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A Pet Trust Can Protect Pets after You’re Gone

Many of us consider our pets members of the family, but the law does not. In Arizona, pets are considered property, reports the East Valley Tribune in the article “Trusts can help provide for a pet’s future.” That means you can’t leave them your house, or open a bank account in their name. However, you can take measures to protect your pets from what could happen to them after you pass away with a Pet Trust.

The simple thing to do is to make arrangements with a trusted family member or friend to take care of your pet and leave some money for their care. The problem is, there’s no way to enforce this, and it’s all based on trust. What happens if something unexpected happens to your trusted family member or friend, and they can’t care for your pet?

You’ve also given them funds that they are not legally required to spend on your pet.

Another choice is to leave your pet to a no-kill animal shelter. However, shelters, even no-kill shelters, can be stressful for animals who are used to a family home. There’s also no way to know when your pet will be adopted, since most people come to shelters to adopt puppies and kittens. There is also the issue of the shelter. Will it continue to operate after you are gone?

The best way that many people care for their pets, is by having a pet trust created. An estate planning attorney in your state will know if your state is among the many that allow a pet trust to be created to benefit your pet.

Start by naming a guardian for your pets, including instructions on whether your pets should be kept together. If you are not sure about a guardian, name additional guardians, in case one does not wish to serve. Then determine how much money you need to leave for the pet’s care. This will depend upon the animal’s age, health and life expectancy. There will need to be adequate funding for any medical issues. The trust can specify whether you want your pet to undergo expensive surgeries or whether they should be kept comfortable at any cost.

You’ll want to make sure to name a guardian who you are confident will care for your pet or pets in the same manner as you would.

A pet trust will require you to name a trustee, who will be in charge of disbursing the funds as they are needed and can also check on the pet to be sure they are well, and your instructions are being followed. The money in the trust must only be used by person for the care of the pets.

A pet trust will give you the peace of mind of knowing that your beloved companion animals are being cared for, even when you are not here to care for them. Speak with an estate planning attorney to learn how to make a pet trust part of your overall estate plan.

Reference: East Valley Tribune (Oct. 14, 2019) “Trusts can help provide for a pet’s future”

 

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Steps to Take as a Parent’s Condition Takes a Turn

Your Parent’s Condition – An 80-year-old man had seizures several months ago. He was treated in the hospital and since then, has had some lapses in short-term memory. His long-term memory is okay, but he is not retaining day-to-day matters very well. His awareness of a loss of some functionality has left him frustrated and a little depressed, as described in the article “Dear Counselor: Need options as father’s condition worsens” from the Davis Enterprise. The use of some antidepressants and medication has been helpful, and he seems better. However, what should the children be doing, at this time, to prepare for what may come next?

The children should make arrangements to have their parents go see an estate planning attorney soon. The fact that only the wife is power of attorney, and that the forms have not been updated in many years is cause for serious concern. While their mom may be capable right now of handling his personal and financial affairs, the stress of caretaking for her husband is likely to take its toll on her. If the parent’s condition deteriorates, she will likely need help. If for some reason she’s unable to act, then it will be far better if the children, or one of the children, has the legal right to step in.

The first question is whether the father has the legal capacity to create new powers of attorney for financial management and health care. To execute a power of attorney, a person must have mental capacity. The legal standard for this is the same as it is for someone signing a contract: the person must understand and appreciate the consequences of the document being signed.

There are four broad categories of mental deficits that impact a person’s capacity: alertness and attention, information processing, thought processes and the ability to modulate mood. Short-term memory problems and depression may be considered deficits in both information processing and mood. However, that is only one part of the analysis.

Most estate planning attorneys will suggest that any client whose mental capacity may be questionable, should obtain a note from their treating physician that they are capable of understanding and signing legal documents. This is not a legal requirement, but it will help if there is a challenge to the documents he signed, and someone claims that he lacked capacity.

If the father indeed has capacity to execute a new power of attorney, then the adult children can be identified as alternates to the wife. If she is not able to act as an agent, then the siblings will be able to step up. However, if he is unable to execute a new power of attorney, the previous power of attorney would be the operative document. If for some reason, the wife is unable to perform as his agent, there is no one to serve as a backup.

In that case, a petition would need to be filed in the probate court to have a child or children appointed conservator. While that would give the child(ren) the same power as a power of attorney, they will also need to report to the court on an on-going basis. Conservatorship proceedings are expensive and time-consuming and should be a last resort.

