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With Consideration for Those Living With Chronic Illness


With Consideration for Those Living With Chronic Illness By: Martin M. Shenkman, CPA, MBA, PFS, AEP, JD Revocable Living Trusts - Introduction What is this powerful ... – PowerPoint PPT presentation

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Title: With Consideration for Those Living With Chronic Illness

Revocable Living Trusts
  • With Consideration for Those Living With Chronic

By Martin M. Shenkman, CPA, MBA, PFS, AEP, JD
Nothing in these slides or any accompanying
presentation is to be considered tax, legal,
investment or other professional advice. The
information is merely provided for educational
purposes and no action should be taken without
the individual consulting his or her own tax,
estate, legal, financial, investment, insurance
and other advisers. The hosts and sponsors of
this program are NOT responsible for its content
or accuracy
Revocable Living Trusts - Introduction
  • What is this powerful document?

What is a Revocable Living Trust?
  • Also called Living Trust, Loving Trust, or
    Inter-Vivos Revocable Trust
  • Revocable you can change it anytime
  • Can be used to avoid probate but this popular
    goal is not the key benefit of this technique
  • Use to consolidate and manage your assets during
  • It is the most powerful tool to manage assets if
    you cannot do so

Tips Revocable Living Trust
  • Your will and power of attorney must be
  • Boilerplate trusts designed to avoid probate
    wont accomplish your goals
  • Focus of document should be protecting you and
    communicating your wishes as your disease
  • Tailor trustee replacement, disability and other
    provisions to the nuances of your anticipated
    disease course
  • Assets must be transferred to the trust to gain
    the most benefit but some assets should not be
    transferred (e.g., IRA).

Tailor your Revocable Trust Planning to Your Needs
  • Every person is unique it has to be your plan,
    your trust, and address your challenges
  • Reflect your personal wishes and circumstances
  • Tailor the document to address your unique assets
    (e.g. a closely held business)

Chronic Illness is Common Trust Now Dont Wait
  • 120 million Americans are living with chronic
    illness or disability
  • By 2020, about 157 million Americans will be
    afflicted by chronic illnesses
  • 26 of those ages 65-74 have had their lives
    significantly impacted by chronic illness
  • 50 of those age 85 and older have had some
    cognitive impairment
  • 9 million people are cancer survivors with
    various side effects from treatment
  • A living trust plan created early after your
    diagnosis with a chronic illness can protect you
    and your loved ones

Watch Out For Hyperbole and Sales Pitches
  • There are many hucksters pushing living trusts to
    play on peoples fears of probate and taxes
  • Only 5,600 estates a year will pay a federal
    estate tax few are affected (but state estate
    tax may still bite)
  • Tax savings can be accomplished in a will or by
    planning, a living trust is not necessary for
  • Probate is not as costly, difficult or evil as
    often portrayed by those hustling trusts
  • The above detract from the most powerful use of a
    living trust namely managing assets in

Revocable Living Trusts Plan your Trust
  • How to plan your trust document

Create Your Revocable Living Trust
  • Establish a personalized (not boilerplate) living
  • Include provisions to address your specific
    health issues
  • Avoid probate and intestacy
  • Manage assets during disability or illness

Living Trust What do you Need
  • Trust agreement a contract between you and the
    trustee (which might be you, but read on)
  • Tax identification number (but check with your
  • Documents to transfer assets to your living trust
    once signed
  • Paperwork to open a trust bank account

Living Trust Naming Trustees
  • Who should be trustee?
  • Should you name two co-trustees at inception?
  • Should you be a trustee?
  • Who should be successor trustees?
  • When should successor trustees step in?

Living Trust Different Time Periods to Address
  • Your living trust might have different provisions
    to address different time periods more
  • 1 Youre alive and well you might be a sole or
    co-trustee and simply manage assets in the trust
  • 2 Youre disabled a co-trustee and successor
    might take over
  • 3 After death it will function like a will
    disposing of your assets

Living Trust Special Trustee Provisions for
Chronic Illness
  • Perhaps you should remain a co-trustee to stay in
    control of your finances but have a co-trustee
    that can act if you have an attack or are
  • Standard language removing a trustee who is
    disabled may not suffice perhaps the co-trustee
    can be authorized to take certain actions alone
    if you cannot act
  • Consider a 30 day disability period so a short
    hospitalization wont affect it

Living Trust Special Distribution Provisions
for Chronic Illness
  • Include details as to the care and other
    decisions you want to guide or control the
    trustees when you are not able to serve
  • Direct the trustee to pay for medical care
    decisions authorized or directed by your health
    care agent (to avoid conflicts)
  • If you should not serve as trustee consider a
    small dollar bank account outside the trust to
    enable you to shop and spend reasonably without
    jeopardizing the trust assets

Living Trusts Hire a Lawyer
  • Be very wary of internet forms they are limited
    in how they can be tailored and wont address
    your special circumstances (e.g. chronic illness)
  • You can fill out forms cheap on line but even if
    the forms were good you cant get a website or
    cheap form to substitute for decades of real
  • Hire an attorney in your state that devotes a
    substantial portion of his or her practice to
    estate and trust planning
  • If the attorney cannot tell you reasons not to
    use a trust, as well as reasons to use a trust,
    go elsewhere no decisions are absolute

