How Do I Find a Great Elder Law Attorney?

Zobuz’s recent article entitled “4 Tips for Hiring a Lawyer to Help with Medicaid Planning” says you may need to turn to an Elder Law attorney who can help you with Medicaid planning.

Here are some factors in choosing the best attorney:

Referrals and Recommendations. Look for an elder law attorney in the National Elder Law Foundation or the National Academy of Elder Law Attorneys database. You can also ask local agencies who work with seniors, such as the Alzheimer’s Association, AARP, as well as hospitals and nursing home social workers.

Experience. Elder law attorneys specialize in legal and financial issues that affect seniors. This includes areas such as estate planning and Medicaid planning. Look for an attorney who’s been successful in Medicaid planning and is board-certified in elder and special needs law.

Fees. Be sure that you understand how fees are structured. You should get a client engagement letter that outlines the services he or she will provide, as well as the fees they charge.

Customer Service. Dealing with Medicaid planning is a process that takes time. You need an attorney you can contact when you have questions.

A Few Other Thoughts…

Meet the elder law attorney in person for a consultation. This will help you to get a sense of his or her personality.

Look for a lawyer who will speak to you in a way you can understand and clarify points as needed.

Remember: if you don’t feel at ease with the attorney, look elsewhere.

When you select a qualified lawyer to help you with Medicaid planning and other medical insurance concerns, you will secure your future care.

Don’t risk your financial security or that of your family by waiting until it is too late.

Reference: Zobuz (April 22, 2022) “4 Tips for Hiring a Lawyer to Help with Medicaid Planning”

What Is the HEMS Standard?

The HEMS standard is used to inform trustees as to how and when funds should be released to a beneficiary, according to a recent article from Yahoo! News, “What is the HEMS Standard in Estate Planning.” Using HEMS language in a trust gives the trustee more control over how assets are distributed and spent. If a beneficiary is young and not financial savvy, this becomes extremely important to protecting both the beneficiary and the assets in the trust. Your estate planning attorney can set up a trust to include this feature.

When a trust includes HEMS language, the assets may only be used for specific needs. Health, education or living expenses can include college tuition, mortgage, and rent payments, medical care and health insurance premiums.

Medical treatment may include eye exams, dental care, health insurance, prescription drugs and some elective procedures.

Education may include college housing, tuition, technology needed for college, studying abroad and career training.

Maintenance and Support includes reasonable comforts, like paying for a gym membership, vacations and gifts for family members.

The HEMS language provides guidance for the trustee. However, ultimately the trustee is vested with the discretionary power to decide whether the assets are being used according to the directions of the trust.

Sometimes beneficiary requests are straightforward, like college tuition or health insurance bills. However, maintenance and support need to be considered in the context of the family’s wealth. If the family and the beneficiary are used to a lifestyle that includes three or four luxurious vacations every year, a request for funds used for a ski trip to Spain may not be out of line. For another family and trust, this would be a ludicrous request.

Having HEMS language in the trust limits distribution. It has greater value, if the trustee is also a beneficiary, lessening the chances of the trust diminishing for non-essentials or to fund a lavish lifestyle.

Giving the trustee HEMS language narrows their discretionary authority enough to help them do a better job of managing assets and may limit challenges by beneficiaries.

HEMS language can be as broad or narrow as the grantor wishes. Just as a trust is crafted to meet the specific directions of the grantor for beneficiaries, the HEMS language can be created to establish a trust where the assets may only be used to pay for college tuition or career training.

Reference: Yahoo! News (Jan. 7, 2022) “What is the HEMS Standard in Estate Planning”

How to Approach Parents about Estate Planning
Young doctor holding the old lady's hand

How to Approach Parents about Estate Planning

One of the lessons learned from the pandemic is not to wait for the “right time” to prepare for death or incapacity. Aging parents who don’t have a plan in place leave their children with a number of obstacles, says this recent article entitled “Why (and How) To Talk to Your Parents About Estate Planning” from NASDAQ.

One is scrambling to unravel the family finances at a time when you are still grief-stricken. Another is managing costs associated with severe illness and death. Incapacity can be even more complicated. It is more so, if the family has to apply for guardianship to make medical and financial decisions for a parent who can’t speak for themselves or manage their financial affairs.

To prevent a host of problems and expenses, start talking with aging parents about estate planning.  They don’t have to live in an” estate” to have an estate. This is simply the term used to describe all assets owned by a couple or individual.

An estate plan is a tool to convey intentions about assets and health. The first step may be to create an inventory of all assets and belongings, from the family home to personal belongings and digital assets. Next, is to have some tough conversations about their wishes for end-of-life care and medical decisions.

