Boston Elder Law Attorneys Blog

When was the last time you looked at your estate plan?

2012-05-16T13:32:39Z

This year is an important year for estate planners. Many changes are set to occur and some of them could call for some serious alterations to estate plans that have already been made. The beauty of an estate plan is that these changes can be made rather easily.

Tax planning is one area in which 2012 could be a monumental year. At the end of this year, the estate, gift and generation-skipping tax exemptions are scheduled to revert back to previous levels. Currently, the estate tax exemption is $5.12 million. If Congress does nothing to extend the current exemptions, all three exemptions will drop to 2001 levels.

]]> This decrease is considerable. Both estate and gift tax exemptions will fall to $1 million per estate. The generation-skipping tax exemption will only be $1.36 million, much lower than its current level. In addition, a 55 percent maximum rate will come with these taxes.

While considering what to do about these changes, be sure to examine the rest of your estate plan thoroughly. Ask yourself if anything has changed in your personal and professional lives. What about in your financial situation?

According to experts, any professional changes, such as retirement, should be addressed in an estate plan before they occur. This way, a spouse or other beneficiary may receive the benefits according to your desires. The distribution of a retirement account could have an impact on a beneficiary having to pay an estate tax bill.

For those who have not touched their estate plans in a lengthy period of time, it may be time to reevaluate your financial situation. You may have expected to have a certain amount of money by the time you reached the age of retirement, but it is likely that the amount is different.

Source: Columbia Business Times, "Estate plans - time for a check up," Ryan Lovill, April 30, 2012

Politics and budgets: How you could lose your Medicaid benefits

2012-05-09T14:26:29Z

When planning for late-life health care, many in Boston believe that there will be programs like Medicare and Medicaid to catch them if their plans fall through. Others rely on these programs to assist them with the burdensome costs that come with the many health issues that are likely to arise later in life. Some use their Medicaid benefits to pay for their stay in a nursing home. Whatever the use, budget cuts that are on the political table may see to the end of such benefits for many individuals throughout the country.

Since last year, many line items on the federal budget have been brought to the chopping block. After promises were made to cut back spending on Medicaid, Medicare and food stamps, the House of Representatives passed a major budget document that would likely see these programs affected.

]]> But House Republican leaders have adjusted tactics as of late, citing the fact that the Senate is still controlled by Democrats, which makes passing any serious budget legislation highly unlikely. Due to the upcoming election, Republicans are looking to keep the voters they have and gain others so they may take control of the Senate and the White House. Creating follow-up legislation to the proposed budget could force some Republicans to make politically dangerous votes.

A shift in party control may allow for more cuts to take place. Legislation has been proposed to cut $261 billion from benefit programs over the next decade. In addition, changes to Medicaid funding Republicans have proposed may allow for hundreds of thousands of people to lose their benefits.

One idea is to turn Medicaid into a block grant program. If these changes occur, many will be affected. When planning for the future, be sure to take these circumstances into consideration so as not to leave yourself open to financial ruin.

Source: Associated Press, "House GOP pulls its budget punches," Andrew Taylor, Apr. 25, 2012

Elderly man leaves estate to multiple charities

2012-05-01T20:41:29Z

Last summer, a 73-year-old man died, leaving behind an estate worth more than $1 million that had no heirs. This does not mean that he did not do any estate planning. He instead chose to leave his money to more than 20 nonprofit organizations located in different parts of the country. Each organization is slated to receive $48,000 from the man's estate.

The 73-year-old was a retired worker for a well-known appliance company. He was a veteran of the Army and was survived by four cousins. According to reports, the wealth he had amassed came from inheritance money and his personal savings fund. He died on July 9, 2011.

]]> According to officials with the bank that executed his estate, the man spent a considerable amount of time researching the organizations that he handpicked to receive a portion of his estate. The list he left includes nature organizations, health-related foundations and children's charities.

Four of the organizations met with bank executives to accept the gifts they had received. A public library, a branch of Ronald McDonald House, a local Shriners group and the Santa Clothes Club were all in attendance. The only organization that had any contact with the good Samaritan was the public library.

This man's generosity should remind those in Boston that when planning an estate, you can also give to charitable organizations. If you have relatives who expect to receive a portion of an estate, it's best to communicate your wishes to them clearly and honestly, so there are no surprises when an estate is executed.

