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October is Special Needs Planning Month! To stay on top of the many changes that occur in our planning practice, our managing attorney regularly attends many educational events. This week, Mr. Haley met with colleagues to "virtually attend" Stetson University Law School's 22nd annual National Conference on Special Needs Planning and Special Needs Trusts.
Why Is Special Needs Planning Important?
If you are the parents of a child with special needs, or If you are injured or disabled, you must guard against an inheritance, an award, or a settlement which could threaten your entitlement to public benefits. If assets are given, bequeathed to, or awarded to an injured or person with special needs, their entitlement to public resources may be lost or reduced. Individuals with disabilities frequently need to avoid the loss of public resources such as Supplemental Security Income (SSI) or Medicaid which otherwise would be available to them. Our office can help you maintain your eligibility for public benefits while enjoying the inheritance or settlement to which you are entitled. You may ask, how is this done? A planning method for this is by utilizing a certain type of trust.
Often, a Supplemental Needs Trust can assist in the preservation of both the public benefits and the assets. A Supplemental Needs Trust is often also referred to as a Special Needs Trust. There are two distinct types of Special Needs Trusts (SNTs): a third party-created trust and a self-created trust.
What Is The Difference Between Third Party And Self-Funded SNT's?
Third party-created SNTs can be created through the mechanism of something known as an inter vivos or testamentary trust and are funded by someone other than the beneficiary, or his or her spouse. They also can be created through a testamentary trust and funded by the beneficiary’s spouse. The third party-created SNT provides for fully discretionary supplemental care, not a support trust. Third party-created SNT’s are frequently used to provide for children or spouses with disabilities. A self-created SNT can help an injured or persons with special needs address their financial needs beyond what is provided through Supplementary Security Income (SSI) and Medicaid benefits.
A special needs trust will manage resources for the benefit of an injured or person with special needs while maintaining the person’s eligibility for public assistance benefits. While governmental agencies recognize special needs trusts, they impose very stringent rules and requirements. It is vital that any family considering a special needs trust consult an experienced Special Needs attorney first!
Funding A Trust
It is important that family members consider how a trust can be adequately funded to meet that loved one's needs!
In addition to creating the trust, families must consider how to fund the trust and at what levels. Funding must be realistic in relationship to the needs of the injured or person with special needs. If a family has insufficient resources to adequately fund a trust, one option may be to consider funding with life insurance.
An SNT must have a trustee who will properly manage the trust assets. The choice of the trustee is a critically important decision. In most instances, a family member will be designated as the trustee. The Estate & Elder Law Center can assist family members who are trustees or can serve as a trustee if so desired. Furthermore, we are fortunate in Virginia to have the Commonwealth Community Trust, a non-profit agency that does nothing but administer special needs trusts!
The ABLE Act
A new option has been made available to help people with special needs and their families save for the future while preserving eligibility for public benefits. The 2014 Achieving a Better Life Experience (ABLE) Act created a new type of tax-advantaged savings account. The money in these accounts can be used for qualified disability expenses and does not apply to the income and asset limits for SSI and Medicaid. To open an ABLE account, an individual must have become disabled – according to the Social Security definition – before age 26.
Individuals may have only one ABLE account, and total contributions to that account, including from family members and friends, are limited to $14,000 per year. The funds may be used for expenses such as housing, education, transportation, health care and assistive technology. The Estate and Elder Law Center can work with your financial advisor to set up an ABLE account and advise you regarding how such an account will best fit into your family’s special needs planning.
For more info, click on the link below to learn more about this specific area of Elder law:
There are a lot of myths and misconceptions in Estate Planning! Whether at seminars in person, through webinars, or over the phone, we often hear these listed below come up quite frequently:
MYTH #1: "Estate planning is only for the rich."
When people hear the word "estate", the automatic association is that of a millionaire, for example, "stately Wayne Manor". This is a popular misconception. Often, people believe that estate planning only benefits the wealthy, but nothing could be further from the truth.
If you own property and assets or have loved ones that depend on you to provide for their income or care, you have an estate and need a plan—regardless of the size of your estate!
Estate planning is something everyone needs to engage in regardless of age, estate size, or marital status. If you have a bank account, investments, a car, home or other property—you have an estate. More importantly, if you have a spouse, minor children, or other dependents, an estate plan is crucial for protecting their interests and their future income needs.
