Can You Afford $91,000 a Year for a Nursing Home?

CassandraGenworth, an insurance company that sells long-term care insurance, recently concluded their annual report surveying over 15,000 assisted living facilities, nursing homes and other long-term providers across the country.  The report found that the median cost for a private nursing home room has risen from $87,600 in 2014 to just over $91,000 per year.  While costs vary widely from state to state, the cost of care in a nursing home has risen at twice the rate of U.S. inflation in the past 5 years.[1]

Much of the aging population believes that Medicare will cover these expenses.  Not so.  “Medicare does not pay the largest part of long-term care services or personal care – such as help with bathing, or for supervision often called custodial care.”[2]   Medicare will pay for a “short stay” if the stay is following a hospital stay of at least three days, the individual is admitted to a Medicare-certified nursing facility and the individual requires “skilled care,” as in physical therapy or nursing services (up to 100 days, although Medicare will only pay 100% for the first 20 days, then the individual must pay a co-pay, currently $157.50 per day).[3]  Medicare will not cover long-term care when an individual is suffering from memory impairment or a degenerative disease that impairs the individual’s ability to care for themselves, i.e. bathe, get in and out of bed, etc.  Medicare will pay for hospice care, only if one is expected to live less than 6 months—if you have a prospect of a year, you’re on your own.  The bottom line is Medicare is not going to cover long-term care in a facility, nor will they cover around-the-clock care at home.

So where do you turn?  Long-term care insurance.  The difficulty with this is the expensive premiums if you wait too long.  The policies can cost upwards of $3,000 per year but max out at a total benefit of $164,000 with a daily benefit allowance of $150 for 3 years.[4]  This can help offset the Medicare premium following a hospital stay.

In the event long-term care insurance maxes out, the final option in long-term care is Medicaid.  It’s estimated that Medicaid pays for more than half of long-term care throughout the country.[5]  However, you must be eligible for Medicaid in order to qualify for assistance, which, in addition to other requirements, has a “resource limit” of $2,000 (although homes are exempt from this calculation).[6]  This has led to many elderly individuals depleting hundreds of thousands of dollars in a few short years in order to cover the expense.  Then, when they are down to their last $2,000, Medicaid will assist them.  These now impoverished individuals have no means for additional necessities aside from what the government offers through social security, disability, Medicaid, food stamps and other state government programs.  Additionally, Medicaid will seek reimbursement from the individual’s estate after their death, including their home, in some instances.

This is one of the many reasons proper, and early, estate planning is so crucial. With proper planning, an aging client can align assets in the event of an illness or hospitalization ensuring that:

(1)    They will have someone they trust making decisions for them, their previously designated health care agent;

(2)    They will have the proper long-term care insurance to assist in covering the cost of long-term care, in the event it’s necessary; and

(3)    They will have safeguards in place so that if they require Medicaid assistance, depleting all of their resources is not required.

However, in order for the estate plan to be effective, it must be structured early and prior to the onset of illness.  Each family has different goals which they hope to accomplish.  We can work with you to set up the most effective estate plan to accomplish you and your family’s goals.

IRS Warns of Latest Tax Scams

Hoffman12Please be aware that a few of our Hoffman & Associates clients were recently contacted by scammers threatening arrest and demanding payment for apparent taxes owed. Thankfully these clients contacted our office right away and were not adversely affected by these criminals posing as IRS agents. My own home answering machine recently contained a message threatening me with arrest if I did not contact them immediately to arrange payment.  The statement below is from the IRS and nicely summarizes the latest IRS scams and provides information on what you should do if contacted.  Please do not hesitate to contact us with any questions or concerns at 404-255-7400.


