Wills & Trusts
Elder Law Associates PA is a full-service estate planning firm, using wills and trusts to accomplish the most proper end-of-life plan for our clients. These documents may provide for asset protection during life, asset distribution upon death and may allow the estate to avoid probate. We advise clients regarding the benefits, advantages and disadvantages of different trusts and assist clients with funding issues.
We use revocable trusts to allow our clients to avoid the probate process and provide a means for proper asset distribution and proper management of assets in the event of incapacity.
Revocable trusts name a trustee who will continue to properly manage one’s assets in the event of permanent loss of capacity, temporary unavailability or upon death. A revocable trust may be used to retain assets for many later generations and leave a legacy from the grantor while properly planning for all available tax benefits. The administration of a trust typically results in considerably less attorney fees than otherwise applicable probate fees.
Within the revocable trust, there are many available planning options. For example, the trust can provide for protective trusts in the event a beneficiary is an inappropriate spender or too immature to handle the assets, if a beneficiary is disabled in any way, or if a beneficiary is going through a divorce. It also may plan for charitable gifts and specific gifts of property.
In addition, under Florida law, the trustee must provide accountings to all beneficiaries, ensuring that all loved ones are properly and adequately informed and that the assets are being disbursed and handled as the creator of the trust intended.
So what’s the difference between a revocable and an irrevocable trust? A revocable trust is just that … it can be revoked or amended during your lifetime, allowing you to use the trust to help you plan for incapacity and to help your family avoid probate upon your death. An irrevocable trust does the same thing, except you can’t amend it and you are not the trustee, so you are essentially giving up control over your assets in the trust. However, the assets in an irrevocable trust are not counted for Medicaid purposes (after the required five-year look-back period), where revocable trusts are fully countable for Medicaid purposes.
Certainly gifting of assets can be done outright, not involving an irrevocable trust. Outright gifts have the advantages of being simple to do with minimal costs involved, including the cost of preparing and recording deeds and the cost of preparing and filing a gift tax return. Many financial institutions have their own documents they use for changing ownership of assets so there are typically no out-of-pocket costs for the transferor.
So, why complicate things with a trust? Why not just keep the planning as simple and inexpensive as possible? The short answer is that gift transaction costs are only part of what needs to be considered. Many important benefits that can result from gifting in trust are forfeited by outright gifting. These benefits are what give value to using irrevocable trusts in Medicaid planning.
Prior to state implementation of the federal Deficit Reduction Act of 2005 (DRA) in recent years (with the exception of California), federal Medicaid law contained a bias against trusts: Most transfers of assets to trusts had a five-year lookback period, whereas there was a three-year lookback period for non-trust transfers. This different standard induced many clients to elect outright gifting in preference to gifting in trust. The DRA leveled the playing field by imposing a five-year lookback period for ALL transfers. Removal of the bias against trusts shifted the discussion of elder law attorneys with clients to the real benefits of gifting in trust versus gifting outright.
Key benefits of gifting in trust are:
- Asset protection from future creditors of beneficiaries
- Preservation of the Section 121 exclusion of capital gain upon sale of the settlors’ principal residence (the settlor is the trust maker)
- Preservation of step-up of basis upon death of the settlors
- Ability to select whether the settlors or the beneficiaries of the trust will be taxable as to trust income
- Ability to design who will receive the net distributable income generated in the trust
- Ability to make assets in the trust noncountable in regard to the beneficiaries’ eligibility for means-based governmental benefits, such as Medicaid and Supplemental Security Income (SSI)
- Ability to specify certain terms and incentives for beneficiaries’ use of trust assets
- Ability to decide (through the settlors’ other estate planning documents) which beneficiaries will receive what share, if any, of remaining trust assets after the settlors die
- Ability to determine who will receive any trust assets after the deaths of the initial beneficiaries
- Possible avoidance of need to file a federal gift tax return due to asset transfer to the trust
Proper estate planning involves more than wills and trusts, however.
Advance Directive (Incapacity) Planning
A big part of estate planning is planning for the event of incapacity due to illness, injury or dementia. There are five essential advance directive documents that everyone should have.
Elder Law Associates PA assists clients in planning for incapacity by preparing durable powers of attorney. The durable power of attorney is a detailed document providing legal authority for the client’s designee to act on the client’s behalf when the client is unable physically and/or mentally to act on his or her own. The language we use in power of attorney documents relates distinctly to clients who are elderly or have disabilities or special needs.
Our firm prepares designation of health care surrogate documents. The health care surrogate document allows clients to choose loved ones who will make vital healthcare decisions when they are unable to make those decisions for themselves. We take care to ensure all state and federal regulations are complied with, including HIPAA language and Florida statutory requirements.
Our attorneys prepare sophisticated living wills for our clients. This legal document specifies the client’s wishes regarding all life-sustaining devices and must be revised continuously to remain current with new and evolving laws. Living wills are most appropriate for adults aged 18 years and above under various circumstances. The younger population is most susceptible to trauma-related persistent vegetative states. In contrast, seniors’ hospital stays and related illnesses are often the impetus for persistent vegetative states, prompting the need for a living will to limit unnecessary and undesired prolonged medical treatment.
Our Advance Directive package also includes the preparation of HIPAA representative forms. HIPAA refers to the Health Insurance Portability and Accountability Act of 1996, and is also called the Medical Privacy Act. Under HIPAA, a health care provider may not release confidential medical records to anyone other than the patient without specific, written authority to do so. By signing a HIPAA Representative Form, the client can authorize his/her family members to access otherwise confidential medical records.
Finally, we prepare Designations of Pre-Need Guardian documents, in which the client can designate who should serve as his/her legally appointed guardian in the event the client’s advance directives are not sufficient to authorize agents to make decisions on the client’s behalf.
Contact Us for More About Estate Planning
Elder Law Associates PA provides Estate Planning services throughout New York and Florida, and particularly in the following cities/municipalities and surrounding communities in South Florida near our offices:
- Palm Beach County: Boca Raton, Delray Beach, Boynton Beach, Highland Beach, Lake Worth, West Palm Beach, North Palm Beach, Palm Beach, Royal Palm Beach
- Broward County: Coconut Creek, Deerfield Beach, Fort Lauderdale, Hollywood, Margate, Plantation, Pompano Beach, Sunrise, Tamarac, Weston
- Miami-Dade County: Aventura, North Miami, North Miami Beach, Sunny Isles, Miami Shores
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