Estate Planning Bits

Be wise on your demise – an estate planning checkup

Very often, as I am dictating my blog posts, I am with my wife. The other day she said to me, “I have a great title for another blog post.” Therefore, this is dedicated to my wife.

It is now a few months after tax season, and your “CPA/tax professional checkup” has passed. Possibly, your health and eye physicals have also been attended to. It may now be time to pursue a financial checkup to assure that all your estate planning documents are up-to-date and in order.

Even though your documents may have been valid at the time they were signed, it may be time to review them to determine whether they need to be revised due to changes in tax laws, a situation with your child, (financial or medical) or perhaps merely a need to adjust to an increase or decease of your assets, or a change of residence from one state to another.

Once an estate plan has been initiated and prepared, it is usually pretty easy to review or revise it. Many clients review their plans on a three-year or five-year schedule, only to determine that they are still in good order and do not need any further changes. Even fairly straightforward documents such as a health care proxy and power of attorney should be reviewed to assure that your health care proxy has been updated to provide for the HIPAA waiver language and that your power of attorney now includes the power to make gifts, including those to the agent under the power of attorney if that is your desired result.

Perhaps your spouse has passed away or become incapacitated and your documents need to be revised to provide for a contingent backup person. In addition, all your life insurance beneficiary designations, retirement plan benefits and designations and other jointly held assets should be reviewed to assure that the proper names are included or excluded as you desire.

A recent review of a client’s plan indicated that all of her children were named in equal shares, but one child had become estranged from the family. Therefore my client’s documents needed to be revised to specifically exclude that child, include no-contest language, and also remove him as a beneficiary from life insurance policies.

In any event, it is important to review your documents, all the details your plan, including names on accounts, beneficiary designations, and all other assets to assure that the plan is complete and updated.

By: Hyman G. Darling, Esquire

Reverse Mortgage - how will this impact my kids' inheritance when I die?

If you’re like most retired people, the single largest asset you have is your home. Since it may be paid for or possibly subject to a small home equity loan, there is significant equity there that could be used for living expenses, including luxuries such as vacations, a new car, or for necessities, such as a new roof, medical expenses, etc.

In any event, there are some people who are dead-set against encumbering their home because they’ve worked hard to pay off their mortgage. They may even have made double payments or paid additional principal on the home mortgage while they were working in order to pay it off sooner. There is something to be said for this, as some people have more security in having their mortgage paid off in retirement. However, a reverse mortgage may be a good option under certain circumstances.

If you’re having a difficult time making your home equity loan payments and need additional funds, a reverse mortgage is an excellent way to obtain additional cash without having to pay it back. In this situation, you shouldn’t worry so much about whether your children will inherit your house, but rather concentrate on your own needs, drawing on your home’s equity if necessary.

For instance, if your home is valued at $225,000 and there is a mortgage outstanding of $50,000 when you die, your children still will receive $175,000. This is probably significantly more than you paid for your home, so your children will receive a windfall based on your investment.

If you want the total amount of the value of your home to be passed onto your children, then consider taking out a life insurance policy on your life that will pay off the mortgage, thus allowing the entire value of the home to pass to your children. If this is your situation, you should consider having your children own the life insurance policy, since if you become institutionalized, the cash value of this policy will be includable in your assets and may have to be withdrawn, or the policy surrendered in order to pay for long-term care expenses.

If your children own the policy, there is a substantial likelihood that it will not be includable in your countable asset picture for Medicaid-type considerations. Even if you or your spouse is not healthy and may not be insurable at standard rates, many policies are sold as second-to-die policies, whereby a husband and wife are insured by one policy that will not pay off until both are deceased. This second-to-die or joint and survivorship policy is an excellent way to provide additional funds for your family to pay off your mortgage and thus receive the full amount of value in your house upon your death.

While each situation is different, you should explore all your options and consider the tax and non-tax implications of a possible reverse mortgage with your financial advisors.

By: Hyman G. Darling, Esquire

Paid in home care and assisted living benefit options for Veterans

There are many plans and benefits available for Veterans who are honorably discharged. One of those benefits that is not so widely advertised is called Aid and Attendance (A&A). It may be used for either home care or assisted living when a person is unable to attend to his own affairs. The principal benefit is available to Veterans who are not disabled from their military service, and their spouses, in addition to other benefits.

