What is a Supplemental Needs Trust?

A Supplemental Needs Trust (or Special Needs Trust), commonly abbreviated as SNT, is a Trust setup to supplement people on means tested programs.

If setup correctly, a Supplemental Needs Trust (SNT) will not affect a person’s means tested benefits.

SNTs come in two major types:  The first party or self-settled and the third-party trust.

First Party Supplemental Needs Trusts

42 U.S.C. 1396p(d)(4)(A)) and 42 U.S.C. 1396p(d)(4)(C)) authorize first party trusts.

Both authorized Supplemental Needs Trusts have a Medicaid payback requirement.  This means that when the beneficiary passes away, the Trust must pay back Medicaid for all Medicaid benefits received during the beneficiary’s lifetime and in all states.

The first type is the self-settled trust.  This means that it is the person’s own money in the trust.  Until December 2016, a person could not setup these themselves.  However, in December 2016, the President signed into law a change that allowed a person to create these types of trusts themselves.

The request is that the person is under 65 years old and disabled under the Social Security definition.  The trust must be for the “sole benefit” of the beneficiary.  You can’t mix and match people in the trust.

The second type is the “pooled” trust.  The only stated requirement is that the person must be disabled under the Social Security definition of disability.  To create a pooled trust, the pool invests the money in a common investment fund.  Think of it like a mutual fund.  The common pool invests each person’s money but each person has a separate accounting.

Third-Party Supplemental Needs Trusts

The law does not directly authorize third-party trusts. Third-party trusts are a way to use money for the special needs person’s benefit, while making sure the money is never theirs.

Generally, the well written third-party supplemental needs trust is not countable as a Medicaid resource.  Somebody other than the beneficiary must create the trust, the funds must not be available to the beneficiary, the trustee must have complete discretion, and the trust used to supplement Medicaid or other means tested programs.

One major benefit is that there is no requirement to pay back Medicaid.  Since the money never belonged to the person, you can decide where the money goes.

Another benefit is that the trustee can weigh the pros and cons of using the money for things Medicaid provides and spend on them anyway.  The trustee must weigh the spend against the loss of benefits.  Some trusts provide the language to do this, and others restrict the trustee to just supplementing.

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Tangible Personal Property Definition

Adverse Possession in Arkansas

First, adverse possession (also known as “squatter’s rights”) is a legal principle that applies when a person who does not have legal title to a piece of property—usually land (real property)—attempts to claim legal ownership based upon a history of possession or occupation of the land without the permission of its legal owner.

Boiled down, it means you use the land like it is your own land for the required legal period, and the land becomes yours.

But, in Arkansas, it is harder than that…

The statute requires either that the person holds “color of title” to the land, or “color of title” to land next to the parcel and paid the ad valorem taxes on the parcel.  Next to in has been held to mean not across a street, but touching the the land you have “color of title” to.

Color of title is a title that appears correct and valid but may be defective.  The courts have ruled that deeds are mere color of title; the actual title to land is secured with an irrefutable instrument, like a land patent. When that land is subsequently conveyed to another owner by a deed, the deed colors the title to show the new owner. Thus, the chain of title from the land patent to the present may include many deeds. The actual title remains with the land patent and lawful deeds show the chain of title to the present landowner. Because the ownership in land is a very specific thing, requiring precise and proper transfers of ownership, it used to be that people always required a certified abstract be provided with a deed to ensure the deed was not merely a color of title fiction.

To prove adverse possession in Arkansas under common law, you must fulfill 6 requirements in addition to color of title:

1. Actually use the land as it would be used by the rightful owner
2. The use is visible and notorious.  You can’t hide the fact that you’re using the property and you can’t have the owner’s permission
3. The use is exclusive
4. It is hostile,  That is, you can’t have permission to use the land
5. You intend to hold the property adversely to the true owner
6. For a period of seven years continuously

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Abatement

Abatement is a word you usually hearing during the administration of an estate. The administration of an estate is the process of gathering the assets and distributing the assets under court supervision.

