Estate Planning

Do I Really Need a Health Care Proxy?

April 30, 2020 No Comments

The Pauls Valley Democrat’s recent article entitled “Advance directives and living wills” explains that an Advance Directive has three parts:

A living will
Naming of your health care agent; and
Your directions for anatomical gifts.

The individual that you name as your Health Care Proxy will make decisions for your treatment and care, if you’re unable to do so. These decisions may extend to all medical issues and aren’t limited to end-stage, life determining decisions that are mentioned in your living will. This is a form of power of attorney that authorizes your agent to act in your behalf to address issues like these:

Accessing your medical information
Discussing your treatment options with your healthcare providers
Getting second opinions on your diagnosis
Selecting and authorizing various medical tests
Your placement in a hospital or care facility
Transferring your care to a new physician; and
Communicating your wishes on life support in terminal or unconscious situations.

For end of life decisions, your health care proxy is bound by your written wishes as expressed in your living will. Life support can be terminated, only if you so authorize in writing. Your healthcare proxy can’t make that decision for you, because that is “personal” to you. You may select one or more persons to act as your proxy, although if two are selected, you should predefine what to do in the event of a conflict.

A best practice is to choose a person who’s younger than you who is geographically close, a person with time to assist you and with whom you’re willing to share in advance your wishes, likes and dislikes as to medical care. This person should be trusted to act and honor your wishes.

Because many decisions relate to your very personal concerns about religion, death and dying, these feelings should be shared with your health care proxy before any serious situation.

The Advance Directive is a very important document that pertains to your wishes, as they relate to medical care, end-of-life and death.

Parts I and II can discuss your wishes for care treatment, as well as your choice of a person to represent your wishes. These are two very important issues. Take the time to consider the advance written expression of your own wishes.

We are ready to help walk you through these decisions, understand the ramifications of your choices, and memorialize your plans in binding legal documents. We are currently offering no-contact initial conferences remotely if you prefer. Book a call now and let us help you make the right choices for yourself and your loved ones.

http://kornfeldlawfirm.com/contact-us/

Reference: Pauls Valley Democrat (Feb. 12, 2020) “Advance directives and living wills”

Transferring the Family Home to Your Child is Never Good Estate Planning

April 27, 2020 No Comments

Transferring ownership of the family home to an adult child may seem like a simple approach for avoiding having the house go through probate, or even qualifying easily for Medicaid. However, this seemingly simple solution comes with many problems, including taxes and the potential for years of delay for qualifying for Medicaid. That’s the advice from the article “Don’t Give Your Adult Kids Your House” from Nerd Wallet.

There are many other ways to transfer a house to family members. Estate planning lawyers will be able to help you accomplish this, without creating extra problems for your family.

First, if you leave the house to your children in your will, which means they don’t get it until you die, they receive something called a “step-up in basis.” This means that all of the appreciation of the house that occurred during the time that you owned the house until your death is not taxed.

Here’s an example. A financial planner advises his client not to let his mother gift him the family home. She paid $16,000 for it back in 1976, and the current market value of the house was close to $200,000. None of that increase in value would be taxable if the son inherited the house. However, she signed a quitclaim to give her son the house while she was living and died shortly afterwards. The estimated tax bill was about $32,000.

Some families who realize the impact of this when it’s almost too late, scramble to give the house back to the parents. They do a last-minute deed change, before it’s too late. There isn’t always time for this.

When it comes to transferring the house, so a parent can qualify for Medicaid, there’s a five-year look back that prohibits any transfer of assets, especially of a house. That can lead to a penalty period, so the senior who needs long-term care will not be eligible for Medicaid.

Transferring a home to an adult child with financial or marital problems is asking for trouble. If the house becomes the child’s asset, then it can be attached by creditors. If a divorce occurs, the home will be an asset to be divided by the couple—or lost completely.