Source: Courier Press, "Late Whirlpool retiree's $1 million estate divided among 22 nonprofits," Susan Orr, Apr. 18, 2012

Estate plans allow legal issues to be avoided

2012-04-24T19:56:55Z

Estate planning experts have been suggesting that it is better to create a plan for an individual's death earlier as opposed to later. This means that younger people -- recently married couples, single adults, people with newborn children -- should also consider creating and organizing their desires to ensure that they are followed at the time of their deaths. Without a thorough estate plan, your loved ones could be left with some serious legal hurdles to maneuver. And plans can always be updated later in life if you live to an older age.

The ideal situation, according to most end-of-life experts, begins with a healthy adult creating his or her plan. But many people may feel that estate planning is not for them. Thoughts about one's own death have repulsed many people, leaving them without a plan when they need it most. Many elderly individuals are currently in this situation and, though it is not ideal, experts will meet with these people to help them create plans to avoid some strenuous circumstances.

]]> Other legal documents that should be included in an estate plan besides a will should include guardianships, do not resuscitate orders and powers of attorney. Powers of attorney give you the ability to designate individuals to make medical and financial decisions when you are no longer able to do so. A do not resuscitate order informs medical professionals that you do not want to be resuscitated if they are presented with such a scenario. That is an extremely important choice that should not be taken lightly. And one's wishes on if he or she wants to be resuscitated in an emergency should be explicitly communicated to an attorney and loved ones.

Some planning professionals worry that some elderly individuals without plans are no longer able to make these decisions on their own. Though this may be the case for some individuals, it is never too late to start an estate plan for those who remain cognizant of their own decisions.

Source: The Herald-News, "Having an end-of-life plan helps ease tensions later," Denis Baran-Unland, April 10, 2012

Long-term care insurance: Should you have it?

2012-04-17T19:16:55Z

As people age, they become more and more susceptible to unexpected injuries and illnesses. Many elderly living in Boston may be considering the option of long-term care insurance. For some, this may be an essential part of long-term care planning. For others, it may not be a wise choice.

Making this decision can be incredibly tough. Long-term care, when necessary, can be incredibly expensive. But as some might tell you, the premiums for long-term care insurance can take up a considerable amount of money, as well. One expert said that the decision you make toward purchasing this type of insurance relies heavily on your personal circumstances. When considering this option, be sure to examine your lifestyle choices and financial resources.

]]> Those who are living unhealthy lives are more likely to be stricken with an incapacitating illness. This can get expensive, and without insurance, the costs to the person will be higher. According to some, those with relatively few assets should not purchase this form of insurance. With a low amount of assets, it is likely that they will be able to turn to Medicaid for assistance.

Those with a large amount of assets may have the means to self-insure. By weighing the combination of finances and lifestyle choices, the decision may be easy to make. But many land in the middle of this situation with a moderately healthy lifestyle and an average amount of assets. These are the ones who will likely have to spend more time researching into the possibilities. When doing this, be sure to not only look at assets, but also income and expenses.

Anyone with a family medical history that reflects a need for long-term care later in life should be ready when the time comes. With a family medical history such as this, it is wise to be prepared for such an occurrence, instead of risking it. The costs to you and your loved ones may be great, and few want to leave their family with a financial burden such as this.

Source: Star Tribune, "Long-term care insurance decision takes research," Chris Farrell, Mar. 31, 2012

Estate taxes: Some states have them but most do not

2012-04-11T20:05:34Z

According to reports, the estate tax rate may increase next year from the current maximum rate of 35 percent to 55 percent. This means that more than half of taxable estates -- which is currently valued at more than $5 million -- will go to the federal government. This may mean that it is time for the elderly living in Boston to begin planning accordingly.

Tax planning is something that every aging individual should do. If a person chooses not to, the taxes may be stripped from the estate when beneficiaries expect certain assets to be bequeathed to them. Instead of receiving your house, a loved one may have to sell it to afford the taxes.

]]> While many states -- currently, more than half -- do not have estate taxes, some do. Some experts believe this is chasing the wealthy out of certain states, such as Tennessee, and into others that do not have estate taxes. In Tennessee, there is not only an estate tax, but also a gift tax. Both of these can reach as high as 9.5 percent, cutting deeply into the estates of many when combined with federal estate taxes.

This means that an individual with an estate valued at $10 million may have to pay $950,000 in taxes when they pass away, and that's only to the state. To avoid this tax, it can be as simple as moving. This allows the wealthy to pass on property, businesses and other assets without the worry of being hit by a state-level estate tax, as long as those belongings are not located in a state that has such a tax.

This flight of the rich is likely what has caused 29 of the 50 states to eliminate their estate taxes. Massachusetts also has an estate tax.

