When Do I Need an Elder Law Attorney?

Elder law is different from estate law, but they frequently address many of the same issues. Estate planning contemplates your finances and property to best provide for you and your family while you’re still alive but incapacitated. It also concerns itself with the estate you leave to your loved ones when you die, minimizing probate complications and potential estate tax bills. Elder law contemplates these same issues but also the scenario when you may need some form of long-term care, even your eligibility for Medicaid should you need it.

A recent article from The Balance’s asks “Do You or a Family Member Need to Hire an Elder Law Attorney?” According to the article there are a variety of options to adjust as economically and efficiently as possible to plan for all eventualities. An elder law attorney can discuss these options with you.

Medicaid is a complicated subject, and really requires the assistance of an expert. The program has rigid eligibility guidelines in the event you require long-term care. The program’s benefits are income- and asset-based. However, you can’t simply give everything away to qualify, if you think you might need this type of care in the near future. There are strategies that should be implemented because the “spend down” rules and five-year “look back” period reverts assets or money to your ownership for qualifying purposes, if you try to transfer them to others. An elder law attorney will know these rules well and can guide you.

You’ll need the help and advice of an experienced elder law attorney to assist with your future plans, if one or more of these situations apply to you:

  • You’re in a second (or later) marriage;
  • You’re recently divorced;
  • You’ve recently lost a spouse or another family member;
  • Your spouse is incapacitated and requires long-term care;
  • You own one or more businesses;
  • You have real estate in more than one state;
  • You have a disabled family member;
  • You’re disabled;
  • You have minor children or an adult “problem” child;
  • You don’t have children;
  • You’d like to give a portion of your estate to charity;
  • You have significant assets in 401(k)s and/or IRAs; or
  • You have a taxable estate for estate tax purposes.

If you have any of these situations, you should seek the help of an elder law attorney.

If you fail to do so, you’ll most likely give a sizeable percentage of your estate to the state, an ex-spouse, or the IRS.

State probate laws are very detailed as to what can and can’t be included in a will, trust, advance medical directive, or financial power of attorney. These laws control who can and can’t serve as a personal representative, trustee, health care surrogate, or attorney-in-fact under a power of attorney.

Hiring an experienced elder law attorney can help you and your family avoid simple but expensive mistakes, if you or your family attempt this on your own.

Reference: The Balance (Jan. 21, 2020) “Do You or a Family Member Need to Hire an Elder Law Attorney?”

How Should I Prepare for My Child’s Future?

It’s been a common path for millennials and their predecessors to go to a four-year college and get a job. If they were short on funds, they’d take out some loans. However, there have been some signals that this norm is changing.

With worries about a student debt crisis and with the experience of recent graduates, new college-age students are increasingly turning to alternatives to the established route to create their own debt-free future.

Kiplinger’s recent article entitled “How to Stay Flexible in Saving for Your Child’s Future” says that student debt is leading to obstacles, when it comes to achieving major milestones of financial freedom. Of the young millennials surveyed, nearly half (47%) said they delayed purchasing a home because of  their debt, 40% delayed saving for retirement and 31% waited to move out of their parents’ home. A total of 28% of parents said they delayed saving for their own retirement, to pay for their children’s education.

Saving for a child’s future now looks different than when these 18-year-olds were born.  It certainly will be the case, when they leave the nest. As a result, it’s critical for parents to try to give them help, by learning how to adapt to the changing times.

With the gig economy and digitally enabled side jobs, parents have more flexibility to maintain their financial goals, while preserving their personal lives.

When considering flexibility, especially when saving for a child’s education, it’s actually one of the big benefits of a 529 plan. Although you’re responsible if you make a withdrawal that isn’t for a qualified education expense, the penalties aren’t too steep. Federal income tax is imposed on the plan’s growth, plus a 10% penalty on the growth. Therefore, depending on the amount withdrawn, the penalty may be very little.

Nonetheless, the tax penalties may worry parents enough that even when their goal is to save for their child’s education, they want to spread their savings into multiple accounts. This has some clear advantages, when the child decides not to go to college after high school. The good news is that there are plenty of options to account for both possibilities.

  • Other investment accounts: You could also create a brokerage account with money earmarked for a child. This gives parents complete flexibility in how the money is used. The money can be used for expenses other than education, but the downside is not having the tax benefits of the 529 plan (tax deferral and potential tax-free growth).
  • Trusts: a trust allows parents to keep complete control over the funds and lets parents provide instructions to the trustee, on how the trust can be used.
  • Custodial accounts: These accounts are managed by a guardian (or custodian), until the child is an adult. These accounts are pretty easy to set up but don’t have the restrictions that can be placed on trust funds.

The digital world has changed everything, including how we plan for our children and their future. Be flexible and make your plans accordingly.

Reference: Kiplinger (Dec. 27, 2019) “How to Stay Flexible in Saving for Your Child’s Future”

What are the Biggest Estate Planning Errors to Avoid?

Nobody likes to plan for events like aging, incapacity, or death. However, failing to do so can cause families burdens and grief, thousands of dollars and hundreds of hours.

