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.

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.