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Estate Planning Blog

Monday, March 9, 2015

What is a Pooled Income Trust and Do I Need One?

A Pooled Income Trust is a special type of trust that allows individuals of any age (typically over 65) to become financially eligible for public assistance benefits (such as Medicaid home care and Supplemental Security Income), while preserving their monthly income in trust for living expenses and supplemental needs. All income received by the beneficiary must be deposited into the Pooled Income Trust which is set up and managed by a not-for-profit organization.

In order to be eligible to deposit your income into a Pooled Income Trust, you must be disabled as defined by law. For purposes of the Trust, "disabled" typically includes age-related infirmities. The Trust may only be established by a parent, a grandparent, a legal guardian, the individual beneficiary (you), or by a court order.

Typical individuals who use a Pool Income Trust are: (a) elderly persons living at home who would like to protect their income while accessing Medicaid home care; (2) recipients of public benefit programs such as Supplemental Security Income (SSI) and Medicaid; (3) persons living in an Assisted Living Community under a Medicaid program who would like to protect their income while receiving Medicaid coverage.

Medicaid recipients who deposit their income into a Pool Income Trust will not be subject to the rules that normally apply to "excess income," meaning that the Trust income will not be considered as available income to be spent down each month. Supplemental payments for the benefit of the Medicaid recipient include: living expenses, including food and clothing; homeowner expenses including real estate taxes, utilities and insurance, rental expenses, supplemental home care services, geriatric care services, entertainment and travel expenses, medical procedures not provided through government assistance, attorney and guardian fees, and any other expense not provided by government assistance programs.

As with all long term care planning tools, it’s imperative that you consult a qualified estate planning attorney who can make sure that you are in compliance with all local and federal laws.


Monday, February 23, 2015

Paying for Your Grandchildren’s Education

The bond between a grandparent and grandchild is a very special one based on respect, trust and unconditional love. When preparing one’s estate plan, it’s not at all uncommon to find grandparents who want to leave much or all of their fortune to their grandchildren. With college tuition costs on the rise, many seniors are looking to ways to help their grandchildren with these costs long before they pass away. Fortunately, there are ways to “gift” an education with minimal consequences for your estate and your loved ones.

The options for your financial support of your heirs’ education may vary depending upon the age of the grandchild and how close they are to actually entering college. If your grandchild is still quite young, one of the best methods to save for college may be to make a gift into a 529 college savings plan. This type of plan was approved by the IRS in Section 529 of the Internal Revenue Code. It functions much like an IRA in that the appreciation of the investments grows tax deferred within the 529 account. In fact, it is likely to be "tax free" if the money is eventually used to pay for the college expenses. Another possible bonus is that you may get a tax deduction or tax credit on your state income tax return for making such an investment. You should consult your own tax advisor and your state's rules and restrictions.

If your granddaughter or grandson is already in college, the best way to cover their expenses would be to make a payment directly to the college or university that your grandchild attends. Such a "gift" would not be subject to the annual gift tax exemption limits of $14,000 which would otherwise apply if you gave the money directly to the grandchild. Thus, as long as the gift is for education expenses such as tuition, and if the payment is made directly to the college or university, the annual gift tax limits will not apply.

As with all financial gifts, it’s important to consult with your estate planning attorney who can help you look at the big picture and identify strategies which will best serve your loved ones now and well into the future.


Monday, February 16, 2015

Role of the Successor Trustee

When creating a trust, it is common practice that the person doing the estate planning will name themselves as trustee and will appoint a successor trustee to handle matters once they pass on.  If you have been named successor trustee for a person that has died, it is important that you hire a wills, trusts and estates attorney to assist you in carrying out your duties. Although the attorney that originally created the estate plan would most likely be more familiar with the situation, you are not legally required to hire that same attorney. You can hire any attorney that you please in order to determine what your obligations are.

