St. Petersburg Estate Planning

What Does an Elder Law Attorney Really Do?

A knowledgeable elder law attorney will make certain that he represents the best interests of his senior client in a variety of situations that usually occur in an elderly person’s life.

An elder care attorney will also be very knowledgeable about several different areas of the law.

The Idaho Falls Spokesperson’s recent article, “What is an Elder Law Attorney and What Can They Do for You?” looks at some of the things an elder care attorney can do.

Elder care attorneys address long-term care issues, housing, quality of life, independence and autonomy—which are all critical issues concerning seniors.

Your elder law attorney knows that one of the main issues senior citizens face is sound estate planning. This may include planning for a minor or adult child, as well as probate proceedings, which is a process where a deceased person’s assets are collected and distributed to the heirs and creditors.

The probate process may also involve the Uniform Probate Code (UPC). The UPC is a set of inheritance rules written by national experts. A major responsibility of the probate process is to fully administer the entire estate, including appointing executors and ensuring that all assets are disbursed properly.

An experienced elder law attorney can also assist your family to make sure that your senior receives the best possible care arrangement, which may become more important as his or her medical needs increase.

An elder care law attorney also helps clients find the best nursing home to fully satisfy all their needs. Finally, they often will also work to safeguard assets to prevent spousal impoverishment, when one spouse must go to a nursing home.

A qualified elder care attorney can be a big asset to your family, as you journey through the elder care planning process. Working with an attorney to set up contingency plans can provide peace of mind and relief to you and your loved ones.

Reference: Idaho Falls Spokesperson (May 20, 2019) “What is an Elder Law Attorney and What Can They Do for You?”

What Should I Keep in Mind in Estate Planning as a Single Parent?

Most estate planning conversation eventually come to center upon the children, regardless of whether they’re still young or adults.  So what should you keep in mind in estate planning as a single parent?

Talk to a qualified estate planning attorney and let him or her know your overall perspective about your children, and what you see as their capabilities and limitations. This information can frequently determine whether you restrict their access to funds and how long those limitations should be in place, in the event you’re no longer around.

Kiplinger’s recent article, “Estate Planning for Single Parents” explains that when one parent dies, the children typically don’t have to leave their home, school and community. However, when a single parent passes, a child may be required to move from that location to live with a relative or ex-spouse.

After looking at your children’s situation with your estate planning attorney to understand your approach to those relationships, you should then discuss your support network to see if there’s anyone who could serve in a formal capacity, if necessary. A big factor in planning decisions is the parent’s relationship with their ex. Most people think that their child’s other parent is the best person to take over full custody, in the event of incapacity or death. For others, this isn’t the case. As a result, their estate plan must be designed with great care. These parents should have a supportive network ready to advocate for the child.

Your estate planning attorney may suggest a trust with a trustee. This fund can accept funds from your estate, a retirement plan, IRA and life insurance settlement. This trust should be set up, so that any court that may be involved will have sound instructions to determine your wishes and expectations for your kids. The trust tells the court who you want to carry out your wishes and who should continue to be an advocate and influence in your child’s life.

Your will should also designate the child’s intended guardian, as well as an alternate, in case the surviving parent can’t serve for some reason. The trust should detail how funds should be spent, as well as the amount of discretion the child may be given and when, and who should be involved in the child’s life.

A trust can be drafted in many ways, but a single parent should discuss all of their questions with an estate planning attorney.

Reference: Kiplinger (May 20, 2019) “Estate Planning for Single Parents”

What Do I Tell My Kids About Their Inheritance?

knowing whether to tell your kids about their inheritance can be tough decision

For some parents, it can be difficult to discuss family wealth with their children and knowing whether to tell your kids about their inheritance can be tough decision. You may worry that when your kid learns they’re going to inherit a chunk of money, they’ll drop out of college and devote all their time to their tan.

Kiplinger’s recent article, “To Prepare Your Heirs for Future Wealth, Don’t Hide the Truth,” says that some parents have lived through many obstacles themselves. Therefore, they may try to find a middle road between keeping their children in the dark and telling them too early and without the proper planning. However, this is missing one critical element, which is the role their children want to play in creating their own futures.

