Estate Planning FAQ’s

Most of us spend a considerable amount of time and energy in our lives accumulating wealth. With this, there comes a time to preserve wealth both for enjoyment and future generations. A solid, effective estate plan ensures that your hard-earned wealth will remain intact as it passes to your beneficiaries, instead of being siphoned off to government processes and bureaucrats.

A Will is a legal document that describes how your assets should be distributed in the event of death. The actual distribution, however, is controlled by a legal process called probate, which is Latin for “prove the Will.” Upon your death, the Will becomes a public document available for inspection by all comers who wish to look at it. This can often be viewed without even leaving their home through a simple online search of the public record/documents. And, once your Will enters the probate process, it’s no longer controlled by your family, but by the court and probate attorneys. Probate can be cumbersome, time-consuming, expensive, and emotionally traumatic during a family’s time of grief and vulnerability. Con artists and others with less-than-pure financial motives have been known to use their knowledge about the contents of a Will to prey on survivors. A Living Trust avoids probate because your property is owned by the Trust, so technically there’s nothing for the probate courts to administer. Whomever you name as your “successor trustee” gains control of your assets and distributes them exactly according to your instructions. There is one other crucial difference: A Will doesn’t take effect until your death, and is therefore no help to you during lifetime planning, an increasingly important consideration since Americans are now living longer. A Living Trust can help you preserve and increase your estate while you’re alive, and offers protection should you become mentally disabled.

Unfortunately, you would be subject to “living probate,” also known as a conservatorship or guardianship proceeding. If you become mentally disabled before you die, the probate court will appoint someone to take control of your assets and personal affairs. These “court-appointed agents” must file a strict accounting of your finances with the court. The process is often expensive, time-consuming and humiliating.

Texas doesn’t have state income taxes. However, the purpose of creating a Living Trust is to avoid living probate, death probate, and reduce or even eliminate state and federal estate taxes. It’s not a vehicle for reducing income taxes. In fact, if you’re the trustee of your Living Trust, you will file your income tax returns exactly as you filed them before the trust existed. There are no new returns to file and no new liabilities are created.

All personal real estate should be transferred into your Living Trust. Otherwise, upon your death, depending on how you hold the title, there will be a death probate in every state in which you hold real property. When your real property is owned by your Living Trust, there is no probate anywhere. However, if you own a business then real estate is often owned within a LLC or other Corporation. You often want these assets separated from your personal assets during your life. There are specific methods that should be used to provide that protection needed during life but also then protect your loved ones at the time of death. There are different methods available depending on the specific business and situation. Please discuss these various strategies when you have a personal meeting with the attorneys of Slaton Schauer Law, pllc. We want you to have the maximum protection available combined with the best tax strategies and therefore this can only be discussed on a case by case basis.

You can give direct gifts or fund an irrevocable trust to qualify for Medicaid, but you have to act in advance because of the five-year look-back period. All divestitures must be completed at least five years before you submit your application for Medicaid coverage.

If you violate this rule, you cannot qualify until you wait out a penalty period that is based on the cost of nursing home care and the amount of the divestitures.

To explain through the use of a simple example, if you give away enough to pay for a year in a nursing home, your eligibility would be delayed by 12 months.

The quick answer is yes with an asterisk. A healthy spouse is entitled to a community spouse resource allowance which is equal to half of the shared countable assets.

However, there is a limit that is updated annually to account for the cost of living. Suffice to say that it is in the vicinity of $130,000. There is also a minimum resource allowance that is hovering around $26,000.

Income that is brought in by the spouse that is living in a nursing home must be contributed toward the cost of the care with the exception of a $60 a month personal needs allowance. This requirement is set aside if a healthy spouse is relying on the income to maintain a reasonable standard of living.

They can receive a community spouse resource allowance, and the limit is in the $3200 a month range the time of this writing.

The first thing you have to understand is the fact that everything that you own does not count. Your home is not a countable asset, and you can retain possession of a motor vehicle. Wedding rings, heirloom jewelry, and engagement rings do not count against you.

Medicaid does not consider your household items or personal belongings, and you can have unlimited term life insurance. Up to $1500 of whole life insurance is allowed, and you can have the same amount set aside for final expenses. Prepaid burial plots are permitted.

