Supplemental Needs Trust In NYC, Westchester, & The NY Metro Area

Supplemental Needs Trusts (sometimes called “Special Needs Trusts”) are special Trusts, authorized by the government, which allow disabled persons to protect their assets while they are receiving government benefits. For a disabled person who may have myriad needs such as a handicapped-accessible home, special clothing, transportation, food, furniture, and countless other accommodations, using up one’s assets on basic healthcare, and then becoming completely dependent on the government, can have devastating consequences for the person’s lifestyle. A Supplemental Needs Trust can prevent this disaster, and protect the disabled person’s standard of living.

There are two kinds of Supplemental Needs Trusts (SNTs). A First Party SNT is established for the benefit of a disabled person under the age of 65, using money belonging to the disabled person. A Third Party SNT is also established for the benefit of a disabled person, who can be any age, but the money in the trust comes from someone other than the disabled person. For example, a parent might establish such a trust for a child who is no longer a minor. Or, an aunt or uncle might establish a Third Party SNT for their disabled niece or nephew. There are important differences between these trusts, discussed below.

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First Party Supplemental Needs Trust

Disabled people under the age of 65 can gain special advantages through a First Party Supplemental Needs Trust. This type of trust can facilitate eligibility for Medicaid or other government benefits, or protect you from becoming ineligible.

For example, if you’re disabled and have received a sum of money through a personal injury lawsuit, an inheritance, or a gift, your receipt of these funds can and often does result in the loss of your government benefits. Without an asset protection strategy, Medicaid will require you to use up these assets to pay for your care.

Compounding this difficulty, you’ll lose any Supplemental Security Income (SSI) you may be receiving, until the entire amount is spent down to the SSI eligibility limit, currently $2,000 in assets. Transferring the money to someone else doesn’t solve the problem either – if you do, you can lose your SSI for up to three years.

If that happens, instead of your cash windfall providing a lifelong improvement in your financial situation and quality of life, you now have significant out-of-pocket medical expenses Medicaid used to cover, and you’ve lost income that you used to receive.

Here’s a trust strategy that provides a solution, if you have or are about to receive assets that will make you ineligible. If you are under 65 years of age and you meet additional criteria, a First Party Supplemental Needs Trust will probably be the best solution. With this type of Supplemental Needs trust, your own assets are used to fund the trust. By federal law, this structure will protect your assets without jeopardizing Medicaid or SSI benefits.

One condition you’ll have to accept is that these are “pay back” trusts. This means that, if anything is left in the trust after you pass on, Medicaid will be reimbursed for the cost of your care from the remaining balance.

A First Party Supplemental Needs Trust can be established by the disabled person, or by a parent, grandparent, guardian or a court.

Third Party Supplemental Needs Trust

If someone other than the disabled person (a third party) wants to help or benefit the disabled person, it would be prudent for the third party to establish a Third Party Supplemental Needs Trust, rather than to make a direct gift or bequest. If you are disabled, and a relative or other person wants to provide money for your benefit, whether as an inheritance or as a gift, then the funds should go into a trust of this kind, rather than to you directly. This will permit you to keep your government benefits.

With this supplemental benefits trust, your age doesn’t matter, and there’s no “pay back” provision. Any person who wants to assist you financially can create this type of trust while he or she is alive, or have the trust become operative after he or she dies according to the terms of a Will. If the creator of the trust is your spouse, he or she must set it up in a Will.

Additionally, just as with most of the other Special Needs Trust vehicles already mentioned, a Third Party Supplemental Needs Trust gives you excellent protection against future creditors, not just Medicaid. If you end up in a lawsuit, the money is more effectively sheltered than it would be outside a trust, giving you greater peace of mind about your financial security.

Contact a Supplemental Needs Trust and Special Needs Trust Attorney at Lamson & Cutner to learn more!

Trusts in Elder Law and Estate Planning

Trusts are among the main workhorses of Elder Law and estate planning, and are some of its most powerful and valuable tools. They serve a number of useful purposes. Most people understand the concept of a Will, but a Trust can serve the identical function as a Will without its inconveniences, and provide significant additional advantages as well.

