Announcer:
It’s time now on KROS for Financial Focus brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA, SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s Financial Focus program.

Nate Kreinbrink:
Good morning and welcome to this week’s financial focus brought to you each and every Wednesday morning right here on KROS. This is Nate. James joining me again today. Halfway through January. A little weather coming back in this weekend, but again, looking at the extended forecast that takes us pretty much to the end of January. Not too shabby the way it’s looking at.

James Nelson:
Yeah, exactly. We can’t complain about this winter. This is one of the better ones for sure.

Nate Kreinbrink:
Looking optimistically, you had some temperatures in the upper 30s, which is definitely nice for January. And then you get to February, which is only four weeks, and then we’re into March already. I seen however many weeks that they were counting down to pitchers and catchers reporting for baseball. So once they get that countdown going, it won’t be long then.

James Nelson:
No, not at all. This is a fun time of year if you’re a sports fan.

Nate Kreinbrink:
It definitely is. So today’s program, I know James and I were talking on the way up here, estate planning. And I know estate planning is a topic that we have touched on, I mean, many months ago I think it seemed like, but it always seems to continue to come up in our meetings and our planning when we’re sitting down with individuals. And it really is an important part that I think, again, oftentime gets overlooked, that people focus solely on how these things are when they’re still alive, they don’t understand the impacts and how it’s going to be impacted after they’re going. How it gets passed on to individuals, to charities. What is the best route to go to and do? Is it really going to where they say it’s going to go? And I think the most basic thing that people think of when they think of estate planning is wills and trusts.

James Nelson:
Yeah, exactly. Wills and trusts, there’s a deference and not everybody is aware of those differences. The wills, probably the biggest thing to remember is it’s a public document. So trusts are private, they’re drafted. It’s a private document and it’s not published. Wills are public. It’s also important to know the differences as far as what assets actually go through the will or the trust. If beneficiary forms are filled out correctly on life insurance and IRA’s and any other retirement accounts, those assets aren’t going through the will or the trust. They’re designated on a beneficiary form and that’s that. So understanding the differences between the two, but also understanding what assets are actually going to go through those documents is key.

James Nelson:
The other thing that we spend a lot of time on is the powers of attorney. The wills and trusts, big picture, get all of the attention and that’s kind of what people focus on. But in those documents you should also have the powers of attorneys, whether that’s for healthcare or for property. Somebody has to sign the tax return, somebody’s got to take care of your affairs if you’re incapacitated and nobody knows when what document’s going to be the most important. We always talk about that. Whether it’s power of attorney for healthcare, power of attorney for property, the actual will, the actual trust. Who knows what’s going to be the most important document? But it’s important to have all of those things in place prior to the event where you may actually need them.

Nate Kreinbrink:
Right. And I think looking at some of these things, they’re oftentimes not pleasant conversations anybody really wants to sit down and have, but they’re extremely critical for when they actually come into place. To know that, “Hey, if something happens to me, I know that things are going to be taken care of based on my wishes.” And another big thing with going down the route of some of these things is just simply avoiding probate. Having to have the things go through courts to be able to tell you where your assets or individual belongings should be passed on to. You can control that rather than having to have it go through probate and pay those costs associated and the lengthy timeframe that goes along with that.

James Nelson:
And the stigma’s always been, “Oh, I have to have a lot of money to have a trust.”

Nate Kreinbrink:
Exactly.

James Nelson:
Well, that’s not the case anymore. It really isn’t and it hasn’t been for quite some time. Revocable trusts are drafted all the time for any number of reasons. It’s not just for people that have money. So going down that path and considering that option is vital for people to at least take a look at it. Not to say that you have to do it, but it’s a little bit more up on the cost on the front side, but it should save you on the backside avoiding probate, avoiding some of those expensive process and it saves time. Probate is a long drawn out process. Nobody wants to go through that if they don’t have to. This is a way to avoid it and something that everybody should at least consider.

Nate Kreinbrink:
Right. And I think people oftentimes think about wills and trusts as just a planning for after they’re gone. There’s also a lot of valuable things that can happen as far as with that planning while they’re still living. And I think that’s some of the issues that you’ve been coming across a lot lately with some of your meetings, James, is just simply Medicaid planning, being able to start protecting some of your assets right now while you’re still living for that instance in case you would happen to go into a nursing home or need Medicaid down the line. We’ve already got the ball rolling and things are already put in place for when that time comes.

