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Director of Special Needs and Elder Law Melissa Donovan is featured in January issue of Lawyer Monthly!

Director of Special Needs and Elder Law Melissa Donovan is featured in January issue of Lawyer Monthly!

Director of Special Needs and Elder Law Melissa Donovan is featured in January issue of Lawyer Monthly!

We are always thrilled when one of our attorneys is featured in industry leading publications like Lawyer Monthly.

Page 4 of January’s issue linked below features a wonderful interview with Melissa Donovan, JD, CELA – our Director of Special Needs and Elder Law Planning at Texas Trust Law. Melissa is a Certified Elder Law Attorney by the National Elder Law Foundation.

She discusses her role at the firm and answers some of the most common questions related to Elder Law and Estate Planning. We hope you take a moment to read this informative article.

The article Director of Special Needs and Elder Law Melissa Donovan is featured in January issue of Lawyer Monthly! can be found at the link below:

https://www.lawyer-monthly.com/issues/2024/01/ 


WHY WE DO WHAT WE DO

Meetings with attorneys always seem to deal with the WHAT and HOW of estate planning and probate. At Texas Trust Law we call ourselves The Peace of Mind People®. We want to take a moment and tell you WHY we do what we do.

Here is the WHY of Texas Trust Law: We LOVE taking complex legal concepts and making those understandable to our clients and their advisors so they can take action. That then allows us to bring peace of mind to our clients and their family if they become incapacitated, at death, and when they are concerned about protecting themselves, their wealth, and their loved ones from predators, problematic family members and the IRS.

A QPRT is a unique financial tool

A QPRT is a unique financial tool

A Qualified Personal Residence Trust (QPRT) is a unique financial tool used in estate planning to reduce the potential estate tax liability by transferring a principal residence or vacation home into a trust. As an irrevocable type of trust, a QPRT allows the grantor to remain in the home for a predetermined term of years, making it a strategic choice for those looking to manage their estate tax effectively. Learn more about QPRTs.

In the realm of estate planning, QPRTs serve a dual purpose. They provide a mechanism to transfer a residence at a reduced tax cost, while ensuring that the property remains part of the family legacy. This is particularly advantageous in the context of rising real estate values and the corresponding increase in estate tax liabilities.

The structure of a Qualified Personal Residence Trust is centered around its ability to freeze the value of the residence at the time of the transfer to the trust. When a residence is transferred into a QPRT, its value for gift tax purposes is determined at that time. This is beneficial if the property appreciates in value over the trust term, since the appreciation occurs outside the grantor’s taxable estate.

Furthermore, the trust term is a critical component of a QPRT. It is during this period that the grantor retains the right to live in the home. The length of the trust term can significantly impact the tax benefits of the QPRT, making it essential to choose a term that aligns with the grantor’s estate planning objectives. American Bar Association’s insights on estate planning.

One of the primary benefits of using a QPRT in estate planning is the potential for significant estate tax savings. Transferring a residence into a QPRT removes the property from the grantor’s taxable estate, potentially leading to lower estate taxes upon the grantor’s death.

In addition to estate tax advantages, a QPRT also offers protection for the principal residence. This ensures that the residence can be passed down to beneficiaries, typically the grantor’s children, at a reduced tax cost. It’s a strategic way to preserve a valuable family asset for future generations, while minimizing the estate tax burden.

Creating a Qualified Personal Residence Trust involves a few key steps. The first step is to determine the value of the residence, which will be based on its fair market value at the time of the transfer. This valuation is crucial for calculating the gift tax implications of the transfer.

Choosing the right trust term for your QPRT is equally important. The term should be long enough to offer substantial tax benefits but not so long that the grantor is unlikely to outlive it. If the grantor does not outlive the trust term, the residence reverts back to the estate, negating the tax benefits. Guidance from the National Association of Estate Planners & Councils.

When using a QPRT for your primary residence, it’s important to understand the rules surrounding occupancy. During the trust term, the grantor has the right to live in the home. This right is crucial, as it allows the grantor to continue enjoying their home while reaping the trust’s benefits.

