Health Care

What Is an Advance Directive, and Why You Need This Document?

The coronavirus pandemic has had an impact on the entire world. No wonder—it’s a frightening disease that experts are just beginning to understand. Many of us are asking ourselves: Am I ready for a worst-case scenario? Anyone who does not have the health care portion of their estate plan in order, needs to address it now, says the timely article “COVID-19 crisis highlights the importance of completing advance directives” from Cincinnati.com.

The topic of an advance directive used to be introduced with a question about what would happen if a person were in a car accident, rushed to the hospital and unable to convey their wishes for care.  The question has now become, what if a sudden onset of COVID-19 occurred, and you were unable to speak on your own behalf? Would your loved ones know what you would want, or would they have to guess?

All adults—that is, anyone over the age of 18—should have an advance directive. The process of creating this and other health care-related estate planning documents will provide the answers to your loved ones, while helping you work through your wishes. Here’s how to start:

What matters to you? Give this considerable thought. What is important to you, who best knows and understands you and who would you trust to make critical decisions on your behalf, in the event of a medical emergency? What medical treatment would you want—or not want—and who can you count on to carry out your wishes?

Get documents in order, so your wishes are carried out. Your estate planning attorney can help you draft and execute the documents you need, so you can be confident that they will be treated as legitimate by health care providers. The estate planning lawyer will know how to execute the documents, so they are in compliance with your state’s laws. Here’s what you’ll want:

  • A living will, which records your wishes for end of life medical treatment, if you cannot speak on your own behalf.
  • Medical power of attorney, to designate a person to make health care decisions, when you are not able to do so. The person is referred to as an agent, surrogate or proxy.
  • A HIPAA release form, so the person you designate can receive and review information about your condition with your medical care providers.

Note that none of these documents concerns distribution of your personal property and assets. For that, you’ll want a will or revocable living trust, which your estate planning attorney can also prepare for you.

Talk to loved ones now. Consider this conversation a gift to them. This relieves them from a lifetime of wondering if they did the right thing for you. Have a forthright conversation with them, let them know about the documents you have have prepared, where to find them and what your wishes are.

Reference: Cincinnati.com (April 27, 2020) “COVID-19 crisis highlights the importance of completing advance directives”

Is Your Estate Plan COVID19-Ready? Three Things to Review Now

Even if you have done comprehensive estate planning with the guidance of a qualified attorney, you may want to re-evaluate certain elements of your plan now, through the lens of the coronavirus pandemic.

Why? There are two uniquely challenging aspects of this pandemic that your current plan may not adequately address.

  1. Medical treatment for severe cases of COVID19 frequently involves intubation and ventilator therapy to combat respiratory failure … and
  2. Quarantine and isolation orders blocking hospital visitors create some communication barriers between patients, doctors and family members.

How might these unique challenges impact your estate plan?

Living Wills. If your living will contains a blanket prohibition on intubation, you may want to reconsider that decision.

Durable Powers of Attorney (DPOA). Given the communication difficulties that may arise when a patient is hospitalized during this pandemic, you may want to revisit the terms of your DPOA to make it easier for your agent to act on your behalf.

Health Care Proxy. A health care proxy allows you to appoint someone else to act as your agent for medical decisions. Under normal circumstances, this person would likely confer with your attending physicians in person and again, these in-person communications may be difficult right now. You want to add language to expressly authorize electronic communication with your agent.

A qualified estate planning attorney, who focuses exclusively in this area of the law, can advise you on whether your current plans accurately represent your wishes during this uniquely challenging time.

Resource: ElderLawAnswers, Three Changes You May Want to Make to Your Estate Plan Now Due to the Pandemic, April 30, 2020

Rules for the HIPAA Waiver Relaxed?

The United States Department of Health and Human Services has announced that it won’t enforce penalties for violations of certain provisions of the HIPAA privacy rule against healthcare providers or their business associates for good-faith disclosures of protected health information (PHI) for public health purposes during the COVID-19 emergency.

The HHS Office for Civil Rights said that it was exercising its “enforcement discrimination” in announcing its change in policy during the coronavirus pandemic, a declared emergency period, reports Modern Healthcare in its article “HHS eases HIPAA enforcement on data releases during COVID-19.”

A HIPAA waiver of authorization is a legal document that permits an individual’s protected health information (PHI) to be used or disclosed to a third party. This waiver is part of a series of patient-privacy measures set forth in the Health Insurance Portability and Accountability Act (HIPAA) of 1996.

