††††††††††††††† ELDER LAW ESTATE PLANNING
Estate planning is not only for the rich or the elite. If you have assets or own property, you have an estate and therefore you should have a plan! Your estate is what you leave after you die. In order to control how it is done, who gets your property, and when they get it you need a plan.
People who do estate planning want to make sure that their assets are passed on to their loved ones without problems, without high legal fees, and without time delays. Sometimes, people do estate planning to make sure that a particular person, such as a spouse or a child, is protected. Often, someone does planning to make sure that they have enough assets to live on for the rest of their life. An estate planning attorney helps you make this happen!
Planning now lets you choose who will handle your legal and financial affairs and make medical decisions for you if you are unable.† It will protect your property and qualify you for medicaid if you require long term care. Upon your death, it will keep your assets in your blood line for the benefit of your children and grandchildren.
†††††††††††††††††††††† LAST WILL AND TESTAMENT
Many people think that a Will is only for people who want to set up trusts or save on estate taxes.† Those may† be important benefits for some people but the primary reason for making a Will is to leave your property to those you care about in the amounts and manner you choose.
A Will lets you say who will receive your property on your death.† Without a Will, the law will decide who gets your property.† Many people think their spouse will automatically get all of their property when they die.† This may not be true.
†††††††††††††††††††††††††††† †††††† WHAT HAPPENS IF YOU DIE WITHOUT A WILL
If you die without a Will, the assets in your name will be distributed by a court appointed administrator among your family members according to a fixed set of rules.† These rules are known as the ADistribution Rules of Intestacy,@ So, for example, if you are survived by:
a spouse and descendants: your spouse takes
the first $50,000 and one-half the balance of
the property and your descendants share the
† †††††† a spouse but no descendants: spouse takes all.
††††††††††††††††††††††† descendants, no spouse: descendants take all.
††††††††††††††††††††††† a parent or parents, no spouse, no descendants:
your parent or parents take all descendants of
either parent but none of the closer relatives:
the descendants of your parents take all.
††††††††††††††††††††† †one or more grandparents or their descendants,
but none of the closer relatives: half goes to the
maternal side and half to the paternal (but not
including second cousins if you have any first
cousins on either side).
†††††††††††††† ††††† †† where Adescendant@ include a mix of generations,
living children take a full equal share and children
of a predeceased child then divide equally the
combined share of their deceased parent.
This result of this is that your property may go to persons that you would not want to share in your estate and eliminate those that you would want to share in your estate. A properly drafted Will will avoid this and enable you you to say who will receive your property on your death.
††††††††††††††††††††††††††††††††††††† WHAT HAPPENS IF YOU DIE WITH YOUNG CHILDREN
Here=s something else to consider: If any of your children are under 18 years of age at your death, a court appointed guardian will be required to manage your minor child=s share of your assets.† Although the court probably would appoint your spouse as guardian of the property for your minor children, this is not guaranteed.† Also, the guardian may have to post a bond.† Payment of the bond premiums will cost money and if any portion of your assets are needed to pay for your child=s education, clothing or living costs, approval of the court is necessary.† The court also requires guardians to file annual accountings of income and expenses.† In addition, the range of investments available for the funds held by the guardian may be limited. As a result if the guardianship lasts for any length of time, the child=s funds may not grow at an acceptable pace.† These problems can be avoided with a properly drafted Will.
If you and your spouse die at or about the same time, it is important that you make a provision not only for a guardian of the property of any child under age 18 but also and perhaps more importantly that you name a guardian of the person for each minor child.† A guardian of he person is given custody of the child during minority.† While the designation in your Will is subject to the review and confirmation by the court, the court will usually give deference to your wishes.† Thus, with a property drafted Will you can provide guidance to the court on who you desire to be the guardian of your minor children
Probate is the legal process of filing a Will of someone who has died to the court for approval. The court approves the Will and legally appoints the executor named under the Will who then carries out the terms of the Will.
