Shalloway and Shalloway, P.A.

When Should You Update Estate Planning Documents?

Estate planning document

Just as individuals must visit doctors for check-ups, they should also have their estate planning documents periodically reviewed by an attorney to verify whether updates are needed given any changes in life circumstance. There are many reasons why an individual’s estate planning documents may require updating. Some of those reasons may include: if an individual’s designated agent(s) have passed away or become incapacitated and no successor agents have been named, or if an individual’s named beneficiaries have passed away and no alternate beneficiaries have been named, or if an individual gets divorced, or if the laws relating to estate planning documents change, or if an individual suddenly needs Medicaid coverage to assist with long term medical costs. While some updates may only require the individual to name additional agents or beneficiaries, other updates, such as those needed to perform Medicaid planning, may require more substantive changes.

In order to create and maintain Medicaid eligibility, it is important for the Medicaid applicant to execute estate planning documents geared to that purpose. Since an individual who needs Medicaid for long term care might eventually lack mental capacity or be unable to physically carry out the requisites for Medicaid planning, a durable power of attorney must grant the individual’s attorney-in-fact certain vital powers. If the durable power of attorney document was executed prior to 2011, however, it is possible for it to lack important powers since Florida law relating to powers of attorney changed in 2011. Common issues that may arise with such stale powers of attorney include the agent lacking the power to create a trust on the principal’s behalf or the power to execute a personal service contract on the principal’s behalf.

If the Medicaid applicant is married, then the applicant’s spouse generally needs a new last will and testament because a spouse typically devises most or all of his/her estate to their spouse. This causes a problem, however, since a Medicaid recipient who receives an inheritance is likely to exceed Medicaid’s $2,000 asset cap, thereby causing loss of Medicaid coverage upon receipt of the inheritance. Even if the spouse attempts to disinherit the Medicaid recipient to circumvent this issue, under Florida’s spousal elective share law, the disinherited spouse is entitled to claim 30% of the deceased spouse’s estate. To avoid this problem, the Medicaid recipient’s spouse must execute a last will and testament that creates a qualified elective share special needs trust. This satisfies Florida’s spousal elective share, but does so by keeping the money in a qualified elective share special needs trust, which preserves the Medicaid applicant’s eligibility since money held in such a trust does not constitute a countable asset.

Although there are many reasons to have your estate planning documents reviewed, it is especially important for individuals contemplating Medicaid planning. To that end, an Elder law attorney can ascertain whether your current estate planning documents are adequate for Medicaid planning purposes.      

Shalloway & Shalloway, P.A., is located in West Palm Beach, FL and serves clients in Palm Beach, Broward, Dade, Okeechobee, Martin and St. Lucie Counties.

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