Emergency Notification System via Cell Phone

In light of recent events, we thought it would be a great time to remind local residents of a very useful Emergency Notification System available to area residents through their cell phones.  Please note that this notification system only works within  Bastrop, Blanco, Burnet, Caldwell, Fayette, Hays, Lee, Llano, Travis, and Williamson Counties.

Since an increasing number of area residents rely exclusively on their cellular telephones as their primary telephone, CAPCOG (Capital Area Council of Governments) has added the ability to notify you on your cell phone if there is an emergency near your home, business, or other location.

You may now link your cellular telephone number to one or more locations within the 10-county CAPCOG region listed above, including your home, business, and the homes of relatives.  If a participating local government activates the system for an area containing one or more of the locations registered to a specific cellular phone number, then the system will attempt to send the emergency message to that cellular telephone.

The registration process only takes a few minutes and could potentially make a big difference to someone's well being during an emergency situation.  Please pass along this helpful tip to your family members, friends, and neighbors!

To register for this service, click here.
If you have previously registered and want to make changes, click here.

Legal Issues for Family Caregivers

There are two phases of legal planning for a caregiver:  How to protect the independence, assets, and family of the person needing care in the good days and during the time of needing help due to mental or physical incapacity.   The best planning provides maximum personal independence, protection of assets, and protection of other family members. The following are some legal techniques that can help accomplish planning goals.

Phase One:  The Good Days (or mostly good days).  This phase assumes that the person creating a plan is competent.  This means they are mentally and physically able to contract.

         •  Sign a Financial Power of Attorney.  This gives the person listed the right to do modest financial business on behalf of the person who signs the documents.

         •  Sign a Health Power of Attorney and Living Will.  This document provides for the person who can make health decisions with the treating health professionals, and also allows for an election of the type of care to be provided when death is near. 

         •  Sign a Last Will and Testament.  This document will indicate who is in charge of the finances after death and who is to receive the decedent’s property.

         •  If a caregiver spouse or the person being cared for is a Veteran, contact the Veteran’s administration or an attorney accredited with the Veteran’s Administration to see what benefits are available to help pay for caregivers.

         If one of the planning goals includes protecting assets for the person being cared for, as well as their spouse or family, there are more complex legal plans that can help.

                  •  Have the individual requiring care sign a revocable trust, providing for others to manage finances and make health decisions.  This trust also covers who is to receive that individual’s assets when they die.

                  •  For a married person, often the healthy, caregiver spouse, can sign a Last Will and Testament, that provides if the healthy spouse dies first, the deceased spouse’s share of the family assets will be set aside for the benefit of the ill spouse, in a manner that continues to provide support but will not interfere with the ability to receive government benefits.

                 •  Single and married people can protect substantial assets if they have the ability to pay their expenses for at least five years. 

Phase Two:  The Bad Days – Incompetency.  At this time the individual being cared for lacks the mental or physical capacity to contract and, therefore, cannot sign legal documents.

         •  It may be possible for the incompetent person’s agents on the financial power of attorney, the health power of attorney, and the Trustee of a revocable trust to work with those documents without the need for a court order.

         •  If there is no financial power of attorney and no health power of attorney, it may be necessary to file papers in the local Court to ask that someone be appointed as Conservator and Guardian for the incapacitated person in order to give someone the legal right to make financial and health decisions for the vulnerable person.  The Conservator makes financial decisions, and the Guardian makes the health and housing decisions.  Many times the Conservator and the Guardian are the same person.  It is necessary to use an attorney to help with this process.

         •  The caregiver needs to consider how to pay for the care required.

Effect of Presidential Budget on Estate Planning

Nothing about the law is ever entirely static. Obviously legal rules and principles change over time. However, some practice areas are far more stable than others. For example, the general process to recover for personal injuries in a car accident is roughly the same now as in the past. At the other end of the spectrum, certain estate planning processes can change virtually every year. This is because much of this type of planning is centered on tax savings. In this way, it mirrors applicable tax rules, and any change in these rules requires changes in estate planning details.

