Frequently Asked Questions

Estate Planning FAQ (Asset Protection, Death and Probate, Power of Attorney, Medicaid, Special Needs Trust)

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This is the art and science of protecting an individual’s property against anything that would hurt them, such as lawsuits.

Threats to wealth don’t arise only from lawsuits. An individual also has to deal with bankruptcy, divorce, federal and tax issues and government seizures. They also have to condone with estate tax as well as a turn in the market.

This is a program established by the federal government, and run by the state to support people with special needs in society (the elderly, children and pregnant mothers.

to many, asset protection helps avoid creditor claims. The aim is to limit access to assets by creditors, while operating within the requirements of the law.

Also called tort, this is a civil wrong which results in the other party suffering harm or loss. The victim must prove that they suffered loss or harm due to direct negligence or breach of duty to get compensated.

Anyone who has a close relative that needs long-term care in a facility, Medicaid is essential. An individual can apply on behalf of the debilitated person or apply for their own sake, that’s if they qualify.

Many people think that only the rich can be litigated, which is a wrong notion. As long as an individual owns some assets, then this protection is essential. Remember it doesn’t depend on what an individual does that will lead to lawsuits; rather, it is the assets they own and the value of these assets that determines the level of vulnerability.

For someone to qualify for this program, they need to demonstrate that they need long-term care, as well as to satisfy some requirements that have been set by the state.

Liability insurance might not protect an individual against every threat that comes their way. It also has its own limits – a person might get sued for more than the coverage they have taken up. Don’t be surprised to find that liability insurance only covers one in three lawsuits that come up. For instance, insurance won’t protect against the effects of divorce.

This depends on the value of assets in question. If it is a lot of property, the cost is relatively higher. Talk to an asset protection lawyer to know how much how much is needed for protection. The complexities of the property also determine the cost. For instance, if the assets out of state, the process is complicated and this needs more effort, which translates into more costs.

This is a legal agreement that gives an individual (the agent) the ability to make decisions on behalf of someone else (principal).

Well, there isn’t a definite time to begin the process, but it is better to begin the process long before the threat from a creditor becomes a reality. For instance, well before the marriage becomes unbearable.

Every state has specific offices that one can apply for this program. Each county also has an office to make the application process easier for the residents. You can get the application from the Medicaid office in your county, alternate offices and online platforms.

It becomes hard to start asset protection once a judgment has been passed, unless you decide to pay off the judgment and then safeguard the remaining property against future lawsuits using an asset protection plan.

Many Medicaid applications get rejected for different reasons, but this shouldn’t worry you. The communication from the agency explains why your application got rejected in the first place. It also explains the appeal process and how to go about it.

Medicaid is administered by private providers that have been identified and tasked by the state to provide the services.

This act might not affect you directly. However, the estate planner is the one that gets fined because it is seen as a way to prevent the court from fulfilling its obligations.

Starting the process when you anticipate a ruling or a divorce is very tricky. This is due to the fraudulent transfer law that might result in penalties and fines.

The care that you receive from Medicaid is similar to, or way much better than what you might receive from private facilities.

No, asset protection should be a continuous commitment. Many people allow their plan to become obsolete when the threat passes. This can be costly. An asset protection plan is only viable when you use it. Time changes many things, including your asset protection plan.

Estate planning lawyer

It is recommended that you review the asset protection plan at least once every year, and as need be with every major event.

Many plans fail because they don’t shelter all assets, leaving others exposed to lawsuits. For you to protect all assets, look to the future and in the past as well. Protect the assets that you already own and those that you feel will materialize soon.

You don’t have to lose control– instead, try to strike a balance between control and safety. The estate planning lawyer guides you on how to do this.

Not necessarily. A Medicaid attorney helps you prepare for long-term care, apply for Medicaid and run many more tasks. The attorney handles a wide variety of issues that relate to Medicaid, but you can still apply for successfully without one.

Yes, this process is 100 percent legal, and it constitutes a big part of modern day estate planning. This process is all about protecting assets rather than avoiding taxes.

A revocable living trust can’t replace an asset protection trust. Clients usually get confused when they are told that a trust protects their property against probate. However, it doesn’t protect assets against lawsuits; this is the role of an asset protection trust.

