by Verena MeiserYou became the Trustee of a trust. Congratulations! Now what?
Did you just become the trustee of a loved one’s trust, or of a trust that holds your own inheritance? Let me give you a quick high-level overview of what to focus on, so you can build yourself a to do checklist.
First, get a hold of the trust agreement, the document. If the trust was set up under a Will, ask for a copy of that Will. Skim the trust and make sure that you are named as trustee. If you were named, understand that you are not only expected to administer the trust, but you are also subject to legal duties often referred to as “fiduciary duties” and the trust laws of the State in which you are administering the trust.
Second, identify the property in the trust. If someone else already served as trustee before you, request all records. If you are the first trustee, because this is a new trust, get a list of assets that were transferred to the trust. How can you recognize that property is in the trust? By how it is titled. The property should be owned by you, as trustee of the trust. This is true for financial accounts and real estate.
Third, read the trust and find the instructions for making distributions. There should be clear instructions regarding the distribution of income and the distribution of principal. I would advise you to engage an estate planning attorney, who can interpret the trust document for you and explain these important provisions, since you must follow them. You may also want to consider hiring an accountant who is familiar with income tax returns for trusts. If the trust holds any property out of state, or property you may not feel qualified to handle, such as firearms or specialized business interests, you should look if the trust allows you to name a co-trustee or to appoint a special trustee, who could help you.
Fourth, now that you have control over the trust property, you need to turn your attention to the beneficiaries of the trust. My best advice is to communicate often and effectively with them. Be consistent in your messages and keep good records of these communications, so nobody can come along later and claim you didn’t share some information with them. Use your people skills and get to know the beneficiaries and their needs. All beneficiaries are different. Be particularly considerate and careful with beneficiaries who may be vulnerable or very trusting of you. My advice: Clearly establish your role as trustee and tell the beneficiaries that you are not their legal adviser. Occasionally there are beneficiaries who don’t understand your role. They may think you are treating the trust property as yours and they will try to take it from you. Let them know you are managing the property according to the rules of the trust and your state’s laws.
If you are in need of support or guidance while you serve as trustee, an estate planning attorney can provide that. Any consultation fee will be less than the legal fees resulting from a dispute with a beneficiary, a tax authority, or a creditor. A visit with an estate planning attorney when you first become Trustee will put you on a good course.
by Verena MeiserWhy Set Up a Trust to Handle a Charitable Donation?
The main reason is that the Grantor, the person setting up the trust, gets income tax, estate and gift tax benefits, while also allowing for the property to be invested in the trust for some period time before the trust terminates and everything is given to charity. While the trust is in existence, that Grantor or the Grantor’s family could benefit by getting distributions from the trust.
With regard to those distributions, there are two accepted methods for calculating them: they can be unitrust amounts or be handled as an annuity, and which of these methods will be followed is determined at the outset and drafted into the trust agreement. A unitrust amount would be a fixed percentage of the total value of the trust, as determined each year, and an annuity would be calculated based on the duration of the trust, which could be a term of years or the Grantor’s life expectancy. Strict rules for these calculations are laid out in Treasury Regulations to the tax code.
For these trusts to be successful, it is critical that the Trustee understands how to administer the trust while complying with these regulations. I would highly recommend an estate planning attorney, an appraiser, and an accountant be involved. The attorney would not only draft the trust agreement, but also advise during the administration, the appraiser would determine the value of the property at the time it is transferred to the trust, which is important since the calculation of distributions hinges on that initial value, and an accountant can calculate the tax deduction and prepare appropriate returns every year.
Charitable Remainder Trusts take a special place in the family of trusts we use for estate planning. They are tax exempt entities! That means that income generated in the trust, is not subject to income tax. That is why these trusts are attractive for Grantors who own appreciated assets or assets that may significantly appreciate in the future, since the sale within the trust would not be subject to capital gains taxes.
The annual distributions to beneficiaries, however, are subject to income tax. Do CRTs provide any other tax benefits? Yes, estate and gift tax benefits. If the person who receives distributions from the trust is the Grantor or the Grantor’s spouse, the initial transfer to the trust will not reduce the available estate tax exemption. When the Grantor dies, no estate tax is due, because the estate gets a charitable deduction for the remaining assets in the trust, as they all go to charity.
