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Estate Planning Attorney

What Is The Difference Between A Living And Testamentary Trust?

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Your estate plan consists of many documents and covers a lot of bases. From protecting assets from creditors and litigants to avoiding probate, a comprehensive estate plan protects you while you’re living and provides for loved ones after death. Because estate plans are, by design, comprehensive, a lot of legal jargon is thrown around and often it’s difficult to keep track of all the nuance and detail. Durable powers of attorney, QTIP elections, unlimited martial deduction, and all the many names of the many different types of trusts, to name a few.  

That said, one of the most common questions posed during an initial estate planning consultation is, what is the difference between a living and a testamentary trust? Years ago testamentary trusts were all the rage, a lot of people have them but don’t know how they work or if they are even providing any benefits to the ultimate goals of estate planning. Since trusts represent one of the most utilitarian estate planning tools, in that they have the ability to do many useful and advantageous things in regards to estate planning, understanding the difference between living and testamentary trusts is critical to providing context to any advice given by Ohio estate planning attorneys.  

  • What is trust? 

As always, we must start with the basics, what is a trust? A trust, to put it simply, is a private agreement that allows a third party, a trustee, to manage the assets that are placed inside the trust for the benefit of trust beneficiaries. There are innumerable types of trusts, each with own its respective legal conventions and purposes. A critical aspect of trusts is that the assets housed within them usually aren’t counted as a part of the trust creator’s taxable estate. Thus, when the owner of the trust creates the trust and properly funds it, the assets go from the owner’s taxable estate to the trust. Afterwards, when the owner dies, the assets are not in the owner’s estate and subject to probate. 

  • What is a living trust? 

A living trust, also called an inter-vivos trust, is simply a trust created when you are alive. They can be either revocable and irrevocable and when someone is talking about a trust, usually it’s a living trust. Living is the umbrella term for a trust and is usually paired with other descriptive terms such as family, asset protection, or revocable or irrevocable to describe the primary purpose of the trust and what it is designed to do. Living trusts must have the same basic composition as other normal trusts, a grantor, trustee, and beneficiary.   

  • What is a testamentary trust? 

A testamentary trust is created in your last will and testament, specifically, it directs your executor of the estate to create it.  Thus, unlike a living trust, a testamentary trust will not take effect until you die.  The terms of the trust are amendable and revocable, in that they can be changed at any time, which makes sense because it doesn’t come into being until after death.  

One of the major distinguishing features of a testamentary trust is the involvement of the local probate court. From the time of the settlor’s death until the expiration of the testamentary trust, the probate court checks up on the trust to make sure it is being managed properly. Court involvement is usually sought in the context of testamentary trusts because these trusts are usually created for beneficiaries who, for some reason, are unable to received and manage trust funds appropriately.  

  • When would you use one over the other?  

At the end of the day, just like every other estate planning decision, it is all circumstantial and highly depend on personal situation and estate planning goals. (Which is why estate planning attorneys ask so many questions when you first meet them.) For the sake of some definitive answer, however, there are some tried and true situations when one is preferable over the other.  

If you are interested in avoiding probate, avoiding excessive court oversight, keeping your estate private, and saving your estate money by simplifying property conveyances and avoiding potential will contests, then a living will is likely a good choice. As mentioned before, since living trusts can be created to meet almost any goal or concern of estate planning, the major deciding factors of use is initial cost and ultimate utility of a trust, i.e. there is no point buying a trust if you have nothing to fund it with.   

Testamentary trusts, on the other hand, are created for young children who may be at risk of receiving improper inheritances or trust distributions, family members with disabilities, or other who may get large amounts of money or assets that enter into the estate upon a testator’s death. Further, these trusts are often highly recommended for parents who are at risk of dying at the same time. 

A testamentary trust can set parameters on your estate and how it will be distributed and/or managed after you pass on.  For example, you might include terms that allow for discretionary distributions of $1,000 a month to be given to your children until the age of 21 in the event both parents pass. This ensure that, even if tragedy strikes, the kids will, at least in some way, be supported by their parents, whether they’re gone or not.  At the end of the day, testamentary trusts, like all trusts, allows estate control even after death. Testamentary trusts are unique, however, in that the allow for greater oversight, via the courts, in what’s going on inside the trust. This can be a double-edged sword, however, in that, depending on how long the court needs to be involved, legal fees and administrative costs could add up making this trust structure unattractive if the trust is designed to last a long time.  

Again, dependent on the circumstances, such as estate planning goals, family structure, available estate assets, either or both types of trusts may be advantageous to use. A Cleveland estate planning attorney is in the best position to judge what is most appropriate for a given situation.

 

Charitable Trust Attorney

Thinking Of Giving To A Charity? Consider A Charitable Remainder Trust.

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Significant and stable retirement income, reduction in taxes, whether income, capital gains, or estate respectively, and the provision of critical needed support for worthy charitable organizations and endeavors. If any, or all, of these sound good to you and your estate planning goals, charitable remainder trusts might be a useful option. Charitable remainder trusts, not to be confused with charitable lead trusts, is a way many people are planning for retirement but also “paying it forward.”  

  • What is a Charitable Remainder Trust? 

A charitable remainder trust is a type of irrevocable trust. Irrevocable trusts are trusts in which the grantor, you, relinquishes all control and ownership over the trust and the assets used to fund the trust. Thus, the trust cannot be changed or canceled without the beneficiaries’ permission. Prior to trust formation, the grantor can dictate whatever terms desired to govern the trust, but after formation, those terms control independent of grantor’s wishes and desires. 

