Which Estate Planning Documents Are Essential? [Fall 2010]
We had a potential client call us the other day and ask us what estate planning documents were absolutely essential. It is our belief that everyone 18 years and older should have two documents: (1) Durable Power of Attorney for Health Care and (2) Durable Power of Attorney for Financial Matters.
These documents ensure that someone can act on your behalf if you’re disabled or incapacitated. Without these documents, a guardianship will likely be necessary. Guardianships are typically costly, time-consuming and stressful. In a guardianship, you lose control and the Court decides who will make health care and financial decisions for you.
It our experience that families could alleviate stress and save thousands of dollars by executing these two documents when they are healthy and able to do so.
Family Care Givers...
The Backbone of Long-term Care [Fall 2010]
It is a myth that most of the elderly are cared for by nursing homes or health care institutions, In fact, 87% of those who need long term care receive that care from unpaid caregivers.
That being the case, what can you do to make caregiving easier down the road? The key word is “plan.”
First, determine where to start:
- Review bank and financial arrangements; Seek help from a financial advisor about how to maximize assets to pay for the care of a loved one
Create a safe environment at home; safety checklists are available on www.aarp.com
- Look into benefits; i.e., social security, pension, disability and veterans
- Maintain medical records
- Consider care options available now and in the future, such as you home, someone else’s home, independent living retirement community, assisted living, nursing home, continuing care retirement community
- Determine how you will pay for the care
- Know that elder depression, although common, is not a part of growing old. Learn to recognize the signs of depression. Is the house dirty, where it once was clean? Are they neglecting chores that they once liked to do? Are they neglecting their own hygiene? Is the refrigerator and/or pantry stocked?
- Identify resources to help you (an elder law attorney can assist you with this)
- Decide on either estate planning or guardianship
Next, learn about estate planning:
- Estate planning documents give the person you choose the power to appoint agents to make decisions when you cannot
- It can avoid guardianship
- It will help control what happens to your assets upon death
- It makes things easier for friends and family
- Even if you have documents, laws change and the documents should be reviewed to determine if any updates are needed; we typically recommend reviews at least every five (5) years
Finally, be sure to take care of yourself:
- Accept help
- Information is power; be proactive
- Consider your own needs, “put your oxygen mask on first”
- Join a support group
- Get respite, take time off for you
Estate Tax in NH?
Stay tuned for more... [Fall 2009]
As is often the case in New Hampshire, agreement on a new budget for the state looks as though it will go down to the wire. A joint House-Senate conference committee convened the week of June 8th, and is charged with resolving the difference between the budget bill passed by the House and that passed by the Senate before July 1.
Caught between the two versions of the budget is a provision, included in the House version but left out of the Senate's, that would add a New Hampshire estate tax at the rate of 8 percent to estates over $2 million. The idea that this concept would be introduced is no surprise, as many states have enacted their own estate taxes in recent years, following the elimination of the "state death tax credit" at the end of 2004.
The reality of this tax, if enacted, is that many New Hampshire estate plans would need to be reviewed and probably updated to protect people from paying unnecessary tax.
The question is whether the House conference members are sufficiently committed to this tax to prevail over the objection of the Senators. Certainly, from today's news stories, it is obvious that this conference committee will not find the job of finding sufficient revenue easy given the current economic realities, which may tilt the scale in favor of this new tax.
More information can be found at www.gencourt.state.nh.us. Check under HB 2. We are actively following the story, so please let us know if we can be of assistance.
Irrevocable Trusts Under Siege in NH [Summer 2009]
Over the past years, the irrevocable trust has been a popular tool to protect assets from nursing home costs. However, these trusts are now facing significant attacks by the State of New Hampshire.
The State is taking the position that a majority of these trusts are now countable for Medicaid purposes. Currently, there are two cases in court contesting the State's position and it is the hope that the court will find the State's position erroneous.
In the meantime, if you have an irrevocable trust, it is important to have your legal advisor review the document to determine whether or not the assets in the trust are protected, as this issue might significantly impact eligibility for Medicaid.
NH Law on Reporting Elder Abuse [Fall 2009]
Under New Hampshire law, if any person suspects or believes in good faith that an elderly person who may be incapacitated is being abused, neglected, exploited or is self-neglecting, that person must report it to the New Hampshire Department of Health and Human Services.
