Revocable Living Trust | Begin the Begin

Five New Year’s Resolutions for Your Estate Plan

January 12, 2017

Happy New Year! Very often the New Year brings all sorts of ‘changes’ for individuals, particularly after having spent any time with family members and friends over the holiday season. Here is a quick list of five resolutions to consider for your estate plan.

Is it time to update your plan? If a plan is in place, when was the last time you reviewed it? Is it simply a binder of documents you received several year ago when you finished the estate planning process and you haven’t looked at since? Have circumstances changed that are not captured in the documents? Who are the fiduciaries (i.e., executor, trustee, healthcare power of attorney, financial power of attorney, guardian, etc.) listed? Are the fiduciaries still capable of serving? Does the plan do what you want it to do? There have been a lot of changes to estate tax laws in recent years, is your plan from before 2013? In some cases, does ‘updating’ your plan, actually mean finishing the process? Or does it mean starting the process so that your theoretical plan is memorialized?
Are there beneficiary designations? When was the last time you checked beneficiary designations on life insurance, retirement accounts (i.e., 401(k), IRAs, 403(b), 457, etc.) and annuities? What about any payable on death (POD) or transfer on death (TOD) designations you have on bank accounts or brokerage accounts…do those designations reflect your wishes? For government employees, are beneficiary designations up-to-date on your Federal, state or local benefits?
Families come in all shapes and sizes -Family Fiduciaries. Are you named as a fiduciary in any family member’s or friend’s plan? Have you touched base with that person recently to see how they are doing both health-wise and financially? Do you understand what your role is as the fiduciary? Do you know the family member’s or friend’s goals and objectives? Are you able to still serve, that is, are you distracted by a health event or financial crisis and perhaps you should not take the role? Have you considered options for a care manager if you are caring for an elderly family member or friend? How about looking at assisted living or skilled nursing or home health aides, if the circumstances warrant such considerations?
Are you charitably inclined? Do you have a charitable giving plan for this year? For future years? For at your death? Have you researched your options including direct giving, donor advised funds, private foundations and/or charitable trusts? Is there a planned gift that you would like to consider? Is now the time to investigate annual giving?
Succession planning occurs at many levels. Who will be in charge of any business whether it is a limited liability company, partnership or corporation? Are shareholders’ agreements and operating agreements up-to-date? And beyond a business interest, who will be in charge of your pets? Are there monies set aside for their care? What about digital assets? Have you ensured a smooth transition of online accounts to a successor? What about your tangible personal property? Is there an inventory? Appraisals? Designated recipients?

True, there are a lot of questions and not a lot of answers here, but that is the planning process. One has to begin with the questions to reach the answers. Working with a professional advisor can both provide you with the guidance needed to navigate these questions and ensure that you complete the process. #planyourjourney #lifeplanning #legacyplanning #estateplanning @bgnthebgn

October is National Special Needs Law Month

October 6, 2016

children-hug The National Academy of Elder Law Attorneys (“NAELA”) has designated October to be National Special Needs Law Month in an effort to educate individuals with disabilities, families and caregivers about what is encompassed in the realm of special needs. For example, topics such as guardianship, conservatorship, powers of attorney, Medicare, Medicaid and special education will be addressed by professional advisors throughout the country. Local resources such as Commonwealth Community Trust and The Arc of Northern Virginia and more national resources such as Special Needs Alliance may hold special awareness events and have resources available for review. Designating a month is an opportunity for individuals with disabilities, families and caregivers to develop their knowledge of available options and emphasizes the importance of speaking with the appropriate professional advisors. Below is a selection of earlier articles discussing a few topics involving special needs planning. #specialneeds #specialneedsplanning #estateplanning @bgnthebgn

The Able Act – An Additional Resource for Families and Advisors

The Able Act – Proposed Legislation Will Modify Certain Provisions

How Divorce Can Impact Your Estate Plan – Special Needs

Changes to Virginia Laws Impacting Seniors and the Disabled

Changes to Maryland Laws Impacting Seniors and the Disabled

Special Needs Trust Fairness Act

The Marriage of Divorce and Estate Planning

August 11, 2016

In case you missed the series about the impact of divorce on estate planning, here is a brief recap of some points to consider.

1. The Property Settlement Agreement may require that you maintain life insurance for any minor children. If that is the case, then have you revisited your estate plan recently? What obligations to maintain life insurance do you have? Does the Property Settlement Agreement have certain requirements for the creation of a trust, and if so, what are those requirements? Have the requirements of the Property Settlement Agreement been fulfilled or incorporated through your estate plan? Are there any provisions of the Property Settlement Agreement that will survive death?

