With Consideration for Those Living With Chronic Illness

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Revocable Living Trusts

• With Consideration for Those Living With Chronic
  Illness

By Martin M. Shenkman, CPA, MBA, PFS, AEP, JD
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Caveats
Nothing in these slides or any accompanying
presentation is to be considered tax, legal,
investment or other professional advice. The
information is merely provided for educational
purposes and no action should be taken without
the individual consulting his or her own tax,
estate, legal, financial, investment, insurance
and other advisers. The hosts and sponsors of
this program are NOT responsible for its content
or accuracy
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Revocable Living Trusts - Introduction

• What is this powerful document?

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What is a Revocable Living Trust?

• Also called Living Trust, Loving Trust, or
  Inter-Vivos Revocable Trust
• Revocable you can change it anytime
• Can be used to avoid probate but this popular
  goal is not the key benefit of this technique
• Use to consolidate and manage your assets during
  disability
• It is the most powerful tool to manage assets if
  you cannot do so

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Tips Revocable Living Trust

• Your will and power of attorney must be
  coordinated
• Boilerplate trusts designed to avoid probate
  wont accomplish your goals
• Focus of document should be protecting you and
  communicating your wishes as your disease
  progresses
• Tailor trustee replacement, disability and other
  provisions to the nuances of your anticipated
  disease course
• Assets must be transferred to the trust to gain
  the most benefit but some assets should not be
  transferred (e.g., IRA).

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Tailor your Revocable Trust Planning to Your Needs

• Every person is unique it has to be your plan,
  your trust, and address your challenges
• Reflect your personal wishes and circumstances
• Tailor the document to address your unique assets
  (e.g. a closely held business)

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Chronic Illness is Common Trust Now Dont Wait

• 120 million Americans are living with chronic
  illness or disability
• By 2020, about 157 million Americans will be
  afflicted by chronic illnesses
• 26 of those ages 65-74 have had their lives
  significantly impacted by chronic illness
• 50 of those age 85 and older have had some
  cognitive impairment
• 9 million people are cancer survivors with
  various side effects from treatment
• A living trust plan created early after your
  diagnosis with a chronic illness can protect you
  and your loved ones

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Watch Out For Hyperbole and Sales Pitches

• There are many hucksters pushing living trusts to
  play on peoples fears of probate and taxes
• Only 5,600 estates a year will pay a federal
  estate tax few are affected (but state estate
  tax may still bite)
• Tax savings can be accomplished in a will or by
  planning, a living trust is not necessary for
  this
• Probate is not as costly, difficult or evil as
  often portrayed by those hustling trusts
• The above detract from the most powerful use of a
  living trust namely managing assets in
  disability

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Revocable Living Trusts Plan your Trust
Agreement

• How to plan your trust document

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Create Your Revocable Living Trust

• Establish a personalized (not boilerplate) living
  trust
• Include provisions to address your specific
  health issues
• Avoid probate and intestacy
• Manage assets during disability or illness

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Living Trust What do you Need

• Trust agreement a contract between you and the
  trustee (which might be you, but read on)
• Tax identification number (but check with your
  CPA)
• Documents to transfer assets to your living trust
  once signed
• Paperwork to open a trust bank account

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Living Trust Naming Trustees

• Who should be trustee?
• Should you name two co-trustees at inception?
• Should you be a trustee?
• Who should be successor trustees?
• When should successor trustees step in?

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Living Trust Different Time Periods to Address

• Your living trust might have different provisions
  to address different time periods more
  specifically
• 1 Youre alive and well you might be a sole or
  co-trustee and simply manage assets in the trust
  name
• 2 Youre disabled a co-trustee and successor
  might take over
• 3 After death it will function like a will
  disposing of your assets

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Living Trust Special Trustee Provisions for
Chronic Illness

• Perhaps you should remain a co-trustee to stay in
  control of your finances but have a co-trustee
  that can act if you have an attack or are
  hospitalized
• Standard language removing a trustee who is
  disabled may not suffice perhaps the co-trustee
  can be authorized to take certain actions alone
  if you cannot act
• Consider a 30 day disability period so a short
  hospitalization wont affect it

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Living Trust Special Distribution Provisions
for Chronic Illness

• Include details as to the care and other
  decisions you want to guide or control the
  trustees when you are not able to serve
• Direct the trustee to pay for medical care
  decisions authorized or directed by your health
  care agent (to avoid conflicts)
• If you should not serve as trustee consider a
  small dollar bank account outside the trust to
  enable you to shop and spend reasonably without
  jeopardizing the trust assets

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Living Trusts Hire a Lawyer

• Be very wary of internet forms they are limited
  in how they can be tailored and wont address
  your special circumstances (e.g. chronic illness)
• You can fill out forms cheap on line but even if
  the forms were good you cant get a website or
  cheap form to substitute for decades of real
  experience
• Hire an attorney in your state that devotes a
  substantial portion of his or her practice to
  estate and trust planning
• If the attorney cannot tell you reasons not to
  use a trust, as well as reasons to use a trust,
  go elsewhere no decisions are absolute

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RV Tips Planning Your Living Trust

