1. With Consideration for Those Living With Chronic Illness By: Martin M. Shenkman, CPA, MBA, PFS, AEP, JD

2. CaveatsCaveats Nothing in these slides or any accompanying presentation is to be considered tax, legal, investment or other professional advice. The information is merely provided for educational purposes and no action should be taken without the individual consulting his or her own tax, estate, legal, financial, investment, insurance and other advisers. The hosts and sponsors of this program are NOT responsible for its content or accuracy

3. Revocable Living Trusts - Introduction What is this powerful document? What is this powerful document?

4. What is a Revocable Living Trust? Also called Living Trust, Loving Trust, or Inter-Vivos Revocable Trust Also called Living Trust, Loving Trust, or Inter-Vivos Revocable Trust Revocable – you can change it anytime Revocable – you can change it anytime Can be used to avoid probate but this popular goal is not the key benefit of this technique Can be used to avoid probate but this popular goal is not the key benefit of this technique Use to consolidate and manage your assets during disability Use to consolidate and manage your assets during disability It is the most powerful tool to manage assets if you cannot do so It is the most powerful tool to manage assets if you cannot do so

5. Tips: Revocable Living Trust Your will and power of attorney must be coordinated Your will and power of attorney must be coordinated Boilerplate trusts designed to avoid probate wont accomplish your goals Boilerplate trusts designed to avoid probate wont accomplish your goals Focus of document should be protecting you and communicating your wishes as your disease progresses Focus of document should be protecting you and communicating your wishes as your disease progresses Tailor trustee replacement, disability and other provisions to the nuances of your anticipated disease course Tailor trustee replacement, disability and other provisions to the nuances of your anticipated disease course Assets must be transferred to the trust to gain the most benefit – but some assets should not be transferred (e.g., IRA). Assets must be transferred to the trust to gain the most benefit – but some assets should not be transferred (e.g., IRA).

6. Tailor your Revocable Trust Planning to Your Needs Every person is unique – it has to be your plan, your trust, and address your challenges Every person is unique – it has to be your plan, your trust, and address your challenges Reflect your personal wishes and circumstances Reflect your personal wishes and circumstances Tailor the document to address your unique assets (e.g. a closely held business) Tailor the document to address your unique assets (e.g. a closely held business)

7. Chronic Illness is Common – Trust Now Dont Wait 120 million Americans are living with chronic illness or disability By 2020, about 157 million Americans will be afflicted by chronic illnesses 26% of those ages 65-74 have had their lives significantly impacted by chronic illness 50% of those age 85 and older have had some cognitive impairment 9 million people are cancer survivors with various side effects from treatment A living trust plan created early after your diagnosis with a chronic illness can protect you and your loved ones

8. Watch Out For Hyperbole and Sales Pitches There are many hucksters pushing living trusts to play on peoples fears of probate and taxes There are many hucksters pushing living trusts to play on peoples fears of probate and taxes Only 5,600 estates a year will pay a federal estate tax – few are affected (but state estate tax may still bite) Only 5,600 estates a year will pay a federal estate tax – few are affected (but state estate tax may still bite) Tax savings can be accomplished in a will or by planning, a living trust is not necessary for this Tax savings can be accomplished in a will or by planning, a living trust is not necessary for this Probate is not as costly, difficult or evil as often portrayed by those hustling trusts Probate is not as costly, difficult or evil as often portrayed by those hustling trusts The above detract from the most powerful use of a living trust – namely managing assets in disability The above detract from the most powerful use of a living trust – namely managing assets in disability

9. Revocable Living Trusts – Plan your Trust Agreement How to plan your trust document How to plan your trust document

10. Create Your Revocable Living Trust Establish a personalized (not boilerplate) living trust Establish a personalized (not boilerplate) living trust Include provisions to address your specific health issues Include provisions to address your specific health issues Avoid probate and intestacy Avoid probate and intestacy Manage assets during disability or illness Manage assets during disability or illness

