Barrett R. King, J.D.

barrett@elvilleassociates.com

No one starts a business (or a marriage, for that matter) with the intention of leaving it. Yet it does happen. Partnerships, like marriages, take quite a bit of work between the partners to maintain stability and a healthy dynamic. When clients come to Elville & Associates for estate planning, we ask whether there are business interests in the portfolio. If so, we routinely review operating agreements, partnership agreements, and shareholders’ agreements to determine the rights and responsibilities of the owners. We want to be sure that, in the event of death or disability, the client’s estate is positioned to sustain the operation of, or transfer the business, as the client would desire.

Even if the event of death or disability is addressed appropriately by the written agreement, we also want to be absolutely sure that steps are taken to address any dispute or unexpected rift that affects the business and drives the partners to want to go their separate ways. A partner’s departure from a business raises issues of business law such as adequate compensation, non-competition agreements, the protection of customer lists, as well as copyright and trademark law.

A unique example recently appeared in this writer’s practice. Four musicians approached the office, seeking to protect themselves in the event their musical group ran into creative differences and a band member wanted to leave. Just like many traditional businesses, the plan of action was as follows. First, this band had a discussion about the direction they wanted to go in and how profits and losses would be shared. Then, we worked to create an agreement. We formed a company and had the company own the group’s name.
The name was trademarked.

Next, we committed the notes from the above-mentioned discussion to writing in the form of a partnership agreement. We discussed what each member would bring to the company in terms of startup capital, equipment, and intellectual property as well as ‘sweat equity’ – in this case, who was the primary songwriter and how the royalties and other revenue would be attributed to each member.

Certainly the goal is to see that their business and their ‘product’ will succeed, but this foursome knew that the possibility that someone wanted to leave (or that the rest wanted to kick this person out) could arise at any time. So the agreement outlines how someone can leave or be forced to leave. It outlined what that person would take with them, which can be different depending on whether departure is voluntary or mandatory.

You may not be in the business of music, but even if your business is selling widgets to a manufacturer of equipment, or if you are a consultant along with one or more other partners, the need for a clear understanding of the possibilities, and the certainties such as death, is still there. Meet with an attorney. You will be advised as to whether the attorney will represent you or the actual company, and your attorney will explain that distinction and why it matters. Do not let your business collapse into ruin because you only envisioned the good times. Even the good times can cause partners to disagree about how revenue is shared. It is utterly cliché, but it applies in both estate planning and business planning: fail to plan, plan to fail.

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By:  Lindsay V.R. Moss, J.D.

lindsay@elvilleassociates.com

Aid and Attendance Improved Pension Benefit … never heard of it?  If so, you are not alone.  It’s a little known benefit offered through the Veterans Administration (VA) for Veterans and spouses of Veterans.  Aid & Attendance can be used to cover the cost of in-home health care, or can be used to assist with the cost of Assisted Living.  To qualify, a veteran does not need to have suffered a service-related injury.  They need only to have served one day of a 90 day minimum active duty military service during a time of war, and also need caregiving for activities of daily living.  The eligible wartime periods are:

• World War I (April 6, 1917 – November 11, 1918)
• World War II (December 7, 1941 – December 31, 1946)
• Korean conflict (June 27, 1950 – January 31, 1955)
• Vietnam era (February 28, 1961 – May 7, 1975 for Veterans who served in the Republic of Vietnam during that period; otherwise August 5, 1964 – May 7, 1975)
• Gulf War (August 2, 1990 – through a future date to be set by law or Presidential Proclamation)

(If the active duty occurred after September 7, 1980, you must have served at least 24 months or the full period that you were called up)

Other requirements include:

• Age 65 or older with limited or no income; or
• Totally and permanently disabled; or
• Receiving Social Security Disability Insurance; or
• Receiving Supplemental Security Income

Aid & Attendance is a tax free monetary benefit through the VA that can supplement a family’s income and enable the use of services that would otherwise be unaffordable.

