I am proud of what this site accomplished in 2007. Starting with no visitors as all sites do and moving up to 600 visitors a month is great, and exceeded my expectations. I appreciate everyone that stops by and takes the time to get educated about Connecticut estate planning and elder law issues. I hope you find the information here valuable and will visit again.

The most popular posts of 2007 were:

1. Estate Planning for Title 19;
2. 9 Questions to Ask BEFORE Entering a Nursing Home;
3. Revocable Trusts and Connecticut Medicaid;
4. Title 19 Penalties and Gifts;
5. Myths and Realities of Living Trusts in Connecticut.

Five is enough. I won’t bore you with a top ten.

I’m already working on making 2008 a great follow-up to what we accomplished in 2007. Stay tuned for details. Have a happy and healthy new year.

Related posts:

1. FY 2007-2008 Medicaid Numbers
2. Estate Planning For Title 19
3. Title 19 Medicaid Protection Workshop

Congress recently opened the door to allow a non-spouse beneficiary to rollover an IRA or 401(k) and stretch distributions over the beneficiary’s lifetime. 2007 was interesting because this new option was not required by all retirement plan administrators, it was optional. At the end of the day, there was confusion and to answer the question if it was even possible for a non-spouse beneficiary to qualify for a rollover you would have to check with each plan administrator.

In 2008 the IRS is attempting to put an end to the confusion and requiring that all plans provide the option for a non-spouse beneficiary to rollover an IRA. This is great news and a great opportunity for those families positioned to take advantage of it. For families that are not prepared, it is simply another sand-trap.

So what is the big sticking point?

Designated Beneficiary. Those two words are critical to how the IRS treats and taxes the transfer of an IRA or other qualified retirement account from the account holder to the beneficiary(ies). You may be thinking, well, as long as I have a beneficiary I am in good shape. That would be wrong, the IRS has dedicated volumes of paperwork to making it perfectly clear to those who are listening that not every beneficiary qualifies as a designated beneficiary.

The biggest example of a beneficiary that is not a designated beneficiary is if your IRA goes into your probate estate either on purpose or by accident. The IRS absolutely hates it when an IRA goes into a probate estate and will almost certainly treat the event as a transfer to a non designated beneficiary and your family would not be able to take advantage of the rollover option without jumping through a lot of costly hoops.

But I went to an attorney and setup a complete estate plan including a living trust etc.

That’s great. I’m glad you’ve embraced personal responsibility for your estate plan rather than run from it like a lot of people according the surveys over the last 10 years. However, all trusts are not the same. Some come from old books in a law library (I’ve seen trust documents reference King George in the Rule Against Perpetuities language. I don’t know if I’m more surprised that the attorney presented it to their client with a straight face or that the client did not think twice about who drafted the trust when they saw it.), some come from computer drafting assembly programs written in imprecise language by people that may or may not be experienced tax attorneys, and some are even drafted by competent attorneys that get it right. Simply having a trust or having an estate plan does not automatically mean your family will qualify for the new rollover benefits.

How can I qualify for rollover treatment?

The IRS has very specific rules for how a trust can qualify as a see through trust and treated as a designated beneficiary. The top level bullet point requirements are:

1. The trust must be valid under state law;
2. The trust must be irrevocable or become irrevocable when the IRA owner dies;
3. The trust beneficiaries must be identifiable from the trust instrument;
4. Proper documentation must be provided to the IRA custodian.

Seems simple enough right? Remember, this is the IRS we are dealing with and they take income tax deferral very seriously because they think they are losing money. They have regulations on top of regulations on top of Private Letter Rulings and court decisions defining each one of those bullets in extensive detail. There is enough material to write a book on those four issues, and people have. I can’t get into detail on all of them here because it would take forever.

The most common stumbling block for inexperienced drafters is the requirement that beneficiaries be identifiable from the trust document. Many trust documents I’ve seen coming in to my office do not contain adequate restrictive language to achieve compliance with this rule. If you don’t have this language or if the people administering your estate handle the IRA or retirement funds incorrectly you have a big flashing sign to the IRS saying your family does not qualify for rollover treatment.