A common misconception is that probate in New York can take over a year, is very expensive and should be avoided. This is often not true when it is handled correctly. It is important to realize that avoiding probate does not mean avoiding estate taxes and trust and estate administration. Avoiding probate may not make the estate settlement process less complicated or time-consuming.
You can avoid probate with the right legal documents and the proper titling of your assets and beneficiary designations. Forms to create a trust that are found in computer software, at stationery stores, and online are not written with your situation in mind and may not comply with New York law. Usually a trust is established to avoid probate, but establishing a trust alone does nothing! Assets must be transferred into the trust by retitling the asset in the name of the Trust which means transferring the deed to real estate to the name of the trust. If this is not done those assets may need to go through probate.
An executor is the person you name in your will to be your legal representative after you die. He or she is the person who will administer and distribute your property. The executor can be a relative, a friend or your lawyer.
Only if you make a will can you choose who will be your Executor. You realize the value of having qualified people help with your affairs during life.† Such people are just as valuable after you die.
†††† †††††††††††††† ††††††††††††††††††††††††DURABLE POWER OF ATTORNEY
This documents lets you select who will manage your finances, pay your bills and take care of you if you become disabled.† Without this document, your loved ones will have to go to Court to have someone appointed to do these things.† This will result in a great legal expense and you may wind up with a stranger managing your affairs.† A Durable Power of Attorney avoids this expense and uncertainty.
††† †† †††††††††††††††††††††††LIVING WILL AND HEALTH CARE PROXY
These documents insure that your wishes as to end of life care are followed and lets you choose who will make health care decisions for you.† Without this document, your spouse or children cannot make these decisions and can result in a Court making these decisions instead of you
Today=s advanced medical technology may result in the possibility of being subjected to various invasive medical procedures, particularly life support systems, which may serve no purpose other than to prolong the process of dying.† But each of us has the right to state his or her wishes in this regard, now, while our faculties are still in command and when our judgment will not be challenged.† This statement of your wishes can be made most effectively through two documents, called: A ALiving Will@ and a AHealth Care Proxy@.
WHAT IS A LIVING WILL?
A Living Will is sometimes called an Advance Directive for Health Care, or a Health Care Declaration
A Living Will is a legal document in which you, as an adult who is now competent, can state your wishes regarding your future health care.† It is used by those persons who want to express their feelings about the withholding or the withdrawing of life-sustaining treatment that prolongs the process of dying.† Many persons want to make clear their objection to unwanted medical measures in advance; others wish to state that they favor measures to have all available kinds of life-sustaining treatment administered.
The Living Will is intended to anticipate the situation wherein you might† be in an incurable or an irreversible mental or physical condition, with no reasonable expectation of recovery.† Your instructions are usually intended to apply if you are in any of the following states:
(a)†††† a terminal condition;
(b)†††† permanent unconsciousness (persistent vegetative
(c)††††† conscious but with irreversible brain damage and
will never regain the ability to make decisions
and/or express your wishes.
The Living Will can also be used to provide for any expression whatsoever of your wishes as to health care and treatment.
WHAT IS A HEALTH CARE PROXY?
A Health Care Proxy is a document which allows you, as a competent adult, to appoint another person as Aagent@ to make decisions for you regarding your health care in the event you lose your decision making capacity or the ability to understand and appreciate the nature and consequence of health care decisions.† The Proxy can be general and apply to all medical decisions, or it can impose limitations and spell out specific instructions.† Some states may limit its applicability in certain situations
IS THE HEALTH CARE PROXY RECOGNIZED IN NEW YORK?
Yes, Public Health Law (Section 2980 et seq.) specifically recognizes the Health Care Proxy and establishes a procedure to allow you (the Aprincipal@) to appoint someone you trust, often a family member or a close friend, to make decisions about your health care treatment on your behalf if you are no longer able to do so
WHEN DOES THE APPOINTMENT OF THE HEALTH CARE PROXY BECOME EFFECTIVE?
Your agent=s authority to make health care decisions under the proxy law is activated only upon a determination by your attending physician, to a reasonable degree of medical certainty, that you have sustained loss of your capacity to make such health care decisions.† Your health care agent cannot act under the proxy until such determination has been made.