Don’t Fall for New Tax Scam Tricks by IRS Posers

Though the tax season is over, tax scammers work year-round. The IRS advises you to stay alert to protect yourself against new ways criminals pose as the IRS to trick you out of your money or personal information. These scams first tried to sting older Americans, newly arrived immigrants and those who speak English as a second language. The crooks have expanded their net, and now try to swindle virtually anyone. Here are several tips from the IRS to help you avoid being a victim of these scams:

  • Scams use scare tactics.  These aggressive and sophisticated scams try to scare people into making a false tax payment that ends up with the criminal. Many phone scams use threats to try to intimidate you so you will pay them your money. They often threaten arrest or deportation, or that they will revoke your license if you don’t pay. They may also leave “urgent” callback requests, sometimes through “robo-calls,” via phone or email. The emails will often contain a fake IRS document with a phone number or an email address for you to reply.
  • Scams use caller ID spoofing.  Scammers often alter caller ID to make it look like the IRS or another agency is calling. The callers use IRS titles and fake badge numbers to appear legit. They may use online resources to get your name, address and other details about your life to make the call sound official.
  • Scams use phishing email and regular mail.  Scammers copy official IRS letterhead to use in email or regular mail they send to victims. In another new variation, schemers provide an actual IRS address where they tell the victim to mail a receipt for the payment they make. All in an attempt to make the scheme look official.
  • Scams cost victims over $20 million.  The Treasury Inspector General for Tax Administration, or TIGTA, has received reports of about 600,000 contacts since October 2013. TIGTA is also aware of nearly 4,000 victims who have collectively reported over $20 million in financial losses as a result of tax scams.

The real IRS will not:

  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand that you pay taxes and not allow you to question or appeal the amount that you owe.
  • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in police or other agencies to arrest you for not paying.

If you don’t owe taxes or have no reason to think that you do:

  • Do not provide any information to the caller. Hang up immediately.
  • Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
  • You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes.

If you know you owe, or think you may owe taxes:

  • Call the IRS at 800-829-1040. IRS workers can help you if you do owe taxes.

Stay alert to scams that use the IRS as a lure. For more, visit “Tax Scams and Consumer Alerts” on IRS.gov.

IRS YouTube Videos:

Single Member LLCs for Asset Protection

IAN M. FISHERAt Hoffman & Associates, we advise many of our clients to form limited liability companies, known as LLCs, to hold and protect their assets. In general, an owner of an LLC interest, or a “member” of the LLC, will not be responsible for any debts of the LLC, which is a win-win situation for the client. Further, if the member gets sued for something related to the LLC, such as the actions of an employee of the LLC or product liability from a product produced by the LLC, the member’s personal property will be shielded from the person suing the LLC.

Additionally, if a member is sued for something unrelated to the LLC, the member’s LLC interest will be somewhat shielded from that judgment creditor. Often the remedy for a judgment creditor against a member of an LLC is what is known as a “charging order,” which means they cannot take ownership of the LLC, but will be entitled to any LLC distributions to that Member.

However, in a few limited instances, a court will look through the LLC to get to a Member’s assets, known as “piercing the veil” of the LLC. Generally, this is done in the case of an LLC with only one member, which is the situation numerous clients find themselves in – they do not have a partner to add or do not want to add a partner to their business. Even with this risk, many clients will want to own the whole LLC themselves, which is a very simple structure, since all of the LLC’s taxes would pass through to that single member.

Often, states are more likely to pierce the veil or not limit the remedy to a charging order in the case of single-member LLCs, or SMLLCs. In fact, only a handful of states limit action against a member of a SMLLC to a charging order. Delaware, Nevada and Wyoming are the popular states that offer this statutory protection. If a client is focused on asset protection and does not want an additional LLC member, forming the LLC in one of these three states is the best course of action.

Even in a state that limits a remedy to a charging order, a court can still pierce the veil of a SMLLC if the LLC member does not respect the structure of the LLC. In a recent Wyoming case, Greenhunter Energy, Inc. v. Western, 2014 WY 144, (WY S.C., Nov. 7, 2014), the Wyoming Supreme Court completely disregarded a SMLLC because the Member did not treat the LLC like a separate operating entity. There were numerous problems in this case, but they are easily avoidable with a proper Operating Agreement and by respecting the LLC as a separate entity.

