One of Missouri’s TOP Elder Law Attorneys Answers Question about Trusts

Question:  When would it make financial sense to place our assets in a Trust? Are there different types of Trusts?

Answer:  A trust is an estate planning document that allows assets and other property that has a title or deed to be re-named in the trust so when the person creating the trust dies, the assets and property in the trust are distributed according to the terms of the trust and avoid probate. The most common reason people create trusts is to avoid having their assets go through the probate process for failure to name a beneficiary. If people are married, they can create their own, individual trusts or a joint trust. 

A trust allows the person or persons who created the trust (called the “Grantor”, “Settlor” or “Trustmaker”) to handle their money and assets as they always have done so long as they have capacity, but if they become incapacitated and unable to handle their finances, a trustee that is appointed then assumes the duties as Successor Trustee. The Grantor may include specific instructions for the Successor Trustee regarding support of dependents, support of the spouse (if both spouses are incapacitated) and other financial matters.

When the Grantor(s) has died, the Successor Trustee will likely have specific instructions about distribution of trust assets to named beneficiaries, charitable organizations or other beneficiaries the Grantor designated. The Successor Trustee may have on-going trustee responsibilities if there are minor or disabled beneficiaries whose inheritance under the trust will continue to be managed by the Trustee.

The most common type of trust is the Revocable Living Trust. It can be changed at any time, can easily accept additional assets as the Grantor acquires new assets and property and only becomes irrevocable (unable to be changed) when the Grantor dies. During the Grantor’s life, the Grantor’s Social Security number is the identification number of the trust and no separate tax return is filed for the trust.

Irrevocable Trusts are used primarily to hold either life insurance, to take advantage of favorable tax treatment of life insurance held in such a trust and to enable the Grantor (the owner of the life insurance policy/policies) to be able to designate to whom and how the life insurance is to be distributed upon his or her death or to protect and preserve assets for estate or Medicaid planning. The terms of an irrevocable trust cannot be changed, other than administrative provisions that may need to be changed due to changes in the law or as a court may allow. Since these trusts cannot be changed, a person considering creating this type of trust should consult with an experienced attorney who knows the pros and cons of creating such a trust. Although these trusts do protect assets for Medicaid and VA planning purposes, they do not allow the Grantor to have access to the trust funds and have other restrictions that may make these undesirable.

Special Needs Trusts are another type of trust, but applicable to individuals who are disabled. This type of trust allows a disabled individual to qualify and maintain eligibility for public benefits, such as Medicaid, SSI, food stamps, and keep assets that would usually be counted as disqualifying the individual from these need based programs. The assets in a Special Needs Trust are not available to the disabled person – the funds and other assets are held in the trust and the Trustee has the discretion whether to use the assets for good and services that the disabled individual’s benefit programs do not pay for. The intent of this type of trust is to supplement, not replace, public benefits available to the disabled individual. In this way, a disabled individual can receive an inheritance, maintenance through a divorce, a lump-sum Social Security disability payment or settlement/award from a lawsuit and not have these funds spent-down to regain eligibility or to become eligible for public benefits.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

ElderCare Matters State Coordinator, Missouri
Debra K. Schuster, M.H.A., J.D.
Debra K. Schuster, P.C.
St. Louis, Missouri
An ElderCare Matters Partner

Is my husband automatically my Power of Attorney (POA) or must I appoint him to this role?

Question:  Is my husband automatically my Power of Attorney (POA) or must I appoint him to this role?

Answer:   No one, including your husband is automatically your agent under a Power of Attorney. The person who you wish to be your agent must be appointed in an instrument with the specific wording required in your particular State and must be executed with the formality of other estate planning documents such as a Last Will and Testament, i.e. witnessed by two (or three) disinterested witnesses, sworn to under oath, and notarized.

A Power of Attorney is a very powerful legal instrument and should not be taken lightly. The person you name as your “agent” usually has all of the same powers as you have. This means that the agent could go to your bank with your signed document and take all of the money out of your accounts, and more.   Regardless of the dangers of having one, this is probably one of the few legal instruments every adult should have. Without it a court may have to decide who will help you if you become incapacitated.

There are basically two types of powers of attorney. The first type is usually used for a specify purpose and is limited in time. For example, if you owned a piece of real estate in another State and wish to sell it, but don’t want to travel to that state for the closing. You could name another individual who could sign all of the closing documents on the day of the closing. Then the Power of Attorney would be limited to that particular day and only for the purpose of the closing of your real estate.

The second type, which most people prefer, especially between husbands and wives, is called a Durable Power of Attorney. These documents are usually broad in the scope of duties that the agent could perform and will be good until you revoke it or die. This document will also last through your incapacity, which is when your will need it most. Most States require specific language in the document saying that it is a Durable Power of Attorney.

