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Dave and the MPS Success Team
Wednesday, December 22, 2010
Wednesday, December 1, 2010
BEWARE OF BIFF AND BAMBI
Joan and Bob recently met with a MPS attorney to determine what they need to consider in creating an estate plan. Bob and Joan were in their mid 60s and had been married for 39 years. They had three children and managed to accumulate about a half a million dollars in assets over their life time. They are living comfortably on their Social Security and pension, and only access the income off of their assets when they want to splurge.
In order to help Joan and Bob determine the best plan, the MPS attorney took them through a series of 15 questions, and also reviewed their current estate plan to identify which of the 15 estate planning issues their current plan accomplished. As the MPS attorney identified multiple issues not currently provided for in their plan, he/she dug deeper to determine if the individual issues were significant to Bob and Joan. The MPS attorney asked whether they were concerned about their spouse remarrying after their death. Both responded with a laugh, and said not the least bit concerned and were confident that even if they did remarry, they would never hurt the children. Bob and Joan were confident they wanted to ensure that what they had worked for their entire life ultimately got to their children.
The MPS attorney explained that while they currently did not have these concerns, in his experience, the emotional trauma one goes through with the loss of a loved one, often triggers reactions one cannot anticipate. He encouraged them to consider implementing protecting against remarriage into their plan so a new spouse could not usurp the benefits of their lifetime of efforts from the children. The MPS attorney jokingly referred to this risk as Biff and Bambi. He further explained, he wanted to help them ensure the money did not end up with Biff, the pool boy, or Bambi, the bar maid. Again, they laughed and assured him this was not a concern of theirs, and indicated that it was not a priority and they did not include it in their planning.
About nine months later, Joan was diagnosed with a serious cancer, and died three months after diagnosis. Bob came into the office distraught, and the MPS attorney assisted him with conveying all of Joan’s assets to his name. About six months later, Bob returned giddy and happy with a young blonde woman, 20 years his junior. He instructed the MPS attorney he wanted to change his estate plan to ensure if anything had happened to him, his new friend “would be provided for”.
The MPS attorney reminded Bob of the goals and objectives he had set with his original wife, and Bob replied not to be concerned as he was very confident about what he was doing. The MPS attorney in good conscious told Bob he could not assist him in this matter, and required he seek other counsel. Bob was disappointed, but immediately got up and left, and sought other counsel to accomplish his objectives.
Each one of us knows a story of someone close to us, or a family friend, who lost their spouse while they were in their early retirement years. We’ve also heard the story of when new found love creeps in and changes the perspective of the surviving spouse. This is a tragedy that does not have to happen. With proper planning, the surviving spouse can get all the benefits of the estate without the risk of losing it to Biff or Bambi, with very little additional effort.
If your clients are concerned about Biff or Bambi, join MPS on December 14th for a ONE hour webinar and learn how to confidently deliver what clients and referral sources don’t blink at writing checks for. Find out what clients are looking for in their estate plan, NOW, what they are willing to pay and how to attract these clients.
This webinar will be hosted by Dave Zumpano, Founder of MPS and practicing attorney, Just Like You! Register here: https://www1.gotomeeting.com/register/968634353
In order to help Joan and Bob determine the best plan, the MPS attorney took them through a series of 15 questions, and also reviewed their current estate plan to identify which of the 15 estate planning issues their current plan accomplished. As the MPS attorney identified multiple issues not currently provided for in their plan, he/she dug deeper to determine if the individual issues were significant to Bob and Joan. The MPS attorney asked whether they were concerned about their spouse remarrying after their death. Both responded with a laugh, and said not the least bit concerned and were confident that even if they did remarry, they would never hurt the children. Bob and Joan were confident they wanted to ensure that what they had worked for their entire life ultimately got to their children.
The MPS attorney explained that while they currently did not have these concerns, in his experience, the emotional trauma one goes through with the loss of a loved one, often triggers reactions one cannot anticipate. He encouraged them to consider implementing protecting against remarriage into their plan so a new spouse could not usurp the benefits of their lifetime of efforts from the children. The MPS attorney jokingly referred to this risk as Biff and Bambi. He further explained, he wanted to help them ensure the money did not end up with Biff, the pool boy, or Bambi, the bar maid. Again, they laughed and assured him this was not a concern of theirs, and indicated that it was not a priority and they did not include it in their planning.
About nine months later, Joan was diagnosed with a serious cancer, and died three months after diagnosis. Bob came into the office distraught, and the MPS attorney assisted him with conveying all of Joan’s assets to his name. About six months later, Bob returned giddy and happy with a young blonde woman, 20 years his junior. He instructed the MPS attorney he wanted to change his estate plan to ensure if anything had happened to him, his new friend “would be provided for”.
The MPS attorney reminded Bob of the goals and objectives he had set with his original wife, and Bob replied not to be concerned as he was very confident about what he was doing. The MPS attorney in good conscious told Bob he could not assist him in this matter, and required he seek other counsel. Bob was disappointed, but immediately got up and left, and sought other counsel to accomplish his objectives.
Each one of us knows a story of someone close to us, or a family friend, who lost their spouse while they were in their early retirement years. We’ve also heard the story of when new found love creeps in and changes the perspective of the surviving spouse. This is a tragedy that does not have to happen. With proper planning, the surviving spouse can get all the benefits of the estate without the risk of losing it to Biff or Bambi, with very little additional effort.
If your clients are concerned about Biff or Bambi, join MPS on December 14th for a ONE hour webinar and learn how to confidently deliver what clients and referral sources don’t blink at writing checks for. Find out what clients are looking for in their estate plan, NOW, what they are willing to pay and how to attract these clients.
This webinar will be hosted by Dave Zumpano, Founder of MPS and practicing attorney, Just Like You! Register here: https://www1.gotomeeting.com/register/968634353
Tuesday, November 23, 2010
Why You Should Leave Your Assets To Loved Ones
Charles came into the law office of an MPS attorney to undertake estate planning. Charles was a widow and had no children. The bulk of his estate was going to three nieces and nephews. Charles had in excess of $750,000.00, and he wanted to ensure when he died, it got to his nieces and nephews quickly and avoided probate. He heard a living trust was the way to do that. When he called the MPS attorney's office, the staff recommended he attend a workshop to discover all the different issues he may not ordinarily be aware of when planning. Reluctantly, he went to the workshop and he was thrilled with all he had learned. Specifically, he liked the option to ensure when he passed, rather than leaving his assets to his nieces and nephews outright, he could give it to them in a protected trust that permits them to access to it for the rest of their lives, but not their creditors, spouses in divorce, nursing homes, the government, or lawsuits.
Charles engaged the MPS attorney and among other things, ensured when he passed, each of his nieces and nephews would receive their $250,000.00 in a trust for their benefit, in which they were the trustee. The trust also provided, they needed a co-trustee which they can appoint at their discretion. Charles later died, and his brother Frank, came into the office as the successor trustee to administer Charles' trust. Frank was confused, as were his children, as to why Charles did not give them this money outright. They were a little disappointed. After some explanation by the MPS attorney, they were accepting and proceeded with the trust administration. Each of them received their separate share of uncle Charley's estate in a trust in which they were named trustee.
About a year later, Scott, one of Frank's children, contacted the MPS attorney concerned about a recent garnishment that had been put on his account at the bank. Evidently, Scott had been sued and a judgment was awarded to the party suing him. They executed a judgment against all of Scott's assets, including his accounts at the bank. Since Scott was a trustee of the trust left by Uncle Charles, they also put a lock on that account in hopes to empty it to satisfy their judgment. The MPS attorney quickly explained to Scott that this is exactly why Uncle Charles had done what he did to ensure if any predators ever attempted to take the money from Scott, they would be prohibited. The MPS attorney immediately sent a letter to the law firm placing the execution on the account and to the bank's attorney advising them any attachment to the account was unauthorized and illegal. After a quick review of the trust, both the judgment holder and the bank acknowledged the account was not subject to levy and released it. The funds remained available for Scott's use without the risk of any further attachment by the judgment creditor or anyone else.
You, or your client, can protect your loved ones when you die to ensure when they inherit what you have worked your lifetime for, it stays with them without being at risk of being lost to their divorce, lawsuits, nursing homes, the government, or other creditors. To learn how to protect your clients assets and have them sending you their friends and family to you for year to come, join the MPS on December 14th for a 1 hour webinar and learn What to do differently in 2011 to make it your most profitable year ever; confidently delivering what clients and referral sources don’t blink at writing checks for.
Find out what a client is looking for in their estate plan, NOW, what they are willing to pay and how to attract these clients. ?
Discover What Clients Writing Checks for & the 3 Elements You Need to Provide it!
This call will be hosted by Dave Zumpano, Founder of MPS and practicing attorney, Just Like You! Register here https://www1.gotomeeting.com/register/968634353
Charles engaged the MPS attorney and among other things, ensured when he passed, each of his nieces and nephews would receive their $250,000.00 in a trust for their benefit, in which they were the trustee. The trust also provided, they needed a co-trustee which they can appoint at their discretion. Charles later died, and his brother Frank, came into the office as the successor trustee to administer Charles' trust. Frank was confused, as were his children, as to why Charles did not give them this money outright. They were a little disappointed. After some explanation by the MPS attorney, they were accepting and proceeded with the trust administration. Each of them received their separate share of uncle Charley's estate in a trust in which they were named trustee.
About a year later, Scott, one of Frank's children, contacted the MPS attorney concerned about a recent garnishment that had been put on his account at the bank. Evidently, Scott had been sued and a judgment was awarded to the party suing him. They executed a judgment against all of Scott's assets, including his accounts at the bank. Since Scott was a trustee of the trust left by Uncle Charles, they also put a lock on that account in hopes to empty it to satisfy their judgment. The MPS attorney quickly explained to Scott that this is exactly why Uncle Charles had done what he did to ensure if any predators ever attempted to take the money from Scott, they would be prohibited. The MPS attorney immediately sent a letter to the law firm placing the execution on the account and to the bank's attorney advising them any attachment to the account was unauthorized and illegal. After a quick review of the trust, both the judgment holder and the bank acknowledged the account was not subject to levy and released it. The funds remained available for Scott's use without the risk of any further attachment by the judgment creditor or anyone else.
You, or your client, can protect your loved ones when you die to ensure when they inherit what you have worked your lifetime for, it stays with them without being at risk of being lost to their divorce, lawsuits, nursing homes, the government, or other creditors. To learn how to protect your clients assets and have them sending you their friends and family to you for year to come, join the MPS on December 14th for a 1 hour webinar and learn What to do differently in 2011 to make it your most profitable year ever; confidently delivering what clients and referral sources don’t blink at writing checks for.
Find out what a client is looking for in their estate plan, NOW, what they are willing to pay and how to attract these clients. ?
Discover What Clients Writing Checks for & the 3 Elements You Need to Provide it!
This call will be hosted by Dave Zumpano, Founder of MPS and practicing attorney, Just Like You! Register here https://www1.gotomeeting.com/register/968634353
Thursday, November 18, 2010
DOES THE GIFT TAX APPLY?
Joe, a widower, came into the office of a MPS attorney. He wanted to avoid paying estate taxes or losing his assets to a nursing home, so he asked the attorney if he should start gifting his assets away to his children. The MPS attorney explained to Joe that there are pros and cons of gifting assets away. Upon review of Joe’s financial situation, the attorney assured him the estate tax did not apply to him, because he did not have sufficient assets to be subject to this tax. In addition, giving assets away now, pose several concerns Joe might not be aware of.
The MPS attorney explained to Joe giving gifts to his children will forever put those assets out of his reach and fully under the control of his children. While his children may be trustworthy, outside events could occur that would put those assets at risk. For example, if his child gets divorced, sued, or dies, the assets would end up in the hands of someone other than Joe. In addition, if his child goes bankrupt, Joe’s assets would have to be used in his children’s bankruptcy.
Also, a gift to children, or others, could make Joe ineligible for Medicaid benefits for up to five years or more! The attorney continued to explain that perhaps the biggest downside of making gifts is that Joe’s children would receive the asset from Joe at his tax basis, which often leads to income taxes to the children when they dispose of the asset. The children would not have had to pay the income tax, had Joe given these assets to them after he died.
As to the gift tax, the attorney explained to Joe that he could gift $13,000 per year to any individual, including his children. If he gifted in excess of $13,000 to any individual or child within a calendar year, it would be subject to a gift tax, but the IRS provides that Joe has a million dollar lifetime exemption in addition to the $13,000 annual exemption. Therefore, if Joe gave away $23,000 to an individual in one calendar year, the additional $10,000 would reduce his $1,000,000 lifetime credit to $990,000. Since Joe only had $512, 000, the gift tax was not a concern to him, because he could never gift a million away, and so he would actually never be subject to a gift tax.
Proper planning ensures that your clients understand the gift tax rules and the significant risk with giving gifts during life. Contact MPS to discover how to help your clients transfer their assets to our trademark iPug™ trusts that permit them to retain control and retain benefits, but still have the protection they seek.
The MPS attorney explained to Joe giving gifts to his children will forever put those assets out of his reach and fully under the control of his children. While his children may be trustworthy, outside events could occur that would put those assets at risk. For example, if his child gets divorced, sued, or dies, the assets would end up in the hands of someone other than Joe. In addition, if his child goes bankrupt, Joe’s assets would have to be used in his children’s bankruptcy.
