Six Questions to Ask an Estate Planning Attorney

questions to ask an estate planning attorneyIf you decide that you are interested in discussing your objectives with an estate planning attorney, you may take pause because you don’t really know how to start the conversation. This is understandable if you have not done much research into the subject.

In this blog post, we will look at six questions that you may want to ask an estate planning attorney so that you get a basic feel for the process. We will also provide brief answers, but you can obtain in-depth information if you actually sit down and have a meaningful discussion with your lawyer.

Will the inheritances that I leave to my loved ones be subject to taxation?

People often wonder about taxes on inheritances. On the positive side of the ledger, inheritances are not subject to regular income taxes. Plus, appreciated inherited assets get a step up in basis, so an inheritor does not have to pay capital gains taxes on appreciation that accumulated during the life of the decedent.

There is a federal estate tax that could enter the picture. We have a credit or exclusion that allows you to transfer $5.45 million tax-free, but any portion of your estate that exceeds this amount could be subject to the estate tax. The tax carries a 40 percent top rate.

We should point out the fact that spouses who are American citizens can transfer unlimited assets to one another free of the estate tax, but it can be applicable on transfers to anyone else.

Some states have state-level estate taxes, but there is no estate tax on the state level in Florida.

Are trusts only useful for very wealthy people?

There are wealth preservation trust that are used by high net worth individuals who are exposed to the estate tax. However, there are other types of trusts that can be useful for people of relatively ordinary means.

What type of trust could provide benefits if I’m not exposed to the estate tax?

A revocable living trust can be a great choice for many people. If you use a will to transfer your personal property, the heirs would not receive their inheritances until the estate was probated by the court. This will typically take somewhere in the vicinity of a year if there are no complications.

There are probate expenses that accumulate, and since probate is a public proceeding, anyone who is interested could access probate records. They could find out how you decided to distribute your resources, and this can cause problems.

These drawbacks could be avoided if you were to use a living trust. Assets in the trust could be distributed by the trustee that you empower outside of probate. This is one benefit, but there are others.

If I leave an inheritance to a person with a disability, will this cause a loss of Medicaid eligibility?

A significant direct inheritance can cause a loss of eligibility for Medicaid coverage. This type of situation is usually addressed through the creation of a supplemental needs trust. Under program rules, the trustee could use assets in the trust to make the beneficiary more comfortable, but eligibility for Medicaid coverage would not be interrupted.

Will assets in a trust count against me if I apply for Medicaid to pay for nursing home care?

If you were to use a revocable living trust, you would have access to the assets while you are living, so resources in this type of trust would count if you were to apply for Medicaid to pay for long-term care.

However, you could prepare yourself for Medicaid eligibility if you establish and fund an irrevocable Medicaid trust. You would not be able to touch the principal, but you could continue to receive income from the earnings of the trust before you  submit your application for Medicaid coverage.

Who will handle my affairs if I become incapacitated?

If you do nothing to prepare for possible latter life incapacitation, interested parties could petition the state to appoint a guardian to act as your representative. You can prevent a guardianship and name your own hand-picked decision-makers if you execute legal documents called durable powers of attorney.

The durable designation is significant, because a power of attorney that is not durable would not remain in effect if the grantor was to become incapacitated at some point in time.

Let’s Get Started

Now that you understand the basics, you may be ready to take action. If you would like to set up a consultation, call us at 239-225-7911 or send us a message through this page: Naples, FL Estate Planning Attorneys.







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