PHI covered under HIPAA is information that can be connected to a specific individual and is held by a covered entity, like a healthcare provider. HIPAA has set out 18 specific identifiers that create PHI, when linked to health information.

The notification was issued to support federal and state agencies, including the CMS and the Centers for Disease Control and Prevention, that require access to COVID-19 related data, including protected health information.

“The CDC, CMS, and state and local health departments need quick access to COVID-19 related health data to fight this pandemic,” OCR director Roger Severino said in a statement. “Granting HIPAA business associates greater freedom to cooperate and exchange information with public health and oversight agencies, can help flatten the curve and potentially save lives.”

HIPAA’s privacy rule only permits business associates of HIPAA-covered entities to disclose protected health information for certain purposes, under explicit terms of a written agreement.

The moratorium enforcement doesn’t extend to other requirements or prohibitions under the privacy rule, nor to any obligations under the HIPAA security and breach notification rules, OCR said.

Reference: Modern Healthcare (April 2, 2020) “HHS eases HIPAA enforcement on data releases during COVID-19”

Preparing for Coronavirus: The #1 Legal Document Every Adult Needs to Have

As the coronavirus continues to disrupt daily life and leave Americans uncertain of the future, you don’t have to feel helpless during this pandemic. In fact, now is a great time to be proactive and plan ahead should you or a loved one fall ill. One of the most important and relatively easy things you can do (and should do) is to select a healthcare surrogate and set up your advance healthcare directive.

What Is a Healthcare Surrogate?

A healthcare surrogate (also called a healthcare agent, medical agent, a healthcare proxy, or a medical proxy) is a person you authorize in a medical power of attorney to make decisions about your medical care if you are too ill to make them yourself or are otherwise unable to communicate your wishes with your healthcare providers.

Why is it important to choose a healthcare surrogate now?

As of April 7, there are 391,665 total cases of coronavirus. Of those, only 9,169 are in critical condition (about 2.34%). So even if you get sick, you’ll most likely have mild symptoms and recover quickly. However, since no one knows exactly how they will be affected by the virus, it’s best to plan for the worst and hope for the best. Part of that planning is making sure someone can make healthcare decisions for you if you fall ill and are unable to make those decisions for yourself.

Factors to Consider in Choosing Your Healthcare Surrogate

A healthcare surrogate is an important role, and the person you choose will have the power to make critical healthcare decisions—like consenting to a treatment plan, whether to accept or refuse medical treatment, and which healthcare providers or hospitals to use for your care. As a result, it is crucial to think carefully about who you choose to fill this role. Many people simply assume that their spouse or their oldest child should take on this role, but they are not always the best suited. Here are some factors to consider when selecting an agent:

Emotional maturity. People handle stress differently, and not everyone is able to set aside their emotions and make level-headed decisions when someone they love is suffering. In addition, some people are simply not assertive enough to act as a strong advocate in the face of differing opinions of other family members–or even health care providers–who suggest a treatment plan you have informed your medical agent you do not want. You should choose someone who is able to think rationally in emotionally difficult circumstances, even if that means you must look outside of your family to find the best person for the job.

Is willing/able to serve. Acting as a healthcare surrogate can be a time-consuming and emotionally draining job. Make sure that the person you choose is willing and able to set aside the time necessary to serve as your patient advocate. Don’t just assume the person you want to be your medical agent is willing: Be proactive and ask if he or she is willing to take on that role. Keep in mind that if you are elderly, you may want to avoid naming a friend or family member who also is older, as there is a greater chance that they will experience mental or physical decline at the same time as you, which could impede their ability to serve as your advocate when the time comes.

Will honor your wishes no matter what. Your healthcare surrogate has a duty to make decisions on your behalf that you would have made to the extent that he or she is aware of your wishes. This is the case even if your healthcare surrogate disagrees with your choices. As a result, your healthcare surrogate should be someone who is willing to set aside his or her own opinions and wishes to carry out yours. It may be prudent to appoint someone who has values and religious beliefs that are similar to yours to reduce the instances in which your surrogate’s opinions differ significantly from yours. Do not choose anyone that you do not trust to carry out your wishes.

People You Should Not Choose

Many states have laws prohibiting certain people from acting as your healthcare surrogate, even if they are otherwise well-qualified to act in that role:

Minors. Many states have laws expressly prohibiting a minor from being a patient advocate. The age of majority could be 18, 19, or 21 years of age, depending upon the state. Some states have exceptions to this prohibition for married or emancipated minors.