Also, a gift to children, or others, could make Joe ineligible for Medicaid benefits for up to five years or more! The attorney continued to explain that perhaps the biggest downside of making gifts is that Joe’s children would receive the asset from Joe at his tax basis, which often leads to income taxes to the children when they dispose of the asset. The children would not have had to pay the income tax, had Joe given these assets to them after he died.
As to the gift tax, the attorney explained to Joe that he could gift $13,000 per year to any individual, including his children. If he gifted in excess of $13,000 to any individual or child within a calendar year, it would be subject to a gift tax, but the IRS provides that Joe has a million dollar lifetime exemption in addition to the $13,000 annual exemption. Therefore, if Joe gave away $23,000 to an individual in one calendar year, the additional $10,000 would reduce his $1,000,000 lifetime credit to $990,000. Since Joe only had $512, 000, the gift tax was not a concern to him, because he could never gift a million away, and so he would actually never be subject to a gift tax.
Proper planning ensures that your clients understand the gift tax rules and the significant risk with giving gifts during life. Contact MPS to discover how to help your clients transfer their assets to our trademark iPug™ trusts that permit them to retain control and retain benefits, but still have the protection they seek.
Saturday, November 13, 2010
WOW
We are privileged at MPS to have the unparalleled community of attorney
family members with us this past week at The Annual MPS Enhancement Retreat.
It was an absolute honor to serve in your cause to help you help others. We
have an abundance of gratitude for your allowing the team at MPS does what
we are passionate about. Thank you for the opportunity to do what we love to
do because at MPS, we succeed by helping you succeed by helping others! We
look forward to 2011 and continue to help each and every one of you in
creating and maintaining a thriving salable practice! Go get 'em!
family members with us this past week at The Annual MPS Enhancement Retreat.
It was an absolute honor to serve in your cause to help you help others. We
have an abundance of gratitude for your allowing the team at MPS does what
we are passionate about. Thank you for the opportunity to do what we love to
do because at MPS, we succeed by helping you succeed by helping others! We
look forward to 2011 and continue to help each and every one of you in
creating and maintaining a thriving salable practice! Go get 'em!
Thursday, November 11, 2010
WHEN YOU LEAST EXPECT IT
Bob and Eleanor, a healthy 70 year old couple, came into the office of a MPS attorney to do estate planning. After a brief educational process and three meetings, the plan was created. Bob and Eleanor were thrilled and went on their merry way.
Three months later, the attorney received a call from Eleanor, indicating Bob was in Intensive Care; one of his kidneys had stopped working and his remaining kidney was shutting down. The ICU doctor told Eleanor that they would have to put Bob on a machine to maintain his life, or he may die. Eleanor was concerned, because while she loved him dearly, Bob was very clear he did not want to live on a machine. Eleanor asked the doctor if the machine would help him recover or whether he would have to stay on the machine. The doctor’s response was, “We’re not sure, but if we elect to put him on the machine, it will be difficult for me to have him removed from it.”
The MPS attorney told Eleanor not to worry that her health care directive had a 30 day provision which ensured that, if she elected to put Bob on any type of life support, she would be able to remove him at any time, but at the latest 30 days. The attorney agreed to stop by ICU and talk with the doctor and show him the legal document. After a review of the 30 day provision, the doctor was pleased and shocked at how nice it was to see good quality legal preparation. It actually took the pressure off of him.
Bob was put on life support and removed three days later after a wonderful recovery. Bob went on to live five more years. Eleanor and Bob thanked the MPS attorney, because Eleanor was confident that, if the 30 day provision was not in the health care directive, she would not have put Bob on life support.
Many people assume it will be a “cut and dry” decision when asked if they want to put their loved one on life support. The truth is, in that moment, the typical individual will do everything possible to preserve the life of their loved one. Even if they want to honor the loved one’s wishes, in many cases they are not emotionally ready to let go. Having the 30 day provision (or other period of time chosen by the client) ensures that control will remain with the family during this critical time, and allow the loved ones to adjust emotionally to the situation at hand. In some cases, like Bob’s, this additional time may even preserve their life. To learn about all the Client Centered Customized provisions that should be in a health care directive to protect your clients and distinguish yourself in your marketplace, contact MPS www.mpssuccess.com .
Three months later, the attorney received a call from Eleanor, indicating Bob was in Intensive Care; one of his kidneys had stopped working and his remaining kidney was shutting down. The ICU doctor told Eleanor that they would have to put Bob on a machine to maintain his life, or he may die. Eleanor was concerned, because while she loved him dearly, Bob was very clear he did not want to live on a machine. Eleanor asked the doctor if the machine would help him recover or whether he would have to stay on the machine. The doctor’s response was, “We’re not sure, but if we elect to put him on the machine, it will be difficult for me to have him removed from it.”
The MPS attorney told Eleanor not to worry that her health care directive had a 30 day provision which ensured that, if she elected to put Bob on any type of life support, she would be able to remove him at any time, but at the latest 30 days. The attorney agreed to stop by ICU and talk with the doctor and show him the legal document. After a review of the 30 day provision, the doctor was pleased and shocked at how nice it was to see good quality legal preparation. It actually took the pressure off of him.
Bob was put on life support and removed three days later after a wonderful recovery. Bob went on to live five more years. Eleanor and Bob thanked the MPS attorney, because Eleanor was confident that, if the 30 day provision was not in the health care directive, she would not have put Bob on life support.
Many people assume it will be a “cut and dry” decision when asked if they want to put their loved one on life support. The truth is, in that moment, the typical individual will do everything possible to preserve the life of their loved one. Even if they want to honor the loved one’s wishes, in many cases they are not emotionally ready to let go. Having the 30 day provision (or other period of time chosen by the client) ensures that control will remain with the family during this critical time, and allow the loved ones to adjust emotionally to the situation at hand. In some cases, like Bob’s, this additional time may even preserve their life. To learn about all the Client Centered Customized provisions that should be in a health care directive to protect your clients and distinguish yourself in your marketplace, contact MPS www.mpssuccess.com .
Wednesday, November 3, 2010
IS MY POWER OF ATTORNEY POWERFUL ENOUGH?
Betty recently went into a nursing home. Her daughter Samantha, who had Power of Attorney for her, became quite anxious because she did not know what to do or where any of her mom’s “stuff” was. She contacted a local MPS attorney to find out what to do. On arrival to the office, the MPS attorney quickly reviewed the Power of Attorney executed, appointing Samantha. On review, the attorney noted it was a standard Power of Attorney, provided for in the state’s statutes, and used by most attorneys. Unfortunately for Samantha, since it was the statutory Power of Attorney, it did not contain sufficient powers for her to do the necessary planning with him.
While the statutory Power of Attorney did provide authority to deal with the bank, financial institutions, and real estate on Betty’s behalf, it did not provide any authority to create a trust, do asset protection planning, or to authorize Samantha to convey assets to herself. Samantha only has one other sister, and being able to distribute to herself or her sister, is a key part of the plan to protect her mother’s assets.
In addition, the use of trust is another important strategy, but the Power of Attorney does not provide for it. Perhaps the greatest challenge, however, is with the Power of Attorney, in that the agent acting as Power of Attorney virtually is handed a “blank check”. While the Power of Attorney grants Samantha authority to access accounts and deal with legal and financial matters on Betty’s behalf, it does not provide any instructions on how Samantha should exercise her authority.
Samantha intended to exercise her authority as her mom would’ve wished, so she began making decisions, which her sister quickly questioned. Samantha readily explained it was always mom’s wishes to do what she had done, but her sister had a very different perspective on what mom would’ve wanted, and the arguments began.
Samantha asked the MPS attorney what she should do. He identified these arguments were typical, and clarified for Samantha that her sister was not necessarily trying to create fights, but merely had a different perspective of what their mom wanted. The truth is, both kids wanted to do what Betty desired, they just had different perspectives of what it was that she really wanted.
A properly drawn Power of Attorney, with a set of instructions attached, can avoid family feuds, and insure Samantha has all the authority necessary to carry out the wishes of her mother, that are clearly defined. The MPS attorney asked Samantha if Betty was still competent. Samantha indicated she was competent, but had no desire to deal with any legal or financial matters. The MPS attorney quickly stated, “Great”. We will get a new Power of Attorney executed, with all the authority you need, and a sufficient set of instructions on how your mom intends you to use it, and we will meet with her to get the document signed.” Samantha was thrilled. Her sister felt better, as well, and they began to work together to meet mom’s needs.
Do your clients have the standard Power of Attorney? Don’t wait until crises occur to discover its pitfalls. Call MPS to discuss your softwares Power of Attorney, and the ramifications of the provisions it has, or more importantly, fails to have.
While the statutory Power of Attorney did provide authority to deal with the bank, financial institutions, and real estate on Betty’s behalf, it did not provide any authority to create a trust, do asset protection planning, or to authorize Samantha to convey assets to herself. Samantha only has one other sister, and being able to distribute to herself or her sister, is a key part of the plan to protect her mother’s assets.
In addition, the use of trust is another important strategy, but the Power of Attorney does not provide for it. Perhaps the greatest challenge, however, is with the Power of Attorney, in that the agent acting as Power of Attorney virtually is handed a “blank check”. While the Power of Attorney grants Samantha authority to access accounts and deal with legal and financial matters on Betty’s behalf, it does not provide any instructions on how Samantha should exercise her authority.
Samantha intended to exercise her authority as her mom would’ve wished, so she began making decisions, which her sister quickly questioned. Samantha readily explained it was always mom’s wishes to do what she had done, but her sister had a very different perspective on what mom would’ve wanted, and the arguments began.
Samantha asked the MPS attorney what she should do. He identified these arguments were typical, and clarified for Samantha that her sister was not necessarily trying to create fights, but merely had a different perspective of what their mom wanted. The truth is, both kids wanted to do what Betty desired, they just had different perspectives of what it was that she really wanted.
A properly drawn Power of Attorney, with a set of instructions attached, can avoid family feuds, and insure Samantha has all the authority necessary to carry out the wishes of her mother, that are clearly defined. The MPS attorney asked Samantha if Betty was still competent. Samantha indicated she was competent, but had no desire to deal with any legal or financial matters. The MPS attorney quickly stated, “Great”. We will get a new Power of Attorney executed, with all the authority you need, and a sufficient set of instructions on how your mom intends you to use it, and we will meet with her to get the document signed.” Samantha was thrilled. Her sister felt better, as well, and they began to work together to meet mom’s needs.
Do your clients have the standard Power of Attorney? Don’t wait until crises occur to discover its pitfalls. Call MPS to discuss your softwares Power of Attorney, and the ramifications of the provisions it has, or more importantly, fails to have.
Tuesday, October 26, 2010
iPug™ Trusts: The Revolution in Estate Planning
You Can Do More Than Think Outside The Box, You Can Re-Invent It
Through out last year and still, Americans have been riding an economic rollercoaster. Many are beset by fear and even more have lost all confidence in the economy. The burning question on their minds is: what will the future bring? Some say that it is anyone’s guess. But, what if it could be more than a guess? What if you had a way to replace uncertainty with certainty? What if you had a means to offer unique solutions that could benefit every client, regardless of their wealth or status, to create a win-win scenario for you and for them? What if you had a brand new weapon in your estate planning arsenal that would not only allow you to shore up the foundation of your practice, but actually help to improve your bottom line, and propel your business to new, untold heights?
According to national expert and legal education instructor David J. Zumpano, CPA, ESQ., The President and Founder of MPS LLC, there is certainty in our uncertain times. As president and founder of MPS, LLC, a national organization that specializes in educating and training lawyers and financial advisors in cutting-edge practice strategies, Zumpano brings hope and solid, proven results in estate planning. The groundbreaking tool that will rocket estate planning to the next level is the iPug™ Trusts. “The strategy of iPug™ planning is a whole new approach to estate planning,” Zumpano states.
So, just what is an iPug™ Trust? The iPug™ Trust is a Self-Settled Asset Protection Trust for the everyday folk and Medicaid compliance that works in all states. It protects client assets from creditors, predators and nursing homes, while permitting the grantor to be trustee and have customized access. The iPug™ Trust was created by utilizing universal, fundamental trust and common law principles dating back to the statute of uses and are not reliant or dependent upon state or federal specific asset protection laws. “In essence, the iPug™ Trust is an Irrevocable Grantor Trust for income and estate tax purposes. It not only provides advantageous tax benefits, including a full step-up in basis, but it also provides asset protection, while retaining Grantor control,” explains Zumpano. “With the increase in the estate tax exemption to $3.5 million, iPug™ Planning will be applicable to 99.5% of Americans.”
What makes iPug™ planning unique? These trusts are easily understood. Whether your clients are everyday people, savvy business owners or busy professionals, they all are looking for iPug™ Trusts to protect their personal planning goals and objectives. “Business owners and professionals who want to protect their assets without giving up control or use of those assets are primary prospects, but iPug™ planning is also exceptionally useful for individuals who want to protect their personal assets, now and from lawsuits, predators and nursing homes,” Zumpano comments. “The key element clients appreciate about iPug™ planning is that they remain in control. They can have full access to income and indirect access to principal depending on individual goals and objectives. Since everything is reported on a 1040, the flexibility of these trusts ensures no separate income or gift tax returns are required.”
