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Medicaid Estate Planning

Medicaid Estate Planning

Everybody makes mistakes, so there is no shame in that. But when it comes to estate planning, there are no second chances. Errors can be devastating, in terms of money and in terms of family hardship. This proces is made all the more acute by probate problems.

Some of the most common errors are the most easily avoided. Here are a few:

  1. Failing to review and update your estate plan. Generally, estate plans are built to last, but changes in your circumstances can require substantial changes to your plan. If you have lost or gained family members or sold or acquired property, you should update your plan.
  2. Automatically deciding to leave assets to heirs outright. While it may be convenient to bequeath your assets to heirs, this may not be the best option. For instance, if you want your money to be spent in certain ways (education, for example), a trust can guarantee your beneficiary will honor your wishes.
  3. Placing estate management burdens on beneficiaries. Having a close family member die is stressful enough. Even a capable, trusted individual can be overwhelmed by having to manage a family member’s estate. This can cause not only grief, but financial loss as well.
  4. Automatically choosing joint ownership of assets. Joint ownership may avoid some hassles-such as probate. But the first joint owner to die will lose all control over who receives the property upon the death of the second spouse. For instance, if the husband dies, his wife may decide to leave the house entirely to her children, excluding his children.

These common mistakes are simple, and easy to avoid. Just don’t hesitate to update or improve your estate plan if you find you may be making one of these errors.

For those bewildered by such terms as Unified Credit, Generation-Skipping Transfer, Annual Exclusion, Applicable Exclusion Amount, Gross Estate, and the like, the IRS has released Publication 950 (Re. March 2002) “Introduction to Estate and Gift Taxes.” It explains estate and gift taxes in everyday terms and helps taxpayers determine how the taxes might affect them.

For those who deal with estate tax issues on a regular basis, this is a great publication to keep handy for clients who need a better understanding of the terms and concepts you might use when counseling them.


View our Irrevocable Medicaid Trust Forms here

Give Your Heirs an Estate Map

The death of a loved one is a painful time. Unfortunately, confusion over the loved one’s estate can often compound grief to make the hardship even worse. For example: the will directs how property should be distributed, but if the estate administrator or representative cannot locate property identified in the will, the settlement of the estate may be burdensome and delayed.

To avoid such situations, you can provide a “map” of your estate to complement your will, compiling all the necessary information in one place. Then make at least two copies—one for home and another for a safe deposit box. For each type of asset, you will need to provide different information. For example:

Cash Accounts: Provide addresses, names, account numbers, and any joint ownership information;

Securities: Include names, ID numbers, amounts, and how to find documents;

Trust Documents: List names and addresses of trustees and beneficiaries and the location of trust documents;

Real Estate: Identify other owners and provide the location of deeds, sales contracts, and mortgage information;

Retirement Assets: Identify IRAs, 401(k)s, etc., and any other retirement plans or pensions you are eligible for, and provide beneficiary names;

Insurance Policies: Provide policy numbers, issuers, beneficiaries, and the location of the documents;

Business Interests: Describe in detail, with names and addresses of any other owners, and with information on any buy-sell agreements;

Miscellaneous Assets: Describe any valuable items and their locations, including the locations of any deeds or other related documents;

Debts: Describe what you owe and to whom, with account numbers, dates, and any other relevant information;

Personal Information: Provide the location of your Social Security card and any other important documents.