Michigan Estate Planning Blog

What College Did Not Teach You: Grads Need Estate Plans

Young people also should plan how their assets will be distributed in case something were to happen to them. Estate planning is more than just deciding how your assets will be distributed. That is a large part of it, but there are other documents every good estate plan should include. Regardless of your age, you might not think you have very much – but you probably have enough to want to have a say in who gets what. A recent article in the National Law Review, titled “Five Estate Planning Documents Every Young Professional Should Have,” lists the documents that every recent college graduate will want to include as part of his or her estate plan: • General Durable Power of Attorney – This is a simple document that lets you choose who will handle your finances in case you are in an accident or get ill and cannot do it yourself. • Health Care Power of Attorney – This document allows you to choose who will make medical decisions for you, if you are incapacitated and cannot make them for yourself. • Will – Your will does not have to be complicated. However, if you want your property or any piece of it to go to someone in particular, then you need a will to make that happen. • Beneficiary Designation – On many of your financial accounts, such as the retirement account and life insurance your first employer gives you, designating a beneficiary allows you to decide who gets the assets of the account after you pass away. • Beneficiary Deed – If you have an interest in real property, you might want to consider a beneficiary deed as they allow you to say who gets that interest after you pass away. However, these are not always appropriate so speak to an experienced estate planning attorney to see if a beneficiary deed is right for you. Estate planning is for everyone, recent graduates included.

Reference: National Law Review (July 7, 2014) “Five Estate Planning Documents Every Young Professional Should Have”

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Deathbed Wills: Are They Any Good?

There is an interesting case being heard in Sacramento probate courts. A man named Joseph Herb O’Brien was dying in a hospital room. For a long time he had an estate plan that left his entire estate in a trust, the sole beneficiary of which was his stepson. The stepson had a long history of legal problems. Shortly before O'Brien passed away, he dictated a new will to two friends. This new will left the vast majority of the estate to one of those friends instead of the stepson. The Sacramento Bee has the full story of what is alleged to have happened in an article titled “Final wishes of a ‘good man’ or deathbed fraud? Judge to rule in probate case.” It is a good read that explains all of the minute details of the case. Basically, the judge has to decide whether O'Brien was competent to change his will at that time or whether his friends coerced him into changing it for their own gain. One thing of particular interest is the fact that it appears O'Brien had considered changing his estate plan on several occasions. The trustee had even threatened to resign on at least three separate occasions if O'Brien left the stepson as the beneficiary of the trust. However, O'Brien never did make the changes. It is not clear whether he wanted to or not. If he did, then the mistake he might have made was to wait too long. If you want to change your estate plan, do not make the same mistake. Get it done while there is still time. Do not rely on a deathbed will. A judge may rule against what you would have wanted.

Reference: Sacramento Bee (July
13, 2014) “Final wishes of a ‘good man’ or deathbed
fraud? Judge to rule in probate case

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Why Do We Know So Much About Lou Reed's Estate?

When most people die there is not much interest in the details of their estates. However, when a celebrity passes away, reporters are keen to find out how much money the celebrity had and how it will be distributed. Recently, the New York Post has had story after story about the specific details of Lou Reed's estate plan. We know how much he had when he passed away. We know how much money his intellectual property interests have earned for his estate since he passed away. We also know how much money each of Reed's heirs will receive. The New York Post is not getting this information because their reporters are doing investigative journalism and figuring it out. As Forbes points out, in an article titled “Lou Reed Walked on the Wild Side With His Estate Planning,” we know what we know about Lou Reed's estate because his entire estate plan consisted of a single will. That will had to be submitted to a public probate process, which allows reporters to gain access to the details. If Reed had used a different estate planning tool, such as a Revocable Living Trust, it would be much more difficult for reporters to find out the details. You might not care whether your estate is made public after you pass away, since you will not be around to deal with any consequences. However, you should consider whether your heirs would want other people to know exactly how much they inherited. It might violate their privacy.

Reference: Forbes (July 10, 2014)  “Lou Reed Walked on the Wild Side With His Estate Planning”

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Gaining Access to Digital Assets: Could Your Heirs Be Committing a Crime?

