Chapter 8: Estate Planning for Special Situations Flashcards
What is a conservatorship?
A fiduciary relationship created by law for the purpose of enabling one person (the conservator) to manage the property of another (the ward)
The conservator:
- must act prudently
- Does not take the title of the property.
- Must make annual filings and reports with the court
Formal court proceeding
What are springing powers?
When the powers of a Power of attorney only become effective once the principal becomes incapacitated.
If used, the document
What is a joint convenience checking account?
Ensures incompetent persons bills are paid and funds available by signing someone up with the ability to manage the account.
What is a do not resuscitate order (DNR)?
A DNR specifies whether emergency resuscitation is or is not to be done. Typically declared in the living will or other medical declaration.
What is a do not resuscitate order (DNR)?
A DNR specifies whether emergency resuscitation is or is not to be done. Typically declared in the living will or other medical decleration.
What is durable power of attorney for health care (DPOAHC)?
Someone who has the right to make end of life decisions for another specified individual
Always springing
What is a living will?
A document that someone creates for themself to give directions concerning medical treatment at the end of life
What is a living will?
A document that someone creates for themself to give directions concerning medical treatment at the end of life.
Applicable when the person is terminal or similar condition
What is a qualified domestic relations order (QDRO)?
A court order recognizing a claimant’s right to receive all or some of the benefits from a qualified plan to satisfy obligation to pay child support, alimony, or marital property rights.
What is a noncitizen spouse and transfer tax implications??
Federal Gift Tax
- Transfers to a alien recipient don’t qualify for the unlimited marital deduction
- May qualify for the supper annual exclusion instead ($159,000)
Gift splitting is not allowed
Federal Estate Tax
-If the citizen spouse dies first, they must claim the fulll amount of assets in their gross estate
What is a qualified domestic trust (QDOT)?
When one spouse dies and the remaining is an alien spouse, the only way that the alien spouse can receive a marital deduction is through a QDOT.
What is a property agreement?
AKA a prenup
Clarifies their respective property rights in the event of death or divorce
Answers:
- Who is responsible for debts?
- What contract
What are advantages and disadvantages of conservatorships and guardianships?
Advantages
- Provide continuing care and supervision
- protect and productively manage property
- oversight, supervision, and enforcement of the court
Disadvantages
- dehumanizing
- uncertain, time consuming, costly
- inflexible as to powers granted
- not suitable for all cases
- uncertain
- expenseive way to manage property
What are strategies for non spouse partners to avoid transfer tax?
During life:
- Gifting with the annual exclusion
- Converting solely owned property into tenancy in common
At death:
- bequeathing property to the other cohabitant
- making charitable bequests
- using life insurance
What is a supplemental trust?
A non-self-settled trust established and funded by the grantor for the benefit of another individual. Assets in the trust are used at the discretion of the trustee to purchase supplemental items for the beneficiary. Ex: The assets are not an available resource to the beneficiary, rather they are used for something specific like a wheelchair vehicle
This keeps the assets out of consideration when applying for Medicaid of SSI
Requirements:
- beneficiary does not have authority of distributions
- trust assets only for supplemental needs, not support
- trust can only have one lifetime bene
- trust is irrevocable