For 2015, the maximum pension rates and income limits are:

• Veteran – $1,788 per month, with an income limit of $21,466 per year
• Veteran with one dependent – $2,120 per month, with an income limit of $25,448 per year
• Surviving/Sick Spouse – $1,149 per month, with an income limit of $13,764 per year
• Veteran Couple – $2,837 per month, with an income limit of $34,050 per year

Pension benefits are needs-based and the “countable” family income must fall below the yearly limit set by law.  However, with the cost of in-home health care and Assisted Living increasing each year, it is often the case that the cost of one’s health care expenses exceeds the family income.

One important thing to consider is that the income limit does not include medical expenses.  For example, if a Veteran and spouse have a combined income of $70,000 a year, but $60,000 of their yearly income is going towards the expense of an Assisted Living (which equates to $5,000 a month… a relatively average cost for an Assisted Living facility), then the Veteran would qualify for the full Aid & Attendance amount of $2,120 per month.  That’s about 40% of the cost of the Assisted Living!  The additional income can make a huge difference in the quality of life for both the individual receiving the benefit and the community spouse.  It could also mean the difference between a substandard Assisted Living facility and a more reputable one.

Aid & Attendance can also be used towards the cost of in-home health care.  For example, if a Veteran (or spouse) is living at home, but is racking up medical expenses utilizing a home health care agency, Aid & Attendance can be used to supplement the cost.  It can even be used to pay the adult child(ren) of a Veteran or spouse, if they are providing the care for their parent, and a valid caregiver agreement is in place.

There are several documents that are needed to start the application process.  The application requires, among other documents, a copy of the Veteran’s DD-214 (discharge paperwork), a medical evaluation from a physician, proof of current medical expenses, net worth and income information, and documentation of current out-of-pocket medical expenses.

The application process can be a very confusing and tedious journey.  Both Stephen Elville, Esq. and Lindsay Moss, Esq. are VA Accredited Attorneys through the Veterans Administration, trained in navigating the intricacies of the VA system.  Call us if you or one of your family members is a Veteran, so we can ensure that you are aware of all benefits you may be eligible for under the law.

For more information, please call 443-393-7696 or complete the form below.

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Tags: Aid & Attendance, veterans administration
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Authored by: Matthew F. Penater, Partner – Elville and Associates
443-393-7696
matt@elvilleassociates.com

In the world of estate planning, the words “probate assets” and “non-probate assets” are used often, though in most cases in my experience, the client does not understand the difference. Simply put, probate assets are assets that pass to a beneficiary through a Last Will and Testament, while non-probate assets are assets that pass to a beneficiary through any means other than a Last Will and Testament. That is a practical definition of the two assets, but not very helpful in assisting you to determine what a probate asset is and what is non-probate. Probate assets are assets owned by an individual, without any co-owners or beneficiary designations in place for that asset. Examples of probate assets are solely-owned vehicles, individually-owned bank accounts, etc. Non-probate assets are assets owned jointly with others or have some type of post-death designation in place. Examples of non-probate assets are: jointly-owned property (car, home, bank accounts, etc.), 401(k)s, life insurance, Transfer on Death accounts, and life estate properties.

Understanding what assets of yours constitute probate and non-probate assets is critical when structuring your estate plan. For example, let’s say you want your children to receive equal shares of your estate. In order to carry out this wish, you prepared a simple Will leaving your estate to your children in equal shares. One of your primary assets is a savings account with $20,000. If you own that account individually, that $20,000 would pass to your children equally, under your Last Will and Testament as you wanted. However, let’s say you added one of your children as a joint owner on that savings account so the child could help pay your bills, etc. (as is very common). Adding your child as a joint owner has now converted that bank account from a probate asset to a non-probate asset, which means the $20,000 will NOT pass under your Will. Instead, upon your death, under the laws of Maryland, the entire balance of that account will become the property of the child who is listed as the joint owner. Perhaps that child will then divide the account among his or her siblings, but then again, maybe not.

The importance of identifying your probate assets v. non-probate assets is central to building your estate plan. Take some time to review your assets and make sure your non-probate arrangements are in concert with your estate plan.

For more information, please call 443-393-7696 or complete the form below.