What makes an ordinary irrevocable trust in to a charitable remainder trust are a few unique characteristics. Namely, the guiding purpose of the trust and the remainder interest. First, usually, the primary goals with a charitable remainder trust is to reduce taxes and provide additional retirement income. The namesake charitable remainder, however, denotes that eventually, after the grantor passes, whatever is left over in the trust, the remainder, is given to a chosen charity.   

  • How do Charitable Remainder Trusts help pay for retirement? 

The name of game is tax reduction and maximizing potential income production, but how do charitable remainder trusts accomplish this. In a nutshell, it begins with transferring high valued assets into an irrevocable trust, thus initially avoiding estate taxes when making the trust.  

After funding, assets are then sold by the trustee, thus avoiding capital gains on the sale, and these proceeds are reinvested into income producing assets, which can add to available retirement income. Additionally, after you pass, the whatever is left in trust, the remainder, passes on to the charitable beneficiary. The precise manner how a grantor will receive income is usually either a fixed distribution rate via percentage value of appreciated assets or a flat amount of actual income earned by trust assets.   

It should be noted, that charitable remainder trusts should not be viewed as the primary vehicle in which an individual will pay for retirement, these trusts really supplement income more than anything. This reality is largely due to the nature of these trusts. A large trust funding takes full advantage of the associated tax breaks, has the ability to earn significant and usable income for retirement expenses based off the initial principle funding, and, at the end of life, represent a charitable contribution large enough to actually make a different in the world. Thus, if an estate is healthy enough in which a charitable remainder trust is an attractive option, usually the grantor(s) have a lesser concern with the financials of old age.  

  • How are Charitable Remainder Trusts taxed?  

At initial funding of a charitable remainder trust, estate tax is avoided on the assets placed in trust and an immediate charitable income tax deduction is enjoyed. The charitable income tax deduction often bumps the grantor down to a lower tax bracket for the year. Additionally, capital gains are avoided when the trustee liquidates trust assets for reinvestment.  

Regarding annual personal income tax for monies distributed from the trust, this is usually paid per your individual income tax rate, however, often at this point in people’s lives, when they are no longer personally working, and most money and assets have already been transferred into various estate planning tools, people are often in the lowest tax bracket. Further, though distributions from a charitable remainder trust are taxable income, often, if proper estate planning was implemented, the total amount for a taxable estate is so low for a person that distributions for a charitable remainder trust are, for all intents and purposes, tax free. 

  • Do I give up control over what I put in my Charitable Remainder Trust? 

No, the trustee you select to manage the trust will govern the trust and its assets according to the rules and terms you dictate at creation. You are always in control. Further, grantors may retain the right to change the trustee if they are doing a poor job or change the charity to another qualified charity without losing any past or future tax advantages.  

  • If I help out my favorite charity with a Charitable Remainder Trusts, won’t my children be mad? 

The happiness of your friends and family all comes down to proper planning. For those people with sizable estates, it is no problem to leave significant money to both children and favorite charities, there’s more than enough for everyone. There is a common concern, however, that people with modest estates don’t have the option to charitably bequest anything, I mean, there’s only so much to go around right?  

Not exactly. Yes, it is correct that money and assets are finite, but, with the income tax savings inherent in using a charitable remainder trust, a person always has the option to either fund an irrevocable life insurance trust or buy a life insurance policy outright. Either way, the life insurance purchased with the tax savings can replace the full value of any assets left to charity and make sure any surviving children receive their full inheritance as well. Using life insurance, via trust or ordinary policy, also avoids probate concerns and income taxes. Estate tax and asset protection concerns, however, on any policy proceeds will only be addressed through the use of a life insurance trust. Ensuring children aren’t left out in the cold when it comes to inheritance is a major concern for most people, make sure your Ohio estate planning attorney is giving a comprehensive rundown of all of your estate planning options, life insurance options included.      

If you think a charitable remainder trust could help you and your family, speak with your Ohio estate planning attorney. You can convert appreciated assets into lifetime income. You can receive an immediate charitable income tax deduction. You can remove assets from your estate, thus reducing estate taxes. And since no capital gains apply when the assets are sold, you receive more to reinvest in income generating property. All of which is in addition to make a substantial gift to your favorite charity.  

Helping You and Your Loved Ones Plan for the Future

Estate Planning Attorney

Are Your Parents in a Nursing Home? Here Are Ways to Prevent Medicaid Estate Recovery

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Medicaid crisis planning has become a hot topic in estate planning. More people need Medicaid to survive the issues and problems of old age but very few actually take the time to address and plan for this all too important need. Contrary to popular belief, Medicaid is not free money. Medicaid is a needs based state and federal program which applicability is primarily focused on recipient income and assets. By waiting too long, though a person may have a sever need for Medicaid support, in the eyes of the program, they’re “too rich” to qualify. At this point, they are left waiting in a state of poverty or sacrificing a lifetime of investment and savings, the spend down, to qualify. Don’t let this happen to you.

Since Medicaid enrollment is surging across the country and the baby boomer generation is aging, the significance of Medicaid enrollment and planning cannot be understated. As always, contact a local Cleveland estate planning attorney to find out how to plan your estate to maintain eligibility for Medicaid, preserve the maximum amount of assets possible while still maintaining that eligibility, and avoid or proactively plan around the Ohio Medicaid Estate Recovery program, “MER”. The MER program is something not a lot of people have heard of, but it can potentially effect millions of senior citizens every year. The government doesn’t care that you’ve heard of the law, only that it is followed.

What is the Medicaid Estate Recovery Program?

