Grandpa died, left everything to a trust. I have questions...

[rmcelwee]

I don't understand "executor of a trust". As far as I know, you're either executor of will or trustee of trust.

I don't know. i'll find out more when she gets back from the funeral and stuff in a few days. Sorry for not having more info.

 

[rmcelwee]

A low income, low asset person can be "dual eligible ". That is, eligible for both Medicare and Medicaid. As you know, Medicare alone doesn't cover all expenses

I know she has been going to an expensive shrink for 10 years or so and that was her big concern about losing benefits. I will get details when my wife gets home.

 

[sheehs1]

The first thing your wife needs to do (if she has not done this) is to get a copy of the trust document and read it carefully. Questions include whether sheis an equal co-trustee and what power she might have to fire the lawyer that you don't trust and replace him/her with a different trustee. Also determine what/how the trust can provide money to her mother. In most trusts the trustee(s) do not control to the ham sandwich level. Possibly she (maybe even without the lawyer) can arrange for mother to get a fixed amount every month. The trust may even be a "special needs" trust which has the goal of not being an asset that disqualifies mother from government benefits. No way around it -- this stuff is complex.

If she does not get satisfaction from the lawyer; good empathy, complete and understandable explanations, etc. then she may have to consult another trusts & estates lawyer. In the extreme she may be able to go to court to have her current co-trustee replaced. A court can also change the terms of the trust but that is a heavy lift.

But the first step is understanding the trust document. She should study it carefully before meeting with the lawyer even if that means the meeting has to be postponed. You can help by doing the same studying. Then you can both have eyes that are glazed over.

+100
Unless the lawyer is named in the trust document, your wife may have most if not all of the power is she is named as primary Trustee. Pay attention to this verbiage in the Trust document.

 

[rmcelwee]

+100
Unless the lawyer is named in the trust document, your wife may have most if not all of the power is she is named as primary Trustee. Pay attention to this verbiage in the Trust document.

She told me over the phone that the lawyer controlled everything, but I have not seen this in writing.

 

[pb4uski]

Perhaps a copy of the trust document is in grandpa's papers.

 

[OldShooter]

@rmcelwee, since we are burying you in suggestions anyway here is one thing to hope for. In some states there is the legal idea of a "Trust Protector." This is a third party named in the trust who has the power to step in and solve problems, including firing a trustee. For our son and grandkids' trusts we have named a younger BFF of DW as Trust Protector. We like the idea a lot.

She told me over the phone that the lawyer controlled everything, but I have not seen this in writing.

"Writing" aka a letter from the lawyer does not control. The trust document controls. If the lawyer claims to control everything but that is not what the trust document says, fire the lawyer and report him/her to the state's professional responsibility board.

 

[Morgan22]

A low income, low asset person can be "dual eligible ". That is, eligible for both Medicare and Medicaid. As you know, Medicare alone doesn't cover all expenses

Grandpa most likely set up the trust so she would not lose her Medicaid benefits. Medicaid picks up almost all of the bills that Medicare does not. An unhealthy 70 year old can blow through $400k easily with medical bills.

I believe there is a rule that her assets cannot be greater than $2k or $2.5k. That includes a checking account. So do not fill up her checking account quarterly as it sounds like you could go over that amount. If you can, pay her bills directly from the trust. Give her some fun money to spend in her checking account.

 

[ivinsfan]

Grandpa most likely set up the trust so she would not lose her Medicaid benefits. Medicaid picks up almost all of the bills that Medicare does not. An unhealthy 70 year old can blow through $400k easily with medical bills.

I believe there is a rule that her assets cannot be greater than $2k or $2.5k. That includes a checking account. So do not fill up her checking account quarterly as it sounds like you could go over that amount. If you can, pay her bills directly from the trust. Give her some fun money to spend in her checking account.

