Chip: Welcome to Lunch With a Lawyer with Chip and Jaleh. I believe this is our 11th session. We’re pleased to have you join us. If you have any questions about anything, anything about the law or any questions you’d like to have answered, please post them to the Facebook and they will read them to us or let us know what the questions is. We’ll be pleased to answer them right on the air. Also, if you would do me a favor and if you’re live, if you would hit share with your other users, maybe we can share a little bit of our knowledge with some of your other friends. We certainly appreciate your dialing in. We’re getting great feedback on doing Lunch With a Lawyer, and we certainly have a good time doing it.
Today’s topic is, what is elder law? That is something that Jaleh is really focused on and does quite a bit of, in fact, just shot a video on what a Miller Trust is. If you have questions about Medicaid, you might want to check out our website, which is rdwaller.com. Certainly we’re available if you do have any questions at 727-847-2288. Jaleh, why don’t you go ahead and tell us what you think what is meant when somebody says elder law.
Jaleh: Elder law, I think, encompasses many things. I think obviously just by the very nature of the word elder, one assumes that it only has to do with those that are considered elderly, which would be considered over the age of 65, which we know once you hit 65, that doesn’t necessarily make your elderly at all, but generally that’s what it’s considered. I think there is a little bit of a misnomer though because a lot of people can benefit from “elder law”. The reason that that is is because elder law does encompass many things. The first topic I’d like to discuss would be estate planning. Elder law does encompass estate planning, it encompasses wills, trusts, advanced directives, things of that nature. I always advise people that this component of elder law is crucial for anyone of any age. I would like to get your thoughts on why do you think that it’s crucial for people of any age to execute estate planning documents.
Chip: I think that I find that there are usually two questions that everybody has when they come to see me about doing estate planning, whether they be 18, or 80, or whatever number age they are. They usually are concerned about how much is the government going to take in the way of estate taxes or inheritance taxes? That issue has been pretty well resolved by the federal government. They’ve raised the estate tax threshold up over … dollars. That eliminates most of the folks that have come to see me as far as that’s concerned, so they usually don’t have any federal estate tax issues.
As far as the state estate taxes are concerned, or inheritance tax, Florida has done away with any estate tax. Folks that come to see me here in Florida, if you don’t have any real estate outside the state of Florida, then you won’t have any estate taxes here unless your estate is more than $5 million. If it’s more than $5 million, then you’re going to have estate taxes if you own real estate outside the state of Florida, and another state may have an estate tax on the value of the real estate.
The other issues which ties into this question, and I’m getting around to answering it, is we want to avoid probate. That really ties into the elder law in that you want as far as the assets passing to whomever you would like to receive them upon your death without having to go through a probate proceeding. Usually that’s done through a husband and wife or joint ownership with the right of survivorship either by tenancy by the entireties or joint tenants with right of … bank accounts or a trust them. This has come out of a elder law treatises, what they call a Lady Bird deed, which works very well for real estate to pass upon your death automatically to your children …. really benefit from doing your estate planning to try and avoid the estate taxes or being informed about estate taxes, as well as trying to avoid probate. Then you also talk about asset protection, and also talk about elder law and whether you need to be concerned about qualifying for Medicaid.
Jaleh: I just want to back up for a moment because I have had some clients say, “You’re speaking in legalese. I don’t really understand what you’re saying.” In layman’s terms, if my aunt passes away and she leaves me as the sole beneficiary of her estate, and we have to have a probate proceeding, and from her estate I inherit $1 million, do I have to pay any taxes as far as when I file my income taxes the next year? Do I have to claim that $1 million? How exactly does that work?
Chip: Whenever you inherit assets, an inventory is filed in the estate or in the trust, which is the fair market value of the property. If you sell that asset for that amount, then there is no tax and you don’t have to pay income tax on that. If you sell it for more than that amount, then you have to pay the long-term capital gains. If you receive a bank account and there is accumulated income, that income will be attributed to you and you’ll have to pay income tax on any income that’s come in. Sometimes, or many times, you may receive a death benefit such as annuity. If you get an annuity, then there is income and you may have to pay the interest on that if you’re the beneficiary of that and they will give it to you. Also if you are a beneficiary of an IRA, you’ll wind up having to pay income tax on the money you receive from an IRA. It depends on the scenario as whether or not you have to pay income tax.