It can be very difficult for your family members to gain access to your email accounts and social media accounts after you pass away. It can be even more difficult for them to gain access to your online financial accounts. For this reason, attorneys always stress that you should plan ahead and make sure you have come up with a good way for someone you trust to access any accounts you have. Recently on PBS News Hour, another potential problem with access to digital accounts was raised in a segment titled “Dead and Online: What Happens to Your Digital Estate When You Die?” One of the interviewees points out that a family member attempting to gain access to your accounts after you pass away could be in violation of federal privacy laws and computer fraud and abuse laws. It could also be a criminal violation to break the terms of service of the website your family member is trying to gain access to in some circumstances. As unlikely as it is, a family member trying to gain access to a deceased's accounts may be criminally charged. It is not a good idea to leave it up to chance. You would not want to actually encourage your family to break the law. This is just another reason that you need to plan ahead and come up with a way that someone can access your online accounts after you pass away. Reference: PBS News Hour (July
12, 2014) “Dead and Online: What Happens to Your
Digital Estate When You Die?

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Family Limited Partnerships: Are They as Good as They Seem?

A Family Limited Partnership creates a separate entity in which you can place an almost unlimited amount of assets. This may help protect the assets from personal creditors and allow you to maintain control of the assets during your life. You can then give your family members limited partnership interests in the entity. A recent article in Life Health Pro, titled “6 Pitfalls That Clients Eyeing an FLP Need to Consider,” points out the potential drawbacks of an FLP: • Expense – Creating an FLP can be very expensive as anything placed into the FLP will need to be appraised. • Limitation on Asset Types – Some assets are not well-suited for an FLP, including residential property and some types of securities. • Puts Conflicts Off – Just putting a family business into an FLP does not necessarily end any conflicts of the next generation over that business. You will still need a business succession plan. • Control of Assets – While you can control FLP assets, there are limits. You cannot use them for personal expenses. • Expensive for Children – Having part ownership of the FLP may subject your children to capital gains taxes they cannot afford. • Minor Children – You cannot give minors an interest in the FLP directly. You have to give them a share through a parent or guardian. Family Limited Partnerships can be an excellent tool to pass on your business. However, you should consider them as only part of your estate plan and you should talk to an estate planning attorney about whether an FLP is right for you and your family.

Reference: Life Health Pro (July 9, 2014) “6 Pitfalls That Clients Eyeing an FLP Need to Consider”

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Estate Taxes in South Korea

Samsung chairman Lee Kun Hee suffered a major heart attack three months ago and has been in the hospital ever since. It does not appear he will live for much longer. That is causing some big estate problems for his heirs. Hee's estate is believed to be worth approximately $12 billion. As China Topix points out, in an article titled “Samsung Heirs Could Pay a Massive US $6 Billion Inheritance Tax,” under South Korean law the estate will have to give half of the estate to the government. The family could avoid some of this tax burden by placing the money in a foundation, but that would mean giving up some control of the assets. It is unclear whether Hee could have avoided this through estate planning before his heart attack. It is possible that South Korea has laws and vehicles that could be used to more effectively keep wealth in the family as opposed to giving it to the government. In the United States, if a wealthy person does nothing, then their family might not be much better off than Hee's. The government will not necessarily take half of the wealth, but a significant portion of the estate will be lost, as much as 40% in some cases. Of course, in the United States there are ways to avoid the estate tax or at least to minimize the burden it can cause families. However, it requires being proactive. You cannot expect to wait until you are sick in the hospital if you hope to avoid the fate of Hee's heirs for your heirs. Contact your estate planning attorney sooner, rather than later.

Reference: China Topix (July 23, 2014) “Samsung Heirs Could Pay a Massive US $6 Billion Inheritance Tax”

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Will Your Spouse Inherit Your IRA?

IRAs are powerful accounts uniquely suited for retirement. No surprise, then, that there are some unique rules that go into effect when an IRA is bequeathed and inherited. Whoever the inheritor of an IRA is they will have some important choices to make fairly soon. If a spouse is inheriting, they have extra leeway that’s worth putting to good use. The sorts of things an IRA inheriting spouse ought to think about don’t make the headlines quite as often. However, DailyFinance offered a helpful guide a short time ago in an article titled “When A Spouse Inherits An IRA.” You see, a spouse has more age-based decisions than a younger inheritor like an adult child. A spouse also has different choices. For instance, a spousal IRA heir can either retitle the account into an inherited IRA or roll it into their own IRA. What to do depends a great deal on the age of the spouse that has passed and the age of the surviving spouse. After all, age determines when and if you can take distributions, and likewise affects the amount in distributions to take. To roll the IRA into your own means to simply add the balances and treat it like a normal IRA from thereon out, taking distributions based on your own life expectancy when you hit age 70½. On the other hand, if it is kept as an inherited account, you might have to immediately start taking distributions (based upon the RMD of the deceased) if the account had already begun distributions. Indeed, just the difference between one account and two accounts is worthy of consideration. The original article offers a few examples on the math that comes into play, and there are a few numbers to play with. In the end, you might say the decisions should come down on a few basics. First, the balance between income and savings. This is both a question of how much money do you need and how soon, especially for retirements and medical costs. Also, factor in taxes because traditional IRA distributions are taxable. Second, depending upon the age and needs of the inheriting spouse, you might consider where the IRA is eventually going. Will you need the money in your lifetime or will you also leave it behind? How ought you to structure that?

