planning for the family farm lakehouse or cabin

Asset Protection Trust – Planning for the Family Farm, Lakehouse, or Cabin

Estate Planning can be overwhelming.  Especially when it comes to decisions on dividing property holding an emotional tie or includes a family-run business.  This includes the family’s farm handed down from generation to generation.  Intertwined with the land are fond memories of children playing and family get-togethers.  The land itself often includes momentous events, like a child’s first steps, proposals, and family holidays.  Planning for the family farm, lakehouse, or cabin has its own set of issues to be resolved.      

Although death is not a pleasant subject to think about, doing so is necessary to ensure that your assets are protected and do not end up in probate.  Even worse than probate, you certainly don’t want your precious assets to end up going to the government, unintended family members, or even skipping to step-children or those not in your blood-line.       

*This blog is for educational purposes only and should not be considered legal advice.  The use of the Paths Law Firm website does not constitute a client-lawyer relationship.

Estate Planning for the Family Farm, Lakehouse, or Cabin 

The primary purpose of creating an estate plan is to set your affairs in order so your wishes are carried out as you desire and intend.  With that said, the first issue to address with your attorney is your goals and their priority.  The information you give your attorney will define the order of the issues to evaluate so the attorney can provide you with options to meet those goals.  

As stated, when planning for the family farm, lakehouse, or cabin, emotions can run high in determining how to divide the estate, and that property in particular.  Common questions are, “Who should I leave my property to?” or “Will the family business be run with the same morals and values handed down from previous generations?”  Due to the emotions, it is also important to ask, “Will the property be lovingly cared for as I have cared for it over the years?” or “Will my choices cause strife in the family after I pass?”   

property planning family

It is easy to envision discontent among family members based on the division of property.  One common situation is for one child wishing to carry on as usual after incapacity or death of a parent and another child anxious for the family farm, lakehouse, or cabin to be sold.  If the estate plan is not laid out in a way clearly defining the division, sale terms, and/or set time frame, it is likely to cause more disputes or legal battles than a scenario where no estate plan exists at all.   Just imagine the dynamics of a blended family and the increase of complexity developing as time passes.  There are his children, her children, and their children.  When the family farm is needed to provide for the surviving spouse, the bloodline of the spouse who died first may wonder, or even feel threatened, that the farm may pass to non-family members. 

Since we are dealing with individuals, over much time, each scenario, and the options available, could be quite simple or extremely complicated.  Therefore, it’s important to have a good estate plan in place.  This is especially true when there are unique assets such as family farms, vacation homes, or cabins involved. 

Some common goals of estate planning include providing for your family, avoiding probate, minimizing taxes, the orderly distribution of assets, protecting assets, and planning for incapacity. 

Asset Protection for the Family Farm, Lakehouse, or Cabin

A common concern people have as they age is the cost of long-term care.  This can have a significant impact on their finances during their life, and an even greater impact on the legacy they leave behind when they pass.  When family farms or vacation properties are part of an individual’s assets, the exposure of loss increases due to the emotional attachment to those assets.  An asset protection trust is one of the best tools used to protect property from creditors, judgments, scammers, or nefarious family members.  In addition, an asset protection trust can be used instead of a prenuptial agreement, to protect your financial future and provide peace of mind.

A primary goal of an asset protection trust is to reduce your financial profile while maintaining a beneficial interest, and often some control, in your assets.  It also prevents future creditors, including the cost of care, from having the ability to seize your assets.  This also makes you a less attractive target for potential litigation.  Assets placed (or titled) into this type of trust are protected from creditors, and court orders, depending on the jurisdiction, to satisfy judgments. 

property trust

Structuring Your Asset Protection Plan

When you decide to place your properties in an asset protection trust, your assets have a legal structure to protect them.  One of the most important decisions you can make with an asset protection trust is the legal jurisdiction in which the trust is established.  The trust’s jurisdiction will determine the laws governing the protection of the trust’s assets.  The jurisdiction can be in any of the 50 states, or for even more protection, it may be offshore.  There are pros and cons to which jurisdiction you choose and should be handled by a qualified attorney.  

