What Happens If A Beneficiary Dies Before Receiving An Inheritance?
What Happens If A Beneficiary Dies Before Receiving An Inheritance?

What Happens If A Beneficiary Dies Before Receiving An Inheritance?

What Happens If A Beneficiary Dies Before Receiving An Inheritance?

When the beneficiary of a deceased person’s probate estate or living trust dies during the course of administering the estate and before the full distribution of the inheritance has been made, things can get sticky.

Let’s say a mother dies and her estate is in the process of being probated when her son dies. The son’s estate can claim his inheritance, which it will in turn distribute to the beneficiaries of his estate, according to a recent article, “Beneficiary dies prior to receiving inheritance” from the Lake County Record-Bee.

This might require probating the deceased child’s estate. Whether or not probate is required, depends both on the value of the son’s own estate, which is increased by the amount of the unreceived inheritance. Another factor is whether all or some of the son’s estate passes to a surviving spouse or registered domestic partner.

In California, probate is required when the gross value of a deceased person’s estate exceeds $150,000 and passes to someone other than the decedent’s surviving spouse or registered domestic partner. Estate planning in California, as in other states, is important to lessen the impact of probate.

No probate is needed to transfer joint assets to a decedent’s surviving spouse or registered domestic partner. In some states they are entitled to use a spousal property court petition to transfer title to real property and other assets held in the name of the deceased spouse into their partner’s name, as relevant. In New York, a solely owned property or asset of the decedent must be probated.

In California, for an estate under $150,000, probate is not required and the estate can often be settled by affidavits, or, if the deceased owned real property worth more than $50,000, a small estate petition to confirm title to real and personal property. However, there are instances where probate of a small estate is necessary, because of the decedent’s debts or figuring out who is entitled to receive a portion of the estate.

This type of situation illustrates the benefits of holding assets in a living trust. This avoids probate, spousal property petitions and small estate petitions. Any time property is worth more than $50,000, it makes sense for the owner to hold title to the property in a trust.

Who will then, inherit the son’s estate? If he had a last will and testament, it is the governing document. If he had a revocable living trust, then he likely will also have a “pour-over will,” which “pours” everything over in the estate to the revocable living trust.

Either way, it’s likely the son’s heirs will need to be probated. With no will, the son’s heirs inherit according to the laws of intestate succession.

If the estate has been planned properly, even the complex situation described above will be more manageable. If neither the mother nor the son had an estate plan, it could take many years to unravel the estate. An estate planning attorney can create a plan that is designed with the laws of your state in mind and address many unexpected situations.

Reference: Lake County Record-Bee (December 7, 2019) “Beneficiary dies prior to receiving inheritance”

 

Medicaid Eligibility for Long-Term Care – The Basics
Medicaid Eligibility for Long-Term Care - The Basics

Medicaid Eligibility for Long-Term Care – The Basics

Medicaid Eligibility for Long-Term Care – The Basics.

Medicaid is a federal- and state-funded healthcare program that is independently operated by each state. Generally, Medicaid programs are for lower-income individuals of any age, provided they meet specific requirements. Because Medicaid has become the primary source of funding for long-term and nursing home care, this article explains basic eligibility requirements for elderly individuals seeking assistance.

Medicaid Eligibility Factors

To qualify for Medicaid as an older individual, you must meet certain criteria. These criteria are based on:

  • Age
  • Citizenship
  • Income
  • Disability
  • Household size
  • Applicant’s role in the household

For purposes of this article, the age requirement would generally be 65. Younger individuals may qualify, if they possess specific disabilities.

While each state differs, Medicaid is only available to U.S. citizens, state residents, permanent residents, or legal immigrants.

Income and Assets

Generally speaking, if you make under 100-200% of the federal poverty level and are elderly, you will likely qualify for your state’s Medicaid program. In certain circumstances, if you make less than 133% of the federal poverty level, you may also be eligible. As of 2020, the federal poverty levels are as follows:

People in Household 2020 Poverty Guideline
(48 Contiguous States and Washington DC)
2020 Poverty Guideline
(Alaska)
2020 Poverty Guideline
(Hawaii)
1 $12,490 $15,600 $14,380
2 $16,910 $21,130 $19,460
3 $21,330 $26,660 $24,540
4 $25,750 $32,190 $29,620
more add $4,420 each add $5,530 each Add $5,080 each

 

In general, a married couple’s incomes are counted separately, if only one spouse is applying for Medicaid. In that case, the non-applicant is allotted some of the applicant spouse’s income. This is referred to as the Minimum Monthly Maintenance Needs Allowance and enables the non-applicant spouse to continue living at home, while their spouse is in a nursing home.