Possible Changes
For example, consider the estate planning changes that may need to be made if the latest presidential budget proposals are enacted.  Advisor One recently shared information on those possible alterations. The President's proposed 2013 budget includes some so-called "tax loophole" closings which may alter what planners do for future clients. For one thing, "grantor annuity trusts" (GRATs) would be curtailed under the latest proposals. GRATs are often helpful in eliminating the gift tax costs of transferring assets to others. This works by creating a trust that is funded with an asset that will appreciate in value. The grantor retains the right to the annuity interest for a set number of years with the remaining assets being transferred to beneficiaries as long as the grantor is still alive. As it now stands grantors can set up GRATs while collecting interest for as little as two years. However, the latest proposals would add risk into the mix by having a minimum of a ten year term with maximum life expectancy of annuitant plus ten years.

In addition, dynasty trusts may be affected by the President's proposed budget. The story explains how these trusts are often used to transfer assets throughout generations without gift or estate tax penalties. However, the latest proposals would cap those benefits at 90 years, potentially limiting the value of the trust.
It is important to note that these possible changes are not guaranteed. As with so many of these issues in recent years, everything ultimately depends on how the executive and legislative branches are able to hammer out any sort of compromise. At this point it is mostly a guessing game as to what will or will not make it into law.

Of course there is little that the individual community members can do to influence these decisions.  At the very least it is important to be aware of potential changes and work with an estate planning attorney to understand what decisions are smart now in anticipation of possible changes in the future.

Not All Funeral Homes Are Created Equal

You thought you had taken care of everything. Your family would not be troubled with a cremation decision at the time of your death.  After all, you completely paid for and signed a pre-need cremation contract with a reputable funeral home.

Think again.  Local funeral homes often add a post-death extra requirement.  Spouses won't have a problem, but if another family member is trying to set up the paid-for cremation at the time of death, many funeral homes insist that a multi-page Authorization for Cremation be signed.  The Authorization has the signer indemnify, defend, and hold harmless the funeral home and crematory (paying their legal fees) if they are caught up in a lawsuit over the disposition.

Sometimes the next of kin does not approve of cremation, which may be why you signed the contract beforehand.  What happens in the case where some kin won't sign the Authorization for Cremation?  One funeral establishment said a single relative's signing won't work if others object and suggested that the matter go to court.  Who is going to pay for that?  Also, some kin cannot be located.  One decedent's body had to remain chilled for 13 days while five adult children, who lived all across the country, were located and persuaded to sign.  Another family was pressured into securing notarized signatures from two elderly siblings who are afflicted with Parkinson's and Alzheimer's.  These elderly siblings were forced to go out in a snowstorm to sign.  Why aren't your wishes simply being honored? You paid the funeral home and signed a contract with explicit details regarding your wishes.

What does the law say?  Everyone agrees that your agent, under a power of attorney, does not control your remains since a power of attorney expires upon death.  An Executor under your Will does not control your remains. They only control your estate property.  Who controls your remains?  There is a form in a Texas statute which allows an Appointment of Agent to Control Disposition of Remains.  Of course this agent also assumes financial responsibility for the handling, to the extent it is not already paid for, in addition to other duties.

This same Texas law also provides that neither permission of next of kin nor an agent under the Appointment of Agent form is needed if you have already provided written directions for the disposition.  This includes cremation in a will, a prepaid funeral contract, or a written instrument signed and acknowledged by you.  In 2005, the Texas Attorney General wrote that a funeral establishment need not obtain "a cremation authorization form" signed by an "authorizing agent" when a purchaser of a prepaid funeral contract has previously specified disposition of the purchaser's remains by cremation ..." The decedent had already "authorized."

Question settled?  No. The 2009 Texas Legislature was persuaded to add a new section stating that the cremation authorization form is not required if (1) the decedent left proper written cremation directions and (2) the authorizing agent refuses to sign the form.  An attorney for a local funeral home interprets this to mean that there has to be both a prepaid cremation plan and a cremation authorization form signed by kin or an agent after death. The words arguably do not say this, but the attorney claims that almost all crematories require the forms.  Oddly enough, the added law allows a crematory to cremate without the form if (1) cremation costs are paid and (2) the authorizing agent provides a positive written identification of the human remains.

Why do funeral establishments add requirements which the law does not?  The friends and/or family are in a weak bargaining position; burdened by grief, pressured by time, reluctant to argue in court while the funeral home has the body.  A suit on the contract could be considered or a transfer could be made to a cooperative funeral home, but these are very inconvenient options. Some funeral homes and crematories are concerned about being involved in a lawsuit, but the law provides that a funeral home or related entity shall not be liable for carrying out the written directions of a decedent or the directions of any person who represents that the person is entitled to control the disposition of the decedent's remains.  If they cannot be liable for carrying out your wishes then they have no reason to require your agent or kin to sign their form and agree to indemnify them.

