The Elder Law Firm Blog

Inner Workings

Wed, 13 Feb 2019 21:37:57 GMT

A trust is defined as an entity created to hold assets for the benefit of certain persons with a trustee managing the trust. The person(s) creating the trust signs a written trust agreement which establishes the trust and spells out the terms and conditions upon which it will be managed.

All this sounds nice. But what does it really mean and how will it help? The focus of this article is what should be in a trust. First, throughout our lifetimes we acquire “stuff,” such as a home and land and sometimes land in different states and countries. We own money in the form of cash, bank accounts, saving accounts, maybe investments such as certificates of deposits, money market accounts and other money investments. Also, we may own stocks, bonds, brokerage accounts, life insurance policies, annuities and other forms of money assets. We own personal property such as clothing, jewelry, vehicles, boats, motorcycles, motor homes, recreational equipment, jewelry, weapons and other tangible personal items.

These things are in our individual names and we can do as we choose with them, such as retain, sell, trade or mortgage them. Few limits are placed on our use of our possessions. Managing our “things” is easy while we are healthy. However, the problems occur when we lose our health or pass away. Who can access your property to help you, pay your expenses or distribute to your family on death? Usually the answer is no one without court intervention.

This is where the trust is beneficial. The ownership of many of these items is changed to the trust to be used for and by you while you are healthy and managed by a trustee for your benefit if you are incapacitated. After your death, assets are distributed your family or friends almost immediately. This saves the expense delay of probate and courts dictating who receives you property. A trust will protect you during your lifetime and later your family.

What is a Trust?

Wed, 13 Feb 2019 21:33:36 GMT

A legal dictionary defines a trust something like this: an entity created to hold assets for the benefit of certain persons or entities with a trustee managing the trust. Most trusts are founded by the person(s) creating the trust, who sign a written declaration of trust which establishes the trust and spells out the terms and conditions upon which it will be conducted. The assets of the trust are usually given to the trust by the grantor, although others can add assets to it.

A trust can be compared to a Will, but is much more than that. Trusts are used during your lifetime, whereas a Will is not needed until after your death. Unlike a Will, the trust is never filed with a court and its contents are private. Usually you are the trustee and have the responsibility of administering and handling the assets in the trust. After creation of the trust, your assets are assigned, deeded, or transferred to the trust. The trust then owns the assets instead of you, but the assets are still for your use and benefit.

Why go to all this trouble? In the trust, you name a trusted person to be the successor trustee to manage the assets if you become disabled or incapacitated. The trustee is required use trust assets for your benefit, not theirs, and will be held accountable if they misuse the trust assets. Without a trust, the courts may decide who will handle your assets when you no longer have the ability yourself.

After the death of a married person, the assets in the trust are used for the surviving spouse until his/her passing. Lastly, after both pass away, the trustee can distribute the assets to beneficiaries as outlined in the trust without going through the probate process. This saves a lot of money for your heirs.

Conflict

Wed, 13 Feb 2019 21:31:14 GMT

In America today, the nation and the people are enveloped in conflict among many diverse groups including conflicts among members of political parties, nationalities, socioeconomic classes, and, closer to home, families. On a personal note, many years ago I concluded that I am not effective in handling domestic relation cases between husbands and wives, not due to the difficulty of understanding the law, but because of the emotions of the parties involved. Emotions often hinder the ability to make rational decisions. I greatly admire those who practice this area of law, but also feel for them.

Conflict within families greatly increases upon the passing of a loved one. The big items, such as bank accounts, investment accounts, land, etc., usually are not difficult to distribute. The difficulty comes with dividing the decedent’s personal items among the beneficiaries. The things that mom or dad possessed and that the children grew up with have great sentimental value to the children. These items are often what families fight over. The old idea of a parent or even a child tagging personal items for specific people is not effective, and can lead to increased conflict.

Not all conflict can be resolved, but an effective tool in limiting conflict is a living trust which lists assets to be distributed as specifically as possible. A Personal Property Memorandum can be attached as an exhibit to a living trust. In this, the person specifies particular items to be distributed to particular people. Such a Memorandum may be changed or modified as situations change. The more specific the person is in detailing how items are to be distributed in their living trust, or even a will, the less likely a conflict will occur within the family.

Consideration should be given to reviewing your existing living trust or will to see how specific it is in distributing your property and whether any changes need to be made due to additions or losses of family members.

Homestead Exemption

Wed, 13 Feb 2019 21:28:55 GMT

To reduce real estate taxes, Mississippi law allows all homeowners to file for Homestead Exemption on their primary home. The exemption is claimed by the homeowner filing an application in the office of the tax assessor in the county of residence. This is done between January 1 and April 1 of the year following the purchase of the property. Once homestead exemption is filed, any change of ownership must be reported to the tax assessor. Change of ownership may occur after death, divorce, inheritance or sale of the house. If a change of ownership has not occurred, there is no need to re-file each year.

If the house is deeded to a revocable or irrevocable living trust, will homestead exemption be lost? If the trust allows the home to be used as primary residence of the beneficiary of the trust, the exemption may be allowed. However, deeding the property to a trust is a change of ownership and a new application for homestead exemption must be filed with the office of the tax assessor in the first quarter of the following year. In filing the new application we suggest taking the deed conveying title into the trust along with a copy of the trust to the tax assessor’s office.

If the trust owns multiple homes, the homestead exemption can be filed on only one home, which should be the primary residence. If more than one home is lived in, only one can be claimed as the primary residence.

Should you have questions as to whether homestead exemption should be filed on a home deeded to your trust, we recommend contacting the attorney who prepared the trust to advise you. Two questions need to be answered: (1) Does the trust allow the lifetime beneficiary to use the home as a primary residence; and (2) Was title of the home transferred into the trust in the previous year?

Foreign Estates

Wed, 13 Feb 2019 21:25:24 GMT

A client recently came to our office with the following situation. The client’s mother had passed away owning a house in Mississippi plus a house, other land and mineral interests in another state. Though the woman was a native of Mississippi, most of her life was spent in the other state. She also left a Will leaving her estate to her husband and if husband predeceased, then to a daughter. The Will, however, was never signed and therefore is invalid.

