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The following is designed to provide accurate and useful information to educate and help in the initial stages of the estate planning process. Please know that we are happy to meet and clarify for you how this information would relate to your personal situation. Feel free to contact our office to schedule a free, no-obligation initial consultation. The following information does not in and of itself constitute legal advice or representation by the law firm.

Trusts

When properly created, a Living Trust can:
  • minimize estate and inheritance taxes,
  • avoid death probate (even in multiple states),
  • determine who will handle your affairs, should you become incapacitated, in order to avoid having to go to court,
  • control distributions to minor beneficiaries beyond the age of 18,
  • provide for special needs beneficiaries without creating benefit ineligibility,
  • protect monies from creditors or divorcing spouses of beneficiaries,
  • maintain financial privacy,
  • minimize the stress that can be placed on family or friends,
  • expedite access to and distribution of resources, and
  • provide you with control even in the event of your disability or death.
A Revocable Living Trust (or "inter vivos trust") is a contract between you as a Trustor and you as a Trustee. The Trustor of a trust originates the creation of the trust and provides the assets used to fund the trust. The Trustee of a trust manages the assets of the trust according to the provisions determined by the Trustor. You are also the initial beneficiary of your own trust. This means that all the resources in the trust must be used and invested in order to take care of you in the best way possible until your death.
The Trustor is the originator of the trust. The Trustor provides the assets used to fund the trust. The Trustor of the Revocable Living Trust has the ability to amend or revoke the Trust.
The Trustee manages the assets according to the provisions of the Trust.
The initial Beneficiary of the Revocable Living Trust is the you, the Trustor.
A Will is a document which states what you want to happen to your belongings at your death. A Will can list guardians for minor children, which can be extremely important. A Will also should name a Personal Representative, or person that you want to handle your affairs at your death. A Will should also state whether or not the Personal Representative must post a bond in order to be appointed and be able to administer your estate.
A Personal Representative is the person responsible for administering an estate at a death.
A Pour-Over Will should always be created in conjunction with a Living Trust. It is a "safety net" device created in the event that any assets are not titled in the name of your Trust at the time of your death. This type of Will establishes the beneficiary of your Probate Estate to be your Living Trust.
While assets titled in a Living Trust do not have to be probated, any Will must go through a court process called "Probate." Probate varies greatly in complexity from state to state based on state law. Probate is basically court supervision of the retitling of assets out of the decedent’s name into his or her beneficiary’s name. Because of the different legal requirements, costs and time can be significant. The degree of difficulty of the process depends greatly on the complexity and nature of the resources involved.
Probate involves court supervision of the retitling of assets out of the decedent’s name into his or her beneficiary’s name. Because of the different legal requirements, costs and time can be significant.
The latest CNN report states that 66% of people in the US die without creating a Will or Living Trust stating their wishes at their death. This is about 2 million people per year.
"Intestate" is the legal word which means there is no valid document stating your wishes at your death. Each state legislature has tried to anticipate what they think most people may want to happen at their death if they die "intestate." Each state has its own intestate succession statutes which take effect for any individual who has not done estate planning. As you can imagine, these “one size fits all” statutes can create some very interesting and often undesirable results.
Sometimes a Trust may not be advisable, but in a majority of situations it can be very beneficial. If you have been advised that a Trust is not advantageous in your specific situation, ask your advisor to project the anticipated costs at a death or incapacitation. Our experience indicates that more thorough planning on the front end almost always pays off. Make sure your advisor is not just anticipating future Probate fees with the understanding that this Probate process is very familiar to him. Make sure that you are receiving this advice from someone qualified and experienced to give you advice in this area of the law.
A "guardianship" is a court proceeding that can be undertaken to appoint an individual for you and give that individual the legal ability to make any decisions involving your person, such as where you should live, any medical care and treatment decisions, etc. During this court proceeding your competency is brought into question and evidence must be presented. This can be a very time-consuming, expensive, and frustrating process to embark on within an overburdened court system. A "conservatorship" is a court proceeding that is undertaken to grant a person the legal ability to make financial decisions for you if you have become incapacitated. The appointed conservator may be required to post a bond, to restrict accounts, and/or to give account to the court in order to take each or any action. The court must review and oversee every step in this process.