Transferring your primary residence to a QPRT can be a smart estate planning move. It allows you to reduce your taxable estate, while maintaining your lifestyle. However, it’s essential to comply with all the trust requirements to ensure that the tax benefits are realized.

A QPRT can also be used effectively for a secondary or vacation home. The same principles apply: the home is transferred into the trust, potentially reducing estate taxes while allowing continued use of the property during the trust term.

However, there are some specific considerations when using a QPRT for a vacation home. Since these properties are often not the primary residence, it’s essential to understand how the trust will affect your use of the property and any potential rental income.

Understanding the tax implications of a QPRT is crucial. For estate tax purposes, the transfer of the residence to the QPRT is treated as a gift, but the grantor’s retained interest reduces the value of the gift in the property. This can lead to significant gift tax savings.

Income tax considerations are also important. The grantor of a QPRT typically continues to pay the property taxes and can deduct these payments on their personal income tax return. This arrangement can be beneficial from an income tax perspective.

What happens at the end of the QPRT term is a critical aspect of the trust. If the grantor outlives the term, the property is transferred to the beneficiaries, typically without additional estate or gift taxes. This is the ideal scenario, since it maximizes the tax benefits of the QPRT.

If the grantor wishes to continue living in the home after the trust term expires, they can lease it from the trust beneficiaries. This arrangement allows the grantor to remain in the home, while ensuring the property remains outside their taxable estate.

At the end of the QPRT term, there may be opportunities to further estate planning objectives by transitioning the property to another trust. This could involve creating a new trust that continues to hold the property for the benefit of family members, providing ongoing estate planning advantages.

This transition is a strategic move that can ensure the continued protection of the property and further estate tax savings. However, it requires careful planning and adherence to tax laws and regulations.

In conclusion, a QPRT is a unique financial tool to minimize estate taxes while protecting your primary or secondary residence. A QPRT can be a powerful tool in your estate planning arsenal by carefully selecting the trust term and understanding the tax implications.

If you’re considering a QPRT as part of your estate plan or have questions about how this type of trust could benefit you, contact our law firm today. Our experienced estate planning attorneys are here to guide you through every step of the process, ensuring that your estate plan is tailored to your unique needs and goals. If you would like to learn more about different types of trusts, please visit our previous posts. 

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A Subtrust is a Multi-Tool that serves various Purposes

A Subtrust is a Multi-Tool that serves various Purposes

A subtrust is a separate entity created under the umbrella of a primary trust or a will. A subtrust becomes active based on the terms of the trust or will when certain events happen, such as the death of the primary grantor, or creator. Subtrusts are used by estate planning attorneys to help families pass on inheritances and protect their heirs from creditors or issues such as lawsuits or divorce. A Subtrust is a multi-tool that serves various purposes, depending on the beneficiaries’ specific needs and the grantor’s goals.

A subtrust is created as part of a primary trust, often a revocable trust. The primary trust acts as a container for your assets, answering critical questions about who gets them, what they receive, when and how. The subtrust, on the other hand, is like a specialized compartment within this container, designed for specific purposes or beneficiaries. Subtrusts remain dormant within the primary trust until a triggering event, typically the death of the grantor. Upon this event, the subtrust becomes active and, in most cases, irrevocable. This means that the terms of the subtrust cannot be changed.

The activation of a subtrust initiates a process known as trust administration. This process involves naming the subtrust, obtaining a tax ID and setting up a bank account. In addition, an appointed trustee will need to manage the trust assets, including making distributions to beneficiaries, filing tax returns and ensuring that the trust operates according to the trust provisions and the grantor’s intentions.

How Do Subtrusts Work If Created Under a Will?

Subtrusts can also be effectively created under a will, offering a flexible approach to estate planning. The will itself can directly establish these trusts or designate a revocable trust as the beneficiary in what is known as a “pour-over” will. This method ensures that the assets are transferred into the trust upon the grantor’s death.

