RJG Legal

Is Estate Planning Really Such a Big Deal?

“Your obligations to your family or loved ones do not stop, even if you have already passed on. If your family, especially your children, are still heavily dependent on you, you can still provide for them through proper estate planning, even if you are no longer present.”

Delaying your estate planning is never a good idea, says The South Florida Reporter, in the new article entitled “Why Estate Planning Is So Important.” That’s because life can be full of unexpected moments and before you know it, it’s too late. Estate planning is for everyone, regardless of financial status, and especially if they have a family that is very dependent on them.

Estate planning is designed to protect your family from complications concerning your assets when you die. Many people believe that they don’t require estate planning. However, that’s not true. Estate planning is a way of making sure that all your assets will be properly taken care of by your family, if you’re no longer able to make your decisions due to incapacity or death.

Without estate planning, a court will name a person—usually a stranger—to handle your assets and finances when you die. This makes the probate process lengthy and stressful. To protect your assets after you die, you need to have an estate plan in advance. You also need to address possible state and federal taxes. Your estate plan is a way to decrease your tax burdens.

With a proper estate plan, your final wishes for your assets will be set out in a legal document. With a will or trust, all of your assets will be distributed to your beneficiaries, according to your final wishes.

This will also save your family from having to deal with the distribution of your assets, which can become very complicated without a will. There can also be family fights from the process of distributing assets without a will.

 It is also important to remember that if you do create an estate plan, you’ll need to update it every once in a while—especially if there’s a significant event that happened in your life, like a birth, a death, or a move. Your estate plan should be ever-changing, since your assets and your life can also change.

It’s vital that you work with an experienced estate planning attorney, who can help you draft the legal documents that will make certain your family is taken care of after you pass away.

Reference: South Florida Reporter (June 12, 2019) “Why Estate Planning Is So Important”

Should I Get Attorney to Write My Will?

“Estate planning can be tricky, which is why many people turn to attorneys to get the job done right.”

Drafting a will is an essential part of estate planning. Even though it’s vitally important, a recent survey from AARP revealed that two out of five Americans over the age of 45 don’t have one.

The Reflector’s recent article, “Things people should know about creating wills,” says that writing your wishes down on paper helps avoid unnecessary work and stress when you die. Signing a will allows heirs to act with the decedent’s wishes in mind and also will make certain that assets and possessions go to the right people.

Estate planning can be complicated. That is the reason why many people turn to estate planning attorneys to make sure this important task is done correctly and legally. Here are some of the estate planning topics to discuss with your lawyer:

List of Your Assets. Create a list of your assets and determine the ones covered by the will and those that will have to be passed through joint tenancy on a deed or a living trust. For instance, life insurance policies or retirement plan proceeds will be distributed by the beneficiaries you named in each account. Remember that your will can list other assets, like memorabilia, antiques, cars and jewelry.

Naming a Guardian. Parents with minor children should definitely designate the person or persons whom they want to become guardians, if they were to die unexpectedly. They can also use their will to name a person who will be in charge of the finances for the children.

Remembering Your Pets. It’s common for pet owners to use their will to detail guardianship for their pets and to leave money or property to defray the cost of their care. However, remember that pets don’t have the legal capacity to own property, so don’t leave money directly to pets in a will. A pet trust is legal in most states and is the best way to leave money and name a caretaker for your pets.

Stating Your Funeral Instructions. Settling probate won’t occur until after the funeral. As a result, any funeral wishes in a will frequently aren’t read until after the fact.

Designate an Executor. This is a trusted individual who will execute the terms of the will. He or she should be willing to serve and be capable of executing the will.

Those who die without a valid will become intestate. This will result in their estate being settled, based on the laws of where that person lived. A court-appointed administrator will have the authority to transfer the assets and property. This administrator is bound by the state’s intestacy laws and may make decisions that go against the decedent’s wishes. To avoid this, work with an experienced estate planning attorney to draft a will and other estate planning documents.

Reference: The Reflector (July 15, 2019) “Things people should know about creating wills”

What are the Best Social Security Claiming Strategies?

“Many American workers plan to rely on Social Security benefits as a steady source of income in retirement. If you are not on top of things, you are at risk for not using the right claiming strategy. If that happens, you could leave thousands of dollars on the table over your lifetime.”

