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Trusts: The Swiss Army Knife of Estate Planning


Trusts serve many different purposes in estate planning. They all have the intent to protect the assets placed within the trust. The type of trust determines what the protection is, and from whom it is protected, says the article “Trusts are powerful tools which can come in many forms,” from The News Enterprise. To understand how trusts protect, start with the roles involved in a trust.

The person who creates the trust is called a “grantor” or “settlor.” The individuals or organizations receiving the benefit of the property or assets in the trust are the “beneficiaries.” There are two basic types of beneficiaries: present interest beneficiaries and “future interest” beneficiaries. The beneficiary, by the way, can be the same person as the grantor, for their lifetime, or it can be other people or entities.

The person who is responsible for the property within the trust is the “trustee.” This person is responsible for caring for the assets in the trust and following the instructions of the trust. The trustee can be the same person as the grantor, as long as a successor is in place when the grantor/initial trustee dies or becomes incapacitated. However, a grantor cannot gain asset protection through a trust, where the grantor controls the trust and is the principal recipient of the trust.

One way to establish asset protection during the lifetime of the grantor is with an irrevocable trust. Someone other than the grantor must be the trustee, and the grantor should not have any control over the trust. The less power a grantor retains, the greater the asset protection.

One additional example is if a grantor seeks lifetime asset protection but also wishes to retain the right to income from the trust property and provide a protected home for an adult child upon the grantor’s death. Very specific provisions within the trust document can be drafted to accomplish this particular task.

There are many other options that can be created to accomplish the specific goals of the grantor.

Some trusts are used to protect assets from taxes, while others ensure that an individual with special needs will be able to continue to receive needs-tested government benefits and still have access to funds for costs not covered by government benefits.

An estate planning attorney will have a thorough understanding of the many different types of trusts and which one would best suit each individual situation and goal.

Reference: The News Enterprise (July 25, 2020) “Trusts are powerful tools which can come in many forms”

Read one of our previous Blogs at:

What Happens If I Don’t Fund My Trust?

Click here to check out our Master Class!

Spendthrift Son in Law

How Do I Keep My Spendthrift Son-in-Law from Getting the Money I Give my Daughter in My Estate?

Say that you were to name your daughter as the beneficiary on your Roth IRA and 401(k) accounts, as well as your house and other investments. Her husband would not be a beneficiary.

His only source of income is a monthly stipend that he receives from a trust and earned income from being a rideshare driver. He has at least $5,000 in credit card debt.

Can Mom use a “bloodline trusts” to prevent her son-in-law from inheriting or getting her money when she dies?

Nj.com’s recent article entitled “Can I protect my daughter’s inheritance from her husband?” explains that “bloodline trusts” were created for this very reason.

Note first that retirement assets can’t be re-titled to a trust. However, a home can be, and investments can be, if they’re not tax deferred.

For assets that can’t be re-titled to the bloodline trust during your lifetime, you can name the trust as the payable-on-death (POD) beneficiary of those assets.

You also should take care in deciding on who you choose as a trustee.

In the situation above, depending on applicable law for your state of residence, the daughter may not be the sole trustee and the sole beneficiary under this form of trust arrangement. However, in all instances, a bank or attorney can be a co-trustee.

This trust arrangement ensures that assets distributed to the daughter aren’t commingled with the assets of her husband with extravagant tastes and an open checkbook. In addition, those assets would not be subject to equitable distribution in the event of a divorce.

If the daughter is the sole trustee over a bloodline trust, then all the planning will be out the window, if the daughter does not agree to this set-up.

For example, if she takes distributions from the trust and deposits them in a joint account with her husband, the money is available for equitable distribution.

This means the daughter arguably has indicated that she does not think of her inheritance as a non-marital asset.

A divorce court would see it the same way and award a portion to the husband in a break-up.

Reference: nj.com (July 21, 2020) “Can I protect my daughter’s inheritance from her husband?”

Read More Related Articles at:

I have a terminal illness and our son-in law is unreliable with money – how can we protect daughter’s inheritance?

How to Keep Your Heirs from Blowing Their Inheritance

Also, Read one of our previous Blogs at:

5 Strategies to Keep Your Heirs From Blowing Their Inheritance

Click here to check out our Master Class!

