Elder Law, Estate Planning

Components of Life Care Planning

Estate planning and elder law are two terms that get used interchangeably often, however, there are significant differences between the two. While some overlap exists between the two, learning and implementing strategies from both law practice types is crucial to prepare for successful aging and preserving a family legacy. 

Estate planning lets families:

  • Name guardians for minor children
  • Manage and protect valuable assets
  • Distribute property according to specific instructions after you die
  • Minimize potential estate taxes
  • Simplify or avoid probate
  • Distribute property to beneficiaries
  • Create a business succession plan

Younger people tend to focus on asset protection in their earlier years. They are building their legacy.

Elder law primarily deals with later stages in life and an aging individual’s needs while they are still alive, like:

  • Retirement goals 
  • Paying for long-term care 
  • Protecting the family if they become incapacitated due to an accident, severe illness, or reduced cognitive function 
  • Accessing proper health care without depleting a senior’s resources 
  • Protecting the legal rights of aging adults 
  • Address the needs of persons with disabilities and war veterans, including their spouses, children, and caretakers

Seniors worry about protecting their legacy from medical costs, fraud, or abuse. They want to keep the family home for a spouse or the next generation.

What is Estate Planning?

Estate planning is for adults of all ages. An estate plan determines what will happen to assets upon death. An estate planning attorney can use wills and trusts to ensure your wishes are followed. If there are minor children, a will identifies a guardian to guide and protect them through life until they become adults. Naming a guardian for minors is a crucial aspect of a will.

Estate planning lawyers can structure assets and property to help an estate avoid probate. Various revocable and irrevocable trusts can save money on estate taxes, leaving more to beneficiaries. The probate process is slow, can be very costly, and is a public process, so it makes sense to keep as much of your estate out of probate as possible.

Several assets can pass to heirs without being addressed in a will or a trust through beneficiary designations. Insurance plans, IRAs, and 401(k)s are all examples of beneficiary designation account types. Reviewing your designations is crucial upon major life changes, particularly death or divorce. Update your beneficiaries. If they have changed or are deceased, a court will decide the fate of your funds.

If you have a small business, estate planning is also relevant to the business’s future success. A succession plan helps a future business owner or family member to run the business upon your retirement, incapacitation, or death. An estate planning attorney can help structure inheritance using life insurance policies to balance inheritable assets if one adult child is particularly interested in running the business and others are not.

What is Elder Law?

Focused on later stages of life, elder law anticipates future medical needs, including long-term care, to ensure a senior can live a long, healthy, financially secure life. The goal is to develop a plan to pay for future care that meets their comfort level while preserving as many assets as possible. An elder law attorney knows how to help you qualify for Medicaid or other government benefits while keeping a portion of your assets. In addition, they may support you through Medicaid hearings and appeals.

Elder law attorneys can help protect individuals from elder exploitation or abuse as they become older and caring for themselves becomes difficult. Designating a durable power of attorney (DPOA) for property and financial affairs and another for health and well-being permits representatives to oversee and protect seniors when they are no longer able. DPOAs are documents used in estate planning. Without a power of attorney, elder law and estate planning can assist with guardianship and conservatorship.

What is Life Care Planning?

As an estate grows in value and minor children become adults, it is important to revisit and amend your estate planning documents. Review them regularly as your life evolves, particularly after marriages, births, divorces, deaths, and substantial changes in finances. You may find yourself straddling the needs of children and aging parents. Estate planning shifts as estate planning attorneys consult with you on elder law matters.

Life care planning protects your assets, health, and legacy at every stage of life and addresses common concerns to avoid potential problems. Proactive planning is the key to living your best life, from raising a family to fears of declining health.

We hope you found this article helpful. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact our Reno office by calling us at (775) 853-5700.

Estate Planning

How to Understand Probate

You can minimize or avoid probate entirely by working with an estate planning attorney. Probate proceedings are part of the public record and can be very time-consuming and expensive. However, in nearly every case, some probate is necessary, so it is important to understand how to navigate the process.

Probate proceedings seek to validate the decedent’s last will and retitle the estate’s assets into the name of heirs according to the deceased’s wishes. These court-supervised proceedings ensure estate debts are paid and oversee the distribution of assets to heirs. 

After losing a loved one, the family will generally come together and hopefully encounter a properly written will and other crucial estate planning documents. Without a well-organized plan, the probate process can take much longer. Family members will be tasked with gathering information necessary for court.

