What does "Probate" mean?
"Probate" is the legal process by which someone is appointed to have authority to manage the assets and income of someone who has become incompetent or deceased. Probate courts provide a way for you to have your assets managed: your bills paid, your income collected, and your assets invested or, after you die, distributed to your heirs. If you become incompetent (e.g., a coma or dementia associated with Alzheimer's) the probate court appoints someone to manage your assets, the things you own, and the things to which you have title during the time you remain incompetent. This someone is usually a family member, but is often an elected official known as a Public Administrator.
After you die, the probate court may appoint someone to pay your final bills, collect any income still due to you, gather up your assets, and then distribute those assets to your heirs or to those you have designated in you Will.
I'm getting divorced; should I do estate planning now or wait until after the divorce is finished?
If you are getting divorced, you have a ton of things on your mind: the paperwork you have to do for the divorce, bills from the divorce lawyer, and all the routine demands on your time. Many people overlook the estate planning question, and their families have paid dearly because of it. For instance, if you take no action and happen to die during your divorce, your soon-to-be-ex will likely get everything, especially if your assets are in both your names.
Another example: if you have any children who are minors, then you need a Will to appoint someone other than your spouse to be the custodian of assets for the children, otherwise your spouse will almost certainly be put in control of any assets you leave to those children.
It is a good idea to consult with an estate planning attorney if you believe that you will have significant assets that you would not want going to your ex-spouse, or if you have an alternative plan in mind for your children in the event of your death.
I already have an estate plan; how do I know that it is a solid one?
First: if the plan is more than a few years old, have a qualified attorney review it for you. The law changes often enough that this is a prudent first step.
What do you mean when you talk about Medicaid and planning for long-term nursing care?
A question we frequently ask our clients is "what do you want to happen for your loved ones when you die?" It is a normal and rational thought. There are limitations on what you can control from the grave, but can you influence what will happen? The answer in many respects is "yes".
These questions and their answers would form your "estate plan". For example, you may want to prepare your estate plan by taking action during your lifetime to relieve some of the burden of your death on your loved ones. If your current estate plan addresses everything you want to influence, then it is a good plan. If you are not sure, then you should make an appointment with Manley, Karraker & Karraker P.C. or another qualified estate planning attorney. A good rule of thumb is to review your existing plan with an attorney every few years, due to adjustments to your income, assets, births, or deaths in your family that would necessitate a change in your estate plan.
The simplest and most certain manner of developing a binding plan for your assets is to have a proper Last Will and Testament (a "Will"). It can, and probably should, contain all your intentions about who is to get what of the things you leave behind (your assets). Writing down a plan for all your assets in my Will allows you to have a single plan that should be easy to follow (it's all in one place) and is quite certain (there are no doubts if properly prepared because it's all written down in detail and signed by me).
Just having a Will is not enough, though. It is critical to remember that your Will only controls those assets that you own in your name alone. If you have an asset with a co-owner or beneficiary named, it will NOT be controlled by your Will. If your Will does not control one of your assets, then your intentions may not be followed. What if one of the named beneficiaries dies before you do? What was your intention for their share? The law or the bank or broker provides the answer, not your Will, if your Will does not control that asset. Because of some laws on POD or TOD accounts, you may accidentally disinherit grandchildren. Some of your loved ones may get stuck paying a bigger portion of your bills than others. Some loved ones may not get the portion of your things that you intended them to receive.
To avoid the potential problems of incomplete planning and beneficiary designations, contact us at (573) 756-6446 to make an appointment to discuss your current estate plan.
Most people think of long term nursing care as a stay in a nursing home that continues after Medicare (not Medicaid) quits paying. Medicare can pay up to about 100 days of nursing care, so long as the care is considered rehabilitation.
For people who must remain institutionalized in a nursing home well past 100 days, Medicaid may become a serious issue. Family members of an ailing loved one are frequently told that assets must be divided and disposed of according the Spend Down Rule, which is not only frequently wasteful, but can place the non-institutionalized family members in a terrible financial bind. However, the Spend Down Rule is merely the most common, or "default," method for achieving eligibility. There are more complicated rules that can be applied in most cases that minimize the negative financial impact that would normally occur under the "default" rule.
Long term nursing care can also mean the need to have significant assistance with basic life functions at home. Medicaid for home and community-based care is somewhat restrictive, but there are benefits available for home care for a lot of people who are not receiving them now.