Some clients desire more anonymity. Delaware, Nevada, and Wyoming all require a manager’s name to be filed with the state, which becomes an easily accessible public record. If a client also desires anonymity, one option would be to form an LLC in a state that does not require a manager’s name to be listed (such as Georgia) and have that LLC serve as the manager of the SMLLC.

Although the SMLLC can be ineffective if not formed and used properly, as shown in the Greenhunter Energy case, it can be a great tool for those clients who have asset protection goals, even if they do not want to bring a partner into their business. If this is you or someone you know, please contact Hoffman & Associates to discuss a single-member LLC to protect your assets.

For more information regarding this or any other business law concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

 

The IRS is at it Again

michael w. hoffmanFamily Limited Partnerships (FLPs) and Family Limited Liability Companies (FLLCs) have long been used for a variety of purposes, including centralized asset management, creditor protection, efficient legacy planning, and implementing legitimate discounting and freezing techniques for estate planning purposes. Our estate and gift tax system relies on accurately determining the fair market value of the property being transferred. Fair market value is to be determined objectively considering hypothetical buyers and sellers. Appraisers must take into account valuation discounts for lack of control and lack of marketability. When property is transferred to descendants or trusts, the value of the particular property being transferred is what is reported for gift tax purposes, and then the property with all future appreciation is excluded from the grantor’s estate.

The IRS began a campaign of attacking FLPs back in 1997. Court decisions have generally rebuffed various tactics and positions taken by the IRS in the family limited partnership area.

The IRS publishes its priority guidance plan each year to emphasize areas of the tax law that the IRS may issue additional regulations. Additional regulations affecting valuations in an intra-family transfer context has been on the IRS’ priority guidance plan for the last 11 years. Now, it has been elevated to a proposal set forth in President Obama’s Administration’s 2013 Green Book. The IRS recently announced that it could issue proposed regulations as early as September, which would severely restrict valuation discounts for interests in FLPs and other family entities.

Articles are now appearing which are encouraging estate planners and clients to get ahead of these likely new rules. It is likely that the IRS position will be that any new rules will be effective upon the publication of the proposed regulations, even though they will not become “final” regulations until a much later date.

Earlier this summer, we sent messages to clients who are in the midst of their estate planning that they may want to expedite the process, before the IRS can issue proposed regulations which greatly curtail the legitimate discounting and freezing techniques that we’ve implemented with countless clients. One would think that only Congress can change the law with respect to re-defining the value of property for gift and estate tax purposes, but the Obama Administration has an historical edict of affecting change by more government regulation. The IRS, no doubt, is feeling very confident in their power to limit valuation discounts by way of their regulatory authority.

If you have put off further estate planning, time may be of the essence. If your planning should include the many benefits of FLPs and FLLCs, or if you have an FLP or FLLC and gifting may be appropriate, you may want to get with your advisor sooner, rather than later. If we can help, give us a call.

For more information regarding this or any other estate planning concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

SINGLE MEMBER LLCS FOR ASSET PROTECTION

IAN M. FISHERAt Hoffman & Associates, we advise many of our clients to form limited liability companies, known as LLCs, to hold and protect their assets. In general, an owner of an LLC interest, or a “member” of the LLC, will not be responsible for any debts of the LLC, which is a win-win situation for the client. Further, if the member gets sued for something related to the LLC, such as the actions of an employee of the LLC or product liability from a product produced by the LLC, the member’s personal property will be shielded from the person suing the LLC.

Additionally, if a member is sued for something unrelated to the LLC, the member’s LLC interest will be somewhat shielded from that judgment creditor. Often the remedy for a judgment creditor against a member of an LLC is what is known as a “charging order,” which means they cannot take ownership of the LLC, but will be entitled to any LLC distributions to that Member.

However, in a few limited instances, a court will look through the LLC to get to a Member’s assets, known as “piercing the veil” of the LLC. Generally, this is done in the case of an LLC with only one member, which is the situation numerous clients find themselves in – they do not have a partner to add or do not want to add a partner to their business. Even with this risk, many clients will want to own the whole LLC themselves, which is a very simple structure, since all of the LLC’s taxes would pass through to that single member.