A properly drafted Living Trust should define incapacity and how it is to be determined. When that determination is verified according to the terms of the Trust, the person you designated will take over and manage the Trust as the Successor Trustee. It is important to have a list of Successor Trustees in order of priority to accommodate for the inability of an individual to serve at any given time. These incapacity provisions, if properly drafted, should avoid any need to pursue a guardianship or conservatorship through the court system.
The Successor Trustee is a person you designate to take over the Trust for you after death or upon a disability. It is important to have a list of Successor Trustees in order of priority for appointment.
Usually a Trust requires more time to draft and will cost more than a Will. The key element is that the Trust must be “funded” for it to work. If the assets are not retitled in the name of the Trust, or “funded,” the terms of the Trust do not control the assets. Therefore, it is vital to transfer title in all of your assets to the Trust in order to make your estate plan work. Deeds to real property must be executed and recorded. Investment accounts must be transferred to the Trust. Life insurance is changed over to the Trust. Tax-deferred and retirement accounts may have the beneficiaries changed to the Trust if that is determined to be in the best interest of the plan. This requires some work, but once completed, the maintenance is minimal. After the initial funding, you must continue to title newly acquired assets in the Trust name. Your estate planning attorney should help you through this process and answer questions for you in the future as they emerge. Another important element involves financing assets within the Trust. Mortgage companies will typically require a retitling of property in your individual name to guarantee the financing. It is important to transfer the property to the Trust once the finance process is complete. These “disadvantages” are merely inconveniences requiring some invested time on your part to make your estate plan work.
"Funding" is the process of retitling assets into the name of the Trust and out of your individual name.
Most Living Trusts are established as “grantor” trusts. This means that the tax ID number associated with your trust is your social security number. If you are married, income from the trust assets may be reported to either social security number if the trust allows for it. You may need to complete a W-9 with your social security number as you “fund” your trust. This tells the financial institution that you have a “grantor” trust as well as how to report any income to the IRS.
You should always consult with a qualified estate planning attorney to help you accomplish your goals. These decisions are too important take a risk. The estate planning attorney should meet with you and should be able to assess your needs based on your desires, as well as to quote you a fee. Estate planning is very personal. Make sure you feel comfortable working with the attorney. You are always entitled to be treated with respect and dignity as the attorney sets about to resolve your concerns. The Living Trust is a legal document which should only be prepared by a qualified attorney. These personal decisions are significant and no room should be left for error. Before retaining an attorney you should know what her qualifications are. Ask how much of the practice is devoted to estate planning. Ask if she merely creates documents in her practice, or if she also administers those documents and will assist when there is a death or disability. It is absolutely necessary to determine whether there are any underlying financial incentives to sell you a Living Trust. Unfortunately, some sellers of questionable financial products use estate planning services as a way to gain private financial information of their clients. A Living Trust can be “given away” as an “enticement” by offices not staffed with competent estate planning attorneys. Further, some estate planning attorneys make commissions on financial products sold to you during this process. Be informed. Estate planning attorneys are hired regularly to settle disputes arising because of poor wording done on the planning end. The old saying definitely applies in estate planning: “You usually get what you pay for.” A little money paid for professional work by a qualified attorney on the front end of a situation can prevent a whole lot of money being needed to clean up an unnecessary mess on the back end of the situation.
No two Trusts are alike. A "good" Trust is one that will do exactly what you want and accommodates for any unforeseen situations. Because no two people are exactly alike, a good estate planning attorney will never create two trusts exactly alike. Yes, there is always some necessary boiler-plate language to handle any unanticipated situation, but you are totally unique and this must be considered when you do your estate planning. There is no "one-size-fits-all" trust.
You have worked hard for your achievements and there are things that you can do to protect yourself and your hard work. A good estate planning attorney is equally enthusiastic about solving problems for a person with modest assets or a person with significant assets. Anyone can benefit by consulting with an estate planning attorney. Be willing to discuss your situation and concerns with her and put your mind at ease.
You can contract with your estate planning attorney to work for you on an hourly basis or on a flat fee basis. Most people are more comfortable working on a flat fee. The legal service agreement or engagement letter presented to you by the attorney should clearly outline services to be provided, costs, and terms of payment. In her charges, an estate planning attorney will typically include a review of your assets and their present title, a detailed discussion of your wants, wishes, and desires, preparation of your documents to your satisfaction, supervision of the execution of the documents, and assistance with the funding of your trust.
A Living Will gives direction about one’s desire for medical life support in the event of a terminal illness.
A Health Care Power of Attorney allows you to appoint someone to make health care decisions for you if you're incapacitated.
