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What is a Power of Attorney?

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An integral part of estate planning is implementing Power of Attorney (POA) documents. All states recognize powers of attorney, but rules and requirements will differ from state to state. The document gives one or more individuals the legal authority to act as your agent or proxy on your behalf. Depending on which POA you choose, the agent’s power may be limited to a particular activity, such as a real estate sale, or cover broader applications.

Permanent and Temporary Powers

A Power of Attorney may give permanent or temporary authority and be invoked immediately or be activated by a future event, such as mental or physical disability. The latter is known as a “springing” Power of Attorney. Powers of Attorney may be rescinded, but most states will require written notice of revocation to the named individual or entity.

Durable, General, and Non-Durable Powers

Some Powers of Attorney are nondurable for the sake of convenience, especially in the case of a single transaction, such as a property sale. Your agent may conduct the sale of a boat or a home described in the POA document. If you are traveling abroad or know you can’t transact this business, a nondurable power of attorney can be greatly beneficial. Once the time period or transaction is complete, the nondurable power of attorney terminates.

A general power of attorney permits the agent to deal with any matters on your behalf that state law allows. Under such an agreement, the proxy may sign checks, handle bank accounts, sell property, manage assets, and file taxes when you are unable. This POA has a wide latitude of authority. Therefore, there needs to be coordination between you and your agent to ensure your best interests are always represented.

The better-known Powers of Attorney are durable and take effect upon incapacitation. The word “durable” means the powers will remain intact even when you can no longer manage your affairs. There are two types of Durable Powers of Attorney. One handles financial matters, and the other manages medical affairs, often called a healthcare directive.

Avoiding Guardianship and Conservatorship

Without these Powers of Attorney in place, a court may need to appoint individuals to act on your behalf upon your incapacitation. Depending on your state laws, these individuals are known as conservators, guardians, or committees. This type of court intervention can be expensive, time-consuming, and is a public proceeding. Most people prefer to keep their matters private by implementing powers of attorney documents in their estate plans to avoid conservatorships.

Financial Power of Attorney

This durable power of attorney permits an agent to manage your financial and business affairs, similar to a general power of attorney. When you become incapable of managing your affairs, the agent’s responsibility is to carry out your wishes to the best of their ability. If the financial power of attorney is also a beneficiary of your estate, they must act with great care to avoid misinterpretation of intent. This document is not just for seniors. An unforeseen illness or unfortunate accident can render a healthy, younger individual incapacitated and in need of financial assistance.

Healthcare Power of Attorney (HCPA)

An HCPA is also known as a healthcare proxy and permits a designated person or agent to make healthcare and medical decisions according to your specific instructions or their best understanding of your wishes. Again, consenting to an HCPA agent for medical care decisions is not only relevant to seniors. An unforeseen illness or accident can render a healthy, younger individual incapacitated, which is why an HCPA is a crucial estate planning document.

The best way to establish powers of attorney is to locate a qualified estate planning attorney. They can help you assess which power of attorney is necessary for your unique situation. They also understand the criteria for identifying the individuals or agents to represent your interests. Delegating general and limited powers to agents can create family strain during the planning stages. An estate planning attorney is familiar with the nuances of these family issues should they arise and how to move forward for all concerned. The biggest benefit of having these matters settled before incapacitation or death is allowing a family to care or grieve for their loved one instead of being bogged down in logistics.

This article offers a summary of aspects of estate planning and elder law. It is not legal advice and does not create an attorney-client relationship. For legal advice, contact our Ruston, LA office by calling us at (318) 255-1760.

Will Writing for Blended Families

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Many American families have stepchildren today, and it is not uncommon for them to receive the same treatment as full biological children when it comes to inheritance. This is particularly true where stepchildren are part of a blended family from an early age. Biological siblings may have different feelings about a stepchild inheriting what they perceive as theirs as a natural heir. A surviving spouse may have the same feelings about their children’s inheritance.

Transferring an Inheritance

Estate planning for blended families is key to a smooth inheritance process, especially since probate rules and intestate succession law do not treat step and biological children the same when it comes to inheriting. Open communication about your estate plan is also helpful in managing heirs’ expectations.

Trying to be equitable among your heirs can be tricky, and relying on your spouse and children to work things out after you are gone is not a good plan. To create a solid plan, carve out some quiet time and identify your most important estate planning goals, including distributions of all assets.

These assets include your house, car, jewelry, other personal items, investments, retirement plans, brokerage accounts, and insurance. If you opt to gift items before your death, be certain you no longer include the asset or property in your estate plan. Even items of little financial value may be an expected inheritance from a child. The goal is to reduce tensions among family members.

