omnibus Reconciliation Act of 1993 (OBRA) was the first legislation that began to set parameters for annuities to be Medicaid-qualifying.  Essentially, it requires the annuity to be irrevocable, non-assignable, to have no cash value, and to be payable over the life expectancy of the annuitant.  The Medicaid-qualified annuity rules are further enhanced by the Deficit Reduction Act of 2005 (DRA), wherein it also required that all annuities must have equal monthly payments with no delay in or balloon payments, and the annuity must name the state as the irrevocable beneficiary after the death of the annuitant.  This significantly reduced the use of Medicaid annuities as a spend-down strategy to only married applicants, but it still allows them to be used in a crisis case to become “otherwise eligible” and use the annuity funds to be used for payment of long-term care costs during any disqualification period created by any uncompensated transfer. 

DRA 05 also provided the first legislative permission for Medicaid-qualified promissory notes.  DRA specifically provides that a loan to a third party by a Medicaid applicant will be deemed as a compensated transfer if it is irrevocable and pays over the life expectancy of the applicant.  Essentially, DRA 05 permitted every individual to create a private annuity.  The one risk, however, is that the statute does not require a promissory note to be non-assignable, so if it is assignable, it will be a countable resource in determining Medicaid eligibility because it is saleable and has a value.  To avoid this, ensure that your promissory note is non-assignable. 

So the question becomes, if you can do your own promissory note, why would you ever use a Medicaid-qualifying annuity? 

The answer comes down to your state's application of the DRA 05 laws regarding promissory notes.  While the federal law is clear that they are permissible, some states still don't permit them and count them as an available resource in determining the eligibility of a Medicaid applicant.  This perplexes me, as federal law is clear, and under federal law, the state law cannot be more restrictive than the federal law.  Most states that have taken a position against promissory notes have seen that position overturned by legal proceedings, whereas many states that do not permit promissory notes have not been effectively challenged. 

Notwithstanding, as estate planners we are not litigators, and we strive to avoid litigation.  So if your state does not permit promissory notes, then the path of least resistance is using Medicaid-qualifying annuities.  When given the choice, a promissory note is easier, it can be done within the confines of your own office and it can be customized to the individual needs of the client, whereas Medicaid-qualifying annuities are typically restricted by the minimum period of time required by the insurance companies (typically a 24-month payout).  To learn how to effectively use a Medicaid annuity versus a promissory note, let LWP show you. 

We still have a few spots left in the room at the Tri-Annual Practice Enhancement Retreat but register now.  Registration closes October 2nd and we WILL reach capacity … (we always sell out)!  If you're an estate or elder law attorney, you don't want to miss this! Click here to register now.

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

 

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FREE WEBINAR: Want to relieve your fears about money?

Most of us, if we are honest, spend a lot of time thinking about money.  Personally, in the last 30 days, I’ve probably thought about all of the following:

  • Bigstock-Money-stress--business-woman--79924558Where is the revenue that I need coming from this month?
  • Will there be enough to be comfortable, or have extra, after meeting all of my obligations?
  • What would I do if an income stream dried up in the future?  What if the money runs out?
  • How can I increase revenue in a certain area…and FAST?

It’s natural and perfectly OK to have these thoughts and concerns.

What’s NOT OK is when your anxiety about money starts causing you to make important decisions from a place of confusion and fear.

A self-sabotaging mindset in this area will literally stop money from coming in. 

You might even finding yourself hoarding money, instead of investing in staff members or resources that will actually help expand your practice, all because you are afraid of not having enough now, and in the future.

I honestly believe this is the number one reason why law firms fail to grow.

Here at LWP, we would be doing a disservice to you if we didn’t teach you how to fix your toxic relationship with money as it relates to growing your practice. 

That’s why we have made the decision to change the format of our “Why Day” this quarter to dig deeper into your money goals and needs to help you start accumulating the wealth you desire from a place of freedom and confidence.

Our mission is two fold: Once we get YOU clear and focused on your fool-proof money plan, we’ll then empower your team—from the secretary to the associate attorney—to get their skin in the game and work SMARTER to hit the revenue and financial goals of your law firm each and every month with grace and ease.

Truly, I don’t care what “bright and shiny objects” you are chasing or how much marketing you are doing, or how smart you are, if you don’t fix your relationship with money, your firm will never grow to it’s full potential—which is a disservice to you, and your local community that needs you.