To determine eligibility, the state will look at your modified adjusted gross income. This is your taxable income, minus certain deductions like:

  • individual retirement contributions
  • tax-exempt interest
  • non-taxable Social Security benefits

In addition to income, the state will look at your assets. Assets are divided into exempt (“non-countable”) and non-exempt (“countable”). Typically, a home, vehicle and furnishings are exempt. A couple’s assets are counted together, and the government will look at any asset transfers for a period of up to five-years in New York (two and a half in California). This is called the “Lookback Period.”

Applying for Medicaid

You can apply for Medicaid at any time. The state has 45-days to approve or deny your application and 90-days, if you are disabled. To apply, you will need, at a minimum:

  • Your birth certificate or driver’s license
  • Recent pay stubs or tax returns
  • Bank statements
  • Proof of address (for example, a lease, utility bill, credit card statements or mortgage bill)
  • Medical records (to prove disability)

To check your state’s guidelines, visit the Medicaid Website. In New York, you could make an appointment to speak with Frank Bruno, Jr. to see what your options may be.

Resources:

Policygenius. “A state-by-state guide to Medicaid: Do I qualify?” (Accessed November 29, 2019) https://www.policygenius.com/blog/a-state-by-state-guide-to-medicaid/

American Council on Aging. “Medicaid Eligibility: 2019 Income, Asset & Care Requirements for Nursing Homes & Long-Term Care” (Accessed November 29, 2019)  https://www.medicaidplanningassistance.org/medicaid-eligibility/

The Finance Buff. “2018 2019 2020 Federal Poverty Levels (FPL) For ACA Health Insurance”  (Accessed November 29, 2019)  https://thefinancebuff.com/federal-poverty-levels-for-obamacare.html

Medicaid Eligibility for Long-Term Care – The Basics

 

Certified Alzheimer’s Disease Dementia Care Trainer
Certified Dementia Practitioner® and CADDCT® Certified Alzheimer’s Disease Dementia Care Trainer through the National Council of Certified Dementia Practitioners

Certified Alzheimer’s Disease Dementia Care Trainer

Frank Bruno, Jr. recently earned professional certifications as a Certified Dementia Practitioner® and CADDCT® Certified Alzheimer’s Disease Dementia Care Trainer through the National Council of Certified Dementia Practitioners (NCCDP), the global leader in dementia education and certification for healthcare and other professionals. Frank Bruno, Jr., Esq. completed the required training to earn the CDP® and CADDCT® designations, which represents individuals that have received comprehensive knowledge in the area of dementia care and achievement in completing the Alzheimer’s Disease and Dementia Care course and seminar training.

The CDP® also commits to ongoing professional development through NCCDP Staff Education Week or other educational opportunities and re-certification every two years. The NCCDP remarks that the “CDP® certification reflects a deep personal commitment on the part of the front line staff, health care professional and the organization’s sense of accountability by abiding by the NCCDP ethics statement, inspiring confidence and dedication in an individual’s professional knowledge through quality of life and quality of care provided by the CDP® to the dementia patient.” The goal of the National Council of Certified Dementia Practitioners is to develop and encourage comprehensive standards of excellence in direct-care skills, education, and sensitivity in the area of dementia care.

Additionally, a CADDCT trainer provides the state of the art and comprehensive ADDC Alzheimers Disease and Dementia Care curriculum to health care professionals, front line staff and students enrolled in health care related degree programs such as nursing, social workers, pharmacist, activity professionals, PT, OT, Speech Therapist, nursing assistants and other important professions serving the older person who already work in the health care industry, supporting industries, government agencies or who will be entering the work force. The ADDC curriculum is the required seminar for those interested in pursuing CDP Certified Dementia Practitioner certification and who qualify for CDP certification. Not everyone will qualify for the CDP certification but all professions can benefit from the comprehensive curriculum. The ADDC curriculum is recognized by CMS Centers for Medicare & Medicaid Services and is listed on the CMS Crosswalk page.

