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Leave a Legacy

Thanksgiving is a Time to Give Thanks and Think About Your Legacy!

Thanksgiving is a Time to Give Thanks and Think About Your Legacy!

What is someone’s legacy?

It is about the richness of the individual’s life, including what that person accomplished and the impact he or she had on people and places. Ultimately, the story of a person’s life reflects the individual’s legacy.  A legacy can also be money or property which someone leaves to you when they die. You could make a real difference to someone’s life by leaving them a generous legacy.  A legacy of an event or period of history is something which is a direct result of it, and which continues to exist after it is over.

What does it mean to carry on a legacy?

The dictionary would define Legacy as a gift or a bequest, that is handed down, endowed, or conveyed from one person to another. It is something descendible one comes into possession of that is transmitted, inherited, or received from a predecessor.

How do I leave a legacy?

9 Ways to Leave Behind a Legacy

  1. Write down family traditions. Even if you no longer do them, traditions give us all a sense of belonging. …
  2. Write down family stories. …
  3. Write down stories about you. …
  4. Pass along skills. …
  5. Write down family recipes. …
  6. Family photos (who’s who) …
  7. Take a DNA test. …
  8. Start a Family Tree.
  9. Create an Estate Plan to make sure your family is taken care of when you no longer can take care of them.

We cannot help you with one through eight, but we can certainly help you with number nine!

What is an Estate Plan?

An Estate Plan starts from the simplest of documents such as Powers of Attorney. There are Durable Powers of Attorney, where you leave a personal representative the power to help you with, and if needed, take over your financial responsibilities. A Health Care Surrogate, or Healthcare Power of Attorney, leaves a personal representative the power to carry on your health desires, and act on your behalf of all your medical and healthcare decisions. A Living Will is a Will that remains in place while you are still alive but conveys in more detail what you want to transpire if you become unable to make decisions on your own.

We are not going to live forever and as we age, we run the risk of declining capacity. Some of us lose the ability to take care of things ourselves, leaving usually a loved one or ones with the task of taking care of us. How much easier will it be for the ones you love to take care of you according to your wishes if you have these documents in place.

Estate Plans go on to include a Last Will and Testament which more clearly defines your wishes and allows you to make specific bequests. A Last Will and Testament will make settling your Estate a much easier process for the ones you love. In Florida, a Last Will and Testament does not negate Probate. Probate can be expensive and land your loved ones in the court system for an unspecified amount of time. However, having a Last Will and Testament will allow the executor of your Will a much easier Probate process than if you pass without one. Passing without one is called dying intestate. This basically means that your Estate will be left up to a judge to decide the who, what, where, and when of your Legacy.

Another option to Estate Planning is Trusts. Trusts are the only documents in Florida which negate Probate. Our Trust Plans come with all the Powers of Attorneys, A Living Will, a Last Will and Testament, and your Trust. A trust allows you to specifically define all aspects of how you want your Legacy handed down. Creating a Trust will keep your loved ones out of Probate and is less expensive in the long run. It comes with special features which can help protect inheritances, reduce federal estate costs, provide remarriage protection, discourage family squabbles, protect retirement funds, provide pet care, protect a family business, protect a vacation home, and so much more.

We at Legacy Planning Law Group are passionate about helping you create an Estate Plan that is just right for you and your unique circumstances. We help you establish and protect your Legacy and finish the race strong!

So, this Thanksgiving while you are reminiscing on all you are thankful for, after the turkey has been carved, and family has returned home, think about what your Legacy is and how you would like to leave it.

You can reach us at 904-880-5554 or go to our website to read more about Team Legacy at:  www.legacyplanninglawgroup.com

One of our professional team members will be happy to get you started and on your way to protecting what means the most and taking care of your family when you no longer can.

We wish you all the Happiest of Holidays!

Read more related articles:

Leaving a Legacy – Planning Your Estate or Inheritance

Leaving a legacy: Why everyone needs an estate plan

Also, read one of our previous Blogs at:

Estate Planning Is a Gift and a Legacy for Loved Ones

Click here to check out our On Demand Video about Estate Planning.

digital assets

How to Protect Your Digital Assets

How to Protect Your Digital Assets

Did you know the average American has $55,000 in digital assets? That’s something definitely worth including in your estate plan. Here’s how to get started.

If you have a normal corporate job and don’t own a website, you may be thinking you don’t have to worry about protecting digital assets. Heck, you may even think you don’t have any assets online!

The reality, however, is that you do have digital assets — even if you don’t know it.

Even something as simple as a username and password can open the door to a broad range of personal information that’s valuable to you or your family.

And if that username and password get into the wrong hands, you may wind up in a situation that results in a huge financial loss or a mountain of hassle and stress.

To find out about the best ways to protect your digital assets in an increasingly complex world, I recently interviewed Professor Jamie Hopkins on my retirement podcast, Stay Wealthy.

What is a Digital Asset?

A recent study from McAfee claims the average American has over $55,000 in digital assets. Keep in mind, however, these assets are not necessarily ones that can be bought or sold. The $55,000 figure represents the average monetary value these assets can be worth to a consumer and the people who love them.

But what is a digital asset exactly?

According to Hopkins, a digital asset could be any type of online information you have stored on the web or in the cloud.

