Blog

Law Office of Michael D. DellaMonaca

Have a Plan for Life

How Do We Live Our Lives When A Loved One Has Alzheimer’s?

The scenario is worrisome, as no one can be sure that this is something B. Smith would have wanted, if she had been asked before the disease had progressed. However, one good thing has come out of it, according to the article “B. Smith’s Alzheimer’s raises question: How to protect your wishes when incapacitated” from USA Today. There are more discussions about expressing people’s wishes, before they become incapacitated from Alzheimer’s.

More families are experiencing this very same dilemma because of the increasing number of Americans suffering from Alzheimer’s and other forms of dementia. More than 5.7 million in this country are suffering from this disease, which currently has no cure and is most likely to impact seniors, women and African Americans, according to the Alzheimer’s Association.

Without advance planning, it’s impossible to know what someone would want to happen. Discussing this is critical, while a patient is still relatively healthy and able to communicate her wishes to family members and to an estate planning attorney.

People who work in this area say there are two areas that must be addressed. One is drafting legal documents with an experienced estate attorney to determine who should be entrusted with health care and financial decisions. There is also a need for document known as a “statement of values” that will help family members understand goals and wishes and not be left guessing.

These decisions are not easy to consider when a person is still well. However, thinking about them and putting them down on paper, and then having the necessary documents prepared to formalize them and make them enforceable are important.

Here are the documents needed:

Durable power of attorney: This lets a trusted family or friend make financial decisions, in the event of incapacity.

Power of attorney for health care: This document permits a family member or friend to make decisions about health care decisions.

A will. The will is for the disposition of assets after your death. It also names the person who will be in charge, the executor.

A revocable trust. This is one of many documents that can be used to allow you to set conditions and directions about assets, while you are still living but when you have become incapacitated. It can be changed at your direction. Hence, the term revocable. An estate planning attorney will know what type of trust should be used for your situation.

Only four out of 10 Americans have wills, with many hesitating to have them created because they think that only rich people need a will. However, without a will, or the other documents described above, the family is left in a terrible situation, where there will be additional costs, if and when decisions need to be made but no one has been legally empowered to make the decisions.

The revocable trust could bypass many unpleasant situations, like instructing a power of attorney to place your assets in a trust that was set up specifically to pay for your care in a skilled nursing facility of your choice, or to describe with great specificity who was allowed to live in your home, if you became incapacitated.

Another missing step: the family discussion. Getting everyone together to discuss planning for the future, isn’t as fun as going on a family vacation, but it is important. If someone is starting to have the effects of dementia, they may not remember what they told another family member. With everyone in the same room, there will be a better chance that their wishes will be clear.

The moment someone learns that they have dementia, is the time to put all these elements into place, before it is too late.

Reference: USA Today (Jan. 31, 2019) “B. Smith’s Alzheimer’s raises question: How to protect your wishes when incapacitated”

Suggested Key Terms: Incapacitated, Alzheimer’s, Revocable Trust, Will, Power of Attorney, Health Care Power of Attorney, Dementia, Statement of Values

Will Stepmother Take Dad’s Money When He Dies?

Here’s a savvy and responsible stepmother—she called for a meeting with the estate planning attorney. At age 57, married to a 72-year old man with three kids from his first marriage and two kids from their marriage, she wanted to make sure that his wealth didn’t become a source of agitation for the family, when he passed. That, says Forbes, typifies how the “new” American family has changed, in the article “How Long Will Stepmom Live? And Other Vexing Estate Planning Questions for Modern Families.”

The stepmother did not want to be seen as rapacious or coming between the kids and their inheritance.

The solution was as follows: money for the stepmother was left to a marital trust with provisions for her benefit, while the children received accelerated inheritances through a series of Grantor Retained Annuity Trusts (GRATs), a qualified personal residence trust for a vacation compound and annual exclusion gifts.

Here’s another example: a male descendent of a wealthy family acknowledged that he had fathered a child without being married to the child’s mother. He had to seek legal determination to ensure that the child would be cared for.

Welcome to today’s new family. They include three-parent families, artificial reproductive heirs and blended families. These are all hot issues in the world of estate planning and attorneys are now addressing these new dynamics.

There are five basic questions that must be addressed when creating an estate plan today:

Who? Who gets your money and your stuff?

How much? How will it be divided among heirs?

When? Will it be at a specific age, or just when you die?

Outright versus in trust? With a trustee, you name a person who will control your assets.

Who represents you? An agent and a fiduciary, with a power of attorney who acts on your behalf, if you become incapacitated, an executor who is in charge of administering your estate, and a trustee who manages any trusts created.

