Stay Current and You’ll Stay Protected
May 27, 2010
In many of our previous posts we’ve stressed the importance of keeping your estate planning documents up-to-date. Changes to the law, as well as changes to your own personal, medical and financial status can wreak havoc on a well-crafted estate plan if these changes aren’t addressed. A good rule of thumb is to have your attorney review your estate planning documents every 2-5 years, but are there other changes or life events that might necessitate a more immediate review or update? The answer to that question is YES!
Andrew Chan has written a short article for the Boston Globe in which he lists 13 significant life events that should have you reaching for the phone to call your attorney. To go to the article and read his list click here. To Mr. Chan’s list we would add just a few more life events that could have an effect on your estate plan:
The approaching need to rely upon assistive living care from caregivers in the home, assisted living or nursing facility.
Concerns about the decline in cognitive mental abilities of yourself or your spouse.
A change in residence—especially if you move to a new state.
Children or grandchildren turning 18 or graduating from college—this may or may not change your estate plan, but at the very least your young adults will now need their own health care directives and privacy forms.
If you anticipate one of your relatives or heirs disagreeing with your wishes and challenging your will, trust or overall estate plan.
There are of course a great number of things which could impact your estate plan, not all of which can be named in one article or blog post; but if you stay aware—and stay in touch with your estate planner—you can rest easy that your plan will continue to function exactly as you intend.
Senator Kennedy’s Legacy May Also Be Yours
May 23, 2010
One of the most important pieces of the recently enacted ”Patient Protection and Affordable Care Act” is the “CLASS Act“, which stands for the Community Living Assistance Services and Supports program. Authored by the late Senator Ted Kennedy and others, it creates — for the very first time — a long term care insurance plan to help those with functional impairments pay for necessary care at home or in their communities. While the daily benefit is limited, the CLASS Act will help many continue to live at home or in assisted living facilities, rather than be forced prematurely into a nursing home in order to qualify for government assistance. Some key features of the program are:
(1) enrollment is open to those who are employed and choose to make voluntary monthly contributions to the program, and there is no underwriting exclusion based on pre-existing conditions; enrollment will open January 1, 2011; (2) eligibility kicks in only after the individual has been enrolled in the voluntary payroll deduction program for 5 years, but the payout will not begin until 2017; (3) benefits will be a minimum of $50/day but be scaled up as high as $75/day, depending upon the degree of impairment, and there is no lifetime “cap” on payout; (4) benefits will coordinate with government assistance from the Medi-Cal program, such that CLASS benefits will have no effect on eligibility for Medi-Cal, Medicare, Social Security Retirement or Disability benefits, nor SSI. In fact, persons in nursing homes who qualify for CLASS benefits will be able to retain 5% of their daily or weekly cash benefit without seeing a reduction in their Medi-Cal subsidy.
Unfortunately, because of the 5 year vesting requirement and the companion requirement that the individual be employed for at least 3 out of those 5 years, most currently retired seniors will not see any direct benefit from the program. However, seniors can, and should in our view, encourage their children and family members who are still employed to sign up. That encouragement can be a part of the parents’ legacy to their own children, just as Senator Kennedy left his legacy to the nation.
For more on topic, see the following fact sheet prepared by the Kaiser Family Foundation.
Stuck In The Middle: Caring For Aging Relatives
May 20, 2010
“Too rich for most government-funded social programs and not rich enough to pay for full-time, long-term care services.”
Does this sound familiar? It is exactly the kind of financial situation most elderly find themselves in today, and one which requires many adult children who are still raising their own kids to also care for their parents. That is the situation in which Michelle Singletary, Washington Post staff writer, finds herself in today. In her W.P. article Prepare now for a future that might include caring for your elderly family, she describes the feelings of frustration, admiration, and obligation that come with caring for her elderly father-in-law.
Singletary writes movingly about the realities of caring for an aging relative, but what she seems most determined to convey is that it is never too early to start thinking about what your own parents’ future holds. “If you have even an inkling that you may become the caregiver for an aging parent or relative, start planning for it now. Ask questions about the person’s finances. Collect information from community and nonprofit organizations. Get your own finances in order because you’ll probably have to pitch in financially.”