 If the decedent had a will it is common that the successor trustee is also named as the executor.  Although the role of executor is similar to that of trustee, there are technical differences. If there was a will, you should consult with an attorney to determine if a court probate process will be required to administer the estate. If all assets were titled in the trust prior to the person’s death, or passed by beneficiary designation, such as in the case of life insurance and retirement plan assets (such as 401ks, IRAs, etc.), then a court probate may not be needed. However, if there were accounts or real estate in the person’s name alone that were not covered by the trust, a court probate may be necessary.

During the probate process, all of the deceased person’s assets must be collected and accounted for. This includes all bank accounts, stocks, bonds, mutual funds, investment accounts, retirement assets, life insurance, cars, personal belongings and real estate. All of these assets should be valued and listed on one or more inventories. Depending upon the value of the assets, an estate tax return may be needed. You should be aware of any final expenses, the person’s final income tax returns, and any creditors. Although this process is lengthy, once all of the appropriate steps are taken, the assets will be distributed and the estate will come to a close. 

If you have been named a successor trustee, an experienced estate planning attorney can help you through this process and make sure you carry out your legal duties as required.  Contact us for a consultation today.


Monday, February 9, 2015

When Will I Receive My Inheritance?

If you’ve been named a beneficiary in a loved one’s estate plan, you’ve likely wondered how long it will take to receive your share of the inheritance after his or her passing.  Unfortunately, there’s no hard or and fast rule that allows an estate planning attorney to answer this question. The length of time it takes to distribute assets in an estate can vary widely depending upon the particular situation.

Some of the factors that will be involved in determining how long it takes to fully administer an estate include whether the estate must be probated with the court, whether assets are difficult to value, whether the decedent had an ownership interest in real estate located in a state other than the state they resided in, whether your state has a state estate (or inheritance) tax, whether the estate must file a federal estate tax return, whether there are a number of creditors that must be dealt with, and of course, whether there are any disputes about the will or trust and if there may be disagreements among the beneficiaries about how things are being handled by the executor or trustee.

Before the distribution of assets to beneficiaries, the executor and trustee must also make certain to identify any creditors because they have an obligation to pay any legally enforceable debts of the decedent with those assets. If there must be a court filed probate action there may be certain waiting periods, or creditor periods, prescribed by state law that may delay things as well and which are out of the control of the executor of the estate.

In some cases, the executor or trustee may make a partial distribution to the beneficiaries during the pending administration but still hold back sufficient assets to cover any income or estate taxes and other administrative fees. That way the beneficiaries can get some benefit but the executor is assured there are assets still in his or her control to pay those final taxes and expenses. Then, once those are fully paid, a final distribution can be made. It is not unusual for the entire process to take 9 months to 18 months (sometime more) to fully complete.

If you’ve been named a beneficiary and are dealing with a trustee or executor who is not properly handling the estate and you have yet to receive your inheritance, you should contact a qualified estate planning attorney for knowledgeable legal counsel.


Monday, January 26, 2015

Selecting An Executor Post Mortem

The death of a loved one is a difficult experience no matter the circumstances.  It can be especially difficult when a person dies without a will.  If a person dies without a will and there are assets that need to be distributed, the estate will be subject to the process of administration instead of probate proceedings.

In this case, the decedent’s heirs can select someone to manage the estate, called an administrator instead of executor.  State law will provide who has priority to be appointed as the administrator. Most states’ laws provide that a spouse will have priority and in the event that there is no spouse, the adult children are next in line to serve. However, those that have priority can decline to serve, and the heirs can sign appropriate affidavits or other pleadings to be filed with the court that nominate someone else as the administrator. Once the judge appoints the nominated person they will then have the authority to act and begin estate administration.

In certain circumstances, it may be necessary to change the initially appointed administrator during the administration process. Whether this is advisable depends on many factors. First, the initial administrator will have started the process and will be familiar with what remains to be done. The new administrator will likely be behind in many aspects of the case and may have to review what the prior administrator did. This can cause expenses and delays. Also, it is possible that the attorney representing the initial administrator may not be able to ethically represent the new one, again causing increased expenses and delays. However, if the first administrator is not doing his/her job, the heirs can petition to remove the individual and appoint a new one.