Not really accurate about blowing the money on medical at 70..but you can blow it on lots of other stuff

 

[Morgan22]

Not really accurate about blowing the money on medical at 70..but you can blow it on lots of other stuff

My understanding is if you do not Medicare advantage or Medicare supplement then there is no out of pocket maximum. Medicaid should pick up much of what Medicare does not cover. But maybe she has supplemental insurance also and could afford the co-pays/deductibles? If she does, then agreed, she shouldn't go broke.

 

[rk911]

is the lawyer named as fiduciary in the trust or is it an informal arrangement?

when my FIL died my wife was the trustee of his trust for the benefit of her mother. no lawyer involved beyond creating the trust. my wife paid the bills and cared for her mother in all respects financial and otherwise for 28-years until she passed.

when my BIL passed i was named trustee of his trust (total surprise to me. i found out the day before he died). again no lawyer involvement beyond creating the trust and providing occasional advice. i located and contacted all of his doctors, gathered all outstanding medical bills, sold the house, paid taxes with the assistance of a CPA, managed the investments and finally distributed assets to the beneficiaries

the only experience i have with trusts are those two and our own family trust which also names no lawyer to supervise or approve expenses for our successor trustees. maybe that's unusual. is it?

 

[Animorph]

I'm thinking the lawyer is helping with the estate and setting up the trust. Your wife is most likely the only trustee of the trust itself. That would be normal for a standard revocable trust. In that case your wife is the sole "decider" of what the trust does. I wouldn't expect any more lawyer fees after the estate is settled and the trust is setup.

My DM is the sole trustee of my dad's trust. We got advice from their lawyer about working through the estate requirements and setting up the trust accounts. After that, Fidelity is happy to do whatever she wants them to and no one is watching over her shoulder. Our own trust is very similar.

If all that works out then as long as you can fit 1%/quarter into DMIL's Medicaid income limit it should all work out just like you planned.

Good luck! I'm not looking forward working though this myself when the time comes.

 

[sheehs1]

She told me over the phone that the lawyer controlled everything, but I have not seen this in writing.

Not to beat this to death but you need a copy of both the will and the trust. I'm a bit confused as in the first post you said your wife was executor of the trust. Like others, I imagine you meant either executor of the will or trustee of the trust. But in either case, it doesn't sound like the lawyer controls everything.

The lawyer is bound by duty to give them to all parties named in either document. Does your MIL have copies? Has anyone else asked the lawyer for copies of the documents? Is anyone else named in the documents that legally should get a copy?

What you can do starts with the verbiage in both documents.

 

[rmcelwee]

Lots of suggestions above. Thanks again guys! It will be another week before wife comes home and I get to see the actual documents.

 

[ERD50]

Lots of suggestions above. Thanks again guys! It will be another week before wife comes home and I get to see the actual documents.

Scan & email? Most phones do a pretty good job as replacement for a scanner. You need those documents, you are flailing around in the dark right now.

Condolences. It's a double shame to lose a loved one, and then have to deal with these financial uncertainties/complexities.

-ERD50

 

[EastWest Gal]

Another thing about Medicaid. The $2000 limit is in countable assets, bank account, CDs, etc. With limits, one’s home and car don’t count.

https://www.agingcare.com/Articles/asset-limits-to-qualify-for-medicaid-141681.htm

I think the trust helps keep her eligible for the Medicaid. And she is on Medicare too, of course.

I agree that a lawyer should not be the trust manager. Look at the paperwork, and do what you need to do to get that lawyer out of the picture. Schwab seems to be a good suggestion to me as well. Corporate trust management is objective, and it can keep you at arms length in dealing with her.

 

[Dash man]

@rmcelwee, since we are burying you in suggestions anyway here is one thing to hope for. In some states there is the legal idea of a "Trust Protector." This is a third party named in the trust who has the power to step in and solve problems, including firing a trustee. For our son and grandkids' trusts we have named a younger BFF of DW as Trust Protector. We like the idea a lot.

"Writing" aka a letter from the lawyer does not control. The trust document controls. If the lawyer claims to control everything but that is not what the trust document says, fire the lawyer and report him/her to the state's professional responsibility board.