A few questions to get started:

  • Who should be the primary caregiver and decision maker?
  • How will health care expenses be paid?
  • Who do you want to make medical decisions?
  • What do you want to happen to your property after you die?
  • Should the family sell the home, or should one of the children inherit it?
  • Do you have any estate planning documents, and where are they kept?

Estate planning is different for everyone, so be wary of downloading basic estate documents from the web and hoping they will be valid. An experienced estate planning attorney will create the necessary documents, as per the laws of your parents’ state of residence, and reflecting their wishes.

If there is no will, or if a will is deemed invalid by the court, the laws of the state will govern how assets are distributed. Making sure a will is properly prepared, along with other estate planning documents, is a more efficient and less costly way to go.

Estate planning includes tax planning, which occurs when property passes from one person to another. Estate and inheritance taxes are the most common concern. While most Americans don’t need to worry about the federal estate tax, individual states have their own rules and thresholds. Some states have both state estate taxes and inheritance taxes. There are ways to minimize taxes, from gifting during your parent’s lifetimes, to establishing trusts for beneficiaries.

An estate plan includes a will, a Power of Attorney for financial matters, a Health Care Proxy so someone can make health care decisions, a Living Will (also known as an Advance Care Directive) and usually some kind of trust. Each serves a different purpose, but all name a designated person to act in a legal manner to handle the affairs of the person, while they are living and after they have passed.

Some families are more comfortable than others about talking about death and money, so you probably already know what to expect from your parents when trying to have this conversation. Be mindful of their feelings, and those of your siblings. These are hard, but necessary, conversations.

Reference: NASDAQ (Nov. 10, 2021) “Why (and How) To Talk to Your Parents About Estate Planning”

When Should I Consult with an Elder Law Attorney?

Elder law attorneys assist seniors or their family caregivers with legal issues and planning that related to the aging process. These attorneys frequently help with tax planning, disability planning, probate and administration of an estate, nursing home placement and many other legal issues.

Forbes’ recent article entitled “Hiring an Elder Law Attorney,” explains that elder law attorneys are specialists who work with seniors or caregivers of aging family members on legal matters that older adults face as they age. Many specialize in Medicaid planning to help protect a person’s financial assets, when they have Alzheimer’s disease or another debilitating illness that may require long-term care. They can also usually draft estate documents, including a durable power of attorney for health and medical needs, and even a trust for an adult child with special needs.

As you get older, there are legal issues you, your spouse or your family caregivers face. These issues can also change. For instance, you should have powers of attorney for financial and health needs, in case you or your spouse become incapacitated. You might also need an elder law attorney to help transfer assets, if you or your spouse move into a nursing home to avoid spending your life savings on long-term care.

Elder law attorneys can help with a long list of legal matters seniors frequently face, including the following:

  • Preservation and transfer of assets
  • Accessing health care in a nursing home or other managed care environment and long-term care placements
  • Estate and disability planning
  • Medicare, Social Security and disability claims and appeals
  • Supplemental insurance and long-term health insurance claims and appeals
  • Elder abuse and fraud recovery
  • Conservatorships and guardianships
  • Housing discrimination and home equity conversions
  • Health and mental health law.

Reference: Forbes (Oct. 4, 2021) “Hiring an Elder Law Attorney”

What If Account has No Named Beneficiary?

It’s not uncommon for a person to have a banking, retirement, or other investment account with no designated beneficiary when they pass away.

Beneficiaries can include spouses, children, other family members, friends and charities. Beneficiary designations can generally be added to assets, such as bank accounts, securities accounts, retirement accounts, life insurance policies, savings bonds and a number of other assets. Designating a beneficiary will determine how an asset is distributed at the owner’s death– regardless of the provisions of the person’s will or trust.

The first step is to probate the will of a deceased, assuming she had one, says nj.com’s recent article entitled “My wife died and her account has no beneficiary. What’s next?”

When a person dies without a surviving beneficiary named for an account, the assets go to that person’s estate.

So, if a person left a will, the assets in the banking account would pass to the beneficiaries under that will.

If the decedent had no will, the beneficiaries would be dictated by the laws of the state in which the decedent resided. These are known as intestacy laws, and they describe who inherits if there’s no will.

An estate may have to go through the probate process before the decedent’s assets can be transferred to the will’s beneficiaries. It depends on the size of the decedent’s estate, and where he or she lived and died. States have what’s called a small estate limit: if an estate falls below that limit, no probate is required.

If you don’t need to go through probate, there’s a way for a beneficiary to request that a banking account be transferred without a court order. If an estate must go through probate, you’ll need a court order (which is how probate ends) to have the assets transferred to your name.

Reference: nj.com (Oct. 22, 2021) “My wife died and her account has no beneficiary. What’s next?”