The grantor names the “trustee,” to hold and manage assets on behalf of a beneficiary or beneficiaries. The trust itself is legally a “person,” and is the owner of the assets that the grantor (or others) transfer to it.

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If you create a trust and place your assets into your trust, you might not need a Will at all. You can designate in the trust agreement what happens to your assets upon your death, in the same way that you would in your Will.

Assets that are in your name alone at the time of your death are subject to your Will, and are required to go through a court process called “probate” before they can be distributed. Probate is public, and often expensive, frustrating, uncertain and time-consuming.

A benefit of all trusts is that assets in the trust are not subject to probate. Distributions can be made quickly and efficiently, the process is private, and far less costly and time-consuming than a probate proceeding.

Different kinds of trusts have different requirements and benefits, and different levels of control by the grantor. Revocable trusts are used for estate planning, avoiding probate, and maintaining privacy. Irrevocable trusts also avoid probate, but at the same time they afford asset protection and facilitate eligibility for government benefit programs such as Medicaid.

Supplemental Needs Trusts, also known as Special Needs Trusts, provide support for persons with disabilities without compromising their eligibility for government benefit programs.

The first step in creating a trust generally involves meeting with a trust lawyer who will review your assets, income, goals, and objectives. Then, he or she will create the trust agreement and help you “fund” the trust. The experienced attorneys at Lamson & Cutner have the knowledge and skills in elder law trusts to help you preserve your assets and income to the greatest extent possible, while ensuring efficient and prompt distribution of your assets to your chosen beneficiaries upon your death.

The types of trusts for the elderly typically used in Elder Law planning include:

Every case is individual and unique, and you’ll need proper advice on what trust configuration will deliver the maximum advantage for you. Different trust strategies apply to various economic and family situations, and often depend on whether you need, or want to plan against the risk of needing, home care or nursing facility care. Trusts are the most effective and prudent way to hold and protect your assets, and they’re fully authorized for this purpose under Federal and New York State laws.

If you already have a trust created for estate planning purposes, your trust should be evaluated by an Elder Law attorney. Make sure that you have focused on the serious financial risks that you may face, in particular the potential need for long-term care at some point. The goal of our services is always to put you in the best position possible to maintain your lifestyle, and to protect your and your family’s financial future.

When you need a trust attorney, choose the caring, experienced legal professionals at Lamson & Cutner. With offices in both NYC and Westchester County, we are conveniently located and prepared to help you create or update elder law trusts. You can speak to us from the comfort of your own home, if you prefer, via Zoom or conference call. To learn more about your options or to schedule a consultation with an estate planning attorney or Medicaid trust attorney, contact us today.

Revocable Trust

Creating a revocable trust, also called a “living trust,” is a strategy that is frequently used for estate planning. It is often appealing because during the Grantor’s lifetime, he or she can be the Trustee, and retain full control over the assets in the trust. Once the Grantor passes away, any assets that remain in the revocable trust are distributed under the terms of the trust, and are not subject to probate or administration in court.

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Probate is the process of administering and distributing the assets that are in the name of a deceased person who has a Will. The process has numerous drawbacks. First, it is a court proceeding, so whoever is named as the Executor in the Will must petition the court and obtain a court order before he or she can act on behalf of the estate. Heirs and potential heirs are required to be located, notified, and given a chance to object to the Will. When there is no Will, the process is called Administration. Administration is a similar court proceeding, where the beneficiaries are prescribed by New York law rather than by a Will.

Both processes are subject to the timing of the court and the judge, which has always been uncertain, and has become even more so since the Covid pandemic. They are also public, so anyone can learn about the decedent’s assets and heirs. Finally and not insignificantly, all of these steps mean that either procedure is time-consuming and costly.

For all these reasons, avoiding probate or administration is a worthwhile objective, for which the revocable trust works well. However, a revocable trust does not work if you wish to become eligible for government benefit programs such as Medicaid.

A revocable trust can be revoked or amended at the option of the Grantor – in other words, the Grantor still has control over the assets and has the ability to withdraw any or all of the assets at any time. The assets in such a trust are considered “resources” by Medicaid, and would be required to be used to pay for the person’s medical or disability needs. That means that the Grantor will not be eligible for Medicaid until the assets in the revocable trust are almost completely depleted.

