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Unique Estate Law Blog

Monday, March 31, 2014

Transferring Shares in A Business

Estate Planning: How Certificates of Shares Are Passed Down

How is the funding handled if you decide to use a living trust?

Certificates represent shares of a company. There are generally two types of company shares: those for a publicly traded company, and those for a privately held company, which is not traded on one of the stock exchanges.

Let's assume you hold the physical share certificates of a publicly held company and the shares are not held in a brokerage account. If, upon your death, you own shares of that company's stock in certificated form, the first step is to have the court appoint an executor of your estate.

Once appointed, the executor would write to the transfer agent for the company, fill out some forms, present copies of the court documents showing their authority to act for your estate, and request that the stock certificates be re-issued to the estate beneficiaries.

There could also be an option to have the stock sold and then add the proceeds to the estate account that later would be divided among the beneficiaries. If the stock is in a privately held company there would still be the need for an executor to be appointed to have authority. However, the executor would then typically contact the secretary or other officers of the company to inquire about the existence of a shareholder agreement that specifies how a transfer is to take place after the death of a shareholder.  Depending on the nature of the agreement, the company might reissue the stock in the name(s) of the beneficiaries, buy out the deceased shareholder’s shares (usually at some pre-determined formula) or other mechanism.   

If you set up a revocable living trust while you are alive you could request the transfer agent to reissue the stock titled into the name of the trust. However, once you die, the "trustee" would still have to take similar steps to get the stock re-issued to the trust beneficiaries.

If you open a brokerage account with a financial advisor, the advisor could assist you in getting the account in the name of your trust, and the process after death would be easier than if you still held the actual stock certificate.


Sunday, March 23, 2014

How Do You Put Assets Into Your Trust?

What Does the Term "Funding the Trust" Mean in Estate Planning?

If you are about to begin the estate planning process, you have likely heard the term "funding the trust" thrown around a great deal. What does this mean? And what will happen if you fail to fund the trust?

The phrase, or term, "funding the trust" refers to the process of titling your assets into your revocable living trust. A revocable living trust is a common estate planning document and one which you may choose to incorporate into your own estate planning. Sometimes such a trust may be referred to as a "will substitute" because the dispositive terms of your estate plan will be contained within the trust instead of the will. A revocable living trust will allow you to have your affairs bypass the probate court upon your death, using a revocable living trust will help accomplish that goal.

Upon your death, only assets titled in your name alone will have to pass through the court probate process. Therefore, if you create a trust, and if you take the steps to title all of your assets in the name of the trust, there would be no need for a court probate because no assets would remain in your name. This step is generally referred to as "funding the trust" and is often overlooked. Many people create the trust but yet they fail to take the step of re-titling assets in the trust name. If you do not title your trust assets into the name of the trust, then your estate will still require a court probate.

A proper trust-based estate plan would still include a will that is sometimes referred to as a "pour-over" will. The will acts as a backstop to the trust so that any asset that is in your name upon your death (instead of the trust) will still get into the trust. The will names the trust as the beneficiary. It is not as efficient to do this because your estate will still require a probate, but all assets will then flow into the trust.

Another option: You can also name your trust as beneficiary of life insurance and retirement assets. However, retirement assets are special in that there is an "income" tax issue. Be sure to seek competent tax and legal advice before deciding who to name as beneficiary on those retirement assets.


Sunday, March 16, 2014

When to Involve Children in Estate Planning

When to Involve Adult Children in the Estate Planning Process

Individuals who are beginning the estate planning process may assume it's best to have their adult child(ren) join them in the initial meeting with an estate planning attorney, but this may cause more harm than good.

This issue comes up often in the estate planning and elder law field, and it's a matter of client confidentiality. The attorney must determine who their client is- the individual looking to draft an estate plan or their adult children- and they owe confidentiality to that particular client.

The client is the person whose interests are most at stake. In this case, it is the parent. The attorney must be certain that they understand your wishes, goals and objectives. Having your child in the meeting could cause a problem if your child is joining in on the conversation, which may make it difficult for the attorney to determine if the wishes are those of your child, or are really your wishes.

