1. REASONS TO DO A WILL
* If you want to leave property to anyone other than your closest next of kin or anyone outside your direct line of descendants.
* If you want to leave specific personal property, i.e. jewelry or artwork, to specific individuals.
* If you have minor children (or even adult children) and want to leave them property as a beneficiary or successor beneficiary so that they receive it in a trust and can access it only upon reaching a certain age.
* If you are a single parent with a minor child or children and you want to nominate a guardian to care for the child or children if something happens to you.
* If you are a couple with a minor child or children and you want to name a guardian to care for the child or children if something happens to both of you.
* If you have a disabled child and want to create a future supplemental needs trust to safeguard the disabled child's inheritance while still enabling the child to receive government benefits, such as Medicaid.
* If you want to do estate planning to try to eliminate or limit estate taxes to be paid by your children after your death.
* If you want to select the specific individual (the executor) to administer your estate after your death.
2. PROS AND CONS OF A WILL VERSUS A LIVING TRUST
Many lawyers strongly urge clients to create a living trust, instead of a
will, to dispose of their assets upon death. There are pros and cons for both
estate plans. Whether a client chooses one or the other should depend on
that individual’s or couple’s circumstances and their wishes. I do believe that too many lawyers convince clients to establish a living trust.
Reasons to consider establishing a Living Trust
* You could avoid probate, a potentially public proceeding in which certain relatives can review, and potentially challenge, your will.
* You could avoid the cost and delay of probate.
* You could avoid kinship problems relating to probate, which can arise if there are unknown or unreachable family members among the class of individuals who are the decedent’s closest next of kin.
* You could arrange for the management of your property by someone else as a trustee.
Negatives of a Living Trust
* You would have higher legal costs now, because if you establish a living trust, you also must establish a pour-over will to complete a proper estate plan.
* With a living trust, you relinquish direct ownership and often control of your property. The property must be managed and taxes must be paid through the trust.
* You must transfer all assets comprising your taxable estate into the trust, which often includes, among other property, bank accounts, brokerage accounts, and a homes or homes. If you fail to transfer the necessary property into the trust – and many do fail to make these transfers – than your estate must be probated and you have nullified the reasons for establishing the trust. THIS IS THE SINGLE BIGGEST REASON WHY MANY INDIVIDUALS AND COUPLES SHOULD NOT ESTABLISH A LIVING TRUST.
3. Why have a Health Care Proxy?
So you can select someone to become your proxy to make healthcare
decisions for you if you can't make decisions for yourself. And upon handpicking
this individual, you also are obligated to inform them of your wishes regarding
end-of life care, which will enable them to follow your wishes.
4. WHY HAVE A POWER OF ATTORNEY?
So you can select someone to be your agent to handle your banking (ie:
pay your bills) and financial management if you need assistance with these
tasks. With proper drafting of the document, the agent also can do Medicaid
planning and oversee many other aspects of your life should you need
5. WHY HAVE A JOINT BANK ACCOUNT?
So you can give your spouse, child or other trusted relative access to
your account so they can pay your bills if you need assistance in doing so.
6. WHEN IS AN ARTICLE 81 GUARDIANSHIP NECESSARY?
Generally, if you do not have a healthcare proxy or a power of attorney,
and your personal life is not being managed properly, i.e. bills are not being
paid, assets are not properly protected and/or your health is suffering because it is not being properly overseen, a guardian may be needed to manage and protect your finances and to manage your healthcare.
7. WHAT IS THE NEW YORK FAMILY HEALTHCARE DECISIONS ACT?
This law allows family members or close friends to make health care decisions, including end-of-life decisions, on behalf of a patient in a hospital or a nursing home
if the individual does not have a health care proxy.
8. WHY IS A LIFE INSURANCE TRUST IMPORTANT?
By having a life insurance trust, you can transfer existing or new life
insurance policies into the trust and, potentially, reduce or eliminate your
9. WHAT IS A SUPPLEMENTAL NEEDS TRUST?
A supplemental needs trust is a trust for the benefit of a disabled
individual that allows the individual to benefit from the assets in the trust,
while also maintaining government benefits, such as a Medicaid, because the
assets in the trust are considered "exempt" assets. A supplemental needs trust
can be part of a person’s will, to safeguard an inheritance for a disabled
child, or can be a separate document and contain assets from a third party
(parents, grandparents, etc.) or the disabled individual themself.
10. WHAT ARE THE MEDICAID FINANCIAL GUIDELINES FOR 2013?
For 2013, an individual with monthly income of less than $800 or assets
of less than $14,400.00 is eligible for Medicaid. A couple's income must be under $1,175.00 and their assets must be under $21,150.00. If an individual or
couple wants Medicaid to pay for home care and has too much income, they may create a pooled income trust to reduce their income for Medicaid purposes. If their assets are above the levels stated, and they only are seeking home care, they may transfer excess assets away one month to get below the Medicaid level and then be eligible for Medicaid the next month. If an individual or couple are seeking Medicaid coverage to cover nursing home care, uncompensated transfers create a five-year look-back period.
Medicaid rules are complex, and it is advised that all clients seek the guidance of a qualified geriatric care manager, social worker or attorney on these issues.
For a more thorough discussion of many of these issues,
please see the Legal Services or Legal Articles sections of my
***SIMPLE ANSWERS TO IMPORTANT QUESTIONS is just that: Simple answers to often-asked questions, meant to give the reader a few guidelines when thinking about the important issues before them. These issues require in-depth thought, discussion and analysis when trying to decide what legal steps to take. An
attorney should be consulted. The above information is not meant to be legal
advice, just the start of a thought process and discussion.
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