Oconee Estate Planning Blog

Is Assisted Living or Memory Care a Better Choice?

Forbes’ recent article entitled “Assisted Living vs. Memory Care: Which Is Right for You?” explains that assisted living is a long-term care facility that lets seniors remain independent, while providing help with daily tasks. It often provides a small apartment, housekeeping, community meals and activities.

It’s critical to thoroughly review the support needs and challenges facing the person you’re supporting and to try to look honestly at what’s working and what’s not.

The best candidate for assisted living is a person who needs assistance with their activities of daily living but still has their reasoning skills intact. Residents can enjoy socialization and activities with people their own age. This helps with isolation after spouses and friends are no longer with them.

Assisted living residents frequently require personal care support. However, these seniors are able to communicate their needs. Residents may receive help with taking medicine, bathing, toileting and other activities of daily living, or ADLs.

Memory care facilities are secured facilities that serve the needs of those with some form of dementia. These facilities typically have smaller bedrooms but more available, open and inviting common spaces. Research shows the way memory care facilities are designed can be helpful in easing the stressful transition from home to a long-term care community. This includes softer colors, a lack of clutter and clear signage.

Confusion and memory loss can cause anxiety. That’s why having a predictable routine can help. As dementia progresses, a patient may forget how to do normal activities of daily living, such as brushing their teeth, eating, showering and dressing. Memory care facilities ensure that these needs are met.

A memory care facility typically has a smaller staff-to-patient ratio because an individual suffering from dementia has greater care needs. Staff will frequently undergo additional training in dementia care.

A memory care facility isn’t always a standalone community. Assisted living or skilled nursing homes may have a separate memory care wing where seniors get the same socialization and activities but with 24/7 protection.

If possible, having both options in one facility can be a plus because the person can start in a less restrictive type of setting in assisted living with the option to transition to memory care as needs, abilities and interests are changed by the condition.

Both types of care have some autonomy but help with hygiene and medication management. However, staff in a memory care unit is specifically trained to work with people with cognitive impairments.

Reference: Forbes (Aug. 16, 2021) “Assisted Living vs. Memory Care: Which Is Right for You?”

Suggested Key Terms: Elder Law Attorney, Long-Term Care Planning, Assisted Living, Nursing Home Care, Disability, Elder Care, Caregiving, Dementia, Alzheimer’s Disease

What Exactly Is a Trust?

MSN Money’s recent article entitled “What is a trust?” explains that many people create trusts to minimize issues and costs for their families or to create a legacy of charitable giving. Trusts can be used in conjunction with a last will to instruct where your assets should go after you die. However, trusts offer several great estate planning benefits that you don’t get in a last will, like letting your heirs to see a relatively speedy conclusion to settling your estate.

Working with an experienced estate planning attorney, you can create a trust to minimize taxes, protect assets and spare your family from going through the lengthy probate process to divide up your assets after you pass away. A trust can also let you control to whom your assets will be disbursed, as well as how the money will be paid out. That’s a major point if the beneficiary is a child or a family member who doesn’t have the ability to handle money wisely. You can name a trustee to execute your wishes stated in the trust document. When you draft a trust, you can:

• Say where your assets go and when your beneficiaries have access to them
• Save your beneficiaries from paying estate taxes and court fees
• Shield your assets from your beneficiaries’ creditors or from loss through divorce settlements
• Instruct where your remaining assets should go if a beneficiary dies, which can be helpful in a family that includes second marriages and stepchildren; and
• Avoid a long probate court process.

One of the most common trusts is called a living or revocable trust, which lets you put assets in a trust while you’re alive. The control of the trust is transferred after you die to beneficiaries that you named. You might want to ask an experienced estate planning attorney about creating a living trust for several reasons, such as:

• If you’d like someone else to take on the management responsibilities for some or all of your property
• If you have a business and want to be certain that it operates smoothly with no interruption of income flow, if you die or become disabled
• If you want to shield assets from the incompetency or incapacity of yourself or your beneficiaries; or
• If you want to decrease the chances that your will may be contested.