Especially when representing elderly clients, there may be concerns that the wishes and desires of a child may be in conflict with the best interests of the parent. For example, in a Medicaid and long-term care estate planning context, the attorney may explain various options and one of those may involve transferring, or gifting, assets to children. The child's interest (purely from a financial aspect) would be to receive this gift. However, that may not be what the parent wants, or feels comfortable with. The parent may be reluctant to express those concerns to the attorney if the child is sitting right next to the parent in the meeting.

Also, the attorney will need to make a determination concerning the client's competency. Attorneys are usually able to assess a client's ability to make decisions during the initial meeting. Having a child in the room may make it more difficult for the attorney to determine competency because the child may be "guiding" the parent and finishing the parents thoughts in an attempt to help. 

The American Bar Association has published a pamphlet on these issues titled "Why Am I Left in the Waiting Room?" that may be helpful for you and your child to read prior to meeting with an attorney. 


Monday, February 03, 2014

8 Things to Consider When Selecting a Caregiver for Your Senior Parent

8 Things to Consider When Selecting a Caregiver for Your Senior Parent

As a child of a senior citizen, you are faced with many choices in helping to care for your parent. You want the very best care for your mother or father, but you also have to take into consideration your personal needs, family obligations and finances.

When choosing a caregiver for a loved one, there are a number of things to take into consideration.

  1. Time. Do you require part- or full-time care for your parent? Are you looking for a caregiver to come into your home? Will your parent live with the caregiver or will you put your parent into a senior care facility? According to the National Alliance for Caregiving, 58 percent of care recipients live in their own home and 20 percent live with the caregiver. You should consider your current arrangement but also take time to identify some alternatives in the event that the requirements of care should change in the future.
  2. Family ties. If you have siblings, they probably want to be involved in the decision of your parent’s care. If you have a sibling who lives far away, sharing in the care responsibilities or decision-making process may prove to be a challenge. It’s important that you open up the lines of communication with your parents and your siblings so everyone is aware and in agreement about the best course of care.
  3. Specialized care. Some caregivers and care facilities specialize in specific conditions or treatments. For instance, there are special residences for those with Alzheimer’s and others for those suffering from various types of cancer. If your parent suffers from a disease or physical ailment, you may want to take this into consideration during the selection process
  4. Social interaction. Many seniors fear that caregivers or care facilities will be isolating, limiting their social interaction with friends and loved ones. It’s important to keep this in mind throughout the process and identify the activities that he or she may enjoy such as playing games, exercising or cooking. Make sure to inquire about the caregiver’s ability to allow social interaction. Someone who is able to accommodate your parent’s individual preferences or cultural activities will likely be a better fit for your mother or father.
  5. Credentials. Obviously, it is important to make sure that the person or team who cares for your parent has the required credentials. Run background checks and look at facility reviews to ensure you are dealing with licensed, accredited individuals. You may choose to run an independent background check or check references for added peace of mind.
  6. Scope of care. If you are looking for a live-in caregiver, that person is responsible for more than just keeping an eye on your mother or father—he or she may be responsible for preparing meals, distributing medication, transporting your parent, or managing the home. Facilities typically have multidisciplinary personnel to care for residents, but an individual will likely need to complete a variety of tasks and have a broad skill set to do it all.
  7. Money.Talk to your parent about the financial arrangements that he or she may have in place. If this isn’t an option, you will likely need to discuss the options with your siblings or your parent’s lawyer—or check your mother’s or father’s estate plan—to find out more about available assets and how to make financial choices pertaining to your parent’s care.
  8. Prepare. Upon meeting the prospective caregiver or visiting a facility, it is important to have questions prepared ahead of time so you can gather all of the information necessary to make an informed choice. Finally, be prepared to listen to your parent’s concerns or observations so you can consider their input in the decision. If he or she is able, they will likely want to make the choice themselves.

Choosing a caregiver for your parent is an important decision that weighs heavily on most adult children but with the right planning and guidance, you can make the best choice for your family. Once you find the right person, make sure to follow up as care continues and to check in with your mother or father to ensure the caregiver is the perfect fit.