2. When was the last time you updated your beneficiary designations on qualified retirement accounts (e.g., 401(k) or IRA accounts), annuities, life insurance or payable on death or transfer of death designations on bank or brokerage accounts?

3. What should happen to your real and personal property? Are there steps you need to take to ensure your real and personal property are distributed to the individuals or entities you want to have benefit?

4. If you are divorcing and have a disabled child, how is that child being provided for upon the incapacity or death of a parent? Is eligibility for public benefits preserved through a properly structured special or supplemental needs trust? Who has authority to make healthcare decisions for the child and in what manner? Has guardianship been determined and the terms in which parents plan to share guardianship specified, if applicable?

5. What happens if an estate plan already exists and you do nothing to update it?

#estateplanning #divorce @bgnthebgn

Elder Law Update – Changes to Laws Impacting Virginia’s Seniors and the Disabled

July 21, 2016

On July 1st (unless otherwise noted) a number of new laws took effect in Virginia that may have an impact on you. Below is a summary of a few key pieces of legislation of which you should be aware.

Section 51.5-44.1 – It is a now a Class 4 misdemeanor to misrepresent your dog as a service dog to gain access to public areas with the animal.

SB 553 – Requires the Board of Health to promulgate regulations relating to audio and visual monitoring of residents in a nursing home by July 1, 2017. The regulations are to address privacy, notice, disclosure, liability, responsibility for equipment, costs and security, among other items.

Section 63.2-1806 – An assisted living facility is not required to provide or allow hospice care at the facility so long as this is disclosed to the resident prior to admission and is otherwise allowed by Federal law.

Section 64.2-2019 – A guardian of an adult incapacitated person is not permitted to ‘unreasonably restrict’ an incapacitated person’s ability to communicate with, visit, or interact with others with whom they have had an ‘established relationship’.

Sections 37.2-817, 37.2-837 and 37.2-838 – A person being discharged from involuntary admission in general or to mandatory outpatient treatment who does not have an advance medical directive must now be provided with a written explanation of the process for executing an advance medical directive and a form of an advance medical directive.

Sections 64.2-2011 and 64.2-2014 – The Department of Medical Assistance Services must now be notified of guardianship appointments, modifications and terminations.

Sections 64.2-2001 and 64.2-2009 – In a petition for a guardianship and/or conservatorship of an incapacitated individual who has not reached age 18, the statute clarifies that the court may enter an order for such guardianship/conservatorship appointing a guardian or conservator prior to age 18, but the court order should state whether the order is effective immediately or when the person turns 18.

Section 63.2-1605 – When investigating financial exploitation of an individual age 6o or older, if the department of social services or adult protective services believes there is ongoing exploitation totaling more than $50,000, then the police are required to be told so an investigation can ensue.

Section 8.01-220.2 – The principal residence held by tenants by the entireties (i.e., ownership between spouses) cannot be used to pay for one spouse’s debt incurred for emergency medical care unless the property is refinanced or transferred to new owners.

Section 23-38.81 – ABLE savings accounts are excluded as countable resources for means-tested public benefits. (Effective October 1, 2016.)

#elderlaw #guardianship #Virginialaw #incapacityplanning #specialneeds @bgnthebgn

Digital Assets Under Virginia Law

July 14, 2016

In an earlier post, there was a discussion about Maryland’s Fiduciary Access to Digital Assets Act. But what has Virginia done with respect to digital assets? Virginia has not adopted the Uniform Fiduciary Access to Digital Assets Act (“UFADAA”) or any version of it. Instead, in 2015 Virginia adopted a version of the Privacy Expectation Afterlife and Choices Act (“PEAC”). Under this statute, a personal representative or executor may petition a court for access to certain information within a deceased individual’s digital records for the 18 month period prior to death. However, the petition will not permit the personal representative to gain access to the content within the digital records unless it can be shown that the deceased individual consented, in some fashion, to have that information released. If the deceased individual did not consent or deleted the information, the information will not be released. Furthermore, the holders of the digital content have the ability to show an undue burden if they release the information, and therefore, can argue against disclosure. The overall impact of Virginia’s statute is still being tested, and therefore, whether it is now simpler for a personal representative to gain access to digital assets is questionable. Furthermore, the statute does not appear to apply to trustees, guardians or agents under a power of attorney or address access to such digital assets during any period of incapacity.

