Todd, Barron, Thomason, Hudman & Bebout, P.C.

Serving Ector & Midland counties and the Permian Basin

3800 East 42nd Street, Suite 409, Odessa, TX 79762 | 432-363-2100

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Viewing entries tagged Estate Planning

Family Limited Partnerships

Posted by Jack Najarian
Jack Najarian
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on Saturday, 09 March 2013
in Blog Post

Family Limited Partnerships and Why They Can Be a Great Estate Planning Tool.

A Family Limited Partnership is an estate planning tool used to help manage large estates, protect assets from creditors, pass wealth to subsequent generations, and avoid estate taxes, among other benefits. Simply put, a Family Limited Partnership is a limited partnership in which all partners are family members. For many wealthy families, it is the “go to” tool to make sure wealth will be maintained in their family for future generations.

A Family Limited Partnership generally takes the form of a limited partnership. Under a common scenario, the parents contribute assets and income (land, stock, etc.) to a limited partnership. The assets contributed are assets the parents owns but they do not use for the purpose of living. In exchange, the parents receive general partnership interest and limited partnership interest. Over time, the parents (the general partners) give their children and grandchildren limited partnership interest.

Before explaining why the above scenario is beneficial, let me give you a general description of the framework of a limited partnership. A limited partnership is made up of two types of partners, general partners and limited partners. The general partner has control over the partnership and manages the partnership. The limited partners are passive owners, and have very little control over the partnership. Unless the partnership agreement provides otherwise, the profits of the partnership flow through to the partners in proportion to their ownership interest in the partnership.

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Estate Planning and the Medicaid Estate Recovery Program (M.E.R.P.)

Posted by Jack Najarian
Jack Najarian
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on Friday, 01 March 2013
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The Texas Homestead Exemption may not protect you from M.E.R.P.

Copyright (c) <a href='http://www.123rf.com'>123RF Stock Photos</a>With the Texas legislature’s adoption of The Medicaid Estate Recovery Program, estate planning has become an important aspect of opting to receive Medicaid benefits. The Medicaid Estate Recovery Program (M.E.R.P.) was created to repay the Medicaid program by requiring the seizure of property in the estates of some of the Medicaid recipients after they die. The program applies to those who started receiving Medicaid benefits after the age of 55 for nursing facility services, intermediate facilities for the mentally ill, and Home and Community-Based Services and Community Attendant Services.

There are four general categories of heirs that are exempt from a M.E.R.P. claim: (1) a surviving spouse; (2) surviving Children under 21 years of age; (3) surviving child of any age who is blind or disabled; or (4) an unmarried adult child residing continuously in the decedent’s homestead for at least one year prior to the time of the Medicaid recipient’s death. However, it is the heirs that do not fall into these four categories that run into issues.

In Texas, we have become accustomed to a tradition of having our homes protected from creditors. Generally, the Texas homestead laws prevent a creditor (except for a mortgage holder, taxing authority, etc.) from forcing the sale of the homestead to satisfy nonpayment of a debt. The Texas homestead exemption has been traditionally known as a great way to shield wealth from creditors.

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