Stuck In The Middle: Caring For Aging Relatives
May 29, 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 Medicaid, Long-Term Care Insurance, and the best way to save and protect your assets. Call our firm and let us help you—and help your aging parents.
Prenups Help With Happily Ever After
May 24, 2010
A lot of what we as estate planners do is help you protect your assets: We help you protect your assets for your children when you die, we help you protect your assets when you are elderly and need long term or nursing care, we help you protect your business or investment assets from frivolous law suits… but we can also help you protect your assets during marriage.
“During marriage?” you may ask, “Why would I need to protect my assets during marriage? I would trust my spouse with my life.” This may be true (in fact, we very much hope it is true) but statistics show that more than 50% of marriages end in divorce, yet according to this article by Robin Epstein and Amy Epstein Feldman only 3% of marrying couples bother to create a prenuptial agreement. The low number may speak for the optimism of marrying couples, but not for their common sense.
A prenuptial agreement is not an admission that you don’t really think your marriage is going to work. On the contrary, prenuptial agreements can be useful in many situations, not just in cases of divorce. If you are entering into a second marriage and have children from a previous marriage a prenuptial agreement is absolutely essential to ensure that your children are entitled to any assets you bring from your previous marriage. If you or your fiancé comes to the relationship with heavy debts a prenuptial agreement can ensure that your marriage doesn’t begin under the weight of all that debt. And a prenuptial agreement can be a precursor to your eventual estate planning.
If you are planning a wedding in the near future, our firm can help answer any questions you may have about prenuptial agreements without any obligation. But really, knowing the many ways a prenup can protect you, your spouse, and your children—is there any reason not to have one?
Back to Basics: Forethought and Planning Prevent a World of Hurt
Wills and estate plans are always touchy subjects among family simply because they can have so much hidden meaning… at least that’s what heirs often think:
I got mom’s jewelry but my sister got a cash gift—does that mean mom loves her more than me?
What’s wrong with me that Dad didn’t choose me as executor?
I never really liked the vacation home, but is my brother trying to cheat me by buying me out?
If I ask my parents about their estate plan now will they think I’m eager for them to die?
Wouldn’t things be so much easier if we could just lay all the estate planning issues on the table and discuss them openly and without judgment? Well, that is exactly what this article on abc.com suggests we do.
The article includes 3 “Estate Planning 101 Inheritance Lessons” to help your family become better prepared for the inevitable: 1. practice honesty and transparency, 2. plan ahead and update often, and 3. think through your own wishes and the wishes of your heirs. Three simple suggestions that can save you and your heirs a world of fighting, hurt feelings, and high legal fees later on.
But it’s not always easy to start such a sensitive conversation with family—that’s where our firm comes in. We can help you with the tough questions and decisions, and when the time comes we can help you discuss those questions and decisions with the rest of your family. Although it’s tempting to simply bury your head in the sand, the longer you put it off the more difficult it becomes. Let us help your family find a peaceful solution today.
Senate Considers Option to Prepay Estate Taxes
May 21, 2010
2010 has been anything but ordinary as far as the estate tax is concerned. First there was the unexpected repeal of the estate tax (unexpected not because the repeal was unplanned, but because nobody expected it to actually happen), then the idea that congress could reinstate the estate tax and make it effective retroactively, and now there are rumblings that certain Senators are considering a prepaid estate tax!
According to this article in the Christian Science Monitor, “News reports suggest that the Senate may soon consider restoring the estate tax with an option allowing people to prepay their tax before they die. Details are apparently still in flux as senators negotiate. We—and maybe they—don’t know yet what they’ll propose for the basic estate tax but it’s unlikely to be harsher than the 2009 version.”
If something like this gets passed, a visit to your estate planning attorney will be more important than ever, especially if you have the wealth to protect and the means to spend some money now to save a lot of money later.
Of course, this is all just speculation right now, but even the idea of prepaid estate taxes tells us just how much the government is counting on that revenue—one way or another. If you were under any illusions that the repeal of the estate tax might turn into a permanent thing this should be more than enough to convince you that the estate tax is here to stay.