If you are currently involved in a situation where an estate needs to be administered, it is recommended that you speak with an estate planning attorney in your state.


Monday, January 12, 2015

Choosing a Guardian for Minor Children

If you are a parent and you are considering estate planning, one of the most difficult decisions you will have to make is choosing a guardian for your minor children.  It is not easy to think of anyone else, no matter how loving, raising your child. Yet, you can make a tremendous difference in your child’s life by planning ahead. 

The younger your child, the more crucial this choice is, because very young children cannot form or express their own preferences about caregivers. Yet young children are not the only ones who benefit from careful parental attention to guardianship. Children close to 18 years old will be legal adults soon, but, as you well know, may still need assistance of a parental figure after the fact.

By naming and talking about your choice of guardian, you can encourage a lifelong bond with a caring family. The nomination of guardians is a straightforward aspect of any family’s estate plan. It can be as basic or detailed as you want. You can simply name the guardian who would act if both you and your spouse were unable to or you can provide detailed guidance about your children and the sort of experiences and family environment you would like for them. Your state court, then, can give strong weight to your expressed wishes.

There are essentially four steps to this process. First, make a list of anyone you know that might be a candidate for guardian of your children.  It is important to think beyond your sisters and brothers and consider cousins, aunts and uncles, grandparents, child-care providers and business partners. You might also want to consider long-time friends and those you’ve gotten to know at parenting groups as they may share similar philosophies about child-rearing. Second, make a list of factors that are most important to you. Here are some to consider:

  • Maturity
  • Patience
  • Stamina
  • Age
  • Child-rearing philosophy
  • Presence of children in the home already
  • Interest in and relationship with your children
  • Integrity
  • Stability
  • Ability to meet the physical demands of child care
  • Presence of enough “free” time to raise children
  • Religion or spirituality
  • Marital or family status
  • Potential conflicts of interest with your children
  • Willingness to serve
  • Social and moral habits and values
  • Willingness to adopt your children

You might find that all or none of these factors are important to you or that there are others that make more sense in your particular situation.  The third step is to, match people with priorities. Use the factors you chose in step two to narrow your list of candidates to a handful.

For many families, it is as easy as it looks. For others, however, these three steps are fraught with conflict. One common source of difficulty is disagreement between spouses. But, consensus is important. Explore the disagreements to see what information about values and people is important to one another and use all of your strongest communications skills to understand each other’s position before you try to find a solution that you can both feel good about. Step four is to make it positive. For some parents, getting past this decision quickly is the best way to achieve peace of mind and happiness. For others, choosing a guardian can be the start of an intensive relationship-building process. An attorney who understands where you and your spouse fall on that spectrum can counsel you appropriately. 


Monday, January 5, 2015

Is There Anyway a Disinherited Child Could Receive an Inheritance From an Estate?

If your estate plan and related documents are properly and carefully drafted, it is highly unlikely that the court will disregard your wishes and award the excluded child an inheritance.  As unlikely as it may be, there are certain situations where this child could end up receiving an inheritance depending upon a variety of factors.

To understand how a disinherited child could benefit, you must understand how assets pass after death.  How a particular asset passes at death depends upon the type of asset and how it is titled. For example, a jointly titled asset will pass to the surviving joint owner regardless of what a will or a trust says. So, in the unlikely event that the disinherited child was a joint owner, that child would still inherit the asset because of how it was titled.

Similarly, if you left that disinherited child as a named beneficiary on a life insurance policy or retirement plan asset, such as an IRA or 401k, that child would still receive some of the benefits as the named beneficiary even if your will stated they were to take nothing. Another way such a "disinherited" child might receive a benefit is if all other named beneficiaries died before you.