How are Subtrusts Different from Revocable Trusts?

Subtrusts offer enhanced protection for your assets and beneficiaries. Unlike a revocable trust, which can be altered during the grantor’s lifetime, a subtrust becomes irrevocable upon activation, providing a firmer legal structure. This irrevocability protects the assets from the beneficiary’s creditors and in cases of legal challenges, such as divorce or lawsuits.

What are Subtrusts Commonly Used for?

Subtrusts serve various purposes, depending on the beneficiaries’ specific needs and the trustor’s goals. They can be used to protect beneficiaries who are minors, financially irresponsible, or have special needs. Subtrusts can also safeguard assets from beneficiaries’ creditors, ensuring that the inheritance is used as intended by the grantor.

Subtrusts have many different names and types, each serving a unique purpose in estate planning, as outlined in an article by the American Academy of Estate Planning Attorneys titled Basics of Estate Planning: Trusts and Subtrusts.

How Do Subtrusts Avoid Probate?

A Subtrust is a multi-tool that serves various purposes, but one of the primary reasons is to avoid the lengthy and often costly process of probate. Having assets in a subtrust bypasses the court-supervised distribution process, making things smooth, quick and easy for your family and heirs after your death.

Subtrusts provide a layer of protection for beneficiaries against their creditors or their own irresponsibility. This is particularly important in cases where a beneficiary may face financial difficulties, divorce, legal disputes, or even car accidents. The subtrust provides a shield for the assets to protect them from external claims. If you would like to learn more about trusts, please visit our previous posts. 

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529 Plans allow Grandparents to help with the Cost of College

529 Plans allow Grandparents to help with the Cost of College

529 plans allow grandparents to help with the cost of college for grandchildren. Helping grandchildren prepare for long-term success and easing the financial burden of college costs is a gift for two generations, as mentioned in a recent article from Kiplinger, titled “529 Plans: Give the Gift of Education (and Compounding).”

Giving cash directly to children or parents isn’t the best long-term strategy. Once the money is given, control is surrendered, and the gift may not be used as intended by the giver. Saving for college is one of the significant financial challenges parents face, especially considering the high inflation of college tuition costs. Between 2021 and 2022, U.S. college tuition rates increased by 12%.

This is where estate planning intersects with the new year. As the current historically high estate tax exemption ends at the end of 2025, managing the size of one’s estate becomes a higher priority. The structure of 529 college savings accounts can be used for tax efficiency and to control the eventual use of the gift while taking advantage of long-term compounding.

Current gift tax rules allow individuals to gift up to $18,000 per year per person. Therefore, a married couple could gift $36,000 to each child and grandchild without it counting against their lifetime exemption or requiring them to file a gift tax return. However, the 529 is even more advantageous, allowing a five-year front-loading of such gifts per recipient.

If your state has a plan, funding 529 plans offers deductions on state income taxes. If your state doesn’t have a 529 plan, you can open an account in another state but won’t receive the tax deduction.

There have always been concerns about overfunding a 529 account or having unused funds if the beneficiary decides not to attend college. Most plans allow account owners to change beneficiaries without any tax consequences as long as the new beneficiary is a member of the current beneficiary’s family. If the new beneficiary is younger than the prior one, it may be wise to change the asset allocation to reflect the new time horizon.

Another common question regards the impact gifting may have on the student’s application for federal aid. While 529 plans owned by parents are considered, 529 plans owned by grandparents are not on the FAFSA (Free Application for Federal Student Aid) form.

Changes to the original 529 structure have rendered these accounts even more valuable. The Tax Cuts and Jobs Act expanded the eligibility of 529 accounts for private and parochial K-12 schools. Then, the SECURE Act allowed 529 funds to be used to pay down up to $10,000 in student debt.

Starting in 2024, the SECURE 2.0 Act allows 529 funds to be rolled over into a Roth IRA at the annual contribution limit up to a lifetime maximum of $35,000 for a beneficiary. The account needs to be open for at least 15 years. Still, having an account grow in a tax-free environment and removing the distribution restrictions presents a valuable new investment tool.