 


Sunday, January 26, 2014

Put Your Spouses Name on the Deed to Your House

A Shared Home but Not a Joint Deed

Many people erroneously assume that when one spouse dies, the other spouse receives all of the remaining assets; this is often not true and frequently results in unintentional disinheritance of the surviving spouse.

In cases where a couple shares a home but only one spouse’s name is on it, the home will not automatically pass to the surviving pass, if his or her name is not on the title. Take, for example, a case of a husband and wife where the husband purchased a home prior to his marriage, and consequently only his name is on the title (although both parties resided there, and shared expenses, during the marriage). Should the husband pass away before his wife, the home will not automatically pass to her by “right of survivorship”. Instead, it will become part of his probate estate. This means that there will need to be a court probate case opened and an executor appointed. If the husband had a will, the executor would be the person he nominated in his will who would carry out the testator’s instructions regarding disposition of the assets. If he did not have a will, state statutes, known as intestacy laws, would provide who has priority to inherit the assets.

In our example, if the husband had a will then the house would pass to whomever is to receive his assets pursuant to that will. That may very well be his wife, even if her name is not on the title.

If he dies without a will, state laws will determine who is entitled to the home. Many states have rules that would provide only a portion of the estate to the surviving spouse. If the deceased person has children, even if children of the current marriage, local laws might grant a portion of the estate to those children. If this is a second marriage, children from the prior marriage may be entitled to more of the estate. If this is indeed the case, the surviving spouse may be forced to leave the home, even if she had contributed to home expenses during the course of the marriage.

Laws of inheritance are complex, and without proper planning, surviving loved ones may be subjected to unintended expense, delays and legal hardships. If you share a residence with a significant other or spouse, you should consult with an attorney to determine the best course of action after taking into account your unique personal situation and goals. There may be simple ways to ensure your wishes are carried out and avoid having to probate your partner’s estate at death.


Sunday, January 19, 2014

Protect Your Family Cabin with a Trust

Protecting Your Vacation Home with a Cabin Trust

Many people own a family vacation home--a lakeside cabin, a beachfront condo--a place where parents, children and grandchildren can gather for vacations, holidays and a bit of relaxation. It is important that the treasured family vacation home be considered as part of a thorough estate plan. In many cases, the owner wants to ensure that the vacation home remains within the family after his or her death, and not be sold as part of an estate liquidation.

There are generally two ways to do this: Within a revocable living trust, a popular option is to create a separate sub-trust called a "Cabin Trust" that will come into existence upon the death of the original owner(s). The vacation home would then be transferred into this Trust, along with a specific amount of money that will cover the cost of upkeep for the vacation home for a certain period of time. The Trust should also designate who may use the vacation home (usually the children or grandchildren). Usually, when a child dies, his/her right to use the property would pass to his/her children.

The Cabin Trust should also name a Trustee, who would be responsible for the general management of the property and the funds retained for upkeep of the vacation home. The Trust can specify what will happen when the Cabin Trust money runs out, and the circumstances under which the vacation property can be sold. Often the Trust will allow the children the first option to buy the property.

Another method of preserving the family vacation home is the creation of a Limited Liability Partnership to hold the house. The parents can assign shares to their children, and provide for a mechanism to determine how to pay for the vacation home taxes and upkeep. An LLP provides protection from liability, in case someone is injured on the property.

It is always wise to consult with an estate planning attorney about how to best protect and preserve a vacation home for future generations.


Monday, December 02, 2013

14 Costly Misconceptions About Planning for Your Senior Years

A Minneapolis Estate Planning and Probate Lawyer Discusses Estate Planning Issues Specific to Seniors

Misconception #1: Most seniors move into nursing homes as a result of minor physical ailments that make it hard for them to get around.  Wrong!  A large percentage of admissions to nursing homes is because of serious health, behavior, and safety issues caused by Alzheimer’s disease and dementia.

Misconception #2: Nursing home costs in Minnesota average $1,500 to $2,500 per month per person.  Hardly.  Current nursing home charges for one resident typically run $6,000 per month, or $72,000 per year, which does not include prescription drugs -- and those costs continue to rise.