A few examples include your emails, your social media accounts, your LinkedIn account, or a website for your business. Hopkins says it’s common for people to have up to 100 accounts with usernames and passwords at any given time — and sometimes significantly more.

Why are digital assets so important?

These assets do have value, and it’s important to ensure there’s a process for handling them if you suddenly pass away. Unfortunately, digital assets are not always accounted for in regular end-of-life documents like a will. As a result, Hopkins says he’s seen situations where someone he died but they continued “living” on Facebook due to the simple fact their family couldn’t access their account.

Imagine what happens then. Random people continue wishing them “Happy Birthday” and tagging them in posts without realizing they’re gone. This kind of situation is upsetting for the family, of course, which means having access to the account information to close it down does hold some value for them.

On the business side of the equation, preserving digital assets is just as important. If you set up an email account for a business under your name and you die, current laws make it difficult to transfer that email account to the business or anyone else.

Also, note there’s risk involved in letting your digital assets linger once you’re gone. For example, there’s a chance someone could access a username and password for your email account then use that information to hack into other accounts like a bank account or credit card. All of a sudden, someone starts racking up charges on a credit card the surviving spouse didn’t even know about.

Read more related articles at :

Estate planning for the digital era

8 Tips for Protecting Your Digital Assets

Also, read one of our previous Blogs at:


Click here to check out our On Demand Video about Estate Planning.



family caregiver

Personal Care Agreements

Personal Care Agreements

Reviewed by attorney Brent Kato, Bruce Feder of Kato, Feder, and Suzuki, LLP.

How to Compensate a Family Member for Providing Care: Introduction

Many families reach a point when they recognize that an ill or older relative needs help. There are usually warning signs: difficulty with daily activities; memory problems; trouble with banking and finances; multiple falls; problems with driving; forgetting medications. Sometimes an elderly or ill loved one needs more than occasional assistance — they need full-time care.

But who will provide that care? The answer is usually close to home: an adult child. One sibling might become the caregiver by default, or one is selected because he or she lives closer or has fewer family responsibilities of his/her own.

The person providing care for a loved one may make a significant sacrifice: giving up a job and employment benefits. A formal agreement among family members can provide a way to compensate a person providing care if he or she is no longer able to hold other employment. Even though most family members want to help and feel a sense of duty to care for a loved one, it is a job with heavy time commitments and responsibilities. One way of protecting the caregiver as well as the person receiving care is by putting the care relationship in writing.

This is a binding agreement, also called a long-term care personal support services agreement, elder care contract, or family care or caregiver contract. Most often, it is called a personal care agreement. This agreement can offer family caregivers security that they will not suffer undue financial consequences. At the same time, the agreement can also offer your loved one peace of mind that she or he has a caring advocate to manage care needs.

What Is a Personal Care Agreement?

The agreement is a contract typically between a family member who agrees to provide caregiver services for a disabled or aging relative and the person receiving care. The personal care agreement is most commonly between an adult child or and his/her parent, but other relatives may be involved, such as an adult grandchild caring for a grandparent.

Drawing up an agreement clarifies for a family what tasks are expected in return for a stated compensation. It can help avoid family conflicts about who will provide care and how much money will change hands. For this reason, the agreement should be discussed with other family members to resolve any concerns before an agreement is drafted.

When contracting with a family member, it is wise to treat the agreement as a legal document. If your relative is receiving state supported in-home care, the agreement will show the state where the money is going and for what kind of services. In addition, a caregiver agreement can offset potential confusion among family members concerned about bequests to heirs, and avoid misunderstandings later over the reduction of the amount of money that may be inherited.

Basic Components of a Personal Care Agreement

A personal care agreement has three basic requirements for a person to pay a family member for care:

  • The agreement must be in writing.
  • The payment must be for care provided in the future (not for services already performed).
  • Compensation for care must be reasonable. This means it should not be more than what would be paid to a third party for the same care in your state or geographic area. Tasks performed should match “reasonable” or “customary” fees typically charged for those services.

A properly drafted personal care agreement will contain:

  • Date the care begins
  • Detailed description of services to be provided, for example, transportation and errands: driving to medical, dental, adult day care, and other appointments, food preparation
  • How often services will be provided (Allow for flexibility in care needs by using language such as, “no less than 20 hours a week” or “up to 80 hours a month.”)
  • How much and when the caregiver will be compensated (weekly or biweekly)
  • How long the agreement is to be in effect (The agreement should set time, such as a year or two years, or even over a personʼs lifetime.)
  • A statement that the terms of the agreement can be modified only by mutual agreement of the parties in writing
  • The location where services are to be provided (home of elder/adult with disabilities, caregiverʼs own home, other location. Allow for the location of the care to change in response to increasing care receiver needs.)
  • Signatures by the parties, date of the agreement

Additional Details to Consider in an Agreement

The caregiver’s tasks should be clearly stated in the agreement but might include the term “or similar to be mutually agreed upon by the parties” for flexibility. If the agreement is too rigid, it will have to be rewritten if circumstances change.

Consider creating an “escape clause” in the event that one of the parties wants to terminate the contract. Use a term such as “this agreement remains in effect until terminated in writing by either party.” Consider a provision that “springs” into action if the caregiver becomes ill or wants a vacation. Is there a designated backup person who can step in temporarily?