An estate plan can help you accomplish these and other important goals:
- Protect those who depend on you and your income during their lifetime.
- Name guardians for minor children, or adult-disabled children.
- Name the family members, loved ones, and organizations that you wish to receive your property following your death.
- Transfer property to your heirs and any organizations you’ve named in your estate planning documents in a tax-efficient and expedient manner, with as few legal hurdles as possible.
- Manage tax exposure.
- Name your executor and/or trustee – the individual(s) or institution you appoint to act in settling your estate and distributing your property.
- Avoid probate, the court process for proving that a deceased person's will is valid.
- Document the type of care that you prefer to receive should you become ill or incapacitated, including any life-prolonging medical care that you do or do not wish to receive. Do not assume that your loved ones "already know what you want."
- Express your personal wishes and preferences for funeral arrangements and how related expenses will be paid.
MYTH #2: Estate planning is only about distributing my assets after I’m gone.
Everyone knows that they need a will. But what happens when someone is in a serious accident, is in a coma, or is suffering from dementia or a stroke? Legacy and incapacity planning are two areas of planning that encompass far more than simply managing your assets during or after your lifetime.
Just like your goals, your legacy is unique to you and your family. While it includes important charitable planning goals and gifting strategies, it goes well beyond the monetary aspects to include passing down the values, experiences, hard work and memories that define your life and are important to you and your family in a way that’s meaningful to you.
Incapacity planning helps you prepare for unexpected events at every stage of your life from naming a guardian for your minor children, to who will manage your affairs if you’re no longer able to do so yourself, to the type of care you will you receive and who will oversee your care.
MYTH #3: A will can oversee the distribution of all of my assets.
A will is a legal document that instructs how your property will be distributed after your death. It allows you to name an executor, who is your personal representative charged with overseeing the distribution of your property and shepherding it through the probate process. Probate is the process that’s required to validate your will and transfer your assets.
However, certain assets may sit outside of your will. These include life insurance policies or qualified retirement accounts (401(k)s, IRAs, etc.) that have a beneficiary designation, as well as assets or accounts with a pay-on-death (POD) or a transfer-on-death (TOD) designation. These assets transfer directly to the named beneficiaries and are not subject to probate. This is why it’s so important to review your account beneficiary designations annually or whenever changes in your life occur. For example, if you divorce and remarry and fail to update the beneficiary designation on your IRA account to your new spouse, your ex-spouse would receive those assets upon your death. Even if your will and/or trust names your current spouse as the beneficiary or co-trustee, since these assets sit outside of your will or a trust, they are not governed by those documents.
In addition to a will, it’s important to work with the right estate attorney to draw up other important legal documents to protect your interests and the interest of your dependents and/or heirs. These include:
- A Durable Power of Attorney is where you name and empower your “agent” to carry out any legal and/or financial decisions that have to be made on your behalf during your lifetime if you are unable to act on your own behalf. Unlike other powers of attorney extending specific or limited powers to a named agent, a durable power of attorney doesn’t end if you become incapacitated. However it should be known that, all powers of attorney end at your death.
- A Health Care Power of Attorney indicates who is empowered to make healthcare decisions on your behalf and spells out how you wish to be cared for, alleviating the burden on your family members and loved ones to make those decisions at a highly stressful and emotional time.
- A Living Will is a legal document that enables you to specify the kind of medical care you do or do not want to receive in the event of illness or incapacity.
- Trusts: While not everyone needs a trust, it can provide the confidence that you have a plan in place to help provide for the safe and accountable management of family assets and to direct their use and distribution in accordance with your wishes and objectives. It allows while you’re alive, for you to remain both the trustee and the beneficiary of the trust, maintaining control of the assets and receiving all income and benefits. Upon your death, a designated successor trustee manages and/or distributes the remaining assets according to the terms set in the trust, avoiding the probate process. In addition, should you become incapacitated during the term of the trust, your successor or co-trustee can take over its management. All trusts fall into one of two categories: revocable or irrevocable. Within these categories, many types of trusts exist to fulfill a broad range of needs and objectives.