Your health care providers. Some states not only prohibit your health care providers from acting as your healthcare surrogate, but also preclude the owner, operator, or any employee of any facility in which you are a patient or resident from acting in that role. Some states that have adopted this prohibition make an exception for individuals who are related to you. A few states, such as Kansas, Missouri, and Kentucky, also have an exception if that person is an active member of the same religious organization as you.

Need help?

Medical directives may be among the most important legal documents you prepare – especially in light of COVID-19. Picking a healthcare surrogate can be tricky and we can help you think through your choice. We can also help with any other estate planning needs you may have—whether that’s setting up a financial power of attorney, last will and testament, or a trust. Please give us a call today to discuss how we can help you and your family be prepared should you fall ill from the coronavirus.

Requests for Estate Plans Reflect Fears about Coronavirus

Estate planning lawyers have always known that estate planning is not about “if,” but about “when.” The current health pandemic has given many people a wake-up call. They realize there’s no time to procrastinate, reports the article “Surge on wills: Fearing death by coronavirus, people ask lawyers to write their last wishes” from InsuranceNews.net. Legal professionals urge everyone, not just the elderly or the wealthy, to put their end-of-life plans in writing.

The last time estate planning attorneys saw this type of surge was in 2012, when wealthy people were worried that Congress was about to lower the threshold of the estate tax. Today, everyone is worried.

Top priorities are creating a living will stating your wishes if you become incapacitated, designating a surrogate or a proxy to make medical decisions on your behalf and granting power of attorney to someone who can make legal and financial decisions.

An estate plan, including a last will and testament (and often trusts) that detail what you want to happen to assets and who will be guardian to minor children upon your death, spares your family legal costs, family disagreements and hours in court that can result when there is no estate plan.

The coronavirus has created a new problem for families. In the past, a health care surrogate would be in the hospital with you, talking to healthcare providers and making decisions on your behalf. However, now there are no visitors allowed in hospitals and patients are completely isolated. Estate planning attorneys are recommending that specific language be added to any end of life documents that authorize a surrogate to give instructions by phone, email or during an online conference.

Any prior documents that may have prohibited intubation need to be revised, since intubation is part of treatment for COVID-19 and not necessarily just an end-of-life stage.

Attorneys are finding ways to ensure that documents are properly witnessed and signed. In some states, remote signings are being permitted, while other states, Florida in particular, still require two in-person witnesses, when a will or other estate planning documents are being signed.

There are many stories of people who have put off having their wills prepared, figuring out succession plans that usually take years to plan and people coming to terms with what they want to happen to their assets.

Equally concerning are seniors in nursing homes who have not reviewed their wills in many years and are not able to make changes now. Older adults and relatives are struggling with awkward and urgent circumstances, when they are confined to nursing homes or senior communities with no visitors.

Reference: InsuranceNews.net (April 3, 2020) “Surge on wills: Fearing death by coronavirus, people ask lawyers to write their last wishes”

The Coronavirus and Estate Planning

As Americans adjust to a changing public health landscape and historical changes to the economy, certain opportunities in wealth planning are becoming more valuable, according to the article “Impact of COVID-19 on Estate Planning” from The National Law Review. Here is a look at some strategies for estate plans:

Basic estate planning. Now is the time to review current estate planning documents to be sure they are all up to date. That includes wills, trusts, revocable trusts, powers of attorney, beneficiary designations and health care directives. Also be sure that you and family members know where they are located.

Wealth Transfer Strategies. The extreme volatility of financial markets, depressed asset values,and historically low interest rates present opportunities to transfer wealth to intended beneficiaries. Here are a few to consider:

Intra-Family Transactions. In a low interest rate environment, planning techniques involve intra-family transactions where the senior members of the family lend or sell assets to younger family members. The loaned or sold assets only need to appreciate at a rate greater than the interest rate charged. In these cases, the value of the assets remaining in senior family member’s estate will be frozen at the loan/purchase price. The value of the loaned or sold assets will be based on a fair market value valuation, which may include discounts for certain factors. The fair market value of many assets will be extremely depressed and discounted. When asset values rebound, all that appreciation will be outside of the taxable estate and will be held by or for the benefit of your intended beneficiaries, tax free.

Charitable Lead Annuity Trusts. Known as “CLATs,” they are similar to a GRAT, where the Grantor transfers assets to a trust and a named charity gets an annuity stream for a set term of years. At the end of that term, the assets in the trust pass to the beneficiaries. You can structure this so the balance of the assets passes to heirs transfer-tax free.

Speak with your estate planning attorney about these and other wealth transfer strategies to learn if they are right for you and your family. And stay well!