“One certified CADDCT trainer impacts thousands of health care providers” NCCDP

The Law Office of Frank Bruno, Jr. serve clients that have been diagnosed with Alzheimer’s and Dementia, and assists those clients and their families with long-term care plans, asset protection and more.

What’s the Latest on Paul Allen’s Estate?
What’s the Latest on Paul Allen’s Estate?

What’s the Latest on Paul Allen’s Estate?

What’s the Latest on Paul Allen’s Estate?

Paul Allen wanted to give away most of the $20 billion-plus fortune he accumulated as Microsoft co-founder, technology investor, real estate magnate and NFL and NBA team owner.

However, about a year after his death, the plans he made are still a closely guarded secret, and its execution is a complex, high-stakes work in progress.

The Seattle Times’s recent article, “What’s happening to Paul Allen’s billions? A year after his death, it’s complicated” says that it can take years to unwind holdings like Allen’s.

The process of giving away as much as $10 billion or more of his estate falls to Jody Allen, trustee, sister and, with her family, sole heir.

Jody Allen “has responsibility for preserving and implementing Paul Allen’s vision for generations to come,” says her biography on the website of Vulcan, the business they co-founded that serves as the hub of the Allen empire.

Jody’s specific intentions are not known outside of her inner circle. However, the expectations are great, based in large part on Paul and Jody Allen’s record of philanthropy. Paul gave away about $2 billion, while he was alive.

The sale of Allen’s cash-consuming assets, like yachts or space ventures, is a regular task in cleaning up an estate, so that when it’s time to distribute cash, there’s liquidity.

However, this clean-up can take several years for estates of this size. Estates have up to 15 months from the date of death, including extensions, to file estate tax returns.

The executor must pay estimated taxes, which can be up to 52% of assets not going to charity.

Any major distributions usually must wait until after state and federal tax officials sign off.

Reference: The Seattle Times (November 26, 2019) “What’s happening to Paul Allen’s billions? A year after his death, it’s complicated”

 

How to Spot Problems at Nursing Homes
How to Spot Problems at Nursing Homes

How to Spot Problems at Nursing Homes

How to Spot Problems at Nursing Homes.

The best time to shop for a nursing home, is when you do not need one. If you wait until you can no longer safely or comfortably live on your own, you probably will not be in a position to do a lot of legwork to investigate facilities. Do your research well ahead of time, so you know the nursing homes in your area that provide high-quality care and, more importantly, the ones that have significant problems.

How to Spot Problems at Nursing Homes. As you evaluate and compare facilities, you need to know how to spot problems at nursing homes. The marketing brochure, website and lobby might be lovely, but you should base your decision about a long-term care facility on much more data than those things. Here are some tips on how to dig for possible problems at nursing homes:

  • Online search. Check out the nursing home’s website to get an overview of the services it offers and the industry affiliations or certifications it has. Look at the daily menus to see if the meals are nutritious and have enough variety. Most people would not enjoy eating the same main course two or three times a week. Look at the activities calendar to see if you would be happy with the planned social events. On some websites, you can view the floor plans of the resident rooms.
  • Ask your primary care doctor to name a few facilities he would recommend for his parents, and those where he would not want them to live.
  • Local Office on Aging location. Every state has an Office on Aging. Contact them to get as much information as you can about safety records, injuries, deaths, regulation violations and complaints about local nursing homes.
  • Your state’s Long-term Care Ombudsman (LCO). Every state also has an Ombudsman who investigates allegations against nursing homes and advocates for the residents. Your state LCO should have a wealth of information about the facilities in your area.
  • State Online Database or Reporting System. Some states have online databases or collect reports about nursing homes.
  • Medicare’s Nursing Home Compare website. Medicare maintains an online tool, Nursing Home Compare, that provides detailed information on nursing homes. Every nursing home that gets any funding from Medicare or Medicaid is in this database. You can enter the name of a specific nursing home or search for all the facilities in a city or zip code. The tool includes information about abuse at long-term care facilities. On the webpage, you can explore the Special Focus Facility section to find nursing homes with a history of problems.
  • Word of mouth. Ask your friends, relatives and neighbors to recommend a quality nursing home. Personal experience can be extremely valuable.
  • Make a short list of the top candidates. After you collect as much information as you reasonably can, narrow your options down to four or five facilities that best meet your needs and preferences.
  • Visit your top choices. There is no substitute for going to a nursing home and checking it out in person. Pay attention to the cleanliness of the place throughout, not just in the lobby. Give the facility the “sniff” test. Determine whether they use products to mask unpleasant odors, instead of cleaning thoroughly. See whether the residents are well-groomed and wearing fresh, clean clothes. Observe the interaction of the staff with the residents. Notice whether people who need assistance at mealtime, get the help they need without having to wait.
  • Take online reviews with a grain of salt. Fake reviews are all over the internet. If you see a nursing home with only a few reviews, and they are all five stars, be skeptical.