Funding a Living Trust

What Happens If I Don’t Fund My Trust?

What Happens If I Don’t Fund My Trust?

Trust funding is a crucial step in estate planning that many people forget to do.

However, if it’s done properly, funding will avoid probate, provide for you in the event of your incapacity and save on estate taxes.

Forbes’s recent article entitled “Don’t Overlook Your Trust Funding” looks at some of the benefits of trusts.

Avoiding probate and problems with your estate. If you’ve created a revocable trust, you have control over the trust and can modify it during your lifetime. You are also able to fund it, while you are alive. You can fund the trust now or on your death. If you don’t transfer assets to the trust during your lifetime, then your last will must be probated, and an executor of your estate should be appointed. The executor will then have the authority to transfer the assets to your trust. This may take time and will involve court. You can avoid this by transferring assets to your trust now, saving your family time and aggravation after your death.

Protecting you and your family in the event that you become incapacitated. Funding the trust now will let the successor trustee manage the assets for you and your family, if your become incapacitated. If a successor trustee doesn’t have access to the assets to manage on your behalf, a conservator may need to be appointed by the court to oversee your assets, which can be expensive and time consuming.

Taking advantage of estate tax savings. If you’re married, you may have created a trust that contains terms for estate tax savings. This will often delay estate taxes until the death of the second spouse, by providing income to the surviving spouse and access to principal during his or her lifetime while the ultimate beneficiaries are your children. Depending where you live, the trust can also reduce state estate taxes. You must fund your trust to make certain that these estate tax provisions work properly.

Remember that any asset transfer will need to be consistent with your estate plan. Your beneficiary designations on life insurance policies should be examined to determine if the beneficiary can be updated to the trust.

You may also want to move tangible items to the trust, as well as any closely held business interests, such as stock in a family business or an interest in a limited liability company (LLC). Ask an experienced estate planning attorney about the assets to transfer to your trust.

Fund your trust now to maximize your updated estate planning documents.

Reference: Forbes (July 13, 2020) “Don’t Overlook Your Trust Funding”

Read more related articles at:

What Happens to Assets Left Out of Your Trust?

Do All Accounts Need to be Included in a Revocable Trust?

ESTATE PLANNING: Mom didn’t fund the trust

Also, read one of our previous Blogs at:

Why Is Trust Funding Important in Estate Planning?

Click here to check out our Master Class!

Trump Healthcare Reform

Why Did Trump Consider Reforming Long-Term Care Insurance?

Why Did Trump Consider Reforming Long-Term Care Insurance?

A Trump administration task force recently released its report on a review of the nation’s long-term care (LTC) insurance system. However, the group was unwilling to commit to any real changes to a badly broken system.

Forbes’ recent article entitled “The Trump Administration Thought About Reforming Long-Term Care Insurance. But Decided Not To” says the report only contained a few minor suggestions, and none will dramatically improve the ability of people to pay for the growing costs of the services and supports required by the elderly with disabilities.

The task force was comprised of senior officials from the departments of Treasury, Health and Human Services and Labor; and the Office of Management & Budget (OMB). The group’s starting point was a set of proposals by the National Association of Insurance Commissioners (NAIC)—which is an extremely cautious consensus document. Nonetheless, the Trump Administration wasn’t prepared to go as far as the NAIC in many areas. They were also reluctant to endorse reforms that might dramatically increase the number of Americans with some form of long-term care insurance.

The task force refused to endorse an opt-out model for employer-based LTC insurance, similar to the design many employers use to encourage workers to participate in 401(k)-like retirement plans. However, they did propose that the federal government do a better job of educating consumers about long-term care and the need to finance it. They also recommended that Congress should grant the Treasury the authority to lower the level of required inflation protection included in private LTC policies. Policies now must offer to increase benefits by 5% annually to qualify for special tax benefits (although consumers can choose less inflation protection). This move would lower premiums.

The task force also would like to see private insurers offer so-called incidental benefits to policyholders, before they become eligible for full benefits. This would allow insurers to help support the costs of home modifications, caregiver training, or information services early in a policyholder’s long-term care need. This could keep people healthier and safer, and lower costs in the long-term.