Part of planning for your aging parent or relative is thinking about Medi-Cal (called “Medicaid” in most other states), Long-Term Care Insurance, and the best way to save and protect your assets. Many aging parents believe that they are “covered” if they have a Will or even a convential “Living Trust”. Those legal documents may be fine for ‘death planning’, but may fall short for Long Term Care Planning. Call our firm and let us help you—and help your aging parents.
Ensure Your Wishes for Medical Treatment are Followed: Share Them With Your Doctor
May 18, 2010
This time of year often involves spring cleaning for many families: reorganizing the closets, clearing the weeds and brush from the yard, and getting rid of all those boxes in the garage or basement. Spring seems to be a time to take stock and start fresh… at least in the home. But what about with your health?
We’re not talking about the diet you vowed to follow in your New Year’s Resolution, or trying to look good in that new bathing suit for summer; what we’re talking about is your annual checkup—taking stock of your health with your primary care physician and making sure you’re both on the same page with your instructions for health care and your advanced healthcare directive or living will.
When clients come into our office for an estate plan, we ensure that their healthcare instructions are completed as well; but the job doesn’t end when the document is signed. Your health care providers need to be aware of your wishes as well. The best way to ensure that they know and understand your wishes is to take a copy of your advanced healthcare directive or living will with you to your next check up and talk to your physician about it, then ask them to keep the copy on file.
A rule of thumb with healthcare wishes is to give a copy of your living will or healthcare directive to each of your primary care physicians, give a copy to each of the healthcare agents you’ve nominated, AND keep a copy or two on file to take with you if you ever need to go to the hospital. And of course keep the signed original in a safe place with the rest of your estate planning documents.
Take Action in the Face of Estate Tax Uncertainty
May 13, 2010
If you’ve been reading our blog regularly then you know that the 2010 estate tax repeal has caused no end of confusion and uncertainty; not only for those who have been dealing with probate and trust administration since the tax was first repealed, but also for those who are trying to think ahead and do the right thing for their spouses and children. Many people have come to the erroneous conclusion that they have no choice but to stand by and wait until the Washington politicians make up their minds about whether or not to restore the estate tax retroactively—but we’re here to tell you that you don’t have to wait to protect your assets and your family.
Forbes.com recently published an article entitled How to Protect Your Family From Estate Tax Uncertainty. This article suggests that there are a number of steps you can take right now to protect your heirs and your assets, even if you don’t know what changes lawmakers may enact tomorrow or 2 months from now. Their suggestions include everything from working with your estate planning attorney on contingency plans to account for anomalies such as no estate tax or minimum exemptions, to common sense action items such as taking the time now to track your cost basis for assets (to help your executor and heirs determine the change in value for tax purposes.) The Forbes article also suggests that some people may want to plan to save by giving—taking advantage of the gift tax exemption amounts. For more on a special technique involving the use of “Disclaimers” in the current estate tax climate, see Attorney Osofsky’s recently published article.
There are always steps you can take to ensure that your estate plan is up to date, our firm can be your compass and your guide; we can help your family prepare for whatever the future may have in store.
Robin Hood Lives On: Tax Breaks to Help Your Family
May 11, 2010
It may seem like you just can’t catch a break when it comes to paying taxes, but according to this article in the Wall Street Journal there are a few little known tax breaks that could end up saving your family money. Some are new—so new, in fact, that it is still before the Senate—such as the tax exemption for employer provided cell phones and smart phones; and some—like the tax free income homeowners can earn if they rent out their home for 14 days or fewer during a year—have been around for a few years.
Of particular interest to our clients is the gift tax exclusion (another lesser known tax break that has been around for a few years.) As stated in the article, “Anyone may give anyone else up to [$13,000] per year in cash or property, free of gift tax. One partner of a married couple can double the gift and the exemption. So a couple with three married children and six grandchildren could give away over $300,000 a year, tax-free.”