As for the family in the example above, the man was almost stuck paying taxes on a $184,000 gain. A tax research firm he engaged learned of a workaround, Section 2036 of the Internal Revenue Code. If the mother retained a life interest in the property, which includes the right to continue living there, then the home would remain in her estate, rather than be treated as a completed gift. The son, as executor of the estate, filed a gift tax return on her behalf to show that he was given a “remainder interest” or the right to inherit, when his mother’s life interest expired at her death.

There are less stressful and less costly ways to avoid the family home being part of the probated estate. We are ready to help walk you through these decisions, understand the ramifications of your choices, and memorialize your plans in binding legal documents. We are currently offering no-contact initial conferences remotely if you prefer. Book a call now and let us help you make the right choices for yourself and your loved ones.

http://kornfeldlawfirm.com/contact-us/

What Estate Planning Documents Do You Need?

Reference: Nerd Wallet (April 3, 2020) “Don’t Give Your Adult Kids Your House”

A Crucial Need during this Pandemic

April 27, 2020 No Comments

While most of those infected with COVID-19 will recover, about 20% need hospitalization, and in the absence of widely approved treatment, those who are placed in the ICU can be in grave danger.

Thousands of deaths from the coronavirus is making many of us look at death more seriously than we would otherwise. Many Americans are looking to create a will, and if you don’t have this important document in place, it’s critical that you create one immediately — just in case.

Motley Fool’s recent article entitled “The 1 Move You Must Make During the COVID-19 Crisis” says that about 37% of Americans have a will. Without one, you’ll risk having little to no say over what happens to your assets in the event of your passing.

It’s not uncommon for people to say things like, “I’m not rich and have very little money to my name, so who cares who gets it after I pass?” This is not so. Even if you only have a modest amount of assets, it’s wise to make out a will, so your wishes are carried out.

If you have minor children, you need to designate a guardian to care for them, this is a Crucial Need During this pandemic if you should die and they don’t have another living parent. This isn’t a question you want to leave unanswered, and you don’t want to leave your family members to fight over who will take on the assume the responsibility of taking in your children.

Create a will with the help of an estate planning attorney. If you create one online, you risk missing nuances that may be important in the event of your passing. If your estate is somewhat complex, it’s worth the money to use a legal expert.

Another estate-planning document to create includes a financial power of attorney, which designates someone to make financial decisions on your behalf, if you can’t.

A healthcare proxy is a person who can make medical decisions on your behalf. Ask your estate planning attorney to help you determine which documents will benefit you.

With our major health crisis, it’s not really the time to delay creating a will, if you don’t have one already. This document could give you and your loved ones peace of mind, when comfort goes a long way.

We are ready to help walk you through these decisions, understand the ramifications of your choices, and memorialize your plans in binding legal documents. We are currently offering no-contact initial conferences During this pandemic remotely if you prefer. Book a call now and let us help you make the right choices for yourself and your loved ones.

http://kornfeldlawfirm.com/contact-us/

Reference: Motley Fool (April 6, 2020) “The 1 Move You Must Make During the COVID-19 Crisis”

Massive Changes to RMDs from Stimulus Plan

April 23, 2020 No Comments

Several of the provisions that were signed into law in the relief bill can taken advantage of immediately, reports Financial Planning in the article “Major changes in RMDs and retirement contributions in $2T stimulus plan.” Here are some highlights.

Extended deadline for 2019 IRA contributions. With the tax return filing date extended to July 15, 2020 from April 16, the date for making 2019 contributions to IRA and Roth IRA contributions has also been extended to the same date. Those contributions normally must be made by April 15 of the following year, but this is no normal year. There have never been extensions to the April 15 deadline, even when taxpayers filed for extensions.

When this tax return deadline was extended, most financial professionals doubted the extension would only apply to IRA contributions, but the IRS responded in a timely manner, issuing guidance titled “Filing and Payment Deadlines Questions and Answers.” These changes give taxpayers more time to decide if they still want to contribute, and how much. Job losses and market downturns that accompanied the COVID-19 outbreak have changed the retirement savings priorities for many Americans. Just be sure when you do make a contribution to your account, note that it is for 2019 because financial custodians may just automatically consider it for 2020. A phone call to confirm will likely be in order.