11. Living Trust – What do you Need Trust agreement – a contract between you and the trustee (which might be you, but read on) Trust agreement – a contract between you and the trustee (which might be you, but read on) Tax identification number (but check with your CPA) Tax identification number (but check with your CPA) Documents to transfer assets to your living trust once signed Documents to transfer assets to your living trust once signed Paperwork to open a trust bank account Paperwork to open a trust bank account

12. Living Trust – Naming Trustees Who should be trustee? Who should be trustee? Should you name two co-trustees at inception? Should you name two co-trustees at inception? Should you be a trustee? Should you be a trustee? Who should be successor trustees? Who should be successor trustees? When should successor trustees step in? When should successor trustees step in?

13. Living Trust – Different Time Periods to Address Your living trust might have different provisions to address different time periods more specifically Your living trust might have different provisions to address different time periods more specifically #1 Youre alive and well – you might be a sole or co-trustee and simply manage assets in the trust name #1 Youre alive and well – you might be a sole or co-trustee and simply manage assets in the trust name #2 Youre disabled – a co-trustee and successor might take over #2 Youre disabled – a co-trustee and successor might take over #3 After death – it will function like a will disposing of your assets #3 After death – it will function like a will disposing of your assets

14. Living Trust – Special Trustee Provisions for Chronic Illness Perhaps you should remain a co-trustee to stay in control of your finances but have a co-trustee that can act if you have an attack or are hospitalized Perhaps you should remain a co-trustee to stay in control of your finances but have a co-trustee that can act if you have an attack or are hospitalized Standard language removing a trustee who is disabled may not suffice perhaps the co-trustee can be authorized to take certain actions alone if you cannot act Standard language removing a trustee who is disabled may not suffice perhaps the co-trustee can be authorized to take certain actions alone if you cannot act Consider a 30 day disability period so a short hospitalization wont affect it Consider a 30 day disability period so a short hospitalization wont affect it

15. Living Trust – Special Distribution Provisions for Chronic Illness Include details as to the care and other decisions you want to guide or control the trustees when you are not able to serve Include details as to the care and other decisions you want to guide or control the trustees when you are not able to serve Direct the trustee to pay for medical care decisions authorized or directed by your health care agent (to avoid conflicts) Direct the trustee to pay for medical care decisions authorized or directed by your health care agent (to avoid conflicts) If you should not serve as trustee consider a small dollar bank account outside the trust to enable you to shop and spend reasonably without jeopardizing the trust assets If you should not serve as trustee consider a small dollar bank account outside the trust to enable you to shop and spend reasonably without jeopardizing the trust assets

16. Living Trusts – Hire a Lawyer Be very wary of internet forms – they are limited in how they can be tailored and wont address your special circumstances (e.g. chronic illness) Be very wary of internet forms – they are limited in how they can be tailored and wont address your special circumstances (e.g. chronic illness) You can fill out forms cheap on line but even if the forms were good – you cant get a website or cheap form to substitute for decades + of real experience You can fill out forms cheap on line but even if the forms were good – you cant get a website or cheap form to substitute for decades + of real experience Hire an attorney in your state that devotes a substantial portion of his or her practice to estate and trust planning Hire an attorney in your state that devotes a substantial portion of his or her practice to estate and trust planning If the attorney cannot tell you reasons not to use a trust, as well as reasons to use a trust, go elsewhere – no decisions are absolute If the attorney cannot tell you reasons not to use a trust, as well as reasons to use a trust, go elsewhere – no decisions are absolute