Probate Court Proceedings

The petitioner, usually the estate executor or personal representative, will begin the process by filing a death certificate and a last will to the probate court. It is also useful to produce a list of know creditors and names and contact data of the decedent’s heirs. Smaller estate probate processes and those estates not contested by heirs can usually work through probate fairly quickly and efficiently.

Laws regarding probate are state-specific, and most states set valuation thresholds. If, for instance, an estate value is less than $75,000 and no one contests the will, less formal probate hearings may move more quickly. Since the advent of COVID-19, these court proceedings may even transact over video calls.

For larger value estates, there is a substantial amount of necessary paperwork to validate the will, determine asset distribution, settle disputes, pay off remaining debts, and ultimately close the estate by paying the decedent’s final taxes. A checklist of documents to gather may include:

  • Death certificates
  • Final will
  • Revocable trust documents
  • Heir and beneficiary contact data
  • Beneficiary designations
  • Pre or post-nuptial agreements
  • Previous three years of federal and state income and gift tax returns
  • Life insurance policies
  • Real estate deeds
  • Vehicle titles
  • Statements of financial accounts
  • Contracts and business agreement documents
  • Appraisals for high-value art, collectibles, or jewelry
  • Other known assets
  • Known debts
  • Ongoing bills
  • Medical and funeral expenses

Probate Proceedings Without a Will

The decedent’s residence states intestacy laws will apply if your loved one dies without a last will (intestate succession). All personal property without a beneficiary designation will be subject to the probate process at the court’s direction.

But some assets will avoid the probate process under state property title, state contract, or state trust law. These assets may include:

  • Beneficiary designate life insurance policies
  • Beneficiary designate retirement funds
  • Beneficiary designate annuities
  • Pay-on-death or transfer-on-death accounts
  • Joint tenancy property with rights of survivorship
  • Tenancy by the entirety
  • All trust property

Cost of Probate

Complex probate processes can be costly and take years to finalize, which is why many individuals retain an estate planning attorney to minimize probate proceedings. Lengthy proceedings can be frustrating for heirs who are rightful beneficiaries but must comply with the probate process. The average cost of probate varies by state; however, five to ten percent of an estate’s value in administrative costs and legal fees is typical. Some estates may lose as much as twenty percent of their value.

Other fees may include executor compensation, court fees for filings and paperwork, and a probate bond. After the probate proceedings are complete, a probate bond may be refunded. The most common reason for high probate costs occurs when beneficiaries contest the will, as ongoing litigation can be expensive. Issues relating to preparing and filing the decedent’s last federal estate tax return and any ensuing audit may also increase the cost of the probate process.

Most individuals will create an estate plan with their lawyer that allows assets to pass outside the probate process, typically through creating a revocable living trust. Depending on your situation, your estate planning attorney may recommend other types of trusts as well as ensure that named beneficiaries on accounts that pass outside of probate are up to date. Regularly reviewing your estate plan with your attorney can help minimize probate court interactions and streamline your heir’s inheritance process. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact our Reno office by calling us at (775) 853-5700.

Elder Law, Estate Planning

Medical Advance Directives: Understanding the Different Types

A trauma or illness could incapacitate anyone, and no one likes to think about it. People experience it every day, unfortunately. With this knowledge, many people like to prepare in advance for the kind of treatment they want in the event of cardiac arrest, respiratory failure, stroke, and brain death. Some people would allow doctors to perform “heroic measures,” and others would rather die without significant medical intervention. Medical advance directives are legal documents that outline the details of your advance healthcare planning.

There are a few types of medical advance directives. A durable power of attorney names a person to act as your healthcare proxy or surrogate who can make medical decisions and follow those outlined in your living will if you are incapacitated. A living will tells medical professionals when they should and should not use certain interventions, like intubation, CPR, and IV nutrition. A living will only pertain to saving a life, but a power of attorney can make any decision. For example, if a person is unconscious but not in peril of death, a power of attorney could consent to minor medical treatment that is not life-threatening.

What Happens without Medical Advance Directives

Of course, many people without advance directives get into car crashes or have other accidents and need someone to make medical decisions for them. Without an advance directive, the state relies on a legal hierarchy of next of kin. Legal guardians make decisions for minors and adults with a conservatorship. The state usually recognizes a spouse or domestic partner as the next of kin for most adults. Without a spouse, the responsibility often goes to an adult child, sibling, or parent. For many people, this system works well.