What are some signs of elder abuse? Signs of elder abuse include lack of knowledge about personal finances, poor personal hygiene, increasingly withdrawn or isolated, sudden inability to pay bills, wearing of inappropriate clothing, unexplained bruises or welts, fear or anxiety around household members or caregivers, and changes in appetite or unusual weight gain or loss.
If you need more information regarding elder abuse, you can call 1-800-949-0470 . It should be noted that in some cases, a guardianship may also be necessary. If you need assistance with guardianship related issues, please call our office and we would be happy to help you.
Recommended Reading for Families Dealing with Alzheimers
Still Alice by Lisa Genova
Reading this book is highly recommended if you have been touched by Alzheimer's disease or if you have clients who have been affected by the disease.
The book is an insightful and touching portrayal of the Alzheimer's journey. This fictional story is narrated by Dr. Alice Howland who is an esteemed psychology professor at Harvard. Alice is almost 50 years old when the first symptoms of Alzheimer's disease emerge and the author does a wonderful job describing what is going on in Alice's head as the disease worsens. As one reviewer of the book stated, this book will inform you, it will scare you and it will change you.
Myths About Wills & Trusts [Winter 2009]
If I die without a Will, everything will go to my spouse...
Not necessarily. If you don't have a Will, your estate is distributed according to the intestacy statute and in some cases, it could be divided between your spouse and your children. This issue is especially relevant if you have children from a previous marriage.
A Will avoids probate...
A Will does not avoid probate. A Will simply tells the Court how you want your assets distributed. How can you avoid probate? Joint ownership and beneficiary designations avoid probate. Trusts can also avoid probate. Trusts also can also provide privacy, unlike a Will, which is a public document.
Creating a trust automatically avoids probate...
In order for a trust to avoid probate, your assets need to be transferred into the trust. At our office, the funding work is done for you; thus you have a better chance of avoiding probate court. Also, it is important for you to review your estate planning documents periodically so that you know it reflects your current situation and wishes. We usually recommend that you revisit your plan at least every five (5) years.*
* Thanks to USA Today, "5 Myths about wills, and what you should do," by Sandra Block, 10/22/09, for some of the information presented in this article.
Michael Jackson Lessons on Wills & Trusts [Winter 2009]
- Have a Will. Since Michael Jackson had a Will, his estate will be distributed according to his wishes. His Will was also drafted using clear and specific language. He specifically referred to his children by name and specifically excluded his ex-wife Debbie Rowe, making his intentions clear.
- Name guardians for your children. This is a difficult issue for many people, but it is important because if no guardian had been named, the Court would have appointed one. However, Jackson might have done a better job naming Guardians given their ages, his mother being 79 and Diana Ross being 65. Should either of them die while one of his children is a minor, the Court will be involved appointing a new Guardian.
- Appoint a good team. Name people you trust and who are competent to carry out your wishes to act as your Executors and/or trustees, and whom you trust to handle financial matters.
- If appropriate, create a trust. A trust can avoid probate and also keeps your affairs out of the courts and therefore, private. A trust can also be helpful if you want to delay the distribution of your assets to your children or if one of your beneficiaries is disabled.
- Review your estate planning documents. Jackson's will was executed in 2002, over 7 years ago. Because things change, we have a review policy for all our clients and typically recommend that they review their estate planning every five (5) years.
Save your Statements - New Medicaid Application Rules [Winter 2009]
The State of New Hampshire is now requiring that Medicaid applicants provide the State with verification of all resources and assets since February 8, 2006.
Although the look-back period for all Medicaid application is five (5) years, until now, unless a file was audited, a Medicaid applicant was only required to show one (1) year of financial statements. Now, most district offices are requiring applicant to show financial statements along with verification of all deposits and withdrawals over $500.00 dating back to February 8, 2006. The Portsmouth office requires five (5) years of statements.
2010: A Year of Tax Change in NH [Winter 2010]
As everyone knows, Congress has been very focused on health care over the last six months or so. One consequence of this focus has been that Congress did not take action to prevent the temporary repeal of the estate tax.
As of January 1 of this year, and until January 1, 2011, there is no estate tax in effect. For the moment, at least, it would appear that the estates of people who die this year will not be subject to estate tax... but stay tuned.
