Trying to plan your North Carolina estate? Get the answers you need to protect your family.

Jackie Bedard has compiled a list of the most frequently asked questions in response those who need help protecting their families with North Carolina estate plans.
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  • What's a Revocable Living Trust?

    There are many different types of trusts. One of the most commonly used is the Revocable Living Trust (also known as RLT or Living Trust). Essentially, "revocable" means you can change your mind, and make changes to the trust—including restating the entire document with new terms. Let's assume that the fancy words "your assets" just mean "your stuff."

    A revocable living trust is like a box with an open top. You can put your stuff in the box and take your stuff out at any time. When you set up the trust, you put all of your stuff, such as your home and bank accounts into the trust. Maybe a few months later, you open a new account at the bank. It can go in the trust.  Then, the following year, you take out some stock in the latest wonder company—you can put it in the trust. A few years later, you decide to sell your home and buy a new home in another neighborhood. You can take the old home out of the trust and sell it, and then when you find your new dream home, you can purchase it and put it in the trust.

    You appoint yourself as the initial trustee of the trust.  The trustee is the person that is responsible for managing the trust assets. If you become incapacitated or when you die, the trust document includes your written instructions specifying who takes over as successor trustee and what they are supposed to you with your stuff. The trust holds everything securely so that your family should not have to face the horrible prospect of probate at the time of death.  

    Additional information:

    To learn more about common estate planning issues, check out our free guide, Estate Planning Pitfalls: The 12 Most Common Threats to Your Estate & Your Family's Future, or to discuss your estate planning concerns, please call our office at 919-443-3035 or use our contact form.

  • What's the Difference Between a Testamentary Trust, Revocable Living Trust, and Irrevocable Living Trust?

    There are as many different types of trusts that may be used for different goals.  First, let’s cover some basic terminology:

    • A Trust is a contract between a Trustmaker, a Trustee, and the Beneficiaries.
    • The Trustmaker (or grantor or donor or settlor) is the person who creates the trust instructions and transfers property to the trust.
    • The Trustee is the person who administers the trust according to the terms of the trust document created by the Trustmaker for the benefit of the Beneficiary.
    • The Beneficiary is the person or entity who benefits from, or will benefit from, the trust.
    • There may be more than one grantor, trustee, and beneficiary of a trust.

    A trust may be created for almost any lawful purpose. A common reason for creating a trust is to provide for and protect someone. A property owner may want to convey property in trust to a minor, to an individual who lacks the skills necessary to manage property, to an individual who is prone to use the property in an excessive or frivolous manner, or to an individual who is susceptible to influence from others.

    Trusts are not one-size-fits-all. Trusts must be customized to carry out the individual Trustmaker’s wishes. Here is an overview of the types of trusts to consider:

    Testamentary trust:  Created within a last will and testament, a testamentary trust does not take effect until the death of the testator (the person who created the will). A testamentary trust can be amended or revoked by updating the will. For example, a will might include a testamentary trust for your minor children specifying at what age the children will have direct access to the funds and who will manage them while the children are still below that age.

    Revocable Living Trust:  A trust that can be amended or terminated by the Trustmaker during the Trustmaker’s life.  Assets that are titled to a trust do not have to go through Probate upon your death, thus Revocable Living Trusts are a common estate planning tool for avoiding probate.  A Revocable Living Trust may also leave things to your beneficiaries protected in the event that your spouse remarries, and it may protect your beneficiaries from future lawsuits, creditors, or divorce.

    Irrevocable Living Trust:  A trust that may not be amended or terminated after it is created—or at the very least, some part of the trust terms cannot be amended or terminated.  In some Irrevocable Living Trusts, the Trustmaker may have retained some limited powers, such as the power to change who the final beneficiaries of the trust will be when the Trustmaker dies or the power to change the Trustee.  In addition, many states, including North Carolina, have adopted some version of the Uniform Trust Code which may allow an Irrevocable Living Trust to be modified or terminated upon the consent of the Trustmaker and beneficiaries of the trust.  Irrevocable trusts may be used for a variety of purposes, including asset protection planning, long-term care planning, or tax planning.

    Additional Estate Planning Information--Learning the Most Common Mistakes:

    To learn more about common estate planning issues, check out our free guide, Estate Planning Pitfalls: The 12 Most Common Threats to Your Estate & Your Family's Future, or to discuss your estate planning concerns, please call our office at 919-443-3035 or use our contact form.