You can’t save any taxes with your plan. Rather, it gives you secondary tax benefits.

This depends on the results of the lawsuit. As lawyers, we take time to comprehend what the lawsuit is all about, the pros, cons and chances of winning the case. We also look at your insurance policy, your assets and the asset categories to determine how the protection can assist you.

The trust is usually transferable, but you cannot be sure because each state establishes a trust using different criteria. Consult with an asset protection lawyer to tell you more about what to expect when you move to another state.

If you are divorced with a pre-nuptial or post-nuptial agreement in place, then an asset protection trust can do something for you. Without any of these, we cannot do anything for you.

To protect your property, we come up with one or more entities on your behalf. These include limited liability companies, irrevocable trusts and many more. The aim of each entity is to protect your assets from lawsuits or creditors.

The LLC protects you from any liabilities generated from the company. If there is a lawsuit against the company, then it is only the company assets that get attached, not your personal property.

This is an arrangement by the federal government whereby the elderly person receives medical, personal and social services from qualified personnel. The care is necessary when you have a disability or suffer from prolonged illness.

Medicaid covers the costs of long-term care services at the health care facility that you are sent to. It also takes care of the costs of the services that you receive at home from health practitioners identified for this task.

You need to realize that not every person uses the same asset protection structure, which means you ought to be cautious when coming up with one. This is why you should establish a plan under the guidance of a lawyer skilled in this field.

A claim is a legal action by a creditor who is seeking satisfaction for any amount that they owe. A claim can be the sum that needs to be paid after a successful lawsuit due to automobile accidents, medical malpractice lawsuits and any other type of judgment.

You can choose anyone to act as the attorney-in-fact, including a family member or a friend. It is vital that you choose someone that you trust to handle the role.

The power of attorney takes effect when the person that creates it becomes mentally unable to make their own personal decisions. In other words, the power of attorney doesn’t allow you to make personal decisions till you are mentally unable to do anything on your own.

  • It discourages lawsuits.
  • It keeps the ownership of assets confidential.
  • The trust works as an alternative to pre-nuptial agreements.
  • Helps protect otherwise unprotected pension assets.

We use different methods to protect your assets. Some of the methods are appropriate for all people and we have others that are tailored for specific people. The techniques also vary depending on the location of the property and the type. Every asset protection technique makes it harder for the creditor to find your assets and attach them.

There is no single protections strategy ideal for everyone. Instead, the estate planner looks at the asset mix, the location of the assets and more. The next step is to look at your goals and future plans to come up with the perfect strategy.

First, choose a professional with extensive asset protection experience. For credentials, you can go to the state bar and verify before you choose the attorney.

While some people try to sell their clients complex structures just to make money, this complexity doesn’t mean more protection. Work with a planner that uses the simplest method to protect your assets.

The process you use to hide your assets needs to be legal for it to work. However, understand that most third parties have the knowledge and intelligence to realize this. With a suitable plan, you can disclose the details of the assets without any fears.

Your power of attorney ends when:

  • You pass away.
  • The person you assign to be the attorney-in-fact dies or cannot be able to serve. However, you can have more than one attorney-in-fact.
  • You assign a new power of attorney when you are still able.
  • You revoke the power of attorney when you are still in your senses.

The prenuptial agreement is a valuable tool because it lists the separate property of the other partner which makes it unreachable by creditors.

There are many ways to secure your residence. The only downside is there isn’t one solution for all situations. When you work with us, we determine your best option.

This is a legal document that allows you (principal) to grant authority to another person (attorney-in-fact/agent) to make legal and financial decisions on your behalf. It is called durable because it remains operational when the principal becomes incapacitated.

This is a power of attorney that becomes effective at a later date, usually when you become mentally incompetent. This means that its effectiveness “springs” into effect only when you become incapacitated.

A FLP is a partnership where members are close relatives.

LLCs are superior to corporations because they guard assets of members from lawsuits.

The person needs to understand what he is signing at the time of signing the document. He must understand the implication of the powers being granted to the agent and what property can be affected by the decisions.

We have seen a lot of shoddy plans that have led to losses. When you decide to come up with an entity, make sure you have the right one for the right situation. Failure to use the right entity can lead to tax implications.