For one thing, if this status remains unchanged, there will be no estate tax, but we will have to cope with what is known as modified carryover basis. Until this year, all assets passing from a decedent to beneficiaries were allowed to have their basis readjusted to fair market value as of date of death - very helpful in the case of appreciated assets. For 2010, this is not the case.
While there will be basis adjustments permitted (generally $1.3 MM, but $3 MM passing to spouses), beyond these adjustments, beneficiaries will take assets at their original basis. There is some confusion as to how the rules will be applied, and it is likely that many people will have trouble establishing the basis for some of their assets (such as their homes)
Another reason to "stay tuned" is that Congress may in fact act to re-establish the estate tax for 2010, and might try to do so retroactively. If they do not act, however, more change will be on the horizon because the estate tax will come back with a $1 MM exemption in 2011.
Existing trust documents may contain language which will have unintended consequences in the current environment. We recommend clients speak with their advisors about this, and we are happy to review documents with clients, and to recommend appropriate changes.
We are also keeping an eye on tax developments in New Hampshire. At the moment, there does not seem to be any movement toward reviving last year's discussion of implementing a New Hampshire estate tax.
However, there has been quite a lot of discussion, as most of you probably know, about the expansion of the interest and dividends tax to LLC entities.
We are following the story, and will keep you updated.
Estate Planning Begins at Age 18 [Winter 2010]
Your 18 year old "baby" has graduated high school, started college and has taken a semester abroad. In his travels your child can't access his bank account and someone needs to contact the bank for him. Unfortunately, in that situation you would not be able to access your child's account unless your child had provided you with the authority to do so in a Durable Power of Attorney for Financial Matters.
Even more importantly, your child needs a Durable Power of Attorney for Health Care. Your baby is now an adult, and as such, your child's privacy will now be respected by medical personnel. This being the case, if your child is hospitalized and decisions need to be made on his behalf and/or medical information needs to be accessed, it is likely that his doctors will not listen to you or provide you with that medical information unless your child has appointed you as his agent in a Durable Power of Attorney for Health Care.
We recommend that you encourage your child to speak with your estate planning attorney about preparing these documents. By doing this, your child can enjoy his college fun and independence and you can enjoy peace of mind knowing that in the event your child encounters a financial issue or is incapable of making decisions relating to his health care, you or someone else is authorized to speak for him.
Simple Steps... Making the Home Safer for an Elderly Family Member [Winter 2010]
We recently read a story in a California newspaper about a 90 year old woman who was trapped in her bathtub because she was too weak to get up. (She survived by drinking water from a rubber duck). This is a true story and it reminds us that there are simple ways to make a home safer for an elderly family member. Here are just a few.
- Get a lifeline. These emergency response systems provide assistance around the clock
- Make sure smoke detectors and carbon dioxide alarms are installed, especially in the kitchen
- Buy small appliances that turn off automatically
- Ensure that all rooms have good lighting with convenient and easy to use switches
- Use nightlights near any night time traffic paths
- Get a telephone with enlarged buttons; get a cell phone for your parent
- Install grab bars in the bathroom and even a shower chair
- Place anti slip rubber decals on the bathtub or exchange the tub for a walk in shower with a shower seat to prevent falls
- Install a programmable thermostat
- Eliminate throw rugs to avoid slips
- Replace the faucets with single level handles for easier one handed control
- Have a spare key in the event of a lock-out; or consider installing a keypad (easier to operate than sticky keys)
- Encourage the use of deadbolts and a peepholes
- Help unclutter the house and cabinets
- Buy furniture that is easy to get up from
Common Questions When a Loved One Passes-Away [Winter 2010]
I am the Executor under my father’s will. What should I do first?
If you are the executor, you should secure the tangible personal property, meaning anything you can touch. Then take your time, if you think the decedent had a Will, you should try to locate the original Will. Most bills that need to be paid can wait a week or two without any adverse consequences.
What if the decedent doesn’t have a Will?
Depending upon how the assets were owned or if the assets had beneficiary designations, those assets would pass according the intestacy laws of New Hampshire.
I went to the bank and tried to withdraw money from the decedent’s account and the bank told me that I would have to go through probate. What is probate?