The Medicaid Estate Recovery program is a federally mandated program which dictates that when a Medicaid recipient dies, the MER program, carried out by the Ohio Attorney general’s office, will attempt to recover from the estate what Medicaid paid for the services provided. Generally, the program will attempt to recover any medical assistance paid by Medicaid if 1) the Medicaid recipient was aged 55 years or older, 2) the Medicaid benefits were correctly paid, and 3) the recipient was permanently institutionalized, like residing in a nursing home or PASSPORT facility.

What assets are recoverable?

For purposes of the MER, the state uses an expansive definition of “estate assets,” which includes any property a Medicaid recipient had any legal ownership interest in at the time of death. Such as assets in a living trust, assets owned jointly, real property tenancies, and TOD and POD designated assets. After death, even property Medicaid determined exempt during a recipient’s lifetime, such as a house accompanied with an intent to return, household goods, or life insurance policies, are subject to recovery. That is why to be aware of the Medicaid lookback period and plan asset ownership and transfer accordingly.

What assets are except?

As a starting point, remember that to qualify for Medicaid, an individual’s countable resources must be below $1500. The good news, however, is that exempt resources and assets do not count towards this total, at least initially. The following is a non-exhaustive list of exempt resources from Medicaid.

  • One automobile – if less than $4500 or any value to the non-institutionalized spouse. This is associated with the Community Spouse Resource Allowance, consult your estate planning attorney for more information.
  • Household goods – plates, clothes, books, etc.
  • Burial plots – burial plot, gravesite, casket, urn, etc.
  • Prepaid burials
  • Qualified Medicaid annuities
  • Qualified Long-term Care Insurance Policies – these are special insurance products that most insurance companies don’t carry, contract your insurance agent. These polices provide LTC in order to avoid depleting assets spent on Medicaid for long-term care.
  • Primary residence – exempt if non-institutionalized spouse or child under 21 who is blind or disabled is living there. Institutionalized spouse can claim primary residence exemption if obtain affidavit of intent to return.
  • Sale of a house – very nuanced exemption rules but, in a nut shell, if actively attempting to sell a house and if you follow Medicaid regulations, though technically you still own property that would make not you Medicaid ineligible, this ownership and sale won’t effect eligibility.

Exemptions to Medicaid countable resources aren’t really considered in most estate plans, even those specifically geared towards preserving assets and ensuring Medicaid qualification. They do, however, become of critical importance in the context of Medicaid crisis planning. Those situations where Medicaid support is needed immediately but no proper estate planning took place in the proceedings years when Medicaid eligibility wasn’t a concern. At this point, every avenue and tactic of getting into Medicaid and sheltering estate assets is analyzed, all at the expense of the family who failed to plan is now scrambling. As any estate planning attorney or financial planner will tell you, the up-front cost of proactively planning is nothing compared to doing everything last minute in a time of dire need.

Most people have spent a lifetime amassing wealth, property, and possessions that they want to leave to friends and family. Assisted living facilities, nursing homes, and hospice care, however, are often possibilities no one contemplates, let alone proactively prepares for. Federal and state assistance programs such as Medicaid often play a critical role in providing the necessary financial support in our elder years. The MER program, however, means that the use of these programs is not without cost. A cost that is regularly not understood when the need is greatest and rarely known by the surviving family when estate assets are taken by the government for services rendered. An estate planning attorney has the knowledge and can formulate the appropriate strategies for your goals and worries to ensure that the most amount of assets go where you want them to go and not to Uncle Sam.

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings.

Daniel A Baron - Estate Planning Lawyer

What is an Irrevocable Trust?

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Cleveland, Ohio estate planning lawyer, Daniel A. Baron, offers the following information as to whether or not you should have an Irrevocable Trust as part of your comprehensive estate planning.

An Irrevocable Trust, by design cannot be modified in any fashion or terminated without the express written consent of the beneficiary or beneficiaries. Once the trust is created it stands AS IS and cannot be changed at all, notwithstanding a few exceptions.

  • Perhaps a beneficiary needs to be changed
  • Perhaps a financial institution may need clarification of a Trustees Identity
  • The beneficiary may need to terminate the trust early due to an immediate need for a large expense

Why would there exist a need for an Irrevocable Trust?

  • It protects your property held in Trust against creditors
  • It minimizes your estate tax liability
  • If you are looking to qualify for government assistance programs, i.e., Medicaid or Veterans Aid and Attendance benefits

There are three parties to a Trust:

First Party: The “Grantor” or “Settlor” who is the person or persons who establishes the trust. Keep in mind that when the Irrevocable Trust is established the “grantor” or “settlor” relinquishes all control of the assets held within the trust.

Second Party: The Trustee who are appointed by the “Grantor” or “Settlor” whose responsibilities include overseeing the assets, investments, etc., and to pay any expenses which benefits to beneficiary

Third Party:   The Beneficiary whose job it is, is to sit back relax and benefit from the income generated by the investments within the trust.

Let’s start the conversation to see if an Irrevocable Trust is the right tax planning strategy for you as part of your Comprehensive Estate Planning. For more information on reviewing your goals for your Comprehensive Estate Planning, contact Daniel A. Baron of Baron Law today at 216-573-3723.

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Estate Planning Attorney

I’m An Executor Of An Estate, How Do I Transfer Property To Heirs And Beneficiaries?

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Baron Law, LLC answers questions for you on transferring property to heirs and beneficiaries while acting as an executor of an estate. It is wise to always hire/consult an experienced estate planning attorney to help you navigate through the questions you may have.