Who is your typical client for long-term nursing care planning?
Our typical client has aging parents, or are themselves aging parents. They usually own a home and have at least $25,000 in other assets, but are not often millionaires - just hard-working people who've managed to work and save something to pass on to the people they love. Although clients may be single, the typical scenario involves a married couple wherein one spouse needs institutionalized nursing home care (or is already in a nursing home) and neither spouse is able to get Long Term Care insurance, which places the non-institutionalized spouse in danger of being left with very few financial resources and an uncertain future. Although planning early would have provided the best solution, there are still tools that an Elder Law Attorney can use to produce significant savings for the non-institutionalized family.
Of course, those with a higher net worth can also benefit from planning. Sometimes we can do our entire job of arranging a plan for someone with a single office conference. As investment assets increase, usually more work is involved.
Is there anyone you cannot help with long-term nursing care planning?
If ALL FOUR OF THE FOLLOWING apply to a potential client:
then there is probably little that we can do for them -- unless they have a question or a problem that they think may need legal attention.
- they have a Will or properly-made beneficiary deed to their home,
- they have a comprehensive General POA and
- they have a Health Care POA (not just a Living Will), AND
- they are already receiving Medicaid,
When is the best time to begin planning for long-term nursing care?
Like any estate planning, when you first think about it is the best time to start working on it. The earlier we develop a plan, the more we can do.
The bottom line is "the sooner the better". But there is a lot we can do to help protect, say, a spouse that is expected to remain at home when the other spouse has become hospitalized and is expected to need long term care when discharged from the hospital - in fact, that is the situation for a lot of our clients, partly because there are fewer uncertainties. At that point we know what the problem is and when it is (now!), and we have a good idea of the resources available to address the problem and of the resources we can protect by applying all the Medicaid laws, not just the more commonly-known regulations.
A final point: all the planning we do is legal. We don't coach people on how to cheat or hide assets; what we do is akin to what professional tax advisers do. Just like your tax professional, we apply laws that most of us don't know about in order to get you the best deal. That's the essence of Medicaid and other long term nursing care or healthcare crisis planning.
Why would I need a Will?
Anyone who owns anything they value, or who has dependent children, should have a Will. If you do not have a Will then the government (e.g., existing laws, the courts or a child welfare agency) will ultimately determine who gets your goods and your children.
Can't I just use Pay on Death (POD) or other beneficiary designations?
You should definitely have a Will in order to have your say as to the custodian of the child should you die. This is especially important in the event both parents should die while a child is still quite young or is an adult with special needs.
For the person with or without children who owns anything of value, a Will is important in order to control who gets possession of that "anything." If you do not have a Will, then the government controls who gets your estate when you die. (Whether you own a little or a lot, it is your "estate" - everything you own at the time of your death).
Of course you can, but it is frequently not advisable. One great risk of using POD type planning is if one of the people you name to receive an asset on your death dies before you do. In that event, the others named may receive the whole asset - so the children of the deceased person get nothing. In other words, your son's grandchildren may be accidentally disinherited if you have a POD account with your son's name on it and your son dies before you do.
I've heard of Trusts: are they better than a Will?
Another reason to avoid POD-type planning is that each asset acquires its own estate plan. Unless you are very careful and consistent, your bank accounts may have different beneficiaries than your Beneficiary Deed, which may have different beneficiaries than your Transfer on Death brokerage account. Finally, the law differs on each type of asset so different results arise in different circumstances. A properly made Will does not have the risk of such inconsistent results due to circumstances.
A Living Trust is one that takes effect during your lifetime, as opposed to your Will, which only takes affect after your death. A trust may also be contained in a Will (known commonly as a "testamentary trust").
A Testamentary Trust can be a simpler form of trust. Such trusts are frequently used as a less expensive means of providing for young children or the disabled.
A Living Trust is appropriate for some people under some circumstances. All assets owned by your Living Trust will skip the probate court process if you should die or become legally "incapacitated" (i.e., incompetent). Living Trusts can be managed with greater privacy. They are especially useful for those with a high net worth, to reduce future costs and to reduce or avoid estate taxes.
Whether one is better than another depends on your needs and your circumstances. We can help you by giving you the legal counsel you need to make the best decision for your family.