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Inherited IRAs

Inherited IRAs Require Careful Handling

Inherited IRAs Require Careful Handling

For those who inherit IRAs, the intersection of taxes, estate law and financial planning can be a tricky place. There are many choices, maybe too many, and making the wrong choice can be costly, according to the recent article “6 inherited IRA rules all beneficiaries must know” from Bankrate.

There are two categories of beneficiaries. Surviving spouses, minor children, chronically ill or disabled individuals, or someone who is not less than 10 years younger than the original owner are subject to one set of rules. Everyone else has another set of rules.

You’ll need to know if the original owner had taken any RMDs—required minimum distributions—before they passed.

Did you want to minimize taxes, or is it more important for you to maximize cash distribution?

These are just a few of the issues to be addressed. Already complicated, inherited IRAs got even more complicated because of the SECURE Act, which changed some longstanding practices. Some experts tell beneficiaries not to do anything, until they meet with an estate planning attorney. The worst thing someone could do is make a wrong step and lose half of the IRA to taxes.

Here are the six rules for inherited IRAs:

1–Spouses have the most flexibility. The surviving spouse may treat the IRA as her own, naming herself as the owner. She can also roll it over into another account, such as another IRA or a qualified employer plan (including 403(b) plans). She could also treat herself as the beneficiary of the plan. However, each choice leads to further choices and decisions. She might let the IRA grow in the account until she reaches age 72, the new age for RMDs. Or she can roll the IRA into an IRA of her own, which lets her then name her own beneficiary.

2—When do you want to take the money? If you fall into the category of surviving spouses, minor children, chronically ill or disabled individuals, or someone who is not less than ten years younger than the original owner, then you can take the distributions over your own life expectancy. That’s the “stretch” option. Otherwise, you need to take distributions from the account over ten years, according to the SECURE Act. Depending on the size of the IRA, that could be a nasty tax bill. You can take as little or as much as you want, but by year ten after the owner’s death, the account must be empty.

3—Know about year of death required distributions. If the owner of the IRA did not take his RMD in the year of his death, beneficiaries are required to do so. If a parent dies in early January, for example, it’s not likely he took his RMD. The IRS doesn’t care if you didn’t know—you’ll be liable for a penalty of 50% of the amount that wasn’t taken out. If someone dies close to the end of the year, it’s possible that heirs might not know about the accounts until after the deadline has passed. If the deceased was not yet 70½, there is no-year-of-death distribution.

4—Get all the breaks you can—tax breaks. For estates subject to the estate tax, IRA beneficiaries will get an income-tax deduction for estate taxes paid on the account. The taxable income earned but not received by the deceased is called “income in respect of a decedent.” When someone takes a distribution from an IRA, it’s treated as taxable income. However, the decedent’s estate is paying a federal estate tax, so beneficiaries get an income-tax deduction for estate taxes paid on the IRA. For a $1 million income in an inherited IRA, there could be a $350,000 deduction offset against that.

5—Beneficiary forms matter. An entire estate plan can be undone by a missing beneficiary form, or one that is not filled out correctly or is ambiguous. If there is no designated beneficiary form and the account goes to the estate, the beneficiary will need to take the distribution from the IRA in five years. Forms that aren’t updated, are missing, or don’t clearly identify the individuals create all kinds of expensive headaches.

6—Improperly drafted trusts are trouble. If they are done wrong, a trust can limit beneficiary options in a big way. If the provisions in the trust are not properly drafted, some custodians won’t be able to see through the trust to determine the qualified beneficiaries. Any ability to maximize the time to take money out of an IRA could be lost. An experienced estate planning attorney who knows the rules about IRAs and trusts is a must.

Reference: Bankrate (July 17, 2020) “6 inherited IRA rules all beneficiaries must know”

Read more related articles at:

Avoiding Mistakes When You Inherit an IRA

Understanding The RMD Rules For Inherited IRAs

Also, read one of our previous Blogs at:

Tapping an Inherited IRA?

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

Medicaid Estate Recovery

Should I Worry about Medicaid Estate Recovery?

Should I Worry about Medicaid Estate Recovery?

What is It? The Medicaid Estate Recovery Program (MERP) may be used to recoup costs paid toward long-term care. It’s designed to help make the program affordable for the government, but it can financially affect the beneficiaries of Medicaid recipients.

AOL’s article entitled “What Is Medicaid Estate Recovery?” explains that’s where Medicaid can help fill the void. Medicaid can assist with paying the costs of long-term care for aging seniors. It can be used when someone doesn’t have long-term care insurance coverage, or they don’t have the assets to pay for long-term care out of pocket. It can also be used to pay for nursing home care, if you’ve taken steps to protect assets using a trust or other estate planning tools.

