by Bill Miller | Jun 25, 2018 | Estate Planning, trust
People really get a lot done with power tools. Sometimes we all just need little extra oomph. It’s like that in estate planning. Some people need a powerful estate planning tool – a trust. Do you need one in your estate plan?
Trusts 101
A trust is a legal entity created and funded by a settlor or trustor. The trust is administered by a trustee for the benefit of the trust’s beneficiaries.
Why Use a Trust?
Trusts can be revocable (you can change it) or irrevocable (changing is hard or impossible). Both are a powerful estate planning tool. Almost any property you own can be used to fund a trust.
Trusts allow assets to be transferred before and after your death. Some trusts are funded by the settlor. Other trusts are funded by the settlor’s Will.
People use trusts to avoid probate. Trust assets typically do not become part of a person’s estate, and so can avoid probate. Assets usually can be delivered more quickly to beneficiaries through a trust.
Trust can exist for generations. For wealthier families, this allows them to spread their wealth over the years, usually taking advantage of tax breaks.
A Trust for Everyone (Almost)
People who do need a trust have several types of trusts to choose from:
- Revocable Living Trusts are the most common trust. Settlors sometimes names themselves as trustee because they get to maintain control of the assets transferred to the trust.
- A Special Needs Trust, as the name states, is for people with special needs. Example: a 16-year old girl with cerebral palsy may need medical and vocation care for years. Her parents may set up a special needs trust to meet her needs for years to come.
- Miller Trusts, also known as Qualifying Income Trusts, are used by Medicaid recipients. Any income they receive in excess of Medicaid’s income limits is transferred to a Miller trust.
- Spendthrift trusts are often used to protect assets from beneficiaries who are vulnerable to creditors or civil judgments. This trust may also be used to protect an inheritance from an irresponsible heir.
- Charitable Remainder Trusts allow the settlor to donate money to a charity while receiving an annuity. The money used to fund the trust pays the settlor’s annuity until death or until the trust terminates. At that time, the remainder of the money goes to the named charity.
- Dynasty Trusts are used to pass wealth through generations while avoiding or reducing taxes
As you can see, trusts can serve many purposes depending on the settlor’s goals and can be a powerful estate planning tool. However, trusts can have negative consequences for settlors if not set up correctly. It’s best to consult with an experienced attorney before establishing a trust.
Learn More About Trusts.
The attorneys at Adams & Miller understand the estate planning needs of their clients. Contact Adams & Miller, P.C. at 256-251-2137 to schedule an appointment. Though our offices are in Anniston and Birmingham, we help clients in Talladega, Gadsden and surrounding communities.
by Bill Miller | Jun 24, 2018 | Estate Planning, Probate
For many people, probate is not the best solution for settling an estate. Probate proceedings can be long, expensive, and frustrating for the heirs and the executor. Fortunately, there are perfectly legal ways to avoid probate.
Probate Explained
After someone dies, their property – their stuff – has to go somewhere. So, if the person who died left a valid Will, someone submits the Will to the court to be probated. An executor appointed by the court begins the sometimes tedious process of gathering the decedent’s assets and claims against the estate. Claims are paid, property is distributed to heirs, and the executor closes the probate when everything is done.
When there is no Will, the property is still distributed. However, the law determines who gets what, not the decedent.
It is usually best for the heirs when the decedent’s property does not pass to them through probate. We’re going to look at three ways to make this happen.
Joint Tenancy
With this type of property ownership, two or more people own the property. Each owner has an undivided, equal interest in the property. In joint tenancy, a deceased owner’s interest does not pass to the other joint tenants.
Sometimes a property is owned by joint tenancy with right of survivorship. This means that if one owner dies, the other owner gains possession of their ownership interest. In Alabama, this joint tenancy with the right of survivorship does not occur automatically. Instead, the right of survivorship must be clearly stated in a legal document.
Property that passes through right of survivorship usually does not become part of the probate estate. Without the right of survivorship, it does.
Beneficiary Designations
With most financial accounts and certain other assets, the owner may designate who will receive the asset upon the owner’s death. You’ve probably seen beneficiary designations on retirement accounts, bank accounts, and insurance policies.
One thing to remember is that beneficiary designations trump the Will. Usually, property that is passed through beneficiary designations will not pass through probate. Instead, it is transferred quickly to the beneficiaries named by the deceased owner.
Although the speedy transfer is great, discuss these designations with your estate planning attorney. Unless your estate plan and the designations are in sync, your heirs could receive more or less than you intended. For example, if your Will states that your three children will inherit equal shares of your estate, but you name your oldest child as beneficiary on your insurance policy, the oldest child will likely receive more than the other two children.
Revocable Living Trust
Trusts are useful estate planning tools. There are various trusts for various purposes, including the revocable living trust.