Pros and Cons of a Domestic Asset  Protection Trust

Domestic trusts can be less expensive to set up when creating a complete asset protection plan.  However, they are in the US legal system which can put them at risk of a court order, federal bankruptcy laws, and state laws.  These laws have been adopted in the US by many states, however, this type of trust is also new and lacks much case law actually demonstrating or defining the protection against judgments or lawsuits.  Likewise, though, these same considerations may make the domestic asset protection trust more attractive.

Components of Your Asset Protection Plan

An asset protection plan structured properly will often include the trust component, but also a bank account, a limited liability company, or another business entity.  The investment and banking accounts are managed based on the trust provisions.  As mentioned, another, possibly additional element of control, is the Limited Liability Company (LLC).  An LLC can be used to control the financial accounts of a family business.  This structure is one way of allowing you to be the day-to-day manager of the business operations.  This type of structure is the most flexible while granting you control in times of prosperity and calm and having a trustee step in if any issues arise and protection is needed.  It is best to appoint someone other than yourself as the trustee to ensure that you are safeguarded.

asset protection trust

Statutes of Limitations 

While there are many options on the structure of your plan, as well as decisions to make on assignments of the settlor (you), and the trustee, there are also considerations to be made regarding the transfer of ownership.  This can include decisions to make regarding transfer to a well or ill spouse and statutes of limitations through gifting or transfer of title. 

There are several significant laws regarding statutes of limitation.  These include, but are not limited to, Medicaid laws, VA Laws, and tax laws.  All of these must be considered when putting your asset protection plan in place.  Each statute or law has specific rules of which you should evaluate the impact on your plan. Some examples include,    

    • Five-Year: This states of limitations states that if you or your spouse enter a nursing care facility and has sold assets at a price that is considered to be below market value within 60 days of applying for assistance through Medicaid, eligibility will be denied.  This is referred to as the “penalty period” and starts on the date you would otherwise be considered eligible. 
    • Three-Year: There are two three-year statutes of limitations that should be considered during asset protection planning related to Veterans Administration (VA) and Tax Law.
      1. VA – The VA has a look-back period of 36 months related to any transfer or sale of property for what is considered to be less than fair market value when there is intent to apply and qualify for benefits through the VA.
      2. Tax Law – Tax returns are also considered.  The IRS statute of limitations is such that the IRS can review taxpayers’ gifts within a 3-year time period based on the due date of the tax return due for the individual gifts.  Additional considerations are the annual gift tax exclusion amount, currently $15,000.  Gifts valued less than $15,000 in value, per donor, per donee don’t require a gift tax return to be filed.  Further, the official estate and gift tax exemption limit for 2020 is $11.58 million per individual, up from $11.4 million in 2019.
    • Two-Year: federal law allows a bankruptcy trustee to void any transfer of an interest of a debtor in property made within 2 years prior to the date of the bankruptcy petition being filed.  Exemptions from such a ruling exist, but the availability of use has declined dramatically over recent years.
planning for the family farm lakehouse or cabin

Evaluation of Assets

Asset evaluation is an important step in your asset protection plan.  While it includes the value of the property, it goes beyond writing down the figures of the financial value.   When it comes to planning for the family farm, lakehouse, or cabin, it is important to consider not only the value but also the current title and the type of asset.

  • Title: This step in the evaluation confirms that the title of the property is valid.  Whenever a family property is involved, it is always possible interim transactions since the title was acquired may have taken place.  This step is to make sure the title is free and clear and there are no issues affecting good title currently or potential transfer problems of title in the future.  One common example is the failure of a lender to record or provide a deed of release.  After a loan is paid, any property securing the loan requires a release by the lender so no encumbrance remains on the property.  Frequently, lenders are not diligent in providing the release, and dealing with the situation in the future can be complicated and expensive.
  • Jurisdiction: The state in which your property is located can have a big impact on the evaluation of your property.  Each state has the right to recognize ownership independent of other states, therefore this is an important step.  Below are a few of the many different types of property ownership  
  • Value: Lastly, it is especially important to define the financial value of the family farm, lakehouse, or cabin in relation to the total estate value.  At times conflicts may arise if the value of the family property is significant in comparison to the rest of the estate.  Especially when its time to divide the inheritance and or co-ownership of property.

estate protection trust

At The End    

The family property passed down through the generations is a wonderful privilege.  Planning to pass down the family treasure to the next, younger generations are also a way to honor those who came before you and to keep the tradition going.  Before you do, be sure to have a well laid out plan and know what your options are. 

