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Posted by on in Elder Law

At Drazen Law Group, we’re often asked why anyone would need an attorney to help put a loved one in a nursing home. After all, the admission process seems like it should be a simple matter, something that family members could easily handle—like going to the DMV to change your vehicle’s license plates. Unfortunately, the process is rarely simple.

When you discover that a loved one needs nursing home care, a lot is riding on your ability to make good decisions quickly, often under pressure, which can be hard even if this is not the first time you’ve been in this situation. Who has time to become a long-term care expert in the time that the nursing home is giving you to review their admissions agreement? How do you know that the decision you make today won’t come back to haunt you tomorrow?

That’s where an attorney—and elder law attorney, to be specific—can be so helpful. When you’re in this situation, you have no way of knowing what you don’t know. When you don’t know what you don’t know, it’s easy to make costly mistakes.

When people don’t know what they don’t know, they often come into the process with three misconceptions.

#1: Getting a loved one into a nursing home will be easy—sort of like checking into a hotel.

Families are often surprised when elderly loved ones end up on wait lists after applying for residence in long-term care facilities. Why does this happen?

Let’s look at the admission process of a nursing home. If the elder is living at home, family members obtain applications for homes they are interested in, complete those forms, and then return them. If the elder is hospitalized, the hospital social worker or discharge planner is responsible for requesting applications on the elder’s behalf and assisting the elder, family, guardian or conservator with the completion of the application.

When an application is requested, the nursing home must send you an application and dated receipt within two days. At this time, the nursing home will place your loved one’s name on the dated list of applicants. This list only shows that your loved one has requested an application and that it has been mailed to you.

Upon receipt of the application, you complete it and return it to the nursing facility. When the application is received by the nursing facility, your name will be placed on the nursing facility waiting list. It is not until your loved one’s name is placed on the waiting list that he or she will be considered for a bed in the nursing facility. Generally, a nursing home must admit applicants on a first-come, first-served basis, based on the date the home receives a completed application. However, Connecticut law provides that if a nursing facility has a certain percentage of beds occupied by Medicaid recipients, or the only room available is a private room, the facility may refuse to admit Medicaid applicants.

In addition to legalized discrimination against those covered by Medicaid, there are many exceptions to the first-come, first served requirement. For example, an elder should be allowed to be admitted ahead of others on the waiting list if his or her spouse is already a patient in the nursing facility, or if the elder requires short term rehabilitation or respite care, or if he or she is currently residing in a facility that is shutting down.

The reality of the wait list means that it is difficult or impossible to know when your elderly loved one will be admitted to the nursing home. It will depend on how many people are ahead of your loved one on the list and how quickly beds become available. Keep in mind that the nursing facility must inform you of your loved one’s place on the wait list whenever you ask for the information.

In all Connecticut nursing homes, once people are on the wait list, they stay there. A person can’t be removed unless he or she has been on the wait list at least 90 days, the nursing facility writes to the elder or his/her caregivers asking if they wish to remain on the list, or the elder or his/her representative does not respond to the letter within 30 days.

If a person rises to the top of the wait list but doesn’t need nursing home care, what happens? In Connecticut, the person retains his or her position at the top of the wait list instead of being sent to the back of the line as is common in other states. The nursing home will go down the list, offering a bed to each person until it’s finally taken. If an elder doesn’t yet need nursing home care, admissions personnel will typically ask families to call when the elder is ready. When an opening occurs, it goes to the person at the front of the line who is ready for that level of care. 

If you’re not a nursing home expert, how would you know any of this?

#2: Nursing homes operate like big, happy families.

I want to start by stressing that there are many fine long-term care facilities that do a wonderful job providing care for their patients. Many have tight-knit communities that can feel like family. Many resemble the idyllic pictures in their sales brochures. However, it’s important to keep in mind that a nursing home is a business. Like any business, it wants to maximize its revenue while minimizing exposure to risk and liability.

One of the most common ways nursing homes minimize risk and potential liability is through the use of language on admission agreements. An admission agreement explains your rights and responsibilities, and those of the nursing home. You want to make sure that you are signing a document that protects your rights and does not expose you or your family to unexpected financial liability. It is important to read the document carefully and to make sure you fully understand its terms before you sign it. However, many first-time buyers of nursing home services, impressed by a compassionate sales pitch, sign admission agreements without even reading them. This is always a mistake.  

Think about it. If you’ve never seen a nursing home admission agreement before, how would you know whether the terms in that agreement were favorable for you? Chances are, you wouldn’t. Even if you had a general practice attorney review the agreement, it’s possible that he or she might miss things that an experienced elder law attorney would catch.

There are dozens of contract provisions in admission agreements that favor the nursing home at the expense of the family. For example, a nursing home may try to get you to sign the agreement as the "responsible party." This is never a good idea. Nursing homes are prohibited from requiring third parties to guarantee payment of nursing home bills, but many try to get family members to voluntarily agree to pay the bills.

The “arbitration provision” is another example. Many nursing home admission agreements contain a provision stating that all disputes regarding the resident's care will be decided through arbitration. An arbitration provision is not illegal, but by signing it, you are giving up your right to go to court to resolve a dispute with the facility.

The private pay requirement is another trap. It is illegal for the nursing home to require a Medicare or Medicaid recipient to pay the private rate for a period of time. The nursing home also cannot require a resident to affirm that he or she is not eligible for Medicare or Medicaid.

But how would you know about any of these, especially if you’ve never seen a nursing home agreement before? You don’t know what you don’t know.

#3: How expensive can nursing home care be? It can’t cost THAT much.

Many families are stunned when they realized just how expensive nursing home care will be. According to the Genworth 2015 Cost of Care Survey for Connecticut, the median annual rate for a semi-private room in a nursing home ranges between $140,000 and $150,000 per year. Annual costs for a private room can top $150,000 in some Connecticut cities including New Haven, Milford and Hartford.

When it comes to figuring out how to pay for nursing home care for a loved one, there are dozens of variables, each representing a series of questions that, if answered incorrectly, could bankrupt the elder, impoverish dependents and expose the family to unnecessary financial liability. What kind of care is needed? How much will care cost? How long will it be needed? Will public benefits be able to cover any of the costs? How can I protect assets to care for a dependent spouse or family member?

There are so many things that can go wrong. One mistake, one missed deadline can create a financial catastrophe that reverberates for years to come. An experienced elder law attorney can help you avoid these mistakes and maximize savings so that you can spend more on things that enhance your loved one’s quality of life.

Most families benefit from expert guidance during the nursing home admission process. Providing that guidance is what we do at Drazen Law Group. We believe that the best outcomes are always the result of a carefully thought out strategy. Choosing facilities, deciding where to apply, and timing those applications can be tricky. The earlier you start planning and the earlier you involve us in the process, the more options you will have, and the more affordable those options will be.  

Questions? Just give us a call at 203.877.7511.

 

Drazen Law Group’s legal articles are made available for educational purposes to provide general information and a general understanding of the law, not to provide legal advice. There is no attorney-client relationship created between the reader and Drazen Law Group. Drazen Law Group’s legal articles are not legal advice. Persons should not act upon this information without seeking advice from a lawyer licensed in their own state or jurisdiction. Drazen Law Group’s legal articles should not be used as a substitute for competent legal advice from a licensed professional attorney in the reader’s state or jurisdiction. Use of Drazen Law Group’s legal articles is at your own risk. The materials presented may not reflect the most current legal developments, verdicts or settlements. These materials may be changed, improved, or updated without notice. Drazen Law Group is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.

 

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Posted by on in Special Needs Planning

In Part 1, Attorney Steven Rubin explained the basics of Pooled Trusts. This week, Attorney Franklin Drazen, certified as an Elder Law Attorney by the National Elder Law Foundation, explains the options available to Connecticut residents who want to participate in a Pooled Trust.

In August 2016, the “What the Hell is a Pooled Trust” blog post explained the basics of Pooled Trusts; what they are, how they work, and how trust funds are used. This follow-up article offers a closer look at Pooled Trust options for Connecticut residents and explains how the options vary.