There is also third type, calling a Springing Power of Attorney. This instrument does not become “active” until such time as you become incapacitated and need someone to act on your behalf. This document usually specifies when it will “spring” into being. Depending upon the terms specified, but usually there is a requirement for one or two physicians to attest to the fact that you are incapacitated and cannot do certain tasks i.e. pay your bills. We do not do many of these because it may be difficult to locate the physicians necessary in a timely manner and if a person is that incapacitated; they may not even remember that they have the document, or where it is kept.

Although, the Power of Attorney will be valid until you revoke it or die, be aware that many banks, brokers, etc. may not honor these documents if they (the bank, broker, etc.) determine that the document is “stale”, meaning that it is too old. We find that this practice is more common with the larger national banks than the local ones. Some States have statutes which prevent banks, etc. from asserting this claim of staleness.

When discussing these documents with your attorney, consider the “best” person for the job. Some people pick their agent not by considering who would be the best, but by who is the oldest child, who lives the closest, or some other “plan” so they don’t offend anyone. Pick the best person you think will do the job for you. You should also pick a back-up individual in case your first choice dies before you or becomes unable or unwilling to serve. Your document could say you want your husband, Peter, but if he can’t serve, then you want your daughter, Pamela. Some individuals want to have two agents serving together, Bert and Ernie, jointly. They are trying to set up a situation where there are checks and balances (one will watch the other) and feel safer with this arrangement. This can become cumbersome when something needs to be done quickly and one of the two can’t be located.

Some final thoughts-The document should be specific as to what the agent is allowed to do. The document should be drafted by an attorney who will ask the right questions of the client before preparing the Power of Attorney and you should ask the attorney exactly what the language means before you sign it. The document should be safeguarded as there is usually only one original and keep in mind that some government agencies i.e. Social Security, and other institutions will not honor it regardless of its age, formalities, etc.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

An ElderCare Matters Partner
George P. Guertin, Esq.
Guertin and Guertin, LLC
North Haven, Connecticut
An ElderCare Matters Partner

My mother has dementia but is still lucid. Is it too late for her to designate me as her Power of Attorney?

Question:  My mother has dementia but is still lucid. Is it too late for her to designate me as her Power of Attorney?

Answer:  Not necessarily.  The issue of whether an individual has the capacity to execute a document, whether it is a contract, a Last Will or Durable Powers of Attorney is a legal issue not a medical issue.  Proper execution of a legal instrument requires that the person signing have sufficient mental “capacity” to understand the implications of the document. While most people speak of legal “capacity” or “competence” as a rigid black line–either the person has it or doesn’t–in fact it can be quite variable depending on the person’s abilities and the function for which capacity is required.

In addition it is also important to understand that there are different standards for capacity for different matters.  A greater understanding is required for some legal activities than for others; for instance, the capacity required for entering into a contract is higher than that required to execute a will.  Each State has slight variances in the exact requirements, but in every State the law lays out certain factors to examine to determine if an individual has the capacity to do certain things. 

The law presumes individuals to be competent. In my State, a person has sufficient mental capacity to make a will if, at the time he executes the document he has:(1) The ability to know the nature and extent of his property;(2) The ability to know the natural objects of his bounty; and (3) The ability to make a disposition of his property in accordance with some plan formed in his mind.

The standards for entering into a contract are different because the individual must know not only the nature of her property and the person with whom she is dealing, but also the broader context of the market in which she is agreeing to buy or sell services or property. Contractual capacity requires the ability to comprehend the nature and quality of the transaction, together with an understanding of what is “going on,” but an ability to comprehend the nature and quality of the transaction, together with an understanding of its significance and consequences.

In your case the issue is whether your mother has the capacity to execute a Durable Power of Attorney. While some States set forth specific standards in regard to capacity to execute Durable Power of Attorney, unfortunately other States such as mine have no defined standards.  Most States which do have defined standards tend to use the contractual definition of capacity.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

James C. Siebert, Esq., An ElderCare Matters Partner
James C. Siebert, Esq.
Law Office of James C. Siebert & Associates
Arlington Heights, Illinois
An ElderCare Matters Partner

What are the requirements to be eligible for Medicaid?

Question:  What are the requirements to be eligible for Medicaid?

Answer:  There are basically three requirements to be eligible for Medicaid.  First, skilled nursing care must be recommended for that person and the state agency must approve that recommendation of the need for skilled nursing home care.

Second, there is an asset limit which will vary from state to state as each state.  This asset limit is usually $2,000 for the Medicaid applicant and $117,240 for the spouse (non-Medicaid applicant).  If both spouses are in the nursing home the figure is $3,000 for both of them combined.  However, do to some differences between states, it is always best to check with an Elder Law Attorney for any variations from the norm.  In proper planning for these individuals or couples, it may become necessary to change the character of an asset (for instance a CD) into an income stream (place funds into an annuity) or convert the asset into an exempt asset such as a roof repair on the family home.

