It’s time to ring in a new year and, with it, an excellent time to review your estate plan.  If you need changes or help, contact an elder law/estate planning attorney. In the meantime here is a list of things to consider in reviewing that plan:

• Were there any life changes such as death, birth, marriage, divorce, a move out of state, family relationship issues, or disability?  
• Do you own real estate in another state, moved from another state, or own a business?
• Do you have minor children, problem children, or no children?
• You wish to change beneficiaries or otherwise disinherit someone;
• Review your beneficiaries on Trusts, bank accounts, life insurance, 401k, retirement accounts, and investments to make sure they exist and this follows your estate plan;
• If you have a Trust verify that all assets intended for the Trust are titled to the Trust;
• If you have a partner that you are not married to proper estate planning can give both of you the ability to help each other legally and inherit from each other if you so choose;

If you do not have an estate plan or are not sure where to start in reviewing your estate plan an elder law and estate planning attorney can be invaluable in helping you with this task. 

At Arizona Mobile Attorneys we stand ready to help with any or all of these issues.

From time to time we run into clients who want to disinherit some or all of their heirs. This most often occurs due to damaged relationships, or a perception that persons or organizations other than the heir are in greater need of the resources to be passed on.

Disinheritance typically causes conflict between the disinherited heir(s) and the heirs and devisees (other beneficiaries) to whom resources are passed, causing the estate plan to be legally contested. This causes considerable time to be spent and unintended stress for those who are left to defend the estate plan, not to mention financial resources of the decedent that must be spent to provide that defense.

There are a number of steps that can be taken to avoid or at least mitigate this problem.

1. Don’t needlessly delay creating and updating your estate plan. When a person waits until shortly before they pass away the disinherited heirs will often claim they didn’t have capacity since they were near death and that their illness or condition prevented them from being able to think clearly. By taking care of your estate planning now, when you are lucid and thinking clearly you can avoid this argument. When major life changes occur the plan should be updated to avoid the same pitfalls.

• Make sure your estate planning documents (Will and/or Trust) identify who your legal heirs are. These are the people who would take your property if you were to die without any will, trust, or other document that legally states who are to take your property when you die. By naming them they can’t claim you forgot they existed (indicating incapacity), which is one argument for contesting an estate plan. If you complete your estate plan sooner, rather than later, you have more time to manage relationships with both inheriting and disinheriting heirs.

• Explicitly state that those heirs you are disinheriting are not to receive anything in your estate planning documents. Some Wills and Trusts actually have language stating that any person who contests the provisions of the document will be disinherited. These provisions are difficult to enforce because state law and the courts are very liberal about accepting excuses for doing so (“Medical people said she was not competent to manage her finances”, or “He was so close to death he couldn’t even legibly write his name”).

Another problem with these No-Contest clauses is the need to “give them something” for the threat of disinheritance to mean anything. There is a popular belief that leaving someone a small inheritance prevents them from claiming they were forgotten. While that may be true, it does not prevent the incapacity argument (“He forgot what our relationship was”) or that there was undue influence or exploitation of a vulnerable person.  These clauses don’t cause harm but they typically aren’t enough to prevent a law suit.

Disinheritance can be a very tricky endeavor when it comes to estate planning. At Arizona Mobile Attorneys we have considerable experience in this area and are ready and able to help you navigate through this difficult aspect of estate planning.

© 2022, Michael G. Kelly

Q.           I am retired and my adult child is borrowing money from me. There is nothing in writing and I am worried about getting paid back. I also want to be fair to my other children when I die. How do I handle these issues?

A.            This is a common problem in a sluggish economy that is forcing adult children to turn to their aging parents for financial assistance.

A written promissory note should always be used when loaning money to a family member, including a child. While it may seem impersonal and cause some tension, it imposes legal responsibility and, in some cases, dealing with personal responsibility is exactly what the child needs. This also makes sense because an aging parent has taken care of the kids. It’s time to worry about oneself. An aging parent has a retirement and increasing healthcare needs to finance. Children who are forced to borrow money are certainly in no position to help. In this context the promissory note itself becomes very important for an older person to preserve financial security.

Many people recite a loan to an heir in their trust or will and attempt to deduct it from the child’s share. While this is one approach, the promissory note approach is a better foundation for imposing fairness. It can be enforced after death to continue payments to the estate which can then distribute the proceeds accordingly.

Sometimes an older parent will want to provide a loan to a child to help with a first home purchase. In situations where real estate is concerned it is also important to secure a loan with a lien, especially for protection in the event the child divorces a spouse or other financial issues come into play regarding that child and their ability to continue to own the purchased home. This will provide the older parent with necessary security if things go awry.

It is highly advisable to consult an elder law and estate planning attorney when considering a loan to a family member to avoid these pitfalls. Arizona Mobile Attorneys is ready to provide solutions to these problems.

CALL FOR A  CONSULTATION

PHONE: (623) 628-1110
FAX: (623) 240-2609

Arizona Mobile Attorneys

© 2022, Michael G. Kelly

One of the most overlooked areas of estate planning is in regard to passing a business interest on to others and how that is to be handled. This is a very important area of estate planning because it affects the rights of current owners who survive an owner who dies, successors of a deceased owner, and the operation of the business itself.