Creating a Trust

Share your ideas with your spouse and agree on a basic approach, including scenarios for who might pass away first. Leaving property outright to a surviving spouse may not be the best approach as it does not ensure the children, step or otherwise, ultimately benefit. Many blended family systems use a trust to provide for a spouse while leaving their property to their children.

Will Contests

Stepchildren can contest a will to be treated as a full biological child if they are named in a prior will. A will that was written before a remarriage creates an opportunity to contest. Note that your stepchildren have very little chance of inheritance without a will. Dying without a will or intestate prevents your stepchildren from inheriting in all but a very few states. In states where they are eligible, stepchildren will be considered last in line to inherit because of the laws of intestate succession.

A stepchild named in a previous will can challenge on the grounds of undue influence, lack of capacity, mistake, fraud, or coercion. If the will being contested is thrown out of probate, estate inheritance reverts to the next most recent will. A stepchild must be named in at least one prior will to have “standing” to challenge the will. If all wills are invalidated, the state will treat stepchildren as intestate heirs.

Separate Wills

Even if a biological parent, in concert with a stepparent, makes their wills simultaneously and identically to leave the estate to one another, a surviving spouse can change their will upon the death of the other. It’s possible they may then exclude the stepchildren. But, if the original will left equal shares to biological and stepchildren, a stepchild could contest to have the most recent will invalidated.

Reciprocal or Mutual Wills

Most states do not recognize reciprocal or mutual wills as a binding contract. A mutual will can only be enforced if it specifically constitutes a binding contract that can’t be changed. It’s far more reliable to create a trust to care for a surviving spouse and your children’s inheritance than depend on mutual wills and goodwill after you’re gone.

While contesting a will is permissible under certain circumstances, there is no guarantee it will be successful. To ensure your legacy wishes are met, consult with a qualified estate planning attorney who understands the intricacies and nuances of estate planning for blended families.

This article offers a summary of aspects of estate planning and elder law. It is not legal advice and does not create an attorney-client relationship. For legal advice, contact our Ruston, LA office by calling us at (318) 255-1760.

Costs Associated with Second Marriages

Costs Associated with Second Marriages

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Most people wouldn’t think of losing their assets to pay for their new spouse’s serious illness when they get married for a second time (or more). But that could happen. Costs for long-term care have been rising significantly for years and continue to grow. Studies show that 70% of Americans will need some form of long-term care. Which can last for three years or longer. It is important to be aware of the costs associated with second marriages.

Paying for Long-Term Care While Protecting Assets

If one spouse becomes ill, the assets of both spouses are, by and large, required to be spent on the ill spouse’s care before Medicaid benefits become available. This could be a big problem. Especially if the money that the healthy spouse had saved for their children’s inheritances goes to pay for the ill spouse’s care instead.

With careful planning, this need not happen. Making financial arrangements in advance can protect the estates of both spouses to ensure they can retain the assets they brought with them to the marriage.

Medicaid Community Spouse Resource Allowance

Medicaid rules allow the healthy spouse to keep an allowance of a certain amount for their benefit. This is known as the Medicaid Community Spouse Resource Allowance (CSRA). But many find that the CSRA is too small to permit the healthy spouse to maintain their standard of living, pay for their retirement, and still have something for their children to inherit.

Any planning or shifting of assets must be done very carefully and only after consulting with an attorney experienced with Medicaid planning. Medicaid heavily penalizes transfers of assets made as gifts.

Medicaid Planning

Assets can be protected, though, by using strategies that are permitted by the Medicaid rules. Some, or all, of the healthy spouse’s assets could buy a Medicaid-compliant annuity. This would provide an income stream for the healthy spouse that will not be deemed available to pay for the ill spouse’s care.

In turn, the assets of the ill spouse could be transferred to people they trust, such as a trustee, an agent for financial affairs, a family member, or a beneficiary. That kind of transfer may be subject to a penalty, depending on when the transfer is made and when long-term care benefits are received. Planning well in advance, at least five years, helps mitigate Medicaid penalties.

There are also long-term care insurance products available to cover the costs of long-term care services. Which everyone should consider when newly married and while they are still reasonably young and healthy.

The best strategy of all, though, is to consult an attorney experienced with Medicaid as soon as possible. The sooner you start planning, the more options you have and the more money you can save. Contact us today to schedule a consultation to learn how we can help you prepare for your future.

Our law firm is dedicated to informing you of issues affecting seniors who may be experiencing declining health. We help you and your loved ones prepare for potential long-term medical expenses. Also, the need to transition to in-home care, assisted living care, or nursing home care.

This article offers a summary of aspects of estate planning and elder law. It is not legal advice and does not create an attorney-client relationship. For legal advice, contact our Ruston, LA office by calling us at (318) 255-1760.