This year, 2018, each individual has an $11.2 million exemption for Federal Estate Tax purposes. Every dollar owned beyond the exemption amount at your death is taxed at about 40%. The estate tax does not affect most people, but when it does it needs to be addressed. There are multiple options to discuss with an estate planning attorney to minimize your estate taxes.
The Health Insurance Portability and Accountability Act of 1996 restricts access to health care records or medical information without specific authorization. A general HIPAA document designates who can have access to your medical record information.
Joint tenancy will avoid probate on the first death, but merely postpones the probate until the second death. Assets titled in joint tenancy are owned completely by both parties, and all assets are passed to the surviving joint tenant. Joint tenancy can create some unanticipated consequences. Joint tenants must unanimously agree to any action pursued. Therefore, if one joint tenant does not want a house to be sold, it cannot be sold. The property is also exposed to the debts of all joint tenants. For example, the house with a mom and daughter on it as joint tenants is exposed in its entirety to the creditors and/or divorce proceedings of either party.
You do not lose control of your assets in a Living Trust. As the Trustor and Trustee you have complete control. The only difference is that the title to your assets has changed to the Trust. The Trust is revocable and changeable by you at any time you wish.
Generally it should take only a couple of weeks to complete your Living Trust. Sometimes this is delayed if you are having difficult time making the necessary decisions or gathering your asset information.
If a Living Trust is completely and properly funded, then there are no assets left in your individual name. Thus, the Court does not have to oversee any title transfers, and therefore no probate is needed.
A Durable Power of Attorney is a legal document that allows another to act in your place. The Durable Power of Attorney must list what specific powers you are giving your agent. A Durable Power of Attorney may be “springing,” which means that it will take effect upon your incapacity as defined in the document. A Durable Power of Attorney may also be “immediate,” which means that as soon as it is executed, the agent has power to act for you. There are now criminal penalties in Arizona for anyone misusing a Durable Power of Attorney. Because of liability, financial institutions may refuse to honor a Durable Power of Attorney (if they feel it is too old, if they feel it does not specify the right powers, if they feel it does not release the institution from liability, or for any other reason). Once an asset is titled in the name of the Trust, the financial institution is bound by the terms of that Trust and must grant your Successor Trustee access upon appropriate documentation of your incapacity. If there is no acceptable Durable Power of Attorney in place, or Trust with incapacity provisions, the Institution will require court documentation appointing a Conservator in order for an agent to gain access to the account upon your incapacity.
Laws change. These changes will not make your estate plan invalid. Typically, most people are unaffected by these changes; however, changes in the law may provide you with some additional benefits or options if you should decide to adopt them into your Living Trust. Changes in the law can usually be added in with an amendment to your Living Trust. Be sure to ask your estate planning attorney if she will notify you of any changes and how she will handle amendments to your Living Trust.
As long as the documents are validly executed, any state will honor estate planning documents from another state. It is always recommended, however, to have them reviewed in the new state to determine if there are additional benefits for you to take advantage of under the new state law. Living Wills vary greatly from state to state.
You can have a POD or TOD beneficiary on most accounts. At your death the POD or TOD beneficiary inherits that account, and this takes precedence over your Will. This can create a problem when a person forgets that they have put a POD beneficiary on an account and later creates a Will to direct the account to a different individual. There may also be some undesired results if multiple POD or TOD beneficiaries are listed. If one of the multiple beneficiaries predecease, the line of succession to that individual’s children will not usually continue as may be desired. Also, a POD or TOD designation does not solve the problem of a disability.
If you establish a Revocable Living Trust, you do NOT have additional asset protection beyond what is statutorily afforded any person. Arizona has an automatic homestead exemption allowance of $150,000. For most purposes, retirement accounts are protected. To gain additional protection, further steps must be taken beyond the Living Trust. This may include an umbrella policy, Family Limited Partnership, Limited Liability Company, Irrevocable Trusts, or Gifting. The Living Trust is the initial building block in an estate plan. It is purposely created to provide maximum flexibility to you, but with that flexibility additional asset protection is not granted. The Living Trust can provide complete asset protection to your successor beneficiaries.
A Testamentary Trust is a trust that is created through a Will. Assets are not put into the Trust until your death. This avoids the hassle of having to retitle assets during your lifetime. However, the Testamentary Trust must be funded through a probate, providing the attorney with double fees for the creation of the Will and the probate of the estate.
An Irrevocable Trust is generally just that—unchangeable. It is generally used for asset protection or tax planning. It can be a very valuable tool in the right situation. You should discuss its appropriateness with your estate planning attorney.

