Economics Finance

Bankruptcy is the final solution to dealing with your financial issues – it is the measure of last resort and should never be undertaken lightly nor without professional advice and assistance. In a nutshell, bankruptcy is where all your assets are liquidated and sold with the proceeds being distributed to your creditors; after a period of supervision, which is 12 months in the UK, you are now free and clear to restart your life without the burden of your debts.

The devil is in the detail – “all of your assets are liquidated and sold”, and this includes your home, your business if you are self-employed, your vehicles and your investments as well as any savings if you have them.

The most common factor is of course, losing your home and having to move your family to usually, rented accommodation. Continue reading ‘Guide to Bankruptcy’ »

On October 1, the latest set of economic indicators seemed to be yet another sharp reminder that the US economy is in for a tough time over the years to come. With higher unemployment figures (although a slowing of job loss number is expected) and slowing manufacturing data, it should come as little or no surprise that people with debt trouble are going to look at bankruptcy as a way to escape the financial pressures facing them.

With many people right now still on pins and needles where their employment is concerned, Chapter 13 Bankruptcy might not be the great solution the American Government intended for it to be. While it may be nice to retain control and possession of important assets, the demands will continue to exist that any structured debt program under Chapter 13 be adhered to. Consequently, Chapter 7 bankruptcy filings should be expected to rise. Continue reading ‘Consider Whether Chapter 13 Bankruptcy is the Right Bankruptcy Option’ »

If you have decided to prepare a will, you have already minimized much of the potential conflict that can arise between potential heirs. As a person who has written a will, known as a testator, you have control over what happens to your assets after you are gone. People who do not leave a will, on the other hand, leave the fate of their assets undecided, and the responsibility to determine who inherits the assets typically falls to the state. This lack of planning can put considerable stress on family members and may lead to contentious conflict over your estate.

Ensuring That Your Will is Probated

When you decide to write a will, be sure to consult the laws of your state. Each state has different requirements for what constitutes a valid will and not meeting these criteria could prevent your will from being probated later on. An experienced probate lawyer can help to ensure that you take all of the necessary steps to create a valid will. Continue reading ‘Avoiding Conflicts Over Inheritance’ »

Every person has a dream of planning a secure future for his family. No one knows when he might die so people try to plan for future in a way to provide security to their partners, children and even relatives. People mostly use wills to provide this safety net. Wills ensure the division of wealth and the rest of the belongings the way a person would want it after his/her death.

Some people tend to think that a will cannot be enough to settle difficult matters like property distribution among the heirs, and they want something more. They opt for a trust that is more practical and easier to manage. This is especially true in cases where the heirs are underage and other people cannot be trusted. In these situations a trust could come real handy.

Beneficiary trusts are run under the name of a beneficiary and a trustee is chosen by the settler to manage it. According to the laws in United Kingdom, the settler has to make it very clear what the goal of the trust is, and what powers are being granted to the trustee. There are many different kinds of beneficiary trusts that are supported by the laws of inheritance in UK. Continue reading ‘How Do Beneficiary Trusts Work?’ »

There is a period of non-eligibility for Medicaid for those who have recently transferred assets. The DRA was enacted in 2006. For transfers that were made prior to the enactment, officials will only look at any transfers that were made within 36 months of the application. If transfers were made after the enactment of the DRA, there is a look-back period of 60 months. This period determines how long you must wait to become eligible for the program after the transfer was made.

The formula is based on the amount that was transferred. It takes the total amount transferred and divides it by the average monthly cost of nursing care. For example, if $100,000 was transferred and the nursing costs are $5,000 per month, the waiting period, or penalty period would be 20 months. There is another rule that is involved with the look-back period. The penalty period will not begin until the individual has moved to the nursing home, has spent down their assets to be eligible for the program, has applied for coverage and has been approved for the coverage but not for the transfer.

When making transfers, it is very important to be aware of these rules and time frames. This information will help you better plan your Medicaid asset protection. Make sure that all transfers are done prior to the time of needing nursing care. It is suggested that if you are considering transferring your assets, you do so as soon as possible. This will eliminate any waiting when Medicaid coverage is needed. If transfers are made within the five year look-back period, the penalty time could actually extend past five years. This will depend on the amount of assets that were transferred.

There are many factors to consider when making transfers. You should take into consideration the estimated cost of nursing care you will need, the transfer penalty in the state in which you reside, your current and projected income and other living expenses. The main goal of the DRA was to try to eliminate any planning. The best solution is to contact an elder law expert to assist you with planning and asset protection transfers.