To become eligible for Medicaid, a Grantor will need to establish a properly structured, irrevocable trust. This means that the Grantor is irrevocably (permanently) giving up ownership of and control over the assets. The Trustee(s) of the trust can be the grantor’s children, for example, who could choose to pay for the Grantor’s needs – but the Grantor does not have the ability to require them to do so.

If you already have a revocable trust created for estate planning purposes, your trust should be evaluated by an Elder Law attorney. These trusts work well if the only goal is estate planning. However, they are not asset protection trusts, and the assets held in such trusts will be counted as your own resources for Medicaid eligibility purposes. A consultation will help you to understand whether a revocable or an irrevocable trust is the appropriate instrument to achieve your goals. Contact us now to schedule a consultation!

Laws for those with Paws: Estate Planning for Your Four-Legged Family Member

It is no secret that dogs and cats have seen their status elevate in the last few decades. Pets have transitioned from mere companions to become beloved members of the family. Over 100 million households have pets across the United States. An astounding 84% of these pet owners refer to themselves as the “mommies and daddies” of their pets.

Regardless of whether you fall into the category of a self-professed pet parent or are simply a proud pet owner, it is important to consider what would happen to your beloved fluffy (or feathery, scaly, or other!) friend, should you pre-decease them.

Across the nation, state legislatures have demonstrated their support for advance planning for our pets. As of 2021, every state has passed a law allowing for the valid creation of Pet Trusts. A Pet Trust is a legal document that provides a plan for the care and maintenance of your pet should you become incapacitated or pre-decease your pet.

Download our Pet Trust Handout

A Pet Trust functions similarly to any other trust a person can create. A Grantor, usually the owner of the pet(s), will enter into a trust agreement with a Trustee. The Trustee assumes the responsibility of ensuring that the trust terms are followed.

The Grantor may leave specific instructions for the Trustee within the trust agreement. These instructions can name a caretaker for your pet and the veterinarian your pet will continue to visit, among other maintenance requests. Importantly, the Trust will own assets you designate to finance the care of your pet until his or her death.

The Trust must also include a provision directing the disposition of the remaining funds at the end of your pet’s life. Popular choices include either to a charity in support of animal welfare, or to the person who took care of your pet after your passing.

Not only does a Pet Trust provide funding and instructions for your pet’s care, but it will also enable you to avoid what could potentially be an adverse Court proceeding. Provisions made for pets in Last Wills and Testaments are subject to review, and can be determined to be invalid by the Surrogate’s Court when the Will is probated. In some cases, gifts for the benefit of pets have been deemed “too lavish.”

Even if the pet provisions in the Will are found to be valid, the funding needed to care for your pet will not be available until the Court has ruled and given authority to the Executor. This can take months or even years.

With a Pet Trust, in contrast, there is no court proceeding. Once you pass away, the Trustee can move immediately to carry out the instructions provided in the trust agreement. This will ensure seamless care for your pet.

Pets are family, too. Don’t forget to plan for their futures, as they surely will never forget you!

7 Key Steps to a Successful Estate Plan

Do Elder Law Attorneys do Estate Planning and Estate Administration

If you’re thinking about estate planning, good for you! Your goal is to make sure your assets are distributed according to your wishes. Here’s a list of the steps you need to take to ensure that happens. Note that a successful estate plan will incorporate measures to protect your assets while you’re alive against the ruinous costs of long-term care. Estate attorneys and Elder Law attorneys can help you achieve this vital objective.

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Step 1: Execute Advance Directives

“Advance Directives” is a legal term for describing the Power of Attorney (“POA”), the Health Care Proxy (“HCP”), and other documents used to authorize and guide others who may need to take future action on your behalf. Your estate attorney or Elder Law attorney can guide you regarding these documents.

Power of Attorney:

This document names an agent to act on your behalf, and defines his or her scope of authority, which can be narrow or broad. For example, it can allow your agent to pay your bills, pick up your mail, or assist you with planning and obtaining long-term care.