If the persons who receive distributions are others, such as the children, then a portion of the value of the property transferred to the trust will reduce the available estate tax exemption. However, the property would be forever removed from the Grantor’s estate, and neither the value of the property nor any further growth would add to the Grantor’s estate at death. While setting up a CRT may sound complicated, the right team of professionals can help smooth the process and help administer the trust year in and year out.
by Verena MeiserShould you Consider a Spousal Lifetime Access Trust (SLAT)?
Change is coming to estate and gift tax laws. Should you consider a Spousal Lifetime Access Trust (a SLAT)?
You may be asking yourself what steps you could take in light of the anticipated reduction in the estate tax exemption and the possible limitation of the annual gift tax exclusion to a total of $20,000 per year per donor, meaning that you could not make more than a total of $20,000 of gifts that do not have to be reported. Gone would be the days of making $15,000 gifts to grandchildren every year, or large contributions to life insurance trusts with Crummey powers to pay for premiums. The anticipated changes will impact many existing estate plans. If yours may be affected, are there any planning strategies you should consider?
Estate planners have many tools at their disposition. I would like to describe one of those, since it is drawing a lot of interest at this time, due to the nature of the anticipated tax law changes. That powerful planning tool is a trust, that could be added to an existing estate plan to lock in the currently high estate tax exemption and, it could also provide the resources to cover insurance policy premiums in excess of $20,000 a year.
Let’s look at a Spousal Lifetime Access Trust.
It is an irrevocable Trust, set up by a Grantor for the benefit of the Grantor’s spouse. Assets are protected from the spouse’s creditors, the spouse can choose the investments and the trustees, and if the transfer to the trust is a complete transfer, the assets are not part of the taxable estate of either spouse. The idea is to fund such a trust with assets of a value up to the current estate tax exemption.
In the case of a married Grantor, the spouse is the beneficiary, and as such, the spouse could share distributed property with the Grantor in the event he or she runs out of assets. That gives a sense of comfort. For the unmarried Grantor, the trust could include provisions for a potential future spouse, often referred to as a “floating spouse”, and children could be named as beneficiaries.
Some other attractive features of a SLAT are that the Spouse could have a lifetime and a testamentary limited power of appointment; meaning that the spouse could appoint funds back to the Grantor. For those who have purchased life insurance in an Irrevocable Life Insurance Trust, to shelter the proceeds from estate taxes, any annual premiums in excess of the new $20,000 gift tax limit, could be paid for with trust property.
The bottomline is that a SLAT has the potential of providing significant estate and gift tax savings making it worthwhile to consider. We are here to advise and explore if a SLAT is a good fit for your family.
by Verena MeiserWe Want Our Children To Inherit Everything We Have. But What If The Survivor Of Us Changes That Plan?
Many married couples envision that their children will someday inherit what remains of their estate, as they know it. What many fail to consider is what could go wrong with that plan during the surviving spouse’s life.
After the first spouse died the survivor may find happiness and companionship in a future relationship, which in turn may come with financial responsibilities for a new family. A prenuptial agreement would offer some protection for the assets of the first marriage. But what if the survivor does not get a prenuptial agreement with the future spouse?
What if the survivor was to suffer from diminished mental capacity at some point? Let’s say the survivor was to lose the ability to manage that property from the first marriage, that both intended to leave to their children. Suddenly, the survivor will have to rely on others to manage and protect that property. What if they change the estate plan? What if the surviving spouse falls victim to predators or scammers?
All of these concerns can be addressed with a carefully designed estate plan. For example, the plan may provide for a Marital Trust that will hold and protect half of the marital property after the first death while still making that property available for the survivor’s needs. Even distributions from a retirement plan to a surviving spouse can be protected that way. There is plenty to consider and discuss with your estate planning attorney. Work with an attorney who listens to your wishes and customizes your documents to address your goals.
by Verena MeiserDo I Need Power of Attorney?
Any time during our adult life, we could experience periods when our capacity is diminished to the point where we could not communicate with our healthcare providers or handle our finances. We would be in a situation where we would have to depend on others to make healthcare decisions for us, and we would have to rely on trusted members of our family or friends to step in and pay our bills, file our taxes, handle any financial matters that might come up.
