104CommonlyAskedQuestionsatSeminarsIncludesMedicaidQuestions

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103CommonlyAskedQuestionsatSeminarsIncludesMedicaidQuestions

TABLEOFCONTENTS

ESTATEANDLEGACYPLANNINGQUESTIONS……………………………………………………PAGE1TAXES:ESTATETAXES,GIFTTAXES,CAPITALGAINS,GSTQUESTIONS…………………..PAGE10POWERSOFATTORNEY&INCAPACITYPLANNINGQUESTIONS………………………….….PAGE12ADVANCEDPLANNINGQUESTIONS…………………………………………..…………………..PAGE15MEDICAIDPLANNINGQUESTIONS……………….……………………………………………….PAGE17

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ESTATEANDLEGACYPLANNINGQUESTIONS

1 WhatisLegacyWealthPlanning?

LegacyWealthPlanningisthecreationofadefinitiveplanformanagingyourtotalwealthwhileyou’realive,distributingyourestatehowyouchooseafteryourdeath,andaclearplantopassonyourlegacy.Yourestateincludesallassetsofanyvaluethatyouown.Thisincludesnon-financialassetsaswellasfinancial assets, including real property, business interests, investments, insurance proceeds,retirementaccounts,andpersonalproperty.Your legacy incorporates importantdecisionsensuringyourfamilycorevalues,responsiblebehaviorsandcommunityinvolvementarepassedontofuturegenerations. Keep in mind, your legacy also includes personal effects, such as family heirlooms,stories,andaccumulatedwisdomandlifelessonsofyourfamily.

2 Whatis“traditional”estateplanning?

Traditionalestateplanning(WillsandTrusts)focusesontheaccumulation,thepreservation,andthedistributionof only your financial assets andworldly possessions. It protectsmaterialwealth fromprobateandminimizestaxes.

3 Whatisthedifferencebetween“traditional”estateplanningandLegacyWealthPlanning?

Traditionalestateplanningisfocusedonfinancialassetsandisconcernedwithavoidingprobateandestatetaxes.Ontheotherhand,LegacyWealthPlanningisconcernedwithfinancialandnon-financialassetsofafamilyandcreatingafamily’spersonallegacyplan.LegacyWealthPlanningaddresseshowtocaptureandtransferfamilytraditionsandvalues,aswellasprotectingfinancialwealthforcurrentandfuturegenerations.

4 WhatisaFamilyWealthTrust?

AFamilyWealthTrust isthemaincomponentofaLegacyWealthPlanandcovers important issuesotherthanavoidingprobate.

5 HowdoesaFamilyWealthTrustdifferfromaRevocableLivingTrust?

MostRevocableLivingTrustsareprimarilyconcernedwithavoidingprobateandestatetaxes.AFamilyWealthTrustofferslifetimebenefits,andprotectswealthforcurrentandfuturegenerations.

6 WhatstepscanItaketopreservemylegacy?

The best approach is to meet with an attorney who understands the Legacy Wealth Planningprocess.Thiswillensureyouaddressthefinancialandnon-financialassetsofyourfamily.Therightattorneywill help you, first, set up a FamilyWealth Trust to preserve your financial legacy. Then,youwillbeeducatedaboutcompletingtheMyLegacyworkbook,toshareinyourownwordsabout

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yourlifestory,familyhistory,memories,andlifelessons.Finally,writingaLegacyPlanningLettertodistributeyourcherishedpossessionswithsentimentalvalue.

7 WhatwillhappentomypropertyifIdiewithoutaWillorTrust?

IfyoudiewithoutaWillorTrust,thestatedetermineswhowillbeyourultimateheirs.Thisdistributionplancanbefoundintheintestacystatuesofeachstate.Theapplicablestatecanbeeitherthelocationofyourlegalresidence(personalproperty),orthestateinwhichyourassetsarelocated(realproperty).In the stateofCalifornia, for example, the law requires thatwithout a validWill or Trust inplace,communitypropertygoesentirelytothesurvivingspouse,andseparatepropertygoestothesurvivingspouseandchildren(ifany),inthisorder:Ifthedecedenthadonlyonechild,thespousegetshalfandthechildgetshalf.Ifthedecedenthadmorethanonechild,thespousegetsone-thirdandthechildrendividetwo-thirdsamongthemequally.(Thechildren,ifany,ofpredeceasedchildrentaketheirparent’sshare.) If the decedent leaves no spouse or direct lineal descendants, parents (or their linealdescendantsiftheyarepredeceased)wouldtaketheestate.

8 HowismypropertytransferredifIdieintestate?

If you die intestate, the transfer of your property is accomplished through a court-supervisedproceedingcalledprobate thatgenerally takesaminimumof sixmonths, typicallya yearormore.Theseproceedingsgenerallyareexpensiveandtime-consumingandtieupyourpropertyforseveralmonths.Probatecanbeavoidedwithproperestateplanning.

9 Whatisprobate?

Probateisthecourtprocedureusedtochangetitletoassetsfromthenameofanindividualwhohaspassedawayintothenameofthelivingbeneficiaries.Itisalsowhereallcreditorsofadecedentfileclaimstocollecttheirdebtsandwhereinterestedpartieswhohaveacomplaintregardingthedeceasedcan file their complaint (aWill contest). Evenwithout a contest, probate can be costly and time-consuming.Probateisapublicproceeding.

10 Canprobatebeavoided?

Probatecanbeavoidedwithcarefulplanning.Thereareanumberofdifferenttechniquesfordoingsowhichcanbeusedaloneorincombination.

11 Whatisjointtenancywithrightsofsurvivorship?

Itisaformofpropertyownershipwhere,uponthedeathofoneoftheowners,allofthedeceasedowners'interestinthepropertyistransferredimmediatelytothesurvivingowners.

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12 Canamarriedcoupleusejointtenancyuntilonespousedies,thensetupaTrustforthesurvivor?

Yes,but thisunfortunatelyhas severalproblemsassociatedwith it.There isnoguarantee that thesurvivingspousewillhavetimetosetupaTrustafterthefirstspousedies,or,moretothepoint,willactuallygetaroundtosettingupaTrust,regardlessoftheamountoftimeavailable.Thismethodalsolosesthe$5.43millionApplicableExclusionAmounttaxadvantage,because,likeanoutrightgift,jointtenancylumpsalltheassetsinonespouse'sestate(unlessanestatetaxreturnisfiledand“portability”iselected).Inaddition,thesurvivorwillnotseetheincreaseinbasisforthesurvivor'sinterestaswouldhappeninacommunitypropertystate.