So, assume you have three children and you wish to disinherit one of them and you state you want all of your assets to go to the other two, and if they are not alive, then to their descendants.  If those other two children die before you and do not have any descendants, there may be a provision that in such a case your "heirs at law" are to take your entire estate and that would include the child you intended to disinherit.

If you wish to disinherit a child, all of these issues can be addressed with proper and careful drafting by a qualified estate planning lawyer.  


Tuesday, December 30, 2014

Preserving and Protecting Documents Is Part of Healthy Estate Planning

Preserving and Protecting Documents Is Part of Healthy Estate Planning

In the unsettled time after a loved one’s death, imagine the added stress on the family if the loved one died without a will or any instructions on distributing his or her assets.  Now, imagine the even greater stress to grieving survivors if they know a will exists but they cannot find it!  It is not enough to prepare a will and other estate planning documents like trusts, health care directives and powers of attorney.  To ensure that your family clearly understands your wishes after death, you must also take good care to preserve and protect all of your estate planning documents.

Did you know that the original, signed version of your will is the only valid version?  If your original signed will cannot be found, the probate court may assume that you intended to revoke your will.  If the probate court makes that decision, then your assets will be distributed as if you never had a will in the first place.

Where should you keep your original signed will?  There are several safe options – the best choice for you depends on your personal circumstances.

You can keep your will at home, in a fireproof safe.  This is the lowest-cost option, since all you need to do is purchase a well-constructed fireproof document safe.  Also, keeping your will at home gives you easy access in case you want to make changes to the document.  There are two main disadvantages to keeping your will at home:

  • You may neglect to return your will to the safe after reviewing it at home, which increases the risk it will be destroyed by fire, flood, or someone’s intentional or accidental actions.
  • Your will could be difficult to find in the event of your death, unless you give clear instructions to several people on how to find it, which then creates a risk of privacy invasion.

You can keep your will in a safety deposit box.  Most banks have safety deposit boxes of various sizes available to rent for a monthly fee.  Banks, of course, tend to be more secure than private homes, which is one primary advantage.  Also, if you keep your will in a safety deposit box, then after your death, only the Executor of your estate may access the original will.  Thus, the will is strongly protected against alteration or destruction, because family members may have access to a copy but only the Executor will have access to the all-important original.

If you do keep your will and other estate planning documents in a safety deposit box, try to do so at the same bank where you keep your accounts and inform your executor of its location.  This will streamline the financial accounting process.

You can also keep your original will and other estate planning documents at your lawyer’s office.    Law firms often have systems for long-term document storage.  However, keep in mind that the law firm may dissolve before the willmaker’s death, which can make it difficult to track down your will.  

You may also be able to store your will and other documents online.  Many large financial institutions have begun offering long-term digital storage of important documents.  However, any electronic version of your original will is – by definition – a copy, not the original.  So, you still must find a safe place to store the original, signed and witnessed will.  Online storage “safes” may be an excellent back-up, but you must still find a secure place to store the paper originals.


Tuesday, December 16, 2014

Making your home senior-proof

Making your home senior-proof

Let’s face it – it’s tough getting old. The aches, pains, and pills often associated with aging are things that many members of the baby-boomer generation know all too well by now. Though you might not be able to turn back time, you can help an aging loved one enjoy their golden years by giving them a safe, affordable place to call home. If an aging parent is moving in with you and your family, there are many quick fixes for the home that will create a safe environment for seniors.

Start by taking a good look at your floor plan. Are all the bedrooms upstairs? You may want to think about turning a living area on the main floor into a bedroom. Stairs grow difficult with age, especially for seniors with canes or walkers. Try to have everything they need accessible on one floor, including a bed, full bathroom, and kitchen. If the one-floor plan isn’t possible, make sure you have railings installed on both sides of staircases for support. A chair lift is another option for seniors who require walkers or wheelchairs.