Is there a provision for room and board costs if the care recipient lives with the caregiver (a proportional share of utilities, mortgage, insurance, taxes)? Consider what happens if the care recipient moves into a care facility. Will health insurance or a long-term care insurance policy be purchased to cover the family caregiver? If so, include that in the personal care agreement and be specific without being inflexible. Consider adding an allowance for easy-to-overlook out-of-pocket expenses.

To determine the level of care required, consult with a local homecare agency, physician, geriatric care manager, hospital discharge planner, or social worker. There may be a fee involved to conduct a care assessment in the home. This will also help in anticipating any future care needs. If the care receiver has dementia, for example, a decline could require different care options.

Examples of care are: personal care, grocery shopping, preparing meals, housekeeping, laundry, coordinating household and medical bills, making phone calls, financial management, transportation (consider mileage), monitoring and managing medications, tracking changes in health, and liaison with healthcare practitioners.

When preparing an agreement, ask yourself what each care task means. Define, for example, what “personal care” is: does it include bathing, dressing, dental hygiene? If you specifically define the care tasks and the time required, the result will be a more realistic caregiving assessment.

Caregivers should maintain a detailed daily log and have a concise job description. Documentation will support the intent of your contractual relationship if for any reason it comes into question.

You are creating a contractual relationship between employer (care recipient) and employee (caregiver), a relationship that requires withholding and paying taxes. Other considerations are whether to provide employee benefits such as health insurance or workersʼ compensation. In the area of taxes and Social Security, you may want to seek the advice of an attorney to confirm what applies in your situation. Consider a vacation pay provision to offset caregiver stress or a raise after one year for a job well done.

How to Discuss Personal Care Agreements Within the Family

A stressful conversation for any family is what happens to the money when a parent becomes ill, and who will serve as the primary caregiver. One method for discussing difficult topics is holding a family meeting. The caregiving team meets in a comfortable place, seated around a table with room to spread out documents under discussion. (Using technology such as Skype may help to include family members who live far away.) A well-organized meeting can provide the family members with shared support and a better understanding of the decisions to be made.

When planning the family meeting, itʼs important to include all necessary members. One question to consider is whether the person receiving care will attend. If your loved one has a cognitive condition (Alzheimerʼs disease or another dementia, for instance), consider whether or not he or she has the capacity to understand the discussion and whether itʼs likely to be upsetting. Are there “hot-button” issues not to be discussed in their presence? How critical is it for them to participate in decisions made on their behalf? Attending all or part of the meeting may allow the care receiver to build trust in the caregiving team. This can help later with their cooperation when tougher decisions must be made.

Before the meeting, itʼs best to set times and dates convenient (as much as possible) for everyoneʼs schedule, then create your meeting agenda.

Hereʼs a suggested list of topics to keep the discussion on track:

  • Definition of the caregiverʼs role, with tasks clearly delineated
  • The duration of the agreement
  • Compensation for caregiving, including how it will be paid (weekly, monthly, lump sum?)
  • Financial changes to the family estate (present and future impact)
  • Who holds Power of Attorney?
  • Who will serve as a backup should the caregiver become sick or need respite?
  • Are there Medicaid “spend down” or “look back” period considerations?
  • Is there a Health Care Directive?
  • Is a physician on the team?
  • How does the care receiver perceive his/her quality of life and independence? (What are their wishes?)
  • What is the plan if it becomes time for placement in a residential facility?

If possible, record your meeting or have someone take notes. You might distribute meeting notes to other family members for future reference. Consider building a “personal care agreement” binder that contains necessary documentation. One person should facilitate the meeting to keep the discussion moving or to set boundaries if the discussion gets out of hand. Some families choose to use an outside facilitator, a social worker, clergy member, geriatric care manager, or another person without a vested interest in the meetingʼs outcomes. More than one meeting may be necessary.

Below are a few examples of what documents that may be helpful:

  • Documentation showing the median hourly compensation for a caregiver in your area (Call local home care agencies to get a sense of costs.)
  • Medical records relevant to caregiver tasks
  • The completed care assessment documenting level of care
  • Additional legal documents such as Health Care Directive, Power of Attorney
  • Financial documents and will and trust agreements

Should the meetings not reach desired goals, family mediation is a growing trend in the U.S., helping families deal with major life transitions. For more information, see the National Care Planning Council noted in the Resources section at the end of this fact sheet.

Do I Need a Lawyer?

You don’t necessarily need to hire an attorney, but it may be advisable when entering into a contractual relationship. It depends on your set of circumstances and how complex an agreement your family requires. If you are considering a pre-paid, lump-sum caregiver contract, you may want to consult with a lawyer. A lump-sum contract is complex, and it’s more difficult to show compensation in terms of “fair market” value for care services. A monthly or bi-weekly salary for care services is easier to track, especially for Medicaid purposes. If you are not comfortable with these transactions, consult an attorney to avoid conflict later.

Another legal consideration is if the care receiver lacks capacity to sign the agreement. The person holding the Power of Attorney or the guardian or conservator may sign. If the family caregiver also holds the care receiver’s Power of Attorney or legal guardianship, consider consulting with an attorney. If you feel there is no need for an attorney, see examples of agreements in the Resources section.