The document that allows us to appoint someone we choose, because we trust them with our health, is called an Advance Directive, and it has three parts; there’s (1) the health care power of attorney, where we name our agents and describe what we authorize them to do on our behalf; (2) the Living Will, where we express our wishes regarding life support at the end of our lives; and (3) the post-death instructions regarding organ donation and funeral or cremation instructions. Don’t be confused by the term “living will” – it is not the Will that distributes our property. We recommend having conversations with the named agents, so they know as much as possible about how we think about healthcare, and any special wishes we may have, in particular when it comes to end of life care. Agents may need to step in to help on short notice – they need to know they were named.
You may wonder what happens when someone doesn’t set up an Advance Directive. Their family will have to petition the local court to appoint a Guardian of the Person, who can then talk with the doctors and make decisions. That is a legal proceeding that involves court and attorneys’ fees that will no doubt exceed the cost of setting up an Advance Directive. To make matters worse, should the family not see eye to eye on who the court should appoint, the whole process could end up in costly litigation.
With regard to getting help with financial matters during incapacity, we can legally authorize persons we choose, by naming them as agents in a durable power of attorney. Since agents deal with our property as fiduciaries, they carry responsibility and are exposed to liability. The clearer we describe what it is we want them to do for us, the better for us and for the agent. If we don’t have a power of attorney, the family has to petition the court to appoint a Guardian of the Property, another court process that will undoubtedly cost more than any attorney’s fee for setting up a power of attorney.
If you would like to set up these documents, an experienced estate planning attorney can guide you through the process of choosing the right agents. The attorney can also make sure that the documents are drafted so they unambiguously reflects your wishes. This helps you and all of those who care about you and want to help.
by Verena MeiserWe Just Became Parents. Do We Need Wills?
I often get contacted by young parents who wonder if they need a Will. Some were told to get a Will, perhaps by their financial adviser or by members of their family. For many reasons, everyone does their surviving relatives a favor by leaving behind a Will, and young parents in particular!
Why is that? In their Wills, the parents can say who they would like to name as their children’s Guardians. Those Guardians could sign the children up at school and take them to the doctor. If, on the other hand, the parents both died without Wills, leaving minor children behind, then the parents’ families would have to petition a court to request that someone be appointed Guardian, to have the legal authority to handle education and health matters for the children. In a perfect World, the two families would agree on who the Guardian should be and who the children would live with, but what happens if the two families don’t agree? The legal proceeding for the appointment of the Guardian would become a costly tug of war over the children, who would be left in limbo, and in the end, the court will select the Guardian. It could end up being someone who would not have been the parents’ first choice. Therefore, setting up Wills, in which the parents clearly identify the Guardian they prefer, and maybe even backup Guardians, in case something happens to their first choice, will avoid uncertainty and potential costs.
Aside from naming Guardians, a Will typically identifies the immediate family, it allows instructions for the distribution of the property and includes the names the persons who should be put in charge of that distribution. Those persons will also have to handle any payments for last expenses and taxes. The process of administering the property of someone who died is called probate and is handled through the local Register of Wills office where the Will is filed after death.
Dying without such instructions, without a Will, is called “dying intestate.” When that happens, the State in which the deceased person lived will have laws that determine who will inherit the estate and who will administer it. Clients are often surprised how the State would distribute their property, since it does not correspond to what they thought would happen.
We recommend parents work with an estate planning attorney who can advise them during the planning process. They will discover that they can address how their children’s inheritance can be managed for them while they are young, and at what ages they can learn to manage it themselves. Parents can also protect their children’s inheritance in case of divorces, or from future creditors. As an estate planning attorney, I spend a lot of time in conversations with my clients, using my experience to help them come up with the best solutions, and then we reflect those in their Wills through careful drafting.
by Verena MeiserHow to Plan for Upcoming Changes in Estate Tax Law
Can a Spousal Lifetime Access Trust (a SLAT) capture the current estate tax exemption? And could it help maintain an expensive life insurance policy? The answer to both questions is Yes.
You may be asking yourself what steps you could take in light of the anticipated drop in the estate tax exemption? If you already have an estate plan, how will these tax law changes affect your current estate plan? Is there anything else you need to do to avoid exposure to estate tax and preserve your property?
