FLORIDA ESTATE PLANNING AND PROBATE LAW BLOG

The Florida Estate Planning and Probate Law Blog is focused on recent federal and state case law and planning ideas.

Showing posts with label Special Needs Trust. Show all posts
Showing posts with label Special Needs Trust. Show all posts

SPECIAL NEEDS TRUST PLANNING

♠ Posted by Marc J. Soss in ,,,,,,,
Families with a special needs child/adult need more estate planning than families without. A Special Needs Trust (SNT) can play an important role in helping families plan. Issues to consider: Preserve public benefits while enhancing your child/adult's lifestyle. Many individuals with special needs obtain basic support from Supplemental Security Income (SSI) - a gateway to Medicaid and other critical programs. Since SSI covers only essential expenses, it is important to create a supplement for their lifestyle. But because SSI imposes limits on income and assets, gifts or an inheritance could adversely impact benefits eligibility. The Social Security Administration (SSA) does not count assets in an SNT as income for determining benefits eligibility because the assets are owned by the trust rather than the special needs beneficiary. Ensure assets will be used as intended. With an SNT, distribution of assets is directed by trust documents as well as SSA and IRS guidelines. By comparison, if you leave assets to an "able-bodied" child and ask that some of the funds be used for the sibling with special needs, the child may fail to honor your request, lose the assets to creditors or die prematurely and leave the funds to his or her own children. Allow others to contribute. If you establish the trust now, family members and friends can make gifts to the SNT. Anyone interested in leaving an inheritance or making a gift should be advised to direct bequests to the SNT. Maximize the benefits of a personal injury settlement. If the child/adult is the recipient of a sizable settlement, having the payout (often a lump sum plus a structured settlement) directed to a self-settled SNT offers several benefits. They will still qualify for public benefits, can use settlement funds for nonessential expenses and may enjoy the financial security of receiving regular payments for life.
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HOW YOU CAN PREPARE FOR YOUR ESTATE PLANNING MEETING

♠ Posted by Marc J. Soss in ,,,,,,,



While meeting with an estate planning attorney may not be on your bucket list of items to accomplish during your lifetime or among your New Year’s resolutions, it is not something that you should put off until you are on your death bed. Many individuals are intimidated by the prospect of planning their estate, however, in most cases it is much easier if you come prepared.



A typical Florida estate plan consists of the following important documents: Last Will and Testament; Revocable Trust (for many individuals); Power of Attorney; Health Care Surrogate; Living Will; and Pre-Need Guardian Declaration. The Revocable Trust (if one is created), Power of Attorney, Health Care Surrogate, Living Will, and Pre-Need Guardian Declaration are all designed to operate during your lifetime and provide guidance in how your personal and financial affairs are handled during your lifetime.  In contrast, the Revocable Trust and Last Will and Testament control how your property is distributed after your death.



When you meet with your estate planning attorney, they will guide you through the various choices and planning options available to you, so that your legal documents reflect your intentions. In order to make your time with your attorney most productive, the following is a list of things that you should discuss and prepare in advance of the meeting:



Create a list of your assets and liabilities. This list should include the value of your home (including mortgage), bank accounts, investment accounts, business interests, personal belongings with value (e.g., artwork or jewelry), insurance policies on your life and retirement accounts. For each asset on the list, include an estimate of its value or current balance, as well as whether you own the asset in your individual name or in joint name with another person, such as your spouse or children. This information will assist your attorney in guiding you through the planning process.



Agents During your Lifetime



Health Care Surrogate: Who will make medical decisions for you if you become incapacitated. The individual you name to serve as your health care surrogate will be empowered to make health care decisions for you, if you are unable to do so. Thought should be given to whom should be appointed for this position, along with a successor to him or her.



Power-of-Attorney: Who will take care of your financial affairs if you become incapacitated. The individual you name to serve as your power of attorney will act as your agent with regard to your financial matters during your lifetime. The power of attorney will become effective immediately after you sign it. Thought should be given to whom should be appointed for this position, along with a successor to him or her.



Living Will: End of Life Decisions. The individual you name to serve as your surrogate will act as your agent with regard to your financial matters during your lifetime. The power of attorney will become effective immediately after you sign it. Thought should be given to whom should be appointed for this position, along with a successor to him or her.



Administration Upon Your Death



Who has the ability and skill to serve as your Personal Representative(s). The individual or professional entity that you select to serve as the Personal Representative of your probate estate will be charged with settling your estate following your death.  Their duties will include collecting your assets, paying debts, expenses and any taxes that may be due and then distributing the remaining estate assets to your beneficiaries. With married couples, each spouse typically names the other to serve as their personal representative.  The next consideration is who or what entity will serve as their successor, if they fail to survive you or are unable to serve. You may name more than one individual to serve in this role, but under Florida law they must either be a family member or resident of the state. Most importantly, it is important that the selected individual(s) or entity are trustworthy.



