Update: The implementation date for the "look back" has been extended from July 1, 2021…
How are these practice areas different, and what do they have in common?
Many people, even many lawyers, see Elder Law as entirely different from estate planning and estate administration. While there are differences, at Lamson & Cutner we think they go hand in hand, and our practice includes assisting clients with all these needs.
First, what are the differences?
- Elder Law addresses your health care and long-term care, and the protection of your assets and income, while you are alive.
- Estate planning and administration are concerned with the distribution of your assets, in many cases in a tax-advantaged way, once you have passed away.
When people visit an estate planning attorney, they are thinking about several issues. First and foremost is figuring out where their assets will go. They may leave their assets to a spouse, their children or other family members, or to charitable organizations. There may be issues that arise if there is a disabled or minor child, such as who will act as guardian or what financial provisions should be made (the creation of a supplemental needs trust, for example).
Once someone has passed away, his or her estate must be distributed, and there is a legal process for doing that. This process varies, depending what kind of estate planning (if any) the deceased did before he or she passed away.
If there is no Will, the person is said to have died ‘intestate’ (without a ‘testament,’ or Will). There is a specific procedure for how to distribute the deceased’s assets in such circumstances, based on state law. The court procedure involved is called “administration.” State-specific laws of “intestacy” or “intestate succession” determine who gets what, and in what order.
If there is a Will, any assets that belong to the deceased are governed by the Will. The Executor (usually the person named in the Will) must follow a court procedure, called “probate.” In probate, the court will determine whether the Will presented is the last Will and whether it is a valid Will. Then, the court will confirm the appointment of the Executor and allow administration of the estate to proceed under the Will.
Any assets that are held in a trust are not subject to probate or administration. This is because the assets that are held in a trust do not belong to the deceased. For example, assets in the “Susan Smith Trust” are owned by the trust, not by Susan Smith. A trust is a private agreement and court supervision is not required to carry out its terms.
Other assets that have specifically designated beneficiaries, such as bank or investment accounts with “Transfer on Death” or “In Trust For” provisions, or retirement accounts, pass without going through probate or administration. These assets are the easiest of all to distribute, but designating beneficiaries is not always possible, or desirable.
Guiding an estate through probate or administration is time-consuming and sometimes frustrating. Executors and heirs are subject to court proceedings that can sometimes drag on without explanation. An experienced attorney is essential. He or she will facilitate the process, help clients to understand what is happening, and explain what can and cannot be expedited. Such an attorney is also experienced at helping Executors make sure they have located all of the assets, and at helping them through the process of finding the heirs and collecting, dividing, and distributing the assets.
As Elder Law attorneys who also do estate planning, we try to help our clients avoid probate and administration if they can. Assets owned by a trust are much easier to distribute than assets that pass through a Will, because they are not subject to a court proceeding. That saves time and money when it comes time to distribute the assets.
Elder Law practice is typically focused on preserving assets and income during the client’s lifetime, so that he or she can stay at home as long as possible and lead a comfortable life. In many cases, the biggest financial risk for seniors is the cost of long-term care. Unfortunately, even many people with a substantial net worth can find their life’s savings being rapidly depleted when faced with the need for care.
Once you focus on this problem, it should be clear that if you have an estate plan but not an Elder Law plan, there is a real possibility that you may have little or nothing in your estate by the time you die.
Elder Law planning can help insure that your assets last as long as possible while you are alive, meaning that you may actually have an estate when you die.
Good Elder Law planning can and usually does incorporate estate planning. You should probably have a Will to cover such issues as unexpected assets or guardian issues. However, often a trust can perform all the functions of a Will, while being much simpler to administer. At the same time, your trust will facilitate eligibility for important government benefits, such as Medicaid.