Once you gather this information, you will be ready in the event you need to stay in a nursing home for a short recuperation from surgery or longer term.

References:

AARP. “Finding a Nursing Home: Don’t Wait Until You Need One to Do the Research.” (accessed December 5, 2019) https://www.aarp.org/caregiving/basics/info-2019/finding-a-nursing-home.html

CMS. “Find a nursing home.” (accessed December 5, 2019) https://www.medicare.gov/nursinghomecompare/search.html

 

How Blended Families Can Address Finances and Inheritance Issues
How Blended Families Can Address Finances and Inheritance Issues

How Blended Families Can Address Finances and Inheritance Issues

How Blended Families Can Address Finances and Inheritance Issues

The holiday season is a popular time for people to get engaged, including people who have been married before. If that’s you, understand that blending families means you’ll need to deal with inheritance and finance issues, says U.S. News & World Report’s article “6 Financial Considerations for Remarriage.” The best time to have these conversations is before you walk down the aisle, not afterwards.

Look at your budget and talk about how things will work. That includes day-to-day expenses, monthly expenses and large purchases, like houses, vacations and cars. Talk about a game plan for going forward. Will you merge your credit card accounts or bank accounts? What about investment accounts?

Financial obligations outside of the marriage. Two things to check before you wed: your divorce papers and the state’s laws. Does anything change regarding your spousal support (alimony) or child support, if you remarry? It’s unlikely that you would lose child support, but the court may determine it can be reduced. The person who is paying child support or alimony also needs to be transparent about their financial obligations.

Review insurance and beneficiaries. One of the biggest mistakes people make, is failing to update beneficiaries on numerous accounts. If your divorce papers do not require life insurance to be left for your spouse on behalf of your children (and some do), then you probably want to make your new spouse the beneficiary of life insurance policies. Investment accounts, bank account, and any other assets where a beneficiary can be named should be reviewed and updated. It’s a simple task, but overlooking it creates all kinds of havoc and frustration for survivors.

What will remarriage do to college financing options? A second marriage may increase a parent’s income for college purposes and make children ineligible for college loans or needs-based scholarships. Even if the newly married couple has not blended their finances, FAFSA looks at total household income. Talk about how each member of the couple plans on managing college expenses.

A new estate plan should be addressed, even before the wedding takes place. Remember, an estate plan is for more than distributing assets. It includes planning for incapacity, including Do Not Resuscitate Orders (DNR), powers of attorney for finances and for health care, designations of guardianship or consent to adoption, various trusts and if needed, Special Needs planning.

Create a plan for inheritance. If either spouse has children from a prior marriage, an estate plan is critical to protect the children’s inheritance. If one spouse dies and the surviving spouse inherits everything, there is no legal requirement for the surviving spouse to pass any of the deceased’s assets to their children. Even if you are in mid-life and death seems far away, you need to take care of this.

Speak with an estate planning attorney who can help you create the necessary documents. You should also talk with your children, at the age appropriate level, about your plans, so they understand that they are being planned for and will be taken care of in the new family.

How Blended Families Can Address Finances and Inheritance Issues.

Reference: U.S. News & World Report (Nov. 18, 2019) “6 Financial Considerations for Remarriage”

 

How Much Control from the Grave Can Parents Have?
How Much Control from the Grave Can Parents Have?

How Much Control from the Grave Can Parents Have?

How Much Control from the Grave Can Parents Have?