And what about that Irrevocable Life Insurance Trust aka ILIT, that you set up to shelter the life insurance proceeds from estate tax? Are the annual premiums greater than $20,000? What if the rumored changes to the annual gift tax exclusion become law, so that each of us will be limited to a total of $20,000 of excluded gifts each year? If that was the case, the excess premium above $20,000 would have to be reported on a gift tax return. And lifetime gifts erode the available estate tax exemption at the time of death.
These are only some of the questions our concerned clients are asking at this time.
We would like to describe a powerful planning tool, a trust, that you could incorporate into your existing estate plan that gives you a shot at trying to lock in the current estate tax exemption and, if you need to can provide the funds for those expensive life insurance premiums, all while continuing to keep the policy out of your taxable estate.
Meet the Spousal Lifetime Access Trust, also known by its acronym as SLAT. What is a SLAT?
It is an irrevocable Trust, set up by one spouse for the benefit of the other spouse. Assets are protected from the other spouse’s creditors, the other spouse chooses the investments and the trustees, and if the transfer to the trust is a completed gift, the assets are not part of the taxable estate of either spouse. A transfer of property to such a trust in an amount that is greater than the anticipated new estate tax exemption (anywhere from 3 to 6.8 Million) can be covered by the current unified gift and estate tax exemption. Current tax law provides that there will not be a claw back. No claw back means that the use of the exemption will not be undone if the exemption is smaller in the year the donor spouse dies. However, tax laws can be changed and even be made retroactively effective. Caution must be taken include provisions that allow for a flexible response to any estate and gift tax law changes that become the law quicker than anticipated.
How is a SLAT different from another irrevocable trust you may already have? Why would someone consider such a trust aside from the creditor and estate tax benefits?
Since the other spouse is the beneficiary of the trust, that spouse could share distributed property with the first spouse in the event the first spouse runs out of assets. That gives a sense of comfort. Children could also be added as beneficiaries, and for the unmarried individual, the trust could include provisions for a potential future spouse, often referred to as the so-called “floating spouse”. In addition, the children could be named as beneficiaries.
Some other attractive features of a SLAT are that the Spouse could have a lifetime and testamentary limited power of appointment. That means the spouse could appoint funds back to the first spouse who set up the trust.
Bottomline is that a SLAT can provide significant estate and gift tax savings making it worthwhile to consider. We are here to advise and explore if a SLAT is a good fit for your family.
Verena Meiser is an Estate Planning attorney with Lewicky, O’Connor, Hunt & Meiser, LLC. She can be contacted at (410) 489-1996 or [email protected].
by Verena MeiserHow the SECURE Act impacts your plan for your retirement accounts. It is a good time to review.
The passage of the SECURE Act left many wondering if their estate planning documents need to be
updated.
Generally, we do not need to revise your trusts to comply with SECURE. It is important to understand
that trust rules did not change. If you included conduit trusts for your beneficiaries, they will still work
as intended, as conduit trusts. If you included a see-through accumulation trusts, they will also still work
as intended, as accumulation trusts.
The 10-Year Rule Basics
The problem introduced by SECURE is that the stretch-IRA and the income tax benefits of distributions
over the life expectancy of the beneficiary are mostly gone and replaced by a requirement that the
entire IRA will have to be paid out within 10 years of your death. There are five situations where the 10-
year rule does not apply; (1) when the plan has no designated beneficiary and the plan participant dies
after the required beginning date for distributions, since the plan continues to pay over the remaining
life expectancy of the deceased plan participant, and (2-5) there are four categories of beneficiaries who
are still eligible to withdraw their inherited interest in the form of minimum required distributions over
their expected lifetime. The eligible groups of beneficiaries are (i) minor children through majority (see
discussion below), (ii) chronically ill or disabled beneficiaries, (iii) persons not more than 10 years
younger than the plan participant, and (iv) spouses named as sole beneficiaries of a trust. Spouses
named directly as beneficiaries can still roll their interest over.
For a conduit trust beneficiary, who does not fall within one of the 4 eligible categories, the 10-year rule
means the beneficiary’s entire share of the inherited IRA has to be distributed to the beneficiary within
10 years. Since the 10 year period will include months of 11 tax years, the income tax impact of
distributions can be spread over 11 tax years. The rate at which distributions are taken is up to the
trustee of the trust.