Should you find yourself in such a predicament and persuasion does not work, the consumer has the recourse of filing a complaint with the Texas Department of Banking at http://www.dob.texas.gov/forms/com-form.pdf.  Also, before you buy a prepaid cremation plan, or even if you already have one, consider talking with your lawyer about how to handle this situation.

IRS Improving Art Appraisal Services

An appraisal is an expert assessment of the value of a particular asset at a given time. Many factors involved in the appraisal of a property can easily distort its value--overvaluing or undervaluing it. The IRS uses appraisals in the process of assessing property taxes, which requires the appeal of experts in the subject. As such, the IRS's Art Appraisal Services' (AAS) job consists of assessing the value of works of art for tax purposes.

A recent article in Accounting Today discusses the IRS' need to improve its appraisal of the value of art and the Government Accountability Office (GAO) report on the matter. The GAO report set the spotlight on the lack of comprehensive quality review and continuing education requirement for the IRS' appraisers, which consistently result in a misstated and most times unfavorable appraisal for the taxpayer.

The report examined not only the appraised values of artwork but also other categories of property such as real estate, automobile and businesses, reaching the conclusion that the burden on taxpayers could be reduced and selected practices improved.

Concerning art appraisals, the report found that the valuation of the property has a huge impact on the tax liabilities of individuals who make non-cash charitable donations or who receive inheritances or gifts of property. Appraisers' task requires them to be familiar with the subject matter and be able to note any factors that may affect the value of the property (e.g., location, surrounding area and condition of the property). But, some properties such as art, real estate, businesses and easements have very unique characteristics, making an independent appraisal essential to determine exactly how much the taxpayer should report to the IRS.

The GAO recommended that the IRS offer a continuing education program to its appraisers, along with a comprehensive quality review program, specifically for the AAS staff. They also suggested that Congress should consider raising the dollar threshold at which qualified appraisals are required for noncash contributions to reflect inflation.

Making Sure the Surviving Spouse has Income

The National Association of Personal Financial Advisors was recently polled determine common surprises encountered by their clients planning for retirement. A Chicago Tribune article highlighted one of the most common responses from those advisors:  a failure to set aside significant income for a surviving spouse.

It is one thing to examine how long an individual is expected to live, subtract that from their current age, and determine how much is needed each of those years. By no means is this an exact science, but it is somewhat intuitive to roughly understand how much a single individual needs to retire. Things get more confusing, however, when spouses get thrown into the mix. As one planner interviewed for the article noted, "One thing people don't plan for is the reduction of income if a spouse or partner dies."

Think about Social Security. When two partners are alive, each may receive Social Security benefits. However, if one of the spouses dies, his or her income will disappear. Even taking into account a larger benefit for the surviving spouse, the overall family income will be lower than before. Similar problems can arise for those living off a pension. A spouse's death may cause the pension income to dry up. If not accounted for, this can thrown some seniors into a financial tailspin. One professional interviewed for the Chicago Tribune story told of a recent client whose retirement income dropped 35% following her husband's passing, but who found only a 10% decrease in expenses. This ultimately required a significant lifestyle change for the woman at the very moment when she craved stability following the loss.

Various tactics can be used to minimize the long-term consequences and provide more stability no matter what the future holds. For instance, a higher-earning spouse may choose to refrain from taking Social Security. This may earn him or her "delayed credits" up to 8% a year until the age of 70. If that spouse passes on, the surviving spouse may be able to switch to the value of the other's benefit, including delayed credits and cost-of-living adjustments. For pensions, a "joint and survivor annuity" might be appropriate, where less is paid out monthly for the peace of mind of knowing that income will continue even if the pensioner dies first.

Federal Bill to Prevent Senior Abuse Advances in Senate

Over the past two years there has been increased focus on the scourge of elder abuse of all kinds.  Yet, the awareness effort has not led to any federal legal changes to help protect seniors from things like physical neglect at home or senior financial exploitation.  That may soon change.