Well, you are only supposed to sign one copy. However, at times you need to sign several, because some third parties need an original copy to allow the agent to transact business on your behalf.

It is true that despite all the efforts we make, the client might get sued or has to settle a case. The biggest effect of the plan is to reduce the effects of the lawsuit on your assets. The settlement you pay is way lower than what you might pay without a plan at all.

At times, a dogged creditor will carry the lawsuit to completion then pursue payment aggressively. If you are required to pay thousands in damages, the plan is put to the test. You need to work with an asset protection lawyer to come up with a good defense.

  • Get assets out of your name you still have the time. However, this needs to be legal.
  • Built up your assets in a structure set up by an estate planner.
  • Remember to stick with a professional that is conversant with the law when an issue arises. You can also ask what a lawyer says regarding fraudulent transfers.

You shouldn’t start protection when:

  • Planning against the creditor that has a direct interest in the property.
  • Planning against a creditor that has been given the go ahead to make a claim.
  • Coming up with a plan that involves fraud or misrepresentation against the court.
  • Planning a fraudulent transfer when the case is already in court.

Exemption planning refers to the process where you reorganize your wealth so that most of it is exempt by law from attachment by creditors. The federal law grants owners a few exemptions, but most of them come from state law.

The durable power of attorney is only valid when you are alive. Its role is to give someone the powers to make decisions on your behalf. You need a last will and testament to tell your executor and the court how you want the estate to be managed and distributed after your demise.

The homestead exemption is made by the state law, aimed at protecting a home from creditors. Make sure you read the fine print from a state to understand whether it applies to you or not.

  • Property taxes.
  • Liens from an initial mortgage on the home or an equity line of credit.
  • Dividing the house due to divorce.

This is the concurrent ownership of assets by two or more people. The most common form of this ownership is the property owned by a husband and wife. The common forms of ownership include tenancy in common, joint tenants with the right of survivorship, tenants by entirety and community property.

A power of attorney executed in New York can be used in another country as long as it is legal and recognized. This means that a government official in the country certifies that the signature is viable.

This is a transfer of an asset that the debtor makes with the aim of stopping a legitimate creditor from taking over the asset to satisfy a legitimate debt.

In a fraudulent transfer, the parties involved get very close scrutiny. The person that received the property also has to re-transfer it back to the original owner. Some states have penalties for these transfers.

  • The court will restore the title to the debtor for the due process to be followed.
  • Freezing the assets pending the outcome of an action as per the court.
  • Award damages from the person who transferred the assets and the one that received them.

If you notice a lot of secrecy in the transaction, or hasty transfer, then something isn’t right.

This is an arrangement that allows you to protect the benefits that the special needs child receives from the government while providing for his special needs.

Creditors have a right to the assets in case you owe them, and this right must be respected. They also have the right to recover property that you transferred to pay creditors. The creditor has 5 years to lodge a lawsuit to this effect.

Creditors generally don’t have the right to demand info about your assets till they have a ruling especially when the assets you own are irrelevant to the issue at hand. In special circumstances however, a court of law can order you to give information on assets to the creditor.

The requirements for you to claim homestead protection varies from state to state. Generally, you file a declaration of homestead in the office where the real estate transactions get recorded. After this, you prove that the property is your primary residence.

If you are an older couple, the state allows you to set up the trust for the surviving spouse, but this trust comes into force only when you pass away.

These are called non-primary residential estate holdings, and you need to protect them differently compared to residential property. These assets are exposed to different legal threats that arise from the inhabitants of the houses, neighborhood associations and even trespassers, making them a priority when it comes to asset protection.

Well, this depends on whether the retirement plan is ERISA-qualified (IRA’s, Roth IRA’s and SEP IRAs) or not. Each category has a specific protection strategy. Talk to us today to get advice on the vulnerability of the retirement program.

It is vital to coordinate an estate plan with the asset protection plan to protect the beneficiaries from creditors. All these relate to your assets, therefore they work better when integrated.

Also called an advance directive, this is a document drafted by a mentally competent person that is over 18 years of age and that dictates the conditions that need to be fulfilled for end-of life medical treatment and other circumstances.