If you're nearing retirement—or even if you’ve already retired—make sure that you are not forgetting the strategies discussed in CNBC’s recent article “Get a bigger check by using these Social Security claiming strategies.” Let’s take a look at what can be done to get more money in your monthly check.

1. Cancelling Social Security payments. Stopping your checks may actually pay off in the long term in some situations. If you claim retirement benefits at the earliest age possible (62), you take a permanently reduced benefit. It’s about 75% of what you are entitled to based on your earnings record. However, if you wait until full retirement age (66 or 67), depending on when you were born, you’ll get your full benefit. If you delay your benefits even longer, you get an 8% bump for every year you wait up until age 70. In all, that’s a potential increase of 32%. If you take Social Security benefits early at 62, you can still change your mind once you reach full retirement age.
2. Filing based on your spouse's record. A 2015 law permanently limited a number of retirement strategies available to beneficiaries. However, one strategy—a restricted benefits application—has been grandfathered in for certain claimants. The key date is January 1, 1954. If you were born on that date or earlier, you can still take advantage of this. Therefore, if you are eligible for benefits on your spouse or ex-spouse's record, you can file for spousal benefits at full retirement age and allow your own retirement benefits to grow until age 70. To do this, your spouse must qualify for retirement benefits. However, you can’t let one spouse file for benefits, based on another spouse's suspended record.
3. Claiming surviving divorced spousal benefits. If it's been some time since you divorced, you could still be eligible for divorced spousal benefits if your ex dies, provided you didn’t remarry before age 60.
4. Collecting benefits with an earnings penalty. There’s a penalty if you collect retirement benefits and continue to work, based on your age. If you are under full retirement age, for every $2 you earn above that threshold, the Social Security Administration deducts $1 from your benefit payments.

Reference: CNBC (December 11, 2018) “Get a bigger check by using these Social Security claiming strategies”

What Exactly is Long-Term Care Insurance?

“Surprisingly, the words "Long-Term Care (LTC) Insurance" mean different things to different people.”

Some people confuse Long-Term Care (LTC) with Long-Term Disability Insurance. The disability insurance coverage is designed to replace earned income in the event of a disability. Others think that LTC is a type of medical insurance.

nj.com’s recent article entitled “The benefits of long-term care insurance” explains that long-term care insurance isn’t meant to be disability income replacement, and it isn’t medical insurance. LTC insurance covers the varied personal needs of persons who are ill and (even temporarily) incapacitated. This includes feeding, clothing, bathing, and driving to appointments and doing the extra washing.

Some people consider LTC insurance as what was once called “Nursing Home Insurance.” This evolved to include either care at home or care in a rehab or nursing home facility.

Married couples are especially susceptible, when one spouse becomes ill or injured because the extra costs of long-term care can eat up all their savings and bankrupt the caregiver spouse. For that reason, those in their 50's should start to look at LTC insurance for several reasons:

1. Annual premiums are lower when acquired at younger ages; and
2. Aging may bring health issues in the future, which may prohibit the opportunity to buy LTC insurance coverage altogether.

 

There are many ways to tailor LTC coverage to make it affordable. The most critical components of an LTC insurance policy include the following:

• The average period of need for most is three years.
• The daily amount of coverage varies by geographical area.
• Home care should be the same as that for care in a facility.
• The waiting period, which determines when the coverage actually starts after the date the incapacity began.
• Married individuals can get a combined policy with a discount.
• An inflation rider: The daily cost of coverage will naturally increase over time with inflation, selecting a rate of inflation will ensure keeping up with rising costs in the future.

Every family should have an open discussion about potential illness or incapacity of family members, and LTC should be a part of that.

Reference: nj.com (January 6, 2019) “The benefits of long-term care insurance”

Do You Have a Will?

“Despite the importance of having a will, a recent survey from AARP found that two out of five Americans over the age of 45 do not have one.”

Drafting a will is an essential component of estate planning.

Drafting a will with an experienced estate planning attorney helps avoid unnecessary work and perhaps some stress, when a family member passes away. A will permits the heirs to act with the decedent's wishes in mind and can make certain that assets and possessions are passed to the correct individuals or organizations.

