Video Summary

Do you need a lawyer to administer a trust?

This usually comes up whenever we have a person who sets up a revocable trust for the purposes of avoiding probate, and when they pass away, they designate someone as the successor trustee. So, the successor trustee then becomes the owner of the, or entitled to the property that’s held in the trust, and they can take care of distributing the assets to the various beneficiaries. Whether or not the person needs or should have an attorney depends on the complexity of the trust.

A trust, once the person who set it up passes away, is supposed to obtain a federal identification number, because it then becomes a separate tax-paying entity. And so that, whenever any income comes in, it’s not taxed to the successor taxee under their individual social security number. There can be, also, questions, if this is an ongoing trust, as far as what duties you owe to the various beneficiaries.

Under the Florida statute, a successor trustee is to send or notify the beneficiaries of the trust, and that they are beneficiaries. They also should serve upon them an inventory, letting them know what assets are in the trust. And, further, if it’s an ongoing trust, or takes some time to administer, they should send out an annual accounting, giving the beneficiaries notice that if they have any complaints about how the trustee is handling the finances of the trust, they have six months in which to object.

One of the most often asked questions of the successor trustee _____ is, “What do I have to do as far as paying the creditors of the deceased settler, or the person who set up the trust?” This is somewhat problematic, in that there may not be a probate proceeding, and the trustee would be responsible for paying those bills. A notice of trust should be filed with the clerk of the court.

The question is, “Well, should I make distribution of all these assets? And then, what happens if a bill comes in?” Well, that is a real problem, as far as giving the successor trustee a definitive answer, in that the creditors can file claims or sue the estate and trust up to two years after the person’s death. So, it’s important to understand who the creditors are, and do a reasonable search to determine the ascertainable creditors.

The other issue is filing a fiduciary tax return – that is, a tax return by the trustee that reports whatever income has come in, and then sending out the notice to the beneficiaries of how much they must pay in taxes. So all of these are matters that need to be addressed, whenever you become a successor trustee, and it’s usually sometimes not within the successor trustee’s expertise, if they are not a professional trustee, in order to do that.

So, it may be wise to consult with an attorney, and discuss with them whatever trust that you may be the successor trustee, to determine just exactly what you need to do, and whether or not you need to engage the services of the attorney. As far as the administration of the trust, so you do not become personally liable for any of the debts, and be protected as far as the beneficiaries are concerned.

If you’d like some advice, or set up an appointment to discuss administration of a trust, well, give me a call, at 727-847-2288.

Video Summary

What is a Miller Trust, and why would I need a Miller Trust in order to qualify for Medicaid?

Let’s talk about first what is the purpose of a Miller Trust, also known as a Qualifying Income Trust.

A Miller Trust solves a single problem. The problem is that the person applying for Medicaid has too much income. A Qualifying Income Trust is an irrevocable trust into which you put your income, and which pays anything left over at your death to the state of Florida, up to the amount of the Medicaid benefits paid on your behalf.

If a Medicaid applicant’s income exceeds the lawful amount for Medicaid eligibility, which is $2,199 per month – effective as of January 1, 2015 – a Qualifying Income Trust must be created with the applicant’s income in order to create eligibility for long-term nursing home care. This insurance is also commonly referred to as a Miller Trust. This is an irrevocable trust.

The income of a Medicaid applicant which exceeds the eligibility criteria is placed in the trust, and someone other than the applicant is the trustee. The trust income will be disposed of in accordance with the directive of the Florida Department of Children and Family Services after the applicant has applied for Medicaid and been approved.

Generally speaking, the applicant will be allowed to retain $105 per month of the income, and may be entitled to divert some of the income to the community spouse if the spouse’s income falls below $1,966.25 per month. This is effective as of July1, 2015. They must also pay a fixed amount towards the patient responsibility for nursing home care.

In the event that there are excess funds in the amount after the applicant dies, Florida Medicaid is entitled to reimbursement from those funds.