Modern families don’t want old-school estate planning solutions. They want to know that their estate plan will work for their situation, which may not match the old “Mom, Dad, Brother, Sister, Brother” construct. So, how should you handle the distribution of wealth for non-traditional families? If a child dies, and a live-in partner is rearing the children, should there be money for the children in a trust? What about taking care of the surviving partner, even if they were not married?

What about late-in-life marriages? If there’s a huge gap in years between grandparents and grandchildren, how will family wealth be passed down? Funding 529 trusts is one answer, and trusts are another. If the age gap is so big that grandparents never meet their grandchildren, a statement of intent in documents can be used to convey the goals and wishes the grandparents have for their grandchildren.

Providing for all children equally isn’t always the goal of the modern family. Some might think their ex-spouse will provide for children and leave them fewer assets than they would have, if that were not a factor. However, don’t assume that, even if you can’t have that conversation with your ex. If your intention is to distribute assets in unequal portions, you may save your loved ones a lot of pain and fighting, by either talking with them about it while you are still living or leaving a letter behind explaining your decision-making process.

It’s hard to tell what changes will come to families in the future, but one thing will remain the same: the need for an estate plan, done with the guidance of an experienced estate planning attorney, is essential.

Reference: Forbes (Jan. 29, 2019) “How Long Will Stepmom Live? And Other Vexing Estate Planning Questions for Modern Families”

Suggested Key Terms: Wills, Trusts, Beneficiaries, Marital Trust, Inheritances, Grantor Retained Annuity Trusts, Blended Families, Estate Planning

When Should I Start My Estate Planning?

Only 42% of Americans have a will or other estate planning documents, according to a 2017 Caring.com study. Among parents of children under 18, only 36% have created a will.

USA Today’s recent article, “Estate planning: 6 steps to ensure your family is financially ready for when you die,” explains that if you die without a will, state laws will decide what happens to your property or who should be legally responsible for minor children. That might be OK in some circumstances, but in others, a grandchild with special needs might not receive the resources you want him to have, or an estranged family member might get your house.

For some reason, people believe that if they don’t do anything, things will “work out.” They often do not. Here is what you should consider:

Create a will. This document states who should get your money and possessions, as well as who would become a guardian to your minor children, if both parents die.

A living will. This legal document states what medical procedures you want or don’t want, if you’re incapacitated and can’t speak for yourself, such as whether to continue life-sustaining treatment. Powers of attorney let you appoint someone you trust to make legal, financial and health care decisions for you, if you are unable.

Trust. This is a legal entity that holds any property you want to leave to your beneficiaries. With a trust, your family won’t have to go through probate. Trusts also let you to set up instructions for how and when property is distributed. A trustee will manage the trust. Make sure you let people know, when you’ve designated them as a trustee. Name a secondary trustee, in case the primary trustee cannot or will not serve.

Beneficiaries. If you have investment accounts and retirement plans like a 401(k), make certain that the individual you’ve listed as the beneficiary is the person you want to receive those funds.  Remember to appoint a contingency or secondary beneficiary, just in case.

Work with an experienced attorney. Estate planning can be complicated, so get some professional legal help.

End-of-life planning isn’t really fun, but it’s necessary, if you want to have full control over your life and your assets.

Reference: USA Today (April 1, 2019) “Estate planning: 6 steps to ensure your family is financially ready for when you die”

 

Should Older Millennials Buy Life Insurance?

We’re all going to die someday. That’s one of the only certainties in life, along with taxes. However, a recent study by Budget Insurance found that 82% of millennials don’t know the purpose of life insurance—despite the fact they’re aging, starting families and dealing with more complex financial situations.

Forbes’ article, “Why Older Millennials Need To Start Taking Life Insurance Seriously,” notes that, although most millennials may not have given life insurance much thought before, it’s now time to begin taking life insurance and other estate planning more seriously. To help with this, more companies are starting to take millennials seriously, when it comes to financial matters. The result? It’s getting easier than ever before to get life insurance.

Life insurance is used to protect your family financially, in case of your death. That is important for millennials who are starting families that depend on them financially.

According to Pew Research, 60% of families depend on dual incomes and just 31% of families rely on a single income.  A total of 91% of families in the U.S. require the income of at least one spouse to survive. However, what happens if one (or both) die? That’s where life insurance comes into play.

Because millennials are still relatively young, getting life insurance is very cost effective. In addition, for the vast majority of millennials, a simple term life insurance policy will do the job.

Term life policies are very inexpensive and can be a financial relief, if they’re ever actually needed.

