Thursday, April 5, 2018

Life Care Planning: The Best Protection for Elders and Their Families

Elizabeth D. Johnson
Legal Assistant
There’s a reason we call it "The Best Protection for Elders and Their Families."

Life Care Planning will help you make the best decisions to protect yourself later on. It can help you achieve your goals and reduce stress for yourself and for your family.

The primary goal of a Life Care Plan is to assist the senior and their family in being able to make legal, financial, and medical decisions without government or court intervention (such as a guardianship, which can be very costly), prolong the senior’s stay at home, protect their quality of life, and preserve their assets.

Over the next 25 years, it is estimated that the number of American households that are caring for an older relative will double. That means that care giving for elderly relatives will become as common as childcare. Care giving in this capacity can be costly, both for the senior citizen and for his family members. Most people want to stay at home (or with an adult child) rather than entering a nursing home. However, most people also don’t want to be a burden on their children, or their children live far away or are too busy with their own lives to provide care for their parents. 
Additionally, many people don’t have children or don’t trust their own family members to provide good care to them or make wise decisions on their behalf.  A Life Care Plan can address all of these issues and concerns.

It’s never too early to start thinking about all of this. One must be prepared for a future where you may not be in control so that your best interests and wishes are carried out properly. So often, clients come to us only when there is a crisis, at which point there are far fewer options available.  By planning early, you can establish your overall priorities and make a plan that meets your goals and adapts to you as your medical or financial situation changes.

You may ask why a law firm would be at the center of the Life Care Plan. So much of the aging process intersects with the law (estate planning, long-term care planning, probate and trust administration, etc.). Instead of stepping in when there is a crisis, a Life Care Plan allows the law firm to be part of the aging process from the start, to maximize the legal options available to the aging client when needed.

So, what is included in a Life Care Plan? First, you would meet with an attorney to discuss your unique goals, conduct a thorough analysis of your financial situation, and determine eligibility for government benefits. Then there would be a medical assessment and on-site evaluation of your current living arrangements with an elder care coordinator (ECC) who has a background in health care and social work. Finally, the attorney and elder care coordinator would work together to develop your Life Care Plan: a written assessment of your current situation and plan for implementing your goals.

The elder care coordinator will work as liaison between you, your family, and all facets of aging: financial, legal, medical, and senior resources. Your elder care coordinator will put you in contact with various senior resources to enhance quality of life, such as resources to help you age in your own home, or, eventually, find facility care that meets your needs. The average person going through the aging process for the first time likely does not know about these various resources and programs in the area, but the ECC already has this knowledge from helping many other clients age gracefully.  If you do eventually need facility care, the ECC can visit you in a facility unannounced to see how you are really being treated. The ECC will know what to look for and can identify subtle problems that your family members might not recognize.  Because the law firm is at the center of your Plan, an attorney can step in and advocate on your behalf to a long-term care facility as soon as the ECC notices a problem.

A Life Care Plan also includes a comprehensive review of your current estate planning documents, if you have them, and creating new estate planning documents for you if you do not have anything in place. Your attorney will also discuss how you plan to pay for care. Do you have long term care insurance, Medicaid, or will you be paying out of pocket? If you or your spouse is a veteran, you would want to look into veteran’s benefits. Your Life Care Plan will also provide safeguarding against financial abuse. Financial abuse and exploitation is more common than people may realize, so your attorney will go over options on how to protect yourself and your assets.

Finally, your Life Care Plan will be an ongoing relationship that adapts to your needs. We will be aware of your family dynamic and will be on the lookout for suspicious or unusual behavior. When sudden changes occur (health issues, death in the family, etc.), your ECC will not have to play catch-up, but can instead step in to solve problems as soon as they appear. We will already be very familiar with your finances and medical situation so that we can step in and help immediately.
In conclusion, proper planning for your aging can be expensive and there are many individual components to consider. A Life Care Plan combines all of these individual components into a single, cohesive plan. Providing input now lets you take control of where and how you age and takes stress off of loved ones. A Life Care Plan is a gift to yourself and your family and an investment in your future.