Income from Medicaid eligibility purposes is considered gross income. This means that all deductions are added back into the income before one can determine the total amount of income for Medicaid eligibility purposes and is another example of why proper Medicaid planning is so important for each involved individual, and why a Qualifying Income Trust may be necessary.

The Qualifying Income Trust may be created by the applicant if the applicant is competent to do so. The Qualifying Income Trust may also be created by the applicant’s spouse, if there is one, and if the spouse is competent to do so. The Qualifying Income Trust may also be created by the attorney-in-fact pursuant to the applicant’s durable power of attorney, provided the durable power of attorney authorizes the agent to do so.

The form for the power of attorney must include specific authorization for the agent or attorney-in-fact to sign the irrevocable Qualifying Income Trust for the incapacitated person’s skilled nursing home Medicaid eligibility.

If none of the above conditions exist, a court proceeding would be necessary to secure the authority to create a Qualifying Income Trust. Following the detailed requirements for drafting Qualifying Income Trusts and for administering an irrevocable Qualifying Income Trust is important for maintaining Medicaid eligibility for an elderly person after it is first obtained. Your attorney should provide you with detailed and specific directions for the proper funding and administration of the irrevocable Qualifying Income Trust.

The Qualifying Income Trust must be properly managed, and payments must be made each month to maintain eligibility. There are very specific rules that must be followed for the trust. For example, it must be a non-interest bearing account.

Please call me at 727-847-2288 for information about the Miller Trust, and if the Miller Trust is a proper planning tool for you and/or your loved one to become eligible for Medicaid for long-term skilled nursing care.

Video Summary

Who controls the money in a supplemental or special needs trust?

Perhaps the most important consideration for an SNT is the selection of a trustee. The trustee of the special needs trust is critical to the successful achievement of the goals and objectives of the special needs trust.

First, the trustee should never be the beneficiary of the special needs trust, or the beneficiary spouse, because of the control and the deeming factors. The trustee should be someone who is experienced with financial matters, or who is capable of retaining the appropriate financial expertise to assist in the management of the assets in the special needs trust.

The trustee must have the time and be willing to exert the effort to become acquainted with and maintain current knowledge of the needs of the beneficiary. And, very importantly, the requirements of the public benefits programs for which the beneficiary of the special needs trust is eligible.

Often, especially with a supplemental needs trust, it is advisable to name co-trustees. One co-trustee could be a corporate trustee, and the other could be a family member or close friend who has frequent contact with the beneficiary of the special needs trust.

Whether co-trustees, a single corporate trustee, one or more individuals are appointed as trustee, consideration should be given to the use of a care manager. The special needs trust can provide that a care manager be hired by the trustee of the special needs trust, to provide the constant contact with the beneficiary necessary to become aware of the beneficiary’s personal needs. And then they can communicate that information regularly to the trustee.

The grantor of the special needs trust can also use a memorandum of instruction, or other similar type of document, to communicate the various personal information about the beneficiary of the special needs trust. Such as the beneficiary’s favorite color, favorite food, likes, dislikes, medications, and other important information regarding the beneficiary.

The special needs trust should include terms that prohibit the distribution of any trust asset for anything provided by the public benefits programs for which the beneficiary of the special needs trust may be qualified. If the trustee conscientiously complies with those provisions, the special needs trust assets will not be deemed to be owned by the beneficiary of the special needs trust, and will be available to use in the trustee’s discretion for other needs of the beneficiary of the trust.

Another common provision for a supplemental needs trust is allowing the trustee to make payments that could possibly disqualify the beneficiary of the trust for some government benefits, if the trustee decides that it is in the best interest of the beneficiary. For example, the trustee may use the special needs trust funds to purchase a house on behalf of the beneficiary. This would cause a reduction in the beneficiary’s social security income stipend, because it is considered a shelter expenditure. However, if the beneficiary of the special needs trust has housing needs that exceed the government benefits, it is in the beneficiary’s best interest to use the trust funds for better housing.