If the assets in an estate are not sufficient to pay the debts, then the assets named to people in the Will shall be “abated.” That is, they will be sold to pay the expenses and debts of the estate.

The normal order is intestate property, the residue of the estate, general gifts, demonstrative gifts, and specific gifts.

Intestate property is property not included under a Will. The residue of the estate is what is left over after all of the gifts listed in the Will. General gifts are usually just a cash gift. Demostrative gifts are cash gifts from a specific account. Specific gifts are specified items of property, either personal or real property.

Note: Non-probate assets do not abate.

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Tax Benefits of Buying a Second Home

Buying a second home can provide you with a place to relax, unwind, and escape from it all. It can also provide you with substantial savings if you take advantage of these tax benefits of buying a second home.

Mortgage Interest

Mortgage interest paid on up to $1.1 million in debt on your first and second homes is fully deductible. Typically, this rule only applies if you treat your second home as a home and not a rental property. But some mortgage interest may still be deductible if you occasionally rent out your second home. To benefit from this deduction, you must use the property for 14 days or more than 10% of the number of days you rent it out a year, whichever is longer.

Tax-Free Profit

You can take up to $500,000 in profit from the sale of a home tax-free if it is your primary residence and you meet the two-year ownership and use requirement. Typically, you do not get the same tax benefit from the sale of a second home. But people have taken advantage of this rule by converting their second home to their primary residence before the sale, thus reaping the tax-free profit.

But in 2009, Congress added a few more restrictions to limit the amount of tax-free profit you can take from a second home. Now, a portion of the profit from the sale of a second home is taxable. The portion is determined by the ratio of the amount of time after 2008 you treated the residence as a second home or rental property and the amount of time you owned it.

Buying a second home can offer many benefits. But to maximize the value of your investment, work with a lawyer to make sure you are not overlooking any potential legal, insurance, financial, or tax problems or opportunities. You must meet other requirements—such as living in the home for two years before you sell it—to take advantage of some of these tax benefits. A Personal Family Lawyer® can help you ensure you meet the requirements, so you can reap all the benefits of owning a second home.

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10 Reasons People Put Off Planning

Reason #1: Intimidation

Estate planning does not have to intimidate you!

If you can create a list of the major stuff you own and the major debts you own, you are well on you way to making a plan.

The other part is deciding who you would want to act for you, that is make decisions for you, if you can’t.  Sometimes this is a difficult decision, but with the expert coaching of your attorney, you’ll get through this part with little trouble.

You should expect about an hour for the initial session in getting to know your attorney and setting goals.  Then you’ll go home with homework to guide you through the needed information.  A short meeting will be scheduled to go over the homework.  At the end of that meeting, you should expect to schedule your signing meeting.

In the meantime, expect a set of drafts for your review.

At the signing meeting, we will sit around a conference table, sign, and witness your documents.  Then they will be put into a notebook for you to take home.

Reason #2: Don’t Care/Apathy

“I’ll spend it all!”

Estate planning is very important for day to day life.

I hope you do and don’t run into any unforeseen things like accidents, medical incidents, or random acts of violence in the meantime.

If you were to become incapacitated for any reason, you deserve to know who will make your decisions, pay your bill, choose your healthcare options, and much more.

If you don’t decide now, then your family will likely have to go to court to get a guardianship over your person and property.  This will cost them a great deal of money and time.

Reason #3: Youth

Youth is not an excuse…

Accidents and random acts of violence happen all the time.

If you are single, you should still have somebody that can legally act on you behalf.

If you are married, even more reason to setup a minimum estate plan to make sure your spouse has access and legal authority to act in you place.

If you have children, then you need to think about protecting them and making sure they and your spouse have immediate access to money and assets without the need of getting the courts involved.

Reason #4: Cost

What cost can you put on peace of mind, security, and comfort?

Basic protective planning for a family starts reasonably and can be added to over time.

