Written by Robert Nickerson
Let's say your finally considering getting an estate plan created. Congratulations, your taking a big step into creating something that will give your family relief in which a plan is laid out in the worst-case scenario. After all, going through the process may sound like it can be stressful and even scary. I can tell you that the process can be straightforward as long as we're cataloging your assets, determining how their going to be distributed, and taking you through the bureaucratic red tape that makes it appear more complex then it actually is.
How often are things completely straightforward? Unfortunately, it's rare. In fact, you’ve probably gone ahead and started to do your own research. You've read some articles. You've picked up a book. You've seen all the rules and ideas that your estate plan can have. But you also probably have a lot on your mind. Who am I going to leave my home to? Whose going to receive my jewelry and heirlooms? What if I have someone in the family with special needs? This will undeniably cause your knowledge of estate plans to collide with the clouding of your own emotion. This is why I always recommend getting in contact with a lawyer before making a decision.
I've come across my fair share of questions from clients with information they've found. Sometimes its about a law in the state of California or about how it connects with Medicare. I also get questions about things I need to ensure is either outdated or even false. I'm going to go through four things I've seen as a misconception about estate planning that need to be cleared.
1. An estate plan should be based solely on tax mitigation
It may be tempting to work your estate plan around taxes, but I can tell you that planning everything only around taxes is a big mistake. Id say only 3% of people need to be worried about paying a federal estate tax. When my clients ask about taxes, I always ask about assets first. That determines if anything will be need to be reported to the government, but more importantly, keeps the focus back on family.
2. I should leave everything to my children
Before you get angry, I'm not at all saying you shouldn't leave your children with nothing. In fact, I would encourage leaving your assets to them. What I'd want to explain is that rather then just putting their name down on paper and moving on, we'd want to see if those assets can be used in a better way. It'll ultimately be yours to decide and I can help you decide how your assets are distributed in a fair manner.
3. All my children should get an equal amount
Yes, it's okay to say no. Most parents are concerned that they're not treating their children equally. Yes it might be good in spirit to split a million dollars between three of your kids. But lets face it, are all kids really the same. A lot of them will have different goals, different skills, and a better mindset. As difficult as the decision can be, you'll feel better if the assets are put in the hands of people you know will continue to keep it's value.
4. I can set up a trust and take care of everything
So you think you can create a trust? I admire your gumption, but your in for a complex time of books, rules, and regulation. A good example would be if you have a large value of assets, then a typical estate plan will involve setting up a trust. However, depending on a number of factors, it could either be revocable or irrevocable. Then there's the process of setting beneficiaries and whether they can set up the fiduciary. We can certainly recommend the direction your estate can go and how a trust in created for the person in question, but I'd advise against doing it yourself.
It's important to note that it's always best to speak to an attorney before making any decisions regarding an estate plan or updating them. I can give you an ease of mind by introducing the subject in a simple manner. If you want more information, you can contact my office for more information.
Written by Robert T. Nickerson
For those that use Instagram, if they follow pop star Britney Spears, they may have noticed that her stories (these are the short videos or pictures that appear for twenty-four hours for the uninformed) have gotten the attention of her fans that have gotten more concerned over her well being. Some of the content has included her talking to colors, talking about accidentally burning her gym with scented candles. Many people blame her current state on her father who has controlled her conservatorship ever since 2008.
The story behind Britney Spears and her conservatorship has gotten be to think about the many families I've helped out through my estate plans. I've had good families and bad families. I've had families who've already identified the problems that need to be addressed. Some don't even see a problem when there is one. So I thought I'd go through a little bit of what conservatorships are, what led Britney Spears to losing control of her own financial and medical decisions, and what you could do to ensure that you don't make the same mistakes.
So what is a conservatorship? A regular person, whose mental state is clear and seems to making appropriate decisions regarding their life and finances, will not need one. But let's say a person has a mental condition or illness like dementia or a physical disability that prevents them from being able to live on their own. A conservatorship is a legally set arrangement in which another party will make the ultimate decision regarding finances or even other aspects of their life.
So how are conservatorships decided? A guardian is set by a judge and will usually remain in place for about a year. Depending on the situation, the conservatorship can either be renewed or dissolved if its determined that it's no longer needed. These are often looked at annually to see what progress has been made and whether a guardian is still needed.
In the case of Britney Spears, her father has ultimate say in every decision she makes, which applies to finances, business, health, voting and even marriage. This kind of control means that she has a probate conservatorship. This places more of the decision making to the guardian assigned. While it may seem like a lot, this is quite common with a probate conservatorship. The other common type, which Britney Spears does not have, is a limited conservatorship. This would grant some power the person in question. But this also requires a degree of health that assumes the person is okay and mentally ready to have a say. This was something Britney Spears didn't have.
A lot of her trouble can be placed back to 2007 when the year proved challenging to the singer. A long with a very public divorce from Kevin Federline, she was faced with an ever increasing schedule of recording, performing, and consistent paparazzi. The pressure got to her and was placed in an involuntary psychiatric hold after she locked herself in a room with her son. This kind of involuntary hold, called a 5150 in the state of California is enacted when " A person, as a result of a mental health disorder, is a danger to others, or to himself or herself, or gravely disabled, a peace officer [or] professional person in charge... may, upon probable cause, take, or cause to be taken, the person into custody for a period of up to 72 hours for assessment, evaluation, and crisis intervention." After two stays in psychiatric facilities, her father, Jamie Spears was granted an emergency temporary conservatorship. This has become a standard conservatorship that has lasted over ten years. This can be more common for some cases, but it's rare for a high profile figure like Britney Spears.