Without a Will, her estate must be administered in the county where she lived at the time of her death. Her assets must be inventoried, creditors notified through publication in a newspaper and in letters to the creditors, and heirs at law must be determined by publishing a Notice to Unknown Heirs in the newspaper and then, at a hearing, the Court must rule who her heirs at law are. In this case, there is only one child. However, this does not end the problem. A similar administration must be filed in all other states where real property or mineral interests are owned. Although there are differences in each state’s laws, estate laws are somewhat similar and the same matters must be attended to according to the laws of the other state.

If the deceased had the foresight to create, fund and administer a Revocable Living Trust, the dual expense, months delay and long-distance administration would have been avoided. The Trust could be created in any state where the Grantor owned real property. The Trust would then be funded by transferring (deeding) the ownership of all real property and mineral interests to the Trust once and for all. The cost to administer estates in two states is at least four or five times the cost of creating a Trust and transferring property in each state.

Whether property is owned in just Mississippi, whether single or multiple tracts, or in several states, a wise consideration is to create a Revocable Living Trust and save your beneficiaries much delay, frustration, and money.

Review

Wed, 13 Feb 2019 21:22:14 GMT

When is the last time you looked at your Will or Trust? If it has been a while, you should read on.

Circumstances in life change: loved ones die, babies are born, people move away, some lose their ability to care for themselves, and financial or other assets change. Like our annual physical and regular automobile maintenance, our estate plans need to be reviewed periodically and possibly revised to adjust to the changed circumstances.

How many who have a Revocable Living Trust have even read it or reviewed its assets since the Trust was created? The Trust is a rather complex document and the provisions of it need to be understood. Elder Law attorneys suggest a Trust or Will be reviewed by a professional at least every three years, if not annually. This includes reviewing the provisions of the document, examining title to all assets in the Trust, inquiring as to the status of all trustees, agents and representatives, inquiring if any assets have been sold or new assets acquired and how any changes affect distribution to beneficiaries. For example, the Trust directs that Mama’s valuable family heirloom be distributed to her daughter, but Mama has given it to a niece prior to her death. Upon distribution of Trust assets, problems may occur. With periodic review, Mama could have removed the heirloom from distribution and saved hurt feelings.

From time to time people tell us they made a Trust several years ago and do not understand it and have not looked at it since. This should never occur. If you have an older trust and have not had it reviewed recently, you should. Contact the attorney who prepared it for you and set an appointment for review. After consultation, make any necessary changes. If the attorney is unavailable or has retired, contact another attorney who specializes in Trust work and set an appointment. A good thing about these documents is that they can be reviewed by any attorney who specializes in elder law.

Trustee

Wed, 13 Feb 2019 21:19:14 GMT

In a trust, the Trustee is the person charged with the management, administration and handling of assets owned by the trust. The Trustee has a fiduciary duty, a special relationship, to the Grantor (Creator) of the trust to use the trust assets for the benefit of the Grantor during the Grantor’s lifetime, including any period of incapacity, and then to distribute the remaining assets to beneficiaries according to the terms set out in the trust agreement.

Trustee selection is important in creating a trust. Many times, the Grantor is the initial trustee who serves until incapacity or death and is succeeded by a named person. Successors are often children of the Grantor. The Trustee must be a person of honesty, integrity and who has the ability to handle business affairs. A common mistake by the Grantor in selecting Trustees is to name successor Trustees in the order of birth of children. This may be a costly mistake for the beneficiaries and for the Trustee. All people have different talents, abilities and gifts. A person without the gift of administration and business sense is not a good selection for Trustee. If children will be used as Trustees, serious consideration should be given to these qualities and the selection should be based on ability to serve rather than loyalty or age. The Grantor is doing a favor to the child who does not possess the ability to serve as Trustee by selecting another.

In discussing possible Trustees with your attorney, you should be honest and objective about the different strengths, abilities and weaknesses of the children and listen to the suggestions of the attorney as to who is the better choice for Trustee.

Duties of the Trustee include handling all assets in the trust, paying trust expenses and those of the Grantor, investing and regulating assets, including filing law suits if necessary to recover funds owed to the trust, ensuring that the trust assets benefit the Grantor first, and then, upon the death of Grantor, distributing the remaining assets to the named beneficiaries as set out in the trust.

Look Back

Wed, 13 Feb 2019 21:17:05 GMT

In 1993, Congress passed laws setting a five year look-back period when transferring assets into an irrevocable trust to qualify for Medicaid benefits. It is not illegal to transfer assets to qualify for Medicaid benefits; however the transfer may delay the time of qualification if the transfer was made less than five years prior to the Medicaid application being filed. Transfers over five years are exempt under this rule.

When does the five year period begin to run for a transfer to a trust? In a Medicaid Asset Protection Trust (MAPT), the time begins running on the date of transfer of each asset into the trust. The date the trust is created is not when the five years begin to run. The transfer of assets normally begins soon after the date of the trust but the assets generally are transferred on different dates. For example, home and land are usually transferred to the trust by deeds within in a few days of date of the trust but financial and brokerage accounts, stocks, bonds, mutual funds, etc. and out of state land, may take several weeks to complete because each institution has their own forms which must be utilized for transfers. The five years begin to run on each asset when it is titled into the trust. Should an asset be transferred years later, a new five years begins to run the date it is transferred.

Will a transfer years later cause the five year look-back period to be extended retroactive on assets previously transferred? No, the five years runs for each asset when it is transferred into the trust. For example, a trust was created in 2015 and all then-owned assets are transferred within a couple of months, but then an additional $100,000, from an inheritance, is received in 2018 and transferred to the trust. The original assets will be protected in 2020, but the new transfer ($100,000) will not be protected until 2023.

Community Spouse

Wed, 13 Feb 2019 21:11:28 GMT

About half of Americans turning 65 today will develop some condition requiring long-term services and support. These individuals will require assistance with activities of daily living such as feeding, getting dressed, or bathing. Often, nursing home care is needed to provide 24-hour medical care. The inability to gain access to affordable, competent care can be the most significant threat to the physical, emotional, and financial well-being of the afflicted individuals and their families.

The cost of institutional care can quickly impoverish working and middle-class individuals, costing on average $6,832 per month. For individuals who qualify, Medicaid will help cover those costs. The institutionalized individuals are required to pay all but a very small portion of their income each month for their care with Medicaid covering the rest. That can leave a spouse still living at home (the “Community Spouse”) without enough money to cover basic living expenses.