Caregiving Stress Among the Sandwich Generation

Caregiving Stress Among the Sandwich Generation

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The sandwich generation is people who are caring for their aging parents along with their own children. You probably feel sandwiched between the older generation and the younger one. It is more likely that you feel pulled in multiple directions while trying to meet the needs of the two generations of family members. According to the Pew Research Center, about a quarter of US adults in 2022 are part of this sandwich generation. It is important to be aware of caregiving stress among the sandwich generation.

Though multi-generational care has existed for millennia, we are seeing an increase of the middle generation simultaneously caring for the older generation and the younger generation. This is due to people living longer and needing more help later in life and the middle generation waiting longer to have children. The result is instead of the older generation providing help with the youngest generation, they are needing help while the youngest generation is too young to care for themselves. This situation puts extra burdens and pressures on the middle generation.

Financial Cost to the Sandwich Generation

Caring for two generations of family members comes with costs, including financial costs. Even if your parents have enough money to meet their needs, you may have to forfeit work time to give unpaid time to caring for their needs and your children’s needs. Most appointments, for seniors and minor children alike, are during business hours, which means you have to take time away from work to shuttle family members to and from appointments as well as other activities.

Some members of the sandwich generation have had to put their careers on hold so they can simultaneously care for older and younger relatives. Some have had to give up full-time jobs and take part-time jobs. Reducing your income early or midway through a career can have long-lasting negative effects. You will have less money saved for retirement, large purchases, and emergencies. This is also true for having enough money to cover short-term expenses.

Emotional Cost to the Sandwich Generation

Raising children is a big commitment and can add enough stress to your life as it is. Add to that the responsibility for an elderly parent and possibly a job and you quickly run out of time for anything else, including you. This can mean that you give up taking proper care of yourself. You may end up forfeiting your social life, hobbies, exercise, or even much-needed sleep. These sacrifices can erode your ability to effectively deal with the stressful situation you are in.

Solutions for the Sandwich Generation

Juggling the time, energy, and economics of caring for two generations of relatives can seriously deplete your reserves. Finding ways to meet each person’s needs, including your own, is crucial to making the situation work. Though each family’s situation is unique and will likely require a unique solution, here are some things to consider trying that could help.

  • Don’t be afraid to ask for help, whether it is from another relative or a family friend.
  • Look into places you can leave your elderly relative for a few hours or a whole day, such as adult daycare, a community center, a public library, or a community recreation center.
  • The same holds true for your children. Look for daycare options and after-school activities for them.
  • Plan as far in advance as possible for scheduling conflicts and financial expenses.
  • Get your elderly relative to do their estate planning and elder law planning at least five years before they may need long-term care. Doing this can allow them to qualify for Medicaid or other government benefits when they will need them the most. Such benefits could help pay for long-term care needs, thus freeing up your time for other things.

Even though you may see taking care of your family members as your highest priority, keep in mind that you need to take care of yourself as well. In the same way flight attendants tell passengers to put their oxygen masks on before helping others with their masks, you can’t take care of others if you are unable to take care of yourself.

Our law firm is dedicated to keeping you informed of issues that affect seniors who may be experiencing declining health. We help you and your loved ones prepare for potential long-term medical expenses. Also, the need to transition to in-home care, assisted living care, or nursing home care.

This article offers a summary of aspects of estate planning and elder law. It is not legal advice and does not create an attorney-client relationship. For legal advice, contact our Ruston, LA office by calling us at (318) 255-1760.

Estate Planning for LGBTQIA+ Communities

Estate Planning for LGBTQIA+ Communities

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To protect your assets, your wishes, and your loved ones, estate planning is crucial regardless of gender identity or sexual orientation. Estate planning for LGBTQIA+ Communities you to designate your partner, whether you are married or not, as the person who can make decisions for you if you are unable to make them yourself. This offers protection against discrimination by people who may be reluctant to recognize your relationship. You can also provide financial support for your partner in your estate plan.

How RFMA Affects Same-Sex Couples

On December 13, 2022, President Biden signed the Respect for Marriage Act (RFMA). The RFMA requires the recognition of valid same-sex and interracial civil marriages by the US federal government and all US states and territories. Note that this law doesn’t apply to unmarried couples. However, unmarried couples can still get partnership decision-making benefits and privileges by way of a different type of estate planning. However, you define your partnership, creating a valid estate plan to protect yourselves is possible and important.

With proper estate planning, married same-sex couples may receive all federal and state benefits of marriage, including unlimited marital deductions for federal estate and gift taxes. By using other legal strategies, unmarried same-sex, transgender, or non-binary couples who can’t receive marital tax benefits can still ensure they will receive the legal right to inherit each other’s assets. They will also be able to make financial and healthcare decisions for each other.