For accumulation trust beneficiaries, who does not fall within one of the four eligible categories, that
means the distributions have to be made to their trusts by the end of the 10 years, over 11 tax years,
and the trustee decides at what rate to withdraw.
We see that the SECURE Act changed the income tax reward of a life-expectancy based payout.
Children and the 10-Year Rule
A minor child beneficiary falls within one of the exceptions to the 10-year rule and the child’s life
expectancy will be used to calculate payouts until the child “attains majority”. At that time, the payouts
switch to the 10-year rule. There is a lot of confusion about what “majority” means. Until we get clear
guidance from the Treasury, the assumption is that it means age 26, as long as the child is a student.
Thus, your child’s share of your IRA will be fully distributed to your child by age 36.
Note that this rule only applies to your minor child. It does not apply to other minors, such as nieces,
nephews, or grandchildren. Also note that for a disabled child, life expectancy payouts continue as long
as the disability lasts.
If the thought of your child having control over their entire share of your IRA by age 36 is a concern, you
could remove the conduit trust provisions for your child’s trust and convert it to an accumulation trust.
Additional updates to your revocable trust could allow your Trust Protector to convert a conduit trust to
an accumulation trust at the time of your death, if circumstances should have changed for your child by
then.
An adult child will receive the payout from the IRA within 10 years of the participant’s death. A conduit
trust for an adult child could be replaced with an accumulation trust, if you wish to keep the
distributions in the child’s legacy trust for asset protection purposes and income taxation at the trust’s
income tax bracket is not a concern. Recall that trusts have compressed marginal tax brackets.
Currently, a trust pays 37% for income above $12,700. If your child is a high earner, the distributions
would be taxed at 37% whether they would be distributed outright to your child or kept in the trust. In
such cases, the benefits of asset protection may weigh in favor of replacing a conduit trust with an
accumulation trust.
Talk to Your Estate Planning Attorney Today
This is a time to review your estate plan. We offer free initial consultations for new clients and free
reviews to our existing clients.
by Verena MeiserAdvantages of Having a Separate Retirement Plan Trust
As you are planning how to leave your IRA, 401(k), 403(b) or other qualified retirement accounts to your spouse, children, or other beneficiaries, consider setting up a separate Retirement Plan Trust.
Any trust that authorizes the trustee to handle the withdrawal of assets from a retirement account and distribution to a beneficiary must contain carefully drafted provisions to comply with requirements of the IRS Tax Code to successfully achieve the desired results. Generally, there are two basic ways to structure retirement asset management by a trustee. The “conduit trust” requires that the trustee immediately distribute all withdrawn amounts to the beneficiary. The “accumulation trust” gives the trustee discretion with regard to the timing of the distribution of withdrawn amounts to the beneficiary, so that the withdrawn amounts could accumulate in the trust. For certain types of beneficiaries, such as young children, it is desirable to accumulate, and for disabled individuals receiving governmental benefits, it is necessary to accumulate in order not to disqualify the beneficiary from governmental benefits.
A significant difference between conduit and accumulation trusts is the starting time for required minimum distributions from the retirement account. In the case of a conduit trust, withdrawals distributions don’t need to start until the year in which the plan participant, who set up the account and saved into it, would have turned 70 ½ years of age. That year, the beneficiary has to begin withdrawing funds at a rate based on the beneficiary’s life expectancy. The younger the beneficiary, the smaller the distributions. In the case of an accumulation trust, withdrawals from the retirement account to the trust need to begin the year following the plan participant’s death. The withdrawal rate will also be calculated based on the beneficiary’s life expectancy.
Conduit and accumulation trusts can be incorporated into a Will or revocable trust. However, to make use of the most sophisticated planning options, including special administrative powers for the trustee and a powerful role for a trust protector, to optimize the conveyance of the retirement accounts to beneficiaries, requires skilled drafting. Incorporation of such provisions into an estate planning document that is likely to be updated at some future time, possibly by another attorney who may not be familiar with the constantly evolving tax laws affecting retirement assets, could lead to failure of the intended plan.