ALTCS

ALTCS stands for Arizona Long Term Care System. It is the program operated under AHCCCS. It is Arizona’s medicaid program. This is a welfare-based program and benefits are available to those who qualify financially and medically.

Medicare is designed to cover the expenses associated with an injury or illness that is recoverable. Medicare may cover the cost of a nursing home or assisted living facility with various co-pay amounts for a limited amount of time. It will not cover those expenses beyond four months. The specific amount of coverage depends on your specific plan, the specific illness or injury, your ability to rehab, etc.
The U.S. Department of Health and Human Services says, “(y)ou may never need long-term care. This year, about nine million men and women over the age of 65 will need long-term care. By 2020, 12 million older Americans will need long-term care. Most will be cared for at home; family and friends are the sole caregivers for 70 percent of the elderly. A study by the U.S. Department of Health and Human Services says that people who reach age 65 will likely have a 40 percent chance of entering a nursing home. About 10 percent of the people who enter a nursing home will stay there five years or more.”
According to ALTCS, the average cost of care for a Nursing Home in Maricopa County is $6905.11 per month.
The AHCCCS Eligibility Manual can be accessed online by clicking here
and then by clicking on the tab that says “MA.”
A facility or service provider is prohibited by law from discriminating against a patient. All patients, regardless of their source of funds, must be treated equally.
1. A good power of attorney which includes gifting provisions and long-term care planning powers is imperative to allow for successful long-term care planning in the future. An Agent acting under a power of attorney must have any powers which may be interpreted as a “benefit” to them specifically listed out (and acknowledged). An appropriate power of attorney will allow planning to go forward instead of requiring court approval, which can be costly and time-consuming.

2. A living trust can be used, if you are married, as a tool to increase the amount of money that the spouse not applying for benefits (often called the “well-spouse”) will be allowed to keep when benefits are applied for. The living trust can offer ease in transferring assets, etc., when the time arrives.

3. A mental health care power of attorney is imperative in ensuring that if an individual’s behaviors are out of control that the individual can easily receive treatment in a geriatric psych hospital setting.
ALTCS has contracted medical assessors who visit the applicant’s location and conduct a Preadmission Screening (PAS) assessment. This assessment is based on the activities of daily living (ADLs) which are mobility, transferring, bathing, dressing, grooming, eating, toileting, and continence. Also assessed are the applicant’s orientation to time and place, and behavioral patterns like aggression, wandering, and self-injury. The applicant must meet a threshold score in order to medically qualify for benefits. This scoring is designed to establish that the applicant has a long-term condition and needs significant assistance on a daily basis with all ADLs. It is important that the caregiver participate in the assessment, as he or she is in the best position to offer accurate information to the medical assessor.
Arizona is an “income cap” state. This means that a Medicaid applicant must receive less income than the maximum allowable amount. The maximum allowable gross monthly income as of January 2017 is $2205.
Yes. For applicants whose income exceeds the maximum allowable income amount in an income cap state, the applicant can create an Income Only Trust. This is commonly called a “Miller Trust” after the case which brought this option to the forefront. This option is only available to those applicants whose income does not exceed the average cost of care for the county in which they are applying for benefits (i.e., Maricopa County for 2017, $6905.11/month).
ALTCS categorizes resources into two groups. All resources are either “countable” or “noncountable.” An ALTCS applicant can only have $2000 in “countable” resources when they apply for benefits.
Yes. Regardless of the titling on assets, prenuptial or postnuptial agreements, ALTCS will view the assets of either spouse to be those of the couple. As of the date that the applicant is determined to be medically eligible, ALTCS will complete a Community Spouse Resource Assessment (CSRA). The CSRA will be determined according to the “snapshot date” in which the applicant was first determined to be medically eligible. This CSRA counts the total value of ALL the countable resources owned by a couple. ALTCS will then divide that total CSRA amount in half. That number is the amount of countable resources the “well-spouse” can keep. If the number is lower than $24,180 for 2017 (the Minimum Community Spouse Resource Allowance the “well-spouse” will be allowed to keep is $24,180 or all the countable resources). If the number is over $120,900 for 2017 (the Maximum Community Spouse Resource Allowance the “well-spouse” will be allowed to keep $120,900 in countable resources). A number between $24,180 and $120,900 the “well-spouse” is allowed to keep that amount of countable resources.

