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EP Planning Pandemic

How Important Is Estate Planning in the Pandemic?

How Important Is Estate Planning in the Pandemic?

Estate Planning during a pandemic. Waiting to create a will leaves nothing but headaches for your heirs and relatives. With nearly 200,000 deaths due to Covid-19 in the U.S. alone, we are reminded of how fast our lives can change.

The Street’s recent article entitled “Life Changes Fast: The Importance of Estate Planning and Health Care Directives” also notes that this reminds us how important it is to make sure we have current estate planning decisions and end-of-life decisions in place.

Here is a basic overview of some important areas of estate and health care planning you should consider:

Your Assets and Belongings

An experienced estate planning attorney can help you determine if a will or a trust would best take care of your objectives and needs. Don’t make this decision on your own because there are major differences between these two types of documents.

Some people use a living trust instead of a will because it avoids the publicity and expense that comes with the probate process. Ask your attorney what is best for your family and situation.

You’ll need to name an executor, who will be in charge of making sure your requests are carried out, including the division of assets. In addition to your will or trust, be sure the beneficiaries on your life insurance and accounts, such as your bank and retirement accounts are current. You should also see how the title is held on any real estate property you own.

Health Care and Your Body

Make certain that it’s super clear and in writing as to what your final wishes are for your medical treatment and final arrangements. Your documents need to address what type of medical treatment you want, if you are not able to make those decisions for yourself. It should also be clear as to any specific life-preserving measures you would want taken.

A power of attorney for healthcare lets you name an agent to make health-related decisions for you, if you’re unable to do so. Some states combine both the power of attorney for health care and a living will into one document, which is called an advance directive. If you want to be an organ donor, make sure this is recorded and your wishes are known (some states have directories or it’s on a person’s driver’s license). Be sure that your hospital and doctor are aware of your wishes and they have copies of any necessary documents.

Guidance and Financial Help. Always consult with an experienced estate planning attorney to be certain that your wishes and objectives are properly spelled out and legally binding.

Reference:  The Street (Aug. 28, 2020) “Life Changes Fast: The Importance of Estate Planning and Health Care Directives”

Read more related articles at:

Pandemic highlights importance of estate planning

Estate Planning Tips Amid The Pandemic

Also, read one of our previous Blogs at: 

What are Some Good Estate Planning Ideas in the Pandemic?

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Guardianship

How Does Guardianship Work?

How Does Guardianship Work?

For the most part, we are free to make our own decisions regarding how we live, where we live, how we spend our money and even with whom we socialize. However, when we are no longer capable of caring for ourselves, most commonly due to advancing age or dementia, or if an accident or illness occurs and we can’t manage our affairs, it may be necessary to seek a guardianship, as explained in the recent article “Legal Corner: A guardian can be a helpful tool in cases of incapacity” from The Westerly Sun. A guardianship is also necessary for the care of a child or adult with special needs.

If no proper estate planning has been done and no one has been given power of attorney or health care power of attorney, a guardianship may be necessary. This is a legal relationship where one person, ideally a responsible, capable and caring person known as a guardian, is given the legal power to manage the needs of a ward, the person who cannot manage their own affairs. This is usually supported through a court process, requires a medical assessment and comes before the probate court for a hearing.

Once the guardian is qualified and appointed by the court, they have the authority to oversee everything about the ward’s life. They have power over the ward’s money and how it is spent, health care decisions, residential issues and even with whom the ward spends time. At its essence, a guardianship is akin to a parent-child relationship.

Guardianships can be tailored by the court to meet the specific needs of the ward in each case, with the guardian’s powers either limited or expanded, as needed and as appropriate.

The guardian must report to the court on a yearly basis about the ward’s health and health care and file an annual accounting of what has been done with the ward’s money and how much money remains. The court supervision is intended to protect the ward from mismanagement of their finances and ensure that the guardianship is still needed and maintained on an annual basis.

