Putnam County Estate Planning & Medicaid

Make a Will to Help Your Heirs

If we remove the reluctance to consider our own mortality and focus on the legal aspects, perhaps it becomes easier to see why having a will is so important.

Ben Franklin had it mostly right – “…nothing can be said to be certain, except death and taxes.” We’d add one more thing: people who do not plan for their eventual demise with a will and an estate plan make things harder for their heirs, according to The Reading Eagle Business Weekly “Make a will, plan for distribution of assets.”

You can pass your wealth to anyone you want, but state and/or federal taxes may be due on these transfers. The rules are also complex, and if you die without a will, the state laws of intestacy may say who gets your wealth.

Most folks make the mistake of signing their wills and life insurance policies, then putting them in files and forgetting about them. These documents and your intentions will become out-of-date. It’s not uncommon for a decedent to have been divorced for five years when they die, but the ex-spouse still inherits all of his or her assets. Why? Because the ex’s name is still in the will or is listed as the beneficiary of the life insurance policy. This happens more frequently than you might think.

Probate?

Probate versus non-probate assets is one of the most misunderstood concepts in estate planning. Probate is the process that deals with proving a will's validity by filing it in court. The will names an executor who is responsible for fulfilling its terms. The estate assets are identified and valued, then given to the individuals named in the will.

There are also non-probate assets that are transferred by operation of law. They specifically include accounts with beneficiary designations like IRAs, 401(k)s, pensions, retirement accounts, life insurance, annuities, and transfer-on-death accounts. These non-probate assets supersede what’s written in the will. The beneficiary designations control them.

If you don’t have a will or you haven’t reviewed it in a while, make this a priority in 2017.

Meet with an estate planning attorney who will be able to create a plan to transfer your assets and coordinate your beneficiary designations. Think of this as a way to show your loved ones that you cared enough to plan ahead so that they are not left cleaning up an expensive and stressful legal and financial mess.

Reference: Reading (PA) Eagle Business Weekly (January 17, 2017) “Make a will, plan for distribution of assets.”

Savvy Tips for Dealing with an Inheritance

Inheritances by their very nature, create many mixed emotions. While you are grateful for the inheritance, you are grieving, which is a painful experience that impacts decision-making skills.

Perhaps the most important thing to know when you are grieving the loss of a loved one and expect to receive an inheritance, is not to make any big decisions. While an inheritance may change your life in a financially good way, as reported in The Reading (PA) Eagle Business Weekly’s recent article, “What to do and what not to do with your inheritance,” you are in a state of emotional crisis. Financial planning and big financial decisions will need to be made, but nothing needs to be done immediately, except for settling the business of the estate, if you are the executor. Here are some dos and don’ts to keep in mind:

What not to do with an inheritance

There’s no rush. Don't go nuts and spend every dollar immediately. Don't invest in long term or risky projects. Be patient.

Don't pay too much in taxes. Work with an estate planning attorney so you pay the appropriate amount to the IRS.

Don't pay off the mortgage. Although this can be emotionally fulfilling, it may not be the best use of your money. Take advantage of today's low interest rates and the tax-advantaged deductible mortgage payments. Create a financial plan so that you don’t run out of retirement funds.

Don't go on a mad spending spree. This should be self-explanatory.

Don't be pressured. Don’t be surprised if many people suddenly come out of the woodwork to offer their unsolicited advice—relatives, old pals, insurance agents, bankers and investment advisers. Just say, "No, I am not ready to make a decision yet." Likewise, don't get pressured into sharing your money with a friend or family member.

What to do with an inheritance

Save it. Deposit the money in the bank, a money market account or a short-term CD.

Pay off debt. Get rid of credit card balances and other high-interest debts that don't have tax benefits.

Do some financial planning. Figure out your long-range financial plan before spending any of this new found wealth and make plans for your retirement.

Update your estate plan. Make sure that your estate plan is up-to-date so your assets go to the intended persons, and you don’t waste it on probate fees and unnecessary taxes.

Meet with an estate planning attorney. If your financial situation has changed as a result of the inheritance, it makes sense for you to meet with a qualified estate planning attorney to update your will and other documents.

