Planning for the Unexpected

A hospital visit can make you realize you need to do some planning for the unexpected.
A hospital visit can make you realize you need to do some planning for the unexpected.

Sadly, this is not an unusual situation. The daughter spoke with her mother once or twice a week, and the fall happened just after their last conversation. She dropped what she was doing and drove to the hospital, according to the article “Parents” in BusinessWest.com. At the hospital, she was worried that her mother was suffering from more than fractures, as her mother was disoriented because of the pain medications.

The conversation with her brother and mother about why she wasn’t notified immediately was frustrating. They “didn’t want to worry her.” She was worried, and not just about her mother’s well-being, but about her mother’s finances, and whether any plans were in place for this situation.

Her brother was a retired comptroller, and she thought that as a former financial professional, he would have taken care of everything. That was not the case.

Despite his professional career, the brother had never had “the talk” with his mother about money. No one knew if she had an estate plan, and if she did, where the documents were located.

All too often, families discover that no planning has taken place during an emergency.

The conversation took place in the hospital, when the siblings learned that documents had never been updated after their father had passed—more than 20 years earlier! The attorney who prepared the documents had retired long ago. The originals? Mom had no idea. The names of her banks and financial institutions had changed so many times over the years that she wasn’t even sure where her money was.

For this family, the story had a happy ending. Once the mother got out of the hospital, the family made an appointment to meet with an estate planning attorney to get all of her estate planning and elder law planning completed. In addition, the family updated beneficiaries on life insurance and retirement accounts, which are now set to avoid probate.

Both siblings have a list of their mother’s assets, account numbers, credit card information and what’s more, they are tracking the accounts to ensure that any sort of questionable transactions are reviewed quickly. They finally have a clear picture of their mother’s expenses, assets and income.

If your family’s situation is closer to the start of the story than the end, it’s time to contact a qualified estate planning attorney who is licensed to practice in your state and have all the necessary preparation done. Don’t wait until you’re uncovering family mysteries in the hospital.

Reference: BusinessWest.com (Aug. 1, 2019) “Parents”

Other articles you may find interesting:

Having the “Someday” Talk with Parents

Using a Trust for Your Children’s Inheritance Plan

Expressing Your End-of-Life Wishes

End-of-life wishes are needed.
Document your end-of-life wishes now to make things easier for your loved ones later.

Discussing end-of-life wishes is something most people still avoid as a difficult topic. It’s true: for many people this topic is just too sad and scary to talk about, says Flagstaff Business News in the article “Easing the End-of-Life Transition with Advance Care Planning.”

However, planning for your death is a kindness to your loved ones, family members, friends or even neighbors who are left to make decisions about your medical care when you can’t do it yourself.

In the estate planning field, this is called advance care planning. It involves learning about the decisions that often need to be made, considering the options and decisions ahead of time, and memorializing those decisions with the correct and enforceable legal documents. This gives a person the ability to think about what they want in the way of treatment or care, and what they don’t want.

Documenting your end-of-life wishes makes things much easier for the survivors who otherwise would have to guess what was on their loved one’s mind or what they would have wanted.

Here are the medical decisions that most frequently need to be made:

CPR, or Cardiopulmonary Resuscitation. This is to get the heart to start beating again, when it has stopped and can range from the use of hands, a defibrillator or chemical means.

Ventilator or Assisted Breathing. This is the use of a machine, connected to a breathing tube that is inserted through the mouth or lungs and down the throat. It is not comfortable, and the patient cannot speak with the tube in their throat.

Artificial Nutrition. This is the delivery of nutrition through an IV (intravenous) or a feeding tube.

Comfort Care. Doing anything to make an individual comfortable at the end of their life. It can include everything from medication to emotional and spiritual counseling. The goal is to provide a person with a dignified end of life, while relieving as much suffering as possible.

Once decisions have been made about these end-of-life medical treatments, it’s time to get them down on paper.

You’ll need a Living Will. This is a written document expressing your wishes for end-of-life care. If you cannot speak on your own behalf, this is the document doctors will use to guide your care.

Durable Power of Attorney. This is a legal document used to name another person to make health care decisions on your behalf.

