Estate & Life Planning

                  People frequently think of estate planning as preparation for death but that is only a part of the equation. With advances in modern medical science and people paying more attention to their health, Americans are living longer than those born just 150 years ago. So, we need to plan not just for death but for living in an uncertain future. Also, we should not think that the planning is only for the rich. Nor is it wise to wait until old age to begin planning.  Your plans for life and death should start young and be reviewed and revised as you age and your circumstances change. The right plan, revised as needed, can save you and your family headaches, heartaches and a good deal of money.
                  The plan you need may be simple and inexpensive or complex and expensive depending on your circumstances. For example, a man or woman in their twenties or thirties might be inclined to delay planning with the idea they are too young to really need it now. If you fall into that category, ask yourself these questions:

  • If I die tomorrow, what will happen to my property? Will it go to the people I want to have it?
  • If I am seriously injured, who will take care of my business and what kind of problems will they have with banks, insurance companies, my employer and the government?
  • If I am catastrophically injured, who will make decisions about my medical care? Will I be kept on life support indefinitely even though that isn’t what I want?
  • What if my spouse and I die while on a trip together, who will take care of my children? How do I know the property or insurance I leave my children will actually be used for their care and benefit?
  • What will happen to my business if something happens to me and I cannot work anymore?

                  If you cannot answer those questions with certainty, you need to make a plan. A simple will, two powers of attorney, and a bit of advice from an attorney requires only a small investment, but can give you peace of mind and protect you and your family. Answers to some of these questions and information that may be more helpful with your situation are found in the FAQs below.
                  If you are older and have a bit more in the way of property, you still have the same issues as the young people, but you have some new ones and your solutions may be more complex. Also, you are thinking about the possibility of retirement or the need to stretch your money, not only for your benefit but also for your family. Questions you might ask are as follows:

  • Will I owe estate taxes? If so, what can I do to reduce or eliminate them?
  • How do I avoid spending all of my money for nursing home care?
  • I plan to remarry and I want to be sure my children by my first wife get what she and I accumulated together.
  • How do I leave my property to my adult child and insure they don’t squander it or lose it in a divorce?
  • Is there other income I may be entitled to because of disability or poor health?
  • Can I make changes in my estate now that will avoid future problems, maximize my estate, and insure that my family gets the largest possible share?

                  There are answers to these questions as well, but, as you get older, you lose the advantage of time. Making plans at an age where you can carry them out is important. When age or ill health cut that time short, it may be too late to plan. Again, see the FAQs below.