The relationship between the ward and the guardian is often a close one and can continue for many years. The guardianship ends upon the death of the ward, the resignation or removal of the guardian, or in cases of temporary illness or incapacity, when the ward recovers and is once again able to handle their own affairs and make health care decisions on their own.

If and when an elderly family member can no longer manage their own lives, guardianship is a way to step in and care for them, if no prior estate planning has been done. It is preferable for an estate plan to be created and for powers of attorney be created, but in its absence, this is an option.

Reference: The Westerly Sun (Sep. 19, 2020) “Legal Corner: A guardian can be a helpful tool in cases of incapacity”

Read more related articles at:

Guardianship

Also read one of our previous Blogs at:

What Should I Know about Guardianship?

Click here to check out our Master Class!

INHERITANCE TAX

Protecting Inheritance from the Taxman

Protecting Inheritance from the Taxman

Wealth Advisor’s recent article entitled “4 Ways to Protect Your Inheritance from Taxes” explains that inheritances aren’t considered income for federal tax purposes—whether it’s cash, investments or property. However, any subsequent earnings on the inherited assets are taxable, unless it comes from a tax-free source. You must report the interest income on your taxes. Any gains when you sell inherited investments or property are also taxable (but you can usually also claim losses on these sales). Remember that state taxes on inheritances vary, so ask an experienced estate planning attorney for details. Let’s look at fours steps you can take to protect your inheritance:

Look at the alternate valuation date. The basis of property in a decedent’s estate is the fair market value (FMV) of the property on the date of death, but the executor might use the alternate valuation date, which is six months after the date of death. This is only available, if it will decrease both the gross amount of the estate and the estate tax liability, typically resulting in a larger inheritance to the beneficiaries. If the estate isn’t subject to estate tax, then the valuation date is the date of death.

Use a trust. If you know you’re getting an inheritance, ask that they create a trust for the assets. A trust lets you to pass assets to beneficiaries after your death without probate.

Minimize retirement account distributions. Inherited retirement assets aren’t taxable, until they’re distributed. There are rules as to when the distributions must happen. If one spouse dies, the surviving spouse usually can take over the IRA as his or her own. Required minimum distributions (RMDs) would begin at age 72, just as they would for the surviving spouse’s own IRA. However, if you inherit a retirement account from someone not your spouse, you can transfer the funds to an inherited IRA in your name. You have to start taking minimum distributions the year of or the year after the inheritance, even if you’re not yet 72.

Make some gifts. It may be wise to give some of your inheritance to others. It will be a benefit to them, but it could also potentially offset the taxable gains on your inheritance with the tax deduction you get for donating to a charitable organization. If want to leave money to people when you die, you can give annual gifts to your beneficiaries while you’re still living up to a certain amount—$15,000 for to each person without being subject to gift taxes. Gifting also reduces the size of your estate, which can be important if you’re close to the taxable amount. Talk with an experienced estate planning attorney to be certain that you’re staying current with the frequent changes to estate tax laws.

Wealth Advisor (Sep. 15, 2020) “4 Ways to Protect Your Inheritance from Taxes”

Read more related articles at:

Best Ways to Protect Your Estate and Inheritances From Taxes

4 Ways to Protect Your Inheritance from Taxes

Also, read one of our previous Blogs at:

What Exactly Is the Estate Tax?

Click here to check out our Master Class!

Probate Process

What’s Involved in the Probate Process?

What’s Involved in the Probate Process?

SWAAY’s recent article entitled “What is the Probate Process in Florida?” says that while every state has its own laws, the probate process can be fairly similar. Here are the basic steps in the probate process:

The family consults with an experienced probate attorney. Those mentioned in the decedent’s will should meet with a probate lawyer. During the meeting, all relevant documentation like the list of debts, life insurance policies, financial statements, real estate title deeds, and the will should be available.

