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Law Office of Michael D. DellaMonaca

Have a Plan for Life

How Risky Is the Coronavirus for Seniors?

MarketWatch’s recent article entitled “America’s growing elderly population is at risk — here’s what we can learn from Italy” says that we need to keep as many people at home to avoid spreading the disease, especially considering not everyone shows signs of the coronavirus but could still be carriers, and protect all citizens, especially the most vulnerable, including the elderly and those with heart and lung diseases.

“What you’re now hearing repeatedly, is that people over 60 and people who have chronic conditions are most at risk of coronavirus,” said Paul Irving, chairman of the Milken Institute Center for the Future of Aging. “That does create serious concerns for older Americans.”

The United States has more than 4,000 confirmed cases of the coronavirus, and 69 deaths.

Italy is to date the hardest hit country in Europe and has the second highest number of confirmed cases and deaths from the coronavirus. China started spreading the infectious disease in December. Italy experienced its highest number of cases within a 24-hour period last weekend — an increase of 3,590 cases and 398 deaths, officials said.

The State of Washington has had the most deaths in the U.S.—many of which were linked to an outbreak at a nursing home in Kirkland in February. There were 26 patients at the Life Care Center of Kirkland who have died between February 19 and March 13, the center said. More than 50% of its residents had been moved to hospitals. New York City, which just shut the nation’s largest public school system for a month, has had five cases as of Sunday night, including two people in their 50s, two people in their late 70s and one woman in her 80s.

The average age of those who passed away in Italy was 81, and many suffered from pre-existing health issues, the BBC said. In China, the death rate among those 80 and older was about 15%, according to a Chinese CCDC report last updated in the middle of February, when there were approximately 72,000 confirmed cases. Those between 70 and 79 years old had a death rate of 8%. By comparison, those in their 20s and 30s each had a death rate of 0.2%, according to Worldometers, which aggregated global reports related to coronavirus.

“There’s also a risk to the broader population, but we really need to focus on protecting our elders,” Irving said. “The older a disease-sufferer, the higher the risk.”

Although just 14.50% of the United States’ population is 65 and older, that number is anticipated to increase in the next decade. Since the start of 2011, about 10,000 people have turned 65 years old each day, and they will continue to do so until 2030, according to nonprofit think tank Pew Research Center. At that point, roughly 18% of the country will be 65 or older.

Government responses to the coronavirus include closing large gatherings of people. like sporting events, universities, and restaurants, which may be important in slowing down the spread of the virus. The CDC recommends all Americans, especially older people, to stay indoors, stock up on necessary food and medications, and reduce contact with others. The CDC also strongly urges everyone to wash their hands with soap and water for 20 seconds, avoid touching their faces and use hand sanitizer with at least 60% alcohol when soap is not available. If you have any questions or questions give your estate planning attorney a call.

Reference: MarketWatch (March 16, 2020) “America’s growing elderly population is at risk — here’s what we can learn from Italy”

Are You One of the Many Headed toward Financial Disaster?

You may be saving for retirement, paying down debt or simply budgeting for your everyday expenses. Whatever your goal is, it’s critical to have a plan in place. Some planning now can go a long way in making sure your finances are as healthy as possible. Without any type of plan, you’re just blindly throwing your money around and hoping for the best.

Motley Fool’s recent article entitled “A Whopping Number of Older Adults May Be Headed Toward a Financial Disaster” says that millions of older adults are making a critical mistake as they plan for the future. If they don’t make any changes soon, it could be extremely expensive.

More than one-third (34%) of baby boomers admit that they haven’t conducted any financial planning whatsoever in the last two years, according to the National Association of Personal Financial Advisors. Therefore, they haven’t planned for retirement, managed a budget, set any goals, reviewed their investments, considered their insurance needs, or done any tax or estate planning. It’s not just baby boomers who aren’t planning. Almost a quarter (24%) of Gen Xers also say they haven’t done any financial planning over the past two years. The generations most likely to have thought about the future are the millennial generation and Gen Z — only 16% and 15%, respectively, said that they haven’t done any recent financial planning.