Currently, the federal estate tax rate is set at 35 percent. If legislators do not step in, that will spike to 55 percent on Jan. 1, 2013. According to reports, President Obama would like to see that rate be capped at 45 percent. Whatever the rate may be, it is time to start creating a plan to account for the costs.

Source: The Wall Street Journal, "Death Tax Defying," Mar. 23, 2012

Loved ones should probably expect less out of your estate

2012-04-04T17:47:38Z

Sometimes, money can make people go crazy, especially when there is a lot of it to be had. For residents of Boston, this means that they should do their best to create a thorough plan for their estates when they pass away. If not poor estate planning may be the cause for a serious rift between loved ones.

For those who are hoping to receive money through inheriting it, think again. It is not wise to live an exorbitant lifestyle if you do not have the means to support it yourself. Some individuals are currently doing this, expecting a windfall from a loved one in the future. But many are not accounting for the increase in life expectancy combined with the increasing costs of health care.

]]> According to reports, about 13 percent of the U.S. population is 65 years or older. Estimates suggest that by the year 2050, that fraction of the population will increase to 20 percent. According to the U.S. Census Bureau, the age group that is growing at the quickest rate is also one of the oldest: seniors between the ages of 85 and 94. Statistics show that this demographic has grown by 30 percent in the past decade. Currently, this group is made up of 5.1 million people.

On top of this, it is estimated that more than 600,000 people will be older than 100 years by 2050.

All of these statistics show that the U.S. population, on average, is growing in age. This means that more health care costs will eat into the retirement funds of loved ones and expected inheritance will likely be much lower, if it is present at all. This is largely due to the number of ailments that cause serious declines in the quality of life as people age.

Source: USA Today, "With more blended families, estate planning gets ugly," Haya El Nasser, Mar. 14, 2012

Long-term health care costs are forcing insurers to hike premiums

2012-03-30T19:23:23Z

As people living in Boston age, many of them are considering the possibility of long-term care insurance. While this form of long-term care planning is important, it seems that many insurers are taking themselves out of the running and ceasing their supplies of this form of insurance. This trend highlights the importance of making a long-term plan in case of a sudden or unexpected medical event.

According to data, 10 of the top 20 insurance providers by sales have pulled out of the long-term care sector in the past five years. Many of them cite the aging population and a rising cost in nursing home care. In situations where long-term care is needed, the medical costs can be unpredictable, and with low interest rates, the desire to insure a large number of people who may need long-term care is quickly dwindling.

]]> Even though the number of elderly is on the rise and it will likely continue to do so for a considerable amount of time, as baby boomers age the cost of long-term care insurance is on the rise. This is likely being caused by the unpredictable costs that can occur later in life. One woman that had been paying a $200-per-month premium to John Hancock Financial for 15 years recently received correspondence from the insurer.

In that correspondence, she was told that her premium would increase to $370 per month if she wanted to keep the same benefits on her long-term care insurance. The premium was just too high for her, so she decided to eliminate some of her benefits.

According to a statement from John Hancock Financial, the insurer is hoping to increase rates by approximately 40 percent across the board. Some states are seeing higher hikes than others -- the aforementioned woman and her shockingly large increase reflect this.

Estimates from the U.S. Department of Health and Human Services indicate that about 70 percent of people over the age of 65 will need long-term care during their lives. With such a high percentage, it may be hard for insurers to maintain the average health costs of an individual using long-term care. These equate to somewhere between $4,000 and $8,000 per month.

According to the 2012 National Long-Term Care Insurance Price Index, new long-term care plans are costing the insured between six and 17 percent more than was being paid by newly insured individuals a year ago.

Source: Huffington Post, "Long-Term Health Care: Higher Costs, Less Coverage," Kathleen Kingsbury, Mar. 21, 2012

The more expensive the will, the better? Perhaps

2012-03-22T02:27:12Z

Individuals in Boston who are shopping around for a lawyer may be wondering why costs for something as simple as a will vary so greatly. An older business model may be to blame, but the higher costs may be worth it in the end.

According to some experts in estate planning, lawyers in the past would charge minimally for a will. They were much simpler then, with some attorneys spending as little as 20 minutes with a client and having everything straightened out. Nowadays, the same thing does not work.

]]> Wills can be much more complicated now. Loved ones are living in different states and in different countries. Many people own real estate in other locations and may even be renting it out. Dividing assets is definitely more complicated if one does not want to leave everything to a spouse or child.

Attorneys who charge the lower fees are often hoping to hook potential clients for their entire estate plan. This means that they will create and execute a will for a set price and then hope the client sticks around to have the rest of their estate administered, which is usually a good idea, since estate planning involves so much more than a will. This includes the need for a health care directive or a power of attorney designation. It could also mean the creation of trusts, so that some assets can avoid probate and be delivered directly to the designated recipients.