It’s possible to get a $1,000,000 term life insurance policy for about $40 per month, depending on your age and health. That is quite a bit of insurance for little expense.

With the increase in millennials who require life insurance, many insurance companies are making buying life insurance very easy.

These companies have online or app-based solutions that focus on speed and ease of use. These companies leverage technology and keep human interaction to a level that most millennials like.

Reference: Forbes (January 26, 2019) “Why Older Millennials Need To Start Taking Life Insurance Seriously”

Suggested Key Terms: Estate Planning, Life Insurance, Millennials

What Doesn’t Medicare Cover?

Medicare Part A and Part B are also known as Original Medicare or Traditional Medicare. These two parts cover a large portion of your medical expenses, after you turn age 65. Part A is hospital insurance that helps pay for inpatient hospital stays, stays in skilled nursing facilities, surgery, hospice care and even some home health care.

Part B is your medical insurance that helps pay for doctors’ visits, outpatient care, some preventive services and some medical equipment and supplies. Most seniors can enroll in Medicare three months before the month they turn 65.

Kiplinger’s article, “7 Things Medicare Doesn’t Cover,” takes a closer look at what isn’t covered by Medicare, plus information about supplemental insurance policies and strategies that can help cover the additional costs, so you don’t wind up with unanticipated medical bills in retirement.

Prescription Drugs. Medicare doesn’t provide coverage for outpatient prescription drugs. However, you can purchase a separate Part D prescription-drug policy for that or a Medicare Advantage plan that covers both medical and drug costs. You can sign up for Part D or Medicare Advantage coverage, when you enroll in Medicare or when you lose other drug coverage. You can switch policies during open enrollment each fall.

Long-Term Care. Medicare provides coverage for some skilled nursing services but not for custodial care. That includes things like help with bathing, dressing and other activities of daily living. However, you can purchase LTC insurance or a combination long-term-care and life insurance policy to cover these costs.

Deductibles and Co-Pays. Part A covers hospital stays and Part B covers doctors’ services and outpatient care. Nonetheless, you have to pay out-of-pocket for deductibles and co-payments. Note that over your lifetime, Medicare will only help pay for a total of 60 days beyond the 90-day limit (“lifetime reserve days”). After that, you’ll pay the full hospital cost. Part B typically covers 80% of doctors’ services, lab tests and x-rays. However, you must pay 20% of the costs, after a $183 deductible (in 2018). A Medigap (Medicare supplement) policy or Medicare Advantage plan can fill in the gaps, if you don’t have the supplemental coverage from a retiree health insurance policy. If you purchase a Medigap policy within six months of signing up for Medicare Part B, insurers can’t reject you or charge more because of preexisting conditions. Medicare Advantage plans have medical and drug coverage through a private insurer. They also may also provide additional coverage, like vision and dental care. You can switch Medicare Advantage plans annually in open enrollment.

Most Dental Care. Medicare will not provide coverage for routine dental visits, teeth cleanings, fillings, dentures or most tooth extractions. There are Medicare Advantage plans that cover basic cleanings and x-rays, but they usually have an annual coverage cap of about $1,500. You could also get coverage from a separate dental insurance policy or a dental discount plan.

Routine Vision Care.  Medicare doesn’t cover routine eye exams or glasses (exceptions include an annual eye exam, if you have diabetes or eyeglasses after certain kinds of cataract surgery). However, some Medicare Advantage plans give you vision coverage, or you may be able to purchase a separate supplemental policy that provides vision care alone or includes both dental and vision care. If you saved money in a health savings account before you enroll in Medicare, you can use the money tax-free at any point for glasses, contact lenses, prescription sunglasses, and other vision care out-of-pocket expenses.

Hearing Aids. Medicare doesn’t cover routine hearing exams or hearing aids, but some Medicare Advantage plans cover hearing aids and fitting exams, and some discount programs provide lower-cost hearing aids.

Medical Care Overseas. Medicare usually doesn’t cover care you receive while traveling outside of the U.S., except for very limited situations (like on a cruise ship within six hours of a U.S. port). However, Medigap plans C through G, M, and N cover 80% of the cost of emergency care abroad with a lifetime limit of $50,000. There are some Medicare Advantage plans that cover emergency care abroad. Another option is to purchase a travel insurance policy that covers some medical expenses, while you’re outside of the U.S.

Reference: Kiplinger (May 23, 2019) “7 Things Medicare Doesn’t Cover”

Suggested Key Terms: Medicare, Retirement Planning, Long-Term-Care, Life Insurance, Medigap, Health Savings Account (HSA)

How Can I Goof Up My Estate Plan?