While all of us should be thinking about our future plans, it’s even more essential for older Americans to focus on their finances. If you’re close to retirement age and haven’t reviewed your investments or thought about your retirement plan recently, you’ll have a hard time knowing if you’re on track. The longer you wait to know if you’re off track, the more difficult it’ll be to make changes and to catch up.

Baby boomers should have plans in place, in case the worst happens. Review your insurance and make an estate plan to be certain that your family is protected if something happens to you. Look at your plans regularly to make sure everything is up to date.

The first part of creating a financial plan is to set goals, like preparing for retirement, paying down your debt, or creating an emergency fund. Next, examine your money situation to find extra cash to put toward those goals. Begin monitoring your spending to get a good idea of just where your money is going every month. It’s a lot harder to stay on a budget and save more, if you don’t know how much you’re spending. Once you get into the habit of tracking your spending, it’ll be easier to discover parts of your budget to cut back. You can start reallocating that money toward your financial goals.

You should also remember that you’ll need to review your plan regularly to make adjustments when needed. This is especially vital when saving for retirement, because there many factors to consider as you’re saving. At least once a year, check that your retirement savings goal is still accurate, and decide whether your current savings are on track to reach that goal. Take a look at your investments to see if your asset allocation is still aligned with your risk tolerance.

Reference: Motley Fool (Feb. 8, 2020) “A Whopping Number of Older Adults May Be Headed Toward a Financial Disaster”

What are the Main Estate Planning Blunders to Avoid?

There are a few important mistakes that can make an estate plan defective—most of these can be easily avoided by reviewing your estate plan periodically and keeping it up to date.

Investopedia’s article from a few years ago entitled “5 Ways to Mess Up Estate Planning” lists these common blunders:

Not Updating Your Beneficiaries. Big events like a marriage, divorce, birth, adoption and death can all have an effect on who will receive your assets. Be certain that those you want to inherit your property are clearly detailed as such on the proper forms. Whenever you have a life change, update your estate plan, as well as all your financial, retirement accounts and insurance policies.

Forgetting Important Legal Documents. Your will may be just fine, but it won’t exempt your assets from the probate process in most states, if the dollar value of your estate exceeds a certain amount. Some assets are inherently exempt from probate by law, like life insurance, retirement plans and annuities and any financial account that has a transfer on death (TOD) beneficiary listed. You should also make sure that you nominate the guardians of minor children in your will, in the event that something should happen to you and/or your spouse or partner.

Lousy Recordkeeping. There are few things that your family will like less than having to spend a huge amount of time and effort finding, organizing and hunting down all of your assets and belongings without any directions from you on where to look. Create a detailed letter of instruction that tells your executor or executrix where everything is found, along with the names and contact information of everyone with whom they’ll have to work, like your banker, broker, insurance agent, financial planner, etc.. You should also list all of the financial websites you use with your login info, so that your accounts can be conveniently accessed.

Bad Communication. Telling your loved ones that you’ll do one thing with your money or possessions and then failing to make provisions in your plan for that to happen is a sure way to create hard feelings, broken relationships and perhaps litigation. It’s a good idea to compose a letter of explanation that sets out your intentions or tells them why you changed your mind about something. This could help in providing closure or peace of mind (despite the fact that it has no legal authority).

No Estate Plan. While this is about the most obvious mistake in the list, it’s also one of the most common. There are many tales of famous people who lost virtually all of their estates to court fees and legal costs, because they failed to plan.

These are just a few of the common estate planning errors that commonly happen. Make sure they don’t happen to you: talk to a qualified estate planning attorney.

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

Hey Dad, Can I Get an Advance on My Inheritance?

Most parents want to divide their estate equally among their heirs, but sometimes things just don’t work out that way. That’s especially the case when one child needs more help than another. Therefore, what parents will often do is count the distributions they make during their lifetime as advances against the child’s future inheritance. This doesn’t always go smoothly, says the article “Lifetime advances of inheritances” from Lake County News.