Rollover treatment is a privilege, not a right. Your family will not qualify for rollover treatment if you do not follow the rules in your estate plan. Make sure you and your attorney understand the requirements and that your estate plan doesn’t fall apart on this critical issue.

Related posts:

1. Another Lost Asset Protection Opportunity
2. Estate Planning Beyond the Documents – Annuities
3. Trouble With Joint Property

This is an important issue because the ultimate question of domicile for the purpose of probate and trust administration is not conclusively determined until a person passes away. There are some steps a person can take during life to tip the scale in the direction they want; however, a result can not be guaranteed until it is too late to change it ironically enough.

My first choice when I am confronted with a living trust case that spans two or more states is to create a living trust that works in both states. With this approach, at least my client’s goals will be carried out regardless of where the site of administration is determined. An important part of this approach is involving local counsel from the other state to review and contribute to the Connecticut living trust I have prepared. For example, if there is a possibility that my client’s estate plan may be administered in Florida, it is important that recent changes in Florida’s laws are included in the will or revocable trust I prepared.

Do you have to work with a local attorney to make sure your estate plan works in a different state than where you created it? In most cases the answer is no. This is because competent drafting will establish the site of the trust as the state where it was created. This means that even if there are judicial proceedings in Florida, the court will interpret the revocable trust according to the law of Connecticut. In my opinion this is a band-aid approach and I do not recommend relying on the court of another state to apply Connecticut law.

In addition to the potential difficulties of applying another state’s law, there may also be missed opportunities. Some states have more favorable trust laws than Connecticut (we still have not adopted the uniform trust code by the way). Working with local counsel to provide a complete estate plan gives you an opportunity to take advantage of special provisions that may not be available or less attractive than the law in Connecticut.

An effective estate plan for dual residency is a challenge and an opportunity. Multi-state estate planning can be a can of worms for the ill-prepared and can have unintended or unforeseen consequences to an estate plan that worked perfectly fine in one state. However, if you act carefully you can not only preserve your existing estate plan, but possibly enhance it as well.

Related posts:

1. Myths & Realities of Living Trusts in Connecticut
2. The FTC on Living Trust Seminars & Scams – How Not to Be a Victim
3. Know Your Estate Plan – Executor and Trustee

How do they decide who gets appointed to what position in what case?

What are the standards for acceptable billing by the court appointed attorney?

In some cases there are some rules that provide guidelines, however, with a lack of oversight who knows what really happens?

Earlier this summer I read this article from Houston. The Houston Chronicle newspaper conducted an investigation of hundreds of probate court records and thousands of billing records. What they found was disturbing and I encourage you to check it out for yourself.

Here are some interesting revelations:

• One Harris County judge approved paying $1,000 in fees to a lawyer for attending her ward’s funeral and burial. Most people would agree there is almost no circumstance where an attorney is needed at a funeral.
• In Harris County those who got the most business in probate cases contributed tens of thousands of dollars for the 2006 judicial races. Could there possibly be a connection between campaign finance and receiving lucrative appointments? Tune in next time on unsolved mysteries.
• Between 2003 and 2005, one judge ordered more than $400,000 in fees paid to one of his former law students — a 12-year lawyer who became one of his top-paid appointees during her first 18 months as an attorney. I started hearing echoes of “it’s not what you know but who you know” when I saw that one; ain’t it the truth. Really now, that is one judge effectively granting one attorney a $100,000+ salary for those years, and it was a newly licensed attorney.
• During the same time, the same judge also approved more than $375,000 to a former law school classmate who had recently returned to practice in Texas and mainly specialized in real estate law.
• In Harris County, the top-paid professionals in one probate court included one of the judge’s former law students, his law school friend and a lawyer with whom he has shared office space and real estate investments.

