Estate Planning, Medi-Cal, Advance Directives & Special Needs Trusts

Transcription

1 Estate Planning, Medi-Cal, Advance Directives & Special Needs Trusts B R U C E A. F E D E R, E S Q. K A T O, F E D E R & S U Z U K I, L L P M A R K E T S T R E E T, S U I T E S A N F R A N C I S C O, C A (415) bfeder@kfslaw.net

2 Topics of Discussion Estate Planning Advance Healthcare Directives Durable Powers of Attorney Medi-Cal Special Needs Trusts

3 What is a will? Disposition to beneficiaries An executor A guardian for minor children Document is dormant until death of testator

4 Does a will cover everything I own? Excluded: Life insurance (if beneficiary named) Retirement plans (if beneficiary named) Assets owned as a joint tenant with right of survivorship Transfer on death or pay on death accounts Community property with right of survivorship Assets held in a trust Your spouse s or domestic partner s half of community property

5 What happens if I don t have a will? California law determines beneficiaries: Spouse/ Registered Domestic Partner Children /Grandchildren/Other relatives Friends/Charities receive nothing State of California if no living relatives

6 How are the provisions of a will carried out? Probate (court supervised) Advantages and disadvantages Estates under $150,000 (no court supervision) Distribution via affidavits Public vs. private

7 What is a revocable trust and should I have one? A trust is a legal arrangement created by a settlor where someone called a trustee, holds property for the benefit of someone else, called a beneficiary. Typically the settlor is also the initial trustee and the beneficiary. Settlors of revocable trusts put their property into the trust for management during their lifetime, with provisions for use of the property during their lifetime and for distribution to beneficiaries after they die.

8 What is a revocable trust and should I have one? Advantages Assets managed according to your wishes Private Avoids probate Successor trustee in event of incapacity Estate tax issues Disadvantages Not under court supervision Cost of preparing higher than will Administration funding trust

9 How could a revocable trust be helpful at my death? Managed by successor trustee without probate Private Can substantially supersede distributive provisions of a Will

10 How could a revocable trust be helpful if I become incapacitated? Your chosen successor trustee manages trust assets Choosing a successor trustee How to determine incapacity Usually upon physician s certification Sometimes upon certification by successor trustee

11 Advantages and Disadvantages of a Revocable Trust Advantages of Trust Disadvantages of Trust Assets managed according to your wishes Private Avoids probate Successor trustee in event of incapacity Can address estate tax issues Not under court supervision Cost of preparing higher than a will Administration steps must be taken to fund the trust

12 Will my beneficiaries have to pay estate taxes? Amount exempted from estate tax Changes to exemption amount Marital deduction Saving estate taxes through estate planning Other taxes to consider Income, capital gains, gift, property and generation-skipping

13 What other planning should I do? Make and maintain a list of assets and debts Make a list of your professional advisors Make a list of electronic user id and passwords for websites used for finance, purchases, social networking, etc. Make sure trusted relative or friend knows where documents are located

14 Power of Attorney The Just In Case Documents

15 Power of Attorney Roles Principal Person granting power Agent Person being authorized to act

16 Power of Attorney Durable Power of Attorney for Finances Complements a trust doesn t replace Springing or effective immediately Advance Health Care Directive/Power of Attorney for Health Care Always Springing POLST form Recognition in other states Revocable

17 Power of Attorney Durable remains effective upon incapacity. Non-Durable becomes invalid upon incapacity. Durable powers of attorney become invalid upon death of principal.

18 Power of Attorney Advance Health Care Directives - End of Life Care What to consider: 1. Be descriptive, but not excessively restrictive. 2. Discuss desires thoroughly with agent/family. 3. Make sure principal understands what end-of-life options are possible. 4. If possible, name at least one alternate agent. 5. Distinguish from Physician Orders for Life Sustaining Treatment (POLST) for seriously ill. 6. Periodically review and update, if necessary.

19 Power of Attorney Some Other Options for Health Care Directives - Express wishes regarding disposition of remains - Can make organ donations - Authorizes release of medical information to agent

20 Conservatorship The Alternative of Last Resort It may be necessary if no advance planning is done (and sometimes even if advance plans are in place).

