Tag Archive for 'probate avoidance'

Avoiding Probate vs Avoiding Taxes vs Medicaid Eligibility

This morning’s post is kind of a follow up to one of yesterday’s posts where I tried to elucidate the differences between planning to avoid probate and planning to “avoid” taxes.  I was inspired this morning to write this brief follow up by Michael J. Keenan of the Connecticut Elder Law Blog and this post of his from this morning where he writes:

Regardless of whatever your neighbor may have told you, if you divest yourself of assets thereby benefiting someone else (with a couple of exceptions) then it’s a gift and it will trigger a period of ineligibility for Medicaid if it falls within the look-back period.  Whether the money goes outright to someone or into a trust for their benefit the State is going to treat it the same way.

He goes on to, he says,  plug himself and I write to congratulate him on both his post and his “plug.”  Not all estate planning attorneys (those who plan for taxes and probate avoidance) are similarly skilled in the area of Medicaid Planning or other aspects of elder law.  This subgroup of specialized planners is also not to be confused with special needs planners (like myself, my dad and our partners Mike and Sam).  If you need some planning and are getting up there in years, I would contact an estate planning attorney first…  Not everyone needs Medicaid planning so don’t seek that first until and unless you’re sure you actually do need it.

The situation Mr. Keenan addressed in this morning’s post is as follows:

They also told me that they wanted the gifting to go into a trust for their kids’ benefit instead of giving the money outright to the kids, and they wanted to do this for two reasons…

First, they were concerned that their kids would waste the money and/or their kids’ creditors would end up getting the money.  They heard that a trust was a great way to handle this situation, correct?  “Absolutely true,” I said.

Second, they didn’t want to worry about Medicaid’s five-year look-back period regarding gifting and they heard that this was a great way to avoid it, correct?  “Absolutely not true,” I said.

Thanks again Mr. Keenan.

Wouldn’t This Be Nice

Joel Shoenmeyer writes here about the (relatively) new Illinois law (Public Act 95-0784) that allows an individual to name a beneficiary of a car thus allowing it to pass outside of probate…  This would be great.

There is only so much work one can do in Ohio to assitt clients with avoiding probate but there’s always something…  Whether its the $1,500 burial policy the decedent took out in 1964 or a car, it can be dificult to escape the ever-widening grasp of probate courts. 

It is true that in Ohio one can own a car jointly which would vest survivorship rights in the surviving joint-owner after the death of the first, but jointly owning assets has its own headaches (I’m thinking mostly of liability here) that make it ill-advised as a planning device to invoke solely for probate avoidance.  There is also the allowance that a surviving spouse can take any two cars of their deceased spouse so long as their aggregate value is less thatn $40,000 and that can be done with an affidavit only (without having to open a full estate).

Here’s hoping our legislature take a short look west and takes the hint.  This would be nice.

Thanks Joel!