Let’s work together to get you back on a winning track.  Get signed up for “Why Day” at our Tri-Annual Practice Enhancement Retreat.  You are going to be blown away by the amazing money coach we have leading the sessions for you and your team.

And, as a bonus, our trainer has agreed to host a private webinar to help you identify and start dealing with trouble areas prior to the retreat (happening 9/25) so that we can laser-focus in on profitable solutions and plans for you during our time together. 

So—here’s what to do and how to get started:

1. Register now for the retreat if you haven’t already at:retreat.lawyerswithpupose.com.

2.  When you are registered (either just now or if you already have a ticket), RSVP for our webinar on 9/25.

I have a hunch that if you join us for Why Day, you won’t even recognize your practice, or YOURSELF, by this time next year. 

It’s going to be life changing. Don’t miss out.

Molly

 

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High Energy / Low Energy

Day One:  My family walked a mile to school for the fourth day of kindergarten. Since I was going out of town, the hugs were a little longer than usual. Before heading to the airport, I also walked my dog, since it would be his last one for three days. The flight was uneventful. I had rearranged my flight to arrive early so I could visit with my aunt in the hospital, where she is undergoing treatment for a brain tumor. Without treatment, the prognosis is six months to live. With treatment, it is 18 months. During our visit, I had to excuse myself for a very challenging business teleconference. When I returned, my aunt was tired.  I sat on her bed looking into her eyes for probably the last time; both of us were crying. An hour later, I was overlooking the beach while having dinner with a colleague. Then I went to bed.

Bigstock-Better-Worse-Roller-Coaster-10548788Day Two:  I awoke early to review my aunt’s financial situation and create a written plan, like I would for any client, to provide to my cousin over breakfast. We discussed ways to initiate difficult conversations. “Are there any specific goals you want to accomplish in the next six to 18 months?” “Is my aunt making choices based on what she wants, or what she believes others want?” “Where would she prefer to die, in a facility or at her home?”

Breakfast lasted right up until it was time for me to give a 45-minute presentation on veterans benefits for over 100 lawyers.  I stepped onto the stage and delivered a strong, fluid speech. Then, I immediately rushed to the airport to catch a flight to New York by way of Georgia, my home state, but I couldn’t stay long enough to see my family. Instead, I spoke with them via Facetime, and my daughter cried because she wanted me to tuck her into bed.  I arrived in New York just in time to slip into bed. Sleep was restless as usual, since I have insomnia.

How many highs and lows do we have throughout a day?  The two back-to back days described above are typical (other than finding out my aunt has a limited time to live).  They are typical for me, for my law office team members and for my clients.  We all go from one emotion to the next, from successes to challenges, from elated to deflated in moments, without taking time to absorb and reflect. Without taking time to celebrate or grieve.  We just stack our emotions on a pile like smashed cars to be recycled.

How does running from one event to the next affect our work product? Our customer service? Our communication and relations with others?  Our profitability and success? 

Negatively.

What can we do? 

First, recognize that you are running through highs and lows. When possible, try to group high-energy events together and low-energy events together. 

Second, pause between events for five minutes and sit with the residual emotions of what you just endured. If it was a success, celebrate – even if just in your mind you smile and say, “I did good.”  Or allow yourself to get upset and release frustration, if necessary, even if just in your mind you scowl and say, “This is not what I intended. I must do better; I cannot let that happen again.” Then clear it away and prepare for the next event, to be completely present and not affected by the prior event.

Third, understand that you are not the only one with days like this. Be there for your team and your clients when they have highs and lows.  Support them.  Your support will enrich your relationships, which in turn will produce better customer service and work product. Lastly, just slow down and be aware.  We see much better when the pace we are traveling is not blurred with speed. 

There is still time to register for our Tri-Annual Practice Enhancement Retreat – but on time pricing ends FRIDAY!  Click here to register today and join your colleagues for what will prove to be a transformation for you and your team that supports you!  Join us October 21-23 in Phoenix for THE estate and elder law fast-track training programs, legal tech focus sessions, collaborative panels, action-oriented keynote by our favorite money coach, personalized Law Firm “Money Plan” development day, and much more!

