So, your loved one did the right thing. They planned ahead and utilized a trust to pass their assets safely and efficiently. You know enough about trusts to know that you don’t need to go through probate. However, what do you need to do?
Distribution of Assets
The trustee needs to distribute the assets of the trust based on the terms set forth in the trust. How that’s done depends on the type of asset being distributed. Cash is pretty easy: the trustee writes a check. Same with non-titled personal items, the trustee just hands them over and the beneficiary signs a receipt. However, if it’s real property, a deed of distribution must be drafted allowing the trustee to distribute hat asset out of the. trust and to the rightful beneficiaries.
IRAs and other retirement accounts can be kind of funky as well. IRAs, if left to the trust, may be inherited directly with immediate tax consequences or they can be paid out to the beneficiaries pursuant to a mandated schedule, which would spread out the tax burden over at least 10 years.
The point is, how assets will be distributed directly depends on the type of assets in the trust.
Property to Stay in Trust
How property in a trust will be distributed also depends on the terms of the trust document. Some trusts are set up to keep assets in trust for the benefit of generations to come. These trusts may outlive generations of successor trustees and last for many years. If the trust to which you’ve been appointed trustee is one of these “legacy trusts”, then your job is straightforward. Follow the terms as set forth in the trust document.
Notwithstanding the straightforward-ness of the job, the “how” may still be illusory. For example, the trust may direct—as many. Trusts do—the trustee to pay out money for the health, maintenance, and support of the beneficiaries. What does that mean? If you’re not a lawyer or otherwise familiar with trusts, you could have hundreds of questions like this.
Thus, upon the death of the trust maker, you should seek advice as to the left and right parameters of your discretion as a trustee.
Everything is Out: What Now?
Once everything has been distributed out of the trust, it time to dissolve it. This is a step that many folks miss. The trust will have a tax identification number. It may also have accountings, bank accounts etc. The tax ID number should be canceled, the bank accounts should be closed down, and the accountings should be finalized.
Conclusion
Having a trust avoids the. headache and perils of probate. However, it still must be administered and dissolved correctly. If. You have questions about trusts, give the experienced attorneys at McIntyre Elder Law a call at (704)-259-7040.
Under Federal law and the Nursing Home Reform Act of 1987, virtually all nursing facilities nationwide must meet specific requirements and adhere to certain standards. Most importantly, federal law prohibits these facilities from requiring financial guarantees from third party individuals. In other words, a facility cannot require a resident’s family member to sign or co-sign an agreement to take on financial liability incurred by the resident. Nonetheless, there is a long history of facilities using admission agreements that do just that.
As a condition of admission, family members and friends of prospective residents are often given admission agreements, and then instructed to sign those admission agreements. Sadly, a resident’s family members and friends often have no realistic opportunity to understand or to even read the admission agreements before signing them. Facilities have been known to then use those guarantees to pressure a family member or friend into paying bills for which the family member or friend should not be responsible.
Many facilities use forms that are confusing and deceptive, even to some attorneys. For example, many facilities will use express language disclaiming any notion that the agreement operates as a third-party guaranty, only to turn around and enforce the agreement as such. One of the most common strategies employed by nursing facilities today include the use of admission agreements that obligate a “responsible party” or “financial legal representative” to use the resident’s money to pay medical expenses. Then, if the resident incurs a large bill prior to death or if the resident’s bills remain unpaid, the facility will bring suit against the third-party representative in an attempt to hold them personally liable. Lawsuits such as these are not only questionable from a professional and ethical perspective, but also conflict with the general rule that duly appointed agents are not liable for the debts of a principal.
In sum, be aware of ambiguous language and terms within a nursing home contract. Does the contract serve to admit the resident into the facility and detail the care and services provided? Or, does it attempt to impose a legal duty on a family member unlawfully? Does it appear to do both? If it’s not obvious what the contract does, you should be hesitant to sign. A credible facility will be considerate of the family’s need to understand the operative language. Pertinent federal law includes but is not limited to: 42 C.F.R § 483.15(a)(3), 42 U.S.C. §§ 1395i-3 (c)(5)(A)(ii) and 1396 r(c)(5)(A)(2).
Here at McIntyre Elder Law, we regularly assist individuals and their family members with navigating placement of their loved ones in a long-term care situation. If you or your family have been the target of a lawsuit under similar circumstances, please do not hesitate to contact our professional team. Our mission is to help seniors maintain their assets and preserve their legacies.