Key aspects of the POA:

It takes effect as soon as you sign it
Your agent will usually be required to show third parties the original POA in order to act for you
Your agent is required at all times to act in your best interest
You can revoke it at any time
In most cases, a POA (and a HCP) will avoid the need for guardianship, which can be expensive, frustrating, and uncertain.
If you are getting older, but don’t need someone to act for you at present, you could execute a Power of Attorney and hold onto the original(s). You could inform the agent where you keep the POA, so that in case of an emergency, the agent could retrieve the original and begin to act on your behalf at that time.

Health Care Proxy:

This document assigns a person to act as your agent on matters of health and medical care.

Key aspects of the Health Care Proxy:

Your Health Care Agent has authority only if you are unable to express your wishes yourself.
In New York, only one agent is permitted. However, you can name an alternate agent should the primary agent be unable to continue in that role.
It is crucial for your Health Care Agent to know your wishes. Their responsibility is to express your wishes, even if your wishes differ from their own.

Living Will:

The purpose of the Living Will is to express your wishes in writing regarding your health care. While the concept is appealing, we find that it is difficult to implement without relying on language that is often ambiguous and subject to differing interpretations and potential dispute. For this reason, we advise clients to execute a Health Care Proxy, and make their wishes known to their Health Care Agent in a less formal way.

Step 2: Review already-existing beneficiary designations

Many people are not aware of the variety of means by which their assets can pass to their beneficiaries upon their death. In advising clients on their estate plans, we usually look for methods that do not require a court proceeding, such as probate or administration. Here are a few examples:

If you own your house with your husband or child as Joint Tenants, and you pass away, the house immediately belongs to the surviving owner 100%.
The same thing goes for bank accounts. If you add your child as a signer on your bank account, and you pass away, the child becomes the 100% owner.
Retirement accounts: You are normally required to name a beneficiary on your retirement accounts. When you pass away, the designated beneficiary automatically inherits the account. From time to time, it is a good idea to review your beneficiary designations to be sure that they reflect your current intentions.

Step 3: Focus on the need to protect yourself now, so that you will have an estate later

It’s worrisome to hear, but true: paying for long-term care has wiped out the life’s savings of millions of people. You’ll want to make sure that you have protected yourself and your estate against this significant risk.

About 70% of our population over the age of 65 ends up needing long-term care at some point in their lives. The cost of long-term care is extremely high, especially in the New York City Metropolitan Area and surrounding counties.

This devastating expense does not have to ruin your estate plan, if you take action. Estate planning can and does go hand in hand with long-term care planning.

Step 4: Create a plan that integrates a Long-Term Care Plan with an Estate Plan

New York Elder Law attorneys are uniquely positioned to help you create a cost-effective, integrated plan to protect you and your estate against the depletion of your assets if you should need long-term care.

It only makes sense to consider creating such a plan, to protect yourself and your family. Unless you are very wealthy, ignoring the risk, and hoping it won’t happen to you, is a formula for disaster. Remember, 7 out of 10 people will need some kind of long-term care at some point, and 4 out of 10 will need nursing home care.

Once you have made a long-term care plan, you can move on to planning for the distribution of your assets after you have passed away. In most cases, a Trust can serve both purposes and more. However, a Will may still be advisable, since, for example, assets may inadvertently remain outside the Trust.

Step 5: Execute Your Documents

None of us want to think about death or disability. Perhaps because Wills, Trusts, Powers of Attorney, Health Care Proxies, and related documents are reminders of mortality, many people delay or find it difficult to take the final step of executing their documents.

If you have been delaying, push yourself to get it done and execute your documents. You’ll gain tremendous peace of mind.

Step 6: If you have a Trust – Fund it

A well-designed plan often involves the creation of a Trust. Many clients come to us for advice after having created estate planning documents with another law firm. If they have a Trust, we will ask: “What’s in your Trust?” Answer: Silence. There is nothing in the Trust.

An unfunded Trust is a useless document, and a complete waste of time and money. A Trust governs only the assets that it owns.

If you are going to create a Trust, you’ll want to work with a law firm that will do more than write the Trust Agreement. Make sure they will advise and assist you with transferring financial assets, deeds, co-op apartments, or other valuable property that belongs in your Trust.

Step 7: Take Action Now

Estate planning firms and Elder Law firms like Lamson & Cutner do this kind of work every day. Their experience can help you to navigate these decisions and steps smoothly and efficiently. Be aware that estate planning firms do not necessarily focus on your long-term care and protecting your assets while you are alive.