The legal hierarchy presents major problems for others. Sometimes people remain legally married to someone who no longer represents their best interests. At other times your next of kin does not share the same values and would not make the right choices for you. Sometimes, you feel more aligned with a person who is a friend instead. In all of these situations, having an advance directive helps ensure that the medical decisions made on your behalf are the same or similar to those you would make for yourself if you were able.

Items to include in a Living Will

Your power of attorney can express end-of-life wishes that address the use or withdrawal of specific treatments. Likewise, some people may want to plan certain end-of-life decisions while they are still healthy. You can specify the types of medical treatment desired, such as:

  • Pain relief (analgesia)
  • Antibiotics
  • Intravenous hydration
  • Artificial feeding (feeding tube)
  • Cardiopulmonary resuscitation
  • Ventilators
  • Do not resuscitate orders (DNR)

Of course, addressing every possible scenario is impossible, but try to be explicit about your instructions for common life and death scenarios.

Items to Discuss with your Healthcare Proxy or Surrogate

Your power of attorney for medical advance directives affords the same rights to request or refuse medical treatment to the surrogate as if the individual at risk were capable of making and communicating decisions. With this in mind, you want to choose someone you trust and who shares your values. You also want to make your desires clear to that person so they can carry out your wishes. For example, let them know if you strongly oppose donating organs, having a blood transfusion, or certain hospital visitors. Explain your decision-making process to them so they can use that reasoning to figure out what you would want.

Creating Advance Directives

As advance directives are legal documents, lawyers are most effective at writing and reviewing them to reflect your wishes and hold up in court. Something is always better than nothing, so start with the basics and add details as they arise. An estate planning or elder law attorney can help create and review your advance directives. As experts in this area, we know the right questions to ask. We will listen to your wishes and help guide you in making important decisions about your care. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact our Reno office by calling us at (775) 853-5700.

Estate Planning

The Trustee’s Role: A Brief Overview

Your estate planning process, whether it is in the middle or just getting underway, likely contains questions regarding how and to whom your assets should be distributed. A trust can be a great tool in your estate planning tool kit. A properly created trust can give you and your family more options and privacy than a will.

Unlike a will, a trust will help keep your estate from going through an expensive, time-consuming, and public probate process. If you set up a trust, you still create a will, but it becomes a pour-over will, which moves (pours) your assets into your trust. You can choose from different types of trusts, depending on how and when you want your assets dispersed.

Types of Trusts

There are many types of trusts, but they all establish a financial arrangement between three parties: the trustor(s), the trustee(s), and the beneficiary(ies). The person creating the trust is known as the trustor, grantor, or trustmaker. Trusts can be created by more than one person. The trustor chooses one or more persons or entities to serve as the trustee. The trust is for the benefit of one or more beneficiaries, which can be people or entities, such as charities. For some trusts, the trustor, trustee, and beneficiary are the same person.

The Role of a Trustee

The role of a trustee can vary widely, depending on the nature of the trust, wishes of the trustor, and needs of the beneficiaries. Generally speaking, a trustee manages the trust and the assets it holds and disperses income or principal from the trust in accordance with the terms of the trust. A trustor may grant the trustee broad latitude in distributing assets to the beneficiaries or may impose strict guidelines. For example, a trustee may be allowed to make funds available for the general wellbeing and happiness of the beneficiaries or may only be able to disperse funds for educational purposes.

If the trustor has a beneficiary who has special needs and is receiving benefits from Medicaid, Medicare, or another government program, then the trustee needs to make sure they are dispersing assets without disqualifying the beneficiary from the government program. Some trusts have a special or supplemental needs provision in them, and some are wholly for the person with special needs.

In addition to dispersing the funds of a trust, the trustee also pays any taxes that are owed, records expenses and income, and oversees the physical assets owned by the trust, such as real estate. The trustee may be required to report taxes, expenses, and income to the beneficiaries on a scheduled basis. All these duties will be dictated by the language in the trust.

Choosing a Trustee

In most cases, the trustee of a trust can also be a beneficiary of the trust. One notable example of when a beneficiary cannot be the trustee of their trust is with a special needs trust. For the beneficiary of a special needs trust to qualify for government assistance, they cannot have any control over the assets of their trust or how they are managed and dispersed.

When considering who will be the trustee of your trust, choose a person you can rely on to follow the instructions you lay out in the trust. This person can be a reliable family member or friend, or an entity, such as a bank or trust company. For some trusts, such as a living trust, you can be the initial trustee and select someone else to be the trustee if you become incapacitated or when you die.