Reason #5: Time

How long do you think it will take on your part?

What if I told you, it’s probably less, much less, than that.  In only 5 to 8 hours you can have your part done.  That includes time meeting with the attorney, gathering information, working with banks, reassigning beneficiaries, and signing.

Reason #6: Don’t Think You Have Assets or an Estate

EVERYBODY HAS ASSETS!

If you have assets, you have an estate.  Your estate is everything you own.

The clothes you are wearing are your asset.  The car you drive is your asset.

But you have more than that… Cars, clothes, jewelry, money, stocks, bonds, retirement, life insurance, patents, investments and more are your assets.

If you take the short amount of time to add up the value of your assets, you may be surprised at how much you really have.

And, you have some assets without value.  Your rights.  Your right to make financial, legal, and medical decisions.  Your dignity to live in the manner you want.  Your right to choose your end of life.  Your right to deny medical treatment.  And more…

You should protect your rights as well as your assets.

Reason #7: Complicated

The complicated part is done by the estate planning attorney!

Your part is to define your goals and answers the questions the attorney will provide.

Reason #8: Mortality

Almost nobody wants to think about the end.

But, do you want to leave your family a loving legacy instead of a mess?

Reason #9: Somebody Will Take Care of It

Yes, somebody will take care of it if you don’t.

However, that comes at a high price.

If you are to become incapacitated, somebody will hopefully step up and get a guardianship over you.  That requires getting statements from a doctor, filing a petition, going to court, and filing annual reports with the court.  This adds up quickly to several thousand dollars, a lot of time, and emotional expense.

If you pass without a plan, somebody will have to step up and settle your estate.  Petitions, trips to court, time, emotional expense, and more…  Many thousands of dollars will be spent to wrap up.

Reason #10: Uncertainty About Who to Ask

This can be a tough decision.  Who to ask to be your trustee, executor, etc.

This is not a good reason to keep putting off planning.  You will work through this issue with the help of your planning attorney.

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Ready to Write Your Will? Consider This Before You Go It Alone or Online.

Tweety Bird can Mess Up Estate Plan

If you want to avoid family fights over your estate, take a long hard look at your closet.

Personal property is something that people often fail to consider when drawing up wills and other estate planning documents, attorney John J. Scroggin told an audience of financial planners last week at the FPA Be conference in Nashville.

“The single biggest point of conflict among family members is not the million dollars over here,” said Scroggin, who is an accredited estate planner and a partner with the Roswell, Georgia-based law firm Scroggin & Co.

“It’s the yellow Tweety Bird [figurine] that sat in mom’s kitchen for 40 years.”

…

(That Tweety bird, a real contested item in a case Scroggin handled, was worth about $1.50 based on comparable eBay auctions, he said. He offered to buy a duplicate and not tell the feuding siblings who had mom’s. They declined.)

 

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The Downsizing Generation: How to Handle a Surplus of Stuff When a Loved One Ages

As the baby boomer generation ages—and downsizes—more and more adult children will be tasked with going through their loved one’s belongings to decide what to do with everything. As more and more people downsize after retirement, china sets, furniture, heirlooms, and other belongings are often left behind and unwanted.

Traditionally, these items have been passed down to the next generation. But today, the next  generation has different needs, tastes, and wants. As a result, there is a surplus of “stuff” baby boomers don’t need or have room for, and their adult children don’t want. Maybe that includes you.

This is an all too common problem with a few helpful solutions.

The thought of tossing a lifetime of belongings in the trash is more than many can bear, which explains the advent of the senior move management industry. Today, there are a plethora of professionals who can help your loved one go through each item to decide what should be kept, what should be given away, and what should go to charity or donated.

The cost of this professional service can be up to $5,000 for a large estate, but it eases the burden on the adult children and ensures the loved one’s wishes are listened to and honored.