In addition to the finer points of estate planning and tax planning, another crucial part of successfully transferring wealth is honest communication between parents and their children. This can be valuable on many levels, including having heirs see the family vision and bolstering personal relationships between parents and children through trust, honesty and vulnerability.

For example, if the parents had inherited a $25 million estate and their children would be the primary beneficiaries, transparency would be of the utmost importance. That can create some expectations of money to burn for the kids. However, that might not be the case, if the parents worked with an experienced estate planning attorney to lessen estate taxes for a more successful transfer of wealth.

Without having conversations with parents about the family’s wealth and how it will be distributed, the support a child gets now and what she may receive in the future, may be far different than what she originally thought. With this information, the child could make informed decisions about her future education and how she would live.

Heirs can have a wide variety of motivations to understand their family’s wealth and what they stand to inherit. However, most concern planning for their future. As a child matures and begins to assume greater responsibility, parents should identify opportunities to keep them informed and to learn about their children’s aspirations, and what they want to accomplish.

The best way to find out about an heir’s motivation, is simply to talk to talk to your kids about their inheritance.

Reference: Kiplinger (May 22, 2019) “To Prepare Your Heirs for Future Wealth, Don’t Hide the Truth”

Complete Your Financial Plan with Estate Planning

Here at Mastry Law we’ve always referred to estate planning as the final piece of your financial planning puzzle.  If you are among those who haven’t put together a basic estate plan, you should make every effort to accomplish this in 2019. Your family and friends will thank you.

The Minneapolis Star-Tribune’s recent article, “No financial plan is complete without a basic estate plan” reports that, while Americans are living longer, it was emphasized in a session at the American Society on Aging’s 2019 conference in New Orleans that 56% of Americans don’t have a will.

Estate Planning is the final piece of your financial planning puzzle.

The basic list isn’t particularly daunting. Talk to an experienced estate planning lawyer to create a will to get your affairs in order.

You should also sign a health care directive and a durable power of attorney. It is also important to decide where you want to be buried or cremated.

You should discuss your late-life goals and desires with your family, relatives and close friends. This gives everyone a better idea about your values and thinking. An estate plan makes things much less stressful on your family.

Many people want to leave at least some money to their loved ones. However, instead of waiting for death to pass on assets, more people are now deciding to “give while living.”

For example, grandparents can help to fund their grandchildren’s education expenses. Nearly two-thirds of people 50 years and older are giving some financial support to family members, according to a survey by the financial services firm Merrill Lynch and demographic consulting firm Age Wave.

Since you are already thinking about your life while devising an estate plan, it is important to understand that far more valuable than your money and assets is your accumulated experience, knowledge and skills. You can tap into your experience later in life to help others succeed.  Your experience and judgment can help family members decide how to have both purpose and a paycheck.

Perhaps you can serve as a mentor for those in your community in areas where you have some expertise?

The desire to leave our families with a legacy is powerful. Don’t leave them without an estate plan.  Remember that giving of our experience can make a significant difference to the community around us.

Reference: Minneapolis Star-Tribune (May 4, 2019) “No financial plan is complete without a basic estate plan”

How Do I Create a Medical Power of Attorney?

A medical power of attorney is a legal document (also called a healthcare power of attorney or durable power of attorney for healthcare) that names an agent to make medical decisions on your behalf, explains Yahoo Finance’s recent article, “How to Set Up Medical Power of Attorney.” A medical power of attorney gives a family member or a trusted friend (a “healthcare agent”) the legal authority to make health decisions for you.

How do I create a medical power of attorney
The medical power of attorney is one of several documents that should be part of your estate plan.

This isn’t the same as a living will, which is a document that details what you’d like your healthcare team to do, if you become incapacitated. You may have a living will and a medical power of attorney. If decisions must be made about resuscitation and life support, recording those wishes in a living will, removes those difficult decisions from your agent.

When you’re thinking about a person to be your healthcare agent, find someone with whom you’re comfortable discussing health-related issues. Select a person you trust with your life and who will assume this responsibility if and when the time comes. Your agent must be your advocate, execute your wishes and make wise decisions, even when friends and family are telling them otherwise.