James Nelson:
Yep. And this is where it starts getting a little bit complex. I mean, people hear the word trust and don’t always know what that means. There’s irrevocable trust, which is a pretty extreme case, but often used in this Medicaid plan that you just referenced, Nate. And then there’s revocable trust, which are just basically replacing the will and you still have full control over your assets. And yes, I have had several appointments in the last month or so dealing with Medicaid planning. Somebody’s either in the nursing home or very close to going in the nursing home. How can we kind of protect some of these assets? What can we do at this late stage in the game to maybe move assets out of one individual’s name into another or into the spouse’s name and still keep everything above the table and legal?

James Nelson:
And Iowa and Illinois both have exemptions amounts for what a spouse can have in their name. You can’t bankrupt the spouse because somebody going into a nursing home. You can’t take the house away. You can’t take the vehicle away because somebody is going in the nursing home. So having these conversations and positioning assets in a way to allow the spouse to continue living in their own home, kind of continue living their hopefully normal lifestyle, yeah, is very crucial. Because if there isn’t any planning and you don’t go through this process, somebody could find out the hard way. I mean, everybody knows these nursing homes are not cheap, seven, $8,000 a month doesn’t take long to, to gobble up a lot of the money. And that’s what we’re trying to avoid.

Nate Kreinbrink:
Right. And I think it’s critical and I think this is another item that’s always on people’s list of things that they know they need to somehow address, but not necessarily know how to do it or kind of keep pushing it down as far as whether it’s longterm care insurance, whether it’s this type of Medicaid planning while they’re still living. And I think once people really though see and understand that, the limits that an individual can have in their own personal name is what? $2,000 I think that can have as far as you can have in your name. Anything above that, then you’re not eligible for Medicaid.

James Nelson:
That’s right.

Nate Kreinbrink:
So again, you have some type of assets that are in your name. It doesn’t take long to hit that $2,000 threshold. So again, we’re basically depleting every asset that’s in your name to be able to be eligible for that thing. And another thing is just the simple five-year look back as far as when gifts are made to another individual. Whereas, if you would go into a nursing home, a care facility, they’re going to look back five years to say, “Hey, did you just dump a bunch of your assets onto another individual?” So again, this isn’t something that can happen and then tomorrow I’m taken care of. This is a five year-plus process that, again, is going to take some planning that again, we want to start getting that ball rolling in place for those individuals that it makes sense to do so.

James Nelson:
That’s right. And we know it when you get up to that deadline and somebody’s going into a facility, your hand … I mean, not totally tied, but you’re pretty limited in what you can do. The longterm care insurance, the five year look back, those are two big items and things that people should be considering well in advance. And it’s not giving all your money away. It’s not giving it all to the kids or depleting everything in your name. It’s positioning assets if we can to help head off any of these issues coming down the line. So it’s important. It’s really important for people to have these conversations and kind of look down the path of somebody who’s having some issues or they’ve dealt with things in the past. Maybe start positioning assets a little bit differently, can probably save some serious money down the line.

Nate Kreinbrink:
And as always, I mean, once we start doing this planning, it’s not kind of a one and done thing. We always want to go back and revisit it. Especially we’ve seen that with the Secure Act that just kind of went into effect this January 1st of 2020 here, as far as changing how people are able to stretch out some of the inheritance or some of the assets that they’ve inherited. Again, we may want to go back and look at the trust, make sure that it’s still titled and still the beneficiaries of the trust is still in line with the new laws as what it was maybe yesterday when things were a little bit different.

James Nelson:
That’s right. The Secure Act changed the retirement space tremendously. I mean, this is the biggest law we’ve seen in a couple of decades. And you’re exactly right, Nate. I mean, going back and looking at trust documents and seeing how these retirement plans were accepted into a trust in some cases is extremely important, because the laws have changed and people need to know how that affects their personal situation.

Nate Kreinbrink:
Again, all important stuff. Stuff people don’t want to talk about, but stuff people definitely do need to start talking about. So questions, give us a call. We’d be happy to sit down with you. Obviously, we’re not attorneys but we’ve seen enough and we work closely with them where we can at least get you kind of on the right path and give you some advice as far as what things to move forward. Before we do run out of time, I did want to mention that every Friday NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of January will be donated to the Clinton Fine Arts Association, Adopt an Instrument program. James, I appreciate you joining me today.

James Nelson:
Absolutely.

Nate Kreinbrink:
Again, this is Nate and James with NelsonCorp Wealth Management bringing you this week’s Financial Focus. Thanks for tuning in and have a great rest of your week.

Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indexes mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA, SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.