Bear in mind, as the baby boomer generation ages, charities and nonprofits that typically accept used furniture and other belongings are faced with the burden of too much stuff. The dated styles baby boomers preferred during their prime don’t fit the tastes and needs of today’s generation. The current generation views belongings like furniture and dishes as functional and more disposable, better suited to their urban, fast-paced lives where minimalism and portability are more prized than sentimentality and tradition.

Another way to decrease the time and effort it takes to dispose of all your belongings is to be very clear about what you consider to be heirlooms and valuable items by indicating in your will, or in a separate writing ancillary to your will, exactly what’s important to you and what isn’t.

Most importantly, talk to your children or other heirs to see what they want and don’t want. And to make sure they know what’s important to you, and what isn’t. The more you can communicate about this now with your loved one’s, the better.

You may be surprised to discover that most family fights that break up families aren’t over money at all, but over the personal property of mom and dad that the kids fight over because there was not clear instructions.

As more baby boomers age and non-profits turn away dated donations,  the need for thoughtful estate planning is greater than ever. A comprehensive estate plan can ensure your belongings either go to those who will cherish them or to charities that will benefit from them.

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Weathering the Storm: How Families Can Plan for Natural Disasters

Planning for natural disasters is more than just stocking up on canned food and water. In a natural disaster, food and water will keep you alive, but how will you rebuild your life if your home and community are devastated? Here are some simple tips that will help you get back on your feet should disaster strike.

Make sure you have enough insurance. Basic homeowner’s insurance typically won’t cover damage caused by natural disasters like floods or earthquakes. You might need to purchase additional insurance to cover these types of events. If you’d like an objective review of the types and amounts of insurance you have, contact us, we can help.

Keep a thorough inventory of what you own. Having up to date information on your personal belongings—especially valuables—will make getting them replaced using your insurance claim easier. Pictures of your belongings stored in the cloud is one great way to handle this in advance of any natural disasters.

Create a financial plan. Natural disasters can be financially disastrous as well. You may not be able to return to work and could face the expense of repairing—or rebuilding—your home.

Plan well to ensure you can meet your expenses and make a financial recovery. Account for your insurance deductibles, which can be 10-20% of the total damages and have six month’s salary in savings to cover any gaps in your ability to earn an income.

Protect important information by making digital and hard copies. Put a copy in a fireproof/waterproof safe and give copies to friends or family that reside outside of your area for safekeeping.

It’s also a good idea to work with us. We have unique tools that can safeguard your information to make recovering from a natural disaster easier even when you’ve lost everything.

Follow standard safety recommendations. Keep enough non-perishable food and water for your family for 3-5 days. Consider investing in a generator. Build a first-aid kit, and learn CPR as a family.

Keep a comprehensive emergency kit with contact information, survival tools, and a change of clothes for your family members. Designate a meeting place all family members can get to in case your home is wiped out. And talk with your family about what to do in different scenarios.

Families who have someone watching out for them can recover more quickly from natural disasters. Working with us can ensure you have someone waiting to assist you when you face tragedy.

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Everything You Need to Know About Estate Planning

As the saying goes, nothing’s certain except death and taxes. While there’s not much choice in the matter when your accountant reveals your tax bill, end-of-life dealings are far more flexible.

How you choose to live out your twilight years – and what happens to your estate after you go – is entirely up to you, says Cristean Yazbeck from Hamilton Blackstone Lawyers.

“Unlike a will, which only comes into effect once you pass away, estate planning encompasses decisions about what you want for your own lifestyle and medical care should you be in a situation where you can no longer make those decisions for yourself,” he says.

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There is a Legal Way for Strangers to Take Your Stuff

Guardians are meant to make decisions for those who cannot care for themselves or their affairs, due to age, mental illness, or developmental disabilities. It’s a role typically filled by family members or friends. But in rare instances when no one is available, or loved ones are deemed unfit, a court may appoint anyone who has completed the state’s guardian qualification process, even if that person is a stranger.

In Parks’ case, the scheme was allegedly carried out in such a way that the victims’ relatives didn’t know what was happening until it was too late.

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