Here are some general guidelines for healthcare agents that you should avoid. Don’t choose:

  • Your healthcare provider or the person who owns a health or residential facility in which you’re residing;
  • A person whose job it is to medically evaluate you, such as a physician;
  • A person who works for a government agency that is financially responsible for your care unless she’s a blood relative;
  • The same person as your court-approved guardian or conservator; or
  • A person who’s already a healthcare agent for more than 10 other people.

It’s important to also name a backup agent, in the event that your primary healthcare agent can’t make decisions on your behalf.

The medical power of attorney is one of several documents that should be part of your estate plan. Meet with an estate planning attorney to make sure that you have the correctly prepared documents you need to protect yourself and your family.

Reference: Yahoo Finance (May 8, 2019) “How to Set Up Medical Power of Attorney”

Estate Planning Hacks Create More Problems

“My idea: put our accounts in my wife’s name and put the land in our children’s names. The way I figure it, when something happens to me, they won’t need to do any of that courtroom mumbo jumbo that costs a few thousand dollars.”

The estate planning attorney in this gentleman’s neighborhood isn’t worried about this man’s plan to avoid the “courtroom mumbo jumbo.” It’s not the first time someone thought they could make a short-cut work, and it won’t be the last. However, as described in the article “Estate planning workaround idea needs work” from My San Antonio, the problems this rancher will create for himself, his wife, and his children, will easily eclipse any savings in time or fees he thinks he may have avoided.

Estate Planning Hacks
Estate planning hacks, or “work-arounds” almost always end up costing the family more time and money in the end.

Let’s start with the idea of putting all the man’s assets in his wife’s name. For starters, that means she has complete control and access to all the accounts. Even if the accounts began as community property, once they are in her name only, she is the sole manager of these accounts.

If the husband dies first, she will not have to go into probate court. That is true. However, if she dies first, the husband will need to go to probate court to access and claim the accounts. If the marriage goes sour, it’s not likely that she’ll be in a big hurry to return access to everything.

Another solution: set the accounts up as joint accounts with right of survivorship. The bank would have to specify that when spouse dies, the other owns the accounts. However, that’s just one facet of this estate planning hack.

The next proposal is to put the land into the adult children’s names. Gifting the property to children has a number of irreversible consequences.

First, the children will all be co-owners. Each one of them will have full legal control. What if they don’t agree on something? How will they break an impasse? Will they own the property by majority rule? What if they don’t want to honor any of the parent’s requests?  In addition, if one of them dies, their spouse or their child will inherit their share. If they divorce, will their future ex-spouse retain ownership of their shares of the property?

Second, you can’t gift the property and still be an owner. The husband and wife will no longer own the property. If they don’t agree with the kid’s plans for the property, they can be evicted. After all, the parents gave them the entire property.

Third, the transfer to the children is a gift. There will be a federal gift tax return form to be filed. Depending on the value of the property, the parents may have to pay gift tax to the IRS.  Because the children have become owners of the property by virtue of a gift, they receive the tax-saving “free step-up in basis.” If they sell (and they have that right), they will get hit with capital gains taxes that will cost a lot more than the cost of an estate plan with an estate planning attorney and the “courtroom mumbo jumbo.”

Finally, the property is not the children’s homestead. If it has been gifted it to them, it’s not the parent’s homestead either. Therefore, they can expect an increase in the local property taxes. Those taxes will also be due every year for the rest of the parent’s life and again, will cost more over time than the cost of creating a proper estate plan. Since the property is not a homestead, it is subject to a creditor’s claim, if any of the new owners—those children —have a financial problem.

Estate plans exist to protect the current owners and their heirs. If the goal is to keep the property in the family and have the next generation take over, everyone concerned will be better served by sitting down with an estate planning attorney and discussing the many different ways to make this happen.

Reference: My San Antonio (April 29, 2019) “Estate planning workaround idea needs work”

Should I Use a DIY Will?

Sure, many of us would prefer to fill in the blanks on our computer at home, than have to talk to anyone about our questions. However, it’s better to get professional advice instead of using an online DIY will.

DIY Will
DIY estate planning packages often cause more trouble than they’re worth.