Minnesota Democrat Sen. Amy Klobuchar and Texas Republican Sen. John Cornyn have sponsored a bill in the U.S. Senate to help prevent these harms recently advanced out of the Senate Judiciary Committee.  The bill passed out of committee on a 15-3 vote this month and will now be sent to the full Senate for approval.

Known as the Guardian Accountability and Senior Protection Act, the measure strengthens the tools available to states to provide proper oversight of guardians and senior conservators.  This focus on oversight is critical, as a lack of third-party monitoring often allows the problem to go unnoticed.  Considering the obvious need for improvement, the measure is supported by those on both sides of the aisle.

Advancement of the bill and increased focus on senior caregiving could not come at a better time, because the senior population continues to rise each and every day.  Failure to account for the issue now means that millions might be affected in coming years.  To address the problem, the measure allows states to use existing money to improve monitoring systems and creates an electronic filing system to monitor guardians and conservatorship audits.

As Sen. Klobuchar noted during committee hearings, "I know every state has incidences of people getting ripped off millions of dollars when their loved one is supposed to be under the care of a guardian. Most guardians do amazing work, good work, but again you have a situation where you have a few that are causing a lot of harm."

Are You Spending More Time Planning Your Vacation Than Your Estate Plan?

This weekend Lake County News published an interesting story noting how many community members spend more time planning their summer vacation than their inheritance and long-term issues. Think about it: how many different contingencies are accounted for when heading away from home for a one to two week trip? Pet sitters are hired, mail is paused, email auto-responders are set-up, plants are moved inside and friends are asked to water them, doors are locked, and a spare key is left in case of emergency. We take these steps just in case, so that we can enjoy our time away with the peace of mind that everything back home can be dealt with in most situations.

In many ways estate planning involves similar forethought--understanding possible issues down the road and taking steps to account for those contingencies. Yet, vacation planning is done instinctively, while estate plans are often delayed or ignore due to either procrastination or apprehension of one's mortality.  It is easy to procrastinate on these sorts of issues without immediate compulsion. Summer vacation planning has to be done by a known date. Estate planning is not that easy, because no one knows for sure how much time they have or if they may need long-term care. The indefinite future makes it easier to procrastinate. Yet, planning is vastly more effective when conducted before emergency necessitates it. You will also get the peace of mind that comes with knowing inheritance and plans are in place.

Many also put off the planning because they assume that the planning is complex and time-consuming. Planning will be done when they finally "have time" for it. There will likely never be a time when you want to do your estate plan; instead one simply has to make time to do things that matter. But beyond that, the planning itself does not necessarily have to be as complex or time-consuming as one imagines. After all, the whole point of having professional help with these issues is to hand of the work to those who deal with these matters day in and day out. In most cases, a legal professional will explain how a trust or will can be created and how to put other documents into place, including a Power of Attorney and Health Care Proxy. Even if nothing more complex is required, having these few pieces in place can make all the difference in case something happens unexpectedly.

Documentary on Financial Elder Abuse Starring Mickey Rooney

A new documentary entitled Last Will and Embezzlement that is slated for release tackles senior financial exploitation.  The film will touch on all aspects of the problem with the ultimate goal of raising awareness of the problem to ultimately lower the incidence of mistreatment.

The centerpiece of the film is an extended interview with perhaps the most well-known advocate against elder financial abuse: Mickey Rooney.  The 91-year old film star testified before Congress last year while detailing abuse that he suffered at the hands of a family member.  His purpose in appearing in the film is to dispel the myth that this sort of exploitation occurs only to those who live alone or have few close friends and family members.  In fact the documentary tagline is: "If it can happen to Mickey Rooney, it can happen to anybody."

The filmmaker was motivated to take on the project after watching her father fall victim to abuse. She explains how her father was in a nursing home, when mysteriously, a stranger entered the facility and claimed to be his son. The senior had just lost his wife and was suffering from severe Alzheimer's at the time. The filmmaker states that her father "would have signed the Magna Carta" if it was placed in front of him at that point in his life.

The scammer used his lie about being a relative to acquire sensitive financial information and exploit the ailing senior. The man also acquired a Power of Attorney over the senior, making it incredibly difficult for the family to unravel the problem down the road. It ultimately took two years before the woman finally learned of the depth of the exploitation.  Her advice: "Set it up so you don't become a victim...know the laws against elder abuse."