Reference: DailyFinance (April 22, 2014) “When A Spouse Inherits An IRA”

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What To Do And What Not To Do: Estate Planning Blunders

There are two important dimensions to getting something done right: knowing what to do and knowing what NOT to do. What about your estate plan? It takes a great deal of training to know what to do to best plan and structure an estate plan. That’s why you consult competent and experienced legal counsel. Maybe you’ve yet to start and maybe you’ve been working with an estate planning attorney for some time and piecing together some foolhardy designs. Either way there are some basic types of blunders that can befall anyone not wary enough to look for them. CNBC compiled a short list of blunders well worth your consideration in a recent article titled “The 5 Biggest Estate-Planning Blunders” 1. Picking the wrong people will make the worst of your plans, whether because they are not dedicated, not capable or even not trustworthy. You need to ensure that only the right people hold your durable power of attorney or serve as executor or trustee. 2. Leaving the wrong assets to your estate rather than passing them outside of probate. For example, do not leave an IRA to your estate. Anything with a beneficiary designation can generally do half the work for you and be passed outside of probate (and outside extra taxation), so long as you use it correctly. This leads naturally to 3: 3. Failing to name your beneficiaries and keep them updated. With an ex-spouse listed on an IRA, you’ll accidentally leave it to them, and that’s just one poignant example. 4. Failing to make your end-of-life medical decisions though a health-care directive. This is one of the easiest to put off because it can be amongst the most difficult to think about – incapacity, feeding tubes, and death. However, not having put a decision to paper often means leaving it to the hospital’s discretion or forces your family to decide (and potentially argue). These are a few (of many) potential blunders and examples of what not to do. There is much to think about of course, and much more NOT to do. In the end, it all depends more on what your actual goals are. One more thing not to do: don’t fail to invest the time to figure out what you ought to do.

Reference: CNBC (April 14, 2014) “The 5 Biggest Estate-Planning Blunders”

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A Plan In Eight Steps

Your estate plan is, to put it briefly, the sum total of your plans for your loved ones, your end-of-life, your assets, and your charitable hopes, and all of it put to paper. Naturally, a properly planned and executed estate plan will have a few key elements and a number of important documents. So how many pieces is that? It should depend upon your own estate and estate plan of course. Regardless, it’s also helpful to break down a basic estate plan and build a basic list. There are a great number of little estate planning lists out there, and a dozen ways to list the documents you might need. That noted, MSN Money provided a helpful guide not too long ago with a helpful list of eight titled “Estate-Planning Documents You Need Right Now.” The eight? 1. Last will and testament 2. Revocable living trust 3. Beneficiary designations 4. Durable power of attorney 5. Health care power of attorney and living will 6. Provision for digital assets 7. Letter of intent 8. List of important documents Now you might not need all of these elements. In the context of your plans, one or another may be all the more important and so all the more robust. However, these are the basics to consider as you get started. The original article has more to say concerning each tool and some further resources besides. Do you have unique goals, unique assets, or a unique family? It’s very likely there is more to be done with these documents and a few useful tools besides. Whether your plan will be basic or advanced, it pays to ensure that your affairs are in order with the input and guidance of competent counsel.