Trade Like A Man, Save Like A Woman
How will you be planning for your retirement? According to CNBC your gender could play a bigger role than you think in your retirement plan. While of course not everyone will adhere to gross generalizations, studies have shown that men and women do have a tendency to take a different approach to saving and investing for retirement. Which way is the right way? Well, as John Ameriks points out in the article, “It’s not a matter of one gender being right and the other wrong… You just need to be aware of the differences when you’re making investing decisions.”
The differences may not be as surprising as you think. Here are some of the things CNBC had to say about how men and women invest and save:
- Men tend to be overconfident about their investing and retirement planning skills.
- Women generally prefer less risky investments.
- Men don’t plan for a long retirement.
- Women save more over time.
Considering the fact that our society still tends to view the stock market as “a man’s game”, and one with which women aren’t quite as comfortable, it makes sense that a man would be more confident with frequent buying and selling, while a woman might tend to go for the safer investment requiring less action and attention over the long haul. But lack of attention doesn’t necessarily mean lack of awareness. Women tend to worry more than men about security in their Golden Years. The article posits that this is because many men don’t expect to live much past 80, but another possibility is that men have more confidence in their ability to earn a living at any time in their lives; whereas women (who are often the ones to leave the job market in order to care for family) are more afraid of having to depend on an outside source for their livelihood.
Part of planning for your retirement is planning for your estate. Whether you are a man or a woman, adventurous or conservative, a trader or a saver—your retirement plan and your estate plan need to be in line with each other. Our office can help ensure that your retirement and estate plans are compatible… both right now and decades down the line.
Take Action in the Face of Estate Tax Uncertainty
May 20, 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.
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 19, 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.
Contact our office for more information on how any of these “Robin Hood” tax saving techniques may help your family this year.
Recent Deaths Bring Home the Consequences of No Estate Tax in 2010
May 7, 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.
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.
Does the New Health Care Reform Affect Your Long Term Care Plan?
From a recent announcement on PR Newswire:
“Many Americans seem confused and immobilized by a key part of the recent Health Reform legislation, the CLASS Act, which will offer a form of long term care insurance for working people and others who may become disabled. ‘CLASS’ stands for Community Living Assistance Services and Supports, and the program, a legacy of the late Senator Edward Kennedy, is intended to offer new choice and security for millions now at risk. But, ‘we find that the public doesn’t know how to react,’ says Denise Gott, Chairman of the Board of LTC Financial Partners LLC (LTCFP), one of the nation’s most experienced long term care insurance agencies.”
The new Health Care Reform will almost surely affect your long term care plan, but is it too soon to know exactly how? You don’t want to be caught without coverage, but you also don’t want to make any decisions without having all the facts.
To help you discover how health care reform may affect your long term care plans, the link above provides access to a newly released 2010 Long Term Care Guide complete with healthcare reform update. Don’t let your family be caught off-guard.
Appellate Court Decision Demonstrates Why Clients Need Elder Law Attorney to Prepare Medicaid Applications
May 4, 2010
Some nursing homes offer residents and their families to prepare and submit a Medicaid application on their behalf. We have advised clients that this is not without risk. Only a licensed attorney is legally authorized to give legal advice. Typically, it is a social worker or Medicaid assistant who would complete the application for the resident.
I have had many a conversation with people who hold themselves out as knowledgeable in Medicaid rules, only to give wrong advice. Hiring an elder law attorney ensures that the applicant has someone representing their interest, not the interest of others.
A recent appeals case illustrates this point, at a great cost to a relative of the nursing home resident. Briefly, the son-in-law of a nursing home resident signed the Admission Agreement and obligated himself to provide information and cooperate with the nursing home with regard to the Medicaid application.
In that case, the Medicaid application was denied for failure to supply certain statements and for uncompensated transfers of assets of the applicant. The Appellant Division, Second Judicial Department, ruled that the nursing home can sue the son-in-law for the loss in Medicaid benefits. To read the case in full, click here.
The case is still pending, but the path has been cleared for the nursing home to pursue its lawsuit against the son-in-law for the $61,000 shortfall to the nursing home caused by the Medicaid denial.
The lesson is not only to carefully read the admission agreement before signing, but to recognize that the family member who may be making an honest effort to assist the nursing home resident, may find himself at the wrong end of an expensive lawsuit.