Most attorneys will recommend separate trusts for couples in separate-property states such as Virginia (as opposed to community property states such as California), although there are a few reasons why couples may want to consider joint trusts.
 
 
Reasons to Choose a Joint Trust Over a Separate Trusts in a Separate Property State
 
 
Joint trusts are consistent with clients’ view of marital assets
 
Many spouses see a joint trust as more consistent with their views of marital property. Instead of treating each asset as “his” or “hers,” all assets are viewed as “ours” by virtue of their inclusion in a single joint trust. This allows clients to avoid the sometimes-contentious process of deciding how marital assets should be divided to fund separate trusts.
 
 
Joint trusts involve the creation of only one trust instrument, which may save attorneys’ fees
 
Clients often view joint trusts as a cheaper alternative to a two-trust estate plan. Whether this will be true depends on the estate planning attorney’s fee structure. Drafting a joint trust can—in some circumstances—be a more time-intensive undertaking than drafting two separate trusts, and many attorneys charge accordingly. Regardless of whether the attorney actually charges less for a joint trust, many clients believe that the fees should be less because the attorney is only preparing one document instead of two.
 
 
Ease of administration during lifetime
 
If both spouses are bringing relatively the same amount of assets into the marriage and don’t have significant issues with creditors to worry about, a joint revocable living trust would be the easiest solution during their lifetimes.  Creating a joint trust may save time and costs to set up and fund as they are typically more straightforward than setting up separate trusts. You may also save extra steps when it’s tax time each year by not having to have an individual tax return for your spouse’s trust and yours.
 
 
Reasons to Choose a Separate Trust Over a Joint Trusts in a Separate Property State
 
 
 
In separate-property states, separate trusts will often be the better choice for married couples with a sweetheart estate plan (at the death of the first spouse, all is left to the surviving spouse, then to the children at the death of the surviving spouse). The benefits of enhanced asset protection, ease of administration, and greater flexibility usually outweigh the psychological benefit of a joint trust.
 
 
 
Enhanced asset protection
 
As a general rule, assets held in a revocable trust are subject to creditor claims of the trust maker(s). Although this is true for both separate trusts and joint trusts, joint trusts have a disadvantage in that they keep all assets in the same trust. If a creditor obtains a judgment over either spouse, all assets in the joint trust are at risk for attachment by the creditor.
 
With separate trusts, each spouse’s assets are segregated into a trust for that spouse. If only one spouse becomes subject to a judgment, only the assets held by that spouse are at risk. The assets of the innocent spouse—which are held in a separate trust—are generally out of reach of the creditors of the spouse being sued. This means that separate trusts provide greater asset protection benefits over joint trusts in situations where only one spouse is liable to a creditor.
 
In addition to asset protection during the grantor’s life, assets in a separate trust are even more protected after the grantor of the separate trust dies. At that time, the trust becomes irrevocable, making it even more difficult for other beneficiaries or the surviving spouse’s creditors to reach the property held in the now-irrevocable trust.
 
Asset protection may be of special interest to doctors and other professionals at high risk of being sued for professional malpractice, who may benefit from the added asset protection afforded by separate trusts. 
 
 
 
Ease of administration at death
 
One of the main problems with joint trusts is the inability to trace assets after one spouse’s death. As assets in a joint trust are bought and sold over time, it can become difficult to identify which assets are treated as belonging to which spouse. In community-property states, it can also become difficult to determine which assets are joint or community property and which are separate property.
 
This process frequently requires careful valuation of the property in the trust as well as executing new deeds for real property, retitling stock certificates, or establishing separate investment accounts to hold the deceased spouse’s separate property.
 
Tracing is especially difficult when joint trusts divide into separate trusts after the first spouse’s death. This requires the surviving spouse to itemize and value the assets that belong in each component after the first spouse’s death. Experience has shown that many surviving spouses simply do not go through this process, resulting in a commingling of assets that is impossible to unwind later.
 
Tracing can be important for both tax and non-tax purposes. For tax purposes, it is important to understand which assets are treated as belonging to the deceased spouse. This can have implications for both basis step-up and federal estate tax purposes. Similarly, if the spouses have different planning objectives, a commingling of assets or failure to separate the estate into separate trusts at death can alter the client’s non-tax estate plan.
 
