Appointing a Successor Trustee when the Trustee Dies

On: By: Bill Gatesman

The governing documents for trusts often designate who will serve as successor Trustee if the office of Trustee becomes vacant. However, sometimes the trust documents are silent concerning this issue, or sometimes none of the designated successors are able to fill a vacancy in the office of Trustee. What can you do in such a circumstance?

In the past, the only recourse a trust beneficiary had was to incur the time and expense of obtaining a court order to appoint a new Trustee. Now however, under Maryland’s recently new Trust Code, beneficiaries can take action to install a successor Trustee without going to court.

In order to do so, the law requires the beneficiary to identify all of the “qualified beneficiaries,” which includes beneficiaries currently eligible to receive income and/or principal distributions, and those who would be able to receive such amounts if the current beneficiaries cease to be eligible.

One provision of the Maryland Trust Code allows for appointment of a successor Trustee by unaimous agreement of the qualified beneficiaries. Another provision allows for persons who have an interest in the trust to enter into a non-judicial settlement agreement, which agreement, among other things, can provide for the appointment of a successor Trustee.

While these avenues of appointing a Trustee are less onerous than having to petition a court, it still is important that one follow all of the procedures set forth in the relevant statutes.

William M. Gatesman works with clients to appoint successor Trustees using these streamlined non-judicial methods, thereby enabling such clients to save time and money.

Funeral Services on a Budget

On: By: Bill Gatesman

While many people take into consideration social or religious considerations when choosing what funeral services to utilize, and such considerations may preclude those from seeking out cremation services, there are others who do not take those considerations into account and desire to know what inexpensive services exist for dealing with one’s bodily remains after death. One such service provider in Maryland and surrounding areas is the Going Home Cremation Service, the website for which company is http://www.goinghomecremation.com/.

Obtaining Medicaid for Prior Month’s Nursing Home Costs

On: By: Bill Gatesman

William M. Gatesman frequently assists clients or their families to obtain Medicaid benefits to cover the long term care costs in a nursing home. In order to qualify for such benefits, the nursing home resident must meet certain medical and financial eligibility requirements, and Mr. Gatesman helps clients to meet those requirements. Often, the strategies employed allow for maximum asset preservation, allowing spouses or families to retain accumulated wealth while still qualifying for Medicaid benefits.

Sometimes, an individual has outstanding unpaid nursing home costs, or other unpaid medical bills, when they finally take action to satisfy the Medicaid eligibility requirements. Fortunately, the law allows for reimbursement for such pre-eligibility medical expenses through the Medicaid program.

That being the case, sometimes the best strategy is to refrain from paying an outstanding nursing home bill in order to qualify for Medicaid, and instead to make a payment that will be more beneficial, such as prepaying funeral and burial costs. Then, when a Medicaid application is filed, the applicant can request that such unpaid nursing home costs be paid with Medicaid dollars.

There are certain restrictions and there is a particular approach one must take in order to secure Medicaid coverage for past due medical bills. William M. Gatesman assists clients in obtaining this benefit which is a benefit over and above securing Medicaid benefits to pay current nursing home costs.

To learn more, you may call William M. Gatesman at 301-260-0095 to find out if you or loved one can benefit from this additional payment option.

Medicaid Asset Preservation with IRAs

On: By: Bill Gatesman

 

Spousal Protection Trusts  A very powerful asset preservation tool William M. Gatesman employs with married couples are Wills with Spousal Protection Trusts, a planning tool developed by Mr. Gatesman. With this tool, both spouses prepare a Will in which there is a trust for the benefit of the surviving spouse. Such trust is designed to be funded, not with assets passing through the estate, but with assets passing outside of probate, through pay on death accounts, beneficiary designations, life estate deeds, and by other means.

