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Trust Adminstrator

What is an Administrator of an Estate?

Managing the affairs and obligation of a recently departed is no easy task. That is why most people take the time to plan their estate. Estate planning, at its fundamental essence, is leaving a plan and instructions for those who survive you regarding what to do with the “stuff” you leave behind. People are living longer than ever before and, consequently, are leaving more behind. Often without a proper plan in place, the loved ones and family members left to organize and account all the leftover worldly possessions are hard pressed to do everything required from them by a probate court within the statutory time limits.

Dying without a will, only exacerbates this difficultly and lengthens the time it takes to administrator an estate. Bluntly, dying without a will, or dying with an invalid will, is never a preferential option. Most people already have a very limited understanding of the probate process, and if you throw intestate succession and administration, with all the accompanying issues and legal winkles, a difficult and trying process only becomes more so. As such, consult with an experienced Ohio estate planning attorney to either properly plan your estate so dying intestate doesn’t happen to you or, for those facing an instate administration, find out all the answers you need regarding what, how, and when to administrate an intestate estate.

What does dying intestate mean?

When a decedent does not have a valid will in existence at the time of death, a decedent is deemed to have died intestate and Ohio intestacy laws govern how estate assets are managed and distributed. There are two primary situations when a person is deemed to have died intestate, 1) there was no last will and testament, or 2) they had a last will and testament, but for some reason or another, it was found invalid.

Ohio intestacy laws may be avoided altogether with proper estate planning, a major aim of which is to ensure you have a will and that it is valid. It is important to note, however, that sometimes intestacy laws will control even if a valid will is subject to probate administration, an experienced estate planning attorney can inform you of these circumstances. Conversely, sometimes Ohio intestacy laws may not apply even if a decedent died intestate. As such, since the controlling law for dying without a last will and testament can vary dependent on circumstance, meeting with an estate planning and/or probate lawyer is highly recommended.

What is an administrator?

In the context of intestate estate administration, an administrator is, for the most part, functionally identical to an executor. Executors, however, are appointed in the last will and testament by the decedent while administrators are appointed by the probate court in the absence of an executor appointment. Note, however, that Ohio has explicit Ohio residency requirements for intestate administrators. Thus, out-of-state residents can only be named executors and cannot serve as administrators.

Why is an administrator needed, what do they do?

The duties of an administrator aren’t easy. The duties of an administrator are specific to each particular estate, however, there is a “core” group of duties and tasks each one must fulfill. Every administrator must:

  • Conduct of thorough search of decedent’s personal papers and attempt to create a complete picture of their finances and family structure.

 

  • Take possession, catalogue, and value all estate property.

 

  • Maintain and protect estate assets for the duration of the probate proceedings.

 

  • Directly notify creditors, debtors, financial institutions, utilities, and government agencies of decedent’s death.

 

  • Publish notices of decedent’s death, usually a newspaper obituary, which serves as notice and starts the clock running on the statute of limitations for creditor claims on the estate.

 

  • Pay or satisfy any outstanding debts or obligations of decedent.

 

  • Represent decedent during probate court proceedings.

 

  • Locate heirs and named beneficiaries and distribute respective assets at the appropriate time.

These duties occur during the probate process, which is a major reason why probate takes many months to complete. Especially within the context of intestate probate administration, where no preplanning, accounting, or collection of information regarding the decedent’s estate was likely done.

Because intestate administration is such a time-intensive and laborious process, many people take the time to plan their estate and attempt to avoid probate entirely. Often trusts are a good option to avoid probate. With trusts, estate assets can be distributed right away, no executor or administrator is needed, and many mornings, which otherwise would be spent in probate court, are freed for personal enjoyment. Contact an Ohio trust attorney to see if avoiding probate through the use of trusts is right for you and your family.

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.