The law doesn’t have a limit to the number of trusts that you can create for a beneficiary.

For the living will to be valid, it must be made by the person in a voluntary manner, without any coercion from relatives or a third party.

There is no law that requires you to make the will in writing, but it is usually hard for you to prove authenticity if you don’t have proof in writing.

This is the act where the doctor makes a decision to switch off life-prolonging treatment from a terminally ill patient that has left no instructions. This isn’t considered a criminal offence because it is made in the interests of the patient.

The person you choose to oversee the property in the trust is tasked with managing and spending the assets in the trust for the benefit of the beneficiary.

The ability for a person to prolong life can come with legal consequences. For one, it alters the start of the succession in a case. It might also affect the tax payable if the life is prolonged into a new tax year.

This is the process where you prove the will and last testament in a court of law.

A few years ago, all estates had to go through probate before being passed to the heirs. At the moment, there are many ways to pass property to the heir without going through probate.

To settle the estate, you need to determine which property is owned by the deceased, pay off the debts if any and then distribute the remainder to the heirs.

Yes, you are allowed to pick more than a single trustee to handle the role. However, you need to be clear on who the primary trustee is and who the alternate one is. The alternate trustee steps in when the primary one becomes unavailable or incapacitated.

In New York, most of the property that is left behind by the will maker will be passed down to the people that have been named in the will. This is called testate succession. If there is no will, then the assets will be distributed according to laws that have been established by the state. These are called intestate.

Probate is just one of the many ways to pass over property. Others include community property transfer, moving the title for joint tenancy ownership and winding up any living trusts.

If you go through a formal court procedure, it takes between 7 and 9 months to close the estate. However, it takes longer if the estate is complicated or if the assets are located out of the state.

When you calculate taxes, you have to consider the gross and net estate. The gross estate is the fair market value of the property at the date of death of the owner. It includes all the assets that the owner held interest in. The net estate is the value of what remains when you subtract the total debts such as liens, mortgages and other debts owed.

This is the sum of all the property held by the decedent that must go through probate.

This is the property that can be taxed in a certain year.

This is the estate that doesn’t have enough assets to clear creditors fully. Usually, you need to work with a lawyer to make things work out.

When the property in the trust has significant value, say, $250,000 or more, you need to consider turning the management of the assets to a corporate trustee. This is an institution that manages the trust funds on behalf of the beneficiary for a fee.

The law doesn’t mandate you to hire a lawyer to settle the estate. A simple estate can be settled with some background information. However, complications that need special knowledge might need a lawyer.

During probate, the court will appoint a personal representative that will handle the estate. This is called the executor (if there is a will) or an administrator (if there is no will).

The person to act as an estate representative depends on various factors including presence of or absence of a will.

At times, the will can name an executor who isn’t able to serve or who is already deceased. In this case the court goes ahead to name an administrator.

In New York, this is an estate with assets of a value less than $100,000. Such an estate doesn’t have to go through probate.

The special needs trust can be terminated when it is no longer needed. Usually, this trust ends when the beneficiary dies. Other reasons for termination of the special needs trust include:

  • Depletion of trust funds.
  • When the beneficiary doesn’t need government support anymore.
  • The beneficiary has lost eligibility for government funds.

The estate of the deceased is usually divided among people that have the right to inherit the property. These are called the beneficiaries. The beneficiaries are determined by the will, law of the state or estate planning devices.

This is a word that denotes a group of kids – all natural children that are born in the generations that follow.

This is a bequest left to people but with conditions attached. If the conditions aren’t met, the bequest is granted to other people named in the document.

Many wills specify the person that gets the property when the named beneficiary doesn’t survive the decedent. This is the alternate beneficiary.

SSI stands for supplemental security income. It is ideal for people that have low income and a few resources. The beneficiary receives monthly cash payments determined by several criteria.

Wills at times contain suggestions, wishes or demands that cannot be enforced. As an executor, you have no duty to comply with these provisions.

This is a gift of money left to a beneficiary. A bequest is generally a general legacy that isn’t tied to a specific item but rather is satisfied by cash payments.