However, the benefits you (or an aging parent) receive from Medicaid are not necessarily free. The Medicaid Recovery Program lets Medicaid recoup or get back the money spent on behalf of an aging senior to cover long-term care costs. Federal law requires states to attempt to seek reimbursement from a Medicaid beneficiary’s estate when they die.

How It Works. The Medicaid Estate Recovery Program lets Medicaid seek recompense for a variety of costs, including:

  • Nursing home-related expenses or other long-term care facility stays
  • Home- and community-based services
  • Medical services from a hospital (when the recipient is a long-term care patient); and
  • Prescription drug services for long-term care recipients.

If you (or an aging parent) die after receiving long-term care or other benefits through Medicaid, the recovery program allows Medicaid to pursue any eligible assets held by your estate. Exactly what that includes depends on your state, but generally any assets that would be subject to the probate process after you pass away are fair game.

That may include bank accounts you own, your home or other real estate and vehicles or other real property. Each state makes its own rules. Medicaid can’t take someone’s home or assets before they pass away, but it’s possible for a lien to be placed upon the property.

What Medicaid Estate Recovery Means for Heirs. The biggest thing about the Medicaid estate recovery for heirs of Medicaid recipients is that they might inherit a reduced estate. Medicaid estate recovery rules also exclude you personally from paying for your parents’ long-term care costs. However, filial responsibility laws don’t. It is rare, but the laws of some states let healthcare providers sue the children of long-term care recipients to recover nursing care costs.

How to Avoid Medicaid Estate Recovery. Strategic planning with the help of an elder law attorney can help you or your family avoid financial impacts from Medicaid estate recovery. You should think about buying long-term care insurance for yourself. A long-term care insurance policy can pay for the costs of nursing home care, so you can avoid the need for Medicaid altogether.

Another way to avoid Medicaid estate recovery is to remove assets from the probate process. For example, married couples can do this by making certain that assets are jointly owned with right of survivorship or using assets to purchase an annuity to transfer benefits to the surviving spouse when the other spouse passes away. You should know which assets are and are not subject to probate in your state and whether your state allows for an expanded definition of recoverable assets for Medicaid. Speak with an experienced elder law lawyer for assistance.

Medicaid estate recovery may not be something you have to concern yourself with, if your aging parents leave little or no assets in their estate. However, you should still be aware of it, if you expect to inherit assets from your parents when they die.

Reference: AOL (Feb. 5, 2021) “What Is Medicaid Estate Recovery?”

Read more related articles at:

Medicaid’s Power to Recoup Benefits Paid: Estate Recovery and Liens

Medicaid Estate Recovery: Long-Term Care Benefits Aren’t Necessarily ‘Free’

Also, read one of our previous Blogs at:

Dark Side of Medicaid Means You Need Estate Planning

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

charitable Remainder Trust

How Do I Use a Charitable Remainder Trust with a Large IRA?

How Do I Use a Charitable Remainder Trust with a Large IRA?

Since the mid-1970s, saving in a tax-deferred employer-sponsored retirement plan has been a great way to save for retirement, while also deferring current income tax. Many workers put some of their paychecks into 401(k)s, which can later be transferred to a traditional Individual Retirement Account (IRA). Others save directly in IRAs.

Kiplinger’s recent article entitled “Worried about Passing Down a Big IRA? Consider a CRT” says that taking lifetime IRA distributions can give a retiree a comfortable standard of living long after he or she gets their last paycheck. Another benefit of saving in an IRA is that the investor’s children can continue to take distributions taxed as ordinary income after his or her death, until the IRA is depleted.

Saving in a tax-deferred plan and letting a non-spouse beneficiary take an extended stretch payout using a beneficiary IRA has been a significant component of leaving a legacy for families. However, the Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act), which went into effect on Jan. 1, 2020, eliminated this.

Under the new law (with a few exceptions for minors, disabled beneficiaries, or the chronically ill), a beneficiary who isn’t the IRA owner’s spouse is required to withdraw all funds from a beneficiary IRA within 10 years. Therefore, the “stretch IRA” has been eliminated.

However, there is an option for extending IRA distributions to a child beyond the 10-year limit imposed by the SECURE Act: it’s a Charitable Remainder Trust (CRT). This trust provides for distributions of a fixed percentage or fixed amount to one or more beneficiaries for life or a term of less than 20 years. The remainder of the assets will then be paid to one or more charities at the end of the trust term.

