The Connecticut Elder Law Blog

Shocker: You May NOT Need a Living Trust

Today's take-home lesson:  In Connecticut, the only genuine benefit of a revocable living trust is probate avoidance.

To be fair, I will also mention that there is a privacy benefit as well; living trusts generally do not become public record, in contrast to wills.  However, in my own 16+ years of law practice there have been very few clients who have cared deeply about about the privacy issue.

In any case, it's important to keep in mind that nearly all of the living trust benefits your neighbor has told you about is not true.  More specifically, they do not lower your probate court fees, and any estate tax liabilty you have can be addressed just as easily in wills or by other means.

That's correct.  The probate court fee assessed on your estate is based on the size of your estate, which includes probate AND non-probate assets.  Contrary to common sense, it is not based on how many of your assets go through the probate process.

Additionally, wonderful things like credit shelter trusts, general support trusts for young or problematic beneficiaries (or young AND problematic beneficiaries!), special needs trusts, spendthrift trusts, etc. can all be incorporated into your wills; you don't necessarily need revocable living trusts to include these in your overall estate plan.

Please note that the concept of avoiding probate is nothing to scoff at!  The probate process can be (but isn't always) a lengthy process and an administrative headache.  Particularly if you have real estate located somewhere outside of Connecticut.

However, you should keep in mind that you probably have some assets that are already designed to avoid probate upon your death, regardless of whether you have a living trust or not, such as beneficiary-driven assets (e.g. life insurance, annuities and qualified retirement accounts) and joint assets.

So...before you sign up for a revocable living trust, which is typically double the cost of a simple will package, make sure your attorney walks you through your "probate exposure".

The all-important disclaimer:  This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

 

Strategic Planning and the Glastonbury Chamber

I recently wrapped up my two-year stint as Chairman of the Board of Directors for the Glastonbury Chamber of Commerce, capping off many enjoyable years as a member of the Chamber's leadership.

Here I am sharing my thoughts on long-term strategic planning for the Chamber.  I'm a big fan of the GCC and what it does for the local business community.  I'm confident that this is going to be a successful and dynamic organization for many years to come!

  

Gifting with a POA

Not surprisingly, I am not a big fan of fill-in-the-blank estate planning documents that you can get online or from an office store.  There are many reasons for that, but one big reason is that online forms for a durable power of attorney (POA) often do not offer a "gifting" provision.  Or they do offer such a provision but there is no advisor involved to explain the benefits (or occassional pitfalls) ofincluding such a provision in your POA.

The take-home lesson for today is this:  An agent under a POA cannot gift assets on your behalf without express authorization to do so in the POA document.

At first glance, this may not seem like a big deal.  But it certainly becomes a big deal if/when transferring assets out of your name for Medicaid or tax purposes becomes highly advisable.  

In the context of a Medicaid application, the State of Connecticut will most likely pretend that such a gift (made by a POA agent without authorization) didn't happen and treat the gifted asset as an "available asset" for the Medicaid applicant.

For real estate title purposes, if a POA agent transfers property without express authorization in the POA document then title to the property has not been effectively transferred.

These are just two examples of BIG problems that can occer when your POA document does not have adequate gifting language.

Of course, having said all of that, there can be good reasons to NOT include gifting powers in a POA, depending on the circumstances.  The point is that this particular POA issue should be discussed with an experienced estate planning and/or elder law attorney.

The all-important disclaimer:  This blog does not offer legal advice, nor does it create an attorney-client relationship.  If you need legal advice, consult with a lawyer instead of a blog.

Income Tax Deduction Limits for Long Term Care Insurance

I generally consider comprehensive long term care insurance as "Plan A" when it comes to protecting your assets from a future nursing home placement.  One benefit of this approach which is often overlooked is the ability to deduct the premium payments for income tax purposes...to a point.

Here are the 2014 income tax deduction limits for long term care insurance premiums:

Age 40 or less:     $370

Over 40 but not over 50:    $700

Over 50 but not over 60:    $1,400

Over 60 but not over 70:    $3,720

Over 70:    $4,660!

Is it a "Conservatorship" or a "Guardianship"?!

This has become a common question among my probate clients who have a loved one who can no longer manage his personal and/or financial affairs.  If the appropriate estate planning documents are not in place then the matter oftentimes ends up in the local probate court.  Then we need to know what to call the matter...a "conservatorship" or a "guardianship".

As you can see, it's a legal question.  This means, by definition, that it does not have a straight answer.

I will spare you all the legal citations.  The answer can best be summarized as follows:

*  If your loved one is under the age of 18 then it is a "guardianship".

*  If your loved one is intellectually disabled (the term "mentally retarded" is no longer appropriate) then it is a "guardianship", regardless of age.

*  If your loved one is over the age of 18 and NOT intellectually disabled, then it's a "conservatorship".  This is most often a case of dementia, Alzheimer's disease, bi-polar disorder, schizophrenia or a traumatic brain injury.

*  If your loved one is an adult and intellectually disabled but only needs help with financial management, then it's a "conservatorship of the estate".  Not a "guardianship".

Oh, and by the way...

A conservatorship that deals with financial matters is a "conservatorship of the estate".

A conservatorship that only addresses personal affiars is a "conservatorship of the person".

A guardianship that encompasses all of the individual's matters is a "plenary guardianship".

A guardianship that only covers some of the indiviual's affairs is a "limited guardianship".

I suppose the obvious follow-up question is why Connecticut law doesn't use just one term, either "conservatorship" or "guardianship", regardless of age or the reason why your loved one is incapable.

Answer:  Your guess is as good as mine!

 

Start Your Engines!

Keenan Law, LLC was a proud sponsor of the Pinewood Derby Races for Scout Pack 356 this past weekend at Nayaug Elementary School here in town.  The event, as always, was a LOT of fun.  

A big thank-you to one of the pack leaders, Jeff Duby, for putting together this rather slick car for the law practice.  I call it "Will on Wheels".  I think it came in dead-last in the sponsors' race, but no matter...sometimes speed isn't everything!