9 (Potential) Problems with Your Trust

All trusts should be reviewed every few years to make sure that they are up-to-date with the law and meet your current goals. Following is a checklist of trust features you can review yourself. But be aware that these only refer to revocable "living" trusts, not to irrevocable trusts.

1. Do you have the right successor trustees? Typically, you will be the trustee of your own revocable trust with your spouse as co-trustee (if you're married). Trusts should name one or more successors in the event the original trustee or trustees are unable to serve. Make sure that you still want the successors you originally named. Also, do you want them to come on and begin acting as trustee now? And if you and your spouse are co-trustees, do you want the successor or successors to step in when the first of you becomes incapacitated or passes away, or not until neither of you can serve?

2. Who can remove trustees? You can always change the trustees of your revocable trust. But do you want your heirs to have this right after you pass away? This can often avoid problems if there are communication problems or disagreements with the trustee. On the other hand, you might want to limit this to some extent to make sure heirs aren't just looking for a trustee to do whatever they say.

3. Can your spouse change the ultimate distribution of trust assets after you have passed away? Many trusts give surviving spouses a so-called power of appointment to redirect trust assets at their death. This can be important to provide for flexibility to respond to changes in family circumstances. However, this usually doesn't make sense in second marriages. In a Massachusetts court case, the second wife used her power to give everything to her children instead of to the original beneficiaries: her deceased husband's children. Even in the case of a first marriage, removing this provision from the trust can provide protection for children and grandchildren in case the surviving spouse remarries and becomes estranged from his family.

4. Does your trust protect your children and grandchildren from lawsuits and divorce? You have the option of drafting your trust to continue for your children's lives to provide creditor and divorce protection.

5. Have you funded your trust? Attorneys often see great trust documents that don't do all that's intended because the clients' assets are still titled in the clients' names. You can avoid probate and make sure that the estate tax protections in your trust operate as planned through retitling assets in the name of the trust.

6. Who is named as beneficiary of your retirement plans and other investments? Often clients spend hours with their attorneys crafting an estate plan to match their goals and then circumvent it through naming individuals as beneficiaries of retirement plans and investment accounts. Make sure these are all coordinated.

7. At what age will children and grandchildren receive their inheritance? Most trusts provide that funds will remain in trust until those inheriting reach a certain age, often 21 or 25. But you can set any age you choose and even permit them to withdraw a portion of the trust at set ages, say half at 25 and half at 30, or a third each at 25, 30 and 35. This doesn't mean that those inheriting can't benefit from the trust assets in the meantime, but only that distribution decisions are made by the trustees until children and grandchildren have more financial experience.

8. Does your trust have provisions providing for maximum tax deferral if it is named the beneficiary of a retirement plan? While you may choose to have your retirement plans go directly to your heirs -- and often this is the simplest approach -- if the plans are going to your trust, there must be special provisions to stretch out the annual required distributions for as long as possible.

9. Is your trust up-to-date for estate tax purposes? Congress and many states have changed the estate tax laws several times in recent years. If your trust is more than five years old, or if you lived in a different state when it was drafted, it should be reviewed by an estate planning attorney to make certain it is still current.

You can check many of these questions on your own. In fact, it's a useful exercise to make sure that you understand what is in your trust. Other issues, particularly those related to tax issues, will require consulting with an estate planning professional. 

Contact us

Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

The Film 'I Care a Lot' Highlights Vulnerabilities in the Guardianship System

Netflix’s popular new movie, I Care a Lot, may be far-fetched in a lot of ways, but it does highlight some real weaknesses in the guardianship system that make it possible for an unscrupulous guardian to take control of an elderly person’s life and bleed their resources dry. Fortunately, steps can be taken to avoid the guardianship system and the kind of nightmare the film portrays. 

A guardian is someone appointed by a court to make decisions on behalf of an incapacitated individual ("ward"). The guardianship process usually starts when a family member or social worker notifies the court that someone can't take care of him- or herself. The court often appoints a family member as guardian. However, if the family can't agree on a guardian or there is no family to act as guardian, the court may appoint a public guardian. Public guardians are supposedly neutral individuals who are hired to act in the ward's best interest.

I Care a Lot follows one such public guardian who exploits the system to gain control of her wards’ estates. The guardian, Marla Grayson, typically petitions for an “emergency guardianship” without notifying the ward. In the case that takes up most of the film, Marla appears on the doorstep of a very surprised Jennifer Peterson with a court order declaring Peterson incompetent (she is nothing of the sort) and forcing her to relocate to a long-term care facility. Marla has already arranged for Jennifer’s doctor to declare Jennifer incompetent, and Marla also has a deal with a long-term care provider to admit Jennifer to his facility. And because it is an emergency guardianship, Jennifer is not required to be notified to appear in court to defend herself. 