Charitable Remainder Trusts can provide that a fixed percentage of the trust assets at the time of creation will be given to the current individual beneficiaries, with the remainder being given to charity, in the case of a Charitable Remainder Annuity Trust (CRAT). There is also a Charitable Remainder Unitrust (CRUT), where the amount distributed to the individual beneficiaries will vary from year to year, based on the changing value of the trust. With both trusts, the amount of the charity’s remainder interest must be at least 10% of the value of the trust at its inception.

Implementing a CRT to extend distributions from a traditional IRA can have tax advantages and can complement the rest of a comprehensive estate plan. It can be very effective when your current beneficiary has taxable income from other sources and resources, in addition to the beneficiary IRA.  It can also be effective in protecting the IRA assets from a beneficiary’s creditors or for planning with potential marital property, while providing the beneficiary a lengthy predictable income stream.

Ask an experienced estate planning attorney, if one of these trusts might fit into your comprehensive estate plan.

Reference: Kiplinger (Feb. 8, 2021) “Worried about Passing Down a Big IRA? Consider a CRT”

Read more related articles at:

How A Charitable Trust Could Save Your IRA

The Charitable Remainder Trust: How to Protect & Stretch Your IRA

Also, read one of our previous Blogs at:

Stretch Out IRA Distributions, Even Without ‘Stretch’ IRA

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


Don’t Wait Until Your Parents Become Incapacitated to Plan for Your Future!

dying intestate

What Does it Mean to Die Intestate?

The Basics of Intestate Heir Law


The term “heir” is frequently heard with intriguing implications in movies and books, but what exactly is the definition?” It’s anyone who is entitled to inherit from the estate of someone who fails to leave a valid last will and testament or to create any other form of an estate plan.

Rules and Laws Defining Intestate Heirs 

Determining who is entitled to inherit comes down to each state’s “intestacy” laws. Sometimes it’s the state where the decedent lived that determines his heirs. Sometimes it’s the state where his physical property was located at the time of his death, and to really complicate things, sometimes it’s both. When a decedent leaves a will, his heirs may be beneficiaries under its terms — or they may not be. Likewise, all beneficiaries are not necessarily heirs. Here’s an example of how an intestate estate — one without a will — is typically distributed.

The Heirs That Are Eligible to Inherit

    • The order in which heirs inherit from a decedent’s estate when he has no estate plan is called “intestate succession.” It’s a list of kin who have the first right to inherit. Someone further down on the list typically will not inherit anything if those who are ahead of him are still living.
    • A surviving spouse almost invariably receives at least half the decedent’s estate. She may receive the entire estate if the decedent leaves no living children or grandchildren.
    • Spouses and children typically share the entire state if all are living. If a child has predeceased the decedent, his children — the decedent’s grandchildren — will typically inherit their parent’s share. Otherwise, they may not be entitled to personally inherit if their parents are still living. Parents and siblings are typically next in line, followed by aunts, uncles, nieces, nephews, and cousins. In some states, the decedent’s parents may share his estate with his surviving spouse if he has no living descendants — children, grandchildren or great-grandchildren.  Unmarried partners, friends, and charities are not heirs, regardless of how emotionally close they may have been or how much the decedent supported them during his lifetime.

A Few Other Rules 

  • Adopted children are heirs just as though they were born to the decedent, as well as children that may be born after his death. Stepchildren are typically not considered heirs or entitled to inherit from their stepparent by law if he did not leave a will naming them as beneficiaries.
  • An heir who criminally caused the death of the decedent is often barred from inheriting from him.

Property Not Subject to Intestate Succession 

Heirs can only inherit from a decedent’s probate estate — and yes, probate is still required without a will. The process just follows state law rather than a decedent’s final wishes.  The probate estate does not include property that passes directly to a named beneficiary by some other means, such as by deed or a life insurance policy. If a decedent dies owning only real estate titled with someone else with rights of survivorship and a life insurance policy naming his son as beneficiary, his other heirs would receive nothing because he would have no probate estate.

Read more related articles at:

Divorce and Estate Planning Changes

Revising Your Estate Plan After Divorce

Revising Your Estate Plan After Divorce

If you don’t update your will, trust, and beneficiary designations, your ex could inherit.

If you’re going through the emotional and financial turmoil of a divorce, estate planning may be the last thing on your mind. But after a divorce, you need to take steps to update your estate plan. If you don’t, then at your death your assets could be distributed in ways that you neither expect nor want—including to your ex-spouse. Here are three steps you can take to make sure your estate plan reflects your current life and wishes.


Start by revoking your old Will  (literally tearing it up is the best way) and making a new one. If you don’t already have a will, now’s the time to make one. It isn’t difficult; hire a lawyer. The same is true if you made a living trust while you were married.