13 WhatifIcreateajointtenancywithmychild?

Thisisadisadvantageouswaytoplananestate.Theproblemwithputtingyourchild'snameonthetitletoyourpropertyasajointtenantisthatwhileitwillavoidprobate,creditorsofthechildwillbeabletoreachthejointtenancyproperty.Itmayalsocreateataxablegiftwhennoneisexpected,andmaynotbeconsistentwithyourultimatelydesireddistribution.

14 HowdoIknowifIhavea“barebones”LivingTrust?

VeryfewestateplanningattorneysofferLegacyWealthPlanning.A"barebones"LivingTrustcoversprobateavoidanceandusuallyignoresimportantissuestoprotectyou,yourspouse(ifmarried)andyourchildren.BringyourexistingTrusttoyourfreeone-hourconsultationandwecanreviewitforyou.

15 IfIhavea“barebones”LivingTrustshouldIgobacktotheattorneywhodraftedtheTrust?

Youcancertainlygobacktotheattorneyyouworkedwithbefore,however,fewattorneysofferLegacyWealthPlanning.IfyouwantLegacyWealthPlanning,contactamemberoftheAmericanAcademyofEstatePlanningAttorneys.

16 WhyisaFamilyWealthTrustbetterthanaPowerofAttorney?

AFamilyWealthTrustisoftenrecommendedtoclientsasthekeydocumentintheirestateplan.OnereasonforthisisthattheFamilyWealthTrustisnormallythebestmethodformanagingassetsduringincapacity.AmajoradvantageoftheFamilyWealthTrustoverthePowerofAttorneyisthataTrusteehasactualtitletotheassetsandthereforethirdpartiesmustdealwiththeTrusteeastheowner.Anagentdoesnothavetitleandhencethirdpartiesmayrefusetodealwiththeagent.ThisisparticularlytrueifthePowerofAttorneyismorethanafewyearsold.

17 WhyshouldIhaveaFamilyWealthTrust?

NotonlydoesaFamilyWealthTrustprovideforthedispositionofyourproperty(likeaWill),butitalsooffersthefollowingbenefits:

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• Providesfortheimmediatetransferortrustmanagementanddistributioninthefutureofassetsafterdeath;

• Allowsforasmoothtransitionofmanagementuponincapacityordeath;• Avoidstheexpenseandhassleofprobateproceedings;• Minimizesestatetaxesanddeferspaymentofestatetaxesformarriedcouples;• Allowsforcontinuedcontroloverassetsafterdeathorincapacity;• Providessecuritytoyouandyourlovedones;• Protectsyourchildren’sinheritancefromtheirownpotentialdivorce;• Safeguardsyourestateforyourkidsifyoursurvivingspouseremarries;• Offersflexibility.

18 WillIstillhavecontrolovermypropertyifIestablishaFamilyWealthTrust?

Absolutely! While you are alive and mentally competent, you have complete control over yourproperty.Youcanbuy,sell, improve,spend,changeinvestments,orgiveawayproperty justasyouwouldwithoutaTrust.TheTrustcanbemodifiedinanymanneryoudesireoritcanbecompletelyrevoked.Uponyourdeath,theTrustbecomesirrevocablesothatnoonecanchangeyourtestamentarywishes.Uponyourincapacity,thesuccessortrusteeyou’venamedwillmanageyourassetsforyourbenefit.Formarriedcouples,theotherspousestillhastotalcontroloverhisorhershareofproperty.

19 WhoistheTrusteeofmyFamilyWealthTrust?

Whileyouarealive,youmayactasTrustee.Formarriedcouples,eitheroneorbothspousesmayactasTrusteeorco-Trustees.ThesuccessorTrusteeisanindividualorcorporationfiduciarywhomyoudesignatetobeinchargeofyourTrustintheeventofdisabilityorupondeath.

20 WhoshouldbedesignatedassuccessorTrusteeofmyFamilyWealthTrust?

YouwillneedtodesignateoneormoresuccessorTrustees.Thesecanbeindividuals,suchasfamilymembers,trustedfriends,Trustedprofessionals,oryoucoulddesignateaninstitution,suchasabankorprofessionalTrustcompany.Individualsmaypredeceaseyou,whileaninstitutionwill(mostlikely)still exist at the time of your death. Institutions provide the benefit of experience in moneymanagementandTrustadministration,whilefamilymembersandclosefriendsaremore"personal"andhavefirst-handknowledgeofyourdesires.Ifyouchooseanindividual,theindividualshouldhavesomebusinesssense,oryoumightwishtonameanindividualandaninstitutionasco-Trustees.Thedownsidetoco-Trusteesisthepossibilityofdisagreements.

21 CanyoubetheTrusteeofmyFamilyWealthTrust?

TechnicallyalawfirmoranattorneyatalawfirmispermittedtobetheTrustee.However,atourlawfirm,weneveractasTrusteeforourclients.Wethinkitisinappropriate.

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22 WillmyincometaxeschangeifIcreateaTrust?

AFamilyWealthTrustdoesnotchangeyourincometaxliability.TheInternalRevenueServicedoesnotrequireanyadditionalincometaxfilingswhenyoucreateaFamilyWealthTrust,andthesameannual1040taxreturnisfiledaslongasamarriedcouplefilesjointlyandtheTrustholdsnoforeignproperty.

23 DopropertytaxeschangeifIcreateaTrust?

Generally,propertytaxesremainthesamewhenrealestateistransferredintoaFamilyWealthTrust,althoughlawsvaryfromstatetostateandcountytocounty.Relevantstatelawneedstobereviewedbeforeanytransferismade.

24 WhatistheannualfeeforaTrust?

ThereisnoannualfeeassociatedwithmaintainingaTrust.FeesareinvolvedwhenanamendmenttotheTrustismadewhichinvolveschangingthetermsoftheTrust.WhenaspouseorTrusteepassesaway,feeswillbechargedinordertohandletheTrustAdministrationtotakeadvantageofcertaintaxbenefits,ifapplicable,andtofollowthetermsoftheTrust.