Congress recognizes the need for balance in the Medicaid program between providing long-term care based on medical necessity and preventing the impoverishment of the spouse at home. When determining Medicaid eligibility, all of a married couple’s assets are totaled regardless of who acquired it. To prevent complete impoverishment of the Community Spouse, Congress enacted some spousal protections:

• While the Institutionalized Spouse may have no more than $4,000 in assets in order to qualify for Medicaid, the Community Spouse may retain some assets. In 2019, the combined value of assets of the Institutionalized Spouse and the Community Spouse allowed is $126,420.

• If the Community Spouse’s income is below $3,160.50 per month, then some or all of the Institutionalized Spouse’s income can be given to the Community Spouse to bring the Community Spouse’s monthly income up to $3,160.50.

• Medicaid does not count the Community Spouse’s income when determining whether the Institutionalized Spouse is eligible for Medicaid. The Institutionalized Spouse’s income is limited to $2,313 per month.

Many do not realize that the spouse at home can have some assets and also possibly access to the Institutionalized Spouse’s income to help pay the bills.

Safe Deposit Box

Wed, 13 Feb 2019 21:07:20 GMT

Accessing a safe deposit after the death of the person leasing the box (the “lessee”) if an estate is opened is a relatively easy process. However, if an estate is not opened, or has already been closed before discovering the existence of a box, gaining access to it can be an aggravating ordeal. Until now, the time and expense of opening an estate in the court system has been required to get authority to open a safe deposit box, which box may or may not contain items of value. For example, several years after closing an estate, the family found that the deceased leased a safe deposit box. The estate had to be re-opened so that the Court could order the bank allow access to the box. We opened it and found nothing but an old canceled promissory note. The family had to pay the cost to re-open the estate and there was nothing there, but we had no other way of knowing what was kept in the box.

Effective July 1, 2018, the Mississippi Legislature has passed new legislation allowing easier access to safe deposit boxes when an estate is not opened. The law provides that a financial institution must grant access to a safe deposit box to certain persons after six months have elapsed since the death of the lessee. The person seeking access when no estate has been opened must be either: (1) the personal representative (executor) named in the lessee’s will; or (2) a successor (heir) of the deceased lessee who died without a will. Additionally, the following documentation must be provided: (1) proof of lessee’s death; (2) proof of the identity of the person seeking access; and (3) a sworn affidavit containing the name of the lessee and date of death, the county where the lessee lived at the time of death, and a statement that no petition for appointment of a personal representative has been granted or is pending in any jurisdiction.

It is a good idea to add a co-owner to your safe deposit box so that someone will have access to its contents upon your death.

Stay in Control

Wed, 13 Feb 2019 21:05:13 GMT

A misconception about Revocable Living Trusts is that once assets are transferred to the trust, they are untouchable or hard to get to which could cause you to be unable to access them when needed. This simply is not accurate. There is very little change in how you use your assets. You are able to control and manage assets during your lifetime and choose who will manage your affairs when you cannot and the conditions under which they will be managed upon your incapacity or death.

As the trustee of a revocable trust, you control everything about the trust and use the assets you choose, when you choose and how you choose. You are not under any restrictions in their use.

If you become incapacitated and are no longer able to handle your affairs, the assets must be used for your care and that of your spouse, if married, and not for anyone else. When you create a trust, you choose who will take over as trustee if you can no longer serve. This person – often a spouse, adult child or close friend – uses the assets for your benefit during your lifetime. This could save family members from going to court to create a conservatorship to gain access to your funds. Conservatorships are expensive, cumbersome and require public disclosure of assets.

Similar to a Will, you choose who receives your assets and in what proportion and when they will receive it upon your death. Unlike a Will, no probate is required to distribute trust assets. Trusts also give more flexibility than a Will in how distributions are made. Assets can be distributed immediately following death or can be spread out over a longer period of time, if needed, to protect any beneficiaries who lack the capacity of handling their affairs or are minors or have any special needs.

Foreign Wills

Fri, 08 Jun 2018 20:14:10 GMT

Is a foreign Will valid in the State of Mississippi?

“Foreign” does not necessarily mean “international” regarding law. Laws specific to one state are considered “foreign” in other states. A Will created in another state is referred to as being “foreign” to this state.

In America, citizens are subject to three general types of law: national or federal, state, and local. Federal laws are uniform throughout the entire United States, whether in the State of Mississippi or the State of Delaware. However, laws of an individual state are peculiar or specific to that state. Within each state, counties and cities have local laws which are specific to the particular county or city.

Where do the laws involving probate and/or Wills fit into these laws? The Tenth Amendment to the United States Constitution provides that “powers not delegated to the United States … are reserved to the States …”. Laws regarding probate and Wills fall under the respective states and therefore vary from state to state. For example, Mississippi has approximately 200 laws regarding signing of Wills and probate of estates. Generally, a Will is not notarized when signed, but is witnessed by two independent witnesses who verify under oath that the testator signed the Will in the presence of both witnesses. However, some states require three witnesses rather than two and some require the testator’s signature to be notarized.

So, can Mississippi courts admit a Will to probate if it was prepared and signed in Oregon and does not conform to the laws of Mississippi? Mississippi law provides that “Wills proven according to the laws of any of the states of the union, of the territories, of the District of Columbia, or of any foreign country, and affecting or disposing of property within this state, may be admitted to probate in the proper court.” Any such Will is treated as if it were executed in Mississippi.

Likewise, Wills created in Mississippi that conform to Mississippi law will be accepted in other states even when requirements of the other state vary from those of Mississippi.

Who Keeps It?

Fri, 08 Jun 2018 20:07:48 GMT

The individual signing a Will is called a Testator. A recent client asked who keeps the Will after the Testator signs it. The follow-up question was whether it should be filed with any Court.

In answer to the second question, the Will is not filed with the Court until the Testator dies and the Will is properly presented to the Court for probate. In fact, Section 91-7-31 of the Mississippi Code requires the original Will to be presented to the Court after the Petition to probate is filed and the Court has ruled that it is a valid, properly executed Will witnessed by two independent witnesses. All Wills must be probated in Court to be effective.