 

Protecting the Surviving Spouse  By using such a Spousal Protection Trust, spouses can set up their affairs such that, after the first of them dies, all the assets are set aside in the trust, available without restriction to the surviving spouse, but fully protected should the surviving spouse require long term care in a nursing home. Moreover, if such trust is properly implemented, the surviving spouse would be able to qualify for and obtain Medicaid benefits for long term care without delay if and when such spouse falls ill and requires nursing home care. In this way, all of the couple’s assets, to the extent not used by the surviving spouse prior to admission to a nursing home, would be preserved for future generations, and thereafter, all care costs would be covered by Medical Assistance. This is a very powerful planning strategy, but care must be taken to ensure that the plan is properly implemented.

 

Implementing the Plan with Tax Deferred Assets Often, when using this tool, the largest assets passing into such spousal protection trust are IRAs and other tax advantaged retirement plans. When this type of asset passes to a beneficiary – and the Spousal Protection Trust would be the beneficiary – special rules apply to continue the income tax deferral that is the hallmark of such investments. But the traditional method of preserving the tax deferred status of such accounts – by making regular required minimum distributions to the individual beneficiary – can reduce the primary benefit of using a Spousal Protection Trust, which is to protect all of the couple’s wealth if and when the surviving spouse requires long term care in a nursing home, which care could be paid for by the Medicaid program.

 

Asset Preservation with Tax Deferral  With proper guidance, however, a married couple can implement a plan that allows them to get the best of both worlds, that is, to prolong the income tax deferral on IRAs and qualified benefit plans for the longest time possible, on the one hand, and to prevent distributions of income and principal to the surviving spouse if and when such spouse might require long term care in a nursing home, on the other hand, thereby maximizing family wealth preservation.

 

Tax Planning Component of the Spousal Protection Trust  The key to obtaining “the best of both worlds” as discussed above is to structure the spousal protection trust as a retirement plan “accumulation trust.” Typically, estate planners will have clients utilize what is known as a “conduit trust” as the beneficiary of an IRA or other tax deferred retirement plan to ensure continued income tax deferral. However, while a properly drafted conduit trust will ensure continuing income tax deferral because such trust mandates that the retirement plan annual minimum distributions be paid from the trust to the surviving spouse, using a conduit trust for Medicaid asset preservation planning is counterproductive because all such minimum distributions received by the surviving spouse would be required to be paid to the nursing home as part of the surviving spouse’s contribution to her cost of care even after she would qualify for Medicaid benefits. [To be sure, the surviving spouse still could get Medicaid for nursing home care, however, the distribution of the required minimum distribution from the conduit trust to such spouse is a waste of assets because, with proper planning, such payments can be avoided.]

 

Putting it All Together  The way to continue the income tax deferral and to maximize income and asset preservation is to employ an accumulation trust in the Spousal Protection Trust. With an accumulation trust, the required minimum distribution from the retirement plan is distributed to the Trustee, but the Trustee is not required to pay such amount to the surviving spouse. Nevertheless because of the nature of the trust, the income tax deferral will continue to be allowed. This is easier said than done, however, because the tax law governing accumulation trusts for IRAs and other tax deferred retirement plans is intricate and complex.

 

Choosing the Right Advisor  Is it important, therefore, that the advocate you choose to assist you with your asset preservation estate planning be well versed in all aspects of law that would affect your situation, including estate planning, income tax planning, IRA planning, Medicaid planning, and other areas.

 

Qualifications  Before he studied law, William M. Gatesman obtained a Masters Degree in Accountancy with a focus on tax planning, and before becoming a lawyer, Mr. Gatesman worked as a tax consultant with a major CPA firm, and as a tax accountant in a major corporation. Mr. Gatesman has spent his career as a lawyer working in the area of estate planning and Medicaid planning, and related areas. Mr. Gatesman has the education, knowledge, and experience in all the areas of law that must be considered when doing asset preservation planning, and Mr. Gatesman relies on this background when he assist clients in employing Spousal Protection Trusts that include accumulation trusts as recipients of IRA and other retirement plan assets.

