States with Most Affordable Long-Term Care?

Seven in 10 people 65 and older will require some type of long-term care during their lifetime. This expense will vary based on the patient’s required level of care, care setting and geographic location, says Think Advisor’s recent article entitled “15 Cheapest States for Long-Term Care: 2020.”

A recent study by Genworth found that the cost for facility and in-home care services increased on average from 1.9% to 3.8% per year from 2004 to 2020. That amounts to $797 annually for home care and as much as $2,542 annually for a private room in a nursing home.

At the current rate, some care costs are more than the 1.8% U.S. inflation rate, Genworth said.

These findings were taken from 14,326 surveys completed this summer by long-term care providers at nursing homes, assisted living facilities, adult day health facilities and home care providers. The survey encompassed 435 regions based on the 384 U.S. Metropolitan Statistical Areas, as defined by the U.S. Office of Management and Budget.

In a follow-up study, Genworth also found that these factors are contributing to rate increases for long-term care:

  • Labor shortages
  • Personal protective equipment (PPE) costs
  • Regulatory changes, such as updated CDC guidelines
  • Employee recruitment and retention issues
  • Wages demands; and
  • Supply and demand.

Here are the 15 cheapest states for long-term care, according to Genworth with their average annual cost:

15. Utah: $59,704

14. Kansas: $57,766

13. Iowa: $57,735

12. Kentucky: $57,540

11. South Carolina: $57,413

10. Tennessee: $56,664

9. North Carolina: $56,512

8. Georgia: $53,708

7. Mississippi: $52,461

6. Arkansas: $50,835

5. Oklahoma: $50,641

4. Texas: $48,987

3. Missouri: $48,753

2. Alabama: $48,240

1. Louisiana: $44,811

Speak with a qualified estate planning attorney to discuss your options for long term care.

Reference: Think Advisor (Dec. 14, 2020) “15 Cheapest States for Long-Term Care: 2020”

Should You Update Your Will When You Move?

In the excitement of a move from one state to another, people often forget that their estate plan may no longer be valid. That is because each state has its own laws about estate planning, according to a recent article “Moving to a new state? If so, make sure those estate plans have been updated” from CNBC. Once you’ve moved to a new state, you’ll want to find a local estate planning attorney to help.

A surprising 4.7 million Americans moved out of their home states last year, and while they may have had checklists including the obvious—driver’s license, finding a physician, and a new barber—finding a new estate planning attorney to update their estate plan may not have been at the top of the list. Or even the middle.

Many think a will that worked in one state is automatically valid in another, but that is not true. Other documents may not be valid, including power of attorney, living will or advance directive, health care proxy and any other estate planning documents.

The time immediately after a move is the right time to review documents for another reason: if your POA agent is now 1,400 miles away, is it realistic for that person to have that role? You probably need to find someone else. The same goes for your healthcare Power of Attorney.

Healthcare powers of attorney and other medical directives vary from state to state. What if the medical providers in your new state don’t recognize and won’t accept a medical POA from another state? If your documents are not accepted, your agent may not be able to make the decisions you had empowered them to make. Your family may need to go to court to confirm the validity of your documents. That is not something you want to force upon your family during a health crisis.

Certain states do not allow non-residents to serve as executors. Only three states allow a non-resident executor, and then only if they are directly related to you. Other states impose other restrictions, including requiring the non-resident to post a bond to protect your estate or appointing an in-state agent.

When people consider moving to another state, it’s often to lower their taxes. However, establishing a new state as your domicile and getting the tax benefit depends on many factors. Those factors include where you work, are registered to vote and what state issued your driver’s license. Also important is: the address on your estate planning documents. If your estate planning documents have your old address while you are trying to establish a new state of residence, you could run into an expensive tax snag.

Speak with your new estate planning attorney about how your assets are titled, including your trusts. Certain types of titling are not recognized in different states. Community property, tenants by the entirety and joint tenancy, with or without right of survivorship, are all treated differently in different states.

Estate taxes also differ from state to state. While federal estate tax only applies to decedents with estates valued at more than $23.4 million (for 2021), state estate taxes, inheritance taxes and gift taxes are imposed at lower levels. Most states do not impose estate taxes on transfers to a surviving spouse, but you’ll want to know what the future will bring beforehand.

An estate planning attorney in your new home state will help you navigate the difference between your old estate plan and the one that will work in your new state.