Equalizing distributions to some children to offset any substantial distributions made to offset the total distribution can lead to trouble, if certain legal requirements are not addressed. In California, the Probate Code is very specific. There are three different approaches in which lifetime distributions are counted as advances of inheritances at death:

  1. The instrument provides for deduction of the lifetime gift from the at-death transfer
  2. The transferor declares in a contemporaneous writing that the gift is in satisfaction of the at-death transfer or that its value is to be deducted from the value of the at-death transfer and
  3. The transferee acknowledges in writing that the gift is in satisfaction of the at-death transfer or that its value is to be deducted from the value at the at-death transfer.

In the first example, the decedent’s will, or trust expressly says that lifetime distributions are to be counted against the future inheritance. This may state a specific dollar amount or may refer to a ledger that tracks ongoing lifetime gifting. The ledger approach is often used when a child is dependent upon a parent for ongoing support, paying off school loans or paying a mortgage.

The second example, which involves a written record of the gift, was the subject of a recent appellate court decision. The deceased father kept track of all monetary gifts to his children. The father’s bookkeeper maintained a spreadsheet and was told by the father that the list was important, so that the payments would be deducted from inheritances. At the father’s death, the son had received more than $450,000 more than the daughter. The son contested the daughter’s request for equalizing the inheritance based on the ledger. The appellate court stated that the ledger met the requirements to serve as a contemporaneous written record. The court also found that the permanent ledger was property authenticated and entered into evidence, based on the daughter’s testimony that she found the ledger among her father’s papers and that it was written in her father’s handwriting.

In the third scenario, where there was a written acknowledgment by the person receiving the “advance” that the money was in satisfaction of the at-death transfer, the court found that the requirement was satisfied and the son had acknowledged that the assets given to him were advances on his inheritance.

A better scenario, and one that would have prevented some, if not all, of the litigation described above, would be to have estate planning documents that clearly state whether any disproportionate lifetime gifting to beneficiaries is to be offset with equalizing payments to the other beneficiaries at death. Your estate planning attorney will be able to create the best plan if your heirs need financial support, following the laws of your state.

Reference: Lake County News (March 14, 2020) “Lifetime advances of inheritances”

Coronavirus News Should Make You Think about Estate Planning

The global Coronavirus (COVID-19) outbreak has many of us thinking about what could happen, if the disease spreads more fully across the general population. We all need to plan for what could possibly happen. To protect yourself and your family, it’s smart to be certain that you have the following these documents prepared and updated, says Motley Fool’s recent article entitled “The Coronavirus Should Have You Thinking About These 4 Things.”

  1. A will or revocable trust. Be sure that your assets will pass to those who you want to receive them after your death. This is critical during crisis times. You don’t want to make things any harder than they need to be. Create an estate plan to avoid potentially expensive and time-consuming processes like probate, which will have greater importance, if your family is confined to their homes in a quarantine situation.

A simple will can cover what happens to your assets at death. This typically works well, especially for modest estates. State laws differ on how complicated a probate process would be with a basic will. Some people opt to use a fully funded revocable trust that doesn’t require probate. For either a will or a revocable trust, make sure that it’s up to date and reflects your current preferences and family circumstances.

  1. Updated beneficiary designations. If you have an IRA, 401(k) account, or life insurance policy, those you name as beneficiaries of that account will receive the proceeds, despite a totally different from arrangement in your will or trust. Many of us also don’t designate any beneficiary for these accounts, which means added complications in the event of death.
  2. Healthcare power of attorney. When we’re in the midst of this Coronavirus, it’s even more urgent that you’ll be able to get the healthcare you need, if you’re hit with this illness. A durable power of attorney for healthcare will give the individuals you choose the ability to make whatever medical decisions you specify on your behalf. An estate planning attorney can help you draft documents that match your specific wishes.
  3. Financial power of attorney. You can designate an agent to help take care of your finances, if you become incapacitated or otherwise unable to handle your financial affairs. A general durable power of attorney for financial matters is another document that lets you delegate responsibility and authority to make financial transactions to the person you name.

