Estate Planning Basics
What is the primary purpose of estate planning?
Estate planning makes sure your assets get to the people you choose, planning can help minimize income, gift and estate taxes, too.
Without an estate plan, and specifically a will, the laws in your state will determine what happens to your possessions, and the courts will decide who gets custody of your children.
True or False: Naming the beneficiary Estate of the Insured will avoid probate.
False.
True or False: A married couple may give $76,000 annually to each of their married children and spouses without using their lifetime exemption.
True.
-An individual can give up to $19,000/yr per person
-An individual can give up to $38,000/yr to a couple
-A married couple can give up to $76,000/yr to another couple
What is the Medicaid asset limit for a single applicant?
In Michigan, a single Medicaid applicant's asset limit is $9,660 effective February 1, 2025
This type of trust allows the person who creates the trust to change or revoke the terms of the trust while they are still alive.
Revocable
Which document is essential for avoiding the probate process?
A living trust is a document used to avoid probate. It allows a person to transfer assets into a trust, retain control over them during their lifetime, and have them distributed to beneficiaries after their death without going through probate court.
True or False: A trust with no assets is still fully effective for estate planning purposes.
False.
What is the 2025 lifetime exemption amount per person?
$13,990,000
What is the average annual cost of private pay nursing care?
$120, 304 for a Private Room
Name 2 legal documents that may be included in an estate plan.
Will
Pour Over Will
Power of Attorney (Financial and/or Healthcare)
Living Trust
Health Care Documents (advance health care directive
List 3 assets that are commonly transferred into a trust?
Bank Accounts
CDs
Real Estate
Life Insurance
Retirement Accounts
What is the function of a quitclaim deed?
Used to transfer real property into a trust without affecting your property taxes
What is the estate tax rate applied to assets exceeding the lifetime exemption?
40%
True or False: A Medicaid recovery claim can apply to assets held in a Lady Bird deed.
False. In Michigan, a Medicaid recovery claim cannot apply to assets held in a Lady Bird deed.
True or False. 529 plans are considered part of the grantor's estate and subject to estate taxes
False.
529 plans are generally not considered part of the grantor's estate and are not subject to estate taxes.
What happens to assets titled in the trust upon death or incapacity?
Assets that are titled in your trust will NOT require probate administration upon your death or incapacity
If a person is purchasing new property, what should be done to ensure it avoids probate?
Be sure the realtor and title company is aware the property should be in the name of the trust
True or False: Life insurance held in an ILIT is typically excluded from the insured’s gross estate.
True.
Life insurance held in an ILIT (Irrevocable Life Insurance Trust) is typically excluded from the insured's gross estate.
How long is the “look-back period” in Medicaid planning.
5 years
An estate tax return must be filed within ______ months of the decendent's date of death.
9 months
Name two common pitfalls of joint ownership in estate planning.
-Unintended tax consequences (gift tax & capital gains tax)
-Claims by creditors
-Unintended disinheritance of descendants
-Loss of control
What is a pour-over will and how does it relate to trust funding?
A Pour-over will ensures any assets not already included in the trust are transferred into it upon your death.
This term describes a person or trustee's right to change a beneficiary on a life insurance policy, convert the policy from term to whole, or to surrender the policy.
"incidents of ownership"
Name 3 non-countable assets in Medicaid planning.
-1 home
-1 vehicle
-Household & Personal Goods
-Life Insurance with a cash amount of $1500 or less
This irrevocable trust is designed to help married couples preserve assets when one spouse needs long-term care and may be seeking Medicaid benefits.
Acceptable responses:
-SBO
-Sole Benefit Trust
-Solely for the Benefit of Trust
-Medicaid Trust