Since the Supreme Court upheld the Affordable Car Act, The Elder Justice Act contained in it can be implemented.  It aims to combat financial, physical, and mental crimes and abuse committed against the elderly.  Some help may also be coming in the form of federal legislation. New York Senator Chuck Schumer, for example, is fighting for stepped up federal laws requiring more mandatory reporting of suspicions of elder mistreatment. While these new rules may help, by no means do they offer clear avenues to eliminate all mistreatment.

Planning and oversight by the family are crucial preventative steps. Obviously having elder law attorneys and other advocates in the mix is one way to ensure abusers aren't able to obtain legal documents and wreak havoc on the life of a vulnerable senior who may not fully understand the situation.  Overall, it's best to have comprehensive oversight and proper preparation before disability or cognitive vulnerability sets in.

Losing the Family Home Over a $400 Tax Bill

Senior care advocates repeatedly remind families that oversight is needed in some cases to ensure seniors do not fall victim to financial exploitation. Beyond protecting against scammers and hucksters, many seniors are facing a new financial crisis that is not rooted in illegal misconduct. When on a fixed income and struggling with confusing money issues, some seniors might face incredibly severe financial penalties for falling behind on certain bills or taxes.  CNN Money reported this week on a growing number of individuals who are losing their homes because they owe relatively small sums.  A report from the National Consumer Law Center (NCLC) detailed how some states have outdated laws that allow states to sell tax liens on delinquent properties.  This means that instead of the government having a lien on a piece of property that owed back taxes or bills for services like water and gas, private investors own the lien.  The investor then collects interests on the overdue bill or, in some cases, forecloses on the home.  Some states allow investors to charge staggeringly high interest rates, from 15% to 50%.

Seniors are particularly vulnerable to falling behind in this way, either because of challenges of being on a fixed income or confusion with the bill paying process.  The NCLC report details one case of an 81-year old woman who lost the home she lived in for 40 years because she owed $474 on a sewer bill.  The NCLC report noted that seniors with cognitive diseases, like dementia and Alzheimer's are prone to fall victim to this situation.  It is very confusing to follow the changing financial arrangements.  The seniors are usually notified of the situation in legalese that many do not understand.  As a result, they do nothing, rack up interest debt, eventually default, and often lose their home.  The report elaborated that seniors without family members or who have not visited with elder law attorneys and other professionals were more likely to be hurt by this situation.  In one case, an elderly woman who lived alone without family fell back $5,000 on taxes.  Eventually, she lost her home and lost about $150,000 in equity that she had accumulated.

Advocates are working to change laws so that interest rates are lowered and adequate warnings are provided to homeowners.  It remains unclear if those efforts will be successful, and so putting preventative measures in place now is prudent for local seniors to avoid this situation.

How Does the Affordable Care Act Affect Taxes and Estate Planning?

No legal news item last week was bigger than the U.S. Supreme Court's decision to uphold virtually the entirety of the Affordable Care Act. In a move that surprised many observers, in a 5-4 decision the Court deemed the controversial "individual mandate" portion of the measure constitutional on grounds that it constituted a tax. While the court held that the Congress could not pass the law pursuant to its power to regulate interstate commerce, it did find it a permissible use of the legislature's taxing power.

Now that the matter is reasonably settled, local residents may be wondering how the law affects their estate planning, if at all. A recent Smart Money story talked about some of these issues, explaining how certain tax matters will indeed change in the upcoming year as a result of the decision. A few select rates will change next year. For example, an extra .9% Medicare tax increase will start for various individuals making over $200,000 or $250,000. In addition, some investment income (long-term capital gains and dividends) may face a 3.8% "Medicare contribution tax." This is in addition to the rising rates if the "Bush tax cuts" expire without renewal.

Starting in 2013, a cap will be added on contributions to a healthcare "flexible spending account" (FSA) plan. Right now there is no cap, so an unlimited amount of money can be contributed to the plan which is then subtracted from taxable income. The money can be used to reimburse qualified medical expenses. Starting next year, contributions to those plans will be capped at $2,500. Similarly, itemized deductions for medical expenses will now apply only to expenses that exceed 10% of annual gross income (up from the current 7.5%).