Probate: why I study the process just to try to avoid it
Before I began to practice in Elder Law, I always assumed that if you went through the probate process then that meant you were doing something right. Probate is the legal process that a court uses to authenticate a will, or in situations where someone passes without a will it is how a court administers someone’s assets according to the law.
In those situations where someone was probating a will, I would think that was a person who was really on the ball. Hey, you planned ahead and had a will to probate so you took care of business and did what was best for everyone involved. But here I am, screaming from the mountain top (specifically from our new office in Hendersonville, come and see me) that you want to avoid probate whenever possible!
Here is why: North Carolina is a limited recovery state. This is a big deal and an important legal right that you have in our state. What that means is that creditors, whether that be credit card companies or those trying to collect medical bills, are limited to going after the possessions in your estate as it passes through the probate process. If any of your assets in your estate can be passed to someone else without going through the probate process, then creditors don’t get the chance to take them. So, if creditors never get a chance to collect on debts because your possessions are passed on without going through probate, then that means more of your estate will get into the hands of your loved ones.
Preserving your estate may seem easier said than done, but that is where the planning comes into play. This is why our firm has made it our mission to provide excellent estate planning services. You bring the estate, that you have worked very hard for your entire life to achieve, and we work with you on a plan to preserve those assets and ensure that you are able to leave behind the legacy that you want. Every plan is different because every estate is different. However, the goal of preserving your legacy remains the same. Our goal is to help you. Sometimes probate is unavoidable and we have to be prepared for what that means. But, one of our strongest tools we have is to help you locate the potential to avoid the probate process.
I found that this opportunity to work with clients to achieve these goals brings with it a very personal reward. I like to see you win! So it would be a personal favor to me to meet with you and see what plan fits your estate. Since you have made it this far, I look forward to meeting you and working with you on a plan to achieve your goals.
Greg is really struggling with some tough decisions with growing the firm and his role. All of life’s best decisions are the toughest and that includes estate planning. In this Elder Law Report we examine the value of not holding on too tight. If we can help with your tough decisions let us know: mcelderlaw.com.
Let’s dispel the myth that a trust when drafted automatically controls or holds property. It must be funded. Brenton and Greg talk about how to fund a trust with many types of property and assets.
Hi, I’m Greg McIntyre with McIntyre Elder Law, and this is the Elder Law Report, our weekly show where we talk about legal issues that affect you and your family. Brenton, what’s our topic today?
Brenton Begley:
Well, we get a question all the time and that question is, how in the world do I put stuff in my trust? That’s a question that’s really important. It’s different for different assets. So, we want to tackle that topic today and really let everybody know how to fund your trust, which is pretty important because-
Greg McIntyre:
[crosstalk 00:00:35] so let’s say I go to an attorney and I say, “I want to draft a trust for my family.” The attorney agrees it’s the right thing, understands my goals, believes for tax purposes, for asset protection purposes, for liability protection purposes, and probate avoidance purposes, and maybe even for benefits qualification to pay for long-term care down the road, for those purposes, that it’s the right thing to do.
Brenton Begley:
Right.
Greg McIntyre:
And then the attorney drafts the trust for me and I have this trust in a nice trust binder, and I say that I want to have my house in that trust. I want to have some investment accounts in that trust. I talk about those being in the trust and how they’re disposed of within the trust. Does that mean that the trust automatically has control over those investment accounts or over my home?
Brenton Begley:
No, not at all. You have to put those assets in the trust. So, that’s part of, well that is funding your trust. So, let’s talk about the real property. Real property. You know, every piece of property in the United States has a deed associated with it, some type of deed charter, whatever. So-
Greg McIntyre:
Real estate, sure.
Brenton Begley:
Real estate. That’s right. To be able to put property into a trust, you have to title it in the name of your trust. So, your trust, if you have one, it has a name. For things to be in that trust name, right, you have to title them in the name. So, you have a deed and that deed will just go from you to your trust. So, you’re the grantor giving the property to your trust, the grantee. That is how you can put property in your trust. Now, you probably haven’t drafted a deed if you’re a layperson, so you need an attorney to do that. Thankfully for our clients, that’s one thing we do for them. We ask them what properties they want to put in the trust, or we suggest what properties they should put in the trust, and we do that part for them. We draft those deeds that go along with the trust and we record those and register deeds in the county in which that property is located to put that on record.
But the investment property or the investment assets are a little bit different because they don’t have deeds. So, you have an investment account and that account is in someone’s name. It might be in your name, might be in your wife’s name, might be in both of your names. To be able to put that in the trust, you can do a couple of things. You can cash it out and open up another investment account in the trust and just transfer all of that cash over into the trust account. Or you can simply transfer the ownership of the account to the trust. Now-
Greg McIntyre:
That can be handled at the bank.
