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Gainesville Florida Estate Planning & Elder Law Blog

Monday, February 10, 2014

Probate vs. Non-Probate

It is extremely important to understand the difference between probate and non-probate assets. Probate refers to the process of how a court determines how to distribute your property after you pass away. Probate assets are distributed to family members by the court, while non-probate assets are assets that go directly to your beneficiaries, bypassing the court process.

In the probate process, you must file a will and appoint and executor, collect assets, pay bills, file taxes, distribute property and file the final account. Since the probate process can be time-consuming and expensive, people often try to avoid it and have non-probate assets.

Probate assets are any assets owned only by the decedent. This can include real property, personal property, bank accounts, an interest in partnership or any life insurance policy.

Non-probate assets include property held in joint tenancy, bank or broker accounts in joint tenancy, property held in a trust, life insurance listing someone else’s name and retirement accounts.


Wednesday, January 29, 2014

Changes in Reverse Mortgage Regulations Create New Opportunities

A few weeks ago we wrote here about a federal court decision that will protect surviving spouses of reverse mortgage holders. That was certainly good news, and now here is some more.

While reverse mortgages were historically viewed with caution and trepidation, that may now be starting to change thanks to regulatory changes making them more understandable and applicable to retirees. 

Historically, there were generally two primary reserve mortgage options: the traditional reverse mortgage, known as a Home Equity Conversion Mortgage (“HECM”), and the HECM Saver, which had a lower payout of equity but fewer upfront fees. But those options became outdated last year. Moving forward, all new mortgages will have to conform to regulations which will provide better clarity and flexibility to retirees.

New reverse mortgages will use a contract structure similar to a purchase money mortgage. Seniors will face a much tighter standard principal limit factor – the amount of equity one can withdraw from a residence. Under old regulations, people could remove the entire equity in a home, but now the limit is 70% of existing equity. 

That means reverse mortgages may no longer serve as well in a financial emergency. However, new reverse mortgages will have flexibility of payment. Specifically, one can take a partial withdrawal of equity one year, for example when the stock market is high and capital gains would be detrimental, without being required to take additional payments in the future unless desired. In easier-to-understand terms, the new reverse mortgage is similar to a home equity line of credit.

There remain many other factors in considering a reverse mortgage – not the least of which is what impact it may have on any aid you may already be receiving. At Boone Law, we deal with these kinds of issues daily. If you’re uncertain about what steps to take, please talk to us before you do anything.


Friday, January 24, 2014

Myth Information: Economic Impact of Elders

It is a myth that Florida elders are a drain on our economy. Florida has one of the greatest percentages of older adults when compared to other states – leading with approximately 18% over the age of 65 and 24% over the age of 60. Older Florida residents contribute a large portion of total tax revenue.

Florida residents age 65 and over own more than 30% of the homes in the state. Their homes are usually more valuable which contributes to a higher property tax percentage. Furthermore, Floridians who are 65 or older typically use fewer of the educational and police/correctional resources because they rarely have children living at home and they are less likely to be incarcerated.

The average person age 18-64 costs the state approximately $800 per person while, on average, Florida retirees produce more than $2,000 per person in net benefits to the state. Older Floridians are also active members of the community. Annually, they contribute 154 million volunteer hours and roughly 25% of Florida residents 65 and over are working. Despite common myths, Florida’s elders are not a drain on the state economy; they provide our state with an economic boost. 


Thursday, January 2, 2014

Court Rules Surviving Spouses of Reverse Mortgage Holders Cannot Lose Homes

In what can only be considered as very good news, a federal court has ruled that banks can’t foreclose on surviving spouses of reverse mortgage holders when the spouses can’t pay off the mortgage. The ruling should lead to regulatory changes that will help surviving spouses stay in their homes even if their names aren’t on the reverse mortgage.

Historically, the surviving spouse has been required to either pay for the house outright or move out if the spouse who dies is the only one named on a reverse mortgage. The most common occurrence of this would be when one spouse is under age 62 and ineligible to sign the mortgage.

But because of the housing downturn, many homes are now worth less than the balance due on the reverse mortgage, meaning that the non-signing spouse cannot repay the loan and faces eviction.