Estate planning may not be the highlight of your week, but the Coronavirus outbreak has more people thinking about what they need to do. Make sure your family will have what they need even if something happens to you.

Reference: Motley Fool (March 8, 2020) “The Coronavirus Should Have You Thinking About These 4 Things”

What Did Kobe Bryant Do for Estate Planning?

Many people were shocked to learn about the death of NBA superstar Kobe Bryant. As one of the wealthiest athletes in the world, his estate is expected to be the subject of increasing interest for his family and others.

The retired Los Angeles Lakers star was killed along with eight other people, including his 13-year-old daughter, Gianna, in a helicopter crash in Calabasas, California last month. Bryant was only 41 years old and seemed ready for a successful career after professional basketball in business. The news devastated his fans and the world at large, but it was heartbreaking for his widow Vanessa Bryant and their three surviving young children.

Newsone’s recent article entitled “Did Kobe Bryant Have A Will? NBA Legend’s Death Highlights Estate Planning In Life” reports that Kobe Bryant died with a net worth of about $600 million. This was in large part to being the second-highest-paid NBA player of all time with career earnings of $323 million just from his 20 years’ worth of league contracts alone, according to Forbes.

You might think that the uber-wealthy need not concern themselves with estate planning. That’s what lawyers are for right? However, that’s actually not the case in many notable instances — especially with members of the black community.

Poor estate planning is fairly common for black people. One scholar says that the failure of African Americans to prepare wills, is likely linked to distrust of government, a belief that their children will ultimately inherit their property and reticence to create division within the family.

One estate planning lawyer told Black Enterprise that “Black Americans are 50% less likely to have a living will, in place in comparison to other groups.”

It is not just African Americans with this problem: a Gallup poll found that most people in the U.S. don’t have a will. AARP estimated that six in 10 adults in America don’t have one.

In many cases, the lack of having a will and testament in place can create family battles, like over the estates of Prince and Aretha.

Hopefully, Bryant was prepared and had a will in place to make sure he controlled his finances in death, as he did in life.

Reference: Newsone (Jan. 30, 2020) “Did Kobe Bryant Have A Will? NBA Legend’s Death Highlights Estate Planning In Life”

Charitable Giving and Your Estate Plan

Americans are a country of generous people. We give to organizations that we feel connected to, and we give to charities that we feel are important. We also give to honor our loved ones, to make life better in our communities and to help when disaster strikes.

Most people don’t give to charity purely for the tax benefits, but charitable giving has long been a benefit of lowering income taxes during our lifetimes, as well as helping minimize estate taxes when we die, says the article “5 Ways to Incorporate Charitable Giving into Your Estate Plan” from Kiplinger. Therefore, if you are charitably minded, why not achieve the most tax-savings you can? Here are five ways to do this.

Appreciated Stock. Gifts of publicly traded stock that has grown or appreciated in value is a good way to support a charity while you are living. If you sell appreciated stock, you will need to pay capital gains tax on the appreciation. However, if you donate appreciated stock to a charity, you’ll receive a charitable income tax deduction equal to the full market value of the stock at the time of the gift. That avoids capital gains taxes. You get the benefit on the appreciated amount, without having to sell it. The charity can, if it wants, sell the stock without paying any capital gains taxes, because registered nonprofits are tax exempt.

Charitable Rollovers. If you are older than 70 ½, you may donate up to $100,000 per year to charities directly from your IRA. This is known as a Qualified Charitable Rollover, or a QCD. The QCD counts towards any Required Minimum Distributions (RMDs) that you need to take from your IRA annually. Under the recently passed SECURE Act, in the future RMDs must be taken by December 31, 2020, after the account owner celebrates their 72nd birthday. Because RMDs are taxable income, they are taxed at ordinary income rates.

By donating through a QCD, you can support a charity, fulfill your RMD requirement and exclude the amount that you donate from your taxable income. For those who don’t need their RMDs, that’s a win-win situation.