How Does This Affect Eligibility for Medicaid?

Medicaid (Medi-Cal in California) is a state and federal program that may pay for long-term care costs for people with limited income and assets. To qualify for Medicaid, a personʼs spending and assets are subject to a “look-back” period of up to five years. This is sometimes called the asset “spend down.” If the care receiver needs to enter a facility or apply for other services that Medicaid might pay for, the personal care agreement can show that care payments were a legitimate expense and not an attempt to hide assets by giving cash to family members. The care receiver is paying for the “value” in personal care services.

Check your state for Medicaid rules since regulations do vary from state to state. These regulations are complicated, and you may want to consult an elder law attorney for help in qualifying for Medicaid or Medi-Cal.


Family Caregiver Alliance
National Center on Caregiving
(415) 434-3388 (800) 445-8106
Website: www.caregiver.org
E-mail: [email protected]
FCA CareNav: https://fca.cacrc.org/login
Services by State: https://www.caregiver.org/connecting-caregivers/services-by-state/

Family Caregiver Alliance (FCA) seeks to improve the quality of life for caregivers through education, services, research, and advocacy. Through its National Center on Caregiving, FCA offers information on current social, public policy, and caregiving issues, and provides assistance in the development of public and private programs for caregivers. For residents of the greater San Francisco Bay Area, FCA provides direct support services for caregivers of those with Alzheimer’s disease, stroke, traumatic brain injury, Parkinson’s, and other debilitating health conditions that strike adults.

Other Organizations and Links

General information regarding personal care


National Care Planning Council

National Academy of Elder Law Attorneys (NAELA)
For a low cost 30-minute consultation, contact your local city or county Bar Association.

Read more related articles at:

Getting Paid to Care for Mom or Dad. Are You Eligible?

Who Pays For Mom? Creating The Family Care Agreement Over A Holiday Zoom

How to Get Paid as a Caregiver for Elderly Parents

Also, read one of our previous Blogs at:

Eldercare and Paid Family Leave: Love and the Bottom Line

Click here to check out our On Demand Video about Estate Planning.


attorney testifies

Estate Planning Attorney’s Testimony Is Key Evidence of Decedent’s Mental Capacity and Absence of Undue Influence

Estate Planning Attorney’s Testimony Is Key Evidence of Decedent’s Mental Capacity and Absence of Undue Influence

Matter of Varrone, 72 Misc. 3d 1201 (N.Y. Surr. Ct. June 17, 2021)

Cynthia Varrone passed away on July 4, 2018. She had five children, but her last will and testament left her entire estate, including her real property, to her son John and specifically disinherited her other children. In addition, Cynthia transferred her real property to John during her life: first, through the execution of a deed dated April 21, 2010, which transferred the property from her sole ownership to herself and John as joint tenants with rights of survivorship, and then by a deed dated October 15, 2013—the same date Cynthia signed her will—transferring full ownership of the property to John and divesting herself of any interest in it.

Another son, Charles, as limited administrator, filed a petition seeking return of the real property to Cynthia’s estate. He asserted that Cynthia suffered from dementia and lacked the capacity to transfer the property to John and that John had exerted undue influence over Cynthia to induce her to execute the deeds. John filed a motion for summary judgment seeking the dismissal of the petition.

Because John had not provided any consideration for the inter vivos gift of the property, the court held that he was required to prove three elements by clear and convincing evidence: (1) the donor’s intent to make a present transfer; (2) actual or constructive delivery of the gift to the donee sufficient to divest the donor of dominion and control over the property; (3) acceptance on the part of the donee.

Because the recording of the deeds gives rise to a presumption of delivery and acceptance, the donor’s intention is paramount in determining whether the transaction was a valid inter vivos gift. Accordingly, it was necessary for John to demonstrate prima facie that Cynthia intended to make an irrevocable present transfer of ownership of the property. In support of his motion for summary judgment, John submitted substantial evidence, including copies of the deeds, Cynthia’s will, and the testimony of Cynthia’s estate planning attorney.

The court held that the deeds themselves were evidence of Cynthia’s donative intent, and that although her will, by its nature, could not serve as evidence of a present intent to give the property to John, it was evidence of her relationship with John at the time of the transaction. In addition, the disinterested deposition testimony of Cynthia’s attorney, Jake Lasala, was further evidence of her donative intent. He testified that he prepared the deeds at Cynthia’s request after discussing the transactions with her. In addition, he personally supervised their execution and arranged for their recording. He repeatedly indicated that Cynthia’s main goal was to ensure that John, who was unmarried, lived with her, assisted her, and would continue to have a place to live. The will, which also devised the real property to John, was prepared to provide Cynthia additional assurance that John would receive the property.

Although the burden was on John to show that Cynthia was competent, the court noted that the law presumes that individuals have capacity, recognizing that those who are elderly and even mentally weak may still be able to comprehend the meaning of a deed or a transfer of property. Further, Lasala provided adequate evidence of her capacity by testifying that at the time of the 2010 and 2013 transfers, there was no indication that Cynthia did not know what she was doing or signing. Lasala also provided prima facie evidence of the lack of undue influence by testifying that he had taken direction solely from Cynthia in relation to the transfers and that they had been executed at her behest.