Don’t wait for a crisis to occur before you take action – it’s far easier to make decisions when you are in a calm frame of mind. Timing can be important, so don’t delay.

New York has a New Law Regarding the Power of Attorney

The Power of Attorney (“POA”) is an important document most people should have, particularly seniors. The POA gives authority to an agent you choose to act on your behalf with regard to the matters and issues specified in the document. The Power of Attorney form mandated by New York State in 2010 was known as the “Short Form,” although it was anything but short. Lawyers (and certainly their clients) never liked it, and sought for years to have it changed and simplified.

Finally, these efforts paid off, and Governor Cuomo has signed legislation that will make the new form of POA more user-friendly.

The appropriate scope of authority is key for a POA. You don’t want to have a situation where your agent cannot take actions that are in your best interest. These actions might include paying your bills, protecting your assets, or applying for Medicaid on your behalf.

Download our Advance Directives Handout

The POA form that has been in effect for the past 10 years is very long and complicated, particularly if you need or want modifications that expand the scope of authority beyond the so-called “standard powers.” (In the opinion of this firm, the standard powers are much too limited in most cases.)

The new law and the new, simpler form, take effect in June 2021. Don’t worry if you already have a good POA; you won’t be obligated to sign a new one.

Here are some highlights from the new law:

The new form will be a single, shorter document, instead of the “Short Form” and the “Statutory Gifts Rider.”
Language that substantially conforms to the prescribed statutory language will be sufficient to make the POA valid. Insignificant mistakes in wording, formatting, punctuation, and the like, will not affect the validity of the document. A POA that has been properly signed will have a presumption of validity.
A Principal who is physically incapable of signing and initialing the document can have another person do it at his or her direction.
Banks and financial institutions that refuse to accept a valid POA will be subject to penalties and paying attorney’s fees.

Although some people are tempted to prepare their own POA’s by copying forms found online or elsewhere, this decision can lead to serious and unfortunate consequences. A POA with a wide scope of authority is crucial to ensure that any and all steps an agent may need to take are permitted. The POA is one of many instances where the advice of a qualified attorney and a comprehensive document are key to ensuring that the wishes of the person naming an agent can be carried out.

Lamson & Cutner has put a great deal of time, effort, and thought into the modifications we include and recommend for our clients. We’ll be happy to advise you on your POA.

Special Needs Care for the Disabled Individual or Child New York

In many cases, disabled individuals who were hurt in an accident or were victims of medical malpractice receive substantial sums as a result of personal injury lawsuits. In other instances, people with disabilities are beneficiaries of inheritances from relatives, designated for their future care. These events may have a substantial negative impact on Medicaid eligibility if you do not plan for them properly.

If you're disabled, here's how to maximize your Medicaid benefits while holding on to your money, income and assets.

If you're disabled, getting even a modest amount of money can jeopardize your Medicaid benefits and Supplemental Security Income. The disability lawyers at Lamson & Cutner have specific proven strategies for protecting these government benefits, while permitting you to enjoy the use of any sum you may receive.

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The danger for the disabled.

If you receive proceeds from a lawsuit, inheritance or gift, without proper planning Medicaid will terminate your benefits. You'll lose your Supplemental Security Income from the Social Security Administration for the same reason. You won't get them back until almost all of the money is dissipated. For many, losing Medicaid and SSI while they spend essentially every penny of the money they won in a lawsuit or received as an inheritance or gift, and then having to re-apply for both programs, is very destabilizing.

For Supplemental Security Income, you must have little or no income to qualify, and less than $2,000 in assets if you're single. For Medicaid, a single individual can have no more than $845 in income in 2016, and only $14,850 or less in assets to be eligible.

This means that money that could have been completely devoted to supplementing your care and improving your lifestyle, now ends up being quickly exhausted paying for your long-term care. You have to pay expenses Medicaid used to cover, as well as losing Supplemental Security Income you'd otherwise have.

Financial protection for the disabled person.