Estate fiduciaries are charged with many obligations and responsibilities during estate administration, the most visible of which is the transfer of real and personal property to designated parties and legitimate creditors. The transfer of property is what everyone thinks about when talking about probate, who gets what and when. Well, just like everything else regarding estate and probate law, there are rules at follow. As always, a local Cleveland, Ohio probate attorney is in the best position to inform you on applicable rules and considerations, a quick phone call can save you a lot of time, money, and headaches.

With regard to estate property, usually the Ohio executor or administrator, sometimes even a beneficiary, must ensure that the proper documentation has been completed in order to transfer the ownership of all property whose interest is passing due the passing of decedent. What documentation is exactly needed, however, depends largely on the type of property passing, the relevant ownership rights within such property, and also whether the property is countable as a probate or non-probate asset.

Real Property

For real property that was owned by the decedent and which passes through probate, the estate fiduciary must file an application for certificate of transfer of real property with the probate court. The required contents, as mandated by Ohio law, for this application are found under Ohio Revised Code § 2113.61(A)(2). Within five days of filing the application for certificate of transfer that is statutorily compliant, the probate court will issue a certificate of transfer to be recorded in the land records where the property is located. This certificate of transfer is the document that actually transfers title for the real property to the relevant beneficiaries denoted in a will.

The procedure for transferring real property from an estate to someone other than a designated beneficiary, for example if real property is sold by an executor, however, is not handled by a certificate of transfer. Real property might be sold during estate administration to resolve outstanding obligations or expenses of decedent, or if the decedent was under contract to selling certain property. In such circumstances, a fiduciary deed would be executed by the estate fiduciary in order to convey the property. When a fiduciary deed is used, the grantor is the fiduciary and is effectively “stepping in the shoes” of the decedent for purposes of the transfer.

Personal Property

The most common personal property an estate fiduciary will handle are bank and investment accounts, especially if the decedent was on Medicaid or other government assistance. Such programs usually have strict income and property thresholds which leaves elder decedents with much smaller estates usually only comprising of an exempted personal residence and small expense account.

Typically, an estate fiduciary will transfer all of the decedent’s bank and brokerage accounts to the name of the estate during the administration. As such, new accounts will be set up under the tax identification number of the estate. In order to transfer a bank or brokerage account from the decedent’s name to the estate, the estate fiduciary usually needs to provide the financial institution which is holding the funds in the name of the decedent with a copy of the death certificate and his letters of authority to act on behalf of the estate. Nowadays, however, most bank and financial institutions have particularized processes for the release of decedent assets to the estate, so it is highly probable a death certificate and letters will not be enough. Because everything is computerized and identity theft has become so prevalent, banks and investment houses want certain forms completed and additional confirmations of the legitimacy of the transfer. An experienced Cleveland probate attorney will know what documents to present and which forms are needed for which financial institution.

Once the accounts are transferred into the name of the estate, the estate fiduciary has more control over the accounts. Before closing the estate, the estate fiduciary can transfer the account assets to the appropriate beneficiaries or liquidate as needed to sustain the costs of estate administration or pay critical obligations. The transfer is usually accomplished by directing the appropriate financial institutions to distribute the assets in kind or cash as the case may be. Again, the paperwork that is required to do this specific and a guiding hand by an Ohio probate attorney will avoid costly mistakes.

Some property, however, passes by operation of law, usually via beneficiary designation. The most common types of property are:

Concurrently owned property with rights of survivorship -This type of concurrently owned property will pass automatically to the surviving owner without regard to the terms of decedent’s will or Ohio intestacy statues, if applicable.

Life Insurance Policies – The terms of a life insurance contract usually allow the policy owner to direct by beneficiary designation where the proceeds of the policy go upon the insured’s death. As such, the proceeds pass automatically without the involvement of a probate court.

Retirement Accounts – Various employee or individual retirement accounts allow the designation of beneficiaries upon death of the owner. Same as with life insurance, cash in these accounts pass automatically without the involvement of a probate court.

Property held under Revocable Trust – Any property held under this type of trust at the time of decedent’s death will usually pass according to the terms of the trust agreement rather than be part of the decedent’s probate estate.

The acquisition, management, and distribution of estate assets is one of the most time-consuming and emotionally draining duties of an estate fiduciary. Aggressive estate claimants, pushy heirs and beneficiaries, and stubborn financial institutions make getting things where they need to go much more difficult than it otherwise should be. An experienced Ohio attorney can act as a buffer between you and those parties who would otherwise making administrating an estate much more difficult.

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.

Helping You And Your Loved Ones Plan For The Future

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation

Daniel A Baron Estate Planning lawyer

What Is A Revocable Trust?

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Cleveland, Ohio estate planning lawyer, Daniel A. Baron, offers the following information as to whether or not you should have a Revocable Trust as part of your comprehensive estate planning.

When you decide it is time to do your estate planning, one decision to make is: Do I Need A Trust? If the answer is yes, then the next question is whether or not a Revocable or Irrevocable Trust is the right tool to use in your Comprehensive Estate Planning.  Although both of these are created to avoid probate, there are differences between the two.

A Revocable Trust means you can change things at any time such as;

  • Beneficiaries
  • Add items of value to the trust or remove items from the trust and so on.
  • Changing Trustees
  • Change what funds the trust
  • Eliminate the trust
  • Change amounts to be funded
  • Add Trustees

With a Revocable Trust – the Grantor or Settlor creates the trust AND can also act as the Trustee AND can be named as the beneficiary.

An Irrevocable Trust means no changes can be made (with a few exceptions) once the trust is created.

An Irrevocable Trust has three parties to the Trust; the Grantor or Settlor, the Trustee(s), and the beneficiary or beneficiaries.