SHOULD YOU EXECUTE BOTH A LIVING WILL AND A HEALTH CARE PROXY?
Yes.† The Living Will is an expression of your attitudes and wishes about your health care.† This instrument is especially important if you do not have a person to appoint as your Health Care Proxy, or if the person you have appointed is not available.† The Health Care Proxy is important because it names the agent you select to make decisions on your behalf if you cannot do so you would want to have your health care agent communicate the views expressed in the Living Will to your physician to be sure the physician understands your wishes.
In New York State, the Health Care Proxy is statutorily recognized.† By specifically providing in the Health Care Proxy statute that a person can specify his or her wishes in a separate document, it appears that the New York Legislation invites persons to also write a Living Will.
CAN YOU APPOINT MORE THAN ONE PERSON TO ACT AS AGENT AT THE SAME TIME?
The New York State Department of Health has stated that each person can appoint only one agent.† While it is not clear that the statute was intended to have this result, most commentators have concluded that the statute precludes more than one agent acting at the same time and recommend that only one person be authorized to act.† The statute does allow for the appointment of an alternative agent and you can and should provide in the Proxy for another person to act if the person you have appointed is unable, unwilling or unavailable to act as your health care agent
CAN YOUR HEALTH CARE AGENT MAKE ALL MEDICAL DECISIONS FOR YOU WHEN AUTHORIZED TO ACT?
Yes.† Your agent can make decisions in accordance with your wishes, including your religious and moral beliefs, if known to your agent, or, if your agent does not know your views, in accordance with your best interests.† However, in regard to the administration of artificial feeding (nutrition or hydration), your agent must have specific knowledge of your wishes, otherwise the agent has no authority to make decisions regarding these procedures.† You should express your views on these matters - just as to other questions - in your Living Will, or in the Proxy itself.† While your views on this subject could also be expressed orally, because of the Aclear and convincing evidence@ rule, it is better to put them in writing.† It is important to discuss your views and wishes with your agent.
WHEN DOES THE HEALTH CARE AGENT HAVE THE AUTHORITY TO DECIDE TO WITHHOLD OR WITHDRAW LIFE-SUSTAINING TREATMENT?
Your agentís power to make such a decision comes into effect only after your attending physician and a second physician give written opinions that you lack decision making capacity.† If you are hospitalized and lack of capacity results from mental illness, then the second opinion must be that of a Board Certified psychiatrist or neurologist.† In certain other cases the second opinion must be that of another relevant specialist.
WHAT IF YOU CHANGE YOUR MIND AND WANT TO REVOKE OR CHANGE YOUR LIVING WILL OR HEALTH CARE PROXY?
Periodic reviews are important to ensure that the documents you have signed are still in accord with your wishes.† You can modify or revoke your Living Will or Health Care Proxy or appoint a different agent at any time, by destroying the document or by executing a new one.† You should also notify your agent, your attorney, your physician or any other health care provider and anyone who has a copy of your change or revocation.† You should notify each of these parties of your change or revocation both verbally and in writing.† Keep a record of who has copies of existing documents to make revocation or amendment easier.
WHEN DOES THE HEALTH CARE PROXY EXPIRE?
Unless you indicate otherwise, the Proxy will remain in effect until your death.† If you wish, you can state a date, or the occurrence of any condition, on which to terminate the Proxy
HOW MANY COPIES SHOULD YOU SIGN?
You may execute more than one original copy of the Health Care Proxy, although the New York State Department of Health has advised that photocopies are acceptable.† Originals or photocopies may be given to your physician, your health care agent, your alternate agent, your attorney or other advisor, close family members, and, of course, one for yourself.
As to the Living Will, you may also execute more than one copy and should provide originals or photocopies to the same individuals.† It is recommended that you carry a wallet card giving information about the existence and location of your Health Care Proxy and Living Will.† If you have executed a Health Care Proxy, it may not be necessary to give your physician a copy of the Living Will.† But you will want to have your health care agent communicate the views expressed in the Living Will to your physician to be sure the physician understands your wishes. If your physician or the hospital questions that the agent is acting contrary to your wishes, the agent could then show that your wishes were expressed to the agent in your Living Will.