Reference: CNBC (Dec. 14, 2020) “Moving to a new state? If so, make sure those estate plans have been updated”

Estate of Charles Schulz Still Making Money

Charles Schulz’s estate made $32.5 million in the past year. That placed third on the list of the highest-paid dead celebrities. Michael Jackson is number one and fellow cartoonist Theodor Geisel aka Dr. Seuss is number two.

Some of Schulz’s income is from the new Apple TV+ show “Snoopy in Space,” as well as classics like “A Charlie Brown Christmas.”

Wealth Advisor’s recent article “Decades After His Death The Estate Of Charles Schulz Is Still Making A TON Of Money” reports the Peanuts creator is consistently one of the highest-earning dead celebrities. Schulz himself is thought to have earned more than $1 billion during the comic strip’s unprecedented 50-year run.

Schulz was born in 1922 in Minneapolis. He knew he wanted to be a cartoonist in kindergarten when he started drawing Popeye. By high school, he was submitting his original cartoons to his school paper, as well as local magazines. After his service in Europe during World War II, Schulz created a cartoon called “Li’l Folks” for the St. Paul Pioneer Press. His cartoons were noticed by United Feature Syndicate, a newspaper syndication company. They offered to syndicate Schulz’s cartoons to their national network of newspapers with one condition: they wanted him to change the name of his comic strip to Peanuts. Schulz hated that, but United Feature Syndicate was already running a comic with a very similar name, and this wasn’t an opportunity he could pass up.

The first Peanuts cartoon ran in 1950, when Schulz was 28 years old. That first year, just seven newspapers ran Peanuts. However, by 1953, Peanuts was a hit, and Schulz was earning $30,000 a year (about $292,000 today). At its zenith, Peanuts was syndicated to more than 2,600 newspapers in 71 countries and 21 languages every day. The comic strip characters also made a fortune with merchandise and endorsements. In the 1980s, Schulz was the highest-paid celebrity in the world by a wide margin. He made $30 million in royalties (about $65 million today). From 1990 until his death in 2000, he earned $40 million a year.

Over nearly 50 years, Schulz drew 17,897 published Peanuts strips. The last of his cartoons was published on Feb. 12, 2000, one day after he died. Remarkably, Schulz wrote and drew every single comic himself. When he died, his will said that no new Peanuts comic strips could be drawn by another cartoonist. So far, his wishes have been honored.

Reference: Wealth Advisor (Dec. 8, 2020) “Decades After His Death The Estate Of Charles Schulz Is Still Making A TON Of Money”

Can an Executor be Replaced?

The executor of a last will and testament is the person responsible for carrying out the instructions in a will. Giving a person this role is giving them the authority to handle many tasks concerning an estate, as explained in the article “How to Change the Executor of a Will” from KAKE.com. The person you name can be anyone you wish, from a spouse to a trusted family member, an adult child or even an estate planning attorney. Minor children may not serve as executors and some states do not permit convicted felons from serving as executors.

What does the executor do?

A beneficiary, a person who receives an inheritance from the estate, is permitted to serve as an executor, but the executor who is a beneficiary may not witness the will if they have a direct interest in it. The executor usually is in charge of:

  • Getting death certificates
  • Creating an inventory of the decedent’s assets, unless one exists already
  • Contacting an attorney to begin the probate process
  • Notifying financial institutions, including banks and investment firms of the person’s death
  • Obtaining a tax ID number for the estate and opening an estate account
  • Distributing assets to the persons named in the will.

The executor may not change the terms of the will, only carry out the instructions. They may collect a fee for their services, usually a percentage of the estate’s value. Regardless, whether they collect their fee is an individual decision.

Can you change the name of the executor on your estate?

There are many reasons why you might wish to change the person you originally named as executor to your estate. This is an important task, and if there have been changes in your life, then your estate plan and will should reflect those changes. Some of the reasons for changing your executor:

  • If the original executor dies, or becomes seriously ill and cannot fulfill their duties
  • If your spouse was the executor, but is now your ex-spouse
  • The person originally named as executor does not want the responsibility
  • Your original executor now lives many miles away.

There are two different ways to change the executor of your will. It is recommended that you discuss which of these two ways are better for your unique situation. Simple solutions often turn into estate planning nightmares.

How is a Codicil Used to Change the Executor?

A codicil is an amendment to a will that changes the terms, without changing the entire will. You specify the changes you want to make to your will, the name of the person who you now want to serve as executor from now on and the date the change needs to take effect. Estate laws are different in every state, so check with your estate planning attorney on the best way to do this. In some states, you’ll need at least two witnesses to be present when you sign and date the codicil. Remember that beneficiaries may not witness the codicil. Be careful to keep your will and the codicil in a safe place.