By using a separate retirement plan trust, the risk of plan failure can be avoided. Furthermore, the strict drafting requirements for retirement assets may stifle the flexibility that could be included in the Will or revocable trust. A retirement trust could be drafted as a conduit trust, as an accumulation trust, or as a conduit trust that can be converted to an accumulation of trust following the plan participant’s death. Such a conversion could be desirable for certain beneficiary situations. For example, the accumulation trust structure would be desirable where a beneficiary’s distributions would be exposed to the beneficiary’s creditors. Since the trustee can accumulate the withdrawn amounts, those assets can be kept in the trust and protected. Another reason to consider a separate retirement plan trust would be the nature of the assets held in the retirement account. Thus, retirement accounts that hold business entities or real estate are best administered separately from the other assets of the estate. The use of a separate retirement plan trust would build a firewall between those accounts and the rest of your estate.
by Verena MeiserThe Movement to Improve End-of-Life Health Care Planning
A nationwide movement has been underway since the late 1990s to improve end-of-life health care planning by individuals. While Advance Directives including Living Wills and Do-Not-Resuscitate Orders (DNRs) have been widely used to address future decisions regarding life support, pain relief and the administration of nutrition and fluids, they do not capture a patient’s preferred level of medical intervention for care either on a routine basis or on an urgent basis due to an acute medical condition. To give individuals the opportunity to express their medical treatment preferences, a process developed that begins with conversations between physicians and patients about available treatment options, and provides forms that record the patient’s preferences for all of the patient’s health care providers to see. Throughout the various States, these forms are known as physicians’ orders for life-sustaining treatment (POLST), medical orders for life-sustaining treatment (MOLST), physicians’ orders for scope of treatment (POST), and medical orders for scope of treatment (MOST). The National POLST Paradigm Task Force provides guidance for successful implementation of such forms.¹ In Maryland, we have the Maryland MOLST Training Task Force. The State provided regulations for the use of Maryland’s MOLST form in July 2013.²
Who Should Have a MOLST form?
Regulations require the MOLST forms to be completed at assisted living programs, home health agencies, hospices, kidney dialysis centers, and nursing homes for newly admitted patients and at hospitals for certain patients.
In addition, the rule of thumb is that any person for whom it would be true that a doctor would not be surprised if the person died within the year should have a MOLST form. Anyone of advanced age or frail health or both should have a MOLST, even those individuals who are not terminally ill, in a persistent vegetative state or suffering from an end-stage condition. Persons in these categories should have a conversation or a series of conversations regarding end-of-life care with a health care provider. Ideally, the conversations are a team effort by all involved in the person’s care and decision-making. End-of-life care is an evolving field. Understanding the nature and effects of treatments, procedures, medications, and methods, is important for every patient, and requires open and frank discussion.
1 The Center for Ethics in Health Care at Oregon Health & Science University first convened the task force. See OR. POLST TASK FORCE, GUIDANCE FOR OREGON’S HEALTH CARE PROFESSIONALS 6, 17 (2013), available at http://www.polst.org/wp-content/uploads/2013/ 12/2013.12.26-OR-Guidebook-2013.pdf 2 The Department of Health and Human Services regulations are found in COMAR 10.01.21
The Shortcomings of Advance Directives and DNRs
Most of us are familiar with a typical Advance Directive that includes a Living Will. Such a document allows an individual to specify whether or not to be administered life-sustaining treatment, as well as nutrition or fluids if the person has no expectation of recovery from a terminal condition, a persistent vegetative state, or an end-stage condition. The Advance Directive is executed with a hypothetical future health event and goes into effect in the future when the client is no longer capable of making health care decisions. At such time, the agent appointed in the directive has decision-making authority on the patient’s behalf.
Most of us are also familiar with Do-Not-Resuscitate (DNR) orders, which prevent resuscitation in the event of cardiopulmonary arrest. Such orders are issued by physicians for certain patients after a conversation with the patient or the patient’s decision-makers.