So where do we stand after learning about all these questionable acts? Well, for one, as a citizen I am glad I am not subject to the probate courts described in the study. Does something similar go on in Connecticut? I don’t know. I hope not, but until someone does their own investigation we won’t know.

This is not an attack on Connecticut probate and I hope you don’t read it that way. I’m sure that won’t stop some of the fanatics that stop by, but I can’t do anything about them. It is a reminder about the vulnerability to corruption that accompanies a politically elected judiciary. Probate judges are important, and they may be better off if they were free of campaign finance.

Related posts:

1. CT Probate Judges Fight for Their Right to Party
2. Storm Clouds – The Next Probate Scandal in Connecticut?
3. Important Reminders from Anna Nicole Smith

The CT legislature enacted a requirement this last session that Connecticut Probate Courts remain open at least 20 hours each week. The legislature did not address how to accommodate the 20 hour requirement. So, who decides when the courts should be open to satisfy this new requirement?

In July Connecticut’s Probate Court Administrator, James Lawlor, notified the probate judges that their courts should be open 4 hours each day. Judge Lawlor also provided that a court could ask for a waiver from the daily requirement if they had good cause.

The Probate Judge’s Association was not happy with being told to show up for work every day even if it is only for 4 hours. The President of the Association, Brookfield’s Judge Joseph Secola, has threatened legal action to avoid this draconian work order from the Probate Court Administrator. One of his more amusing comments is [Lawlor's] “position is not king. The judges aren’t serfs that have to go to him on their knees to request a waiver from a standard that the law does not require.”

Hey Probate Judges, this is not the way to improve your image and enhance the respectability of a court system that has been under regular attack for the last five or so years. Go to work, serve the public, and stop the grand-standing over someone expecting you to show up to your job for 4 hours every day. If it is really that horrible, you can find another job. Oh wait, you might have to work 8 hours a day somewhere else.

A lot of people have to show up for work at a lot tougher jobs than yours for 8 or more hours ever day, remember that.

Related posts:

1. Probate Judges and You – Independent Arbiter or Self-Dealing Politico?
2. Storm Clouds – The Next Probate Scandal in Connecticut?
3. Important Reminders from Anna Nicole Smith

The Coventry Funeral Home was the subject of a search warrant on Tuesday. The home’s former owner, Kevin Riley, has been under investigation by the Health Department and the state probate court. Riley is accused of entering homes of the deceased and disposing of items without the family’s permission. The probate court is investigating that complaint as well as 12 other cases while the health department decides whether to revoke Riley’s embalmer’s license.

You can read the full story from WFSB here.

I don’t really have anything to add to this. All I can say is “wow.”

Related posts:

1. CT Probate Judges Fight for Their Right to Party
2. Probate Judges and You – Independent Arbiter or Self-Dealing Politico?
3. Storm Clouds – The Next Probate Scandal in Connecticut?

Privacy concerns in Probate are nothing new. Attorneys have spread the word about these privacy concerns to the public over the years. Many families recognize the disadvantage of having their information in the public domain and have implemented an estate plan to protect their privacy. Some continue to be skeptical and do nothing. I understand the initial reaction of: “who could possibly be interested in my family’s probate records in small town Connecticut which contain nothing valuable other than a house?” One person that may be interested is that real estate investor down the street…

For those of you that think “it won’t happen to me”, consider the following. First, Diamond Farming Probate Real Estate Kit. This is a real estate investing program for sale throughout the United States that, in the words of its creator, “… explains in detail how you can make bargain, and even super-bargain buys, of real estate property going through probate.” Do you still think nobody is going through the Probate Court records to identify desperate sellers in order to make a low bid?

Second, take a look at Court Records Online. This is a company gathering up court records, including Probate records, to have available for retrieval on its website to anyone that is curious. Do you still think your records are going to stay relatively unknown and anonymous in the basement of the Town Hall?

Today’s topic is your information is valuable to someone. It can be someone you never imagined and someone with no personal agenda other than profit. Whether it is someone trying to make a low bid on your real estate for personal gain or a company just collecting public information for curious people someone is watching.