Why Change the Entire Will to Change Only the Executor’s Name?

The reasons for your changing your executor’s name may have occurred in combination with other changes in your life that warrant a review of your entire estate plan. This should be done every three or four years, or every time there are big life changes or big changes to tax laws. If you don’t review your estate plan, you can miss out on new opportunities to protect more of your estate for your family.

What If I Don’t Name an Executor?

Not having an executor is similar to not having a will. If you do not have either, the court will assign an executor to be in charge of distributing your estate, according to the laws of your state. You may not like how the law distributes your assets, but you will have given up any control. It’s much better for all concerned for you to have a will and make certain to have an executor.

Reference: KAKE.com (Dec. 29, 2020) “How to Change the Executor of a Will”

What are Options for Powers of Attorney?

Power of attorney (POA) documents are an important component of an estate plan. There are four types. You should review each carefully to see which one will work best for you in your situation. What is required for a power of attorney, depends upon what power you want to authorize, says Carmel’s Hamlet Hub in a recent article titled “4 Types of Power of Attorney.”

Limited Power of Attorney. If you need someone to act on your behalf for a limited purpose, use a limited power of attorney. This will specify the date/time after which the power no longer is in effect.

General Power of Attorney. This is an all-encompassing power of attorney, in which you assign every power and right you possess as an individual to a certain party. It’s typically used where the principal is incapacitated. It is also used with those who don’t have the time, skills, knowledge, or energy to handle all of their financial matters. The power you assign is in effect for your lifetime, or until you are incapacitated (unless it is also “durable”). However, you can elect to rescind it before then.

Durable Power of Attorney. The key distinction with a durable power of attorney is that it stays in effect, even after you’ve become incapacitated. Therefore, you want to sign a durable power of attorney if: (i) you want to give the designated agent authority ONLY if you’re unable to act for yourself; or (ii) you want to give the agent immediate authority that continues after you’re unable to act for yourself. You need to contact an experienced estate planning attorney to discuss these different types of powers.

Note that a limited or general power of attorney ends when you become incapacitated. At that point, a court will appoint a guardian or conservator to handle your matters. You can rescind a durable power of attorney at any time prior to becoming incapacitated.

Springing Power of Attorney. This document serves the same purpose as a durable power of attorney, but it’s effective only upon your becoming incapacitated. When drafting this, your experienced estate planning attorney will help you make clear your definition of “incapacitated.”

Remember that you’ll need to state in your power of attorney document which powers and duties you are assigning to the attorney-in-fact.

Regardless of the type of power of attorney you implement, the attorney-in-fact has the power to do only what your POA indicates. Contact an experienced estate planning attorney to discuss the different types of powers and which would apply to your circumstances.

Reference: Carmel’s Hamlet Hub (Dec. 16, 2020) “4 Types of Power of Attorney”

 

Should I Add that to My Will?

In general, a last will and testament is an easy and straightforward way to state who gets what when you die and designate a guardian for your minor children, if you (and your spouse) die unexpectedly.

MSN’s recent article entitled “Things you should never put in your will” explains that you can be specific about who receives what. However, attaching strings or conditions may not work because there’s no one to legally enforce the terms. If you have specific details about how a person should use their inheritance, whether they are a spendthrift or someone with special needs, a trust may be a better option because you’ll have more control, even from beyond the grave.

Keeping some assets out of your will can actually benefit your future heirs because they’ll get their inheritance faster. When you pass on, your will must be “proven” and validated in a probate court prior to distribution of your property. This process takes some time and effort, if there are issues—including something in your will that doesn’t need to be there. For example, property in a trust and payable-on-death accounts are two types of assets that can be distributed to your beneficiaries without a will.

Don’t put anything in a will that you don’t own outright. If you jointly own assets with someone, they will likely become the new owner. For example, this applies to a property acquired by married couples in community property states.

Property in a revocable living trust. This is a separate entity that you can use to distribute your assets which avoids probate. When you title property into the trust, it is subject to the trust’s rules.  Because a trust operates independently, you must avoid inconsistencies and not include anything in your will that the trust addresses. Contact an experienced estate planning attorney to discuss.