Who has the ability and skill to serve as your Trustee(s). The individual or professional entity that you select to serve as the trustee of your Trust, upon your death or inability to serve, will be responsible to manage your financial affairs, while you are alive, and settling your financial affairs following your death.  Similar to a Personal Representative, their duties will include collecting your assets, paying debts, expenses and any taxes that may be due and then distributing the remaining estate assets to your beneficiaries. With married couples, both spouse’s typically serve as the trustees, while they are capable. The next consideration is who or what entity will serve as their successor, if they fail to survive or are unable to serve. You may name more than one individual to serve in this role, without any restrictions of family membership or resident of the state. Most importantly, it is important that the selected individual(s) or entity are trustworthy.



Items of Personal Property and to whom they should pass upon your death.  Create a written document which states how you would like to dispose of your personal items (wedding ring, jewelry, automobile(s), baseball card collection, etc.) at your death, even if you do not believe they have any monetary value. Without a separate written statement, your personal items will pass to a surviving spouse or be divided equally among your children or beneficiaries. The itemized list can potentially avoid family disputes over items with sentimental but no monetary value.



Plan for Distribution of your Estate. How, to whom and in what amounts you want your remaining estate assets distributed is the next important decision you will need to consider. Your assets can be distributed to any individual (family member, friend, acquaintance, etc.) or charity you may select. The assets can be distributed outright or over an extended time period (they reach a certain age, until the beneficiary needs or wants funds, etc.). There is no wrong decision as you are free to distribute your assets as you choose.
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SELECTING THE RIGHT TRUSTEE FOR YOUR TRUST

♠ Posted by Marc J. Soss in ,,,,,,,
Upon creation of a Revocable or Irrevocable Trust (a legal arrangement through which a trustee holds legal title to property for another person), you will need to appoint an individual or trust company to serve as its trustee (person or entity in charge). With a Revocable Trust, that individual is typically the creator of the Trust. With an Irrevocable Trust, this can be either an individual or individual (but not the creator). Regardless of the type of Trust created, it is important to appoint an individual or institution to serve if the named individual or institution is unable to continuing serving for the Trust. Selection of the right trustee can be crucial to making sure the intent of the Trust is fulfilled and your goals accomplished. Their responsibilities include making proper investments, paying bills, keeping accounts, and preparing tax returns. The main consideration when selecting a trustee is whether they are trustworthy and can manage the assets in the beneficiary's best interest. Regardless of whom may be selected, it is important to revaluate the selection every few years to ensure they are the right individual or entity for the job and still capable of fulfilling their obligations to the beneficiaries. The right individual or institution today may not be right tomorrow.
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CHANGES TO FLORIDA LAW IMPACTING YOU

♠ Posted by Marc J. Soss in ,,,,,,,,


FLORIDA'S HEALTH CARE SURROGATE STATUTES: Effective October 1st, an individual may assign the power to a surrogate to make health care decisions for that person even if the person is not incapacitated. If there is ever a conflict between the surrogate and the principal, the principal's decision is controlling as long as the principal has capacity. A principal may also amend or revoke the durable health care surrogate as long as the principal is not incapacitated. A principal can do this through a variety of different ways including written amendments or written revocation. Physicians still must discuss treatment and other important information with a person who is not incapacitated regardless of whether or not there is a surrogate. Parents now have an option to name a health care surrogate for minors under 765.2035(6). This will be useful if a parent is unavailable to provide consent for treatment for their child. This could come up in a variety of situations, such as when the parents are traveling without their minor children.

FLORIDA UNIFORM TRANSFERS TO MINORS ACT:  Effective July 1, 2015, Florida allows custodianships to last until the age of 25. Florida statute 710.123 now allows for an age of 25 to be set as the termination date when the UTMA account is created. A Florida custodianship can be created if the custodian, minor, or transferor lives in Florida or if the property protected by the custodian is in Florida.  Florida Statute 710.123(2) was added, which grants minor beneficiaries of UTMAs with a termination age of 25 the ability to withdraw the funds at 21. However, there is also the ability to limit the right to withdraw to a certain duration so that if the beneficiary does not use their right within the specified time, then the assets cannot be withdrawn until the age of 25 when the UTMA terminates. This time period is generally 30 days.


FLORIDA GUARDIANSHIP LAW: Under prior law, durable powers of attorney were suspended when anyone initiated judicial proceedings to determine incapacity of an individual or to have a guardian advocate appointed. This suspension lasted until the petition was dismissed or withdrawn. The new law provides that certain family members (child, parent, spouse, or grandchild) will no longer be automatically removed from being agents upon the incapacity of the principal, and the powers provided in the document will continue. The new statute also has a process to suspend a power of attorney that is held by a family member in case that family member is abusing their power.
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UPDATE YOUR FLORIDA POWER OF ATTORNEY AND HEALTH CARE DESIGNATIONS REGULARLY

♠ Posted by Marc J. Soss in ,,,,,,,

Most individuals have their estate planning documents prepared and then put them away on a shelf. During that time period the laws pertaining to them can change many times. As a result, it is very important to review your Florida Health Care Surrogate and Powers of Attorney at least every three (3) years. 
Your Health Care Surrogate appoints a trusted person to make medical decisions on your behalf in the event an illness or injury renders you unconscious or otherwise incapacitated. Your Power of Attorney appoints an individual to make financial decisions or execute transactions on your behalf. It is important to review these documents to make sure that the individual you previously entrusted to handle affairs on your behalf can still be trusted, they are still around and involved in your life, or they may be deceased. 