Brenton Begley:
That’s right.
Greg McIntyre:
Or a financial advisor, right? The financial advisor or a company where you hold those investment accounts can handle the transfer of the name of that. And they would want the trust document, to be able to see the trust, so you’d want to take the trust binder in. And really, they want on file generally the trust certification document, right?
Brenton Begley:
That’s right. [crosstalk 00:03:56]-
Greg McIntyre:
How is the trust certification document different than the larger, bigger trust?
Brenton Begley:
Yeah, trust certification document is [inaudible 00:04:05]. So, trust is a private document, and that’s important to know. It’s not registered anywhere, on file anywhere. It’s your private document that what you put in there can remain private. And that’s one of the benefits of a trust. So, you don’t want to have the full trust document on file somewhere because it’s private. That’s your private business.
Greg McIntyre:
Like the register of deeds, right?
Brenton Begley:
That’s right. That’s right.
Greg McIntyre:
It shows [crosstalk 00:04:30] that he has control of a property. I wouldn’t want to record the whole big fat detailed trust that told all the details. Right?
Brenton Begley:
That’s right. That’s right.
Greg McIntyre:
[crosstalk 00:04:37] business.
Brenton Begley:
Right. So, if something needs to be recorded, you can record the trust certification, which is a summary of your trust. And it goes over the basic elements of the trust that anyone would need to know to be able to prove that your trust exists, who the parties to the trust are, the type of trust that it is, and the powers that the trustees have over that trust, and generally what type of property it holds.
Greg McIntyre:
Understood. Understood.
Brenton Begley:
[crosstalk 00:05:05].
Greg McIntyre:
So, if I had a piece of real estate and I deeded that into the trust, I record that deed at the register of deeds, I would also want to record the trust certification document to show that the trustee now had control and how the trustee had control over that piece of land. And that’s in the public record and chain of title, right?
Brenton Begley:
Right.
Greg McIntyre:
And same thing with the bank. They’ll want a copy of that trust certification, but it’s a way that you can show the nuts and bolts, a summary of the trust without disclosing the entire trust or keeping it on record somewhere.
Brenton Begley:
That’s right. And it’s very important because a will is something that becomes public record. It gets filed in the courthouse and anyone can go and pull that file and take a look at it. But a trust, it’s different. You avoid having to deal with the courthouse, and you avoid having to go through that Probate process and you avoid having to subject your private wishes to public scrutiny.
Greg McIntyre:
Right.
Brenton Begley:
That’s one of the reasons why a trust is so beneficial, is you avoid the opportunity for outsiders to come in and challenge your estate plan, which is very important.
Greg McIntyre:
Sure. Absolutely. So, funding a trust, I just find that people have such a misconception generally-
Brenton Begley:
Yeah. [crosstalk 00:06:29]. One fear that a lot of people have is, and one question I get all the time is, “Hey, am I going to have to list out every dish, every picture, every chair, every rug, every piece of furniture that I have to be able to put all this stuff in the trust, because I don’t want all of that going through Probate.” So, let me ask you, what do we do to prevent that from being reality, where you have the list and inventory-
Greg McIntyre:
At the time you sign the trust, we have you sign an assignment of all personal property that’s non-titled assets like household assets, goods, things like that to the trust, so that we can go ahead and claim the protection of the trust. And so, the trust can handle those assets outside of the Probate process, which is a very nice luxury for a trust that we draft.
Brenton Begley:
Right. And it’s very important to have that along with the trust so that you know that all your personal items or non-titled assets are in the trust. Whatever you have now or hereafter acquire will go in there. But sometimes things are left out. Sometimes people make mistakes, they might get something and forget to put it into the trust. Is there any safeguard, safety net there to make sure assets pass by the terms of the trust if someone forgets to put something into the trust?
Greg McIntyre:
There is. We draft wills that go along with the trust that would take something that wasn’t in the trust and go ahead and put it in there at the time and let the trust do the heavy lifting. However, also we draft personal property memorandums with our trust as well that allow you to list assets that are in the trust that might get placed all the personal property in the trust, and then if you want to say, “You know, little Johnny gets the baseball card selection. My daughter Jane, she gets my doll collection and my china and other…” And so on and so forth. You can fill that part out at your leisure, with the more voluminous items. So, we try to make it as convenient as possible and explore funding with you and make sure you’re educated on funding.
