The trust (revocable or irrevocable) must have at least one of three terms:

1. A specific right of the beneficiary to occupy the premises;
2. The right to amend or revoke the trust; or
3. The power to withdraw the homestead premises from the trust and place the record title in the occupant’s name.

The applicant must apply for the homestead exemption between February 1 and June 30 of each year.

There is a sliding scale on the exempt amount tied to income. If an applicant has over $49,000 in income the exempt percentage is zero.

The post Trusts and the Nebraska Homestead exemption appeared first on John Feller.

I am one of the few attorneys in the country and the only one in Nebraska who can work this legal magic. And magic it can be as one married couple in the South was able to protect over $23,000 per year from the nursing home.

I spent over 100 hours researching and writing to adapt the In-Marriage QDRO to Nebraska law after I learned of it in February 2018.

Right now the most popular use of this innovative legal strategy is transferring 401(k) money from the older spouse to an IRA of the younger spouse in order to defer RMD’s. There are, however, about ten applications for the Happily Married Couple QDRO with the purchase of an annuity or another debt-based financial product with 401(k) equity money being popular also.

I have a thirty minute Power Point presentation for financial advisors or potential clients and I will be happy to show it to you.

The post The Happily Married Couple QDRO appeared first on John Feller.

The court found that the contract containing the arbitration clause was supported by mutual consideration even though there was a suggestion that the nursing home did not arbitrate all disputes.

The arbitration clause was also not contrary to existing Nebraska public policy or law. There is a 2016 federal regulation prohibiting “a pre-dispute agreement for binding arbitration” but that regulation has been put on hold by a federal court. Of course Congress and the Unicameral can pass a law prohibiting arbitration agreements with nursing home residents but I think that is unlikely.

Source: Heineman v. Evangelical Luth. Good Sam. Soc., 300 Neb. 187 (June 8, 2018).

The post Nursing Home Arbitration Clause Valid in Nebraska. appeared first on John Feller.

“5-22-14
I Brian L Tiedeman want all my
All Property to Dustin Lovorn
I here by attend to change my will.
[Signature]”

There was no other appointment with his lawyer and Tiedeman passed away on February 24, 2015.

Lovorn sought to probate the handwritten will. Both the district court and the Nebraska Supreme Court held the document was not a valid will and that the document indicated only an intent to create a new will at a future date.

Lessons:

1. Don’t put off making a will.
2. Hire a lawyer to draft your will. You don’t have to own four million dollars of real estate to make it worth your while to do it right.

In re Estate of Tiedeman, 25 Neb. App. 722 (April 10, 2018).

The post The Failed Four Million Dollar Handwritten Will appeared first on John Feller.

“(1) reception of the child into the home and treatment of the child as a member of the family, (2) assumption of the responsibility for support beyond occasional gifts and financial aid, (3) exercise of parental authority and discipline, (4) relationship by blood or marriage, (5) advice and guidance to the child, (6) sharing of time and affection, and (7) existence of written documentation evincing the decedent’s intent to act as parent.”

In this case, the person who asserted that she was the child of the deceased wanted to claim the full $40,000 inheritance tax exemption and have her inherited share taxed at 1%.

Her mother was not married to the deceased and the deceased never adopted her. She lost the case due to inadequate evidence.

N RE ESTATE OF HASTERLIK, 299 Neb. 630 (April 13, 2018).

The post Nebraska Defines the Term “Parent” appeared first on John Feller.

The former spouses then both hired lawyers and went to court in order to interpret the agreement. The Douglas County district court judge ruled, but it was appealed to the Nebraska Supreme Court. The case was then decided last week.

I recall a poster in workplaces that was popular in my youth: Why is there never enough time to do it right the first time but always enough time to do it right later?

The doctors probably thought they were saving money by hiring a mediator. They surely ended up spending more money to sort out what should have been done right the first time.

