2 - Protecting Your Assets with The Three Lands of Estate Planning

In this episode we go over one of the fundamental concepts of Bellomo & Associates: “The Three Lands to Your Family’s Security”. The three elements of this concept are Tax Land, Long-term Care Land, and Estate Planning Land. Understanding these three “lands” is essential for trust planning and protecting your assets. Maintaining control of your assets is key, so it is important to understand Tax Land and Long-term care land so that you do not unnecessarily lose control of your assets to unexpected circumstances. On our next show, we’ll continue the conversation about the three lands and then we’ll dive into trusts. You won’t want to miss it!

Key Takeaways

Takeaway 1: Tax Land

Currently, there is no federal estate tax with individual assets equalling $12.06 million or less ($24.12 for a married couple). No current clients have problems with staying under that mark. After 2025, the federal estate tax limit is set to go down to $5 million plus inflation. We can estimate it will be around $5.8 million for an individual and $11.6 million for a married couple. Historically, Congress only passes tax bills related to estate tax when they absolutely must, so estate law is set to go forever at $5.8 million unless there is great necessity to change the law again. The transfer of the money can occur during life, at death, or a combination of both stages. For annual exclusion gifts, you can give $16,000 per child and their spouse per year. Essentially, we can give everything away in Tax Land.

Takeaway 2: Long-term Care Land

Includes skilled nursing homes or skilled care in the home. The average cost for nursing homes in PA is around $14,000, and $12,500 between York and Lancaster.

In-the-home care can cost between $21 and $23 thousand per month. Paying for long-term care can either be done out-of-pocket, with long-term care insurance or with government programs (Medicaid). If a spouse enters a nursing home, we are able to protect the assets for the spouse residing at home 100%. If a single individual enters a nursing home, we are able to protect 50% of the assets. You cannot give away all of your assets in Long-term Care Land. You can only give away up to $500 per month in aggregate.

Takeaway 3: Estate Planning Land

Estate Planning Land is where you can keep the control that you lose in the other 2 lands, such as not being able to take back any gifts in Tax Land. Estate Planning Land accounts for the unexpected, whereas in tax land, your father could put your name on everything, but if you unexpectedly die the next day, control of the money is lost. Bad things happen to good people, you could lose your assets. Outright gifts are risky but trusts aren’t. When you put money in trusts, you avoid capital gains tax. CONTROL IS THE KEY. You must make sure to look into all three lands before making any final determination.

Links and Resources Mentioned

Bellomo & Associates workshops, including “The Three Lands of Estate Planning”: https://bellomoassociates.com/workshops/