Who keeps the Will? We recommend that the Testator keep the Will in a safe place. The Executor must know its location and have access to it upon the Testator’s death. Some use a fireproof safe in the home or a safe deposit box at a bank. Someone, preferably the Executor, needs to know the combination or have a key to the safe or be authorized to open the safe deposit box. If the Testator decides to rewrite the Will, the old one should be destroyed. If the Testator has the old Will in his/her possession, this is much easier to accomplish.

Some clients prefer for the attorney preparing the Will to keep the original in the law office. This is an acceptable practice; however, it is not a practice of this office for the simple reason that we do not want to take a chance of it being destroyed should something happen to our office space.

Another option is to hand the original Will over to the Executor for safe keeping. This gives the Executor easy access to it. Mississippi Code Section 91-7-5 requires any person holding the original Last Will and Testament to produce it to the Court.

Wherever it is kept, the Executor and/or beneficiaries must be aware of its location and have access to it in order to produce it for probate.

Advance Health Care Directive

Fri, 08 Jun 2018 20:04:43 GMT

Sometimes called Living Will

A difficult situation occurs when a person is terminally ill, will likely die in a short period of time and must rely on machines to live. A decision must be made whether to try to maintain life artificially by use of a respirator and hydration and feeding tubes. If the family is not in agreement and no one has authority to make a decision, it creates great stress within the family and can cause lifelong wounds. This situation can be avoided if the person has signed an Advance Health Care Directive (“AHCD”). An AHCD is a written statement from the person indicating his or her choice of whether or not to be kept alive under these circumstances. This is a needed tool in estate planning.

An AHCD consists of three main parts. The form is a statutory form that if properly completed will be accepted by hospitals and medical providers. The first part consists of naming an agent. The agent may be a spouse, adult child or friend. Successor agents should also be named in the order they are to serve. The agent does not make the decision, but conveys the person’s decision to the medical provider as set out below.

The second part consists of instructions for health care and includes choosing whether to be kept alive by artificial means when the medical treatment team has determined one of the following situations applies: (1) there is an incurable and irreversible condition that will result in death within a relatively short time; OR (2) the patient is unconscious and to a reasonable degree of medical certainty will not regain consciousness; OR (3) the likely risks and burdens of treatment would outweigh the expected benefits. Acting alone, the medical team cannot introduce artificial assistance nor discontinue it. The Agent is to communicate the wishes of the patient as indicated on the AHCD. Please note that this is a drastic action and is not used when the patient is expected to recover.

Also, instructions are included in this section that pain medication must be administered to relieve pain even if the medication may shorten the patient’s life.

The third part deals with selecting a primary physician to oversee the patient’s case. This is optional and is generally not recommended due to the various illnesses and situations that can cause death and the number of doctors treating a terminally ill patient. The chosen doctor may not specialize in the illness that the patient is experiencing, or the doctor may have moved or retired since the AHCD was signed.

An AHCD should be signed by the person and the signature either notarized or witnessed by two independent witnesses. Upon completing the AHCD, it is strongly suggested that copies be provided to your agents and medical providers.

This document is not filed of record in the courthouse. Many attorneys practicing elder law, including this firm, do not charge for preparation of these documents.

How Caregivers Can Deal with Stress-Related Insomnia

Fri, 16 Feb 2018 16:07:56 GMT

From Guest Blogger Sarah Johnson of Tuck Sleep Foundation

Caregiver stress often leads to sleep loss. Sleep deprivation can increase the amount of stress felt during the day resulting in changes in the mood, stamina, and strength of the caregiver. Finding appropriate methods to deal with stress can help caregivers take better care of themselves and the senior for whom they care.

Recognizing Caregiver Stress

Caregivers face a unique situation wherein they may be “on duty” 24/7. When you recognize that your stress is affecting your ability to sleep, you may need to take steps to manage it more effectively. If you let stress and sleep loss continue, you could be putting your own health at risk. Prolonged caregiver stress can lead to:

· Depression and Anxiety : While women are more likely than men to develop anxiety and depression, either gender is at risk. Depression opens you to other health risk factors such as heart disease and stroke.

· Weight Changes: Obesity is often associated with sleep deprivation because it alters the release of hunger controlling hormones. Like depression, obesity increases your risk for other health problems, including diabetes.

· Attention and Memory Problems: Lack of sleep doesn’t give the brain the time it needs to clean and rejuvenate itself at night. That leads to short-term memory problems, inability to focus, and decreased reasoning skills.

· Weakened Immune System: You may find yourself more susceptible to the flu and common colds. A weakened immune system also takes longer to fight off infections.

Make Time and Get Comfortable

In part, the answer lies in making enough time for better sleep. Caregivers may be tempted to stay up late after their senior has gone to bed for a little quiet time to themselves. Sleep deprivation only serves to increase stress the following day. So try to keep a consistent bedtime for yourself and the senior for which you care.

When it is time to go to bed, be sure your mattress and pillow aren’t making you uncomfortable. You want to be able to lay down and fall asleep within a reasonable amount of time. That may mean finding a mattress that supports your preferred sleep style and a cooling pillow to keep you from getting too warm at night.

Ways to Reduce Stress for Better Sleep

1. Mindfulness Meditation

Stress often revolves around worrying about the future or past. Mindfulness meditation helps focus the mind and body on the present. Meditation performed before or in bed can help calm the mind and body in preparation for more restful sleep.

2. Leave Stress on Paper

Many people are better able to process their thoughts and emotions when they write them down in a journal. Taking a few minutes to write down worries and concerns can help the mind settle down for the night.

3. Regular Exercise

Regular exercise can combat a number of stress-related symptoms. It can reduce your blood pressure, improve your moods, and make you feel more energized. Exercise also helps you feel more tired at night, which can help you fall asleep faster.

4. Nap

Naps can work wonders for those who care for seniors who are up during the night. A short 30-45 minute nap may be all you need to counteract the effects of stress-related insomnia. If the person you care for takes a nap each day, take some of the time to get rest for yourself so that you can better handle the stress.

Sarah Johnson

Community Relations sjohnson@tuck.com
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Tuck Sleep Foundation is a community devoted to improving sleep hygiene, health and wellness through the creation and dissemination of comprehensive, unbiased, free web-based resources. Tuck has been featured on NPR, Lifehacker, Radiolab and is referenced by many colleges/universities and sleep organizations across the web.

