Many clients ask the question, “Do I need a Will?” The answer is an unqualified YES, ABSOLUTELY, WITHOUT A DOUBT.  In fact, everyone walking the face of the earth that has assets, no matter how modest, needs a properly drafted and valid Will.  There are numerous reasons that every adult should have a properly drafted Will, and this article addresses one of the primary reasons – transfer of ownership and title to assets on death.  Many clients have told me of their mistaken belief that ownership of assets will transfer upon death to the intended beneficiary, with no legal process, as if by magic.  This belief is fostered by the fact that some assets contain beneficiary designations or survivorship clauses or payable upon death designations and transfer outside of the provisions of a Will.  But, not all assets have such provisions and those distributions should be addressed by a properly drafted Will.

Assets which do not contain any legally enforceable beneficiary designation pass through the estate of a deceased person to the heirs at law. The heirs at law will be determined by the provisions of the deceased party’s Will, or in the absence of a valid Will, by the laws of the State having proper jurisdiction.  Many times clients have an expectation of what those State laws will be, but in many instances the State law is much different than the client expects.  For example, in Alabama, the law of intestate succession (the law that applies when no Will is probated) provides that upon the death of married person who is survived by a spouse and living children, the estate is distributed with the spouse receiving $50,000 plus ½ of the remainder of the estate and the remaining ½ of the estate is distributed to the children.  This is NOT the result that most married couples intend upon the death of a spouse.  A properly drafted Will assures that the directions of a party, as to distribution of assets on death, will be followed as stated, and intended, by the maker of the Will.

Another common issue that is questioned by clients is the need for Probate proceedings. Probate is the legal process through the Probate Court by which the Will of a deceased person is recognized by the Court as the true last Will and testament of the deceased party.  It is this process, and the Orders of Court, by which the distributions stated in the Will are given legal significance.  A Will means nothing and has no legal significance without Probate.  Probate is a process that should not be feared.  In Alabama, it is not unnecessarily cumbersome or overly expensive.

That brings us to the question, “Do I need an attorney to prepare a Will or to Probate a Will.” There is no law that requires a person to have an attorney assist with the preparation of a Will or to represent a party in the Probate process. However, the practical answer is most people do retain the services of a competent attorney in both instances.  A properly drafted Will assures that the family is able to effectively accomplish transfer of assets on death of a family member with a minimum of difficulty and expense.  The services of an attorney in navigating the Probate process  assures the family of an efficient process in dealing with the issues of assets, taxes and debts upon the death of loved one at a very emotional and  stressful time.

Michael E. Brodowski

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances.  No attorney-client relationship is formed nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney.  If you require legal advice, please consult with a competent attorney in your area.

Michael Brodowski, Chris Harper and I will be giving a presentation on November 5, 2015 at 6:00 p.m. at 1892 Restaurant. Our presentation will focus on how to properly create an estate plan for individuals planning to give assets to an individual with a disability. We will focus on the importance of having a Will, Powers of Attorneys and/or Trust, with a particular emphasis on the benefits of Special Needs Trusts. Please let me know if you plan to attend by calling my office at 256-534-4571. Seating is limited.

David McCurry

A frequent question I hear from my clients is “How do I qualify for Medicaid if I need to go to the nursing home?”

To qualify for Alabama Medicaid, an individual’s income must not exceed $2,199.00 per month and an individual’s countable assets must not exceed $2,000.00 (based on 2015 law).  Some examples of non-countable assets include burial items, one automobile, household furnishings, certain life insurance policies and a home.   If a Medicaid recipient owns a home, then Medicaid has the authority, in most cases, to place a lien against that residence and recover the lien when the family sells the house.  If an individual’s assets are over the $2,000.00 limit, then Medicaid requires the individual to spend down his or her assets until they are below the $2,000.00 limit.   Most people don’t like the idea of spending down their assets to qualify for Medicaid and this leads them to ask “Can I give all of my assets away and qualify for Medicaid?”  The short answer is it just depends.

Alabama Medicaid has a five year look back rule that prevents individuals from giving all of their assets away right before they apply for Medicaid.  Any non-exempt transfer of assets within the last five years will result in a penalty against the Medicaid applicant.  The penalty is a period of time that Medicaid denies Medicaid assistance for the applicant and the length of this penalty period depends on the value of the improperly transferred assets.  Any transfer of assets that occurred more than five years ago will not cause a penalty.

A healthy person who does not anticipate the need for nursing home care within the next five years may consider transferring assets out of his or her name if their goal is to eventually qualify for Medicaid should nursing home care becomes necessary.  The next issue to address is who will receive the transferred assets.  Many times my clients tell me they want to transfer the assets to their children.  Children are potential candidates but there are certain risks involved when transferring assets to children.  What if a child dies or becomes incapacitated?   Or what if a child has a lawsuit or divorce filed against him or her?  If any of these events occur then the transferred assets may be owned or controlled by someone who has no desire to assist the parent/transferor if the parent needs financial assistance in the future.  An alternative transferee to consider is a Medicaid Trust.  All of the risks involved in transferring assets to children are reduced or eliminated through the use of a Medicaid Trust.

The challenges of paying for nursing home care are dependent on each client’s particular situation.  Meeting and overcoming those challenges requires careful planning and the advice of an estate planning professional.

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances.  No attorney-client relationship is formed nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney.  If you require legal advice, please consult with a competent attorney in your area. 

There are many different techniques and strategies available to plan for individuals with a disability.  The vast majority of the time this planning involves the creation of a Special Needs Trust as part of the plan.

What is a Special Needs Trust?  Like any trust, a Special Needs Trust is a contract and you can draft whatever rules and provisions into the trust that you want.  What type of disability are we dealing with?  Where will the individual live?  Who can or should be the Trustee of the Trust?  What are the goals you want to achieve in planning for the individual with a disability?  These are just a few of the questions that will change the planning strategies contained within the provisions of the Special Needs Trust from client to client.  It’s not a one size fits all document.