In addition, you should have your estate planning attorney prepare a Last Will and Testament or a Revocable Living Trust, so your property is distributed according to your wishes. An estate planning attorney can help make sure all the details are addressed.

These are not fun topics but thinking about what you would like to have occur and documenting your end-of-life wishes provides direction for your loved ones, who would otherwise be guessing at what you would have wanted.

Reference: Flagstaff Business News (Aug. 2, 2019) “Easing the End-of-Life Transition with Advance Care Planning”

Other articles you may find interesting:

A Health Care Surrogate’s Powers

Who Should Be the Agent of My Power of Attorney?

New Income Tax Form Designed for Seniors

IRS Form 1040
The IRS has created a new Form 1040 for seniors.

There’s a new tax form designed with seniors in mind. The IRS released a draft form of the 1040-SR, “U.S. Tax Return for Seniors,” says Kiplinger in its article, “IRS Releases Draft Form of New 1040 Tailored for Seniors.”

This form was created by the 2018 Bipartisan Budget Act. One of its provisions required the development of a tax return that would be easy for seniors to use. The form will highlight retirement income streams and other tax benefits for seniors. Taxpayers age 65 and older can use this form to file their 2019 tax returns.

It’s designed off the regular 1040, and the IRS says it uses all the same schedules, instructions, and attachments. Taxpayers who use tax software to file may not even notice the difference.

However, for taxpayers who still complete paper tax forms, the new form will be friendlier to aging eyes. The font is bigger, and the shading on the regular 1040 has been removed to improve the contrast and increase legibility.

One important feature of the new tax form is the addition of a standard deduction chart. The form lists the standard deduction amounts, including the extra standard deduction amount for which taxpayers age 65 and older qualify. This way, seniors don’t have to search around for the information. The chart also makes it simpler for seniors to take advantage of the full standard deduction for which they’re eligible, especially for those who may not even be aware of the extra amount for which they qualify.

The tax form has lines for specific retirement income streams, like Social Security benefits, IRA distributions, and pensions, as well as earned income from work.

The draft form will be finalized later this year.

Reference: Kiplinger (July 12, 2019) “IRS Releases Draft Form of New 1040 Tailored for Seniors”

Other articles you may find interesting:

Filing Estate Taxes for a Deceased Family Member

Who Should Be the Agent of My Power of Attorney?

Becoming Your Aging Loved One’s Money Manager

money managers help others with their finances
Before a loved one is showing the beginning symptoms of cognitive decline, make sure the necessary legal documents are in place so you can easily step in as his money manager.

Sometimes a loved one starts having trouble managing her money because of confusion, cognitive decline, Alzheimer’s disease, or some other form of dementia. When that happens, you might find yourself having to serve as her money manager. Here are some things you need to know about handling your aging loved one’s finances.

Changes to Make Now

Your loved one must be legally competent to take certain steps, such as adding a trusted friend or relative to a bank account or creating a power of attorney so her chosen money manager can  handle her financial matters. Once your aging loved one becomes incapacitated, she will not be able to hand the reins over to someone else. So plan ahead, before the confusion or dementia really sets in.

At that point, the only option is to go to court and obtain a guardianship or conservatorship. This legal process can take weeks, months, or even longer, and they often cost your aging loved one thousands of dollars in legal fees. Not only does she have to pay for the lawyer who files and handles the guardianship for you, she also has to foot the bill for court costs and payment to the person the court appoints to represent her.

People often challenge changes to legal documents that a person makes after a certain age, or while in the early stages of Alzheimer’s. The best way to counter this situation is to get a letter from your loved one’s doctor at the same time she decides to execute a power of attorney or add you to her bank account. The doctor’s letter should say your relative was of sound mind at that time.

How to Avoid Elder Financial Abuse

Sadly, the vast majority of people who steal from older adults are the people they trust the most. Family members, friends, clergy and financial professionals commit the lion’s share of elder financial abuse. To prevent this outcome for your loved one, you have two options:

  • Have two people in charge of your loved one’s finances instead of only one. The two people can alternate the responsibility monthly or quarterly. This arrangement provides automatic oversight of each person’s actions. You could, for example, have a close relative and a dear friend serve as the two money managers.
  • Use a money management service. These companies can take care of things like paying the bills and balancing the checkbook for your aging relative. You should have a relative or friend go over the reports from the company every month to check for fraud on the part of the company. Your local National Association of Area Agencies on Aging can provide names of money management programs in your area.

