Why Establish A Special Needs Trust Or Supplemental Needs Trust?

For families and friends of individuals with special needs, the primary concern is sustaining the individual financially. Not only do we want to ensure that their requirements for daily care are met, but we also want to make every effort to provide the best quality of life possible. One of the best ways to meet both goals is to establish either a Special Needs Trust or a Supplemental Needs Trust which allows a person with special needs to continue receiving government assistance for standard care while the trust money can be used for supplemental benefits such as advanced medical treatment, education, entertainment, and even vacations.

A key to success is knowing whether a Special Needs Trust or a Supplemental Needs Trust is right for the situation at hand, and this series is intended to inform readers about some of the basics and benefits of each. Because the laws and terminology involving trusts vary from state to state, it is helpful to consult with a local attorney who specializes in this area. If the Beneficiary lives outside the state of Minnesota, the special needs trust attorney will inform you about the options available for your loved one and help you take the steps necessary to safeguard their well-being.

What Is The Difference Between A Health Care Directive And A POLST Form?

This question is one that many patients and their families ask. Even though a Health Care Directive and a Physician Orders for Life-Sustaining Treatment (POLST) form deliver similar instructions, it is important to know the particulars of both.

A Health Care Directive is a unique legal document that provides individuals and those close to them with peace of mind in the event of unforeseen circumstances like a car accident or a fall. If a person becomes incapacitated and is no longer able to communicate wishes for his or her health or personal care, a Health Care Directive allows him or her to convey treatment preferences to doctors and to appoint a Health Care Agent to act on his or her behalf. It is smart for all adults to have one prepared to ensure that their wishes are followed medically. Keep in mind that Health Care Directive laws and the definitions of key medical terms vary from state to state, which makes it particularly helpful to meet with an Elder Law attorney to ensure that your Health Care Directive has been drafted and executed properly.

A POLST form is different than a Health Care Directive primarily because it must be written and signed by a physician. When filling out the form, doctors converse directly with their patients and record directions about what to do if they become unable to speak for themselves. Examples of topics that doctors and patients discuss are who should make medical decisions on behalf of the patient (if a Health Care Agent has not already been appointed) and whether or not to attempt life-sustaining measures, such as CPR after cardiac arrest. While Health Care Directives are prepared in advance of medical issues, POLST forms are completed when a new critical medical condition arises or when changes to a current condition take place.

What makes a POLST form particularly useful is its ability to give end-of-life instructions when no Health Care Directive is available. However, those with a Health Care Directive can also complete a POLST form with their doctor since it adds more detail to the guidelines already established. Plus, POLST forms are easily recognizable – the doctors, nurses, and other medical professionals attending to patients can quickly navigate and spot the key information on the document.

For general information about Health Care Directives from the Minnesota Department of Health, visit www.health.state.mn.us/divs/fpc/profinfo/advdir.htm. If you would like more information about POLST forms, check out www.polst.org. To learn about state-specific laws and terms or to draft a Health Care Directive, be sure to consult with an Elder Law attorney.

2014 Changes to Minnesota’s Estate and Gift Taxes

Estate Tax

On March 21, 2014, Governor Dayton signed a tax bill (H.F. 1777; Minnesota Laws, Chapter 150) that will gradually increase the Minnesota estate tax exemption from $1.2 million for deaths in 2014 to $2.0 million for deaths in 2018 and thereafter.

Minnesota and the federal government impose an estate tax if you die with assets in excess of the exemption amount. There is no estate tax due if assets transfer directly to a surviving spouse. However, an estate tax is required when assets transfer to non-spouse beneficiaries when the decedent’s gross estate exceeds the applicable exemption amount.

The new Minnesota exemption amounts are as follows:

Year of Death

MN Exemption Amount

2014

$1,200,000

2015

$1,400,000

2016

$1,600,000

2017

$1,800,000

2018 and thereafter

$2,000,000

The federal estate tax exemption is currently $5,320,000 for deaths in 2014 and the top federal rate is 40%. With proper estate planning, a married couple can transfer twice these exemption amounts free of estate tax to their beneficiaries.