Often, states are more likely to pierce the veil or not limit the remedy to a charging order in the case of single-member LLCs, or SMLLCs. In fact, only a handful of states limit action against a member of a SMLLC to a charging order. Delaware, Nevada and Wyoming are the popular states that offer this statutory protection. If a client is focused on asset protection and does not want an additional LLC member, forming the LLC in one of these three states is the best course of action.

Even in a state that limits a remedy to a charging order, a court can still pierce the veil of a SMLLC if the LLC member does not respect the structure of the LLC. In a recent Wyoming case, Greenhunter Energy, Inc. v. Western, 2014 WY 144, (WY S.C., Nov. 7, 2014), the Wyoming Supreme Court completely disregarded a SMLLC because the Member did not treat the LLC like a separate operating entity. There were numerous problems in this case, but they are easily avoidable with a proper Operating Agreement and by respecting the LLC as a separate entity.

Some clients desire more anonymity. Delaware, Nevada, and Wyoming all require a manager’s name to be filed with the state, which becomes an easily accessible public record. If a client also desires anonymity, one option would be to form an LLC in a state that does not require a manager’s name to be listed (such as Georgia) and have that LLC serve as the manager of the SMLLC.

Although the SMLLC can be ineffective if not formed and used properly, as shown in the Greenhunter Energy case, it can be a great tool for those clients who have asset protection goals, even if they do not want to bring a partner into their business. If this is you or someone you know, please contact Hoffman & Associates to discuss a single-member LLC to protect your assets.

Hoffman & Associates Announces its Newest Partner, Kim Hoipkemier

hoffmankimcolorHoffman & Associates is proud to announce that Kim Hoipkemier has become a partner of the firm effective January 1, 2015.  Kim joined H&A in 2011 bringing with her extensive experience in estate planning and representation of high end clients.  She currently specializes in the areas of wills, trusts, estate administration and probate.

“Kim has become engaged in our practice in a relatively short period of time and helps define our compelling brand to clients, vendors and other professionals”, commented Mike Hoffman, founding and managing partner.  “Kim has built a solid foundation in estate planning and her contributions make us a better firm.”

Mrs. Hoipkemier is a magna cum laude undergrad from the University of Georgia and a cum laude graduate from the University of Georgia School of  Law.  She is a member of the Fiduciary Law Section of the State Bar of Georgia and a member of the Wills Clinic through the State Bar of Georgia Young Lawyers Division.

About Hoffman & Associates

Hoffman & Associates is a boutique law firm established in 1991 specializing in estate planning and probate and tax and business law. Expertise in these areas comes from a dedicated staff of both attorneys and CPAs delivering personalized service and sound financial guidance.   Hoffman & Associates prides itself in having a standalone tax practice and attorneys licensed in Georgia, Florida, North Carolina and Tennessee.

VP of Administration Celebrates 20 Years of Service with Hoffman & Associates

Hoffman & Associates celebrated Trish Kennedy’s 20 year anniversary on Monday December 1, 2014 with a staff luncheon.  Trish started working for H&A back in 1994 managing the day-to-day operations of the firm. She has been instrumental in the firm’s success and growth through her unparalleled work ethic and commitment, her can-do attitude, her organization, and strong communication skills.  According to Mike Hoffman, Managing Partner “Trish is the glue that holds everyone together.” Congratulations to Trish from the entire staff at H&A!

 

Trish KennedyAbout Hoffman & Associates:

Hoffman & Associates is a boutique law firm specializing in Estate Planning, Tax Planning and Business Law. Expertise in these areas comes from a dedicated staff of both attorneys and CPAs delivering personalized legal service and sound financial guidance.   Hoffman & Associates prides itself in having a standalone tax practice and attorneys licensed in Georgia, Florida, North Carolina and Tennessee.