Speak with your estate planning attorney about how 529 plans can allow grandparents to help family members with the cost of college and plan for estate taxes. If you would like to learn more about gifting and 529 plans, please visit our previous posts. 

Reference: Kiplinger (Dec. 20, 2023) “529 Plans: Give the Gift of Education (and Compounding)”

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Adjustment in Cost Basis is a Crucial Tax Consideration

Adjustment in Cost Basis is a Crucial Tax Consideration

The adjustment in cost basis is a crucial tax consideration. The adjustment in the cost basis is sometimes overlooked in estate planning, even though it can be a tax game-changer. Under this tax provision, an inherited asset’s cost basis is determined not by what the original owner paid but by the value of the asset when it is inherited after the original owner’s death.

Since most assets appreciate over time, as explained in the article “Maximizing Inheritance With A Step Up” from Montgomery County News, this adjustment is often referred to as a “step-up” basis. A step-up can create significant tax savings when assets are sold and is a valuable way for beneficiaries to maximize their inheritance.

In most cases, assets included in the decedent’s overall estate will receive an adjustment in basis. Stocks, land, and business interests are all eligible for a basis adjustment. Others, such as Income in Respect of the Decedent (IRD), IRAs, 401(k)s, and annuities, are not eligible.

Under current tax law, the cost basis is the asset’s value on the date of the original owner’s death. The asset may technically accrue little to no gain, depending on how long they hold it before selling it and other factors regarding its valuation. The heir could face little to no capital gains tax on the asset’s sale.

Of course, it’s not as simple as this, and your estate planning attorney should review assets to determine their eligibility for a step-up. Some assets may decrease in value over time, while assets owned jointly between spouses may have different rules for basis adjustments when one of the spouses passes. The rules are state-specific, so check with a local estate planning attorney.

To determine whether the step-up basis is helpful, clarify estate planning goals. Do you own a vacation home you want to leave to your children or investments you plan to leave to grandchildren? Does your estate plan include philanthropy? Reviewing your current estate plan through the lens of a step-up in basis could lead you to make some changes.

Let’s say you bought 20,000 shares of stock ten years ago for $20 a share, with the original cost-basis being $400,000. Now, the shares are worth $40 each, for a total of $800,000. You’d like your adult children to inherit the stock.

There are several options here. You could sell the shares, pay the taxes, and give your children cash. You could directly transfer the shares, and they’d receive the same basis in your stock at $20 per share. You could also name your children as beneficiaries of the shares.

As long as the shares are in a taxable account and included in your gross estate when you die, your heirs will get an adjustment in basis based on the fair market value on the day of your passing.

If the fair market value of the shares is $50 when you die, your heirs will receive a step up in basis to $50. The gain of $30 per share will pass to your children with no tax liability.

Tax planning is part of a comprehensive estate plan, and the adjustment in cost basis is a crucial tax consideration. An experienced estate planning attorney can help you and your family minimize tax liabilities. If you would like to learn more about tax planning, please visit our previous posts.

Reference: Montgomery County News (Dec. 20, 2023) “Maximizing Inheritance With A Step Up”

 

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Strategies to avoid Inheritance Disputes

Strategies to avoid Inheritance Disputes

One of the many aspects of a professionally created estate plan involves employing strategies to avoid inheritance disputes. Your estate planning attorney has various tools, from creating a revocable living trust to drafting a detailed and legally sound will, as outlined in the article “6 Estate Management Strategies to Avoid Inheritance Disputes and How to Implement Them” from Legal Reader.

Creating a revocable living trust and placing assets in the trust allows those assets to be passed to heirs directly and according to the instructions you provide in the language of the trust. Assets not in the will need to pass through the probate process, where those involved in the estate plan might need to attend lengthy and stressful court proceedings. In some jurisdictions, the court may require the presence of all heirs and even estranged family members who were not properly disinherited.