A will is where you:

  • Leave your property to the people of your choice.
  • Name an executor to wrap up your estate when the time comes.
  • Nominate a guardian to take care of young children if it’s ever necessary.

All of these choices may be affected by divorce. Let’s look at them one by one.

Leave property

If you’re like most people, if you made a will while you were married, you left everything to your spouse—probably not the result you want now. It’s best to start fresh with a new will, naming new beneficiaries and alternate beneficiaries, who would inherit if your first choice didn’t outlive you. In most states, if you get divorced after making a will, any gifts that your will makes to your former spouse are automatically revoked. For example, California law states that dissolution (divorce) or annulment of a marriage revokes any bequests that your will made to your former spouse. (Cal. Probate Code § 6122.) The rest of the will is not affected. But it’s not a good idea rely on state law. Not every state has a law like California’s, and laws can change. Also, the law doesn’t take effect until you have a final decree of divorce—if you’re still in the divorce process, gifts to your spouse are still valid. In some states, gifts to relatives of your former spouse are also revoked by divorce. For example, Arizona law revokes gifts in a will made to anyone related to your former spouse by blood, adoption, or affinity (marriage). (Ariz. Rev. Stat. § 14-2804.) If your state has such a law and your will leaves property to your former spouse’s child (your former stepchild), divorce would revoke the gift to the child. Relying on state law also can create some uncertainty about what happens to the property you left to your former spouse, if state law revokes that provision of your will. The general rule is that the property passes as though your former spouse had died before you did. So if your will named an alternate (contingent) beneficiary for that gift, that beneficiary inherits. If you didn’t name an alternate beneficiary, but did name a “residuary beneficiary,” then that beneficiary inherits. Otherwise the property passes under state law, as if there were no will, to your closest surviving relatives. Those potential complications underscore the importance of making a new will. That way, it will be clear about who you want to inherit, and you can name alternates as well.

Name an executor

If you don’t want your ex-spouse to inherit your property, you probably don’t want him or her in charge of your estate, either. But if you named your spouse as your executor (called your personal representative in some states), it could happen unless you make a new will. In many states, divorce revokes the appointment of a former spouse to serve as executor of the will or trustee of a trust. The alternate executor, if you named one in your will, would serve instead. Still, don’t count on state law—in your new will, appoint a new executor and an alternate.

Name a guardian for your minor children

A key reason that many parents of young children make wills is to name a guardian, who would raise their children in the unlikely event neither parent could. If you have kids under 18, that’s probably one reason you want to make a will. A court will appoint a guardian to care for a child only if both parents are deceased or unfit. (And courts find a parent unfit only if there is a serious and ongoing problem, such as a history of child abuse or addiction.) If you don’t want your ex-spouse to raise your children in the event of your untimely death because you don’t think he or she is a good person or a good parent, it’s probably not something you can prevent. In your will, however, you can name whomever you choose to serve as guardian, in case both you and the other parent aren’t available. (It is, thankfully, rare for both parents to be unavailable.) If you feel strongly that the other parent shouldn’t have custody of your children, write down your reasons in a letter and attach it to your will. It will at least give the judge something to consider.

2. Update Beneficiary Designations

As important as your will is, it might now cover some of your most valuable assets. Many assets pass outside of a will, to beneficiaries named on paperwork provided by a bank or insurance company. So be sure to update your beneficiary designations for:

  • Life insurance policies
  • Retirement accounts such as IRAs and 401(k)s
  • Pay-on Death Bank Accounts
  • Transfer-on-death brokerage accounts
  • To name a new person to inherit these assets, request new documents from your bank, brokerage company, or employer, and submit them as soon as possible. Don’t assume that state law (or even the terms of a divorce decree) will revoke any earlier designations you made naming your former spouse. Certain “qualified plans,” such as 401(k)s, pensions, and employer-provided life insurance policies, are governed by a federal law called ERISA (the Employee Retirement Income Security Act). And ERISA says that a plan administrator must turn funds over to the beneficiary named in the plan documents—no matter what state law says. So if your former spouse is still the named beneficiary, he or she will inherit unless you change the paperwork.

3. Make New Powers of Attorney

Powers of attorney—documents that give someone authority to act for you if it’s ever necessary—are a big part of an estate plan. You should have two powers of attorney: one for healthcare (medical decisions), and one for financial matters. If you already have powers of attorney that give your former spouse authority to make decisions on your behalf, revoke them and make new documents.