While some may be intimidated by the process, it's important to consult with an attorney when planning an estate, because the law is much more complicated than writing out a will. The money spent could be viewed as an investment in saving your beneficiaries trouble down the road.

Source: Calgary Herald, "Pricey estate plans may be worth the expense," John Poyser, Mar. 5, 2012

You're getting older, time to start planning for your estate

2012-03-15T01:56:38Z

A comprehensive estate plan for Boston residents is much more than a will. It can also include a durable power of attorney, a health care power of attorney, a living will and a revocable living trust. All of these combined allow for better asset protection and personal protection when they are needed. Some people may believe that many of these things are unnecessary, but they are extremely beneficial.

The revocable living trust, while often used by the wealthy, is helpful for anyone with assets that they want to control throughout their lifetime and beyond -- possibly for generations to come. The invested wealth can be shared according to guidelines set by the person who started the trust. One of the best parts of a living trust is that it allows any assets placed in it to avoid the probate process, saving both time and money for the estate and beneficiaries.

]]> A living will is a document that displays the choice of an individual when a terminal illness causes a person to become incapacitated, often resulting with the use of life-sustaining equipment. If you do not want to have your life lengthened artificially, a living will can express this for you.

A health care power of attorney gives a loved one the ability to make medical decisions for you when you are incapable of doing so.

The durable power of attorney is a similar document that gives a named individual the ability to act on your behalf. More often than not, the decisions that are made by your named agent are concerned with finances.

With all of these, it is important to designate people who are trustworthy and have your best interests at heart. Sometimes it is better to designate an attorney or friend, rather than a family member, to make decisions on your behalf.

Source: The Georgetown Dish, "Your Five Most Important Estate Planning Documents ... Are You Prepared?," Sean Randall, Feb. 26, 2012

Estate plans should be updated every few years

2012-03-07T21:15:04Z

Any elderly individuals living in Boston should have an estate plan in place. Many know the importance of estate planning but choose not to create one. Others have plans created but do not understand how important it is to update them every few years.

Recent news has placed a spotlight on the estate of Whitney Houston. Many are curious what the famous singer -- ranked as the 20th-top-selling artist of all time in the United States -- has done with her assets. According to reports from the family, her sole benefactor is her daughter, who she had with then-husband Bobby Brown.

]]> The daughter is now 18 years old, and many experts are hoping that Houston set up trusts for her assets to flow to her daughter over time, rather than all at once. Can you imagine what a teenager would do after receiving a massive amount of money, directly after the death of his or her parent?

Houston divorced Brown in 2006. Experts say that, at this point, she should have updated her insurance beneficiaries, any trusts that she created, and her will to reflect the changes.

Other events when an update should occur include a new marriage, the birth of a child, or a move to another state.

For wealthy individuals, estate plans should be updated every few years to make sure that any newly acquired assets are included and addressed. This allows an individual to ensure minimal estate taxes and maximum benefit for his or her beneficiaries.

What many financial advisers find though, is that some wealthy individuals, including celebrities, do not take the time to finalize their plans. They may begin planning for their estates but never finish. The more money involved, the longer the planning process will likely take. It's important to make the hard decisions and finish the process.

Source: Investment News, "Whitney Houston: Estate planning lesson in a sad, untimely death," Liz Skinner, Feb. 19, 2012

What kind of estate plans should you have ready?

2012-03-02T20:42:55Z

As people age, certain topics should come to mind. How are you going to financially weather retirement? Where will you live out the rest of your life after you stop working? What should happen to your estate when you pass away?

For aging individuals in Massachusetts and elsewhere, this last question may be one of the most important. Estate planning is crucial, and it can mean the difference between having the majority of your estate held up in probate court -- being fought over by loved ones -- and a smooth transition that will see your loved ones happily enjoying memories of you.

]]> First and foremost, a will should be created. Some experts believe that this step should be viewed as a catch-all to ensure that nothing in your estate slips through the cracks. To make a will is legitimate, have a proper witness appear at the time of validation. This can be done with the assistance of an attorney.

A general power of attorney should be established next. This will cover any situations in which you become incapacitated and incapable of taking care of your financial and legal matters. By designating a loved one or a professional as your power of attorney, this person can then take care of these matters for you.

Without this sort of designation, the court system has to become involved and it may be too late by the time the court finally awards someone the power of attorney over you.

Another power of attorney designation addresses health care. This person will be able to make medical decisions once you are unable to do so.

