Why Irrevocable Trusts vs outright Gifting

People often wonder about the value of using irrevocable trusts in Medicaid planning. Certainly gifting of assets can be done outright, not involving an irrevocable trust. Outright gifts have the advantages of being simple to do with minimal costs involved.

Brian Raphan, P.C.

So, why complicate things with a trust? Why not just keep the planning as simple and inexpensive as possible?

The short answer is that gift transaction costs are only part of what needs to be considered. Many important benefits that can result from gifting in trust are forfeited by outright gifting. These benefits are what give value to using irrevocable trusts in Medicaid planning.

Key benefits of gifting in trust are:

  1. -Asset protection from future creditors of beneficiaries. Preservation of the exclusion of capital gain upon sale of the Settlors’ principal residence (the Settlor is the person making the trust).
  2. -Preservation of step-up of basis upon death of the trust Settlors o Ability to select whether the Settlors or the beneficiaries of the trust will be taxable as to trust income.
  3. -Ability to design who will receive the net distributable income generated in the trust.
  4. -Ability to make assets in the trust non-countable in regard to the beneficiaries’ eligibility for means-based governmental benefits, such as Medicaid and Supplemental Security Income (SSI).
  5. -Ability to specify certain terms and incentives for beneficiaries’ use of trust assets.
  6. -Ability to decide (through the settlors’ other estate planning documents) which beneficiaries will receive what share, if any, of remaining trust assets after the settlers die.
  7. -Ability to determine who will receive any trust assets after the deaths of the initial beneficiaries.
  8. -Possible avoidance of need to file a federal gift tax return due to asset transfer to the trust.

If you have questions about any of the above items, please call me, Brian A. Raphan, Esq at 212-268-8200. There are additional measures available and your individual situation should be assessed before making any financial decision.

 AVVO PRO

Trusts Attorney – New York, NY.  AVVO Legal Guide Contribution

www.RaphanLaw.com  Medicaid@RaphanLaw.com

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New: Visiting Lawyer Services for Elder New Yorkers

Visiting Lawyer Services

Why should the elderly that aren’t as mobile as they used to be, or live in an assisted living facility or are even at home wheelchair bound, not have easy access to the same professional legal care as others? Well, they should. And now they do.

Visiting Lawyer Services (VLS) is now available to New Yorkers that are homebound or unable to travel to a lawyer. With VLS our lawyers come to you. There’s no longer a need to coordinate aides, transfers or transportation as you won’t need it The same practice areas of elder law firm are the same available with VLS.  Most of the services that we handle in our office can be handled at your place. For example; signing of your Will, Living Will, Health Care Proxy, revising a Will, Estate Planning, Medicaid Planning or setting up a Trust. If witnesses are needed for signing documents we also arrange them to be with us as well. Other family members or loved ones may be present as well.

Visiting Lawyer Services

You remain in the comfort of your home, apartment or nursing facility and we’ll bring all the necessary documents. This has been very helpful for elder couples–as is often the case with elders, one spouse may be healthy and agile yet the other quite limited.

‘Not being burdened by travel time or hindered by physical ability also allows seniors to focus better on their legal needs. We’ve taken our hands-on approach, compassion and legal prowess to the next level’

For more information on how our Visiting Lawyer Services can help, feel free to call me at 212-268-8200. – Brian

http://www.VisitingLawyerServices.com

info@raphanlaw.com

The Rights of Nursing Home Residents

While residents of nursing homes have no fewer rights than anyone else, the combination of an institutional setting and the disability that put the person in the facility in the first place often results in a loss of dignity and the absence of proper care.

As a result, in 1987 Congress enacted the Nursing Home Reform Law that has since been incorporated into the Medicare and Medicaid regulations. In its broadest terms, it requires that every nursing home resident be given whatever services are necessary to function at the highest level possible. The law gives residents a number of specific rights:

  • Residents have the right to be free of unnecessary physical or chemical restraints. Vests, hand mitts, seat belts and other physical restraints, and antipsychotic drugs, sedatives, and other chemical restraints are impermissible, except when authorized by a physician, in writing, for a specified and limited period of time. 
  • To assist residents, facilities must inform them of the name, specialty, and means of contacting the physician responsible for the resident’s care. Residents have the right to participate in care planning meetings. 
  • When a resident experiences any deterioration in health, or when a physician wishes to change the resident’s treatment, the facility must inform the resident, and the resident’s physician, legal representative or interested family member. 
  • The resident has the right to gain access to all his or her records within one business day, and a right to copies of those records at a cost that is reasonable in that community. The facility must explain how to examine these records, or how to transfer the authority to obtain records to another person. 
  • The facility must provide a written description of legal rights, explaining state laws regarding living wills, durable powers of attorney for health care and other advance directives, along with the facility’s policy on carrying out these directives. 
  • At the time of admission and during the stay, nursing homes must fully inform residents of the services available in the facility, and of related charges. Nursing homes may charge for services and items in addition to the basic daily rate, but only if they already have disclosed which services and items will incur an additional charge, and how much that charge will be. 
  • The resident has a right to privacy, which is a right that extends to all aspects of care, including care for personal needs, visits with family and friends, and communication with others through telephone and mail. Residents thus must have areas for receiving private calls or visitors so that no one may intrude and to preserve the privacy of their roommates 
  • Residents have the right to share a room with a spouse, gather with other residents without staff present, and meet state and local nursing home ombudspersons or any other agency representatives. They may leave the nursing home, or belong to any church or social group. Within the home, residents have a right to manage their own financial affairs, free of any requirement that they deposit personal funds with the facility. 
  • Residents also can get up and go to bed when they choose, eat a variety of snacks outside of meal times, decide what to wear, choose activities, and decide how to spend their time. The nursing home must offer a choice at main meals, because individual tastes and needs vary. Residents, not staff, determine their hours of sleep and visits to the bathroom. Residents may self-administer medication. 
  • Residents may bring personal possessions to the nursing home such as clothing, furnishings and jewelry. Residents may expect staff to take responsibility for assisting in the protection of items or locating lost items, and should inquire about facility policies for replacing missing items. Residents should expect kind, courteous, and professional behavior from staff. Staff should treat residents like adults. 
  • Nursing home residents may not be moved to a different room, a different nursing home, a hospital, back home or anywhere else without advance notice, an opportunity for appeal and a showing that such a move is in the best interest of the resident or necessary for the health of other nursing home residents. 
  • The resident has a right to be free of interference, coercion, discrimination, and reprisal in exercising his or her rights. Being assertive and identifying problems usually brings good results, and nursing homes have a responsibility not only to assist residents in raising individual concerns, but also to respond promptly to those concerns.