Pooled Trusts in Connecticut

In 1993, Connecticut state legislature granted an organization called the Planned Lifetime Assistance Network (PLAN) the authority to act as trustee of Special Needs Trusts in the state. PLAN of Connecticut offers several different trust options depending on the beneficiary’s situation. It is effectively the only organization in the state that can administer a Special Needs Pooled Trust. PLAN is unlike any other trustee in Connecticut in that they accept trusts of any monetary amount and focus solely on special needs trust management.

It’s worth noting that Federal Medicaid law requires the use of a Pooled Trust established and administered by a charity. But unlike the rest of the country, Connecticut residents’ choices are effectively limited by statue to using PLAN of Connecticut.  

Benefits of a Pooled Trust

The PLAN Pooled Trust is the only trust in Connecticut that can be used by an individual over the age of 65 who has a disability. The PLAN Pooled Trust allows an individual with a disability to fund a trust account with his or her own assets, retain a lifetime benefit from those assets, and still qualify for government benefits like Medicaid and Supplemental Security Income (SSI). Many individuals using a Pooled Trust are depositing their excess income into the trust each month to qualify for benefit programs administered by the Department of Social Services. It’s inexpensive compared to the cost of setting up a Special Needs Trust for an individual. The administrative cost are generally modest in comparison. Funds in the Pooled Trust earn interest of dividend income.

Who Should Use the PLAN Pooled Trust?

The PLAN of Connecticut Pooled Trust is for a person of any age who has a disability (or for their family to set aside modest amounts of money for the disabled person:

  • Wants to stay in his/her home with home care services, but is over the asset or income limit for that program
  • Is told by the state that they do not qualify for a Medicaid Waiver program because their income/assets exceed the cap
  • Inherits money but is already receiving home care or long term care services through a Medicaid Waiver
  • Is in an assisted-living arrangement where the State of Connecticut provides the home-care portion of the cost
  • Would like to establish and fund his/her own trust, yet remain on benefits with money received from a windfall like an inheritance, accident, divorce or back payment from Social Security.

The PLAN Pooled Trust is also used when the amount to be set aside is relatively small because PLAN trust administration costs are usually lower than that of other trust options.

Is Creating a PLAN Pooled Trust Something You Can Do on Your Own?

We don’t advise it. This is not a do-it-yourself project. It’s extremely complicated.  PLAN of Connecticut partners with attorneys who work with individuals and families to participate in a Pooled Trust because the PLAN Pooled Trust is just one piece of a very complex puzzle. If you are a person with a disability or you are the primary caregiver for someone with disabilities, it’s vital to work with an experienced estate planning or elder law attorney who can help you develop the best course of action for your situation. Anyone with disabilities who is trying to qualify or preserve eligibility for public benefits while maximizing quality of life needs a comprehensive plan to make sure that all the pieces fit together.

Does the Beneficiary’s Age Matter?

Yes. If you are disabled, live in Connecticut, and under 65, things are fairly straight forward and you have options. However, if you’re disabled and over 65, you’re limited to participating in a Pooled Trust managed by Plan of Connecticut. It’s important to keep in mind that for someone over 65, a contribution to a Pooled Trust can be considered a transaction for less than fair value (i.e. a gift) resulting in a penalty period unless you have a well thought out plan for the money. This can be tricky so it’s important to get help from an attorney who works with this every day.

What Happens to the Money after the Beneficiary Dies?

According to federal regulations, upon the beneficiary’s death, any residual funds are either left to the PLAN Charitable Trust for the benefit of other individuals with disabilities, or paid back to the state that provided services as reimbursement.

Remember, if you do this wrong, you risk losing eligibility for public benefits. The professional you rely on needs to be able to design a plan that will satisfy the eligibility criteria for public benefits. The pieces must fit together and timing can be critical.

This is just the tip of the iceberg. The rules and the economics associated with public benefits and special needs trusts change without warning. The strategies we might employ today might not be effective in the future. That’s why it’s vital to get help from an experienced elder law attorney. Drazen Law Group attorneys deal with these situations every day. We have decades of experience and can help you determine whether participation in a Pooled Trust is right for your situation. Just give us a call at 203.877.7511.

 

Drazen Law Group’s legal articles are made available for educational purposes to provide general information and a general understanding of the law, not to provide legal advice. There is no attorney-client relationship created between the reader and Drazen Law Group. Drazen Law Group’s legal articles are not legal advice. Persons should not act upon this information without seeking advice from a lawyer licensed in their own state or jurisdiction. Drazen Law Group’s legal articles should not be used as a substitute for competent legal advice from a licensed professional attorney in the reader’s state or jurisdiction. Use of Drazen Law Group’s legal articles is at your own risk. The materials presented may not reflect the most current legal developments, verdicts or settlements. These materials may be changed, improved, or updated without notice. Drazen Law Group is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.

 

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Posted by on in Elder Law

In late September, as part of the first major overhaul of federal nursing home regulations in a quarter-century, the Centers for Medicare and Medicaid Services (CMS) issued a final rule prohibiting binding pre-dispute arbitration agreements in facilities that accept Medicare and Medicaid patients. Attorney Franklin Drazen explains what this means for families.

Families often turn to us for help when they’re looking for a nursing home for a loved one. That’s why a new ruling by The Centers for Medicare and Medicaid Services (CMS) is worth sharing. CMS has ruled that nursing homes can no longer force claims of negligence, elder abuse, sexual harassment, wrongful death, and other disputes into the private system of justice known as arbitration. For families, this represents a major victory because it means that arbitration clauses imbedded in the fine print of nursing home admission contracts can no longer keep patterns of wrongdoing out of the public eye. 

The final rule goes a giant step further than the draft rule proposed last year, which simply required nursing homes that included binding arbitration agreements in their admission contracts to explain the agreements and ensure that patients acknowledge their understanding of them.  

CMS said it received a “significant number” of comments on its proposed rule, with commenters from the long-term care facility industry asking the agency to withdraw the proposal, while members of the public, advocates, and members of the legal community, wanted a blanket prohibition on pre-dispute arbitration agreements. Those supporting an outright ban included 34 senators and 16 state attorneys general.

Ultimately, CMS determined that there “is a significant differential in bargaining power between long-term care facility residents and long-term care facilities,” and went with a total ban. After a dispute arises, the resident and the long-term care facility will still have the option to enter into a binding arbitration agreement if both parties agree.

Industry executives warn that the new rule will trigger more lawsuits that could increase costs and force some long-term care facilities to close. Many believe that CMS has overstepped its authority.  

Although the rule could be challenged in court, it took effect on November 28 and will affect only future nursing home admissions; pre-existing arbitration agreements will still be enforceable.

Will the long-term care industry push back on the new CMS rules? Probably. For now, as the New York Times wrote in its coverage, “[CMS] has restored a fundamental right of millions of elderly Americans across the country: their day in court.”

It’s worth noting that when you’re choosing a long-term care facility for a loved one, having an attorney review admissions documents can help you avoid problems down the road. At Drazen Law Group, we have decades of experience helping families as their loved ones enter the nursing home. We can help you determine which facility is most appropriate, review the admissions documents, reduce the family’s potential liability to the nursing home, help you avoid mistakes while qualifying your loved one for public benefits, and preserve assets for other family members to the greatest extent possible. When we work with families, the money we save them usually more than offsets our fee.

If you would like help, just give us a call at 203.877.7511.

 

Drazen Law Group’s legal articles are made available for educational purposes to provide general information and a general understanding of the law, not to provide legal advice. There is no attorney-client relationship created between the reader and Drazen Law Group. Drazen Law Group’s legal articles are not legal advice. Persons should not act upon this information without seeking advice from a lawyer licensed in their own state or jurisdiction. Drazen Law Group’s legal articles should not be used as a substitute for competent legal advice from a licensed professional attorney in the reader’s state or jurisdiction. Use of Drazen Law Group’s legal articles is at your own risk. The materials presented may not reflect the most current legal developments, verdicts or settlements. These materials may be changed, improved, or updated without notice. Drazen Law Group is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.

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Posted by on in Special Needs Planning

For the past few weeks, we’ve been talking about ABLE accounts. In this final installment of our three-part series, Attorney Franklin Drazen talks about the importance of developing an overall strategy for funding the living expenses of a person with special needs, and shares links to online resources that will be helpful to any family exploring the possibility of opening these tax-advantaged accounts.