WHAT WILL MY ESTATE INCLUDE AT THE TIME OF MY DEATH? This is not the most frequently asked question but it should be at the top of the list. Most people think they know the answer but do not. In fact, what counts as your estate for tax purposes and what counts for your estate when carrying out the provisions of your will may be two different things. People assume everything is controlled by a well written will but that is far from true; your life insurance goes to the beneficiaries you have named, your bank account goes to those you have set up as joint owners (like the joint bank account with your spouse), your retirement account goes to a named beneficiary, and you may have other property that passes "outside" of
  • the will. It is not unusual to find that a will presented for possible probate is meaningless; most or all of the deceased person’s property passed to others outside the will. However, even some property passing outside of the will is counted by the IRS for tax purposes. So, having a will is not enough; you must have a plan.
  • IF I DIE WITHOUT A WILL, WHAT WILL HAPPEN TO MY PROPERTY? In Mississippi, if you die without a will, your property passes to your spouse and your children in equal shares. If you have no spouse, then it passes to the children equally. If a child is already deceased, their part passes to their children in equal parts. If you leave no spouse and no descendant, your property passes to your living parents and brothers and sisters.  Next, you have cousins but you should have the idea by now. Generally, these are not the choices people would make for their property. All of this can be avoided with a proper will or will substitute.
  • CAN I DO ANYTHING I WANT WITH MY PROPERTY IN MY WILL? Almost, but not quite. You cannot do anything illegal and there are few laws that place some limits on your choices. The rule against perpetuities limits how far into the future you can delay vesting of gifts by will. Also, if you have a spouse, he or she is entitled to a minimum share of your estate which changes depending on the number of children and the value of his or her independent estate. State law may also impose a lien on some of your property if you receive certain Medicaid benefits. Remember, there are also alternatives to a will, such as trusts, deeds, and other vehicles mentioned in other FAQs, which may give you more flexibility.
  • WHAT IS A SIMPLE WILL AND HOW DOES IT HELP ME? A simple will generally passes all of your property to one or more named individuals, makes provision for payment of your debts, and selects the person or persons you would like to manage your affairs after you are gone. It also dispenses with some expenses your estate (and therefore your family) would incur as a result of your death. For example, state law requires that your property be inventoried and appraised and your estate representative must make one or more accountings of money received and spent in winding up your affairs. Also, a bond for the value of your personal property, which is generally purchased from an insurance company, must be posted. All of those requirements, which can cost from several hundred to a few thousand dollars, may be waived in a properly drafted will. Possibly the biggest benefit is the knowledge that your property will go to the loved ones you designate.
  • WHAT IS A TRUST AND HOW DOES IT WORK? There are numerous types of trusts used to do a great many things. Once set up and operating, a trust is a legal entity or legal person. It may have its own tax identification number and may file a tax return. A trust holds property, may have a bank account, and someone is designated to operate it. In order to be recognized in Mississippi, the trust (or a substitute called a certificate) must be filed in the county records to be recognized.  A “testamentary” trust is one included in a more complex will that only takes effect on death and perhaps on the occurrence of other conditions, such as children or grandchildren still being minors. A trust may also be set up during one’s lifetime, it can be revocable or irrevocable, and it can be for the benefit of the person establishing it or for others or for both.  If you transfer all of your property to a lifetime trust, you may well avoid the probate of a will because the trust goes on without you.  Trusts are suited to those that want more control of property after they are gone and there are may be tax and other benefits to be gained depending on your specific situation.
  • WHAT PART DOES MEDICAID PLAY IN MY ESTATE PLANNING? Sometimes, a very big part. More and more people are going into nursing homes and living there for a year or more. Everyone wants to live and die at home but we must realize that is not always practical or even possible. Frequently, the specialized care needed is not available at home and, other times, there is no spouse or child who is capable of the physical demands or available for around the clock care. The cost of nursing home care in Northeast Mississippi is around $ 6,000.00 per month (in 2010) and, like all health care costs, will rise. The cost of in-home care is only slightly less and that does not included any specialized care which would require a nurse. At $ 72,000.00 per year, even a fair sized estate can be depleted quickly, leaving nothing for the person who worked for that property or that person’s family. If a person does not have liquid assets or money to pay for nursing home care, Medicaid will pay all that is not covered by their social security benefits. However, Medicaid then has a lien on that person’s home and other property when they pass away.  For more, see the next FAQ.
  • DO I QUALIFY FOR NURSING HOME CARE PROVIDED BY MEDICAID?  Medicaid is funded by federal and state money and the federal government has guidelines the states must follow to receive federal funding. The guidelines for eligibility for Medicaid, changes from time to time. For 2011, to qualify for Medicaid, you must fall within the property and income guidelines. Those are as follows:
    • Your income cannot exceed $ 1,267.00 per month;
    • You have $4,000.00 or less in cash;
    • You can own one home, however this will be subject to a lien by Medicaid at the time of your death;
    • You may have two cars;
    • You may have a prepaid burial and a cemetery plot with some limits on cost;
    • You may have the usual furniture and appliances for a home; and
    • You may have some rental property which meets very specific criteria.
The eligibility is somewhat greater for couples and, as indicated above, these guidelines are subject to change. To be sure you have the most up-to-date information please follow this link: The income requirement may be overcome by a Miller Trust (named for the court case that approved the format) and the property and lien provisions may be overcome by advance planning. The most important point to remember is that Medicaid counts not only property you own to determine eligibility, it also counts property you gifted away within the five years prior to application for Medicaid nursing home benefits.  This is called a “look back” period. So, if you gave your home, valued at $ 60,000.00 to your children the year before applying to Medicaid for nursing home care, you will probably be disqualified for Medicaid assistance for 10 months (assuming $6,000.00 per month for nursing home care). As a result, if you want to preserve your property

for your family, you must start planning well before you might need nursing home services and Medicaid.