  • What is a Living Trust and Why You Might Want One?

    Probate can be a time-consuming and often costly process when administering your estate if you have a will. What if there were a way to specify when and how you want your children to receive their inheritance, who will manage it while they are younger, all while avoiding the tedious probate process?  That’s where a Living Trust comes into play.

    A Living Trust is a set of instructions from you designed to authorize someone you designate as “trustee” to administer your trust estate in the event of you become incapacitated or in the event of your death.  Assets that are titled to a Living Trust generally do not have to go through Probate—thus avoiding many of the unnecessary costs and delays associated with the probate process.

    However, there are other reasons besides avoiding Probate to have a Living Trust, including protecting beneficiaries from future creditors, lawsuits, divorce, or disability, or providing for the continuing administration of the estate for a minor beneficiary. In addition, privacy and reduced costs of administration are often additional advantages of a Living Trust.

    There are many different types of Living Trusts that may be used for different purposes. 

    Additional Information:

    To learn more about common estate planning issues, check out our free guide, Estate Planning Pitfalls: The 12 Most Common Threats to Your Estate & Your Family's Future, or to discuss your estate planning concerns, please call our office at 919-443-3035 or use our contact form.

  • Does a Will Avoid Probate?

    I often find that often people have heard horror stories about probate or that it’s important to “avoid probate” but they aren’t even sure what probate actually is or why people want to avoid it.

    Technically “probate” refers to the proving of the will (i.e. that there is a will and that the court has determined that it is valid) and then separately there is the administration of the estate (i.e., the actual handling of the assets of the estate).  Most people refer to these collectively as “probate.” Thus, as you might have already inferred, a will does not avoid probate.  In fact, having a will is a one-way ticket to probate.

    When the court is involved in overseeing the administration of your estate (i.e., the probate process), this can cause things to get bogged down and add unnecessary fees.  The executor of your will must be legally acknowledged by the court before the executor can even begin handling your estate.  And then there are a variety of tasks, accountings, and filings that are required as part of the probate process—all while the court babysits your executor, which tends to slow things down.

    It’s not uncommon for the costs of probate, between court costs, legal fees, executor commissions, appraisals, and so forth, to cost 2-5% of the probate estate, and the process can take anywhere from several months to a year or longer to complete.

    That means that your family could wind up spending 9 to 18 months or longer dealing with the court, spending 2-5% of the estate on probate costs, and because this is a court process, everything—your will, what you owned, who is receiving what, etc. becomes a matter of public record for any nosy person to see.

    That is why you hear about people wanting to avoid probate. We help families look at their specific circumstances and estate planning goals and determine whether planning to avoid probate should be part of their planning.  

    To learn more about common estate planning issues, check out our free guide, Estate Planning Pitfalls: The 12 Most Common Threats to Your Estate & Your Family's Future, or to discuss your estate planning concerns, please call our office at 919-443-3035 or use our contact form.

  • Who Would Make Medical Decisions for Your Minor Children?

    God forbid, but if your family is ever in an accident, who would be authorized to make medical decisions for your children if you’re unable to?

    Did you know that you can authorize who can make medical decisions for your child if you’re unable to? If you have minor children, this is a medical authorization for your minor children is a critical component to your estate planning. It’s one of the many important components of our Children’s Safeguard Plan

    You see, we’ve thought long and hard about all the various “what if” scenarios for families with minor children and what we could do to better protect your family.  That’s how the Children’s Safeguard Plan came into being. We were seeing far too many parents with “cookie cutter” wills that did too little to protect their young children. We wanted to provide a better solution to the unique planning concerns of young families like yours.

    Free Guide for Parents with Minor Children:

    If you have minor children, make sure you check out our free guide, on Children's Safeguard Planning, that covers the unique issues involved in estate planning when you have minor children, including naming guardians and protecting their future. Or, contact us to discuss the best way to get started at 919-443-3035 or via our contact form.

  • How Does the Medicaid Application Work for Nursing Home Care?

    What could be easier? Go down to your local Medicaid office, pick up and fill out an application, turn it in, and you’re qualified. Not exactly. While there are medical, asset, and income qualification issues, other aspects come into play when a caseworker evaluates your application. Here we will discuss some of those issues and highlight the need to understand exactly what the application is asking and how answers will be evaluated.