More than One Trustee

More than one person can serve as trustee at a time. This can be a good option for when beneficiaries are young. For example, a trustor can allow a young beneficiary to serve as a co-trustee of their trust along with an older trustee until a certain age when the beneficiary can serve as sole trustee.

Choosing the trustee of a trust is an important decision. When you are making this decision, consider the purpose of the trust now and in the future. Consider who will be able to best manage the trust’s assets and the beneficiaries’ needs. An experienced estate planning attorney can help you create the trust, or trusts, that will best suit your needs and select the right trustees.

This article offers a summary of aspects of estate planning law. It is not legal advice, and it does not create an attorney-client relationship. For legal advice, you should contact an attorney. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact our Reno office by calling us at (775) 853-5700.

Estate Planning

To Avoid These Common Estate Planning Mistakes, Review Your Plan Regularly

Estate planning is viewed by many Americans as something they can do once and then file away until they die. However, without being aware of the potential impact, people will make gifts during their lifetime or change listed beneficiaries on accounts which can have enormous unintended consequences on their will or trust. Review your estate plan regularly to help to prevent these common mistakes.

Gifting money during your lifetime without changing your will

It is a common practice for people to include cash gifts in their will. Whether money for a favorite nephew or niece, childhood friend, or household worker, there can be significant sums of cash for distribution to inheritors listed in your will. Often, family members learn these gifts were already satisfied during your lifetime because they hear the story about the joy it brings to the recipient.

Without modifying your will after gifting cash during your lifetime, the named individual will still get the gift when the will enters probate. Smaller gift amounts may not create issues in an estate but don’t match your intentions. More considerable sums of money can create situations that financially break an estate plan. A court will not know that a gift was satisfied during your lifetime either, and there is no one left to speak to the intention of the will, resulting in a second gifting of cash.

The cash gift is paid again if the inheritor chooses not to be forthcoming. While many in the family will view a lifetime gift as an advance on an inheritance, if the recipient does not agree, you may have to litigate, which can be costly. If you give lifetime gifts of cash and do not intend to give a secondary gift upon your death, change your will after the gift.

Too few assets to fund a trust

If your trust is years old and its overall assets have decreased in value, reviewing the gift provisions outlined in your trust is crucial. You may not have enough assets to pay for all of the gifts. It is not unusual that in flush financial times, people create grand estate plans leaving cash to family and friends and creating trusts for others’ benefit. These good intentions can fall far short of reality in leaner times, leaving some people to receive less than hoped or nothing at all.

In a trust, cash gifts pay out first. For example, if you leave $1,000,000 to your sibling and the rest in trust for your children, but at the time of death, your trust is only worth $1,150,000, the trust will then only contain $150,000 for your children after the payout. This is probably not your intention. Another possibility is your trust provisions don’t get funded because there is no cash to cover them. 

Sadly, it will be the lawyer or trustee’s responsibility to advise these recipients of what they were supposed to receive from the trust, but unfortunately, they will not. Regular review of your trust and its goals can avoid this situation. Crafting a trust with realistic goals or making amendments to those goals during less abundant times will keep the trust’s intentions valid and achievable.

Thinking all assets pass through your will

Some people leave a lot of money that they believe satisfies all the gifts listed in their will. They total all their assets, which seems large enough to address all beneficiaries. However, all assets will not pass under the will, which is the difference between probate and non-probate assets.

Probate assets will pass through the decedent’s name into their estate and be distributed according to the will. In contrast, non-probate assets pass outside the will, usually by joint ownership or beneficiary designation. Knowing the difference between the asset classes provides the true value in the estate and receives distribution according to your will. Also, be clear your estate will need to deduct any outstanding debts, expenses, and taxes, which will reduce the probate asset number again.

Joint ownership additions

It is very easy to add an individual as a joint owner with rights of survivorship of an asset such as a bank account or piece of real estate. Yet if your will relies on that asset being part of your estate to pay others (or debts, expenses, and taxes), there may be a problem. Joint ownership can often lead to will contests and lengthy court battles. Before succumbing to the temptation of joint ownership, speak with your estate planning attorney and proceed cautiously so as not to upset the existing estate plan.

Changes to beneficiary designations

Beneficiary designation changes can have unintended consequences on your estate plan. The most common problems occur with changes to beneficiaries in life insurance policies. The policy may be payable to your trust to cover the cost of bequests, pay estate taxes, or shelter monies from estate taxes. Similarly, a retirement account due to an individual but changed to another may result in adverse income tax consequences. You may upend the intention of your estate plan by casually changing a beneficiary designation.

