Covert Law: FAQ Frequently Asked Questions

Frequently Asked Questions

Estate Planning FAQ:

  • What is Estate Planning?
    Estate Planning is simply a process of transferring your assets to people, charities, etc. you wish to receive those assets when you pass away.
    Estate Planning can take many forms: such as simply beneficiary-designating assets, titling assets jointly with another, passing assets through a Will, or passing assets through a Trust.
  • Should I Simply Beneficiary-Designate my Assets?
    Generally, no.
    When an individual receives an asset from another as a result of being named the beneficiary of that asset, then that individual could lose the asset to a past or future divorcing spouse, lawsuit, bankruptcy, nursing home seizure, or other creditors and predators.
  • What about Naming a Beneficiary of my IRA?
    IRAs must have named beneficiaries to avoid probate. If you have no named beneficiary of your IRA or Qualified Plan, then usually your IRA will have to be probated at your death - usually the opposite result most people want.
    If you are married and have children, then typically you probably named your spouse as your Primary Beneficiary and your children as your Contingent Beneficiaries. The problem is that if your spouse remarries after you die, then your replacement could end up with your IRA - not your children. Or if your spouse moves to a state that does not asset protect IRAs (like Florida), then your spouse could lose your entire IRA in a lawsuit.
  • Should I Add My Children as Joint Tenants of my Accounts?
    This is typically a Big NO. If you add a child as a co-owner or joint tenant with right of survivorship, then that child will inherit that asset if you die first.
    However, if that child causes an automobile accident, for example, and gets sued and loses, then your entire account could be lost in that lawsuit.
  • Should I Have a Will or a Trust?
    Yes. Wills and Trusts can usually direct who gets what when you die. You can specify different percentages, different amounts, different time thresholds when a beneficiary can take the asset, etc.
    The decision of whether to have a Will-based estate plan or a Trust-based estate plan will depend upon your individual circumstances. Many people prefer a Trust because a Trust will avoid your children from having to go into the Probate Court to receive your assets when you die - provided your assets and been aligned properly so that at the time of your death, every asset passes through your Trust.
  • How do I Keep My Child's Spouse from Getting My Assets?
    If you have named your Child by name in your Will or your Trust, then your Child will inherit your assets in their own name - because you named them by name. This could subject that inherited asset to their past and future divorces, lawsuits, bankruptcies, nursing home seizure, and other creditors and predators.
    If your Child never divorces but simply dies owning your assets - and your Child is married at their death - then your assets that your Child inherited from you will most likely pass according to your Child's Will or Trust; and your Child's Will or Trust will probably give everything to their spouse. Then if your Child's spouse re-marries, your assets could go out of your bloodline to someone else's grandchildren.
    You can prevent this from happening by utilizing special asset-protected trusts for your children and grandchildren so that your assets will automatically pass to your children and then your grandchildren rather than out of your bloodline.
  • What Health Care Documents Should I Have?
    Most everyone should have five (5) Health Care documents:
    (1) Health Care Surrogate Designation. This is sometimes referred to as a medical power of attorney. It is a legal document that names who can make a medical decision for you if you cannot make it yourself.
    (2) Living Will. A Living Will is simply a written legal document that specifies your intention as to what you want your Health Care Surrogate and your medical providers to do if you are mentally incapacitated AND are either in a (a) terminal condition, or (b) an end-stage condition, or (c) a persistent vegetative state.
    (3) HIPAA Authorization. A HIPAA Authorization is a written legal document that names those persons you wish to be able to call your medical providers, hospitals, emergency rooms, etc. and get answers to your questions - as well as copies of your health care records and other health-related documents. HIPAA stands for the Health Insurance Portability & Accountability Act of 1996 - which became effective in April 2004.
    (4) Health Document Emergency Card. This is a plastic laminated card you carry in your wallet that enables an emergency room or other health care provider to obtain your Health Care Surrogate Designation, Living Will and HIPAA Authorization. With this card, your health care documents, including all of your current medications, can be faxed directly into an emergency room within 3 minutes to anywhere in the world. Everyone should have this Health Document Emergency Card.
    (5) Health Care Documents Organizer™. This is an organization document that coordinates access to all your medical care, including usernames, passwords, etc. - so that in a medical emergency, your trusted family members can have immediate access to everything with one click.