The couple then must explore how to best “spend down” the one-half of the applicant’s estate to the $2,000 resource limit. These options are very fact-specific and best discussed with an elder law attorney. You may have an ability to “spend down” without actually spending any of the money.
Probably not. Elder law attorneys often do use gifting as a technique and part of the long-term care plan. However, it is important to know that any money or assets transferred to someone other than a spouse for less than fair market value will incur a penalty period during which ALTCS benefits cannot be received. ALTCS will value the amount of the gift and divide the amount by the current monthly cost for nursing home care in your county ($6905.11/month for Maricopa County, January 2017). For example, a transfer of a CD from the applicant to his son would incur a 2.17 months penalty period ($15,000/$6,905.11=2.17 months). This penalty period cannot start until the applicant has been deemed medically and financially eligible for benefits by ALTCS.
A gift can be “cured” and not trigger a penalty period only upon a full return of the entire gifted amount.
The “look back period” is currently 5 years. This means that you must disclose to ALTCS any financial dealings involving gifts or transfers for less than fair market value that occurred within 5 years of the date of application. ALTCS has every right to ask for complete documentation of this time period. An elder law attorney will always make full disclosure to ALTCS of any and all transfers or gifts.
ALTCS will cover room and board, all medical and hospital expenses, medications, adult day care, respite care, mental health services, hospice, and home health nursing. Expenses most often not covered by ALTCS include some dental expenses, glasses, hearing aids, adult diaper supplies, etc. ALTCS will not cover rent or independent living expenses.
ALTCS will pay for some Home and Community Based Services (HCBS). The case manager, along with the applicant, will decide what is financially feasible based on the needs of the applicant. This will never include 24-hour in-home care. However, it may include visits several times a week for several hours by a certified professional. Some providers will allow a family caregiver to certify through the service provider in order to provide the family caregiver with payment for the care being provided to the applicant during his or her stay in the home.
As of October 2017, Mercy Care, United Healthcare, and Bridgeway are the only contracted service providers accepting new clients with ALTCS for Maricopa County.
When you qualify for benefits with ALTCS and have chosen your service provider, that service provider will assign you a case manager to oversee your case and listen to your concerns.
Your ALTCS caseworker and your service provider’s case manager will work together to determine what your “share of cost” will be. If you are single and are not living in your home, it will be your income with the exception of $110.25/month for your Personal Needs Allowance (PNA). If you are married, the amount is determined by a complicated formula which considers the needs of the “well-spouse first.” The “well-spouse” is entitled to at least a minimum monthly income of $2,003.00 (Minimum Monthly Maintenance Needs Allowance-MMNA). The case manager will discuss the “share of cost” amount with you and will give you directions as to how they would like you to pay it every month.
This amount has to do with gifting for federal gift tax purposes and has nothing to do with Medicaid or ALTCS. Tax consequences involved when doing ALTCS planning are an important reason to work with an elder law attorney so you do not have unintended tax consequences to your actions.
Usually a home is a “non-countable” resource. This means that you can qualify and ALTCS doesn’t count the value of your home towards your allowable amounts of resources. As of 2017, ALTCS takes no action towards recovery as long as there is a “well-spouse” and the applicant's name has been removed from the property. If you are single or both needing services, ALTCS will place a lien on your home for the amount of services rendered by them if they have determined that there is no “intent to return home.” This is called a TEFRA lien. ALTCS does not have any interest in your home if you can show that you have any intent to return there. If you do indeed return, the lien may be removed. ALTCS usually determines that after 60 days in a SNF, you no longer “intend to return home.” Due to the fact that all cases are very fact specific, it can be in one’s best interest to sell a home, or to gift the home, or to just allow the TEFRA lien to be placed on the home. This is an important discussion to have with an elder law attorney.
The goal of ALTCS planning is to provide as much leverage as possible for the applicant and the “well-spouse.” Money preserved from a “spend-down” can be used to purchase additionally needed services, private pay for a desired facility for a period of time, provide for supplies, etc. Knowing this money is available provides peace of mind to the applicant and family members as they try to anticipate all future needs. All planning is fully and openly discussed with ALTCS and done according to their rules, policies and the law.
Some things are worth paying for. In this kind of a complex situation, one cannot usually afford to make any mistakes, especially involving personal comfort and well-being. Taking care of a loved one is difficult enough. By allowing an experienced elder law attorney to guide you through this process, you will quickly see the value in your decision.

Disclaimer

This information is not intended as legal advice and does not create an attorney/client relationship. The information provided on this site is as current and reliable as possible. No general information can replace a one-on-one conference with an attorney to discuss your particular and individual situation. This information by itself is not to be relied on to do legal estate planning.