Probate is a court process by which a person's assets change hands at their death. For example, if a person dies with assets in his or her name and that person’s will says that all assets are to go to the children, the children cannot take possession of those assets until the will and other papers have been filed with the probate court, and the court has given its approval. The whole process takes at least six months, and often more.
I thought that if I had a will that there would be no probate.
No, a will only directs the distribution of assets to beneficiaries; it does not avoid probate. Joint ownership and beneficiary designations can avoid probate.
What about trusts? Don’t trusts automatically avoid probate?
Trusts can also avoid probate, but only if the trust(s) is properly funded. We work closely with our clients to insure that their trusts are properly funded so that probate can be avoided.
What happens to the original Will?
In New Hampshire, even if there are no probate assets, the original Will is supposed to be filed in the Probate Court within 30 days of the decedent’s death.
Do I need a lawyer?
Most of the time having a consultation with a lawyer after a loved one dies is important. Death is often accompanied by significant financial, legal and emotional issues. A lawyer can assist you in handling these issues, navigating the court system and collecting and administering the assets. A lawyer can also help you administer a trust if there is one. It should be noted that you can see a lawyer when you are ready to do so. More importantly, you and your family should take the time to grieve.
Medicare Misconceptions [Spring 2010]
Medicare: Part D
As part of the Affordable Care Act, the Donut Hole will disappear in 2020. In the meantime, donut hole rebate checks start arriving June 10, 2010. Medicare recipients who enter into the prescription drug coverage gap infamously known as the “donut hole” anytime before the end of 2010 should receive a one time $250.00 rebate check from Medicare.
Important points for Medicare recipients to remember:
- You do not have to sign up for the one-time $250 rebate check….the only requirement is to have incurred Part D. prescription drug costs that have landed you in the donut hole for 2010.
- In determining whether a recipient is eligible for the rebate check, Medicare will review records sent from your pharmacy to your Part D. prescription drug plan.
- The rebate checks will come from Medicare and not from your prescription drug plan.
- The rebate checks are not available to anyone receiving “Extra Help”, that is, the Part D Low-Income subsidy, because those individuals never have a gap in their Part D. Coverage.
- The $250.00 is not taxable.
Beginning in 2011, the Donut Hole will slowly shrink and you will pay less for your prescription drugs in the donut hole:
- You will get a 50% discount on brand-name prescription drugs purchased while in the donut hole in 2011.
- Starting in 2013, the federal government will gradually add to the discount so that by 2020, you will pay no more than 25% of the cost of brand-name prescription drugs while in the donut hole.
- Starting in 2011, if you purchase generic prescription drugs, you will get a 7% price-cut.
- By 2020, the donut hole will disappear for all drugs, both generic and brand names. It is important to note that the discounts do not affect a beneficiary’s ability to qualify for Part D catastrophic coverage if the actual costs of the individual’s drugs are high enough to reach that level.
Medicare: Dispelling the myths about skilled care coverage at a nursing home
As you may know, Medicare pays a limited amount of nursing home care. Generally, the maximum is 100 days (20 days (100%) and 80 days (80%)). Nonetheless, receiving this coverage is important to many people and in order for Medicare to pay, the patient must meet certain requirements:
- The patient must have been hospitalized for at least three days.
- The patient must be admitted to the nursing home for at least one of the underlying conditions treated in the hospital.
- The nursing home resident must receive skilled level of care on a daily basis.
What does a skilled level of care mean? Skilled services require technical or professional personnel such as registered nurses, licenses practical nurses, physical, occupational or speech therapists. In order for a service to qualify as “skilled”, it must be so inherently complex that it can only be safely and effectively performed by, or under the supervision of, professional or technical personnel. Importantly, skilled services can include “observation and assessment of a changing condition” as well as “overall management and evaluation of a care plan.”
Unfortunately, a common reason given for cutting off Medicare coverage is that “skilled services” are longer needed when, in fact, the patient does requires skilled services. Often nursing homes may mistakenly require a resident to be improving or showing progress in order to continue to be covered by Medicare. If a resident “plateaus,” or the nursing facility says the resident can no longer be rehabilitated, the facility may deny the resident further coverage. Denying Medicare coverage based on this reason is incorrect.
Medicare is making an attempt to educate people about this issue because these improper denials can significantly impact the elderly and those with disabilities.
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