25 HowdoIfundmyTrust?

FundingaTrustentailstransferringassetsyouownasanindividualintothenameofyourTrust.Forsomeassets,ourlawfirmmakesthetransfersandpreparesthedocumentsforyoutosign,forexample,realestate.Forotherassetsthatourlawfirmisunabletochangeforyou,wewillgiveyouinstructionsastohowtitleischanged,andwillprovideyouwiththenecessarypaperwork.Forexample,tofundyourTrustwithbankaccounts,aletterispreparedforyoutotaketothebanktochangetitleofyouraccounts.YouwillhavetogotothebankinpersontosignanewsignaturecardasTrusteeofyourTrust.

26 WhatassetsareleftoutsideofmyTrust?

Althoughthere'snothingwrongwithhavingyourcheckingaccountinthenameofyourTrust,someindividualsliketohavejusttheirnameonthechecks.YoucandosoeveniftheaccountisintheTrust,oryoucansimplychoosetoleaveasmallcheckingaccountoutsideoftheTrust.OtherassetswhichshouldnotbefundedintotheTrustareIRAsandpensionplans.What'simportantistocoordinatetheappropriatebeneficiarydesignationwithyouroverallestateplan.Thisisacomplexareaofplanningandmustbebasedoneachperson'sindividualfamilycircumstancesandsizeofestate.

27 Howisout-of-statepropertyfundedintomyTrust?

Out-of-statepropertyistransferredintotheTrustbyusingalocalattorneyinthatstateworkingwithour lawfirm.Weareamemberof theAmericanAcademyofEstatePlanningAttorneys,anationalorganizationwithmemberscoasttocoast.Therefore,wecancontactanothermemberattorneyinthestatewhereyourpropertyislocatedtohaveittransferredtoyourTrustwithaminimumofdelay.

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28 Howaretime-sharesfundedintoaTrust?

Timeshares are transferred based upon the type of ownership you have. Some timeshares are acontractandaretransferredtotheTrustbyanassignmentofthecontract.Othertimesharesareafee-simple,whichmeans you have absolute ownership and it is a form of real estate. Therefore, it istransferredbydeedingittotheTrust

29 IfItransferrealestatetomyTrustcanthebankcallmyloan?

EnactedaspartoftheGarn-St.GermainDepositoryInstitutionsActof1982(P.L.97-320;96Stat1501)adue-on-saleclausecannotbeenforcedona"transferintoanintervivosTrustonwhichtheborroweris and remains a beneficiary andwhichdoesnot relate to a transfer of rights of occupancy in theproperty."Thisexemptionappliestoresidentialrealpropertycontaininglessthanfivedwellingunits{12USCSec.1701j-3(d)}.Theregulationslistthattheborrowerinthistypeofsituationmustremainthe beneficiary and occupant of the property {12 CFR 591.5(b)(vi)}. However, "occupancy" is notdefined.Therefore,prudencesuggestsnotifyingthelendinginstitutionbeforethetransfer.

30 DoesaFamilyWealthTrustprovideassetprotection?

DuringthelifetimeofbothspousesthereisnoassetprotectionprovidedbyaFamilyWealthTrust.However,theremaybesomeprotectionforthesurvivorafterthefirstspousedies,dependinguponthe choices you select. The Trust can also be created to provide creditor protection for otherbeneficiariesoftheTrust.

31 IsaFamilyWealthTrustonlyfortherich?

No.AFamilyWealthTrustcanhelpanyonewhowantstoprotecthisorherfamilyfromunnecessaryprobate fees,attorney’s fees,courtcostsand federalestate taxes. In fact, theFamilyWealthTrustofferssubstantialprotectionforyourfamily,regardlessofyourtotalestate.Inadditiontosavingsatdeath,especially ifyourestate isover$100,000,theFamilyWealthTrustalsoprovidessavingsandpeaceofmindduringlife,becauseitavoidstheexpenseandemotionalnightmareofanincapacityor“living probate” proceeding. Also, a Family Wealth Trust can protect spouses in the event ofremarriageafteronespousediesandcanaffordgreaterprotectionforchildren.

32 HowdoIknowifmyestatehasenoughliquidity?

Liquidityplanningispartofestateplanning.Generally,itisnecessarytolookattheestateandseeifthereisenoughcashtopaytaxes,administrativeexpenses,andsupportdependentfamilymembers.Therearegenerallytwowaystodealwiththeliquidityissue,eitherbyreducingtaxesandexpenseswhichrequirecash,orbyincreasingthecashandliquidityoftheestate.TechniqueswhichreducetaxesincludefullyusingtheApplicableExclusionAmountatdeath,makingannualgifts,andusingplanningtechniques such as GRITs and QPRTs. Other techniques which reduce expenses include avoidingprobateandusingaFamilyWealthTrust.Ofcourse,increasingtheliquidityoftheestatecanbedonethroughconversionofassetsaswellaslifeinsurance.

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33 WhydoIneedaPour-OverWillifIhaveaFamilyWealthTrust?

A Pour-OverWill is used first to name a guardian for minor children. Second, it protects againstintestacy in the event any assets have not been transferred into the Trust at the death of theTrustor/Owner.Itsfunctionisto"pour"anyassetsleftoutoftheTrustintoitsotheyareultimatelydistributedaccordingtothetermsoftheTrust.

34 Whataretheadvantagestokeepingassetsinatrustformybeneficiaries,insteadofdistributingthemoutright?Whataboutthedisadvantages?

Theadvantages includepotentialprotection fromdivorce,creditors, taxingauthorities,bankruptcy,beneficiaryindiscretionandmismanagement,aswellasassuringtheassetsremaininthefamily.Thedisadvantagesarethattheremaybesomesmalladministrativeburdens,suchaspotentiallyneedingtofileanincometaxreturnforthetrust.

35 HowdoIchangemyTrust?

AnactualchangetothetermsofaTrustiscalledanamendmenttotheTrust.Anexamplewouldbechangingthedistributionfromtwochildrentojustonechild.ATrustcanalsobechangedbyatotalrestatementoftheTrustifmultiplechangesareinvolved.

36 WillmyTrustneedtobechangedwhenIbuyorsellassets?

BuyingorsellingassetsdoesnotchangetheTrustterms.ItmerelychangestheassetsintheTrust.SothinkofbuyingandsellingassetsasassetsgoinginandoutoftheTrustwithoutchangingthetermsoftheTrust.