Third, there is an income limit that must be met as well as the asset limit. For instance in Florida the limit is $2,163 a month and this includes all income (Social Security, pension, rental income, interest income, etc.).  Florida is an income cap state, which means that if you receive more than $2,163 a month then the Medicaid applicant must establish a Qualified Income Trust to hold most, if not all, of his/her income.  Whether or not the need for a Qualified Income Trust is necessary, all of the Medicaid patient’s monthly income goes to the nursing facility with $35 a month set aside for the patient’s haircuts, nails, etc.

In all instances, whenever a question exists regarding Medicaid eligibility, one would be wise to consult with an elder law attorney as the rules can be tricky and may a family has tripped over a Medicaid rule although well meaning in their intentions.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

An ElderCare Matters Partner
Ivan Michael Tucker, Esq.
Law Office of I. Michael Tucker, PLC
Altamonte Springs, Florida
An ElderCare Matters Partner

What is a Special Needs Trust?

Question:  What is a Special Needs Trust?

Answer:  While the majority of the clients we see love their children equally and wish to treat them equally when they die, there are circumstances where this is not a good idea. One of those circumstances is where a child has “issues”. Issues, in this context, usually mean that he or she has a developmental disability that may last for their lifetime and now or later they may need government assistance. Issues could also mean that he or she has an alcohol or drug dependency and also may need government assistance, or worse yet, may use their inheritance to further their addiction with a terrible ending.

Although it may seem like a good idea, I strongly discourage people from establishing custodial accounts or leaving cash or other assets outright to heirs with disabilities, if they are or will receive benefits from the State. The distribution of assets outright may disqualify the beneficiary from government assistance, which is means-based.

When the assets of an individual with special needs exceed the governmental financial resource limits, the individual may be disqualified from both Supplemental Security Income (SSI) and Medicaid.

A more appropriate way to pass an inheritance to a special needs beneficiary is to utilize a Supplemental Needs Trust, also known as a Special Needs Trust. Supplemental Needs Trusts can be either self-settled Trusts, or third-party Trusts. A self-settled Trust is a Trust set up with the disabled persons own assets. The disabled individual is the Grantor and the beneficiary. A third-party Trust is created by one person (the Grantor) for the benefit of another, so long as the Grantor is not legally responsible for providing support for the disabled individual.

A Supplemental Needs Trust containing certain provisions may be established to administer and distribute Trust assets to a beneficiary with special needs without otherwise disqualifying them from governmental benefits. If drafted properly, the assets in the Trust are not counted for the purpose of determining eligibility for governmental benefits. A properly drafted self-settled Supplemental Needs Trust will require the Trust to pay back the government after the death of the special needs individual for governmental benefits provided to the individual.  If the assets are depleted then they do not need to be reimbursed.   Supplemental Needs Trusts should be drafted with care. The instrument should not direct the Trustee to make disbursements for a disabled person’s heath, maintenance or support as this will cause the Trust assets to be includable in determining eligibility for governmental benefits. One way to accomplish this goal is to give the Trustee absolute discretion on disbursements. When distributions are up to the Trustee’s sole and absolute discretion, the assets in the Trust are not counted when calculating eligibility for governmental benefits.

Supplemental Needs Trusts can be a valuable tool in planning for disabled individuals. The process requires consideration of many issues and should be approached with care by a qualified legal professional.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

An ElderCare Matters Partner
George P. Guertin, Esq.
Guertin and Guertin, LLC
North Haven, Connecticut
An ElderCare Matters Partner

Michigan Elder Law Attorney Answers Family’s Question

Question:  What is the difference between an Elder Law Attorney and an Estate Planning Attorney?

Answer:  The difference between an Elder Law Attorney and an Estate Planning Attorney can be quite substantial. An Estate Planning Attorney traditionally focuses on dealing with what happens to a client after the client passes away. They would often deal with avoiding probate, minimizing estate taxes and distributing assets to the client’s loved ones exactly as the client wanted them to be distributed – to name a few. However, Elder Law Attorneys not only focus on estate planning issues (a very important part of elder law) but they also deal with issues that face clients during their lives. An Elder Law Attorney will help protect assets for a client if there is ever an incapacity issue. Elder Law Attorneys will often deal with Medicaid issues, Veterans’ Benefits, Special needs counseling and Long Term Care Issues – to name a few. 

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

An ElderCare Matters Partner
Elder Law Attorney Jim Thomas
Law Office of Carol Thomas
Saginaw, Michigan
An ElderCare Matters Partner

Connecticut Elder Law Attorney Answers Question about a Living Trust

Question:  What is a Living Trust, and is this something that my elderly parents should consider setting up?