Takeaways: Based on reported decisions, undue influence claims relating to actions of decedents with dementia are on the rise. The best way to combat them is for the responsible trusts and estates attorney to personally supervise the preparation and execution of the relevant documents and maintain notes of discussions with the client.

Read more related articles at:




Elder Fraud phone

DOJ’s New Elder Fraud Hotline Fields 500 Calls a Month

DOJ’s New Elder Fraud Hotline Fields 500 Calls a Month

Toll-free phone number debuted in March to help older victims of financial scams

DOJ’s New Elder Fraud Hotline Fields 500 Calls a Month. En español | About 500 calls per month are coming into the National Elder Fraud Hotline, launched in March, which offers free help to people age 60 and older who may have been victims of financial fraud.

Part of the U.S. Department of Justice, the hotline may be reached by calling toll-free 833-FRAUD-11 (833-372-8311). It was created by the department’s Office for Victims of Crime. The hotline is staffed seven days a week from 6 a.m. to 11 p.m. ET. Translation services are available for non-English speakers.

Paid staffers trained in elder abuse answer the calls, said Keely Frank, a case management shift supervisor for the Virginia-based hotline, who spoke during a webinar Thursday. Calls vary, she said, from romance scams to contractor fraud to computer tech-support cons to fake Publishers Clearinghouse sweepstakes.

Troubling complaint in 2020

A common complaint this year is known as the U.S. Marshals scam, Frank said. It’s an impostor fraud: Crooks pose as federal marshals, court officers or other law enforcement officials and demand payment, for example, to avoid arrest or to post bail. Earlier this year both the Marshals Service and FBI issued an alert about the scam.

It’s important to keep in mind that these bad actors do not always say they are from the Marshals Service; some lie and purport to be with the Drug Enforcement Administration (DEA) or another agency.

More key points about the National Elder Fraud Hotline:

• Friends, relatives and service providers — regardless of age — also may call if they suspect an older person has been victimized by financial fraud.

• Calls to the hotline are recorded, but callers may remain anonymous.

• Fraud cases are not investigated by hotline personnel. Staffers assist victims in filing official reports at the local, state and federal level, where probes may be launched. Often hotline staffers help victims make official reports to the FBI’s Internet Crime Complaint Center, or the Federal Trade Commission.

The nature of the 500 calls a month, on average, vary, according to Frank. Some calls are about ongoing, years-long frauds and some pertain to frauds that happened “two years ago, 10 years ago, last week or earlier today,” she said.

Frank urges victims to report cases as soon as possible to the hotline and other authorities: local police, financial institutions, state attorneys general and, in the case of home contractors, state licensing boards. The prospects of a victim recovering financial losses are better if a report is made promptly, she said.

The National Adult Protective Services Association hosted the webinar. More about the hotline is available online.

Hotline shares more resources

Callers to the National Elder Fraud Hotline, a program of the Department of Justice (DOJ), also receive advice on next steps and additional resources including materials from:

• the Elder Justice Initiative, also part of DOJ.

• the Consumer Financial Protection Bureau.

• AARP’s Fraud Watch Network.

• the National Center on Law and Elder Rights.

• the National Center on Elder Abuse

AARP’s Fraud Watch Network can help you spot and avoid scams. Sign up for free Watchdog Alerts, review our scam-tracking map, or call our toll-free fraud helpline at 877-908-3360 if you or a loved one suspect you’ve been a victim.

Read more related articles at:

Identity-Fraud Report: Older Adults Need Better Online Security

Top 10 Frauds Hitting Adults 60 and Older in 2020

National Elder Fraud Hotline 

Also, read one of our previous Blogs at:

Elder Financial Abuse Is Increasing

Click here to check out our On Demand Video about Estate Planning.

Last Will vs Trusts

Last Will and Testament vs. a Trust: What’s the Difference?

Last Will and Testament vs. a Trust: What’s the Difference?

Most lawyers are familiar with a Last Will and Testament, but for many, a trust remains a mystery. Let’s lift the veil and discuss how these planning devices are similar, how they differ, and why it might be beneficial for a lawyer to learn trust drafting.

Last Will and Testament

The person signing the Last Will and Testament is called a Testator. A Last Will and Testament takes effect upon the Testator’s death and requires a court process called probate. The Last Will and Testament gives the court directions on what the Testator wants to happen during this probate process.

Probate could be very long and costly. If a beneficiary doesn’t agree with what the Testator says in the Last Will and Testament, the case becomes contested and could result in a very long family battle. As with all court processes, the final decision will be up to the judge and the Testator’s wishes could possibly not be honored. And since probate involves a court, the case, including the Last Will and Testament document, are available for the public to see.

The document will tell the court who the Testator wants named as Executor. This person will find and notify beneficiaries, notify and deal with creditors, deal with banks and financial institutions, attend court hearings, handle all the distributions and accountings, sell property as needed, and basically do everything needed to wrap up the Testator’s affairs.

The Last Will and Testament will tell the court who the Testator wants to receive certain property, name Guardians for minor children, and state how the Testator would like their remains disposed of. The Last Will and Testament could also create a testamentary trust, such as when a beneficiary’s share is held in trust or the creation of a special needs trust for the surviving spouse or other beneficiaries.