So, what can you do to protect your digital assets but also ensure that your fiduciaries have authority to act on your behalf with respect to your digital assets? You can make sure your last will and testament, revocable living trust and/or general durable power of attorney are updated to include authority and power regarding digital assets. Moreover, you need to organize your digital assets by making sure the location of hard files and back-up files (i.e., in the cloud, on a USB drive, etc.) are known to your fiduciaries. Your fiduciaries will need to be able to provide user names, passwords, answers to security questions and any other authentication methods associated with the accounts.

Finally, your fiduciaries also need to know what digital assets are out there, so be sure to list the following information: e-mail accounts, domain names, online storage accounts (e.g., Dropbox), financial software, bank accounts, securities or brokerage accounts, types of devices, taxes, retirement accounts, credit cards, insurance (e.g., health, homeowners’, car, disability, etc.), debts (e.g. mortgage or car loans), utilities, social media, digital media (e.g., Netflix, Kindle, iTunes), membership or loyalty programs (e.g., frequent flyer accounts) as well as any other account that requires an online presence (e.g., Skype, Amazon or professional affiliations).

When you really think about it, your digital footprint might be quite extensive and your fiduciaries need the information to be better able to provide for your care and handle your estate. #estateplanning #incapacityplanning #estateadministration #digitalassets @bgnthebgn

Maryland Enacts Fiduciary Access to Digital Assets Act

July 7, 2016

On October 1, 2016, Maryland’s Fiduciary Access to Digital Assets Act will come into effect, thereby giving a fiduciary (i.e., personal representative, guardian, agent or trustee) or a designated recipient (i.e., a person named using an online tool) the ability to request access to a person’s digital assets in certain circumstances. Digital Assets is defined as “an electronic record in which an individual has a right or interest.” The Act allows an individual to direct whether their digital content is disclosed, to whom and to what extent. This authority can be granted through an online tool provided by the custodian (e.g., Google has Inactive Account Manager or Facebook has Legacy Contact) or through an individual’s will, trust or power of attorney. Access may still be subject to the terms of service agreement and gives the custodian of such information (e.g., Google) some discretion as to the breadth of the disclosure and the ability to charge an administrative fee. If a request is made, the Act requires that a custodian comply no later than 60 days from the receipt of the request, including receipt of all the ancillary documentation associated with the request as detailed under the statute.

So, next steps for you? When creating accounts be sure to look for whether the website requires you to complete an online tool. You may want to opt out of using the online tool so that you can better control your wishes through your estate planning documents. Furthermore, if you reside in Maryland, you should review and update your estate planning documents to ensure that access to digital assets has been addressed in accordance with your wishes. Finally, you should create and store in a secure location a list of all your digital assets, including your credentials, so that your nominated fiduciaries know what assets to access during any period of incapacity and upon death. #estateplanning #estateadministration #digitalassets #MFADAA @bgnthebgn

Caveat Venditor vs. Caveat Emptor – Thorsen Case Highlights How Attorney and Client Must Beware

June 30, 2016

The recent opinion from the Virginia Supreme Court in the case of Thorsen, et al. vs. Richmond Society for the Prevention of Cruelty to Animals (RSPCA) contains lessons for attorneys and clients surrounding the preparation of estate planning documents.

The case involved the preparation of a Last Will and Testament in 2003 in which Alice L. Cralle Dumville, the testatrix (or creator of the will) desired to make sure that her estranged husband did not receive any of her estate should she die during the pendency of the divorce. To that end, she asked an attorney, James B. Thorsen, to prepare a will leaving her assets to her mother, and if her mother predeceased, to the RSPCA. Ms. Dumville died in 2008 having had her mother predecease her in 2007. The RSPCA was notified that they were the beneficiary of Ms. Dumville’s estate, except a problem was discovered with the will. The will left only Ms. Dumville’s tangible personal property to the RSPCA and made no provision for her real property, which would pass by intestacy to Ms. Dumville’s two heirs at law.

Mr. Thorsen filed suit to correct the ‘scrivener’s error’ in the Circuit Court of Chesterfield County, but the Circuit Court found that the language of the will was clear in that only the tangible personal property was to be distributed to the RSPCA, while the remainder of Ms. Dumville’s assets would pass by intestacy. The RSPCA then sued Mr. Thorsen in Richmond Circuit Court for breach of contract-professional negligence stating that it was a third-party beneficiary to the agreement between Mr. Thorsen and Ms. Dumville. The Circuit Court agreed and Mr. Thorsen appealed to the Virginia Supreme Court arguing that (a) the RSPCA was not an intended third-party beneficiary, (b) a written agreement with any third-party beneficiary was required, and (c) the statute of limitations barred the RSPCA’s action.