If you would like to learn more or schedule an appointment, please give us a call.

Monday, April 2, 2018

Medicare vs. Medicaid

Barbara K. Armstrong
I am often asked what the difference between Medicare and Medicaid actually is. So, I decided to do a little summary on the differences that I hope you will find helpful in the event that you, a relative, or a friend has questions. 

Medicare is a federal health insurance program for individuals 65 or older, under 65 with certain disabilities, or any age if they have End Stage Renal Disease or ALS. The federal government provides coverage and it is paid for from payroll tax.  The coverage depends on the type of plan you choose and may include the following:
  • Care and services received as an inpatient in a hospital or skilled nursing facility (Part A)
  • Doctor visits, care and services received as an outpatient, and some prevent care (Part B)
  • Prescription drugs (Part D)

Medicare Advantage plans (Part C) combine A and B coverage, and often will include drug coverage (Part D) as well. Medicare costs depends on the coverage that is chosen.   The costs may include premiums, deductibles, co-pays and coinsurance. Upon reaching the age of 65 years, many people are enrolled in Part A automatically.   To be sure of your eligibility, you should contact your local Social Security office.

Medicaid is a joint federal and state program that helps pay health care costs for people and families who have limited income and resources.  There are different programs that are designed for specific populations. Although Medicaid is a joint program, it is governed by the state you reside in.  Each state creates its own Medicaid programs, which have to follow federal guidelines. Mandatory benefits include, in part:
  • Care and services received in a hospital or skilled nursing facility
  • Care and services received in a federally qualified health care center, rural health clinics of freestanding birth centers (licensed or recognized by the individual state)
  • Doctor, nurse midwife, and certified pediatric and family nurse practitioner services

Medicaid costs depends on income and the rules of your state. Costs may include premiums, deductibles, co-pays and coinsurance. Certain groups are exempt from most out-of-pocket costs. Eligibility for Medicaid depends upon the state that you live in. If you think that you may qualify, you should call your State Medical Assistance (Medicaid) office to inquire.

Thursday, March 22, 2018

A Life Lesson from Harper Lee’s Death

Catherine E. Sears, Esq.

As a lawyer, I am practically required to love Harper Lee’s To Kill a Mockingbird.  As an estate planning lawyer who evaluates clients’ competency on a daily basis, the mysteries surrounding the 2015 publication of Ms. Lee’s long-lost second novel, Go Set a Watchman, and the author’s subsequent death in 2016 are as fascinating to me as Boo Radley was to Scout.  The story is also potentially as tragic as Boo’s, as it is widely disputed whether Ms. Lee – who famously shied away from the public eye after writing Mockingbird – had had the mental capacity to agree to the publication of Watchman.  Some argue that she was competent, while others worry that those she trusted manipulated her into publishing the sequel simply to increase the size of her estate which, conveniently, they would inherit upon her death only a few months later.

Adding to the suspicion was the fact that Ms. Lee’s attorney moved to have the author’s will – which had been executed only eight days before her death – filed with the local court under seal, so that the public could not see the identities of Ms. Lee’s beneficiaries.  Just last month, however, a lawsuit to unseal the will and make the document part of the public record was decided in favor of The New York Times.  Though technically a victory for the Times, the win did not reveal much more meaningful information, as it simply revealed that Ms. Lee’s will was a pour-over will that left all of her assets to her trust, which is not a public record.  Thus, the identity of the beneficiaries and the monetary scope of their inheritance continue to remain a mystery to the curious public.

Just as Atticus Finch taught his children valuable lessons in Mockingbird, we can all learn an important lesson from Ms. Lee’s estate planning.  There are significant differences between will-based estate plans and trust-based plans and, depending on your family’s financial situation and personal values, one of these options might make much more sense than the other. 