There are several critical errors you can make that will render an estate plan invalid. Many of these can be easily avoided, by examining your plan periodically and keeping it up to date.

Investopedia’s article, “5 Ways to Mess Up Estate Planning” gives us a list of these common issues.

Not Updating Beneficiary Designations. Be certain those to whom you intend to leave your assets are clearly named on the proper forms. Whenever there’s a life change, update your financial, retirement, and insurance accounts and policies, as well as your estate planning documents.

Forgetting Key Legal Documents. Revocable living trusts are the primary vehicle used to keep some assets from probate. However, having only trusts without a will can be a mistake—the will is the document where you designate the guardian of your minor children, if something should happen to you and/or your spouse.

Bad Recordkeeping. Leaving a mess is a headache. Your family won’t like having to spend time and effort finding, organizing and locating your assets. Draft a letter of instruction that tells your executor where everything is located, the names and contact information of your banker, broker, insurance agent, financial planner, attorney etc.. Make a list of the financial websites you use with their login information, so your accounts can be accessed.

Faulty Communication. Telling your heirs about your plans can be made easier with a simple letter of explanation that states your intentions, or even tells them why you changed your mind about something. This could help give them some closure or peace of mind, even though it has no legal authority.

Not Creating a Plan. This last one is one of the most common. There are plenty of stories of extremely wealthy people who lose most, if not all, of their estate to court fees and legal costs, because they didn’t have an estate plan.

These are just a few of the common estate planning errors that happen. For more information on how to be certain your assets will be dispersed according to your wishes, talk with a qualified estate planning attorney.

Reference: Investopedia (September 30, 2018) “5 Ways to Mess Up Estate Planning”

Suggested Key Terms: Estate Planning Lawyer, Wills, Guardianship, Revocable Living Trust, Probate Court, Inheritance, Beneficiary Designations, Transfer on Death (TOD) Accounts, Letter of Instruction, Executor

When Do I Need a Power of Attorney?

Estate planning is important. Signing a power of attorney can be essential for those seeking to safeguard their financial resources and other assets.

The Tri-County Times explains in its article, “Power of attorney protects loved ones,” that a POA is granted to an “attorney-in-fact” or “agent.” It gives that individual the legal authority to make decisions for an incapacitated “principal.” The laws for creating a power of attorney vary based on the state.  However, there are some general similarities.

Many people think their families will be able to intercede, if an event occurs that leaves them incapacitated and unable to make decisions for themselves. That’s not always true. If a person isn’t named as an agent or granted legal access to financial, medica, and other information, family members may be left out. Further, the government may appoint someone to make certain decisions for an individual, if no POA is named.

Almost everyone can benefit from establishing a power of attorney.

A signed power of attorney will remove the legal obstacles that may arise in the event that a person is no longer physically or mentally capable of managing certain tasks.

A power of attorney is a broad term that covers a wide range of decision-making. The main types of POA are a general power of attorney, health care power of attorney, durable power of attorney and special power of attorney.

The responsibilities of some of these overlap, but there are some legal differences. For instance, a durable power of attorney relates to all the appointments involved in general, special and health care powers of attorney being made “durable”—meaning that the document will remain in effect or take effect if a person becomes mentally incompetent.

Certain powers of attorney may expire within a certain time period.

An agent appointed through POA may be able to handle many tasks, depending on what powers are granted in the document. They include banking transactions, filing tax returns, managing government-supplied benefits, deciding on medical treatments and executing advanced health care directives.

Although a power of attorney document can be completed on your own, sitting down with an experienced estate planning attorney is preferred to better understand the intricacies of this vital document and ensuring that it will be legally binding and properly prepared.

Reference: Tri-County (MI) Times (January 24, 2019) “Power of attorney protects loved ones”

Suggested Key Terms: Estate Planning, Power of Attorney, Healthcare Directive

How Older Travelers Can Stay Safe

One of the top dreams of retirees is to travel, whether to visit the kids and grandkids or go to all those places you did not have the time or money to explore when you were working and rearing your family. The joy of travel can turn into a nightmare, however, if you find yourself a victim of unsafe circumstances. Here are some recommendations from the U.S. Department of State on how older travelers can stay safe when abroad.

Months Before Your Trip

If there is a problem with your passport, you could get stranded at customs and immigration in a foreign country. When you first begin to plan your trip, pull out your passport and check the expiration date. If there are not at least six months left after you return from your travels, renew your passport.