When a money manager starts handling your loved one’s finances, she should prevent identity theft and fraud by canceling and shredding your relative’s debit cards and credit cards. She should also close the accounts at PayPal and other online shopping services.

Keep All Transactions Above Suspicion

Because incapacitated people are so vulnerable to theft and fraud, the people who manage your loved one’s money and other assets should take precautionary measures to make it clear they are acting in your relative’s best interests. Always write the reason for the payment on the memo line of the check. And never co-mingle funds.

Do not borrow from the account. Do not use your loved one’s assets for purchases that benefit anyone other than your relative. Do not use her assets for your own benefit, like driving her car to work.

Every state has different regulations, so talk with an estate planning or elder law attorney near you.

References:

AARP. “Managing a Loved One’s Money.” (accessed July 11, 2019) https://www.aarp.org/caregiving/financial-legal/info-2017/managing-someone-elses-money.html?intcmp=AE-CAR-LEG-EOA1

Other articles you may find interesting:

Why is an Advance Directive so Important with Dementia?

Are Your Estate Planning Documents Age-Appropriate? (Part 1)

How Much Money Should I Provide My Child with Special Needs?

A child with special needs
It can be hard to determine how much money you should leave for the care of your child with special needs, but the first step is to create some sort of a plan.

One of the toughest things about planning for a child with special needs is trying to calculate the amount of money it’s going to take to provide while the parents are alive and after the parents pass away.

Kiplinger’s recent article asks “How Much Should Go into Your Special Needs Trust?” The article explains that it’s not uncommon for parents to have done some estate planning, but not necessarily special needs estate planning. They haven’t thought about how much money they should earmark to fund their child’s trust or which assets would be the best to use.

Special needs estate planning often involves creating a type of trust which will allow a person with a disability to continue to receive certain public benefits while avoiding complete impoverishment. Typically, ownership of assets more than $2,000 would make the individual ineligible for certain public benefits. But assets held in a special needs trust (SNT) don’t count toward this amount.

A child with special needs can generate a lot of expenses over his or her lifetime. The precise amount will be based on the needs and lifestyle of your family, as well as your child’s capabilities. When you die, this budget must be increased because the things you did for free must now be paid for.

An SNT often isn’t funded until the parents’ death. At that point, the trust would file a tax return each year and pay taxes at the higher trust tax rates. There are also legal and trust administration expenses to think about. But the public program benefits your child receives can, in many cases, offset many of the above-mentioned costs.

It’s vital to conduct a complete analysis of the future costs of providing for your child with special needs so you can start saving and making adjustments in your financial and estate planning. The Kiplinger article provides some great information about how to start thinking about the realities of your child’s future needs.

Speak with an elder law or estate planning attorney about the different types of special needs trusts.

Reference: Kiplinger (June 10, 2019) “How Much Should Go into Your Special Needs Trust?”

Other articles you may find interesting:

ABLE Accounts: No More Medicaid Recovery

Special Needs, Special Trusts: SNT FAQs

Why is an Advance Directive so Important with Dementia?

An advance directive is so important when dementia sets in.
Advance directives are so important when dementia sets in.

The Roanoke Times advises in the recent article “What to do in absence of advance directive” to talk to an experienced elder care attorney when dementia may be an issue with a parent or other loved one. Then ask your physician for a geriatric evaluation consultation for your loved one with a board-certified geriatrician and for a referral to a social worker to assist in navigating the medical system.

Everyone older than 55 should have advance directives in place. That way, if they become incapacitated, a trusted agent can fulfill their wishes in a dignified manner. Think ahead and plan ahead.

As a family’s planning starts, the issue of competence or mental capacity must be defined. A mere diagnosis of Alzheimer’s disease doesn’t necessarily indicate current incompetence or a lack of capacity. At this point, a person still has the right to make a decision—despite family members disagreeing with it. Competency should be re-evaluated after a number of “poor” choices or an especially serious choice that puts the person or others at risk.