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Tags: non-probate assets, probate, probate assets
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By: Olivia R. Holcombe-Volke, Esq.
olivia@elvilleassociates.com

Effective estate planning must contemplate not only your own desires or preferences as to whom or what will receive your estate after death, but also what impact that inheritance might have on the beneficiary.  The most common example of why and when this is important is when an intended beneficiary has special needs and is receiving public benefits, in which case a supplemental needs trust may be necessary to protect both the beneficiary and the inheritance.  Other less obvious circumstances faced by beneficiaries who receive your inheritance deserve contemplation too, though.

A beneficiary who is receiving public benefits for a reason other than disability, for example, and who will therefore face the difficult choice between receiving an inheritance and losing the public benefits, or refusing the inheritance in order to stay on public benefits. For most people, this decision is one between a rock and a hard place, utterly defeating the best intentions of the decedent and the decedent’s estate plan. With careful consideration and planning, this unfortunate result can be avoided.

Another set of circumstances that is likely to lead to more trouble than a decedent intends to cause for his or her beneficiaries is one in which property is left to two or more beneficiaries who don’t get along.  This reality can lead to infighting, which, in the worst case scenario, can lead to litigation and the dissipation of assets, thereby wasting the distribution the decedent intended for the benefit of the recipients.

It may be hopeful, but not realistic, to believe that beneficiaries who don’t get along while you are alive will be able to communicate and work together after you die – particularly where money is involved.  Again, careful planning can ensure that your intentions achieve a positive result and aren’t wasted by the realities of whom you choose to leave your estate to.  The point in all of this is that you may have the very best intentions – but in your efforts to ensure those intentions see long-term success, it is vital to take into account the realities of your beneficiaries and all intended circumstances.

For more information, please call 443-393-7696 or complete the form below.

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Tags: beneficiary, estate, estate plan, inheritance, public benefits
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By: David A. (Andy) Hall, Esq.
443-393-7696
andy@elvilleassociates.com

Sometimes an estate client will anticipate that there will be a challenge to her estate after she dies – and frankly if there is a house, then in this area it’s generally worth at least a couple hundred thousand dollars, thus, it’s worth fighting over. Perhaps her children do not get along. Or there is a family business in which one relative has spent many years alongside to build and grow, and the client wishes to leave that relative a larger share of the business. In an effort to prevent challenges to her will, a client may ask her estate planning attorney to utilize an in terrorem clause. These can also be known as “no-contest” clauses. An in terrorem clause essentially states that when someone objects or attacks the will (through the appropriate legal process), then the challenger will no longer receive a legacy or residual distribution that they otherwise would have received through the will.

Under Maryland law, an in terrorem clause in a will is void where there exists probable cause for instituting law suit. Md. Code, Est. & Trusts Art. § 4-413. Someone considering whether or not to challenge a will should consult with an experienced estates and trusts attorney to determine whether there exists probable cause to challenge a will.

An in terrorem clause is ineffective from preventing a challenge by someone who is disinherited as there is no stick (or carrot) to make the challenger think twice prior to challenging. If they have nothing to lose, then there is nothing to prevent them from hiring an estate litigation attorney to challenge the will.

A no-contest or in terrorem clause may still be a good idea to include in your estate planning documents depending on your particular family dynamics. While no clause can prevent all estate litigation, these clauses may be useful in preventing meritless litigation, i.e., a baseless challenge designed to extract a monetary settlement. In addition, it may be a useful tool for your personal representative to use when negotiating a settlement with a will challenger as it can make estate litigation an all-or-nothing proposition.

No one wants to think about their family fighting over their estate. Having a thorough and frank conversation with your estate planning attorney can help identify red flags and allow the planning attorney to attempt to draft around those challenges. One such solution is appointing a third party as personal representative because the disinterested person can help prevent the estate administration from becoming a battle ground for long-simmering family disputes. Avoiding estate and trust litigation before it starts can save your family many tens of thousands of dollars in costs.

Tags: estate litigation, in terrorem clause
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By: Stephen R. Elville, Esq. – steve@elvilleassociates.com

The rules for how income will reduce a Supplemental Security Income (SSI) beneficiary’s monthly benefit can be very confusing.  Here is a quick look at how the Social Security Administration (SSA) treats an SSI beneficiary’s income.