These problems rarely get better over time. Speak with an experienced estate planning attorney as soon as possible to prepare for the future of your parent’s condition.

Reference: Davis Enterprise (Oct. 2019) “Dear Counselor: Need options as father’s condition worsens”

 

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What Do I Need to Know about Medicare Advantage?
Elder Couple at Home with Bills

What Do I Need to Know about Medicare Advantage?

Monthly premiums for Medicare Advantage (MA) plans are anticipated to decrease by an average of $3.87 to an estimated $23 in 2020. That’s a 14% drop, according to the Centers for Medicare and Medicare Services (CMS). Roughly one-third of Medicare’s 60 million beneficiaries belong to these private insurance plans.

AARP’s recent article, “Medicare Advantage Premiums to Decrease in 2020,” explains that these plans include Medicare Part A. That covers hospital care, hospice, and some nursing home and rehabilitative services. These plans also include Part B, which helps pay for physician visits and other outpatient services, including lab testing, scans and other diagnostic services. Most Medicare Advantage plans also include prescription drug coverage.

The recently announced premiums represent a nationwide average. Actual monthly charges for Medicare Advantage plans will vary, depending on what the plan covers and where beneficiaries reside. CMS announced that premiums for Part D prescription drug coverage were also trending down by about 13.5% to a projected $30 a month.

Many Medicare Advantage plans also cover some dental, vision and hearing care. Over the past two years, CMS has also added other benefits that will hopefully improve the health of seniors. These services include in-home meals, transportation, adult day care services and improvements to beneficiaries’ homes. That may look like wheelchair ramps and shower grips. However, not all Medicare Advantage plans have these extra benefits.

The Centers for Medicare and Medicare Services projects that about 250 plans in 2020 will offer access to these supplemental services, impacting about 1.2 million enrollees.

Enrollment in MA plans has been steadily climbing. The Centers for Medicare and Medicare Services projects that more than 24 million people will be in an MA plan in 2020.

The agency says that 1,200 more Medicare Advantage plans will be available in 2020, than were being sold last year.

Reference: AARP (September 24, 2019) “Medicare Advantage Premiums to Decrease in 2020”

 

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How Do I Change My Will?

Many parents have wills that were drafted years ago. Now they want to leave some specific items to people. Those are items not specifically mentioned in the will.

How can I change my will? Can I just write this list and sign it in front of a notary, or do I need to have my will changed?

If you’re the executor and don’t want your father to have to spend more money to add these items to the will, how is it done?

Dad can keep it simple, says nj.com’s recent article, “Does my dad need to pay money to get a new will?” However, doing so will likely cause more trouble for the executor.

The father can create a written list that disposes of tangible personal property, not otherwise identified and disposed of by the will.

The list must either be in the testator’s handwriting or be signed by the testator. This list also must describe the item and the recipient clearly. This list can be created before or after the will is signed.

This list can be amended or revoked. It should be kept with the will or given to the executor, so he or she knows about it and can ensure it is followed.

This list isn’t legally enforceable. The executor may elect to honor such a distribution, assuming the beneficiaries of the other tangible personal property and/or residuary estate agree. That’s so, even if the will doesn’t reference the written list but the testator nevertheless leaves the list.

However, it would not be in the interest of the executor and may be perceived as a breach of fiduciary duty to honor such a list and make such a distribution, if the beneficiaries named in the will object. No one wants to cause a fight over the items on the list, after the parent is gone.

As a result, it would be wiser to invest in having the items added to a revised will to protect the father’s wishes. If some of the beneficiaries got into a quarrel over the items on the list, it could result in a family fight that a properly drafted and executed revision or amendment could prevent.

Reference: nj.com (October 14, 2019) “Does my dad need to pay money to get a new will?”

 

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Do My Heirs Need to Pay an Inheritance Tax?

U.S. News & World Report explains in its article, “What Is Inheritance Tax?” that estate taxes and inheritance taxes are often mentioned as if they’re the same thing. However, they’re really very different in concept and practice.

Remember that not every estate is required to pay estate taxes, and not every heir will pay inheritance taxes. Let’s discuss how to determine whether these taxes impact you.

Inheritance can be taxable to heirs. However, this is based upon the state in which the deceased lived and the heirs’ relationship to the benefactor.