RMDs are waived for 2020. As a result of the Coronavirus Aid, Relief and Economic Security Act (CARE Act), Required Minimum Distributions from IRAs are waived. Prior to the law’s passage, 2020 RMDs would be very high, as they would be based on the substantially higher account values of December 31, 2019. If not for this relief, IRA owners would have to withdraw and pay tax on a much larger percentage of their IRA balances. By eliminating the RMD for 2020, tax bills will be lower for those who don’t need to take the money from their accounts. For 2019 RMDs not yet taken, the waiver still applies. It also applies to IRA owners who turned 70 ½ in 2019. This was a surprise, as the SECURE Act just increased the RMD age to 72 for those who turn 70 ½ in 2020 or later.

IRA beneficiaries subject to the five- year rule. Another group benefitting from these the rules are beneficiaries who inherited in 2015 or later and are subject to the 5-year payout rule. Those beneficiaries may have inherited through a will or were beneficiaries of a trust that didn’t qualify as a designated beneficiary. They now have one more year—until December 31, 2021—to withdraw the entire amount in the account. Beneficiaries who inherited from 2015-2020 now have six years, instead of five.

Additional relief for retirement accounts. The new act also waives the early 10% early distribution penalty on up to $100,000 of 2020 distributions from IRAs and company plans for ‘affected individuals.’ The tax will still be due, but it can be spread over three years and the funds may be repaid over the three-year period.

Many changes have been implemented from the new legislation. Speak with your estate planning attorney to be sure that you are taking full advantage of the changes and not running afoul of any new or old laws regarding retirement accounts.

Reference: Financial Planning (March 27, 2020) “Major changes in RMDs and retirement contributions in $2T stimulus plan”

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Restrictions While Visiting the Elderly in a Care Facility

April 22, 2020 No Comments

The restrictions while Visiting the Elderly in a Care Facility started after the American Health Care Association, the largest national trade organization representing long-term care centers, and the Centers for Disease Control and Prevention issued guidance recommending extreme measures to prevent a scenario that has played out in a Washington state nursing home, where the virus spread rapidly and took many lives.

The Richmond Times-Dispatch’s recent article entitled “Virginia nursing homes restrict visitors over coronavirus fears, families worry about separation” says, however, that some family members and advocates worry that — without loved ones allowed to visit — residents will be even more vulnerable to neglect in nursing homes that already struggle to give them basic care.

“What we have found is that experts believe that this is the most prudent step that we can take to protect the residents,” said Keith Hare, CEO of the Virginia Health Care Association, the state chapter of the AHCA. “We have to put the health and well-being of these residents first. … It really is unprecedented action.”

However, some family members who are told that they can drop off supplies for the residents at the nursing home, cannot stay for a visit. Some are worried that parents with Alzheimer’s who need help eating, won’t be fed without their regular visitors because nursing homes are understaffed.

Nursing homes in the state say it was a hard decision to cease visitation, but it was necessary to prevent any exposure in the care facilities. They’re going to do whatever we can to keep it out, official say.

Innovative Healthcare Management, a company that runs five nursing homes in Virginia with a total of 750 residents, said that it has been educating its staff and preparing for a potential outbreak, since first learning of the coronavirus outbreak in China. IHM recently began screening visitors for possible coronavirus infection before they entered the facilities. The company decided to restrict all nonessential visitors, except when a resident is believed to be dying.

Nursing homes are trying other ways for family members to connect with residents, like phone calls and video chats.

While nursing homes around the country are doing the same thing and are restricting group gatherings within the centers, they are trying to make sure residents are being entertained with in-room activities, such as movies, card games, and puzzles. The focus at the facilities is on communication and keeping residents entertained.

Reference: Richmond Times-Dispatch (March 15, 2020) “Virginia nursing homes restrict visitors over coronavirus fears, families worry about separation”

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What Medicare Mistakes can Ruin Retirement?

April 15, 2020 No Comments

Healthcare expenses can loom large in retirement. Therefore, failing to totally understand Medicare could be a costly mistake. The Motley Fool’s recent article entitled “3 Medicare Mistakes That Could Wreck Your Retirement” warns that these three mistakes could throw a wrench in your retirement plan.