New Tax Laws

rush@theelderlawfirm.net — Fri, 16 Feb 2018 16:04:07 GMT

Congress recently passed a massive tax reform package called “Tax Cuts and Jobs Act of 2017” (“TCJA”) which went into effect January 1, 2018. Many components of the new law will expire by January 1, 2026 unless Congress renews it before that time. Understanding the logic of how Congress thinks is far beyond the scope of this article.

While the tax laws are changing significantly and affect all taxpayers, the purpose of this article is to highlight the law’s effects on estate planning.

The death of “death taxes” did not occur as we had hoped. However, for estates of persons dying between January 1, 2018 and December 31, 2025, and gifts made during that same time period, the gift and estate exemption (death taxes) and Generation Skipping Tax increase to $10 million for an individual and $20 million for a married couple, adjusted annually for inflation. The projected adjusted exemption for 2018 is $11.2 million for individuals and $22.4 million for married couples, which is double the 2017 amount. Without Congressional intervention, in 2026, the exemptions will return to the 2017 amounts. The marginal tax rate remains at 40% for anything subject to these taxes.

While not terminating the “death taxes,” the new law nearly deals a “death blow” to it, at least for now. It is estimated that there will be fewer than 2,000 estates nationwide subject to estate taxes, whereas approximately 5,000 estates would pay estate taxes without the change.

Does this mean that estate planning is no longer necessary? No, not at all. Estate planning involves many non-tax issues, such as asset protection, guardianships for children, conservatorships for seniors, family business succession, planning for loved ones with special needs, and dictating the distribution of assets when, to whom and in what amounts. If you needed an estate plan before this law passed, you will still need an estate plan under the new law.

If you have any questions, please feel free to call me at 601.992.1437 or email Richard@theelderlawfirm.net .

Richard Young

The Elder Law Firm

Flowood, Mississippi

The Three Protections (Part 3)

rush@theelderlawfirm.net — Fri, 16 Feb 2018 15:47:57 GMT

The Trust Continues

Today’s article is part three of a series explaining why a Revocable Living Trust (RLT) can be a better estate planning tool than a Will. The first protection provides for the grantors to retain control of assets. The second protects the grantors in the event of incapacity when they cannot handle their affairs.

The third protection is for the ultimate beneficiaries of the RLT. “Revocable Living Trust” means that the trust lives beyond the lifetime of the grantors. When the trust is created, the grantors’ property is transferred from the grantors’ names to the trust’s name. Therefore, unlike when a person dies owning property, the property is owned by the trust and can continue to be managed by the trust or distributed to the beneficiaries.

RLTs reflect the grantors’ wishes as to how trust assets are to be handled upon their deaths. At that time, the successor trustee takes over management of trust assets and follows the trust’s instructions. Often the trust directs the property to be distributed to the beneficiaries, outright. However, sometimes it is in the best interest of a beneficiary for that person’s share to be held in trust and not distributed outright. Examples include minor beneficiaries who are incapable of handling property, or an adult beneficiary who is irresponsible with money. Also, beneficiaries can be caught in situations where someone has a claim against them or property could be taken from them through a court judgment, divorce proceeding or liens. In these cases, the assets intended for the beneficiary can be maintained in the trust as long as the grantor directed and distributed either on a periodic basis, such as monthly or quarterly, or distributed at certain ages, such as 21, 25 and 30.

The trust contains a “spendthrift clause” which prevents creditors, vicious spouses or lien holders of beneficiaries from attaching property while it remains in the trust.

The third protection is that the property in the trust is distributed to the beneficiaries as grantors directed and eliminates the need for Court action after the death of the grantors, allowing almost immediate distribution to the beneficiaries. This saves long delays and significant money for the family.

If you have any questions, please feel free to call me at 601.992.1437 or email Richard@theelderlawfirm.net .

Richard Young

The Elder Law Firm

Flowood, Mississippi

The Three Protections (Part 2)

rush@theelderlawfirm.net — Fri, 16 Feb 2018 15:45:03 GMT

Protect You from Yourself

Today’s article is the second part of a three-part series detailing reasons a Revocable Living Trust (RLT) is superior to a Last Will and Testament (Will). The first protection is that the creator of a trust, the grantor, has complete control of assets.

If the grantor/trustee becomes incapacitated and can no longer wisely administer the trust, protection is needed from others and sometimes from him/herself. The RLT provides this protection. In creating a trust, the grantor names a successor trustee; rather than being named by a third party or Court. Usually, the successor trustees are spouses, children, friends, or financial institutions. The grantor decides in advance who is best qualified to handle their affairs and assets and not someone else or a Court. Normally, a trustee who is business oriented is the better choice.

During grantor’s incapacity, the successor trustee has control of and use of trust assets for grantor’s benefit exclusively. The trustee is legally bound to use the assets wisely, in a businesslike manner, to protect them, and to benefit the grantor. A violation of this duty can result in legal repercussions and could be answerable to a Court. The successor trustee will pay all bills, enter contracts and conduct business.

In the case of incapacity without an RLT, the family may have to petition the Court to create a conservatorship. In a conservatorship, the Court controls the assets and names the person who will serve as conservator. The conservator is charged with protecting the assets and must seek Court approval for expenditures, purchases, sales or contracts. Each trip to the courthouse by the attorney for the conservatorship costs money. Though a conservatorship is expensive, slow and cumbersome, it does protect assets and insures assets are used for benefit of the person. Finally, upon death of the person, the assets in the conservatorship must go through the probate process, another long, lengthy and expensive cost to the estate.

The second protection of a RLT over a Will is that the grantor and his/her assets are protected without Court intervention.

If you have any questions, please feel free to call me at 601.992.1437 or email Richard@theelderlawfirm.net .

Richrd Young

The Elder Law Firm

Flowood, Mississippi

The Three Protections (Part 1)

rush@theelderlawfirm.net — Fri, 16 Feb 2018 15:16:40 GMT

Retain Control of Assets

Estate Planners debate the merits of planning using a Last Will and Testament versus a Revocable Living Trust (RLT). Each family’s unique situation enters into the decision of which method to use.

