Elder law attorney Jim Koewler joins Suzanne to talk about setting up your estate plan and the people needed to complete various documents, such as powers of attorney, wills, living wills, revocable trusts, and irrevocable third-party trusts. This segment covers setting up irrevocable third-party trusts.
Irrevocable Third-Party Trust for disabled person
- Grantors are initial trustees
- Successor trustee
Successor trustee approaches
– Trustee: Person who will look out for disabled beneficiary but will not cave in to unreasonable demands for money from trust and will not resent having to deal with beneficiary
– Trustee: Bank or trust company or trusted family member
– Distribution Committee (to make decisions on when to pay out for benefit of beneficiary, taking pressure off the trustee)
- Special needs attorney
- Social worker
- Family member(s) (maybe)
(Gives access to health information. Doesn’t grand decision-making authority.)
- Include everyone who is named in Health Care Power of Attorney
- Include any other family members or friends who are likely to help look after you if you need care (long-term or otherwise)
Listen in to hear details and explanations. Learn more about Jim Koewler at Answer for Elders or at his website, and look here to see a list of all of Jim’s podcasts.
View Episode Transcript
*The following is the output of transcribing from an audio recording. Although the transcription is largely accurate, in some cases it is incomplete or inaccurate due to inaudible passages or transcription errors.
The following podcast is by Mr. Jim Taylor, elder law and special needs attorney helping and protecting those who need long term care. And welcome back everyone to answers for elders radio network. And we’re in segment number four, our final segment talking about the people that you need in your life at the end of your life, whether it’s accepting long term care or in a situation that you could be not being able to speak for yourself or manage your own financial and legal affairs. And we’re here with our wonderful legal mind. Jim Taylor, the Keylor law firm in Ohio. And Jim, I’m glad we are talking about this topic. So thank you again for today and we just got done talking about revocable trusts, and now he’s going to talk about air revocable trusts, different animal,
different animal. Okay. So and and the comments I have here are for the way I do a revocable trusts for a special needs child. Okay. So I’m trying to do two things here. I’m trying to maintain as much benefit for and control for the parents as I can during the parents lifetimes. So it looks like a revocable living trust while they are alive or before they trigger it and say make it a revocable now. Okay. So this is not a straight up revocable trust. But what I talked about after the initial trustees after the initial Grand Tours, then the rest of that could simply be a straight up. irrevocable trust. So if you want every vocable from the very beginning, then you simply skip the grantor has been the initial trustees. Okay. So again, like a revocable living trust, when I am trying to create a trust with parents money, maybe grandparents money, okay, but a generation up or generation two from the disabled person. Then I want though that generation that parents, grandparents, aunts, uncles, whoever it is that wants to set this up to have maximum use of their funds during their lifetimes. Should they want it that way. So let’s assume they want it that way. Because if they don’t, then we just go straight to revocable trust, which would be after, after what we’re just what I’m saying right now. Okay. But let’s assume they want maximum use of it for themselves during their lifetimes, or at least while they are still healthy and don’t need long term care. Then this revocable living trust, okay. But there’s an estate planning attorney who often put these things together, because this is an estate planning package. So I kind of do the special needs input, he does the estate planning input, we work very, very, very well. He and I are quite good friends, both professionally and personally. And so this is our structure. So we build into it, that at some point, the initial trustees are out and his successor trustees take over, it might be a death, which is just like a revocable living trust a garden variety revocable living trust. It might be when one of them needs long term care, or however we want to define that because several wages do that does a doctor say so? Does the Medicaid agency say so? That sort of thing. Okay, I’m not gonna go into those details, because we don’t need to do that here. But because that’s, that’s not the person that we’re talking about. We’re focusing on the people in these die and named in these documents right now. Okay. But so we build in triggers where the initial trustees are out, and successor trustees take over at that point. It looks a lot like a from the