Registration Link: http://retreat.lawyerswithpurpose.com/

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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Lawyers With Purpose Unites With Life Care Funding

Do you ever feel like you don’t know how to help a client? That the traditional planning strategies just won’t work in the situation presented?  Here is a common scenario:

Jane, a widow who lives in an assisted living facility, has two adult children who are independent with no disabilities. When Jane’s husband, David, died two years ago, Jane gave each of her children $100,000 without consulting a lawyer.  At that time, Jane was living at home and doing well.  About six months after David died, Jane began experiencing a series of mini-strokes. The cost of her care is depleting her resources rapidly.  The children really want to avoid putting her in a nursing home but are concerned she will need one soon.  During your meeting, you naturally raise the possibility of a transfer of assets penalty due to the prior transfers. 

LCF LogoIf you are like many elder care attorneys, you will likely try to find ways for the remaining funds to stretch out during the penalty period.  You may even propose that the children return the gifts if possible. It is not possible.

Is there anything you are overlooking? Maybe a dormant asset you can utilize?

There may be. Have you asked your client if she has life insurance?

Term life, universal life, and whole life insurance policies can be sold to pay for care.  In Jane’s case, she has a $300,000 policy.  She was considering letting it lapse because she can no longer afford the annual premiums. Instead of letting it lapse, let it work for her to pay for care during the Medicaid look-back period. Assuming a company purchases the policy for 40% of its face value, Jane would then have a fund of $120,000, or $3,333 per month for 36 months, to pay for care during the remaining five-year look-back. Jane’s income, added to these additional funds, will be sufficient to cover the cost of the assisted living facility for three years. At that time, the family can feel comfortable and confident about transitioning Jane into a nursing home and applying for Medicaid, if necessary.

Lawyers with Purpose is proud to announce that we have teamed up with Life Care Funding to assist lawyers and clients in identifying good situations to fund care!

To learn a little more about Life Care Funding for yourself, your team and your clients click here.  If you have clients that could benefit from converting a life insurance policy into a long term care benefit click here for the Long Term Care Benefit Qualification Form.  Or to learn more this new planning option for seniors, go to www.LifeCareFunding.com.  Never hesitate to contact Life Care Funding directly at 888-670-7773 or email info@lifecarefunding.com.  

Chris Orestis, CEO, will be sharing more information at the Lawyers with Purpose Tri-Annual Retreat, October 21-23, in Phoenix, Arizona.  If you haven't registered yet – we are reaching capacity!  Register today before pricing goes up and all seats are filled.

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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When to Use the KIT™Trust

Over the years, LWP has become known for its MIT, FIT and KIT trusts for asset protection and long-term care benefits planning, but few understand the KIT and its flexibility.  Let's do a quick review…  

A MIT Trust, or “My Income Trust,” is an income-only irrevocable IPUG asset-protection trust that allows the client to maintain control of assets, benefit from them to the extent they're willing to put them at risk, and modify or change the trust in all regards at any time other than in regards to the protection of which they seek. 

Bigstock-Illuminated-light-bulb-in-a-ro-85128830The FIT Trust, or “Family Irrevocable Trust,” is an irrevocable IPUG asset-protection trust that allows the client to be in control of the assets, manage them and identify who gets distributions from it and when, but the client does not retain any rights to the income or principal.

Finally, the KIT Trust, or “Kids Irrevocable Trust,” is created by the children of the benefit of the MIT or FIT client where assets have already been conveyed to the children prior to being educated as to the benefits that the MIT or FIT could provide for the client's assets.  The typical use of the most difficult form of KIT Trust is when mom and dad transfer the family farm (or other major assets) to avoid losing them to the nursing home.  The KIT Trust is a strategy to protect assets that have already been conveyed to the kids (or others) before the client got to you.   

How do KIT Trusts work? 

A transfer of assets by individuals to their children may protect the assets from their long-term care costs and other risks, but it puts them squarely at risk from the creditors and predators of the children to whom they were transferred.  For example, if one of the children that the farm was transferred to gets divorced, sued or dies, that child's ownership interest is no longer subject to the client’s influence, but rather is subject to the child's estate plan, or worse, lack of an estate plan. 

That's why the KIT Trust is a great tool to use when assets have already been conveyed to the children.  A properly designed KIT Trust will be created by the children as co‑grantors, and it will be an irrevocable IPUG asset protection trust, which allows the children to be a sole trustee or co‑trustee with their parents in the management of assets transferred to the trust. 