Many of these issues can be avoided with separate trusts. With separate trusts, each spouse is treated as the owner of the assets titled in that spouse’s trust. Any changes in value or sales or purchases of assets are clearly delineated, regardless of whether they occur before or after the spouse’s death. This makes it much easier to identify the original ownership of the assets and the tax consequences that occur both before and after each spouse’s death.  Trust administration after the death of the first spouse can be very simple and straightforward. The only tasks may be notifying the financial institutions of the grantor’s death and providing them with the trust’s new tax identification number in order to properly report tax issues going forward.
 
 
 
Flexibility and protection after death
 
Many joint trusts become irrevocable upon the death of the first spouse. Many clients are concerned that the spouse could remarry or favor one child over another. The purpose of irrevocability is to provide the first spouse with assurance that his or her estate planning objectives are ultimately achieved.
 
This assurance comes at the cost of lack of flexibility. If there are changes in the law, finances, or family dynamics after the first spouse’s death, joint trusts that have become irrevocable do not allow the surviving spouse to adjust the estate plan to accommodate these changes. Separate trusts, on the other hand, preserve the ability of the surviving spouse to alter, amend, or revoke the assets held in the surviving spouse’s trust.
 
At the death of a spouse, separate trusts are generally set up to allow the trust assets to be used as needed to support the surviving spouse under the “HEMS” standard (Health, Education, Maintenance and Support), but do not allow the surviving spouse to withdraw trust assets beyond the HEMS standard or redirect the assets of the trust.  However, the surviving spouse still has full control over the assets in their own separate trust. 
 
By comparison, a joint trust may be set up in one of three ways:
 

1. After the death of one spouse, the surviving spouse has complete control over the trust assets, and may amend or revoke the trust at any time; OR
2. After the death of one spouse, the surviving spouse has limited control over the trust assets, including the separate assets of the surviving spouse within the trust, with no ability to amend or revoke the trust (in other words, the surviving spouse cannot access any of the trust assets other than for their needs); OR
3. If a Joint Pour-Over Trust is used, then after the death of one spouse, the separate assets of the trust and one-half the joint or community assets are poured into separate Revocable Living Trusts which were previously drafted for each spouse.  This plan requires the drafting of three trusts, but allows the ease of use of a joint trust while both spouses are alive but the control of assets after death that separate trusts allow. 

 
If separate trusts are used, rather than a joint trust, it is possible protect the deceased spouse’s trust assets from being redirected to a new spouse or new children should the surviving spouse remarry, and thus prevents the surviving spouse from disrupting the deceased spouse’s estate plan with regard to the deceased spouse’s assets, without limiting the surviving spouse’s control over their own separate assets in their own trust. 
 
 
 
Remarriage and Blended Family Benefits
 
Couples who have been married before or who have children from another relationship may also benefit from using separate trusts. This is particularly true when each spouse has property or inheritance that they would like to keep separate for certain reasons.
 
For example, perhaps a newly married spouse has inherited their parents’ home and the couple would like to live there, but the new spouse wants to make sure the family home stays in their own family and passes only to their own children at their death.
 
In addition to a prenuptial agreement, keeping the house in a separate trust would allow this spouse to specify exactly how that home should be used and passed on when they die. Using a joint trust to achieve the same result requires much more careful drafting and introduces a much greater potential for confusion and mistakes in administering the trust after the death of the spouse who owns the house.
 

What is a Power of Attorney?

It is a legal document that designates an individual to make decisions on your behalf in case you cannot make choices for yourself. The individual is your personal agent: someone who acts in your best interests if you are unable to for whatever reason. A Power of Attorney gives your agent certain abilities, like handling your finances, filing your taxes, or making medical decisions for you.

That sounds like a lot of power. When would I need a Power of Attorney?

There are different powers of attorneys for different circumstances and for different lengths of time. You could need a power of attorney if you decide to live overseas for a few years, if you become incarcerated, if you fall into a coma, if you become affected by dementia, or a host of other financial or healthcare-related reasons. A Power of Attorney generally comes into play when you become incapacitated.
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Okay, that could be helpful. Why do I need a Power of Attorney?