This is the first of three planned articles describing the advantages of an RLT over a Last Will and Testament. The first advantage is that trust property can only be used for the benefit of the grantor during the grantor’s lifetime. The person signing the RLT is the grantor. There may be two grantors if it is a married couple creating the trust.

The grantor transfers real property and financial accounts to the trust, making the trust the owner of record of this property. The trustee(s), usually the grantor(s), uses the property according to the terms of the trust agreement. The protection offered to the grantor(s) is that income and principal in the RLT is used for the benefit of grantor(s) and no one else has any right to trust property during the grantor(s) lifetime.

While a grantor is serving as trustee, he or she may act on behalf of the trust without the consent of anyone else, including another trustee, for much of trust-related business. For joint trusts, while both grantors are living, they must act together to amend, restate or revoke the trust.

Often in a joint trust, the trust, or parts of it, becomes irrevocable upon the death of one grantor. However, the trust property is still to be used for the benefit of the remaining grantor for his or her lifetime, and is not distributed to beneficiaries. Nothing will limit the surviving grantor’s right to income and principal. Upon death of the second grantor, trust property is distributed to beneficiaries as directed by the trust provisions.

The first of three protections provided by an RLT is to use the assets of the trust for the benefit of the grantor(s) during the grantor(s) lifetime. The next Senior Moments article will discuss the second protection offered by trusts.

If you have any questions, please feel free to call me at 601.992.1437 or email Richard@theelderlawfirm.net .

Richard Young

The Elder Law Firm

Flowood, Mississippi

Hi, George

rush@theelderlawfirm.net — Tue, 07 Nov 2017 15:36:30 GMT

The following was posted on social media by Rev. John Sharp of Lena, Mississippi:

The attorney gathered the entire family for the reading of the will. Relatives came from near and far, to see if they were included in the bequests. The lawyer somberly opened the will and began to read:

"To my cousin Ed, I leave my ranch.

"To my brother Jim, I leave my money market accounts.

"To my neighbor and good friend, Fred, I leave my stocks.

"And finally, to my cousin George, who always sat around and never did anything, but wanted to be mentioned in my will, I say, 'Hi, George.'”

This funny story illustrates an important fact in creating Wills. The person creating a Will is called a “testator.” The main purpose of a Will is for the testator to choose who receives assets and how much they receive. The only individual who may contest being left out of a Will is a spouse. Children have no right to contest a Will based solely on the fact that the testator omitted them. Mississippi law allows an omitted spouse to “renounce the Will.” In this case, the spouse receives the share of the estate that would have been received if there was not a Will, less the spouse’s separate estate. This can get into some interesting calculations in an estate.

We have seen several instances where the relationship between the parents and the children is so bad that the parents choose to leave the entire estate to various and sundry charities. In drafting Wills, it is not important to our office to know why children are or are not included. There are many instances where the testator will divide the assets in unequal amounts to children, usually based upon the need of the child or how attentive the child is to the parents. In planning your Will, take into consideration all of the factors and let your conscience guide you in distributing your assets to whom and in what amount you desire.

Text Will

rush@theelderlawfirm.net — Tue, 07 Nov 2017 15:30:31 GMT

A text, written by a 55 year old Australian man, was found in the draft folder of his phone. It contained information on how to access his bank account as well as directions for what to do with his ashes and ended with “My will.” The unsent text was addressed to his brother and indicated that the brother and a nephew would be the recipients of his house and funds, and excluded his wife, stating, “…[wife] will take her stuff only she’s ok gone back to her ex AGAIN I’m beaten…”.

The Court in Australia ruled that this is a valid will in a case brought by the wife where she attempted to gain control over his estate. Australia law states that a Will must be signed in front of two witnesses over the age of 18 who are not included as beneficiaries in the Will. The “text will” clearly did not comply with that law, but Australia amended its law in 2006 to allow for special cases with less formal documentation.

In Mississippi, to quote one of my rules, “that dog won’t hunt!” Mississippi Code Section 91-5-1 controls execution of wills in Mississippi and provides that the person executing the will (testator) must be 18 years of age or older, be of sound and disposing mind, not under undue influence of anyone, and the will must be attested by two or more credible witnesses. The witnesses must be independent people who are in the presence of the testator when the will is signed. The signature of the testator is not notarized, but the signatures of the witnesses are. If a witness is not present and does not observe the testator signing the will, but signs as a witness anyway, the will is invalidated. If a will is ruled invalid, the estate must be administered with the decedent’s heirs at law being the beneficiaries in the estate. Witnesses are not required if the testator wrote a holographic will which handwritten, not typed, wholly in the hand of the testator which is then signed and dated.

Per Capita

rush@theelderlawfirm.net — Tue, 07 Nov 2017 15:27:28 GMT

How is it different from "per stirpes"?

In our last article, I discussed the importance of the term “per stirpes” in a Last Will and Testament. “Per stirpes” is a Latin term meaning “by roots” or in estate planning terms, “by blood or blood relatives.” “Per capita” is Latin meaning “by heads” or “for each head.” It is used in Wills to indicate that each of the beneficiaries shall receive equal shares of the estate.

The “per stirpes” phrase in a Will may read something like this: “In the event my spouse predeceases me, I give, devise and bequeath my property…to my children in equal shares, share and share alike, or to their descendants, per stirpes.” In this example, if the spouse is deceased and there are four children, each child would receive one-fourth of the estate. However, one of those children, Tom, has three children, and has predeceased the parents. These three grandchildren will receive Tom’s one-fourth share in equal parts, or one-twelfth each, and the remaining children would receive one-fourth each. If Tom had no children, his share would be distributed equally among the remaining children, who would receive one-third each.

An example of “per capita” may be where the testator decided to skip his children and go directly to his grandchildren. This Will could read something like this: “I give devise and bequeath my property to my grandchildren, then living at the time of my death, equally, share and share alike.” In this case, if there are 10 grandchildren, the estate will be divided into ten shares. If four grandchildren have died, leaving six children, it will be divided into six equal shares. No descendants of the deceased grandchildren will inherit anything. With per capita, it does not make any difference how many grandchildren there are or how many children they have. The living grandchildren receive the estate equally.

In drafting a Will, it is very important to be sure that the testator understands how the distribution is to occur and to review the Will periodically to ensure it accomplishes the purpose of the testator.