AARP sued the Department of Housing and Urban Development (HUD) on behalf of three surviving spouses who faced imminent foreclosure and eviction from their homes. The case involved the spouses of individuals who took out Home Equity Conversion Mortgage (HECM), which are the most widely available reverse mortgage and are administered by HUD. AARP charged that in not protecting spouses from foreclosure, HUD was violating federal law.  

In a decision that came down in late September of last year, the U.S. District Court for the District of Columbia agreed with AARP and told HUD to find a way to shield surviving spouses from foreclosure and eviction.

It’s not clear yet how HUD will correct the problem. One possibility is that the agency may take over affected loans from the banks that hold them. But experts stress that the ruling does not mean that couples can safely take out a reverse mortgage and leave one spouse off the loan. AARP still strongly discourages taking out a reverse mortgage with only one spouse signing, and that’s good advice.


Thursday, January 2, 2014

Staying Eligible for Medicaid after the Death of a Spouse

When one member of a couple moves to a nursing home, it is generally assumed that spouse will be the first to die. But what happens if a Medicaid recipient's spouse dies first? It’s important to plan for that possibility, otherwise it could impact the nursing home resident's assets and eligibility for Medicaid.

In order to be eligible for Medicaid benefits in most states, a nursing home resident may have no more than $2,000 in assets. The Medicaid applicant's spouse, the community spouse, can keep more assets. In general, using 2013 standards, the community spouse may keep one-half of the couple's total countable assets up to a maximum of $115,920, depending on the state. Often when one spouse seeks to qualify for Medicaid, he or she transfers assets to the community spouse.

The death of a Medicaid recipient's spouse can affect the amount of assets the Medicaid recipient has, and therefore his or her Medicaid eligibility. A common example involves the community spouse leaving his or her estate to the spouse in a nursing home and receiving Medicaid. The additional assets will make that spouse ineligible for Medicaid. Even if the community spouse's will did not leave anything to the other spouse most states allow a spouse to claim a share of the estate. Medicaid can assess a penalty even if the surviving spouse does not claim his share.

The couple's house can also become a problem. Most spouses own property jointly. If the community spouse dies, the Medicaid recipient will own the house. Depending on the state, the nursing home resident may have to prove either an intention to return home or a likelihood of returning home in order for the house not to count as an asset. If the resident sells the house, the proceeds from the sale will make the resident ineligible for Medicaid.

To prevent a community spouse's death from impacting the institutionalized spouse’s Medicaid eligibility, it is important that the community spouse update his or her estate plan. There are steps the community spouse can take to protect the spouse in the nursing home, including setting up a trust. That’s something with which we can help.


Thursday, January 2, 2014

Is an Electronic Will Valid?

With tablets all the rage, an interesting legal issue has arisen. Is a will created on a tablet computer valid? An Ohio judge recently answered that question in the affirmative, but most states have not addressed the issue. As electronic devices become more commonplace, this question will inevitably arise more frequently.

The Ohio case came as a result of a man in the hospital wanting to draft a will. With no paper available, he used a tablet. He signed using the stylus, and his brothers signed as witnesses. After his death, his family printed out the will and submitted it to probate. The judge admitted the will to probate, finding that it met the requirements of Ohio law, which are that a will be in writing, signed by the testator, and witnessed. If the will had not been approved, his estate would have passed to his parents under state law, not to the people and organizations designated under the will.

Although the judge approved the will, he noted that the legislature needs to update the law to address electronic wills. Currently, Nevada is the only state that specifically provides guidelines for creating a valid electronic will. While electronic wills are convenient, they raise concerns about authentication and forgery. In some states, electronic wills aren't allowed. For example, Arizona and North Carolina accept only wills that are executed using paper.


Thursday, December 12, 2013

Merck Study to Look at Alzheimer’s

One of the most common of illnesses we face as families with our elders is Alzheimer’s, which in many ways remains a mystery to the medical community. Now, Merck & Co. (MRK) is putting the prevailing theory on the cause of Alzheimer’s to a test with two studies in thousands of people that may, once and for all, determine whether the amyloid tangles that grow in the brain spur the disease or are simply an outgrowth. To learn more about the effort by Merck, click here: http://bloom.bg/1hNX4kq.