On December 28, 2016, we looked at the challenges faced by people with disabilities, discussed how ABLE accounts address those problems, and explained how ABLE accounts differ from Special Needs Trusts and Pooled Trusts. On January 4, 2017, we explored the mechanics of ABLE accounts including eligibility criteria, contribution limits, allowable expenses, and discussed how to access to state ABLE programs. This week, the focus is on resources and planning.

Resources

Any Google search will generate a long list of websites on the topic. Here’s a short list of some of the best resources available to help you learn more about ABLE accounts.

This video from The ABLE National Resource Center provides a good overview of the program.



Able-Now.com also provides an overview.

The Able National Resource Center offers excellent guidance on what to think about when you’re considering an ABLE account, offering videos on a variety of subjects.

Use this comparison tool to find and compare ABLE programs in the U.S.

The Importance of Planning

I believe that educated people make better choices. It’s important to understand as much as you can about your options.

However, it’s also important to keep the big picture in mind. When it comes to developing a plan to enhance quality of life for a person with special needs, an ABLE account is just one tool in a toolbox that can also include various types of Special Needs Trusts, Pooled Trusts and more. If you don’t know which tool is appropriate for your situation or you choose a tool and use it at the wrong time, you can create problems for yourself, your loved one and your financial future.

That’s why it’s so important to get help. Planning for people with disabilities is a highly-specialized area of law. You’ll get the best guidance from attorneys who do this kind of work every day and understand how all the tools work together. At Drazen Law Group, we help hundreds of families each year plan for the realities of life with disabilities. If you would like assistance assessing all the available options to create a long-term plan for your loved one that will maximize quality of life, financial security and peace of mind, just give us a call at 203.877.7511.

 

Drazen Law Group’s legal articles are made available for educational purposes to provide general information and a general understanding of the law, not to provide legal advice. There is no attorney-client relationship created between the reader and Drazen Law Group. Drazen Law Group’s legal articles are not legal advice. Persons should not act upon this information without seeking advice from a lawyer licensed in their own state or jurisdiction. Drazen Law Group’s legal articles should not be used as a substitute for competent legal advice from a licensed professional attorney in the reader’s state or jurisdiction. Use of Drazen Law Group’s legal articles is at your own risk. The materials presented may not reflect the most current legal developments, verdicts or settlements. These materials may be changed, improved, or updated without notice. Drazen Law Group is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.

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Posted by on in Special Needs Planning

Last week, we looked at the problems and challenges faced by people with disabilities, discussed how ABLE accounts address those problems, and explained how ABLE accounts differ from Special Needs Trusts and Pooled Trusts. This week, Attorney Franklin Drazen discusses the mechanics of ABLE accounts including eligibility criteria, contribution limits, allowable expenses, and how to access to state ABLE programs.

Who is eligible for an ABLE account?

At this time, the ABLE Act limits eligibility to individuals with significant disabilities who became disabled before age 26. If a person meets this age criteria and is also receiving benefits already under SSI and/or SSDI, he or she is automatically eligible to establish an ABLE account. If a person is not a recipient of SSI and/or SSDI, but still meets the age of onset disability requirement, he or she could still be eligible to open an ABLE account if he or she meets Social Security’s definition and criteria regarding significant functional limitations, and he or she receives a letter of certification from a licensed physician. The individual doesn’t need to be under the age of 26 to be eligible for an ABLE account. If the age of onset was before the individual’s 26th birthday, he or she can participate.

Why limit eligibility to people who become disabled before age 26? Though we don’t know for certain, it’s likely that the disability advocates who championed the legislation wanted the focus to be on people with lifelong disabilities rather than those who become disabled due to age or illness later in life. We’ve heard that there’s a movement to increase the age limit to 46 but we’re not aware of any official change to the statute. If the age limit does change, we’ll share the news with you.

Are there limits to how much money can be put in an ABLE account?

The total annual contributions by all participating individuals, including family and friends, for a single tax year is $14,000. No matter how many people are contributing, the $14,000 limit applies. The ABLE Act provides for periodic adjustments for inflation. Under current tax law, $14,000 is the maximum amount that an individual can “gift” to another person without needing to report the gift to the IRS (this is called the gift tax exclusion). The limit of contributions made over time to an ABLE account varies by state and parallels limits for education-related 529 savings accounts. Many states have set this limit at more than $300,000 per plan. However, for individuals with disabilities who are recipients of SSI, the ABLE Act sets some further limitations. The first $100,000 in ABLE accounts is exempt from the SSI $2,000 individual resource limit. If an ABLE account exceeds $100,000, the beneficiary’s SSI cash benefit is suspended until the account falls back below $100,000. Meanwhile, the person continues to receive Medicaid benefits.

Additionally, upon the death of the beneficiary, the state in which the beneficiary lived may file a claim to recoup all or a portion of the funds in the account equal to the amount in which the state spent on the beneficiary through their state Medicaid program. This is commonly known as the “Medicaid Pay-Back” provision and the claim could recoup Medicaid related expenses from the time the account was opened.

Which expenses are allowed by ABLE accounts?

ABLE account funds can be spent only on “qualified disability expenses.” These are expenses that the person incurs because he or she is living a life with disabilities. This could include expenses related to education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management, administrative services, and other efforts which help improve health, independence, and/or quality of life.

Can a person have more than one ABLE account?

No. The ABLE Act limits the opportunity to one ABLE account per eligible individual.

If there is no ABLE program in your state, is it necessary to wait for the state to establish a program before opening an account?

No. While the original law passed in 2014 did state that an individual had to open an account in his or her state of residency, this provision was eliminated by Congress in 2015. Today, a person can enroll in any state’s program that accepts out-of-state residents. This is true regardless of where the person lives or whether the person’s home state has decided to establish an ABLE program.

At this writing, ABLE programs in Ohio, Nebraska, and Tennessee are accepting enrollment by out-of-state residents. Some states—Florida, for example—only accept in-state residents. Use this comparison tool to find and compare ABLE programs in the U.S.

Will states offer options to invest the savings contributed to an ABLE account?

As with 529 college savings plans, states are likely to offer qualified individuals and families multiple options to establish ABLE accounts with varied investment strategies. It’s important to carefully consider what future needs and costs might be over time, and to assess risk tolerance when considering investment strategies. Account contributors or designated beneficiaries can change the way their money is invested in the account up to two times per year.

Keep in mind that this can get complicated quickly. We’re here to help. The staff at Drazen Law Group can guide you through the process of selecting the state program that best fits your needs. Just give us a call at 203.877.7511.

NEXT WEEK: Connect with helpful resources available to people who want to learn more about ABLE accounts.

 

Drazen Law Group’s legal articles are made available for educational purposes to provide general information and a general understanding of the law, not to provide legal advice. There is no attorney-client relationship created between the reader and Drazen Law Group. Drazen Law Group’s legal articles are not legal advice. Persons should not act upon this information without seeking advice from a lawyer licensed in their own state or jurisdiction. Drazen Law Group’s legal articles should not be used as a substitute for competent legal advice from a licensed professional attorney in the reader’s state or jurisdiction. Use of Drazen Law Group’s legal articles is at your own risk. The materials presented may not reflect the most current legal developments, verdicts or settlements. These materials may be changed, improved, or updated without notice. Drazen Law Group is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.

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Posted by on in Estate Planning

If you’ve just inherited an IRA, annuity, stocks, bonds, or other assets from your parents, minimizing your tax obligation is critical. What do you need to know to keep Uncle Sam from taking more than his share when you file your tax return? In this three-part series, Attorney Franklin Drazen covers a few of the basics. This week, we look at stocks, bonds and mutual funds.

Inherited retirement accounts like IRAs and annuities, and assets like stocks, bonds and mutual funds live at the tricky three-way intersection of estate planning, financial planning and tax planning. That’s why I advise my clients who’ve inherited these assets to do nothing until we’ve met to explore their options. When you inherit assets from a deceased parent, your actions will determine your tax bill. The worst thing to do is to sell the stock, bond or mutual fund, put the proceeds in your account, and then come to see me saying, “Now what?" This week, we look at a few of the basic tax implications of inherited stocks, bonds and mutual funds.