A living trust can be a smart move for those with even relatively modest estates. The downside is that while a revocable trust will usually keep your assets out of probate if you were to die, there still will be estate taxes if you hit the threshold.

By contrast, an irrevocable trust can’t be changed once it’s been created. You also relinquish control of the assets you put into the trust. However, an irrevocable trust has a key advantage in that it can protect beneficiaries from probate and estate taxes.

In addition, there are many types of specialty trusts you can create. Each is structured to accomplish different goals. Ask an experienced estate planning attorney about these.

Reference: MSN Money (July 9, 2021) “What is a trust?”

Suggested Key Terms: Estate Planning Lawyer, Probate Court, Inheritance, Asset Protection, Will Contest, Trustee, Revocable Living Trust, Irrevocable Trust, Probate Attorney, Estate Tax

Do I Need Witnesses for a Power of Attorney?

A power of attorney (POA) is a legal document that gives an individual (known as “the agent” or “attorney-in-fact”) the authority to act on behalf of another person (called “the principal”).

The agent can have broad legal authority or limited authority to make decisions about the principal’s property, finances, or medical care. A POA is frequently used in the event of a principal’s illness or disability, or when the principal can’t be present to sign necessary documents for financial transactions.

The types of powers of attorney include:

• Conventional, also known as a limited power of attorney;
• Durable, which lasts for a lifetime unless you cancel it;
• Springing, which only comes into play for specific events; and
• Medical, also known as a durable power of attorney for healthcare.

Each state has its own specific requirements for powers of attorney.

For example, nj.com’s recent article entitled What makes a power of attorney legal in N.J.?” says that, under New Jersey State § 46:2B-8.9, a power of attorney must be in writing, duly signed and acknowledged, and notarized. The acknowledgement may be taken by an authorized individual in the state of New Jersey or in any other state or foreign jurisdiction. In the Garden State, there’s no witness requirement for a power of attorney.

Also, New York’s power of attorney statute requires two witnesses.

Many financial institutions examine the POA for witnesses and will question a document without a witness.

So if the validity of a POA is called in question, a witness would be needed to swear that he or she saw the maker of the POA execute the instrument as their own act, therefore.

So even if witnesses aren’t required, it’s wise to have a witness on the power of attorney.

Regardless, do not go it alone. Engage the services of an experienced estate planning attorney admitted to practice law in your state.

Reference: nj.com (Aug. 2, 2021) : What makes a power of attorney legal in N.J.?”

Suggested Key Terms: Elder Law Attorney, Estate Planning, Power of Attorney

What are My Best Estate Planning Moves?

Tickertape’s recent article “5 Estate Planning Tips That Aren’t Just for the Wealthy” explains that a common misconception is that estate planning isn’t necessary if your estate assets amount to less than the 2021 federal estate tax exemption of $11.7 million per individual.

But most of us can benefit from estate planning. This can help protect your assets for your heirs. Estate planning includes creating a last will or revocable living trust, making certain that you have the right beneficiaries, and creating a health care directive. Creating a solid estate plan can decrease the odds that your family will have to deal with a problematic probate and reduce the amount of money because of unneeded taxes.

Create a Will. A last will is one way to let people know how you want your assets taken care of after you die. Plus, a last will should include information about who should act as guardians for minor children and care for any pets. Talk to an estate planning attorney about the specific laws for probate to make sure you do it correctly.

Name Your Beneficiaries. Review your beneficiary designations and make sure they’re up to date. When there’s a major life change, you should look at your beneficiary designations (e.g., life insurance and retirement funds), update your last will, and make sure everything matches. This includes charities as well as individuals. There are estate planning strategies designed to help you pass your assets on, but none of these will help if you don’t have your beneficiaries properly designated and assets aligned with your estate plan.

Ask Your Attorney About a Trust. A fully funded revocable living trust can be great tool to pass your assets on while potentially helping your heirs avoid probate. There are many different types of trusts that can be used to provide a variety of benefits. Much depends on your situation, so work with an experienced estate planning attorney.