Special needs trusts are commonly used to provide the beneficiary with specially equipped vehicles, concert tickets, transportation tickets, dental work – these things are not covered by Medicaid or other public benefits programs. They could also be considered to be used for things such as the theater, performing arts admission tickets, computers, and other electronic devices such as televisions, iPads, and anything that would be necessary to the benefit of the beneficiary of the special needs trust.

With a third party special needs trust, the grantor has the right to designate, in the special needs trust document, who will be the beneficiaries of the trust upon the death of the primary beneficiary.

In conclusion, special needs trusts, whether third party or self-settled, are valuable tools for beneficiaries who are disabled or have other special needs.

If you’re interested in setting up a special needs trust, please contact me at Waller and Mitchell, at 727-847-2288.

Video Summary

What is a joint trust and can I establish one?  A joint trust is whenever usually husband and wife sign a trust agreement.  Thereby you’ve gotta have two people, of course, to have a joint trust, particularly whenever they own all their assets jointly, and it’s not – you just need to contact an attorney to be able to establish a joint trust.

If the purpose of the joint trust is to avoid probate, you can do that through titling your assets as husband and wife and that way you avoid probate when the first one passes away.  If the purpose of the joint trust is to establish a… who you want to receive the asset when both the husband and the wife passes away, that is very, very remote on a simultaneous death, and I really don’t recommend it on that basis.

Also if you do set up a joint trust, do not put your homestead property into a joint trust.  There’s all sorts of problems that are associated with that.  Also joint trust destroy what they call tenancy body entirety is to give you a certain amount of protection from creditors if there is a judgment against either husband or wife under Florida law.  So I am not a big fan or I don’t usually recommend folks to set up joint trust.  I think you can title your assets so that they can go to the survivor rather than having a joint trust.  If you don’t want your assets to go to your spouse, you have a prenuptial agreement; you have a second marriage or something like that; then I suggest you have separate trust, one for the husband and one for the wife as far as that’s concerned.  And again, not putting the homestead property in either trust.

So if you have any questions about establishing a trust, joint or otherwise, give me a call at (727) 847-2288.  Thank you.

Video Summary

Hi!  I’m Chip Waller. Does a designated trustee need to hire a lawyer to administer a Trust?

Usually the designated trustee is a successor to a decedent. So the answer is, I suggest that you contact an attorney, like me, and find out what your duties and responsibilities are as a successor trustee as well as can you be held liable if you don’t follow the Florida statute for the Florida Trust Code.

Some of the things that you need to do as a successor trustee is obtain a Federal Identification Number because you’re dealing with monies that are not yours, and you don’t want to have to report any income under your Social Security number because it’s not your money or your income.  And you need to file what they call a Fiduciary Tax Return, a 1041.

Next as a successor trustee you’re required to send a copy of the Trust to all the beneficiaries.  And that’s sometimes not what anybody wants to know about, but particularly if there’s a distribution or if you’re supposed to pay income for life to someone.  But everyone who is a beneficiary under the Trust is to get a copy of the Trust document.

You also usually have many questions about, well, should I pay all the creditors?  Well, and now can I – when can I distribute all this money and not be responsible for the creditors’ claims?  That’s usually a fairly tough question.

And one of the other responsibilities that you have, and potential liability for, is doing an accounting.  So you initially have to prepare an inventory and send out, to all the beneficiaries, an inventory of all the assets.

Once they get that, well then they’re entitled to an annual accounting which sets forth how much income and what transaction took place.  And if you fail to do that, you have liability for many, many, many years to come and have potential liability.

So, as my recommendation, that before – if you’re designated as a trustee of a Trust, that you consult with an attorney to find out what your duties, responsibilities and liabilities are as far as serving as a successor trustee, and decide if you want to undertake those responsibilities and potential liability.

If you have any questions give me a call at 727-847-2288.  Thank you!