A host of issues will likely arise when a business owner dies: who are that person’s successors? What are their qualifications regarding business management decisions? Should the new owners have voting rights or any other right to participate in the management of the business? If new owners are allowed to participate in voting and management then how are deadlocks and other management disputes handled? How these questions are answered and when they are answered should all be answered in the estate plan as well as in the business formation documents.

At Arizona Mobile Attorneys we provide business formation services as an integral part of our estate planning service. We can help you address these issues in an effective manner that provides you and your family with piece of mind and helps to ensure the business continues to run smoothly after you are gone.

© 2022 Michael G. Kelly

The New Year is a Great Time to Assess Your Estate Plan!

Many of us procrastinate about this task, sometimes until the very end of life. It is actually one of the most important things we can do for ourselves and our loved ones and should be given ongoing periodic attention.

Everyone over 18 should at least have a plan that helps protect them and their loved ones in the event that they become unable to make informed decisions regarding their property or care due to debilitating injury or illness. This plan should include at the very least Durable Powers of Attorney for Financial Affairs and Health Care, as well as authorizations for others to obtain records from health providers.

As a person goes through life and acquires more wealth and property it becomes more and more important to preserve that wealth for those whom we care about most. As time goes by Wills, Trusts and other estate planning documents become increasingly important to protect those whom we love. Those loved ones can change and often do due to death or other reasons. That is why it is important to take stock periodically and maintain a well-conceived estate plan. The new year is a perfect time to do so.

Arizona Mobile Attorneys will work with you to make sure you have a well-conceived estate plan that meets your needs and protects your loved ones.

© Michael G. Kelly

We often encounter single clients who have joint bank accounts with a child or a trusted friend. While these accounts are convenient and will avoid probate on death, we do not recommend them for the following reasons:

1. Fraud. When an additional person is named as an owner on a joint account they have free access to that account and may treat the money as their own. Many older adults have found their accounts gutted by a child or a friend that they considered above reproach.
2. Exposure to Legal Liability. If this person who has been named as an additional owner on an account runs into legal trouble the money in the account is considered their money for purposes of satisfying any lawsuit judgment.  This would include accident liability, creditor issues, divorce judgments and more.
3. No Inheritances.  If the true owner of the account passes away all the money goes to the surviving joint owner. That is fine if it is what is intended. Often times however, the joint owner has promised to distribute the money to other heirs. Unfortunately that person has no obligation to distribute the funds and often does not honor that intent.

There are three steps every person can take to assure that they can avoid fraud and legal liability while assuring that their money goes to the persons  they want it to go to when they die:

1. Remove the joint owner(s) from the account. They are not necessary if you merely need them to help you manage your finances and other business and aren’t providing them with a gift.
2. Execute a Durable Financial Power of Attorney that allows the joint owner to fulfill those financial and business management functions you need them for. An effective Durable Power of Attorney will protect the maker from being financially exploited and protect against the problems discussed here.
3. Complete beneficiary designations with the institutions holding the accounts to assure that those persons you wish to inherit the money will actually get it. These institutions typically have forms for you to fill out and sign. It is a fairly easy task that avoids the need to go through a probate proceeding in court to get the property distributed.

At Arizona Mobile Attorneys we can help you with these and other matters concerning estate planning and physical and mental capacity planning. Please contact us for more information

© 2021, Arizona Mobile Attorneys

Your Disabled Child’s Special Needs and Adulthood

Q.           My child with a disability is turning 18. Can he continue to get the publicly funded services we were able to get for him as a minor?

 A.            Once your child turns 18 your legal authority over him ends. For example, you were able to get involved in his education through development of an Individual Education Plan (IEP) to assure that he received public benefits that enabled him to succeed at school. Now that he is an adult his financial and care needs are his legal responsibility.

 Q.           My child can’t do this by herself. What can I do to help assure that she gets the services she needs?

A.            A first recommended step is to have your child apply for benefits under the Social Security Income (SSI) program at your local Social Security Office if your child has less than $2,000 of property in her own name. Once SSI is obtained she will be automatically eligible for Medicaid coverage upon applying to the Arizona Health Care Cost Containment System (AHCCCS). This will open the door to valuable community health services not otherwise available; particularly in regard to mental health.

Q.           My child is really not able to make informed decisions regarding his care and finances. How can I continue to step in and do that for him?

A.            There are a number of steps that can be taken to establish a continuing authority for you. In regard to Social Security, you should apply to the Social Security Administration to be a Representative Payee at the time SSI is applied for. This is the only agent for receipt of payments that Social Security will recognize.

Another step would be to establish a guardianship through the Superior Court. This approach does have the drawback of eliminating the rights of the disabled person to act independently, making them more vulnerable. It is a public record of developmental disability with a potential for stigmatization. Lastly, it is an expensive and time consuming court process. It should only be undertaken when necessary.