Once it is created and the assets are transferred to it (typically the assets the children received from their parents), the assets are protected from the children's creditors and predators.  In fact, as a third-party trust, it is not even countable in mom and dad's Medicaid eligibility calculation if they were named beneficiary of the trust.  The question is how to properly create a KIT irrevocable trust. 

The key point when creating a KIT Trust is understanding that the children become the client in the context of the trust creation.  The KIT Trust is a grantor trust, but to the children. Therefore, all income generated by the trust, regardless of whom it’s distributed to, will be passed to the children who created it, so ensuring a proper investment strategy that works well with the children's tax planning is essential. 

Another key element with a KIT Trust is identifying the beneficiaries.  Can you make mom and dad the income or principal beneficiary of the KIT Trust?  Well, the answer is yes, but it's up to each attorney and their comfort level.  I have successfully named parents beneficiaries of the income and principal of a KIT Trust for years without it becoming an available resource when determining their Medicaid eligibility. 

The key distinction is the fact that it is a “third-party trust,” not a trust created by the parent as Medicaid applicants, but rather, by a third party, their children.  Many raise the issue of it being funded with assets that were the parents', but that is not a fact at issue, as the children are not applying for Medicaid and the assets of the irrevocable trust are not subject to the look-back period related to parent eligibility. 

Again, although it is permissible, some attorneys are not comfortable naming the parents principal beneficiary.  In reality, it may not be necessary to name the parents as principal beneficiary, since it was evident by the giving up of the asset to the kids that they no longer needed to have access to them.  A more conservative approach is to allow them access to income only, but it is in no way reckless to permit access to principal. 

The final question in creating a KIT Trust is what to do when mom and dad die.  Since the trust is created by the children (siblings), there can be an inherent gift upon the funding of the trust if the children transfer the asset from the parents to the KIT Trust, depending on how it’s created.  Presumably, upon mom and dad’s death, the kids get back their share of the remaining assets, but a complete gift will occur during the parent’s lifetime whenever a distribution is made from the trust.  In addition, even if the children receive equal shares upon the death of mom and dad, under tax law it is not presumed that the share they receive was the share they put in. 

So, by creating a KIT Trust, if it is not properly designed, there could be inherent gift tax issues between the children upon the funding of the trust and upon the termination of the lifetime trust after the death of the parent.  One way to alleviate this concern is to set up separate shares and ensure that all distributions to any beneficiary are made equally from each separate share, and at the termination of the lifetime trust, each child gets their separate share balance back.  This should mitigate any risk of gift tax issues and offer the opportunity to convert the KIT Trust to a separate MIT Trust or FIT Trust for each of the children's separate shares upon the death of the parent.  It all requires a clear knowledge of the subject and a software system to keep your practice aware of the key issues.

If you want to learn more about Lawyers With Purpose and in particular would like a free demo of our estate planning drafting software, click here now to schedule a call.  

Our Tri-Annual Practice Enhancement Retreat registration is open.  If you want to experience what it's like to be a Lawyers With Purpose member consider experiencing it first hand by being in the room with us October 21-23 in Phoenix, AZ.  But register soon and save – the price goes up 9/19!  We are half way at capacity and the first few days are completely SOLD OUT!

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

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Direct Mail Secrets That Will Make Your Competitors Cry

Chances are, your competitors think direct mail is DEAD.

Who reads junk mail anymore?”

“Isn’t email more popular… and cheaper?”

“If you build a website, they will come.  That’s all you need…”

Bigstock-Crying-Baby-1292079Well, too bad for your competitors, because LWP is about to teach you how to profit from their BIGGEST marketing mistake.

At our October 2015 Tri-Annual Practice Enhancement Retreat, we are devoting an entire class to teach you and your marketing staff TIMELESS direct mail strategies that will not only WORK to FILL YOUR SEMINARS (think 30-50 attendees PER session!), draw traffic to your website and slam your calendar with new appointments, but will leave your competitors scratching their heads and begging for mercy.

