Putnam County Estate Planning & Medicaid

Make Downsizing Part of Your Retirement Plan

Once upon a time, we all visited Grandma and Grandpa at the family homestead, and the siblings and their own children would pitch in to help care for them and their home. Times have changed, and now it’s more likely that Grandma and Grandpa live in a modern condo.
A reporter shared his personal story about his parents, who are in the early stage of retirement and have wisely decided to leave their old five-bedroom, single-family home behind to move into a smaller two-bedroom home as part of their retirement plan. In the Chicago Tribune article, “Don't want to burden your children? Plan now,” he candidly shared that the old place was in need of a lot of work. Now his parents live in a smaller new home in a neighborhood where they can walk to everything instead of needing to drive. Even better, friends and family live close enough to continue their relationships. Sounds perfect – yet it wasn’t an easy transition.
Downsizing is emotionally and logistically difficult. It is wise to do so while you are young, healthy retirees. In more traditional times, older folks would be cared for until the end of their lives by children and extended family. However, times have changed.
Part of this changing perspective is from "the triple-decker sandwich," where baby boomers are facing retirement themselves and have to also care for their elderly parents—plus manage relationships with their own children.
The number of Americans needing long-term care is expected to double in the next 30 years, and a recent study of Medicare patients found that out-of-pocket costs at the end of life were highest for patients with dementia. These people require help with daily living, often for years—most of whom aren’t covered by public programs.
Here are some ideas on how to address this issue:
Downsizing. If you're in a large, expensive home in a car-dependent neighborhood, downsizing now lets you limit expenses while maintaining independence longer. Proximity to family and friends is also very important. Even though 89% of respondents in the survey said they'd wanted to stay in their current home, they still found the option of a smaller home to be much more preferable to a nursing home or assisted living.
Invest in long-term care insurance. If you want to be cared for in your home, find an insurance policy that covers that type of care as part of your retirement planning. The younger and healthier you are, the cheaper these policies are going to be.
Bring the entire family to meet with an estate planning attorney. There are discussions you’ll need to have about passing wealth down through the generations, inheritances and estate planning. An experienced elder law or estate planning attorney will be able to help the family.
Reference: The Chicago Tribune (November 14, 2015) “Don't want to burden your children? Plan now”

Planning for the Future, Especially the Unpleasant Parts

The last thing you want your loved ones to have to deal with when you have passed away is a tangled mess of financial and inheritance issues. The unpleasant reality is simple: we all die. But with advance planning, we can help our loved ones so that they are not left to pick up the pieces after us.
It’s true that we’d far rather spend time planning a vacation than doing estate planning. Learning about and buying life insurance is another equally unpopular pastime. According to a study of more than 2,000 married adults conducted by NerdWallet, approximately one in three couples have never purchased life insurance. Even more dramatic, a survey of adults who have life insurance report that if their spouses were to die, they would not be able to manage financially.
The national newspaper USA Today recently published a helpful article, “5 ways couples can tackle estate planning now,” that urges readers to take some basic steps now to provide security for their family members —whatever the future may bring. Here are five things you can do to prepare.
1. Determine how much life insurance is needed for you and your family. Many folks simply go with whatever life insurance their employer provides, but that's usually not enough coverage for families. Plus, you may lose the policy if you switch jobs.
2. Understand your spouse's life insurance policy. Even if your better half has been doing the management, you should know the basics about his or her life insurance coverage. The survey found that married adults with children were less likely than those without children to do this: 58% of those with children knew these details, compared to 67% of married adults without children. Among married adults with or without children, women are less likely than men to know the terms of their spouse's policy. Fifty-seven percent of women felt confident about the details, compared to 69% of men. The article says that you should know:
• The name of the insurance company holding the policy
• Why it was purchased
• The amount of coverage
• The costs
• When it expires, if it's a term life insurance policy
• The deadline for converting term coverage to permanent life insurance (if allowed).
3. Have a will prepared. Make sure you have a will in which you explain who gets your belongings and assets after you die. You also should name an executor to manage your estate and a guardian for your children. A will is a must, especially for parents, and you should consult with an estate planning attorney. He or she can help you with other critical estate-planning tasks, like setting up trusts and completing financial and health care powers of attorney documents.
4. Make sure you put financial records in a secure place where they can be found. The NerdWallet survey says that 30% of married adults with children and 23% of those without kids don't know how to get their family's financial records. The article suggests creating a one-page, quick-start guide that provides information about bank accounts, life insurance companies and policy numbers, and locations of important documents.
5. Talk to your spouse about final wishes. Married adults need to know each other’s final wishes, such as burial and services.
Don’t wait until after the funeral to look at estate documents. Talking about the end of life may not be enjoyable, but it’s a top personal priority.
Reference: USA Today (November 14, 2015) “5 ways couples can tackle estate planning now”