The Delaware County Daily Times’ recent article, “Senior Life: Things people should know about creating wills,” says that estate planning can be complicated. That’s the reason why many people use an experienced attorney to get the job done right. These attorneys specialize in estate planning and will discuss the following topics with their clients.

• Assets: Create a list of known assets and determine which of those are covered by the will and which have to be passed on according to other estate laws, such as through joint tenancy or a beneficiary designation, like life insurance policies or retirement plan proceeds. A will also can dispose of other assets, such as photographs, mementos and jewelry.
• Guardianship: Parents with minor children should include a clause regarding whom they want to become the guardians for their underage children or dependents.
• Pets: Some people use their will to instruct the guardianship of pets and to leave assets for their care. However, remember that pets don’t have the legal capacity to own property, so don't give money directly to pets in a will.
• Funeral instructions: Finalizing probate won’t occur until after the funeral, so wishes may go unheeded.
• Executor: This individual is a trusted person who will carry out the terms of the will. She should be willing to serve and be capable of executing the will.

 

Those who die without a valid will become intestate. This results in the estate being settled based upon the laws where that person lived. A court-appointed administrator will serve in the capacity to transfer property. This administrator will be bound by the laws of the state and may make decisions that go against the decedent's wishes.

To avoid this, a will and other estate planning documents are critical. Talk to an estate planning attorney this week.

Reference: The Delaware County Daily Times (January 7, 2019) “Senior Life: Things people should know about creating wills”

Professional Guardian Preys on Elderly in Nevada

“The choices she made were out of greed, not because she didn’t understand the ethical obligations of being a guardian.”

Several people described their personal grief, and they read letters from several others who lost thousands of dollars and expensive heirlooms that would never be replaced, because a guardian stole from elderly victims for whom she was supposed to care.

The Las Vegas Journal-Review reported in a recent article, “Ex-Nevada guardian to serve up to 40 years behind bars,” that as victims wept and told their stories of suffering during a court hearing, a shackled and seated April Parks kept her head turned and never looked their way.

Karen Kelly, Clark County’s public guardian, read through a long list of names of seniors who were victimized and lived under “intense anxiety and anguish” for the final years of their lives because of Parks and those who worked closely with her. Parks’ business partner, Mark Simmons, and her husband, Gary Neal Taylor, also were ordered to serve time in prison. In addition, the judge ordered the three defendants to pay more than $500,000 to their victims. Parks, 53, pleaded guilty last year to exploitation, theft and perjury charges.

One woman, Barbara Ann Neely, said Parks separated her from family and friends, saying, “She was not a guardian to me.”

Neely said. “She did not protect me. As each day passed, I felt like I was in a grave, buried alive.”

Another victim compared Parks to Hitler.

The 53-year-old Parks told the judge that she accepted responsibility “but never intended harm,” adding that “things could have been done better. … We were a group practice, and honestly I think some things got ahead of us.”

She claimed that she had a “great passion” for guardianship and took “great care and concern” in her work.

Parks was one of the most active private professional guardians in Nevada, and she frequently acted as the surrogate decision-maker for as many as 50 to 100 elderly and mentally incapacitated people at a given time. As guardian, she had total control of their finances, estates and medical decisions.

Las Vegas Journal-Review (January 4, 2019) “Ex-Nevada guardian to serve up to 40 years behind bars”

What States are Most Concerned with End-of-Life Issues?

“While roughly 90% of Americans agree that discussing end-of-life care with their loved ones is important, only 27% actually follow through with conversations focused on planning, according to research from public engagement initiative The Conversation Project.”

Although many have ramped up community outreach efforts, the dread of thinking about death has been a roadblock for hospice providers in some parts of the country, says the Home Health Care News in the recent article, “These States Are Most Concerned About End-of-Life Issues.”

A new study identified several states where end-of-life is on people’s minds. It found that overall, Wisconsin is the state most concerned about end-of-life issues, with New York as a close second. New Hampshire, South Dakota, and Ohio make up the rest of the top five. And the states least concerned about end-of-life issues: Nevada, California, Wyoming, Utah and Alaska.