Long Term Care Planning FAQ:

  • What is Long Term Care Planning?
    Long Term Care Planning is simply just that: planning today for your care sometime in the future. This can include financial, estate and health care planning.
    Usually people are referring to your future health care needs when they use the term "long term care planning." But that doesn't have to be the case.
    For example, if there comes a time when you can't or don't want to be responsible for managing your mutual funds, IRA investments, etc., who is going to do that for you? Have you designated someone qualified to help you or your surviving spouse with that money management sometime in the future?
    However, for most of us, what we mean when we use the term "long term care planning" is who is going to take care of me if I become disabled and how am I going to pay for it?
    And "long term care planning" deals with just that: planning for where I am going to live, planning for who is going to take care of me, and planning for how can I afford this type of skilled nursing care if my family can no longer take care of me?
  • When Do I Need Long Term Care Planning?
    If you need future medical care to you or your loved ones sometime in the future, then that's when you need it - sometime in the future.
    The problem is that if you don't "Pre-Plan" today, if you become mentally disabled sometime in the future, then you can't plan - because you are not legally competent to do that planning. You can only engage in planning for yourself or your loved ones if you are mentally capable of doing the planning.
    So when should you engage in long term care planning? When you are mentally competent to do it! When is that? Probably today.
    If you procrastinate about doing that planning now (which can be very simple planning at minor expense compared to the cost of long term care), then you really never know when you will become unable to plan sometime in the future.
  • How Do I Pay for a Nursing Home?
    There are generally four (4) ways to pay for a Nursing Home:
    (1) Long Term Care Insurance Policy. This has historically been the way most people have "pre-planned" for their future long term care needs. A long term care insurance policy is basically a health insurance type of "supplement" policy - it pays for your long term care needs if you become sick enough to qualify for and need skilled nursing care.
    If you purchase this type of insurance policy and you never need skilled nursing home care in the future, then you typically will not receive back all of the premiums you have paid over the years.
    These policies are generally very expensive.
    (2) Life Insurance Indemnity Policy with Long Term Care Rider. This has been the life insurance industry's answer or response to the escalating cost of traditional long term care insurance policies.
    These policies are much less expensive than traditional long term care insurance policies. They are a new breed of life insurance policies that pay out an indemnity (money) to you if you become sick enough to need assistance with your activities of daily living.
    Because these policies are "life insurance" policies, you have to qualify medically - meaning you have to be healthy now when you apply - otherwise the life insurance company will not issue the policy to you.
    (3) Your Own Money. You could elect to "self-insure" and risk having to pay for your possible long term health care needs out of your own pocket - using your money to pay the monthly nursing home bill.
    Depending upon where you live and what type of a skilled nursing home facility you are staying in, those monthly charges can range from $8,000 to $15,000 per month.
    (3) Medicare/Medicaid. The fourth method of paying for the monthly cost of skilled nursing care is to have Medicare and Medicaid make payments directly to the nursing home for you.
    Medicare will pay directly to the nursing home for your care for a limited number of days and then Medicaid will continue to pay after your Medicare days have been exhausted.
    To qualify for these benefits, you will need to satisfy certain income and asset limits and other restrictions. If you do qualify, then you will receive these benefits.
    If, for example, you could not qualify today, you may be able to "pre-plan" now so that when and if you needed to access your Medicare/Medicaid benefits, you would be able to do so immediately.
  • What is Medicaid Planning?
    Medicaid Planning is the process of creating a legal set of documents and strategies that will result in you satisfying the income and asset limits Medicaid imposes.
    You can choose to do nothing today and then enter into what is generally referred to as "Crisis Planning" when you have to go into a nursing home. This severely limits your planning options, is usually expensive, and may result in various penalty periods during which you may have to pay the nursing every month using your own money.
    The other option is to "Pre-Plan" today for your future long term care needs, which can result in you meeting the income and asset limits in the future at much less expense and result in immediate receipt of Medicaid benefits when needed.
  • How Can I Prevent from Having to Spend-Down All of My Assets
    What is commonly referred to as the "spend down" of your assets results when you attempt to receive Medicaid benefits without previously having structured your assets to meet the income and asset limit tests. If you have failed to previously plan to meet the income and asset tests, then you may be required to spend down your assets until you do.
    You can prevent from having to do this by engaging in Pre-Planning now so that if you need Medicaid benefits in the future, then you can receive them immediately. In the alternative, you may still qualify for Medicaid benefits in a "crisis" situation - although that planning in a time of crisis may be substantially more expensive and offer you less options to structure your affairs.
  • What are the Income & Asset Rules - - AND, Can I Still Qualify if I Exceed Them?
    Medicaid imposes limits on income and assets you may own before you may qualify for benefits.
    (1) INCOME. Florida permits a person to have monthly income from all sources up to and including $2,250 per month as of January 1, 2018.
    However, if you properly plan, you may still qualify for Medicaid benefits in Florida if your income exceeds this limit.
    Other Income Limits:
    Personal Needs Allowance: $105/month
    MMMNA Lower Range: $2,030/month
    MMMNA Upper Range: $3.090/month
    (2) ASSETS. Florida permits a person to have countable assets of $2,000 as of January 1, 2018.
    Again, with proper planning, you may still qualify for Medicaid benefits if your countable assets exceed $2,000.
    Other Asset Limits:
    CSRA: $123,600
    Home Equity Limit: $572,000
    Life Insurance Face Value Limit: $1,500
    Burial Savings Account Limit: $2,500
    NOTE: All effective January 1, 2018.
  • Can I Gift $15,000 per Year Without Medicaid Penalizing Me?
    No.
    The $15,000 per year annual exclusion gift tax exemption as of January 1, 2018 does not permit you to give up to that amount and still qualify for Medicaid. This exemption is an exemption from having to pay a Gift Tax on that transfer. Medicaid does not recognize this exemption and will penalize the Medicaid applicant - which may result in being disqualified from receiving Medicaid benefits immediately.