You should also be aware that transfers could have tax consequences if not done correctly. If you transfer the assets to your children, they will be responsible for all taxes. If the value of the asset appreciates, there could be serious consequences. Your children will not receive the tax break that they would if they had received the assets through your estate. This is another reason why it is so important to carefully plan any transfers. Continue reading ‘Transfer Assets For Medicaid Eligibility’ »

Asset Protection as well as estate planning and trusts, in general, can be viewed similar to a poker match. In some cases, you need a simple hand and sometimes only a full house will win. This is a unique way to look at asset protection, estate planning, and trusts. There is no shame in winning with just a pair of deuces. Sometimes, that low pair can win hands. However, in many cases, the pair of deuces may not cut it when you are on the World Series of Poker Tour. You might need a more powerful hand. The same is true with estate planning and trusts. Often, an expert on asset protection planning will tell you that a simple pair will suffice, while other times, you will need that full house.

This is the simplest form of a trust. For example, this type of trust is when a parent sets up a trust for their child and names an independent trustee. As long as the assets from the trust remain in the trust, they will be protected from impudence on behalf of the child, divorce or other possible problems. The parents have the ability to select a trustee that will manage the trust. Through distributions from the trust, the trustee can guide the child in the right direction. In most cases, the trust will include an annual demand power. This assures that any gifts that are given to the trust will qualify for the annual gift-tax exclusion. This will preserve the parent’s exemption of $1 million.

This is where a little more planning comes into play. Let’s say that the trust is to last a long time, maybe forever if it is allowed by the state. As long as the assets associated with the trust remain in the trust, the assets can be protected. However, seeing as the trust will last forever, the parent can allocate some of their generation skipping transfer-tax exemption. In this case, all growth in the assets of the trust will be removed from the transfer-tax system forever. Continue reading ‘Types of Asset Protection & Trusts’ »

Different assets like possessions, property and money, which belong to a deceased person at the time of his/her death are included to value the estate of a deceased one. Similarly, certain assets that were given away by them within seven years before their death are also included. This valuation must precisely show what these assets would value for in the open market at the time of death.

If you are a personal representative, valuing the estate of the deceased’s estate is the first thing that you will need to do. Normally, you cannot take over as the manager of their estate as long as some due inheritance tax is not paid. However, you must also keep this fact in mind that inheritance tax is paid if the value is over £312,000. Continue reading ‘How to Evaluate the Estate of Someone Who Has Died’ »

Though it may seem impossible, there are ways to plan ahead for Medicaid. Most people believe they have to rid themselves of all income and assets in order to receive benefits, but this is not always true. These strategies will help you plan for the future so your medical care expenses will be covered.

It is said that the average stay in a nursing home is 30 months. The cost can range between $3,000 and $5,000 per month or $90,000 to $150,000 in total. This is why it is so important to plan ahead. The financial burden can be massive if proper planning is not done. The eligibility requirements are based on the need for medical care as well as the individual’s financial situation. Since the program is controlled by the state government, each state may have different eligibility guidelines. Assets and income will always be the most important eligibility factors. In most cases, almost all of your savings and assets will have to be depleted to become eligible. Continue reading ‘Medicaid Planning Strategies’ »

Inheritance tax is basically an amount of money that the Government will charge when someone hands down anything to his/her sons and daughters, or else to their family or friends. It is simply an amount charged on the value of the property, or the amount of money that is being passed on.

These days, everyone is tense about inheritance tax, mainly because people think it is incomprehensible, although it is not that difficult to understand. Previously only the rich ever cared about it, but these days, everyone seems to be catching up, and worrying, seems to be infectious. A chunk of the inheritance gets wasted in taxes, and hence a smart approach is necessary. Inheritance tax is also known as voluntary tax, because with proper planning, one can avoid it.

Trusts are useful for several reasons. Trusts can be used to transfer numerous varieties of assets. A few of them could be land, shares, money, or even a house. Even though, the trust fund has been made, the trustees, or the one who opened the trust in the first place, still have some degree of control over what happens to the assets.

With the help of trust funds, one can make future arrangements for friends and family. One can present gifts to add to the trust, where one can identify the beneficiaries and give details about how, and when can they obtain the savings. One can also protect assets by not giving the beneficiaries control over them. One of the biggest benefits of trusts is that it helps with the planning to reduce inheritance tax. Continue reading ‘Inheritance Tax Trusts Explained Simply’ »

Some people say if you make a will you can make sure that no inheritance tax will be charged on your estate, as if a blanket rule applies. In actual fact some estates won’t involve inheritance tax as they are under the allowance. Others may be less straightforward and we’d always advise you to consult a professional before attempting to sort things out for yourself.

If inheritance tax is due, your executors would have six months, from the end of the month in which you die, to settle the amount. After this time interest will be charged. Inheritance tax on certain assets, such as buildings and land, may be deferred, but will still be payable eventually.

There are some gifts which are free of inheritance tax whether they’re given during your lifetime or at the time of your death. These are gifts which you make to UK charities or to your spouse or a civil partner. If you’re separated but not divorced (or the civil partnership has not been dissolved) then you’re still free to make the gift. This applies as long as you both live permanently in the United Kingdom. This also applies to donations of political parties in the UK and various national institutions such as universities, the National Trust and national museums. Continue reading ‘Wills and Pets’ »