Helping You and Your Loved Ones Plan for the Future

Estate Planning Attorney Baron Law

D.I.Y. Estate Planning: Saving a Dollar Now, Lose a Thousand Later

D.I.Y. Estate Planning:  Legal Zoom, Rocket Lawyer, and Youtube has granted an unprecedented amount of legal information to the public. Online forums, blogs, and television allow people to converse at any time and anywhere about pretty much anything. Nowadays ordinary people can undertake their own legal research, legal drafting, and, if necessary, personal representation.  Just because you can do something, however, doesn’t mean you should. Google searches and online videos are not a substitute for the advice and guidance of an experienced Ohio attorney and many people put themselves in a bad position after they convince themselves that an attorney is simply not necessary.

At the end of the day, do-it-yourself legal services is all about saving money and time. People don’t want to spend hundreds if not thousands of dollars on legal services and spend the time conversing and meeting with an attorney. Online legal materials, at least the cheap or free ones, are great at providing a false sense of security, that everything is straight-forward, do X and you’ll get Y.

Law firms hear the same problems and fix the same issues from self-representation every day. People who, after a quick google search, start drafting their own wills, LLCs, and contracts. People who put their faith in a disinterested corporation and a handful of document templates. Legal Zoom and Rocket Lawyer are not law firms and they do not represent you or your interests, they explicitly say so on their websites. They cannot review answers for legal sufficiency or check your information or drafting. An experienced Cleveland estate planning attorney, however, properly retained and with your best interests in mind will accomplish everything you expect, and often more.

Hired attorneys are under legal and professional obligations to do the best job possible. They don’t want to get sued for malpractice, they want you to pay your legal bill, and they want you to refer your friends and family. A particular client is concerned with a tree, while the attorney pays attention to the forest. A proper attorney will draft documents correctly with established legal conventions in mind, legalese isn’t something done for attorneys own benefit, it has a definitive and beneficial purpose. A lot of trouble is caused by D.I.Y. legal drafters and estate planners due to typos or the inclusion of legalese for legalese sake. Further, a knowledge of federal, state, and local law along with local procedure and jurisdictional customs is necessary to obtain a proper outcome with minimal cost and stress. At the end of the day, the legal system is made up of people, knowing who to talk to and when is a large reason why attorneys are retained.

We live in a brave new world, never before has so much legal information been so readily accessible to so many. In the same vein, never before has our lives been so complex and estate planning matches this. Attorneys do more than drafting and research, they advise you on the best ways to protect your family and assets in light of an ever-changing legal landscape and your own personal life and dreams. Often do-it-yourself legal services are simply not worth the risk and lull you into a false sense of security. Ultimately, you need your estate planning documents to do what you expect them to. As such, call of local Ohio estate planning attorney and make sure yours are done right.

What is the Difference Between a Trust and a Will in Estate Planning?

What is a Will?

A will is a basic document outlining your wishes for your estate. It identifies an executor of your estate and provides the opportunity to divide your assets among your beneficiaries. This tool allows you to control the future care for any minor children and division of your assets. Without a will, the laws of your state will determine how your assets are divided. Therefore, a will is the minimum estate plan you need to care for your family and your assets. However, the purpose of a will is to guide the probate court to act in accordance with your desired plan.

What are the limitations with a will?

Probate

A will does not avoid probate court, and the average time to administer a will through probate is 18 months, while the minimum is six months. The length of this process can place a burden on the family left behind, and it allows creditors to make claims on any debts you owe.

Cost

Probate requires a number of fees–on average 5-7% of the value of the estate.

Public Transaction

Anything that goes through probate is public information. This means that both your assets and the way you choose to divide them become public, able to be found online in detail.

What is a Trust?

A trust is another form of estate planning that allows you to divide your assets as you desire. While this is similar to a will, a trust allows greater control and bypasses the limitations of a will as seen above.

A trust avoids probate, thus freeing your assets and your family from the court system. As such, probate fees are also avoided, and your personal information (assets and beneficiaries) is kept private.

What are other benefits of a trust?