 

Estate Sales May Be Easier When Letting a Professional Run the Show

Add estate sales to the many things that we used to do ourselves until we got smarter! Having a professional estate sales team on your side can take some of the sting out of having to sell your possessions.
Unless you are thrilled to get rid of all of your possessions, chances are your estate sales is taking place because of any one of the three Ds – death, divorce or downsizing. When you live in the same house for thirty years, you accumulate stuff. Lots of stuff. Preparing to sell your stuff requires being ruthless, unemotional and motivated. And you need to know the true market value of things that you may have some extreme attachments to. Sounds like a job for a professional! To save time, money and heartache, many people today are turning to professional estate sale planners.
The Casper Journal’s recent article, “Professionals can ease burden of planning estate sale,” provides some good advice on the subject.
Selecting a reputable estate sales professional is important. These are your possessions, and many of them are valuable.
When finding and estate sales person, ask your family, friends, and business professionals for recommendations. Your estate planning attorney may have some very good references.
Next, look into their business histories and customer reviews at the Better Business Bureau’s website, and conduct a search online to see what type of articles or reviews of their services have been posted.
You should then choose a few and interview these professionals in person before deciding on the company you want to engage. Ask them about their credentials, certifications, and education in the area of estate sales. Also, make sure that they are insured and bonded.
Ask for the names of three or four references. Contact them to find out about their experiences working with the company and whether or not they would hire them again.
Before signing the contract, make sure you understand it, and consider asking your attorney to review it for you. Just so there are no surprises, you’ll want to find out the following from the estate sales business you plan to use:
• Does the company charge a flat fee or commission?
• What is their commission and are there additional fees?
• What services are included?
• What do you need to prepare for the sale?
• Is there an extra charge to clean before and after the sale?
• How much time will they need to get the estate ready for the sale?
• How are sales recorded?
• Can the family attend?
• How are discounts or negotiations handled?
• What do they do with stuff that doesn’t sell?
Make sure to be very thorough when you interview your prospective estate planning team. The better prepared you are, and the more comfortable you are with whomever you hire, the better your estate sale will be.
Reference: The Casper Journal (November 11, 2015) “Professionals can ease burden of planning estate sale”

New Revelations About Robin Williams’ Death Becomes More Heartbreaking

If your spouse was to die suddenly, would you be prepared, or would it kick off legal battles and lawsuits between family members?
When Susan Williams, the late Robin Williams’ widow, shared the sad details about his suffering from Lewy body dementia, a heartbreaking side of the comedian and actor’s life became even clearer. This is a terrible brain disease that causes severe anxiety and hallucinations. The news coverage reminds us that it is very important to do proper planning because we never know when we, or our spouse, may pass.
The website thestreet.com posted an article, “Nasty Fight Over Robin Williams' $50 Million Fortune Shows Importance of Estate Planning,” which said that the backstory about the comedian’s struggles, including brain disease, only makes it more painful for his fans around the world.
However, money made this sad story even worse. Williams' death was so unexpected, his heirs had a tough time making sense of his will. His three kids from two previous marriages and his widow fought a bitter court battle to divide up the estimated $50 million estate.
Williams' widow said the process was extremely painful. In addition to the money, there was a valuable collection of clothing, collectibles and memorabilia. High-priced lawyers went through his homes, safes, and papers trying to determine what Williams really intended. This was despite the fact that Williams had made a will and had signed a prenup with his wife.
We can all learn from this. You must prepare very carefully for the sudden death of your spouse, and do it today.
thestreet.com’s article includes a 10-Point Checklist to help you to make some preparations ahead of time.
While your family situation may not be as complicated as the Williams family is, planning should be done with a qualified attorney so that your loved ones are not forced into terrible feuds.
Reference: thestreet.com (November 11, 2015) “Nasty Fight Over Robin Williams' $50 Million Fortune Shows Importance of Estate Planning”

 

Will You Still Friend Me or Tweet Me When I’m Gone?