Trusts for the LGBTQIA+ Community

Whether you’re in a marriage or a similarly committed relationship, a revocable living trust allows you and your partner to nominate each other as trustees of your respective trusts. This will allow you and your partner to manage each other’s financial affairs if one of you becomes incapacitated. A trust is also the best way to ensure your loved one receives the assets and privileges you want them to have. If a same-sex, transgender, or binary couple has children, in which one parent is a biological parent, a trust allows the biological parent to name the other parent as guardian of the children while they are minors if the biological parent were to become incapacitated or die.

Durable Financial Powers of Attorney for the LGBTQIA+ Community

A durable financial power of attorney is an easy way to designate your partner as the person who may handle your financial affairs if you become incapacitated. Durable financial powers of attorney documents vary somewhat from state to state, so it’s important to review and modify this document if you move to a different state.

Advance Health Care Directives for the LGBTQIA+ Community

Executing an advance health care directive allows you to specify medical treatments you want or don’t want. It also allows you to name a person, or persons, to make health care decisions for you if you are unable to make them yourself. An advance health care directive can prevent your biological family members from interfering with your partner’s ability to make health care decisions for you.

Including a HIPAA form with your advance health care directive is important. The form permits health care professionals to disclose pertinent health information and medical records to your partner.

Wills for the LGBTQIA+ Community

A will allows you to name a person to act as executor of your estate after you pass away. An executor is tasked with producing an inventory of your estate, paying all credible debts, paying remaining taxes, and distributing assets to heirs. In your will, you can indicate to whom each asset should be allocated.

If a same-sex, transgender, or binary couple has children, in which one parent is a biological parent of the children, a will addresses guardianship of the children if the biological parent dies while they are still minors. This can help prevent a custody battle between the surviving parent and the children’s biological parent’s family.

Before finishing your estate plan, you should make sure you tie up any loose ends from any previous committed relationships. If you were in a legal union before same-sex marriage was an option, you might be subject to updated state laws that now consider your previous legal union as a lawful marriage. Some states have automatically converted registered civil unions or domestic partnerships into legal marriages.

Prior to the US Supreme Court’s Obergefell v. Hodges ruling in 2015, some same-sex couples married in states that recognized their marriage but then moved to states that did not recognize their marriage. Some of these couples may have split up without legally dissolving their marriage, believing it was no longer valid in their new home state. Many LGBTQIA+ people are unaware they are still married to former partners. This can lead to the possibility of future claims against their estate from a former partner.

Estate Planning is Important for Everyone

Estate planning can be especially beneficial for non-married LGBTQIA+ couples in a committed relationship. If you and your partner have not properly executed adequate estate plans, state laws will, by default, grant rights to biological family members. This may contradict your wishes.

Members of the LGBTQIA+ community have unique needs that can potentially make estate planning more nuanced. We are happy to meet with you to discuss how to properly document your wishes regarding the inheritance of your assets, who can make decisions for you if you’re unable to, and who should care for your minor children if the need arises.

This article offers a summary of aspects of estate planning and elder law. It is not legal advice and does not create an attorney-client relationship. For legal advice, contact our Ruston, LA office by calling us at (318) 255-1760.

Providing Support for Adults with Disabilities

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The number of Americans with disabilities is growing, and so is providing support for adults with disabilities. Parents planning for the future well-being of their adult children is a responsive, ongoing process. A Journal of the American Medical Association reports the life expectancy of adults with Down Syndrome has increased from 25 in 1983 to 60 in 2020. The same study cites that those with cerebral palsy, the most common motor disability of US children, may often live into their 50s.

The ever-increasing life expectancies of adults with disabilities mean that comprehensive special needs planning requires short and long-term planning to lay the foundation of five key elements to ensure a successful support system:

  1. Vision
  2. Living Accommodation
  3. Government Resources
  4. Private Financial Resources
  5. Legal Needs

Vision

How do you envision your adult child’s life after you’re gone? As you define and refine your vision to the extent possible, you should involve your child in the process. It’s important to focus on the strengths and abilities of the adult child, not just the challenges of their disabilities. This involvement helps promote self-esteem and independence to the highest degree possible.

Letter of Intent (LOI)

Although this letter is not a legal document, it provides key instructions and information about your child’s routines, preferences, and wishes. The LOI can and should be extremely detailed, including identifying caregivers, medical information and providers, and other individuals in their lives who may be a good fit to care for or support your child. Reviewing and updating the letter at least every two years or when significant changes occur is good practice.

Supported Decision-Making

If your adult child is capable and in charge of decision-making, selecting a team of trusted advisors is still important. This team may include family members, professionals, friends, and community services who all participate in your adult child’s success. The National Resource Center for Supported Decision-Making has information about the right to make choices by state.