However, the task force didn’t endorse the plan. Rather, they said the idea should be further assessed and suggested Congress “could consider” changes to allow such a benefit. Aside from this, the group offered only general support for state efforts to make policies more attractive to consumers. The administration also didn’t endorse major new tax subsidies for buyers of long-term care insurance.

The task force’s biggest contribution may have been its finding that no public policy changes alone will fix private LTC insurance. There’s also more evidence pointing to a public social insurance benefit, the solution adopted by every major developed country in the world, except for the US and England. The group said combined with such a public program, private insurance might also have a future.

Reference: Forbes (Aug. 12, 2020) “The Trump Administration Thought About Reforming Long-Term Care Insurance. But Decided Not To.”

Read more related articles at:

How The Trump Administration Is Reforming Medicare

Donald Trump on Health Care

Also read one of our previous Blogs at:

Do I Need Long-Term Care and Why?

Click here to check out our Master Class!

Valerie Harper

What’s Happening to Valerie Harper’s Emmy Awards in Her Estate?

Vanity Fair’s recent article entitled “Lawsuit Nixes Auction of Valerie Harper’s Emmy Awards” reports that the U.S. District Court for the Central District of California issued a temporary restraining order on behalf of the Academy of Television Arts and Sciences against Julien’s Auctions.

The Culver City, CA brokers of pop culture artifacts had planned to put four statuettes awarded to the late Valerie Harper up for bid at their “Hollywood: Legends & Explorers” event. Harper won the Outstanding Performance by an Actress in a Supporting Role in Comedy three years in a row for the role of Rhoda Morgenstern on The Mary Tyler Moore Show. She then won the Outstanding Lead Actress in a Comedy Series for her spin-off TV show, Rhoda.

The online bidding had already started, according to The Hollywood Reporter, with bids reaching as much as $8,000 for each prize. However, that is when the Television Academy went to court to stop the sale. The academy argued that the sale of Harper’s trophies would cause damage to the integrity of the Emmys, contending that its “economic existence depends on the exclusivity and achievement symbolized by possession of an Emmy statuette.”

Generally, when a person dies, and they bequeath some property to an heir in their will, the heir owns it. However, it’s a little different in LaLaLand. Specifically, it’s different with the awarding of Emmys. Technically, the Academy only loans the awards to the winners. While the winners may keep the statuettes for life and subsequently pass them on to their heirs as part of their estates, the TV Academy is still technically the owner.

“The Television Academy retains title and has a policy that copies of the Statuettes cannot be sold,” attorney Eric Bakewell wrote. “It would be unfathomable that any winner in a high-profile acting category (much less an individual who has won multiple awards in a high-profile acting category) would be unaware of the policy,” his statement said.

In fact, Emmy Awards from 1978 to the present are awarded with an actual written notice that reiterates this policy. However, Valerie Harper’s awards are from 1975 and earlier, so there’s a bit of gray there.

The TV Academy posted a $15,000 bond to Julien’s Auctions, which would be used to cover the auction house’s cost claims for advertising and potential repetitional damages. Even without “Rhoda’s” awards, Julien’s “Hollywood Legends & Explorers” weekend was reported to be a success: a printed Marilyn Monroe eulogy from Joe DiMaggio brought in a top bid of $24,320.

Reference: Vanity Fair (July 17, 2020) “Lawsuit Nixes Auction of Valerie Harper’s Emmy Awards”

Read more related articles at:

TV Academy Sues to Stop Auction of Valerie Harper’s ‘Mary Tyler Moore’ Emmy Statuettes

Television Academy Suing Auction House To Block Sale Of Valerie Harper’s Emmys

Also read one of our previous Blogs at :

How Does the Death of Prince’s Brother Impact the Late Rock Star’s Estate?

Click here to check out our Master Class!

Social Security Scams

A Four-Decades Long Social Security Scam Finally Ends

A Four-Decades Long Social Security Scam Finally Ends

In one of the largest fraud cases of its kind, a 76-year-old small business owner in Oregon has been collecting his deceased aunt’s Social Security checks and even her stimulus payment from the Treasury Department issued in May, as reported by AARP in the article “Nephew Allegedly Cashed Dead Aunt’s Social Security Checks for More Than 40 Years.” The nephew, George William Doumar, also collected his own Social Security benefits, telling authorities, “it was nice to have the extra money coming in every month.”