Revocable means the trust can be changed fairly easily by the settlor, the person who established the trust. After signing the trust document, the settlor transfers assets to the trust. This type of trust can be used to avoid probate, reduce estate taxes, or manage assets. In general, trusts avoid probate because the trust assets never become part of the settlor’s estate.
A Little Planning Is What’s Needed.
For most people, it’s not that difficult to avoid probate. It just takes some astute estate planning with the assistance of an attorney who knows Alabama law.
The attorneys at Adams & Miller have the experience you need to get the estate plan you deserve. Contact Adams & Miller, P.C. at 256-251-2137 to schedule an appointment or fill out our convenient Contact Form. We help clients in Anniston, Talladega, Birmingham, Gadsden and surrounding communities.
by Bill Miller | Jun 23, 2018 | Estate Planning
Two patients arrived at the local hospital’s emergency room one night. Both had suffered strokes that left them unable to communicate. One family showed up with estate planning documents. The other did not. Is it ever possible to draw up estate plans in the ER?
Patricia N.
Patricia has no estate plans drawn up. Her Will would not help handle her incapacity. What she needs right now is a durable power of attorney, a health care power of attorney, an advance directive, and possibly a living Will. As the hospital staff work on Patricia N., her family scrambles to find any estate planning documents she has signed. They need to know her wishes for end-of-life treatment, should the time come to consider it. Since she didn’t name an agent to act on her behalf in a durable power of attorney, her financial affairs will be neglected. The doctors are not authorized to speak to her family members, because she didn’t sign a health care power of attorney. The awful truth sets in. She didn’t plan for this and now it’s too late. She no longer has the ability – the capacity – to make decisions for herself.
Thomas E.
Thomas has an estate plan. He even took the time to meet with his family about it. He named agents in his durable power of attorney and health care power of attorney, then shared copies of his estate planning documents with them. As his anxious family waits in the Emergency Room, his powers of attorney are handed to hospital staff and doctors. They can rest assured that they can now discuss Thomas N.’s medical condition and financial affairs with his agents. If the time comes to consider long-term care or end-of-life treatment, they can be confident they are doing what Thomas wants, even if he is not able to speak to them.
Can we sign estate planning documents in the ER?
It’s entirely possible for individuals to sign estate planning documents in the Emergency Room – if they have the capacity, or the ability, to do so. Someone who has suffered an illness or injury that prevents them from communicating will lack the capacity to make decisions about and sign estate planning documents.
How can you make sure this does not happen to your family?
People of all ages need estate plans. However, estate planning is particularly critical for people who are elderly or who suffer from serious health conditions.
The attorneys at Adams & Miller understand the estate planning needs of their clients. Contact Adams & Miller, P.C. at 256-251-2137 to schedule an appointment. We help clients in Anniston, Talladega, Birmingham, Gadsden and surrounding communities.
by Bill Miller | Jun 22, 2018 | Estate Planning, Probate
Sometimes people die without leaving a valid Will. This is referred to as being “intestate.” In fact, only about 40% of Americans have bothered to write the most important document they’ll ever write – their Last Will and Testament. However, just about every adult has estate assets that need to pass to their heirs. Even though there’s no legal document to guide the transfer of those estate assets, Alabama law provides a way to settle an intestate estate.
Not All Assets Are Probate Assets.
Some assets pass to named beneficiaries or surviving co-owners, even if no Will exists:
- Anything you own as a joint tenancy or tenancy by the entirety.
- Property transferred to a living trust;
- Proceeds from life insurance policies payable to named beneficiaries;
- Funds in an IRA, 401(k), or other retirement account;
- Securities in a transfer-on-death account; and
- Payable-on-death bank accounts.
Distributing Assets When There’s No Will.
Alabama law provides for the succession of other assets, taking into consideration the marital status of the decedent and whether there are any descendants. By the way, any part of a person’s probate estate that is not addressed by his Will transfers to heirs pursuant to intestate laws.
Succession in a complicated family will be, well, complicated.
| If decedent is survived by: |
Then probate assets pass: |
| a spouse, but no children |
entirely to spouse |
| a spouse, no children, parent or parents |
first $100,000 to spouse, then one-half of the rest |
| a spouse, children of decedent and spouse |
first $50,000 to spouse, plus one-half of the balance |
| a spouse, children of decedent but not surviving spouse |
one-half of the estate to the spouse |
| children of decedent |
in an amount based on degree of kinship to decedent |
| parents, but no spouse or children |
equally to the parents |
| no spouse, children, or parents |
to other children of parents (siblings) |
| no spouse, children, parents, or siblings |
to grandparents or children of grandparents based on degree of kinship. |
If there are no obvious heirs, the estate administrator will conduct an investigation. In cases where they are unable to find any heirs, the probate estate passes to the state.