Chew on these stats:

  • 73% of U.S. consumers said that they prefer direct mail for brand communications because they can read the information at their convenience. Epsilon’s 2013 Channel Preference Study
  • 62% of Americans said that they enjoy checking the mailbox for postal mail. Epsilon’s 2013 Channel Preference Study
  • 79% of consumers will act on direct mail immediately compared to only 45% who say they deal with email straightaway. Direct Marketing Association, October 2013
  • Direct mail is the preferred channel for receiving marketing from local shops (51%) and banks (48%). Direct Marketing Association, October 2013
  • Direct mail — yes, snail mail — still reigns supreme, boasting a 4.4% response rate, compared to email’s rate of 0.12%. PRWeb.com, November 2013 
  • 56% of consumers think printed marketing is the most trustworthy of all communication channels. Direct Marketing Association survey, November 2013
  • Direct mail has the highest rate of success in new customer acquisition at 34% compared with other marketing channels. Target Marketing magazine, February 2013
  • 75% of consumers are saying that they are examining their mail more closely in the recent months to search for coupons and discounts. Journal of Marketing, January 2013
  • 40% of consumers say that they have tried a new business after receiving direct mail, and 70% have renewed relationships with businesses that they had previously ceased using. Journal of Marketing, January 2013

Bottom Line:  If you are not hitting the PHYSICAL MAILBOX, in addition to the INBOX of folks in your community, you are leaving a ridiculous amount of money and new business on the table!

And, the best news is that most firms don’t know the first thing about direct mail marketing– so you have a unique opportunity right now to get in front of your ideal clients, practically competition free

During our focus session on direct mail, we will cover:

  • How to fill estate planning and elder law seminars using direct mail invitations, postcards and flyer inserts in the newspaper;
  • How to purchase mailing lists at the lowest price and target the most responsive demographics for your services;
  • Copywriting secrets to ensure your mail avoids the trash can and is immediately acted upon by your ideal clients;
  • How to use direct mail strategies to build your firm’s database;
  • The most effective types of mailing to consider, and which to avoid, for your practice area;
  • Easy ways to track your ROI to ensure your direct mail marketing is as profitable as possible;

… and so much more!

While your competitors are busy chasing the latest bright shiny objects, let us show you how to perfect the timeless art of direct mail marketing that never goes out of style or fails to produce great results. Direct mail marketing is far from dead and it’s time you got in the game! 

Register now for our October Tri-Annual Practice Enhancement Retreat and make sure you attend this focus session with the key marketing players of your team.  On time pricing ends soon!  The event is filling up so register today to make certain you get a seat in the room!

http://www.retreat.lawyerswithpurpose.com

And, come prepared with your questions. We’ll leave plenty of time to chat about YOUR law firm and work as a team to help you position your firm for success in this area.

Hope to see you in class,

Roslyn Drotar – Lawyers With Purpose, Online Marketing Strategist

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Good News – Bad News!

PRACTICE WITH PURPOSE IS SOLD OUT! PLEASE READ!

Wow ….

It takes A LOT to shock me, but I’ve just confirmed that the Practice With Purpose portion of our October Retreat has officially SOLD OUT only two weeks into registration.

With that crazy update comes good and bad news.

Bigstock-Paper-Fortune-Teller-10213730Bad news:  I’ve called the hotel today personally. We are in the largest room possible and there is nothing else available at our venue.  We are not allowed to add seats either because of fire laws.  So unfortunately, we have to close registration down for this portion of the program.

If you had your heart set on attending the Practice With Purpose portion of the week and bringing your team, please send me an email to get on a wait list. I will contact you personally if someone is not able to make it and a space opens up.

Now, for the good news.

The remainder of the retreat week is still available and will ROCK!  Just about everyone attending Practice With Purpose has chosen to stay the entire week because our breakout sessions and team programs are just phenomenal this quarter.

We have the largest ballroom on the property for this portion of the program—so as of right now, there is STILL SPACE!  But, I was informed that we are creeping up on capacity limits here as well.  Please don’t wait to reserve your spot!

And, because the full-week registration option is no longer available, we have decided to slash the registration price for the remainder of the retreat.  For a limited time, you can join us at a discounted rate when you attend from Wednesday, October 21- Friday October 23.

Oh, and you can STILL bring three team members, absolutely FREE as our gift to you.  This portion of the program is all about equipping not only the attorney, but the entire staff for success—so take advantage of being able to snag FREE tickets for your team while you can!

To view the class schedules and retreat agenda, simply click here.

If you have questions, please feel free to email me at mhall@lawyerswithpurpose.com.  I’m happy to schedule a call with you to discuss the sessions and/or registration options that are best for your law firm.

Here’s to an AMAZING October Retreat!

Molly