Both Doumar and his aunt, who is not named, lived in Brooklyn. She never married and had no children. Before she died, back in 1971, she named her nephew her sole beneficiary of her life insurance policy. Until July 14, he was getting both his and his aunt’s monthly checks. When interviewed at his home by federal agents, he slumped and said, “that’s a long story … what happened was, well, she’s passed and yes, I’ve been collecting her Social Security.”

Here is what has emerged in this bizarre story:

At age 65, the aunt applied for Social Security, but her wages in 1970 made her ineligible to receive benefits. By August 1977, the Social Security Administration initiated retirement benefits, using her initial benefit application. The first retirement check went out to her in September 1977—after she’d been dead for more than six years.

She had lived in a nursing facility in Brooklyn from about 1969 until her death in 1971. Doumar also lived in Brooklyn and says he doesn’t recall how he obtained regular possession of the checks. He also said that at one point, he reported her death to the SSA, but there are no records of her death being reported.

At first, he cashed her checks at a New York business he owned, but he moved to Oregon in 1989. He forged her signature to add her name to a joint checking account he had with his wife in Oregon. The Social Security checks were mailed to the business he owned.

In February, when government staffers deemed that the aunt would have been 114 years old, they became suspicious. No updates had been made to her account in more than 30 years, except for the address change.

Doumar is facing felony charges, and authorities plan to seek restitution for the amount he stole: $460,192.30. Minus the stimulus check, that’s about $912.50 a month, for nearly 42 years.

It might have been nice to have the extra money, but not to be facing the possibility of 10 years in prison and a $25,000 fine, in addition to paying back the money owed to the Social Security Administration.

Reference: AARP (Aug. 14, 2020) “Nephew Allegedly Cashed Dead Aunt’s Social Security Checks for More Than 40 Years.”

Read more related articles at:

Social Security Update Archive

Protect Yourself from Social Security Scams

Also, read one of our previous blogs at:

What are the Latest Senior Scams?

Click here to check out our Master Class!

Caregiver agreement

What Is a ‘Caregiver’ Agreement?

What Is a ‘Caregiver’ Agreement?

The idea that a family member or trusted friend may be paid to take care of an aging parent or sibling is a welcome one. However, most family members don’t understand the legal complexity involved in privately paying for care, says the recent article “Paying a family member for care” from The Times Herald. Payments made to a family caregiver or a private caregiver can lead to a world of trouble from Medicaid and the IRS.

This is why attorneys create caregiver agreements for clients. The concept is that the care and services provided by a relative or friend would otherwise be performed by an outside person at whatever the going rates are within the person’s community. The payment should be considered a fully compensated transfer for Medicaid eligibility purposes and should not result in any penalty being imposed if it is done correctly.

This is more likely to be avoided with a formal written caregiver agreement. In some states, like Pennsylvania, a caregiver agreement is required to be sure that the payments made to the caregiver are not deemed to be a gift under Medicare rules.

The caregiver agreement must outline the services that are being provided and the rate of pay, which can be in the form of weekly, monthly or a lump sum payment. This is where it gets sticky: that payment should not be higher than what an outside provider would be paid. An excessively high payment would trigger a red flag for Medicaid and could be viewed as a gift.

Medicaid has a five-year look back period, where the applicant’s finances are examined to see if there were efforts to minimize the person’s financial assets to qualify for Medicaid. If any transfers of property or assets are made that are higher than fair market value, it’s possible that it will be viewed as creating a period of ineligibility. That is why it’s so important to have a contract or written agreement in place, when a family member or other person is hired to provide those services and is paid privately.

There are also income tax consequences. The caregiver is considered a household employee by the IRS. They are not considered to be an independent contractor and should not be issued a 1099 to reflect their payment. If that is done, it could be considered to be tax evasion.

Speak with an estate planning attorney about crafting a caregiving agreement and how to handle the tax issue, when privately paying for care. They will help avoid putting Medicaid eligibility in jeopardy, as well as avoiding problems with the IRS.

