Mellor & Backo, LLPFindLaw IM Template2024-03-05T19:56:12Zhttps://www.northportlaw.com/feed/atom/WordPressOn Behalf of Mellor & Backo, LLPhttps://www.northportlaw.com/?p=468792024-03-05T19:56:12Z2024-02-21T22:38:11ZTransfers and gifts can lead to penalties
When someone requires Medicaid benefits to pay for long-term care needs in Florida, their recent financial history is subject to scrutiny by the state. Not only does the state look at their current income and resources, but professionals may also evaluate five years of someone's prior financial transactions.
Any inappropriate or excessive transfers and gifts during those five years could lead to the state imposing a penalty. First, the state determines the total value of the gifts and inappropriate transfers. Then, the state converts that to a set number of months of care based on current costs. The applicant must then pay for their own medical needs for that number of months before they become eligible for Medicaid coverage.
Obviously, those who have already gifted and transferred their resources are not in a position to pay out of pocket for in-home help or a room in a nursing home. They face those penalties at a time when they may struggle to find alternative means of paying for their coverage. Therefore, it is usually a smart move for people to consider the possibility that they might need Medicaid before their health begins to decline.
Someone who plans in advance can potentially make transfers and even gifts to loved ones years before they apply for Medicaid. Therefore, those transactions won't lead to more scrutiny or any financial penalties. Changing the ownership of assets, possibly by using them to fund a trust, is one way to protect resources while simultaneously helping ensure that someone can receive financial aid when they are vulnerable later in life.]]>On Behalf of Mellor & Backo, LLPhttps://www.northportlaw.com/?p=468662023-11-22T21:05:56Z2023-11-22T21:05:56Zirrevocable trust into your estate plan.
Protection from creditors
One of the most attractive benefits of irrevocable trusts is that they offer protection from creditor claims against you. Because you don’t have control over the assets and can’t change the terms of the trust, creditors can’t touch the contents of the trust once it’s funded.
Privacy after your death
The terms of the irrevocable trust don’t have to go through probate, so your heirs can have more privacy than if the assets were handed down through a will. The terms of the trust won’t be made public unless the heirs decide they want to make them known.
Example
Several different types of trusts fall in the category of irrevocable trusts. One of these is the special needs trust. This enables you to care for someone who relies on needs-based programs to get the care and assistance they need without compromising their eligibility for benefits. The trustee of the trust can use the contents of trust to take care of very specific needs, which don’t include those covered by the needs-based programs.
Trusts are only one part of a comprehensive estate plan. Seeking legal guidance to craft a plan that reflects your unique needs and circumstances can be very helpful.]]>On Behalf of Mellor & Backo, LLPhttps://www.northportlaw.com/?p=468642023-08-21T18:44:04Z2023-08-21T18:44:04Zwhat these events may look like and why a plan may be necessary well before someone’s golden years.
Having a child
Young people who have their first child may want to consider an estate plan. It can be beneficial to put assets in a trust just in case they pass away while their child is still a minor. They can also use the estate plan to choose a guardian, giving them the assurance that their child will have a stable life with the support and guidance they need in the event that they pass away unexpectedly.
Being diagnosed with an illness
Naturally, health complications also mean that it’s time to engage in estate planning. Even when the prognosis is good, an estate plan can be helpful. For example, someone who has been diagnosed with cancer may expect to make a full recovery in the next few years, but it can still be beneficial to create an estate plan just in case. The plan can also use a medical power of attorney or other such documents to plan for the possibility of a complicated medical future.
There’s no time like the present
Another reason that people wait until they are older to make an estate plan is because they’re waiting until they have “enough” assets to do it. But there are two important things to note here. The first is that a person doesn’t have to be wealthy to benefit from an estate plan. The second is that, they may also want to consider things like long-term care planning and setting up advanced healthcare directives in the event that they’re injured or taken ill and cannot advocate on their own behalf.
No matter why you’ve decided to make an estate plan, it’s critical that you understand all of the legal options you have available to you by seeking legal guidance. You can then create a comprehensive plan that will work well for your family.]]>On Behalf of Mellor & Backo, LLPhttps://www.northportlaw.com/?p=468622023-05-19T19:23:57Z2023-05-19T19:23:57ZEstate taxes
Florida does not collect an estate tax based on the property someone owns when they die, but the federal government still does. Any estate worth more than $12,920,000 could be subject to tax at the federal level. In cases where the estate is quite large and there was no advance planning, the personal representative of the estate may need to allocate as much as 40% of the estate's total value toward federal estate taxes.