Even if nothing has changed since you signed your Florida Health Care Surrogate and Powers of Attorney, it’s a good idea to sign new documents every few years. Because of liability concerns, some financial institutions and health care providers may be reluctant to honor powers of attorney that are more than a few years old.
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CHEAP WILLS CAUSE MAJOR HEADACHES

♠ Posted by Marc J. Soss in ,,,,,,,,
Ever wonder why you can purchase a computer program, for under $40, and be able to create an entire estate plan? The answers is that most individuals are looking for bargains. However, being cheap when it comes to your estate planning may cause huge problems when you die.  Modern family structures (second and third marriages, children with multiple spouses, etc..) have also added complexity to the drafting of estate plans.   A person should seek out the advice of a competent Florida Estate Planning attorney when having their estate plan drafted. 
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COMMON FLORIDA ESTATE PLANNING MISTAKES

♠ Posted by Marc J. Soss in ,,,,,,,,,

Most individuals, despite the best of intentions, fail to put their Florida estate affairs in order prior to death or incapacity. Without proper planning a Florida residents best intentions will not be enough to accomplish their Florida estate planning objectives. As a result, the ultimate distribution of their Florida probate assets will be pursuant to the Florida Statutes. The following list is the most common Florida estate planning mistakes made by Florida residents: 

Failing to plan. The biggest mistake is failing to create a Florida estate plan. Without a Florida estate plan, the Florida Statutes will determine where your assets will be distributed at death. This is probably not what you want to happen to your assets. In addition, without a Florida estate plan, you have no method to name a guardian for minor children or who will act for you if you become incapacitated.

Doing it yourself.  You will be disappointed if you believe that you will save money by using a do-it-yourself online estate planning preparation service or by writing your own documents. Poorly drafted Florida estate planning documents documents will only cost you or your heirs additional money when they are needed most. The problems created by not getting competent Florida legal advice will not be borne by the person creating the Florida estate planning documents but their children and grandchildren. 

Not planning for disability. A properly drafted Florida estate plan will specify what will happen to your assets when you become incapacitated. It is important to have documents, such as a power of attorney and health care proxy, that appoint someone you trust to act on your behalf if you can't act for yourself.  

Not checking your beneficiary designations. You should periodically review your insurance policy and retirement plan beneficiary designations to make sure they correct. Insurance and retirement accounts do not follow your Will or Revocable Trust and are distributed according to the forms you fill out with creating the account. You need to make sure you have named a beneficiary and the beneficiary is who you want it to be.

Not reviewing the plan. Once you have created a Florida estate plan it is important to keep it up to date. Circumstances change over time and your estate plan needs to keep up with these changes. Major changes that may affect your plan include getting married or divorced, having children, or experiencing an increase or decrease in assets. Even if you don't have any major changes, you should review your plan periodically to make sure it still expresses your wishes.

For more information on updating your plan,
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THE IMPORTANCE OF SELECTING THE RIGHT ESTATE PLANNING DOCUMENTS

♠ Posted by Marc J. Soss in ,,,,,,,,,
When creating a Trust it is important to understand the differences between the different types. Similar to a Power of Attorney or Health Care Surrogate they can range from simple to extremely complex.  Most individuals are familiar with the terms "Family Trust" or "Marital Trust," but there are many different types that can be utilized as a part of your estate plan. The only rule is that if the trust benefits a spouse, “you must cause the trust to be included in the second spouse’s estate, for estate-tax purposes.”  If it is not included in the second spouse’s estate, the assets would have the same basis as at the first spouse’s death. 

Trust options include, a Credit Shelter Trust, Special Needs Trust, Elective Share Trust, Trust for non-US spouse, Life Insurance Trust and Charitable Trusts.

Credit Shelter Trust.  A Trust created upon the first spouse's death to shelter a portion or all of their estate tax exemption amount.  This makes certain the estate-tax exemption is in place.

Special Needs Trust. A Trust established for a special needs child or adult to protect the assets from government attachment and allow the individual to maintain all of their government benefits.

Elective Share Trust.  A Trust established, upon the death of the first spouse, which provides the surviving spouse with the required 30% share of the deceased spouse's estate and ensures the assets pass, upon the death of the surviving spouse, to their designated beneficiaries of the predeceased spouse. Typically utilized in the case of second marriages.

Trust for Non-US Spouse. A non-US citizen spouse is not entitled to the unlimited marital deduction. As a result, to protect the assets that would pass to them upon the death of the first spouse, the funds would pass into this Trust. The assets would then be held for their lifetime or distributed to them should they become a US citizen.  

Irrevocable Life Insurance Trust.  Life insurance can help beneficiaries pay estate taxes. The death benefit is paid to a Trust instead of an estate or individual and stays outside the estate’s taxable value. 

Charitable Remainder Trusts.  “Assets can pay to a client for life, to children for life, and to grandchildren for a period of time, and then go to a charity.”
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