A Trust

The person who signs a trust is called the Grantor. Unlike the Last Will and Testament, an inter vivos trust is effective during the Grantor’s lifetime. The trust will name a Trustee, and this person is in charge of carrying out the terms of the trust. A trust, in plainest terms, is a contract between the Grantor and the Trustee.

The Grantor transfers his property to the trust after signing it and now the Trustee owns the property. Because the Grantor does not have any property directly in his name, probate is avoided. At the Grantor’s death, no court process is required.

As with the Last Will and Testament, the trust will also give instructions on how the Grantor wants property distributed at the Grantor’s death. A Pour-Over Will can also name Guardians for minor children and dictate the Grantor’s disposition of remains.

A trust can also have other purposes, like trusts that focus on three main categories: Medicaid protection, Veterans’ benefits protection, and special needs.

A Medicaid Asset Protection Trust protects the Grantor’s assets while allowing the Grantor to qualify for Medicaid benefits. Usually, these Medicaid benefits are those for long-term care, such as assisted living or nursing home care. Likewise, a Veterans Asset Protection Trust  allows the Grantor to protect assets while qualifying for Veterans’ pension benefits.

There several trusts focused on those with special needs. The First-party Special Needs Trust is used when the Grantor is the one trying to protect their own assets while qualifying for public benefits, usually Social Security. The Third-Party Special Needs Trust is used when someone other than the person receiving public benefits wants to set aside funds to be used for the benefits-recipient’s care and comfort. The Secure Special Needs Trust is used to hold and administer retirement-fund assets, such as proceeds from the Grantor’s 401(k) after the Grantor’s death.

A Revocable Living Trust allows the Grantor to revoke or amend at any time. Usually, the Grantor names himself as Trustee and he carries on managing his property just as before he transferred it into the trust. The Revocable Living Trust is most commonly used when the Grantor is healthy and when public benefits are not a concern.

These trusts are oftentimes more desirable than using a Last Will and Testament because the trusts can avoid probate, offer asset protection and taxation benefits, keep family matters private, and allow beneficiaries to maintain eligibility for public benefits.

Read more related articles at:

Estate Planning 101: The Difference Between A Will And A Trust

Understanding the Differences Between a Will and a Trust

Also, read one of our previous Blogs at:

Wills v. Trusts: What’s Right for You?

Click here to check out our On Demand Video about Estate Planning.

special needs trust

Special Needs Trusts 101: The Basics

Special Needs Trusts 101: The Basics

Trusts are certainly not the most perspicuous of legal inventions, but they can be a critical part of elder law planning and special needs planning. Experienced professionals understand the nuances of the various types of trusts available, what language is necessary, and which trust would benefit a client in a given circumstance. But for those of us who need a little refresher, let’s get back to the basics and take a dive into some of the lingo and concepts of special needs trusts.

What are Special Needs Trusts?

A special needs trust is a type of trust specifically used for special needs planning. This trust allows a beneficiary to preserve access to public benefits while being able to benefit from trust assets on some level.  As with all trusts, the Trustee manages trust assets for the benefit of the beneficiary.

What about distributions during the lifetime of the beneficiary?  The trust can be designed where the Trustee can only make distributions that supplement government benefits, a supplemental distribution standard. One thing to keep in mind is that even if there is a supplemental distribution standard in the trust document, that standard really is discretionary if the beneficiary is not currently on public benefits.  The trust document dictates that once the beneficiary is on public benefits, distributions may not supplant, impair, or diminish those benefits.

Or, the trust can be designed so that the Trustee can also make distributions that supplant government benefits, a supplemental and discretionary distribution standard. To supplant government benefits means to replace or decrease those benefits.  So, the Trustee may distribute trust assets, knowing that the distribution could decrease the amount of government benefits received by the beneficiary, if it is in the best interest of the beneficiary. And, of course, the Trustee can also make supplemental distributions.

First-Party SNT

A first-party special needs trust, also referred to as a d4A trust (due to its location within the US Code), is a self-settled trust. This type of trust is funded with the assets of beneficiary, who is also the applicant of government benefits.  The assets are used for the beneficiary’s personal benefit only. To curtail a Medicaid transfer penalty, this individual must be under the age of 65 when the trust is established and the individual establishing the trust must be either the beneficiary; a parent, grandparent, or legal guardian of the disabled beneficiary; or a court.  If the individual is over age 65, a transfer penalty may be imposed when applying for certain long-term care Medicaid benefits.

The state must be the remainder beneficiary of any funds remaining in the d4A trust after the death of the beneficiary, up to the amount the state expended on benefits for them. In some states, the specific state Medicaid agency must be listed in the trust agreement.  For most states, however, it is sufficient to give a generic reference to the state in the payback provision.  After any government agencies are repaid for benefits received, any remaining trust assets is distributed to residuary beneficiaries.

A typical client that may benefit from a d4A trust would be one that has assets to preserve while still desiring to qualify for benefits.  Maybe this client won an award or settlement and was already on public benefits and would like remain on those benefits.  Maybe this client was the recipient of an inheritance and doesn’t want their new found wealth to disqualify them from benefits.