We also draft a letter that details how to fund a trust with any type of asset and put that in the front of your trust binder so that you can answer your own questions as the trust funding and anything else that you have left over, we’d be glad to answer those questions for you and help you with funding.
Brenton Begley:
That’s right.
Greg McIntyre:
So, if you have any questions on drafting trusts or funding trusts, call us at McIntyre Elder Law at 704-749-9244, or schedule your free consultation today at mcelderlaw.com. Thank you so much, Brenton, for helping me explore trust funding.
A rough & tumble format between 2 cantankerous candidates, Rex Rational and Erny Irrational. These 2 face off for your vote of planning versus spontaneity. Which one wins? You decided. For your Free Consult call: 704-749-9244 or at mcelderlaw.com. And remember… This vote is all about you and your future!
One or more pieces of real estate. Substantial retirement assets.
Aging & Health Problems.
No Long Term Care Insurance.
Blended Family.
Have you put off planning? We understand these are strange times and as our civic duty we are offering complementary consults for Estate Planning and Elder Law legal issues. Schedule yours today!
Transcript:
Greg McIntyre, Estate Planning/Elder Law Attorney:
Hi, I’m Greg McIntyre with the Elder Law Report and we’re going to talk about a very important topic today, four signs it might be time to consider a Trust. Four signs that you need to look for that might indicate you need a Trust, because people often don’t know if they need a Trust, a Will or what kind of Estate Planning document and mix and plan that they need. We’re going to give you some insight today on why you might need a Trust and why you might not need a Trust. [inaudible 00:00:41] Side that you might need a trust is that you own more than one piece of real estate. In addition, maybe you have financial retirement assets. Let’s talk about that, how does wealth and property accumulation become a sign` that you might need a trust.
Brenton Begley, Estate Planning/Elder Law Attorney:
Well, number one, the more property, the more wealth that you have, the more you have to lose. And if you allow your assets to pass through the probate process, then they are subject to more risk than if you kept them out of that process. So, that’s, that’s number one, and that’s something that I like to remind people of that no matter what kind of trust you get, you avoid probate, okay? The other thing is, the more property and the more wealth you have, again, the more you have to lose during your life, not just at your passing. So if you are an individual over age 65, you have a 70% chance of needing some type of long-term care in the future, which is a huge risk to your assets because long-term care can cost anywhere from $10,000, $15,000 a month. It could be hundreds of thousands of dollars a year. So that’s something that you should certainly consider, even if you’re able to get Medicaid, qualify for Medicaid, that does not mean that your assets won’t be subject to risk.
So a trust can be a very good tool to use, to protect those assets from probate, from the nursing home and from any type of benefit program like Medicaid that may cover your long-term care can also help you qualify for much needed benefits to qualify and pay for that long-term care.
Greg McIntyre, Estate Planning/Elder Law Attorney:
So let me ask this, Brendan, what about liability protection for someone with more than one piece of property or some substantial retirement assets? Does the Trust offer liability protection?
Brenton Begley, Estate Planning/Elder Law Attorney:
It does, and again, there’re multiple ways to set up a Trust, but if you’re worried about liability protection, you’re worried about getting sued and losing this property you’ve worked hard all your life, maybe some other types of cash assets or liquid assets, a Trust can be a great shield to protect you from personal liability now. [crosstalk 00:03:18]
Greg McIntyre, Estate Planning/Elder Law Attorney:
But what about tax protection or maximizing tax benefits?
Brenton Begley, Estate Planning/Elder Law Attorney:
I’m glad you brought that up. I’m surprised you brought it up and I didn’t bring it up. I thought I was the Tax guy. Yeah, so tax protection, we have something that’s looming over our heads that a lot of people don’t know because we’re in a little bit of a grace period right now, but the Death Tax is coming back. Okay. That’s a drum I’ve been beating for a while, letting everybody know that, hey you might not have to worry about estate and inheritance tax right now, but that’s coming back and Trust can be a great tool to prevent your estate from being depleted by 40,50%, right? Percent tax rate, okay. Agents, significantly deplete your estate, if your estate is subject to that tax rate and a Trust can help you totally avoid that.
Greg McIntyre, Estate Planning/Elder Law Attorney:
So thank you very much Brendan. The second sign that you might be time to consider a trust, you’re having some health problems and you’re aging. You’re getting up in years, you’re past retirement age or you’re at retirement age or older and starting to experience some health problems or might be concerned that they’re on their horizon.
Brenton Begley, Estate Planning/Elder Law Attorney:
Right.