  1. The Grantor or Settlor is the person who funds or establishes the Trust
  2. The Trustee is the person who oversees the trust, and
  3. The beneficiary reaps the rewards of the income generated by the investments of the trust. Although the Grantor / Settlor and the beneficiary can be the same, they cannot act as the Trustee

With a Revocable Trust you must remember if you are looking to keep investments, bank accounts, property, and any other such asset as part of the trust, the accounts must be set up in the trusts name and property must be titled to the trust.  Failure to do this while you are still living means that the assets still in your personal name at the time of your death will be subject to probate and a larger amount of estate taxes.

If you are having difficulty determining whether your situation calls for a Revocable or Irrevocable Trust, seek the advice of an experienced Estate Planning Lawyer. For more information on reviewing your goals for your Comprehensive Estate Planning, contact Daniel A. Baron of Baron Law today at 216-573-3723.

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Baron Law LLC Estate Planning Attorney

529 Plan For Your Grandchildren

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Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can. For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.

In order to become Medicaid eligible, generally, one must have $2,000 or less in assets and earn only $2,205 or less per month in income. There are, however, multiple exceptions which carve out excludable assets, such as the child caregiver exception and the community spouse resource allowance. With the recent upswing in U.S. financial markets, many individuals are asking their estate planners and elder law attorneys ways to save or invest their money but not run afoul of eligibility requirements for government assistance programs such as Social Security and Medicaid. Increasing in popularly and meeting this increased need for saving and investment, 529 and 529A plans are widely being used by Ohio estate planning attorneys to great benefit and profitability.

What is a 529 Plan?

A 529 Plan is comparable to a health saving account. Money is put in and receives tax-benefits if used for educational purposes. All of the contributions made to the account grow tax-free and withdrawals are free from federal and state tax if used for qualified higher education expenses. Significantly, contributions to 529 Plans are not tax deductible. 529 Plans allow money to accrue tax free for the benefit of a designated third-party beneficiary while still retaining control of the assets by the owner prior to distribution provided such funds are spent on education.

529 Plans are a countable Medicaid asset because the owner can take their money back out at any time. As such, an individual owning a 529 Plan will face eligibility problems for government assistance programs if the money within a 529 Plan isn’t spent before applying for such assistance. The critical question is who owns the account. If owner reserves right to revoke or take the money within a 529 Plan, Medicaid will require the money to be spent on healthcare, spenddown, before eligibility for Medicaid services. Further, improper distributions, i.e. spending the money in the 529 account for medical bills instead of college, will trigger deferred taxes, plus penalties of 10 percent.

One solution to a mandatory 529 account spenddown is to legally shift the account to a family member of the beneficiary, such as a grandchild’s parents. However, though this effectively transfers control of the money to a third party thus facially making it a noncountable asset, such a transaction is still considered a transfer of assets that triggers a Medicaid penalty period if it occurs within the 5-year lookback window.

At this point, 529 Plans are not a recognized federal exception and no Ohio regulations are on the books exempting 529 Plans as a countable Medicaid asset. As such, estate and Medicaid planners must be aware that even though 529 Plans are attractive vehicles for saving, 529 Plan use may have significant consequences for seniors and individuals in need of government assistance programs such as Medicaid, Medicare, and Social Security. Contract a local Cleveland estate planning attorney to find out which saving accounts are preferable for your situation.

What is a 529 A plan?

Often referred to as a STABLE or ABLE account, 529A plans are accounts used as moderate investment vehicles to generate money to pay for approved expenses for the disabled. STABLE accounts are exempted from Medicaid and are not a countable resource. As such, having a STABLE account does not affect Medicaid eligibility. Further, the first $100,000 in a STABLE account is exempt from the Social Security Income limit.

Additionally, taxpayers can deduct contributions up to $​4,000 from their Ohio taxable income per STABLE account, per year, with unlimited carryforward of contributions over the yearly amount. This means that if contributions exceed $4,000 to a STABLE account in a year, the remainder of your contributions are carried forward to subsequent years until your entire contribution has been fully deducted. In this way, the government incentivizes maximum STABLE contributions which, in turn, reduces the financial burden on government assistance programs. Furthermore, a beneficiary’s individual contributions may also be eligible for the federal Saver’s Credit. An Ohio estate planning attorney can fill you in on the details, use, and eligibility requirements of the federal Saver’s Credit.

STABLE account earnings are not subject to federal income tax provided they are spent on qualified disability expenses. Acceptable. i.e. qualified, expenses are quite more expansive than with 529 Plans, an expense is qualified if 1) the expense was incurred at a time when an individual was suffering from an eligible disability, or 2) the expense relates to the disability, or 3) the expense assists in the maintenance or improvement of health, independence, or quality of life for a disabled individual.

Qualified expenses are not just medical expenses, but also include education, vocational, and living expenditures. Some examples include:

Tuition, books, and educational supplies and materials

Rent, mortgage, property taxes, and utilities

Transportation, qualified vehicles, and moving expenses

Vocational training

Health insurance premiums, medical equipment, treatment, and personnel

Legal fees, financial management services, and funeral expenses

If STABLE funds are used for non-qualified purposes, the owner will have to pay income taxes on the distributions, plus an additional 10% penalty. Further, the non-qualified funds can be counted as an asset/income for eligibility for government assistance programs such as Medicaid and Social Security. If you’re thinking about taking significant distributions from STABLE plans, always consult your estate planning attorney. The last thing you want is to get a disabled family member kicked off government assistance and then have to go through the arduous process of reapplying.