A geriatric evaluation consultation will test your loved one’s factual understanding of concepts, decision-making and cogent expression of choices, the possible consequences of their choices, and reasoning of the decision’s pros and cons. If she passes the evaluation, she’s deemed to have the mental capacity to make choices on her own. If she cannot demonstrate competency, an attorney can petition the court for a competency hearing, after which a guardian may be appointed to oversee her affairs.

The time to address these types of issues is before the patient becomes incapacitated. The family should discuss living wills, health care proxies, powers of attorney, and estate planning now with an experienced elder law or estate planning attorney.

Taking these proactive steps can be one of the greatest gifts a person can bestow upon herself and her loved ones – peace of mind. If you put an advance directive in place, it can provide that gift when it’s needed the most.

Reference: Roanoke Times (June 17, 2019) “What to do in absence of advance directive”

Other articles you may find interesting:

Having the “Someday” Talk with Parents

Cognitive Decline Doesn’t Have to Happen

Are Your Estate Planning Documents Age-Appropriate (Part 2)

Estate planning documents must be appropriate for your age and situation.
Planning ahead may help to protect your home and other assets should one or both of you need care in the future.

In Part 1, we met Joe and Claire, now age 65, and reviewed their need for age-appropriate health care and decision-making documents. We left off with the question, “What planning can Joe and Claire do now to prevent losing everything in the event their health fails?”

The costs of long-term care can be staggering. According to the Genworth 2018 Cost of Care Survey, Florida home health aides can cost, on average, $46,904 per year, based on care provided 44 hours per week and a median hourly rate of $20.50. Nursing home care in Florida, on average, is nearly double that – $97,820 per year for a semi-private room.

What are Joe and Claire’s chances of needing long-term care? According to the Department of Health and Human Services, someone turning 65 today has a 70% chance of needing some type of long-term care services in their remaining years. This means Joe and Claire should be considering how they will pay for that care in the event one or both of them are part of that 70%.

Joe and Claire’s choices include: 1) paying out of their own pocket for care, 2) purchasing long-term care insurance, 3) qualifying for government assistance programs, or 4) any combination of these choices.

By planning early – before there’s a health care crisis – Joe and Claire can take advantage of all three options, yet protect their home and any other cash or assets they wish. This type of asset protection is done using a specially designed irrevocable trust. Only a portion of Joe and Claire’s assets would be transferred to the irrevocable trust, with the remainder either remaining in Joe and Claire’s name, or held in a revocable trust with special provisions for the surviving spouse.

By transferring assets to an irrevocable trust, those assets would not be counted in the future (in most cases, after 5 years) if Joe or Claire needed to qualify for government assistance to help pay for their long-term care. If Joe or Claire is a wartime Veteran, there are additional cash assistance programs available through the Veterans Administration that should be explored as another means to help pay for their care.

To round out the asset protection package, Joe and Claire would also complete their other estate planning documents, such as financial Powers of Attorney, Health Care Advance Directives, and Living Wills. They would also explore purchasing an appropriate long-term care insurance policy in the event one of them needed care sooner than expected.

By planning early, Joe and Claire have the documents and tools in place to protect their home and other assets should one or both of them need care in the future – and there is a 70% chance they will. Joe and Claire have also lessened the emotional and financial stress placed on a family when a health care crisis does happen. They’ve taken care of the heavy lifting with regard to their assets, so their family can just focus on what really matters – making sure they have the best care possible.

Other articles you may find interesting:

Time to Take Over A Parent’s Finances?

Not Your Grandfather’s Senior Community

 

 

Are Your Estate Planning Documents Age-Appropriate? (Part 1)

Estate planning documents must be appropriate for your age and situation.
Estate planning documents must be appropriate for your age and situation.

Twenty years ago, Joe and Claire, age 45 at the time, went on their first vacation without their kids since they were married. They had no estate planning documents in place, and had to scramble quickly to get a simple Will and Power of Attorney to make sure their kids would be taken care of should something happen to them. They owned a home with a mortgage, and had very little in savings.

The Will named a guardian for their minor children, and named a trustee to hold their children’s money in trust until they reached age 21. The Durable Power of Attorney only addressed basic financial issues, naming an agent to act in their place (paying bills, writing checks for the kids’ various activities) in the event they were unable to.