Attorneys at Lamson & Cutner have successfully used the following time-tested strategy to protect income and financial assets, and preserve Medicaid and SSI elegibility for many disabled clients. Here's how it works:

If you're under 65 years old, the law allows the creation of a "first party" Supplemental Needs Trust, which is established and funded with your own money. A Supplemental Needs Trust is a legal structure that's formed to protect the assets of a disabled person, without jeopardizing his or her Medicaid or Supplement Security Income benefits. These are referred to as "pay back" trusts, meaning that after you pass on, whatever is left over in the trust is first used to reimburse Medicaid. You might also hear it referred to as a Self Settled Trust.

If you're over 65, other special protective trusts can be used for Medicaid planning purposes, depending on your unique circumstances. These can also deliver excellent results.

If you are to receive money through an inheritance or a gift, a variation of the strategy works even better. The person who wants to provide money for you sets up a "third party" Supplemental Needs Trust to receive and secure the funds from New York Medicaid eligibility requirements, and Social Security regulations. This kind of SNT will enable you to avoid losing your benefits, which would occur if the money the money went to you directly. In this scenario, your age does not matter, and there is no "pay back" provision.

Another advantage of the third party Supplemental Needs Trust is that a person who may wish to give you money now can set it up while they're alive, or leave it to you under their Last Will and Testament. It's a flexible asset protection tool.

Many of the legal and financial strategies for assisting a disabled person are drawn from the practice of Elder Law. It has a vast array of methods for guarding money, income and assets for those with debilitating illnesses and injuries, and for providing future financial support. A Lamson & Cutner attorney can give you more information on these planning techniques for disabled persons.

The benefits to you.

These legal procedures allow you to continue to qualify under Medicaid and Social Security asset and income limits. Legally a trust is a distinct entity, considered to be a separate "person" in effect. So the money is not regarded as being yours. You become exempt from rules that would force you to pay your own expenses, which would normally be covered by government benefits.

That means Medicaid can't come knocking on your door, asking you to contribute the money you received to the cost of your own care. You remain eligible for your existing benefits, and protect the additional money you've received for your long-term financial security.

Additionally, a trust gives you protection from future creditors, not just Medicaid. If you are the target of a lawsuit concerning a claim arising after the trust was created, any money in it is sheltered and you don't have to worry about losing your financial security.

Protecting the future of a special needs child...

Any family with a special needs child can receive major benefits from effective disability planning. Severe disabilities such as autism can impose major financial burdens on parents. A major concern is the question of who will care for the child when the mother and father are gone. Elder Law, Medicaid and estate planning techniques can be critical to the child's future financial, physical and emotional well-being as an adult.

Here's an example involving a Lamson & Cutner Elder Law client:

In a case Lamson & Cutner handled involving disability, a woman was in a nursing home on Medicaid, and she unexpectedly received a $1,000,000 inheritance from her sister. A family friend immediately contacted the firm, and a strategy was devised to protect the woman from losing her Medicaid benefits, and to preserve the money for the care of her disabled son. In the absence of these measures, a significant portion of the $1,000,000 inheritance would have had to be contributed towards the payment of the mother's nursing home care. The family received a major financial benefit, won through effective legal representation.

In other instances, a disabled person's circumstances will involve more extensive Medicaid or disability planning procedures. Here's another actual case:

The firm represented a single, middle-aged man suffering from traumatic brain injury. Lamson & Cutner moved his assets to a protective trust, and shifted his excess income to a pooled income trust, so that it could still be used to pay his bills. This enabled him to receive Medicaid benefits, and to be placed on the Traumatic Brain Injury Waiver Program, allowing him to get extra services for his special needs.

You can find out more about these asset protection strategies in Lamson & Cutner's new Special Report, 25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs. It's filled with proven approaches, and it's free. Or, simply Contact Us now.

Elder Law and Estate Planning

This is Strategy #18 from Lamson & Cutner’s publication, “25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs.” Click here to see the other strategies.

Elder law and estate planning go together. Everyone has heard stories of the havoc that is caused when someone with money and property dies without a Will. It's a reality lawyers see all the time. Not having a Will that clearly expresses your intentions and divides your assets can be a recipe for family trouble.

Effective Elder Law planning can save all of your cash and assets if you plan early enough, or a substantial portion even if planning is done at the last minute. Keep this in mind: if you're on Medicaid, it will cover all of your medical and health expenses whether you're getting home or nursing facility care. So it's likely that you'll have enough money to maintain your quality-of-life, and still have something to leave to family members after you pass on.