We say that this gift tax exclusion may be of particular interest to our clients because if you are looking for a way to lower your estate tax, or anticipate applying for government medical services in the next few years, giving gifts to loved ones right now may help you achieve your goal—if you go about it the right way. One caution: if you make large gifts now, they could prevent you from qualifying for a government subsidy, Medi-Cal, in the event you need long term care in a nursing facility. At the moment, however, there are ways that you can both (1) make tax free gifts to family members AND (2) minimize (or even eliminate) the risk to a long term care subsidy should you need it. However, such gifts must be very carefully managed so as to be compliant with both tax law and with Medi-Cal rules. Expert guidance is essential.
Contact our office if you would like guidance as to how any of these “Robin Hood” tax saving techniques may help your family this year.
Protecting Your Parents, Protecting Yourself
May 10, 2010
Do you need long-term care insurance? You may think you’re too young to think about that quite yet, but what about your parents? If you’re reading this blog it’s likely that your parents are at an age where they soon may need some sort of care, whether that will be in-home care, nursing care, or even need to stay in a nursing facility; if your parents haven’t planned ahead for this eventuality, the burden for their care—either financial or physical or both—may fall on you.
It is for this very reason that a new trend in long-term care insurance seems to be emerging. According to this article by Stacy Schultz, there is an upswing in the purchase of long-term care insurance by the Boomer Generation—except the insurance isn’t for the Boomers themselves, it’s for their parents. “Many of them have just had a relative go through being in a nursing home, and they see the devastation and the stress it causes,” quotes the article. “They’re concerned about mom and dad, and if their parents don’t have a lot of means they want to buy insurance for them.”
If you are considering buying long-term care insurance, either for yourself or your parents, you have a number of options, especially compared to even just a few years ago. Forbes.com recently published an article outlining the improvements in long-term insurance, and what your options are if you’re buying it today.
Take an hour or two this month to talk to your parents (or your kids) and advisors about what the coming years have in store. You may not need long-term care insurance, but you will certainly need a plan, and it’s never a bad idea to know your options, especially when it comes to protecting your future. In the lives of many Boomers, protecting their own future also means protecting their parents’ futures.
Recent Deaths Bring Home the Consequences of No Estate Tax in 2010
May 8, 2010
There was too much confusion to be much rejoicing when the estate tax was repealed for a year on January 1st, 2010. Although the words “no estate tax” may sound good, nobody really expected the state of affairs would last. Most experts believed that Congress would never actually let it happen in the first place; then when ’09 became ’10 without any action on the estate tax repeal that the George W. Bush administration had put into place experts warned people not to get too comfortable, that a retroactive estate tax would likely be implemented.
Well, we’re 4 months into 2010 and there is still no retroactive estate tax—but there is also still no rejoicing. This is because the lack of estate tax has actually created more problems than it has solved for the wealthy and affluent. According to this article in Financial Advisor Magazine the recent deaths of Texas billionaire Dan Duncan and Taco Bell founder Glen W. Bell, Jr. have only made it clear to tax attorneys that “lawsuits of various kinds will blossom in the estate-tax vacuum. The more money left on the table when the wealthy die, the more likely heirs are to fight for years over who should inherit.”
And you don’t have to be a billionaire to feel the consequences of the lack of tax. This article in Bloomberg Businessweek explains that those who think they’re catching a break on the estate tax could instead “…wind up paying stiff capital-gains taxes on inheritances. That’s because of the disappearance of what’s known as the “step-up” in basis, which allowed assets to be revalued for tax purposes at the time of death.”
But even this is preferable to finding yourself unintentionally disinherited by standard estate tax clauses included in older wills and trusts, a scenario that is more likely to happen than you may think if your spouse or parent hasn’t had their estate plan reviewed yet this year. For more on this see Attorney Gene Osofsky’s article, “Estate Tax Repeal Creates Planning Dilemmas: Some Spouses May Now Be Left ‘Out In The Cold’”.
What is the bottom line? Every silver lining has a dark cloud, and you want to take every precaution possible to keep your heirs safe from the storm during this “gap year” in the estate tax.
Jinies.com