In short, the Virginia Supreme Court, in a 6-1 decision, disagreed with Mr. Thorsen and agreed with the Circuit Court finding for the RSPCA. By doing so, the Virginia Supreme Court found that a third-party beneficiary who is ‘clearly and definitely’ the intended beneficiary of a contract (even one where no written agreement exists) may sue to enforce its rights derived from the contract even though the third-party beneficiary may not know it is a beneficiary for many years (as is the case in most estate planning documents). The lone dissenter argued that the majority was establishing a new cause of action against attorneys that should be created by way of legislation, not through the judiciary. Furthermore, the dissent believes that the majority’s decision does not simply apply with respect to third-parties in an estate planning context, but will be applied to all legal malpractice actions.

So, what does this mean for individuals looking to have estate planning documents prepared? First, you should make sure you have read and understand your documents. Otherwise, there is a chance that the estate planning documents do not capture your wishes and the result could be that unintended beneficiaries receive your estate. Next, you may find that the estate planning process is more involved to ensure that you do understand your documents and have read them thoroughly. And ultimately you should be working with an attorney who routinely prepares estate planning documents unlike in this case where it appears that Mr. Thorsen may not have regularly prepared wills.

For attorneys, various commentators have said that likely there is a legislative fix in the works for the 2017 General Assembly session that may include passing a statute that allows for the correction of mistakes in wills, similar to the statute that applies to revocable living trusts. But until then, practitioners may be unwilling to prepare wills and may only be willing to prepare revocable trusts. Furthermore, practitioners will be watching to see if this decision is applied to other situations in which there is a potential third-party beneficiary. Going forward, this is a case which highlights how both the attorney and the client should beware as the possibility for unintended consequences exists on both sides. #estateplanning #ThorsenvsRSPCA #thirdpartybeneficiary @bgnthebgn

How Divorce Can Impact Your Estate Plan – Failure to Update an Existing Plan

June 16, 2016

Now that we have addressed property settlement agreements, beneficiary designations, real and personal property and special needs, what happens if an estate plan already exists and you do nothing to update it? Presumably, the existing plan was prepared during the marriage and has the former spouse in fiduciary positions and named as a beneficiary. The entire plan should be updated to reflect new trustees, personal representatives/executors, financial powers of attorney and healthcare agents. But often, recently divorced individuals simply do not have the inclination to handle one more legal matter (particularly if the divorce was not amicable).

Virginia law has a savings clause that may apply. Under Virginia law, if a person creates a last will and testament while married, divorces and subsequently dies without updating his or her last will and testament, the divorce “revokes any disposition or appointment of property made by the will to the former spouse.” Va. Code §64.2-412. In addition, any appointment of the former spouse as a fiduciary under the will, including as executor, trustee, conservator or guardian, is revoked. However, this law does not change any financial power of attorney or healthcare power of attorney under which the former spouse may be named. Furthermore, the law does address provisions contained in a trust agreement. Therefore, a former spouse may have authority to act or be treated as a beneficiary unless changes are made or other state statutes apply.

Moreover, if there is an irrevocable trust or “spousal lifetime access trust” (SLAT) that benefits a spouse, then there may continue to be income tax consequences to the creator of that irrevocable trust even though the parties divorce. The regulatory and legislative history surrounding the applicable tax code sections (Sections 71, 672, 677 and 682) is not as clear as it should be, in certain circumstances, as to whether a grantor (or creator of the trust) will still be held liable for the income tax associated with the irrevocable trust that otherwise benefits an ex-spouse. Therefore, the trust agreement and relevant tax law need to be reviewed and a determination made regarding any ongoing tax liability.

Overall, taking into account all of the considerations described throughout this series, it is clear that after a divorce (and perhaps even during a divorce), it is imperative that you begin the process of updating your estate plan to avoid the potential of having a former spouse in a position of authority during incapacity or upon death and to avoid a former spouse unintentionally benefiting from your demise. #beginthebegin #divorce #estateplanning #updateyourestateplan @bgnthebgn

How Divorce Can Impact Your Estate Plan – Special Needs

June 9, 2016

As we continue to explore the impact of divorce on an estate plan, another issue that arises is the care and support of children, particularly children with disabilities. Presumably, the property settlement agreement will handle ongoing financial support and initial custody, but what happens during the incapacity or upon the death of a parent? An earlier article discussed the benefits of planning for any life insurance requirements under the property settlement agreement. But in addition to a general plan for life insurance, it may be necessary to designate the life insurance to a special or supplemental needs trust to allow the disabled child to qualify for public benefits. The special or supplemental needs trust can be created within one’s personal estate plan (e.g., a subtrust under a Last Will and Testament or revocable living trust) or as a standalone trust created prior to incapacity or death. Setting the proceeds of the life insurance aside in such a trust will help protect those proceeds for the disabled child’s benefit, protect those proceeds from the child’s potential creditors and allow for flexibility in public benefits planning.

