Frequently Asked Questions
NOTE: These
are some frequently asked questions that I have received over
the years and I thought visitors to my website might find them
useful or informative. They are arranged as follows: Living
Trust Questions, Care-Giving for the Elderly, Estate Taxation
Questions, Estate and Financial Seminars (I tell you what I
think you can get out of them), Elder Law and Estate Planning
Attorneys.
Living Trust Questions:
Q.
Is there any specific amount of assets that a person should own
before they need to have a living trust?
A.
Not necessarily. In the past there was a prevalent view
(probably misconceived, by the way) that a person needed to have
at least $600,000 before they had to have a living trust. That
number is irrelevant now anyway, but the point of it was to
suggest that living trusts were only for the affluent. In fact,
living trusts may be worthwhile for anyone who has the need and
wish to avoid probate proceedings at his or her death. Living
trusts are also very significant estate planning vehicles to
provide for physically and mentally challenged men and women and
for those who are disabled. And of course, it is also true that
living trusts are important in estate planning for individuals
with federally taxable estates.
Q.
Do I need a living trust if, instead, I have a Will and durable
power of attorney.
A.
The question is not so much whether you need a trust, as it is
whether a trust is what will most accomplish your particular
estate planning needs and goals. If you have a Will, then the
assets you own or control at your death will pass to the persons
you have named in that Will; but first they will have to pass
through court proceedings known as probate. In fact, probate
proceedings are not as terrible as various folks have portrayed
them, but clearly probate has its disadvantages. A durable power
of attorney automatically expires upon the death of the one who
made it, so it is of no help in avoiding probate. Also, the
Court can suspend a durable power of attorney in the event that
the one who made it is determined by that Court to be
incapacitated. This is not to say that durable powers of
attorney are not important documents. I think that everyone
should have one in which a close relative or trusted advisor
such as his or her attorney has been named. A durable power of
attorney is one of the most important planning tools available
for estate planning.
Q.
If I have a living trust will I lose my Florida homestead
exemption?
A.
Not if the trust is properly drawn to allow the trustee to
obtain the exemption; and if the trust allows the Grantor to
live in the home for life. The key is that a reputable attorney
who understands estate planning should draw a living trust. I
have seen several of these form living trusts that can be bought
cheaply through some newspaper or magazine ad. In my opinion
they are not worthy of the money spent on them.
Q.
What are the income tax consequences of putting my assets into
my name as trustee of my living trust?
A.
When a living trust is created by someone for his/her/their
benefit, it is considered by the I.R.S. to be a “Grantor” trust.
The Grantor can continue to file income tax returns just the
same as before (Although I usually suggest that a notation be
made in the tax return to the effect that assets are held by the
taxpayer in his/her/their living trust.) The same social
security number can be and should be used. As such time as a
successor trustee takes over a new tax identification number
will be needed, unless the trust assets are distributed prompted
to the heirs and beneficiaries.
Q.
Do I lose control of my assets when I put them in a living
trust? I don’t want that to happen.
A.
It
won’t happen unless you specifically direct that it does. When
you have a living trust created all you are doing is creating a
relationship with yourself. That relationship with yourself
allows that portion of your estate that is held in trust to
avoid probate proceedings, may well also avoid the impact of the
Florida Guardianship Law, can maintain the confidentiality of
your estate and can speed up the process of getting your estate
settled. You lose no control of your assets while you are alive
and have your capacity, because you are the one who is managing
them.
Q.
I do not have any children nor any close relatives. Who should I
select as either the successor trustee of my trust if I decide
to have one, or the personal representative of my estate if I
have a will?
A.
This problem arises frequently because many people do not have
anyone whom they trust to comply with the provision of a trust
or will regarding the distribution of estate assets. It is my
opinion that there are several good choices, anyone of which may
be to your advantage:
1) Your attorney if he or she is an estate planning
or elder law attorney.
2) Banks with trust powers are often selected.
3) Some stock brokerage firms have trust
departments.
4) Close friends—but here you need to be very, very
cautious. First, keep in mind
that you are not doing your friend an honor. You are
imposing a burden of him or her that could be
substantial. Second, it’s always good if a successor
trustee or personal representative has business
acumen. So it is my view that it’s not always a good
idea to choose someone simply because you happen to
like them and they are a friend. |
Care-Giving for the Elderly:
Q.
What are the options available for taking care of my parents who
are getting to the stage where they need care giving assistance?
A.