Reference: The Times Herald (Aug. 13, 2020) “Paying a family member for care”

Read more related articles at:

Personal Care Agreements

Expert Tips for Creating a Family Caregiver Contract

Also, read one of our previous Blogs at:

How Can I Be a Good Caregiver?

Click here to check out our Master Class!

tiger King

Daughters of Don Lewis from ‘Tiger King’ File Lawsuit

Daughters of Don Lewis from ‘Tiger King’ File Lawsuit

“It’s a lawsuit for equity,” said Jacksonville based lawyer John M. Phillips, who specializes in personal injury and wrongful death cases and is representing Lewis’ family in the action.

Wealth Advisor’s recent article entitled “Family of Tiger King’s Don Lewis files lawsuit against Carole Baskin and others” explains that that the attorney filed a “pure bill of discovery.” That’s a pretty obscure legal pleading. It demands that the defendants produce information they might have about the Lewis case for possible use in later lawsuits. The plaintiffs are Lewis’ adult daughters, Donna L. Pettis, Lynda L. Sanchez, Gale Rathbone and Lewis’ longtime assistant, Anne McQueen.

At a news conference, Phillips explained that his legal move could mean depositions and subpoenas to determine who exactly the family will sue in the future. The complaint demands that the defendants turn over electronic device data, diaries and investigative material related to Lewis. Phillips said Carole Baskin, one of the stars of the Netflix series is “invited to the table” to willingly come forward with information on Lewis.

“Generally you announce a $150 million lawsuit and how we’re going to get justice,” Phillips said. “And we are going to do all of that, in time. But our office wants to invite reason, to invite civil conversation where it can be had.”

Carole Baskin was married to Lewis, when he disappeared. Kenny Farr worked as a handyman for Lewis for many years and continued working for Baskin after Lewis went missing. The third defendant in the suit, Susan A. Bradshaw, is listed as a witness on Lewis’ will and durable power of attorney. Bradshaw told the Tampa Bay Times in 2005 that Baskin asked her to testify that she was there for the will signing—but she wasn’t.

Phillips said that his law firm is also conducting an independent investigation into Lewis’ disappearance.

“We may or may not have hopped a fence yesterday just to try to investigate and find out if, you know, if this was a place where Don Lewis could have been buried,” Phillips said in an interview with HLN.

A judge is tasked with deciding whether to allow the bill of pure discovery to go forward. The family’s attorney will have to convince the judge that the lawsuit isn’t filed as a “fishing expedition,” simply looking for evidence, or that it’s not being used to harass the defendants.

Lewis was never found after his wife reported him missing in August of 1997, a day before a scheduled trip to Costa Rica. Lewis was declared legally dead in 2002. The interest in Lewis’ case again came into focus, when it was part of the hit Netflix series “Tiger King”, which was the story of the feud between Baskin and Oklahoma zookeeper Joe Exotic. Lewis’ daughters suspect that Baskin was somehow involved in their father’s disappearance.

Reference: Wealth Advisor (Aug. 11, 2020) “Family of Tiger King’s Don Lewis files lawsuit against Carole Baskin and others”

Read More Related Articles at:

‘Tiger King’ update: Don Lewis’ daughters file suit against Carole Baskin; $100K reward offered

Family of Tiger King’s Don Lewis files lawsuit against Carole Baskin and others

Also, Read one of our previous Blogs at:

What is the Verdict on the Will of Carole Baskin’s Long-Missing Husband?

Click here to check out our Master Class!



Medical POA for Healthcare

What Do I Need besides a Durable Power of Attorney for Healthcare?

A medical power of attorney (POA) is a durable power of attorney for healthcare. This document lets a trusted friend or family member serve as your agent to make important and necessary healthcare decisions, if you become incapacitated or unable to communicate or participate in care.

Forbes’s recent article entitled “For Medicare, Having A Power Of Attorney Is Not Enough” explains that with COVID-19, this is very important. The risk for severe illness from this disease increases with age, and hospitals aren’t permitting visitors. This lack of access can create some major challenges in managing a family, dealing with critical business issues and paying bills.