And what if the child is receiving public benefits like Social Security Income (SSI), is on Medicaid or receives a Medicaid Waiver and child support is awarded? In that situation it is prudent to consider the creation of a self-settled or (d)(4)(A) special or supplemental needs trust to receive the child support payments. Such self-settled trusts have very particular required provisions in order for the disabled child to maintain eligibility for public benefits, but will avoid reduction or elimination of the available benefits if properly structured and implemented. This is an issue that should be addressed during negotiations and to include in the property settlement agreement, and therefore, not to figure out after the divorce is final.

As for the guardianship/custody of the disabled child, how will that be handled? If the child is a minor, then the parents will hopefully reach an agreement as to co-parenting and incorporate that agreement in the property settlement agreement (or as determined by the court if agreement cannot be reached). For an adult child who is disabled, a guardianship proceeding to establish that the child is disabled and to appoint a guardian must be commenced. The resulting court order will address the parents’ authority to act jointly or separately, after making reasonable efforts to contact each other, regarding the child’s medical care and housing, including (a) emergency medical treatment, (b) non-emergency hospitalizations, (e) personal care appointments, (f) immunizations, (g) routine dental and vision appointments, (h) admission to a facility, and (i) developmental assessments, among other things. Furthermore, the court order will address what happens if a parent cannot continue acting as guardian due to incapacity or death. Ultimately, guardianship of a child with disabilities ends up being less about which parent has the child on a particular holiday (also important) and more about the type and quality of care the child will need and how that care will be provided.

So consider the following: (1) If you are divorcing and have a disabled child, how is that child being provided for upon the incapacity or death of a parent? (2) Is eligibility for public benefits preserved through a properly structured special or supplemental needs trusts? (3) Who has authority to make healthcare decisions for the child and in what manner? #divorce #specialneeds #estateplanning #specialneedstrust

How Divorce Can Impact Your Estate Plan – Real Estate and Personal Property

June 2, 2016

After addressing property settlement agreements and beneficiary designations, this next article in the series on divorce and estate planning discusses real estate and personal property.

Married couples tend to own real estate together, whether as a primary residence, a vacation home or an investment property, and may have purchased a variety of personal property together, such as artwork, furnishings and the like. Upon divorce, Virginia law dictates that all rights in real and personal property, “including the right of survivorship in real or personal property title to which is vested in the parties as joint tenants or as tenants by the entirety, with survivorship as at common law, shall be extinguished. . .” Va. Code §20-111. Thus, by operation of law, the ownership of real and personal property is converted to ownership as tenants in common.

Now depending on the property settlement agreement, each party will generally own fifty percent of the real and/or personal property. In order to ensure that the real and/or personal property is used for an individual’s benefit during incapacity and distributed to his or her beneficiaries upon death, a person should consider transferring such real and personal property to a revocable living trust (the benefits of which I have discussed in earlier posts).

Alternatively, for the real property, Virginia has the Uniform Real Property Transfer on Death Act, which allows a person to essentially designate a beneficiary for his or her real property by way of a transfer on death deed. This deed is revocable, provided certain formalities under the statutes are followed, but allows for you to be on record to the public as to who or what entity should receive the real property. Although it is a revocable designation, it is not that straightforward to change, particularly if you decide to do so multiple times, which may create issues if death occurs in the midst of a change. Thus, a transfer on death deed should only be considered in certain circumstances depending on your overall estate plan.

With all that said, keep in mind that if nothing is done to handle the real and personal property, then both will pass by operation of law (and perhaps to unintended beneficiaries – think #Prince). More control exists if real and personal property are passed through an effective estate plan, (e.g., by way of a revocable living trust) versus letting state statute decide. So, if you are recently divorced or in the process of divorcing, ask yourself what should happen to your real and personal property and be sure to take action so the real and personal property does pass in accordance with your wishes. #divorce #estateplanning #transferondeath #revocablelivingtrust