Bequest by Will or Revocable Trust. A more traditional way to support a charity, is to leave an amount in your will or revocable trust. The bequest is language in your will or trust that states the amount you want to leave to the charity, clearly identifying the charity you want to receive the funds, and if you want, stating the purpose that you’d want the charity to use the funds. An important point: make sure that you use the legally accurate name of the charity to avoid any confusion. This is a common error that causes no many problems for charities.

Consider also giving a donation that can be used for a charity’s “general purpose.” This lets the charity decide where to best allocate your donation, rather than tying the money to a specific program. If you chose to list a specific purpose, meet with the development office or the executive director at the charity to ensure that they are able to fulfill that desire. Otherwise, the charity may need to refuse the bequest.

Name a Charity as the Beneficiary of Retirement Accounts. This can be done by naming the charity as a beneficiary on the account documents. Be sure to use the legally correct name of the charity. The charity will be able to withdraw funds from the retirement account without paying taxes. People who receive funds from retirement accounts pay income tax rates on distributions, but charities do not. You may want to donate retirement account funds to charities, and non-taxable assets to heirs.

Charitable Remainder Trusts. This is a way to help the charity and provide for heirs. Your estate planning attorney would create a Charitable Remainder Trust (CRT) and names the CRT as the beneficiary of an IRA. A CRT is a “split interest trust,” where a person receives annual payments for the CRT for a set period of time. When the person or charitable organization’s interest in the CRT ends, the remaining funds are distributed to the charity of your choosing. There are very strict rules about how CRTs are structured, including the percentages that the charity must receive. An estate planning attorney will be able to create this for you.

Reference: Kiplinger (March 2, 2020) “5 Ways to Incorporate Charitable Giving into Your Estate Plan”

How Do I Revoke a Revocable Trust?

A revocable trust is a flexible legal vehicle that lets the creator (known as the grantor) manage trust assets, as well as to alter the trust itself or its beneficiaries at any time in her lifetime. Also called a “living trust,” this trust is frequently used to transfer assets to heirs to avoid the time and expenses of probate. It is much different than if assets were simply bequeathed in a will. During the life of the trust, income earned is distributed to the grantor, and only after her death does its property transfer to the beneficiaries.

A recent Investopedia article asks “How exactly does one go about revoking a revocable trust?” According to the article, people might revoke a trust for several reasons, but typically it involves a life change. A common reason for revoking a trust, is a divorce when the trust was created as a joint document with one’s soon-to-be ex-spouse.

A trust might also be revoked because the grantor wants to make changes that are so extensive that it would be simpler to dissolve the trust and create a new one. A revocable trust may also be revoked, if the grantor wants to appoint a new trustee or totally change the provisions of the trust.

Note that while they avoid probate, revocable trusts aren’t exempt from estate taxes. Because of the fact that the grantor has control of the assets during his or her lifetime, the property is considered part of the taxable estate.

When dissolving a revocable trust, first remove all the assets that have been transferred into it. This means changing titles, deeds, or other legal documents to transfer ownership from the assets of the trust back to the trust’s grantor directly. Next, have a legal document created that states the trust’s creator, having the right to revoke the trust, does want to revoke all terms and conditions of the trust and dissolve it completely. This is often called a “trust revocation declaration” or “revocation of living trust.” As a seasoned estate planning attorney to create this document for you to be sure that it is correctly worded and meets all the qualifications of your state’s laws. If the trust has a variety of assets, it is also often smarter to let an experienced attorney make certain that everything has been properly transferred out of the trust.

The dissolution document should be signed, dated, witnessed and notarized. If the trust being dissolved was registered with a specific court, the dissolution document should be filed with the same court. Otherwise, you can just attach it to your trust papers and store it with your will or new trust documents.

Reference: Investopedia (Jan. 13, 2020) “How exactly does one go about revoking a revocable trust?”

The Second Most Powerful Estate Planning Document: Power of Attorney

All too often, people wait until it’s too late to execute a power of attorney. It’s uncomfortable to think about giving someone full access to our finances, while we are still competent. However, a power of attorney can be created that is fully exercisable only when needed, according to a useful article “Power of attorney can be tailored to circumstances” from The News-Enterprise. Some estate planning attorneys believe that the power of attorney, or POA, is actually the second most important estate planning document after a will. Here’s what a POA can do for you.