MarketWatch’s recent article, “Online wills may save you money, but they can lay these estate-planning traps,” says that if you prepare your taxes yourself and you make a mistake, you may need to meet with the IRS. However, you may never know the results of your work when it comes to a DIY will. Who will be the ones to find out if you made any mistakes, and need to pay the price? Your family.

You can find many DIY options for completing your own estate plan. With the ease and availability of these programs, along with lower prices, one would think more people would have an up-to-date estate plan. According to the AARP article, Haven’t Done a Will Yet?, only 4 in 10 American adults have a will or living trust.

The four basic estate planning documents are a will, a trust, power of attorney for financial matters and an advance health care directive. If you try to produce any or all of them through a DIY site, expect to be offered a fill-in-the-blank approach. However, each state has its own probate code and the program you use may have different names for the documents. They also may not address state-specific questions.

Some DIY sites have all these documents, but you must buy their higher-end packages to access them. Others offer what they call a “limited attorney consultation” in the form of a drop-down menu of questions with pre-written responses, not an actual conversation with an attorney.

The range of DIY services also has a range of prices. Some claim it’s $69 for just a will, and others charge hundreds of dollars for what may be described as a “complete plan.” Some sites have more information than others about their options, so you must dig through the website to be certain you’re getting a legally binding will or other estate planning document. It is important to read the fine print with care.

Most of these websites presume you already know what you want, but most people have no idea what they want or need. When you get into the complexities of family dynamics and trust language specific to your state and situation, these DIY estate planning packages can cause more challenges than working with a qualified estate planning attorney.

Remember: you don’t know what you don’t know. You may not know the case law and legislation that have evolved into your state’s probate code.

Play it safe and use an attorney who specializes in estate planning. Your family will be grateful that you did.

Reference: MarketWatch (May 3, 2019) “Online wills may save you money, but they can lay these estate-planning traps”

How are Financial Advisors Trying to Prevent Financial Exploitation?

The next time you see your financial adviser, you may be asked to provide a trusted point of contact, such as a relative or friend to call, if the adviser has a reasonable belief that you might be a victim of financial exploitation.

St. Petersburg Estate Planning
Financial advisors are working hard to prevent clients from falling prey to financial exploitation

Kiplinger’s recent article, “New Rules Battle Financial Scams, Elder Abuse” says that your adviser could place a temporary hold on a suspicious disbursement request from you, so your money is protected until the concern is investigated. Once money has left an account, it’s hard to get it back.

Changes include several new laws that protect seniors and their money. For older adults, financial exploitation is a growing problem. One in five older Americans are the victim of financial exploitation each year, resulting in the loss of $3 billion annually.

Mild cognitive impairment can result in older adults not seeing red flags for fraud, says Michael Pieciak, president of the North American Securities Administrators Association (NASAA), which represents state securities regulators. The ability to judge risk may be diminished. He noted that social isolation plays a part, with vulnerable seniors home during the day and apt to answer the phone when a fraudster calls.

Federal and state lawmakers, along with the financial services industry, have initiated new rules to help safeguard seniors and their assets. The idea is that financial institutions and professionals are on the front lines of spotting elder financial abuse. The changes are designed to protect seniors and to shield financial professionals from liability for reporting possible exploitation.

Congress passed the Senior Safe Act in 2018. This law protects financial services professionals from being sued over privacy and other violations for reporting suspected elder financial abuse to law enforcement, provided they’ve been trained. If a bank teller notices that a senior seems confused about withdrawing money or making puzzling transactions, the teller could tell a superior, who could contact authorities, if necessary.

Nineteen states have enacted some version of a NASAA model act that provides registered investment advisers and broker-dealers with guidance on telling a trusted point of contact and putting a temporary hold on a client’s account to investigate financial fraud.

Reference: Kiplinger (April 3, 2019) “New Rules Battle Financial Scams, Elder Abuse”

When Should I Review My Estate Plan?

As life changes, you need to periodically review your estate-planning documents and discuss your situation with your estate planning attorney.

WMUR’s recent article, “Money Matters: Reviewing your estate plan,” says a common question is “When should I review my documents?”

Estate Plan Review
You should review your estate plan each time a major life event occurs or every 5 years, whichever comes first.