Let’s say that your father had a considerable portfolio of stocks and bonds. He died and you’re the heir. What are the tax implications for you? If you hang on to the stock, no problem. But if you decide to sell it, you must report on your tax return the sale for the stock you inherited. But since you inherited the stock, your “cost basis” for calculating the gain or loss will generally be the fair market value of the stock on your father’s date of death. You only have to pay income tax on the amount over what the stock was worth on the day your father died, which makes establishing the “date of death” value very important. Let’s say that your father bought shares of a stock at $5 per share and the price had increased to $20 per share on the date of his death. When you go to sell that stock, you’ll only pay taxes if you sell it for more than $20 per share. Better yet, because the stock represents a long-term capital gain, the gain is taxed at the lower capital gains rate rather than ordinary income rates. It’s worth noting that the appreciation of the stocks or bonds before your father’s death will not be subject to income or capital gains tax.

Sound confusing? It is. The tax laws governing the transferred assets from one generation to the next are complicated, frustrating and arcane. Fortunately for you, the professionals at Drazen Law Group are well equipped to help you develop a strategy that will make sure that family wealth ends up where your parents wanted it to be. Just give us a call at 203.877.7511.

Drazen Law Group’s legal articles are made available for educational purposes, to provide general information and a general understanding of the law, not to provide legal advice. There is no attorney-client relationship created between the reader and Drazen Law Group. Drazen Law Group’s legal articles are not legal advice. Persons should not act upon this information without seeking advice from a lawyer licensed in their own state or jurisdiction. Drazen Law Group’s legal articles should not be used as a substitute for competent legal advice from a licensed professional attorney in the reader’s state or jurisdiction. Use of Drazen Law Group’s legal articles is at your own risk. The materials presented may not reflect the most current legal developments, verdicts or settlements. These materials may be changed, improved, or updated without notice. Drazen Law Group is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.

 

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Posted by on in Estate Planning

If you’ve just inherited an IRA, annuity, stocks, bonds, or other assets from your parents, minimizing your tax obligation needs to be addressed. What do you need to know to keep Uncle Sam from taking more than his share when you file your tax return? In this three-part series, Attorney Franklin Drazen covers a few of the basics. This week, we look at annuities.

Inherited retirement accounts like IRAs and annuities and assets like stocks and bonds live at the tricky three-way intersection of estate planning, financial planning and tax planning. That’s why I advise my clients who’ve inherited these assets to do nothing until we’ve met to explore their options. When you inherit assets from a deceased parent, your actions will determine your tax bill. The worst thing to do is to cash out the plan, put it in your account, and then come to see me saying, “Now what?” Though IRAs and annuities are often established to grow money on a tax-deferred basis, the way they are viewed from a tax perspective is very different. This week, we look at annuities.

Annuities are insurance products that allow a person to invest money that can grow tax deferred and provide a source of monthly, quarterly, annual, or lump sum income during retirement. An annuity can make periodic payments for a certain amount of time, or until a specified event occurs (for example, the death of the person who receives the payments). Unlike an IRA, which can have only one owner, an annuity can be jointly owned and typically will name one or more beneficiaries to receive the annuity when the owner dies.

Annuities are fundamentally a life insurance product, which alters how they are handled for taxation and inheritance purposes. If your parent had a deferred annuity, he or she made an initial investment and it grew over time. Your loved one was probably told at the point of sale that no taxes would be payable on the income generated by the annuity until withdrawals begin. Your parents probably really liked the sound of that, especially if they were concerned about needing extra money in retirement.

But here’s the rub. Many people never get around to taking withdrawals because there are other sources of income to fund their retirement. So when these people die, their beneficiaries—most often their children—end up with a big surprise when they start withdrawing funds from these accounts.

For all annuities purchased after 1985, an annuity’s earnings are withdrawn first and are therefore subject to taxation. All withdrawals are taxable as ordinary income until the account value reaches the initial amount invested. Distribution of the initial investment is a non-taxable return of capital. Because annuity income is considered income in respect of a decedent (IRD), it is taxable at ordinary income tax rates, and you don’t get the benefits of the stepped up basis and lower capital gains tax rates available from inherited stocks, bonds and mutual funds. I’ll discuss that in next week’s blog.

If you inherit an annuity that’s not part of an IRA (yes, IRAs can purchase annuities but that’s a more complicated post for another time), you can recover the initial investment in the annuity, also known as the basis, as mentioned above, without paying taxes. There are some adjustments you can make to your basis depending on the amount of estate taxes paid on your parent’s estate.

Sound confusing? It is. The tax laws governing the transfer of assets from one generation to the next are complicated, frustrating and arcane. Fortunately for you, the professionals at Drazen Law Group are well equipped to help you develop a strategy that will make sure that family wealth ends up where your parents wanted it to be. Just give us a call at 203.877.7511.

Drazen Law Group’s legal articles are made available for educational purposes, to provide general information and a general understanding of the law, not to provide legal advice. There is no attorney-client relationship created between the reader and Drazen Law Group. Drazen Law Group’s legal articles are not legal advice. Persons should not act upon this information without seeking advice from a lawyer licensed in their own state or jurisdiction. Drazen Law Group’s legal articles should not be used as a substitute for competent legal advice from a licensed professional attorney in the reader’s state or jurisdiction. Use of Drazen Law Group’s legal articles is at your own risk. The materials presented may not reflect the most current legal developments, verdicts or settlements. These materials may be changed, improved, or updated without notice. Drazen Law Group is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.

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Posted by on in Estate Planning

If you’ve just inherited an IRA, annuity, stocks, bonds, or other assets from your parents, minimizing your tax obligation is paramount. What do you need to know to keep Uncle Sam from taking more than his share when you file your tax return? In this three-part series, Attorney Franklin Drazen covers a few of the basics. This week, we look at Individual Retirement Accounts, or IRAs.

Inherited retirement accounts like IRAs and annuities and assets like stocks and bonds live at the tricky three-way intersection of estate planning, financial planning and tax planning. That’s why I advise my clients who’ve inherited these assets to do nothing until we’ve met to explore their options. When you inherit assets from a deceased parent, your actions will determine your tax bill. The worst thing to do is to cash out the plan, put it in your account, and then come to see me saying, “Now what?”

Though IRAs and annuities are often established to grow money on a tax-deferred basis, the way they viewed from a tax perspective is very different. This week, we look at IRAs.

IRAs, are essentially individual savings accounts where investments such as stocks, bonds and mutual funds are held, with earnings accumulating tax free until it’s time to take distributions. IRAs are defined and regulated by the IRS, which sets eligibility requirements, limits on how and when you can make contributions, take distributions, and determines the tax treatment for various the various types of IRAs.

If you inherit a parent’s traditional IRA, it’s important to remember that any distribution from an IRA account (even an inherited one) is taxed at ordinary income rates. Roth IRAs are the exception. Also, keep in mind that if you inherit a traditional IRA from a parent, you must take yearly required minimum distributions, or RMDs, based on your own life expectancy. You have to take out your first distribution by December 31 of the calendar year following the year your parent died. If you miss that date, you default back to the 5-year rule, which means that you’ll have five years after your parent died to withdraw all the funds from the account. There are certain situations where the application of these rules might yield a different results, especially when a trust is the beneficiary of the IRA account. That’s why it’s important to get timely guidance from qualified tax/financial professionals.

Another hurdle for adult children who inherit traditional IRAs is figuring out if the parent had taken his or her RMD in the year of death. If your 80 year-old father died March 15 of this year, leaving you his IRA, he probably hadn't gotten around to taking out his distribution yet. If he didn’t take his RMD before his death that means you have to take it out before year’s end. If you don't know about that or forget to do it, you're liable for a penalty of 50 percent of the required distribution. This is especially problematic if your parent dies late in the year. The last day of the year is the deadline for taking that year's RMD. So if your father died on Christmas Day and still hasn't taken out the distribution, you may not even find out that you own the account until it's already too late to take out that year's distribution. In some cases, you can request a waiver of the penalty if the RMD wasn’t taken.

Also, even if you are under age 59 ½, you can make the withdrawal from your inherited retirement account without getting hit with a 10 percent early withdrawal penalty.