  • WHAT CAN I DO TO QUALIFY FOR MEDICAID AND STILL LEAVE MY PROPERTY TO MY FAMILY? If you plan far enough ahead, you have options. Be sure to read the preceding FAQ response. Depending on many factors, it is possible to gift away your property more than five years before you will need nursing home care, which will qualify you for Medicaid, and still leave all or most of that property to your loved ones. This is accomplished with a trust tailored to your specific situation considering many factors. A qualified attorney must guide you through this process.
  • WHAT DOES MY ATTORNEY NEED TO HELP ME MAKE A PLAN FOR LIFE AND DEATH? When you meet with the attorney, you need to give him a list of your assets with approximate values and an idea of your total debt. You should be prepared to tell the attorney the goals you have and how you would like your property distributed upon death or later. If you believe your net estate (the value of all property less your total debt) will approach $ 1,000,000.00, your asset list should be detailed but need not include routine household items unless they are truly valuable (antiques, oriental rugs, collections, etc.). Be sure to account for all real estate, bank accounts, stocks, bonds, precious metals and gems, retirement accounts, and other substantial assets.
  • WHEN IS THE CORRECT TIME TO CONSULT AN ATTORNEY ABOUT SETTING UP OR REVISING MY LIFE AND ESTATE PLAN? Now is the time to start planning, if you are an adult and own any property at all. Your plan should be revised or, at least revision should be considered, on the happening of any of the following events:
    • If you are contemplating marriage, you may need to consider a prenuptial agreement. There are two situations where these are more important. First, if you have a substantial estate and are concerned about protecting it in the event of divorce, an agreement BEFORE the marriage is imperative. Second, if you are marring for the second time and want insure that the property you (or you and your late spouse) accumulated passes to your children, a prenuptial agreement is probably a good idea. It may well allay tension between your children and the new step mother or father.
    • You divorce. Most likely, you would prefer that your ex not inherit from you and, if you have children, you need to decide who will manage their inheritance if something happens to you before they reach majority.
    • More children join the family through birth or adoption. There are rules for interpreting wills where children born after the will is written are not mentioned, but, again, it is best to insure your wishes are carried out.
    • Death of a spouse or child (or anyone else included in your will).
    • You plan to go into business with others, whether as a partnership, a corporation or a limited liability company.  If you are in business with others as joint owners, that means you have assets tied up (and possibly joint debts you owe) and the last thing your family (or your partners) need is joint ownership of a business. The family (possibly including minor children) may be involved in a business they know nothing about and have no interest in operating. The partner probably doesn’t want to be in business with your family either. The solution is to have an agreement, in advance, to guide all involved in separating the interests. Your family will need to get your value out of the business and your partner will need the ability to hold and operate the business.


                  A will is nothing more than your instructions for passing your property after your death and designating an estate representative to follow your instructions and wind up your personal and business affairs. Sounds simple but it is not. If you do not have a will, your property passes according to State law and you cannot be sure who will handle your affairs. Additionally, a will is not the only legal document that controls your disposition of property and most people are not aware of that.  To prepare a will, your attorney needs to know generally what property you own (and the value), what debts you owe, who your family members are, who you want to have what property , and who you trust to deal with your property and your heirs after you are gone. 
                  It is possible to prepare your own will and lawyers love it when people do. Then they get to clean up the mess.  Although a holographic will is valid in Mississippi, there are certain requirements that must be met for it to be recognized by the Courts.  Plus, there is an art to wording the will correctly so that no confusion arises.  Finally, many assume, incorrectly, that a simple will can control the disposition of all property. The cost of will preparation by a qualified attorney, more than pays for itself after you are gone.
                  Please read the topic “Estate and Life Planning,” for more comprehensive information and also the sections on Powers of Attorney.

                  A power of attorney allows you to appoint someone to handle your business affairs if you are incapacitated for any reason. You can appoint one person, two persons to act together, or alternates if one of the two is unavailable. The person(s) designated, called an attorney-in-fact, can do almost everything you could do if you were able. The can sign checks, take out loans, and transact most business for you. There are some legal limits to the attorney-in-fact’s authority but not many. Therefore, you must appoint a person (or persons) that you trust to manage your business. Handling your business is separate from managing your health care, so please read the section on Health Care Powers of Attorney.

                  A health care power of attorney allows you to appoint one or more persons to make your health care decisions if you are not capable. Most people remember the tragic case of Terry Schivo who suffered severe brain damage resulting in her living in an institution, dependent on a feeding tube and equipment to help her breath. Her husband and her parents fought over the right to decide whether or not life support would be pulled or continued indefinitely. The court battle continued for years and her fate was debated in the United States Congress. The whole dispute was over Terry’s wishes. Sadly, she left no directive to guide the doctors or the courts.
                  You can decide whether to pull the plug and when. Your health care power of attorney can also give other directions such as organ donation.  The important things are that they let you decide who decides and you make your wishes on the matter crystal clear.