Living Accommodation

Where your adult child will live depends on several factors, including their disability type and available financial resources. If your child currently lives in your home, don’t wait until you die to have them move into and experience a new home. Moving can be a tough experience while you are alive but catastrophic when you are gone.

Housing Options

  • Your home – It’s great if you can leave your residence to your child in a special needs trust as long as it also contains enough money to cover ongoing property maintenance, taxes, and other costs.
  • Another home – You might purchase a townhouse or condo for your child and hold the property in a special needs trust.
  • Section 8 vouchers – This federal program provides housing in the community to low-income people; however, wait lists can be long.
  • Group homes – Adults with disabilities can use private money or Medicaid payments to live in a group home. In some cases, this living situation also has counselors and other staff that can help residents live as independently as possible.
  • If assisted living is a requirement, a special needs attorney can help identify options.

Government Resources

Creating a schedule of the individuals, services, and organizations that have become your adult child’s support system. And how they are financed makes your vision for your child a reality. You can be creative, and pair speech, physical, and occupational therapists, as your child’s abilities develop more fully. Much of your child’s resources throughout adult life will depend on the continuation of government programs that provide the support and services they need.

Government Assistance Programs

It’s wise to involve a special needs attorney to explain how to properly manage these resources. In order to preserve your child’s access to government programs.

A person with developmental disabilities can often access the Supplemental Security Income (SSI) program. Which guarantees a minimum income to qualifying low-income recipients. A representative payee can assist those individuals who are unable to manage their finances.

To be eligible for Medicaid benefits, the recipient must have a limited income and assets (assets not protected by ABLE or Special Needs Trust accounts) and covers a broad range of health care costs.

Maintaining eligibility standards and managing these benefits may be more than your adult child with disabilities can manage. Identifying a reliable candidate and creating the structure that legally permits them to facilitate these programs is crucial to your child’s future well-being.

Many US military personnel have experienced serious physical and mental health problems since serving in Iraq and Afghanistan. A large percentage of these service members are unmarried and under thirty. For parents of veterans with disabilities, look into the Veterans Disability Compensation program.

There is also a benefits program for veterans with permanent disabilities, which is needs-based. The Veterans Disability Pension has eligibility requirements based on your adult child’s assets and income. A veterans specialist or disability attorney can create a special needs trust to ensure your adult child can qualify.

Many other government programs are available to help your adult child with disabilities have a successful future. A special needs attorney can explain more about discrimination protections outlined in the Americans with Disabilities Act (ADA), the Affordable Care Act (ACA), the Ticket to Work Program, and more.

Private Financial Resources

Parents of children with special needs have additional planning requirements to ensure the safety and success of their child’s life when they are no longer alive to oversee that child’s well-being. Creating a realistic strategy is key to success. Begin with creating a general framework with a special needs lawyer and then fill in the financial details. Financial resources may include life insurance policies and other investment strategies.such as funding an Achieving a Better Life Experience (ABLE) account. The cash flow these accounts create will allow your adult child to continue living a life of safety, purpose, and impact after you are gone.

Additionally, your lawyer can create a special needs trust appropriate for your family’s financial situation and child’s needs. This trust type provides additional monies to your adult child without them losing eligibility for government benefits. There are various special needs trust types, including:

  • Third-Party Special or Supplemental Needs Trust (SNT)
  • First-Party Special Needs Trust or Self-Settled SNT
  • Pooled Special Needs Trusts

Legal Needs

There are several legal tools that parents can use to create a lifelong plan for their adult child with disabilities, including:

  • Guardianship
  • Special Needs Trusts
  • Advance Health Care Directive
  • Durable Power of Attorney

It’s important to consult with an attorney who has experience with special needs and disability law. In order to determine the best option for your adult child’s future specific needs and situation.

Conclusion

Planning for your child with special needs is customized to your family circumstances and your child’s unique needs. Legal guidance is critical because missteps can lead to ineligibility for crucial government benefits programs. To provide for your child’s future success after you are gone, speak to a special needs or disability attorney and begin your proactive planning.

This article offers a summary of aspects of estate planning and elder law. It is not legal advice and does not create an attorney-client relationship. For legal advice, contact our Ruston, LA office by calling us at (318) 255-1760.

 

Common Mistakes in Special Needs Planning

Common Mistakes in Special Needs Planning

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Statistics show that 26% of American adults live with some form of disability–  more than you might think. However, federal and state benefits, such as Medicaid and Supplemental Security Income (SSI), are available for persons with special needs. These benefits are “needs-based,” which means the amount of assets and income the beneficiary can have are very limited.