Be sure to remove all hazards in hallways and on floors. Get rid of throw rugs – they can pose a serious tripping hazard. Make sure all child or pet toys are kept off the floor. Add nightlights to dark hallways for easy movement during the night when necessary. Also install handrails for support near doorframes and most importantly, in bathrooms.

Handlebars next to toilets and in showers are essential for senior safety. Use traction strips in the shower, which should also be equipped with a seat and removable showerhead. To avoid accidental scalding, set your hot water heater so that temperatures can’t reach boiling. You may also want to consider a raised seat with armrests to place over your toilet, to make sitting and standing easier.

This applies to all other chairs in the house as well. Big, puffy chairs and couches can make it very difficult for seniors to sit and stand. Have living and dining room chairs with stable armrests, and consider an electronic recliner for easy relaxation.

To keep everyone comfortable and help avoid accidents, store all frequently used items in easily accessible places. Keep heavy kitchen items between waist and chest height.

Even with appropriate precautions, not all accidents can be avoided. Purchasing a personal alarm system like Life Alert can be the most important preparation you make for a senior family member. If they are ever left alone, Life Alert provides instant medical attention with the push of a button that they wear at all times.

Amidst all the safety preparations, remember that it’s important to keep the brain healthy, too. Have puzzles, cards, large-print books and magazines, computer games, and simple exercises available to keep seniors of healthy body and mind.

These simple preparations can not only help extend the life of your loved one, but help to make sure their remaining years are happy and healthy.


Thursday, December 4, 2014

Preventing a Will Contest

Preventing a Will Contest & Preserving Peace in the Family

The purpose of writing a Last Will and Testament is to make sure that you – and not an anonymous probate court judge – have control over the distribution of your property after your death.  If one or more family members disputes the instructions in your will, however, then it is possible  that a probate court judge may decide how your assets will be distributed.

Protect yourself, your family members and your last wishes by taking steps to prevent a will contest after your death.  Will contests (this is the legal term used to describe a family member’s challenge to the contents of a will) can be based on one or more of these claims:

  • The will was not properly executed
  • The willmaker was under improper or undue influence from a beneficiary
  • The willmaker or another person committed fraud
  • The willmaker lacked the mental capacity to make the will

There are a number of steps that you can take to help prevent will contests based on any of those claims.  It is important to remember, though, that different states have different laws regarding wills and probate.  What is advisable in one state may be inadvisable in another, which is why the first suggestion for preventing a will contest is:

  1. Obtain qualified legal advice regarding your estate plan.  Estate planning has become a popular “do it yourself” legal task, but you should at least consider having your will reviewed – if not written – by a qualified estate planning lawyer.  Writing your will with the help of an estate planning attorney will also ensure that your will is a properly executed and valid legal document.
     
  2. Don’t delay estate planning.  Plan your estate while you are in good health – “of sound mind and body.”  If you create your will while your physical or mental health is failing, your will becomes vulnerable to claims that it is invalid due to your lack of mental capacity.
     
  3. Consider a no-contest clause.  A no-contest clause (also called an in terroreum clause) in a Last Will and Testament disinherits anyone who contests the will.  Keep in mind, though, that no-contest clauses are valid in some states but not in others.
     
  4. Consider using trusts.  Trusts are becoming more widely usedin estate planning , and are useful for various situations.  A will is a public document once it is filed in probate court, and the public nature of the document can give rise to disputes and will contests.  In contrast, a revocable living trust is a personal and private document that does not have to be filed as a public record.  Furthermore, lifetime trusts can be used to provide financially for “troublesome” beneficiaries who might otherwise spend through their inheritance.  Lifetime trusts are flexible and can link financial inheritance to the accomplishment of goals that you set forth in the trust documents.
     
  5. Write your will independently.  To avoid claims of undue influence after your death, make sure you write your will in circumstances that are clearly free from interference by family members or other beneficiaries.  Avoid having beneficiaries serve as witnesses, for example, and don’t allow beneficiaries to attend your meetings with your estate planning attorney.  This is especially important if you are under the care of a family member who is also a beneficiary.
     