There are five investment options to choose from for a STABLE account, however, a financial adviser is in the best position to pick the best option for a client. A STABLE account used in conjunction with a special needs trust is an effective and powerful investment tool for those with disabled children or family members. Further, federal regulations specifically provide for tax-free rollovers from 529 college savings plans to STABLE accounts. Most people chose to rollover because either college expenditures are no longer needed or a priority in light of a recent and significant health change for a loved one.

529 college saving accounts and STABLE plans can become an indispensable saving and investment vehicle in one’s estate plan. An experienced and knowledgeable estate planning attorney is in the best position to advise you of the pro’s and con’s of each. Maintaining eligibility for government assistance while maximum personal retention of money and assets is perhaps the most common concern for clients of elder law attorneys. Both of the above mentioned tools, in the right hands, can financially provide for necessary healthcare and save or earn a lot of money for family members.

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.

Helping You And Your Loved Ones Plan For The Future

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.

My Trustee Isn’t Very Good At Their Job, Can I Get Rid Of Them?

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Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can.  For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.

Trusts are common estate planning tool. They are used to plan for retirement, provide for needed elder case, ensure Medicaid and other government aid eligibility, and provide for special needs children. A critical part of any trust is its trustee. The trustee is the primary agent responsible for managing trust assets and money and ensuring that the instructions and intent of the settlor are followed. At the end of day, if everything goes as planned, a trust will continue to exist and operate long after its settlor has passed. As such, the trustee is often solely responsible for the health of the trust and the welfare of trust beneficiaries.

With great power, comes great responsibility. Such is the case with trustees. In the same vein, however, most crime comes from opportunity. If there is nothing to steal, there is no chance of theft. The opposite also holds true. If you were left in an empty room with $300,000 dollars and no one was watching, how honest would you be? How honest could the ordinary man be? As such, tragically, too many trustees are found out too late to be lazy or untrustworthy and they must be removed and replaced. As with most things regarding trusts, Ohio law has set down rules and procedures to follow if you want to replace a trustee. Naturally, as with any legal question, always consult with an experienced Ohio estate planning attorney before you do anything.

Removal of a Trustee

Removal of a trustee requires serious consideration and appreciation for its consequences. Not only is it nuanced process requiring the learned help of an experienced Cleveland estate attorney, but it can also run counter to the express wishes and intent of the trust settlor. If the settlor is alive, and the trust revocable, replacing a trustee isn’t too big of a deal. But if the settlor is dead, and the trust irrevocable, now decisions have to be made that may subtract from the settlor’s goals.

A first trustee was an individual who the settlor had the utmost faith to carry out their wishes and guard their property. To go and replace them with another will affect how trust property is managed, how and when trust property is distributed, how much the trustee will demand as compensation, and the relationship between the trustee and beneficiaries. Since the power to replace a trustee shouldn’t be taken lightly, Ohio law placed rules and procedures on how and when it can be undertaken.

To start, the power to remove a trustee is primarily codified in O.R.C. § 5807.06(A). Wherein a “settlor, a cotrustee, or a beneficiary may request the court to remove a trustee, or the court may remove a trustee on its own initiative.” This by itself doesn’t say much, but evidently pretty much anyone with a legitimate interest in the trust may act to replace a trustee. The ability to do something, however, should always be paired with a valid reason why. This is where experienced Ohio estate planning counsel comes in handy. An attorney is in the best position when a trustee is just being difficult rather than derelict in their duties.

Why Remove a Trustee

Just because you can do something, doesn’t mean you should. Generally, replacing a trustee should only occur in a handful of circumstances, most of which are codified in Ohio law. Per

O.R.C. § 5807.06(B), a court may remove a trustee for any of the following reasons:

The trustee has committed a serious breach of trust;

Lack of cooperation among cotrustees substantially impairs the administration of the trust;

Because of unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, the court determines that removal of the trustee best serves the interests of the beneficiaries.

All these reasons go to a trustee’s inability to carry out their duties effectively or downright committing crimes as a trustee. A surly or unpleasant trustee is not grounds for removal, regardless of how much you dislike them. Only in extreme circumstances of incompetence, dereliction, or illegality should an action for trustee removal be undertaken. Your estate planning attorney is in the best position to judge when and if this threshold has been reached.

Importance of Successor Trustees

So, you’ve successfully removed an unsuitable trustee, now what? Naturally, a new trustee must be appointed and, of course, Ohio law provides for this possibility. Per O.R.C. § 5807.04 (C), if there is a vacancy in the trustee position, new trustee is selected using the following order of priority:

(1) By a person designated in the terms of the trust to act as successor trustee;

(2) By a person appointed by someone designated in the terms of the trust to appoint a successor trustee;

(3) By a person appointed by unanimous agreement of the qualified beneficiaries;

(4) By a person appointed by the court.

This is why selecting appropriate successor trustees, or drafting adequate methods to select them, are so important, though it is often seen as a throwaway detail when drafting a trust. At the very end of this list, a probate court has the authority to appoint a new trustee if no other methods exist. This is not an appetizing prospect for most settlors. The last thing settlors want is a court taking control out of their hands and appointing someone they don’t want or don’t know. The whole point of going through the long process of trust creation is a guarantee control of money and assets in specific and delineated ways. To have everything go right out the window because of improper successor trustee appointments is foolish. As such, proper thought and planning must go into your trustee and successor trustee appointments.

Most people don’t expect their first, or even second choices, for trustee to die, refuse appointment, or just not be very good at the job. An experienced Ohio estate planning attorney can help with the vetting process and also provide much needed instruction and guidance to selected trustees to make sure they understand the gravity of the position and possess the knowledge to do the job correctly and efficiently.

Helping You And Your Loved Ones Plan For The Future

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.

Dan Baron Baron Law

Exceptions and Bars to Inheritance

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Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can. For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.