In the probate process, beneficiaries can air grievances if they are unhappy with the inheritance agreement and could potentially challenge the will. By passing assets via a trust, you can completely reduce or avoid the opportunity for these disputes to occur.

The foundation of a successful estate plan is a will created with an experienced estate planning attorney. A will is a legally binding document outlining how the decedent wanted their assets and property distributed upon death. The estate planning attorney will work with you to ensure the language in the will is extremely specific and leaves no room for interpretation.

Some assets pass through beneficiary designations, including life insurance policies, retirement, investment, and bank accounts. To avoid problems with these financial assets, regularly review and update beneficiary designations to avoid giving someone no longer in your life a generous gift. These should be reviewed anytime a significant life event occurs, like marriage, divorce, birth or death, changes in financial circumstances, or when you acquire new assets.

A prenuptial agreement can mitigate the risk of inheritance disputes by establishing specific terms and conditions in the event of a divorce. They are particularly important in states where the courts can divide property acquired during the marriage regardless of where the assets came from. By drafting documents explicitly declaring intentions about the treatment of inherited assets, you provide an additional layer of protection to assets in case of divorce. The process also fosters communication between parties to assist in clarifying expectations for the future.

A well-drafted no-contest clause can diminish the likelihood of legal battles among heirs and challengers. It helps dissuade disgruntled beneficiaries from pursuing costly litigation by putting any inheritance at risk if they should decide to pursue what they feel are unfair distributions. It is imperative to engage an experienced estate planning attorney licensed to practice law in your state to have an effective no-contest clause in a will or a trust.

In some situations, liquidating non-cash assets like real estate makes the most sense. It’s far easier to divide cash than proportions of real estate. However, a buyout arrangement can be implemented if one sibling wants to purchase the property. Beneficiaries could buy out each other’s shares if there’s more than one heir, eliminating the need to sell the asset.

By employing strategies to avoid inheritance disputes, you can ensure your will clearly articulates your wishes. If you would like to learn more about inheritance issues, please visit our previous posts. 

Reference: Legal Reader (Dec. 4, 2023) “6 Estate Management Strategies to Avoid Inheritance Disputes and How to Implement Them”

Understanding how the Retirement Earnings Test works

Understanding how the Retirement Earnings Test works

It’s tempting to increase income once a wage earner is eligible for Social Security—at age 62—by taking benefits early. However, those benefits are likely to be temporarily reduced because of earned income. The “retirement earnings test” is poorly understood by the public, as reported in an article from CNBC, “Social Security rule for beneficiaries who keep working is ‘poorly understood,’ report finds. This is from a study conducted by the Social Security Advisory Board, a bipartisan, independent federal agency. It helps provide an understanding of how the retirement earnings test works.

According to the study, between 20% and 50% of pre-retirees don’t know their monthly benefits may be lowered if they claim Social Security and keep working.

Even wage earners who know their benefits might be reduced don’t know this is a temporary reduction. As few as 30% to 40% understand the reductions will eventually be added back to their benefits when they reach their full retirement age (FRA).

Here’s how the retirement earnings test works. It applies to Social Security beneficiaries under FRA, generally between ages 66 and 67, depending on their date of birth. A beneficiary under FRA who continues to work will have their benefits cut by $1 for every $2 earned in 2024. The rule applies to income over $22,320.

The rule differs for the year a beneficiary reaches their full retirement age when $1 is deducted for every $3 earned over a separate limit. In 2024, this applies to earnings over $59,520 only for the months before a beneficiary reaches full retirement age.

Today’s wage earners are more likely to remain in or move in and out of the workforce before fully retiring, so this rule will likely impact more people.

The Social Security Administration’s policy directs the field office staff to discuss the retirement earnings test with all applicants. However, this doesn’t always happen, according to the Society Security Advisory Board. These conversations also don’t always happen with prospective beneficiaries who have stopped working.

The report recommends making the information on the Social Security website more accessible and doing the same for related tools on the website.