    “Do you intend to return to your home?” Eight simple words that we all understand. But answering that question incorrectly can convert the home from an exempt asset that does not count against the applicant, into a countable asset that will need to be sold and the money spent on nursing home and medical care. Why?

    The home of a Medicaid applicant only retains its exempt status if the person intends to return to the home. But let’s be honest. Unless a person is discharged to a nursing home to receive a short period of therapy and rehabilitation, that person is not likely to come out of the nursing home. In other words, the applicant knows, the family knows, and the caseworker knows, that the person is not likely ever to return home. Nonetheless, the question needs to be answered with a “yes” or the home loses its exempt status.

    When to file the Medicaid application can be a difficult issue as well due to the convoluted Medicaid laws and regulations. During recent years, rules have changed for qualifying for Medicaid. The two most commonly discussed are the look-back period and the calculation of the penalty period. The look-back period is the time frame during which Medicaid can “look back” at your finances to ensure that you meet all the rules for qualifying for Medicaid. The look-back period is nothing more than the length of time for which Medicaid can require you to provide your financial information.

    An elder law attorney in your state will have a complete list of information that the state requires to be submitted with the Medicaid application. Download our article on why it may make sense to hire an elder care attorney to assist you with the Medicaid application.

    At a minimum, an applicant has to provide proof of citizenship; marital status; death certificate for deceased spouse; a photo ID; copies of social security, Medicare, and health insurance cards; information on any pre-paid funeral or burial plans; and complete and comprehensive financial information for the entire look-back period. This information includes all open or closed bank accounts, all investments, life insurance policies, income information, annuities, and literally everything to do with your finances that occurred during the look-back period.

    People sometimes ask, “How does Medicaid find out about my finances?” The answer is simple: you have to tell them. Failing to do so or hiding assets or income are violations of federal law and, when discovered, will be penalized with fines and possible time in jail. No applicants for Medicaid should do anything other than make full and proper disclosure of all required information. And remember, sometimes it’s best to get help from a professional to plan for Medicaid.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Are Joint Accounts Protected for Medicaid Eligibility Purposes?

    All too often a parent will add a child’s name to bank accounts. Often the parent does this as a matter of convenience, to keep the accounts out of probate, or from a mistaken belief that the accounts are then protected from Medicaid and nursing homes. Generally, the parent does not know the potential problems created by adding the child to the accounts, but there are a few issues that should be considered before creating this type of account.

    When a child’s name is added to an account that child becomes an owner along with the parent. The child could draw out the entire account balance and use the money for himself. Further, if the child gets divorced, the account might be considered by the divorce court as an asset of the child’s to be divided in the divorce proceedings. Even if the court ultimately decides that the spouse of the child is not entitled to any of the account, the account might be tied up in expensive litigation for a long period of time.

    Another thing most people don’t realize when they put a child on an account is that the ownership is usually joint with rights of survivorship. This means that when the parent dies, the account does not pass through the parent’s Will, but instead, the surviving child automatically owns the account. If there is only one child, this might not be a big deal. However, if a parent has multiple children and the parent’s Will leaves the parent’s assets equally to all of the children, then the parent’s intention will not be followed insofar as the co-owned accounts legally go to just one child—the child who was on the account. 

    Furthermore, adding a child to an account does not help with regard to Medicaid and nursing home planning. The entire account balance will still be considered by Medicaid as being owned by the parent except to the extent that the child can prove she actually contributed some of her own money to the account.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Why Proper Estate Planning is Important, Especially if Medicaid is Involved

    Most married couples have what are commonly referred to as reciprocal wills. These wills say give all to wife if husband dies first, and give all to husband if wife dies first, and when both are gone, then to the children. What if the husband is in the nursing home on Medicaid and the wife is healthy at home? They have reciprocal wills, and then, the wife dies first. Who inherits with reciprocal wills? The husband does. What does Medicaid do? It stops paying for the husband’s nursing home care until he has exhausted the money inherited from his wife. The wife, as the community spouse, was able to keep half of their assets up to a certain amount plus the exempt assets such as the house and the car. Now the husband in the nursing home owns all of those assets, and they will have to be spent down to nothing before he can qualify for Medicaid to pay for his care again.

    This unexpected and potentially devastating result could have—and should have—been avoided with the use of bypass planning. While several options exist for bypass planning, such as disinheriting the husband and passing those assets to the next generation, one excellent option is the supplemental needs trust.