When someone dies intestate (without a will), there are several exceptions to the rules of descent and estate distribution which act to bar a person from receiving what would have been such person’s intestate share of the decedent’s estate. These rules and exceptions highlight the importance of having a comprehensive estate plan and, in certain circumstances, are of paramount importance to heirs and beneficiaries. Rules are only written when they are needed, and the context surrounding these rules and exceptions illustrate some of the more extreme problems that an estate administration may potentially face. As always, an experienced Ohio estate planning attorney can fill you in on all the details and make a plan that will deal with any issues proactively.

Slayer Statute

The most commonly known exception is the slayer statute which is codified under Ohio Revised Code § 2105.19. This statute deals with the crimes of aggravated murder, murder, voluntary manslaughter, and/or complicity in the violation of any of the above crimes. If one has pled guilty to, has been convicted of, or has been found not guilty by reason of mental defect of, any one of the above crimes, such person is barred from receiving any portion of his or her victim’s estate. This statute bars inheritance regardless of whether it would have been through intestacy or as a bequest under a will. The same also applies to other property received as a result of death, like insurance proceeds. The slayer statute is an attempt by the Ohio legislature to write into law the cliché that crime doesn’t pay.

Illegitimate Children

Under common law, children born out of wedlock were not entitled to inherit from their mother or father. O.R.C. § 2105.17 states, however, that children born out of wedlock shall be capable of inheriting or transmitting inheritance from and to their mother and from and to those from whom she may inherit, or to whom she may transmit inheritance, as if born in lawful wedlock.

Ohio’s intestacy statute does not specifically address the ability of children born out of wedlock to inherit from their father. This issue, however, has been addressed in Ohio case law. Such case law has established multiple ways in which a child born out of wedlock could inherit from such a child’s father, some of the ways include the child’s father: 1) marrying the child’s mother, 2) providing for the child in a will, 3) designating the child as an heir, or 4) adopting the child.

The enactment of the Ohio Parentage Act, codified via O.R.C. § 3111, provided an additional way for a parent-child relationship to be established by allowing a child to bring an action to determine parentage. There has been disagreement among Ohio courts as to whether such actions to determine parentage must be brought prior to the father’s death. Some courts have held that while O.R.C § 2105.06 “does not require a parentage action to be brought before the death of the father… a probate court does not have jurisdiction to hear a parentage action under O.R.C. Chapter 3111.” See Estate of Hicks, 629 N.E.2d 1086 for more information. This likely creates a necessity to bring any parentage action by any estranged child as soon as possible in order to prevent being automatically disinherited by virtue of a lack of probate court jurisdiction. Contact a local Cleveland estate attorney to make sure your inheritance rights are valid and, if not, the appropriate steps are undertaken to validate and protect them.

Children Conceived as a Result of Rape

Recently in 2015, the Ohio legislature recently passed law that prevents a person who commits rape or sexual battery, or any of such person’s relatives, from receiving an intestate share from a child, or child’s decedents, who was conceived as a result of the rape. Such is codified via O.R.C § 2105.062.

Children who are abandoned by parents

If a minor child has been “abandoned” by a parent, then the parent is prevented from receiving an intestate share of the deceased minor’s estate. O.R.C. 2105.10(B). A child is “abandoned” by a parent if the parent has failed, without justifiable cause, to communicate with the minor, care for the minor, and provide support as required by law for at least a year immediately prior to the minor’s death. O.R.C. 2105.10 (A)(1). While few minors die with significant assets, this statute may be significant in the event of a wrongful death of the minor in which a significant windfall due in insurance proceeds or litigation may be contemplated. This potential windfall is a major reason why estate planning, even for individuals relatively young, should not be overlooked. The last thing a grieving family wants to do, while also negotiating a legal settlement, is deal with internal family disputes over who has authority over the decedent child’s estate, and along with it, the authority to negotiate the settlement amount for legal claims. Contact a local estate attorney to prevent this from happening.

Issues relating to adoption

Once a child has been adopted and after the final order of adoption is issued, the adopted child’s relationship with the natural/birth family, except the natural parent in the case of a step-parent adoption, is legally terminated. This eliminates any rights such child had to inherit from the natural family under the laws of descent and distribution. Instead, the adopted child, if that child is adopted prior to age 18, is treated as a child of the adoptive parent for purposes of intestate succession law and entitled to all the rights and privileges inherent to being a natural child.

These rules and exceptions to inheritance only touch on the multitude of problems and issues that face families when planning an estate or administrating an estate after death. Death is something no one likes to think about and even less people plan for. Just a few hours, however, with an experienced Cleveland land estate planning attorney can save your family months of stress and thousands of dollars in legal fees and court costs.

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.

Estate Planning Attorney - Baron Law

I Need Medicaid, How Can I Keep My Home?

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Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can. For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.

Caring for elderly loved ones, yourself or others, is not cheap. Assisted living facilities, nursing homes, and hospice care can easily run thousands of dollars a month and, as such, most people cannot afford to pay for it out of pocket for very long. We’ve all heard the horror stories, people stuck in dilapidated or abusive care facilities or having to spend every last cent just for a bed in a proper facility. No one expects to spend the last years of their lives in such an appalling state, but tragically, it happens more often than you think. To combat this, many resort to relying on government assistance to pay for managed care. To qualify for that assistance, however, many people must “spend down” their assets or reduce their income in order to become eligible for government programs, namely Medicaid.

The thought of having to choose between either having a fire sale and/or willingly living in a crummy facility and/or becoming a burden on your family is hardly an attractive prospect. Everyone wants to pass as much of their money and assets on to friends and family and no one wants to become a burden. Medicaid is well aware of this and imposes a five-year “look back” period for eligibility to ensure that people don’t simply transfer their money and assets away to qualify for government benefits.