Taxes

Saving on taxes is one benefit of a trust. However, given current tax laws, this is not an advantage unless your estate’s value is over 10 million dollars. Note, though, that this exemption is subject to change, and tax benefits may become more valuable.

Asset Protection

This is the biggest reason people use trusts over wills. Trusts allow for greater protection of the estate in case of something unexpected such as a beneficiary who develops a credit issue, or the possibility of a divorce.


If you are realizing that estate planning is more important and less simple than you thought, Baron Law will walk you through every step to ensure that your family and your assets are protected. To learn more about the difference between a will and a trust, or to begin planning for your future, contact the estate planning attorneys at Baron Law today.

Hot Powers

Does Your Power of Attorney Contain the “Hot Powers?”

Who will manage my finances and investments if I am sick or incapacitated? Who will pick what doctor treats me or if a risky but potentially lifesaving procedure should be performed? What if I am put on life sustaining medical support? These are the sorts of questions and issues typically handled by your power of attorney. As they suggest, these are critically important decisions that shouldn’t be taken lightly. Fundamentally, however, these issues can only be handled by your power of attorney if they possess authority, given by you and in writing, to do so. This is why ever since 2012, when Ohio law changed, “hot powers” are a significant topic for you to discuss with your estate planning attorney.

I. Durable Power of Attorney

To understand what hot powers are, you must understand what a power of attorney is. A financial power of attorney, also known as a durable power of attorney, is a legal document that a person can use to appoint someone to act on his or her behalf, i.e. an agency appointment. A power of attorney comes in many forms, but its primary purpose is to grant authority to one or more responsible parties to handle financial or health decisions of a person in the event of illness or other incapacity. Life, and its associated obligations and burdens, tend to continue regardless of one’s physical or mental health. Powers of attorney are protection that ensures affairs are handled and medical wishes are followed even if you are lacking capacity in mind or body.

As stated, powers of attorneys come in many forms. A financial power of attorney, as the name suggests, grants your agent the authority to make financial decisions for you. Managing investments, buying selling land or property, representing you in business negotiations, etc. Healthcare power of attorney works the same way but with healthcare decisions. If you are incapacitated or otherwise can’t decide for yourself, your agent will decide who your doctor is, what treatment you undergo, what medication should be administered, etc.

As always, the terms, powers, and limits for your agents are decided by you in the documents that appoint your agent. If you want to add limits on how long they are appointed, what issues they can or cannot decide, or when exactly their powers manifest, you can do so. Furthermore, you always possess the authority to dismiss them outright or appoint someone new.

Powers of attorney are important to have because surviving spouses or family members will face difficulty and frustration gaining access to things like bank accounts and property that is in your name only. This can be especially damaging within the context of business or professional relations in which the “gears of industry” must keep moving. Alas, if an individual trusted to handle the business if something happens doesn’t possess the authority to so, significant or even fatal business consequences may result. The same goes for medical decisions, often treatment decisions must be made right there and then. Hesitation may mean permanent damage or death to you and if someone doesn’t have express authority to make those decisions, things get confusing, messy, and take a lot longer.

II. “Hot Powers”

So, where do “hot powers” fit in all this. Effective March 22, 2012, Ohio adopted the Uniform Power of Attorney Act, or UPOAA, which was focused on preventing financial elder abuse. Now, powers of attorney must include a statutory language designed to help prevent agents from abusing their power. Put simply, the law now demands power of use more specific drafting and specific denotation “hot powers.”

“Hot powers” grant extraordinary powers to your agent and often these powers can have the effect of altering your estate plan. As such, these powers must be expressly granted per statutory guidelines before they are used by your agent. The most popular of them is the power to gift money or property. “Hot powers” are often used to continue a plan of gifting, sheltering money or property from costs of late life healthcare. Specified gifting “hot powers” can gift anywhere from a limited dollar amount or unlimited, dependent on the scope of the “hot powers” granted and the goals of your estate plan. Further, this power can also be limited to a class of people, such as spouse or children.