Misunderstanding the retirement earnings test often influences workers to delay claiming benefits until full retirement age. Waiting to claim at full retirement age means workers receive all the benefits they earned, while those who claim earlier have permanently reduced benefits.

For most people affected by the retirement earnings test, there’s no effect on the amount of their lifetime benefits, but not understanding the rules may keep them from enjoying more income in their senior years.

As beneficiaries continue to work, they also pay Social Security payroll taxes. This could increase their benefits if the earnings fall within their highest earnings years.

Beneficiaries must properly report wages, as the IRS reports wages to the SSA. If it is determined benefits have been overpaid, the SSA will withhold benefits until the sum is recouped. This is a situation to avoid. If you are nearing retirement age, or are considering taking social security early, understanding how the retirement earnings test works can be the difference between paying the bills and being in debt. If you would like to learn more about retirement planning, please visit our previous posts. 

Reference: CNBC (Dec. 20, 2023) “Social Security rule for beneficiaries who keep working is ‘poorly understood,’ report finds

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Appointing a Trust Protector is a Critical Decision

Appointing a Trust Protector is a Critical Decision

Serving as the trustee of a special needs trust (SNT) can be particularly challenging because it often requires long-term financial management of the trust, while maintaining a good relationship with the beneficiary. Furthermore, because trustees wield great financial power over the trust assets, oversight of their investment and distribution decisions is helpful. Trust protectors can add an additional layer of protection to oversee the management of a trust, supervise the trustee’s actions and remove and replace the trustee when needed. This article delves into why appointing a trust protector is a critical decision that can significantly impact the management of a SNT and guard the beneficiary’s rights.

The Case of Senator Feinstein: A Cautionary Tale

U.S. Sen. Dianne Feinstein’s lawsuit against the trustees of her late husband Richard Blum’s trust, as related in The Hill’s article, “Feinstein accuses trustees of husband’s estate of financial abuse”, highlights one reason why a trust protector may be helpful. Before her death in September 2023, Feinstein accused the trustees of withholding funds and breaching their fiduciary duties.

Through three separate lawsuits, Feinstein claimed that the trustees breached their fiduciary duties to honor the terms of the trust by not making the anticipated distributions of $5 million that were supposed to be placed into her trust in quarterly installments. She argued that the trustees’ inaction in their administration of the trust was intended to benefit Blum’s daughters at her expense, who were slated to receive $22 million each from the trust without Feinstein’s distribution.

For the late Sen. Feinstein, a trust protector may have provided the needed control over the trust assets to leverage the distribution intended by her late husband, who was the settlor. In the context of a special needs trust, where disabled beneficiaries may not be able to supervise their trustees, the role of a trust protector becomes even more critical in managing the trust.

What is a Trust Protector?

Special Needs Alliance explains in the article “Trust Protectors for Special Needs Trusts” that a trust protector is a person appointed to oversee the actions of the trustee and ensure that a trust is administered in line with the settlor’s intentions. Suppose a trustee performs in a manner that is unsatisfactory or even mismanages the trust assets. In that case, the trust protector can be empowered by the trust document to replace that person with a successor trustee. This role is particularly important in special needs trusts, where beneficiaries might not fully understand or be able to manage their financial affairs due to the nature of their disabilities.

How Does a Trust Protector Oversee the Trustee?

A trust protector works alongside the trustee, providing an extra layer of oversight in managing the trust assets according to the instructions in the trust document. They can resolve disputes, guide trustees and ensure that the trust’s administration aligns with the settlor’s intent. Trust protectors are granted various powers, including the ability to review trustee actions, including distribution decisions, replace the trustee and amend trust terms to adapt to changing laws and beneficiary needs. Their primary responsibility is to act in the best interests of the beneficiaries.

How Do Grantors Choose the Right Trust Protector?

Naming a trust protector involves considering their expertise, impartiality and understanding of the beneficiary’s needs. A third party, such as an attorney, accountant, or other professional, can often serve in this role. Family members who may be too challenged by the role of trustee also make a good choice for the trust protector. Selecting a family member who has a good relationship with the beneficiary, understands the nature of their disability and can serve as a good mediator between the trustee and beneficiary is a wise choice.