 

Maximizing Wealth Preservation  All of this knowledge and expertise enables William M. Gatesman to utilize sophisticated legal tools, such as the Spousal Protection Trust, which trust allows clients to maximize wealth preservation if a surviving spouse should require nursing home care in the future while still allowing such spouse to prolong the income tax deferral afforded by the inherited IRA or other retirement plan for as long as possible.

What is Medicaid Planning?

On: By: Bill Gatesman

Our website has a new look! I hope that you enjoy the refreshing update to the Maryland Elder Law website. As part of our website update, we have added a new page that answers the question, “What is Medicaid planning?”

 

To find out the answer to that question, you may click on that question in the black bar at the top of this page if you are viewing this page from your computer. Or you may simply click on the question that follows: “What is Medicaid Planning?” and the page that answers that question will open in a new browser window. Call us at 301-260-0095 for more information.

 

Applying for Medicaid Gives State Access to Bank Records

On: By: Bill Gatesman

In order to combat fraud and abuse, Congress passed a law in 2008 (referred to in this article as the “Asset Verification Statute”), which law just now is being implemented in Maryland, directing States to impose an electronic asset verification process to facilitate asset disclosure relating to Medicaid applications for long term care.

When Disclosure is allowed.  In most instances, under Federal law, banks may not disclose one’s financial records to the government except where there is a valid law enforcement or judicial subpoena or summons, or a search warrant.  However, that same federal law allows the account holders themselves to authorize such disclosure through a written instrument.

The Asset Verification Statute directs that States that provide Medicaid benefits to aged, blind or disabled persons to cover the costs of long term care in a nursing home, or care in assisted living or at home, require the applicants for such benefit programs to provide written authorization to the State to obtain documentation from banks and other financial institutions for accounts owned by the applicant or by any other person (such as the applicant’s spouse) whose assets are considered when one applies for such benefits. Continue reading “Applying for Medicaid Gives State Access to Bank Records” →

Sheltering Assets to Maintain Housing Benefits

On: By: Bill Gatesman

Various articles on this website address ways in which aged or disabled persons may protect their assets and still get government benefits such as Medicaid for long term care in a nursing home, or Medicaid for health care in the community.  By retaining accumulated assets or protecting assets one is about to inherit, an individual can ensure for herself a better quality of life, especially when the only other alternative is to fully impoverish oneself to retain government benefits.

One tool lawyers utilize to enable clients to shelter assets is a trust.  There are various types of trusts that can be employed depending on the individual’s circumstances, and each type of trust has its advantages and disadvantages.

For example, the law will allow a disabled person to keep his or her accumulated wealth to allow for a higher quality of life and to still obtain Medicaid benefits.  [Such opportunity is separate and distinct from the benefit under the Affordable Care Act which allows non-disabled people with low incomes to obtain Medicaid health insurance.  Moreover, this long-standing opportunity afforded to disabled persons likely will persist even if the President and Congress were to repeal the Affordable Care Act as they have threatened to do.] Continue reading “Sheltering Assets to Maintain Housing Benefits” →

Trustee’s Liability for Contractor’s Work

On: By: Bill Gatesman

Whether you are a Trustee of a trust that owns real property, a Personal Representative of a decedent’s estate that holds real property, or simply a homeowner, it is important for you to know your potential liability when you engage a contractor to perform work on the property if an employee of the contractor gets hurt on the job.

Many home service contractors do not carry worker’s compensation insurance coverage for their employees.  This is especially notable with tree service contractors.  The same men who climb trees with powerful chain saws to cut limbs and tree trunks while hanging from a rope around their waists in one of the most dangerous home service professions often find it prohibitively expensive to pay the premiums for worker’s compensation insurance, and therefore do not obtain such coverage.