Filing the petition. The process would be in initiated by the executor or personal representative named in the will. He or she is in charge of distributing the estate’s assets. If there’s no will, you can ask an estate planning attorney to petition a court to appoint an executor. When the court approves the estate representative, the Letters of Administration are issued as evidence of legal authority to act as the executor. The executor will pay state taxes, funeral costs, and creditor claims on behalf of the decedent. He or she will also notice creditors and beneficiaries, coordinate the asset distribution and then close the probate estate.

Noticing beneficiaries and creditors. The executor must notify all beneficiaries of trust estates, the surviving spouse and all parties that have the rights of inheritance. Creditors of the deceased will also want to be paid and will make a claim on the estate.

Obtaining the letters of administration (letters testamentary) obtained from the probate court. After the executor obtains the letter, he or she will open the estate account at a bank. Statements and assets that were in the deceased name will be liquidated and sold, if there’s a need. Proceeds obtained from the sale of property are kept in the estate account and are later distributed.

Settling all expenses, taxes, and estate debts. By law, the decedent’s debts must typically be settled prior to any distributions to the heirs. The executor will also prepare a final income tax return for the estate. Note that life insurance policies and retirement savings are distributed to heirs despite the debts owed, as they transfer by beneficiary designation outside of the will and probate.

Conducting an inventory of the estate. The executor will have conducted a final account of the remaining estate. This accounting will include the fees paid to the executor, probate expenses, cost of assets and the charges incurred when settling debts.

Distributing the assets. After the creditor claims have been settled, the executor will ask the court to transfer all assets to successors in compliance with state law or the provisions of the will. The court will issue an order to move the assets. If there’s no will, the state probate succession laws will decide who is entitled to receive a share of the property.

Finalizing the probate estate. The last step is for the executor to formally close the estate. The includes payment to creditors and distribution of assets, preparing a final distribution document and a closing affidavit that states that the assets were adequately distributed to all heirs.

Reference: SWAAY (Aug. 24, 2020) “What is the Probate Process in Florida?”

Read more related articles at:

The Probate Process

What Is Probate, and How Does It Work?

Also, read one of our previous blogs at:

How Does a Probate Proceeding Work?

Click here to check out our Master Class!

 

Elderly during COVID-19

New Survey Conducted on Keeping the Elderly Safe in the Pandemic

New Survey Conducted on Keeping the Elderly Safe in the Pandemic

Those in our oldest generations, who were recently surveyed, were found to be more distrustful of senior living and care operators than younger generations.

Nearly half (49.5%) of baby boomers said they don’t trust senior living and care providers to keep residents safe, while 43.9% of the Silent Generation reported the same distrust.

Younger people are more trusting: 42.3% of Generation X reported distrust, 31.8% of millennials and 38.2% of Generation Z.

McKnight Senior Living’s recent article entitled “41% don’t trust assisted living, nursing homes to keep residents safe during pandemic: survey” notes that 43.1% of baby boomers responded that they trust facilities “somewhat,” as did 51.4% of the Silent Generation respondents.

Some of this mistrust may come from the extensive media coverage of coronavirus deaths in nursing homes because senior residents are especially vulnerable to the illness.

Some say that it goes further than that: the quarantine and social distancing has added to families’ stress and anxiety over the safety and mental well-being of the seniors who live in these facilities because they aren’t able to visit as often as they want.

An online survey from ValuePenguin.com and LendingTree of more than 1,100 Americans recently found that COVID-19 has generated a rush of loneliness and worry among older adults.

According to the results, 36% of older adults feel lonelier than ever. In addition, more than 70% of seniors said that they have worries about the virus’ effects on their younger relatives. Those concerns were equally expressed by younger generations for their older relatives. Almost 50% of both age groups are worried that their relatives will catch the virus.

However, the pandemic looks to have a silver lining for family communications. An overriding sense of concern for the mental and physical health of elderly loved ones has led to more contact since the pandemic began.