Reference: The National Law Journal (March 13, 2020) “Impact of COVID-19 on Estate Planning”

The Second Most Powerful Estate Planning Document: Power of Attorney

All too often, people wait until it’s too late to execute a power of attorney. It’s uncomfortable to think about giving someone full access to our finances, while we are still competent. Some estate planning attorneys believe that the power of attorney, or POA, is actually the second most important estate planning document after a will. Here’s what a POA can do for you.

The term POA is a reference to the document, but it also is used to refer to the person named as the agent in the document.

Generally speaking, any POA creates a fiduciary relationship, for either legal or financial purposes. A Medical or Healthcare POA creates a relationship for healthcare decisions. Sometimes these are for a specific purpose or for a specific period of time. However, a Durable POA is created to last until death or until it is revoked. It can be created to cover a wide array of needs.

Here’s the critical fact: a POA of any kind needs to be executed, that is, agreed to and signed by a person who is competent to make legal decisions. The problem occurs when family members or spouse do not realize they need a POA until their loved one is not legally competent and does not understand what they are signing.

Incompetent or incapacitated individuals may not sign legal documents. Further, the law protects people from improperly signing, by requiring two witnesses to observe the individual signing (and in Florida and many other states it must also be notarized by a Notary Public).

The law does allow those with limited competency to sign estate planning documents, so long as they are in a moment of lucidity at the time of the signing. However, this is tricky and can be dangerous, as legal issues may be raised for all involved, if capacity is challenged later on.

If someone has become incompetent and has not executed a valid power of attorney, a loved one will need to apply for guardianship. This is a court process that is expensive, can take several months and leads to the court being involved in many aspects of the person’s life. A power of attorney can be executed quickly.

The biggest concern to executing a power of attorney, is that the person is giving an agent the control of their money and property.

Having an estate planning attorney create the power of attorney that is best suited for each individual’s situation is the most sensible way to provide the protection of a POA, without worrying about giving up control while one is competent.

Reference: The News-Enterprise (Feb. 24, 2020) “Power of attorney can be tailored to circumstances”

Planning for Long-Term Care

Starting to plan for elder care should happen when you are in your 50s or 60s. By the time you are 70, it may be too late. With the median annual cost of a private room in a nursing facility coming in at more than $100,000, not having a plan can become one of the most expensive mistakes of your financial life. The article “Four steps you can take to safeguard your retirement savings from this risk” from CNBC says that even if care is provided in your own home, the annual median cost of in-home skilled nursing is $87.50 per visit.

There are fewer and fewer insurance companies that offer long-term care insurance policies, and even with a policy, there are many out-of-pocket expenses that also have to be paid. People often fail to prepare for the indirect cost of caregiving, which primarily impacts women who are taking care of older, infirm spouses and aging parents.

The best time to start planning for the later years is around age 60. That’s when most people have experienced their parent’s aging and understand that planning and conversations with loved ones need to take place.

Living Transitions. Do you want to remain at home as long as is practicable, or would you rather move to a continuing care retirement community? If you are planning on aging in place in your home, what changes will need to be made to your home to ensure that you can live there safely? How will you protect yourself from loneliness, if you plan on staying at home?

Driving Transitions. Knowing when to turn in your car keys is a big issue for seniors. How will you get around, if and when you are no longer able to drive safely? What transportation alternatives are there in your community?

Financial Caretaking. Cognitive decline can start as early as age 53, leading people to make mistakes that cost them dearly. Forgetting to pay bills, paying some bills twice, or forgetting accounts, are signs that you may need some help with your financial affairs.

Healthcare Transitions. If you don’t already have an advance directive, you need to have one created, as part of your overall estate plan. This provides an opportunity for you to state how you want to receive care, if you are not able to communicate your wishes. Not having this document may mean that you are kept alive on a respirator, when your preference is to be allowed to die naturally. You’ll also need a Health Care Power of Attorney, a person you name to make medical decisions on your behalf when you cannot do so. This person does not have to be a spouse or an adult child—sometimes it’s best to have a trusted friend who you will be sure will follow your directions. Make sure this person is willing to serve, even when your documented wishes may be challenged.

Reference: CNBC (Jan. 31, 2020) “Four steps you can take to safeguard your retirement savings from this risk”

Facts and Figures for Older Workers and Retirees in 2020

A new year always brings change, and this year is no exception. From Market Watch, the article “Numbers that older workers and retirees need to know in 2020” provides key information for this new year.