When planning for a loved one with special needs, you must ensure they don’t receive money or other assets thatcould cause disqualification from their government benefits. Here are some common mistakes in special needs planning.

Gifts

Gifts of money or assets from well-intentioned family members or friends can disqualify a loved one with special needs from government benefits. This would cauwe their countable assets to exceed the acceptable limit. After getting disqualified, it can be difficult to requalify for benefits. It’s better to have gifts go to a special needs trust or a similar financial planning tool set up for the benefit of the recipient.

Disinherit

Some parents believe if they disinherit their child with special needs, that child’s siblings will help take care of them for the remainder of their life. This plan puts a lot of responsibility on the other siblings and can fall apart for many reasons. If the inheritance is in the siblings’ names, it could be lost due to divorce, lawsuits, bankruptcy, or irresponsible spending. Additionally, Louisiana’s forced heirship laws can foil such a plan. Forced heirship requires that a special needs child (or grandchild in some circumstances) must received a certain amount of a decedent’s estate after he or she dies.

Lack of a Trust

Failing to create a special needs trust for your loved one with special needs is a common mistake.  Government benefits are used for basic living expenses, such as housing, food, and medical care. Therefore, a person with special needs usually won’t have enough money for other expenses, such as travel and hobbies. Creating a special needs trust can make funds available for expenses that government benefits don’t cover.

Crowdfunding

Similar to gift-giving from family members and friends, donations from a crowdfunding campaign can negatively affect your loved one with special needs. By pushing their countable assets over the acceptable limit. If you want to create a crowdfunding campaign to benefit your loved one with special needs, find a way to keep the funds out of your loved one’s name. Again, a special needs trust could be a good option.

Consult an Attorney

The best way to avoid making mistakes that could cause your loved one with special needs to lose their government benefits is to consult with an attorney experienced in elder law and estate planning. They will be able to help you find the best solution for your particular situation.

Our law firm is dedicated to informing you of issues affecting persons with special needs. We help you and your loved ones plan for the best possible future. Contact us today to schedule an appointment.

This article offers a summary of aspects of estate planning and elder law. It is not legal advice and does not create an attorney-client relationship. For legal advice, contact our Ruston, LA office by calling us at (318) 255-1760.

The Different Types of Trusts

The Different Types of Trusts

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It may seem that trusts only belong to wealthy people, but they are common and useful tools for estate planning of all sizes. They are used to manage and protect assets, control the distribution to beneficiaries, and continue family legacies. There are different types of trusts.

Types of Trusts

There are many types of trusts, but they all establish a financial arrangement between three parties: the settlor(s), the trustee(s), and the beneficiary(ies). The person creating the trust is known as the settlor. (In other states, the creator of the trust can be referred to as the trustor, grantor, or trustmaker.) Trusts can be created by more than one person or entity. The trustee manages the trust and disperses income or principal from the trust according to specific terms. The trust is for the benefit of one or more beneficiaries, which can be people or entities, such as charities.

Benefits of Trusts

Trusts provide many benefits. One of the key benefits is transferring assets from the owner to the trust fund, so assets do not have to go through a probate court before reaching the beneficiary. This allows the beneficiary to receive the assets faster and generally privately. Probate proceedings can last for months, unnecessarily delaying the dispersal of assets. Since court records can be viewed by the public, in many circumstances assets become public knowledge.

A person can establish a trust that they benefit from during their lifetime. Trusts can also be used to hold and disperse assets to beneficiaries who are minors, disabled, or otherwise unable to manage the assets. Some trusts are used to remove countable assets from a person who is planning to apply for Medicaid benefits. Assets intended for heirs may prevent them from qualifying for Medicaid coverage. Trusts created for this purpose are usually established at least five years before the settlor plans to apply for Medicaid.

Since estate taxes and gift taxes can eat into the number of assets a beneficiary receives, trusts provide a way to avoid or lessen these taxes. Trusts can protect assets from creditors, legal claims, and family disputes regarding how your assets should be dispersed. You may have additional reasons to create a trust for your assets.

Types of Trusts

There are two types of trusts:  living and testamentary. Trusts may be revocable or irrevocable. They can be funded during or after the settlor’s life, depending on the purpose of the trust. These common trusts are described as follows:

Living Trust

A living trust  or inter vivos trust  is set up while the settlor is still alive. The assets that are held in the living trust are typically available to the settlor during his or her lifetime. This type of trust is helpful if the settlor wants to have access to the assets but wants to give clear direction on how they will be distributed after death.

Testamentary Trust

A testamentary trust is a trust that is contained within an individual’s last will and testament. It is generally set up to benefit the settlor’ descendants. It goes into effect when the will is probated by a probate court judge.