Nearly 44% of the younger survey-takers stated they’ve spoken to their older relatives more frequently during the pandemic, about 25% of young people reported visiting their older relatives in person more frequently.

The top request from respondents aged 75 and older to their loved ones, is to call more frequently.

Reference: McKnight Senior Living (Sep. 11, 2020) “41% don’t trust assisted living, nursing homes to keep residents safe during pandemic: survey”

Read more related Articles at:

Coronavirus and COVID-19: Caregiving for the Elderly

AARP Coronavirus Poll: How Older Americans Feel About Their Health, Families, Finances

Also read one of our previous Blogs at:

C19 UPDATE: Keeping Ourselves and Our Elderly Loved Ones Safer

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Pre Election

Pre-Election Estate Planning Includes a Vast Variety of Trusts

You might remember a flurry of activity in advance of the 2016 presidential election, when concerns about changes to the estate tax propelled many people to review their estate plans. In 2020, COVID-19 concerns have added to pre-presidential election worries. A recent article from Kiplinger, “Pre-Election Estate Planning Moves for High Net-Worth Families,” describes an extensive selection of trusts that can are used to protect wealth, and despite the title, not all of these trusts are just for the wealthy.

The time to make these changes is now, since there have been many instances where tax changes are made retroactively—something to keep in mind. The biggest opportunity is the ability to gift up to $11.58 million to another person free of transfer tax. However, there are many more.

Spousal Lifetime Access Trust (SLAT) The SLAT is an irrevocable trust created to benefit a spouse funded by a gift of assets, while the grantor-spouse is still living. The goal is to move assets out of the grantor spouse’s name into a trust to provide financial assistance to the spouse, while sheltering property from the spouse’s future creditors and taxable estate.

Beneficiary Defective Inheritor’s Trust (BDIT) The BDIT is an irrevocable trust structured so the beneficiary can manage and use assets but the assets are not included in their taxable estate.

Grantor Retained Annuity Trust (GRAT) The GRAT is also an irrevocable trust. The GRAT lets the grantor freeze the value of appreciating assets and transfer the growth at a discount for federal gift tax purposes. The grantor contributes assets in the trust and retains the right to receive an annuity from the trust, while earning a rate of return as specified by the IRS. GRATs are best in a low interest-rate environment because the appreciation of assets over the rate goes to the beneficiaries and at the end of the term of the trust, any leftover assets pass to the designated beneficiaries with little or no tax impact.

Gift or Sale of Interest in Family Partnerships. Family Limited Partnerships are used to transfer assets through partnership interests from one generation to the next. Retaining control of the property is part of the appeal. The partnerships may also be transferred at a discount to net asset value, which can reduce gift and estate tax liability.

Charitable Lead Trust (CLT). The CLT lets a grantor make a gift to a charitable organization while they are alive, while creating tax benefits for the grantor or their heirs. An annuity is paid to a charity for a set term, and when the term expires, the balance of the trust is available for the trust beneficiary.

Charitable Remainder Trust (CRT) The CRT is kind of like a reverse CLT. In a CRT, the grantor receives an income stream from the trust for a certain number of years. At the end of the trust term, the charitable organization receives the remaining assets. The grantor gets an immediate income tax charitable deduction when the CRT is funded, based on the present value of the estimated assets remaining after the end of the term.

These are a sampling of the types of trusts used to protect family’s assets. Your estate planning attorney will be able to determine if a trust is right for you and your family, and which one will be most advantageous for your situation.

Reference: Kiplinger (Aug. 16, 2020) “Pre-Election Estate Planning Moves for High Net-Worth Families”

Read more related articles at:

Pre-Election Estate Planning Moves for High-Net-Worth Families

Estate Planning in the 2020 Election Year

Also, read one of our previous blogs at:

Different Trusts for Different Estate Planning Purposes

Click here to check out our Master Class!

LTC Insurance

What’s the Latest Trend in Long-Term Care Insurance?