Joe and Claire did not prepare a Living Will, or any type of estate planning document that named another person to make healthcare decisions for them if needed. Their main focus was their children, and making sure the mortgage and other bills were paid if something happened to them while they were away.

Joe and Claire arrived home from their trip perfectly healthy, and the documents they signed sat in a safe deposit box for the next 20 years. Now age 65, Joe and Claire are nearing retirement and have accumulated a nice “nest egg” and just paid off their home.

However, they recently had a friend suffer a near-fatal heart attack and it was a sharp reminder to them of how precious life is. The topic of their Will from 20 years ago came up, and they both agreed it was time for an update.

Joe and Claire now need estate planning documents that address their current age and status – near retirement with substantial savings. The Durable Power of Attorney that worked for their purposes 20 years ago needs a major makeover. Joe and Claire need to consider who will step in and make financials decisions on all of their matters if they are unable to act due to incapacity.

Incapacity can be the result of a disease, like Alzheimer’s, or it could come from a more sudden health event, like a heart attack or stroke. As Joe and Claire grow older, the possibility of a debilitating health event increases. They have more assets than they did 20 years ago, including a number of online accounts that would need to be managed. A generic form is usually not enough to cover the complex issues that arise as we get older, and as we acquire more possessions.

This increasing possibility of a health crisis also sheds light on the need to have their medical wishes properly documented through a health care directive. What type of life-sustaining measures should be undertaken for them? Who will make health care decisions if they are unable to? The natural choice is to choose the other spouse as agent, but what if the other spouse is unable or unwilling to act?

If Joe and Claire haven’t designated their agent through proper legal estate planning documents, then a court may be left to decide for them – an expensive and sometimes lengthy process that can be very stressful on the family.

Another issue that is important to discuss is what type of care should be provided if Joe or Claire need it? Does Joe wish to stay home and receive care there? If so, who should provide that care? Do both of them want to transition to independent living at some point when keeping up a home and yard becomes too much? If the conversation isn’t held while Joe and Claire are healthy, then other family members and friends are left to guess what they would have wanted.

As shown above, age-appropriate estate planning documents that address health care and financial decision-making are critical. The other critical planning concern is what will happen to all of Joe and Claire’s possessions if one or both of them get sick and need substantial care on a long-term basis?

In our next article: What steps can Joe and Claire take to prevent losing everything in the event their health fails?

Other articles you may find interesting:

Are No-Contest Clauses Valid In Florida?

Do I Need to Update My Estate Plan if I Relocate?

Having the “Someday” Talk with Parents

Daughter talking with her parent
Don’t wait too long to have these important conversations with your parents.

The cause of sleepless nights for many baby boomers now comes from worrying about their aging parents instead of their young children. As parents age, it becomes more important to talk with them about a number of “someday” issues, advises Kanawha Metro in the article “Preparing for someday.” As their lives move into the elder years, your discussions will need to address housing, finances, and end-of-life wishes.

Where do your parents want to spend their later years? It may be that they want to move to an active retirement community not far from where they live now, or they may want a complete change of scenery, perhaps in a warmer climate.

One family made arrangements for their mother to take a tour of a nearby senior-living community after their father passed. By showing their mother the senior-living community, they made an unknown, slightly intimidating thing into a familiar and attractive possibility. Because she saw the facility with no pressure, just a tour and lunch, she knew what kind of options it presented. The building was clean and pretty, and the staff was friendly. Therefore, it was a positive experience. She was able to picture herself living there.

Money becomes an issue as parents age. If the person who always handled the family finances passes away, often the surviving spouse is left trying to figure out what has been done for the last five decades. A professional can help, especially if they have had a long-standing relationship.

However, when illness or an injury takes the surviving spouse out of the picture, even for a little while, things can get out of control fast. It only takes a few weeks of not being able to write checks or manage finances to demonstrate the wisdom of having children or a trusted person named with a power of attorney to be able to pay bills and manage the household.

As parents age and their health becomes fragile, they need help with doctor appointments. Having a child or trusted adult go with them to speak up on their behalf, or to explain any confusing matters, is very important.

Having an estate plan in place is another part of the business of aging that needs to be accomplished. It may be helpful to go with your parents to meet with an estate planning attorney to create documents that include a Last Will and Testament, Durable Power of Attorney and advanced health care directive. Without these documents, executing their estate or helping them if they become incapacitated will be more complex, and more costly.