37 DoIhavetocometoyourlawfirmtochangetheTrust?

Thereisnothingthatrequiresyoutoworkwiththeattorneyorthelawfirmthatoriginallypreparedyourestateplanningdocuments.We,ofcourse,hopethatyouwillreturntoourfirmtodoanyworkintheestateplanningarea,baseduponourphilosophyofbeingofservicetoourclientsandbeingtherewhenweareneeded.

38 WhatarethefeestochangemyTrust?

Atourfirm,wealwayschargeaflatfeeonceweknowexactlywhatthechangesareyouwant.Inthepreviousexample,foranamendmentchangingthedistributionofassets,wecharge<InsertAmount>atthepresenttime

39 WhendoesaTrustendorterminate?

A Trust will end or terminate when the distribution of all assets is made pursuant to the Trustdocument.

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40 HowdoIrevokemyTrust?

Trustsarerarelyrevoked.Mostofthetime,onceaTrustissetup,noonewantstorevokeit.However,therearesituationswhereitdoesoccur,primarilyinthecaseofdivorce.Abriefwrittenagreementisprepared,indicatingthattheTrustisnowrevoked.Theassetsareremovedandputinthenameoftheindividuals,whoarefreetoestablishnewTrustsiftheysodesire.

41 CansomeonecontestaTrustlikebreakingorcontestingaWill?

Anyonecanhireanattorneytoquestionhowlegalaffairshavebeenarranged.So,intheory,anyonecanattempttocontestaTrust.Inpractice,however,itismuchmoredifficultthancontestingaWill.AsallWillsmustbeprobated,anyinterestedpartycaneasilyjointheroutineprobatecourtproceedingsandcontesttheWillatthattime.Incontrast,someonewhowantstocontestaTrustmusttaketheinitiativetobeginhisorherownlawsuit,completewithcourtandattorneyfees.

42 WhathappenstoaFamilyWealthTrustwhenonespousedies?

Whenonespousepassesaway,atthattime,thesurvivingspouseshouldcontactourofficesothatwecansetupameeting.AtthatmeetingweexplainwhatneedstobedoneinordertofollowthetermsoftheTrust.WeneedtoinventoryallassetssothatweknowwhatisintheTrustinordertodividetheassetsintotheATrustandtheBTrust--thesurvivor’sTrustandthefamilyTrust,ifapplicable.TherearetremendoustaxbenefitsassociatedwiththeA/BtypeofTrust,whichiswhyasnapshotistakenoftheassetsatthedateofdeathofthespouse.

43 Whatisthecostwhenonespousedies?

Wechargeanhourlyfeebaseduponthetimeweworkonthematterorapercentageofthevalueoftheestate.Itvariesfromclienttoclientdependinguponthenatureoftheassetsandthecomplexityof the financial situation.Our fees rangeanywhere from<InsertAmount> in a simple situation to<InsertAmount>foralargerestateandmorecomplicatedfinancialpicture.

44 WhathappensifIamsinglewhenIdie?

Whenasingleindividualpassesaway,whoeverisnamedassuccessorTrusteeshouldcontactouroffice.Inmostcases,theTrusteeisinstructedthatassetsneedtobecollected,debtsneedtobepaidandthenultimatelythedistributionofassetswillbemadepursuanttothetermsoftheTrust.Inessence,thetermsoftheTrustarecarriedout.

45 HowlongdoesittaketosetupaTrust?

Inourfirm,weliketocompletetheworkwithinfourweeksofourfirstclientmeeting.

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46 DoIworkwithyouoraparalegal?

Thefirststepintheestateplanningprocessisforyoutocomeinforyourinitialconsultation.Atthattime,youwillmeetwithmeoroneoftheotherestateplanningattorneysatthefirm.Wewillworkwithyouand,ofcourse,draftallofthedocumentationtoimplementyourestateplan.Wedoalsohavespeciallytrainedparalegalsinourlawfirm,whodospecificjobssuchasassetcollectionandfundingandthingsofthatnature,aswellasthenotarizationoftheappropriatedocuments.Youwillmeetthemasyourestateplantakesshape.

47 WhatistheTrustname?

YourTrustnamewillbe“[yourname]asTrusteeofthe[yourlastname]FamilyWealthTrustdated[date],andanyamendmentsthereto”.Anexamplewouldbe“BillandMarySmithasco-TrusteesoftheSmithFamilyWealthTrustdatedJanuary1,2009,andanyamendmentsthereto”.

48 DoesyourlawfirmdoWills?

Atourfirmourmaingoalistoeducateclientsabouttheiroptionsinestateplanning.Wethengiveourclientsourjudgmentastowhatisbestforthem.IfitisappropriateaWillmaybeprepared.

49 Doesyourlawfirmhandleprobate?

Whatever your estate planning needs, from start to finish, we are here to help.We handle TrustAdministrationsandProbates.Itisofteninthesecircumstances,whenafamilycomestousdistraughtoverthelossofalovedone,thattheyfindourprobateservicessoveryimportant.Wecanhelpthemthroughthedifficultandoftentime-consumingprocessofprobate.

50 WhathappenstomyTrustifyouoryourfirmisgone?

The benefit of working with our firm is that we have several attorneys who do estate planning.<Dependinguponfirmsize.>Intheunlikelyeventthatthefirmisnotaround,Iamsurethatwewillhavejoinedwithanotherfirminordertocarryonthebusinessandtobeabletoserveourclients.Iftherearechangesinthefirm,wewillinalllikelihoodcontactyoutoletyouknowaboutthemandhowtocontactusinthefuture.

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TAXES:ESTATETAXES,GIFTTAXES,CAPITALGAINS,GSTQUESTIONS

51 Howlargeofanestatecanpassfederalestatetax-free?

The federalgovernmentallowsevery individualanamount free fromestate taxat theirdeath, the“ApplicableExclusionAmount,”whichis$5millionandisindexedforinflation.Thismeansthatin2015,estatetaxeswillnotbeowedatthetimeofanindividual'sdeathunlessthenetvalueoftheestateexceeds$5.43million.