Power of Attorney. Estate planning also includes documents in the event you become incapacitated. Signing a power of attorney allows an agent to make decisions on your behalf if you’re incapacitated. Find a person you trust to handle these decisions and have an estate planning attorney prepare the legal documents to ensure that everything is correct.

Think About Giving Now. You don’t need to wait until you’re gone to provide resources to your family. In 2021, you can give up to $15,000 to each recipient without paying the gift tax. If you’re married, each spouse can give $15,000. When you give to charity now, instead of waiting until you pass, you may claim a tax deduction, whether you donate directly, give stock, or set up a donor-advised fund. This allows you to benefit now—along with your beneficiaries.

Reference: Tickertape (June 25, 2021) “5 Estate Planning Tips That Aren’t Just for the Wealthy”

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What Upgrades Can I Make to ‘Age in Place’?

With our aging population, we need more solutions to help seniors live well. That’s where universal design comes in: it’s a concept that tries to make products and structures usable by everyone, regardless of age, ability, or other factors.

Money Talks News’s  article entitled “8 Essential Home Features for Aging in Place” says that aging in place requires homes that accommodate our needs as we age. The article sets out a list of eight design features buyers focused on accessibility are looking for based on survey data from the National Association of Home Builders’ 2021 “What Home Buyers Really Want” report.

8. Lower countertops. The kitchen is the center of most homes, and it’s an important part of universal design. Countertops that are three inches lower than the standard height of 36 inches lets seniors and those with limited mobility to fully participate in meal prep. You can round all countertop edges and corners because fewer 90-degree angles may reduce bumping and bruising and minimize injury in the event of a fall.
9. Lower kitchen cabinets. According to Aging in Place, upper kitchen cabinets that are three inches lower than standard height lessens the tendency to overreach and potentially lose balance. Lower cabinets that feature pull-out shelves, “lazy Susan” corner cabinets and easy-pull handles offer additional convenience for seniors and those who rely on a wheelchair or mobility scooter.
10. Bathroom aids. For seniors, using the bathroom safely can a challenge. Aging-in-place design recommends these features to make bathrooms more practical and convenient:

• A walk-in tub or a shower with non-slip seating
• An adjustable or hand-held showerhead
• A comfort-height toilet
• Ground-fault interrupter (GFI) outlets that reduce the risk of shock; and
• Grab bars near the toilet and shower.

5. A Stepless entrance. To age in place safely, AgingCare recommends that a home’s main entrance not have steps and should have a threshold height of no more than a half an inch. Here are a couple of ways that an entryway without steps can make life better for seniors:

• It facilitates smooth entrance/exit by wheelchair, scooters, or walker
• It decreases the risk of falls, particularly in snowy or icy conditions; and
• It makes it easier to get deliveries and enter the home carrying groceries.

4. Non slip floors. According to the CDC, more than 35 million older adults fell at least once in 2018, and 32,000 died from fall-related injuries. To help, non-slip surfaces like low-pile carpet, cork and slip-resistant vinyl can minimize the risk.
5. Wide hallways. Wide hallways (defined as at least four feet wide) let seniors access every space in their home with a walker, wheelchair, or scooter, or with the assistance of a home health aide.
6. Wide doorways. A standard doorway can be as narrow as 24 inches, which is a tight fit for seniors who rely on wheelchairs, scooters, or walkers. Seniors like wide doorways, defined as at least three feet wide. According to the ADA, doorways should have at least 32 inches of clear width. To help with an easy transition from room to room, thresholds should be as flush to the floor as possible.
7. Full bath on main level. Not just convenient, it’s a critical safety feature for seniors. Besides eliminating the need to go up and down stairs several times a day, main floor bathrooms also allow the elderly to (i) respond to incontinence issues more quickly; (ii) practice regular self-care; and (iii) access a private space when required.

