Month: March 2023

Florida Medicaid Pay-Back

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Most Florida residents do not know that Medicaid for the elderly is merely a type of loan to pay for their long-term care needs and is not a gift or grant. The basic point is that if a Florida resident is on Medicaid, any remaining assets the decedent owned upon their death is subject to a lien by the state of Florida. This is commonly known as the Medicaid pay-back or reimbursement provisions, and many residents are unaware of this provision in the law.

Florida Medicaid does have a pay-back provision, similar to other states. During one’s lifetime, if they receive Medicaid benefits, and pass away after the age of 55, the State of Florida is a creditor in their estate. The state has a claim in the amount of funds expended to the deceased party’s benefit during their lifetime, which can definitely be a great deal of money if the subject individual spends time in long-term care. HOWEVER, this situation may not generally be much of an issue in most situations.

First, if the Medicaid applicant was single, he or she was only allowed to have less than $2,000 in countable assets in order to be on Medicaid. This scenario means that the applicant likely has nothing for Medicaid to make a claim against upon the applicant’s death. A single applicant, who is already impoverished, generally has nothing for the state of Florida to take.

Further, even if the decedent owned a homestead real property or primary residence, this property is not subject to creditor’s claims (including the state of Florida) in most circumstances.    There are exceptions to this rule though, such as:

  • The decedent’s property lost its homestead status before death (possibly by renting the home, as an example);
  • Not all homestead properties are equal. If the property is a co-operative share, such as in a mobile home park, this does not get statutory protection for Florida homestead purposes; and/or
  • The decedent’s Last Will & Testament called for the sale of the decedent’s home.

Consequently, the Medicaid lien is not an issue in most circumstances. Therefore, where would a Medicaid lien take place?  There are a few circumstances where the lien could/would be applicable:

  • The decedent sold their home and went off of Medicaid before death (i.e., the applicant went on private pay);
  • The decedent received an inheritance, either before they died or after, which could then be subject to the lien;
  • The decedent did not disclose or discover all known assets as part of the application process and the assets had to be probated upon death; and/or
  • The decedent’s spouse died first and left money to the Medicaid applicant, who then passes away.

One major point to be made is that proper estate planning can avoid any potential Medicaid lien. That result is one reason to see an experienced estate planning attorney in order to ensure the family creates a good estate plan with the necessary documents to help avoid probate as well as creditor problems upon the family member’s death.

Accordingly, the Medicaid lien is not a worry for most Medicaid applicants if they either have nothing or very little at death or have created a good estate plan. This situation also merits good asset protection planning which can protect assets during one’s lifetime and at their death.

The foregoing is just a general and brief overview of the subject of Florida Medicaid’s lien & its pay-back or reimbursement in the state of Florida.

If you have any additional questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.

Advance Directives or Living Wills & Related Documents in Florida

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An Advance Directive, also sometimes known as a Living Will, is a legal document which details a person’s predetermined wishes about end-of-life care. Advance Directives are highly encouraged to everyone as a means to make difficult decisions regarding one’s care in the event of a catastrophic injury such as severe brain trauma resulting in coma or vegetative state. These decisions should not be left up to family members who are already suffering and might be unsure of that individual’s wishes. Such directives help to avoid disputes as to how to proceed regarding one’s end-of-life medical treatment.

Advance Directives allow these critical decisions to be made in advance by the individual. Under Florida law, a Living Will must be signed by its maker in the presence of two (2) witnesses, at least one of whom is neither the spouse nor a blood relative of the maker. If the maker is physically unable to sign the Living Will, one of the witnesses can sign in the presence and at the direction of the maker.

Unlike the Living Will, however, an Advance Directive is not limited to terminal illness. It may also include medical events such as dementia, stroke, or coma. There are many different types of Advance Directives, including, but not limited to, a Living Will, Health Care Surrogate or medical power of attorney and Do Not Resuscitate (DNR) Order.

Technically, through Advance Directives, one can make legally valid decisions about their future medical care. Florida law recognizes two (2) types of Advance Directives: 1) A Living Will Declaration. 2) A Designation of Health Care Surrogate.

A Living Will is a legally binding document which expresses an individual’s end-of-life preferences, such as whether that person wants to be kept alive through artificial life-support means or equipment.