Thinking that Medicare will cover all your healthcare costs. It’s critical that you understand that Medicare will help cover some of your medical expenses in retirement—but it doesn’t cover everything. You will still be liable to pay all your premiums, deductibles, co-insurance, and co-pays. Medicare Part A usually doesn’t have a premium, but you’ll have a deductible of $1,408 per benefit period. Part B’s standard premium is $144.60 per month with a deductible of $198 per year. Note that Medicare Parts A and B don’t cover prescription drugs or routine vision and dental care. For those things, you’ll have to purchase Medicare Part D or a Medicare Advantage plan at an additional cost.

It’s also important that you understand that Medicare typically doesn’t cover long-term care, a major expense. Prior to retirement, it’s a good idea to add these costs into your plan.

Failing to research your plan options each year during open enrollment. Medicare open enrollment is from October 15^th until December 7^th each year. In this period, retirees can make changes to their plans, such as switching from Original Medicare (Parts A and B) to a Medicare Advantage plan or vice versa. You can also change from one Advantage plan to another or add Part D coverage. After you’ve been on Medicare, you should look into options available to you and shop around to save money.
Failing to enroll in Medicare when first eligible. When you become eligible for Medicare, you must enroll during your initial enrollment period (IEP). This begins three months prior to the month you turn 65 and ends three months after the month you turn 65. Failure to enroll could mean a penalty of 10% of your Part B premium. The longer you go without enrolling, the higher your penalty will be, and you usually must continue paying the penalty for as long as you have Part B coverage.

Note that if you’re not ready to enroll in Medicare at 65, you may qualify for a special enrollment period. Say, for example, if you (or your spouse) are still working at age 65 and are covered by insurance through your employer, you can delay your Medicare enrollment until after you quit your job.

Medicare can be confusing. The better educated you are about the program, the wiser decisions you’ll be able to make sure your retirement fund lasts longer.

By avoiding these common mistakes, you can save money and prepare for your senior years.

Reference: The Motley Fool (March 20, 2020) “3 Medicare Mistakes That Could Wreck Your Retirement”

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If Not Now, When? It is the Time for Estate Planning

April 14, 2020 No Comments

What else could possibly go wrong? You might not want to ask that question, given recent events. A global pandemic, markets in what feels like free fall, schools closed for an extended period of time—these are just a few of the challenges facing our communities, our nation and our world. The time is now for estate planning, in other words, to be sure that everyone has their estate planning completed, advises Kiplinger in the article “Coronavirus Legal Advice: Get Your Business and Estate in Order Now.”

Business owners from large and small sized companies are contacting estate planning attorney’s offices to get their plans done. People who have delayed having their estate plans done or never finalized their plans are now getting their affairs in order. What would happen if multiple family members got sick, and a family business was left unprotected?

Because the virus is recognized as being especially dangerous for people who are over age 60 or have underlying medical issues, which includes many business owners and CEOs, the question of “What if I get it?” needs to be addressed. Not having a succession plan or an estate plan, could lead to havoc for the company and the family.

Establishing a Power of Attorney is a key part of the estate plan, in case key decision makers are incapacitated, or if the head of the household can’t take care of paying bills, taxes or taking care of family or business matters. For that, you need a Durable Power of Attorney.

Another document needed now, more than ever: is an Advance Health Care Directive. This explains how you want medical decisions to be made, if you are too sick to make these decisions on your own behalf. It tells your health care team and family members what kind of care you want, what kind of care you don’t want and who should make these decisions for you.

This is especially important for people who are living together without the legal protection that being married provides. While some states may recognize registered domestic partners, in other states, medical personnel will not permit someone who is not legally married to another person to be involved in their health care decisions.

Personal information that lives only online is also at risk. Most bills today don’t arrive in the mail, but in your email inbox. What happens if the person who pays the bill is in a hospital, on a ventilator? Just as you make sure that your spouse or children know where your estate plan documents are, they also need to know who your estate planning attorney is, where your insurance policies, financial records and legal documents are and your contact list of key friends and family members.

