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9 Estate Planning Terms You Need To Know

By Estate Planning

Estate Planning Terms

No one likes to think about one’s own death. However, planning ahead can help your family avoid unnecessary complications, delay, and expense. This may be done through wills, trusts, joint ownership, and life insurance. In addition, modern estate planning also includes “life” planning through powers of attorney and health care proxies. These enable someone else to act for you in the event of your incapacity. Understanding the following terms is the first step toward planning your estate. However, no estate planning steps should be taken without consulting with a qualified professional.

  • Probate

This is the name for the process in the Probate Court through which the ownership of your assets passes to your heirs. It includes the collection of your assets, the payment of your bills, and the distribution of your estate. It only covers what you own outright, not joint property, trust property, life insurance proceeds, or any assets that have beneficiaries or payable-on-death terms.

  • Will

Your will is a legally binding statement of who will receive your property at your death. It also appoints a legal representative to carry out your wishes. However, the will only covers probate property.

  • Estate Tax

The estate tax applies to both the probate and the nonprobate property of the decedent. For federal purposes, the amount free from taxation is $5.6 million as of 2018 per individual, $11.2 million per married couple. For Rhode Island, a person can pass $1,537,656 free from estate taxation.

Reading your Estate Planning documents is critical to understanding your plan

  • Marital Deduction

On the federal level, anything passing to the surviving spouse of a decedent is not included in the taxable estate and, consequently, is not subject to taxation. All of the couple’s assets are then taxed upon the death of the surviving spouse, unless an estate tax plan has been executed.

  • Trust

A trust is a legal entity under which one person—the “trustee”—holds legal title to property for the benefit of others—the “beneficiaries.” The trustee must follow the rules provided in the trust instrument. An irrevocable trust is one that cannot be changed after it has been created. A revocable trust is one that may be changed or rescinded by the person who created it. Trusts are often used for tax planning, to provide for someone with expertise to manage assets, or to shelter assets to protect them from creditors or for long-term care planning.

  • Durable Power of Attorney

Under a power of attorney, you may appoint someone else to act for you when you are unable to do so yourself. The reason may be your mental incapacity or your inability to be somewhere when needed. The person you appoint—your “attorney-in-fact”—must always act in your best interest and try to make choices you would make if you were able to do so.

  • Health Care Proxy

Similar to a power of attorney, through a health care proxy you may appoint someone else to act as your agent—but for medical, as opposed to financial, decisions. Unlike a power of attorney, the health care proxy does not take effect until your doctor determines that you are incapable of making decisions yourself. Before that decision, your agent may make no decisions on your behalf. You may include in your proxy a guideline for your agent to use in making decisions. These may include directions to refuse or remove life support in the event you are in a coma or a vegetative state. On the other hand, your instructions may be to use all efforts to keep you alive, no matter the circumstances.

  • Community Spouse Resource Allowance (CSRA)

If your spouse has to move to a nursing home, you will have to pay for his or her care out of pocket until he or she qualifies for Medicaid. Under the Medicaid program the nursing home spouse may only have $4,000 in “countable” assets. (Noncountable assets include your home, household belongings, one car, and prepaid funeral plans.) The amount the healthy spouse is permitted to keep under the Medicaid program is known as the “community spouse resource allowance” or “CSRA.” The CSRA is all of the couple’s combined assets up to a cap of $123,600 (in 2018). In some cases, the community spouse is entitled to retain assets above the $123,600 limit when her income is less than the minimum monthly maintenance needs allowance, which is described below.

  • Minimum Monthly Maintenance Needs Allowance (MMMNA)

The Medicaid rules also govern the amount of income the community spouse is entitled to once the nursing home spouse qualifies for Medicaid. Normally, the community spouse keeps his or her income and the nursing home spouse pays his or her income to the nursing home, keeping only a $50.00-a-month “personal needs allowance.” However, if the healthy spouse’s income is low, he or she may be entitled to a share of the nursing home spouse’s income. In each case where a married nursing home resident qualifies for Medicaid, the Department of Human Resources calculates a “minimum monthly maintenance needs allowance” or “MMMNA” for the community spouse based on his or her housing costs. This will range from a low of $2,057.50 to a high of $3,090.00 a month (in 2018). If the community spouse’s own income is below his or her MMMNA, he or she will be entitled to a share of the nursing home spouse’s income to make up the difference.

Want to learn more? Contact Attorney Matthew J. Leonard, Esq. at 401-401.648.7000 or at to arrange for a free consultation.

End of Life Option Act

By Uncategorized

What is the End of Life Option Act?

As of June 9, 2016, California joins Oregon, Vermont, and Washington in permitting terminally-ill residents to request a lethal prescription under its End of Life Option Act.

 A Brief History of Options at End of Life: The Right to Refuse Treatment

Do Not Resuscitate Orders

death_with_dignityIn 1976, the decision by a patient to decline resuscitation was fought all the way to the New Jersey Supreme Court, where the court upheld the rights of Karen Ann Quinlan’s parents to order her removal from artificial ventilation. In 1987, New York became the first state to pass a law allowing patients to file a “Do Not Resuscitate” order with their medical team. In Rhode Island the Department of Health recognizes Medical Orders for Life Sustaining Treatment (“MOLST”) which are instructions to follow a terminally ill patient’s wishes regarding resuscitation, feeding tubes and other life-sustaining medical treatments. The MOLST form can be used to refuse or request treatments and are completely voluntary on the part of patients. These orders can supplement Do Not Resuscitate (DNR) instructions or a COMFORT ONE bracelet.

