Long-Term Care Planning
Nearly two out of three Americans will need assistance with activities of daily living such as bathing, walking, dressing, and toileting at some point in their lives due to an illness or disability. Long-term care has been historically associated with nursing homes. The truth is that most care is actually provided for at the home – where you are most comfortable.
At the Law Office of Mary Paier Powers, we use a strategic asset management approach for planning your future by taking into mind more than the aggregate of your assets, but any State and/or Federal tax implications and the ever rising costs of Nursing Homes and Health Care, any businesses you own, and the style of living you want to enjoy as you age.
What will you do?
Attorney Powers will sit down with you and discuss what assets you have, and who or whom you may own those assets with.
Types of Assets To Be Considered
- Family Limited Partnerships
- Life Insurance Policies;
- Bank Accounts;
- Investment Property
- Co or Sole Owner?
Family Limited Partnerships
Family Limited Partnerships (FLPs) are typically created when family members (typically the parents) own a business and want to continue its success and existence as they age and step away from sole management. The parents are allowed to take the business assets, place them within the Partnership, still retain control over the business but also allows for the parents to shift their assets to their children. This type of Partnership allows business assets to transfer outside of Probate, protecting the family assets while still having complete control. Once formed, the Partnership becomes its own entity, with its own Tax Identification Number, and is allowed to conduct the same activities as an individual or a corporation.
Significant Advantages of Family Partnerships
- Valuation Discount
- Due to a limited partners lack of control and marketability of their interest, a transfer of their interest in the Partnership has a much lower value than a gift in regards to Gift Tax purposes.
- With precise drafting language, such a gift could fall under the Annual Gift Tax Exclusion ($14,000.00)
- General Partners (typically the parents) retain control over the assets and can have the sole decision-making ability in regards to distributing or reinvesting any income or profits from the Partnership
- Restrictions can be placed on the limited partners (usually the children), disallowing any transfer or sale of their ownership interest.
- This protects their share passing through their estate at their death to a spouse or children, or to those outside the family
- It also protects assets from divorce estates and creditors
Currently, there is an Annual Federal Gift Tax of $14,000.00. This means that you can pass up to $14,000.00 a year, to an unlimited number of people, and still not pay or file any gift tax. This is useful in many circumstances because those we gift to, our children and grandchildren, are most often in the lower tax brackets than us and cuts the rate of tax that are levied against us each year. It also benefits our children and grandchildren’s possibilities for higher education and/or medical expenses.