Inheritance taxes are a state tax on a portion of the value of a deceased person’s estate that’s paid by the inheritor of the estate. There are no federal inheritance taxes. Currently, there are only six states that impose an such a tax, according to the American College of Trust and Estate Counsel. The states that have an inheritance tax are Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. New York does not have an inheritance tax

Inheritance laws for tax and exemption amounts are different in each of these six states. In Pennsylvania, there’s no tax charged to a surviving spouse, a son or daughter age 21 or younger and certain charitable and exempt organizations. Otherwise, the Keystone State’s inheritance tax is charged on a tiered system. Direct descendants and lineal heirs pay 4.5%, siblings pay 12% and other heirs pay a cool 15%.

Inheritance tax is determined by the state in which the deceased lived. Estate taxes are deducted from the deceased’s estate after death and aren’t the responsibility of the heirs. Some states also charge their own estate taxes on assets more than a certain value. The states that charge their own estate tax are Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington and Washington, D.C.

Decreasing estate taxes are the responsibility of the deceased prior to his or her death. They should work with an estate planning attorney to map out strategies that can lessen or eliminate estate taxes for certain assets.

Remember these taxes are state taxes. They are imposed by only six states and are the responsibility of the heirs of the estate, even if they live in another state. In contrast, estate taxes are federal and state taxes. The federal estate tax is a 40% tax on assets more than $11.4 million for 2019 ($22.8 million for married couples). This is charged, regardless of where you live. Some states have additional estate taxes with their own thresholds.

Inheritance taxes are paid by the heirs, and estate taxes are paid by the estate. An estate planning attorney can help to find ways to reduce taxes and transfer money efficiently.

 

 

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The Shocking Cost of Caregiving Expenses – and What to Do About It

If you provide caregiving services for an aging relative, you might not realize how much it caregiving expenses cost you out of pocket to help your loved one. The expenses of taking food to your older parent, picking up prescriptions and supplies, buying clothing and providing transportation and other incidentals, can add up to $5,000 a year or more. Most Americans do not have an extra $5,000 lying around to spend – year after year – on these additional costs.

Covering these caregiving expenses will likely mean you have to work. Since you cannot be in two places at one time, you will miss work when you run your aging parent to the doctor and take care of other necessary errands. You might get to work late or have to leave early. Many caregivers lose their jobs, because of absences due to taking care of an older parent. You need to know about the shocking cost of caregiving expenses – and what to do about it.

Find Sources of Funding or Services

Your loved one might qualify for additional benefits through Social Security. Medicaid can help with Medicare premiums, co-pays, deductibles and other out-of-pocket expenses. Supplemental Security Income (SSI) can provide additional funds to help pay for everyday items.

Your state might offer programs that can provide food and transportation. Check with your local Council on Aging office for services in your area.

If either of your parents served in the military, the Veterans Administration (VA) might provide Aid and Assistance to pay for caregiving services. Veterans and their spouses can also receive other types of benefits, like medical care.

If your aging parent needs long-term care, think about having them sell their home. Doing so can reduce many of their monthly costs and provide a source of funds to pay for memory care, assisted living, or a nursing home. See if your parent has bank accounts or investments that could get liquidated to pay for their needs. They might be able to “spend down” to qualify for Medicaid.

Try to Avoid Having History Repeat Itself

Many people end up paying for everyday items or caregiving expenses because their elderly parents cannot afford even the necessities of life. Pensions are almost unheard of now. When a person retires, he will have to live on his savings, investments, retirement income and Social Security.

For quite a few Americans, the Social Security check is barely enough to pay the utilities. People often do not understand how much their Social Security check will get reduced by being a stay-at-home parent, when the children are young or by working part-time. They find out too late, that they might only get a few hundred dollars a month during their golden years.

To make sure your children do not have to help you financially when you retire, use a free online tool to calculate how much Social Security and other income you can expect when you retire. If that number is too low, explore ways to increase your retirement income, like contributing more to your 401(K) and working a few more years to retire after your full retirement age. Consider long-term care insurance, particularly if Alzheimer’s disease or other forms of dementia seem to run in your family.

Every state has different regulations. You can talk with an elder law attorney in your area about how your state differs from the general law of this article.