What are Digital Assets in an Estate?

Planning for what would happen to our intangible, digital assets in the event of incapacity or death is now as important as planning for traditional assets, like real property, IRAs, and investment accounts. How to accomplish estate planning for digital assets is explained in the article, aptly named, “Estate planning for your digital assets” from the Baltimore Business Journal.

Digital asset is the term used to describe all electronically stored information and online accounts. Some digital assets have monetary value, like cryptocurrency and accounts with gaming or gambling winnings, and some may be transferrable to heirs. These include bank accounts, domains, event tickets, airline miles, etc.

Ownership issues are part of the confusion about digital assets. Your social media accounts, family photos, emails and even business records, may be on platforms where the content itself is considered to belong to you, but the platform strictly controls access and may not permit anyone but the original owner to gain control.

Until recently, there was little legal guidance in managing a person digital files and accounts in the event of incapacity and death. Accessing accounts, managing contents and understanding the owner, user and licensing agreements have become complex issues.

In 2014, the Uniform Law Commission proposed the Uniform Fiduciary Access to Digital Assets Act (UFADAA) to provide fiduciaries with some clarity and direction. The law, which was revised in 2015 and is now referred to as RUFADAA (Revised UFADAA) was created as a guideline for states and almost every state has adopted these laws, providing estate planning attorneys with the legal guidelines to help create a digital estate plan.

A digital estate plan starts with considering how many digital accounts you actually own—everything from online banking, music files, books, businesses, emails, apps, utility and bill payment programs. What would happen if you were incapacitated? Would a trusted person have the credentials and technical knowledge to access and manage your digital accounts? What would you want them to do with them? In case of your demise, who would you want to have ownership or access to your digital assets?

Once you have created a comprehensive list of all of your assets—digital and otherwise—an estate planning attorney will be able to update your estate planning documents to include your digital assets. You may need only a will, or you may need any of the many planning tools and strategies available, depending upon the type, location and value of your assets.

Not having a digital asset estate plan leaves your estate vulnerable to many problems, including costs. Identity theft against deceased people is rampant, once their death is noted online. The ability to pay bills to keep a household running may take hours of detective work on your surviving spouse’s part. If your executor doesn’t know about accounts with automatic payments, your estate could give up hundreds or thousands in charges without anyone’s knowledge.

There are more complex digital assets, including cryptocurrency and NFTs (Non-Fungible Tokens) with values from a few hundred dollars to millions of dollars. The rules on the valuation, sale and transfers of these assets are as yet largely undefined. There are also many reports of people who lose large sums because of a lack of planning for these assets.

Speak with your estate planning attorney about your state’s laws concerning digital assets and protect them with an estate plan that includes this new asset class.

Reference: Baltimore Business Journal (Sep. 16, 2021) “Estate planning for your digital assets”

Are 529 Plans Part of Your Estate?

Estate planning attorneys, accountants and CPAs say that 529s are more than good ways to save for college. They’re also highly flexible estate planning tools, useful far beyond education spending, that cost practically nothing to set up. In the very near future, the role of 529s could expand greatly, according to the article “A Loophole Makes ‘529’ Plans Good Wealth Transfer Tools. Here’s How to Use Them” from Barron’s.

Most tactics to reduce the size of an estate are irrevocable and cannot be undone, but the 529 allows you to change the beneficiaries of a 529 account. Even the owners can be changed multiple times. Here’s how they work, and why they deserve more attention.

The 529 is funded with after tax dollars, and all money taken out of the account, including investment gains, is tax fre,e as long as it is spent on qualified education expenses. That includes tuition, room and board and books. What about money used for non-qualified expenses? Income taxes are due, plus a 10% penalty. Only the original contribution is not taxed, if used for non-qualified expenses.

Most states have their own 529 plans, but you can use a plan from any state. Check to see if there are tax advantages from using your state’s plan and know the details before you open an account and start making contributions.

Each 529 account owner must designate a single beneficiary, but money can be moved between beneficiaries, as long as they are in the same family. You can move money that was in a child’s account into their own child’s account, with no taxes, as long as you don’t hit gift tax exclusion levels.

In most states, you can contribute up to $15,000 per beneficiary to a 529 plan. However, each account owner can also pay up to five years’ worth of contributions without triggering gift taxes. A couple together may contribute up to $150,000 per beneficiary, and they can do it for multiple people.

There are no limits to the number of 529s a person may own. If you’re blessed with ten grandchildren, you can open a 529 account for each one of them.

For one family with eight grandchildren, plus one child in graduate school, contributions were made of $1.35 million to various 529 plans. By doing this, their estate, valued at $13 million, was reduced below the federal tax exclusion limit of $11.7 million per person.