Per Stirpes

rush@theelderlawfirm.net — Tue, 07 Nov 2017 14:58:19 GMT

What is it?

In reviewing your Last Will & Testament you may have noticed an unusual little phrase “per stirpes.” What in the world does this phrase mean and why did your lawyer put it in your Will?

“Per Stirpes” is a Latin term meaning “by roots” or in estate planning terms, “by blood or blood relatives.” Beneficiaries take from your estate by right of representation, which means that they will inherit in a share equal to that of the individual they are representing.

For example, you have three children and they each have children. The phrase might appear in your Will something like this, “I leave my estate to my children, Tom, Dick and Harry, equally, share and share alike, per stirpes.” Written like this, each child will receive one-third of your estate. If all three children are living at the time of your death, your grandchildren receive nothing. However, if Tom dies before you, his share will go to his two children, Jerry and Mary. Tom’s children will divide his share equally between them. In this example, your grandchildren would each receive one-sixth of the total estate, while your living children, Dick and Harry, each receive one-third.

This sounds simple and easy, but many times it is not. Let’s take it a step further, suppose one of Tom’s children, Mary, predeceased both you and Tom. Mary had two children, Jane and June. In this situation, your great-grandchildren, Jane and June, will receive equally the share your deceased grandchild (Mary) would have received, or one-twelfth (1/12th) interest in the estate. Sometimes, a parent outlives multiple children and grandchildren. Distribution can get confusing in these situations.

Using “per stirpes” in Wills covers the typical family situation so that your Will doesn’t have to be changed every time a beneficiary predeceases you. However, if someone predeceases you and you no longer want this typical pattern to apply, then changes will need to be made. Regular reviews of estate plans help make sure your Will is written the way you want it.

The Estate

rush@theelderlawfirm.net — Wed, 23 Aug 2017 15:25:39 GMT

When a person’s estate must be probated or administered through the Chancery Court, the Decedent’s life can be opened up for the world to see. The basic purpose of probate is to: (1) gather assets; (2) locate beneficiaries or heirs; (3) notify creditors; (4) pay creditors; and (5) distribute assets to heirs. This is the legal side of an estate.

There is another part of an estate that is more spiritual, or personal, in nature. This aspect reveals the more intimate facets of the Decedent’s life. The personal side must be handled with great care, reverence and love.

Through the probate process, the positives and victories in the person’s life are seen along with the negatives, failures and problems. Next to domestic cases, such as divorce and custody matters, estates generate the most emotion among participants. During this time, the best in families will shine through and, sadly, the worst shows as well. For example, a Decedent may own a bank account jointly with one child expecting that the funds will be divided equally among all the children. By law, the joint account goes to the surviving owner and is that person’s separate property. The joint owner is not under a legal duty to share it with anyone. The best is when they do, and the worst is when they refuse.

Old wounds, long buried, may now rise to the top. The sibling rivalries, wrongs of the past—real or imagined—and old disagreements resurface and may have to be resolved in the estate. Many of the problems relate to sentimental value placed upon various assets, usually not of high monetary value, but of deep, personal value to the Decedent and children. Heated arguments may arise over who gets Mama’s rocking chair.

If the Decedent had prepared a Personal Property Memorandum listing items and their recipients, many of these fights could have been avoided. Often in estates, feelings get hurt which may negatively affect their family relationships forever. A detailed Personal Property Memorandum can reduce the chances of family arguments.

In an estate, the most emphasis is on the legal issues of the estate, but the personal aspect may have the greatest impact on the families and this should be handled with great care and reverence for the deceased.

Richard Young

This Is Why You Should Help a Senior Loved One Downsize

rush@theelderlawfirm.net — Tue, 22 Aug 2017 22:00:24 GMT

If you are a caregiver managing your senior loved one’s care from afar, you know better than anyone how difficult it can be for a person with limited mobility or symptoms of early-stage dementia to live independently. Her challenges multiply when she lives in a large family home that is too much for her to clean and maintain. Both of you worry about her climbing the stairs, getting in and out of the bathtub, and reaching high cabinets. If these concerns weigh on you, it is time for you to help your senior loved one downsize. We offer some advice to help you through the process.

1. Downsizing Helps a Senior Loved One Remain Safe

Large houses with two or more stories are dangerous for seniors with limited mobility because they have to climb stairs to get to the most-used areas of the home several times a day. Downsizing to a single-story, ranch-style home ensures that seniors do not attempt to climb stairs. And, most ranch-style homes do not have a step onto porches or into garages, so you won’t have to worry about your loved one climbing any stairs at all. Long-distance caregivers gain peace of mind knowing that their senior loved one is not risking a fall or harming her knees or hips by navigating staircases.

2. Downsizing Often Results in Having Extra Money for Home Modifications

The majority of seniors live in family homes in which they raised their children. These homes often are too large for one person. Downsizing to a smaller home is a way for a senior to make some money because he can sell a larger home for more money than the cost of a smaller home. Seniors then use this extra money to make home modifications to ensure their safety.

In many cases, smaller ranches are easier to modify to enable your senior loved one to age in place. Rather than spending a great deal of money installing a chairlift in a home that is too large for your loved one, you can put money into widening doorways, installing no-slip flooring, or installing a walk-in tub or shower. Smaller ranches also have open floor plans, which makes them easier to clean and navigate for seniors.

3. Downsizing Results in Decluttering

If you worry that your loved one will trip and fall and you won’t be aware of her injury right away, you need to help her declutter. Downsizing does not just mean moving to a smaller home; it also means sorting through belongings and keeping items that are most useful and most sentimental in order to move to a smaller home. When you declutter your loved one’s home, you ensure that all of her belongings have a spot in which to fit, so you decrease the likelihood that she will trip over something on the floor or out of place. Everyday Health shares some helpful tips for preventing falls at home if you want some more information.

Of course, the challenge with decluttering is determining what to keep and what to donate, sell, give away, or trash. This process should not happen overnight. Your loved one will need time to reminisce, make decisions, and come to terms with parting with some belongings. You can begin by encouraging her to go room by room and make a yes pile and a no pile. Once she narrows down what she wants to keep, she can further downsize by asking direct questions about each item in the yes pile. Looking at each item as objectively as possible will help her decide what to move to her new home.