52 Whatisthemaritaldeduction?

TheInternalRevenueServiceallowsanindividualtoleaveanyamountofassetstohisorherspousewithout taxation. At the death of the surviving spouse, however, all assets in the estate over theApplicableExclusionAmountwillbeincludedinthesurvivor'staxableestate;assetsabove$5.43millionaretaxedat40%in2015.

53 HowcanIleavemyestatetomyspousetax-free?

Anoutrightgiftatdeathqualifiesfortheunlimitedmaritaldeductionforestatetaxesand,therefore,therewill be no tax paid on the amount left to the surviving spouse. However, the $5.43millionApplicableExclusionAmountontheestateofthefirstdeceasedspouseislostwhenthesecondspousedies,unlessanestatetaxreturnisfiledand“portability”iselected.

54 Whatis“Portability”andcanIjustrelyonit?

“Portability” is theability foronespousetouse theremainingunusedestate taxexclusionof their

spousewhodiedbeforehimorher.InordertotakeadvantageofPortability,thedeceasedspouse’s

estatemustfileanestatetaxreturnandmustelectsuchPortability.RelyingonPortabilitymayormay

notberightforyou.Portabilitydoesnotmaximizetheamountofmoneythatmaybeabletopassfree

ofestatetax.Amountspassingdirectlytoaspouse,even ifwithintheestatetaxexclusion,maybe

subject claims from the surviving spouse’s creditorsornewspouse.Portability is effectiveonly for

federalestatetaxesandnotstateestateandinheritancetaxes.Forthesereasonsandothers,relying

onPortabilitymaynotberightforyou.

55 ShouldIusemy$5.43millionApplicableExclusionAmountduringmylifetime?

Thisisacomplexquestion.Theanswerdependsuponindividualfamilycircumstancesandthesizeofyourestate.

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56 WhatistheAnnualGiftTaxExclusion?

TheAnnualGiftTaxExclusionisanamountthatcanbegivenawayannuallywithoutresultingingifttaxonthetransfer.TheAnnualGiftTaxExclusionamountisinflationadjustedandcurrentlyis$14,000perrecipient.Thereisnolimitonthenumberofrecipientstowhomqualifyinggiftscanbemade.

57 Whathappensifthetaxlawchanges?IsmyTruststillvalid?

Intheeventofataxlawchange,theTrustisstillvalid.However,amendmentstotheTrustmaybeneededtocomplywithortakeadvantageofthenewlaw.

58 WhatisCapitalGainsTax?

CapitalGainsTaxisanincometaxpaidontheappreciationofthevalueofanassetfromwhenyoubought it to when you sold it. If you lost money, it would be a "capital loss."Theincometaxrateforcapitalgainsonpropertyheldforoverayearistypicallymuchlowerthanthetaxrateonordinaryincome.

59 Whatisastep-upinbasis?

Astep-up—orstep-down—inbasisisanadjustmentfortaxpurposestoanasset'sfairmarketvalueatthedateofthedeathoftheowneroftheasset.Forexample,ifyouboughtashareofstockfor$100thatincreasedinvalueto$500atthetimeofyourdeath,yourtaxbasiswas$100butincreasesto$500atthetimeofdeath.Thisincreaseisknownasastep-upinbasis.Ifyouboughtthestockfor$500anditwasworth$100atthetimeofyourdeath,itwouldbeastep-downinbasis.

60 Domyassetsgetastep-upinbasisifthey’reinmyTrustwhenIdie?

YourshareoftheassetsheldintheTrustdoesgetastep-up—orstep-down—inbasisuponyourdeath.Therewillbeanotherstepup—orstep-down—inbasisofyourspouse'sshareoftheTrustassetsatthedeathofyourspouse.Thestep-upinbasisallowsthepersoninheritingtheassettosellitwithouthavingtopaycapitalgainstax.

61 Whenisanestatetaxreturndue?

Anestatetaxreturnisdueninemonthsafterthedateofdeathandmaybeextendedforsixmonths.AreturnisrequiredifassetsareinexcessoftheApplicableExclusionAmountremainingatdeath,evenifthenetestateislessthantheApplicableExclusionAmount.Undercertaincircumstances,filinga706isrecommendedeveniftheestateislessthantheApplicableExclusionAmount,inordertostartthestatuteof limitations running,or toelect “portability”of thedeceased spouse’sunusedApplicableExclusionAmount.

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62 WhatistheGeneration-SkippingTransferTax?

Thisisataxleviedonassetsthataregiventoindividualswhoaremorethanonegenerationyoungerthanthedonor.Anexamplewouldbeagrandparentgivinganassettoagrandchildeitherduringthegrandparent's lifeoratdeath.Eachdonorhasa$5.43millionexemptionintheyear2015fromtheGeneration-SkippingTransferTax.Effectively,thisexemptioncanallowyoutoskipestatetaxinyourchild’sestate.

POWERSOFATTORNEY&INCAPACITYPLANNINGQUESTIONS

63 WhatisaPowerofAttorney?

APowerofAttorneyisadocumentauthorizingsomeoneelse(youragent)toactonyourbehalf(theprincipal).Thepurposeofgivingsomeonesuchapoweristoenabletheagenttoactonyourbehalfwhenyoucannotactforyourself.

64 WhocancreateaPowerofAttorney?

Generally,anyindividualcancreateaPowerofAttorneyifover18yearsofageandlegallycompetent.This,however,variesfromstatetostate.

65 WhomayactasanagentunderaPowerofAttorney?

Ingeneral,anagentmaybeanyonewhoislegallycompetentandovertheageof18.Usually,itisafamilymembersuchasaspouseorachild.Morethanonepersoncanbenamedasanagent.However,sometimesnamingtwoormoreindividualstoacttogethercanproveinconvenient,particularly ifapowerofattorneymustbeexercisedpromptly.Abettercourseistonameoneindividualasagentandthenanotherasabackup.

66 WhatisthedifferencebetweenaGeneralandaLimitedPowerofAttorney?

AGeneralPowerofAttorneyauthorizesyouragenttodoalmosteverythingonyourbehalfwhichyoucoulddoforyourself.ALimitedPowerofAttorneyauthorizesyouragenttoperformonlycertainactsspecificallylistedinthedocument.

67 HowdoesanagentuseaPowerofAttorney?

Youragentpresentsthepowertotheotherpartyinvolvedinthetransactionandsignsanynecessarydocumentsneededforsuchtransactionsonyourbehalf.Youragentnormallysignsyourname,addingthereafter“byAttorneyinFactMarySmith.”