21 Public Benefits Medicare Available to all persons 65 or older who made Social Security contributions Medi-Cal for long term care Must meet asset and income requirements and be medically needy Planning may be necessary Veteran s Benefits In Home Support Services Supplemental Security Income (SSI) Housing Benefits through Section 8

22 Medi-cal Eligibility SSI and other categorically-related recipients are automatically eligible. Others may also qualify if "medically needy" and if their income and resources are within the Medi-cal limits Assets must not exceed $2,000 for an individual (higher for married couples) For Medi-cal eligibility (including gifting & transfers) consultation with a knowledgeable attorney is strongly recommended.

23 Common Exempt Assets A principal residence (up to a certain value in most states) A prepaid funeral contract of unlimited value Designated burial account One automobile Household furnishings Personal jewelry Work related pension or retirement accounts (including IRA s) Other real property of limited value if producing income Certain annuity contracts

24 Protections for Community Spouse Community Spouse Resource Allowance - $117, 240 (2014) Minimum Monthly Maintenance Need Allowance - $2,931 (2014) Amounts can be increased by court Allocation of income between spouses Community spouse can keep more of their income than MMMNA

25 Estate Claims For long term care or benefits received after 55 Exceptions to claims: Spouse, Minor or Disabled Child Hardship State will waive proportionate share of the claim if care was provided to the decedent that prevented or delayed the decedent s admission into long term care Importance of planning/possibility of gifting Advance Planning is very important.

26 Special Needs Trusts (SNT) Designed to hold assets for the benefit of a disabled individual who is a recipient or may become a recipient of public benefits, including Supplemental Security Income (SSI) and Medi-Cal. The assets of the SNT can be used to purchase goods or services for the beneficiary to enhance the beneficiary s quality of life without adversely affecting the beneficiary s entitlement to public benefits.

27 Administration There are certain criteria to be followed in administering an SNT in order to avoid disqualifying the beneficiary for public benefits, including: The Trustee of the SNT generally pays the vendor directly for goods or services purchased for the beneficiary. The Trustee should not provide cash disbursements to the beneficiary. Disbursements are made at the discretion of the trustee. Obtaining advice of an experienced SNT attorney is strongly recommended.

28 Types of SNT Three kinds of SNTs: 1. First Party Special Needs Trust SNT funded with beneficiary s own funds. 2. Third Party Special Needs Trust SNT that can be established by anyone except the beneficiary, and funded with assets that do not belong to the beneficiary. 3. Pooled Special Needs Trusts

29 First Party Special Needs Trust Typically funded by: Money received from an inheritance. Money received from a personal injury claim. Money from the beneficiary s own savings earned prior to becoming disabled.

30 Guidelines In order to avoid ineligibility for public benefits because of the SNT: The SNT must be established by parent, grandparent, or legal guardian (conservator) of the beneficiary or by a court. Beneficiary must be under age 65 when trust established, and Beneficiary must have been disabled when SNT established and continues to be disabled. Must have payback provision to reimburse state agency for certain Medicaid benefits paid. Payment is due upon death of the beneficiary or upon termination of the SNT.

31 Third Party Special Needs Trusts SNT funded with monies that do not belong to the beneficiary. It could be an SNT set up in a relative s Will or Living Trust for the benefit of the beneficiary. It could be an SNT established and funded during a relative s lifetime with the relative s own money. The beneficiary can be of any age when trust is established. No payback provision is required because the SNT was not funded with the beneficiary s own money.

32 Pooled Special Needs Trusts Trust is irrevocable, to be established by a non-profit association. Receives funds from or on behalf of multiple beneficiaries and keeps a separate account for each beneficiary. In some states, Pooled Trusts may be joined for beneficiaries who are already 65 years old. Pools funds for investment and management purposes. Disburses funds for goods or services for the beneficiary. Joinder into the Pooled Trust must be made by the individual, parent, grandparent, or by a court. Medi-cal entitled to some reimbursement at death of the beneficiary, or alternatively, at least some funds may be retained by the Pooled Trust. Consult with an attorney experienced with Pooled Trusts before joining.

33 Resources Family Caregiver s Alliance Fact sheets on powers of attorney, estate planning, conservatorships, etc. California Advocates for Nursing Home Reform (CANHR) Fact sheets on long term care and Medi-Cal California Hospice Foundation Fact sheets on POLST

34 Kato, Feder & Suzuki, LLP 685 Market Street, Suite 540 San Francisco, CA (415) Bruce A. Feder The information contained in this presentation is for informational purposes only and should not be construed as legal advice on any subject matter. Do not rely on this information without personally consulting an attorney. No attorney-client relationship is formed unless agreed to in writing by both parties.