At Paths Elder law, we are a Kansas City metro area estate planning law firm.  We have the expertise to help you create a well laid out plan for your entire estate and to ensure the protection of your assets.    We take a holistic approach to provide legal counsel.  And, we work with you and your family to provide you with options that meet your specific needs.  Our legal counsel is here to help.  If you or someone you know is ready to start their customized estate plan, contact Paths Law Firm to schedule a consultation. 

Educational Seminar at Paths Law Firm

Paths Law Firm provides a Free Educational Elder Law Seminar every month to help you plan for your future.

Administrative Assistant

Ryan D. Foley

Ryan Foley at Paths Law

Administrative Assistant

Ryan D. Foley

Ryan graduated from the UMKC School of Law in 2018 and passed the Missouri Bar that year. Prior to law school, Ryan attended the University of Missouri – Columbia where he attained a degree in Business. He is a Kansas City native, growing up in the Northland where he achieved his Eagle Scout rank by doing a project for his high school. During his time in law school, Ryan was introduced to the practice area of Elder Law by one of his professors and has been

Ryan enjoys working with and educating clients to provide advocacy and support during the unfamiliar and often overwhelming probate process. Ryan understands the challenges faced by individuals when faced by the uncertainty and complexity of government systems or even handling a Trust during a time of grief, and he strives to make the process as easy as possible.

Administrative Assistant

Makaylee A. Morelli

administrative assistant at Paths Law

Administrative Assistant

Makaylee A. Morelli

Makaylee is currently working on her bachelor’s in political science and hopes to soon start law school as an aspiring attorney. In her free time, she loves to spend time with her friends and family but most importantly her dogs Taffyta, Tallulah Belle, and Harry. Their favorite thing to do is go on coffee dates and get pup cups.

Attorney

Kathleen E. Overton

Kathleen Overton, attorney at Paths Law

Attorney

Kathleen E. Overton

After starting her career as a disability attorney, Kathleen transitioned into estate planning at a mid-sized regional law firm. Kathleen joined Paths Law Firm in 2021 when she decided to return to a boutique law firm that provides excellent service and quality to clients. Because of her background as a disability attorney, she brings a thorough understanding of public benefits to each client meeting. At Paths Law FIrm, Kathleen focuses on traditional estate planning and business entity formation, providing tailored advice unique to each client’s situation.

Public Benefits Assistant

Tena K. Dooley

Public Benefits Assistant

Amanda D. Martin

I have my Associates in Applied Science and have over 20 years of office management experience. I have two daughters and one grandson.

During my time away from the office I enjoy spending time with my family.  I enjoy almost everything outdoors and my hobbies include fishing and gardening.

PARALEGAL

Sydney R. Morris

Paths Law elder law in Kansas City

PARALEGAL

Sydney

Sydney is currently enrolled at the University of Missouri-Kansas City pursuing an accounting degree and plans to later attend law school.

In her free time, Sydney enjoys spending time with her nephews and volunteering at her local church.

 

CLIENT SERVICES MANAGER

Christy L. Phillips

client service manager at Paths Law

CLIENT SERVICES MANAGER

Christy L. Phillips

Phone: 816-640-8635
Email: [email protected]

Christy has 3 years of experience in Elder Law working for seniors and their families as a Benefits Coordinator processing Medicaid and VA applications. Prior to joining Paths Law Firm Christy worked in the finance industry for over 10 years.

 

Christy’s experience in the finance industry has been extremely beneficial to her role as Benefits Coordinator. There have been many influences that went into her decision to select the field of Elder Law. Christy has a special place in her heart for the elderly and attributes this to her relationship with her grandparents.

When asked why she loves what she does, Christy said that at Paths Elder law, she gets the opportunity to help clients in more ways than one. Her favorite part of her job is getting clients approved for Medicaid or VA benefits as it is a huge relief for them and their loved ones.

Christy was raised in Ogden, Utah, and moved to Independence, MO, when she was ten years old. She has two children that keep her busy and fill her life with joy! Christy’s daughter cheers for Avila University, and her son plays competitive baseball for the Bucks and races BMX locally for the Motorcycle Closeout Team.

When Christy is not working, she enjoys crafting and making homemade gifts for her loved ones and raising her kids to be healthy, happy, and positive humans.