As a state with a large senior citizen population, California’s spot in the latter group was somewhat surprising to the researchers. They found that population size has little to no bearing on concern or awareness toward end-of-life issues. They assumed that states like California or Florida, two states that have some of the highest senior citizen populations in the country, would rank at the top of our list for end-of-life issues. However, it turned out that states in the Midwest, like Wisconsin, South Dakota, and Ohio are more concerned about these issues.

To determine which states are thinking the most about end-of-life issues, the study evaluated the prevalence of certain targeted online search terms, like “palliative care,” “estate planning,” “end-of-life care,” “home care,” “caregiver” and “assisted living.” The term “home care” ranked the highest in northeastern states like New York, Pennsylvania, and Connecticut. New York’s interest in home care could, perhaps, be explained by the fact that home health aides and personal care aides are among the state’s largest occupational group, the researchers contend.

Nationally, home care employment is anticipated to increase by more than 40% between 2016 to 2026, according to the U.S. Bureau of Labor Statistics. They found that a state’s interest in a given end-of-life topic was based on a health care-related issue unique to that area.

Although Alaska was toward the bottom of the study, it was first in hospice admissions growth from the second quarter of 2017 to the same period in 2018. In fact, the state’s hospice admissions increased by more than 17%, far outpacing Wisconsin 6.5% growth, according to the latest data.

Alaska, Delaware, and South Dakota all experienced double-digit hospice admissions growth from Q2 2017 to Q2 2018. In contrast, Maine, North Dakota, Nebraska, Hawaii, New York, and Rhode Island all experienced negative growth.

Reference: Home Health Care News (January 6, 2019) “These States Are Most Concerned About End-of-Life Issues”

How Does the Medicaid Look-Back Work?

“Medicaid will look back five years, to see if there should be a penalty period.”

Say that an investment house in New Jersey worth $300,000 is passed from mother to daughter for sale of $1 today. Just two years later, the mother applies for Medicaid. There’s a look-back penalty period that will apply, says nj.com in the recent article, “If mom sells her house for $1, what Medicaid penalty will apply?” The article explains that when someone applies for Medicaid, gifts create periods of Medicaid ineligibility.

A Medicaid applicant is required by the government to document all of her financial transactions during the "look-back period." That period is five years immediately prior to the date of application.

If the applicant’s financial records show a transfer of assets within that period, the Medicaid administrators will presume that the assets were transferred to promote eligibility for Medicaid benefits. This could be a check or withdrawal, for which there is no explanation other than a gift.

The value of the transfer will be divided by the statewide daily nursing home rate to get the number of months of the ineligibility, also known as the penalty period. In New Jersey, that rate is currently $343.85, or $10,459 per month.

The five-year year look-back period commences when the transfer is made. However, the penalty period of ineligibility starts on the date the applicant is otherwise eligible for medical assistance under the State plan, but for the application of the penalty period.

So, in our $1 house example, if the New Jersey Medicaid applicant transferred $300,000, the monthly penalty period of ineligibility for this transfer would be calculated by dividing $300,000 by $10,459, which equals 28.68 months of ineligibility. There is no rounding down, by the way.

The penalty period would start when the applicant medically needs an institutional level of care, has countable resources below $2,000 and has filed a Medicaid application to establish that she would have been otherwise eligible but for the asset transfer. Note: there’s no limit on the length of the penalty period.

Thus, assuming the applicant otherwise would have qualified for Medicaid but for the asset transfer, the applicant wouldn’t be eligible for Medicaid for an additional 28.68 months.

However, if the application was made more than 60 months after the transfer date, then the transfer would be outside of the 60-month lookback period and, if no other transfers were made, then no penalty period would be imposed, and the applicant would be eligible 61 months after the transfer date.

Contact an elder law attorney in your state to learn how the rules would apply under local law. There are a number of strategic asset protection tools available, but they must be completed in a timely fashion.

Reference: nj.com (December 25, 2018) “If mom sells her house for $1, what Medicaid penalty will apply?”

Choose Power of Attorney Agents Wisely

“O’Hara used a steady stream of his mother’s income from Social Security and other investments ‘to pay for personal expenses, including cell phone plans, credit card payments, youth soccer fees and entertainment,’ the indictment said.”