However, it is important to keep these tax issues in perspective, because they represent just a part of the bill. The overall goal is to provide comprehensive health insurance for more Americans so that overall expenditures go down while quality of care goes up, but the long-term effect of these sweeping changes will not be fully fleshed out for years to come. While the high-profile and controversial nature of the law may suggest that many things will change for all residents once it is fully in effect, the truth may be a bit less dramatic for many local families.

Planning for Couples with an Age Gap

Each estate plan is slightly different, but there are some challenges in estate planning that present themselves to different couples.  One common challenge is planning for married couples who have a significant age difference.

Perhaps the most obvious issue involves overall financial planning.  With age differences, one spouse is likely to outlive the other, perhaps by a considerable length of time.  The younger spouse may therefore feel more comfortable taking certain risks than the older spouse who is more likely to suffer from short-term financial dips.  It is important to balance the interests of both partners.  Couples of different ages require unique planning so that time horizons are meshed.  Retirement planning can be tricky if one spouse plans on working longer.  Similarly, long-term health care planning will be implicated by the age differential.  One spouse may need care earlier, though it is usually not prudent to automatically assume that the younger spouse will be able to provide the needed care.

A recent Morning Star article touched on many of these topics and mentioned a few other issues to consider for couples in this situation.  One point made in the story is that these couples often need to prioritize long-term care and life insurance.  Planning for disability is particularly crucial to couples, because family finances must account for both partners.  If one spouse is injured or faces a medical complication and is disabled, then family finances may be decimated if expensive, long-term care is needed.  In the worst-case scenario, assets are exhausted to care for one spouse while the second spouse remains healthy.  In order for the sick spouse to receive Medicaid support, assets for the entire couple must be below a certain level.  The healthier spouse can be left with little to no assets.  In these situations it is critical to get professional advice, as certain strategies can be employed in order to save as many assets for the second spouse as possible while still allowing the ill spouse to qualify for Medicaid.  This is particularly true for spouses with large age differences, because the younger spouse often needs assets to last for many years to come.

Family Feuds Over Inheritance While Parents Are Alive

Family inheritance disputes are extremely common.  In most of the cases that make headlines, a famous individual passes away without conducting thorough estate planning and various family members publicly feud to get their fair share of the individual's wealth.  Family disagreements regarding an inheritance are quite common, particularly when no planning is done and the matters must be left up to the court-centered probate process.  Sometimes, though, feuding occurs even before the family matriarch or patriarch passes away.  For example, a recent Sacramento Bee letter explored a situation where two siblings seemingly isolated an aging mother from other siblings. Claims of undue influence and abuse were made. The three ostracized siblings were left wondering what options were available to ensure they received their share of the inheritance.

The case: The 80-year-old mother drafted a will specifying that she wanted all of her assets split evenly between her children.  However, after the will was created, two siblings convinced the mother to take out loans totaling more than $100,000 for their children's college education and to purchase a house.  One daughter obtained power of attorney over the mother and moved into the mother's home.

The three remaining siblings became concerned about the situation, questioning whether their mother was being taken advantage of, and reported their suspicions to local authorities.  The mother is now on Social Security and has no assets other than her home, which may even have been used as collateral on the loans. The siblings are left wondering if they will have any inheritance at all.

This situation presents a wide range of legal issues, and the case is a reminder of the dangers of relying only on a will.  Legally, the resolution of these issues will depend on a range of factors, including whether the siblings signed promissory notes on the loans and whether any changes to the will were made in the time that the daughter has lived with the mother.  No matter how it ends, it is likely to be a contentious, drawn-out process.

The lesson: Parents can ensure that their children never deal with this situation by locking down inheritance affairs early on with more comprehensive legal tools, like trusts. Children are well-served by encouraging their parents to deal with these issues as soon as possible since planning will not only settle inheritance issues, but also save on taxes and provide for potential disability.

Did You Know Your Taxes Are Going Up?

At a recent national meeting of the American Academy of Trust, Estate and Elder Law Attorneys, a premier educational seminar for estate planning attorneys, a major topic we discussed was taxes.  There are some important increases that you should know about.

Taxes are scheduled to increase dramatically in 2013: 

 

                                                                           2012                  2013

Estate and Gift Tax – Top Tax Rate                       35%                   55%

Estate and Gift Tax Exemption                              $5 million           $1 million

Federal Income Taxes – top rates

         Capital Gains                                              15%                   20%

         Qualified Dividends                                      15%                   39.6%

         Interest & Compensation Income                  35%                   39.6%

        

In the current political climate, Congress and the President are not likely to reach a compromise on these issues.  What does this mean for you?  2012 is a year of opportunity while taxes are lower.  It would be wise to schedule an appointment to review your estate plan before September 1, and see if there are steps you can take to improve your family’s position.  If you wait to the last minute, it may not be possible to put a plan in place before the law changes.