A Living Trust is often “sold” as a device to avoid Probate. It seems that every week there is an ad in the local newspapers encouraging seniors to attend a lunch or dinner seminar where they will learn to avoid Probate. While this may be of benefit to some, there are, in my opinion, better reasons for couples and individuals to have Revocable Living Trusts. But, not only elderly parents should consider Living Trusts. This form of Estate Planning is beneficial for many age groups; from the young couple with the minor children, to the middle aged who may have grown the size of their estate to the taxable level, to the retired person who wants to assure a smooth transition of their assets to the next generation. There is no age group that is immune to incapacity, taxes, family issues, or death.

A Will, which most people have or are familiar with, only provides instructions to others when you die. Wills do not contemplate you becoming incapacitated, where as a Living Trust provides people that you, not the Court, want to help you manage your affairs should you become incapacitated. Why would you want to take a chance that this situation will arise and you will have a Judge, who does not know you, appoint another individual, who may not be a relative or even someone you know, to manage your financial as well as personal affairs. You can name that person now in your Living Trust, and also an alternate in case your first choice is unable to serve.

Another benefit of a Living Trust, also sometimes referred to as a Revocable Living Trust, or an AB Trust, for married people is the ability to increase the amount of assets that you are allowed to pass without paying Estate Tax.

Some clients are concerned about the privacy of their estate plan. While a Will is a public document which is available to anyone, a Living Trust is not. If you do not want your neighbor to find out that you gave your jewelry to your niece or that you disinherited your wayward son, then a Revocable Trust is for you.

Many of our clients own property in multiple States. They may own their home here in Connecticut and have a “winter home” in Florida or the Carolinas. Normally when they die there is Probate in both jurisdictions. A Revocable Living Trust will often eliminate that probate process for both.

And finally why would anyone want to have their estate go though Probate. It is a government process full of forms to be completed and hearings to attend.   It is a long process, usually nine months to one year and is a public process, as described above, where anyone can go and observe what most people believe is a private matter. Oh, and it is not inexpensive either.

You can find some of America’s TOP Elder Law Attorneys who can help you with your family’s Elder Care Matters on ElderCareMatters.com - America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

An ElderCare Matters Partner
Attorney George P. Guertin
Guertin and Guertin, LLC
North Haven, Connecticut
An ElderCare Matters Partner

Trust Administration – What You Need to Know BEFORE You Agree to Administer a Trust

Question:  What are some of the things I should know BEFORE I agree to be the Administrator of someone’s Trust?

Answer:  If you are considering taking on the responsibility of administering someone’s trust, there are a few things you should know about your obligations. Trust administration is an important job, and it can be frustrating or even overwhelming. Keeping various family members and beneficiaries happy, tracking down all of the assets, and complying with Michigan law is no easy juggling act!

Can an Attorney Help You Administer a Trust?

While you might not think that you need an attorney to handle some of the tasks of administration, working with a seasoned estate planning professional is useful to properly carry out the provisions of the trust and give you the knowledge of how to do your job the right way. Not every trust needs to be administered with a Michigan attorney, but many do.

Even trustees managing the simplest trusts should at least consult with an experienced attorney before starting estate and trust administration. Some trusts can be very complex to sort through. Even basic and straightforward trusts will lead to questions about what you should do, when and how.

Professional advice can give you a great deal of confidence with the tasks of administering a trust, such as filing tax returns and other pertinent documents, making wise investment decisions, transferring real estate ownership, communicating with beneficiaries, and funding any sub-trusts.

The Importance of Good Organization and Record Keeping

An important aspect of administering trusts comes down to your own organizational ability. You’ll need to keep records for all the beneficiaries of the trust and be able to contact them with updates and any changes.

If you are carrying out a living trust after someone has passed away, you’ll be required to take on even more responsibility for managing several critical tasks like identifying beneficiaries, dealing with creditors, obtaining death certificates, alerting the Social Security Administration of the death, providing an inventory of trust assets, and establishing a record-keeping system to track every dollar that comes in our out of the trust.

The Right Team of Professionals Can Help Make Your Job Easier

The right team of professionals – an attorney, accountant, and financial planner – can help you set up the right system from the start. It’s much easier to spend the time at the outset of administration getting a clear and efficient system running rather than trying to backtrack and piece together information later on down the road.

Additionally, you will need to make sure that you are compliant with the IRS regarding any trust administration. You will need a federal tax identification number so that the gains and losses from the trust are reported appropriately. Your legal and financial professionals can help. You may also have to interact with other professionals, like realtors or appraisers, in order to verify the value of various assets. Taking the time to put a good team around you will be well worth it in the long run.

If you need help with this or other elder care / senior care legal matters, you can find thousands of Elder Care Professionals from across America on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.

An ElderCare Matters Partner
Don L. Rosenberg, Attorney and Counselor
The Center for Elder Law
Troy, Michigan
An ElderCare Matters Partner