Eliminate a scavenger hunt by making sure that at least two siblings know where the originals of these documents are.

One of the more difficult conversations has to do with end-of-life and funeral arrangements. Where do your parents want to be buried, or do they want to be cremated? What should be done with their remains? What do they want done with their personal belongings? Are there certain items that they want to be given to certain members of the family, or other people they care for?

Finally, who do they want to care for their pets? If there is a family member who says they will take their parent’s pet, can that person be trusted to follow through? There needs to be a Plan A, Plan B, and Plan C so that the beloved pet can be assured a long and comfortable life after their owner has passed.

Yes, these are difficult conversations. However, not having them can lead to far more difficult issues. Knowing what your loved ones wish to happen, and making it enforceable with an estate plan, provides everyone in the family with peace of mind.

Reference: Kanawha Metro (May 29, 2019) “Preparing for someday”

Other articles you may find interesting:

Widowed? What Happens Next?

Pet Trust FAQs: For the Love of Fluffy

Cognitive Decline Doesn’t Have to Happen

Cognitive decline isn't a mandatory part of getting older.
Cognitive decline isn’t a mandatory part of getting older. In many cases, it can be avoided.

For many decades, people assumed cognitive decline was inevitable with advanced age. Medical experts said people stopped making new brain cells as adults, so when we lose cells through injury or deterioration, there are no “spare parts” to replace them. As a result, it seemed logical that cognitive impairment was only a matter of time.

The nagging doubt about this theory was the fact we all know people who remain mentally sharp well into their nineties and even past the age of 100. As it turns out, you were not the only one who might have wondered about the accuracy of the long-held assumption of inevitable age-related cognitive decline. A recent study reveals we can grow new brain cells well past retirement age.

Columbia University and the New York State Psychiatric Institute worked together on a study designed to explore this issue. They performed autopsies soon after death on the brains of 28 people ranging in age from 14 to 79. The subjects had all been healthy prior to sudden death. None of them had cognitive decline during their lives.

The researchers examined the hippocampus area of the brain. The hippocampus processes learning and memory and grows new brain cells to replace those we lose through daily attrition. In particular, the scientists looked at the neurons (nerve cells) and blood vessels within the hippocampus.

Although the brains of the older subjects in the study did not form as many new blood cells and their new neurons might not have been able to make as many connections as the brains of the younger subjects, the study revealed a startling fact. The brains of healthy older people continue making new brain cells, just as well as the brains of younger healthy people.

There was no difference in the volume of new brain cells between the younger and older brains. Since the hippocampus does not stop making new brain cells as long as you stay healthy, the researchers concluded many seniors do not suffer cognitive or emotional decline, despite the common assumption to the contrary.

Take-Aways from the Study Findings

Seniors do not get the respect they deserve in American society. One excuse people get for being dismissive of their elders, is the widely held belief that old people become mentally feeble. This research challenges this idea and shows that healthy older people can be just as sharp as people in their youth.

The common belief about seniors having cognitive decline can be a self-fulfilling prophecy. If a person believes cognitive decline is an automatic part of aging, the person might not try to prevent this result. We all know people who suddenly start to act older after they hit a milestone birthday, as if living up to their expectations for a person of that age.

Now that we know there is no such thing as automatic cognitive decline because of age, we can do something about it. You can stay sharp as long as you stay healthy. Keep learning and reading. Study a foreign language. Learn to play a musical instrument. Do word puzzles. Stay socially active and involved in your community. Take a walk every day to get regular physical exercise. Eat nutritious food.

And above all, avoid things that damage brain cells, particularly the hippocampus. Misusing drugs, even prescription ones, drinking too much alcohol and smoking can all damage the hippocampus and cause cognitive decline. If the hippocampus isn’t healthy, you won’t be able to continue making new brain cells as you age.

References:

AARP. “Older Adult Brains Can Grow Thousands of New Cells.” (accessed May 30, 2019) https://www.aarp.org/health/conditions-treatments/info-2018/older-brains-grow-new-cells.html

Other articles that may interest you:

The Importance of Funding Your Trust

A Solo 401(k) Works for Self-Employed