RV Tips Planning Your Living Trust
  • Hire a lawyer in the state you claim is where you
    reside and are domiciled that is a tie to that
    state to support your position (but alone will
    never be enough, its just one factor)
  • Rvers, or anyone who facing tax uncertainty as
    to which state they reside in (or in which they
    are domiciled), should consider the address
    designated in their trust and which state law is
    indicated to apply
  • Where are the assets are that will be transferred
    to the trust
  • Where should you sign your trust in the state
    you claim is your residence and domicile
  • Can you use formalities for your trust that are
    more likely to be accepted in other states (e.g.,
    3 witnesses and a notary)

Revocable Living Trusts Get Organized
  • Keeping the confusing names of legal documents

Organize Emergency, Financial, Information and
Advisors Information
  • Without organization your trust will be of
    marginal help
  • Contact People (names, numbers)
  • Financial Information (account information)
  • Passwords and Security Codes
  • Documents (Estate planning documents, legal
    documents, and more)
  • Budget and Plan

Financial Information is Critical to Organize for
your Trust to Succeed
  • Title to Accounts
  • Change appropriate assets to your trust
  • Dont transfer IRAs, professional practices and
    other inappropriate assets
  • Beneficiary designations
  • Coordinate with trust beneficiary provisions for
    assets transferred
  • Account Management
  • Duplicate statements
  • Consolidation and simplification
  • Automation
  • Organizing records
  • On line payments
  • Automatic deposits
  • A trust without more is not enough

RV Tips on Organizing Financial Info and Using
Living Trusts
  • Rvers, or anyone who travels extensively, should
    take extra precautions to make sure information
    is available when needed
  • When determining where to keep accounts consider
    tax issues of residency/domicile
  • Consider transferring all permitted (appropriate)
    assets to your living trust but retaining a bank
    account in your own name in the state where you
    believe you are domiciled
  • Ask an attorney in the state where you own real
    estate or tangible property (collectibles) if
    transferring the assets to your trust will be
    sufficient to cut tax ties to that state (it may
    avoid probate but not solve your state income or
    estate tax issue)

Revocable Living Trusts Relationship to Other
  • Keeping the confusing names of legal documents

Overview of Estate Planning and Living Trusts
  • Powers of Attorney
  • Only relevant to assets not transferred to your
    living trust
  • Why standard forms arent suffice
  • Special provisions to include to coordinate with
    living trust
  • Living Wills
  • Trustee of living trust might fund medical bills
  • Address specific health issues
  • Experimental procedures
  • Organ and tissue donations
  • Health Proxies
  • Selecting agent
  • What is different for you if you live with
    chronic illness
  • Trustee should follow agents health care
  • Revocable Living Trusts
  • Often the keystone of your plan
  • Boilerplate forms rarely address nuances needed
  • Coordinate with other documents

How does a living trust compare to a will and
power of attorney?
  • Will disposes of your assets after death
  • Power of attorney gives an agent authority to
    handle certain legal and tax matters while you
    are alive and often while you are disabled
  • Living trust can address both and catch gaps in
    the other documents trustee holds legal title
    to your assets and may be able to act more
    quickly and with less issues than an agent under
    a power of attorney

Will Consider a Pour Over Will
Your will might designate that your assets
should be distributed to your trust
Revocable Living Trusts Ancillary Steps
  • Follow up steps must be addressed to make your
    living trust plan works

RV Tips for Living Trusts
  • Using a living trust can consolidate assets,
    minimize the likelihood of other states claiming
    that their law applies, and make management of
    your assets easier by a family member or friend
    who lives at a distance from where you are but
    you have to get assets transferred to the trust
    (watch which ones) to accomplish this
  • Living trusts alone will not suffice for many
    planning needs -- you might benefit from a
    limited liability company to own real estate or
    tangibles consult a lawyer in the state where
    the assets are located, in addition to the lawyer
    you hire in the state you claim is your domicile

Insurance Coverage May Have to Be Updated
  • Property, casualty, liability insurance
  • If assets are transferred to your trust update

Insurance Coverage Considerations
  • Dont make assumptions get every insurance
    coverage reviewed before transferring an asset to
    your trust, and at least every 2 years
  • You might need to name the trustee and trust as
    owner of your home to assure proper coverage

Beneficiary Designations May Need Updating
  • Consider all beneficiary designations for assets
    transferred to your living trust the trust is
    a new account and youll need forms
  • Obtain copies of the forms you file and keep them
    with trust records
  • Note IRA, pension (and often life insurance)
    should generally not be transferred to your trust

Revocable Living Trusts Consider Everyone
  • Family, loved ones, trustees must all be
    considered to make your living trust plan work

Provide for Loved Ones
  • While the discussions above focused on using a
    living trust to protect you, also be sure to
    provide for your loved ones

  • Educate and inform your fiduciaries
  • Preparation of beneficiaries

Having a real conversation is one of the most
important steps you can take
Communication Tips
  • Explain your finances, family, care, disease, and
    so forth to your advisers tell all so they can
    help properly
  • Discuss with family, friends or others involved
    in your life what help you might need
  • Can the trustee you named really be counted on?
    Have alternatives
  • Express your wishes in face to face meetings and
    then confirm key points in writing

Revocable Living Trusts Its a Process
  • Monitor, review and revise regularly

Review, Revisit, Revise
  • Nothing remains static
  • Tax and property laws
  • Family situations
  • Assets and net worth
  • Health

Revocable Living Trusts Get Started
  • Planning is great but implement!

Make an Action Plan
And Get Started
Protect yourself and your loved ones
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