Misconception #3: Children can care for a parent with Alzheimer’s disease at home, without the need for nursing home care.  Not true!  Many patients with Alzheimer’s disease end up in nursing homes because children are simply unable to provide the level of care their parent needs.  In most cases, the children want to care for their parents.  But, as a practical matter, they simply can’t.  Moving a parent into a nursing home is an intensely personal issue and should not be labeled as a right or wrong decision. In many cases, it’s the only realistic option.  The rare exception is when the family has enough money to pay for skilled nursing care at home.

Misconception #4: Standard legal forms are all you need for a good estate plan.  Not true.  A competent estate plan begins with clearly defined goals, supported by well-drafted legal documents, and the repositioning of assets, as needed, to protect your estate from taxes, probate costs, and catastrophic nursing home costs. But you MUST PLAN EARLY.

Misconception #5: Your child will never move you into a nursing home.  Wrong.  Most children consider all options before moving a parent into a nursing home.  But, sadly, children usually find they have no other alternative.  As a result, parents who never expected to live in a nursing home soon discover that a nursing home is the only place with the staff and equipment to provide the care they need.

Misconception #6: As payment for nursing home care, the government will take your family home.  Not true, if you plan ahead.  Many people fear that the government will take their home in exchange for nursing home care, but you can avoid this with proper planning.  You’ll be glad to know there are some ways you can protect your home so it won’t be taken.

Misconception #7: You will never end up in a nursing home.  That’s hard to predict.  Your odds are roughly 50/50.  Of Americans reaching age 65 in any year, nearly half will spend some time in a nursing home.  And a surprising number will require care for longer than one year.  That means every year, tens of thousands of seniors will face costs of $48,000 or more ($60,000 in Minnesota), which does not include the cost of prescription drugs.

Misconception #8: If your spouse enters a nursing home, all of your joint savings will have to be spent on his or her care.  No.  With proper planning you can keep half of your combined “countable” assets up to approximately $103,000 (increasing each year).  In some circumstances, you may be able to protect nearly all of your life savings.  In fact, it is often possible to protect much more than the $103,000 maximum.  “Countable” assets are those assets such as cash, checking accounts, savings, CDs, stocks, and bonds that the government considers available to be spent on the cost of nursing home care.

Misconception #9: Legally, you can give away only $14,000 to each of your children each year.  Not true.  You can give away any amount, but you have to report to the IRS gifts in excess of $14,000 per recipient per year ($28,000 if both husband and wife make a gift).  However, there is no requirement that you pay any gift tax unless you have exhausted your lifetime exclusion amount, which is currently set at $2,000,000 for an individual. But, there is a "look back" period so you must work with a qualified attorney before gifting away any assets as you age.

Misconception #10: You can wait to do long-term planning until your spouse or you get sick.  Yes, to some degree.  However, you and your spouse will be much better off if you have taken important planning steps in advance, before a crisis occurs.  What stops most people from being able to effectively plan when they are in the middle of a crisis is that the ill person is unable to make decisions and sign the necessary legal documents.

Misconception #11: All General Durable Powers of Attorney are created equal.  Completely false!  A General Durable Power of Attorney is a highly customized legal document -- and NOT a form!  Most Durable Powers of Attorney don’t contain even the most basic gifting authority.  Without a gifting power, your agent is usually limited to spending your money on your bills and selling your assets to generate cash to pay your bills.  Some Durable Powers of Attorney contain a gifting provision, but the Minnesota Statutory Power of Attorney it is limited to $10,000 per year.  This is particularly concerning for unmarried couples as the IRS considers ANY exchange of money/assets between them to be a gift.  The annual limit of $10,000 is too small for effective asset protection planning, and relates to a completely different type of federal estate and gift tax issue.  Unique Estate Law has created an enhanced power of attorney to get around that limit.