The iPug™ Trust is immune to market conditions. “In times of fear and anxiety, such as we have and still currently experiencing, many peoples’ level of fear of losing what they have is heightened and they are more likely to engage in this form of asset protection planning because it enables them to remain in control and have customized access,” elaborates Zumpano. “A decrease in the value of their portfolios actually has a positive result when planning for Medicaid eligibility, because it enables it to be accomplished in less time and creates a ‘Medicaid freeze,’ ensuring no additional penalties will be incurred when the full value of their stocks return.” Zumpano also points out that people need nursing homes regardless of market conditions. “This creates an immediate need that far outweighs those of a wavering stock market,” he says. “Clients see iPug™ planning as a solution in these uncertain times, rather than a condition of these uncertain times.”
How does iPug™ planning offer security for future generations? In addition to asset protection during a client’s lifetime, iPug™ planning allows clients to pass assets on to their children in a manner that protects their children from lawsuits, divorce and nursing home expenses. “And, if necessary,” Zumpano adds, “their children’s indiscretions. The iPug™ Trust also allows clients to preserve their personal values by creating family standards that have a direct bearing on access to assets bequeathed to their heirs.”
How can you incorporate iPug™ planning into your practice? MPS can teach you the legal technical, counselling, design, drafting and tax issues associated with iPug™ planning, and with the trademarked tools MPS has created, you can rest assured that you dot every “i” and cross every “t” in following the law. MPS has also created an education-based enrollment system that allows you to market iPug™ planning to individuals, business owners and professionals easily, quickly allowing you to show the value of this type of planning. “These systems enable prospective clients to choose a plan not based on its cost, but rather based on clear value distinctions they identify in the education process,” Zumpano explains. “MPS also provides a systematized process for attorneys to implement into his or her practice, which includes educational workshops for clients and referral sources, client-friendly tools that help support clients in their decisions, and attorney-friendly tools to ensure effectiveness, efficiency and compliance with laws. Lastly, MPS provides an implementation guide for the attorney or financial advisor and their support staff to help implement this new trust genre into their practice. We have a very active national membership based organization of graduates that support one another as the systems are implemented, in over 46 states.”
How will the iPug™ planning take your practice to the next level? The MPS three-day Profit Practice Program™ enables attorneys to serve an expanded market and provide favorable solutions to clients’ everyday stresses. “The benefits for you will not only be a greater knowledge of the law,” says Zumpano, “but the ability to provide increased desirable options to your clients by counselling them in this NEW opportunity area of planning. By implementing iPug™ planning, you will increase your revenue and propel your practice to new levels, even in these turbulent times.”
If you’d like more about this topic or schedule an interview with David J. Zumpano, CPA/Esq., please email Molly Hall mhall@mpssuccess.com .
Through out last year and still, Americans have been riding an economic rollercoaster. Many are beset by fear and even more have lost all confidence in the economy. The burning question on their minds is: what will the future bring? Some say that it is anyone’s guess. But, what if it could be more than a guess? What if you had a way to replace uncertainty with certainty? What if you had a means to offer unique solutions that could benefit every client, regardless of their wealth or status, to create a win-win scenario for you and for them? What if you had a brand new weapon in your estate planning arsenal that would not only allow you to shore up the foundation of your practice, but actually help to improve your bottom line, and propel your business to new, untold heights?
According to national expert and legal education instructor David J. Zumpano, CPA, ESQ., The President and Founder of MPS LLC, there is certainty in our uncertain times. As president and founder of MPS, LLC, a national organization that specializes in educating and training lawyers and financial advisors in cutting-edge practice strategies, Zumpano brings hope and solid, proven results in estate planning. The groundbreaking tool that will rocket estate planning to the next level is the iPug™ Trusts. “The strategy of iPug™ planning is a whole new approach to estate planning,” Zumpano states.
So, just what is an iPug™ Trust? The iPug™ Trust is a Self-Settled Asset Protection Trust for the everyday folk and Medicaid compliance that works in all states. It protects client assets from creditors, predators and nursing homes, while permitting the grantor to be trustee and have customized access. The iPug™ Trust was created by utilizing universal, fundamental trust and common law principles dating back to the statute of uses and are not reliant or dependent upon state or federal specific asset protection laws. “In essence, the iPug™ Trust is an Irrevocable Grantor Trust for income and estate tax purposes. It not only provides advantageous tax benefits, including a full step-up in basis, but it also provides asset protection, while retaining Grantor control,” explains Zumpano. “With the increase in the estate tax exemption to $3.5 million, iPug™ Planning will be applicable to 99.5% of Americans.”
What makes iPug™ planning unique? These trusts are easily understood. Whether your clients are everyday people, savvy business owners or busy professionals, they all are looking for iPug™ Trusts to protect their personal planning goals and objectives. “Business owners and professionals who want to protect their assets without giving up control or use of those assets are primary prospects, but iPug™ planning is also exceptionally useful for individuals who want to protect their personal assets, now and from lawsuits, predators and nursing homes,” Zumpano comments. “The key element clients appreciate about iPug™ planning is that they remain in control. They can have full access to income and indirect access to principal depending on individual goals and objectives. Since everything is reported on a 1040, the flexibility of these trusts ensures no separate income or gift tax returns are required.”
The iPug™ Trust is immune to market conditions. “In times of fear and anxiety, such as we have and still currently experiencing, many peoples’ level of fear of losing what they have is heightened and they are more likely to engage in this form of asset protection planning because it enables them to remain in control and have customized access,” elaborates Zumpano. “A decrease in the value of their portfolios actually has a positive result when planning for Medicaid eligibility, because it enables it to be accomplished in less time and creates a ‘Medicaid freeze,’ ensuring no additional penalties will be incurred when the full value of their stocks return.” Zumpano also points out that people need nursing homes regardless of market conditions. “This creates an immediate need that far outweighs those of a wavering stock market,” he says. “Clients see iPug™ planning as a solution in these uncertain times, rather than a condition of these uncertain times.”
How does iPug™ planning offer security for future generations? In addition to asset protection during a client’s lifetime, iPug™ planning allows clients to pass assets on to their children in a manner that protects their children from lawsuits, divorce and nursing home expenses. “And, if necessary,” Zumpano adds, “their children’s indiscretions. The iPug™ Trust also allows clients to preserve their personal values by creating family standards that have a direct bearing on access to assets bequeathed to their heirs.”
How can you incorporate iPug™ planning into your practice? MPS can teach you the legal technical, counselling, design, drafting and tax issues associated with iPug™ planning, and with the trademarked tools MPS has created, you can rest assured that you dot every “i” and cross every “t” in following the law. MPS has also created an education-based enrollment system that allows you to market iPug™ planning to individuals, business owners and professionals easily, quickly allowing you to show the value of this type of planning. “These systems enable prospective clients to choose a plan not based on its cost, but rather based on clear value distinctions they identify in the education process,” Zumpano explains. “MPS also provides a systematized process for attorneys to implement into his or her practice, which includes educational workshops for clients and referral sources, client-friendly tools that help support clients in their decisions, and attorney-friendly tools to ensure effectiveness, efficiency and compliance with laws. Lastly, MPS provides an implementation guide for the attorney or financial advisor and their support staff to help implement this new trust genre into their practice. We have a very active national membership based organization of graduates that support one another as the systems are implemented, in over 46 states.”
How will the iPug™ planning take your practice to the next level? The MPS three-day Profit Practice Program™ enables attorneys to serve an expanded market and provide favorable solutions to clients’ everyday stresses. “The benefits for you will not only be a greater knowledge of the law,” says Zumpano, “but the ability to provide increased desirable options to your clients by counselling them in this NEW opportunity area of planning. By implementing iPug™ planning, you will increase your revenue and propel your practice to new levels, even in these turbulent times.”
If you’d like more about this topic or schedule an interview with David J. Zumpano, CPA/Esq., please email Molly Hall mhall@mpssuccess.com .
Tuesday, October 19, 2010
HOW OFTEN DO I NEED TO UPDATE MY WILL?
Many people ask how often they should update their estate plan. Washington State University did a study in 1999 that revealed the average time between updates to a Will is 19.7 years. This makes sense considering most people do a Will when their first child is born and then review it some 20 years later when little Johnny is off to college and they have an option for early retirement. But is this sufficient? Well usually not. In the timeframe of those 20 years, the laws are constantly changing.
In addition, families change, finances change, and even your health changes. Each of these changes impacts your estate plan. In many cases, we review Wills involving bequests to individuals that are no longer alive, or do not provide for children born subsequent to the execution of the Will. IAlso, most individuals lack critical estate planning documents such as a Healthcare Proxy, Living Will, and Power of Attorney. In some instances, even a Living Trust might be advantageous to meet and accomplish individual goals.
Other issues that change that may require you to update your plan are the laws. In fact, the estate tax law has changed six times in the last ten years. These changes could adversely impact your family if you do not monitor them to ensure your plan avoids any adverse consequences from the change. In addition, changes to your family including the birth, death, marriage, or divorce of anyone in your plan, could also impact its effectiveness.
Your health plays a key role and we often find, after a family crisis, perspectives change considerably, which may create a need to update your plan. Most importantly, you do not want to wait for a crisis to update your plan. In most crisis situations, such as being diagnosed with a terminal condition or other serious health matters, individuals are not thinking of their estate plan, but rather are thinking of getting better. It is critical to revisit your estate plan before a crisis to ensure you have the proper legal protections in place to handle your affairs if you are unable.
A proper estate plan will ensure what you have gets to whom you want, when you want, the way you want. How often should you update your Will? You should at least review it annually and then decide whether you need to seek professional help to get it updated.
In addition, families change, finances change, and even your health changes. Each of these changes impacts your estate plan. In many cases, we review Wills involving bequests to individuals that are no longer alive, or do not provide for children born subsequent to the execution of the Will. IAlso, most individuals lack critical estate planning documents such as a Healthcare Proxy, Living Will, and Power of Attorney. In some instances, even a Living Trust might be advantageous to meet and accomplish individual goals.
Other issues that change that may require you to update your plan are the laws. In fact, the estate tax law has changed six times in the last ten years. These changes could adversely impact your family if you do not monitor them to ensure your plan avoids any adverse consequences from the change. In addition, changes to your family including the birth, death, marriage, or divorce of anyone in your plan, could also impact its effectiveness.
Your health plays a key role and we often find, after a family crisis, perspectives change considerably, which may create a need to update your plan. Most importantly, you do not want to wait for a crisis to update your plan. In most crisis situations, such as being diagnosed with a terminal condition or other serious health matters, individuals are not thinking of their estate plan, but rather are thinking of getting better. It is critical to revisit your estate plan before a crisis to ensure you have the proper legal protections in place to handle your affairs if you are unable.
A proper estate plan will ensure what you have gets to whom you want, when you want, the way you want. How often should you update your Will? You should at least review it annually and then decide whether you need to seek professional help to get it updated.
AVOIDING THE NURSING HOME
A common concern is how to avoid a nursing home. Some people profess, "I will never go to a nursing home." In my last visit to a nursing home, it was full and no one I met was there voluntarily. That being said, avoiding the nursing home can become achievable with proper planning. There are three key factors in protecting against the requirement of having to go to a nursing home: (1) You must legally authorize the people you trust to make decisions for you should the need for long-term care arise, (2) You must document your wishes, and (3) You must provide a way to pay for your care at home should the need arise.
Most people believe being married for many years entitles them to make decisions for their spouse, if a health care crisis occurs. That is not always true. If you are single or widowed, it is even more problematic. The more important question is: What decision would you make if something happened to your spouse or loved one? Many think they know what they would do, but in my experience, when put in that position, most are unaware of the severe emotional stress and fears that impact them upon the long-term disability of a loved one.
The key to maximize your options to stay home and avoid nursing homes is to ensure you have properly authorized your loved one to act for you and to ensure you have documented your wishes. This is achieved by a properly executed Health Care Proxy, Living Will and Personal Care Plan. While these documents are readily available at hospitals, senior centers and other public places, you should be warned that not all are the same. Not all versions have the necessary legal language to provide you the maximum protection and control. Getting these documents from such places is like getting your legal documents at a dentist’s office. You should consult a qualified Elder Law or Estate Planning attorney to ensure you have the proper documents to accomplish your objectives.
Once your legal protections are put in place, providing for payment of care needs is critical. The most common ways to pay for care at home include Medicaid benefits, Veterans' benefits and Long-Term Care Insurance. Under the current Medicaid and Veteran’s Administration Rules, most individuals can qualify for benefits within 30 days, if properly advised. Medicaid is a government form of health insurance for the poor, and individuals can qualify for care in the home for as many hours a day determined necessary for their safety.
There is also a little-known benefit for any veteran, or surviving spouse of a veteran, called the Veterans Aid and Attendance Benefit To qualify, the veteran must have served at least 90 days of active duty, of which one of the 90 days would have been served during wartime. This includes World War II, Korea, Vietnam, and even the Gulf War. The veteran need not have been in combat or even traveled to foreign soil, but merely been enlisted during the dates the war was declared. If eligible, a veteran and spouse may be entitled to up to $1,950.00 per month to pay toward any medical expenses, including Medicare premiums, prescriptions and paid care, to name a few. The VA benefit is paid directly to the veteran, or the veteran’s surviving spouse, from the Veterans Administration. A surviving spouse is entitled up to $1,056.00 a month.