Reference: MSN Money (April 18, 2014) “Estate-Planning Documents You Need Right Now”

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Handing Over The Reins: Tricks To Converting Foundations Into Donor-Advised Funds

To run the charitable foundation is to have absolute control and discretion over the charity, its goals, its practices, and all the decisions regarding where the money is to go. While this can be richly rewarding, it can be exhausting. Now there is a popular alternative to a full foundation and a move to collapse back into what is known as a donor-advised fund. That noted, there are some tricks to the transfer and limitations to the fund worth understanding. If you or your family run a charitable foundation and are considering this alternative, The Wall Street Journal had a few points to consider in a recent article titled “Risks to Consider With Donor-Advised Funds.” First, what is a donor-advised fund? Unlike a foundation that is run much like a business, a fund is much more like an investment vehicle run by an expert. As the name suggests, donors give to the fund and then advise it how to ultimately donate the money it takes in. There are some ways to more carefully form the fund so as to grant greater or lesser control. Ultimately, however, it is simply a different kind of animal than a foundation. It also means that there are far fewer administrative burdens (especially on you as the donor), far fewer fiduciary requirements, fewer taxes, and greater privacy. The original article has a helpful chart you might peruse to understand the differences. So what are the problems? First, to transfer from a foundation to a fund means coming to terms with the new benefits and shortcomings of the fund, and that may be a family activity. Second, the transfer will mean winding up the foundation and this ought to be done with care. State regulations can affect how to wind up the foundation, or how and when to give notice that you are doing so, so there is a bit of red tape. Then there are the foundation assets themselves. What if some of the assets are illiquid or otherwise difficult to move? Indeed, you need to at least leave enough assets in the foundation to let it get through the expenses involved in the windup. There are a few more issues addressed in the original article, and even more besides that may affect your particular foundation and/or assets. These are certainly issues to think about, but for many the message is also that there are options out there if the foundation has gotten out of hand. Either way, how does the foundation or the donor-advised fund fit into the overall plan?

Reference: The Wall Street Journal (April 13, 2014) “Risks to Consider With Donor-Advised Funds”

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Charity on “Spend-Down” Mode

Sometimes good things are built to last, and sometimes you decide it has run its course. This seems to be the growing attitude amongst philanthropists tending to the family foundation. In fact, today's charitable foundations seem to be shifting from maintenance for longevity to spending down and winding up. This may give you pause to consider your own charitable giving, whether you are a donor to various foundations or, should you run one, to the future of the foundation itself. This trend was identified in a recent article in The Wall Street Journal titled “The Rise of Spend-Down Philanthropy.” The hard numbers in the article come from an analysis by the Bridgespan Group which found a marked jump in spend-downs. As reported there, “About 50 years ago, only 5% of the total assets of America's largest 50 foundations were held by spend-downs. In 2010, that number had risen to 24%, according to Bridgespan Group in Boston.” Why spend down? Well it varies from foundation to foundation, but then it also relates to the purpose and nature of the foundation in the first place. The foundation typically has a philanthropic goal set up at its creation, but that goal may not carry forward past the original creator. This is especially true in a family foundation and, eventually, mission drift becomes a sustainability issue. The family may even not grow around the goal in the way originally hoped – they have lives, after all, and may not have the ability to keep up the foundation – and so the longevity may be in question due to logistics rather than the goal. A spend-down mode should be meaningful to the donor, too. It means funds are going out the door and into the world, potentially having real effects today. Then again, and without a careful hand guiding the course, that doesn’t mean the cause is getting the biggest bang for its buck. These charities may tend to be less inquisitive and less thoughtful out of necessity of quick decision-making, and may not adopt long-term goals. It is, if nothing else, an interesting trend to see the rise of the spend-down foundation, and maybe a meaningful one to think about when you think about your own goals in philanthropy.

Reference: The Wall Street Journal (April 13, 2014) “The Rise of Spend-Down Philanthropy”

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An Intermediary Care Service

Caring for an elderly loved one is, more often than not, ensuring that they receive the right care at the right time, and neither too much of it nor too little. This balancing act can be difficult, expensive and exhausting. Elder care options are often appreciated and one intermediary option was recently covered in an ElderLawAnswers post titled “Adult Day Care: Providing a Break for Caregivers.” While there are a number of types of actual facilities, sometimes you don’t quite want or need a facility. Perhaps you are not ready just yet or you hope to avoid them entirely. Increasingly, families are choosing to personally care for their elderly loved ones at home. The difficulty faced is the burden this places on the caregiver, and the limitations it imposes on the lifestyle of the elderly loved one. A convenient solution is adult day care, a service less diminutive than the name suggests and rather quite useful as an intermediary option to take much of the burden off of the caregiver. Adult day care programs vary widely, both in substance and in availability. As a result, it is wise to snoop around in your local area and consider your needs. The costs tend to be modest, in the grander scheme, and various health insurances or long-term care insurances will cover or defray the cost. Medicare, unfortunately, does not yet pay for this type of service.

