There are many misconceptions about the law in general and about estate planning in particular. There are also many opportunities to use the law to protect those we love, when it comes to helping families navigate life and the legal processes that happen after the death or disability of a loved one. The best option is to plan ahead, reports the article “I’m dead, now what? Myths about deaths in Georgia” from the Cherokee Tribune & Ledger-News. Here are the top four myths about what happens when someone dies.
Supplemental Security Income and Medicaid are critical sources of support for those with disabilities, both in benefits and services.
To be eligible, a disabled person must satisfy restrictive income and resource limitations.
That’s why many families ask special needs lawyers about the two types of special needs trusts.
If aging in place is your goal, then long-term planning needs to be considered, including how the house will function as you age, accommodations for the people who will care for you and how to pay for care, says the Record Online in the article “Start planning now so you can ‘age in place.’”
A person with a disability can only have $4,000 to keep the Medicaid assistance that he or she has. That’s because those receiving Supplemental Security Income, Social Security Disability Income and/or participating in programs like Medicaid or Medicare have limits placed on their assets. If they go over the limits, their benefits will be suspended. In some cases, these limits can be as little as $2,000.
Mississippi Today’s recent article, “New tax-free accounts allow Mississippians with disabilities to save without the risk of losing benefits,” explains that it’s common for a grandparent of a child with a disability to die and provide an inheritance for the child in their will. It may not a large amount of money, but $5,000 will disqualify them from government programs. Until now, it meant that those who wanted to support family members with disabilities were often limited to buying groceries.
On July 1, Mississippi started a program that allows residents with disabilities to set aside money without risking the loss of government benefits. Income earned from the accounts is tax free “if spent on qualified disability-related expenses,” according to the Mississippi Department of Rehabilitation Services. The program was created under the federal Achieving a Better Life Experience (ABLE) Act signed by President Obama in 2014 and the Mississippi ABLE Act signed by Governor Phil Bryant in 2017.
In addition to the financial benefits, the mental health of participants and their families might also improve from the ABLE program. That’s because financial independence is very helpful psychologically, but the reverse is also true. Not having financial independence can be detrimental psychologically. The ability for parents to save for their disabled children might also decrease stress.
Eligibility is restricted to those who were disabled before age 26.
“There was originally not an age limit in the legislation but whenever they ran it through the budget office and they scored the cost in the legislation it was going to be … like $20 billion or something that it was going to cost the federal government if there wasn’t an age limit in there, which was going to kill the bill,” Mississippi Department of Rehabilitation Services chief of staff Billy Taylor told Mississippi Today. So (age limit) was put in there … to drive the cost of the program down.”
Mississippi is part of the National ABLE Alliance. It’s a partnership of states that utilize the same program. The program allows out of state residents to create ABLE accounts, allows contributors to ABLE accounts to deduct contributions from their taxable income, allows account holders to use debit cards and to choose from seven different investment options.
Call us (228) 460-5243 or email us at firstname.lastname@example.org to find our how your estate planning attorney can help you.
Legal disclaimer: The information in this article is provided for information purposes only and should not be construed as legal advice. Your should not act or refrain from acting on the basis of any content included in this article or on our website (www.perklawgroup.com) without seeking legal or professional advice.
Reference: Mississippi Today (July 8, 2019) “New tax-free accounts allow Mississippians with disabilities to save without the risk of losing benefits”
Every month, Lawrence Cappiello writes a check to a nursing home for $12,000 to pay for the cost of his wife’s nursing home care. Two years ago, his net worth was $500,000. In less than two years, the Cappiello’s savings will be gone. This unsettling story is explained in the article “How to Keep LTC Costs From Devouring Your Client’s Life Savings” from Insurance News Net. He is suffering from nursing home sticker shock and says he should have known better.
1) Myth: My spouse can make all of my healthcare and financial decisions because he/she is my spouse.
2) Myth: I’ve told my family how I want my affairs handled after I die. They’ll divide everything the way I want it divided.
3) Myth: I signed a will before, so I don’t need to do it again.
4) Myth: I am not wealthy enough to need an estate plan.
Discussing the next steps isn’t an easy conversation, but if you plan ahead it can be less painful for everyone involved, says KARE 11 in Minneapolis in the article, “Making the best care decisions for aging parents.”
Many families find this out the hard way. When a parent requires immediate urgent care, the family must jump into “go” mode. It can be overwhelming. There are many options, which range from various levels of in-home care, to independent living, to assisted living and even to skilled nursing care. You should understand the level of care you need and what you can afford.
Unless you qualify for Medicaid, you’ll need to pay for assisted living out of your own pocket. For most of us, this could drain assets in short order. Many people also aren’t planning for long-term care in retirement.
It’s best to plan early. If you’re going to buy a long-term care policy, the best time to apply is in your 40s or 50s, when your health is good and the cost is cheaper.
Sit down with an elder law attorney, regardless of your assets, because the laws concerning Medicare and Medicaid are confusing. Every situation is also different.
