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The question on everybody’s minds the past few months has been “what legislative action will be taken regarding the expiration of the estate tax in 2010?” Well, Congress has adjourned for the year and the answer to the question is… Nothing.
With Congress home for the holidays and no action taken, the estate tax is still slated to disappear on January 1st, reverting in 2011 to the old rate of 55 percent for estates worth more than $1 million. But before you get too excited, take a moment to read what this article in the New York Times has to say:
“Jere Doyle, wealth strategist at Bank of New York Mellon, said the wealthy should not get their hopes up for an end to the estate tax. He pointed out that an estate did not have to submit its first tax bill until nine months after a person’s death. The Senate could wait, then, until the summer to decide on the estate tax and make it retroactive to the beginning of the year. This would wreak havoc on estate planning. Even if the Senate acted early in the coming year, it could still lead to a flurry of legal challenges on the constitutionality of reinstating a tax that had disappeared.”
It turns out the Congress’s failure to act has not made it easier for you to pass your wealth onto your children, it has only made things more uncertain than ever. The best action you can take during this “in-between time” is to have your estate plan reviewed by a professional to ensure that you’ve taken the right steps to prepare for whatever the future may bring; and most importantly, do not submit the first tax bill for a deceased’s estate in 2010 without talking to your estate planning attorney first!
The Department of Defense provides military funeral honors at the burials of veterans, however you have to request this honor. Military funeral honors include the presence of an honors detail to fold and present the U.S. flag to the next of kin and play “Taps.” Funeral home directors request funeral honors from the Department of Defense. Other honors for deceased Veterans may include: Headstones and Markers; Presidential Memorial Certificate, Reimbursement of Burial Expenses and/or Burial in a VA National Cemetery.
We make no secret on our blog of how important we think it is to talk about estate planning to friends and family; we also admit that we know how difficult a subject it is to broach, and we’ve tried in the past to offer advice on how to make the discussion a little easier. Now we can recommend a book that can help you not only come to a better understanding of the ins and outs of estate planning, but also provide fun and interesting topics to serve as conversation starters with your family over the holidays.
The book, Trial and Heirs, by Andrew and Danielle Mayoras, “uses real celebrity stories to help you avoid estate ‘errors’ as you plan for your ‘heirs’… and gives you a front row seat in the courtroom while the authors replay the scenarios and point out what went wrong, the winners and losers, and what you can learn from it.”
Probate, estate planning, and trusts may seem like something for the rich and famous—something removed from the lives of the average Joe; but the truth is that there is nothing more universal than death and the process of dealing with the aftermath. Rich or poor, famous or unknown… we all have to plan for the inevitable.
Cicero said “In nothing do men more nearly approach the gods than in giving health to men,” a quote which underlines the important role of anyone involved in your health care, whether it be a doctor or an agent. A health care agent is the person who makes medical decisions for you if you are unable to make them for yourself, decisions which often pertain to life and death, and can include the very difficult decision of whether or not to continue your life with artificial means. You certainly want to have someone in this role who is close to you, someone you can trust, but that is not the only criteria you may want to think about. You’ll want to make sure your agent is also someone who will ask smart questions, work thoughtfully with your doctor, and take an active role in making sure that your wishes are followed. The role of health care agent can be very “close to the gods” indeed, and should be taken seriously as such.
If you have a vague idea of what a health care agent is and does, but aren’t quite confident in the fact, the California Office of the Attorney General has provided this very informative article on the subject, which addresses not only the definition of health care agent, but also includes helpful tips on how to choose the best person for the job, as well as important things to keep in mind if you are the person who is acting as agent for someone else.
Long term care costs are one of the biggest crises faced by seniors today. With the costs of long term care reaching as high as $140,000 annually for full time nursing home assistance in some parts of the country, it is little wonder that Medicaid pays for about half of all the long term care in America. As seniors and the loved ones who care for them face the prospect of extended care, Medicaid eligibility becomes a central question.
In order to qualify or be eligible for Medicaid you must be either a citizen of the United States or what is defined as a “qualified alien” and meet certain medical need and resource requirements.