Assets with named beneficiaries. Some financial accounts are payable-on-death or transferable-on-death. They are distributed or paid out directly to the named beneficiaries. That makes putting them in a will unnecessary (and potentially troublesome, if you’re inconsistent). However, you can add information about these assets in your letter of instruction (see below). As far as bank accounts, brokerage or investment accounts, retirement accounts and pension plans and life insurance policies, assign a beneficiary rather than putting these assets in your will.

Jointly owned property. Property you jointly own with someone else will almost always directly pass to the co-owner when you die, so do not put it in your will. A common arrangement is joint tenancy with rights of survivorship.

Other things you may not want to put in a will. Businesses can be given away in a will, but it’s not the best plan. Wills must be probated in court and that can create a rough transition after you die. Instead, work with an experienced estate planning attorney on a succession plan for your business and discuss any estate tax issues you may have as a business owner.

Adding your funeral instructions in your will isn’t optimal. This is because the family may not be able to read the will before making arrangements. Instead, leave a letter of instruction with any personal wishes and desires.

Reference: MSN (Dec. 8, 2020) “Things you should never put in your will”

 

Should I Create Estate Plan Myself?

US News & World Report’s recent article entitled “Do-It-Yourself Estate Planning Mistakes” provides some issues that do-it-yourself estate planners might encounter and why it is best to consult an experienced estate planning attorney.

What are the Right Questions to Ask?  Completing a simple and straightforward form—like a beneficiary designation for your IRA— is one thing, but what about tax consequences, probate law, new legislation and court procedures? Are you ready to take these on? The trick is that you may not know what you don’t know. That’s why it’s money well-spent to employ the services of an experienced estate planning attorney.

Is My Situation Complex? Likewise, you may have property and assets all over the country (or world) that require expert advice. You must be certain that your planning, tax planning and financial planning all work together because they’re all interrelated. If you only work on one of these areas at a time, you may create complications in another area and unintentionally increase your expenses or taxes. It can also create headaches and expense for your heirs. If you have a child with special needs, a blended family, or want to control how and where a beneficiary spends your money, a cookie cutter approach won’t do. Instead, you should see an experienced estate planning attorney.

What are the Probate Laws in My State? Estate planning laws and taxes are different in each state.  Your state will have different rules and legal procedures for creating and administering an estate. There are many different state laws that govern inheritance taxes. There are 17 states plus DC that tax your estate, inheritance or both, and the tax laws can affect your situation when planning. Eleven states plus DC have only an inheritance tax. One state taxes both inheritances and estates.

If you mess up your estate planning documents, if could cause significant problems for your family. You best bet is to work with an experienced estate planning attorney in your state.

Reference: US News & World Report (Dec. 18, 2020) “Do-It-Yourself Estate Planning Mistakes”

 

What Legal Documents Should You Have?

You might think that the coronavirus pandemic has caused everyone to get their estate planning documents in order, but the 20th annual Transamerica Retirement Survey of Retirees found that 30% of all retirees have nothing prepared—not even a will. That’s not good, for them or their families, says this timely article “6 Legal Documents Retirees Need—but Don’t Have” from MSN Money.

The survey revealed some troubling facts:

Only 32% have a Health Care Power Of Attorney or Medical Proxy, which allows named persons to make medical decisions on the retiree’s behalf.

Only 30% have an Advance Directive or Living Will, sharing their end-of-life wishes for medical care.

A mere 28% have a designated Power of Attorney, so an agent can act on their behalf to pay bills and manage finances, if they are too sick to do so.

Worse, only 19% have written funeral and burial arrangements. Their families will be left to make all the decisions.

18% have a Health Insurance Portability and Accountability Act (HIPAA) waiver, which is needed so someone else may speak with health care and insurance providers on their behalf.

11% have a Trust of any kind.

The study shines a bright light on a big problem that will be faced by families, if their elders have not taken steps to prepare for incapacity or death. Ignoring the problem does not make it go away. It becomes more complicated, expensive and stressful for the loved ones left behind.

These documents and a last will and testament are needed, so families have the legal right to take care of their loved ones while they are living, as well as handle their estates after they pass. Contact an estate planning attorney to assist you in preparing these documents.

Without them, the family may find themselves having to go to court to have a guardian appointed in the event their senior loved ones are too ill to manage their financial affairs.

If the loved one should die and there is no will in place, the court will rely on the state’s estate laws to determine who inherits assets. An estranged family member could end up owning the family home and all of its contents, regardless of their absence from the family.

An experienced estate planning attorney can work with the family in a safe, socially distanced manner to have the necessary documents created, before they are needed.