• Hire a lawyer in the state you claim is where you
  reside and are domiciled that is a tie to that
  state to support your position (but alone will
  never be enough, its just one factor)
• Rvers, or anyone who facing tax uncertainty as
  to which state they reside in (or in which they
  are domiciled), should consider the address
  designated in their trust and which state law is
  indicated to apply
• Where are the assets are that will be transferred
  to the trust
• Where should you sign your trust in the state
  you claim is your residence and domicile
• Can you use formalities for your trust that are
  more likely to be accepted in other states (e.g.,
  3 witnesses and a notary)

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Revocable Living Trusts Get Organized

• Keeping the confusing names of legal documents
  clear

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Organize Emergency, Financial, Information and
Advisors Information

• Without organization your trust will be of
  marginal help
• Contact People (names, numbers)
• Financial Information (account information)
• Passwords and Security Codes
• Documents (Estate planning documents, legal
  documents, and more)
• Budget and Plan

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Financial Information is Critical to Organize for
your Trust to Succeed

• Title to Accounts
• Change appropriate assets to your trust
• Dont transfer IRAs, professional practices and
  other inappropriate assets

• Beneficiary designations
• Coordinate with trust beneficiary provisions for
  assets transferred

• Account Management
• Duplicate statements
• Consolidation and simplification

• Automation
• Organizing records
• On line payments
• Automatic deposits
• A trust without more is not enough

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RV Tips on Organizing Financial Info and Using
Living Trusts

• Rvers, or anyone who travels extensively, should
  take extra precautions to make sure information
  is available when needed
• When determining where to keep accounts consider
  tax issues of residency/domicile
• Consider transferring all permitted (appropriate)
  assets to your living trust but retaining a bank
  account in your own name in the state where you
  believe you are domiciled
• Ask an attorney in the state where you own real
  estate or tangible property (collectibles) if
  transferring the assets to your trust will be
  sufficient to cut tax ties to that state (it may
  avoid probate but not solve your state income or
  estate tax issue)

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Revocable Living Trusts Relationship to Other
Documents

• Keeping the confusing names of legal documents
  clear

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Overview of Estate Planning and Living Trusts

• Powers of Attorney
• Only relevant to assets not transferred to your
  living trust
• Why standard forms arent suffice
• Special provisions to include to coordinate with
  living trust
• Living Wills
• Trustee of living trust might fund medical bills
• Address specific health issues
• Experimental procedures
• Organ and tissue donations

• Health Proxies
• Selecting agent
• What is different for you if you live with
  chronic illness
• Trustee should follow agents health care
  directions

• Revocable Living Trusts
• Often the keystone of your plan
• Boilerplate forms rarely address nuances needed
• Coordinate with other documents

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How does a living trust compare to a will and
power of attorney?

• Will disposes of your assets after death
• Power of attorney gives an agent authority to
  handle certain legal and tax matters while you
  are alive and often while you are disabled
• Living trust can address both and catch gaps in
  the other documents trustee holds legal title
  to your assets and may be able to act more
  quickly and with less issues than an agent under
  a power of attorney

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Will Consider a Pour Over Will
Your will might designate that your assets
should be distributed to your trust
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Revocable Living Trusts Ancillary Steps

• Follow up steps must be addressed to make your
  living trust plan works

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RV Tips for Living Trusts

• Using a living trust can consolidate assets,
  minimize the likelihood of other states claiming
  that their law applies, and make management of
  your assets easier by a family member or friend
  who lives at a distance from where you are but
  you have to get assets transferred to the trust
  (watch which ones) to accomplish this
• Living trusts alone will not suffice for many
  planning needs -- you might benefit from a
  limited liability company to own real estate or
  tangibles consult a lawyer in the state where
  the assets are located, in addition to the lawyer
  you hire in the state you claim is your domicile

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Insurance Coverage May Have to Be Updated

• Property, casualty, liability insurance
• If assets are transferred to your trust update
  coverage

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Insurance Coverage Considerations

• Dont make assumptions get every insurance
  coverage reviewed before transferring an asset to
  your trust, and at least every 2 years
• You might need to name the trustee and trust as
  owner of your home to assure proper coverage

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Beneficiary Designations May Need Updating

• Consider all beneficiary designations for assets
  transferred to your living trust the trust is
  a new account and youll need forms
• Obtain copies of the forms you file and keep them
  with trust records
• Note IRA, pension (and often life insurance)
  should generally not be transferred to your trust

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Revocable Living Trusts Consider Everyone
Affected

• Family, loved ones, trustees must all be
  considered to make your living trust plan work

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Provide for Loved Ones

• While the discussions above focused on using a
  living trust to protect you, also be sure to
  provide for your loved ones

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Communicate

• Educate and inform your fiduciaries
• Preparation of beneficiaries

Having a real conversation is one of the most
important steps you can take
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Communication Tips

• Explain your finances, family, care, disease, and
  so forth to your advisers tell all so they can
  help properly
• Discuss with family, friends or others involved
  in your life what help you might need
• Can the trustee you named really be counted on?
  Have alternatives
• Express your wishes in face to face meetings and
  then confirm key points in writing

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Revocable Living Trusts Its a Process

• Monitor, review and revise regularly

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Review, Revisit, Revise

• Nothing remains static
• Tax and property laws
• Family situations
• Assets and net worth
• Health

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Revocable Living Trusts Get Started

• Planning is great but implement!

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Make an Action Plan
And Get Started
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Protect yourself and your loved ones