In order to qualify for Medicaid the applicant has to have a medical need for long term care. As a combination of Federal and state law apply in the Medicaid system, the rules for what constitutes a “medical need” vary from state to state. However, most states look at what is called “activities of daily living” (“ADLs”). We will discuss what constitutes ADLs in a future blog post for now examples would include feeding themselves and toileting on their own. In general an individual applying for Medicaid will be considered to have a medical need and thereby be eligible if they are unable to complete several ADLs without assistance. The more ADLs that they are unable to complete without assistance the easier time they will have qualifying.
The resource requirements for Medicaid eligibility are financially driven and complicated. In general there is a two prong test looking at the resources the applicant has available and the applicant’s income. A single applicant must have less than $2,000 in available resources in order to be eligible for Medicaid. The rules are different for married couples in order to avoid “spousal impoverishment.” Additionally the rules vary somewhat state by state so it is important to know your state’s specific rules when applying for Medicaid.
The second prong of the resource requirement for Medicaid eligibility deals with the applicant’s income. Here again the state of residence of the applicant plays an important role. The states are divided on how they deal with income. Many states employ what is called the “income cap” rule to determine eligibility. In states employing an income cap, the majority of them will limit Medicaid long term care benefits to individuals with less than $1,656 per month of income. Most of the remaining states will use the “medically needy” test which provides that income eligibility is met by the inability to pay the actual costs of the private care that is needed.
Medicaid is an essential tool for seniors in covering their long term care needs. With nearly 50% of seniors using Medicaid knowing and planning for the eligibility rules can be critical to protecting senior’s hard earned assets. Remember the rules vary considerably state by state so it is essential to know your state’s specific eligibility rules.
In all humor there is a shred of truth, and Mark Twain was a master at using humor to cut straight to the truth of just about any situation. The following quote by Twain seems especially astute: “When I was younger, I could remember anything, whether it had happened or not; but my faculties are decaying now and soon I shall be so I cannot remember any but the things that never happened. It is sad to go to pieces like this but we all have to do it.”
The frightening truth is that as we age we become vulnerable. As the body fails we have to set aside our pride and rely on others for help. But the truly frightening prospect is the possibility that our mind may fail as well. We begin to doubt our memories, and technological advances outstrip our abilities to keep up with them. With this vulnerability comes the opportunity for abuse.
Unfortunately, elder abuse is becoming more and more common. Seniors are a growing class of individuals with money in savings or retirement, and there is no shortage of scam artists looking to take advantage of them financially. The truly sad fact is that most financial elder abuse is committed by someone close to the victim, a person in whom they have placed their trust. In such cases, the abuse may not be pre-meditated, but that in no way makes the abuse acceptable.
The good news is that there are ways to guard against financial abuse. The California Bankers Association has published an excellent list of tips to help prevent elder financial abuse and significantly reduce your chances of becoming a victim, and your estate planning attorney can help you with many of them.
If you think that someone you know may be the victim of elder abuse, either physically or financially, you can help. The National Center on Elder Abuse has a help hotline, as well as a list of warning signs, and community outreach opportunities.
Do you know who will take care of you when you are too elderly to take care of yourself? According to the statistics your caregiver is likely to be a woman, and most likely to be your daughter or daughter-in-law. What this means is that unless you have a plan for your future long term care, the financial burden of caring for you will fall to her and her family.
“Financial burden” refers not just to the expense of paying for food and medical costs, but to loss of income incurred over years of care-giving. “Women take time away from their careers to care for family members,” writes George I. Connolly, “and… lose an average of $659,130 over a lifetime in reduced salary and retirement benefits.”
Many people think that government programs will pick up what they can’t pay for themselves, but relying on government programs can leave your family footing just as much of the bill as they would without them. You may want to consider other alternatives as well, such as investing in long-term-care insurance. If you aren’t sure about your options, or how to start planning for the future, call our office for help.
If you are a daughter of aging parents, now is the time to talk to your parents about the future. Studies show that you are the one who is likely to shoulder the responsibility of caring for them as they age. Doing so will affect your family, your career, your finances, and even your health.
The subject of aging and elder care is a difficult one, but not one to be left to the last minute. Talk to your family about your wishes and plans for the future, then bring your estate planning attorney into the discussion. Once you have an idea of your wishes, an expert can help you feel better about your options, and put you on the right path for keeping your family healthy, happy, and financially secure in the years to come.