Finally, a long term care insurance policy can also enable you to stay at home. While considered expensive by some, the annual premium for a long-term care policy for a couple is often less than one month's nursing home care for one of them. More importantly, a properly purchased long term care policy can provide a home care benefit to pay for healthcare benefits received in the home, and help to avoid the need to go to a nursing home.
Obviously, no one chooses to go to a nursing home. The determination of whether you or a loved one has to go into a nursing home is not dependent upon your wishes, but rather, dependent upon your planning. Make sure your planning is complete, so you maximize your options.
Most people believe being married for many years entitles them to make decisions for their spouse, if a health care crisis occurs. That is not always true. If you are single or widowed, it is even more problematic. The more important question is: What decision would you make if something happened to your spouse or loved one? Many think they know what they would do, but in my experience, when put in that position, most are unaware of the severe emotional stress and fears that impact them upon the long-term disability of a loved one.
The key to maximize your options to stay home and avoid nursing homes is to ensure you have properly authorized your loved one to act for you and to ensure you have documented your wishes. This is achieved by a properly executed Health Care Proxy, Living Will and Personal Care Plan. While these documents are readily available at hospitals, senior centers and other public places, you should be warned that not all are the same. Not all versions have the necessary legal language to provide you the maximum protection and control. Getting these documents from such places is like getting your legal documents at a dentist’s office. You should consult a qualified Elder Law or Estate Planning attorney to ensure you have the proper documents to accomplish your objectives.
Once your legal protections are put in place, providing for payment of care needs is critical. The most common ways to pay for care at home include Medicaid benefits, Veterans' benefits and Long-Term Care Insurance. Under the current Medicaid and Veteran’s Administration Rules, most individuals can qualify for benefits within 30 days, if properly advised. Medicaid is a government form of health insurance for the poor, and individuals can qualify for care in the home for as many hours a day determined necessary for their safety.
There is also a little-known benefit for any veteran, or surviving spouse of a veteran, called the Veterans Aid and Attendance Benefit To qualify, the veteran must have served at least 90 days of active duty, of which one of the 90 days would have been served during wartime. This includes World War II, Korea, Vietnam, and even the Gulf War. The veteran need not have been in combat or even traveled to foreign soil, but merely been enlisted during the dates the war was declared. If eligible, a veteran and spouse may be entitled to up to $1,950.00 per month to pay toward any medical expenses, including Medicare premiums, prescriptions and paid care, to name a few. The VA benefit is paid directly to the veteran, or the veteran’s surviving spouse, from the Veterans Administration. A surviving spouse is entitled up to $1,056.00 a month.
Finally, a long term care insurance policy can also enable you to stay at home. While considered expensive by some, the annual premium for a long-term care policy for a couple is often less than one month's nursing home care for one of them. More importantly, a properly purchased long term care policy can provide a home care benefit to pay for healthcare benefits received in the home, and help to avoid the need to go to a nursing home.
Obviously, no one chooses to go to a nursing home. The determination of whether you or a loved one has to go into a nursing home is not dependent upon your wishes, but rather, dependent upon your planning. Make sure your planning is complete, so you maximize your options.
Wednesday, October 13, 2010
LOSING CONTROL IS YOUR GREATEST THREAT
Many people wonder what Estate Planning is and why you need to do it. Simply stated, Estate Planning ensures you maintain control of your property as long as you are able and when you are no longer able, those you trust are able to act on your behalf with full instructions by you.
There are two forms of losing control. First is the loss of control of your financial assets. If you become incapacitated, your assets may be inaccessible by your loved ones unless other legal measures had been taken to authorize someone to act. Bank accounts, stocks, bonds, IRAs, and the like are not automatically accessible by your loved ones. Not even your spouse! To ensure control is maintained, the most common Estate Planning tool is a Power of Attorney. A Power of Attorney grants authority to someone else to act on your behalf. What most people do not appreciate is a Power of Attorney is valid when signed. Therefore, once signed, the person you appoint can access your accounts, or dispose of your assets, with or without your consent. You can execute a statutory Power of Attorney or create a personalized one.
Most all lawyers use the state statutory form which was created by the state and grants general powers the state deems necessary to act for someone who cannot act for themselves. The challenge is whether the statutory form is sufficient. For example, the statutory form does not grant permission to access safe deposit boxes, change beneficiaries on jointly owned accounts, nor even to create trusts. These powers, and others not authorized, can be absolutely essential if asset protection or Medicaid eligibility is desired, if you become incapacitated.
To ensure your agent (appointee) has all the powers required to address your concerns, you should discuss your goals with a qualified estate planning attorney to create personalized Power of Attorney which can grant all authority and also provide the guidelines on when and how to use it. Some individuals also consider execution of a “Springing Power of Attorney”. A Springing Power of Attorney is signed now, but becomes valid upon the “happening of an event”. The challenge is proving the “event” has occurred to the satisfaction of financial institutions or others that are asked to honor it. They need to be sure the conditions have been met or they can be personally liable.
Another serious form of loss of control is with your medical decisions. Should you become incapacitated and decisions have to be made on your health, no one will be able to make decisions for you without proper legal documents. As a result, those decisions could be left to the medical professionals or courts. Do you remember the Terri Schiavo case? That is a perfect example of failure to have proper healthcare directives in place.
Health Care directives consist of a Health Care Proxy and/or a Living Will. A Health Care Proxy is a document in which you grant legal authority to someone to make your health care decisions for you if you are unable. The short fall of most Heath Care Proxies is they grant the individual you appoint the authority to make decisions on your behalf, but rarely provide any guidelines for them to follow. This can be lifelong wonder to the person you appoint whether they feel they made the “right” decision that resulted in you passing.
A Living Will, conversely, can provide written instructions for your health care agent to follow. Most standard Living Wills, however, only deal with life and death issues and fail to address care issues when death is not imminent. Ensure you get the proper guidance on creating your health care directives since it is likely to determine if you will live or die in an unanticipated situation.
Maintaining control at all times is a critical element of a proper estate plan. Ensuring you have proper Power of Attorney and Healthcare Directive is absolutely essential to maintaining control with the people you choose (and not the State, or the Courts) should something happen to you. contact www.mpssuccess.com to learn how to make certain your clients maintain control at all times.
There are two forms of losing control. First is the loss of control of your financial assets. If you become incapacitated, your assets may be inaccessible by your loved ones unless other legal measures had been taken to authorize someone to act. Bank accounts, stocks, bonds, IRAs, and the like are not automatically accessible by your loved ones. Not even your spouse! To ensure control is maintained, the most common Estate Planning tool is a Power of Attorney. A Power of Attorney grants authority to someone else to act on your behalf. What most people do not appreciate is a Power of Attorney is valid when signed. Therefore, once signed, the person you appoint can access your accounts, or dispose of your assets, with or without your consent. You can execute a statutory Power of Attorney or create a personalized one.
Most all lawyers use the state statutory form which was created by the state and grants general powers the state deems necessary to act for someone who cannot act for themselves. The challenge is whether the statutory form is sufficient. For example, the statutory form does not grant permission to access safe deposit boxes, change beneficiaries on jointly owned accounts, nor even to create trusts. These powers, and others not authorized, can be absolutely essential if asset protection or Medicaid eligibility is desired, if you become incapacitated.
To ensure your agent (appointee) has all the powers required to address your concerns, you should discuss your goals with a qualified estate planning attorney to create personalized Power of Attorney which can grant all authority and also provide the guidelines on when and how to use it. Some individuals also consider execution of a “Springing Power of Attorney”. A Springing Power of Attorney is signed now, but becomes valid upon the “happening of an event”. The challenge is proving the “event” has occurred to the satisfaction of financial institutions or others that are asked to honor it. They need to be sure the conditions have been met or they can be personally liable.
Another serious form of loss of control is with your medical decisions. Should you become incapacitated and decisions have to be made on your health, no one will be able to make decisions for you without proper legal documents. As a result, those decisions could be left to the medical professionals or courts. Do you remember the Terri Schiavo case? That is a perfect example of failure to have proper healthcare directives in place.
Health Care directives consist of a Health Care Proxy and/or a Living Will. A Health Care Proxy is a document in which you grant legal authority to someone to make your health care decisions for you if you are unable. The short fall of most Heath Care Proxies is they grant the individual you appoint the authority to make decisions on your behalf, but rarely provide any guidelines for them to follow. This can be lifelong wonder to the person you appoint whether they feel they made the “right” decision that resulted in you passing.
A Living Will, conversely, can provide written instructions for your health care agent to follow. Most standard Living Wills, however, only deal with life and death issues and fail to address care issues when death is not imminent. Ensure you get the proper guidance on creating your health care directives since it is likely to determine if you will live or die in an unanticipated situation.
Maintaining control at all times is a critical element of a proper estate plan. Ensuring you have proper Power of Attorney and Healthcare Directive is absolutely essential to maintaining control with the people you choose (and not the State, or the Courts) should something happen to you. contact www.mpssuccess.com to learn how to make certain your clients maintain control at all times.
Friday, October 8, 2010
IS THERE AN ESTATE TAX IN 2010?
In 2001, President Bush signed major tax legislation which the full impact was not felt until January 1, 2010. Under the 2001 Act, the estate tax exemption, the amount of assets someone can die with without having to pay estate tax, was gradually raised from $675,000 to $3.5 million. The 2001 legislation further provided the estate tax was eliminated January 1, 2010, but reverted back to the 2001 rules on January 1, 2011. Lots of dates and confusion; what does this all mean? Well, Congress since 2001 had assured us the law would never revert back in 2011 as originally anticipated. In addition, they also assured us we would never have estate tax eliminated in 2010. What has occurred? The January 1, 2010 estate tax, as we know, it is no longer in effect. Instead, what has occurred is, a modified adjusted basis for assets of decedents dying in 2010. What does this all means? If your clients had a stock they paid $10,000.00 for that is worth $100,000.00 upon death, there would be $90,000.00 of unrealized gain. Under the 2010 tax law, each person dying would have $1.3 million in unrealized gain to add to their assets they distribute to their beneficiaries. If that doesn’t make sense to your clients, anything more said will just confuse them more.
So what can you do? Let me explain. This Congress has stated it does not like this law because they are afraid the rich will die and not pay taxes. Congress has said many times it is going to eliminate the 2010 law retroactively to January 1, 2010. Will they? I don't know. They've been saying that for seven years; it still has not happened. But more importantly, if they do, what will happen in 2011? Will the law revert back to the levels they were in 2001 ($1 million), 2009 ($3.5 million), or will it be a whole new law in place? We don’t know. This is the importance of ensuring your current estate plan addresses the tax law as we know it.
A properly drawn estate plan will provide language in any scenario. Do your clients plans? You must properly and simply inform your clients on estate taxes as they are most likely paying more taxes than need be. Join us Monday October 18th at 4PM EST for an Exclusive Webinar to “Learn How the Upcoming Estate Tax Changes Effect your Practice”, Space is limited. Reserve your Webinar seat now at:
https://www1.gotomeeting.com/register/948292049
So what can you do? Let me explain. This Congress has stated it does not like this law because they are afraid the rich will die and not pay taxes. Congress has said many times it is going to eliminate the 2010 law retroactively to January 1, 2010. Will they? I don't know. They've been saying that for seven years; it still has not happened. But more importantly, if they do, what will happen in 2011? Will the law revert back to the levels they were in 2001 ($1 million), 2009 ($3.5 million), or will it be a whole new law in place? We don’t know. This is the importance of ensuring your current estate plan addresses the tax law as we know it.
A properly drawn estate plan will provide language in any scenario. Do your clients plans? You must properly and simply inform your clients on estate taxes as they are most likely paying more taxes than need be. Join us Monday October 18th at 4PM EST for an Exclusive Webinar to “Learn How the Upcoming Estate Tax Changes Effect your Practice”, Space is limited. Reserve your Webinar seat now at:
https://www1.gotomeeting.com/register/948292049
Wednesday, October 6, 2010
VA BENEFITS TO THE RESCUE
Shirley was recently admitted to an assisted living facility and her daughter Beth was concerned because Shirley’s income was insufficient to pay the monthly costs. She knew, it would only be a matter of time before mom depleted all of her assets. Beth was not worried about inheriting the assets, she was more concerned with ensuring mom remained independent and maximized the options she had for her care. Shirley and Beth visited a local MPS attorney to help them.
Shirley was not independently wealthy. She had about $150,000.00 in brokerage and savings her husband left her. It represented their lifetime of savings and she was dependent upon the income for her needs. However, with her recent admission to the assisted living facility, her monthly income was short by $1,100.00. At the initial meeting, the MPS attorney did a thorough analysis of Shirley’s financial condition and her personal family goals. He discovered Shirley’s husband was a Veteran of World War II and served two years. As such, it became evident Shirley could become entitled to a Veterans’ Aid and Attendance Benefit to help her pay for her assisted living care.