Misconception #12: Since you are married, your spouse will be able to manage your property and make financial decisions without a general durable power of attorney.  Not true.  If you become incapacitated and your spouse needs to sell or mortgage the family home -- or gain access to financial ac-counts that are in your name only -- your spouse will need a general durable power of attorney.  Without one, your spouse will have to go to Court and get the judge’s permission to act on your behalf by way of a conservatorship proceeding.

Misconception #13: You can hide your assets while you become eligible for Medicaid (Known as Medical Assistance in Minnesota).  False!  Intentional misrepresentation in a Medicaid application is a crime and can be costly.  The IRS shares any information concerning your income or assets with the local Medicaid eligibility office.  You -- or who-ever applied for Medicaid -- may have to repay Medicaid to avoid prosecution.

Misconception #14: Medicaid rules that applied to your neighbor when he went into a nursing home will also apply to you.  Maybe not.  Medicaid rules change.  Don’t assume the law that applied to your neighbor will also apply to you.  In addition, there may have been facts about your neighbor’s situation that you just don’t know.


Monday, November 18, 2013

Updating Your Estate Plan, Part II: Signs It's Time to Update Your Estate Plan

A Minnesota Estate Planning and Probate Attorney Lists 20 Red Flags That Signal When Your Will or Living Trust is Out of Date

I offer clients the opportunity to sit down with me and review their estate plans at least once each year.  However, this doesn’t mean you should wait until your next review if your circumstances change.  This Estate Planning Checklist identifies events that could make a significant impact on your estate.  If any of these events occurs, please call me.  For your protection, we may need to amend or revise one or more of your estate planning documents.

Changes Involving You or Your Spouse/Partner

1.  You get married.
2.  You and your spouse divorce or partner break up.
3.  Your spouse/partner dies or becomes incapacitated.
4.  Your health changes.

Changes Involving Your Children, Grandchildren or Other Beneficiaries

5.  You have a child.
6.  You adopt a child.
7.  Your child marries.
8.  Your child divorces.
9.  Your child becomes ill.
10.  One of your beneficiaries experiences an economic change, good or bad.
11.  One of your beneficiaries proves to be financially irresponsible.
12.  One of your beneficiaries has a change in attitude toward you.

Changes in Your Economic Condition

13.  The value of your assets increases or decreases.
14.  Your insurability for life insurance changes.
15.  Your employment changes.
16.  Your business interests change, such as becoming involved in a new partnership or corporation.
17.  You retire from your business or profession.
18.  You acquire property in a different state.
19.  You move to a different state.

Changes to a Person Named in Your Estate Plan

20.  Something happens to a person named in your estate plan, such as the death or incapacity of your personal representative, executor, trustee, guardian or conservator.


Monday, November 11, 2013

Updating Your Estate Plan, Part I: Why Your Plan May Need Maintenance.

Minneapolis Estate Planning and Probate Lawyer Explains Why Your Estate Plan Needs Maintenance

When you buy a new car, everything works perfectly.  (At least, you hope it does.)  But then in 3,000 miles, it’s time for an oil change.  Also, you must keep your eye on the level of coolant in the radiator, your transmission fluid, and your power steering fluid.  You must make sure your alternator works to keep the battery charged.

What happens if you don’t maintain your car?  Your engine could burn up.  Your transmission could fail.  Your car could overheat.  Your battery could go dead.  All of which mean you’re stuck on the side of the road trying to hitchhike to the nearest town.

Your estate plan is like your car.  When you set it up, everything is current and accurate.  But you need to keep your eye on your assets, insurance, Powers of Attorney, gifting program, distribution plan, successor trustees, beneficiaries, and so much more.  That’s why it’s important that you meet with your estate planning attorney every year.

You wouldn’t think of going on a long trip without making sure that your car was in tip-top shape.  Yet every day, people embark on the long trip we call life.  And the problem with our “life trip” is that we’re never sure when that trip might end.  It’s a good idea to review your estate plan with your lawyer every year or two to see if changes in your family’s circumstances need to be reflected in your estate plan.