Jaleh: I think that we actually do have a question right now from our audience. The question is, if you could please explain … This is a little bit beyond our context today of what elder law is, but I think obviously our audience wants to know the answer. If you could explain how a land trust operates?
Chip: Sure. In fact, I want to thank whoever came in. That’s the whole idea is we don’t know what questions you have, so … out a topic and start talking about it, and then you asking questions, we want to talk about what you have in mind. A land trust, first let me give you a little back … Illinois land trust, or Chicago land trust. Florida has taken the concept of the land trust and put into a Florida statute. It’s governed by a Florida statute. What that does is it’s where you designate a trustee who hold the title to the property, and there’s a designated beneficiary. The trustee holds the property for the direction of the beneficiary.
What land trusts are used for, some of the examples of what land trusts are used for, number one, is to not disclose the identity of the beneficiary or the beneficial owner of the property. They used land trusts whenever they assembled all the property for Disney World over in Orlando, going out and buying it all, and then once they got it all assembled in various land trusts, no one really knew who was buying up this property because they were under various land trusts. That’s an example. I have any number of investors who like to hold rental property in a land trust. That way they isolate any liability that they may have as far as a particular piece of property to that piece of property, and that way they don’t have exposure outside of losing the property that’s subject to the land trust.
Some folks are concerned about people knowing how much land they have and want to hold it in the name of a trustee. Hopefully I’ve tried to hit the nail on the head, or maybe if you have a follow up question, just post it and we’ll try and keep talking at it until we get it down.
Jaleh: Sounds like a good idea. I think we’ll go back to our topic at hand, which is the what is elder law. We’ve discussed estate planning, and we’ve discussed why estate planning is necessary for anyone, no matter what our ages. It is not specifically for the elderly. Another thing that forays from estate planning into the next topic of elder law would be guardianships. If you have properly executed estate planning documents, specifically a properly executed durable power of attorney, generally there will not be the need for a guardianship proceeding. However, if you do not have estate planning documents in place and certain life changing events happen which may diminish your capacity, then at that point you would need what’s called a guardianship, which essentially is a court monitored process, is a court overseen process, which helps manage the person and property of an incapacitated individual.
Chip: Jaleh, though, a guardianship, in my opinion, is very drastic. Before they can even have a guardianship, don’t you have the ward, or the person who you have guardianship over, they have to be declared incapacitated and incompetent, correct?
Jaleh: Yes, sir, they have to be declared incapacitated. Incapacity is a fluid concept. One size does not fit all. As a part of the guardianship procedure, there is an incapacity adjudication by the court, and that doesn’t happen by lawyers essentially coming together and say, “Well, we don’t think … is all there.” That actually is determined by … committee. There are three medical professionals that are appointed by the court that go and they make that determination of incapacity as far as the ward is concerned, and they go down specific rights. Again, guardianship is not one size fits all because a person may have the ability to manage their person, to make decisions about their medical decision making or their social environment, but that same person may not have the capacity to manage their property, to make dispositions or gifts, to contract or to sue. It does definitely go in a case by case basis, and the court does determine which right it’s going to remove based upon the examining committee’s recommendation.
You’re absolutely correct, it is a very drastic measure. From the court’s perception, they don’t like to do them if they don’t have to if there is what’s called a lesser restrictive alternative such as a properly drafted power of attorney. It is a very drastic measure, but that is the prime reason why we encourage our clients to complete estate planning documents while they’re well to avoid the necessity, and the time, and the expense of a guardianship in the entirety.
Chip: What about using a trust or setting up a trust as far as your elder law planning, as far as doing that? What’s been your experience?