 

Practice Areas

  • Medicaid Benefits
  • VA Benefits

 

Professionalc Memberships and Affiliations

  • Missouri Notary

FINANCIAL MANAGER

René A. Fracassa

Rene A. Fracassa, Paths Law

FINANCIAL MANAGER

René

René has worked along side Rusty for 35 years. Not only is she part of the Paths team, she is also his wife. René spends her time working with the accountant to keep all of the finances in order, as well as general office management.

In addition to helping run the office, she helps manage the family and grandkids, tries to keep everyone fed, and has a passion to teach Bible Studies. Her former career in Event Planning trained her to juggle all the activity. She understands Rusty’s passion to serve people from the first mention of law school. It is a great pleasure for her to be an important part of every area of his life.

 

MARKETING MANAGER

Hilary R. Tichota

Hillary at Paths Law

MARKETING MANAGER

Hilary

Hilary plays a vital role in the daily operations of the office. In addition to her regular office duties, Hilary has a heart of gold.

For more than 5 years, Hilary has operated the front desk at Paths, running the office and catering to clients. Hilary recently moved into the role of Community Relations Coordinator. She has a passion for people and a focus to share our business practices with the community’s seniors, businesses, and clients. She especially has a heart for seniors, showing they are loved through her visits, treats, the “Pen to Pal” program, and volunteering services at various senior living communities. She is a wonderful wife and mother of two. Most activities with seniors involve her great talent for any type of craft.

 

SR. PARALEGAL & OPERATIONS MANAGER

Jennifer A. Bronson

Jennifer, senior paralegal

SR. PARALEGAL & OPERATIONS MANAGER

Jennifer

Jennifer has been in the legal field for over 25 years and considers Paths her second home.

When she’s not running the office or working for our clients, she’s spending time with her first passion – her children.

ATTORNEY

Russell A. Fracassa (Rusty)

attorney at Paths Law elder law

ATTORNEY

Russell A. Fracassa (Rusty)

Phone: 816-640-8635

When asked what he wants to do, his reply was “I just want to sit at the kitchen table and work directly with people.” Rusty enjoys working with clients providing experienced advocacy and supporting them through their unfamiliar and overwhelming situations. Due to all the challenges faced by seniors, it is essential to work with an experienced elder law attorney who has expertise in the law, issues, and concerns affecting seniors and their families.

Rusty brings nearly 30 years legal experience and expertise working for seniors and their families as an elder law attorney in Kansas City and surrounding. Prior to law school, Rusty was a practicing accountant. This provides invaluable experience in his current practice of law. Rusty decided to put his focus on helping the elderly, vulnerable adults, and their families navigate challenging life, end of life, and death events.

Rusty understands the challenges faced by individuals whose capacity is declining and how upsetting the loss of a loved one can be. He understands he may not be able to eliminate his client’s grief from loss, but he strives to provide clients with peace of mind. Rusty works directly with client’s long term care issues, including Medicaid, Veteran’s Benefits, Estate Planning, Asset Protection, and Special Needs Planning.

In 2010, Rusty’s faith and love led him and part of his family to China as Christian missionaries. He and his wife, went permanently, but ended up dedicating 3 years to that ministry. They returned to Missouri to help with grandchildren after a family tragedy and later began anew with Paths Elder Law. The goal is providing compassionate care through legal advocacy.

When Rusty is not practicing law, he enjoys spending time with his family, grandchildren, and excessive eating at local restaurants.

 

Practice Areas

 

  • Wills and Trusts
  • Estate Planning
  • Asset Protection
  • Medicaid Benefits
  • VA Benefits
  • Probate
  • Guardianship and Conservatorships
  • Education

 

BSBA and Master’s in Accounting, Master’s in Inter-Cultural Studies, and Doctorate in Juris Prudence

  • Rockhurst University
  • Liberty University
  • University of Missouri – Kansas City


Admissions to Practice

  • Missouri


Professional Memberships and Affiliations

  • State Bar of Missouri
  • National Academy of Elder Law Attorneys (long-time Member)
  • Elder Counsel (Charter and Ongoing Member)
  • Missouri Association of Trial Attorneys (Past Member)
  • Kansas City Metropolitan Bar Association
  • Missouri State Bar Committees – Elder Law, Estate Planning, Probate