Florida Elder Law Blog - ElderLawAssociates.com

Although your life insurance policy may pass to your heirs income tax-free, it can affect your estate tax. If you are the owner of the insurance policy, it will become a part of your taxable estate when you die. While the federal estate tax is currently zero, the exemption will be $1 million and the rate will increase to 55 percent on January 1, 2011, if Congress fails to act in the interim. And state estate taxes are still in effect now. You should make sure your life insurance policy won't have an impact on your estate's tax liability.
If your spouse is the beneficiary of your policy, then there is nothing to worry about. Spouses can transfer assets to each other tax-free. But if the beneficiary is anyone else (including your children), the policy will be a part of your estate for tax purposes. For example, suppose you buy a $200,000 life insurance policy and name your son as the beneficiary. When you die, the life insurance policy will be included in your taxable estate. If the total amount of your taxable estate exceeds the estate tax exemption, then your policy will be taxed.

In order to avoid having your life insurance policy taxed, you can either transfer the policy to someone else or put the policy into a trust. Once you transfer a policy to a trust or to someone else, you will no longer own the policy, which means you will not be able to change the beneficiary or exert control over it. In addition, the transfer may be subject to gift tax if the cash value of your policy (the amount you would get for your policy if you cashed it in) is more than $13,000. If you decide to transfer a life insurance policy, do it right away. If you die within three years of transferring the policy, the policy will still be included in your estate.

If you transfer a life insurance policy to a person, you need to make sure it is someone you trust not to cash in the policy. For example, if your spouse owns the policy and you get divorced, there will be no way for you to get it back. A better option may be to transfer the life insurance policy to a life insurance trust. With a life insurance trust, the trust owns the policy and is the beneficiary. You can then dictate who the beneficiary of the trust will be. For a life insurance trust to exclude your policy from estate taxes, it must be irrevocable and you cannot act as trustee.

If you want to transfer a current life insurance policy to someone else or set up a trust to purchase a policy, send us an email to set up a consultation with one of our attorneys.

For more information on estate taxes, click here.

Amy is 58 years old and lives alone in an apartment that her mother left to Amy and her brother, Joshua. Their mother passed away suddenly in March, having done little to plan her estate, although she did designate Amy and Joshua as "payable on death" beneficiaries on her various bank accounts.


Amy approached us extremely distraught over the fact that she was about to inherit one half of her mother's estate. When we asked her why, her answer explained everything. Amy is disabled and receiving SSI benefits. Therefore, her receipt of an inheritance from her mother would jeopardize her ongoing eligibility for SSI, which up until now has been providing a monthly check of about $840 per month, allowing Amy to pay her bills and live in the community. The inheritance would only last so long, and once it was gone she would be right back where she was before her mother died - living month to month on her government benefit check from SSI.


Perhaps even more importantly, Amy also receives Medicaid benefits to cover her ongoing medical costs associated with her disability. The Medicaid benefits would also be lost upon her receipt of the inheritance from her mother. So Amy asked us if there was anything we could do.


Thankfully, the answer was a resounding "yes." In Amy's situation, she can establish a self-settled supplemental needs trust which she can fund with her anticipated inheritance from her mother. Such self-settled supplemental needs trusts must be established in Federal law by a parent, grandparent, court or guardian for an individual under the age of 65. Both of Amy's parents are now deceased, and she does not have any grandparents, nor has a guardian been appointed for her.


Because Amy is under 65 years of age, the law allows us to petition the court for approval of the creation of the supplemental needs trust, which we did. By obtaining court approval for the creation of Amy's supplemental needs trust, we were able to have her trust created pursuant to court order, and all of the funds she expects to receive from her mother's estate can now be protected for Amy's benefit. These funds can be set aside in a trust account that will only pay for those items that would not be paid for by SSI or Medicaid.


Much to Amy's relief, instead of losing her mother's entire inheritance, we were able to protect it in a way that permits Amy to continue to receive her much needed government benefits.

Labels: florida elder law, Florida Elder Law Attorney, Florida Special Needs Trust

The Brown family reunion has always been an event everyone looks forward to. Family visits, games, stories and everyone’s favorite foods are always on the agenda. On the top of the menu is Grandmas Lemon Coconut Cake. Grandma always makes the traditional cake from her old family recipe. This year, however, the cake tasted a little on the salty side, perhaps a half cup full of salty.

Though the family was disappointed over the cake, of more concern was Grandma’s confusion with the recipe and her similar confusion about the loved ones around her. Could something be wrong with grandma's mental state?

One might say that for an elder person a little forgetfulness or confusion is normal, but when do you know if there is a serious problem, such as dementia?

An online article from FamilyDoctor.org outlines some common symptoms in recognizing dementia.