Revocable Trust

A revocable trust is created while the settlor is still alive and wishes to continue to benefit from the assets that the trust will hold. Often the settlor, trustee, and beneficiary are the same person while that person is still alive. After the settlor dies, a successor trustee assumes management of the trust for the benefit of the beneficiaries designated in the trust. The settlor can change or terminate a revocable trust while her or she is still alive.

Irrevocable Trust

An irrevocable trust cannot be changed or terminated during the settlor’s lifetime. Because the assets held in an irrevocable trust are off limits to the settlor, this type of trust helps protect assets from creditors and taxes. It is often used when planning for Medicaid or government benefits. It may also be used to limit access to minors and adults with special needs to distribute funds at specific times or over their lifespan.

Trusts help individuals and businesses protect and direct their assets to beneficiaries while keeping those assets out of probate court. An experienced estate planning attorney can help you create the trust, or trusts, that will best suit your family’s needs and financial goals.

This article offers a summary of aspects of estate planning law. It is not legal advice, and it does not create an attorney-client relationship. For legal advice, Contact our Ruston, LA office by calling us at (318) 255-1760.

The Estate Planning Process

The Estate Planning Process

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An estate planning process is a multifaceted process that involves several documents spelling out a person’s wishes. During the process, you can name people to make financial decisions on your behalf when you are unable. You can designate beneficiaries for your assets. You can also express your wishes for what type of medical care you want if you are severely ill or injured and unable to communicate.

Since each person’s situation is unique, every estate plan is different. Here are the basic steps in the estate planning process to get you started. Working with an estate planning attorney will help you create and implement a plan that works for your specific needs.

Inventory Your Assets

We often don’t realize how many tangible and intangible assets we have until we start counting them. Before meeting with an estate planning attorney, create an inventory of everything you own that has significant monetary or family value.

Your tangible assets may include:

  • Real estate, both residential and commercial (unless owned by your company)
  • Vehicles, such as cars, motorcycles, or boats
  • Collectible items, such as artwork, antiques, coins, stamps, or trading cards
  • Jewelry and other valuable items

Your intangible assets may include:

  • Checking and savings accounts
  • Investments, such as mutual funds, stocks, bonds, or certificates of deposit
  • Retirement plans, such as a 401(k) or an IRA
  • Life insurance policies or health savings accounts
  • Ownership shares in a business

After you have created an inventory of your assets, determine each asset’s value. If you are unable to attach a dollar amount to an asset, you can determine its worth by how much your heirs will value it or have it appraised. By giving each asset a value, you will be able to evenly divide your assets among your heirs.

Determine Your Family’s Needs

One important aspect of estate planning is making sure your dependents’ needs will be met after you’re gone. Life insurance can be a good way to ensure the necessary funds to support your loved ones. Work with a financial advisor to be certain you have enough life insurance to cover your dependents’ needs.

If you have minor children, name a guardian and a backup guardian who can take care of your children if you and your spouse are both unable to care for them. In addition to naming guardians for your children, it is a good idea to express what’s most important to you. For example, you can share your values related to education, religion, and general child rearing.

Put It All in Writing

For your estate plan to be official, you need to put your desires into legal documents and sign them in the presence of a notary public and one or two witnesses. The requirements for a valid will vary from state to state. Here are some estate planning documents that may be part of your estate plan.

  • Will: A will is an estate planning document that everyone should have. You can use your will to name the person you want to manage your estate after you have passed away. You can also designate which beneficiaries should get which assets, appoint guardians for your minor children, and explain funeral and burial arrangements.
  • Trust: During the estate planning process, you may determine that you need a trust to manage some of your assets. Trusts are useful estate planning tools that can offer various asset protection benefits. An estate planning attorney can let you know if a trust can help you achieve your estate planning goals.
  • Durable Financial Power of Attorney: This document allows you to appoint a person you trust to manage your financial affairs if you are unable to manage them.
  • Advance Health Care Directive: With this document, you can express your wishes for end-of-life care and name a person you trust to make health care decisions on your behalf if you are unable to do so.
  • HIPAA form: This form is usually only about three pages long and includes a list of people whom health care providers may share your medical information with.

Review and Update Your Estate Plan

Too many people think that once they have signed their estate plans, they are through with the process. However, since changes in our lives are inevitable, changes to our estate plans are often necessary. You should review your estate plan every few years and consult with your estate planning attorney when you need to make changes.

 

This article offers a summary of aspects of estate planning law. It is not legal advice and does not create an attorney-client relationship. For legal advice, contact our Ruston, LA office by calling us at (318) 255-1760.