Read more related articles at:

Estate Planning Documents to Update When Getting a Divorce

8 Estate Planning Moves If You Are Getting Divorced

Also, Read one of our previous Blogs at:

What Does My Estate Plan Look Like after Divorce?

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


What is a Disability Panel and How Does it Work?

What is a Disability Panel and How Does it Work?


What is a Disability Panel and How Does it Work? Aging can be both rewarding and challenging. With age we gain the wisdom we wish we would have had in our youth. We have lived to an age where we have gotten to experience a lot of what life has to offer. We may have gotten to watch our children grow into fine adults, having children of their own, now our Grandchildren. We can look back on our life and see the things we have accomplished and what we will be leaving as our Legacy.

Some of us were able to amass some wealth to pass onto future generations, some of us will need that wealth to carry us into old age. Whatever our situation is, we are not getting any younger and we all know with age we experience some decline both physically and mentally. There may come a time when we develop Dementia or Alzheimer’s and need our trusted loved ones to help or actually make decisions for us. Don’t wait until it is too late to make your wishes known. Although macabre, it is a fact of life, one day we will pass on. We may do so fully capacitated, or we may become incapacitated before we pass.

Right now, is the time to make our wishes known. While we are still cognizant and in control. There are so many decisions you can make when it comes to end-of-life decisions. We do not think of them on a daily basis, and it is not the most enjoyable thing to think about, but it should be considered.

Establishing a Trust, Living Will, and Advanced Healthcare Directives is a start in the right direction. At Legacy Planning Law group all of our Trust packages come with a Living Will, a Last Will and Testament, a Durable Power of Attorney, and Advanced Healthcare Directives. We got you covered at every end.

We also include the option for a Disability Panel. What is a Disability Panel you might ask? A Disability Panel is a group of people of your choosing who will decide if and when you are truly incapacitated and unable to make good decisions. This panel could include, for instance, your primary care physician, an appropriate specialist recommended by the doctor and approved by your spouse, your spouse, adult children, etc. You decide whether the panel’s decision must be unanimous, or by a majority vote. This puts you in complete control.

Although unpleasant, it’s never too soon to start planning and getting your affairs in order!

Read more related articles at:

Disability Panel, Would One Benefit You?

Don’t Let a Random Doctor Decide Your Fate – Establishing an Individualized Disability Panel to Determine If You Are Disabled

Also, read one of our previous Blogs at:

How Do I Talk about End-Of-Life Decisions?

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


I’m NOT in a Low-Income Bracket, I Couldn’t Possibly Qualify for Medicaid, Think Again!

I’m NOT in a Low-Income Bracket, I Couldn’t Possibly Qualify for Medicaid, Think Again!

I’m NOT in a Low-Income Bracket, I Couldn’t Possibly Qualify for Medicaid, Think Again! Think you make too much money to be eligible for Medicaid? Have too many assets and too much savings? Think Medicaid is only for the poor and less fortunate? Think again! Medicaid for some is a best kept secret. It has long been stigmatized as a program for the poor and less fortunate, but Medicaid also exists for people who are Pregnant, or are responsible for a child 18 years of age or younger, or  for the Blind, or  those who have a disability or a family member in your household with a disability, or  if you are 65 years of age or older.

Being an Elder Law Attorney, we will focus more on Medicaid eligibility requirements for seniors, but the related articles also touch on the other eligibility requirements as well for others. We also are professionals in Special Needs Trusts and Planning, which falls into the category of those with disabilities. We have over 20 years of experience exclusively in Elder Law and Estate Planning. those are the only area’s our Attorney practices so he is an expert on these areas. Let us show you how Medicaid can be a valuable asset in helping in your long term planning and helping to protect the assets you’ve worked so hard to obtain. Our Attorney knows Medicare and how it works and how it can be advantageous to your specific scenario.

Florida Medicaid Eligibility Requirements For Seniors

What is Medicaid?

Medicaid is a jointly funded, Federal-State health care program for persons who are financially eligible. Medicaid provides care for acute medical needs, rehabilitation, and long-term care at home and in nursing homes. There are also numerous community-based programs, including adult day care, and assistance with local transportation.

Does Medicaid Pay for Long-term Care?

Yes, Medicaid pays for long-term care in a nursing home. In a few states it also pays for long-term senior care in the home. Medicare on the other hand, does not pay for long-term care.

If I Give Away My House and All My Money Will I Qualify?