Right now, estate planning attorneys are talking with clients about a “Plan C”—a plan for what would happen if heirs, beneficiaries and contingent beneficiaries are wiped out. They are adding language that states which beneficiaries or charities should receive their assets, if all of the people named in the estate plan have died. This is to maintain control over the distribution of assets, even in a worst-case scenario, rather than having assets pass via the rules of intestate succession. Without a Plan C, an entire estate could go to a distant relative, regardless of whether you wanted that to happen.

http://kornfeldlawfirm.com/contact-us/

Reference: Kiplinger (March 16, 2020) “Coronavirus Legal Advice: Get Your Business and Estate in Order Now.”

Coronavirus Scams are Surfacing

April 13, 2020 No Comments

Maryland U.S. Attorney Robert K. Hur is “encouraging all Marylanders to be aware of individuals attempting to profit from the coronavirus pandemic,” reported Marcia Murphy, a USAO spokeswoman.

The Cecil Whig’s recent article entitled “Maryland U.S. attorney warns of COVID-19 scams; Cecil County remains vigilant” cautions that coronavirus scams are being uncovered around the country.

Scammers have been sending e-mails to people claiming to be from local hospitals offering coronavirus vaccines for a fee. However, no vaccine is currently available for the coronavirus. Some of these criminals are using websites that appear to be legitimate but are actually fake websites that infect the users’ computers with harmful malware or seek personal information that can be later used to commit fraud. Many of these scams prey on the most vulnerable, especially the elderly.

Seniors need to contact the police, if they think someone has targeted them for a scam and to educate themselves on the COVID-19-related scams by checking official government websites, like the CDC.gov for information.

Seniors need to scrutinize anyone who makes a contact with them about a COVID-19 vaccine—which does not exist—and to report any such interaction to law enforcement.

Late last week, U.S. Attorney General William P. Barr sent a memo to all U.S. Attorneys, in which he made the investigation of these scams and the individuals perpetrating them a priority. Therefore, federal, state and local law enforcement agencies are prepared to investigate these frauds.

The Federal Trade Commission has consumer information about coronavirus scams on its website, including a complaint form to report scammers. Elderly victims can also call the newly launched Elder Fraud Hotline at 833-FRAUD-11 (833-372-8311), if they believe they are victims of a coronavirus scam—or any other type of fraud.

In addition to selling bogus cures and infecting computers by using COVID-19-related communications, other examples of coronavirus schemes include:

Phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention
Those asking for donations for fraudulently, illegitimate, or non-existent charitable organizations; and
Scammers posing as doctors, who ask for patient information for COVID-19 testing and then use that information to fraudulently bill for other tests and procedures.

Barr asked the public to report suspected fraud schemes related to COVID-19, by calling the National Center for Disaster Fraud (NCDF) hotline (1-866-720-5721) or by e-mailing the NCDF at disaster@leo.gov.

Reference: Cecil Whig (March 23, 2020) “Maryland U.S. attorney warns of COVID-19 scams; Cecil County remains vigilant”

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The Coronavirus and Estate Planning

April 12, 2020 No Comments

As Americans adjust to a changing public health landscape and historical changes to the economy, certain opportunities in wealth planning are becoming more valuable, according to the article “Impact of COVID-19 on Estate Planning” from The National Law Review. Here is a look at some strategies for estate plans:

Basic estate planning. Now is the time to review current estate planning documents to be sure they are all up to date. That includes wills, trusts, revocable trusts, powers of attorney, beneficiary designations and health care directives. Also be sure that you and family members know where they are located.