Minnesota estate tax brackets have been simplified. The estate tax rates for 2014 begin at 9% on estates over the exemption amount and incrementally increase to a maximum of 16% on estates over $10,100,000. There is no longer a 41% estate tax bracket between $1,000,000 and $1,093,000. In 2013, the estate tax due on a $2.0 million estate was $99,600 and this amount will decrease to $78,000 for 2014 deaths, $60,000 for 2015, $40,000 for 2016, $20,000 for 2017 and no tax for 2018 or later deaths.

Gift Tax

In 2013, the Minnesota legislature levied a gift tax for taxable gifts made on or after July 1, 2013. H.F. 1777 retroactively repeals the Minnesota gift tax to its effective date of July 1, 2013. These changes do not affect the requirement to file a federal gift tax return. Taxable gifts (currently, any gift in excess of $14,000) made within three years of a decedent’s death will continue to be included in the taxable estate for purposes of determining Minnesota estate tax due.

The information included in this article is intended to provide general information regarding the 2014 changes to Minnesota estate and gift tax laws and does not constitute legal or tax advice. To review your personal estate planning situation, please contact Maser, Amundson, Boggio & Hendricks, P.A. to meet with an attorney.

Recent Studies Show That A Blood Test Predicts Alzheimer’s

Researchers from Georgetown University and Rochester University (NY) recently published the results of a study that may significantly impact a doctor’s ability to foresee oncoming Alzheimer’s Disease.

Read More→

Effective January 1, 2013 Annual Exclusion Rate for Gifts Will Increase to $14,000

Effective January 1, 2013, the annual exclusion rate for gifts will increase to $14,000, up from $13,000 in 2012. What does this mean?

This means that a person can gift $14,000 per year to any individual without having to file a gift tax return. So I could gift $14,0000 to each of my children and my husband could also gift $14,000 to each child. So effectively a couple could transfer $28,000 to each child without having to file a gift tax return. Assuming the children are stable and can handle money appropriately, this may be a means, among others, to reduce the Minnesota estate tax that would be imposed on estates in excess of $1,000,000.

Kris L. Maser
Attorney at Law

What is a Trust Protector?

Kris Maser Attorney at Law

A Trust Protector is neither a trustee of the trust nor a beneficiary of the trust. Generally, the Trust Protector should also not be the grantor, the grantor’s spouse or any other person who has contributed or will contribute funds to the trust.

The Trust Protector is the person named in the trust to provide independent oversight to accomplish the stated purpose of the trust. Trust protectors can enhance the trust’s original purpose specifically when the Trust Protector is included in a Special Needs Trust. For example, a Trust Protector in a Special Needs Trust could be given the responsibility to over see the beneficiary’s needs and advise the trustee as to what is needed for the care and comfort of the beneficiary. The Trust Protector could also be empowered to determine appropriate placement for the beneficiary and to follow up on the care provided to the beneficiary.

Do Your Homework When Working With A Financial Advisor

Kris Maser Attorney at Law

The Financial Industry Regulatory Authority Inc., (FINRA) the brokerage industry’s largest regulator, has issued a warning against financial advisors using authoritative-sounding titles like “certified senior advisor” or “certified retirement counselor” because the use of these misleading designations has become so wide spread. Sometimes these designations are no more than “weekend” designations obtained by attending a hotel seminar. Some of these designations don’t require a high school education or a college diploma.

Go to FINRA Regulatory Notice 11-52 for more information.

When working with a financial advisor please do your homework: ask for references, review the financial planner’s background including the time she/he has been in business as well as his or her education history.

Steep Decline In Estates Owing Estate Taxes

Over the last decade there has been a steep decline in estates owing estate taxes to the federal government. Only 0.6 % of those who died in the USA in 2008 owed any estate tax.

Because of the increase of the filing threshold, the number of estates that needed to pay taxes dropped from 108,000 in 2001 to less than 34,000 in 2009. Of these estates filing returns in 2001 only 51,700 paid a tax. In 2009, the figure dropped to 14,700 of the 34,000 returns filed.