Not anymore. There is a 5-year look-back law now. Uncle Sam can find your money and make you pay. You should consult an Elder-law attorney to understand the acceptable ways to “spend-down” assets to qualify for Medicaid as a low-income senior. You can gift some assets, within limits, to a beneficiary, but you should remember that these assets will no longer be in your control. Also, remember that the leading type of elder abuse is financial, many times by a family member. Spousal poverty protection laws have been passed to allow the spouse of a senior who needs long-term nursing home care to maintain usually up to 50% of the couple’s assets.

How do I apply?Applications are available through your state Medicaid program. but it is very helpful to seek the advice of an attorney to help you navigate this process.

How soon will coverage start?

Coverage can possibly begin from 3-months prior to the application’s approval. Applications sometimes take longer than expected. You should ask about the usual approval timeframe when you submit your initial application for Medicaid coverage.

What is the minimum asset requirement to qualify?

Asset requirements are usually limited at $2,000.00, but your Attorney will know what is specific to you and your situation.

Does Medicaid long-term care have a limit?

No, Medicaid will pay for long-term care in a nursing home for as long as a senior qualifies for needing the care, even if this means multiple years of care until death.

Medicaid ServicesFlorida Agency for Health Care Administration
Florida Medicaid Services
(866) 762-2237

Read more related articles here:

Florida Medicaid

Florida Statewide Medicaid Managed Care Long-Term Care Program (SMMC LTC)

Also, read one of our previous Blogs here:

How to Plan for Spouse’s Medicaid

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



advanced directives

Living Wills and Advance Directives for Medical Decisions

Living wills and advance directives for medical decisions

Plan ahead and get the medical care you want at the end of life.

By Mayo Clinic Staff

Living wills and other advance directives are written, legal instructions regarding your preferences for medical care if you are unable to make decisions for yourself. Advance directives guide choices for doctors and caregivers if you’re terminally ill, seriously injured, in a coma, in the late stages of dementia or near the end of life. Advance directives aren’t just for older adults. Unexpected end-of-life situations can happen at any age, so it’s important for all adults to prepare these documents. By planning ahead, you can get the medical care you want, avoid unnecessary suffering and relieve caregivers of decision-making burdens during moments of crisis or grief. You also help reduce confusion or disagreement about the choices you would want people to make on your behalf.

Power of attorney

A medical or health care power of attorney is a type of advance directive in which you name a person to make decisions for you when you are unable to do so. In some states this directive may also be called a durable power of attorney for health care or a health care proxy. Depending on where you live, the person you choose to make decisions on your behalf may be called one of the following:

  • Health care agent
  • Health care proxy
  • Health care surrogate
  • Health care representative
  • Health care attorney-in-fact
  • Patient advocate

Choosing a person to act as your health care agent is important. Even if you have other legal documents regarding your care, not all situations can be anticipated and some situations will require someone to make a judgment about your likely care wishes. You should choose a person who meets the following criteria:

  • Meets your state’s requirements for a health care agent
  • Is not your doctor or a part of your medical care team
  • Is willing and able to discuss medical care and end-of-life issues with you
  • Can be trusted to make decisions that adhere to your wishes and values
  • Can be trusted to be your advocate if there are disagreements about your care

The person you name may be a spouse, other family member, friend or member of a faith community. You may also choose one or more alternates in case the person you chose is unable to fulfill the role.

Living will

A living will is a written, legal document that spells out medical treatments you would and would not want to be used to keep you alive, as well as your preferences for other medical decisions, such as pain management or organ donation. In determining your wishes, think about your values. Consider how important it is to you to be independent and self-sufficient, and identify what circumstances might make you feel like your life is not worth living. Would you want treatment to extend your life in any situation? All situations? Would you want treatment only if a cure is possible? You should address a number of possible end-of-life care decisions in your living will. Talk to your doctor if you have questions about any of the following medical decisions:

  • Cardiopulmonary resuscitation (CPR) restarts the heart when it has stopped beating. Determine if and when you would want to be resuscitated by CPR or by a device that delivers an electric shock to stimulate the heart.
  • Mechanical ventilation takes over your breathing if you’re unable to breathe on your own. Consider if, when and for how long you would want to be placed on a mechanical ventilator.
  • Tube feeding supplies the body with nutrients and fluids intravenously or via a tube in the stomach. Decide if, when and for how long you would want to be fed in this manner.
  • Dialysis removes waste from your blood and manages fluid levels if your kidneys no longer function. Determine if, when and for how long you would want to receive this treatment.
  • Antibiotics or antiviral medications can be used to treat many infections. If you were near the end of life, would you want infections to be treated aggressively or would you rather let infections run their course?
  • Comfort care (palliative care) includes any number of interventions that may be used to keep you comfortable and manage pain while abiding by your other treatment wishes. This may include being allowed to die at home, getting pain medications, being fed ice chips to soothe mouth dryness, and avoiding invasive tests or treatments.
  • Organ and tissue donations for transplantation can be specified in your living will. If your organs are removed for donation, you will be kept on life-sustaining treatment temporarily until the procedure is complete. To help your health care agent avoid any confusion, you may want to state in your living will that you understand the need for this temporary intervention.
  • Donating your body for scientific study also can be specified. Contact a local medical school, university or donation program for information on how to register for a planned donation for research.