People often incorrectly assume that trusts are only for the wealthy and that “regular people” should have a will.  As a best-selling novelist, Ms. Lee was likely an incredibly wealthy woman, so one could argue that her situation feeds into this stereotype.  Certainly, by having a trust instead of a will, Ms. Lee – like anyone with a trust-based estate plan – likely saved her estate quite a bit of money by avoiding the various fees associated with the process of probating a will.  Therefore, there certainly are financial reasons to consider a trust in lieu of a will, especially depending what kind of assets you have, but this is only one consideration.

By all accounts, Ms. Lee identified by so many characteristics other than her wealth.  She is best remembered, perhaps, for her desire for privacy, as she refused to be interviewed and openly fought efforts to turn her hometown in Alabama into a Mockingbird-themed tourist trap.  Similarly, a key characteristic of a trust is the privacy it affords its grantor (the client establishing the trust).  As The New York Times discovered, trust documents are private, and, unlike a will, their contents do not become public with the court even after the grantor dies.  Many clients, even those without large estates, prefer the privacy that a trust affords as they do not want nosy neighbors or friends to be able to see what their assets are and who will receive them.

Additionally, Ms. Lee valued simplicity, as illustrated by the fact that she lived in a non-descript home with her sister and routinely shopped at the dollar store.  Having a trust also conforms with this characteristic, as a trust greatly simplifies the process of administering a decedent’s estate.  With probate, or the process of administering a will, there are numerous documents that need to be filed with the court, as well as strict deadlines dictating when these documents must be completed.  Furthermore, before the personal representative or executor can even begin filing the documents, he or she must go through a formal qualification process.  As a result, in Virginia, it can easily take over a year for even a simple will to be probated from start to finish.  In contrast, administering a trust is much faster and simpler.

Though many uncertainties remain regarding Go Set a Watchman and Ms. Lee’s death, it is indisputable that the benefits of a trust conformed with the attributes of Ms. Lee’s personality.  If you, like Ms. Lee, value privacy and simplicity, consider discussing with an estate planning attorney whether a trust-based estate plan is right for you.

Full New York Times article here

Thursday, March 1, 2018

K-9 Companions: Cute, Cuddly, and Good for Your Health Too!

Teresa M. Clemons
Office Manager

It can be a lonely life for senior citizens - whether living on their own or in an assisted living facility, or dealing with physical and/or mental conditions. Though it's not a cure for health issues by any stretch of the imagination, a dog can provide relief for many of the issues that our elderly population deals with daily. Whether dealing with the loss of a spouse or another loved one, or having a child move far away, the companionship of a furry, four-legged friend can lead to a different kind of love and friendship.

Living with dementia or Alzheimer’s can be very scary and can cause frustration and agitation.  The interaction with a puppy (holding, petting - which is also great for arthritis - or giving kisses) can have a calming effect. In some sufferers who have trouble eating on a regular basis, the company of a dog has actually stimulated their appetites. It can be hard for seniors to stay active if they do not get out much or do not have planned activities. A short walk (stopping and starting as many pooches do, as they have to sniff every blade of grass along the way) can be a nice, mild cardio workout! Sometimes it will lead to activities even when the dog is not physically there.  Owners may want to read about the specific breed, and having a topic to discuss with others can be a great way to stimulate the brain. The American Heart Association even released a study showing that owning or interacting with a dog can prevent heart disease! How amazing the power of a K-9 companion can be.  

Monday, February 19, 2018

Why Young People Need Estate Plans Too

Valerie M. Hollar, Paralegal
We can’t predict the future, but one thing is for sure, if we leave unanswered questions about how to settle our affairs, those that we leave behind may be left with a heavy burden. Simply put, yes, even the youthful among us need to take some time and get some degree of a plan in order. An estate plan doesn’t necessarily just mean deciding how your friends and family should divide your assets after you are gone, but also includes who would make medical decisions, who would pay your bills, and who would take care of your kids or your pets if something were to happen to you.

Every person, no matter their age, needs Powers of Attorney. There are two types of Powers of Attorney documents, a General Durable Power of Attorney and a Medical Power of Attorney. These documents allow someone to help take care of your business and medical decisions if you become incapacitated. Two other documents that are important are a Living Will and a HIPAA release form. A living will directs medical professionals to know how you wish to be treated if you are incapacitated and can’t make your own decisions. A HIPAA authorization form lets them know who they can release information to about your care.