 

Estate Planning with Your Parents

Estate Planning with Your Parents

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Discussing your parents’ wills, or lack thereof, with them, can be intimidating. Many adult children put off having the “dreaded talk” of estate planning with your parents and are unprepared when an unforeseen event like an accident or illness happens. A 2022 survey conducted by caring.com shows despite the COVID-19 pandemic, two-thirds of adult Americans do not have a will or estate plan. Putting off the discussion is risky, even if there is apprehension about getting started.

Protecting Your Family While Still Alive

A will is only part of an estate plan and only becomes active upon death. However, crucial documents such as a living will, powers of attorney, and living trusts protect a parent’s quality of life and outline their medical preferences while alive. This point is an important distinction to draw in conversation with your parents. Estate planning isn’t just about inheriting property, money, and objects. It is also a plan for your parents’ future, bringing peace to their daily lives, knowing emergency instructions exist.

While talking to your parents about estate planning helps them, it also helps the family’s adult children. Often with their own family to care for, they must plan for their future beyond their parents. When parents don’t prepare for retirement, including the need for long-term care or end-of-life decision-making, caretaking might cost the adult children a lot of money, derailing the next generation’s financial stability. Every family has a vested interest in discussing their parents’ estate plans.

Incapacitation and End-of-life Care

Even if your parents have a modest estate, they should make their preferences known regarding incapacitation and end-of-life care. Are there enough available estate assets to cover them through retirement and long-term care issues? If not, there are other options for protecting you and your parents from financial ruin. An estate planning or elder law attorney develops strategies to meet these specific goals.

Professional legal advice helps to start the conversation with parents and siblings. There will be many ideas and viewpoints. Each may be valid, but remember, what seems fair to one sibling may not seem reasonable to another. An open family discussion will instruct specific people to make medical and financial decisions, pay for higher levels of care, and offer options for long-term care services and facilities. It also prevents conflict after parents are gone about “what they would have wanted.” If your parents are making a first-time plan, encourage them to create one that clearly outlines expectations while alive and after death to avoid future issues.

When to Talk about Estate Planning

The sooner, the better. It may take several planning sessions. Figure out the best time when the entire family can get together and keep each meeting to about an hour, presenting a clear agenda. Consider when your parents are at their best during any given day. Some parents may prefer the morning while others prefer the afternoon. Working family members may require weekend meetings. Try to accommodate all family members’ needs but prioritize your parents.

To clearly understand what to address in your family meetings, research what is included in comprehensive estate planning. At your first meeting, providing a general overview may encourage your parents to retain an estate planning attorney. Their attorney may attend some of your meetings or provide answers to specific questions that come up.

Updating an Estate Plan

If an older estate plan is in place, you will need an estate planning lawyer to review its current effectiveness. A child-specific trust when children were minors is outdated if you are adults. Rules and safeguards for trusts and other legal entities may change or no longer be relevant. Estate planning is not a set-it-and-forget-it enterprise. State and federal laws frequently change and can impact existing plans.

Your parents may have multiple marriages between them. In blended families, stepparents can be cause for concern for adult children. It can get very messy, so specific instructions about what goes to a second husband or wife versus what goes to biological or stepchildren must be clear. Some parents consider this a privacy issue and do not want to share these details. Do your best to explain future concerns and pivot to long-term care planning issues while still alive rather than inheritance after death. The goal is to help preserve their assets to live comfortably in a medical crisis and leave the legacy they intended after death. You want to understand their wishes for themselves as well as other family members.

Understanding Your Parent’s Point of View

Have your parents review, or identify what roles they expect their spouse and adult children to play in the estate plan — letting the family know who is selected and why helps manage future expectations. If there is contention on the part of a family member about roles, talk out the feelings and try to bring everyone to an understanding about your parents’ point of view. Take notes during your discussions and refer to them often, following up with supporting data to put family members at ease when resolving sticking points.

Try to keep the conversation on track and handle one topic at a time. Key topics to review will include the estate plan, net-worth statement, family business (if any exists), powers of attorney for health care and financial and digital assets, trusts, will, living will, real and personal property, investments, and long-term care. Set goals for your meetings to provide direction. Know that some of these conversations may be unpleasant or unpredictable. There are as many communication styles among family members as there are unique personalities. Scenarios are endless, so patience and flexibility are key to success.

Include your estate planning attorney and financial advisor if there are certain issues you can’t seem to get past as a family. Directly or indirectly, professional guidance will provide information that will clear up disagreements. Everyone can air their grievances, and the professionals can address each issue from a practical standpoint and how it affects your parents’ well-being emotionally and financially. Although a series of family meetings with honest intentions to help guide your parents’ estate planning can be challenging, the entire family will benefit in the future. Contact our Ruston, LA office by calling us at (318) 255-1760 to speak to one of our experienced estate attorneys.