In the ten years since, things have taken an interesting route. Britney Spears remained just as busy as ever with more tours, more albums, time as a judge on the X Factor, and even a Las Vegas show. Her conservatorship also saw some changed. She had married her boyfriend Jason Trawick in 2012 who was added as a co-conservator, until the next year when the engagement was called off. Her lawyer Andrew Wallet was also a co-conservator until 2019 when he resigned from his position. This left her father as sole conservator, but he also stepped down due to a personal health emergency. He then named a temporary third party, Jodi Montgomery, as the new day-to-day conservator.
So what about the rest of Britney Spear's family? Have any of them tried to intervene in the conservatorship? Her mother, Lynn, had put in multiple requests to be more involved with her estate, without much success. Her younger sister Jamie-Lynn, has dismissed any claims that her sister is unwell, claiming that her family has taken the best measures to help and blasted critics who've debated about Britney's sanity.
On August 19, a hearing determined that the current arrangement will remain in place, with the father coming back in as the role of sole conservator.
Given that we only know Britney Spears through her music and social media appearances, who knows what's really going on. What I will add is that given her continuous success, she seems to be managed by the right people who know how to keep her away from negative behavior. Something else could be going on, but none of us know.
Conservatorships can be set up for anyone. It's not just a luxury for the wealthy. In fact, under the right circumstance, this may even be a necessary move to the health and well being for someone you love. The Law Offices of Jeffrey C. Nickerson can help guide through the process and what steps to take. For more information, click on the button below to see what can be done.
Personal care contracts or caregiver agreements can solve a variety of problems because they allow an elderly or disabled individual the option to remain in their home while allowing funds to be paid out to that caregiver for assistance leading to a penalty-free transfer of assets and reimbursements for care provided.
In order for a care contract to be recognized and upheld by governmental agencies, the contract should be structured as a written employment contract setting forth the specific duties of the caregiver and the specific salary to be paid. Each state has different requirements that must be followed, so it is important to check on the requirements in advance. Generally, there must be (a) a written agreement in place between the individual providing services and the individual receiving care specifying the services to be provided which is signed and dated on or before the date the services began; (b) the services provided must not be duplicative of what is being paid to someone else; (c) the care recipient must have a demonstrated need for the personal services; (d) the services are necessary and essential; (e) compensation for the services must be made at the time services are performed; and (f) the fair market value of the services provided must be equal to the value of assets given for the services.
Funds should not be paid for caregiving assistance without a written contract in place since this will be viewed as a gift. Generally, it is not possible to pay for services rendered prior to the date of the written care contract. If there will be more than one caregiver, separate caregiver agreements should be obtained. A doctor’s letter should also be obtained establishing the need for the assistance.
Some states require that a caregiver log be maintained detailing the services provided under the personal care contract. If a caregiver fails to maintain such a detailed log, these states take the position that despite the fact that all of the other requirements have been met, the care provider cannot prove that the services were actually provided, and thus the care recipient cannot meet the burden that the payments were “transfers for fair market value.” In these states, it is essential that the caregiver keep a log of services performed.
It is also important that the contracted rate paid to the caregiver for services provided be reasonable. A good rule of thumb is to make sure that the hourly rate paid to the caregiver does not exceed the hourly rate which would be paid to a professional caregiver. If the hourly rate is excessive, then Medicaid will likely claim a portion of the funds paid to be a “gift” or a “transfer of assets” resulting in a period of ineligibility.
If the elderly or disabled individual is a wartime Veteran who is homebound and has limited finances, a personal care contract may also assist the Veteran in obtaining additional assistance under the VA Aid and Attendance benefit provisions. The VA requires a detailed care agreement and a doctor’s letter in order for such care agreement to be given consideration.
It is important that the contract detail the services to be provided by the caregiver, as well as the number of hours which the caregiver will work. Caregiver duties generally include assisting with activities of daily living, housekeeping duties, meal preparation and assisting with transportation of the care recipient, monitoring the recipient’s mental and physical condition, and providing companionship and assistance on a general basis.
Given the level of control involved in the typical personal care contract, this arrangement is generally treated as that of an employer/employee and not an independent contractor and will be taxed accordingly. The caregiver and care receiver must review and be aware of the tax obligations involved in these agreements.
If the requirements are not followed, the transfer of funds will be considered a gift and a penalty will be imposed. Obviously, if the individual still requires care, a written care contract can be put in place for all services going forward; however, this does not correct the past arrangement. The safest course is to put the care agreement in place prior to any transfer or payment for services.
It is recommended that this type of contract be prepared by an experienced special needs/elder law attorney after consulting with the individual and the family regarding the type of care needed, the funds to be paid for services, and the authority to be given to the caregiver.
About this Article: We hope you find this article informative, but it is not legal advice. You should consult your own attorney, who can review your specific situation and account for variations in state law and local practices. Laws and regulations are constantly changing, so the longer it has been since an article was written, the greater the likelihood that the article might be out of date. SNA members focus on this complex, evolving area of law. To locate a member in your state, visit Find an Attorney.
Jeffrey C. Nickerson - Estate Planning Attorney - My Passion is Special Needs Planning!