If you participate in social media, store photos in the cloud or have a blog, you have digital assets. Just as you plan for distribution of property and assets in an estate plan, today it is wise to plan for your digital assets as well.
Today’s millennials understand that their digital assets, which include everything from family movies hosted in the cloud, to social media accounts, digital currencies like Bitcoin and domain names, have value that can be passed to others when they die. One young man created a will that listed all of his digital assets and used a password manager to gather all passwords in a central location. He gave the password manager to his brother, who is his estate executor. He also moved certain digital assets, particularly photos and movies, to a file sharing service so that other family members would have access to them in the event of his demise.
Many people neglect to include digital effects in their estate plans, which can be a huge mistake, as valuable assets may go unnoticed, or money and time might be spent attempting to find them.
There are some assets like digital currencies, video game characters, and Internet domain names that exist only in cyberspace. You can’t put these in a safety deposit box: they can be overlooked because they aren’t as tangible. These days, folks are acquiring more digital assets like Facebook photos or email addresses all the time. However, getting access to social media accounts can be difficult because laws governing digital assets vary by state. Online sites concerned with user privacy have drastically different terms and conditions that sometimes exclude executors.
Create an inventory of your online accounts and their passwords—but don’t include them in your will. Wills should not be changed as often as you change your online account information. Simply explain how you want each account handled if you die, with the terms and conditions for each site included. Save this inventory in an encrypted file, a safe, and with your estate planning attorney. You should also authorize your executor to obtain access to devices and online accounts and reset passwords.
Keep your photos on a computer or local storage device rather than an online site so they’re easier to retrieve. Better yet, save them on two storage devices in separate places, like a home safe and a lawyer’s office.
Some assets can’t be passed on to heirs. An iTunes library can’t be passed as digital music and e-book purchases are nontransferable because they’re licensed to the user. You can only leave these assets if a user agreement permits it.
The wise person will make this process as transparent and easy as possible for their heirs. As time goes on, more of our lives will be digital and this will become even more important.
Reference: New York Times (November 11, 2015) “Plan Your Digital Legacy, and Update Often”

The Growing Specter of Guardian Abuse

The traditional and expected role of the court appointed guardian is to protect and look out for the best interest of the individual who they have been assigned to care for. Sadly, there are a growing number of cases where professional guardians, those who are not related to their wards, are taking advantage of their elderly wards, decimating estates and causing unnecessary hardship.

Guardianship is a fairly straightforward and basic function. A person who is not able to handle her or his own affairs, for any number of reasons, is assigned a guardian by the court, who is to act on their behalf for financial, medical and care-taking purposes. The guardian is charged with putting the interest of their ward first, and the guardian is entrusted with a great deal of responsibility.

However, as the Wall Street Journal reports, in "Abuses Plague Guardianship Systems Across the Country," the financial abuse of elderly people by guardians is rampant throughout the United States.

Court appointed guardians with no family relationship to the elderly wards too often act in their own interests and deplete the wealth of the wards.

This problem is mostly avoidable through estate planning. Part of a good estate plan is planning for end of life issues and getting a general durable power of attorney and a health care power of attorney. With those two documents, you can appoint someone you know and trust to look after your financial and medical affairs in case you are ever not competent to do so. Doing that can often make the appointment of a guardian unnecessary.

Even if a guardian is necessary, a court will likely appoint the person you have already designated as trustworthy whenever possible.

Do not fall victim to an abusive guardian.

Schedule an appointment with an estate planning attorney and get the documentation that you need to make your own decisions about who should look after your affairs if you are not able to do so.

Reference: Wall Street Journal (October 30, 2015) "Abuses Plague Guardianship Systems Across the Country"

 

What Wealthy Estates Actually Own

It is said that the rich are different from you and me, and that is true. The assets of wealthy people can be grouped into a few categories, and trust us, they are different than regular people.

There is a lot of media coverage and discussion about the federal income tax, but despite that, the number of estates that actually pay this federal tax are proportionately small. Less than 12,000 estate tax returns were filed with the IRS in 2014, and of those, most of the estates did not even have to pay any federal estate taxes.

Thus, the estates that do pay the tax are those of the wealthiest of the wealthy in the country. By looking at the data on the returns where an estate tax was due it is possible to get an idea of what kind of assets wealthy people have.

As reported by the Wall Street Journal, in "When the Superrich Die, Here's What's in Their Wallets," the IRS has recently released that information for estate tax returns filed in 2014.

While the article breaks the data down into what the extremely wealthy few hold and what the just wealthy enough to pay the estate tax hold, there are things both groups have in common when they pass away.

Overwhelmingly, the most common asset is stock in publicly traded companies. The next most popular assets are closely held stock and bonds. Real estate, cash, retirement accounts and limited partnerships also make up a large percentage of the assets held by estates that are subject to the estate tax.

What this data reveals is that wealthy people have several different types of assets that need to be included in an estate plan.

It is important to treat each asset appropriately to limit the estate tax burden and to ensure that if any estate tax is owed, that the assets are liquid enough for the estate to pay it.

A qualified estate planning attorney can guide you through this process.

Reference: Wall Street Journal (October 30, 2015) "When the Superrich Die, Here's What's in Their Wallets"

Two Steps for Estate Planning Success

It takes two steps to succeed at estate planning, and you need to know both! The first is knowing what the most common mistakes are. Equally important is knowing what to do to avoid them, or solve them when they occur.