A Living Will is the written statement that would say that a person may want a Do Not Resuscitate Order. The Do Not Resuscitate Order, on the other hand, is a physician’s order for medical professionals to not provide CPR to the subject person, usually done on a yellow form. A Florida Do Not Resuscitate Order form (DNR or DNRO) is a document or instrument which is used by residents of Florida who suffer from incurable or irreversible medical conditions. This form states that the requester does not wish to be resuscitated in case of respiratory or cardiac arrest. A physician must sign off on a DNR order. A DNR must be honored in any healthcare setting by all medical personnel, including EMTs and paramedics outside of a medical facility. For a Florida DNR to be legally valid or effective, the form must be printed on yellow paper before it is completed by the patient/authorized representative and physician. A blank yellow form can be obtained  for free by writing to the Florida Department of Health.  Once a doctor writes a DNR order at the patient’s request, no one can override it, including family members. If the said patient changes their mind about the DNR, however, they can always speak to their doctor and have it revoked.

Anatomical donation is a document that indicates an individual’s wish to donate, at death, all or part of their body. This can be an organ and tissue donation to persons in need, or donation of their body for training of healthcare workers. One can write down their choice to be an organ donor by designating it on their driver’s license or state identification card, signing a uniform donor form, or expressing one’s wish in a Living Will.

Although some Living Wills may contain directives regarding organ donations or autopsies which remain in effect briefly after one’s death, any authority granted by a Living Will terminates or ends when the person passes away.

Although an Advance Directive may ultimately decide whether an individual continues to live with artificial life support or passes away, there are many other details that make up a Living Will. An Advance Directive should provide instruction for specific scenarios such as the use of specialized equipment including breathing machines, feeding via tube, what to do in the event of ceased breathing or heartbeat, and others. Advance Directives may also serve to name an individual to hold durable power over attorney to make these important decisions. A skilled and knowledgeable attorney can provide guidance about creating Living Wills and Advance Directives.

Proper planning for the future is one of the most responsible things a Florida resident can do. It will lessen the burden on family members and loved ones in the event of a catastrophic injury that leaves the victim unable to make decisions regarding their own health, treatment, and maintenance.

The foregoing is just a general and brief overview of the subject of Advance Directives and/or Living Wills, among others, in the state of Florida.

If you have any additional questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.

Beneficiary Designations & the Like Take Priority over Last Wills & Trusts

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Beneficiary Designations as well as a Lady Brid Deed takes precedence or priority over a Last Will & Testament as well as a Trust, which means that if one gets divorced and remarries, but does not update their beneficiaries on accounts, a former spouse may be the legal heir to those accounts if you named them the beneficiary while married. Trusts control the trust estate, the assets that are placed within their ownership and titled in the trust name. They do not overlap and therefore cannot supersedeother designations.

A Last Will or living trust do NOT override the beneficiary designations for life insurance policies, retirement accounts and other types of investment or bank accounts. This includes accounts, such as life insurance policies, annuities, IRAs, other tax-favored retirement accounts and employer-sponsored benefit plans. The person(s) named on the most-recent beneficiary form will get the money automatically if one dies, regardless of what the Last Will or living trust document might state.

Deeds such as a Lady Bird with its Remaindermen (i.e., like designated beneficiaries but for real property) or ownership by the Entirety as a married couple and/or joint tenants with right of survivorship, the surviving spouse will automatically get sole ownership of the property when the other spouse dies and/or the property automatically goes to the surviving joint tenant or Remainderman.  The major advantage of these types of ownership is that they avoid probate.

Most beneficiary designations will require one to provide a person’s full legal name and their relationship (i.e., spouse, child, mother, etc.). Some beneficiary designations also include information like mailing address, email, phone number, date of birth and Social Security number.

An estate plan in Florida can include several documents, many of which may require beneficiaries, like any trusts, a person may have set up or intended to set up, non-probate assets like 401(k), IRA accounts, life insurance policies, and pensions. Assets from these accounts will go to the beneficiaries upon the owner’s death. It is important, therefore, to make sure one chooses their beneficiaries carefully. 

A beneficiary designation involves naming the person who will directly receive an asset in the event of the death of its owner. Again, assets which allow for beneficiary designations include insurance policies, retirement accounts such as 401(k) plans, annuities, and other financial accounts. Trusts also need beneficiary designations. An individual can also choose beneficiaries in their Last Will and Testament. 

It must be noted that beneficiaries are different from heirs. Beneficiaries are chosen while heirs are those who inherit the property of a person who dies intestate, or without a Last Will, usually next of kin as governed by state law.

The designation process ensures the named beneficiary directly receives the asset, rather than it passing to the owner’s estate and going through probate, which may involve significant time and expense.