While not eligible immediately, the attorney was able to provide an estate planning option to have Shirley create a trust to put a bulk of her assets in so it could be protected for the family to use for her. At the same time, by doing so, she would become eligible for a Veterans’ Aid and Attendance Benefit which is available to Veterans of World War II, Korea, Vietnam, and the Gulf War. This benefit is also available to the surviving spouses. As a surviving spouse of a World War II Vet, Shirley was able to become eligible to receive $1,056.00 a month. She was thrilled. She was able to protect her family, protect her lifetime of assets, and be able to afford her care. She was also thrilled to learn this benefit would pay for care in her home, should she decide to go back home. Beth was relieved.
Contact MPS to find out how you can protect your clients so they can walk out of your office feeling just like Beth did.
Shirley was not independently wealthy. She had about $150,000.00 in brokerage and savings her husband left her. It represented their lifetime of savings and she was dependent upon the income for her needs. However, with her recent admission to the assisted living facility, her monthly income was short by $1,100.00. At the initial meeting, the MPS attorney did a thorough analysis of Shirley’s financial condition and her personal family goals. He discovered Shirley’s husband was a Veteran of World War II and served two years. As such, it became evident Shirley could become entitled to a Veterans’ Aid and Attendance Benefit to help her pay for her assisted living care.
While not eligible immediately, the attorney was able to provide an estate planning option to have Shirley create a trust to put a bulk of her assets in so it could be protected for the family to use for her. At the same time, by doing so, she would become eligible for a Veterans’ Aid and Attendance Benefit which is available to Veterans of World War II, Korea, Vietnam, and the Gulf War. This benefit is also available to the surviving spouses. As a surviving spouse of a World War II Vet, Shirley was able to become eligible to receive $1,056.00 a month. She was thrilled. She was able to protect her family, protect her lifetime of assets, and be able to afford her care. She was also thrilled to learn this benefit would pay for care in her home, should she decide to go back home. Beth was relieved.
Contact MPS to find out how you can protect your clients so they can walk out of your office feeling just like Beth did.
Wednesday, September 29, 2010
Do Quarterbacks Win Games?
A quarterback is a very important player on the football field, but it's not the quarterback alone who wins the game. Imagine a football game with just a quarterback? It would be difficult to score since he is the only one to have the ball. If he has wide receivers to catch the ball it increases the chances of winning the game, but, having a wide receiver is still not enough to ensure the team wins. Adding running backs to carry the ball and run will again increase the team=s chances of winning. But, even with all these arsenals it is difficult to win without an offensive line to block and protect those that need to score. It takes a team to score touchdowns and win games. The same is true with estate planning. Like football, creating an effective estate plan requires a team.
The attorney is a critical player to construct the legal structure to ensure the client's needs are met and his wishes are carried out while they are healthy, if they become disabled, after they die, and even, to protect the beneficiaries. The financial advisor is critical to ensure the client’s assets are invested properly to provide them life long security. The accountant ensures the plan created by the attorney and financial advisor does not create adverse tax consequences that undo benefits of the plan. Finally, family members play a critical role to ensure the goals of the client are carried out when the client is not able to do it themselves. Building an estate planning team creates long-term relationships for the professional team and benefits the client by providing continuity and a multiple expertise to help the client have a successful plan. Leaving any one of these members out may disable a plan to work, but the likelihood of success is drastically reduced.
Licensed attorneys of MPS understand the importance of working with a professional team. It takes the efforts of all of all the professionals to implement a successful plan. Drafting proper, up to date, legal documents is essential, but when combined with comprehensive financial planning, it often leads to results the attorney or financial professional cannot achieve on their own. The accountant ensures there is no fumbles on the play and the family members cheer on the team and are ready to get in the game when needed. In the game of estate planning, the client is the coach and they rely heavily on their players to win the game. Does your law firm have a winning team built? And do you have a comprehensive Referral Management System built to manage the team in a way that dinguishes each of the players in manner that leaves the client referring everyone in their world to each of you for their planning needs? If not, call us to see how MPS can support you in building a team to help create the WIN/WIN/WIN/WIN in your practice.
The attorney is a critical player to construct the legal structure to ensure the client's needs are met and his wishes are carried out while they are healthy, if they become disabled, after they die, and even, to protect the beneficiaries. The financial advisor is critical to ensure the client’s assets are invested properly to provide them life long security. The accountant ensures the plan created by the attorney and financial advisor does not create adverse tax consequences that undo benefits of the plan. Finally, family members play a critical role to ensure the goals of the client are carried out when the client is not able to do it themselves. Building an estate planning team creates long-term relationships for the professional team and benefits the client by providing continuity and a multiple expertise to help the client have a successful plan. Leaving any one of these members out may disable a plan to work, but the likelihood of success is drastically reduced.
Licensed attorneys of MPS understand the importance of working with a professional team. It takes the efforts of all of all the professionals to implement a successful plan. Drafting proper, up to date, legal documents is essential, but when combined with comprehensive financial planning, it often leads to results the attorney or financial professional cannot achieve on their own. The accountant ensures there is no fumbles on the play and the family members cheer on the team and are ready to get in the game when needed. In the game of estate planning, the client is the coach and they rely heavily on their players to win the game. Does your law firm have a winning team built? And do you have a comprehensive Referral Management System built to manage the team in a way that dinguishes each of the players in manner that leaves the client referring everyone in their world to each of you for their planning needs? If not, call us to see how MPS can support you in building a team to help create the WIN/WIN/WIN/WIN in your practice.
Wednesday, August 18, 2010
Have you really taken a vacation?
I just returned from a one week beach vacation with my family at Schroon Lake, an exciting resort community nestled in the Adirondack Mountains. This has been a family tradition the 1st week of August for many, many years. We all start getting real excited about it….in February when the snow and cold are “getting old” in Central NY. We start talking and dreaming about unplugging and “doing nothing” except rest, rejuvenation and connection with the ones we love the most. The beauty of this “remote” vacation is there was no cellular service so I am truly unable to take calls or access the internet via my air card. Wow, what an experience. At first, it felt somewhat paralyzing, not being connected to the outside world. Don’t get me wrong, Cell service was available if I drove a mile or two towards town, which we did a handful of times throughout the week, but I am please to find at those times I had absolutely no interest in looking at my phone or email messages on my blackberry.
Interestingly though, when discussing vacations and time off with attorneys over the last ten years, it is sad to learn most all of us fail to have a real vacation. How is a real vacation defined? Well, it’s being present with the people you are vacationing with; whether it’s your family, loved ones, or friends. You see, running to your Blackberry, cell phone, or internet becomes a place of comfort, but what’s at risk is really far more than what you may be missing when you shut them down. What’s at risk is the relationship you have with the people closest to you. Your disregard for them in favor of a business has an impact, makes them feel less worthy of you than your co‑workers, clients, and worse yet, the dreaded list serves we feel compelled to reply to. There is no greater danger to us as individuals than the loss of the respect of our families and ones we love.
So, when you go on vacation are you taking calls? How often are you on the internet? I must admit, this past vacation I learned there was wireless internet in the house. I couldn’t resist and found myself replying to email. After 2 hours I shook myself and realized what a wasted opportunity of time I could have been with my family. The computer went off and did not turn on again.
So, as you take your next vacation, or better yet, when you leave the office at the end of the day, consider the possibility, the office leaves you and you are able to be present to the people important in your life. The truth is, too many times people important to us are gone because of divorce, death, or some other catastrophe or worse yet, they are still there but they are hurt, wounded, and sad at their loss of real connection with us. So, I welcome you to have a real vacation with the people you love the most, and you may discover a full, new appreciation, and believe it or not, in my experience, you will be more effective at work when you do return. When you are relaxed and free from stress you are more focused and more creative. Focus and creativity are key components to success. One of the best ways to regain your balance, focus and get excited about your practice again is to take a real vacation. So if you haven’t yet taken a vacation this summer, I encourage you to get something on the books for the Fall before all the holiday and year end planning “rush” starts. Take pleasure and happy vacationing!
Interestingly though, when discussing vacations and time off with attorneys over the last ten years, it is sad to learn most all of us fail to have a real vacation. How is a real vacation defined? Well, it’s being present with the people you are vacationing with; whether it’s your family, loved ones, or friends. You see, running to your Blackberry, cell phone, or internet becomes a place of comfort, but what’s at risk is really far more than what you may be missing when you shut them down. What’s at risk is the relationship you have with the people closest to you. Your disregard for them in favor of a business has an impact, makes them feel less worthy of you than your co‑workers, clients, and worse yet, the dreaded list serves we feel compelled to reply to. There is no greater danger to us as individuals than the loss of the respect of our families and ones we love.
So, when you go on vacation are you taking calls? How often are you on the internet? I must admit, this past vacation I learned there was wireless internet in the house. I couldn’t resist and found myself replying to email. After 2 hours I shook myself and realized what a wasted opportunity of time I could have been with my family. The computer went off and did not turn on again.
So, as you take your next vacation, or better yet, when you leave the office at the end of the day, consider the possibility, the office leaves you and you are able to be present to the people important in your life. The truth is, too many times people important to us are gone because of divorce, death, or some other catastrophe or worse yet, they are still there but they are hurt, wounded, and sad at their loss of real connection with us. So, I welcome you to have a real vacation with the people you love the most, and you may discover a full, new appreciation, and believe it or not, in my experience, you will be more effective at work when you do return. When you are relaxed and free from stress you are more focused and more creative. Focus and creativity are key components to success. One of the best ways to regain your balance, focus and get excited about your practice again is to take a real vacation. So if you haven’t yet taken a vacation this summer, I encourage you to get something on the books for the Fall before all the holiday and year end planning “rush” starts. Take pleasure and happy vacationing!
Wednesday, August 4, 2010
ESTATE PLANNERS CAN’T HIDE FROM MEDICAID ANY MORE: WHAT YOU NEED TO KNOW TO AVOID MALPRACTICE: PART 4
The penalty period is the period of time an applicant is ineligible for benefits because of an uncompensated transfer. The penalty is calculated by dividing the amount of the uncompensated transfer by the average cost of one month’s nursing home care in the region of the applicant. The federal law requires states to annually establish the average one-month private paid cost of nursing homes in their states. This is commonly referred to as the “monthly divisor.” The penalty period begins at different times, depending upon when the uncompensated transfer occurred. If the transfer occurred prior to DRA ‘05, the penalty begins in the month of the transfer. If a client applied for benefits today and had made a $100,000 uncompensated transfer 20 months ago he is eligible for benefits upon application as long as the monthly divisor was $5,000 or more ($100,000 ÷ 5,000 = 20 months). Since the transfer was made prior to DRA ‘05, the penalty begins in the month of transfer and the 20-month penalty will have expired immediately prior to the application. DRA ‘05 however changed the start date of any penalty period on uncompensated transfers. The penalty period on all transfers after February 8, 2006, no longer begins at the date of the gift, but rather on the date the applicant becomes “otherwise eligible.” To be otherwise eligible, the applicant must meet the medical needs for care and the Medicaid income and asset qualifying levels, but for the application of any penalty period for a uncompensated transfer. Therefore, the penalty no longer begins when you make the transfer, but rather, not until you are in the nursing home and financially qualify. The anomaly is that while you financially qualify and are eligible, you will not receive any benefits until the penalty period has expired. While this seems complicated, there are already proven strategies to get your clients qualified similarly to what was available prior to DRA ‘05.
In addition to the rules for qualification, several exemptions are available, including a home or a life estate in a home, car, prepaid funeral, personal belongings, life insurance up to $1,500.00 of face value, and other assets needed to generate income to bring the community spouse up to her MMMNA. There are a lot of planning opportunities with the use of these exemptions and exceptions. If after applying all the exemptions, the applicant still has “excess resources” (more assets than the limit is), the applicant must “spend down” any excess. A spend-down is the systematic spending or transferring of assets to get the applicant to the Medicaid qualifying asset limit. In most circumstances, the spend-down involves uncompensated transfers in which a penalty period will apply.
When Medicaid planning, penalty periods are common and planned for to ensure sufficient assets are available to pay for care during any penalty period. There are several Medicaid spend-down planning strategies available. Typically, a Medicaid spend down involves an uncompensated transfers to an individual or a trust. If a client is not willing to transfer assets, other options include purchasing a long-term care insurance policy, an immediate annuity, or use of a promissory note.
Prior to DRA ‘05 it was common to transfer assets to children or others because there was not significant risk to do so. A small transfer would have a short penalty period and most people were confident they could stay healthy through it. DRA ’05 makes outright transfers to individuals no longer viable because they are now subject to a 60-month look-back and the penalty no longer begins at the date of the transfer. If an uncompensated transfer occurs within sixty months of applying for benefits, the penalty will not begin until after the client applies and otherwise qualifies. Therefore, post DRA ‘05 transfers can make an individual ineligible for 60 months or more. The only viable technique remaining is to utilize Medicaid Asset Protection Trusts (MAP-Trusts™). MAP-Trusts™ are specifically designed with provisions friendly to the Medicaid qualifying rules. Typical MAP-Trusts™ provide income to the grantor during their lifetime but not principal. Medicaid law specifically prohibits the applicant or their spouse from having any benefits available to the them from a self-settled trust. Any discretion to the Trustee to distribute to the Grantor or spouse is considered an available resource when determining eligibility. Therefore, it is critical the trust not permit any right to distribute principal to the Grantor or spouse. This is why most family trusts fail Medicaid eligibility requirements.