17. RV Tips – Planning Your Living Trust Hire a lawyer in the state you claim is where you reside and are domiciled – that is a tie to that state to support your position (but alone will never be enough, its just one factor) Hire a lawyer in the state you claim is where you reside and are domiciled – that is a tie to that state to support your position (but alone will never be enough, its just one factor) Rvers, or anyone who facing tax uncertainty as to which state they reside in (or in which they are domiciled), should consider the address designated in their trust and which state law is indicated to apply Rvers, or anyone who facing tax uncertainty as to which state they reside in (or in which they are domiciled), should consider the address designated in their trust and which state law is indicated to apply Where are the assets are that will be transferred to the trust Where are the assets are that will be transferred to the trust Where should you sign your trust – in the state you claim is your residence and domicile Where should you sign your trust – in the state you claim is your residence and domicile Can you use formalities for your trust that are more likely to be accepted in other states (e.g., 3 witnesses and a notary) Can you use formalities for your trust that are more likely to be accepted in other states (e.g., 3 witnesses and a notary)

18. Revocable Living Trusts – Get Organized Keeping the confusing names of legal documents clear Keeping the confusing names of legal documents clear

19. Organize Emergency, Financial, Information and Advisors Information Without organization your trust will be of marginal help Without organization your trust will be of marginal help Contact People (names, numbers) Contact People (names, numbers) Financial Information (account information) Financial Information (account information) Passwords and Security Codes Passwords and Security Codes Documents (Estate planning documents, legal documents, and more) Documents (Estate planning documents, legal documents, and more) Budget and Plan Budget and Plan

20. Financial Information is Critical to Organize for your Trust to Succeed Title to Accounts Title to Accounts Change appropriate assets to your trust Change appropriate assets to your trust Dont transfer IRAs, professional practices and other inappropriate assets Dont transfer IRAs, professional practices and other inappropriate assets Beneficiary designations Beneficiary designations Coordinate with trust beneficiary provisions for assets transferred Coordinate with trust beneficiary provisions for assets transferred Account Management Account Management Duplicate statements Duplicate statements Consolidation and simplification Consolidation and simplification Automation Automation Organizing records Organizing records On line payments On line payments Automatic deposits Automatic deposits A trust without more is not enough A trust without more is not enough

21. RV Tips on Organizing Financial Info and Using Living Trusts Rvers, or anyone who travels extensively, should take extra precautions to make sure information is available when needed Rvers, or anyone who travels extensively, should take extra precautions to make sure information is available when needed When determining where to keep accounts consider tax issues of residency/domicile When determining where to keep accounts consider tax issues of residency/domicile Consider transferring all permitted (appropriate) assets to your living trust but retaining a bank account in your own name in the state where you believe you are domiciled Consider transferring all permitted (appropriate) assets to your living trust but retaining a bank account in your own name in the state where you believe you are domiciled Ask an attorney in the state where you own real estate or tangible property (collectibles) if transferring the assets to your trust will be sufficient to cut tax ties to that state (it may avoid probate but not solve your state income or estate tax issue) Ask an attorney in the state where you own real estate or tangible property (collectibles) if transferring the assets to your trust will be sufficient to cut tax ties to that state (it may avoid probate but not solve your state income or estate tax issue)

22. Revocable Living Trusts – Relationship to Other Documents Keeping the confusing names of legal documents clear Keeping the confusing names of legal documents clear

23. Overview of Estate Planning and Living Trusts Powers of Attorney Powers of Attorney Only relevant to assets not transferred to your living trust Only relevant to assets not transferred to your living trust Why standard forms arent suffice Why standard forms arent suffice Special provisions to include to coordinate with living trust Special provisions to include to coordinate with living trust Living Wills Living Wills Trustee of living trust might fund medical bills Trustee of living trust might fund medical bills Address specific health issues Address specific health issues Experimental procedures Experimental procedures Organ and tissue donations Organ and tissue donations Health Proxies Selecting agent What is different for you if you live with chronic illness Trustee should follow agents health care directions Revocable Living Trusts Often the keystone of your plan Boilerplate forms rarely address nuances needed Coordinate with other documents