In general, every dollar of unearned income (such as interest or dividends) received by an SSI beneficiary reduces his SSI benefit by one dollar, and every dollar of earned income (such as wages) reduces his benefit by 50 cents.  If these reductions bring the SSI benefit down to zero, then the beneficiary loses SSI and in many cases the Medicaid benefits that come with it.

But before applying these rules, all Supplemental Security Income beneficiaries are allowed to disregard their first $20 of monthly income from any source.  In addition to this initial deduction, beneficiaries who are working can ignore their next $65 of earned income.

In addition to these helpful income disregards, a beneficiary who is working may deduct from her monthly earned income figure any impairment-related work expenses like specialized transportation costs and durable medical equipment required for her job.  It does not matter if the beneficiary also needs those services or supplies to help her outside of work as well.  These expenses are deducted from income on a dollar-for-dollar basis.

For example, if an SSI beneficiary makes $1,000 a month at work and needs to pay $200 a month for a special van to transport him to his job, that beneficiary will have his SSI benefit reduced by $357.50 ($1,000 – $20 income disregard – $65 earned income disregard – $200 impairment-related work expenses = $715 / 2 = $357.50).

Because these income rules can be difficult to implement — even the SSA doesn’t get them right all the time — it’s important to discuss all of your sources of income with your special needs planner prior to applying for Supplemental Security Income.  Every dollar counts!

For more information, please call 443-393-7696 or complete the form below.

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Tags: social security administration, ssi, supplemental security income
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Authored by: Olivia R. Holcombe-Volke,
Esq., 443-393-7696,
olivia@elvilleassociates.com 

In this final posting of my three-part coverage of life estate deeds, I will address the form of life estate deed that is “without powers.” A life estate deed “without powers” means that the life estate tenant cannot sell, mortgage, assign, or otherwise encumber the property without the consent of the remaindermen. However, just as with a life estate deed with powers, during the lifetime of the life estate tenant, the use, possession, and ownership interest of the property doesn’t change, and at the death of the life estate tenant, the remaindermen simply file a death certificate with Land Records, and the property becomes owned by the remaindermen. And, as with a life estate deed with powers, the property held as a life estate without powers is also includible in the life estate tenant’s estate at death, such that the remaindermen get a step-up in basis for capital gains purposes. The pivotal distinction between the two types of life estate deeds, and the tradeoff for sacrificing the power to sell, mortgage, assign, or otherwise encumber the property, is that a life estate deed without powers is only subject to Medical Assistance scrutiny in the first five years following the date of the deed (during which time it is considered a gift that is subject to penalty). Five years after the date of a life estate deed without powers, the property is no longer considered an available asset of the life estate tenant, for Medical Assistance purposes.

A life estate deed is one of several options for use in avoiding probate. It is not the only option, nor is it always the best option, depending on the circumstances of one’s assets, beneficiaries, and goals. When choosing to utilize a life estate deed, the next question of most importance is whether to use one with or without powers, a decision that will primarily rely on the likelihood of the life estate tenant needing Medical Assistance (Medicaid) at some point. As with all decisions regarding one’s estate plan, the best decision is one made in consultation with an experienced estate planning attorney.

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Authored by: Jeffrey D. Stauffer, Community Relations Director — jeff@elvilleassociates.com, 443-393-7696

Stephen R. Elville, Principal at the estate planning, elder law and special needs planning firm of Elville and Associates, P.C., will be presenting on a nationwide webinar through Bloomberg BNA on Wednesday, Octdober 8th from noon to 1:00 p.m. The webinar, titled “What Clients Need to Know About Planning for a Loved One with Special Needs,” will educate listeners about working with a family and their loved one with special needs — from what is involved in the planning process for a special needs family, to the importance of preserving the loved one’s financial security and quality of life.

The key issues of understanding the role of public benefits, making decisions about the future, and using estate planning and trusts to protect assets will be discussed along with the types of special needs trusts and their specific purposes.

To learn more or sign up for the webinar, please click here.