Reference: ElderLawAnswers.com (April 11, 2014) “Adult Day Care: Providing a Break for Caregivers”

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Handing Down the Family Home: A Potentially Dangerous Gesture

Giving the family home to your heirs early? Take great care! This is too important a gift to get wrong, and it’s too easy to do just that. This challenge was the subject of recent article in The Wall Street Journal titled the “Dangers of Giving Your Home to Your Children.” The family home is often the most important gift you could ever give to an adult child or your adult children. It is meaningful simply by right of being the family home and its place in the family history. When given to a young couple it is also a gift of the future, and a very practical one if you don’t need the space anymore or just wish to downsize. Nevertheless, houses are as complex as they are valuable when considered as assets and potential tax burdens. Giving the house away early means moving a taxable asset around, and doing so at different times and in different ways will bring different tax burdens. These issues include weighing the consequences of a lifetime gift versus as a testamentary bequest. In the end, you need to fit the house into your overall plan, and carefully at that. Then there is even more to the financial side and the darker side of liability. A house as an asset is a magnet for creditors, divorce proceedings, and all manners of scaly legal problems that make claim or foreclose upon the house under the name of a younger, less financially stable, adult child. Giving it to them to live in forever might end up risking it to creditors, and if you intend to stay living there that means putting you out too. And what about control? Not all family problems work themselves out, after all. It is now up to the kids to keep or sell the house, even against your wishes and, again, even to evict you right out onto the curb if you intend to still live there. So, do appreciate the house and the gift of it to your loved ones. At the same time, however, also appreciate it as a difficult transition fraught with potential issues to guard against. Once you appreciate the issues you can appreciate the solutions, and depending upon the house, your heirs, and your own needs there are many powerful solutions at your disposal.

Reference: The Wall Street Journal (April 13, 2014) “Dangers of Giving Your Home to Your Children”

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Handing Down a Headache and Not a Home: Pitfalls of the Reverse Mortgage

The reverse mortgage has its benefits, especially for many retirees needing some additional cash to make ends meet in the current interest rate environment. However, as the financial community has been quick to point out, there are also some serious drawbacks to consider. The biggest drawback to bear in mind is that your heirs and loved ones may bear the brunt of the burden when it comes to those drawbacks. It is important to know how reverse mortgages work before you sign up for them. While you are at it, make you’re your heirs and other inheritors know what to expect. The issue of reverse mortgages and inheritances is not a new difficulty. Nevertheless, it does seem to be a new sour spot between borrower families and lenders. The New York Times recently reported on the situation as more and more baby boomers are finding themselves discovering that the “Pitfalls of Reverse Mortgages May Pass to Borrower’s Heirs.” Whether you are the one with a reverse mortgage (or considering taking one out) or one of those on the inheriting end, this article is worth reading. Ideally, a reverse mortgage is supposed to assist an elderly person or couple by providing a “loan” against the value of their home. The home equity serves as the security for the loan. The loan is really only expected to be dealt with at the time of their passing (or, earlier should they move). The home is likely their most valuable and yet entirely non-liquid asset, after all. Following the death of the elderly person or last surviving spouse, the lender either forecloses on the house to secure repayment of the reverse mortgage or, by law, the family/inheritors are allowed to pay off the balance or some lesser settlement amount. Apparently, more and more lenders are playing hard ball. They are hiding the pay-off options, the settlement options, and even moving straight to foreclosure proceedings within weeks of the passing of the borrower. This means that many baby-boomers finally inheriting the home either will not inherit the home at all or end up fighting against a bureaucracy. Even if it’s not intentional on the part of lenders, it’s still a very real problem for even diligent heirs to face. It’s important to know the difficulties that may be inherited, whether you are set to leave the house behind or whether you’re set to inherit it and want to keep it in the family.