These are some of the more common mistakes people make that can negatively affect your estate planning goals. Regularly review your intentions and legal documents with your estate planning attorney to clarify changes in assets and asset types, lifetime gifts, beneficiary designations, and joint ownership additions. Doing so will keep your legacy as you intend it to be. We hope you found this article helpful. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact our Reno office by calling us at (775) 853-5700.

Estate Planning

Sibling Estate Disputes: How to Avoid Them or Resolve Them

In most families, there can be no getting around sibling rivalry. Depending on your particular family members and the dynamic between them, old rivalries from the past can become more significant when a parent passes. Adult children who are emotionally upset and in the unfamiliar territory of an inheritance process can invent new problems or magnify existing ones.

Protecting Family Relationships

Rivalry issues often present in heartbreaking ways, damaging family relationships and altering the parent’s original intent for estate distribution. It can potentially cost family members significant time and money in litigation. The death of a parent is a difficult test for siblings, particularly in cases where assets are shared unequally.

It is possible to avoid many inheritance disputes with some forethought if a parent implements a few key steps before and after death with sound estate planning. Comprehensive estate planning includes a will and trust with a non-sibling trustee or executor and the chance for equitable gift-giving during the parent’s lifetime, providing the opportunity to elaborate on or defend their decisions. Non-family fiduciaries who can act in the estate distribution include an attorney, CPA, or other financial institution that provides this service. Professional services may be well worth implementing as a strategy to diffuse issues between contentious family members.

Gifting to Children Before Death

One technique for a parent to quell potential issues is to legally gift up to $16,000 annually to each child without owing taxes on those gifts and spending down the estate’s cash assets, so there is less to argue over. You can’t argue about assets that have already been gifted. Every parent has the right to do whatever they choose with their money during their lifetime.

Using Neutral Parties to Distribute Assets after Death

After a parent dies, a mediator is particularly useful if one of the family’s adult children is the executor or trustee of the estate. The mediator remains neutral and can counsel all siblings about the estate’s distribution process while helping to keep emotions on an even keel. A mediator can also help executors or trustees formulate a plan to liquidate estate assets and split the proceeds among heirs, sometimes using the services of an independent fiduciary for assistance.

Income Disparity Among Siblings

Sometimes sibling economic disparity creates different perspectives about what is fair. Suppose a financially stable adult child prefers to hold onto an inheritable asset for a long-term payout while another heir in greater need requires an immediate return. A mediator may aid in negotiating the sale of that interest to the more financially stable heir while cashing out the other sibling, keeping the deal within the family.

Situations that Can Lead to Contesting the Will

New spouses and step-children, disabled and dependent siblings who require care, and estranged children are very likely to mount challenges to the status quo of inheritance if they feel they are being unfairly compensated. Legal actions citing undue influence for personal gain are not uncommon but can be difficult and expensive to prove. It is legally permissible for a parent to leave a child out of their will. To avoid legal challenges by the disinherited (and likely disgruntled) child, the parent should discuss their reasons with the child upfront or explain the decisions they made in their will.

Letters of Intent

A handwritten letter of instruction for gifting family keepsakes can outline who gets what and, although it is not legally binding, can be helpful in most circumstances. Without written guidance, how siblings choose to distribute heirlooms among themselves is left to chance. Try to establish an agreeable framework among siblings in advance. Once someone digs their heels in about a certain keepsake, they can quickly lose objectivity. While it doesn’t make sense, there are instances where sibling litigants spend more money trying to win a family heirloom in court than the object itself is worth. A systematic approach agreed to upfront can circumvent these emotional responses to family keepsakes.

There are as many potential problems to resolve in estate distribution as there are personalities. However, parents usually know which children are likely to fight over their inheritance. Action that prevents conflicts among heirs while a parent is alive is the most direct way to solve the problem. A parent can also make changes to their plans as financial circumstances and feelings among siblings change.

Reviewing and revising your estate plan to account for marriages, deaths, divorces, and births shows that heirs receive due consideration, decreasing the potential for conflict. An estate planning attorney can advise you about gift-giving while you are alive and create an estate plan that reduces the chances of sibling rivalry and infighting after your death. Proactive planning and honest discussions with your lawyer can help craft a plan that provides the best opportunity for peaceful outcomes among siblings. We hope you found this article helpful. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact our Reno office by calling us at (775) 853-5700.