VA Demands Compensation for Overpayment

If you are a veteran receiving benefits for non-service connected pension and Aid and Attendance, the VA may make a demand to be paid back for overpayment to you. What can you do?
 
The VA can forgive any debt if there was no indication of fraud, misrepresentation, or bad faith on the part of the claimant and recovery of the debt would be against equity and good conscience.  [38 USC § 3502 and 38 CFR § 1.963(a)]. You can submit a request for the debt to be forgiven or ask that there be a “waiver of the debt.”  The request must be in writing and received by the VA within 180 days of the VA’s request for repayment .  If you fail to request that the debt be forgiven within the deadline, the VA can garnish Social Security benefits, stop your VA benefits, and garnish any tax return you may be receiving.

In summary, pay attention to your mail if you have been receiving VA benefits.  If you receive a letter stating you have been overpaid, take action so that you don't end up on the hook for the overpayment.

Should Each Spouse Have Their Own Estate Planning Lawyer?

Estate planning requires the attention of an entire family:  husbands, wives, children, grandchildren, and others all have a stake in ensuring that planning is done properly and timely.  This raises the question whether each individual with a stake in the planning needs their own lawyer.  Does each spouse in a blended family have adverse interests such that a single lawyer cannot represent them both in their planning?  An article in Forbes recently discussed this very question.

Of course, in certain family situations it is usually vital that couples have separate counsel. For example, while certain types of uncontested divorces exist, in most cases couples going through a separation must have their own legal advocate, because the entire process is contentious. Most times, though, the same issues do not apply in elder law estate planning.  While divorce involves a "tug-of-war" over property splitting and other issues, estate planning is a collaborative process where families talk together with the counsel of experienced legal professionals to discuss their long-term financial wishes and potential care needs.  There is typically much less inherent conflict.  This does not necessarily mean that that both spouses will automatically agree on every single detail of a plan, but the resolution of those disagreements are generally not so contentious that they necessitate each party have their own individual legal counsel.

The article mentions an added benefit of going through the process together, noting that "it builds greater trust and more open communication between the two of you, and possibly with all of the children in your lives. There are certain situations where separate representation may have benefits, though.  It is usually a combination of factors which might result in significant dispute, including situations where only one spouse has a child, where one spouse is much wealthier than the other, if the relationship is still very new, if there is a prenuptial agreement, if there is a large age difference between spouses, or if one spouse has certain privacy issues that they might not want exposed during the process.  It's a topic worth considering when starting a family estate plan.

Passing on Religious Values in Your Estate Plan

An estate plan usually includes a range of features, from a trust and pour-over will to a Power of Attorney, and yet no two plans are identical. While inheritance, retirement, and long-term care issues are common to all, the exact way to accomplish those goals depend on one's situation, perspective, and values.
For example, religious belief can have very large implications on some of these issues. End-of-life decisions delineated in a living will reflect an individual's personal perspective on advanced life support measures--often guided by a particular faith. In some case an advanced medical directive might include a clause that indicates such end-of-life decisions must be made by an individual with a particular religious perspective, such as an Orthodox rabbi with an expertise in Jewish law.

Religious traditions and inheritance issues are usually the most controversial way that one's faith can affect their estate plan. Many families have individuals with varying kinds and degrees of religious faith, which can be a recipe for feuding for a family when religious issues are involved in how assets will be dispersed. Often there are few easy answers.

The most conflict-ridden of these issues relates to parents who wish their children to marry someone within the tradition. These parents often seek to disinherit those who marry outside the faith. Disinheritance on these grounds often lead to family divisions and costly legal fights. That is why it is important to talk with experienced professionals about these concerns to be made fully aware of one's options and the potential ramifications of certain actions.

Clauses in inheritance documents that hinge on marriage decisions by heirs have been upheld in many courts so long as they are not deemed to encourage divorce. Yet, one purpose of planning is to account for possible legal challenges before they occur to hopefully prevent them altogether. One common alternative that may be less divisive is to leave assets to heirs in trust with a trustee given broad criteria to make distributions. In that way, religious conduct may play a role in the inheritance while allowing special circumstances to be taken into account.