Do not resuscitate and do not intubate orders

You don’t need to have an advance directive or living will to have do not resuscitate (DNR) and do not intubate (DNI) orders. To establish DNR or DNI orders, tell your doctor about your preferences. He or she will write the orders and put them in your medical record. Even if you already have a living will that includes your preferences regarding resuscitation and intubation, it is still a good idea to establish DNR or DNI orders each time you are admitted to a new hospital or health care facility.

Creating advance directives

Advance directives need to be in writing. Each state has different forms and requirements for creating legal documents. Depending on where you live, a form may need to be signed by a witness or notarized. You should ask a lawyer to help you with the process.

Review your advance directives with your doctor and your health care agent to be sure you have filled out forms correctly. When you have completed your documents, you need to do the following:

  • Keep the originals in a safe but easily accessible place.
  • Give a copy to your doctor.
  • Give a copy to your health care agent and any alternate agents.
  • Keep a record of who has your advance directives.
  • Talk to family members and other important people in your life about your advance directives and your health care wishes. By having these conversations now, you help ensure that your family members clearly understand your wishes. Having a clear understanding of your preferences can help your family members avoid conflict and feelings of guilt.
  • Carry a wallet-sized card that indicates you have advance directives, identifies your health care agent and states where a copy of your directives can be found.
  • Keep a copy with you when you are traveling.

Reviewing and changing advance directives

You can change your directives at any time. If you want to make changes, you must create a new form, distribute new copies and destroy all old copies. Specific requirements for changing directives may vary by state. You should discuss changes with your primary care doctor and make sure a new directive replaces an old directive in your medical file. New directives must also be added to medical charts in a hospital or nursing home. Also, talk to your health care agent, family and friends about changes you have made. Consider reviewing your directives and creating new ones in the following situations:

  • New diagnosis. A diagnosis of a disease that is terminal or that significantly alters your life may lead you to make changes in your living will. Discuss with your doctor the kind of treatment and care decisions that might be made during the expected course of the disease.
  • Change of marital status. When you marry, divorce, become separated or are widowed, you may need to select a new health care agent.
  • About every 10 years. Over time your thoughts about end-of-life care may change. Review your directives from time to time to be sure they reflect your current values and wishes.

Physician orders for life-sustaining treatment (POLST)

In some states, advance health care planning includes a document called physician orders for life-sustaining treatment (POLST). The document may also be called provider orders for life-sustaining treatment (POLST) or medical orders for life-sustaining treatment (MOLST). A POLST is intended for people who have already been diagnosed with a serious illness. This form does not replace your other directives. Instead, it serves as doctor-ordered instructions — not unlike a prescription — to ensure that, in case of an emergency, you receive the treatment you prefer. Your doctor will fill out the form based on the contents of your advance directives, the discussions you have with your doctor about the likely course of your illness and your treatment preferences. A POLST stays with you. If you are in a hospital or nursing home, the document is posted near your bed. If you are living at home or in a hospice care facility, the document is prominently displayed where emergency personnel or other medical team members can easily find it. Forms vary by state, but essentially a POLST enables your doctor to include details about what treatments not to use, under what conditions certain treatments can be used, how long treatments may be used and when treatments should be withdrawn. Issues covered in a POLST may include:

  • Resuscitation
  • Mechanical ventilation
  • Tube feeding
  • Use of antibiotics
  • Requests not to transfer to an emergency room
  • Requests not to be admitted to the hospital
  • Pain management

POLST also indicates what advance directives you have created and who serves as your health care agent. Like advance directives, POLSTs can be canceled or updated.

Read more related articles at:

Advance Care Planning: Health Care Directives

Advance Medical Directives (Living Will, Power of Attorney, and Health Care Proxy)

Also, read one of our previous Blogs at:

Why Do I Need an Advanced Healthcare Directive?

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

Special needs planning

Financial Planning for Loved Ones with Disabilities

Financial planning for loved ones with disabilities

Your challenges are unique, so you need strategies that can help meet your needs.