ARE WITNESSES NECESSARY?
Yes. You as principal should sign the Health Care Proxy in the presence of two witnesses, who must also sign and give their names and addresses.† In fact, the New York statute requires that the witnesses state that the principal appeared to execute the Proxy willingly and free from duress.† In New York, the person designated as agent or alternate agent may not act as a witness and special witness requirements apply in health care facilities.† Note that some states (not new York) require notarization as well as witnesses.† Also, some states bar certain persons from acting as witnesses and some states require a statement that the witnesses knew the principal.
It is also good practice to have two independent witnesses to the execution of your Living Will, if that is a document separate from your Health Care Proxy.
REVOCABLE LIVING TRUST
A Trust is a legal person that you create with a written document. The trust then holds title to whatever property you transfer into it.† It is called revocable since you can revoke it at any time. With this type of trust you still control your property while you are alive and upon your death your property will go as you specify in the trust.† You may revoke or change the terms of this trust at any time.
This Trust generally avoids the need to probate a Will since you specify in the trust who will receive your property on your death.
Even though a Will may not be needed, one is usually prepared to make sure that any property that you did not place in the trust will find its way into the trust upon your death.† This a called a Pour Over Will.
This trust avoids the risk of a Court intervening in your affairs if you become disabled and appointing a stranger to manage your affairs. Although this can be avoided by preparation of a Durable Power of Attorney.
The trust will automatically transfer all real estate which you own regardless of which state it is located.† This avoids the cost of an ancillary probate proceeding.
While this type of trust can be changed by you at any time, it does not protect your property if you become severely disabled and require long term care. It does not save you Federal Estate taxes. It is more costly to create then preparing a Last Will and Testament which for most people can accomplish the same objectives at a fraction of its cost
IRREVOCABLE LIVING TRUST
An Irrevocable Living Trust has the same advantages as the Revocable Trust, however, once created cannot be changed unless everyone involved in the trust agrees.
This type of trust is also called a Medicaid Asset Protection Trust since if you become disabled you may qualify for Medicaid and protect your assets.
This trust is ideal to protect your family home.† It permits you to remain in your home for the rest of your life, keep all your income and protect it should you need long term care.
This trust usually will not affect your lifestyle since you still receive your pension and Social security checks directly, have the right to stay in your home and keep all of your real estate tax exemptions.† The trust can sell and trade assets through a trustee that you choose and you may change the trustee at any time.
LOOK BACK PERIODS
The Medicaid Asset Protection Trust is subject to a look back period of five (5) years. This means if you transfer assets into this Trust and require nursing home care after five years have passed your assets are fully protected.†† Even though there is a five year wait it pays to get started now since you will get credit for the time you accumulate if you do not make the full five years.
The 5 year look back period only applies to nursing home care and does not apply to Medicaid services for home health care.† This means a transfer now will let you qualify for Medicaid home care services without waiting.
The Medicaid Asset Protection Trust is very flexible.† You have the right to sell your home and use the money from its sale to buy another home or condominium and continue to enjoy the protection of the trust.
PROTECTING ASSETS FOR CHILDREN
Many successful parents have children who are poor at handling money. They want to provide for their children upon their death but fear that their children may waste away their inheritance.
A solution to this problem is a Spendthrift Trust.† Your children=s inheritance is managed by someone you choose who will distribute their inheritance in a plan you create such as giving their inheritance to them in installments based on their ages.† This enables you to provide for your loved ones and also safeguard their inheritance from being wasted.
PLANNING FOR DISABLED CHILDREN
You can provide for disabled children in your Will without risking government benefits they are receiving by creating a Special Needs Trust. This trust legally permits you to provide for them without the risk of loosing their benefits.
The purpose of a special needs trust is to supplement a disabled person's income in order to pay for their wants and needs not covered by government benefits.
The trust usually covers things like education, clothing, recreation and uncovered medical care, etc.