What’s the Latest Trend in Long-Term Care Insurance?

Approximately half of Americans turning age 65 today will require some type of long-term care (LTC) in their lives. The older a person, the more likely he or she will need LTC at some point. What’s the Latest Trend in Long -Term Care Insurance?

The Treasury Department also reminds us about the general aging of the national population because much of the baby boom generation already is above that age, and the rest will be within 10 years.

FedWeek’s recent article entitled “Report Sees Mismatch between Long-Term Care Insurance Needs, Purchases” also notes that private insurers began offering long-term care insurance in the 1970s in response to demand for financial protection against the risk of having to enter a nursing home. The sales of new policies hit a high in the early 2000s but have since dropped because many insurance companies left the market due to the poor financial performance of these products.

The sales of these policies peaked in 2002, when the government started its own program for federal employees, the Federal Long Term Care Insurance Program.

About 750,000 people bought policies, but the numbers have fallen steadily since. It was down to just 57,000 in 2018, despite the fact the share of the population in the age group most likely to purchase private LTCI were up from 9.5% in 2010 to 11.4% that year.

The Treasury Department report also emphasized that the government doesn’t recommend purchasing or not purchasing insurance. However, it said that currently much of the burden of providing this care falls on the Medicaid program. It paid $159 billion for these expenses in 2018, while Long Term Care insurance covered only about $10 billion, and individuals paid another $55 billion out of pocket. It is also hard to know the amount of unpaid care provided by family members.

The report said that for the private LTC insurance market to meet the coming demand, there will have to be more innovation in the way this type of insurance is designed and delivered.

This may be having LTC coverage as a rider to other types of insurance, instead of a stand-alone product, along with policies with a more limited scope. This limited scope could be to cover only nursing home care and only for up to a year, which would mean lower premiums.

The Treasury Department also said there should be better coordination when it comes to how such insurance is regulated, education and awareness programs regarding possible need for coverage and tax incentives to buy LTC insurance.

So those are some answers to what the latest tends in Long Term Care Insurance are.

Reference: FedWeek (Sep. 10, 2020) “Report Sees Mismatch between Long-Term Care Insurance Needs, Purchases”

Read more related articles at:

Long-Term Care and LTC Insurance – New Trends

10 Best Long Term Care Insurance of 2020

Also, Read one of our previous Blogs at:

Do I Need Long-Term Care and Why?

 

How to Keep Track of Mom’s Healthcare Information if She Gets Sick or Injured

How to Keep Track of Mom’s Healthcare Information if She Gets Sick or Injured

It’s common for seniors to have several chronic medical conditions that must be closely monitored and for which they take any number of prescription medications. Family caregivers usually are given a crash course in nursing and managing medical care, when they start helping an aging loved one. The greatest lesson is that organization is key, which is especially true when a senior requires urgent medical care. Here is How to Keep Track of Mom’s Healthcare Information if She Gets Sick or Injured

Physicians encounter countless patients and families who struggle to convey important medical details to health care staff, according to The (Battle Ground, WA ) Reflector’s recent article titled “The emergency medical file every caregiver should create.”

A great solution is to create a packet that contains information that caregivers should have. Here’s what should be in this emergency file:

Medications. Make a list of all your senior’s prescription and over-the-counter medications, with dosages and how frequently they’re taken.

Allergies. Note if your loved one is allergic to any medications, additives, preservatives, or materials, like latex or adhesives. You should also note the severity of their reaction to each of these.

Physicians. Put down the name and contact info for the patient’s primary care physician, as well as any regularly seen specialists, like a cardiologist or a neurologist.

Medical Conditions. Provide the basics about your senior’s serious physical and mental conditions, along with their medical history. This can include diabetes, a pacemaker, dementia, falls and any heart attacks or strokes. You should also list pertinent dates.