Neither the Advance Directive nor the DNR provides a client the opportunity to specify the kind and level of medical intervention, during or at the end of life, that reflect the client’s preferences, values, and goals. The choices are either for no intervention at all or full intervention. A MOLST allows the patient to clearly and accurately identify the desired level of care from among the available treatment options as they are explained to the patient or the patient’s health care decision-makers by a physician, physician’s assistant or nurse practitioner. The care-related decisions can be addressed separately from the choice regarding DNR orders. Thus, a person may not want to be resuscitated, but, in all other situations, the person may want more or less aggressive care. Since the patient may lose the capacity to participate in the conversations, it is still important to have an Advance Directive that appoints a health care agent, who can talk with the patient’s health care providers on behalf of the patient.
What Treatment Categories does the MOLST Cover?
The Maryland MOLST allows the patient to make informed choices regarding the administration of antibiotics, nutrition, fluids, ventilation, blood transfusion, hospital transfer, medical workup, and dialysis, in addition to cardiopulmonary resuscitation (CPR). As part of the conversation with medical staff regarding the treatment categories, the staff will summarize key facts and opinions about the patient’s medical situation and prognosis, and the relevance of various treatment options.³ The medical staff is expected to ensure that the patient’s choices are informed as a result of the consultation with the physician, physician’s assistant or nurse practitioner, who signs the order. Since a patient’s medical needs are likely to change over time, it is important to continue to have these conversations. The MOLST can be updated when the patient reverses an earlier decision based on changes in his or her medical condition.
What is the Purpose of the MOLST Worksheet?
An individual who is not currently facing an acute medical condition and has the capacity to discuss health care treatment options with a health care provider has the option of completing the MOLST Worksheet. The worksheet is part of the MOLST and allows a person to document treatment preferences for future situations. If and when the time comes that the person needs a MOLST, the worksheet provides valuable input for the completion of the MOLST form. The topics covered by the worksheet are the same as those addressed on the MOLST form. An individual may choose which of these topics to address. There is no requirement that all categories be worked on.
Minors with Terminal Illnesses and Individuals with Disabilities
Some states allow minors with terminal illnesses to have POLSTs, and some provide a section for special concerns of individuals with disabilities. The Maryland MOLST does not provide a section for individuals with disabilities.
MOLST Need to be Kept Where They Can Be Found – the Registry
Emergency Medical Technicians (EMTs) or first responders will respect and implement a patient’s wishes. They can only do so if they see the MOLST. A physician can provide guidance on where to keep the form; on the bedside table or room door, for the bed-ridden patient, on the refrigerator, in the purse, or any other place where it can be discovered before procedures are started that may go against the patient’s wishes.
Some states maintain a registry for their residents’ POLST or MOLST forms. The advantage of a registry is that EMTs and other providers have access to the forms. Maryland has such a registry.
³See Health Care Decision Guide for Health Care Professionals by the Maryland MOLST Training Task Force, May 2012.
Legal Protections
A competent individual’s use of a MOLST, properly executed in accordance with local law, is protected by constitutional and common law. The Due Process Clause protects our deeply personal liberty to reject medical treatment. Since the form is completed after conversations with the physician, a patient’s informed consent, as well as the individual’s liberty and privacy concerns are satisfied. A health care provider’s refusal to honor a MOLST would implicate common law and constitutional violations at the least.
The US Supreme Court has been united in its view that a competent individual, absent a specific compelling public interest has a right to refuse medical treatment.
“On balance, the right to self-determination ordinarily outweighs any countervailing state interests, and competent persons generally are permitted to refuse medical treatment, even at the risk of death. Most of the cases that have held otherwise, unless they involved the interest in protecting innocent third parties, have concerned the patient’s competency to make a rational and considered choice.”4 This language is decisive for the constitutional validity and enforceability of a MOLST. It announces that each person has a fundamental liberty interest to control his or her medical care.
The MOLST Should Be Signed By the Patient
The Task Force recommends that the MOLST be signed by the patient to ensure that there was at least some communication about the form with the patient or the patient’s health care agent. Such a requirement would increase the confidence that the form reflects the patient’s informed decisions.
Fiscal Considerations
Patients who do not wish to have very expensive treatments, benefit from having a MOLST that is properly implemented.
MOLST has to be part of estate planning and elder law consultations
The Medical Orders for Life-Sustaining Treatment (MOLST) form and associated worksheet are part of a comprehensive estate planning consultation. Estate planning and elder law attorneys need to draw clients’ attention to the existence and function of this form.