Everyone should establish a power of attorney. Anyone can become incapacitated at any time, but it is especially important for seniors to set up a power of attorney before they become physically or mentally incapacitated. That way, you can ensure that someone will get your estate and your affairs in order. Otherwise, if you become incapacitated without a POA in place, then no one can handle your affairs until someone pays a lawyer to go to court and be appointed your guardian and conservator. So not only do you risk leaving your affairs in limbo, but you also risk not being able to choose the person who handles those affairs.


A Power of Attorney is very valuable because it appoints a spouse, child, loved one, attorney, or friend to can handle your estate, health, and finances if you become unable to do so yourself, rather than wait for the worst to happen without having a plan in place.

A Special Needs Trust (SNT) protects assets for someone who is chronically ill or physically or mentally disabled so that they can remain eligible for public benefits while being able to inherit or draw income from a separate fund.

Various benefits like Supplemental Security Income, Medicare, Medicaid, or other programs provide monetary assistance for qualifying individuals who make below a certain amount. SNTs are set up so that the individual has a resource that does not belong to them, but that they can still draw from. A trust of this kind does not count as part of the individual’s assets, therefore they can qualify for financial assistance while still retaining a source of income. Generally, the funds have to be used for certain purposes, such as medical expenses, payments for caretakers, transportation costs, and other things that public benefits do not cover.

Having a protected source of income in a Special Needs Trust is incredibly beneficial for someone with a disability or chronic illness, where medical and living expenses are high but disability benefits can only go so far. It is important that the SNT gets established before the beneficiary turns 65 years old.

There are different kinds of SNTs that accomplish the same goals—supplying the individual with income while they remain eligible for public assistance—but in different ways. Additionally, the party who creates the SNT will designate someone to control it. That person will oversee the management of the trust and disburse the funds to the beneficiary.

The disabled or chronically ill person can put their own money into a first party SNT that they can draw from later. However, first party SNTs may be subject to Medicaid repayment rules, meaning that the money is still considered the individual’s and will be used to evaluate whether they qualify for financial assistance programs.

There are also third party SNTs, which are also called Supplemental Needs Trusts, which have funds that get put into the trust by someone else, such as the parents of the individual, which the disabled or chronically ill person draws from later. These funds are not subject to Medicaid repayment rules and do not effect the beneficiary’s eligibility for public benefits.

An SNT can be created as part of someone’s will or as a standalone. If the SNT is created under a Last Will and Testament or a Living Will, then the beneficiary cannot withdraw funds until the testator dies. If an SNT is created on its own and not part of someone else’s will, the beneficiary does not need to wait to withdraw funds. They are also designated as revocable or irrevocable, meaning that if the beneficiary has the power to revoke the trust, the assets will be considered available for Social Security and Medicaid purposes (remember, these programs consider the individual’s finances when deciding how many benefits they can award). If the SNT is irrevocable, the beneficiary cannot dissolve the trust and the assets cannot be seized by certain programs.

When setting up a Special Needs Trust or any kind of fund for yourself or a loved one, you should consult an attorney to draw up a valid legal document that will ensure that the trust has a clear directive and purpose. Seek out an attorney who has experience in trusts, estate planning, elder or disability law.

If you are thinking about the future, you probably have a lot on your plate: How do I draft a will? What is a power of attorney? Why do I need to manage my assets? But, have you thought about nursing home care?

Probably not, because almost no one thinks they will have to live in a nursing home or that they will eventually need round-the-clock care. There is no debate that we all want to be independent and we all want to be able to take care of ourselves no matter what. However, despite our best efforts, it can be difficult to plan for emergency medical care or financial difficulty.

What do you do when you’ve promised your loved one that you’ll never place them in a home, but you’ve realized that you don’t have the skills to take care of them like a professional? It is a difficult decision for elders and families alike, so it is rare for anyone to even acknowledge that they will have to deal with these things.

Nonetheless, even though no one thinks they will even have to consider full-time care in a nursing home, but sometimes the unexpected happens and then you’re facing having to spend thousands of dollars a month while draining your savings and your children’s inheritance. These kinds of changes can be sudden, jarring, and scary.