Sound confusing? It is. The tax law governing the transfer of assets from one generation to the next are complicated, frustrating and arcane. Fortunately for you, the professionals at Drazen Law Group are well equipped to help you develop a strategy that will make sure that family wealth ends up where your parents wanted it to be. Just give us a call at 203.877.7511.

Drazen Law Group’s legal articles are made available for educational purposes only as well as to provide general information and a general understanding of the law, not to provide legal advice. There is no attorney-client relationship created between the reader and Drazen Law Group. Drazen Law Group’s legal articles are not legal advice. Persons should not act upon this information without seeking advice from a lawyer licensed in their own state or jurisdiction. Drazen Law Group’s legal articles should not be used as a substitute for competent legal advice from a licensed professional attorney in the reader’s state or jurisdiction. Use of Drazen Law Group’s legal articles is at your own risk. The materials presented may not reflect the most current legal developments, verdicts or settlements. These materials may be changed, improved, or updated without notice. Drazen Law Group is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.

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Posted by on in Elder Law

Every once in a while, someone will ask me how I got in to elder law. Like many things in life, it wasn’t planned. It was more like a fortunate wandering into a wonderful career.

I didn’t set out to become a lawyer. After college, the plan was for me to work in the family business that had been thriving for three generations. But before I graduated, the family business failed and I decided to go to law school. After law school I earned an advanced law degree in taxation and started work as a business, tax and estate planning attorney. People are often surprised to hear that I actually like doing tax work because I enjoy the complexity.

In 1992, I started doing seminars to show people how to use living trusts and how to minimize estate taxes. People would come up to me after those seminars asking for help. Some wanted help with estate planning-related legal issues. Others wanted to protect an elderly loved one’s assets while qualifying him or her for Medicaid/Title XIX.  I encouraged these people to find elder law attorneys experienced in Medicaid applications but often heard that they had talked to other law firms and were told that nothing could be done.

That’s when I started thinking about becoming an elder law attorney. I had learned the basics of Medicaid eligibility and realized that I might be able to use my knowledge to help these people who didn’t have anywhere else to go. And so I started taking cases.

Gradually, my skill and confidence grew. Every time someone came to see me, I would look at the facts of the case. Even if the facts of two cases seemed identical, I would have to devise a different solution for each because every situation when closely examined was different. With every case I took, I learned more, especially from the families I worked with. Clients would share what they had learned during the long-term care journey and I would share my growing knowledge with other families.

Then I decided I wanted to become a Certified Elder Law Attorney (CELA). While studying for the certification exam, I learned about even more topics that were relevant to the needs my clients were presenting, things like how the medical system works, Medicare rules, pensions, special needs trusts and many other topics.

After I passed the CELA exam, the firm began to add services. We started doing special needs trusts and added Life Care Planning to our service menu. Life Care Planning was a great addition because it enabled us to help our clients with problems that were outside the scope of the traditional asset-focused elder law firm, things like case management, care coordination and care advocacy. So I added non-legal staff like elder care coordinators with social work or medical training. We also added services to help people with disabilities and those facing catastrophic illnesses. Though these individuals face a different set of challenges, their families have many of the same needs as those of our elderly clients.

As the firm grew, my passion for elder law grew as well and I wanted to give back. I had been a member of the National Academy of Elder Law Attorneys for a while and was traveling around the country attending workshops and meeting like-minded professionals. I wanted local attorneys to have the same opportunities for education and networking so I started the Connecticut Chapter of the National Academy of Elder Law Attorneys. Working to build a local network of attorneys dedicated to helping seniors in the same way I am has been very satisfying.

Why do I enjoy the practice of elder law so much? I enjoy being part of the team we have assembled to give our clients the most comprehensive and personalized planning available anywhere. The work I do is intellectually challenging. I don’t like doing the same thing every day and in an elder law practice, no two days are alike. I also find the work with families to be immensely rewarding. I’m able to use everything I’ve learned so far to help family members step back, see the problem from a different perspective and reach consensus on a plan of action. I love it because I can see the effect our work has on families. Everyone is so grateful—and not just after we’re done working with them. Their gratitude is apparent before we even begin. For these families, knowing that someone will be there to guide them during the long-term care journey relieves a lot of stress.

I also cherish the multi-generational nature of my work. Some clients have been with me for years—through the creation of their initial estate plans, through the long-term illnesses of their parents, and work with them and their children during their own later years.

Elder law is challenging. If practiced comprehensively, it consists of eleven distinct practice areas that are constantly changing. The dynamic and demanding nature of the field is one of the things I like the most.  It’s also the reason so few attorneys choose this path, and one of the reasons why so few competent and accomplished elder law attorneys are general practitioners.

Not everyone gets the chance to do work they love, and I am very grateful for the opportunity to serve families in this way. It is an honor and a privilege to be a part of our clients’ lives while earning the trust they put in us to guide their family as they face new challenges.

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Posted by on in Elder Law

I’ve worked with a lot of family caregivers over the years. Most burn the candle at both ends to take care of their elderly loved ones while tending to families and careers of their own. In many cases, family caregivers become so focused on the tasks at hand that they don’t even know they need a break.

Are you  a caregiver? Paying attention to –and honoring—your own needs isn’t an act of selfishness. It’s an act of personal responsibility. Many caregivers who neglect themselves end up coming down with an illness of their own. If that happens to you, the person you’re caring for will suffer. Self-care ultimately positions you to be the best possible caregiver you can be.

When you’re in the thick of things, that can be hard to see.

How can you tell you need a break? It’s really quite simple. If you can’t remember the last time you had any time for yourself, you need a break. If you’re tending to a spouse or parent 24/7, you need a break. If you can’t remember the last time you enjoyed a favorite hobby or pastime, you need a break. If you find yourself starting to resent the person you’re caring for, you need a break. If you think spending an hour on your own shopping is a break, you need a break. If you’re feeling guilty about the resentment, you’re not an evil person. You just need a break! The question to ask isn’t if you need you a break. It’s when, how long and how often your breaks should be.

Once you’ve accepted the fact that you could use a break, what should that break look like? How can you pull it off? Here are a few tips.

  • Short breaks are fine. Your break can be as little as a couple of hours away two or three times each week.

  • Running errands isn’t really a break. Some caregivers believe that the time they leave the house to go shopping for their elderly loved one qualifies as a break. It may feel like one but it’s not as rejuvenating as time spent focusing on something completely unrelated to your caregiving responsibilities.

  • Do things you enjoy. Try to spend at least some of your time away doing things you love. Get some exercise. Go sightseeing. Play cards. See a movie. Dream about the future. Shop for non-essentials-- for things you don’t need. Have lunch with a friend. This change in focus helps recharge your batteries.

  • Expect to feel resistance. You may find that the first time you attempt to carve out some time for yourself, it’s hard. But if you do it consistently, you’ll get better at it. Dealing with the normal challenges of caregiving will get easier.

  • Expect to get resistance. If your loved one is accustomed to your constant presence, he or she may complain when you take time off from caregiving duties. Ignore those complaints, no matter how vocal, and take your breaks anyway. Your loved one will be happy when you come back.

If you’re really burned out, sometimes only a serious change of scenery will do. That’s when it’s time to get away for a week or two, which will do a lot to help you unwind. But then the inevitable questions arise. Where should I go? What should I do?  Who will care for my loved one while I’m away?

The good news is that caregivers today have options. Here are a few of the most workable.

  • Consider asking another family member to cover you. You’ll want to talk to this family member to make sure that he or she is up to the task. We often find that an elder’s primary caregiver is doing so much that it takes two or more people to duplicate the services and care that he or she provides. Not every family member has the time or patience to take on caregiving duties.

  • Call an agency. If no family members are up to the task, look to the professionals. One option is to hire an agency to provide someone to stay with your loved one. Keep in mind that some non-profit organizations, most notably the Alzheimer’s Association, have funds available to offset the cost of respite care so family caregivers can catch a break.

  • Look to assisted living facilities. If hiring someone to come to your loved one’s home isn’t an option, check with the assisted living facilities in your area to see if they would allow your loved one to stay there while you’re away. Many will allow seniors to stay for a week or two at a time and it can be a win-win situation for all. Not only does your loved one get needed care, he or she gets to experience life at the facility, trying new activities and meeting new friends. You may find that your loved one likes the facility, which will make future housing transitions easier.