A subset of the d4A trust is one with a Medicare Set-Aside (MSA) sub-trust.  This MSA is oftentimes required when there is a personal injury or worker’s compensation settlement. Medicare has an interest in preserving a certain amount of the proceeds of the settlement so they aren’t dissipated while Medicare is left paying for future medical expenses. So, a requirement of the settlement agreement may be to set aside a certain amount of the funds for future medical bills that Medicare would otherwise be forced to cover.

Third-Party SNT

A third-party trust special needs trust, also known as a supplemental needs trust, is a trust funded by assets that belong to someone other than the beneficiary. This type of trust is not specifically authorized by US Code; there are no age limits for this type of trust to curtail a Medicaid transfer penalty.  However, if the beneficiary has the power to revoke, terminate, or sell the trust for their own benefit, then it is a countable resource for Medicaid purposes. Otherwise, it is usually exempt. And because the assets used to fund the trust never belonged to the beneficiary, a payback provision is not required.

A common client scenario for a third-party SNT would be an individual with means who would like to set aside money for the care of a disabled friend or family member. This can be done during the lifetime of the donor or as a part of their estate plan.  A typical estate plan usually contains contingent special needs trust provisions which direct the share going to a beneficiary who is on public benefits into a third-party supplemental needs trust.

Pooled Trusts

A pooled trust, found in the US Code under 1396p(d)(4)(C), is also known as a d4C trust. It is established and managed by a charity or non-profit organization and is funded by the disabled person, for that individual’s sole benefit. The fundamental idea is that an individual’s trust is a subaccount within a master trust, a collection of other individual trusts. The managing entity oversees the collective individual trusts within the pool as a whole. The arrangement minimizes expenses for the individual trusts.  This type of trust may need a payback provision, depending upon the particular trust’s joinder agreement and may have age limits, for pre- and post-age 65 transfers, depending upon state law. A typical client may be one with minimal assets to fund into the trust, so that a traditional d4A trust would be fiscally unreasonable.

Sole Benefit Trusts

A sole benefit trust, authorized by subsection 1396p(c) of the US Code, is a hybrid trust. This type of trust is used to preserve the assets of a Medicaid applicant. The grantor funds the trust for the benefit of a disabled person under age 65 – or for a disabled child or spouse of any age – typically without suffering from transfer penalties for those transfers. This trust is often used as a life preserver during Medicaid crisis planning.

Of course, the rules of a particular state may have restrictions or create additional requirements for a sole benefit trust. In some states, a payback provision may not be required if the trust is actuarially sound – a model explained in a previous ElderCounsel blog.  Typically, the sole benefit trust must either pay out all assets within the beneficiary’s life expectancy, be payable to the beneficiary’s estate upon death, or include a payback provision reimbursing the state.

In Sum

Trusts can be a crucial tool for elder law and special needs planning attorneys. Knowing which trust would best benefit a client can be tough to grasp. The rules of law differ with each particular type of trust and within the individual states. One missing or inadequate element can mean the difference between a happy client eligible for Medicaid and one suffering from a severe penalty for an improper transfer made into the trust. A successful trust requires thoughtful planning and extensive knowledge.

Read more related articles at:

Your Special Needs Trust (“SNT”) Defined

Special Needs Trusts

Also, read  one of our previous Blogs at:

Estate Planning For Special Needs Family Members

Click here to check out our On Demand Video about Estate Planning.


Tax Codes

The End of a Step-up in Basis?

The End of a Step-up in Basis?

The End of a Step-up in Basis? A step-up in basis, or more accurately, a basis adjustment, has been a cornerstone of many estate plans throughout the years. Let’s take a look at what a basis adjustment is, how a step-up in basis works, and some recent news about its possible demise.

The basis of property is a tax term and it is the amount that someone paid for it. If that property is later sold, capital gains or losses must be reported. This would be an amount taxed on the difference of the original basis amount and the amount of the sales price.

However, a basis adjustment occurs when the property is inherited. Meaning, the beneficiary of that property receives it with a basis of its current fair market value instead of its original purchase price. Let’s look at an example. Nancy bought stock in XYZ Corp. in 1970. She paid $100,000 for it. It is now worth $500,000. If she sold it this year, she would have to pay capital gains tax on the $400,000 profit. Instead, if Nancy died this year and her son inherited the property, he would take the property with a basis of $500,000. He received a step-up in basis. Nancy’s son could then sell the property at its fair market value of $500,000 with no capital gains tax due.

A basis adjustment can even be preserved in irrevocable trust planning. In the EC Medicaid Asset Protection Trust®, a basis adjustment is achieved via reserving a limited power of appointment. Per Treasury Regulation 25.2511-(b)(2), a limited power of appointment is an incomplete gift. An incomplete gift means that the Grantor never relinquished full control of that asset and it will be included in his estate. If assets are includable in the Grantor’s estate, then the assets qualify for a step-up in basis. (See 26 US Code § 1014(b)(9). (While this planning is generally desirable, if the estate is subject to estate tax, then a decision will need to be made: Is a basis adjustment more desirable or is the avoidance of estate tax?)