Download our Estate Planning Handout

Good planning anticipates that scenario, and includes specific measures to address distribution of your resources when you die. Since trusts are a central feature in many plans, you gain three special benefits they offer, which simple Wills do not provide.

First, when you die and all your cash, investments, or real property are in certain kinds of trusts, these assets are not included in the probate of your estate. Probate is an involved legal process of collecting, accounting for and distributing a person's money and property after death. It is time-consuming and expensive. Your children or other beneficiaries might not get the proceeds for months, or even years. With a trust, the trustee can make distributions quickly after you pass on. It's very clean and efficient.

Second, if there are disgruntled relatives who disagree with your bequests and wish to pursue litigation, trusts afford greater protection than Wills. They are harder to attack and dismantle. One of the main reasons that most trusts are a strong shield against future lawsuits is because the money or assets in them do not belong to you or the trustee. They're owned by the trust, which legally is a separate and distinct entity.

Attorneys for the unhappy parties will advise them of this, and so there's less likely to be a court battle. That means your wishes will be carried out without contest, and your family will avoid a dispute that could lead to an all out war.

Third, trusts offer more privacy than Wills. Your wishes can be kept secret, and carried out without knowledge of uninvolved parties. That's because in most cases you are not required to file trust documents with the courts, unless you have a Pourover Will that transfers your probate estate to the trust.

When planning involves a married couple, in most cases it’s critical to do estate planning for the wife or husband who is well, at the same time Medicaid benefits are being sought for the spouse who is ill. There’s a common misconception that arises in these scenarios, which is vital to understand. It involves a concept called "Spousal Refusal."

By law, each spouse has an obligation of financial support for the other. This allows Medicaid to require the well or "community" spouse to contribute to the cost of care from available assets. Legally however, Medicaid cannot deny benefits or halt the application process because a husband or wife refuses to monetarily provide for his or her ill spouse. This is why, from an Elder Law planning perspective, a legal document referred to as a "Spousal Refusal" is employed. By signing it and refusing to contribute to your spouse's care, it permits the application process to continue so that your wife or husband can qualify for benefits. At the same time, it also keeps your assets intact, so that estate planning strategies can be initiated to protect them.

Signing a Spousal Refusal doesn't mean you're automatically exempt from economic support of your husband or wife. It just means Medicaid can't deny benefits to your spouse because you've refused support. In these cases, Medicaid will pursue legal remedies to enforce your obligation and recoup the cost of benefits, to the extent possible. Fortunately, with effective estate planning, it’s possible to retain the benefits of a significant portion of your assets, or even all of them if you plan early enough.

It is also possible to negotiate with Medicaid in most of these instances, since they'd rather come to a reasonable settlement than initiate legal proceedings. Needless to say, in negotiations with a government agency, you are better off having them handled by experienced Elder Law legal professionals than going it alone.

For these reasons, it's wise to choose an Elder Law firm that has an estate lawyer on board. Inquire if it does before you retain one.

25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs

Should I be concerned about avoiding probate?

Avoiding probate is probably not the most important concern for seniors, but it is nevertheless a worthwhile goal and is generally easily achievable. Probate is a court proceeding. It can be frustrating, expensive and subject to delays of all kinds. Also, probate sometimes results in a prolonged dispute among disgruntled family members or others, which increases expenses and delays distributions to beneficiaries.

Lamson & Cutner's attorneys can help you with your Elder Law plan and your estate plan at the same time. Usually, the same strategies and legal documents serve both purposes.

Download our Estate Planning Handout

At what age should I start planning for my long-term care?

There are no hard and fast guidelines – because it depends on the state of your health as well as your age. The most important thing is to inform yourself about the risks you face and the options and solutions available to you. When you are in your 60’s, it is certainly a good time to become informed, and to take some modest initial steps, such as obtaining a good power of attorney and health care proxy. Probably by the time you are in your 70’s, you should be taking steps to protect your assets against the ruinous costs of long-term care.

Download our Estate Planning Handout

For effective planning, if you are making any transfers of your assets now, the five-year look back period must be taken into account.
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