The term POA is a reference to the document, but it also is used to refer to the person named as the agent in the document.

Generally speaking, any POA creates a fiduciary relationship, for either legal or financial purposes. A Medical or Healthcare POA creates a relationship for healthcare decisions. Sometimes these are for a specific purpose or for a specific period of time. However, a Durable POA is created to last until death or until it is revoked. It can be created to cover a wide array of needs.

Here’s the critical fact: a POA of any kind needs to be executed, that is, agreed to and signed by a person who is competent to make legal decisions. The problem occurs when family members or spouse do not realize they need a POA, until their loved one is not legally competent and does not understand what they are signing.

Incompetent or incapacitated individuals may not sign legal documents. Further, the law protects people from improperly signing, by requiring two witnesses to observe the individual signing.

The law does allow those with limited competency to sign estate planning documents, so long as they are in a moment of lucidity at the time of the signing. However, this is tricky and can be dangerous, as legal issues may be raised for all involved, if capacity is challenged later on.

If someone has become incompetent and has not executed a valid power of attorney, a loved one will need to apply for guardianship. This is a court process that is expensive, takes several months and leads to the court being involved in many aspects of the person’s life. The basics of this process: three professionals are needed to personally assess the “respondent,” the person who is said to be incompetent. The respondent loses all rights to make decisions of any kind for themselves. They also lose the right to vote.

A power of attorney can be executed quickly and does not require the person to lose any rights.

The biggest concern to executing a power of attorney, is that the person is giving an agent the control of their money and property. This is true, but the POA can be created so that it does not hand over this control immediately.

This is where the “springing” power of attorney comes in. Springing POA means that the document, while executed immediately, does not become effective for use by the agent, until a certain condition is met. The document can be written that the POA becomes in effect, if the person is deemed mentally incompetent by a doctor. The springing clause gives the agent the power to act if and when it is necessary for someone else to take over the individual’s affairs.

Having an estate planning attorney create the power of attorney that is best suited for each individual’s situation is the most sensible way to provide the protection of a POA, without worrying about giving up control while one is competent.

Reference: The News-Enterprise (Feb. 24, 2020) “Power of attorney can be tailored to circumstances”

Can an Elder Law Attorney Help My Family?

The right elder law attorney can counsel a family through the difficult details and requirements of the situations that may come up to protect the rights and welfare of seniors and their families. An elder law attorney may help with issues, such as guardianship, conservatorship, power of attorney, estate planning, Medicaid planning, probate and estate administration and advanced directives.

The Senior List’s recent article entitled “What is Elder Law and How Can an Elder Law Attorney Help Me?” explains that because the laws on the care of the elderly differ in each state and are always subject to change, it is essential to find an elder law attorney who is skilled, knowledgeable and up-to-date on elder law policy and legal issues.

Before meeting with an elder law attorney, create a list of the specific concerns for the present and foreseeable future so you know what qualifications and capabilities your attorney will need. You want a lawyer who’s experienced and educated, as well as comfortable to speak with.

You can ask these questions of your elder law attorney to help you make your decision:

  • How long have you been practicing in elder law?
  • Do you stay up to date on this area of law, by ongoing study and attending seminars on this subject matter?
  • Take a look at the required services we think will be needed. Can you fulfill them?
  • Do you have litigation experience?
  • What type of fee schedule do you offer?

If you’d like to try to stay up to date on what’s happening within elder law, go online and search for “aging and disability” as well as the name of the state in which the senior lives. Every state government has a department in charge of these matters (the official names will vary).

While caring for a love done can be stressful, understanding what options are available to them and to you, can make it all much easier. We suggest you contact an experienced elder law/estate planning attorney.

Reference: The Senior List (Oct. 10, 2019) “What is Elder Law and How Can an Elder Law Attorney Help Me?”