For example: You should review your estate plan with your estate planning attorney any time (1) you get married, (2) you go through a break up or divorce, (3) your partner/spouse dies or becomes incapacitated, (4) your health changes, (5) you have or adopt a child, (6) your children marry or divorce, (7) a potential problem arises with a beneficiary, (8) the value of your assets changes, (9) your employment changes, (10) your business interests change, (11) you retire, (12) you acquire property in another state, (13) you move to a different state, or (14) something happens to a person named in your estate plan that could affect your relationship or the duties they are to perform on your behalf.

But wait.  Is your estate plan really like your car?  It’s more accurate to say it’s like a fire engine -- ready to handle any emergency at a moment’s notice.  When your spouse has a heart attack, you want the paramedics -- right now!  You don’t want to call 9-1-1 and have the dispatcher explain to you that the fire truck has a dead battery.  Or a flat tire.  

It would be ridiculous to buy a new fire engine, back it into the fire station where it waits for the next emergency, and then not have a mechanic check under the hood for a year.  Do you know how many things can go wrong with a fire truck’s engine if it goes without service for a year?

Yet that’s exactly what people do with their estate plans.  They invest hard-earned money to set up their plans.  Then they put their plans in a drawer or safe deposit box where they gather dust for 2 years, 5 years, even 10 years -- often without updating the plan even once!

And then, when these people have an emergency, do you know what happens?  They dig out their paper-work only to learn that their plan no longer works.  You see, it was custom designed to fit their specific needs 5 years ago.  But now their needs, and often the law, have changed -- and no one updated the plan.  What a tragedy!

Your estate plan must be fully operational, ready to handle any emergency at a moment’s notice.  If your spouse has a heart attack and cannot make medical decisions, you don’t want the nurse at the hospital to explain that the legislature changed the law and now your Powers of Attorney are no longer valid.  Or, if your spouse dies, you don’t want the judge to tell you that your estate must go through probate because your Revocable Living Trust has not been properly maintained and updated.

You need your estate plan to be ready for any emergency -- 24 hours a day -- because you never know when you might need it.

An out-of-date estate plan isn’t worth the paper it’s written on.  But a current estate plan that works precisely the way it should -- protecting your family and safeguarding your assets -- is the greatest gift of love you can give to your family, your spouse, and yourself.  Your custom designed estate plan, created specifically for you -- combined with yearly maintenance meetings to keep your estate plan in tip-top shape -- are the best investment you’ll ever make.  I guarantee it.


Tuesday, November 05, 2013

19 Smart Ways to Protect Your Assets

Minneapolis Estate Planning and Probate Lawyer Explains How to Protect Your Assets

Smart Way #1: Make a promise to yourself -- now.  Make a personal commitment to yourself and your family that you will do everything possible to protect your family and your assets.

Smart Way #2: Identify your personal and financial goals.  If you could have anything you want, personally and financially, what would it be?  What are your dreams?  How do you and your spouse want to spend your retirement years?

Smart Way #3: Discover which tools you can use to achieve those goals.  You have many legal tools at your disposal that, when used correctly, will create exactly the plan you want for yourself and your family.  Ask your estate planning attorney to explain the tools that will achieve your personal and financial goals.

Smart Way #4: Avoid probate and the Court system, as appropriate.  Create a family estate plan that, upon your death, distributes your assets to your heirs without going through the Court-supervised process called probate.  Most often a Revocable Living Trust is used for this purpose.

Smart Way #5: Reduce income taxes whenever possible.  Create a family asset protection plan that eliminates unnecessary income and capital gains taxes and minimizes all other taxes.  Without proper planning, much of your estate can be lost to various types of taxes.

Smart Way #6: Protect yourself with insurance.  Lawsuits can quickly tie up your assets.  And if the other party wins the lawsuit, the judgment against you could quickly deplete your funds.  If you drive frequently, own rental property, or operate a business, buy an umbrella liability policy that protects your assets from lawsuits.

Smart Way #7: Provide for future health care and financial decisions.  Your family estate plan should protect you and your spouse if the time comes when either of you cannot make decisions.  Your estate planning attorney can make sure you have the legal documents in place so a competent, trusted person can make these important decisions according to your wishes.

