Elder Law Resources
Estate & Tax Planning
Wills
A will is a document that sets forth for whom and how a person wishes to leave his estate at his death. For parents with minor children, or families with beneficiaries with disabilities or children with other special concerns, such as creditor issues, the drafting of a will is important to make sure the person’s goals are accomplished in the best manner. A will should also include contingent beneficiaries. For larger estates, estate tax avoidance provisions in a will (or a trust) are sometimes helpful to reduce estate taxes.
Revocable Trusts
A living revocable trust is a tool primarily used to avoid probate. Although probate can be a long process in other states, the probate process is typically efficient and inexpensive in Maine. However, if you have property in a different state or want your affairs to be a private matter, a revocable trust can be very helpful
Beneficiary Designations
Many of your assets are distributed to loved ones not by Will or Revocable Trust, but by beneficiary designations. Typically, Individual Retirement Accounts, annuities, and life insurance are commonly distributed in this manner. Advice regarding beneficiary designations for these types of assets is important to make sure the beneficiary designations are consistent with a person’s estate plan, as well as providing the optimum income tax deferral and estate tax reduction.
Tax Planning
The federal estate and gift tax laws have been amended several times in the last several years. Under the most recently amended law, there are no federal estate taxes when a person dies with assets valued at less than $11.4 million for year 2019 (tax exemption amount). The lifetime gift tax exemption has also increased to $11.4 million. The exemptions are permanent but may increase each year based on inflation. Effective January 1, 2016, Maine set its estate tax exemption amount to match the federal exemption in effect in 2016 ($5 million) and to allow for cost of living adjustments each year. Therefore, the Maine estate tax exemption amount is currently $5.7 million. For estate tax purposes, the Maine estate, similar to the federal estate, includes all probate and non-probate assets. Assets left to a spouse or charity are not subject to estate tax.
For persons with assets potentially subject to estate tax, there are estate planning options that can be considered to reduce and sometimes eliminate federal and Maine estate taxes. There are a number of other strategies during life and at death to reduce gift and estate taxes, including charitable giving, life insurance, outright gifts or gifts in trust.
Federal estate and gift tax planning has become less common because the exemption amounts have increased. Capital gains taxes, however, can be as high as 20% with additional taxes on top of the 20%. There are planning options to avoid capital gains taxes at death, and these taxation issues should be considered as part of any estate plan.
We anticipate that there will be future changes in the exemption amounts under federal and Maine law. In 2019, a bill to reduce the Maine exemption amount to $2 million was narrowly defeated, and we expect there will be further efforts to reduce this exemption in 2020.
Special Needs & Settlement Planning
Without proper planning, the receipt of a lawsuit settlement, an inheritance, or a sum of money from another source by a person with disabilities may have a disastrous effect on the person with disabilities and their families’ public benefits. We routinely work with persons with disabilities and their families, and personal injury attorneys, to evaluate goals, current health and future prognosis, and current and future public benefits so as to craft the legal tools to accomplish the goal of having the proceeds enhance the person’s quality of life without unnecessarily impacting important public benefits. Tools may include trusts, ABLE accounts and/or spending down uncounted protected assets.
Probate, Estate & Trust Administration
Personal representatives, executors, trustees, and other fiduciary positions, such as agents under powers of attorney often need up to date legal advice to administer an estate, to follow the terms of the operative instrument, and to understand their roles and responsibilities under the law. Legal services often include representation in and filings of documents in probate court, and advice regarding potential or actual disputes.
Asset Preservation & Long Term Care Planning
Along with aging comes the risk of health issues that require in home help, assisted living, and/or nursing home care. Clients and their families are concerned with maintaining as much independence as possible, obtaining high quality of care if the need arises, and saving their hard-earned assets for their spouses and families. Up-to-date legal advice regarding long term care insurance, medical insurance, and public benefits such as Medicare, MaineCare (Maine’s Medicaid program), Supplemental Security Income (SSI), and Social Security benefits, is critical to best effectuate your goals. As part of this advice, we routinely assist in the MaineCare application process for nursing home, residential care or community benefits.
New Subsidized Housing Rules – The Federal Housing and Urban Development Authority has issued new rules, which become effective January 1, 2024, that will dramatically change income and asset rules applicable to current and future residents in subsidized housing. For the first time, the rules impose an asset limit of $100,000 and make significant changes to the calculation of income, including making some trust distributions countable as income. Residents of subsidized housing should contact their attorney to understand how these rules will affect their ongoing eligibility and, if they remain eligible, how the new income rules will affect their monthly rental obligations.
Management of Health Care Decisions During Life
Health Care Advance Directives – Health care powers of attorneys and living wills are documents that you execute in advance to name trusted person(s) that you authorize to make health care and end of life decisions if you are unable to make such decisions. You can also make your wishes known regarding end of life decisions.
Guardianships – If a person does not have a health care advance directive and he becomes incapacitated, a court appointed guardian is sometimes necessary. A guardianship is necessary in the event of family disputes regarding health or personal decisions or in the event an incapacitated person is at serious risk. A guardianship actually takes away some or all the legal rights of an incapacitated person to make personal and health care decisions for himself and usually names a family member to make such decisions.
Financial Powers of Attorney – A financial power of attorney is a document that names a trusted person(s) to manage your financial decisions, as well as your assets, in the event of incapacity. A financial power of attorney can be effective from the time the document is executed or can be effective only after you are found to be incapacitated.
Revocable Trusts – A living revocable trust is an agreement to manage your financial affairs during life in the event of incapacity and also can serve as a will substitute and avoid probate at your death.
Conservatorship – If a person does not have a financial power of attorney or revocable trust, a court may have to appoint a trusted family member, friend or financial institution to make financial decisions for an incapacitated person. Even if a person has these documents, a conservator may be appointed if the person is incapacitated, taking actions that place him at financial risk is at serious risk of financial exploitation by others or is not cooperative with the use of a financial power of attorney. The conservator can be the same person as the guardian under a joint guardianship and conservatorship petition filed in probate court, or it can be a different person.
Joint Ownership of Assets – This legal relationship has risks and benefits and needs to be reviewed carefully as part of an overall plan.