  • Consider a nursing home. If your loved one’s care needs are more extensive, many nursing homes are willing to take your loved one on a private pay basis.

When I’m working with clients, I have a simple way to determine whether a family caregiver needs a break. I ask a simple question: Would you rather have a crisis or a transition? Stressed out family caregivers are usually unable to provide the typical answer of preferring transitions to crises or sometimes are unable to provide any answer at all. If I get a blank look as a response, I know that I’m dealing with a caregiver who needs a break.

Most caregivers don’t realize that the stress of being constantly “on duty” has a negative impact on their ability to reason. I’ve found that if the caregiver removes the stress by taking some time off, it restores the person’s ability to function and recalibrates their perspective. They’re then able to return to their caregiving duties with a renewed commitment to care for their loved ones without sacrificing themselves in the process.

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Posted by on in Estate Planning

I’m often asked whether a person who inherits property has to pay income taxes on that property. In most cases, the answer is no. However, there is one exception: Income in respect of a decedent, also known as IRD.

All income the decedent would have received had death not occurred that was not properly includible on the final return is income in respect of a decedent.  Examples include retirement plan assets, IRA distributions, salary, wages, sales commissions, and unpaid interest and dividends. Items of IRD along with other estate assets, are eventually distributed to the beneficiaries of an estate. While most assets in the estate pass to beneficiaries income tax free, the income from IRD assets is generally taxed when the income is actually received by the beneficiary. IRD is taxed to the beneficiary at the beneficiary’s income tax rates. For example, distributions to beneficiaries from IRA’s are income to the beneficiary in the year received from the IRA. However, if a decedent’s estate has paid federal estate taxes on the IRD assets, a beneficiary may be eligible for an IRD tax deduction based on the amount of estate tax paid.

It's important to remember that though this deduction is available, it won’t apply to you unless you paid estate taxes. For many people, IRD won’t be a factor.

If you’re wondering about IRD, just give us a call. Drazen Law Group attorneys have a thorough understanding of the taxes that come into play during the estate settlement process. We will examine the decedent’s estate tax return to see if the estate paid an estate tax, and then calculate how much of the decedent’s estate tax was attributable to the items of IRD that you inherited. You can then claim this as a deduction on your tax return but only if you itemize and only if you claim the IRD deduction in the same tax year in which you actually received the income.

It’s complicated. But don’t worry. We’ll handle all the details. At Drazen Law Group, we have extensive experience helping clients that have received inherited property , including the IRD. We take great satisfaction in helping our clients keep hard-earned wealth in the hands of the family—instead of passing it on to Uncle Sam. Just give us a call at 203.877.7511.

 

Drazen Law Group’s legal articles are made available for educational purposes to provide general information and a general understanding of the law, not to provide legal advice. There is no attorney-client relationship created between the reader and Drazen Law Group. Drazen Law Group’s legal articles are not legal advice. Persons should not act upon this information without seeking advice from a lawyer licensed in their own state or jurisdiction. Drazen Law Group’s legal articles should not be used as a substitute for competent legal advice from a licensed professional attorney in the reader’s state or jurisdiction. Use of Drazen Law Group’s legal articles is at your own risk. The materials presented may not reflect the most current legal developments, verdicts or settlements. These materials may be changed, improved, or updated without notice. Drazen Law Group is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.

 

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Posted by on in Estate Planning

Do trusts pay taxes? It depends. 

Generally speaking, the IRS divides trusts in two broad categories when it comes to the issue of taxation:

  1. In a grantor trust, the owner (the “grantor” in tax lingo) is treated as an individual taxpayer. All income generated by the grantor trust is reported by the trust owner’s on his/her regular individual return (Form 1040). In essence there is no difference in taxation whether the grantor owns the property in his or her own name or as part of the trust.
  2. In a non-grantor trust, the trust is considered a separate entity with its own tax ID number that files a fiduciary return on Form 1041 if the trust generates any income during the year.

The language used in the trust agreement determines whether a trust is considered a grantor trust. All other trusts are treated as non-grantor trusts. All living trusts because they benefit the person establishing the trust are grantor trusts during that person’s lifetime.

For non-grantor trusts, the trust gets a deduction against its income for distributions made to the beneficiary during the year. If the trust’s income is greater than its distributions, the trust pays tax on the amount of undistributed income. The concept of Distributable Net Income, or DNI—the maximum amount received by a beneficiary that is taxable—is important to keep in mind. In other words, the beneficiaries receiving distributions from a non-grantor trust will not have taxable income greater than the trust’s income.

Most of the time, trust beneficiaries will pay lower taxes on income than the non-grantor trust. Tax brackets for trusts are closer together than for individuals, which mean you end up paying the maximum rate of tax on undistributed income in a trust. For example, a married couple doesn’t hit the 33 percent income tax rate until their income is $240,000. The threshold for a trust is much lower. A trust might be at the 33 percent rate for undistributed income of $10,000 - $12,000.

You have approximately 65 days after the end of the year (until around March 5) to make a distribution to the trust beneficiary and have that distribution counted on the tax return for that year. For example, you would have until early March 2017 to make a distribution to a trust beneficiary and have that distribution offset income generated by the trust for the 2016 tax year. Don’t forget that taxes are just one factor in a trustee’s decision about trust distributions. A trustee must follow the terms of the trust agreement and pay attention to the needs of the trust beneficiaries.

If you have a non-grantor trust, you can minimize the tax burden by choosing investments wisely.  If you need to invest the money of a non-grantor trust, you should consult an estate planning attorney or CPA having experience with trust taxation and a financial advisor.

If you want to understand the tax characteristics of your trust, give Drazen Law Group a call at 203.877.7511. Our experienced attorneys are ready to help.

 

Drazen Law Group’s legal articles are made available for educational purposes to provide general information and a general understanding of the law, not to provide legal advice. There is no attorney-client relationship created between the reader and Drazen Law Group. Drazen Law Group’s legal articles are not legal advice. Persons should not act upon this information without seeking advice from a lawyer licensed in their own state or jurisdiction. Drazen Law Group’s legal articles should not be used as a substitute for competent legal advice from a licensed professional attorney in the reader’s state or jurisdiction. Use of Drazen Law Group’s legal articles is at your own risk. The materials presented may not reflect the most current legal developments, verdicts or settlements. These materials may be changed, improved, or updated without notice. Drazen Law Group is not responsible for any errors or omissions in the content of this site or for damages arising from the use or performance of this site under any circumstances.

 

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Posted by on in Milford Estate Planning

b2ap3_thumbnail_man-couple-people-woman.jpgMany people are familiar with this common horror story: a parent remarries later in life to a person with a family of his or her own. When the parent passes away, their estate goes entirely to their new spouse through the laws of intestacy. When the new spouse then dies, the cumulative estate goes to his or her children, leaving the original parent’s children without their rightful inheritance. This happens all too often and usually leads to nasty court battles and hard feelings all around. However, estate planning lawyers in Milford want people to know that with proper planning, these issues can be avoided.

While it may not always be pleasant to think about what happens if you pass away, Milford estate planning attorneys strongly advise those who are entering into a blended family situation to consider the following:

  • Truly think about who you want to provide for and in what manner. You may want to leave everything to your children, you may want to provide for your new spouse, or you may even want to leave a legacy for each member of your blended family. The decision is up to you, so think carefully about it.
  • Speak to your family about any heirlooms or items they may have a personal connection with and may want after your passing. If possible, make it known in your estate plan that certain family members should receive certain items.
  • Consider the possibility that you may pass first, but also consider that your spouse may pass before you. While you may be preoccupied with protecting your own legacy, consider what may happen if the roles are reversed and your family ends up with your spouse’s family’s inheritance – then make plans with your spouse to ensure each side will achieve a satisfying outcome.
  • Review your insurance policies, estate planning documents, and beneficiary forms for financial accounts to ensure they are all up to date – and more importantly, that you are not leaving funds for an ex-husband or wife. There are many, many cases of insurance payouts going to an ex-spouse who has had nothing to do with the deceased for years instead of going to the current spouse, all because the policies were forgotten and never updated.
  • When consulting with a Milford estate planning lawyer, make sure they have experience helping blended families in these matters. There are many techniques that can be used, such as the use of certain Trusts, to ensure all members of the family are adequately taken care of and all of your wishes are met, but it takes an attorney practiced in such matters to make sure these things are done correctly.