What Role Do Trust Protectors Play in Special Needs Trusts?

In special needs trusts, trust protectors play a vital role in ensuring that the trust caters to the unique needs of the beneficiary, considering their disability and inability to manage financial affairs. Their role can vary based on the trust agreement terms and state laws. The trust protector can review financial decisions or investments and sometimes force large distributions for purchases, like a house or car, based on the impact on the beneficiary. They can also help the beneficiary understand financial statements and tax documents provided by the trustee.

Is a Trust Protector Also Important to Consider for General Estate Planning?

Appointing a trust protector into any trust is a critical decision. It adds an extra layer of protection and adaptability, ensuring that the trust remains effective and relevant over time. Only a few states have specific laws authorizing and regulating trust protectors. Therefore, it’s essential to work with an experienced estate planning attorney to carefully draft the trust to define the role and anticipate potential issues in exercising the power of the trustee or trust protector.

The Future of Trust Protectors in Estate Planning

As laws and family dynamics evolve, the role of trust protectors is becoming increasingly important in estate planning, offering flexibility and protection for beneficiaries.

Conclusion

Trust protectors offer an essential safeguard in trust administration, especially for special needs trusts. Their oversight ensures that the trust remains effective, adaptable and true to the settlor’s intentions, providing peace of mind for both settlors and beneficiaries.

  • Trust protectors provide essential oversight and adaptability.
  • They ensure that the trust’s administration aligns with the settlor’s intent.
  • Their role is crucial in special needs trusts for beneficiaries who cannot manage their affairs.
  • Trust protectors are becoming increasingly important in modern estate planning.

If you would like to learn more about trust protectors, and trusts generally, please visit our previous posts. 

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Navigating Advance Directives in Dementia Care

Navigating Advance Directives in Dementia Care

Navigating the complexities of advance directives in dementia care is one of the biggest challenges for caregivers. The concept of advance directives in healthcare is both a cornerstone of patient autonomy and a source of profound ethical dilemmas, particularly in the context of dementia. This was poignantly illustrated in a recent New York Times article by Dr. Sandeep Jauhar, who shares his personal story about his father’s battle with dementia. This article delves into the complexities surrounding advance directives, especially for patients with dementia, and offers guidance for families grappling with these challenging decisions.

Understanding Advance Directives

Advance directives are legal documents that allow individuals to outline their preferences for medical care if they cannot make decisions for themselves. These directives are crucial in ensuring that a patient’s wishes are respected, particularly at the end of life. However, when it comes to progressive conditions like dementia, the clarity of these directives often becomes blurred.

The Dilemma in Dementia Care

Dementia uniquely challenges the concept of advance directives. As Dr. Jauhar describes, the person who made the directive may evolve into someone with different desires and capacities. This transformation raises the question: should we honor the wishes of the person who drafted the directive, or should we consider the current state and apparent desires of the patient?

Ethical Considerations

This situation presents a significant ethical dilemma. On the one hand, there’s the principle of respecting the patient’s autonomy as expressed in their advance directive. On the other hand, there’s the issue of non-maleficence — the duty to do no harm — which could conflict with a directive when a patient seems content in their current condition despite severe cognitive impairment.

The Role of Family and Caregivers

Families and caregivers often find themselves at the heart of this conflict. They must balance respect for the patient’s previously stated wishes with empathy for their current state. Effective communication among family members and healthcare providers is crucial in navigating these decisions.

Legal and Medical Perspectives

Advance directives legally are typically held as the definitive expression of a patient’s wishes. However, the medical community is increasingly recognizing the need for flexibility, especially in the context of diseases like dementia that significantly alter a patient’s cognitive and emotional state.

Rethinking Advance Directives

There’s a growing consensus that advance directives need to accommodate the possibility of changing perspectives, especially for conditions that affect cognitive function. This could involve incorporating specific clauses about cognitive decline or changing desires in the directive.