Here’s one more: powers of attorney don’t stand alone, when it comes to dealing with Medicare issues. Medicare requires a beneficiary’s written permission to use or provide personal medical information for any purpose not defined in the privacy notice contained in the Medicare & You handbook. A competent person can complete the form, call the “1-800-MEDICARE Authorization to Disclose Personal Health Information.” When needed, the representative is then authorized to talk with Medicare, research and choose Medicare coverage, handle claims and file an appeal.

Make sure that you’ve authorized Medicare to release information to family or an agent. You should also see if the authorization applies for a specified period of time or indefinitely. You must mail the completed form to Medicare. You can revoke this authorization at any time. For those who are no longer able to give consent, their personal representative can complete the form and attach a duly executed power of attorney.

There’s another authorization to address. It concerns individual Medicare plans – Medicare Advantage, Part D prescription drug, or Medicare supplement. Every plan has an authorization form that gives the authority to speak to plan representatives about claims or coverage, update contact information and more, depending on the individual plan.

To begin this process, check the plan’s member information or talk to a customer service representative.

You never know what’s in the future, so take the time now to prepare. You should take these three important steps.

  1. Establish or update your financial and medical powers of attorney
  2. Identify and name an authorized Medicare representative; and
  3. Contact your Medicare plan(s) and fill out the authorization forms.

Reference: Forbes (August 4, 2020) “For Medicare, Having A Power Of Attorney Is Not Enough”

Read more related articles at:

Giving Someone a Power of Attorney for Your Healthcare (multi-state guide and form)

The Difference Between POA, Durable POA and a Living Will

Also, Read one of our previous blogs at:

Preparing for an Emergency Includes Power of Attorney

Click here to check out our Master Class!

Adult kids fighting

How Can I Avoid Family Fighting in My Estate Planning?

How Can I Avoid Family Fighting in My Estate Planning?

It’s not uncommon for parents to modify their first estate plans, when their children become adults. At that point, many parents’ estate plans are designed to help efficiently transfer assets to the surviving spouse and ultimately to the adult children. However, this process can encounter a number of hiccups and headaches.

Forbes’ recent article entitled “Three Steps To Estate Planning Without The Family Friction” explains that there are a number of reasons for sibling animosity in the inheritance process. The article says that frequently there are issues that stem from a lack of communication between siblings, which causes doubts as to how things are being done. In addition, siblings may not agree if and how property should be sold and maintained. To help avoid these problems, use this three-step process for estate planning.

Work with an experienced estate planning attorney. Hire an estate attorney who has many years of working in this practice area. This will mean that they’ve seen—and more importantly—resolved every type of family conflict and problem that can arise in the estate planning process. That’s the know-how that you’re really paying for, in addition to his or her legal expertise in wills and trusts.

Create a financial overview. This will help your beneficiaries see what you own. A financial overview can simplify the inheritance process for your executor, and it can help to serve as the foundation for you and your executor to frankly communicate with future beneficiaries to reduce any lingering doubts or questions that they may have, when they’re not in the loop. Your inventory should at least include the following items:

  • A list of all assets, liabilities and insurance policies you have and their beneficiaries
  • Contact information for all financial, insurance and legal professionals with whom you partner;
  • Access information for any websites your beneficiaries may need for your online accounts; and
  • A legacy letter that discusses non-financial items for your children.

Hold a family meeting. Next, conduct a family meeting that includes the parents and the children who will be inheriting assets. Some topics for this meeting include:

  • The basics of your estate intentions
  • Verify that a trusted person knows the location of your important estate documents
  • State who your executor and other involved people will be and your rationale
  • Make certain that all parties value communication and transparency during this process; and
  • Discuss non-financial legacy items that are important for you to give to your children.

This three-step process can help keep your children’s relationships intact after you are gone. Hiring an experienced estate planning attorney, creating a clear financial overview and communicating what’s important to you are critical steps in helping to keep your family together.

Reference: Forbes (July 2, 2020) “Three Steps To Estate Planning Without The Family Friction”

Read more Related articles at:

How to make sure your estate plan won’t cause a family fight

8 Signs Your Family Will Fight Over Your Estate

Also read one of our previous Blogs at:

Spare Your Family From a Feud: Make Sure You Have a Will

Click here to check out our Master Class!

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