Probate & Trust Administration FAQ:

  • What is Estate Administration?
    Estate Administration generally refers to two (2) types of administration:
    (1) Probate Administration. This type of administration of an estate refers to the filing of a petition in the local probate court where the decedent died for the purpose of administering assets, paying claims, and making distribution of the estate assets.
    Probate administration is typically required for assets a decedent dies with that are titled in the decedent's name alone without any beneficiary designation.
    (2) Trust Administration. This type of administration of an estate refers to the processing of assets owned by a revocable or irrevocable trust or beneficiary-designated to a trust.
  • What's the Difference Between Probate & Trust Administration?
    The difference between these two types of estate administration deals mainly with who is administering those assets after death. In a Probate Administration, the local probate court judge and the appointed Executor or Personal Representative of the Estate are in charge of administering the estate. Probate Administration can be time consuming and more expensive that Trust Administration.
    In a Trust Administration, the Successor Trustee is typically responsible for the the administration of assets titled in a trust or beneficiary-designated to a trust. Generally, this type of administration is done in the lawyer's office rather than in court. Trust Administration is usually quicker and less expensive than Probate Administration, although the assets themselves are dealt with in substantially the same manner.
  • What Does Probate Cost & How Long Does it Take?
    In Florida, the time it takes to fully probate an estate is governed by (1) built-in court time deadlines and notice periods, (2) the "type" of probate, and (3) the complexity of the estate. Unfortunately, there is no "typical" or "average" time period for probate. It could be as little as 6 months or last several years.
    The cost of probate in Florida can be calculated in different ways. Attorney's fees are governed by Florida statutes. Reasonable attorney's fees are defined by Florida statutes and are calculated based on the size of the estate. For many estates, the average Florida statutory attorney's fee is about 3%. Attorneys may also charge based on a flat fee or hourly basis. This does not include court costs such as filing fees, publication costs, probate bonds, etc.
  • What Does Trust Administration Cost & How Long Does it Take?
    In Florida, Trust Administration is also governed by Florida Statutes. A reasonable attorney's fee for Trust Administration is defined as 75% of the probate fee. So, if a probate estate would result in a statutory fee of 3%, the same assets administered through Trust Administration would be approximately 2.25%. Attorneys may also charge on a flat fee or hourly basis.
    Time associated with Trust Administration is generally much less than with Probate Administration. A Trust Administration can typically be completed within 6 months, although a more complex administration could take longer.
  • How Can I Avoid Probate?
    If you would prefer your assets be administered in a less expensive manner and in a shorter period of time, you may wish to consider implementing a Trust-based estate plan. This type of planning will permit the estate, after death, to be administered less expensively and usually quicker - without ever having to go to court.

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