Parents who want to protect their home from being sold by heirs can do so by way of a dynasty trust, but it gets complicated, explains the Santa Cruz Sentinel’s article “Not a good idea to keep home in ‘dynasty trust.’” Every situation is different, so every family considering this strategy should meet with an estate planning attorney to learn if this is a solution or an added complication.

Why would the parents want to make their children’s lives complicated? Perhaps they think the children are likely to end up in a bad situation, and they are attempting to provide a safe landing for what they believe is inevitable. Or they simply cannot manage the idea, that one day the house won’t be part of the family.

The house can be protected from a sale, through the use of a revocable trust. Instead of distributing the home in equal shares among their children, along with all of their other assets, the house can be put in the trust and their trust can continue after their deaths. The trust can include any restrictions they want, with respect to how they want the home to be maintained after their deaths.

They can even put their home into a dynasty trust. Done correctly, a dynasty trust can hold the property for the children, grandchildren and great-grandchildren. However, there are some issues.

First, if the home is held in trust, it means that the trust must be funded, since there will be expenses for the home, including maintenance and upkeep. Unless the home is used as a rental property, there won’t be any income to pay for these expenses. The parents will need to leave a significant amount of assets in the trust, so that big and small items can be paid for, or the children may be charged with paying for the expenses.

Next is the problem of capital gains taxes. When the parents pass, the home receives a stepped-up cost basis. That means that when the property is eventually sold, the amount of capital gains tax and in this case, California income tax due, will be based on the increase of the value of the property since the surviving spouses’ date of death.

If the home is held in trust until all of the siblings have died, the value of the house will likely have increased dramatically. Where is the money to pay the taxes coming from? Will the house need to be sold to pay the tax?

What if one of the children decides to move into the house and lets it get run down? The other two siblings may never receive their inheritance. There are so many different ways that this could lead to an endless series of family disputes.

Keeping a “spare” house may not be realistic. It may force the children to become rental property managers when they don’t want to. It may exhaust their finances. In other words, it may become a family burden, and not a place of refuge.

Talk with an estate planning attorney. It may be far better to distribute the home outright to the children along with other assets and let them decide what the best way forward will be.

Reference: Santa Cruz Sentinel (December 1, 2019) “Not a good idea to keep home in ‘dynasty trust.’”

 

Who Should I Name as Trustee?
Who Should I Name as Trustee?

Who Should I Name as Trustee?

Who Should I Name as Trustee? Who do you “trust” to make certain that your financial legacy lives on?

Kiplinger’s recent article, “Consider Your Trustee Carefully: It Makes a Difference,” advises you to remember that selecting a trustee should be thought of as more of a business decision than a personal one. A trust can be perfectly designed for success, but its goals may not be fully carried out, when a trustee lacks knowledge, dedication, or objectivity.

You should know the trustee’s fiduciary responsibilities to make an informed choice when selecting someone to perform the duties. Consider more than a person’s understanding and respect for your financial goals and values, because a trustee must also play a big part in investment management, tax planning and filing, making appropriate distributions to beneficiaries or for their benefit and protecting the trust’s assets.

The trustee must regularly review beneficiaries’ requests for money and decide when to approve or deny distributions, in accordance with the trust’s instructions. Making this decision can be difficult and stressful for someone with a personal connection to the beneficiary.

One option is a corporate trustee, like a trust company or bank trust department. They can provide an objective, third-party opinion based on the long-term objectives of the trust. A corporate trustee can serve as either the sole trustee or co-trustee of your trust. Naming a professional trustee, along with a trusted friend or family member may be a good move.

Using a corporate trustee can potentially diminish unanticipated family tension, and also enables the sharing of fiduciary responsibilities with the co-trustee. The co-trustees must act in concert, unless the trust allows one co-trustee to act alone. It also may let the corporate trustee make the tough decisions in this situation, without doing further harm to the family relationship of the personal co-trustee and beneficiary.

Choosing the right trustee(s) can help make certain that your financial legacy and intentions will be carried out, plus, it will be done professionally and objectively solely for your heirs’ benefit.

Reference: Kiplinger (October 14, 2019) “Consider Your Trustee Carefully: It Makes a Difference”

Who Should I Name as Trustee?

Remaining Even and Fair in Estate Distribution
Remaining Even and Fair in Estate Distribution

Remaining Even and Fair in Estate Distribution

Remaining Even and Fair in Estate Distribution.