There are estate planning strategies available, however, that will allow major assets to stay within the family while still maintaining Medicaid eligibility. The Caregiver Child Exemption, also known as the Adult Child Caregiving Exemption, is perhaps the one of most popular Medicaid planning tools available to preserve assets while maintaining eligibility. An estate planning attorney is in the best position to advise you on the best course of action given your particular circumstances but becoming familiar with the landscape and legal language of Medicaid will help you make the best decisions when the time comes for action.

Why should I care/How does this benefit me?

We are all naturally self-interested, so the first question everyone asks is, how does the Medicaid Caregiver Child Exemption benefit me?

In a nutshell, this is an exemption to the five-year lookback for Medicaid eligibility that can allow you to stay in your home instead of a nursing home or assisted living facility and still receive Medicaid assistance. Regardless of how nice a managed care facility is, everyone is more comfortable in their own home. The Medicaid Caregiver Child Exemption increases the amount of time you can spend in your own home before the realities of your own health force to into a more intensive care facility.

How does the Medicaid Caregiver Child Exemption work?

To qualify for the Exemption, the caregiving child must live in the home with their parent(s) for at least two years prior to the parent becoming eligible for Medicaid benefits. Further, the caregiving child must provide a level of care that effectively prevents the parent for needing to stay in a nursing home or assisted care facility. This at-home care saves the Medicaid program money and frees up much needed bed space in Medicaid approved facilities, hence the reason Medicaid offers the Exemption in the first place.

To effectively understand how the Exemption operates, and exploit it to the fullest extent, one must understand its constituent parts. Note, all the following criteria must be satisfied in order for the Exemption to apply.

What’s a “Child” under the Exemption?

A child under the Exemption is limited only to a biological or legally adopted child. A niece, nephew, grandchild, cousin, aunt, uncle, or stepchild does not count. Medicaid constricts eligible transfers only to direct decedents in order to prevent abuse of the Exemption and because, more often than not, our children are the ones who are going to step up and provide the needed care for parents.

To prove a qualifying family relationship, usually a birth certificate or adoption certificate is used.

What’s a “Home” under the Exemption?

The only “homes” eligible for the Exemption are those of primary residence. No vacation homes, secondary residences, or rental properties. Further, the child caregiver and the parent must reside together for the entirety of the two years. Medicaid wants to ensure the home is actually being used to provide healthcare for the parent in lieu of a managed care facility. If an adult child and parent are living together for an extended period of time, its more likely the Exemption is being used for legitimate purposes rather than a cover for an improper transfer of property.

To prove a qualifying home, evidence such as utility bills, tax returns, of government ID’s for both the parent and child caregiver for at least two years prior to Medicaid eligibility are sufficient.

What’s “Care” under the Exemption?

A child simply living with a parent, cooking meals, doing laundry, picking up medication, is not enough. The amount and manner of care must be enough to establish to Medicaid that the labors of the child caregiver is the reason why the parent isn’t in a nursing home or assisted living facility. If such labor is the difference between the parent staying at home or taking up a bed in a professional facility, then the non-disqualifying transfer of the home to the child is justified.

Establishing the proper level of care is the hardest criteria to prove. This is usually established by having the primary care physician of the parent complete and sign a Medicaid form clearly documenting the care provided by the child. Legal documentation that the care of the child prevented institutionalization of the parent during the two-year lookback is required as well. Any additional documents from family, friends, and medical professionals demonstrating the labors of the child caregiver is beneficial as well.

How to Apply

You don’t file or apply to use the Exemption in the conventional sense. When applying for Medicaid, you also submit the documentation establishing the transfer of your home to your child qualifies for the Exemption. Obtaining the required documentation to prove the applicability of the Exemption is the hardest part. Further, because the burden of proof lies with the applicant, Medicaid will show no leniency for mistakes or omissions.

This is why Medicaid planning and retaining legal counsel is so critical. The Exemption criteria should be met as soon as practical, so the two-year look back can start running as soon as possible. Further, an attorney can ensure all the documentation and forms are properly filled out, executed, and mailed to the proper government agency. Last the thing you want is to find out you have months or years of additional Medicaid ineligibility because an additional penalty period was accrued due to improperly gifting your home to your child.

What if I mess up and the Exemption doesn’t apply?

If the transfer of the home was improper, Medicaid will deny that the Exemption apples, consider the house a qualifying asset, and a penalty period will accrue in proportion to the value of the house. This means on top of the two years that the child caregiver must live with a parent before Medicaid eligibility, a period of further ineligibility is added. This period is determined based on the dollar amount of value of the house divided by either the average monthly private patient rate or daily private patient rate of nursing home care in Ohio.

The home that you lived in for years, if not decades, is one of your most valuable assets, both financially and emotionally. Old age, however, means significant money is needed to live comfortably, even more so in the event of illness or disease. Wise use of the Medicaid Child Caregiver Exemption can cut off years of Medicaid ineligibility and enable comfortable and convenient caregiving for families with ailing parents. Use of the Exemption, however, is not guaranteed and proper steps must be taken. This is why an experienced estate planning attorney can mean the difference between living in your own house receiving much-needed government assistance or waiting years for help or being forced in live in second-rate managed care facilities.

Also, should an elderly individual already be receiving Medicaid benefits, the family should contact a local Cleveland estate planning attorney and find out if the Medicaid Child Caregiver Exemption is still available.

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.

Helping You And Your Loved Ones Plan For The Future

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.