Are you committed to an estate plan that protects your privacy? I can show you proven techniques to preserve your privacy during disability and death. You can reserve your consultation by calling (860) 593-0404.

Related posts:

1. Probate Judges and You – Independent Arbiter or Self-Dealing Politico?
2. CT Probate Judges Fight for Their Right to Party
3. Important Reminders from Anna Nicole Smith

Who is going to pay that bill every month? Medicare? Medicare covers 100 days at best if you have the correct coverage and satisfy the conditions for benefits. Long term care insurance? Many people do not have long term care insurance. Even those that do have coverage often find themselves with monthly bills in excess of the policy benefits. Do you have a current policy and does it pay enough? Medicaid? In order to qualify for Title 19 Medicaid benefits in Connecticut you must satisfy some strict eligibility standards. Without a plan for action, your savings can dwindle away while you wait for benefits.

You can choose to protect your savings by exercising the rights you are entitled to under current law. The laws change however, and common proven techniques that are available now may not be available in the future or even next year. The legislature took additional steps to close another loophole effective July 1, 2007. The sooner you start the more choices you have.

The Title 19 Medicaid Protection Winter Workshop will give you an assessment of your risks and opportunities from an experienced attorney that has protected millions of dollars for his clients. Get a head start and act early, or face the spend-down later on.

You Should Reserve Your Free Consultation If Any Of The Following Apply To You:

• Your family currently faces or may face a nursing home placement within the next 6 years; or
• Your spouse resides in a nursing home; or
• You currently rely on a revocable living trust or annuities for Medicaid protection; or
• Your family has more than $50,000 in assets other than the primary residence.

When:
October 1-19, 2007
Monday, Wednesday, & Friday Appointments
9:30am, 1:30pm, and 4:30pm

Where:
Law Office of Richard L. Shea
66 Cedar Street, Suite 300A
Newington, CT 06111

This is the last opportunity to guarantee asset protection planning at year 2007 rates.

Related posts:

1. Reminder – Medicaid Asset Protection Workshop
2. Estate Planning For Title 19
3. Connecticut Medicaid (Title 19): MMNA

The Executor is the person or company responsible to administer the instructions contained in your Last Will and Testament.  In practical terms, there are almost no requirements to qualify as an Executor other than that the person be eighteen years of age or older.  The Executor can even be in a different State.  In many cases, the person you nominate as Executor will be approved by the Probate Court without incident.  However, anyone interested in the Estate will have an opportunity to object to the nominated Executor and may persuade the Probate Court to reject the nominated Executor if there are concerns about financial responsibility or trustworthiness.

The Executor of an Estate will be required to secure a bond in an amount determined by the Probate Court.  You can excuse this requirement for bond in your Will.  The bond requirement exists to provide any beneficiaries wronged by the Executor’s actions an opportunity to recover some or all of their loss.

Now that we know what an Executor is, what does an Executor do?  In general terms, the Executor collects all of the Estate’s assets, pays the Estate’s debts, files the required tax returns, and then distributes the remaining assets in accordance with the terms of the Will.  The Executor has significant control over the administration of the Estate.  Many Wills grant the Executor broad discretion on certain matters.  The Executor can exercise that discretion, although they are not permitted to substitute their own judgment for what is embodied in the Will.  The Executor has a full plate, is yours up to the task?

A Trustee is responsible for many of the same duties as an Executor.  One important difference is that in many cases a Trustee is not under the active supervision of the Probate Court.  In this situation, it is even more important that someone you trust is in the position of Trustee.

How do you choose an Executor or Trustee?  The advice I give my clients is to choose someone you trust, someone that is responsible, and someone that understands your goals.  The Executor or Trustee is responsible for your property upon death or disability, it is only reasonable that you have a certain comfort level with them.

