Why Do I Need A Durable Power Of Attorney?
Video Summary
Why do I need a durable power of attorney? Well, there’s many reasons why a durable power of attorney is a necessary document.
First and foremost, a durable power of attorney is probably one of the most, if not the most, important estate planning document that you’ll utilize during your lifetime. And the reason that this is so is because a durable power of attorney allows you, in your lifetime, while you have capacity, to appoint an agent to act on your behalf to manage your affairs.
Also, it’s very important to know that the power of attorney statute in Florida did change in October 2011, where there are certain super powers, which now need to be specifically enumerated in your document as well as initialed in your document. These super powers include things such as the power to do banking transactions on your behalf, the power to do investment transactions on your behalf, create a Miller Trust on your behalf, even create, modify, or change a trust or a beneficiary designation. This is a lot of power that you’re giving this specific person that you’re appointing as your agent. Therefore, it’s very, very important that you choose somebody that you trust immensely, because this document will allow them to do many things on your behalf.
More importantly, a power of attorney is very important because it can prevent the necessity of a guardianship proceeding being instituted on your behalf in the event that you have an accident or you become incapacitated in your lifetime. Therefore, a durable power of attorney is a necessary document, whether you are in your 20s or whether you are in your 90s.
If you have any more questions about estate planning or a durable power of attorney, please give me a call here at Waller & Mitchell at (727) 847-2288.
- Published in Estate Planning, Videos
Who Is Responsible For The Debts Of A Deceased Person?
Video Summary
Who is responsible for the debts of a deceased person? The deceased person is – if they signed for a service or a credit card, they’re the ones that have the liability and, therefore, if they have an estate, their estate assets are the ones that would have to be used to pay their creditors. If no one has signed as a co-obligor, or to be responsible along with the deceased person, then there isn’t anyone that has to pay the debts.
So if you have a loved one, or any person who’s passed away, and they have a will and you’re named as a beneficiary or the personal representative, you need not worry about being responsible for their debts. That’s the whole purpose of the probate process, wherein you send out – open up a probate estate proceeding with the Court. You send a notice to the reasonably ascertainable creditors – which you check the mail, and if they sent a bill – sent ’em a bill – and you send them a notice that they’re to file a claim within the probate proceeding, or in the Court proceeding. And so they have three months in which to do that from the date that the first notice is published. So it’s important that you send ’em this notice.
And so then, once the estate is wound up, you put the claims in a category. And there’s priority as to which claims which get paid first out of the estate assets. The first category of claims that gets paid first is the fees of the personal representative and the attorney who are handling the administration of the estate. Next in line is the funeral bills, and the bills of the last illness, and burial. Then we have – you have the federal tax liens – if there’s any taxes that they owe – and then you go on down any number of other categories.
Credit cards and general bills are a Class 8 creditor. So the first money out of the estate, before anything’s paid to the beneficiaries, is paid to the Class 1, 2, 3 creditors, in that order. If there aren’t enough assets to pay all the creditors, the creditors do not get paid, or they get paid pro rata, meaning that they only get a portion of their claim.
The personal representative, or the executor –we now call them personal representatives – has no personal obligation to pay those bills, with the exception of the Internal Revenue Service, which they need to take certain precautions to verify what the tax bill is. But if they do that, they’re not responsible for the new taxes. And so the beneficiaries nor the personal representative has any personal liability whatsoever for a deceased person’s bills or debts.
Now if, however, you – like, say, in the – if you have a spouse that passes away and you’ve signed on the credit card or signed any bills that you’re a responsible party, or agreed to be obligated, well, you have continuing obligation because you signed along with the deceased person to be obligated for that.
But that’s a question I often get asked, is, “Am I responsible for my spouse’s debts when they pass away?” And the answer is no. You’re not, not unless you signed to be responsible. That even includes their hospital bills and any other bills that they have liability for. That is with a big asterisk, there, that says, “unless you signed and said that you would be responsible for them.”
So if you have – if there’s a person who’s passed away and they have lots of bills and have few assets, and you’re the beneficiary, well, don’t hesitate to call me, and I’ll be glad to discuss the probate of the will. There are certain assets which are exempt from the claims of the creditors.
So give me a call at (727) 847-2288.
If I Have A Will Does My Estate Have To Be Probated?
Video Summary
If I have a will, does my estate have to be probated? Well, the question is not whether or not you have a will or you don’t have a will. The question is: do you have any assets that are titled just in your name that do not designate a beneficiary?
An example of assets that you have that name beneficiaries is, let’s say, a life insurance contract. That’s your asset. You designate a beneficiary, so it’s controlled by the life insurance contract and is payable to whoever you designated as a beneficiary. So that doesn’t have to be probated.
Same thing with IRAs, 401(k)s. They all – you’ve designated a beneficiary to receive the benefits of these, really, trust. An IRA, or a 401(k), or annuities, that’s all controlled by contract, and it says that when you pass away who’s to receive those assets.
Another example of assets that name a beneficiary: if you have a joint account, which is usually the case between husband and wife. They own their bank accounts jointly. They own their real estate jointly. And if they do, when one of the spouses pass away, well, the property automatically passes to the survivor. Any other assets that you own as joint tenants with right of survivorship passes automatically, or pursuant to the contract. You also look at bank accounts. You look at bank accounts that have a “payable on death” or your brokerage account, which is “transfer on death,” and so those assets pass pursuant to your contract with the brokerage house, or whatever financial institution.
However, if you have an asset that’s just in your name, then your estate must be probated. It doesn’t matter whether you have a will or you don’t have a will; that’s what determines whether or not you have a probate proceeding.