Reference: The New York Times (March 26, 2014) “Pitfalls of Reverse Mortgages May Pass to Borrower’s Heirs”

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The Family Foundation In The Shadow Of Giants

In the face of big-time charities – the Gates Foundations, the Case Foundations, former presidents and the Rockefellers of today – small family charities and foundations have a little trouble making it into the spotlight. It’s an unfortunate problem of recognition that the Wall Street Journal points out over in “Small-Fry Family Foundations,” and many new charities face. Many new retirees are ready for a new challenge and a second career of giving back. After all, once they are playing the “back nine” of life, several new retirees are looking to make a difference with the fruits of their life’s work. Many choose to create a family foundation to make the most meaningful use of their time and money, not to mention to achieve their charitable objectives. How unfortunate it is, then, to see such lofty objectives fall by the wayside or simply go unnoticed because it is eclipsed. It’s crime enough to see mom-n’-pops go under when it comes to business and this isn’t just business; it is charity. So what ingredients make a family foundation successful? How do you steal a bit of the limelight to help your cause? These are things to think about even in the formation of the foundation, and even as you consider this as a family mission and second career. The original article contains advice and a case study or two to ponder if you already have or are considering creating a family foundation.

Reference: The Wall Street Journal (March 28, 2014) “Small-Fry Family Foundations”

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Life Insurance Donations: Two Birds With One Stone

Life insurance can be an incredible boon to your family, and a buffer against a dozen high-cost issues or a source of much-needed liquidity in the face of an estate tax. Then again, you might just end up not needing it all. What do you do with the policy? The good news is that you can kill two birds with one stone. Have you thought about donating your life insurance to a worthy cause? WealthManagement.com explained the motive and the usefulness of the approach a short time ago in a recent article titled “Donating Life Insurance.” What if it turns out that you won’t need that life insurance policy for which you scrimped to pay premiums over the years? Your children are grown and on their own, plus you have built up enough wealth to carry you and your spouse through retirement. Perhaps you have forgotten about that old policy sold to you by a college buddy when he was just getting into the business. In short, the policy is “found money” you really do not need now. Consider this: your favorite charity could make good use of your policy and its eventual proceeds. Charities in the know are far more amenable to such unique gifts than you might realize. Now, instead of the eventual proceed being a potential tax burden to your estate, you can claim a current charitable deduction. Two birds with one stone. Be sure to read the original article for more of the particulars. Then, before taking action, schedule a consultation with your estate planning attorney to make sure you connect all of the dots and get the best benefit while doing the most good.

Reference: WealthManagement.com (March 18, 2014) “Donating Life Insurance”

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Planning For Control Without Ownership: The Family Limited Partnership

Planning for your estate and the good of your family is often a game of give and take. In addition, it can be a question of how much and when. Namely, you want to give away your assets but not just yet. As is so often the case, where there’s a need there’s a tool. A particularly powerful tool in this case is the Family Limited Partnership (FLP). An FLP can do double duty as a tool for asset protection as well as for estate planning. Family Limited Partnerships have long been a useful tool for many, but Forbes recently offered a helpful perspective in an article titled “How To Protect Your Assets Without Giving Up Control.” You see, the FLP represents a way to separate control from direct ownership of assets. Those in business will understand the benefit of indirect ownership quite clearly. Indirect ownership is the essence of forming an entity to structure a business – an LLC or a corporation, for example – which protects the owner(s) from liabilities, creditors and the like, and often vice versa. A Family Limited Partnership is, in reality, a form of a Limited Partnership. The distinction? You just use it for family assets like a house, individual assets, and anything you’d want to control even as you protect it and slowly gift it away. Well, how does that work? Limited partnerships allow for different types of partnership stakes: general partnership interests are vested with all the control, while limited partnership interests just represent ownership without control. Even if the limited partnership interests outweigh the general partnership interests 99 to 1, the general interest retains control. This arrangement has a business use, but in a family it means that the parents can own all of the general partnership interests while granting out limited interests to the Family Limited Partnership that owns all of the assets. The parents keep control, the children slowly/eventually take on ownership, and creditors or claimants have a hard time touching the assets. As you might have guessed, there are even tax benefits when it comes to bequeathing or gifting the FLP assets. There is a great deal of finesse required to make an FLP arrangement work. Nevertheless, in its basic form the benefits are clear. Both in determining the structure of the FLP and in actually setting it up, competent counsel can mean all of the difference between a fully balanced and solid plan, and a potential mess.