In addition to your own comfort level, consider the other beneficiaries that will be depending on the Executor.  This is particularly important in second marriages where a step-parent may be in control of a step-child’s inheritance and some children may be uncomfortable with that arrangement.  You may trust your second spouse entirely, but do you want to risk your children hauling your spouse into court all the time because of petty arguments when a more sensible arrangement may be available?  If you can not settle on an Executor or Trustee that everyone is comfortable with, you can consider an independent fiduciary to fill those roles.  It may cost more in dollars and cents, but it may also save your family a lot of headaches and argument.

Now that you know the basics of the Executor and Trustee positions, check your documents and see who you’ve put in those positions.  In many cases the Executor of a Will is nominated in the very last Article or near the end.  Trustee nominations can be found anywhere in a trust document, but it should be clearly identified with something to the effect of “Appointment of Trustee” as a title.

Now that you know who you have appointed to the positions of Executor and Trustee, you are already ahead of the game.  Some people I meet with bring in documents for me to review and are surprised when the attorney that drafted the document appointed themselves or their law firm as a fiduciary when they don’t remember agreeing to such an arrangement.  That is a big red flag to me.  In other cases, people have designated parents that are no longer fit to serve as Fiduciary or other individuals that may have become estranged since the documents were originally drafted.  Make sure your Executor and Trustee appointments reflect your goals today and get them updated if they do not.

Related posts:

1. Myths & Realities of Living Trusts in Connecticut
2. Consumer Alert: The Estate Plan, or No Estate Plan?
3. Celebrity Estate Plan – Leona Helmsley

I had never heard of the specific company “The Estate Plan,” although I have heard of various individuals and organizations with no or varying degrees of attorney involvement peddling Living Trust documents and other estate planning devices. I recently heard someone mention “The Estate Plan” company and the following case was brought up in that discussion: Cleveland Bar Assn. v. Sharp Estate Serv., Inc., 107 Ohio St.3d 219.

It is a case from the Supreme Court of Ohio by the Cleveland Bar Association against Sharp Estate Services and The Estate Plan among other defendants. The Bar Association claimed The Estate Plan engaged in unauthorized practice of law with the actions they used to sell Living Trust documents much the same way a person sells a financial product. You can read the details in the case yourself, but the critical flaw with the methodology used by The Estate Plan, as found by the Court, was the absence of independent licensed legal advice throughout the client representation process.

Designing and drafting estate planning documents is very much providing legal advice. It is providing advice to implement a client’s goals through the various legal devices available. It is being proactive to identify threats to a client’s estate plan and advising on how to minimize those threats. It is more than pushing a “magic button” and delivering one document that works for everyone everytime.

As a client, you seek to accomplish your goals through legally binding and effective documents. Would you ask your mechanic how to accomplish this and what makes sense for you? If you answered “no”, then I can’t imagine why you or anyone would consider the opinion of someone else without a law license.

To make things worse, the fees they were charging at the time (2002) were close to or above $2,000 for a Living Trust plan. Note, this was an estate plan from someone forbidden to practice law or give any legal advice. I admit I’m not familiar with the Ohio estate planning market, but in Connecticut you can still get quality estate planning work from an experienced attorney for not much more than what a company breaking the law was charging people.

Why did I bring this up and what does this have to do with attorneys? Well, The Estate Plan used attorneys as employees in an attempt to immunize themselves from unauthorized practice of law claims. The Court found these attorneys to be little more than data entry personnel and rubber stamp providers for their documents. The attorneys did not maintain their professional independence and that is where I am disappointed. As an attorney I work for you, the client. I have an obligation to you to provide independent appropriate advice. If an attorney lets external factors interfere with that obligation the very core of the attorney-client relationship is threatened.

I brought this story up to educate you, my reader. Even though I’m pointing out another black spot on the legal profession from some of its members, I want you to know what is going on out there. So the next time someone tries to sell you a Living Trust as the solution to all your problems, make sure the person telling you that is an attorney, and that they are an independent attorney working for you.

Related posts:

1. Know Your Estate Plan – Executor and Trustee
2. Does Your Estate Plan Really Work?
3. Celebrity Estate Plan – Leona Helmsley