  • Planning for the future can be overwhelming, but creating a care plan is one place to start for a family dealing with a member who has a disability.
  • Your loved one might qualify for local or federal benefits and you might be able to save for their needs in a tax-advantaged ABLE account.
  • For long-term planning, you might want to consider a trust for an individual with special needs.

When you have a family member with special needs, you think about so many things all at once that future planning often gets shunted aside in favor of getting through today. But most of the challenges you face are not temporary. So when you are ready, you should consider thinking through the whole life cycle of help that is ahead of you. “When families first get started on this process, they are usually in emergency mode, and there are 20 things they need to take care of right that second,” says Justin McNeeley, a CFP® at Fidelity based in Covington, Kentucky, who has planned for his own child who has special needs. “It’s hard to focus on what more there might be, but you have to look at it like an ounce of planning is worth a pound of cure.”To help get started, try thinking about your planning in life stages:


Figuring out the financial parameters of caring for a family member with special needs often starts with the care plan, known as a letter of intent. For most people, this is not a formal legal document or template, but more of a handbook that guides your future support team on how to provide the best care for your loved one. When crafting your letter of intent, there is no standard set of requirements. You can begin with basic information and add more over time. Some good places to start might be your loved one’s daily routine, their medical care, and their life goals, and plans. From there, you can figure out your financial needs. For example, does your house need structural modification? Or does one spouse intend to be a primary caretaker and not work full-time? There are many variables, like the age of your loved one, the exact nature of their disability, and the overall financial condition of your family.

Intermediate planning

The good test for when you need to do advanced financial planning for an individual with special needs is if you anticipate them needing assistance caring for themselves through adulthood. When you determine the severity of the need, you can then figure out what level of local and federal benefits are involved. One account some families use to provide for special needs adults is the ABLE account, a tax-advantaged savings account for individuals with disabilities, named from the Achieving a Better Life Experience Act of 2014. According to federal law, individuals lose eligibility to certain government benefits if they have more than $2,000 in countable resources ($3,000, if married), according to the Social security Administration. But by saving in an ABLE account, some families can help shield contributions from that countable resources limit. What’s more, after-tax contributions to these accounts can grow tax-deferred, and if withdrawals are used for qualified disability expenses, which includes but is not limited to rent, food, transportation, education and employment training, health care, and personal support services, any earnings on such distributions will be federal income tax-free. These accounts don’t make sense for everyone, so consult with a financial advisor to see if it is a good strategy for you.

Long-term planning

It can be hard for families to look far down the road and think about what happens when primary caregivers are no longer able to care for their loved one, but setting up for the future can prevent mistakes later on that could negatively impact benefits and cause conflict. One very important thing is to have a legal guardianship plan in place in case one of the caregivers dies. “Every parent should consider doing this,” says McNeeley, who is a consultant for Fidelity’s Lifetime Engagement group, “but especially so if you have a child with special needs, and if you couple that with having a detailed care plan, you can help make sure that your loved one’s future care team is set up for success.” There are several types of trusts that many families establish for the benefit of individuals with special needs. One of the most common is a third-party special needs trust, and is created by someone who wants to leave money for a dependent with special needs but doesn’t want that person to lose out on government benefits. The trust can be established by a will or created during the benefactor’s lifetime. The creators of the trust appoint a trustee who has discretion over when and how funds are distributed. The trustee cannot distribute money directly to the dependent, but they can pay for certain items and services not covered by the dependent’s monthly Supplemental Security Income (SSI) for disability. Upon the death of the dependent, whatever assets are left in the trust can be distributed according to the creator’s wishes as specified in the terms of the trust. Some families also use a first-party special needs trust, which is designed for individuals with special needs who come into money through an inheritance, a settlement, or other unexpected means, and are under age 65. These trusts are designed to ensure that the money doesn’t jeopardize means-tested eligibility for government benefits. “If family members want to leave money, they have to be careful and coordinate their intention with the beneficiary and the caregivers,” says McNeeley. Least common is a pooled trust, which allows nonprofit organizations to set up and manage first-party and/or third-party pooled special needs trusts for the benefit of any number of people with special needs.

Bottom line

All estate plans need to evolve over time, to keep pace with changes in people’s lives and financial situations. Each of these types of trusts come with their own benefits and limitations. Whether a special needs trust is an appropriate solution and, if so, which type is best suited for your particular situation and that of your loved one, is best discussed with an experienced attorney. And no matter which type you choose, try to build some flexibility into your plan. To make sure your plan stays current, review it every 3 to 5 years, or whenever your life or your family changes in a major way. That way you can be confident that your loved ones will be cared for when you’re no longer here to look after them financially.

Read more related articles at:

Family members with disabilities need special planning

Special needs planning essentials

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.


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