References:

HuffPost. “Caregiving Will Cost You $5000 A Year – And Maybe Your Job.” (accessed October 9, 2019) https://www.huffpost.com/entry/caregiving-will-cost-you-_b_12047182

 

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The Little-Known Option of Selling Your Life Insurance Policy

You might not know that you can sell your life insurance property to get cash now. If this idea appeals to you, make sure you do your research before you exercise the little-known option of selling your life insurance.

Why People Sell Their Life Insurance

The reasons someone might want to part with a life insurance policy, can range from highly practical to downright inadvisable. The bottom line is, not everyone wants to continue paying premiums for a policy that will only benefit someone else. Here are some of the common reasons people give for exchanging their life insurance for cash:

  • The reason you bought the policy no longer exists. Let’s say the judge in your divorce ordered you to maintain a term life insurance policy to guarantee child support, but your children are grown up and long past the age for child support. As long as you have enough in savings or you have paid off the mortgage and other significant debt, the ever-increasing premiums might not make financial sense.
  • The premiums for life insurance often increase as you get older. That policy that only cost you $40 a month when you were in your twenties or thirties, can run you $150 or $200 a month a few decades later. It might be a better use of that money to put it into your 401(K). If you have already retired, the funds you are spending on a life insurance policy could cause you financial stress. You should not do without your medication, for example, so you can pay a life insurance premium.
  • It would be a shame to pay all of those premiums for use and then lose the coverage because you can no longer afford to continue paying. Instead of letting your insurance lapse for nonpayment, explore the possibility of getting some much-needed cash for the policy. You can put that cash into your retirement savings, pay down your mortgage or other debts, or cover large expenses, like medical bills.

How to Sell Your Life Insurance Policy

If you and your financial advisor decide that selling your policy is the right decision, you will need to compare the companies that buy life insurance policies. Here is how the process works. The “life settlement company” will pay you around 20 percent of the benefit value of the policy. The company pays the premiums for the rest of your life and then collects the full amount. The person you designated as the beneficiary will no longer get any proceeds from your policy.

Make sure you deal with a reputable company. Check with the insurance commissioner, consumer protection agency, and Attorney General’s Office to see if the company has a history of complaints or lawsuits. Some of these life settlement companies are reputable firms, but con artists try to defraud people every day through a variety of schemes, including posing as life settlement companies. Because of the high potential for consumer fraud, the federal government regulates this industry carefully.

You might want to talk to an elder law attorney near you about how the regulations of your state differ from the general law of this article.

References:

HuffPost. “3 Not-So-Crazy Reasons To Sell Your Life Insurance.” (accessed October 9, 2019) https://www.huffpost.com/entry/3-notsocrazy-reasons-to-s_b_11440812

 

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Can I Protect My Daughter’s Inheritance from Her Loser Husband?

It’s not unusual for a parent not to fall in love with their child’s choice for a spouse. They may even go as far as to try and make certain that their daughter- or son-in-law doesn’t get their inheritance.

You can shield your money from your new son-in-law, says nj.com’s recent article “My daughter is getting married. How can I protect her inheritance?”

A good strategy is to create a trust, either as part of a will, or a living trust that would receive the estate assets for the benefit of the child and the child’s children.

A trust is a fiduciary arrangement that lets the trustee maintain trust assets, on behalf of a beneficiary or beneficiaries.

Trusts can be created in many ways and can specify precisely how and when the assets can be allowed to pass to the beneficiaries.

The trustee is a person or company that holds and administers the trust assets for the benefit of a third party. A trustee can be given a wide range of authority in the trust agreement. The trustee makes decisions in the beneficiary’s best interests, and they have a fiduciary responsibility to the trust beneficiaries.

Trust assets can be used for the health, education, maintenance and support of a child. The assets that are left over (if any) at the death of the child and any remainder are directed to go to the grandchildren outright or in trust.

Provided the assets distributed to the daughter aren’t commingled with the assets of her husband, those assets wouldn’t be subject to equitable distribution, if they couple were to one day get divorced.

The daughter can also enter into a prenuptial or postnuptial agreement. With this type of agreement, her spouse waives the right to any assets inherited by the daughter.

Talk these types of situations over with a qualified estate planning attorney.

Reference: nj.com (September 27, 2019) “My daughter is getting married. How can I protect her inheritance?”

 

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How to Keep Charitable Giving After We Are Gone

Americans are a generous people, giving of our time and resources, through donations and volunteering. However, according to the article “Charitable conundrum: Why do we give up on giving at death?” from the Austin Business Journal, less than one out of nine individuals include a charitable  giving as part of their estate plan.