  6. Be of sound mind and body.  At the time you write and sign your will, you can ask your physician to perform a physical examination and certify that you are mentally competent to execute your will.  Another option is for your attorney to ask you a series of questions before you sign your will and document that the questions were asked and answered.  It may also be a good idea to make a video recording of the process of signing your will, as another way to prove mental competency.
     
  7. Answer your family’s questions.  Consider sharing your intentions with your family and other beneficiaries.  If you explain the reasons for the decisions you made regarding bequests, you may help prevent will contests after your death.  Instead or in addition, you may write a letter to your beneficiaries that will be read at the same time your will is read.
     
  8. Keep your will dust-free.  Once your Last Will and Testament and other estate planning documents are complete, don’t just file and forget them.  Review your will with an attorney at least once a year and make any necessary changes in a timely manner.
     

Tuesday, November 25, 2014

The ‘Sandwich Generation’

The ‘Sandwich Generation’ – Taking Care of Your Kids While Taking Care of Your Parents

“The sandwich generation” is the term given to adults who are raising children and simultaneously caring for elderly or infirm parents.  Your children are one piece of “bread,” your parents are the other piece of “bread,” and you are “sandwiched” into the middle.

Caring for parents at the same time as you care for your children, your spouse and your job is exhausting and will stretch every resource you have.  And what about caring for yourself? Not surprisingly, most sandwich generation caregivers let self-care fall to the bottom of the priorities list which may impair your ability to care for others.

Following are several tips for sandwich generation caregivers.

  • Hold an all-family meeting regarding your parents. Involve your parents, your parents’ siblings, and your own siblings in a detailed conversation about the present and future.  If you can, make joint decisions about issues like who can physically care for your parents, who can contribute financially and how much, and who should have legal authority over your parents’ finances and health care decisions if they become unable to make decisions for themselves.  Your parents need to share all their financial and health care information with you in order for the family to make informed decisions.  Once you have that information, you can make a long-term financial plan.
  • Hold another all-family meeting with your children and your parents.  If you are physically or financially taking care of your parents, talk about this honestly with your children.  Involve your parents in the conversation as well.  Talk – in an age-appropriate way – about the changes that your children will experience, both positive and challenging.
  • Prioritize privacy.  With multiple family members living under one roof, privacy – for children, parents, and grandparents – is a must.  If it is not be feasible for every family member to have his or her own room, then find other ways to give everyone some guaranteed privacy.  “The living room is just for Grandma and Grandpa after dinner.”  “Our teenage daughter gets the downstairs bathroom for as long as she needs in the mornings.”
  • Make family plans.  There are joys associated with having three generations under one roof.  Make the effort to get everyone together for outings and meals.  Perhaps each generation can choose an outing once a month.
  • Make a financial plan, and don’t forget yourself.  Are your children headed to college?  Are you hoping to move your parents into an assisted living facility?  How does your retirement fund look?  If you are caring for your parents, your financial plan will almost certainly have to be revised.  Don’t leave yourself and your spouse out of the equation.  Make sure to set aside some funds for your own retirement while saving for college and elder health care.
  • Revise your estate plan documents as necessary.  If you had named your parents guardians of your children in case of your death, you may need to find other guardians.  You may need to set up trusts for your parents as well as for your children.  If your parent was your power of attorney, you may have to designate a different person to act on your behalf.
  • Seek out and accept help.  Help for the elderly is well organized in the United States.  Here are a few governmental and nonprofit resources:
    • www.benefitscheckup.org – Hosted by the National Council on Aging, this website is a one-stop shop for determining which federal, state and local benefits your parents may qualify for
    • www.eldercare.gov – Sponsored by the U.S. Administration on Aging
    • www.caremanager.org  -- National Association of Professional Geriatric Care Managers
    • www.nadsa.org – National Adult Day Services Association

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