Most of us look forward to these winter holidays as a time to spend with family, enjoy the spirit of giving, and even relax a few days away from the stress of our jobs. Every year we hear about how stressful the holidays are, and yet we look forward to them anyway. Why is it that estate planning—another activity rife with benefits that admittedly comes with a little stress—is often avoided at all costs? In truth, the things we do to make our holiday planning more enjoyable and less stressful can be applied to estate planning as well:
1. Don’t wait until the last minute. Not doing our shopping (or planning) ahead of time often means we won’t get what we want. The same can be true of estate planning. Some areas of planning (specifically planning for Medicaid, retirement, and long-term care) must begin at least a few years before you think you’ll need it.
2. You can’t please everybody. Just as blended families have to come to terms with the fact that they won’t please every in-law every year, you have to accept that you may not be able to please all of your children or heirs in your estate plan. In the end, an estate plan is about your assets and your wishes.
3. Planning ahead makes execution easier. Everyone knows that braving the stores at the height of the holiday season is much easier if you’ve thought ahead and already know what you’re getting. Estate planning also benefits from a little bit of forethought, and the whole process runs smoothly if you go into your attorney’s office already having made a list of assets, goals, and people you trust.
4. Expect to get what you pay for. Paying $5 for the tree in the corner of the lot doesn’t mean you’ve gotten a deal; more often it means you’ve gotten a tree that will lose all its needles in the next 2 days. Don’t make the mistake of getting a “deal” on an estate plan that won’t withstand the test of time.
5. Don’t forget the extras. That radio controlled car looks nice under the tree, but it’s not much fun if you’ve forgotten the batteries to make it go. Your estate plan may also require some “extras” to make it work: funding, memorandum of intent, letters of notification to fiduciaries, etc.
With a little planning your holidays—and your estate—can be easy and stress free. Contact our office to get started on your estate plan before the year is over.
We have all heard the horrible stories of nursing home abuse, and we know if we have a loved in a nursing home we need to keep a watchful eye for signs of abuse or neglect. But are you equally aware that if you or your family has long-term care insurance, you need to keep a watchful eye on the fine print in these policies and what the insurance company is up to. Just a few years ago, some long-term care insurance providers were caught off guard when people not only were living longer; they continued to pay their premiums instead of letting the policy lapse after just a couple years. These companies were quickly seeing their profits disappear. Many Americans have found out, after years of paying their premiums on time that after only a short time in a nursing home the insurance company determines that the care is no longer “medically necessary” and the coverage is abruptly cut off. Or maybe the policy only covers certain care, treatment, medication, etc. When the coverage ends or is limited, nursing home residents will be forced to turn to their savings. Without the proper asset planning, the nursing home bills can deplete a lifetime’s worth of savings in fairly short order.
There are still a lot of good long-term care insurance policies out there, and a lot of good companies providing these policies and willing to stand behind their policies. It remains a very good product for many people. However, situations like what I have described above make it all the more clear that long-term health care decisions need to be made once you are well informed on the topic. Jones Elder Law can help you work through all the details, the fine print and the red tape to make sure you make the best decision for yourself and your family. Let us help you place the correct long term care insurance product in your asset protection plan.
Along with the rest of the nation, you are probably watching the progress of various versions of the health care legislation making their way (or not making their way) through Congress. Today’s New York Times points out that the current bill contains a “major new federal insurance program for long-term care” — although many are not aware of it.
Should it become law, the program might have a significant effect on a problem that is already bad, and promises to get worse. That is, how are we to care for members of our society who can no longer care for themselves, but might live for years? To give just one prominent example, former President Ronald Reagan revealed his Alzheimer’s diagnosis in 1994, but did not pass away until ten years later.
Nursing home costs have the potential to bankrupt families that are not prepared with legal planning. Drafted by the late Sen. Edward M. Kennedy several years ago, this federal insurance program might be an important tool in addressing the problem, but critics say it will be unsustainable. Instead of families going bankrupt paying for nursing home care, it will be the government, in their view. Read the entire article here.