Some people make the mistake of thinking that the six-month guideline applies to the day you start your trip. However, it actually refers to the date you get home. Just make sure you do not delay in sending in your renewal application. It can take several months or longer for you to receive your new passport.

Before You Finalize Your Travel Plans

Do not deposit any money or pay for your airfare, hotel, tours, or other costs, before you check out these websites:

  • The S. State Department website issues travel warnings to let you know when there is a safety concern in another country. You do not want to walk into the middle of a country’s civil war or other violence. The State Department will also let you know the legal requirements for entering specific countries. If you need a visa, follow the instructions on how to obtain one and allow plenty of time. Some countries allow you to get a visa online or at your arrival airport.
  • The Centers for Disease Control (CDC) issues guidance on required and recommended vaccinations for visiting particular countries. Some of these vaccines require multiple injections spaced weeks apart, so you should check well in advance of your trip. You might have to carry proof of vaccinations to be allowed into a country.

Money Makes the World Go ‘Round

It is no fun to be on your trip of a lifetime and suddenly be unable to use your bank or credit cards. Notify your banks and credit card companies of the dates you will be traveling, and in which countries, so they do not put a security freeze on your accounts. Find out where you can make deposits and withdrawals, while on the road.

Compare international transaction fees to avoid excessive charges. You can order some local currency from your bank to have on hand, as soon as you land in a country. Therefore, you will not have to stand in long lines at the currency exchange in the airport. Search online to find out where you can get the best currency exchange rate at your destination. Exchange rates fluctuate constantly, so be sure to check and recheck.

Medication

Some countries restrict certain medications that are legal in the United States. Check on the State Department website to find out if any of your drugs are illegal where you will be traveling. Always carry prescription medication in the original pharmacy container, and have your doctor write extra prescriptions for you, in case you lose your drugs. Carry enough medicine for the trip and some extra, in case you experience any delays.

Your local elder law attorney can help you prepare the legal documents that will give you peace of mind during your travels, and explain to you how your state regulations might differ from the general law of this article.

References:

AARP. “State Department Wants Older Travelers to Stay Safe.” (accessed December 29, 2018) https://www.aarp.org/travel/travel-tips/safety/info-2018/state-department-recommendations.html

U.S. State Department. “Country Information.” (December 30, 2018) https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages.html

CDC. “Vaccines. Medicines. Advice.” (December 30, 2018) https://wwwnc.cdc.gov/travel

Why is Financial Fraud So Risky for Seniors?

“[Financial fraud] is a very high risk for 100 percent of the elderly population,” said North Carolina Secretary of State Elaine Marshall. “Senior citizens have social security coming [in]. Maybe they have a pension [or] some savings. This is a magnet for crooks and people who want to take their golden years away from them and line their pockets with somebody else’s gold.”

WRAL.com says, in the article “Elderly population a ‘very high risk’ for financial fraud,” that scams looking to make a quick buck and disappear may be easier to see, than the subtle but truly harmful abuse that makes a more significant impact.

As people get older, they usually depend more on close family and friends for help, but it can be very easy to abuse that relationship. These types of activities usually target seniors who have diminished mental or physical capacities. Abuse can begin when seniors put their trust in the wrong people. It can be a very close, trusted family member or the caregiver—someone who’s very close physically or in relationship.

It’s not uncommon for a senior to be persuaded to change his will to benefit a person with whom he had developed a close relationship, only to find out the person had ulterior motives. This type of financial abuse or exploitation can also be hard to see initially.

“Sadly, so much of the elder abuse is done by somebody in the family who is trusted, who is caring for this person, and then takes advantage of them,” Marshall said.

“A word of caution to families–as folks get isolated and lonely, it is very important that they have social contact in a positive nature, every day. Not just somebody coming in to see if they’re walking around and eating,” Marshall said. “They need socialization. And therein becomes an avenue for crooks to follow.”

Seniors should also be wary of invitations to sales pitches masked as “free lunches,” charities that aren’t who they say they are and writing checks to unverified individuals. If it sounds too good to be true, the elderly should use extreme caution before making a financial commitment.

To prevent this, families can divide responsibility between more than one family member. If you have multiple children, giving each one access to the finances makes certain that anything bad will be detected quickly. Another option is to create a trust with the help of an elder law or estate planning attorney. A trust permits the designation of a trustee and requires a more thorough credentialing process to access the assets. An elder law attorney can help in creating a trust and can provide advice on any other methods to protect your finances.

It comes down to determining whom you can trust. Finding credentialed individuals to help you manage and establish safeguards for your assets is critical.

Reference: WRAL.com (January 2, 2019) “Elderly population a ‘very high risk’ for financial fraud”