very beginning, revocable, nobody’s ever going to screw with it. Trust. Okay. One of the big reasons, and I realized this isn’t a person question, but one of the big reasons to leave it revocable for a long time, is it gets better tax treatment from on income tax. Ah, trust your revocable trusts have a very high income tax rate and revocable trusts are the same as individual rates. So there’s another reason we like to make it revocable at the beginning, so we have the better tax treatment. We lose fewer assets paying taxes. Or I guess we only lose income pay in taxes so we retain more of the income by reading Using the tax mark, which means it grows more. Okay, it was assuming we didn’t invest in crap. So when we get to the successor trustee, there are two approaches. And they can be wildly different. And sometimes it depends on who you have available as trustees, and sometimes depends on how much money and doesn’t make sense to take the second approach, because that’s going to be the more expensive and more complicated. So the first approach is, we simply have a friend, a family member, something that is the trustee, looking out for the funds for the benefit of this special needs child, a family member, okay. And it’s, let’s just assume for sake of discussion that we’re talking about the child of the initial Grand Tours, okay, just make the discussion easier. They can be anybody, you can be the paperboy that really like Okay, sure. Okay. But, but we are naming a person to look out for the funds for the disabled person for the disabled child. Okay, that can be a brother, sister, aunt, uncle, close friend, we want someone generally who is younger than the initial trustees, because we don’t want someone who’s likely to die at roughly the same time as the initial trustee. Okay, because then we’re scrambling looking for who’s next. Okay, so we want someone younger, and we hope at least a generation younger. But it’s also someone who we can trust and someone is comfortable managing what might be large sums of money, and possibly having to put up with pressure from the disabled person saying, I want that I want a I want Seahawks tickets. Now, as someone in Ohio, I don’t know why anyone would want C has tickets. But I’m hoping you’re listening because I know you’re a Seahawks fan. And, or I want a computer or I want a TV or I want it in cash Well, if if the person dependent if the disabled person depends on Social Security or Medicaid, don’t give them cash Period End of discussion
now, because then you can miss it or lose the benefits.
So we want someone who can who can stand up to what might be unreasonable demands from the person who is the disabled beneficiary of the trust. Now the initial Grand Tours are gone. I mean, judicial grantor has can do whatever they want for the disabled person, again, other than cash, because that’s not a trick question. That is a Social Security SSI. Medicaid question. Okay. And it’s just a you made a mistake, sort of thing? No, you could do that in person without a trust. So. So we’ve tried to avoid that no matter what. But the once the initial grantor is presumably the parents have relinquished control of the Trust for whatever reason, then the successor trustee may have to put up with unreasonable demands from the disabled beneficiary and has to be able to withstand those right. Or at least to separate the wheat from the chaff. Sure. So the other way to go, which combines high level, we hope, knowledge on financial management with an understanding that those usually to a Trust Company or bank, okay. And you but with the understanding, as I mentioned before, that trust companies and banks don’t do discretion? Well, no. And a trust for the benefit of a disabled person almost always has completely unfettered discretion in the trustee. Because that’s what keeps the trust from being counted. Right. So pretty and Medicaid is available to the person, right to the person, okay. Correct. But it also means they have complete discretion. Yes, I will give them Seahawks tickets, I will give them Seahawks tickets for 40 years. And, you know, the Seahawks have moved within four years, like every other, you know, football team does. But you know, that’s what discretion is all about. Okay. And oh, I know, we bought them a nice blue and ice TV, but now they want a blue one. So we’ll buy it blue TV now. And I’m right, so the second approach is have a trustee who is a professional money manager. But don’t give them the burden, slash authority because authority to distribute is a burden. Because you have to make it you got to make a decision about discretion. Don’t give them the authority to make distributions. They simply have authority to manage the funds and create a distribution committee. Have people who know the disabled individual
and can get that TV set? And
one can get it in to simply tell the trustee but yeah, we said get the TV set.