Advance Health Care Directives

In 1991, Congress passed the Patient Self-Determination Act, requiring hospitals to honor a patient’s decisions with regards to their own health care, including decisions to withhold treatment.

Rhode Islanders have the right to control decisions related to their medical care and to authorize others to make medical decisions for them if they become unable to do so themselves.

Living Wills

The Rights of the Terminally Ill Act allows individuals to instruct their physicians to withhold or withdraw life-sustaining procedures in the event of a terminal condition. If you wish to establish a Living Will, as part of your estate plan, we would prepare a form that reflects your goals and wishes compliant with the requirements of the Act.

Durable Power of Attorney for Health Care

Rhode Island law allows an individual to authorize another person to make decisions affecting their health care if they become unable to do so. You do not have to have a terminal condition to activate the Durable Power of Attorney for Health Care. If you wish to name an agent for these purposes, you must use the statutory that we prepare and complete as part of our estate planning services for our clients.

Organ Donation

The Office of State Medical Examiners supports the donation of organs and tissue. Organ donation can help families through the grieving process and give others a second chance at life.

End of Life plan

 “End of Life Options Act” in California

Patients must make two oral requests, at least 15 days apart, and a written request. Their attending physician must make a determination that they have a terminal illness with a life expectancy of less than six months, and must make a determination that the patient has the mental capacity to make the request for aid-in-dying medication; a consulting physician must make the same determinations. The patients must be able to ingest the medication themselves, although they may have assistance in preparing it.

The cause of death may not be listed as suicide; any insurance benefits, wills, or contracts shall be treated as if the person died a natural death from their underlying terminal illness.

At least one challenge has already been filed, seeking a preliminary injunction against the implementation of the Act. The California Department of Public Health shall release annual reports, beginning July 1, 2017, with statistics on prescriptions issued and deaths resulting from those prescriptions, so it will be a year before we know if anyone has availed themselves of this Act.

Does Rhode Island Have an End of Life Option?

Rhode Island currently does not have similar End of Life Option legislation, though there have been several bills similar to the Oregon-style physician-assisted dying bills that have been considered in the Rhode Island state legislature before, in 1995, 1998, 2001, 2006 (H 7428, S 2766) and 2007 (HB 6080). Most recently, Representative Ajello’s submitted a bill, H 7659, the Sapinsley Compassionate Care Act, which was heard in a House Committee on March 23, 2016, and held for further study.

The citizens of Oregon passed Measure 16, “Oregon Death with Dignity”, in November 1994, by a slim margin of 51.31% to 48.69% which authorizes physicians to provide aid-in-dying to terminally ill patients.

Other States

Four states now have aid-in-dying statutes: Oregon, created by voter initiative in 1994; Washington, created by voter initiative in 2008; Vermont, created by the state legislature in 2013; and California, created by the state legislature in 2015, effective June 9, 2016. Three states have statutes prohibiting aid-in-dying: Arkansas, Idaho, and Georgia.

Concerned with your Medical Directive and want to discuss further?

Contact our office to discuss drafting a Medical and Health Care directive that reflects your wishes.

Portions of this article were cited from LISI Estate Planning Newsletter #2440 (August 4, 2016).


6 Major Reasons For Planning Your Estate

By Uncategorized

Estate and asset protection planning provides solutions to the following types of concerns:


How will I avoid the cost and inconvenience of probate for my spouse and children?

If you have ever been confronted with needing to administer an Estate for a loved one who died without a will or estate plan, they quickly realize the time and expense associated with the probate process.  For many clients, the best solution is a revocable trust, often referred to as a living trust. This document when funded will enable you to avoid the probate process.


If I can’t make legal, financial, or healthcare decisions for myself, how can I be sure my wishes are carried out?

Again, a revocable trust may provide the answer. In addition, every client needs a durable power of attorney and a health care proxy appointing a trusted individual to make financial and health care decisions for you when you no longer can yourself.


How can I make sure my wealth and possessions end up in the right hands when I’m gone?

Wills and trusts are vehicles for passing on your assets to those you choose. Many clients are concerned about funds they leave to their children being at risk of their children’s creditors, spouses upon divorce, or simply bad decisions their children may make. For them, a family protection trust can provide the protection they seek. In addition, proper planning will prevent the payment of unavoidable estate taxes upon your death.


My spouse needs more care than I can give. Will we lose everything to pay for care, or are there options?

Not if you plan properly, the earlier, the better. There are a number of planning options available to spouses of nursing home residents to protect their financial well-being while qualifying their ill spouse for Medicaid coverage of nursing home fees.


My child is disabled. How can I provide for her future?

We have helped many parents of children with special needs plan for their children through the creation of a special needs trust funded with life insurance.


What legacy will I leave?

Your greatest legacy of course is the children and grandchildren you raise, if any, and the memories you leave with your family, friends, and work colleagues. However, support of charities and an estate plan that provides for your family and smoothly passes on what you leave behind will also contribute greatly to the legacy you leave and your family’s welfare for decades to come.

Contact us today for more information 401.648.7000

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