Practical Advice for Families

Families should approach advance directives as dynamic documents. It’s essential to regularly revisit and potentially revise these directives, considering the patient’s evolving health status and wishes. Open discussions about end-of-life preferences are crucial, as is seeking advice from healthcare professionals and legal experts.

Conclusion

The journey through a loved one’s dementia, as Dr. Jauhar’s story illustrates, is fraught with complexities and emotional challenges. While respecting a patient’s past wishes is crucial, so is recognizing their present state and evolving desires. The balance between these perspectives is delicate but fundamental in end-of-life care.

Empathy, understanding, and open communication remain our most powerful tools as we continue to confront these issues. It’s imperative to not only consider what was desired in the past but also to remain sensitive to the needs and happiness of the patient in their current state.

For those seeking guidance navigating advance directives, especially in the context of dementia care, it is advisable to consult with a local estate planning attorney. These professionals can provide invaluable assistance in drafting and updating advance directives to reflect your or your loved one’s evolving wishes and medical circumstances. Reach out to your local estate planning attorney today to ensure that your advance directives are consistent with your current desires and legal standards. If you would like to learn more about advance directives, please visit our previous posts. 

Reference: New York Times“My Father Didn’t Want to Live if He Had Dementia. But Then He Had It.” by Dr. Sandeep Jauhar.

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Estate Planning for Unmarried Senior Couples

Estate Planning for Unmarried Senior Couples

An increasing number of couples at various stages of life are choosing to live together without marrying, making estate planning a bit more challenging. This is especially true when considering estate planning for unmarried senior couples, according to a recent article from Kiplinger, “Estate Planning and the Legal Quirks of Retiree Cohabitation.”

From one perspective, living together without being legally married provides an advantage: you have your own estate plan. You may distribute assets after death with no obligation to leave anything to a partner or their biological children. In many jurisdictions, the law requires spouses to leave a significant portion to their surviving spouse. This doesn’t apply if you’re cohabitating.

However, there are downsides. For example, a surviving unmarried partner doesn’t benefit from inheriting assets without estate taxes. A non-spouse transferring assets may find themselves generating sizable estate or income taxes. To avoid this, your estate planning attorney will discuss tax liability strategies.

Owning real property together can get complicated. Consider an unmarried couple buying a property solely in one person’s name, excluding the partner to sidestep any possible gift taxes. If the sole owner dies, the partner has no claim to the property. The solution could be planning for property rights in the estate plan, possibly leaving the property outright to the partner or in trust for the partner’s use throughout their lifetime. It still has to be planned for in advance of incapacity or, of course, death.

Regarding healthcare communication and directives, special care must be taken to ensure that the couple can be involved in each other’s care and decision-making. By law, decision-making might default to the married spouse or kin. Without a designated healthcare proxy, a cohabitating partner has no legal authority to obtain medical information, make medical decisions, or, in some cases, won’t even have the ability to have access to a hospitalized partner. A healthcare power of attorney is essential for unmarried couples.

For senior couples living together, blending families can be challenging. However, blending finances can be even more complex. Living together later in life can create many concerns if there are former spouses or children from a prior relationship. If a senior decides to marry, they are advised to have a prenuptial agreement so children from previous unions are not disinherited. If a potential spouse has big issues signing such a document, it should raise a red flag to their motivation to marry.

Living together without the legal protection of marriage is an individual decision and may be seen as a means of avoiding legalities. However, it needs to be examined from the perspective of estate planning for the unmarried senior couple, to protect both parties and their families. Couples must prepare for the future, for better or worse, in sickness and health. If you would like to learn more about estate planning for unmarried couples, please visit our previous posts. 

Reference: Kiplinger (Dec. 6, 2023) “Estate Planning and the Legal Quirks of Retiree Cohabitation”

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Information in our blogs is very general in nature and should not be acted upon without first consulting with an attorney. Please feel free to contact Texas Trust Law to schedule a complimentary consultation.
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