24. How does a living trust compare to a will and power of attorney? Will – disposes of your assets after death Will – disposes of your assets after death Power of attorney gives an agent authority to handle certain legal and tax matters while you are alive and often while you are disabled Power of attorney gives an agent authority to handle certain legal and tax matters while you are alive and often while you are disabled Living trust can address both and catch gaps in the other documents – trustee holds legal title to your assets and may be able to act more quickly and with less issues than an agent under a power of attorney Living trust can address both and catch gaps in the other documents – trustee holds legal title to your assets and may be able to act more quickly and with less issues than an agent under a power of attorney

25. Will: Consider a Pour Over Will

26. Revocable Living Trusts – Ancillary Steps Follow up steps must be addressed to make your living trust plan works Follow up steps must be addressed to make your living trust plan works

27. RV Tips for Living Trusts Using a living trust can consolidate assets, minimize the likelihood of other states claiming that their law applies, and make management of your assets easier by a family member or friend who lives at a distance from where you are – but you have to get assets transferred to the trust (watch which ones) to accomplish this Using a living trust can consolidate assets, minimize the likelihood of other states claiming that their law applies, and make management of your assets easier by a family member or friend who lives at a distance from where you are – but you have to get assets transferred to the trust (watch which ones) to accomplish this Living trusts alone will not suffice for many planning needs -- you might benefit from a limited liability company to own real estate or tangibles – consult a lawyer in the state where the assets are located, in addition to the lawyer you hire in the state you claim is your domicile Living trusts alone will not suffice for many planning needs -- you might benefit from a limited liability company to own real estate or tangibles – consult a lawyer in the state where the assets are located, in addition to the lawyer you hire in the state you claim is your domicile

28. Insurance Coverage May Have to Be Updated Property, casualty, liability insurance Property, casualty, liability insurance If assets are transferred to your trust update coverage If assets are transferred to your trust update coverage

29. Insurance Coverage Considerations Dont make assumptions – get every insurance coverage reviewed before transferring an asset to your trust, and at least every 2 years Dont make assumptions – get every insurance coverage reviewed before transferring an asset to your trust, and at least every 2 years You might need to name the trustee and trust as owner of your home to assure proper coverage You might need to name the trustee and trust as owner of your home to assure proper coverage

30. Beneficiary Designations May Need Updating Consider all beneficiary designations for assets transferred to your living trust – the trust is a new account and youll need forms Consider all beneficiary designations for assets transferred to your living trust – the trust is a new account and youll need forms Obtain copies of the forms you file and keep them with trust records Obtain copies of the forms you file and keep them with trust records Note: IRA, pension (and often life insurance) should generally not be transferred to your trust Note: IRA, pension (and often life insurance) should generally not be transferred to your trust

31. Revocable Living Trusts – Consider Everyone Affected Family, loved ones, trustees must all be considered to make your living trust plan work Family, loved ones, trustees must all be considered to make your living trust plan work

32. Provide for Loved Ones While the discussions above focused on using a living trust to protect you, also be sure to provide for your loved ones While the discussions above focused on using a living trust to protect you, also be sure to provide for your loved ones

33. Communicate Educate and inform your fiduciaries Educate and inform your fiduciaries Preparation of beneficiaries Preparation of beneficiaries

34. Communication Tips Explain your finances, family, care, disease, and so forth to your advisers – tell all so they can help properly Explain your finances, family, care, disease, and so forth to your advisers – tell all so they can help properly Discuss with family, friends or others involved in your life what help you might need Discuss with family, friends or others involved in your life what help you might need Can the trustee you named really be counted on? Have alternatives Can the trustee you named really be counted on? Have alternatives Express your wishes in face to face meetings and then confirm key points in writing Express your wishes in face to face meetings and then confirm key points in writing

35. Revocable Living Trusts – Its a Process Monitor, review and revise regularly Monitor, review and revise regularly

36. Review, Revisit, Revise Nothing remains static Nothing remains static –Tax and property laws –Family situations –Assets and net worth –Health

37. Revocable Living Trusts – Get Started Planning is great – but implement! Planning is great – but implement!