Medicaid can help cover the costs of a nursing home if you have less than $2,000 in assets, but the reality is that most people funnel their life savings into monthly nursing home care until there is nothing left, and only then can Medicaid step in to help. Medicaid Estate Planning Attorneys have the specialized knowledge and training to avoid this outcome and help protect your future.

Medicaid Estate Planning can be a difficult field to navigate with complex laws and ever-changing policies, but with the help of an attorney, you do not have to make difficult decisions about long-term care by yourself. If you are already thinking about estate planning—the process of setting up legal protections for your money, assets, and property for yourself and the loved ones who will inherit from you—you also need to plan for long term care.

If you are not thinking about your future, you should start planning now. Medicaid Estate Planning attorneys can help you protect your money and property for yourself, your future, and your loved ones, while simultaneously helping you qualify for Medicaid financial assistance for nursing home care whenever you may need it.

When it comes to retirement, surveys of our aging population leave us with one resounding piece of advice:  Don’t underestimate how long you could live.  If you’re lucky enough to retire at age sixty-five, then it might not be unreasonable to expect that you could need to subside on your retirement savings for another thirty years.  A 2015 survey of octogenarians (people in their 80’s) by New York Life found that more than half of participants were not expecting to live as long as they had, leaving them wishing they had saved more money throughout their lives.

Americans are now living much longer lives than our grandparents did.  Our own longevity is increasing, while the longevity of Social Security is in doubt.  The 2015 Social Security Trustee’s annual report projected that the combined trust funds that help pay old age and disability benefits will run out by the year 2034.  That means the funds will dry up by the time today’s 48-year-olds reach full retirement age.

This projection doesn’t mean that retirement payments will stop completely in 2034.  It means that by that time, the funds won’t hold enough money to pay the retirement benefits fully; only about 75% of the benefits will be covered.  So what does that really mean for us?  It means that unless politicians act to adjust the current system, we may not be able to rely on Social Security getting us through our retirement years.  We like to think that Congress will act sooner rather than later to initiate a solution.  But for now, the current precarious position of Social Security forces us to think beyond “Plan A” and onto “Plans B, C and D.”
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Shockingly enough, over half of all American households nearing retirement age have absolutely no retirement savings.  So what provides most of the retirement income for about half of all seniors?  You guessed it:  Social Security.  If aging Americans can’t fully rely on Social Security to provide for us through retirement, then we need to think about financial planning, and the sooner the better.

More and more Americans do not have access to a retirement savings plan at their workplace.  While it’s clear that most of us are far more likely to save for retirement if we can do so out of our paychecks, there are still plenty of ways to save even if our employer doesn’t provide a 401(k) plan.  If you're planning for retirement, consider speaking with a financial adviser about funding an IRA or a Roth IRA.  An IRA, or an Individual Retirement Account, is a type of savings account geared toward retirement that offers a few tax advantages.  With traditional IRAs, you can defer paying income tax on up to $5,500 that you contribute.  Investors over age 50 can defer paying income tax on as much as $6,500.  You can defer to pay income tax while you invest your money in your IRA, but income tax will be due once you withdraw the money from the account.  A Roth IRA is slightly different, in that you do not get a tax deduction on your contributions, but you don’t pay any tax on the earnings and the withdrawals are tax-free when you’re ready to retire.

Another way to ensure you’re saving for retirement is to put aside your tax refunds every year.  Save them in an account promised for retirement.  In fact, by using IRS Form 8888, you can directly deposit your tax refund into a savings account, an investment account or an IRA.

If you have trouble saving your earnings, try setting up a direct deposit.  You can allocate a certain percentage of each of your paychecks to go into your retirement account.  That way, you can save passively and ensure your money is set aside in a safe place.  If you’re wondering how much you should set aside, most financial experts are now recommending saving 15% of your income for retirement.