Then, without Jennifer’s knowledge or consent, Marla takes control of her life and finances. After Jennifer is moved to the care facility, Marla begins the process of selling her house and belongings and taking a generous cut of the proceeds. From there, the movie takes a lot of twists and turns that we won’t reveal here, but the starting premise is unfortunately not Hollywood fantasy.

The film’s premise is in fact quite similar to a real-life case involving Nevada public guardian April Parks. As guardian for hundreds of wards, Ms. Parks, took over their lives, sold their belongings, and charged their estates hundreds of dollars an hour while doing so. Over her 12 years as a public guardian, Ms. Parks built relationships with hospitals and medical providers to refer patients to her and found doctors who were willing to declare her targets incompetent. Families often found out too late that their loved one was under guardianship and beyond their legal control. 

Ms. Parks is clearly at the far end of guardianship exploitation and has been sentenced to 16 to 40 years in prison, but there are other unscrupulous guardians still exploiting the system. Unfortunately, in many states, the lack of court oversight combined with poorly trained guardians leads to abuse. Courts often do not have the resources necessary to provide proper oversight, and only a small minority of states certify their professional guardians. 

Not all states are equally vulnerable to guardianship exploitation. For example, New York’s guardianship system requires that an independent evaluator meet with the ward before an incapacitation hearing. And Arizona requires that its professional guardians be licensed through the state and that the ward have an attorney present during the incapacitation hearing, among other protections. Florida’s governor signed a law in 2019 requiring guardians to report details of payments, among other things. Nevada has also enacted a number of reforms, including requiring that individuals subject to guardianship be represented by an attorney. And in a rare display of bipartisanship, Congress passed a bill in 2017 that empowers federal officials to investigate and prosecute unscrupulous guardians and conservators appointed by state courts. 

While some states have begun passing reforms, there is more to be done. The Unform Law Commission, which provides states with model legislation, has proposed the Uniform Guardianship, Conservatorship, and Other Protective Arrangement Act (UGCOPAA).   The law would allow a court to order a protective arrangement rather than a full guardianship when appropriate, require that notice of the guardianship be sent to family, and prevent the guardian from barring family members from visiting the ward, among other things. So far only Washington and Maine have enacted the model law. 

Regardless of your state’s laws, the best approach is to avoid the need for guardianship and conservatorship entirely by putting durable powers of attorney and health care proxies in place ahead of time when you can choose the person you would like to make decisions for you when necessary. Even if you're not at risk of exploitation because your children or grandchildren would step in, the need for court intervention causes otherwise unnecessary expense and delay.

Contact us

Elise Lampert, Esq.

Law Office of Elise Lampert 

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

 

How the $1.9 Trillion COVID-19 Relief Bill Aids Seniors

President Biden has signed the latest COVID-19 relief bill, which in addition to authorizing stimulus checks, funding vaccine distribution, and extending unemployment benefits, also provides assistance to seniors in a number of ways. 

The $1.9 trillion American Rescue Plan Act (ARPA) delivers a broad swath of relief, covering families, employers, health care, education, and housing. The following are the provisions that most directly affect older Americans:

• Relief checks. The ARPA provides $1,400 direct payments to individuals earning up to $75,000 in annual income and couples with incomes up to $150,000. The payments phase out for higher earners, and there are no payments for individuals earning more than $80,000 a year or couples making more than $160,000. Eligible dependents, including adult dependents, also receive $1,400. People collecting Social Security, railroad retirement, or VA benefits will automatically receive the payment even if they don’t file a tax return. The checks will not affect eligibility for Medicaid or Supplemental Security Income as long as any amount that pushes recipients above the programs’ asset limits is spent within 12 months.  

• Medicaid home care. The Act provides more than $12 billion in funding to expand Medicaid home and community-based waivers for one year. This funding will allow states to provide additional home-based long-term care, which could keep people from being forced into a nursing home. The money will also allow states to increase caregivers’ pay. 

• Nursing homes. Nursing homes have been hit hard during the pandemic. The Act supports the deployment of strike teams to help nursing homes that have COVID-19 outbreaks. It also provides funds to improve infection control in nursing homes. 

• Pensions. Many multi-employer pension plans are on the verge of collapse due to underfunding. The Act creates a system to allow plans that are insolvent to apply for grants in order to keep paying full benefits. 

• Medical deductions. If you have a large number of medical expenses, you may be able to deduct some of them from your taxes, including long-term care and hospital expenses. The Act permanently lowers the threshold for deducting medical expenses. Taxpayers can deduct unreimbursed medical expenses that exceed 7.5 percent of their income. The threshold was lowered to 7.5 percent under the 2017 tax law, but was set to revert to 10 percent for some taxpayers in 2021.  

• Older Americans Act. The ARPA provides funding to programs authorized under the Older Americans Act, including vaccine outreach, caregiver support, and the long-term care ombudsman program. It also directs funding for the Elder Justice Act and to improve transportation for older Americans and people with disabilities. 

Contact us

Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com