Every few years is the quick answer, but a change in your life may also necessitate a review. Major life events can be related to a marriage, divorce, or death in the family; a substantial change in estate size; a move to another state and/or acquisition of property in another state; the death of an executor, trustee or guardian; the birth or adoption of children or grandchildren; retirement; and a significant change in health, to name just a handful.

When you conduct your review, consider these questions:

  • Does anyone in your family have special needs?
  • Do you have any children from a previous marriage?
  • Is your choice of executor, guardian, or trustee still okay?
  • Do you have a valid living will, durable power of attorney for health care, or a do-not-resuscitate to manage your health care, if you’re not able to do so?
  • Do you need to plan for Medicaid?
  • Are your beneficiary designations up to date on your retirement plans, annuities, payable-on-death bank accounts and life insurance?
  • Do you have charitable intentions and if so, are they mentioned in your documents?
  • Do you own sufficient life insurance?

In addition, review your digital presence and take the necessary efforts to protect your online information, after your death or if you’re no longer able to act.

It may take a little time, effort, and money to review your documents, but doing so helps ensure your intentions are properly executed. Your planning will help to protect your family during a difficult time.

Reference: WMUR (January 24, 2019) “Money Matters: Reviewing your estate plan”

Federal Estate Taxes of Little Worry for Most

If you are worried about the federal estate tax (more commonly referred to as the “death tax”), it is a good problem to have. It means that your asset level is above the limits brought about by the new tax laws. That wasn’t the way things were 10 or 20 years ago, when federal estate tax limits were much lower. As a result, many middle-class families found themselves with big estate tax issues, when estates were settled. A recent article in the Rome Sentinel addresses the estate tax from an historical perspective and what you need to know about it today. The article is titled “2019 update: Should you be concerned about the estate tax?”

For starters, there are many loopholes and nuances in the tax laws. Therefore, every situation is different. Your estate planning attorney will be able to review your individual situation and work with the laws of your state to make sure that your estate plan works for your family and minimizes your estate tax liability.

Estate Tax
Most of us will never have to worry about paying estate taxes.

The estate tax concept is based on laws from past centuries, when the goal was to limit the amount of property that individuals could pass from one generation to the next. The death tax is now government’s way of saying you had too many assets, or assets that could not be fully valued or taxed, except upon your death. After death, the net worth of your estate is calculated by valuing your assets minus any liabilities.

Assets are counted as anything of value. However, they include: cash, insurance policies, stocks, bonds, real estate, annuities, brokerage accounts, business interests and today, digital assets. They are brought to present market value to create the “gross estate.” Liabilities are counted as debts, mortgages, assets, funeral and estate expenses, and any assets lawfully passing to a surviving spouse. The liabilities are deducted from the assets to get to the “net estate” value.

Federal limits to the estate tax deduction were doubled, and today very few estates in the US are subject to the federal estate tax. Here’s a comparison: in 2000, the federal estate tax exemption was $675,00 and an estimated 52,000 estates had to pay taxes. The top 10% of income earners paid almost 90% of the tax, with more than a quarter of that paid by the wealthiest 0.1%. Even those percentages have decreased since 2017.

When the new Tax Cut and Jobs Act became effective, the exclusion for federal estate tax increased from $5.49 million per person to $11.18 million per person. In 2019, there has been a further increase, to $11.4 million per person. That remains in effect until 2025.

Many states impose their own estate taxes. In New York State, the Basic Exclusion Amount for New York State Tax for estates for people who died on or after Jan. 1, 2019, and before Jan. 1, 2020, has increased from $5.49 million per person to $5.74 million per person. These amounts will increase in 2020 and will be adjusted for inflation in the future.  Florida imposes no estate tax.

However, even without the federal death tax, people still need estate plans to protect themselves and their families. A will ensures that your assets are distributed to the people you want to receive your assets. An estate plan includes Power of Attorney, to name the person you want to make financial decisions in the event you are incapacitated. You also want to have a Health Care Power of Attorney, so someone can make decisions about your health care, if you cannot speak on your own behalf. Talk with an estate planning attorney to make sure that your plan will work as intended to protect you and your family.

Reference: Rome Sentinel (Jan. 22, 2019) “2019 update: Should you be concerned about the estate tax?”

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