Do Not Resuscitate (DNR) Order. If a senior doesn’t want to receive CPR or intubation if they go into cardiac or respiratory arrest, include a copy of their state-sponsored and physician-signed DNR order or Physician Orders for Life-Sustaining Treatment (POLST) form.

Medical Power of Attorney. Keep a copy of a medical power of attorney (POA) in the packet. This is important for communicating with medical staff and making health care decisions. You should also check that the contact information is included on or with the form.

Recent Lab Results. Include copies of your senior’s most recent lab tests, which can be very helpful for physicians who are trying to make a diagnosis and decide on a course of treatment without a complete medical history. This can include the most recent EKGs, complete blood counts and kidney function and liver function tests.

Insurance Info. Provide copies of both sides of all current insurance cards. Include the Medicare Supplement Insurance (Medigap) and Medicare Prescription Drug Plan (Part D) cards (if applicable). This will help ensure that the billing is done correctly.

Photo ID. Emergency rooms must treat patients, even if they don’t have identification or insurance information However, many urgent care centers require a picture ID to see patients. You should also include a copy of their driver’s license in the folder.

Once you have all the records, assemble the folder and put it in an easily accessible location. Give the packet to paramedics responding to 911 calls. It should also be brought to any visits at an urgent care clinic.

Reference: The (Battle Ground, WA ) Reflector (Sep. 14, 2020) “The emergency medical file every caregiver should create”

Read more related articles at:

Can I access someone else’s medical records (health records)?

10 Things to Know About HIPAA & Access to a Relative’s Health Information

Also, read one of our previous Blogs at:

Do I Really Need a Health Care Proxy?

Click here to check out our Master Class!

Protecting Assets from nursing home costs

How Do I Keep My Assets from the Nursing Home?

How Do I Keep My Assets from the Nursing Home?

If you don’t have a plan for your assets when it comes time for nursing home care, they can be at risk. Begin planning now for the expenses of senior living. The first step is to consider the role of Medicaid in paying for nursing home services.

WRCB’s recent article entitled “How to Protect Your Assets from Nursing Homes” describes the way in which Medicaid helps pay for nursing homes and what you can do to shield your assets.

One issue is confusing nursing homes and skilled nursing facilities. Medicare does cover a stay in a skilled nursing facility for convalescence. However, it doesn’t pay for full-time residence in a nursing home. For people who can’t afford to pay and don’t have long-term care insurance, they can apply for Medicaid. That’s a government program that can pay nursing home costs for those with a low income. People who don’t have the savings to pay for nursing home care and then require that level of care, may be able to use Medicaid.

For those who don’t qualify for Medicaid when they need nursing home care, they may become eligible when their savings are depleted. With less money in the bank and minimal income, Medicaid can pay for nursing home care. It is also important to remember that when a Medicaid recipient dies, the government may recoup the benefits provided for nursing home care from the estate. Family members may discover that this will impact their inheritance. To avoid this, look at these ways to protect assets from nursing home expenses.

Give Away Assets. Giving loved ones your assets as gifts can help keep them from being taken by the government when you die. However, there may be tax consequences and could render you Medicaid ineligible.

Create an Irrevocable Trust. When assets are placed in an irrevocable trust, they can no longer belong to you because you name an independent trustee. The only exception is that Medicaid can take assets that were yours five years before you died. Therefore, you need to do this as soon as you know you’re going into a nursing home.

Contact an experienced estate planning, elder law, or Medicaid planning attorney to help you protect your assets. The more you delay, the less likely you’ll be able to protect them.

Reference: WRCB (Dayton) (Sep. 4, 2020) “How to Protect Your Assets from Nursing Homes”

Read more related articles at:

Medicaid Trust: Qualify for Government Aid for Nursing Home Cost

6 Steps To Protecting Your Assets From Nursing Home Care Costs

Also read one of our Previous Blogs at:

New Medicare Rule Makes It Harder to Receive Home Care

Click here to check out our Master Class!

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