When this happens, the alternate beneficiary takes up the position. If the will doesn’t have an alternate beneficiary, the New York law takes up the assets.

These are assets that are in form of cash or that can easily be converted to cash. These include stocks and bonds, bank accounts and real estate other than the residential home.

This is land and anything else that is permanently attached to the land. These include houses, crops, and trees. Even a mobile home attached to the land is treated as a real property. Any property that doesn’t fit the bill of real property is called personal property.

This is a form of ownership that is by two or more people at the same time. This comes in different forms including tenancy in common, community property, life estate or joint tenancy.

This is an arrangement of ownership where two or more people own an undivided interest in the property. The co-owners don’t automatically take up the other persons share when the person passes away.

If you are only catering for the needs of one loved one, then you can put all the assets in the special needs trust and pray that it lasts long. If they are many beneficiaries, then you need to divide the assets among the family members.

Neither a will nor the laws of intestate succession have any effect on joint tenancy.

A life tenancy means that you own assets only for a certain period, usually when you are alive. It is ideal for the elderly who are allowed to access the property till they pass away then they pass it over to someone else.

This refers to the ability to make decisions (such as signing a will) when you have a sound mind and you are capable of managing your affairs.

You don’t have to keep your will in a designated area. However, it is upon you to make sure it is safe and secure for the executor to get their hands on as needed. You can choose to keep a copy with your lawyer or somewhere else that you deem safe.

No. this is because the clause in the joint ownership document spells out that if you die, the property goes to the co-owner.

This is the surrogate court in New York that helps you interpret the will and assign an executor.

Improper execution of a will simply means it wasn’t written clearly or it isn’t legal.

If the will-maker was under any form of duress when coming up with a will, this is called undue influence.

Even with a valid will, you need to work with a probate attorney so that you ensure you have done all the essential tasks as per the requirements of the state.

The only way to avoid probate is to use revocable trusts with named beneficiaries or use special needs trusts.

The process in New York requires you to have the following:

  • The residential information.
  • Name, residential and date of death of the will maker.
  • The names and contact information of all beneficiaries and interested parties.
  • Details of the minor beneficiaries.

When you receive this letter, it is just a way to inform you of your appointment by the court to serve as an administrator to an estate.

This is a person, usually a friend or a relative that helps a special needs child to cope with different personal issues. The guardian is also tasked with making decisions on behalf of the beneficiary.

This is the person that you name to inherit the assets when they are left over in case the beneficiary passes away.

After a will is presented to court, the administrator needs to mail the notices of probate to the concerned parties within 60 days. Within ten days of mailing, he needs to let the court know that they did this.

After you fill all the proper forms, the clerk of the court prepares a judgment to admit the will to probate.

This is a certificate that acts as evidence showing the rights that you have given a fiduciary. The certificate needs to be presented to certain institutions to achieve tasks such as transferring of stocks.

You have to identify the right pooled trust, pay the initial signup fee, sign an agreement and then commit to paying an annual amount.

Due to the necessary requirements, congestion in courts and time requirements, the probate process can take even up to 3 years or more.

Probate is a public process, which means every aspect of the estate is open to the public. This includes personal finances and information on the family business.

Any transaction that you make during probate needs to be approved by the court. This includes selling any asset or buying something using money left behind by the decedent.

This is a cash advance given to a person who is entitled to inherit property that is under the probate process. The term doesn’t exist, but it is thrown around to mean when an heir assigns their inheritance rights to a lender for some cash.

This is an instrument executed by a person in a manner prescribed by New York law. The aim of the will is to dispose of the person’s property after their death. The will usually appoints a personal representative or revises a different will.

In the world of trusts, this is an insurance policy that covers losses to the trust especially when the trustee embezzles trust funds or violates a duty of trust owed to the beneficiary

This is the process of deciding what happens to your estate when you die. The main objectives are:

  • Preserve any wealth that has been passed down through the ages.
  • For the property to be used as per your wish after you pass away.
  • Make sure your heirs get the greatest possible wealth after you pass on, in the appropriate form.

Just about everyone needs estate planning. You might not be wealthy, but as long as you have some assets, a degree of planning is essential.