Reference: MSN MONEY (Dec. 15, 2020) “6 Legal Documents Retirees Need—but Don’t Have”

 

How to Plan for ‘Black Sheep’ Kid in Will

Every family has unique circumstances as far as wealth, financial planning and plans for the future. Therefore, it is critical that you consider your individual beneficiaries’ circumstances, when it comes to estate planning.

Kiplinger’s recent article entitled “Estate Planning for ‘Black Sheep’ Beneficiaries” explains that this may take the shape of child with a substance abuse issue, a lack of financial acumen and responsibility, or a mental illness. You also may want to reward certain behaviors in the future. All these situations can be addressed thoughtfully and effectively in your estate planning documents with the help of an experienced estate planning attorney. Let’s dispel some of the common myths surrounding these issues:

Myth #1: You are required to split your estate evenly among your children. Disinheriting a beneficiary happens a lot. It can occur for a variety of reasons that have nothing to do with disapproval of a potential beneficiary’s lifestyle choices. Regardless of the reason for disinheriting completely or making unequal distributions, it’s best to discuss this in your estate documents or in a separate letter. Give the reasons for your decision to head off any possible claim against the estate or even just hard feelings among family members.

Myth #2: Once you’ve disinherited your black sheep, it’s irreversible. Not so. You should review your estate planning choices regularly because situations change (hopefully for the better), and you can revise your estate plan to provide incentives for your beneficiary to continue making progress.

Myth #3: You have no control of the issue after you pass away. While there’s no direct control after you die, you can, however, make specific instructions in your trust to reward and motivate your black sheep to behave in a certain fashion. You can also treat the share of inheritance for one beneficiary differently than others. Therefore, a financially responsible child may be allowed to access such a share of the estate in one lump sum; but you create a trust for the second child who has issues.

Myth #4: Trusts are huge hassle. Certain trusts permit you to name a person to help your beneficiary manage their inheritance. This can be a family member or friend, as well as a professional trustee who will assume the administrative responsibilities of a trust.

Don’t avoid the subject of estate planning. Work with an experienced estate planning attorney and discuss the options available.

Reference: Kiplinger (Dec. 8, 2020) “Estate Planning for ‘Black Sheep’ Beneficiaries”

 

How Can Blended Families Use Estate Planning to Protect All of the Siblings?

If two adult children in a blended family receive a lot more financial help from their parent and stepparents than other children, there may be expectations that the parent’s estate plan will be structured to address any unequal distributions. This unique circumstance requires a unique solution, as explained in the article “Estate Planning: A Trust Can Be Used to Protect Blended Families” from The Daily Sentinel. Blended families in which adult children and stepchildren have grandchildren also require unique estate planning.

Blended families face the question of what happens if one parent dies and the surviving step parent remarries. If the deceased spouse’s estate was given to the surviving step parent, will those assets be used to benefit the deceased spouse’s children, or will the new spouse and their children be the sole beneficiaries?

In a perfect world, all children would be treated equally, and assets would flow to the right heirs.  However, that does not always happen. There are many cases where the best of intentions is clear to all, but the death of the first spouse in a blended marriage change everything.  Other events occur that change how the deceased’s estate is distributed. If the surviving step-spouse suffers from Alzheimer’s or experiences another serious disease, their judgement may become impaired.

All of these are risks that can be avoided, if proper estate planning is done by both parents while they are still well and living. Chief among these is a trust,  a simple will does not provide the level of control of assets needed in this situation. Don’t leave this to chance—there’s no way to know how things will work out. Contact an experienced estate planning attorney to assist you.

A trust can be created, so the spouse will have access to assets while they are living. When they pass, the remainder of the trust can be distributed to the children.

If a family that has helped out two children more than others, as mentioned above, the relationships between the siblings that took time to establish need to be addressed, while the parents are still living. This can be done with a gifting strategy, where children who felt their needs were being overlooked may receive gifts of any size that might be appropriate, to stem any feelings of resentment.

That is not to say that parents need to use their estate to satisfy their children’s expectations. However, in the case of the family above, it is a reasonable solution for that particular family and their dynamics.

A good estate plan addresses the parent’s needs and takes the children’s needs into consideration. Every parent needs to address their children’s unique needs and be able to distinguish their needs from wants. A gifting strategy, trusts and other estate planning tools can be explored in a consultation with an experienced estate planning attorney, who creates estate plans specific to the unique needs of each family.

Reference: The Daily Sentinel (Dec. 16, 2020) “Estate Planning: A Trust Can Be Used to Protect Blended Families”