Source: Beacon Journal, "Betty Lin-Fisher: Wills and other legal documents still important," Betty Lin-Fisher, Feb. 5, 2012

Recession is just one reason that planning should start now

2012-02-29T16:58:39Z

Seniors in Boston may have a rough road ahead of them. Many of them had their retirement accounts drained by the recession while many had already retired or had planned to do so soon. This has caused some to find themselves in tough financial situations.

What is even tougher is when the time comes that an elderly individual can no longer care for him or herself. It is at this time a person can be considered incapacitated and it can happen for a multitude of reasons, whether it be age, disease or an accident. Long-term care planning is very important, but many seniors have not prepared for this possibility.

]]> Some have not even thought about it and those who have might be unable to do the financial planning because they simply cannot afford to bear the costs. According to a Gallup survey, approximately two-thirds of Americans are worried that they will not be able to afford retirement.

It seems that these worries are well-founded. A 2010 rating issued by the Employee Benefit Research Institute on retirement readiness showed that almost half of the oldest baby boomers may not have enough resources to afford basic retirement and uninsured health care costs.

Another survey -- this one conducted by the MetLife Mature Market Institute -- found that long-term care planning costs are on the rise as trends have suggested they would be. Last year, national nursing home care costs were at an average of $87,235 per year.

Combine these high costs, which are expected to rise year after year, with the aforementioned issues stemming from the recession and the future may look a little less bright for the elderly. Because of this seemingly dim outlook, planning for long-term care should begin earlier rather than later.

Source: Senior Housing News, "Will the Nation Go Broke Paying for Senior Housing & Long-Term Care?," Alyssa Gerace, Feb. 15, 2012

"Affordable Assisted Living" model catching on

2012-02-24T19:46:47Z

The aptly named "Affordable Assisted Living" model currently being piloted in another state (a similar program is in the works for Massachusetts) is tasked with finding a happy medium between high-cost nursing home care and ever-dwindling Medicaid funds that many seniors rely on to cover the costs of medical treatment. The hopeful solution is to seek Medicaid waivers for assisted living facilities, which are normally not covered by Medicaid policies, to allow seniors who are no longer able to live independently but are not in need of around-the-clock care to live in less restrictive, far cheaper assisted living facilities instead of nursing homes.

This method has been in use in that state since the mid 1990s, and began when the state government was in the midst of a huge budget crunch (much like the entire country today). Studies found that about 30 percent of the state's nursing home residents didn't actually need 24-hour monitoring, and would be much better served in assisted living facilities instead.

]]> The state's "Supportive Living Program" began after the federal government instituted a waiver program option that gave states the option of using alternatives to traditional nursing home institutionalization, provided the costs didn't amount to more than would be expected in a full-care facility.

The program has expanded over the years to include more than 100 supportive living facilities and now saves the state millions of dollars each year and allows more residents to qualify for assistive care that they might otherwise not be able to afford. Instituting a similar program in Massachusetts could -- providing the same model of waivers and supportive living facilities -- potentially save the state tens of millions of dollars in the next decade.

Of course what's most important is that the facilities continue to offer the high quality of care that clients should expect.

Source: Senior Housing News, "Stretching Medicaid Dollars with "Affordable" Assisted Living Models," Alyssa Gerace, Feb. 15, 2012

Long-term care can be expensive, but necessary

2012-02-15T16:07:33Z

Residents of Boston and elsewhere often have a lot on their plate despite the fact that many of them are retired. One of the major concerns for people as they age is the availability of long-term care planning. How will you and your family afford the costs of long-term care when it is most needed?

People who have pre-existing conditions have to worry about this every day. Since it is on their minds regularly, they are more likely to be prepared for becoming incapacitated, so that loved ones and family members do not have to cover the care or costs.

]]> More often than not, it is those that do not see it coming who are hurt the worst by a debilitating injury or the onset of an unexpected mental condition.

One such option for long-term care planning for federal employees and members of the military is the Federal Long Term Care Insurance Program. This program provides options for assistance with daily activities that may include dressing, bathing and eating.

The U.S. Department of Health and Human Services has stated that nearly 70 percent of people older than 65 years will need long-term care at one point or another in their lives. The number of people who are prepared for this is likely much lower.

The costs associated with long-term care are not cheap. Home health care has an average annual cost of $28,080. The cost of assisted living is higher, $50,724, while nursing home care has an average annual cost of $86,870. If you do not want your family having to foot the bill for this, begin planning for long-term care as soon as possible.

Source: Belvoir Eagle, "Federal insurance plan provides long-term care," Debra Caruso, Feb. 2, 2012