Why do we stop giving at death? We know that the causes we care about continue to work after we are gone. There are many reasons for this, but perhaps the biggest reason behind his omission is that we tend to avoid estate planning. It’s an emotional challenge, preparing in a very real way to leave the world we enjoy with our loved ones. It’s not as much fun as going fly fishing or playing with the grandchildren.

Here are a few ways to include charitable giving in your estate plan, even when you aren’t having your estate plan created or reviewed.

Charitable beneficiaries. You can make a charity a partial beneficiary of a retirement account. They can be added as a primary beneficiary or as a contingent beneficiary. These changes can be made simply by contacting the custodian of the account and following their instructions for changing beneficiaries. Note that in certain states, spousal approval is required for any beneficiary changes. You can use this opportunity to also update your beneficiaries.

There’s a tax benefit in doing this. Charitable beneficiaries do not have to pay income tax on retirement distributions, although individuals do. Depending on the income level of an individual beneficiary, an heir could lose more than 40% of the inherited retirement account to state and local taxes.

The addition of a charitable beneficiary may restrict the ability for family members to stretch the receipt of retirement assets over time. Check with your estate planning attorney to make sure your good deed does not cause a hardship for family members.

Create a charitable IRA of your own. Another way to use retirement funds for a donation, is to roll some assets out of a main retirement account into a smaller retirement account with only charitable beneficiaries. Instead of consolidating accounts, you are doing the opposite, but for a good reason. This will allow you to manage the amount of money being left to the charity and take required or discretionary distributions from whichever account you choose.

Life insurance and annuities. Both of these vehicles use beneficiary designations, so the same strategy can be used for these accounts. Typically, the annuity must still be in the deferral state—not annuitized—and the life insurance contract must allow for changes to be made to the beneficiaries, which is true for most accounts. Note that life insurance proceeds are non-taxable to individuals and charities, and annuity proceeds are generally partially tax-free to individual heirs (amount of basis in the contract).

Talk with your estate planning attorney about the optimal strategies for making charitable giving part of your estate plan. Your situation may differ, and there may be other ways to maximize the wealth that is shared with charities and with your family.

Reference: Austin Business Journal (October 2, 2019) “Charitable conundrum: Why do we give up on giving at death?”

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What is in Diahann Carroll’s Estate?

Diahann Carroll was the star of the late 60’s Julia, the first TV series about a black professional woman that wasn’t stereotypically portrayed. Diahann Carroll’s Estate was larger than you might think, larger than other Hollywood Stars.

The Cheatsheet’s recent article asks “What Was Diahann Carroll’s Net Worth at the Time of Her Death?” According to the article, Carroll passed away on October 4, 2019, from complications due to breast cancer, a disease she battled for 22 years.

Carol Diahann Johnson was born in the Bronx, New York City on July 17, 1935. Her father was a subway conductor, and her mother was a nurse. Both of her parents supported her dreams of entering the entertainment industry, enrolling her in the Fiorello H. LaGuardia High School of Music & Art and Performing Arts, where she attended school with actor, Billy Dee Williams.

Her parents also enrolled her in dancing, singing and modeling lessons. Diahann began modeling for Ebony at the age of 15, and entered TV contests under the name Diahann Carroll. After graduating from high school, she began to attend New York University but dropped out before graduating, to pursue her career in entertainment.

In 1968, Carroll became a household name for her role as Julia in the television series Julia. Her performance earned her a Golden Globe Award for “Best Actress In A Television Series” and an Emmy nomination.

Carroll went on to appear in shows like Grey’s Anatomy, for which she received an Emmy nomination for “Outstanding Guest Actress in a Drama Series” and White Collar. She received five Emmy nominations, two Golden Globe nominations, one Academy Award nomination and other accolades for her talent.

Diahann Carroll was married several times. She will forever be remembered among entertainers who broke barriers for African-American entertainers.

After being diagnosed with breast cancer in 1997, she became an activist and stressed the importance of early detection for the prevention of the spread of the disease. In 2011, Carroll was inducted into the Television Academy Hall of Fame.

According to Celebrity Net Worth, Carroll had a net worth of $20 million at the time of her passing.

Reference: The Cheatsheet (October 5, 2019) “What Was Diahann Carroll’s Net Worth at the Time of Her Death?”

 

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