When you own assets all over the country, estate planning helps you avoid ancillary probate that has to be undertaken in multiple states apart from New York. Ancillary probate is usually costly and reduces the value of the estate.

As a business owner, you need to protect your interest in the business at all costs. As time goes by, you need to determine whether the business can be eventually given to heirs or sold off. This is where estate planning comes in.

Even when your spouse is from out of the country, you still need to provide for them when you pass away. An estate plan will lay out the conditions to be followed in such a case.

These include:

  • Single/simple will – this involves one person creating a single document.
  • Joint will – a single document with provisions set up by several people. For instance, a will prepared and executed by a husband and wife.
  • Mutual wills – this involves multiple documents executed by multiple parties. The parties come up with an agreement to leave their property as per certain rules.
  • Reciprocal wills – a will in which two people name each other as recipients of the assets in case one person passes on before the other.

If you live in a common law state, the assets that you acquire in marriage are yours, unless you come up with an agreement states differently.

In New York, you can contest a will if you are left out yet you have proven rights to the property. This is only feasible if you have evidence you were left out intentionally.

Well, foster children have similar rights as your own kids, which means you need to provide for them in the will.

A residence is where a person stays at the time of death. The domicile is the place a person considers as the permanent home and will return to eventually even if they live in a different county.

Testamentary capacity means:

  • The will maker is aware of the nature of the will that he is signing.
  • He understands what he owns.
  • He understands who is a member of the family and who isn’t.

Wills come with different clauses:

  • Preliminary clause – this is for identifying the will-maker, the place of residence and the validity of the will.
  • Dispositive clause – this specifies the heir.
  • Appointment clause – this specifies the person to manage the estate.
  • Concluding clause – this proves the validity of the will, including the signatures and the witnesses.

When you get married, the law automatically allows you to transfer property to your spouse to reduce the tax liability. This means the property you transfer won’t be taxed at all, thanks to the law on marital deduction.

are various factors that are involved in the calculation of the market value of a property. These include:

  • Condition of the assets in question. This includes the defects and the physical qualities.
  • The location and size of the asset.
  • The use of the property in line with trends, for instance the valuation price of the land on which the property stands on.
  • Suitability of the assets for actual use.
  • Size and condition of any structures on the property.
  • How much income is received on the property.
  • Valuation of the property in probate court.
  • The projected cost of making improvements on the property.

The executor has two possible dates to determine the value of the property. This can be the date of death of the owner or the value of the property six months after the decedent passes away.

This clause lays down the rules of disinheriting someone. For this, you need a clause that sets down the maximum amount that a person inherits when they contest the will.

This document is amendable till you die. However, talk to your estate planning lawyer to understand the rules that specify the revocation process in New York. Follow these rules to avoid any challenges during the probate period.

Many people don’t think about what happens when they die, so they don’t come up with a will. If there is no valid will, we term this “intestate”. And this means New York laws of intestacy take over the process to ensure assets are distributed as expected.

At times, an individual dies with only a few assets taken care of while others aren’t covered. This is called partial intestacy.

The priority in this case is given to surviving family members. The children, grandkids, great grand kids and other relatives gave priority.

At times a person dies intestate, and without surviving family members. When this happens, the state holds the assets in a trust for several years, waiting for someone to come forward to claim it. Without a claimant, the property is taken up by the state.

This is a clause that transfers property to the other owner after the co-owner dies. Two ownership types give you this option – the joint tenancy with right of survivorship (JTWROS) and tenancy by entirety (TBE).

You can change the clauses in the revocable living trust, but you cannot do the same for the irrevocable trust.

A gift tax is applicable on gifts over $1million during a lifetime. For anything less than this, you don’t have to pay tax.

This is tax applied to your estate after you die.

Calculation of estate tax is a simple process as long as you know the net value of the estate. Take the gross estate value, subtract the deductions. This gives the taxable estate. Next, add taxable lifetime transfers since 1976 to get the tax base. Then multiple this value by applicable estate tax rate to get the tentative estate tax. Subtract the tax credits to get the net estate tax due.

You can deduct the following expenses from the gross estate to get the net estate:

  • Funeral expenses
  • Debts
  • Casualty losses
  • Administrative expenses
  • Marital deductions
  • State estate taxes