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68 WhataretheformalitiesofsigningaPowerofAttorney?

Requirementsvaryfromstatetostate,butgenerallyasimplenotarizationorsigningthepowerinthepresenceofwitnessesisnecessary.

69 WhendoesaPowerofAttorneybecomeeffective?

Thisdependsuponwhatthepowersays.Itcanbemadeeffectiveatthetimeofsigningoritcanbecomeeffectiveatthetimeofyourincapacityoranotherevent.

70 HowdoesaPowerofAttorneyterminate?

Death revokes a Power of Attorney. You may also cancel your Power of Attorney by signing arevocation.ThebestwaytorevokeaPowerofAttorneyistodestroyallcopies.However,thirdpartieswithoutnoticeoftherevocationmaystillrelyonthePowerofAttorney.So,itisbesttosendanoticeofrevocationtoanyonethathadhonoreditinthepast,suchasthebank.IfthepowerisaNon-durablePowerofAttorney itwill be ineffectiveduring your incapacity,while aDurable PowerofAttorneysurvivesyourincapacity.

71 UnderaPowerofAttorney,canmyagentmakeagiftonmybehalf?

Yes,butyourPowerofattorneymustspecificallyauthorizeyouragenttomakesuchgiftsfromyourassetstopersonswhomyouwouldlikelymakegifts.

72 Mustthird-partieshonoraPowerofAttorney?

Thereisnowaytoforceathird-partytoacceptthepower.Manybankswillrequireyoutocompletetheirownformstoauthorizeyouragenttowritechecksonyouraccount,soitisadvisabletoinquireastowhetheryourbankinginstitutionrequiressuchformsthatcanbecompletedinconjunctionwithexecutingapowerofattorney. Inaddition, the IRSgenerallywillnothonoranyPowerofAttorneyunlessyouusetheIRSForm2848.

73 WhatarethedisadvantagesofaPowerofAttorney?

First,third-partiesmaynotrecognizeyourPowerofAttorney.Second,itcanbedifficulttorevokeaPowerofAttorney,especiallyifyouragenthasgivencopiestothird-partiesthathavehonoredit.Third,theagentcanreachyourassetswithoutcourtapprovalorsupervision.Therefore,itisimperativethatyouselectanagentwithgreatcareandhavetremendousconfidenceinthatindividual.

74 Aretherealternativesformanagingpropertywhenapersonbecomesincapacitated?

Thereareseveral.OneisusingaDurablePowerofAttorney.Anotherisacourt-supervisedproceedingreferredtoasaguardianshiporconservatorship.Anotheralternative is theuseofaFamilyWealthTrustwhereassetsarefundedintotheFamilyWealthTrust.

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75 WhatmakesaDurablePowerofAttorneydurable?

ADurablePowerofAttorneyremainseffectiveevenifyoubecomeincapacitated.Generally,unlessthepowerspecificallyindicatesitisdurable,itisnotdurableandwillterminateuponyourincapacity.

76 ShouldIhaveaDurablePowerofAttorney?

Yes.TheDurablePowerofAttorneyforpropertyisoftenusedinconjunctionwithaTrusttoenableyouragenttotransferyourassetsintoyourTrustintheeventyoubecomedisabled.ADurablePowerofAttorneycanbemadeeffectiveimmediatelyuponbeingsignedorcanbecomeeffectiveatthetimeofyourincapacity,whichisalsocalleda“springing”PowerofAttorney(checkrelevantstatelawtoseewhatisallowed).

77 WhataretheadvantagesofaDurablePowerofAttorneyforProperty?

A Durable Power of Attorney can be a better way to deal with incapacity than a guardianship orconservatorship.Itavoidsthecourtproceedingthataguardianshiporconservatorshiprequires.

78 ShouldIhaveaDurablePowerofAttorneyforHealthCare?

Yes,itisimportanttohaveaDurableHealthCarePowerofAttorney,sometimescalledaHealthCareProxy. Itallowsyouragenttomakeanumberofhealthcaredecisionsonyourbehalf.Oftenthis isaccompaniedwithaLivingWilloraphysician'sdirectivethatcancovertheissueofremainingonlifesupportsystemsundervaryingcircumstances.

79 WhatisaLivingWill?

ALivingWill,orsometimescalledaphysician'sdirective,isadocumentinwhichyougivedirectionsforlifesustainingtreatmentshouldyoubecomeunabletocommunicateyourwishes.SomestateshavecombinedthisintotheAdvancedHealthCareDirective.

80 Whatisaguardianshiporconservatorship?

Thisisacourt-supervisedproceedingwhichnamesanindividualorentitytomanagetheaffairsofanincapacitatedperson.Aguardianshipmayalsoincludethedutytocarefortheincapacitatedperson.

81 Whatisthenominationofaguardian?

The nomination of a guardian occurswhen an individual seeks court approval to act on behalf ofsomeonewhoisincapacitated.ThisisavoidedthroughthecreationofaPowerofAttorneythatcanbeusedtonameaguardianintheeventoneisneeded.

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82 Whatarethedisadvantagesandadvantagesofaguardianship?

A primary disadvantage to a guardianship is that it is a public proceeding, thereby exposing theincapacitatedindividualtoembarrassmentasthedetailsoftheirincapacityarediscussedatlength.Itisalsoexpensive,andisarestrictiveprocedure.Inaddition,thereisnoguaranteethattheendresultwill be in accordance with the incapacitated person's wishes, and someone unacceptable to theincapacitated person could be placed in charge of his or her affairs. A major advantage to aguardianshipisthatthecourtswatcheverymovetheguardianmakesinrelationtotheassets.Somefeelthisprovidesincreasedprotectionaswellasestablishingtheauthorityofaguardianasthirdpartiesmustdealwiththeguardianduetothecourt'ssupervision.