Retirement Plan Changes. Limits for how much can be saved in 401(k), 403(b), Thrift Savings Plan, and most 457 plans have increased by $500 to $19,500 for 2020. If you are 50 and older, the “catch-up” contribution has also increased by $500.

For those with SIMPLE retirement plans, which are usually from small businesses with 100 or fewer employees, you can increase savings by $500 to $13,500.

What hasn’t changed—if you have an individual traditional IRA, you can save $6,000, with a catch-up contribution of $1,000.

Social Security Changes. The Social Security Administration reports that the average monthly benefit in 2019 was $1,356.05. This will rise by 1.6% in 2020, which will mean an increase of $21.69 per month. Last year, some 63.8 million Americans took Social Security benefits. It was the first year since the program began in 1935 that spending topped $1 trillion.

Another change to Social Security in 2020 is the longer period of time to reach full retirement age. For people born in 1958, this now increases to 66 years and eight months. The longer period is also going to increase in 2021 and 2022—making the full retirement age 67 for anyone born in 1960 or later.

That doesn’t mean people can’t get Social Security benefits earlier—you can elect to take benefits as early as age 62—but you’ll receive less. If you take benefits at age 62, they’ll be 75% of the monthly benefits because you will have added 48 months. At age 65, you’ll receive 93.3% of full benefits because of adding an additional 12 months. If you are taking spousal benefits, there are more numbers to consider.

Medicare Changes. The good news was the increase from Social Security. The bad news? Standard monthly Part B premiums will increase 6.7%, from $135.50 in 2019 to $144.60. That’s the minimum premium. Depending upon your premium, they could go as high as $491.60 per month. Medicare officials blame higher drug prices on the increase.

Health care costs are part of a rising tide of costs facing retirees and older workers. Considering how few Americans have enough money saved for retirement, this is going to become more of a national issue as boomers and millennials age. It should serve as a reminder for all—save as much as you can for retirement, starting now.

Reference: Market Watch (Dec. 28, 2019) “Numbers that older workers and retirees need to know in 2020”

Start the New Year with Estate Planning To-Do’s

Families who wish their loved ones had not created an estate plan are far and few between. However, the number of families who have had to experience extra pain, unnecessary expenses and even family battles because of a lack of estate planning are many. While there are a number of aspects to an estate plan that take some time to accomplish, The Daily Sentinel recommends that readers tackle these tasks in the article “Consider These Items As Part of Your Year-End Plan.”  

Review and update any beneficiary designations. This is one of the simplest parts of any estate plan to fix. Most people think that what’s in their will controls how all of their assets are distributed, but this is not true. Accounts with beneficiary designations—like life insurance policies, retirement accounts, and some bank accounts—are controlled by the beneficiary designation and not the will.

Proceeds from these assets are based on the instructions you have given to the institution, and not what your will or a trust directs. This is also true for real estate that is held in JTWROS (Joint Tenancy with Right of Survivorship) and any real property transferred through the use of a beneficiary deed. The start of a new year is the time to make sure that any assets with a beneficiary designation are aligned with your estate plan.

Take some time to speak with the people you have named as your agent, personal representative or successor trustee. These people will be managing all or a portion of your estate. Make sure they remember that they agreed to take on this responsibility. Make sure they have a copy of any relevant documents and ask if they have any questions.

Locate your original estate planning documents. When was the last time they were reviewed? New laws, and most recently the SECURE Act, may require a revision of many wills, especially if you own a large IRA. You’ll also want to let your executor know where your original will can be found. The probate court, which will review your will, prefers an original. A will can be probated without the original, but there will be more costs involved and it may require a few additional steps. Your will should be kept in a secure, fire and water-safe location. If you keep copies at home, make a note on the document as to where the original can be found.

Create an inventory of your online accounts and login data for each one. Most people open a new account practically every month, so keep track. That should include email, personal photos, social media and any financial accounts. This information also needs to be stored in a safe place. Your estate planning document file would be the logical place for this information but remember to update it when changing any information, like your password.

If you have a medical power of attorney and advance directive, ask your primary care physician if they have a means of keeping these documents, and explain how you wish the instructions on the documents to be carried out. If you don’t have these documents, make them part of your estate plan review process.

A cover letter to your executor and family that contains complete contact information for the various professionals—legal, financial, and medical—will be a help in the case of an unexpected event.

Remember that life is always changing, and the same estate plan that worked so well ten years ago, may be out of date now. Speak with an experienced estate planning attorney in your state who can help you create a plan to protect yourself and your loved ones.

Reference: The Daily Sentinel (Dec. 28, 2019) “Consider These Items As Part of Your Year-End Plan”

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