 

If you have questions about estate planning for your blended family or you wish to update your estate plan to account for your blended family, please contact us at (203) 877-7511 to set up a consultation.

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Posted by on in Milford Estate Planning

b2ap3_thumbnail_attorney.jpgIrrevocable Trusts are an integral part of most asset protection planning strategies. They are used to protect property and assets from nursing homes and other predators and, depending on your individual situation, can end up saving you thousands of dollars. Milford Trusts attorneys have put together some of the basics to give you everything you need to know about Irrevocable Trusts.

Irrevocable

Just as the name suggests, an Irrevocable Trust cannot be terminated once it is created which is what sets it apart from a Revocable Trust. The reason it cannot be revoked is because of the many benefits afforded by the Trust for protecting assets and shielding against taxes. Revocable Trusts are good for avoiding probate and allowing successor trustees to manage affairs if the grantor becomes incapacitated, while Irrevocable Trusts are mainly used for asset protection purposes.

A Living Trust

There are actually two types of Irrevocable Trusts – Living and Testamentary. A Living Trust comes into effect and is irrevocable as soon as it is initially funded, meaning the ownership of assets changes while the grantor is still alive and stays that way after the grantor passes away. A Testamentary Trust becomes irrevocable when the grantor dies, meaning the terms of the Trust cannot be changed after that point. Most Revocable Trusts become Irrevocable at the time of the grantor’s passing while other Testamentary Trusts are created through the Last Will and Testament.

Different Types of Irrevocable Trusts

As noted earlier, Irrevocable Trusts are designed to save money either by reducing taxes or protecting assets. There are many different types of Irrevocable Trusts available depending on what situation you’re in and what goals you’d like to accomplish. Here are a few of the Irrevocable Trusts and their benefits:

  • A Bypass Trust is used to significantly reduce estate taxes once the second spouse has passed away. The Trust holds all the assets from the first spouse, meaning the surviving spouse does not actually own the assets. This reduces the amount of the estate for estate tax purposes.
  • A QTIP Trust is used to delay or postpone the payment of estate taxes once the second spouse passes away.
  • A Medicaid or Special Needs Trust holds ownership of a person’s assets in order to make them eligible for state and/or federal benefits, either when it is time to enter a nursing home or if the benefits are in danger of being lost due to an inheritance.

 

If you have questions about setting up an Irrevocable Living Trust, or if you’d like to have your current Irrevocable Living Trust reviewed by an experienced Trust Attorney, please give our Milford estate planning and asset protection planning law firm a call at (203) 877-7511 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it. to set up a consultation.

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Posted by on in Connecticut Probate

b2ap3_thumbnail_88fbb900645677f48ae7ca4dd9eae710.jpgThe death of a loved one is one of the most difficult experiences to deal with in life. What makes the situation even harder is the financial aspect that accompanies funeral and burial expenses. Money is often the last thing grieving families want to think about but, unfortunately, expenses related to death must be paid fairly soon after a loved one has passed. This is especially true if the deceased was the main provider of income for the family and the family needs some assets to make it through until other arrangements can be made. Luckily, there are ways to receive death benefits quickly to help pay for these end-of-life expenses and hopefully bring some small comfort to families during their time of need.

Life insurance and annuities can usually be collected quickly since these types of policies and accounts need to have a beneficiary named and any asset that names a beneficiary does not need to go through the probate process. Typically, the companies holding the policies and accounts need a certified death certificate in order to start the process of releasing the assets, but many forms from the companies must be filled out. It may be wise to consult with a Milford probate attorney to make sure the forms are filled out correctly so the assets can be claimed as soon as possible.

Social Security benefits, such as a death benefits or monthly survivor benefits, can be claimed quickly after a loved one’s passing and will go to a surviving spouse or dependent children, if any. These benefits are relatively easy to receive but certain eligibility requirements must be met such as age or disabilities. If you are unsure if you meet the requirements to receive Social Security death and/or survivor benefits, please contact a probate attorney in Milford as soon as possible because some survivor benefits from Social Security are not retroactive if they are claimed after a certain amount of time has passed since death.

There are also benefits available from the VA for the spouses of veterans. Once again, these benefits are relatively easy to claim but certain eligibility requirements must be met. An experienced Milford probate lawyer should be able to advise you as to what you need to do in order to claim veteran’s death benefits.

If you have a loved one who has recently passed and need assistance getting death benefits, or if you’d like to make sure your benefit policies are in order for when the time comes, please give our Milford probate law firm a call at 203 877 7511 or send us an email at This email address is being protected from spambots. You need JavaScript enabled to view it. to set up a consultation to see how we may help you.

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Posted by on in Milford Elder Law

b2ap3_thumbnail_Dollarphotoclub_82406568.jpgIf you or a loved one has recently been diagnosed with Alzheimer’s disease, you are undoubtedly going through an emotionally-draining and tumultuous time. One thing that could help you is to plan ahead and develop your own care team. This is a group of support people that will help you through the different stages of the disease. Here are a few things to consider when deciding if you would benefit from a care team:

 Why do I need to build a team now?

 A team can reduce the stress and feelings of being out of control of your own life. A team can help you live a more productive and active life during the early stages of the disease. Once you have a team in place you can make plans for daily living and emergencies, and you can assign roles to each team member.  As the disease progresses, it may be harder for you to make decisions, so having a team in place with specific instructions can help both you and your family members.

 Who should I include in my care team?

 Typically, you want to include family, friends, professional advisors (incapacity/disability attorney here in Milford, social workers, care coordinators) and doctors. Ask people that you trust to make important decisions for you if you are not able. Have a conversation with your team and express your wishes to them. Plan in advance what type of long-term care you’d like and what medical care you would prefer in the later stages of the disease. Neighbors can also be key members of your team in the early stages – especially if you live alone. Since they are close by, they can help with day-to-day tasks and are easy to reach in case of emergencies. You should also contact community groups or church groups that can help with day-to-day tasks.

 Tips for developing your care team

 Talk to potential members and gauge their interest and willingness in joining your team. Discuss what you will need from them and their ability to help you. Make sure to be as specific as you can and let them know exactly what you will need to the best of your knowledge. Understand that some people are not going to be able to be a part of your care team. Their family and work obligations may mean that they do not have the proper amount of time needed to devote to you. Don’t take this type of response negatively. Be glad that they let you know in advance as you want to make sure that people have the time to care for you when you need it.

 It’s also wise to start scheduling consultations with professional advisors if you do not currently have any.  The first appointment you make should be with a Milford incapacity and disability attorney as he or she will help you craft legal documents such as Powers of Attorney and Healthcare Directives that give your care team actual legal authority to act for you when you are no longer able. An attorney may also help you implement an asset protection plan now so that your finances are not an issue and your family is not on the hook when it comes time to pursue options for long-term care later.

 Building a support team can make it a bit easier to think about the situations you may face. When you start these conversations, you will find many people will come forward and offer their help.  Take the help that is offered! Your care team can make a big difference in your quality of life.  

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Posted by on in Milford Elder Law

b2ap3_thumbnail_Fotolia_84655705_XS.jpgElder lawyers in Milford are well-versed on the ins-and-outs of nursing home expenses and they continually work with seniors to determine how best to lower costs and protect assets.  One recommendation that does not always get enough attention is to spend a little on remodeling your home to save big on nursing home costs down the road.

Nursing homes and retirement homes provide a lot of benefits to the elderly but there are times when moving into one of these facilities may not be entirely warranted.  Instead of pulling out the brochures and comparing amenities early on, seniors might want to consider looking at ways to upgrade their own homes to spend more time living completely or partially independently.

The average cost of nursing home care in the Milford area is continuing to rise.  It is not unusual to expect to pay as much as $75,000 each year to reside in one.  If you compare that to the costs of making a few modifications to your existing home, it is easy to see how tens—even hundreds—of thousands of dollars can be saved.

Of course, Milford elder lawyers are not experts when it comes to home renovations but there are a lot of great resources for suggestions on how to make your home more livable in the later years.