Greg McIntyre, Estate Planning/Elder Law Attorney:
Why, if you’re aging and the older you get, is that an indicator and why coupled with health problems, is that a real arrow that should point you to consider a Trust, to pass your assets and protect them?
Brenton Begley, Estate Planning/Elder Law Attorney:
Well as I mentioned before, [inaudible 00:05:03] is an ally for a lot of people, the majority of people. That’s a big deal, it costs a lot. Medical bills in general can totally deplete an state after someone’s passed away, especially if that estate is going through the probate process. So if you want to prevent the inevitable medical bills that you will incur in the future from the depleting your estate, then a trust is a great tool to do that sort of thing. So if you know that you have health problems, if you know that you’re getting up there in age and so you’re more likely to have health problems, including the need for long-term care, then a Trust is not only going to help you qualify, but help you, protect, shield assets from being taken by these creditors that you can incur. And when I say creditors, I mean these medical creditors, like the nursing home, hospital bills, things like that, and help preserve these assets for the next generation.
Greg McIntyre, Estate Planning/Elder Law Attorney:
Agreed, agreed, excellent answer. Thank you so much. And [inaudible 00:06:06] is, very good job, very good job. So number three, signs that its time to consider a Trust, you have no long-term care insurance.
Brenton Begley, Estate Planning/Elder Law Attorney:
Yeah. A lot of people don’t, a lot of people don’t have long-term care insurance. Some people don’t even know what it is, and that’s not your fault because no one’s out there telling you that these things exist. So long-term care insurance is exactly what it sounds like, it’s insurance to cover the cost of long-term care. If you ever go into long-term care, now there’s different insurance policies, there’re different ways that you can qualify. You might not qualify if you have a preexisting condition or over a certain age. So for that reason a lot of people don’t have it. Also, you might not be able to afford the premiums, even if you do qualify. So that being said, if you don’t have long-term care insurance to cover the cost of long-term care, you have to have an alternative plan to protect your assets and pay for long-term care. And a Trust is just such a good tool to do both of those things, as, as we’ve mentioned before.
Greg McIntyre, Estate Planning/Elder Law Attorney:
And we draft some particular trust that are made just for that, to shield assets from, and from a creditor recovery, as well as to make them not accountable asset, should you have to apply for, say a Medicaid benefit to pay for long-term care in the future. We drafted a couple of trusts that are just perfect for that. And number four, signs that you might need to consider a trust, are that there’s a blended family.
Brenton Begley, Estate Planning/Elder Law Attorney:
Right.
Greg McIntyre, Estate Planning/Elder Law Attorney:
So what if there’s a blended family?
Brenton Begley, Estate Planning/Elder Law Attorney:
Yeah, this is a big deal. A blended family means that maybe two families came together after a wife and husband have both had kids, maybe even grandkids, and they come together and get married later on in life. And so there’s this mixture of these families. Sometimes they get along, sometimes they don’t, but because of that lack of family history, you might have tensions after someone’s passed away. You don’t want your estate to get tied up for years and some type of Will challenge, in some type of probate litigation. So a Trust can solve that problem just easily. Very simply, just like that. You know, it can allow the spouses to dictate what happens to their share of their assets that they’ve already built up over their lives, maybe even inherited from their spouses. If their spouse passed away, maybe they’ve inherited it from their family members, things like that, things that were always supposed to go to their children, you can make sure that still happens so when one passed away, it isn’t just a Battle Royale for the assets that are up for grabs.
So that’s a very important reason why you might want to consider a trust to just take that burden off your family.
Greg McIntyre, Estate Planning/Elder Law Attorney:
So thank you so much, Brendan, for explaining the four signs it’s time to consider a Trust. To recap, if you own more than one piece of real estate or have substantial retirement assets, if you have aging or health problems, if you don’t have long-term care insurance, or if you have a blended family. Thank you for tuning in the Elder Law Report, and we’ll see you next week.
Maybe, but you need to be aware of the dangers of doing so and a disturbing trend within the industry. Watch this informative Elder Law Report.
Have you put off planning? We understand these are strange times and as our civic duty we are offering complementary consults for Estate Planning and Elder Law legal issues. Schedule yours today!
Jake from State Farm??? NO! Jake Edwards from McIntyre Elder Law! Jake is an experienced attorney and newest attorney with the team of McIntyre Elder Law. Here is why Jake practices estate planning & elder law. Get to know Jake!
Have you put off planning? We understand these are strange times and as our civic duty we are offering complementary consults for Estate Planning and Elder Law legal issues. Schedule yours today!