What is the benefit of creating a Special Needs Trust?  The short answer is a Special Needs Trust can greatly enhance the quality of life of the individual with a disability by allowing him or her to benefit from the assets in the trust while maintaining his or her Medicaid and SSI benefits.  The Special Needs Trust can pay for travel expenses, hobbies, entertainment (T.Vs, computers) additional medical equipment or services not covered by Medicaid, among other things.

So why do you need a Special Needs Trust to maintain Medicaid and SSI benefits?  In order to qualify for Medicaid and SSI benefits an individual must have resources of less than $2,000 (this includes bank accounts, cash, stocks, bonds etc.).  A Special Needs Trust is not considered to be a resource of the beneficiary for Medicaid and SSI eligibility purposes.  Therefore, if assets are intended to benefit an individual with a disability, giving those assets outright to the individual is poor planning because of the high probability it results in a loss of Medicaid and SSI benefits.  The better plan is to leave the assets to a Special Needs Trust which would allow the individual, as beneficiary of the Special Needs Trust, to benefit from the assets in the Special Needs Trust and maintain his or her Medicaid and SSI benefits.

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances. No attorney-client relationship is formed nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney. If you require legal advice, please consult with a competent attorney in your area.

Most people use either a Last Will and Testament or a Revocable Living Trust as their primary Estate Planning instrument.  So what’s the difference?  Both instruments control the distribution of assets to loved ones upon death but the manner in which this happens is one of the main differences between these two documents.

A Last Will and Testament has no effect until an individual dies and it has no effect until the Personal Representative of the Will petitions the Probate Judge to declare that the Will was validly executed under the laws of the State of Alabama (sometimes called “probating the Will”).    This legal process involves filing several documents with the Probate Court, notifying beneficiaries under the Will and next of kin of their right to a hearing in front of the Probate Judge to contest the Will and notifying creditors of the decedents death among other things.  If nobody contests the Will, then the Probate Judge issues Letters of Testamentary to the Personal Representative which allows him or her to collect the assets of the estate and eventually distribute the assets to the beneficiaries under the Will.

A Revocable Living Trust will be effective upon the signing and execution of this instrument.  Once established, the next step involves transferring assets into the Trust.  Upon death, all of the assets in the Trust will pass to the beneficiaries named in the Trust without Probate Court involvement.

In comparison, the main difference between a Will and a Revocable Living Trust is that the Will must go through the Probate Court system.  Because a Trust avoids the Probate Court, administering a Trust upon death is generally quicker and more cost effective than probating a Will.  The time frame for probating a Will is generally six months to one year even if it is a relatively simple estate and nobody is contesting the Will.  This is because the estate must remain open for at least six months to allow creditors to make claims against the estate.  Attorney’s fees and out of pocket expenses for individuals are usually higher when probating a Will.  If a decedent owned real estate in more than one State, then the Will must be probated in each State (increasing time and expenses).  Avoiding Probate Court means that a Revocable Living Trust is more private than a Will because a Will becomes a public record that anybody has the right to see.  Lastly, a Revocable Living Trust is harder for disgruntled heirs to contest than a Will.

While a Revocable Living Trust generally works better for a decedent’s loved ones upon death it is not the best fit for everyone.  A Trust requires more work to initially establish than a Will because you have to transfer assets into the Trust after its creation.  If assets are not properly transferred then the Trust may not operate as smoothly as it should have upon death.  Additionally, a Trust is generally more expensive than a Will to initially establish.

In conclusion, a Last Will and Testament and a Revocable Living Trust are both proper Estate Planning instruments and I recommend that you implement the one that best meets your Estate Planning goals.

S. David McCurry

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances. No attorney-client relationship is formed nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney. If you require legal advice, please consult with a competent attorney in your area.

Welcome to our blog!  We hope that this blog helps educate our viewers about the areas of law we practice and prevent mistakes we encounter too often.

Most people think creating an Estate Plan is important and something they should do.  However, statistics show that the majority of adult Americans do not have a Last Will and Testament, Trust or Power of Attorney.  Why is this the case?  The reasons I have heard include:  “I’m too busy.”  “I’m young and healthy, why do I need an Estate Plan now.”  “I don’t have enough assets to make an Estate Plan.”  “It’s too expensive.”  None of these are valid reasons for failing to create an Estate Plan.

If everybody knew the date of their death then I’m sure more people would create a good Estate Plan.  This not being the case, I am too often dealing with the estate of a decedent who passed away suddenly or by accident.  There is no need for this to happen to you or your loved ones.  I recommend making an Estate Plan today assuming that you will pass away today.  If the unexpected occurs then you have properly planned.  If the unexpected doesn’t occur then you can always update your plan whenever a change is needed (e.g. the children become mature enough to play a larger role in the estate plan).

Another reason to create an Estate Plan today is to avoid death bed estate planning which often involves making rushed decisions about the Estate Plan.  Good estate planning takes longer than most people think and some Estate Planning options may not be available in a death bed planning scenario.  Additionally, death bed planning is more likely to be contested by an heir claiming the decedent didn’t understand the documents he or she signed.

Our clients tell us another benefit of creating their Estate Plan is the peace of mind they have when it is established.  They know that they will be taken care of if they become disabled and that their loved ones will receive the items they want them to receive at their death.

S. David McCurry

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. The law changes frequently and varies from jurisdiction to jurisdiction. Being general in nature, the information and materials provided may not apply to any specific factual and/or legal set of circumstances. No attorney-client relationship is formed nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney. If you require legal advice, please consult with a competent attorney in your area.