Reference: Forbes (March 18, 2014) “How To Protect Your Assets Without Giving Up Control”

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Estate Planning And The Specter Of Alzheimer’s

Alzheimer’s is no ordinary condition. What it means to the patient and to their mind is simply unique, just as it is uniquely meaningful to the family. Unfortunately, it is also a uniquely meaningful condition when it comes to estate planning and there are very important steps to take sooner rather than later. Planning for one’s estate and for one’s late-in-life plans requires more than a bit of wherewithal. This is not only an empirical fact but also a legal one. Because Alzheimer’s and dementia affect the mind means certain legal choices, whether regarding healthcare or disposition of property to one’s heirs, simply have to be down and in writing well before they are questionable. It’s a complex problem. Fortunately, there are some important tools to keep in mind early and get a plan in place. Some of the basics were helpfully pointed out in a LifeHealthPro article last month titled “4 things to know about Alzheimer’s and estate planning.” The four things? • Collect Your Documents: that is, all of the important documents should be easily at hand or easily discoverable for when they are needed, and not by the patient but by whoever cares for them. • Property Management: perhaps more appropriately, you should have a plan for assets in this life and an estate plan to direct assets thereafter. • Advanced Directives: these documents spell out important decisions and/or give that decision-making power to others through a Durable Power of Attorney, a Living Will, and Medical Directives (like a Do Not Resuscitate order). • A Living Trust: a trust can be all the more useful in organizing and disposing of property as well as allowing another to manage it, which is that much more powerful for an Alzheimer’s patient. These are just the basics. Regardless, and not without coincidence, these are important basics steps and tools when it comes to any estate plan. Planning in anticipation of Alzheimer’s is no different than the planning one ought to do anyway. But then, to the extent many of us will be affected by Alzheimer’s or dementia, it only stands to reason that we should all be diligent in our planning. Once we have one of these conditions, it could be too late to plan for anything. Be sure to get your own estate in place and work with your elderly loved ones to ensure they have the plans in place allowing for you to care for them.

Reference: LifeHealthPro (March 11, 2014) “4 things to know about Alzheimer’s and estate planning”

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Study Shows Higher Estimates Of Deaths From Alzheimer's

Alzheimer’s disease is a unique challenge to a family. As you plan for old age, and even while planning for the estate itself, it is essential to plan accordingly. Unfortunately, some recently released bad news regarding Alzheimer’s has brought the need for proper planning into even sharper focus. Earlier this month, Reuters reported on a recent Alzheimer’s study in an article titled “Alzheimer's deaths much more common than realized: study.” Alzheimer’s is actually a fatal disease. However, the real toll from the disease occurs first during life. More to the point, the recent study found that, “Nearly half a million elderly Americans likely died from Alzheimer's disease in 2010, a figure almost six times higher than previous estimates of annual deaths.” The original Reuters article has much to say about the study and about the nature of the disease itself. Nevertheless, beyond the data, this news should get us thinking about what it means to be living and planning for old age or an estate in an era of Alzheimer’s. This is a story about medical facts, but Alzheimer’s also brings economic and legal issues to confront. If a loved one already shows signs of the disease, then there is much to learn and understand. Do not ignore the matter. Get help now, not later. Contact a qualified elder law attorney to help you with the legal issues and coordinate the professional resources you will need.

Reference: Reuters (March 5, 2014) “Alzheimer's deaths much more common than realized: study”

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No Inheritance Or Compensation For Services? Lesson Learned

Even if you do not live in Massachusetts, if you are caring for an elderly loved one and may or may not be an heir apparent, there is something to be learned from a recent case in the Bay State, Cheney v. Flood (84 Mass. App. Ct. 1134, Feb. 7, 2014). There is a difference between care given out of responsibility and that given out of expectation of payment. Similarly, there is a difference between payments for services and an inheritance. ElderLawAnswers considered the Cheney case in an article titled “Don't Just Hope for an Inheritance; Get It in Writing.” In the case in question, Suzanne M. Cheney and her family offered many services to her stepfather, Anthony R. Turco. They provided these services without an actual agreement for payment. Well, Anthony passed away and Suzanne was left out of any inheritance. Suzanne was, as a result, not happy. She took the estate to court, arguing that she was due reasonable compensation for her care independent of any inheritance. The court disagreed, finding that there was no evidence she offered her care with expectation of compensation. In reality, there truly is a difference between an inheritance and compensation for services rendered. It is easy to think the worst, but in these cases oftentimes is a very legitimate conversation to be had about the needs and expectations of the caregiver as much as the needs of the elderly loved one. If you care for an elderly loved one, there are some very real ways to structure the relationship that might serve to benefit everyone. These conversations (and written agreements) are much better worked out by family in advance than by a court later on.