A Veteran does not have to be retired from military service, but only to have served at least 90 days on active duty, although the requirement is longer and different for more recently discharged Veterans. He also has to have served at least one day during wartime. The need of the Veteran or the spouse must in fact be from a disability, but not necessarily from their military service. This is called a non-service connected condition.

A&A provides financial assistance based on whether the Veteran has dependents or not, up to $1,413 per month with no dependents and up to $1,675 per month with one dependent. A widow or widower of an honorably discharged Veteran may receive up to $908 per month.

The principal benefit available allows a person to have additional funds if living in an assisted living community, or at home, and requiring care or assistance on a regular basis, which would otherwise prevent them from attending to their own affairs and leaving them in a dangerous living environment if they lived alone.

The hope is that these funds allow a home-care aid worker to come in and attend to the Veteran’s needs, not on a 24/7 basis, but at least frequently enough for them to remain at home. If the Veteran is in an assisted living facility, the benefit allows them to maintain or increase their level of assistance received so they will not have to be institutionalized in a long-term care facility.

There are significant forms that need to be completed as well as necessary verifications from physicians. Additional information may be found on the Veterans’ Affairs website at www.va.gov.

By: Hyman G. Darling, Esquire

The benefits of Health Care Proxies and Durable Powers of Attorney for college age kids

Having a valid Health Care Proxy and Durable Power of Attorney is important for college-aged “kids.”

With the spring semester having just passed, many parents awaited the safe and exhausting trek home of their college-aged kids. Many kids are preparing to spend a semester abroad, in another state, or just take some time away from it all. Regretfully, we have all heard of the rare situations where a freak accident occurred during a long drive, scuba diving near Baja or having a bit too much fun out for the night with friends.

What happens when a medical emergency arises and your child cannot make or convey his or her own decisions? You, or you and your spouse or ex, rush to the hospital and want to know what is going on with your now adult child. Without a valid Health Care Proxy appointing you as the Health Care Agent or court appointed guardianship in place, the hospital is prohibited from releasing information or discussing the situation with you. Although you will find exceptions to how strictly medical providers implement this restriction, because of HIPPA Laws, medical facilities’ hands (and mouths) frequently are tied.

This topic is not made to create panic among parents or grandparents who know that a Health Care Proxy has not been signed, but rather, to encourage you to make time NOW while the student is home over the summer break to begin to broach the topic with your child.

It is hard to bring up the topic at a family dinner, but perhaps you just print out a copy of this article and leave it on your “child’s” desk, or bring it up during one of those rare evenings at home. In fact, many colleges encourage students to seriously consider signing such forms prior to leaving on semesters away from their home college.

Remember, although you consider this person your “child,” under the law, once he or she turns 18, under HIPAA, the medical care community treats him or her as completely separate and distinct from you, and owes that “child” full confidentiality unless he or she has executed a Health Care Proxy or a Medical Authorization form allowing you to make such decisions. True, there are circumstances where medical providers may still slip up and allow a parent or friend more information and input than warranted, but without the Health Care Proxy in-hand that appoints you as the Health Care Agent, the provider is prohibited from discussing the care and treatment of your child with anyone else, including you.

Remember, just because you are the parent of a child does not give you carte blanche to obtain information concerning your child’s medical circumstances with a health care provider, doctor or hospital. It is the properly signed and notarized HCP that documents the authority for a medical facility to release or share medical information. Once the document is signed, get copies of it to your child’s college health services, primary care physician, and possibly even consider putting a copy in the glove-compartment of his or her car.

One more thing that should be mentioned; even with a signed Health Care Proxy, a medical care provider may only discuss your child’s medical situation under very narrow circumstances, when there is a medical situation which requires action and your child cannot make informed decisions about his or her medical care or cannot communicate those decisions. Therefore, your child’s privacy is protected. For example, you can’t get information about pregnancy or eating disorders under this document as long as your child exhibits the ability to make informed decisions and communicate them.

By: Lisa L. Halbert, Esquire

PS - on a personal note, my son arrived in Costa Rica recently with an ATM card in hand and little other money. His card was rejected by the local banks. I am happy to report that just prior to leaving, he signed a Durable Power of Attorney, so I was able to shift his funds around and discuss with the bank the "now what," of his situation.