Personal debt
Any amount of money owed by the decedent when they pass will become the responsibility of their estate. Credit card balances and debts owed for someone's last medical treatments could substantially diminish what they pass to their loved ones. Even Medicaid benefits can consume part of an individual's legacy and reduce what their chosen beneficiaries inherit from their estate. Typically, any assets passing through probate court are subject to creditor claims before family members have a right to inherit them.
Probate litigation
When there are challenges against someone's estate planning paperwork or the actions of the representative of the estate, the legal proceedings that follow could potentially consume a noteworthy portion of the estate's resources. It can cost tens of thousands of dollars to resolve a disagreement about the validity of someone's estate planning paperwork, and the estate itself often has to absorb thanks a sizable portion of those expenses.
Testators who understand the challenges that could diminish what they leave for others can put together more effective estate plans. Beneficiaries and estate representatives who understand which other parties have claims against estate resources will be less likely to feel shocked and disappointed by the outcome of the probate process. Overall, seeking legal guidance and learning about Florida probate laws may potentially benefit anyone with a direct relationship to a Florida estate.
]]>On Behalf of Mellor & Backo, LLPhttps://www.northportlaw.com/?p=468602023-02-27T06:27:14Z2023-02-27T06:27:14ZFive years of finances are subject to scrutiny
In Florida, large gifts and sizable transfers into a trust could trigger a Medicaid penalty if they occur too close to someone's application for benefits. The state will expect someone to pay with their own resources for care if a penalty applies.
Any large transfers or gifts conducted in the five years leading up to someone's Medicaid application can potentially trigger a penalty. Covering such a penalty can leave someone with limited resources and income responsible for tens of thousands of dollars in nursing home care costs. Advance planning significantly increases an older adult's chances of getting benefits quickly should the need arise as they age.
The earlier in life someone addresses the possible future need for Medicaid benefits, the easier it will likely be for them to apply when the time comes. Different financial circumstances necessitate different planning strategies, but creating a trust and possibly making gifts to family members might factor into someone's Medicaid planning process when establishing or updating an estate plan around the time of retirement.
Careful planning is also important for the protection of certain property. People can qualify for benefits and could then leave their estates subject to large claims by the Medicaid estate recovery program. Even someone's home could be at risk of liquidation after their death without advance planning.
Learning more about Medicaid requirements and estate recovery programs can benefit those concerned about their future financial stability. In general, it is a good idea for older adults to be as proactive as they can be when seeking guidance about Medicaid eligibility.]]>On Behalf of Mellor & Backo, LLPhttps://www.northportlaw.com/?p=467292023-01-12T09:13:54Z2022-11-18T22:14:57Zsome traits you may want to look for.
Physical ability
First of all, many parents consider picking their own parents as the guardians, because they are the child’s grandparents. This can’t be effective because you know that they already have such a close personal connection, but you really have to consider your parents’ mental and physical health to determine if they would be able to do this job. This is especially true if your children are very young and so your parents would theoretically have to raise them for years or even decades.
A similar parenting style
You probably have opinions about what type of parenting style is best for your child. It can be wise to pick someone that will at least generally agree with these parenting tactics. This makes the transition go more smoothly for your child and you know that they’re being raised in a way that you would approve of.
Similar goals and values
Parents also have very different goals and values. Some value education for example, while others value religion. There’s no right or wrong set of values to choose from, but you may want to choose a guardian who is going to give your children a similar upbringing.
Financial ability
Finally, just consider that person’s financial ability to take care of your child and provide for their needs. It’s not all about whether or not someone is willing or if they have a similar parenting style. They also have to realistically be able to take on this new role in your child’s life.
Once you determine who you would like to choose, then it’s a matter of setting up your estate plan and officially selecting that guardian. Be sure you know about all of the necessary legal steps to take at this time.]]>On Behalf of Mellor & Backo, LLPhttps://www.northportlaw.com/?p=465052023-01-12T09:14:01Z2022-08-23T19:55:08ZRecent gifts will be part of your estate
To determine if you have enough property left in your name for estate taxes to apply, you have to look at recent financial transactions, not just the value of your personal property. The Internal Revenue Service (IRS) will look back at three years of gifts and add their total value to the value of the remaining assets in your estate.
The closer your plan is to the threshold for estate tax exemption, the greater the risk that the gifts you make in the last years of your life could trigger estate taxes. After all, you can give each potential beneficiary up to $16,000 without triggering gift taxes every year. If you make the maximum gift to all four of your children and also all of your grandchildren, three years' worth of gifts could very easily push your estate over the exemption threshold and put you at risk of estate taxes after you die.