One way to pass on beliefs is to craft an "ethical will." These wills are not legally binding but instead are exercises undertaken by thinking about one's overall legacy. An ethical will is often given to a family while one is still alive. It acts as a way to pass on the values, wisdom, and perspective gained over the course of a lifetime. Quite often an ethical will shares morals and lessons rooted in the author's spiritual faith. It is yet another way for one to pass on those faith-based beliefs to loved ones.

Estate Planning and Medicaid Planning Workshops in May

Join us for our upcoming in-office seminars this month!  Please call 512.476.0888 to register or for more information.  Attendance is free!

Tuesday, May 15th in Austin, TX 

Estate Planning Basics 2-3 pm

Medicaid Planning 3-3:30 pm

Wednesday, May 16th in Georgetown, TX

Estate Planning Basics 2-3 pm 

Medicaid Planning 3-3:30 pm

  

In Estate Planning Basics you will learn about:

• Living Trusts, a powerful estate planning tool
• Wills, uses and misconceptions
• Estate planning for IRAs and life insurance proceeds
• Protecting your assets
• Reducing death taxes, attorney’s fees, and other costs
• Avoiding guardianship
• Living wills and powers of attorney
• Avoiding probate court
• Avoiding Estate Planning Pitfalls

In Medicaid Planning you will learn about:

• What you may own and still be eligible for Medicaid
• The truth about the new look-back rule...when the look-back starts and why you may still be eligible for Medicaid even if you have transferred assets in the last five years
• How you may still be eligible for Medicaid for nursing home care even if you earn more than $1,911 per month
• How you can provide for your spouse before you spend it all on nursing home expenses
• How assets may still be preserved if you are currently in a nursing home
• How an Irrevocable Trust may preserve and protect assets
  

Attendees of both workshops will receive the opportunity to schedule a complimentary private consultation with Ronald Greening regarding Texas planning.

Niche Retirement Communities Becoming More Popular

We've all seen the ads: smiling seniors lounging at the pool or playing golf, laughing, and enjoying the sunshine as a voice-over speaker describes the available space at a new senior living location. Retirement communities have long been popular, but that these assisted living locations are becoming more sought-after than ever. According to a recent US News article, nique senior communities are popping up across the country at a steady clip catering to more and more specific niches in an attempt to closely meet the needs of certain segments of the senior population. Some of the most popular niche senior living facilities (besides those around beaches or golf courses) are "university-based retirement communities." These locations are built around college campuses in order to provide seniors with the opportunity to attend campus events and even sit in on classes.

Many other communities are being built that center around specific hobbies and activities. Across the country new facilities have recently been built targeting seniors who want to become artists, providing help for those seeking to learn how to paint or write their first novel. Another senior facility is even referred to as an "astronomer's village" and is geared toward stargazers with every living unit equipped with a built-in telescope. Yet another targets "aging hippies" where residents are encouraged to make their own living space and practice sustainability techniques. No longer are nursing homes or assisted living facilities the only places where seniors can plan on spending their golden years. Most expect these activity-based living centers to slowly begin branching out to include support for those in need of more and more specialized healthcare.

Costs for these niche communities are somewhat similar to other long-term care options. For example, a recent MetLife Market Survey found that the average national rent for an assisted living facility was about $3,500. Many retirement communities have rent prices that are comparable, ranging anywhere from $2,500 to $7,000 monthly. However, many of these locations also come with "entry fees" which range from $150,000 to $600,000. All or part of the fee may be returned when the resident leaves or dies. Units at these locations can sometimes be purchased.

Where do you keep your important documents?

Who knows where you keep your important papers?  In an emergency situation, valuable time could be wasted tracking down important legal papers.  Make it a point to tell your children, successor trustee, or personal representative where they can find your original documents.  If you store those documents in a safe deposit box, or a safe at home, make certain they have the ability to get into the box or safe. 

We frequently receive calls from our clients’ family members who want to know where they can find these documents, and they need them “now” because there is a family crisis.   There are legal limitations that tie our hands so often we cannot provide our copies to the family.

You do not have to tell anyone about the contents of the papers, just let them know how they can access them in an emergency.