If you are very close to retirement age already, consider delaying your Social Security benefit.  The older you are when you file for Social Security benefits, the greater your annual payment (up to age 70).
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Once you have your nest egg, no matter how big or how small that egg may be, the most important and urgent next step is to protect it.  Building your savings and failing to protect them is like storing your nest egg on the edge of a brick wall; Humpty Dumpty can fall at any time.  In our elder law practice we've witnessed this happen to many families.  Illness and injury send over half of all older adults into long-term care facilities.  Often, a person admitted into a long-term care facility, such as a nursing home, feels forced to spend down their savings and even sell their house to pay the bills.  With nursing homes costing well over $80,000 per year, it’s no wonder that most families find their savings drained within the first year.  Don’t let this happen to you.  With a little planning, you can protect your savings from the devastating costs of long-term care.  In fact, even if you or your loved one is already admitted into a nursing home, there are still steps you can take to protect whatever savings you have left.  We can help you protect your assets from the costs of long-term care and health crises.  Contact us for a free consultation.

An LLC, or a Limited Liability Company, is fairly easy and affordable to form in the state of Virginia.  An LLC is a useful entity to form for many reasons.  If you’re starting a business, forming an LLC will offer you legal protection.  As a business owner, you would have limited liability for debts and obligations.  For example, if you own a dance studio and one of your students breaks a leg on a slippery floor, and they decide to sue for medical bill payments, that student would need to sue your business (your LLC) instead of suing you individually.  That way, your LLC would be financially responsible, instead of risking your own personal bank accounts.  Other advantages to forming an LLC include pass-through taxes, which means that you would not be required to file a separate corporate tax return, and enhanced credibility for your business.

The first step in forming an LLC is deciding on a name.  Your name must end with “Limited Liability Company,” or “LLC.”  For example, our fictional dance studio could be called “Dave’s Dance Studio, LLC.”  There are a few prohibited words, however.  You cannot choose a title that could be confused with a state agency, such as “Secret Service” or “IRS.”

Once you’ve decided on a name, you will need to do a name search to make sure it’s available.  The next step is registering your LLC with the State Corporation Commission.  You can do this online or by mail.  Upon registration, you will need to select a Registered Agent for your LLC.  The registered agent can be a person or a business who is responsible for dealing with all the paperwork, receiving the mail and filing annual state taxes for your LLC.  Your registered agent can be someone within the company, including yourself.  Some people choose to name their lawyer as their registered agent, because one of the most important responsibilities of the registered agent is to "accept service of process," or be the one to be served with a lawsuit if the business is sued.  You must file the Articles of Organization and pay a non-refundable fee of $100.

Once you’ve formed your LLC, don’t forget to create an operating agreement.  An operating agreement is not required of an LLC in Virginia, but it’s always a good idea to have clear-cut rules and guidelines for your business.  An operating agreement is a simple legal document that outlines the operating procedures of your company.  If you’re interested in forming an LLC, or if you have already formed an LLC and would like to establish an operating agreement, we can help you draft the professional legal document you need.  Contact us for a free consultation.

Granting someone you trust a power of attorney allows that person -- known as your "agent" or "attorney in fact" -- to manage your financial and personal affairs if you are unable to do so.  Your agent is empowered to sign your name and is obligated to be your fiduciary -- meaning they must act in your best financial interest at all times and in accordance with your wishes.

A power of attorney can be made “springing,” which means that it only goes into effect under circumstances that you specify, the most typical being when you become incapacitated.  Often that means your agent cannot act until he or she provides doctors' letters and sometimes court orders to prove you are incapable of making decisions for yourself.

An attorney can help you decide which form makes the best sense for your circumstance. In any case, take care in choosing your agent. That person should be competent, trustworthy, willing to take on the burden of your affairs and financially secure.

If you choose a relative or friend as your agent, you probably won't have to pay them.  But if you name a bank, lawyer or other outside party, you will have to negotiate compensation, which can range from hourly fees to a percentage of your assets paid annually.

Why do you need a power of attorney?

No one is immune from aging or the loss of mental clarity that may come with it. And you're never immune to health crises that may leave you unable to handle the business of your life: paying bills, managing investments or making key financial decisions.

If you become incapacitated without having a power of attorney, the court may appoint a “conservator” to manage your affairs and handle your assets.  This process might cost your family well over $2,000 in attorney’s fees and court costs, not including the cost of the lawyer who will be appointed by the court to represent you during the court proceeding (this lawyer is called the guardian ad litem). 

The person chosen by the court may not be someone you would have picked.  Assigning someone you choose and trust a power of attorney now could save you and your family from heartache later on.