Trusts can be a useful tool for large estates
If you have to worry about estate taxes when planning and multi-million dollar legacy, a trust is a very useful tool to employ in conjunction with strategic gifts. Rather than relying on one or the other, a combination of these two approaches can successfully diminish the total value of your estate while reducing both estate and gift tax obligations.
Familiarizing yourself with the unique rules that apply to large estates will help you create the most effective estate plan given your current holdings and the legacy that you want to leave when you die.]]>On Behalf of Mellor & Backo, LLPhttps://www.northportlaw.com/?p=465032023-01-12T09:14:06Z2022-05-16T21:32:29ZUsing your will and trust to plan for incapacity
It is possible to plan for incapacity with your will and trust. One of the things you will want to do first is to choose your financial power of attorney and health care POA. The financial power of attorney grants one person (or more, if you select multiple people) to take care of your finances if you cannot do so on your own any longer. The health care power of attorney appoints a person to make health care decisions on your behalf if you cannot speak for yourself.
It’s also possible to use a living trust to make it possible for a trustee to gain immediate control of your assets if you’re incapacitated. This is important, because it allows someone to step in right away without having to go through a long process to begin to help you with your finances.
Prepare to go over your estate plan to create the right protections
Every person is different, which is why it’s necessary to go over your wishes with your attorney as you build your estate plan.
For some people, it may make sense to have one person assigned as a financial power of attorney and another as a health care power of attorney. For others, having multiple people work together in these roles or a single person hold both may make more sense.
It’s worth adding, at the very least, your wishes for your care if you are incapacitated. Doing this will help guide your family in the case that you are hurt or too sick and can’t tell them what you want them to know in the future.]]>On Behalf of Mellor & Backo, LLPhttps://www.northportlaw.com/?p=464232023-01-12T09:14:14Z2022-02-18T22:36:00ZA good estate plan protects you and your family and friends, so you know that your beneficiaries get their inheritances and that you are given the best quality of life for as long as you live.
A personalized estate plan gives you control over your estate
With a personalized estate plan, you may have better control over how your estate is distributed once you pass away. You can leave details about your wishes and how you’d like your estate to be handled, too, so that the executor only takes the actions that are legal and that you’ve approved.
Many people think of an estate plan as a cut-and-dry method of passing on assets, but it will also protect you. With your estate plan, you can set up a health care power of attorney who is different from your financial power of attorney, create a plan for your care as you get older and set requirements in trusts or other documents that limit what people will receive from you if they don’t do what you’ve asked.
No two people have the same estate, assets or wishes, which is why it’s so important to personalize an estate plan to make sure your wishes are clear. A good estate plan reflects your personality and hopes for your family as well as offering protections against taxation or financial losses. The right estate plan will give you more control over your assets and help make sure that your heirs and beneficiaries get what they deserve.]]>On Behalf of Mellor & Backo, LLPhttps://www.northportlaw.com/?p=464222023-01-12T09:14:19Z2021-11-18T20:08:51ZThe Florida courts won't uphold no-contest clauses
If a family member wants a bigger inheritance than what you left for them, they could challenge your estate and cost everyone in the family thousands of dollars in probate fees. Trying to avoid those legacy-diminishing expenses can motivate some testators to include no-contest clauses in their estate plans.
A no-contest clause disinherits someone for challenging the estate plan. People add the clauses when they know their children constantly fight over things or when they choose to disinherit someone and believe they will be unhappy about that decision.
Although you technically can still include a no-contest clause in your Florida estate plan, state law in Florida prohibits the courts from enforcing the clause. While it may still serve as a deterrent, it won't have any practical effect during estate administration. Worse, it could actually strengthen someone's claim that your estate plan was inaccurate or outdated.
Unenforceable and ruled documents may be more vulnerable to a challenge
Keeping old clauses and terms in your estate plan could actually achieve the exact opposite of your intent when you added those terms. Sometimes, people can successfully challenge an estate plan based on it being so old and outdated that it no longer reasonably reflects the values and priorities of the testator.
A holdover no-contest clause from estate planning years ago in another state could strengthen the claim someone makes about your documents being old and inaccurate. Although leaving the clause in doesn't inherently invalidate the rest of the document, it could increase the risk of someone challenging your wishes.
Updating your documents to reflect Florida state law can help ensure your estate plan is enforceable if you die after moving to Florida.]]>