Reference: ElderLawAnswers (March 17, 2014) “Don't Just Hope for an Inheritance; Get It in Writing”

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Planning for Late-In-Life Care

Planning for the health and proper care of an aging parent is no easy undertaking. That is a given. As a parent moves toward healthcare and assisted living there are myriad questions and issues to consider. These run the gamut from financial to medical and, yes, the emotional. By way of a primer, consider reading (and sharing) a recent Forbes article titled “The Basics: Assisted Living For Your Parent.” Some of the most important issues in planning for late- or end-of-life care include understanding the various kinds of facilities and treatments available. There is, for example, a decided difference between nursing home care and an assisted living situation. Even within assisted living communities there are many different kinds of facilities, from the large to the small and the homey to the clinical. In the end, you must know what to look for and what is appropriate for the elderly loved one in need of care. The key, if possible, is to include your loved in the evaluation process. Ensure that they are included in the discussions and options. Otherwise, expect resistance to change because the transition to care away from home is by nature very disruptive on many levels. Once you know the kind of care needed and your loved one is on board, then comes the question of how to pay for it and how to understand Medicaid, Medicare, and the programs that can help fill the gaps. Needless to say, this can be a complex process. Be sure to read and share the original article to help you and your loved one make a transition that is right for their circumstances.

Reference: Forbes (March 13, 2014) “The Basics: Assisted Living For Your Parent”

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Dementia and Family Finances: the Glass Half Empty and the Need for Planning Early

Dementia is an unfortunate and pernicious affliction. Unfortunately, it is one that will afflict the majority of households at some point. Because it is so real a possibility to face, it is one better faced sooner rather than later. Proper planning can reduce the inevitable stress on all concerned. The issue of dementia in planning was recently addressed by MarketWatch in article titled “Stunning study on dementia, couples and money.” The results of the study mentioned are multifaceted. However, there is one obvious data point upon which the article rotates - the vast majority of households turn over financial control to the unimpaired spouse once the original leader of family finances shows signs of dementia. Unfortunately, dementia doesn’t work that way; it’s far too subtle. This means that many households may have waited too long, and then the unimpaired spouse is left to learn all of the finances and pick up any broken pieces from a spouse who may be unable to fully account for it all. That is a glass half empty, unfortunately. So how do you fight against so subtle an affliction and a tide of impairment affecting (as far as we can tell) fully 22% of Americans over the age of 71? You plan early and spouses plan together. In fact, there is much to do and it is all about starting early. The original article, as it happens, also offers a helpful bit of wisdom with five practical tips. Are you an adult child working to assist your aging parents? Then some of these tips are critical to share with your parents sooner rather than later.

Reference: MarketWatch (June 2, 2014) “Stunning study on dementia, couples and money”

Filling in the (Estate Planning) Gaps with a Letter of Intent

Your estate and your plan for it are more than just a set of documents. Nevertheless, it is only through documents that you and your wishes truly get a voice. There are the legal documents that speak to the court, but that does not necessarily do all of the speaking you need it to. When you need to leave that much more instruction behind there is an important tool to be found in the Letter of Intent. A “Letter of Intent,” not unlike the business version used in and around business transactions, is not the document that does the legal heavy lifting but it can move things along. So, too, with letters of intent which are meant to supplement and complement a will or trust arrangement, but never to do the work standing alone. LifeHealthPro offered some important perspective on the Letter of Intent in a recent article with some special attention to planning for special needs children and it is worth your thoughts: “Letter of intent: a useful component of an estate plan.” If the will tells the probate court what you want to do with your assets, the Letter of Intent gives you the voice to say the same for all of the other topics, from your hopes and wishes to very practical instruction regarding this or that. If you have a child with special needs, then a Letter of Intent can give you the space to offer all manners of practical instruction that simply cannot fit within a will and may be inappropriate for a legal document in the first place. That is the rub, of course. The Letter of Intent is not the will and is not legally binding. For a bit more on the Letter of Intent as a tool and for a great deal more advice on how to use it, particularly with regard to children with special needs, check out the original article. Sometimes this little letter can mean all of the difference. In any event, it might help you and your loved ones organize your thoughts. In the end, however, if your objectives require that some essential legal concerns are addressed, then the heavy lifting needs to be done in properly drawn legal documents. So what are your needs and how will you put them to paper?

Reference: LifeHealthPro (June 3, 3014) “Letter of intent: a useful component of an estate plan”