Probate Without a Will
When there’s no Will, probate is much more difficult and more expensive.
A probate court will appoint a personal representative. This person performs the same duties as an executor, but without the guidance of a Will. At the conclusion of probate, the executor distributes estate assets to the appropriate heirs.
Sounds easy, dying without a Will can set up family feuds that last for generations. Potential heirs may disagree on everything from who should be the administrator to who is actually an heir.
Don’t Wait to Prepare Your Will.
The best solution for your family is to leave a valid Will. Avoid letting a court determine who gets your stuff. Make a Will and keep it up to date.
Schedule a free consultation with the attorneys at Adams & Miller, P.C. Our attorneys know how to help people like you. Just give us a call at 256-251-2137 or use our Contact Form to set up an appointment. Serving clients in the greater Anniston area, including Birmingham, Talladega, and Gadsden.
by Bill Miller | Jun 20, 2018 | Estate Planning
A power of attorney is a powerful legal document. The principal, the person signing the document, names an agent to act on his or her behalf if necessary. There are different types of power of attorney forms with different purposes. Powers or attorney also cover different time frames, with some taking effect immediately, or just covering a limited time period, or a specific event. When signing a power of attorney, it’s important to know whether it’s a springing power of attorney or an immediate durable power of attorney.
Springing Power of Attorney
This type of power of attorney “springs” into action if you become incapacitated for some reason.
People may use a springing power of attorney because they don’t feel comfortable signing a power of attorney that becomes effective immediately. Maybe they don’t trust their agents, or perhaps they want to remain in control for as long as possible. Military personnel sometimes sign a springing power of attorney when they are deployed.
There are some problems with a power of attorney that becomes effective upon incapacity. The most important issue is how to determine whether you are truly incapacitated or not. If you use a springing power of attorney, at least one doctor will have to examine you to determine capacity, or the ability to make decisions. While the determination is being made, your agent will be powerless. All of this can be time consuming and the delays can cause problems.
Durable Power of Attorney
When a principal signs a power of attorney, it becomes effective immediately unless the document states a future effective date or a triggering event. A durable power of attorney remains in effect even if the principal becomes in capacitated.
An agent named in a durable power of attorney is authorized to make decisions when the power of attorney is signed, unless stated otherwise in the document. If the principal becomes incapacitated, the agent can immediately begin to act without a determination from a doctor.
Learn More About Powers of Attorney.
Maybe you have an older parent facing elder law issues. Maybe you are looking ahead to your own future. Either way, it’s important to know what rights and protections are available for senior citizens. Schedule a consultation with one of our attorneys and find out where you stand. Our phone number is 256-251-2137, or you may want to use the Contact Form on our website. We’re have office in in Anniston and Birmingham and assist clients in communities like Hoover, Vestavia Hills, Irondale, and Calera.
by Bill Miller | Jun 19, 2018 | Estate Planning, Medicaid, Medicaid Planning
Many people have never heard of Medicaid Estate Recovery. Medicaid recipients may not realize that benefits received for long-term care may have to be repaid. After certain recipients pass away, Medicaid may attempt to recovery some or all of the funds paid for their care. You may need Medicaid benefits in the future, so it’s important to know how to go about protecting your estate from Medicaid recovery.
What is Medicaid Estate Recovery?
Medicaid is a federally funded, state administered program that pays health-care benefits to qualified individuals.
Due to federal law, individual state Medicaid programs must attempt to recover some of the money paid to certain recipients age 55 or older. As with most government programs, there are restrictions to Medicaid Estate Recovery.
And there are ways to protect against it.
Protection from Medicaid Estate Recovery.
Advance planning is key. It may be too late if Medicaid files a claim against an estate.
Alabama’s Partnership for Long-Term Care program allows people to buy long-term care insurance. Restrictions apply, and you may need to qualify to purchase this insurance.
Some use trusts as a part of their estate planning with an eye toward asset protection. Currently, only an irrevocable trust provides protection from Medicaid Estate Recovery. Even then, an irrevocable trust is still subject to Medicaid’s 60-month look back period.
Simply giving your assets to your family may create more problems than it solves. Your estate may be protected from Medicaid Recovery, but there’s no guarantee your family will do the right thing.
Your best course of action is to talk to an attorney who has extensive Medicaid experience.
A Final Note.
Some states have what are called filial responsibility laws. In these states, children can be held accountable for their parents’ nursing home bills. Fortunately, Alabama does not have this type of law.
Learn More About Protecting Your Estate.
The attorneys at Miller Estate and Elder Law can help you with Medicaid eligibility, applications, and asset protection. For a free consultation, contact us at 256-251-2137 or use our convenient Contact Form. We have offices in Anniston and Birmingham and we assist clients in the Leeds, Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.