For information regarding estate planning, tax planning or any business law  concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

Hoffman & Associates, Proud Sponsor of the Footprints for the Future 5K

footprints for the future 5kTeam Hoffman & Associates Running for Education in Sandy Springs

Hoffman & Associates (H&A) was a proud sponsor and supporter of the recent Footprints for the Future 5K held on Saturday November 8, 2014. Runners took to the streets in Sandy Springs hoping to make a difference in the lives of students in the 11 public schools in their district.

This inaugural race, organized by the Sandy Springs Education Force (SSEF), helped raise awareness and funds to support their mission of inspiring and supporting all Sandy Springs public school students to graduate and pursue productive lives beyond high school.  According to Joe Nagel, Partner at H&A and co-chair of the event, “I believe in education and in the great work that SSEF is doing in our community.” Joe, whose mother was an educator in Atlanta for many years,  is proud to be involved and making a difference in the lives of so many students.

Several staff members of H&A also participated in the race including Trish Kennedy, Mary Daugherty, Kim Hoipkemier, and Carolina Gomez.

About Sandy Springs Education Force:
In an effort to support Sandy Springs public schools and students, SSEF actively engages the resources of civic leaders, community stakeholders, and businesses to deliver supplemental programs and services in eleven public schools.  For more information about SSEF, please visit their website at www.sandyspringseducationforce.org

About Hoffman & Associates:
Hoffman & Associates, a boutique law firm established in 1991, specializes in high-end estate planning, tax planning and business law. Expertise in these areas comes from a dedicated staff of both attorneys and CPAs delivering personalized service and sound financial guidance.   Hoffman & Associates prides itself in having a standalone tax practice and attorneys licensed in Georgia, Florida, North Carolina and Tennessee. For more information about H&A please visit our website at www.hoffmanestatelaw.com

Hoffman & Associates Promotes Estate Planning Awareness Week, October 20-26, 2014

Hoffman & Associates announced today that they are joining their colleagues at WealthCounsel in a public relations campaign to showcase National Estate Planning Awareness Week, October 20-26, 2014.

According to a 2014 industry trends survey of estate planners conducted by WealthCounsel, one of the most common reasons clients engage in estate planning is to spare their family members and heirs the chaos and conflict that often occurs after their death.  Another common reason that consumers engage in planning is to protect their children from mismanaging their inheritance, or to shield their children’s inheritance from creditors.

Estate planning is one of the most overlooked areas of personal financial management.  More than 120 million Americans do not have proper estate plans to protect themselves or their families in the event of sickness, accidents, or untimely death.  This costs many families wasted dollars and unnecessary hardship that can be minimized with proper planning.

In 2008, the founders of The Financial Awareness Foundation worked with Congress to pass a resolution proclaiming the third week in October as National Estate Planning Awareness Week.  The resolution noted that “Many Americans are unaware that lack of estate planning and financial illiteracy may cause their assets to be disposed of to unintended parties by default through the complex process of probate.”

“You will enjoy the peace of mind that comes with an estate plan that is flexible, that you can modify as your lifestyle changes or as external factors dictate,” said Mike Hoffman, managing partner at H&A.  According to Kim Hoipkemier of H&A “As a member of WealthCounselÒ, our firm has access to a state-of-the-art document drafting system, a network of experienced colleagues throughout the country with whom we can collaborate, and superior educational resources to help us stay on the leading edge of knowledge.”

In addition to WealthCounselÒ, Mike Hoffman is a member of the Georgia, American and Ohio Bar Associations, the American Association of Attorney-Certified Public Accountants, The American Institute of Certified Public Accountants, the Georgia Society of Certified Public Accountants, and founder and member of the Estate Planning and Financial section of the Georgia Society of CPAs.  Kim Hoipkemier is a member of the American and Georgia Bar Associations.

For more information regarding this or any other estate planning concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose. The information contained herein is provided “as is” for general guidance on matters of interest only. Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. Before making any decision or taking any action, you should consult a competent professional advisor.

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