FAQ

NOTE: These are some frequently asked questions that we have received over the years and we thought visitors to my website might find them useful or informative. They are arranged as follows: Living Trust Questions, Care-Giving for the Elderly, Estate Taxation Questions, Estate and Financial Seminars (We tell you what we think you can get out of them), Elder Law and Estate Planning Attorneys.

Living Trust Questions:

Is there any specific amount of assets that a person should own before they need to have a living trust?

Not necessarily. In the past there was a prevalent view (probably misconceived, by the way) that a person needed to have at least $600,000 before they had to have a living trust. That number is irrelevant now anyway, but the point of it was to suggest that living trusts were only for the affluent. In fact, living trusts may be worthwhile for anyone who has the need and wish to avoid probate proceedings at his or her death. Living trusts are also very significant estate planning vehicles to provide for physically and mentally challenged men and women and for those who are disabled. And of course, it is also true that living trusts are important in estate planning for individuals with federally taxable estates.

Do I need a living trust if, instead, I have a Will and durable power of attorney?

The question is not so much whether you need a trust, as it is whether a trust is what will most accomplish your particular estate planning needs and goals. If you have a Will, then the assets you own or control at your death will pass to the persons you have named in that Will; but first they will have to pass through court proceedings known as probate. In fact, probate proceedings are not as terrible as various folks have portrayed them, but clearly probate has its disadvantages. A durable power of attorney automatically expires upon the death of the one who made it, so it is of no help in avoiding probate. Also, the Court can suspend a durable power of attorney in the event that the one who made it is determined by that Court to be incapacitated. This is not to say that durable powers of attorney are not important documents. I think that everyone should have one in which a close relative or trusted advisor such as his or her attorney has been named. A durable power of attorney is one of the most important planning tools available for estate planning.

If I have a living trust will I lose my Florida homestead exemption?

Not if the trust is properly drawn to allow the trustee to obtain the exemption; and if the trust allows the Grantor to live in the home for life. The key is that a reputable attorney who understands estate planning should draw a living trust. I have seen several of these form living trusts that can be bought cheaply through some newspaper or magazine ad. In my opinion they are not worthy of the money spent on them.

What are the income tax consequences of putting my assets into my name as trustee of my living trust?

When a living trust is created by someone for his/her/their benefit, it is considered by the I.R.S. to be a “Grantor” trust. The Grantor can continue to file income tax returns just the same as before (Although I usually suggest that a notation be made in the tax return to the effect that assets are held by the taxpayer in his/her/their living trust.) The same social security number can be and should be used. As such time as a successor trustee takes over a new tax identification number will be needed, unless the trust assets are distributed promptly to the heirs and beneficiaries.

Do I lose control of my assets when I put them in a living trust? I don’t want that to happen?

It won’t happen unless you specifically direct that it does. When you have a living trust created all you are doing is creating a relationship with yourself. That relationship with yourself allows that portion of your estate that is held in trust to avoid probate proceedings, may well also avoid the impact of the Florida Guardianship Law, can maintain the confidentiality of your estate and can speed up the process of getting your estate settled. You lose no control of your assets while you are alive and have your capacity, because you are the one who is managing them.

I do not have any children nor any close relatives. Who should I select as either the successor trustee of my trust if I decide to have one, or the personal representative of my estate if I have a will??

This problem arises frequently because many people do not have anyone whom they trust to comply with the provision of a trust or will regarding the distribution of estate assets. It is my opinion that there are several good choices, anyone of which may be to your advantage:

  1. Your attorney if he or she is an estate planning or elder law attorney.
  2. Banks with trust powers are often selected.
  3. Some stock brokerage firms have trust departments.
  4. Close friends—but here you need to be very, very cautious. First, keep in mind that you are not doing your friend an honor. You are imposing a burden of him or her that could be substantial. Second, it’s always good if a successor trustee or personal representative has business acumen. So it is my view that it’s not always a good idea to choose someone simply because you happen to like them and they are a friend.

Care-Giving for the Elderly:

What are the options available for taking care of my parents who are getting to the stage where they need care giving assistance?