Many people aren’t aware that Medicare doesn’t cover many long-term care services. In fact, that limited benefit is designed to get somebody back to independent living, not help them with basic activities of daily living. Therefore, if it becomes a situation where somebody is going to need help with such basics as dressing, bathing and other activities of daily life for the rest of their life, Medicare is not going to cover it.
If you believe gifting your estate away now will stop you from losing it in the future, remember that most states have a five-year look back period. Any gifts of money or property in the 60 months before applying for Medicaid, can be taken back to pay for the program or the applicant will be penalized.
It’s difficult enough to make the decision to place your parent in someone else’s care, let alone to fret about how you’re going to pay for it. Plan now, if you can.
Reference: KARE 11 (Minneapolis) (November 27, 2018) “Making the best care decisions for aging parents”
When a person contests a will, they’re arguing that the will isn’t valid. A will can be contested because an individual claims that the deceased person didn’t possess the required capacity to make a will, was unduly influenced or insane, made a more recent will, or there was fraud, duress or forgery. A will can also be contested because it contains technical flaws.
The Carroll County (MD) Times’ article, “Contesting a will is difficult; only an ‘interested party’ is eligible,” explains that to be eligible to contest a will in Maryland, you must be an “interested party.” This means you’re named in the will or would have been eligible to inherit by law, if the deceased hadn’t written a will.
In Mississippi, contested wills are heard by the Chancery Court. Chancellors are tasked with hearing and deciding contested cases. They direct the actions of personal representatives (executors) and pass orders for administering an estate.
The person contesting a will has the burden of proof, meaning that she must show that the will isn’t valid. Other interested parties aren’t required to prove that the document is valid, but they may be called to testify, if they were present or involved when the deceased person made the will or signed and executed it.
Make no mistake: challenging a will is difficult. Courts regard a will as an expression of the deceased person’s wishes, and since he’s not around to tell the court, “No, that’s not what I meant,” judges are hesitant to make changes in the will as written.
This is a good reminder to be certain your will says what you want it to say. If it doesn’t, work with a qualified estate planning attorney to have revisions made or codicils (additions that modify or explain provisions in the will) added to reflect your intent accurately.
If a will is successfully contested, the estate is then treated as if the deceased died without a will or intestate. This doesn’t guarantee that the challenger will get some of the estate, because it’s based on where she is in the line of succession set out in state intestacy laws. If a person dies without a will, priority in the distribution of his estate will be as follows in Mississippi:
- First, to the children and the descendant’s of children who died prior to the deceased individual (Under Mississippi’s laws of intestacy, a spouse is treated like a child as far as his or her share of the estate is concerned);
- Second, to the decedent’s father, mother, brothers, sisters, and descendants of brothers and sisters who predeceased the deceased individual;
- Third, to the grandparents and uncles and aunts.
If none of the relatives listed above exists, succession continues to any blood relatives of the highest degree defined by Mississippi law.
In the event there’s no qualifying relative, the estate goes to the State of Mississippi. If the deceased was on Medicaid, the assets of the deceased may be required to be paid to the State of Mississippi Division of Medicaid.
Reference: Carroll County (MD) Times (November 23, 2018) “Contesting a will is difficult; only an ‘interested party’ is eligible”
Trust funds are often associated with the very rich, who want to pass on their wealth to future heirs. However, there are many good reasons to set up a trust, even if you aren’t super rich. You should also understand that creating a trust isn’t easy.
U.S. News & World Report’s recent article, “Setting Up a Trust Fund,” explains that a trust fund refers to a fund made up of assets, like stocks, cash, real estate, mutual bonds, collectibles, or even a business, that are distributed after a death. The person setting up a trust fund is called the grantor, and the person, people or organization receiving the assets are known as the beneficiaries. The person the grantor names to ensure that his or her wishes are carried out is the trustee.
While this may sound a lot like drawing up a will, they’re two different legal vehicles.
Trust funds have several benefits. A trust can reduce estate and gift taxes and keep assets safe. With a trust fund, you can establish rules on how beneficiaries spend the money and assets allocated through provisions. For example, a trust can be created to guarantee that your money will only be used for a specific purpose, like for college or starting a business.
A trust fund can also be set up for minor children to distribute assets to over time, such as when they reach ages 25, 35 and 45. A special needs trust can be used for children with special needs to protect their eligibility for government benefits.
At the outset, you need to determine the purpose of the trust because there are many types of trusts. To choose the best option, talk to an experienced estate planning attorney, who will understand the steps you’ll need to take, like registering the trust with the IRS, transferring assets to the trust fund and ensuring that all paperwork is correct. Trust law varies according to state, so that’s another reason to engage a local legal expert.
Next, you’ll need to name a trustee. Choose someone who’s reliable and level-headed. You can also go with a bank or trust company to be your trust fund’s trustee, but they may charge around 1% of the trust’s assets a year to manage the funds. If you go with a family member or friend, also choose a successor in case something happens to your primary trustee.
It’s not uncommon for people to have a trust written and then forget to add their assets to the fund. If that happens, the estate may still have to go through probate.
Another common issue is giving the trustee too many rules. General guidelines for use of trust assets is usually a better approach than setting out detailed rules.
Reference: U.S. News & World Report (November 8, 2018) “Setting Up a Trust Fund”