Since this new law, third parties such as a financial institution are not required to honor a general power of attorneys. Now, the law asks that a power of attorney include specifically which types of assets and accounts the agent is allowed to control. The spirit of this change is to 1) ensure individuals specifically know and agree to the powers they are giving, and 2) there will no longer be agents running around with “golden tickets” that allow them to do whatever they want to under the sun.

III. Should you give “hot powers”

Like every question in estate planning, whether you should give “hot powers” is circumstantial. The main consideration is who will be given the powers and under what terms. As stated above, “hot powers” are extraordinary powers meaning in the wrong hands they are really screw up your life and a well-crafted estate plan.

Regardless of whether you give these powers or not, it is probably wise to have your Cleveland estate planning attorney look at your powers of attorney if it has been more than five years. The law and your personal circumstances change quite often. Note, a power of attorney created before the 2012 law change will still be valid, however, it may be deficient in expected ways, ways that could hurt you down the line. In sum, the 2012 change means agents are prohibited from performing certain acts unless the power of attorney specifically authorizes them. Because financial power of attorney documents give significant powers to another person, they should be granted only after careful consideration and consultation with experienced legal counsel.

 

Estate Planning Attorney

What Is The Difference Between A Living And Testamentary Trust?

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.

 

Estate Planning Lawyer

Common Questions With Inherited IRA’s

Most of us don’t have millions of dollars in liquid assets to fund our retirements. Ordinary people use common investment tools such as traditional IRAs, Roth IRAs, simplified employee pension plans (“SEPs”), and savings incentive match plans for employees (“SIMPLE IRAs”) to pay for healthcare and living expenses in old age. The main goal for any retirement plan is for an individual or couple to outlive their savings, and often, if proper planning is implemented, this is the case. So, what happens to these retirement accounts after their owners pass away? What do sons, daughters, brothers, sisters, or even close friends do with these accounts if they are named beneficiaries? This is often where inherited IRAs and their confusing rules regarding mandatory distributions come into play. Though creating an IRA is simple, when it comes to inheritance and asset distribution, most people don’t know where to start. That is why an advance discussion with a Cleveland estate planning attorney or tax advisor can give you the information needed to avoid unintended consequences with inheriting an IRA.    

  • What is an Inherited IRA? 

A cavalier attitude for IRA owners and their beneficiaries can lead to paying higher taxes, triggering penalties, or giving up future opportunities for tax-advantaged, or tax-fee, growth. This first step to avoiding these outcomes is to know what an inherited IRA is. 

In a nutshell, an inherited IRA is a retirement account that is opened when a person inherits an IRA or employer-sponsored retirement plan after the account holder dies. The assets held in the deceased individual’s IRA is transferred into a new inherited IRA in the beneficiary’s name. Usually, the account is transferred, inherited, via a beneficiary designation. This is why inherited IRAs are also referred to “beneficiary IRAs.” The rules that govern the transfer of the account assets, however, depends heavily on whether the beneficiary is a spouse or non-spouse. 

The big concern with inherited IRAs is the schedule for required mandatory distributions, namely when do they have to begin. When required mandatory distributions must begin and how they are measured is nuanced and depends on a variety of factors such as beneficiary age, age of the deceased own, type of IRA, income needs, and creditor protection concerns. Most people are unfamiliar of all the rules and considerations associated with inheriting IRAs, as such, always talk to an experienced Ohio estate planning attorney if you have any doubt with the proper course of action in your circumstances.  

  • Options for Spouses 

The name of the game for spouses is rollover. Spouses can transfer the deceased spouse’s IRA into their name and defer distributions until required mandatory distributions are triggered. (When, however, these distributions must start is a fact sepcfiic question to bring up with your attorney). This rollover allows tax-advantaged growth of the IRA funds to continue with no interruption. It is critical, however, that the spouse take no direct control of inherited IRA funds or else a taxable event will be triggered. The good news is surviving spouses have 60 days from receiving inherited distributions to roll them into their own IRAs without a problem as long as no issues regarding required minimum distribution are present. Note, though rollover is often the most popular option, you always have the option to cash out the IRA, just be aware of what benefits you’re forfeiting and also any potential penalties and/or personal tax liabilities.   

