Estate planning involves planning now for an uncertain future to ensure your wishes are carried out regarding managing your assets, end of life choices, and who receives your assets at your death. This can include a Durable Power of Attorney for Finances, an Advance Directive for Health Care, and a Will or Revocable Living Trust. I work with clients to ensure they understand their options and the documents involved in estate planning, and help them to execute their planning.
Elder Law typically refers to long term care planning. This often includes planning for Medicaid, Social Security Disability (SSDI), or Supplemental Security Income (SSI), and other public benefit programs for housing and food stamps. Typically my clients have a spouse or loved one who is currently in need of long term care or who will need long term care in the foreseeable future. My goal is to help families find available benefits, preserve resources, and creatively spend down for Medicaid eligibility. I assist my clients to obtain the necessary benefits and care for their loved ones, while preserving assets to ensure the spouse and dependents are able to support themselves.
Medicaid is a joint federal-state program that helps pay for medical assistance and long term care costs. Eligibility is based on financial need with limits on income and resources. To qualify for long term care services, an applicant is also evaluated on care needs and the ability to perform activities of daily living. This evaluation results in a service priority level. Beginning in 2006, the Medicaid program paid for long-term care services for people in service priority levels 1 through 13.
A Special Needs Trust is used to help obtain or maintain government benefits that are based on financial need, like Medicaid or Supplemental Security Income (SSI). The special needs trust can be used to pay for items that improve quality of life that are not covered by government benefits. A special needs trust can be established by a parent, grandparent, or other family member as part of his or her estate planning. This type of trust is sometimes referred to as a ‘third party’ special needs trust. Since 2016, a beneficiary can establish his or her own ‘first party’ special needs trust to receive an inheritance or other money and still maintain eligibility for means tested benefits. I work with families who have loved ones with special needs to preserve assets and public benefits, ensure the family understands how a special needs trust preserves SSI and Medicaid eligibility, and also advise trustees on administration and potential problems managing a special needs trust.
Special Needs Planning
Probate is the court process whereby a judge appoints an agent, called a personal representative, to manage the decedent’s probate estate. This includes making sure all final debts, taxes, and expenses are paid and then distributing the remainder of the estate according to the terms of the decedent’s will. If there is no will, the estate is distributed to the closest living relatives according to state law. Probate can also include other legal matters, including the court-involved creation, modification, and termination of trusts, the establishments of guardianships and conservatorships, and other protective proceedings.
A trust is a legal device established to own assets like bank accounts, brokerage accounts, and real property for one or more persons. The person who establishes a trust is called the trustor, settlor, or grantor. The person with legal authority to manage the trust assets is called the trustee. Initially, the trustor and trustee are most often the same individual(s). The trustor usually is the lifetime beneficiary of the trust. At the surviving trustor’s death the remaining beneficiaries, often children or other family members, receive their respective shares as described in the trust. Understanding the difference between types of trusts can guide you in selecting the one that best meets your needs. A revocable living trust is a trust that is established during your lifetime. A testamentary trust comes into existence at your death. You, as Trustor, would have provisions in your will or revocable living trust forming the testamentary trust and directing some portion of your assets be used to fund the trust. If you intend to benefit minor children or grandchildren you may want to have that beneficiary’s share go into a testamentary trust or sub-trust rather than to the minor directly. A gift to a minor at your death could require establishing a Conservatorship for the minor if your estate planning did not include provisions under the Uniform Transfer to Minors Act (UTMA) laws of the minor’s state of residence.
Estate Tax Planning
The federal estate tax for an individual applies to estates over $11,400,000 for 2019. The top marginal rate remains 40 percent. For Oregon residents, the exemption on state estate taxes is $1 million. Oregon only taxes the amount of the estate over $1 million. The tax rate starts at 10% for the first dollar over $1 million and increases to a maximum rate of 16% for estate values over $9.5 million. Oregon does not tax lifetime gifts. Currently, the federal gift tax annual exclusion for a gift from one individual to another is $15,000. The lifetime gift tax exemption for gifts made during 2019 is $11,400,000. However, capital gains tax exposure on low basis capital assets need to be considered when making lifetime gifts and/or using trusts for estate tax planning purposes.