Think of the money as a family education endowment. If it’s needed for a crisis, it can be accessed, even though taxes will need to be paid.

To create a 529 that will last for multiple generations, provisions need to be made to transfer ownership. Funding 529 plans for grandchildren’s education must be accompanied by designating their parents—the adult children—as successor owners, when the grandparents die or become incapacitated.

The use of 529s has changed over the years. Originally only for college tuition, room and board, today they can be used for private elementary school or high school. They can also be used to take cooking classes, language classes or career training at accredited institutions. Be mindful that some expenses will not qualify—including transportation costs, healthcare and personal expenses.

Reference: Barron’s (May 29, 2021) “A Loophole Makes ‘529’ Plans Good Wealth Transfer Tools. Here’s How to Use Them”

How can I Revoke an Irrevocable Trust?

Is there a way to get a house deed out of the trust?

Nj.com’s recent article entitled “Can I dissolve an irrevocable trust to get my house out?” says that prior to finalizing legal documents, it is important to know the purpose and consequences of the plan.

An experienced estate planning attorney will tell you there are a variety of trust types that are used to achieve different objectives.

There are revocable trusts that can be created to avoid probate, and others trusts placed in a will to provide for minor children or loved ones with special needs.

Irrevocable trusts are often created to shield assets, including the home, in the event long-term nursing care is required.

Conveying assets to an irrevocable trust typically starts the five-year “look back” period for Medicaid purposes, if the trust is restricted from using the assets for, or returning assets to, the individual who created the trust (known as the “grantor”).

When you transfer assets to a trust, control of the assets is given to another person (the ‘trustee”).

This arrangement may protect assets in the event long-term care is required. However it comes with the risk that the trustee may not always act how the grantor intended.

For instance, the grantor can’t independently sell the house owned by the trust or compel the trustee to purchase a replacement residence, which may cause a conflict between the grantor and trustee. Because the trust is irrevocable, it could be difficult and expensive to unwind.

In light of this, it’s important to designate a trustee who will work with and honor the wishes of the grantor.

An experienced estate planning attorney retained for estate and asset planning should provide clear, understandable and thoughtful advice, so the client has the information needed to make an informed decision how to proceed.

Reference: nj.com (April 6, 2021) “Can I dissolve an irrevocable trust to get my house out?”

What Do I Need to Know about Estate Planning?

Your idea of planning for the future may include vacations and visits to family and friends—estate planning, not so much. However, it should, advises Real Simple in the article “Everything You Need to Know About Estate Planning—and Why You Should Start Now.” Estate planning concerns decisions about distributing your property when you die, and while that’s not as much fun as planning a trip to an adventure park, it’s become increasing important for adults of all ages.

A survey by caring.com found that the number of young adults with a last will (ages 18-34) increased by 63 percent since 2020. Many tough lessons were learned through the pandemic, and the importance of having an estate plan was one of them.

An estate plan is more than documents for when you die. There are also documents for what should happen, if you become disabled. The last will is one piece of the larger estate plan. An estate plan is also an opportunity to plan for wealth accumulation and building generational wealth, at any level.

Estate planning is for everyone, regardless of their net worth. People with lower incomes actually need estate planning more than the wealthy. There’s less room for error. Estate planning is everything from where you want your money to go, to who will be in charge of it and who will be in charge of your minor children, if you have a young family.

It may be rare for both parents to die at the same time, but it does happen. Your last will is also used to name a guardian to raise your minor children. With no last will, the court will decide who raises them.

If you’ve filled out 401(k) and life insurance paperwork at work, you’ve started estate planning already. Any document that asks you to name a beneficiary in case of your death is part of your estate plan. Be certain to update these documents. Young adults often name their parents and then neglect to change the beneficiaries, when they get married or have children.

For single people, estate planning is more important. If you have no estate plan and no children, everything you own will go to your parents. What if you have a partner or best friend and want them to receive your assets? Without an estate plan, they have no legal rights. An estate planning attorney will know how to plan, so your wishes are followed.

Estate planning includes planning for disability, also known as “incapacity.” If you become too sick to manage your affairs, bills still need to be paid. Who can do that for you? Without an estate plan, a family member will need to go to court to be assigned that role—or someone you don’t even know may be assigned that role. Your last will names an executor to manage your affairs after you die.

Work with an experienced estate planning attorney to have your last will, Power of Attorney, Medical Power of Attorney and other parts of your estate plan created. The court system and processes are complex, and the laws are different in every state. Trying to do it yourself or using a template that you download, could leave you with an invalid last will, which will cause more problems than it solves.

Reference: Real Simple (May 12, 2021) “Everything You Need to Know About Estate Planning—and Why You Should Start Now”