Yeah, yeah. But then
the professional who has an obligation to look out for the beneficiaries down the road after the disabled person. Anyway, it might be nieces and nephews, it might be the ASPCA. But there’s still residual beneficiaries. Otherwise, you might just, you know, burn the money and give it to Medicaid. So we’ve always got somebody and those residual beneficiaries have a right to ask to demand reasonable management. So the distribution committee has complete discretion as a carry shadow, jewels as a committee, right, then, you know, people on the committee that know the way around this stuff, it might be the special needs attorney who’s been helping the family or the special needs attorneys today, because the attorney has since retired, but you get the idea. Someone who knows their way around Special Needs law. It might also be the caseworker or a social worker or a family consult family hired consultant who understands Special Needs stuff, that’s that’s looking out for this special needs individual. And it might include their teachers or a teacher. Tricky finding somebody willing, but it depends on relationship. That might be it, and maybe a family member, too. Okay, you can make the committee as big as you want, but make it more than one.
Yes. So we have one minute left.
Oh, wow. I did I talked a while. Okay. So, Bill, is the HIPAA release. Okay. Believer, you’ve heard me talk before, if you’ve listened to prior podcast, I’m a big believer in having a broad HIPPA release so that your family and friends can look at long term care. So who to name and your HIPAA release? Everybody? Yes, their name, your health care power of attorney, even if they’re the eighth successor trustee, and its successor agent. Put them in there. Put your brother in there, put your cousin in there. Now, if you if you and your brother wind each other up, don’t put your brother in there, right. Anyone who you think is going to be looking out for you? And that might include your elder law attorney, your special needs law attorney and his or her care court
manager? I’m sorry. a care manager?
a care manager? Yeah, yeah. Yep, exactly. homecare agency. And they should all be in there because they need the ability to know what’s going on with exactly. And the handle release allows them to get that information and prevents a paid caregiver from locking them out.
Perfect. Jim, thank you so much for this valuable information today. I am so grateful to you. And I hope each and every one of you gained a lot of wisdom. It’s not about who you think you emotionally might want to have close to you. But what are the qualities of those individuals? And we’re very glad to have gone through that and causes a little bit of thought, you know, definitely for me, and I know for so many of you. So Jim, thank you for being with us. And don’t
owe it to your family member. You don’t owe it to a friend and name them in here. These are business decisions. Yes. Yeah. With that. You can keep your friends separate and it’s okay used to have to explain it.
Yes. And to each and every one of you. I hope you’re having a wonderful holiday season. Jim, Happy Holidays to you coming on to you. And to each and every one of you until next week, be good to each other.
State of Ohio resonance, you have a friend to help you navigate long term care while protecting your assets. You can reach Jim at WWW dot protecting seniors.com or just email him at JKOEW l e. R Typhon. A F. E. J Keylor AFP at protecting seniors.com
Transcribed by https://otter.ai
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Founder and CEO of Answers for Elders, Inc., Suzanne Newman proclaims often, “Caring for my mom was the hardest thing I ever have done, but it was also my greatest privilege.” Following a career of over 25 years in sales, media, and marketing management, Suzanne Newman found herself on a 6-year journey caring for her mother. Her trials and tribulations as a family caregiver inspired an impassioned life mission outside of the corporate world to revolutionize the journey that so many other American families also find themselves on. In 2009, she became the founder and CEO of Answers for Elders, Inc., subsequently hosting hundreds of radio segments and podcasts, as well as authoring her first book. Suzanne and Answers for Elders, Inc. have spent 14 years, and counting, committed to helping families and seniors along their caregiving journeys by providing education, resources, and support. Each week on the Answers for Elders podcast, Suzanne is joined by vetted professional experts in over 65 categories including Health & Wellness, Life Changes, Living Options, Money, Law, and more. Suzanne lives in Edmonds, Washington with her husband, Keith, and their two doodle dogs, Whidbey and Skagit.
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