ADVANCEDPLANNINGQUESTIONS

83 Whatisa“CTrust”or“QTIPTrust”?

A“CTrust”or“QTIPTrust”(QTIPstandsforQualifiedTerminableInterestProperty)isamaritalTrust.ThisiswhereonespouseownsmorethantheApplicableExclusionAmount($5.43millionin2015)andwantstocontrolthatadditionalamountofmoneyafterheorshepassesaway,yetalsodeferthetaxontheamountabovetheApplicableExclusion.ByputtingtheamountabovetheApplicableExclusionintoaQTIPTrust,estatetaxesaredeferreduntilthesurvivingspousepassesaway.Animportantissue,oftenoverlooked,iswhopaystheestatetaxontheQTIPassets(thesurvivingspouse).AQTIPTrustisalsousedinconnectionwithmaximizingwhatiscalledtheGeneration-SkippingTransferTaxexclusionamount.

84 WhatistheUniformTransferstoMinorsAct?

Thisisalawthatestablishesacustodianshipforholdingthepropertyofaminor.Propertyisgiventothecustodianwhomanagesitandusesitforthebenefitoftheminor.

85 WhatisaQDOTTrust?

AQDOTTrust(QDOTstandsforQualifiedDomesticTrust)isaspecialTrustsetupwhenanon-citizenspouseisthesurvivingspouse.Thetaxlawgenerallydoesnotallowanindividualtoobtainthemaritaldeduction when leaving assets to a non-citizen spouse. The marital deduction is obtained if thepropertyisheldinaQDOTTrust.

86 WhatisaCharitableRemainderTrust(CRT)?

ACharitableRemainderTrustpermitsadonortodefertheincometaxconsequencesonthesaleofacapitalgainpropertyandmakeacharitablegift.ThedonortransferspropertytotheTrust,retainingtherighttoreceiveastreamofannualpaymentsforatermchosenbythedonor.Atthedonor’sdeaththeremainingassetsgotothecharity.ThetwotypesareCharitableRemainderAnnuityTrustsandCharitableRemainderUniTrusts.

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87 WhatisaFamilyLimitedPartnership(FLP)?

AFamilyLimitedPartnershipisapartnershipmadeupoffamilymembersandisusedinmanycasestofacilitateassetmanagement,taxplanningandgifting.Generally,theparentsarethegeneralpartners,controlling the partnership and making all decisions. The limited partners are often children orgrandchildrenwhoreceivegiftsofpartnership interests.This isaverypopularandeffectiveestateplanningtool.

88 WhatisaCrummeyPower?

ACrummeyPowerisaspecialpowerregardinggiftsinTrust.Itwasnamedforacourtcaseofsomeyearsago.InorderforagiftinTrusttoqualifyfortheannualgifttaxexclusion,theindividualrecipientmusthavearighttowithdrawthemoneyforsomecertainperiodoftime.TherighttotakethegiftfromtheTrustduringtheperiodoftimeindicatedisknownastheCrummeyPower.

89 WhatisanILIT?

ILIT stands for Irrevocable Life InsuranceTrust. This is anestateplanning technique,oftenused toensurethatlifeinsuranceproceedswillnotbesubjecttofederalestatetax.Itcanbeusedeffectivelytoreducethesizeofthetaxableestateandtoprovideasourceoftax-freefundsthatmaybeusedtopayanydeathtaxesdueatthedeathoftheinsured.

90 WhatisaGrantorRetainedAnnuityTrustorGRAT?

This is a Trust into which an individual transfers property and retains the right to receive annualpaymentsfromtheTrustforatermofyears.Thisisataxplanningtechniquetoreducethesizeofanestateandtheamountoftheresultingestatetax.Ifthepropertygrowsfasterthantheassuredinterestrate, set monthly by the IRS, what remains in the Trust passes to children or other remainderbeneficiaries,freefromstateandgifttax.

91 WhatisaQualifiedPersonalResidenceTrust(QPRT)?

ThisisanirrevocableTrustintowhichapersonalresidenceistransferred.TheindividualorcouplewhocreatedtheTrustretainstherighttousethepropertyforthetermoftheTrust.ThisisataxplanningtechniquetoremovetheassetfromtheestateoftheindividualmakingtheTrust.IfthegrantorsurvivesthetermoftheTrust,thentheassetisnotpartoftheestate.

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MEDICAIDPLANNINGQUESTIONS

92 WhatisthedifferencebetweenMedicaidandMedicare?

PeopletendtoconfuseMedicareandMedicaid,butthetwoprogramsarenotthesame.Medicaidisajointfederal-stateprogramthatpayscertainhealthcarecosts.Theprogramisneeds-based,meaningthat it is available to thosewhomeet certain financial criteria, including income and asset limits.Medicareisafederally-fundedhealthinsurancedesignedforpeople65andolder.Itisalsoavailableforyoungerpeoplewhohavecertaindisabilities.WhileMedicarecoversmanyhealthcareexpenses,itdoesnotprovidecompletecoverage.For instance,manypeopleare surprised todiscover that theprogram’scoverageforlong-termcareisextremelylimited.

93 Can’tIjustgiveawaymyassetsandqualifyforMedicaidbenefits?

Somepeoplemistakenlybelieve that theycansimplygiveawaysomeorallof theirassets to theirchildrenorotherrelativesinordertoqualifyforMedicaid.WhilepartofMedicaidplanningmayinvolvegivingawaysomeofyourassets,thishastobedonewithextremecautionandshouldonlybedonewiththeadviceofanexperiencedelderlawandestateplanningattorney.Ifyougiveawayyourassetsat the wrong time, or use the wrongmethod, you can face tough penalties. In 2006, the federalgovernmentpassedalawthatincludeda“5-yearlook-backperiod”whichimposespenaltiesforcertainassettransfersmadewithinthe5yearsbeforeyouapplyforMedicaidcoverage.

94 Can’tIjustaddmyson/daughter’snametothetitleofmyhousetoavoidlosingmyhometoMedicaidrecovery?

IfyoureceiveMedicaidbenefits,afteryourdeaththestatetriestorecoupthemoneyspentonyourcare.Theydothisbytryingtocollectagainsttheassetsyouleavebehind.SinceyoucanhaveverylittleassetsinordertoqualifyforMedicaid,thestateusuallygoesafterthefewremainingassetsleft,likethehome.ThisisknownasestateorMedicaidrecovery.RecoveryisallowedinmostcircumstancesandinmoststatesonassetsownedinJointTenancy,unlesstheonlyotherjointtenantbesidesyouisyourspouse.Additionally,ifyouchangethetitleonyourhometoyourchild’snamealone,ratherthanaddingthemtothetitle,itwouldbeconsideredagiftandinmostcircumstanceswouldcreateapenaltyifyouappliedforMedicaidbenefitswithin5years.Also,keepinmindthataddingyourchild’snametothe title on your home or other assets could expose you to their creditors, divorce, and otherunforeseenfinancialproblems.Therefore,there isonlyaverysmallpercentageofsituationswhereaddingachild’snametothetitlecouldworkforMedicaidplanning.