Wealth Transfer Strategies. The extreme volatility of financial markets, depressed asset values,and historically low interest rates present opportunities to transfer wealth to intended beneficiaries. Here are a few to consider:

Intra-Family Transactions. In a low interest rate environment, planning techniques involve intra-family transactions where the senior members of the family lend or sell assets to younger family members. The loaned or sold assets only need to appreciate at a rate greater than the interest rate charged. In these cases, the value of the assets remaining in senior family member’s estate will be frozen at the loan/purchase price. The value of the loaned or sold assets will be based on a fair market value valuation, which may include discounts for certain factors. The fair market value of many assets will be extremely depressed and discounted. When asset values rebound, all that appreciation will be outside of the taxable estate and will be held by or for the benefit of your intended beneficiaries, tax free.

Grantor Retained Annuity Trusts (GRATS). The use of a GRAT allows the Grantor to contribute assets into a trust while retaining a right to receive, over a term of years, an annuity steam from the Trust. When the term of years expires, the balance of the Trust’s assets passes to the beneficiaries. The IRS values the ultimate transfer of assets to your intended beneficiaries, based on the value of the annuity stream you retain and an assumed rate of return. The assumed rate of return, known as the 7520 rate comes from the IRS and is currently 1.8%. So, if you retain the right to receive an annuity stream from the trust equal to the value of the assets plus a 1.8% rate of return, assets left in the trust at the end of the term pass to your beneficiaries transfer-tax free.

Charitable Lead Annuity Trusts. Known as “CLATs,” they are similar to a GRAT, where the Grantor transfers assets to a trust and a named charity gets an annuity stream for a set term of years. At the end of that term, the assets in the trust pass to the beneficiaries. You can structure this so the balance of the assets passes to heirs transfer-tax free.

http://kornfeldlawfirm.com/contact-us/

Reference (March 13, 2020) “Impact of COVID-19 on Estate Planning

What is the Difference between Guardianship and Power of Attorney?

April 8, 2020 No Comments

Protecting yourself or a loved one can take many different forms, since aging takes a toll on the ability to handle financial and medical decisions. In most situations, guardianship or a power of attorney does the trick, says the article “Guardianships vs. Powers of Attorney” from the Pittsburgh Post-Gazette. How to know which is the best one to use?

A guardianship is a court-authorized assignment of surrogate decision-making power for the benefit of a person who has lost the ability to make informed decisions on their own, often described as a person who has become incapacitated. The decisions that another person can make on their behalf can be very broad, or they can be very specific.

If a person becomes incapacitated, either through a slowly progressing illness like dementia or quickly, as the result of an accident, a judge will appoint a person or sometimes an organization to handle health care and financial decisions. The court-appointed guardian or organization could be a person or agency you have never heard of and would not know your family or anything about you.

Yes, that is scary. However, guardianship takes place when families do not plan in advance to appoint a surrogate decision maker, also known as an “agent.”

Here’s even more scary news: once the court has appointed a guardian, that relationship may continue for the rest of the incapacitated person’s life. That means annual accountings and involvement with the court, legal fees and other professional fees the guardian or court deems necessary.

There are some guardians who have made headlines for stealing money and making care decisions that the individual and their families did not want.

Meeting with an estate planning attorney to prepare for incapacity as part of an overall estate plan is a far better way. Why don’t more people do it?

They aren’t aware of the importance of power of attorney.
They don’t want to spend the money.
They don’t know who to choose as their power of attorney
They don’t want to think about incapacity or death.

In contrast to a court-supervised lifetime guardianship, a properly drafted power of attorney can provide for an agent to make a variety of financial and medical decisions. The person named as a power of attorney (the agent) can serve for the person’s lifetime, just like a guardian.

This is the most fundamental estate planning document, after the last will and testament. Once it’s prepared, you can always change your mind and you or your agent never need to go to court.

Reference: Pittsburgh Post-Gazette (Feb. 24, 2020) “Guardianships vs. Powers of Attorney”

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Transferring the Family Home to Your Child is Never Good Estate Planning

A Crucial Need during this Pandemic

Massive Changes to RMDs from Stimulus Plan

Restrictions While Visiting the Elderly in a Care Facility

What Medicare Mistakes can Ruin Retirement?

If Not Now, When? It is the Time for Estate Planning

Coronavirus Scams are Surfacing

The Coronavirus and Estate Planning

What is the Difference between Guardianship and Power of Attorney?

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