There has been big news recently that there may be an end to the step-up in basis when property is inherited. The Sensible Taxation and Equity Promotion (STEP) Act has been introduced in the Senate. It proports to tax any transfer of property, including at death. However, there would be a $1 million exclusion for inherited property.

What are the ins and outs of this new proposed law? How would trust planning be impacted? Is it likely to pass? We hosted a webinar on June 14th to discuss the STEP Act and other proposed tax bills.

Read more related articles at:

What the STEP Act might mean to you

Sensible Taxation and Equity Promotion Act (STEP) of 2021| PFP learning library podcast

Also, Read one of our previous Blogs here:

What are My Taxes on a House I Inherited?

Click here to check out our On Demand Video about Estate Planning.



Nursing Home Charges

Does Voluntary Payment of Past-due Nursing Home Charges Violate Federal Law?

Does Voluntary Payment of Past-due Nursing Home Charges Violate Federal Law?

Does Voluntary Payment of Past-due Nursing home Charges Violate Federal Law? Federal law prohibits a nursing home from requiring that past-due expenses be paid as a condition for a resident to be admitted to or continue to stay at a facility. But what if someone volunteers such payment?

This issue was recently litigated in the Commonwealth of Kentucky Court of Appeals. In this case, Erma was in a nursing home and filed for Medicaid benefits about 6 months after her arrival. Erma’s application was approved and Medicaid paid 3-months retroactive benefits to the nursing home. During her private-pay tenure, Erma had accrued a balance of about $35,000.

Erma’s daughter, Christy, executed a promissory note to the nursing home that promised to pay for this balance. Christy made one payment under the note and then defaulted. The nursing home filed suit against her for payment. Christy argued that the nursing home could have sought payment from Medicaid.

The trial court ruled in favor of the nursing home and Christy appealed. We now have this case out of the appeals court. In her appellate brief, Christy raised new arguments. The appeals court allowed the introduction of new arguments, under the palpable error review rule. “A palpable error which affects the substantial rights of a party may be considered by the court on motion for a new trial or by an appellate court on appeal, even though insufficiently raised or preserved for review, and appropriate relief may be granted upon a determination that manifest injustice has resulted from the error.”

Christy’s new argument was that the promissory note was illegal under the Nursing Home Reform Act and other federal regulations. Such laws state that a nursing home cannot require a third-party guarantee of payment as a condition for a resident to be admitted to or continue to reside in a nursing home. Christy claimed that the nursing home’s bookkeeping department brought her in to sign the promissory note but she testified that she signed it voluntarily.

Interestingly, while other states have precedent that allows a voluntary payment of the past due amounts owed without incurring a violation of federal statutes, Kentucky had no precedent on the matter before the instant ruling. Other states’ precedents ruled that if the federal government had intended on forbidding third-party guarantee payments, they would have explicitly done so. However, the federal laws do not ban the payments in their entirety, but only if the payments are a condition on the resident staying at the nursing home. The Kentucky appeals court here jumped on the bandwagon with other states and ruled in favor of the nursing home. Christy executed the promissory note voluntarily so it wasn’t predicated as a condition before Erma was allowed to stay at the facility. As a result, Christy was on the hook for the amount of the note.

Read more related article at:

How Does Nursing Home Billing Work?

Nursing Home Costs and Ways to Pay

Also, Read one of our previous Blogs at:

Protect Your Estate from Nursing Home Costs

Click here to check out our On Demand Video about Estate Planning.

Grantors Trust

What is a Grantor Trust?

What is a Grantor Trust?

Grantor Trusts can be a source of confusion for elder law attorneys and their clients alike. That’s because they are not a typical type  The biggest difference to note is that it is about how the trust’s income is taxed rather than who receives the income or assets.

In short, a Grantor Trust is a trust in which the originator of the trust, retains control over it. Therefore, the income is included in the income of the deemed owner  rather than the trust or any other person. This distinction places them into the “revocable” category. The goal of establishing one is to tax someone other than the recipient on the income that is generated by the trust.

Because Trust status is an income tax concept (rather than a gift tax or estate tax concept), it includes both ordinary income and capital gains. The status could apply to one type of income but not the other — it’s not an all-or-nothing proposition. A person can also have power over a fractional share of the trust, causing grantor status only as to that share.

A originator usually acts as trustee of his own revocable living trust, retaining control over its income and assets. The grantor can appoint and change trust beneficiaries, and determine who who receives income from the trust. As the person making all of these decisions, he or she assumes the tax liability for the trust.

Types :

Because it is an income tax term, it’s not a term that elder law attorneys should be using with their clients. Instead, it’s helpful to understand the types of trust that fall under the Grantor Trusts umbrella.

These include Retained Interest Trusts, such as Revocable Trusts (or Living Trust), Grantor Retained Annuity Trusts (GRAT), and Qualified Personal Residence Trusts (QPRT). They can also include Intentionally Defective Grantor Trusts (IDGT). An IDGT is a completed transfer to a trust for transfer tax purposes but an incomplete, “defective” transfer for income tax purposes.


Read more related articles here:

Grantor Trust … The Good and the Bad

How a Grantor Trust Works

Also, read one of our previous Blogs here:

 Case Law: Grantor-retained Annuity Trust and Estate Taxes

Click here to check out our On Demand Video about Estate Planning.

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