In many cases, knowledge is power. But in estate planning, knowledge by itself can be a dangerous thing. You need to pair knowledge of the most common estate planning mistakes with another kind of knowledge: what to DO about those mistakes. And we would even add a third thing: knowing WHO to ask for help!

For example, you might know that it is desirable to avoid probate, but that is of little use unless you also know how to create an estate plan that will keep an estate out of probate. For the same reason it is important to not only know what common estate planning mistakes are but also to know how to avoid them.

A recent article by The Street entitled "How to Avoid the Most Common Estate Planning Mistake" discusses the most common mistakes and how to avoid them. Tips from the article include:

• Updating Beneficiary Designations – People often fail to update the beneficiaries of their retirement accounts and life insurance policies, which leads to the wrong people getting the assets. Avoiding this mistake is as simple as filling out a form.
• Communicating With Heirs – When your heirs do not know what to expect from your estate plan, it can lead to hurt feelings and anger. This can be avoided by telling people what to expect.
• Creating Your Own Will – If you create your own will, you are likely to make mistakes in it. To avoid this problem, seek the assistance of an estate planning attorney.
• Failing to Account for the Estate Tax – If you do not plan for the estate tax, then your estate might face a hefty bill that could have been avoided.

Fortunately, these potential miscues can be avoided by contacting a qualified estate planning attorney to guide you.

Reference: The Street (October 31, 2015) "How to Avoid the Most Common Estate Planning Mistake"

Robin Williams Will Continue to Delight Us, But Not for 25 years

Through the use of technology, we will still be able to enjoy the brilliance of comedian and actor Robin Williams in a number of different formats, even though he has passed away. But it will be 25 years before his likeness is resurrected, in keeping with his own wishes, which were clearly expressed and planned for in his will.

Certain celebrities continue to earn phenomenal amounts of money, even though they are deceased. Using advanced technology, audiences enjoy what appear to be live performances and new material from actors and singers who have been gone for decades. Holograms are good enough to convince stadiums filled with fans that they are seeing the real deal.

For the estates that hold the rights to the likenesses of celebrities this can earn millions of dollars a year. Such is the case with the likenesses of Michael Jackson, James Dean, Betty Page and many others.

Not every celebrity, however, is comfortable with the idea of their name and likeness being used after they pass away to make money.

That appears to have been the case for Robin Williams.

Forbes reports that a trust agreement bars Williams' name or likeness from being used for 25 years in an article entitled "Why Robin Williams Won't Be Making Millions Beyond The Grave."

As the article points out, many celebrities might consider doing the same thing as Williams to avoid complicated tax issues.

However, in Williams' case there was no need to limit the use of his name and likeness for tax purposes as the rights to use his name and likeness are held by a charitable foundation.

Apparently, Williams was uncomfortable with the idea of someone else deciding how his name and likeness could be used in the years shortly after his death. For example, he may not have wanted someone else deciding that he should endorse a product that he himself would not have.

Reference: Forbes (October 27, 2015) "Why Robin Williams Won't Be Making Millions Beyond The Grave."

What You Need to Know About Escheatment

Escheatment is not as well known as its distant real estate cousin, eminent domain. Escheatment refers to the right and process of a state government to claim ownership of accounts of a person who has passed away and has no known heirs or beneficiaries. However, there are instances when accounts are seized when people are still alive. There are several simple steps to take to prevent this from happening.

A state government has the legal right to claim the property of a person who has passed away and has no heirs or beneficiaries. Here's the problem: almost all state governments today are experiencing significant shortfalls in revenues. As a result, some states have become a little too eager and too aggressive about claiming property through escheatment.

What often happens is that an account holder has not stayed in contact with a brokerage or financial institute for a long time. The financial institute then reports the assets in an account as unclaimed property. Rather than making any effort to locate the person who owns the account, the government claims the property as its own. This can create issues for people who have long term investments as part of their retirement and estate plans.

Recently, Investopedia listed how you can avoid this happening to your stock accounts in "4 Ways to Avoid Escheatment of a Stock Account."

The tips include:

• Make regular contact with the brokerage even if it is just to speak to a representative.
• Cash all dividend checks. Even if you think the amount of the dividend is too small to bother with, cash the check so that the brokerage knows a living person is receiving the checks.
• Complete any proxy voting paperwork even if you do not care about it, as this will show that you are still alive.
• Update contact information when it changes so that the brokerage knows how to get in touch with you.

If you follow the above steps, then your estate will not find itself in the position of the government having already claimed your assets through escheatment before the assets could be distributed to your heirs.

An experience estate planning attorney help you avoid escheatment by having appropriate default heirs listed in your estate plan.

Reference: Investopedia (October 29, 2015) "4 Ways to Avoid Escheatment of a Stock Account."