There are too many to discuss fully in this section of my
website. I can say, though, that what is most important to make
sure that the person you wish to protect is being treated with
maximum dignity and respect. If you are not able to take care of
your parents or relatives, or if they just need assistance with
daily care matters; I always advise that you select someone who
can assess needs and abilities and who can then give you a
reasonable approach to their care needs. Elder law attorneys are
familiar with such needs and can be most helpful. Another good
choice would be geriatric care managers who might work in
coordination with the attorney. Licensed practical nurses (LPNs)
are good sources of help. If necessary, assisted living
facilities offer plenty of care without the atmosphere of a
nursing home. And, of course, when it becomes necessary, a
nursing home may be an option. Finally, you should really try to
find a way to keep your parents at home for so long as is
reasonably possible.
Estate Taxation:
Q.
Is life insurance taxable at death of the owner of the life
insurance policy?
A.
Generally, the proceeds of a life insurance policy paid as a
result of the death of the insured are excluded from gross
income for income tax purposes. However, life insurance proceeds
that are payable to the decedent’s estate or that are payable to
a beneficiary that is not the decedent’s estate, but where the
decedent retained some incident of owners of the policy (such as
the right to change the beneficiary) are includible in the
estate of the one who died for estate tax purposes.
Q.
What are the federal estate tax “numbers” in the event I have a
federally taxable estate at the time of my death?
A.
Here they are but only through the year 2011.
Year:
2006
2007
2008
2009
2010
2011 |
Exemption:
$2 million
$2 million
$2 million
$3.5 million
REPEALED
????????????? |
Highest Rate
46%
45%
45%
45%
-0-
???? |
|
(Theoretically, though, in 2011, the tax reverts to
$1 million with a 55% highest rate; but that will up
to Congress and it is not all clear right now what
will happen. |
Q.
Does Florida have an estate tax or an inheritance tax?
A.
Florida has an estate tax that is sometimes referred to as a
“pick-up” tax. The way it works is that if—I said if—an estate
owes a federal estate tax, then the state of Florida is entitled
to receive an amount equal to the credit for the payment of
state death taxes that is authorized by the Internal Revenue
Code.
Estate and Financial Seminars:
Q.
What is your view of the typical estate planning seminar where
we are given either a free lunch or free dinner and then the
speaker discusses estate planning, trusts, probate, wills,
incapacity planning, tax planning, Medicaid issues, and matters
like that?
A.
In my opinion a seminar is basically a place where folks can
acquire general and I feel, limited information about issues
such as estate planning, Medicaid, wills, trusts, probate,
incapacity planning, tax planning, etc., etc. So if you go to
one, keep that in mind. I think that in many if not most
situations, a seminar is simply not the place to obtain specific
information about your precise estate planning needs. The reason
I feel that way is that I believe each estate or elder law
planning matter presents different problems that need to be
resolved in the way that is drawn for the particular person’s
needs. Therefore, in order for an estate planning or elder law
planning attorney, or for a competent financial planner to be
able to give you good information about your particular estate
planning or elder law planning needs, it is necessary that the
attorney or financial planner spend sufficient time with you to
obtain facts that are specific to you and your needs. Simply
put, I do not believe that this can be accomplished in a seminar
where the speaker may not know you, may never have met you, may
have absolutely no idea of what your goals, needs and wishes
are. Most of all, I do not think it can happen in a seminar
where the speaker has never spoken to you, except perhaps to
answer a question or two that you got to pose at the end of the
speech. In my view, this is just plain bad planning.
Elder Law and Estate Planning Attorneys:
Q.
Is there any difference between an elder law attorney and an
estate-planning attorney?
A.
There could be. It depends on the expertise of the particular
attorney. Many elder law attorneys are more comfortable with
Medicaid matters and matters involving durable powers of
attorney and the rights of the elderly in nursing homes. Others
are also extremely expert in simple and complex estate planning
for all persons as well as the elderly. Estate planning
attorneys who are also elder law attorneys should be able to
assist with simple estate planning or with very complex estate
planning including disability planning and estate planning for
the wealthy.
Q.
Should I see an estate planning attorney if I have strictly
estate planning matters and should I see an elder law attorney
if I have issues relating to growing older?
A.
Please don’t look at it that way. An elder law attorney should
be able to help you plan your estate, organize it and make sure
that your assets are protected as best as the law allows. An
estate planning attorney can frequently do the very same
planning for you; but some estate planning attorneys may not
focus their practice simply on the elderly; but on folks of any
age. I do not consider myself to be strictly an elder law
attorney although I do practice in that area. Rather, I consider
myself to be an estate planning attorney and elder law attorney.
Many elder law attorneys see themselves the same way. |