What To Do With Virtual Assets In Your Estate Planning?

Kris Maser Attorney at Law

Digital assets can range from items of financial value like online bank and brokerage accounts to domain names, Twitter accounts and social-media pages. Sometimes accounting for these assets after the death of the owner can be a nightmare. It becomes even more difficult if the decedent paid bills or filed tax returns on line. Without login information to access web accounts you may need to resort to hiring a computer forensics expert or obtain a court order for access to material.

Without access into the accounts of the decedent there is no way to stop automated bill payments or other automated services.

Suggestion: take inventory of all digital accounts and store a list of passwords and other necessary information on a flash drive. Put the drive in a safe deposit box or lock it in a safe. Remember to keep the inventory updated.

 

Elder Care Dilemma – One Family’s Solution

Kris Maser Attorney at Law

In my 30 years as an elder law attorney I have had the opportunity to counsel many families in the journey through the elder care maze. Families struggle with the want to help their elders, the high cost of care outside and even inside the home, the time commitment for care, jobs outside the house, layoffs because of the current economic condition, and caring for the family and children. I have seen some creative solutions and some disasters.

Let me share with you one family’s solution to their elder care dilemma. Mother – age 73 and father – age 84. Mother is healthy and has been caring for her husband who was diagnosed with Alzheimer’s disease 4 years ago. Mother admits she is tired and feels isolated. There are 4 children in the family. All children have children. Three of the 4 children live in Minneapolis, the 4th lives in San Francisco. Two of the children have been laid off from their jobs and have been looking for work for the past 8 months. One child, a daughter, is a registered nurse and is working. She is single with 3 small children.

All children get along. After much discussion with Mom and Dad alone in my office and later with the children, with the consent of the parents, a plan was devised to help mom care for dad, help single daughter with daycare issues, find employment for the 2 laid off children and keep the child in San Francisco involved.

In a nutshell this is what the plan looks like. The parents will pay to build an addition to RN daughter’s house to add a mother-in-law suite. (This daughter has the space on her property to do so.) The value of this addition to the house will be noted and used for further discussion about the division of the parents’ estate upon both parents’ death. A contract will be developed to determine who is responsible for what costs in the maintenance of the family compound.

RN daughter will continue to work but will monitor and oversee medications and be involved with medical issues for Dad. Mother will continue to provide care. The two children who are currently unemployed will be hired by Mother and Dad to augment care for Dad and for Mother, if Mother begins to need help. Social security will be withheld, along with FICA, FUTA and workers compensation insurance. The three children will allocate hours for care, develop cleaning schedule and meal preparation schedules, and be on sight to assist Mother with care for father and to care for father when Mother needs time away.

The children of RN daughter are school age, but need oversight after school. They will now be able to return home after school. RN daughter will discontinue the after school programs that the family used to provide daycare for her children while she is working.

AND the child in San Francisco? This child agreed to handle the investments, income taxes, set up the accounts, pay the parents bills and pay the salaries of siblings. This child will also make periodic trips to Minnesota to visit the parents and spell the other three children. (The parents don’t see this child enough and would like to pay for the child’s return to Minneapolis more often.)

We have a lot of things to determine here. How long can the parents stay independent? What happens if any of the children want out of the arrangement or if the parents want out? How do we determine salaries for the children? What other work is to be done around the house while the children are caring for the parents? Is any of this work going to benefit the RN daughter and if so should she pay the other children? Should RN daughter be paying siblings and parents for the child care? Who is responsible for meal preparation? Who will pay for groceries? Do the siblings have to bring their own lunches? And how will the parents allocate the funds that remain, if any, after their deaths?

Interesting, isn’t it. When care was being provided to parents during the depression often times there was no money to pay for expenses. Everyone just pitched in. The benefit now is that in this family they are choosing to provide care at home and pulling the entire family together to do it. Thankfully there are sufficient funds to carry this program on for some time.

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