Reference: Money Talks News (Aug. 5, 2021) “8 Essential Home Features for Aging in Place”

Suggested Key Terms: Disability, Elder Care, Aging in Place

Checklist for Estate Plan’s Success

We know why estate planning for your assets, family and legacy falls through the cracks. It’s not the thing a new parent wants to think about while cuddling a newborn, or a grandparent wants to think about as they prepare for a family get-together. However, this is an important thing to take care of, advises a recent article from Kiplinger titled “2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?

Every four years, or every time a trigger event occurs—birth, death, marriage, divorce, relocation—the estate plan needs to be reviewed. Reviewing an estate plan is a relatively straightforward matter and neglecting it could lead to undoing strategic tax plans and unnecessary costs.

Moving to a new state? Estate laws are different from state to state, so what works in one state may not be considered valid in another. You’ll also want to update your address, and make sure that family and advisors know where your last will can be found in your new home.

Changes in the law. The last five years have seen an inordinate number of changes to laws that impact retirement accounts and taxes. One big example is the SECURE Act, which eliminated the Stretch IRA, requiring heirs to empty inherited IRA accounts in ten years, instead of over their lifetimes. A strategy that worked great a few years ago no longer works. However, there are other means of protecting your heirs and retirement accounts.

Do you have a Power of Attorney? A POA gives a person you authorize the ability to manage your financial, business, personal and legal affairs, if you become incapacitated. If the POA is old, a bank or investment company may balk at allowing your representative to act on your behalf. If you have one, make sure it’s up to date and the person you named is still the person you want. If you need to make a change, it’s very important that you put it in writing and notify the proper parties.

Health Care Power of Attorney needs to be updated as well. Marriage does not automatically authorize your spouse to speak with doctors, obtain medical records or make medical decisions on your behalf. If you have strong opinions about what procedures you do and do not want, the Health Care POA can document your wishes.

Last Will and Testament is Essential. Your last will needs regular review throughout your lifetime. Has the person you named as an executor four years ago remained in your life, or moved to another state? A last will also names an executor for your property and a guardian for minor children. It also needs to have trust provisions to pay for your children’s upbringing and to protect their inheritance.

Speaking of Trusts. If your estate plan includes trusts, review trustee and successor appointments to be sure they are still appropriate. You should also check on estate and inheritance taxes to ensure that the estate will be able to cover these costs. If you have an irrevocable trust, confirm that the trustee is still ready and able to carry out the duties, including administration, management and tax returns.

Gifting in the Estate Plan. Laws concerning charitable giving also change, so be sure your gifting strategies are still appropriate for your estate. An estate plan review is also a good time to review the organizations you wish to support.

Reference: Kiplinger (July 28, 2021) “2021 Estate Planning Checkup: Is Your Estate Plan Up to Date?

Suggested Key Terms: Relocation, SECURE Act, Stretch IRA, Guardian, Executor, Power of Attorney, Health Care Directive, Trusts, Trustee, Estate Planning Attorney, Successor, Charitable Giving, Last Will and Testament, Inheritance Taxes

What’s a QTIP Trust?

A QTIP trust (qualified terminable interest property trust) lets a grantor provide assets in a “safe spot” for a surviving spouse but still control what happens to those assets once that surviving spouse passes away. A QTIP trust can offer financial reassurance if you’re concerned about what would happen to your spouse after you’re gone.

Yahoo Finance’s recent article entitled “How Does a QTIP Trust Work?” explains that a qualified terminable interest property trust allows one spouse to provide income for another. This type of trust can also be used to pass on assets to other beneficiaries, including children. A QTIP trust is a type of irrevocable trust, so once you transfer assets to the trust, that transfer typically can’t be reversed.

With a QTIP trust, your spouse is considered to be a lifetime beneficiary: he or she can draw on trust income for life. Those who receive the assets held in the trust once the surviving spouse passes away are called remainder beneficiaries. These may be children from a previous relationship. A surviving spouse primarily benefits from a QTIP trust because of the income he or she can get from it. The surviving spouse would have limited or no access to the underlying assets in the trust but would still benefit from any income it generates.