Medicaid is another jointly administered federal/state government health insurance program that will pay for a stay in a nursing home.

Medicaid does not consider your household items or personal belongings, and you can have unlimited term life insurance. Up to $1500 of whole life insurance is allowed, and you can have the same amount set aside for final expenses. Prepaid burial plots are permitted.

Since Medicare is a health insurance program for seniors, and so many elders need living assistance, you may assume that the program would cover custodial care. In fact, this is not the case, so you have to look elsewhere for assistance.

The average length of stay is about a year, but 35 percent of people that require care need assistance for a minimum of two years. An attention-getting 13 percent receive long-term care for more than five years.

We practice in Austin, Texas, and the average cost of nursing home care in our area is over $11,000 a month according to Caring.com.

When you have always been capable of handling your own affairs, it can be hard to envision a time when you will need help with your day-to-day needs. Of course, you probably experience things today that you couldn’t wrap your head around when you were 15 years old.

According to the United States Department of Health and Human Services, 70 percent of seniors will need help with their activities of daily living. More than one third of elders will eventually reside in nursing homes.

Yes. If you’re part of the LGBTQ community, a Living Trust offers protection for your estate, as well. It will completely eliminate a living probate, a death probate, and you can minimize or eliminate estate taxes. Further, it provides privacy from prying eyes.

Yes. The default in state law, called “intestacy,” is designed with married couples in mind. If a married person dies without any estate plan, the survivor will get a good portion of the assets left behind. However, if you’ve not married, or you are in a state that does not recognize domestic partnership or civil union, your survivor would get nothing. Instead, the family of origin of the partner who died would get anything in that partner’s name, including bank accounts, real estate, etc.

Maybe. Federal law allows married couples to give each other an unlimited amount of property without gift tax during life or estate tax at death. Federal law does not recognize non-marriage relationships.  However, each person gets to give up to his or her tax exclusion during their lifetime to anyone they want. But, any use during lifetime reduces the amount available for transfers at death. In addition, anyone can make a gift to any other person, called the Annual Gift Tax Exclusion, without gift tax and without reducing his or her estate tax exclusion.

Unless your spouse or partner has adopted your minor children, a court would decide what would be in the child’s best interest. Typically, your family of origin and that of the child’s other biological parent are given preference by the court. However, in your last Will, you can nominate your spouse or partner to be the guardian for your minor child. The court will then give weight to your suggestion while weighing what is in the child’s best interest.

Yes, if you are married or in a registered relationship and in a state which recognizes that relationship.  However, if you’re either, i) not married or in a registered relationship, or ii) you are in a state which does not recognize that registered relationship, then default state law allows your partner’s family of origin rather than you to make those decisions. However, if your spouse or partner designates you as agent under their Health Care Power of Attorney, then you would be able to make such decisions.

If you are married or in a state that recognizes civil unions or domestic partnerships and you register as such, proof of such registration would be sufficient. Otherwise, you would need to have your spouse or partner designate you as agent under their Health Care Power of Attorney. The agent also can limit other visitors.

If you are married, or in a registered domestic partnership or civil union recognized by your state, your spouse or partner can make those decisions for you. If you are not in a registered relationship, or that relationship is not recognized by your state, then state law would recognize your family of origin to make those decisions. However, you can override state law and give your spouse or partner the authority to make such decisions by signing a Health Care Power of Attorney. With such a document, when you are unable to make your own medical decisions, your spouse or partner can step in and speak for you. Further, this document will designate your spouse or partner as your choice to be guardian for you if one needs to be appointed. Without such a designation, your family of origin may have priority for such an appointment.

No, you have to do estate planning in order to allow your spouse or partner to have that authority. Specifically, by designating your spouse or partner as agent under a General Durable (Financial) Power of Attorney, he or she can make decisions on your behalf regarding financial matters.

There are many important reasons to create an estate plan, such as avoiding probate, minimizing taxes and providing creditor and divorce protection for beneficiaries.

No. These various relationships affect state law rights and responsibilities only in the states which recognize them. Only marriage is respected by the federal government

If you are single, only your Conservator would have that authority.