Working with MAP-Trusts™ is intellectually challenging and dynamic. As tax professionals, we go to great length to educate ourselves and create trusts to minimized income taxes and preserve the clients estate tax exemption. MAP-Trusts™ work totally different. In fact, they ensure all income on the assets are taxed to the grantor and all assets are included in the grantor’s estate for estate tax purposes. The typical Medicaid planning client does not have a taxable estate so the benefit of using a “pure grantor” trust is favorable for the client. It also ensures a full step up in basis occurs at their death. Also typical in a MAP-Trust™ is enabling the grantor to be the sole trustee of the trust, which is preferred by clients.
If a client is unwilling to use a MAP-Trust™, they can purchase long-term care insurance to subsidize the cost of care. While DRA ’05 has restricted the use of annuities, they still play an important role in post DRA ’05 planning strategies. DRA ’05 also permits clients to transfer their excess assets in exchange for a promissory note, provided it is paid back over the client’s life expectancy, in equal payments, without delay, with no cancellation at death. While DRA ’05 specifically provides promissory notes are considered compensated, many states consider it an available resource, to the extent it could be sold. The sale value of the note is treated as an asset and included in the computation of the CSRA for the community spouse or the individual resource allowance for single applicants.
There are many opportunities for those willing to learn the Medicaid qualifying rules. Medicaid planning, while seeming complicated, is really a very finite set of rules that can be learned with a little effort. The truth is, if you are providing estate planning services, you must be aware of the Medicaid qualifying rules to properly represent your clients. It applies to 96% of potential clients. If you are not comfortable with the Medicaid qualifying rules or if they appear to be complicated or comprehensive, you must commit to learning them and implementing them into your practice. If you are willing to, you will be able to provide more solutions for your clients, you will create a much greater relationship and appreciation from your clients and they will pay higher fees. But must importantly, you will avoid the pits in your stomach or waking up with night sweats from not knowing the law.
Wednesday, July 28, 2010
ESTATE PLANNERS CAN’T HIDE FROM MEDICAID ANY MORE: WHAT YOU NEED TO KNOW TO AVOID MALPRACTICE: PART 3
Did you ever get that pit in your stomach while attending a CLE after learning something for the first time you weren’t doing but should have been. You immediately begin to assess the number of clients it affects and strategize how you’re going to fix it. Did you ever wake up in the middle of the night in a sense of panic having realized you forgot something essential in a plan created for a client. Well, be prepared for the pit in your stomach and the night sweats if you are an estate-planning attorney who is not proficient with the Medicaid qualification rules. If you are going to practice in the estate planning area, you must have a working knowledge of the Medicaid qualification rules to properly represent your clients. Knowing the rules will enable you to be a better counselor by providing more solutions for your clients, and planning for their long-term care before they need it. Your clients will be grateful, more satisfied and pay you more and refer their friends and family.
Is learning the Medicaid rules worth it? Recent studies show 6,000 to 7,000 people a day are turning age 65. There are currently 37 million Americans over the age of 65 and it is expected to almost double to 72 million in the next twenty years. Other statistics show more than 50 percent of those over the age of 65 will spend time in a nursing home before their death. There are 103 million households, of which ninety-six percent have less than $750,000.00 of assets. Typical health-care costs for a nursing home average $75,000.00 to $90,000.00 per year, and the increases in these costs annually outpace inflation. A typical client needs $1.5 million of invested assets to generate the income needed to pay for their cost of care. If they do not have $1.5 million, they need to consider long-term care planning. Many estate-planning attorneys focus on estates of $1 million or more. While it is a desirable profile, such estates represent less than 4 percent of the American population. Most estate planning attorneys are stepping over 96 percent of clients to service the 4 percent that fit the desired profile. In working with clients in the 96 percentile, I have found they more easily identify the value provided them by protecting their assets from the threat of long-term care. They are very willing to pay for solutions to these concerns. Clients with modest estates are much more likely to pay for asset protection than those with larger estates. They also tend to be more grateful, and more likely to bring you cookies and refer their friends.
Implementation of the Deficit Reduction Act 2005 (DRA ‘05), in February, 2006, systematically eliminated the Monday morning Medicaid planning attorneys; those that attend a Friday CLE and Monday begin practicing. For those willing to learn this area of law, there is a tremendous opportunity because of the number of people needing these services. More importantly, since it impacts 96 percent of American households, it is critical you become aware of the key requirements to qualify for Medicaid in the event of your clients’ long-term care. A common fear of estate planning attorneys is that Medicaid law is “always changing” and difficult to “get your arms around.” Nothing could be further from the truth. There have only been two major changes to Medicaid Law since its inception, the Omnibus Reconciliation Act of 1993 (Obra ‘93) and DRA ‘05 and it is not difficult to get your arms around. Medicaid law is a very succinct set of rules that can be covered in less than three hours. Once you are aware of the rules and exceptions, the rest of the practice is merely applying fact pattern to those rules. It intrigues me how many practitioners warmly embrace the tax law and its several hundred thousand pages of text and are willingly to dredge through the Code to solve problems for their clients but Medicaid law instills fear.
Medicaid law is imbedded in Title XIX of the Social Security Act, specifically at 42 USC 1396-1396s. Section 1396p deals with the qualification rules for Medicaid. The regulations can be found at 42 CFR § 430 et seq. and 20 CFR § 416 et seq. While Medicaid is federal law, it is implemented 100% by the states. Each state, therefore, has the exclusive right to interpret the federal Medicaid law. To be eligible for nursing home benefits, the client must meet the medical requirements and be a U.S. citizen or resident alien. If these conditions are met, the client must also meet certain income and asset qualifying limits. The amount of income an applicant may retain and still be eligible for benefits is referred to as the personal needs allowance (PNA). For single applicants, the PNA is less than $75.00 per month. All income in excess must be contributed toward the applicant’s cost of care. If the applicant is married, the community spouse is entitled to a minimum monthly maintenance needs allowance (MMMNA) to ensure they are not impoverished. The federal law permits each state to set a MMMNA, but it must be within a range set by the federal government. In 2007 the minimum MMMNA must be between $1,650.00 and $2,541.00 per month. Most states use the federal maximum as their minimum. The amount of assets (resources) an applicant can have and still be eligible is also set by the federal law. If the applicant is single, they are entitled to a small amount of assets. Most states utilize the federal SSI amount of $2,000.00. Other states permit more. New York permits the most at $4,200. If the applicant is married, the federal law allows more assets be retained to prevent impoverishment of the community spouse. This is referred to as the community spouse resource allowance (CSRA). The federal law provides the minimum CSRA not be less than $20,238.00 nor more than $101,640.00. A majority of states utilize the federal maximum as their State minimum CSRA.
Other important terms relevant to Medicaid planning are the look-back period and penalty period. These are the most misunderstood and misinterpreted terms in all of Medicaid law. The look-back period, is merely the period of time Medicaid can look back at your client’s financial records when applying for benefits. It has no relevance to eligibility. It is merely the period of time Medicaid can look at financial records to determine if any transfers were made in the 36 to 60 months previous to applying for benefits. The objective is to ensure people don’t transfer away their assets and then ask for Medicaid to pay for their care. When reviewing the applicant’s financial records, Medicaid will request support for withdrawals to identify whether the transfer was compensated or uncompensated. A transfer is “compensated” if, after the transfer, something of equal value is received in return. Transferring $120,000.00 to purchase a home of that value is a “compensated” transfer. An “uncompensated” transfer occurs if a transfer of assets is made and something of less than the value given or of no value is received. Any shortfall in value received is an “uncompensated” transfer. An uncompensated transfer may render the applicant ineligible for benefits depending upon the amount of the transfer and when it was made. There is no rule that provides an uncompensated transfer made during the look-back period renders the applicant is ineligible. The look-back period is just the period of time Medicaid will look at the records to identify uncompensated transfers. Once identified, a penalty period will be calculated based on the amount of the uncompensated transfer. If an uncompensated transfer occurred prior to the look-back period, it will not be identified and no penalty will occur. For transfers inside the look-back period, the penalty period must be exhausted prior to being eligible for benefits.
To be continued...
Is learning the Medicaid rules worth it? Recent studies show 6,000 to 7,000 people a day are turning age 65. There are currently 37 million Americans over the age of 65 and it is expected to almost double to 72 million in the next twenty years. Other statistics show more than 50 percent of those over the age of 65 will spend time in a nursing home before their death. There are 103 million households, of which ninety-six percent have less than $750,000.00 of assets. Typical health-care costs for a nursing home average $75,000.00 to $90,000.00 per year, and the increases in these costs annually outpace inflation. A typical client needs $1.5 million of invested assets to generate the income needed to pay for their cost of care. If they do not have $1.5 million, they need to consider long-term care planning. Many estate-planning attorneys focus on estates of $1 million or more. While it is a desirable profile, such estates represent less than 4 percent of the American population. Most estate planning attorneys are stepping over 96 percent of clients to service the 4 percent that fit the desired profile. In working with clients in the 96 percentile, I have found they more easily identify the value provided them by protecting their assets from the threat of long-term care. They are very willing to pay for solutions to these concerns. Clients with modest estates are much more likely to pay for asset protection than those with larger estates. They also tend to be more grateful, and more likely to bring you cookies and refer their friends.
Implementation of the Deficit Reduction Act 2005 (DRA ‘05), in February, 2006, systematically eliminated the Monday morning Medicaid planning attorneys; those that attend a Friday CLE and Monday begin practicing. For those willing to learn this area of law, there is a tremendous opportunity because of the number of people needing these services. More importantly, since it impacts 96 percent of American households, it is critical you become aware of the key requirements to qualify for Medicaid in the event of your clients’ long-term care. A common fear of estate planning attorneys is that Medicaid law is “always changing” and difficult to “get your arms around.” Nothing could be further from the truth. There have only been two major changes to Medicaid Law since its inception, the Omnibus Reconciliation Act of 1993 (Obra ‘93) and DRA ‘05 and it is not difficult to get your arms around. Medicaid law is a very succinct set of rules that can be covered in less than three hours. Once you are aware of the rules and exceptions, the rest of the practice is merely applying fact pattern to those rules. It intrigues me how many practitioners warmly embrace the tax law and its several hundred thousand pages of text and are willingly to dredge through the Code to solve problems for their clients but Medicaid law instills fear.
Medicaid law is imbedded in Title XIX of the Social Security Act, specifically at 42 USC 1396-1396s. Section 1396p deals with the qualification rules for Medicaid. The regulations can be found at 42 CFR § 430 et seq. and 20 CFR § 416 et seq. While Medicaid is federal law, it is implemented 100% by the states. Each state, therefore, has the exclusive right to interpret the federal Medicaid law. To be eligible for nursing home benefits, the client must meet the medical requirements and be a U.S. citizen or resident alien. If these conditions are met, the client must also meet certain income and asset qualifying limits. The amount of income an applicant may retain and still be eligible for benefits is referred to as the personal needs allowance (PNA). For single applicants, the PNA is less than $75.00 per month. All income in excess must be contributed toward the applicant’s cost of care. If the applicant is married, the community spouse is entitled to a minimum monthly maintenance needs allowance (MMMNA) to ensure they are not impoverished. The federal law permits each state to set a MMMNA, but it must be within a range set by the federal government. In 2007 the minimum MMMNA must be between $1,650.00 and $2,541.00 per month. Most states use the federal maximum as their minimum. The amount of assets (resources) an applicant can have and still be eligible is also set by the federal law. If the applicant is single, they are entitled to a small amount of assets. Most states utilize the federal SSI amount of $2,000.00. Other states permit more. New York permits the most at $4,200. If the applicant is married, the federal law allows more assets be retained to prevent impoverishment of the community spouse. This is referred to as the community spouse resource allowance (CSRA). The federal law provides the minimum CSRA not be less than $20,238.00 nor more than $101,640.00. A majority of states utilize the federal maximum as their State minimum CSRA.
Other important terms relevant to Medicaid planning are the look-back period and penalty period. These are the most misunderstood and misinterpreted terms in all of Medicaid law. The look-back period, is merely the period of time Medicaid can look back at your client’s financial records when applying for benefits. It has no relevance to eligibility. It is merely the period of time Medicaid can look at financial records to determine if any transfers were made in the 36 to 60 months previous to applying for benefits. The objective is to ensure people don’t transfer away their assets and then ask for Medicaid to pay for their care. When reviewing the applicant’s financial records, Medicaid will request support for withdrawals to identify whether the transfer was compensated or uncompensated. A transfer is “compensated” if, after the transfer, something of equal value is received in return. Transferring $120,000.00 to purchase a home of that value is a “compensated” transfer. An “uncompensated” transfer occurs if a transfer of assets is made and something of less than the value given or of no value is received. Any shortfall in value received is an “uncompensated” transfer. An uncompensated transfer may render the applicant ineligible for benefits depending upon the amount of the transfer and when it was made. There is no rule that provides an uncompensated transfer made during the look-back period renders the applicant is ineligible. The look-back period is just the period of time Medicaid will look at the records to identify uncompensated transfers. Once identified, a penalty period will be calculated based on the amount of the uncompensated transfer. If an uncompensated transfer occurred prior to the look-back period, it will not be identified and no penalty will occur. For transfers inside the look-back period, the penalty period must be exhausted prior to being eligible for benefits.