Smart Way #8: Plan now to fund nursing home care.  Sadly, many people think the only way they can pay for their nursing home care is by spending down their estate.  But, in fact, you can fund your long-term care in ways that do not require that you spend down your estate.  One common way is with long-term care insurance.  Don’t wait until it’s too late to decide how to fund your nursing home care.  Do it now, long before you need it.

Smart Way #9: Pay close attention to Alzheimer’s disease and its associated costs -- even if you have no reason to worry about it.  Many people who never expect Alzheimer’s disease to strike have had to face its problems with no advance planning.  So, plan for Alzheimer’s disease now, while you have time.  This includes the need to address issues of backup decision-makers, assisted living, and nursing home care.  If your children can care for you later in life, that’s fine.  If they cannot, your advance planning will pay big dividends.  Plan for the worst -- and hope for the best.  Then, in either case, you will have all your bases covered.

Smart Way #10: Keep all control within your family.  If you don’t plan properly, you could find that a friend or relative has petitioned the Court to intervene on your behalf.  Once a judge gets involved, you have ongoing legal and accounting expenses, plus more problems and hassles than you would ever want to endure.  The smart way to plan for your later years is to keep total control within your family.
Smart Way #11: Create your plan now, while everyone involved is competent to make decisions.  Seniors often come to our office seeking help only to learn that they are too late to correct a terrible situation.  We feel awful when we must tell them that the much-needed planning should have been done two, five or ten years earlier.  Don’t wait until you need help to create your plan.  By then, it’s too late.

Smart Way #12: Review your plan at least once a year.  Every time your circumstances change or your goals change, you should change your estate plan.  If your plan is not up to date, the unintended consequences to you and your family could be disastrous.  Make an appointment at least every year to meet with your estate planning attorney.  Then you can go over your plan and discuss any changes in your life circumstances.

Smart Way #13: Make proper decisions concerning your retirement benefit distributions.  Make sure your estate plan maximizes income-tax-free deferrals and minimizes income and estate taxes.  

Smart Way #14: Work closely with your physician about your Medicare coverage.  Often skilled nursing services and home health coverage are terminated or denied with little or no input from your treating physician.  Before you go without health care that could be covered by Medicare, talk with your physician about your concerns so that he or she can help you get the Medicare coverage you deserve.

Smart Way #15: Think about future housing options.  Start from the perspective of where you would like to live.  Then determine if you could afford this option by comparing your monthly income along with your life savings to the initial cost and the ongoing financial commitment you would have to make.  Make sure you consider (1) your healthcare needs that will not be covered by insurance, (2) financial security for your surviving spouse, and (3) your desire to pass on a legacy to your children.

Smart Way #16: If you are in a second marriage, decide how you will handle the high cost of nursing home care.  If you are not able to pay $5,000 per month to a nursing home and want your children from an earlier marriage to receive your property, a Marital Agreement alone will not do the trick.  Medicaid ignores these contracts and considers all of the couple’s assets, whether owned jointly or individually, in determining Medicaid eligibility.  A better choice is to include in your Marital Agreement a provision that requires each spouse to obtain and maintain long-term care insurance.  Also, you can include additional provisions that clearly state that the healthy spouse is able to take all necessary steps to protect his or her separate property from a Medicaid “spend-down.”

Smart Way #17: Keep the lines of communication open within your family.  If one of your children will be managing your finances, you should take specific steps to help him or her avoid conflict within your family.  Insist that your child disclose to other family members what has been done on your behalf.  You can do this by adding this instruction to your Trust or General Durable Power of Attorney.  By doing this you accomplish two things: One, you keep everyone in the loop so feelings of distrust are eliminated.  And two, you reduce the risks of financial abuse because other family members will know how your finances are being managed.

Smart Way #18: Don’t let incapacity put your family at risk for criminal or social worker investigations.  Many professionals are responsible for protecting frail and elderly people from predators.  If your legal documents don’t provide clear legal authority and guidance on how to manage your assets, the police or adult protective services could step in and question your children’s actions and motives.  If authorities investigate your children’s actions, at worst, they could file criminal charges.  At best, an investigation by adult protective services could return a “finding” of no current financial abuse.  You can eliminate these risks to your children -- and avoid becoming a burden to your children -- with a competent estate plan.