There are too many to discuss fully in this section of my website. I can say, though, that what is most important to make sure that the person you wish to protect is being treated with maximum dignity and respect. If you are not able to take care of your parents or relatives, or if they just need assistance with daily care matters; I always advise that you select someone who can assess needs and abilities and who can then give you a reasonable approach to their care needs. Elder law attorneys are familiar with such needs and can be most helpful. Another good choice would be geriatric care managers who might work in coordination with the attorney. Licensed practical nurses (LPNs) are good sources of help. If necessary, assisted living facilities offer plenty of care without the atmosphere of a nursing home. And, of course, when it becomes necessary, a nursing home may be an option. Finally, you should really try to find a way to keep your parents at home for so long as is reasonably possible.

Estate Taxation:

Is life insurance taxable at death of the owner of the life insurance policy?

Generally, the proceeds of a life insurance policy paid as a result of the death of the insured are excluded from gross income for income tax purposes. However, life insurance proceeds may be included for purposes of calculating estate taxes  where the decedent retained some incident of ownership in the policy (such as the right to change the beneficiary).

What are the federal estate tax “numbers” in the event I have a federally taxable estate at the time of my death?
Year Exclusion
Amount
Max/Top
tax rate
2001 $675,000 55%
2002 $1 million 50%
2003 $1 million 49%
2004 $1.5 million 48%
2005 $1.5 million 47%
2006 $2 million 46%
2007 $2 million 45%
2008 $2 million 45%
2009 $3.5 million 45%
2010 Repealed
2011 $5 million 35%
2012 $5.12 million 35%
2013 $5.25 million[27] 40%
2014 $5.34 million[28] 40%
2015 $5.43 million[29] 40%
Does Florida have an estate tax or an inheritance tax?

Florida has an estate tax that is sometimes referred to as a “pick-up” tax. The way it works is that if—I said if—an estate owes a federal estate tax, then the state of Florida is entitled to receive an amount equal to the credit for the payment of state death taxes that is authorized by the Internal Revenue Code.

Estate & Financial Seminars:

What is your view of the typical estate planning seminar where we are given either a free lunch or free dinner and then the speaker discusses estate planning, trusts, probate, wills, incapacity planning, tax planning, Medicaid issues, and matters like that?

A. In my opinion a seminar is basically a place where folks can acquire general and I feel, limited information about issues such as estate planning, Medicaid, wills, trusts, probate, incapacity planning, tax planning, etc., etc. So if you go to one, keep that in mind. I think that in many if not most situations, a seminar is simply not the place to obtain specific information about your precise estate planning needs. The reason I feel that way is that I believe each estate or elder law planning matter presents different problems that need to be resolved in the way that is drawn for the particular person’s needs. Therefore, in order for an estate planning or elder law planning attorney, or for a competent financial planner to be able to give you good information about your particular estate planning or elder law planning needs, it is necessary that the attorney or financial planner spend sufficient time with you to obtain facts that are specific to you and your needs. Simply put, I do not believe that this can be accomplished in a seminar where the speaker may not know you, may never have met you, may have absolutely no idea of what your goals, needs and wishes are. Most of all, I do not think it can happen in a seminar where the speaker has never spoken to you, except perhaps to answer a question or two that you got to pose at the end of the speech. In my view, this is just plain bad planning.

Elder Law & Estate Planning Attorneys:

Is there any difference between an elder law attorney and an estate-planning attorney?

There could be. It depends on the expertise of the particular attorney. Many elder law attorneys are more comfortable with Medicaid matters and matters involving durable powers of attorney and the rights of the elderly in nursing homes. Others are also extremely expert in simple and complex estate planning for all persons as well as the elderly. Estate planning attorneys who are also elder law attorneys should be able to assist with simple estate planning or with very complex estate planning including disability planning and estate planning for the wealthy.

Should I see an estate planning attorney if I have strictly estate planning matters and should I see an elder law attorney if I have issues relating to growing older?

Please don’t look at it that way. An elder law attorney should be able to help you plan your estate, organize it and make sure that your assets are protected as best as the law allows. An estate planning attorney can frequently do the very same planning for you; but some estate planning attorneys may not focus their practice simply on the elderly; but on folks of any age. I do not consider myself to be strictly an elder law attorney although I do practice in that area. Rather, I consider myself to be an estate planning attorney and elder law attorney. Many elder law attorneys see themselves the same way.