Do you know the difference between a Living Will and a Do Not Resuscitate order (DNR)? A living will is a document that lets the doctors know how you want to be treated if you are incapacitated and there are no measures that can be taken to make you better. It usually allows for comfort care measures when death is near. A Do Not Resuscitate order is for when you do not want medical interventions to try and save your life. These are not the same documents, which is a common misconception.

First marriages are currently occurring later in life than in recent history. Couples seem to be in relationships longer these days before tying the knot. This is wonderful as it has led to a decline in divorce rates among millennials. But, it is creating a new issue. A relationship with someone does not automatically mean they are a family member in the court's eyes. It is important to have a plan in place so that your significant other can be the one making decisions for you, if that is what you want.

If you have young children, you need a will or a trust. Without naming a guardian in one of these documents, the state can appoint a guardian for your children from your family members, and it may not be someone that you want! Have you thought about how much money is needed for their care and education? If you have a complicated family situation, you need an estate plan. Divorce often leads to family situations that are less than pleasant. Often times when a spouse remarries it is important to protect their children’s inheritance from the ex-spouse or the new parent in the family. Wills and trusts can be set up to make sure that your children receive what you want them to, upon your death.

We all think that we are invincible and a lot of us have the “it won’t ever happen to me” attitude. Just because you are young, doesn’t mean you don’t need to plan. Taking the time and the money to set up provisions now is a great gift to leave those you love, just in case something tragic happens. Creating an Estate Plan means leaving as few loose ends as possible for those you love to have to tie up. You can never be too prepared, and it’s never too early to start.

Helpful Articles:

Reasons Millennials Need Estate Planning.

Tuesday, February 6, 2018

A Review of the 2018 Tax Cuts and Jobs Act

Helena S. Mock, Esq.
As most of you know, the Tax Cuts and Jobs Act (TCJA) signed into law at the end of 2017 made extensive changes to the tax laws that will affect almost all Americans beginning in 2018.  One of those changes will result in many fewer estates being subject to the 40% estate tax, and larger estates owing less tax. 

Before the TCJA, the first $5 million (as adjusted for inflation in years after 2011) of transferred property was exempt from estate and gift tax. For estates of decedents dying and gifts made in 2018, this “basic exclusion amount” as adjusted for inflation would have been $5.6 million, or $11.2 million for a married couple with proper planning and estate administration allowing the unused portion of a deceased spouse's exclusion to be added to that of the surviving spouse (known as “portability”). 

The new law, however, temporarily doubles the amount that can be excluded from these transfer taxes. For decedents dying and gifts made from 2018 through 2025, the TCJA doubles the base estate and gift tax exemption amount from $5 million to $10 million. Indexing for post-2011 inflation, brings this amount to approximately $11.2 million for 2018 ($22.4 million per married couple).

As a result of the large estate tax exemption amount, many estates no longer need to be concerned with the federal estate tax.  Much of the planning done prior to 2011, and even many done since then, centered on estate tax avoidance but completely ignored minimizing income tax. But with so few estates now being subject to estate tax, planning for such estates can be devoted almost exclusively to saving income taxes. While saving both income and transfer taxes has always been a goal of estate planning, it was more difficult to succeed at both when the estate and gift tax exemption level was much lower. Below are some tax planning strategies you may want to revisit in light of the larger exemption amount and other recent changes in the law.

Gifts that use the annual gift tax exclusion are one example. One of the benefits of using the gift tax annual exclusion to make transfers during life is to save estate tax. This is because both the transferred assets and any post-transfer appreciation generated on the gifted assets are removed from the donor's estate. However, because the estate tax exemption amount is so large, estate tax savings may no longer be necessary. Making an annual exclusion transfer of appreciated property carries a potential income tax cost because the person receiving the gift receives the donor's basis upon transfer. Thus, the recipient could face an income tax liability (a capital gains tax) if the gifted property were later sold. If there is no concern the donor’s estate will be subject to estate tax, then the donor must consider whether it is wise to make the gift now or wait and leave the property to the individual at death because appreciated property which passes to a beneficiary at death will get a step-up in basis that will wipe out the capital gains tax on any appreciation occurring between the date the property was acquired and the date of death.