95 WhenisittoolatetodoMedicaidplanning?

ItisnevertoolatetodoMedicaidplanning.However,thebestwaytoplanforMedicaidandlong-termcareistodosowellbeforetheneedarises.Thisispre-needplanning,anditgivesyouthemostoptionsfor preserving your assets. Crisis planning, when someone is already in a nursing home or needsimmediatelong-termcare,canbeanincrediblehelptothosefacinganimmediateneedforMedicaid

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benefits.But,crisisplanninghasitsdisadvantages,suchastheinabilitytotakeadvantageofplanningthatescapes the5-year look-backperiod,whichmay reduce theamountof assets youareable topreserve.

96 Myparent/spousehasearlysignsofdementia,canwestilldoMedicaidPlanning?

Thefirststepistodeterminetheir“capacity,”whichmeanssomeonefullyunderstandsthedecisionstheyaregoingtomake.Whenyoucomeintoouroffice,ifthereisaconcernaboutcapacitywewillaskyoutocontacttheirphysicianandaskforastatementfromthemonyourlovedone’sabilitytomakethesedecisions.Ifitisdeterminedthatyourlovedonehascapacity,thenwewouldneedtoensurethatthereisanincapacityplaninplacetopreservetheabilitytodofutureplanningwiththeuseofPowersofAttorney,etc.ThenwecanhelpyouwithanyMedicaidplanningthatwouldbeappropriateforyoursituationrightnow.However,ifitisdeterminedthattheydonothavecapacity,wewillneedtoseeiftheyhaveanincapacityplaninplacethatwouldallowsomeoneelsetomaketheseplanningdecisionsontheirbehalf.Ifthereisnoincapacityplaninplace,itmaybenecessarytogotocourttoappointsomeonetomakethosedecisionsforthem.

97 DoesMedicaidpayforin-homecare?

IfyouqualifyforMedicaidthenyoucanqualifyforbenefitsthatcouldpayforin-homecare.ThisiscalledCommunityMedicaidandtherulesandbenefitscanvarygreatlyandcouldbeimpactedbyyourpersonalsituation.Therefore,wewouldneedtomeetwithyoupersonallytodeterminethenatureofyourneedsandwhatMedicaidcouldpotentiallypayfor.

98 WhatarethedisadvantagestoaMedicaidtrust?

Themaindisadvantageisthatyou’vemadeanirrevocabletransferofyourassetstothetrustandyoucannotundothistransfer.However,typicallyyouretaintherighttoincomefor lifefromtheassetsyou’ve transferred and youmay continue to live in your home,while preserving your home fromMedicaidrecovery.

99 WhatarethedifferencesbetweenaFamilyWealthTrustandaMedicaidTrust?

AFamilyWealthTrustcanbechangedatanytimeandyouhavecompletecontrolandfullaccesstoyourassetstitledinthetrust.TheMedicaidTrustmayprovideassetprotectionfromlong-termcarecostsandMedicaidrecovery.Bothtrustsprovidenumerousbenefits,suchasremarriageanddivorceprotectionandprobateavoidance.Wefindthatmanyfamiliesbenefitfromhavingbothtrustscreated.Wecangiveyouarecommendationaboutwhatisbestforyouandyourfamilywhenwemeetwithyou.

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100 MyspouseandIarehealthyandwedon’thaveafamilyhistoryofdementiaordisability,shouldwestillconsiderMedicaidplanning?

As Americans live longer lives, the possibility of needing long-term care increases considerably,regardlessoffamilyhistory.Infact,Americans65andolderhavea40%chanceofenteringanursinghome in their lifetime.Withthehighriskof losingyourassetsandyour familyhomeasa resultofpayingnursinghomecostswithoutMedicaidplanning,itmakessenseformostfamiliestoengageinsome sort of pre-needMedicaid planning to protect against the unexpected.We can discuss yourpersonalsituationfurtherduringyourconsultation.

101 I’veheardthatyouhavetoimpoverishyourselfinordertoqualifyforMedicaid,howmuchcanaMedicaidTrustprotect?

Medicaiddoeshavestrictincomeandassetlimitsbutifyouplanfarenoughinadvance,thereisnolimittotheamountofmoneythataMedicaidTrustcanprotect,aslongasplanningisdonefarenoughinadvanceofneedingandapplyingforMedicaid.

102 IsthereanassetmaximumforplanningandqualifyingforMedicaidbenefits?

Yes,thereareassetslimitsimposedbyMedicaidinourstate.InordertoqualifyforMedicaidyoumustpassa“means”testthatreviewsyourassetsandthoseofyourspouse,ifyou’remarried.Withproperplanning,doneatleast___yearsbeforetheneedforMedicaid,wecanrepositionassetssotheyareexemptfrombeingcountedforMedicaidqualification.Thesooneryouplan,themorewecanhelpyouprotect.

103 IfIneverendupneedinglong-termcareandMedicaidbenefits,whathappenstomyassetsintheMedicaidTrust?DoIstillhavecontroloverthem?CanIundothetrust?

WhetherornotyouendupneedingtoqualifyforMedicaidtopaylong-termcareexpenses,theassetsyouplaceintheMedicaidTrustwillbedistributedtoyourbeneficiariesasyouhadoriginallydecided.Youalsoretainarighttochangethebeneficiariesoraddnewones(exceptyourself),however,thetrustisirrevocable,whichmeansthatyoucannotundoit

104 What’sthedifferencebetweenSSDIandSSI?

Thereisalotofconfusionoverthesetwotermsandbenefits.SSDIisSocialSecurityDisabilityInsuranceand isavailable topeoplewhohavepaid intoSocialSecurity for the requiredperiod, regardlessofincomeorassets,andwhoarenowdisabledorblind.Ontheotherhand,SSIisSupplementalSecurityIncome,whichisavailabletopeoplewhohavelimitedresourcesandincome,andaredisabled.