  • Options for Non-Spouses 

Unfortunately, non-spouses do not have the option to rollover and the rules for them are quite a bit more complex. Option one for non-spouses is to disclaim all or part of the deceased owner’s IRA assets. This decision must be made within nine months of the original IRA owner’s death and before possession of the assets occurs. This is usually done by named beneficiaries who wish to avoid being kicked up to a higher tax bracket which, in turn, would practically eat everything inherited anyways via state and federal taxation. 

Option two is to cash out the IRA either immediately or within five years. Taxes will be paid on the amount of distribution, but no 10% IRA early withdraw penalty will accrue. With this option the IRA assets must be exhausted by December 31st of the fifth year following the original IRA owner’s death. This five-year period allows some planning to occur to mitigate any potential tax hit, but, if an IRA is large enough, state and federal taxes will eat a large part regardless.  

Option three is to transfer assets from the deceased owner’s IRA into an inherited IRA and take required minimum distributions in order stretch out the potential tax hit and fully exploit the tax-advantage status of an inherited IRA. As a general rule, the IRS requires non-spouse inherited IRA owners to start taking required minimum distributions starting December 31 after the year of death of the original account owner, and each year thereafter. Also, distributions from inherited IRAs taken before age 59½ are not subject to a 10% early withdrawal penalty in most cases. The rules and guidelines regarding these required mandatory distributions can be confusing and are highly dependent on the particular facts surrounding the IRA inheritance.  

The calculated amount of required mandatory distributions for non-spouses is determined via IRS life expectancy tables, IRS required mandatory distribution guidelines, and IRS criteria based on your age, life expectancy, number of named beneficiaries, type of original IRA, and age of deceased IRA owner. When distributions must start, if at all, how much each distribution must be, and whose life expectancy will govern the distribution schedule are each questions that all competent estate planning attorneys will discuss with you and plan for. Planning IRA inheritance for non-spouses is no easy task but it represents an often critical retirement issue that goes unaddressed and causes massive tax problems for beneficiaries.  

Most people who use retirement accounts are at least semi-knowledgeable when it comes to creating and managing IRAs, but very few are concerned about what happens after they pass on. This is where your legal and tax advisers come in. Proper planning and conversation with your estate planning attorney can avoid higher taxes for beneficiaries, triggering penalties, and giving up future tax-advantaged, or tax-fee, growth. Properly planning for retirement not only is a concern for you, but also for the friends and family you leave behind.  

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.  

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

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.

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A Trustee Isn’t Paying Me, What Can I Do?

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 […]

Estate Planning Attorney - Baron Law

I Need Medicaid, How Can I Keep My Home?

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.

Trust Administration Attorney

Common Reasons Why Family Trusts Are Important

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 lauded as an almost indispensable component of estate planning. This largely stems from the ability to outright negate the tax burden upon an estate through the use of martial exemptions, the unified tax credit, and deductions. Nuanced trust use and understanding of the internal revenue code prevents an estate, of which a family has spent a lifetime of labor on, from being consumed by taxes, such as the generation-skipping tax, federal estate tax, and gift tax.

Apart from the overt tax benefits, trusts also afford grantors and beneficiaries a host of secondary benefits. From ensuring comfortable living during senior years and Medicaid eligibility to confirming trust asset longevity and legitimacy, a well drafted, implemented, and managed trust can provide decades of support and peace of mind for surviving friends and family. The following are four not widely-known benefits of using a trust. Nowadays trusts are a ubiquitous but misunderstood estate planning tool. As such, knowing all the ways trusts can work for you helps in deciding if you want to incorporate one into your estate plan.