Reference: Reading (PA) Eagle Business Weekly (January 17, 2017) “Office Space: What to do and what not to do with your inheritance”

Touch Choices and Challenges for Special Needs Families: Retirement Planning

One of the hardest pieces of the financial puzzle for Special Needs Families is balancing parent’s retirement planning while ensuring that the Special Needs family member gets the care they need.

Planning for life after the parents of a Special Needs child pass away, must include ensuring that the individual retains their eligibility for government assistance. This requires an experienced estate attorney who is familiar with government program requirements, ABLE accounts and retirement planning.

Morningstar’s recent article, “Retirement Planning for Special-Needs Families,” explains that the need is growing. One in every five Americans has a disability, and 20 million families have at least one family member who has a disability, says the National Disability Institute. The costs can also be extremely high, with the lifetime cost of caring for a person with autism ranging from $1.4 million to $2.4 million, according to an advocacy and research group. Lifetime costs are similar for people affected by other severe impairments.

While government benefit programs provide some assistance, the eligibility rules vary depending on when a disability is incurred. There’s a set of rules for people disabled as children (prior to age 22) and another for those disabled at older ages. Here some key topics for consideration and action:

• The care plan should include the safety of the child, along with aspects of life fulfillment, including work, learning and play.
• Projected cash flow needs will depend on the type of disability, capability of the individual needing care and the level of care needed.
• Investment allocations. Families who have a child with special-needs should be more conservative in how they allocate their retirement portfolios, and maintain a higher level of cash.
• Government benefits include Social Security, Medicare and Medicaid.
• Families need to understand all of the government rules on asset and income limits for a person with disabilities.
• A Special Needs Trust is a critical part of a family retirement plan.
• Beneficiary designations must be structured properly, because inheritances can jeopardize government benefits eligibility.

Parents are advised to create a document that offers details of the specific needs and wants of the family member, so that his or her guardian will have as much information as possible when the parents are no longer present. Everyone in the family needs to be educated and prepared. A special needs attorney will be able to guide the family through the planning process.

Reference: Morningstar (January 17, 2017) “Retirement Planning for Special-Needs Families”

Alzheimer’s or Dementia Screening Now Covered by Medicare

You might think that any doctor seeing patients over a certain age would automatically screen for Alzheimer’s or other dementia-related diseases, but until now that has not been the case.

Starting in January, Medicare will now begin reimbursing doctors for screening and providing information about care planning for patients with Alzheimer’s and other cognitive impairment diseases. What seems like common sense public health policy, took many years of advocacy from patient groups.

Santa Cruz Sentinel’s recent article, “Diagnosing Alzheimer’s: Medicare now pays doctors to stop and assess memory loss,” reports that more than 5 million Americans are living with Alzheimer’s, and as many as 16 million will have the disease in 2050.  The cost of caring for those with the disease and other types of dementia is also skyrocketing. In the U.S., it’s estimated to total $236 billion in 2016 and is anticipated to increase to $1.1 trillion by 2050.

However, many people are unaware that they are afflicted with the disease: only about 50% of Americans are diagnosed. Experts contend that many doctors don’t take the time required to test for Alzheimer’s disease. But the new Medicare billing code will provide more incentive for primary care doctors to take the time for more evaluation and care-coordination.

An early and documented diagnosis—along with access to care planning services—gives Alzheimer’s patients better outcomes. It’s even possible to see signs of cognitive problems before the person realizes it themselves. However, research thus far, suggests that medications will only be effective in the early stages of the disease, when the symptoms are the mildest. Therefore, primary care doctors must look for those mild cognitive problems.

However, many physicians aren’t equipped to help their patients take advantage of the new Medicare rule. The issue is that most front-line physicians typically aren’t trained in this area. They first need to understand how to assess these patients before referring them to neurologists or to develop care plans.

A spokesperson from the Centers for Medicare & Medicaid Services says that the new rule does not include anything about educating doctors. Many patient advocate groups are mobilizing to educate physicians, some in tandem with their states, to increase awareness of the new coverage and to encourage doctors to include screening during their patient appointments.

Reference: Santa Cruz Sentinel (January 7, 2017) “Diagnosing Alzheimer’s: Medicare now pays doctors to stop and assess memory loss”