    The supplemental needs trust is part of the wife’s estate planning documents and is formally established on her death for the benefit of the nursing home husband. The supplemental needs trust does two very important things. First, it maintains the nursing home husband’s eligibility for governmental benefits such as Medicaid. Second, the supplemental needs trust makes the money in the trust available on behalf of the husband to pay for all the things Medicaid does not pay for such as eyeglasses, hearing aids, dentures, and so on. The wife would choose a trustee for the supplemental needs trust (often an adult child) who would be in charge of using the money for the husband’s benefit according to the guidelines set forth in the trust. In this way, eligibility for benefits is preserved, while the wife has the peace of mind of knowing that she has provided for her husband if she dies first, without all of the money going to nursing home care. The nursing home husband’s quality of life is improved and, often, an inheritance is still available to the couple’s children or grandchildren, since the money is not being spent on nursing home care at a monthly cost often exceeding $5,000.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Should I Let the Nursing Home Help With My Medicaid Planning?

    It is not the job of the Medicaid agency or the nursing home to tell you how to use Medicaid’s rules to help you preserve assets. The Medicaid agency basically processes your application and tells you whether you are approved for Medicaid. Even if the Medicaid agent sees ways you can preserve assets, she is unlikely to tell you.

    Nursing homes receive more pay for people paying out of their own pocket than they do for those on Medicaid. Further, the person at the nursing home that assists the nursing home’s clients in applying for Medicaid is not trained to know the strategies available to preserve assets. Her job for the nursing home is to assist those clients in applying for Medicaid who have spent down their assets by paying their money to the nursing home. Her job does not include telling you all the strategies to keep you from having to pay your money to the nursing home. In fact, she might get in trouble with her employer, the nursing home, if she starts telling you such strategies, assuming she even correctly knows any.

    It makes sense that these institutions should be able to support your understanding and use of Medicaid. So, it’s important to realize that while they work with the program, they can’t provide advice on planning, payment, and best practices. An elder law attorney is your best resource to provide clear and strategic approach to Medicaid. It’s always a good idea to do your research as well.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.

  • Should I Include Medicaid Planning in My Long-Term Care Planning?

    Medicaid planning is the art and science of working within the Medicaid laws and rules to preserve assets to improve the quality of life of the person receiving Medicaid benefits, the quality of life of that person’s spouse, and to improve the quality of life of the person’s loved ones. Medicaid planning is analogous to tax planning. Tax planning does not seek to evade paying taxes, it only seeks to minimize the amount of taxes owed through good pre-planning and taking advantage of the rules in the Internal Revenue Code. Medicaid planning works the same way.

    Why do Medicaid planning? A true story illustrates its importance. Two adult daughters visited their mother in the Alzheimer’s unit of the local nursing home. This lovely elderly lady, who needed Medicaid to pay for her care, had hearing aids, the kind that are small and fit inside the ear. While the two daughters talked to her, the mother’s hearing aid fell out. Mom picked it up and held it in the palm of her hand for a moment, looking at it. Her daughters thought she was about to insert it back into her ear. Instead, with a quick movement, the mother popped the hearing aid into her mouth and started to chew. She thought it was a piece of candy! She chewed the hearing aid hard enough to destroy it, to crack the hearing aid’s battery case, and to chip and damage several teeth.

    Who pays to replace the hearing aid? Who pays to repair her teeth? In many states, Medicaid will not pay for such things. Medicaid doesn’t pay for eyeglasses in many states or pays so rarely (one pair of glasses every five years) that it’s tantamount to not paying at all. Medicaid does not pay for clothes. If the Medicaid recipient wants a phone in her room, she pays for it herself. If she wants a television in her room, she pays. Medicaid only allows her to have a personal needs allowance, so small that it tantalizes by what it cannot pay, rather than for what it does pay. Medicaid planning sets funds aside to be used for the benefit of the person who needs help. Medicaid planning improves the quality of the person’s life.

    Additional Information on North Carolina Medicaid Assistance for Nursing Home Care:

    Download a free copy of Jackie Bedard’s book, The Ultimate Guide to Paying for Nursing Home Care in North Carolina, to learn the nursing home and Medicaid secrets you need to know to avoid going broke in a nursing home and leaving your family penniless.