To be continued...
Wednesday, July 21, 2010
ESTATE PLANNERS CAN’T HIDE FROM MEDICAID ANY MORE: WHAT YOU NEED TO KNOW TO AVOID MALPRACTICE: PART 2
Many attorneys believe Medicaid Law is challenging because it is constantly changing. If that scares you, I remind you many areas of law change often (i.e., tax law). Medicaid law on the other hand, has only changed twice in over 25 years. The first change came in 1993 with the passage of the Omnibus Reconciliation Act of 1993 (OBRA-93). There was not another change in the law until February, 2006 when the Deficit Reduction Act of 2005 (DRA-05) was put into law. DRA-05 attempted to close many loopholes and has created many obstacles for lawyers dabbling in this area. I believe, to the contrary, DRA-05 created the greatest opportunity we have seen in estate planning in more than 20 years. In 2006, my practice exceeded its greatest year by 40 percent, and I attribute it totally to the implementation of DRA-05. The question is, who is going to handle these complex issues for clients? Those willing to commit to learn the rules and implement them in a way to make it easier for clients to navigate, will undoubtedly be the winners. I have seen it in my own practice.
Clients today need leadership and options. They need to be able to get answers to their questions and solutions to eliminate their fears. I have yet to meet a senior-aged client, whether wealthy, of moderate means or poor, who is not concerned about “losing everything they have” to a nursing home. Estate planning today is no longer just about taxes or avoiding probate. It has become much more comprehensive due to the changing dynamics of our health care system which forces you to be either rich enough to pay for it all or so poor you’re not able to pay for anything. It provides nothing for those in between (which is a majority of estate planning clients). It also discriminates against the types of care needed. For example, Medicare will pay all costs associated with heart surgery (often $300,000 to $400,000), but pays little, if any, costs associated with care for Alzheimer’s ($60,000 to $90,000 per year).
Estate planning today requires a broad range of knowledge in several areas of the law. Obviously, you need confidence in how to draft wills, health care proxies, living wills, powers of attorney, and trusts. Now, you must also become familiar with Medicaid Asset Protection Trusts (MAP Trusts™). If you are going to practice in estate planning you must become familiar with the Medicaid qualifying rules and the trust and non-trust options to provide clients. You must also commit to a comprehensive approach to get a working knowledge of this area of the law. The good news is, it is a finite world, much less finite than tax law. Many estate planning lawyers avoid discussing Medicaid because they don’t understand it. Just because you don’t understand it, doesn’t mean you don’t have to understand it. You can no longer avoid it!
So remember the ad, “This is not your father’s Oldsmobile.” The rest of the story is many experts believe that single ad campaign led to the downfall and dissolution of the 103-year-old company. Estate planning is the same. It is not what it used to be. You must commit to learning the Medicaid laws and rules to accomplish the goals and objectives of your clients or you may suffer the same fate as Oldsmobile. Many attorneys I work with in this area report a more rewarding practice because of the good they are able to do for their clients. For those willing to dive in and participate in this exciting multi-faceted area of the law, you will create significant value to your clients and more opportunity for profit in your own practice.
[In part three and four of this article, we will cover the key Medicaid rules for you to be aware of.]
Clients today need leadership and options. They need to be able to get answers to their questions and solutions to eliminate their fears. I have yet to meet a senior-aged client, whether wealthy, of moderate means or poor, who is not concerned about “losing everything they have” to a nursing home. Estate planning today is no longer just about taxes or avoiding probate. It has become much more comprehensive due to the changing dynamics of our health care system which forces you to be either rich enough to pay for it all or so poor you’re not able to pay for anything. It provides nothing for those in between (which is a majority of estate planning clients). It also discriminates against the types of care needed. For example, Medicare will pay all costs associated with heart surgery (often $300,000 to $400,000), but pays little, if any, costs associated with care for Alzheimer’s ($60,000 to $90,000 per year).
Estate planning today requires a broad range of knowledge in several areas of the law. Obviously, you need confidence in how to draft wills, health care proxies, living wills, powers of attorney, and trusts. Now, you must also become familiar with Medicaid Asset Protection Trusts (MAP Trusts™). If you are going to practice in estate planning you must become familiar with the Medicaid qualifying rules and the trust and non-trust options to provide clients. You must also commit to a comprehensive approach to get a working knowledge of this area of the law. The good news is, it is a finite world, much less finite than tax law. Many estate planning lawyers avoid discussing Medicaid because they don’t understand it. Just because you don’t understand it, doesn’t mean you don’t have to understand it. You can no longer avoid it!
So remember the ad, “This is not your father’s Oldsmobile.” The rest of the story is many experts believe that single ad campaign led to the downfall and dissolution of the 103-year-old company. Estate planning is the same. It is not what it used to be. You must commit to learning the Medicaid laws and rules to accomplish the goals and objectives of your clients or you may suffer the same fate as Oldsmobile. Many attorneys I work with in this area report a more rewarding practice because of the good they are able to do for their clients. For those willing to dive in and participate in this exciting multi-faceted area of the law, you will create significant value to your clients and more opportunity for profit in your own practice.
[In part three and four of this article, we will cover the key Medicaid rules for you to be aware of.]
Wednesday, July 14, 2010
ESTATE PLANNERS CAN’T HIDE FROM MEDICAID ANY MORE: WHAT YOU NEED TO KNOW TO AVOID MALPRACTICE: PART I
Do you remember the ad in the 80s, “This is not your father’s Oldsmobile?” It was used to win over a new demographic of car-buyers. Previously, the car maker had been popular with adults over 50 and was looking to attract a much younger market. While recently teaching a two-day Medicaid boot camp to 50 lawyers, this ad resonated in my mind as I watched the transformation of these traditional estate planning attorneys as they became enlightened to the relevance of Medicaid Laws to their practice. It became clear to me, like Oldsmobile, estate planning is not like it used to be! If you are going to practice estate planning, you must obtain a working knowledge of the Medicaid qualifying and disqualifying rules and how they impact clients and the estate plans you create for them. If you are willing to commit to this, you will not only avoid malpractice, but will create added value for clients, and new opportunities and profit for your practice.
Most estate planning attorneys agree, the need for long-term care is the greatest concern among the majority of their clients. Many attorneys unfamiliar with the application of Medicaid Laws, fluff it off and say, “You have too much money to qualify for Medicaid.“ The net worth of clients rarely alleviate their fear. Often, the typical “millionaire” has a home and $500,000 in marketable securities and/or cash. This millionaire does not feel rich and often is a typical Medicaid-planning client. For those with less, it is even more important. Recent demographics indicate there are 101 million households in the United States. Thirty-two million have $100,000.00 to $500,000.00, and Martindale-Hubbell statistic indicates of the more than one million lawyers in America, roughly 8,000 classify themselves as practicing “elder law.” If you do the math, there is one elder law attorney per 3,750 households. Assuming a planning fee of one month’s nursing home cost and an average monthly nursing home cost of $5,000, the market potential per elder law attorney practice is $18,750,000.
Recent statistics also indicate more than 6,000 men and women in the United States turn 60 every day. The aging population is putting increasing demands on our health care system. In the “old days” things were simple - you lived, then you died. The typical concern of an estate planning client was estate taxes and most concerns were resolved by drafting a Will. Today, with the proliferation of nursing homes and other long-term care facilities, and the enactment of estate Tax Reform under the Bush Administration, clients’ “worry” has shifted from taxes to long-term care. Estate planning has become more focused on clients’ lives (creating the need for trust planning) rather than their deaths (traditional Will plans). Eight out of ten individuals who come into our offices indicate loss of assets if they need nursing home care, as their number one concern. While estate planning dynamics have not changed, including clients’ need to control their property and to provide a legacy for those they leave behind, the threat to these goals has become far greater by the possibility of long-term care taking all they have worked so hard for. Estate planning today must address and resolve clients concerns regarding the need for long-term care. You cannot hide from it any more!
Medicaid Laws impact virtually every aspect of estate planning. Similar to tax law, simple things lawyers do pursuant to common law or contract law, which have been done for centuries, may, unbeknownst to the attorney, create adverse consequences in the Medicaid planning context. For example, individuals often transfer their home to their children to “protect it” from the nursing home. The truth is, in most all cases the home is exempt when determining Medicaid eligibility, but that simple transfer can create unintended adverse tax and Medicaid consequences. If the house is transferred without reserving a life estate, there is a loss in a “step-up” in basis at the client’s death and a completed gift has occurred. If it is transferred with a reserved life estate, a gift of the remainder interest has occurred without the ability to utilize the annual gift tax exemption because it is not a present-interest gift. Other adverse results include the property becoming owned by unintended beneficiaries like the spouse of a deceased child, the property being listed in a bankruptcy petition of a child or being liened by a judgment creditor of a child. While it appears to be simple on its face, the mere transfer of a home has multiple legal implications. The transfer also has significant Medicaid qualifying implications; it can disqualify an individual from Medicaid for 60 months or more.
Another significant impact Medicaid has on estate planning is its impact on trust or gift planning. Many clients believe revocable living trusts protect their assets from Medicaid. A simple rule I teach clients is “whatever you can get, Medicaid can get.“ Therefore, all assets in a revocable living trust are considered an available resource when determining Medicaid eligibility. More importantly, traditional estate planning lawyers often create an irrevocable trust granting the trustee ascertainable standards to distribute income or principal for the benefit of the grantor or spouse. While this may work for typical asset protection, there is an absolute exception in the Federal Medicaid law that treats all assets in discretionary trusts created by the applicant or spouse, an available resource when determining Medicaid eligibility. Most revocable living trusts convert to a family trust at the Grantor’s death, permitting income or principal to the spouse or other beneficiaries pursuant to ascertainable standards. This is also considered an available resource in determining the spouse’s Medicaid eligibility. Gifting also has significant ramifications. A simple gift to a child, grandchild for college, or to your church to build a new hall, can lead to disqualification for Medicaid for up to five years or more. These consequences are unlikely to be the intention of your client. The question is, are you aware of them? How can an estate planning attorney guide clients on transferring assets, creating trusts or giving gifts without being familiar with its impact on Medicaid eligibility.
-to be continued...
Most estate planning attorneys agree, the need for long-term care is the greatest concern among the majority of their clients. Many attorneys unfamiliar with the application of Medicaid Laws, fluff it off and say, “You have too much money to qualify for Medicaid.“ The net worth of clients rarely alleviate their fear. Often, the typical “millionaire” has a home and $500,000 in marketable securities and/or cash. This millionaire does not feel rich and often is a typical Medicaid-planning client. For those with less, it is even more important. Recent demographics indicate there are 101 million households in the United States. Thirty-two million have $100,000.00 to $500,000.00, and Martindale-Hubbell statistic indicates of the more than one million lawyers in America, roughly 8,000 classify themselves as practicing “elder law.” If you do the math, there is one elder law attorney per 3,750 households. Assuming a planning fee of one month’s nursing home cost and an average monthly nursing home cost of $5,000, the market potential per elder law attorney practice is $18,750,000.
Recent statistics also indicate more than 6,000 men and women in the United States turn 60 every day. The aging population is putting increasing demands on our health care system. In the “old days” things were simple - you lived, then you died. The typical concern of an estate planning client was estate taxes and most concerns were resolved by drafting a Will. Today, with the proliferation of nursing homes and other long-term care facilities, and the enactment of estate Tax Reform under the Bush Administration, clients’ “worry” has shifted from taxes to long-term care. Estate planning has become more focused on clients’ lives (creating the need for trust planning) rather than their deaths (traditional Will plans). Eight out of ten individuals who come into our offices indicate loss of assets if they need nursing home care, as their number one concern. While estate planning dynamics have not changed, including clients’ need to control their property and to provide a legacy for those they leave behind, the threat to these goals has become far greater by the possibility of long-term care taking all they have worked so hard for. Estate planning today must address and resolve clients concerns regarding the need for long-term care. You cannot hide from it any more!
Medicaid Laws impact virtually every aspect of estate planning. Similar to tax law, simple things lawyers do pursuant to common law or contract law, which have been done for centuries, may, unbeknownst to the attorney, create adverse consequences in the Medicaid planning context. For example, individuals often transfer their home to their children to “protect it” from the nursing home. The truth is, in most all cases the home is exempt when determining Medicaid eligibility, but that simple transfer can create unintended adverse tax and Medicaid consequences. If the house is transferred without reserving a life estate, there is a loss in a “step-up” in basis at the client’s death and a completed gift has occurred. If it is transferred with a reserved life estate, a gift of the remainder interest has occurred without the ability to utilize the annual gift tax exemption because it is not a present-interest gift. Other adverse results include the property becoming owned by unintended beneficiaries like the spouse of a deceased child, the property being listed in a bankruptcy petition of a child or being liened by a judgment creditor of a child. While it appears to be simple on its face, the mere transfer of a home has multiple legal implications. The transfer also has significant Medicaid qualifying implications; it can disqualify an individual from Medicaid for 60 months or more.