Bathroom Renovations for Seniors

For just a few hundred dollars, it is possible to upgrade an existing bathroom to offer more safety and convenience to the senior living in the home.  This may be as simple as adding some grab bars near the toilet and a seat and detachable showerhead in the tub.  Other fairly low-cost considerations might include laying down some nonslip flooring.

While more costly, there are other options in the bathroom, too.  Widening doorways for wheelchair accessibility and changing out existing tubs for walk-in showers are reasonable solutions for many people.  Again, it is worthwhile to compare the price of the work to the overall cost of nursing home care for a year.  If the changes and upgrades allow the senior to stay in his or her home for three more years, even a cost of $10,000 would easily be recouped within a few months.

Kitchen Renovations for Seniors

Some suggestions for making a kitchen more user-friendly for an elderly person include raising the oven up by building it into the wall or putting some lower cabinets onto wheels for easier access.  Utilizing an eat-in kitchen rather than carrying food to the dining room is also a simple step in making life easier and avoiding moving to a nursing home sooner.

As with bathroom renovations, keep in mind that floor safety is important.  Water gets spilled easily so a nonslip surface is best.  Many elder lawyers in Milford see clients who are facing a nursing home stay due to a slip-and-fall accident that breaks a hip and limits mobility.  Paying attention to floor safety helps to avoid this situation.  You can also make life a bit easier by choosing one that is easy to clean.

By investing in your home now, you can increase your ability to stay in it longer and therefore avoid many of the costs associated with nursing home care.  An elder lawyer in Milford can help you to identify these and other ways to enjoy your retirement.

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Posted by on in Milford Estate Planning

b2ap3_thumbnail_Fotolia_49249610_XS.jpgIdentity theft is the fastest rising crime in America today. Criminal syndicates located overseas are gaining access to your personal information through a variety of tactics and using that information to open credit cards and bank accounts to buy products that they are then selling for profit.

Due to complex international laws most of these criminals are never prosecuted, and you are left to deal with the aftermath. If you know anyone that has had their identity stolen, you know that the problems that arise from this can last years. These criminals have relied on hacking into computer systems to gain access to your personal information, but they have now turned to “phishing scams” where they trick you into giving them your personal information. The criminals will pose as IRS agents, credit card operators, and now estate planners.

When posing as estate planning lawyers, criminals in Milford will use several different tactics. One common tactic is a telemarketing scam. On the phone they will exaggerate the benefits of estate planning, likely promising a tax free transfer of all your assets once you pass away.


Since they have no intention of making good on these promises they will tell you whatever you want to hear. They will aggressively insist that this offer is only good for a limited time and will do everything to keep you on the phone until you give over your personal information. They know once you get off the phone they will have lost you as a victim. As a general rule,
never give out your social security number over the phone.

Another common tactic is to use a mass marketing approach. They will send emails or sometimes letters through the regular mail. They will again over-promise what is legally possible in the hope that you will want to sign up. They will then ask you to send your personal information as well. 

The bottom line is if the offer is too good to be true, it usually is. If you have any doubt, always follow up with a qualified estate planner. Even if it is not a case of identity theft, there are many companies that will oversell a flimsy, one-size fits all estate plan that will not make it through the probate process.

 If you are contacted by someone claiming to be a Milford estate planner and they are asking for your personal information, you should contact us to review the information they sent you. You can call the office at (203) 877-7511 with any questions you may have regarding potential identity theft scams. 

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Posted by on in Milford Estate Planning

b2ap3_thumbnail_Fotolia_59906233_XS.jpgEstate planning lawyers in Milford are typically tasked with the job of helping clients determine what to do with their assets after death.  There are other important aspects to estate planning, and one that can be overlooked is the need for disability insurance.  Those who are in good health and looking forward to retirement in the next decade or so often do not see the wisdom in their estate planning lawyer’s recommendation for disability insurance.

Peak Earning

Keep in mind, though, that when you are in your 50s and 60s, you are likely at your peak earning point.  You have probably worked your way up and are far beyond the entry-level position you were so excited to get when you started your career.  True, you also hopefully have less debt than you did in the past, but there are still plenty of financial obligations eating into your paycheck.

What happens when you unexpectedly fall ill or are somehow injured and can not return to work for a period of time (or at all)?  Is your savings and spouse’s income going to be enough to keep the forward momentum you have been creating all these years?  How will you keep up with your monthly expenses, including saving for the retirement you deserve?

Disability Insurance Considerations

If you realize that disability insurance is the safety net you need, your Milford Will and Trust lawyer can help you determine the best way to purchase it.  For many people, that means going through your employer.  Employers will often provide a group policy that does not require you to go through the medical underwriting process.  There is a good chance that this is going to be the most inexpensive way to purchase a policy.

On the other hand, you may realize that your employer’s policy doesn’t offer as much insurance as you’re likely to need.  A Will and Trust lawyer in Milford will probably recommend that you start by looking for a policy that replaces 60-70% of your current salary, but this may not cover your actual needs.  In that case, you will want to purchase supplemental coverage.  Again, this may be available through your employer at a better rate than buying it commercially.

Your health and other factors can also affect the cost and the coverage for which you are eligible.  Many policies come with the caveat that the terms can be changed by the provider over time or that they can refuse to allow you to renew your policy based on their criteria.  You may need to do some research with your Milford estate planning lawyer to find a policy that includes terms that make you comfortable and protect you for the duration of the relationship.

For help choosing a disability policy that is right for you, we encourage you to contact our Milford planning and elder law firm at (203) 877-7511 and ask to schedule a strategic planning session with the mention of this article. 

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Posted by on in Milford Special Needs Trust

It’s a common question, especially for people caring for a loved one with a disability. Attorney Steven L. Rubin with Drazen Law Group answers the most commonly-asked questions about pooled trusts.

What is a “Pooled Trust”?

A pooled trust is a creature of federal disability law, authorized by Congress under 42 U.S.C. section 1396p(d)(4)(C). Before this law was enacted, individuals with disabilities who received personal injury settlements, inheritances, or windfalls risked the loss of essential government benefits such as Supplemental Security Income (SSI) and Medicaid. In some cases, individual with a disability actually gave away their money to avoid losing their government benefits. Congress therefore stepped in and authorized non-profit associations like Plan of Connecticut, to create Trusts to which the funds are transferred. The Trust administers the money for the benefit of a person living with a disability (called the “beneficiary”).

What can the Trust money be used for?

The money can be used for the beneficiary’s “special needs.” For that reason, the term “Special Needs Trusts” has been coined to describe these types of Trusts. Another term that has been used is “Supplemental Needs Trust.” Generally speaking, the Trust money can be used to purchase any goods or services that SSI or Medicaid does not pay for -- typically, non-support items that are other than essential medical care, food, shelter, and clothing.

You mean a beneficiary can receive government benefits and yet set aside an unlimited amount of money to pay for amenities like vacations and entertainment? The government allows this? What is the catch?
This is true, and there is a catch -- two of them, actually. First, the Trust money no longer belongs to the beneficiary. Once the beneficiary transfers his money to the Trust, he cannot change his mind and ask for the money back. The money belongs to the Trust, which is required by law to distribute the money to or for the beneficiary’s best interests, subject to certain limitations.

Second, at the death of the beneficiary, any money that remains in the Trust account established with the beneficiary’s money, is paid to the State as reimbursement for any Medicaid benefits the State has paid out on behalf of the beneficiary. (Note: this applies to Medicaid benefits only, not SSI benefits.) After “Medicaid payback,” any remaining Trust money will be given to persons designated by the beneficiary, such as other family members. The beneficiary can request that the State not be paid back, however. Instead, the beneficiary may allow the Trust to keep the money, but the Trust must use the retained money for the benefit of other individuals with disabilities. The retained money will not be paid back to the government.

Why should I transfer my money to the Trust for the benefit of my adult disabled child if the government must be paid back after he dies?

There is no payback to the government of money that other people, including the child with a disability’s parents, transfer to the Trust for the benefit of a family member with a disability. Payback is required only if the assets that are transferred to the Trust are owned by the beneficiary, such as a personal injury settlement or inheritance.
Questions about pooled Trusts? Drazen Law Group can help. Just give us a call at (203) 877-7511.

Source: VistaPoints.org

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