Beneficiary designations are unique to each asset and may be managed by the entity that holds the subject asset.  An example would be a life insurance policy whereby the company that holds the policy will likely provide a beneficiary designation form during the enrollment process. In the said form, the applicant would specify which individuals (i.e., beneficiaries) should benefit from the subject policy in the case of death.

When a person dies, the instructions in their Last Will & Testament only distributes assets included their “probate estate” or in their name alone.  Assets with beneficiary designations get excluded from the probate estate.  To avoid a conflict, it is crucial to ensure that the language in one’s Last Will correlates with and/or considers their beneficiary designations.  It merits to perform a regular review and update of the Last Will as well as beneficiary forms as needed since, typically, a beneficiary designation overrides a Last Will.

Common categories of beneficiaries in Florida include eligible designated beneficiaries, designated beneficiaries, non-living beneficiaries, and contingent beneficiaries. Different eligibility rules may apply to various categories of beneficiaries. 

Eligible designated beneficiaries include:

  • Spouses;
  • Children under 18 years of age;
  • Individuals with a disability;
  • Chronically ill individuals; or
  • Individuals within 10 years of age of the deceased.

Eligible designated beneficiaries have additional rights to designated beneficiaries. 

A designated beneficiary is any living person who does not fall into the above categories. This may include a friend or extended family members, such as elderly parents or a sibling. 

Another type of beneficiary is a non-living beneficiary, such as a charity, trust, or estate. 

A contingent beneficiary is a “backup” beneficiary to whom receives the asset in the event the primary beneficiary is unable. 

When choosing a beneficiary, the following are key factors to keep in mind.

A beneficiary typically must be over 18 years of age. If an individual wants to gift an asset to a minor upon death, one may need to set up a minor’s trust and name the trust as the beneficiary, if appropriate; otherwise, a legal guardianship will be needed. 

Financial dependents are a good starting point when considering who to designate as a beneficiary. These may include a spouse, children, or other extended family members.

A beneficiary generally must have an insurable interest in the insured person. The foregoing means there must be a legitimate financial interest between the two, such as in the case of dependent children or a spouse. 

Some life insurance policies or pension funds set rules for naming a beneficiary. Make sure to be aware of these before making decisions and seek legal and financial advice about the options. 

Depending on the document and the terms of the contract, some beneficiaries may be irrevocable. The preceding means one cannot revoke said beneficiary’s rights unless they agree to it. At first glance, one may wonder why they even would want to designate beneficiaries as irrevocable, but there are benefits. An estate planning attorney can explain the reasons and situations where irrevocable beneficiary designations may be most appropriate as well as the reverse.

In Florida, the best way to avoid most potential issues when it comes to a beneficiary designation is to speak with a lawyer to ensure the selected designation is valid. 

Some common challenges that may arise when designating a beneficiary are as follows.

When choosing a beneficiary, it is possible to set either a fixed dollar amount or percentage the subject beneficiary will receive. However, a fixed dollar amount can cause issues if the value of the asset is insufficient (or if it increases in value, leaving a portion of the asset to probate). To avoid this, assign a percentage value instead. 

Failing to name a contingent or alternate beneficiary may result in an asset needlessly going through probate. To avoid this, identify a contingent beneficiary who will receive the asset in the event the primary beneficiary cannot accept it, such as when the primary has predeceased. 

The identity of a named beneficiary may not be clear, such as when several people in the family share the same or similar name. Names may also change as a result of marriage or divorce. Always confirm the correct legal name of the intended designated beneficiary and ensure that the applicable document is updated to reflect any name changes. 

Designating “all my children” can create challenges. For example, if a child beneficiary dies before their parent, it may be unclear as to how their portion should be distributed. It may be distributed among the surviving children, or instead, pass to their offspring or descendants. To avoid this issue, one should be specific when naming a beneficiary.

The foregoing is just a general and brief overview of the subject of beneficiary designations and the like versus other estate planning instruments in the state of Florida. If you have any additional questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.

Trusts in Florida- Revocable and Irrevocable (A Brief Overview)

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In Florida, the main difference between a revocable trust and an irrevocable trust is that a revocable trust can be amended or revoked during the settlor’s (i.e., creator of the said Trust and whose assets are used to fund the Trust) lifetime, while an irrevocable trust cannot. In terms of asset protection, a revocable trust is rarely used as part of an asset protection plan, while irrevocable trusts are useful in several asset protection contexts.