There are alternatives to guardianship which can eliminate these drawbacks and pave the way for an enhanced quality of life with the lowest degree of restrictions on an individual’s rights, such as Powers of Attorney for medical and mental healthcare and Durable Powers of Attorney for Finances. These legal documents serve much the same purpose as a guardianship and are strictly private, eliminating the potential for stigma and the added costs of a continuing court process.

 Q.           Can I continue to provide financial support to my child while he or she is receiving government benefits?

A.            A special needs individual receiving an inheritance, lawsuit settlement, or monetary gift can be disqualified from having Social Security and Medicaid benefits if proper planning is not done.  A special needs trust can be utilized to protect their money and keep their savings below the Social Security and Medicaid requirement of $2,000. There are several forms of Special Needs Trusts and the design and administration of the trust is critical in order to provide all of the protection and benefits needed. A Special Needs Trust enables you to appoint someone you trust to manage assets and advocate for the individual. It also provides for an enhanced quality of life for the beneficiary and as well as allows one to be self-reliant and independent to the maximum extent possible.

 Q.           I have seen standard forms on the internet and elsewhere. Can I use these forms?

 A.            While these forms can be helpful for families that simply cannot afford an attorney, they are often not suitable for a given set of circumstances. Both Arizona law and federal law provide special requirements for these documents to be valid and protect your child’s government benefits. A standard form may not conform to those requirements. It is best to consult a special needs attorney for assistance in most cases.

At Arizona Mobile Attorneys we provide assistance to families in obtaining and maintining government benefits for individulas with special needs.

Long-term care is a very expensive option whether you are in a nursing home or having the skilled nursing and other assistance coming into your home.

You may be able to get government assistance to help pay for long-term care if your father qualifies. As a veteran he may be eligible for Aid and Attendance assistance from the U.S. Department of Veterans Affairs (“VA”) as well as assistance from the Arizona Long-Term Care System (ALTCS).

As a war veteran over the age of 65 your father may attain basic VA Aids and Attendance Pension financial eligibility, if he has combined assets and income of $130,773 or less. In addition he will have to show a need for assistance with two activities of daily living, or a showing Alzheimer’s disease, or a mental condition rendering him dependent on care.

In order to maximize benefits it is important to show that he is spending more on care than his income will cover. The VA benefit for Aids and Attendance for a single person is currently $23,238 per year, which is reduced dollar for dollar by any income that is in excess of care expenses.

ALTCS medical eligibility is similar to VA medical eligibility. ALTCS financial eligibility has an asset limit of $2,000 (Neither ALTCS nor VA count a residence, one car, and household goods and furniture as assets). ALTCS can provide additional care when needed, beyond what VA would provide for. In addition ALTCS has an income limit of $2,382.

In order to take advantage of these programs your father will likely need to reduce the assets that VA and ALTCS would count in determining eligibility. In addition income that is counted must also be dealt with to obtain eligibility. This typically is a complicated process that requires considerable planning and guidance in its execution. It is important to retain an attorney who is well versed in elder law, including VA and ALTCS benefits, in order to successfully become eligible for these programs while protecting assets for the veteran and his family. Arizona Mobile Attorneys has the experience and ability to help reduce countable assets and income in order to accomplish these goals.

          There is often much confusion about the differences between a Living Trust and a Will. While both documents are used to transfer property upon the death of the owner of that property, the manner in which they work is actually quite different.
          A will is used to give instructions to a probate court regarding how a decedent ‘s (dead person’s) property is to be gifted out on their death. Generally, for a will to have full legal effect it must be processed by a court through a probate estate proceeding. Such a proceeding takes time, at least 8 to 12 months, and sometimes considerably longer depending on the facts and circumstances. This may involve some court supervision of the personal representative (executor) and often entails considerable attorney fees and administrative expenses. The will becomes a public document, as do all of the affairs of the estate.
          A living trust is a document that operates outside of probate. The person who creates the trust places their property with a trustee during their lifetime, or through executing a transfer-on-death document that also avoids probate, and the property is managed and distributed in accordance with the terms of the trust agreement. The trust agreement is essentially a private document which does not require any court involvement. While there are administrative expenses and an attorney may be retained if necessary, Trusts typically involve less expense while they are in operation (after the death of the owner) than a will requires. It is very important to follow through and actually transfer property you want to place into a trust over to the trustee.
          Trusts have added benefits in that they can avoid lump sum distributions to financially irresponsible beneficiaries, protect against divorce situations with ex-spouses of beneficiaries, and help manage post-death IRA and 401(k) distributions.
          Wills should be a part of an estate plan. In the event that a decedent has left property that is not in a trust, the will is a backstop measure to assure that there is some instruction on how that property is to pass to others. The will can even leave any such property to a living trust (called a pour over will). A Parent can also name a guardian for their minor child in a will. In situations with small estates (no more than $100,000 in real estate and $75,000 in personal property and money) a person named in a will who is not a natural immediate heir (i.e. a friend) can utilize an abbreviated method of probate and bypass court involvement to have property distributed much sooner.
          We recommend that both wills and trusts be included in an effective estate plan in order to avoid probate, and to effectively manage and distribute property after the death of the owner.