Couple with Disabled Child
Facts: This married couple has a minor son with cerebral palsy who is receiving Medicaid and Medicare. They also have an adult daughter. Although they are not wealthy, the couple has a good sized estate which they want to preserve for their children.
Concerns: Having discussed this matter with their Medicaid case worker, the couple was aware that their son would be ineligible for Medicaid if he had more than $2,000 of assets and that he would have to "spend down" his inheritance to that point before his eligibility would be restored. Our clients sought a way to avoid triggering his ineligibility for government assistance, while preserving as much of the estate as possible for their daughter.
Solution: Our office prepared a Living Revocable Trust for the couple with a Special Needs Provision for their son that will take effect upon the death of the husband and wife. Under the terms of the Special Needs Provision, the Trustee (the couple's daughter) will control the funds and will be able to distribute funds for her brother's benefit - as long as the expenditures will not disqualify him from receiving Medicaid. Finally, upon the son's death any remaining funds will be distributed to the couple's daughter.
Senior Adult with Limited Assets
Facts: The client is a widow of modest means in her early 70's. She owns a small house which she shares with her divorced daughter. In addition, she has an investment account, bank account and annuity. She also has an old will naming her daughter as sole beneficiary.
Concerns: During our initial consultation the client stated that she felt that she did not need (and could not afford) a Living Revocable Trust. However, she wanted to spare her daughter from the time and expense of Probate.
Solution: Our office drafted a Beneficiary Deed that will automatically transfer the client's house to her daughter upon the client's death. We also advised her on methods to transfer her assets and property to her daughter in order to avoid Probate - without executing a new Will or establishing a Living Revocable Trust. The end result is that she has peace of mind knowing that her estate will pass automatically to her daughter without the need for Probate.
Facts: Our client, an only child, came to our office for advice after his father, a widower, had died. His father did not own any real estate and the value of his titled personal property (a bank account and an old car) was less than $50,000.
Concerns: Our client wanted to know how to transfer the property to himself and whether his father's estate would be taxable and/or subject to Probate.
Solution: Because this estate did not include real estate and the aggregate value of the titled property was less than $50,000, we were able to transfer the property to our client without Probate using a Small Estates Affidavit. Furthermore, since Colorado does not have an inheritance tax and the federal estate tax exemption is presently $5,000,000, we were able to assure our client that he was not responsible for any taxes on his inheritance.
Large Estate Subject to Estate Tax
Facts: This client, a widow in her 60's, owns a ranch with a value in excess of $15,000,000. However, as is true with many farmers and ranchers, she was land rich and cash poor.
Concerns: Our client was concerned that her children would be forced to sell the ranch to pay the federal estate tax when she died. She also wanted to avoid having her estate tied up in Probate.
Solution: Using a variety of estate planning tools including a Living Revocable Trust, a Limited Liability Company, an Irrevocable Life Insurance Trust and a Conservation Easement - coupled with an extensive gifting program to her children and grandchildren --- we were able to eliminate both Probate and the federal estate tax. Even better, the Conservation Easement will result in extensive cash flow to our client for the next several years.
Probate for Out of State Decedents
Facts: The deceased parents of our client lived in Texas and had executed a Living Revocable Trust in order to avoid Probate. Unfortunately, they forgot to transfer title to their Colorado vacation condo (which had been held as tenants in common) to their Trust and the property was now in the estates of both parents. As a result, the title company in Colorado would not insure the title, which prevented our clients from selling the property.
Concerns: Our clients had a buyer for the property and needed to remove the "cloud" on the title of the property as quickly as possible in order to preserve the sale.
Solution: Our firm opened up Informal Probate proceedings for both estates, and we were able to complete the sale on time within a few weeks.
Estate Planning for Couple with Children from Previous Marriages
Facts: A married couple, each with children from a previous marriage, came to our office seeking advice on creating an estate plan. Each of them brought assets into the marriage and together they had acquired substantial assets during the marriage.
Concerns: Although the couple had a high level of trust in each other, each wanted to insure that the surviving spouse could not "rewrite" the plan or disinherit the children of the deceased spouse. They each wanted their premarital assets to go to their own children and the marital assets to be divided 50%-50% among the two sets of children. Finally, each of them wanted to insure that the survivor of them had sufficient assets to live on after the death of the other.
Solution: Our office created a Trust for each party that provided that any prenuptial property owned by that person went directly to his or her children upon that person's death, and that his/her share of the marital property be placed in Trust for the surviving spouse. The Trusts further provided that the surviving spouse was to receive all income from the deceased spouse's Trust, as well as principal from the Trust if the surviving spouse exhausted his or her own premarital and marital funds. Finally, the trusts provided that any funds remaining in that person's Trust would go to that spouse's children after the death of the surviving spouse.
Facts: An Executor of an estate being probated in Oklahoma contacted our firm when she discovered that the deceased held title to mineral interests in Colorado.
Concerns: The Executor wanted to close the estate in Oklahoma, but could not do so until the Colorado mineral interests could be distributed to the heirs. She also was concerned that she would have to open Probate in Colorado.
Solution: As this client had already been appointed as Executor in Oklahoma, we were able to utilize a simplified process referred to as Ancillary Probate in order to have her authority recognized in Colorado. Our office prepared a Personal Representative's Deed to distribute the property to the heirs and she was able to close the Oklahoma Probate.
Facts: These clients, who were in their late sixties, had limited resources - a modest home, a car and less than $200,000 in cash and investments. Although our clients were in average health, both sets of their parents had been in long term care facilities and wound up applying for Medicaid. Our clients did not have (and could not afford) the cost of long term care insurance.
Concerns: Our clients wanted to preserve their assets (and in particular their home) for their children, if either or both of them wound up applying for Medicaid. They also wanted to know what assets were exempt under the laws pertaining to Medicaid and if they could gift their property to their children.
Solution: Our office prepared a life estate deed transferring their residence to their children subject to our client's right to live in the property during their lifetime. Under Medicaid laws and regulations, Medicaid cannot seize the residence or place a lien on the property if five (5) years have passed between the date of the transfer and the date that the person applies for Medicaid. We also met with our clients to discuss converting assets that are "countable" under Medicaid to "non-countable" assets. By doing so the clients were able to exempt most of their property in the event that they apply for Medicaid at a later date.
Guardianship, Conservatorship and Divorce
Facts: Our client was referred to our office by her divorce attorney. She was reluctantly seeking a divorce from her husband, who was a resident in a secure Alzheimer's unit, in order to preserve her pre-marital assets. Because of her husband's incapacity, the Court required that a Guardian and Conservator be appointed to represent the husband, and our client's son agreed to fill those roles.
Concerns: Our client was interested in finalizing the divorce as soon as possible in order to preserve her non-marital funds. In addition she wanted to make sure that her soon to be ex-husband would be properly cared for after the divorce.
Solution: Our firm successfully petitioned the Probate Court for appointment of the son as Guardian and Conservator. Later, when it was determined by the son that his father should be moved to a Texas facility, our firm successfully petitioned the Probate Court for an Order allowing the move.