Another significant impact Medicaid has on estate planning is its impact on trust or gift planning. Many clients believe revocable living trusts protect their assets from Medicaid. A simple rule I teach clients is “whatever you can get, Medicaid can get.“ Therefore, all assets in a revocable living trust are considered an available resource when determining Medicaid eligibility. More importantly, traditional estate planning lawyers often create an irrevocable trust granting the trustee ascertainable standards to distribute income or principal for the benefit of the grantor or spouse. While this may work for typical asset protection, there is an absolute exception in the Federal Medicaid law that treats all assets in discretionary trusts created by the applicant or spouse, an available resource when determining Medicaid eligibility. Most revocable living trusts convert to a family trust at the Grantor’s death, permitting income or principal to the spouse or other beneficiaries pursuant to ascertainable standards. This is also considered an available resource in determining the spouse’s Medicaid eligibility. Gifting also has significant ramifications. A simple gift to a child, grandchild for college, or to your church to build a new hall, can lead to disqualification for Medicaid for up to five years or more. These consequences are unlikely to be the intention of your client. The question is, are you aware of them? How can an estate planning attorney guide clients on transferring assets, creating trusts or giving gifts without being familiar with its impact on Medicaid eligibility.
-to be continued...
Tuesday, July 6, 2010
THE MISSING COMPETENCY
As lawyers, we have been trained well in the law and how to seek out answers. In fact, I might even suggest we have been trained to become contrarians. Imagine being married to us? Law school taught us using the traditional Socratic Method to think critically and analyze situations to get a result for clients. In fact, every lawyer in the world can take either side of any issue, just ask us. But, as I coach attorneys on running their law practice, I have identified a missing “core” competency to be a successful attorney, I note a common theme. Inconsistent cash flow, frustration, overwhelmed, and worst of all, no money. While we have been trained exceptionally in the law and how to think critically and analytically for any issue put before us, I realize few of us have the competency on how to run a business. Knowing how to run a business is a core competency most lawyers are missing, but unfortunately cannot succeed without.
Fortunately for me, prior to law school, I was a Certified Public Accountant. I was born and raised in a family business and our Sunday afternoon dinner was the "board meeting." My parents did not permit me positions of authority until they were earned. I started in the warehouse then graduated to the truck driver. Eventually, I was brought into the office to learn the accounting, public relations, and other elements of running a successful business. My parents were able to increase their business 37 fold in the 25 years they owned it before selling it to the third generation in 1991. That's when I left and completed law school. So, as I entered law school, I entered from the perspective of an entrepreneur who was raised in a family business and then, while working as a Certified Public Accountant for a Price Waterhouse, got to audit the books of other businesses to see how they operated, efficiently or not.
So, how do you teach someone the core competency of learning a business? It could take years but, when a system is created, it may only require months. For example, if you do not know how to cook hamburgers but are able to buy a McDonald's, Wendy's, or Burger King Franchise, they would have all the systems, structure, marketing, and support necessary for your success. The same is true with the law. Unfortunately, since the law does not permit "franchises", you must seek out successful business models proven in the industry and help create a meaningful result for clients. I have been fortunate in creating those systems to run a successful estate and elder law practice, and it is my absolute passion in life to share them with every attorney I have the ability to interact with. Many are available for free as part of my passion to help people succeed. But, what if you choose to do it on your own? Then, you have to define how you will get there. To have a successful business, the most critical element is distinguishing and tracking revenues and expenses. You must control your fixed expenses and have as many "variable” expenses as possible. Variable expenses are important because do not exist unless there is revenue associated it; whereas, fixed expenses are there whether you generate income or not. So, if you minimize your fixed expenses and maximize your variable expenses you should be able to maintain and operate profitably. You must also ensure you have the minimum amount of sales you need to pay fixed expenses, variable expenses and YOU! You must have a sales program in place to identify how you're going to generate the necessary leads for you show clients value so they actually hire you. And finally, after using your marketing to generate leads, and showing the value, you must be able to keep your promises made and get the client the result they paid you for. If you do, they will speak well of you to their friends; the greatest form of marketing. This creates a harmonious cycle of referrals from clients. In my recent analysis of my own business, I realized more than 20 percent of the referrals into our office where coming from clients. That cannot occur unless you have a systematic approach on how to deal with clients so you, and each of your team members, can be consistent.
So, are you comfortable knowing the law alone? Don't be. Knowing the law in and of itself will not help you have a successful business. Seek out your solution on how to run a business and go. That combined with your legally technical competency is a winning combination. Receive a free 90 minute exercise “The Revenue Focuser” to see how you can begin profitability in as little as 30 days.
Fortunately for me, prior to law school, I was a Certified Public Accountant. I was born and raised in a family business and our Sunday afternoon dinner was the "board meeting." My parents did not permit me positions of authority until they were earned. I started in the warehouse then graduated to the truck driver. Eventually, I was brought into the office to learn the accounting, public relations, and other elements of running a successful business. My parents were able to increase their business 37 fold in the 25 years they owned it before selling it to the third generation in 1991. That's when I left and completed law school. So, as I entered law school, I entered from the perspective of an entrepreneur who was raised in a family business and then, while working as a Certified Public Accountant for a Price Waterhouse, got to audit the books of other businesses to see how they operated, efficiently or not.
So, how do you teach someone the core competency of learning a business? It could take years but, when a system is created, it may only require months. For example, if you do not know how to cook hamburgers but are able to buy a McDonald's, Wendy's, or Burger King Franchise, they would have all the systems, structure, marketing, and support necessary for your success. The same is true with the law. Unfortunately, since the law does not permit "franchises", you must seek out successful business models proven in the industry and help create a meaningful result for clients. I have been fortunate in creating those systems to run a successful estate and elder law practice, and it is my absolute passion in life to share them with every attorney I have the ability to interact with. Many are available for free as part of my passion to help people succeed. But, what if you choose to do it on your own? Then, you have to define how you will get there. To have a successful business, the most critical element is distinguishing and tracking revenues and expenses. You must control your fixed expenses and have as many "variable” expenses as possible. Variable expenses are important because do not exist unless there is revenue associated it; whereas, fixed expenses are there whether you generate income or not. So, if you minimize your fixed expenses and maximize your variable expenses you should be able to maintain and operate profitably. You must also ensure you have the minimum amount of sales you need to pay fixed expenses, variable expenses and YOU! You must have a sales program in place to identify how you're going to generate the necessary leads for you show clients value so they actually hire you. And finally, after using your marketing to generate leads, and showing the value, you must be able to keep your promises made and get the client the result they paid you for. If you do, they will speak well of you to their friends; the greatest form of marketing. This creates a harmonious cycle of referrals from clients. In my recent analysis of my own business, I realized more than 20 percent of the referrals into our office where coming from clients. That cannot occur unless you have a systematic approach on how to deal with clients so you, and each of your team members, can be consistent.
So, are you comfortable knowing the law alone? Don't be. Knowing the law in and of itself will not help you have a successful business. Seek out your solution on how to run a business and go. That combined with your legally technical competency is a winning combination. Receive a free 90 minute exercise “The Revenue Focuser” to see how you can begin profitability in as little as 30 days.
Sunday, June 6, 2010
GETTING OFF THE HAMSTER WHEEL
I was recently speaking with several attorneys regarding the operation of their law practice and their personal lives. The commonality; each woke up, went to work, dealt with client issues, staff issues, complaints, ended up working late, therefore got home late, not present at home, went to bed, woke up and started the day all over again. It reminds me of the movie “The Groundhog Day”. It was an interesting revelation as I recall this occurred many years ago in my practice and recently has been threatening to happen again. This conversation, however, made me rethink the fundamentals that helped me get off the hamster wheel which I am reapplying once again in my own practice.
Michael Gerber in the E-Myth talks about having time to work "ON” the business versus "IN” the business. Most of us get stuck working IN the business, doing the day-to-day routine items that need to get done, managing staff, dealing with client issues, getting work done but few of us take the time to work ON our business and ensure are keeping our eye on the “future ball” in a more efficient manner. Nothing illustrates it more in my own personal experience of; planning, open time, and development time. The First critical element to working ON my business is planning. I start every Monday morning where the first two hours of my week I am in a restaurant eating breakfast planning all the events for my week, identifying what is occurring, and the open time available for me to create; this is the time in my life that I have to wade into the already scheduled (default) and the time to which I have directly impact what will happen in the future (design). Planning is the most critical element to any of us to avoid being "Dumped on" all week without knowing its coming. It also empowers us to utilize any open time to begin to change the future from our current reality or past.
The second critical element of working ON my business is what I call Open time (my initials). Essentially, this is one day per week where no one is allowed to schedule ANYTHING for me. This is my day to use as I deem best for the future of my businesses and the people whom work with me on my team. I may also decide to use this time for family matters. The beauty is the knowing that I have this one day each week which empowers me on Monday during my planning to prioritize those things that will have the greatest impact on my business and personal life in the short term, medium term, and long term. Oftentimes, during these days, I am able to work on short-term, medium-term, and long-term projects. I encourage you to try scheduling an Open Time into your calendar each week (and preferably not on a Friday). Just try it for 30 days and see what occurs for you.
The third element to my week, which has a great impact on ensuring my firm continues to move forward, is Development Time. Development time is two; two-hour blocks during the week which all members of the firm must leave open and not schedule anything. The purpose of this time is to ensure all members of the firm are using those two, two-hour blocks, four hours a week, to work on the business (i.e., get caught up, developing a system, clear frustrations, training) or provide opportunity for the entire team to be "available" if needed. This prevents any catastrophe in our operations because of our lack of ability to get everybody together. At a minimum, we all know there are two times during the week where we are all available, if needed. In many cases, this time is also utilized for one or two individuals to get together to move projects forward to help them become more efficient in what they are doing. For those of you worrying about how much you have in the week, I do schedule one of the two-hour development blocks on my open time.
So, are you on a hamster wheel trying to get off? I recommend you consider these three elements in your week and implement them for 30 days and see what impact it can have. The truth is, you are showing up everyday anyway, it is a matter of what intentional, focused, present and future practice energy you are putting into it, week in and week out. Trust and take try it on, it will help move you in the right direction to get off the hamster wheel. Good luck. For a free download of The complete MPS Weekly Planning Focusers go to www.mpsccs.com.
Friday, May 28, 2010
HOW MANY REFERRAL SOURCES ARE ENOUGH?
Recently, I attended a program focused on referrals. The question was asked “How many referral sources are enough? As I pondered this, I was quite intrigued at what I discovered. Interestingly for me once again, it came down to focus. Chet Holmes of The Ultimate Sales Machine™ says should you do 10 things 14,000 times. When identifying the number of referral sources you need its really no different.
So how many referral sources do you need? Consider, if you would, a single meeting with a potential referral source is approximately 1.5 hours. Assume further, you were committed to three meetings per week to meet with new referral sources. That would take only 4.5 hours of your entire work week, about 10% of your time. The question is, “Is it effective?” If you stay committed to three referral source meetings per week, that will permit you to meet with 12 people per month; totaling about 144 people per year. Give or take a few. Seriously. If each of these 144 people referred you one or two cases, you will have between 144 and 288 cases per year, probably far beyond what you could handle or need to meet your firm monthly revenue goal. So, is it necessary to meet with various referral sources three times a week? Absolutely; but only if you are more than intentional about it.
However, what if I said you were limited to only ten referral sources? Which ten would you pick? And knowing that you only had ten to chose from, what would be the criteria to identify whether a potential referral source made it to your top ten? These are the questions you want to ask yourself to be able run an efficient profitable practice because as we know, if there are no referrals, there is no business. And busy without business means loss, financial loss.
What I recommend is you pick your top ten referral sources and meet with them and identify what it is about them that made them your top referral source. Is it their personality? Is it their clientele? Is it the values you share in common? I suggest you indentify the qualities of your top ten; then your top two or three and absolute clone them. What if, instead of meeting 144 people a year, you focused on the ten you had the best relationships with and asked them to introduce you to people like them? What if, each one of them you asked to introduce you to just three more people? What if, instead of meeting 12 new people per month, you commit to meeting four people, the same four people, and once each quarter? And you continue to build your relationship and continue to work together in the ways that serve both of you best. This creates several efficiencies. First, you have to manage fewer relationships. While your top ten will introduce you to 30 others, most of those ones referred to could be managed through that one relationship. Continuing on, if one of the referrals from your top ten becomes a new top ten, then you can request three from them. Now you are beginning to build a network of networks rather than starting fresh over and over again.
Interestingly, as I look at my calendar and see the little time I have to market, I have a conundrum to determine how can I not market, otherwise, I’ll have no work to do. Working smarter, not harder is always the answer. It is working with efficiency. So, I challenge each of you to uncover who your top ten referral sources are. Will you meet with just anyone? A standard you have to determine right off the bat. Another standard I would identify is if somebody’s calling you as opposed to you calling them. Pay attention; possibly they’re identifying you as their top ten and they should get priority or at least a free look at you to determine if there’s a possibility for them to fall into your top ten. It doesn’t take much. It just takes focus, intentionally and authenticity. It’s not hard folks and you may actually find yourself having fun and oh yeah; increased clients, increased referrals and increased cash flow.
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