A Trust is a contract between a maker of the subject trust (often called a grantor or settlor) and a trustee set up for the benefit of named beneficiaries. A maker of the said trust transfers legal title of their property to a trustee who holds the title and property as a fiduciary for the benefit of named current and future beneficiaries. Again, a settlor is the entity that establishes a trust. The term of settlor is encompassed by several other names such as donor, grantor, trustor, and trustmaker. Regardless of what this entity is called, its role is to legally transfer control of an asset to a trustee who manages it for one or more beneficiaries.

Trusts are essential tools for estate planning. People anticipate conveying their assets to estate planning trusts, but they often do not understand how various types of trusts fit into the estate planning process. Trusts have many purposes, including avoiding probate, reducing estate taxation, or protecting assets from creditor risk. The type of trust and the terms of trust depend on the priority of various planning goals.

Trusts are primarily differentiated by whether they are revocable or irrevocable. A revocable trust conveys assets to a trust expressed by a written trust agreement which expressly reserves the settlor’s right to revoke the trust entirely or amend any part of the trust agreement for any reason during the settlor’s lifetime. Most estate planning trusts that direct the disposition of the settlor’s property upon death are revocable trusts. These estate planning trusts are called “living trusts” because the settlor retains complete control benefits of the trust while he is living.

An irrevocable trust is a trust whose trust agreement prohibits revocation or amendment. Transfers to irrevocable trusts are final conveyances, with some few exceptions. A settlor cannot change his mind about transfers he makes to an irrevocable trust.

Some trusts are designed to be irrevocable from their inception; others start out revocable and later become irrevocable. An example of a trust that starts out irrevocable is a trust set up to make gifts to the settlor’s children during the settlor’s lifetime. Assets transferred to an irrevocable children’s trust are the children’s property. The trustee, as a fiduciary, must use the principal assets and trust income for the children’s benefit and not for the direct benefit of the settlor. Of course, using the trust money for the children’s education, for example, usually indirectly benefits the settlor.

An example of a lifetime irrevocable trust in Florida is an insurance trust. There are tax benefits and asset protection benefits of owning life insurance in the name of an irrevocable trust. The death benefit of life insurance (the amount paid to family members or whatever named beneficiary upon the insured’s death) is part of the insured’s taxable estate, except when the life insurance is owned by an irrevocable trust. For example, death benefits paid to family members are vulnerable to their creditors upon receipt, however, the death benefits are creditor-protected if the money is held inside a properly drafted irrevocable insurance trust.

A revocable trust becomes irrevocable upon the death of all settlors. The trust is locked at death, and the settlor’s heirs (the future trust beneficiaries) cannot change the terms of such inherited trust, with very few exceptions. The said trust becomes irrevocable. No one can change the terms of the trust or add property to it. Also, the trust settlor is no longer the trustee, instead, a successor trustee takes over. The settlor’s written notes, memorandum given to family members, or oral instructions given to family members during his lifetime will not change the revocable trust’s estate plan once it becomes irrevocable.

A revocable living contains written instructions for how the settlor desires to distribute his assets after death. The process of transferring assets, paying debts, and following the settlor’s instructions is referred to as trust administration. Trust administration is directed by the persons the settlor nominated to serve as their successor trustee(s). Trust administration in Florida is the legal procedure whereby a successor trustee of an existing trust carries out the trust document’s instructions after the settlor’s death. Trust administration refers to the tasks associated with managing the assets, distributions, and filings of a trust. Said tasks can often be quite complex and time sensitive.

Trust administration involves several tasks. For example, the family must first confirm their understanding of the settlor’s written instructions expressed in their trust agreement, and any disagreements regarding the trust instructions must be resolved. The successor trustee must find out if the settlor owed money or was subject to any legal claims. The successor trustee must use non-exempt trust assets to satisfy debts and settle claims. The settlor’s income tax liability for the year of death must be determined and paid. The successor trustee also must determine if the settlor’s taxable estate is subject to estate taxation.

Only after the trust administration is substantially completed may the successor trustee distribute trust assets to the settlor’s heirs or beneficiaries according to the settlor’s written instructions. After assets are distributed and the administration is complete, the successor trustee can close the trust. Successor trustees should get a written agreement among all beneficiaries that the subject trust administration has been successfully completed so that the said living trust and all of its trust accounts may be closed.

The foregoing is just a general and brief overview of the subject of revocable and irrevocable trusts in the state of Florida.

If you have any additional Questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.