"Dementia causes many problems for the person who has it and for the person's family. Many of the problems are caused by memory loss. Some common symptoms of dementia are listed below. Not everyone who has dementia will experience all of these symptoms.

• Recent memory loss. All of us forget things for a while and then remember them later. People who have dementia often forget things, but they never remember them. They might ask you the same question over and over, each time forgetting that you've already given them the answer. They won't even remember that they already asked the question.
• Difficulty performing familiar tasks. People who have dementia might cook a meal but forget to serve it. They might even forget that they cooked it.
  Problems with language. People who have dementia may forget simple words or use the wrong words. This makes it hard to understand what they want.
• Time and place disorientation. People who have dementia may get lost on their own street. They may forget how they got to a certain place and how to get back home.
  Poor judgment. Even a person who doesn't have dementia might get distracted. But people who have dementia can forget simple things, like forgetting to put on a coat before going out in cold weather.
• Problems with abstract thinking. Anybody might have trouble balancing a checkbook, but people who have dementia may forget what the numbers are and what has to be done with them.
• Misplacing things. People who have dementia may put things in the wrong places. They might put an iron in the freezer or a wristwatch in the sugar bowl. Then they can't find these things later.
• Changes in mood. Everyone is moody at times, but people who have dementia may have fast mood swings, going from calm to tears to anger in a few minutes.
  Personality changes. People who have dementia may have drastic changes in personality. They might become irritable, suspicious or fearful.
• Loss of initiative. People who have dementia may become passive. They might not want to go places or see other people."
  

Dementia is caused by change or destruction of brain cells. Often this change is a result of small strokes or blockage of blood cells, severe hypothyroidism or Alzheimer’s disease. There is a continuous decline in ability to perform normal daily activities. Personal care including dressing, bathing, preparing meals and even eating a meal eventually becomes impossible.

What can family members do if they suspect dementia? An appointment with the doctor or geriatric clinic is the first step to take. Depending on the cause and severity of the problem there are some medications that may help slow the process. Your doctor may recommend a care facility that specializes in dementia and Alzheimer’s. These facilities offer a variety of care options from day care with stimulating activities to part or full-time live-in options. Sometimes if patients tend to wander off, a locked facility is needed.

In the beginning family members find part time caregivers for their loved one. At first, loved ones need only a little help with remembering to do daily activities or prepare meals. As dementia progresses, caregiving demands often progress to 24 hour care. Night and day become confused and normal routines of sleeping, eating and functioning become more difficult for the patient. The demented person feels frustrated and may lash out in anger or fear. It is not uncommon for a child or spouse giving the care to quickly become overwhelmed and discouraged.

Family gatherings provide an excellent opportunity to discuss caregiving plans and whole family support. It is most helpful if everyone in the family is united in supporting a family caregiver in some meaningful way.

"The first step to holding a family meeting, and perhaps the most difficult one, is to get all interested persons together in one place at one time. If it's a family gathering, perhaps a birthday, an anniversary or another special event could be used as a way to get all to meet. Or maybe even a special dinner might be an incentive.

The end of the meeting should consist of asking everyone present to make his or her commitment to support the plan. This might just simply be moral support and agreement to abide by the provisions or it is hoped that those attending will volunteer to do something constructive. This might mean commitments to providing care, transportation, financial support, making legal arrangements or some other tangible support."

Professional home care services are an option to help families in the home. These providers are trained and skilled to help with dementia patients. Don’t forget care facilities as well. It may be the best loving care a family member can give is to place their loved one in a facility where that person is safely monitored and cared for.

As always, before making any legal decisions, it is recommended that you consult a qualified Florida Elder Law Attorney.

Labels: Florida Elder Care, florida elder law, Florida Elder Law Attorney, Florida Guardianship, Florida Special Needs Trust

The Trials and Heirs blog recently had an article about how to avoid exploitation of the elderly by a family member. They recommend:

1. Getting expert advise who knows the ins and outs of Florida estate planning. I would also recommend using a Florida Estate Planning Attorney who is familiar with Florida Elder Law.
2. Be careful of joint accounts as they can take the money or create ineligibility for nursing home coverage.
3. Consider "Springing" Powers of Attorney, or as we call them contingent Durable Powers of Attorney, as they only give powers once you are incapacitated.
4. Choose wisely, which may mean not choosing a family member or the oldest child because of emotional reasons.
5. Having checks and balances by using more than one person to make decisions and to avoid fights.
6. Selecting someone to monitor your accounts. This person can be a trusted advisor and should have the ability to question and stop inappropriate actions.

These are issues that should be dealt with in Florida Estate Planning as well as to avoid abuse of the elderly. To discuss your concerns or issues contact a qualified Florida Elder Law Attorney.

Labels: florida elder law, Florida Elder Law Attorney, Florida Litigation