Smart Way #19: Hire a competent, experienced estate planning attorney to create an estate plan.  The areas of estate planning and elder law are far too complex to hire just any attorney.  Often, strategies used in estate planning to minimize taxes directly conflict with strategies used in elder law planning to protect assets and achieve Medicaid eligibility for nursing home care.  In situations where both goals are important, you and your family need a lawyer who has in-depth knowledge and experience with both sets of rules and strategies.  Most attorneys are not qualified to provide these services.  Make sure the estate planning attorney you hire has the knowledge, skill, judgment, and experience to create a competent plan for you and your family.


Monday, October 14, 2013

Helping the Family Prepare for Loved Ones in Advancing Age

Advance Planning Can Help Relieve the Worries of Alzheimer’s Disease

The “ostrich syndrome” is part of human nature; it’s unpleasant to observe that which frightens us.  However, pulling our heads from the sand and making preparations for frightening possibilities can provide significant emotional and psychological relief from fear.

When it comes to Alzheimer’s disease and other forms of dementia, more Americans fear being unable to care for themselves and burdening others with their care than they fear the actual loss of memory.  This data comes from an October 2012 study by Home Instead Senior Care, in which 68 percent of 1,200 survey respondents ranked fear of incapacity higher than the fear of lost memories (32 percent).

Advance planning for incapacity is a legal process that can lessen the fear that you may become a burden to your loved ones later in life.

What is advance planning for incapacity?

Under the American legal system, competent adults can make their own legally binding arrangements for future health care and financial decisions.  Adults can also take steps to organize their finances to increase their likelihood of eligibility for federal aid programs in the event they become incapacitated due to Alzheimer’s disease or other forms of dementia.

The individual components of advance incapacity planning interconnect with one another, and most experts recommend seeking advice from a qualified estate planning or elder law attorney.

What are the steps of advance planning for incapacity?

Depending on your unique circumstances, planning for incapacity may include additional steps beyond those listed below.  This is one of the reasons experts recommend consulting a knowledgeable elder law lawyer with experience in your state.
 

  1. Write a health care directive, or living will.  Your living will describes your preferences regarding end of life care, resuscitation, and hospice care.  After you have written and signed the directive, make sure to file copies with your health care providers.
     
  2. Write a health care power of attorney.  A health care power of attorney form designates another person to make health care decisions on your behalf should you become incapacitated and unable to make decisions for yourself.  You may be able to designate your health care power of attorney in your health care directive document, or you may need to complete a separate form.  File copies of this form with your doctors and hospitals, and give a copy to the person or persons whom you have designated.
     
  3. Write a financial power of attorney.  Like a health care power of attorney, a financial power of attorney assigns another person the right to make financial decisions on your behalf in the event of incapacity.  The power of attorney can be temporary or permanent, depending on your wishes.  File copies of this form with all your financial institutions and give copies to the people you designate to act on your behalf.
     
  4. Plan in advance for Medicaid eligibility.  Long-term care payment assistance is among the most important Medicaid benefits.  To qualify for Medicaid, you must have limited assets.  To reduce the likelihood of ineligibility, you can use certain legal procedures, like trusts, to distribute your assets in a way that they will not interfere with your eligibility.  The elder law attorney you consult with regarding Medicaid eligibility planning can also advise you on Medicaid copayment planning and Medicaid estate recovery planning.

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From within Hennepin County Unique Estate Law represents estate planning and elder law clients throughout Minnesota, including Minneapolis, Edina, Bloomington, St. Louis Park, Minnetonka, Plymouth, Wayzata, Maple Grove, St. Paul, and Brooklyn Park. The Minnesota law firm of Unique Estate Law focuses on all aspects of estate planning, including specialized wills, trusts, powers of attorney and medical directives for married couples, young families, blended families, single parents, gay families and those going through a divorce. Unique Estate Law also handles probate administration, asset protection, Medical Assistance planning, elder law, business succession planning, adoptions and cabin planning.



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