For nearly four years, John Jerome O’Hara took charge of his mother’s care at a Kentucky nursing home. She suffered from Alzheimer’s disease.

O’Hara gained power of attorney over her affairs in June 2014. He was expected to manage thousands of dollars in income a month. In addition, O’Hara was supposed to use that income for his mom’s living expenses at Wesley Manor in Louisville.

However, reports The Washington Post in the article “He had power of attorney over his Alzheimer’s-afflicted mother—and stole $332,000, grand jury says,” for nearly four years, O’Hara robbed his mother instead. The charges contained 18 counts—ten of bank fraud, four of wire fraud and four of “access device fraud.”

The charges carry a maximum of several lifetimes in prison, the indictment said.

Each bank fraud count carries a maximum of 30 years in prison. In addition, there’s the potential for hefty fines and restitution.

O’Hara took the funds, in part, by writing checks to himself, according to the indictment.

He also wrote checks out to cash or signed “POA” for power of attorney. He withdrew money from her bank accounts to use for his expenses, prosecutors allege.

O’Hara’s alleged theft left a trail of financial distress, which was clear to investigators. Most significantly, he failed to pay his mother’s living expenses, the indictment said. This forced other family members to pay more than $100,000 to keep her cared for at the nursing home.

In addition, O’Hara left other obligations unpaid. He missed mortgage payments at his mother’s home in Lexington, the indictment said, and the home was foreclosed in March, as a result.

Reference: The Washington Post (December 9, 2018) “He had power of attorney over his Alzheimer’s-afflicted mother—and stole $332,000, grand jury says”

What is Seattle Doing to Combat Elder Abuse?

“As Seattle’s senior population rises, elder abuse is increasingly becoming an issue on city officials and caretakers’ radars. Advocates throughout the nation are calling on states to increase public awareness of elder abuse and for courts to respond to the epidemic.”

Research from the New England Center for Investigative Reporting shows that adult protective services throughout the country conducted more than 713,000 elder-abuse investigations in fiscal year 2017. Almost a third of the cases identified the victims of abuse or self-neglect. In Washington State, reported elder-abuse cases increased from 19,000 in 2012 to 49,000 in 2017, according to Seattle Weekly’s recent article, “Seattle Takes on Elder Abuse as Reported Cases Rise.”

Mary Lynn Pannen, the founder and CEO of Washington-based geriatric care management firm Sound Options, remarks that the increased reporting is a result of better data collection. She has seen progress in the state’s response to elder abuse, since she worked as the head of a Tacoma-Pierce County Health Department counsel that focused on the issue 35 years ago. Over the past 30 years, she and her staffers have consulted with families throughout the region on caring for older adults. Employees help caretakers create and execute care plans, work with elder law attorneys and advocate on behalf of people in care facilities. Staffers are trained to be keenly aware of elder-abuse cases, which typically show up as financial exploitation. They’ll look for signals like bruises on the senior’s body or a refusal by family members or caretakers to allow the senior to respond to the staffers’ inquiries. Once they’ve gathered enough information to suspect abuse, staffers then report it to Adult Protective Services.

“One of the things to prevent abuse, is to make sure that we can help de-stress the whole family unit, because caregiving is really hard,” Pannen said. “This is a serious issue and we need to have the public understand that.”

Abuse often goes unreported because older adults feel shame or are unaware about the neglect or abuse they’ve received from their own family members or caregivers. Local agencies have strengthened protections for seniors in recent years.

The Seattle Human Services Department’s Aging and Disability Services Division (HSD/ADS) seeks to address the widespread issue, by working with the Office of the King County Prosecuting Attorney and Adult Protective Services to provide older adults with financial, health, legal services and safe housing in the face of abuse.

According to Adult Protective Services’ (APS) data, King County’s work is helping to increase elder-abuse reporting. They reported a nearly 50% increase over the previous five years in reported allegations of elder abuse in 2014. In 2017, more than 11,000 allegations were reported to APS in the region that includes King County, with nearly 30% of the cases concerning financial exploitation.

Reference: Seattle Weekly (December 12, 2018) “Seattle Takes on Elder Abuse as Reported Cases Rise”

Suggested Key Terms: Elder Abuse, Seniors, Financial Exploitation, Aging