Components of an Elder Law Estate Plan

For most clients, an Elder Law Estate Plan consists of the following documents and features:

1. A Revocable Living Trust (RLT) or an Irrevocable Medicaid Asset Protection Trust (MAPT)

Generally the client will have one of these trusts or the other, not both. The MAPT is used where protection of assets is required in the absence of long-term care insurance. For married couples with estates over one million dollars, two trusts may be required, one for each spouse, to create two estates thereby doubling the exemption from estate taxes. Where clients wish to protect the inheritance from children’s divorces, lawsuits and creditors, and keep the inheritance in the bloodline so it passes to grandchildren instead of to in-laws or strangers, Inheritance Trusts may be added as an option to either the RLT or the MAPT. These are “stand-by trusts”.
They remain empty until you die or, if you have a spouse, until the second of you dies, and then your trust or trusts pay out to the children’s Inheritance Trusts.

2. Pour-Over Will

A new will which cancels your old will and provides that in case you may have left anything outside of your trust, the assets should be poured into your trust after you are gone, as your wishes are provided in the trust. Care should be taken to ensure that any assets left outside the trust are either joint with someone else or have a designated beneficiary. The use of the pour-over will is to be avoided, if possible, since it must be probated. It is there “just in case”.

3. Power of Attorney

Allows the person or persons you choose to handle your legal and financial affairs should you be unable to for any reason. There are distinct advantages to having an elder law estate planning attorney draft the power of attorney. Since they deal with disability on a daily basis, they are more aware of the essential powers that may be needed should a client become disabled. Some of the common powers that we have found useful to add to standard form powers are:

a. To change beneficiaries on IRA’s, annuities and insurance policies
b. To create or modify a trust
c. To make gifts in unlimited amounts

These additional powers may make the difference between the client qualifying for Medicaid benefits one day or losing some or all of their assets.

4. Health Care Proxy/Living Will

The proxy is the person who you wish to make medical decisions for you if you are unable to decide for yourself. The living will authorizes termination of life support systems when your proxy determines that is best.

5. Funeral and Burial Instructions

In your own handwriting you may provide:
a. Type of funeral
b. Type of burial
c. Whether funeral has been prepaid
d. Who will be in charge of the arrangements
e. What organs and tissues you may wish to donate

6. Final Instructions to Your Family

A form to fill out giving your family basic information they will need to settle your estate including:

a. Date and place of any marriage
b. Subscriptions that need to be cancelled
c. Your computer user names and passwords
d. Family, friends, businesses and professional advisors who should be contacted in the event of death
e. Any information you would like included in your obituary
f. A checklist of what needs to be done by those settling your affairs, such as contacting Social Security and the Post Office

7. Deeds

New deeds should be prepared transferring your real property from your name into the name of your trust. This is important for out-of-state property as well to avoid probate in the other jurisdiction.

8. Memorandum of Personal Effects

Modern practice is to leave a handwritten list of which valuables go to which of the heirs and to request that the trustee honor the terms of the memorandum for those special items. This way, the client does not need to see the attorney to change their estate plan for personal effects. If they change their mind as to these personal items, they may simply tear up the old memorandum and write a new one.

9. Instructions for Transferring Assets to Your Trust

Although this is explained in person at the time the trust is executed, a written set of instructions will accompany the documents as well. Many law firms will undertake this exercise on your behalf, for an additional fee. However, most clients are able to do this for themselves.

10. Monitoring and Maintaining the Plan

At a minimum, a program should be in place to review the plan at least once every three years for changes in the law as well as in the client’s assets, their health or in their personal lives and those of their heirs, such as births, death, marriages and divorces. This way, in the event of death or disability, which may occur many years later, the plan is always current. A law firm newsletter is also recommended to keep the client abreast of any law changes that may affect their plan on an ongoing basis.