Nursing Home Myths and Realities

Myth

Reality

Medicaid does not pay for the service you want.

Medicaid residents are entitled to the same service as other residents.

Only staff can determine the care you receive.

Residents and family have the right to participate in developing a care plan.

Staff cannot accommodate individual schedules.

A nursing home must make reasonable adjustments to honor residents’ needs and preferences.

You need to hire private help.

A nursing home must provide all necessary care.

Restraints are required to prevent the resident from wandering away.

Restraints cannot be used for the nursing home’s convenience or as a form of discipline.

Family visiting hours are restricted.

Family members can visit at any time of day or night.

Therapy must be discontinued because the resident is not progressing.

Therapy may be appropriate even if resident is not progressing; Medicare may pay even without current progress.

You must pay any amount set by the nursing home for extra charges.

A nursing home may only require extra charges authorized in the admission agreement.

The nursing home has no available space for residents or family members to meet.

A nursing home must provide a private space for resident or family councils.

The resident can be evicted because he or she is difficult or is refusing medical treatment.

Being difficult or refusing treatment does not justify eviction.

Heir tight: The dos and don’ts of creating rock-solid trusts

Good article via Jennifer Woods at cnbc

Imagine working for decades so that one day you could pass your assets on to your children or grandchildren.

Wouldn’t you like to know that when the day comes, they won’t lose it all on bad investments or to a gold-digging spouse—or simply because they have no idea how to properly manage large sums of money?

Whether you’re bestowing assets during your lifetime or leaving them as an inheritance, creating trusts with well-thought-out terms can ensure your money lands in the right hands and isn’t squandered.

“When you write a will and leave money outright to your heirs … once it’s inherited, there are no controls on how that money is being handled, and you don’t know what will happen,” said certified financial planner Ian Weinberg, CEO of Family Wealth and Pension Management.

“Using trusts helps protect your heirs against future catastrophes—[such as] bankruptcies, money-hungry predators disguised as friends, family looking for loans or business bailouts and other financial challenges—and can also provide for certain special needs of your children or grandchildren,” he said.

Many trusts make multiple payouts over time, the hope being that spacing out distributions will prevent the beneficiary from blowing it all in one shot.

Read More Busting age-based investing myths

Russ Weiss, a certified financial planner with Marshall Financial Group, said that when it comes to setting the distribution terms with clients, “the conversations become tricky.”

In many cases, his clients use age-based payouts, in which a percentage of assets is distributed at various ages.

“The child doesn’t get it all at once,” he said. “If they are irresponsible with money, hopefully they can manage [with spread-out distributions].”

Distribution options

Payouts at 25, 30 and 35 years of age have historically been common, though experts warn that in this day and age, 25 is too young to properly manage large sums of money.

Weiss also has clients who schedule periodic payouts after the benefactor dies, so beneficiaries may get a distribution, for example, every five years following the death.

Who needs a trust?

  • Trusts are not just for the ultrarich. If your heirs stand to inherit even a few hundred thousand dollars, a trust is worth considering.
  • People with young children could benefit from a testamentary trust, established in a will and effective upon one’s death. It dictates how assets will be distributed at later dates. The drawbacks? These trusts go through probate, delaying disbursements, and the records are public.
  • Revocable trusts, or living trusts, are often a better option. You allocate, access and manage assets, and amend terms while you’re alive. When you die, the trust can convert to an irrevocable trust with unchangeable terms. Other pluses: They’re easy to set up, are flexible and protect privacy.—J.W.
  • For more info regarding the proper use of Trusts feel free to email me. Sincerely, Brian

Understanding the Differences Between a Will and a Trust

Brian Raphan

Everyone has heard the terms “will” and “trust,” but not everyone knows the differences between the two. Both are useful estate planning devices that serve different purposes, and both can work together to create a complete estate plan.

One main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death or afterwards. A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.” A trust usually has two types of beneficiaries — one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.

A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust. A trust, on the other hand, covers only property that has been transferred to the trust. In order for property to be included in a trust, it must be put in the name of the trust.

Another difference between a will and a trust is that a will passes through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the deceased wanted. A trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. Unlike a will, which becomes part of the public record, a trust can remain private.

Wills and trusts each have their advantages and disadvantages. For example, a will allows you to name a guardian for children and to specify funeral arrangements, while a trust does not. On the other hand, a trust can be used to plan for disability or to provide savings on taxes. As your elder law attorney I can tell you how best to use a will and a trust in your estate plan. Feel free to email me with any questions.

Regards, Brian A. Raphan, Esq.

The Law Offices of Brian A. Raphan, P.C.

7 Penn Plaza, New York, NY 10001

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