Yes, in our case the lawyer is the Trust Protector and can change the corporate trustee if they are not doing their job.

 

[rmcelwee]

My wife called me last night. It sounds like she is the trustee of the trust. She was using different terminology but it did sound like she was in charge. I also spoke with my mother and she said back in the day she used to write those types of documents. Can't wait to see the actual papers.

On another note, Grandpa (WWII Navy vet) had a nice military funeral yesterday. They buried his ashes - I had never heard of that before but I do my best to stay away from funerals and weddings. The last funeral I went to was my grandfather's back in 1984. The last wedding I attended was mine back in 1991 at the Justice of the Peace's office (we eloped).

 

[imnontrad]

Check the state guidelines about what is and is not used in the Medicaid calculation. Some include the house & car and others don't. Also, look to see if there is a certain date when their assets for eligibility is calculated. Ad long as their assets ON THAT date meet the criteria is good. So if that date is on the 1st, they can get income on the 2nd way above that - as long as it is spent before the next 1st rolls around.
If the lawyer is not named as a trustee, why can't you fire him? Also, who is handling how the trust is invested? Mayybe another trust department (Vanguard,etc) may have llower fees. Also, don't nickle and dime the trust. Submit all receipts at once for one payment.

 

[BasketCase24]

I'm executor for my recently departed MIL, and also co-trustee with FIL. They recently set up a revocable living trust. I'm now the co-trustee with FIL. A few things I learned, which may or may not be applicable in your state or situation.
1. Co-trustees can act independently. One does not need permission from the other to distribute assets (Because I'm also the executor, I have a fiduciary responsibility to consult with FIL/co-trustee, but he would not need to consult with me.)
2. Trusts have to be set up specifically to be sheltered from being considered an asset for purposes of Medicaid.
3. Having a trust means nothing if the trust has no assets. Assets have to be titled to the trust to be subject to its protection/restrictions.
4. There may be time limits (look back window) for moving assets into a trust established to obtain/maintain Medicaid eligibility.
5. (Not specifically about trusts) Medicaid is a generic term for the state-run process. The state-specific processes differ greatly between states, so make sure you refer to the right rules.
6. An Elder law attorney is worth their weight in gold. The government also keeps a running list of attorneys that are VA certified to work with Veteran's to coordinate benefits, similar to Medicaid.

 

[HGTVFanatic]

Is Medicaid a necessity now? I'm assuming she's eligible for Medicare at age 70. Does she now have enough liquid assets to pay Medicare premiums? That may free you of the need to set up disbursements in a way that still qualifies her for Medicaid.

This is brilliant Athena.

 

[momoftwo]

Not same situation at all but here's some info to consider.

We have an adult diabled daughter. She has Medicaid and more recently Medicare.
The Medicare is way more useful for her for medical needs. BUT the medicaid qualifies her for many state services like community support, habilitation, etc.
She must not have more than 2K in her name.
She has an ABLE account that helps her. She has a special needs trust to hold our assests she will inherit.

I'd recommend finding an elder care/special needs attorney.

Best of luck.

 

[Buckeye]

My wife's grandfather died. Her mother (sole heir) is horrible with money so everything was left in a trust. My wife is great with money and is the executor of the trust. We had great plans to use the money to help her mother out but it seems like this is a horrible way to accomplish it and sounds like it is fantastic way for the lawyer to drain the trust of money. Mother lives in a house owned by grandpa ($100k) and drives a car owned by grandpa ($2k). There is also another house and car. In addition, mother is on medicaid and can only get so much money (about 25K per year including 10K in SocSecurity) before getting kicked off. There is probably around $400K total in property. Mother is a very unhealthy 70 years old.

It sounds to me that every time mother wants a ham sandwich we will pay for it, submit a bill to the trust and the lawyer will give us $2 and keep $75 as a fee (I don't know for sure but I am sure it is somewhat based in fact).

I suggested my wife relinquish the title of executor (or whatever her title is) and just let mother and lawyer handle all of it. Just too much hassle. I really hate to see fees and inflation destroy the money he left. Any extra money given to mother will be completely wasted.