Treating everyone equally in estate planning can get complicated, even with the best of intentions. What if a family wants to leave their home to their daughter, who lives locally, but wants to be sure that their son, who lives far away, receives his fair share of their estate? It takes some planning, says the Davis Enterprise in the article “Keeping things even for the kids.” The most important thing to know is that if the parents want to make their distribution equitable, they can.

If the daughter takes the family home, she’ll need to have an appraisal of the home done by a certified real estate appraiser. Then, she has options. She can either pay her brother his share in cash, or she can obtain a mortgage in order to pay him.

Property taxes are another concern. The taxes vary because the amount of the tax is based on the assessed value of the real property. That is the amount of money that was paid for the property, plus certain improvements. In California, property taxes are paid to the county on one percent of the property’s “assessed value,” also known as the “base year value” along with any additional parcel taxes that have become law. The base year value increases annually by two percent every year. This was created in the 1970s, under California’s Proposition 13.

Here’s the issue: the overall increase in the value of real property has outpaced the assessed value of real property. Longtime residents who purchased a home, years ago still enjoy low taxes, while newer residents pay more. If the property changes ownership, the purchase could reset the “base year value,” and increase the taxes. However, there is an exception when the property is transferred from a parent to a child. If the child takes over ownership of the home, they will have the same adjusted base year value as their parents.

If the house is going from parents to daughter, it seems like it should be a simple matter. However, it is not. Here’s where you need an experienced estate planning attorney. If the estate planning documents say that each child should receive “equal shares” in the home, each child receives a one-half interest in the home. If the daughter takes the house and equalizes the distribution by buying out the son’s share, she can do that. However, the property tax assessor will see that acquisition of her brother’s half interest in the property as a “sibling to sibling” transfer. There is no exclusion for that. The one-half interest in the property will then be reassessed to the fair market value of the home at the time of the transfer—when the siblings inherit the property. The property tax will go up.

There may be a solution, depending upon the laws of your state. One attorney discovered that the addition of certain language to estate planning documents allowed one sibling to buy out the other sibling and maintain the parent-child exclusion from reassessment. The special language gives the child the option to purchase the property from the other. Make sure your estate planning attorney investigates this thoroughly, since the rules in your jurisdiction may be different.

Reference: Davis Enterprise (Oct. 27, 2019) “Keeping things even for the kids”

 

What’s Everything I Need to Know About Wills?
What’s Everything I Need to Know About Wills?

What’s Everything I Need to Know About Wills?

What’s Everything I Need to Know About Wills?

Writing a will is a critical part of estate planning. A will contains your legally binding directions for the distribution of your property and responsibilities, when you pass away.

Like the title says, Money Check’s recent article, “Guide to Writing a Will: Everything You Need to Consider,” sets it all out—from soup to nuts.

Do it myself or hire an experienced estate planning attorney? It’s wiser to hire a qualified estate planning attorney to help you draft your will. There are many heartbreaking stories of people who decided to do it by themselves and missed important steps. If that’s the case, the probate judge will not recognize the will and will take control of the estate. Don’t let this happen to your family. Use a legal professional.

Name Your Heirs. List all of the people you want to include in your will. You can omit or include anyone you want. If you do want to leave out a certain family member, be sure you clearly indicate that in the will. You don’t have to explain why you decided to include or exclude family members from your will.

Name an Executor.  Select your attorney or a close family member as the executor.

Select a Guardian for your Children. Name a responsible and willing guardian for your minor children. You should also be sure to discuss your decision with the potential guardian.

Be Clear on the Assets Beneficiaries are to Receive. Avoid vagueness or questions in your will. Clearly explain who gets what. This will help avoid confusion and disputes among family. A thoroughly crafted will prevents stressful and upsetting situations from happening to your family, after your passing.

Include Your Final Wishes with the Will. You can leave your will and a final letter to your family with your executor. This is also called a letter of last instruction.

Get Your Witnesses. When you’re ready to sign your will, be sure to get two witness (or only one depending on your state’s laws) of legal age, over 18-years old, to sign the documents.

Keep Your Will Somewhere Safe and Accessible. Store your will in a safe place, where your family can get to it when you die.

Reference: Money Check (October 23, 2019) “Guide to Writing a Will: Everything You Need to Consider”

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