Fox Business’ recent article, “Here are the top estate planning mistakes to avoid,” says that planning for life’s unexpected events is critical. However, it can often be a hard process to navigate. Let’s look at the top estate planning mistakes to avoid, according to industry experts:

  1. Failing to sign a will (or one that can be located). The biggest mistake is simply not having a will. Estate planning is critically important to protect you, your family and your hard-earned assets—during your lifetime, in the event of your incapacity, and upon your death. We all need estate planning, no matter the amount of assets you have. In addition to having a will, it needs to be findable. The Wall Street Journal says that the biggest estate planning error is simply losing a will. Make sure your family has access to your estate planning documents.
  2. Failing to name and update beneficiaries. An asset with a beneficiary designation supersedes any terms in a will. Review your 401(k), IRA, life insurance, and any other accounts with beneficiaries after any significant life event. If you don’t have the proper beneficiary designations, income tax on retirement accounts may have to be paid sooner. This may lead to increased income tax liability, and the designation of a beneficiary on a life insurance policy can affect whether the proceeds are subject to creditors’ claims.

There’s another mistake that impacts people with minor children, which is naming a guardian for minor children and then naming that person as beneficiary of their life insurance, instead of leaving it to a trust for the child. A minor child can’t receive that money. It also exposes the money to the beneficiary’s creditors and spouse.

  1. Failing to consider powers of attorney for adult children. When your children reach age 18, they’re adults in the eyes of the law. If something unfortunate happens to them, you may be left without any say in their treatment. In the event that an 18-year-old becomes ill or has an accident, a hospital won’t consult with their parents if a power of attorney for health care isn’t in place. Unless a power of attorney for property is signed, a parent may not be able to take care of bills, make investment decisions and pay taxes without the child’s signature. This could create an issue when your child is in college—especially if he or she is attending school abroad. It is very important that when your child turns 18 that you have powers of attorney put into place.

Reference: Fox Business (October 15, 2019) “Here are the top estate planning mistakes to avoid”

Why A Health Care Power of Attorney Makes Sense

Having a Health Care Power of Attorney in place before it is needed, is one of the best ideas of estate planning, along with having a Power of Attorney in place before it is needed. Why? This is because taking a pro-active approach to both of these documents, means that when the unexpected occurs and that is exactly how things occur—unexpectedly—the person or persons you have named for these important roles will be able to step in quickly and made decisions.

Time is often of the essence, when these documents are needed.

According to the article “Medical guardianship versus power of attorney” from The News Enterprise, a health care power of attorney is a document that grants another person the power to make medical decisions for you, when you no longer have the ability to make those decisions for yourself. It is known by a few other names, depending on the state where you live: health care proxy, a medical power of attorney or a health care surrogate.

It needs to have HIPAA-compliant language, which will allow the person you name the ability to review medical information and discuss protected health information with your health care providers.

A health care power of attorney may also include language for an advance medical directive, which gives instructions for end-of-life decisions. This is often called a “living will,” and is your legal right to reject medical treatment, decisions about feeding tubes and the number of doctors required to determine the probability of recovery and pain management.

A health care power of attorney does not generally empower another person to make decisions, until you are unable to do so. Unlike a general durable power of attorney, which permits another person to make financial or business decisions with you while you are living, as long as you are able to understand your medical situation, you are still in charge of your medical decisions.

A guardianship is completely different from these documents. A guardian may only be appointed, if a judge or jury finds you wholly or partially disabled in such a way that you cannot manage your own finances or your health. The appointment of a guardian is a big deal. Once someone has been appointed your guardian, you do not have any legal right to make decisions for yourself. A court will also appoint a legal fiduciary, who will make your financial decisions.

There are record-keeping requirements with a guardianship that do not exist for a power of attorney. The court-appointed representative is responsible for reporting to the court any actions that they have taken on your behalf.

To have power of attorney documents executed, the person must be capable of understanding what they are signing. This means that someone receiving a diagnosis of dementia needs to have these documents prepared, as soon as they learn that their capacity will diminish in the near future.

If the documents are not prepared and executed in a timely fashion, a guardianship proceeding may be the only option. Planning in advance is the best way to ensure that the people you trust are the ones making decisions for you. Speak with an experienced estate planning attorney now to have these documents in place.

Reference: The News-Enterprise (Oct. 13, 2019) “Medical guardianship versus power of attorney”

What Are The Essential Estate Planning Documents?
Two Wills documents with an Estate Tax form.

What Are The Essential Estate Planning Documents?

Forbes’ recent article, “Retirement, Estate Planning: Documents You Should Have,” says that in this time of life, while emotions are running high, it’s critical to be make sure your financial and legal matters are in order.

Putting together a well thought out financial plan and creating an estate plan lets you be certain that personal, financial, and health wishes will be carried out the way you want. Managing your estate, regardless of the size, starts with working with an experienced estate planning attorney who will help give you greater control, privacy and security of your legacy. Here are the documents you need to get started:

Will. This is a legal document that is used to detail your wishes regarding the distribution of your assets and property, as well as the care of any minor children, by naming a guardian in the event your pass away while they’re still young.

Power of Attorney. This is a written authorization that gives a trusted family or friend the authority to act on your behalf in business, legal, and financial matters, if you’re unable to act for yourself due to a mental or physical disability. The requirements are different in each state, so ask your attorney about the right form and language to include.

Health Care Directive. This is also known as a living will. It is another legal document that states your health-care preferences, in case you become incapacitated or unable to speak for yourself. It also allows you to say how you’d like your end-of-life care to be handled.

Information Document. Another important part of your estate plan is a document that contains bank account information, passwords, insurance policies, contact information for attorneys, financial planners and any other significant data regarding your personal estate and final wishes. It’s also called a Letter of Last Instruction that provides this important information to family in the event of an emergency.

Plan for the future, by making certain that your loved ones know and are able to carry out your final wishes.

Reference: Forbes (August 28, 2019) “Retirement, Estate Planning: Documents You Should Have”

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