Wife will have another meeting with the lawyer this week and I would like to give her a list of intelligent/important questions to ask. Any suggestions?

Your wife needs to be named as the trustee and take care of paying her mother's expenses. If your mother needs to a controlled way to spend on her own, go to truelinkfinancial.com and set up a debit card account with controls. The cost is $10 per month. No hidden fees. You can decide which expenses you should pay and which expenses she should pay. Pay an accountant to do the taxes. I am the trustee for a special needs trust for a friend (59 y/o) on SSI and TrueLinkFinancial is awesome.

Please do not hand it over to the lawyer. Take control if at all possible. If you hand it over, they will rob her blind and she will be in a bad position trying to advocate for herself. Please don't put her in that position. Keep a very, very close eye on the lawyer and what he is charging if you cannot get your wife named as trustee. Hopefully, the trust document allows for another trustee. Get a copy of the trust document and read for yourself what is possible with respect to who can be the trustee. It will be laid out in black and white. It's a simple piece of paper signed by the lawyer to name your wife as successor trustee.

 

[Retired Expat]

I'm executor for my recently departed MIL, and also co-trustee with FIL. They recently set up a revocable living trust. I'm now the co-trustee with FIL. A few things I learned, which may or may not be applicable in your state or situation.
1. Co-trustees can act independently. One does not need permission from the other to distribute assets (Because I'm also the executor, I have a fiduciary responsibility to consult with FIL/co-trustee, but he would not need to consult with me.)
2. Trusts have to be set up specifically to be sheltered from being considered an asset for purposes of Medicaid.
3. Having a trust means nothing if the trust has no assets. Assets have to be titled to the trust to be subject to its protection/restrictions.
4. There may be time limits (look back window) for moving assets into a trust established to obtain/maintain Medicaid eligibility.
5. (Not specifically about trusts) Medicaid is a generic term for the state-run process. The state-specific processes differ greatly between states, so make sure you refer to the right rules.
6. An Elder law attorney is worth their weight in gold. The government also keeps a running list of attorneys that are VA certified to work with Veteran's to coordinate benefits, similar to Medicaid.

Basketcase24 makes some very good points. #1 that assets need to be in the trust name. I am an expat with no state residency in the USA. Hence no state can administer my Will should I die regarding my US assets. My local assets are subject to the laws of the land and wills can only address a %. The answer to that was creating a trust and moving the majority of my assets into it and having the trust clearly state what should be done (like a will but not). If the assets are not in the trust you have to look at the will. Your MIL may have inherited them out right.

Of course your MIL might be willing to trust her daughter to manage things and give her control now or a share of the control. Perhaps it would be good to discuss with a geriatric and estate attorney. MIL should have medical proxy, living will, real will and so forth. Now my might be a good time to broach those subjects?

 

[Emerson11]

no wonder entitlement programs are in trouble

Doesn't seem right that someone can be the beneficiary of a $400,000 trust and also collect from medicaid, a program implemented to serve those who are truly poor and unable to work. Yet, I have heard people boast about gaming medicaid: paying lawyers to redistribute assets so as to avoid the claw back provisions, preserving big inheritances for offspring, and forcing foolhardy taxpayers to cover long term care for elderly parents. So, I shouldn't be surprised that a trust beneficiary can be subsidized by taxpayers.

 

[athena53]

Yet, I have heard people boast about gaming Medicaid: paying lawyers to redistribute assets so as to avoid the claw back provisions, preserving big inheritances for offspring, and forcing foolhardy taxpayers to cover long term care for elderly parents.

A bit OT but yes, I get "Suggested Posts" in my FB feed for lawyers and seminars that will tell me "how to preserve your assets for your heirs" and how to keep "the government" from taking all your money for LTC. I've responded with a comment that that's what my assets are for, but get either no response or the computer-generated "Hi, Athena53! Thanks for reaching out! Call us at 1-800-CHEATER and we'll tell you more."