Lesson:

Estate planning can be complicated. Sometimes hiring a lawyer is cheaper in the long run. This is especially true if you own real estate and don’t have a revocable living trust. Probate is a time consuming and costly process; even in Nebraska.

Source: Carlson v. Carlson, 299 Neb. 526 (April 6, 2018).

The post Sometimes it is Cheaper to Hire a Lawyer appeared first on John Feller.

Jennie Shire created a testamentary trust in 1947. It was funded with $125,000 and provided that the bank trustee would pay $500 per month to her daughter and then her granddaughter for their lives.

Inflation and the passage of time did its work. At the time of the 2016 trial, the trust was worth nearly one million dollars and was projecting to generate an annual income stream of between $64,000 and $81,000 per year. But the $500 per month that the income beneficiary was receiving was never indexed to inflation and $500 in 1947 dollars is equivalent to about $5,000 today.

The granddaughter – who was living on her total monthly of $1,100 per month – petitioned the county court to modify the terms of the trust. Possible future beneficiaries – both known and unknown – were added to the lawsuit. The Nebraska Attorney General was appointed to represent the charitable beneficiaries. Half of the known beneficiaries consented to the modification of the trust, but an attorney appointed to represent unknown beneficiaries opposed it. The county court never heard either way from six known beneficiaries.

The county court ruled that the trust could not be modified because the trust did not permit a modification and all the of beneficiaries did not consent to a modification. The Nebraska Supreme Court affirmed.

If none of the living and known beneficiaries – along with the bank trustee – did not affirmatively object then why did both courts not allow modification?

Two reasons. The first reason is that a court – even sitting in equity – must follow both the plain language of the trust and of Nebraska law. They can’t make it up and the law doesn’t allow it. There is a difference in the law in affirmatively consenting to a modification and not objecting to a modification. There was no evidence on the record from six known beneficiaries regarding modification.

The other reason was the attorney representing unknown beneficiaries affirmatively opposed the modification. Their interests would be affected by a modification and therefore the trust could not be modified. In this case, Nebraska law required unanimous consent to modification of the trust.

Lesson:

Consider if you want your trust to be modified in the future and if you need to account for inflation in determining income payments.

In re Trust of Shire, 299 Neb. 25 (February 16, 2018).

The post An Absurd Result? appeared first on John Feller.

Workshops are the second Tuesday of each month in the Johnny Carson room at the Enterprise Center. If you attend a future workshop please enter from the west lobby and it is on the first floor.

The post Yesterday was Mardi Gras appeared first on John Feller.

1. The headline item is that the estate tax exemption is now $22.4 million for married couples and $11.2 million for single people. This means that the federal estate tax will be paid by even fewer Nebraskans. (But note that the Nebraska state inheritance tax is still the law. )
2. Many couples planned for a bypass trust when the taxable estate amounts were much lower. That made sense at the time. But with the new higher estate tax exemptions maybe the plan should be revisited. When the second spouse in a bypass trust plan passes away the appreciated assets in it miss out on a step-up in basis. If the children want to sell the assets right away, they would take a large hit on capital gains tax.
3. Because estate taxes are not an issue for most people the conversation with an estate planning attorney is focused on the wishes of the client. “It’s really helping to coach people through important decisions: How to make sure money isn’t squandered and aligning assets with values and visions, ” Brent Brodeski, CEO of Savant Capital.

Item three is our main focus and we learn about your vision for your assets in our Vision Meeting. You decide what estate plan is right for you.

The post Three Estate Planning Implications from the New Tax Law appeared first on John Feller.

“Medicare covers only a short period of care after a person has been hospitalized. That leaves Medicaid, the state-administered program for the poor. But it kicks in only after people have burned through their assets — precisely the outcome that insurance is meant to avoid. The paperwork involved is a protracted ordeal, especially for those with physical and mental impairments, suddenly thrust into poverty.”

The dismal result predicted by BloombergView doesn’t have to happen to you! Come to my workshop and find out how it can be different with proper planning.

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