So what’s the advantage of having a will? Well, a will says – directs who you wish to receive that asset so that you don’t leave it to the state of Florida and the statutes to say who receives the assets. So you can name who you want to receive your assets under a will, and you can also designate who you wish to be in charge of your estate, which is called an “executor” or a “personal representative.”
So the question is not whether you have a will and it avoids probate, or whether you die without a will. It only matters whether or not you have your – you die with assets that are just in your name and we must have a probate proceeding to determine who the beneficiary of that asset would be. By looking at a will or looking at the Florida statutes, the Florida statute does set forth that if you die without a will, then it passes to all of your heirs, or your children, or, if you have deceased children, to their children or grandchildren. And it goes on to explain who else would receive it if you don’t have any children.
So if you have any questions about an estate proceeding, with or without a will, well, give me a call at (727) 847-2288.
What Is A Trustee And Who Should Be A Trustee?
Video Summary
What is a trustee, and who should be a trustee? A trustee is the person who is in charge of a trust. As the word trust means, you are in – you’re trusting somebody with your assets, and the person that you’re trusting with your assets is called a trustee. And so they’re the ones that have certain powers – usually to invest the money – and they are given directions under the trust instrument to decide or given direction as to how they should spend the money or use the money. Sometimes a trust provide for discretionary disbursement, so the trustee uses their own judgment as to how much money should be distributed out to a beneficiary, such as a minor child, for their care or for their education.
So that’s – and the trustee can be anybody. A trustee can be a bank, which – financial institutions. They really go out and look for that – trust departments – however, your estate needs to be sizable in order for them to serve and to take charge of your estate. I believe that they start at about $500,000.00. Smaller estates usually have individuals who are concerned.
So, well, who should you designate as the trustee? Well, many times, whenever we do estate planning documents, you start by naming yourself, which is a little hard to explain whenever you’re trusting yourself with the trust – with your own assets, but that’s really what the trust instrument says. You direct yourself as the trustees to use the money for your benefit, and you’re the one who established the trust as the settlor or the grantor of the trust. However, it’s usually an estate planning tool, and then you designate what you want done with your assets when you pass away.
Course, when the trustee passes away, there needs to be a successor trustee. Well, who should you name? Well, usually, in the estate planning scheme of things, or whenever you prepare a trust for estate planning purposes, customarily you name a family member. Sometimes you might name a professional, such as your attorney, your accountant, or financial advisor – they have some restrictions as far as doing that – but many times it’s a family member who you believe has good business sense and will follow your directions.
A lot has to do with whether or not the term – under the terms of the trust you just want make distribution immediately upon your death rather than having it held for an extended period of time over, let’s say, a minor’s time until they reach age 25. Well, if they’re gonna pay out money, well, then you want someone that’s sort of sensitive to raising a child and understanding how, whenever you’re 18 years old or younger, that you’d like to have a brand-new Corvette or some other high-performance automobile. So you would want the trustee to think like you would do and say, “Well, a Toyota Camry – a used Toyota Camry with about 60,000 miles will do just fine to get you to and from school, and be dependable transportation.”
But you sorta understand you need to look at what the circumstances are as to who you appoint as your trustee. You can name multiple trustees and have one be responsible for the financial investments. There’s any number of people who you can name, and why you would name them, but I usually see where a family member is designated. And sometimes. in the absence of a family member, they may ask their attorney or accountant to serve. If they ask the attorney to sign, then a disclosure must be initialed at the time the document’s signed advising you that there can be additional charges to serve as a fiduciary – whether it be a trustee or personal representative – by the attorney, that you’ve been explained that you can designate anybody you want, including a bank or family member.
It’s very hard to say, well, who should serve as trustee. It depends on your individual circumstances and what family members or persons you know that are available to be able to do what you would like done after you pass away.
So if you’d like to set up a trust, or have some questions about a trust, give me a call at (727) 847-2288.
Should I Give My Children My Money Now To Qualify For Medicaid In The Future?
Video Summary
Should I give my children my money now in order to qualify for Medicaid for skilled nursing care in the future?
Many people come to my office and ask this question. The answer to that question is an emphatic no. You should absolutely not give your children your money in order to qualify for Medicaid for skilled nursing care, and here’s the reason why. Medicaid has a five year look-back period. Well what is included in that five year look-back period? One of the things that Medicaid examines in reviewing your bank statements, which are required as a part of the application process is has the applicant made any improper transfers and/or gifts in the preceding five years. If you give your children your money, that is going to be considered an improper gift and/or transfer, which will affect your eligibility for Medicaid for skilled nursing care.
Let me give you a little bit of an example. Let’s say that Mom wants to gift $56,000 to her son, and we’ll use the son as John. Well John takes the $56,000 and let’s just say that John takes this a year before Mom actually needs to apply for Medicaid for skilled nursing care. In that situation, Mom is looking at a penalty period of seven months of ineligibility to be qualified for Medicaid for skilled nursing care. Well how do we get that number? Well, Medicaid uses a divisor of approximately $8,000 in order to calculate this ineligibility period. So when you take the $56,000 gift, divided by the $8,000, you get seven months of ineligibility. So that’s one of the main reasons that you don’t want to gift away your assets to your children or siblings or family members in order to qualify for Medicaid for skilled nursing care. There are many avenues in order to qualify for skilled care through Medicaid in which you do not have to deplete all of your resources by providing the money to the nursing home, and there are viable what’s called “spend down” methods.
If you have questions about these spend down methods, or are interested in creating a Medicaid plan that is best for you and/or your family member, please give me a call here at Waller and Mitchell, as I’m sure I can assist you with your needs. Call me at 727-847-2288.
- Published in Medicaid Planning, Videos