If you are a long-distance caregiver, you want to ensure your loved one is managing as well as possible independently. Living in a large home with stairs, too many rooms, and too much clutter is not an ideal situation for seniors who have mobility issues or who are in the early stages of dementia. That’s why you should help your loved one downsize to a ranch home with modifications that is safer and easier to navigate and maintain. It’s also important to help her declutter in preparation for the move to her smaller home.

Marie Villeza

Elderimpact.org | info@elderimpact.org

Trigger

rush@theelderlawfirm.net — Tue, 22 Aug 2017 20:49:45 GMT

No…not Roy Roger’s horse. A trigger is a mechanism or an event that initiates another event or series of events, generally more significant. A specific event can initiate or trigger the powers in a certain type of Power of Attorney (“POA”).

A POA is a document wherein a person, or “Principal,” designates specific authority to an agent to perform responsibilities on behalf of the Principal. The powers granted can be general or very specific. The better drafted POA specifies in detail the duties of the agent. An agent must use the powers granted in the POA and the Principal’s assets for and on behalf of the Principal and not for the benefit of the agent. The Agent has a fiduciary duty, a legal obligation, to protect the Principal.

There are two ways for a POA to give powers to an agent. In one, the POA becomes effective immediately upon the Principal signing the document. The other is sometimes called a “Springing Power of Attorney” and empowers the agent to act only after the Principal becomes incompetent as defined by the document. To establish incompetency of the Principal, the POA usually requires an examination and certificate of one or two physicians. This certificate triggers, or springs, the powers of the agent.

The decision to empower the agent upon execution of the document or to delay the trigger until the Principal is declared incompetent depends upon the condition of the Principal at the time the POA is signed. A person in poor health should allow the powers to be effective immediately. Those who are healthy should sign a POA for protection, if needed, to start at a later date and triggered by incompetence.

A Durable Power of Attorney is one that continues the power of the agent on behalf of the Principal during the period of incapacity and/or disappearance. A POA terminates upon the death of the Principal.

“Happy trails to you till we meet again.”

Richard Young

Multi-State Estates

rush@theelderlawfirm.net — Tue, 25 Jul 2017 14:39:30 GMT

Without a Will, her estate must be administered in the county where she lived at the time of her death. Her assets must be inventoried, creditors notified through publication in a newspaper and in letters to the creditors, and heirs at law must be determined by publishing a Notice to Unknown Heirs in the newspaper and then, at a hearing, the Court must rule who her heirs at law are. In this case, there is only one child. However, this does not end the problem. A similar administration must be filed in all other states where real property or mineral interests are owned. Although there are differences in each state’s laws, the handling probate and administration of estates is somewhat similar everywhere and the same matters must be attended to according to the laws of the other state.

Medicaid Mistakes

rush@theelderlawfirm.net — Tue, 11 Jul 2017 13:28:36 GMT

Many clients have received erroneous information from others regarding Medicaid and acting on this information often delays Medicaid eligibility. Several of the mistakes made are as follows:

Thinking it’s too late to plan. It's almost never too late to take planning steps, even after a senior has moved to a nursing home.
Giving away assets. Medicaid sets limits on the amount of money and types of assets a person can own and still receive Medicaid. Many people think that giving these things to their children or others will solve that. However, transfers to others can delay Medicaid eligibility.
Ignoring allowable transfer options created by Congress. Certain transfers can be made without jeopardizing Medicaid eligibility. These include: transfers to disabled children (even adult children who are not dependent on the Medicaid applicant), certain caretaker children, certain siblings and the purchase of an annuity which will then be “non-countable” yet will allow a supplement of income for the spouse who remains at home.
Applying for Medicaid too early. This can result in a longer ineligibility period in some instances.
Applying for Medicaid too late. This can mean the loss of many months of eligibility.
Not getting qualified help. This is a complicated field that most people deal with only once in their lives. Tens of thousands of dollars are at stake. It is penny wise and pound foolish not to consult with people who make their living guiding others through the process.
Confusion about the myth of Medicaid “taking my home.” Educate yourself about the rules and policy of estate recovery for Medicaid recipients. Medicaid does not “take your home.” In certain cases there may be no estate recovery at all. When there is estate recovery, Medicaid places a lien against the home so that some of the money they spent on the Medicaid recipient can be recouped from the proceeds when the home is sold.

Get all the facts from reputable sources and professionals who know and understand the rules.

SENIOR MOMENTS

rush@theelderlawfirm.net — Wed, 17 May 2017 15:34:54 GMT

Medicaid Income Trusts

To qualify for long-term care under the Medicaid program, there are two general qualification criteria: (1) monthly income; and (2) resources. Some of the specific eligibility requirements can change annually and a prior article covered the changes for 2017. The current income limit is $2,205 per month. However, there is an avenue available to qualify for Medicaid when the resource criterion is met, but the monthly income is too high. The Division of Medicaid designed a mechanism called a “Medicaid Income Trust,” or sometimes "Qualified Income Trust." This Medicaid Income Trust is not to be confused with a Revocable Living Trust or a Medicaid Asset Protection Trust which are often topics in this column.

The Medicaid Income Trust is a short document that is signed by the applicant or representative of the applicant and commences the month that the applicant first receives Medicaid benefits for long-term care. The concept of the trust is that the applicant’s monthly income in excess of $2,205 is held in the Medicaid Income Trust. It is then periodically audited and the monies held there are paid to Medicaid to defray the amount Medicaid has paid to the nursing home. Using this approach, a Medicaid applicant who otherwise qualifies for benefits can qualify for Medicaid even with a monthly income greater than the current amount allowed.

The income of the applicant’s spouse does not affect the applicant’s eligibility. The spouse’s income is not used in calculations for Medicaid eligibility if the spouse is not also applying. This allows the spouse to live at home and have sufficient resources to pay expenses.

The income limit for long-term Medicaid care is not necessarily applicable for all Medicaid services. There are different criteria for each program, including the Medicaid waiver program known as Home and Community Based Services. This program provides assistance for qualifying persons needing care but who are remaining at home. To qualify for this program, the applicant either receives Supplemental Security Income (SSI) or meets the income and resource eligibility requirements for income level up to 300% of the SSI federal benefit rate and meets certain medical criteria.