As far as tax benefits, a QTIP trust lets the assets qualify for the marital deduction, so any assets in the trust are excluded from your estate for tax purposes once you pass away. When the surviving spouse dies, the QTIP trust is dissolved, and the assets are transferred to the remainder beneficiaries. Then the assets held in the trust would be included in the surviving spouse’s estate for tax purposes. It’s a very attractive feature because you can use the trust to manage estate taxes for a surviving spouse. Any tax obligation owing when the surviving spouse passes away would be passed on to the remainder beneficiaries.

A QTIP might be a good option if your current marriage isn’t your first, and you have children from a previous relationship. With this trust, your current spouse won’t be financially stranded if something happens to you. Plus, you can ensure that your kids from the previous relationship inherit your assets held in the QTIP. Also, a QTIP trust might be the answer if you’re concerned about what your current spouse might do with your assets if inherited outright. This trust can ensure that your spouse is not able to use your assets in a way that goes against your wishes after you’re gone.

QTIP trusts can be wise when you’re married and have children from a previous marriage. Ask an experienced estate planning attorney about the benefits of creating a QTIP trust and how it might work in your specific situation.

Reference: Yahoo Finance (July 30, 2021) “How Does a QTIP Trust Work?”

Suggested Key Terms: Estate Planning Lawyer, Asset Protection, Probate Attorney, QTIP Trust (Qualified Terminable Interest Property Trust), Remainder Beneficiary

What are Responsibilities of Trustees and Executors?

Being a fiduciary requires putting the interest of the beneficiary over your own interests, no matter what. The person in charge of managing a trust, the trustee, has a fiduciary duty to the beneficiary, which is described by the terms of the trust. This is explained in a recent article titled “Estate Planning: Executors, executrix and personal representatives” from nwitimes.com.

Understanding the responsibilities of the trust requires a review of the trust documents, which can be long and complicated. An estate planning attorney will be able to review documents and explain the directions if the trust is a particularly complex one.

If the trust is a basic revocable living trust used to avoid having assets in the estate go through probate, duties are likely to be similar to those of a personal representative, also known as the executor. This is the person in charge of carrying out the directions in a last will.

A simple explanation of executor responsibilities is gathering the assets, filing tax returns, and paying creditors. The executor files for an EIN number, which functions like a Social Security number for the estate. The executor opens an estate bank account to hold assets that are not transferred directly to named beneficiaries. And the executor files the last tax returns for the decedent for the last year in which he or she was living, and an estate tax return. There’s more to it, but those are the basic tasks.

A person tasked with administering a trust for the benefit of another person must give great attention to detail. The instructions and terms of the trust must be followed to the letter, with no room for interpretation. Thinking you know what someone else wanted, despite what was written in the trust, is asking for trouble.

If there are investment duties involved, which is common when a trust contains significant assets managed in an investment portfolio, it will be best to work with a professional advisor. Investment duties may be subject to the Prudent Investor Act, or they may include the name of a specific advisor who was managing the accounts before the person died.

If there is room for any discretion whatsoever in the trust, be careful to document every decision. If the trust says you can distribute principal based on the needs of the beneficiary, document why you did or did not make the distribution. Don’t just hand over funds because the beneficiary asked for them. Make decisions based on sound reasoning and document your reasons.

Being asked to serve as a trustee reflects trust. It is also a serious responsibility, and one to be performed with great care.

Reference: nwitimes.com (July 18, 2021) “Estate Planning: Executors, executrix and personal representatives”

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Does Your Estate Have to Go Through Probate?

Probate is a court-supervised process intended to ensure the validity of a lasts will and to protect the distribution of assets after a person has died. If there is no last will, probate still takes place, according to the article “Probate—Courts protecting you after death” from Pauls Valley Democrat.