Jaleh: A trust is a very viable planning tool, but I always recommend to people that it’s going to depend on their individual specific circumstances. Similar to guardianships, trusts are not one size fits all. Depending on your familial situation, depending on the type of income that you want to generate for your beneficiaries after you pass, and depending on the specifics of your individual situation such as do you potentially have a adult disabled child, do you have minor children, do you potentially have one child who has issues with judgments and creditors that you want to prevent them receiving a full inheritance at once because of many issues, that you’re afraid they may squander it, or that potentially the judgment creditor may receive it, that’s something that you want to consider in making that determination as far as whether a trust is going to be a viable estate planning tool for you.
Moving forward into how a trust interplays with guardianship is a trust can be a great tool if you already have a trust in place to prevent the need for a guardianship of property because you have a trustee, assuming that you’ve nominated a successor trustee in your trust, that handles that component. There would not need to be a guardianship over that specific asset.
Chip: Also, what I’ve found as far as doing estate planning, besides having a will or a trust, the other documents which ties into the care of someone or making medical decisions whether they’re incapacitated or not is the health care surrogate, which is like a medical power of attorney where you designate someone to make health care decisions for you. Also, you authorize the release of your medical information to whoever you designate as a health care surrogate. This is something that I really, for whatever age, to execute that. They’re not supposed to release any medical information even to a spouse if you go into the hospital. I think if you go to the doctor’s office, a lot of times they have you sign something as to who you’re supposed to release it to. If you go into the hospital first, then you don’t have a chance to execute that. Josh is giving me the hi sign here as to what the question is. Shoot, Josh.
Josh: You’re going to have to repeat what I say because I’m not miked. What should I take into consideration when changing my will?
Chip: What should I take in consideration when changing my will? You look at your change in circumstance. Whole purpose of a will, or a trust, or whatever document you use is you designate who you want to receive your assets, and usually in what shares or percentages. As life changes, your circumstances change. That’s what you need to take in consideration whenever you need to change your will. Whether someone has passed away, whether or not you’ve been estranged from a beneficiary, whether you just want to provide a dollar amount versus a percentage share, whether you want to provide for grandchildren having a share of your estate versus your children, those are all the factors that you need to take in consideration as to whether or not you change your will because you can always have a last will. If you have a very old will, that doesn’t mean it’s still not valid. Do you have anything to add to that, Jaleh?
Jaleh: the only thing that I would also like to piggyback on that question is something that has been asked on occasion. It’s not a common question, but I think that we need to at least put this out there for our audience. What I would definitely say is take into consideration … A lot of times we know, and I’ll bring this up, we do not practice family law, but we know the statistics. We know that one out of ever two marriages will fail. With that being said, we have definitely had clients that have called and said, “Well, I’m married to my spouse, but I don’t want to leave my spouse in my will. I want to cut them out completely. I’m going to have you come … to your … We’re going to draft a will, and I don’t want to provide for my spouse. Will that effectively make sure that they don’t receive anything when I pass away?” I’d like you to answer that question because this is something that we’ve discussed before. It may seem straightforward in that no, if they’re not in the will, they get nothing, but that is not the answer.
Chip: What I have found is first off is, if you have any calls or questions particularly about estate planning or elder law, give us a call at 727-847-2288. You can also visit our website. We have about 300 videos there that talk about any number of range of topics as far as real property, estate planning, probate, real estate litigation, foreclosures, any number of things. That’s under R as in Roland, D as in dynamite, Waller.com. Visit our website and you can be able to pass the bar once you read all 300 videos.
Getting back to can you cut your spouse out of your will, out of receiving anything? First off is your will only controls the assets that are in your name alone at your death. I’m going to get around to answering the question, but these are what I have found, that a 401(k) can only be left to your spouse. If you hold your assets as husband and wife, it’s automatically going to go to your spouse. If your IRA designates your spouse as the beneficiary, it’s automatically going to go to them. First off, we need to look at what assets you have in your name alone. The Florida statues provide that if you cut your spouse out of your will, the spouse has a right to take a 30% elective share against all assets that you own at the time of your death. That takes in consideration whatever you have in a trust, whatever you have in IRAs, joint accounts, all of that.