According to its website, “Bloomberg BNA, a wholly-owned subsidiary of Bloomberg, is a leading source of legal, tax, regulatory and business information for professionals. It has a network of more than 2,500 reporters, correspondents and leading practitioners that deliver expert analysis, news, practice tools, and guidance. Its flagship legal product, Bloomberg Law, a fully-integrated legal and business intelligence research solution, combines trusted news and expert analysis with comprehensive market data and cutting-edge technology.”

Mr. Elville works with individuals and families to provide a unique attorney-client experience and peace of mind solutions to the challenges they face with estate, asset protection, and tax planning issues, and with disability and a long-term care planning issues. He has extensive experience in working with clients involved in crisis situations. He also brings a unique and personalized approach to pre-crisis planning. Mr. Elville routinely handles clients issues in the followings areas: wills, trusts, powers of attorney, living wills/advance medical directives, Medicaid asset protection trusts, Medicaid planning and qualification, estate administration, fiduciary representation, nursing home selection, guardianships, special needs planning for children and adults, Social Security Disability Income (SSDI), Supplemental Security Income (SSI) and IRS tax controversy.

Mr. Elville was named to the Maryland Super Lawyers list for 2015, and is a member of the National Association of Elder Law Attorneys, Elder Counsel, Wealth Counsel, the Academy of Special Needs Planners, and the National Network of Estate Planning Attorneys. He currently serves as a member of the Maryland State Bar Association Elder Law Section Council and the Charitable Gift Planning Advisory Committee for Anne Arundel Medical Center. He also serves as Chair for Law Day Maryland.

He is a frequent guest presenter for banks and credit unions, businesses, associations, hospitals, and other facilities and groups. He provides continuing education for financial advisors and CPAs, and is a guest lecturer for the National Business Institute. Mr. Elville’s daily blog appears on WBJC.com and on elvilleassociates-staging.bgbshlgq-liquidwebsites.com and his articles have appeared in The Business Monthly.

For more information, please call 443-393-7696 or complete the form below.

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Authored by: Jeffrey D. Stauffer, Community Relations Director — jeff@elvilleassociates.com, 443-393-7696

Elville and Associates is pleased to announce it will sponsor the 10th Annual Scarecrow Classic 5K and 1 Mile Walk hosted by the Brain Injury Institute of Maryland, to be held on Sunday, October 4, 2015 at its all-new location on the University of Maryland-Baltimore County campus.  For detailed information and to sign up for the event, please click here.

According to the event’s website, “this event will rally survivors, families, friends, and supporters around the common goal of raising awareness about brain injury within the community and providing much needed funding to support the programs and initiatives of BIAMD.”

Elville and Associates fully supports the important mission of the Brain Injury Association of Maryland, which is “to create a better future through brain injury prevention, education, advocacy, and promotion of research.”  For more information about the BIAMD, visit its website at biamd.org, or complete the form below.

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By: David A. (Andy) Hall, Esq. – Elville and Associates, P.C.
443-393-7696, andy@elvilleassociates.com

Ask your estate planning attorney whether you it is advisable to appoint co-personal representatives. Co-personal representatives are two (or more) people named as personal representative simultaneously.  Successor personal representatives are named as backups in case your first choice is unable to serve whether by reason of death, incapacity or unwillingness to serve. You should always name at least one successor personal representative, but two is preferable.

In a co-personal representative situation, Maryland law by default requires the concurrence of all personal representatives in order to act on behalf of the estate. This can lead to issues with the practical aspects of managing the estate, or it can create a friction point in an already tense family situation.

You should consider the motivations for wanting co-personal representatives. If you think that one person might not be able to handle the job alone, you are probably better off appointing someone else altogether. In general, one person will end up doing the majority of the work, but will be hampered by seeking the concurrence/assent of the other personal representative.

If there is a family issue, you can always appoint someone outside of the family. When there is a family dynamic where there is distrust, estrangement, or other issues, then the appointment of co-personal representatives may only serve to exacerbate the situation.

In short, appointing co-personal representatives can lead to unnecessary delay, arguments, or even litigation. It is best to name one trusted individual to serve as personal representative, and name at least one trusted successor. Help avoid estate and trust litigation before it ever happens by contacting your estate planning attorney. Make sure your attorney can competently guide you through not only proper tax planning and asset protection, but also provide counsel to avoid litigation before it starts.

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