Every estate that owns property must be probated, unless the title or ownership of the property has been transferred before the person died by gift, if the property is owned jointly with another person, or if it passes by direct beneficiary designation. If a person died without a last will, probate still takes place, but the guidelines used are those of the state law where the person died.

In all cases, it’s better to have a last will and to decide for yourself how you want your assets distributed. For all you know, your state law may give everything you own to an estranged third cousin and her children, who are perfect strangers to you.

If you don’t have a last will, which is referred to as dying “intestate,” the court decides who is going to serve as your administrator. This person will be in charge of distributing all of your worldly goods and taking care of the business part of settling your estate, like paying taxes, selling your home, etc. Without a last will, the court picks a person, and it might not be the person you would have wanted.

Here are the basic steps in probating an estate, once the probate petition is filed:

Initial hearing. This is where the court affirms its jurisdiction and identifies all known heirs, and the personal representative is identified.

Letters Testamentary. This document is issued to the personal representative. This is a judge signed document proving to others, like banks and investment custodians, that the personal representative is legally permitted to handle your property and act on behalf of your estate. It’s similar to a Power of Attorney.

Probate. This court process collects, identifies, and accounts for all assets of a decedent. The representative must be mindful to document any money going in and out of the estate during the administrative process.

Written notice must be given to all and any known heirs. This can lead to relatives and others believing they have a claim on your estate and to then challenge the provisions of your last will with the court.

Notice is also provided to creditors, who have at least 60 days after notice is provided to make a claim on the estate. This timeframe varies by jurisdiction. In some jurisdictions, these notices are published in local newspapers, once a week for two or more consecutive weeks. Once they receive fair notice, general creditors who fail to file a claim lose their right to ever file a claim on the estate.

An estate plan is created with an eye to minimizing taxes, maximizing privacy for the family and heirs, and transferring ownership of assets with as little red tape as possible. Failing to properly plan can lead to a probate taking months, and in some cases, years.

Reference: Pauls Valley Democrat (July 1, 2021) “Probate—Courts protecting you after death”

Suggested Key Terms: Probate, Power of Attorney, Letters Testamentary, Creditors, Will, Personal Representative, Intestate, Estate, Title, Ownership

How Do I Sell a Home in an Irrevocable Trust?

A trustee who sells a home in irrevocable trust for a parent who died should know that generally, assets transferred to an irrevocable trust will be deemed a completed gift and will not be included in an estate for estate tax purposes.

Lehigh Valley Live’s recent article entitled “What happens to tax on a home sold from a trust?” explains that this means there wouldn’t be a step-up in basis to the fair market value upon the decedent’s death.

Remember that an irrevocable trust is a type of trust in which its terms can’t be modified, amended, or terminated without the permission of the grantor’s named beneficiary or beneficiaries.

Irrevocable trusts have tax-shelter benefits that revocable trusts to don’t.

However, an irrevocable trust can be created so that the settlor (the creator) of the trust keeps certain rights and powers, so that gifts to the trust are incomplete.

In that instance, the assets are included in the settlor’s estate upon death and obtain a step-up in basis upon the decedent’s death.

If the trust sells the asset in the trust, the trust may need to file Form 1041, U.S. Income Tax Return for Estates and Trusts, and the trust may be required to pay a tax.

If the trust distributes any income to the beneficiaries in the same tax year it receives that income, the income is passed through to the beneficiaries, and the beneficiaries must report it on the beneficiaries’ individual tax returns (Form 1040) and pay any tax due.

It’s generally a good idea to report and pay tax at the individual rate instead of at the trust or estate level.

That’s because the trust or estate will begin to pay tax at the highest rate at only $13,150. In comparison, an individual doesn’t pay tax at the highest rate until his or her income exceeds over $440,000.

Note that an irrevocable trust is a more complex legal arrangement than a revocable trust. As a result, there might be current income tax and future estate tax implications when using this type of trust. It’s wise to seek the assistance of an experienced estate planning attorney.

Reference: Lehigh Valley Live (Aug. 16, 2021) “What happens to tax on a home sold from a trust?”

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