There is a special asset which is not counted in the elective share but a spouse has a certain right to. That’s called the home or the homestead. If you have a home just in your name, then the spouse is entitled to a life estate. They can within six months of the date of your death … The other portion, if you have a spouse, the remainder interest after the life estate, or the other half interest, passes to your children. Under your will, you can only leave your homestead to your spouse. You can’t leave it to anyone else. If you do, then the spouse is entitled to a life estate with the remainder interest going to the kids. Life estates are awfully hard to understand and explain.
In answer to your question, you cannot cut your spouse out. If you do, they have a right to elect to take against the will. Of course, that’s their right. They don’t have to do that. Sometimes we have a moral obligation or understanding between the parties. Hasn’t that been your experience?
Jaleh: That has definitely been my experience. I think that’s definitely something that our audience should know is that it’s not as simple in estate planning as just cutting out your spouse because they do have rights under the Florida Constitution, and the legislature has specifically drafted some of those rights including the elective share rights. I think it’s important we touched upon that.
Josh: We have another question. What areas of law does your firm cover? How long have you been in business?
Chip: I’m going to tackle that. I’ve been practicing law on Main Street for the last 45 years, and Jaleh’s been here, what, about 4 or 5?
Jaleh: 4 and a 1/2 almost.
Chip: 4 and a 1/2 years. I was started out in 1971 with James J. Altman. It was Waller & Mitchell until 1977, and then I opened up my own office across the street. It was in Sims Park, a little building there. They’ve since torn that down. Then I had a practice by myself for a while, and then I went into practice with Stan Mills until 1989 when he got appointed to the bench to be judge and served that for 20 years. I think that’s 20 years or better, and he retired. Then Mr. Mitchell came to join me shortly thereafter and practiced with me for 20 years. He’s been retired now for a couple of years.
What areas do we practice in? I’m a board certified real estate attorney. Like I tell folks, anything that has to do with dirt, I do it. That’s a broad overstatement. I don’t do everything. I do a lot of transactional work as far as contracts for the sale and purchase of real property, representing both buyers and sellers in real estate transactions, I do leases, and then real estate litigation such as evictions, foreclosures, suits to quiet title, partition. Those are the type of issues that I do in real property. I’ve been drafting wills my entire career and handling probate, drafting trusts. In the past, Mr. Mitchell’s done more of the guardianship, and now Jaleh has done that. Do estate planning, which we’ve seen the tax law come through. Jaleh, you can pick up on the other areas that you practice in that we also do, or pick up anything I forgot to tell them.
Jaleh: The only other things that we practice here is we do guardianships, which you have touched upon. We also do Medicaid planning for skilled nursing care, so that is a part of the practice which encompasses the elder law component. Then we also do the probate administration as well as trust administration. That’s pretty much the areas that we cover. You also do some corporate law as well, and we also do some general litigation, but specifically related to real estate and also to elder law.
Chip: Also, I’d like to tell folks if you call us about any question, any time you need a lawyer, call us. If we don’t handle it, I will try and direct you to someone who I believe can take care of the problem for you and be happy to refer you out to someone who I’ve had good experience with. Josh says we have another question.
Josh: It’s a follow up. Do you do walk-ins, or do I have to call ahead or go to your website to make an appointment?
Chip: I can answer that. No, we don’t do walk-ins. You do need to call and set up an appointment. That number is 727-847-2288. What I would also tell you is we don’t do free consultations that you’ve seen all the personal injury lawyers do. We usually charge $100 for a half an hour conference. If it runs over that, then there may be an additional charge. If you retain us, then we will either give you a flat fee, a contingency fee, or an hourly basis on how to handle your matters as far as that’s concerned. Most of the estate planning, elder law, and whatever is done on a flat fee basis.
Jaleh: Most, yes.
Chip: Also, one other area, Jaleh mentioned the corporate world. I also handle the buying and selling of businesses as far as that’s concerned, representing buyers and sellers. By the way, you’re all a great audience here. We’re getting lots of questions, so that’s terrific. Anything else, Josh?
Josh: That’s it, sir.
Chip: I think we’ve been rattling on here for about the past half an hour, so I think we’ll probably say goodbye, or as Roy Rogers would say, happy trails. I won’t sing to you or else I’d really turn you off, but we’ll see you next month. If you have any questions in the meantime, email us or call us at 727-847-2288.