No longer is it necessary to engage in complicated planning to equalize the estates of both spouses so that each can take advantage of the estate tax exemption amount. Generally, a two-trust plan (generally referred to as a credit shelter (bypass, family, residuary, etc.) trust and marital trust) was established to minimize estate tax. “Portability,” or the ability to apply the decedent's unused exclusion amount to the surviving spouse's transfers during life and at death, became effective for estates of decedents dying after 2010, but the concept wasn’t made permanent until 2013. As long as the election is made, portability allows the surviving spouse to apply the unused portion of a decedent's applicable exclusion amount (the deceased spousal unused exclusion (DSUE) amount) as calculated in the year of the decedent's death. The portability election gives married couples more flexibility in deciding how to use their exclusion amounts.

Estate exclusion or valuation discounts that do not preserve the step-up in basis may no longer be desirable given the excessive exemption amount. Some strategies previously used to avoid inclusion of property in the estate may no longer be worth pursuing.  Instead, it may be better to have the property included in the estate or have the property not qualify for valuation discounts so that the property receives a step-up in basis, or a larger (new) basis at death. The gap between the transfer tax rate and the capital gains tax rate has narrowed, making strategies that do not preserve the step-up in basis less desirable.

For all of these reasons, and many more which are not discussed here, if your estate plan has not been updated since 2013, it merits review.  The increased exclusion amount may have an impact on your plan.  Whether you should make any changes depends on your individual goals and circumstances.

Monday, January 15, 2018

A Millennial's Perspective to Combating Phone Addiction

Elizabeth D. Johnson
Legal Assistant 
There are many things that differ between my generation and my mother’s but the one I’d like to discuss is the well-known smart phone obsession. My mother is a very smart woman but she just doesn’t get her phone like I do (no offense, mom). Honestly, she is lucky because it’s easier for her generation to shut down and step away from their “entire world in your pocket” device than it is for mine. The average person checks their phone 110-150 times per day! So, with that being said, how do I successfully cut back on cell phone usage and not start nervously twitching? Why do I even want to do this in the first place? Well, I’d like to see if I even can plus I’ve been using a smart phone for a good 10 years at least and my anxiety/stress have only gotten worse. Coincidence? Probably not.

So how do I actually do this? Where do I even begin? First things first, I’ve got to start with social media, i.e. Instagram, Facebook, and Snapchat. I have started setting up a shortcut that with three clicks of the home button, turns my screen black and white, hopefully making social media “less attractive”. Then, I will designate a certain time in the day to check my social media accounts. For example, when I get home from work the first thing I like to do is plop on the couch and scroll through everything, so that will be my Instagram and Snapchat time. Facebook is something I care less about since it really only connects me to the people I vaguely remember from high school. So, I will delete this app from my phone and check Facebook during my lunch break on a computer.

One tip I read about and may (or may not, let’s be real) try is to not use your phone as an alarm clock. I have my phone as my alarm clock now and therefore it is the first thing I touch in the morning and I see all of my text and social media notifications and lay in bed for 10 minutes longer than I need to just to check everything. Plus, an actual alarm clock set further away from the bed might motivate me to get up instead of staring into an abyss of what activities my friend’s brother’s cousin got into last night. Another tip that I came up with on my own, inspired by being in group chats and hearing a constant buzz or beep every 3 seconds, was to completely silence my phone if I’m not expecting any important calls or texts. I don’t even have the vibration on to really keep the annoyance at bay. I also have specific ringtones for people like my boyfriend and mom so that if I hear it go off I will know who it is and whether or not it may be urgent.

I don’t have the best history with completing projects such as the time I said I was going vegan and then bought a block of cheese the next day. So, I don’t think I’m going to do great with this project but if it helps me combat even a little bit of the obsession, then it was well worth it.