MYTH #4: Once I put a plan in place, I am finished! I don’t need to revisit it later.
Planning is never a “once and done” proposition. Your life, preferences and goals change over time, and may be also be impacted by outside influences, such as the financial markets, tax law changes and economic events. What if you marry or divorce, welcome a new child or grandchild, your minor children become adults, you move to another state, or experience the death of a spouse? All of these changes need to be reflected in your estate planning. That’s why it’s important to periodically review and update your estate planning documents, including your beneficiary designations and how your various accounts are titled!
The U.S. Centers for Medicare & Medicaid Services (CMS). took a new step to support care transitions from long-term care facilities into home- and community-based settings.
On Wednesday, CMS announced the availability of up to $165 million in supplemental funding to states (including Virginia) currently operating Money Follows the Person (MFP) demonstration programs. MFP programs allow certain Medicaid users, including older adults, to more seamlessly transition from a nursing home or institution back into the home, only if they desire to do so.
“The tragic devastation wrought by the Coronavirus on nursing home residents exposes America’s over-reliance on institutional long-term care facilities,” CMS Administrator Seema Verma said in the agency’s announcement. “Residential care will always be an essential part of the care continuum, but our goal must always be to give residents options that help keep our loved ones in their own homes and communities for as long as possible.”
To read the original full article, be sure to check out the link below from Home Health Care News:
Do you have a blended family? What happens when you want to be cremated and your family wants you buried instead?
Be sure to join us for an online discussion with Cricket Haley of Covenant Care Management. Online events presented are re-occurring and typically hosted on the 3rd Wednesday of each month.
Our next Zoom meeting is set for Wednesday, September 16, 2020 6:00 PM Eastern Time (US and Canada).
Please join us in saying Happy Anniversary and Congratulations this morning to Managing Attorney, Robert W. Haley of The Estate & Elder Law Center of Southside Virginia!
So, exactly what is a 'Death Cafe''? Join Covenant Care Management today online via Zoom (08-19-2020) at 6:00 PM today to find out!
Meeting ID: 872 8235 0550
File this next one under the 'be aware/scam' category: Let's say you recently visited an attorney to have a deed done on your home, and once that deed is drafted, finished and completed by the attorney, you are called to come to their office and sign it in front of a notary, and then take it to the clerk's office as directed by that attorney to put it on record. After that, you most likely put it out of your mind.
But wait - what's this? A few weeks later, you then receive a 'Recorded Deed Notice' in the mail. This letter may certainly look legitimate at first, and claims that you need to send money (anywhere from $20.00 to $100.00, or more in some cases) to get a copy of your deed. The letter states that a copy of your deed is necessary to prove ownership.
Do not send money or respond to these companies. The truth is, you can get a copy of your recorded deed locally from your clerk of courts office in your county for a nominal charge if do you need one.
Once a deed has been filed and recorded, it is in the court system and is legally processed, regardless of whether or not you have a personal copy of it. If you receive a letter claiming that you should send money to obtain your deed, or any other document pertaining to your deed, and you are unsure if that letter is truly legitimate, contact the original attorney who prepared your deed, your county tax assessor, or your county clerk of court for more information.
For those at risk for falling, the bedroom can be a hazard zone. You may not hear about bedroom falls in the news, but falls for a variety of reasons, are a well-known and documented danger that the senior population face in their day-to-day lives! https://myslumberyard.com/blog/bedroom-fall-prevention/
The IRS is warning nursing home and other care facilities that Economic Impact Payments (EIPs) generally belong to the recipients, not the organizations providing the care.
The IRS issued this reminder following concerns that people and businesses may be taking advantage of vulnerable populations who received the Economic Impact Payments.
"The payments are intended for the recipients, even if a nursing home or other facility or provider receives the person’s payment, either directly or indirectly by direct deposit or check," the agency said in a statement. These payments do not count as a resource for purposes of determining eligibility for Medicaid and other federal programs for a period of 12 months from receipt. They also do not count as income in determining eligibility for these programs.
To read the full article on this courtesy of CPA Practice Advisor, click here.
Courtesy of CNBC.com, this article below explains how some Americans who are still eagerly awaiting their coronavirus stimulus payments may be in for an unwelcome surprise: Receiving less money than they had expected!
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