Regardless of the size of your estate or your net worth, if you want to protect your assets and provide for the future of your loved ones, you need an estate plan. There is no “one-size-fits-all” estate plan. At J Nichols Law, we tailor our services to you based on your situation and your objectives. We assist with a variety of estate planning documents, including the following:
A Will is a legal document that determines what happens to your assets after you die. In your Will, you appoint a person called an Executor who will be in charge of carrying out your wishes as set forth in your Will. Your Will can appoint a guardian over your minor children and provide for trusts to be set up for children or other loved ones to manage assets for the benefit of those loved ones. As important as it is to carefully consider what you provide for in your Will, it is even more important that the correct legal procedures and formalities are followed to make your Will effective and ensure that it will achieve your desired goals.
POWERS OF ATTORNEY
Powers of attorney are legal documents that appoint agents with authority to act on your behalf. With a Medical Power of Attorney, also referred to as a Healthcare Power of Attorney, you can appoint one or more agents to make medical decisions for you in the event you are unable to make medical decisions for yourself. With a Statutory Durable Power of Attorney, sometimes referred to as a Financial Power of Attorney, you can appoint one or more agents with authority to act on your behalf with regard to your money and your assets, including real estate. These documents are important to have in case you later find yourself in a position where you are physically or mentally incapacitated. Importantly, these documents need to be in place before a person becomes mentally incapacitated because the person has to be able to understand the legal effect of the document at the time he or she signs it. If you do not have powers of attorney in place and no longer have capacity to execute a power of attorney, it may become necessary for a Court to appoint a Guardian to make decisions for you and to manage your assets.
DECLARATION OF GUARDIAN
A Declaration of Appointment of Guardian for Children is a document that appoints one or more persons to serve as Guardian of your children in the event you die before your children reach age 18. You can appoint one person or a married couple to serve as Guardian of the Person to make decisions regarding where the child will live and otherwise take care of the child physically, and a person or married couple to serve as Guardian of the Estate to manage assets for the benefit of the child. The same person or married couple can serve as both Guardian of the Person and Estate.
A Declaration of Guardian in the Event of Later Incapacity is a document in which you can designate a Guardian of the Person and Estate for you in the event of your later incapacity. If you have powers of attorney in place, you generally will not need a guardian to be appointed even if you later become incapacitated, but a situation could arise in which a Court would still require appointment of a guardian. In this case, if you have already designated the person(s) you wish to serve as guardian in a Declaration of Guardian, the court will honor your wishes, provided that the person(s) you designated otherwise qualifies to serve as your guardian.
Trusts are an important part of many estate plans. Trusts are used to pass assets for the benefit of a person without actually giving the asset to the person directly. A trust designates a person to serve as Trustee to manage assets left to the trust and make distributions from the trust assets for the benefit of one or more beneficiaries of the trust. There are many different types of trusts and many different purposes for leaving assets in trust. At J Nichols Law, we regularly form many types of trusts for our clients, including retirement benefits trusts and special needs trusts.
RETIREMENT BENEFITS TRUSTS
A retirement benefits trust is a special type of trust designed to receive retirement benefits. These trusts are used when a person has one or more retirement accounts and does not wish to leave the retirement account(s) directly to one or more particular beneficiaries for whatever reason (perhaps the beneficiary has creditors you want to protect the assets from, is not good at managing money, or the account holder wants to ensure any remaining assets after the beneficiary dies pass to another set of beneficiaries), but also does not want to cause the trust to incur negative tax consequences. Special provisions are needed in the trust agreement to avoid negative tax consequences. It is imperative to have an attorney that is well versed in this area of the law prepare the trust agreement to insure it is structured properly to avoid negative tax consequences while taking advantage of the trust structure. This is especially true since the passing of the Setting Every Community Up for Retirement Enhancement Act (the SECURE Act) which significantly changed the rules and the landscape for using and drafting these trusts.
SPECIAL NEEDS TRUSTS
For a person to qualify to receive certain governmental benefits, such as Medicaid or SSI, in addition to having a special needs condition, the person must have less than a certain amount of assets and/or receive less than a certain amount of income each month. A special needs trust, also known as a supplemental needs trust, is a type of trust designed to allow persons receiving, or otherwise eligible to receive, governmental benefits to benefit from assets in the trust and continue to qualify to receive governmental benefits. The two main branches of special needs trusts are first party special needs trusts and third-party special needs trusts. First party special needs trusts are typically set up when a person with special needs receives a settlement or award from a lawsuit. Third party special needs trusts are more common. These trusts are set up when a person wishes to give or leave funds or other assets to benefit a person with special needs without disqualifying the person from receiving support from governmental benefits.
It is very important to structure special needs trusts properly so as not to unintentionally cause a beneficiary to lose his or her medical or governmental benefits. Without the specific provisions needed to meet the special needs trust criteria, the assets in a trust will be considered the beneficiary’s personal assets rather than the trust’s assets and render the beneficiary ineligible for many government programs.
A Warranty Deed with Enhanced Reservation of Life Estate, also known as a Ladybird Deed, is a special type of deed that conveys an interest in property to one or more persons subject to an “enhanced” life estate retained by the person conveying the property. This is a way that a person can leave real property to pass to a loved one after the person has died without the loved one having to engage in probate proceedings to obtain title to the property. The person conveying the property as the grantor retains all rights to the property while the grantor is living, including the right to revoke the Ladybird Deed should the grantor decide to leave the property to someone else. The Ladybird Deed is also used as a Medicaid planning tool to prevent a homestead owned by a person receiving long-term care Medicaid benefits from being sold and proceeds used to pay the government.
LET’S DISCUSS YOUR OPTIONS
Let an experienced estate planning attorney listen to you as you describe your facts and your goals and help you decide what option best meets your objectives. Call us today at 409-257-7878 to schedule a consultation. You can also contact us by clicking here.