Primacy of Trusts over UTMA Custodial Accounts (Conveyances to Minors)

Apart from financial aid and personal savings, a common way to help pay for college tuition and associated expenses is a UTMA custodial account. As with any large expense, a little foresight and planning can make a big difference. The Uniform Transfer to Minors Act, i.e. the UTMA, is a potentially advantageous vehicle for the creation of a college savings account.

In Ohio, children under 18 can’t receive direct inheritance. As such, UTMA accounts are available to control and protect assets for minors until they reach they reach the chosen age of termination, between 18 and 25. These accounts are privileged to non-taxed and partially taxed earnings amounts, up to a limited amount, and are simple to create. Though expedient to make, using trusts to house assets for college often is more preferable in particular circumstances.

For a UTMA account, at the age of termination, the beneficiary gets control of the assets. This may pose an untenable risk of frivolous spending or mismanagement. Further, the age of termination is statutorily prescribed, meaning if a grantor desires continued oversight or staggered distribution, such is unavailable. Trusts on the other hand are free to impose continued control and measured distribution thus ensuring asset longevity and more nuanced settlor control. Furthermore, UTMA accounts count as an asset for financial aid eligibility which could reduce available financial assistance or foreclose it entirely. Also, the preferential tax treatment of UTMA accounts are only really effective for smaller gifts. As such, for larger gifts, the tax benefits of using UTMA transfer is negated. Thus, in many circumstances and for many people trusts are preferable for minor conveyances. Contact a local estate planning attorney to find out if a UTMA account or personalized trust plan is right for you.

Professional Rules Mandating Due Diligence

Trust formation is a measured and complex process often undertaken with attorney guidance. As such, an attorney’s ethical obligations of due diligence and competent representation control during trust creation and management.

Because attorneys are ethically bound to do a good job, a secondary benefit of using a trust is the unsung legwork attorneys put in to support a trust and fulfill their duties. For example, confirming a complete chain of title or the existence of valid deeds and signatures. Often long-term or complex assets are rife with unrecognized errors or hibernating claims of ownership. A watchful and dutiful attorney will disarm any surprises before assets are housed within a trust, surprises which would otherwise go unnoticed in the absence of a trust and the supporting attorney. Again, hiring an experienced Cleveland estate planning attorney can save you and your beneficiaries a lot of time and stress down the line.

Deliberate Election of Trustee Experts

A critical component of trust formation is the selection of a trustee. The trustee is responsible for managing trust assets and making distribution per the grantor’s instructions. The importance of this position should not be understated.

Often, however, trust assets are investment accounts, land, or securities. Each asset type possesses its own laws and requisite knowledge to manage effectively. Since trusts are estate planning tools crafted over months, attorneys regularly counsel the appointment of trustees with expertise reflective to trust assets, not just a close family member with little understanding regarding the management of trust assets. Willingness of a grantor to use a trust, with the associated time and resource costs, means a grantor will go the extra mile to pick the best trustee for the job. The right person in the right place can make all the difference.

Privacy
It is a little-known fact that trusts also, by their very nature, protect the privacy of the grantor and the assets placed within the trust. When a person dies with a will, the will goes through probate. Because probate files are publicly accessible court documents, anyone can read the will. Thus bequests, beneficiaries, creditor claims, and any other personal information is obtainable by anyone, for any reason. Trusts, on the other hand, are confidential. Since trusts are private agreements, beneficiaries, trust assets, and the trust estate structure are protected from those not meant to know.

Any internet search about trusts will return volumes of results concerning all the multitudes of trusts out there. From self-needs trust, to tax-shelter trusts, to family trusts, trusts reflect the needs and goals of their creators. Trusts, however, are not a hot or common topic of conversation. As such, not many know, unless they sit down with their Ohio estate planning attorney, of all the ways trusts can mitigate, eliminate, or avoid personal or family problems. In an effort to inform people regarding trusts, and if they are something a particular person should look into, go to www.doineedatrust.com and take a 1-minute quiz. The only thing you’ve got to lose is 1-minute, but you could be saving yourself thousands over your lifetime.

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.