The problem with that is, if one of the workers is injured on the job, even if that person is an employee of the contractor, then the law may treat such injured worker as your employee for liability purposes.  And, unless you, as Trustee or homeowner, have worker’s compensation insurance to cover this particular type of worker – and obtaining such coverage for the once in a blue moon tree cutter or other home service contractor likely is not possible – then the potential liability is unlimited. Continue reading “Trustee’s Liability for Contractor’s Work” →

The Secret World of Medicaid Regulation

On: By: Bill Gatesman

Potential clients sometimes ask William Gatesman whether they can pursue their legal matters themselves.  Often, the advice in response to such an inquiry is that the client would obtain a more favorable outcome using the services of a knowledgeable lawyer.  A key component of that advice is that the lawyer should be knowledgeable.

Unfortunately for the general public, when it comes to applying for Medicaid benefits, there is a limited pool of lawyers in Maryland who can be viewed as being truly knowledgeable about all of the nuances in the Medicaid eligibility rules.

This should not be the case.  Maryland law, and in particular, the Maryland Administrative Procedures Act, mandates that the rules governing such matters as the Maryland Medicaid program be promulgated and implemented through a transparent public process.  Through that process, such rules are to be disclosed and maintained in a manner to make them easily accessible to the public.

Unfortunately, with respect to the Maryland Medicaid program, some of the rules are complex, hidden, and accessible by only a few who know where and when to look for them.  One of the problems arises because Medicaid is a joint Federal and State program.  Notwithstanding that, the rules as they apply in Maryland (Medicaid rules vary state by state) should be put in place in accordance with the Administrative Procedures Act, however, the Maryland Administrative Procedures Act routinely is disregarded.  Indeed, a senior Medicaid official recently advised William Gatesman that there is an administrative freeze by the Maryland Governor that prohibits any action toward implementing new regulations.

So, then, how do Medicaid lawyers in Maryland know what are the rules that apply to their clients?  Sadly, sometimes the answer to that question is that some of those lawyers don’t know. Continue reading “The Secret World of Medicaid Regulation” →

Don’t Let the Notary Public Skip a Step

On: By: Bill Gatesman

Many legal documents, such as deeds, trusts, powers of attorney, and contracts, either require, or are made more legitimate, by having a notary public sign the document. This is referred to as “notarizing” the document.

In Maryland, a person who is a Notary Public must obtain a license, must be sworn in by an officer of the Circuit Court, and must follow certain rules in the exercise of the Notary Public’s powers. A Notary Public must ensure that she knows the person who is signing the document. This usually is accomplished by the Notary Public reviewing that person’s driver’s license or passport.

Then, after witnessing the individual sign the document, the Notary Public will complete what is known as a Notary Jurat, which is a section of the legal document in which the Notary Public enters certain information, including the expiration date of the Notary Public’s license, signs the document, and affixes his or her seal to the document, which seal often takes the form of a special ink stamp on the document page.

In addition to those actions, the rules governing the actions of a Notary Public require that the Notary Public maintain a “fair register” of all of the acts undertaken by the Notary Public. This is one step that often is overlooked. There are lawyers who also are licensed Notary Publics who will witness a client’s signature to a document but might overlook recording the action in a Notary Public fair register. Indeed, I have encountered some lawyer-Notary Publics who were unaware of the requirement to maintain a contemporaneous fair register.

The fair register is an important record because, if a client ever requested it, the Notary Public has an obligation to provide such client with a certified copy of the record of the act that was notarized. For example, some years after a legal document is signed, if there is a question as to the legitimacy of the signature, a party to the legal document may seek out the Notary Public to request a certified copy of the fair register entry memorializing the execution of such legal document. If the notary public did not make an entry in a fair register and did not maintain that fair register as required under the law and regulations governing Notary Publics, then it would be impossible to obtain such a certified copy at some future time.

Knowing these rules, a client who signs a document requiring notarization could make an appropriate inquiry with the Notary Public if the Notary Public did not ask the client to sign Notary Public’s fair register.

William M. Gatesman is both a lawyer and a licensed Notary Public, and is available to assist clients in both capacities.