Tuesday, December 10, 2013

Sam Boone Honored at AFELA Meeting

Sam Boone was honored recently at the AFELA (Academy of Florida Elder Law Attorneys) Annual Meeting and UnProgram for completing a highly successful year as president of the organization. Among the goals achieved under Sam’s watch was a redesign of the AFELA website, making it much more user friendly and valuable to attorneys, the media and the public in general. Also, at the same meeting, Sam delivered a well-received presentation on QSNT (Qualified Special Needs Trusts).


Friday, December 6, 2013

Duties of a Trustee

One of the most important decisions in creating a trust is choosing a trustee. The person creating the trust must choose a trustee that will understand what their duties are, the intent of the person behind the funding and exercise spending power for expenses that fall within the parameters set forth by the terms of the trust.

            Over the past year, two important decisions have emerged from New York which detail the affirmative duties assumed by trustees managing a trust for an individual with special needs.

            The first case memorialized a trustee’s requirement to take reasonable interest in and action on behalf of a beneficiary with special needs. In Matter of JP Morgan Chase Bank N.A. (Marie H.), 2012 NY Slip Op 22387, the trustees left the beneficiary without adequate care, despite his significant inheritance. The court decided that a trustee has a duty “to make themselves knowledgeable about [a beneficiary’s] condition and his needs, and the availability of services that would enable them to provide for those needs.” This duty extends to determining the medical, educational and quality of life needs that can be met by utilizing trust assets. By turning a blind eye to such needs and not approving proper and necessary payments to accommodate such needs, a trustee fails to fulfill their obligations.

            The second case, Liranzo v. LI Jewish Education/Research, focuses on the obligation of a trustee to investigate the public benefits available to a beneficiary of a special needs trust and holds a trustee liable for such a breach. The court determined that it breached its duties by “failing to make the necessary inquiries.

            The lesson to take away from this is to pick your trustees wisely when establishing a trust. Most importantly ensure that your trustee understands their obligation to the beneficiary.


Thursday, November 21, 2013

Differentiating between a will and a trust

Many people do not understand what the difference between a will and a trust is. I came across a great article by JDSupra that spells it out very well.          

            A will is a written document that states how your property will be distributed when you die. It must be signed and witnessed.            

            On the contrary, a trust is a written agreement designating someone (a trustee) to be responsible for managing your property. The most common is the living trust; much different from a will that comes into affect after you, as the owner of the assets, pass away. When you die with a trust in place, the assets that are in the trust transfer directly upon your death to your heirs and your family avoids the public probate process.

            Once you have grasped the concept you may be wondering: which on is best for you? It truly depends on preference as well as the size of your estate. Every family is different, and it is difficult to make generalizations about whether a will or a trust is better overall. However, in general if you have minor children, a child or grandchild with special needs, have a certain amount of assets (valued at more than $100,000), or own real estate, a trust could be the better option. 

            To read more refer to this outside source: http://www.jdsupra.com/legalnews/confused-about-the-difference-between-a-61665/ 


Thursday, November 14, 2013

Important CMS Changes

The Center for Medicare Advocacy has changed its policy for homebound patients. As of November 19, 2013, however, CMS will require Medicare beneficiaries to meet two sets of criteria before their home health agency even considers whether they have an ordinary inability to leave home. Medicare only covers home healthcare if, among other requirements, the beneficiary is homebound. The new policy states the patient must meet two criteria with subfield stipulations:          

            1. The patient must either:

                            - Due to illness or injury, need the aid of supportive devices such  as crutches, canes, wheelchairs, and    walkers; the use of special transportation; or the assistance of another person in order to leave their place of residence

                        - Have a condition such that leaving his or her home is medically contraindicated.

             2. The patient must meet one of these criteria and also meet both of the following:

                            -There must exist a normal inability to leave home;

                        -Leaving home must require a considerable and taxing effort.

 For more information about this new policy please reference the CMS website: http://naela.informz.net/z/cjUucD9taT0zNjIxNzY1JnA9MSZ1PTEwMjQyMTAzMjYmbGk9MTk5MjMxMDQ/index.html


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